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 ($M) world-class customer (20.00) 5.7 service 5.4 5.6 12/31/15 3/31/16 6/30/16 9/30/16 12/31/16 SNL U.S. Bank: Includes all Major Exchange Shared Vision (NYSE, NYSE MKT, NASDAQ) Banks in SNL’s coverage universe. • Simple, powerful strategic 2014Y 2015Y 2016Y blueprint for success TOTAL 3-YEAR SHAREHOLDER RETURN Relationship Banking Focus GFED (+101.88%) SNL U.S. Bank (+43.65%) • Thriving communities TANGIBLE BOOK VALUE 120.00 need community banks (TBV) PER SHARE TBV ($) TBV (%) 16.00 TBV / Share ($) 200.00 100.00
15.50 180.00 Price / TBV (%) 80.00 160.00 15.00 140.00 60.00 14.50 132 120.00
14.00 RETURN % TOTAL 100 100.00 40.00 13.50 93 78 80.00 13.00 20.00 60.00 12.50 40.00 0.00 2013Y 2014Y 2015Y 2016Y 12.00 20.00 SNL U.S. Bank: Includes all Major Exchange 11.50 0.00 (NYSE, NYSE MKT, NASDAQ) Banks in 2013Y 2014Y 2015Y 2016Y SNL’s coverage universe.
(2) has been subjectto suchfiling requirements for th bid and asked prices of theregistrant's this Form10-Korany amendmen be contained, to the best of registrant's knowledge, in defini Exchange Act of 1934during the preceding 12 months (or for such s Yes ___NoX For thefiscal year ended December 31, 2016 [ X] ANNUALREPORT the Exchange Act. (Check one): reporting company. See the definitions of“large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rul For the transition period from to ______[ ] TRANSITIONREPORT PURSUANT TOSECT 4,421,275 shares of the registrant's Common Stock outstanding. (the last business of the registrant’s day most recently co months (orforsuch shorter period thatthe registrant was require Data Filerequired to besubm Smaller reporting company X Large accelerated file ___ The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, based on the ave Indicate by check mark whether the registrant is a shellcompan Indicate by check mark whether the registrant is a large accele Indicate bycheckmarkifdisclosure of delinquent filerspursuant to Item405ofRe Indicate by check mark whetherthe registrant has submitted el Indicate by check markwhether the registra Indicate by check mark iftheregistrant is not requiredto f Indicate by check mark if the registrant is awell-known seasone Portions ofthe Proxy Statement for theAnnua Common Stock,parvalue$.10 per 1341 WestBattlefield,Springfield,Missouri (State orOther Jurisdiction of Incorporat (Address ofPrincipal Executive Offices) Title of Class GUARANTY FEDERAL BANCSHARES,GUARANTY INC. or Organization) SECURITIES ANDEXCHANGECOMMISSION SECURITIES PURSUANT TOSECTION13 Delaware 43-1792717 itted and posted pursuant to Rule 405 of Regula t to thisForm 10-K. [X] Registrant's telephonenumber,in Securities registered pursuant to Section 12(g)of the Act: None Common Stock as quotedtheGl Common Stockas on Securities registered pursuant to Section 12(b)of the Act: DOCUMENTS INCORPORATED BYREFERENCE INCORPORATED DOCUMENTS (Exact Name of Registrant as Specified in Its Charter) share nt: (1) has filed allreportsrequired to be filed bySection 13 or 15(d) of the Sec l Meeting of Stockholders (the St “Proxy Commission FileNumber: 0-23325
UNITED STATES ion e past 90days. Yes X No Accelerated filer ___ Washington, D.C. 20549 D.C. Washington, FORM 10-K ION 13 OR 15(d)OFTHESECURITIESEXCHANGEACT1934 mpleted second quarter) was $63.3 million. AsofMarch 15,2017ther
tive proxyincorporated or by referencein information statements OR 15(d) OFTHESECURITIES EXCHANGE ACTOF1934 ile reportspursuanttoSection13 d to submit Yes files). post such and X No ectronically andposted onitscorporate Web site, if any, every - or - - y (asy defined in Rule 12b-2 of the Exchange Act). Yes ____ No d issuer,as defined in Rule405 of the Securities Act.Yes___ cluding area code: (417) 520-4333 horter period that the registrant was required to file such r
ratedfiler, anacceleratedfile
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(I.R.S. EmployerIdentification No.) gulation S-K is not contained herein, and w atement”) to be heldon May 24, 2017(Part Exchange on which Registered
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FORM 10-K This page intentionally left blank left intentionally page This
FORM 10-K
7A Quantitative and Qualitative Quantitative Management'sDiscussion and Analysis of Fina 7A 7 12 12 Executiv Executive Directors, Of 11 10 Other Information ...... 9B Controls and Procedures ...... 99 Changes in and Disagreements with Accountants 9A Financial Statements 9 8 Selected 6 Mine Safe Legal Proceedings ...... 39 4 Pr 3 2 Unresolved Staff Comments ...... 38 1B Risk Factors ...... 29 1A 4 Principal Accoun Certain Relationships and Related Tran 14 13 Bu 1 Item and Fina Exhibits Signatures 15 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 5 Matters ...... Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Securities ......
operties ...... siness ...... e Compensation ...... e Financial ty Disclosures ...... ty 39 ting Fees and Services ...... ncial Statemen Data ...... and Suppleme ficers and Corporate Governance ...... GUARANTY FEDERAL BANCSHARES, INC. BANCSHARES, FEDERAL GUARANTY Disclosures About t Schedules ...... t ntary Data ...... 57 TABLE OFCONTENTS sactions, and Director Form 10-K PART III PART IV PART II PART I ncial Condition and Results of akt Risk ...... Market on Accounting and Financial Disclosure ...... 99
Independence ...... 10
Operations ...... 44 ...... 38 ...... 4 ...... 100 ...... 43 ...... 101 ...... 102 ...... 102 ..... 101 ... 55
Page
40 40 101 101 2
FORM 10-K This page intentionally left blank left intentionally page This
FORM 10-K
owns Guaranty Statutory Trust I and Guaranty Statutory Trust II, both Delaware statutory trusts. Company the the Bank, to basis. In addition a consolidated on provided from would be different that immaterially information or to identical is data only Bank on based table or chart in a information Further, Bank. ofthe operations include Company in few engages Forth Company activities. other The Bank. the from Guaranty Federal Savings Bank to Gu powers in Missouri, and the Company became abank holding company. On this date, the name of the Bank was changed ou remained which Bank the shares All of the Company. of along with themutual holding company, and the shares of the Bank held by the public were exchanged for shares of the on D and reorganization conversion the with connection In offering. ina public sold were shares remaining the and company mutual the holding to companystructure hadincreated April been mutual company. The holding holding mutual existing itsthen and the Bank involving and reorganization conversion Item 1. Business further regarding the re financialdetails Company’s and position equity stockholders’ total and million were deposits $505.4 access charges) on the Securities and Exchange materialsThese Commission. Securities ava are also and Exchange any amendments tothese reports assoon as reasonably practicable after they are electronica Quarterl Form10-K, on Report its Annual its website through included as part of,orincorporated by reference into, th Internet Website Federal Home Loan Banks (“FHLB”). is a Bank this Itemme The in 1. Regulation” and “Supervision Insurance Fund of the Federal Deposit Insurance Corporation (the "FDIC"). See discussion under section captioned securities. maturities ofinvestment and prepayments amortizations, and principal; loan of and prepayments amortization borrowings; interestlia interest-bearing on assetsand expense earning interest margin, on net are primarily dependent operations of from sa generated and gains for services provided, fees charged investmentsother and and its loans from on interest are principally derived revenues Bank's The marketableother securities. and also Bank in The invests securities,U.S.Government loans. and other mortgage-backed permanent loans, one- loans,mortgage construction residential investing those deposits, together with funds generated from Guaranty Bank for Guaranty Federal Savings Bank, a federa chartered corporation that was formed inSeptember 1997. Th Guaranty Federal Bancshares, Inc.
At December 31, 2016, the Company’s consolidated assets On June 27, 2003, the Bank converted froma federal savings bank to a state-chartered trust company with banking address website internet Company’s isThe www.gbankmo.com. The information contained on that website is not The Bank is regulated by the Missouri Division of Finance (“MDF”) and its deposits are insured by the Deposit The Bank's principal business has been, and continues to be Guaranty Federal Bancshares, Inc. (hereinafter referred to as “we,” “us,” “our,” or the “Company”) is a Delaware-
ecember 30, 1997,theshares of theBank held by
ity of the Company is to oversee its investment in in aranty Bank. Theits investment primaryoversee the is Company to activity of l savings bank (the "Bank") on December"Bank") on lsavings bank (the 1995 at which time more than a majority of the shares of the Bank were issued of the were issued shares Bank the of at morea majority time than which 1995 Commission's website at www.sec.gov. PART I is Annual Report on Form 10-K. The Company makes available Company The on Form Report 10-K. is Annual tstanding after the conversion are owned by the Company. e Company became a unitary savi was $70.0 million. See Item 6 “Selected Financial Data” for Data” for Financial SeeItem “Selected 6 was million. $70.0 bilities. The Bank's primary sour Bank's The bilities. y Reports on Form 10-Q and Current Reports on Form 8-K and and 8-K Form Reports on Current and 10-Q on Form y Reports 4 , which is one of 11 regional regional Des11 is one of the FHLB of Moines, which mberof
to four-family residential mortgage loans, business, consumer which is the difference between interest income on interest- income on interest isthe difference between which les of loans and investment securities, and the Bank’s results results the Bank’s securities, and investment and loans les of operations, in commercial real estate loans, multi-family in commercial realestateloans, operations, sults of operations the for sults operations of previous five fiscal years.
is reason, unless the otherwise specified, to references ilable free of charge (other than a user's regular internet internet regular a user's than (other ilable freeofcharge , attracting retail deposits from the general public and public general fromthe retaildeposits , attracting were $688.0million, net lo the mutualthe holdingcomp 30, 1997, in connection with a plan of ngsand loan holdingcompany federal agency securities and and securities federal agency lly filed or furnished to the to orfurnished lly filed ces of funds are: deposits; are: deposits; ces offunds ans were $540.5 million, any wereextinguished
FORM 10-K
%
3% 77%
100% 8,740 136 e southwestern corner of of corner e southwestern of the Bank’s loan portfolio portfolio loan Bank’s of the a Loan Production Office in Office Production a Loan
care. There is a significant regional regional significant a is care. There 46,188 10% 46,405 10% 7,802 175 43,266 9% 48,917 10% ur “Market Area”). The major components of the of the components major The Area”). ur “Market accredited colleges and one major university. Part university. accredited major one and colleges $ 20% 94,422 $ 20% 102,225 21
22% 110,025 23% 111,944 2 44% 179,079 38% 167,761 35% 78% 362,955 77% 365,308 folio is comprised offolio different is comprised typesof industries. n Counties,which th in are ringfield. The Bank also has ringfield. 494,652 494,652 100% 472,980 100% 477,252 data relating to the composition composition the data relating to
92,114 19% 92,722 20% 95,227 20% $ 487,801 $ 465,003 $ 468,376 17,246 3% 17,303 4% 16,717 4% As of December 31, 31, of December As 5 6,589 262 (Dollars in Thousands) Thousands) (Dollars in anson, Missouri, which has developed a strong tourism industry industry tourism strong a developed has which Missouri, anson, business and accounted for more than 82%of our loan portfolio
41,604 41,604 8% 33,786 7% tion, retail, light manufacturing and health lighttion, manufacturing andretail, whom pass through Sp whom pass through 5,812 333 7% 7% 45,463 9% 36,785 7% of Springfield, Nixa and Ozark, Missouri Ozark, Nixa (o and of Springfield,
o large regional hospitals. There also are four are also There hospitals. regional large o 5,742 108,594 108,594 $ 20% 100,160 $ 20% 99,116 99,011 18% 102,999 21% 109,360 249,581 46% 208,824 42% 215,605 447,570 82% 396,051 79% 385,292 546,581 100% 499,050 100%
$ % $ % $ % $ % $ % 2016 2015 2014 2013 2012
Like commercial banksour many port loan in our market, The Bank's primary market areas are Greene and Christia and Greene areas are market primary The Bank's ...... losses fees/costs, net ...... fees/costs, net 382 family ...... $ ...... family ... business loans 75,405 14% 81,007 16% estate ...... estate loans ...... loans other loans ...... loans other One to four One to four (includes loans loans (includes sale): held for Multi-family ...... Multi-family 48,483 9% Construction ...... Construction 40,912 Commercial real real Commercial Consumer loans .. .. Consumer loans 23,606 4% 21,992 4% Allowance for loan Allowance for loan Deferred loan loan Deferred Commercial
Total Loans, net .... $ .... Total net Loans, 540,457 $ 492,905 health care presence with tw with presence health care Total mortgage Total consumer and
by value as of December 31, 2016. Set forth below is selected is selected forth below 2016. Set 31, December of as value by ...... loans Total Less: Missouri and includes the cities includes the cities Missouri and educa industries, service are local economy growthofbe the attributed canproximity area’s to its to Br and five between attracts and Springfield, of south miles 30 located is Branson entertainment. and music country to related of each year, many six million tourists WebsterMissouri County, and Jasper County, Missouri. Activities Lending estate lendingHowever, a significant real portionour is of indicated: dates the at Mortgage loans
MarketArea
FORM 10-K
of rents and leases. The Bank Bank leases.The and rents of real estate,personal guarantees ofthe principals, asecurityin centers, medical offices, motels, churches and other non-residential buildings. estate loans are generally permanent loans secured by improved rate fixed initial period adjustments subsequent with at a spr 66% 49,162 32,658 2,090 Total loans (1) 16,504 ...... Consumer loans ...... Commercial loans ...... as its maximum31, amount.2016, real estate loan commercial Loans receivable net ...... Allowancelosses for loan ...... originated with adjustable rates of interest, the rates of majority of wh with adjustable originated to 80% of the appraised value of the mortgaged property. The ma amounts in portfolio. up are Commercialgenerally estate originated of 46% the or loan million loans realtotal Bank's $250.0 Before(1) deductionsfor unearned discounts,deferred 19 24,068 Commercial real estate Construction ...... 57,934 Multi-family ...... One to four family ...... $ rates. interest adjustable have which rates and interest and allowance for loan losses, asof D (1) Includesmortgage loans heldforsale of $2,183 6, Deferred loan fees/costs ...... 9,719 12, Less: Consumer loans ...... 23,480 4,979 Commercial loans ...... Commercial real estate Construction ...... Multi-family ...... One to four family ...... $ Loan Maturities prepayments or scheduled principal amortization. loans that have adjustable rates as due
Total loansTotal (1) ...... To commercialTo originate real the estate loans, Bank generall The following table setsforththematu Commercial Real EstateLoans. The following table sets forth the dollar amount, before deductions for unearned discounts, deferred loan fees/costs
0,8 249,581 107,883 118,557 23,141 ...... 1026 86,164 140,276 ...... has established its loan-to-one limitaborrower itsloan-to-one established has ecember 31,2016of all loans due after December 2017,whichhavepre-determined in the period during which they contractually mature. The table does not include As of December 31, 2016, the Bank ha Bank the 2016, 31, December of As rity oftheBank's loanportfolio as
Due in One One in Due
1188 2681 $ 9,7 546,581 197,872 $ 246,811 $ 101,898 $ $ 623 3,0 1,5 75,405 16,954 32,208 26,243 Year or Less
loan fees/costs and allo and fees/costs loan 2307 1166 $ 4,8 43% 444,683 191,646 $ 253,037 $ $ Fixed Rates Fixed 436 4,8 4,6 108,594 45,669 $ 48,589 $ 14,336 $ terest in the related personal property, and a standby assignment astandby and property, personal therelated terest in ead to the ead to Wall StreetPrime commercial real rate. Bank's The 6 ich are quoted at a spread to the Wall Street Prime rate for th
property such as office buildings, as small such retailproperty stores, office buildings, shopping 215 ,6 1,3 30% 17,432 5,267 12,165 jority of commercial Bank’s estate jority the have loans real been
2,7 1,3 48,483 15,332 28,172 y requires amortgageand secu y requires
One Through Through One Five Years Due After 3,2 9,5 39% 94,258 36,324 $ $ Adjustable Adjustable (Dollars in thousands) (Dollars in Thousands) tion, which millionwas asof which $22.7 December tion, Rates wances for loan losses. losses. loan for wances 177 387 85% 13,887 11,797 0 706 23,606 7,086 801 8 498 40,912 4,948 484 46 354 45% 43,504 ,436 of December 31, 2016. The table shows d commercial realestateloanstotaling
Due After
2640 38% 226,440
Five Years Total Total rity interest in the subject the subject in rity interest $ 540,457 $ 5,742 382
Adjustable Adjustable Total Total %
e
FORM 10-K
h al al me, ced upon the security the upon ced ndent on successful operation operation successful ndent on lio consisted of one- to four-family four-family to one- of consisted lio xed-rate loans, primarily because as because as primarily loans, xed-rate ated for a term of up to 30 years on up to of for a term ated included approximately $7.5 million, or million, $7.5 approximately included ) the funds are advan funds are ) the ealtors within our Market Area. Originated Originated our Market Area. ealtors within h provideh thewith Bank contractual the rightdeem to er and involve a greater degree of risk than residential residential than risk of degree greater a involve er and ed to a constantplusa 2.50%ed oneof(CMT), maturity to a year ial real estate are often depe often are estate real ial tial mortgage loans, which on generally are made the basis om the cash flow of the borrower'sthe ofresult,a theAs business. cashthe om flow mmercial business loans are of higher risk and typically are typically and higher risk of are loans mmercial business depreciate over time, may be difficult to appraise and may may and appraise to difficult be may time, over depreciate aised value over terms up to twovalue uploans years. Developmentaised over to terms on of the infrastructure required of a subdivision, (2) the cas the (2) subdivision, a of required infrastructure the of on or the selling price of the mortgagedproperty,of the price selling whicheveror the is business loans are generally secured by business assets, such such assets, business by secured generally are loans business
mize theseby risks careful underwriting, requiringmize personal employment and other income and by which real secured are family single are residences such Typically, ary lending area. 7 se, thereby increasingpotential the for default. ti At the same 20% of the Bank’s total loan portfo loan total Bank’s the of 20% fferent from in fi the inherent from risks fferent The Bank offers fixed- and adjustable-rate (“ARM”) first mortgage loans loans mortgage first (“ARM”) adjustable-rate and fixed- offers Bank The mmercial real estate loan portfolio real estate loan portfolio mmercial duration of the loan. ARM loans are origin are ARM loans loan. duration of the and projected estimate prices lot and absorptionrates to assess loanson residenti than residential mortgage loans because (1 because loans mortgage residential than clude due-on-sale clauses whic clauses due-on-sale clude attorney referrals, established builders and r e percentages greater than 80%. 80%. than greater percentages e ary Market Area. ary Area. Market The Bank generally originates both owner occupied and non-owner occupied one- to four-family residential residential four-family to one- occupied non-owner and occupied owner both originates generally Bank The Loans secured by commercial real estate are generally larg generally estate are real commercial by secured Loans As of December 31, 2016, the Bank’s co the 2016, 31, December of As As of DecemberAs of2016, 31, Business Loans. Commercial thecommercialhad Bank business totaling loans $75.4 Loans. Mortgage Four-Family to One- or million $108.6 2016, 31, December of As Generally, ARM loans pose credit risks di credit risks pose loans ARM Generally, interest rates rise, the underlying ofrise, the the payments ri interest borrower rates mortgage loans. Because payments on loans secured by commerc secured on loans Because payments loans. mortgage themarketability of underlying the property bemay adversely higher by affected Theinterest doesBank originaterates. not ARM loans provide that negativefor amortization. valueof 80% appraised the up mortgage to amounts in loans lower. The Bank on occasion may make loans up to 95% of appraised value or the selling price of the mortgage property, property, mortgage of the price selling the or value of appraised 95% to up loans make may occasion on Bank The lower. for 80% over amount excess the for insurance mortgage private requires typically Bank the However, lower. is whichever mortgageloans with valu to loan subdivisions. The Bank typically loans up to 75% of apprthe of involve generally risk a greater degree as accounts receivable, equipment and inventory. Unlike residen co ascertainable, easily more be to tends value whose property made ofbasis on borrower's ability thetothe make repayment fr which Bank the by originated loans of number a are there However, owner. the of residence primary the as serve that homes past customers, or existing from obtained generally are originations Loan properties. occupied non-owner by are secured local community, of the members
or management of the properties, repayment of such loans may be subject, to a greater extent, to adverse conditions in the the in conditions adverse to extent, greater a to subject, be may loans such of repayment properties, the of management or or the real estate The economy. Bankmarket seeks mini to such restricting generally and Bank, the by known otherwise borrowers and customers established to only lending guarantees, loansprimto its 1.4%to knowledge its utilizes lots. the in develop of The local loans Bank market land conditions intoresidential and cost development the appraisals to evaluate ofthe hasvaluewhich land lower completi materially a to prior to required interest of amount the (3) and lots, individual the of sale the of function a is repayment debt for available flow the developmentthe and required lots. sell complete to ofthe time function a is debt service the million14%of theor Bank's total loan portfolio. Commercial of the borrower's ability to makerepaymenther or his from availability of funds for repayment the of commercial business loans be may substantially dependenton of success the the business collateral itself. Further, the securing the loansmay business commercial its expand to continue to expects Bank The business. of the success on the based value in fluctuate lendingopportunitiesas present themselves. prim Bank's the in residences four-family to one- by secured mortgage loans in the Bank'sportfolio in Bank's the without property the of ownership transfers borrower the that event the in payable and due immediately loan the consent. years. seven to one of periods rate interest fixed have that loans balloon and ARM offers currently Bank The loans. residential of end the at be made can that ("caps") adjustment rate interest maximum on the limits for provide loans ARM Generally, the throughout period and each applicable owner-occupied properties and generally up to 25 years on non-owner occupied properties. Typically, interest rate rate interest Typically, properties. occupied non-owner on 25 years up to generally and properties owner-occupied adjustsecurities treasury U.S. on based calculated are adjustments pricedbasedcompetitively conditions are on market loans and cost the onfixed-rate charged rates Interest to2.75% margin. years 30 to 15 of terms for made are loans mortgage fixed-rate Bank's The committed. is the loan time the at existing funds of market. secondary the on sold being currently are which
FORM 10-K
loan may be impaired. operation of the related real estate property. realestateproperty. flowIf the oftherelated cash operation Furthermore, the repayment of loans secured by multi-family reside these loans. monitoring types and incomeof on difficulty theproperties, of evaluating producing increased conditions and including the concentration of principal in alimited number of loans and borrowers, the effects of general economic Bank generally does not accrue interest balance of $733,562andtwo loans betweenand 30 89 dayspast due withaggregate an principal balance $862,718. of The Delinquencies, Non-Performing and Problem Assets. portfolio. the in normal course of business. These loans re themselves. present opportunities $23.6 million or 4% of the Bank’s total loan portfolio. The Bank expects to continue to expand its consumer lending as certificates of deposit, autom underwriting and construction monitoring procedures. respects from that which is required for residential mortgage these factors, the analysis of the prosp dependent onthesuccess of the ultimate pr As often lending invol its completion. a result, construction attributable primarilylending, fact to the warrant. as inspections and progresses as increments construction in purposes, models, and commercial properties typicallyhave loan interest only payments at floating rates and have terms of six months to fifteen months. Construction loans for speculative purpose of resale, aswell asona"pre-sold" basis. Construction loans made for the purpose of resale generally provide for completed. has been time construction the locate to they will able that be are speculating who builders to real estate. commercial owner-operated or This portion th of construction of owner-occupied residential real estate or to finance speculative construction secured by residential real estat loan portfolio. Construction loans originated by the Bank are generally secured by permanent mortgage loans for the four-family residential mortgage loans and carry larger loan loan bala carry larger and loans mortgage four-family residential maximum is the 2016, will lend Bank a multi-familyon real estate loan. the residential adjustments based on the Wall Streetpr the are to FHLB at a spread rates of which quoted interest ad multi-fa Bank’s the of Aportion property. ofthe value appraised in amounts of the to of 80% up originated generally are loans mortgage Multi-family real the estate. in interest security a as ge Bank the loans, mortgage multi-family to regard With loans. of December or 9%2016, $48.5 million 31,
Construction Loans. Multi-Family Mortgage Loans. Mortgage Multi-Family Delinquent Loans. As of December 31, 2016, the Bank has ten loans 90 days or more past due with a principal aprincipal past due with more 90 or days hastenloans the Bank As 31, December 2016, Loans. of Delinquent loans. Director andInsider Consumer and OtherLoans. Construction lending by its nature entails significant additio significant entails its nature by lending Construction Construction loans are made to contractors who have sufficient financial strength and a proven track record, for the Loans secured by multi-family residential real estate generally involve a greater degree of credit risk than one- to obiles, boats and home equity loans. As of D As of December 31, 2016, construction loans to Management believes that loans to Director ective construction loan projects requires an expertise that is different in significan is that different expertise an requires projects loan ective construction on loans past due more than 90 days. The Bank also offers consumer loans, primarily consisting of loans secured by ime rate.The loan-to-one-bo that funds are advanced upon the security of the project under construction prior t flect normal credit terms and represent no multi-family Bank The originates mortgage loans in its primary area. lending As oject andthe ability ofthe borrower or gu of the Bank's total loan port
e Bank’s loan portfolio consists of speculative loans, i.e., loans, speculative of consists loan e Bank’s portfolio a purchaser for the underlying property prior to or shortly after from the project is reduced, the borrower's ability to repay th repay to ability borrower's the isreduced, project from the 8
lending. The Bank attempts to address these risks through its these through risks toaddress The Bankattempts lending.
ves theves disbursementof substantial funds with repayment nerally requires personal guarantees of the principals as well vance rate for the initial fixed rate period with subsequent rate with initialvance rate period subsequent fixed for the nces. This increased credit risk mily mortgage loans have been originated with adjustable adjustable with originated been have loans mortgage mily to value ratios of up to 80%. Loan proceedsare disbursed ntial real estate is typically dependent upon the successful successful the upon dependent realestateistypically ntial nal risks as compared with one-to four-family mortgage mortgage four-family with one-to ascompared nal risks rrower limitation,$22.7million as of December 31, folio consisted of multi-family residential real estate ecember 31, 2016, the Bankecemberthe 31,2016, taled or 7% $41.0 million of the Bank's total s and Officers are prudent and within the more collection risk than any other loan loan other any risk than more collection arantor toBecause repayarantor loan. of the is a result of is a resultseveral of factor has such loans totaling
loans loans s, s, o e e t
FORM 10-K
mated
non-accrual basis or 90 days or days basis or 90 more non-accrual of
5,291 15,848 15,331
December 31, December
1,027 6,776 2,793
1 1 460 3,663 3,664 (Dollars in Thousands) Thousands) in (Dollars 272 272 $ 911 $ 816 $ 2,281 sis and are placed on non-accrual status when, in sis on non-accrual the and placed are
13 - 63 319 $ 13,755 $ 5,291 $ 15,848 $ 15,331 8,080 2,893 4,530 6,274
ual rates becomes doubtful. As part of such review, mortgage mortgage review, such of part As doubtful. becomes rates ual
foreclosed assets are periodically performed by management, management, by performed periodically are assets foreclosed
9 1.60% 1.60% 2.79% 1.08% 3.41% 3.27%
1.25% 2.11% 0.84% 2.56% 2.32%
sult of foreclosure or by deed in lieu of foreclosure is deemed a foreclosed foreclosed a deemed is foreclosure of lieu in deed by or foreclosure of sult
As
7,669 11,593 4,264 9,009 12,219 - - - - -
2016 2015 2014 2013 2012 - - - - - 963 2,162 1,027 6,839 3,112
when either principal or interest than is due, 90 or whenpast more other days paldoubt. is in or interest Interest a loanunpaid accrued and the time is at
fair valuecharged is operations. fair to arged against interest income. income. interest against arged s ...... s 8,632 13,755
re contractually past re contractually Non-Performing Assets. Loans are reviewed on a regular ba regular on a reviewed are Assets. Loans Non-Performing re a as Bank the by acquired estate Real The following table sets forth the Bank's loans that were accounted for on a on for accounted were that loans Bank's the forth table sets following The loans ...... loans - - - - - Total past maturity or past due accruing accruing due past or maturity past Total Total non-accrual loan non-accrual Total One to four family ...... $ ...... family four to One ...... Multi-family 2,060 $ ...... Construction ...... estate real Commercial 2, 5,447 - 162 1,24 - - - - One to four family ...... family four to One ...... Multi-family ...... Construction ...... estate real Commercial ------Commercial loans ...... loans Commercial ...... loans other and Consumer ------Consumer and other loans ...... loans other and Consumer 38 Commercial loans ...... loans Commercial 925 2,149 maturity or past due 90 days or more: more: or days 90 due past or maturity orcontractually past due 90days or more on-mortgage loans: loans: on-mortgage on-mortgage loans: loans: on-mortgage contractually past maturity or 90 days or more more or days 90 or maturity past contractually ...... assets total of percentage a as due past contractually past maturity or 90 days or more more or days 90 or maturity past contractually $ ...... due past 8,632 more or days 90 or maturity past contractually ...... loans net of percentage a as due past
Mortgage Loans: Loans: Mortgage
circumstances indicate the collection of princi of collection indicate the circumstances ch is status non-accrual on placed heldasset for untilsale such Whensold.is it as foreclosedtime a held asset acquiredis sale for recordedis it esti its at Total on for accounted or basis non-accrual a contract at interest all of collection the management, of opinion Total on for accounted or basis non-accrual a Total on for accounted or basis non-accrual a status generally on non-accrual placed loans are N Mortgage Loans: Loans: Mortgage value,fair estimated less selling expenses.Valuations of such and anysubsequent decline inestimated N a which loans Accruing basis a on for non-accrual accounted Loans delinquentdatesindicated. the at Summary Delinquency
FORM 10-K
Non-Performing Assets interest income for the periods then ended. the impact on and resulting loans of settlement assets in acquired assets, including all foreclosed and guidelines) regulatory mato neeticm o h eid In lesser quality. to be of assets determineconsidered those Interest income that would have been recorded Impact on interest income for the period: assets non-performing Total as a of percentage Total non-accrual loans as Real estate and other assets acquired in N Mortgage loans: N Total non-performing assets deficiencies are not corrected. "Doubtful as possibility the by distinct are characterized and weaknesses classifications for problem assets: substandard, doubtful, and if assetsand, problem identify to authority have examiners bank classification. “Special Mention” and have identified weaknesses, that if the situation deteriorates, the loans would merit asubstandard capital. regulatory cover to to assets related losses classifiedsubstand possible 100% of the portion of the asset classified loss or charge off such amount. A portion of general loss allowances established thereof is classified as loss, the insure losses from assets for loan allowances general toestablish Bank possess credit deficiencies orpotentialweaknesses deserving ma to institution insured an expose currently not do assets which regulations The warranted. isnot the institution asset as an of An asset "loss" is c classified improbable. and questionable, that the weaknesses make collection or liquidation in full on on th infull liquidation or the weaknesses make collection that on-mortgage loans: loans: on-accrual nnnacun on ...... 9 57 3.27% 3.41% $ 90 2.47 1.08% on non-accruing loans ...... $ 1.64% 2.79% - total assets ...... 1.60% loans ...... - - settlement of loans 6,274 4,530 - 2,893 1,24 8,080 162 - 5,447 Commercial real estate 2, ...... Construction ...... $ 2,060 Multi-family ...... One to four family ...... $ omrillas ...... 2 2,149 38 925 Consumer and other loans ...... Commercial loans ...... Total non-accrual loans The following table shows the principal amount of non-performing assets (i.e. loans that arenot performing under Problem Assets. Federal regulations require that the Bank review Bank and the Problem that classify itsasse require Assets.Federal regulations For management purposes, the Bank also designates certain ...... ,8 2, 2,682 ......
a percentage net of ...... ,3 1,5 13,755 8,632 ...... $ 134 11,314 ...... $ d institution must either esta sets" have the weaknesses of substandard as 93 ,6 ,2 ,3 3,112 6,839 1,027 2,162 963
21 21 21 03 21 2012 2013 2014 2015 2016
769 153 424 909 12,219 9,009 4,264 11,593 7,669
addition, in connection with examinations of insured institutions insured of examinations with connection in addition, onsidered uncollectible and of such little value that continuance thatlittle continuance such value and of uncollectible onsidered ard or doubtful may be included in determining an institution's an institution's in determining may included doubtful be ard or 10 e basis of currently existing facts, conditions, and values hig and values facts, conditions, existing e basis of currently have also created a “special mention” category, described as described category, mention” also a“special have created
a sufficient degree of risk to warrant classification but do but to warrant classification risk degree of asufficient $ 617 846 1,7 19,861 $ 19,670 8,456 $ 16,147 $ $ loss. "Substandard assets"must have one ormore defined 3 - 3 319 63 - 13 that the insured institution somewill sustain if the institution loss insured the that classified as substandard or doubtful. If an asset or portion anasset If or portion or doubtful. assubstandard classified appropriate, requirethemto beclassified.There are three nagement's close attention. Federal regulations require the blish specific allowances for loan losses in the amount loans for additional attention. Such loans are called arecalled loans Such attention. additional for loans 9 ,6 3,165 392 2,281 $ 816 911 $ 272 $ (Dollars in Thousands) $ 3 $ 7 484 $ 572 337 $ 3 $ 3,664 3,663 460 1 13% .7 3.01% 3.17% 1.35% % December 31, 107 676 2,793 6,776 1,027 As of ,9 588 15,331 15,848 5,291 sets with the additional characteristic characteristic the additional sets with 382 4,530 3,822 ts on a regular basis to hly hly of
,
FORM 10-K
on umber Amount umber Amount N rs, the estimated fair value of the of value fair rs, the estimated umber Amount umber Amount N $ 3 584 $ 28,092 84 ------4 1,078 6 1,604 10 2,682 $ - - - - 3 $ 34 - 6,044 - 584 - 3 17 5 584 12 6,312 5,447 - 7,381 74 25,410 6 226 assified assets as of December 31, 2016. assets 31, assified of as December e total allowancefor total e loan considered losses level a to r loanr losses was $5.7 millionor 1.06% gross of loans circumstances warrant. circumstances (Dollars in Thousands) Thousands) in (Dollars sses and valuation of foreclosed assets held for sale. Such Such for sale. held assets foreclosed valuation of and sses
ous regulatoryousof their agencies,part examinati an integral as 11 umber Amount umber Amount N e amounts of the Bank's cl Bank's the of amounts e bly assured, considers among other matte other bly assured, considers among loan portfolio or other portfolioor loan $ 13,016 $ 13,016 $ 14,492 73 flects not onlyflects not management's determination to maintain anlosses allowance for loan as management charged off specific loans that had been previously identified and and identified previously been had that loans specific off charged management as for non-performing or problem assets, but also reflects the regional economy and the the and economy regional the reflects also but assets, problem or non-performing for umber Amount umber Amount N
Special Mention Substandard Doubtful Total
Management records a provision for loan losses to bring th bring to losses loan for provision a records Management The allowance for loan losses is established through a provision for loan losses based on management's evaluation evaluation management's on based losses loan for provision a through established is losses loan for allowance The Bank's total allowance2016, fo 31, the of December As The following table shows the aggregat the shows table following The Land and other assets ...... assets other and Land - - 6 1,604 One to four family ...... family four to One - ...... Total - 8 4 1,078 Multi-family ...... Multi-family ...... Construction ...... estate real Commercial - ...... Commercial - ...... Other and Consumer 4 5,922 - 2 4,503 - - 8 sale: - 12 1,459 1,225 5 - 5,447 - 6 - 226 - - - One to four family ...... family four to One $ 2 2,591 $ 32 3,453
Total foreclosed assets ...... assets foreclosed Total - - 10 2,682 outstanding (excluding mortgage loans held for sale), a decrease of $69,491 from December 31, 2015. The Bank experienced experienced Bank The 2015. 31, December from $69,491 of decrease a sale), for held loans mortgage (excluding outstanding recoveries of excess offs in loan charge classifiedimpaired.as Thisallowance re consistentregulatorywith expectations Bank'spolicy of evaluating risksthe inherent in portfolio. loan its adequatebased on the Bank’s internal analysis and methodology.During 2016, the Bank recorded a provisionfor loan loss charges through allowance the to adding continue to need the anticipates Management below. table the in shown as expense, toprovision forloan growthas losses in the of the risk inherent in its loan portfolio and the general economy. Such evaluation, which includes a review of all loans on on loans all of a review includes which evaluation, Such economy. general the and portfolio loan its in inherent risk of the be reasona full collectability not may which underlying conditions, economic collateral, historical loan experience, loss and otherwarrant factors that recognition in providing for an adequate loan loss allowance.In addition, vari process,periodically review the Bank's allowance for lo loan require theagenciesBank recognizeto additions may onallowance judgmentsbased aboutinformation their to available the of at the examination.to time their them Losses Loan for Provision and Losses Loan for Allowance Foreclosed assets held-for- assets Foreclosed Loans: Total loans ...... loans Total 8 13,016 63 11,810
FORM 10-K
Allowance for loan losses as a percentage of Allowance for Loan Losses indicated. Allowance for loan losses as a percentage of 60 N 1,375 Ending balance Provision charged to expense ...... Net loan charge-offs N Mortgage Loans: Recoveries N Mortgage Loans: balance Beginning
Gross loan charge offs
et charge-offs as a percentage of average on-mortgage loans: on-mortgage loans: vrg on,nt ...... 2 1. 1.12% average loans, net ...... oa o-efriglas ...... 7 4% 2% 9 57% 49% 125% 42% 67% total non-performing loans ...... osmradohrlas ...... (9) (190) Consumer and other loans ...... omrillas ...... 4 6 1 198 110 65 40 4 89 8 Consumer and other loans ...... Commercial loans ...... Commercial loans on,nt ...... 8 0.27% 0.28% loans, net ...... ut-aiy ...... - - - - 25 23 - 9 - 10 - 20 91 - - Commercial real estate 34 Construction ...... Multi-family ...... One to four family ...... - - - Commercial realestate Construction ...... Multi-family ...... One to four family ...... oa eoeis ...... 5 74 254 Total recoveries ...... chargeTotal offs The following tables set forth certain information concerni set certaininformation tables forth following The
...... (7) - (2 - (171) ...... 169 (1 (1,699) ......
...... (9 - (69) ...... 2 9 94 - 99 - 32 ......
21 21 21 21 02 2012 2013 2014 2015 2016 572 $ ,1 $ ,8 $ ,0 $ 8,740 7,802 $ (7,823) 6,589 $ (2,488) 5,812 $ (2,488) $ 5,742 (1,377) $ (1,445)
(361) (119) (2,168) (1,432) (5,620) (5,620) (1,432) (2,168) (119) (361) 9 4 1 6 235 166 114 44 97
(1,338) (1,332) (547) (1,295) (2,585) (2,585) (1,295) (547) (1,332) (1,338) 10,613 8,740 $ 7,802 $ 6,589 $ $ 5,812 $ 17 0 13 7 147 73 113 30 157
4) (9 17 19 (265) (139) (127) (99) (47)
122 123 41 89 (1,335) (879) (411) (1,233) (1,222)
12
19 10 14 (73) (164) (150) (119)
ng the Bank's allowance for loan losses for the periods periods the for losses loan for allowance Bank's the ng 41 275 277 (8,205) (2,727) (2,715) ,451) 6 14% .7 1.88% 1.67% 1.41% 16% (Dollars in Thousands) ,7 ,5 5,950 1,550 1,275 0 4 6 37 56 49
27 29 382 239 227
December 31, 05% .3 1.68% 0.53% 0.53% 5 5 28 50 5
Year ended 9 27 (985) (277) (9)
08 128 (5,547) (1,268) ,018)
FORM 10-K
%
deposit 0 0 100% stment security portfolios. security stment and sale of federal funds. federal of sale and 28% 2,098 24% ities, certain certificates of certificates ities, certain of $94.5 million and an estimated fair fair an estimated and $94.5 million of As of of As its rate interest risk profileor restructure theportfolio December 31, 31, December s, is designedprimarilyis s, to provide and maintain liquidity, rity and available-for-sale inve available-for-sale rity and ypes of liquidypes assets, includingUnited States Treasury nces, repurchase agreements, agreements, repurchase nces, 2,240 2,240 34% 2,150 $ 6,589 $ $ $ 6,589 100% 7,802 8,74 100% rities, $92.4 million, or 99.9%, of theCompany’s investment
(Dollars in thousands) thousands) in (Dollars e interest rate and credit risk, rate and credite interest and complement to Bank's the
13 ecurities, trust preferred securecurities, trust preferred nt securities with an amortized cost amortized nt securities with an
certain bankers' bankers' accepta certain Amount Amount % Amount % Amount % Amount % Amount %
2016 2015 2014 2013 2012
The investment policy of the Company, which is established by the Company’s Board of Directors and reviewed by by reviewed and Directors of Board Company’s the by established is which Company, the of policy investment The t various in invest to authority the has Company The securitytoa sell will time changetheto time, From Company The following table shows the amount of the allowance allocated to the mortgage and non-mortgage loan categories categories loan non-mortgage and mortgage the to allocated allowance the of amount the shows table following The Total ...... $ 5,742 $ $ 5,742 5,812 100% ...... 100% Total on-Mortgage Loans .... 1,616 .... Loans on-Mortgage 1,616 28% 2,042 35%
the Asset/Liability CommitteetheAsset/Liability Director of of Board Company’s the mitigat help to investments, on return favorable a generate to lending The activities. policy currentlyheld-to-matu for provides Thedoes Company not currently engage trading in investment doesandsecurities not anticipate doing of inAs so future.the has investme Company 2016, the 31, December accounting of the description for Statements” Financial Consolidated to “Notes 1 of the Note See million. $92.4 of value policy for investments. Based on thevaluecarrying of these secu $76.5 Company sold 2016, millionIn the andin its cash flows. securities and recognized$192,537 gains.of
$ 4,126 ...... $ Loans Mortgage 3,770 72% $ 4,349 65% $ N 5,652 66% $ 6,642 72% 76 Activities Investment securitiesportfolio are available-for-sale. Allocation ofAllocationAllowance for Loan Losses andrespectivethe percent loan that of category to loans. total agencies,federal corporate s obligations, of various securities institutions, savings and banks insured of
FORM 10-K
HELD-TO-MATURITYSECURITIES:
HELD-TO-MATURITYSECURITIES: Securities: Debt Equity Securities AVAILABLE-FOR-SALESECURITIES: December31, 2015 As of Securities: Debt AVAILABLE-FOR-SALESECURITIES: December31, 2016 As of securities. held-to-maturity and securities Investme of Composition Government sponsored mortgage-backed secu Government sponsored mortgage-backed secu Government sponsored mortgage-backed securities and and securities Government mortgage-backed sponsored Government sponsored mortgage-backed securities and and securities Government mortgage-backed sponsored 31 Municipals ...... 3, Corporates ...... 8,533,885 U. S. government agencies ...... 39 Municipals ...... Corporates B onpos ...... 48 SBA loan pools ...... B onpos ...... 54 SBA loan pools ...... The following tables set forth the amortized cost andappr ...... $ 7,003, $ ...... $ 102,212 ...... $ nt Securities Portfolio nt Securities
iis .... 758 2 - 28,153 - 625 27,528 rities ...... iis .... 309 3 - 43,935 - 836 43,099 rities ......
$ 94,504,813 $ 139,780 $ (2,217,205 (2,217,205 139,780 92,427,388 ) $ $ 94,504,813 $ $ $ 98,421,231 $ 327,016 $ (1,411,825 (1,411,825 327,016 97,336,422 ) $ $ 98,421,231 $ $ Amortized Amortized
14
Cost Cost Cost 1573 1,3 (1,127,037 ) 19,432 ,115,793 1265 3235 (85,808 ) 302,335 ,132,635 (1,085,654 65,673 ,357,506 6361 1,6 (1,024,121 ) 13,764 ,643,681 6,1 1209) 3 (152,019 ) - 965,719 oximate fair market values of the available-for-sale 8 $ 400 $ (4,514 ) 54,050 $ 986 $
- (3,0 8,396,784 (137,101 ) - 1,8 (12,776 ) 10,081 $ $
Unrealized Unrealized
Gains Gross Gains Gross
Unrealized Unrealized
(Losses) (Losses) Gross Gross ) 38,337,525 38,337,525 ) Approximate Approximate
31,349,162 31,349,162
70352 7,053,522 $
9,1 99,517 $
Fair Value Fair Value Fair Value
70818 47,008,188 36334 53,633,324 8370 ,813,700
FORM 10-K
99,297 Total 1,187,770 8,337,525 Fair Fair 0,516,299
Value Value
Fair ValueFair
$ 105,023
Approximate Approximate
15,589,890 32,903,980
Approximate
Date Date ot Due on on Due ot a Single a
Maturity Gross Gross Securities
N (Losses) (Losses)
Unrealized Unrealized
47,036,341 47,036,341 47,036,341 47,036,341
Yield Yield
Average
Weighted Weighted
2.74% 47,036,341
Years Years
After Ten Ten After
Gross Gross Gains
Unrealized Unrealized
,737,060 ,737,060 3.66%
$ $ 16,121 ) (13,310
- ) (271,282 10,256,773 Cost
Ten Years Years Amortized $ 94,504,813 $ 2.95% 92,427,388 Through Through
After Five Five After
,474,316 ,474,316 185,747 ,075,181 ) (70,173 235,977 ) (794,859 6
Cost
$ 2,997,422 $ 4,056,100 $ $ $ 4,056,100 2,997,422 $ - 7,053,522 28,847,880 8,190,348 3 -
15
Amortized $ $ 87,240,757 $ $ ) 86,530,604 439,471 (1,149,624 Five Five Years Years
Through Through
AfterOne
$ 1,299,297 $ 11,187,770 $ 32,903,980 $47,036,341 $ 92,427,388 $ $47,036,341 32,903,980 $ 11,187,770 $ $ 1,299,297 rities ...... rities 60,993 1,626 - 62,619 date ...... date 48,143,321 ...... - - - and Average Weighted Yields Weighted Average and
s ...... s 1,297,373 1.43% 1,2 ...... $ ...... 102,212 Thecertain following information set forth weighted regarding tables average the yields ofthe and Bank's maturities securities and SBA loan pools loan SBA and securities SBA loan pools ...... pools loan SBA 61 pools not pools on due single a maturity Corporates Corporates ...... $ mortgage-backed sponsored Government - Municipals ...... Municipals 1,299,297 U. S. government agencies ...... agencies government S. U. 10,528,055 Municipals ...... Municipals 15 sponsored mortgage-backed Government securities and Government sponsored mortgage-backed secu mortgage-backed sponsored Government
Due in one to five year five to one in Due Government sponsored loan mortgage-backed Government securities SBA and Due after ten years ...... years ten after Due 33
Debt Securities: Securities: Debt Investment Portfolio Maturities Maturities Investment Portfolio DebtSecurities: 2016. 31, December of as portfolio securities investment ...... years ten to five in Due 11,327,059 2.50% 1
Equity Securities Securities Equity SECURITIES: AVAILABLE-FOR-SALE
As of December of As 2014 31, December HELD-TO-MATURITY SECURITIES: SECURITIES: HELD-TO-MATURITY
As of December of As 2016 31, December
FORM 10-K
oe akt .. .5 1550 1 0.42 0.20% 31% 6% 0.45% 155,530 Money Market 28,095 ..... 0.20% Savings ...... thousands). Deposit AccountTypes employees and its convenient office and banking center locations. standing relationships with customers to attract and retain these deposits. typically obtained from the areas in which its offices are lo manages its deposit position and mixmanage to interest rate risk and improve its net interestmargin. The Bank's deposits are closely Company The service providers. financial from non-bank competition and interest rates, local competition, prevailing accounts. Bank offers various checking accounts, money markets, savings, fixed-term certificates of de concentrated on a diverse deposit mix, such that transaction acco prepay and amortization, loans of prepayments and oa eois... 0,6 10 5736 10 4988 100% $479,818 100% $517,386 100% $ 505,363 Total Deposits ...... Certificates of N N Sources of Funds
ern ead.. .0 091 5 0.00% 15% 80,911 0.00% bearing demand ... 29 ots .. 13% 4 0 1. 0% 1.47 42 0% 1.44 1% 1.35 1.34% 1,874 1% 72-95 months ..... 1.37% 1.02 3,655 60-71 months ..... 3% 1.47% 0.82 5,106 48-59 months ..... 4% 1.40% 0.54% 36-47 months 12,882 ..... 1.24% 13% 24-35 months 22,328 ..... 0.89% 12-23 months 65,802 ..... 0.75% 1-11 months ...... rate, fixed-term) (fixed- Deposit: on-interest 0.31% 26% 0.30% $ 129,138 OW ...... oa ...... 1,8 2% 22% 111,689 Total ...... oa ...... 3364 8 78% 393,674 Total ...... The followingtablesetsforththe distri its through service quality high providing by core deposits stable of level ahigh maintain to seeks Bank The The flow of by deposits is influenced significantly Deposits. General
. The Company's primarysources of
The Bank offers a variety of deposit accounts having a range of interest rates and terms. The Bank has and terms. Bank has The rates interest arange of accounts having of deposit a offers variety The Bank A fDcme 1 A fDcme 1 A fDcme 1 As of December 31, As Decemberof 31, As of December 31, Percent Amount Average Deposits Percent Rate Amount Deposits Interest Rate of Total Amount Deposits Rate Average Percent Interest Average
2016 2016 bution of the Bank's depositaccounts ments maturities and investment securities. of
funds are retail andcommercial cated. The Bank relies primarily reliesBank primarily The cated. 16 4 4 % 14% 18 0% 198 1.43% 0% 14 34% general economic conditions, changes in money in and money market changes conditions, economic general
1063 3% 04% 7,4 36% 0.43% 171,948 33% % 170,603 ,7 0 .0 ,1 1% 1% 3,315 1% 1.50% 4,528 0% 1.41% 6,709 5% 1% 1.28% 6% 2,274 1% 21,925 1.10% % 4,671 27,938 3% 0.81% % 6,895 8% % 12,654 % 43,523 % unts makeunts a greater percent of 1558 2% 2,8 25% 120,982 22% 115,548 585 % 02% 2,1 5% 23,619 0.20% 5% 25,865 787 3 .0 178 11% 51,708 0.00% 13% 67,897 557 % 05% 5,6 11% 56,369 0.55% 9% 45,517 0,3 8 5,3 75% 358,836 78% 401,838 23% 0.34% $111,561 27% $137,473 o oa Itrs of Total Interest of Total 2015 2015
deposits, borrowings, amortization at thedatesindicated (dollars in posit and individual retirement on customer service and long- funding than in the past. The 2014 2014
FORM 10-K
------rent rent ,350 4,782 4,782 16,002 24,530 18,383 63,697 $100,000 or
- - 2,100 - - - - - $ - 8,250 thousands) in (Dollars 2016 31, of As December posit of posit accounts ...... $ commonpractice, allowing the Bank to $ $ 56,500 66,700 $ As of December 31, December of As ...... $ (Dollars in Thousands) Thousands) in (Dollars
- - - - 2,100 50,000 - - 50,000 95,700 $ 95,700 $ 52,100 60 's lending purposes.'s general business activities andother the Bank's certificate of de certificate Bank's the ity is not present,not ity is rate advantageous or at a currelative to mpliance with eligibilitympliance portion standards, funds of the a
50,000
2016 2015 2014
17 their structure, allow thebetter allow structure, Bank manage liquidity and their to interest rate its members. Use of FHLB advances is a is a advances of FHLB Use members...... 1.72% % 2.25 2.00% ity as of December 2016. 31, ity as December of onth end ...... $ ...... end onth 95,700 certain data for FHLB advances as of the dates indicated. indicated. dates the of as advances FHLB for data certain rate ...... rate 1.79% % 2.24 2.18% ...... $ ...... 43,600
The Company’s borrowings consist primarily of FHLB advances, Federal Reserve advances, issuances of junior junior of issuances advances, Reserve Federal advances, of FHLB primarily consist borrowings The Company’s thefor source Bank fundsof primary theDeposits are or ($100,000 deposits jumbo on dependence the reducing on emphasis place to continued management 2016, In ...... $ ...... balance outstanding Average interest average Weighted $ 71,200 $ ,592 52 54,588
more by time remaining until matur until remaining time by more ...... less or months Three Over twelve months ...... months twelve Over Total ...... period: the For rate at of period end average Weighted Remaining maturity: maturity: Remaining Over three through six months ...... months six through three Over Borrowings repurchase. to debenturessubordinatedagreements sold securities under and Maturities ofCertificates of Deposit of$100,000 or More of amount approximate the indicates following table The more)...... months twelve through six Over of System, FHLB the loans, such for demand the meet cannot funds lendable of supply the when periods during However, which available, makes Banksubject the is a member, to co necessary through loans (advances) to its liquid significant when a time at customers its to funding provide to due advances, FHLB rates. deposit market presents table following The risk. Maximum outstanding as of any m any of as outstanding Maximum
Less year one than ...... years four to Three ...... years five to Four ...... years five Over One to two years ...... years two to One ...... years three to Two 2,100
Total ...... $
FORM 10-K
Federal Reserve Bank Borrowings Weighted average interest rate of subordinated debent ...... debentures Subordinated borrowings outstanding.The Bankhad no borrowingsthis on lineasof December 31, 2016and 2015. $25.2 million asof December 31, 2016. The Federal Reserve Trusts the payable by to the dividends pay will be used to the rate equal at a floating thereafter quarterly. The Trust II Debentures bear interest at a fixed rate of 6.47% for 5 years, payable quarterly, after issuance and Company and Wilmington Trust Company, as trustee. The Trust I Debentures bear interest at a fixed rate of 6.92%, payable Trust I Debentures, the “Debentures”) pursuant to the terms of Indentures dated December 15, 2005 by and between the in the principal amount of $5,155,000 (“Trust I Debentures”) and $10,310,000 (“Trust II Debentures”, and together with the debentures from the Company. The Company issued 30-year junior subordinated de the proceeds of the Trusts’saleoftheir commonsecuritiestothe Company, were million of the issuing of $15 Trust Preferre The Debentures are subordinated to the prior payment of any other indebtedness of the Company. declares bankruptcy, fails to make the required payments within 30 days or breaches certain covenants within the Debentures. years resulting without respectively, consecutive to for five up Company the the addition, payments, events. In Trusts tax may adverse and certain dividend and interest defer occurrence of the Trust capitalPreferred Securities,of treatmentregulatory eith ranging up to 103.2% of the principal amount thereof, and upon the occurrence of certain events, such asachange in the after five years fromat its option issu as applicable, and respectively Trusts, the the or Company by callable Preferred the Securities are each Trust and Debentures Junior Subordinated Debentures:
Statutory TrustII (“Trust II”)aDelawa each subsidia formed Company two wholly-owned The hereinafter). at the dates indicated. have funds available. distributions on, andthe liquidation or redemption price of,th the of obligations all payment any and has guaranteed Company Pr Trust the under Trust each of ofthe obligations guarantee irrevocable alimited, issued
During 2008, the Bank established a borrowing line with line a borrowing established the Bank During 2008, Pursuant to two guarantee agreements by and between The Debentures mature on February 23, 2036. Subject to prior approval by the Federal Reserve Board, the On December 15, 2005, the Comp The following sets forth table information following certain The as to th
three month LIBOR plus 1.45%. The interest payments by the Company to the Trusts ance, and sooner in the case of a special d Securities. The proceeds of thed Securities. The proceeds sale Preferred of Secu Trust any completed an offering of $15 million re statutory trust (each a “Trust”, and co rs .. 37% .8 3.45% 3.48% 3.75% ures .... to the to of the holders Tr 18
$ 545 1,6 $ 15,465 15,465 $ 15,465 $ $
21 21 21 2014 2015 2016
e Trust Preferred Securities to
the Companyand Wilmington Bank requires theBank to maintain collateralinrelationto in a default. An event of default may occur if the Company if the may occur ofdefault event An a in default. ries, Guaranty Statutory TrustI (“Trust I”)and Guaranty Federal Reserve Bank. The Bank had the ability to theFederal to Bank ability Reserve borrow had The Bank. e Company's subordinated debentures issued to the Trusts Trusts related to the Trust Preferred Securities including the TrustTrusts to PreferredSecuritiesrelated including er Trust being deemed an investment company or the company or investment an deemed er Trustbeing ust Preferred Securities.
