Exhibit 10.1

Peoples State Bank

Focus Rewards Plan for Executive Officers

The Focus Rewards Plan for Executive Officers provides an annual cash incentive
opportunity for executive officers of PSB Holdings, Inc. in their capacities as
Bank officers.  Incentive compensation is determined under a formula that
derives 20% of the incentive compensation amount from achievement of certain
specific Bank-wide financial and non-financial goals, 40% of the incentive
compensation amount from the achievement of the Bank’s net income target, and
40% of the incentive compensation amount from the Bank’s return on equity when
compared against a peer group of publicly reporting banks.  The peer group is
made up of publicly reporting banks and thrifts in the United States with assets
between $500 million and $1 billion, as reported by SNL Securities.

The following table illustrates the potential incentive compensation under
various scenarios.  Incentive compensation is paid in cash following the
determination of results under the plan for the preceding fiscal year.  

Percentile Rank of

All Specific Bank-wide Goals Achieved

PSB ROE compared

% of Bank Budgeted Pre-incentive Net Income Achieved

to Peer Group

<95%

95%

98%

100%

 

Incentive Compensation as a Percentage of Base Salary

 

 

 

 

 

Less than 50th percentile

2.0%

 

2.8%

 

4.4%

 

6.0%

 

50th to 55th percentile

6.0%

 

6.8%

 

8.4%

 

10.0%

 

55th to 60th percentile

7.5%

 

8.5%

 

10.5%

 

12.5%

 

60th to 65th percentile

9.6%

 

10.9%

 

13.4%

 

16.0%

 

65th to 70th percentile

12.0%

 

13.6%

 

16.8%

 

20.0%

 

70th to 75th percentile

15.0%

 

17.0%

 

21.0%

 

25.0%

 

> 75th percentile

18.0%

 

20.4%

 

25.2%

 

30.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentile Rank of

No Specific Bank-wide Goals Achieved

PSB ROE compared

% of Bank Budgeted Pre-incentive Net Income Achieved

to Peer Group

<95%

95%

98%

100%

 

Incentive Compensation as a Percentage of Base Salary

 

 

 

 

 

Less than 50th percentile

0.0%

 

0.8%

 

2.4%

 

4.0%

 

50th to 55th percentile

4.0%

 

4.8%

 

6.4%

 

8.0%

 

55th to 60th percentile

5.0%

 

6.0%

 

8.0%

 

10.0%

 

60th to 65th percentile

6.4%

 

7.7%

 

10.2%

 

12.8%

 

65th to 70th percentile

8.0%

 

9.6%

 

12.8%

 

16.0%

 

70th to 75th percentile

10.0%

 

12.0%

 

16.0%

 

20.0%

 

> 75th percentile

12.0%

 

14.4%

 

19.2%

 

24.0%