<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                 450 5TH STREET
                             WASHINGTON, D.C. 20549

                                ---------------
                                   FORM 10-QSB

(Mark One)

 X       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
 --      EXCHANGE ACT OF 1934 

 For the quarterly period ended September 30, 1998
                                ------------------

                                      OR

 --      TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT

 For the transition period from     to 
                               ----   -----


                          Commission File No 0-27624f
                          RELIANCE BANCSHARES, INC.
                          -------------------------            
      (Exact name of Small Business Issuer as specified in its charter)
                                        
              


          Wisconsin                                        39-1834823
          ---------                                        ----------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)                       



3140 S 27th Street, Milwaukee Wisconsin                      53215
----------------------------------------                   ----------
(Address of principal executive offices)                   (Zip Code)




Issuer's telephone number, including area code (414) 671-2222      
                                              ---------------     

Not applicable
(Former name, former address and former fiscal year, if changed since last
report) 



Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.


                                (1)  Yes X   No  
                                         --     --



State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.



                Class                      Outstanding September 30, 1998
                -----                      ------------------------------
Common Stock, par value $1.00 per share            2,395,564 shares


<PAGE>   2
                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                                   FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998

                                      INDEX


                                                                        PAGE NO.

PART I - Financial Information

    Consolidated Statements of Financial Condition                          1

    Consolidated Statements of Income                                       2

    Consolidated Statements of Stockholders' Equity                         3
 
    Consolidated Statements of Cash Flows                                 4 - 5

    Notes to Consolidated Financial Statements                            6 - 7

    Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                        8 - 11

PART II - Other Information                                                  12



<PAGE>   3
                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                 Consolidated Statements of Financial Condition

                                 (In Thousands)

<TABLE>
<CAPTION>

                                                                               September 30,               June 30,
                                                                                   1998                      1998
                                                                               ------------               ----------     
                                                                                              (Unaudited)
Assets:
<S>                                                                               <C>                      <C>      
       Cash                                                                       $     180                $     842
       Cash equivalent interest-bearing deposits                                      3,919                    3,504
                                                                                  ---------                --------- 
            Total cash and cash equivalents                                           4,099                    4,346

       Investments
            Certificates of deposit                                                     294                      493
            Investment securities available for sale, at fair value                   8,448                   10,949
       Federal Home Loan Bank stock - at cost                                           200                      200
       Loans receivable - net                                                        27,004                   25,798
       Accrued interest receivable                                                      104                       87
       Office properties and equipment                                                   71                       75
       Prepaid expenses and other assets                                                234                      341
                                                                                  ---------                --------- 
                 Total assets                                                     $  40,454                $  42,289
                                                                                  =========                ========= 

Liabilities and Equity:
       Deposit accounts                                                           $  17,380                $  17,330
       Borrowed funds                                                                   - -                    2,000
       Income taxes:
            Current                                                                     (37)                      20
            Deferred                                                                    292                      263
       Accrued and other liabilities:
            Interest                                                                     21                       31
            Other                                                                       263                      273
                                                                                  ---------                --------- 
                 Total liabilities                                                   17,919                   19,917
                                                                                  ---------                --------- 

Commitments and contingencies                                                           - -                      - -

Stockholders' equity:
       Common stock, $1.00 par value; 6,000,000 shares authorized;
            2,562,344 shares issued                                                   2,562                    2,562
       Additional paid-in-capital                                                    10,010                   10,001
       Unearned ESOP compensation                                                      (449)                    (449)
       Accumulated other comprehensive income                                           780                      729
       Retained earnings - substantially restricted                                  11,146                   11,043
       Treasury stock, at cost, 166,780 and 166,780 shares                           (1,514)                  (1,514)
                                                                                  ---------                --------- 
            Total stockholders' equity                                               22,535                   22,372
                                                                                  ---------                --------- 
                 Total liabilities and stockholders' equity                       $  40,454                $  42,289
                                                                                  =========                =========
</TABLE>









See accompanying notes to consolidated financial statements.

