UNITED STATES
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

|[X]                                                                       | ANNUAL REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934     
|------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|For the fiscal year ended June 30, 2002                                  
|- 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.

|Delaware(State or Other Jurisdiction of Incorporation or Organization)               | 43-1792717(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------------ | ----------------------------------------------
|1341 West Battlefield, Springfield, Missouri(Address of Principal Executive Offices) | 65807(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.[ X ]

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 12, 2002, was $33.9 million. As of September 12, 2002 there were outstanding 3,031,206 shares of the Registrant's Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

1.         Portions of the Annual Report to Stockholders for the fiscal year ended June 30, 2002. (Part II)

2.         Portions of the Proxy Statement for the 2002 Annual Meeting of Stockholders. (Part III)

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|     | GUARANTY FEDERAL BANCSHARES, INC.
Form 10-K
TABLE OF CONTENTS                         |     
|---- | ------------------------------------------------------------------------------------- | ----
|Item |                                                                                       | Page
|     | PART I                                                                                |     
|1.   | Business                                                                              | 4   
|2.   | Properties                                                                            | 23  
|3.   | Legal Proceedings                                                                     | 23  
|4.   | Submission of Matters to a Vote of Security Holders                                   | 23  
|     | PART II                                                                               |     
|5.   | Market for Registrant's Common Equity and Related Stockholder Matters                 | 23  
|6.   | Selected Financial Data                                                               | 23  
|7.   | Management's Discussion and Analysis of Financial Condition and Results of Operations | 23  
|7A.  | Quantitative and Qualitative Disclosures About Market Risk                            | 24  
|8.   | Financial Statements and Supplementary Data                                           | 24  
|9.   | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | 24  
|     | PART III                                                                              |     
|10.  | Directors and Executive Officers of the Registrant                                    | 24  
|11.  | Executive Compensation                                                                | 24  
|12.  | Security Ownership of Certain Beneficial Owners and Management                        | 25  
|13.  | Certain Relationships and Related Transactions                                        | 26  
|14.  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       | 26  

Signatures/Certifications

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PART I

Item 1. Business

Business of the Company



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. There is a large regional health care presence with two large regional hospitals employing over 14,000. 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.

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Lending Activities

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





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, 2002 of all loans due after June 2003, which have pre-determined interest rates and which have adjustable interest rates.



The following table sets forth the maturity of the Bank's loan portfolio as of June 30, 2002. 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.



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One- to Four-Family Mortgage Loans.

As of June 30, 2002, $149.4 million or 44% of the Bank's total loan portfolio consisted of one- to four-family residential loans, of which 71% 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. The Bank is currently selling all conforming fixed-rate mortgage loans it originates on the secondary market.

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%.

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Multi-Family Mortgage Loans.

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.

Construction Loans. As of June 30, 2002, construction loans totaled $49.8 million or 15% 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.

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, 2002, the Bank has commercial real estate loans totaling $58.4 million or 17% 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.

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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 $7.3 million as of June 30, 2002, 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 guarantees, lending only to established customers and borrowers otherwise known to the Bank, and generally restricting such loans to its primary market area.

As of June 30, 2002, the Bank's commercial real estate loan portfolio included approximately $7.9 million in loans to develop land into residential lots. 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, 2002, the Bank has such loans totaling $39.4 million or 11% 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.

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Delinquencies and Problem Assets.

Delinquent Loans. As of June 30, 2002, the Bank has three loans 90 days or more past due with a principal balance of $191,003 and twenty five loans between 30 and 89 days past due with total principal balances of $792,923. The Bank generally does not accrue interest on loans past due more than 90 days.

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



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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.

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





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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, 2002.



As of June 30, 2002, foreclosed assets held for sale consists of two cars, four single-family houses, and a residential building lot.

One borrower accounts for approximately $1.0 million of total non-accrual loans at June 30, 2002. An unoccupied office condominium unit secures the loan. The borrower has made all loan payments. Subsequent to June 30, 2002, the borrower signed a lease with a new tenant. Single family houses collaterize the other non-accrual loans.

