Guaranty Financial 8-K Guaranty Financial Group Inc. Reports First Quarter 2008 Results

Exhibit 99.1

DRAFT 4/25/08

NEWS
RELEASE                                                                                                                                                                                    

FOR IMMEDIATE RELEASE
CONTACT:	Rusty LaForge
	SVP, Director of Investor Relations
	(214) 360-1967

GUARANTY FINANCIAL GROUP INC. REPORTS
FIRST QUARTER 2008 RESULTS

AUSTIN, TEXAS, April 29, 2008—Guaranty Financial Group Inc. (NYSE: GFG) (“Guaranty”) today reported a net loss of $10 million or $0.28 loss per share for the first quarter 2008 compared to $27 million net income for the first quarter 2007. Results include $60 million higher provision for credit loss in first quarter 2008 compared to first quarter 2007.

“While we remain excited about completing our first quarter as an independent publicly-traded company, it coincided with one of the most difficult times for our industry,” said Ken Dubuque, Guaranty’s President and Chief Executive Officer. “Our employees, management, and board of directors are focused on near-term strategies related to credit, costs and capital, which will lead us through these challenging times until we can further our long-term growth strategy, which we discussed at the end of the last quarter. As the second largest publicly-traded financial institution holding company headquartered in Texas, Guaranty is positioned well to execute this strategy.”

Net interest income was $98 million for the first quarter 2008, an increase of 3% from the first quarter 2007, principally as a result of growth in the commercial loan portfolio. Net interest margin for the first quarter 2008 was 2.49% compared to 2.56% for the first quarter 2007, remaining relatively stable despite significant recent movements in short-term market rates and shifts in the yield curve.

Provision for credit losses was $58 million for the first quarter 2008 compared to a $2 million credit for net recoveries for the first quarter 2007. The higher provision for credit losses was principally a result of continued weakness in single-family construction markets, particularly in northern and central California. Ron Murff, Guaranty’s Chief Financial Officer, added: “Market conditions certainly continued to deteriorate in first quarter 2008. We experienced continued increases in non-performing loans in the first quarter, principally out of our homebuilder portfolio. We have increased our allowance for loan losses from $71 million at March 31, 2007 to $172 million at March 31, 2008, which increased our allowance as a percentage of total loans from ..74% to 1.67% during that same period. However, during that time frame of increasing reserves by more than $100 million, actual net charge-offs were only $7 million. While we do not anticipate a recovery of the housing market in the near term, we believe that at this time we are appropriately reserved.”

Noninterest income was $42 million for the first quarter 2008, an increase of 8% from the first quarter 2007, principally as a result of increased fixed annuity sales commissions, and increased fees and service charges on deposits. Insurance commissions and fees including fixed annuity sales were $19 million for the first quarter 2008, an increase of 19% from the first quarter 2007. Service charges on deposits increased 8% to $13 million in the first quarter 2008 from $12 million in the first quarter 2007.

Noninterest expense was $99 million for the first quarter 2008, an increase of 6% from the first quarter 2007. A significant portion of this increase related to increased costs associated with operating as a stand-alone company following the late 2007 spin-off from Temple-Inland Inc.

Guaranty undertook an efficiency review during the first quarter 2008, which resulted in the elimination of 135 jobs. “We conducted a complete review of the company and identified several areas in which the company could operate more efficiently without affecting the premium level of service that we provide to customers,” said Mr. Robert Greenwood, Guaranty’s Chief Administrative Officer. “In addition to reducing our total work force by more than 5%, we are implementing other improvements in efficiency and productivity. As a newly independent public company, and in light of the difficult economic environment, the need to be as lean as possible is even more important today.”

Loans net of allowance increased from $9.6 billion at March 31, 2007 to $10.1 billion at March 31, 2008. “The strong and growing commercial lending portfolios continue to offset run-off in the single-family mortgage portfolio as well as the declining homebuilder loan portfolio,” noted Mr. Kevin Hanigan, Guaranty’s Chief Banking Officer. “Our decision to exit the retail mortgage banking business in 2004 and 2005 has allowed Guaranty to avoid some of the issues facing other financial institutions in this environment, but we also have our own challenges. As a part of the internal reorganization completed during the first quarter, we have a group of experienced lenders focused on homebuilder and other loans that need special attention, and they are aggressively identifying emerging problem loans early so that we can minimize losses.”

