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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002.

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ____________

COMMISSION FILE NUMBER: 000-24235

GUARANTY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)


TEXAS
(State or other jurisdiction of
incorporation or organization) 		75-16516431
(I.R.S. Employer
Identification No.)

100 W. ARKANSAS
MT. PLEASANT, TEXAS 75455
(Address of principal executive offices, including zip code)

903-572-9881
(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 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.
|X| Yes    |_| No

As of August 12, 2002, there were 2,996,428 shares of the registrant’s Common Stock, par value $1.00 per share, outstanding.

GUARANTY BANCSHARES, INC.
INDEX TO FORM 10-Q


PART I - FINANCIAL INFORMATION   Page

  Item 1.   Financial Statements    
      Consolidated Balance Sheets   3
      Consolidated Statements of Earnings   4
      Condensed Consolidated Statements of Changes in Shareholders’ Equity   5
      Condensed Consolidated Statements of Cash Flows   6
      Consolidated Statements of Comprehensive Income   7
      Notes to Consolidated Financial Statements   8
  Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   12
  Item 3.   Quantitative and Qualitative Disclosures about Market Risk   23

PART II - OTHER INFORMATION    

  Item 1.   Legal Proceedings   24
  Item 2.   Changes in Securities and Use of Proceeds   24
  Item 3.   Defaults upon Senior Securities   24
  Item 4.   Submission of Matters to a Vote of Security Holders   24
  Item 5.   Other Information   24
  Item 6.   Exhibits and Reports on Form 8-K   24
  Signatures   25

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


  June 30,
2002
  December 31,
2001
 
  (Unaudited)      
ASSETS
               
Cash and cash equivalents     $ 10,305   $ 15,410  
Federal funds sold       12,775     4,395  
Securities available-for-sale       94,707     81,715  
Loans, net of allowance for loan losses of $3,576 and $3,346       344,387     327,909  
Premises and equipment, net       13,386     13,616  
Other real estate       1,896     562  
Accrued interest receivable       3,053     3,167  
Goodwill       2,338     2,338  
Other assets       8,699     11,397  
 
 
 
      Total assets     $ 491,546   $ 460,509  
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Liabilities    
   Deposits:    
      Noninterest-bearing     $ 67,755   $ 63,726  
      Interest-bearing       335,012     319,553  
 
 
 
         Total deposits       402,767     383,279  
FHLB advances       42,930     33,092  
Long-term debt       7,000     7,000  
Other liabilities       5,103     5,311  
 
 
 
         Total liabilities       457,800     428,682  
 
 
 
Shareholders’ equity:    
   Preferred stock, $5.00 par value, 15,000,000 shares authorized,    
         no shares issued       —     —  
   Common stock, $1.00 par value, 50,000,000 shares authorized,    
         3,252,016 issued at June 31, 2002 and    
            3,250,016 at December 31, 2001       3,252     3,250  
   Additional capital       12,676     12,659  
   Retained earnings       19,348     17,723  
   Treasury stock, 255,588 and 245,588 shares at cost       (2,783 )   (2,653 )
   Accumulated other comprehensive income       1,253     848  
 
 
 
   Total shareholders’ equity       33,746     31,827  
 
 
 
   Total liabilities and shareholders’ equity     $ 491,546   $ 460,509  
 
 
 

See accompanying Notes to Consolidated Financial Statements.

3

GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)


  Three Months Ended
June 30, 		  Six Months Ended
June 30, 		 
  2002
  2001
  2002
  2001
 
Interest income:                    
   Loans     $ 5,935   $ 6,129   $ 11,878   $ 12,339  
   Securities       1,203     1,130     2,291     2,267  
   Federal funds sold and other temporary investments       56     234     105     503  
 
 
 
 
 
      Total interest income       7,194     7,493     14,274     15,109  
Interest expense:    
   Deposits       2,514     3,983     5,134     8,120  
   FHLB advances and other borrowed funds       585     290     1,105     653  
 
 
 
 
 
      Total interest expense       3,099     4,273     6,239     8,773  
 
 
 
 
 
      Net interest income       4,095     3,220     8,035     6,336  
Provision for loan losses       450     185     700     340  
 
 
 
 
 
      Net interest income after provision for loan losses       3,645     3,035     7,335     5,996  
Noninterest income:    
   Service charges       761     687     1,405     1,305  
   Other operating income       434     354     787     728  
   Realized gain on available-for-sale securities       280     51     317     317  
 
 
 
 
 
      Total noninterest income       1,475     1,092     2,509     2,350  
Noninterest expense:    
   Employee compensation and benefits       2,107     1,790     4,214     3,710  
   Occupancy expenses       486     460     960     924  
   Other operating expenses       981     957     1,890     1,838  
 
 
 
 
 
      Total noninterest expenses       3,574     3,207     7,064     6,472  
 
 
 
 
 
      Earnings before income taxes       1,546     920     2,780     1,874  
Provision for income taxes       453     197     705     413  
 
 
 
 
 
      Net earnings     $ 1,093   $ 723   $ 2,075   $ 1,461  
 
 
 
 
 
      Basic earnings per common share     $ 0.36   $ 0.24   $ 0.69   $ 0.48  
 
 
 
 
 
      Diluted earnings per common share     $ 0.36   $ 0.24   $ 0.69   $ 0.48  
 
 
 
 
 

See accompanying Notes to Consolidated Financial Statements.

4

GUARANTY BANCHSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS’ EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)


  Three Months Ended
June 30, 		  Six Months Ended
June 30, 		 
  2002
  2001
  2002
  2001
 
Balance at beginning of period     $ 32,568   $ 30,457   $ 31,827   $ 29,425  
Net income       1,093     723     2,075     1,461  
Cash dividends declared on common stock       (450 )   (391 )   (450 )   (391 )
Purchases of treasury stock       —     (246 )   (130 )   (411 )
Proceeds from stock option exercises       19     —     19     —  
Change in accumulated other comprehensive income, net of tax       516     (41 )   405     418  
 
 
 
 
 
Balance at end of period     $ 33,746   $ 30,502   $ 33,746   $ 30,502  
 
 
 
 
 

See accompanying Notes to Consolidated Financial Statements.

5

GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)


  Six Months
Ended June 30,
 
  2002
  2001
 
Net cash from operating activities     $ 4,823   $ 2,428  
 
Cash flows from investing activities:    
   Securities available for sale:    
      Purchases       (47,239 )   (22,229 )
      Sales       19,629     18,368  
      Maturities, calls, and principal repayments       15,284     14,135  
   Net increase in loans       (19,194 )   (13,685 )
   Purchases of premises and equipment       (269 )   (537 )
   Proceeds from sale of other real estate       1,476     376  
   Net change in federal funds sold       (8,380 )   (14,475 )
 
 
 
      Net cash from investing activities       (38,693 )   (18,047 )
Cash flows from financing activities:    
   Net change in deposits       19,488     22,634  
   Net change in short-term FHLB advances       9,838     (7,000 )
   Repayment of long-term FHLB advances       —     (154 )
   Stock options exercised       19     —  
   Purchase of treasury stock       (130 )   (411 )
   Dividends paid       (450 )   (391 )
 
 
 
      Net cash from financing activities       28,765     14,678  
 
 
 
      Net change in cash and cash equivalents       (5,105 )   (941 )
Cash and cash equivalents at beginning of perio