10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

(Mark One)     x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)                  

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 0-23325

Guaranty Federal Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Delaware	43-1792717
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1341 West Battlefield
Springfield, Missouri	65807
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (417) 520-4333

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.    Large accelerated filer oAccelerated filer o Non-accelerated filer o Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of May 6, 2011
Common Stock, Par Value $0.10 per share	2,672,359 Shares

GUARANTY FEDERAL BANCSHARES, INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements
Condensed Consolidated Financial Statements (Unaudited):
	Condensed Consolidated Statements of Financial Condition	3
	Condensed Consolidated Statements of Income	4
	Condensed Consolidated Statements of  Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures about Market Risk		28
Item 4. Controls and Procedures		29
PART II. OTHER INFORMATION
Item 1.  Legal Proceedings		30
Item 1A.  Risk factors		30
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 3.  Defaults Upon Senior Securities		30
Item 4.  (Removed and Reserved)		30
Item 5.  Other Information		30
Item 6.  Exhibits		30
Signatures

2

PART I  FINANCIAL INFORMATION

Item 1.  Financial Statements

GUARANTY FEDERAL BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

MARCH 31, 2011 (UNAUDITED) AND DECEMBER 31, 2010

ASSETS	3/31/11			12/31/10
Cash	$	2,994,369		$	2,968,669
Interest-bearing deposits in other financial institutions		37,694,911			11,176,660
Cash and cash equivalents		40,689,280			14,145,329
Interest-bearing deposits		5,587,654			12,785,000
Available-for-sale securities		98,727,919			96,844,653
Held-to-maturity securities		246,083			260,956
Stock in Federal Home Loan Bank, at cost		5,025,200			5,025,200
Mortgage loans held for sale		280,500			2,685,163
Loans receivable, net of allowance for loan losses of March 31, 2011 - $12,909,473 - December 31, 2010 - $13,082,703		492,044,408			501,980,385
Accrued interest receivable:
Loans		1,757,204			2,058,576
Investments and interest-bearing deposits		412,713			611,698
Prepaid expenses and other assets		6,932,485			6,161,861
Prepaid FDIC deposit insurance premiums		2,712,475			2,977,356
Foreclosed assets held for sale		10,850,102			10,539,867
Premises and equipment		11,295,444			11,324,685
Bank owned life insurance		10,529,434			10,449,630
Deferred income taxes		4,860,347			4,817,761
	$	691,951,248		$	682,668,120
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits	$	489,806,563		$	480,694,273
Federal Home Loan Bank advances		93,050,000			93,050,000
Securities sold under agreements to repurchase		39,750,000			39,750,000
Subordinated debentures		15,465,000			15,465,000
Advances from borrowers for taxes and insurance		231,450			134,002
Accrued expenses and other liabilities		633,540			655,404
Accrued interest payable		684,795			878,675
		639,621,348			630,627,354
COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS' EQUITY
Capital Stock:
Series A preferred stock, $0.01 par value; authorized 2,000,000 shares; issued and outstanding March 31, 2011 and December 31, 2010 - 17,000 shares		16,219,241			16,150,350
Common stock, $0.10 par value; authorized 10,000,000 shares; issued March 31, 2011 and December 31, 2010 - 6,779,800 shares;		677,980			677,980
Common stock warrants; March 31, 2011 and December 31, 2010 - 459,459 shares		1,377,811			1,377,811
Additional paid-in capital		58,349,490			58,505,046
Unearned ESOP shares		(375,930	)		(432,930	)
Retained earnings, substantially restricted		35,988,485			35,746,914
Accumulated other comprehensive income
Unrealized appreciation on available-for-sale securities, net of income taxes		1,708,981			1,843,004
		113,946,058			113,868,175
Treasury stock, at cost; March 31, 2011 and December 31, 2010 - 4,070,860 and 4,080,220 shares, respectively		(61,616,158	)		(61,827,409	)
		52,329,900			52,040,766
	$	691,951,248		$	682,668,120

See Notes to Condensed Consolidated Financial Statements

3

GUARANTY FEDERAL BANCSHARES, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 THREE  MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

	3/31/2011			3/31/2010
Interest Income
Loans	$	6,717,072		$	7,194,253
Investment securities		725,211			936,943
Other		87,835			134,086
		7,530,118			8,265,282
Interest Expense
Deposits		1,599,941			2,834,114
Federal Home Loan Bank advances		600,379			778,876
Subordinated debentures		206,812			255,946
Other		279,179			286,869
		2,686,311			4,155,805
Net Interest Income		4,843,807			4,109,477
Provision for Loan Losses		900,000			950,000
Net Interest Income After Provision for Loan Losses		3,943,807			3,159,477
Noninterest Income
Service charges		339,231			378,452
Other fees		7,197			6,478
Gain on sale of investment securities		3,704			160,275
Gain on sale of loans		278,200			298,317
Gain (loss) on foreclosed assets		(133,987	)		44,833
Other income		263,554			286,017
		757,899			1,174,372
Noninterest Expense
Salaries and employee benefits		2,265,151			2,065,502
Occupancy		426,865			425,017
FDIC deposit insurance premiums		285,744			309,654
Data processing		139,660			107,299
Advertising		75,000			75,000
Other expense		959,804			773,547
		4,152,224			3,756,019
Income Before Income Taxes		549,482			577,830
Provision for Income Taxes		26,520			101,964
Net Income		522,962			475,866
Preferred Stock Dividends and Discount Accretion		281,391			281,391
Net Income Available to Common Shareholders	$	241,571		$	194,475
Basic Income Per Common Share	$	0.09		$	0.07
Diluted Income Per Common Share	$	0.09		$	0.07

See Notes to Condensed Consolidated Financial Statements

4

GUARANTY FEDERAL BANCSHARES, INC.

 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

 THREE MONTHS ENDED MARCH  31, 2011 (UNAUDITED)

	Preferred Stock		Common Stock		Common Stock Warrants		Additional Paid-In Capital			Unearned ESOP Shares			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, January 1, 2011	$	16,150,350	$	677,980	$	1,377,811	$	58,505,046		$	(432,930	)	$	(61,827,409	)	$	35,746,914		$	1,843,004		$	52,040,766
Comprehensive income
Net income		-		-		-		-			-			-			522,962			-			522,962
Change in unrealized appreciation on available-for-sale securities, net of income taxes		-		-		-		-			-			-			-			(134,023	)		(134,023	)
Total comprehensive income																							388,939
Preferred stock discount accretion		68,891		-		-		-			-			-			(68,891	)		-			-
Preferred stock dividends (5%)		-		-		-		-			-			-			(212,500	)		-			(212,500	)
Stock award plans		-		-		-		25,749			-			-			-			-			25,749
Treasury stock re-issued		-		-		-		(156,806	)		-			256,823			-			-			100,017
Treasury stock purchased		-		-		-		-			-			(45,572	)		-			-			(45,572	)
Release of ESOP shares		-		-		-		(24,499	)		57,000			-			-			-			32,501
Balance, March 31, 2011	$	16,219,241	$	677,980	$	1,377,811	$	58,349,490		$	(375,930	)	$	(61,616,158	)	$	35,988,485		$	1,708,981		$	52,329,900

See Notes to Condensed Consolidated Financial Statements

5

GUARANTY FEDERAL BANCSHARES, INC.