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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, 2002 the Bank's total allowance for loan losses was $2.6 million or 0.78% 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.

For fiscal years 1998 through 2002, the Bank experienced loan charge offs in excess of 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.

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



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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.



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, 2002, the Company has investment securities with a carrying value of $19.7 million and an estimated fair value of $19.9 million. Of those securities $16.5 million, or 84%, 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:





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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, 2002:





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Sources of Funds

General

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.

Deposit Accounts Types

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





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

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, 2002.



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.



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 $31,000 in its service corporation as of June 30, 2002. 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. In addition the service corporation sells property and casualty insurance through an agreement with American National Property and Casualty, a Springfield-based insurance company.

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Critical Accounting Policies

"Management's Discussion and Analysis of Financial Condition and Results of Operations" is based upon the Company's consolidated financial statements and the notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. On an on-going basis, management evaluates its estimates and judgments.

Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates.If actual results are different than management's judgements and estimates, the Company's financial results could change, and such change could be material to the Company.

Material estimates and judgments that are particularly susceptible to significant change relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management obtains independent appraisals for significant properties.

The Company has identified the accounting policies for the allowance for loan losses and related significant estimates and judgments as critical to its business operations and the understanding of its results of operations. For a detailed discussion on the application of these significant estimates and judgments and our accounting policies, also see Note 1 of the Consolidated Financial Statements.

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Financial Highlights

|Year Ended June 30,           
|------------------------------
|                              
|Dividend Payout Ratio         
|Return on Average Assets      
|Return on Average Equity      
|Stockholders' Equity to Assets
|                              

Employees

Substantially, all of the activities of the Company are conducted through the Bank. As of June 30, 2002 the Company has no salaried employees.

As of September 12, 2002 the Bank has 90 full-time employees and 53 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 branch offices are located, primary competition consists of one thrift institution, 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.

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Company Regulation

General.

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 depositor (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.

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The FDIC charges an annual assessment for the insurance of deposits based on the risk a particular institution poses to its deposit insurance fund. Under this system, SAIF members pay within a range of 0 cents to 27 cents per $100 of domestic deposits, depending upon the institution's risk classification. Risk classification is based on an institution's capital group and supervisory subgroup assignment. In addition, all FDIC-insured institutions are required to pay assessments to the FDIC at an annual rate of approximately .0172% of insured deposits to fund interest payments on bonds issued by the Financing Corporation ("FICO"), an agency of the Federal government established to recapitalize the predecessor to the SAIF. These assessments will continue until the FICO bonds mature in 2017.

Regulatory Capital Requirements. OTS capital regulations require savings associations to meet three capital standards: (1) a tangible capital requirement of 2% 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.

Don M. Gibson has been President and Chief Executive Officer of the Company and the Bank since January 2002. Prior to joining the Company, Mr. Gibson was a retired banking executive. From March 2000 to July 2000 Mr. Gibson was President of Sinclair National Bank, Gravette, Arkansas. Prior to that, Mr. Gibson was at Great Southern Bank, a subsidiary of Great Southern Bancorp, Inc., Springfield, Missouri, holding various positions since September 1975 with his last being Vice Chairman.

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.

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Bruce Winston

As of June 30, 2002, the years of age of these individuals was 58 for Mr. Gibson, 55 for Mr. Williams and 54 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, three full-service branch offices in Springfield, four in-store branches located in the Dillons Supermarkets in Springfield and one in-store in 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, 2002, 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, 2002 (the "2002 Annual Report") is incorporated herein by reference. Dividends paid information on pages 9 and 10 of the 2002 Annual Report is incorporated herein by reference.

With respect to Equity Compensation Plan information see Item 12. "Security Ownership of Certain Owners and Management Related Matters."

Item 6. Selected Financial Data

The information contained on page 3 of the 2002 Annual Report is incorporated herein by reference.

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

The information contained on pages 4 through 15 of the 2002 Annual Report is incorporated herein by reference.

23



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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 2002 Annual Report is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The financial statements set forth on pages 16 to 42 of the 2002 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 23, 2002 (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", " "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.

