United States
                       Securities and Exchange Commission

                             Washington, D.C. 20549

                                   FORM 10-QSB

                        [x] Quarterly Report pursuant to
                           Section 13 or 15 (d) Of The
                         Securities Exchange Act of 1934

                    For the Three Months Ended March 31, 2000

                 [ ] Transition Report under Section 13 or 15(d)
                     Of The Securities Exchange Act of 1934

                         Commission File Number 0-28864

                               PS Financial, Inc.
--------------------------------------------------------------------------------
           (Exact name of the registrant as specified in its charter)

       Delaware                                        36-4101473
--------------------------------------------------------------------------------
(State of incorporation)                 (I.R.S. Employer Identification Number)

                4800 South Pulaski Road, Chicago, Illinois 60632
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (773) 376-3800
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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
stock, as of the latest practicable date.

Class:                                     SHARES OUTSTANDING at May 10, 2000
--------------------------------------------------------------------------------
Common Stock,  $.01 par value              1,302,057



<PAGE>



                               PS Financial, Inc.

                                   Form 10-QSB

                                 March 31, 2000

                         Part I - Financial Information

ITEM 1 - FINANCIAL STATEMENTS                                              Page
  Condensed Consolidated Statements of Financial
     Condition at March 31, 2000 and December 31, 1999                       3
  Condensed Consolidated Statements of Income
     for the three  months ended March 31, 2000 and 1999                     4
  Condensed Consolidated Statements of Stockholders'
     Equity for the three months ended March 31, 2000 and 1999               5
  Condensed Consolidated Statements of Cash Flows
     for the three months ended March 31, 2000 and 1999                      6
  Notes to the Condensed Consolidated Financial Statements
     as of March 31, 2000                                                    8

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS                      10

                           Part II - Other Information

         Item 6. Exhibits and Reports on Form 8-K                           15






                                       2

<PAGE>


                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                      CONDENSED CONSOLIDATED STATEMENTS OF
                          FINANCIAL CONDITION March 31,
                           2000 and December 31, 1999
--------------------------------------------------------------------------------
                  (Dollars in thousands, expect per share data)
<TABLE>
<CAPTION>

                                                                                March 31,   December 31,
                                                                                  2000           1999
                                                                                ---------     --------
<S>                                                                             <C>           <C>
ASSETS

Cash on hand and in banks                                                       $     431     $    868
Interest-bearing deposit accounts in other  financial institutions                  5,283        2,437
                                                                                ---------     --------
         Total cash and cash equivalents                                            5,714        3,305

Interest-bearing term deposits in other financial  institutions                       159          159
Equity securities available for sale                                                1,249        1,917
Securities available for sale                                                      33,391       33,633
Mortgage-backed securities available-for-sale                                       5,381        5,636
Loans receivable, net                                                              70,903       72,179
Federal Home Loan Bank stock                                                        1,927        1,927
Premises and equipment, net                                                           530          477
Accrued interest receivable                                                           991        1,051
Other assets                                                                        1,221        1,072
                                                                                ---------     --------
         Total assets                                                           $ 121,466     $121,356
                                                                                =========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
         Deposits                                                               $  65,972     $ 63,983
         Advances from borrowers for taxes and insurance                              380          733
         Advances from the Federal Home Loan Bank                                  35,417       37,405
         Accrued interest payable and other liabilities                             5,430          363
                                                                                ---------     --------
                  Total liabilities                                               107,199      102,484

Stockholders' Equity
         Common stock $0.01 par value per share, 2,500,000 shares authorized;
         2,182,125 issued
                                                                                       22           22
         Additional paid-in capital                                                21,648       21,644
         Retained earnings, substantially restricted                                7,028        6,862
         Unearned ESOP shares                                                        (956)        (981)
         Unearned stock awards                                                       (723)        (767)
         Treasury stock, at cost, 855,914 and  488,681 shares, respectively
                                                                                  (10,948)      (6,425)
         Accumulated other comprehensive loss                                      (1,804)      (1,483)
                                                                                ---------     --------
                  Total stockholders' equity                                       14,267       18,872
                                                                                ---------     --------
                           Total liabilities and stockholders' equity           $ 121,466     $121,356
                                                                                =========     ========
</TABLE>

          See accompanying notes to consolidated financial statements.




