<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                  ___________

                                   FORM 10-K
                       FOR ANNUAL AND TRANSITION REPORTS

                    PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

For the fiscal year ended        June 30, 2000
                          --------------------

                                    - or -

|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from                   to
                               ------------------

                     Commission File Number:      0-23325
                                              -----------

                       GUARANTY FEDERAL BANCSHARES, INC.
             -----------------------------------------------------
            (Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S>                                                  <C>
                  Delaware                                    43-1792717
------------------------------------------           ---------------------------
(State or Other Jurisdiction of Incorporation         (I.R.S. Employer Identification No.)
 or Organization)
</TABLE>


   1341 West Battlefield, Springfield, Missouri                 65807
-------------------------------------------------    ---------------------------
(Address of Principal Executive Offices)                      (Zip Code)

Registrant's telephone number, including area code:     (417) 520-4333
                                                     -----------------

Securities registered pursuant to Section 12(b) of the Act:          None
                                                             ------------

Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $.10 per share
                    --------------------------------------
                               (Title of Class)
         Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ ]

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based on the average bid and asked prices of the Registrant's
Common Stock as quoted on the National Market of The Nasdaq Stock Market on
September 7, 2000, was $37.1 million.

         As of September 5, 2000 there were outstanding 4,649,776 shares of the
Registrant's Common Stock.
<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the Annual Report to Stockholders for the fiscal year ended June
30, 2000. (Part II)
2. Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders.
(Part III)



                       GUARANTY FEDERAL BANCSHARES, INC.

                                   Form 10-K

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
Item                                                                                                        Page
-----                                                                                                       ----
<S>                                                                                                         <C>
                                                          PART I

         1.       Business...............................................................................1

         2.       Properties............................................................................19

         3.       Legal Proceedings.....................................................................19

         4.       Submission of Matters to a Vote of Security Holders...................................19

                                                       PART II

         5.       Market for Registrant's Common Equity and Related Stockholder Matters.................19

         6.       Selected Financial Data...............................................................19

         7.       Management's Discussion and Analysis of

                  Financial Condition and Results of Operations.........................................19

         7A.      Quantitative and Qualitative Disclosures About Market Risk............................20

         8.       Financial Statements and Supplementary Data...........................................20

         8.       Changes in and Disagreements with Accountants

                  on Accounting and Financial Disclosure................................................20

                                                      PART III

         10.      Directors and Executive Officers of the Registrant....................................20

         11.      Executive Compensation................................................................20

         12.      Security Ownership of Certain Beneficial Owners and Management........................20

         13.      Certain Relationships and Related Transactions........................................20

         14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................21

Signatures
</TABLE>
<PAGE>

         GUARANTY FEDERAL BANCSHARES, INC. (THE "COMPANY") MAY FROM TIME TO TIME
MAKE WRITTEN OR ORAL "FORWARD-LOOKING STATEMENTS", INCLUDING STATEMENTS
CONTAINED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
(INCLUDING THIS ANNUAL REPORT ON FORM 10-K AND THE EXHIBITS THERETO), IN ITS
REPORTS TO STOCKHOLDERS AND IN OTHER COMMUNICATIONS BY THE COMPANY, WHICH ARE
MADE IN GOOD FAITH BY THE COMPANY PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

         THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, SUCH
AS STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES, EXPECTATIONS, ESTIMATES AND
INTENTIONS, THAT ARE SUBJECT TO CHANGE BASED ON VARIOUS IMPORTANT FACTORS (SOME
OF WHICH ARE BEYOND THE COMPANY'S CONTROL). THE FOLLOWING FACTORS, AMONG OTHERS,
COULD CAUSE THE COMPANY'S FINANCIAL PERFORMANCE TO DIFFER MATERIALLY FROM THE
PLANS, OBJECTIVES, EXPECTATIONS, ESTIMATES AND INTENTIONS EXPRESSED IN SUCH
FORWARD-LOOKING STATEMENTS: THE STRENGTH OF THE UNITED STATES ECONOMY IN GENERAL
AND THE STRENGTH OF THE LOCAL ECONOMIES IN WHICH THE COMPANY CONDUCTS
OPERATIONS; THE EFFECTS OF, AND CHANGES IN, TRADE, MONETARY AND FISCAL POLICIES
AND LAWS, INCLUDING INTEREST RATE POLICIES OF THE BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM, INFLATION, INTEREST RATES, MARKET AND MONETARY
FLUCTUATIONS; THE TIMELY DEVELOPMENT OF AND ACCEPTANCE OF NEW PRODUCTS AND
SERVICES OF THE COMPANY AND THE PERCEIVED OVERALL VALUE OF THESE PRODUCTS AND
SERVICES BY USERS, INCLUDING THE FEATURES, PRICING AND QUALITY COMPARED TO
COMPETITORS' PRODUCTS AND SERVICES; THE WILLINGNESS OF USERS TO SUBSTITUTE
COMPETITORS' PRODUCTS AND SERVICES FOR THE COMPANY'S PRODUCTS AND SERVICES; THE
SUCCESS OF THE COMPANY IN GAINING REGULATORY APPROVAL OF ITS PRODUCTS AND
SERVICES, WHEN REQUIRED; THE IMPACT OF CHANGES IN FINANCIAL SERVICES' LAWS AND
REGULATIONS (INCLUDING LAWS CONCERNING TAXES, BANKING, SECURITIES AND
INSURANCE); TECHNOLOGICAL CHANGES; ACQUISITIONS; CHANGES IN CONSUMER SPENDING
AND SAVING HABITS; AND THE SUCCESS OF THE COMPANY AT MANAGING THE RISKS
RESULTING FROM THESE FACTORS.

         THE COMPANY CAUTIONS THAT THE LISTED FACTORS ARE NOT EXCLUSIVE. THE
COMPANY DOES NOT UNDERTAKE TO UPDATE ANY FORWARD-LOOKING STATEMENT, WHETHER
WRITTEN OR ORAL, THAT MAY BE MADE FROM TIME TO TIME BY OR ON BEHALF OF THE
COMPANY.
<PAGE>

PART I

Item 1.  Business

Business of the Company

  The Company is a Delaware-chartered corporation that was created in September
1997 at the direction of Guaranty Federal Savings Bank (the "Bank").  The
Company became the holding company for the Bank on December 30, 1997, in
connection with a plan of conversion and reorganization involving the Bank and
its then existing mutual holding company.  The mutual holding company structure
had been created in April 1995 (the "Conversion") at which time more than a
majority of the shares of the Bank were issued to the mutual holding company and
the remainder were sold in a public offering.  In connection with the conversion
and reorganization on December 30, 1997, the shares of the Bank held by the
mutual holding company were extinguished along with the mutual holding company
and the shares of the Bank held by the public were exchanged for shares of the
Company.  Shares of the Company were issued on December 30, 1997.

  The Company is a unitary savings and loan holding company which, under
existing laws, generally is not restricted in the types of business activities
in which it may engage provided the Bank retains a specified amount of its
assets in housing-related investments.  The primary activity of the Company is
to oversee its investment in the Bank.  The Company engages in few other
activities.  For this reason, unless otherwise specified, references to the
Company include operations of the Bank.  Further, information in a chart or
table based on Bank only data is identical to or immaterially different from
information that would provided on a consolidated basis.

Business of the Bank

  The Bank is a federally chartered stock savings bank that obtained its current
name in April 1995 at the time it reorganized from a mutual savings association
known as "Guaranty Federal Savings and Loan Association" into a mutual holding
company structure.

  The Bank's principal business has been, and continues to be, attracting retail
deposits from the general public and investing those deposits, together with
funds generated from operations, in both permanent and construction one-to four-
family residential mortgage loans, multi-family residential mortgage loans,
commercial real estate loans, and consumer and other loans.  The Bank also
invests in mortgage-backed securities, U.S. Government and federal agency
securities and other marketable securities.  The Bank's revenues are derived
principally from interest on its loans and other investments and fees charged
for services provided.  The Bank's primary sources of funds are: deposits;
borrowings; amortization and prepayments of loan principal; and amortizations,
prepayments and maturing of mortgage-backed securities.

  The Bank is regulated by the Office of Thrift Supervision ("OTS") and its
deposits are insured by the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation (the "FDIC").

Market Area

  The Bank's primary market area is Greene County, which is in the southwestern
corner of Missouri.  While the population of Greene County increased 12.4%
between 1980 and 1990 and its per capita income grew approximately 32% between
1985 and 1990, the average per capita income in 1990 still was lower than the
average per capita income for Missouri and the United States.  Springfield has a
Metropolitan Statistical Area population of approximately 250,000.  The local
economy is well diversified with the majority of jobs in light manufacturing and
service industries.  There is a large regional health care presence with two
large regional hospitals employing over 8,000.  There also are four accredited
colleges and one major university with total enrollment approaching 25,000.
Part of Greene County's growth can be attributed to its proximity to Branson,
Missouri, which has developed a strong tourism industry related to country music
and entertainment.  Branson is located 30 miles south of Springfield, and
receives between five and six million tourists each year, many of whom pass
through Springfield.

