UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934



For Quarter Ended                                   Commission File No. 33-76064
March 31, 1999




                         GUARANTY FINANCIAL CORPORATION




          Virginia                                              54-1786496
(State or other Jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)



                1658 State Farm Blvd., Charlottesville, VA 22911
                     (Address of Principal Executive Office)


                                 (804) 970-1100
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter  period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. Yes _X_ No ___.

         As of May 10, 1999, 1,501,727 shares, of the Registrant's Common Stock,
par value $1.25 per share, were outstanding.


<PAGE>

                         GUARANTY FINANCIAL CORPORATION

                         QUARTERLY REPORT ON FORM 10-QSB

                                      INDEX
<TABLE>
<CAPTION>
<S>                                                                                            <C>
Part I.    Financial Information                                                               Page No.
--------------------------------                                                               --------
          
Item 1     Financial Statements
          
           Consolidated Balance Sheets as of
           March 31, 1999 and December 31, 1998 (unaudited)                                       3
          
           Consolidated Statements of Operations for the
           Three Months Ended March 31, 1999 and 1998 (unaudited)                                 4
          
           Consolidated Statements of Comprehensive Income for the
           Three Months Ended March 31, 1999 and 1998 (unaudited)                                 5
          
           Consolidated Statements of Cash Flows for the
           Three Months Ended March 31, 1999 and 1998 (unaudited)                                 6
          
           Notes to Consolidated Financial Statements  (unaudited)                                8
          
Item 2     Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                                    9
          
Part II.   Other Information
----------------------------
          
Item 1     Legal Proceedings                                                                     12
          
Item 2     Changes in Securities                                                                 12
          
Item 3     Defaults upon Senior Securities                                                       12
          
Item 4     Submission of Matters to a Vote of Security Holders                                   12
          
Item 5     Other Information                                                                     12
          
Item 6     Exhibits and Reports on Form 8-K                                                      12
          
           Signatures                                                                            13
</TABLE>




                                       2
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                   March 31       December 31
                                                                     1999            1998              
                                                                  ----------      ----------
                                                                 (Unaudited)
<S>                                                            <C>                <C>
ASSETS                                                         
Cash and cash equivalents                                           $11,813         $10,527           
Investment securities
   Held-to-maturity                                                   1,972           2,344           
   Available for sale                                                27,204          26,638           
   Trading                                                            2,944           1,000           
Investment in FHLB stock, at cost                                     1,300           1,300           
Investment in FRB stock, at cost                                        271             271
Loans receivable, net                                               175,879         162,369           
Accrued interest receivable                                           1,739           1,651           
Real estate owned                                                       366             488           
Office properties and equipment, net                                  7,966           7,050           
Mortgage servicing rights                                             2,663           1,978
Other assets                                                          1,431           1,404           
                                                                  ----------      ----------
          Total assets                                             $235,548        $217,020           
                                                                  ==========      ==========
                                                                                                      
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
   DDA/MMDA accounts                                                $55,383         $45,752           
   Savings accounts                                                  10,792           9,863           
   Certificates of deposit                                          122,002         117,190           
                                                                  ----------      ----------
                                                                    188,177         172,805           
Bonds payable                                                         1,818           1,786           
Advances from Federal Home Loan Bank                                 21,000          21,000
Securities sold under agreement to repurchase                         2,941           1,009           
Accrued interest payable                                                249             125           
Income Taxes Payable                                                    264             243
Payments by borrowers for taxes and insurance                         1,223             128           
Other liabilities                                                       917             470           
                                                                  ----------      ----------
          Total liabilities                                         216,589         197,566           
                                                                  ----------      ----------

COMMITMENTS & CONTINGENCIES
Convertible Preferred securities                                      6,900           6,900
                                                                                                      
STOCKHOLDERS' EQUITY                                                                                  
Preferred stock, par value $1 per share, 500,000                                                      
   shares authorized, none issued                                         0               0           
Common stock, par value $1.25 per share,                                                              
   4,000,000 shares authorized, 1,501,727                                                             
   issued and outstanding                                             1,877           1,877           
Additional paid-in capital                                            5,725           5,725           
Accumulated other comprehensive income                                 (679)             89           
Retained earnings                                                     5,136           4,863           
                                                                  ----------      ----------
          Total stockholders' equity                                 12,059          12,554           
                                                                  ----------      ----------
Total liabilities and stockholders' equity                         $235,548        $217,020           
                                                                  ==========      ==========
                                                                                                                 