(Dollars in Thousands) redemption at a special redemption price As of DecemberAs of 31, ferrable interest debentures to the debentures Trusts interest ferrable llectively, the “Trusts”), for the purpose used by each Trust to purchaseeachTrust certain used by of “Trust Preferred Securities” (defined eferred Securities whereby the the whereby Securities eferred the extent eachTrust doesnot Trust Company, the Company
rities, together with rities,
FORM 10-K
11% 11% 9.78% 9.78% 1.33 1.33 0.92% 0.92% 9.67% 9.67% 0.15 0.15 ed with the
pal subsidiary and a state- e not consolidat 18% 18% 1.30 1.30 $ 0.88% 0.88% 8.81% 8.81% 0.23 0.23 $ 10.17% 10.17% ended ended ended Year ents in the amount $15.0 million in May May in million $15.0 amount the in ents
27% 27% ust II. As discussedAs above, detail I and II. in Trust ust more 1.27 1.27 $ 0.83% 0.83% 8.00% 8.00% 0.34 0.34 $ 10.17% 10.17% e Bank, princi the Company’s ting principles, the Trusts ar ess segment is contained the in section captioned “Segment rity in January2018. Beginning February 2010, in the poseof issuing trust preferred securities tojunior acquire e since February 1, 2003, had agreements with third party party third with agreements had 2003, 1, February e since
19 inateuntilbasis the quarterly agreements on maturity. a
ended Year 31, December 31, December Year 2016 31, December 2015 2014
$ subsidiary, Guarantysubsidiary, FinancialofServices Springfield, Inc., a Missouri
e Company paid off one of these agreem these of one off paid Company e of $5.0 million inNovember 2011. The Company The hasguaranteed and any all payment obligationsof Trusts related the
sets ...... sets ...... dividend,certain following tableequity Theforthsets Companyandthe of forindicated. periods ratios asset the The banking Company’s operation conducted throughprincipalsubsidiary, its the Bank, is the Company’sonly The Bank has one service corporation corporation one service has The Bank th date, maturity stated the to Prior prior million, $10.0 remaining the off pay to order in transaction structured a executed Company the 2015, June In wholly-owned has subsidiaries: th (i) three The Company borrowed InJanuary$30.0 2008, the Company million understructured Interest was three repurchase agreements.
...... Ratio Payout Dividend Common SecuritiesSold Under Agreements to Repurchase Information” in Note 1 to the Notes of the Consolidated Financial Statements in this report.of the1 Consolidated this Notesin Statements to Note the Financial in Information” Assets and on Equity Return providers for the sale of securities and casualty insurance products.and casualty of securities sale providersthe for reportable segment. information Other about thebusin Company’s Company. corporation. This service corporation, whichhasbeen inactiv counterparty, Barclay’s Capital, Inc., hadoptioncounterparty,the Inc., Capital, Barclay’s to term amount the in agreement another and 2013 tostatedits date, maturity incurring prepayment$463,992.penalty a of Information and Segment Activity Subsidiary charteredbank with trust Missouri; powers in (ii) Trust I; and(iii) Tr in 2005 December for theformed exclusive were purTrust II payments interest The Trusts. the of assets sole the are debentures Those Company. the by issued debentures subordinated the to dividends the pay to Trusts the by used are and Trusts the of revenues sole the are debentures the on Company the by holders of the trustpreferred securities. accepted accoun generally Under securities. preferred to the trust based on fixeda weighted average rate of 2.65% until matu
...... Assets Average on Return Equity Average on Return As to Equity Stockholders' ...... Diluted EPS Dividends on Common Shares ...... $ ...... Shares Common on Dividends
FORM 10-K
General Supervisionand Regulation products,and byemphasizing pe compete effectivelyits primary Market in Area by offering co directors and shareholders, selective advertising in local media and direct mail solicitations. The Bank believes it is able to campaigns through their greater capital resources. Our marketing efforts depend heavily upon referrals from officers, offered by competito institutions. various financial Our larger in location. Theprimaryfactors attractiv firmsoffered have online Recently, stores. retail and Bank's other deposit products and services come frommoney market mutual funds, brokerage firms, insurance companies, companies, and savings institutions inholding thelocated remainder of Market our Area. Significant for thecompetition institutions. savings and unions, credit banks, offi main and branch the office Bank's area, where metropolitan of loans. The Bank's primary competitors Competition 2016, the Company had no employees. None of the Bank's empl variou of policies and regulations by and statutes Consequently, the Company’s growth and earnings performance ma Employees
● ● ● ● ● ● ● ● securities laws administered by the Securities and Exch and Securities laws by the securities administered accounting rules developed by the Financial taxation laws administered by the Internal Revenue Service (IRS) and state taxing authorities; authorities; state (IRS) and taxing Revenue Service by the Internal laws administered taxation anti-money laundering laws enforced by the U.S. Department of Treasury (Treasury); Consumer Financial Protection Bureau (“CFPB”). Federal Deposit Insurance Corporation; and Missouri Division of Finance; Board of Governors of the Federal Reserve System (“FRB”);
Additionally, the Company’s business may be impacted
Direct competitionDirect for deposi The Bank experiences substantial competition both in attrac The Company andthe Bank are subject to an extensive regulatory framework under federal and statelaw. As of Bank Decemberthe 31, 2016,
rsonal customer service. competing for loans are interest rates and loan areinterest ratesand forloans competing t accounts comes from other commercial banks, credit unions, regional bank and thrift are the financial institutions near each of had 146 full-timeandpart-timeemployees 26 employees. As of December 31, s bank regulatory authorities, including the: the: including authorities, regulatory s bank Accounting Standards Board (FASB); and 20 mpetitive interest rates and loan fees, and a variety of fees, and deposit loan interest rates and mpetitive rs have a greater ability to finance a greaterrs have to ability wide-ranging advertising
ces are located, primary competition consists of commercial ces are located, of commercial consists primary competition ange Commission (SEC) and state securities authorities. ange Commission oyees are represented by a co e financial service products to consumers, irrespective of irrespective toconsumers, e service products financial by assorted laws and rules, including: including: rules, laws and by assorted ting and retaining deposit accounts and in the origination y be affected by the requirements of federal and state origination feesand the range of services theBank'sthe Springfield offices. In llective bargaining group.
FORM 10-K r d and the Bank. and the Bank. Cumulatively, these changes result in theseresult changesCumulatively, d provide excessive compensation; compensation; excessive provide d rding supervisory their and enforcement This activities. and regulations applicableto the Company . The Basel III Rule establishes new higher capital ratio ratio higher capital new establishes III Rule Basel . The ng, supervising, and enforcing compliance with consume with compliance enforcing and supervising, ng, ficantly impacts the Company’s operationsresults. and the Company’s ficantly impacts a result, the Company cannot result,a the predict the Act’s Dodd-Frank , bank holding companies with than more $1billion in assets
new operating restrictions new on banking organizations with followingdescriptiondoes not to be purport complete and is
21 institutions (see “New Capital Rules” below); Capital Rules” institutions“New below); (see e inappropriate risks or that coul that or risks inappropriate e s the risk-weighting of certain assets. the risk-weighting of certain s intended for the protection of the Bank’s customers and depositors and not for the the for not and depositors and customers Bank’s the of protection the for intended ameworkfinancial for institutions and holding their companies. other Among
rovided for new disclosures related to executive compensation and corporate governance and prohibite and governance corporate and compensation executive to related disclosures new for rovided In July 2013, the U.S. federal banking agencies approved a final rule to comprehensively revise the regulatory capital capital regulatory the revise comprehensively to rule final a approved agencies banking federal U.S. the 2013, July In The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act” or “Dodd-Frank”) “Dodd-Frank”) or Act” (“Dodd-Frank 2010 of Act Protection and Consumer Reform Street Wall Dodd-Frank The
briefSet forth below is a summary of laws material certain Regulatory agencies often havesignificant discretion rega
various by rulemakings through be implemented to scheduled provisions numerous contains Act The Dodd-Frank p encourag that arrangements compensation financialprotection laws; assessments; insurance implementi which for the responsible is CFPB, created deposit bank’s a calculating for base assessment the changed and limit coverage insurance deposit the increased deposits; demand on interest of payment on prohibition the repealed onbanking imposedcapital new requirements
and subsidiaries; non-bank its and Company the examine to Board Reserve Federal the of authority the enhanced banking. mortgage consumer on restrictions and requirements new imposed ● ● ● ● ● ● ●
framework for the U.S. banking sector, implementing many aspects of the framework agreed to by the International Basel Basel International the by to agreed framework of the aspects many implementing sector, banking U.S. the for framework The III Rule”). “Basel Act (the the Dodd-Frank by required changes incorporating and Supervision Bank on Committee capitalrequirements apply banksall to and savings associations insurance in engaged companies holding loan and savings certain than (other companies holding loan and savings and companies) holding diversified grandfathered and underwriting tightens requirements, definition the “capital,” of imposes and increase buffers, insufficient capital
substantially more demanding capital standards for U.S. banking organizations. organizations. banking U.S. for standards capital demanding more substantially significantly changedregulatory the fr provisions,Dodd-Frank the Act:
qualified in its entirety by reference to the full text of the statutes and regulations described below. below. described regulations and statutes the of text full the to reference by entirety its in qualified Act Dodd-Frank comprehensive supervisory and regulatory framework signi framework regulatory and supervisory comprehensive Additionally,new legislationis introduced to time time thatfrom andimpact could the the Company Bank substantial in financial or operations Bank’s the or Company’s the on regulations or statutes new of impact or extent, nature, the and ways conditionscannot predictedbewith any certainty. These and regulations laws primarily are The Company. the of creditors or stockholders the of benefit
Minimum Capital Requirements Capital Minimum federal regulatory agencies over a period of several years. Many, but not all, of the regulations have been issued and full full and been issued have regulations of the all, not but Many, years. several of period a over agencies regulatory federal implementationofDodd-Frankthe notstill is Act complete. continue This significantlywill law to influence the regulatory As operate. Company the and Bank the which in environment ultimate impact on the Companyor the Certain Bank thisrules at time. proposed or adopted underDodd-Frank the Act are section. this throughout discussed
FORM 10-K
the in to treatment mortgage loans Basel thefinal residential change risk-weighting III of Rule. there was no initially contemplated, real Although exclusions. of to certain property, subject construction development, or arecredit facilities which loans, 2019. January and 2016 January between in The new rules became effective fo organizations, such as the Company and the Bank, which operate under the “standardized approach” (“Standardized Banks”). exposures,morein foreign or and other
than 90 days past due and assigns a hi risk-based capital ratio. The final rule assigns a higher risk-w in a risk weight a results higher All else higher being equal, capital. Generally,CET1 greater institution’s of an percentage deferred tax assets and mortgage servicing assets must be deducted from CET1 capital if such assets exceed acertain mortgage ta assets, deferred associated than net servicing of re also rule The forward. going capital AOCI CET1 in include the Bank Company made and and this of 2015 quarter the first excluding accumulated other comprehensive income (“AOCI”) from The Basel as thefinal a entities such the IIIwith Rule CompanytimeBank and provides one to right continue “opt-out” si and securities trust preferred capital asTier1 grandfathers the final permanently Bank, rule asthe such December 31, in assets asof 2009, billion $15 lessthan with smaller entities for capital. However, Tier of 1 preferred trust securities have and preferred stock phased-out been cumulative perpetual for capital. total incr above ratios noted theminimum buffer, conservation capital of to risk-wei of 0.625%, the level 2.5% reach final additional assets on Ja at 0.625% beginning risk-weighted of phased-in to the assets, minimumweighted inaddition Tier CET1, a 1, purchases) and pay discretionary bonuses to executive officers. The capital conservation buffer is equal to 2.5% of risk- abilit the on restrictions avoid order to in of CET1 comprised
computing risk-based regulatory capital, capital, whic regulatory risk-based computing
The Basel III Rule, among other features:
Moreover, the Basel III Rule changes the risk-weightings for Furthermore, the Basel III Rule includes more restrictive definitions for the components ofcapital. Forexample, In addition, the Basel III Rule requ The Basel III Rule distinguishes between banking organizations subject to the “advanced approaches” method of
● ● Introduces a new capital measure, Common Equity Tier 1 (“CET1” or “Tier 1 Common”), which is define Requires banking institutions maintain: to institutions banking Requires certain regulatory adjustments; and regulatory certain as common stock instruments, related surplus (net of Treasury stock), and retained earnings, subject to a new minimum ratio of CET1 to risk-weighted a o aminimum amount of Tier 1capital (the sum of o o a total capital (the sum of Tier 2capital) (the sumTier and capital of 1 atotal o a minimum ratio of leverage Tier 1 capital of 4%. o buffer); a capital conservation buffer); and weighted assets of at least incr weighted is an 6%, which that, priorto to conversion that, permanent financing, finance orhave financed the acquisition, r the Company and the Bank on gher risk-weighting of 150% (up from 100%) banking organizations that successfully opt- h are those with $250 billion or more in more or billion $250 with those are h ires that bankingthat ires organizations ma x liabilities, be deducted from CET1 capital. Additionally, certai Additionally, from capital. deducted CET1 be liabilities, x milar instruments issued by such entities prior to May 19, . May 19, 2010 to prior entities such by issued milar instruments risk-weighted asset amount which, in turn, gives rise to a lower 22 eighting of 150% (up from 100%) for exposures that are more more are that exposures for 100%) from (up 150% of eighting nd total capital ratios. Thecapita ratios. capital nd total y to make capital distributions (including dividends and stock stock and dividends (including distributions make capital y to ghted assets on January, 1 2019. 2019. January, 1 assets on ghted quires that goodwill and certain other intangibleother assets, certain and other that goodwill quires deductions froman institution’s base.deductions capital reduce CET1
nuary 1, 2016, and increasing each subsequent year by an yearbyan each subsequent increasing and 1, nuary 2016, election. Accordingly, the Ba ease to 7% for CET1,and 10.5% for 8.5%forTier1capital, easeto 7% January1, 2015, w CET1 capital. This opt-out was required to be made in certain assets that are used to calculate capital ratios. ease from 4% (plus a cap ssets of at least 4.5% (plus a capital conservation ratio of at least 8% of risk-weighted assets (plus ratioofat assets(plus least8% of risk-weighted CET1 andAdditionalTier 1 capital) torisk- in (“Advanced Banks”) and other banking for high-volatility commercialreal estate for high-volatility intain a“capitalconservation buffer” total consolidated assets or billion $10 consolidated total ith certain requirementsbeto phased- nk and the Company need not Accordingly, factoring in the in factoring Accordingly, l conservation buffer will be buffer will be l conservation ital conservation buffer); buffer); ital conservation n d
FORM 10-K
f ent ent ased capitalo ratio b ased capital ratio10% of b rcapitalized”, “significantly “significantly rcapitalized”, licable law, regulation,rule, risk-based capital measure and and measure capital risk-based l tier depends upon its capital levels in levels capital its upon depends tier l The FDIC is required to take prompt ile reports with the MDF and the FDIC MDF andFDIC ile reports the with the reserve requirements requirements reserve subject to certain e Company and the Bank couldbe required order, corrective order, prompt or capital directive, action ial institutions ial experiencing significant growthcould be and to raise capital requirements for certain categories. categories. certain for requirements capital raise to and capital hadhasrules, RuleIII Basel the minimal impact of deposit insurance for banks, savings institutions, and and institutions, savings for banks, deposit insurance of have a strong capital base and currently maintain adequate les were amended effective Januaryeffective 1, amended were les 2015 to incorporate tions,hasviolatedor app any rs, include a Tier 1includers, totaland Tier a irements withoutonirements significant reliance assets. intangible
average consolidated total assets minus its average tangible ratio of 5% or greater, a CET1 to risk- to greater, a CET1 or of 5% ratio ital levels and level rates are of supervisoryAssessment risk. to January1,2009. TheDodd-Frank Act also increased the “adequately capitalized”, “unde capitalized”, “adequately enforcementactivities and examination policies. Regulation by 23 the Bank, does not meet its thecapitaldoes not minimum Bank, The meet requirements. The deposit accounts held by the Bank are insured by the DIF. DIF. by the are insured Bank by the held accounts deposit The pital ratio of 8% or greater, a total risk- total ora greater, 8% pitalof ratio depositors andnot the Company’s shareholders. and Prompt Corrective Action. Action. and Prompt Corrective or nontraditionalor Accordingly, activities. th acquisitionsbanksother or of savings institutions.regulatory These authorities have uring, and capital adequacy.is also The Bank
. The Bank, Missouri-chartered a The. as non-member depository trust regulatedprimarily company, is by the 6.5% or greater, a Tier 1 to risk-based ca risk-based to 1 Tier a greater, or 6.5% or greateror notis andwritten subject any agreement, to directive; “Well-capitalized”hasTier 1 leverage if it a ●
Regulatory Capital Requirements Capital Regulatory Requirements A bank's insurance is determined quarterlymultiplying by rate by assessment its assessment base. its assessment bank’s a deposit terminate The insurance FDIC may if it finds institution the that has engagedunsafeunsoundand in General Although the Basel III Rule is more stringent thanprevious stringent more is Rule III Althoughthe Basel Nonetheless,banking federal guidelines provide financ that Assessments. and Accounts Deposit of Insurance Directors of Board Bank's the to reports and Bank the examines regularly FDIC, the with conjunction in MDF, The
expected to maintain capital levels abovetheminimum requ suchcertainAdditionally, circumstances, higher capitalunder levels situations as requiredrate could be involving interest risk, concentrations risk from of credit, order or condition imposed by the FDIC. FDIC. the by imposed condition or order correctiveaction anif insured depository institution, such as established has capital five tiers: “well-capitalized”,FDIC The Dodd-Frank Act permanently increased the maximum amount amount increased the maximum Act permanently The Dodd-Frank retroactive depositor, insured per $250,000 to unions credit 1.35%. to 1.15% from DIF the of deposits insured to worth net of ratio minimum basePer FDIC rules, is a bank’s assessment the institution’s equity.hasThe FDIC risk-based adoptedbanksFor a for rates. system than assessment with billion $10 less such assets, in cap Bank’s on the based is as the Bank, the risk classification institution’s capita depository A undercapitalized”. and “critically undercapitalized” subject to adjustment and (1) decrease for issuance of long-term unsecured debt (including senior unsecured debt and and debt unsecured senior (including debt unsecured long-term of issuance for decrease (1) and adjustment to subject and banks; insured other by issued debt subordinated or unsecured of long-term holdings for increase (2) debt); subordinated deposits. brokered of holdings significant for increase well-capitalized, not or well-rated not are that banks for (3) unsafepractices,unsound an or is in condition to continueopera MDF and FDIC. The Bank is subject to extensive federal and state regulatory oversight in all areas of banking operations, operations, banking of areas all in oversight regulatory state and federal extensive to subject is The Bank FDIC. and MDF including,notbut limitedto, lending payable rates investments, oninterest loans, deposits, activities, deposits, establishm tomaintain higher capital inlevels the future. Regulationtheof Bank restruct corporate branches, of othe among which, measures, capital relevant various to relation leveragea ratio capital measure. PromptCorrective The Actionru requirements, CET1 the including Rule, III Basel the under changes insuredAn financialinstitution considered:is on the Company and thedate. Bank,The to Company and the Bank standards. new the meet to capital these agencies is designed to protect the Bank’s the protect to designed is agencies these transactions such as mergers with or with transactions such as mergers extensivediscretion in connection supervisorytheirwith and promulgated by the FRB. the FRB. by promulgated also f must The Bank operations. found in the Bank's that are deficiencies on any concerningactivities and its financial condition, in addition to obtainingregulatory prior approvalsentering to into certain
FORM 10-K
fund. surplus the impair would which of dividends the payment and prohibits fund a surplus of maintenance the for provides which achieve compliance withthe standard. If its capital is impaired. Additionally, under Missouri under statute, Additionally, divide is impaired. its capital law, the Bank may pay dividends to the Company only from a portion of its undivided profits and may not pay dividends if the FDIC mayrequire, after notice and hearing, that the bank cease and desist from th to be undercapitalized. If the FDIC believes that a bank is engaged in, or about to engage in, an unsafe or unsound practice, it ifit cause would may ifpayment is or dividends Under pay undercapitalized not institution law,federal anFDIC-insured DecemberAs of the 31, 2016, Bank was (“FHFA”). member,As a the Bank is required to purchase and maintainminimum a investment in the stock of the FHLB. use to make loans to families, farms and businesses. The FHLBs are overseen by the Federal Housing Finance Agency is FHLBsystem’sFHLBs. The primary purpose deficiency hasactions the until other supervisory been take corrected. tocorr institution the must, byorder,require anagency plan, areaguidelineseach provide standards in fees be and compensation, and stock valuation earnings, quality, systems, credit systems internal audit documentation, loan and guide The institutions. depository insured federally of soundness in this report. Statements” Financial Consolidated of the “Notes to the Note 1 December 31, 2016. Applicable capital an undercapitalized institutions, a brokereddeposits, and restrictions onpaying bonusesincreasing orcompensation forexecutive officers.critically For on prohibition directive, ofacapital issuance the including actions, to enforcement abank of a variety subject could guidelines meet capital Failureto the institutions. depository
unsafe or unsound condition unsafe todeemsor condition or institution the unsound isin an institution that the forhearing) may and reclassifiedopportunity FDIC be (afternotice ifthe determines institution institution as critically undercapitalized) based on supervisory in undercapitalized treatasignificantly not (but lowercategory were inthe next asifthe institution provisions supervisory wit comply to institution undercapitalized or capitalized an adequately require It is also to permitted capitalized. adequately
Dividend Limitations Federal Home LoanBank System. Safety and Soundness Standards and met guidelines, Bank The itsadequacy capital minimum Federal banking agencies are required to take prompt corr If an institution fails to meet a standard, a regulator
a well-capitalized insured depository institution as institution depository insured The FDIC may, reclassifyawell-capitalized certain circumstances, under ● ● ● ● “Undercapitalized” if it has a Tier 1 “Undercapitalized” ratio leverage less than 4%, a CET1 to of risk- “Significantly undercapitalized” if it has a Tier 1 leverage ratio of less than 3%, a CET1 to to risk- aCET1 3%, lessthan of ratio aTier leverage ifithas 1 undercapitalized” “Significantly “Critically undercapitalized” if “Critically a tangible capitalit equity has assets equal undercapitalized” to total ratio less or to 2%.than “Adequately capitalized” if it has it has aTier ifit ithas 1 le has capitalized” “Adequately than 4.5%, a Tier 1 to risk-based capital ratio of less than 6% and a total risk- 6% and less than ratio of capital a Tier 4.5%, to than risk-based 1 8%; ratio ratio of less than 3%, a 4%, ratio a total less risk- Tier than capital and toof 1 risk-based of less than 6%; and less than of ratio of 4.5% or greater, a Tier 1 to risk-based 1 to risk-based a Tier greater, or of 4.5% ratio ratio of 8%or greater; receiver may be appointed. . The amount of dividends that the Bank may pay is subject to various regulatory limitations. in compliance with this requirement. an institution fails to submit an acceptabl and an institution must establish its own d ratioinformation iscont . The federal bank regulators have adopted guidelines to promote the safety and The Bank is amember ofthe FHLB of DesMoines, which is one of 11 regional to provide stable funding to member institutions that such institutions in turn in turn institutions such that memberto institutions funding provide stable to be engaging in an unsafe or unsound practice. or unsound unsafe an in be engaging paying dividends or management fees, prohibition on accepting accepting on fees, prohibition management or dividends paying 24 ect the deficiency. The agency may, agency andinsomeect the The casesmust,deficiency.
may require theinstitution to underwriting, interest-rate-risk exposure, asset growth, asset exposure, interest-rate-risk underwriting, formation other than the capita capital ratio of ratio capital 6% orof greater, a total and risk- nefits and other operational and managerial standards. Themanagerial and operational other and nefits lines set forth standards for internal controls, information information controls, forinternal set standards lines forth nds paid by the Bank are restricted by a statutory formulastatutory a restricted by are Bank the by paid nds verage ratio of 4% or greater, a CET1 to risk- ective action to resolve capital deficiencies atinsured ained under the section titled“Regulatory Matters”in theBankcategorized as “well-capitalized”, was as of procedures to achieve such goals. e plan or failstoimplement anaccepted at practice. In addition, under Missouri b submit anacceptable plan to ased capital ratio of less than less than of ratio capital ased l levels of th b ased capital ratio lessased capital of b ased capital ratio ased ratio capital e institution. b b b ased capital ased capital ased capital capital ased An An h ,
FORM 10-K
s e iate ding ding Credit Transaction Credit of Act transactionswith affiliates ese reserve requirements are requirements reserve ese programs. In addition,In programs. the U.S. liability “qualified if they make on accounts, non-personaltime er Act (“EFTA”), Home Mortgage Mortgage Home Act (“EFTA”), er Bank for purposes of these restrictions. normal riskofrepayment or presentother stitution’sandoutstantotal the capital, l regulators have issued guidance to address address to guidance issued have regulators l The establishes (“BSA”) Bank Act Secrecy the t (“FCRA”), (“FCRA”), t Fair andAccurate ent upon the sale of the property, as well as properties for properties as well as property, the of sale the upon ent ed onfinancial U.S. institutions.The purpose of the BSA excess of $110.2 million. Th million. $110.2 of excess % or more during the prior 36 months. If a bank’s portfoliobank’s If a prior theor during 36 months. % more tionsfrom engaging in certain at least as favorable at to the Bankas, those prevailingat th borrower’s ability to repay the mortgage-related obligation the repay mortgage-related abilityborrower’s to type of CRE, or are approaching or exceed the following following the exceed or approaching are or CRE, of type
Act prohibitsAct deceptive, unfair, or abusivepractices acts or velopment, and other land represent 100% or more of the the of more or 100% represent land other and velopment, a a ilities consist ofnet transacti ons with banks. These laws include, but are not limited to, the the to, limited not are but include, laws These banks. with ons d their relatedd their includingcredit such interests, that extension es Act (“RESPA”), and Truth in Lending Act (“TILA”), andLendingTruth in and Act (“RESPA”), es 25 s, and acceptance of the stock or other securities of an affil of an securities or other stock of the acceptance s, and receive certain protections from from protections certain receive p written customeridentificationwritten p transactionaccounts between$15.5 millionand $110.2 million; The FRB requiresFRB The insured depository institutionsto maintain ons for managing a concentrated portfolio. The guidance includes includes guidance The portfolio. concentrated a managing for ons Federal imposes law certain limitationson the ability of a bank to The Bank may be subject to greater scrutiny from federal banking regulators regulators banking federal from scrutiny greater to be subject may Bank The t (“GLBA”), t Funds Transf Electronic (“GLBA”), 6, the first $15.2otherwise first ofmillion reservable the the6, balances exemptfrom are tes. The is an Company of affiliate the The CFPB has issued new rules implementing several Dodd-Frank requirements requirements Dodd-Frank several implementing rules new has issued The CFPB affiliated companies. Federal law also restricts therestricts affiliatedlaw also Bank’s companies. ability Federal toextend credit d parties, andnotd involve than the more Anti-Terrorism Regulation. Regulation. Anti-Terrorism loansrepresent 300% or the of more in In connectionbanking with its activities, the Bank subject is of tofederal number a commercial real estate (“CRE”) loans. Federa (“CRE”) estate real commercial ect consumers in their transacti in their ect consumers n underwriting factors. Lenders also n underwriting Transactions with Affiliates and Insiders. Laws. Protection Consumer Anti-Money Laundering and and Laundering Anti-Money Lending. Estate Real Commercial Per the guidance, institutions have may that significantconcentration CRE risk that havethose are experienced rapid Requirements. Account Reserve Transaction Residential Real Estate Lending. and state laws designed to prot to designed laws state and Ac Credit Reporting Fair (“ECOA”), Equal CreditOpportunity Act 2003 (“FACTA”), Gramm-Leach-Bliley Ac Gramm-Leach-Bliley (“FACTA”), 2003 ProcedurReal Estate Settlement (“HMDA”), DisclosureAct varioustheir state counterparts. addition, In the Dodd-Frank privacy financial consumer regulate FACTA, and FCRA, GLBA, including laws, federal several Moreover, (“UDAAP”). information. financial consumer of sharing the restrict and engage in “covered transactions”affilia with Department of Treasury’s Office of Foreign Asset Controls (“OFAC”) administers and enforces economic and trade sanctions sanctions trade and economic enforces and administers (“OFAC”) Controls Asset Foreign of Office Treasury’s of Department basedonforeign U.S. policy and national security against entities such targetedas countries foreign and terrorists. framework for anti-money laundering (“AML”) obligations impos (“AML”) laundering anti-money for framework or transfer the hide to or for, intermediaries as used being from providers services financial other and banks prevent to is Strengthening and Uniting The crimes. other and laundering, money trafficking, drug from, derived money of deposit Act”) Patriot (“USA 2001 of Act Terrorism Obstruct and Intercept to Required Tools Appropriate Providing by America policies, implement to requirement including the banks, on obligations of number imposes a and BSA amended the The financing. terrorism and laundering money of instances report and detect to designed reasonably controls and procedures institutionsdevelo requires also Act financial Patriot to USA The definition of “covered transactions,” which was expanded under the Dodd-Frank Act, includes extensions of credit to to credit of extensions includes Act, Dodd-Frank the under expanded was which transactions,” “covered of definition The of affiliate securities or other in stock affiliates, investments and must consider certai and must unless the transactions are on terms substantially the same as, or as, substantially the same on terms unless are transactions the mortgages.” Additionally,rules prohibit new certainsuchfeatur loanas negativees, amortization, interest-only payment, balloonpayments,penalties.” and prepayment borrowerpoints restrict and by a and paidfees as collateral for loans.Additionally, law prohibits federal institu reserves against specified deposit againstreserves specified Reservable liabilities. liab time for transactions non- comparable time with an shareholders, principal directors, to officers, its executive deposits,Eurocurrencyand 201 liabilities. For requirements;netreservefor 3% is the reserve requirement in accounts transaction net for 10% is requirement reserve the and subject annual adjustment. to expectati provide to and concentrations CRE about concerns depend is repayment which for loans construction and development income. rental upon dependent is repayment which a specific exposures to notable have lending, in CRE growth supervisory criteria: (i) total loans for construction, land de total CRE (ii) or institution’s capital; total balanceof the institution’s loanportfolio CRE has50 by increased practices. management risk heightened in engage bank the must guidelines, general these of outside goes based on its concentration of of concentration its on based must bemust on made substantially including terms, the same rate and interestas those collateral,prevailing at the time for comparable transactionsunrelated withthir features. unfavorable regarding residential mortgage lending. Lenders must assess assess lending.Lenders mortgage must residential regarding
FORM 10-K
Regulation of the Company the of Regulation Bank has received a “Satisfactory” CRA rating. for mergers, acquisitions, orto open a new branch or facil Bank’s record in meeting these obligations. CRA ratings are also taken into account by regulators in evaluating applications neighborhood low- moderate-income and including communities, affirmative consistent with and safe obligation, continuing private equity and hedge funds, (ii) s securities financial instruments;other in and and trading an institutions Frank Act, depository insured generally prohibits Bank. the to support resources commit to and the Bank to strength actas of to a source obligated islegally Company the FRB.Additionally, the with under the Bank Holding Company Act of 1956 (“BHCA”). The Company is required to file periodic reports of its operations hold bank Additionally, issues. supervisory any unresolved to exceed “well capitalized”thresholds both beforeandafter there consolidated net worth.Prior approvalmaynot be required if for all such purchases during the preceding twelve months is equal to 10% or more of the bank holding company’s paid consideration with the net aggregated when or redemption, the purchase on if the for securities gross considerati equity redeeming or repurchasingstock if: be an uns would payment such directors should “eliminate, defer, or severely limit” dividends if: to consult institutions financial encourages buffer. FRBstrongly Also, the conservation capital required the maintain must to dividends pay seeking institutions the BaselIII under Rule, Additionally, undercapitalized. considered be would institution the dividends, of payment if, following dividends are fromgenerally paying institutions prohibited Financial capital. adequate maintain requirement to certain situations. in prior approval including restrictions, regulatory applicable and depositors, including Bank, to thepriorclaims the creditors of is of subject Bank from the distributions dividends tostockholders) is dividends paid toitby the Ba ● ● ● ● ● ● if such redemption or will redemption repurchase if such the bank holding company is considering expa is company considering bank holding the the bank the holdingcompany is“significant at risk” of developinga financial weakness; capital adequacy regulatory minimum its meeting, of not danger isin meet, or willnot company holding bank the the bank holding company’s rate of earnings retention is the bank holding company’s net income available to shareholders for the past four quarters, net of dividends paid outlook; or or outlook; redemption or repurchaseoccurs. ratios. ratios. during that period, is not sufficient to fully fund the dividends;
General. Community ReinvestmentAct. Rule. Volcker Restrictions onDividends and Stock Repurchases
Generally, a bank holding company must notify the FRB prior to the purchase or redemption of its outstanding Banking regulators also have the authority to prohibit banks and bank holding companies from paying a dividend if The amount of dividends that the Companymay pay is subject to various regulatory limitations, including the
The Company is a registered bank holding company subject to regulation and supervision by the FRB The Volcker Rule, issued by the federal banking and securities regulators pursuant to Dodd- the regulators pursuant andsecurities banking federal bythe issued Volcker Rule, The
afe or unsoundafe or practice. subject to certain exceptions. with the agency prior to paying dividends. The FRB has indicated that a board of that a board indicated FRB The has dividends. to paying prior agency the with Under the Community Reinvestment Act of 1977 (“CRA”), the Bank has a has theBank (“CRA”), 1977 of Act Reinvestment Community the Under cause a net reduction in capital from the beginning of the quarter in in the which quarter the of beginning the in capital from reduction a net cause nsion (either acquisition (eithernsion or acquisition activities); and new ity. Based on its most recent CRA 26 nk. The right oftheCompany to receive dividends or other the bank holding company, am .
and sound operation, to help meet the credit needs ofits credit needs meet to help the operation, sound and ing companies are expected to ponsoring or acquiring or retaining an ownership interest in in interest ownership an retaining or acquiring or ponsoring
The Company’ssource of funds (includingcash flowtopay d their affiliatedtheir d companies fr purchase, isconsideredmanaged,” “well andisnotsubject inconsistent with capital needs and macroeconomic overall and needs with capital inconsistent s. As part of its examinations, the FDIC evaluates the FDIC the the evaluates s. As part itsexaminations, of compliance examinations, the ong othermeetor things,will om: (i) short-term proprietary consult with the the FRB before with consult
FORM 10-K p s” and executive compensation compensation executive and national securitiesexchanges “claw back” from current and current from back” “claw that are “covered transaction with its capital restoration plan in with capital restoration its based on the restatement. Recovery Recovery restatement. the on based e information. Per SOX, the Company’s Company’s SOX, the Per e information. public interest in meeting in public needs interest the and maintainingregularly and evaluating the CEO and CFO certifications requireandtheseCEO certifications CFO strict the extent to which the Company and and Company the which to extent the strict dd-Frank Act requires companies to give give to companies requires Act dd-Frank The Company’s stock is registered with the SEC and, SEC and, with the is registered stock The Company’s if it determines, among other things, that the proposal proposal the that things, other among determines, it if ns, ns, corporate governance, are requiredare to certify that the quarterly and annualreports among other issues, corporate governance, auditing and auditing governance, corporate issues, other among
or or merge(iii) or consolidate with any other bank holding ices to banksices to and subsidiaries, their bankholding although they have theymadedisclosures auditors to certain and the audit , substantiallylessen function competition, as a otherwise or to whether anyto whether occurred misconduct in connectionwith or an to support theFinancial support Bank. from the Company may ies whoseies securities are listedon ces generally focuses on capital adequacy. Consideration of Consideration capital adequacy. on focuses generally ces e listed on the NASDAQ Global wouldMarket) be required to 27 . UnderCompanymust. obtainBHCA, the the the prior approval an accounting restatement, would would restatement, an accounting nk. Additionally, anynk. transactions e Governance. nced and timely disclosure of corporat timely disclosure and nced ed to act as a source of financial financial of source as a act is expected to Company policy, the FRB Under quired to guarantee the Bank's compliance guarantee the Bank's to quired compensation they should not have received received have not should they compensation ) they are responsible for establishing, material fact. The SEC’s rules regarding fact. regarding rules SEC’s The material and Corporat and titive effects are clearly outweighed by the by the outweighed clearly are titiveeffects As discussed above, federal regulations re regulations federal above, discussed As
protectio investor other provides Act Dodd-Frank The of Subsidiaries. Support Banking Control in Changes and Activities, Acquisitions, holding bank of a “control” acquiring company or person any to prior required is approval FRB Additionally, of that than other business any in engaging from prohibited generally are companies holding bank Moreover, Transactions with Affiliates. Regulation Federal Securities The Sarbanes-Oxley Act 2002of (“SOX”) addresses, The FRB may disapprove of the purchase or redemption redemption or purchase the of disapprove may The FRB develop and enforce recovery policies that, in the event of event the in that, policies recovery enforce and develop effectiveness of internal controls over financial reporting; (ii) reporting; financial over controlseffectiveness internal of their about reports annual and quarterly in information included have they (iii) and directors; of board of the committee could that factors other in or reporting financial over controls internal in changes been have there whether and evaluation materially internalaffect reporting. financial controlover Do the For example, U.S. publicly companies. that traded requirements affect Dodd the to Pursuant payments. parachute” “golden and compensation executive approving vote non-binding a shareholders FrankinAct, July 2015, ruleproposedcompanSEC thethat a ar whosesecurities Company the and (including associations strength to the Bank and, where required, to commit resources resources commit to required, where and, Bank the to strength become should Bank the if Moreover, it. provide to be inclined otherwise not might Company the when even required be re be would Company the undercapitalized, would constitute anunsafe unsound or business practice. enha and accounting, executive compensation, (CFO) Officer Financial Chief and (CEO) Officer Executive Chief a of statement untrue any contain not do (i that: others, among to certify, officers former executive officers incentive-based incentive-based officers executive former wouldberequired without regardfault to and withoutregard order for such plan to be accepted by the FDIC. the by accepted be to plan such for order ownershi or indirect direct acquire (ii) bank; of a assets the all substantially acquire (i) may: Company the before FRB of the or control of more than 5% of the voting shares of anybank; company.therestricts BHCA also The Company’s ability to acquire direct or ownershipindirect or control of 5% or more managerial and financial the consider to required is FRB The corporation. nonbanking of any shares voting of class of any resourcesfuture and prospects of theholding bank banks and companies concerned the and convenienceofneeds the and resour financial of Consideration served. be to community convenience andneeds includes the involvedinstitutions’ not under performance The themay FRB CRA. approve a transaction if it wouldin result or tend create a monopoly to of trade,restraint unlessanti-compe the convenience of thecommunity to be served. voting outstanding the of more or 25% acquires company or person a if exist to presumed conclusively is “Control” company. than more acquires company or person a if control of presumption rebuttable a is There company. holding bank a of shares 10%but less than 25%of any class voting of securities. banking, managing, and controllingor banksfurnishing serv tobeproperbanking” incidentto “closely relatedthat determined to are and engage in“a permitted activities are companies thereto.” otherwise or borrowing including Bank, the with transactions” “covered certain in engage may directors and officers its tothe securities or or Ba selling from assets obtaining credit withbe the nonpreferentialmust on Bank terms. therefore, the Company is subject to SEC restrictions and requirements, including rules regarding information sharing, proxy proxy sharing, information regarding rules including requirements, and restrictions SEC to subject is Company the therefore, solicitation,and insider trading.
FORM 10-K
market. He isa board member and active vo Vice President, Relationship Manager for Regions Bank, Union Planters Bank, and Capital Bank & Trust in the St. Louis Puls served as Senior Vice Pres Company in June 2016. Mr. Puls has over 24 years of experience in the banking industry. Prior to joining the Company Mr. Missouri. organizations, including past Chairman of the Southwest Missouri Regional Board of the Make-A-Wish Foundation of been recognized by the Springfield Business Journal as a “40 Under 40” honoree. He hasserved several not-for-profit Ac Public Certified of Institute American Accountant with a Bachelor of Science was employed by BKD, LLP, acertified public accounting and ad August 2005, Mr. Peters served asthe Chief Financial Officer of Southern Missouri Bank for approximately two years and and services financial inthe experience years of 24 over has Brothers Big Sisters Board. Relati and Agency Allocations theUnited Member Way of isalso a past in2012. He asPresident serving Commerce Chamber of Area the Springfield of subsidiary development 2014. From 2009 through 2014, he was aBoard Member of the Springfield Business Development Corporation, the economic in EconomicDevelopment of Chairman as Vice Commerce serving of Chamber Area Springfield the Member of a Board Community Depository St. Louis’ Bank of Reserve Federal the to the Amer of Council term Bankers three-year the Community on Chairman of the Legislative Affairs Comm School of Banking of Colorado. Mr. Burke currently serves Mr. Burkereceived a Bachel President and Chief Executive Officer of th elected toa one-yearterm by the Bo ExecutiveOfficersof the Registrant companies’ recovery policies, andtheir actions underthose policies.The proposed rules are notyet final. executive officer’s responsibility for the erroneous misstatement. The proposed rules would also require disclosure of listed for Ms. Biser and 50 for Ms. Robeson. honoree. 40” a “40 Under named been and Business” in Women Springfield Class XIII, and has been recognized by the Spring of Springfield boards and as a member of the Ozarks Transportation Organization board. She is a graduate of Leadership Springfield, asPastPresident Chairman for of City Utilities Council for the MissouriStateUniversity Advisory Executive Bankers. Shecurrently serves onthe Spri Certified Trustwas awarded the & Financ of Missouri-Columbia and a Master of Business Administration Degree from Drury University. In addition, Ms. Robeson management experience in the technology industry. She has a and executive industry 3years of services financial inthe years experience of 25 over has Ms.Robeson 2012. July institution. She received a Bachelor of Science Degree in years at financial for another years eight and administration fourteen worked for nearly Bank credit National Metropolitan 2009. Ms. Biser has 30 years of banking experience. Prior to joining the Bank, Ms. Biser served as Chief Credit Officer of – St. Louis. H. Charley Puls Carter Peters BurkeShaun A. Set forth below is information concerning the executive office the executive concerning is information below Set forth As of December 31, 2016, the age of these individuals wa E. Robeson isRobin Executive Vice President and Chief Operating February in the Bank She Creditjoined Bank. Chief Officerofthe and VicePresident Sheri BiserisExecutive
is Executive Financial Chief Vice and Offi President is Executive joined the Bank in March 2004 as President and Chief Executive Officer and was appointed Officer and was appointed Chief Executive and asPresident March 2004 the in Bank joined is Executive VicePresident andChief Lending Offi or of Science Degree in Finance from Missouri State University andis a graduate of the Graduate ident, Market President in Southeast Missouri Missouri Southeast in President Market ident, ard of Directors of the Company. the Company. of of Directors ard
countants and the Missouri Society of Certif of Society and the Missouri countants Degree in Accounting from Missouri State ngfield Area Chamber of Co of AreaChamber ngfield lunteer forthe AmericanRedCross and is ittee and was previously Chairman of the Audit Committee. In 2014, a he began In 2014, Committee. of the Audit Chairman and was previously ittee e Company on February 28, 2005. He has over 30 years of banking experience. experience. banking of years 30 over has He 2005. 28, February on Company e ial (CTFA) Advisor professional from designation Certified Institute of the in Accounting University. Fortfrom Hays State 28 of the Big Brothers/Big Sisters of the Ozarks and Rotary Club Rotary Club Sisters and the BigOzarks Brothers/Big of the of public accounting industries. Prior to joining the Company in industries. in the Priorto Company accounting joining public Bachelor of Art Degr Art of Bachelor ons Executive Committee, Salvation Army Board, and Big and Army Salvation Board, Committee, Executive ons on the board of the Missour of the board on
ican Bankers Association. In March 2016 he was appointed appointed was he 2016 In March Association. Bankers ican College of Business. She previously served as board Vice Vice as board served previously She Business. of College field Business Journal as one of the “20Most Influential Institutions Advisory Council. From 2012 to 2014, was he to 2014, From 2012 Council. Advisory Institutions s 53 for Mr. Burke, 47 for Mr. visory firm, foreleven years. rs of the Company. Each ex mmerce BoardofDirectors cer of the Bankand the Company. Mr. Peters for Regions Bank. Before that, he was Senior cer of the Bank. He joined the Bank and the the and the Bank Bank. He joined the cer of Officer of the Bank. She joined the Bank in the Bank joined Bank. She Officer ofthe ee in Communication from the University University from the ee in Communication a graduate of the University of Missouri University of the a graduate ied Public Accountants. Mr. Peters has Peters has Mr. Accountants. ied Public University. He University. is amember of the i Bankers Association as Vice Peters, 57 for Mr. Puls,57 53 Peters, He is a Certified Public HeisaCertified Public ecutive officer is annually and is a member of the the of member a is and
FORM 10-K
s e ts. ate ties ). Our success depends depends success Our ). sks and uncertainties.An valuesduenaturetheto of th d adverselyd affect ourbusiness, nal financial institutions to diversify to diversify institutions financial nal ility of our customers torepay their loan of ourility customers
rms of their loans. With respect to secured loans, loans, secured to respect With loans. their of rms ssouri (our “Market Area” “Market (our ssouri rsely affected by, certain ri by, certain rsely affected bility that losseswill be sustained becauseborrowers, herdeclines conditions, includingvalueof real estate, the in de variety of diverse real and personal property that may be may that property personal and real diverse of variety de ition, decreases in real estate estate real in ition, decreases of operations of depending on the of severity the economic ofrepay customersThe loans. their loan to Bank’s policies
below together with all of the othertheinformation below of all with together included and come levels, deposits levels,come and estate activity real in these marke upon the continued growth and welfare of the general general of the welfare and growth continued the upon of our borrowers to repay their loans which could materially which could their materially of loans repay borrowers our to y extend well beyond these market areas, adverse economic adverse economic areas, market well beyond these y extend te loans are made is located. Adverse developments affecting affecting developments Adverse is located. made te loans are 29 our borrowers could negatively impact the future cash flow and and flow cash future the impact negatively could borrowers our nerally our financial affect condition and results operations.of mmaterial also may an materially mmaterialmay also risks risks and uncertainties described below, other risks and uncertain cant portion of our portioncant lending of business. $448.0 Real estate loans were million,
are less able than other regional or natio or regional than other less able are
e portfolio, as of December 31, 2016. The market value of real estate securing securing real estate of value market 2016. The 31, December of e portfolio, as rform in accordance with the te the with accordance in rform curing the loans to cover operating expenses and debt service. Economic events events Economic service. debt and expenses operating cover to loans the curing ve an adverse an business. impact ve our on adverse cantly incantly as shorta periodresulta time of market of conditions ourin Market Area couldreduce theaffect rate, growthour ab uld the increase credit risk associatedour withportfolio. loan Additionally, est real onetary and fiscal policies of the federal government, environmental contamination (as (as contamination environmental government, federal the of policies fiscal and onetary the cities of Springfield, Nixa and Ozark, Mi Ozark, and Nixa Springfield, of cities the
southwestern the in are which County, Christian and County Greene in concentrated heavily are operations Our
Real estate lendingsignifi comprises a A significant source of risk for us arises from the possifrom risk for arises us of sourceA significant
Our business and operations are subject to, and may be adve may and to, are subject operations and business Our
Although our customers' business and financial interests ma interests financial and business customers' our Although conditionsmarket areas these affect that Our business is concentrated in and largely dependent dependent largely and in is concentrated business Our tosignificanta extentupon the business activity, population, in which estate loans, of real Our loan/lease high concentration portfolioto our relatively possesses increased risk due values. estate real to specific risks involve geographical markets in which we operate. operate. we which in markets geographical including Missouri, of corner to us, affect the valueto us, affect the of collateral underlying loans and ge we concentration, Because of our geographic and adversely the affect Bank’s financial conditionresults and downturnofnaturethe or regulatory the changes. assetin quality Deterioration ha could pe to fail may parties related and guarantors wi of loans a repayment these includes the thesecuring collateral environmental and ot by changesprevailingaffected in economic, in m rates, changes interest changes in discusseddetailmore otherin and below) external events. Inadd Bank’s(discussed loanportfolio the above) ability could affect financial business, our on effect adverse material have a could that losses unexpected prevent not may procedures and liquidity. ofor operation condition, results or approximately 82% of our total loan/leas of our 82% or approximately signifi fluctuate can loans estate real our marketof values the affected properties impairing ability the not currently known to us or that we currently deem to be i be to deem currently we that or us to known currently not of any to due decline could stock common our of price market or value The operations. of results and condition financial investment. your of part or all lose could you and risks, other or identified these risksourcredit across markets. multiple lendingtypically involves higher loan principal generallyand amounts repayment the dependent,is loans the of part, large in the properties se from on sufficient income of that or control our of outside regulations governmental or
Item 1A. Risk Factors Risk 1A. Item you decision, investment an making Before business. our in inherent risks to subject is stock common our in investment shouldcarefully consider risksuncertaintiesandthe described incorporated referenceby this in report. In addition to the which is where most of the real estate on which our real esta real estate on which of the is where most which real estate valuesour Market Area co in
FORM 10-K
directly to us by the Bank. If and to the payment expectations on such loans can be more easily influenc the borrowers’ successful business operatio real estate loans or consumer loans beca tobe greater loans isconsidered than of the types risk these rela to riskrelated credit The business loans. Our loan portfolio possesses increased risk due to the p liability. to additional us that environmentalcannot guarantee our review will all detect property. We may touse or sellthe environmental also risks ability limitour or reducethe also property’s value materially expens substantial mayproperty, weincur aownership of are found, environmental laws and regulations may prescribe our approach to remediation. As a result, while we have that willproperty secure loans. our identify any to review known environmental environmental an credit,weconduct risks associated extending with the real responsible for environmental risks, such foreclosure or collateralthrough real ot property the title to estate with real ility securing our loans. collateral liab risk associated environmental subject to We are effectively. risks we areif one concentrated tothe are assusceptible not or morebanks with companies subsidiary holding Larger bank and resu condition financial our effectively, it from operating Our future success is dependent on our ability to compete effectively in the highly competitive banking industry. or underlying collateral values would have a material adverse effect on our financial condition and results of operation. portfoli loan commercial the quality credit of inthe significant deterioration Any general. in economy the in marketestate or operating assetoperating a in Arelatively subs location. small geographic financial condition and results of operation a impact on the financial condition and results of operations of the Bank would have a material adverse impact on our Our operations areconcentr our net interest income could be adversely impacted. competition causes us tosignificantly discount services. banking traditional to a feasible alternative with restrictions as we are. Many of our resources greater these substantially have of competitors Many sponsored enterprises, mutual fund companies, insurance companies, brokerage companies, and other non-bank businesses. institutions, national banking institutions, and a wide range of other financial institutions such as credit unions, government throughout our market area. Our competitors include other community banks, regional and super-regional banking
Our loan portfolio includes a signifi A significant portion of our loan portfolio is secured by real property. Under certain circumstances, we may take We face competition in attracting and inattracting We facecompetition As a holding company with only one subsidiary bank, bank, our subsidiary one withonly company As a holding a materialhave could these effect results Any of adverse As we try to meet competitors’ our terms in markets competition our increased may pricing, and in: result ● ● ● ● loan terms that are more favorable to deposit rates; or rates and loan between spreads reduced a decrease in the amounts of our loans and deposits; interest rate changes to
ated in one subsidiary bank; an event or a or event bank; an one subsidiary in ated
In addition, we routinely inspect properties prior to foreclosing. If environmental risks competitors compete across geographic boundaries and are able to provide customers customers toprovide able are and boundaries geographic across compete competitors extent our Bank is not successf use commercial loans often have larger balances, and repayment usually depends on various types of accounts; varioustypes of as hazardous materials, which attach to ns. The underlying commercial realesta cant amount of commercial real estate loans and commercial business loans. business commercial real and commercial estate loans of cant amount the interest ratesweoffer onloans or nd,accordingly, on your investmentin us. retaining deposits, making loans, and providing other financial services services other financial and providing loans, retaining deposits, making the borrower and less favorable to the Bank. 30 ercentage of commercial real estate loans and commercial environmental issues relating to a property, which could subject could toa issues relating property, which environmental e and bear potential liability for any damages caused. The The caused. for any liability damages e potential and bear of their or subsidiary facilities was banks to able not operate lts of operation could be materially and adversely impacted. impacted. adversely and materially be could lts ofoperation bank facilities and which are more geographically dispersed her means. As the titleholder of the property, we may be maybe property, we ofthe titleholder the means. As her
than we do and some are not subject to the same regulatory same to the regulatory subject some arenot we and do than t antial portion of our cash flow comesfrom dividends paid ed by adverse conditions in th on our ability to grow and and grow re to our ability on ul or an event were to occur that prevents it or hinde investment risk is concentrated ininvestment primary is concentrated one risk just series of events having a materiala adverseof eventshaving series the property. Forthese reasons, priorto increase theamount wepay on deposits, te values, customer cash flow and ted to owner-occupied residential
main profitable. profitable. main If increased e related industries, the real
rs rs o -
FORM 10-K
f he security breaches, security breaches,
ability to address t address to ability es, the use of the internet the internet of use es, the establish operational procedures procedures operational establish was accessed through information through information accessed was ent, but also from ent, but alsofrom , in part, upon our nd competency in our selection of third of in third selection our competency nd ange frequently and because attacks can and frequently ange ces industry could have a material adverse adverse material a have could industry ces oducts and services to our customers. Failure to to our customers. oducts and services rt because of new rt technologi because rators of fraud, of hackers,rators we others.While terrorists, and to increased operating costs as well as litigation and as and well as litigation costs to increased operating equately addressed if they do.In addition, withhelp the of e of technology increases efficiency and enables financial nnot predict howour technology in changes will affect
ducts and services that will satisfy customer demands for demandsfor customer satisfy ductswill that services and res, and we may bewe res, and subject may to litigationandfinancial losses ition to threats cybersecurity againstwe are alsous, i at risk otherwise businessour conduct efficiently and effectively. 31 r operations. Many of our competitors have substantially greater ement security technology and ement our information. If our data If our data our information. a material adverse effect on our business. business. our on effect adverse material a y go undetected for extended periods of time. time. of periods extended for undetected go y we place a high priority on reliability a reliability priority on place high we a cations failure or a similar catastrophic ev catastrophic similar cations a failure or sful in marketing these pr sful in marketing reduce costs. Our future success will depend will success future Our costs. reduce pecially because the techniques used ch used techniques because the pecially financial conditionand resultsof operations. nological change affecting the financial servi financial affecting the change nological of our systems and products. products. and systems our of
In additionwithissues toprovided services the by thirduse parties, thewe vendors are alsoto subjectsame the and operations retention, record communications, our of portion a substantial for vendors party third on We rely of introductions frequent with change technological rapid undergoing continually is industry services financial The
have could events these of any of occurrence The Our operationsdependentOur are uponour ability to protect our computer equipment notonly againstdamage from pa in recently increased have risks security Our information party vendors, we do not control their actions. Any problems caused by these third parties, including as a result of their not not their of result a as including parties, third by these caused problems Any actions. their control not do we vendors, party our affect adversely and materially could poorly, services their performing their or reason any for services their us providing abilitydeliver toproducts and servicesor customers to our expense. and delay significant entail also could vendors party third these Replacing we them, with contracting to prior vendors party of third a review we conduct Although above. discussed risks cybersecurity cannot control the security oftheirTherefore, systems. add in financial control systems technology. While While technology. systems control financial We are dependent upon outside third parties for processing and handling of our records and data. and records our of handling and processing for parties third outside upon dependent are We our third parties vendors are unable to adequately protect protect adequately to unable are vendors parties third our reputation. our to damage and exposure financial and legal significant face could we vendor, party third a to provided We continuallytechnological encounter change,and we ca business. new technology-drivenproducts and services. The effective us and customers serve better to institutions andtelecommunication technologies (including devices)conduct financialmobile other to businessand transactions and the increased sophisticationactivities and of organized crime, perpet no be can there interruptions, and failures systems of impact the limit or prevent to procedures and policies established have suchassurance notthat that be they events will occur ad or will third-party service providers, we intend continue to impl to preventto be ablepreventative anticipate not to implement or effective such may we damage. against Nevertheless, measures types, es of these all security breaches originate from a wide of variety sources. In addition, not beour measures security ablemay to detect all cyber and threats ma breaches data that risk a is there therefore Cybersecurity threats and privacy breaches us subject could breaches and privacy Cybersecurity threats other liabilities. telecommuni fire, power loss, physical theft, causes that failure or damage Any hackers. by caused problems disruptive other and worms viruses, attacks, service of denial an interruptioncondition our effect on adverse financial a material in couldoperations have and our results of operations. communicationOur and information systems present securitymay duerisks to susceptibility of digitally stored information hackingtorequired be or identity We may theft. to expend significant additionalresources to modify our protective measures or vulnerabilities investigate and to remediate orother exposu loss a or reputation our to damage in result also could This us. by maintained insurance any through covered fully are not that security the in confidence of usingcustomers byourneeds of technologyprovideto pro convenience, as well as to create additionalou efficiencies in resources to invest in technological improvementsthan Wedo.we not be may able to effectively implementnew technology- be succes or products and services driven keep pace with tech successfully oneffect businessour and, turn,in our
FORM 10-K
pay dividends to our stockholders, or fulfill obligations such or obligations fulfill ourstockholders, to dividends pay expenses, meet our securities, invest in to loans, the future in originate ability our adversely impact could funding available the national and super-regional banks because of their smaller size and limited analyst coverage. Any significant decline in Furthermore, regional and community banks, including the Bank, generally haveless access to the capitalmarkets, than do customer deposits, available borrowings, sales of loans or investments could have an adverse effect on our liquidity. Liquidity needscould adversel customeror in defaults materiallydecline deposits, a the of the loan extent on depending a in customer would, borrowers to decline repayor loans deposits their of inability market national and Market our deposit levels may also be affectedby a number in the interestboth of rateenvironment factors, in thecompetitive cluding affec or events trends adverse conditions, adverse effect on our financial condition and results of operation. of results operation. and effect condition adverse our financial on liabilitie on paid interest rates of our and condition. demands, any of which could have amaterial adverse impact on our liquidity, business, results of operations and financial of the borrowers to repay their loans can are they source of liquidity, area stable repayments relatively The financial condition of the Bank’s of results operation. and effect condition adverse our financial on resulting from changes in interest rates would have an adverse impact on net interest income, which could have a material any interest income to offset the associated funding expense. Thus, an increase in the amount of nonperforming assets interest income. Subsequently, wecontinue to have acost to fund the loan, which is reflected asinterest expense, without reversFurther,nonaccrualstatus, loanwe on a when we place reduction of income recognized, which could have a material adverse effect on our results of operations and cash flows. loan on interest or principal the to pay borrowers of ability Changes in interest rates could nega condition. have financial impactcould our a material which adverse on loans, repay to ability or of, repayment of certain of our loans as borrower interest interest fromhigher rates. resulting In adeclining demand reduced adversely any affected maybe by collateral underlying marketability of samefor default. the At the time, our results of operations. Rapidly changing interest rate Interestratechanges may affect borr Decreases or increases in interest rates could have a negative e Furthermore, growth liabilities. may for in slower loan higher and substantially result rates loangenerallyus. demand reduce result in our interest expense increasing faster than interest income because of mismatches in th increases coul in interest rates income affected. in is the Rapid our future net As interest interest rates change, management. interest drivers our of net key ratesarethe income. Interest
Adequate ourab liquidityin iscritical Interest rate increases often result in larger larger payment in re result rateincreases Interest often
Two ofthe Bank’s primary sources of fundsareloan re Changes in interest ratesalso canaffect the value of loan Interest and fees on loans and securities, net of interest interest net of securities, and loans fees on and Interest
s refinance at intes refinance rates. in lower Fluctuation Area, local and national economic conditions, natural disasters and other various events. The The events. other various and natural disasters conditions, economic national Area, local and y affect ourresultsof operations and financialcondition. environments could reduce ournet interest margin and otherwise negatively impact tivelyimpact our nonperforming a customers and borrowers could adv owers’ repayment schedules, negatively ting the business environment, natural natural disa environment, business ting the be adversely affected bya number off s, and therefore decr therefore and s, ility to meet theneeds ility to of our customer nd adversely affect our liquidity and financial condition. rate environment, there may be an increase in prepayments on prepayments in increase an may be there rate environment, 32 subject to the borrowers’ ability to repay their loans. The ab The loans. their repay to ability tothe borrowers’ subject s may lead to an increase in our nonperforming assets and a assets in increase and our an snonperforming may to lead margin and are subjectto many
ffect on the spreads between our interest rates earned on asset on earned rates interest our between spreads the ffect on e any accrued but unpaid interest asrep
ease our net interest income, which would have a material amaterial have ease interest would income,our which net quirements for quirements borrowers, our the increase potential which paid on deposits and borrowings, are a large part of our part net of are a large borrowings, and on deposits paid payments and customer deposits. Though scheduled loan scheduled Though customer deposits. and payments s. An increase in increase ra s. interest An aying our borrowings or meeting deposit withdrawal withdrawal deposit meeting or borrowings our aying rest ratesmaytherefore change borrowers’ timin ssets, decreasing net interest income. ersely affect the Bank’s liquidity. actors, includingchangesinthe economic impacting ourfinancialcondition. sters and othervarious sters and factors.Customer s. Aninability to
factors beyond the control of control the beyond factors e maturities of our assets and tes thatadverselyaffectsthe receivable, which decreases access funding through
ility ility g d s
FORM 10-K
, , lity hese hese
ver, if our internal controls controls internal our if ver, e financial services industry services financial e
ally and adversely affect our our affect adversely and ally hiring, and training expenses y authority, ourprofitabi future we are unable to recruit replacement recruit to unable are we t be immediately available. immediately be t d adverselyourd affect revenues, net fect our liquidity. our fect dsupervision, discussedas detail in more below,which efforts of highlyefforts skilled of individuals and ability their to flows from investment thefrom flows from securities. Cashflows ere is intense competition in th intense competition ere is actors that are notspecific us,are such to that actors disruptionsevereas or useofimproper confidential information. maintainWe ly at costs that could materi ly at costs that could r Market Area may adversely affect ourtoability maintainadversely affect may Area Market r rties. In certain cases, we may be required to sell investment investment sell to required be may we cases, certain In rties. e against operational risks. Howe e risks. against operational
d result in increased recruiting, blishedregulators,our by as discussed below, which require tion, supervision, and comprehensive regulation by various various by regulation comprehensive and supervision, tion, reducinginterest resultantlyincome and we While income.net periods of rising interestrates. These changes be beyond may 33 ation or regulators’ supervisor lio may adversely af lio adversely may quidity, those sources may no may sources those quidity, gnificantly affect our operations or earnings. earnings. or operations our affect gnificantly FDIC. These regulators have broad discretion in their supervisory and enforcement enforcement and supervisory their in discretion broad have regulators These FDIC. professionals,management and staff coul orany resulting if not is loss or exceeds insured applicable insurance such limits, to, customer or employee fraud. employee or customer to, notbut alincluding,limited risks, our portfo investment
ely affected. ely
Another primary sourceof liquidity for the Bank is cash
beWe required may timefrom to to time rely onsecondary sources liquidity of to withdrawal meet demands or sanctions, regulatory losses, financial to us subject could misconduct customer and employee and errors Employee
Our performanceOur is largely dependenton the talents and if impacted be also may success our retention, employee with struggle do we If
subjectare We significantto regulationstate and federal an A decrease in cash flows from from flows cash in A decrease investmentportfolio bybe changes rates,affected resulting may during interest of in excessive periods in flow cash of levels to required be also may We whole. as a industry services financial the about publicity negative or markets financial the of pa third from money borrow to collateral as investments pledge thereby needs, liquidity meet to losses sizable for instruments believewe are currently that sufficiently be requiredliquid,future to turn t not to in the will be can no assurance there we on or be available not may which liquidity of sources secondary operation. of results and condition financial Inability or retainto hire certain key resulting netlower in income. operation certain to subject are We mitigat to coverage insurance and controls of internal a system that we and the Bank maintain adequate capital to supportgrowth our and thegrowth. Bank’s To extent the our activities and/or Bank’s the activitiesor are restricted by regul limited otherwise fund operations. Such sources include the FHLB advances, brokered deposits and federal funds lines of credit from from credit of lines funds federal and deposits brokered advances, FHLB the include sources Such operations. fund otherwise correspondentbanks. Our ability to borrow couldbe impairedby f hidingunauthorizedcould frominclude lawsuits activities employees and reputation. our our Misconductseriously by harm orunauthorized us, improper on activities of ourcustomers, behalf and MDF FRB, the the including agencies, Weactivities. are also subject to capitalization guidelinesesta declining interest rates andduring lower levelsof cash flow ourcontrol couldand significantly influence our available cash. li of sources secondary on rely to required are we If various result, a As investors. of benefit the for not and customers Bank’s the of protection and benefit the for primarily is Our approval. regulatory without us to can pay subsidiary Bank our dividends of amount the restrict provisions statutory examina to subject Weare is costly. compliance regulatory income and growth plans. growth and income operate and manage to personnel key on rely We environment. bank community a in relationships customer retain and attract employees, our of None portfolios. deposit and loan our as such functions generating revenue major including business, our are employees Such us. with contracts employment to subject are team, management key our comprise who those including at-will and not are terminating thus restricted from lack contractswith The of employment key employment. their employees couldhavematerial adverse a on impact our ability to Theemployees. such retain of loss key management or our key loan businesswithcontactstheir communities inofficers the within ou revenues. our affect negatively could which effectively, portfolios these manage and Th of time. amount reasonable in a key employees and management for qualifiedIn employees. for addition, personnelofcoulloss key advers be may fail to prevent or detect an occurrence, detect an occurrence, or fail to prevent operations. of results and condition financial business, our on effect adverse material a have could failures si may that regulation extensive to subject are We
FORM 10-K
fi suddenly change resulting in lower earnings. Management’sanalysisnecessary ofthe fundingfor theallowance for loan loss account may be incorrect ormay minimum thresholds. co Regulator’s penalties. faces increasing institution deterior levels capital institution’s Asan undercapitalized." capitalized," "adequately capitalized," meet that do mini not institutions depository at insured all of which are subject to material changes. involves a high degree of subjectivity and requires us to make in increased regulato the Bank could be subject to increasingly strict limitations on capital distributions and bonus payments. and discretionarybonus paymentstoexecutive officers. If wethe orBank dipbelow thecapital conservation buffer, we or minimum risk-based capital requirements. The buffer must be main their of the balance sheets. Although impact on us has been the siz assets, decreasing their against to hold morebetter capital and institutions financial requires and requirements prior based capital ratios, and increase the risk-weights for certain a the fewyears.next in over phased The new requirements chan the Bank on January 1, 2015, with additional requirements, such as the capital conservation buffer (discussed below), to be than other businesses. Revised minimum capital adequacy requirements under the Basel III Rule became effective for us and to more hold are required capital generally institutions the industry,with banking associated risks to the losses). Due absorb Decreases in capital and changes to the fo that may cost of be requir compliance the new predict could im laws regulations in or Changes certainty. any with ne into authority enforcement and its supervisory as well. CFPB evolve The has shown it is that a ag proactive must compliance our enforced, and to interpreted, implemented, be the continue Bank. As and these us regulations including Dodd-Frank fromAct increased the have in resulted stemming time. over The Dodd-Frank significantly Changes in federal or state regulation may increase our costs. nancial reporting to stockholders and regulators. The determina The funding of the allowance for loan loss account is the most significant estimate made by management in its in estimate management made by isthe most account significant loss loan allowancefor ofthe The funding to regulat subject could be Bank the we and Accordingly, Federal law with broad to take provides regulators powers the above Capital CET1 buffer comprised of conservation a capital 2.5% maintain must institutions Financial level of to to an Federaladequate regulatory rules capital assets require available maintain (net institutions banking Bank the onus or changes regulatory or legislative proposed or current of effect or nature the predict cannot We and may change evolving constantly are industry our that govern interpretations and policies, regulations, laws, The
● ● ● ● ● ● ● ● appointing a receiver. appointing a prohibiting the payment of subordinated debt; and debt; and subordinated payment of the prohibiting or raises; bonuses executive prohibiting affiliates; with transactions restricting stock; capital additional of the issuance requiring restricting growthactivities; or limiting requiring submissioncapitala of plan; requiring a waiver to accept brokered deposits;
ry supervision.