 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

 THREE MONTHS ENDED MARCH  31, 2010 (UNAUDITED)

	Preferred Stock		Common Stock		Common Stock Warrants		Additional Paid-In Capital			Unearned ESOP Shares			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, January 1, 2010	$	15,874,788	$	677,980	$	1,377,811	$	58,523,646		$	(660,930	)	$	(61,820,869	)	$	35,741,705		$	1,696,502		$	51,410,633
Comprehensive income
Net income		-		-		-		-			-			-			475,866			-			475,866
Change in unrealized appreciation on available-for-sale securities and effect of interest rate swaps, net of income taxes		-		-		-		-			-			-			-			(127,970	)		(127,970	)
Total comprehensive income																							347,896
Preferred stock discount accretion		68,890		-		-		-			-			-			(68,890	)		-			-
Preferred stock dividends (5%)		-		-		-		-			-			-			(212,500	)		-			(212,500	)
Stock award plans		-		-		-		28,399			-			-			-			-			28,399
Treasury stock purchased		-		-		-		-			-			(2,012	)		-			-			(2,012	)
Release of ESOP shares		-		-		-		(31,139	)		57,000			-			-			-			25,861
Balance, March 31, 2010	$	15,943,678	$	677,980	$	1,377,811	$	58,520,906		$	(603,930	)	$	(61,822,881	)	$	35,936,181		$	1,568,532		$	51,598,277

See Notes to Condensed Consolidated Financial Statements

6

GUARANTY FEDERAL  BANCSHARES, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

	3/31/2011			3/31/2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	522,962		$	475,866
Items not requiring (providing) cash:
Deferred income taxes		36,126			739,716
Depreciation		177,507			207,075
Provision for loan losses		900,000			950,000
Gain on loans and investment securities		(281,904	)		(458,592	)
(Gain) loss on sale of foreclosed assets		51,769			(90,619	)
Accretion of gain on termination of interest rate swaps		-			(254,373	)
Amortization of deferred income, premiums and discounts		(9,346	)		(11,650	)
Stock award plan expense		25,749			28,399
Origination of loans held for sale		(10,525,511	)		(12,520,610	)
Proceeds from sale of loans held for sale		13,208,374			14,465,014
Release of ESOP shares		32,501			25,861
Treasury shares re-issued		100,017			-
Increase in cash surrender value of bank owned life insurance		(79,804	)		(100,146	)
Changes in:
Prepaid FDIC deposit insurance premiums		264,881			295,204
Accrued interest receivable		500,357			358,593
Prepaid expenses and other assets		141,333			118,846
Accounts payable and accrued expenses		(215,744	)		(132,467	)
Income taxes receivable		-			(637,751	)
Net cash provided by operating activities		4,849,267			3,458,366
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in loans		8,022,272			10,510,939
Principal payments on available-for-sale securities		3,812,706			3,332,230
Principal payments on held-to-maturity securities		14,873			57,308
Proceeds from maturities of available-for-sale securities		10,500,000			12,456,500
Purchase of premises and equipment		(148,266	)		(139,662	)
Purchase of available-for-sale securities		(17,142,280	)		(33,686,763	)
Proceeds from sale of available-for-sale securities		737,277			7,778,597
Purchase of interest-bearing deposits		-			(12,501,000	)
Proceeds from maturities of interest-bearing deposits		7,197,346			5,788,983
Purchase of tax credit investments		(911,957	)		-
Capitalized costs on foreclosed assets held for sale		(85,586	)		(6,966	)
Proceeds from sale of foreclosed assets held for sale		746,633			976,793
Net cash provided by (used in) investing activities		12,743,018			(5,433,041	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, NOW accounts and savings accounts		11,773,317			2,336,467
Net decrease in certificates of deposit		(2,661,027	)		(5,858,550	)
Advances from borrowers for taxes and insurance		97,448			116,428
Preferred cash dividends paid		(212,500	)		(212,500	)
Treasury stock purchased		(45,572	)		(2,012	)
Net cash provided by (used in) financing activities		8,951,666			(3,620,167	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		26,543,951			(5,594,842	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		14,145,329			33,016,697
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	40,689,280		$	27,421,855

See Notes to Condensed Consolidated Financial Statements

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1:  Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Guaranty Federal Bancshares, Inc.’s (the “Company”) Form 10-K annual report for 2010 filed with the Securities and Exchange Commission (the “SEC”).  The results of operations for the periods are not necessarily indicative of the results to be expected for the full year.  The condensed consolidated statement of financial condition of the Company as of December 31, 2010, has been derived from the audited consolidated balance sheet of the Company as of that date.  Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.

Certain reclassifications have been made to the 2010 condensed consolidated financial statements to conform to the 2011 financial statement presentation.  These reclassifications had no effect on net income.

Note 2:  Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Guaranty Bank (the “Bank”).  All significant intercompany transactions and balances have been eliminated in consolidation.

Note 3:  Securities

The amortized cost and approximate fair values of securities classified as available-for-sale are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Approximate Fair Value
As of March 31, 2011
Equity Securities	$	102,212	$	9,767	$	(30,680	)	$	81,299
Debt Securities:
U. S. government agencies		31,516,913		156,185		(218,338	)		31,454,760
U. S. treasuries		2,499,216		-		(5,466	)		2,493,750
Government sponsored mortgage-backed securities		61,896,909		2,801,242		(41	)		64,698,110
	$	96,015,250	$	2,967,194	$	(254,525	)	$	98,727,919

8

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Approximate Fair Value
As of December 31, 2010
Equity Securities	$	102,212	$	7,089	$	(31,381	)	$	77,920
Debt Securities:
U. S. government agencies		27,409,482		222,014		(128,414	)		27,503,082
Government sponsored mortgage-backed securities		66,407,555		2,865,745		(9,649	)		69,263,651
	$	93,919,249	$	3,094,848	$	(169,444	)	$	96,844,653

Maturities of available-for-sale debt securities as of March 31, 2011:

	Amortized Cost		Approximate Fair Value
1-5 years	$	32,032,642	$	32,030,564
6-10 years		1,983,487		1,917,946
Government sponsored mortgage-backed securities not due on a single maturity date		61,896,909		64,698,110
	$	95,913,038	$	98,646,620

The amortized cost and approximate fair values of securities classified as held to maturity are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Approximate Fair Value
As of March 31, 2011
Debt Securities:
Government sponsored mortgage-backed securities	$	246,083	$	18,967	$	-	$	265,050
	$	246,083	$	18,967	$	-	$	265,050

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Approximate Fair Value
As of December 31, 2010
Debt Securities:
Government sponsored mortgage-backed securities	$	260,956	$	20,828	$	-	$	281,784
	$	260,956	$	20,828	$	-	$	281,784

9

Maturities of held-to-maturity securities as of March 31, 2011:

	Amortized Cost		Approximate Fair Value
Government sponsored mortgage-backed securities not due on a single maturity date	$	246,083	$	265,050
	$	246,083	$	265,050

The book value of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $68,052,945 and $60,631,261 as of March 31, 2011 and December 31, 2010, respectively.  The approximate fair value of pledged securities amounted to $70,654,327 and $62,981,616 as of March 31, 2011 and December 31, 2010, respectively.

Realized gains and losses are recorded as net securities gains.  Gains on sales of securities are determined on the specific identification method.  Gross gains of $3,704 and $160,275 as of March 31, 2011 and March 31, 2010, respectively, were realized from the sale of available-for-sale securities.  The tax effect of these net gains was $1,370 and $59,302 as of March 31, 2011 and March 31, 2010, respectively.

The Company evaluates all securities quarterly to determine if any unrealized losses are deemed to be other than temporary.  Certain investment securities are valued at less than their historical cost. These declines are primarily the result of the rate for these investments yielding less than current market rates, or declines in stock prices of equity securities. Based on evaluation of available evidence, management believes the declines in fair value for these securities are temporary. It is management’s intent to hold the debt securities to maturity or until recovery of the unrealized loss. Should the impairment of any of these debt securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified, to the extent the loss is related to credit issues, and to other comprehensive income to the extent the decline on debt securities is related to other factors and the Company does not intend to sell the security prior to recovery of the unrealized loss.