</TABLE>



                                       3
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)

                                                             Three Months Ended
                                                                  March 31,
                                                            --------------------
                                                               1999       1998  
                                                            ---------  ---------
                                                                 (unaudited)
Interest income
   Loans                                                      $3,328     $2,154 
   Investment Securities                                         578        354 
                                                            ---------  ---------
Total interest income                                          3,906      2,508 
                                                            ---------  ---------

Interest expense
   Deposits                                                    2,015      1,430 
   Borrowings                                                    511         74 
                                                            ---------  ---------
Total interest expense                                         2,526      1,504 
                                                            ---------  ---------

Net interest income                                            1,380      1,004 
                                                                                
Provision for loan losses                                         60         42 
                                                            ---------  ---------
                                                                                
Net interest income after provision                                             
      for loan losses                                          1,320        962 
                                                                                
Other income                                                                    
   Loan fees and servicing income                                 88         96 
   Gain on sale of loans and securities                          494        395 
   Service fees on checking                                      125         65 
   Other                                                          87         57 
                                                            ---------  ---------
Total other income                                               794        613 
                                                            ---------  ---------
                                                                                
Other expenses                                                                  
   Personnel                                                     936        481 
   Occupancy                                                     215        249 
   Data processing                                               165        113 
   Deposit insurance premiums                                      3         11 
   Other                                                         382        319 
                                                            ---------  ---------
Total other expenses                                           1,701      1,173 
                                                            ---------  ---------
                                                                                
Income (loss) before income taxes                                413        402 
                                                            ---------  ---------
                                                                                
Provision (loss) for income taxes                                140        153 
                                                            ---------  ---------
                                                                                
Net income (loss)                                               $273       $249 
                                                            =========  =========
                                                                                
Basic and diluted earnings per common share                    $0.18      $0.17 
                                                            =========  =========



                                       4
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                          March 31,
                                                                                -----------------------------
                                                                                    1999             1998
                                                                                ------------     ------------
                                                                                         (unaudited)
<S>                                                                                   <C>              <C>  
Net Income                                                                            $ 273            $ 249

Other comprehensive income, net of tax effect:

   Unrealized gains (loss) on securities available for sale                            (768)            (168)
                                                                                ------------     ------------

Comprehensive Income (loss)                                                           $(495)           $  81
                                                                                ============     ============

</TABLE>



                                       5
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                                            Three Months Ended
                                                                                                 March 31,
                                                                                       ----------------------------
                                                                                           1999            1998
                                                                                       ------------    ------------
                                                                                               (unaudited)
<S>                                                                                    <C>             <C>
Operating Activities
     Net Income                                                                              $273            $249
     Adjustments to reconcile net income to net cash provided
          (absorbed) by operating activities:
          Provision for loan losses                                                            60              42
          Depreciation and amortization                                                       140             110
          Amortization of deferred loan fees                                                  (31)             27
          Net amortization of premiums and accretion of discounts                             418              96
          Loss (gain) on sale of loans                                                       (180)           (233)
          Originations of loans held for sale                                             (18,217)        (13,420)
          Proceeds from sale of loans                                                      18,397          13,653
          Loss (gain) on sale of securities available for sale                                (89)           (188)
          (Gain) loss on trading securities                                                    22             (23)
          Purchase of trading securities                                                  (10,057)        (28,405)
          Sales of trading securities                                                       7,345          29,460
          Changes in:
               Accrued interest receivable                                                    (88)            (36)
               Other assets                                                                  (294)           (263)
               Accrued interest payable                                                       124              (3)
               Prepayments by borrowers for taxes and insurance                             1,095             160
               Other liabilities                                                              469           2,503
                                                                                      ------------    ------------

Net cash provided (absorbed) by operating activities                                         (613)          3,729 
                                                                                      ------------    ------------

Investing activities
     Net (increase) decrease in loans                                                     (13,756)            501
     Mortgage-backed securities principal repayments                                          372              91
     Proceeds from sale of securities available for sale                                    5,073          17,507
     Purchase of securities available for sale                                             (6,000)        (19,133)
     Redemption of FHLB stock                                                                   0               0
     Purchases of office property, plant and equipment                                     (1,056)           (479)
                                                                                      ------------    ------------

