CEO Comments
“The year is off to a strong start with earnings
per share growth of 57% over the prior year quarter. First
quarter results position us well for future growth in 2019.
Expansion of our deposit focus and market presence continues as we
approach a strategic growth goal of one billion dollars in total
assets. For our shareholders, our capital position continues
to grow at a steady pace as we achieve these results, while also
increasing our dividend. We look forward to the balance of
2019 as we continue to focus on steady growth, profitability,
improved liquidity and serving our valued
customers.”
- Shaun A. Burke, President and Chief Executive Officer
Financial Condition – March 31, 2019
versus December 31, 2018
- Total assets grew $16.3 million (2%) to $981.5 million.
- Total gross loans decreased $16.6 million (2%).
- Total deposits increased $57.2 million (8%).
- FHLB borrowings were reduced by $53.2 million (51%).
- Stockholders’ equity increased by $2.1 million (3%).
- Nonperforming assets decreased by $689,000 (5%).
Results of Operations – First quarter
ended March 31, 2019 versus the same quarter in 2018
- Total revenues increased $3.4 million (37%).
- Net interest income increased $1.7 million (29%).
- Net interest margin increased 22 basis points to 3.50%.
- Net income available to common
shareholders for the quarter was $2,120,000 as compared to
$1,356,000 in the first quarter of 2018. Diluted earnings per
common share was $0.47 for the quarter as compared to $0.30 earned
in during the first quarter of 2018. The increase is
primarily driven by the positive impact of increased
interest-earning assets and efficiencies gained from the Hometown
Bank acquisition.
Select Quarterly Financial
Data
Below are selected financial results for the
Company’s first quarter of 2019, compared to the fourth quarter of
2018 and the first quarter of 2018.
|
Quarter ended |
|
March
31, |
|
December
31, |
|
March
31, |
|
2019 |
|
2018 |
|
2018 |
|
(Dollar amounts in
thousands, except per share data) |
Net income available to
common shareholders |
$ |
2,120 |
|
|
$ |
2,385 |
|
|
$ |
1,356 |
|
|
|
|
|
|
|
Diluted income per
common share |
$ |
0.47 |
|
|
$ |
0.53 |
|
|
$ |
0.30 |
|
Common shares
outstanding |
|
4,454,388 |
|
|
|
4,426,131 |
|
|
|
4,403,965 |
|
Average common shares
outstanding , diluted |
|
4,498,962 |
|
|
|
4,494,063 |
|
|
|
4,466,786 |
|
|
|
|
|
|
|
Annualized return on
average assets |
|
0.90 |
% |
|
|
1.00 |
% |
|
|
0.70 |
% |
Annualized return on
average common equity |
|
10.47 |
% |
|
|
11.79 |
% |
|
|
7.25 |
% |
Net interest
margin |
|
3.50 |
% |
|
|
3.83 |
% |
|
|
3.28 |
% |
Efficiency ratio |
|
73.28 |
% |
|
|
68.19 |
% |
|
|
74.50 |
% |
|
|
|
|
|
|
Common equity to assets
ratio |
|
8.42 |
% |
|
|
8.34 |
% |
|
|
9.40 |
% |
Tangible common equity
to tangible assets |
|
8.02 |
% |
|
|
7.92 |
% |
|
|
9.40 |
% |
Book value per common
share |
$ |
18.55 |
|
|
$ |
18.18 |
|
|
$ |
17.22 |
|
Tangible book value per
common share |
$ |
17.58 |
|
|
$ |
17.18 |
|
|
$ |
17.22 |
|
Nonperforming assets to
total assets |
|
1.38 |
% |
|
|
1.47 |
% |
|
|
1.21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The following were items impacting the first
quarter operating results as compared to the same quarter in 2018
and the financial condition results compared to December 31,
2018:
Interest income – Total interest income
increased $3,141,000 (39%) during the quarter. The increase
is primarily driven by the addition of earning assets as a result
of the Hometown acquisition. The average balance of
interest-earning assets increased $154.5 million (21%), while the
yield on average interest earning assets increased 68 basis points
to 5.00%. Compared to the first quarter of 2018, the average
loan balance portfolio increased $137.4 million, loan yields
increased by 70 basis points to 5.36% and $373,000 in loan
accretion was recognized on loans acquired from Hometown compared
to none in the same quarter in 2018.
