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 Six Months Ended June 30, 1999

                         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
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                    (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  (First Filing Pursuant to Rule 15d-13(a))


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 August 13, 1999
--------------------------------------------------------------------------------
 Common Stock,  $.01 par value                1,726,384



<PAGE>


                               PS Financial, Inc.
                                   Form 10-QSB
                         Six Months Ended June 30, 1999

  Part I - Financial Information

 ITEM 1 - FINANCIAL STATEMENTS                                             Page

  Condensed Consolidated Statements of Financial
  Condition at June 30, 1999 and December 31, 1998                          3

  Condensed Consolidated Statements of Income for the
  three months and six  months ended June 30, 1999 and 1998                 4
  Condensed Consolidated Statements of Changes in
  Stockholders' Equity for the six months ended June 30, 1999 and 1998      5
  Condensed Consolidated Statements of Cash Flows for the six months
   ended June 30, 1999 and 1998                                             6
  Notes to the Condensed Consolidated Financial Statements
  as of June 30, 1999                                                       8

 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS                              9

  Part II - Other Information

  Item 4. Submission of Matters to a Vote of Security Holders               15
  Item 6. Exhibits and Reports on Form 8-K                                  15


                                       2

<PAGE>


                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                       June 30, 1999 and December 31, 1998
                  (Dollars in thousands, expect per share data)

                                                      June 30,  December 31,
                                                        1999        1998
                                                     ---------  ------------
 ASSETS
 Cash on hand and in banks                           $     488  $     448
 Interest-bearing deposit accounts
     in other  financial institutions                      313      3,789
 Total cash and cash equivalents                           801      4,237

 Interest-bearing term deposits in
     other financial  institutions                         159        159
 Equity securities                                       3,192      3,278
 Securities available-for-sale                          34,754     24,318
 Mortgage-backed securities available-for-sale           7,062     11,354
 Loans receivable, net                                  62,110     56,822
 Federal Home Loan Bank stock                            1,586      1,319
 Premises and equipment, net                               474        426
 Accrued interest receivable                               954        803
 Other assets                                              769         68
 Total assets                                        $ 111,861 $  102,784

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Liabilities
 Deposits                                            $  57,526 $   55,429
 Advances from borrowers for taxes and insurance           695        578
 Advances from the Federal Home Loan Bank               31,627     23,764
 Accrued interest payable and other liabilities          2,010      1,987
 Total liabilities                                      91,858     81,758

Stockholders' Equity
 Common stock $0.01 par value
       per share, 2,500,000
       shares authorized; 2,182,125
      issued and outstanding                                22         22

 Additional paid-in capital                             21,638     21,638
 Retained earnings, substantially restricted             6,511      6,141
 Unearned ESOP shares                                   (1,029)    (1,077)
 Unearned stock awards                                    (855)      (941)
 Treasury stock, at cost, 425,741 and
        338,737 shares respectively                     (5,412)    (4,759)
 Accumulated other comprehensive income                   (872)         2
 Total stockholders' equity                             20,003     21,026
 Total liabilities and stockholders' equity          $ 111,861  $ 102,784

                                       3
<PAGE>


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

<TABLE>
<CAPTION>
                                                   Six Months Ended            Three Months ended
                                                     June 30,                         June 30,
                                                ----------------------          -------------------
                                                1999              1998          1999           1998
                                                ----              ----          ----           ----
<S>                                              <C>            <C>           <C>            <C>
 Interest income
   Loans                                         $  2,377       $  1,851      $   1,228      $     978
   Securities                                         837            963            491            424
   Mortgage-backed securities                         311            302            149            143
   Dividend income on equity securities               133              -             66              -
   Other                                               99             77             45             44
            Total interest income                   3,757          3,193          1,979          1,589

 Interest expense
   Deposits                                         1,162            864            588            433
   Other borrowings                                   728            479            402            255
            Total interest expense                  1,890          1,343            990            688

 Net interest income                                1,867          1,850            989            901

 Provision for loan losses                              0              0              0              0

 Net interest income after provision
      for loan losses                               1,867          1,850            989            901

 Noninterest income
   Net gain on sale of securities                      18             23             18              0
   Other                                               42             46             22             34
            Total noninterest income                   60             69             40             34

