GUARANTY FEDERAL BANCSHARES INC (Form: 10-K, Received: 03/30/2005 11:31:16)

Exhibit 10.4

Guaranty Federal Savings Bank

Restricted Stock Plan

and Trust Agreement

Article I

ESTABLISHMENT OF THE PLAN AND TRUST

1.01 Guaranty Federal Savings Bank ("Savings Bank") hereby establishes the Restricted Stock

Plan (the "Plan") and Trust (the "Trust") upon the terms and conditions hereinafter stated in this Restricted

Stock Plan and Trust Agreement (the "Agreement").

1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust assets existing on the

date of this Agreement and all additions and accretions thereto upon the terms and conditions hereinafter

stated.

Article II

PURPOSE OF THE PLAN

2.01 The purpose of the Plan is to reward and to retain personnel of experience and ability in

key positions of responsibility with the Savings Bank and its subsidiaries, by providing such personnel of

the Savings Bank and its subsidiaries with an equity interest in the parent corporation of the Savings Bank,

Guaranty Federal Bancshares, Inc. ("Parent"), as compensation for their prior and anticipated future

professional contributions and service to the Savings Bank and its subsidiaries.

Article III

DEFINITIONS

The following words and phrases when used in this Plan with an initial capital letter, unless the

context clearly indicates otherwise, shall have the meaning as set forth below. Wherever appropriate, the

masculine pronoun shall include the feminine pronoun and the singular shall include the plural.

3.01 "Beneficiary" means the person or persons designated by the Participant to receive any

benefits payable under the Plan in the event of such Participant's death. Such person or persons shall be

designated in writing on forms provided for this purpose by the Committee and may be changed from time

to time by similar written notice to the Committee. In the absence of a written designation, the Beneficiary

shall be the Participant's surviving spouse, if any, or if none, the Participant's estate.

3.02 "Board" means the Board of Directors of the Savings Bank, or any successor corporation

thereto.

3.03 "Cause" means the personal dishonesty, incompetence, willful misconduct, breach of

fiduciary duty involving personal profits, intentional failure to perform stated duties, willful violation of

a material provision of any law, rule or regulation (other than traffic violations and similar offense), or a

material violation of a final cease-and-desist order or any other action which results in a substantial financial

loss to the Parent, Savings Bank or its Subsidiaries.

3.04 "Change in Control" shall mean: (i) the sale of all, or a material portion, of the assets of

the Parent or Savings Bank; (ii) the merger or recapitalization of the Parent or the Savings Bank whereby

the Parent or Savings Bank is not the surviving entity; (iii) a change in control of the Parent or Savings

Bank, as otherwise defined or determined by the Office of Thrift Supervision ("OTS") or regulations

promulgated by it; or (iv) the acquisition, directly or indirectly, of the beneficial ownership (within the

meaning of that term as it is used in Section 13(d) of the 1934 Act and the rules and regulations

promulgated thereunder) of twenty-five percent (25%) or more of the outstanding voting securities of the

Parent or Savings Bank by any person, trust, entity or group. This limitation shall not apply to the

purchase of shares of up to 25% of any class of securities of the Parent or Savings Bank by a tax-qualified

employee stock benefit plan which is exempt from the approval requirements, set forth under 12 C.F.R.

Â§574.3(c)(1)(vi) as now in effect or as may hereafter be amended. The term "person" refers to an

individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole

proprietorship, unincorporated organization or any other form of entity not specifically listed herein. The

decision of the Committee as to whether a Change in Control has occurred shall be conclusive and binding.

3.05 "Committee" means the Board of Directors of the Parent or the Restricted Stock Plan

Committee appointed by the Board of Directors of the Parent pursuant to Article IV hereof.

3.06 "Common Stock" means shares of the common stock of the Savings Bank or any successor

corporation or Parent thereto.

3.07 "Conversion" means the effective date of the stock charter of the Savings Bank and

simultaneous acquisition of all of the outstanding stock of the Savings Bank by the Parent.

3.08 "Director" means a member of the Board of the Savings Bank.

3.09 "Director Emeritus" means a person serving as a director emeritus, advisory director,

consulting director, or other similar position as may be appointed by the Board of Directors of the Savings

Bank or the Parent from time to time.

3.10 "Disability" means any physical or mental impairment which renders the Participant

incapable of continuing in the employment or service of the Savings Bank or the Parent in his current

capacity as determined by the Committee.

3.11 "Employee" means any person who is employed by the Savings Bank or a Subsidiary.

3.12 "Effective Date" shall mean the date of stockholder approval of the Plan by the Parent's

stockholders.

3.13 "Parent" shall mean Guaranty Federal Bancshares, Inc., the parent corporation of the

Savings Bank.

3.14 "Participant" means an Employee, Director or Director Emeritus who receives a Plan Share

Award under the Plan.

3.15 "Plan Shares" means shares of Common Stock held in the Trust which are awarded or

issuable to a Participant pursuant to the Plan.

3.16 "Plan Share Award" or "Award" means a right granted to a Participant under this Plan to

earn or to receive Plan Shares.

3.17 "Plan Share Reserve" means the shares of Common Stock held by the Trust pursuant to

Sections 5.03 and 5.04.

3.18 "Savings Bank" means Guaranty Federal Savings Bank, and any successor corporation

thereto.

3.19 "Subsidiary" means those subsidiaries of the Savings Bank which, with the consent of the

Board, agree to participate in this Plan.

3.20 "Trustee" or "Trustee Committee" means that person(s) or entity nominated by the

Committee and approved by the Board pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan

assets for the purposes set forth herein.

Article IV

ADMINISTRATION OF THE PLAN

4.01 Role of the Committee. The Plan shall be administered and interpreted by the Board of

Directors of the Parent or a Committee appointed by said Board, which shall consist of not less than two

non-employee members of the Board, which shall have all of the powers allocated to it in this and other

sections of the Plan. All persons designated as members of the Committee shall be "Non-Employee

Directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended

("1934 Act"). The interpretation and construction by the Committee of any provisions of the Plan or of

any Plan Share Award granted hereunder shall be final and binding. The Committee shall act by vote or

written consent of a majority of its members. Subject to the express provisions and limitations of the Plan,

the Committee may adopt such rules, regulations and procedures as it deems appropriate for the conduct

of its affairs. The Committee shall report its actions and decisions with respect to the Plan to the Board

at appropriate times, but in no event less than one time per calendar year. The Committee shall recommend

to the Board one or more persons or entity to act as Trustee in accordance with the provision of this Plan

and Trust and the terms of Article VIII hereof.

4.02 Role of the Board. The members of the Committee and the Trustee shall be appointed or

approved by, and will serve at the pleasure of the Board. The Board may in its discretion from time to time

remove members from, or add members to, the Committee, and may remove, replace or add Trustees. The

Board shall have all of the powers allocated to it in this and other sections of the Plan, may take any action

under or with respect to the Plan which the Committee is authorized to take, and may reverse or override

any action taken or decision made by the Committee under or with respect to the Plan, provided, however,

that the Board may not revoke any Plan Share Award already made except as provided in Section 7.01(b)

herein.

4.03 Limitation on Liability. No member of the Board, the Committee or the Trustee shall be

liable for any determination made in good faith with respect to the Plan or any Plan Share Awards granted.

If a member of the Board, Committee or any Trustee is a party or is threatened to be made a party to any

threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or

investigative, by any reason of anything done or not done by him in such capacity under or with respect

to the Plan, the Parent and the Savings Bank shall indemnify such member against expenses (including

attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him

or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner

he or she reasonably believed to be in the best interests of the Parent, the Savings Bank and its Subsidiaries

and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was

unlawful. Notwithstanding anything herein to the contrary, in no event shall the Savings Bank take any

actions with respect to this Section 4.03 which is not in compliance with the limitations or requirements

set forth at 12 CFR 545.121, as may be amended from time to time.

Article V

CONTRIBUTIONS; PLAN SHARE RESERVE

5.01 Amount and Timing of Contributions. The Board of Directors of the Savings Bank shall

determine the amounts (or the method of computing the amounts) to be contributed by the Savings Bank

to the Trust established under this Plan. Such amounts shall be paid to the Trustee at the time of

contribution. No contributions to the Trust by Participants shall be permitted except with respect to

amounts necessary to meet tax withholding obligations.

5.02 Initial Investment. Any funds held by the Trust prior to investment in the Common Stock

shall be invested by the Trustee in such interest-bearing account or accounts at the Savings Bank as the

Trustee shall determine to be appropriate.

5.03 Investment of Trust Assets. Following approval of the Plan by stockholders of the Parent

and receipt of any other necessary regulatory approvals, the Trust shall purchase Common Stock of the

Parent in an amount equal to up to 100% of the Trust's assets, after providing for any required withholding

as needed for tax purposes, provided, however, that the Trust shall not purchase more than 173,632 shares

of Common Stock, representing 4% of the aggregate shares of Common Stock issued by the Parent in the

Conversion. The Trustee may purchase shares of Common Stock in the open market or, in the alternative,

may purchase authorized but unissued shares of the Common Stock or treasury shares from the Parent

sufficient to fund the Plan Share Reserve.

