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. 0-25905
March 31, 2001




                         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)


         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
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 1, 2001,  1,961,727  shares of Common Stock,  par value $1.25
per share, were outstanding.


<PAGE>

                         GUARANTY FINANCIAL CORPORATION

                         QUARTERLY REPORT ON FORM 10-QSB

                                      INDEX
                                      -----

Part I.  Financial Information                                          Page No.
------------------------------                                          --------

Item 1      Financial Statements

            Consolidated Balance Sheets as of March 31, 2001
            (unaudited) and December 31, 2000                               3

            Consolidated Statements of Operations for the
            Three Months Ended March 31, 2001 and
            2000 (unaudited)                                                4

            Consolidated Statements of Comprehensive Income
            for the Three Months Ended March 31, 2001
            and 2000 (unaudited)                                            5

            Consolidated Statements of Cash Flows for the Three
            Months Ended March 31, 2001 and 2000 (unaudited)                6

            Notes to Consolidated Financial Statements (unaudited)          7

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

Part II. Other Information
--------------------------

Item 1      Legal Proceedings                                              14

Item 2      Changes in Securities                                          14

Item 3      Defaults upon Senior Securities                                14

Item 4      Submission of Matters to a Vote of Security Holders            14

Item 5      Other Information                                              14

Item 6      Exhibits and Reports on Form 8-K                               14

Signatures                                                                 15







                                       2
<PAGE>

Part I.  Financial Information
------------------------------

Item 1   Financial Statements

                            GUARANTY FINANCIAL CORPORATION
                              CONSOLIDATED BALANCE SHEETS
                                   ($ In Thousands)
<TABLE>
<CAPTION>
                                                            March 31           December 31,
                                                              2001                 2000
                                                          ------------         ------------
                                                          (Unaudited)
<S>                                                       <C>                  <C>
ASSETS
Cash and cash equivalents                                 $     16,213         $     15,550
Investment securities
   Held-to-maturity                                              1,165                1,200
   Available for sale                                           26,555               17,931
Investment in FHLB stock                                         1,550                1,550
Loans receivable, net                                          194,706              201,617
Accrued interest receivable                                      2,086                2,079
Real estate owned                                                1,229                1,301
Office properties and equipment, net                             9,959                9,877
Mortgage servicing rights                                        1,046                1,021
Other assets                                                     1,756                1,897
                                                          ------------         ------------
          Total assets                                    $    256,265         $    254,023
                                                          ============         ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
-----------
Deposits:
   NOW/MMDA accounts                                      $     63,102         $     59,465
   Savings accounts                                             11,445               10,311
   Certificates of deposit                                     151,405              146,952
                                                          ------------         ------------
                                                               225,952              216,728
Bonds payable                                                      764                  792
Advances from Federal Home Loan Bank                             6,000               14,000
Accrued interest payable                                           676                  394
Payments by borrowers for taxes and insurance                      683                  264
Other liabilities                                                  549                  795
                                                          ------------         ------------
          Total liabilities                                    234,624              232,973
                                                          ------------         ------------
COMMITMENTS & CONTINGENCIES
---------------------------

Convertible preferred securities                                 6,012                6,012

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, 1,961,727
   issued and outstanding                                        2,452                2,452
Additional paid-in capital                                       8,953                8,953
Accumulated comprehensive loss                                    (795)              (1,218)
Retained earnings                                                5,019                4,851
                                                          ------------         ------------
          Total stockholders' equity                            15,629               15,038
                                                          ------------         ------------
Total liabilities and stockholders' equity                $    256,265         $    254,023
                                                          ============         ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In Thousands)

                                                       Three Months Ended
                                                             March 31,
                                                    ---------------------------
                                                        2001           2000
                                                    ------------   ------------
                                                            (unaudited)
Interest income
   Loans                                            $      4,598   $      4,768
   Investment securities                                     507            559
                                                    ------------   ------------
Total interest income                                      5,105          5,327
                                                    ------------   ------------
Interest expense
   Deposits                                                2,593          2,362
   Borrowings                                                336            657
                                                    ------------   ------------
Total interest expense                                     2,929          3,019
                                                    ------------   ------------
Net interest income                                        2,176          2,308