                                       3
<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------
                  (Dollars in thousands, except per share data)

                                                           Three months ended
                                                                  March 31,
                                                           ------------------
                                                             2000       1999
                                                           -------    -------
Interest income
  Loans                                                    $ 1,469    $ 1,149
  Securities                                                   557        346
  Mortgage-backed securities                                    91        162
  Dividend income on equity investments                         29         67
  Other interest earning assets                                110         54
                                                           -------    -------
          Total interest income                              2,256      1,778

Interest expense
  Deposits                                                     758        574
  Federal Home Loan Bank advances                              499        326
                                                           -------    -------
          Total interest expense                             1,257        900
                                                           -------    -------

Net interest income                                            999        878

Provision for loan losses                                        7          0
                                                           -------    -------

Net interest income after provision for loan losses            992        878

Noninterest income
  Net loss on sale of securities                               (58)         0
  Other operating income                                        37         20
                                                           -------    -------
          Total noninterest income                             (21)        20

Noninterest expense
  Compensation and benefits                                    249        221
  Occupancy and equipment expense                               38         31
  Data processing services                                      22         78
  Federal deposit insurance premiums                             3          8
  Professional fees                                             60         13
  Other operating expenses                                      64         61
                                                           -------    -------
          Total noninterest expense                            436        412
                                                           -------    -------
Income before income tax expense                               535        486
Income tax expense                                             149        127
                                                           -------    -------
Net income                                                 $   386    $   359
                                                           =======    =======

  Basic earnings per share                                 $  0.25    $  0.22
                                                           =======    =======
  Diluted earnings per share                               $  0.25    $  0.22
                                                           =======    =======

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
                             (Dollars in thousands)
<TABLE>
<CAPTION>

Three Months Ended March 31                             2000               1999
------------------------------------------------  ----------------- -----------------

<S>                                               <C>       <C>      <C>      <C>
Common Stock
Balance at beginning of year                      $     22           $    22
                                                  --------           -------
Balance at March 31                               $     22           $    22
                                                  ========           =======
Additional Paid-In Capital
Balance at beginning of year                      $ 21,644           $21,638
Change in additional paid in capital                     4                 0
                                                  --------           -------
Balance at March 31                               $ 21,648           $21,638
                                                  ========           =======

Retained Earnings, Substantially Restricted
Balance at beginning of year                      $  6,862           $ 6,141
Net income for the period                              386   $ 386       359   $ 359
Dividends declared                                    (220)             (218)
                                                  --------           -------
Balance at March 31                               $  7,028           $ 6,282
                                                  ========           =======

Unearned ESOP Shares
Balance at beginning of year                      $   (981)          $(1,077)
Change in unearned ESOP shares                          25                24
                                                  --------           -------
Balance at March 31                               $   (956)          $(1,053)
                                                  ========           =======

Unearned RRP Shares
Balance at beginning of year                      $   (767)          $  (941)
Change in RRP shares                                    44                43
                                                  --------           -------
Balance at March 31                               $   (723)          $  (898)
                                                  ========           =======

Treasury Stock
Balance at beginning of year                      $ (6,425)          $(4,759)
Change in treasury stock                            (4,523)             (653)
                                                  --------           -------
Balance at March 31                               $(10,948)          $(5,412)
                                                  ========           =======

Accumulated Other Comprehensive Income
Balance at beginning of year                      $ (1,483)          $     2
Change in unrealized gain (loss) on securities
available-for-sale, net of tax
                                                      (321)   (321)     (194)   (194)
                                                  --------   -----   -------   -----
Balance at March 31                               $ (1,804)          $  (192)
                                                  ========           =======

Total Stockholders' Equity                        $ 14,267           $20,387
                                                  ========           =======

Comprehensive Income                                         $  65             $ 165
                                                             =====             =====