                                       1
<PAGE>

Lending Activities

     Set forth below is selected data relating to the composition of the Bank's
loan portfolio at the dates indicated:


Composition of Loan Portfolio

<TABLE>
<CAPTION>
                                                                                  As of June 30,
                                                    --------------------------------------------------------------------------------
                                                         2000              1999              1998           1997           1996
                                                    --------------   ---------------   --------------   -------------  -------------
                                                       $       %        $       %         $       %        $      %       $      %
                                                    --------------   ---------------   --------------   -------------  -------------
                                                                                   (Dollars in Thousands)
<S>                                                 <C>              <C>               <C>              <C>            <C>
Mortgage loans (includes loans held for sale):
  One to four units                                 $198,155   63%    178,680   63%     148,396   66%    116,441  68%   98,918   68%
  Multi-family                                        39,146   12%     35,795   13%      21,536   10%     15,457   9%   13,701    9%
  Construction                                        41,372   13%     38,605   14%      34,729   16%     25,149  15    21,729   15%
  Commercial real estate                              26,559    9%     20,771    7%      12,721    6%      8,323   5     8,739    6%
                                                    --------  ---    --------  ---     --------  ---    -------- ---   -------  ---
Total mortgage loans                                 305,232   97%    273,851   97%     217,382   97%    165,370  97%  143,087   98%
                                                    --------  ---    --------  ---     --------  ---    -------- ---   -------  ---
  Commercial business loans                              761    0%        544    0%         646    0%        383   0%      255    0%
  Share loans                                            461    0%        573    0%         623    0%        720   0       530    0%
  Automobile                                           1,941    1%      2,016    1%       2,018    1%      1,765   1%    1,005    1%
  Other                                                7,118    2%      5,389    2%       3,251    1%      2,727   2%       48    0%
                                                    --------  ---    --------  ---     --------  ---    -------- ---   -------  ---
Total consumer and other loans                        10,281    3%      8,522    3%       6,538    3%      5,595   3%    1,838    1%
                                                    --------  ---    --------  ---     --------  ---    -------- ---   -------  ---
Total loans                                          315,513  100%    282,373  100%     223,920  100%    170,965 100%  144,925  100%
                                                              ===              ===               ===             ===            ===
Less:
  Loans in process                                    16,668           15,466            15,235           10,476         7,572
  Deferred loan fees/costs, net                          164              180                84              (39)          (22)
  Unearned discounts                                     108              109               190              216           238
  Allowance for loan losses                            2,520            2,349             2,191            2,177         2,108
                                                    --------         --------          --------         --------       -------
Total Loans, Net                                    $296,053          264,269           206,220          158,135       135,029
                                                    ========         ========          ========         ========       =======
</TABLE>

The following table sets forth the dollar amount, before deductions for unearned
discounts, deferred loan costs and allowance for loan losses, as of June 30,
2000 of all loans due after June 2001, which have pre-determined interest rates
and which have adjustable interest rates.


Fixed and Adjustable Rate Loans by Type


<TABLE>
<CAPTION>
                                Fixed Rates     Adjustable Rates      Total
                              ---------------  -------------------  -----------
                                              (Dollars in Thousands)
<S>                           <C>              <C>                  <C>
One-to four-family                $    57,795              126,193      183,988
Multi-family                           11,469               26,469       37,938
Construction                            3,220                1,808        5,028
Commercial real estate                  5,199               11,267       16,466
Consumer & other loans                  7,751                    -        7,751
                              ---------------    -----------------  -----------
Total loans (1)                   $    85,434              165,737      251,171
                              ===============    =================  ===========
</TABLE>

(1) Before deductions for unearned discounts, deferred loan fees/costs, net and
    allowance for loan losses.

                                       2
<PAGE>

The following table sets forth the Bank's loan originations, purchases, sales,
and principal repayments.

<TABLE>
<CAPTION>
Origination, Purchase and Sale of Loans              Year ended June  30,
                                              ---------------------------------
                                                 2000        1999        1998
                                              ---------    --------    --------
                                                   (Dollars in Thousands)
<S>                                           <C>          <C>         <C>
Total gross loans receivable at
   beginning of period                        $ 282,373     223,920     170,965
                                              ---------    --------    --------
Loans originated:
  One-to-four-family                             62,206      66,282      66,385
  Multi-family                                    1,310       8,444          19
  Construction                                   50,346      44,503      35,800
  Commercial real estate                         11,870      10,440       7,793
  Consumer and other                              8,450       7,643       6,008
                                              ---------    --------    --------
Total loans originated                          134,182     137,312     116,005

Loans purchased:
Total loans purchased                                 -       7,896           -

Loans sold:
Whole loans                                      (5,000)    (10,376)     (6,364)
Loan principal repayments                       (68,247)    (61,734)    (53,684)
Other items, net (1)                            (27,795)    (14,645)     (3,002)
                                              ---------    --------    --------
Net loan activity                                33,140      58,453      52,955

Total gross loans receivable at
end of period                                   315,513     282,373     223,920
                                              =========    ========    ========
</TABLE>

(1)  Consists principally of non-cash portion of loan originations.

          The following table sets forth the maturity of the Bank's loan
portfolio as of June 30, 2000. The table shows loans that have adjustable-rates
as due in the period during which they contractually mature. The table does not
include prepayments or scheduled principal amortization. Prepayments and
scheduled principal repayments on loans totaled $68.2 million for the year ended
June 30, 2000.

<TABLE>
<CAPTION>
                                                 Due After One
                                  Due in One     Through Five    Due After Five
Loan Maturities                  Year or Less        Years           Years             Total
                                 ------------    -------------   --------------    -----------
                                                    (Dollars in thousands)
<S>                              <C>             <C>             <C>               <C>
One to four family                $    13,903           73,873          110,115        197,891
Multi family                            1,208           12,115           25,823         39,146
Construction                           21,786            3,252            1,776         26,814
Commercial real estate                  9,007            5,037           11,429         25,473
Consumer and other loans                1,770            3,448            4,303          9,521
                                  -----------    -------------   --------------    -----------
Total  loans   (1 )               $    47,674           97,725          153,446        298,845
                                  -----------    -------------   --------------    -----------
Less:
Deferred loan fees/costs                                                                   164
Unearned discounts                                                                         108
Allowance for loan  losses                                                               2,520
                                                                                   -----------
Loans  receivable net                                                              $   296,053
                                                                                   ===========
</TABLE>

(1) Includes mortgage loans held for sale of $995.

                                       3
<PAGE>

     One- to Four-Family Mortgage Loans. The Bank offers fixed- and adjustable-
rate first mortgage loans secured by one- to four-family residences in the
Bank's primary lending area. Typically, such residences are single family homes
that serve as the primary residence of the owner. However, there are a
significant number of loans originated by the Bank which are secured by non-
owner occupied properties. Loan originations are generally obtained from
existing or past customers, members of the local community, referrals from
attorneys, established builders, and realtors within the Bank's market area.
Originated mortgage loans in the Bank's portfolio include due-on-sale clauses
which provide the Bank with the contractual right to deem the loan immediately
due and payable in the event that the borrower transfers ownership of the
property without the Bank's consent.

     As of June 30, 2000, $198.2 million or 63% of the Bank's total loan
portfolio consisted of one- to four-family residential loans, of which 69% were
ARM loans. The Bank currently offers ARM loans that have fixed interest rates
for either one, three or five years and, following that initial fixed period,
adjust annually. The Bank has also offered ARM loans for which interest rates
adjust every one, three or five years. Generally, ARM loans provide for limits
on the maximum interest rate adjustment ("caps") that can be made at the end of
each applicable period and throughout the duration of the loan. ARM loans are
originated for a term of up to 30 years on owner-occupied properties and
generally up to 25 years on non-owner occupied properties. Typically, interest
rate adjustments are calculated based on U.S. treasury securities adjusted to a
constant maturity of one year (CMT), plus a 2.50% to 2.75% margin. Interest
rates charged on fixed-rate loans are competitively priced based on market
conditions and the cost of funds existing at the time the loan is committed. The
Bank's fixed-rate mortgage loans currently are made for terms of 15 and 30
years.