Net cash absorbed by investing activities                                                 (15,367)         (1,513)
                                                                                      ------------    ------------
</TABLE>



                                       6
<PAGE>

                CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

<TABLE>
<CAPTION>
                                                                                            Three Months Ended     
                                                                                                 March 31,         
                                                                                       ----------------------------
                                                                                           1999            1998    
                                                                                       ------------    ------------
                                                                                               (unaudited)         
<S>                                                                                    <C>             <C>
Financing activities
     Net increase (decrease) in deposits                                                   15,359           10,632
     Repayment of FHLB advances                                                                 0                0
     Increase (Decrease) in securities sold under agreement to repurchase                   1,932           (2,989)
     Proceeds from the issuance of common stock, net                                            0                0
     Dividends paid                                                                             0              (46)
     Principal payments on bonds payable, including unapplied payments                        (25)            (147)
                                                                                       -----------     ------------

Net cash provided by financing activities                                                  17,266            7,450
                                                                                       -----------     ------------

Increase (decrease) in cash and cash equivalents                                            1,286            9,666
                                                                                       -----------     ------------

Cash and cash equivalents, beginning of period                                             10,527            5,917
                                                                                       -----------     ------------

Cash and cash equivalents, end of period                                                 $ 11,813         $ 15,583
                                                                                       ===========     ============
</TABLE>





                                       7
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               For the Three Months ended March 31, 1999 and 1998



Note 1  Principles of Consolidation

The  accompanying  consolidated  financial  statements  include the  accounts of
Guaranty  Financial   Corporation  (the   "Corporation")  and  its  wholly-owned
subsidiaries,  Guaranty Capital Trust I and Guaranty Bank (the "Bank"),  and the
Bank's wholly-owned subsidiaries, GMSC, Inc., which was organized as a financing
subsidiary,  and  Guaranty  Investments  Corp.,  which  was  organized  to  sell
insurance annuities and other non-deposit  investment  traditional products. All
material   intercompany  accounts  and  transactions  have  been  eliminated  in
consolidation.

Note 2  Basis of Presentation

In the opinion of management,  the accompanying  unaudited interim  consolidated
financial  statements  contain  all  adjustments   (consisting  only  of  normal
recurring  accruals)  necessary to present  fairly the financial  position as of
March 31,  1999 and the  results of  operations  and cash flows for the  interim
periods ending March 31, 1999 and 1998. All 1999 interim  amounts are subject to
year-end  audit,  and the results of operations  for the interim  periods is not
necessarily indicative of the results of operations to be expected for the year.






                                       8
<PAGE>



ITEM 2               MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Expansion of the Existing Branch Network

The  opening  of a full  service  branch  in  Henrico  County  in the  Wellesley
development is expected to occur in early summer 1999.  This office is our first
entry into the west  Richmond  market and will be large enough to  accommodate a
regional loan group along with the retail operation.

A site has been obtained in the Forest Lakes  development in Northern  Albemarle
County for a full-service  branch office.  Regulatory  approval has been granted
and a fall 1999 opening is anticipated.


Changes in Financial Condition

Total assets  increased $18.5 million,  or 8.5%, from $217.0 million at December
31, 1998 to $235.5  million at March 31, 1999 primarily as a result of growth in
the loan portfolio.  Cash and cash equivalents increased $1.3 million, or 12.2%,
to $11.8 million at March 31, 1999 from $10.5 million at December 31, 1998.

Investment  securities,  at March 31, 1999,  increased $2.1 million, or 7.1%, to
$32.4 million from $30.2 million at December 31, 1998. This change resulted from
of a  net  increase  of  $566  thousand  in  investment  grade  corporate  bonds
classified as available for sale offset by principal  payments  received of $372
thousand on mortgage-backed securities classified as held to maturity, and a net
increase of $1.9 million in the trading account.

