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
        December 31, 1996




                         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 ___ (not  subject to filing  requirements  for the
past 90 day days).

         As of February 12, 1997, 1,499,008 shares were outstanding.


<PAGE>



                         GUARANTY FINANCIAL CORPORATION

                         QUARTERLY REPORT ON FORM 10-QSB

                                      INDEX

Part I.  Financial Information                                          Page No.

Item 1   Financial Statements

         Consolidated Statements of Financial Condition
         as of December 31, 1996 and June 30, 1996   .        .        .     3

         Consolidated Statements of Operations for the
         Three Months and the Six Months Ended 
         December 31, 1996 and 1995 .      .         .        .        .     4

         Consolidated Statements of Cash Flows for the
         Six Months Ended December 31, 1996 and 1995 .        .        .     5

         Notes to Consolidated Financial Statements  .        .        .     7

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

Part II. Other Information

Item 1   Legal Proceedings .        .       .        .        .        .    13

Item 2   Changes in Securities      .       .        .        .        .    13

Item 3   Defaults upon Senior Securities    .        .        .        .    13

Item 4   Submission of Matters to a Vote of Security Holders  .        .    13

Item 5   Other Information .        .       .        .        .        .    13

Item 6   Exhibits and Reports on Form 8-K   .        .        .        .    13

         Signatures        .        .       .        .        .        .    14


                                       2
<PAGE>

<TABLE>
<CAPTION>
 
                        GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CONDITION
                                 (In Thousands)

                                                      DECEMBER 31,     JUNE 30,
                                                          1996           1996
                                                     ------------     ----------
ASSETS                                                         (Unaudited)
<S>                                                     <C>           <C>      
Cash and cash equivalents                               $   6,066     $   5,431
Investment securities
   Held-to-maturity                                         3,157         3,731
   Available for sale                                      15,726         9,564
   Trading                                                  1,007             0
Investment in FHLB stock at cost                            1,360         1,360
Loans receivable, net                                      81,270        84,081
Accrued interest receivable                                   671           712
Real estate owned                                              51            33
Office properties and equipment, net                        4,946         3,525
Other assets                                                1,923         1,724
                                                        ---------     ---------
          Total assets                                  $ 116,177     $ 110,161
                                                        =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
   NOW/MMDA accounts                                    $  10,300     $   9,653
   Savings accounts                                         4,777         4,654
   Certificates of deposit                                 66,324        60,380
                                                        ---------     ---------
                                                        $  81,401     $  74,687
Bonds payable                                               2,706         3,144
Advances from Federal Home Loan Bank                       17,500        17,500
Securities sold under agreement to repurchase               6,681         6,104
Accrued interest payable                                       61            99
Deferred income taxes                                          94             0
Payments by borrowers for taxes and insurance                 106           146
Other liabilities                                             989         2,131
                                                        ---------     ---------
          Total liabilities                             $ 109,538     $ 103,811
                                                        ---------     ---------

STOCKHOLDERS' EQUITY
Preferred stock, par value $1 per share, 500,000
   shares authorized, none issued                            --            --
Common stock, par value $1.25 per share,
   4,000,000 shares authorized, 924,008 and
   919,168 issued and outstanding                       $   1,155     $   1,149
Additional paid-in capital                                  1,972         1,982
Net unrealized gain (loss) on securities
    avaiable for sale                                        (154)         (279)
Retained earnings                                           3,666         3,498
                                                        ---------     ---------
          Total stockholders' equity                    $   6,639     $   6,350
                                                        ---------     ---------
Total liabilities and stockholders' equity              $ 116,177     $ 110,161
                                                        =========     =========
</TABLE>


                                       3
<PAGE>
 
<TABLE>
<CAPTION>

                         GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)

                                                 Three Months Ended      Six Months Ended
                                                     December 31,           December 31,
                                                 -------------------    -------------------
                                                   1996       1995        1996       1995
                                                   ----       ----        ----       ----
                                                     (unaudited)           (unaudited)
<S>                                                <C>        <C>        <C>        <C>   
Interest income
   Loans                                           $1,715     $1,640     $3,455     $3,193
   Mortgage-backed securities                         276        118        567        237
   Investment securities                              123        128        251        255
   Trading account assets                               3          4          3         21
                                                   ------     ------     ------     ------
Total interest income                              $2,117     $1,890     $4,276     $3,706
                                                   ------     ------     ------     ------

