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
September 30, 1998




                         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 November 23, 1998, 1,501,383 shares were outstanding.


<PAGE>

                         GUARANTY FINANCIAL CORPORATION

                         QUARTERLY REPORT ON FORM 10-QSB

                                      INDEX

<TABLE>
<CAPTION>

Part I.   Financial Information                                                        Page No.
<S>                                                                                       <C>
Item 1    Financial Statements

          Consolidated Statements of Financial Condition
          as of September 30, 1998 and December 31, 1997                                   3

          Consolidated Statements of Operations for the
          Three and Nine Months Ended September 30, 1998 and 1997                          4

          Consolidated Statements of Cash Flows for the
          Nine Months Ended September 30, 1998 and 1997                                    5

          Notes to Consolidated Financial Statements                                       7

Item 2    Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                              8

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

</TABLE>



                                       2
<PAGE>

                         PART I. FINANCIAL INFORMATION

Item 1                        FINANCIAL STATEMENTS


                         GUARANTY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)
<TABLE>
<CAPTION>

                                                            SEPTEMBER 30,      DECEMBER 31,
                                                                1998               1997 
                                                            -------------      ------------
                                                                       (Unaudited)
<S>                                                             <C>               <C>    
ASSETS                                                                 
Cash and cash equivalents                                        $16,464            $5,917 
Investment securities                                         
   Held-to-maturity                                                2,168             2,846 
   Available for sale                                              9,700            11,524 
   Trading                                                             0             1,032 
Investment in FHLB stock at cost                                   1,040               860 
Other investments                                                     79                79 
Loans receivable, net                                            132,101            99,675 
Accrued interest receivable                                        1,231               844 
Real estate owned                                                    332                65 
Office properties and equipment, net                               6,703             5,999 
Other assets                                                       3,525             1,867 
                                                            -------------      ------------
          Total assets                                          $173,343          $130,708 
                                                            =============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
   NOW/MMDA accounts                                             $42,507           $16,037 
   Savings accounts                                                9,278             6,434 
   Certificates of deposit                                        90,450            90,476 
                                                            -------------      ------------
                                                                 142,235           112,947 
Bonds payable                                                      1,985             2,360 
Convertible trust preferred securities, net                        6,383                 -
Advances from Federal Home Loan Bank                               9,000                 - 
Securities sold under agreement to repurchase                          -             2,989 
Accrued interest payable                                              80                58 
Payments by borrowers for taxes and insurance                        205                80 
Other liabilities                                                  1,198               414 
                                                            -------------      ------------
          Total liabilities                                      161,086           118,848 
                                                            -------------      ------------

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, 1,501,383                                                  
   issued and outstanding                                          1,877             1,877 
Additional paid-in capital                                         5,725             5,725 
Net unrealized gain (loss) on securities                                                   
    available for sale                                               (27)               51 
Retained earnings                                                  4,682             4,207 
                                                            -------------      ------------
          Total stockholders' equity                              12,257            11,860 
                                                            -------------      ------------
Total liabilities and stockholders' equity                      $173,343          $130,708 
                                                            =============      ============

</TABLE>


                                       3
<PAGE>

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

                                                      Three Months Ended         Nine Months Ended  
                                                         September 30,             September 30,
                                                    ----------------------    ----------------------
                                                       1998        1997          1998        1997   
                                                    ----------  ----------    ----------  ----------
                                                          (unaudited)              (unaudited)
<S>                                                    <C>         <C>           <C>         <C>
Interest income
   Loans                                               $3,028      $1,950        $7,717      $5,472 
   Mortgage-backed securities                              49         133           160         927 
   Other securities                                       429         368         1,116         611 
                                                    ----------  ----------    ----------  ----------
Total interest income                                   3,506       2,451         8,993       7,010 
                                                    ----------  ----------    ----------  ----------

Interest expense
   Deposits                                             1,569       1,320         4,465       3,541 
   Borrowings                                             496         260           857         984 
                                                    ----------  ----------    ----------  ----------
Total interest expense                                  2,065       1,580         5,322       4,525 
                                                    ----------  ----------    ----------  ----------

Net interest income                                     1,441         871         3,671       2,485 

Provision for loan losses                                  49          30           136          76 
                                                    ----------  ----------    ----------  ----------

Net interest income after provision
      for loan losses                                   1,392         841         3,535       2,409 