Net loans were $175.9  million at March 31, 1999, an increase of $13.5  million,
or 8.3%, from net loans of $162.4 million at December 31, 1998. During the first
quarter of 1999, the corporation continued to underwrite substantially all fixed
rate residential  mortgage loans for immediate sale in the secondary market. The
primary  focus of portfolio  lending  continues to be  prime-based  construction
loans (including  builder lines of credit),  commercial real estate and business
loans and  consumer  loans which are  typically  priced 175 to 250 basis  points
above  fixed-rate  residential  loans.  The increase in the loan  portfolio  was
primarily related to new commercial loan business and increased construction and
land development loans.

At March 31, 1999, loans held for sale were approximately $3.7 million.

Other  real  estate  owned of $366  thousand  at March 31,  1999  related to two
single-family  residential  properties.  Net  proceeds  from the  sales of these
properties are  anticipated to approximate the carrying value at March 31, 1999.
No material losses are anticipated.

Deposits  increased by $15.4  million,  or 8.9%,  between  December 31, 1998 and
March 31, 1999. This growth was comprised of a $9.6 million increase in NOW/MMDA
accounts,  a $929  thousand  increase  in savings  accounts  and a $4.8  million
increase in certificates of deposit.  Management plans to continue its marketing
efforts aimed at corporate customers as well as individual checking, savings and
money  market  accounts  to attract  lower cost  funds and  reduce  reliance  on
certificates of deposit as a primary funding source.  However, no assurances can
be given that these strategies will be successful, or if successful, will reduce
the Bank's reliance on certificates of deposit as a primary funding source.

Office properties and equipment  increased $916 thousand since December 31, 1998
due to purchases  of land for two branch  sites,  Wellesley  in Henrico  County,
Virginia and Forest Lakes in Albemarle County, Virginia.



                                       9
<PAGE>

At March 31, 1999, $21.0 million in advances were borrowed from the Federal Home
Loan Bank.  These  advances are  comprised  entirely of daily rate credits which
reprice based on previous days Fed Funds rate.


Results of Operations

Net Income

Guaranty  reported net income of $273  thousand and $249  thousand for the three
month periods ended March 31, 1999 and 1998, respectively. This increase was due
primarily  to increased  net interest  income and gains on the sale of loans and
securities  which were  partially  offset by  additional  costs  relating to the
overall growth of the Corporation.

Net Interest Income

Net interest  income  increased by $376 thousand,  or 37.5%, to $1.4 million for
the three  months  ended March 31,  1999,  compared to $1.0 million for the same
period in 1998. Average earning assets increased to $211.0 million for the three
months ended March 31, 1999,  compared to an average  balance of $124.0  million
for the same  period in 1998.  The  average  rate earned was 7.82% for the three
months  ended  March 31,  1999  compared  to 8.20% for the same  period of 1998.
Interest rate spread and net interest  margin for the three month periods ending
March 31, 1999 and 1998 were 2.80% and 2.98%, and 3.05% and 3.28%, respectively.


Provision for Loan Losses

Management  analyzes the potential  risk of loss on Guaranty's  loan  portfolio,
given  the  loan  balances  and the  value  of the  underlying  collateral.  The
allowance  for  loan  losses  is  reviewed  monthly  and is  based  on the  loan
classification system, which classifies problem loans as substandard,  doubtful,
or loss.  Additional  provisions are added when deemed  necessary by management.
Based on this evaluation,  Guaranty recorded a provision of $60 thousand for the
three months ended March 31, 1999  compared with a provision of $42 thousand for
the same period in 1998.  As of March 31,  1999,  the total  allowance  for loan
losses was $1.0 million.


Non-Interest Income

Non-interest  income was $794 thousand for the first quarter of 1999 compared to
$613  thousand for the same period in 1998.  This  increase was primarily due to
gains on loan sales and increases in service fees on deposit accounts.


Non-Interest Expense

Non-interest expense increased $528 thousand,  or 45.0%, to $1.7 million for the
three months  ended March 31, 1999  compared to $1.2 million for the same period
in 1998.  This increase was primarily due to the overall  growth of the bank and
the resulting increase in personnel costs.

Income Tax Expense

Guaranty  recognized  income tax expense of $140  thousand  for the three months
ended March 31,  1999,  compared to $153  thousand  for the same period in 1998.
This  change  in  tax  expense  between  periods  is  primarily  a  result  of a
reallocation  of state  income taxes to state  franchise  taxes.  


