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 Quarter Ended September 30, 1999

[ ]  Transition  Report  Pursuant  to 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 (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 November 15, 1999
Common Stock,  $.01 par value                      1,669,290


<PAGE>

                                                                           Page
PART I - Financial Information

  Item 1 - FINANCIAL STATEMENTS
    Condensed Consolidated Statements of
      Financial Condition at September 30,
      1999 and December 31, 1998                                             3
    Condensed Consolidated Statements of
      Income for the three months and nine
      months ended September 30, 1999 and 1998                               4
    Condensed Consolidated Statements of Changes
      in Stockholders' Equity for the nine
      months ended September 30, 1999 and 1998                               5
    Condensed Consolidated Statements of Cash
      Flows for the nine months ended September 30,
      1999 and 1998                                                          6
    Notes to the Condensed Consolidated Financial
      Statements as of September 30, 1999                                    8

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

Item 3 - Quantitative and Qualititave Disclosure About Market Risk          14

PART II - Other Information

  Item 1 - Legal Proceedings                                                17
  Item 2 - Changes in Securities                                            17
  Item 3 - Defaults Upon Senior Securities                                  17
  Item 4 - Submission of Matters to a Vote of Security Holders              17
  Item 5 - Other Information                                                17
  Item 6 - Exhibits and Reports on Form 8-K                                 17

SIGNATURES                                                                  18


                                     - 2 -

<PAGE>

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

                                                     September 30,  December 31,
                                                          1999          1998
                                                        --------      --------
ASSETS
Cash on hand and in banks                               $    521      $    448
Interest-bearing deposit accounts in
   other  financial institutions                             257         3,789
                                                        --------      --------
         Total cash and cash equivalents                     778         4,237

Interest-bearing term deposits in
   other financial  institutions                             159           159
Equity securities                                          2,556         3,278
Securities available-for-sale                             33,785        24,318
Mortgage-backed securities available-for-sale              6,105        11,354
Loans receivable, net                                     68,104        56,822
Federal Home Loan Bank stock                               1,927         1,319
Premises and equipment, net                                  483           426
Accrued interest receivable                                  985           803
Other assets                                                 930            68
                                                        --------      --------
         Total assets                                   $115,812      $102,784
                                                        ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Deposits                                             $ 56,461      $ 55,429
   Advances from borrowers for taxes and insurance         1,061           578
   Advances from the Federal Home Loan Bank               37,943        23,764
   Accrued interest payable and other liabilities          1,386         1,987
                                                        --------      --------
     Total liabilities                                    96,851        81,758

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                              21,641        21,638
  Retained earnings, substantially restricted              6,698         6,141
  Unearned ESOP shares                                    (1,005)       (1,077)
  Unearned stock awards                                     (811)         (941)
  Treasury stock, at cost, 490,281 and
     338,737 shares respectively                          (6,425)       (4,759)
  Accumulated other comprehensive (loss) income           (1,159)            2
                                                        --------      --------
     Total stockholders' equity                           18,961        21,026
                                                        --------      --------
       Total liabilities and stockholders' equity       $115,812      $102,784
                                                        ========      ========

                                     - 3 -

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

-------------------------------------------------------------------------------------------
                                                  Nine months Ended     Three months ended
                                                    September 30,          September 30,
                                             -----------------------  ---------------------
                                                1999         1998         1999        1998
                                             -----------  ----------  ----------  ---------
<S>                                           <C>         <C>          <C>        <C>
Interest income
  Loans                                       $   3,705   $   2,907    $   1,328  $   1,056
  Securities                                      1,390       1,361          553        398
  Mortgage-backed securities                        409         465           98        163
  Dividend income on equity securities              196          87           63         87
  Other                                             148         144           49         67
                                              ---------   ---------    ---------  ---------
          Total interest income                   5,848       4,964        2,091      1,771

Interest expense
  Deposits                                        1,753       1,346          591        482
  Other borrowings                                1,245         849          517        370
                                              ---------   ---------    ---------  ---------
          Total interest expense                  2,998       2,195        1,108        852
                                              ---------   ---------    ---------  ---------

Net interest income                               2,850       2,769          983        919

Provision for loan losses                           ---          40          ---         40
                                              ---------   ---------    ---------  ---------


Net interest income after provision
    for loan losses                               2,850       2,729          983        879