Interest expense
   Deposits                                        $  992     $  728     $1,960     $1,413
   Borrowings                                         506        571        980      1,131
                                                   ------     ------     ------     ------
Total interest expense                             $1,498     $1,299     $2,940     $2,544
                                                   ------     ------     ------     ------

Net interest income                                $  619     $  591     $1,336     $1,162

Provision (credit) for loan losses                     46         15         92         11
                                                   ------     ------     ------     ------

Net interest income after provision
      for loan losses                              $  573     $  576     $1,244     $1,151

Other income
   Loan fees and servicing income                  $  119     $  126     $  267     $  271
   Gain (loss) on sale of loans and securities        241         79        309        156
   Service fees on checking                            26         22         52         45
   Other                                               39         27         71         43
                                                   ------     ------     ------     ------
Total other income                                 $  425     $  254     $  699     $  515
                                                   ------     ------     ------     ------

Other expenses
   Personnel                                       $  381     $  244     $  748     $  649
   Occupancy                                           71         74        132        152
   Data processing                                     88         69        165        137
   Deposit insurance premiums                          47         50        101        101
   BIF/SAIF premium disparity assessment             --         --          347       --
   Other                                              133        177        223        173
                                                   ------     ------     ------     ------
Total other expenses                               $  720     $  614     $1,716     $1,212
                                                   ------     ------     ------     ------

Income before income taxes                         $  278     $  216     $  227     $  454
                                                   ------     ------     ------     ------

Provision for income taxes                             97         74         79        158
                                                   ------     ------     ------     ------

Net income                                         $  181     $  142     $  148     $  296
                                                   ======     ======     ======     ======

Earnings per common share                          $ 0.20     $ 0.15     $ 0.16     $ 0.32
                                                   ======     ======     ======     ======

</TABLE>

                                        4
<PAGE>

<TABLE>
<CAPTION>

                         GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Six Months Ended December 31, 1996 and 1995
                                 (In Thousands)

                                                                                 1996        1995
                                                                                 ----        ----

<S>                                                                           <C>            <C>
Operating Activities
      Net Income                                                                   148          296
      Adjustments to reconcile net income to net cash provided
           (absorbed) by operating activities:
           Provision for loan losses                                                92           11
           Depreciation and amortization                                            76           45
           Amortization of deferred loan fees                                       64           13
           Net amortization of premiums and accretion of discounts                  85           90
           Loss (gain) on sale of loans                                           (217)         (26)
           Originations of loans held for sale                                 (11,774)      (4,667)
           Proceeds from sale of loans                                          11,822        4,693
           Originations of loans securitized                                      --         (4,406)
           Loss (gain) on sale of mortgage-backed securities                      (111)         (81)
           Loss (gain) on sale of securities available for sale                   --            (17)
           (Gain) loss on disposal of office properties and equipment             --              6
           (Gain) loss on sale of trading securities                                18          (26)
           Purchase of trading securities                                      (36,331)     (54,074)
           Sales of trading securities                                          35,306       54,100
           (Gain) loss on sale of real estate owned                               --              5
           (Increase) decrease in real estate owned                                (18)        (282)
           Changes in:
                Accrued interest receivable                                         41          (50)
                Other assets                                                      (130)         (89)
                Accrued interest payable                                           (38)         (13)
                Prepayments by borrowers for taxes and insurance                   (40)        (211)
                Other liabilities                                               (1,010)        (412)
                                                                               -------      -------

Net cash provided (absorbed) by operating activities                            (2,017)      (5,095)
                                                                               -------      -------


Investing activities
      Net (increase) decrease in loans                                           2,753       (1,754)
      Mortgage-backed securities principal repayments                              776          580
      Purchase of mortgage-backed securities                                   (23,980)     (10,001)
      Proceeds from sale of mortgage-backed securities                          17,845       10,061
      Purchase of securities available for sale                                   --         (4,003)
      Proceeds from sales of securities available for sale                        --          4,011
      Purchases of FHLB stock                                                     --            (42)
      Proceeds from sale of office equipment                                      --              4
      Purchases of office properties and equipment                                (423)        (105)
      Disbursement on construction of office building                           (1,082)        --
      Improvement of land                                                           (3)        (938)
                                                                               -------      -------