     Generally, ARM loans pose credit risks different from the risks inherent in
fixed-rate loans, primarily because as interest rates rise the underlying
payments of the borrower rise, thereby increasing the potential for default.  At
the same time, the marketability of the underlying property may be adversely
affected by higher interest rates.  The Bank does not originate ARM loans that
provide for negative amortization.

     The Bank generally originates both owner occupied and non-owner occupied
one-to four-family residential mortgage loans in amounts up to 80% of the
appraised value or the selling price of the mortgaged property, whichever is
lower. The Bank may on occasion make loans up to 95% of appraised value or the
selling price of the mortgage property, whichever is lower. However, the Bank
typically requires private mortgage insurance for the excess percentage over 80%
for mortgage loans with loan to value percentages over 80%.

     Multi-Family Mortgage Loans. The Bank originates multi-family mortgage
loans in its primary lending area. As of June 30, 2000, $39.1 million or 12% of
the Bank's total loan portfolio consisted of multi-family residential loans.
With regard to multi-family mortgage loans, the Bank generally requires personal
guarantees of the principals as well as security interest in real estate. Multi-
family mortgage loans are generally originated in amounts of up to 80% of the
appraised value of the property. The majority of the Bank's multi-family
mortgage loans have been originated with an adjustable rates of interest, the
majority, of which are quoted at a spread to the FHLB advance rate for the
initial fixed rate period and with subsequent adjustments at a spread to the one
year US Treasury rate. The loan-to-one-borrower limitation, $8.6 million as of
June 30, 2000, is the maximum the Bank will lend on a multi-family real estate
loan. Loans above $500,000 require Board of Directors approval on a case-by-case
basis.

     Loans secured by multi-family residential real estate generally involve a
greater degree of credit risk than one- to four-family residential mortgage
loans and carry larger loan balances. This increased credit risk is a result of
several factors, including the concentration of principal in a limited number of
loans and borrowers, the effects of general economic conditions on income
producing properties, and the increased difficulty of evaluating and monitoring
these types of loans. Furthermore, the repayment of loans secured by multi-
family residential real estate is typically dependent upon the successful
operation of the related real estate property. If the cash flow from the project
is reduced, the borrower's ability to repay the loan may be impaired.

                                       4
<PAGE>

     Construction Loans. As of June 30, 2000, construction loans totaled $41.4
million or 13% of the Bank's total loan portfolio. Construction loans are made
to certain builders for construction of single family homes for resale, as well
as to individuals in connection with long-term, permanent loans to be made upon
completion of the construction. This portfolio predominantly consists of
speculative loans, i.e., loans to builders who are speculating that they will be
able to locate a purchaser for the underlying property prior to or shortly after
the time construction has been completed.

     The Bank principally finances the construction of single-family homes.
Construction loans are made to contractors who have sufficient financial
strength and a proven track record, for the purpose of resale, as well as on a
"pre-sold" basis. Construction loans made for the purpose of resale generally
provide for interest only payments at fixed rates and have terms of six months
to one year. Construction loans on "pre-sold" homes may convert into a permanent
ARM loan upon completion of construction. Construction loans to a borrower who
will occupy a home, or to a builder who has pre-sold the home, typically have
loan to value ratios of up to 85%. Construction loans for speculative purposes,
models, and commercial properties typically have loan to value ratios of up to
80%. Loan proceeds are disbursed in increments as construction progresses and as
inspections warrant. The Bank employs inspectors rather than paying title
companies for construction disbursement purposes.

     Construction lending by its nature entails significant additional risks as
compared with one-to four-family mortgage lending, attributable primarily to the
fact that funds are advanced upon the security of the project under construction
prior to its completion.  As a result, construction lending often involves the
disbursement of substantial funds with repayment dependent on the success of the
ultimate project and the ability of the borrower or guarantor to repay the loan.
Because of these factors, the analysis of the prospective construction loan
projects require an expertise that is different in significant respects from
that which is required for residential mortgage lending.  The Bank has attempted
to address these risks through its underwriting and construction monitoring
procedures.

     Commercial Real Estate.  As of June 30, 2000, the Bank has commercial real
estate loans totaling $26.6 million or 9% of the Bank's total loan portfolio.
Commercial real estate loans are generally originated in amounts up to 80% of
the appraised value of the mortgaged property. The majority of the Bank's
commercial real estate loans have been originated with adjustable rates of
interest, the majority, of which are quoted at a spread to the FHLB advance rate
for the initial fixed rate period with subsequent adjustments at a spread to the
one year US Treasury rate. The Bank's commercial real estate loans are generally
permanent loans secured by improved property such as office buildings, retail
stores, small shopping centers, medical offices, motels, churches and other non-
residential buildings.  Less than $4 million in commercial real estate loans are
located outside the Bank's market area.

     To originate commercial real estate loans, the Bank generally requires a
security interest in the real estate, personal guarantees of the principals, a
security interest in personal property, and a standby assignment of rents and
leases.  The Bank has established its loan-to-one borrower limitation, which was
$8.6 million as of June 30, 2000, as its maximum commercial real estate loan
amount. Commercial loans above $500,000 require Board of Directors approval on a
case-by-case basis.  Because of the small number of commercial real estate loans
and the relationship of each borrower to the Bank, each such loan has differing
terms and conditions applicable to the particular borrower.

     Loans secured by commercial real estate are generally larger and involve a
greater degree of risk than residential mortgage loans.  Because payments on
loans secured by commercial real estate are often dependent on successful
operation or management of the properties, repayment of such loans may be
subject, to a greater extent, to adverse conditions in the real estate market or
the economy.  The Bank seeks to minimize these risks by careful underwriting,
requiring personal guaranty, lending only to established customers and borrowers
otherwise known to the Bank, and generally restricting such loans to its primary
market area.

                                       5
<PAGE>

     As of June 30, 2000, the Bank's loan portfolio also included approximately
$8.6 million in loans to develop land into residential lots and loans on
completed lots in the commercial real estate loan portfolio.  The Bank utilizes
its knowledge of the local market conditions and appraisals to evaluate the
development cost and estimate projected lot prices and absorption rates to
assess loans on residential subdivisions.  The Bank typically loans up to 80% of
the appraised value over terms up to two years.  Development loans generally
involve a greater degree of risk than residential mortgage loans because (1) the
funds are advanced upon the security of the land which has a materially lower
value prior to completion of the infrastructure required of a subdivision, (2)
the cash flow available for debt repayment is a function of the sale of the
individual lots, and (3) the interest required to service the debt is a function
of the time required to complete the development and sell the lots.

     Consumer and Other Lending. The Bank also offers other loans, primarily
loans secured by certificates of deposit, commercial business assets, consumer
loans, home equity and automobile loans. As of June 30, 2000, the Bank has such
loans totaling $10.3 million or 3% of the Bank's total loan portfolio. The Bank
will continue to expand its consumer and commercial lending as opportunities
present themselves.

     Loan Approval Authority and Underwriting.  All loans must have the approval
of the members of the Loan Committee which consists of seven senior officers.
The Loan Committee meets periodically to review and approve loans made within
the scope of its authority.  Loans in excess of $500,000 require prior approval
by the Board of Directors.

     For all loans originated by the Bank, upon receipt of a completed loan
application from a prospective borrower, a credit report is requested, income,
assets, and certain other information are verified, and, if necessary,
additional financial information is requested.  An appraisal of the real estate
intended to secure the proposed loan is generally required, which currently is
performed by certified appraisers.  It is the Bank's policy to obtain
appropriate insurance protection on all real estate first mortgage loans.
Borrowers generally must also obtain hazard insurance prior to closing.
Borrowers generally are required to advance funds for certain items such as real
estate taxes, flood insurance and private mortgage insurance, when applicable.


Delinquencies and Problem Assets.

     Delinquent Loans. As of June 30, 2000, the Bank has one loan 90 days or
     ----------------
more past due with a principal balance of $12,495, two loans contractually past
maturity with a total principal balance of $236,414 and twelve loans between 30
and 89 days past due with total principal balances of $984,000. The Bank
generally does not accrue interest on loans past due more than 90 days.

                                       6
<PAGE>

     The following table sets forth the Bank's loans that were 90 days or more
delinquent at the dates indicated.