                                        1

<PAGE>   4


                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                        Consolidated Statements of Income

                      (In Thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                            Three Months Ended
                                                                                              September 30,
                                                                               --------------------------------------------
                                                                                      1998                     1997
                                                                               -------------------      -------------------
                                                                                                  (Unaudited)
Interest and dividend income:
<S>                                                                            <C>                      <C>   
       Mortgage loans                                                          $              582       $              599
       Investment securities                                                                  191                      239
       Mortgage-backed and related securities                                                  10                       15
       Other loans                                                                            - -                      - -
       Dividends on stock in Federal Home Loan Bank                                             3                        3
                                                                               -------------------      -------------------
            Total interest and dividends                                                      786                      856
                                                                               -------------------      -------------------

Interest expense:
       Deposits and escrows                                                                   227                      227
       Notes payable and other borrowings                                                      32                       88
                                                                               -------------------      -------------------
            Total interest expense                                                            259                      315
                                                                               -------------------      -------------------
            Net interest income                                                               527                      541
Provision for loan losses                                                                       5                        5
                                                                               -------------------      -------------------
       Net interest income after provision for loan losses                                    522                      536
                                                                               -------------------      -------------------

Noninterest income:
       Gain (loss) on sale of investments                                                     - -                       (4)
       Other income                                                                           - -                      - -
       Loan fees and service charges                                                            3                        2
                                                                               -------------------      -------------------
            Total noninterest income                                                            3                       (2)
                                                                               -------------------      -------------------
            Operating income                                                                  525                      534
                                                                               -------------------      -------------------

Noninterest expense:
       Compensation and benefits                                                              130                      160
       Occupancy                                                                                7                        7
       Advertising                                                                              1                        2
       Furniture and equipment                                                                  1                        1
       Federal insurance premiums                                                               3                        3
       Professional services                                                                  129                       22
       Data processing                                                                         20                       18
       Stationery, communications, and other operating                                         19                       20
       Directors' fees and expenses of directors, officers
            and employees                                                                      23                       20
                                                                               -------------------      -------------------
                  Total noninterest expense                                                   333                      253
                                                                               -------------------      -------------------
                 Income before income taxes                                                   192                      281
                                                                               -------------------      -------------------

Income taxes:
       Current                                                                                 92                      121
       Deferred                                                                                (3)                      (3)
                                                                               -------------------      -------------------
            Total income taxes                                                                 89                      118
                                                                               -------------------      -------------------
            Net income                                                         $              103       $              163
                                                                               ===================      ===================

Earnings per share (basic and diluted)                                         $             0.04       $             0.07
                                                                               ===================      ===================

Dividends per share                                                            $              - -       $              - -
                                                                               ===================      ===================
</TABLE>








See accompanying notes to consolidated financial statements.

                                        2

<PAGE>   5
                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                Consolidated Statements of Stockholders' Equity

                                 (In Thousands)



<TABLE>
<CAPTION>
                                   
                                                                                      Accumulated                               
                                                     Additional       Unearned           Other                                  
                                         Common        Paid-in          ESOP         Comprehensive    Retained                  
                                         Stock         Capital      Compensation        Income        Earnings                  
                                      -----------   ------------  -------------   --------------    ------------                
                                                                                      (Unaudited)                               
                                                                                                                                
<S>                                  <C>            <C>             <C>                <C>             <C>                          
Balances at June 30, 1998             $   2,562     $   10,001      $      (449)       $     729       $  11,043                
Comprehensive Income                                                                                                            
   Net income                                --             --               --              - -             103                
                                                                                                                                
   Other comprehensive income,                                                                                                  
     net of tax:                                                                                                                
      Change in unrealized gain                                                                                                 
        (loss) on securities                                                                                                    
        available for sale, net                                                                                                 
        of applicable deferred                                                                                                  
        income taxes of $32                  --             --               --               51             - -                 
                                                                                                                                 
                                                                                                                                 
        Total Comprehensive Income                                                                                               
                                                                                                                                 
                                                                                                                                 
Amortization of unearned                                                                                                         
   ESOP compensation                         --              9               --               --             - -                 
                                      ---------     ----------      -----------        ---------      ----------                 
                                                                                                                                 
Balances at September 30, 1998        $   2,562     $   10,010      $      (449)       $     780      $   11,146                 
                                      ==========    ==========      ===========        =========      ==========                 

<CAPTION>                                                           

                                                                                           Total
                                                                    Treasury           Stockholders'
                                                                      Stock                Equity         
                                                                -----------------   -----------------