Provision for loan losses                                    150            130
                                                    ------------   ------------
Net interest income after provision
      for loan losses                                      2,026          2,178

Other income
   Loan and deposit fees and servicing income                234            193
   Gain (loss) on sale of loans and securities               175            (71)
   Other                                                     129             92
                                                    ------------   ------------
Total other income                                           538            214
                                                    ------------   ------------
Other expenses
   Personnel                                               1,261          1,034
   Occupancy                                                 339            314
   Data processing                                           254            255
   Marketing                                                  28             20
   Deposit insurance premiums                                 26             59
   Other                                                     402            340
                                                    ------------   ------------
Total other expenses                                       2,310          2,022
                                                    ------------   ------------

Income before income taxes                                   254            370
                                                    ------------   ------------

Provision for income taxes                                    86            126
                                                    ------------   ------------

Net income                                          $        168   $        244
                                                    ============   ============

Basic and diluted earnings
  per common share                                  $       0.09   $       0.12
                                                    ============   ============


          See accompanying notes to consolidated financial statements.






                                       4
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In Thousands)

                                                        Three Months Ended
                                                             March 31,
                                                    ---------------------------
                                                        2001           2000
                                                    ------------   ------------
                                                            (unaudited)

Net Income                                          $        168   $        244
                                                    ------------   ------------
Other comprehensive income:
  Unrealized gains on securities available for sale          641            197

Income tax expense related to items of other
   comprehensive income                                    (218)           (67)
                                                    ------------   ------------

Other comprehensive income, net of tax                       423            130
                                                    ------------   ------------

Comprehensive Income                                $        591   $        374
                                                    ============   ============



           See accompanying notes to consolidated financial statements










                                       5
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                                      2001            2000
                                                                                  ------------    ------------
                                                                                           (unaudited)
<S>                                                                               <C>             <C>
Operating Activities
      Net Income                                                                  $        168    $        244
      Adjustments to reconcile net income (loss) to net cash
                  provided by operating activities:
                  Provision for loan and real estate owned losses                          210             130
                  Depreciation and amortization                                            398             179
                  Deferred loan fees                                                       (24)            (18)
                  Net amortization of premiums and accretion of discounts                    7             (25)
                  Gain (loss) on sale of loans                                            (326)             71
                  Originations of loans held for sale                                  (15,333)         (3,921)
                  Proceeds from sale of loans                                           15,659           3,850
                  Other                                                                   (218)              -
                  Changes in:
                               Accrued interest receivable                                  (7)           (276)
                               Other assets                                                141           1,761
                               Accrued interest payable                                    282             157
                               Prepayments by borrowers for taxes and insurance            419              48
                               Other liabilities                                          (246)           (627)
                                                                                  ------------    ------------
Net cash provided by operating activities                                                1,130           1,573
                                                                                  ------------    ------------
Investing activities
      Net (increase) decrease in loans                                                   6,812         (14,950)
      Increase in originated mortgage servicing rights                                    (230)              -
      Mortgage-backed securities principal repayments                                       35              46
      Purchase of securities available for sale                                         (8,000)              -
      Purchase of FHLB stock                                                                 -             (50)
      Purchase of servicing rights                                                           -             (47)
      Purchase of other real estate                                                          -               -
      Purchase of office properties and equipment                                         (275)           (136)
                                                                                  ------------    ------------
Net cash provided (absorbed) by investing activities                                    (1,658)        (15,137)
                                                                                  ------------    ------------
Financing activities
      Net increase in deposits                                                           9,224          21,159
      Proceeds from FHLB advances                                                       15,000          11,000
      Repayment of FHLB advances                                                       (23,000)         (6,000)
      Decrease in securities sold under agreement to repurchase                              -         (12,162)
      Repurchase of convertible preferred securities                                         -             (63)
      Dividends paid on common stock                                                         -            (117)
      Principal payments on bonds payable, including unapplied payments                    (33)              -
                                                                                  ------------    ------------
Net cash provided (absorbed) by financing activities                                     1,191          13,817
                                                                                  ------------    ------------
Increase in cash and cash equivalents                                                      663             253