</TABLE>

          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                Three months ended
                                                                                      March 31,
                                                                                -------------------
                                                                                  2000       1999
                                                                                --------   --------
<S>                                                                             <C>        <C>
Cash flows from operating activities
  Net income                                                                    $    386   $    359
  Adjustments to reconcile net income to net cash from operating activities
    Provision for loan losses                                                          7          -
    Depreciation                                                                      20         13
    Amortization of premiums and discounts on investment and
       mortgage-backed securities, net
                                                                                     (22)         -
    Net loss on sales of  securities available-for-sale                               58          -
    RRP Expense                                                                       44         43
    ESOP Expense                                                                      29         24
    Change in
       Deferred loan origination fees                                                (10)       (11)
       Accrued interest receivable and other assets                                 (110)      (149)
       Other liabilities and deferred income taxes                                   544     (1,374)
                                                                                --------   --------
         Net cash provided by (used in) operating activities                         946     (1,095)

Cash flows from investing activities
  Proceeds from repayment of securities available-for-sale                           192      1,143
  Maturities of securities available-for-sale                                        637      3,500
  Purchase of securities available-for-sale                                            -     (6,987)
  Net change in loans                                                              1,279     (1,065)
  Capital expenditures, net                                                          (73)       (33)
                                                                                --------   --------
    Net cash provided by (used in) investing activities                            2,035     (3,442)

Cash flows from financing activities
  Net increase in deposits                                                         1,989      1,552
  Dividends paid                                                                    (220)      (218)
  Borrowings from FHLB                                                             8,500      1,900
  Repayment of FHLB borrowings                                                   (10,488)      (385)
  Purchase of Treasury Stock                                                           -       (653)
  Net decrease in advance payments by borrowers for insurance and taxes
                                                                                    (353)      (230)
                                                                                --------   --------
    Net cash provided by (used in) financing activities                             (572)     1,966
                                                                                --------   --------

Change in cash and cash equivalents                                                2,409     (2,571)

Cash and cash equivalents at beginning of period                                   3,305      4,237
                                                                                --------   --------
Cash and cash equivalents at end of period                                      $  5,714   $  1,666
                                                                                ========   ========

</TABLE>

                                       6
<PAGE>

                              PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                Three months ended
                                                                                      March 31,
                                                                                -------------------
                                                                                  2000       1999
                                                                                --------   --------
<S>                                                                             <C>        <C>
Supplemental disclosure of cash flow information
  Cash paid during the period for
    Interest                                                                    $  1,264   $    915
    Income taxes                                                                       -          -

Supplemental schedule of noncash investing activities
    Amount due to broker for purchase of securities                                    -        999
Supplemental schedule of non cash financing activity
    Amount due to shareholders for purchase of tendered shares                     4,523          -

</TABLE>

          See accompanying notes to consolidated financial statements.


                                       7
<PAGE>


                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
              Notes to Condensed Consolidated Financial Statements
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated 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,  the unaudited  condensed  consolidated  financial
statements  contain  all  adjustments   (consisting  only  of  normal  recurring
adjustments)   necessary  to  present  fairly  the  financial  condition  of  PS
Financial,  Inc. as of March 31, 2000 and the results of its  operations for the
three month periods ended March 31, 2000 and 1999.

The  condensed  financial  statements  should  be read in  conjunction  with the
audited financial  statements and accompanying notes (or "notes thereto") of the
Company for the years ended December 31, 1999, 1998 and 1997.

NOTE 2 - EARNINGS PER SHARE

A  reconciliation  of the  numerators and  denominators  for earnings per common
share  computations  for the  three  months  ended  March  31,  2000 and 1999 is
presented below.
<TABLE>
<CAPTION>
                                                               Three Months Ended March 31,
                                                               ----------------------------
                                                                    2000         1999
                                                                 ----------   ----------
<S>                                                              <C>          <C>
Basic Earnings Per Share
  Net income                                                     $  386,418   $  358,977
                                                                 ==========   ==========
  Weighted average common shares outstanding                      1,532,463    1,670,410
                                                                 ==========   ==========
    Basic Earnings Per Share                                     $     0.25   $     0.22
                                                                 ==========   ==========
Earnings Per Share Assuming Dilution
  Net income                                                     $  386,418   $  358,977
                                                                 ==========   ==========
  Weighted average common shares outstanding                      1,532,463    1,670,410

