<PAGE>
 
                                   FORM 10-Q
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
 
                 For the quarterly period ended June 30, 1998
                                        
                        Commission file number 1-12625
                                        
                           PREMIER BANCSHARES, INC.
            (Exact name of registrant as specified in its charter)

          GEORGIA                                          58-1793778
(State or other jurisdiction of               (IRS employer identification no.)
 incorporation or organization)
 
      2180 ATLANTA PLAZA                                       31061
   950 EAST PACES FERRY ROAD                                 (zip code)
       ATLANTA, GEORGIA
    (address of principal
      executive offices)

REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE 404-814-3090

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  X           No    
                                ---             ---

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
 
          CLASS                                    OUTSTANDING AT JULY 31, 1998
Common stock, $1.00 par value                              17,048,329
<PAGE>
 
                   PREMIER BANCSHARES, INC. AND SUBSIDIARIES

                                   FORM 10-Q

                               TABLE OF CONTENTS
                                        

                                                                        Page No.
                                                                        --------
Part I. Financial Information

Item 1. Consolidated Condensed Financial Statements....................     3

        Consolidated Condensed Statements of Condition (Unaudited)
        as of June 30, 1998 and December 31, 1997

        Consolidated Condensed Statements of Income (Unaudited)
        for the Three Months Ended June 30, 1998 and 1997

        Consolidated Condensed Statements of Income (Unaudited)
        for the Six Months Ended June 30, 1998 and 1997

        Consolidated Condensed Statements of Cash Flows (Unaudited)
        for the Six Months Ended June 30, 1998 and  1997

        Notes to Unaudited Consolidated Condensed Financial Statements

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations............................    11

Item 3. Quantitative and Qualitative Disclosures About Market Risk.....    17


Part II. Other Information

Item 6. Exhibits and Reports on Form 8-K...............................    17
Signatures.............................................................    20
<PAGE>
 
PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                   PREMIER BANCSHARES, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CONDITION
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                JUNE 30,            DECEMBER 31,
                                                                                  1998                  1997
                                                                                --------              --------
                                                                               (dollar amounts in thousands)
<S>                                                                             <C>                   <C>
Assets
  Cash and due from banks                                                       $ 34,719              $ 31,971
  Interest-bearing deposits with other banks                                       3,961                 6,477
  Federal funds sold                                                              35,877                42,352
  Securities available for sale                                                  122,993               124,133
  Loans held for sale                                                             49,003                59,363

  Loans                                                                          644,509               571,011
  Allowance for credit losses                                                     (9,648)               (9,355)
                                                                                ---------             --------
  Net loans                                                                      634,861               561,656

  Premises and equipment, net                                                     22,776                22,569
  Goodwill and other intangibles                                                   2,633                 2,817
  Other real estate owned                                                          2,119                 1,237
  Other assets                                                                    17,125                12,946
                                                                                ---------             --------
       Total assets                                                             $926,067              $865,521
                                                                                =========             ========
Liabilities
    Deposits
       Noninterest-bearing                                                      $113,782              $101,452
       Interest-bearing                                                          620,063               608,538
                                                                                ---------             --------
       Total deposits                                                            733,845               709,990

    Federal funds purchased and securities sold
     under repurchase agreements                                                  18,122                25,923
    Federal Home Loan Bank advances                                                1,875                 2,875
    Guaranteed preferred beneficial interests in the
     Company's subordinated debentures (trust preferred                           28,750                28,750
     securities)
    Other borrowings                                                              49,514                12,135
    Other liabilities                                                              8,566                 7,402
                                                                                ---------             --------
       Total liabilities                                                         840,672               787,075

Shareholders' Equity
 Common stock, $1 par value; 60,000,000 shares authorized;
 17,048,329 and 16,843,036 shares issued at June 30, 1998
 and December 31, 1997, respectively                                              17,048
    Capital surplus                                                               35,919                35,095
    Retained earnings                                                             31,051                25,758
    Unrealized gains on securities available-for-sale, net                         1,377                   750
                                                                                ---------             --------
       Total shareholders' equity                                                 85,395                78,446
                                                                                ---------             --------
       Total liabilities and shareholders' equity                               $926,067              $865,521
                                                                                =========             ========
</TABLE>
 
See notes to consolidated condensed financial statements.
<PAGE>
 
                   PREMIER BANCSHARES, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                            THREE MONTHS ENDED JUNE 30,
                                                                                               1998              1997
                                                                                           -----------       -----------
                                                                                           (dollar amounts in thousands,
                                                                                               except per share data)
<S>                                                                                         <C>               <C>
  Loans, including fees                                                                       $17,336            $13,661
  Investment securities:
      Taxable                                                                                   1,572              2,223
      Tax-exempt                                                                                  225                323
  Federal funds sold                                                                              555                484
  Other interest income                                                                            61                 49
                                                                                          -----------        -----------
          Total interest income                                                                19,749             16,740

INTEREST EXPENSE
  Deposits                                                                                      7,821              6,940
  Other borrowings                                                                              1,712                748
                                                                                          -----------        -----------
          Total interest expense                                                                9,533              7,688

  Net interest income                                                                          10,216              9,052
Provision for credit losses                                                                       150                 48
                                                                                          -----------        -----------
  Net interest income after provision for credit losses                                        10,066              9,004