5.04 Effect of Allocations, Returns and Forfeitures Upon Plan Share Reserves. Upon the

allocation of Plan Share Awards under Sections 6.02 and 6.05, or the decision of the Committee to return

Plan Shares to the Parent, the Plan Share Reserve shall be reduced by the number of Shares subject to the

Awards so allocated or returned. Any Shares subject to an Award which are not earned because of

forfeiture by the Participant pursuant to Section 7.01 shall be added to the Plan Share Reserve.

Article VI

ELIGIBILITY; ALLOCATIONS

6.01 Eligibility. Employees and Directors Emeritus are eligible to receive Plan Share Awards

within the sole discretion of the Committee. Directors who are not otherwise Employees shall receive Plan

Share Awards pursuant to Section 6.05.

6.02 Allocations. The Committee will determine which of the Employees will be granted Plan

Share Awards and the number of Shares covered by each Award, provided, however, that in no event shall

any Awards be made which will violate the Charter or Bylaws of the Savings Bank or its Parent or

Subsidiaries or any applicable federal or state law or regulation. In the event Shares are forfeited for any

reason or additional Shares are purchased by the Trustee, the Committee may, from time to time, determine

which of the Employees will be granted Plan Share Awards to be awarded from forfeited Shares. In

selecting those Employees and Directors Emeritus to whom Plan Share Awards will be granted and the

number of shares covered by such Awards, the Committee shall consider the prior and anticipated future

position, duties and responsibilities of the Employees, the value of their prior and anticipated future services

to the Savings Bank and its Subsidiaries, and any other factors the Committee may deem relevant. All

actions by the Committee shall be deemed final, except to the extent that such actions are revoked by the

Board. Notwithstanding anything herein to the contrary, in no event shall any Participant receive Plan

Share Awards in excess of 25% of the aggregate Plan Shares authorized under the Plan.

6.03 Form of Allocation. As promptly as practicable after a determination is made pursuant

to Section 6.02 or Section 6.05 that a Plan Share Award is to be made, the Committee shall notify the

Participant in writing of the grant of the Award, the number of Plan Shares covered by the Award, and the

terms upon which the Plan Shares subject to the award may be earned. The date on which the Committee

makes its award determination or the date the Committee so notifies the Participant shall be considered the

date of grant of the Plan Share Awards as determined by the Committee. The Committee shall maintain

records as to all grants of Plan Share Awards under the Plan.

6.04 Allocations Not Required. Notwithstanding anything to the contrary at Sections 6.01,

6.02 or 6.05, no Employee shall have any right or entitlement to receive a Plan Share Award hereunder,

such Awards being at the sole discretion of the Committee and the Board, nor shall the Employees as a

group have such a right. The Committee may, with the approval of the Board (or, if so directed by the

Board) return all Common Stock in the Plan Share Reserve to the Savings Bank at any time, and cease

issuing Plan Share Awards.

6.05 Awards to Directors. Notwithstanding anything herein to the contrary, upon the Effective

Date, a Plan Share Award consisting of 8,682 Plan Shares shall be awarded to each Director of the Savings

Bank that is not otherwise an Employee. Such Plan Share Award shall be earned and non-forfeitable at the

rate of one-fifth as of the one-year anniversary of the Effective Date and an additional one-fifth following

each of the next four successive years during such periods of service as a Director or Director Emeritus.

Further, such Plan Share Award shall be immediately 100% earned and non-forfeitable in the event of the

death or Disability of such Director or Director Emeritus, or upon a Change in Control of the Savings Bank

or Parent; provided that such accelerated vesting is not inconsistent with applicable regulations of the Office

of Thrift Supervision ("OTS") or other applicable banking regulatory agency at the time of such Change

in Control. Subsequent to the Effective Date, Plan Share Awards may be awarded to newly elected or

appointed Directors of the Savings Bank by the Committee, provided that total Plan Share Awards granted

to non-employee Directors of the Savings Bank shall not exceed 30% of the total Plan Share Reserve in the

aggregate under the Plan or 5% of the total Plan Share Reserve to any individual non-employee Director.

Article VII

EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

7.01 Earnings Plan Shares; Forfeitures.

(a) General Rules. Unless the Committee shall specifically state to the contrary at the time

a Plan Share Award is granted, Plan Shares subject to an Award shall be earned and non-forfeitable by a

Participant at the rate of one-fifth of such Award following one year after the granting of such Award, and

an additional one-fifth following each of the next four successive years; provided that such Participant

remains an Employee, Director, or Director Emeritus during such period. Notwithstanding anything herein

to the contrary, in no event shall a Plan Share Award granted hereunder be earned and non-forfeitable by

a Participant more rapidly than at the rate of one-fifth of such Award as of the one year anniversary of the

date of grant and an additional one-fifth following each of the next four successive years.

(b) Revocation for Misconduct. Notwithstanding anything herein to the contrary, the Board

shall , by resolution, immediately revoke, rescind and terminate any Plan Share Award, or portion thereof,

previously awarded under this Plan, to the extent Plan Shares have not been delivered thereunder to the

Participant, whether or not yet earned, in the case of a Participant who is discharged from the employ or

service of the Parent, Savings Bank or a Subsidiary for Cause, or who is discovered after termination of

employment or service to have engaged in conduct that would have justified termination for Cause. A

determination of Cause shall be made by the Board within its sole discretion.

(c) Exception for Terminations Due to Death or Disability. Notwithstanding the general

rule contained in Section 7.01(a) above, all Plan Shares subject to a Plan Share Award held by a Participant

whose employment or service with the Parent, Savings Bank or a Subsidiary terminates due to death or

Disability, shall be deemed earned and nonforfeitable as of the Participant's last date of employment or

service with the Parent, Savings Bank or Subsidiary and shall be distributed as soon as practicable

thereafter.

(d) Exception for Termination after a Change in Control. Notwithstanding the general rule

contained in Section 7.01 above, all Plan Shares subject to a Plan Share Award held by a Participant shall

be deemed to be immediately 100% earned and non-forfeitable in the event of a Change in Control of the

Parent or Savings Bank and shall be distributed as soon as practicable thereafter; provided that such

accelerated vesting is not inconsistent with applicable regulations of the OTS or other applicable banking

regulatory agency at the time of such Change in Control.

7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award, whether or not

earned, shall also be entitled to receive an amount equal to any cash dividends declared and paid with

respect to shares of Common Stock represented by such Plan Share Award between the date the relevant

Plan Share Award was granted to such Participant and the date the Plan Shares are distributed. Such cash

dividend amounts shall be held in arrears under the Trust and distributed upon the earning of the applicable

Plan Share Award. Such payment shall also include an appropriate amount of earnings, if any, of the Trust

assets with respect to any cash dividends so distributed.

7.03 Distribution of Plan Shares.

(a) Timing of Distributions: General Rule. Except as provided in Subsections (d) and (e)

below, Plan Shares shall be distributed to the Participant or his Beneficiary, as the case may be, as soon

as practicable after they have been earned. No fractional shares shall be distributed. Notwithstanding

anything herein to the contrary, at the discretion of the Committee, Plan Shares may be distributed prior

to such Shares being 100% earned, provided that such Plan Shares shall contain a restrictive legend

detailing the applicable limitations of such shares with respect to transfer and forfeiture.

(b) Form of Distribution. All Plan Shares, together with any shares representing stock

dividends, shall be distributed in the form of Common Stock. One share of Common Stock shall be given

for each Plan Share earned. Payments representing cash dividends (and earnings thereon) shall be made

in cash. Notwithstanding anything within the Plan to the contrary, upon a Change in Control whereby

substantially all of the Common Stock of the Parent shall be acquired for cash, all Plan Shares associated

with Plan Share Awards, together with any shares representing stock dividends associated with Plan Share

Awards, shall be, at the sole discretion of the Committee, distributed as of the effective date of such

Change in Control, or as soon as administratively feasible thereafter, in the form of cash equal to the

consideration received in exchange for such Common Stock represented by such Plan Shares.

(c) Withholding. The Trustee may withhold from any payment or distribution made under

this Plan sufficient amounts of cash or shares of Common Stock necessary to cover any applicable

withholding and employment taxes, and if the amount of such payment or distribution is not sufficient, the

Trustee may require the Participant or Beneficiary to pay to the Trustee the amount required to be withheld

in taxes as a condition of delivering the Plan Shares. The Trustee shall pay over to the Parent, Savings

Bank or Subsidiary which employs or employed such Participant any such amount withheld from or paid

by the Participant or Beneficiary.