  Add dilutive effect of assumed exercises
    Incentive stock options                                               -            -
    Stock awards                                                     10,727            -
                                                                 ==========   ==========
    Weighted average common and dilutive potential common shares
    outstanding                                                   1,543,190    1,670,410
                                                                 ==========   ==========
      Diluted Earnings Per Share                                 $     0.25   $     0.22
                                                                 ==========   ==========

</TABLE>


All of the  outstanding  options  at March 31,  2000 and 1999  relate to options
granted in 1997 at an exercise  price of $14.00.  In January  1998,  the Company
paid a special dividend,  which was declared in 1997, which resulted in a change
in equity  structure.  This event allowed the Company to modify the stock option
agreements  to adjust the exercise  price to $11.02,  which was an adjustment in
direct  proportion to the decrease in exercise price as compared to market value
as a result of the change in equity structure.


                                       8
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
              Notes to Condensed Consolidated Financial Statements
--------------------------------------------------------------------------------

NOTE 3 - MODIFIED DUTCH TENDER OFFER

On March 1, 2000,  the Company  offered to purchase up to 333,858  shares of its
common stock through a modified dutch tender offer. Upon expiration of the offer
on March 29, 2000, the Company  agreed to purchase  367,233 shares of its common
stock at a price of $12.00 per share.  Final payment for these shares took place
on April 7, 2000.  Funding for the  purchase  consisted of $3.5 million of cash,
$577,000 on a variable rate loan with a current rate of 7.25%, and $300,000 on a
variable rate line of credit with a current rate of 8.27%.

NOTE 4 - SUBSEQUENT EVENT

At the  2000  annual  meeting  held  on May 3,  2000,  shareholders  approved  a
stockholder proposal on the sale of the Company,  details of which are disclosed
in the proxy statement to the 2000 annual meeting.















                                       9
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Comparison of Financial Condition at March 31, 2000 and December 31, 1999

Total assets increased  $110,000 to $121.5 million at March 31, 2000 from $121.4
million  at  December  31,  1999,  due  mainly  to  increases  in cash  and cash
equivalents of $2.4 million.

The Company's net loans receivable decreased by $1.3 million to $70.9 million at
March  31,  2000  from  $72.2   million  at  December   31,   1999.   Securities
available-for-sale  decreased by $1.2 million to $40.0 million at March 31, 2000
from $41.2 million at December 31, 1999, as maturities of equity  securities and
principal repayments from mortgage backed securities were accumulated to pay for
treasury shares tendered in the dutch auction tender offer. These decreases were
mainly  offset by an increase in cash and cash  equivalents  of $2.4  million to
$5.7 million at March 31, 2000 from $3.3 million at December 31, 1999.

Total  liabilities  at March 31,  2000 were  $107.2  million  compared to $102.5
million at December 31, 1999, an increase of $4.7 million.  The increase was due
mainly to an  accrual  recorded  in the first  quarter  of $4.5  million  as the
Company was contractually liable to purchase 367,233 shares in the dutch auction
tender offer which  expired on March 29, 2000.  The  settlement  of these shares
actually took place on April 7, 2000. During the period, deposits increased $2.0
million to $66.0  million at March 31, 2000 from $64.0  million at December  31,
1999,  while FHLB advances  decreased $2.0 million to $35.4 million at March 31,
2000 from $37.4 million at December 31, 1999.

Stockholders'  equity at March  31,  2000 was $14.3  million  compared  to $18.9
million  at  December  31,  1999,  a decrease  of $4.6  million,  or 24.3%,  due
primarily to the  recording of the liability for the purchase of $4.5 million of
treasury  stock in the dutch auction  tender offer,  a $321,000  increase in the
unrealized  loss  on  securities  available-for-sale,  and  payment  of  regular
dividends totaling $220,000, partially offset by net income of $386,000.

Comparison  of  Operating  Results for the Three Months Ended March 31, 2000 and
March 31, 1999.

General

Net income for the three months ended March 31, 2000 was  $386,000,  an increase
of $27,000,  or 7.5%,  from net income of $359,000  for the three  months  ended
March 31, 1999.  The increase in net income is primarily  due to a $17.6 million
increase in interest earning assets.