Cash and cash equivalents, beginning of period                                          15,550          12,634
                                                                                  ------------    ------------
Cash and cash equivalents, end of period                                          $     16,213    $     12,887
                                                                                  ============    ============
</TABLE>






           See accompanying notes to consolidated financial statements


                                       6
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
               For the Three Months Ended March 31, 2001 and 2000


Note 1  Principles of Presentation

The  accompanying   consolidated  financial  statements  of  Guaranty  Financial
Corporation  (the "Company")  have not been audited by independent  accountants,
except for the balance sheet at December 31, 2000.  These  financial  statements
have been prepared in accordance  with the  regulations  of the  Securities  and
Exchange Commission in regard to quarterly (interim)  reporting.  In the opinion
of management,  the financial  information  presented  reflects all adjustments,
comprised  only of normal  recurring  accruals,  that are  necessary  for a fair
presentation  of the  results for the interim  periods.  Significant  accounting
policies and accounting  principles have been  consistently  applied in both the
interim and annual  consolidated  financial  statements.  Certain  notes and the
related  information  have been condensed or omitted from the interim  financial
statements presented in this Quarterly Report on Form 10-QSB.  Therefore,  these
financial  statements  should be read in conjunction  with the Company's  Annual
Report on Form 10-KSB for the year ended  December 31, 2000. The results for the
three  months  ended March 31,  2001 are not  necessarily  indicative  of future
financial results.

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Guaranty Capital Trust I and Guaranty
Bank, and Guaranty  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 products.
All material  intercompany  accounts and  transactions  have been  eliminated in
consolidation.

Amounts in the year 2000 financial  statements have been reclassified to conform
to  the  year  2001  presentation.  These  reclassifications  had no  effect  on
previously reported net income.

Note 2  Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

Note 3  Earnings Per Share

Basic earnings per share is based on net income divided by the weighted  average
number of common  shares  outstanding  during the period.  Diluted  earnings per
share shows the dilutive effect of additional common shares issuable under stock
option  plans.  The basic and diluted  earnings  per share for the three  months
ended March 31, 2001 and 2000 have been determined by dividing net income by the
weighted  average  number of shares of common  stock  outstanding  during  these
periods,  1,961,727.  All options outstanding were anti-dilutive for each period
presented  and,  therefore,  not  included  in the  diluted  earnings  per share
calculations.





                                       7
<PAGE>

Note 4  Loans

The loan portfolio is composed of the following:

                                                     March 31,     December 31,
                                                       2001            2000
                                                   ------------    ------------
                                                            (In thousands)
Commercial business loans                          $     63,420    $     62,976
Mortgage loans                                           53,972          59,613
Real estate loans                                        53,673          54,437
Consumer loans                                           26,153          26,987
                                                   ------------    ------------
Total loans                                             197,218         204,013

Less allowance for loan loss                             (2,512)         (2,396)
                                                   ------------    ------------
                                                   $    194,706    $    201,617
                                                   ============    ============

Note 5  Allowance for Loan Loss

The following is a summary of transactions in the allowance for loan loss:

                                                     March 31,     December 31,
                                                       2001            2000
                                                   ------------    ------------
                                                          (In thousands)
Balance at January 1                               $      2,396    $      1,303
Provision charged to operating expense                      150           1,505
Recoveries added to the reserve                               0              23
Loans charged off                                           (34)           (435)
                                                   ------------    ------------
Balance at the end of the period                   $      2,512    $      2,396
                                                   ============    ============









                                       8
<PAGE>

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


Changes in Financial Condition

Total assets  increased by $2.3 million to $256.3 million at March 31, 2001 from
$254.0  million  at  December  31,  2000.  Cash and cash  equivalents  increased
$663,000,  or 4.3%,  to $16.2  million at March 31,  2001 from $15.6  million at
December 31, 2000.  This increase  resulted  primarily  from an increase of $9.3
million in deposits  and a decline of $6.9  million in loans that offset an $8.6
million increase in the investment portfolio.