Net cash provided (absorbed) by investing activities                            (4,114)      (2,187)
                                                                               -------      -------
</TABLE>

                                       5
<PAGE>
<TABLE>
<CAPTION>

                         GUARANTY FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS, continued


Financing activities
<S>                                                                            <C>           <C>  
      Net increase (decrease) in deposits                                        6,713        6,903
      Repayment of FHLB advances                                               (10,000)      (6,000)
      Proceeds from FHLB advances                                               10,000        7,000
      Increase (decrease) in securities sold under agreement to repurchase         577         (553)
      Principal payments on bonds payable, including unapplied payments           (524)          15
                                                                               -------      -------

Net cash provided (absorbed) by financing activities                             6,766        7,365
                                                                               -------      -------

Increase (decrease) in cash and cash equivalents                                   635           83
                                                                               -------      -------

Cash and cash equivalents, beginning of period                                   5,431        6,519
                                                                               -------      -------

Cash and cash equivalents, end of period                                         6,066        6,602
                                                                               =======      =======

</TABLE>

                                       6
<PAGE>



                         GUARANTY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               For the Six Months ended December 31, 1996 and 1995



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 Bank ("the Bank"),  GMSC, Inc., which was organized as a
financing  subsidiary,  and Guaranty  Investments  Corp., which was organized to
sell insurance annuities.  All material  intercompany  accounts and transactions
have been eliminated in consolidation.

Note 2  Basis of Presentation

The  accompanying  interim  financial  statements are unaudited;  however,  such
information  reflects all  adjustments  which are, in the opinion of management,
necessary in order to make the consolidated financial statements not misleading.
All adjustments are of a normal recurring nature.

Note 3  New Accounting Pronouncements

On July 1, 1996,  the  Corporation  adopted  Statements of Financial  Accounting
Standards No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets to be  Disposed  of" ("SFAS  121").  SFAS 121  requires  that
long-lived  assets and certain  intangibles  to be held and used by an entity be
reviewed for impairment  when events or changes in  circumstances  indicate that
the  carrying  amount may not be  recoverable.  In  addition,  SFAS 121 requires
long-lived  assets and certain  intangibles  to be disposed of to be reported at
the lower of  carrying  amount or fair value  less costs to sell.  The effect of
adopting SFAS 121 was immaterial to the interim financial  statements  presented
herein.

In October 1995, SFAS No. 123, "Accounting for Stock-Based  Compensation" ("SFAS
123") was issued.  The statement is effective for fiscal years  beginning  after
December 15, 1995. The statement encourages,  but does not require, companies to
expense the fair value of employee stock options, based on the fair value on the
date  of the  grant.  Companies  that  elect  to  continue  to  follow  existing
accounting   rules  (the  intrinsic  value  method  that  often  results  in  no
compensation results) must provide those pro forma disclosures of net income and
earnings  per share  which  would have been had the new fair value  method  been
used. In addition,  SFAS 123 requires all companies to make  significantly  more
disclosures  regarding employee stock options than are currently  required.  The
Corporation has elected to adopt the disclosure  requirements for the year ended
June 1997.  Management does not expect the application of this  pronouncement to
have a material effect on the financial statements.

In June 1996,  the FASB issued its Statement of Financial  Accounting  Standards
No. 125,  "Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
Extinguishments of Liabilities" ("SFAS 125"). This statement provides accounting
and reporting  standards  for  transfers  and servicing of financial  assets and
extinguishments of liabilities.  After a transfer of financial assets, an entity
recognizes  the  financial  and  servicing  assets  that  it  controls  and  the
liabilities that it has incurred, derecognizes financial assets when control has
been surrendered, and derecognizes liabilities when extinguished. In addition, a
transfer of financial  assets in which the  transferor  surrenders  control over
those assets is accounted for as a sale to the extent that  consideration  other
than  beneficial  interests in the  transferred  assets is received in exchange.
SFAS 125 is 




                                        7
<PAGE>

effective for transfers and servicing of financial assets and extinguishments of
liabilities  after  December  31,  1996,  and  is to be  applied  prospectively.
Management  does not  expect the  application  of this  pronouncement  to have a
material effect on the financial statements.