 Noninterest expense
   Compensation and benefits                          461            446            240            218
   Occupancy and equipment expense                     65             60             34             32
   Data processing                                     92             30             14             15
   Federal insurance premiums                          16             13              8              6
   Professional fees                                   49             50             36             33
   Other                                              136            124             75             74
            Total noninterest expense                 819            723            407            378

 Income before income tax expense                   1,108          1,196            622            557
 Income tax expense                                   306            424            179            199

 Net income                                        $  802         $  772        $   443        $   358
 Earnings per share                                $ 0.48         $ 0.41        $  0.27        $  0.19
 Average shares outstanding                     1,661,724      1,867,852      1,652,596      1,875,819

</TABLE>
                                       4
<PAGE>

<TABLE>
<CAPTION>


                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  (Dollars in thousands, except per share data)

  Six Months Ended June 30                              1999                1998
<S>                                               <C>       <C>          <C>       <C>
  Common Stock
  Balance at beginning of year                     $     22              $      22
  Balance at June 30                               $     22              $      22
  Additional Paid-In Capital
  Balance at beginning of year                     $ 21,638              $  21,602
  Change in additional paid in capital                    0                     26
  Balance at June 30                               $ 21,638              $  21,628
  Retained Earnings, Substantially Restricted
  Balance at beginning of year                     $  6,141              $   5,518
  Net income for the period                             802    $ 802           772   $772
  Dividends declared                                   (432)                  (453)
  Balance at June 30                               $  6,511              $   5,837
  Unearned ESOP Shares
  Balance at beginning of year                     $ (1,077)             $  (1,173)
  Change in unearned ESOP shares                         48                     50
  Balance at June 30                               $ (1,029)             $  (1,123)
  Unearned Stock Awards
  Balance at beginning of year                     $   (941)             $  (1,117)
  Change in stock awards                                 86                     89
  Balance at June 30                               $   (855)             $  (1,028)
  Treasury Stock
  Balance at beginning of year                       (4,759)                (1,896)
  Change in treasury stock                             (653)                  (794)
  Balance at June 30                               $ (5,412)             $  (2,690)
  Accumulated Other Comprehensive Income
  Balance at beginning of year                     $      2              $     153
  Change in unrealized (loss) on securities
                available-for-sale net of tax          (874)    (874)          (36)    (36)
  Balance at June 30                               $   (872)             $     117
  Total Stockholders' Equity                       $ 20,003              $  22,763

  Comprehensive Income / (Loss)                                 $(72)                 $736

</TABLE>
                                       5
<PAGE>


                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                    Six months ended
                                                                                         June 30,
                                                                                ------------------------
                                                                                   1999          1998
                                                                                ----------   -----------
<S>                                                                              <C>           <C>
 Cash flows from operating activities
  Net income                                                                     $   802       $    772
  Adjustments to reconcile net income to net cash
      from operating activities
   Depreciation                                                                       28             25
   Amortization of premiums and discounts on
       investment and mortgage-backed securities, net                                 (7)            13
   Net gain on sales of securities available-for-sale                                (18)           (23)
   Stock award expense                                                                86             89
   ESOP expense                                                                       48             71
   Change in
        Deferred loan origination fees                                               (47)           (41)
        Accrued interest receivable and other assets                                (852)           722
        Other liabilities and deferred income taxes                                 (640)           129
             Net cash provided by operating activities                              (600)         1,757

 Cash flows from investing activities
  Proceeds from sale of securities available-for-sale                                  0          3,500
  Proceeds from sale of mortgage-backed securities available-for-sale
                                                                                   2,028          1,102
  Proceeds from sale of equity securities available-for-sale                          92              0
  Purchase of Federal Home Loan Bank Stock                                          (267)          (238)
  Proceeds from repayment of securities available-for-sale                         2,097          1,381
  Proceeds from maturities of securities available-for-sale                        3,500         12,000
  Purchase of securities available-for-sale                                      (13,961)        (6,996)
  Purchase of mortgage-backed securities available-for-sale                            0         (3,014)
  Purchase of equity securities available-for-sale                                     0           (268)
  Net decrease in interest-bearing term deposits in other financial institutions
                                                                                       0              2
  Net change in loans                                                             (5,241)       (10,411)
  Capital expenditures, net                                                          (76)           (14)
       Net cash used in investing activities                                     (11,828)        (2,956)

