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, 1997




                         GUARANTY FINANCIAL CORPORATION




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



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


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

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

           As of October 29, 1997, 1,501,383 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 Balance Sheets as of 
         September  30, 1997 (unaudited) and December 31, 1996                 3

         Consolidated Statements of Operations for the Three and
         Nine Months Ended September 30, 1997 and 1996 (unaudited)             4

         Consolidated Statements of Cash Flows for the
         Nine Months Ended September 30, 1997 and 1996 (unaudited)             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



                                       2
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

                                                     SEPTEMBER 30,  DECEMBER 31,
                                                         1997            1996 
                                                     ------------   ------------
ASSETS                                               (Unaudited)              
Cash and cash equivalents                               $8,415          $6,076
Investment securities                                              
  Held-to-maturity                                       2,948           3,157
  Available for sale                                    12,641               0
  Trading                                                    -          16,736
Investment in FHLB stock, at cost                          875           1,360
Investment in FRB stock, at cost                            72               -
Loans receivable, net                                   96,448          81,270
Accrued interest receivable                                914             671
Real estate owned                                           65              51
Office properties and equipment, net                     5,956           4,946
Other assets                                             1,397           1,753
                                                      ---------       --------
      Total assets                                    $129,731        $116,020
                                                      =========       ========
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                               
LIABILITIES                                                        
Deposits:                                                          
  NOW/MMDA accounts                                    $13,261         $10,300
  Savings accounts                                       5,907           4,777
  Certificates of deposit                               88,954          66,324
                                                      ---------       --------
                                                       108,122          81,401
Bonds payable                                            2,464           2,706
Advances from Federal Home Loan Bank                     5,500          17,500
Securities sold under agreement to repurchase                -           6,681
Accrued interest payable                                    65              61
Payments by borrowers for taxes and insurance              278             106
Other liabilities                                        1,775             990
                                                      ---------       --------
      Total liabilities                                118,204         109,445
                                                      ---------       --------
                                                                  
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 and
  924,008 issued and outstanding                          1,877          1,155
Additional paid-in capital                                5,725          1,975
Net unrealized gain (loss) on securities                                      
  available for sale                                         19              -
Retained earnings                                         3,906          3,445
                                                       ---------      --------
      Total stockholders' equity                         11,527          6,575
                                                       ---------      --------
Total liabilities and stockholders' equity             $129,731       $116,020
                                                       =========      ========



                                       3
<PAGE>

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

                                                 Three Months Ended    Nine Months Ended
                                                    September 30,         September 30,
                                                 ------------------    ------------------
                                                   1997      1996        1997      1996  
                                                 --------  --------    --------  --------
                                                    (unaudited)            (unaudited)
<S>                                              <C>        <C>        <C>        <C>    
Interest income
  Loans                                          $ 1,950    $ 1,740    $ 5,472    $ 5,042
  Mortgage-backed securities                         133        283        927        673
  Other securities                                   368        136        611        407
  Trading account assets                              --         --         --          2
                                                 -------    -------    -------    -------
Total interest income                              2,451      2,159      7,010      6,124
                                                 -------    -------    -------    -------
                                                                                
Interest expense                                                                
  Deposits                                         1,320        968      3,541      2,688
  Borrowings                                         260        475        984      1,403
                                                 -------    -------    -------    -------
Total interest expense                             1,580      1,443      4,525      4,091
                                                 -------    -------    -------    -------
                                                                                
Net interest income                                  871        716      2,485      2,033
                                                                                
Provision for loan losses                             30         46         76         92
                                                 -------    -------    -------    -------
                                                                                
Net interest income after provision                                             
    for loan losses                                  841        670      2,409      1,941
                                                                                
Other income                                                                    
  Loan fees and servicing income                      92        149        319        406
  Gain (loss) on sale of loans and securities        395         68        471        159
  Gain on sale of purchased servicing                 --         --        117         --
  Service fees on checking                            39         25        160         69
  Other                                               53         32        138         83
                                                 -------    -------    -------    -------
Total other income                                   579        274      1,205        717
                                                 -------    -------    -------    -------
                                                                                