<TABLE>
<CAPTION>
Delinquency Summary                                                                   As of June 30,
                                                                  ----------------------------------------------------------
                                                                     2000         1999        1998        1997       1996
                                                                  ----------   ----------  ----------  ----------  ---------
                                                                                      (Dollars in Thousands)
<S>                                                               <C>          <C>         <C>         <C>         <C>
Loans contractually past maturity or past due 90 days or more and
  accounted for on a non-accrual basis:
Mortgage Loans:
  One-to four-family                                              $       13          110           -         279          -
  Multi-family                                                             -            -           -         286          -
  Construction                                                            84            -           -         190        273
  Commercial real estate                                                   -            -           -           -          -
                                                                  ----------   ----------  ----------  ----------  ---------
                                                                          97          110           -         755        273
                                                                  ----------   ----------  ----------  ----------  ---------
Non-mortgage loans:
  Commercial loans                                                         -            -           -           -        120
  Consumer and other loans                                                 -            -           -           -          -
                                                                  ----------   ----------  ----------  ----------  ---------
                                                                           -            -           -           -        120
                                                                  ----------   ----------  ----------  ----------  ---------
    Total non-accrual loans                                               97          110           -         755        393
                                                                  ----------   ----------  ----------  ----------  ---------
Accruing loans which are contractually past
  maturity or past due 90 days or more:
Mortgage Loans:
  One-to four-family                                                     152            -           -           -        246
  Multi-family                                                             -            -           -           -          -
  Construction                                                             -          102         121         113      1,047
  Commercial real estate                                                   -            -           -           -         91
                                                                  ----------   ----------  ----------  ----------  ---------
                                                                         152          102         121         113      1,384
                                                                  ----------   ----------  ----------  ----------  ---------
Non-mortgage loans:
  Commercial loans                                                         -            -           -           -          -
  Consumer and other loans                                                 -            -           -           -          -
                                                                  ----------   ----------  ----------  ----------  ---------
                                                                           -            -           -           -          -
                                                                  ----------   ----------  ----------  ----------  ---------
    Total past maturity or past due accruing loans                       152          102         121         113      1,384
                                                                  ----------   ----------  ----------  ----------  ---------
Total contractually past maturity or 90 days or more
past due                                                          $      249          212         121         868      1,777
                                                                  ==========   ==========  ==========  ==========  =========
Total contractually past maturity or 90 days or more
past due as a percentage of net loans                                   0.08%        0.08%       0.06%       0.55%      1.32%
                                                                        ====         ====        ====        ====       ====
Total contractually past maturity or 90 days or more
past due as a percentage of total assets                                0.07%        0.07%       0.05%       0.44%      0.96%
                                                                        ====         ====        ====        ====       ====
</TABLE>

  Non-Performing Assets.  Loans are reviewed on a regular basis and are placed
  ---------------------
on non-accrual status when, in the opinion of management, the collection of all
interest at contractual rates is doubtful.  Mortgage loans are placed on non-
accrual status generally when either principal or interest is more than 90 days
past due.  Interest accrued and unpaid at the time a loan is placed on non-
accrual status is charged against interest income.

  Real estate acquired by the Bank as a result of foreclosure or by deed in lieu
of foreclosure is deemed a foreclosed asset held for sale until such time as it
is sold.  When a foreclosed asset held for sale is acquired it is recorded at
its estimated fair value, less estimated selling expenses.  Valuations are
periodically performed by management, and any subsequent decline in fair value
is charged to operations.

                                       7
<PAGE>

  As of July 1, 1995, the Bank implemented Statement of Financial Accounting
Standards No. 114 ("SFAS 114").  While implementation had no material effect on
net income, in accordance with the pronouncement, loans totaling $851,818, net
of the valuation allowance, which were previously classified as in-substance
foreclosures and reported as part of foreclosed assets held-for-sale, were
reclassified to loans along with $199,033 of related allowances for
uncollectibility.

  The following table shows the principal amount of non-performing assets and
the resulting impact on interest income for the periods then ended.

<TABLE>
<CAPTION>
Non-Performing Assets                                                         As of June 30,
                                                          -------------------------------------------------------------
                                                            2000         1999         1998          1997         1996
                                                          ---------    ---------    ---------    ----------   ---------
                                                                              (Dollars in Thousands)
<S>                                                       <C>          <C>          <C>          <C>          <C>
Mortgage Loans:
  One-to four-family                                      $     578          151          213           279           -
  Multi-family                                                  441          751          775           286           -
  Construction                                                   84            -            -           190         273
  Commercial real estate                                      3,652            -            -           502           -
                                                          ---------    ---------    ---------    ----------   ---------
                                                              4,755          902          988         1,257         273
                                                          ---------    ---------    ---------    ----------   ---------
Non-mortgage loans:
  Commercial loans                                                -            -            -             -         120
  Consumer and other loans                                        2            4           24             -           -
                                                          ---------    ---------    ---------    ----------   ---------
                                                                  2            4           24             -         120
                                                          ---------    ---------    ---------    ----------   ---------
    Total non-accrual loans                                   4,757          906        1,012         1,257         393
Real estate and other assets acquired in
settlement of loans                                               2          102          286           210           2
                                                          ---------    ---------    ---------    ----------   ---------
Total non-performing assets                               $   4,759        1,008        1,298         1,467         395
                                                          =========    =========    =========    ==========   =========



Total non-accrual loans as a percentage of net
loans                                                          1.61%        0.34%        0.49%         0.79%       0.29%
                                                               ====         ====         ====          ====        ====
Total non-performing assets as a percentage of
total assets                                                   1.39%        0.32%        0.50%         0.74%       0.21%
                                                               ====         ====         ====          ====        ====
Impact on interest income for the period
Interest income that would have been
recorded on non-accruing loans                            $      47           10           16            31          15
                                                          =========    =========    =========    ==========   =========
</TABLE>

                                       8
<PAGE>

     Problem Assets.  Federal regulations require that the Bank review and
     --------------
classify its assets on a regular basis. In addition, in connection with
examinations of insured institutions, OTS examiners have authority to identify
problem assets and, if appropriate, require them to be classified. There are
three classifications for problem assets: substandard, doubtful, and loss.
"Substandard assets" must have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. "Doubtful assets" have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions, and values questionable, and there is a high
possibility of loss. An asset classified "loss" is considered uncollectible and
of such little value that continuance as an asset of the institution is not
warranted. The regulations have also created a special mention category,
described as assets which do not currently expose an insured institution to a
sufficient degree of risk to warrant classification but do possess credit
deficiencies or potential weaknesses deserving management's close attention.
Assets classified as substandard or doubtful require the institution to
establish general allowances for loan losses. If an asset or portion thereof is
classified loss, the insured institution must either establish specific
allowances for loan losses in the amount of 100% of the portion of the asset
classified loss or charge off such amount. A portion of general loss allowances
established to cover possible losses related to assets classified substandard or
doubtful may be included in determining an institution's regulatory capital,
while specific valuation allowances for loan losses generally do not qualify as
regulatory capital.

     For management purposes, the Bank also designates certain loans for
additional attention. Such loans are called "Special Mention" and have
identified weaknesses that if the situation deterioriates the loans would merit
a Substandard classification.

     The following table shows the aggregate amounts of the Bank's classified
assets as of June 30, 2000.

<TABLE>
<CAPTION>
Classification of Assets              Special Mention         Substandard             Doubtful              Loss
                                    -------------------    -----------------      ----------------    ----------------
                                    Number       Amount    Number     Amount      Number    Amount    Number    Amount
                                    ------       ------    ------     ------      ------    ------    ------    ------
                                                                      (Dollars in Thousands)
<S>                                 <C>         <C>        <C>       <C>          <C>       <C>       <C>       <C>
Loans:
  One- to four-family                   28      $ 1,699        19    $ 1,596           -    $    -         -    $    -
  Multi-family                           -            -         3        652           -         -         3       123
  Commercial real estate                 5        1,495         2      3,652           -         -         -         -
  Land                                   3          286         -          -           -         -         -         -
  Other loans                            -            -         7         42           -         -         -         -
                                    ------      -------    ------    -------      ------    ------    ------    ------
Total loans                             36        3,480        31      5,942           -         -         3       123
                                    ------      -------    ------    -------      ------    ------    ------    ------
Foreclosed assets held-for-sale:
  One- to four-family                    -            -         -          -           -         -         -         -
  Commercial real estate                 -            -         -          -           -         -         -         -
  Land and other assets                  -            -         1          2           -         -         -         -
                                    ------      -------    ------    -------      ------    ------    ------    ------
Total foreclosed assets                  -            -         1          2           -         -         -         -
                                    ------      -------    ------    -------      ------    ------    ------    ------
  Total                                 36      $ 3,480        32    $ 5,944           -    $    -         3    $  123
                                    ======      =======    ======    =======      ======    ======    ======    ======
</TABLE>


     As of June 30, 2000, the Bank has no real estate obtained through
foreclosure, and $1,625 in other repossessed property.

     Substandard loans include five loans to three borrowers totalling $4.4
million.  Three of the loans to one borrower are secured by multifamily
properties.  These properties have not historically generated sufficient cash
flow to properly maintain the properties and service the debt.  The second
troubled borrower is a builder having difficulty selling newly constructed
homes.  The third troubled borrower owns and operates three motels.  Since the
loan secured by these motels was originated, the motels have experienced
significant competition from newly constructed motels.  Each of these loans was
current as of June 30, 2000.

