Delaware	43-1792717
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)
1341 West Battlefield
Springfield, Missouri	65807
(Address of principal executive offices)	(Zip Code)

Class	Outstanding as of May 12, 2005
Common Stock, Par Value $0.10 per share	2,915,194 Shares

GUARANTY FEDERAL BANCSHARES, INC.
TABLE OF CONTENTS
Item			Page
PART I. Financial Information
1. Financial Statements Consolidated Financial Statements (Unaudited):
	Statements of Financial Condition		3
	Statements of Income		4
	Statements of Stockholders’ Equity		5
	Statements of Cash Flows		7
	Notes to Consolidated Financial Statements		8
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			10
3. Quantitative and Qualitative Disclosures about Market Risk			16
4. Control and Procedures			18
PART II. Other Information
1. Legal Proceedings			19
2. Unregistered Sales of Equity Securities and Use of Proceeds			19
3. Defaults Upon Senior Securities			19
4. Submission of Matters to a Vote of Security Holders			19
5. Other Information			19
6. Exhibits			19
Signatures

	2

GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 2005 (UNAUDITED) AND DECEMBER 31, 2004
ASSETS		3/31/05			12/31/04
Cash		$	7,994,293			14,087,915
Interest-bearing deposits in other financial institutions			643,462			1,808,543
Cash and cash equivalents			8,637,755			15,896,458
Available-for-sale securities			14,249,860			15,101,768
Held-to-maturity securities			1,214,515			1,305,158
Stock in Federal Home Loan Bank, at cost			5,048,600			5,146,500
Mortgage loans held for sale			2,416,043			3,590,536
Loans receivable, net of allowance for loan losses of
March 31, 2005 - $4,739,298 - December 31, 2004 - $4,536,654			407,264,291			388,742,792
Accrued interest receivable:
Loans			1,528,532			1,500,170
Investments			79,820			69,845
Prepaid expenses and other assets			1,939,996			1,976,284
Foreclosed assets held for sale			39,800			78,150
Premises and equipment			7,137,613			7,188,867
		$	449,556,825			440,596,528
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits		$	302,080,609			296,387,742
Federal Home Loan Bank advances			104,000,000			100,000,000
Securities sold under agreements to repurchase			855,267			1,264,020
Advances from borrowers for taxes and insurance			535,087			271,796
Accrued expenses and other liabilities			333,703			234,818
Accrued interest payable			520,635			361,516
Dividend payable			448,863			450,868
Income taxes payable			886,985			220,046
Deferred income taxes			197,818			632,459
			409,858,967			399,823,265
STOCKHOLDERS' EQUITY
Common Stock:
$0.10 par value; authorized 10,000,000 shares;
issued March 31, 2005 - 6,509,010 shares;
December 31, 2004 - 6,493,861 shares			650,901			649,386
Additional paid-in capital			52,645,893			52,384,842
Unearned ESOP shares			(1,743,930	)		(1,800,930	)
Retained earnings, substantially restricted			33,201,271			32,437,131
Accumulated other comprehensive income
Unrealized appreciation on available-for-sale securities,
net of income taxes; March 31, 2005 - $1,338,853;
December 31, 2004 - $1,653,740			2,279,669			2,815,828
			87,033,804			86,486,257
Treasury stock, at cost; March 31, 2005 - 3,562,467 shares;
December 31, 2004 - 3,492,759 shares			(47,335,947	)		(45,712,994	)
			39,697,857			40,773,263
		$	449,556,825			440,596,528

GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)
		3/31/2005			3/31/2004
INTEREST INCOME
Loans		$	5,726,879			4,719,147
Investment securities			95,791			68,182
Other			78,248			53,788
			5,900,919			4,841,117
INTEREST EXPENSE
Deposits			1,559,107			1,153,832
Federal Home Loan Bank advances			893,972			895,578
Other			4,129			888
			2,457,208			2,050,298
NET INTEREST INCOME			3,443,710			2,790,819
PROVISION FOR LOAN LOSSES			225,000			188,830
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES			3,218,710			2,601,989
NONINTEREST INCOME
Service charges			381,348			440,595
Late charges and other fees			91,475			73,630
Gain on sale of investment securities			195,788			177,957
Gain on sale of loans			141,948			121,612
Income (loss) on foreclosed assets			2,801			(5,987	)
Other income			70,550			45,477
			883,910			853,284
NONINTEREST EXPENSE
Salaries and employee benefits			1,272,824			1,126,595
Occupancy			333,209			278,881
SAIF deposit insurance premiums			9,661			8,933
Data processing			87,912			120,969
Advertising			28,695			78,558
Other expense			448,092			432,081
			2,180,393			2,046,017
INCOME BEFORE INCOME TAXES			1,922,228			1,409,256
PROVISION FOR INCOME TAXES			707,454			439,880
NET INCOME		$	1,214,774			969,376
BASIC EARNINGS PER SHARE		$	0.43			0.35
DILUTED EARNINGS PER SHARE		$	0.41			0.33

See Notes to Condensed Consolidated Financial Statements
	4

GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED)
		Common Stock			Additional Paid-In Capital			Unearned ESOP Shares			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, January 1, 2005		$	649,386			52,384,842			(1,800,930	)		(45,712,994	)		32,437,131			2,815,828			40,773,263
Comprehensive income
Net income			-			-			-			-			1,214,774			-			1,214,774
Change in unrealized appreciation
on available-for-sale securities, net
of income taxes of ($314,887)			-			-			-			-			-			(536,159	)		(536,159	)
Total comprehensive income																					678,615
Dividends ($0.16 per share)			-			-			-			-			(450,634	)		-			(450,634	)
Stock award plans			-			10,053			-			-			-			-			10,053
Stock options exercised			1,515			171,209			-			-			-			-			172,724
Release of ESOP shares			-			79,789			57,000			-			-			-			136,789
Treasury stock purchased			-			-			-			(1,622,953	)		-			-			(1,622,953	)
Balance, March 31, 2005		$	650,901			52,645,893			(1,743,930	)		(47,335,947	)		33,201,271			2,279,669			39,697,857

GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
		Common Stock			Additional Paid-In Capital			Unearned ESOP Shares			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, January 1, 2004		$	642,890			51,330,202			(2,030,930	)		(44,549,879	)		29,919,695			2,666,143			37,978,121
Comprehensive income
Net income			-			-			-			-			969,376			-			969,376
Change in unrealized appreciation
on available-for-sale securitites, net
of income taxes of ($12,827)			-			-			-			-			-			(21,840	)		(21,840	)
Total comprehensive income																					947,536
Dividends ($0.155 per share)			-			-			-			-			(434,069	)		-			(434,069	)
Stock award plans			-			24,707			-			-			-			-			24,707
Stock options exercised			2,221			232,482			-			-			-			-			234,703
Release of ESOP shares			-			57,039			59,000			-			-			-			116,039
Treasury stock purchased			-			-			-			(301,103	)		-			-			(301,103	)
Balance, March 31, 2004		$	645,111			51,644,430			(1,971,930	)		(44,850,982	)		30,455,002			2,644,303			38,565,934