24



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Item 12. Security Ownership of Certain Beneficial Owners and Management

Except as set forth below, information required by this item is incorporated herein by reference to the

section captioned "Voting Securities and Principal Holders Thereof" in the Proxy Statement.



|Equity Compensation Plan Information                       |                                                                                                
|---------------------------------------------------------- | -----------------------------------------------------------------------------------------------
|Plan category                                              | (a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|Equity compensation plans approved by security holders     | 412,182                                                                                        
|Equity compensation plans not approved by security holders | 17,875                                                                                         
|Total                                                      | 430,057                                                                                        

_______________

|(1) | At a special stockholders' meeting on July 22, 1998, the Company's stockholders approved the Restricted Stock Plan (the "RSP"). Following the approval of the Plan, the Company contributed $2,373,065 to a separate trust to purchase the 173,632 shares in the RSP. As of June 30, 2002 there are 56,576 shares in this plan that are not vested and 5,706 that are unallocated.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | All of these shares can be awarded as restricted shares. See "- Description of Stock Plans Not Approved by Shareholders."                                                                                                                                                                                                                                                         

25



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Description of Stock Plans Not Approved by Stockholders

2000 Stock Compensation Plan

2001 Stock Compensation Plan. During the year ended June 30, 2001, the directors of the Company established the Stock Compensation Plan (the "2001 SCP") with both a stock award component and a stock option component. Stock options awarded under the plan are considered non-qualified for federal income tax purposes. Officers, directors and employees of the Company and its subsidiaries are eligible under the plan. Awards become fully vested in the event of a "change in control" as defined in the plan. Under the stock award the component of this plan, the Committee awarded 10,239 restrictedshares of the Company's common stock. The shares for this plan were taken from forfeited shares in the RSP. As of June 30, 2002, none of the shares in this plan are vested. There were no options granted from this plan.

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.

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 2002 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, 2002 and 2001.                                                                                                                                                                    
| |     | Consolidated Statements of Income for the Years Ended June 30, 2002, 2001, and 2000.                                                                                                                                         
| |     | Consolidated Statements of Stockholders' Equity for the Years Ended June 30, 2002, 2001, and 2000.                                                                                                                           
| |     | Consolidated Statements of Cash Flows for the Years Ended June 30, 2002, 2001, and 2000.                                                                                                                                     
| |     | 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.

26



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| |     | 3.                                 | The following exhibits are included in this Report or incorporated herein by reference:
| | --- | ---------------------------------- | ---------------------------------------------------------------------------------------
| | (a) | List of Exhibits:                 
| |     |                                    | 3(i)                                                                                   
| |     |                                    | 3(ii)                                                                                  
| |     |                                    | 4                                                                                      
| |     |                                    | 10.1                                                                                   
| |     |                                    | 10.2                                                                                   
| |     |                                    | 10.3                                                                                   
| |     |                                    | 10.4                                                                                   
| |     |                                    | 10.5                                                                                   
| |     |                                    | 10.6                                                                                   
| |     |                                    | 10.7                                                                                   
| |     |                                    | 13                                                                                     
| |     |                                    | 21                                                                                     
| |     |                                    | 23                                                                                     
| |     |                                    | 99.1                                                                                   
| |     |                                    | 99.2                                                                                   
| | (b) | Reports on Form 8-K: April 4, 2002

_____________________

|(1) | Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended June 30, 1998 (SEC File No. 0-23325) and incorporated herein by reference.                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Filed as an exhibit to the Form 8A filed by Registrant on January 22, 1999 and incorporated herein by reference.                                                            
|(3) | Filed as Exhibit 10.1 of the Registration Statement on Form S-1 filed by the Registrant on September 22, 1997 (SEC File No. 333-36141) and incorporated herein by reference.
|(4) | Filed as Exhibit 10.2 of the Registration Statement on Form S-1 filed by the Registrant on September 22, 1997 (SEC File No. 333-36141) and incorporated herein by reference.
|(5) | Filed as Exhibit A of the proxy statement for a special meeting of stockholders held on July 22, 1998 (SEC File No. 0-23325) and incorporated herein by reference.          
|(6) | Filed as Exhibit B of the proxy statement for a special meeting of stockholders held on July 22, 1998 (SEC File No. 0-23325) and incorporated herein by reference.          
|(7) | Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year ended June 30, 2001 (SEC File No. 0-23325) and incorporated herein by reference.                  