                                        8
<PAGE>



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



Changes in Financial Condition

Deposit growth during the six months ended December 31, 1996 enabled Guaranty to
increase assets.  Total assets  increased by $6.0 million,  or 5.5%, from $110.2
million at June 30, 1996 to $116.2  million at December 31,  1996.  This deposit
growth - all local funds - was primarily invested in mortgage-backed securities.

Cash and cash  equivalents  increased  $635,000,  or 11.69%,  to $6.1 million at
December 31, 1996. This increase in cash was due to the combination of increased
deposits,  principal payments received on investment securities, and the sale of
loans.

Investment  securities,  at December 31, 1996,  increased  by $6.6  million,  or
45.0%, to $21.3 million from $14.7 June 30, 1996. However, during the six months
ended  December 31, 1996,  $11.8 million of loans were sold to decrease the loan
to deposit ratio. The proceeds of the sale were used to purchase higher yielding
investment securities.  Included in the investment portfolio are $3.2 million of
mortgage-backed securities,  classified as held to maturity, which collateralize
the bonds payable,  $15.7 million of GNMA and FHLMC  mortgage-backed  securities
classified as available for sale,  $1.0 million of United States  Treasury Notes
classified  as trading  securities  and $1.4  million of Federal  Home Loan Bank
stock, recorded at cost.

The loan portfolio  consists  primarily of mortgage loans, the majority of which
are  residential  first  mortgage  loans.  Of the $82.4  million of gross  loans
outstanding at December 31, 1996, 78.4% represent  residential  first mortgages.
Net loans were $81.3  million at December  31, 1996,  a 3.3%  decrease  from net
loans of $84.1 million at June 30, 1996  primarily due to the sale of fixed rate
loans totaling $11.8 million.

Real estate  owned  increased  by $18  thousand,  or 54.5%,  to $51  thousand at
December 31, 1996 from $33 thousand at June 30, 1996. These assets were acquired
through  foreclosure  and at December 31, 1996  consisted of one  property.  The
property is guaranteed by FHA/VA, and no significant loss is expected.

Deposits increased by $6.7 million,  or 9.0%, between June 30, 1996 and December
31,  1996.  The  majority of the growth was in  certificates  of deposit,  which
increased $5.9 million at December 31, 1996.  This growth - all local funds - is
a reflection of continued marketing and the opening of a new branch.

Office properties and equipment increased $1.4 million, or 40.3%, since June 30,
1996.  This increase is due to the completion of the new  operations  center and
fourth   retail   branch   office,   which  is  located  on  the  east  side  of
Charlottesville on Pantops mountain.  The office and branch opened to the public
on December 9, 1996.

Other borrowed money increased $577 thousand,  or 9.5%,  while Federal Home Loan
Bank advances remainded unchanged due to a $5.0 million two year advance made in
September 1996 to extend short term borrowings to match asset  maturites  offset
by $5 million in repayments.



                                       9
<PAGE>



Results of Operations

Net Income

Guaranty  reported net income of $181  thousand and $142  thousand for the three
month periods ended December 31, 1996 and 1995, respectively,  and $148 thousand
and $296  thousand for the six month  period  ended  December 31, 1996 and 1995,
respectively.  The increase in the second  quarter is due  primarily to gains on
the sale of  investment  securities  available  for  sale  and  loans in 1996 as
compared to 1995.  The decrease in earnings  during the first three month period
was due to the Federal legislation enacted in September 1996 to recapitalize the
Savings  Association  Insurance Fund ("SAIF").  The one-time special  assessment
based on deposits of March 31, 1995 equaled $347 thousand for Guaranty.


