<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
        
                                  FORM 10-QSB

Mark One

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

         For the quarterly period ended June 30, 1998
                                        --------------
                         
                          Commission File No. 0-27448
<TABLE> 

                     GOLDEN ISLES FINANCIAL HOLDINGS, INC.
                     -------------------------------------
       (Exact name of small business issuer as specified in its charter)
<S>                                                             <C>

        Georgia                                              58-1756713
-------------------------------------------------------------------------
(State of Incorporation)                                   (I.R.S. Employer 
                                                          Identification No.)

             3811 FREDERICA ROAD, ST. SIMONS ISLAND, GEORGIA 31522
             -----------------------------------------------------
                   (Address of Principal Executive Offices)


                                (912) 638-0667
               ------------------------------------------------
               (Issuer's Telephone Number, Including Area Code)


                                      N/A
      ------------------------------------------------------------------
        (Former Name, Former Address and Former Fiscal Year, if Changed
                              Since Last Report)

</TABLE> 


        Check whether the issuer (1) 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 issuer was required to file such reports), and (2) has
        been subject to such filing requirements for the past 90 days.

Yes   X   No
     ----   -----   

                    APPLICABLE ONLY TO CORPORATE ISSUERS:  

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

Common Stock, no par value per share:   2,463,615 shares issued and
outstanding as of July 8, 1998.

Transitional Small Business Disclosure Format: (Check one): Yes        No   X
                                                                -----    -----
<PAGE>
 
PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements
 
Golden Isles Financial Holdings, Inc.
St. Simons Island, Georgia
Consolidated Balance Sheets

                                                   June 30,     December 31,
                                                     1998           1997
ASSETS                                           (Unaudited)     (Audited)
Cash and due from banks                          $  4,134,981   $  3,224,761
Federal funds sold                                  6,650,000      2,330,000
                                                 ------------   ------------
  Total cash and cash equivalents                $ 10,784,981   $  5,554,761
Investment securities
 available-for-sale at
  estimated market values                          19,165,639     16,787,502
Loans, net                                         90,449,888     87,431,438
Loans held-for-sale                                        --        307,457
Property and equipment, net                         3,201,755      3,195,582
Other assets                                        2,588,802      2,256,116
                                                 ------------   ------------
 
  Total Assets                                   $126,191,065   $115,532,856
                                                 ============   ============
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
 Non-interest bearing deposits                   $  9,970,828   $  7,251,295
 Interest bearing deposits                         86,615,724     83,539,462
                                                 ------------   ------------
  Total deposits                                 $ 96,586,552   $ 90,790,757
                                                 ------------   ------------
 
Notes payable                                       8,638,000      9,367,458
Federal Home Loan Bank borrowings                   7,073,336      3,879,171
Other liabilities                                   1,190,088        745,665
                                                 ------------   ------------
 
  Total Liabilities                              $113,487,976   $104,783,051
                                                 ------------   ------------
 
Commitments and contingencies
Shareholders' Equity:
 Common stock, no par value
  50 million shares authorized,
  2,313,645 (12/31/97) shares and
  2,463,615 (6/30/98) issued and
  outstanding                                    $  1,094,338   $  1,094,338
Paid-in-capital                                    11,400,192      9,959,244
Retained (deficit)                                    154,429       (360,699)
Accumulated other comprehensive
 income                                                54,130         56,922
                                                 ------------   ------------
 
  Total Shareholders' Equity                     $ 12,703,089   $ 10,749,805
                                                 ------------   ------------
 
  Total Liabilities and                  
    Shareholders' Equity                         $126,191,065   $115,532,856
                                                 ============   ============
 
Refer to notes to the financial statements.

                                       2
<PAGE>
 
Golden Isles Financial Holdings, Inc.
St. Simons Island, Georgia
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
                                                      Three Months Ended
                                                           June 30,
                                                       1998         1997
 
Interest income                                     $2,927,255   $2,634,599
                                                    
Interest expense                                     1,491,811    1,337,446
                                                    ----------   ----------
                                                    
Net interest income                                  1,435,444    1,297,153
                                                    
Provision for possible loan losses                     184,100      129,500
                                                    ----------   ----------
                                                    
Net interest income after provision                 
 for possible loan losses                            1,251,344    1,167,653
                                                    ----------   ----------
                                                    
Other income                                           282,205      470,605
                                                    ----------   ----------
                                                    
Salaries and benefits                                  605,825      623,698
Occupancy Expense                                      116,724      122,284
Regulatory fees and assessments                         10,841       29,102
Supplies and printing                                   49,537       31,117
Legal & professional                                    60,409      140,090
Advertising                                             16,595       29,618
Other operating expenses                               246,085      491,945
                                                    ----------   ----------
                                                    