(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection (a) above, no Plan

Shares may be distributed prior to the date which is five years from the effective date of the Conversion

to the extent the Participant or Beneficiary, as the case may be, would after receipt of such Shares own in

excess of ten percent (10%) of the issued and outstanding shares of Common Stock held by parties other

than Parent, unless such action is approved in advance by a majority vote of disinterested directors of the

Board of the Parent. Any Plan Shares remaining undistributed solely by reason of the operation of this

Subsection (d) shall be distributed to the Participant or his Beneficiary on the date which is five years from

the effective date of the Conversion.

(e) Regulatory Exceptions. No Plan Shares shall be distributed, however, unless and until

all of the requirements of all applicable law and regulation shall have been fully complied with, including

the receipt of approval of the Plan by the stockholders of the Parent by such vote, if any, as may be

required by applicable law and regulations as determined by the Board.

7.04 Voting of Plan Shares. After a Plan Share Award has become earned and non-forfeitable,

the Participant shall be entitled to direct the Trustee as to the voting of the Plan Shares which are associated

with the Plan Share Award and which have not yet been distributed pursuant to Section 7.03, subject to

rules and procedures adopted by the Committee for this purpose. All shares of Common Stock held by the

Trust as to which Participants are not entitled to direct, or have not directed, the voting of such Shares,

shall be voted by the Trustee as directed by the Committee.

Article VIII

TRUST

8.01 Trust. The Trustee shall receive, hold, administer, invest and make distributions and

disbursements from the Trust in accordance with the provisions of the Plan and Trust and the applicable

directions, rules, regulations, procedures and policies established by the Committee pursuant to the Plan.

8.02 Management of Trust. It is the intention of this Plan and Trust that the Trustee shall have

complete authority and discretion with respect to the management, control and investment of the Trust, and

that the Trustee shall invest all assets of the Trust, except those attributable to cash dividends paid with

respect to Plan Shares not held in the Plan Share Reserve, in Common Stock to the fullest extent

practicable, except to the extent that the Trustee determines that the holding of monies in cash or cash

equivalents is necessary to meet the obligations of the Trust. In performing their duties, the Trustees shall

have the power to do all things and execute such instruments as may be deemed necessary or proper,

including the following powers:

(a) To invest up to one hundred percent (100%) of all Trust assets in the Common Stock

without regard to any law now or hereafter in force limiting investments for Trustees or other

fiduciaries. The investment authorized herein may constitute the only investment of the Trust, and

in making such investment, the Trustee is authorized to purchase Common Stock from the Parent

or from any other source, and such Common Stock so purchased may be outstanding, newly issued,

or treasury shares.

(b) To invest any Trust assets not otherwise invested in accordance with (a) above in such

deposit accounts, and certificates of deposit (including those issued by the Savings Bank),

obligations of the United States government or its agencies or such other investments as shall be

considered the equivalent of cash.

Trust.

(d) To cause stocks, bonds or other securities to be registered in the name of a nominee,

without the addition of words indicating that such security is an asset of the Trust (but accurate

records shall be maintained showing that such security is an asset of the Trust).

(e) To hold cash without interest in such amounts as may be in the opinion of the Trustee

reasonable for the proper operation of the Plan and Trust.

(f) To employ brokers, agents, custodians, consultants and accountants.

(g) To hire counsel to render advice with respect to their rights, duties and obligations

hereunder, and such other legal services or representation as they may deem desirable.

(h) To hold funds and securities representing the amounts to be distributed to a Participant or

his Beneficiary as a consequence of a dispute as to the disposition thereof, whether in a segregated

account or held in common with other assets.

(i) As may be directed by the Committee or the Board from time to time, the Trustee shall

pay to the Saving Bank earnings of the Trust attributable to the Plan Share Reserve.

Notwithstanding anything herein contained to the contrary, the Trustee shall not be required to

make any inventory, appraisal or settlement or report to any court, or to secure any order of a court for the

exercise of any power herein contained, or to maintain bond.

8.03 Records and Accounts. The Trustee shall maintain accurate and detailed records and

accounts of all transactions of the Trust, which shall be available at all reasonable times for inspection by

any legally entitled person or entity to the extent required by applicable law, or any other person determined

by the Committee.

8.04 Earnings. All earnings, gains and losses with respect to Trust assets shall be allocated in

accordance with a reasonable procedure adopted by the Committee, to bookkeeping accounts for

Participants or to the general account of the Trust, depending on the nature and allocation of the assets

generating such earnings, gains and losses. In particular, any earnings on cash dividends received with

respect to shares of Common Stock shall be allocated to accounts for Participants, except to the extent that

such cash dividends are distributed to Participants, if such shares are the subject of outstanding Plan Share

Awards, or, otherwise to the Plan Share Reserve.

8.05 Expenses. All costs and expenses incurred in the operation and administration of this Plan,

including those incurred by the Trustee, shall be paid by the Savings Bank.

8.06 Indemnification. Subject to the requirements and limitations of applicable laws and

regulations, the Parent and the Savings Bank shall indemnify, defend and hold the Trustee harmless against

all claims, expenses and liabilities arising out of or related to the exercise of the Trustee's powers and the

discharge of their duties hereunder, unless the same shall be due to their gross negligence or willful

misconduct.

Article IX

MISCELLANEOUS

9.01 Adjustments for Capital Changes. The aggregate number of Plan Shares available for

issuance pursuant to the Plan Share Awards and the number of Shares to which any Plan Share Award

relates shall be proportionately adjusted for any increase or decrease in the total number of outstanding

shares of Common Stock issued subsequent to the effective date of the Plan resulting from any split,

subdivision or consolidation of the Common Stock or other capital adjustment, change or exchange of the

Common Stock, or other increase or decrease in the number or kind of shares effected without receipt or

payment of consideration by the Parent.

9.02 Amendment and Termination of the Plan. The Board may, by resolution, at any time,

amend or terminate the Plan. The power to amend or terminate the Plan shall include the power to direct

the Trustee to return to the Parent all or any part of the assets of the Trust, including shares of Common

Stock held in the Plan Share Reserve, as well as shares of Common Stock and other assets subject to Plan

Share Awards which have not yet been earned by the Participants to whom they have been awarded.

However, the termination of the Trust shall not affect a Participant's right to earn Plan Share Awards and

to the distribution of Common Stock relating thereto, including earnings thereon, in accordance with the

terms of this Plan and the grant by the Committee or the Board. Notwithstanding the foregoing, no action

of the Board may increase (other than as provided in Section 9.01 hereof) the maximum number of Plan

Shares permitted to be awarded under the Plan as specified at Section 5.03, materially increase the benefits

accruing to Participants under the Plan or materially modify the requirements for eligibility for participation

in the Plan unless such action of the Board shall be subject to ratification by the stockholders of the Parent.

9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall not be transferable

by a Participant, and during the lifetime of the Participant, Plan Shares may only be earned by and paid

to the Participant who was notified in writing of the Award by the Committee pursuant to Section 6.03.

No Participant or Beneficiary shall have any right in or claim to any assets of the Plan or Trust, nor shall

the Parent, Savings Bank, or any Subsidiary be subject to any claim for benefits hereunder.

9.04 No Employment Rights. Neither the Plan nor any grant of a Plan Share Award or Plan

Shares hereunder nor any action taken by the Trustee, the Committee or the Board in connection with the

Plan shall create any right, either express or implied, on the part of any Participant to continue in the

employ or service of the Parent, Savings Bank, or a Subsidiary thereof.

9.05 Voting and Dividend Rights. No Participant shall have any voting or dividend rights of

a stockholder with respect to any Plan Shares covered by a Plan Share Award, except as expressly provided

in Sections 7.02 and 7.04 above, prior to the time said Plan Shares are actually distributed to such

Participant.

9.06 Governing Law. The Plan and Trust shall be governed by and construed under the laws

of the State of Missouri, except to the extent that Federal Law shall be deemed applicable.

9.07 Effective Date. The Plan shall be effective as of the date of approval of the Plan by

stockholders of the Parent, subject to the receipt of approval or non-objection by the OTS or other

applicable banking regulator, if applicable.

9.08 Term of Plan. This Plan shall remain in effect until the earlier of (i) termination by the

Board, (ii) the distribution of all assets of the Trust, or (iii) 21 years from the Effective Date. Termination

of the Plan shall not effect any Plan Share Awards previously granted, and such Plan Share Awards shall

remain valid and in effect until they have been earned and paid, or by their terms expire or are forfeited.

9.09 Tax Status of Trust. It is intended that the Trust established hereby shall be treated as a

grantor trust of the Savings Bank under the provisions of Section 671 et seq. of the Internal Revenue Code

of 1986, as amended, as the same may be amended from time to time.

EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is effective as of November 1, 2004, by and between Guaranty Bank (the " Bank ") and Eldon Erwin (the " Executive ").

WHEREAS, the Bank desires to employ the Executive on the terms and conditions hereinafter set forth; and

WHEREAS, the Executive is willing to render his services to the Bank on the terms and conditions set forth herein with respect to such employment; and

NOW, THEREFORE, in consideration of promises and the mutual terms and conditions hereof, the Bank and the Executive hereby agree as follows:

1. Employment . The Bank hereby employs the Executive and the Executive hereby accepts employment with the Bank upon the terms and conditions hereinafter set forth.