titutions and the numerous requirements requirements numerous the and titutions ins of banking regulation Act reshaped "undercapitalized," "significantly rmulas for calculating adequate capita
w areas and to issue new rules and guidance. rrective powers include, but are not limited to: limited to: are include, but not powers rrective ed to keep pace with in mum requirements. arefive capital There tiers: capital "well minimal to date, we cannot guarantee that will continue. that will continue. guarantee we cannot date, to minimal 34 ates and itates and falls the below “well threshold, such capitalized” ency and we anticipate that the CFPB will continue to expand toexpand CFPBwillcontinue that the and we anticipate ency pact our our business pact alsocannot practices andprofitability. We ssets. Cumulatively, the Basel III Rule is BaselIIIRule more stringent the than ssets. Cumulatively, significant estimates of current credit risks and future trends, and future credit risks current significant estimates of ge the definition of capital, increase minimum increase of capital, ge the definition risk- required
tion of the appropriate level of the allowance of appropriate of level the forlosses loan tion compliance costs for institutions both large and small, and large both institutions for costs compliance
ory restrictions and penalties ory falls if certain capital below tained in order to avoid limitations on capital distributions distributions capital on in toavoid order limitations tained "prompt corrective action" to dustry regulatorychanges. undercapitalized" and "critically and undercapitalized" l may negatively impact us or result resolve capital deficiencies e
FORM 10-K
t s used by the Federal Reserve Reserve Federal the by used s
itions, including conditions economic our in specifically instruments are used in varying are used combinationsinstruments in to influence
management currently expects. If negative changes to the the to changes negative If expects. currently management acquiring us, despite the possible benefit to our stockholders. stockholders. our to benefit possible the despite us, acquiring 35 it conditions. Among the instrument Among conditions. it aggered terms of three years; years; three of terms aggered affected by the policiesof Reserve. Federal the by An important the affected function of the certainsuch approvals cases be may percentagerequired ownership. of lesser a at that may become uncollectible, may that we cannotpredict loan and losses with certainty, tively impact our stockholders. our impact tively but are notto: limited are but
outstanding without prior Board approval; approval; Board prior without outstanding on at stockholder meetings; meetings; stockholder at on 10% or more of our outstanding common stock; stock; common outstanding our of or 10% more and Directors; of Board our in vacancy a fill may directors only that requirement a advancenotice requirements fordirector nominations andfor proposing matters that stockholders ac may prohibition a votingonofof common shares total owned shares beneficially 10% stock excess in of owns beneficially who person any with combinations business certain for requirements voting supermajority st to directors of election the directors. our of any to remove requirements voting supermajority ● ● ● ● ● ●
In addition being to affected by general economic cond
Although management believes that the allowance for loan/lease losses as of December 31, 2016 was adequate to to was adequate 31, 2016 December as of losses for loan/lease allowance that the believes management Although and “DGCL”) (the Delaware of Law of State the Corporation General the documents, governing our in Provisions condition financial business, our upon Reserve Federal the of regulations and policies monetary the of effects The
In addition, because we are a bank holding company, purchasers of 10% or more of our common stock may be may stock common our of more or 10% of purchasers company, holding bank a we are because In addition, premium a at stock common our for bids discourage attempts, takeover potential discourage may provisions These
performance of our loan portfolio were to occur, management may find it necessary to or be required to fund the allowance allowance the fund to required be or to necessary it find may management occur, to were portfolio loan our of performance for loan accountloss through additional chargesprovisionour to for loan lossexpense. These changes occur may suddenly Additionalnature.andin dramatic be provisions theto allowance for loan losses and loan excess in allowancelosses said of may adverselyaffect our business, financialcondition and results operations. of and condition financial business, our affect adversely could Reserve Federal the of regulations and policies Monetary of results operations. growth are and our earnings Area, Market cred and supply money the regulate to is Reserve Federal provisions These include, absorbon any losses existingloans/leases we cannot assureour thatfor you allowance loan will prove losses sufficient to cover actual losses loan the in future, particularlyeconomic conditions if difficult than are more from party third a or prevent delay could regulations federal to implement these objectives are open market operations in U.S. government securities, adjustments of the discount rate and discountrate the of adjustments government securities, U.S. operations in opentheseobjectives market are toimplement These deposits. bank against requirements reserve changes in interest affects also use Their deposits. and investments loans, bank credit, of distribution the and growth economic overall ratescharged on loans paidor deposits.on of results operating on the effect significant a had have but be predicted, cannot future the in operations of and results past. the in Bank, our including banks, commercial nega could provisions Anti-takeover
required to obtain approvals under the Change in Bank Control Act of 1978, as amended, or the Bank Holding Company Act Act Company Holding Bank the or amended, as 1978, of Act Control Bank in Change the under approvals obtain to required in and “BHCA”), (the amended as 1956, of over market price or adversely affect the market price of, and the voting and other rights of the holders of, our common stock. common our of, holders the of rights other and voting the and of, price market the affect adversely or price market over These provisionsThese coulddiscourage also proxy contests andmake it more difficult forholders of our common stock elect to Directors. of Board our by nominated candidates the than other directors
FORM 10-K
on our common stock until such payments have been brought current. current. brought been such have payments stock until our common on in the future. stock will increase common economic and market conditions over which we have no control. We cannot assure you that the volume of trading in our and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general order the and liquidity depth, desired characteristicshaving of volume relative to many other stocks whose shares are also quoted on the NASDAQ Global Market. A public trading market the price you paid for them. There isalimitedtrading market for our so. to thatdo it will be able guarantee no paid before the Company can pay dividends on its capital stock. debt interest on our to pay Failure debentures for up to 20 consecutive quarters. However, if it el pay dividends on its capital stock, including its common stock. The Company has the right to defer interest payments on the payments onthe Company’s existing debentures, which totaled $579,000 for 2016, must bepaid before the Company can dividendsif: Reserve indicates that the Board that the of indicates Directors Reserve a bank holdin of adequ capital earnings, our light of in trustpreferred debt) and effects of the cash payment of dividends on common stock and other Tier 1 capital instruments (i.e., perpetual preferred stock Federal Reserve regarding capital adequacy and dividends. The Federal Reserve guidelines generally require us to review the market value is intact. represented by the issued and outstanding and outstanding issued represented by the declared and/or the preceding fiscal the manner described in the DGCL, or (2) in case there is no “surplus,” net profits for the fiscal year in which the dividend i stock. common our on dividends topay unable and we may tous, be dividends to pay able regulatory met,requirements are not Bankwillnot be the capital andliquidity and by other general restrictions on dividends that are applicable to the Bank. If current or any future to Bank di pay the of ability The capital. consolidated sufficient to maintain the need and byas Delaware law, restrictions well as regulatory is limited pay dividends to Directors. Our ability There are restrictions on our ability to pay di
outstanding our of certain on if wedefault future, the In Although our common stock is listed for trading on the NASDAQ Global Market, it has a low average daily trading Although the Company expects to be able to pay all required interest on the junior subordinated debentures, there is As ofDecember 31, 2016
Moreover, as a bank holding company, our ability to declare and pay dividends is subject to the guidelines the of the guidelines to is subject dividends and declare pay company, our to asability a bank holding Moreover, The DGCL provides that dividends by a Delaware corporation may be paid only from: (1) “surplus” determined in Holders of ourcommon stock are entitled to receive divide
● ● ● the company company meet, the will not of meeting,is or in itsdanger not minimum adequacy capital ratios. regulatory the the rateprospective of earnings isretention inco the company’s net income available to stockholders for the past four quarters, net of dividends previously current and prospective financial condition; or condition; financial prospective and current paid during that period, is not sufficient to fully fund the dividends;
, may adversely impact our ability to pay common stock dividends. we had $15.5 million of junior subordinated debentures held by two Trusts. Interest Trusts. Interest two by debentures held subordinated junior of million $15.5 we had year. Dividends paid fromsecondthe source maynot bepaid unlessthecapital stock of allclasses having a preference up commonnotyou be may ablestock, and vidends on and repurch and on vidends 36 liness depends on the presence in the market of willing buyers marketwilling of the in the presence on depends liness g company eliminate,should de ient tosufficient maintain itsobligation by to islimited us vidends acy and financial condition. As a financialgeneral condition. acy and matter, Federal the ects to defer interest payments, payments, defer interest ects to
debts, we will be prohibited from making dividend payments payments dividend making from prohibited be wewill debts, nsistent the company’ nsistent with nds only when, asand if ase our common stock. on the distribution of assets at current assetsatcurrent of on the distribution toresellyour shares at or above fer or significantly reduce the the significantly reduce fer or all interest mustdeferred be s capital needs andcapitals needs overall declared by our Board of
s
FORM 10-K
e a ir ct ct n, ation , or causeserious ted accounting principles and ted accounting principles and
results of operations and actual andmay differthese results from wance for loan losses, require the application of the application losses, require for loan wance proceedingschallenging ourlending legality of the l be a materia vary there resultsIf actual significantly, may . expenses and related disclosure of contingent assets and and assets of contingent disclosure related and expenses rvicesinstitutions, the including interrelatedare Bank, as versevalueof changesfair these These securities. the to ese and other federalese and and initiatives from state officials may
insurance, the scope of this coverage may not provide us with with us provide not may coverage this of scope the insurance, mance. These broad market fluctuations may adversely affect affect adversely may fluctuations market broad These mance. ethical behavior of our employees, and from actions from bytaken our and employees, of behavior ethical accordance with generally accep with generally accordance dustry, which require us to make estimates and judgments that judgments and estimates make us to requirewhich dustry,
uct. Damage to our reputationour to uct. could Damage impact our abilityattra to 37
ces industry,we are exposed high toa of levelpotential litig higher operational therebycosts, reducing ourrevenue. to lawsuitsto regulatoryor y and which may differ from actual results. results. actual from differ may which and y ns could negatively affect our business. business. our affect negatively could ns bject to an inherent degree of uncertainty bject to an inherent degree fect our financial business, fect condition or and assets as a result of the difficulties or failures of other banks, which would r growth. There can be no assurance that we could raise the necessary capital to to capital necessary the raise could we that assurance no be can There growth. r y compliance, lending practices, corporatepractices, lending compliance, y regulator and legal including areas, of er ke estimates and judgments, which are which judgments, and us to make requires estimates financial statements ng policies, such as those pertaining to our allo pertaining ng policies, such as those
operationsOur increasing businesses to and are subject regulatoryalso oversightscrutiny, which and lead to may Reputational risk, or the risk to us from negative publicity, is inherent in our business. Negative publicity can result result can publicity Negative business. our in inherent is publicity, negative from us to risk the or risk, Reputational
future couldWe become the in subject in prepared are statements financial consolidated Our Additionally, general market forces may have a negative effect on our stock price, independent of factors affecting affecting factors of independent price, stock our on effect negative a have may forces market general Additionally,
abilityengage toOur in routine funding other and transactions be negatively could by affected the actions and
subject us to further judgments, settlements, fines or penalties, or cause us to be required to restructure our to operationsrequired be or andcause us or penalties, to fines settlements, judgments, further subjectus to activities,ofall which could reputationalto lead orissues, relatedour to businesses and operations. Althoughwe maintain full,or even partial, coveragein anyparticular case. additional regulatory investigationsor enforcement actions. Th reputational harm to participant a servi financial As the us. in reputationalharm or business practices. Future actions against us may result in judgments, settlements, fines, penalties or other resultspenaltiesadvers orother fines, practices. judgments,settlements, orbusiness Futureresult actions in usagainst may to us, which could materially adversely af Our reputation could be damaged by negative publicity. publicity. negative by damaged be could reputation Our numb a in conduct alleged or actual from governance,litigation, inadequate protectiondata, customer of regulators,ofcondagenciesresult ratings that a othersand as new or maintain existing loan and deposit customers, employees and business relationships. relationships. business and employees customers, deposit and loan existing maintain or new consolidated our of preparation The uncertaint of degree inherent an to subject general reporting practices within U.S. financial servicesthe in affect the reported amounts of assets, liabilities, revenues and and revenues of assets, liabilities, amounts reported the affect We face legal risks, both from regulatory investigations and proceedings and from private actions brought against us. against brought actions private from and and proceedings investigations regulatory from both risks, We face legal liabilities. Some accounti their By estimates. financial calculating for assumptions appropriate the selecting in by management judgment significant are su judgments and estimates nature, these conditions or assumptions different under judgments and estimates in operations subsequent conditionperiods. financial on orresults our of adverse effect The soundness of other financial institutio financial other of soundness The our stock specifically. Factors beyond our control, including price and trading fluctuation, can significantly influence the fa the influence significantly can fluctuation, trading and price including control, our beyond Factors specifically. stock our value of securitiesour in portfolio potential and cause can ad conditions resultvolatility in may (i) in the level of, and fluctuations prices in, the market ofgenerally and, stocks tur in more or one about, questions or rumors or even by, Defaults relationships. or other counterparty clearing, of trading, result institutions,financial services services or industry financial generally, the have ledmarket-wide liquidity to problems and oflossesdepositor, creditor and counterparty confidence and couldlead to defaults losses or by by other us or institutions. We could experience increases in deposits increase theousupportneed capital to we supportoursatisfactory growth or on terms us. to our common stock and (ii) sales of substantial amounts of our common stock in the market, in each case that could be could that case each in market, the in stock common our of amounts substantial of sales (ii) and stock common our perfor operating our in to changes or disproportionate unrelated stock. common our of value market the commercialfinancialinstitutions. se soundness ofFinancial other
FORM 10-K
291 East Hwy CC 291 East
709 W Mt. Vernon
Loan Production Offices O JState Hwy 1701 W ...... for the foreseeable future. are free of encumbrances owned buildings Main Office Item 2. Properties Item 1B. UnresolvedComments Staff
Operations Center Springfield, 1341 W Battlefield Road ...... 2639 E 32nd St, Suite 1100 Spur Dr 2004 2155 W Republic Road SpringfiMissourield, 65803 1905 W Kearney ...... 4343 S National Springfield,Misso 2109 N Glenstone ...... Springfield, Misso 1510 E Sunshine ...... Offices Banking Center Spring Elfindale ...... W 1414 leased. with land owned Building *
The following table sets forth certain applicable. Not
...... Mars ...... Springfield, Misso ...... Nixa, Mi ...... Nixa,
R...... Joplin, Missouri 65804 R ...... Springfield, Missouri 6580 Missouri Springfield, ......
Location
ak isui671 08 we N/A Owned 2008 zark, Missouri 65721 or mortgages. The Bank’s facilities The or mortgages. are we fed isui676 2007 Missourihfield, 65706 Missouri 65714 il,Msor 50 20 Ond N/A Owned 2009 Missourifield, 65807 information concerning theBank’s ssouri 65714 isui687 95 we N/A Owned 1995 Missouri 65807 r 51 20 Ond N/A N/A N/A Owned Owned 2000 Owned 1987 uri 65810 1979 uri 65803 uri 65804 38
20 Lae* 2046 Leased* 2006 7
Opened Year 2008 2008 05 2005 06 esd 2017 Leased 2016
esd 2044 Leased* esd 2017 Leased facilities as of December31, 2016.Allas facilities esd 2044 Leased* ll maintained and considered adequate adequate considered and ll maintained Owned or esd 2038 Leased* Leased
renewal options) (Including any Expiration Lease Lease
FORM 10-K in which the Bank the which in l proceedings cannot be predicted with predicted l proceedings be cannot ceedings, on properties properties on ceedings, scal Year Covered This by Covered scal Year Report g of real property loans, and other issues incident to the to incident issues other loans, and property real g of e effect on thee effect business, Company’s financial conditionor
39 ile the ultimate outcome of such lega such of outcome ultimate ile the atened litigation with legal counsel, management believes thatat this time the During the Last Quarter of the Fi the of Quarter Last the During
Notapplicable. (a) Material Legal Proceedings Proceedings Legal Material (a) andThe time the Company from Bank, to be time, ordinary parties tomay routine litigation,which in arises the Terminated Proceedings (b) Notapplicable.
holds security interests, claims involving the making and servicin Wh Bank. and the Company of the business
pro condemnation and liens, enforce to claims as such business, of course normal
Item 3. Legal Proceedings Legal 3. Item certainty, after reviewing pending reviewing and after certainty, thre outcome of any such litigation advershavewill not a material resultsof operations. Disclosures Safety Mine 4. Item
FORM 10-K
Quarter ended: Quarter ended: December 31, 2016 and 2015. Dividends andCommon Stock Prices date the Company had 6,875,503 shares of common stock issued and 4,421,275 shares of common stock outstanding. Shareholders Global Market under the symbol “GFED”. Market Information Securities quartertheended for years D other factors that the Company’s Board requirements Company’s results cash operations, the of things, Item 5. Market for Registrant's
eebr3 ...... 2.0 16.3 16 14.9 21.20 16.90 16.18 December 31 ...... September 30 ...... June 30 ...... ac 3 ...... 31...... March ue 0...... /321 7521 $ 0.08 0.10 0. 0.08 $ $ 1/13/2017 $ $ 7/5/2016 10/20/2016 12/22/2016 4/14/2016 December 31 9/29/2016 .... 6/23/2016 September 30 ... 3/24/2016 30...... June 31...... March The table below sets forth the cashdividends per share on the Company’s common stock for the years ended that At stock. common Company’s the of shares of holders 1,406 approximately were there 2017, 15, March of As The common stock of Guaranty Federal Bancshares, Inc. (the “Company”) is listed for trading on the NASDAQ The table below reflects the range of common stock high Any future dividends willbe at the discretion of theComp
elrd ad Paid Declared ecember 31, 2016and 2015. December 31, 2016
Common Equity, Related Stockholder Ma Year ended
of Directors may consider relevant. Hg o ih Lw Low High Low High Dcme 1 06 Dcme 1 05 December 31, 2015 December 31, 2016
1.7 14.80 15.57 $ $
Dividend Per PART II hr elrd ad Paid Declared Share eredd Year ended 40
and surplus, financial condition, regulatory limitations and limitations regulatory condition, financial surplus, and 8 92/05 01/05 0.05 $ 10/15/2015 9/24/2015 08 any’s Board of Directors and will depend on, among other
and low sale prices per the NASDAQ Global Market by Market Global the per NASDAQ saleprices low and 1/321 11/06 0.08 0.05 0.05 $ 1/15/2016 $ 7/16/2015 12/23/2015 $ 4/16/2015 6/25/2015 3/26/2015
0 1.0 14.15 15.20 .00 1.5 14.30 14.30 15.25 15.20 0 8
tters and Issuer Purchases of Equity $ 52 13.02 15.25 $ $ December 31, 2015
Year ended eredd Year ended
Dividend Per hr Share
FORM 10-K
12/31/16 12/31/16
12/31/15 12/31/15
sted. The graph reflects the historical historical reflects the graph The sted. 12/31/14 12/31/14 177.42 191.53 265.56
Period Ending Period 164.57 164.57 188.84 201.98 219.89 12/31/13 12/31/13
192.96 233.80 274.96 389.55
NASDAQ OMX Global Indexes which the comparable to is 41 12/31/12 12/31/12 118.69 168.21 176.48 192.08 265.02
, assuming that all dividends were reinve were that all dividends , assuming the hypothetical value of that investment as of the Company’s fiscal years ended fiscal years ended as of the Company’s that investment value of the hypothetical
12/31/11 , 2016, the last day this data was available by our third-party provider. provider. third-party our availableby was data this day last the 2016, , 4, 2015, and 2016
DAQ DAQ ...... 00 100. 119.19 171.31
With respect to the equity compensation plan information required by this item, see “Item 12. Security Ownership Ownership Security 12. “Item see item, this by required information plan compensation equity the to respect With Set forth below is a stock performance graph comparing the cumulative total shareholder return on the Common Common the on return shareholder total cumulative the comparing graph performance stock a is below forth Set As a result ofAs a a change the in totaldata return available made us to through ourprovider, vendor performanceour
ASDAQ - Total US ...... US Total - ASDAQ ...... Index Bank ASDAQ 100.00 100.00 117.45 ndex
report. this in Matters” Stockholder Related and Management and Owners Certain of I ... Inc. Bancshares, Federal Guaranty 100.00 N N 120.88
Stock with (a) the cumulative total stockholder return on stocks included in The Nasdaq – Total U.S. Index(b) theTotal cumulative U.S. – totalNasdaqcumulative stockholder The the (a) Stockwith return included on in stocks total stockholderreturn on stocks included in The Bank NASDAQ Indexandcumulative (c) the stockholder total returnon the of as $100 of investment the assume comparisons investment three All NASDAQ. Bank U.S. SNL the in included stocks 2011 and 31, on December close of business 2012, 201 31, 2013, December
Financial Performance Financial performance of the Common Stock, and, as a result, may not be indicative of possible future performance of the Common Common the of performance future possible of be indicative not may result, a as and, Stock, Common the of performance NASDAQ. from obtained was graph this compile to used data The Stock. SNL U.S. Bank NAS U.S. SNL Bank graphs goingforward will be using an index providedby December from only provided is Index Stock Bank NASDAQ the for information note, Please Index. Stock Bank NASDAQ 31 2011 31, through December AuthorizedSecurities for Issuanceunder EquityCompensation Plans
FORM 10-K
Issuer Purchases of Equity Securities
fourth quarter ended December 31, 2016. Total Total Decemberto1, 2016 December 31, 2016 N to October 1, 31, 2016 2016 October
ovember 1, 2016 to November 30, 2016 22,000 16.89 22,000 152,548 152,548 22,000 16.89 22,000 2016 30, to November 2016 ovember 1, (1) The Company has a repurchase plan which was announced on August 20, 2007. This plan authorizes the authorizes plan This 2007. 20, August on announced was which plan a repurchase has Company The (1)
The following table summari
for this plan. There are no other repurc p urchase by the Company of up to 350,000 shares of the Company’s common stock. There is no expiration date Period zes the repurchase activity of the Comp activity of the repurchase zes the
(a) Total Number 22,000 $ 16.89 22,000 22,000 16.89 22,000 $ Purchased of Shares hase plans in effect at this time. 42 - -
(b) Average Price Paid per Share Paid per any’s Common Stock during the Company’s - - (c) Total Number Announced Plans Plans Announced or Programs (1) Part of Publicly Publicly Part of Purchased as of Shares 152,548 - 174,548 - (d) Maximum Purchased Under Shares that May the Plans or the Number of Programs Yet Be
FORM 10-K
4 4 68,376 14,798 2012 2012 2012
$ 500,015
2,055
2013 2013 2013
1,399 1,03
14,044 13,657
10,887 11,286
$ $ 12,303 41,663 55,350 68,050 50,355 50,868 16,771 15,355 14,204 16,703 014 $ 014 $ 25,855 27,606 685 685 20,758 20,748 2014 2014 2014
4,329 5,097 6,858
3,350 5,319 3,256 3,165 3,822 4,530
1,275 1,550 5,950 1 1 2,113 2,516 755 8 8 7,895 7,756 2,699 As of December 31, December of As 31, December of As 462 462 1,350 1.32 $ 1.32 $ 1.35 $ 1.63 0.32 ,336 ,336 86,529 97,772 102,162 Years ended December 31, December ended Years 2015 2015 2015
$ $ 517,386 $ 479,818 487,319
18,780 14,417
43 100 100 16,610 14,865 457 457 492,905 487,801 465,003 4 ,837 ,837 20,310 19,410 19,208 ,088 $ ,088 $ 18,774 12,494 ,234 ,234 10,121 ,871 11,421 10,540 10,603 95,700 95,700 52,100 60,350 2016 2016 2016 69,974 66,422 61,477 - - 357 795 1,077 21,212 20,910 20,
$ $ 25,389 $ 25,190 25, 15,465 15,465 15,465 15,465 15,465
618,005 586,413 566,983 569,533 609,564 $ $ 687,979 $ 652,835 $ 628,460 $ 619,888 660,432 $ $ 687,979 $ 652,835 $ 628,460 $ 619,888 660,432
...... 1,947 1,987 030 2, 1,853
...... 19,273
...... 17, ...... 1,477 1, The followingThe tables include certain information concerningfinancial position the andoperationsof results of income ...... $ ...... income $ 5,594 $ 5,717 $ 5,782 $ 5,240 1,944 t losses ...... losses 19 accretion ...... accretion Bank advances ...... advances Bank e $ ... shareholders common to available income et $ 5,594 $ 5,717 $ 5,425 $ 4,445 867 et interest income ...... income interest et loan for provision after income interest et ...... income oninterest expense oninterest 4,870 4,478 umber of full-service offices ...... offices full-service of umber 9 9 9 9 9
Preferred stock dividends and discount discount and dividends stock Preferred $ ...... share common per income Basic $ 1.28 Interest expense ...... expense Interest 4,177 4,280 ...... taxes income for Provision 2,013 N 2,46 N $ ...... share common per income Diluted $ 1.27 $ 1.30 $ 1.33 $ 1.58 0.30 N ...... losses loan for Provision N 1,375 N N 600 ...... income Interest Data Supplemental N $...... share common per dividends Cash Income of Statements Summary $ 0.34 $ 0.23 $ 0.15 $ - - Accrued interest receivable receivable interest Accrued ...... EQUITY STOCKHOLDERS' LIABILITIES LIABILITIES $ ...... Deposits 505,363 Guaranty Federal Bancshares, Inc. (including consolidated data from operations of Guaranty Bank) as of the dates indicated. indicated. dates the of as Bank) Guaranty of operations from data consolidated (including Inc. Bancshares, Federal Guaranty share. per except thousands in expressed are amounts Dollar Sheets Summary Balance ASSETS $ ...... equivalents cash and Cash 9
Item 6. Selected Financial Data Financial Selected 6. Item ...... deposits interest-bearing and Investments ...... net receivable, Loans 92,427 540, 97 FederalLoan Home Bank Federaland Reserve .. repurchase to agreements under soldSecurities Subordinated debentures ...... liabilities Other - - 10,000 10,000 25,000 Income before income taxes ...... taxes income before Income 7,607 8,17 Prepaids and other assets ...... assets other and Prepaids ...... assets Foreclosed 11 ...... net equipment, and Premises 2,682 insurance life owned Bank 10 2,392
FORM 10-K
risks, uncertainties and factors, please For and further time. these from informationother to about timeCommission Exchange SecuritiesCompany with the and from and other resulting these factors set factors; filedbythe in therisks andother forth documents reports at managing an changes technological estate collateral; asset quality insurance); and securities taxes, banking, concerning and services; the competitors' products impactto changes of the theseand perceived of services by overall value and products that operates as a one-bank holding compa GENERAL Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and laws, changes in interest rates; the developmenttimely of the Comp which in economies local the and the realestatevalues of the strength and general in Stateseconomy the United of strength the statements: looking performance to differ materially from the plans, objectives, expectations, estimates andintentions expressed in such forward- which are beyond the Company's control). The following factors, among others, could cause the Company's financial objectives, expectations, estimatesandinte statements. expressions are intended to identify such When used in this Annual Report on Form 10-K, words such provisi "safe harbor" the to pursuant Company the faith by good K and the exhibits thereto), in its reports to stockholders and in other communications by the Company, which are made in Form Report on 10- Annual this (including Commission Exchange and withthe Securities the filings in company's contained FORWARD-LOOKING STATEMENTS corporation whichhas inactive been since February 1,2003. isaservice third subsidiary The this report. in Financial Statements to 1 Consolidated of theNotes Note Information” in Bank is the Company’s only reportable segment. Seealso the discussion contained in the section captioned “Segment the through conducted operation banking Company’s The Company. the by issued debentures subordinated junior acquire to securities preferred trust issuing of purpose exclusive for the inDecember wereformed 2005 TheseTrusts subsidiary. Statutory Trust I,aDelaware statutory trust; and (ii) Guaranty Statutory Trust II,aDelaware statutory trust and athird ina consumerlending throughout southwestern Missouri. at which such financing may be offered. The Company intends to focus on commercial,one- to four-family residential and general and market interest rates cost the Company’s influence including the MDF and the FDIC, significantly influence the Company’s operations. Interest rates on competing investments from for services. fees charged General economic conditions as additional financing sources. in exceed outflows cash securities. When permissible other and mort sponsored government to purchase these funds uses also real estate loans, mortgage loans secured by one- to four-family residences, and consumer and business loans. The Company attracting deposits from the general public and using such de specified, references to the Company incl the activities,Company and assets significant has no other than
The primary activity of the Company is primary the of The activity Guaranty Federal Bancshares, Inc. (t These forward-looking statements involve risks and uncert CompanyThe statements may "forward-looking from statements", timemake including written to oral or time (i) Guaranty subsidiary: its principal than other Bank, subsidiaries the active Companywholly-owned two The has The Company derives revenues principally from interest earn
any conductsoperations; theeffects of, and chan reviewthe disclosure includedin Item“Risk1A. Factors” this of Form10-K. d cybersecurity risks; acquisitions; employee retention; the success of the Company forward-looking statements but are not the exclusive ny. Guaranty Bank (the “Bank”) is a wholly-owned subsidiary of the Company. the of (theBank ny. “Bank”)subsidiary Guaranty is a wholly-owned ude the operations of the Bank. Co Bank. The the of ude the operations ntionsthatare subjectto change based on variousimportant factors (someof he “Company”) isaDelawarecorp to oversee its investment in the Bank. The Company engages in few other gage-backed securities, US government and agency obligations, agency USgovernment and securities, gage-backed 44 as “anticipates,” “estimates,” “believes,” “expects,” andsimilar posits to originate multi-family, construction and commercial commercial and construction multi-family, to originate posits and acceptance and of new products and policies of the financial institution regulatory agencies, agencies, regulatory ofthe institution and policies financial
of are a funds. activities Lending flows, the Company uses borrowings and brokered deposits deposits brokered and borrowings flows, the uses Company in financial(including services' regulations laws laws and its investment in the Bank. For this reason, unless otherwise reason, this unless For Bank. the its investment in ons of the ons Private Securities Reform Litigation 1995. Act of users, including the features users, including deterioration; environmental liability associated realassociated with liability environmental deterioration; ainties, such as statements of the Company's plans, ed on loans and investments and,toalesser extent, oration organized on December 30, 1997 oration organizedon December30, ges in, trade, monetary and fiscal policies and monetary trade, in, ges mpany’s principal businessconsistsof , pricing and quality compared compared quality and , pricing and services of the company ffected by the interest rates the by ffected means of identifying such
ctive ctive
FORM 10-K 52 (5%), primarily primarily (5%), 52 as of December 31, December of as 15,813. The Company 15,813. The Company to $505,362,750. During realized depreciation on realized depreciation sed $35,144,747 (5%) to to (5%) $35,144,747 sed loans increased $6,879,853 increased loans d by $47,271,733 (10%) to (10%) to d by $47,271,733 ecember 31, 2015. 2015. 31, ecember impaired with a related allowance allowance related with a impaired ecember 31, 2015 to December of 100,000 as decreased $4,893,2 decreased ring 2016 has increased the general general the has 2016 increased ring recoveries by $1,444,491 for year the d December 31, 2015 was 1.06% and 2015 was 1.06% 31, December d d of both fiscal years. fiscal years. both of d Company continuesCompany to focus its lending ts received of $85,9 of received ts net loans receivable of $47,271,733. $47,271,733. of receivable net loans loan $69,491decreased losses In $5,742,449. to The Company does not undertake to update any any update to undertake not does Company The eased $12,022,945 (2%) $12,022,945 (2%) eased any’s total assets increa assets total any’s ders’ equity (including un equity ders’ loans receivable increase receivable loans the Company during the year ended December 31, 2016, 31, December ended year the during Company the cant depositdollarsfor projects large that produced an ,439, and stockholders' equity increased $3,551,915 (5%) y. Managementy. believes the loanfor allowanceat is losses retail, commercial andpublichadThisfunds. allowed the made from timebehalfonfrom to made by time or theof Company.
eased by $8,163,633 and certificates of deposit decreased decreased of deposit certificates by $8,163,633 and eased . On a per. On common a basis, stockholders’ share equity increased (5%) to $69,974,380. Net income for the year ended December December ended year the for $69,974,380.income Net (5%) to financing. multi-family Permanent 45 l assets was 10.2% at the en the at 10.2% was assets l 2016, the allowance for allowance the 2016, of December 31, 2016. 2016. 31, of December identified loans totaling $8,699,000 as loans identified 31, 2016, deposits 31, 2016, deposits decr actors are not exclusive. are not actors creased $43,600,000 (84%) from $52, from (84%) $43,600,000 creased increase in overall loan balances du balances loan overall in increase commercial estate, primarily real securedby owner occupied and retail low- sly classified as nonperforming) exceeded nonperforming) classified as sly order to fund the Company’s growth in growth Company’s the fund to order (8%) due to increased loan demand. The The demand. loan increased (8%) due to of $1,375,000 recorded of $1,375,000 recorded by by sales, maturities and principal paymen and principal by sales, maturities $1,085,645 at D at $1,085,645 to compared 2016 31, December at r 31, 2015 to $16.09 as $16.09 to 2015 31, r sale), as of December 31, held for sale), 2016 loans as of December an xcluding mortgage December 31, 2015 to December 31, 2016, stockhol 31, December 2015 to 31, December From The Company cautionsThe Company that the listed f From December 31, 2015 to December 31, 2016, the Comp the 2016, 31, December to 2015 31, December From securities available-for-sale 2016, 31, December 31, 2015 to December From From December 31, 2015 to December 31, 2016, net 2016, 31, net December 2015 31, to December From 31, 2016, management December of As December 2015 to 31, December From in advances Bank Loan Home Federal From December 31, 2015 to December 31, 31, 2015 December to December From
forward-looking statement, whether written or oral, that may be forward-lookingorthatoral, writtenmay whether statement, CONDITION FINANCIAL $687,979,819, liabilities increased $31,592,832 (5%) to $618,005 to$69,974,380. The stockholders’of ratio equity to tota offset $82,423,495 of purchases due to in 2016 31, December of as $95,700,000 31, 2016 exceeded dividends paid or declared by $4,089,156. The equity portion of the Company’s unrealized losses on on losses unrealized Company’s the of portion equity The $4,089,156. by declared or paid dividends exceeded 2016 31, available-for-sale securities declined by $625,285 during 2016 had net unrealized losses of $2,078,050 of losses unrealized net had (17%) due to three new significant credits offset by loan payoffson existing credits. Commercial loans decreased$5,602,165 (7%)which was primarily due to anticipatedpayoffs. Loans securedby both owner and non-owneroccupied one-to-four $8,153,141 increased residences family effortsthe in categories. commercialloan estate real occ and ownerupied charge- of result a as decreased reserve overall the However, requirements. reserve loss loan for allowance the of component loans gross of percentage as a losses, loan for The allowance loans. nonperforming on established reserves specific of offs (e outstanding outstanding, loans ming nonperfor of percentage a as losses, loan for allowance The respectively. 1.17%, 2016201566.5%wasrespectiveland31, December 109.9%, and levela providingsufficientbe to in for potential loan inlosses the Bank’s existing loan portfolio. decr balances transaction savings and checking period, this $3,859,312. For the majorityof 2016, experienced Company the growth strong in checkingsavings anddue accounts to its including deposits, transaction core increase to efforts continued Company to reduce higherpriced certificates of deposit. However,during the fourthquarter of2016, various public fund and onecustomers business commercial utilized customer signifi overall decline indeposits for 2016. available-for-sale securities, netof tax) increased$3,551,915 Decembe of as $15.27 from $538,273,640. Permanent loans secured by secured loans Permanent $538,273,640. to moving projects construction larger two to due was which (20%) $40,756,300 increased projects, housing income to primarily due (10%) $4,550,558 decreased loans Construction demand. loan increased overall and financing permanent permanent to moving above discussed credits larger two the for loan lossesof $602,000. Impaired loansdecreased by $6,031,000 during 2016, compared to thebalance of $14,730,000 2015. 31, at December losses loan for provision the to addition (previou loans of specific loan charge-offs December 31, 2016. The ended Company’s
FORM 10-K
Transaction accounts Transaction accounts ...... Certificates ofdeposit neetbaig accounts Savings Interest-bearing: uodntddbnue .. 545 3. 15,465 Subordinated debentures ... eucaeareet ... 00% - - 0.00% - 535,617 Total interest-bearing ...... Repurchase agreements ..... 648,618 Total interest-earning ...... Other assets Investment securities ...... amounts are expressed in thousands. average yields have not been calculatedona taxequivalent Averageare balances basedbalances.Tax-freeincome ondaily yields. net rate and thespreads Company’s shows table the addition, In andcosts. yields average weighted resulting (3) the Ratio ofinterest-earning N Earningcosting yield less N Stockholders' equity Total liabilities N FHLB advances LIABILITIES AND N Loans ...... Interest-earning: AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS ASSETS various categoriesofinterest-earning assets interest-beari and for balances o the average indicated: and, (1) the periods costs, theand yields and corresponding liabilities interest-bearing et interest income, and income, et interest balance et earning oninteres oninteres interest-earning assets interest-earning ... net yield spread on liabilities assets tointerest- ...... rate EQUITY STOCKHOLDERS'
t t The following table showsthe balances as baig ..... 8,8 82,388 -bearing ...... 40,632 39,362 -earning ...... 121% ...... ,9 9,991 ......
...... 6805 618,005 ...... 9,0 95,700 ...... $ ...... b ..... 1301 ...... 113,001 $ earing ..... 995 990 69,910 69,975 ...... 6790 $ 7,1 6107 $ 2,8 625,284 $ 651,097 $ 673,613 $ 687,980 $ 625,284 $ Ended Year 651,097 $ 673,613 $ Ended Year 687,980 $ December 31, 2014 Ended Year December 31, 2015 December 31, 2016 Asof December 31, 2016
9,2 .5 101,081 1.95% 92,427 1169 08% 1,2 994 0.89% 111,220 0.89% 111,689 513, 4.81% $ 546,200 $
Balance
8,6 0.40% 284,668 805 02% $ 749 55 $ 27,489 0.20% $ 28,095
3.53%
Yield
Cost
.0 5839 4, 548,359 0.80% 179 1.00 614,994 25,389 4.01% 632,981 4.33% 17,905 0.31% .9 7,3 1,314 73,833 1.59% / 3 1,6 579 3.74% 15,465 53% Average
115 %
534 166 127 51,277 61,686 55,344 0,0 5619 565,492 586,179 603,703
8,2 9,0 7,3 75,033 $ 90,501 $ 84,622 $
2,5 1,235 0.39% 320,352
Balance
9 $ 23,315 4. $ 995
of December 31, 2016 of various categ 1,895 1.87%
21,212 3.35% $
Interest
7 .6 524,493 177 0.76%
17% 390 1,196 2.22% 53,970 1.78%
basis. Average loanbalancesloans. Dollar include non-accrual 46
3.25%
Yield ng liabilities, (2) the total intere total the (2) liabilities, ng .0 455 11 .4 1,0 265 10,000 121 2.64% 4,575 0.00%
Cost
.0 2,4 $ 9 .0 24, 49 0.20% $ $ 24,841 0.20% $ / 4 5114 23,565 $ 501,194 54% $ is not accordingly, material;
2,5 141 0.60% 23,552 % Average
6,1 5,9 59,792 64,918 3,0 3,3 36,036 36,103
117 %
3589 1,277 0.42% 305,849
1,6 3 34% 15,465 539 3.49% 15,465
1973 1,098 0.92% 119,793
Balance
028 1,484 1.64% 90,248
4,280 0.82% 25,190 4.1
20,910 $ 3.40%
Interest
.0 4584 23,255 $ 465,874 4.70% 4.99% $
3.28%
Yield ories of interest-earning assets and
Cost
/ % 8,4 25,014 4.25% 589,248 0% st earned or paid thereon, thereon, paid st earned or
Average
interest income andrelated 1,1 4,329 0.84% 514,215 2915 1,242 0.43% 289,175
1134 1,038 0.86% 121,344
115%
347 132 0.56% 23,487 1,627 1.63% 99,887
5,6 1,202 2.23% 53,865
Balance
6 $ 49 0.20% $ 366
533 3.45%
20,685 $ 3.51%
Interest
3.40%
2.65%
Yield
Cost
/ and
f
FORM 10-K
e
0.29% 0.29% 0.61% 0.32% Total
Treasury Treasury One-Year One-Year commercial loans to Rate Rate & Balance Balance
3.75% which basis 25 a is
y Rate is a proxy for 30-year 30-year for a proxy is Rate y Year ended Year ended 1.84% 1.84% 2.14% -0.30% -0.30% Rate Rate Interest Interest (1,326) ) (104 176
its adjustable rate rate adjustable its Treasury Treasury Ten-Year Ten-Year
Balance Balance Average % %
December 31, 2015 versus December 31, 2014 2014 31, December versus 2015 31, December Averagefor the Year Shown
, 2016, the prime rate was was rate prime the 2016, , tes that are largely a functionofgeneral the levelof ininterest income and interest expense for periodsthe 0.25 3.51% 3.51% 3.26% 103) 103) (82) 36 ) (3 (49) Total ), (ii) changes(ii) ), in interest (changerates multipliedrate in by on is providedrespect with to changes attributable (i) to: l Reservel Open Market the Committee increased (“FOMC”) (104) 117 (13) 2 74 ) (8) (1 60 - (6) 37 - 9 - 9
411 (157) 16 ) (2 (143) lance and (change interest rates multiplied in by balance chang Prime Prime
47 Treasury Rate. The ten-year Treasur Rate. The ten-year Treasury
Rate Rate & Balance Balance
87) $ 87) $ (51) $ 302 $ 1,688 $ (1,362) $ ) (101 225 830) $ $ 830) $ (21) $ (249) $ 1,763 $ (1,351) $ ) (102 310 r 31 As December 2016. of ral Reserve. The Bank typically indexes Bank typically The ral Reserve. Year ended Year ended (528) (528) (19) 199 1,606 Rate Rate Interest Interest (121) 121 (121) (144) - - (144)
Balance Balance Average own in the previous table. For each category of each category of For table. previous the own in rates sh average and balances average changes in
December 31, 2016 versus December 31, 2015 2015 31, December versus 2016 31, December
...... The Bank charges borrowers and pays depositors interest ra The following table sets forth information regarding changes changes regarding information forth sets table following The Rates trended upward by the end of 2016endupwardtrendedtheRates byof Federa the as
et change in interest interest in change et et change in interest interest in change et income ...... $ ...... income $ 440 ( debentures ...... debentures ...... agreements - (121) 40 - 40 - 6 - 6 expense ...... expense 306 (441) 32 ( income ...... income 746
December 2015 31, December 2016 31, December Change in netinterest Change in 31, DECEMBER AND 2016 31, DECEMBER ENDED YEAR OF - COMPARISON OPERATIONS OF RESULTS 2015 Rates Interest N ...... rates in Change interestfor rates 52 weekly average the weeks sets forth the ending table DecemberThe above interest rates. 2016 31, and Fede by the 2015 as reported 31, December andprime its adjustable rate mortgage loans to the one-year N expense: Interest ...... accounts Savings .... accounts Transaction ... deposit of Certificates 5 61 (79) (98) 1 (27) (4) - 2 (41) 6 72 1 (35) ) (1) (2 35 - - income: Interest $ ...... Loans .... securities Investment $ 602 178 ( 208 25 ...... advances FHLB Subordinated 440 (236) Repurchase (87) Other assets ...... assets Other (34) 94 (23) indicated resulting from from indicated resulting interest-earning liabilities assets and interest-bearing informati changes (changebalance balance in in multiplied oldrate bythe
point increase from 2015. 31, December from increase point fixed rate home mortgage loans. loans. mortgage home rate fixed Decembe in points basis 25 by rate discount the oldbalance); andthe(iii) combined of effect changesba in thousands. in expressed are amounts Dollar rate). in
FORM 10-K
loan loss provisions. additional of establishment the order estimates. In addition, the amount ofthe allowance forloan losses is subject to review by regulatory agencies which can for potential loan losses in its existing loan portfolio, there can be no assurance that discussionsSee further warrant. of a ofratehad 2.61%. prioryear was the prepaymentofthe Company’s $10million re effective wholesale funding continue to improve the Company’s overall cost of funds. Also improving cost of funds over the $249,990 (1%). The average loan receivabl increased $10,833,000 (12%) while the average yield improved 23 basis points to 1.87%. charges to the provision for loan losses if anticipated growth growth the lossesfor loan to ifanticipated provision charges conditio regulatory economic and on based accordance withmethodology. its The Bank will maintaining and balances loan increased the to primarily due $600,000 for theyears ended portfolio. loan Company’s the of to collectability related other factors and conditions economic general considers Company the addition, In Company’s loan portfolio. inthe loans past due and impaired trends and banking consider Company itsassessment, making the When portfolio. loan existing the in losses loan for potential provide Company to the by adequate considered alevel to losses for loan income. Balances, Interest and Average Yields” s inte assetsand of interest-earning balances average overall while (5%), $23,866,000 increased liabilities 4.01%. to 9 basis points assets decreased earning interest average yield on the while (3%), $17,987,000 increased The expansion of lower-cost, core deposit relationships and redu and relationships deposit core lower-cost, of expansion The deposits increased $8,578,000 (2%), however, the average interest rate paid to depositors decreased 4 basis points to 0.50%. comparedto 2015. to significant competition on new and and rene on new competition significant to points to 4.54%. The Company experienced strong loan activity during 2016. However, pricing on loans is challenging due Although the Bank maintains its allowance for loan losses at a level which it considers to be sufficient to provide to sufficientbe to provide itconsiders losseswhich atalevel loan for itsallowance maintains the Bank Although Net Interest Income.creased interest income Company’sNet Interest $302,562 in (1%)net The primar (1%).The average $199,692 balance income increased of interest Total Income. Interest Offsetting the increase in interest income on investments wa investments on income increase ininterest the Offsetting Based on its internal analysis and methodology, management methodology, and analysis itsinternal Based on Provision for Loan Losses. Provisions for loan losses are charged or credited to earnings to bring the total allowance increased securities $411,6 oninvestment income Interest Interest expense on deposits decreased $139,889 (6%) du (6%) $139,889 decreased deposits on expense Interest Interest Expense.Totalinterestexpenseaverage as the decreased $102,870 (2%) December 31, 2016 and 2015, respectively. The Company’s increase inthe provision was the allowance for loan losses allowance for loan the u ection (pages 47 and 48) for additional information on components of net interest interest of net oncomponents information additional for 48) and 47 (pages ection wing credits. The pricing pres The pricing credits. wing e balance increasede balance $12,801,000 (3%) while the average yield decreased 16 basis ns. Management may need to increase the allowance for loan losses through losses through for loan the allowance increase to may need Management ns. the average cost of interest-bearing lia ofinterest-bearing cost average the continue to monitor its allowance for 48 rest-bearing liabilities. Refer to in the Bank’s loan portfolio in loan portfolio the Bank’s in purchase agreement during the second quarter of 2015, which 2015, of which quarter the second during agreement purchase
general portfolio at reserves portfolio general s prior loss experience, volume and type of lending, local ctions in higher priced retail products and utilization of cost of utilization and products retail priced higher in ctions nder “Financial Condition” above. 23 (28%). The average balance of investment securities securities ofinvestment balance average 23 The (28%). s the decline in interest income on loans which decreased in decreased decline which s on the income loans interest ring 2016 as the average balance of interest bearing bearing interest of balance average asthe 2016 ring recorded a provision for loan losses of $1,375,000 and and loan losses of $1,375,000 for aprovision recorded sure has impacted the ability to maintain loan yield yield loan maintain to ability the impacted has sure future loan losses bilities decreased 6 basis points to 6 0.76 points decreased basis bilities loan losses and make future additions creases or other circumstances a level deemed appropriate in the tables in the “Average tables “Average the in the balance of interest-bearing ofinterest-bearing balance ily due to the increase in increase to the ily due interest-earning assets will notexceed int ernal %.
