UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

(MarkOne)  [X]

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

                      For the quarter ended March 31, 1998
                                            -------------- 
                                       OR

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

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

Commission number 0-23325
                  -------  

                        Guaranty Federal Bancshares, Inc.
                        ---------------------------------
             (Exact name of registrant as specified in its charter)

       Delaware                                              43-1792717     
       --------                                              ----------     
(State or other jurisdiction of                             (IRS Employer
incorporation or organization)                             Identification No.)

    1341 West Battlefield
  Springfield, Missouri                                         65807           
  ---------------------                                         -----           
(Address of principal executive offices)                     (Zip Code)


                        Telephone Number: (417) 889-2494
                                          --------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 the number of shares  outstanding of each of the  registrant's
classes of common stock, as of the latest practicable date.


                  Class                        Outstanding at May 11, 1998
                  -----                        ---------------------------

         Common Stock, Par Value $0.10               6,225,817 Shares


<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC

                                    Form 10-Q

                                TABLE OF CONTENTS
Item                                                                    Page
----                                                                    ----
                          PART I. Financial Information
                          -----------------------------

1.  Consolidated Financial Statement (Unaudited):
         Statements of Financial Condition                                3

         Statements of Income                                             4

         Statements of Cash Flow                                          5

         Notes to Consolidated Financial Statement                        6

2.  Management's Discussion and Analysis of Financial Condition and       9
         Results of Operations

                           PART II. Other Information
                           --------------------------

1.  Legal Proceedings                                                    17

2.  Changes in Securities and Use of Proceeds                            17

3.  Defaults Upon Senior Securities                                      18

4.  Submission of Matters to Vote of Security-holders                    18

5.  Other Information                                                    18

6.  Exhibits and Reports on Form 8-K                                     18

    Signatures                                                           19



                                       2
<PAGE>




PART I

Item 1.  Financial Statements
         --------------------

                        GUARANTY FEDERAL BANCSHARES, INC.

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                  MARCH 31, 1998 (UNAUDITED) AND JUNE 30, 1997

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>

                                                                           March 31,       June 30,
                                                                            1998             1997
                                                                       -------------    -------------
                                                                                        (Unaudited)
<S>                                                                    <C>              <C>          
Cash                                                                   $     887,404    $     417,485
Interest-bearing deposits in other financial institutions                 17,130,088        3,399,866
                                                                       -------------    -------------
         Cash and cash equivalents                                        18,017,492        3,817,351

Available-for-sale securities                                              4,829,266        3,360,000
Held-to-maturity securities                                                9,070,423        8,585,753
Mortgage-backed securities, held-to-maturity                              12,888,531       15,813,890
Mortgage loans held for sale                                               5,911,556        5,903,002
Loans receivable, net                                                    184,461,863      152,232,295
Accrued interest receivable
         Loans                                                             1,105,129          996,014
         Investments                                                         164,918          165,949
         Mortgage-backed securities                                          123,306          149,598
Prepaid expenses and other assets                                          2,046,216        1,963,875
Foreclosed assets held for sale                                              224,155          210,155
Premises and equipment                                                     7,482,395        6,267,157
                                                                       -------------    -------------
                                                                       $ 246,325,250    $ 199,465,039
                                                                       =============    =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
LIABILITIES
Deposits                                                               $ 144,432,638    $ 151,246,482
Federal Home Loan Bank advances                                           27,861,206       18,150,844
Advances from borrowers for taxes and insurance                              545,815          674,618
Accrued expenses and other liabilities                                     1,705,850          666,427
Accrued interest payable                                                     186,543          131,245
Income taxes payable                                                         466,665          289,268
Deferred income taxes                                                      1,330,000          816,000
                                                                       -------------    -------------
                  Total Liabilities                                      176,528,717      171,974,884
                                                                       -------------    -------------

STOCKHOLDERS' EQUITY
Capital Stock
        Common stock, $0.10 par value; authorized 10,000,000 shares;
         issued and outstanding 6,225,817 shares                             622,582        3,125,000
Additional paid-in capital                                                48,998,665        3,687,356
Unearned ESOP shares                                                      (3,444,540)            --
Retained earnings, substantially restricted`                              20,775,301       18,620,219
                                                                       -------------    -------------
                                                                          69,952,008       25,432,575

Unrealized appreciation on available-for-sale securities,
     net of tax                                                            2,844,525        2,057,580
                                                                       -------------    -------------
                                                                          69,796,533       27,490,155
                                                                       -------------    -------------
                                                                       $ 246,325,250    $ 199,465,039
                                                                       =============    =============
</TABLE>

See Notes to Consolidated Financial Statements 

                                       3

<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC.

