UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                   FORM 10-QSB
                                   (Mark One)


[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the period ended:  March 31, 1997

[ ]  Transition  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

For the transition period from _____________  to _____________

Commission file number  0-28864

                               PS FINANCIAL, INC.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified In Its Charter)

                Delaware                                     36-410473
----------------------------------------           -----------------------------
    (State or Other Jurisdiction of                        (IRS Employer
     Incorporation or Organization)                     Identification No.)

           Chicago, Illinois                                   60632
----------------------------------------           -----------------------------
(Address of Principal Executive Offices)                     (Zip Code)

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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 YES  X   NO 
                                     ---     ---
Indicate the number of shares outstanding of each the issuer's classes of common
stock, as of the latest practicable date:

                 Class                             Outstanding at March 31, 1997
----------------------------------------           -----------------------------
     Common Stock, par value $0.01                        2,020,304 shares


                                                                               1

<PAGE>


                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS


                                       INDEX


Part I.  Financial Information

  Item 1.  Financial Statements

     Condensed Consolidated Statements of Financial Condition as of
       March 31, 1997 and December 31, 1996.................................   3

     Condensed Consolidated Statements of Income for the three months
       ended March 31, 1997 and 1996........................................   4

     Condensed Consolidated Statements of Changes in Stockholders' Equity
       for the three months ended March 31, 1997 and 1996...................   5

     Condensed Consolidated Statements of Cash Flows for the three
       months ended March 31, 1997 and 1996.................................   6

     Notes to the Condensed Consolidated Financial Statements as of
       March 31, 1997.......................................................   8

  Item 2.  Management's Discussion and Analysis of the Financial Condition
    and Results of Operation................................................   9

Part II. Other Information

  Item 6.  Exhibits and Reports on Form 8-K.................................  13









                                                                               2

<PAGE>


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

--------------------------------------------------------------------------------

                                                       March 31,    December 31,
                                                         1997           1996
                                                         ----           ----
ASSETS                                                              
Cash on hand and in banks                              $    450       $    579
Interest-bearing deposit accounts in other                         
  financial institutions                                  2,683          8,179
                                                       --------       --------
     Total cash and cash equivalents                      3,133          8,758
Interest-bearing term deposits in other financial                  
  institutions                                              149            248
Securities available-for-sale                            27,175         24,080
Mortgage-backed securities available-for-sale             7,695          4,702
Loans receivable, net                                    35,608         35,943
Federal Home Loan Bank stock                                362            362
Premises and equipment, net                                 455            461
Accrued interest receivable                                 486            477
Other assets                                                 55            102
                                                       --------       --------
     Total assets                                      $ 75,118       $ 75,133
                                                       ========       ========

LIABILITIES AND EQUITY                                             
Liabilities                                                        
     Deposits                                          $ 41,867       $ 42,203
     Advances from borrowers for taxes and                         
       insurance                                            214            477
     Accrued interest payable and other liabilities         561            306
                                                       --------       --------
         Total liabilities                               42,642         42,986
                                                                   
Shareholders' equity                                               
    Common stock - $ 0.01 par value per share,                     
       2,500,000 shares authorized; 2,182,125 shares               
       issued and outstanding                          $     22       $     22
     Additional paid-in capital                          21,170         21,170
     Retained earnings, substantially restricted         13,099         12,669
     Unearned ESOP shares                                (1,691)        (1,691)
     Unrealized loss on available-for-sale                         
       securities, net                                     (124)           (23)
                                                       --------       --------
     Total shareholders' equity                          32,476         32,147
                                                       --------       --------
     Total liabilities and shareholders' equity        $ 75,118       $ 75,133
                                                       ========       ========

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                                                                               3

<PAGE>

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

--------------------------------------------------------------------------------

                                                          Three months ended
                                                               March 31,
                                                          ------------------
                                                          1997          1996
                                                          ----          ----
Interest income
  Loans                                                $      804     $      815
  Securities                                                  371            183
  Mortgage-backed securities                                  129             64
  Other interest-earning assets                                75             42
                                                       ----------     ----------
    Total interest income                                   1,379          1,104