FORM 10-K
0.20% 0.20% 0.32% 0.12% Treasury Treasury One-Year One-Year . During 2015, the 2015, the . During commercial loans to interest-earning assets assets interest-earning 3.50% which basis 25 a is y due to increased gains on gains increased to y due y Rate is a proxy for 30-year 30-year for a proxy is Rate y employee benefits increased benefits employee 2.14% 2.14% 2.54% -0.40% -0.40% theCompany’s increased activity its adjustable rate rate adjustable its on January 3, 2017 Treasury Treasury Ten-Year Ten-Year
tion of tax-exempt revenue sources. sources. revenue tax-exempt of tion % %
Averagefor the Year Shown , 2015, the prime rate was was rate prime the 2015, , The increase in salaries and employee benefits is due due is benefits employee and salaries in increase The tes that are largely a functionofgeneral the levelof 0.01 3.26% 3.26% 3.25% ,135(9%). This was primaril $491,018Salaries (3%). and l Reservel Open Market the Committee increased (“FOMC”) commissions which increased due to the mortgage volume volume mortgage the to due increased which commissions
Prime Prime ronger real estate market and market estate real ronger 49 Treasury Rate. The ten-year Treasur Rate. The ten-year Treasury
ary 13, 2017, to stockholders of record to stockholders 13, 2017, ary r 31 As December 2015. of ral Reserve. The Bank typically indexes Bank typically The ral Reserve. primarilythrough increased the utiliza 000,000 repurchase agreement. agreement. repurchase 000,000 ......
The Bank charges borrowers and pays depositors interest ra
Non-Interest Income. Non-interest income increased $392 increasedincome Non-interest Income. Non-Interest Non-Interest Expense. Non-interest expense increased increased expense Non-interest Expense. Non-Interest Income Taxes.provision Thefor decreased taxes income $448,565(18%)over 2015 direct a result as of the record of stockholders to 2016 14, April on share per $0.08 of dividends paid Company The Paid. Dividends Cash Interest Income. Total interest of increased income balance $175,320 average (1%). The Rates trended upward by the end of 2015endupwardtrendedtheRates byof Federa the as
RESULTS OF OPERATIONS - COMPARISON OF YEAR ENDED DECEMBER 31, 2015 AND DECEMBER 31, DECEMBER AND 2015 31, DECEMBER ENDED YEAR OF - COMPARISON OPERATIONS OF RESULTS 2014 Rates Interest increased $25,746,000 (4%), while the yield on average interest earning assets decreased 15 basis points to 4.10%. 4.10%. to points basis 15 decreased assets earning interest average on yield the while (4%), $25,746,000 increased
December 2015 31, December 2014 31, December Company $1,008,332 paid dividendscommonDuringon stock. in 2014, thepaid Companyalso $648,280dividends in on commonandstock $413,000 dividends onpreferredits stock...... rates in Change interestfor rates 52 average weekly the weeks sets forth the ending table December above The interest rates. 2015 31, and Fede by the 2014 as reported 31, December andprime its adjustable rate mortgage loans to the one-year as ofApril 4, 2016, and$0.08 per shareon July 15,2016, to stockholders of record ofas July 2016,5, and$.08 per shareon on share per $0.10 of dividend cash a declared also and 2016 10, October of as record of stockholders to 2016, 20, October Janu on 2016, was 22, which paid December Company’s decrease in taxable income income taxable in decrease Company’s sale of mortgage loans held for sale of $312,120 (22%). A st A (22%). $312,120 of sale for held loans mortgage of sale $881,227(7%) whichwas partiallyoffset by the prepayment penalty$463,992 of (100%) paid during 2015 as part of a $10, a prepay to transaction structured in Federal Housing Administration lending increased mortgage volume compared to 2015. Originations of mortgage loans loans mortgage of Originations 2015. to compared volume mortgage increased lending Administration Housing Federal in heldfor sale were$63,974,589 during 2016 compared $56,515,986 to 2015. in to thefor addition productionJoplinand new loan theofstaff commercial mortgage office in and addition the keyother of positions technology, in commercial production. andretail The Company is continuingto position growthfuture itself for mortgage were compensation impacting Also and expansion. above. Income” “Non-Interest under above noted 2014. 31, December from increase point fixed rate home mortgage loans. loans. mortgage home rate fixed Decembe in points basis 25 by rate discount
FORM 10-K
credit relationships. existing maintain to and while the average yield decreased 29 basis points to 4.70%. Strong competition is causing a reduction in rates for new credits the Bank’s loan portfolio increases or ot or increases portfolio loan Bank’s the may need to increase the allowance for loan ad future and make for loanlosses itsallowance monitor to lower requirements classified reserve newly experienced on declining historicloss rates, whichare usedtocalculate the reservethe for homogenous poolloans. of Company The hasalso $1,275,000 for portfolio. loan Company’s the of to collectability related other factors and conditions economic general considers Company the addition, In Company’s loan portfolio. inthe loans past due and impaired trends and banking consider Company itsassessment, making the When portfolio. loan existing the in losses loan for potential provide Company to the by adequate considered alevel to losses for loan decreased by 12 basis pointsfrom 3.40% to 3.28%. liabilities interest-bearing cost of average assets the interest-earning and on yield average the spreadbetween Company’s net intere the average an in in increase resulting $90,501,000, by liabilities ofinterest-bearing balance average the the assetsexceeded ofinterest-earning 31, balance 2015, average th and (3%) $15,598,000 increased inte cost of average the (2%), while $10,278,000 increased the Company’s cost of funds as well as enhanced ot successful in these efforts, which allowed for reductions in w made significant efforts over the last several years to grow lower cost core deposit relationships. The Company has been under “Financial Condition” above. in 2014. to $34,694,993 compared 2015 during sale $56,515,986 for loanswere held mortgage of Originations estate market and the Company’s incr eliminate annual future and onits sheet liabilities balance funding non-core cost, higher reduce to significantly Company the allowed has This prepayment of $463,992. penalty a prepayment thoseWith proceeds,theCompan of $5,800,000 approximately and loans guaranteed Administration Interest Expense. Total interest expense decreased $49,423 $49,423 decreased interest expense Expense. Total Interest Interest onloans increased $309,903 Generally, the overall decrease in the provision for loan First, theCompany executed astruct Based on its internal analysis and methodology, manageme Provision for Loan Losses. Provisions for loan losses are charged or credited to earnings to bring the total allowance during (4%) $94,781 increased on expense deposits Interest Net Interest Income. TheCompany’s ne Non-Interest Income. Non-interest income increased $1,234,247 (36%) which was primarily due to two factors. Secondly, gains on sales of loans held for sale increased $589,394 (60%). This was primarily due to a stronger real the years ended December 31, 201 y prepaid a $10,000,000 repurchase agreement (b e average interest rate paid to depositors interest rate to depositors e average paid her circumstancesSe warrant. eased activity in Federal Housing Administration lending compared to 2014. to2014. compared lending inFederal Housing Administration eased activity losses through charges to the provision fo provision tothe charges through losses (1%) and the average loan receivable t interest income increased$224,743(1%).During ured transaction selling approximately $4,000,000 of Small Business 5 and 2014, 5respectively. her liquidity and capital pe capital and her liquidity ditions based on economic and regulatory conditions. Management Management on conditions. economicbased regulatory ditions and rest-bearing liabilities decreased 2 basis points to 0.82%. 0.82%. to points basis 2 decreased liabilities rest-bearing holesale funding, thereby reducing 50 nonperforming credits during the year. The Bank will continue the during credits nonperforming year. The willBank continue
st earning balance of $15,468,000 (21%). In addition, the (21%). addition, In $15,468,000 of balance st earning s prior loss experience, volume and type of lending, local interest expense of $261,000. This transaction has improve has transaction This of $261,000. interest expense losses for the year presented has resulted primarilyfromresulted has year presented the losses for investment securities for a combined gain of $488,000. of $488,000. gain acombined securitiesfor investment (1%) as the average balance of interest-bearing liabilities liabilities interest-bearing of balance average asthe (1%) nt recorded a provision for loan losses of $600,000 and losses $600,000 loan of for a provision nt recorded 2015 as the average balance of e further discussions of the allowance for loan losses remained the same at 0.54%. The Company has rformance measurements. earinginterest annual balance increased r loan losses if anticipated growth in ifanticipated losses r loan the Company’s cost of funds. the yearended December interest bearing deposits of 2.61%) incurring of2.61%) $35,320,000 (8%) d
FORM 10-K
. During 2014, the 2014, the . During itors andborrowers andfund deposits borrowings. and FHLB on January 5, 2016 to meet tothe meet needs of depos ,984 (10%) which was primarily dueaddition to the,984was primarily (10%)which of e taxe 2014.credits in Furthermore, duringfirst effective the future growth and expansion. Also impacting compensation m the Federal Reserve Bankwhich is considered a secondary
funds available for customer customer for available funds sufficient have to Company the 51 ary 16, 2016, to stockholders of record to stockholders 16, 2016, ary tioncaptioned Accounting“New Pronouncements” in Note to14 the Notes to the
Cash Dividends Paid. The Company paid dividends of $0.05 per share on April 16, 2015 to stockholders of record record of stockholders to 2015 16, April on share per $0.05 of dividends paid Company The Paid. Dividends Cash Other expenses that experienced increases were occupancy expense which increased $207,696 (12%) primarily due due primarily (12%) $207,696 increased which expense occupancy were increases experienced that expenses Other IncomeTaxes. provisionThe forincome taxes increased $348,821 (17%) over direct2014 result a as anof increase Liquidity refers to theflows ability cash to future manage First, the Company paid a $463,992 prepayment penalty incurred on the prepayment of a repurchase agreement agreement repurchase of a prepayment the on incurred penalty prepayment a $463,992 paid Company the First, $909 increased benefits andSecondly, employee salaries Non-Interest Expense. Non-interest expense increased $1,851,098 (12%). This increase was primarily due to a few few a to due primarily was increase This (12%). $1,851,098 increased expense Non-interest Expense. Non-Interest operations. Maintaining appropriate levelsof liquidity allows demandwithdrawal for loans, of deposit balances andities ofdeposits matur and The Company’s other liabilities. primary ofsources liquidity includeand cash equivalents, cash availabl e-for-sale securities, customer fro available lines borrowing established has also Company The source of funds. quarter2015, of the Company adopted FinancialAccounting Standards Board(“FASB”) issuedAccounting Standards sec the (see 2014-01 No. (“ASU”) Update Consolidated Financial Statements in the report). several key officers during 2015. The Company continues to strengthen its depth in the areas of technology, marketing, marketing, technology, of areas the in depth its strengthen to continues Company The 2015. during officers key several commercial and retail production to positionorder infor itself above. noted improvement volume loan mortgage the to due increased have which commissions, mortgage were torecognizedexpense depreciation on purchases new equipment in fourth late quarter2014 andAlso, Company into 2015. the (24%). $99,996 increased expense advertising and 2015 in efforts marketing its increased has as ofApril 6, 2015, and$0.05 per shareon July 16,2015, to stockholders of record ofas July 2015,6, and$.05 per shareon on share per $0.08 of dividend cash a declared and also 2015 5, as October of record of stockholders to 2015, 15, October Janu on 2015, was 23, which paid December Company also paid $648,280in dividends on common stock and $413,000 dividends on its preferred stock. During 2013, the stock. preferred outstanding then its on dividends in $600,000 paid Company LIQUIDITY intaxable increasedincome utilizationand Company’s ofthe stat (further discussed above). above). discussed (further factors. factors.
FORM 10-K
are also subject to qualita that could have a direct material effect on the Company's financial statements. The Bank's capital amounts and classifications agencies. Failure to meetminimum capital requirements cantrigger certain mandatory and discretionary actions by regulators consolidated regulatory capital. TheBank continues to be subject to various capital requirements administered by banking to report is longer obligated and no 2015, in February issued Statement Company Policy Holding Small Bank Reserve's which is predominantly comprised is of retawhich predominantly Basel III Rule, the following three components comprise a banking organization’s “regulatory capital”: (i) “CET1 capital,” purposes of the critically undercapitalized equity tangible for CET1 measure, the of definition the capital framework, aligning the and introducing into ratios capital framework action for corrective the prompt to changes made requir capital tier minimum1 (“CET1”) equity requirement,tier1 er and capital ahigh minimum Act (“BaselDodd-Frank IIIRul toorganizations them align banking the with Basel III regula CAPITAL REQUIREMENTS place to attempt to manage the a capacity willborrowing provide Bank as of December 31, 2016. The Bank plans to maintain its FHLB and Federal Reserve Bank borrowings to a level that DecemberBasedexisting31, 2016. coll on as of fromFHLB, the $59,766,000 additional an borrow to ability to the of assets, the35% advances has of Bank limitation certificates ofthese will renew inthe normalmajority course to scheduled that are deposit of certificates in $71,182,536 deposit flows and anticipated future deposit flows, which are subject to, and influenced by, many factors. The Bank has 31, 2015, representing adecrease of $9,685,978. The variations in levels ofcash and cash equivalents areinfluenced by time. TheCompany’s cash and cash equivalents totaled $9,088,441 the Bank on assetsare dependent such of levels less.The or and certificates institutions, financial of de deductions. and adjustments regulatory applicable included in Tier 1 capital and limited amounts of a banking organization’s allowance for loan and lease losses (ALLL), less of atleast five years andissubordinated and (iii) “Tier 2008; of 2 Capital,” includes instruments which su in CET1 capital, and “TARP” preferred stock and other instruments issued under the Emergency Economic Stabilization Act include not interests Tier 1 minority surplus, criteria and related eligibility specified meeting similar instruments and stock which are subject to certain restrictions; interest, minority CET1 and elections), opt-out make not do that organizations (for AOCI stock), treasury any of (net surplus In July 2013, the Federal Reserve issued a final rule that that a final rule issued the Federal Reserve In July 2013, The Companymeets the cr eligibility The Company’s most liquid assets are cash and cash equivalents, which are cash on hand, amounts due from tive judgments by regulators about component appropriate level of liquidity. e”). The Basel III Rule implemented a revised definition of regulatory capital, a new common common anew capital, regulatory of a definition revised implemented BaselIIIRule e”). The
sufficient to provide for contingencies. Management has many policies and controls in many andcontrols has policies Management for contingencies. toprovide sufficient (ii) “Additional Tier1Capita (ii) “Additional to the claims of depositors and general creditors, total capital minority interest n interest capital minority total creditors, and general depositors the claims to of ined earnings and common stock instrument posit with other financial institutions that institutions posit withother financial prompt correctiveactioncateg ateral, theBank has the ab iteria ofasmall holding comp bank of operations. Based on existing existing Basedon of operations. 52 ’s and financing, operating, investment at any given activities mature in one year or less. Management anticipates that the thatthe anticipates mature in yearorless.Management one tory capital capital meetframeworktory and certain requirements ofthe
ch as subordinated debt that has a minimum original maturity maturity hasaminimum original that debt assubordinated ch depository institutions by incorporating the new minimum minimum new the incorporating by institutions depository revised its risk-based and leve as of December 31, 2016 and $18,774,419 as of December December as of $18,774,419 and 2016 31, December of as l,” which consists of consists non- l,” which ility toborrow$25,1 s, risk weightings and other factors. ory with the definition of tier 1 capital. Under the the Under capital. tier 1 of definition the with ory have an three maturity m an have of original s that meets that certain criteria and related any inaccordance withtheFederal 64,000 fromthe Federal Reserve collateral as well as the FHLB’ cumulativeperpetual preferr rage capital requirements for ement. The final rules also onths ed ot ot d s
FORM 10-K
rsuant to twoguarantee e ratio of Tier 1 to capital of Tier e ratio guarantee the performance performance the guarantee l lines and $15,960,000l lines and and credit andcredit standby letters of t future cash requirements. requirements. cash future t 2019. capital The conservation ngresulti effectively vation buffer face constraints on dividends, equity on dividends, constraints face originate loans of loans to originate commitments nding ustdoes nothave funds available. entsissued theby Bank to t Preferred Securities andt Preferred pu regulatory guidelines. See also additional information edit are agreements to lend to a customer as long as there there as long as customer a to lend to agreements are edit to comply with the following minimum capital (i) minimum ratios: with the to following comply assets; (ii) a Tier 1Tier a (ii) assets; ratiocapital of 6.0%of risk-weighted ratio of 4.0%, calculated as th 0, respectively,0, for commercia es do not necessarily represen necessarily not do es
c stress. Banking institutionsofratiowith commonequity a emented at 2.5% on January 1, on January 2.5% at emented total capitalof risk-weightedof ratio(unchanged 8.0% assets erred Securities includingerred Securities distributions on, and the liquidation 53 buffer effectively resulting in a minimum buffer effectively resultingtotal a minimum capital in ratio of a 2.5% "capital conservation 2.5% a "capital buffer" resultingeffectively in a 0%, plus the 2.5% capital conser capital 2.5% the plus 0%,
16 and 2015, unused lines of credit to lines of credit to unused 2015, 31, 2016 and d in the contract. As of December y and Wilmington Trust Company, the Company issued a limited, irrevocable irrevocable limited, a issued Company the Company, Trust Wilmington and y ber 31, ber 2016 2015, and outsta the Bank had minimum but below the conservation buffer will buffer below the conservation but minimum maintain (i) a minimum ratio of common common of ratio (i) a minimum maintain to Bank require the will III Rule e Basel erred Securitieserredextenttheto each Tr Various commitments and contingent liabilities arise in the normal course of business, which are not required to be be to required notwhich ofare business, course normal and commitments the contingent in Various arise liabilities Standby letters of credit are irrevocable conditional commitm conditional irrevocable are credit of letters Standby In connection with issuance the Company’s of the Trus The Bank as “well capitalized” is classified under current Effective January 1, 2015, the final ruleBank requires1,2015,the January the Effective Beginning January 1, 2016, the capital conservation buffer requirement was phased in at 0.625% of risk-weighted risk-weighted of 0.625% at in phased was requirement buffer conservation capital the 2016, 1, January Beginning
lines of commitments, are loan of these significant The most sheet. on the balance recorded providedunder the caption of“RegulatoryNotes 1theNote in Matters” Consolidatedto Financial Statements. OFF-BALANCE ARRANGEMENTS SHEET credit. Commitments to extend credit are agreements to lend a customer to as long as therenoviolation is of any condition Decem of As contract. the in established the Compan and between by agreements guaranteeofobligations the ofTrusteach under the Trust Preferred Securitieswhereby Company hasthe guaranteed and any all payment obligationsof the TruststorelatedTrust the Pref orredemption priceof,the Trust Pref approximately$6,152,000 $4,218,000,and respectively.Lines of cr condition establishe any violation of is no borrowersaggregated approximately $89,103,000 $68,066,00and $14,461,000, respectively,for open-end the consumerportion loanSince a of lines. commitment and expireof line credit may withoutbeingdrawn upon,total commitmentsunused the and lin of a customerto a third party. The credit risk involved issuing in letters standby of credit is essentially as thethat same involvedextending hadin Bank outstanding The total loanscustomers. standbyofto letterscredit amounting $11,596,000 to and$12,135,000 ofDecember 2016as 31, and respectively.2015, The commitments extend overvarying periods time. of repurchases, and compensation based on the amount of the shortfall. shortfall. the of amount the on based compensation and repurchases, minimum ratio of common equity Tier 1 to risk-weighted assets of at least 7.0% upon full implementation); (ii) a minimum minimum a (ii) implementation); full upon 7.0% least at of assets risk-weighted to 1 Tier equity common of ratio minimum 6. least at of capitalrisk-weighted1to assets ofTier ratio the above assets risk-weighted Tier 1 to a new common equity Tier 1 capital ratio of 4.5% of risk-weighted of 4.5% of ratio capital 1 Tier equity common new a the(iii) a 4.0%); prior from of requirement assets (increased When requirement). the prior from totalof (unchanged4.0%assets of ratio leveragea and requirement); (iv) the prior from th 2019, 1, January on in phased fully equity Tier 1 risk-weighted to 4.5%, assets of at least plus uponratio capital1in full of 8.5% Tier a minimum implementati on); ratio of total(iii) a minimum capital risk-weighted to conservation capital 2.5% the plus 8.0%, least of at assets leverage a minimum (iv) and implementation); full upon 10.5% assets. average impl until fully year each amount same by the assets, increasing designedbuffer is to absorb economi of periods during losses
FORM 10-K
principles generally accepted inthe Unite of December 31, 2016. Dollar amounts are expressed in thousands. ts and the notes thereto, which have b have which Company’s thereto, consolidatednotes the financialand statemen ts POLICIES ACCOUNTING CRITICAL - - structure of the Bank’s assets and liabilities are critical to the maintena services, since such pricesare affected by - same necessarily the Interest rates do not in move inflation. of - interest result, impacta finasignificant on a more rates have - - timeover to inflation. due - money of power purchasing the relative in changes considering without dollars, termshistorical in of results operating and - accounting principles generally accepted in th - 440 285 IMPACT OF INFLATION AND CHANGING PRICES 440 - 285 Other longterm obligations ...... Purchase obligations ...... - Operating leases ...... 95,700 Subordinated debentures ...... FHLB and Federal Reserve advances ...... Other borrowings ...... 111,689 Time and brokered certificates of deposit ...... stated Deposits without OBLIGATIONS CONTRACTUAL AGGREGATE appraisals for significant properties. assets independent for held sale, management obtains of withthedetermination connection In and fair values. loans financial results could change, and such change could be material to the Company. differ from thoseestimates. Ifactual re arefrom not assetsliabilities apparent that readily of and ot to bereasonablethe circumstances,under during the reported periods. On an on-going basis, management evaluates its estimates and judgments. contingent assets andliabilitiesatthe date of the financia re make affect the that judgments estimates management to and of theallowance forloan losses, the valua
oa ...... $617,683 Total ...... $ Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the the is upon based Results Operations and of and Analysis Condition of Financial Discussion Management’s Asa in nature. are monetary primarily afinancialinstitution of liabilities the assets and most companies, Unlike The Company prepared theconsolidated and dete fixed Company’s the summarizes table The following Material are estimates that to signif particularly susceptible Management bases its estimates and judgments on historical experience and on various other factors that are believed otata biain Ttl rls he er Fv er Five Years Five Years Three Years or less Total Contractual Obligations maturity ...... $ 393,674 $ 393,674 $ - $ - $ - - - $ - $ 393,674 $ 393,674 $ maturity ...... $ sults are different than management’s judgments and estimates, the Company’s the results of which form the basis for making judgments about the carrying values values carrying the about judgmentsmaking for basis form ofthe which results the
tion of real estate acquired in connection inflation. In the current interest rate interest the current In inflation. d States of America. TheStates ofAmerica. d e United States of Americarequire UnitedStates which More than Three to One to One Year financial statements and related data presented herein in accordance with 40 18 8 8 - 86 186 158 430 545 - - - 15,465 - - - 15,465
l statements andthe reported her sources. There can be no a no be can There sources. her
ncial institution’s institution’s effectsperformancencial the generalthan of leve 54 direction or in the same magnitude as the price of goods and and of asthe price goods sameor inthe magnitude direction the allowance forloan losses andthe valuation of foreclosed
ported amounts of assets and liabilities and the disclosure of the disclosure and liabilities assets and of amounts ported 5939 $8,8 ,7 16 8,877 $ 82,581 $ 509,339 $ $ 360 210 - - 52,100 43,600 icant in change the termnear determination relate the to nce of acceptable performance levels. 112 025 ,9 1,421 8,791 30,295 71,182 rminablecontractual obligations by payment as date preparation of these financial statements requires een prepared inaccordance with accounting environment, liquidity and the maturity maturity the and liquidity environment, e the measurement of financial position with foreclosures or in satisfaction of satisfaction orin with foreclosures amounts of revenues and expenses ssurance that actual results will results that actual ssurance 86 ,886 not not ls
FORM 10-K
ed
its total deposits and its total deposits
nk’s efforts to reprice its reprice its efforts to nk’s decreases in market interest interest in market decreases estimates of the projected changes changes projected the of estimates 016 and 2015, the Bank’s savings Bank’s 016 and 2015, the
NPV of% as of PV Assets
0% 0% % 14.63 % 0.00 -8% -8% % 13.95 % -0.69 -5% -5% % 13.70 % -0.93 -4% -4% % 14.31 % -0.32 -14% -14% % 12.25 % -2.38 e allowance for loan losses and related significantrelated and allowancee for losses loan of December 31, 2 of December , 2016 primarily due to the Ba due to the primarily 2016 , order to minimize the impact of changing interest rates on on rates interest of changing impact the minimize to order prohibit them from adversely prohibitfrom impacting Bank’s them the interest as to capture the highest net interest income, and to stabilize and to stabilize income, net interest highest the to capture as nk are priced competitively theto Bank’s meet in order
neous and permanent increases and increases permanent neous and 55
) ) )
- -
d $393,673,761 or 78% of totale accounts deposit rket December 31, 2016 and 2015, 2016 31, management’s and December spread requirements. As
gnificant estimates andgnificantestimates andjudgments ourtheof accounting 1 Note see policies, also
$ (8,391)
ive Disclosures Market About Disclosures Risk ive
2015 to 0.29% on December 31 December on 0.29% to 2015
Estimated Net Portfolio Value PortfolioValue Net Estimated l Statements”l in this report. ITIVITY ANALYSIS ITIVITY
Theresponsibility of managingand executing the Liability Asset Bank’s Policy tofalls the Bank’s LiabilityAsset/ consumer equity, home estate, real and business commercial of origination the emphasize to continued has Bank The TheBank constantly depositsmonitors anits to effort in The hasidentified Company the accountingth policies for
The following tables as forth set following The of
in Rates Rates in Amount $ Change $ Change % Ratio NPV Change BP ChangeBP 12/31/2016 C ...... C 100,710
N +200 ...... +200 $ ...... +100 92,319 96,547 (4,163 MANAGEMENT / LIABILITY ASSET so risk rate interest manage to seeks ALCO (ALCO.) Committee that interest net income, through changingrate environments. interest Management attempts position to Bank’s instrument the in movements rate probable in with repricing characteristics line netthe Since Bank’s income. interest spreadrelative the eenbetw financial assets and liabilities is constantly changing, the Bank’scurrent net interest income not may anbe indication of netfuture income.interest and adjustable-rate, one- to four-family residential loansoriginatingwhilefour-family one- to fixed-rate, residential loans continually Management forthe resale monitors immediate inloan portfolio purposemarket. the primarily thesecondary for concentration. over and diversification product of Ba the depositspaid at on of interest sensitivity. rate Rates objectives and asset/liability management estimates and estimates to critical as judgments businessits understandingoperationstheand ofresultsoperations. of its detailFor a discussion on the application of these si these of application the on discussion Financia Consolidated to “Notes Qualitat and Quantitative 7A. Item -100 ...... -100 95,335 (5,375 -200 ...... -200 86,491 (14,219) accounts, checking accounts, and money ma and money accounts, accounts, checking
$401,837,394orof78% deposits, total respectively. weighted The averagepaid rate on these accounts decreasedbasis1 December 31, on 0.30% from point retail and business accountsduring 2016. RATE INTEREST SENS
in Value Economic of Equityevent the (“EVE”) in of instanta thousands. in expressed are amounts Dollar rates.
FORM 10-K
interest market rates continue as industry and inthe institution financial regulatory conditions and ascompetitive long so above asdescribed will continue exp Management and strategies. goals liability asset and Bank’s and de policies the for administering isresponsible management borrowers many of ability theirservice de the adjustable-rate to in interest rates, prepayment andearly withdrawal levels could deviate significantly from those assumed in the table. Finally, as certainassets,such rates. Additionally, th similar to repricing, periods maturities or have may liabilities the co in presented analysis in of method the inherent are 6,498 interest in rates. All earnings projec EVE changes and indicative of actual results. Further, the computations do not contemplate any actions the Bank may undertake in response to relative interestre rates,loan levels market of including 83,783 using actual maturity and repricing schedules for the Bank’s loans and deposits, and are based on numerous assumptions, -200 ...... 10...... 75,723 -100 ...... 10...... 7,1 (5,973 71,312 67,444 N +100 ...... $ +200 ...... due to if interestto activity due refinancing rates market remain cons in loans of adjustable-rate the proportion addition, restricted. In fixed rate period typically from oneto five years and over the remaining life of the asset changes in the interest rate are
...... 7,8 77,285 C ...... 12/31/2015 PCag BP Change nRts $Aon hne %Cag P ai hne Change NPV Ratio % Change $ Change $ Amount in Rates The Bank’s Board of Directors is responsible for revi for is responsible Directors of Board Bank’s The e their ratesor interest future predict cannot Management model generated internally an on are based changes rate interest effects of hypothetical prospective of Computations
they have in recent years. Estimated Net ValuePortfolio
152) (1,562 ) $ 981) (9,841 ) $
floating-rate loans, which represent the Ba loans, represent which floating-rate
tions are based on a point in time static balance sheet. sheet. in time balance a point static are tions on based - paymentsand deposit run-offs, shouldand not berelied uponas
)
56 mputation of EVE. For example, although certain assetsand certain although example, EVE. For of mputation
tant or decrease in the future. ey may react in differing degrees to changes in marketest in to inter changes degrees ey may differing in react
bt mayinterest ofbt an rate the increase. in event decrease ects that the Bank’s asset and liability policies and strategies policies and asset ects liability that the Bank’s and the Bank’s loan portfolio could decrease in future future periods in decrease could loan portfolio the Bank’s ewing the Bank’s asset and lia the Bank’sassetand ewing ffect on the Bank’s EVE in the future. Certain shortcomings shortcomings Certain future. Bank’s EVE in the the ffect on terminations of the Board of Directors with respect to the withrespect to ofDirectors Board the of terminations
1% 06 -1.10 % 10.61 % -13% 8 1.3% -0.68 % 11.03 % -8% 2 1.6% -0.35 % 11.36 % -2% % 17 0.00 % 11.72 % 0% % 23 0.66 % 12.38 % 8% NPV as % of PV of Assets Assets PV of as % of NPV
nk’s primary loan product, have an init an have product, primaryloan nk’s
Further, in the event of a chan
bility policies. The Bank’s Bank’s policies. The bility
ial ial ge
FORM 10-K
- - 56) 0,853
15,213,147
491,001,907 2,837,500
- - 0 0 52,100,000 396 396 1,074,957 282 282 53,258,126 1,336 1,336 3,525,032 8,441 8,441 18,774,419
769,478 $ 769,478 3,561,272 ,183,633 ,183,633 1,902,933 ,871,039 ,871,039 10,540,428 1,947,063 1,947,063 1,986,692 9,272,893 9,272,893 18,779,915 5,318,963 15,465,000 15,465,000 15,465,000
207,833 196,102
92,399,235 97,292,487 27,528 43,099 50,552,077 50,441,464
58 3,661,6 3,758,933
618,005,439 586,412,607 57,347,
107,277,668 103,701,534
$ $ 687,979,819 652,835,072 $ 69,974,380 $ 687,979,819 66,422,465 652,835,072 31, December 31, December 2016 2015
) (37,303,288 (37,279,069) ...... $ ...... $ 505,362,750 517,385,695
...... 687,550 685,900 016 and and 016 2015
57 ...... ) 41 (1,309,2 (683,9
ectively ectively ......
December 2 31, December Consolidated Balance Sheets Sheets Balance Consolidated ...... 538,273,640 Guaranty Federal Bancshares, Inc. Inc. Bancshares, Federal Guaranty losses at December 31, 2016 and 2015 - - 2015 and 2016 31, December at losses surance ...... surance 192,460 19 ial institutions ial ...... 1,077, ASSETS See Notes to Consolidated Financial Statements Statements Financial Consolidated to Notes See tively tively at cost ...... cost at 4,611,000
restricted ...... taxes ...... nces ...... nces 95,700,00 liabilities liabilities 8,879) and ($401,688), respectively respectively ($401,688), and 8,879) for sale ...... sale for 2,682,353 2,391,727 rance ...... rance 1 ures ...... ures capital ...... capital ecurities ...... ecurities y ...... eceivable ...... eceivable LIABILITIES AND STOCKHOLDERS' EQUITY STOCKHOLDERS' AND LIABILITIES
ectivel 2016 and 2015 - 6,875,503 and 6,859,003 shares, resp shares, 6,859,003 and 6,875,503 - 2015 and 2016 Unrealized loss on available-for-sale securities, net ofincome31, net onUnrealized taxes; available-for-salesecurities, loss December ($76 2015 - 2016 and $5,742,449 and $5,811,940, respec $5,811,940, and $5,742,449 Cash and cash equivalents ...... equivalents cash and Cash 9,08
Subordinated debent Subordinated Deposits ...... adva Bank Loan Home Federal Capital Stock: Stock: Capital 31, December issued shares; 10,000,000 authorized par value; $0.10 stock, Common Additional paid-in paid-in Additional Retained earnings, substantially substantially earnings, Retained Advances from borrowers for taxes and in and taxes for borrowers from Advances other and expenses Accrued ...... payable interest Accrued Accumulated other comprehensive loss loss comprehensive other Accumulated LIABILITIES
STOCKHOLDERS' EQUITY EQUITY STOCKHOLDERS'
TreasuryDecembercost; at 2016 stock, 31, and 2015 2,465,476- and 2,466,462 resp shares,
Accrued interest r interest Accrued CONTINGENCIES AND COMMITMENTS ...... sale for held loans Mortgage of net receivable, for allowance Loans loan 2 ...... assets other and expenses Prepaid held assets Foreclosed 2,96 ...... net equipment, and Premises 10 insu life owned Bank Cash and due from banks ...... $ ...... banks from due and Cash 3, ...... securities Available-for-sale
Item 8. Financial Statements and Supplementary Data Supplementary and Statements Financial 8. Item financ other in deposits Interest-bearing s Held-to-maturity Bank, Loan Home Federal in Stock income receivable and Deferred
FORM 10-K
Share Common Per Income Diluted IncomeCommonBasic Per Share Net Income Available to Preferred Stock Dividends and Discount Accretion Provision for IncomeTaxes Income Before Income Taxes Noninterest Expense Noninterest Income Losses Loan for Provision Net Interest Income Interest Expense Interest Income Net Income Net Interest Income After Provision for Loan Losses
te xes ...... 28193 2,672,541 2,821,923 525,00 Other expense ...... Advertising ...... Data processing DCdpstisrnepeim ...... 350, Prepayment penalty on repurchase agreements FDIC deposit insurance premiums ...... Salaries and employee benefits Gain on sale of Small Busines Administration loans Gain on sale of mortgage loans held 1,13 Gain on sale of investment secu Service charges ...... Securities sold under agreements to 2,423,8 1,31 debenturesSubordinated 2,283,982 Federal Home Loan Bank advances ...... Deposits ...... cuac ...... 1,827, Occupancy ...... 1,499,589 1,535,796 Other income ...... Net gain (loss) on foreclosed assets ...... te ...... 1915 141,096 179,155 Other ...... Investment securitie ...... Loans ......
...... 8,7 790,928 889,575 ......
...... 1,89 s ......
Common Shareholders Common 7 533,207 538,785 579,410 ...... 1,8,6 98537 8,8 9,805,337 10,686,564 ...... rities ...... rities Years Ended December2014 31, 2016, 2015 and ...... repurchase ...... See Notes to Consolidated Financial Statements frsl ...... ,0,7 13638 913,258 1,396,358 1,708,478 for sale ...... Consolidated Stat Guaranty Federal Bancshares, Inc...... 2742 344,818 297,462 ...... 58 ementsof Income
17,100,746 16,609,728 14,864,924 14,864,924 16,609,728 17,100,746 2014 2015 2016 $ 1.28 $ 1.32 $ 1.35 1.35 1.32 $ 1.28 $ 5,425,486 5,716,767 $ $ 5,594,011 $ $ $ 1.27 $ 1.30 $ 1.33 1.33 1.30 $ 1.27 $ $ 2,112,508 2,461,329 2,012,764 13500 0,0 1,275,000 600,000 1,375,000 41702 ,7,8 4,329,305 4,279,882 4,177,012 48027 ,7,7 3,350,119 4,478,072 4,870,207 21,212,314 20,909,752 20,685,009 20,685,009 20,909,752 21,212,314 76675 ,7,9 7,895,204 8,178,096 7,606,775 19,837,314 20,309,752 19,410,009 19,410,009 20,309,752 19,837,314 55401 $57677 $5,782,696 5,716,767 $ 5,594,011 $ $ 25,389,326 25,189,634 25,014,314 25,014,314 25,189,634 25,389,326
120 1463) (213,239 ) (164,663 ) 1,270
2,1,7 23,564 23,314,776 $ $
9,3 1700 34,163 187,090 192,537 ,6 1,214,880 4,664 1,202,383 1,196,393 3,620 ,9 1,483,772 5,395
7 4704 448,675 447,044 475 0 1,904,886 209 525,000 0 463,992 - - -
2,3 264,625 120,833
,766 $ 23,254,863 23,254,863 ,766 $ 1 2,329,090 71 357,210 - 131,991 131,991
1,697,190 1,697,190
2,713,674 1,264,027 1,351,910
425,004 425,004
1,627,460
8,2 685,028 533 95,353 - -
FORM 10-K
65
) ) ) (34,163
) (186,775 3,300,555
21) 21) ) (138,330 1,208,5 ,537) ,537) (187,090
625,285) 625,285) ) (235,535 2,057,827
(992,406) ) (373,865 3,266,392
$ $ 4,968,726 $ 5,481,232 7,840,523 $ 2016 $ 5,594,011 $ 5,716,767 5,782,696 2015 2014
of Comprehensive Income Comprehensive of 59 ...... Guaranty Federal Bancshares, Inc. Bancshares, Federal Guaranty See Notes to Consolidated Financial Statements Statements Financial Consolidated to Notes See taxes ...... taxes (799,869) , 2016, 2015 and 2015 2016, 31, 2014 December Ended Years Consolidated Statements Statements Consolidated nt for realized gains on on gains realized for nt investment securitiesinvestment included netin income,before income ...... taxes (192 comprehensive income ...... income comprehensive (367,1 available-for-sale, before income income before available-for-sale, Less: Reclassification adjustme Reclassification Less: Income tax of Income expense items (credit) related other to Change in unrealized gain (loss) oninvestment securities unrealizedChangegain(loss) in Total other items in comprehensive income (loss) ...... (loss) income comprehensive in items other Total Other comprehensive income (loss) ...... (loss) income comprehensive Other (
TOTAL COMPREHENSIVE COMPREHENSIVE TOTAL INCOME OTHER ITEMS OF COMPREHENSIVE INCOME (LOSS): (LOSS): INCOME COMPREHENSIVE OF ITEMS OTHER ...... INCOME NET
FORM 10-K
Changes in:
Purchase of bank owned life insurance ...... Purchase of premises and equipment ...... Proceeds from maturities of available-fo Proceeds from sales of available-for-sal Purchase of available-for-sale Principal payments on available-for-sale Principal payments on held-to-maturity Items not requiring (providing) cash: N CASH FLOWS FROM INVESTING ACTIVITIES N CASH FLOWS FROM OPERATING ACTIVITIES Prhs)rdmto fFdrlHm onBn tc ...... 17350 3940 (271,800 ) 319,400 (1,773,500) Proceeds from sale of foreclosed assets (Purchase) redemption of Federal Home Loan Bank stock ...... et change in loans 5,59 et income ...... $ mriaino eerdicm,peim n icut,nt . 6531 0,8 825,906 704,985 665,361 Origination of loansfor held awardStock plans ...... Amortization of deferred income, premiums and discounts, net ... foreclosedofLoss (gain) on sale Gain on sale of mortgage loans held for sale and investment 1,37 Gain on sale of Small Business Administration loan Provision for loan losses ...... rpi xessadohrast ...... 56 Income taxes receivable/payable Accrued expenses and other liab Prepaid expenses and other assets ...... Accrued interest receivable Proceeds from sale of loans held fo Depreciation eerdicm ae ...... 123,09 Deferred income taxes ...... Increase in cash surrender value of bank owned life insuran Net cash used in investing act euiis ...... (1, securities ...... Net cash provided by operating activitie ...... 8521 918,441 845,221 ...... (5 ...... 39,629 ...... securities ae ...... (6 sale ...... vte ...... (4 ivities ...... ilities ast ...... ( assets ...... 341,305 ...... Years Ended December2014 31, 2016, 2015 and ae...... 65 r sale ...... See Notes to Consolidated Financial Statements held for sale ...... scrte ...... 15 securities ...... euiis ...... 76, e securities ...... r-sale securities ...... scrte ...... 8,88 securities ...... (75,505) ...... (82,423, ...... Consolidated Statementsof CashFlows Guaranty Federal Bancshares, Inc...... 8,469,338 s ...... 2742 (344,818 ) (297,462) s ......
60 e .. (9,7) 3265) (373,523 ) (362,695 ) (492,978) ce .....
21 05 21 2014 2015 2016
7,8 2559 2 285,589 373,782
11582 (5,0 (471,98 (856,106 ) (1,175,832) ,2,1 797, 2,922,119 535,000
34,694,993 ) (34,694,993 (56,515,986 ) 3,974,589) ,3,6) 2,3,7 (9 (20,236,477 ) 8,033,060) ,9,6) (4,870,934 1,498,165) 4237 57,398 ,402,367 8,6 33,059 480,961 1,7) 0,7 131,840 104,670 112,576) 0,1) (1,758,0 901,015) ,0 6000 1 600,000 5,000 ,9 10519 1,006,68 1,005,159 3,696 ,8 10,445,6 4,281 ,1 5,716,76 4,011 $ 51 784 18,169 17,894 ,571
9) 5,5,1 ( (55,150,017 ) 495)
3078 657, 320,738 1 (4,000,000 ) -
7,839,094 (0,1 183,722 (208,412 )
6,0 (185,259 ) (69,305 ) 336 (177,41 43,366 71 41,759,0 ,741 62 35,085, ,682 7 657,431 876 9 9,698,931 69 87 ) (1,015,766 ) (1,015,766 87 ) 7 $ 5,782,696 5,782,696 7 $ 3,151,000 - ) (23,700,987 ) (23,700,987 )
9,499,989
755,937 755,937
40,823,180 ) 40,823,180 2500 ,275,000 ,983,354 ) ,983,354 219 42,189 9 396 7 573 2 62 8 7 ) 0 ) - -
FORM 10-K
- - - - ,591,720 )
$ 4,337,521 - - 8,000,000 - - - - 15,814,312 - - ) (12,000,000 ,499 ) ,499 ) (844,786 ) 250,000 ) 250,000 ) (3,000,000 )
18,677,912 674,055 187,129 210,870
------) (10,000,000
33) $ 33) $ 43,000,898 ) (4,908,937
8,589 $ 8,589 $ 190,026 371,971 4,000 $ 4,000 $ 1,445,000 360,000 (3,859,312) (3,859,312) ) (5,433,485 (2
(1,415,180) (873
223,099,999 (179,499,999) (8,
(9,685,978) 6,280,529 190,690 18,774,419 12,493,890 12,303,200
$ $ 9,088,441 $ 18,774,419 12,493,890
2016 2015 2014
61 ...... hase ...... hase
...... $ ...... $ 149,920 $ 61,200 239,229 Guaranty Federal Bancshares, Inc. Inc. Bancshares, Federal Guaranty s ...... s 29,877,744
Consolidated Statements of Cash Flows Flows Cash of Statements Consolidated ...... $ (8,163,6 See Notes to Consolidated Financial Statements Statements Financial Consolidated to Notes See , 2016, 2015 and 2015 2016, 31, 2014 December Ended Years of loans ...... $ ...... loans of 3,22 deposit ...... (371,538) ...... Real estate acquired in settlement settlement in acquired estate Real Interest paid ...... $ ...... paid Interest $ 4,165,281 4,325,925 Income taxes paid, net of (refunds) ...... $ ...... (refunds) of net paid, taxes Income 72 Net cash provided by financing activitie financing by provided cash Net Sale and financing of foreclosed assets held for sale for held assets foreclosed of financing and Sale NOW accounts and savings accounts savings and accounts NOW et decrease in certificates of certificates in decrease et et increase (decrease) in demand deposits, et (decrease) increase demand in ...... EQUIVALENTS YEAR YEAR
Proceeds from FHLB and Federal Reserve advances ...... advances Reserve Federal and FHLB from Proceeds ...... advances Reserve Federal and FHLB of Repayments ...... stock common of issuance from Proceeds Advancesfrom(repayments to) borrowersfor.. taxes and insurance ...... stock preferred of Redemption ...... exercised options Stock from Proceeds ...... paid dividends cash preferred and Common 1,607 purchased stock Treasury 85,800 46,869 ) (5,684 Repayment of securities sold under agreements to repurc to agreements under sold securities of Repayment
Supplemental Cash Flows Information Information Flows Cash Supplemental INCREASE(DECREASE) IN CASH ANDCASH YEAR OF END EQUIVALENTS, CASH AND CASH
N CASHFROMFLOWS FINANCING ACTIVITIES N CASH AND CASH EQUIVALENTS, BEGINNING OF OF BEGINNING CASH EQUIVALENTS, AND CASH
FORM 10-K
N N N Balance, January1,2014 Change in unrealized gain(loss) Change in unrealized gain(loss) Change in unrealized gain(loss) Proceeds from issuance of Dividends on common stock Dividends on common stock - Preferred(5%)stock dividends ... Preferredstock discount Preferredstock redeemed Balance, December 31, 2014 Dividends on common stock rauysokprhsd ...... - Treasurystock purchased ...... - Stockaward plans ...... Balance, December 31, 2015 Stock options exercised tc wr ln ...... - Stockaward plans ...... tc wr ln ...... - Stockaward plans ...... Balance, December 31, 2016 Stock options exercised Stock options exercised
$367,121 net of income taxesof on available-for-sale securities, $138,330 net of income taxesof on available-for-sale securities, $1,208,565 net of income taxesof on available-for-sale securities, common stock ($0.34 per share) ($0.23 per share) accretion ...... ($0.15 per share) et incomeet ...... incomeet ...... incomeet ......
...... - ...... - ...... - ...... - ...... - ...... - ...... - ...... - ...... - ...... - ...... (12, ...... 11,983,790 678,360 57,655,031 (61,
- 682,320 50,366,546 (37,673, - 685,900 50,441,464 (37,279, - $ 687,550 $ 50,552,077 $ (37,303,288 $ - - - - 5,594,011 - - - - 5,716,767 - - - - 5,782,696 - - - - 620 (16,210) - - - 16,210 Preferred Stock Consolidated Statementsof Stockholders' Equity Years Ended December2014 31, 2016, 2015 and 0,0) - - - - 000,000) See Notes to Consolidated Financial Statements Guaranty Federal Bancshares, Inc.