<S>                                                                <C>              <C>   
Balances at June 30, 1998                                        
                                                                    $    (1,514)       $    22,372
Comprehensive Income                                                                   
   Net income                                                                          
                                                                            --                 103
   Other comprehensive income,                                                        
     net of tax:                                                                      
      Change in unrealized gain                                                       
        (loss) on securities                                                          
        available for sale, net                                                       
        of applicable deferred                                                        
        income taxes of $32                                                            
                                                                            --                  51
                                                                                       -----------
        Total Comprehensive Income                                                    
                                                                                               154
                                                                                       -----------
Amortization of unearned                                                              
   ESOP compensation                                                                  
                                                                            --                   9
                                                                    -----------        -----------
Balances at September 30, 1998                                                          
                                                                    $    (1,514)       $    22,535
                                                                    ===========        ===========

</TABLE>


See accompanying notes to consolidated financial statements.

                                        3
<PAGE>   6
                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                                 (In Thousands)



<TABLE>
<CAPTION>



                                                                                                 Three Months Ended
                                                                                                    September 30,
                                                                                  --------------------------------------------
                                                                                         1998                     1997
                                                                                  -------------------      -------------------
                                                                                                     (Unaudited)
<S>                                                                             <C>                      <C>                 
Cash Flows from Operating Activities:
       Net Income                                                               $                103     $                163
       Adjustments to reconcile net income to net cash provided (used)
                   by operating activities:
            Provision for depreciation                                                             4                        4
            Provision for loan losses                                                              5                        5
            Amortization of premiums, discounts and fees - net                                   (24)                     (25)
            ESOP expenses                                                                          9                       28
            Increase (decrease) in income taxes payable                                          (57)                      81
            Provision for (reduction of) deferred income taxes                                    (3)                      (3)
            (Increase) decrease in interest receivable                                           (17)                     (12)
            Net increase (decrease) in accrued/other liabilities                                 (20)                      11
            Net (increase) decrease in prepaid expense and other assets                          107                        6
            Loss (gain) on investments                                                           - -                        4
                                                                                  -------------------      -------------------
                    Net cash provided (used) by operating activities                             107                      262
                                                                                  -------------------      -------------------

Cash Flows from Investing Activities:
       Proceeds from sale/maturities of investment securities
            available for sale                                                                 4,752                      776
       Purchase of investment securities available for sale                                   (2,000)                  (1,898)
       Net (increase) decrease in loans                                                       (1,185)                     583
       Principal payments collected on mortgage-backed
            securities                                                                            29                      165
                                                                                  -------------------      -------------------
                    Net cash provided (used) by investing activities                           1,596                     (374)
                                                                                  -------------------      -------------------

Cash Flows from Financing Activities:
       Purchase of treasury stock                                                                - -                     (483)
       Repayments of short-term borrowing                                                     (2,000)                     - -
       Proceeds from securities sold under repurchase agreements                                 - -                    2,043
       Payments on securities sold under repurchase agreements                                   - -                   (2,008)
       Increase (decrease) in deposit accounts                                                    50                      106
                                                                                  -------------------      -------------------
                    Net cash provided (used) by financing activities                          (1,950)                    (342)
                                                                                  -------------------      -------------------
                    Increase (decrease) in cash and cash equivalents                            (247)                    (454)

Cash and Cash Equivalents at beginning of period                                               4,346                    3,048
                                                                                  -------------------      -------------------

Cash and Cash Equivalents at end of period                                      $              4,099     $              2,594
                                                                                  ===================      ===================


</TABLE>


See accompanying notes to consolidated financial statements.

                                        4


<PAGE>   7
                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                                 (In Thousands)

<TABLE>
<CAPTION>

                                                                                       Three Months Ended
                                                                                          September 30,
                                                                         --------------------------------------------
                                                                                1998                     1997
                                                                         -------------------      -------------------
                                                                                            (Unaudited)
<S>                                                                            <C>            <C>           
Supplemental Cash Flow Information:
       Cash paid during the period for:
            Interest on deposit accounts                                       $       27     $           28
            Income taxes                                                              148                109
            Interest on borrowings                                                     32                 88

       Noncash investing activities:
            Loans transferred to foreclosed properties and real
                         estate in judgment                                           - -                - -

            Total increase in unrealized gain on securities available
                                   for sale                                            84                 40

            Investments transferred to available-for-sale from
                  held-to-maturity, at cost                                           - -              3,818


Accounting Policies Note:        Cash equivalents include demand deposits at other financial institutions and
                                 the Federal Home Loan Bank.