2. Exclusive Services . The Executive shall devote all working time, ability, and attention to the business of the Bank during the term of this Agreement and shall not, directly or indirectly, render any services to or for the benefit of any other business, corporation, organization, or entity, whether for compensation or otherwise, without the prior knowledge and written consent of the Board of Directors.

3. Duties . The Executive is hereby employed as Executive Vice President and Chief Lending Officer of the Bank, and shall perform for or on behalf of the Bank such duties as the Bank shall assign from time to time and shall render his services at the principal business offices of the Bank, as such may be located from time to time, unless otherwise agreed in writing between the Bank and the Executive, and shall perform such duties in accordance with the Bank’s policies and practices, including its employment policies and practices. The Executive is expected to achieve, at a minimum, all the following performance standards and expectations:

Promptly notify the President/CEO of any and all events that materially or potentially could materially impact the financial, operational, or reputation of the Bank and/or Holding Company. Such events include but are not limited to regulatory, judicial, litigation, audit, loan defaults, major customer relations, internal operations, and employee moral.

Perform all usual and customary responsibilities and duties of a Chief Lending Officer. This includes directing the Bank’s overall lending operation. Supervises all phases of the lending operation for the bank and held accountable for the entire loan portfolio. Originates loan underwriting, documentation, objectives and management policy for approval by loan committee, President, and directors. Guides and directs all activities of loan officers, support, and loan servicing staff. Directs and participates in business development activities. Serves on asset/liability committee and other managerial committees as requested by the President.

3)	Lead in an ethical manner and make certain that the excellent reputation of the Bank is maintained.

4)	Achieve the Bank’s Profit and Budget plan as approved by the Board of Directors.

5)	Generate new personal loan production of $15 million in 2005.

6)	Achieve total net loan portfolio growth of 15% in 2005.

7)	Achieve commercial and consumer loan fee collections of $150,000 in 2005.

8)	Maintain 30-day loan delinquency to total loans below .50%.

9)	Maintain net charge-offs as a percentage of average total loans below .15%.

10)	Maintain minimum yield on the total loan portfolio of 5.00%.

4. Term . The term of employment under this agreement shall be a period of two years commencing on the Effective Date above (the "Commencement Date"), subject to earlier termination as provided herein. Beginning on the first anniversary of the Commencement Date, and on each anniversary thereafter, the term of employment under this Agreement may be extended for a period of one year in addition to the then-remaining term of employment under this Agreement, if approved by the Board of Directors of the Bank and agreed to by the Executive within 30 days in advance of the date on which the term of employment under this Agreement would otherwise be extended, in which event the remaining unexpired term of the Executive’s employment shall be at least two (2) years. If the Board of Directors does not so approve, or the Executive does not so agree, the term of Executive’s employment shall expire on the expiration date in effect at the time.

5. Compensation . Executive is to treat compensation information as confidential and disclose it to no one other than immediate family members and Executive’s professional advisors, who must be instructed to keep such information confidential. As compensation for services rendered under this Agreement, the Executive shall receive the following:

a. Base Salary . The Bank shall pay the Executive a base salary (" Base Salary ") of $140,000 per year, payable semi-monthly ($ 5,833.34) on the 15 ^th and 30 ^th of each month, less applicable deductions and withholdings, during the term of this Agreement, prorated for any partial employment month. Any adjustments in salary or other compensation shall in no way limit or reduce any other obligation of the Bank hereunder.

b. Additional Compensation . During Executive’s first year of employment, he may earn a bonus of $20,000 if the Bank achieves the performance standards in Section 3 above.

The Executive will be eligible for bonuses paid in the form of stock through the Employee Stock Ownership Plan (ESOP) beginning in 2006.

Annual bonuses will be paid within 15 days following the year-end audited financial statement being released.

c. Stock Options . The Executive will be granted options to purchase 10,000 shares of common stock of Guaranty Federal Bancshares, Inc. as set forth in the attached Stock Option Agreement.

6. Benefits . In addition to the compensation pursuant to Section 5 hereof, the Executive shall be entitled to receive the following:

a. Participation in Employee Plans . The Executive shall be entitled to participate in any health, disability, and group term life insurance plans, in any pension, retirement, or profit sharing plans, in any executive bonus plan, or in any other perquisites and fringe benefits that may be extended generally from time to time to employees of the Bank, benefits will be provided at no additional cost over and above what other employees pay.

b. Vacation . The Executive shall be entitled to nineteen (19) days of vacation with full salary and benefits each year. Executive may carry over into the next year only 24 hours (3 days) of vacation. Upon termination of the Executive's employment, Executive will be paid the cash equivalent for accrued but unused vacation.

7. Reimbursement of Expenses . Subject to such rules and procedures as from time to time are specified by the Bank, the Bank shall reimburse the Executive on a monthly basis for reasonable business expenses necessarily incurred in the performance of his duties under this Agreement.

8. Confidentiality/Trade Secrets . The Executive acknowledges his position with the Bank is one of the highest trust and confidence both by reason of his position and by reason of his access to and contact with the trade secrets and confidential and proprietary business information of the Bank. Both during the term of this Agreement and thereafter, the Executive therefore covenants and agrees as follows:

a. He shall use his best efforts and exercise utmost diligence to protect and to safeguard the trade secrets and/or confidential and proprietary information of the Bank, including but not limited to the identity of its current or prospective customers, suppliers and licensors, its arrangements with its customers, suppliers and licensors, and its technical, financial and marketing data, records, compilations of information, processes, programs, methods, techniques, and specifications relating to its customers, suppliers, licensors, products, and services;

b. He shall not disclose any of such trade secrets and/or confidential and proprietary information, except as may be required in the course of his employment with the Bank or by law; and

c. He shall not use, directly or indirectly, for his own benefit or for the benefit of another, any of such trade secrets and/or confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda, notes, or other documents relating to the business of the Bank, whether prepared by the Executive or otherwise coming into his possession, shall be the exclusive property of the Bank and shall be delivered to the Bank and not reproduced and/or retained by the Executive upon termination of his employment for any reason whatsoever or at any other time upon request of the Bank.

9. Non-Competition . If Bank terminates Executive with Cause or if Executive terminates his employment without Good Reason, or upon termination of this Agreement as set forth in Section 4 hereof, for a period of two (2) years following the termination, the Executive Agrees that he will not, without the prior written consent of the Bank, directly or indirectly, as an employee, employer, consultant, agent, principal, partner, shareholder, corporate officer, director, or through any other kind of ownership (other than ownership of securities of publicly held corporations of which the Executive owns less than five percent 5% of any class of outstanding securities) or in any other representative or individual capacity, attempt to sell any of the services or products of any entity engaged in the business or banking, investment and/or lending, or in any other segment of the industry in which the Bank or any subsidiary of the Bank is or may become involved after the date hereof and prior to the date of termination of the Executive’s employment. However, if Bank terminates without Cause, or Executive terminates with Good Reason, or if Executive’s employment terminates within one (1) year following a Change in Control, the restrictive period above shall be the length of time the Bank is required pursuant to the terms of this Agreement to pay Executive the compensation set forth in Section 5, but in no event shall such restrictive period be less than one (1) year.

10. Nonsolicitation . If Bank terminates Executive with Cause or if Executive terminates his employment without Good Reason, or upon termination of this Agreement as set forth in Section 4 hereof, for a period of two (2) years following the termination, the Executive Agrees that he will not, without the prior written consent of the Bank, during the period of his employment and after termination of employment, he will not, either directly or indirectly, for himself or for any third party, except as otherwise agreed to in writing by the Bank, employ or hire any other person who is then employed by the Bank, or solicit, induce, recruit, or cause any other person who is then employed by the Bank to terminate his employment for the purpose of joining, associating, or becoming employed with any business or activity that is engaged in the industry or any other segment of the industry in which the Bank is involved in or may become involved after the date hereof. However, if Bank terminates without Cause, or Executive terminates with Good Reason, or if Executive’s employment terminates within one (1) year following a Change in Control, the restrictive period above shall be the length of time the Bank is required pursuant to the terms of this Agreement to pay Executive the compensation set forth in Section 5, but in no event shall such restrictive period be less than one (1) year.