Investment  securities at March 31, 2001 increased $8.6 million to $29.3 million
from $20.7 million at December 31, 2000. At the dates indicated,  the investment
portfolio was comprised of the following:

                                                 March 31,    December 31,
                                                   2001           2000
                                               ------------   ------------

     Held to maturity:
         Mortgage-backed securities            $        915   $        950
         U.S. Government obligations                    250            250

     Available for sale:
         Corporate Bonds                             18,133         17,508
         U.S. Government obligations                  8,000              -

     Other:
         Federal Reserve Bank & other stocks            422            422
         Federal Home Loan Bank stock                 1,550          1,550
                                               ------------   ------------
                                               $     29,270   $     20,680
                                               ------------   ------------

Net loans were $194.7 million at March 31, 2001, a decrease of $6.9 million from
net loans of $201.6  million at  December  31,  2000.  The  decrease in the loan
portfolio was primarily  related to a $6.1 million  decrease in mortgage  loans.
This decrease primarily represented loans sold to the Federal Home Loan Mortgage
Corporation in the normal course of business  during the quarter.  The allowance
for loan losses  increased  to $2.5 million or 1.27% of gross loans at March 31,
2001. All other components of the loan portfolio were substantially flat for the
quarter.

Real estate owned  decreased to $1.2 million  outstanding at March 31, 2001 from
$1.3  million  at  December  31,  2000  due to a  $60,000  increase  in the loss
allowance on a foreclosed  commercial property.  This property is under contract
for sale,  which should close in the second quarter of 2001. Net proceeds to the
Company are expected to be approximately  $600,000. The remainder of real estate
owned consists of developed lots located within a residential  subdivision.  Net
proceeds are anticipated to approximate the carrying value at March 31, 2001.

Deposits were $226.0 million at March 31, 2001, an increase of $9.3 million,  or
4.3%,  from total  deposits of $216.7  million at December 31, 2000. The deposit
growth was primarily the result of a $4.5 million  increase in  certificates  of
deposits and a $3.6 million  increase in demand  accounts.  This  increase was a
result of overall  growth and increases at the  Company's  two newest  branches,
Forest  Lakes in  northern  Albemarle  County and Lake  Monticello  in  Fluvanna
County.




                                       9
<PAGE>

At March 31,  2001,  $6.0  million was  borrowed  from the FHLB on a  short-term
basis,  representing  an $8.0 million  decrease from the balance  outstanding at
December 31, 2000.  Increases in the Company's  deposits  allowed the Company to
decrease its borrowed money.  The FHLB advances are comprised  entirely of daily
rate credits that reprice based on the previous day's Fed Fund rate.

Total  stockholders'  equity  increased to $15.6 million at March 31, 2001. This
increase was primarily due to net income of $168,000 for the three-month  period
and an improved market value of available-for-sale investments that are recorded
at the  lower of cost or  market  value.  The  market  value of the  investments
improved due to the recent declines in the prime lending rate.

Results of Operations

Net Income

The Company reported net income of $168,000 for the three months ended March 31,
2001,  compared to net income of $244,000  reported  for the same quarter in the
prior year. The decrease in net income was primarily due to a decline in the net
interest  margin and increased  other  expenses that offset gains on the sale of
loans and  additional  deposit  fee income as compared to the same period of the
prior year.

Net Interest Income

Net interest  income  decreased to $2.2 million for the three months ended March
31, 2001 from the $2.3  million  reported  during the same  period in 2000.  The
decrease was due to a decline in the average amount of loans outstanding  during
the most recent quarter.  The net interest margin was 3.79% for the three months
ended March 31,  2001,  compared  to 3.76% for the same  period  last year.  The
following  table  summarizes the factors  determining  net interest income ($ in
thousands).