NONINTEREST INCOME
  Service charges on deposit accounts                                                             668                760
  Securities transactions, net                                                                      2                 (9)

  Mortgage banking activities                                                                   6,419              2,857
  Other noninterest income                                                                      1,931              1,585
                                                                                          -----------        -----------
          Total noninterest income                                                              9,020              5,193

NONINTEREST EXPENSE
  Salaries and employee benefits                                                                8,233              5,862
  Net occupancy and equipment expense                                                           1,663              1,262
  Merger related expenses                                                                         360                346
  Other noninterest expense                                                                     3,153              2,191
                                                                                          -----------        -----------
          Total noninterest expense                                                            13,409              9,661
                                                                                          -----------        -----------
Income before income taxes                                                                      5,677              4,536
Income taxes                                                                                    1,537              1,528
                                                                                          -----------        -----------

NET INCOME                                                                                    $ 4,140            $ 3,008
                                                                                          ===========        ===========
(1)Per Share Information:
  Basic earnings per share                                                                $      0.24            $  0.18
  Weighted average shares outstanding - Basic                                              16,953,889         16,602,188

  Earnings per share - Diluted                                                                 $ 0.24              $0.18
  Weighted average shares outstanding - Diluted                                            17,406,647         16,869,985
  Dividends declared per share                                                            $      0.08        $      0.07
</TABLE>
 
See notes to consolidated condensed financial statements.
_______________

(1)  After giving effect to stock splits payable to stockholders of record on
January 23, 1998 and March 6, 1997.
<PAGE>
 
                   PREMIER BANCSHARES, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                   SIX MONTHS ENDED JUNE 30,
                                                                                    1998               1997
                                                                                ------------        ----------
                                                                                   (dollar amounts in thousands
                                                                                      except per share data)
<S>                                                                                <C>                 <C>
     Loans, including fees                                                          $33,000            $25,578
     Investment securities:
        Taxable                                                                       3,027              4,546
        Tax-exempt                                                                      506                654
     Federal funds sold                                                               1,277              1,370
     Other interest income                                                               61                 84
                                                                                    -------            -------
        Total interest income                                                        37,871             32,232

INTEREST EXPENSE
     Deposits                                                                        15,604             13,747
     Other borrowings                                                                 2,886              1,296
                                                                                    -------            -------
        Total interest expense                                                       18,490             15,043

     Net interest income                                                             19,381             17,189
Provision for credit losses                                                             150                184
                                                                                    -------            -------
     Net interest income after provision for credit losses                           19,230             17,005

NONINTEREST INCOME
     Service charges on deposit accounts                                              1,427              1,479
     Securities transactions, net                                                         9                (45)
     Mortgage banking activities                                                     12,286              5,376
     Other noninterest income                                                         3,207              2,466
                                                                                    -------            -------
        Total noninterest income                                                     16,929              9,276

NONINTEREST EXPENSE
     Salaries and employee benefits                                                  15,598             11,189
     Net occupancy and equipment expense                                              3,227              2,442
     Merger related expenses                                                            377                394
     Other noninterest expense                                                        5,871              4,551
                                                                                    -------            -------
         Total noninterest expense                                                   25,073             18,576
                                                                                    -------            -------
Income before income taxes                                                           11,087              7,705
Income taxes                                                                          3,213              2,172
                                                                                    -------            -------
NET INCOME                                                                          $ 7,874            $ 5,533
                                                                                    =======            =======

(1)Per Share Information:
     Basic earnings per share                                                         $0.47              $0.33
     Weighted average shares outstanding - Basic                                 16,916,511         16,602,188

     Earnings per share - Diluted                                                     $0.45              $0.33

     Weighted average shares outstanding - Diluted                               17,330,063         16,819,630
     Dividends                                                                        $0.16              $0.11
</TABLE>

See notes to consolidated condensed financial statements.
____________________
(1) After giving effect to stock splits payable to stockholders of record on
    January 23, 1998 and March 6, 1997.
<PAGE>
 
                   PREMIER BANCSHARES, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                         SIX MONTHS ENDED JUNE 30,
                                                                                           1998             1997
                                                                                         --------         --------
                                                                                       (dollar amounts in thousands)
<S>                                                                                     <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                             $  7,874         $  5,533
     Adjustments to reconcile net earnings to net cash provided by
       operating activities:
          Provision for credit losses                                                         150              184
          Depreciation expense                                                              1,341              922
          Amortization and accretion, net                                                     212              263
          Gain on sale of premises and equipment                                             (560)              --
          Gain on sale of branch                                                             (657)              --
          Gain on sale of subsidiary                                                           --             (757)
          Gain on sale of securities                                                           (8)             (45)
          Gain on sale of mortgage loans                                                  (12,126)          (5,376)
          Net originations of mortgage loans                                               22,486          (10,549)
          Changes in other assets and liabilities
              Increase in other assets                                                     (5,063)          (2,582)
              Increase (decrease) increase in other liabilities                               882              (97)
                                                                                         --------         --------
       Net cash used in  operating activities                                              14,531          (12,504)

