Guaranty Federal Bancshares, Inc. 2016 Annual Report
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Annual Report and Proxy 2016 Guaranty Federal Bancshares, Inc. 2016 Annual Report Investor Information ANNUAL MEETING OF STOCKHOLDERS: The Annual Meeting of Stockholders of the Company will be held Wednesday, May 24, 2017 at 6:00 p.m., local time, at the Guaranty Bank Operations Center, 1414 W. Elfindale St., Springfield, Missouri. ANNUAL REPORT ON FORM 10-K: Copies of the Company’s Annual Report on Form 10-K, including the financial statements, filed with the Securities and Exchange Commission are available without charge upon written request to: Vicki Lindsay, Secretary Guaranty Federal Bancshares, Inc., 1341 W. Battlefield Rd., Springfield, MO 65807-4181 TRANSFER AGENT: Computershare Investor Services PO Box 43078 Providence, RI 02940-3078 STOCK TRADING INFORMATION: Symbol: GFED SPECIAL LEGAL COUNSEL: Husch Blackwell LLP 901 St. Louis St., Suite 1900 Springfield, MO 65806 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM: BKD, LLP 910 St. Louis St. PO Box 1190 Springfield, MO 65801-1190 STOCKHOLDER AND FINANCIAL INFORMATION: Carter Peters, Executive Vice President, Chief Financial Officer 417-520-4333 Company Overview Branch Map • Established in 1913, headquartered in Springfield, Missouri IOWA • 4th largest deposit market share in MSA ILLINOIS • 9 full-service branches in the Springfield, Missouri MSA Kansas City St. Louis • 24,000+ MoneyPass & TransFund ATMs MISSOURI • Mortgage Loan Production Offices KANSAS Joplin in Marshfield and Joplin, Missouri Springfield OKLAHOMA Branson • Commercial Loan Production Office ARKANSAS in Joplin, Missouri • New HQ and “Branch of the Future” planned in Springfield, Missouri (Q4/2017) BRANCH LOCATIONS 1905 W. Kearney FINANCIAL HIGHLIGHTS: 2109 N. Glenstone YEAR ENDED DECEMBER 31, 2016 Springfield Balance Sheet (dollars in thousands) 1510 E. Sunshine Total Assets $ 687,980 1341 W. Battlefield Total Loans 540,457 Total Deposits 505,363 2155 W. Republic 4343 S. National Total Equity 69,974 1701 W. State Hwy J Profitability Hwy CC & Main Return on Average Assets 0.83% Nixa Ozark Return on Average Equity 8.00% 709 W. Mount Vernon Net Interest Margin 3.35% Efficiency Ratio 65.56% Asset Quality Joplin Nonperforming Assets/Total Assets 1.64% 2639 East 32nd Street Suite R Capital Tangible Common Equity Ratio 10.17% Branch Locations (9) Major Cities Tangible Book Value per Common Share $16.09 The President’s Letter DEAR FELLOW SHAREHOLDERS: Guaranty is dedicated to improving the financial well-being of those we serve. By combining deep expertise with a personal touch, we help our customers realize their goals by delivering advice, ideas and services that match their needs throughout their life’s journey. By continuously putting our customers first, we help families flourish, businesses become stronger, and communities prosper. The banking industry continues to be intensely competitive and faces overcapacity in traditional branch distribution, rapidly changing customer expectations, new technologies and new non-bank competitors. Yet, we believe that what continues to make Guaranty successful is its community banking philosophy. For decades, Guaranty’s customers have greatly valued their relationships with their local Guaranty contacts. Simply put, to the customer, there is no substitute for the “personal touch,” and we intend to be the bank that delivers it. To complement our high-touch philosophy we continue to implement technology enhancements to meet changing demands and broaden our customer base. In 2016 we expanded our merchant services offerings, updated our bill pay and mobile banking platforms, and rolled-out Apple, Samsung and Android electronic pay solutions. To protect against the increasing cyber-crime threat, we transitioned all debit cards to EMV chip-enabled technology and started providing real-time fraud watch on all accounts. Our approach is working as we achieved another consistent year in 2016. We will provide a few highlights here, but we invite you to review our detailed information in this Annual Report and our 2016 Form 10-K filed with the Securities and Exchange Commission. Earnings for the year ended December 