Noninterest income
  Net gain (loss) on sale of securities             (57)         22          (75)        (1)
  Other                                              60          71           18         25
                                              ---------   ---------    ---------  ---------
          Total noninterest income                    3          93          (57)        24

Noninterest expense
  Compensation and benefits                         691         709          230        263
  Occupancy and equipment expense                    98          90           33         30
  Data processing                                   110          45           18         15
  Federal insurance premiums                         25          20            9          7
  Professional Fees                                  58          69            9         19
  Other                                             201         185           65         61
                                              ---------   ---------    ---------  ---------
          Total noninterest expense               1,183       1,118          364        395
                                              ---------   ---------    ---------  ---------

Income before income tax expense                  1,670       1,704          562        508
Income tax expense                                  455         572          149        148
                                              ---------   ---------    ---------  ---------

Net income                                    $   1,215       1,132    $     413  $     360
                                              =========   =========    =========  =========
Earnings per share
         Basic                                $    0.76   $    0.61    $    0.26  $    0.20
                                              =========   =========    =========  =========
         Diluted                              $    0.76   $    0.60    $    0.26  $    0.20
                                              =========   =========    =========  =========
Average shares outstanding                    1,607,423   1,848,945    1,577,928  1,815,776
                                              =========   =========    =========  =========

</TABLE>

                                              - 4 -

<PAGE>

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

Nine months Ended September 30                   1999             1998
                                             --------------- ----------------
Common Shares
Balance at beginning of year                 $    22          $    22
                                             =======          =======
Balance at September 30                      $    22          $    22
                                             =======          =======
Additional Paid-In Capital
Balance at beginning of year                 $21,638          $21,602
ESOP shares released                               3               35
                                             -------          -------
Balance at September 30                      $21,641          $21,637
                                             =======          =======
Retained Earnings, Substantially Restricted
Balance at beginning of year                 $ 6,141          $ 5,518
Net income for the period                      1,215  $1,215    1,132  $1,132
Dividends declared                              (658)            (666)
                                             -------          -------
Balance at September 30                      $ 6,698          $ 5,984
                                             =======          =======
Unearned ESOP Shares
Balance at beginning of year                 $(1,077)         $(1,173)
ESOP shares released                              72               72
                                             -------          -------
Balance at September 30                      $(1,005)         $(1,101)
                                             =======          =======
Unearned Stock Awards
Balance at beginning of year                 $  (941)         $(1,117)
Stock awards earned                              130              134
                                             -------          -------
Balance at September 30                      $  (811)         $  (983)
                                             =======          =======
Treasury Stock
Balance at beginning of year                  (4,759)          (1,896)
Purchase of treasury stock                    (1,666)          (1,414)
                                             -------          -------
Balance at September 30                      $(6,425)         $(3,310)
                                             =======          =======
Accumulated Other Comprehensive Income
Balance at beginning of year                 $     2          $   153
Change in unrealized loss on securities
available-for-sale net of tax                 (1,161)(1,161)      (36)   (36)
                                             ------- ------   ------- ------
Balance at September 30                      $(1,159)         $   117
                                             =======          =======
Total Shareholders' Equity                   $18,961          $22,366
                                             =======          =======
Comprehensive Income                                     $54          $1,096
                                                      ======          ======

                                     - 5 -

<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
--------------------------------------------------------------------------------
                                                  Nine months ended
                                                    September 30,
                                                ---------------------
                                                  1999         1998
                                                --------     --------
Cash flows from operating activities
 Net income                                     $  1,215     $  1,132
 Adjustments to reconcile net income to
   net cash from operating activities
   Depreciation                                       41           36
   Provision for loan loss                           ---           40
   Amortization of premiums and discounts
     on investment and
     mortgage-backed securities, net                 (19)          10
   Net (gain) loss on sales of securities
   available-for-sale                                 57          (22)
   Stock award expense                               130          134
   ESOP expense                                       75          107
   Change in
     Deferred loan origination fees                  (61)         (60)
     Accrued interest receivable
       and other assets                           (1,044)         611
     Other liabilities and deferred
       income taxes                                 (877)      (1,206)
                                                --------     --------
       Net cash (used in) provided by
          operating activities                      (483)         782