Certain other investments in debt and equity securities are reported in the financial statements at an amount less than their historical cost.  Total fair value of these investments at March 31, 2011 and December 31, 2010, was $21,315,592 and $5,386,231, respectively, which is approximately 22% and 6% of the Company’s investment portfolio.  These declines primarily resulted from changes in market interest rates and failure of certain investments to meet projected earnings targets.

10

The following table shows gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2011 and December 31, 2010.

	March 31, 2011
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equity Securities	$	-	$	-		$	40,854	$	(30,680	)	$	40,854	$	(30,680	)
U. S. government agencies		17,916,736		(218,338	)		-		-			17,916,736		(218,338	)
U. S. treasuries		2,493,750		(5,466	)		-		-			2,493,750		(5,466	)
Government sponsored mortgage-backed securities		864,252		(41	)		-		-			864,252		(41	)
	$	21,274,738	$	(223,845	)	$	40,854	$	(30,680	)	$	21,315,592	$	(254,525	)

	December 31, 2010
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equity Securities	$	-	$	-		$	40,153	$	(31,381	)	$	40,153	$	(31,381	)
U. S. government agencies		4,374,049		(128,414	)		-		-			4,374,049		(128,414	)
Government sponsored mortgage-backed securities		972,029		(9,649	)		-		-			972,029		(9,649	)
	$	5,346,078	$	(138,063	)	$	40,153	$	(31,381	)	$	5,386,231	$	(169,444	)

11

Note 4:  Loans and Allowance for Loan Losses

Categories of loans at March 31, 2011 and December 31, 2010 include:

	March 31,			December 31,
	2011			2010
Real estate - residential mortgage:
One to four family units	$	102,555,697		$	103,052,035
Multi-family		48,840,024			44,138,034
Real estate - construction		59,796,346			63,308,397
Real estate - commercial		188,198,430			195,889,801
Commercial loans		83,617,854			85,427,589
Consumer and other loans		22,114,796			23,425,843
Total loans		505,123,147			515,241,699
Less:
Allowance for loan losses		(12,909,473	)		(13,082,703	)
Deferred loan fees/costs, net		(169,266	)		(178,611	)
Net loans	$	492,044,408		$	501,980,385

Classes of loans by aging at March 31, 2011 and December 31, 2010 were as follows:

As of March 31, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	1,015	$	-	$	1,062	$	2,077	$	100,479	$	102,556	$	-
Multi-family		-		-		-		-		48,840		48,840		-
Real estate - construction		-		22		102		124		59,672		59,796		-
Real estate - commercial		410		-		167		577		187,621		188,198		-
Commercial loans		1,334		1,940		1,956		5,230		78,388		83,618		-
Consumer and other loans		209		50		71		330		21,785		22,115		-
Total	$	2,968	$	2,012	$	3,358	$	8,338	$	496,785	$	505,123	$	-

As of December 31, 2010
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	1,158	$	562	$	1,591	$	3,311	$	99,741	$	103,052	$	-
Multi-family		-		-		-		-		44,138		44,138		-
Real estate - construction		1,969		89		311		2,369		60,939		63,308		-
Real estate - commercial		-		234		-		234		195,656		195,890		-
Commercial loans		2,571		-		2,021		4,592		80,836		85,428		-
Consumer and other loans		100		25		29		154		23,272		23,426		-
Total	$	5,798	$	910	$	3,952	$	10,660	$	504,582	$	515,242	$	-

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Nonaccruing loans are summarized as follows:

	March 31,		December 31,
	2011		2010
Real estate - residential mortgage:
One to four family units	$	3,205,333	$	3,119,760
Multi-family		-		-
Real estate - construction		10,960,017		8,934,666
Real estate - commercial		2,421,045		2,980,117
Commercial loans		4,551,637		7,743,116
Consumer and other loans		252,202		234,475
Total	$	21,390,234	$	23,012,134

The following tables present the activity in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of and for the three months ended March 31, 2011 and the year ended December 31, 2010:

March 31, 2011	Construction			Commercial Real Estate			One to four family			Multi-family			Commercial			Consumer and Other			Unallocated		Total
Allowance for loan losses:	(In Thousands)
Balance, beginning of period	$	4,547		$	3,125		$	1,713		$	528		$	2,483		$	687		$	-	$	13,083
Provision charged to expense		803			274			518			(7	)		12			(1,485	)		785	$	900
Losses charged off		(69	)		(1,475	)		(265	)		-			(518	)		(40	)		-	$	(2,367	)
Recoveries		10			2			-			-			34			1,247			-	$	1,293
Balance, end of period	$	5,291		$	1,926		$	1,966		$	521		$	2,011		$	409		$	785	$	12,909
Ending balance:  individually evaluated for impairment	$	3,491		$	181		$	518		$	-		$	678		$	86		$	-	$	4,954
Ending balance:  collectively evaluated for impairment	$	1,800		$	1,745		$	1,448		$	521		$	1,333		$	323		$	785	$	7,955
Loans:
Ending balance:  individually evaluated for impairment	$	12,069		$	4,211		$	4,552		$	-		$	5,794		$	1,148			-	$	27,774
Ending balance:  collectively evaluated for impairment	$	47,727		$	183,987		$	98,004		$	48,840		$	77,824		$	20,967			-	$	477,349

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December 31, 2010	Construction			Commercial Real Estate			One to four family			Multi-family		Commercial			Consumer and Other			Unallocated		Total
Allowance for loan losses:	(In Thousands)
Balance, beginning of year	$	2,810		$	2,923		$	1,646		$	393	$	3,554		$	2,750		$	-	$	14,076
Provision charged to expense		5,620			563			948			135		716			(2,782	)		-	$	5,200
Losses charged off		(3,893	)		(373	)		(906	)		-		(1,847	)		(366	)		-	$	(7,385	)
Recoveries		10			12			25			-		60			1,085			-	$	1,192
Balance, end of year	$	4,547		$	3,125		$	1,713		$	528	$	2,483		$	687		$	-	$	13,083
Ending balance:  individually evaluated for impairment	$	3,134		$	1,384		$	149		$	-	$	1,052		$	307		$	-	$	6,026
Ending balance:  collectively evaluated for impairment	$	1,413		$	1,741		$	1,564		$	528	$	1,431		$	380		$	-	$	7,057
Loans:
Ending balance:  individually evaluated for impairment	$	9,281		$	5,150		$	3,363		$	-	$	8,409		$	1,008		$	-	$	27,211
Ending balance:  collectively evaluated for impairment	$	54,027		$	190,740		$	99,689		$	44,138	$	77,019		$	22,418		$	-	$	488,031

Activity in the allowance for loan losses was as follows for the three months ended March 31, 2010:

	March 31,
	2010
Balance, beginning of period	$	14,076,123
Provision charged to expense		950,000
Losses charged off, net of recoveries		(2,605,207	)
Balance, end of period	$	12,420,916

The following summarized impaired loans at March 31, 2011 and December 31, 2010:

March 31, 2011	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	4,552	$	4,558	$	518	$	3,797	$	35
Multi-family		-		-		-		-		-
Real estate - construction		12,069		12,172		3,491		11,202		2
Real estate -  commercial		4,211		5,225		181		4,906		11
Commercial loans		5,794		7,850		678		7,407		35
Consumer and other loans		1,148		1,149		86		1,091		18
Total	$	27,774	$	30,954	$	4,954	$	28,403	$	101