                                                Three Months     Three Months
                                                    Ended            Ended
                                               March 31, 2001   March 31, 2000
                                               --------------   --------------

         Average Interest Earning Assets       $      232,835   $      249,268

                   Avg. Yield                       8.89%            8.67%


       Average Interest Bearing Liabilities    $      219,188   $      236,976

                   Avg. Cost                        5.42%            5.16%


                Interest Spread                     3.48%            3.50%

                Interest Margin                     3.79%            3.76%

The recent decreases in the prime rate will negatively  impact earnings over the
next two quarters as loan and  investment  yields will  decline  faster than the
cost of certificates of deposit.






                                       10
<PAGE>

Provision for Loan Losses

The Company provides  valuation  allowances for anticipated losses on loans when
its  management  determines  that a  significant  decline  in the  value  of the
collateral  has  occurred,  and if the value of the  collateral is less than the
amount of the unpaid  principal of the related  loan,  plus  estimated  costs of
acquisition and sale. In addition,  the Company  provides  reserves based on the
dollar  amount and type of  collateral  securing its loans,  in order to protect
against  unanticipated  losses. A loss experience  percentage is established for
each loan type and is reviewed quarterly.  Each quarter,  the loss percentage is
applied to the  portfolio,  by product type, to determine the minimum  amount of
reserves required. The Company recorded a provision of $150,000 and $130,000 for
the three  months ended March 31, 2001 and 2000,  respectively.  The increase in
the  provision  for loan  losses was due to  management's  efforts  to  properly
reflect the credit risk in its loan  portfolio.  Net  charge-offs  for the three
months ended March 31, 2001 were $34,000 or .02% of total loans  outstanding  at
March 31, 2001.  At March 31,  2001,  the Company had $2.1 million of loans that
were 90 days or more  past  due.  Of this  total,  only  $263,000  of loans  was
considered  to be  non-accrual.  At March 31, 2001 the allowance for loan losses
was $2.5 million or 1.27% of total loans.  Management believes the allowance for
loan losses is adequate to cover loan losses  inherent in the loan  portfolio at
March 31, 2001. Loans classified as special mention,  substandard,  doubtful and
loss have been adequately  reserved.  Although  management believes that it uses
the best information  available to make such determinations,  future adjustments
to the  allowance  for loan  losses may be  necessary,  and net income  could be
significantly  affected,  if circumstances differ substantially from assumptions
used in making the initial determinations.

Other Income

Total other  income for the three  months  ended  March 31,  2001 was  $538,000,
compared to $214,000  for the same period in 2000.  Deposit  fees  increased  to
$179,000 for the current quarter from the $137,000 reported for the same quarter
of the prior year.  Net gains on loan sales  resulted in income of $326,000  for
the current quarter, while the same period in the prior year included net losses
of  $32,000  due to  declining  mortgage  interest  rates.  While the  declining
mortgage  interest  rates had a positive  impact on loan sale gains,  the market
valuation of originated mortgage servicing rights was negatively impacted. Total
other income  included a $151,000  writedown of  originated  mortgage  servicing
rights in the  current  quarter,  compared  to a $39,000  writedown  in the same
period of the prior year.

Other Expense

Other expenses during the three months ended March 31, 2001 were $2.3 million, a
$288,000  increase  over those  incurred  during the same  quarter of 2000.  The
increase is primarily  attributable to the additional  operating expenses of the
Forest Lakes branch in Albemarle County, severance accruals for former employees
of $165,000 and a $60,000  additional loss provision on a foreclosed  commercial
property.

The Company  currently  operates nine  full-service  banking offices.  The ninth
branch  opened in early  February in  northern  Albemarle  County.  There are no
current  plans to open any  additional  offices.  The Company has entered into a
definitive purchase and assumption  agreement with Central Virginia Bank to sell
its branch office in Henrico County. This transaction,  which remains subject to
regulatory  approval,  includes the assumption of deposit accounts and an option
by Central Virginia Bank to acquire selected  consumer and commercial  loans. No
material gain or loss is expected as a result of this sale.  Closing is expected
to occur in mid-summer 2001.

