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Guaranty Bank's debt offering launched in mid-July.
SBJ file photo
Guaranty Bank's debt offering launched in mid-July.

Guaranty Bank finalizes $20M offering

Posted online

Guaranty Federal Bancshares Inc. (Nasdaq: GFED) completed a $20 million debt offering launched earlier this month.

The subordinated notes became available July 15, said Guaranty Bank Chief Financial Officer Carter Peters. They initially will have a fixed annual interest rate of 5.25% for the first five years, with plans to make adjustments on a quarterly basis thereafter. The company plans to redeem the notes around September 2025, according to a news release.

“This capital raise is a cost-effective way to increase our regulatory capital at an attractive interest rate without diluting our current stockholders," Guaranty President and CEO Shaun Burke said in the release. "We are very pleased with the support from the investment community that resulted in the successful completion of the offering.”

Guaranty plans to use the net proceeds of the offering for general corporate purposes. The notes are structured as Tier 2 capital, which is supplementary capital needed to satisfy banking regulations, according to Investopedia.com.

Guaranty Bank recently reported second quarter net income of $1.9 million, a roughly 22% drop from a year earlier.

GFED shares were trading at $14.75 as of 9:48 a.m., compared with a 52-week range of $12.70 to $26.93.

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