See Notes to Condensed Consolidated Financial Statements
	6

GUARANTY FEDERAL BANCSHARES, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED)
		3/31/2005			3/31/2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	1,214,774			969,376
Items not requiring (providing) cash:
Deferred income taxes			(119,754	)		(56,031	)
Depreciation			175,166			150,875
Provision for loan losses			225,000			188,830
Gain on loans and investment securities			(337,736	)		(299,569	)
Gain on sale of foreclosed assets			(3,948	)		-
Amortization of deferred income, premiums and discounts			(3,676	)		28,695
Stock award plan expense			6,448			15,476
Origination of loans held for sale			(8,063,961	)		(6,339,694	)
Proceeds from sale of loans held for sale			9,380,402			4,730,794
Release of ESOP shares			136,789			116,039
Changes in:
Accrued interest receivable			(38,337	)		(41,632	)
Prepaid expenses and other assets			36,288			(104,693	)
Accounts payable and accrued expenses			256,232			106,807
Income taxes payable			670,544			319,182
Net cash provided by (used in) operating activities			3,534,231			(215,545	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans			(19,017,117	)		(17,851,839	)
Principal payments on held-to-maturity securities			90,450			128,939
Proceeds from maturities of available-for-sale securities			2,000,000			1,500,000
Purchase of premises and equipment			(123,911	)		(19,859	)
Purchase of available-for-sale securities			(1,986,588	)		(1,496,303	)
Proceeds from sale of available-for-sale securities			198,725			180,894
Purchase of FHLB stock			97,900			(217,000	)
Proceeds from sale of foreclosed assets			301,298			-
Net cash used in investing activities			(18,439,243	)		(17,775,168	)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock options exercised			172,724			234,703
Cash dividends paid			(450,868	)		(433,207	)
Cash dividends received on RRP stock			-			124
Net increase (decrease) in demand deposits,
NOW accounts and savings accounts			1,982,900			(3,563,638	)
Net increase in certificates of deposit and securities sold
under agreements to repurchase			3,301,214			10,557,828
Proceeds from FHLB advances			109,700,000			70,000,000
Repayments of FHLB advances			(105,700,000	)		(68,455,281	)
Advances from borrowers for taxes and insurance			263,292			315,398
Treasury stock purchased			(1,622,953	)		(301,103	)
Net cash provided by financing activities			7,646,309			8,354,824
DECREASE IN CASH AND CASH EQUIVALENTS			(7,258,703	)		(9,635,889	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			15,896,458			22,656,794
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	8,637,755			13,020,905

		Three Months ended March 31,
		2005			2004
Net income, as reported		$	1,214,774			969,376
Less: Total stock-based employee compensation
cost determined under the fair value-based
method, net of income taxes			(8,782	)		(8,725	)
Pro forma net income		$	1,205,992			960,651
Earnings per share:
Basic - as reported		$	0.43			0.35
Basic - pro forma		$	0.43			0.34
Diluted - as reported		$	0.41			0.33
Diluted - pro forma		$	0.41			0.33

		For three months ended March 31, 2005
		Income Available to Stockholders			Average Shares Outstanding			Per-share
Basic Earnings per Share		$	1,214,774			2,815,482		$	0.43
Effect of Dilutive Securities: Stock Options						141,054
Diluted Earnings per Share		$	1,214,774			2,916,177		$	0.41
		For three months ended March 31, 2004
			Income Available to Stockholders			Average Shares Outstanding			Per-share
Basic Earnings per Share		$	969,376			2,796,263		$	0.35
Effect of Dilutive Securities: Stock Options						119,914
Diluted Earnings per Share		$	969,376			2,916,177		$	0.33

		3/31/2005			3/31/2004
Unrealized gains (losses) on		$	(655,258	)		143,290
available-for-sale securities
Less: Reclassification adjustment for
realized (gains) losses included in income			(195,788	)		(177,957	)
Other comprehensive income (loss),
before tax effect			(851,046	)		(34,667	)
Tax expense (benefit)			(314,887	)		(12,827	)
OTHER COMPREHENSIVE INCOME (LOSS)		$	(536,159	)		(21,840	)

Average Balances, Interest and Average Yields

The Company’s profitability is primarily dependent upon net interest income, which represents the difference between interest and fees earned on loans and debt and equity securities, and the cost of deposits and borrowings. Net interest income is dependent on the difference between the average balances and rates earned on interest-earning assets and the average balances and rates paid on interest-bearing liabilities. Non-interest income, non-interest expense, and income taxes also impact net income.