Cash flows from investing activities
  Proceeds from sale of securities
      available-for-sale                           2,298        3,500
  Proceeds from sale of mortgage-backed
      securities available-for-sale                3,373        1,102
  Proceeds from sale of equity securities
      available-for-sale                              92          ---
  Purchase of Federal Home Loan Bank Stock          (608)        (619)
  Proceeds from repayment of securities
      available-for-sale                           2,656        1,864
  Proceeds from maturities of securities
      available-for-sale                           3,500       15,000
  Proceeds from maturities of equity
      securities                                     588          205
  Purchase of securities available-for-sale      (16,926)      (8,300)
  Purchase of mortgage-backed securities
      available-for-sale                             ---       (3,014)
  Purchase of equity securities
      available-for-sale                             ---       (4,272)
  Net decrease in interest-bearing term
      deposits in other financial institutions       ---           52
  Net change in loans                            (11,221)     (15,907)
  Capital expenditures, net                          (98)         (14)
                                                --------     --------
   Net cash used in investing activities         (16,346)     (10,403)

Cash flows from financing activities
  Net increase in deposits                         1,032        9,936
  Dividends Paid                                    (658)      (8,195)
  Borrowings from FHLB                            14,179       11,397
  Purchase of treasury stock                      (1,666)      (1,414)
  Net change in advance payments
      by borrowers for insurance and taxes
                                                     483          420
                                                --------     --------
   Net cash provided by financing activities      13,370       12,144

Change in cash and cash equivalents               (3,459)       2,523

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

Cash and cash equivalents at end of period      $    778     $  8,813
                                                ========     ========

Supplemental disclosure of cash flow information
   Cash paid during the period for
     Interest                                   $  3,005     $  2,071
     Income taxes                                    ---          870

Supplemental disclosure  of  noncash
   investing  activity  Amount  due broker at
   September 30 for purchase of securities
   available-for-sale                           $    987     $    ---

                                     - 6 -

<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
September 30, 1999 and December 31, 1998,  and the results of its operations for
the three month and nine month periods ended September 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 nine months ended September 30, 1999
and 1998 is presented below.
<TABLE>
<CAPTION>
                                                    Nine months Ended       Three Months Ended
                                                       September 30,           September 30,
                                                 ----------------------  ----------------------
                                                    1999        1998        1999        1998
                                                 ----------  ----------  ----------  ----------
<S>                                              <C>         <C>         <C>         <C>
Basic Earnings Per Share
     Net income                                  $1,215,471  $1,132,288  $  411,487  $  360,723
                                                 ==========  ==========  ==========  ==========
     Weighted average common shares outstanding   1,607,423   1,848,945   1,577,928   1,815,776
                                                 ==========  ==========  ==========  ==========
         Basic Earnings Per Share                $     0.76  $     0.61  $     0.26  $     0.20
                                                 ==========  ==========  ==========  ==========
Earnings Per Share Assuming Dilution
     Net income                                  $1,215,471  $1,132,288  $  411,487  $  360,723
                                                 ==========  ==========  ==========  ==========
     Weighted average common shares outstanding   1,607,423   1,848,945   1,577,928   1,815,776

     Add dilutive effect of assumed exercises
         Incentive stock options                        ---      33,938         ---      12,436
         Stock awards                                   ---         206         ---         ---

     Weighted average common and dilutive
      potential common shares outstanding         1,607,423   1,883,089   1,577,928   1,828,212
                                                 ==========  ==========  ==========  ==========
              Diluted Earnings Per Share         $     0.76  $     0.60  $     0.26  $     0.20
                                                 ==========  ==========  ==========  ==========

</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.

                                     - 7 -

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

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

Total assets increased $13.0 million from $102.8 million at December 31, 1998 to
$115.8  million  at  September  30,  1999 due  mainly to  increases  in the loan
portfolio of $11.3  million and  securities  available for sale of $9.5 million,
funded by an  increase  in FHLB  advances  of $14.1  million  and a decrease  in
mortgage-backed securities available for sale of $5.3 million.

The Company's net loans receivable increased by $11.3 million from $56.8 million
at December 31, 1998 to $68.1  million at September 30, 1999,  while  securities
available-for-sale increased by $9.5 million, from $24.3 million at December 31,
1998 to $33.8 million at September 30, 1999.  These increases were mainly offset
by decreases in cash and cash equivalents of $3.5 million,  from $4.2 million at
December  31, 1998 to $778,000 at  September  30,  1999,  while  mortgage-backed
securities  available-for-sale  decreased  $5.3  million,  from $11.4 million at
December  31, 1998 to $6.1  million at September  30,  1999,  as lower  yielding
assets were replaced by higher  yielding  assets.  The Company is  considering a
policy of selling  loans,  with servicing  retained,  in the future to fund loan
demand.