CASH FLOWS FROM INVESTING ACTIVITIES
   Decrease  (increase) in interest bearing deposits                                        2,516           (6,173)
   Proceeds from maturities and paydowns of investment securities available-for-sale
   Proceeds from sales of investment securities available-for-sale
   Purchases of investment securities                                                     (31,752)         (25,268)
    available-for-sale
   Net increase in loans                                                                  (73,784)         (89,154)
   Decrease in federal funds sold, net                                                      6,475           33,049
   Additions to premises and equipment                                                     (2,422)          (2,014)
   Proceeds from sales of premises and equipment                                              783               --
   Sale of  bank branch                                                                    (7,122)              --
       Net cash used in investing activities                                              (71,525)         (50,491)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits                                                                32,716           39,671
   Net increase in short  term borrowings                                                  28,578           26,803
   Cash dividends paid                                                                     (2,581)          (1,176)
   Purchase of treasury stock                                                                  --             (348)
   Proceeds from exercise of stock options                                                  1,029              215
                                                                                         --------         --------
       Net cash provided by financing activities                                           59,742           65,165
                                                                                         --------         --------

       Net increase in cash and cash equivalents                                            2,748            2,170
Cash and cash equivalents, beginning of period                                             31,971           29,095
                                                                                         --------         --------
Cash and cash equivalents, end of period                                                 $  34,71         $ 31,265
                                                                                         ========         ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the period for:
      Interest                                                                             18,252           14,849
                                                                                         ========         ========
      Income taxes                                                                          4,800            1,385
                                                                                         ========         ========
</TABLE>

See notes to consolidated condensed financial statements.
<PAGE>
 
                   PREMIER BANCSHARES, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1998
                                  (UNAUDITED)
                                        

Note 1.  BASIS OF PRESENTATION

The accompanying consolidated condensed financial information of Premier
Bancshares, Inc. and Subsidiaries (the "Company") is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.  The results of operations for the
three-month and six month periods ended June 30, 1998 are not necessarily
indicative of the results to be expected for the full year.  These statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.

Note 2.  BUSINESS COMBINATIONS

Completed Combinations.

On June 9, 1998, the Company completed a business combination with Lanier Bank &
Trust Company ("Lanier") by exchanging 1,625,990 shares of the Company's common
stock for all of the outstanding common stock of Lanier. The combination was
accounted for as a pooling of interests and, accordingly, the financial
statements reflect the combination as if it took place on January 1, 1998.  All
prior period consolidated financial statements have been restated to include the
results of Lanier.

On December 12, 1997, the Company completed a business combination with Citizens
Gwinnett Bankshares, Inc. ("Citizens") by exchanging 2,066,834 shares of the
Company's common stock for all of the outstanding common stock of Citizens. The
combination was accounted for as a pooling of interests and, accordingly, the
financial statements reflect the combination as if it took place on January 1,
1997, and all prior period consolidated financial statements have been restated
to include the results of Citizens.

On June 23, 1997, the Company completed a business combination with Central and
Southern Holding Company ("Central and Southern") by exchanging 3,653,523 shares
of the Company's common stock for all of the outstanding common stock of Central
and Southern. The combination was accounted for as a pooling of interests and,
accordingly, the financial statements reflect the combination as if it took
place on January 1, 1997, and all prior period consolidated financial statements
have been restated to include the results of Central and Southern.

The following table illustrates the Company's net interest income and net income
on a consolidated basis for periods prior to the business combinations discussed
above:

<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED JUNE 30,
                                                                       1998         1997
                                                                     -------       -------
                                                                    (dollars in thousands)
<S>                                                                 <C>            <C>
Net interest income:
Premier Bancshares, Inc., exclusive of pre-acquisition amounts       $17,894       $ 6,967
   Lanier (1)                                                          1,487         1,457
   Citizens  (2)                                                           -         4,066
   Central and Southern (3)                                                -         4,699
                                                                     -------       -------
Total                                                                $19,381       $17,189
                                                                     =======       =======
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED JUNE 30,
                                                                       1998         1997
                                                                     -------       -------
                                                                    (dollars in thousands)
<S>                                                                 <C>            <C>
Net income:
Premier Bancshares, Inc., exclusive of pre-acquisition amounts       $ 7,533       $ 2,573
   Lanier (1)                                                            341           352
   Citizens  (2)                                                           -         1,093
   Central and Southern (3)                                                -         1,515
                                                                     -------       -------
Total                                                                $ 7,874       $ 5,533
                                                                     =======       =======
</TABLE>
______________________

(1)  1998 amounts reflect the results of operations from January 1, 1998 through
     the effective merger date of June 9, 1998.  Results of operations for the
     period from June 10, 1998 through June 30, 1998 are included in Premier
     Bancshares, Inc. amounts.

(2)  1997 amounts reflect the results of operations from January 1, 1997 through
     the effective merger date of December 12, 1997.  Results of operations for
     the period from December 13, 1997 through December 31, 1997 are included in
     Premier Bancshares, Inc. amounts.

(3)  1997 amounts reflect the results of January 1, 1997 through the effective
     merger date of June 23, 1997.  Results of operations for the period from
     June 24, 1997 through December 31, 1997 are included in Premier Bancshares,
     Inc. amounts.