Net Interest Income

Net interest income increased by $28 thousand, or 4.7%, to $619 thousand for the
three months ended  December  31, 1996,  compared to $591  thousand for the same
period in 1995. Net interest  income  increased by $175 thousand,  or 15.1%,  to
$1.34  million for the six months  ended  December  31,  1996  compared to $1.16
million in the same period in 1995.  Average  earning assets  increased by $11.1
million to $106.7 million for the six months ended December 31, 1996 compared to
an increase of $1.3  million to $90.7  million for the same period in 1995.  The
average rate earned also  increased  to 8.01% for the six months ended  December
31, 1996 from 7.97% at June 30, 1996 compared to an increase to 8.17% from 7.59%
for the same period in 1995. Average interest bearing liabilities also increased
by $14.6  million to $105.8  million for the six months ended  December 31, 1996
compared to an increase of $0.1 million to $85.7  million for the same period in
1995.  Interest  rate spread and net  interest  margin for December 31, 1996 and
1995 were 2.46% and 2.50%,  and 2.24% and 2.56%,  respectively.  The majority of
this  improvement in net interest income is due to the decrease in the rate paid
on borrowed money and the decrease in the rate paid on  certificates of deposit.
The average rate paid on FHLB advances and other  borrowings  decreased 54 basis
point to 5.54% for the six  months  ended  December  31,  1996 from  6.03%.  The
average balance of certificates of deposit rose $14.9 million dollars, or 30.7%,
to $63.3  million in the six month  period  ending  December  31,  1996 with the
average rate falling 10 basis points.


Provision for Loan Losses

Management analyzes the potential risk of loss on the 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 $46 thousand for the
three  months ended  December 31, 1996,  and a provision of $15 thousand for the
same  period in 1995.  For the six months  ended  December  31,  1996,  Guaranty
recorded a provision  of $92  thousand.  For the same six month  period in 1995,
Guaranty recorded a provision of $11 thousand. As of December 31, 1996 the total
allowance for loan losses amounted to $870 thousand,  of which $709 thousand was
not specifically allocated to identified problem loans.

Non-Interest Income

Non-interest income increased $171 thousand,  or 67.3%, to $425 thousand for the
three months ended  December 31, 1996 from $254  thousand for the same period in
1995. Non-interest income increased by $183 thousand, or 35.5%, to $699 thousand
for the six month period ended  


                                       10
<PAGE>

December  31, 1996  compared to the same  period in 1995.  The  increase in both
periods was due to gains on the sales of loans and  investment  securities  held
for sale.


Non-Interest Expense

Non-interest expense increased $106 thousand, or 17.3%, to $720 thousand for the
three months ended  December  31, 1996,  compared to $614  thousand for the same
period in 1995.  The  increase  in expenses  for these three  months is directly
connected to the opening of the fourth retail  branch office and the  relocation
of the corporate headquarters.  Non-interest expense increased $504 thousand, or
41.6%,  to $1.7 million for the six months ended December 31, 1996,  compared to
$1.212 for the same  period in 1995.  Although  additional  personnel  have been
hired to staff the new retail  branch office that opened in December  1996,  the
majority  of  this  increase  was  due to the  Federal  legislation  enacted  in
September 1996 to recapitalize  the Savings and Loan  Assocation  Insurance Fund
("SAIF"). The one-time special assessment based on deposits as of March 31, 1995
equaled $347 thousand for Guaranty.

Income Tax Expense

Guaranty  recognized  income tax expense of $97  thousand  for the three  months
ended  December 31, 1996,  compared to $74 thousand for the same period in 1995.
Guaranty  recognized income tax expense of $79 thousand for the six months ended
December  31,  1996,  compared  to $158  thousand  for the same  period in 1995.
Because of a loss in the first quarter of fiscal 1997 due to the one-time "SAIF"
assessment, Guaranty recognized a tax benefit in that quarter.


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.  By regulatory definition,  liquid
assets include cash,  interest bearing deposits with banks,  federal funds sold,
and government  agency and high rated  corporate  securities  with maturities of
five years or less. Guaranty is required to maintain liquid assets on an average
monthly  basis equal to at least 5% of its  liquidity  base.  Liquidity  base is
further  defined as total deposits plus all short term  borrowings.  At December
31, 1996, Guaranty's liquidity ratio was 6.3%.