The following table sets forth certain information relating to the Company’s average consolidated statements of financial condition and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense annualized by the average balance of assets or liabilities, respectively, for the periods shown. Average balances were derived from average daily balances. The average balance of loans includes loans on which the Company has discontinued accruing interest. The yields and costs include fees which are considered adjustments to yields. All dollar amounts are in thousands.

	12

		Three Months ended 3/31/2005									Three Months ended 3/31/2004
		Average Balance			Interest			Yield / Cost			Average Balance			Interest			Yield / Cost
ASSETS
Interest-earning:
Loans		$	396,194			5,727			5.78	%	$	339,346			4,719			5.56	%
Investment securities			9,915			96			3.87	%		10,267			68			2.65	%
Other assets			11,837			78			2.64	%		14,785			54			1.46	%
Total interest-earning			417,946			5,901			5.65	%		364,398			4,841			5.31	%
Noninterest-earning			20,456									20,170
		$	438,402								$	384,568
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing:
Savings accounts		$	15,179			42			1.11	%	$	16,979			34			0.80	%
Transaction accounts			87,203			290			1.33	%		74,660			163			0.87	%
Certificates of deposit			171,560			1,227			2.86	%		124,269			956			3.08	%
FHLB Advances			96,992			894			3.69	%		108,769			896			3.30	%
Other borrowed funds			1,038			4			1.54	%		784			1			0.51	%
Total interest-bearing			371,972			2,457			2.64	%		325,461			2,050			2.52	%
Noninterest-bearing			25,636									20,660
Total liabilities			397,608									346,121
Stockholders’ equity			40,794									38,447
		$	438,402								$	384,568
Net earning balance		$	45,974								$	38,937
Earning yield less costing rate									3.01	%								2.79	%
Net interest income, and net yield spread
on interest earning assets					$	3,444			3.30	%				$	2,791			3.06	%
Ratio of interest-earning assets to
interest-bearing liabilities						112	%								112	%

Results of Operations - Comparison of Three Month Periods Ended March 31,

2005 and 2004

Net income for the three months ended March 31, 2005 was $1,214,774 as compared to $969,376 for the three months ended March 31, 2004, which represents an increase in earnings of $245,398 (25%) for the three month period ended March 31, 2005.

Interest Income

Total interest income for the three months ended March 31, 2005, increased $1,059,802 (22%) as compared to the three months ended March 31, 2004. For the three month period ended March 31, 2005 compared to the same period in 2004, the average yield on interest earning assets increased 34 basis points to 5.65%, and the average balance of interest earnings assets increased approximately $53,548,000.

Interest Expense

Total interest expense for the three months ended March 31, 2005, increased $406,910 (20%) when compared to the three months ended March 31, 2004. For the three month period ended March 31, 2005, the average cost of interest bearing liabilities increased 12 basis points to 2.64%, and the average balance of interest bearing liabilities increased approximately $46,511,000 when compared to the same period in 2004.

	13

Net Interest Income

Net interest income for the three months ended March 31, 2005, increased $652,891 (23%) when compared to the same period in 2004. The average balance of interest earning assets increased by approximately $7,037,000 more than the average balance in interest bearing liabilities increased when comparing the three month period ended March 31, 2005 to the same period in 2004. In addition, for the three month period ended March 31, 2005, the earning yield minus the costing rate spread increased 22 basis points to 3.01% when compared to the same period in 2004.

Provision for Loan Losses

Based primarily on the continued growth of the commercial loan portfolio, management decided to increase the allowance for loan losses through a provision for loan loss of $225,000 for the three months ended March 31, 2005, compared to $188,830 for the same period in 2004, representing an increase of 19%. The Bank will continue to monitor its allowance for loan losses and make future additions based on economic and regulatory conditions. Management of the Company anticipates the need to continue increasing the allowance for loan losses through charges to the provision for loan losses as anticipated growth in the Bank’s loan portfolio increases or other circumstances warrant. Although the Bank maintains its allowance for loan losses at a level which it considers to be sufficient to provide for potential loan losses in its existing loan portfolio, there can be no assurance that future loan 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 loan loss provisions.