The carrying value of the investment portfolio decreased from $5.5 billion at December 31, 2007 to $4.9 billion at March 31, 2008. Approximately $419 million of this decline was a result of unrealized losses within securities categorized as available-for-sale, and the remaining approximately $200 million decline was a result of principal reduction and payoffs. This portfolio consists of agency and non-agency mortgage-backed securities, none of which are secured by sub-prime collateral, all of which remain triple-A rated, with significant levels of subordination as credit enhancement. Guaranty has not purchased and does not hold any non-agency securities that rely on support from bond insurers. Securities market conditions weakened considerably in the first quarter, and the unrealized losses on the entire portfolio of securities increased to nearly $1.1 billion, none of which were considered other than temporary impairments or recognized in earnings.

Total deposits decreased slightly from $9.4 billion at December 31, 2007 to $9.2 billion at March 31, 2008. Guaranty Bank gathers deposits from its commercial customers and through its network of approximately 160 branches located in Texas and California. Total non-deposit investment product sales for the first quarter 2008 increased by more than 50% over the first quarter 2007, to $190 million for the quarter, principally as a result of cross-selling efforts directed at withdrawing depositors.

Guaranty will host a conference call at 2:00 p.m. Eastern Time (1:00 p.m. Central Time) on April 29, 2008, to discuss financial results for first quarter 2008. The meeting may be accessed through webcast or by conference call. The webcast may be accessed through Guaranty’s Internet site at www.guarantygroup.com. To access the conference call, listeners calling from the United States should dial 1-866-700-5192 at least 15 minutes prior to the start of the call. Those wishing to access the call from outside the United States should dial 1-617-213-8833. The passcode is 64974351. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-888-286-8010 in the United States and at 1-617-801-6888 outside the United States. The passcode for the replay is 16393614.

Guaranty Financial Group Inc. is the second largest publicly-traded financial institution holding company headquartered in Texas and one of the 50 largest publicly-traded financial institution holding companies based in the U.S. ranked by asset size. Guaranty Financial Group operates Guaranty Bank, which engages in consumer and business banking activities through a network of more than 150 banking centers in Texas and California. Guaranty Bank also provides financing to middle market companies, independent energy producers, and the real estate industry. Additionally, Guaranty Bank operates an insurance agency, Guaranty Insurance Services, Inc.

Some statements made in this news release [and any hyperlinked materials] may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipate,” “could,” “estimate,” “likely,” “intent,” “may,” “plan,” “expect,” and similar expressions, including references to assumptions or our plans and goals. Readers should not place undue reliance on these forward-

looking statements. These forward-looking statements involve risks and uncertainties. Guaranty’s actual results or performance may differ materially from those suggested, expressed, or implied by forward-looking statements due to a wide range of factors including, but not limited to: general economic, market, or business conditions; demand for new housing; competitive actions by other companies; changes in laws or regulations and actions or restrictions of regulatory agencies; deposit attrition, customer loss, or revenue loss in the ordinary course of business; cost or difficulties related to becoming a stand-alone public company; the inability to realize elements of our strategic plans; changes in the interest rate environment that expand or reduce margins or adversely affect critical estimates and projected returns on investments; economic conditions affecting real estate values and oil and gas prices and changes in market and/or general economic conditions, either nationally or regionally, that are less favorable than expected; natural disasters in primary market areas that may result in prolonged business disruption or materially impair the value of collateral securing loans; assumptions and estimates underlying critical accounting policies, particularly allowance for credit losses, may prove to be materially incorrect or may not be borne out by subsequent events; current or future litigation, regulatory investigations, proceedings or inquiries; strategies to manage interest rate risk may yield results other than those anticipated; a significant change in the rate of inflation or deflation; changes in the securities markets; the ability to complete merger, acquisition or divestiture plans; regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of our business following a merger, acquisition or divestiture; the final resolutions or outcomes with respect to our contingent and other corporate liabilities related to our business and any related actions for indemnification made pursuant to the separation and distribution agreement between us and Temple-Inland Inc.

Other risks are detailed in our Annual Report on Form 10-K for the year ended December 31, 2007 and other reports filed with the Securities and Exchange Commission. Readers may access our reports filed with the Securities and Exchange Commission atwww.sec.gov. Guaranty disclaims any obligation to subsequently revise or update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

