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Guaranty Federal earnings up 33 cents for 1Q

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Guaranty Federal Bancshares Inc. (Nasdaq: GFED), the holding company for Guaranty Bank, reported a 33-cent increase in earnings per share compared to fourth-quarter 2010. Per-share earnings were up 2 cents a share compared to first-quarter 2010, according to a bank news release.

Net income for the first quarter was $523,000, up from $475,000 recorded in first-quarter 2010. First-quarter net income increased by $883,000 from a fourth-quarter 2010 net loss of $360,000.

Other first-quarter financial highlights:
  • The net interest margin improved 13 basis points to 3.1 percent compared to fourth-quarter 2010 and up 67 basis points compared to first-quarter 2010.
  • Nonperforming assets dropped $717,000 and core transaction deposit accounts increased $11.8 million from Dec. 31.
  • Book value per common share was $13.52 as of March 31.
According to the release, the bank attributes its first-quarter earnings improvements to several key factors, including an increase of $735,000 in net interest income compared to the same quarter a year ago. The bank is continuing to reduce its costs of funding on various deposits, such as premium money market accounts and certificates of deposit.
While loans have declined due to weak loan demand and specific foreclosures, Guaranty Federal is managing loan pricing by increasing yield on renewing credits and focusing on reducing nonaccrual loans, the release said.

Because of increased reserve needs on a few specific credits, the company recorded a $900,000 provision for loan loss expense for the quarter, down from $950,000 in the same quarter in 2010. As of March 31, the allowance for loan losses was 2.56 percent of gross loans outstanding – excluding mortgage loans held for sale – compared to 2.54 percent as of Dec. 31.

Also affecting earnings was a $421,000 decrease in noninterest income, as a result of $4,000 in gains on sales of investments during the quarter, compared to $160,000 of gains for first-quarter 2010. The company also posted a loss of $134,000 on foreclosed assets for the first quarter, compared to $45,000 in income for first-quarter 2010, the release said. Service-charge income, which includes overdraft charges, dropped $39,000 in the first quarter, compared to first-quarter 2010, partly due to amended regulations adopted in July.

Guaranty Federal also reported an increase of $391,000 in noninterest expenses for the first quarter, compared to the same period in 2010. Costs for salaries and benefits were up $200,000, as the company added associates at the executive level and in commercial and mortgage lending and risk managements. Legal expenses also were up by $102,000 compared to first-quarter 2010 because of costs incurred for a few specific troubled borrowers, the release said.

Guaranty Bank has nine full-service branches in Greene and Christian counties, with loan production offices in Greene, Wright, Webster and Howell counties.

Guaranty shares were trading at $6.15 as of 9:50 a.m., compared to a 52-week range of $4.30 to $7.14.[[In-content Ad]]

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