Exhibit 10.3

PSB HOLDINGS, INC.

DIRECTORS DEFERRED COMPENSATION PLAN

(as amended and restated effective January 1, 2014)

1.

Adoption of Plan and Restatement of Plan Document.  PSB Holdings, Inc. (“PSB
Holdings”) has previously adopted the  PSB Holdings, Inc. Directors Deferred
Compensation Plan (the “Plan”), as amended.  PSB Holdings hereby amends and
restates the Plan as follows, which shall be effective on and after January 1,
2014.

2.

Purpose.  The purpose of the Plan is to provide an alternative method of
compensating members (the “Directors”) of the board of directors of PSB
Holdings, whether or not they otherwise receive compensation as employees, in
order to aid PSB Holdings and its Subsidiaries in attracting and retaining as
Directors persons whose abilities, experience, and judgment can contribute to
the continued progress of PSB Holdings and its subsidiaries and to provide a
mechanism by which the interests of the Directors and the shareholders of PSB
Holdings can be more closely aligned.

3.

Definitions.  As used in this Plan, the following terms shall have the meaning
set forth in this paragraph 3:

(a)

“Bank” means Peoples State Bank, a Subsidiary of PSB Holdings, Inc.

(b)

“Beneficiary” means such person or persons, or organization or organizations, as
the Participant from time to time may designate by a written designation filed
with PSB Holdings during the Participant’s life.  Any amounts payable hereunder
to a Participant’s Beneficiary shall be paid in such proportions and subject to
such trusts, powers, and conditions as the Participant may provide in such
designation.  Each such designation, unless otherwise expressly provided
therein, may be revoked by the Participant by a written revocation filed with
PSB Holdings during the Participant’s life.  If more than one such designation
shall be filed by a Participant with PSB Holdings, the last designation so filed
shall control over any revocable designation filed prior to such filing.  To the
extent that any amounts payable under this Plan to a Participant’s Beneficiary
are not effectively disposed of pursuant to the above provisions of this
subparagraph 3(b), either because no designation was in effect at the
Participant’s death or because a designation in effect at the Participant’s
death failed to dispose of such amounts in their entirety, then for purposes of
this Plan, the Participant’s “Beneficiary” as to such undisposed of amounts
shall be the Participant’s estate as provided for in subparagraph 6(c)(ii).

(c)

“Board” means the Board of Directors of PSB Holdings.

(d)

“Change in Control” means the happening of any of the following events:

(i)

when any “person” as defined in Section 3(a)(9) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d) and 14(d)
thereof, including a “group” as defined in Section 13(d) of the Exchange Act,
excluding

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any employee benefit plan sponsored or maintained by PSB or any subsidiary of
PSB (including any trustee of such plan acting as trustee), directly or
indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time), of securities of PSB representing
30% or more of the combined voting power of PSB’s then outstanding securities
with respect to the election of the directors of PSB; or

(ii)

when, during any period of 24 consecutive months, the individuals who, at the
beginning of such period, constitute the Board of Directors of PSB (the
“Incumbent Directors”) cease for any reason other than death to constitute at
least a majority thereof, provided, however, that a director who was not a
director at the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval of, at
least a majority of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such 24-month
period) or by prior operation of this provision; or

(iii)

the occurrence of a transaction requiring stockholder approval of the
acquisition of the Bank by an entity other than PSB or a 50% or more owned
subsidiary of PSB or shareholder approval of the acquisition of PSB through
purchase of assets, or by merger, consolidation or otherwise, except in the case
of a transaction pursuant to which, immediately after the transaction, PSB’s
shareholders immediately prior to the transaction own at least 60% of the
combined voting power of the surviving entity’s then outstanding securities with
respect to the election of the directors of such entity solely be reason of such
transaction; or

(iv)

the liquidation or dissolution of the Bank or PSB.

(e)

“Deferral Account” means the account established pursuant to subparagraph 5(a)
to record a Participant’s Directors Fees.

(f)

“Deferrals” means the amount of Directors Fees which a Director elects to defer
pursuant to this Plan.

(g)

“Directors Fees” means all retainer, meeting fees, or other compensation to
which a Director would otherwise become entitled for services to be rendered as
a Director, but excluding any compensation to which such person is entitled to
receive in his capacity, if any, as an employee of PSB Holdings or any
Subsidiary.

(h)

“Participant” means a Director who has an undistributed balance in his or her
Deferral Account.

(i)

“Return on Equity” for any calendar year means a percentage equal to the
quotient determined by dividing (i) PSB’s net income for such year, by (ii)
average stockholders’ equity of PSB Holdings, determined without regard to
unrealized gains or losses on investment securities, on a consolidated basis for
such year.

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(j)

“Subsidiary” means the Bank and each other subsidiary of PSB Holdings, including
any subsidiary of the Bank.  