                                       9
<PAGE>

Allowance for Loan Losses

     The allowance for loan losses is established through a provision for loan
losses based on management's evaluation of the risk inherent in its loan
portfolio and the general economy.  Such evaluation, which includes a review of
all loans on which full collectibility may not be reasonably assured, considers
among other matters, the estimated fair value of the underlying collateral,
economic conditions, historical loan loss experience, and other factors that
warrant recognition in providing for an adequate loan loss allowance.  In
addition, various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for loan losses and valuation
of foreclosed assets held for sale.  Such agencies may require the Bank to
recognize additions to the allowance based on their judgments about information
available to them at the time of their examination.

     As of June 30, 2000 the Bank's total allowance for loan losses was $2.5
million or 0.80% of total loans.  This allowance reflects not only management's
determination to maintain an allowance for loan losses consistent with
regulatory expectations for non-performing assets, but also reflects the Bank's
policy of evaluating the risks inherent in its loan portfolio, and the regional
economy.

     In March 1996 the Bank had $1.4 million of loan recovery on a commercial
loan which was previously partially charged off. The loan recovery represents
amounts recovered in excess of the carrying balance of the loan as reflected by
the original terms of the loan, including accrued interest and previously
charged-off principal. Consequently, the Bank determined that the allowance for
loan losses was sufficient and credited the provision for loan losses for $1.2
million. During fiscal year 1997, the Bank again experienced a net recovery and
elected to make no further addition to the allowance.

     During fiscal 2000, 1999 and 1998, the Bank experienced loan charge offs in
excess or recoveries, and based on the loan portfolio review discussed above,
elected to add to the allowance through a provision for loan loss, as shown in
the table below.  Management anticipates the need to continue adding to the
allowance through charges to provision for loan losses as anticipated growth in
the loan portfolio or other circumstances warrant.

                                       10
<PAGE>

     The following tables set forth certain information concerning the Bank's
allowance for possible loan losses for the periods indicated.

<TABLE>
<CAPTION>
Allowance for Loan Losses                                              Year Ended June 30,
                                                         ------------------------------------------
                                                          2000      1999     1998     1997    1996
                                                         -------   ------   ------  ------  -------
                                                                    (Dollar in Thousands)
<S>                                                      <C>       <C>      <C>     <C>     <C>
Beginning balance                                        $ 2,349    2,191    2,177   2,108   1,718
                                                         -------   ------   ------  ------  ------
Gross loan charge offs
Mortgage Loans:
  One-to four-family                                           -        -      (56)    (59)     (4)
  Multi-family                                                 -        -        -       -       -
  Construction                                                 -       (3)     (49)      -       -
  Commerical real estate                                       -        -        -       -       -
                                                         -------   ------   ------  ------  ------
                                                               -       (3)    (105)    (59)     (4)
                                                         -------   ------   ------  ------  ------
Non-mortgage loans:
  Commercial loans                                             -        -        -       -       -
  Consumer and other loans                                    (9)     (26)     (46)     (4)      -
                                                         -------   ------   ------  ------  ------
                                                              (9)     (26)     (46)     (4)      -
                                                         -------   ------   ------  ------  ------
   Total charge offs                                          (9)     (29)    (151)    (63)     (4)
                                                         -------   ------   ------  ------  ------
Recoveries
Mortgage Loans:
  One-to four-family                                           -        -       42      35       -
  Multi-family                                                 -        -        -       -       -
  Construction                                                 -        -        -       -       -
  Commercial real estate                                       -        -        -       -   1,400
                                                         -------   ------   ------  ------  ------
                                                               -        -       42      35   1,400
                                                         -------   ------   ------  ------  ------
Non-Mortgage loans:
  Commercial loans                                             -        7        -      97       7
  Consumer and other loans                                     -        -        -       -       -
                                                         -------   ------   ------  ------  ------
                                                               -        7        -      97       7
                                                         -------   ------   ------  ------  ------
   Total recoveries                                            -        7       42     132   1,407
                                                         -------   ------   ------  ------  ------
Net loan recoveries (charge-offs)                             (9)     (22)    (109)     69   1,403
Provision for loan losses charged (credited)
 to expense                                                  180      180      123       -  (1,212)
Allowance reclassified to loans which were
 previously classified as insubstance
 forclosures                                                   -        -        -       -     199
                                                         -------   ------   ------  ------  ------
Ending balance                                           $ 2,520    2,349    2,191   2,177   2,108
                                                         =======   ======   ======  ======  ======

Net charge-offs (recoveries) as a percentage
 of average loans, net                                      0.00%    0.01%    0.06%  -0.05%  -1.10%
                                                         =======   ======   ======  ======  ======
Allowance for loan losses as a percentage of
 average loans, net                                         0.89%    1.00%    1.24%   1.49%   1.65%
                                                         =======   ======   ======  ======  ======
Allowance for loan losses as a percentage of
 total non-performing loans                                   53%     259%     217%    173%    536%
                                                         =======   ======   ======  ======  ======
</TABLE>

                                       11
<PAGE>

Allocation of Allowance for Loan Losses

     The following table shows the amount of the allowance allocated to each
loan category and the percent of that loan category to total loans.

<TABLE>
<CAPTION>
                                                                          As of June 30,
                                   ----------------------------------------------------------------------------------------
                                        2000               1999                1998             1997              1996
                                   -------------      --------------      -------------     -------------     -------------
                                    Amount   %         Amount     %        Amount    %      Amount     %      Amount     %
                                   -------  ----      -------   ----      -------  ----     -------  ----     -------  ----
                                                                      (Dollars in thousands)
<S>                                <C>      <C>       <C>       <C>       <C>      <C>      <C>      <C>      <C>      <C>
Mortgage Loans                     $ 2,439    97%     $ 2,341     97%     $ 2,185    97%    $ 2,099    97%    $ 2,071    99%
Consumer and other loans                81     3%           8      3%           6     3%         78     3%         37     1%
                                   -------  ----      -------   ----      -------  ----     -------  ----     -------  ----
  Total                            $ 2,520   100%     $ 2,349    100%     $ 2,191   100%    $ 2,177   100%    $ 2,108   100%
                                   =======  ====      =======   ====      =======  ====     =======  ====     =======  ====
</TABLE>

Investment Activities

     The investment policy of the Company, which is established by the Board of
Directors and reviewed by the Investment Committee, is designed primarily to
provide and maintain liquidity, to generate a favorable return on investments
without incurring undue interest rate and credit risk, and to complement the
Bank's lending activities. The policy currently provides for held-to-maturity
and available-for-sale portfolios. The Company has adopted an investment policy
which strictly prohibits speculation in investment securities. The Company does
not currently engage in trading investment securities and does not anticipate
doing so in the future. As of June 30, 2000, the Company has investment
securities with a carrying value and an estimated fair value of $20.4 million.
Of those securities $13.6 million, or 67%, of the Company's investment
securities portfolio are available-for-sale.

     The Company has the authority to invest in various types of liquid assets,
including United States Treasury obligations, securities of various federal
agencies, trust preferred securities, certain certificates of deposit of insured
banks and savings institutions, certain bankers' acceptances, repurchase
agreements, and loans on federal funds.

     The following tables set forth the amortized cost and approximate fair
market values of the available-for-sale securities and held-to-maturity
securities:

<TABLE>
<CAPTION>
                                                               Gross            Gross
                                           Amortized        Unrealized       Unrealized      Approximate
Investment Securities                         Cost             Gains          (Losses)        Fair Value
                                         ------------       ------------    ------------     ------------
<S>                                      <C>                <C>             <C>              <C>
As of June 30, 2000

AVAILABLE-FOR-SALE SECURITIES

Equity Securities:

  FHLMC stock                            $     94,000         3,794,000               -         3,888,000
  Other stock                                 938,005            83,665        (172,379)          849,291

Debt Securities:

  Trust preferred securities                6,509,629           143,604               -         6,653,233
  Mortgage-backed securities                2,295,819                 -         (41,036)        2,254,783

HELD-TO-MATURITY SECURITIES:
  U.S. government agencies                    600,061                 -         (19,022)          581,039
  Mortgage-backed securities                6,168,611           113,477        (106,541)        6,175,547
                                         ------------       -----------     -----------      ------------
                                         $ 16,606,125         4,134,746        (338,978)       20,401,893
                                         ============       ===========     ===========      ============
</TABLE>