Interest expense - Total interest expense
increased $1,397,000 (73%) during the quarter. The increase
is primarily driven by the addition of interest-bearing deposits as
a result of Hometown. The average balance of interest-bearing
liabilities increased $139.5 million (22%), while the average cost
of interest-bearing liabilities increased 51 basis points to
1.74%. The liquidity challenges among institutions in our
markets have created significant competitive pressures on deposit
rates. To fund its asset growth and maintain prudent
liquidity levels going forward, the Company will continue to
utilize a cost-effective mix of retail and commercial core deposits
along with non-core, wholesale funding.
See the Analysis of Net Interest Income and
Margin table below for the first quarter.
Asset Quality, Provision for Loan Loss Expense and
Allowance for Loan Losses – The Company’s nonperforming
assets decreased to $13.5 million as of March 31, 2019, compared to
$14.2 million as of December 31, 2018.
Based on its reserve analysis and methodology, the Company did
not record a provision for loan losses expenses during the quarter
compared to $225,000 recorded during the prior year quarter.
The lack of provision expense was primarily due to a decline in
overall loan balances. At March 31, 2019, the allowance for
loan losses of $7.8 million was 1.02% of gross loans outstanding
(excluding mortgage loans held for sale), consistent with the 1.02%
reserved as of December 31, 2018.
In accordance with generally accepted accounting principles for
acquisition accounting, the loans acquired through the acquisition
of Hometown were recorded at fair value; therefore, there was no
allowance associated with Hometown’s loans at acquisition.
Management continues to evaluate the allowance needed on the
acquired Hometown loans factoring in the net remaining discount of
$2.1 million at March 31, 2019.
Management believes the allowance for loan losses is at a
sufficient level to provide for loan losses in the Bank’s existing
loan portfolio.
Non-interest Income – Noninterest income
increased $245,000 (19%) during the quarter compared to the same
quarter in 2018. This was primarily due to increases in
service charge income and income from the sale of SBA and mortgage
loans. Offsetting these items were increased realized losses
on foreclosed assets and available-for-sale securities compared to
the first quarter of 2018. Fee income from deposits service
charges increased $85,000 (27%) and debit card interchange income
increased $90,000 (43%). These areas were positively
impacted by additional deposit accounts from the Hometown
acquisition. Income from sales of SBA and mortgage loans
increased $79,000 (46%) and $46,000 (12%), respectively, compared
to the first quarter of 2018. Losses on the sale of
foreclosed assets increased $63,000 (143%) as well as on the sale
of investment securities by $34,000 (1,063%) when compared to
2018.
Non-interest Expense – Noninterest expenses
increased $1,368,000 (25%) due to a few significant factors
discussed below.
Salaries and employee benefits increased $786,000 (25%) compared
to the same quarter in 2018 due to the Hometown acquisition and the
Company’s continuing expansion in the Joplin, Missouri market,
pre-acquisition.
Occupancy expenses and data processing expenses increased
$363,000 (47%) and $86,000 (29%), respectively, for the quarter due
to additional facilities, equipment and transactions related to the
Hometown acquisition.
Other expenses increased from the prior year quarter by $311,000
(24%). An increase in professional service expenses of
$80,000 (48%) was due to the Company meeting thresholds to be
considered an accelerated filer with the U.S. Securities and
Exchange Commission, (including increased auditor attestation
requirements) and implementation of new accounting standards.
Increases in other areas were primarily due to the Hometown
integration.
Core deposit intangible amortization increased $119,000 (100%)
from the prior year quarter due to the Hometown acquisition.
Merger expenses decreased from the prior year quarter by
$211,000 (93%).
Capital – At March 31, 2019, stockholders’
equity increased to $82.6 million compared to $80.5 million at
December 31, 2018. On a per common share basis, tangible book
value increased to $17.58 at March 31, 2019 as compared to $17.18
as of December 31, 2018.
From a regulatory capital standpoint, all capital ratios for the
Bank remain strong and above regulatory requirements.