 Cash flows from financing activities
  Net increase (decrease) in deposits                                              2,097            (30)
  Dividends Paid                                                                    (432)        (8,022)
  Borrowings from FHLB                                                             7,863          4,800
  Purchase of Treasury Stock                                                        (653)          (794)
  Net increase in advance payments by borrowers for insurance and taxes
                                                                                     117            121
       Net cash provided by (used in) financing activities                         8,992         (3,925)

 Decrease in cash and cash equivalents                                            (3,436)        (5,124)

 Cash and cash equivalents at beginning of period                                  4,237          6,290

 Cash and cash equivalents at end of period                                      $   801       $  1,166
</TABLE>

                                       6

<PAGE>


<TABLE>
<S>                                                                             <C>           <C>

 Supplemental disclosure of cash flow information
             Cash paid during the period for
                       Interest                                                  $ 1,848       $  1,310
                       Income taxes                                                    -            645

 Supplemental disclosure of noncash investing activity
             Amount due broker at June 30 for purchase
                of securities available-for-sale                                 $ 1,200       $      -

</TABLE>

































                                       7
<PAGE>


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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying  unaudited 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  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
June 30, 1999 and December 31, 1998,  and the results of its  operations for the
three month and six month periods then ended June 30, 1999 and 1998.

NOTE 2 - EARNINGS PER SHARE

A  reconciliation  of the  numerators and  denominators  for earnings per common
share  computations  for the three months and six months ended June 30, 1999 and
1998 is presented below.
<TABLE>
<CAPTION>

                                                 Six Months Ended June 30, Three Months Ended June 30,
                                                 ------------------------- ---------------------------
                                                      1999        1998        1999          1998
                                                 -----------  ------------ ----------  ---------------
<S>                                              <C>           <C>         <C>          <C>
  Basic Earnings Per Share
  Net income                                     $   801,984   $  771,565  $  443,007   $  357,647

  Weighted average common shares outstanding       1,661,724    1,867,852   1,652,596    1,875,819
  Basic Earnings Per Share                       $      0.48   $     0.41  $     0.27   $     0.19

  Earnings Per Share Assuming Dilution
  Net income                                     $   801,984   $  771,565  $  443,007   $  357,647

  Weighted average common shares outstanding       1,661,724    1,867,852   1,652,596    1,875,819
  Add dilutive effect of assumed exercises
  Incentive stock options                                  -       37,169           -       37,169
  Stock awards                                             -            -           -            -
  Weighted average common and dilutive
     potential common shares outstanding           1,661,724    1,905,021   1,652,596    1,912,988
  Diluted Earnings Per Share                     $      0.48   $     0.41  $     0.27   $     0.19
</TABLE>

All of the  outstanding  options  at June 30,  1999 and 1998  relate to  options
granted in 1997 at an exercise price of $14.00 In January 1998, the Company paid
a special  dividend 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>


Comparison of Financial Condition at June 30, 1999 and December 31, 1998

Total assets  increased $9.1 million from $102.8 million at December 31, 1998 to
$111.9  million  at June 30,  1999  due  mainly  to an  increase  in  securities
available  for sale of $6.0 million and an increase in net loans  receivable  of
$5.3 million,  partially  offset by a decrease in cash and cash  equivalents  of
$3.4 million.  The increase in total assets was primarily  funded by an increase
in FHLB advances of $7.8 million and an increase in deposits of $2.1 million.

The Company's net loans receivable  increased by $5.3 million from $56.8 million
at December 31, 1998 to $62.1 million at June 30, 1999. In addition,  securities
available-for-sale  increased by $10.5  million,  from $24.3 million at December
31,  1998 to $34.8  million at June 30,  1999,  as lower  yielding  assets  were
replaced by higher  yielding  assets.  These  increases  were mainly offset by a
decrease in cash and cash  equivalents  of $3.4  million,  from $4.2  million at
December  31,  1998 to  $801,000  at June 30,  1999,  as well as a  decrease  in
mortgage  backed  securities  of $4.3 million from $11.4 million at December 31,
1998 to $7.1 million at June 30, 1999.