31, 2016 were $5.59 million, or $1.27 per diluted common share. Return on average assets was .83%, net interest margin was 3.35%, and return on average common equity was 8.00%. The Company ended the year with assets of $687.98 million, up 5.4% from the previous year end. Capital continued to be strong with stockholder’s equity of $69.97 million, or 10.17% of assets, equivalent to a book value of $16.09 per common share. In 2016, the U.S. economy showed steady growth with low interest rates, increasing consumer confidence and lower unemployment rates. Hopes were raised with the November election for corporate tax reform and relief from overregulation that created a positive environment for financial markets. These developments combined with our stable financial performance for 2016 resulted in extraordinary returns for our shareholders as we realized a one-year total return of 41.68% on our common stock. This compared favorably to the industry as the total return for the SNL U.S. Bank Index was 26.35%. We believe that steady economic expansion, overall higher interest rates and more thoughtful regulation will create a strong operating environment for banks in 2017. In 2016, as part of our strategic focus on growth, we expanded our footprint with the June opening of a new loan production office in Joplin, Missouri. We also broke ground on our 10th banking facility in Springfield, and we launched a new look for our 103 year-old brand. Our new logo features a more modern eagle image that is bright blue in color and the tag line “Your Life. Your Money. Your Bank.” which signifies our customer-centric focus. While economic, competitive and regulatory landscapes change over time, Guaranty’s goal of helping clients achieve financial success remains unchanged. The capability to offer a full range of products and services, while also providing exceptional “know-how”, continues to make our bank unique. As such, we are confident in our ability to further deliver exceptional service to clients and profitable growth to you, our shareholders, in 2017 and beyond. Sincerely, Shaun A. Burke President & Chief Executive Officer Guaranty Federal Bancshares, Inc. OUR COMMUNITY TOTAL ASSETS ($M) TOTAL 1-YEAR SHAREHOLDER RETURN BANK CULTURE 700.0 GFED (+41.68%) 680.0 Choice Employer SNL U.S. Bank (+26.35%) • Value employee 660.0 40.00 contribution and perspective 640.0 30.00 • Provide development 620.0 to reach full potential 600.0 20.00 Authentic Culture 580.0 and Values 2013Y 2014Y 2015Y 2016Y 10.00 • Foster communication, TOTAL RETURN % TOTAL collaboration, 0.00 accountability, trust and respect NET INCOME AVAILABLE (10.00) • Moments of Magic TO COMMON SHAREHOLDERS ($M) world-class customer (20.00) 5.7 service 5.4 5.6 12/31/15 3/31/16 6/30/16 9/30/16 12/31/16 SNL U.S. Bank: Includes all Major Exchange Shared Vision (NYSE, NYSE MKT, NASDAQ) Banks in SNL’s coverage universe. • Simple, powerful strategic 2014Y 2015Y 2016Y blueprint for success TOTAL 3-YEAR SHAREHOLDER RETURN Relationship Banking Focus GFED (+101.88%) SNL U.S. Bank (+43.65%) • Thriving communities TANGIBLE BOOK VALUE (TBV) PER SHARE 120.00 need community banks TBV ($) TBV (%) 16.00 TBV / Share ($) 200.00 100.00 15.50 180.00 Price / TBV (%) 80.00 160.00 15.00 140.00 60.00 14.50 132 120.00 14.00 RETURN % TOTAL 100 100.00 40.00 13.50 93 78 80.00 13.00 20.00 60.00 12.50 40.00 0.00 2013Y 2014Y 2015Y 2016Y 12.00 20.00 SNL U.S. Bank: Includes all Major Exchange 11.50 0.00 (NYSE, NYSE MKT, NASDAQ) Banks in 2013Y 2014Y 2015Y 2016Y SNL’s coverage universe. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016 FORM 10-K - or - [ ] 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 (I.R.S. Employer Identification No.) or Organization) 1341 West Battlefield, Springfield, Missouri 65807 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (417) 520-4333 Securities registered pursuant to Section 12(b) of the Act: Title of Class Exchange on which Registered Common Stock, par value $.10 per share NASDAQ Global Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ___ No X Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ___ No X 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 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).