- - - - (2,8) (625,285) (625,285) - - - (235,535) (235,535) - - - - - 2,057,827 2,057,827 - - - - - 22,664,985 (6,850,673)
390 206,910 3,960
,8 1359 - - - 183,549 3,580
,5 8,5 - - 84,150 1,650
Common
Stock ------
394,220 (108,631) 2,6 347,319 26,463 (4,2) 886,911 (644,722)
Additional Paid-In Capital 62
- - - - -
(7,3) - (371,538)
Treasury Stock 225,185) 43,769,485 8) 85961 4841 61,476,847 (448,421) 289) 48,549,691 6) 32816 6396 66,422,465 (683,956) 069) 53,258,126 - - - - -
73722 $ (1,309,241) 69,974,380 ) $ $ 57,347,282 $ -
(338,000) (1,504,855) (1,008,332)
(648,280)
Earnings Retained
- - - -
Comprehensive 25628 50,355,233 (2,506,248)
Income (Loss) Income Accumulated Other - - 5,594,011 - 5,716,767 - 5,782,696 - - (12,000,000) 187,129 - 85,800 - 15,814,312 ------
(338,000) (1,504,855) (1,008,332) 285,589 (371,538) (648,280) 373,782 242,189
210,870 Total
FORM 10-K
. . s es e” ior
of its cost basis,cost its of it recogniz nerally accepted in the United accepted in nerally (that is, the difference between the the between difference the is, (that
with foreclosures or in satisfaction of curity as projected based on cash flow on cash curity based projected as inated in consolidation. consolidation. in inated rnings and the remaining portion in other other in portion remaining the and rnings method over the terms of the securities. terms the over method and ability to holdclassifiedare maturity to “heldas en theen does Company not intend debta sell to security, icant change in the near term relate to the relate determination near term the change in icant e Bank are alsoBank are e subject to the regulation federalcertainof therecovery beforesecurity a fied as held to maturity are classified as “available-for-salas classified are heldto fiedmaturity as
e amount of an other-than-temporary impairment recorded in recorded in impairment other-than-temporary ofan amount e the allowance for loan losses and the valuation of foreclosed of foreclosed valuation and the losses for loan allowance the es that it more likely than not will not be required to sell pr requiredsell to be than not will likely notmore it that es the date of the financial statements and the reported amount reported the and statements financial the of date the
sis offuturethe timing sis of estimated flowsofcash the security 63 e trade date tradee and determined are using the specific identification ities thatities Companythe intends thanlikely would orsell more to d balances have been been elim have balances d of income reflect the full impairment reflect the of income in interest income using the interest using the in interest income ary impairmentdebt security of a in ea tion of real estate acquired in connection connection in acquired estate real of tion received over the remaining term of the se of the term remaining received over the aminations by those regulatory authorities. authorities. regulatory those by aminations ealized gains and losses excluded from earnings and reported in other comprehensive comprehensive other in reported and earnings from excluded losses and gains ealized GUARANTYFEDERAL BANCSHARES, INC. FINANCIAL STATEMENTS FINANCIAL CONSOLIDATED NOTES TO statements consolidated The Company’s
susceptible particularly signif to that estimates are Material wh value carryingvalue, below debtwith fair For securities positive intent the has management debtsecurities Certainthat The preparation of financial statements with ge in accounting principles conformity statements of financial The preparation The consolidated financial include statements the accounts of the and Company its wholly owned subsidiary, the TheCompany operates one-banka as holding company. primarilyis Bank The engaged providing in fullrange a of
of the allowance for loan losses, the valua the losses, for loan of the allowance POLICIES ACCOUNTING SIGNIFICANT OF SUMMARY AND OPERATIONS OF NATURE 1: NOTE Operations of Nature comprehensive income. For held-to-maturitycomprehensive debtsecurities,For income. th amortized is impairment other-than-temporary previous a of portion noncredit the for income comprehensive other prospectivelyonover security bathe theof the remaining life States of America requires management to make estimates and assumptions that affect the reported amounts of assets and and assets of amounts reported the affect that assumptions and estimates make to management requires America of States at assets and liabilities of contingent liabilities and disclosure loansvalues.fair and In connection with the determinationof ondebtsecur value) security’s amortizedfair cost andbasis held-to-maturity and available-for-sale For basis. cost amortized the of recovery expected the before sell to required be not thatdebtmanagementhas securities intent believ no and sell to recognized is loss noncredit the while earnings, in recognized is impairment the of component loss credit the only recovery, to assets held for sale, management obtainsmanagement sale, heldfor independentassets properties. significant for appraisals Securities of revenues and expenses during the reporting period. Actual results could differ from those estimates. estimates. those from differ could results Actual period. reporting the during expenses and revenues of amount the as identified is earnings in recognized component loss credit The income. comprehensive other accumulated in be to not expected flows of principal cash and are carried at fair value, with unr with value, at fair and are carried are recognized premiums Purchase income. Gains andof on losses securities are recorded sale the on th method. method. to maturity” and tomaturity” recorded notclassi Securities amortizedat cost. nothave to will sell the Company likely thannot, more andis it the credit componentother-than-tempor an of Use of Use Estimates Bank. All significantAll transactionsprofits, intercompany Bank. an bankingmortgage and services to individual and corporatecustomers in southwest Missouri. is subject The Bank to institutions. and th The financial other Company competitionfrom and state agencies and receive periodic ex periodic receive and agencies state and projections. Principles of Consolidationof Principles
FORM 10-K
pricemarket the or fair loan collateral if the the of isvalue collateral dependent. either the present value ofexpect amount of the shortfall in relation to the principal and interest owed. Impairmentmeasured is on a loan-by-loan basis by and the borrower, including the length of th delays and payment shortfalls on a case-by-case basis, taking in and shortfallsgenerally payment delays payment insignificant experience that Loans due. interest when payments and principal scheduled collecting of probability agreement. Factors considered by management in determining impairment include payment status, collateral value and the unable to collect the scheduled payments of principal or intere data. historical the or risk reflectedin loss fully are not that quality credit on influences external or internal assessment an of derived from theBank’s internal risk rating process. Other adjustmentsmay bemade to the allowance for pools of loans after general component covers nonclassified loans and is based on historical charge-off experience and expected loss given default marketflows value price) of the im (or collateral observable or classified as impaired. For those loans that are classified as impaired, an allowa revision as more inform as subjective isinherently evaluation This conditions. economic that may affectsituations the borr adverse of hi light in loans the of collectibility of the review periodic Write-downs to fair value are recognized as a charge to earni loan balance is confirmed. Subsequent recove th against are charged losses Loan income. to charged losses Mortgage Loans HeldforSale on nonaccrual or charged off at an ear secured and in process of collection. Past loan. costs, ar of certain direct origination net Loans origination of the loan and are recognized in noninterest income upon sale of the loan. amounts of the loans sold, and are recorded in noninterest income. Direct loan origination costs and fees are deferred at aredetermin losses and Gains investors. to aresold loans from resulting for losses sale. held and loans mortgage Gains and of origination inthe process loans onmortgage risk to reduce market aresometimes acquired loans sellmortgage to Allowance for Loan Losses Losses Loan for Allowance current and future payments are reasonably assured. return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are broug interest income. Theinterest on these loans is accounted for on The allowance forloanlosses isevaluated on a regular A loan is considered impaired when, based on current in current on based impaired when, isconsidered A loan The allowance consists of allocated and general components. The allocated component relates to loans that are The allowance for loan losses is established aslosses are estimated to have occurred through a provision for loan For loans amortized at cost, interest in Mortgage loans held forsale are carried The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit iswell- credit the unless pastdue is days 90 loan time the atthe is loans discontinued on interest accrual of The
All interest accruedfor loans thatare interest butnotcollected placed onnonaccrualAll ation becomes available. ed future cash flows discounted liercollectionprincipal dateif ofor e deferred and amortized as a level yield ad are not classified as impaired. Manageme due statusis based on contractual terms ofthe loan. Inallcases, loans are placed ower’s ability to repay, estimated collateral and value of any estimated underlying prevailing to repay, ower’s ability e delay,the reasons for the delay, the borrower’s prior payment recordand the ries, if any, are cred come is accrued based on the unpaid prin at the lower of cost or fair value, or cost lower of at the ed bythe difference betweened theselling price andthe carrying e allowance when management believes the uncollectibility of a a of the uncollectibility believes management e allowance when storical experience, the nature and volume of the loan portfol the loan theof nature and volume experience, storical ngs at the time a decline in va 64 salesofmortgage loans are recognized when therespective to consideration all of the circumstances surrounding the loan the loan all the circumstances of surrounding to consideration paired loan is lower than the carrying value of that loan. The of that loan. carrying value the is lower than loan paired
the cash-basis or cost-recovery st when due according to the contractual terms of the loan ited to the allowance. to the allowance. ited atthe loan’s effective intere formation and events, it is probable that the Bank will be Bank will be the that itisprobable events, and formation it requires estimates that are susceptible to significant it to requires estimates are susceptible that basismanagement by andis based upon management’s interest is consideredis interest doubtful. nce is established when the discounted cash nt determinesthe significance of payment justment over the respective term of the determined using an aggregate basis. cipal balance. Loan origination fees or charged off is reversed against lue occurs. Forwardcommitments st rate, loan’s the obtainable method, until qualifying for rating rating io, ht ht
FORM 10-K
or the
Income (in years) (in s between Deferred periods. current and deferred. Current Current and deferred. current net expenses from foreclosed from expenses net Company recognizes tax-free tax-free recognizes Company es for each major depreciable major es for each ...... 35 - 40 3 - 10 e initially recorded value at fair less as the largest amount of tax benefit that benefit of tax largest amount as the t or liability is based on the tax effects of effects tax the on based is liability or t ely evaluated for impairment based on the group’s group’s the on based impairment for evaluated ely nts of income tax expense: tax income of nts preciation. Depreciation is charged to expense using the the using expense to charged is Depreciation preciation. cash surrender value. The value. The surrender cash ting guidance (ASC 740, tax accoun with income ferred tax assets and liabilitie ce if, based on the weight of evidence available, it is more more is it available, of evidence weight on the based ce if, tion allowance are included in included are allowance tion eals orlitigation eals processes, any.if positiontaxA meetsthat settlementwith taxinga authority fullhas that knowledge of
itions and other relevant factors that affect repayment of the the of repayment affect that factors relevant itions and other assets. The estimated usefulestimated assets. The liv 65 on the technical that the merits, tax positionbe realized will not a tax positionnot a tax the has more-likely-than-not met recognition value of these policies and from death benefits. benefits. death from and policies these of value an foreclosure held an are for and sale ar characteristics are collectiv are characteristics a deferred tax will not asset be realized. come taxes in accordance accordance taxes in come . Under this method, the net deferred tax asse tax deferred net the method, this Under . improvements ...... improvements Deferred income taxdefrom changes expense results in
Bank owned life insurance policies are carried at their carried at their are policies Bank owned life insurance accounts for The in Company Depreciable assets are stated at cost less accumulated de at cost less accumulated are stated Depreciable assets Assets acquired through,or in of, lo lieu Groups of loans with similar risk risk similar with loans of Groups
). The income tax accounting guidance results in two compone two in results guidance accounting tax income The ). es es fixtur and Furniture and ...... vehicles Buildings and and Buildings
differencesbetweenbookbasesthe and and assets of tax liabilities, and enacted recognizedchanges are laws andrates tax in inperiod whichin the occur. they assets. Equipment and Premises Taxes BankOwned Life Insurance straight-linemethod over the estimated usefulof lives the as are follows: equipment and premises of classification surrender cash in increases periodic the from income Taxes Income tax enacted the of provisions the applying by period current the for refunded or paid be to taxes reflects expense tax income the using taxes income deferred determines Company The revenues. over deductions of excess or income taxable the to law method sheet) balance (or liability not, likelyrecognizedtaxbased is more than assets are if it examined likelihood a percent;the 50terms likely thannotmeans than more ofThe uponmore examination.term sustained uponand examination resolutioninclude also related app the of initially and is measured subsequently threshold recognition the more-likely-than-not has50 greater a than percent likelihood being of upon realized loans. ForeclosedforHeld Assets Sale all relevant information.determination The ofor whether management’s to subject and is date reporting the at available information and circumstances facts, the considers threshold allowan valuation a by reduced are assets tax Deferred judgment. historicalexperience loss adjusted for changescond trends, in of portion all or thatsome likelythannot costs to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically are valuations foreclosure, to Subsequent basis. cost new a establishing foreclosure, of date the at sell to costs sell. to costs estimated less value fair or amount carrying of lower the at carried are assets the and management by performed valua the in changes and operations from expenses and Revenue
FORM 10-K
Cash Equivalents for interest-rate risk. Dollar amounts are expressed in thousands. since that notification that management believes have changed the Bank’s category. events or are There no conditions table. the in assetforth following Tier ratios Common Equity 1 risk-based and leverage TierI risk-based, Tier I risk-based, total minimum maintain Bankmust the as To well capitalized categorized be action. Deposit Insurance Corporation categorized the Bank as well capitalizedundertheregulatory framework for promptcorrective it is subject. which requirements to adequacy met all capital amounts and ratios (set forth in the table below). Management believes, as of December 31, 2016 and 2015, that the Bank adjustments to capital regulatory reflectednot in financial these statements. could require Company’s regulators the Furthermore, factors. and other weightings risk components, about regulators under regulatoryaccounting practices. Theca assets of measures quantitative involve that guidelines capital Under capital adequacy guidelines and the regulators that, if undertaken, could have a direct and materi minimum meet by requirements actions capital to discretionary mandatory certain initiate can possibly and additional Matters Regulatory has been recognized in income. income (loss)and unrealized gain held-to-maturityon secur of a portion for which securities available-for-sale on (loss) taxes. Other comprehensive income (loss) includes unrealized Comprehensive Income Company’s required reserve on Restriction on Cashand Due From Banks At December 31, 2016 and 2015 cash equi U.S. federal subject state incomeor to tax longer
The Bank's actual capital amounts and ratios are also presente As ofDecemberthemost31, 2016, ensure to regulation by established measures Quantitative The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure Comprehensive income consists of net income and other comprehensive income (loss), net of applicable income in funds reserve to maintain Company isrequired The three maturities with months investments of allor original less to cash liquid Company considers be equivalents. The CompanyThe files incomeconsolidated with tax itsreturns subsidiary. theWith Company a few is exceptions, no The Company recognizes interest and penalties on inco December 31, 2016 was $1,082,000. valents consisted of interest-bearing regulatory framework for prompt correc pital amounts and classification are also recent notificationfrom theMissouri Di examinations by tax authorities for years before 2012. years before for 2012. authorities tax by examinations ities for which a portion of an other-than-temporary impairment impairment of an other-than-temporary a portion ities for which 66 al effecton the Company's cons an other-than-temporary impairment has been recognized in recognized been has impairment an other-than-temporary , liabilities and certain off-balance-sheet items as calculated calculated as items off-balance-sheet certain and liabilities ,
gain (loss) on available-for-sal me taxes as a component of income tax expense. cash and/or on deposit with the Federal Reserve Bank. The capital adequacy require the Bank to maintain minimum minimum to maintain Bank the require adequacy capital d in the table. No amount was deducted from capital deposits and money market accounts. tive action, the Bank mustmeet specific subject to qualitative judgments by the vision of Finance and the Federal olidated financialstatements. e securities, unrealized gain
FORM 10-K
mputing regulatory regulatory mputing
nversion buffer required to avoid limitations on
$ 36,434 $ 6.0% 48,578 % 8.0
is not included in co e-for-sale securities is not included
% $ % 48,578 $ % $ 8.0% 27,325 60,723 % 10.0 $ 4.5% 39,470 % 6.5
% $ % 26,329 $ 4.5% 38,030 % 6.5 67
exclude the capital co capital the exclude
$ 13.4% 23,403 $ 4.0% 35,105 % 6.0
Amount Ratio Actual Amount Ratio AdequacyPurposes Amount Capital For Ratio ActionProvisions Corrective Prompt Under Capitalized Well Be To
Amount Ratio Actual Amount Ratio AdequacyPurposes Amount Capital For Ratio ActionProvisions Corrective Prompt Under Capitalized Well Be To
31, December of As limitations. regulatory various to subject is pay may Bank the that dividends of The amount capital requirements minimum The above to risk-weighted assets Bank .... $ .... Bank assets risk-weighted to 78,635 13.4 risk-weighted assets Bank ...... $ ...... assets Bank risk-weighted 78,635 $ .... Bank assets risk-weighted to 84,447 $ 14.4% 46,806 $ 8.0% 58,508 % 10.0 adjusted total assets Bank ...... $ ...... Bank assets total adjusted 78,635 $ 12.2% 25,844 $ 4.0% 32,305 % 5.0 to risk-weighted assets Bank .... $ .... Bank assets risk-weighted to 85,255 14.0 adjusted total assets Bank ...... $ ...... Bank assets total adjusted 85,255 $ $ 12.5% ...... Bank assets risk-weighted 27,283 85,255 14.0% $ 4.0% $ .... Bank assets risk-weighted to 34,103 90,997 15.0 % 5.0 capital. 20162015and the Bank exceeded the capital minimum requirements. not BankThe pay may dividends which would reduce above. shown requirements minimum the below capital Commonequity 1tier capital ratio (core)1 Tier capital, ratioand to Totalrisk-based capital, ratioand of As 2015 31, December (core)1 Tier capital, ratioand to Commonequity 1tier capital ratio Tier 1 (core)1 Tier capital, ratioand to (core)1 Tier capital, ratioand to Totalrisk-based capital, ratioand As of December of As 2016 31, December
capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. The capital capital The officers. executive to payments bonus discretionary certain and payments dividend including distributions, capital at 0.625% was buffer conversion capital The 2019. by 2.50% to 2015 for 0.0% from in phased being is buffer conservation or unrealized net 2016. 31, on loss gain The availabl December
FORM 10-K
General Litigation informationfinancial consolidated statements. in corresponding the the presented separately for the Company’s reportable segment, as is not information Selected deposits. Bankand brokered HomeLoan Federal from the borrowings public, general from the Weighted average common shares outsta statement presentation. These reclassifi Reclassifications common share because their exercise pr per income of diluted computation the in included not were but respectively, and2014, 2015 2016, 31, December ended follows: Earnings Per Common Share of financialCompany’s results or position operations. believes thatas of December 31,2016,the outcome ofanysu management counsel, withlegal litigation Bank. threatened After andthe Company and of the business reviewing pending servicin and making the claims involving interests, security holds normal course of business, such as claims to enforce liens, and condemnation pro family, construction, commercial andcons multi-family by one-to-four residences, loans secured mortgage in business of originating the engaged is segment principally the opits Bank. banking investment in The assetsthan other iue noeprcmo hr ...... 12 .0 $1.33 1.30 $ 1.27 $ 4,074,501 4,389,349 Diluted income per common share ...... $ 4,420,248 Basic income per common share ...... $ Weighted averageshares outstanding diluted ...... Effect of dilutive securitie N Segment Information
et income available to common shareh Certain reclassifications have been made to the 2015 and 2014 financial statements to conform to the 2016 financial financial 2016 the to conform to statements financial and 2014 the 2015 made to been have reclassifications Certain Stock options to purchase 68,500, 88,500and 131,500 shares of common stock were outstanding during theyears The computation for earnings percommon share for the y the arises in which litigation, routine may to parties ordinary time, be to Bank, from Company the time The and The principal business ofthe Company ...... 56,299 s ...... cations had no effect on net income. ice was greater than the average ma les ...... 5,594,011 olders ...... $ dn ...... 43399 ,3,1 4,006,461 4,333,418 4,363,949 nding ...... umer loans. These loans are funded primar funded are loans These loans. umer is overseeing the business of the Bank. The Company has no significant eration is the Company’s only reportable segment. The banking segment. The banking is the eration onlyCompany’s reportable 68
there is no isthere no material that difference informationbetween and ch litigationwillnothavematerial a adverseeffect on the g of realproperty and loans, other issuesincident tothe
Ya ne Ya ne Ya ne Year Ended Year Ended Year Ended ears ended December 31, 2016, 2015 and 2014 isas 2014 and 2015 31, 2016, December ended ears December 31, 2016 2016 rket price of the commonthe shares.rket price of 1.28 $ 1.32 $ 1.35 1.35 1.32 $ 1.28 $ ceedings, on properties
ily through the attraction of attraction the deposits through ily 591 68 55,931 ,1,6 5,425,486 5,716,767 $ $ December 31, 2015 2015
in whichthe Bank December 31, 2014 2014 00 ,040
FORM 10-K
96,784
Fair ValueFair Fair ValueFair Fair ValueFair
Fair Value Fair
Approximate Approximate Approximate Approximate Approximate Approximate
19) 19) 3,813,700
,776) $ ,776) 99,517
(4,514) (4,514) 7,053,522 (85,808) (85,808) 31,349,162 085,654) $ 38,337,525 $ 38,337,525 085,654) 93 93 47,008,188 ,127,037) ,127,037) 47,008,188 ,024,121) ,024,121) 53,633,324 Gross Gross Gross Gross Gross Gross (Losses) (Losses) (Losses) (Losses) (Losses) (Losses)
Unrealized Unrealized Unrealized Unrealized Unrealized
33,737,060 33,737,060 32,903,980 Cost Cost Amortized Amortized
Gross Gross Gains Gains Gains Gross Gross Gross Gross Gains
11,327,059 11,187,770 $ $ 1,297,373 1,299,297
$ $ 94,477,285 92,399,235
Unrealized Unrealized Unrealized Unrealized
Unrealized
$ $ 625 $ - 28,153
$ $ 10,081 (12
93 93 (1 19,432 81 81 (1 13,764 885 885 - (137,101) 8,3 Cost Cost Cost with unrealized gross gains and losses, of securities with unrealized gross gains and losses, of securities
31,132,635 31,132,635 302,335
$ 39,357,506 $ 39,357,506 $ $(1, 65,673
Amortized
$ 94,477,285 $ 94,477,285 $ $ 92,399,235$(2,217,205) 139,155 Amortized Amortized $ 98,378,132 $ 98,378,132 $ $ 97,292,487$(1,411,825) 326,180
69 securities ...... $ ...... securities 27,528 securities as of December 31, 2016: 31, securities December of as
te ...... te 48,115,7 maturity are as follows: as are maturity ...... $ ...... 102,212
The amortized cost values, andThe together fair approximate amortized
cost values, andThe together fair approximate amortized loan pools ...... 48,115,7 ...... pools loan loan pools ...... 54,643,6 ...... pools loan Corporates ...... 6 7,003,98 Corporates 54,050 sponsored mortgage-backed Government securities SBA and Government sponsored mortgage-backed mortgage-backed sponsored Government Municipals ...... U. S. government agencies ...... agencies government S. U. 8,533, Municipals ...... Corporates ...... 9 3,965,71 Corporates sponsored mortgage-backed Government securities SBA and - (152,0 on a single maturity da maturity single a on
1-5 1-5 years ......
Maturities Sale for Available of Maturities 5-10 years ...... years 5-10 After ten years ...... years ten After Governmentsponsored mortgage-backed loan poolssecurities SBA and not due
As of December of As 2015 31, December As of December of As 2016 31, December
Debt Securities: Securities: Debt debt available-for-sale of Maturities classified as available-for-sale are as follows: follows: as are available-for-sale as classified Equity Securities Equity DebtSecurities: NOTE 2: SECURITIES 2: NOTE As of December of As 2016 31, December classified as held to held as classified Debt Securities: Securities: Debt
FORM 10-K
primarily resulted from changes in marketfrom in failu primarily interest changes rates resulted and These declines portfolio. the and Company’s 70% of investment 86% isapproximately which respectively, $68,123,480, and amount less than their historical 2014. and 2015 loss. the to recovery unrealized of prior security to sell the intend Company does not the the extent to income comprehensive to other and issues, credit to loss recognized in net income in the period the other-than-temporar the cost and of the basis investment resulting the reduced will be temporary, than securities become other these debt any of to maturity the to or securities debt hold intent management’s the dec believes management evidence, available of evaluation on market ra current lessthan these yielding investments ratefor the $47,617,900 and $52,0 Debt Securities: December31, 2015 As of temporary. Certain investment securities are valued less than lessthan securitiesare investment valued Certain temporary. tax effect of these net gains was $71,239, $69,223 and $12,640 in 2016, 2015 and 2014, respectively. se sale of available-for-sale Government sponsored mortgage-backed secu Government sponsored mortgage-backed Certain Certain investmentsother securitiesare in andequity debt down for other-than-temporarwere written securities No The carrying value of securities pledged as collateral, to secure public deposits and fo Maturities of held-to-ma The Company evaluates all securities quarterly to determine if any unrealized losses are losses deemed Company to ifany to than allsecurities be other The determine quarterly unrealized evaluates from resulting $286,725 and $18,819 $69,338, losses of gross and $320,888 and $205,909 of $261,875, gains Gross 95,842 as of Decem
curities were realized for the years ended Dece cost. Total fair value of these investments turity securities as of December 31, 2016: ber 31, 2016 and 2015, euiis ...... 43,099 securities ...... $ iisntdeo igemtrt ae...... 2,2 28,153 27,528 $ rities not due on a single maturity date ...... $ 70 until recovery of the unrealized loss. Should the impairment of the impairment loss. Should of the unrealized of recovery until their arehistorical These cost. declines primarily of result the
Amortized
re of certain investments to m the decline on debt securities is related to factors other an is related securities debt on the decline
respectively. y impairment during the years ended December 31, 2016, tes, or pri stock in declines
lines in fair value infairvalue lines for these se
y impairment is identified, to the extent the loss is loss relate the extent the to y impairment is identified,
reported in the consolidated intheconsolidated reported Cost Cost at December 31, 2016 and 2015, was $79,361,229 mber 31, 2016, 2015 and 2014, respectively. The The respectively. 2014, and 2015 mber 31, 2016,
86 $ $ 43,935 - $ 836 $ $
Unrealized
Gains Gross
ces of equity securities. Based securities. ces of equity
eet projected earnings targets. r other purposes
Amortized
Unrealized
curities are temporary. Itis curities aretemporary.
(Losses) financial statementsfinancial at an Gross Cost Cost Approximate
Approximate , amounted to
Fair Value Fair Value Fair Value Fair Value
d d
FORM 10-K
,808 ) 85,654) 152,019 ) Losses Losses Losses Losses Unrealized Unrealized (1,024,121 ) (1,127,037)
,218 $ (1,0
) ) (333,486) 6 6 21,991,881 49 ) ) 49 (5,811,940) 59 $ 59 98,257,417 ,873 ,873 208,824,573 ,307 ,307 45,462,895 Fair ValueFair Fair ValueFair 4,732 4,732 81,006,897 December 31, 31, December 98,300 98,300 497,147,333 73,640 $ 73,640 491,001,907 83,523 83,523 41,603,670
,633) $33,264 Losses Losses Losses Losses 40,912 (382,211
2016 2015 $ 538,2 Unrealized Unrealized (686) 2,877,272 (4,514)
48,995,416 (530,256)
43,219,739 (104,526)
138,200 138,200 (72,311) 3,813,700 ( December 31, 2015 31, December December 31, 2016 2016 31, December
Fair ValueFair Fair ValueFair 1,996,864 (53,136) 8,396,784 ) (137,101
71 unrealized lossposition December at 31,2016 and 2015. 082,021) $ 082,021) $ 179,402 (3 Losses Losses Losses Losses Unrealized Unrealized (70,266) 715,410 (15,542) 6,882,429 (85 $ $ - $ 35,151 $ (12,776) $ 35,151 ) (12,776
,463 ,463 (1,022,511) 3,649,276 996,172 996,172 (3,828) 881,100 ber 31, 2016 and2016 31, ber include: 2015 Fair ValueFair Fair ValueFair $33,084,816 $(1,
$47,314,541 $ $47,314,541 $ 20,808,939 ) $ $ 68,123,480 (727,804) (1,411,825 $ (684,021)
$74,651,451 $ (2,108,360) $ 4,709,778 $ $ $74,651,451 $ (2,108,360) 4,709,778 $$79,361,229 (108,845) (2,217,205)
Months 12 than Less More or Months 12 Total Months 12 than Less More or Months 12 Total
net ...... l ...... l 249,580 tion ...... 75,40 ...... 48,4 s ...... s 544,3 Categories of loans at Decem at loans of Categories
The following table shows gross unrealized losses and fair value, aggregated by investment category and length of of length and category investment by aggregated value, fair and losses unrealized gross shows table following The Description of Securities Securities Descriptionof Description of Securities Securities Descriptionof Total loan Total Net loans ...... One to four family units ...... $ ...... units family four to One 106,410,5 Multi-family Multi-family backed securities andSBA loan 39,570 ...... pools backed securities andSBA loan 33,072,102 ...... pools 15,923,314 (493,865)
Consumer and other loans ...... loans other and Consumer 23,606,30 Commercial loans Commercial Real estate - commercia - estate Real Real estate - construc - estate Real residential mortgage: - estate Real Allowance for loan losses ...... loan for losses Allowance fees/costs, loan Deferred (5,742,4 Less: Less: ALLOWANCEANDNOTELOANS 3: LOANFOR LOSSES Corporates ...... Corporates 1, mortgage- sponsored Government $ ...... Securities Equity ...... agencies government S. U. 6,399,920 ...... Municipals 6,167,019 (83,965) -
Municipals ...... Corporates ...... Corporates 1,675,500 mortgage- sponsored Government (79,708) 2,
time that time individual have securities been continuousa in
FORM 10-K
As of DecemberAs of31, 2015 DecemberAs of31, 2016 osmradohrlas ...... 8 10 - 1,327 8 1,239 - 2 88 Consumer and other loans ...... Commercial loans ...... - - - - Real estate - commercial ...... Real estate - construction ...... Real estate - residential mortgage: 593 - 593 ------Consumer and other loans ...... - Commercial loans ...... Real estate - commercial ...... Real estate - construction ...... Real estate - residential mortgage:
Real estate - construction Commercial loans ...... Real estate - comme Real estate -mortgage: residential osmr n ohr on ...... loans other and Consumer
oa ...... $ ...... Total oa ...... $ 367 $ ...... Total oa ...... Total ut-aiy ...... 164 164 - 41,604 41,604 - - 273 - 105 $ 168 $ - - $ Multi-family ...... One to four family units ...... $ - 48,483 48,483 - - - 965 103 $ - 495 $ 367 Multi-family ...... $ One to four family units ...... $ Multi-family ...... Oneto four family units ...... Nonaccruing loans are su Classes of loans by aging at December 31, 2016 and 2015 were as follows: ca ...... 16 rcial ......
...... 5,446,896 ...... mmarized as follows:
30-59 30-59
Past Due Past Due
Days Days 0 $ 7 $ ,2 2,689 2,423 $ 176 $ 90 $
60-89 60-89 $ 9 $ 3 1,596 734 $ 495 $ $
- 3 38 38 -
,7 1,079 1,079 -
Past Due Past Due
Days Days
Greater Greater
72
90 Days90 Days90
Than Than
Total Total Total 543 543 - 45,463 45,463 - - 40,912 40,912 -
(In Thousands) (In Thousands) - 2951 4,8 - 249,581 249,581 -
Due Past Due Past 55 2,272 ,535 2,060,180 $ $
21 05 2015 2016
$ 8,631,6 $
925,281 $ 494,458 $ 497,147 $ - - 497,147 494,458 $ $ $ 2,8 2,9 - - 21,992 21,982 81,007 79,680 2775 0,2 - - 208,824 207,745 98,257 $ 97,984 $ $ - 106,411 105,446 $ $ $ 2,6 2,0 - 23,606 23,568 7,1 7,0 - 75,405 74,812 $ 542,802 $ 544,398 $ - - 544,398 542,802 $ $ $
Current Current Current
37,791 December 31, ,9 1 1,491
Total Total Total
39 $ 13,755,475 13,755,475 39 $
Receivable Receivable -
Loans Loans 8,079,807 ,4,3 2,149,333
Accruing Accruing
90 Days 90 Days Loans > Loans >
2099 ,240,909 Total Total Total and and 12,8 1 91 -
FORM 10-K
Total Total Total Total Total Total
- $ - (1,451) - $ - (2,715) - $ - 74 - $ - 227 - $ - (1,699) - $ - 254
Unallocated Unallocated Unallocated Unallocated
23,500 $ 23,500 $ - 535,699
and Other and Other and Other and Other and Other and Other Consumer Consumer Consumer Consumer Consumer Consumer
- - (119) 4 4 40 8 8 89 r 31, 2016, 2015 and 2014: 2014: and 2015 2016, 31, r 858 $ 858 $ 21,004 $ - 482,417 $ 087 $ 16,445 $ - 487,409 2,388 2,388 14 $ (258) 1,275
Commercial Commercial Commercial
r loan losses and the recorded investment in loans based based in loans investment recorded the losses and r loan (In Thousands) Thousands) (In (In Thousands) Thousands) (In (In Thousands) Thousands) (In Multi- Multi- Multi- family family family family family family
$ $ 48,483 $ 74,480
$ $ 127 $ 1,751 $ 173 $ 101 5,804 $ $ 177 $ 1,070 $ 210 $ 437 4,947
$ $ - $ 1,027 $ 801 $ - 6,028 $ $ 206 $ 927 $ 292 $ 111 5,140
73 272 $ 272 $ - $ 2,149 $ 988 $ - 14,730 One to One to One to
9 - 65 49 d for the years ended Decembe ended years the for d four family family four four family family four four family family four
- - (99) - - - 20 -
Real Estate Real Estate Real Estate Commercial Commercial Commercial
32 34 -
$ $ 207,583 $ 95,985 $ 41,604 78, $ $ 215,145 $ 97,054 $ 33,786 91,
$ $ 249,420 104,351
5 5 99 330 $ 330 $ 1,992 $ 900 $ 127 $ 1,954 $ 185 $ 101 6,589 377 $ 377 $ 1,687 $ 856 $ 206 $ 1,168 $ 337 $ 111 5,742 246 $ 246 $ 1,526 $ 821 $ 177 $ 1,382 $ 223 $ 437 5,812
Construction Construction Construction Construction Construction Construction
1,139 (466) - 50 (576) 117 $ 336 600 1,262 198 48 29 (51) 215 $ (326) 1,375
...... $ 1, ...... $ 1, ...... $ 1, ...... 91
The followingtablesTheactivitypresent inthe the fo allowance
expense ...... expense (651) (157) 21 (82) expense ...... expense expense ...... expense Provision charged to charged Provision ...... Losses charged off Recoveries (411) (9) (127) - (2,018) (150) Losses charged off ...... Losses charged off (1,233) Provision charged to to charged Provision Recoveries ...... Recoveries 10 Losses charged off ...... Losses charged off (1,222) (69) (47) - (171) (190) Provision charged to charged Provision Recoveries evaluated for impairment .... $ .... evaluated for impairment 37,383 $ .... evaluated for impairment $ .... evaluated for impairment $ 376 $ $ .... evaluated for impairment 954 $ 158 $ $ .... evaluated for impairment $ 1,834 2,893 $ 36 864 33,892 $ 460 $ - 847 $ 203 $ 12 $ - 785 evaluated for impairment .... $ .... evaluated for impairment $ 8,080 $ 1,241 2, evaluated for impairment .... $ .... evaluated for impairment $ .... evaluated for impairment $ 540 $ 706 $ - $ 1,526 821 $ - $ - $ 312 $ 13 $ - 865 evaluated for impairment ... $ ... evaluated for impairment 35,465 evaluated for impairment ... $ ... evaluated for impairment $ 5,447 $ 161 $ 2,060 $ - $ 925 $ 106 $ - 8,699 evaluated for impairment ... $ $ ... impairment for evaluated $ ... evaluated for impairment $ 302 $ 1,075 $ $ 1,687 - 842 $ 14 $ - $ 241 $ 45 $ - 602 ans: ans: As of December 31, 2014 31, December As of As of December 31, 2015 31, December As of
Ending balance: collectively collectively balance: Ending individually balance: Ending collectively balance: Ending Loans: individually balance: Ending collectively balance: Ending Allowance losses: loan for Loans: Loans: balance: individually Ending Ending balance: individually balance: individually Ending collectively balance: Ending Ending balance: collectively collectively balance: Ending Allowance losses: loan for Ending balance: individually balance: individually Ending Ending balance: individually balance: individually Ending collectively balance: Ending As of December 31, 2016 31, December As of Allowance losses: loan for on portfolio segment and impairment method as of an of as method impairment and segment portfolio on Balance, end of year Balance, beginning of year beginning of year Balance, $ $ 2,387 $ 2,059 $ 997 $ 209 $ 1,519 $ 272 $ 359 7,802 Balance, beginning of year beginning of year Balance, $ $ 1,330 $ 1,992 $ 900 $ 127 $ 1,954 $ 185 $ 101 6,589 Balance, beginning of year beginning of year Balance, $ $ 1,246 $ 1,526 $ 821 $ 177 $ 1,382 $ 223 $ 437 5,812 Balance, end of year Balance, end of year
o
FORM 10-K
As of DecemberAs of31, 2016 principal, forbearanceor otheractio of forgiveness extensions, payment the loan, rate interest on in the a reduction include could These concessions difficulties. loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial in accordance with the contractual terms of based on current information and events, it is probable the Bank osmradohrlas ...... 13 13 5 1 - 112 45 103 103 Total Consumer and other loans ...... Loans without a specific valuation allowance
Real estate - residential mortgage: osmradohrlas ...... 3 3 0 2 - 90 - 868 - 3 622 3 622 Loanswith a specificvaluation allowance Consumer and other loans ...... Commercial loans ...... Real estate - commercial Real estate - construction Real estate - residential mortgage: osmradohrlas ...... 16 10 1,377 106 925 Total Consumer and other loans ...... Commercial loans ...... Real estate - commercial Real estate - construction omrillas ...... 0 755 303 Commercial loans ...... Real estate - commercia Real estate - construction Real estate - residential mortgage:
ut-aiy ...... - - - - - 2,165 $ - $ - 2,006 $ 2,006 $ Multi-family ...... One to four family units ...... $ ut-aiy ...... - - - - - 2,060 $ Multi-family ...... One to four family units ...... $ ut-aiy ...... - - - - - 54 Multi-family ...... One to four family units ...... $
...... as of and for the loans years ended summarizesThe following impaired Dece A loan is considered impaired, in accordance with the impairment accounting guidance (ASC-310-10-35-16), when ...... 3 - 139 - - - l ...... 6 6 - 50 - 540 - 161 161 ...... 6 6 - 69 - 679 - 161 161 ...... 307 307 ,2 - 5,427 - 3,017 3,017 ...... 547 660 0 762 - 7,622 302 6,680 5,447 ...... 240 363 0 215 - 2,195 302 3,663 2,430 ......
ns intended to maximize collection. collection. maximize to intended ns the loan. Impaired loans includenonperforming commercial loans but also include
$ 8,699 $ 10,384 $ 602 $ 12,010 $ 2 2 12,010 $ 602 $ 10,384 $ 8,699 $ $
Recorded
Balance 74
will be unable to collect a
5 1 2 - 27 $ 14 $ 54 $ $
Principal Principal
Balance Unpaid Unpaid ,6 1 212 $ - 2,192 $ 14 $ 2,060 $ 4 22 2 202 45 6
4 135 - 1,315 241
(In Thousands) 21 4 - 447 241
Allowance Allowance
Specific mber 31, 2016and 2015: ll amounts due from the borrower
in Impairedin
Investment
Average Average Loans
Recognized
Income Interest
FORM 10-K
r
d ty Interest Interest Income
Recognized Recognized
s that were classified as classified as were that s Loans Loans Average
s funds at a market rate for rate market a at funds s
Investment Investment
in Impaired inImpaired
tension datean at maturity of the tion of the face amount or maturi amount face of tion the Specific Specific
Allowance
312 616 - (In Thousands) Thousands) (In
312 1,281 -
8 8 13 206 1 84 84 13 118 - 904 904 - 88 1 the table above included loan included table above the financial difficulties, financial the Bank considers information Unpaid Balance Balance
Principal
$ $ - $ - $ 228 -
clude the debtor’s ability to acces to ability debtor’s the clude
ing life of the debt, (ii) an ex debt,ing life of the bt; (ii) a payment default is probablefutureforeseeable in the 75 with similar risk, (iii) a reduc a risk, (iii) similar with e modification relative to unpaidprincipal balance or collateral Balance Balance
Recorded
$ $ 14,730 $ 17,521 $ 865 $ 8,110 4
odification to loan terms to determine whether or not a concession has been has concession a not or whether determine to terms loan to odification
has declared or is in the process of declaring bankruptcy and (iv) the debtor’sbankruptcy the and (iv) declaring of process has declared or is in the fy the contractual payments due under the original terms of the loan without a without loan the of terms original the under due payments contractual the fy ...... 8,080 10,568 540 4,891 -
...... 2,350 4,838 540 3,255 - ...... 5,730 5,730 - 1,636 - ...... 1,241 1,241 - 234 - ...... 1,241 1,241 - 234 - In assessing whether or not a borroweror not is experiencingInwhether assessing ended year the for $8,665,000 of loans impaired average on recognized was $200,000 approximately of Interest shown in loans Bank’s impaired 2016, the 31, At December m the of aspects all considers Bank The
......
Multi-family ...... Multi-family - - - - - One to four family units ...... $ ...... units family four to One - One to four family units ...... $ ...... units family four to One ...... Multi-family $ 2,272 $ 2,272 - $ - $ 1,498 - 3 - - - One to four family units ...... $ ...... units family four to One ...... Multi-family $ 2,272 $ 2,272 - $ - $ 1,270 - 3 - - -
Real estate - construction construction - estate Real ...... commercial - estate Real ...... loans Commercial 611 - 914 - - - - Real estate - residential mortgage: mortgage: residential - estate Real Commercial loans ...... loans Commercial ...... loans other and Consumer 2,149 Total 988 2,452 98 Real estate - construction construction - estate Real commercial - estate Real
Real estate - construction construction - estate Real commercial - estate Real mortgage: residential - estate Real ...... loans Commercial ...... loans other and Consumer 1,538 allowance valuation specific a with Loans 904 1,538 - 665 - Real estate - residential mortgage: mortgage: residential - estate Real Loans without a specific valuation allowance allowance valuation specific a without Loans As of December 2015 31, of As December Consumer and other loans ...... loans other and Consumer Total 84 troubled debt restructurings (TDR). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing experiencing is borrower the (i) both if TDR a considered is loan a of restructuring The (TDR). restructurings debt troubled grantedhas difficultiesconcession.the and a financial creditor (ii) currently availablethe regarding financial condition ofThisborr the information ower. includes,notbut limited is whethe to, debtor is currently defaultpayment (i) the in onof its de any December 2014. 31, December withoutdebtor modification; (iii) the the to satis flow is sufficient projected cash modification. in Bank the by considered factors Key borrower. the to granted debtwith risk similar characteristics, the significanceof th value of the debt,delay andof significance a the in the timingoriginalofrelative of payments contractual the to the terms the of terms the to modifications more or one include generally Bank the by granted concessions common most The loan. fordebt,rate the remain reduction such a (i) interest the in as interest rate lower than the current market rate for new debt debt new for rate market current the than lower rate interest accrue in reduction a (v) payments, interest-only of period temporary a (iv) loan, original the in stated as debt the of amount interest, and (vi) an extension an and interest, ofamortization.(vi)
FORM 10-K
resulted in charge offs of $0 and
Consumer and other loans ...... Commercial loans ...... Consumer and other loans ...... Commercial loans ...... Real estate - commerc Real estate - construc
Real estate - residential mortgage: Real estate - residential mortgage: Real estate - commercial Real estate - construction Total ...... Total ...... Multi-family ...... One to four family units ...... Multi-family ...... One to four family units ...... The troubled debt restructurings described above increased the allowance for loan losses by $41,458 and and $0 losses by $41,458 the loan allowance for increased above described restructurings debt troubled The The following summarizesinformation regarding troubled new debt restructuringsclass: by
tion ...... ial ial ...... $1,233,075 during the years ended D 76 Number Number
ofLoans ofLoans ecember 31, 2016 and 201 16 1141 161,491 161,491 1 13538 $ 1,345,358 1,345,358 $ 7 $ 68904 5,655,969 6,889,044 5 4,8 5,741,189 5,741,189 $ 5,575,358 2 $ 5,575,358 1 3 1 - $ - - - - -
91672 $ 7,934,37 5 9,146,742 $ $
7089 771,557 750,849 1581 165,831 165,831 Recorded Balance Recorded Balance Pre-Modification Pre-Modification Outstanding Outstanding 2015 2015 2016 5, respectively. - $ - - - - -
Recorded Balance Recorded Balance Post-Modification Post-Modification Outstanding Outstanding ------
FORM 10-K
l- 57 Total Total Modification Modification Modification Modification track record of track record $ 5,741,189 $ 7,934,375
generally secured by owner- by secured generally bitpotential or wel problems Combination Combination
2015 2016 ong with a multi-year a with ong ity ofobligor theor of the collateral 500 500 461,057 771,5 5,831 5,831 - 165,831 Term Term Term Term l amounts and spread over a large number of number a large over spread and l amounts $ $ - $ 1,345,358 1,345,358 $ $ 165,831 5,575,358 $ $ 310,500 7,623,875
- $ - $ - $ - - mily real estate loans are mily real estate loans are in full, on the basis of currently existing facts, conditions extensions creditof that exhi
Interest Rate Rate Interest Interest Rate Interest 77
the loan the portfolio describedfollows.are as light of the circumstances surrounding loan.specific lightcircumstances the a of ve strong asset quality and liquidity al liquidity and quality asset strong ve loans that are currently protected but are potentially weak. The credit risk weak. The potentially are but protected that are currently loans the current sound worth and paying capac paying and worth sound current the in the Bank’s market areas that might that areas market Bank’s the within conditions economic by be impacted can act that the loans are of smaller individua are of smaller that the loans act a borrower’s personal income. income. personal borrower’s a ...... - - - - ...... - - 5,575,358 5,575,358 ...... - - 161,491 161,491 n ...... n - - 5,655,969 5,655,969 represents rating mention-This Special Substandard-Thisrepresentsshow ratingthat loans signs continuingof negativetrends financialunprofitability and f by the Risk is mitigated
Doubtful-Thisrating represents loanshave thatweaknesses all theof substandard loans classified with the additional Riskcharacteristicsapplicable to each segment of Real estate-Residential Thefamily: residential 1-4 fa 1-4 ha that loans represents rating Pass-This partofon-goingAs the of monitoring credit the quality ofthe Bank’s loan portfolio, management tracks loansby The following presents the troubled debt restructurings by type of modification: modification: of type by restructurings debt troubled the presents following The One to four family units ...... $ ...... units family four to One - One to four family units ...... $ ...... units family four to One ...... Multi-family - - - ...... Multi-family - - - - - Total ...... $ - Total ...... $ - Consumer and other loans ...... loans other and Consumer - - - - Commercial loans ...... loans Commercial - 16 Real estate - construction construction - estate Real commercial - estate Real constructio - estate Real Real estate - commercial commercial - estate Real ...... loans Commercial - 310, Consumer and other loans ...... loans other and Consumer - - - -
Real estate - residential mortgage: mortgage: residential - estate Real Real estate - residential mortgage: mortgage: residential - estate Real profitability. protected by is inadequately and therefore, may bemay constituterisk relatively in yet anminor, increased occupied 1-4 family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of of rating credit and income personal the on dependent primarily is loans these of Repayment residences. family 1-4 occupied theborrowers. Credit risk in these loans or either values property impact borrowers. borrowers.
pledged, if any. any. if pledged, collectionor make weaknesses that characteristic the liquidation improbable. and questionable highly values, and defined weaknesses are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on on effect their and repayment, orderly of likelihood the and risk of degree the upon based primarily are weaknesses defined followinginternally ratings:The assigned and soundness. the the are Bank’s safety an internal rating system. All loans an assigned internalan are creditsystem. internal quality rating ratingbased on ananalysis ofborrower’s the financialcondition. Theusedcriteria qualityassignto to ratings
FORM 10-K
are typically independent of the loan purpose. Credit risk is risk Credit purpose. the loan of independent are typically Repayment for purposes. for other these personal loans ty and that from cash impactflow stability the business operations. conditions these loans is Credit risk in operation. business principal needs, equipment purchases and expansions. The loans in this category are repaid primarily from the cash flow of a borrower’s economies in the Bank’s market areas. ma loans in these risk real estate.Credit As of DecemberAs of31, 2016 rating system of Decem as and general economic conditions in the Bank’s mark on the property securing the loan. These lo these loans is generally dependent on the successful operations creditworthiness of a borro may impacted by the be these loans Creditriskin long-term of financing. andtheavailability conditions economic their ultim to due real higherother risk than be estateloans or an property interim commitment from Bank loan the until perm developers and property owners. Sources of repayment of these loans may include permanent loans, sales of developed costs and estimated value of the completed Rating:
obfl ...... - - - - 54 584 - 584 - - - - 5,92 1,45 - 5,447 Doubtful ...... Substandard ...... 35,465 Special Mention ...... Pass ...... $ oa ...... $ 40 $ ...... Total Consumer: The consumer loan portfolio consists of variou Commercial: Thecommercialpo internal Bank’s the oftheusing loan portfolio credit quality the about information provides table The following Real estate-Commercial: Commercial real estate loans typically involve larger principal amounts, and repayment of developmen and land Construction Real estate-Construction:
ber 31, 2016 and 2015:and ber 31, 2016 wer, property values and the local eco local the and wer, values property
Construction
y beimpacted the local and bythe creditworthiness values property of aborrower, rtfolio includes loans to commercial customers for use in financing working capital capital usein working for financing loans tocommercialcustomers includes rtfolio ans are viewed primarily as cash flow lo project and include independent appraisal 92 $ 249,581 48, ,912 $106,411 $ $ Commercial
$ 4,0 $0,6 $48,483 $ $100,367 242,200 $
et area) and the creditworthiness of a borrower. Real Estate
driven by consumer economic 78 ate repayment being sensitive to interest rate changes, general interest to rate changes, sensitive being ate repayment driven by creditworthiness of creditworthiness by driven pes of loans ofwill loans comepes income from that sources a borrower’s
,9 - 453 13,016 - 226 11,810 1,225 4,503 - - 3,453 9 2,591 2 of the property securing theloan orthe business conducted
nomies in the Bank’s market areas.
anent financing is obtained. These loans are considered to
One to family s term and line of credit loans such as automobile loans loans asautomobile such loans credit of line s term and
four t real estate loans are usually based upon estimates of estimates of upon t based real estateloans are usually (In Thousands) Multi-
family
8 7,0 23,606 75,405 $ 483 $ ans and secondarily as loans secured by secured loans as secondarily and ans reviews and a financial analysis of the $ 903 $ 23,380 $ 69,093 $
Commercial Commercial
factors (such asunemployment a borrower and the economic Consumer
and Other
$518,988
$544,398 $544,398
Total Total
FORM 10-K
Total
497,147$
0,540,428
$ 463,666 $ es not have the es
271,799
10,746,555 and Other Other and
) ) (14,545,775) 11,791,945
Consumer Consumer
5,115 5,115 25,115 ,629,058 as of December 31, as ,629,058 December of 871,039 $ 871,039 1
Commercial
met. The Company do Company The met.
(14,885,985 604 $ 604 $ 73,407 21,775 31, December 31, December $ 2016 $ 2,251,789 2,250,789 2015 25,757,024 25,086,203
family family
utilization of the tax credits. At December 31, December At of utilization tax the credits.
Multi-
1 1 - 4,730 23,635 217 (In Thousands) Thousands) (In four four
family family One to to One
ber 31, 2016 and 2015 was 4.81% and 4.87%, respectively. respectively. 4.87%, and 4.81% was 2015 and 2016 31, ber PARTNERSHIPS
out Missouri. Effective January 2015, the investments are are investments the 2015, January Effective Missouri. out
r a minimum 15complianceyear period,minimum a r eachmust partnership 657 657 3,319 - 2,267 - 9,243 79
Real Estate Estate Real
$ $ $ 41, 91,267 198,230
Commercial
,463 $ $ $ $ ,463 41,604 98,257 $ 208,824 81,007 21,992 lidated Balance Sheets. Conso Company’s the on
ises and equipment, stated at cost, are as follows: follows: as are cost, at stated equipment, and ises
Construction
AFFORDABLEHOUSING gulatory requirements in order to maintain the maintain to order in requirements gulatory ent ...... ent 11,357,768 ...... 11,850,553 tion tion ...... pment pment ...... $ 10,
...... 271,799 ISES ANDISES EQUIPMENT are policies Such management. of members key certain on insurance life owned Bank purchased has Company The The Company has purchased investments in limited partnerships that were formed to operate low-income housing housing low-income operate to formed were that partnerships limited in investments purchased has Company The Decem of as loans on rate interest average weighted The foramountingDecember others2015,31, $54,722andofThe serviced 2016 mortgage loans Bank $64,220 to and as prem of classifications Major Net premises and equi and premises Net Total ...... $ 45 Pass ...... $ 37,383 Special Mention ...... Mention Special - 3, Substandard ...... Substandard 8,080 6,937 3,67 Doubtful ...... Doubtful - - - - 603 - 603
Leasehold improvements improvements Leasehold Less accumulated deprecia accumulated Less Buildings and improvements improvements and Buildings Land ......
Automobile ...... Automobile equipm and fixtures Furniture, 2
ability to exert significantpartnerships. Fo over influence the re housing affordable to adhere 2016 andnet 2015, carrying the values of the investments Company’s in these entities was $1,871,582$2,688,704, and assets other in included are and respectively, Rating: Rating: As of December 2015 31, of As December NOTE 5: BANK OWNED LIFE INSURANCE LIFE OWNED BANK 5: NOTE of excess in value surrender cash in The increase realized. be can that amount the or value, surrender cash their at recorded premiumthe paid single reported is other noninterest as income. The balance31, December 2016 2015 and at was $19,272,893and $18,779,915, respectively. IN INVESTMENTS 6: NOTE apartment complexes and housing single-family units through are conditions certain if method zation the proportional amorti under accounted for respectively. The Bank serviced commercial loans for others amounting to $5,978,363 and $7 $5,978,363 and to amounting loans for others commercial serviced Bank respectively. The 2016and 2015, respectively. PREM 4: NOTE
FORM 10-K
02% 336371 79 .0% 418734 77.7% 401,837,394 0.30 % 77.9% 5.0% 393,673,761 0.29% 25,864,718 0.20 % 5.5% 28,095,248 0.20% 155,529,796 0.45% Savings ...... Money market ......
09% 116899 21 .1% 155831 22.3% 115,548,301 0.91 % 22.1% 111,688,989 0.90% 2015, respectively. respectively. 2015, deposit with a minimum balance of $250,000 was approximately $11,798,000 and $6,009,000, as of December 31, 2016 and certificates of of amount aggregate The respectively. and as 31, of 2015, 2016 December $63,442,000, and $63,697,000 etfcts 505,362,750 $ 0.43% Total Deposits ...... Certificates: 80,910,910 $ 0.01% N Demand ...... DEPOSITS NOTE 7: 2014. and 2015 2016, years fiscal the eachof during $885,478 and $885,478 $817,122, was costs investment the of Amortization respectively...... 4,003,063 4,787,609 Thereafter ...... 10,262,403 2021 ...... 20,032,460 2020 ...... 71,182,536 2019 ...... 2018 ...... 2017 ...... $ .0 .9 .... .4 20,369 2.14% 54,319,296 1.28% 57,349,324 2.00% - 3.99% ...... 0.54% 1.00% - 1.99% ...... 0.00% - 0.99% ...... W ...... 03% 129, 0.30% OW ...... The Company received income A summary of certificates of de The aggregate amount of certificates of minimumdeposit with a balanceof Deposits are comprised of the followi Weighted Average Average
Rate
December31, 2016 posit by maturity as of December 31, 2016, is as follows: as follows: is 2016, December 31, as of maturity by posit tax credits of $1,221,394, $1,221,394 and $1, Balance 3,0 2.% 0.31 % 25.6% 137,807 ng at December 31, 2016 and 2015: .% 21 ,4,8 0.3% 1,343,985 2.17 % 0.0% 60 .0% 6,9,6 13.1% 67,897,263 0.00 $ % 16.0% Percentage of Deposits Deposits of 08 .2% 0.42 % 30.8% 80
0.% 04 $ 51 0.43 $ % 100.0% 08 .1% 5,4,3 10.2% 11.7% 53,142,739 1.31 % 61,061,577 0.54 % 10.8% 11.3%
Weighted Average Average Rate ...... 1,420,918 ......