Total  liabilities at June 30, 1999 were $91.9 million compared to $81.8 million
at December 31,  1998,  an increase of $10.1  million.  The  Company's  deposits
increased  by $2.1  million,  from $55.4  million at December  31, 1998 to $57.5
million  at June 30,  1999.  Advances  from the  Federal  Home  Loan  Bank  also
increased $7.8 million, from $23.8 million at December 31, 1998 to $31.6 million
at June 30, 1999.  These  increases  were the result of leveraging the Company's
high  capital  ratio and provide  additional  liquidity to fund  increased  loan
demand.

Equity at June 30, 1999 was $20.0 million  compared to $21.0 million at December
31, 1998, a decrease of $1.0 million,  or 4.8%, due primarily to net earnings of
$802,000  offset by a $874,000  decrease in the  unrealized  gain on  securities
available-for-sale, payment of regular dividends totaling $432,000, and treasury
stock purchased at a cost of $653,000.


Comparison  of  Operating  Results for the Three  Months Ended June 30, 1999 and
June 30, 1998.

General
Net earnings for the three months ended June 30, 1999 were $443,000, an increase
of $85,000,  or 23.7%,  from net earnings of $358,000 for the three months ended
June 30, 1998.  The increase in net earnings is primarily due to the increase in
net  interest  income as a result of an  increase  in average  interest  earning
assets.

Interest Income
Interest  income  for the three  months  ended  June 30,  1999 was $2.0  million
compared to $1.6 million for the three  months ended June 30, 1998,  an increase
of $390,000, or 24.4%. The increase in interest income was the result of a $21.8
million increase in the average balance of interest-earning assets primarily due
to an increase in the average balance of loans  receivable.  The increase in the
average  balance  was  partially  offset  by a  decrease  in  yield  on new loan
originations  for the three  months  ended June 30,  1999.  The decrease in loan
yields was primarily the result of repayments on higher-yielding mortgages being
replaced by lower-yielding mortgages as long term rates declined in general.

Interest Expense
Interest expense for the three months ended June 30, 1999 was $990,000  compared
to $688,000 for the three  months ended June 30, 1998,  an increase of $302,000,
or 43.9%.  The increase in interest  expense was primarily due to an increase of
$10.4 million in average balance of FHLB advances and an increase in the average
balance  of the  Bank's  deposits  of $16.3  million,  in an  attempt  to better
leverage the Company's  high capital ratio and provide  additional  liquidity to
fund increased loan demand.  The increase in deposits and advances was partially
offset by a lower cost of funds,  as rates  declined in general  over the twelve
month period.

                                       9
<PAGE>

Provision for Loan Losses
The Bank's  provision  for loan losses was zero for the three  months ended June
30,  1999 and 1998.  At June 30,  1999,  the Bank's  allowance  for loan  losses
totaled  $266,000,  or 0.4% of total  loans.  The  amount of the  provision  and
allowance  for 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 June 30, 1999 is  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-values  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  over  sixty  days at June 30,  1999  increased  to $1.0
million  compared to $758,000 at December 31, 1998.  Non-accruing  loans at June
30, 1999 totaled $258,000 compared to $777,000 at December 31, 1998.

Noninterest Income
Noninterest income for the three months ended June 30, 1999 was $40,000 compared
to $34,000 for the three months ended June 30, 1998.  The increase was primarily
due to a net gain of $18,000 on the sale of securities in 1999, partially offset
by a decrease  of $12,000 in other  noninterest  income as a result of a $16,000
gain on the sale of a company vehicle in 1998.

Noninterest Expense
Noninterest  expense  was  $407,000  for the three  months  ended June 30,  1999
compared to $378,000 for the three  months  ended June 30, 1998,  an increase of
$29,000.  The  increase  was  primarily  a  result  of  a  $22,000  increase  in
compensation and benefits.

Income Taxes
Income taxes were  $179,000 for the three months ended June 30, 1999 compared to
$199,000 for the three  months  ended June 30,  1998, a decrease of $20,000,  or
10.1%.  The  decrease  was  primarily a result of an  increase  in earning  from
municipal securities which are tax free for federal tax purposes.


Comparison of Operating  Results for the Six Months Ended June 30, 1999 and June
30, 1998.