  Total operating expenses                           1,106,016    1,467,854
                                                    ----------   ----------
Net income before taxes                             $  427,533   $  170,404
                                                    
Income taxes                                           205,342       36,129
                                                    ----------   ----------
                                                    
Net income                                          $  222,191   $  134,275
                                                    ==========   ==========
                                                    
Other comprehensive income, net of tax:             
 Unrealized holding gains/(losses)                  
  arising during period                                (49,426)      35,989
                                                    ----------   ----------
                                                    
Comprehensive income                                $  172,765   $  170,264
                                                    ==========   ==========
                                                    
Income per share-Basic                                   $.094        $.057
                                                    ==========   ==========
                                                    
Income per share-Diluted                                 $.094        $.057
                                                    ==========   ==========
                                                    
Average Shares Outstanding                           2,363,976    2,344,303
                                                    ==========   ==========
 

Refer to notes to the financial statements.

                                       3
<PAGE>
 
Golden Isles Financial Holdings, Inc.
St. Simons Island, Georgia
Consolidated Statements of Income and Comprehensive Income
(Unaudited)

                                                     Six Months Ended
                                                         June 30,
                                                     1998         1997
 
Interest income                                   $5,814,343   $5,183,905
                                                  
Interest expense                                   2,945,219    2,691,707
                                                  ----------   ----------
                                                  
Net interest income                                2,869,124    2,492,198
                                                  
Provision for possible loan losses                   280,757      193,100
                                                  ----------   ----------
                                                  
Net interest income after provision               
 for possible loan losses                          2,588,367    2,299,098
                                                  ----------   ----------
                                                  
Other income                                         523,918    1,012,117
                                                  ----------   ----------
                                                  
Salaries and benefits                              1,253,680    1,435,843
Occupancy expense                                    199,416      194,142
Regulatory fees and assessments                       20,407       43,335
Supplies and printing                                 81,248       71,470
Legal & professional                                 122,387      289,304
Advertising                                           59,890       54,231
Other operating expenses                             520,601      906,538
                                                  ----------   ----------
                                                  
  Total operating expenses                         2,257,629    2,994,863
                                                  ----------   ----------
Net income before taxes                           $  854,656   $  316,352
                                                  
Income taxes                                         339,525      123,876
                                                  ----------   ----------
                                                  
Net income                                        $  515,131   $  192,476
                                                  ==========   ==========
                                                  
Other comprehensive income, net of tax:           
 Unrealized holding gains/(losses)                
  arising during period                               (2,792)     (10,889)
                                                  ----------   ----------
                                                  
Comprehensive income                              $  512,339   $  181,587
                                                  ==========   ==========
                                                  
Income per share-Basic                                 $.219        $.082
                                                  ==========   ==========
                                                  
Income per share-Diluted                               $.219        $.082
                                                  ==========   ==========
                                                  
Average Shares Outstanding                         2,338,949    2,344,303
                                                  ==========   ==========
 

Refer to notes to the financial statements. Golden Isles Financial Holdings,
Inc.

                                       4
<PAGE>
 
Golden Isles Financial Holdings, Inc.
St. Simons Island, Georgia
Consolidated Statements of Cash Flows
(Unaudited)

                                              Six Months Ended
                                                   June 30,
                                              1998           1997
 
Cash flows from operating activities:     $ 1,076,413   $    603,014
                                          -----------   ------------
 
Cash flows from Investing Activities:
   Decrease in loans held-for-sale        $   307,457   $  6,157,638
   (Purch)/Sale of fixed assets              (174,966)        43,221
   Increase in loans                       (3,299,220)    (5,937,667)
  Securities - available-for-sale
   Maturity and paydowns                    5,089,393        540,807
   Sale of securities                             - -        500,000
   Purchase of securities                  (7,470,306)    (8,004,668)
  Securities - held-to-maturity
   Purchase of securities                         - -            - -
   Maturity and paydowns                          - -        359,207
                                          -----------   ------------
 
Net cash used in investing activities     $(5,547,642)  $ (6,341,462)
                                          -----------   ------------
 
Cash flows from Financing Activities:
  Incr/(decr) in various borrowings       $ 2,464,707   $ (5,824,905)
  Sale of stock/option amortization         1,440,947         33,903
  Increase in deposits                      5,795,795      6,162,059
                                          -----------   ------------
 
Cash provided from/(used in)financing
       activities                         $ 9,701,449   $    371,057
                                          -----------   ------------
 
Net incr/(decr) in cash and cash
       equivalents                        $ 5,230,220   $ (5,367,391)
Cash and cash equivalents,
 beginning of period                        5,554,761     12,890,836
                                          -----------   ------------
Cash and cash equivalents, end of
       period                             $10,784,981   $  7,523,445
                                          ===========   ============
 


Refer to notes to the financial statements.