221,394 during 2016 December31, 2015 174295 26.6% 137,472,955 7,0,5 33.0% 170,602,458 Balance $100,000 was approximately$100,000 was ,8,9 100.0% 7,385,695 $ 111,688,989 111,688,989 $ Percentage , 2015 and 2014, , 2015 of Deposits Deposits of
FORM 10-K
Rate Rate Average Weighted Weighted
Amount Amount 50,000,000 2.14% - 0.00% 2,100,000 4.87% 49,467 49,467 49,071 276,808 $ 276,808 1,242,158
Years ended ended Years December 31, 31, December 1,102,928 1,050,081 Rate Rate Average Weighted Weighted
343 ) ) 343 ) (5,332 (12,220) 100,000 100,000 4.87% ingsource. The aggregate amount brokeredof deposits Amount Amount 43,600,000 43,600,000 50,000,000 0.79% 2.14% lationoutstanding to balancescollateral For advances.of rity in January 2018. Beginning February 2010, in the $ 95,700,000 95,700,000 $ $52,100,000 1.72% 2.25% 2016 31, December 2015 31, December
ces at 95% of their fair value. Based onexisting value. fair Based 95%collateralas their of at ces
serve Bank requires to maintain Bank the collateralrelation in the Bankhas the ability toborrow an additional$59.8 million $ $ 2,283,982 $ 2,423,871 2,329,090
2016 2015 2014 81 inateuntilbasis the quarterly agreements on maturity. a
...... $ ...... $ 1,235,359 1,
...... (9, Maturity Date ...... 1,002,872 ...... 55,094
borrowed InJanuary$30.0 2008, the Company million under structured Interest was three repurchase agreements. 2008,During Bank the established a borrowing line with Federal the Reserve Bank. The Bank has the ability to SecuritiesSold Under Agreements to Repurchase requires Bank toThe collateral the maintain FHLB in re
Loan Home Federal Bank advances consist theof following: The Bank utilizes brokered deposits as anadditional fund Advances Bank Loan Home Federal Borrowings Bank Reserve Federal A summary of interestsummary A depositsexpense on follows: as is OW and Money Market accounts accounts Market Money and OW
Certificate accounts penalties withdrawal Early Savings accounts accounts Savings N
2017 ...... 2017 ...... 2018 ...... 2, 2019
purposes, the FHLB values mortgage loans free of other pledges, liens and encumbrances at 80% of their fair value, and and value, fair their of 80% at encumbrances and liens pledges, other of free loans mortgage values FHLB the purposes, otherofinvestmentpledges, free securities liensencumbran and Re Federal The 2016. 31, December of as million $25.2 borrow 2015. and 2016 31, December of as line on this outstanding borrowings no had Bank The outstanding. to borrowings based on a fixed weighted average rate of 2.65% until matu hadcounterparty,optionthe Inc., Capital, Barclay’s to term
was approximately $41,456,000 and $45,794,000 as of December 31, 2016 and 2015, respectively. respectively. 2015, and 2016 31, December of as $45,794,000 and $41,456,000 was approximately BORROWINGS 8: NOTE well as the FHLB’s limitationof advances35% of assets, to 2016. 31, December of as FHLB, the from
FORM 10-K
NOTE 10: INCOME TAXES Tier I securities or as qualify either for Tier II capital purp regulatory debenture notes bearinterest at afixed rate for five years and thereafter at afloating rate based on LIBOR. The preferred fixed/variable rate subordinated debenture notes due 2036, which were redeemable beginning in 2011. Trust II subordinated beginning in 2011. The sole assets of Trust II were originally $10,310,000 aggregate principal amount of the Company’s aggregate principal amount of the Company’s fixed rate subordinated debenture notes due 2036, which were redeemable 2015. and 2016 31, December both of as corporate income tax rate. The unrecorded deferred income carryback of net operating losses would create income for tax purposes only, which would be subject to the then current purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses or adjustments arising from income taxliabilityhasbeen recognized. This amount represents securitie preferred of $10,000,000 and Trust IIissued securities in securities the preferred of proceeds invest the gross to and tru assets in the the of interests beneficial undivided securities representing preferred II, toTrust issue Statutory Guaranty NOTE 9: of a penalty $463,992. prepayment incurring maturity date, its stated to 2013 and another agreement in the amount
eerdicm ae ...... 123,091 Deferred income taxes ...... Taxes currently payabl
As of December 31,2016and 2015, retained earnings in of: consists taxes income for provision The Iand Trust Statutory Guaranty subsidiaries, trust grantor owned two wholly the Company formed 2005, During In June 2015, the Company executed a structured transaction in order to pay off the remaining $10.0 million, prior Prior to the stated maturity date, th
SUBORDINATED DEBENTURES ...... 1,889,673 $ ...... e
of $5.0 million in November 2011. 2011. November in million $5.0 of e Company paid off one of these agreem
tax liability on the above amount 82 21 05 21 2014 2015 2016
$ 2,012,764 $ 2,461,329 $ 2,112,508 2,112,508 2,461,329 $ 2,012,764 $ $ notes of the Company. Trust Ii Trust Company. of the notes
s. The sole assets of Trust assets of sole The s. an allocation of income tobad debt deductions for tax cluded approximately oses, subject to certain limitations. to oses, limitations. certain subject
21051 $ 1,445,947 2,140,591 $ $ 2,3 666,561 320,738 ents in the amount $15.0 million in May December31, YearsEnded $5,075,000 for which no deferred$5,075,000 forwhichno was approximately $1,878,000 ssued $5,000,000 of preferred of preferred $5,000,000 ssued I were originally $5,155,000 $5,155,000 I wereoriginally
sts sts
FORM 10-K
-
(368,245) (51,713) $ 1,976,060 123,390
%) %) (3.4%)
to the fair valueto of thefair the ,135 $ ,135 3,230,105 ,441 ,441 768,879 768,879 401,688
would be received to sell an asset or asset an sell to received be would Years ended ended Years December 31, 31, December 30.1% 26.8% 34.0% 34.0% (45,646) (70,849) 228,996 446,122
(735,104) (490,807) 31, December 31, December 2016 2015 4,209,239 3,720,912
%) %) (1.7%) (1.4%)
(4.2%) (4.2%) (4.8 quoted prices quoted assets or liabilities; for similar quoted to income tax expensetaxto income Company’stheat effective rate scribesthreeinputs levels of be used to measure may that (2.2%) (1.5%) (1.6%)
2016 2015 2014
rred taxes shown on the December 31, 2016 and 2015 balance balance 2015 2016 and 31, December the on shown taxes rred market participants at the measurement date. participants the820 Topic market also at 83 rities ...... rities , defines fair value as the price that price the as value fair defines , ...... 681,281 773,652 ASSETS AND OF VALUE LIABILITIES quires an entitymaximize to the useof observable inputsminimize and the use of other inputs that are observable or can be corroborated by observable market data for data market observable by corroborated be can or observable are that inputs other d credits ...... credits d ...... (642,977) s ...... $ ...... s 1,952,433 Fair Value Measurements te ...... te 34.0% ...... 26.5% sset ...... $ 3,474 : Unobservable: inputs supported bylittle or noactivitysignificantand market are : Observable: inputs other than 1Level prices, such as : Quoted prices in active markets for identicalfor liabilitiesQuoted or assets markets prices: active in
Level 3 ASCTopic 820, Level1 Level 2
reconciliationA of income tax expense at the statutory rate
The tax effects of temporary differences related to defe to related differences of temporary effects The tax Cash surrender value of life insurance ...... insurance life of value surrender Cash ...... interest exempt Tax ...... Other (3.3 2.2% 4.1% (0.8%) Accumulated depreciation depreciation Accumulated Other ...... FHLB stock dividends ...... dividends stock FHLB (46,481) Allowances for loan losse loan for Allowances State financial institution tax an tax institution financial State Writedowns on foreclosed assets held for sale for held foreclosedon assets Writedowns ...... fees/costs loan Deferred on secu available-for-sale depreciation Unrealized 56,209 Tax Credits ...... Credits Tax Other ...... 521 et deferred tax a tax deferred et assets or liabilitiesor assets prices in markets that are not active; or active; not are that markets in prices substantiallyof the the full liabilitiesor assets term Actual effective rate effective Actual specifies a fair valuefair specifiesa hierarchy which re unobservable inputs whenfair measuring value.The standard de paid to transfer a liabilityorderlyan in transaction between value:fair
ra statutory at Computed
Increase (reduction)Increase in resulting taxes from: N Deferredtax liabilities: NOTE 11: DISCLOSURES ABOUT FAIR is shown below: below: shown is sheets are: are: sheets assets: tax Deferred
FORM 10-K
Available-for-sale securities fair the using fair value estimating include impairment interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of Impaired loans (Collateral Dependent): hierarchy. valuation the of 3 Level within value obtained principallyfrom independen t sources, adjusted for selling costs. Forecl AssetsHeld for Foreclosed Sale: hierarchy. the to assets valuation pursuant such nonrecurring basis and recognized in the ac pricin are using by fair estimated values market Ifsecurities. quoted equity include 1 securities Level hierarchy. the Level 1 valuation of securities: Available-for-sale assets pursuant to the valuation hierarchy. recurringtheaccom basisin and recognized As of December31, 2015 As of Available-for-sale securities Debt securities: As of December31, 2016 As of measurements fall at December 31, 2016 balancesheets measured at the erarchyfair fair in which hi valu valuefair value a recurring on the basis within thandlevel e securities. Companybacked The has securities. Levelno 3 m agencies, U.S.government include securities 2 flows. Level Equity securities: securities: Equity Debt securities: securities: Debt Financial assets: Financial assets: oprts ...... ,5 - 7,05 - 7,053 - and SBA securities Government mortgage-backed sponsored Corporates ...... oprts ...... ,1 - 3,81 - 99 - $ 3,814 - - - $ - and SBA securities Government mortgage-backed sponsored Corporates ...... Municipals ...... 99 $ U.S. government agencies ...... Other ...... $ ...... Municipals onpos ...... 47 - loan pools ...... onpos ...... 53 - loan pools ...... The following is adescription of the valuation methodologies used for assets measured at fair value on a me and valuation inputs of the is a following description The The following table presents the fair the presents table following The
...... $ ...... $ 99 ...... $ Where quoted market prices are available in an in are available prices market quoted Where Fair value is estimated using recent appraisa recent using isestimated Fair value Loans for which it is probable that the Company will not collect all principal and and will collect allprincipal not Company that the for itisprobable Loans which g models, prices of securities with quoted g models, and 2015 (dollar amountsthousands):in companying consolidated balance sheets, as panying consolidated balance sheets, as well as the general classification of such valueassets recogni measurementsof value of the collateral for collateral dependent loans. loans. dependent for collateral collateral of the value 84 unicipals, U.S. corporate and government sponsored mortgage- and government U.S. sponsored corporate unicipals,
- 3,3 - 38,33 - $ 38,338 $ - $ $
Level 1 Level 1 inputs inputs inputs inputs thodologies used for assets measured at fair value on a - $ 92,399 $ - $ 92,399 92,399 - $ 92,399 $ - $ active market, securities are classified areclassified within market, securities active
ls, comparable sales and other estimates of $ 97,193 $ - $ 97,292 97,292 - $ 97,193 $ $ ,9 - 8,397 - 8,397
similar characteristics or cash discounted
Level 2 Level 2 inputs inputs inputs inputs zed in theaccompanying consolidated osed assets held for sale are classified 139 31,3 - 31,349 well as the general classification of 08 47,00 - ,008 63 53,63 - ,633
prices are th available, not
Level 3 Level 3 inputs inputs inputs inputs
Total fair Total Total fair Total
value value 9 49 en 8 3 8 3 4 e
FORM 10-K
value value value value Totalfair Totalfair Range Range Range Range Average) (Weighted (Weighted
(Weighted Average) theend of the period when mber 31,2016 and 2015(dollar Level3 inputs Level3 inputs $ $ 12,923 12,923 $ $ 1,006 1,006 $ $ 149 149 $ $ $ - -
realizable value value realizable (4%) 23% - 0% realizable value value realizable 0% realizable value value realizable (7%) 100% - 0% value realizable 10% Discount toreflect Discount toreflect Discount to reflect Discount to reflect Level2 inputs Level2 inputs
unobservable inputs used nonrecurringin Level 3 fair s those transfers to occur at occur to transfers those s assets measured at fairvalue on a nonrecurringbasis and l dependent within are classified Level3 value fair of the
85 value measurements fall at Dece value measurements - - Comparable Market Level1 inputs Level1 inputs
2015 Valuation Technique UnobservableInput 2016 UnobservableValuationTechnique Input Fair ValueFair Fair ValueFair December 31, December December 31, December
...... $ ...... $ - - ...... $ ...... $ - - ...... $ ...... $ - - ...... $ ...... $ - - The followingtablequantitative presents information about
There were no transfers between valuation levels for any asset during the years ended December 31, 2016 or 2015. 2015. or 2016 31, December years ended the during asset for any levels valuation between transfers no were There If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of of amount the measuring of method value fair the then dependent, collateral as identified is loan impaired the If The following table presents the fair value measurement of measurement fair value the table presents following The
Foreclosed assets held for sale: sale: for held assets Foreclosed December 2015 31, December December 2015 31, December
Impaired loans: loans: Impaired
December 2016 31, December December 2016 31, December the assets are valued. are assets the thousands): in amounts (dollar measurements value $ ... dependent) (collateral loans Impaired 5,000 Comparable Market
Impaired loans (collateral dependent) .. $ $ .. dependent) (collateral loans Impaired 1,006 Comparable Market Foreclosed assets held for sale ...... $ ...... sale for held assets Foreclosed Foreclosed assets held for sale ...... $ ...... sale for held assets Foreclosed 149 Comparable Market consider Company the necessary, deemed are techniques valuation If
impairmentutilized. is method This requires obtaining a current independent appraisal ofthe collateral and applying a discount factor tovalue. theImpaired loans that are collatera hierarchy when impairment is determined using the fair value method. method. value fair the using determined is impairment when hierarchy thevalue level hierarchyfair within thewhich in fair the thousands): in amounts
FORM 10-K
settle themotherwise terminate the cost or to on estimated or agreements, into remaining terms taking the account of the agreem of credit lines letters and of credit loans, originate to Commitments Interest payable to its par close value. limited market for similar debt instruments and the Company has the option to call the subordinated debentures at an amount Subordinated debentures and notes payable similarwith terms maturities. remaining and advances and Federal Reserve Bank Federal Home Loan cash flows offered future rates currently the using carrying amount approximates fair value. The fair value of fixe Deposits for fair values. held sale approximates these characteristics wereaggregated for purposesthecalculations of and for the same ratings borrowers with similarcredit be made to remaining maturities. would similarwith Loans loans Loans market quoted estimated for using prices similar securities. securities Held-to-maturity Cash and cash equivalents, interest-bearing deposits and Federal Home Loan Bank stock accompanying consolidated committed rates. The fair ofletters rates.The value committed th considers also fair value commitments, fixed-rate For loan valuecommitmentsThe fair of to origin The carrying amount approximates fair value. For these variable rate instruments, the carrying amount is areasonable estimate offair value. There is currently a agreem under securities sold and advances of fair value The Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The market the rates at similar cash flows using thewhich future isestimated by discounting loans of fair The value Fair value is based on quoted market prices, if available. Ifa quoted market price is not available, fair value is The carrying amounts reported in the consolidated balance sheets approximate those assets' fair value. the in recognized instruments all financial other fairvalue of toestimatethe wereused methods The following balance sheets at amounts other than fair value. of credit and lines of credit is based on isbased credit lines of and credit of ate loans is estimated using the fees cu for deposits of similar remaining maturities. similar of deposits remaining for and securities sold under agreements to repurchase repurchase to agreements under sold securities and 86 the obligations at the the with the counterparties obligations reporting date. e difference between current levels of interest rates and the interest ratesandthe of levels current between e difference . The carrying amount of accrued interest and mortgage loans
d-maturity certificates of deposit is estimated by discounting d-maturity certificates of is discounting estimated by deposit ents and the present credit wort credit and ents the present ents to repurchase is estimated ratesondebt by using isestimated torepurchase ents fees currently charged for similar agreeme for charged fees currently rrently charged to enter into similar similar into to enter charged rrently hiness of the counterparties. counterparties. the of hiness nts
FORM 10-K
n Level Level Hierarchy Hierarchy 3 2
ecember 31, 2016, ecember ecember 31, 2016, ecember 986,692 986,692 2 Fair Fair Value Value
Bank. As Bank. D of Bank. As Bank. D of e disclosure of certain significant of certain significant disclosure e ial instruments at December 31, 2016 2016 31, at December ial instruments 1,986,692 1,986,692 1, Amount Amount Carrying Carrying pire no later than ten years from the ofdate from thanlater noten pire years 517,385,695 511,225,380 511,225,380 517,385,695
2 52,100,000 53,227,960 2 53,227,960 52,100,000 2
ans forbenefitof the certain directors,officers and Level Level Hierarchy Hierarchy 2 196,102 196,102 2 $ $ 18,774,419 1 18,774,419 1 2 43,099 43,935 2 ns. Estimates related to the allowance for loan losses are e Company’s Board ofadministers BoardDirectors Company’s e the plans. The
2 1,902,933 1,902,933 2
s due to certain concentrationsdiscussed i risk are of credit 87 directors of of the Company and the directors directors of the Company and the directors Fair Fair Value Value 15,465,000 15,465,000 3 15,465,000 15,465,000 3 fair values of the Company’s financ Company’s the of fair values
640 537,645,692 537,645,692 640 495,207,798 491,001,907 3 7,063 7,063 1,947,063 2 362,750 504,829,161 504,829,161 362,750 2 are employees of the Company or its subsidiary. The option price must not be less not price must option The or its subsidiary. Company of the employees are Amount Amount Carrying Carrying 20% per year over a five-year period. period. five-year a over year per 20%
2016 31, December 2015 31, December
mpany stock on the date of grant. All optionsAll onmpanystockgrant. of datethe ex ESTIMATES AND CONCENTRATIONS AND ESTIMATES h or stock to key employees and to or stock h h or stock to key employees and to or stock h
The following table presents estimated The estimated table following presents
requir America of States United the in accepted generally principles Accounting On May 27, 2015, the Company’sstockholders voted to approve the Guaranty Federal Bancshares,2015 Inc. Equity
On May 26, 2010, the Company’sstockholders voted to approve the Guaranty Federal Bancshares,2010Inc. Equity In addition, the Company establishedstock fouroption pl
advances ...... advances 95,700,000 95,764,840 Cash and cash equivalents ...... $ $ ...... equivalents cash and Cash $ 9,088,441 9,088,441 Held-to-maturity securities ...... securities Held-to-maturity . stock Bank Loan Home Federal 4,611,000 27,528 ...... sale for held loans Mortgage 4,611,000 2,183,633 538,273, ...... net Loans, 2,183,633 28,153 ...... receivable Interest 1,94 2 2,837,500 2,837,500 Reserve Federal and FHLB 2 Deposits ...... 505, ...... Deposits instruments ...... instruments value): contractual of (net ... credit extend to Commitments ...... credit of lines Unused ------Interest payable ...... payable Interest 207,833 207,833 Subordinated debentures ...... debentures Subordinated 15,465,000 Financial assets: assets: Financial and2015. estimates andestimates current vulnerabilities due to certain concentratio footnotereflected in the regarding loans. vulnerabilitie Current NOTE 12:NOTE SIGNIFICANT Financial liabilities: Financial liabilities: EquityPlans awards equity under Stock Common of shares 250,000 to up of grant the for provides Plan The Plan”). (the”2015 Plan equity-based other or units, performance rights, appreciation stock stock, restricted awards, stock options, stock including awards payable in cas thefootnote regarding loans. 13:NOTE BENEFIT EMPLOYEE PLANS Unrecognizedfinancial restrictedfor 27,645stock sharesofCommon granted been has Stock under the Plan. awards equity under Stock Common of shares 200,000 to up of grant the for provides Plan The Plan”). (the”2010 Plan equity-based other or units, performance rights, appreciation stock stock, restricted awards, stock options, stock including awards payable in cas non-incentivestock optionsfor 25,000 shares andrestricted stock for 139,330shares Common of Stockhavebeen granted Plan. the under employeesCompany the of and subsidiary. its committeeA of th options stock Incentive options. stock nonqualified or options stock incentive either be may plans these under options stock can be granted only to participants who Co the of value market the than of grant.rate optionsthe at The vest
FORM 10-K
Balance outstanding as of December Balance outstanding as of December Stock Options as ofDecemberexercisableOptions Balance outstanding as of January Balance outstanding as of December ofie ...... (38,000) Forfeited ...... (2, Forfeited ...... ofie ...... (20,000) Forfeited ...... Exercised Granted ...... (10,80 Exercised ...... Granted ...... (25,10 Exercised ...... Granted ...... The tables below summarize transactions under the Company’s equity plans:
,21 ...... 6,0 1100 16.54 121,000 168,100 1, 2014 ...... 3,21 ...... 60,000 31, 2016 ...... 3,21 ...... 60,000 31, 2016 ...... 1 04 ...... 140,300 31, 2014 ...... 1 05 ...... 91,500 31, 2015 ...... 88
Nme fsae Number of shares Incentive Stock (150 (5,000) (11,500) Option Option 0) (24,000) 700) ) (25,000) 0) (14,500) 0) - - - Non-Incentive Non-Incentive 5,0 20.15 52,500 $ 5,0 20.15 52,500 $ 250 18.23 82,500 750 19.58 57,500 StockOption 25. - 28. - - - -
19.03 5.22 5.33 .0 5.20 ExercisePrice Weighted Average Average 9 19 8 28 - -
FORM 10-K
d - - - - 8.55 8.55 Weighted Weighted Date Price AverageGrant-
- - ve a one year cliff vesting. cliff vesting. one year ve a 894) 894) 12.26 955 $ 955 13.62 ( 8,951 8,951 14.78 4,679 15.01 4,562 4,562 10.99 (7,201) (7,201) 13.13 (15,083) (15,083) 11.64 (31,688) (31,688) ded December 31, 2016, 2015 and ded December ining contractual life of 1.35 years. years. 1.35 of life contractual ining umber of shares shares of umber ensation expense related to nonvested nonvested related to ensation expense N
65,025 at December 31, December at $565,025 tions was $660,120 and ed stock to directors that ha directors that to ed stock ed stock to officers that have a cliff vesting at the end end at the a cliff vesting have that officers to ed stock restricted stock to officers that have a cliff vesting at the at vesting cliff a have that officers to stock restricted and 2014, respectively. In June 2015, the Company granted granted Company the 2015, June In respectively. 2014, and
89 these awards for the years en years for the these awards ng stock options of options stock ng a 112,500 rema had 4 ...... 4 $ 27,629 7.39 , 2015 ...... 2015 , 43,477 ...... 2016 , 12.75 60, , 2014 ...... 2014 , 30,503 10.26 there was $287,443 of unrecognized comp there was $287,443 of unrecognized e Company granted 19,704 shares of shares 19,704 granted e Company as of January 1, 201 1, January of as trinsic value of outstanding exercisable stock op stock exercisable outstanding of value trinsic
Total stock-based compensation expense is comprised of expense for restricted stock awards and stock options. options. stock and awards stock restricted for expense of comprised is expense compensation stock-based Total As of December 31, 2016, total outstandi total 2016, 31, December of As Thetotal intrinsicvalue outstandingof stockoptions was $660,120 $565,025and Decemberat 31,2016 2015,and InFebruary2016, the Company granted9,336 shares restrictof During2016, the granted Company 15,343shares of restrict Vested ...... Vested ...... Forfeited ...... Vested ...... Forfeited Granted ...... Granted 2 Granted ...... Granted 2 Granted ...... Granted 3 Vested ...... Vested ...... Forfeited
end ofendthree years. During 2014,theCompany granted 23,320 shares restrictedof officersto stock havethat vestingcliffa at these to relating expense The period. vesting applicable the over recognized being is expense The years. of three end the awardsfor years the endedDecember 31, 2016, 2015 and 2014was $267,606, $176,644and $102,099,respectively. Expense recognized for theyears ended December31,2016, 2015 and 2014 was $393,638,$297,295 and$254,340, 2016, 31, December As of respectively. restricted stock awards, whichrecognizedbewill awards, restricted stock over the remaining vesting periods. Balance of shares non-vested as of December 31 as Balance non-vested December of of shares 31 as Balance non-vested December of of shares Balance of shares non-vested as of December 31 as Balance non-vested December of of shares in total The respectively.
Restricted Stock Restricted 2016 and2015, respectively.The fair valueof optionsvested during 2016, 2015, and2014 $0, was $143,350 and$361,517, respectively. and vested fully was that directors to stock restricted of 11,242 and 8,281 granted Company the 2014, and 2015 February In 2015 31, in during full December the year ended expensed thus, recognize being is expense The years. three of end the at vesting cliff a have that directors to stock restricted of shares 966 relating to The expense period. vesting applicable the over 2014was $126,032, $124,910 and$122,538, respectively. of three years. During 2015, th 2015, During years. three of Balance of shares non-vested non-vested shares of Balance
FORM 10-K
of expense recognition in the income statement. ASU statement. 2016-02 income the in recognition expense of recognize them as they occur. The provisions of this update of this update The provisions as they occur. them recognize afte into at, orentered leasesexisting and operating for capital fiscal years. A m interim those within periods including 2018, a mate to have expected is not of ASU 2016-01 Adoption sale securities.ASU2016-01iseffec measurement category,andclarifies the gui by liabilities assetsand financial of separate presentation required the and details risk credit specific instrument in income comprehensive in other presentation the separate required measur when be disclosed notion exit price the requires and cost, disclosure clarifies reporting investments, equity assessmentof Liabilities Assetsand Financial Financial of Measurement and on the financial statements, other than the required new disclosures. impact will a standard significant have but time the atthis statements, not believe do financial itsconsolidated on 2014-09 ASU of theadopting impact first in the evaluating it is the new quarter of currently 2018, guidance to adopt plans Company for under are accounted GAAP, co securities that which and loans beginning after December 15, 2017. The guidance does not apply to revenue associated with fina Effective Date Deferral of the December 15, 2016, however, the FASB issued amendments the financial institutions. Initially, were effective for entities for annual reporting periods public beginning aft for recognition to revenue approach or timing the impact significantly to expected is not toASU 2014-09 receive. expects reflect thetransfer of goods servicestocustomersand in an amount equal to terms longer than 12 months. Leases will be classified as eith forallleaseswith sheet the balance on aleaseliability and aROUasset alesseetorecord that requires (ROU) model use theimpact on Company’s financial results of flows. position, cash or operations be recognized in the period of adoption. Management does not expect the requirements of this update to have amaterial December 15, 2016. The update The update also provides th tax deficiency the exist, not does tax benefit excess a cumulative is there benefit.extent a cumulative tax the excess In event th awards vest. the tax Currently, excess periodbenefits in which income tax consequences of excess tax benefits and deficiencies payment transactions, including the income tax consequences of Employee Share-BasedAccounting Payment a financialimpactsignificant will have the on statements. our pending adoption of the new standard on our consolidated financial statements, but at this time do not believe the standard in the financial statements, with certain practical expedients business to facilitate sales to customers. The core principle of principle of core to The customers. facilitate sales to business ofother a scope guidance the within obligations and rights revenue arising from contracts with customers, except for th 606): (Topic 2014-09, NOTE 14: NEWACCOUNTING PRONOUNCEMENTS
In January 2016, the FASB issued ASU 2016-01, Financial Instruments- Overall (Subtopic 825-10): (Subtopic Overall Instruments- Financial 2016-01, ASU issued FASB the 2016, January In In February 2016, the FASB issued ASU 2016-02, In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) (“ASU”) Update Standards issued Accounting Board (“FASB”) Standards Accounting Financial May 2014, the In (“ASU 2014-09”). The scope of the guidance applies to to applies Revenue guidance from ofthe Contracts Thescope withCustomers 2014-09”). (“ASU atmay entities to continue estimate forfeitures ” which deferred the effective date of ASU 2014 requires a modified retrospectivetransition un tive for annualtive for and interimreporting peri dance for a valuation allowance on deferred tax assets related to available-for- . The purpose of the update was to to was the update of purpose . The ASU2015-14 rial impact on our consolid nd nonmonetary exchanges between entities in the same line of same the line in entities between exchanges nonmonetary nd Leases becom 90 at a tax deficiency has occurred during the reporting period an er finance or operating,cl with available.Company The is curr odified retrospective transition approach is required for lessees is required approach transition retrospective odified the new guidance is that an entity should recognize revenue to revenue recognize should entity an is that guidance the new e following:leasecontracts, in requirements for financial instruments measured at amortized atamortized measured instruments for financial requirements r, the beginning of the earliest
(“ASU 2016-01”). ASU 2016-01 simplifies the impairment impairment the simplifies 2016-01 ASU 2016-01”). (“ASU should be recognized in income ing fair value of financial instruments. ASU 2016-01 details details ASU2016-01 instruments. of financial value fair ing is recognized in income tax expense under current GAAP. or deficiencies impact stockhold is effective for is effective fiscal years mprises a significant portion mprisesstream. revenue of portion our a significant As the such transactions. Under the provisions of the update the the update the of provisions the Under transactions. such for the change in fair value of a liability related to change in related to change for the change a liability fair value of Revenue fromContracts with e effective for interimand (“ASU 2016-02”). ASU 2016-02 establishes aright-of- establishes 2016-02 ASU 2016-02”). (“ASU in accounting forstock based compensation or -09 by one year to annual and interim periods the consideration that the entity receives or der which a cumulative e ods beginning after December 15,2017. simplify the accounting for share-based share-based for accounting simplify the ated financial statements. ated financial assification affecting the patter assification affecting annual periods beginning after after beginning periods annual comparative period presented beginning after December 15, afterDecember 15, beginning ently evaluating the impact the of evaluating ently surance contracts, contractual tax expense in the in the expense reporting tax ncial instruments, including Customers (Topic 606) – ers’ equity directly tothe directly ers’ equity ffect to equity will Improvements to Improvements Recognition er d n
FORM 10-K
Measurement of of Measurement Classification of Certain rward-looking information rward-looking d (2)ten-year a warrant to April 201315, connectionin with which was conducted immediately conducted was which ected credit losses. In addition, the ASU ASU In credit the ected addition, losses.
in practice around how certain transactions transactions certain how around practice in h flows. h Thisnew accountingguidance will organizations will now use fo will now organizations redeemed redeemed 5,000Series PreferredA Shares $5for million bt securities and purchased financial assets with credit purchased assets andfinancial bt securities things, that the Series A Preferred Shares were redeemable redeemable A Preferred Shares were Series that the things, ons for fiscal years, and interim periods within those fiscal periods within those years, and interim fiscal ons for effective for and years, fiscal interim periodswithin those “Series A Preferred Shares”), an A Shares”), Preferred “Series Designations by which the A Preferred Series Shares were ury settled the sale of such Series A Preferred Shares to theShares Preferred A ury such of Series sale settled the
g date based on historical experience, current conditions, and 91 000 Series A Preferred Shares Preferred A 000 Series change to reflect the full amount of exp of amount full the reflect to change ncial institutions and other other and institutions ncial , 2019, with later effective dates for non-SEC registrant public companies and other . Among other things, the amendments in this ASU require the measurement of all all of measurement the require ASU this in amendments the things, other Among . The updateTheintendedis todiversityreduce the d as capital. qualifie 1 Tier Shares Preferred
On January 30, 2009, the Company issued and sold, and the Treasury purchased, (1) 17,000 shares of the Company’s Company’s the of shares 17,000 (1) purchased, Treasury the and sold, and issued Company the 2009, 30, January On on Treasury the with Agreement Agency Placement a into entered Company The On13,June 2012, regulatorywith approval, Company the InAugust 2016,FASB issued the 2016-15, ASU of Statement Cash (Topic Flows 230): In June2016, issuedFASB the ASU 2016-13, FinancialInstruments-Credit Losses (Topic326): a private auction by the Treasury of all ofbyremainingits 12, auctionthe privatea all of Treasury On April 29,2013, Auction”). “Private Treas thereafter the (the winningbidders in Private the Auction, consisting ofunrelatedparties six the to Company. NOTE 15: PREFERRED STOCK AND COMMON STOCK STOCK WARRANT COMMON AND 15: NOTE STOCK PREFERRED (the A Series Stock Preferred Perpetual Cumulative Rate Fixed for “Warrant”), (the share per $5.55 of price exercise an at stock common Company's the of shares 459,459 to up purchase an aggregatepurchase$17.0 of price million. TheCertificate of other among provided, Designations”) of “Certificate (the created provided also Designations of Certificate The dividends. unpaid but accrued plus share per $1,000 of amount liquidation the at annum per 9% to increased which issuance of date the from years five first the for annum per 5% of rate dividend a for A Series The thereafter. Shares remaining outstanding and owned owned and outstanding remaining Shares Preferred A Series 12,000 $19,444, leaving of dividends unpaid accrued and plus by Treasury. amends accounting the for credit on available-for-sale losses de deterioration.For SEC filers, the amendments in this ASU are 15 December after beginning fiscal years, organizations.Early adoption bewill permitted for organizati all years, beginning afterDecember 15, 2018. The currently is Company evaluatingprovisions the of ASU2016-13 No. to thepotential determine impactconsolidated the newon standardand Company’s have too will the is statements, financial it financialthisonat early statements. the totime the determine impact and Cash Payments. Cash Receipts withinclassifiedare the respectwithstatement to cas flowsof cash types of eight not is 2016-15 ASU of Adoption 2017. 15, December after beginning periods reporting and annual interim for be effective statements. financial consolidated our on impact material a have to expected to better inform their credit loss estimates. Many of the loss estimation techniques estimation Many the still of appliedto loss be loss better today permitted, their estimates. inform credit will will techniques those to inputs the although Credit Losses on Financial Instruments on Financial Credit Losses expectedfinancial credit the for losses assets held reportin at Fina forecasts. supportable and reasonable
FORM 10-K
Directors compensation Directors EXPENSES OTHERNOTE 17: acquisitions. for future capital increasing including purposes, corporate general of the Company’s Series A Preferred Stoc approximately $15.8 million. The Company us share. grante option over-allotment exercise of the approximately $17.2 million in gross proceeds by selling 1,499, selling by proceeds gross in million $17.2 approximately OFFERING STOCK COMMON 16: NOTE the Series A Preferred Stock on May 7, 20 Series A Preferred of the holders the Stockprovided with a formal notice of redemption and thirty days thereafter redeemed Share. At the time of the redemption, the Series A Preferred Shares carried a c plus million amount$12 of liquidation the for their affiliates, or redeem the Company’s remaining 12,000 Se CPP was completed. CPP was completed. purchase priceof$2,0 aggregate te prtn ...... 6355 491,941 238,744 673,565 397,438 152,581 60, Other operating ...... ATM expense 271,739 ...... 149,379 14 Contributions ...... 113,34 210, Loan expense ...... 155,9 01 Organization dues ...... 115,430 Accounting ...... 141,529 Supervisory exam ...... 158, Insurance ...... Postage ...... 139, Telephone ...... Office supplies 25 ...... Deposit expense ...... Legal expense ...... 13 Outside services ......
Other expenses for the years ended December Net proceeds from thesaleof shares after under On March theOn March 7, Company 2014, an underwritten offering closed Company ofitsraised The stock. common On April3,2014,the Compan the Warrant repurchased Company the thereafter, Shortly ...... 221, $ ...... 03,250 incash. As a result of the Warrant
y received approval from the Board of Gove k on May 7, 2014 and used May 7, on k 14, plus all accrued and unpaid dividends. ries A Preferred Shares from the par d to the underwriters of 195,652 shares, at a price to the public of $11.50 per ed the net proceeds from the offering to
31, 2016, 2015 and 201 and 31, 2016, 2015 92 accrued but unpaid dividends of $19.50 SeriesAPreferr per of$19.50 dividends unpaid but accrued
writing discounts and estimated offering expenses were 999 shares ofitsTreasuryStoc shares 999 21 05 21 2014 2015 2016 December 31, December 31, December 31,
28193 $26251 $2,713,674 2,672,541 $ 2,821,923 $ $ 391 51,433 53,951 74,798 94,189 theremaining net proceeds fo from Treasurypursuant to the terms thereofforthe repurchase, the Company’s participation in the in the participation Company’s the repurchase, oupon rate of 9.0% per annum. The Company 4 were as follows: ,0 137,723 5,709 275,657 1,051 ,0 75,000 2,500 ties who had purchasedties who had themfrom Treasury 45 ,465 215 216,770 $ 072 $ 0 52,500 000 171,759 939 141,674 77,862 434 234 rnors ofthe Federal ReserveSystem to
redeem the remain k, which includes the full the includes k, which r working capitaland for r working 1 106,139 106,139 1 118,268 118,268
217,280 217,280 246,545 246,545 641,638 641,638 269,016 50,004 146,845 146,845 77,909 77,909 253,457 253,457 96,660 96,660 ing 12,000 shares 67,710 67,710 739 57,359 ed
FORM 10-K
g 644 128)
- - 394,269 135,000 as of December n of credit, is based on is of credit, n guarantee the performance performance the guarantee ounts receivable, inventory, comparable comparable transactionswith originate fixed-rate mortgage loans loans mortgage fixed-rate originate e, inventory, property and equipment, property and equipment, inventory, e, omer's credit worthiness on a case-by- credit worthiness omer's 6,000 and $12, violationconditionany of established in ateral on public deposits andto enhance $ $ 3,946,621 4,409, edsupport to public privateand borrowin
$ $ 4,409,644 6,483,503
Year ended December 31, 31, December ended Year actual obligations.actual The involvedcredit risk in 237,174 ) ) 237,174 ) (463,023 (2,468, entsissued theby Bank to credit and deposits were made in the ordinary course course ordinary the in made were deposits and credit customer as longcustomeras nothereas violation is ofconditionany ans to executiveofficers and directors and their affiliates. standbyletters of credit, the seek recourse Bank may from uses the same creditgranting policies inusessame the of lines credit as it held varies but may include acc varies but may held re cash requirements. Each customer's credit worthiness is worthiness is credit Each customer's requirements. re cash similar transactions. standbyPerformance letters of credit are similar
involved extending in loansfor customers.of to Fees letters expiration dates or other termination clauses and may require require may and clauses termination other or dates expiration e commitments extend over varying periods of time with the the with time of periods varying over extend commitments e those prevailing at the time for ndincludedare in earnings the termination at respectivetheof
2016 2015 2014
93
a customer as long as there is nothereas long as is customer a e Bank had outstanding commitments to commitments outstanding had Bank e y letters of credit amounting to $11,59 to y letters of credit amounting ld varies but may include accounts receivabl accounts but may include ld varies of credit from the FHLB issued for collissued of credit the from FHLB rious customers for industrialrevenue bond issues. Asof December31, 2016 and requirements. The Bank evaluates each cust evaluates Bank The requirements. standbyissu primarily creditof letters are e commitmentse may expirewithout being upon,drawn total the commitment amounts of certain customers under non-financial contr non-financial under customers certain of ...... $ 3,946,621 ear ...... $ ...... ear 5,822,136 ...... (1, The Bank hasconfirming letters lendto agreements to are creditof Lines
commitm conditional irrevocable are credit of letters Standby Commitmentsto extend agreementstoare credit lend a to th 2015, and 2016 31, December of As outstanding standb The Bank had total Inordinary the ofcourse business, the Bank grantedhas lo of extensions other and loans such opinion, management's In New Loans ...... Loans New Repayments 3,112,689
Balance, beginning of of year beginning Balance, y of end Balance,
the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn being without expire may line the of portion a Since dates. expiration fixed have generally credit of Lines contract. the futu unusedupon, represent total necessarily do the not lines evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit credit management's on based is necessary, deemed if obtained, collateral of amount The basis. case-by-case on a evaluated Collateral he counterparty. of the evaluation established in the contract. Commitments generally have fixed fixed have generally Commitments contract. the in established th of portion a Since fee. a of payment future cash represent not necessarily do 31, 2016 and 2015, respectively, with terms ranging from 1 year to 2 years. years. 2 to year 1 from ranging terms with respectively, 2015, and 2016 31, Bank issued letters ofgrantedcreditva Bank issued to letters 2015,ofletters these credit aggregated approximately $19,725,000 and $20,028,000. commercial and real estate residentialreal estate. Management instruments. sheet balance on for does Annualactivity following:consisted ofthe other persons.other management'sFurther, opinion, in of risk these collectability not did normal loans than involvemore orpresent other unfavorable features. features. unfavorable other RISK CREDIT AND 19: NOTE COMMITMENTS of approximately $6,152,000 and $4,218,000, respectively. Th majority disbursedperiod. being thirty-day withina ecessary by the Bank upon extensio by the necessary if deemed obtained, of collateral amount The basis. case counterparty. Collateral of the evaluation credit management's propertyestate. real andcommercial equipment, and estate real residential Financial party. third a to customer a of arrangements, including commercial paper, bond financing and and financing bond paper, commercial including arrangements, issued performance guarantee to issuing standby letters of credit is essentially as that the same a revenue the recorded Bank deferredby as initially credit are agreements. Should thebe Bankobligated underperform to the paid. amounts of reimbursement for customer the NOTE 18:NOTE RELATED TRANSACTIONS PARTY of business and were made on substantially the same terms as as terms on substantially made thewere of and same business
FORM 10-K
NOTE 20: CONDENSED NOTE 20: PARENT COMPANYSTATEMENTS lines. and $15,96 commerciallines for respectively, $68,066,000, 6, Due to subsidiary ...... Accrued expenses and other liabilitie Subordinated debentur Liabilities Investment in Capital Trust I Investment in subsidia Available-for-sale securitie ...... Cash Assets Stockholders' equity Deferred income taxes ...... Refundable income taxes ...... Prepaid expenses and other assets years endedyears December 31, 2016, 2015and 2014 the for parent company, Guaranty Federal Banc Condensed Balance Sheets
Treasury stock 57, Unrealized loss on available-for-sale secur 687, Retained earnings ...... Additional paid-incap Common stock ......
The condensed balance sheets as of December 31, 2016 and As of December 31, 2016 and 2015, unused lines of credit to
37,303,288 ) (37,279,069) (37,279,069) (37,303,288 ) ...... y ...... 83,946 ry ...... ital ...... 0 $ 15,465,000 15,465,000 15,465,000 $ $ ...... es s ......
I ...... 465,000 & II ...... 14,597 ...... 551, s ...... te,nt ...... (1 ities, net ...... 94 0,000 and $14,461,000, respectively, for open-end consumer consumer open-end for respectively, $14,461,000, and 0,000
2015, and statements of income and cash flows for the borrowers aggregated appr
$ 1,571,915 $ 3,642,158 3,642,158 1,571,915 $ $
$ 85,997,923 $ 82,303,419 82,303,419 85,997,923 $ $
21 05 2015 2016 $ 85,997,923 $ 82,303,419 82,303,419 85,997,923 $ $
50,552
3,956) (683,956) ,309,241 ) 347,282 53,258,126 53,258,126 347,282 eebr3, December 31, shares, Inc., are as follows: oximately $89,103,000 and ,411 77,953,486 77,953,486 ,411 ,077 50,441,464 50,441,464 ,077 0 6,900 900 643 550 685,900 685,900 550 - 1 - -
465,000 465,000
9,985
957 99,517 384 13,894
0,5 409,054 939 19,379
FORM 10-K
- - 33,207 (1,282,986) (399,000) 16,069
765,848
- $ - 5 ) ) 5 (883,986) 7 $ 7 5,782,696
- $ - Years ended December 31, 31, December ended Years ,000) ,000) ) (415,000 4,011 $ 4,011 5,716,76 ,025,894) ,025,894) (842,36 (1,460,894) ) (1,257,365
1,511,226 1,273,565 1,299,055
2016 2015 2014 50,332 16,200 16,069
95
ubsidiaries ...... ubsidiaries 6,619,905 6,559,132 6,666,682 ...... $ ...... (435 ...... 579,410 538,785 5 Related party party Related Other ...... Other 50,332 16,200 Other ...... Other 931,816 734,780 Interest expense: expense: Interest Dividends from bank subsidiary from Dividends income: Interest et income ...... $ ...... income et 5,59 subsidiaries ...... subsidiaries (1 income (loss) of subsidiaries ...... subsidiaries of (loss) income
Income (loss) before equity in undistributed earnings of of earnings undistributed in equity before (loss) Income Credit for income taxes income for Credit s of income undistributed in Equity N Expense Expense beforeIncome(loss) income taxes and equity in undistributed Income Income Condensed Statements of Income Income of Statements Condensed
FORM 10-K
Cash, beginning ofyear year end of Cash, Increase (Decrease) in cash N Cash Flows From Financing Activities N Cash Flows From Investing Activities N CashFlows From Operating Activities CondensedStatements of Cash Flows
et cash provided by (used in) financin et cash provided by investing cashin) operatinet providedby (used e noe ...... 5,59 Items not requiring (providing) cash: Net income ...... $ Changes in: Redemption ofpreferred stock ...... Treasury Stock purchased Cash dividends paid on common and preferred stock ...... options exercise Stock Proceeds from issuance of common stock ...... Proceeds from sales of AFS s cre xess ...... 32,450 Accrued expenses ...... Income taxes payable/refundable (1 Prepaid expenses and other assets ...... 373,782 8,988 Gain on investment securities ...... Stock award plan expense ...... Deferred income taxes ...... Equity in undistributed income of s ...... 580 8,2 210,8 187,129 85,800 d ...... (371,538) ...... activities ecurities ...... 3,3 10663 326,287 1,096,653 139,837 ...... g activities g activities 65912) (6,666,682) (6,559,132 ) (6,619,905) ubsidiaries ......
...... 121,101 ......
...... (1,700,918) ...... 44 (490,426) ...... 96
36218 ,8,7 822,196 3,882,370 3,642,158 (2,070,243) (240,212 ) 3,060,174 3,060,174 (240,212 ) (2,070,243) 2014 2015 2016 $ 1,571,915 $ 3,642,158 $ 3,882,370 3,882,370 3,642,158 $ 1,571,915 $ $
(,1,8) 8349) (844,786) (873,499 ) (1,415,180)
70 200 157,745 2,060 (700)
121,101 8,889) 5,716,767 4,011 $ Years ended December 31, Yearsended December 31, - -
(579) 55,519 (95,779 ) 242,189 285,589
(8,7 3,180,396 (686,370 )
,5 (120,222) 6,158 15,814,312 - - (17,976) - (12,000,000) - - -
$ 5,782,696 5,782,696 $
0 70 - - -
FORM 10-K
7 7 ,347 ,639 4,172 6,351 250,000 722,299 586,089
514,981 554,983
0 0 425,000
386 386 1,985,622 916 916 2,034,328 052,003 052,003 3,964,059 317,707 317,707 4,364,169 ,298,122 ,298,122 5,557,026 ,182,430 5,257,241 $ 6,354,303 $ $ 6,354,303 6,625,664 $ $ 6,229,091 6,286,396 1,056,181 1,068,638 1,046,661 1,029,155
) (5,507 2,038 5,718 2,11
Years ended December 31, 31, December ended Years $ $ 0.35 $ 0.33 0.33 $ $ 0.29 $ 0.35 0.35 456 456 525,644 658,205 54 000 910 820,828 416,177 - 35 200,000 437 696,158 621,751
5,000 5,000 375,000 200,00 7,375 416,399 554,009 9,634 9,634 5,177,532 5 5,947 5,274,134 5
3,692 ) (7,545 3,601 917,981 917,981 2,234,107 2,040, 803,980 803,980 1,672,551 2,095, 329,544 $ 329,544 $ $ 1,418,635 1,537,949 1,430 276,605 $ 276,605 $ $ 1,541,907 1,256,152 1,519
$ $ 4,968,726 $ 5,481,232 7,840,523
$ $ 5,594,011 $ 5,716,767 5,782,696 2016 2015 2014
ended Quarter 2015, 31, December Ended Year Mar-15 Jun-15 Sep-15 Dec-15 ended Quarter 2016, 31, December Ended Year Mar-16 Jun-16 Sep-16 Dec-16
97 ......
taxes ...... taxes 2,695 Bank ...... Bank 77) (628,9 ) (227,990 2,054,226 ...... 638,366 653,769 657,296 ...... 615,846 654,089 693,782 QUARTERLY QUARTERLY RESULTS OPERATING securities ...... securities 470, ...... securities 334, ...... 4,078,722 4,514,944 4, ...... 4,109,476 4,309,394 4, available-for-sale, before income before available-for-sale, income ...... income (997) Other comprehensive income (loss) ...... (loss) income comprehensive Other Comprehensive income (loss) of (loss) income Comprehensive Change in unrealized gain (loss) oninvestment securities unrealizedChangegain(loss) in Income tax expense related to other items of comprehensive comprehensive of items other to related expense tax Income et income available to common shareholders ...... $ 1, ...... shareholders common to available income et et interest income ...... income interest et 5,19 expense oninterest oninterest expense expense oninterest $ 1, ...... shareholders common to available income et et interest income ...... income interest et 5,17
Income before income taxes ...... 1, taxes income before Income Income before income taxes ...... 1, taxes income before Income TOTAL COMPREHENSIVE COMPREHENSIVE TOTAL INCOME Gain on loans and on Gain investment loans net income, noninterest Other and on Gain investment loans net income, noninterest Other Provision for income taxes ...... taxes income for Provision 588, N $ ...... share common per income Basic $ ...... share common per income Diluted 0.31 $ 0.30 $ 0.35 $ 0.32 0.33 Interest expense ...... 1,091,690 expense Interest 1,112,376 N ...... losses loan for Provision 150, N Diluted income per common share ...... $ ...... share common per income Diluted $ 0.29 $ 0.28 $ $ 6,287,637 ...... income Interest 6,386,510 $ 0.35 0.34 N ...... taxes income for Provision 52 N $ ...... share common per income Basic 0.29 Interest income ...... $ $ $ 6,205,045 ...... income Interest 6,204,314 ...... 1,025,411 expense Interest 1,026,782 N ...... losses loan for Provision 37 21: NOTE UNAUDITED NET INCOME INCOME NET (LOSS): INCOME COMPREHENSIVE OF ITEMS OTHER Statements of Comprehensive Income Income Comprehensive of Statements
FORM 10-K March 24,2017 Springfield, Missouri BKD, America. 31,2016,inconformity with December accounting and theresultsoftheiroperations cashflows positionof Guaranty Federal Ba respects, thefinancial In our opinion, theconsolidated financialstatements We believethatouraudits provide areasonablebasisforour opinion. significant estimatesmade management by and evalua amounts anddisclosuresinthefinancialstatemen express nosuchopinion. Our auditsalsoincludedexamining, ona supporting the testbasis,evidence ofthe opinion ontheeffectiveness auditing procedures that areappropriateinthecircumstances,butnotfor purpose ofexpressingan Our auditsincluded consideration ofinternal c required tohave, norwereweengage assurance about whether the financial statementsmaterial misstatement. ofThe Company free is not are require Board that (United States). Those standards we We conducted our with audits the insta accordance responsibilitybased onour istoexpressanopinionaudits. onthesefinancialstatements December 31,2016.Themanagement is Company’s responsibleforthesefinancialstatements.Our periodended equity inthethree-year andcashflowsforeach of the income, stockholders’ years 31, 2016of December and 2015, andthe relatedc consolidated bala We haveauditedtheaccompanying Springfield, Missouri Inc. FederalBancshares, Guaranty Audit Committee, Stockholders BoardofDirectorsand LLP Report ofIndependentRegister Company’s internal controlover financialreporting. Accordingly, we d toperform, auditofitsintern an ontrol over financialreportingas a basisfordesigning ts, assessingtheaccountingprinciplesused and onsolidated statementsof income,comprehensive ndards of the Public Company AccountingOversight ndards ofthePublicCompany principles accepted generally in the United States of referred to above in present all fairly, material nce sheets of Guaranty Federal Bancshares, Inc.as Federal Bancshares, Guaranty nce sheetsof ting the overall financialstatementpresentation. ncshares, Inc. asncshares, of December31, 2016 Inc. and 2015, for in each the of the period years three-year ended planandperform theauditstoobtain reasonable ed Public Accounting Firm al control overfinancialreporting.
FORM 10-K
ithin the time periodsithin time the specified in the ting and Financial Disclosure Financial and ting ect, the Company’s internal internal Company’s affect, the likely to materially ly as defined in Rule 13a-15(e)Exchange Rulethe of Securities in defined as re controls and procedures were effective as of December December of as effective were procedures and controls re d Chief Financiald Chief Officer, as appropriate to allow timely and Chief Financial Officer, of theof effectiveness the Chief Officer, and Financial such information accumulatedis and communicated to the
99
lly affected, or are reasonab ed, processed, summarized and reported w reported processed, summarized ed, and ts with Accountants On Accoun On Accountants ts with
FinancialReporting
There have been no changes in the Company’s internal controls over financial reporting during the fourth quarter quarter fourth the during reporting financial over controls internal Company’s the in changes no been have There Theout carried Company an evaluation, under the supervisionparticipationwithand Company’s the of the The Company maintains disclosure controls and procedures Notapplicable.
controlsover financialreporting. materia 2016 that have December 31, ending Securities and ExchangeandSecurities and that Commission’s rulesforms, and an Officer Executive Chief its including management, Company’s disclosure. required regarding decisions management, includingCompany’s the Executive Chief Officer Officer Executive Chief Company’s the evaluation, foregoing the on Based procedures. and controls disclosure Company’s disclosu Company’s the that concluded Officer Financial Chief and 2016. 31, Control Internal Over Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the the in disclosed be to required information that ensure to designed are that Act”), “Exchange (the amended as 1934, of Act record is reports Act Exchange Company’s and Controls 9A. Item Procedures Procedures and Controls Disclosure Item 9. Item Changes Disagreemen and in
FORM 10-K
Management’s Report on Internal Control Over Financial Reporting accounting principles generally accepted in the United States of accounting principlesUnited States generallyin the accepted the fi of the preparation and reporting financial of reliability isa pro reporting over control internal financial Company’s financial reporting, over control internal adequate maintaining Item 9B. OtherInformation December 31, 2016, the Company’s internal control over fina Sponsoring Organizations of the Treadway Commission. Based on that assessment, management concluded that, as of 31, 2016, based on the framework set forth in Internal Control-Integrated Framework (1992) issued by the Committee of reporting includes those policies and procedures that (i) (i) pertai that andprocedures policies those includes reporting may deteriorate. theprocedures or with policies degree of compliance the that or effectiveness to future periods are subject st to financial respect with assurance reasonable only provide and the circumvention of overriding controls. Accordingly, ev human error the of possibility including matter inherent limitations, systems, no have how control well designed, All internal that could have a material eff Company’s assets the of disposition or use, acquisition, unauthorized of detection timely or prevention regarding assurance made onlyin accordance with auth of America,States principlesthe United generallyaccepted in that transactions are recorded as necessary topermit prep accurately and fairly reflect the transactions
Not applicable. applicable. Not The management of Guaranty Federal Bancshares, Inc. (the “Company”) is responsible for establishing and
Management assessed the effectiveness of the Company’s in Because ofitsinherent limitations, inte ect on the financial statements.
orizations ofmanagement anddirectors of to the risk that controls and dispositions of the assets of the Co rnal control over financial reporting may notprevent or detect misstatements. 100 aration of financial statements in accordance with accounting ncial reporting was effective.