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                            Gross           Gross
                                          Amortized       Unrealized      Unrealized     Approximate
Investment Securities                       Cost            Gains          (Losses)       Fair Value
                                        --------------  --------------  --------------  --------------
<S>                                     <C>             <C>             <C>             <C>
As of June 30, 1999
AVAILABLE-FOR-SALE SECURITIES:
Equity Securities:
 FHLMC stock                            $      94,000       5,474,000             -         5,568,000
 Other stock                                  735,762         106,973         (72,700)        770,035
Debt Securities:
 Mortgage-backed securities                 2,644,526           7,168         (38,554)      2,613,140
HELD-TO-MATURITY SECURITIES:

 U. S. government agencies                  7,442,210              32          (6,800)      7,435,442
 Mortgage-backed securities                 7,952,433         300,020         (63,913)      8,188,540
                                        --------------  --------------  --------------  --------------
                                        $  18,868,931       5,888,193        (181,967)     24,575,157
                                        ==============  ==============  ==============  ==============


As of June 30, 1998
AVAILABLE-FOR-SALE SECURITIES:
Equity Securities:
 FHLMC stock                            $      94,000       4,424,000             -         4,518,000
 Other stock                                  215,697          32,522          (1,198)        247,021
Debt Securities:
 Mortgage-backed securities                 9,047,661           7,997             -         9,055,658
HELD-TO-MATURITY SECURITIES:
 U. S. government agencies                  8,922,389          14,358         (75,747)      8,861,000
 Mortgage-backed securities                11,948,654         522,116         (21,770)     12,449,000
                                        --------------  --------------  --------------  --------------
                                        $  30,228,401       5,000,993         (98,715)     35,130,679
                                        ==============  ==============  ==============  ==============
</TABLE>



Composition of Investment Portfolio


     The following table sets forth certain information regarding the carrying
values, weighted average yields and maturities of the Bank's investment
securities portfolio as of June 30, 2000:

<TABLE>
<CAPTION>
                                                                        Weighted
Investment Portfolio Maturities and Average          Amortized           Average           Approximate
Weighted Yields                                        Cost               Yield             Fair Value
--------------------------------------------       --------------     -------------       --------------
<S>                                                <C>                <C>                 <C>
Due after ten years (1)                             $  7,109,690              7.44%           7,234,272
Equity securities not due on a
  single maturity date                                 1,032,005              0.00%           4,737,291
Mortgage-backed securities not due on a
  single maturity date                                 8,464,430              7.74%           8,430,330
                                                   --------------             -----       --------------
                                                   $  16,606,125              5.84%          20,401,893
                                                   ==============             ====        ==============
</TABLE>

(1) Consists of government agency and trust preferred securities

                                       13
<PAGE>

Sources of Funds

     General. The Company's primary sources of funds are deposits, borrowings,
amortization and prepayments on loans and mortgage-backed securities.

     Deposits. The Bank offers a variety of deposit accounts having a range of
interest rates and terms. The Bank's deposits principally consist of fixed-term
certificates, passbook savings, money market, individual retirement accounts
("IRAs"), and NOW (checking) accounts. The flow of deposits is influenced
significantly by general economic conditions, changes in money market and
prevailing interest rates, local competition, and competition from non-bank
financial service providers. The Bank's deposits are typically obtained from the
areas in which its offices are located. The Bank relies primarily on customer
service and long-standing relationships with customers to attract and retain
these deposits.

     The Bank seeks to maintain a high level of stable core deposits by
providing convenient and high quality service through its offices.

     The following table sets forth the distribution of the Bank's deposit
accounts at the dates indicated.


Deposit Account Types

<TABLE>
<CAPTION>
                                                                          As of June 30,
                                   -----------------------------------------------------------------------------------------------

                                              2000                              1999                            1998
                                   -------------------------------  ------------------------------  ------------------------------

                                   Average                Percent   Average               Percent   Average               Percent
                                   Interest               of Total  Interest              of Total  Interest              of Total
                                     Rate      Amount     Deposits    Rate     Amount     Deposits    Rate      Amount    Deposits
                                   --------   --------    --------  --------  --------    --------  --------   --------   --------
                                                                          (Dollars in Thousands)
<S>                                <C>        <C>         <C>       <C>       <C>         <C>       <C>        <C>        <C>
NOW                                   1.89%   $ 20,482          14%    1.91%  $ 18,068          13%     2.24%  $ 14,468         10%
Savings                               2.72%      8,551           6%    2.23%     8,751           6%     2.68%     8,658          6%
Money Market                          4.77%     17,511          12%    3.81%    15,546          11%     3.64%    10,587          8%
Non-interest bearing demand           0.00%      6,554           5%    0.00%     4,371           3%     0.00%     3,142          2%
                                              --------        ----            --------        ----             --------       ----
     Total                                      53,098          37%             46,736          33%              36,855         26%
                                              --------        ----            --------        ----             --------       ----

Certificates of Deposit: (fixed-rate, fixed-term)

  1-11 months                         5.44%     64,595          45%    4.40%    15,041          11%     5.00%    14,169         10%
  12-23 months                        5.75%     17,379          12%    4.71%    34,874          25%     5.19%    38,059         27%
  24-35 months                        5.88%      5,158           4%    5.14%    21,545          15%     5.64%    26,415         19%
  36-47 months                        5.47%      1,453           1%    5.48%     8,862           6%     5.71%    10,147          7%
  48-59 months                        6.08%      2,866           2%    5.73%     1,784           1%     5.98%     1,789          1%
  60-71 months                        5.94%         58           0%    6.09%     7,752           5%     6.04%     8,354          6%
  72-95 months                        0.00%          -           0%    6.24%     4,543           3%     6.28%     5,187          4%
                                              --------        ----            --------        ----             --------       ----
     Total                                      91,509          63%             94,401          67%             104,120         74%
                                              --------        ----            --------        ----             --------       ----
Total Deposits                                $144,607         100%           $141,137         100%            $140,975        100%
                                              ========        ====            ========        ====             ========       ====
</TABLE>

                                       14
<PAGE>

     The following table indicates the approximate amount of the Bank's
certificate accounts of $100,000 or more by time remaining until maturity as of
June 30, 2000.


Maturities of Certificates of Deposit of $100,000 or More


                                                As of June 30, 2000
                                               ---------------------
                                               (Dollars in Thousands)
Three months or less                           $                1,488
Over three through six months                                   1,055
Over six through twelve months                                  2,781
Over twelve months                                              2,146
                                               ----------------------
Total                                          $                7,470
                                               ======================


Borrowings

     Deposits are the primary source of funds for the Bank's lending activities
and other general business purposes. However, during periods when supply of
lendable funds cannot meet the demand for such loans, the FHLB System makes
available, subject to compliance eligibility standards, a portion of the funds
necessary through loans (advances) to its members. The following table presents
certain data for Federal Home Loan Bank advances as of June 30 of each year
presented.


Selected Data for Federal Home Loan Bank Advances
                                             2000         1999         1998
                                          ----------    --------     -------
                                                  (Dollars in Thousands)

Remaining maturity as of June 30:
Less than one year                        $   53,673      21,823       3,972
One to two years                              13,335       7,507       8,562
Two to three years                             3,802      10,335       2,098
Three to four years                           22,233       3,168       3,102
Four to five years                             6,413      22,233       1,641
Over five years                               37,051      39,728      25,706
                                          ----------    --------     -------
  Total                                   $  136,507     104,794      45,081
                                          ==========    ========     =======

Weighted average rate as of June 30             6.07%       5.71%       6.08%

For the year ended June 30:
  Average balance                         $  114,124      79,985      27,630
  Average interest rate                         5.94%       5.90%       6.13%

Maximum outstanding as of any month end   $  136,507     104,794      45,081


Subsidiary Activity

     The Bank is a subsidiary of the Company. The Bank has one service
corporation subsidiary, Guaranty Financial Services of Springfield, Inc. The
Bank has an investment of $43,000 in its service corporation as of June 30,
2000. The service corporation sells mutual funds, fixed and variable annuities,
unit investment trusts, individual stocks and bonds, and life insurance. Such
sales are completed through an agreement with "INVEST" for providing brokerage
services. The service corporation sells property and casualty insurance through
an agreement with American National Property and Casualty, a Springfield based
insurance company.

                                       15
<PAGE>

Financial Highlights

                                            Year Ended June 30,
                                        --------------------------
                                         2000      1999      1998
                                        ------    ------    ------
Dividend payout Ratio
  since conversion December 1997           60%       57%       52%

Return on Average Assets                 1.10%     1.19%     1.25%

Return on Average Equity                 5.85%     5.15%     5.81%

Stockholders' Equity to Assets          16.55%    20.25%    27.18%

Employees

     Substantially, all of the activities of the Company are conducted through
the Bank. As of June 30, 2000 the Company has no salaried employees.