                        CONSOLIDATED STATEMENTS OF INCOME

         THREE AND NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
                                                    Three Months Ending           Nine Months Ending
                                                 ------------------------     ---------------------------
                                                   3/31/98        3/31/97        3/31/98      3/31/97
                                                   -------        -------        -------      -------
<S>                                             <C>           <C>             <C>             <C>      
INTEREST INCOME
Loans                                           $  3,696,895    3,136,573      $10,794,484      9,083,147
Investment securities                                 95,928      121,217          289,221        404,127
Mortgage-backed securities                           242,033      327,691          807,373      1,105,547
Other                                                348,943       96,911          642,517        271,164
                                                 -----------  -----------       ----------    -----------
       Total Interest Income                       4,383,799   3,682,392        12,533,595     10,863,985
                                                 -----------  -----------       ----------    -----------

INTEREST EXPENSE
Deposits                                           1,688,787    1,811,745        5,296,373      5,607,797
Federal Home Loan Bank advances                      339,326      293,406        1,159,344        531,979
Other deposits                                             0            0           79,043              0
                                                 -----------  -----------       ----------    -----------
       Total Interest Expense                      2,028,113    2,105,151        6,534,760      6,139,776
                                                 -----------  -----------       ----------    -----------

NET INTEREST INCOME                                2,355,686    1,577,241        5,998,835      4,724,209

PROVISION FOR LOAN LOSSES                             30,000            0           93,352              0
                                                 -----------  -----------       ----------    -----------

NET INTEREST INCOME AFTER
       PROVISION FOR LOAN LOSSES                   2,325,686    1,577,241        5,905,483      4,724,209
                                                 -----------  -----------       ----------    -----------

NONINTEREST INCOME (LOSS)
Service charges                                      150,430       69,999          425,055        165,816
Late charges and other fees                           28,224       22,334           81,710         61,416
Gain (loss) on loans, investment
    securities and mortgage-backed securities         12,295       (5,736)          69,666         22,274
Income on foreclosed assets                            8,525       28,001           10,611         16,605
Other income                                          53,001       21,249          116,071         67,530
                                                 -----------  -----------       ----------    -----------
       Total Noninterest Income                      252,475      135,847          703,113        333,641
                                                 -----------  -----------       ----------    -----------

NONINTEREST EXPENSE
Salaries and employee benefits                       591,973      490,643        1,675,038      1,603,324
Occupancy                                            202,054      167,897          550,917        473,952
SAIF deposit insurance premiums                       23,164       27,617           70,116      1,117,310
Data processing fees                                 105,547       97,588          302,849        280,717
Advertising                                          108,300       99,296          297,046        191,920
Other expense                                        214,442      124,434          608,693        383,133
                                                 -----------  -----------       ----------    -----------
       Total Noninterest Expense                   1,245,480    1,007,475        3,504,659      4,050,356
                                                 -----------  -----------       ----------    -----------

INCOME BEFORE INCOME TAXES                         1,332,681      705,613        3,103,937      1,007,494
PROVISION FOR INCOME TAXES                           489,438      253,797        1,149,403        351,726
                                                 -----------  -----------       ----------    -----------

NET INCOME                                      $    843,243      451,816    $    1,954,534       655,768
                                                 ===========  ===========     =============   ===========

EARNINGS PER SHARE BASIC                        $       0.14          n/a    $          n/a           n/a
                                                 ===========  ===========      ============   ===========
EARNINGS PER SHARE DILUTED                      $       0.14          n/a    $          n/a           n/a
                                                 ===========  ===========      ============   ===========
</TABLE>

See Notes to Consolidated Financial Statements 

                                       4
<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>

                                                                              1998             1997
                                                                              ----             ----
<S>                                                                    <C>              <C>          
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                            $  1,954,534     $   655,768
   Items not requiring (providing) cash:
       Deferred income taxes                                                  51,504          (59,643)
       Depreciation                                                          331,393          314,074
       Provision for loan losses                                              93,352                0
       (Gain) loss on loans, investment securities
         and mortgage-backed securities                                      (69,666)         (22,274)
       Amortization of deferred income, premiums and discounts                79,965          (23,806)
       RRP expense                                                            74,470           90,036
   Origination of loans held for sale                                     (5,686,116)      (5,129,632)
   Proceeds from sale of loans held for sale                               5,743,616        3,603,783
   Changes in:
       Accrued interest receivable                                           (81,792)         103,546
       Prepaid expenses and other assets                                     (81,657)        (237,343)
       Accounts payable and accrued expenses                               1,095,043           38,448
       Income taxes payable                                                   194,626           87,741
                                                                         ------------     ------------
         Net cash provided by  (used in) operating activities              3,699,272         (579,302)
                                                                         -----------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Net increase in loans                                                 (32,420,629)     (14,475,154)
   Principal payments on mortgage-backed securities,
       held-to-maturity                                                    2,925,359        2,956,242
   Purchase of premises and equipment                                       (317,833)         (94,039)
   Proceeds from sale of available-for-sale securities                             0        5,318,175
   Purchase of held-to-maturity securities                                (4,855,431)               0
   Proceeds from sale of real estate owned                                    14,000                0
   Proceeds from maturities or calls of
       available-for-sale securities                                               0          733,464
   Proceeds from maturities or calls of
       held-to-maturity investments                                        4,259,673        1,000,000
   Capitalized costs on foreclosed assets                                          0          169,334
                                                                         -----------      -------------
Net cash used in investing activities                                    (30,394,861)      (4,391,978)
                                                                         ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from sale of common stock, net                                42,628,054                0
   Unearned ESOP shares                                                   (3,444,540)               0
   Stock options exercised                                                    44,372                0
   Cash dividends paid                                                    (1,621,372)        (562,500)
   Cash dividends received on RRP stock                                        8,704            7,649
   Net increase in demand deposits,
       NOW accounts and savings accounts                                   8,044,921        1,752,269
   Net increase (decrease) in certificates of deposit                    (14,345,968)     (12,693,977)
   Proceeds from FHLB advances                                            43,750,000       31,163,750
   Repayments of FHLB advances                                           (34,039,638)     (10,003,199)
   Advances from borrowers for taxes and insurance                          (128,803)        (187,289)
   Reduction of shares in RRP trust                                                0           13,358
                                                                         -----------      ------------
     Net cash provided by financing activities                            40,895,730        9,490,061
                                                                         -----------      -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                     14,200,141        4,518,781