27



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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 25, 2002 | By:                              









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:
Date: | /s/ Don M. Gibson
Don M. Gibson
President and Chief Executive Officer
(Principal Executive Officer)
September 25, 2002          | By:
Date: | /s/ Ivy L. Rogers
Ivy L. Rogers
Director
September 25, 2002                            
|--------- | ------------------------------------------------------------------------------------------------------------------------------- | --------- | ---------------------------------------------------------------------------------------
|          |                                                                                                                                 |           |                                                                                        
|By:
Date: | /s/ Bruce Winston
Bruce Winston
SVP and Chief Financial Officer
(Principal Accounting and Financial Officer)
September 25, 2002 | By:
Date: | /s/ Gary Lipscomb
Gary Lipscomb
Director
September 25, 2002                            
|          |                                                                                                                                 |           |                                                                                        
|By:
Date: | /s/ Wayne V. Barnes
Wayne V. Barnes
Director
September 25, 2002                                                                 | By:
Date: | /s/ Jack L. Barham
Jack L. Barham
Chairman of the Board and Director
September 25, 2002
|          |                                                                                                                                 |           |                                                                                        
|By:
Date: | /s/ Gregory V. Ostergrem
Gregory V. Ostergren 
Director
September 25, 2002                                                      | By:
Date: | /s/ Raymond D. Tripp
Raymond D. Tripp
Director
September 25, 2002                      
|          |                                                                                                                                 |           |                                                                                        
|By:
Date: | /s/ Kurt D. Hellweg
Kurt D. Hellweg
Director
September 25, 2002                                                                 | By:
Date: | /s/ Tim Rosenbury
Tim Rosenbury
Director
September 25, 2002                            
|          |                                                                                                                                 |           |                                                                                        
|By:       | /s/ James L. Sivils, III
James L. Sivils, III 
Director
September 25, 2002                                                      |           |                                                                                        

28



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I, Don M. Gibson, certify that:

1. I have reviewed this annual report on Form 10-K of Guaranty Federal Bancshares, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.



|Date: September 25, 2002 | /s/ Don M. Gibson
Don M. Gibson
President and Chief Executive Officer
|------------------------ | ---------------------------------------------------------------------



I, Bruce Winston, certify that:

1. I have reviewed this annual report on Form 10-K of Guaranty Federal Bancshares, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.



|Date: September 25, 2002 | /s/ Bruce Winston
Bruce Winston
Senior Vice President and Chief
       Financial Officer
|------------------------ | ----------------------------------------------------------------------------------------

29



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Exhibit 13



GUARANTY FEDERAL BANCSHARES

2002 ANNUAL REPORT

CONTENTS



|1
2
3
4
16
43
46 | Investor Information
President's Message
Selected Consolidated Financial and other Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Financial Statements
Independent Accountants' Report
Directors and Officers
|---------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

COMMON STOCK PRICES & DIVIDENDS

The common stock of Guaranty Federal Bancshares, Inc. is traded in the over-the-counter market and quoted on the NASDAQ National Market. As of September 3, 2002, there were 1,696 stockholders of the 6,365,915 shares of common stock issued and outstanding.

The Company paid cash dividends of $0.25 per share on October 15, 2001 to shareholder's of record as of 
September 4, 2001, and $0.25 per share on April 12, 2002, to shareholder's of record as of April 1, 2002. The Company declared a cash dividend of $0.125 per share on June 27, 2002, that was paid on July 19, 2002, to shareholder's of record on July 8, 2002. Effective with this dividend the Company anticipates paying dividends on a quarterly basis rather than on a semi-annual basis.



The table below reflects the range of common stock closing prices by quarter.