cess designed to provide reason provide to cess designed
nancial statements forexternal statements nancial and that receipts and expenditu as such term is defined in Exchange Act Rule 13a-15(f). The The 13a-15(f). Rule Act in Exchange defined term is such as atement preparation. Also, proj
n to the maintenance of record n tothe maintenance en effective internal America. The Company’s inte may become inadequate because ternal control over financia
the Company; and(iii) mpany; (ii) provide reasonable assurance controls over financial reporting can financial reporting over controls purposes in accordance with with accordance in purposes res of the Companyare being res of able assurance regarding the ections of any evaluation of s that, in reasonable detail, detail, reasonable in that, s l reportingas of December rnal controloverfinancial of changes in conditions, provide reasonable
FORM 10-K ference, and (ii) under the under the and (ii) ference, mpany’s website and clicking and website mpany’s emphasis on compliance by the directors directors the by compliance on emphasis
1934, is contained under the section captioned “Report section under the 1934, is contained ief Financial Officer, Principal Accounting Officer or or Officer Accounting Principal Officer, Financial ief is incorporated herein by is re herein incorporated
u will then be ableu will then to click on, and Company’s access, the ated herein by reference. reference. by herein ated
and Management and Management and Related Matters Stockholder accessed by logging onto logging by the accessed Co 101 PART III PART is incorporated herein by reference. by reference. herein is incorporated tely designated committee of the Company’s board of directors established in in established directors of board Company’s of the committee designated tely Securities Exchange Act of Securities Exchange Act Company (including the Bank), with special with the Bank), (including Company ain Beneficial Owners Beneficial ain
oxy Statement and is incorpor is and Statement oxy 3(a)(58)(A) of the
Information required by this item is contained under the section captioned "Ownership of Certain Beneficial Owners Owners Beneficial Certain of "Ownership captioned section the under contained is item this by required Information The information contained in the Proxy Statement under the section captioned "Report of the Compensation Compensation the of "Report captioned section the under Statement Proxy the in contained The information The information contained under the section captioned "First Proposal: Election of Directors" (excluding any any (excluding Directors" of Election Proposal: "First captioned section the under contained The information The Company has adopted a Codeof Conduct and Ethics, and it applies to all of the members ofboard the of The information required by Item 10 regarding an audit committee financial expert and the identification of the the of identification the and expert financial committee audit an 10 regarding Item by required The information Additional information required by this item is contained (i) in the Proxy Statement under the section captioned captioned section the under Statement Proxy the in (i) contained is item this by required information Additional
and Officers Governance Corporate Executive Directors, 10. Item
and Management" in the Proxy Statement and and Statement Proxy the in Management" and
reference. by herein incorporated is Committee” Cert of Ownership 12. Item Security information contained under the section captioned “Meetings and Committees of the Board of Directors”) of the Proxy Proxy the of Directors”) of Board the of Committees and “Meetings captioned section the under contained information reference. by herein incorporated is Statement the of employees and officers directors,
of theCompany and the Company’s Chief ExecutiveOfficer, Ch available is Ethics and of Conduct Code The Company’s Company. the for functions similar performing persons or Controller be may and www.gbankmo.com at website Company’s the on onthe “About thenUs” link and the “Codeof Conduct” link.Yo if Ethics, and Conduct of Code Company’s the under, granted waivers and to, Amendments Ethics. and Conduct of Code well. as website postedbewill theto any, Company’s of the audit committee, a separa members accordance with section Pr the of Committee” Audit the of and Compliance" Reporting Ownership Beneficial 16(a) "Section section captioned "Executive Officers of the Registrant" in Item 1 of this report. report. this of 1 Item in Registrant" the of Officers "Executive captioned section Compensation Executive 11. Item
FORM 10-K
Equity compensation plans not approved by security of the Company’s common stock may be issued: 1 Financial Statements 1. Services" in the Proxy Statement and is Accoun Item Principal 14. incorporated hereinreference. by CertaiDirectors andTransactions with 112,50 Totals ...... Equity compensation plans approved by Item 13. Certain Relationship Item 15. Exhibits and Financial Schedules
Plan category
The following consolidated financial stat financial consolidated following The as part of this report under Item 8. The following table sets forth information as of December 31 The information required by this item is contained under the section captioned section the under item iscontained by this information required The The information required by this item is contained under the sections captioned "Indebtedness of Management and Notes to Consolidated Consolidated Financial to Notes Statements. Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2016, 2015 and 2014. Consolidated Statements of Cash Flows for th Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016, 2015 and 2014. Consolidated Statements of Income for the Y ConsolidatedSheetsas of Balance Report of Independent Registered Public Accounting Firm
tingServices Fees and s and Related Transactions, and Director Independence incorporated herein by reference. scrt odr ...... 112,500 security holders ...... n Related Persons"and “Director Independence” in the Proxy Statement andis Decemberand 31, 2016 2015. ements andthe report ofindependent re
holders ...... ears Ended December 31, 2016, 2015 and 2014. 2014. and 2015 2016, 31, December Ended ears e YearsEnded December31, 2016, 2015 and 2014. PART IV 102
securities to be securities
warrants and
outstanding outstanding issued upon exercise of Number options, , 2016 with respect to equity plans under which shares rights (a)
of
$ 20.15 0 $ -
2.5 222,355 20.15 $
gistered public accounting firm are filed
average exercise
warrants and
outstanding outstanding Weighted- price of options, "
rights (b) (b) Principal Accountant Fees and
-
222,355 222,355 issuance under compensation column (a)) reflected in Number of (excluding remaining securities for future securities available equity plans (c)
-
FORM 10-K
f f d d ates Department of the Treasury, with respect to the to respect with Treasury, the of Department ates
ntures and (ii) the repurchase agreements between the between agreements repurchase (ii) the ntures and ensationChiefAnnual LendingPlans-ChiefFinancial, an curities Purchase Agreement – standard terms incorporate standard– Agreement terms curities Purchase mpensation Annual Plan-Chief Financial Officer and Chie Officer mpensationAnnual Financial Plan-Chief
103 e CompensationAnnual Plan-Chief LendingOfficer *(15) Exhibit Description Index to Exhibits Exhibits to Index h the SEC upon request, copies of (i) the instruments defining the rights o rights the defining instruments the (i) of copies request, upon SEC h the eferred Stock and the Warrant (11) (11) Warrant the and Stock eferred for the Series A Preferred Stock (21) (21) A for Stock Series Preferred the e Series A Preferred Stock (22) Stock Preferred A Series e of Incorporation of Guaranty Federal Bancshares, Inc. (1) (1) Inc. Bancshares, Federal Guaranty of Incorporation of
y referencey betweentherein, the and Company St United the theCompany and Seniorits Executive (12)Officers* *(13) Officer Bancshares, Inc. (24) Inc. Bancshares, ChiefCredit (16)Officers Operating Officer *(14) *(14) Officer Operating CompanyBarclay’sand Inc. Capital, datedSeptember 2007 and January 2008. b the holders of each issue of its junior subordinated debe junior subordinated each issue of its of the holders issuance and sale of Series A Pr A Series of sale and issuance notrequired under therelated instructions inapplicableare or and therefore havebeen omitted. 2. Financialstatement schedules which forprovision in the is made applicable accountingregulations of the are SEC Exhibit Number Number 10.11 10.11 Bank, the among and by 2009 28, January dated Arrangements Compensation Regarding Waiver and Amendment 10.12 Description Written of2009 Executive IncentiveAnnual Compensation Plan-President and Chief Executive 10.13 Written Description 2009of Executive Incentive Co 3.1 3.1 Federal Guaranty of A Series Stock, Preferred Perpetual Cumulative Rate Fixed the of Elimination of Certificate furnis agrees to hereby The Company 10.15 WrittenDescription 2010of Executive Incentive Comp 10.10 Agreementdated Letter January 30, 2009, including Se
3(i).1 3(i).2 Certificate Restated 3(ii) Designationsof Certificate (7) amended as Inc., Bancshares, Federal Guaranty of Bylaws 4.1 4.2 4.3 RightsAgreement dated January 20, 1999 concerning the issuance ofpreferred relatedand stock rights.(2) th for Certificate of Form (23) Stock Common Purchase to Warrant
10.14 Description Written 2009 of ExecutiveIncentiv 10.1 10.2 *(3) Plan Option Stock 1994 10.3 Recognitionand Retention *(4)Plan 10.4 *(5) Plan Option Stock 1998 10.5 *(6) Plan Stock Restricted 10.6 *(6) Agreement Severance Control in Change of Form 10.7 *(7) Burke A. Shaun and Bank the between and by 2004 9, March of as effective Agreement Employment 10.8 *(8) Plan Option Stock 2004 10.9 *(9) Plan Option Stock 2004 the under Agreement Option Stock Incentive of Form *(10) Plan Option Stock 2004 the under Agreement Option Stock Non-Incentive of Form 3. reference: by herein or incorporated Report this with filed are exhibits following The
FORM 10-K
Filed asExhibit 10.2 of the Registration Statement onFormS-1 filed by the Registrant on September 23, 1997 (SEC (4) Filed asExhibit 10.1 of the Registration Statement onFormS-1 filed by the Registrant on September 23, 1997 (SEC Filed as an exhibit to the Form 8A filed by Registrant on January 22, 1999 and incorporated herein by reference. (3) (2) Filed as an exhibit to the Annual Report on Form 10-K (1) ______Equity *(18) Plan Inc. 2010 Bancshares, Federal Guaranty Incentive Executive of 2010 Written Description 10.17 10.16 Officercertifications pursuantto U.S.C.18 Section 1350 32 Office Financial Principal the of Certification Consent ofBKD, LLP 31(i).2 CertificationPrincipalthe of Executive Officer pursuantto Rule 13a-14(a)theExchange of Act Subsidiaries of the Registrant (See Item 1. 31(i).1 23 21 Equity*(25) Plan Inc. 2015 Bancshares, Federal Guaranty 10.23 10.25 Employment Agreement, dated June 27, 2016, between between 2016, 27, June dated EmploymentAgreement, 10.25 10.21 Written Description of 2014 Employment Agreements Employment 2014 of Description Written 10.21 Financial, Chief Executive, Plans-Chief Annual Compensation Incentive Executive 2013 of Description Written 10.20 Financial, Chief Executive, Plans-Chief Annual Compensation Incentive Executive 2012 of Description Written 10.19 Financial, Chief Executive, Plans-Chief Annual Compensation Incentive Executive 2011 of Description Written 10.18 101 The following materials from Guaranty Federal Bancshares materials fromGuaranty following The 101 02 Amendment to EmploymentAgreements, Amendment to Restricted Stock Award Agreement, dated June 1, 2016, 10.24 Financial, Chief Executive, Plans-Chief Annual Compensation Incentive Executive 2015 of Description Written 10.22 File No. 333-36141) and incorporated herein by reference. File No. 333-36141) and incorporated herein by reference. 23325) and incorporated herein by reference. of 2016 Executive Incentive ExecCompensationPlans- Chief Annual (unaudited), and (vi) related notes. related notes. and (vi) (unaudited), Consolidated Statement of Stockholders’ Equity (unaudited), (v) the Consolidated Statements of Cash Flows b (iii) Condensed Consolidated Statements ofCompre Consolidated (iii) Condensed Statementsof Financial Condition (unaudited), (ii)Condensed Consolidated Statementsof Operations (unaudited), December 31, 2016 formatted inExtensible BusinessRe Chief Operating, Chief Lending and Chief Credit Officers *(21) Credit Officers *(21) Chief and Chief Lending Operating, Chief Credit Officers *(20) Chief and Chief Lending Operating, Chief Credit Officers *(19) Chief and Chief Lending Operating, Chief Chief Executive, Chief Financial, Chief Executive, Chief Chief Operati Chief Operating, Chief Lending and Chief Credit Officers *(23) Credit Officers *(23) Chief and Chief Lending Operating, Chief etween the Company and H. Michael Mattson and Written Description of 2016 Executive Incentive Executive of2016 Description and Written H.Michael Mattson and the Company etween * Management contract or compensatory plan or arrangement Compensation Annual Plan- Chief Lending Officer *(27) *(27) Officer Lending Chief Plan- Annual Compensation utive, Chief Financial, Chief Chief utive, and Officers Credit Chief Operating, *(26) Business – Subsidiary and Segment Information) Information) Segment and – Subsidiary Business r pursuant to Rule 13a-14(a) of the Exchange Act Act Exchange the of 13a-14(a) Rule to r pursuant ng, Chief Lending and Chief Credit Officers *(22) Compensation Annual Plans-Chief Operating Officer (17) Officer (17) Compensation Plans-Chief Annual Operating 104
and 2014 Executive Incentive Compensation Compensation Plans- Annual Incentive Executive and 2014 the Company and H. Charley Puls and WrittenDescription and Puls Charley H. and the Company for the fiscal year ended June 30, 1998 (SEC 1998 0- File No. 30, June ended year fiscal the for hensive Income (Loss) (unaudited), (iv) (iv) Condense (unaudited), (Loss) Income hensive porting Language (XBRL):(i) Condensed Consolidated , Inc.’s Annual Report on Form 10-Kforthe year ende d d
FORM 10-K
d d d d d d sition period ended December 31, 2003 file 31, 2003 December ended period sition t filed by the Registrant on March 6, 2002 (SEC File No. File (SEC 2002 6, March on Registrant the by filed t for the fiscal year ended June30,File No.0- 2001(SEC
105 o. 333-170205)o. and incorporatedherein by reference. o. 0-23325) and incorporated herein by reference. reference. by herein incorporated and 0-23325) o. Registrant on March 30, 2005 and incorporated herein by reference. reference. by herein incorporated and 2005 30, March on Registrant by reference. herein by reference. herein by reference. herein incorporated by reference. herein incorporated by reference. herein incorporated by reference. herein and incorporated and incorporated herein by reference. by reference. herein and incorporated by reference. herein and incorporated by reference. herein and incorporated by reference. herein and incorporated herein by reference. by reference. herein by reference. herein incorporated by reference. herein incorporated herein by reference. by reference. herein herein by reference. by reference. herein N incorporated herein by reference. by reference. herein incorporated Registrant on March 30, 2005 and incorporated herein by reference. reference. by herein incorporated and 2005 30, March on Registrant 333-83822) and incorporated herein by reference. reference. by herein incorporated and 333-83822) reference. by herein incorporated and 23325) bythe Registrant on 0-23325)March No. 200430, (SEC File and incorporated herein reference.by N (9) (9) the by filed 2004 31, December ended year fiscal the for 10-K Form on Report Annual the to 10.12 Exhibit as Filed (10) FiledExhibit as 10.13 Annualtheto Report 10-K Form on for thefiscal ended year December 200431,filed by the (11) incorporated and 2009 3, February on Registrant the by filed 8-K Form on Report Current the to 10.1 as Exhibit Filed (12) incorporated and 2009 3, February on Registrant the by filed 8-K Form on Report Current the to 10.2 as Exhibit Filed (13) and 2009 9, February on Registrant the by filed 8-K Form on Report Current the to 10.23 Exhibit as Filed (14) and 2009 9, February on Registrant the by filed 8-K Form on Report Current the to 10.24 Exhibit as Filed (15) and 2009 9, February on Registrant the by filed 8-K Form on Report Current the to 10.25 Exhibit as Filed (16) FiledExhibitsas 10.1 through 10.3 the to Current Report 8-K Form on filed by the Registrant on February 2, 2010 (17) incorporate and 2010 26, April on Registrant the by filed 8-K Form on Report Current the to 10.4 Exhibit as Filed (19) (19) 2011 28, February on Registrant the by filed 8-K Form on Report Current the to 10.5 through 10.1 Exhibits as Filed (20) FiledExhibitsas 10.1 through 10.5 the to Current Report 8-K Form on filed by the Registrant on February 2, 2012 (21) FiledExhibitsas 10.1 through 10.5 the to Current Report 8-K Form on filed by the Registrant on February 8, 2013 (22) FiledExhibitsas 10.1 through 10.10 to Current the Report on 8-K Form filed by the Registrant on March 201426, (23) FiledExhibits as 10.1 through 10.5 to theCurrent onReport Form 8-K filedby the Registrant onMarch 3,2015 an (5) FiledForm S-8 Registration as Exhibit 4 to the Statemen (6) 10-K Form on Report Annual the to exhibit an as Filed (7) tran the for 10-K Form on Annual Report the 10.8 to Filed as Exhibit (8) (8) File (SEC 2004 19, on May held of stockholders meeting the annual for statement proxy A the to Appendix as Filed (25) (25) incorporate and 2015 28, May on Registrant the by filed 8-K Form on Report Current the to 10.1 Exhibit as Filed (26) an 2016 3, June on Registrant the by filed 8-K Form on Report Current the to 10.9 through 10.1 Exhibits as Filed (27) and 2016 28, June on Registrant the by filed 8-K Form on Report Current the to 10.2 and 10.1 as Exhibits Filed (18) (18) File (SEC 2010 29, October on Registrant the by filed Statement Registration S-8 Form the to 99.1 Exhibit as Filed (24) (24) incorporate and 2015 3, November on Registrant the by filed 8-K Form on Report Current the to 3.1 as Exhibit Filed
FORM 10-K
y /s/ Carter Peters By: 2017 24, March Date: A. Burke Shaun A. Burke /s/ Shaun By: on behalf following persons registrantof the the in capacitiesand indicated.the dates on and
Kurt D. Hellweg /s/ Kurt D. Hellweg By: 2017 24, March Date: /s/ David T. Moore By: 2017 24, March Date: Director 2017 24, March Date: Director Director EVP and Chief Financial Officer (Principal Executive Officer) Officer Executive and Chief President Carter Peters March 24, 2017 Dated: caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. David T. Moore John Griesemer Griesemer /s/John By: Financial and Officer) (Principal Accounting 2017 24, March Date: curities Exchange Act of 1934, this report has been signed below by the the Pursuantby below signed tothe thishas been report of 1934, requirementAct ofthe Exchange Securities Pursuant to the requirements of Section the to of requirements13 th Section of or 15(d) Pursuant adDrco Director and Director SIGNATURES
By: /s/ Greg /s/ Greg A. Horton By: James L. Sivils, III Director Director B: /s/ James R. Batten By: 2017 24, March Date: Date: March 24, 2017 2017 24, March Date: 2017 24, March Date: Greg A. Horton 2017 24, March Date:
Tim Rosenbury James R. Batten B: /s/ James L. Sivils, III By: By: /s/ Tim Rosenbury /s/ Tim Rosenbury By:
106 By: /s/ Shaun A. Burke A. Burke /s/ Shaun By: PeietadCifEeuieOfcr Representative) Authorized (Duly Officer Executive and Chief President Shaun A. Burke INC. BANCSHARES, FEDERAL GUARANTY
e Securities Exchange Act of 1934, the registrant has duly duly has registrant the 1934, Actof Exchange e Securities Chairman of the Boar
d andd Director
FORM 10-K This page intentionally left blank left intentionally page This
FORM 10-K
VOTE PERSONALLY AT THE MEETING. OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO ANNUAL MEETING REVOKE YOUR PROXY BY WRITTEN INSTRUMENT AT ANY TIME PRIOR TO THE VOTE AT THE
(ii) notifying you of the availability of availability you of the (ii) notifying
PREVENT YOU FROM VOTING IN FROM VOTING PREVENT YOU MEETING PLAN THE ANNUAL TO ATTEND IF POSSIBLE,CURRENTLY YOU AS EVEN SOON AS CARD PROXY YOUR RETURN AND DATE SIGN, TO YOU URGES DIRECTORS OF BOARD THE 2017 24, April Springfield, Missouri Annual Report may be accessed at to provide access to our proxy materials both elected we have the Commission, by toSecurities andExchange promulgated the rules Pursuant 2017. 24, May Held on be to The advisory (non-binding) vote to approve executive compensation. The election of three directors. 2. 1. Meeting. at the to vote entitled stockholders the 3, close are business at the on 2017 of April p.m., record of at May 6:00 24, 2017, local time. Stockholders Bank Op atthe Guaranty held (the “Company”) willbe Inc. Important NoticeRegarding the Availability Proxyof Materials for the2016 AnnualStockholders’ Meeting . Such other matters asmay come properly before the Meeting or any adjournments thereof. Except with 4. The ratification of BKD, LLP as Independent Registered Public Accounting Firm to the Company for the 3. acting upon: and purpose of for the considering held is being Meeting The A Proxy Card and a Proxy Statement for the Meeting are enclosed. Notice is hereby given that an annual meeting of the stockholders (the “Meeting”) of Guaranty Federal Bancshares, any other business to come before the Meeting. respect to procedural matters incident to the conduct of the Meeting, th fiscal year ending December 31, 2017. . IF YOU AREA STOCKHOLDERWHOSESHARES ARENOTREGISTERED IN YOUR NOTICE OF MEETINGNOTICE OF STOCKHOLDERS OF GUARANTY FEDERAL BANCSHARES, INC. FEDERALBANCSHARES, GUARANTY
www.gbankmo.com. our materialsproxy internet. the on PERSON AT THE ANNUAL MEETING ______SPRINGFIELD, MO 65807-4181 65807-4181 MO SPRINGFIELD, by: (i) sending you this full set of proxy 1341 WEST 1341 BATTLEFIELD To Be Held on May 24, 2017 24, Be Held on May To
520-4333 (417)
erations Center, 1414 W. Elfindale, Springfield, Missouri, on Missouri, Springfield, 1414 W. Center, Elfindale, erations
BY ORDER OF THE BOARD OF DIRECTORS Chairman of the Board James Batten This Notice and Proxy
materials, including a proxy card; and IF YOU DESIRE IF e Board of Directors is not aware o
Statement and our 2016 Statement and our
. THIS WILL NOT , AND YOU MAY f
PROXY STATEMENT This page intentionally left blank left intentionally page This
PROXY STATEMENT CEO and President Shaun A. Burke Respectfully, but yourwill that meeting assure is counvote accompanying postage-paid return envelope have. LLP, our independent registered publicaccounting firm, willbe pr and Directors theCompany. of the operations I willreport on th describe Statement Proxy and Stockholders May at Meeting of 24, 2017 ofAnnual 6:00 on p.m., local Missouri, Wednesday, attached Notice time. The Springfield, attendto the 2017 AnnualMeeting of Stockholdersto be held Dear Fellow Stockholder:
Whether or not you plan to attend the meeting, please si On behalf of the Board of Directors and management of Guaranty Federal Bancshares, Inc., I cordially invite you
e formal business tobe transacted atth ted if you are unable to attend the meeting. meeting. the to attend are if you ted unable as soon possible. This
April 24, 2017 2017 24, April
atthe Guaranty BankOperati officers of the Company, as well as representatives of BKD, of aswellrepresentatives Company, officers the of gn and date theenclosed proxy card and return itinthe esent to respond to any questionsthat stockholders may will notprevent you from 1341 W.1341 Battlefield e meeting. Following the formalmeeting, 417-520-4333 417-520-4333 ons Center, 1414 W. Elfindale, Elfindale, W. 1414 Center, ons ▪ Springfield, MO 65807 Springfield, voting in person at the ▪ www.gbankmo.com
PROXY STATEMENT This page intentionally left blank left intentionally page This
PROXY STATEMENT
will be mailed to stockholders on or about April 24, 2017. April 24, 2017. about on or stockholders mailed to will be 1414 Center, Operations Bank Guaranty the at Meeting”), and at any “Annual (the 2017 Guaranty Federal Bancshares, Inc. (the “Company”) for use at the annualmeeting of stockholders to be held on May 24,
exceed the Limit. However, iftheCompan in excess of 10% of the outstanding shares of Common Stock as Article XIII of the Company’s Certificate of Incorporation provides that no holder of Common Stock that beneficially owns (“Record 2017 3, April on business of close the at Company if required, if to required, Article XIII), major a of Holders outstanding. and issued applicable. not Article XIII is Stock, Common the in result that Stock shares ofCommon the of acquisition beneficial owners of Common Stock. other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materialsto the firms brokerage reimburse and Comp willalso the The Company any. by borne be will fromstockholders proxies soliciting employees of Company will no regular the and Officers, directors officers, directors and regular employees of the Company personally, by telephone, by internet or by further correspondence. Meeting. if that stockholder only files the instrument written proper with executed to The proxy an earlier proxy. revoke sufficient Secretary of the Company written instruc Meeting. Annual at the to be taken action any exist for rights or dissenters’ appraisal owned. No Stock come beforethe AnnualMeetingorany Statement and on the proxy card and in the discretion of those named in the proxies upon any other business that may properly speci the of approval FORthe intheproxies thosenamed will bevoted by proxies the Annual Meeting in accordan Board of to the Directors an returned duly executed, if properly with connection in prepared been has Statement Proxy This All persons who were holders of record of the common stock, par value $0.10 per share (“Common Stock”) of the Stockholders are urged toindicate their Voting may be by proxy or in person. As of the Record Date, the Company had 4,421,275 shares of Common Stock may by solicited be at proxies Meeting, the Annual representation sufficient to assure necessary extent To the A stockholder giving a proxy has the power to revoke the proxy at any time before it is exercised by filing with the RECORD DATE--VOTING--VOTE REQUIREDFOR APPROVAL a quorumwill constitute atfor the transacting of purposes Annualbusiness Meeting. ce with the stockholder’s instructions indicated thereon. Where no instructions areindicated, GUARANTY FEDERAL BANCSHARES, INC. INC. BANCSHARES, FEDERAL GUARANTY adjournment thereof. Each stockholder shall have one vote for each share of Common SPRINGFIELD, MISSOURI 65807-4181 MISSOURI SPRINGFIELD, adjournment(s) thereof. The Annual Meeting will at Meeting thereof. adjournment(s) Annual be held The 6:00 p.m., time, local ity of the outstanding shares shares Common (after Stock effect, to of ity giving of the entitled outstanding vote tions revoking the proxy. A duly executed proxy bearing a later date will be alater will be date bearing proxy executed A duly proxy. the revoking tions y’s Board of Directors(the“Boardof y’s W. Elfindale, Springfield, Missouri. It 1341 WEST 1341 BATTLEFIELD vote in the appropriate spaces on the pr ______PROXY STATEMENT by a stockholder who attends the Annual Meeting will be revoked will Meeting be revoked the Annual attends who by a stockholder 1 beneficial owner owning more than 10% of the outstanding outstanding the of 10% than more owning owner beneficial Date”) will be entitled to cast votes at the Date”) to castat the votes Meeting.Annual entitled will be d not revoked prior to the Annual Meeting, will be at will voted be Meeting, priortothe d not revoked Annual the Secretary prior to the end of the voting at the Annual the atthe Annual Secretary priorto theend of the voting of the Record Date (the “Lim t be compensated for their solicitation efforts. The cost of The cost of efforts. for solicitation t compensated their be the solicitation of proxiesbyBoard the of Directors of Directors” or the “B Directors” or
is anticipated thatthisProxyStatement fic proposals presented in this inthis Proxy fic proposals presented oxy card. Eachcard. proxysolicitedhereby,oxy it”), mayit”), vote the shares that
oard”) approves the
PROXY STATEMENT
sory
48% Outstanding Outstanding owner. However, as as However, owner. Percent of Percent Total CommonShares
the beneficial owner owning Article XIII of theof CertificateArticle XIII ted as votested as will not cast and and Two are not deemed to be be to deemed not are Two and customers in “street name” on name” in “street customers
ectionor of directors advi the of the beneficial beneficial the of Nature of Nature Beneficial Ownership Amount and and Amount (2) 330,715 7.
dependentRegistered Public is Accounting Firm,
ned below) will be treated as shares present for purposes of the shares that resulted in and such shares in excess of the Limit may be voted as be voted may Limit of the excess in shares and such e shares they hold for their hold they shares e ”) do not instruct the brokers how to vote the customer’s customer’s vote the how to brokers not instruct the do ”) the beneficial owners. These are referred to as “broker non- “broker as to referred are These owners. beneficial the that resulted in the beneficial owner owning more than 10% 10% than more owning owner beneficial the in resulted that as abstentions will not be coun amended (the “Exchange Act”).
shares ofshares Common Stock holdthey on name street in Proposal therefore will notel affect thetherefore
neficial owners. Proposals One Proposals owners. neficial 2 shares of Common Stock they hold in street name on Stockname Proposals hold they in sharesCommon street of jority of the votes cast on such matters. matters. such on cast votes the of jority tes of the shares representedofsharesthe by tes proxy or thepersonat in Annual Meeting. at exceed the Limit despite the instructions the despite Limit the exceed at approval of executive compensation, or ratification of BKD, LLP as the independent independent the as LLP BKD, of ratification or compensation, executive of approval Name and Address Address and Name of Owner Beneficial ee, regarding of ratification LLP the BKD, as In regarding ee, 67 ...... 67 (1) 794,022 17.96% beneficial owner. owner. beneficial SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT MANAGEMENT AND OWNERS BENEFICIAL CERTAIN OF OWNERSHIP SECURITIES electedare Directors by of plurality a vo y’s Certificate of Incorporation, no record owner of shares of Common Stock Stock Common of shares of owner record no Incorporation, of Certificate y’s Compan XIII of the Article to Pursuant Persons and groups owning in excess of 5% of the Common Stock are required to file certain reports regarding such such regarding reports certain file to required are Stock Common the of 5% of excess in owning groups and Persons Regardless of the number of shares of the Company’s Common Stock owned, it is important that stockholders be stockholders that important is it owned, Stock Common Company’s the of shares of number the of Regardless Proxies marked as abstentions andbroker non-votes (as defi
oved the acquisition of the shares the of acquisition the approved the Board if stated above, of the outstanding CommonStock,not Article XIII is applicable by instructed the The proposalsThetoapprove executive compensation (advisory) the theof andselection independent ratify to registered public ma a of vote affirmative the require firm accounting
approval of executive compensation. of approval executive compensation. in owns beneficially that owner beneficial a for shares holds that nominee other or company trust a bank, a broker, a as such th shares the vote may Limit, the of excess Castle Creek Capital Partners V, LP LP V, Partners Capital Creek Castle votes.”non-votes Brokernot be will counted as votesandcast, One and Two in the absence of instructions on how to vote from vote to how on instructions of absence the in Two and One routineand,matters such,as notbrokersentitled are to vote Three in the absence of instructions on how to vote by the be the by vote to how on instructions of absence the in Three routine matters when the customers (i.e. the when customers “beneficialroutine the owners matters Thr Proposal Only shares. bedeemedto routinea entitledbe will Brokers matter. vote to affect the election of directors, advisory directors, of election the affect vote th to entitled Brokers are firm. accounting public registered of determining whether a quorum is present. is quorum Proxiesof whether a determining marked 6051 El Tordo Tordo El 6051 ownershippursuant Securities the to Exchange 1934,of Act as
of Incorporation of the Company restricts the voting by persons who beneficially own in excess of 10% of the outstanding outstanding the of 10% of excess in own beneficially who persons by voting the restricts Company the of Incorporation of ofshares Common Stock unless the Board approvedthe acquisition Company. the of plans benefit employee to apply not does restriction This Stock. Common outstanding the of 10% than more followingThe tableforth,sets ofas the Record personsDate,or groups who are known theby Company to beneficially own Stock. Common the of 5% than more represented by proxy or be present in person at the Annual Meeting. In order for any proposals considered at the Annual Annual the at considered proposals any for order In Meeting. Annual the at person in present be or proxy by represented by vote to requested are Stockholders present. be must quorum a stockholders, Company’s the by approved be to Meeting completingthe enclosed proxy card returningand signedit anddated enclosedthe in postage-paid envelope. Racho Santa Fe, CA 920 CA Fe, Santa Racho FJ Capital Management, LLC LLC Management, Capital FJ ...... 22101 VA McLean, 1313Dolley306 Blvd, Madison Ste
PROXY STATEMENT
(2) Information based on a joint schedule 13G/Afiled with schedule onajoint based Information (2)
(1) Information based on a joint schedule 13G/A filed wi filed 13G/A schedule a joint on based Information (1) 2017 by FJ Capital Management LLC (“FJ”), Financial Opportunity Fund (“FOF”),Financial Opportunit Fund FJ by LLC(“FJ”),Financial Management Opportunity Capital 2017 investment), SB Holdings (263,277 voting and investment) and RIC (263,277 voting and investment). investment). and voting RIC (263,277 and investment) and (263,277 voting SB Holdings investment), and investment), Mr. Friedman (330,715 voting and 67,438 investment), SB Manager (263,277 voting an and investment), BE IX (3,252 voting and investment), BE X (2,295 voting and investment), BE XI (8,750 voting investment), FOLSF (4,903 voting and investment), BE III (246,186 voting and investment), BE VIII (2,794 voting investment power over the shares as follows: FJ (330,715 voting and 67,438 investment), FOF (45,724 voting an Investment Company Inc. (“RIC”) as Friedman, SunBridge Manager LLC (“SB Manger”), SunBridge Holdings LLC (“SB Holdings”) and Realty IX XLLC Equities LLC (“BE Equities (“BE IX”), Bridge LLCIII Equities Fund (“FOLSF”),Bridge LLC (BEIII”),BridgeLong/Short by Fund V of the shares of Comm Company’of the Article XIII Common Stock, including the 351,894sh The record holder of the shares ofCommon Stock beneficially owned by Fund V may vote all 794,022 shares o beneficial ownership oftheCommon Shares, except tothe is a managingis a principal ofCCC V.CCCV, Mr. Eggemeyer, share voting and dispositive power over the by Fund V. CCC V is the sole general partner of Fund V. Mr. Eggemeyer, Mr. Merlo, Mr. Pietrzak, and Mr. Thomas Reporting Persons may be deemed to be the beneficial owner of the 794,022 shares of Common Stock held directly Eggmeyer III, Mark G. Merlo, John T. Pietrzak and J. Mikesell Thomas asthe “Reporting Persons.” Each of the Partners Castle V,LP(“Fund by Capital Creek 2016 s Certificate of Inco s on Stock that exceed the Limit. the “Reporting Persons.” The Schedule 13G/A reports shared voting and ares thatexceed the 442,1 794,022 shares rporation, because th 3
th the Securities and Exchange Commission on 18, on August Commission Exchange th theSecuritiesand V”), Castle Creek Capital V M. Capital LLC (“CCCV”),John V”),CastleCreek the Securities and Exchange Commission on February onFebruary 14, Commission the Securities and Exchange Mr.Merlo, Mr. Pietrzak, and Mr. Thomas each disclai beneficially owned by Fund extent of their respective pecuniary interest in Fund V. Fund interest in oftheir extent pecuniary respective X”), Bridge Equities XI X”),Bridge Equities LLC (“BE XI”), MartinS. 28 shares that constitute the Limitpursuant to e Board of Directors approved the acquisition Equities VIII LLC (“BE VIII”), Bridge LLC (“BEVIII”), VIII Equities V, due to the fact that each m d d y f
PROXY STATEMENT
y
2.4% 2.4% Outstanding Outstanding
Percent of Percent Total Common Shares is shown below with with below shown is *
2.1% 1.1%
* * 10.0% *
the shares of Common Stock Stock Common of shares the
2,817 2,817 * 1,000 1,000 * 4,201 4,201 * 94,308 (3) 31,093 (7) (7) 31,093 29,650 (4) 15,224 (8) 26,492 (5) (5) 26,492 50,447 (6) (6) 50,447 74,921 (2) (2) 74,921 1.7% 11,168 11,168 * respect to which shares the respective the shares which to respect 1% stock ownership ownership 1% stock Nature of Nature Beneficial Amount and and Amount Ownership (1) Ownership Named Executive Officers (see section titled section (see Officers Executive Named
450,584 (9)
e Record Date, with respect to respect with Date, e Record shares beneficially owned by directors and executive officers officers executive and directors by owned beneficially shares
e ownershipwrittenfurnished and reports to Company, the
4 in family members, by certain related entities or by trusts of which the or by trusts related entities by certain members, in family ees orees substantial beneficiaries, with hip, the same securities behip, attributedmay the same owned beingbeneficially as b the Board, up to 2,500 shares. Less than Less shares. 2,500 to up Board, the certain forms, the Company believes that all Section 16(a) filing requirementsfiling16(a)Section believes that Company the all certain forms, rectors, nominees for director and and director for nominees rectors, utive officers as a group (Twelve (Twelve group a as officers utive
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE COMPLIANCE REPORTING BENEFICIAL 16(a) OWNERSHIP SECTION Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than than more own who persons and directors, and officers Company’s the requires Act Exchange the of 16(a) Section The following tablecertain forth sets information as of th director or executive officer may be deemed to have sole or shared voting and/or investment powers. Due to the to Due powers. investment and/or voting shared or sole have to deemed be may officer executive or director for determiningrules owners beneficial directors and executive officers are trust are officers executive and directors accounts, in a fiduciary capacity, by certa fiduciary capacity, a accounts, in more than one person. The holders may disclaim beneficial ownership of the included shares which are owned by or by owned are which shares included of the ownership beneficial disclaim may holders The person. one than more withfamily trustotheror members, entities. (1) (1) retirement in members, family with jointly held as shares well as directly, held shares include may Amounts persons) persons) ......
Name of Beneficial Owner Beneficial of Name Shaun A. Burke ...... Burke A. Shaun
Carter Peters ...... with Stock Common the in ownership of changes and ownership their detailing reports file to Stock, Common of the 10% theand Securities Exchange Commission (“SEC”) and reports. to furnish copiesownership with such all of the Company of theBasedofreview th copies solely on Company’s the filing of the representations to relative with were complied Stock, Common the of 10% than more own who persons and directors, and officers its to applicable fiscal 2016 during year. the
Tim Rosenbury ...... Rosenbury Tim ...... III Sivils, Jamie ...... Batten James Kurt Hellweg ...... Hellweg Kurt beneficially owned by each of the di each of the by owned beneficially an (*). asterisk (2) Includes (3) 20,000 sharesbe that acquired withinmay ofdays 60the Record Datethrough the exercise options.of Includes (4) 2,500 Includes options. of the exercise Date through of the Record days 60 within be acquired that may shares (5) 7,500 Includes options. of the exercise Date through of the Record days 60 within be acquired that may shares (6) 7,500 Includes options. of the exercise Date through of the Record days 60 within be acquired that may shares (7) 32,500 shares that be may acquired Includes within 60 days of the RecordDate through the exerciseof options. (8) 5,000 Includes options. of the exercise Date through of the Record days 60 within be acquired that may shares (9) 6,500 Includes options. of the exercise Date through of the Record days 60 within be acquired that may shares 81,500 shares that bemay acquiredwithin 60 days of the RecordDate through the exerciseof options. H. Charles Puls ...... Puls Charles H. Sheri Biser ...... Robeson Robin Totalowned directorsall by andexec John Griesemer ...... Griesemer John ...... Moore David 109,263 Greg Horton ...... Horton Greg “Summary Compensation Table”) of the Company, and the total and the Company, of the Table”) Compensation “Summary non- and grants stock of exclusive shares, 2,500 of minimum a own to director each for is policy Company’s The group. a as of minimum a own to required are Board the on experience of years five than less with Directors options. stock exercised on service of year full each for shares 500
PROXY STATEMENT
As of the Record Date (1) theCo also directors of or untiltheirsuccessorsare elected and qua Mee at the election Annual upon and, Board Board, by the the of Griesemer) are expiring at the Annual Meeting. stockholders hasserved for a th office of one class of directors expires ea as a director or nominee.a director or as understandings between the nominees or directors and any other person pursuant to which any such person was or is selected is for Company term successor the his until or asindicated, if elected and has consented to being name will to thissolicitation be
James R. Batten D. Hellweg Kurt A. Burke Shaun Tim Rosenbury Horton A. Greg T. Moore David James L. III Sivils, F. Griesemer John In addition to the three nominees proposed to serve on the Board as described above, the following individuals are individuals following the above, as described to serve on the Board tothree proposed the nominees In addition Messrs. Moore, Sivils and Griesemer have been nominated, upon the recommendation of the Nominating Committee eight. Board will be the constituting ofdirectors The number Unless otherwise specified on the proxies Name Name
mpany, each serving for the current term indicated. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS RECOMMENDS UNANIMOUSLY THE BOARD OF DIRECTORS
voted in favor of the election ofeachpersonnamedthein favor of voted THAT YOU VOTE FOR THE FOR THAT YOU VOTE Who Will Continue in Office ree-year term. Theterms ofthree of the pr FIRST PROPOSAL:ELECTION OF DIRECTORS Nominees for Three-Year Terms Expiring 2020 d as a d nominee in Statement. Proxy this lified. Each nominee hasindicated that he ch yearinrotation so thatthe class Directors WhoDirectors Are Not Nominees Age (1) 52 52 49 49 46 46 received by the Company, Age (1)
54 54 60 60 59 59 53 53 57 57
5
FOLLOWING NOMINEES After Meeting the Annual ting, will hold office for a three-year term expiring in a three-year termin 2020 office for hold expiring will ting, elected and qualified. There are no arrangements or are arrangements There no qualified. and elected The Board is divided into into classes. termthree The is divided Board of The Director Since Director Since 2002 2002 2008 2008 2014 2014 it is intended that proxi in the following table to be a director of the esent directors (Messrs. Moore, Sivils and 2006 2006 2002 2002 2000 2000 2004 2004 2016 2016 up for election ateach annual meeting of
is willing and able to serve as a direc
esreceived in response Current Term Current Term Expires Expires 2017 2017 2017 2017 2017 2017 2019 2019 2019 2018 2018 2018 2018 2019 2019
tor tor
PROXY STATEMENT g make him a valuable make him g er of the World Presidents WorldPresidents the of er t and processing equipment equipment t and processing an emphasis in management in management an emphasis 2002, serving as the President experience in public company Vulcan Materials Company in Materials Company Vulcan d of Education for Springfield Public Public for Springfield Education d of e Document Systems, a computer software software computer a Systems, Document e of the Board of Directors of Paul Mueller Mueller Paul of Directors of Board the of Board Board the of ofDirectors member of and ficer an environmental consulting withan environmental offices firm of Integrity Home of Integrity Home Care & Hospice, a multi-line background in public accountin public in background er of milk cooling equipmen cooling of milk er University. He is a member ofUniversity. theHe is a member American Institute of Stone Sand and Gravel Association. He is a past Member He is a past Member Association. Gravel and Stone Sand d Missouri Real Estate Broker. Mr. Sivils has developed developed Sivils has Mr. Broker. d Missouri Real Estate University of Missouri – Columbia. Mr. Sivils is a memberUniversitya is of Sivils Mr. Missouri – Columbia. 999 awarded him the designation of Alumni Fellow. He is a a is He Fellow. Alumni of designation the him awarded 999 rton holds a Bachelor of Scienceholds Bachelora in of Business Administration rton in 2000, Mr. Horton was a partner in the accounting firm firm accounting the in a partner was Horton Mr. 2000, in at Paul Mueller Company since since Company Mueller Paul at significant his to due e Board 0 clients Missouri in and Kansas, and co-founderof affiliate rience with accounting public in rience esidents’ Organization a and memb Organization esidents’ a management trainee with with trainee management a 6 field Communities, member CatholicofSpringfield Schools member thefield Communities, the Board of Directors of the Company. of the Company. of Directors the Board rience and deep ties in the local community. community. local the in ties deep and rience activein board and withvolunt serviceFellowshipthe Christianeer of Athletes, of Commerce and Vice President of the Boar of the Vice President and of Commerce sed organizations and his organizations sed esident of Product Development at Corporat Development of Product esident is Executiveis President,Vice Operations Chief Of , JD, is the CEO of Environmental Works,of Environmental Inc., CEO , JD, is the is is President, Executive andChief Officer, member
, CPA, is Chief Executive Officer and co-owner , AIA, is Managing Partner of Butler, Rosenbury & Partners, Inc., an architecture and planning firm firm planning and an architecture Inc., & Partners, Rosenbury of Butler, Partner Managing is AIA, ,
Sivils, III James L. Greg A. Horton David T. Moore Moore T. David Tim Rosenbury Set forth below are brief summaries of the background and business experience, including principal occupation, of of occupation, principal including experience, business and background the of summaries brief are below forth Set F. John Griesemer Northern Virginia. Mr. Griesemer holds a B.S. degree in Industrial Management and Engineering from Purdue Purdue from Engineering and Management Industrial in degree a B.S. holds Griesemer Mr. Virginia. Northern University. He is the Chairman of the Board of Mercy Spring National of the of the Board a member Board and Development of the Achievement Junior Ministries, Campus Catholic Association, Producers Limestone Missouri the of Board of the organizational strong a Board the to brings Griesemer Mr. Foundation. College Community Technical Ozark and Ozarks andleadership background, management expe in Springfield, Kansas City and St. Louis, MO. Mr. Sivils began his career as a Missouri licensed attorney in 1990. In 1993, 1993, In 1990. in attorney licensed Missouri a as career his began Sivils Mr. MO. Louis, St. and City Kansas Springfield, in a license Real Estate and became developing began Mr. Sivils of University the from degree J.D. a holds Sivils Mr. Missouri. Southwest in projects residential and commercial numerous the from degree B.A. a and School Law City Kansas – Missouri Pr Young the of Chapter Ozarks the of Chair Chapter past and and business general in experience significant and leadership community strong Board the to brings Rosenbury Mr. Schools. management. and development estate real member of a number of professional and civic organizations, for many of which he has held leadership positions,of whichheldof professional leadershiporganizations,has and heoffornumber civic includingmany member a of the Springfield Area Chamber Chairman in Springfield, Missouri. Mr. Rosenbury joined the firm in 1984 after practicing in Memphis, Tennessee. He graduated with with He graduated Tennessee. Memphis, in practicing after 1984 in firm the joined Rosenbury Mr. Missouri. Springfield, in B.Arch.a from University 1980,Mississippi in1 whichState in Organization. Mr. Sivils legal background, knowledge and experience with real estate matters and experience running a a running experience and matters estate real with experience and knowledge background, legal Sivils Mr. Organization. Board. the to resource valuable a him make company employee 100+ Company. Paul Mueller Company is a publicly held manufactur management, corporate governance, business acquisitiondevelopment. technology andand and integration,In information tocommunity. the local personal andties business has long-term Mooreaddition, Mr. Board. the to resource Springfield Underground,Inc. Springfield Underground, Inc. a privately is held construction materials supplierreal and Manager General and Manager Area as served previously Griesemer Mr. area. Missouri Springfield, the in developer estate as and companies related Inc. Underground, Springfield of each nominee and director currently serving on serving and currently director nominee each
Biographical Information Biographical headquartered in Springfield, Missouri. Mr. Moore has worked Mueller Paul joining to Prior 1997. since Directors of Board company’s the of a member been has he Additionally, 2011. since Pr Vice was Moore Mr. Company, a B.A. and Business of School Booth - Chicago of University The from MBA an holds Moore Mr. years. six for company, Middleburyfrom Moorevaluable College. th is a asset to Mr. that2,000 care enterprise employshome and5,00over serves Integrity Pharmacy. Prior to launching Integrity Care Home expe of years twenty has He LLP. & Keehn, Selim Whitlock, consulting,and auditing information systems, services. Ho Mr. withAccounting an Specialization CentralState from Missouri been has and Accountants, Public Certified Mr. Commerce. of Area Chamber Springfield the and Southeast, Springfield of Club Rotary Missouri, of Town Girls & Boys in Horton’s expertise large service-ba
PROXY STATEMENT
Executive Officer. Mr. Batten is considered to be “ind the of position Chief Currently, holds the Mr.separate. Batten of Chairmanholds Mr. Burke position and the Board of Board Leadership Structure These (“NASDAQ”).Market are “independent directors” as that term isdefined inRu Director Independence WPO, and is a Trustee of the ADF profit sharing plan, serving as a Director of the Investment Committee. IDF, IsoNova, Company, Products FITCO, Hammons Inc., Works, Environmental Family Darr Foundation, the CoxHealth, Mensa, and enjoys competing in ultra-distance bicycling r chaired the Greater Ozarks Chapter of th of World Chapter the GreaterOzarks of Area Chamber of Commerce, the Springfiel Hellweg fromEngineering a B.S. degreeholds University in the Mr pilot. as an instructor Fleet and the Atlantic in that as a to pilot helicopter During 1987. from tours time, 1980 served he Senior Vice PresidentOperations,Senior Vice of and Pr in ADF joined Mr. Hellweg industries. feed and food the both Enterprises,Inc.). IDF, ADF,an FITCO Petcare), and Chairman ofthe Board of Dehydrated Foods, Inc. (“ADF”), Food Ingredients Technology Company, L.L.C (“FITCO” – a joint venture with Mars Brothers Big Sisters Board. Relati and Agency Allocations theUnited Member Way of development subsidiary of the Springfield Area Chamber of Commerce servingas Pr economic the Corporation, Development Business Springfield the Member of aBoard was 2014, he through From 2009 2014. in Economic Development of Chairman as Vice Commerce serving of Chamber Area Springfield the Member of a Board Bank Federal Depository Community Reserve St. Louis’ of the to Banker Community the term on three-year Chairman of the Legislative Affairs Commi School of Banking of Colorado. Mr. Burke currently serves on the board of the Missouri Bankers Association as Vice Mr. Burkereceived a Bachel President and Chief Executive Officer of th Big Brothers Big Sisters of the Ozarks and New Covenant Academy. has also served on a number of other professional and civic boards including the Springfield Area Chamber of Commerce, Battenisafo Mr. Church. of Hope and Treasurer Resources Haskins & Sells Mr. from is a member 1986. Batten until the1984 Capital of of board Solutions, Foundation AG Financial O’Reilly, Mr. Batten was employed by the accounting firms of In Automotive, O’Reilly Treasurerof and Chief Vice Officer Financial of President Finance, Executive as the Mr. served March Batten 2009. through 2007 September Office asChief Operations Battenserved Mr. 2014. February through 2009 April from organization relief nonprofit international an Hope, of Convoy of President Vice Executive the was managementconsultant serving businessesand non-profitorgani manufactureringredients of thefor food industry. Prior
Throughout its history, the Company has kept the positions the kept has the Company its history, Throughout The Board has determined that all ofthe directors, except Kurt D. Hellweg Kurt BurkeShaun A. James R.Batten
joined the Bank in March 2004 as President and Chief Executive Officer and was appointed Officer and was appointed Chief Executive and asPresident March 2004 the in Bank joined , CPA, is Chief Financial Officer of , CPA,is Officer Financial Interna Chief of or of Science Degree in Finance from Missouri State University andis a graduate of the Graduate is the Chairman ofthe Board of Internationa directors constitute a majority of the Board. a majority the of constitute directors
d IsoNova are privately held privately are d IsoNova e Young Presidents’ Organization. He is Presidents’ Organization (“WPO”) (where (“WPO”)(where Organization Presidents’ IsoNova Technologies, L.L.C. (“IsoNova” – a joint venture with Rembrandt Rembrandt with venture ajoint L.L.C. (“IsoNova” – Technologies, IsoNova c. (NASDAQ: ORLY) c. s Council of thes Americanof Council esident/COO. Prior to joining ADF, Mr. He ADF, joining to Prior esident/COO. e Company on February 28, 2005. He has over 30 years of banking experience. experience. banking of years 30 over has He 2005. 28, February on Company e d Area Arts Council, and the Springfield Symphony. He is the founding member is theHe founding Symphony. the Springfield and Council, Arts d Area ttee and was previously Chairman of the Audit Committee. In 2014, he began a ependent” according to NASDAQ listing requirements. requirements. listing NASDAQ to according ependent” le 5605(a) (2) of the MarketplaceRules of Th to joining IDF in September 2016, Mr. Batten served asa served Mr. Batten IDFin September 2016, to joining r and Executive Vice President of 7 rmermembertheIssuer of NASDAQ AffairsCommittee. He ons Executive Committee, Salvation Army Board, and Big and Army Salvation Board, Committee, Executive ons aces. He currently serves on Whitlock, Selim &Keehn, from 1987 and has previously served zations from March 2014 through August 2016. Mr. Batten Mr. Batten 2016. August through 2014 March from zations of Nebraska. He is a past Board Member of the Springfield Institutions Advisory Council. From 2012 to 2014, was he to 2014, From 2012 Council. Advisory Institutions tive officer of the Company, forMr.Burke officer of who isan executive from January 1993 through March 2007. March Prior through 2007. from to 1993 joining January companies that manufacture for ingredients market and of Chairman of the Board and Chief Executive Officer Executive Chief and Board the Chairman of of BankersAssociation. March In 2016he was appointed tional Dehydrated Foods Foods Dehydrated tional l Dehydrated Foods, Inc. (“IDF”), American American (“IDF”), Inc. Foods, l Dehydrated a Black Belt in Taekwondo, a member of amember BeltinTaekwondo, a Black he is still active), and has previously previously ishas stillactive), and he llweg was an officer in the U.S. Navy esident in 2012. He is also a past the followingBoards: ADF, AG Financial Solutions from from Solutions AG Financial 1986 to 1993 and Deloitte, as Vice PresidentasSales, Vice of (IDF) a privately held (IDF) aprivately held e NASDAQ Stock .
PROXY STATEMENT , and , elve regular meetings. No regular meetings. elve Directors of Directors the Company, rest that may arise when the the may arise when that rest tenuating circumstances. All All circumstances. tenuating more effectively monitor effectively more and the full Board of Directors and its and Directors full Board of the financial institution. We face a number number a face We institution. financial i Lindsay, Secretary, Guaranty Federal Lindsay, Secretary, i ates our commitment to good corporate corporate good to commitment our ates that oversight is effective. effective. is oversight that garding director attendance at the Company’s annual annual Company’s the at attendance director garding tings on a regular and consistent basis.We have regular annual meetings absent ex absent annual meetings mmunicate with the Board of Board mmunicate with the r 31, 2016, the Board held r 31, 2016, tw Board the tive Officer Officer tive to focus on our day-to-day business, while c areas of risk and risk management,risk risk and and of each committeec areas eliminates the conflictsof inte to-day management of risks the Company faces, while the faces, Company the risks of management to-day structureallows the Board to 8 of these committees receives regular reports from management management from reports receives regular of these committees
at of regular special and meetings
risk when managing and operating every operating every and managing when risk expected to attend these these attend to expected r the Company at this time and demonstr and time this at Company r the their writtentheircorrespondence to: Vick by mail tion mechanisms in place to ensure to place in mechanisms tion
our Chief Executive Officer. Executive Chief our of the Board of Directors of Board the of tions Directors with its areas of responsibility. Each responsibility. of its areas
AlthoughCompany the does not policy havea formal re co to wish who persons interested other and Stockholders The business of the Company is conducted of the Company business The for essential is Board the and management between communication open and full for providing that believe We
It is necessary to effectively manage manage to effectively It is necessary While thefull Board charged is ultimate oversight variouscommittees of for withresponsibility risk management, The Board believes that having separate positions and having an independent outside director serve as Chairman is Chairman as serve director outside independent an having and positions separate having that believes Board The
Bancshares, 1341Inc., Battlefield,West Springfield, Missouri65807. orany individual director, should send director attended less than 75% of those meetings and the meetings held by all committees of the Board of Directors on which which on Directors of Board the of committees all by held meetings the and meetings those of 75% than less attended director he served. are all directors meeting, stockholders’ currentdirectors attended theCompany’s annual meetingof stockholdersheld on 25,May 2016. Communica Stockholder standing committees. The standing committees consist of the Executive, Audit, Compensation, Investment, Nominating, Nominating, Investment, Compensation, Audit, Executive, the of consist committees The standing committees. standing Decembe ended months twelve the Special. During Building and
regarding our risks and reports regularly to the Board concerning risk. risk. concerning Board the to regularly reports and risks our regarding of areas specific their with consistent personnel, management senior Certain oversight. and management risk effective responsibility, attend Boardmeetings and/or Board committee mee communica and reporting ongoing and Committees and Meetings positions are held by one person. In addition, this leadership of performance the evaluate Oversight Risk in Role Board’s business competition. Management is responsibleforday- the InBoard, wholerole and its ofcommittees, through its responsibilityoversight a riskhasof as management. general for the proceduresdesignedprocesses and management risk responsibility thatthe to the itself Board satisfy has the oversight, risk designed. as functioning and appropriate are management by implemented and the Board also responsibilities ofmembers have and specific management with tooversight.Boardrisk Each respect our committee has oversight been assigned responsibility specifi for considers risks within of risks, including but not limited to, general economic risks, credit risks, regulatory risks, audit risks, reputational risks reputational risks, audit risks, regulatory risks, credit risks, economic general to, limited not but including risks, of the appropriate leadership structure fo structure leadership the appropriate governance.Separating these positions our allows Chief Execu allowingChairman to the lead the Boardin its fundamental role of providing adviceto and independent oversightof Chairman independent an having that believe We management.
PROXY STATEMENT director.” During the twelve Nominating Committee consists ofthree directors, Messrs. Siv whom arerequired to bean “independent director” as defined under the NASDAQ listing standards. Currently, the Nominating Committee connection with the annual meeting of stockholders held on May 27, 2015. Board of Directors. Acopy ofthe Aud Proxy as in B to it the Committee prepared Charter Appendix Statement was included Company’s the by adopted awrittencharter under operates Committee The Audit independent auditors. Company’s the The A review. auditor’s independent the management and the independent auditors to review the Company’s financial statements and significant findings based on Charter is included isas Charter included Appendix A to Proxy Statement. this th by a adopted under formalcharter operates written Committee independent auditors toreview aud the ofthe annual results auditors independent skills and experience necessary to complement existing me search to identify candidates based upon for the Board as a whole. With respect to nominations of appropriate has deemed Committee the Nominating and experience mix skills the of of in light contribution person’s such assess will also Committee Nominating The to as a director. serve and willingness ability continued assesses their it and to expertise, and other skills, experience, knowledge, consider Committee does the Nominating but policy, diversity the Board has the appropriate tools to perform its oversight function effectively. The Committee does not have aseparate assess to whether members order in committee and its directors experience of and the skills of monitors mix Committee The as well as expe values, overall shared and communities Company’s to the and a commitment policy) and public regulation marketing, finance, of accounting, banking, as an (such understanding knowledge specialized stock ownership, meetings, committee and atBoard attendance Board, the on tenure obligations), independence, conflictsinterest,of diversity,age, number ofother directorshipsand commitments(including charitable criteria: following on the based nominees) incumbent (including for each of the committees of the Board. and recommending totheBoard the director areas as wellas other regulatory compliance issues, (ii) meet among other things, (i) regularlymeets with the internal auditor to review audit programs and the results of audits of specifi qualifies as an Audit Committee Financial Expert, as defined in Mr. Moore that determined has Board The of 1934. the Act inge of Rule10A-3 set forth SecuritiesExchan independence and Hellweg, each of whom an “independent is director” as defined under the NASDAQ listing standards and the criteria for the Exchange Act. The Audit Committee of the Board currently consists of four directors: Messrs. Moore, Horton, Batten, Audit Committee Stock beneficially owned by him or her. In addition, the stockholder making such nomination must promptly provide to the the to must provide promptly nomination such making the stockholder In addition, her. himby or beneficially owned Stock giving notice must list his or her name and address, asthey appear on the Company’s books, and the amount of Common Common Stock beneficiallyowned, and (iv) other information that would be required in a proxy statement. The stockholder to the (i) respect nominee, must with name, setforth, age, Company as provided above no later than the tenth day after notice of the meeting was mailed to stockholders. A nomination given by the Company to stockholders, written notice ofthe stockholder nomination must be given to the Secretary of the days prior to the meeting at which such nominee may be considered. However, if less than 31 days’ notice of the meeting is delivered or mailed by first class United Statesmail, postage prepaid, to the Secretary of the Company between 30 and 60 review selected candidates and make its recommendation to the Board. The Nominating Committee of the Board is composed of three or more directors as appointed by the Board, each of During the twelve months ended December 31 The Nominating Committee isresponsibl With respect to nominating existing directors, the Nominating Committee reviews relevant information available available information relevant reviews Committee Nominating the directors, existing to nominating respect With The Company has a separately designated Audit Committee Nominations by a stockholder will be considered by th by considered will be by a stockholder Nominations
monthsended DecembertheNomina 31, 2016, criteria the Nominating Committee deems Committee criteria the Nominating In accordance with its udit Committee is responsible for hiring, retaining, compensating and terminating nominees for election and appointment to th to appointment and forelection nominees e for identifying individuals qualifie individuals identifying e for demographics which may contribute to the Board. Board. the to may contribute which demographics , 2016, the metAudit Committee five times. new directors, the Nominating Committee will conduct a thorough a thorough new conduct will the directors, Nominating Committee mbers of the Board. The No 9 and addresses,(ii) and principal s atleastannuallyinexecutiv the rules and regulations of the and regulations the rules it and it and other matters,related a charter, the Nominating Committee recommends candidates e Nominating Committee if such nomination is written and and iswritten nomination if such Committee e Nominating e Board of e Board Directors. A copy ils, Moore,and Batten, each of the diversity of its directors and nominees in terms of terms in and of nominees its directors diversity of the business experience, education, integrity and reputation, rience in the context of the needs asa of the Board whole. needs of the context in the rience establishedinaccordance Section with 3(a)(58)(A) of ting Committee met two appropriate and considering the mix of minating Committee will minating then Committee e Board, as well as director nominees d toserve as members oftheBoard occupation oremployment, (iii) occupation e session with the Company’s SEC. This standingcommittee, of the Nominating Committee Committee Nominating the of nd (iii) meets quarterly with whom is an “independent times. Thetimes. Nominating c
PROXY STATEMENT d mmittee members to executive officers of the the of officers executive to non-employee directors of the of the directorsnon-employee
each of these co each of these together with the full Board, full determineswith togetherthe med Executive Officers of the Company of the Company Officers Executive med y’s Compensation Committee or Board of or Board Committee Compensation y’s e Compensation Committee recommends recommends Committee Compensation e and the Bank, did not serve as a member of a member as serve did not Bank, and the
which consists solely of adoptedcopyA ofbyofBoard Company’s Directors. the s mission, goals and objectives. objectives. and goals s mission, 016, the Compensation Committee met two times. The two times. met Committee 016, Compensation the Horton. As indicated above, above, As indicated Horton. try salary surveys and the recommendations of management management of recommendations the and surveys salary try act andhaveact individualswho skills, experience and retain the s of the Company and the Bank, including the Chief Executive Executive Chief the including Bank, the and Company the of s e Company. All compensation paid All compensation e Company. 10
and the Board of Directors of the Bank are comprised of the same persons. persons. same the of comprised are Bank the of Directors of Board the and t ont ExecutiveCompensation”). Th employed any member of the Compan member any employed Chief Executive Officer and the other Na other the Officer and Executive Chief the Bank to meet the Company’ the meet to Bank the REPORT THE OF COMMITTEE COMPENSATION t andofExecutive Chief the Company Officer ecutive compensation. The Compensation Committee, Committee, Compensation The compensation. ecutive
ilosophyand Objectives The Compensation Committee,responsiblewithdesigningis togetherfull the for Board, the compensationand Company of Directors of The the Board
Bank. the of directors non-employee of consisted has Board the of Committee Compensation the 2002, August Since The Compensation Committee, together with the full Board, has designed the compensation and benefit plans for for plans benefit and compensation the designed has Board, full the with together Committee, The Compensation 2 31, December ended months twelve the During
The Compensation Committee Bank’s of the Directors,of Board Moore and Griesemer, Hellweg, of Messrs. Bank, is comprised on relies and employees no has Company The standards. listing NASDAQ the under defined as director” “independent an is th by received services limited the for Bank the of employees of the to the compensation adjustments Company is paid by the Bank. Bank. the by paid is Company director and officers executive employees, all for plans benefit indus measures, performance of review on its based Officer, (See “Repor compensation concerning Companyother any information reasonablyby requestedNominations the stockholders Company. from bewill considered nominations. other all as criteria same the using evaluated and Committee Compensation when recommendations, other makes and performance, Bank’s the and performance individual of assessment its upon based Committee Compensation the by directly engaged be may consultants Independent Directors. of Board full the to appropriate, ex Company’s the evaluate to
and to manage the Company and and Company the manage to and Mr. Burke, the current Presiden current the Mr. Burke, Participation Insider and Interlocks Committee Compensation theCompensation onCommittee the ofserved 2016. Compensationduring theexecutive No Committee officer Company or that company of any Board of Directors Directors. ANALYSIS AND DISCUSSION COMPENSATION all employees, executivedirectorsorder and officers in attr to work ethic to provide a coordinated work forcewill effectivelythat out and the carry efficiently adopted policiesbyBoar the Ph Compensation Overall the compensation of all other officers.Compensation The Committee delegatemay authority its subcommittee to a of the Committee. Compensation CompensationCommittee operatesunder writtencharter formal a Statement. Proxy to this AppendixB included is Charter theCommittee as Compensation
PROXY STATEMENT
the Company’s exec Executive Committee of the Bank recommends all compensation and benefit plans to the full Board for approval annually. savings medicaldeferred plan, the long-term interests of executives and stockholders. compensation to attractandretain talented primarily in the form of restricted stock awards. We believe that our stock award programs are an important component of of compensation. a level to specific factors tie any to attempt Committee evalua Compensation The industry. the companies within
materiallynot did alterstructure policies or the forNEO’s the compensation for 2017. or 2016 Co this in described factors the other and consideration on vote advisory ex the 2016 regarding executive compensation, including the non-binding ad vote). pay” advisory proposal on the compensation of the Named Executive Say on Pay of 2016 Consideration executive officer and the salary compared to resultsatcomparable comp Bank over themost recentlycompleted fis executive officer andfees fortheBoard. compensation statistics basedon our assetsize,makes cost of
● ● ● ● Competition. The Committee believes that compensatio Accountability for Individual for the be Performance.partIndividual tied Accountability performance to individual’s should in to Compensation Alignment with Stockholder Interests. Compensation should be tied in part to the Company’s stock performance to in financial Company’s tied be part the should Compensation Performance. Business for Accountability Company. Company. stockholders. long-termsuch incentives through reflect individual contributions to the Company’s performance. p Company can attract, retain and The Compensation Committee is guided by the following four key principles in determining the compensation of compensation the indetermining principles four key following by the isguided Committee Compensation The All executive officers may participate on an equal, non-discriminatory basis in the Bank’s contributory 401(k) tax- The Compensation Committee offers long-term incentives for executive officers and other management personnel To determine compensatio the The Board and the Compensation Committee pay careful attention to communications received from shareholders non-binding the approved shareholders of voting 94.75% meeting of shareholders, annual 2016 Company’s the At erformance, sothatexecutives are
Compensation Philosophy and Objectives utive officers: ecutive compensation butecutive specific notfor 2016 insurance plan, long-term disability plan and group life insurance plan. The Compensation Compensation The plan. life insurance plan and group long-termplan, disability insurance compensation levels ofeach executive officer
n of executive officers and directors, th motivate talented personnel. The Compensation Committee then review executives, provide anincentive for long-t anies withinthe industry, and (ii)th as restricted stock, to align the executive’s interests with those of the interests the withCompany’s of those executive’s stock,the as to restricted align cal year(includingReturn on Assets held accountable through their compen
mpensation Discussion and and mpensationAnalysis, Discussion Compensation the Committee 11 11 visory vote. The Company carefully considered the result of result the considered carefully Company The vote. visory Officers (or “NEOs”), (commonly referred to as a “say-on- living adjustments, and estab n should reflect thecomp tes all factors subjectively in the sense that they do not that the sense in tes subjectively all factors e Compensation Committ e Compensation e responsibilitiesand performance ofeach compared to like positions at comparable compensation decisions. Based on this , Return on Equity,assetquality,etc.) ermcorporate performance, and to align s financial (i) the performance ofthe sation forthe performance ofthe lishes salaryranges foreach lishes etitive marketplace,etitive sothe ee reviews industry
PROXY STATEMENT of the Board of Directors Directors of Board the of s review was designed s to review y’s executives to take any to y’s executives nd realized and unrealized nd realized ts, including the performance performance the including ts, intenance of the compensation of compensation the intenance of the Compensation Committee Committee of the Compensation any faces that could threaten its value. These risks risks These value. its threaten that could any faces Companyor the Bank. specifically requested to do so by the Chairman of the Chairman by the do so to requested specifically t, thet, Compensation Committee compensation in the aggregate to be reasonable and not and reasonable be to aggregate in the compensation geographic a locationsimilar financial and comparable with d encourage any of the Compan the of any encourage d ld not replace, or override, override, ma or not replace, ld d. The CEO is not a member not a member is CEO d. The ponents, including accumulated a accumulated including ponents, nts. The Compensation Committee’ Compensation nts. The 12 centive compensation arrangemen compensation centive tive awards and evaluated the relationship between the Company's Company's the between relationship the evaluated and awards tive discussedCompensationDiscussion Analysisand the included thisin tive Officer (the “CEO”) and other NEOs is recommended by the the by recommended is NEOs other and “CEO”) (the Officer tive n inton consideration thein Committee’s decisions.