Total  liabilities  at September 30, 1999 were $96.9  million  compared to $81.8
million at  December  31,  1998,  an increase of $15.1  million.  The  Company's
deposits  increased by $1.1 million,  from $55.4 million at December 31, 1998 to
$56.5  million at September  30, 1999.  Advances from the Federal Home Loan Bank
also increased  $14.1 million,  from $23.8 million at December 31, 1998 to $37.9
million at September 30, 1999. These increases were the result of leveraging the
Company's high capital ratio and provide additional  liquidity to fund increased
loan demand.

Total  Stockholders'  Equity at September 30, 1999 was $19.0 million compared to
$21.0  million at December  31,  1998,  a decrease of $2 million,  or 9.5%,  due
primarily  to net earnings of $1.2  million  partially  offset by a $1.2 million
decrease in the  unrealized  gain on securities  available-for-sale,  payment of
regular dividends totaling  $658,000,  and treasury stock purchased at a cost of
$1.6 million.

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

General
Net income was $413,000 for the three months ended  September  30, 1999 compared
to $360,000  for the three  months  ended  September  30,  1998,  an increase of
$53,000,  or 14.7%.  The increase in net income was primarily due to an increase
in net  interest  income as a result of an  increase  in the  balance of average
interest earning assets and a decrease in noninterest expense,  partially offset
by a decrease in noninterest income.

Interest Income
Interest  income was $2.1 million for the three months ended  September 30, 1999
compared to $1.8  million for the three  months ended  September  30,  1998,  an
increase of $300,000,  or 16.7%.  The increase in interest income was the result
of a $20.7 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  September  30,  1999.  The
decrease   in  loan  yields  was   primarily   the  result  of   repayments   on
higher-yielding mortgages being replaced by lower-yielding mortgages.

                                     - 8 -

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Interest Expense
Interest  expense was $1.1 million for the three months ended September 30, 1999
compared to $852,000 for the three months ended  September 30, 1998, an increase
of $248,000,  or 29.1%. The increase in interest expense was primarily due to an
increase of $12.3 million in average balance of FHLB advances,  in an attempt to
better  leverage  the  Company's  high  capital  ratio  and  provide  additional
liquidity to fund increased loan demand,  and an increase in the average balance
of the Bank's  deposits of $12.1 million.  The increase in deposits and advances
was partially  offset by a lower cost of funds,  as the Bank's  savings  account
rate declined over the twelve month period.

Provision for Loan Losses
The  Bank's  provision  for loan  losses  was zero for the  three  months  ended
September 30, 1999 compared to $40,000 for the three months ended  September 30,
1998.  At  September  30, 1999,  the Bank's  allowance  for loan losses  totaled
$253,000,  or 0.4% 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  September  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-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  over sixty days at September 30, 1999  increased to $1.7
million  compared  to  $758,000  at December  31,  1998.  Non-accruing  loans at
September 30, 1999 totaled $475,000 compared to $777,000 at December 31, 1998.

Noninterest Income
Noninterest  income was a loss of $57,000 for the three months  ended  September
30, 1999 compared to income of $24,000 for the three months ended  September 30,
1998.  The  decrease  was  primarily  due to an  increase in the loss on sale of
securities of $74,000,  as lower yielding  assets were liquidated and reinvested
in higher yielding assets.

Noninterest Expense
Noninterest  expense was $364,000 for the three months ended  September 30, 1999
compared to $395,000 for the three months ended  September  30, 1998, a decrease
of $31,000,  or 7.9%. The decrease was primarily a result of a $33,000  decrease
in compensation and benefits.

Income Taxes
Income  taxes were  $149,000  for the three  months  ended  September  30,  1999
compared to $148,000 for the three months ended  September 30, 1998, an increase
of $1,000, or 0.7%. The increase was primarily a result of a $54,000 increase in
pretax  earnings,  which was  partially  offset by an  increase  in income  from
federally tax-exempt municipal bonds.