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             3,817,351        2,674,557
                                                                        ------------     ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                               $  18,017,492    $   7,193,338
                                                                        ============     ============
</TABLE>

See Notes to Consolidated Financial Statements 

                                       5
<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1:  Conversion, Reorganization and Stock Issuance
         ---------------------------------------------

         Guaranty  Federal  Bancshares,  Inc.  completed the  conversion  from a
federally   chartered  mutual  holding  company,   (formerly   Guaranty  Federal
Bancshares,  M. H. C.) to a Delaware-chartered stock corporation on December 30,
1997. Guaranty Federal Bancshares, Inc. exchanged 1,880,710 shares of its common
stock for all the Bank's common stock not held by Guaranty  Federal  Bancshares,
M. H. C. This exchange ratio was 1.931. In addition  4,340,812  shares at $10.00
per share  were  sold in the stock  offering,  including  344,454  shares to the
employee stock ownership plan ( the "ESOP"). Costs related to the stock issuance
have been applied to reduce the gross  proceeds,  resulting in net proceeds from
the  offering  of $39.2  million.  Total  shares  of  common  stock  outstanding
following the offering and exchange was 6,221,522.

         In April  1995  Guaranty  Federal  Savings  and Loan  Association  (the
"Association")  reorganized  from a federally  chartered mutual savings and loan
association into a federal mutual holding company,  Guaranty Federal Bancshares,
M.  H.  C.  (the  "MHC").  As  part  of  the  reorganization,   the  Association
incorporated a de novo federally  chartered stock savings bank, Guaranty Federal
Savings  Bank  (the  "Bank")  and  transferred  most of its  assets  and all its
liabilities  to the Bank. The Bank issued  3,125,000  shares of its common stock
(par value $1.00) of which  972,365  shares were sold to parties  other than the
MHC, thus creating a minority  ownership interest in the Bank. The shares had an
initial public offering price of $8 per share, resulting in gross sales proceeds
of $7,778,920.  Costs related to the stock issuance,  which have been applied to
reduce the gross proceeds,  were $654,388.  Also $100,000 was transferred to the
MHC for the initial capitalization in connection with reorganization.

Note 2:  Basis of Presentation
         ---------------------

         The accompanying  unaudited interim  consolidated  financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information  and with the  instructions to Form 10-Q and
Rule  10-01 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals)  considered  necessary for a fair
presentation have been included.

                                       6

<PAGE>
                        GUARANTY FEDERAL BANCSHARES, INC

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 2:  Basis of Presentation, continued
         --------------------------------

           Operating results for the nine-month periods ended March 31, 1998 and
1997, are not necessarily indicative of the results that may be expected for the
full year.  Prior to December 30, 1997,  the Company  engaged in no  significant
business activity other than formation activities. Between December 30, 1997 and
March 31, 1998, the Company  engaged in no significant  business  activity other
than ownership of the common stock of the Bank.  Accordingly,  all  consolidated
financial  statements  for periods prior to December 30, 1997,  relate solely to
the Bank and Guaranty Financial  Services,  Inc. of Springfield,  a wholly owned
subsidiary of the Bank. For further information refer to the Savings Bank's June
30, 1997, Form 10-KSB which was filed with the Office of Thrift  Supervision and
includes a complete set of audited financial statements through June 30, 1997.

Note 3:  Principles of Consolidation
         ---------------------------

         As more fully described in Note 1, the Company is a  Delaware-chartered
stock corporation organized to facilitate the conversion from the mutual holding
company  form of  ownership  of the Bank to the stock  holding  company  form of
ownership  of the  Bank  and  hold all of the  capital  stock  of the  Bank.  In
connection with the conversion, Guaranty Federal Bancshares, M. H. C., which had
owned 69% of the common  stock of the Bank,  was merged  with and into the Bank,
and its shares of the Bank were canceled.

         The  consolidated  financial  statements  include  the  accounts of the
Company,  its wholly -owned  subsidiary,  Guaranty  Federal Savings Bank and the
wholly-owned subsidiary of the Bank, Guaranty Financial Services of Springfield,
Inc. Significant  intercompany accounts and transactions have been eliminated in
consolidation.

Note 4:  Earnings Per Share
         ------------------

         The  FASB  recently  adopted  SFAS  128,  "Earnings  Per  Share."  This
statement  replaces  the  presentation  of  primary  earnings  per share  with a
presentation  of basic  earnings per share.  The  statement  also  requires dual
presentation  of basic and diluted  earnings per share by entities  with complex
capital   structures  and  requires  a  reconciliation  of  the  numerators  and
denominators  between the two calculations.  SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997,  including interim
periods.