Other expenses                                                                  
  Personnel                                          424        294      1,219        818
  Occupancy                                          212         58        555        207
  Data processing                                    108         76        275        223
  Deposit insurance premiums                          30         54         86        143
  BIF/SAIF premium disparity assessment               --        347         --        347
  Other                                              239        166        559        438
                                                 -------    -------    -------    -------
Total other expenses                               1,013        995      2,694      2,176
                                                 -------    -------    -------    -------
                                                                                
Income (loss) before income taxes                    407        (51)       920        482
                                                 -------    -------    -------    -------
                                                                                
Provision (loss) for income taxes                    141        (18)       324        168
                                                 -------    -------    -------    -------
                                                                                
Net income (loss)                                $   266    $   (33)   $   596    $   314
                                                 =======    =======    =======    =======
                                                                                
Earnings (loss) per common share                 $  0.18    $ (0.04)   $  0.41    $  0.34
                                                 -------    -------    -------    -------
                                                                               
</TABLE>



                                       4
<PAGE>

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

                                                                           1997         1996
                                                                         --------     --------
                                                                              (unaudited)
<S>                                                                      <C>          <C>     
Operating Activities                                                     
  Net Income                                                             $    596     $    314
  Adjustments to reconcile net income to net cash provided  
    (absorbed) by operating activities:   
    Provision for loan losses                                                  76           92
    Depreciation and amortization                                             248           85
    Gain on sale of purchased servicing                                      (117)          --
    Proceeds from the sale of purchased servicing, net                        374           --
    Amortization of deferred loan fees                                         69           99
    Net amortization of premiums and accretion of discounts                    87           95
    Loss (gain) on sale of loans                                             (182)        (255)
    Originations of loans held for sale                                    (8,085)      (6,790)
    Proceeds from sale of loans                                             8,267        6,914
    Loss (gain) on sale of securities available for sale                     (310)         (23)
    (Gain) loss on trading securities                                           9          118
    Purchase of trading securities                                        (42,259)     (72,381)
    Sales of trading securities                                            42,250       72,263
    (Gain) loss on sale of real estate owned                                    2            1
    Other, net                                                                764          (97)
    Changes in:                                                                      
      Accrued interest receivable                                            (243)         (92)
      Other assets                                                            342          153
      Accrued interest payable                                                  4           (9)
      Prepayments by borrowers for taxes and insurance                        172          223
      Other liabilities                                                       785          239
                                                                         --------     --------
                                                                                     
Net cash provided (absorbed) by operating activities                        2,849          949
                                                                         --------     --------
                                                                                     
Investing activities                                                                 
  Net (increase) decrease in loans                                        (15,185)      (9,276)
  Mortgage-backed securities principal repayments                           1,039          740
  Proceeds from sale of securities available for sale                      37,165       10,620
  Purchase of securities available for sale                               (34,921)     (17,990)
  Redemption of FHLB stock                                                    485           43
  Purchase of FRB stock                                                       (72)          --
  Purchases of office properties and equipment                             (1,258)      (2,497)
                                                                         --------     --------
                                                                                     
Net cash provided (absorbed) by investing activities                      (12,747)     (18,360)
                                                                         --------     --------
</TABLE>



                                       5
<PAGE>

                         GUARANTY FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
<TABLE>
<CAPTION>

                                                                           1997         1996
                                                                         --------     --------
                                                                              (unaudited)
<S>                                                                      <C>         <C>   
Financing activities
  Net increase (decrease) in deposits                                      26,721      19,289
  Proceeds from FHLB advances                                               3,500       5,000
  Repayment of FHLB advances                                              (15,500)     (8,550)
  Increase (decrease) in securities sold under agreement to repurchase     (6,681)      2,920
  Proceeds from the issuance of common stock, net                           4,472          --
  Principal payments on bonds payable, including unapplied payments          (275)       (604)
                                                                         --------    --------

Net cash provided (absorbed) by financing activities                       12,237      18,055
                                                                         --------    --------

Increase (decrease) in cash and cash equivalents                            2,339         644
                                                                         --------    --------

Cash and cash equivalents, beginning of period                              6,076       5,836
                                                                         --------    --------

Cash and cash equivalents, end of period                                 $  8,415    $  6,480
                                                                         ========    ========
</TABLE>


Supplemental Disclosure of Non-cash Investing Activities:

On January 1, 1997,  securities  with a carrying  value of  approximately  $15.8
million were  transferred  from the trading  account to the  available  for sale
account.