11. Remedies for Breach of Covenants of the Executive .

a. The covenants set forth in Section 8 of this Agreement shall continue to be binding upon the Executive, as provided herein in Section 11 notwithstanding the termination of his employment with the Bank for any reason whatsoever. The Bank and the Executive further acknowledge and agree that, if any court of competent jurisdiction or other appropriate authority shall disagree with the parties' foregoing agreement as to reasonableness, then such court or other authority shall reform or otherwise modify the foregoing covenants only so far as necessary to be enforceable.

b. The covenants set forth in Sections 8 of this Agreement shall continue to be binding upon the Executive, as provided herein in Section 11 notwithstanding the termination of his employment with the Bank for any reason whatsoever. The covenants set forth in Sections 9 and 10 shall continue to be binding upon the Executive in accordance with their terms. Such covenants shall be deemed and construed as separate agreements independent of any other provisions of this Agreement and any other agreement between the Bank and the Executive. The existence of any claim or cause of action by the Executive against the Bank, unless predicated on this Agreement, shall not constitute a defense to the enforcement by the Bank of any or all such covenants. It is expressly agreed that the remedy at law for the breach of any such covenant is inadequate, injunctive relief and specific performance shall be available to prevent the breach or any threatened breach thereof, and that the party bringing the claim shall not be required to post bond in pursuit of such claim. For any such claim, the prevailing party shall be entitled to recover his/its attorney’s fees and costs incurred in pursuit of such claim.

12. Termination . This Agreement (other than Sections 8, 9 and 10, which shall survive any termination hereof according to their terms, but subject to claims or causes of action by Executive against the Bank predicated on this Agreement) may be terminated as follows:

a. The Bank may terminate this Agreement and the Executive’s employment hereunder at any time, with Cause, upon written notice to the Executive. The Executive may terminate this Agreement and his employment hereunder, at any time, with Good Reason.

b. For purposes of this Agreement, "Cause" occurs when Executive, in the Bank’s reasonable belief, does any of the following:

(i) is charged or indicted with, or pleads guilty or nolo contendre to, any criminal act under federal or state law which constitutes a felony;

(ii) breaches any material provision of this Agreement;

(iii) knowingly or should have known that Executive’s conduct would violate any provision of applicable federal or state banking laws or regulations;

(iv) knowingly or should have known that Executive’s conduct would violate any applicable local, state, or federal law relating to discrimination or harassment;

(v) knowingly or should have known that Executive’s conduct would violate the Bank’s policies and/or practices applicable to executive employees; or

(vi) dies or becomes permanently disabled from continuing to provide the level of service required under this Agreement.

c. The Executive shall have "Good Reason" to effect a termination in the event that the Bank (i) breaches its obligations to pay any salary, benefit, or bonus due hereunder, (ii) requires the Executive to relocate more than 25 miles from the Bank’s principal place of business, or (iii) substantially diminishes the functional responsibilities of the Executive (it being understood that structural changes, such as a change in title or to whom the Executive reports, do not constitute changes in functional responsibilities) or a reduction due to performance-based reasons, and in the event of any of (i), or (ii), the Executive has given written notice to the Bank as to the details of the basis for such Good Reason within thirty (30) days following the date on which the Executive alleges the event giving rise to such Good Reason occurred and the Bank has failed to provide a reasonable cure within thirty (30) days after its receipt of such notice.

d. In the event that (x) Bank terminates Executive’s employment with Bank for cause or as a result of the death, disability or adjudication of legal incompetence of Executive, or (y) Executive terminates Executive’s employment with Employer for any or no reason, Bank shall pay or provide to Executive:

(i) such salary as Executive shall have earned up to the date of Executive’s termination: and

(ii) such other benefits and other amounts due Executive under Sections 5 and 6 or as otherwise required by applicable law, as Executive shall have earned up to the date of Executive’s termination.

e. In the event that Bank terminates Executive’s employment with Bank without cause or if Executive shall have terminated his employment for Good Reason, Bank shall pay to Executive:

(i) the Base Salary for the remaining term of employment under this Agreement, at the time such payments are due: and

(ii) such other benefits and other amounts due Executive under sections 5 and 6 above for the remaining term of this Agreement, at the time such payments are due.

Further, notwithstanding anything herein contained to the contrary, if a "Change of Control" (as hereinafter defined) occurs during the term of this Agreement and Executive’s employment with Bank terminates for any reason (other than Executive’s death or the expiration of the term of this Agreement) at any time within the greater of twelve (12) months or the then remaining term of the Agreement after the Change of Control is consummated, then Bank shall pay to Executive in one lump sum, in cash, within ten (10) business days after the effective date of the termination of Employment, an amount equal to the sum of one and ninety-nine one hundredths (1.99) times the Base Salary; provided, however, that if and to the extent payment of such lump sum would not be deductible by Bank for federal income tax purposes by reason of application of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), then payment of that portion due Executive under this part f shall be deferred until the earliest date upon which payment can be made without being nondeductible under section 162(m) of the code.

For purposes of this Agreement, the term "Change in Control" shall mean (A) the sale of all, or a material portion, of the assets of the Bank or its holding company, unless the Executive executes a new employment agreement with the purchaser; (B) the merger or recapitalization of the Bank or its holding company whereby the Bank or its holding company is not the surviving entity, unless the Executive executes a new employment agreement with the surviving entity; or (C) the acquisition, directly or indirectly, of the beneficial ownership (within the meaning of that term as it is used in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder) of fifty percent (50%) or more of the outstanding voting securities of the Bank or its holding company by any person, trust, entity or group. This limitation shall not apply to the purchase of Shares by underwriters in connection with a public offering of the Bank’s stock or the holding company’s stock, [or the purchase of shares of up to twenty-five percent (25%) of any class of securities of the Bank or its holding company by a tax-qualified employee stock benefit plan which is exempt from the approval requirements set forth under 12 C.F.R. section 574.3(c)(1)(vi) as now in effect or as may hereafter be amended.] The term "person" refers to an individual or a corporation, partnership, limited liability company, trust, association, joint venture, Pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein.

g. Voluntary Termination. If the Executive shall voluntary terminate his employment in connection with, or within 12 months after, a "Change in Control" which occurs, and if such Change in Control was at any time opposed by the Bank’s Board of Directors, the Executive shall be entitled to receive the compensation described in Sections 12e. and 12f. on the same basis as is set forth in Sections 12e. and 12f.

13. Arbitration of Disputes .

a. Any dispute or claim arising out of or relating to this Agreement or any termination of the Executive’s employment, other than a dispute or claim arising under Sections 8 through 11, shall be settled by final and binding arbitration in the greater Springfield, Missouri metropolitan area in accordance with the Employment Arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

b. The fees and expenses of the arbitration panel shall be borne equally by the Executive and the Bank.

c. Either party may elect to have any dispute governed by this Section 13 to be resolved by a panel of three arbitrators, and the party electing same shall bear any additional costs resulting from such selection, the provisions of Section 13.b. notwithstanding.

14. No Mitigation . The Executive shall not be required to mitigate the amount of any salary or other payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by the Executive as the result of employment by another, by retirements after the date of termination or otherwise.

15. Notices . Any notices to be given hereunder by either party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepaid, with return receipt requested. Mailed notices shall be addressed as follows:

a. If to the Bank:

President & CEO

Guaranty Bank

1341 W. Battlefield

Springfield, MO 65807

b. If to the Executive:

Eldon Erwin

4696 S. Turnberry

Springfield, MO 65810

Either party may change its address for notice by giving notice in accordance with the terms of this Section 15.

16. General Provisions .

a. Law Governing . Notwithstanding any conflict of laws to the contrary, this Agreement shall be governed by and construed in accordance with the laws of the State of Missouri, and the parties hereby submit to the jurisdiction of the federal/state courts in the State of Missouri for any dispute not subject to Section 13.

b. Invalid Provisions . If any provision of this Agreement is held to be illegal, invalid, or unenforceable, then such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable provision there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and still be legal, valid or enforceable.

c. Entire Agreement . With the exception of the Stock Options Agreement, this Agreement sets forth the entire understanding of the parties and supersedes all prior agreements or understandings, whether written or oral, with respect to the subject matter hereof. No terms, conditions, warranties, other than those contained herein, and no amendments or modifications hereto shall be binding unless made in writing and signed by the parties hereto.

d. Binding Effect . This Agreement shall extend to and be binding upon and inure to the benefit to the parties hereto, their respective heirs, representatives, successors, and assigns. This Agreement may not be assigned by the Executive, but may be assigned by the Bank to any person or entity that succeeds to the ownership or operation of the business in which the Executive is primarily employed by the Bank.

e. Waiver . The waiver by either party hereto of a breach of any term or provision of this Agreement shall not operate or be construed as a waiver of a subsequent breach of the same provision by any party or of the breach of any other term or provision of this Agreement.

f. Titles . Titles of the paragraphs herein are used solely for convenience and shall not be used for interpretation or construing any work, clause, paragraph, or provision of this Agreement.

g. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Bank and the Executive have executed this Agreement as of the date and year first above written.

THIS AGREEMENT CONTAINS AN ARBITRATION CLAUSE.

EXECUTIVE: GUARANTY BANK:

By:

Eldon Erwin Shaun A. Burke

President & CEO

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

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

GUARANTY FEDERAL BANCSHARES, INC.