                                       7
<PAGE>
                        GUARANTY FEDERAL BANCSHARES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 4:  Earnings Per Share, continued
         -----------------------------

         As more fully  described  in the  preceding  Notes,  the Company had no
operations prior to December 30, 1997 and earnings per share information for the
common  stock of the Company  for the nine  months  ended March 31, 1998 and the
three months and nine months ended March 31, 1997 has not been presented because
the information is not available or would not be meaningful.
<TABLE>
<CAPTION>
                                                                 For three months ended March 31, 1998
                                                                 -------------------------------------
                                                                   Income         Shares      Per-share

<S>                                                                <C>           <C>            <C>  
Basic EPS
Income available to common stockholders                            $843,243      5,877,527      $0.14
                                                                                                =====

Effect of Dilutive Securities
Stock options                                                                       75,059
RRP shares                                                                          25,013
                                                                  ---------       --------
Income available to common stockholders                            $843,243      5,974,753      $0.14
                                                                   ========      =========      =====
</TABLE>

Options  to  purchase  5,000  shares of common  stock at $12.63  per share  were
outstanding  during the three months ended March 31, 1998, but were not included
in the  computation  of diluted  EPS  because the  options'  exercise  price was
greater than the average market price of the common shares.

Note 5:  Benefit Plans
         -------------

         On October 18, 1995,  the Bank's  stockholders  voted to approve both a
Recognition and Retention Plan ("RRP") and a Stock Option Plan ("SOP").  The RRP
authorized shares to be issued to directors, officers and employees of the Bank.
As of March 31, 1998, all of the RRP shares have been purchased and awarded. The
Bank is amortizing  the RRP expense over each  participant's  vesting period and
the financial  statements  reflect $74,470 RRP expense for the nine month period
ending March 31, 1998. The SOP  authorized  stock options on shares to be issued
to officers and employees of the Bank, all of which have been granted.  Both the
RRP and SOP vest over a five year period.  The RRP and SOP have been adjusted to
reflect the conversion,  reorganization  and stock issuance  described in Note 1
with all vesting  periods  remaining  unchanged.  At March 31, 1998,  there were
180,395  unexercised options that have been granted at prices ranging from $5.83
to $12.63 per share and 47,163 RRP shares were unvested.


                                       8
<PAGE>


                        GUARANTY FEDERAL BANCSHARES, INC

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         of Operations
         -------------

General
-------

         The accompanying Consolidated Financial Statements include the accounts
of Guaranty Federal  Bancshares,  Inc. (the "Company"),  and all accounts of its
wholly  owned  subsidiary , Guaranty  Federal  Savings Bank (the "Bank") and all
accounts of the wholly-owned subsidiary of the Bank, Guaranty Financial Services
of Springfield, Inc. All significant intercompany transactions and balances have
been eliminated in consolidation.

         However,  because the conversion,  reorganization and stock issuance of
the  Company,  the Bank and related  entities  did not occur until  December 30,
1997,  all results  prior to that date  reflect the accounts of the Bank and its
subsidiary.  The Company  realized  approximately  $39.2 million in net proceeds
from the stock issuance of which the Company  provided $19.9 million to the Bank
as capital and the Company provided a loan of $3.44 million to fund the purchase
of stock for the  employee  stock  ownership  plan.  Other than the loan for the
ESOP, most of the funds received have been invested in loans.

         The primary  function of the Company has been to monitor its investment
in the Bank,  as a result,  the results of  operation of the Company are derived
primarily  from  operations of the Bank.  The Bank's  results of operations  are
primarily  dependent on net interest  margin,  which is the  difference  between
interest   income  on   interest-earning   assets   and   interest   expense  on
interest-bearing liabilities. The Bank's income is also affected by the level of
its  noninterest  expenses,  such as  employee  salary and  benefits,  occupancy
expenses and other  expenses.  The  following  discussion  reviews the financial
condition at March 31,  1998,  and the results of  operations  for the three and
nine months ended March 31, 1998 and 1997.

Financial Condition
-------------------

         The  Company's  total  assets  increased  $46,860,211,  or 23.5%,  from
$199,465,039 as of June 30, 1997, to $246,325,250 as of March 31, 1998.

         Cash and cash  equivalents  increased  by  $14,200,141,  or 372.0% from
$3,817,351 as of June 30, 1997, to $18,017,492  as of March 31, 1998.  This is a
result of proceeds from the stock  conversion  being placed in  interest-bearing
deposits with other financial institutions.

                                       9


<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC

Financial Condition (continued)
-------------------------------

         Available-for-sale  securities  increased  $1,469,266  , or 43.7%  from
$3,360,000  as of June 30,  1997,  to  $4,829,266  as of  March  31,  1998,  and
held-to-maturity  securities increased $484,670,  or 5.6%, from $8,585,753 as of
June 30, 1997 to  $9,070,423  as of March 31, 1998.  The Bank  continues to hold
96,000 shares of Federal Home Loan Mortgage  Corporation  ("FHLMC") stock with a
amortized cost of $94,000 in the  available-for-sale  category.  As of March 31,
1998,  the gross  unrealized  gain on the stock was  $3,932,000 an increase from
$3,266,000 as of June 30, 1997.