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December 31, 2010	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Average Investment in Impaired Loans		Interest Income Recognized
	(In Thousands)
Real estate - residential mortgage:
One to four family units	$	3,363	$	3,380	$	149	$	4,521	$	185
Multi-family		-		-		-		1,007		-
Real estate - construction		9,281		10,683		3,134		7,221		9
Real estate -  commercial		5,150		5,150		1,384		3,671		30
Commercial loans		8,409		10,364		1,052		8,383		41
Consumer and other loans		1,008		1,011		307		4,193		93
Total	$	27,211	$	30,588	$	6,026	$	28,996	$	358

The following tables provide information about the credit quality of the loan portfolio using the Bank’s internal rating system as of March 31, 2011 and December 31, 2010:

March 31, 2011	Construction		Commercial Real Estate		One to four family		Multi-family		Commercial		Consumer and Other		Total
	(In Thousands)
Rating:
Pass	$	40,812	$	160,624	$	93,032	$	48,333	$	73,203	$	20,130	$	436,134
Special Mention		4,468		14,057		3,009		507		2,161		199		24,401
Substandard		14,516		13,517		6,515		-		8,254		1,786		44,588
Total	$	59,796	$	188,198	$	102,556	$	48,840	$	83,618	$	22,115	$	505,123

December 31, 2010	Construction		Commercial Real Estate		One to four family		Multi-family		Commercial		Consumer and Other		Total
	(In Thousands)
Rating:
Pass	$	45,307	$	173,210	$	93,816	$	44,138	$	73,291	$	21,580	$	451,342
Special Mention		4,621		7,604		2,962		-		1,028		4		16,219
Substandard		13,380		15,076		6,274		-		11,109		1,842		47,681
Total	$	63,308	$	195,890	$	103,052	$	44,138	$	85,428	$	23,426	$	515,242

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Note 5:  Benefit Plans

The Company has stock-based employee compensation plans, which are described fully in the Company’s December 31, 2010 Annual Report on Form 10-K.

The table below summarizes transactions under the Company’s stock option plans for three months ended March 31, 2011:

	Number of shares
	Incentive Stock Option		Non-Incentive Stock Option		Weighted Average Exercise Price
Balance outstanding as of January 1, 2011		194,750		170,829	$	16.14
Granted		-		-		-
Exercised		-		-		-
Forfeited		-		-		-
Balance outstanding as of March 31, 2011		194,750		170,829		16.14
Options exercisable as of March 31, 2011		109,350		100,829		20.18

Stock-based compensation expense recognized for the three months ended March 31, 2011 and 2010 was $25,749 and $28,399, respectively.  As of March 31, 2011, there was $250,039 of unrecognized compensation expense related to nonvested stock options, which will be recognized over the remaining vesting period.

In January 2011, the Company granted restricted stock to directors that was fully vested and thus, expensed in full during the three months ended March 31, 2011.  The amount expensed was $100,017 for the quarter which represents 16,952 shares of common stock at a market price of $5.90 at the date of grant.

Note 6: Income Per Common Share

	For three months ended March 31, 2011
	Income Available to Common Stockholders		Average Common Shares Outstanding		Per Common Share
Basic Income per Common Share	$	241,571		2,669,006	$	0.09
Effect of Dilutive Securities				11,305
Diluted Income per Common Share	$	241,571		2,680,311	$	0.09

	For three months ended March 31, 2010
	Income Available to Common Stockholders		Average Common Shares Outstanding		Per Common Share
Basic Income per Common Share	$	194,475		2,636,561	$	0.07
Effect of Dilutive Securities				-
Diluted Income per Common Share	$	194,475		2,636,561	$	0.07

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Stock options to purchase 365,579 and 329,579 shares of common stock were outstanding during the three months ended March 31, 2011and 2010, respectively, and stock warrants to purchase 459,459 shares of common stock were outstanding during the three months ended March 31, 2010, but were not included in the computation of diluted income per common share because their exercise price was greater than the average market price of the common shares.

Note 7: Other Comprehensive Income (Loss)

Other comprehensive income (loss) components and related taxes were as follows:

	3/31/2011			3/31/2010
Unrealized gains (losses) on available-for-sale securities	$	(209,031	)	$	211,521
Accretion of gains on interest rate swaps into income		-			(254,373	)
Less: Reclassification adjustment for realized gains included in income		(3,704	)		(160,275	)
Other comprehensive loss, before tax effect		(212,735	)		(203,127	)
Tax benefit		(78,712	)		(75,157	)
Other comprehensive loss	$	(134,023	)	$	(127,970	)

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

	3/31/2011		12/31/2010
Unrealized gain on available-for-sale securities	$	2,712,669	$	2,925,404
Tax effect		1,003,688		1,082,400
Net of tax amount	$	1,708,981	$	1,843,004

Note 8: New Accounting Pronouncements

In January 2011, the Financial Accounting Standards Board (FASB) issued ASU No. 2011-01, “Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.” The provisions of ASU No. 2010-20 required the disclosure of more granular information on the nature and extent of troubled debt restructurings and their effect on the allowance for loan and lease losses effective for the Company’s reporting period ended March 31, 2011. The amendments in ASU No. 2011-01 deferred the effective date related to these disclosures, until after the FASB completes its project clarifying the guidance for determining what constitutes a troubled debt restructuring.

            In April 2011, the FASB issued ASU No. 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” The provisions of ASU No. 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, include factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibits creditors from using the borrower’s effective rate test to evaluate whether a concession has been granted to the borrower, and add factors for creditors to use in determining whether a borrower is experiencing financial difficulties. A provision in ASU No. 2011-02 also ends the FASB’s deferral of the additional disclosures about troubled debt restructurings as required by ASU No. 2010-20. The provisions of ASU No. 2011-02 will be effective for the Company’s reporting period ending September 30, 2011. The adoption of ASU No. 2011-02 is not expected to have a material impact on the Company’s consolidated financial statements.

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Note 9: Disclosures about Fair Value of Assets and Liabilities

ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Topic 820 also specifies a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

The following is a description of the inputs and valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying statements of financial condition, as well as the general classification of such assets pursuant to the valuation hierarchy.

Available-for-sale securities:  Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.  Level 1 securities include equity securities.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows.  For these investments, the inputs used by the pricing service to determine fair value may include one or a combination of observable inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bid offers and reference data market research publications and are classified within Level 2 of the valuation hierarchy.  Level 2 securities include U.S. government agencies and government sponsored mortgage-backed securities.  The Company has no Level 3 securities.

The following table presents the fair value measurements of assets recognized in the accompanying statements of financial condition measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2011 and December 31, 2010 (dollar amounts in thousands):

3/31/2011
Financial assets:
	Level 1 inputs		Level 2 inputs		Level 3 inputs		Total fair value
Equity securities	$	81	$	-	$	-	$	81
Debt securities:
U.S. government agencies		-		31,455		-		31,455
U. S. treasuries		-		2,494		-		2,494
Government sponsored mortgage-backed securities		-		64,698		-		64,698
Available-for-sale securities	$	81	$	98,647	$	-	$	98,728

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12/31/2010
Financial assets:
	Level 1 inputs		Level 2 inputs		Level 3 inputs		Total fair value
Equity securities	$	78	$	-	$	-	$	78
Debt securities:
U.S. government agencies		-		27,503		-		27,503
Government sponsored mortgage-backed securities		-		69,264		-		69,264
Available-for-sale securities	$	78	$	96,767	$	-	$	96,845

The following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying statements of financial condition, as well as the general classification of such assets pursuant to the valuation hierarchy.