Form 10-K

TABLE OF CONTENTS
	Item		Page

		PART I

	1	Business	5

	2	Properties	28

	3	Legal Proceedings	28

	4	Submission of Matters to a Vote of Security Holders	28

		PART II

	5	Market for Registrant's Common Equity, Related Stockholder Matters	28
		and Issuer Purchases of Equity Securities

	6	Selected Financial Data	29

	7	Management's Discussion and Analysis of
		Financial Condition and Results of Operations	29

	7A.	Quantitative and Qualitative Disclosures About Market Risk	29

	8	Financial Statements and Supplementary Data	29

	9	Changes in and Disagreements with Accountants
		on Accounting and Financial Disclosure	29

	9A.	Controls and Procedures	29

	9B.	Other Information	29
		PART III

	10	Directors and Executive Officers of the Registrant	30

	11	Executive Compensation	30

	12	Security Ownership of Certain Beneficial Owners and Management
		and Related Stockholder Matters	30

	13	Certain Relationships and Related Transactions	33

	14	Principal Accountant Fees and Services	33

		PART IV

	15	Exhibits and Financial Statement Schedules	33
Signatures

Composition of Loan Portfolio
	As of December 31,					As of December 31,					As of June 30,
	2004					2003					2003					2002					2001					2000
	$		%			$		%			$		%			$		%			$		%			$		%
											(Dollars in Thousands)
Mortgage loans (includes loans held for sale):
One to four family	$	121,307		31	%	$	129,477		37	%	$	144,404		40	%		149,443		44	%		189,436		55	%		198,155		63	%
Multi-family		52,259		13	%		44,242		13	%		41,022		11	%		44,055		13	%		42,641		12	%		39,146		12	%
Construction		45,090		11	%		49,814		14	%		64,464		18	%		49,807		15	%		55,317		16	%		41,372		13	%
Commercial real estate		97,550		25	%		72,105		21	%		71,046		19	%		58,434		17	%		43,893		13	%		26,559		9	%
Total mortgage loans		316,206		80	%		295,638		86	%		320,936		88	%		301,739		89	%		331,287		96	%		305,232		97	%
Commercial business loans		55,606		14	%		24,618		7	%		18,967		5	%		8,358		2	%		5,511		1	%		761		0	%
Consumer loans		25,172		6	%		25,441		7	%		25,486		7	%		31,075		9	%		10,573		3	%		9,520		3	%
Total consumer and other loans		80,778		20	%		50,059		14	%		44,453		12	%		39,433		11	%		16,084		4	%		10,281		3	%
Total loans		396,984		100	%		345,697		100	%		365,389		100	%		341,172		100	%		347,371		100	%		315,513		100	%
Less:
Loans in process		-					9,425					25,539					18,326					24,212					16,668
Deferred loan fees/costs, net		106					237					211					230					268					164
Unearned discounts		7					19					26					50					88					108
Allowance for loan losses		4,537					3,886					2,775					2,650					2,697					2,520
Total Loans, Net	$	392,334				$	332,130				$	336,838					319,916					320,106					296,053

Fixed and Adjustable Rate Loans by Type
	Fixed Rates		Adjustable Rates		Total
	(Dollars in Thousands)
One-to four-family	$	19,468		83,810		103,278
Multi-family		25,577		16,002		41,579
Construction		442		6,473		6,915
Commercial real estate		30,589		53,559		84,148
Commercial loans		3,542		21,449		24,991
Consumer loans		7,250		15,284		22,534
Total loans (1)	$	86,868		196,577		283,445
(1) Before deductions for unearned discounts, deferred loan fees/costs and
allowances for loan losses.

Loan Maturities	Due in One Year or Less		Due After One Through Five Years		Due After Five Years		Total
	(Dollars in thousands)
One to four family	$	14,438		15,188		91,681		121,306
Multi family		10,680		20,137		21,442		52,259
Construction		38,175		6,915		-		45,090
Commercial real estate		13,401		74,478		9,671		97,550
Commercial loans		30,614		19,838		5,154		55,606
Consumer loans		2,638		5,399		17,135		25,173
Total loans (1)	$	109,947		141,954		145,083		396,984
Less:
Deferred loan fees/costs								106
Unearned discounts								7
Allowance for loan losses								4,537
Loans receivable net							$	392,334
(1) Includes mortgage loans held for sale of $3,591.

Delinquency Summary	As of						As of
	December 31,						June 30,
	2004			2003			2003			2002			2001			2000
							(Dollars in Thousands)
Loans accounted for on a non-accrual basis
or contractually past due 90 days or more
Mortgage Loans:
One- to four-family	$	770			703			331			154			444			13
Multi-family		-			-			-			-			-			-
Construction		-			-			-			-			1,065			84
Commercial real estate		158			-			-			-			668			-
		928			703			331			154			2,177			97
Non-mortgage loans:
Commercial loans		-			-			-			-			109			-
Consumer and other loans		79			40			-			37			18			-
		79			40			-			37			127			-
Total non-accrual loans		1,007			743			331			191			2,304			97
Accruing loans which are contractually past
maturity or past due 90 days or more:
Mortgage Loans:
One- to four-family		-			-			-			-			-			152
Multi-family		-			-			-			-			-			-
Construction		-			-			-			-			-			-
Commercial real estate		-			-			-			-			-			-
-					-			-			-			-			152
Non-mortgage loans:
Commercial loans		-			-			-			-			-			-
Consumer and other loans		-			-			-			-			-			-
-					-			-			-			-			-
Total past maturity or past due accruing loans		-			-			-			-			-			152
Total accounted for on a non-accrual basis or contractually past maturity or 90 days or more past due	$	1,007			743			331			191			2,304			249
Total accounted for on a non-accrual basis or contractually past maturity or 90 days or more past due as a percentage of net loans		0.26	%		0.22	%		0.10	%		0.06	%		0.73	%		0.08	%
Total accounted for on a non-accrual basis or contractually past maturity or 90 days or more past due as a percentage of total assets		0.23	%		0.19	%		0.08	%		0.05	%		0.62	%		0.07	%

Non-Performing Assets	As of						As of
	December 31,						June 30,
	2004			2003			2003			2002			2001			2000
Non-accrual loans:							(Dollars in Thousands)
Mortgage loans:
One- to four-family	$	770			703			331			659			1,358			578
Multi-family		-			-			-			-			-			441
Construction		-			-			-			-			2,115			84
Commercial real estate		158			-			-			1,017			1,396			3,652
		928			703			331			1,676			4,869			4,755
Non-mortgage loans:
Commercial loans		-			-			-			-			60			-
Consumer and other loans		79			40			-			75			19			2
		79			40			-			75			79			2
Total non-accrual loans		1,007			743			331			1,751			4,948			4,757
Real estate and other assets acquired in settlement of loans		78			6			182			683			4			2
Non-performing loans classified as in-substance
foreclosures		-			-			-			-			-			-
Total non-performing assets	$	1,085			749			513			2,434			4,952			4,759

Total non-accrual loans as a percentage of net loans		0.26	%		0.22	%		0.10	%		0.55	%		1.55	%		1.61	%
Total non-performing assets as a percentage of total assets		0.25	%		0.19	%		0.13	%		0.65	%		1.32	%		1.39	%
Impact on interest income for the period:
Interest income that would have been recorded on non-accruing loans	$	23			15			13			21			179			47

Classification of Assets	Special Mention				Substandard				Doubtful				Loss
	Number		Amount		Number		Amount		Number		Amount		Number		Amount
	(Dollars in Thousands)
Loans:
One- to four-family		11	$	713		98	$	5,253		-	$	-		-	$	-
Multi-family		-		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-		-
Commercial real estate		-		-		-		-		-		-		-		-
Land		-		-		3		195		-		-		-		-
Other loans		5		179		25		319		1		6		-		-
Total loans		16		892		126		5,767		1		6		-		-
Foreclosed assets held-for-sale:
One- to four-family		-		-		1		50		-		-		-		-
Land and other assets		-		-		5		28		-		-		-		-
Total foreclosed assets		-		-		6		78		-		-		-		-
Total		16	$	892		132	$	5,845		1	$	6		-	$	-

Allowance for Loan Losses	Year ended			Six months ended			Year Ended
	December 31,			December 31,			June 30,
	2004			2003			2003			2002			2001			2000
							(Dollars in Thousands)
Beginning balance	$	3,886			2,775			2,650			2,697			2,520			2,349
Gross loan charge offs
Mortgage Loans:
One- to four-family		(188	)		(41	)		(358	)		(52	)		(5	)		-
Multi-family		-			-			-			-			-			-
Construction		-			-			(11	)		(235	)		-			-
Commercial real estate		-			-			-			(23	)		(115	)		-
		(188	)		(41	)		(369	)		(310	)		(120	)		-
Non-mortgage loans:
Commercial loans		-			-			-			-			-			-
Consumer and other loans		(43	)		(14	)		(168	)		(28	)		(13	)		(9	)
		(43	)		(14	)		(168	)		(28	)		(13	)		(9	)
Total charge offs		(231	)		(55	)		(537	)		(338	)		(133	)		(9	)
Recoveries
Mortgage Loans:
One- to four-family		9			1			19			-			-			-
Multi-family		-			-			-			-			-			-
Construction		-			1			6			-			-			-
Commercial real estate		-			-			-			-			-			-
		9			2			25			-			-			-
Non-mortgage loans:
Commercial loans		-			-			-			-			-			-
Consumer and other loans		9			2			27			-			-			-
		9			2			27			-			-			-
Total recoveries		18			4			52			-			-			-
Net loan charge-offs		(213	)		(51	)		(485	)		(338	)		(133	)		(9	)
Provision for loan losses charged to expense		864			1,162			610			291			310			180
Ending balance	$	4,537			3,886			2,775			2,650			2,697			2,520