(k)

“Termination of Service” means the bona fide termination of a Participant’s
services as a member of the Board and each other board of directors of any
Subsidiary which has been designated as a participating Subsidiary.

4.

Deferral of Directors Fees.

(a)

Annual Election.  Each Director may elect (i) before April 18, 2003, with
respect to the year ended December 31, 2003, and (ii) before January 1 of any
subsequent fiscal year of PSB Holdings, to defer the payment of all or any
portion of the Directors Fees to which the Director would otherwise become
entitled for services to be rendered during each fiscal year subsequent to the
date on which such election is effective and on or before the last day of the
month in which the director’s 70th birthday occurs.  An election by a Director
to defer Director’s Fees pursuant to this subparagraph 4(a) shall be effective
with respect to Director’s Fees earned during the first fiscal year beginning
after the date such election is made and during each subsequent fiscal year
until revoked or amended, provided, however, that any such revocation or
amendment shall only be effective with respect to fiscal years beginning after
the date written notice of such revocation or amendment is first received by PSB
Holdings.  

(b)

New Director.  Despite any other provision of subparagraph 4(a), if a person
first becomes a Director during a fiscal year, such Director may, within 30 days
of his election or appointment, elect to become a Participant with respect to
all or any portion of the Director’s Fees earned and payable (i) from and after
the date on which he is elected a Director if an election is filed on or before
the date of such election, or (ii) if no election is filed pursuant to clause
(i), on the first day of the first month immediately following the month in such
fiscal year in which such election is made, and on or before the last day of the
month in which the director’s 70th birthday occurs.  An election by a Director
to defer Directors Fees pursuant to this subparagraph 4(b) shall remain in
effect until the last day of the fiscal year in which such election is made and
during each subsequent fiscal year until revoked or amended, provided that any
such revocation or amendment shall only be effective with respect to fiscal
years beginning after the date written notice of such revocation or amendment is
first received by PSB Holdings.

(c)

Payment of Fees.  Directors Fees which are deferred pursuant to this paragraph 4
shall be distributable in accordance with paragraph 6 and only after such
Participant’s Termination of Service.  Any Directors Fees not subject to an
election made in accordance with this paragraph 4 shall be paid in accordance
with the Board’s policy as from time to time in effect.

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5.

Accounting and Elections.

(a)

Accounts.  PSB Holdings shall establish a Deferral Account in the name of each
Director who has elected to defer the payment of Directors Fees pursuant to
paragraph 4.

(b)

Crediting Deferred Fees.  As of each date on which PSB Holdings would otherwise
make a payment of Directors Fees, that portion of the Directors Fees of each
Participant who has a deferral election then in effect shall, to the extent
deferred, be credited by PSB Holdings to the Participant’s Deferral Account.

(c)

Crediting Interest.  On each March 1, (each, a “Crediting Date”), up to and
including the Basic Initial Payment Date (as defined in paragraph 6), interest
shall be credited to each Participant’s Deferral Account based on the average
balance in the Deferral Account as of the last day of each calendar quarter of
the year ending on the Crediting Date at an annual interest rate equal to the
following:

(i)

on each Crediting Date occurring on or before March 1, 2007, interest at a rate
equal to 50% of the Return on Equity for the calendar year ending on the
December 31 immediately preceding such Crediting Date if, but only if, the
Return on Equity for such calendar year was not less than 12%;

(ii)

on the Crediting Date occurring on March 1, 2008, interest at a rate equal to
50% of the Return on Equity for the calendar year ending December 31, 2007;

(iii)

on each Crediting Date occurring on or after March 1, 2009, interest at a rate
equal to 100% of the Return on Equity for the calendar year ending on the
December 31 immediately preceding such Crediting Date, but in no event shall
such interest rate be less than 5% nor more than 15%; and

(iv)

on each Crediting Date occurring on or after March 1, 2015, interest at a rate
equal to 100% of the Return on Equity for the calendar year ending on the
December 31 immediately preceding such Crediting Date;

provided, however, that, notwithstanding the foregoing:

(x)

on March 1 of the year following the year in which the Director has incurred a
Termination of Service prior to December 31, the interest to be credited
hereunder shall be at a rate equal to 8% per annum; and

(y)

if the Director has specified an Initial Payment Date other than the Director’s
Basic Initial Payment Date, then interest at the rate of 8% per annum shall be
credited under this subparagraph 5(c) on each March 1 following such Basic
Initial Payment Date.

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(d)

Annual Report.  Within 120 days of the end of each fiscal year in which this
Plan is in effect, PSB Holdings shall furnish each Participant a statement of
the year-end balance in such Participant’s Deferral Account.

6.

Distribution of Deferred Amounts.

