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July 31 (Reuters) - Guaranty Financial Group Inc (GFG.N: Quote, Profile, Research) posted a huge loss in the second quarter, hurt by mounting provision for bad loans and a charge related to deferred tax, and said it reduced its workforce by 5 percent.

The company, which was spun off by Temple-Inland Inc (TIN.N: Quote, Profile, Research) last year, posted a quarterly loss of $85 million, or $2.24 a share, compared with a profit of $24 million, a year earlier.

Guaranty's loss widened more than eight-fold, or by $75 million, sequentially.

The latest quarterly results include a charge of $46 million due to a valuation allowance on deferred tax assets, the company, which has savings and loan banks in Texas and California, said.

The company also said it will terminate its previously announced rights offering in light of the recently closed private placement transactions.

The company said it paid $3 million in severance costs due to the elimination of 135 jobs during the quarter.

Provision for credit losses for the quarter was $99 million, compared with less than $1 million in the year-ago quarter, hurt by its increases in bad loans in its homebuilder and single-family mortgage portfolio.

Net charge-offs rose nine-fold to $19 million sequentially.