Income Tax Expense

The Company  recognized income tax expense of $86,000 for the three months ended
March 31, 2001, compared to $126,000 for the same period in 2000. Changes in tax
expense  between the two quarters are primarily a result of changes in the level
of  taxable  income.  Effective  income  tax rates  were  34.0% for all  periods
presented.



                                       11
<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.  The Company'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.
The Company has been able to generate  sufficient  cash  through its deposits as
well as through its borrowings.

The Company 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,
2001,  total approved loan  commitments  outstanding  were  approximately  $10.9
million.  At the same  date,  commitments  under  unused  lines of  credit  were
approximately $56.6 million.  Certificates of deposit scheduled to mature in one
year or less at March 31, 2001 were $129.4 million.  Management  believes that a
significant  portion of maturing deposits will remain with the Company. If these
certificates  of deposit do not remain  with the  Company,  it will have to seek
other sources of funding that may be at higher rates or reduce assets.

At March 31,  2001,  regulatory  capital  was in excess of amounts  required  by
Federal Reserve  regulations to be considered  well  capitalized as shown by the
following:

                    Tier 1 risk based capital ratio      10.87%
                    Total risk based capital ratio       12.39%
                    Tier 1 leverage ratio                 8.60%

The Company's capital  structure ensures that it has the necessary  resources to
protect against risk inherent in its business.


Regulatory Issues

In October 2000,  the Company and it subsidiary,  Guaranty Bank,  entered into a
written  agreement  with the Federal  Reserve Bank of Richmond and the Bureau of
Financial  Institutions of the  Commonwealth of Virginia with respect to various
operating  policies and procedures.  Various bank operating  policies  including
asset/liability management,  liquidity, risk management, loan administration and
capital  adequacy  will be  submitted  to the bank  regulators  for  review  and
approval.  The Company is restricted  from paying future  dividends or incurring
any debt at the parent  company  level  without prior  regulatory  approval.  In
addition,  Guaranty Bank is prohibited from paying intercompany dividends to the
Company without prior regulatory  approval.  Absent this intercompany  dividend,
the Company does not have  sufficient  resources to make the payments due on its
outstanding  subordinated  debt  securities.  The Company and Guaranty Bank have
requested  regulatory  approval  for  an  intercompany  dividend  in  an  amount
sufficient  to make the June  15,  2001  payment  due on its  subordinated  debt
securities.







                                       12
<PAGE>

Forward Looking Statements

Certain  statements  in  this  quarterly  report  on  Form  10-QSB  may  include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities  Exchange Act of 1934,
as amended. These forward-looking statements are generally identified by the use
of  words  such  as  "believe",  "expect",  "anticipate",  "should",  "planned",
"estimated",  and  "potential".  These  statements  are  based on the  Company's
current  expectations.  A variety of factors  could cause the  Company's  actual
results to differ materially from the anticipated  results or other expectations
expressed in such forward-looking  statements.  The risks and uncertainties that
may  affect  the  operations,  performance,  development,  and  results  of  the
Company's  business  include  interest  rate  movements,  competition  from both
financial  and  non-financial  institutions,   the  timing  and  occurrence  (or
nonoccurence)  of transactions  and events that may be subject to  circumstances
beyond the Company's control, and general economic conditions.






















                                       13
<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

















                                       14
<PAGE>

                                   SIGNATURES

         In accordance with the  requirements of the Securities  Exchange Act of
1934, as amended,  the registrant  caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                          GUARANTY FINANCIAL CORPORATION



Date: May 14, 2001                        By:  /s/ Richard L. Saunders
                                              ----------------------------------
                                               Richard L. Saunders
                                                Senior Vice President and
                                                 Interim Chief Executive Officer


Date: May 14, 2001                        By:  /s/Thomas F. Crump
                                              ----------------------------------
                                               Thomas F. Crump
                                                Senior Vice President and
                                                 Chief Financial Officer




















                                       15