Effective October 17, 1997, the Company acquired Traditional Mortgage
Corporation ("Traditional") for 114,598 shares of the Company's common stock at
a fair market value of $1,833,000.  Traditional originates residential mortgage
loans primarily for sale to independent third party investors.  Traditional was
merged with Premier Lending Corporation.  The acquisition was accounted for as a
purchase and the results of operations for Traditional from the date of
acquisition are included in the consolidated financial statements.  The purchase
price was allocated to the acquired assets and liabilities based on the fair
value of those assets and liabilities as determined by the Company.   The excess
of the total acquisition cost over the fair value of the assets and liabilities
acquired is being amortized on a straight-line basis over a period of fifteen
years.

Subsequent and Pending Combinations

On July 1, 1998, the Company completed a business combination with Button
Gwinnett Financial Corporation ("Button Gwinnett") by exchanging 5,571,778
shares of the Company's common stock for all of the outstanding common stock of
Button Gwinnett.  The combination will be accounted for as a pooling of
interests.  The combination with Button Gwinnett will increase total assets by
approximately $220 million.

On July 2, 1998, the Company completed a business combination with The Bank
Holding Company ("BHC") by exchanging 2,170,447 shares of the Company's common
stock and 40,770 shares of the Company's preferred stock for all of the
outstanding common and preferred stock of BHC.  The combination will be
accounted for as a pooling of interests.  The combination with BHC will increase
total assets by approximately $138 million.
 
On July 9, 1998, the Company announced that a definitive merger agreement had
been entered into with Frederica Bank & Trust ("Frederica").  As of December 31,
1997, Frederica had total assets of $66,166,000 and for the year ended December
31, 1997, had revenue and net income of $5,420,000 and $660,000, respectively.
The merger is expected to be accounted for as a pooling of interests.

Note 3.  SHAREHOLDERS' EQUITY AND DIVIDENDS PER SHARE

The Company declared a three-for-two stock split on January 8, 1998 for
stockholders of record as of January 23, 1998.  All per share data has been
restated to reflect the split.

On February 24, 1997, the Company declared a 1.8055 stock split for stockholders
of record as of March 6, 1997.  All per share data has been restated to reflect
the split.
<PAGE>
 
On June 23, 1998, the Company declared dividends of $0.08 per share payable to
shareholders of record as of June 30, 1998.  During the quarter ended June 30,
1997, the Company declared cash dividends of $0.07 per share (restated for stock
splits and pooling of interests).

Note 4.  CURRENT ACCOUNTING DEVELOPMENTS

On January 1, 1998, the Company adopted the provisions of Financial Accounting
Standards Board ("FASB") Statement No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," ("Statement
125"), relating to repurchase agreements, securities lending and other similar
transactions and pledged collateral, which had been delayed until after December
31, 1997 by FASB Statement No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125, an amendment of FASB Statement No. 125,"
("Statement 127"). Statement 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of liabilities
based on a consistent application of a "financial-components approach" that
focuses on control. Under that approach, after a transfer of financial assets,
an entity recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control has been
surrendered and derecognizes liabilities when extinguished. Statement 125
provides standards for consistently distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings. The adoption of the
additional provisions of Statement 125 as amended by Statement 127 resulted in
no material impact on the Company's financial condition or results of
operations.

As of January 1, 1998, the Company adopted FASB Statement No. 130, "Reporting
Comprehensive Income" ("Statement 130").  Statement 130 establishes new rules
for the reporting and display of comprehensive income and its components;
however, the adoption of this Statement had no impact on the Company's net
income or shareholders' equity.  Statement 130 requires unrealized gains or
losses on the Company's available-for-sale securities, which prior to adoption
were reported separately in shareholders' equity, to be included in other
comprehensive income.  Prior year financial statements have been reclassified to
conform to the requirements of Statement 130.  During the three and six months
ended June 30, 1998, total comprehensive income totaled $4,174,000 and
$8,501,000, respectively.  During the three and six months ended June 30, 1997,
total comprehensive income totaled $2,766,000 and $5,795,000, respectively.

Effective January 1, 1998, the Company adopted FASB Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("Statement 131"). Statement 131 superseded FASB Statement No. 14, "Financial
Reporting for Segments of a Business Enterprise". Statement 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. Statement 131 also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The adoption of Statement 131 did not affect results of operations or financial
position.

Note 5.  EARNINGS PER SHARE

Earnings per share for periods prior to 1998 have been restated from amounts
previously reported to reflect the effect of business combinations accounted for
as poolings of interests.  For the quarter ended June 30, 1997, net income per
common share and net income per common share, diluted, have been adjusted
$(0.01).  For the six months ended June 30, 1997, net income per common share
and net income per common share, diluted, have been adjusted $(0.02).
<PAGE>
 
The following tables set forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED JUNE 30,
                                                                      1998                    1997
                                                                    -------                 -------
                                                                 (In thousands, except per share data)
<S>                                                                <C>                     <C>
NUMERATOR:
  Net income                                                        $ 4,140                 $ 3,008
                                                                    =======                 =======
DENOMINATOR:
  Denominator for basic earnings per share - weighted
   average shares                                                    16,954                  16,602
  Effect of dilutive securities - stock options                         453                     268
                                                                    -------                 -------
  Denominator for diluted earnings per share - adjusted
   weighted average shares and assumed conversions                   17,407                  16,870
                                                                    =======                 =======
Net income per share of common stock                                $  0.24                 $  0.18
                                                                    -------                 -------
Net income per share of common stock - diluted                      $  0.24                 $  0.18
                                                                    =======                 =======