</TABLE>














See accompanying notes to consolidated financial statements.

                                        5

<PAGE>   8



                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                    Notes to Consolidated Financial Statements

                                   (Unaudited)

  1  The information contained in the accompanying consolidated financial
     statements is unaudited. In the opinion of management, the financial
     statements contain all adjustments (none of which were other than normal
     recurring entries) necessary for a fair statement of the results of
     operations for the interim periods. The results of operations for the
     interim periods are not necessarily indicative of the results which may be
     expected for the entire fiscal year. The accompanying consolidated
     financial statements should be read in conjunction with the consolidated
     financial statements for the year ended June 30, 1998 contained in the
     Company's Form 10-KSB.

  2  In February 1997, the Financial Accounting Standards Board issued Statement
     No. 128, "Earnings Per Share" (SFAS No. 128). SFAS 128 simplifies the
     standards for computing earnings per share and makes the calculation
     comparable to international standards. SFAS 128 replaces primary earnings
     per share with a presentation of basic earnings per share. It also requires
     dual presentation of basic and diluted earnings per share and a
     reconciliation of basic to diluted earnings per share.

     Basic earnings per share is computed by dividing income available to common
     stockholders by the weighted-average number of common shares outstanding
     for the period. Diluted earnings per share reflects the potential dilution
     that could occur if securities or other contracts to issue common stock
     were exercised into common stock or resulted in the issuance of common
     stock that then shared in the earnings of the Company.

     SFAS 128 is effective for financial statements issued for periods ending
     after December 15, 1997, and requires restatement of all prior earnings per
     share data.

     The following reconciles amounts reported in the financial statements:


<TABLE>
<CAPTION>



                                                                    Three Months Ended
                                                                    September 30, 1998
                                                    ----------------------------------------------
                                                       Income          Shares         Per Share
                                                     (Numerator)    (Denominator)      Amount
                                                    --------------  --------------  --------------
<S>                                                 <C>              <C>             <C>                   
Income available to

    Common Shareholders:
    Basic earnings per share                        $      103,000       2,329,287            0.04                                  
                                                                                    ==============

Effect of diluted securities
    Options                                                   - -           34,334
                                                    --------------  --------------

Income available to
    Common Shareholders:
    Diluted earnings per share                      $      103,000       2,363,621            0.04                                  
                                                    ==============  ==============  ==============
</TABLE>


     Weighted-average shares outstanding for the three months ended September
     30, 1997 were 2,445,689 for basic and 2,452,142 for diluted.






                                       6


<PAGE>   9




  3  During the quarter ended September 30, 1997, the Company transferred its
     investments from its held-to-maturity portfolio to its available-for-sale
     portfolio. This was done as the result of the sale, from its
     held-to-maturity portfolio, of a $200,000 REMIC, on which a $1,375
     realized loss was incurred, whose nature and volatility was inconsistent
     with the Company's investment objectives.  The remaining  investments in
     the held-to-maturity portfolio transferred to the available-for-sale
     portfolio had an amortized cost of $3.8 million and resulted in an
     unrealized gain of $48,000.
        
  4  The Financial Accounting Standards Board (FASB) has issued SFAS No. 130,
     "Reporting Comprehensive Income," which is effective for fiscal years
     beginning after December 15, 1997.  This statement establishes standards
     for reporting and display of comprehensive income and its components
     (revenues, expenses, gains and losses) in a full set of general purpose
     financial statements. This statement requires that all items that are
     required to be recognized under accounting standards as components of
     comprehensive income be reported in a financial statement that is displayed
     with the same prominence as other financial statements.  The Company
     adopted SFAS No. 130 on July 1, 1998.