Net charge-offs as a percentage of average loans, net		0.07	%		0.02	%		0.15	%		0.10	%		0.04	%		0.00	%
Allowance for loan losses as a percentage of average loans, net		1.39	%		1.19	%		0.85	%		0.82	%		0.87	%		0.89	%
Allowance for loan losses as a percentage of total non-performing loans		451	%		523	%		838	%		151	%		55	%		53	%

Investment Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Approximate Fair Value
As of December 31, 2004
AVAILABLE-FOR-SALE SECURITIES:
Equity Securities:
FHLMC stock	$	66,588		4,945,012		-			5,011,600
Other stock		2,000,000		-		(560,000	)		1,440,000
Debt Securities:
Trust preferred securities		6,570,814		84,468		-			6,655,282
U. S. government agencies		1,994,798		88		-			1,994,886
HELD-TO-MATURITY SECURITIES:
U. S. government agencies		228,807		375		-			229,182
Mortgage-backed securities		1,076,351		77,737		-			1,154,088
	$	11,937,358		5,107,680		(560,000	)		16,485,038

Investment Securities		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses	)		Approximate Fair Value
As of December 31, 2003
AVAILABLE-FOR-SALE SECURITIES:
Equity Securities:
FHLMC stock	$	78,336		4,587,264		-			4,665,600
Other stock		2,000,000		-		(326,000	)		1,674,000
Debt Securities:
Trust preferred securities		6,557,201		11,071		(40,840	)		6,527,432
U. S. government agencies		1,996,317		477		-			1,996,794
HELD-TO-MATURITY SECURITIES:
U. S. government agencies		256,142		78		-			256,220
Mortgage-backed securities		1,611,452		81,240		-			1,692,692
	$	12,499,448		4,680,130		(366,840	)		16,812,738

Investment Portfolio Maturities and Average Weighted Yields	Amortized Cost		Weighted Average Yield			Approximate Fair Value
Due within one year	$	1,994,798		2.09	%	$	1,994,886
Due after ten years (1)		6,799,621		2.34	%		6,884,464
Equity securities not due on
a single maturity date		2,066,588		0.00	%		6,451,600
Mortgage-backed securities not due on a
single maturity date		1,076,351		6.21	%		1,154,088
	$	11,937,358		2.30	%	$	16,485,038
(1) Consists of government agency and trust preferred securities

	(Dollars in thousands)
	As of December 31, 2004
Three months or less	$	2,441
Over three through six months		715
Over six through twelve months		2,378
Over twelve months		6,536
Total	$	12,070

Selected Data for Federal Home Loan Bank Advances
	As of						As of
	December 31,						June 30,
	2004			2003			2003			2002
	(Dollars in Thousands)
Remaining maturity:
Less than one year	$	61,264			63,290			60,323			13,334
One to two years		12,500			7,850			7,350			26,322
Two to three years		3,000			10,500			6,500			5,350
Three to four years		16,650			1,000			3,000			6,500
Four to five years		386			14,950			3,950			3,000
Over five years		6,200			11,247			33,496			56,577
Total	$	100,000			108,837			114,619			111,083

Weighted average rate at end of period		3.62	%		3.58	%		4.14	%		5.38	%

For the period:
Average balance	$	111,169			101,841			108,020			126,534
Average interest rate		3.17	%		4.17	%		5.22	%		5.56	%

Maximum outstanding as of any month end	$	120,086			109,496			114,619			144,711

Financial Highlights	Year ended			Six Months Ended			Year Ended
	December 31,			December 31,			June 30,
	2004			2003			2003			2002

Dividend Payout Ratio		43	%		60	%		48	%		63	%

Return on Average Assets (1)		1.04	%		0.45	%		0.95	%		0.93	%

Return on Average Equity (1)		10.74	%		4.42	%		9.78	%		7.63	%

Stockholders' Equity to Assets		9.25	%		9.82	%		9.37	%		9.40	%



EPS Diluted	$	1.47			0.52			1.26			1.00
Dividends	$	0.63			0.31			0.60			0.63

(1) Annualized for six months ended December 31, 2003

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
October 1, 2004 to October 31, 2004		886		20.05		886		201,675
November 1, 2004 to November 30, 2004		7,000		23.97		7,000		194,675
December 1, 2004 to December 31, 2004		9,590		23.86		9,590		185,085
Total		17,476		23.71		17,476

Equity Compensation Plan Information

					(c)
					Number of securities
					remaining available
	(a)		(b)		for future issuance
	Number of securities to be		Weighted-average		under equity
	issued upon exercise of		exercise price of		compensation plans
	outstanding options,		outstanding options,		(excluding securities
Plan category	warrants and rights		warrants and rights		reflected in column (a))


Equity compensation plans		336,988		14.04		259,237
approved by security holders


Equity compensation plans not		47,875		15.96		14,761
approved by security holders

Totals		384,863		14.28		273,998


	GUARANTY FEDERAL BANCSHARES, INC.

Date: March 30, 2005	By:	/s/ Shaun A. Burke

		Shaun A. Burke President and Chief Executive Officer (Duly Authorized Representative)


/s/ Shaun A. Burke			/s/ Tim Rosenbury

Shaun A. Burke President and Chief Executive Officer and Director (Principal Executive Officer)			Tim Rosenbury Director Date: March 30, 2005


/s/ Bruce Winston			/s/ Gary Lipscomb

Bruce Winston SVP and Chief Financial Officer (Principal Accounting and Financial Officer Date: March 30, 2005			Gary Lipscomb Director Date: March 30, 2005


/s/ Wayne V. Barnes			/s/ Don M. Gibson

Wayne V. Barnes Director Date: March 30, 2005			Don M. Gibson Chairman of the Board and Director Date: March 30, 2005


/s/ Gregory V. Ostergren			/s/ James L. Sivils, III

Gregory V. Ostergren Director Date: March 30, 2005			James L. Sivils Director Date: March 30, 2005


/s/ Kurt D. Hellweg			/s/ Jack L. Barham

Kurt D. Hellweg Director Date: March 30, 2005			Jack L. Barham Vice Chairman of the Board and Director Date: March 30, 2005

Date	Shares	Percentage of Total Shares Awarded Which Are Exercisable/ Non-forfeitable

As of		20%
As of		40%
As of		60%
As of		80%
As of		100%

1	Investor Information
2	President’s Message
3	Selected Consolidated Financial and Other Data
5	Management’s Discussion and Analysis of Financial Condition and Results of Operations
22	Consolidated Financial Statements
54	Report of Independent Registered Public Accounting Firm

	Year ended				Six months ended				Fiscal Year ended
	December 31, 2004				December 31, 2003				June 30, 2003
	High		Low		High		Low		High		Low
Quarter ended:
March 31	$	19.95		18.70		n/a		n/a		15.73		14.90
June 30		19.95		18.81		n/a		n/a		16.40		15.15
September 30		20.01		19.11		17.30		16.04		14.50		13.81
December 31		24.15		20.00		19.59		17.15		15.75		13.35


	2
*Guaranty Federal Bancshares, Inc.* *Selected Consolidated Financial and Other Data*

Summary Statement of Income	Year ended		Six months ended		Six months ended
	December 31,		December 31,		December 31,
	2004		2003 (1)		2002
					(Unaudited)
Interest income	$	20,539		9,846		11,290
Interest expense		8,446		4,491		6,086
Net interest income		12,093		5,355		5,204
Provision for loan losses		864		1,162		205
Net interest income after provision
for loan losses		11,229		4,193		4,999
Noninterest income		3,616		2,089		1,752
Noninterest expense		8,248		3,994		4,060
Income before income taxes		6,597		2,288		2,691
Provision for income taxes		2,313		788		927
Net income	$	4,284		1,500		1,764

Basic	$	1.53		0.54		0.63
Diluted	$	1.47		0.52		0.62

	Years ended
	June 30,
		2003		2002		2001

Interest income	$	21,782		25,223		27,182
Interest expense		11,445		14,087		16,378
Net interest income		10,337		11,136		10,804
Provision for loan losses		610		291		310
Net interest income after provision
for loan losses		9,727		10,845		10,494
Noninterest income		3,688		3,634		2,103
Noninterest expense		8,179		8,994		7,621
Income before income taxes		5,236		5,485		4,976
Provision for income taxes		1,656		1,892		1,743
Net income	$	3,580.00		3,593		3,233