(a)

Initial Payment Date.  The “Initial Payment Date” of a Director shall be the
later of (i) the March 1 following the last day of the calendar year in which
occurs the Director’s Termination of Service (the “Basic Initial Payment Date”)
and (ii) with respect to a Director who retires prior to the mandatory
retirement age for Directors, the March 1 specified by the Director as the
Initial Payment Date (but not later than the March 1 occurring on or immediately
after, as the case may be, the date on which such Director would have attained
his mandatory retirement age) in a written election filed with PSB Holdings not
less than one year prior to his Termination of Service.

(b)

Ending Balance.  The “Ending Balance” of a Director’s Deferral Account means the
balance of the Deferral Account determined as of the Initial Payment Date.

(c)

Distribution.  On the Initial Payment Date, distribution of the Ending Balance
shall be made in cash in accordance with the following:

(i)

Automatic Form of Payment.  In 120 monthly installments beginning on   the
Initial Payment Date in an amount equal to the amount necessary to amortize the
repayment of a loan in an amount equal to the Ending Balance in 120 monthly
payments at an interest rate of 8% per annum with payments being made on the
first day of each monthly period.

(ii)

Death Benefit.  In the event that the Director dies before receiving payment of
the entire amount to which he is entitled under this Agreement, the unpaid
balance shall be paid in a lump sum or in installments, as specified in the
Director’s most recent election in accordance with the provisions of
subparagraph 6(c)(iv), to the Beneficiary of such Participant.  If a Beneficiary
dies after the Director’s death, but before receiving the entire payment of the
Beneficiary’s portion of the amount to which the Director was entitled under
this Agreement, the portion of the unpaid balance which such Beneficiary would
have received if he had not died shall be paid in a lump sum to such
Beneficiary’s estate unless the Director designated otherwise.

(iii)

Change in Control.  In the event a Participant incurs a Termination of Service
in connection with a Change in Control, payment of the Ending Balance shall be
made on the first March 1 following the Participant’s Termination of Service (or
on the date of such termination if it occurs on March 1).

(iv)

Elective Forms of Distribution.  The Director may elect, (A) before the first
day of each calendar year, (B) subject to the provisions of subparagraph
6(c)(iii), and (C)

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one year prior to his Termination of Service, that payment of the Director’s
Ending Balance shall be made in one of the following forms:

(A)

in 60 monthly installments beginning on the Initial Payment Date in an amount
equal to the amount necessary to amortize the repayment of a loan in an amount
equal to the Ending Balance in 60 monthly payments at an interest rate of 8% per
annum with payments being made on the first day of each monthly period; or

(B)

in a lump sum, payable on the Initial Payment Date.

(d)

Modification of Payments.  After a Participant’s Termination of Service occurs,
neither such Participant or his Beneficiary shall have any right to modify in
any way the schedule for the distribution of amounts credited to such
Participant under this Plan as specified in the last election filed by the
Participant.  However, upon a written request submitted to the Secretary of PSB
Holdings by the person then entitled to receive payments under this Plan (who
may be the Participant or a Beneficiary), the Board may in its sole discretion,
accelerate the time for payment of any one or more installments remaining
unpaid.

7.

Form for Elections.  The Secretary of PSB Holdings shall provide election forms
for use by Directors in making an initial election to become a Participant and
for making all other elections or designations permitted or required by the
Plan.

8.

Miscellaneous.

(a)

No Assignment.  Amounts payable hereunder may not be voluntarily or
involuntarily sold or assigned, and shall not be subject to any attachment, levy
or garnishment.

(b)

No Right of Election.  Participation in this Plan by any person shall not confer
upon such person any right to be nominated for re election or re-elected to the
Board.

(c)

Unsecured Claims.  PSB Holdings shall not be obligated to reserve or otherwise
set aside funds for the payment of its obligations hereunder, and the rights of
any Participant under the Plan shall be an unsecured claim against the general
assets of PSB Holdings.  All amounts due Participants or Beneficiaries under
this Plan shall be paid out of the general assets of PSB Holdings.

(d)

Plan Administration.  The Board shall have all powers necessary to administer
this Plan, including all powers of Plan interpretation, of determining
eligibility, and the effectiveness of elections, and of deciding all other
matters relating to the Plan; provided, however, that no Participant shall take
part in any discussion of, or vote with respect to, a matter of Plan
administration which is personal to him, and not of general applicability to all
Participants.  All decisions of the Board shall be final as to any Participant
under this Plan.  

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(e)

Amendment and Termination.  The Board may amend this Plan in any and all
respects at any time (including, specifically, but not limited to, the rate at
which interest will be credited to any Deferral Account from and after the date
of such amendment), or from time to time, or may terminate this Plan at any
time, but any such amendment or termination shall be without prejudice to any
Participant’s right to receive amounts previously credited to such Participant
under this Plan.