The Company's comprehensive income for the three months ended September 30,
1998 and 1997 is as follows:
<TABLE>
<CAPTION>

    
                                                                               Three months Ended
                                                                                   September 30,
                                                                          ----------------------------
                                                                              1998            1997
                                                                          --------------  ------------
<S>                                                                     <C>                <C>
Net income                                                                $    103,000    $    163,000
Other comprehensive income, net of taxes
      Unrealized gains (losses) arising during the period                       51,000          24,000
                                                                          ------------    ------------

Comprehensive income                                                      $    154,000    $    187,000
                                                                          ============    ============
</TABLE>



                                       7




<PAGE>   10
                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations


General

Reliance Bancshares, Inc. (Company) has no significant assets other than common
stock of Reliance Savings Bank (Bank), cash and cash equivalents, investment
securities and the loan to the ESOP. The Company's principal business is the
business of the Bank. Therefore, the information in the Management's Discussion
and Analysis of Financial Condition and Results of Operations relates to the
Bank and its operations.

Certain statements in this report which relate to the Company's plans,
objectives or future performance, may be deemed to be forward-looking statements
within the meaning of the Private Securities Litigation Act of 1995. Such
forward-looking statements includes words and phrases such as "will likely
result", "are expected to", "will continue", "is anticipated", "estimate",
"project", or similar expressions and various other statements contained herein.
Such statements are based on management's current expectations. Actual
strategies and results in future periods may differ materially from those
currently expected because of various risks and uncertainties. Additional
discussion of factors affecting the Company's business and prospects is
contained in periodic filings with the Securities and Exchange Commission.

Pending Merger

On June 30, 1998, the Company signed a definitive Agreement and Plan of
Reorganization that provides for the acquisition of the Company and thus the
Bank by St. Francis Capital Corporation ("St. Francis"). Under the terms of the
definitive agreement, St. Francis will acquire all of the outstanding shares of
the Company through a merger transaction pursuant to which the Company's
shareholders will elect to receive either cash or shares of St. Francis's common
stock in exchange for their shares (the "Merger"). Consummation of the
transaction is subject to regulatory approval, approval of the Company's
shareholders and the satisfaction of certain other conditions.

Lending Activities

The Bank originates first mortgage loans secured by one-to-four family
owner-occupied residences and residential construction loans within the Bank's
primary lending area. All of the Bank's first mortgage loans are originated for
the Bank's own loan portfolio. The Bank originated $4,821,000 mortgage loans at
an average rate of 8.60% during the three months ended September 30, 1998
compared to $3,429,000 at an average rate of 8.69% during the three months ended
September 30, 1997.

The Bank had $475,000 in commitments outstanding to originate mortgage loans at
September 30, 1998.

Liquidity and Capital Resources

The Bank's principal sources of funds are cash receipts from deposits, principal
collections on loans and mortgage-backed and related securities, proceeds from
maturities of securities, and net earnings. The Bank has an agreement with the
Federal Home Loan Bank to provide cash advances, should the need for additional
funds be required. The financial institution industry 

                                       8
<PAGE>   11


historically has accepted interest rate risk as a part of its operating
philosophy. The Bank continues to actively manage its interest rate risk, with
strategies such as originating mortgage loans which permit adjustment to the
interest rate annually after an initial fixed-rate term of three years in order
to reduce inherent interest rate risk.

The Bank is required to maintain minimum amounts of capital to total
"risk-weighted" assets, as defined by the banking regulators. At September 30,
1998, the Bank is required to have a minimum 3% Tier 1 capital to total assets
ratio, a minimum 4% Tier 1 capital to risk-weighted assets ratio and a minimum
8% of qualifying total capital to risk-weighted assets ratio. The Bank's actual
ratios at that date were 51.99%, 69.12% and 72.34%, respectively.
Wisconsin-chartered savings banks are also required to maintain a minimum
capital to assets ratio of 6%. The Bank's capital exceeds all minimum standards
required by federal and state regulations.

For regulatory purposes, liquidity is measured as a ratio of cash and certain
investments to withdrawable deposits and short-term borrowings. The minimum
level of liquidity required by regulation is 8%. The Bank's liquidity ratio was
over 60% at September 30, 1998.

Financial Condition

Total assets decreased $1,835,000 to $40,454,000 at September 30, 1998 from
$42,289,000 at June 30, 1998. Investment securities decreased $2,501,000 to
$8,448,000 at September 30, 1998 from $10,949,000 at June 30, 1998, certificates
of deposit decreased $199,000 to $294,000 at September 30, 1998 from $493,000 at
June 30, 1998 and cash and cash equivalent deposits decreased $247,000 to
$4,099,000 at September 30, 1998 from $4,346,000 at June 30, 1998. Loans
receivable increased $1,206,000 to $27,004,000 at September 30, 1998 from
$25,798,000 at June 30, 1998. The net decrease in these items was offset by the
elimination of the $2,000,000 in borrowed funds from the $2,000,000 outstanding
balance at June 30, 1998.

