Guaranty buys back $5M in stock from Treasury

Guaranty Federal Bancshares Inc. (Nasdaq: GFED) announced yesterday it has repurchased $5 million of $17 million in preferred stock it sold to the U.S. Department of Treasury under its Capital Purchase Program.

CPP is part of the Troubled Asset Relief Program, created by the Emergency Economic Stabilization Act of 2008.

The Springfield-based bank holding company sold the stock to the Treasury on Jan. 30, 2009, according to a news release.

Guaranty President and CEO Shaun Burke said the repurchase was completed without the issue of additional stock or debt.

"Our solid capital position achieved through a return to profitability and effective balance sheet management provided the ability to complete this repurchase transaction solely with internally generated funds," Burke said in the release.

As part of the $5 million repurchase, Guaranty is reducing its retained earnings in the second quarter by about $128,000 to account for the discount on the preferred shares, which were being amortized for a period of five years from the issue date. Beginning in the third quarter, quarterly dividends on the preferred shares will be reduced by $62,500 per quarter, the release said.

Burke said the company expects to pay off its balance with the Treasury by January 2014, when the scheduled dividend rate would increase from 5 percent to 9 percent.

Guaranty posted a 59.5 percent earnings increase to $834,000 in the first quarter. As of March 31, the company that operates nine Guaranty Bank branches in Greene and Christian counties had $690.03 million in assets and $484.22 million in deposits, according to Springfield Business Journal archives.

As of 9:33 a.m., the company's shares were trading at $8.05, compared to its 52-week range of $3.84 to $9.50.