INVESTOR INFORMATION

ANNUAL MEETING OF SHAREHOLDERS: The Annual Meeting of Stockholders will be held Wednesday,
October 23, 2002, at 6:00 p.m., at the Clarion Hotel, 3333 S. Glenstone, Springfield, Missouri.

ANNUAL REPORT ON FORM 10-K: Copies of the Guaranty Federal Bancshares Form 10-K Report to the Securities and Exchange Commission are available without charge upon written request to: Lorene Thomas, Secretary, Guaranty Federal Bancshares, Inc., 1341 W. Battlefield St., Springfield, MO 65807-4181.

TRANSFER AGENT: Registrar and Transfer Company, 10 Commerce Drive, Cranford, NJ 07016

STOCK TRADING INFORMATION: Over-the Counter Symbol: GFED

SPECIAL LEGAL COUNSEL: Manatt, Phelps & Phillips, LLP, 1501 M Street N.W., Suite 700, Washington, D.C. 20005

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS: BKD, LLP, 901 St. Louis St., PO Box 1190, Springfield, MO 65801-1190

SHAREHOLDER AND FINANCIAL INFORMATION: Bruce Winston, Senior Vice President, Chief Financial Officer 417-520-0206



1



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Dear Shareholders,

Our most recent fiscal year ending June 30, 2002, brought about record earnings and significant changes to our organization. Net income of $3.59 million, resulting in a 7.6% return on equity, reached new heights for the bank. Total assets grew to $376.9 million and total deposits increased to $223.6 million, both all time highs.

The Company's board of directors has charged me with improving the bank's performance, thus increasing shareholder value. After six months of getting acquainted and familiarizing myself with the bank and its personnel, I am excited about the potential that exists for growing the bank and increasing its profitability through fine-tuning the efforts of our highly skilled staff.

During the past year, we increased our presence in the Springfield market with the acquisition of four additional branch locations in the Dillon's supermarkets. We are now even more convenient for our customers with the addition of our full-service Internet location at GFED.com, where customers can bank on-line, check balances, transfer funds and even pay their bills. Our mortgage department continues to set the bar for residential loan closings in Greene County, and our recent emphasis on commercial lending has been even more successful than anticipated.

In March 2002, the repurchase of 1,068,000 shares of our common stock was completed. This transaction utilized our excess capital and brought our equity level more in-line with our industry peers. This transaction has resulted in a positive effect on earnings per share. The Company's earnings per share in fiscal year 2002 were $1.01, an increase of 29% over fiscal year 2001. During the year we paid two semi-annual dividends of $0.25 per share. In July 2002, we paid our first quarterly dividend of $0.125 per share, which implemented our new quarterly dividend policy. Through an economically challenging year, we have outperformed the market ending the year with a stock price of $13.86 per share, a 22% increase since June 30, 2001.

We believe we are positioned for another strong and stable fiscal year, and are ready to harvest the results of our previous labors. Our focus for the year is on increasing our operating efficiencies, controlling expenses and providing exceptional customer service. Achieving these goals should increase profitability, continue growth in total assets and deposits and further increase our stock price. I am looking forward to reporting our results to you for fiscal year 2003.





| | Sincerely,                     
| | -------------------------------
| |                                
| | Don M. Gibson
President and CEO



2



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Guaranty Federal Bancshares, Inc.



The following tables include certain information concerning the financial position of Guaranty Federal Bancshares, Inc. (including consolidated data from operations of subsidiaries) as of the dates indicated. Dollar amounts are expressed in thousands except per share data.





3



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Guaranty Federal Bancshares, Inc.



GENERAL













FINANCIAL CONDITION







4



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Guaranty Federal Bancshares, Inc.