                                                                        SIX MONTHS ENDED JUNE 30,
                                                                      1998                    1997
                                                                    -------                 -------
                                                                 (In thousands, except per share data)
NUMERATOR:
  Net income                                                        $ 7,874                 $ 5,533
                                                                    =======                 =======
DENOMINATOR:
  Denominator for basic earnings per share - weighted
   average shares                                                    16,917                  16,602
  Effect of dilutive securities - stock options                         413                     218
                                                                    -------                 -------
  Denominator for diluted earnings per share - adjusted
   weighted average shares and assumed conversions                   17,330                  16,820
                                                                    =======                 =======
Net income per share of common stock                                $  0.47                 $  0.33
                                                                    -------                 -------
Net income per share of common stock - diluted                      $  0.45                 $  0.33
                                                                    =======                 =======
</TABLE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Condensed Financial Statements, including the footnotes, and is qualified in its
entirety by the foregoing and other more detailed financial information
appearing elsewhere herein.  Historical results of operations and the percentage
relationships among any amounts included in the Consolidated Condensed
Statements of Income, and any trends which may appear to be inferable therefrom,
should not be taken as being necessarily indicative of trends in operations or
results of operations for any future periods.

Comments in this Management's Discussion and Analysis regarding the Company's
business which are not historical facts are forward-looking statements that
involve risks and uncertainties.  Among these risks are that the Company is in a
highly competitive business and is pursuing a growth strategy that relies in
part on the completion of acquisitions of bank holding companies and other
<PAGE>
 
financial institutions.  There can be no assurance that in its highly
competitive business environment, the Company will successfully implement its
growth strategy.

FINANCIAL CONDITION

At the end of the second quarter of 1998, total assets increased $60,546,000 or
7.0% from December 31, 1997.  Total loans (excluding mortgage loans held for
sale), increased $73,498,000 or 12.9% from December 31, 1997 to June 30, 1998.
The loan increases are primarily attributable to increased demand for loans in
the markets that the Company serves.  Mortgage loans held for sale decreased
$10,360,000 or 17.5% during the same period. Federal funds sold decreased
$6,475,000 or 15.3% from December 31, 1997 to June 30, 1998.  Securities
available-for-sale decreased $1,140,000 or 0.9% during the same period due to
maturities and calls. The proceeds from securities sold or maturing were used to
partially fund the increase in loans.

Other borrowings increased by $37,379,000 or 308.0% as the result of the Company
funding its mortgage banking operation with a warehouse line of credit from a
regional bank.  Total liabilities increased by $53,597,000 or 6.8% from December
31, 1997 to June 30, 1998. Noninterest-bearing deposits increased by $12,330,000
or 12.2% and interest-bearing deposits increased by $11,525,000 or 1.9% during
the same period as the Company has increased its market area through the
acquisition of Central and Southern Holding Company in June 1997, Citizens
Gwinnett Bankshares in December 1997, and Lanier Bank and Trust in June 1998.

RESULTS OF OPERATIONS

For the three-month period ended June 30, 1998 the Company recorded net income
of $4,140,000 as compared to $3,008,000 for the same period in 1997.  This
$1,132,000 or 37.6% increase is due primarily to the following:

  Net interest income increased $1,164,000.
  Provision for credit losses increased $102,000.
  Total noninterest income increased $3,827,000.
  Total noninterest expense increased $3,748,000.
  Income tax expense increased $9,000.
 
The reasons for these changes are discussed more fully below.

For the six-month period ended June 30, 1998 the Company recorded net income of
$7,874,000 as compared to $5,533,000 for the same period in 1997.  This
$2,341,000 or 42.3% increase is due primarily to the following:

  Net interest income increased $2,192,000.
  Provision for credit losses decreased $34,000.
  Total noninterest income increased $7,653,000.
  Total noninterest expense increased $6,497,000.
  Income tax expense increased $1,041,000.
 
The reasons for these changes are discussed more fully below.

Net Interest Income
-------------------

Net interest income increased $1,164,000 or 12.9% for the three month period
ended June 30, 1998 compared to same period in 1997, due to an increase in
average earning assets.  Average earning assets increased by approximately $149
million while average interest-bearing liabilities increased by approximately
$119 million. Yields on earning assets decreased by 18 basis points and costs of
interest-bearing liabilities increased by 19 basis points. The net interest
margin declined to 4.76% in the second quarter of 1998 from 5.06% in the
comparable period of 1997.

Net interest income increased $2,192,000 or 12.8% for the six month period ended
June 30, 1998 compared to same period in 1997, due to an increase in average
earning assets.  Average earning assets increased by approximately $135 million
while average interest-bearing liabilities increased by approximately $131
<PAGE>
 
million. Yields on earning assets decreased by 13 basis points and costs of
interest-bearing liabilities increased by 20 basis points. The net interest
margin declined to 4.67% in the second quarter of 1998 from 4.95% in the
comparable period of 1997.

