Guaranty Federal Bancshares, Inc. is a Delaware-chartered corporation that
was formed in September 1997. The Company became a unitary savings and loan
holding company for Guaranty Federal Savings Bank, a federal savings bank (the
"Bank") on December 30, 1997, in connection with a plan of conversion
and reorganization involving the Bank and its then existing mutual holding company.
The mutual holding company structure had been created in April 1995 at which
time more than a majority of the shares of the Bank were issued to the mutual
holding company and the remaining shares were sold in a public offering. In
connection with the conversion and reorganization on December 30, 1997, the
shares of the Bank held by the mutual holding company were extinguished along
with the mutual holding company, and the shares of the Bank held by the public
were exchanged for shares of the Company. All of the shares of the Bank which
remained outstanding after the conversion are owned by the Company.
On June 27, 2003, the Bank converted from a federal savings bank to a state-chartered
trust company with banking powers in Missouri, and the Company became a bank
holding company. On this date, the name of the Bank was changed from Guaranty
Federal Savings Bank to Guaranty Bank. The primary activity of the Company is
to oversee its investment in the Bank. The Company engages in few other activities.
For this reason, unless otherwise specified, references to the Company include
operations of the Bank. Further, information in a chart or table based on Bank
only data is identical to or immaterially different from information that would
be provided on a consolidated basis. In addition to the Bank, the Company owns
Guaranty Statutory Trust I and Guaranty Statutory Trust II, both Delaware statutory
trusts.
The Banks principal business has been, and continues to be, attracting retail
deposits from the general public and investing those deposits, together with
funds generated from operations, in commercial real estate loans, multi-family
residential mortgage loans, construction loans, permanent one- to four-family
residential mortgage loans, business, consumer and other loans. The Bank also
invests in mortgage-backed securities, U.S. Government and federal agency securities
and other marketable securities. The Banks revenues are derived principally
from interest on its loans and other investments and fees charged for services
provided, and gains generated from sales of loans and investment securities,
and 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 Banks primary
sources of funds are: deposits; borrowings; amortization and prepayments of
loan principal; and amortizations, prepayments and maturities of investment
securities.
The Bank is regulated by the Missouri Division of Finance (“MDF”)
and its deposits are insured by the Deposit Insurance Fund of the Federal Deposit
Insurance Corporation (the "FDIC"). See discussion under section captioned
“Supervision and Regulation” in this Item 1. The Bank is a member
of the FHLB of Des Moines, which is one of 11 regional Federal Home Loan Banks
(“FHLB”).
General. The Companys primary sources of funds are retail and commercial deposits,
borrowings, amortization and prepayments of loans and amortization, prepayments
and maturities of investment securities.
Deposits. The Bank offers a variety of deposit accounts having a range of interest
rates and terms. The Bank has concentrated on a diverse deposit mix, such that
transaction accounts make a greater percent of funding than in the past. The
Bank offers various checking accounts, money markets, savings, fixed-term certificates
of deposit and individual retirement accounts.
The flow of deposits is influenced significantly by general economic conditions,
changes in money market and prevailing interest rates, local competition, and
competition from non-bank financial service providers. The Company closely manages
its deposit position and mix to manage interest rate risk and improve its net
interest margin. The Banks deposits are typically obtained from the areas in
which its offices are located. The Bank relies primarily on customer service
and long-standing relationships with customers to attract and retain these deposits.
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