GUARANTY FINANCIAL GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2008			2007			2007			2007			2007
	(In millions, except per share)
INTEREST INCOME
Loans and loans held for sale	$	151		$	173		$	179		$	175		$	171
Securities available-for-sale		27			28			16			10			8
Securities held-to-maturity		47			50			53			57			60
Federal Home Loan Bank stock dividends		3			3			2			3			4
Other earning assets		—			1			1			2			—
Total interest income		228			255			251			247			243
INTEREST EXPENSE
Deposits		(76	)		(84	)		(88	)		(86	)		(83	)
Borrowed funds		(54	)		(69	)		(64	)		(66	)		(65	)
Total interest expense		(130	)		(153	)		(152	)		(152	)		(148	)
NET INTEREST INCOME		98			102			99			95			95
(Provision) credit for credit losses		(58	)		(33	)		(19	)		—			2
NET INTEREST INCOME AFTER (PROVISION) CREDIT FOR CREDIT LOSSES		40			69			80			95			97
NONINTEREST INCOME
Insurance commissions and fees		19			18			18			16			16
Service charges on deposits		13			14			14			13			12
Operating lease income		2			2			1			2			2
Other		8			4			9			7			9
Total noninterest income		42			38			42			38			39
NONINTEREST EXPENSE
Compensation and benefits		(51	)		(45	)		(45	)		(43	)		(48	)
Occupancy		(8	)		(8	)		(7	)		(7	)		(6	)
Information systems and technology		(5	)		(3	)		(4	)		(4	)		(3	)
Other		(35	)		(39	)		(34	)		(40	)		(36	)
Total noninterest expense		(99	)		(95	)		(90	)		(94	)		(93	)
(LOSS) INCOME BEFORE TAXES		(17	)		12			32			39			43
Income tax benefit (expense)		7			(6	)		(11	)		(15	)		(16	)
NET (LOSS) INCOME	$	(10	)	$	6		$	21		$	24		$	27
(LOSS) EARNINGS PER SHARE:
Basic	$	(0.28	)	$	0.17			n/a			n/a			n/a
Diluted	$	(0.28	)	$	0.17			n/a			n/a			n/a
AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic		35.5			35.4			n/a			n/a			n/a
Diluted		35.5			36.1			n/a			n/a			n/a

GUARANTY FINANCIAL GROUP INC.

CONSOLIDATED BALANCE SHEETS (unaudited)

	March 31,			December 31,			September 30,			June 30,		March 31,
	2008			2007			2007			2007		2007
	(In millions)
ASSETS
Cash and cash equivalents	$	181		$	277		$	197		$	286	$	208
Restricted cash		105			107			—			—		—
Loans held for sale		12			16			19			20		23
Loans, net of allowance for losses		10,099			9,928			9,561			9,470		9,575
Securities available-for-sale		1,487			1,882			1,970			888		502
Securities held-to-maturity		3,440			3,642			3,851			4,192		4,608
Investment in Federal Home Loan Bank stock		251			256			224			211		208
Property and equipment, net		234			233			222			222		224
Accounts, notes, and accrued interest receivable		90			97			107			103		107
Goodwill		144			144			144			141		141
Other intangible assets		25			26			27			23		25
Deferred income taxes		222			72			43			34		29
Other assets		133			116			122			106		91
TOTAL ASSETS	$	16,423		$	16,796		$	16,487		$	15,696	$	15,741
LIABILITIES AND EQUITY
Deposits	$	9,248		$	9,375		$	9,376		$	9,532	$	9,494
Federal Home Loan Bank borrowings		5,732			5,743			5,075			4,582		4,324
Obligations to settle trade date securities		—			—			435			—		—
Other liabilities		136			125			141			133		154
Subordinated debentures and other borrowings		101			101			101			101		141
Subordinated notes payable to trust		314			314			314			314		314
Preferred stock issued by subsidiaries		—			—			—			—		305
TOTAL LIABILITIES		15,531			15,658			15,442			14,662		14,732
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.01 per share, 25 million shares authorized, none issued		—			—			—			—		—
Common stock, par value $1 per share, 200 million shares authorized, 37.3 million shares issued		37			35			35			35		35
Additional paid-in capital		901			902			793			790		788
Retained earnings		226			236			230			209		185
Accumulated other comprehensive income (loss)		(272	)		(35	)		(13	)		—		1
TOTAL STOCKHOLDERS’ EQUITY		892			1,138			1,045			1,034		1,009
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	16,423		$	16,796		$	16,487		$	15,696	$	15,741

GUARANTY FINANCIAL GROUP INC.