Provision for Credit Losses
---------------------------

The Company recorded a provision for credit losses of $150,000 for the second
quarter of 1998.  The Company had net recoveries during the quarter of $135,000
related to prior period charge offs, the majority of recoveries being sales
finance loans. Management anticipates the net recovery trend will continue with
continued recoveries of prior period charge offs.  Management will monitor and
adjust the level of the allowance for credit losses in relation to this net
recovery stream, as well as the overall level of the allowance for credit losses
to loans outstanding and management's assessment of credit losses inherent in
the loan portfolio.
<PAGE>
 
                                 ASSET QUALITY
<TABLE> 
<CAPTION> 
                                                 JUNE 30, 1998        DECEMBER 31,
                                                 -------------        ------------
                                                                (dollars in thousands)
<S>                                                  <C>                <C>              <C>             <C> 
Loans past due 90 days or more and
Nonaccrual loans                                      3,203              2,875              328           11%
                                                     ------             ------            -----           ---
    Total nonperforming loans                         3,226              3,502             (276)          (8)%
 
Other real estate owned                               2,142              1,237              905           73%
                                                     ------             ------            -----           ---
   Total nonperforming assets                        $5,368             $4,739            $ 630           13%
                                                     ======             ======            =====           === 
Nonperforming loans/Total loans                        0.50%              0.61%
Nonperforming assets/Total assets                      0.58%              0.55%
</TABLE>

The table above illustrates the changes in the level of nonperforming assets
from December 31, 1997 to June 30, 1998. The level of nonperforming assets at
June 30, 1998 increased slightly from December 31, 1997.  Management anticipates
the levels of nonperforming loans and assets to remain at relatively low levels.

Noninterest Income
------------------

The Company's main sources of noninterest income are from mortgage banking
activities and from service charges on deposit accounts.  Noninterest income
increased substantially in the second quarter of 1998 compared to the same
period in 1997. Income from mortgage banking activities increased $3,562,000 in
the three months ended June 30, 1998 compared to the same period in 1997 due to
the increased volume of mortgage loan originations in part due to the
acquisition of Traditional Mortgage Company in October 1997 and continued strong
housing demand in the Company's markets.  Other operating income increased
$445,000 primarily due to the sale of a subsidiary branch banking location.

Noninterest income increased substantially for the six months ended June 30,
1998 compared to the same period in 1997. Total noninterest income increased
$7,653,000, or 82.5% for the six months. Income from mortgage banking activities
increased $6,910,000, or 128.5% in the six months compared to the same period in
1997.

Noninterest Expense
-------------------

Noninterest expense increased substantially for the three month and six month
periods ended June 30, 1998 compared to the same periods in 1997.  Salaries and
employee benefits expense increased primarily due to increased commissions on
mortgage loan originations. Occupancy expense also increased due to the
Company's opening of two new branches of a subsidiary bank during the third
quarter of 1997.

Income Tax Expense
------------------

Income tax expense increased slightly for the three months ended June 30, 1998
compared to the same period in 1997.  The effective tax rate for second quarter
1998 was 27% versus 34% for the same period in 1997.  Second quarter 1997
accrued taxes were reduced by the utilization of tax credits and prior period
net operating loss carryforwards.

Income tax expense increased $1,041,000, or 47.9% for the six months ended June
30, 1998 compared to the same period in 1997.  The effective tax rate for the
six months was 29% vs. 28% for the same period in 1997.
<PAGE>
 
INTEREST RATE SENSITIVITY MANAGEMENT

Interest rates play a major part in the net interest income of a financial
institution.  The sensitivity to rate changes is known as "interest rate risk."
The repricing of interest-earning assets and interest-bearing liabilities can
influence the changes in net interest income.  As part of the Company's
asset/liability management program, the timing of repricing assets and
liabilities is referred to as Gap management.  It is the policy of the Company
to maintain a Gap ratio in the one-year time horizon of .80 to 1.20. The Gap
analysis indicates that the Company is somewhat asset sensitive in relation to
changes in market interest rates.

The Company uses simulation analysis to monitor changes in net interest income
due to changes in market interest rates.  The simulation of rising, declining,
and a most likely interest rate scenario allows management to monitor and adjust
interest rate sensitivity to minimize the impact of market interest rate swings.
Each month management updates all available data concerning cash flows of assets
and liabilities, changes in market interest rates, and expectations as to new
volumes of loans.

LIQUIDITY

Liquidity is an important factor in the financial condition of the Company and
affects the Company's ability to meet the borrowing needs and deposit withdrawal
requirements of its customers.  Assets, consisting principally of loans and
investment securities, are funded by customer deposits, purchased funds, and
borrowed funds.

The investment portfolio is one of the Company's primary sources of liquidity.
Maturities of securities provide a constant flow of funds which are available
for cash needs. Investment securities that contractually mature within one year
total $13 million. However, mortgage-backed securities and securities with call
provisions create cash flows earlier than the contractual maturities.  Estimates
of prepayments on mortgage-backed securities and call provisions on other
securities increase the forecasted cash flow from the investment portfolio
within one year to approximately $17 million.  Maturities in the loan portfolio
also provide a steady flow of funds.  The Company's liquidity also continues to
be enhanced by an increasing core deposit base.  Deposits have increased $24
million since year ended December 31, 1997, or approximately 3.4%.  At June 30,
1998, the loan-to-deposit (excluding loans held for sale) ratio was 88%.