         Mortgage-backed securities,  held-to-maturity,  decreased $2,925,359 or
18.5%,  from  $15,813,890 as of June 30, 1997, to  $12,888,531,  as of March 31,
1998.  The decrease is  attributed to  prepayments  received on various pools of
mortgage-backed  securities  during the nine months ending March 31, 1998. As of
March 31, 1998,  and June 30,  1997,  there were no  mortgage-backed  securities
classified as available for sale.

         Net  loans  receivable   increased  by  $32,229,568,   or  21.2%,  from
$152,232,295,  as of June 30, 1997, to  $184,461,863,  as of March 31, 1998, and
loans held-for-sale  increased by $8,554, or 0.1% from $5,903,002 as of June 30,
1997 to $5,911,556  as of March 31, 1998.  Growth  consisted  primarily of loans
secured by both owner and  non-owner  occupied  residential  real estate,  which
increased by $26,000,000,  of which approximately $19,000,000 were in fixed rate
loans. The Bank has adopted a strategy,  whereby fixed rate loans are being held
in the portfolio and funded with FHLB advances. The Bank has been able to obtain
a positive spread of  approximately  125 basis points using this funding method.
However,  this strategy has increased the interest rate risk of the Bank. Growth
in loans  receivable is  anticipated  to continue and represents a major part of
the Bank's planned asset growth.

         Allowance for loan losses increased  $23,672 or 1.1% from $2,177,009 as
of June 30, 1997, to $2,200,681  as of March 31, 1998.  The allowance  increased
due to increases in the loan loss  provision  for the period.  The allowance for
loan losses as of March 31,  1998 and June 30, 1997 was 1.3%,  and 1.4% of total
loans  outstanding.  As of March 31,  1998,  the  allowance  for loan losses was
180.5% of loans past due 90 days or more versus 262.8% as of June 30, 1997.

         Fair value of foreclosed assets held-for-sale  increased $14,000,  from
$210,155 as of June 30, 1997 to $224,155 as of March 31, 1998.  This increase is
the net difference  between  property  repossessed and property sold during this
period.  During this period there were sales of a four-plex and six-plex and one
automobile  previously held for sale. The remaining  properties in this category
include a duplex  acquired in July 1996, a single family  residence  acquired in
June 1997, and one automobile  acquired in November  1997.  Management  believes
that these assets can be sold with no further loss to the Bank.

                                       10
<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC

Financial Condition (continued)
-------------------------------

         Premises and equipment increased $1,215,238,  or 19.4%, from $6,267,157
as of June 30, 1997, to  $7,482,395 as of March 31, 1998.  The Bank opened a new
branch office in the southern  section of  Springfield  in December  1997.  This
branch is  located  on a site of land  purchased  by the MHC,  and  subsequently
transferred  to the  Company  in  connection  with  its Plan of  Conversion  and
Reorganization.  The land was  transferred  at a fair value of  $1,228,798.  The
branch office is currently  housed in a modular  building  which is leased for a
two year period.  During the two year lease, the Bank intends to examine whether
to  extend  the lease of the  modular  office,  or  commence  construction  of a
permanent branch office facility.

         Deposits decreased $6,813,844 or 4.5%, from $151,246,482 as of June 30,
1997, to $144,432,638 as of March 31, 1998. For the nine months ending March 31,
1998,  checking and passbook  accounts  increased by $8,044,921,  or 28.1% while
certificates  of deposits  decreased by $14,345,968,  or 11.7%.  The majority of
this decrease can be attributed to the management's  decision to allow high cost
certificate  of deposit  accounts to run off and  replace  these funds with FHLB
advances at an overall  lower cost. In addition  approximately  $1.5 million was
withdrawn from accounts to purchase stock in the Company.

         FHLB advances  increased  $9,710,362 or 53.5%,  from  $18,150,844 as of
June 30, 1997 to $27,861,206  as of March 31, 1998.  This increase is due to the
management's  decision to fund fixed rate loans with FHLB  advances,  as well as
replacing  certificate run off with FHLB advances. As of March 31, 1998 the Bank
had the ability to borrow an additional $74.0 million from the FHLB.

         Stockholders' equity (including  unrealized  appreciation on securities
available-for-sale,   net  of  tax)  increased  $42,306,378,   or  153.9%,  from
$27,490,155  as of June 30, 1997,  to  $69,796,533  as of March 31,  1998.  This
increase  was  primarily  due to the  sale of  $39,963,580  of  common  stock in
connection   with  the  Plan  of  Conversion  and   Reorganization.   Unrealized
appreciation on securities available-for-sale,  net of tax, contributed $786,945
to  stockholders'  equity for the nine months ended March 31, 1998. On March 19,
1998 a cash dividend of $0.15 per share was declared.  This dividend was payable
on April 30, 1998 to  stockholders  of record on April 2, 1998. The total amount
of the dividend was $933,841.50  which  represents a reduction in  stockholders'
equity.