Selected Ratios and Other Data (unaudited)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2008			2007			2007			2007			2007
	(Dollars in millions except per share data)
For the quarter:
Net interest income	$	98		$	102		$	99		$	95		$	95
(Provision) credit for credit losses		(58	)		(33	)		(19	)		—			2
Net (loss) income		(10	)		6			21			24			27
Net (charge-offs) recoveries		(2	)		(6	)		—			1			8
Return on average assets		(0.24	)%		0.15	%		0.53	%		0.61	%		0.69	%
Return on average stockholders’ equity		(3.65	)%		2.28	%		8.06	%		9.38	%		10.51	%
Net interest margin		2.49	%		2.59	%		2.65	%		2.55	%		2.56	%
Quarter-end:
Loans, net	$	10,099		$	9,928		$	9,561		$	9,470		$	9,575
Non-performing assets		284			179			130			36			36
Non-performing assets ratio		2.76	%		1.78	%		1.35	%		0.38	%		0.37	%
Capital/Equity:
Guaranty Bank tier 1 leverage ratio		7.58	%		7.74	%		7.79	%		8.07	%		7.86	%
Guaranty Bank tier 1 risk-based ratio		9.38	%		9.63	%		9.94	%		10.00	%		9.97	%
Guaranty Bank total risk-based capital ratio		10.61	%		10.54	%		10.68	%		10.61	%		10.58	%
Tangible equity/tangible assets		4.45	%		5.82	%		5.36	%		5.60	%		5.41	%
Tangible equity per common share	$	19.38		$	27.36			n/a			n/a			n/a
Credit reserves:
Allowance for loan losses	$	172		$	118		$	91		$	72		$	71
Allowance for loan losses to total loans		1.67	%		1.17	%		0.94	%		0.75	%		0.74	%
Allowance for loan losses to non-performing loans		66	%		71	%		75	%		248	%		257	%
Total deposits	$	9,248		$	9,375		$	9,376		$	9,532		$	9,494
Average interest-bearing deposits		8,588			8,609			8,794			8,777			8,631
Total branches		158			158			159			156			153

	March 31,			December 31,			September 30,			June 30,			March 31,
	2008			2007			2007			2007			2007
Loan portfolio:	(In millions)
Single-family mortgage	$	1,572		$	1,672		$	1,783		$	1,915		$	2,131
Single-family mortgage warehouse		869			695			496			583			688
Single-family construction		1,341			1,510			1,785			1,817			1,768
Multifamily and senior housing		1,752			1,541			1,338			1,270			1,243
Commercial real estate		1,800			1,674			1,647			1,519			1,356
Commercial and business		1,349			1,340			1,158			1,086			1,041
Energy		1,434			1,470			1,316			1,218			1,283
Consumer and other		154			144			129			134			136
Total loans		10,271			10,046			9,652			9,542			9,646
Less allowance for loan losses		(172	)		(118	)		(91	)		(72	)		(71	)
Loans, net	$	10,099		$	9,928		$	9,561		$	9,470		$	9,575

GUARANTY FINANCIAL GROUP INC.

Average Balance Sheet (unaudited)

	For the Three Months Ended March 31,
	2008								2007
	Average					Yield/			Average				Yield/
	Balance			Interest		Rate			Balance		Interest		Rate
ASSETS
Cash equivalents	$	64		$	—		3.36	%	$	93	$	—		5.03	%
Loans held for sale		9			—		6.58	%		21		—		7.61	%
Loans		9,962			151		6.04	%		9,454		171		7.22	%
Securities		5,426			74		5.49	%		5,100		68		5.32	%
Investments in Federal Home Loan Bank stock		251			3		4.26	%		225		4		6.24	%
Total earning assets		15,712		$	228		5.81	%		14,893	$	243		6.54	%
Unrealized loss (gain) on available-for- sale securities		(57	)							2
Other assets		828								763
Total assets	$	16,483							$	15,658
LIABILITIES AND EQUITY
Interest-bearing deposits:
Interest-bearing demand	$	3,674		$	22		2.43	%	$	3,470		23		2.69	%
Savings deposits		173			—		0.72	%		192		—		0.70	%
Certificates of deposit		4,741			54		4.54	%		4,969		60		4.79	%
Total interest-bearing deposits		8,588			76		3.56	%		8,631		83		3.85	%
Short-term Federal Home Loan Bank borrowings		4,732			39		3.26	%		3,440		45		5.22	%
Long-term Federal Home Loan Bank borrowings		780			8		4.20	%		1,098		10		3.59	%
Subordinated debentures and other borrowings		106			2		8.48	%		106		2		8.13	%
Subordinated notes payable to trust		314			5		6.34	%		161		3		6.50	%
Preferred stock issued by subsidiaries		—			—		0.00	%		308		5		7.10	%
Total borrowings		5,932			54		3.64	%		5,113		65		5.08	%
Total interest-bearing liabilities		14,520		$	130		3.59	%		13,744	$	148		4.31	%
Interest rate spread							2.22	%						2.23	%
Noninterest-bearing demand deposits		674								720
Other liabilities		194								166
Stockholders’ equity		1,095								1,028
Total liabilities and stockholders’ equity	$	16,483							$	15,658
Impact of noninterest-bearing funds							0.27	%						0.33	%
Net interest income/margin				$	98		2.49	%			$	95		2.56	%