                                       6
<PAGE>



                         GUARANTY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Nine Months ended September 30, 1997 and 1996



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  and other  non-traditional  products.  All  material
intercompany accounts and transactions have been eliminated in consolidation.

Note 2  Basis of Presentation

In the opinion of management,  the accompanying  unaudited interim  consolidated
financial  statements  contain  all  adjustments   (consisting  only  of  normal
recurring  accruals)  necessary to present  fairly the financial  position as of
September 30, 1997 and 1996 and the results of operations and cash flows for the
interim periods ending September 30, 1997 and 1996. All 1997 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


Charter Conversion

Effective  the close of business on June 30, 1997,  Guaranty  Bank,  the primary
operating  subsidiary of the Corporation,  received final regulatory approval to
convert from a federally-chartered  savings association to a Virginia-chartered,
federal reserve member commercial bank. Management believes that operating under
a commercial  bank charter will better suit the Bank's  business  plan than will
the federal savings association charter.


New Branch Site

On  October  21,  1997,  Guaranty  Bank  received  approval  from the  Bureau of
Financial  Institutions  for the State of Virginia to  establish a branch at the
Lake Monticello Plaza in Fluvanna County, Virginia.


Changes in Financial Condition

Deposit  growth  during  the  nine  months  ended  September  30,  1997  and the
completion  of a secondary  offering  of common  stock in January  1997  enabled
Guaranty to increase assets.  Total assets increased by $13.7 million, or 11.8%,
from $116.0  million at December  31, 1996 to $129.7  million at  September  30,
1997. This deposit growth - all local funds - was used to reduce borrowings with
the  remaining  amounts  primarily  invested in loans and cash at September  30,
1997.

Cash and cash equivalents  increased $2.3 million,  or 37.7%, to $8.4 million at
September 30, 1997 from $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  loans,  the sale of loans and the  completion  of a
secondary offering of the Corporation's  common stock in January 1997.  Proceeds
to the Corporation from the offering (net of offering  expenses of approximately
$280,000) were approximately $4.4 million.

Investment securities,  at September 30, 1997, decreased $4.4 million, or 22.1%,
to $15.5  million from $19.9  million at December 31,  1996.  This  decrease was
primarily a result of principal repayments on mortgage-backed securities and the
sale of securities to fund loan  closings and the general  operational  needs of
the Corporation. In addition, to reduce the Corporation's exposure to prepayment
risk on mortgage-backed  securities,  the Corporation restructured its available
for sale portfolio into corporate bonds from  mortgage-backed  securities during
the quarter ended September 30, 1997.

Due to a mandatory  stock  redemption in March 1997,  investment in Federal Home
Loan  Bank  stock,  a  restricted  security  recorded  at cost,  decreased  $485
thousand,  or 35.6%,  from $1.4 million at December 31, 1996 to $875 thousand at
September 30, 1997.

The loan portfolio  consists  primarily of mortgage loans, the majority of which
are  residential  first  mortgage  loans.  Of the $97.5  million of gross  loans
outstanding at September 30, 1997,  approximately  69.1%  represent  residential
first mortgages. Net loans were $96.4 million at September 30, 1997, an increase
of $15.1  million,  or 18.6%,  from net loans of $81.3  million at December  31,
1996. This increase was primarily a result of increased loan originations due to
the general growth and expansion of the existing  branch network during the past
nine months,  market  demand and the expanded  commercial  and consumer  lending
programs which were



                                       8
<PAGE>

started in 1996. Increased  originations were partially offset by scheduled loan
payments and the sale of approximately $8.1 million of fixed rate mortgage loans
at a gain of $182 thousand.

Real estate owned of $51 thousand at December 31, 1996 was sold during the first
quarter of 1997 at a loss of approximately $1 thousand.  Other real estate owned
at September  30, 1997 of  approximately  $65  thousand  consisted of one single
family residence acquired through foreclosure.