                                       11
<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC

              Results of Operations - Comparison of Three Month and
                Nine Month Periods Ended March 31, 1998 and 1997

         Net income for the three  months and nine  months  ended March 31, 1998
was $843,243 and $1,954,534,  as compared to $451,816 and $655,768 for the three
months and nine  months  ended March 31,  1997 which  represents  an increase in
earnings  of $391,427  or 86.6% for the three  month  period,  and a increase in
earnings of  $1,298,766  or 198.1% for the nine month  period.  The  increase in
earnings  for the three month and nine month period  ending March 31, 1998,  was
primarily  due to increases in net  interest  income and non interest  income as
well as a  decrease  in  premiums  assessed  by the  Federal  Deposit  Insurance
Corporation  ("FDIC") on Savings Association  Insurance Fund ("SAIF") assessable
deposits.  Legislation was signed into law on September 30, 1996,  requiring all
SAIF-insured institutions to pay a one-time special assessment of 65.7 cents for
every $100 of deposits.  This special  assessment  decreased  net income for the
quarter ended September 30, 1996 by approximately $559,000.

Interest Income
---------------

         Total interest  income for the three months and nine months ended March
31, 1998, increased $701,407 or 19.0% and $1,669,610 or 15.4% as compared to the
three  months and nine months  ended March 31,  1997.  For the nine month period
ended March 31, 1998 the average yield on interest  earning assets  decreased 11
basis points to
 8.00%,  while  the  average  balance  of  interest  earnings  assets  increased
$30,000,000 over the same period one year ago.

Interest Expense
----------------

         Total  interest  expense for the three  months  ended  March 31,  1998,
decreased  $77,038 or 3.7%,  when  compared to the three  months ended March 31,
1997 and increased  $394,984,  or 6.4% for the nine months ended March 31, 1998,
when compared to the nine months ended March 31, 1997. For the nine month period
ended March 31, 1998, the average cost of interest bearing liabilities decreased
15 basis points to 5.1% while the average balance  increased  $15,000,000,  when
compared to the same period in 1997.

                                       12
<PAGE>



                  GUARANTY FEDERAL BANCSHARES, INC.

Net Interest Income
-------------------

         Net  interest  income for the three  months and nine months ended March
31, 1998, increased $778,445, or 49.4% and $1,274,626, or 27.0% when compared to
the same period in 1997.  This is due primarily to a increase in the  difference
between  average  earnings  assets and  average  interest  bearing  liabilities.
Average interest earning assets increased by $30,000,000 to $209,000,000 for the
nine month  period  ended March 31,  1998,  when  compared to the same period in
1997,  while average interest  bearing  liabilities  increased by $15,000,000 to
$171,500,000  for the nine month period ended March 31, 1998,  when  compared to
the same period in 1997. This is a result of $18,000,000  from the proceeds from
the stock  conversion  being used to pay off FHLB advances,  while the remaining
$21,200,000 was placed into interest earning assets.

Provision for Loan Losses
-------------------------

         Based  primarily  on  the  continued   growth  of  the  loan  portfolio
management  decided to increase the  allowance  for loan loss reserve  through a
provision  for loan loss of $30,000 and  $93,352  for the three  months and nine
months  ended March 31,  1998,  respectively.  There was no  provision  for loan
losses  recorded for the three months and nine months ended March 31, 1997.  The
Bank will  continue  to monitor  its  allowance  for loan losses and make future
additions  based  on  economic  and  regulatory  conditions.  Although  the Bank
maintains  its  allowance  for loan losses at a level which it  considers  to be
sufficient  to provide for  potential  losses,  there can be no  assurance  that
future losses will not exceed internal estimates. In addition, the amount of the
allowance for loan losses is subject to review by regulatory  agencies which can
order the establishment of additional loss provisions.

Noninterest Income
------------------

         Noninterest income increased $116,628, or 85.9% and $369,472, or 110.7%
for the three months and nine months ended March 31, 1998,  when compared to the
three months and nine months ended March 31,  1997.  The increase was  primarily
due to a increase in checking account service charges,  which increased  $80,431
or 114.9% and  $259,239  or 156.3% for the three  months and nine  months  ended
March 31, 1998, when compared to the same period in 1997.


                                       13

<PAGE>





                        GUARANTY FEDERAL BANCSHARES, INC

Noninterest Expense
-------------------

         Noninterest expense increased  $238,005,  or 23.6% for the three months
ended March 31, 1998, and decreased $545,697, or 13.5% for the nine month period
ending  March 31, 1998 when  compared to the three  months and nine months ended
March 31,  1997.  The primary  cause for the  decrease for the nine month period
ended  March  31,  1998  was the  one-time  assessment  by the  Federal  Deposit
Insurance  Corporation  ("FDIC") on all SAIF assessable deposits as of March 31,
1995.  This assessment  resulted in a $931,989  addition to SAIF premiums during
the nine month period ended March 31, 1997. The total SAIF premiums for the nine
month period ending March 31, 1997, was  $1,117,310,  as compared to $70,116 for
the nine month period ending March 31, 1998.

           Advertising  expense  increased  $9,004, or 9.1% for the three months
ended March 31, 1998, and increased $105,126, or 54.8% for the nine months ended
March 31, 1998, when compared to the same period in 1997. The primary reason for
this  increase  was the  additional  expense in  connection  with the  marketing
campaign  designed to attract  checking  accounts  which was  initiated in early
1997.

