FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

         (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, 1998

                                       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 0-24683

                               FLORIDA BANKS, INC.
             (Exact name of registrant as specified in its charter)

                FLORIDA                                   58-2364573
     (State or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                 Identification No.)

                         SUITE 212 SOUTHPOINT SQUARE II
                           4110 SOUTHPOINT BOULEVARD
                                JACKSONVILLE, FL
                                   32216-0925
                    (Address of principal executive offices)

                                 (904) 296-2329
              (Registrants telephone number, including area code)

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

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. Yes   No[X]

Indicate the number of shares outstanding of each of the registrants  classes of
common stock, as of the latest practicable date.

     Title                                   Outstanding
     COMMON STOCK, $.01 PAR VALUE            OUTSTANDING AT SEPTEMBER 30, 1998
     PER SHARE                               5,852,756


<PAGE>


ITEM 1. FINANCIAL STATEMENTS

FLORIDA BANKS, INC.

CONDENSED BALANCE SHEET (Unaudited)
--------------------------------------------------------------------------------
                                                     September 30,  December 31,
                                                         1998           1997

ASSETS
CASH AND DUE FROM BANKS                               $ 2,377,063   $ 2,788,211
FEDERAL FUNDS SOLD                                      6,115,000    10,245,000
REPURCHASE AGREEMENTS PURCHASED                        18,000,000
                                                       ----------    ----------
Total cash and cash equivalents                        26,492,063    13,033,211

INVESTMENTS SECURITIES:
  Available for sale, at fair value 
  (cost $23,541,536 and $10,445,885 at 
  September 30, 1998 and December 31, 1997,
  respectively)                                        23,558,027    10,452,185
Other investments                                         291,850       313,050

LOANS:
  Commercial real estate                               15,915,636    15,281,442
  Commercial                                           19,288,139    13,157,905
  Residential mortgage                                  4,179,615     3,268,704
  Consumer                                              1,129,396     1,222,045
  Credit card and other loans                           1,300,433       869,031
                                                       ----------    ----------
        Total loans                                    41,813,219    33,799,127
  Allowance for loan losses                              (611,053)     (481,462)
  Net deferred loan fees                                 (100,364)      (78,765)
                                                       ----------    ----------
        Net loans                                      41,101,802    33,238,900

PREMISES AND EQUIPMENT, NET                               715,881       511,503

ACCRUED INTEREST RECEIVABLE                               482,425       332,031

DEFERRED INCOME TAXES, NET                              2,390,224     2,420,271

OTHER ASSETS                                              159,109        94,628
                                                      -----------   -----------
TOTAL ASSETS                                          $95,191,381   $60,395,779
                                                      ===========   ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
  Noninterest-bearing demand                          $ 5,734,585   $ 6,441,785
  Interest-bearing demand                               3,391,046     3,073,535
  Regular savings                                       7,862,425     5,874,911
  Money market accounts                                 1,274,257     1,348,431
  Time $100,000 and over                               10,822,829    10,214,403
  Other time                                           18,105,546    18,507,107
                                                      -----------   -----------
        Total deposits                                 47,190,688    45,460,172

REPURCHASE AGREEMENTS SOLD                              3,395,646     5,911,513

TREASURY TAX AND LOANS                                    607,193     2,405,604

ACCRUED INTEREST PAYABLE                                  200,250       198,817

ACCOUNTS PAYABLE AND ACCRUED EXPENSES                     145,456       106,038
                                                      -----------   -----------
        Total Liabilities                              51,539,233    54,082,144
                                                      -----------   -----------

SHAREHOLDERS' EQUITY:
  Common Stock                                             58,528        12,152
  Additional paid-in capital                           46,090,851     5,537,996
  Preferred stock                                         606,000
  Warrants                                                164,832
  Retained earnings (accumulated deficit)
    (deficit of $8,434,037 eliminated upon 
    quasi-reorganization on December 31, 1995          (3,278,287)      759,707
  Unrealized gain on available for sale 
    investment securities, net of tax                      10,224         3,780
                                                      -----------   -----------
        Total shareholders' equity                     43,652,148      6,313,63
                                                      -----------   -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $95,191,381   $60,395,779
                                                      ===========   ===========

See notes to condensed financial statements.

                                       2

<PAGE>


FLORIDA BANKS, INC.

CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
--------------------------------------------------------------------------------

                              Three Month Period Ended   Nine Month Period Ended
                                     September 30,             September 30,
                              ------------------------   -----------------------
                                   1998         1997         1998        1997
                              ------------------------   -----------------------

INTEREST INCOME:
  Loans, including fees        $  960,137   $  854,843   $2,636,837   $2,507,961
  Investment securities           328,406      145,727      648,702      424,393
  Federal funds sold              208,450       84,716      385,888      283,744
                               ----------   ----------   ----------   ----------
     Total interest income      1,496,993    1,085,286    3,671,427    3,216,098
                               ----------   ----------   ----------   ----------

INTEREST EXPENSE:
  Deposits                        533,360      521,824    1,548,958    1,557,975
  Repurchase agreements            47,642       45,395      167,374      133,601
  Borrowed funds                   26,034        9,739       73,602       25,158
                               ----------   ----------   ----------   ----------
     Total interest expense       607,036      576,958    1,789,934    1,716,734
                               ----------   ----------   ----------   ----------

NET INTEREST INCOME               889,957      508,328    1,881,493    1,499,364

PROVISION FOR LOAN LOSSES          77,000       15,000      107,000       45,000
                               ----------   ----------   ----------   ----------

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES         812,957      493,328    1,774,493    1,454,364
                               ----------   ----------   ----------   ----------