From June 30, 2001 to June 30, 2002, net loans receivable decreased by $457,993. During this period, permanent loans secured by both owner and non-owner occupied one to four unit residential real estate decreased by $40,260,499, (22%), consumer installment loans increased $20,407,896 (198%), multi-family permanent loans increased by $1,413,584 (3%), construction loans decreased by $5,509,995 (10%) and permanent loans secured by commercial real estate increased $14,540,564 (33%). As a part of the Commercial Federal acquisition, the Company purchased approximately $15.5 million in consumer and home equity loans. During this period the Company increased its emphasis on commercial lending, while selling the majority of conforming loan production on the secondary market. These loan sales allowed the Bank to provide customers with 30-year fixed rate mortgages while retaining a banking relationship with the customer. As a result of these loan sales, loans serviced for others increased by $38,932,904 (76%).

















5



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Guaranty Federal Bancshares, Inc.



AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS









6



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Guaranty Federal Bancshares, Inc.







RESULTS OF OPERATIONS - COMPARISON OF YEARS ENDED JUNE 30, 2002 AND 2001











7



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Guaranty Federal Bancshares, Inc.



Interest on loans decreased $1,281,546 (5%) as the average loan receivable balance increased $15,374,000 (5%) while the average yield decreased 78 basis points to 7.35%. The decrease in loan yield is the result of the combination of new loans at lower rates, repayments of higher yielding loans, and the roll down of adjustable rate loans. Interest on investment securities decreased $513,427 (45%) as the average balance decreased $413,000 (3%) and the average yield decreased 326 basis points to 4.18%. As long as interest rates remain at historical low levels, our customers will benefit from loan rates adjusting downward and from refinancing to fixed-rate mortgages to lock-in the rates. These adjustments and refinances will negatively impact portfolio loan yields in future quarters.

















8



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Guaranty Federal Bancshares, Inc.



Non-Interest Expense. Non-interest expense increased $1,372,221 (18%). Increases in salaries and employee benefits, occupancy and data processing expense are principally attributable to the Company's recent expansion through branch additions and an overall increase in accounts served. The Company incurred approximately $183,000 in "one-time" costs in connection with the Commercial Federal acquisition and approximately $150,000 in legal and professional expenses in connection with the settlement of a dispute over the repurchase of the Company's stock.





RESULTS OF OPERATIONS - COMPARISON OF YEARS ENDED JUNE 30, 2001 AND 2000















9



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Guaranty Federal Bancshares, Inc.



Interest expense on deposits increased $567,569 (9%) as the average balance of interest costing deposits increased $1,348,000 (1%) and the average interest rate paid to depositors increased 37 basis points to 4.82%. The average balance of interest costing core deposit accounts increased $2,698,000 (6%) and the average balance of certificates of deposit decreased $1,350,000 (1%).











Non-Interest Expense. Non-interest expense increased $1,201,061 (19%). Salaries and employee benefits increased $669,063 (20%) due to increased staffing for the commercial loan department, the computer system conversion and the increased volume of customer transactions. Occupancy expense increased $175,759 (21%) primarily due to the opening of a new full service branch on South National, as well as upgrading computer hardware for the new "in-house" core system. Data processing expense increased $113,927 (22%). This was a result of various one-time conversion costs related to the new computer system. Other expense increased $258,506 (22%) due to increases in legal expense, postage, loan expense, accounting services and overdraft losses. The Savings Association Insurance Fund assessment declined $27,524 (49%) as the fund reached the level prescribed by the FDIC. Advertising increased $11,330 (3%).









10



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Guaranty Federal Bancshares, Inc.



ASSET / LIABILITY MANAGEMENT















11



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Guaranty Federal Bancshares, Inc.



INTEREST RATE SENSITIVITY ANALYSIS

















12



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Guaranty Federal Bancshares, Inc.



LIQUIDITY AND CAPITAL RESOURCES















IMPACT OF INFLATION AND CHANGING PRICES







13



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Guaranty Federal Bancshares, Inc.



IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) recently adopted SFAS 141, "Business Combinations." This Statement establishes new standards for financial accounting and reporting for business combinations. This Statement eliminates the pooling-of-interests method and requires that all business combinations be accounted for using the purchase method. The provisions of this Statement apply to all business combinations initiated after June 30, 2001 and to all business combinations accounted for using the purchase method for which the date of acquisition is July 1, 2001, or later. Initial adoption of SFAS 141 had no effect on the Company's financial statements.