General
Net earnings for the six months ended June 30, 1999 were  $802,000,  an increase
of $30,000, or 3.9%, from net earnings of $772,000 for the six months ended June
30, 1998.  The  increase in net  earnings is primarily  due to a decrease in the
income tax expense,  due to an increase in earnings  from  municipal  securities
which are tax free for federal tax purposes,  partially offset by an increase in
noninterest expense.

Interest Income
Interest income for the six months ended June 30, 1999 was $3.8 million compared
to $3.2 million for the six months ended June 30, 1998, an increase of $600,000,
or 18.8%.  The  increase  in interest  income was the result of a $21.8  million
increase in the average balance of  interest-earning  assets primarily due to an
increase in the average balance of loans receivable and securities available for
sale in an attempt to better leverage the Company's high ratio.  The increase in

                                       10
<PAGE>

the  average  balance  was  partially  offset by a decrease in yield on interest
earning  assets the six months ended June 30, 1999. The decrease in asset yields
was  primarily  the result of  repayments  on  higher-yielding  mortgages  being
replaced by lower-yielding mortgages as long term rates declined in general.

Interest Expense
Interest  expense  for the six  months  ended  June 30,  1999  was $1.9  million
compared to $1.3 million for the six months ended June 30, 1998,  an increase of
$600,000,  or 46.2%.  The increase in interest  expense was  primarily  due to a
$15.7  million  increase in the average  balance of deposits,  as well as a $9.8
million  increase  in average  balance of FHLB  advances,  used in an attempt to
better leverage the Company's  capital ratio and to fund increased loan demand..
The $26.8 million increase in average interest bearing liabilities was partially
offset by a decrease in the average  cost of funds.  The decrease in the cost of
funds was  primarily  due to a decline in interest  rates in general since June,
1998.

Provision for Loan Losses
The Bank's  provision for loan losses was zero for the six months ended June 30,
1999 and 1998. At June 30, 1999,  the Bank's  allowance for loan losses  totaled
$266,000,  or 0.4% of total loans. The amount of the provision and allowance for
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 six months ended June 30, 1999 is  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-values 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.

Noninterest Income
Noninterest  income for the six months ended June 30, 1999 was $60,000  compared
to $69,000 for the six months ended June 30, 1998.  The decrease was primarily a
result of a net gain of $16,000 on the sale of a company vehicle in 1998.

Noninterest Expense
Noninterest expense was $819,000 for the six months ended June 30, 1999 compared
to $723,000 for the six months ended June 30, 1998, an increase of $96,000.  The
increase was primarily a result of a $62,000 increase in data processing expense
due to the  Company's  decision to change  data  processing  vendors,  a $15,000
increase  in  compensation  and  benefits,  and an  increase of $12,000 in other
expenses, primarily used to grow the loan portfolio.

Income Taxes
Income taxes were  $306,000  for the six months ended June 30, 1999  compared to
$424,000 for the six months  ended June 30,  1998,  a decrease of  $118,000,  or
27.8%.  The  decrease  was  primarily a result of an  increase in earnings  from
municipal  securities  which are tax free for  federal  income tax  purposes.

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.

                                       11
<PAGE>

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
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 June
30, 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
June 30,  1999,  $44.5  million or 93.1% 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 June 30, 1999, adjustable rate mortgage-backed  securities
totaled $5.8 million which represented 4.9% 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.

An  approach  used by  management  to  quantify  interest  rate  risk is the 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.



                                       12

<PAGE>


The  following  table sets forth,  at March 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
-------------------  ---------  -------------   ---------  -------
  +300               10,050             10.7    (8,816)       (47)
  +200               13,008             13.3    (5,858)       (31)
  +100               15,973             15.8    (2,894)       (15)
  ---                18,866             18.0       ---        ---
  -100               22,109             20.3     3,243         17
  -200               25,688             22.7     6,821         36
  -300               29,656             25.1    10,790         57

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 Bank'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  1998,  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.