Foreclosed Assets Held for Sale:   Fair value is estimated using recent appraisals, comparable sales and other estimates of value obtained principally from independent sources, adjusted for selling costs.  Foreclosed assets held for sale are classified within Level 3 of the valuation hierarchy.

Impaired loans (Collateral Dependent):   Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment.  Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized.  This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2011 and December 31, 2010 (dollar amounts in thousands):

Impaired loans:
	Level 1 inputs		Level 2 inputs		Level 3 inputs		Total fair value
March 31, 2011	$	-	$	-	$	3,254	$	3,254
December 31, 2010	$	-	$	-	$	16,163	$	16,163

Foreclosed assets held for sale:
	Level 1 inputs		Level 2 inputs		Level 3 inputs		Total fair value
March 31, 2011	$	-	$	-	$	775	$	775
December 31, 2010	$	-	$	-	$	6,686	$	6,686

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying balance sheets at amounts other than fair value.

Cash and cash equivalents, interest-bearing deposits and Federal Home Loan Bank stock

The carrying amounts reported in the balance sheets approximate those assets' fair value.

19

Held-to-maturity securities

Fair value is based on quoted market prices, if available.  If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans

The fair value of loans is estimated by discounting the future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.  Loans with similar characteristics were aggregated for purposes of the calculations.  The carrying amount of accrued interest approximates its fair value.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits.  The carrying amount approximates fair value.  The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturities.

Federal Home Loan Bank advances and securities sold under agreements to repurchase

The fair value of advances and securities sold under agreements to repurchase is estimated by using rates on debt with similar terms and remaining maturities.

Subordinated debentures

For these variable rate instruments, the carrying amount is a reasonable estimate of fair value.  There is currently a limited market for similar debt instruments and the Company has the option to call the subordinated debentures at an amount close to its par value.

Interest payable

The carrying amount approximates fair value.

Commitments to originate loans, letters of credit and lines of credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit worthiness of the counterparties.  For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.  The fair value of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.

20

The following table presents estimated fair values of the Company’s financial instruments at March 31, 2011 and December 31, 2010.

	March 31, 2011				December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	40,689,280	$	40,689,280	$	14,145,329	$	14,145,329
Interest-bearing deposits		5,587,654		5,587,654		12,785,000		12,785,000
Held-to-maturity securities		246,083		265,050		260,956		281,784
Federal Home Loan Bank stock		5,025,200		5,025,200		5,025,200		5,025,200
Mortgage loans held for sale		280,500		280,500		2,685,163		2,685,163
Loans, net		492,044,408		498,338,660		501,980,385		508,839,154
Interest receivable		2,169,917		2,169,917		2,670,274		2,670,274
Financial liabilities:
Deposits		489,806,563		491,626,123		480,694,273		482,094,550
Federal Home Loan Bank advances		93,050,000		91,537,691		93,050,000		92,694,525
Securities sold under agreements to repurchase		39,750,000		40,500,035		39,750,000		40,473,482
Subordinated debentures		15,465,000		15,465,000		15,465,000		15,465,000
Interest payable		684,795		684,795		878,675		878,675
Unrecognized financial instruments
(net of contractual value):
Commitments to extend credit		-		-		-		-
Unused lines of credit		-		-		-		-

Note 10: Derivative Financial Instruments

The Company recorded all derivative financial instruments at fair value in the financial statements.  Derivatives were used as a risk management tool to hedge the exposure to changes in interest rates or other identified market risks.

When a derivative is intended to be a qualifying hedged instrument, the Company prepares written hedge documentation that designates the derivative as 1) a hedge of fair value of a recognized asset or liability (fair value hedge) or 2) a hedge of a forecasted transaction, such as, the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge).  The written documentation includes identification of, among other items, the risk management objective, hedging instrument, hedged item, and methodologies for assessing and measuring hedge effectiveness and ineffectiveness, along with support for management’s assertion that the hedge will be highly effective.

On November 7, 2008, the Company elected to terminate three interest rate swap agreements with a total notional value of $90 million.  At termination, the swaps had a market value (gain) of approximately $1.7 million.  The gain was deferred and was accreted into income.  The Company recognized $254,373 of this gain for the three months ended March 31, 2010.  As of June 30, 2010, the original gain at termination was fully accreted into income in accordance with the stated maturity date of the original agreement.

Note 11: Preferred Stock and Common Stock Warrants

On January 30, 2009, as part of the U.S. Department of the Treasury's Troubled Asset Relief Program's Capital Purchase Program (“CPP”), the Company entered into a Securities Purchase Agreement - Standard Terms with the United States Department of the Treasury (the "Treasury") pursuant to which the Company sold to the Treasury 17,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the "Series A Preferred Stock") and issued a ten year warrant (the "Warrant") to purchase 459,459 shares of the Company's common stock (the "Common Stock") for $5.55 per share (the "Warrant Shares") for a total purchase price of $17.0 million (the "Transaction").

21

The Series A Preferred Stock qualifies as Tier 1 capital and is entitled to cumulative preferred dividends at a rate of 5% per year for the first five years, payable quarterly, and 9% thereafter. The Series A Preferred Stock has a liquidation preference of $1,000 per share, plus accrued and unpaid dividends.  The failure by the Company to pay a total of six quarterly dividends, whether or not consecutive, gives the holders of the Series A Preferred Stock the right to elect two directors to the Company's Board of Directors.

The Company may redeem the Series A Preferred Stock for $1,000 per share, plus accrued and unpaid dividends, in whole or in part, subject to regulatory approval.

The Warrant is exercisable immediately upon issuance and expires in ten years. The Warrant has anti-dilution protections and certain other protections for the holder of the Warrant, as well as potential registration rights upon written request from the Treasury.  The Treasury has agreed not to exercise voting rights with respect to the Warrant Shares that it may acquire upon exercise of the Warrant. If the Series A Preferred Stock is redeemed in whole, the Company has the right to purchase any shares of the Common Stock held by the Treasury at their fair market value at that time.

The Company is subject to certain contractual restrictions under the CPP and the Certificate of Designations for the Series A Preferred Stock that could prohibit the Company from declaring or paying dividends on its common stock or the Series A Preferred Stock.

The proceeds from the CPP were allocated between the Series A Preferred Stock and the Warrant based on a fair value assigned using a discounted cash flow model.  This resulted in an initial value of $15,622,189 for the Series A Preferred Stock and $1,377,811 for the Warrant.  The discount of approximately $1.4 million on the Series A Preferred Stock is being accreted over the straight-line method (which approximates the level-yield method) over five years ending February 28, 2014.

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (the “ARRA”) was signed into law.  The ARRA imposes certain additional executive compensation and corporate expenditure limits on all current and future CPP recipients.  These limits are in addition to those previously imposed by the Treasury under the Emergency Economic Stabilization Act of 2008 (the “EESA”).  The Treasury released an interim final rule (the “IFR”) on TARP standards for compensation and corporate governance on June 10, 2009, which implemented and further expanded the limitations and restrictions imposed by EESA and ARRA.  The IFR applies to the Company as of the date of publication in the Federal Register on June 15, 2009, but was subject to comment which ended on August 14, 2009.  The Treasury has not yet published a final version of the IFR.

As a result of the Company’s participation in the CPP, the restrictions and standards established under EESA and ARRA are applicable to the Company.  Neither the ARRA nor the EESA restrictions shall apply to the Company at such time that the federal government no longer holds any of the Company’s Series A Preferred Stock.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The primary function of the Company is to monitor and oversee its investment in the Bank.  The Company engages in few other activities, and the Company has no significant assets other than its investment in the Bank.  As a result, the results of operations of the Company are derived primarily from operations of the Bank. The Bank’s results of operations are primarily dependent on net interest margin, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities.  The Bank’s income is also affected by the level of its noninterest expenses, such as employee salaries and benefits, occupancy expenses and other expenses.  The following discussion reviews the Company’s financial condition as of March 31, 2011, and the results of operations for the three months ended March 31, 2011 and 2010.