Other income
   Loan fees and servicing income                          86          92           279         319 
   Gain (loss) on sale of loans and securities            483         395           984         471 
   Gain on sale of purchased servicing                      -           -             -         117 
   Service fees on checking                               102          39           265         160 
   Other                                                   59          53           158         138 
                                                    ----------  ----------    ----------  ----------
Total other income                                        730         579         1,686       1,205 
                                                    ----------  ----------    ----------  ----------

Other expenses
   Personnel                                              883         424         1,954       1,219 
   Occupancy                                              279         212           765         555 
   Data processing                                        153         108           379         275 
   Deposit insurance premiums                               -          30            11          86 
   Other                                                  292         239           905         559 
                                                    ----------  ----------    ----------  ----------
Total other expenses                                    1,607       1,013         4,014       2,694 
                                                    ----------  ----------    ----------  ----------

Income before income taxes                                515         407         1,207         920 
                                                    ----------  ----------    ----------  ----------

Provision for income taxes                                201         141           462         324 
                                                    ----------  ----------    ----------  ----------

Net income                                              $ 314       $ 266         $ 745       $ 596 
                                                    ==========  ==========    ==========  ==========

Basic and diluted earnings per common share            $ 0.21      $ 0.18        $ 0.50      $ 0.41
                                                    ==========  ==========    ==========  ==========
</TABLE>


                                       4
<PAGE>


                         GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Nine Months Ended September 30, 1998 and 1997
                                 (In Thousands)
<TABLE>
<CAPTION>

                                                                                            1998           1997
                                                                                        ------------   ------------
                                                                                                (unaudited)
<S>                                                                                     <C>            <C>  
Operating Activities
      Net Income                                                                           $ 745          $ 596
      Adjustments to reconcile net income to net cash provided
           (absorbed) by operating activities:
           Provision for loan losses                                                         136             76
           Depreciation and amortization                                                     371            248
           Gain on sale of purchased servicing                                                 -           (117)
           Proceeds from the sale of purchased servicing, net                                  -            374
           Amortization of deferred loan fees                                                139             69
           Net amortization of premiums and accretion of discounts                           (45)            87
           Loss (gain) on sale of loans                                                     (996)          (182)
           Originations of loans held for sale                                           (49,952)        (8,085)
           Proceeds from sale of loans                                                    50,037          8,267
           Loss (gain) on sale of securities available for sale                             (313)          (310)
           (Gain) loss on trading securities                                                 323              9
           Purchase of trading securities                                                (77,440)       (42,259)
           Sales of trading securities                                                    78,149         42,250
           (Gain) loss on sale of real estate owned                                            -              2
           Other, net                                                                        574            764
           Changes in:                                                                               
                Accrued interest receivable                                                 (387)          (243)
                Other assets                                                              (1,925)           342
                Accrued interest payable                                                      22              4
                Prepayments by borrowers for taxes and insurance                             125            172
                Other liabilities                                                            784            785
                                                                                     ------------   ------------

Net cash provided (absorbed) by operating activities                                         347          2,849
                                                                                     ------------   ------------

Investing activities
      Net (increase) decrease in loans                                                   (32,599)       (15,185)
      Mortgage-backed securities principal repayments                                        743          1,039
      Proceeds from sale of securities available for sale                                 47,421         37,165
      Purchase of securities available for sale                                          (45,284)       (34,921)
      Purchase of FRB stock                                                                    -            (72)
      Redemption (purchase) of FHLB stock                                                   (180)           485
      Purchases of office properties and equipment                                        (1,050)        (1,258)
                                                                                     ------------   ------------

Net cash provided (absorbed) by investing activities                                     (30,949)       (12,747)
                                                                                     ------------   ------------



                                       5
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS, continued


Financing activities
      Net increase (decrease) in deposits                                                 29,288         26,721
      Proceeds from FHLB advances                                                         39,000          3,500
      Repayment of FHLB advances                                                         (30,000)       (15,500)
      Increase (decrease) in securities sold under agreement to repurchase                (2,989)        (6,681)
      Proceeds from the issuance of common stock, net                                          -          4,472
      Proceeds from the issuance convertible preferred securities, net                     6,400              -
      Dividends paid on common stock                                                         (90)             -
      Principal payments on bonds payable, including unapplied payments                     (460)          (275)
                                                                                     ------------   ------------