Non-Generally Accepted Accounting
Principle (GAAP) Financial Measures
In addition to the GAAP financial results presented in this
press release, the Company presents non-GAAP financial measures
discussed below. These non-GAAP measures are provided to
enhance investors’ overall understanding of the Company’s current
financial performance. Additionally, Company management
believes that this presentation enables meaningful comparison of
financial performance in various periods. However, the
non-GAAP financial results presented should not be considered a
substitute for results that are presented in a manner consistent
with GAAP. A limitation of the non-GAAP financial measures
presented is that the adjustments concern gains, losses or expenses
that the Company does expect to continue to recognize; the
adjustments of these items should not be construed as an inference
that these gains or expenses are unusual, infrequent or
non-recurring. Therefore, Company management believes that
both GAAP measures of its financial performance and the respective
non-GAAP measures should be considered together.
Operating Income
Operating income is a non-GAAP financial measure that adjusts
net income for the following non-operating items:
- Gains (losses) on sales of investment securities
- Gains (losses) on foreclosed assets held for sale
- Provision for loan loss expense
- Provision for income taxes
- Merger costs
A reconciliation of the Company’s net income to its operating
income for the quarters ended March 31, 2019 and 2018 is set forth
below.
|
Quarter ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(Dollar amounts are in thousands) |
|
|
|
|
Net income |
$ |
2,120 |
|
$ |
1,356 |
|
|
|
|
|
Add back: |
|
|
|
Provision
for income taxes |
|
375 |
|
|
293 |
|
Income before income
taxes |
|
2,495 |
|
|
1,649 |
|
|
|
|
|
Add
back/(subtract): |
|
|
|
Net loss
(gain) on investment securities |
|
31 |
|
|
(3 |
) |
Net loss
(gain) on foreclosed assets held for sale |
|
19 |
|
|
(44 |
) |
Merger
costs |
|
17 |
|
|
228 |
|
Provision
for loan losses |
|
- |
|
|
225 |
|
|
|
67 |
|
|
406 |
|
Operating income |
$ |
2,562 |
|
$ |
2,055 |
|
|
|
|
|
|
|
|
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 16 full-service branches in Greene,
Christian, Jasper and Newton Counties and a Loan Production Office
in Webster County. Guaranty Bank is a member of the MoneyPass
and TransFund ATM networks which provide its customers surcharge
free access to over 24,000 ATMs nationwide. For more information
visit the Guaranty Bank website: www.gbankmo.com.
The Company may from time to time make written
or oral “forward-looking statements,” including statements
contained in the Company’s filings with the SEC, in its reports to
stockholders and in other communications by the Company, which are
made in good faith by the Company pursuant to the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995.
Words such as “anticipates,” “estimates,” “believes,” “expects,”
and similar expressions are intended to identify such
forward-looking statements but are not the exclusive means of
identifying such statements.
These forward-looking statements involve risks
and uncertainties, such as statements of the Company’s plans,
objectives, expectations, estimates and intentions, that are
subject to change based on various important factors (some of which
are beyond the Company’s control). The following factors, among
others, could cause the Company’s financial performance to differ
materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward-looking statements:
- the strength of the United States economy in general and the
strength of the local economies in which we conduct
operations;
- the effects of, and changes in, trade, monetary and fiscal
policies and laws, including interest rate policies of the Federal
Reserve, inflation, interest rates, market and monetary
fluctuations;
- the timely development of and acceptance of new products and
services and the perceived overall value of these products and
services by users, including the features, pricing and quality
compared to competitors’ products and services;
- the willingness of users to substitute competitors’ products
and services for our products and services;
- our success in gaining regulatory approval of our products and
services, when required;
- the impact of changes in financial services laws and
regulations (including laws concerning taxes, banking, securities
and insurance);
- technological changes;
- the ability to successfully manage and integrate any future
acquisitions if and when our board of directors and management
conclude any such acquisitions are appropriate;
- changes in consumer spending and saving habits;
- our success at managing the risks resulting from these factors;
and
- other factors set forth in reports and other documents filed by
the Company with the SEC from time to time.