Noninterest Income

Noninterest income increased $30,626 (4%) for the three months ended March 31, 2005 when compared to the three months ended March 31, 2004. The increase for the three months ended March 31, 2005 was primarily due to increases in late charges and other fees, gain on sale of loans, gain on sale of investments and other income, which were partially offset by a decrease in service charges as discussed below.

Gain on sale of loans increased $20,336 (17%) for the three months ended March 31, 2005 when compared to the same periods in 2004, which was a result of an increase in the amount of loans sold on the secondary market during the three months ended March 31, 2005, compared to the same period in 2004.

Gain on sale of investments increased $17,831 (10%) for the three months ended March 31, 2005 when compared to the same period in 2004. This increase was due to an increase in the FHLMC stock price. During the three months ended March 31, 2005 the Bank sold 3,000 shares of FHLMC stock resulting in a profit on sale of $195,788, during the same period in 2004 the Bank sold 3,000 shares of FHLMC stock resulting in a profit on sale of $177,957.

Late charges and other fees increased $17,845 (24%) for the three months ended March 31, 2005 when compared to the same period in 2004. This increase was partially due to an increase of $9,220 on late charges collected on loans during the three month period ended March 31, 2005, when compared to the same period in 2004. In addition, during the three month period ended March 31, 2005, the Bank’s originated mortgage servicing rights ("OMSR") amortization expense was $51,966 compared to $63,204 during the same period in 2004. Also, during the three month period ended March 31, 2004, OMSR impairment loss adjustment was a charge off of $9,558 compared to a charge off of $0 during the same period in 2005.

 

Other income increased $25,073 (55%) for the three months ended March 31, 2005 when compared to the same period in 2004. This increase was primarily due to an increase in the amount of ATM fees collected during the three months ended March 31, 2005, compared to the same period in 2004.

Service charges on transaction accounts decreased by $59,247 (13%) during the three months ended March 31, 2005 when compared to the same period in 2004. This is a result in a decrease in the amount of "non-sufficient funds" and overdraft fees collected during this three month period when compared to the same period in 2004. This decrease is a result of fewer "non-sufficient funds" checks presented per account during the three month period ended March 31, 2005, compared to the same period in 2004.

	14

Noninterest Expense

Noninterest expense increased $134,376 (7%) for the three months ended March 31, 2005 when compared to the three months March 31, 2004. The increase for the three months ended March 31, 2005 was primarily due to increases in salaries and employee benefits and occupancy, which were partially offset by decreases in advertising and data processing as discussed below.

Salaries and employee benefits increased $146,229 (13%) for the three months ended March 31, 2005 when compared to the same period in 2004. This increase was due to several factors, including additions in executive and staff positions, pay increases to existing employees and increases in employee benefit costs during the three month period ended March 31, 2005 when compared to the same period in 2004.

Occupancy expense increased $54,328 (19%) for the three months ended March 31, 2005 when compared to the same period in 2004. There were increases in expenses related to building repair and maintenance, furniture and fixtures repair and maintenance, furniture and fixture depreciation and property taxes for the three months ended March 31, 2005 when compared to the same period in 2004.

Data processing expense decreased $33,057 (27%) for the three months ended March 31, 2005 when compared to the same period in 2004. This decrease was primarily due to the Bank’s decision to terminate their relationship with a third-party vendor that provided data processing services during 2004.

Advertising expense decreased $49,863 (63%) for the three months ended March 31, 2005 when compared to the same period in 2004. This decrease was primarily due to the Bank’s decision to discontinue a direct mail advertising promotion during 2004.

Provision for Income Taxes

There was an increase of $267,574 (61%) in the provision for income taxes for the three months ended March 31, 2005 as compared to the same period in 2004. This increase was due to the increase of $512,972 in before tax income for the three months ended March 31, 2005, compared to the same period in 2004 and an increase in the effective tax rate.