Effective  January 1, 1999,  Statement  of Financial  Standards  (SFAS) No. 134,
"Accounting for Mortgage-Backed  Securities Retained after the Securitization of
Mortgage  Loans  Held  for  Sale  by  a  Mortgage  Banking  Enterprise",  became
effective.  SFAS No. 134 allows entities with mortgage banking  operations which
convert  pools of mortgages  into  securities  to classify  these  securities as
available-for-sale,   trading,  or  held-to-maturity,  instead  of  the  current
requirement to classify these pools as trading. This standard is not expected to
have a material effect on the Company.

                                       13
<PAGE>

American Institute of Certified Public  Accountants  Statement of Position 98-5,
effective in 1999, requires all start-up, pre-opening, and organization costs to
be expensed as incurred.  Any such costs  previously  capitalized  for financial
reporting  purposes  must be  written  off to  income  at the start of the year.
Statement  of Position  98-5 is not  expected  to have a material  impact on the
company.

Year 2000

As the year 2000 approaches,  a significant business issue has emerged regarding
how existing application software programs and operating systems can accommodate
the date value for the year 2000. Many existing software  application  products,
including  software  application  products used by the Company and its suppliers
and customers,  were designed to accommodate only a two-digit date value,  which
represents  the year.  For  example,  information  relating  to the year 1996 is
stored in the system as "96".  As a result,  the year 1999 (i.e.  "99") could be
the maximum date value that these systems will be able to process accurately. In
response to concerns about this issue, regulatory agencies have begun to monitor
holding companies' and banks' readiness for the year 2000 as part of the regular
examination  process.  The Company presently  believes that with modification to
existing  software,  conversion to new software,  and  conversion to a new third
party data processor,  the year 2000 issue will not pose significant operational
problems   for  the   Company's   computer   systems  or  business   operations.
Implementation  of the Company's plan to test in-house and out-sourced  software
has been  underway  since the first  quarter of 1998.  Testing  of  applications
considered to be "mission critical" is scheduled for completion by third quarter
of 1999.  Total  compliance  of all  systems is  expected  by  management  to be
completed by the third quarter of 1999; management currently estimates that such
compliance  will  cost  $15,000.  The team for the plan is  responsible  for the
implementation  of the plan and reports to the Company's Board of Directors on a
monthly basis until the plan is completed.  However,  if such  modifications and
conversions are not made, or are not completed timely, the year 2000 issue could
have a material  adverse impact on the  operations of the Company.  In addition,
there can be no assurance  that  unforeseen  problems in the Company's  computer
systems,  or the systems of third parties on which the Company's computers rely,
will  not  have an  adverse  effect  on the  Company's  systems  or  operations.
Additionally,  failure of the  Company's  customers'  to  prepare  for year 2000
compatibility  could  have a  significant  adverse  effect  on  such  customer's
operations and  profitability,  thus inhibiting their ability to repay loans and
adversely  affecting  the  Company's  operations.  The  Company  does  not  have
sufficient  information  accumulated from customers of the Company to enable the
Company to assess the degree to which  customers'  operations are susceptible to
potential problems relating to the year 2000 issue.

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>

                           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

 The Company's annual meeting of stockholders was held on April 28, 1999. At the
 meeting,  Sylvester  J Ptak and  Kimberly P Rooney  were  elected  for terms to
 expire in 2002. The votes cast for and withheld from each such director were as
 follows:

  Director           For         Withheld/Abstain   Broker Non-Votes
  Sylvester J Ptak   1,525,367   123,094            0
  Kimberly P Rooney  1,527,367   121,094            0

                  Also  at  the  annual  meeting,   a  proposal  to  ratify  the
 appointment of Crowe, Chizek and Company,  LLP as independent  auditors for the
 fiscal  year ending  December  31,  1999 was  approved.  The votes cast for and
 against this proposal,  and the number of abstentions and broker non-votes with
 respect to the proposal, was as follows

 For             Against       Abstentions     Broker Non-Votes
 1,633,450       7,711         7,300           0

Item 5.  Other information

 None

 Item 6.          Exhibits and Reports on Form 8-K

                  a.              None
                  b.              None


                                       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: August 14, 1999          By: /s/Kimberly Rooney
                                    ------------------------
                                    Kimberly Rooney
                                    Chief Executive Officer
                                    (Principal Executive Officer)

 Date: August 14, 1999          By: /s/Jeffrey Przybyl
                                    ------------------------
                                    Jeffrey Przybyl
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)




















                                       17