Net cash provided (absorbed) by financing activities                                      41,149         12,237
                                                                                     ------------   ------------

Increase (decrease) in cash and cash equivalents                                          10,547          2,339

Cash and cash equivalents, beginning of period                                             5,917          6,076
                                                                                     ------------   ------------

Cash and cash equivalents, end of period                                                $ 16,464       $  8,415
                                                                                     ============   ============

</TABLE>



                                       6
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Nine Months ended September 30, 1998 and 1997



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,  Guaranty  Investments Corp., which was organized to sell
insurance  annuities and other  non-traditional  products,  and Guaranty Capital
Trust I,  which  was  formed  to issue  convertible  preferred  securities.  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
September 30, 1998 and December 31, 1997 and the results of operations  and cash
flows for the interim  periods  ending  September  30,  1998 and 1997.  All 1998
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.




                                       7
<PAGE>

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


Expansion of Existing Branch Network

In  November  1998,  a  seventh  full-service  branch  was  opened  at the  Lake
Monticello  development  in Fluvanna  County,  Virginia.  Subject to  regulatory
approval, the Bank plans to open an eighth full-service branch, the first in the
Richmond,  Virginia metropolitan area, near the Wellesley development in Western
Henrico County in June 1999.


Expansion of the Commercial Lending Division

In June 1998, the Bank hired three  commercial  loan officers and one commercial
loan   administrator   from  a  recently   acquired   statewide  bank  that  was
headquartered in Charlottesville,  Virginia. Management anticipates, although no
assurances can be given,  that this group will generate  significant  commercial
loans and business deposits which will benefit net interest income, net interest
margin and loan portfolio diversification.


Changes in Financial Condition

Deposit growth,  proceeds from Federal Home Loan Bank (the "FHLB")  advances and
net proceeds from completion of a convertible  preferred  securities offering in
May 1998 enabled  Guaranty to increase  assets.  Total assets increased by $42.6
million, or 32.6%, from $130.7 million at December 31, 1997 to $173.3 million at
September  30,  1998.  These  proceeds  were  primarily  invested  in loans  and
short-term interest earning deposit accounts.

Cash and cash equivalents  increased $10.5 million,  or 178.3%, to $16.5 million
at September  30, 1998 from $5.9 million at December 31, 1997.  This increase in
cash was primarily due to the combination of increased  deposits,  proceeds from
the sale of corporate bonds classified as available for sale, proceeds from FHLB
advances,  proceeds  from  loan  sales,  and  the  completion  of a  convertible
preferred  securities offering in May 1998. Proceeds to the Corporation from the
offering (net of offering expenses of approximately $500,000) were approximately
$6.4 million.

Investment securities,  at September 30, 1998, decreased $3.8 million, or 22.9%,
to $11.87  million from $15.4  million at December 31, 1997.  This  decrease was
primarily  a result of the sale of $1.8  million in  investment-grade  corporate
bonds,  a decrease of $1.0 million in treasury  notes  classified as trading and
principal payments received on mortgage-backed  securities of approximately $700
thousand.  At the dates indicated,  the investment portfolio is comprised of the
following:

                                            September 30,  December 31,
                                                 1998          1997
                                            -------------  ------------
       Mortgage-backed securities
         classified as held-to-maturity           $ 2,168       $ 2,846
       Corporate bonds classified
         as available-for-sale                      9,700        11,524
       US Treasury Notes classified
         as trading                                     -         1,032
                                            -------------  ------------
                                                  $11,868       $15,402
                                            =============  ============



                                       8
<PAGE>

Net loans were  $132.1  million at  September  30,  1998,  an  increase of $32.4
million,  or 32.5%,  from net loans of $99.6 million at December 31, 1997.  This
increase was primarily  related to prime based residential  construction  loans,
including builder lines of credit originated by an experienced construction loan
officer hired in December 1997,  located in the Bank's primary market of Central
Virginia.  Balances  outstanding  relating  to these  loans  increased  to $39.0
million at September  30,  1998,  from $11.6  million at December  31, 1997.  In
addition,  during the first nine months of 1998,  loans with a carrying value of
approximately  $49.9  million  were  sold at a net  gain of  approximately  $1.0
million.  At September  30, 1998,  loans held for sale were  approximately  $3.0
million.