Interest Income

Interest  income for the three  months  ended  March 31,  2000 was $2.3  million
compared to $1.8 million for the three months ended March 31, 1999,  an increase
of  $478,000,  or 26.6%.  The  increase in interest  income was the result of an
increase in the average balance of  interest-earning  assets primarily due to an
increase in the average balance of mortgage loans.


Interest Expense

Interest  expense for the three  months  ended  March 31, 2000 was $1.3  million
compared to $900,000 for the three  months ended March 31, 1999,  an increase of
$357,000,  or 39.7%.  The increase in interest  expense was due to the increased
average balance of  interest-bearing  liabilities  during the three months ended
March 31, 2000  compared to the three months ended March 31, 1999, as well as an
increase in the Company's cost of funds due to an increase in short term deposit
rates.


                                       10
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Provision for Loan Losses

The Bank's provision for loan losses was $7,000 for the three months ended March
31, 2000  compared to zero for the three months  ended March 31, 1999.  At March
31, 2000, the Bank's allowance for loan losses totaled $274,000, or .2% of total
loans.  The amount of the provision and allowance for estimated  losses on loans
is influenced by current economic conditions,  actual loss experience,  industry
trends  and  other  factors,  such as  adverse  economic  conditions,  including
declining  real estate values,  in the Bank's market area. In addition,  various
regulatory  agencies,   as  an  integral  part  of  their  examination  process,
periodically  review the Bank's  allowance  for loan losses.  Such  agencies may
require the Bank to provide  additions  to the  allowance  based upon  judgments
which differ from those of management.  The absence of a loan loss provision for
the three months ended March 31, 1999 was indicative of management's  assessment
of the adequacy of the allowance for loan losses, given the trends in historical
loss experience of the portfolio and current economic conditions, as well as the
fact that the  majority  of loans are  single-family  residential  loans and the
loan-to-value  ratios are generally less than 80%. Although  management uses the
best information available, future adjustments to the allowance may be necessary
due to economic,  operating,  regulatory and other conditions that may be beyond
the Bank's control.

Past due loan balances at March 31, 2000  decreased to $3.7 million  compared to
$5.2  million at March 31,  1999.  Included  in the past due loan  balances  are
non-accruing  loans at March 31, 2000 totaling $1.3 million compared to $563,000
at March 31, 1999.

Noninterest Income

Noninterest  income  for the three  months  ended  March 31,  2000 was a loss of
$21,000 compared to income of $20,000 for the three months ended March 31, 1999.
The decrease was primarily due to a $58,000 loss on sales of securities in 2000,
partially offset by a $17,000 increase in other income.

Noninterest Expense

Noninterest  expense  was  $436,000  for the three  months  ended March 31, 2000
compared to $412,000 for the three  months ended March 31, 1999,  an increase of
$24,000.  The  increase  was  primarily  a  result  of  a  $28,000  increase  in
compensation  expense and a $47,000  increase in  professional  fees,  partially
offset  by a $56,000  decrease  in data  processing  expenses.  Data  processing
expense was higher in 1999 due to a system  conversion that was completed in the
first quarter of 1999.

Income Taxes

Income taxes were $149,000 for the three months ended March 31, 2000 compared to
$127,000 for the three months ended March 31, 1999,  an increase of $22,000,  or
17.3%.  The  increase  was  primarily  a result of a $49,000  increase in pretax
earnings.

Asset/Liability Management

In an attempt to manage its  exposure to changes in interest  rates,  management
monitors the Company's interest rate risk. The Board of Directors meets at least
quarterly to review the Company's interest rate risk position and profitability.
The  Board  of  Directors  also  reviews  the  Company's  portfolio,  formulates
investment strategies and oversees the timing and implementation of transactions
to assure  attainment of the Company's  objectives in the most effective manner.
In   addition,   the  Board   reviews  on  a  quarterly   basis  the   Company's
asset/liability  position,  including simulations of the effect on the Company's
capital of various interest rate scenarios.