                                       5
<PAGE>
 
Golden Isles Financial Holdings, Inc.
St. Simons Island, Georgia
Notes to Financial Statements (Unaudited)
June 30, 1998

Note 1 - Basis of Presentation

The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB.  Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments (consisting of normal recurring  accruals) considered  necessary
for a fair presentation have been included.  Operating results for the six-month
period ended June 30, 1998 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998.  For further information,
refer to the financial statements and footnotes thereto included in Form 10-KSB
for the year ended December 31, 1997.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Reclassification.  The consolidated financial
statements include the accounts of the parent company and the Subsidiaries.  All
significant intercompany accounts and transactions have been eliminated in
consolidation.

Basis of Accounting.  The accounting and reporting policies of GIFH conform to
generally accepted accounting principles and to general practices in the banking
industry.  GIFH uses the accrual basis of accounting by recognizing revenues
when earned and expenses in the period incurred, without regard to the time of
receipt or payment of cash.

Loans, Interest and Fee Income on Loans.  Loans are stated at the principal
balance outstanding.  Unearned discount, unamortized loan fees and the allowance
for possible loan losses are deducted from total loans in the statement of
condition.  Interest income is recognized over the term of the loan based on the
principal amount outstanding.  Points on real estate loans are taken into income
to the extent they represent the direct cost of initiating a loan.  The amounts
in excess of direct costs are deferred and amortized over the expected life of
the loan.

Loans are generally placed on non-accrual status when principal or interest
becomes ninety days past due, or when payment in full is not anticipated.  When
a loan is placed on non-accrual status, interest accrued but not received is
generally reversed against interest income.  If collectibility is in doubt, cash
receipts on non-accrual loans are not recorded as interest income, but are used
to reduce principal.

Allowance for Possible Loan Losses. The provisions for loan losses charged to
operating expense reflect the amount deemed appropriate by management to
establish an adequate reserve to meet the present and foreseeable risk
characteristics of the current loan portfolio.

                                       6
<PAGE>
 
Golden Isles Financial Holdings, Inc.
St. Simons Island, Georgia
Notes to Financial Statements (Unaudited)
June 30, 1998

Management's judgement is based on periodic and regular evaluation of individual
loans, the overall risk characteristics of the various portfolio segments, past
experience with losses and prevailing and anticipated economic conditions.
Loans which are determined to be uncollectible are charged against the
allowance.  Provisions for loan losses and recoveries on loans previously
charged-off are added to the allowance.

In May 1995, FASB issued Statement of Financial Accounting Standards No. 122,
Accounting for Mortgage Servicing Rights, (SFAS 122).  SFAS 122 amends SFAS 65,
Accounting for Certain Mortgage Banking Activities, to require that a mortgage
banking enterprise recognize as an asset rights to service mortgage loans for
others regardless of the manner in which those servicing rights are acquired.
It also requires an enterprise to assess its capitalized mortgage servicing
rights for impairment based on the fair value of those rights.  In assessing
impairment, Management believes that the adoption of SFAS 122 will not have a
material impact on the financial position of GIFH.

Property and Equipment.  Building, furniture and equipment are stated at cost,
net of accumulated depreciation.  Depreciation is computed using the straight
line method over the estimated useful lives of the related assets.  Maintenance
and repairs are charged to operations, while major improvements are capitalized.
Upon retirement, sale or other disposition of property and equipment, the cost
and accumulated depreciation are eliminated from the accounts, and gain or loss
is included in income from operations.

Income Taxes.  The consolidated financial statements have been prepared on the
accrual basis.  When income and expenses are recognized in different periods for
financial reporting purposes and for purposes of computing income taxes
currently payable, deferred taxes are provided on such temporary differences.


Statement of Cash Flows.  For purposes of reporting cash flows, cash
and cash equivalents include cash on hand, amounts due from banks and federal
funds sold.  Generally, federal funds are purchased or sold for one day periods.

Net Income/(Loss) Per Share.  Net income per share was computed by dividing net
income by the weighted average number of shares outstanding for each period.
Common stock equivalents in the form of outstanding stock options were included
in the determination of the weighted average number of shares outstanding only
if they were dilutive.  Income per share of $.219 for the six-month period ended
June 30, 1998 may not be indicative of projected earnings/(losses) for the year
ending December 31, 1998.