NONINTEREST INCOME:
  Service fees                    102,283       83,540      288,522      235,136
  Gain on sale of loans            80,349        9,192      100,058      118,117
  Gain on sale of securities         --            244        8,197        7,635
  Other noninterest income         21,459       10,153       75,136       32,246
                               ----------   ----------   ----------   ----------
                                  204,091      103,129      471,913      393,134
                               ----------   ----------   ----------   ----------

NONINTEREST EXPENSES:
  Salaries and benefits         3,694,526      253,773    4,329,413      766,658
  Occupancy and equipment         139,652       62,305      303,097      182,950
  Data processing                  30,582       22,913       79,822       69,012
  Other                         1,236,873      125,769    1,543,518      362,988
                               ----------   ----------   ----------   ----------
                                5,101,633      464,760    6,225,850    1,381,608
                               ----------   ----------   ----------   ----------

INCOME (LOSS) BEFORE PROVISION
  (BENEFIT) FOR INCOME TAXES   (4,084,585)     131,697   (4,009,444)     465,890

PROVISION (BENEFIT) FOR
  INCOME TAX EXPENSES                --         50,225       28,550      177,782
                               ----------   ----------   ----------   ----------

NET INCOME (LOSS)             $(4,084,585)  $   81,442  $(4,037,994)  $  288,108
                              ===========   ==========  ===========   ==========

EARNINGS (LOSS) PER SHARE:
  Basic                       $     (0.94)  $     0.07  $     (1.25)  $     0.24
                              ===========   ==========  ===========   ==========
  Dilited                         N/A       $     0.06      N\A       $     0.22
                                            ==========                ==========

See notes to condensed financial statements.
                                      
                                       3

<PAGE>


<TABLE>
<CAPTION>
FLORIDA BANKS, INC.

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
--------------------------------------------------------------------------------

                                                                                                             Unrealized
                                                                                                           (Loss) Gain on
                                                                                                             Available
                                                                                       Warrants  Retained     for Sale
                                                                           Additional to Acquire Earnings    Investment
                                     Preferred Stock      Common Stock        Paid-In   Common (Accumulated  Securities,
                                     Shares Par Value   Shares  Par Value     Capital   Stock     Deficit)   Net of Tax    Total
                                     ------ ---------   ------  ---------     -------   -----     --------   ----------    -----

<S>                                   <C>    <C>       <C>        <C>      <C>         <C>       <C>           <C>      <C>        
BALANCE, DECMEBER 31, 1997                             1,215,194  $12,152  $ 5,537,996           $   759,707   $ 3,780  $ 6,313,635

Net income                                                                                        (4,037,994)            (4,037,994)
Proceeds from
  Initial Public Offering, net                         4,100,000   41,000   37,351,950                                   37,392,950
Exercise of stock options                                159,806    1,598      238,402                                      240,000
Issuance of Common Stock
  to Founders
Issuance of Common Stock
   to Founders                                           297,000    2,970    2,155,718                                    2,158,688
Issuance of Units                                         80,800      808      807,192 $164,832                             972,832
Issuance of preferred stock           60,600 $606,000                                                                       606,000
Unrealized gain on available
   for sale investment securities,
   net                                                                                                           6,444        6,444
Purchase of fractional shares                                (44)                 (407)                                        (407)
                                      ------ --------  ---------  -------  ----------- --------  -----------   -------  -----------

BALANCE, SEPTEMBER 30, 1998
   (UNAUDITED)                        60,600 $606,000  5,852,756  $58,528  $46,090,851 $164,832  $(3,278,287)  $10,224  $43,652,148
                                      ====== ========  =========  =======  =========== ========  ===========   =======  ===========
</TABLE>
See notes to Condensed Financial Statements.
                                       4

<PAGE>



<TABLE>
<CAPTION>

FLORIDA BANKS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
--------------------------------------------------------------------------------

                                                         Nine Month Period Ended
                                                              September 30,
                                                         -----------------------
                                                          1998             1997
                                                          ----             ----
OPERATING ACTIVITIES:
<S>                                                  <C>             <C>         
Net income (loss)                                    $ (4,037,994)   $    288,108
Adjustments to reconcile net income (loss) to net
  cash (used in) provided by operating activities:
   Noncash compensation and financing costs             3,939,054            --
   Depreciation and amortization                          111,604          79,227
   Deferred income taxes                                   23,330            --
   Gain on sale of securities                              (8,197)         (7,635)
   Amortizaiton of premiums on investments, net           (45,878)        (15,667)
   Provision for loan losses                              107,000          45,000
   Increase in accrued interest receivable               (150,394)        (37,597)
   Increase in accrued interest payable                     1,443          13,679
   Increase in other assets                               (64,481)       (325,735)
   Decrease (increase) in other liabilities              (120,362)        301,579
                                                     ------------    ------------
        Net cash (used in) provided by
          operating activites                            (244,875)        518,743
                                                     ------------    ------------

INVESTING ACTIVITIES:
  Proceeds from sales, paydowns and maturities
   of investment securities:
   Available for sale                                   6,325,899      12,172,441
   Other                                                   28,600            --
  Purhcases of investment securities:
   Available for sale                                 (19,364,505)    (13,525,642)
   Other investments                                       (7,400)        (42,200)
  Net increas in loans                                 (7,969,902)     (2,883,583)
  Cash resulting from Merger                              163,971            --
  Purchases of premises and equipment                    (275,495)        (87,105)
                                                     ------------    ------------
        Net cash used in investing activities         (21,098,832)     (4,366,089)
                                                     ------------    ------------

