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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 SEPTEMBER 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 file 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 November 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 - Unaudited    
    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   11
Item 3.   Quantitative and Qualitative Disclosures about Market Risk   23
Item 4.   Controls and Procedures   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 PAR VALUE)


  September 30,
2002
  December 31,
2001
 
  (Unaudited)      
ASSETS
               
Cash and cash equivalents     $ 17,013   $ 15,410  
Federal funds sold       25,655     4,395  
Securities available-for-sale       96,958     81,715  
Loans, net of allowance for loan losses of $3,632 and $3,346       347,775     327,909  
Premises and equipment, net       13,333     13,616  
Other real estate       889     562  
Accrued interest receivable       2,872     3,167  
Goodwill       2,338     2,338  
Other assets       9,002     11,397  
 
 
 
       Total assets     $ 515,835   $ 460,509  
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Liabilities    
   Deposits:    
       Noninterest-bearing     $ 66,646   $ 63,726  
       Interest-bearing deposits       349,239     319,553  
 
 
 
          Total deposits       415,885     383,279  
   FHLB advances       52,847     33,092  
   Long-term debt       7,000     7,000  
   Other liabilites       5,119     5,311  
 
 
 
          Total liabilities       480,851     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 and 3,250,016 shares issued       3,252     3,250  
   Additional capital       12,676     12,659  
   Retained earnings       20,440     17,723  
   Treasury stock, 255,588 and 245,588 shares, at cost       (2,783 )   (2,653 )
   Accumulated other comprehensive income       1,399     848  
 
 
 
       Total shareholders’ equity       34,984     31,827  
 
 
 
       Total liabilities and shareholders’ equity     $ 515,835   $ 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
September 30, 		  Nine Months Ended
September 30, 		 
  2002
  2001
  2002
  2001
 
Interest income:                    
   Loans     $ 6,069   $ 6,263   $ 17,947   $ 18,602  
   Securities       1,229     1,209     3,520     3,476  
   Federal funds sold and other temporary investments       59     50     164     553  
 
 
 
 
 
       Total interest income       7,357     7,522     21,631     22,631  
Interest expense:    
   Deposits       2,408     3,688     7,542     11,808  
   FHLB advances and other borrowed funds       653     336     1,758     989  
 
 
 
 
 
       Total interest expense       3,061     4,024     9,300     12,797  
 
 
 
 
 
       Net interest income       4,296     3,498     12,331     9,834  
Provision for loan losses       335     341     1,035     681  
 
 
 
 
 
       Net interest income after provision for loan losses       3,961     3,157     11,296     9,153  
Noninterest income:    
   Service charges and fees       1,014     682     2,791     1,986  
   Other operating income       166     471     581     1,199  
   Realized gain on available-for-sale securities       47     94     364     411  
 
 
 
 
 
       Total noninterest income       1,227     1,247     3,736     3,596  
 
 
 
 
 
Noninterest expense:    
   Employee compensation and benefits       2,140     1,933     6,354     5,643  
   Occupancy expenses       490     479     1,450     1,402  
   Other operating expenses       1,053     934     2,943     2,772  
 
 
 
 
 
       Total noninterest expenses       3,683     3,346     10,747     9,817  
 
 
 
 
 
       Earnings before income taxes       1,505     1,058     4,285     2,932  
Provision for income taxes       413     239     1,118     652  
 
 
 
 
 
       Net earnings     $ 1,092   $ 819   $ 3,167   $ 2,280  
 
 
 
 
 
       Basic earnings per common share     $ 0.36   $ 0.27   $ 1.06   $ 0.76  
 
 
 
 
 
       Diluted earnings per common share     $ 0.36   $ 0.27   $ 1.05   $ 0.76  
 
 
 
 
 

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
September 30,
  Six Months Ended
September 30,
 
  2002
  2001
  2002
  2001
 
Balance at beginning of period     $ 33,746   $ 30,502   $ 31,827   $ 29,425  
Net income       1,092     819     3,167     2,280  
Proceeds from stock options exercised       —     —     19     —  
Cash dividends declared on common stock       —     —     (450 )   (391 )
Purchases of treasury stock       —     (20 )   (130 )   (431 )
Change in accumulated other    
   comprehensive income, net of tax       146     403     551     821  
 
 
 
 
 
Balance at end of period     $ 34,984   $ 31,704   $ 34,984   $ 31,704  
 
 
 
 
 

See accompanying Notes to Consolidated Financial Statements.

5

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


<
  Nine Months
Ended September 30,
 
  2002
  2001
 
Net cash from operating activities     $ 6,115   $ 2,614  
 
 
 
Cash flows from investing activities:    
   Securities available for sale:    
       Purchases       (64,831 )   (47,981 )
       Sales       28,013     23,325  
       Maturities, calls, and principal repayments       23,355     18,556  
   Net increase in loans       (24,068 )   (32,052 )
   Purchases of premises and equipment       (462 )   (746 )
   Proceeds from sale of other real estate       2,941     651  
   Net change in federal funds sold       (21,260 )   4,995  
 
 
 
       Net cash from investing activities       (56,312 )   (33,252 )
 
 
 
Cash flows from financing activities:    
   Net change in deposits       32,606     17,728  
   Net change in short-term FHLB advances       (245 )   (9,000 )
   Net change in long-term FHLB advances       20,000     19,768  
   Net change in federal funds purchased       —     2,540  
   Stock options exercised       19     —  
   Purchase of treasury stock       (130 )   (431 )
   Dividends paid       (450 )   (391 )
 
 
 
       Net cash from financing activities       51,800     30,214  
 
 
 
       Net change in cash and cash equivalents       1,603     (424 )
Cash and cash equivalents at beginning of period       15,410     10,212  
 
 
 
Cash and cash equivalents at end of period     $ 17,013   $ 9,788  
 
 
 
Supplemental disclosures:    
   Cash paid for income taxes     $ 1,320   $ —  
   Cash paid for interest       9,558     13,043