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The discussion set forth below, as well as other portions of this Form 10-Q, may contain forward-looking comments. Such comments are based upon the information currently available to management of the Company and management’s perception thereof as of the date of this Form 10-Q.  When used in this Form 10-Q, words such as “anticipates,” “estimates,” “believes,” “expects,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Such statements are subject to risks and uncertainties.  Actual results of the Company’s operations could materially differ from those forward-looking comments.  The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in demand for banking services; changes in portfolio composition; changes in management strategy; increased competition from both bank and non-bank companies; changes in the general level of interest rates; changes in general or local economic conditions; changes in federal or state regulations and legislation governing the operations of the Company or the Bank; and other factors set forth in reports and other documents filed by the Company with the SEC from time to time, including the risk factors described under Item 1A. of the Company’s Form 10-K for the fiscal year ended December 31, 2010.

Financial Condition

The Company’s total assets increased $9,283,128 (1%) from $682,668,120 as of December 31, 2010, to $691,951,248 as of March 31, 2011.

Interest-bearing deposits decreased $7,197,346 (56%) from $12,785,000 as of December 31, 2010, to $5,587,654 as of March 31, 2011. The decrease is due primarily to maturities during the period.

Available-for-sale securities increased $1,883,266 (2%) from $96,844,653 as of December 31, 2010, to $98,727,919 as of March 31, 2011. The increase is primarily due to purchases of $17.1 million offset by sales, maturities and principal payments received of $15.0 million.

Held-to-maturity securities decreased primarily due to principal repayments by $14,873 (6%) from $260,956 as of December 31, 2010, to $246,083 as of March 31, 2011.

Mortgage loans held for sale decreased by $2,404,663 (90%) from $2,685,163 as of December 31, 2010, to $280,500 as of March 31, 2011 due to declining volumes of mortgage loan refinancings during the period.

Net loans receivable decreased by $9,935,977 (2%) from $501,980,385 as of December 31, 2010, to $492,044,408 as of March 31, 2011.  During this period, commercial real estate loans decreased $7,691,371(4%), commercial loans decreased $1,809,735 (2%), permanent multi-family loans increased $4,701,990 (10%), construction loans decreased $3,512,051 (6%), loans secured by owner occupied one to four unit residential real estate decreased $496,337 (1%) and installment loans decreased $1,311,047 (6%).  The Company continues to focus its lending efforts in the commercial and owner occupied real estate loan categories, and to reduce its concentrations in non-owner occupied commercial real estate.

Allowance for loan losses decreased $173,230 (1%) from $13,082,703 as of December 31, 2010 to $12,909,473 as of March 31, 2011. The allowance decreased due to net loan charge-offs of $1,073,230 exceeding the provision for loan losses of $900,000 recorded during the period.  Management charged off certain specific loans that had been identified and classified as impaired at December 31, 2010.  See discussion under “Results of Operations – Comparison of Three Month Periods Ended March 31, 2011 and 2010 – Provision for Loan Losses.”   The allowance for loan losses, as a percentage of gross loans outstanding (excluding mortgage loans held for sale), as of March 31, 2011 and December 31, 2010 was 2.56% and 2.54%, respectively.  The allowance for loan losses, as a percentage of nonperforming loans outstanding, as of March 31, 2011 and December 31, 2010 was 60.4% and 56.9%, respectively.  Management believes the allowance for loan losses is at a level to be sufficient in providing for potential loan losses in the Bank’s existing loan portfolio.

Deposits increased $9,112,290 (2%) from $480,694,273 as of December 31, 2010, to $489,806,563 as of March 31, 2011.  For the three months ended March 31, 2011, checking and savings accounts increased by $11.8 million and certificates of deposit decreased by $2.7 million.  See also the discussion under “Quantitative and Qualitative Disclosure about Market Risk – Asset/Liability Management.”

23

Stockholders’ equity (including unrealized appreciation on available-for-sale securities, net of tax) increased $289,134 from $52,040,766 as of December 31, 2010, to $52,329,900 as of March 31, 2011.  The Company’s net income during this period was $522,962.  In conjuction with the Series A Preferred Stock, the Company accrued $212,500 of dividends (5%) during the period.  On a per common share basis, stockholders’ equity increased from $13.51 as of December 31, 2010 to $13.52 as of March 31, 2011.

Average Balances, Interest and Average Yields

The Company’s profitability is primarily dependent upon net interest income, which represents the difference between interest and fees earned on loans and debt and equity securities, and the cost of deposits and borrowings.  Net interest income is dependent on the difference between the average balances and rates earned on interest-earning assets and the average balances and rates paid on interest-bearing liabilities.  Non-interest income, non-interest expense, and income taxes also impact net income.

The following table sets forth certain information relating to the Company’s average consolidated statements of financial condition and reflects the average yield on assets and average cost of liabilities for the periods indicated.  Such yields and costs are derived by dividing income or expense annualized by the average balance of assets or liabilities, respectively, for the periods shown.  Average balances were derived from average daily balances.  The average balance of loans includes loans on which the Company has discontinued accruing interest.  The yields and costs include fees which are considered adjustments to yields.  All dollar amounts are in thousands.

24

	Three Months ended 3/31/2011								Three Months ended 3/31/2010
	Average Balance		Interest			Yield / Cost			Average Balance		Interest			Yield / Cost
ASSETS
Interest-earning:
Loans	$	494,906	$	6,717			5.43	%	$	517,811	$	7,194			5.56	%
Investment securities		96,185		725			3.02	%		110,184		937			3.40	%
Other assets		39,527		88			0.89	%		53,176		134			1.01	%
Total interest-earning		630,618		7,530			4.78	%		681,171		8,265			4.85	%
Noninterest-earning		52,753								55,133
	$	683,371							$	736,304
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing:
Savings accounts	$	19,591		32			0.65	%	$	15,355		37			0.96	%
Transaction accounts		254,739		695			1.09	%		257,637		1,292			2.01	%
Certificates of deposit		170,386		873			2.05	%		211,665		1,506			2.85	%
FHLB Advances		93,050		600			2.58	%		116,050		779			2.69	%
Securities sold under agreements to repurchase		39,750		279			2.81	%		39,750		286			2.88	%
Subordinated debentures		15,465		207			5.35	%		15,465		256			6.62	%
Total interest-bearing		592,981		2,686			1.81	%		655,922		4,156			2.53	%
Noninterest-bearing		37,474								28,129
Total liabilities		630,455								684,051
Stockholders’ equity		52,916								52,253
	$	683,371							$	736,304
Net earning balance	$	37,637							$	25,249
Earning yield less costing rate							2.97	%							2.32	%
Net interest income, and net interest margin on interest earning assets			$	4,844			3.07	%			$	4,109			2.41	%
Ratio of interest-earning assets to interest-bearing liabilities				106	%							104	%

Results of Operations - Comparison of Three Month Periods Ended March 31, 2011 and 2010

Net income for the three months ended March 31, 2011 and 2010 was $522,962 and $475,866, respectively, which represents an increase in earnings of $47,096 (10%).