FINANCING ACTIVITIES:
  Net increase (decrease) in demand deposits,
    money market accounts and savings accounts          1,523,651        (449,899)
  Net increase (decrease) in time deposits                206,865        (375,157)
  Increase (decrease) in repurchase agreements         (2,515,867)        200,864
  Increase (decrease) in other borrowed funds          (1,798,411)        387,503
  Exercise of stock options                               240,000            --
  Proceeds from Initial Public Offering                38,129,551            --
  Proceeds from sale of Units                               3,778            --
  Offering costs                                         (737,008)           --
  Payment of Note Payable                                (250,000)           --
                                                     ------------    ------------
        Net cash provided by (used in)
          financiing activities                        34,802,559        (236,689)
                                                     ------------    ------------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS:                                13,458,852      (4,084,035)

CASH AND CASH EQUIVALENTS:

  Beginning of period                                  13,033,211      14,898,784
                                                     ------------    ------------
  End of Period                                      $ 26,492,063    $ 10,814,749
                                                     ============    ============

SUPPLEMENTAL DISCLOSURES
  OF CASH FLOW INFORMATION:
   Cash paid for interest                            $  1,788,501    $  1,696,745
                                                     ============    ============
</TABLE>

See notes to condensed financial statements.










                                       5
<PAGE>


FLORIDA BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
--------------------------------------------------------------------------------
1.   BASIS OF PRESENTATION

     Florida Banks,  Inc. (the Company) was incorporated on October 15, 1997 for
     the purpose of becoming a bank holding company and acquiring First National
     Bank of Tampa (the  Bank).  On August 4, 1998,  the Company  completed  its
     initial public  offering and its merger (the Merger) with the Bank pursuant
     to which the Bank was merged  with and into  Florida  Bank No. 1,  N.A.,  a
     wholly-owned  subsidiary of the Company,  and renamed  Florida  Bank,  N.A.
     Shareholders of the Bank received  1,375,000  shares of common stock of the
     Company  valued  at  $13,750,000.  The  Merger  was  considered  a  reverse
     acquisition  for  accounting  purposes,  with  the Bank  identified  as the
     accounting acquiror.  The Merger has been accounted for as a purchase,  but
     no goodwill has been recorded in the Merger and the financial statements of
     the Bank have become the  historical  financial  statements of the Company.
     
     The number of shares of common stock, the par value of common stock and per
     share  amounts  have been  restated to reflect the shares  exchanged in the
     Merger. 

     The condensed  financial  statements  have been prepared in accordance with
     the rules and regulations of the Securities and Exchange Commission related
     to  interim  financial  statements.  These  unaudited  condensed  financial
     statements do not include all disclosures  provided in the annual financial
     statements.   The  condensed   financial   statements  should  be  read  in
     conjunction  with the financial  statements and notes thereto  contained in
     the  Companys  Registration  Statement  on  Form  S-1  as  filed  with  the
     Securities and Exchange  Commission.  All adjustments of a normal recurring
     nature which, in the opinion of management, are necessary to fairly present
     the results of the interim  periods have been made.  Results of  operations
     for the nine month  period  ended  September  30, 1998 are not  necessarily
     indicative of the results to be expected for the full year.

2.   NON-RECURRING EXPENSES  

     The Company incurred a non-recurring non-cash, charge of $3,939,054 related
     to the February 3, 1998 sale of common  stock and warrants  included in the
     Units sold to  foreign  investors  and the  February  11,  1998 sale of the
     297,000 shares of common stock to 14 officers,  directors, and consultants.
     The Company recorded such non-cash compensation expense and financing costs
     measured as the  difference  between the fair value of common stock,  based
     upon the initial public  offering  price of $10.00 per share,  and the sale
     price or allocated  proceeds of $.01 per share. These non-cash charges were
     recorded with a  corresponding  increase in additional  paid-in capital and
     therefore had no effect on the Companys total  shareholders  equity or book
     value.

                                       6
<PAGE>


FLORIDA BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)  (Continued)
--------------------------------------------------------------------------------

3.   SHAREHOLDERS EQUITY

     On  February  3, 1998,  the Company  sold 101 Units to  accredited  foreign
     investors.  Each Unit was comprised of (i) 600 shares of Series A Preferred
     Stock,  (ii) 800 shares of Common Stock, and (iii) Warrants to purchase 800
     shares of Common Stock at the initial public  offering  price, at the price
     of $6,008 per Unit.  The net  proceeds  to the  Company  from this  private
     placement was approximately $600,000. The Series A Preferred Stock has been
     valued at its redemption  value of $606,000.  The Company is in the process
     of redeeming the Series A Preferred  Stock at a redemption  price of $10.00
     per share using a portion of the proceeds from the initial public offering.
     The  Series A.  Preferred  Stock is  non-voting.  The  Company  recorded  a
     nonrecurring  noncash  charge of $972,000  relating to the  issuance of the
     Common Stock and Warrants,  with a  corresponding  increase to shareholders
     equity.  Financing costs relating to the Common Stock have been measured as
     the  difference  between the fair value of the Common  Stock,  based on the
     initial  public  offering  price of $10.00  per  share,  and the  allocated
     proceeds of $.01 per share.  The Warrants  have been valued at an aggregate
     price of  $164,832  or $2.04 per share,  as  determined  by an  independent
     appraisal.  The proceeds from the issuance of such Units  provided  funding
     for the  Companys  development  stage  operations.  

     On August 4, 1998,  the Company  completed its initial  public  offering of
     4,000,000 shares at an offering price of $10.00 per share and completed its
     Merger with the Bank. See Note 1.

     On  September  1,  1998,  the  Underwriters  exercised  a portion  of their
     over-allotment  and purchased an additional  100,000 shares of the Companys
     common  stock,  $.01 par value per  share,  at a price of $10.00 per share,
     less underwriting discounts and commissions.