In managing its asset/liability mix, PS Financial, depending on the relationship
between long- and  short-term  interest  rates,  market  conditions and consumer
preference,  often places more emphasis on managing net interest  margin than on


                                       11
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

better  matching the interest rate  sensitivity of its assets and liabilities in
an effort to enhance net interest income. Management believes that the increased
net interest  income  resulting from a mismatch in the maturity of its asset and
liability  portfolios can, during periods of declining or stable interest rates,
provide  high  enough  returns to justify the  increased  exposure to sudden and
unexpected increases in interest rates.

The  Company's  interest  rate risk  increased  during the twelve  months  ended
December 31, 1999 due to the large increase in fixed rate loans, funded by fixed
rate time deposits and FHLB advances.  However, management has taken a number of
steps to limit to some extent its interest rate risk. First, the Company focuses
its fixed rate loan  originations  on loans with maturities of 15 years or less.
At March 31, 2000, $52.3 million, or 94.1%, of the Company's one- to four family
residential  loan portfolio  consisted of fixed rate loans having original terms
to maturity of 15 years or less.  Second, the Company offers balloon loans of 10
years or less in an attempt to decrease its asset/liability mismatch. Third, the
Company   has   maintained   a   mortgage-backed   securities   portfolio   with
adjustable-rates.  At March 31, 2000, adjustable rate mortgage-backed securities
totaled $5.4 million which represented 4.6% of interest-earning  assets. Fourth,
the Company has  attempted to reinvest  the  proceeds of most of its  borrowings
into assets with maturities  which are anticipated to be similar to those of its
borrowings.  Finally,  a substantial  proportion  of the  Company's  liabilities
consists of passbook  savings  accounts  which are believed by  management to be
somewhat less sensitive to interest rate changes than certificate accounts.

Generally, the investment policy of the Company is to invest funds among various
categories of  investments  and  maturities  based upon the  Company's  need for
liquidity, to achieve the proper balance between its desire to minimize risk and
maximize  yield,  to provide  collateral  for  borrowings,  and to  fulfill  the
Company's  asset/liability  management policies.  Investments  generally include
interest-bearing  deposits in other federally  insured  financial  institutions,
FHLB stock, U.S. Government securities and municipal securities.

PS  Financial's  cost of funds  responds to changes in interest rates due to the
relatively short-term nature of its deposit portfolio. Consequently, the results
of operations are heavily influenced by the levels of short-term interest rates.
PS Financial offers a range of maturities on its deposit products at competitive
rates and monitors the maturities on an ongoing basis.


                                       12
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

An approach used by  management to quantify  interest rate risk is net portfolio
value ("NPV")  analysis.  In essence,  this approach  calculates  the difference
between the present  value of  liabilities,  expected cash flows from assets and
cash flows from off balance sheet contracts.  The following table sets forth, at
December 31, 1999,  an analysis of the Bank's  interest rate risk as measured by
the estimated changes in NPV resulting from instantaneous and sustained parallel
shifts in the yield  curve  (+/-300  basis  points,  measured in 100 basis point
increments).

                                            Estimated Increase
Change in Interest Estimated Ratio of NPV   (Decrease) in NPV
       Rates          NPV        to        ------------------
  (Basis Points)    Amount   Total Assets   Amount   Percent
------------------ -------- -------------- -------- ---------
                            (dollars in thousands)

       +300         $5,194       4.8%     $(11,027)    (68)%
       +200          8,779       7.9        (7,443)    (46)
       +100         12,498      10.8        (3,724)    (23)
        ---         16,222      13.5           ---     ---
       -100         19,757      15.9         3,536      22
       -200         23,569      18.3         7,347      45
       -300         27,830      20.7        11,608      72

Certain  assumptions  utilized in assessing  interest rate risk were employed in
preparing the preceding table.  These assumptions relate to interest rates, loan
prepayment  rates,  deposit decay rates, and the market values of certain assets
under the various interest rate scenarios.  It was also assumed that delinquency
rates will not change as a result of changes in interest  rates  although  there
can be no assurance that this will be the case. Even if interest rates change in
the designated amounts,  there can be no assurance that the Company's assets and
liabilities  would  perform as set forth above.  In  addition,  a change in U.S.
Treasury rates in the designated amounts accompanied by a change in the shape of
the Treasury yield curve would cause significantly  different changes to the NPV
than indicated above.