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

Liquidity and Sources of Capital

Golden Isles Financial Holdings, Inc., St. Simons Island, Georgia (GIFH) was
incorporated under the laws of the State of Georgia in 1987 for the purpose of

                                       7
<PAGE>
 
becoming a holding company for its then proposed de novo bank, The First Bank of
Brunswick, Brunswick, Georgia (the Bank).  Upon commencement of the Bank's
principal operations on July 2, 1990, GIFH acquired 100 percent of the Bank's
voting stock by injecting $4.5 million into the Bank's capital accounts.
Subsequently, an additional $1.1 million was injected into the Bank's capital
accounts.  Deposits at the Bank are each insured up to $100,000 by the Federal
Deposit Insurance Corporation.

In late 1993, GIFH formed two subsidiaries, First Credit Service Corporation,
Brunswick, Georgia (FCC) and First Bank Mortgage Corporation, Brunswick, Georgia
(FBMC).  FCC engages in consumer finance and credit related insurance
activities. FBMC ceased operations as of April 30, 1997.  From inception to
March 31,1998, GIFH injected $2,085,000 and $2,875,000 into the capital accounts
of FCC and FBMC, respectively.  GIFH owns 100 percent of the voting shares of
the Bank, FCC and FBMC.

In the following discussion, unless any information is specifically identified
as reflecting the financial condition of the Bank, FCC or FBMC, it is intended
to reflect the financial condition of GIFH on a consolidated basis.

Liquidity is the company's ability to meet all deposit withdrawals immediately,
while also providing for the credit needs of customers.  The June 30, 1998,
financial statements evidence a fair liquidity position as total cash and cash
equivalents amounted to $10.8 million, representing 8.5% of total assets.
Investment securities amounted to $19.2 million, representing 15.2% of total
assets; these securities provide a secondary source of liquidity since they can
be converted into cash in a timely manner.  Note that the Company's ability to
maintain and expand its deposit base and borrowing capabilities are a source of
liquidity.  For the six-month period ended June 30, 1998, total deposits
increased from $90.8 million to $96.6 million, representing an increase of 6.4%.
GIFH's 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 GIFH's liquidity increasing
or decreasing in any material way.

Effective March 29, 1997, the Company entered into a credit facility with
American Banking Company, Moultrie, Georgia.  Under the facility the Company
borrowed $3,500,000 as a term loan to be used for repayment of the line of
credit at Southeastern Bank, and had up to $1,000,000 as a revolving line of
credit to be used for working capital.  The interest rate with respect to both
loans is .25% over the Suntrust Bank, Atlanta prime rate.  The term loan calls
for quarterly interest only payments for the first eighteen months and for
quarterly principal and interest payments over five additional years, principal
being repaid on the basis of a ten year amortization and semi-annual principal
reductions of $175,000.  The revolving line of credit matured March 25, 1998,
with no outstanding balance.  The term loan is secured by a pledge of the stock
of the Bank owned by the Company.

                                       8
<PAGE>
 
The Bank maintains an adequate level of capitalization as measured by the
following capital ratios and the respective minimum capital requirements by the
Bank's primary regulators.

                            Bank's        Minimum required by
                        June 30, 1998   regulatory authorities
Leverage ratio                7.9%               4.0%
Risk weighted ratio          12.1%               8.0%

Note that with respect to the leverage ratio, the regulators expect 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 7.9 percent is well above
the required minimum.

Results of Operations

Net income for the six-month period ended June 30, 1998, amounted to $515,131,
or $.219 per share.  The primary reason for the increase in earnings is
attributed to the closing of FBMC and improved earnings at the Bank. Operating
expenses for the first half of 1998 were $737,234 less than the same period of
1997.  Salaries and benefits were down 13% from the same time last year.  Legal,
professional and other expenses were also lower than the same period  in 1997
because 1997 figures included the costs related to the March 11, 1997, Special
Meeting of Shareholders.   Several other items are of interest when compared to
the results of the same six months of 1997.

a.   Net interest income, which represents the difference between interest
     received on interest earning assets and interest paid on interest bearing
     liabilities, has increased from $2,492,198 for the six-month period ended
     June 30, 1997 to $2,869,124 for the same period one year later,
     representing an increase of $376,926, or 15%.  This increase was attained
     because total interest earning assets increased from $104.4 million at June
     30, 1997, to $116.8 million at June 30, 1998.

b.   The net interest yield, defined as net interest income divided by interest
     earning assets, increased slightly from 4.8% for the six-month period ended
     June 30, 1997, to 4.9% for the six-month period ended June 30, 1998.