4.   EARNINGS PER SHARE

     The  following  is  a  reconciliation   of  the  denominator  used  in  the
     computation of basic and diluted earnings per common share.
<TABLE>
<CAPTION>

                                     Three Month Period Ended       Nine Month Period Ended
                                          September 30,                   September 30,
                                     ------------------------       -----------------------
                                         1998        1997              1998          1997
                                         ----        ----              ----          ----
<S>                                   <C>         <C>               <C>         <C>      
Weighted average number of common       
  shares outstanding - Basic          4,349,423   1,215,194         2,222,661   1,215,194


Incremental shares from the assumed
  conversion of stock options              --        85,903              --        85,903
                                      ---------   ---------         ---------   ---------


Total - Diluted                       4,349,423   1,301,097         2,222,661   1,301,097
                                      =========   =========         =========   =========
</TABLE>

     The  incremental  shares from the assumed  conversion of stock options were
     determined using the treasury stock method under which the assumed proceeds
     were equal to (1) the amount that the Bank

                                       7
<PAGE>


FLORIDA BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)  (Continued)
--------------------------------------------------------------------------------

     would  receive  upon the exercise of the options plus (2) the amount of tax
     benefit  that would be  credited to  additional  paid-in  capital  assuming
     exercise  of the  options.  The  assumed  proceeds  are  used  to  purchase
     outstanding  common  shares at the  Companys  offering  price of $10.00 per
     share for 1998 and an assumed  fair value equal to the Banks  average  book
     value per common share for 1997 as the Banks stock was not actively  traded
     and limited  trades during 1997  indicated that book value was a reasonable
     estimate of fair value.

5.   NEW ACCOUNTING PRONOUNCEMENTS

     During the quarter  ended March 31,  1998,  the Bank  adopted  Statement of
     Financial  Accounting  Standards No. 130,  Reporting  Comprehensive  Income
     (SFAS 130). 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.  SFAS 130
     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.  SFAS 130 does not require a specific  format for the financial
     statement but requires that an  enterprise  display an amount  representing
     total  comprehensive  income  for the  period in the  financial  statement.
     Additionally,  SFAS 130 requires that an enterprise  (a) classify  items of
     other comprehensive income by their nature in a financial statement and (b)
     display the accumulated  balance of other  comprehensive  income separately
     from retained earnings and additional paid-in capital in the equity section
     of a statement  of financial  position.  This  Statement  is effective  for
     fiscal years beginning after December 15, 1997.  Total  comprehensive  loss
     for the  three  months  and  nine  months  ended  September  30,  1998  was
     $(4,063,307) and $(4,031,550),  respectively.  Other comprehensive loss was
     comprised  solely of the change in unrealized gains (loss) on available for
     sale investment  securities,  net.  

6.   SUBSEQUENT  EVENTS

     The Company opened a community  banking office in Jacksonville,  Florida on
     August 6, 1998. The Jacksonville  office was created as a de novo branch of
     the Bank.

                                        8
<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

The  following  discussion  should  be read in  conjunction  with the  financial
statements and related notes appearing elsewhere in this Form 10-Q.

RESULTS OF OPERATIONS

Three Months Ended  September 30, 1998 Compared to Three Months Ended  September
30, 1997

The Company's net income for the third quarter of 1998 decreased  $(4.2) million
to a net loss of $(4.1) million for the three month period ending  September 30,
1998,  from net income of $81,000 for the three month period ended September 30,
1997.  Basic  earnings  per share for the  third  quarter  of 1998 was a loss of
$(.94)  compared  to  basic  and  diluted  earnings  per  share of $.07 and $.06
respectively  for the  third  quarter  of 1997.  Included  in the loss of $(4.1)
million  for the third  quarter  of 1998  were  non-recurring  compensation  and
financing  expenses of $3.9  million or $(.91) per share.  These  expenses  were
related to the February 3, 1998 sale of common  stock and  warrants  included in
the units  sold to  foreign  investors  and the  February  11,  1998 sale of the
297,000 shares of common stock to 14 officers,  directors and  consultants.  The
Company recorded such non-cash compensation expense and financing costs measured
as the difference between the fair value of common stock, based upon the initial
public  offering  price of $10.00  per share,  and the sale  price or  allocated
proceeds  of $.01  per  share.  These  non-cash  charges  were  recorded  with a
corresponding increase in additional paid in capital and therefore had no effect
on the Companys total shareholders equity or book value.

Operating losses, net of non-recurring expenses of $3.9 million, were $(146,000)
for the three month period ended  September 30, 1998 compared to a net income of
$81,000 for the three month  period ended  September  30,  1997.  The  operating
losses  in the third  quarter  of 1998  primarily  resulted  from  non-recurring
expenses  associated  with the merger  transaction  with First  National Bank of
Tampa,  in  which  the  Company  acquired  the  Bank,  and  the  opening  of the
Jacksonville, Florida offices of the Company and Bank.

The increase in net interest  income of $382,000,  or 75.1%, to $890,000 for the
three month period ended  September 30, 1998,  from $508,000 for the three month
period ended  September 30, 1997,  consists of an increase in interest income of
$412,000, or 37.9%, and an increase in interest expense of $30,000, or 5.2%. The
increase  in  interest  income  of  $412,000  in the  third  quarter  of 1998 is
primarily attributable to an increase of $256,000 in interest on investments and
federal  funds sold  resulting  from the  investment  of the net proceeds of the
public offering.

The provision for loan losses charged to operations increased $62,000 to $77,000
for the three month period ended September 30, 1998,  from $15,000 for the three
month period ended September 30, 1997.   This increase represents the additional
reserves resulting from new loan growth.

Non-interest  income  increased  97.9%,  or $101,000,  to $204,000 for the three
month period ended  September  30, 1998 from $103,000 for the three months ended
September 30, 1997. The increase in non-interest  income primarily resulted from
an  increase of $71,000 in the gain on sale of SBA  guaranteed  loans to $80,000
for the third  quarter of 1998 compared to $9,000 for the third quarter of 1997.
Loans sold in the third  quarter of 1998 were  originated  in prior  periods and
sold in conjunction with the Companys established holding periods.  Increases in
other  non-interest  income and service fees of $30,000,  reflect an increase in
deposit account fees and ACH/EFT service fees.

