SPRINGFIELD, Mo., Jan. 16, 2009 (GLOBE NEWSWIRE) -- Guaranty Federal Bancshares, Inc. (Nasdaq:GFED) announced today that it has received preliminary approval from the U.S. Treasury Department for the sale of up to $17 million of preferred stock and related warrants to the U.S. Treasury under the Capital Purchase Program of the Emergency Economic Stabilization Act of 2008. This approval is subject to certain standard closing conditions and the execution of definitive agreements. The Capital Purchase Plan is designed to provide capital to healthy financial institutions, thereby increasing confidence in the banking industry and increasing the flow of financing to businesses and consumers.
Guaranty Federal Bancshares, Inc. President and CEO Shaun A. Burke commented, "During the past few weeks, we have been evaluating the Capital Purchase Program and the impact that the Company's participation in the program might have on our ability to serve our customers, support our communities and create long-term value for our shareholders. While our Company is 'well-capitalized' by all regulatory standards, this investment would enhance Guaranty's capital position. After careful consideration, we have concluded that the additional capital available through the program would increase our ability to provide appropriate lending to consumers and businesses and would enhance the Company's financial flexibility."
Under the agreement and as a potential participant in the program, Guaranty Federal Bancshares, Inc. will issue preferred stock to the U.S. Treasury with a dividend rate of 5 percent per annum for five years. The rate will increase to 9 percent per annum thereafter if the preferred shares are not redeemed by the Company. In addition to the preferred stock, the U.S. Treasury will receive 10-year warrants entitling the Treasury to purchase common stock of Guaranty Federal Bancshares, Inc. with an aggregate value equal to 15 percent of the amount of the preferred stock issuance.
About Guaranty Federal Bancshares, Inc.
Guaranty Federal Bancshares, Inc. (Nasdaq:GFED) has a subsidiary corporation offering full banking services. The principal subsidiary, Guaranty Bank, is headquartered in Springfield, Missouri, and has ten full-service branches in Greene and Christian Counties and Loan Production Offices in Wright, Webster and Howell Counties. In addition, Guaranty Bank is a member of the TransFund ATM network which provides its customers surcharge free access to over 100 area ATMs and over 700 ATMs nationwide. For more information visit the Guaranty Bank website: www.gbankmo.com.
The discussion set forth above may contain forward-looking comments. Such comments are based upon the information currently available to management of the Company and management's perception thereof as of the date of this release. Actual results of the Company's operations could materially differ from those forward-looking comments. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in demand for banking services; changes in portfolio composition; changes in management strategy; increased competition from both bank and non-bank companies; changes in the general level of interest rates; the effect of regulatory or government legislative changes; technology changes; and fluctuation in inflation.