                                       10
<PAGE>

Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations either
through the sale of existing  assets or through the  acquisition  of  additional
funds through  asset and liability  management.  Guaranty's  primary  sources of
funds are deposits,  borrowings and amortization,  prepayments and maturities of
outstanding loans and securities. While scheduled payments from the amortization
of loans and  securities are relatively  predictable  sources of funds,  deposit
flows and loan  prepayments  are greatly  influenced by general  interest rates,
economic  conditions  and  competition.  Excess  funds are invested in overnight
deposits to fund cash requirements experienced in the normal course of business.
Guaranty has been able to generate  sufficient cash through its deposits as well
as through its borrowings.

Guaranty  uses its sources of funds  primarily  to meet its  on-going  operating
expenses, to pay deposit withdrawals and to fund loan commitments.  At March 31,
1999, the total approved loan commitments outstanding amounted to $10.0 million.
At the same date,  commitments  under unused  lines of credit  amounted to $42.4
million.  Certificates  of  deposit  scheduled  to mature in one year or less at
March 31, 1999 totaled  $98.4  million.  Management  believes that a significant
portion of maturing deposits will remain with Guaranty.

The  Corporation  and the Bank  are  subject  to  Federal  Reserve  regulations,
including  the Bank  Holding  Company Act. At March 31,  1999,  the  Corporation
exceeded  all  applicable  regulatory  capital  requirements  as  shown  in  the
following table.

         Tier 1 Risk-based                                    6.50%
         Total Risk-based                                     7.05%
         Tier 1 Capital to average adjusted total assets      9.78%

Year 2000 Project


The Year 2000 ("Y2K")  issue relates to whether  computer  systems will properly
recognize and process date  sensitive  information on and after January 1, 2000.
Systems that do not properly recognize such information could generate erroneous
data or fail. The Bank is heavily  dependent on computer  systems in the conduct
of substantially all of its business activities.

The  Corporation  has both a Y2K Committee and a Y2K Plan that were  established
and  adopted  in  1998.  The  Plan,  as  recommended  by the  Federal  Financial
Institutions   Examination   Council,  is  based  on  five  phases:   Awareness,
Assessment, Renovation, Validation and Implementation. The Corporation continues
in the Validation phase, or testing phase, which was scheduled for completion by
April 1999.  As of this report  date,  all testing has not been  completed.  The
process is ongoing and should be  completed in the third  quarter.  In the event
that  any of its  mission  critical  computer  systems  fail  to  meet  the  Y2K
requirements,  or if other  systems  that the Bank  depends  upon for  automated
processing of ongoing  transactions,  such as  electrical or data  transmission,
fail,  the  Bank is  required  by  Federal  regulators  to  develop  and  test a
comprehensive   contingency  plan.  The  contingency  plan  is  currently  being
developed and should be completed by September 1999.

Successful  and timely  completion  of the Y2K project is based on  management's
best estimates  derived from various  assumptions  of future  events,  which are
inherently  uncertain,  including the testing of results of the core  processing
system maintained by a third party service bureau, and readiness of all vendors,
suppliers  and  customers.  No  assurance  can be given  that  the Plan  will be
successfully  completed by the Year 2000,  in which case the  Corporation  could
incur data processing delays,  mistakes or failures.  These delays,  mistakes or
failures could have a significant adverse impact on the financial  statements of
the Corporation.



                                       11
<PAGE>

Part II  Other Information


Item 1            Legal Proceedings
                           Not Applicable

Item 2            Changes in Securities
                           Not Applicable

Item 3            Defaults Upon Senior Securities
                           Not Applicable

Item 4            Submission of Matters to a Vote of Security Holders
                           Not Applicable

Item 5            Other Information
                           Not Applicable

Item 6            Exhibits and Reports on 8-K

                  (a)  Exhibits - None

                  (b)  Reports on Form 8-K - None



                                       12
<PAGE>


                                   SIGNATURES



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



                                        GUARANTY FINANCIAL CORPORATION







Date:   May 11, 1999                    By: /s/ Thomas P. Baker
                                            ---------------------------
                                            Thomas P. Baker
                                            President, CEO and Director

                                        By: /s/ L. Ben Johnson
                                            ---------------------------
                                            L. Ben Johnson
                                            Vice President & Controller