Real  estate  owned of $65  thousand  at  December  31, 1997 was sold during the
second  quarter of 1998. No unreserved  losses were  recognized on this sale. At
September  30,  1998,  real  estate  owned was  comprised  of one  single-family
residential  property  located  in western  Albemarle.  No  material  losses are
anticipated on the ultimate sale of this property.

Deposits  were  $142.2  million at  September  30,  1998,  an  increase of $29.3
million,  or 25.9%,  from total deposits of $113.0 million at December 31, 1997.
The majority of this growth was in lower cost NOW/MMDA accounts, which increased
$26.5 million,  or 44.2%.  This growth,  comprised  solely of local funds,  is a
reflection of the combined effect of expanded marketing efforts to attract lower
cost demand deposits and the impact of recent bank  consolidations on Guaranty's
primary market. As a result of the Bank's increased focus on commercial  lending
and the attraction of business accounts,  management plans to expand the current
product  mix and  marketing  efforts  aimed at  corporate  customers  during the
remainder  of 1998 and the first  quarter of 1999.  During the third  quarter of
1998,  the Bank added  sweep  accounts  designed to be  competitive  with larger
regional banks operating in Guaranty's primary market. Consequently,  management
anticipates  a  continued   reduction  in  the  Bank's  historical  reliance  on
certificates of deposit as a primary funding source during the remainder of 1998
and 1999.  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 $704 thousand since December 31, 1997.
This increase was primarily due to capital expenditure  relating to improvements
at Corporate headquarters, leasehold improvements at the West Main Street branch
prior to opening in late June 1998 and  construction  costs relating to the Lake
Monticello branch which opened in November 1998.

At  September  30, 1998,  $9.0  million in advances was borrowed  from the FHLB.
These advances are comprised  entirely of daily rate credits which reprice based
on the previous days Fed Fund rate.

Results of Operations

Net Income

Guaranty  reported net income of $314  thousand and $266  thousand for the three
month periods ended September 30, 1998 and 1997, respectively, and $745 thousand
and $596 thousand for the nine month periods ended  September 30, 1998 and 1997,
respectively.  These increases were primarily a result of increased net interest
income and gains on the sale of loans and securities which were partially offset
by additional  costs  relating to expansion of the retail  network,  residential
lending division, commercial loan department and back-office personnel.

Net Interest Income

Net interest  income was $1.4 million for the quarter ended  September 30, 1998,
up 65.4% from the $871 thousand  earned during the same period in 1997.  For the
first  nine  months of 1998,  net



                                       9
<PAGE>

interest income was $3.7 million, a 47.7% increase over the first nine months of
1997. Net interest margin  increased 58 basis points to 3.41% for the first nine
months of 1998 from 2.83% during the same period in 1997. These improvements are
primarily a result of growth and improved  yields on loans and reduced  costs of
deposits. The impact of these improvements were partially offset by the interest
costs of a $6.9 million  convertible  preferred security offering that closed on
May 5, 1998. For the nine months ended  September 30, 1998, the average  balance
and average yield on loans was $115.7 million and 8.92%, respectively,  compared
to $86.2 million and 8.46% for the same period in 1997. Loan growth is primarily
related to prime based residential  construction loans,  including builder lines
of credit located in the Bank's primary market of Central Virginia.  Outstanding
balances  relating  to these loans  increased  to  approximately  $39 million at
September 30, 1998, from  approximately  $5 million at September 30, 1997. Also,
in June 1998, the Bank hired three  commercial  loan officers and one commercial
loan   administrator   from  a  recently   acquired   statewide  bank  that  was
headquartered in  Charlottesville.  Management  anticipates that this group will
generate  significant  commercial loans and business deposits which will benefit
net interest income, net interest margin and loan portfolio diversification.

The average balance of interest bearing deposits increased to $122.1 million for
the first nine  months of 1998 from $93.4  million  for the same period in 1997.
However,  the  corresponding  average rate paid on these  deposits  decreased 16
basis  points to 4.89% from 5.05%  during the same  periods.  In  addition,  the
average  balance of  non-interest  bearing  deposits  increased  to $4.4 million
during the nine months ending  September 30, 1998,  from $1.6 million during the
same period in 1997.


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 $49 thousand for the
nine months ended  September  30 1998,  and a provision of $30 thousand for the
same period in 1997.  For the  nine-month  periods ended  September 30, 1998 and
1997,  Guaranty  recorded  a  provision  of  $136  thousand  and  $76  thousand,
respectively.  As of September 30 1998 the total  allowance  for loan losses was
$957 thousand.