Impact of New Accounting Standards

In June  1999,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities".  SFAS No. 133  standardizes the accounting
for derivative instruments, including certain derivative instruments embedded in
other  contracts.  Under  the  standard,  entities  are  required  to carry  all
derivative instruments in the statement of financial position at fair value. The
accounting for changes in the fair value (i.e.  gains or losses) of a derivative
instrument  depends on whether it has been designated and qualifies as part of a
hedging  relationship  and,  if so, on the  reason  for  holding  it. If certain
conditions are met, entities may elect to designate a derivative instrument as a
hedge of exposure to change in fair value, cash flows, or foreign currencies. If
the hedged exposure is a fair value exposure, the gain or loss on the derivative
instrument is  recognized in earnings in the period of change  together with the
offsetting  loss or gain on the  hedged  item  attributable  to the  risk  being
hedged. If the hedged exposure is a cash flow exposure, the effective portion of
the  gain  or loss on the  derivative  instrument  is  reported  initially  as a
component of other  comprehensive  income  (outside  earnings) and  subsequently
reclassified into earnings when the forecasted transaction affects earnings. Any
amount  excluded  from  the  assessment  of hedge  effectiveness  as well as the
ineffective  portion of the gain or loss is reported  in  earnings  immediately.
Accounting for foreign  currency  hedges is similar to accounting for fair value
and cash flow hedges. If the derivative instrument is not designated as a hedge,
the gain or loss is  recognized  in  earnings  in the  period  of  change.  This
Statement will have no effect on the Company.


                                       13
<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Year 2000

         The Company successfully completed its Year 2000 changeover without any
problems or  disruptions  to operations.  While  management  believes that it is
unlikely,  there can be no  assurance  that  problems  not yet  apparent  to the
Company or its vendors will not arise as the year  progresses.  Management  will
continue to monitor all business  processes and relationships with third parties
to ensure that all processes continue to function  properly.  Total expenditures
on the Year 2000 project were $11,000.

Safe Harbor Statement

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.   The  Company  intends  such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purpose  of  these  safe  harbor
provisions.  Forward-looking  statements,  which are based on certain assumption
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identifiable  by use  of the  words  "believe",  "expect",  "intend",
"anticipate",  "estimate",  "project""  or similar  expressions.  The  Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which could have a material adverse affect on the
operations and future prospects of the Company and the subsidiaries include, but
are not limited to, changes in: interest  rates,  general  economic  conditions,
legislative  /  regulatory  changes,  monetary  and fiscal  policies of the U.S.
Government,  including  policies of the U.S.  Treasury  and the Federal  Reserve
Board, the quality or composition of the loan or investment  portfolios,  demand
for loan products, deposit flows, competition,  demand for financial services in
the Company's  market area and accounting  principles,  policies and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such  statements.  Further
information  concerning  the  Company  and its  business,  including  additional
factors  that  could  materially  affect the  Company's  financial  results,  is
included in the Company's filings with the Securities and Exchange Commission.


                                       14
<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS

                           PART II. OTHER INFORMATION
--------------------------------------------------------------------------------

Item 1.  Legal Proceedings
         None

Item 2.  Changes in Securities
         None

Item 3.  Defaults Upon Senior Securities
         None

Item 4.  Submission of Matters to a Vote of Security Holders
         None

Item 5.  Other information
         None

Item 6.  Exhibits and Reports on Form 8-K
         a.  None
         b. (1)  A current  report on Form 8-K was filed on March 17, 2000 to
                 announce  fourth quarter and year end earnings
            (2)  A current  report was filed on  February 2, 2000 to announce
                 annual meeting date.







                                       15
<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.

                                         PS FINANCIAL, INC.
                                         (Registrant)

Date: May 15, 2000                       By: /s/Kimberly Rooney
                                             --------------------------------
                                             Kimberly Rooney
                                             Chief Executive Officer
                                             (Principal Executive Officer)

Date: May 15, 2000                       By: /s/Jeffrey Przybyl
                                             --------------------------------
                                             Jeffrey Przybyl
                                             Chief Financial Officer
                                             (Principal Financial and
                                                  Accounting Officer)












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