Non-interest  expense increased $4.6 million to $5.1 million for the three month
period  ended  September 30, 1998  compared  to  $465,000  for  the  three month
period ended September 30, 1997.  The increase in  non-interest expense resulted


                                       9
<PAGE>


primarily from increases in salaries and benefits,  occupancy and equipment, and
other expenses.  Salaries and benefits  expenses  increased $3.4 million to $3.7
million for the third quarter of 1998 compared to $254,000 for the third quarter
of 1997.  This  increase  resulted  from  non-recurring,  non-cash  compensation
expense  of $3.0  million  related to the sale of common  stock to 14  officers,
directors and  consultants,  normal salary  increases and the  additional  staff
associated with the opening of the Jacksonville banking office and the staff for
the holding  company.  Included in salaries and  benefits  expense for the third
quarter  of 1998 are  non-recurring  expenses  of  $99,000  associated  with the
relocation of executive officers of the Company.

The increase in occupancy and equipment expense of $77,000, or 124.1%,  resulted
from the additional  leased space for the Bank's SBA  department,  startup costs
and lease expense for the Jacksonville  banking and holding company office,  and
from  additional  depreciation  and  maintenance  expenses  resulting  from  the
purchase of additional  computer  equipment.  Data processing expenses increased
$8,000 or 33.5% to $31,000  for the three  months  ended  September  30, 1998 as
compared to $23,000 for the same period in 1997. This increase resulted from the
conversion  and  implementation  of  several  new  products  and the  additional
processing  expenses  for the  Company  in  connection  with the  opening of the
Jacksonville  banking  office.  Other expenses  increased $1.1 million,  to $1.2
million for three month period ended  September  30, 1998,  compared to $126,000
for the three month period ended  September  30, 1997.  This  increase  resulted
primarily  from a  non-recurring  financing  cost  of  $972,000  related  to the
February 3, 1998 sale of common stock and warrants included in the units sold to
foreign  investors.  Additional  other  expenses  for the third  quarter of 1998
compared to the third quarter of 1997 include costs  associated with the opening
of the Jacksonville banking office and legal,  accounting and other professional
fees associated with the acquisition of First National Bank of Tampa.

No  provision  or benefit for income  taxes was  recognized  for the three month
period ended  September  30, 1998 as compared to a provision for income taxes of
$50,000 for the same period ended  September  30, 1997.  Included in the loss of
$(4.1) million for the third quarter of 1998 are non-tax deductible  expenses of
$ 3.9 million  associated the sale of common stock and warrants  included in the
units  sold to  foreign  investors  and the sale of  common  stock to  officers,
directors  and  consultants.  Therefore,  no tax benefit is  recognized  for the
period ending  September 30, 1998. The provision for income taxes of $50,000 for
the third quarter of 1997 represents an estimated  effective  annual tax rate of
38%.

Nine Months Ended September 30, 1998 Compared to the Nine Months Ended September
30, 1997

The Company's net income for the nine months ended  September 30, 1998 decreased
$(4.3)  million to a net loss of $(4.0) million for the nine month period ending
September  30,1998,  from net income of $288,000 for the nine month period ended
September 30, 1997. Basic earnings per share for the nine months ended September
30, 1998 was a loss $(1.25)  compared to basic and diluted earnings per share of
$.24 and $.22,  respectively,  for the nine months  ended  September  30,  1997.
Included  in the loss of $(4.0)  million  for the first nine months of 1998 were
non-recurring expenses of $3.9 million or $(1.22) per share. These expenses were
related to the February 3, 1998 sale of common  stock and  warrants  included in
the units  sold to  foreign  investors  and the  February  11,  1998 sale of the
297,000 shares of common stock to 14 officers,  directors and  consultants.  The
Company recorded such non-cash compensation expense and financing costs measured
as the difference between the fair value of common stock, based upon the initial
public  offering  price of $10.00  per share,  and the sale  price or  allocated
proceeds  of $.01  per  share.  These  non-cash  charges  were  recorded  with a
corresponding increase in additional paid in capital and therefore had no effect
on the Companys total shareholders equity or book value.

Operating losses, net of non-recurring  expenses of $3.9 million, were $(99,000)
for the nine month period ended  September  30, 1998 compared to a net income of
$288,000 for the nine month  period ended  September  30,  1997.  The  operating
losses  incurred  in the first  nine  months  of 1998  primarily  resulted  from
non-recurring

                                       10
<PAGE>

expenses  associated with the merger  transaction in which the Company  acquired
First  National  Bank of Tampa  and the  opening  of the  Jacksonville,  Florida
offices of the Company and the Bank.

The increase in net interest  income of $382,000,  or 25.5%, to $1.9 million for
the nine months  ended  September  30, 1998  compared  $1.5 million for the same
period in 1997,  consists  of an increase in  interest  income of  $455,000,  or
14.2%, and an increase in interest expense of $73,000,  or 4.3%. The increase in
interest  income for the first nine months of 1998 is primarily  attributable to
an  increase of $326,000  in  interest  on  investments  and federal  funds sold
resulting from the investment of the net proceeds of the public offering.

The  provision  for loan  losses  charged  to  operations  increased  $62,000 to
$107,000  for the period  ended  September  30,  1998 from  $45,000 for the same
period in 1997. This increase  represents the additional reserves resulting from
new loan growth.

