CEO Comments
“At the beginning of 2020, the terms coronavirus or
COVID-19 meant very little to most. Today, it is an ever-present
event that has completely changed how we live and conduct business
with customers and vendors. The personal and financial impacts are
unlike anything seen in modern history and will likely continue for
the foreseeable future. The negative trends and stories are hard to
avoid, but despite these unprecedented times, I see many positive
events occurring each day at the Bank as we serve the communities
we operate in such as:
- Quickly adapting to assist clients in a socially distant and
economically challenging environment
- Mobilizing technology to keep significant portions of our
associates working remotely
- Contacting small business customers that have been
significantly impacted financially and providing relief and/or
originating SBA loans to support them during the crisis.
More than ever, an event like this showcases why community banks
like Guaranty are deemed ‘essential’ in our communities.
Transitioning to 2020 financial results, the year is off to a
solid start with net income of $2.1 million leading to diluted
earnings per share growth of 4% over the prior year quarter. First
quarter results include a precautionary funding of the provision
for loan losses of $500,000 as we anticipate increased loan
deferment and payment delays as impacts from the economic
uncertainty will affect sections of our borrowers. Additionally,
150 basis point cuts in interest rates during the quarter by the
FOMC will impact our income statement as deposit and lending rates
will trend lower during the remainder of the year. Our efforts to
expand our deposit base will continue to provide a quality source
of liquidity to fund loan opportunities as they arise. Our capital
ratios exceed all regulatory guidelines and will enable the Bank to
handle adverse impacts from an economic slowdown. For our
shareholders, we continue to achieve established goals despite the
ever-changing business environment. We continue to focus on steady
growth, paying a solid dividend and being a valued partner to the
communities we serve. We look forward to the balance of 2020 and
whatever it may bring as we serve our valued customers, employees
and shareholders.”
- Shaun A. Burke, President and Chief Executive Officer
COVID-19 Response Items
- Participation in the SBA Payroll Protection Program (PPP), a
government stimulus program formulated under the CARES Act that
began in April 2020. To date, we have approved and funded 451 PPP
requests for $49 million to support nearly 7,000 local jobs.
- Approximately 40% of our staff working remotely as we do our
part to flatten the infection curve.
- Working with borrowers to temporarily modify loan agreements
and/or defer payments to get through the crisis.
- Proactively increased call center and retail assistance to
handle customer concerns and expected increases in video banking
transactions.
- Development of information and resource material through our
website and social media channels to provide tips to avoid COVID-19
scams and help protect customer finances.
2020 First Quarter
Highlights
- Diluted earnings per common share was $0.49 for the first
quarter as compared to $0.47 during the first quarter of 2019.
- During the quarter, a new share repurchase plan was approved
that allows for the repurchase of up to 250,000 shares over the
next three years. 16,716 shares were repurchased during the
quarter.
- The Company declared its 24th consecutive quarterly dividend on
March 27, 2020.
- The efficiency ratio improved to 69.29% from 71.50% during the
quarter.
- Total deposits increased $28.1 million (3%) and the loan to
deposit ratio finished the quarter at 86.06% compared to 89.01% as
of December 31, 2019.
Select Quarterly Financial
Data
Below are selected financial results for the Company’s first
quarter of 2020, compared to the fourth quarter of 2019 and the
first quarter of 2019.
|
Quarter ended |
|
March
31, |
|
December
31, |
|
March
31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in
thousands, except per share data) |
Net income available to common
shareholders |
$ |
2,105 |
|
|
$ |
2,316 |
|
|
$ |
2,120 |
|
|
|
|
|
|
|
Diluted income per common
share |
$ |
0.49 |
|
|
$ |
0.53 |
|
|
$ |
0.47 |
|
Common shares outstanding |
|
4,337,115 |
|
|
|
4,313,083 |
|
|
|
4,454,388 |
|
Average common shares
outstanding , diluted |
|
4,336,302 |
|
|
|
4,397,506 |
|
|
|
4,498,962 |
|
|
|
|
|
|
|
Annualized return on average
assets |
|
0.82% |
|
|
|
0.91% |
|
|
|
0.90% |
|
Annualized return on average
common equity |
|
9.84% |
|
|
|
10.86% |
|
|
|
10.47% |
|
Net interest margin |
|
3.24% |
|
|
|
3.38% |
|
|
|
3.50% |
|
Efficiency ratio |
|
69.29% |
|
|
|
71.50% |
|
|
|
73.28% |
|
|
|
|
|
|
|
Common equity to assets
ratio |
|
8.15% |
|
|
|
8.36% |
|
|
|
8.42% |
|
Tangible common equity to
tangible assets |
|
7.81% |
|
|
|
8.00% |
|
|
|
8.02% |
|
Book value per common
share |
$ |
19.31 |
|
|
$ |
19.62 |
|
|
$ |
18.55 |
|
Tangible book value per common
share |
$ |
18.43 |
|
|
$ |
18.71 |
|
|
$ |
17.58 |
|
Nonperforming assets to total
assets |
|
1.17% |
|
|
|
1.09% |
|
|
|
1.38% |
|
|
|
|
|
|
|
The following were items impacting the first
quarter operating results as compared to the same quarter in 2019
and the financial condition results compared to December 31,
2019:
Interest income – Total interest income
decreased $298,000 (3%) during the quarter. The decrease is
primarily due to declining interest rates and the asset mix of
having greater percentages of cash and investment holdings rather
than loans when compared to prior periods. The average balance of
total interest-earning assets increased $55.2 million (6%), but the
yield on average interest earning assets decreased 46 basis points
to 4.54%. Compared to the first quarter of 2019, the average
balance of the loan portfolio decreased $46.2 million and the
average loan yield decreased by 12 basis points to 5.24%. Loan
accretion income recognized from the Hometown Bancshares
acquisition in 2018 was $210,000 during the quarter compared to
$373,000 in the same quarter of 2019.