Deposits  increased by $26.7 million,  or 32.8%,  between  December 31, 1996 and
September 30, 1997. The majority of the growth was in  certificates  of deposit,
which increased $22.6 million, or 34.1%. This growth,  comprised solely of local
funds, is a reflection of continued marketing and the opening of a new branch on
the east side of Charlottesville  in December 1996 and in Harrisonburg  Virginia
in May 1997.  Management has recently  instituted  expanded  programs to attract
commercial  checking accounts and other retail demand deposit accounts to reduce
the  Corporation's  reliance  on time  deposits,  which  were  used as a primary
funding source when the bank operated as a savings and loan.  However,  there is
no assurance  that these  programs  will be successful  or if  successful,  will
reduce the Corporation's reliance on time deposits as a source of funds.

Office properties and equipment increased $1.1 million, or 22.4%, since December
31, 1996.  This increase was primarily due to the completion of the fifth retail
branch office, which is located in Harrisonburg,  Virginia,  and improvements to
the previously leased RIO Road branch and office building which was purchased in
June 1996.  All available  space within the RIO Road building was leased at June
30, 1997. The Harrisonburg branch opened to the public in May 1997.

Due to increased  liquidity resulting from increased deposits and the completion
of a secondary  offering of common  stock,  management  reduced the  reliance on
other borrowed funds during the nine months ended  September 30, 1997.  Advances
from Federal Home Loan Bank decreased $12.0 million,  or 68.6%, due to scheduled
maturities  and early  prepayment  of FHLB advances  which  resulted in one time
prepayment  penalties of approximately  $45 thousand which are included in other
expenses in the  consolidated  financial  statements.  No securities  sold under
agreements to repurchase  were  outstanding  at September 30, 1997,  compared to
$6.6 million at December 31, 1996.


Results of Operations

Net Income

Guaranty  reported  net  income of $266  thousand,  or $.18 per  share,  for the
quarter ended September 30, 1997 compared to a loss of $33 thousand, or $.04 per
share,  for the same period in 1996.  This  increase  was  primarily a result of
improved  net  interest  margin  and  increased  gains on the sale of loans  and
securities resulting from a favorable interest rate environment during the first
nine  months  of  1997.  In  addition,  Guaranty  incurred  a  one-time  special
assessment of  approximately  $347 thousand to recapitalize  the SAIF during the
third quarter of 1996. Net income was $596 thousand,  or $.41 per share, for the
nine months ended September 30, 1997, up 90% from the $314 thousand, or $.34 per
share,  earned  during the same period in 1996.  This  increase was  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 the
opening of the  Harrisonburg  branch in May 1997 and one-time  costs  associated
with the  conversion  from a  federally  chartered  savings  and loan to a state
chartered bank effective the close of business on June 30, 1997.



                                       9
<PAGE>

Net Interest Income

Net interest income  increased by $155 thousand,  or 21.6%, to $871 thousand for
the three months ended  September  30, 1997,  compared to $716  thousand for the
same period in 1996. Net interest income  increased by $452 thousand,  or 22.2%,
to $2.49 million for the nine months ended  September 30, 1997 compared to $2.03
million in the same period in 1996.  Average  earning assets  increased by $15.3
million to $117.1 million for the nine months ended September 30, 1997, compared
to an  increase of $13.6  million to $99.1  million for the same period in 1996.
The average rate earned  decreased to 7.99% for the nine months ended  September
30, 1997 from 8.71%  during the same period in 1996.  Average  interest  bearing
liabilities  increased  by $13.9  million to $114.1  million for the nine months
ended  September  30, 1997  compared  to an  increase of $10.2  million to $95.7
million  for the same  period in 1996.  The  average  cost of  interest  bearing
liabilities decreased to 5.29% for the nine months ended September 30, 1997 from
6.03%  during the same period in 1996.  Interest  rate  spread and net  interest
margin for the nine month periods ending  September 30, 1997 and 1996 were 2.70%
and 2.83%,  and 2.69% and 2.89%,  respectively.  The increase in average earning
assets was  primarily  attributed  to loan growth  while the increase in average
interest bearing deposits was primarily attributed to growth in time deposits.

Management  expects the net  interest  margin to improve over the next twelve to
twenty four months as the expanded  commercial  and consumer  lending  programs,
which were begun in 1996,  begin to impact the balance  sheet and  statement  of
operations. In addition, all newly originated fixed-rate mortgage loans are sold
in the secondary  market.  Also,  management has recently  implemented  expanded
programs to attract commercial  checking account and other retail demand deposit
accounts to reduce the Corporation's  reliance on non core time deposits,  which
were used as a primary  funding  source when the bank  operated as a savings and
loan.  However,  there is no assurance that these programs will be successful or
if  successful,  will reduce the  Corporation's  reliance on time deposits as of
source of funds.


