Guaranty Federal Bancshares, Inc. Announces Third Quarter 2008 Financial Results
SPRINGFIELD, Mo., Oct. 21, 2008 -- Guaranty Federal Bancshares, Inc. (Nasdaq:GFED), the holding company (the "Company") for Guaranty Bank, today announces the following results for its quarter ended September 30, 2008:
Third Quarter 2008 Financial Results
-- Total assets increased $117.1 million, or 21%, from December 31,
2007
-- Total net loans increased $50.4 million, or 10%, from December
31, 2007
-- Total investments increased $53.0 million, or 273%, from December
31, 2007
-- Total deposits increased $17.9 million, or 4%, from December 31,
2007
-- Diluted earnings per share was $.11 for the quarter
The Company announces that earnings for the third quarter ended September 30, 2008 were $.11 per diluted share, or $299,000, an increase of 111% from the ($.96) per diluted share during the second quarter ended June 30, 2008. This was a decrease of 81% from the $.59 per diluted share, or $1,613,000, the Company earned during the third quarter of the prior year.
The decline in net income and earnings per share over the prior year quarter was attributable to several factors:
-- The Company has increased its provision for loan losses by $1.5
million during the quarter (698% over the prior year quarter) to
compensate for significant loan growth, increased reserves on
specific credits and continued concerns over the local and
national economy.
-- Non-interest income decreased 27%, primarily due to the Company's
loss of income from the sale of shares of its available-for-sale
Freddie Mac (FRE) equity investment. Due to the national real
estate crisis, FRE suffered a significant financial downturn
beginning in the third quarter of 2007, which has resulted in a
sharp decline in the stock price. Because of this, the Company
suspended divesting of FRE shares in the fourth quarter of 2007.
This income accounted for $181,632 or 16% of non-interest income
in the prior year third quarter. Also, the Company experienced
modest declines in income from sales of mortgage loans during the
quarter. This can be attributed primarily to the decline in the
local economy and housing market.
-- Non-interest expense increased 6%, primarily due to the increased
personnel costs incurred from hiring several key associates
throughout fiscal year 2007 in the areas of commercial lending,
corporate services, human resources, marketing and internal
audit. Also, in 2007, the Federal Deposit Insurance Corporation
increased its assessments of insurance premiums on all insured
institutions. Because of credits available to the Company for
2007, these increased costs were not owed by the Company until
the first quarter of 2008. For the quarter, these assessment
premiums increased $72,000 or 653% over the prior year quarter.
President and CEO Shaun Burke commented, "Although we returned to profitability in the third quarter, we remain concerned about the very strong headwinds facing the economy and the banking industry. We are taking an aggressive approach to identifying borrowers negatively impacted by the deteriorating economy. As a result, we increased our loan loss provision over $1.5 million during the quarter, as compared to the prior year quarter, and at quarter-end, our allowance for loan losses equaled 1.99% of total loans compared to 1.20% at September 30, 2007. Nonperforming loans and assets remain at elevated levels. Closely monitoring asset quality and working with our distressed borrowers will continue to be a top priority for our lending team."
Mr. Burke continued, "A priority has been to improve our net interest margin. Aggressive rate cuts implemented by the Federal Reserve beginning in September 2007 and continuing through April 2008 negatively impacted the margin. This quarter, we began to reverse the decline with a 13 basis point improvement over the second quarter as a result of loan pricing initiatives and lower costs of funds. In addition to the net interest margin improvement, we also generated an increase in non-interest income and a decrease in non-interest expense in comparison to second quarter."
"Our capital position is sound and remains above the regulatory 'well-capitalized' levels. Management and the Board of Directors are committed to successfully navigating the immediate challenges of the economy while remaining focused on the long-term initiatives of improving shareholder value," commented Burke.
About Guaranty Federal Bancshares, Inc.
Guaranty Federal Bancshares, Inc. (Nasdaq:GFED) has a subsidiary corporation offering full banking services. The principal subsidiary, Guaranty Bank, is headquartered in Springfield, Missouri, and has ten full-service branches in Greene and Christian Counties and Loan Production Offices in Wright, Webster and Howell Counties. In addition, Guaranty Bank is a member of the TransFund ATM network which provides its customers surcharge free access to over 100 area ATMs and over 700 ATMs nationwide. For more information visit the Guaranty Bank website: www.gbankmo.com.
The discussion set forth above 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 release. When used in this release, 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; the effect of regulatory or government legislative changes; technology changes; fluctuation in inflation; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.
Financial Highlights:
Quarter ended Nine Months ended
Operating Data: 30-Sep-08 30-Sep-07 30-Sep-08 30-Sep-07
--------- --------- --------- ---------
(Dollar amounts are in thousands,
except per share data)
Total interest income $ 9,268 $ 9,734 $ 27,424 $ 28,437
Total interest expense 4,747 5,202 14,760 15,177
Provision for loan
losses 1,675 210 8,179 630
--------- --------- --------- ---------
Net interest income
after provision for
loan losses 2,846 4,322 4,485 12,630
Noninterest income 849 1,169 2,551 3,691
Noninterest expense 3,168 2,987 9,482 8,857
--------- --------- --------- ---------
Income (loss) before
income tax 527 2,504 (2,446) 7,464
Income tax expense
(credit) 228 891 (866) 2,682
--------- --------- --------- ---------
Net income (loss) $ 299 $ 1,613 $ (1,580) $ 4,782
========= ========= ========= =========
Net income (loss) per
share-basic $ 0.11 $ 0.60 $ (0.61) $ 1.75
========= ========= ========= =========
Net income (loss) per
share-diluted $ 0.11 $ 0.59 $ (0.61) $ 1.70
========= ========= ========= =========
Annualized return on
average assets .18% 1.25% (.33%) 1.24%
Annualized return on
average equity 3.25% 14.29% (5.08%) 13.95%
Net interest margin 2.80% 3.61% 2.81% 3.69%
As of As of
Financial Condition Data: 30-Sep-08 31-Dec-07
--------- ---------
Cash and cash equivalents $ 13,158 $ 12,046
Investments 72,376 19,400
Loans, net of allowance for loan losses
9/30/2008 - $11,507; 12/31/2007 - $5,963 566,635 516,242
Other assets 30,678 18,090
--------- ---------
Total assets $682,847 $565,778
========= =========
Deposits $436,106 $418,191
FHLB advances 148,436 76,086
Subordinated debentures 15,465 15,465
Securities sold under
agreements to repurchase 39,750 9,849
Other liabilities 4,301 3,500
--------- ---------
Total liabilities 644,058 523,091
Stockholder's equity 38,789 42,687
--------- ---------
Total liabilities and stockholder equity $682,847 $565,778
========= =========
Equity to assets ratio 5.68% 7.54%
========= =========
Book value per share $ 14.87 $ 16.37
========= =========
Non performing assets $ 17,427 $ 7,981
========= =========
CONTACT: Guaranty Bank
Shaun A. Burke, President & CEO
417-520-4333
www.gbankmo.com
1341 W. Battlefield
Springfield, MO 65807