The FASB recently adopted SFAS 142, "Goodwill and Other Intangible Assets". This Statement establishes new financial accounting and reporting standards for acquired goodwill and other intangible assets. The Statement addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. It also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. SFAS 142 is effective for fiscal years beginning after December 15, 2001. Early adoption is permitted for entities with fiscal years beginning after March 15, 2001. The Company will first apply SFAS 142 in the first quarter of its fiscal year ending June 30, 2003. Adoption of SFAS 142 as of that date will have no initial effect on the Company's financial statements.

The FASB recently adopted SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This Statement addresses how and when to measure impairment on long-lived assets and how to account for long-lived assets that an entity plans to dispose of either through sale, abandonment, exchange or distribution to owners. The Statement also requires expected future operating losses from discontinued operations to be recorded in the period in which the losses are incurred rather than at the measurement date. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The Company will first apply SFAS 144 in the first quarter of its fiscal year ending June 30, 2003. Initial adoption of SFAS 144 will have no effect on the Company's financial statements.



14



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Guaranty Federal Bancshares, Inc.



Summary of Unaudited Quarterly Operating Results





15



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Guaranty Federal Bancshares, Inc.





See Notes to Consolidated Financial Statements

16



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Guaranty Federal Bancshares, Inc.





See Notes to Consolidated Financial Statements

17



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Guaranty Federal Bancshares, Inc.





See Notes to Consolidated Financial Statements

18



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Guaranty Federal Bancshares, Inc.





See Notes to Consolidated Financial Statements

19



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Guaranty Federal Bancshares, Inc.





See Notes to Consolidated Financial Statements

20



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Guaranty Federal Bancshares, Inc.



|NOTE 1: | NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|------- | -------------------------------------------------------------------

Organization





Nature of Operations



Principles of Consolidation



Use of Estimates







21



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Guaranty Federal Bancshares, Inc.



Investments in Debt and Equity Securities







Mortgage Loans Held for Sale



Loans



Loan Servicing



Allowance for Loan Losses







22



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Guaranty Federal Bancshares, Inc.



A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent.

Foreclosed Assets Held for Sale



Premises and Equipment



Fee Income



Income Taxes



Cash Equivalents



Regulatory Matters







23



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Guaranty Federal Bancshares, Inc.



As of June 30, 2002, the most recent notification from the Office of Thrift Supervision categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Bank's category.









24



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Guaranty Federal Bancshares, Inc.



Earnings Per Share









25



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Guaranty Federal Bancshares, Inc.



Impact of Recent Accounting Pronouncements







Segment Information





26



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Guaranty Federal Bancshares, Inc.



|NOTE 2: | INVESTMENTS IN DEBT AND EQUITY SECURITIES
|------- | -----------------------------------------













27



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Guaranty Federal Bancshares, Inc.



The amortized cost and approximate fair values of securities classified as held to maturity are as follows:





Maturities of held-to-maturity securities as of June 30, 2002:









28



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Guaranty Federal Bancshares, Inc.



|NOTE 3: | LOANS AND ALLOWANCE FOR LOAN LOSSES
|------- | -----------------------------------

Categories of loans at June 30, 2002 and 2001, include:







Activity in the allowance for loan losses was as follows:









29



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Guaranty Federal Bancshares, Inc.



|NOTE 4: | PREMISES AND EQUIPMENT
|------- | ----------------------

Major classifications of premises and equipment, stated at cost, are as follows:







30



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Guaranty Federal Bancshares, Inc.



|NOTE 5: | DEPOSITS
|------- | --------



















31



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Guaranty Federal Bancshares, Inc.



|NOTE 6: | FEDERAL HOME LOAN BANK ADVANCES
|------- | -------------------------------











32



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Guaranty Federal Bancshares, Inc.



|NOTE 7: | INCOME TAXES
|------- | ------------

















33



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Guaranty Federal Bancshares, Inc.