Proceeds from the sale and maturity of securities were also used to fund loans
and purchase securities. An unrealized gain on securities available for sale,
net of tax effect, of $51,000 has been recognized as a component of
stockholders' equity at September 30, 1998. Stockholders' equity is expected to
increase or decrease in the future to the extent, net of income tax effect, that
the market value of securities held for sale increase or decrease.

Accrued interest on loans and securities increased and accrued interest on
certificates of deposit decreased due to timing of interest receipts and
interest payments. Other assets and income taxes payable fluctuated due to
timing of corporate income tax payments.

Year 2000 Issue

The "Year 2000 Issue" concerns a problem resulting from computer programs being
written using two digits rather than four digits to define the applicable year.
Any of the Company's software programs, or software programs used by its
third-party providers, that are date-sensitive may recognize a date using "00"
as the year 1900 rather than the year 2000. If not corrected, this problem could
cause a major system failure or miscalculations and represent a material cost to
the Company.

During 1997, the Company developed a Year 2000 Compliance Plan and conducted a
review of its computer systems and its third-party systems identifying those
that could be affected by the Year 2000 Issue. The inventory prepared included a
review of its non-computer equipment and infrastructure issues, such as its
heating, ventilation and air-conditioning equipment, and security equipment,
which could have embedded systems, to verify that they will function in Year
2000.

                                       9
<PAGE>   12


The plan also identified all third-party service providers, vendors, and
commercial credit customers doing business with the Company.

All of the Company's, equipment, vendors and suppliers, and commercial credit
customers were analyzed and segregated into two categories: critical systems and
non-critical systems. Critical systems were defined as those having
date-sensitive attributes which, if not Year 2000 compliant, could have a
material impact on the operations of the Company. Non-critical systems were
defined as those having date-sensitive attributes which, if not Year 2000
compliant, could continue to function by alternative methods which would not
have a material impact on the operations of the Company. An example of a
critical system is the Company's internal data-processing systems and those of
its third-party providers since non-compliance would pose a significant risk to
the Company. An example of a non-critical piece of equipment is the Company's
postage meter since, if non-compliant, the alternative is to use stamps.

During the first quarter of 1998, the Company initiated formal communications
will all of its significant vendors, suppliers, and commercial credit customers
to inform them of the Company's plan for Year 2000 compliance and to determine
the extent to which the Company is vulnerable to those third parties' failure to
remedy their own Year 2000 issue. There can be no assurance that the systems of
other organizations upon which the Company's operations rely, including
essential utilities and telecommunications providers, will be timely converted,
or would not have a materially adverse effect of the Company. A target date of
December 31, 1998 has been established for the initial assessment of the
responses of vendors, suppliers and significant credit customers.

The Company has not incurred any costs to date associated with its Year 2000
readiness plans other than the soft-dollar costs relating to its review process.
The Company estimates its costs to be between $30,000 and $40,000 to upgrade its
computer hardware to be Year 2000 compliant. The Company believes that, with
modifications to existing software used by the Company and by its third-party
providers, the Year 2000 problem will not pose significant operational problems
for the Company. The Company does not anticipate costs to remedy the Year 2000
issue will have a material impact on the financial condition of the Company.

Due to the pending merger with St. Francis Capital Corporation, the concerns
related to the Year 2000 Issue may have little or no impact on the operations of
the Company as it exists now. However the Company has developed contingency
plans should the merger not go through. Those plans include the purchase of Year
2000 computer hardware and for the testing of its computer systems with its
third-party servicer to be completed before the end of the first quarter of
1999.

Net Income

The Company had net income of $103,000 for the three months ended September 30,
1998 compared to net income of $163,000 for the three months ended September 30,
1997. The primary reason for the decrease in net income was due to decreased
interest income on investment securities and loans partially offset by decreased
interest expense on borrowings. Net income for the 1998 period was also affected
by higher professional services expense relating to the Company's pending merger
partially offset by lower compensation and benefits expense.