Nonperforming Assets

The allowance for loan losses is calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Bank’s existing loan portfolio. When making such evaluation, management considers such factors as the repayment status of its loans, the estimated net realizable value of the underlying collateral, borrowers’ intent (to the extent known by the Bank) 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, 2005, was $4,739,298 or 1.2% of average net loans receivable. Total assets classified as substandard, doubtful or loss as of March 31, 2005, were $5,669,776 or 1.3% of total assets. In connection with a normal regulatory e xamination by the Federal Deposit Insurance Corporation in February 2004, the Bank identified and reclassified a group of approximately 150 loans secured by single family residences, totaling approximately $9.4 million, because it was deemed that the loan files relating to these loans did not contain sufficient information to effectively evaluate the credits. As of March 31, 2005, $3,860,655 of the assets classified as substandard were attributed to this group of loans. Management considered nonperforming and total classified assets in evaluating the adequacy of the Bank’s allowance for loan losses.

	15

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. All dollar amounts are in thousands.

		3/31/2005			12/31/2004			12/31/2003
Nonperforming loans		$	506			1,007			743
Real estate acquired in settlement of loans			40			78			6
Total nonperforming assets		$	546			1,085			749
Total nonperforming assets as a percentage of total assets			0.12	%		0.25	%		0.19	%
Allowance for loan losses		$	4,739			4,537			3,886
Allowance for loan losses as a percentage of average net loans			1.20	%		1.16	%		1.17	%

Liquidity and Capital Resources

The Bank’s primary sources of funds are deposits, principal and interest payments on loans and mortgage-backed securities, proceeds from maturing investment securities and extensions of credit from FHLB. 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.

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. As of March 31, 2005, the Bank had approximately $11,056,000 in commitments to originate mortgage and commercial 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Asset/Liability Management

The goal of the Bank’s asset/liability policy is to manage interest rate risk so as to maximize net interest income over time in changing interest rate environments. Management monitors the Bank’s net interest spreads (the difference between yields received on assets and paid on liabilities) and, although constrained by market conditions, economic conditions, and prudent underwriting standards, the Bank offers deposit rates and loan rates designed to maximize net interest income. Management also attempts to fund the Bank’s assets with liabilities of a comparable duration to minimize the impact of changing interest rates on the Bank’s net interest income. Since the relative spread between financial assets and liabilities is constantly changing, the B ank’s current net interest income may not be an indication of future net interest income.

As a part of its asset and liability management strategy and throughout the past several years, the Bank has continued to emphasize the origination of adjustable-rate, one- to four-family residential loans and adjustable-rate or relatively short-term commercial real estate, commercial business and consumer loans, while originating fixed-rate, one- to four-family residential loans primarily for immediate resale in the secondary market on either a service-retained basis or service-released basis. This allows the Bank to serve the customer’s needs and retain a banking relationship with respect to such fixed-rate residential loans, while limiting its exposure to the risk associated with carrying a long-term fixed-rate loan in its loan portfolio.

The Bank is also managing interest rate risk by the origination of construction loans. As of March 31, 2005, such loans made up 13.8% of the net loans receivable and continue to account for a larger portion of the Bank’s existing portfolio. In general, these loans have higher yields, shorter maturities and greater interest rate sensitivity than other real estate loans.

The Bank constantly monitors its deposits in an effort to decrease their interest rate sensitivity. Rates of interest paid on deposits at the Bank are priced competitively in order to meet the Bank’s asset/liability management objectives and spread requirements. As of December 31, 2004, the Bank’s savings accounts, checking accounts, and money market deposit accounts totaled $127,351,296 or 43% of its total deposits. As of March 31, 2005, these accounts totaled $129,334,196 or 43% of the Bank’s total deposits. The Bank believes, based on historical experience, that a substantial portion of such accounts represents non-interest rate sensitive core deposits.