Interest expense - Total interest expense
decreased $235,000 (7%) during the quarter. The decrease is
primarily driven by lower costs on nearly all interest-bearing
deposits, despite solid growth in our deposit base. The average
balance of interest-bearing liabilities increased $44.5 million
(6%), while the average cost of interest-bearing liabilities
decreased 23 basis points to 1.51%. Cuts to key interest rates by
the FOMC have caused significant reductions across the yield curve
in 2020, however, pricing strategies by other institutions in our
markets will continue to create 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 increased to $12.0 million as of March 31, 2020, compared to
$11.0 million as of December 31, 2019.
Based on its reserve analysis and methodology, the Company
recorded $500,000 in provision for loan loss expenses during the
quarter compared to no provision amounts recorded during the prior
year quarter. The decision to expense this amount was a
precautionary move made as the COVID-19 virus is expected to
continue negatively impacting the economy and increase stress
within most segments of the loan portfolio. At March 31, 2020, the
allowance for loan losses of $8.0 million was 1.10% of gross loans
outstanding (excluding mortgage loans held for sale), an increase
from the 1.04% reserved as of December 31, 2019.
In accordance with generally accepted accounting principles for
acquisition accounting, the loans acquired through a prior
acquisition were recorded at fair value; therefore, there was no
allowance associated with the loans at acquisition. Management
continues to evaluate the allowance needed on the acquired loans
factoring in the net remaining discount of $750,000 at March 31,
2020.
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 $535,000 (34%) during the quarter compared to the same
quarter in 2019. This was primarily due to income of $555,000
(100%) recognized from a new loan swap product that debuted during
the quarter, increased income from the sale of mortgage loans of
$117,000 (27%) and an increase in realized gains from the sale of
investment securities of $59,000 (190%). Offsetting these items was
a decrease of income from the sale of SBA loans of $250,000 (100%)
due to none of these loans being sold during the quarter.
Non-interest Expense – Noninterest expenses
decreased $46,000 (1%) during the quarter. Salaries and employee
benefit expenses decreased $9,000 (<1%) while occupancy expenses
increased $18,000 (2%) compared to the same quarter in 2019,
respectively. Due to full staffing at nearly each facility and no
changes in the number of locations over the past year, no
significant fluctuations were experienced in these categories.
Other non-interest expense items decreased $55,000 (3%) when
compared to the same quarter in 2019. This net reduction was made
up of several items with the following being the largest
contributors:
- Data processing expenses increased $209,000 (54%) for the
quarter due when compared to the prior year due to 2020 having a
full quarter of expenses related to upgrades made to our core
processing system in last half of 2019.
- A $100,000 (100%) reduction in FDIC assessment premiums due to
previously awarded credits being permitted to offset current
fees.
- Loan expenses decreased $69,000 (51%) due to lower loan
origination activity.
- Postage expenses were lower by $26,000 (46%) due to
efficiencies gained from the upgrading of core processing systems
and increased electronic delivery of items.
- Decreased professional service expenses of $30,000 (15%) were
experienced due to initial expenses related to new SEC accelerated
filer thresholds and expenses related to the implementation of new
accounting standards that occurred in the first quarter of 2019
were not present during the comparable 2020 quarter.
Capital – As of March 31, 2020, stockholders’
equity decreased $800,000 (1%) to $83.8 million from $84.6 million
as of December 31, 2019. Net income for the quarter exceeded
dividends paid or declared by $1.5 million, however, stock
repurchase and award activity decreased equity balances by $300,000
and the equity portion of the Company’s unrealized losses on
available-for-sale securities and effects of interest rate swaps
decreased equity balances by an additional $2.0 million. On a per
common share basis, tangible book value decreased to $18.43 at
March 31, 2020 as compared to $18.71 as of December 31,
2019.