Financial Highlights
Operating
Data: |
Quarter ended |
|
March
31, |
|
2019 |
|
2018 |
|
(Dollar amounts are
in thousands, except per share data) |
|
|
|
|
Total interest
income |
$ |
11,097 |
|
|
$ |
7,956 |
|
Total interest
expense |
|
3,322 |
|
|
|
1,925 |
|
Net
interest income |
|
7,775 |
|
|
|
6,031 |
|
Provision for loan
losses |
|
- |
|
|
|
225 |
|
Net
interest income after provision for loan losses |
|
7,775 |
|
|
|
5,806 |
|
Noninterest income |
|
|
|
Service
charges |
|
402 |
|
|
|
317 |
|
Gain on
sale of loans held for sale |
|
426 |
|
|
|
380 |
|
Gain on
sale of Small Business Administration loans |
|
250 |
|
|
|
171 |
|
Net gain
(loss) on foreclosed assets |
|
(19 |
) |
|
|
44 |
|
Other
income |
|
505 |
|
|
|
407 |
|
|
|
1,564 |
|
|
|
1,319 |
|
Noninterest
expense |
|
|
|
Salaries
and employee benefits |
|
3,959 |
|
|
|
3,173 |
|
Occupancy |
|
1,133 |
|
|
|
770 |
|
Merger
costs |
|
17 |
|
|
|
228 |
|
Amortization of core deposit intangible |
|
119 |
|
|
|
- |
|
Other
expense |
|
1,616 |
|
|
|
1,305 |
|
|
|
6,844 |
|
|
|
5,476 |
|
Income before income
taxes |
|
2,495 |
|
|
|
1,649 |
|
Provision for income
taxes |
|
375 |
|
|
|
293 |
|
Net income |
$ |
2,120 |
|
|
$ |
1,356 |
|
Net income per common
share-basic |
$ |
0.48 |
|
|
$ |
0.31 |
|
Net income per common
share-diluted |
$ |
0.47 |
|
|
$ |
0.30 |
|
|
|
|
|
Annualized return on
average assets |
|
0.90 |
% |
|
|
0.70 |
% |
Annualized return on
average equity |
|
10.47 |
% |
|
|
7.25 |
% |
Net interest
margin |
|
3.50 |
% |
|
|
3.28 |
% |
Efficiency ratio |
|
73.28 |
% |
|
|
74.50 |
% |
|
|
|
|
|
|
|
|
Financial
Condition Data: |
As of |
|
March
31, |
|
December
31, |
|
2019 |
|
2018 |
Cash and cash
equivalents |
$ |
43,049 |
|
|
$ |
34,122 |
|
Available-for-sale
securities |
|
98,794 |
|
|
|
86,266 |
|
Loans, net of allowance
for loan losses |
|
|
|
3/31/2019
- $7,846; 12/31/2018 - $7,996 |
|
763,393 |
|
|
|
779,815 |
|
Goodwill |
|
1,435 |
|
|
|
1,435 |
|
Core deposit
intangible |
|
2,862 |
|
|
|
2,981 |
|
Premises and equipment,
net |
|
19,778 |
|
|
|
20,095 |
|
Lease right-of-use
assets |
|
9,927 |
|
|
|
- |
|
Bank owned life
insurance |
|
20,309 |
|
|
|
20,198 |
|
Other assets |
|
21,922 |
|
|
|
20,226 |
|
Total
assets |
$ |
981,469 |
|
|
$ |
965,138 |
|
|
|
|
|
Deposits |
$ |
806,831 |
|
|
$ |
749,619 |
|
Advances from
correspondent banks |
|
52,100 |
|
|
|
105,300 |
|
Subordinated
debentures |
|
21,739 |
|
|
|
21,761 |
|
Other borrowed
funds |
|
5,000 |
|
|
|
5,000 |
|
Lease liabilities |
|
9,944 |
|
|
|
- |
|
Other liabilities |
|
3,237 |
|
|
|
2,979 |
|
Total
liabilities |
|
898,851 |
|
|
|
884,659 |
|
Stockholders'
equity |
|
82,618 |
|
|
|
80,479 |
|
Total
liabilities and stockholders' equity |
$ |
981,469 |
|
|
$ |
965,138 |
|
Common equity to assets
ratio |
|
8.42 |
% |
|
|
8.34 |
% |
Tangible common equity
to tangible assets ratio (1) |
|
8.02 |
% |
|
|
7.92 |
% |
Book value per common