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Interest Rate Sensitivity Analysis

The following table sets forth as of March 31, 2005 management’s estimates of the projected changes in net portfolio value ("NPV") in the event of 100, 200, and 300 basis point ("bp") instantaneous and permanent increases and 100, 200 and 300 basis point instantaneous and permanent decreases in market interest rates. Dollar amounts are expressed in thousands.

BP Change		Estimated Net Portfolio Value									NPV as % of PV of Assets
in Rates		$ Amount			$ Change			% Change			NPV Ratio			Change
+300		$	34,560		$	(5,961	)		-15	%		8.58	%		-1.31	%
+200			37,560			(2,961	)		-7	%		9.27	%		-0.62	%
+100			39,619			(902	)		-2	%		9.72	%		-0.16	%
NC			40,521			-			-			9.89	%		-
-100			40,837			316			1	%		9.90	%		0.02	%
-200			40,845			324			1	%		9.85	%		-0.04	%
-300			41,001			480			1	%		9.82	%		-0.06	%

Computations of prospective effects of hypothetical interest rate changes are based on an internally generated model using actual maturity and repricing schedules for the Bank’s loans and deposits, and are based on numerous assumptions, including relative levels of market interest rates, loan repayments and deposit run-offs, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Bank may undertake in response to changes in interest rates.

Management cannot predict future interest rates or their effect on the Bank’s NPV in the future. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have an initial fixed rate period typically from one to five years, and over the remaining life of the asset changes in the interest rate are restricted. In addition, the proportion of adjustable-rate loans in the Bank’s portfolio could decrease in future periods due to refinancing activity if market interest rates remain steady in the future. Further, in the event of a change i n interest rates, prepayment and early withdrawal levels could deviate significantly from those assumed in the table. Finally, the ability of many borrowers to service their adjustable-rate debt may decrease in the event of an interest rate increase.

The Bank’s Board of Directors (the "Board") is responsible for reviewing the Bank’s asset and liability policies. The Board meets quarterly to review interest rate risk and trends, as well as liquidity and capital ratios and requirements. The Bank’s management is responsible for administering the policies and determinations of the Board with respect to the Bank’s asset and liability goals and strategies.

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Item 4. Controls and Procedures

(a) The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")) that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2005.

(b) There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II

Item 1.    Legal Proceedings

None.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes the repurchase activity of the Company’s common stock during the Company’s first quarter ended March 31, 2005.

ISSUER PURCHASE OF EQUITY SECURITIES

Period		(a) Total Number of Shares Purchased			(b) Average Price Paid per Share			(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)			(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2005 to January 31, 2005			17,052			23.44			17,052			168,033
February 1, 2005 to February 28, 2005			5,851			23.27			5,851			162,182
March 1, 2005 to March 31, 2005			46,805			23.23			46,805			115,377
Total			69,708			23.28			69,708

(1)	The Company has a repurchase plan which was announced on November 22, 2002. This plan authorizes the purchase by the Company of 300,000 shares of the Company’s common stock. There is no expiration date for this plan. There are no other repurchase plans in effect at this time.

Item 3.    Defaults Upon Senior Securities

Not applicable.

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

None.

Item 5.    Other Information

None.

Item 6.    Exhibits

11. Statement re computation of per share earnings (set forth in "Note 4: Earnings Per Share" of

the Notes to Condensed Consolidated Financial Statements (unaudited))

31(i).1 Certification of the Principal Executive Officer pursuant to Rule 13a -14(a) of the Exchange Act

31(i).2 Certification of the Principal Financial Officer pursuant to Rule 13a - 14(a) of the Exchange Act

32.1 CEO certification pursuant to Rule 13a - 14(a) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2 CFO certification pursuant to Rule 13a - 14(a) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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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.

Signature and Title    Date

/s/ Shaun A. Burke     May 12, 2005      

Shaun A. Burke

President and Chief Executive Officer

(Principal Executive Officer and Duly Authorized Officer)

/s/ Bruce Winston                                 May 12, 2005

Bruce Winston       

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

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