Interest Income

Total interest income for the three months ended March 31, 2011 decreased $735,164 (9%) as compared to the three months ended March 31, 2010.  For the three month period ended March 31, 2011 compared to the same period in 2010, the average yield on interest earning assets decreased 7 basis points to 4.78%, while the average balance of interest earning assets decreased approximately $50,553,000.  The Company’s decrease in the average yield on interest earning assets was primarily impacted by the average yield on loans which decreased 13 basis points to 5.43% for the three months ended March 31, 2011, as compared to 5.56% during the same period in 2010. The Company’s yield on loans was negatively impacted due to the expiration of interest income being recognized on a matured interest rate swap as of June 30, 2010.  The effect for the three months ended March 31, 2011 was approximately $255,000.  Another factor that has negatively impacted the Company’s yield on loans is the high level of nonaccrual loans which was $21.4 million as of March 31, 2011, as compared to $21.8 million as of March 31, 2010.

25

Interest Expense

Total interest expense for the three months ended March 31, 2011 decreased $1,469,494 (35%) when compared to the three months ended March 31, 2010.  For the three month period ended March 31, 2011, the average cost of interest bearing liabilities decreased 72 basis points to 1.81%, and the average balance of interest bearing liabilities decreased approximately $62,941,000 when compared to the same period in 2010.  The primary reason for the significant decrease in the average cost of interest bearing liabilities was the reduction at the beginning of 2010 and continued reduction throughout 2010 and the first quarter of 2011, in the cost of money market deposits generated through an aggressive deposit campaign in the first quarter of 2009.  Also, the Company reduced its FHLB advances during the third quarter of 2010.  As a result, interest expense on these advances decreased $178,497 (23%) for the three months ended March 31, 2011 as compared to the same period in 2010.

Net Interest Income

Net interest income for the three months ended March 31, 2011 increased $734,330 (18%) when compared to the same period in 2010. The average balance of interest earning assets decreased by approximately $12,388,000 less than the average balance in interest bearing liabilities decreased when comparing the three month period ended March 31, 2011 to the same period in 2010.  For the three month period ended March 31, 2011, the net interest margin increased 66 basis points to 3.07% when compared to the same period in 2010.

Provision for Loan Losses

Based on its internal analysis and methodology, management recorded a provision for loan losses of $900,000 for the three months ended March 31, 2011, compared to $950,000 for the same period in 2010.  The Bank will continue to monitor its allowance for loan losses and make future additions based on economic and regulatory conditions.  Management of the Company anticipates the need to continue increasing the allowance for loan losses through charges to the provision for loan losses if anticipated growth in the Bank’s loan portfolio increases or other circumstances warrant.  Although the Bank maintains its allowance for loan losses at a level which it considers to be sufficient to provide for potential loan losses in its existing loan portfolio, there can be no assurance that future loan losses will not exceed internal estimates.  In addition, the amount of the allowance for loan losses is subject to review by regulatory agencies which can order the establishment of additional loan loss provisions.

Noninterest Income

Noninterest income decreased $416,473 (35%) for the three months ended March 31, 2011 when compared to the three months ended March 31, 2010.

Gains on investment securities for the three months ended March 31, 2011 were $3,704 compared to $160,275 during the same period in 2010.  Losses on foreclosed assets were $133,987 for the three months ended March 31, 2011 as compared to gains of $44,833 for the same period in 2010.  Gain on sale of loans decreased $20,117 (7%) for the three months ended March 31, 2011 when compared to the same period in 2010.  Deposit service charges decreased $39,221 (10%) due primarily to declines in overdraft charges, which is partially due to amendments to Regulation E regarding fees on debit card and ATM transactions.

Noninterest Expense

Noninterest expense increased $396,205 (11%) for the three months ended March 31, 2011 when compared to the three months ended March 31, 2010.

26

Salaries and employee benefits increased $199,649 (10%) for the three months ended March 31, 2011 when compared to the same period in 2010.  This increase was primarily due to additions of associates throughout 2010 in the areas of executive, commercial and mortgage lending and risk management.

Other expenses increased $186,257 (24%).  Legal costs increased $102,000 over the prior year quarter due to costs incurred for a few specific troubled borrowers.  Also, the Company granted restricted stock to directors during the quarter that were fully vested and thus, expensed in full during the three months ended March 31, 2011.  The amount expensed was $100,017 for the quarter which represents 16,952 shares of common stock at a market price of $5.90 at the date of grant.

Provision for Income Taxes

The decrease in the provision for income taxes is a result of the decrease in the Company’s taxable income for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010, as well as the increased utilization of federal income tax credits.

Nonperforming Assets

The allowance for loan losses is calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Bank’s existing loan portfolio.  When making such evaluation, management considers such factors as the repayment status of its loans, the estimated net realizable value of the underlying collateral, borrowers’ intent (to the extent known by the Bank) and ability to repay the loan, local economic conditions and the Bank’s historical loss ratios.  The allowance for loan losses, as a percentage of nonperforming loans outstanding, as of March 31, 2011 and December 31, 2010 was 60.4% and 56.9%, respectively.  Total loans classified as substandard, doubtful or loss as of March 31, 2011, were $44.6 million or 6.44% of total assets as compared to $47.7 million, or 6.98% of total assets at December 31, 2010.  Management considered nonperforming and total classified loans in evaluating the adequacy of the Bank’s allowance for loan losses.

The ratio of nonperforming assets to total assets is another useful tool in evaluating exposure to credit risk.  Nonperforming assets of the Bank include nonperforming loans and assets which have been acquired as a result of foreclosure or deed-in-lieu of foreclosure.  All dollar amounts are in thousands.

	3/31/2011			12/31/2010			12/31/2009
Nonperforming loans	$	21,390		$	23,012		$	34,285
Real estate acquired in settlement of loans		10,850			10,540			6,760
Total nonperforming assets	$	32,240		$	33,552		$	41,045
Total nonperforming assets as a percentage of total assets		4.66	%		4.91	%		5.56	%
Allowance for loan losses	$	12,909		$	13,083		$	14,076
Allowance for loan losses as a percentage of gross loans		2.56	%		2.54	%		2.61	%

Liquidity and Capital Resources

Liquidity refers to the ability to manage future cash flows to meet the needs of depositors and borrowers and fund operations.  Maintaining appropriate levels of liquidity allows the Company to have sufficient funds available for customer demand for loans, withdrawal of deposit balances and maturities of deposits and other liabilities.  The Company’s primary sources of liquidity include cash and cash equivalents, customer deposits and Federal Home Loan Bank of Des Moines borrowings.  The Company also has established borrowing lines available from the Federal Reserve Bank which is considered a secondary source of funds.

The Company’s most liquid assets are cash and cash equivalents, which are cash on hand, amounts due from financial institutions, and certificates of deposit with other financial institutions that have an original maturity of three months or less.  The levels of such assets are dependent on the Bank’s operating, financing, and investment activities at any given time.  The Company’s cash and cash equivalents totaled $40,689,280 as of March 31, 2011 and $14,145,329 as of December 31, 2010, representing an increase of $26,543,951.  The variations in levels of cash and cash equivalents are influenced by deposit flows and anticipated future deposit flows, which are subject to, and influenced by, many factors.

27

The Bank’s capital ratios are above the levels required to be considered a well-capitalized financial institution.  As of March 31, 2011, the Bank’s Tier 1 leverage ratio was 9.38%, its Tier 1 risk-based capital ratio was 12.10% and the Bank’s total risk-based capital ratio was 13.36% - all exceeding the minimums of 5%, 6% and 10%, respectively.