reaten the value of the the of value the reaten ied the risks that the Comp the that risks ied the
O may act as a key discussion partner with the Compensation Committee members to to members Committee Compensation the with partner discussion key act a as may O ay with the Company, but shou but Company, with ay the The compensation of the Chief Execu Chief of the compensation The The Compensation Committee has reviewed all componentsof the CEO’s andNEOs compensation,other the environmen financial and economic current the of view In TheCompensation Committee reviewed and identif members Committee The
risk technology and Information Credit risk risk Liquidity risk rate Interest risk Market Fiduciary/litigationrisk Operation/transactionalrisk ● ● ● ● ● ● ●
Compensation Committee with final approval from the fullCommitteeCompensation Boar approval from with final and does not attend any Compensation Committee meetings unless unless Committee meetings Compensation any not attend does and The CE Committee. Compensation provides also CEO The direction. strategic our and environment market the context, business regarding information provide NEOs, the for compensation and evaluations performance individual on Committee Compensation the to recommendations otherthan himself.The Compensation providestrives Committee compensation to total that alignedis and competitive with of group based a peer on LLC, ChaseCompGroup, consultant, compensation by its 2016 in data compiled compensation publicly-tradedselected withincompanies banking the industry, performance.peerThe group provides referencea point when making decisionspay and benchmarking short-term and long- by augmented analysis, this on based range a reflect packages compensation The mechanics. and awards plan incentive term below described plans equity various the under Grants Company. the and officer executive individual the of performance the st to incentive long-term provide Reportof Executive Compensation group. the peer from range established on this Based awards. stock restricted and options stock unrealized and realized and accumulated bonus, salary, including review, total theNEOs other the Committee and finds CEO’s total NEOs and CEO’s the of component any considers Committee Compensation the when that noted be should It excessive. of all the com mix and amounts the aggregate compensation, take are awards, stock restricted and options stock COMMITTEE COMPENSATION REPORT Board the to recommended Committee Compensation the discussion, and review such on Based management. with Statement ofDirectors thethat Compensation DiscussionAnalysisand includedbe this in Statement for withfiling the SEC.
has reviewed the design and operation of the Company's in Company's the of operation and design the reviewed has objectivestargetusedand connectionlevelsin with incen arrangeme these and practices and policies management risk woul program of the compensation any aspect whether assess unnecessary or inappropriate risks that could th could that risks inappropriate or unnecessary
include, but are notbutare include, to, following:limited the
PROXY STATEMENT
ispresented for both officers. on June 27,2016asthe replacement for H. Michael Mattson, wh executive officer received annual compensation that exceeded $10 (1) (1) During the fiscal year ended December 31 Officer (“CCO”) and the Chief Operating Officer (“COO”). Thes ChiefOfficer Financial CEO,the indicated (“ by the periods Summary Compensation Table Executive Officers have been aligned with the interests of our stockholders. retention objectives,and our stockownership guidelines have be business plan, our mix of equity-based awards has been allocat contained in our long-term incentivecompen regard, the performance objectives contained in our annual incentive compensation plan have been balanced with those information on executive compensation design and administrative V/L 2015 187,833 38,000 47,167 2016 194,166 2015 165,833 54,000 EVP/COO 17,179 37,995 20,396 2016 172,333 RobesonRobin 36,049 17,175 - EVP/CCO 6,832 BiserSheri 87,575 2016 2015 168,333 EVP/CLO 17,125 20,474 PulsCharles H. - 17,130 2015 180,000 36,000 EVP/CLO 35,987 2016 105,461 MattsonH.Michael 2016 184,166 62,000 36,000 EVP/CFO CarterPeters 2015 300,600 47,846 63,601 2016 $ 306,866 President/CEO $ 61,000 $ 47,850 BurkeA. Shaun Name andPrincipal
● ● ● ● ● Position Year Fraud risk Financial risk Reputation risk Environmental risk risk Compliance
The following table sets forth information with respect to the compensation awarded to, paid to the to orfor following earned sets totable respect compensation awardedto,The forth with paid the information THE COMPENSATION COMMITTEE THE The Compensation Committee also reviewed and discusse N o director fees were paid to Mr. Bu 04 7,8 2,8 3,1 - 2014 176,583 23,580 32,116 - 2014 149,638 10,196 24,496 2014 164,625 10,235 26,937 2014 180,000 17,990 21,006 2014 300,600 31,796 60,422 Salary Salary (1) Bonus
(2) , 2016, no other person served as the CE
Awards Stock sation plan to ensure that both area both that ensure to plan sation (3) rke for any of the years presented. Option
- $ $ ------Awards - - - - David T. Moore Greg A. Horton Kurt D. Hellweg John F. Griesemer - - -
13 13
CFO”),theOfficer ChiefLending (“CLO”),Chiefthe Credit Compensation Incentive Plan Non-Equity Non-Equity e executive officers are collectively referred to as the NEOs. ed to ensure an appropriate appropriate an ensure to ed o retired effective June 30, 2016. Thus, only a partial year year a partial only Thus, 2016. 30, June effective retired o 0,000. Mr. H. Charles Puls, CLO, began his employment en established to ensure that the interests of our Senior the interests of Senior that our to ensure established en features that could induce exce d materialson compensationd ri ------$ ------
Compensation Nonqualified Deferred ligned and consistent with our long-term our consistent with and ligned O or CFO of the Company, and no other ,4() 210,449 7,041(8) - 217,381 11,449(6) 264,827 - 12,840(5) - ,8() 295,447 9,286(9) - 98,132 3,725(7) - 295,875 13,709(5) 426,667 431,796 14,620(4) - 16,080(4) $ - - $ ,1() 280,513 7,513(9) - ,8() 233,137 7,580(8) - 130,164 7,573(6) - 1366 213,113 11,316(6) 231,262 - 12,266(5) 411,970 - 19,152(4) - ,6() 239,342 7,063(9) ,8() 190,316 5,986(8) All Other All Compensation combination of incentive and incentive of combination
sk assessment, including ssive this risktaking. In
Total
Compensation
PROXY STATEMENT
r r r r f r – $10.90, respectively; 24 months base pay. Such Such pay. base 24 months in controlCompany,of the ricted stock awarded to each stock awarded ricted officer other than Mr. Burke Mr. Burke than other officer
are grant price of are grant ch severance would be made in periodic periodic in made be would severance ch Change-in-Control ents$5,480, of $5,306 and $10,004, respectively,fo t Agreements with the NEOs (including amendmentsNEOs (including with the Agreements t pay the officer severancein the event theofficer’s ares and grant price of rest of price grant and ares rther extended or earlier terminated pursuant to its terms, its pursuantto terminated orrtherearlier extended provides that is eligible thetoofficer participate in the ice of $10.90; Mattson:Mr. 2016 – 1,142 shares at a pe with established ExecutiveIncentive CompensationAnnual surance benefit plans made available to executive-level to executive-level made available plans benefit surance into an employment agreement with the new CLO H. Charles intowith the an employment agreement new CLO H. Charles 14 release and waiver of claims in favor of the Company. Company. in favorthe of ofclaims and waiver release the employment agreement), each agreement), the employment 4.79; 2014 – 2,247 shares at a per sh per a at shares 2,247 – 2014 4.79; Upon Termination or Upon Termination rke would receive 36 months base pay. Su receive 36 months rke would share grant price$15.00; of 2015–1,384 per shares at a grant share price $14.79; of 2014 - 2,471 shares at a 1,379 – 2015 $15.00; of price grant share per a at shares 1,145 – 2016 Biser: Ms. $10.90; of price grant share per at shares of $1 share grant price a per contribution. matching 401(k) Company’s the and Ms. Robeson:2016 – 2,533 sharesper at a grant share of price $15.00; 2015–3,189 shares per at a share grantprice of $14.79; 2014 – 2,946shares at pera sharegrant price of $10.90.The restricted stockgrants clif country dues. club country dues. club vest three years after the grant date. date. grant the after years three vest country dues. club 4,300 shares at a per share grant price of $14.79; 2014 - 5,543 shares at a per share grant price of $10.90; Mr. $10.90; of price grant share per a at shares 5,543 - 2014 $14.79; of price grant share per a at shares 4,300 Peters:20162,400 per– a shares share at grant price $15.00; of 2015–2,433 shares at a pershare grant price of $14.79; 2014 – 1,927 shares at a per share grant pr Plans. Plans. for the Company’s 401(k) matching contribution. contribution. matching 401(k) Company’s the for forthe Company’s 401(k) matchingcontribution and payments of$2,670, $4,716$4,731,and respectively, fo club dues to Mr. Puls in 2016. 2016. in Puls Mr. to dues club for the Company’s401(k) matching contribution and paym forthe Company’s 401(k) matchingcontribution and payments of$4,903, $4,920$4,646,and respectively, fo Amounts represent the aggregate grant date fair value computed in accordance with Accounting Standards Accounting with accordance in computed value fair date grant aggregate the represent Amounts Codification Topic 718 (“ASC Topic 718”) of time-vestedrestricted granted. stock No assumptions were sh of number The value. fair the determine to necessary of the executives was as follows: Mr. Burke: 2016– 3,190 shares per at a sharegrant of price $15.00; 2015 On March 24, 2014, the Company entered into Employmen into entered Company the 2014, 24, March On Each employment agreement obligates the Company to to Company obligates the agreement Each employment In event the of involuntary termination after a change without cause 12 months within (2) (2) accordance in NEOs to awarded were bonuses Cash (9) Amount includes payments to Ms. Robesonof $9,286, $7,513 and $7,063 in 2016, 2015 and 2014, respectively, (6) Amountincludes payments of $4,903, $6,733 $6,585 2016,and 20152014,in and respectively, MattsontoMr. (7) (7) country for $2,025 and contribution matching 401(k) Company’s the for $1,700 of payments includes Amount (4) (4) Burke Mr. to respectively, 2014, and 2015 2016, in $9,148 and $9,314 $10,600, of payments includes Amount (5) Peters Mr. to respectively, 2014, and 2015 2016, in $7,620 and $7,920 $8,806, of payments includes Amount (3) (3) 2014. and 2015 2016, in granted awards stock restricted to related compensation represents column This (8) Amountincludes payments of $7,580, $7,041 $5,9862016, and 2015in 2014, and respectively, BiserMs.to fo
Payments Potential Agreements, Employment dated June2016). On2016, June27, the Company entered fu unless year, one of term a has agreement employment Each Puls. and officer the to payable base salary a minimum forth sets and Company’s bonus, incentive, health retirement, and in other employees. cause without termination involuntary officer’s the of event the In cause. without Company the by terminated is employment in defined (as in control of the Company a change to prior receive would Mr. Burke pay. base 12 months receive would Mr. Burke than other officer each claims of waiver and release a executing officer the upon conditioned is and sum lump single a in made be would severance in favorof theCompany.
would receive 24 months base pay. Mr. Bu Mr. pay. base months 24 receive would installmentsand conditionedis upon executing the officer a
PROXY STATEMENT
(100%). Onehundredpercentof the amount of bonus being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum Company’s CFO, for 2016. Pursuant to this plan, a maximum amount of 50% of base pay may be paid to Mr. Peters, with underthis plan. (iv) non-performing assets to average total each award level areas follows: (i) revenue gr achieved. The four performance measurements ofthe Company percent of the bonus amount will be paid incash. For any amount being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum (100%). One hundred 2016. Pursuant to this plan, a maximum amount of 50% of base pay maybe paid to Mr. Burke, with the amount of bonus below. discussed further are which year 2016, calendar the for NEOs in 2017 to months in the case of Mr. Burke) following the officer’s termination of employment. information during his or her employment or to solicit the Company’s employees or customers for a period of 12 months (24 (iii) efficiency ratio (20%); and (iv) pre-tax net income (30%). income net (iv)pre-tax and (20%); ratio efficiency (iii) to eachmeasurement) applicabletoeach awar threshold level of performance must be achieved. The four performance measurements of the Company (and the weight given (100%). Onehundredpercentof the amount of bonus being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum Company’s COO, for 2016. Pursuant to this plan, a maximum amount of 50% of base pay may be paid to Ms. Robeson, with this under is paid plan. this under is paid plan. growth and (33.33%), (iii)deposit (iii) efficiency ratio (20%); and (iv) pre-tax net income (30%). income net (iv)pre-tax and (20%); ratio efficiency (iii) to eachmeasurement) applicabletoeach awar threshold level of performance must be achieved. The four performance measurements of the Company (and the weight given given to each measurement) applicable to (100%). Onehundredpercentof amount of bonus being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum Company’s CCO, for 2016. Pursuant to this plan, a maximum amount of 50% of base pay may be paid to Ms. Biser, with the this under is paid plan. the threshold level of performance must be achieved. The thr maximumhundred perc (100%). One Puls, with the amount of bonus being based on three possible leve Mr. Puls, the Company’s CLO, for 2016. Pursuant to this plan, a maximum amount of 25% of base pay may be paid to Mr. be satisfied before an award is paid under this plan. plan. this under an award is paid satisfied before be netno (iv) income(iii) pre-tax and (30%); to eachmeasurement) applicabletoeach awar threshold level of performance must be achieved. The four performance measurements of the Company (and the weight given The Compensation Committee approved an The Compensation Committee approved an incentive compensation CEO, for Company’s plan for Mr. the compensation Burke, an incentive approved Committee Compensation The comp incentive into the entered Company 2016, On June 1, As acondition ofentering into the em The Compensation Committee approved an incentive compensation arrangement with respect to Ms. Robeson, the the to Ms. with respect Robeson, arrangement compensation an incentive approved Committee Compensation The The Compensation Committee approved an On June 27, 2016, the Compensation Co Compensation the June 27, 2016, On pre-tax net income (33.33%). Certain criteria, Certain net income pre-tax (33.33%). the bonus amount will be paid incash.For an the bonus amount will be paid incash.For an the bonus amount will be paid incash.For an ent of the bonus amount will be paid in cash. n-performing assets to average n-performingtotal assets average assets to assets (20%). Certain criteria, however, must be satisfied before an award is paid each award levelareas follows: (i)net d level areas follows:(i) revenue growth(30%); (ii) net interest margin (20%); d level areas follows:(i) revenue growth(30%); (ii) net interest margin (20%); d level areas follows:(i) revenue growth(20%); (ii) net interest margin (20%); owth (20%); (ii) net intere st margin (20%);pre-taxincome (iii) net (40%);and ployment agreement, each officer hasag mmittee approved an incentive compensation arrangement with respect to incentive compensation arrangement with arrangement with compensation torespect Mr. incentive Peters, the incentive compensation arrangement with respect to Ms.Biser,the withrespect arrangement compensation incentive 15 15 ee performance measurements of
Certaincriteria, must however, Certaincriteria, must however, (and the weight given to each ls of incentiveawards;ls of thres to be paid, the thresholdto bethe paid, level ofperformancemust be ensation arrangements with however, must be satisfied before an award beforemust an satisfied however, be For any amount to be paid under this plan, y amount to be paid under this plan, the y amount to be paid under this plan, the y amount to be paid under this plan, the loan growth (33.33%),(ii)commercial (30%). Certain criteria, however, must must criteria, (30%). Certain however, reed notto divulg hold (25%);targ the Company (and the weight the weight (and Company the be satisfied before an award be satisfied before an award measurement) applicableto respect to bonuses payable payable to bonuses respect eany confidential et (50%);and
PROXY STATEMENT
r
Equity or Other Other or Awards: Awards: Have Not Have Marketor RightsThat Unearned of Unearned Shares,Units Vested ($)(6) Payout Value Value Payout Incentive Plan Incentive nk of $830 per nk of $830
committee or committee memberships STOCK AWARDS STOCK Equity Awards: Awards: Unearned Unearned Vested (#) Number of of Number Shares, Units Incentive Plan Incentive That Have Not Not Have That or Other Rights Rights Other or
ensation from the Ba ensation from years 2016,2015, and2014, restricted additional $170 monthly fee in addition addition in fee monthly $170 additional Date Date Option Expiration
Board, receives an additional $340 monthly fee. The The fee. $340 monthly additional receives an Board, ors will receive fees for fees ors will receive Price Price Option Exercise
- - 28.78 1/2/2018 - $ $ - 28.43 1/3/2017 $ (2) 13,033 276,039 - 5.08 1/4/2020 - - 28.78 1/2/2018 $ (3) 6,760 143,177 - - 5.40 2/9/2019 $ (4) 4,771 101,050 - - - - $ (5) 8,668 183,588
16
(#) (#) Equity Options Incentive Unearned Unearned Securities Number of of Number Underlying Underlying Unexercised er of the Board received cash comp received Board er of the Plan Awards: PlanAwards: y’s 2015y’s Equity DuringPlan. fiscal
awards at a per share price of $21.18 of price share per a at awards ttee. The Chairman of the OPTION AWARDS OPTION mpensation, each non-employee member of member non-employee each mpensation, co cash the to addition In monthly. e from the Company. Direct the Company. from Securities Underlying Underlying Options (#) Unexercised Unexercised Unexercisable Number of d at Fiscal Year End 2016 atEnd Fiscal Year
Securities Underlying Underlying Options (#) Exercisable Exercisable Unexercise
of Number During 2016, each non-employee memb During 2016, each non-employee The following the table option summarizes has and stock awards thewhichto made Company were NEOs the Directors may participate in the Compan the in participate may Directors holding period upon vesting and exercise, unless the employment relationship between the Company and him is and him Company the between relationship employment the unless and exercise, vesting upon period holding terminated. Name and Name
PrincipalPosition
Sheri Biser Biser Sheri EVP/CCO Robeson Robin EVP/COO 1,500 5,000 - - - - Shaun Burke A. President/CEO(1) Peters Carter 10,000 10,000 EVP/CFO 5,000 - - - 2016. 31, of as December outstanding Outstanding Equity Awards Equity Awards Outstanding (1) Shares ofstock purchased pursuant optionsto granted Mr.Burke to 2005in (20,000 shares) are subject to 5-yeaa (2) (2) (3) 2/25/19 – 3,190 2/2/18; – 4,300 2/4/17; – 5,543 follows: as vest awards stock Restricted (4) 2/25/19 – 2,400 2/2/18; – 2,433 2/4/17; – 1,927 follows: as vest awards stock Restricted (5) 2/25/19 – 1,145 2/2/18; – 1,379 2/4/17; – 2,247 follows: as vest awards stock Restricted (6) 2/25/19 – 2,533 2/2/18; – 3,189 2/3/17; – 2,946 follows: as vest awards stock Restricted stock unvested aggregate Represents Compensation Directors’ payabl attended, meeting board each Bank compensation equity receives the Board attendance at committee meetings comprised of$200 per meetingExecutive, for the Audit and Compensation Committees meeting for any other commi $125 per and Committeesan receives Compensation and g Buildin Audit, the of each of Chairman fee. meeting per regular the to stock awards of 1,167, 1,183, and 1,606, respectively, were granted to each independent, non-employee director to provide provide to director non-employee independent, each to granted were respectively, 1,606, and 1,183, 1,167, of awards stock equity compensation thefrom Company.Annual equity compensationdetermined is discretion at theof the Compensation Committee.
PROXY STATEMENT
2014 for serving as a director
Horton Greg Moore David GriesemerJohn James Sivils Tim Rosenbury Ostergren Gregory Hellweg Kurt James Batten Barham Jack Gibson Don
(1) This column represents equity compensation fromComp compensation the equity represents column This (1) stock awards granted under the 2015 Equity Plan and 2010 Equity Plan. The compensation for 2016 per director o $17,505 represents 1,606 shares granted at a per share price of $10.90. o director per 2014 for compensation The $14.79. of price share per at a granted shares 1,183 represents $17,497 o director per 2015 for compensation The $15.00. of price share per at a granted shares 1,167 represents $17,505 The following table sets fort Name Year of the Company and the Bank. h information with respect to the compensatio 04 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2016 2014 2015 2014 2015 06 2016 06 2016 $ 2016 06 2016 06 2016 06 2016 2016 06 2016 06 2016
or Paid in Cash ($) Cash ($) Paid in or Fees EarnedFees 17 17 any and is the aggregate grant 13,080 13,080 10,975 13,425 13,085 10,800 12,870 11,175 12,740 12,000 12,695 12,640 12,355 14,430 11,615 14,620 12,685 12,685 14,045 14,045 15,150 15,150 11,800 11,800 5,975 5,975 $ 4,450 4,450 4,700 7,870 7,870 875 ------
StockAwards n received in fiscal ($)(1) 17,505 17,505 17,505 17,505 17,505 $ 17,497 17,497 17,505 17,497 17,505 17,497 17,505 17,497 17,505 17,497 17,505 17,497 17,505 17,505 17,497 17,505 17,505 17,505 17,505 17,505 17,505 17,505 17,505 17,505 17,505 date fair value of restricted fair value date ------
years 2016 2015, and Compensation ($) Total Total 30,590 30,590 23,480 23,480 21,955 21,955 30,577 30,577 28,480 30,922 28,305 30,367 28,680 30,237 29,505 30,192 30,145 29,852 31,935 29,120 32,117 31,550 31,550 25,375 25,375 29,305 29,305 32,655 32,655 30,190 30,190 4,700 875 ------
f f f
PROXY STATEMENT
- ce Type
any’s total assets at year at assets total any’s
st be automatically deducted automatically be st the Bank’sof costfunds with at 3/31/17 3/31/17 at 5% of the Company’s capital ofthe Company’s 5% Interest Rate 1.00% Home Mortgage
408 408 1.00% Home Mortgage ployment is terminated for reasons other 3/31/17 3/31/17 Principal Balance as of as of Balance $ 861,063 1.00% Home Mortgage $ 751,030 1.00% Home Mortgage $ 350,899 1.00% Home Mortgage $ - 1.00% Home Mortgage $ 353,980 1.00% Home Mortgage $ 368,120 1.00% Home Mortgage $ - 1.00% Home Mortgage $ 142,470 1.00% Home Mortgage
- - - - - t of the average of the Comp the of average the of t probation period eligibleare toparticipate in thisLoan the Note ceases to be the primary or secondary residen secondary or primary the be to ceases Note the the greater of $25,000 or egate indebtedness to thebelow Company oron the Bank stable rate mortgage priced at priced mortgage stable rate nk’s all-in cost of funds with a 1% floor. The offloor. 1% be will index funds nk’s a with cost all-in provides loans to its officers, directors, and employees to to anddirectors, providesloans employees officers, to its rty closing costs. Payments mu Payments costs. closing rty The maximum adjustment per year is 2% with a 6% lifetime lifetime 6% a with 2% is year per adjustment maximum The Amount 18 respect to the Loan Program, all loans provided under the Loan Loan the under provided loans all Program, Loan the to respect Outstanding Since 01/01/16 Since 01/01/16 Largest Principal Principal Largest
$ $ 431,552 410,475 ce January 1, 2016Januaryce 1, notedexcept as the in following table. d Transactions with Certain Related Persons Related Certain with Transactions d Loan Loan Date of of Date $120,000 or (ii) one percen or if the property securing property the if or note/amortization. If the borrower’s em borrower’s the If note/amortization. Director Director 8/14/2008 $ 789,927 & Director 1/14/2011 $ $ 247,278 236, President, CEO President, Name Position Name Loans made to a director or executive officer in excess of officer in excess or executive to a director made Loans No Directors, Executive or their Officers affiliates had aggr Kurt Hellwegg Kurt Hellwegg Don M. Gibson Director 9/12/2008 $ 148,821 James R. Batten Batten R. James Director 10/27/2008 Carter M. Peters Peters M. Carter EVP, CFO 7/18/2016 $ Carter M. Peters Peters M. Carter EVP, CFO 6/9/2008 $ 439,161 (Shaun A. Burke) (Shaun A. Burke) James L. Sivils III III James L. Sivils Director 6/1/2014 $ 382,720 John F. Griesemer Director 5/9/2016 $ Henry Charles Puls Henry Charles Puls EVP, CLO 8/22/2016 $ The Burke Family Trust George Timothy Rosenbury George Timothy Rosenbury Director 6/19/2008 $ 159,747
Indebtedness of Management and Directors an and of Indebtedness Directors Management the of members disinterested the of a majority by advance in approved be must $500,000) of maximum a to (up surplus and Boardof Directors. The Bank, like other financial institutions, and directors Bank eligible to benefit additional an As loans. consumer as well as residences personal refinance or purchase provides Program Loan The Program”). “Loan (the program loan mortgage employee an offers Bank the employees, adju one-year a rates, namely interest at favorable loans mortgage a 1% floor. The purpose of the loan must be to purchase or refinance a primary or secondary residence (i.e., no investment investment no (i.e., residence or secondary primary a refinance or purchase to be must loan the of purpose The a 1% floor. 30-day the completed have employees that full-time All properties). secondary to standard qualify must which disclosures, financial and application standard includes Underwriting Program. marketrequirements. The responsibleis borrower for third all pa
from an account maintained at the Bank. The index rate is the an is the Ba rate at account Bank.maintained from The index dayscalculationclosing.month-end the prior45within last to maximum. Each loan has up to a 30-year a to up has loan Each maximum. than normal retirement, disability or death, disability retirement, normal than end for the last completed fiscal year, at any time sin time any at year, fiscal completed last the for end the Note.thepayment will adjust The the followingmonth the amortize to outstandingusingNote balance new interest of the the with andrate rate remaininginterestthe the than Other term. business, of course ordinary the in made been have Officers Executive and Directors to provided loans other and any Program onand those ofas terms substantially prevailing collateral the transactions same comparable the and,at time, opinion in the of management of thenot do Company, involve thannormal more of therisk collectability or present other unfavorable features. (i) of lesser the exceeding loans rate market of the Employee, the interest rate will adjustwill originalprovision pursuant that tobeenof rate effect would to in rate have the the the interest of Employee, the
PROXY STATEMENT
PROPOSALEXECUTIVE ON COMPENSATION. future executive compensation arrangements. The Compensation Committee andthe Board may, however, take shall Further, the vote of the Board. fiduciary duty additional Compensation Committee andmay not beconstrued as overruling adecision by the Board or ascreating or implying any narrative disclosure) and related material in th disclosed in the Compensation Discussion and Analysis, an at th will be proposal presented As following a the result, compensationCompany’s of name the basis, non-binding and an advisory on approve, to to vote stockholders Company’s the enable SEC rules corresponding into such filing. such into inco the Act, notwithstanding Exchange the SEC under the with Report the of the CommitteeAudit by refe be shall incorporated qualifies as an Audit Committee Financial Expert as defined by defined under Rule 5605(a)(2) and qualified pursuant to Rule 5605(c)(2)(A). The Board has also determined that Mr. Moore directors isindependent under
auditors and the independent auditors have the opportunity to communicate with one another. registered public accounting firm and intern process and systems of internal control, (ii) monitor the independence and performance of the Company’s independent Effect of ProposalEffect of Background of the Proposal Proposal of the Background THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE OFTHE AVOTEFOR APPROVAL RECOMMENDS UNANIMOUSLY THE BOARDOFDIRECTORS theAsunder SECprovided be this willrules, not vote appro stockholders the that RESOLVED, Proposal The Dodd-Frank Wall Street Reform and Consumer Pr The primary duties and responsibilities of the Audit Committ the Audit of and responsibilities The primary duties The Audit Committee of the Board is composed of four di
ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION EXECUTIVE APPROVE TO VOTE (NON-BINDING) ADVISORY the MarketplaceRulesof Nasdaq. In particular d executive officers as disclosed in thisPr REPORT OF THE REPORT al auditors, and (iii) assure that manage e Company’s Proxy Statement for the Annual Meeting. SECOND PROPOSAL ve thecompensation of
e Annual Meeting in the form of the following resolution: resolution: following the in the forme Meeting of Annual AUDIT COMMITTEE 19 19 not affect any compensation paid or awarded to any executive. executive. to any awarded paid or affect any compensation not
d the compensation tables (together with the accompanying accompanying the with (together tables compensation d the
rporation by reference of this Report of the Audit Committee rence into the Company’s Annual Report on form 10-K filed filed 10-K form on Report Annual Company’s the into rence the rules and regulations of the the of regulations and rules the into account the outcome of the vote whenconsidering binding on the Company’s Board of Directors orthe Directors Board of Company’s the on binding otection Act of 2010 (the “Dodd-Frank Act”) and Act”) “Dodd-Frank (the 2010 of Act otection rectors. The Boardhasdetermrectors. ee are to (i) Company’see areto the monitor financial reporting
the Company’s named executive officers, as theexecutiveofficers, as Company’snamed oxy Statement in accord , each of these directors isindependent as ment, the Board of Directors, the internal SEC. Only this paragraph of SEC. paragraph Only this ined thateach of these ance with SEC rules.
PROXY STATEMENT ces
ultation on accounting on ultation rendered and cons and rendered . The Audit Committee has concluded that that concluded has Committee Audit The . lidated statements financial with managementhas and sures and the letter from BKD, LLP, the Company’s Company’s BKD, LLP, the letter from the sures and and December 31, 2015, BKD, LLP, the Company’s Company’s the LLP, 2015, BKD, 31, December and mber 31, 2016, and $6,605 for the calendar year ended calendar $6,605 for the 2016, and 31, mber were $154,345were for the calendar year ended December31, g with the SEC. SEC. the with g ces renderedrelatedces tax compliance, to tax advice and tax policies or procedures relating to the pre-approval of servi of pre-approval the to relating procedures or policies e aggregate fees billed for thesebillede aggregateduring servicesfor fees these periods
professionalwork and ESOP services, compliance including 20
pendence as auditors of our financial statements. statements. financial our of auditors as pendence THE AUDIT COMMITTEE THE AUDIT Horton A. Greg Moore T. David Batten R. James Hellweg D. Kurt
ber 31, 2016 2016 31, for ber filin billed for assurance and related services related and assurance for billed consolidatedfinancial statements be included in the Company’s Annual Report on ndependent registered public accounting firm public accounting registered ndependent ded December 31, 2015. 2015. 31, ded December 0 for the calendar year ended December 31, 2015. 31, December ended year calendar the for 0 During the calendar years ended December 31, 2016 December years ended calendar During the and LLP BKD, by provided be to services non-audit permissible and audit all pre-approves Committee Audit The disclo written the received also has Committee Audit The to recommended Committee Audit the above, described review and discussions Committee’s Audit the upon Based TheCommittee has discussedandreviewed the audited conso December 2015. 31, December services, were $1,410 for the calendar year ended Dece ended year $1,410 for the calendar were services, planningwere$23,000 for calendar the year endedDecember 31, 2016 and $22,800 for the calendar year ended 2015. 31, December statements and reviews of quarterly financial statements statements quarterly financial of and reviews statements mattersotherwise not reported (a) in abovewere$4,070 for the calendar year endedDecember 31,$13,180and 2016 en year calendar the for 2016 and $146,98 and 2016
(b) fees Aggregate fees: Audit-related (a) (a) Audit Aggregatebilled fees: professional for fees renderedof audits for services financial annual the the Company’s (c) Tax fees: Aggregate fees billed servi for professional (d) All other fees: Aggregatebilledfees for all other
PRINCIPAL ACCOUNTANT AND FEES SERVICES ACCOUNTANT PRINCIPAL independent registered public accounting firm during these periods, provided various audit, audit related and non-audit non-audit and related audit audit, various provided periods, these during firm accounting public registered independent services,including tax, belowtheto forth Company. th are Set services: such of description and brief a the estimated fees for these services. There are no other specific no other are There fees for these services. the estimated LLP BKD, by rendered services non-audit and audit the whether considered Committee Audit The LLP. BKD, by performed compatiblewere with maintaining indeLLP’s BKD, discussed with BKD, LLP, the Company’s independent registered public accounting firm matters required to be discussed discussed be to required matters firm accounting public registered independent Company’s the LLP, BKD, with discussed Committees. Audit with Communications 1301, No. Standard by Auditing Accounting Company Public the of requirements applicable the by required firm, accounting public registered independent concerning Committee Audit the with communications accountant’s independent the regarding Board Oversight firm’s that firm accounting public registered independent the with has discussed Committee Audit The independence. with compatible is services non-audit of provision the whether considered has Committee Audit The independence. of the i maintaining the independence Company. the from independent is firm accounting public registered independent the audited that the Directors of the Board the for 10-K Decem fiscal Form ended year
PROXY STATEMENT
proxy statement and annual report, the stockholder must contact his or her broker, bank or other nominee. to householor her consent his of these proxy materials, eachstockholder one copy of the annual report and this Proxy Statement to such address. However, even if the broker has sent only one copy householding, he or shewas deemedhaveto consented toprocess. the foregoingIf the proceduresapply, the broker hassent materials isknownas“householding.” If th for each company in which they hold shares through that broker or bank. This practice of sending only one copy of proxy bank may have sent the stockholder a notice Secretary of the Company at th the Record Date. Any stockholder who has not received acopy of the annual report may obtain acopy by writing to the together with 2017, April 24, on will be mailed statements, financial that matter. on voting May 1, 2017, itisexpectedth discretion of the persons named in the accompanying proxy. If the Company did not have notice of amatter on or before intended that proxiesinthe accompanying fo ot any if Statement. However, Proxy inthis above described LLP. Bank, wasBKD, subsidiary, the its REGISTERED PUBLIC ACCOUNTING FIRM FOR TH FIRM ACCOUNTING PUBLIC REGISTERED THE RATIFICATION OF THEAPPOINTMENT OFBKD, LLP ASTHE COMPANY’S INDEPENDENT December 31, 2017. As part of fiscalfirm forthe Company yearending accounting the public of registered astheindependent BKD, LLPto continue to maketo a statement, if so desired, will beand independent registered public accounting firm. may investigate the reasons for stockholder rejection and may consider whether to retain BKD, LLP or to appoint another of the outcome of the vote on this proposal. If the stockholde The Au appointment. ratifysuch that itsstockholders requesting If a stockholder and other residents at the samemailing address own Common Stock in street name, the broker or including 31, 2016, December ended the period for to stockholders report annual Company’s the that is anticipated It The Board of Directors is not aware of The independent registered public acc THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS FOR A VOTE RECOMMENDS UNANIMOUSLY OFTHE COMPANY THE BOARDOFDIRECTORS
A representative of BKD, LLP will be pr be LLP will BKD, of A representative INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ACCOUNTING PUBLIC REGISTERED INDEPENDENT ding, or to request householdingto request ding, or at the persons named inthe acco e Company’s address as provided at the end of goodcorporate practice,the RATIFICATIONBKD, OF AS LLP In accordance withitscharte inthehouseholdshould receive aproxy thather hisor hous e stockholder did not respond thathe or available to respond to appropriate questions. questions. to appropriate to respond available rm thatarereceived from stockholders wi ounting firm forthe periodended D any business to come before the Annu esent at theesent Meeting. The Annual re THIRD PROPOSAL MISCELLANEOUS rs do not ratify the appointment, however, the Audit Committee Committee Audit the however, appointment, the ratify not rs do 21 21
E FISCAL YEAR ENDING DECEMBER 31, 2017. Audit CommitteeandtheCompan y’s Board of Directors are
reportannual andproxystatement will receiveonlyone ehold if a household is receiving multiple copies of the Company’s her matters properly come theher should meeting, before it is mpanying proxy willexercise dit Committee is not required to take any action as a result asaresult action any take to required Committee isnot dit this Proxy Statement, to all stockholders of record as of record all stockholders of Statement, to this Proxy r, the AuditCommittee hasselectedandappointed
the next section of this Proxy Statement.
ecember 31, 2016 fo card. If a stockholder wishes to revoke presentative will have an opportunity opportunity an have will presentative she did notwant toparticipate in al Meeting other than those matters ll be voted in ll thereof respect the voted in be discretionary authority when
r the Company and
PROXY STATEMENT
utive offices at 1341 W. 1341 at utive offices DATE UPON WRITTEN DATE UPON WRITTEN eeting, the proposal will not be eligible eligible be not will eeting, proposal the
ch proposal is received at the Company’s main office main Company’s at the received ch proposal is eceived at the Company’s exec the Company’s eceived at AS OF THE RECORD s proxy material, orsubmittedis proxy s material, for inclusion properlybutis
22 tween 60 days and 30 days prior to the m to the prior 30 days and days 60 tween STOCKHOLDER PROPOSALS STOCKHOLDER r proposal if notice of su notice proposal if r -4181, no later than December 25, 2017. 25, no -4181, later than December MISSOURI 65807-4181.MISSOURI oposal to take action at such meeting must be r be must such meeting action at take oposal to A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL THE FINANCIAL (INCLUDING 10-K ON FORM REPORT ANNUAL THE COMPANY’S A COPY OF of meeting annual year’s next at action take to proposal stockholder a of notice receives Company the event the In In order to be eligible for inclusion in the Company’s proxy materials for next year’s annual meeting of stockholders, stockholders, of meeting annual year’s next for materials proxy Company’s the in inclusion for eligible be to order In forpresentation thatat meeting. However, thanless if 31 days’ notice of annual the meeting providedis by the a Company, the by stockholders the to mailed was notice after days 10 than later no received be to have would proposal stockholder’s meeting. that for Company BE WILL SEC, THE WITH FILED AS 2016, 31, DECEMBER ENDED PERIOD THE FOR STATEMENTS) TO STOCKHOLDERS CHARGE WITHOUT FURNISHED Battlefield, Springfield, Missouri 65807 Missouri Springfield, Battlefield, stockholdersnotis submitted that Company’ inclusionfor the in excludedthe proxyfrom personsthe material, named in proxythe by sent the Company stockholdersits to intend to exercise stockholde on the vote discretion to their stockholder then 2018, 23 May on held is meeting annual year’s next If meeting. the to prior days 30 and days 60 between Company’s The 2018. 23, April and 2018 24, March between Company the to delivered be to have would proposals Certificate of Incorporationprovides notice thatof if a stockholder proposal to next take year’s at action annual is meeting office be main at the Company’s not received any stockholder pr any stockholder
Dated:April 24,2017 REQUEST TO VICKI LINDSAY, SECRETARY, GUARANTY FEDERAL BANCSHARES, INC., 1341 WEST WEST 1341 INC., BANCSHARES, FEDERAL GUARANTY SECRETARY, LINDSAY, VICKI TO REQUEST BATTLEFIELD, SPRINGFIELD,
PROXY STATEMENT
Committee Authority, Responsibilities and Process and Responsibilities Authority, Committee of theprovision Bylaws of the laws state (c) the or the of of Corporation, Delaware. authorized and empowered to adopt its own ru to adopt and empowered authorized meetings, notice, waiver of notice, and quorum and voting requir voting and quorum and notice, of waiver notice, meetings, regarding meetings (including meetings by conference telephone or similar communications equipment), action without of theminutes of eachmeeting and any ac minutes minutesthe the with meeting of file Committee of the Board, or if the Board chooses not to do vacancies, subject tothe qualification re judgment. The Board shall have and each of whom shall be free from any relationship that would interfere with the exercise of his or her independent minutes to be adequate kept of will cause each of whom shall be an independent director as defined Meetings and Composition Committee (iii) and Directors; of Board the to orappointment election members, criteria Board with consistent Guaranty Federal Bancshares, Inc. (the “Corporation”) for the
Purpose
. Access tothe Corporatio 2. Recommend to the Board the approp 1. . Recommend candidates (including incumbents) for election and appointment to the Board of Directors, 3. The Committee shall meetThe Committee least two at
The Committee shall have the following authority and responsibilities: responsibilities: and authority shall the following Committee have The Board, by the as appointed more threea chairperson) (including be comprised or of directors shall Committee The The Nominating Committee (t Corporation,or other personswh recruiting candidates for the Board. effectively. members in order to assess whether the Board has the appropriate tools to perform its oversight function committee and its of directors experience and ofskills mix the monitor shall Committee The whole. values, shared as communities and well as overall expe accounting, marketing,finance, re committeemeetings, stock ownership,specialized knowledge (such an understanding as of banking, and commitments (including charitable obligations), charitable (including commitments and integrity and reputation, independence, conflicts of interest, diversity, age, number of other directorships the nomination orappointment of directors, based on the following criteria: business experience, education, to set and the subject Bylaws inprovisions Corporation’sforth the relating to Incorporation Certificate of requests. as the Committee information pertinent such to provide Committee the of the power at any time he “Committee”) shall be appointed by th so, by a majority vote of the Committee. Committee. the of vote by a majority so, quirements ofthis Charter. The Committee G
approved by the Board; (ii) recommending all will its proceedings, report its at actions the meetingnext and Board wil the of UARANTY UARANTY tion taken by unanimous consent. TheCommittee isgoverned by the same rules n’sand torequest resourcesthatany di Nominating Committee Charter Nominating les of procedure not inconsistent with with (a inconsistent les of not procedure times annually or more timesor more annually frequently as ose advice and counsel are sought counselare ose advice and gulation and public policy) and a F
EDERAL riate size of the Board and assist in identifying, interviewing and interviewing assist identifying, Board and riate in the size of to change or replace themembersh by theNASDAQStock Market (t recommending to the Board Board direct to the recommending 23 23
the Board. Committee members will be furnished with copies copies members with will be furnished Committee the Board. B purpose of (i) identifying individuals qualified to serve as to serve qualified individuals identifying (i) of purpose ANCSHARES ements as are applicable to tenure on the the Board, on tenure rience in the context of the needs of the Board as the Board of of the needs context the rience in ,
I
NC .
e Board of Directors (the “Board”) of circumstances dictate. The Committee to the Board the director nominees for chairperson shall be designated by the b rectors, officers or ) any provision of this Charter, (b) any y the Committee, attend any meeting any attend y theCommittee, commitment totheCorporation’s he “NASDAQ”) listingstandards or nominees for each committee. committee. foreach nominees or ip of the Committee and to fill the Board.TheCommittee is attendance atBoardan employees ofthe APPENDIX A APPENDIX d a l
PROXY STATEMENT
f r f d or terminate one or more one or terminate corporationand Bylaws. the following steps: steps: following the such counsel orother advisersas it deems ttee deems appropriate and considering the mix the considering and appropriate deems ttee the authority to retain the authority propriate, be thepropriate, Corporation’sbe counsel,legal the Committee will review will the relevant information Committee ility and willingness to serve as a director. The director. a as serve to willingness ility and ation’sIn Certificate of have been addressed to the corporate secretary, an havebeen addressed secretary, corporate to the acancies on committees as necessary, and (ii) review (ii) and necessary, as on committees acancies ecommendation to the Board. The Committee may Committee The Board. the to ecommendation e search firm’s fees and retention terms, whichfees fees andretention terms, firm’s e search ment existingment Board The will Committee members. and evaluatedand otheusing criteria as all same the s, the Committee will conduct the will s, Committee thorough a search to ssignments and committee chairs on all committees o on chairs committee and ssignments tions the Committee will take will Committee the tions 24 propriate for the Board. Board. the for propriate e Corporation’se expense, ee in identifyingdirector candidatesotherwise andout carrying its Charter and recommend any proposed changes to the Board for approval. for Board the to changes proposed any recommend and Charter available to it and assess their continued ab continued their assess and it to available Committee will alsoperson’s assess such contributionof skills light and in mix of the experience ap deemed has Committee the then review selected candidates and make a r and make candidates selected review then candidates. identifying in management senior or members Board other from input seek ofskills and experience necessary to comple identify based candidates upon the criteria Commi ominations stockholders from will be considered Taking this into account, for each year’s nomina year’s each for account, into this Taking which comply Corporrequirements of the the with N nominations. fill v to committee members recommend and the Board, of this the adequacy reassess and shall be borne by the Corporation. Corporation. the by borne be shall responsibilities, retain, and may at th ap it Committee deems the if necessary (which may, Committ assist the to search firms responsibilities, including sole authority to approve th accountants or other advisers). The Committee shall have The Committee advisers). other or accountants a. With respect to nominating existingdirectors, b. With respect to nominationsdirector ofnew 5. nominations Review submitted by whichstockholders, 6. a committee Board the to recommend Annually (i) 4. Conduct or authorizeof studies or investigations within into matters the Committee’s scopeo
7. 8. delegateto and whensubcommittees authority appropriate. Form by the delegatedBoard. Committee toany expressly responsibilities other the duties or Perform
PROXY STATEMENT
● ORGANIZATION feesand retention terms. related approve to authority nece asitdetermines advisors and other counsel outside retain and regulations. The Committee shallmaintain free and open communication with Bankmanagement. The Committeemay listing requirements for NASDAQ Stock Market, Inc. issuers and any applicable Securities and Exchange Commission rules COMPOSITION development. ● responsibilities: and to limit th scope of are of activities the intended below not Committeecarrying out the in general The activities of recurring AND DUTIES RESPONSIBILITIES shall meet semi-annually, at least or more tothe reports regular making sche including Committee, the of forleadership responsible th as chair by appointed be member shall One ofthe Committee moreat least three or directors, each of membersCommittee shall be elected by the (the“Bank”)is responsible for human resource policies, sa The Compensation Committee(the “Committee”) of Guaranty Fede PURPOSE ● ●
Recommendadjustments tothecompensa Establish and provide oversight regarding the Bank’s compensation and benefit plans and a Review and approve base salary and all incentive compensati Establish and provide oversight of all incentive compensation plans and approve changes deemed appropriate and Board ofDirectors. individual performance and the Bank’s performance, and make other recommendations, when appropriate, to the full appropriate and consistent with consistent and appropriate regulations an and any other considerations th designated by the Committee, taking into account corporate and individual performance, as well as peer group practices consistent with regulations and sound compensation principles and practices. and practices. principles compensation sound and with regulations consistent
liaison with Bank management. The Committee Committee The with liaison Bank management. regular chairwillalsomaintain The Board. e Committee deems appropriate. COMPENSATION COMMITTEE CHARTERCOMPENSATION COMMITTEE whom shall satisfy the definition of indepe
frequently as the Committ Board of Directors annually. The membership ofThe the Directors annually. Committee of Board of consist shall tion of the President/Chief Executive Officer based upon its assessment o d sound compensation principles and practices. e Committee. The Committee shall have the following authority authority thefollowing shall have Committee The e Committee. 25 25 laries and benefits, compensatio laries and benefits, duling and presiding over meetings, preparing agendas, and agendas, preparing over meetings, presiding and duling ssary to carry out its duties. The Committee shall have sole sole Committee have The itsduties. shall carryout ssary to e Board of Directors an on an its oversight role are role described below. specified duties The its oversight on payments for other officers or employees of the Bank as ral Bancshares, Inc.(the “Company”) and Guaranty Bank ee considers necessary. ndent director as defined in any qualitati
n arrangements and executive andexecutive n arrangements nual basis. The chair shallbe chair The basis. nual p prove deemed changes APPENDIX B ve f
PROXY STATEMENT d d m
. and applicable other laws, lish, approve and recommen lish, approve ts, and change in control agreements asedcompensation. Estab b e Sarbanes-Oxley Act of 2002 e Sarbanes-Oxley ate to discharge to ate dutiesBank’s the at responsibilities its and onof its duties and responsibilities to a subcommittee of the 26 ased plans, which includes establishing, reviewing and approving and reviewing establishing, includes which plans, ased b other retention terms, all at theat all Bank’s retention expense. other terms, mber or chair of a Board committee. committee. Board a of chair or mber , review and assess the adequacy of this Charter to ensure compliance with any with compliance ensure to Charter of this the adequacy assess and , review
nce goals used to grant equity- grant to used goals nce
the rules or regulations promulgated by any Regulatory Authority. Authority. Regulatory any by promulgated regulations or rules the including compensation for service as a me a as service for compensation including regulations and rules relating to compensation arrangements for directors, CEO, and Executive Officers Executive and CEO, directors, for arrangements compensation to relating rules and regulations Presidentor equivalentposition. rules or regulations promulgated by any Regulatory Authority and, when appropriate, recommend any modifications to modifications any recommend appropriate, when and, Authority by any Regulatory promulgated regulations or rules approval. its for Board the Committee. with Bank management. management. Bank with appropriate,ofthat so the informed is the Committee’s Board activities. to the Stock Option Committee the grant and issuance of stock options, stock awards, and other equity awards, equity other and awards, stock options, stock of issuance and grant the Committee Option Stock the to necessary, where provisions plan interpreting plans, purchase stock Company’s the for discounts purchase establishing appropriate. deemed as time to time from or documents plan the in forth set as duties administrative other performing and comparison. market for all short- and long-term performa short-all and long-term Reportonto regularly Boardactivities its the suchwith recommendations otherand matters Committee dee the as may Makean annual report executiveon compensation forinclusion thein Company’s annual proxy statement requiredas by compensation, director of level appropriate the Board full the to recommend and compensation director Evaluate officers. and directors for guidelines ownership stock review periodically and Establish Monitor the Bank’s compliancewith the requirements of th The Committee in may, its discretion, delegateporti any behalfonof the Review Board, and elect, individualsproposedby Management hold to position the of Executive Vice Periodically,no but less than annually use group peer of the composition and philosophy provideoversight Establish,and theof review Bank’s compensation agreemen severance agreements, contractual approve all employment Review and equity- the for committee administrativ e the as Serve ● ● ● ● ● ● AUTHORITY AND RESOURCES ● ● ● ● ● The Committee shall authority have the and resources appropri expense, and may obtain advice from external legal, accounting, or other advisors. The Committee shall have the authority authority have the shall Committee The advisors. other or accounting, legal, external from advice obtain may and expense, toretain select and consultants to in the assist evaluationof executive compensation, the terminate of services to such any and fees consultant’s the approve to and consultant,
PROXY STATEMENT MANAGEMENT RESPONSIBILITIES or statementspresentedprepared or by: In performing their responsibilities, Committee members are entitle financial Bank’s the condition. assess whether the overall design and performance of the Bank Committee should receive data and analysis from Bank management compensation arrangements for all covered employees -- not solely senior executives -- are appropriately balanced. The ● design recommendations, monitoring, and assessment of incentive compensation arrangements and payouts: arrangements. Therefore, the Committee designates that the following members of Bank management should be involved in in assessment input and such have of the design management, risk including Bank personnel, that appropriate requires To reinforce and support the development andmaintenance of Directors. arrangements should be supported by strong corporate governance, including active and effective oversight by the Board of these (3) and risk-management; and controls effective with compatible be should arrangements such (2) risk; imprudent appropriately balance risk and financial results in a manner that does not encourage employees to expose the Bank to compensation arrangements: (1) incentive co excessive risk-taking. In doin balan properly isto Committee the of asserves compensation a recognizes Committee thatThe incentive payments. approved of in consideration information Committ Committee. The the to for payment recommendations in accordance with the established plan has been conduc payout of and eligibility verification ofRiskManagement to purposes. Once for the Director plan verification the incentive for under payout recommendation make will management period, incentive of the end Furthermore, at the evaluations. such feedb provide and will and fromreward arisk perspective ● Ultimately, the Committee acting on behalf of the Board of Dir upon approval and implementation thesein Additionally, to implementation. the Committeeby mustprior and be approved plans payments compensation All incentive membersThese ofmanagement are responsible forthe design of
● ● ● Director of Risk Management, and the Human Resources Director. P P and the Human Resources Director. SeniorVice Presidents, VicePresidents, MortgageBanking Personnel,Operations & PersonnelOther Applicable Another committee of the Board as to matters within its designated authority which the Committee member Committee the which authority itsdesignated asto matters within the Board of committee Another Counsel, independent auditors, or other persons as to matters which the Committeemember reasonably believes to One or more officers or employees of the Bank whom th ersonnel Incentive Plans: resident/Chief Executive& Officer E reasonably believes to merit confidence. be withinthe professional or expertcompetence such of person. competent in the matters presented. g so,theCommittee alsorecogn President/Chief Executive Offi ce such compensation arrangements with dividuals will evaluatetheeffectiveness
mpensation arrangements at xecutive VicePresidentIncentive Plans: ack and/or make recommendations to the Committee based upon based to the Committee make recommendations and/or ack 27 27 balanced incentive compensation arrangements, the Committee Committee the arrangements, compensation incentive balanced cer, ExecutivePresidents, Vice ee will review such recommendations and any other pertinent pertinent any other and recommendations such ee will review ted, the Director ofRisk Managementmake will such izes the following three key principles for consideration in consideration izes three for the keyfollowing principles ’s incentive compensation arrangements are consistent with areconsistent arrangements compensation ’s incentive incentive compensation plans as directed by the Committee. Committee. as the by directed compensation plans incentive ectors is responsible for ensuri e Committee member reasonably believes to be reliable and and to be reliable believes member reasonably e Committee key tool to attract and retain skilled staff. As such, a goal staff. a goal skilled As such, retain attract and to tool key d to rely in good faith on information, opinions, toreports faith information, d opinions, rely in good on or other sources that are suff the Bankthe should provideem prudent operations that do not encourage andtheto be success balancedof plans President/Chief Executive Officer, Director of RiskManagement ng that the Bank’s incentive Bank’sincentive that the ng icient to allow the board to ployees incentives that
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PROXY STATEMENT
Guaranty Federal Bancshares, Inc. 2016 Annual Report
Board of Directors Guaranty Federal Bancshares, Inc. and Guaranty Bank
James R. Batten, CPA Shaun A. Burke John F. Griesemer Chairman of the Board President and CEO Vice Chairmen of the Board Chief Financial Officer Guaranty Federal Bancshares Executive Vice President and COO International Dehydrated Foods, Inc. and Guaranty Bank Springfield Underground, Inc.
Kurt D. Hellweg Greg A. Horton David T. Moore Chairman Chief Executive Officer President and CEO International Dehydrated Foods, Inc. Integrity Pharmacy and Paul Mueller Company and American Dehydrated Foods, Inc. Integrity Home Care
Tim Rosenbury, AIA James L. Sivils, III, JD Executive Vice President CEO, Environmental Works, Inc. and Chairman, Butler, Rosenbury & Partners, Inc. Executive Officers Guaranty Federal Bancshares, Inc. and Guaranty Bank
Shaun A. Burke Carter M. Peters Robin E. Robeson President, Executive Vice President, Executive Vice President, Chief Executive Officer Chief Financial Officer Chief Operating Officer
H. Charles Puls Sheri D. Biser Executive Vice President, Executive Vice President, Chief Lending Officer Chief Credit Officer
SPRINGFIELD: 1341 West Battlefield 2109 North Glenstone 4343 South National 1905 West Kearney 1510 East Sunshine 2155 West Republic
NIXA: 709 West Mount Vernon 291 East Hwy CC
OZARK: 1701 West State Hwy J
LOAN PRODUCTION OFFICES: 2639 East 32nd Street, Joplin 1100 Spur Dr. Ste. 15, Marshfield 417.520.4333 / gbankmo.com