Non-interest  income increased $79,000, or 20.0%, to $472,000 for the nine month
period ended  September 30, 1998 from $393,000 for the same period in 1997.  The
increase in non-interest  income resulted from an increase in service fee income
of  $53,000,  an  increase in other  income of  $43,000,  partially  offset by a
decrease  in  the  gain  on  sale  of  loans  of  $18,000.  Increases  in  other
non-interest  income and service fees of $96,000 reflects an increase in deposit
account fees and ACH/EFT service fees.

Non-interest  expense  increased $4.8 million to $6.2 million for the nine month
period  ended  September  30, 1998  compared to $1.4  million for the nine month
period ended September 30, 1997. The increase in non-interest  expense  resulted
primarily from increases in salaries and benefits, occupancy and equipment, data
processing,  and other expenses.  Salaries and benefits expenses  increased $3.6
million to $4.3 million for the nine months ended September 30, 1998 compared to
$767,000 for the same period in 1997. This increase resulted from  non-recurring
non-cash  compensation  expense  of $3.0  million  related to the sale of common
stock to 14 officers, directors and consultants, normal salary increases and the
additional staff associated with the opening of the Jacksonville  banking office
and the staff for the holding company. Included in salaries and benefits expense
for the  nine  month  period  in 1998  are  non-recurring  expenses  of  $99,000
associated with the relocation of executive officers of the company.

The increase in occupancy and equipment expense of $120,000,  or 65.7%, resulted
from the additional  leased space for the Bank's SBA  department,  startup costs
and lease expense for the Jacksonville  banking and holding company office,  and
from  additional  depreciation  and  maintenance  expenses  resulting  from  the
purchase of additional  computer  equipment.  Data processing expenses increased
$11,000 or 15.7% to $80,000  for the nine  months  ended  September  30, 1998 as
compared to $69,000 for the same period in 1997. This increase resulted from the
conversion  and  implementation  of  several  new  products  and the  additional
processing  expenses  for the  Company  in  connection  with the  opening of the
Jacksonville  banking  office.  Other expenses  increased $1.2 million,  to $1.5
million for the nine months ended  September  30, 1998  compared to $363,000 for
the same period in 1997. This increase resulted  primarily from a financing cost
of $972,000  related to the  February 3, 1998 sale of common  stock and warrants
included  in the units sold to foreign  investors.  Additional  other  operating
expenses  for the nine months  ended  September  30,  1998  compared to the same
period  in  1997,   included  costs  associated  with  to  the  opening  of  the
Jacksonville  banking office and legal,  accounting and other  professional fees
associated with the acquisition of First National Bank of Tampa.

A provision for income taxes of $29,000 was recognized for the nine month period
ended September 30, 1998 as compared to a provision for income taxes of $178,000
for the same period ended  September  30,  1997.  Included in the loss of $(4.0)
million  for  the  nine month  period  in  1998 are  non-tax deductible expenses

                                       11
<PAGE>


of $3.9 million associated the sale of common stock and warrants included in the
units  sold to  foreign  investors  and the sale of  common  stock to  officers,
directors and consultants.  Therefore, no benefit for income taxes is recognized
for the period  ending  September  30, 1998.  The  provision for income taxes of
$29,000  for  the  nine  month  period  ended   September  30,  1998  represents
managements  estimate  of the  alternative  minimum  tax for  this  period.  The
provision for income taxes of $178,000 for the same period in 1997 represents an
estimated effective annual tax rate of 38%.

FINANCIAL CONDITION

Total  assets at  September  30, 1998 were $95.2  million,  an increase of $34.8
million or 57.6%, from $60.4 million at December 31, 1997. The increase in total
assets  primarily  resulted from the injection of funds from the public offering
on August 4, 1998.  Total Federal Funds sold  decreased $4.8 million or 47.1% to
$5.4 million at September  30, 1998 as compared to $10.2 million at December 31,
1997.  Funds which were previously  invested in Federal Funds to maintain excess
liquidity,  were  reinvested  in longer  term  assets or loans after the capital
injection.  Repurchase  agreements  purchased  increased  to  $18.0  million  at
September 30, 1998 from $0 at December 31, 1998.  These assets  represent  short
term  investment  of the excess  proceeds of the public  offering  reserved  for
future  capitalization  of the Bank and the funding of loan  growth.  Investment
securities increased $13.1 million or 121.5% to $23.8 million from $10.8 million
at December 31, 1997.  The increase in investment  securities  also reflects the
investment  of the excess  proceeds of the public  offering  reserved for future
capitalization of the Bank and the funding of loan growth.

Total loans  increased $8.0 million,  or 23.7%, to $41.8 million at September 30
1998,  from $33.8 million at December 31, 1997.  The increase in total loans was
funded by the proceeds of the capital  offering.  The  allowance for loan losses
increased $130,000, or 26.9%, to $611,000 at September 30, 1998 from $481,000 at
December  31,  1997.  The  increase   resulted  from  recoveries  of  previously
charged-off loans of $23,000 and additional  provisions of $107,000,  during the
nine month period ended 1998.  The  allowance for loan losses as a percentage of
total  loans  increased  slightly  form 1.42% at  December  31, 1997 to 1.46% at
September 30, 1998  Management  believes that such  allowance for loan losses is
sufficient to cover estimated losses in the Banks loan portfolio.

Deposits increased $1.7 million, or 3.8%, to $47.2 million at September 30, 1998
from $45.5 million at December 31, 1997. The increase in total deposits resulted
from a decrease of $707,000,  or 11.0%, in non-interest  deposits, a decrease of
$74,000,  or 5.5%, in money market deposits,  offset by an increase of $318,000,
or 10.3%, in interest bearing demand deposits,  an increase of $2.0 million,  or
33.8%, in savings deposits,  and an increase of $207,000, or 0.7%, in total time
deposits. Time deposits often fluctuate in response to interest rate changes and
can vary rather significantly on a quarterly basis. The decrease in non-interest
and interest-bearing  demand deposits reflects the normal seasonal  fluctuations
for these types of accounts.