Guaranty's  primary sources of funds are deposits,  borrowings and amortization,
prepayments and maturities of outstanding loans and mortgage-backed  securities.
While  scheduled  payments from the  amortization  of loans and  mortgage-backed
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 December
31, 1996,  the total  approved  loan  commitments  outstanding  amounted to $3.0
million. At the same date,  commitments under unused lines of credit amounted to
$6.4 million. Certificates of deposit scheduled to mature in one year or less at
December 31, 1996 totaled $57.3 million.  Management believes that a significant
portion of maturing deposits will remain with Guaranty.

Guaranty is subject to OTS regulations  requiring  savings  institutions to meet
the following  minimum levels of regulatory  capital (1) tangible  capital of at
least 1.5% of total  adjusted  assets,



                                       11
<PAGE>

(2) core capital of 3% of total adjusted assets and (3) risk-based capital of 8%
of total risk-weighted  assets. At December 31, 1996, Guaranty exceeded all such
regulatory capital requirements as shown in the following table.



                                                               Percent of
(Dollars in thousands)                      Amount        Adjusted Assets
--------------------------------------------------------------------------
Tangible Capital:
Regulatory capital                          $6,793                  5.85%
Minimum capital requirement                  1,743                  1.50%
--------------------------------------------------------------------------
Excess regulatory capital                   $5,050                  4.35%
--------------------------------------------------------------------------

Core Capital:
Regulatory capital                          $6,793                  5.85%
Minimum capital requirement                  3,485                  3.00%
--------------------------------------------------------------------------
Excess regulatory capital                   $3,308                  2.85%
--------------------------------------------------------------------------

Risk-based Capital:
Regulatory capital                          $7,499                 13.28%
Minimum capital requirement                  4,519                  8.00%
--------------------------------------------------------------------------
Excess regulatory capital                   $2,980                  5.28%
--------------------------------------------------------------------------




                                       12
<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
                           The Annual Meeting of Shareholders of Guaranty 
Financial  Corporation was held December 11, 1996 in  Charlottesville,  Virginia
for the purposes of electing  four  individuals  to the Board of  Directors  and
ammending  Guaranty's 1991 Incentive Plan (the "Plan").  Proxies for the meeting
were solicited  pursuant to Regulation  14(a) of the Securities and Exchange Act
of 1934, as amended.

There was no solicitation in opposition to management's nominees to the Board of
Directors  as listed  in the  proxy  statement,  and all of such  nominees  were
elected with the following vote:

<TABLE>
<CAPTION>
                                  Shares        Shares        Shares
                                 voted for     withheld     not voted        Total
                               -----------------------------------------------------
For 3 - Year Term
<S>                              <C>            <C>          <C>            <C>    
     Thomas P. Baker             468,728        3,180        447,260        919,168
     Charles R. Borchardt        467,928        3,980        447,260        919,168
     Harry N. Lewis              468,828        3,080        447,260        919,168
For 1 - Year Term
     James R. Sipe, Jr           468,828        3,080        447,260        919,168

</TABLE>

There were no abstentions or broker non-votes in the election of directors.

In addition,  Guaranty's shareholders voted on a proposal to amend the Plan. The
Plan  initially  authorized the issuance of up to 50,000 shares of Common Stock.
Options to purchase  36,000  shares have been  granted and 14,000 shares  remain
available for grants and awards under the Plan.  The Plan, as amended,  reserves
111,000  shares,  increasing the shares  available for new grants under the Plan
from 14,000 to 75,000 shares.  To date, none of the options have been exercised.
The Plan, as amended, was approved with 295,762 shares voting for, 46,280 shares
voting against,  6,814 shares abstaining,  and 123,052 shares counting as broker
non-votes, and 447,260 shares did not vote.

Item 5            Other Information

                           None.
   
Item 6            Exhibits and Reports on 8-K

                  (a)      Exhibits - None

                  (b)      Reports on Form 8-K - None



                                       13
<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:   February 12, 1997              By:/s/ Thomas P. Baker
                                          -------------------------------------
                                          Thomas P. Baker
                                          President and Chief Executive Officer



Date:   February 12, 1997               By:/s/ Kathleen M. Focht
                                          -------------------------------------
                                           Kathleen M. Focht
                                           Vice President, Secretary, Treasurer,
                                           and Chief Financial Officer




                                       14