c.   Other income for the six-month period ended June 30, 1998 and 1997 amounted
     to $523,918 and $1,012,117 respectively.  The decrease in other income is
     due primarily to the loss of fee income and other charges that were earned
     through FBMC.

d.   Operating expenses for the six-month period ended June 30, 1998 and 1997
     amounted to $2,257,629 and $2,994,863 respectively, representing an
     decrease of $737,234, or 25%.  The closing of FBMC and the downsizing of
     GIFH were primarily responsible for the decline in operating expenses.
     Operating expenses represented an annualized 3.6% and 5.3% of total assets
     as of June 30, 1998 and 1997, respectively.  Salaries and benefits were 13%
     lower for the first quarter 1998 compared to 1997.  The first half of 1997
     operating expenses include one time costs associated with the March 11,
     1997, Special Meeting.

e.   The provision for loan losses was almost $90,000 more for the first six
     months of 1998 versus the same period of 1997.This is due to the fact that
     there was an excess in the loan loss reserve during the first half of 1997.

                                       9
<PAGE>
 
     The allowance for loan losses as a percentage of gross loans remained
     constant at 1.7% from the same time last year.  Management considers the
     allowance for loan losses to be adequate and sufficient to absorb possible
     future losses; however, there can be no assurance that charge-offs in
     future periods will not exceed the allowance for loan losses or that
     additional provisions to the allowance will not be required.

GIFH is not aware of any current recommendation by the regulatory authorities
which, if they were to be implemented, would have a material effect on GIFH's
liquidity, capital resources, or results of operations.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.  As of June 30, 1998, there are no material pending
legal proceedings to which the Company or any of its subsidiaries is a party or
of which any of their property is the subject.

Item 2.  Changes in Securities.

     (a)  None.

     (b)  None.

Item 3.  Defaults Upon Senior Securities.  None.

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

     (a) The annual meeting of shareholders of Golden Isles Financial Holdings,
Inc. was held on Wednesday, June 24, 1998 at 10:00 a.m. at the Comfort Inn, 5308
New Jesup Highway, Brunswick, Georgia 31525 for the purpose of electing
directors.

     (b) Proxies were solicited pursuant to Regulation 14A under the Exchange
Act.

     (c) The sole item voted on at the meeting was the election of directors.
All directors nominated were elected by the following votes:

          (i)   C. Ray Acosta, 1,266,700 for, 2,171 against and -0- abstentions.

          (ii)  James M. Fiveash, 1,266,700 for, 2,171 against and -0-
abstentions.

          (iii) L. McRee Harden, 1,266,700 for, 2,171 against and -0-
abstentions.

          (iv)  Michael D. Hodges, 1,266,700 for, 2,171 against and -0-
abstentions.

          (v)   Russell C. Jacobs, Jr., 1,266,700 for, 2,171 against and -0-
abstentions.

          (vi)  Claude Kermit Keenum, 1,266,700 for, 2,171 against and -0-
abstentions.

                                       10
<PAGE>
 
          (v)   Jimmy D. Veal, 1,266,700 for, 2,171 against and -0- abstentions.

          (vi)  J. Thomas Whelchel, 1,266,700 for, 2,171 against and -0-
abstentions.

Item 5.  Other Information.  On June 17, Golden Isles Financial Holdings, Inc.
signed a Letter of Intent with New South Financial Services, Inc., a subsidiary
of First Liberty Financial Corporation to sell substantially all of the assets
of First Credit Service Corporation, including the bulk of the portfolio of
loans.  First Credit Service Corporation is a wholly-owned consumer finance
subsidiary of Golden Isles Financial Holdings, Inc.  Subsequent to the sale
Golden Isles Financial Holdings, Inc. will cease operation of its independent
consumer finance business.  As of the date of this report the transaction was
proceeding to closing, but a definitive agreement had not been signed.

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

     (a)  Exhibits

     Exhibit No:  Description

     27   Financial Data Schedule

     (b)  Reports on Form 8-K  -  There were no reports on Form 8-K
          filed during the quarter ended June 30, 1998.

                                       11
<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.

GOLDEN ISLES FINANCIAL HOLDINGS, INC.
(Registrants


Date:  August 10, 1998

By: /s/ J. Thomas Whelchel
   --------------------------
   J. Thomas Whelchel
   Chairman

                                       12
<PAGE>
 
INDEX TO EXHIBITS

Exhibit                                    Sequential
Number      Description                    Page Number

 27       Financial Data Schedule              12







                                      13