Shareholders equity increased by $37.3 million to $43.7 million at September 30,
1998,  from $6.3 million at December 31, 1997.  This increase  resulted from the
net proceeds from the Initial Public Offering of $38.1 million,  the exercise of
stock  options  on May 28,  1998  whereby  240,000  shares of common  stock were
purchased  at an  exercise  price,  or $1.00  per  share,  partially  offset  by
operating losses, net of compensation and financing costs, of $99,000.

Non-accrual loans increased to $393,000 at September 30, 1998, compared to $0 at
December 31, 1997. These nonaccrual loans represent five commercial  loans, four
of which are SBA  guaranteed  loans of which  $298,000 is guaranteed by the SBA,
subject to certain  conditions.  The Bank reflected these loans as nonaccrual as
they are over 90 days past-due and in liquidation  at September 30, 1998.  These
loans were  classified as impaired loans at December 31, 1997 which an allowance
for loan losses for the Bank's estimated exposure on these loans.

                                       12
<PAGE>


LIQUIDITY

The  Company,  through its  subsidiary,  the Bank has  traditionally  maintained
levels of liquidity above levels required by regulatory authorities.  The Bank's
operational needs, demand for loan disbursements, and savings withdrawals can be
met by loan principal and interest payments received,  new deposits,  and excess
liquid  assets.   Significant  loan  demand,   deposit   withdrawal,   increased
delinquencies  and increased  real estate  acquired in settlement of loans could
alter this  condition.  Management  does not foresee any liquidity  problems for
1998.

Liquidity and Sources of Capital
--------------------------------

Liquidity is the Companys ability to meet all deposit  withdrawals  immediately,
while also  providing for the credit needs of customers.  The September 30, 1998
financial  statements  evidence a satisfactory  liquidity position as total cash
and cash  equivalents  amounted to $26.5  million,  representing  27.8% of total
assets.  Investment securities amounted to $23.8 million,  representing 25.1% of
total assets.  These  securities  provide a secondary  source of liquidity since
they can be converted  into cash in a timely  manner.  The  Companys  ability to
maintain  and expand its  deposit  base and  borrowing  capabilities  are also a
source of liquidity.  For the nine-month  period ended September 30, 1998, total
deposits  increased  from $45.5  million at December 31, 1997 to $47.2  million,
representing an annualized  increase of 3.8%. There can be no assurance that the
Company will be able to maintain this level of growth.  The Companys  management
closely monitors and maintains appropriate levels of interest earning assets and
interest bearing liabilities so that maturities of assets are such that adequate
funds are provided to meet customer  withdrawals  and loan demand.  There are no
trends,  demands,  commitments,  events or uncertainties that will result in. or
are  reasonably  likely to result  in,  the  Companys  liquidity  increasing  or
decreasing in any material way.

Management is committed to maintaining  capital at a level sufficient to protect
depositors,  provide for reasonable growth, and fully comply with all regulatory
requirements.  Managements strategy to achieve this goal is to retain sufficient
earnings while providing a reasonable return on equity.

The table below illustrates the Banks regulatory capital ratios at September 30,
1998:

                                                              Mimimum
                                         September 30,       regulatory
    Bank                                     1998           requirement
    ----                                 -------------      -----------
          Tier 1                            46.60%              4.00%
                                            =====               ==== 
          Total risk-based capital ratio    47.96%              8.00%
                                            =====               ==== 
          Leverage ratio                    24.75%              3.00%
                                            =====               ==== 

Note that with respect to the leverage  ratio,  the OCC expects a minimum of 5.0
percent to 6.0 percent  ratio for banks that are not rated CAMEL 1. Although the
Bank is not  rated  CAMEL 1, its  leverage  ratio of  24.75%  is well  above the
required minimum.

                                       13
<PAGE>


Year 2000 Compliance Disclosure

As the year 2000 ("Year  2000")  approaches,  an  important  business  issue has
emerged regarding existing  application software programs and operating systems.
Many existing application software products, including the Bank's, were designed
to accommodate a two-digit  year. For example,  "98" is stored on the system and
represents 1998 and "00" represents  1900. The Bank primarily  utilizes M&I Data
Services,  Inc.  ("M&I"),  a third-party  vendor, to provide its primary banking
applications, including core processing systems. In addition, the Bank also uses
M&I's software for certain ancillary  computer  applications.  M&I has committed
substantial  resources in the process of  modifying,  upgrading or replacing its
computer  applications to ensure timely Year 2000  compliance.  M&I has notified
the Bank  that it has  successfully  completed  the  conversion  of its  banking
systems to a Year 2000-ready platform. Prior to the actual conversion,  both the
Bank and M&I conducted  comprehensive  awareness,  assessment,  renovation,  and
testing phases as part of their  respective  Year 2000  projects.  Each of these
phases helped both  organizations  ensure that that they understood the scope of
the year 2000 impact on their  day-to-day  business.  In August  1998,  M&I Data
Services Year 2000 Outsourcing Solution,  the Banks core processing systems, was
certified by the  Information  Technology  of America  (ITAA).  ITAA 2000 is the
banking  industrys  century  date  change  certification  program.  The  program
examines  processes  and methods used by  companies  to perform  their Year 2000
software conversion. M&I Data Services has provided all upgrades,  modifications
and systems  enhancements  to the Bank in  accordance  with its data  processing
agreement and without additional costs to the Bank.