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:
- Provision for income taxes
- Gains (losses) on sales of investment securities
- Gains (losses) on foreclosed assets held for sale
- Loan swap fees
- Provision for loan loss expense
A reconciliation of the Company’s net income to its operating
income for the quarters ended March 31, 2020 and 2019 is set forth
below.
|
Quarter ended |
|
|
March
31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Dollar amounts are
in thousands) |
|
|
|
|
|
Net income |
$ |
2,105 |
|
|
$ |
2,120 |
|
|
|
|
|
|
Add back: |
|
|
|
|
Provision for income taxes |
|
408 |
|
|
|
375 |
|
Income before income
taxes |
|
2,513 |
|
|
|
2,495 |
|
|
|
|
|
|
Add back/(subtract): |
|
|
|
|
Net loss (gains) on investment securities |
|
(28 |
) |
|
|
31 |
|
Net losses on foreclosed assets held for sale |
|
7 |
|
|
|
19 |
|
Loan swap fees |
|
(555 |
) |
|
|
- |
|
Provision for loan losses |
|
500 |
|
|
|
- |
|
|
|
(76 |
) |
|
|
50 |
|
|
|
|
|
|
Operating income |
$ |
2,437 |
|
|
$ |
2,545 |
|
|
|
|
|
|
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 32,000 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, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Dollar amounts are
in thousands, except per share data) |
|
|
|
|
Total interest income |
$ |
10,799 |
|
|
$ |
11,097 |
|
Total interest expense |
|
3,087 |
|
|
|
3,322 |
|
Net interest income |
|
7,712 |
|
|
|
7,775 |
|
Provision for loan losses |
|
500 |
|
|
|
- |
|
Net interest income after |
|
|
|
Provision for loan losses |
|
7,212 |
|
|
|
7,775 |
|
Noninterest income |
|
|
|
Service charges |
|
409 |
|
|
|
402 |
|
Gain on sale of loans held for sale |
|
543 |
|
|
|
426 |
|
Gain on sale of Small Business Administration loans |
|
- |
|
|
|
250 |
|
Gain (loss) on sale of investments |
|
28 |
|
|
|
(31 |
) |
Loan swap fees |
|
555 |
|
|
|
- |
|
Other income |
|
564 |
|
|
|
517 |
|
|
|
2,099 |
|
|
|
1,564 |
|
Noninterest expense |
|
|
|
Salaries and employee benefits |
|
3,950 |
|
|
|
3,959 |
|
Occupancy |
|
1,151 |
|
|
|
1,133 |
|
Other expense |
|
1,697 |
|
|
|
1,752 |
|
|
|
6,798 |
|
|
|
6,844 |
|
Income before income
taxes |
|
2,513 |
|
|
|
2,495 |
|
Provision for income
taxes |
|
408 |
|
|
|
375 |
|
Net income |
$ |
2,105 |
|
|
$ |
2,120 |
|
Net income per common
share-basic |
$ |
0.49 |
|
|
$ |
0.48 |
|
Net income per common
share-diluted |
$ |
0.49 |
|
|
$ |
0.47 |
|
|
|
|
|
Annualized return on average
assets |
|
0.82% |
|
|
|
0.90% |
|
Annualized return on average
equity |
|
9.84% |
|
|
|
10.47% |
|
Net interest margin |
|
3.24% |
|
|
|
3.50% |
|
Efficiency ratio |
|
69.29% |
|
|
|
73.28% |
|
|
|
|
|
|
|
|
|
Financial Condition
Data: |
As of |
|
March
31, |
|
December
31, |
|
|
2020 |
|
|
2019 |
Cash and cash equivalents |
$ |
84,344 |
|
$ |
92,672 |
Available-for-sale
securities |
|
140,009 |
|
|
118,495 |
Loans, net of allowance for
loan losses |
|
|
|
3/31/2020 - $8,049; 12/31/2019 - $7,608 |
|
723,044 |
|
|
723,519 |
Intangibles |
|
3,820 |
|
|
3,939 |
Premises and equipment,
net |
|
18,799 |
|
|
19,164 |
Lease right-of-use assets |
|
8,909 |
|
|
9,053 |
Bank owned life insurance |
|
24,849 |
|
|
24,698 |
Other assets |
|
23,858 |
|
|
20,485 |
Total assets |
$ |
1,027,632 |
|
$ |
1,012,025 |
|
|
|
|
Deposits |
$ |
849,536 |
|
$ |
821,407 |
Advances from correspondent
banks |
|
50,000 |
|
|
65,000 |
Subordinated debentures |
|
15,465 |
|
|