Non-Interest Income

Non-interest  income was $730  thousand for the third  quarter 1998  compared to
$579 thousand for the same period in 1997. For the nine months ending  September
30, 1998,  non-interest  income was $1.7 million, up $481 thousand from the $1.2
million  reported  during the same period in 1997. This increase was primarily a
result of net gains on the sale of loans and securities of $984 thousand  during
the first nine months of 1998,  compared to $471 thousand during the same period
in 1997. In addition,  1997 amounts were positively  impacted by a one-time gain
of $117 thousand on the sale servicing located outside the Corporation's primary
market.

Non-Interest Expense

Operating  expenses  during the third quarter of 1998 were $1.6 million,  a $594
thousand  increase over those incurred during the third quarter of 1997. For the
nine months  ending  September  30, 1998,  operating  expenses were $4.0 million
compared to $2.7 million  during the same period in 1997.  These  increases  are
primarily  attributable  to the increased  size of the Bank and expansion of the
residential and commercial lending divisions.



                                       10
<PAGE>

Income Tax Expense

Guaranty  recognized  income tax expense of $201  thousand  for the three months
ended September 30, 1998, compared to $141 thousand for the same period in 1997.
Guaranty  recognized  income tax  expense of $462  thousand  for the nine months
ended September 30, 1998, compared to $324 thousand for the same period in 1997.
Changes in tax expense  between periods are primarily a result of changes in the
level of taxable income.


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.  In  connection  with  the  conversion  to a state
chartered bank,  Guaranty  anticipates  reducing its reliance on borrowings as a
source of funds.

In  May   1998,   the   Corporation   issued,   through   a   public   offering,
convertible-preferred  securities with a par value of $6.9 million. Net proceeds
to the Corporation from the offering were approximately $6.4 million.

Guaranty  uses its sources of funds  primarily  to meet its  on-going  operating
expenses, to pay deposit withdrawals and to fund loan commitments.  At September
30, 1998, total approved loan commitments  outstanding were approximately  $17.7
million.  At the same  date,  commitments  under  unused  lines of  credit  were
approximately $40.8 million.  Certificates of deposit scheduled to mature in one
year or less at September 30, 1998 were $54.7 million.  Management believes that
a significant portion of maturing deposits will remain with Guaranty.

At September 30, 1998,  regulatory  capital was in excess of amounts required by
Federal Reserve  Regulations to be considered  well  capitalized as shown in the
following table:

Tier 1 risk based                                           8.22%
Total risk based                                            8.71%
Tier 1 to average adjusted total assets                    10.48%


Year 2000 Project

The Year 2000 presents  problems for  businesses  that are dependent on computer
hardware  and  software  to  perform  date  dependent   calculations  and  logic
comparisons.  A great deal of software and  microchip  technology  was developed
utilizing two digit years rather than four digit years  (example:  97 instead of
1997).  Technology  utilizing  two digit  years most  likely will not be able



                                       11
<PAGE>

to  distinguish  the year 2000 from 1900, and therefore may shut down or perform
miscalculations and comparisons as much as 100 years off.

Guaranty,  in conjunction with its outside service bureau,  has developed a plan
to  address  Year  2000  exposure  surrounding   Guaranty's  computer  and  data
processing  systems.  Since early 1997,  Guaranty has been  updating its systems
hardware  to be Year 2000  compliant.  The next  step  involves  testing  system
software, half of such testing was completed as of September 30, 1998, and it is
estimated  that the process  will cost  approximately  $25,000 to  complete.  In
conjunction with this testing, Guaranty plans to test its other systems that are
not related to the service bureau.  Management anticipates Guaranty will be Year
2000 compliant, thus satisfying all regulatory requirements.



                                       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
                           Not Applicable

Item 5            Other Information
                           Not Applicable

Item 6            Exhibits and Reports on 8-K
                           Not Applicable



                                       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:   November 23, 1998              By: /s/ Thomas P. Baker
                                           ------------------------------------
                                           Thomas P. Baker
                                           President and Chief Executive Officer



Date:   November 23, 1998              By: /s/ Vincent B. McNelley
                                           ------------------------------------
                                           Vincent B. McNelley
                                           Senior Vice President and 
                                           Chief Financial Officer




                                       14