Effective April 15, 1998, the Company and Premier Lending Corporation, a wholly
owned subsidiary, entered into a $90 million Mortgage Warehouse Line of Credit
Loan and Security Agreement with SunTrust Bank, Central Florida, National
Association, individually and as agent for Colonial Bank, CoreStates Bank, N.A.
and SouthTrust Bank, National Association.  The proceeds of the line of credit
will be used to provide interim funds for the funding of eligible residential
mortgage loans prior to resale thereof to investors pre-approved by the agent.
Advances of the proceeds of the line of credit will be made from time to time by
the lenders, on a pro rata basis in accordance with their respective percentage
interest, upon written request of the Company and/or Premier Lending
Corporation's compliance with such advance conditions as may be established from
time to time by the agent.  The term of the line of credit is one year.  The
line of credit is secured by an assignment of and a grant of a first priority
security interest in the subject mortgage loans.

SHAREHOLDERS' EQUITY

The Company maintains a ratio of shareholders' equity to total assets that is
adequate relative to industry standards.  The Company's ratio of shareholders'
equity to total assets was 9.2% at June 30, 1998, compared to 9.1% at December
31, 1997.

The Company and its subsidiary banks are required to comply with capital
adequacy standards established by the Federal Reserve and the FDIC.  Currently,
there are two basic measures of capital adequacy: risk-based measure and
leverage measure.

The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance sheet exposure and to enhance the
value of  holding liquid assets. The resulting capital ratios represent capital
as a percentage of total risk-weighted assets and off-balance sheet items.
Recently the Federal Reserve and the FDIC proposed that interest rate risk be
considered in computing risk-based capital ratios.
<PAGE>
 
The minimum standard for the ratio of total capital to risk-weighted assets is
8%.  At least 50% of that capital level must consist of common equity, undivided
profits and noncumulative perpetual preferred stock, less goodwill and certain
other intangibles ("Tier I capital").  The remainder ("Tier II capital") may
consist of a limited amount of other preferred stock, mandatory convertible
securities, subordinated debt and a limited amount of the allowance for credit
losses.  The sum of Tier I capital and Tier II capital is "total risk-based
capital."

The Federal Reserve and the FDIC also adopted regulations which supplement the
risk-based guidelines to include a minimum leverage ratio of 3% of Tier I
capital to total assets less goodwill (the "leverage ratio").  Depending upon
the risk profile of the institution and other factors, the regulatory agencies
may require a leverage 1% to 2% higher than the minimum 3% level.

                                 CAPITAL LEVELS
<TABLE>
<CAPTION>
                                                 AT JUNE 30, 1998
                                                 ----------------
<S>                                              <C>
Tier I Capital Leverage Ratio                          11.23%
 
Tier I Risk-based Capital Ratio                        14.79%
Tier II Risk-based Capital Ratio                        1.47%
                                                       -----
Total Risk-based Capital Ratio                         16.26%
                                                       =====
</TABLE>

YEAR 2000

Like many financial institutions, the Company relies upon computers for the
daily conduct of its business and for data processing generally.  There is
concern among industry experts that commencing on January 1, 2000, computers
will be unable to "read" the new year and there may be widespread computer
malfunctions.  The Company is taking steps to prepare both its information
technology systems and its other equipment and machinery for the Year 2000 date
change.  The Company expects to substantially complete these efforts at the end
of calendar year 1998, with testing to continue through 1999.  Although the
Company does not believe that it will incur any material costs or experience
material disruptions in its business associated with preparing its internal
systems for the Year 2000, there can be no assurances that the Company will not
experience unanticipated negative consequences and/or material costs caused by
undetected errors or defects in the technology used in its internal systems.
The Company is currently unable to estimate the most reasonably likely worst-
case effects of the Year 2000 and does not currently have a contingency plan in
place for any such unanticipated negative effects.  The Company intends to
analyze the worst-case scenarios and the need for such contingency planning once
the measures described above have been completed and testing of the Company's
systems for Year 2000 compliance has begun.

The Company is currently unable to estimate whether it is exposed to significant
risk of being adversely affected by the Year 2000 noncompliance by third
parties.  During the third quarter of 1998, the Company intends to begin
contacting third parties with which it has material relationships, including its
material customers, to attempt to determine their preparedness with respect to
Year 2000 issues and to analyze the risks to the Company in the event any such
third parties experience significant business interruptions as a result of Year
2000 noncompliance.  The Company expects to complete this review and analysis
and to determine the need for contingency planning in this regard by March 31,
1999.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk exposure is interest rate risk and, to a
lesser extent, credit risk and liquidity risk.  The Company has little or no
risk related to trading accounts, commodities or foreign exchange.  Interest
rate risk is the exposure of a banking organization's financial condition and
earnings ability to adverse movements in interest rates.  The Company has
analyzed the assumed market value risk and earnings risk inherent in its
interest rate sensitive instruments related to interest-rate swings of 200 basis
points, both above and below current levels (rate shock analysis).  Earnings and
fair value estimates are subjective in nature and involve uncertainties and
matters of significant judgment and, therefore, cannot be determined with
precision.  There have been no significant changes in the Company's market risk
exposure since December 31, 1997.
<PAGE>
 
PART II.OTHER INFORMATION

ITEM 4.SUBMISSIONS OF MATTERS TO A VOTE OF SECURITIES HOLDERS

On June 30, 1998, the Company held its annual shareholders' meeting at which the
shareholders approved the following proposals:

1. The proposal to approve the Agreement and Plan of Reorganization entered into
   with Button Gwinnett Financial Corporation dated February 5, 1998, as
   amended. This proposal was approved with 9,441,716 shares or 61.22% voting
   for the proposal, 11,706 or .08% voting against the proposal and, 34,762 or
   .23% abstaining from the proposal. There were 1,951,906 or 12.65% broker non-
   votes.