         Other expense  increased  $90,008,  or 72.3% for the three months ended
March 31, 1998, and increased $225,560, or 58.9% for the nine months ended March
31, 1998.  The largest  increase  within this category was for office  supplies.
This increase was due to the increased number of customer accounts which in turn
require more forms,  etc. to service,  as well as the  equipping of a new office
with supplies during the nine month period ended March 31, 1998.

         The  ESOP  was  implemented  at the  time of the  stock  conversion  at
December 30, 1997. In addition, the Company intends to adopt a stock option plan
and a restricted  stock plan if  stockholder  approvals are  received.  The cost
associated with these benefit plans as well as costs associated with the Company
being a public  company are expected to increase  noninterest  expense in future
periods.

Provision for Income Taxes
--------------------------

         There was a $235,641 and $797,677  increase in the provision for income
taxes for the three months and nine months ended March 31, 1998,  as compared to
the same period in 1997. The large increase for the three months ended March 31,
1998,  was primarily due to the increase in pre-tax  income when compared to the
same period in 1997.  The increase for the nine months ended March 31, 1998, was
primarily  due to the  increase  in  pre-tax  income  due  to the  FDIC  special
assessment made September 30, 1996.

                                       14
<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC.

Nonperforming Assets
--------------------

         The allowance for loan losses is calculated based upon an evaluation of
pertinent  factors  underlying  the  various  types and  quality  of the  loans.
Management  considers  such  factors  as the  repayment  status  of a loan,  the
estimated net  realizable  value of the  underlying  collateral,  the borrower's
intent and ability to repay the loan,  local economic  conditions and the Bank's
historical  loss ratios.  The Bank's  allowance  for loan losses as of March 31,
1998, was  $2,200,681 or 1.3% of loans  receivable.  Total assets  classified as
substandard,  doubtful, or loss as of March 31, 1998, were $2,072,282 or 0.8% of
total assets.  Management  has  considered  nonperforming  and total  classified
assets in evaluating the adequacy of the Bank's allowance for loan losses.

         The ratio of  nonperforming  assets to total  assets is another  useful
tool in  evaluating  exposure to credit risk.  Nonperforming  assets of the Bank
include  nonperforming  loans  (nonaccruing  loans) and  assets  which have been
acquired as a result of foreclosure or deed-in-lieu of foreclosure.
<TABLE>
<CAPTION>

                                                    3/31/98          6/30/97            3/31/97
                                                    -------          -------            -------
                                                                (Dollars In Thousands)
<S>                                              <C>              <C>                 <C>       
   Nonperforming loans                           $    1,691       $    1,257          $      594
   Real estate acquired in
   settlement of loans                                  224              210                 246
                                                 ----------       ----------          ----------

   Total Nonperforming Assets                    $    1,915       $    1,467          $      840
                                                  ==========       =========           =========
   Total Nonperforming Assets
   as a Percentage of Total
   Assets                                             0.78%            0.74%               0.43%
   Allowance for loan losses                        $ 2,201          $ 2,177             $ 2,175
   Allowance for loan losses as a
         Percentage of  loans, net                    1.14%            1.36%               1.44%
</TABLE>

Liquidity and Capital Resources
-------------------------------

         The  Bank's  primary  sources  of funds  are  deposits,  principal  and
interest  payments on loans,  and  securities  and extensions of credit from the
Federal  Home  Loan  Bank of Des  Moines.  While  scheduled  loan  and  security
repayments and the maturity of short-term  investments are somewhat  predictable
sources of funding,  deposit  flows are  influenced  by many factors  which make
their  cash  flows  difficult  to  anticipate.   Office  of  Thrift  Supervision
regulations  require the Bank to maintain  cash and eligible  investments  in an
amount equal to at least 4% of customer  accounts and  short-term  borrowings to
assure its ability to meet demands for  withdrawals  and repayment of short-term
borrowings.  As of March 31, 1998, the Bank's  liquidity ratio was 16.5%,  which
exceeded the minimum regulatory requirement.

                                       15
<PAGE>

                        GUARANTY FEDERAL BANCSHARES, INC.

Liquidity and Capital Resources (continued)
-------------------------------------------

         The Bank  uses its  liquidity  resources  principally  to  satisfy  its
ongoing  commitments  which include funding loan  commitments,  funding maturing
certificates of deposit as well as deposit withdrawals,  maintaining  liquidity,
purchasing  investments,  and meeting operating expenses. At March 31, 1998, the
Bank had approximately $6,325,000 in commitments to originate mortgage loans and
$11,040,000 in  loans-in-process  on mortgage loans.  These  commitments will be
funded  through  existing  cash  balances,  cash flow from  operations  and,  if
required  FHLB advances . Management  believes that  anticipated  cash flows and
deposit growth will be adequate to meet the Bank's liquidity needs.

The Year 2000 issue
-------------------

         A great  deal of  information  has been  disseminated  about the global
computer crash that may occur in the year 2000. Many computer  programs that can
only distinguish the final two digits of the year entered (a common  programming
practice in earlier years) are expected to read entries for the year 2000 as the
year 1900 and compute payment,  interest or delinquency  based on the wrong date
or are expected to to unable to compute payment, interest or delinquency.  Rapid
and accurate data  processing  is essential to the  operation of the Bank.  Data
processing is also essential to most other financial institutions and many other
companies.