                                     - 9 -

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Nine months Ended September 30, 1999 and
September 30, 1998.

General
Net income  was $1.2  million  for the nine  months  ended  September  30,  1999
compared to $1.1  million for the nine  months  ended  September  30,  1998,  an
increase of $100,000,  or 9.1. The increase in net income was 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 and loss on sale of securities.

Interest Income
Interest  income was $5.8 million for the nine months ended  September  30, 1999
compared to $5.0  million for the nine  months  ended  September  30,  1998,  an
increase of $800,000,  or 16.0%.  The increase in interest income was the result
of a $20.9 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 capital ratio.  The increase in the average balance was partially offset by
a  decrease  in yield on  interest  earning  assets  for the nine  months  ended
September  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 was $3.0 million for the nine months ended  September 30, 1999
compared to $2.2  million for the nine  months  ended  September  30,  1998,  an
increase of $800,000,  or 36.4%.  The increase in interest expense was primarily
due to a $14.2 million increase in the average balance of deposits, as well as a
$10.6 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 $24.8 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 the  Bank's  savings  account
interest rates since October, 1998.

Provision for Loan Losses
The  Bank's  provision  for loan  losses  was zero  for the  nine  months  ended
September 30, 1999  compared to $40,000 for the nine months ended  September 30,
1998.  At  September  30, 1999,  the Bank's  allowance  for loan losses  totaled
$251,000,  or 0.4% 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  September  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-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.

Noninterest Income
Noninterest  income was $3,000 for the nine  months  ended  September  30,  1999
compared to $93,000 for the nine months ended  September 30, 1998.  The decrease
was  primarily  a result of a net loss of $57,000 on sales of  securities  and a
decrease in other income of $11,000.

                                     - 10 -

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Noninterest Expense
Noninterest  expense was $1.2  million for the nine months ended  September  30,
1999  compared to $1.1 million for the nine months ended  September 30, 1998, an
increase of $100,000.  The increase was primarily a result of a $65,000 increase
in  data  processing  expense  due to the  Company's  decision  to  change  data
processing vendors, and an increase of $16,000 in other expenses, primarily used
to  grow  the  loan  portfolio,  partially  offset  by an  $18,000  decrease  in
compensation and benefits.

Income Taxes
Income taxes were $455,000 for the nine months ended September 30, 1999 compared
to  $572,000  for the nine  months  ended  September  30,  1998,  a decrease  of
$117,000,  or 20.5%.  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.

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
September 30, 1999,  $51.1 million or 94.3% 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  September  30,  1999,  adjustable  rate  mortgage-backed
securities  totaled  $6.1 million  which  represented  6.2% 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.

                                     - 11 -

<PAGE>
                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
            Quantitative and Qualitative Disclosure About Market Risk

The  primary  objective  of PS  Financial's  investment  strategy  is to provide
liquidity necessary to meet funding needs as well as to address daily,  cyclical
and  long-term  changes  in  the  asset/liability  mix,  while  contributing  to
profitability  by providing a stable flow of  dependable  earnings.  Investments
generally include interest-bearing deposits in other federally insured financial
institutions, FHLB stock and U.S. Government securities.

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.

The  following  table sets forth,  at June 30,  1999,  the latest date for which
information  is  available,  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 (+/-400 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               796          7.92       (10,143)    (56)
       +200             11,245         10.81       (6,814)    (38)
       +100             14,679         13.56       (3,380)    (19)
        ---             18,059         16.06          ---     ---
       -100             21,370         18.33        3,311      18
       -200             25,174         20.76        7,115      39
       -300             29,421         23.27       11,361      63

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

                                     - 12 -

<PAGE>


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.

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.

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 Bank 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"  was  completed  in October,  1999.  Total
compliance  of all systems is  expected by  management  to be  completed  by the
October,  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

                                     - 13 -
<PAGE>

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  Bank'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 Bank's operations.  The Company does not have sufficient
information  accumulated  from  customers  of the Bank 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 the  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
        None
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: November 15, 1999            By: /s/Kimberly Rooney
     ------------------            ---------------------------------------------
                                   Kimberly Rooney
                                   Chief Executive Officer
                                   (Principal Executive Officer)

Date: November 15, 1999            By: /s/Jeffrey Przybyl
     ------------------            ---------------------------------------------
                                   Jeffrey Przybyl
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)


                                     - 16 -