2. The proposal to elect the following directors of Premier to serve until the
   next annual meeting: N. Michael Anderson, George S. Carpenter, Jr., Donald N.
   Ellis, William M. Evans, Jr., John H. Ferguson, D.D.S., Robert E. Flourney
   III, A.F. Gandy, Robin R. Howell, C. Steve McQuaig, M.D., Darrell D. Pittard,
   James E. Freeman, Billy H. Martin, James L. Coxwell, Sr., Robert C. Oliver
   and Thomas E. Owen, Jr. This proposal was approved with 11,322,388 shares or
   73.42% voting for the proposal, and 117,702 or .76% withholding authority.

3. The proposal to ratify the selection of Ernst & Young LLP as Premier's
   independent public accountants for the year ending December 31, 1998. This
   proposal was approved with 11,384,029 shares or 73.82% voting for the
   proposal, 22,206 or .14% voting against the proposal and 33,855 or .22%
   abstaining from the proposal.

4. The proposal to amend Premier's Articles of Incorporation to increase the
   number of authorized shares of Premier Common Stock from 20,000,000 to
   60,000,000. This proposal was approved with 11,132,836 shares or 72.19%
   voting for the proposal, 205,623 or 1.33% voting against the proposal and
   29,054 or .19% abstaining from the proposal. There were 72,577 broker non-
   votes with regard to this proposal.

5. The proposal to amend the Premier Bancshares, Inc. 1997 Stock Option Plan to
   increase the number of shares of common stock available for grant thereunder
   from 1,125,000 to 3,000,000 shares. This proposal was approved with 8,734,574
   shares or 56.64% voting for the proposal, 689,191 or 4.47% voting against the
   proposal and 64,419 or .42% abstaining from the proposal. There were
   1,951,906 broker non-votes in connection with this proposal.

6. The proposal to approve the Premier Bancshares, Inc. Employee Stock Purchase
   Plan. This proposal was approved with 8,967,370 shares or 58.15% voting for
   the proposal, 435,588 or 2.83% against the proposal and 85,226 or .55%
   abstaining from the proposal. There were 1,951,906 or 12.6% broker non-votes
   with regard to this proposal.

Item 6.Exhibits and Reports on Form 8-K

a. Exhibits

EXHIBIT
NUMBER      EXHIBIT
------      ---------
 10.1       Premier Bancshares, Inc. 1997 Stock Option Plan (as amended and
            restated effective July 1, 1998) (Incorporated by reference as
            Exhibit 99.1 to Premier's Form S-8 filed on July 21, 1998).

 10.2       Employment Agreement dated July 1, 1998 by and among Premier,
            Premier Bank, The Bank of Gwinnett County and Glenn S. White dated
            July 1, 1998.

 10.3       Employment Agreement dated July 1, 1998 by and among Premier Bank,
            The Bank of Gwinnett County and Andrew R. Pourchier.

 10.4       Severance Pay Agreement dated as of July 1, 1998, by and among
            Premier Bank, The Bank of Gwinnett County and John C. Pentecost.
<PAGE>
 
 10.5       Severance Pay Agreement dated as of July 1, 1998, by and among
            Premier Bank, The Bank of Gwinnett County and Linda S. George.

 10.6       Severance Pay Agreement dated as of July 1, 1998, by and among
            Premier Bank, The Bank of Gwinnett County and William P. Shaver.

 10.7       Employment Agreement dated as of July 2, 1998, by and among First
            Community Bank of Henry County, Premier and Charles B. Blackmon.

 10.8       Employment Agreement dated as of January 1, 1998 by and between
            Premier and Jo S. Hill.

 10.9       Employment Agreement dated as of June 9, 1998 by and between
            Premier, Premier Bank and A. Lee Wilhelm.

 10.10      Employment Agreement dated effective as of July 1, 1998, by and
            between Premier, Premier Bank, Central and Southern Bank of Georgia
            and Michael E. Ricketson.

 10.11      Employment Agreement dated effective as of July 1, 1998, by and
            between Premier, Premier Lending Corporation, Premier Bank and
            Darrell D. Pittard.

 10.12      Employment Agreement dated effective as of July 1, 1998, by and
            between Premier, Premier Bank and Robert C. Oliver.

 27.1       Financial Data Schedule


b. Reports on Form 8-K

On June 9, 1998, the Company filed a Current Report on Form 8-K, reporting the
consummation of the merger of Lanier Bank & Trust Company with and into Premier
Bank.
<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.


PREMIER BANCSHARES, INC.
-------------------------
Registrant


Date:  August 14, 1998          Darrell D. Pittard
                                ------------------
                                Darrell D. Pittard
                                Chief Executive Officer


Date:  August 14, 1998          Michael E. Ricketson
                                --------------------
                                Michael E. Ricketson
                                Chief Accounting Officer