     As of June 30, 2000, the Bank has 79 full-time employees and 29 part time
employees. None of the Bank's employees are represented by a collective
bargaining group. The Bank believes that its relationship with its employees is
good.

Competition

     The Bank experiences substantial competition both in attracting and
retaining deposit accounts and in the making of mortgage and other loans.

     Direct competition for savings accounts comes from other savings
institutions, credit unions, regional bank and thrift holding companies, and
commercial banks located in its primary market area. Significant competition for
the Bank's other deposit products and services comes from money market mutual
funds, brokerage firms, insurance companies, and retail stores. The primary
factors in competing for loans are interest rates and loan origination fees and
the range of services offered by various financial institutions. Competition for
origination of real estate loans normally comes from other savings institutions,
commercial banks, mortgage bankers, mortgage brokers, and insurance companies.

     The Bank's primary competition comprises the financial institutions near
each of the Bank's offices. In the Springfield metropolitan area, where the
Bank's main office and four branch offices are located, primary competition
consists of one thrift institution and 25 commercial banks and 13 credit unions.

     The Bank believes it is able to compete effectively in its primary market
area by offering competitive interest rates and loan fees, and a variety of
deposit products, and by emphasizing personal customer service.


Regulation

     Set forth below is a brief description of certain laws which relate to the
regulation of the Company and the Bank. The description does not purport to be
complete and is qualified in its entirety by reference to applicable laws and
regulations.

                                       16
<PAGE>

Company Regulation

     General. The Company is a unitary savings and loan holding company subject
to regulatory oversight by the OTS. As such, the Company is required to register
and file reports with the OTS and is subject to regulation and examination by
the OTS. In addition, the OTS has enforcement authority over the Company and its
non-savings bank subsidiaries, which also permits the OTS to restrict or
prohibit activities that are determined to be a serious risk to the subsidiary
savings bank. This regulation and oversight is intended primarily for the
protection of the depositors of the Bank and not for the benefit of stockholders
of the Company.

     Qualified Thrift Lender Test. As a unitary savings and loan holding
company, the Company generally is not subject to activity restrictions, provided
the Bank satisfies the Qualified Thrift Lender ("QTL") test or a somewhat
similar test for domestic building and loan associations. If the Company
acquires control of another savings association as a separate subsidiary, it
would become a multiple savings and loan holding company, and the activities of
the Company and any of its subsidiaries (other than the Bank or any other SAIF-
insured savings association) would become subject to restrictions applicable to
bank holding companies unless such other associations each also qualifies as a
QTL or domestic building and loan association and were acquired in a supervisory
acquisition. See "- Regulation of the Bank - Qualified Thrift Lender Test."


Regulation of the Bank

     General. As a federally chartered, SAIF insured savings association, the
Bank is subject to extensive regulation by the OTS and the Federal Deposit
Insurance Corporation ("FDIC"). Lending activities and other investments must
comply with various federal statutory and regulatory requirements. The Bank is
also subject to certain reserve requirements promulgated by the Board of
Governors of the Federal Reserve System.

     The OTS, in conjunction with the FDIC, regularly examines the Bank and
prepares reports for the consideration of the Bank's Board of Directors on any
deficiencies that are found in the Bank's operations. The Bank's relationship
with its depositors and borrowers is also regulated to a great extent by federal
and state law, especially in such matters as the ownership of savings accounts
and the form and content of the Bank's mortgage documents.

     The Bank must file reports with the OTS and the FDIC concerning its
activities and financial condition, in addition to obtaining regulatory
approvals prior to entering into certain transactions such as mergers with or
acquisitions of other savings institutions. This regulation and supervision
establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the SAIF and depositors.
The regulatory structure also gives the regulatory authorities extensive
discretion in connection with their supervisory and enforcement activities and
examination policies, including policies with respect to the classification of
assets and the establishment of adequate loan loss reserves for regulatory
purposes. Any change in such regulations, whether by the OTS, the FDIC, or the
Congress, could have a material adverse impact on the Company, the Bank, and
their operations.

     Insurance of Deposit Accounts.  The deposit accounts held by the Bank are
insured by the SAIF to a maximum of $100,000 for each insured member (as defined
by law and regulation).  Insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe or unsound practices,
is in an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
institution's primary regulator.

     As a member of the SAIF, the Bank paid an insurance premium to the FDIC
equal to a minimum of 0.23% of its total deposits. The FDIC also maintains
another insurance fund, the Bank Insurance Fund ("BIF"), which primarily insures
commercial bank deposits. In 1996, the annual insurance premium for most BIF
members was lowered to $2,000. The lower insurance premiums for BIF members
placed SAIF members at a competitive disadvantage to BIF members.


                                       17
<PAGE>

     Effective September 30, 1996, federal law was revised to mandate a one-time
special assessment on SAIF members such as the Bank of approximately .657% of
deposits held on March 31, 1995.  Between January 1, 1997 and December 31, 1999,
the deposit insurance assessment for most SAIF members was reduced to 0.064% of
deposits on an annual basis and BIF members were assessed approximately .013% of
deposits.  After 1999, assessments for BIF and SAIF members were equalized.  The
FDIC may increase assessments based upon losses in the SAIF or BIF.

     Regulatory Capital Requirements.  OTS capital regulations require savings
associations to meet three capital standards: (1) a tangible capital requirement
of 1.5% of total adjusted assets, (2) a leverage ratio (core capital)
requirement of 4% of total adjusted assets and (3) a risk-based capital
requirement equal to 8% of total risk-weighted assets.  Regulations that enable
the OTS to take prompt and corrective action against savings associations
effectively impose higher capital requirements on savings associations.

     Dividend and Other Capital Distribution Limitations. The Bank must give the
OTS 30 days advance notice of any proposed declaration of dividends to the
Company, and the OTS has the authority under its supervisory powers to prohibit
the payment of dividends to the Company. In addition, the Bank may not declare
or pay a cash dividend on its capital stock if the dividend would (1) reduce the
regulatory capital of the Bank below the amount required for the liquidation
account established in connection with the conversion from mutual to stock form
or (2) reduce the amount of capital of the Bank below the amounts required in
accordance with other OTS regulations. In contrast, the Company has fewer
restrictions on the payment of dividends.

     Qualified Thrift Lender Test. Savings institutions must meet either the QTL
test pursuant to OTS regulations or the definition of a domestic building and
loan association in section 7701 of the Internal Revenue Code (the "Code"). If
the Bank maintains an appropriate level of certain specified investments
(primarily residential mortgages and related investments, including certain
mortgage-related securities) and otherwise qualifies as a QTL or a domestic
building and loan association, it will continue to enjoy full borrowing
privileges from the FHLB of Des Moines. The required percentage of investments
under the QTL test is 65% of assets while the Code requires investments of 60%
of assets. A bank must be in compliance with the QTL test or definition of
domestic building and loan association on a monthly basis in nine out of every
12 months.

     Federal Reserve System. The Board of Governors of the Federal Reserve
System requires all depository institutions to maintain non-interest bearing
reserves at specified levels against their transaction accounts (primarily
checking, NOW, and Super NOW checking accounts) and non-personal time deposits.


Executive Officers of the Registrant

     Set forth below is information concerning the three executive officers of
the Company.

     James E. Haseltine joined the Bank in 1983, and has served as Director,
president and Chief Executive Officer since 1990.  Mr. Haseltine has held the
same positions with the Company since its formation in September 1997.  After
graduating Drury College in 1968, he entered military service with the U.S. Army
and served in the Republic of Vietnam.  He has served as a founding member and
Chairman of the Affordable Housing Action Board of Springfield, Inc., an
organization serving low to moderate income families.  He is a licensed real
estate broker.

     Currently, he serves as a director of America's Community Bankers, a
national trade organization serving financial institutions, is President of the
Springfield Business and Development Corporation, a director of the Home
Builders Association of Springfield, and a director of the Springfield Public
Schools Foundation. He is a member of First and Calvary Presbyterian Church.

                                       18
<PAGE>

         William B. Williams joined the Bank in 1995 as Executive Vice
President and Chief Operating Officer. Mr. Williams has held the same positions
with the Company since its formation in September 1997. Prior to joining the
Bank, Mr. Williams worked as a consultant to Midland Loan Services, L.P., a
commercial mortgage banker in Kansas City, Missouri. From 1987 to 1994, Mr.
Williams worked for North American Savings Bank in Grandview, Missouri, most
recently as Executive Vice President and Chief Financial Officer. Mr. Williams
received a BSBA degree from the University of Arkansas in 1969 and after serving
as an officer in the U.S. Navy, he received a MBA degree from Tulane University
in 1974. He is a CPA.