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 $30 thousand for the
three months ended  September 30, 1997,  compared to a provision of $46 thousand
for the same period in 1996. For the nine month periods ended September 30, 1997
and 1996,  Guaranty  recorded a  provision  of $76  thousand  and $92  thousand,
respectively.  As of September  30, 1997,  the total  allowance  for loan losses
amounted to $902 thousand, or .9% of gross loans outstanding.


Non-Interest Income

Non-interest income increased $305 thousand, or 111.3%, to $579 thousand for the
three months ended  September 30, 1997 from $274 thousand for the same period in
1996.  Non-interest income increased by $488 thousand, or 68.1%, to $1.2 million
for the nine month period ended September 30, 1997 from $717 for the same period
in 1996. The primary reason for the increase in both periods was increased gains
on the sale of loans and  securities  as a result of a favorable  interest  rate
environment  during the third  quarter  of 1997.  Gains on the sale of loans and
securities  increased  $312 thousand,  or 196.2%,  to $471 thousand for the nine
month period ended  September 30, 1997 from $159 thousand for the same period in
1996. In addition,  during June 1997, the Corporation recorded a gain of $117 on
the sale of purchased  servicing relating to loans secured by property which was
outside of the Bank's principal market area.



                                       10
<PAGE>

Non-Interest Expense

Non-interest  expense increased $18 thousand,  or 1.8%, to $1.01 million for the
nine months  ended  September  30, 1997  compared to $995  thousand for the same
period in 1996.  Non-interest expense increased $518 thousand, or 23.8%, to $2.7
million for the nine months ended  September  30, 1997  compared to $2.2 million
for the same period in 1996.  Excluding the one time charge to recapitalize  the
SAIF during 1996,  increases in both  periods  were  primarily  due to increased
costs  directly  related  to the  opening of a  combined  branch  and  corporate
headquarters on the east side in  Charlottesville  in December 1996, the opening
of the  Harrisonburg  branch in May 1997, and one time costs associated with the
successful conversion to a state bank effective June 30, 1997.


Income Tax Expense

Guaranty  recognized  income tax expense of $141  thousand  for the three months
ended September 30, 1997,  compared to an income tax benefit of $51 thousand for
the same period in 1996. Guaranty recognized income tax expense of $324 thousand
for the nine months ended September 30, 1997,  compared to $168 thousand for the
same  period in 1996.  Changes in tax  expense  between  periods is  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 and
time deposits as a source of funds.

In January 1997, the  Corporation  completed a secondary  offering of its common
stock. Net proceeds to the Corporation from the offering were approximately $4.4
million.

On September 25, 1997,  Guaranty declared a quarterly dividend of $.03 per share
payable on November 1, 1997 to holders of record as of October 15, 1997.

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, 1997,  the total  approved loan  commitments  outstanding  amounted to $14.7
million. At the same date,  commitments under unused lines of credit amounted to
$8.2 million. Certificates of deposit scheduled to mature in one year or less at
September 30, 1997 totaled $76.3 million. Management believes that a significant
portion of maturing deposits will remain with Guaranty.



                                       11
<PAGE>

At September 30, 1997, Guaranty exceeded all regulatory capital  requirements as
shown in the following table.


                                              Regulatory Requirement
                                           ----------------------------
                                              Well        Adequately
(Dollars in thousands)           Actual    Capitalized    Capitalized
                               ----------------------------------------
                                
Tier 1 Risk Based Capital        13.56%       6.00%          4.00%
Total Risk Based Capital         14.62%      10.00%          8.00%
Tier 1 Leverage Ratio:            9.38%       5.00%          4.00%
                                    



                                       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

            (a)   Exhibits - None

            (b)   Reports - 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: November 10, 1997                 By: /s/ Thomas P. Baker
                                           ----------------------------
                                           Thomas P. Baker
                                           President and Chief Executive Officer



Date: November 10, 1997                 By: /s/ Vincent B. McNelley
                                           ----------------------------
                                           Vincent B. McNelley
                                           Senior Vice President and 
                                           Chief Financial Officer




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