Net Interest Income

Net interest income decreased $14,000 from $541,000 for the three months ended
September 30, 1997 to $527,000 for the three months ended September 30, 1998.
The decrease in net 







                                       10
<PAGE>   13
interest income was due to decreased interest income on investment securities
and loans partially offset by decreased interest expense on borrowings. Interest
income on loans decreased as a result of a lower portfolio average balance and a
lower average yield while interest income on investment securities decreased as
a result of a lower portfolio average balance. Interest expense on borrowings
decreased due to a lower average balance of borrowings.

Provision for Loan Losses

The allowance for loan losses is increased by charges to income and decreased by
charge-offs (net of recoveries). Management's periodic evaluation of the
adequacy of the allowance is based on the Bank's past loan loss experience,
known and inherent risks in the portfolio, adverse situations that may effect
the borrower's ability to repay, the estimated value of any underlying
collateral, and current economic conditions. There can be no assurance that the
allowance for loan losses will be adequate to cover losses which may in fact be
realized in the future and that additional provisions for loan losses will not
be required. The amount of the provision for loan losses for the three months
ended September 30, 1998 and 1997 reflected management's intention to continue
to make additions to the Bank's allowance for loan losses until it is equal to
approximately 1.0% of the Bank's gross loan portfolio. However, the Bank will
continue to monitor its loan loss experience, the condition and composition of
its loan portfolio and general economic conditions, and may make further
additions to its allowance for loan losses to a greater or lesser extent than it
has done historically, depending upon changes in the aforementioned conditions.

There was one nonperforming loan of $197,000 at September 30, 1998 and none at
September 30, 1997. As a result of this evaluation, the Bank's provision for
loan losses for the three months ended September 30, 1998 and 1997 amounted to
$5,000 and $5,000 respectively.

Noninterest Income

Noninterest income increased $5,000 from ($2,000) for the three months ended
September 30, 1997 to $3,000 for the three months ended September 30, 1998. The
increase in noninterest income was the result of the $4,000 loss on the sale of
investments for the three months ended September 30, 1997.

Noninterest Expense

Noninterest expense increased $80,000 from $253,000 for the three months ended
September 30, 1997 to $333,000 for the three months ended September 30, 1998.
Compensation and benefits decreased $30,000 from $160,000 for the three months
ended September 30, 1997 to $130,000 for the three months ended September 30,
1998 due to the decrease in costs associated with the pension plan. Fees for
professional services increased $107,000 from $22,000 for the three months ended
September 30, 1997 to $129,000 for the three months ended September 30, 1998 due
to legal fees for services rendered in connection with the pending merger with
St. Francis Capital Corporation.

Income Taxes

Income taxes fluctuated due to the level of pre-tax earnings.


                                       11
<PAGE>   14
                    RELIANCE BANCSHARES, INC. AND SUBSIDIARY

                           PART II - Other Information


Item 1 - Legal Proceedings

       There are no material legal proceedings to which the Holding Company or
       the Bank is a party or of which any of their property is subject. From
       time to time, the Bank is a party to various legal proceedings incident
       to its business.

Item 2 - Changes in Securities

       None.

Item 3 - Defaults upon Senior Securities

       Not applicable.

Item 4 - Submission of Matters to a Vote of Security Holders

       None.

Item 5 - Other Information

       None.

Item 6 - Exhibits and Reports on Form 8-K.

       a)     Exhibits:  None.

       b)     Reports on Form 8-K: On July 2, 1998, the registrant filed a Form
              8-K to announce that it had entered into a definitive Agreement
              and Plan of Reorganization with St. Francis Capital Corporation,
              dated June 30, 1998.


                                   Signatures
                                   ----------
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                            RELIANCE BANCSHARES, INC.

                                  (Registrant)

Date:    November 10, 1998  BY:  /s/ Allan T. Bach                     
                                 --------------------------------------------
                                 Allan T. Bach, Chairman of the Board,
                                 President and Chief Executive Officer
                                 (Principal Executive Officer)



Date:    November 10, 1998  BY:  /s/ Carol A. Barnharst                       
                                 --------------------------------------------
                                 Carol A. Barnharst, Vice President and
                                 Chief Financial Officer (Principal Financial
                                 and Accounting Officer)





                                       12