With regards to the securities sold to the Treasury under CPP, if the Company is unable to redeem the Series A Preferred Stock within five years of its issuance, the cost of capital to the Company will increase significantly from 5% per annum ($850,000 annually) to 9% per annum ($1,530,000 annually).  Depending on the Company’s financial condition at the time, the increase in the annual dividend rate on the Series A Preferred Stock could have a material adverse effect on the Company’s liquidity and net income available to common stockholders.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Asset/Liability Management

The goal of the Bank’s asset/liability policy is to manage interest rate risk so as to maximize net interest income over time in changing interest rate environments.  Management monitors the Bank’s net interest spreads (the difference between yields received on assets and paid on liabilities) and, although constrained by market conditions, economic conditions, and prudent underwriting standards, the Bank offers deposit rates and loan rates designed to maximize net interest income.  Management also attempts to fund the Bank’s assets with liabilities of a comparable duration to minimize the impact of changing interest rates on the Bank’s net interest income.  Since the relative spread between financial assets and liabilities is constantly changing, the Bank’s current net interest income may not be an indication of future net interest income.

As a part of its asset and liability management strategy and throughout the past several years, the Bank has continued to emphasize the origination of short-term commercial real estate, commercial business and consumer loans, while originating fixed-rate, one- to four-family residential loans primarily for immediate resale in the secondary market.

The Bank constantly monitors its deposits in an effort to decrease their interest rate sensitivity.  Rates of interest paid on deposits at the Bank are priced competitively in order to meet the Bank’s asset/liability management objectives and spread requirements.  The Bank believes, based on historical experience, that a substantial portion of such accounts represents non-interest rate sensitive core deposits.

Interest Rate Sensitivity Analysis

The following table sets forth as of March 31, 2011 management’s estimates of the projected changes in net portfolio value (“NPV”) in the event of 100 and 200 basis point (“bp”) instantaneous and permanent increases and decreases in market interest rates.  Dollar amounts are expressed in thousands.

BP Change	Estimated Net Portfolio Value								NPV as % of PV of Assets
in Rates	$ Amount		$ Change			% Change			NPV Ratio			Change
+200		59,492		(3,491	)		-5.50	%		8.70	%		-0.31	%
+100		61,108		(1,875	)		-3.00	%		8.84	%		-0.17	%
NC		62,983		-			0.00	%		9.01	%		0.00	%
-100		65,471		2,488			4.00	%		9.26	%		0.25	%
-200		69,575		6,592			10.50	%		9.73	%		0.72	%

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Computations of prospective effects of hypothetical interest rate changes are based on an internally generated model using actual maturity and repricing schedules for the Bank’s loans and deposits, and are based on numerous assumptions, including relative levels of market interest rates, loan repayments and deposit run-offs, and should not be relied upon as indicative of actual results.  Further, the computations do not contemplate any actions the Bank may undertake in response to changes in interest rates.  For further discussion of the Company’s market risk, see the Interest Rate Sensitivity Analysis Section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2010 Annual Report on Form 10-K.

Management cannot predict future interest rates or their effect on the Bank’s NPV in the future.  Certain shortcomings are inherent in the method of analysis presented in the computation of NPV.  For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees to changes in market interest rates.  Additionally, certain assets, such as adjustable-rate loans, have an initial fixed rate period typically from one to five years, and over the remaining life of the asset changes in the interest rate are restricted.  In addition, the proportion of adjustable-rate loans in the Bank’s portfolio could decrease in future periods due to refinancing activity if market interest rates remain steady in the future.  Further, in the event of a change in interest rates, prepayment and early withdrawal levels could deviate significantly from those assumed in the table.  Finally, the ability of many borrowers to service their adjustable-rate debt may decrease in the event of an interest rate increase.

The Bank’s Board of Directors (the “Board”) is responsible for reviewing the Bank’s asset and liability management policies.  The Board meets quarterly to review interest rate risk and trends, as well as liquidity and capital ratios and requirements.  The Bank’s management is responsible for administering the policies and determinations of the Board with respect to the Bank’s asset and liability goals and strategies.

Item 4. Controls and Procedures

(a)  The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures.   Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2011.

(b)  There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

29

PART II

Item 1.  Legal Proceedings

None.

Item 1A.  Risk Factors

Not applicable.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes the Company’s repurchase activity regarding its common stock during the Company’s first quarter ended March 31, 2011.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2011 to January 31, 2011		-		-		-		197,624
February 1, 2011 to February 28, 2011		-		-		-		197,624
March 1, 2011 to March 31, 2011		7,592	$	6.00		7,592		190,032
Total		7,592	$	6.00		7,592

(1) The Company has a repurchase plan which was announced on August 20, 2007.  This plan authorizes the purchase by the Company of up to 350,000 shares of the Company’s common stock.  There is no expiration date for this plan.  There are no other repurchase plans in effect at this time.

Item 3.  Defaults Upon Senior Securities

Not applicable.

Item 4.  (Removed and Reserved)

Item 5.  Other Information

None.

Item 6.  Exhibits

10.1	Written Description of 2011 Executive Incentive Compensation Annual Plan – President and Chief Executive Officer* (1)
10.2	Written Description of 2011 Executive Incentive Compensation Annual Plan – Chief Financial Officer* (2)
10.3	Written Description of 2011 Executive Incentive Compensation Annual Plan – Chief Operating Officer* (3)
10.4	Written Description of 2011 Executive Incentive Compensation Annual Plan – Chief Lending Officer* (4)
10.5	Written Description of 2011 Executive Incentive Compensation Annual Plan – Chief Credit Officer* (5)

30

11.	Statement re: computation of per share earnings (set forth in “Note 6: Income Per Common Share” of the Notes to Condensed Consolidated Financial Statement (unaudited)
31(i).1	Certification of the Principal Executive Officer pursuant to Rule 13a -14(a) of the Exchange Act
31(i).2	Certification of the Principal Financial Officer pursuant to Rule 13a - 14(a) of the Exchange Act
32.1	CEO certification pursuant to 18 U.S.C. Section 1350
32.2	CFO certification pursuant to 18 U.S.C. Section 1350

*Management contract or compensatory plan or arrangement

___________________________________________________________

(1) Filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on February 28, 2011 and incorporated herein by reference.

(2) Filed as Exhibit 10.2 to the Current Report on Form 8-K filed by the Registrant on February 28, 2011 and incorporated herein by reference.

(3) Filed as Exhibit 10.3 to the Current Report on Form 8-K filed by the Registrant on February 28, 2011 and incorporated herein by reference.

(4) Filed as Exhibit 10.4 to the Current Report on Form 8-K filed by the Registrant on February 28, 2011 and incorporated herein by reference.

(5) Filed as Exhibit 10.5 to the Current Report on Form 8-K filed by the Registrant on February 28, 2011 and incorporated herein by reference.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Guaranty Federal Bancshares, Inc.
Signature and Title	Date
/s/ Shaun A. Burke	May 16, 2011
Shaun A. Burke
President and Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)
/s/ Carter Peters	May 16, 2011
Carter Peters
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

32

EX-31.I1

Exhibit 31(i).1

Certification of the Principal Executive Officer

Rule 13a – 14(a) of the Securities Exchange Act of 1934

I, Shaun A. Burke, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Guaranty Federal Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 16, 2011	/s/ Shaun A. Burke
	Shaun A. Burke
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.I2

Exhibit 31(i).2

Certification of the Principal Financial Officer

Rule 13a – 14(a) of the Securities Exchange Act of 1934

I, Carter Peters, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Guaranty Federal Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 16,  2011	/s/ Carter Peters
	Carter Peters
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CEO CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350*

In connection with the Quarterly Report of Guaranty Federal Bancshares, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shaun A. Burke, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Shaun A. Burke

Shaun A. Burke

Chief Executive Officer

(Principal Executive Officer)

May 16, 2011

*  A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CFO CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350*

In connection with the Quarterly Report of Guaranty Federal Bancshares, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Carter Peters, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Carter Peters

Carter Peters

Chief Financial Officer

(Principal Financial Officer)

May 16, 2011

*  A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.