         The Board of  Directors  of the Bank  adopted  a Year  2000  Compliance
Policy which mandates to senior  management and all employees,  full  compliance
with  the time  frames  dictated  by sound  business  practice  and the  Federal
Financial  Institutions  Examination  Council.  The Bank's Year 2000  Compliance
Project is an  ongoing  process  and the Bank  expects  to be in  compliance  by
December 31, 1998.

         The Bank has  experienced  considerable  growth in recent  years which,
independent  of the year 2000  issue,  has  created the need to upgrade the core
data  processing  system.   Management  is  currently  receiving  proposals  and
attending  presentations of core data processing systems.  One of the main items
included in the proposal is written  certification  of compliance  with the year
2000  issue.  At this  time a new  core  data  processing  system  has not  been
selected.


                                       16
<PAGE>






                        GUARANTY FEDERAL BANCSHARES, INC.

                                     PART II

Item 1.  Legal Proceedings
--------------------------

         None.

Item 2.  Changes in Securities and use of proceeds
--------------------------------------------------

         The registrant  filed a registration  statement on Form S-1 (Commission
file no.  333-36141)  that was  declared  effective  on November  12,  1997.  On
December 30, 1997,  Guaranty Federal  Bancshares,  Inc. completed the conversion
and  reorganization  of  Guaranty  Federal  Savings  Bank and its former  mutual
holding  company  by  selling  4,340,812  shares  of  common  stock  to  certain
depositors  of the Bank and a benefit  plan of the Bank at a price of $10.00 per
share. In addition  approximately  1,880,710  shares of common stock of the Bank
held by public  stockholders were exchanged for common stock of Guaranty Federal
Bancshares,  Inc. at a ratio of 1.931  shares of common stock of the Company for
each share of the Bank. The only class of securities  registered pursuant to the
offering was common stock,  par value $0.10 per share,  and all 6,221,522 shares
registered were issued.

         The  Offering  commenced  on November  21, 1997 and was  terminated  on
December 16, 1997, and the sale of all of the Common stock  registered under the
Offering at $10.00 per share was  completed  on  December  30,  1997.  Friedman,
Billings,  Ramsey & Co., Inc. assisted the registrant as the sole underwriter on
a best effort basis.

         Of the 6,221,522  shares  registered and issued:  (1) 3,996,358  shares
were sold (at $10.00 per share),  resulting  in cash  proceeds to the Company of
$39,963,580,  (2) 344,454 shares were sold (at $10.00 per share) to the trust of
the  employee  stock  ownership  plan of the Bank ( the  "ESOP") and funded by a
direct  loan (with  proceeds  used from the  offering)  from the  Company to the
trust,  an  affiliate  of the  Company,  in the  amount of  $3,444,540,  and (3)
1,880,710  shares (minus a certain de minimus  number of  fractional  shares for
which cash will be paid)  issued in exchange  for the common  stock of the Bank.
The  expenses  for the  offering  were  $778,000  resulting  in net  proceeds of
$42,630,000  ($43,408,000  minus  $778,000)  of which  $19,981,790  was directly
contributed to the Bank,  and  $22,648,210  was retained by the Company.  Of the
$778,000 in expenses,  $150,000 in underwriting  commissions and $40,000 in fees
were paid to Friedman, Billings, Ramsey & Co., Inc.


                                       17
<PAGE>




                        GUARANTY FEDERAL BANCSHARES, INC.

Item 2.  Changes in Securities and use of proceeds, continued
-------------------------------------------------------------

         There has been no material  change in the use of the net proceeds  from
the  disclosures  set  forth  in the  prospectus  filed in  connection  with the
Offering.  The  Company  used a portion of the  proceeds it retained to loan the
Company's  Employee Stock Ownership Plan approximately $3.4 million at a rate of
8.5%,  to be repaid over 15 years.  The Bank has used the  $19,981,790  proceeds
contributed by the Company to repay outstanding FHLB advances.  The remainder of
the  proceeds  have been  loaned by the  Company to the Bank to fund its general
business operations.

         The only direct or indirect  payments to directors,  officers,  general
partners of the  Company or their  associates,  to persons  owning 10 percent or
more of any class of equity securities of the Company,  and to affiliates of the
Company were: (1) the  contribution  of the Company to the Bank, (2) the loan to
the Bank, and (3) the loan to the trust of the ESOP. The only direct or indirect
payment to others was the $778,000 in expenses.


Item 3.  Defaults Upon Senior Securities
----------------------------------------

         Not applicable.

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

         Not applicable

Item 5.  Other Information
--------------------------

         Not applicable

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

         a)       Exhibits

                  None.

         b)       Reports on Form 8-K

                  None.

                                       18
<PAGE>




                        GUARANTY FEDERAL BANCSHARES, INC.

                                   SIGNATURES

         Pursuant to the  requirements  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.


         Signatures                                         Date
         ----------                                         ----

        \S\  James E. Haseltine                            5/11/98
------------------------------------------                 -------
      James E. Haseltine
     President and Chief Executive Officer
     (Duly authorized officer)



       \S\  Bruce Winston                                  5/11/98
------------------------------------------                 -------
     Bruce Winston
     Vice President and Chief Financial Officer
     (Principal Financial and Accounting Officer)

                                       19