15,465 |
Other borrowed funds |
|
11,200 |
|
|
11,200 |
Lease liabilities |
|
8,972 |
|
|
9,106 |
Other liabilities |
|
8,696 |
|
|
5,215 |
Total liabilities |
|
943,869 |
|
|
927,393 |
Stockholders' equity |
|
83,763 |
|
|
84,632 |
Total liabilities and stockholders' equity |
$ |
1,027,632 |
|
$ |
1,012,025 |
Common equity to assets
ratio |
|
8.15% |
|
|
8.36% |
Tangible common equity to
tangible assets ratio (1) |
|
7.81% |
|
|
8.00% |
Book value per common
share |
$ |
19.31 |
|
$ |
19.62 |
Tangible book value per common
share (2) |
$ |
18.43 |
|
$ |
18.71 |
Nonperforming assets |
$ |
12,012 |
|
$ |
10,995 |
(1) Total Assets less Intangibles divided by Stockholders’
Equity(2) Stockholders’ Equity less Intangibles divided by Common
Shares Outstanding
Analysis of Net Interest Income and Margin:
|
Three months ended 3/31/2020 |
|
Three months ended 3/31/2019 |
|
Average Balance |
|
Interest |
|
Yield / Cost |
|
Average Balance |
|
Interest |
|
Yield / Cost |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Interest-earning: |
|
|
|
|
|
|
|
|
|
|
|
Loans |
$ |
733,591 |
|
$ |
9,553 |
|
|
5.24 |
% |
|
$ |
779,764 |
|
$ |
10,303 |
|
|
5.36 |
% |
Investment securities |
|
125,851 |
|
|
885 |
|
|
2.83 |
% |
|
|
90,061 |
|
|
598 |
|
|
2.69 |
% |
Other assets |
|
96,515 |
|
|
361 |
|
|
1.50 |
% |
|
|
30,906 |
|
|
196 |
|
|
2.57 |
% |
Total interest-earning |
|
955,957 |
|
|
10,799 |
|
|
4.54 |
% |
|
|
900,731 |
|
|
11,097 |
|
|
5.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-earning |
|
71,533 |
|
|
|
|
|
|
59,405 |
|
|
|
|
|
$ |
1,027,490 |
|
|
|
|
|
$ |
960,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing: |
|
|
|
|
|
|
|
|
|
|
|
Savings accounts |
$ |
39,704 |
|
|
26 |
|
|
0.26 |
% |
|
$ |
39,897 |
|
|
30 |
|
|
0.30 |
% |
Transaction accounts |
|
503,138 |
|
|
1,378 |
|
|
1.10 |
% |
|
|
410,061 |
|
|
1,475 |
|
|
1.46 |
% |
Certificates of deposit |
|
199,349 |
|
|
1,090 |
|
|
2.20 |
% |
|
|
239,248 |
|
|
1,101 |
|
|
1.87 |
% |
FHLB advances |
|
51,482 |
|
|
274 |
|
|
2.14 |
% |
|
|
60,204 |
|
|
357 |
|
|
2.40 |
% |
Subordinated debentures |
|
15,465 |
|
|
196 |
|
|
5.10 |
% |
|
|
21,753 |
|
|
291 |
|
|
5.43 |
% |
Other borrowed funds |
|
11,491 |
|
|
123 |
|
|
4.31 |
% |
|
|
5,000 |
|
|
68 |
|
|
5.52 |
% |
Total interest-bearing |
|
820,629 |
|
|
3,087 |
|
|
1.51 |
% |
|
|
776,163 |
|
|
3,322 |
|
|
1.74 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing |
|
120,825 |
|
|
|
|
|
|
101,813 |
|
|
|
|
Total liabilities |
|
941,454 |
|
|
|
|
|
|
877,976 |
|
|
|
|
Stockholders’ equity |
|
86,036 |
|
|
|
|
|
|
82,160 |
|
|
|
|
|
$ |
1,027,490 |
|
|
|
|
|
$ |
960,136 |
|
|
|
|
Net earning balance |
$ |
135,328 |
|
|
|
|
|
$ |
124,568 |
|
|
|
|
Earning yield less costing
rate |
|
|
|
|
3.03 |
% |
|
|
|
|
|
3.26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, and net
yield spread |
|
|
|
|
|
|
|
|
|
|
|
on interest earning assets |
|
|
$ |
7,712 |
|
|
3.24 |
% |
|
|
|
$ |
7,775 |
|
|
3.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning
assets to |
|
|
|
|
|
|
|
|
|
|
|
interest-bearing liabilities |
|
|
|
116 |
% |
|
|
|
|
|
|
116 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts: Shaun A. Burke (CEO) or Carter M. Peters (CFO),
1-833-875-2492
Guaranty Federal Bancsha... (NASDAQ:GFED)
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De Mai 2024 até Jun 2024
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