In  addition  to its core  processing  systems,  the  Company  and the Bank have
implemented  a Year 2000  compliance  program  whereby the Bank is reviewing the
Year 2000 issues that may be faced by its other third-party vendors and loan and
deposit  customers.  Under such  program,  the Company will examine the need for
modifications  or replacement of all non-Year 2000 compliant pieces of software.
This  process  is  ongoing,  however,  to date the Bank has not  identified  any
mission  critical  software  systems that are not Year 2000  compliant or in the
process of being modified for compliance.  Within the last nine months, the Bank
has made a physical  inventory of its computer and other  hardware and equipment
to determine if such hardware is Year 2000  compliant.  As part of this process,
the Company and Bank have replaced  certain  equipment and hardware at a cost of
$34,000.  The Bank has also  established  a reserve in the amount of $10,000 for
the cost of outside solution providers to review,  assess and provide testing of
its internal  computer  network and other  internal  systems.  Management of the
Company does not currently  expect that the cost of its and the Bank's Year 2000
compliance  program will exceed the amount of the established  reserves nor will
any costs in excess of these reserves be material to its financial condition.

An area of concern by the Company, Bank and its primary regulator, the Office of
the Comptroller of the Currency,  Administrator  of National Banks is the effect
of Year 2000 issues on its deposit and loan  customers.  Failure to address Year
2000  related  issues  could have  significant  impact on the ability of certain
customers of the Bank to continue operations.  The Banks loan portfolio could be
negatively  impacted  if  customers  are  unable to honor  loan  agreements  and
defaults  occur as a result of failure to address Year 2000 issues.  In February
of 1998,  the Bank  conducted  a review of all loan  relationships  in excess of
$25,000 to determine the  potential  effect of Year 2000 issues on the customers
systems.  The primary focus of this review was a determination  of the readiness
of the customer to address Year 2000  problems and the effect of such  readiness
on the customers ability to repay loans. Management identified a small number of
customers  which could be potentially  be affected by Year 2000 issues,  and has
addressed the Banks concern with these customers. Continuing monitoring of these
customer  relationships will be made to ensure that the necessary  modifications
to systems will be made on a timely  basis.  In  addition,  the Bank now reviews
Year 2000 related issues, as part of its normal  underwriting  criteria and loan
approval process.  The Bank also includes Year 2000 compliance  requirements and
covenants requiring compliance within its standard loan agreements. Although the
Company  and Bank have  taken  extensive  steps to  address  Year 2000  customer
related issues; there can be no assurance that these customers will be Year 2000
compliant. Failure of certain customers to adequately address these issues could
result in loan defaults which would negatively impact the Companys earnings.

                                       14
<PAGE>


The Company  believes that its mission critical systems are currently or will be
Year 2000  compliant  by December 31, 1998 and expects that it will satisfy such
compliance program without material disruption of its operations.  Management of
the Company has also  evaluated  the potential  effect on M&I's data  processing
systems  should  events  beyond M&Is  control  such as power and  communications
failures occur as a result of Year 2000 issues. In addition,  the Banks internal
systems  could  fail as a result  of  undetected  system or  software  errors or
failure of certain  infrastructure  which is beyond the control of the Bank. The
Bank has  prepared a Year 2000  Contingency  Strategy  and Policy  (the Plan) to
address the various recovery solutions for Year 2000-related  issues,  which may
arise from the most  likely  Year 2000  scenarios,  based on  current  available
information.  The Plan identifies and classifies  areas within the  organization
which could  potentially be effected by Year 2000 issues.  The identified  areas
are  assigned a status of  Mission  Critical,  Long-Term  Mission  Critical,  or
Non-Mission  Critical.  Based on these  classifications,  contingency  plans are
prepared to provide at level a minimum acceptable level of service on an ongoing
basis to the Banks customers.  Outside  solution  providers will review the Plan
and testing on mission  critical  functions  will be completed by the end of the
first quarter of 1999.

Although  the Company and Bank have taken  extensive  steps to address Year 2000
related issues, there can be no assurance that all necessary  modifications will
be identified and corrected or that  unforeseen  difficulties  or costs will not
arise.  In  addition,  there can be no  assurance  that the failure of the Banks
internal  systems or the systems provided by M&I or other companies on which the
Company's  systems  rely will not  negatively  impact the  Company's  systems or
operations.

CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS

The foregoing  Management's  Discussion and Analysis  contains  various "forward
looking  statements"  within the meaning of Section 27A of the Securities Act of
1933,  as amended,  and Section 21E of the  Securities  Exchange Act of 1934, as
amended, which represent the Company's expectations or beliefs concerning future
events,  including,  but not limited to, statements regarding growth in sales of
the Company's products, profit margins and the sufficiency of the Company's cash
flow for its future liquidity and capital resource needs,  These forward looking
statements  are further  qualified by important  factors that could cause actual
results to differ materially from those in the forward looking statements.

Item 3.   Changes in Information About Market Risk

          Not Applicable.

Part II.  Other Information

Item 1.   Legal Proceedings

          Not Applicable.

Item 2.   Changes in Securities

          No disclosure required.

Item 3.   Defaults Upon Senior Securities

          No disclosure required.

                                       15
<PAGE>


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

          No disclosure required.

Item 5.   Other Information

          No disclosure required.

Item 6.   Exhibits and Reports on Form 8-K

          (a) Exhibits. The following exhibit is filed with this Report.

              Exhibit No.         Description
              -----------         -----------
                 27.1             Financial Data Schedule (for SEC use only)

          (b) Reports on Form 8-K. No report on Form 8-K was filed during the
              quarter ended September 30, 1998.

                                       16
<PAGE>


                                   SIGNATURES
                                   ----------


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                      Florida Banks, Inc.


Date:   November 12, 1998             By: /s/Charles E. Hughes, Jr.
                                          -----------------------
                                          Charles E. Hughes, Jr.
                                          President and Chief Executive Officer


Date:   November 12, 1998             By: /s/T. Edwin Stinson, Jr
                                          -----------------------
                                          T. Edwin Stinson, Jr.
                                          Chief Financial Officer



                                       17
<PAGE>