         Bruce Winston is Vice President and Chief Financial Officer of the
Bank. He joined the Bank in 1992. Mr. Winston has held the same positions with
the Company since its formation in September 1997. Prior to joining the Bank, he
served in various other capacities with two other financial institutions over a
period of 20 years. He is a graduate of Southwest Missouri State University.

         As of June 30, 2000, the years of age of these individuals was 54 for
Mr. Haseltine, 53 for Mr. Williams and 52 for Mr. Winston.

Item 2.  Properties
-------------------

         The offices of the Company are located in the main office of the Bank.

         The Bank's office facilities currently consist of the main office in
Springfield, Greene County, Missouri and three full-service branch offices in
Springfield and one in-store branch located in the Walmart Supercenter in Nixa,
Christian County, Missouri.  The Bank has a relatively new main office building,
which provides the Bank with a modern office for customer services and projects
a favorable image for the Bank in the local marketplace.

Item 3.  Legal Proceedings
--------------------------

         The Company and the Bank, from time to time, may be parties to ordinary
routine litigation, which arises in the normal course of business, such as
claims to enforce liens, condemnation proceedings, on properties in which the
Bank holds security interests, claims involving the making and servicing of real
property loans, and other issues incident to the business of the Company and the
Bank.  As of June 30, 2000, there were no claims or lawsuits pending or known to
be contemplated against the Company or the Bank that would have had a material
effect on the Company or the Bank.

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.


PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters
------------------------------------------------------------------------------

         The information on page 1 of the Annual Report to Stockholders of the
Registrant for the fiscal year ended June 30, 2000 (the "2000 Annual Report") is
incorporated herein by reference.  Dividends paid information on pages 9 and 11
of the 2000 Annual Report is incorporated herein by reference.

Item 6.  Selected Financial Data
--------------------------------

         The information contained on page 3 of the 2000 Annual Report is
incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Conditions and
-------------------------------------------------------------------------
Results of Operations
---------------------

          The information contained on pages 4 through 14 of the 2000 Annual
Report is incorporated herein by reference.

                                       19
<PAGE>

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

         The information contained on pages 11 and 12 under the headings
"Asset/Liability Management" and "Interest Rate Sensitivity Analysis" of the
2000 Annual Report is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data
----------------------------------------------------

         The financial statements set forth on pages 15 to 40 of the 2000 Annual
Report, are incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants On Accounting and
------------------------------------------------------------------------
Financial Disclosure
--------------------

         Not applicable.


PART III

Item 10. Directors and Executive Officers of the Registrant
-----------------------------------------------------------

  `      The information contained under the section captioned "First Proposal,
Election of Directors" in the proxy statement for the Annual Meeting of
Stockholders to be held October 25, 2000 (the "Proxy Statement") is incorporated
herein by reference.

         Additional information concerning executive officers and directors is
included in the Proxy Statement in the section captioned "Section 16(a)
Beneficial Ownership Reporting Compliance" and under "Executive Officers of the
Registrant" in Item 1 of this report.

Item 11. Executive Compensation
-------------------------------

         The information contained in the sections captioned "Directors
Compensation", "Executive Compensation" "Compensation Committee Interlocks and
Insider Participation", "Compensation Committee Report on Executive
Compensation," "Summary Compensation Table," "Employment Agreements," and
"Aggregated Option/SAR Exercises and Fiscal Year end Option/SAR Values," in the
Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

         (a)   Security Ownership of Certain Beneficial Owners
               Information required by this item is incorporated herein by
               reference to the section captioned "Voting Securities and
               Principal Holders Thereof" in the Proxy Statement.

         (b)   Security Ownership of Management
               Information required by this item is incorporated herein by
               reference to the second chart in the section captioned "Voting
               Securities and Principal Holders Thereof" in the Proxy Statement.

         (c)   Not applicable.

Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------

         The information required by this item is incorporated herein by
reference to the section captioned "Transactions with Certain Related Persons"
in the Proxy Statement.

                                       20
<PAGE>

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
------------------------------------------------------------------------

         (a)   The following documents are filed as a part of this report:

               1.   The following financial statements and the report of
               independent accountants included in the 2000 Annual Report are
               incorporated herein by reference and also in Item 8 of this
               report.

               Independent Accountants' Report

               Consolidated Balance Sheets as of June 30, 2000 and 1999.

               Consolidated Statements of Income for the Years Ended June 30,
               2000, 1999, and 1998.

               Consolidated Statements of Changes in Stockholders' Equity for
               the Years Ended June 30, 2000, 1999, and 1998.

               Consolidated Statements of Cash Flows for the Years Ended June
               30, 2000, 1999, and 1998.

               Notes to Consolidated Financial Statements.

               2.   Financial Statement Schedules for which provision is made in
               the applicable accounting regulations of the SEC are not required
               under the related instructions or are inapplicable and therefore
               have been omitted.

               3.   The following exhibits are included in this Report or
               incorporated herein by reference:

                    (a)    List of Exhibits:
                    3(i)   Certificate of Incorporation of Guaranty Federal
                           Bancshares, Inc.*
                    3(ii)  Bylaws of Guaranty Federal Bancshares, Inc.*
                    4      Rights Agreement dated January 20, 1999 concerning
                           the issuance of preferred stock and related rights.**
                    10.1   1994 Stock Option Plan***
                    10.2   Recognition and Retention Plan****
                    10.3   1998 Stock Option Plan*****
                    10.4   Restricted Stock Plan******
                    10.5   Change in Control Severance Agreements
                    10.6   2000 Stock Compensation Plan*******
                    13     Annual Report to Stockholders for the fiscal year
                           ended June 30, 2000 (only those portions incorporated
                           by reference in this document are deemed "filed")
                    21     Subsidiaries of the Registrant*
                    23     Consent of Baird Kurtz & Dobson
         (b)   No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
_____________________
*      Incorporated by reference to the identically numbered exhibit of the
       Annual Report on Form 10-K for the fiscal year ended June 30, 1998 (SEC
       file number 0-23325).
**     Incorporated by reference to the identically numbered exhibit of the Form
       8A filed by Registrant on January 22, 1999.
***    Incorporated by reference to Exhibit 10.1 of the Registration Statement
       on Form S-1 filed by the Registrant on September 22, 1997 (SEC file
       number 333-36141).
****   Incorporated by reference to Exhibit 10.2 of the Registration Statement
       on Form S-1 filed by the Registrant on September 22, 1997 (SEC file
       number 333-36141).
*****  Incorporated by reference to Exhibit A of the proxy statement for a
       special meeting of stockholders held on July 22, 1998 (SEC file number
       0-23325).
****** Incorporated by reference to Exhibit B of the proxy statement for a
       special meeting of stockholders held on July 22, 1998 (SEC file number
       0-23325).
*******Incorporated by reference to the identically numbered exhibit of the Form
       10Q filed by the Registrant on May 12, 2000 (SEC file number 0-23325).

                                       21
<PAGE>

                                  SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                        GUARANTY FEDERAL BANCSHARES, INC.

Dated: September 20, 2000               By:  /s/ James E. Haseltine
                                             -----------------------------------
                                             James E. Haseltine
                                             President and Chief Executive
                                              Officer
                                              (Duly Authorized Representative)

       Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


By:    /s/ James E. Haseltine           By:    /s/ Ivy L. Rogers
       -------------------------------         ---------------------------------
       James E. Haseltine                      Ivy L. Rogers
       President and Chief Executive           Director
        Officer
       (Principal Executive Officer)
Date:  September 20, 2000               Date:  September 20, 2000


By:    /s/ Bruce Winston                By:    /s/ Gary Lipscomb
       -------------------------------         ---------------------------------
       Bruce Winston                           Gary Lipscomb
       Vice President and Chief                Director
        Financial Officer
       (Principal Accounting and
        Financial Officer)
Date:  September 20, 2000               Date:  September 20, 2000


By:    /s/ Wayne V. Barnes              By:    /s/ Jack L. Barham
       -------------------------------         ---------------------------------
       Wayne V. Barnes                         Jack L. Barham
       Director                                Chairman of the Board and
                                                Director
Date:  September 20, 2000               Date:  September 20, 2000


By:    /s/ George L. Hall               By:    /s/ Raymond D. Tripp
       -------------------------------         ---------------------------------
       George L. Hall                          Raymond D. Tripp
       Director                                Director
Date:  September 20, 2000               Date:  September 20, 2000


By:    /s/ Gregory V. Ostergren         By:    /s/ Kurt D. Hellweg
       -------------------------------         ---------------------------------
       Gregory V. Ostergren                    Kurt D. Hellweg
       Director                                Director
Date:  September 25, 2000               Date:  September 21, 2000

                                       22