Basic	$	1.28		1.01		0.78
Diluted	$	1.26		1.00		0.77

Summary Balance Sheet	As of December 31,						As of June 30,
	2004			2003 (1)			2003			2002
ASSETS
Cash and cash equivalents	$	15,896			22,657			19,015			16,964
Investment securities		21,553			16,731			15,522			19,683
Loans receivable, net		392,333			332,130			336,838			319,916
Accrued interest receivable		1,570			1,306			1,430			1,655
Prepaids and other assets		1,976			7,351			10,455			10,293
Foreclosed assets		78			6			182			683
Premises and equipment		7,189			6,576			6,709			7,356
	$	440,597			386,757			390,151			376,550
LIABILITIES
Deposits	$	296,388			237,131			235,677			225,284
Federal Home Loan Bank advances		100,000			108,837			114,619			111,083
Other liabilities		3,436			2,811			3,313			4,748
		399,823			348,779			353,609			341,115

Common stock		649			624			624			624
Additional paid-in capital		52,385			47,366			47,366			47,366
Unearned ESOP shares		(1,801	)		(3,100	)		(3,100	)		(3,100	)
Retained earnings		32,437			23,236			23,236			23,236
Unrealized appreciation on available-for-
sale securities, net		2,816			3,439			3,439			3,439
Treasury stock		(45,713	)		(8,132	)		(8,132	)		(8,132	)
STOCKHOLDERS' EQUITY		40,773			37,978			36,542			35,435
	$	440,597			386,757			390,151			376,550

Supplemental Data	As of December 31,						As of June 30,
		2004			2003 (1	)		2003			2002
Number of full-service offices		7			9			9			9
Cash dividends per share	$	0.63			0.31			0.60			0.63

	Six Months Ended								Year Ended
	December 31, 2002								June 30, 2003
	(Unaudited)
	Average Balance			Interest		Yield / Cost			Average Balance			Interest		Yield / Cost
ASSETS
Interest-earning:
Loans	$	323,292		$	10,827		6.70	%	$	326,441		$	20,928		6.41	%
Investment securities		11,988			231		3.85	%		11,103			419		3.77	%
Other assets		24,800			232		1.87	%		18,864			434		2.30	%
Total interest-earning		360,080			11,290		6.27	%		356,408			21,781		6.11	%
Noninterest-earning		13,990								19,368
	$	374,070							$	375,776

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing:
Savings accounts	$	17,507			132		1.51	%	$	17,390			221		1.27	%
Transaction accounts		67,002			460		1.37	%		67,614			814		1.20	%
Certificates of deposit		127,218			2,530		3.98	%		126,376			4,768		3.77	%
FHLB advances		107,612			2,959		5.50	%		108,020			5,634		5.22	%
Other borrowed funds		971			5		1.03	%		832			7		0.84	%
Total interest-bearing		320,310			6,086		3.80	%		320,232			11,444		3.57	%
Noninterest-bearing		17,390								18,946
Total liabilities		337,700								339,178
Stockholders' equity		36,370								36,598
	$	374,070							$	375,776
Net earning balance	$	39,770							$	36,176
Earning yield less costing rate							2.47	%							2.54	%
Net interest income, and
net yield spread on
interest-earning assets				$	5,204		2.89	%				$	10,337		2.90	%
Ratio of interest-earning assets to
interest-bearing liabilities		112	%							111	%

	Year ended												Six Months Ended
	December 31, 2004 versus June 30, 2003												December 31, 2003 versus 2002
	Average Balance			Interest Rate			Rate & Balance			Total			Average Balance			Interest Rate			Rate & Balance			Total
Interest income:
Loans	$	(938	)		(3,133	)		(193	)		(4,264	)	$	361			(1,569	)		(52	)		(1,260	)
Investment securitites		(130	)		(100	)		5			(225	)		(40	)		(68	)		12			(96	)
Other assets		(174	)		(96	)		11			(88	)		(102	)		25			(11	)		(88	)
Net change in interest income		(1,242	)		(3,329	)		(177	)		(4,577	)		219			(1,612	)		(51	)		(1,444	)

Interest expense:
Savings accounts		(81	)		(75	)		2			(154	)		-			(62	)		-			(62	)
Transaction accounts		(21	)		(143	)		(13	)		(177	)		52			(166	)		(19	)		(133	)
Certificates of deposit		(782	)		(1,151	)		(59	)		(1,992	)		(105	)		(474	)		20			(559	)
Advances		(2,115	)		(2,214	)		(32	)		(4,361	)		(159	)		(717	)		38			(838	)
Other borrowed funds		-			(1	)		-			(1	)		-			(3	)		-			(3	)
Net change in interest expense		(2,999	)		(3,584	)		(102	)		(6,685	)		(212	)		(1,422	)		39			(1,595	)
Change in net interest income	$	1,757			(190	)		(75	)		2,108		$	431			(190	)		(90	)		151

	Prime			Ten-Year Treasury			One-Year Treasury
December 31, 2004		4.34	%		4.27	%		1.88	%
June 30, 2003		4.43	%		3.96	%		1.46	%
Change in rates		-0.09	%		0.31	%		0.42	%

	U.S. Treasury Securities
	Average for the Year Ended
	Prime			Ten-Year Maturity			One-Year Maturity
June 30, 2003		4.43	%		3.96	%		1.46	%
June 30, 2002		5.33	%		4.99	%		2.56	%
Change in rates		-0.90	%		-1.03	%		-1.10	%

BP Change	Estimated Net Portfolio Value							NPV as % of PV of Assets
in Rates	$ Amount		$ Change		% Change			NPV Ratio			Change
+300		37,875		(2,721)		-7	%		8.80	%		-0.39	%
+200		39,820		(776)		-2	%		9.15	%		-0.04	%
+100		40,669		73)		0	%		9.27	%		0.08	%
NC		40,596							9.19	%
-100		39,948		(648)		-2	%		8.99	%		-0.20	%

Payments Due By Period

			One Year		One to		Three to		More than
Contractual Obligations	Total		or less		Three Years		Five Years		Five Years

Deposits without stated maturity	$	127,351		127,351		-		-		-
Time and brokered certificates of deposit		169,036		96,114		62,386		9,856		680
Short-term borrowings		1,264		1,264		-		-		-
Federal Home Loan Bank advances		100,000		49,414		24,350		19,650		6,586
Operating leases		361,750		63,550		102,100		102,100		94,000
Purchase obligations		-		-		-		-		-
Other long term obligations		-		-		-		-		-
Total	$	759,401		337,693		188,836		131,606		101,266

	Mar-04		Jun-04		Sep-04		Dec-04
Interest income	$	4,841,117		4,872,149		5,192,334		5,633,673
Interest expense		2,050,298		1,934,800		2,123,222		2,337,309
Net interest income		2,790,819		2,937,349		3,069,111		3,296,363
Provision for loan losses		188,830		225,000		225,000		225,000
Gain on sale of loans and investment securities		299,569		247,956		309,109		370,894
Other noninterest income, net		550,694		628,678		648,125		561,150
Noninterest expense		2,042,996		2,079,394		2,043,422		2,082,059
Income before income taxes		1,409,256		1,509,589		1,757,923		1,921,348
Provision for income taxes		439,880		494,797		601,549		777,117
Net income	$	969,376		1,014,792		1,156,374		1,144,231
Basic earnings per share	$	0.35		0.36		0.41		0.41
Diluted earnings per share	$	0.33		0.35		0.40		0.39
Six Months Ended December 31, 2003, Quarter ended (1)
September-03						December-03
Interest income			$	4,997,093		4,848,585
Interest expense				2,326,503		2,164,542
Net interest income				2,670,590		2,684,043
Provision for loan losses				212,000		950,000
Gain on sale of loans and investment securities				559,033		304,490
Other noninterest income, net				672,221		553,127
Noninterest expense				1,995,285		1,998,170
Income before income taxes				1,694,559		593,490
Provision for income taxes				617,862		170,026
Net income			$	1,076,697		423,464
Basic earnings per share			$	0.39		0.15
Diluted earnings per share			$	0.38		0.15
Fiscal Year June 30, 2003, Quarter ended
September-02				December-02		March-03		June-03
Interest income	$	5,746,456		5,543,740		5,304,477		5,187,047
Interest expense		3,120,175		2,965,401		2,778,498		2,580,339
Net interest income		2,626,281		2,578,339		2,525,979		2,606,708
Provision for loan losses		100,000		105,000		255,000		150,000
Gain on sale of loans and investment securities		224,577		444,643		403,633		471,184
Other noninterest income, net		638,875		443,639		688,873		372,905
Noninterest expense		2,026,229		2,033,749		2,050,978		2,069,031
Income before income taxes		1,363,504		1,327,872		1,312,507		1,231,766
Provision for income taxes		467,458		459,888		427,824		300,830
Net income	$	896,046		867,984		884,683		930,936
Basic earnings per share	$	0.32		0.31		0.32		0.33
Diluted earnings per share	$	0.32		0.30		0.31		0.33