A reconciliation of income tax expense at the statutory rate to income tax expense at the Company's effective rate is shown below:







|NOTE 8: | DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
|------- | -----------------------------------------------------









34



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Guaranty Federal Bancshares, Inc.



The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and Cash Equivalents



Investment Securities



Accrued Interest Receivable



Mortgage Loans Held for Sale



Loans



Deposits



Federal Home Loan Bank Advances



Securities Sold under Agreements to Repurchase



Accrued Interest and Dividend Payable



Commitments to Extend Credit, Letters of Credit and Lines of Credit





35



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Guaranty Federal Bancshares, Inc.



|NOTE 9: | SIGNIFICANT ESTIMATES AND CONCENTRATIONS
|------- | ----------------------------------------



|NOTE 10: | EMPLOYEE BENEFIT PLANS
|-------- | ----------------------

Stock Award Plans













Stock Option Plans







36



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Guaranty Federal Bancshares, Inc.



At a special stockholders' meeting on July 22, 1998, the Company's stockholders approved the 1998 Stock Option and Incentive Plan. Under this plan, the Committee may grant stock options for up to 434,081 shares of the Company's common stock.











37



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Guaranty Federal Bancshares, Inc.



The fair value of each option granted is estimated on the date of the grant using the Black-Scholes pricing model with the following weighted-average assumptions:









Employee Stock Ownership Plan





38



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Guaranty Federal Bancshares, Inc.



The following is a summary of ESOP shares as of June 30, 2002:



|NOTE 11: | RELATED PARTY TRANSACTIONS
|-------- | --------------------------





|NOTE 12: | COMMITMENTS AND CREDIT RISK
|-------- | ---------------------------



As of June 30, 2002 and 2001, the Bank had outstanding commitments to originate loans of approximately $9,485,000 and $9,679,000, respectively. The commitments extend over varying periods of time with the majority being disbursed within a thirty-day period. As of June 30, 2002 and 2001, commitments of $3,910,000 and $8,854,000, respectively, were at fixed rates and $5,575,000 and $825,000, respectively, were at floating market rates.









39



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Guaranty Federal Bancshares, Inc.



Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer's credit worthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on balance sheet instruments.



|NOTE 13: | CONDENSED PARENT COMPANY STATEMENTS
|-------- | -----------------------------------







40



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Guaranty Federal Bancshares, Inc.







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Guaranty Federal Bancshares, Inc.







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Independent Accountants' Report





Board of Directors
Guaranty Federal Bancshares, Inc.
Springfield, Missouri



We have audited the accompanying consolidated balance sheets of GUARANTY FEDERAL BANCSHARES, INC.as of June 30, 2002 and 2001, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended June 30, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of GUARANTY FEDERAL BANCSHARES, INC.as of June 30, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2002, in conformity with accounting principles generally accepted in the United States of America.

| | /s/ BKD, LLP
| | ------------



July 24, 2002
Springfield, Missouri



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Exhibit 23



Consent of Independent Accountants



Board of Directors
Guaranty Federal Bancshares, Inc.
Springfield, Missouri



We consent to the incorporation by reference in Registration Statement Nos. 333-47241, 333-31196, 333-65544 and 333-83822 on Forms S-8 of Guaranty Federal Bancshares, Inc. of our report dated July 24, 2002, relating to the consolidated balance sheets of Guaranty Federal Bancshares, Inc. as of June 30, 2002 and 2001, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended June 30, 2002, which report appears in the Annual Report on Form 10-K of Guaranty Federal Bancshares, Inc. for the year ended June 30, 2002.



/s/ BKD,LLP

September 25, 2002
Springfield, Missouri





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Exhibit 99.1

CEO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Guaranty Federal Bancshares, Inc. (the "Company") on Form 10-K for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Don M. Gibson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)         The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)         The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Don M. Gibson

Don M Gibson
Chief Executive Officer
September 25, 2002



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Exhibit 99.2

CFO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Guaranty Federal Bancshares, Inc. (the "Company") on Form 10-K for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bruce Winston, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)         The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)         The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Bruce Winston

Bruce Winston
Chief Financial Officer
September 25, 2002



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