Guaranty Federal Bancshares, Inc. :GFED-US: Earnings Analysis: 2016 By the Numbers : January 27, 2017

Guaranty Federal Bancshares, Inc. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of Guaranty Federal Bancshares, Inc. – Great Southern Bancorp, Inc., Southern Missouri Bancorp, Inc. and Enterprise Financial Services Corp (GSBC-US, SMBC-US and EFSC-US) that have also reported for this period.

Highlights

  • Net interest income margins narrowed from 81.80% to 81.33% compared to the same period last year.
  • Net loan assets changed 10.07% compared to same period last year and 10.07% from previous period, total deposits changed -2.32% compared to same period last year and -2.32% from previous period.
  • Earnings grew despite decline in operating margins and pre-tax margins compared to same period last year.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 26.08 25.56 24.1 26.08 24
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 5.59 5.72 5.78 5.24 1.94
Earnings Growth (YOY) -2.15 -1.14 10.36 169.55 -49.32
Net Margin 21.45 22.36 23.99 20.09 8.1
EPS 1.27 1.3 1.33 1.58 0.3
Return on Equity 8.2 8.94 9.7 8.78 1.65
Return on Assets 0.83 0.89 0.93 0.82 0.3

Access our Ratings and Scores for Guaranty Federal Bancshares, Inc.

Earnings Growth Analysis

GFED-US‘s year-on-year decline in earnings was influenced by a weakening of net interest income margins from 81.80% to 81.33% as well as issues with loan loss provisions. As a result, net interest income after provisions margins went from 79.45% to 76.06% in this period. For comparison, net interest income margins were 81.80% and net interest income after provisions margins 79.45% in the last period. In addition, loan loss provisions as a percentage of net interest income were 6.48% this period and 2.87% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (HY YOY)
Total Deposits Growth Rate History (HY YOY)

The firm’s decline in net interest income margins came despite the relative increase in the level of net loan assets. In addition, total deposits as a percentage of equity went from 7.79% to 7.22%. On an absolute basis, net loan assets changed 10.07% compared to the same period last year and 10.07% from the previous period. Total deposits changed -2.32% compared to the same period last year and -2.32% from the previous period.

Margins

Despite a decline in operating’s margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Guaranty Federal Bancshares, Inc.

Company Profile

Guaranty Federal Bancshares, Inc. operates as a bank holding company, which engages in the provision of financial and banking services. Its products include checking and savings accounts, deposits, personal and mortgage loans, business financing, auto loans, online and mobile banking, eStatements, adn online payment services. The company was founded in September 1997 and is headquartered in Springfield, MO.

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