share |
$ |
18.55 |
|
|
$ |
18.18 |
|
Tangible book value per
common share (2) |
$ |
17.58 |
|
|
$ |
17.18 |
|
Nonperforming
assets |
$ |
13,520 |
|
|
$ |
14,209 |
|
|
|
|
|
|
|
|
|
(1) Total Assets less Goodwill and Core Deposit Intangible
divided by Stockholders’ Equity(2) Stockholders’ Equity less
Goodwill and Core Deposit Intangible divided by Common Shares
Outstanding
Analysis of Net
Interest Income and Margin |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended 3/31/2019 |
|
Three months ended 3/31/2018 |
|
Average Balance |
|
Interest |
|
Yield / Cost |
|
Average Balance |
|
Interest |
|
Yield / Cost |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Interest-earning: |
|
|
|
|
|
|
|
|
|
|
|
Loans |
$ |
779,764 |
|
$ |
10,303 |
|
|
5.36 |
% |
|
$ |
642,346 |
|
$ |
7,378 |
|
|
4.66 |
% |
Investment
securities |
|
90,061 |
|
|
598 |
|
|
2.69 |
% |
|
|
80,400 |
|
|
495 |
|
|
2.50 |
% |
Other assets |
|
30,906 |
|
|
196 |
|
|
2.57 |
% |
|
|
23,478 |
|
|
83 |
|
|
1.43 |
% |
Total
interest-earning |
|
900,731 |
|
|
11,097 |
|
|
5.00 |
% |
|
|
746,224 |
|
|
7,956 |
|
|
4.32 |
% |
Noninterest-earning |
|
59,405 |
|
|
|
|
|
|
|
|
|
37,801 |
|
|
|
|
|
|
|
|
$ |
960,136 |
|
|
|
|
|
$ |
784,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
Interest-bearing: |
|
|
|
|
|
|
|
|
|
|
|
Savings accounts |
$ |
39,897 |
|
|
30 |
|
|
0.30 |
% |
|
$ |
31,320 |
|
|
21 |
|
|
0.27 |
% |
Transaction
accounts |
|
410,061 |
|
|
1,475 |
|
|
1.46 |
% |
|
|
369,135 |
|
|
930 |
|
|
1.02 |
% |
Certificates of
deposit |
|
239,248 |
|
|
1,101 |
|
|
1.87 |
% |
|
|
155,525 |
|
|
472 |
|
|
1.23 |
% |
FHLB advances |
|
60,204 |
|
|
357 |
|
|
2.40 |
% |
|
|
65,252 |
|
|
333 |
|
|
2.07 |
% |
Subordinated
debentures |
|
21,753 |
|
|
291 |
|
|
5.43 |
% |
|
|
15,465 |
|
|
169 |
|
|
4.43 |
% |
Other borrowed
funds |
|
5,000 |
|
|
68 |
|
|
5.52 |
% |
|
|
- |
|
|
- |
|
|
- |
|
Total
interest-bearing |
|
776,163 |
|
|
3,322 |
|
|
1.74 |
% |
|
|
636,697 |
|
|
1,925 |
|
|
1.23 |
% |
Noninterest-bearing |
|
101,813 |
|
|
|
|
|
|
|
|
|
71,472 |
|
|
|
|
|
|
|
Total liabilities |
|
877,976 |
|
|
|
|
|
|
708,169 |
|
|
|
|
Stockholders’
equity |
|
82,160 |
|
|
|
|
|
|
75,856 |
|
|
|
|
|
$ |
960,136 |
|
|
|
|
|
$ |
784,025 |
|
|
|
|
Net earning
balance |
$ |
124,568 |
|
|
|
|
|
$ |
109,527 |
|
|
|
|
Earning yield less
costing rate |
|
|
|
|
3.26 |
% |
|
|
|
|
|
3.10 |
% |
Net interest income,
and net yield spread on interest earning assets |
|
|
$ |
7,775 |
|
|
3.50 |
% |
|
|
|
$ |
6,031 |
|
|
3.28 |
% |
Ratio of
interest-earning assets to interest-bearing liabilities |
|
|
|
116 |
% |
|
|
|
|
|
|
|
117 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts: Shaun A. Burke (CEO) or Carter M. Peters (CFO),
1-833-875-2492
Guaranty Federal Bancsha... (NASDAQ:GFED)
Historical Stock Chart
From Aug 2024 to Sep 2024
Guaranty Federal Bancsha... (NASDAQ:GFED)
Historical Stock Chart
From Sep 2023 to Sep 2024