Interest expense                                              424            436

Net interest income                                           955            668

Provision for loan losses                                      --             --
                                                       ----------     ----------
Net interest income after provision for loan losses           955            668

Noninterest income
  Net gain on sale of securities                                6             --
  Other income                                                 18             14
                                                       ----------     ----------
    Total noninterest income                                   24             14

Noninterest expense
  Compensation and benefits                                   166            114
  Occupancy and equipment expense                              32             26
  Data Processing                                              14             12
  Federal deposit insurance premiums                            7             24
  Other operating expenses                                     61             35
                                                       ----------     ----------
    Total noninterest expense                                 280            211
                                                       ----------     ----------

Income before income tax provision                            699            471

Provision for income taxes                                    269            183
                                                       ----------     ----------
Net income                                             $      430     $      288
                                                       ==========     ==========
Earnings per share                                     $      .21
                                                       ==========
Average shares outstanding                              2,020,304
                                                       ==========

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                                                                               4

<PAGE>


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

--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                         Net Unrealized
                                                              Retained                      Loss on
                                             Additional       Earnings,       Unearned     Securities          Total
                                  Common       Paid-in      Substantially       ESOP       Available-      Stockholders'
                                   Stock       Capital        Restricted       Shares       for-Sale          Equity
                                   -----       -------        ----------       ------       --------          ------
<S>                                <C>         <C>             <C>             <C>            <C>            <C>     
Balance at January 1, 1996         $ --        $    --         $11,667         $    --        $  57          $ 11,724

Net income                           --             --             288              --           --               288

Change in net unrealized loss
  on securities available-for-
  sale net of tax                    --             --              --              --         (149)             (149)
                                    ---        -------         -------         -------        -----          --------

Balance at March 31, 1996          $ --        $    --         $11,955         $    --        $ (92)         $ 11,863
                                   ====        =======         =======         =======        =====          ========
Balance at December 31, 1996       $ 22        $21,170         $12,669         $(1,691)       $ (23)         $ 32,147

Net income                           --             --             430              --           --               430

Change in net unrealized loss
  on securities available-for-
  sale net of tax                    --             --              --              --         (101)             (101)
                                   ----        -------         -------         -------        -----          --------

Balance at March 31, 1997          $ 22        $21,170         $13,099         $(1,691)       $(124)         $ 32,476
                                   ====        =======         =======         =======        =====          ========
</TABLE>

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                                                                               5

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (Dollars in thousands, except per share data)
                                   (Unaudited)

--------------------------------------------------------------------------------

                                                             Three months ended
                                                                  March 31,
                                                             ------------------
                                                              1997        1996
                                                              ----        ----
Cash flows from operating activities
  Net income                                                $   430     $   288
  Adjustments to reconcile net income to net
    cash from operating activities
     Depreciation                                                11           8
     Amortization of discounts and premiums
       on securities                                            (12)          7
     Net gain on sales of
        securities available-for-sale                            (6)         --
     Change in
        Deferred loan origination fees                          (14)         (1)
        Accrued interest receivable and other assets            100          32
        Other liabilities and deferred income taxes             255          12
                                                            -------     -------
            Net cash provided by operating activities           764         346

Cash flows from investing activities
  Proceeds from sales of securities available-
     for-sale                                                 4,001          --
  Proceeds from sale of mortgage-backed
     securities available-for-sale                            1,014          --
  Purchase of Federal Home Loan Bank Stock                       --         (21)
  Proceeds from repayment of securities
     available-for-sale                                         193         200
  Proceeds from maturities of securities
     available-for-sale                                       1,250       2,000
  Purchase of securities available-for-sale                  (8,514)     (3,508)
  Purchase of mortgage-backed securities
     available-for-sale                                      (4,176)         --
  Net decrease in interest-bearing term
     deposits in other financial institutions                    99          --
  Net change in loans                                           348      (1,060)
  Capital expenditures, net                                      (5)         (3)
                                                            -------     -------
    Net cash used in investing activities                    (5,790)     (2,392)

Cash flows from financing activities
  Net increase (decrease) in deposits                          (336)      1,531
  Net decrease in advances from
    borrowers for insurance and taxes                          (263)       (281)
                                                            -------     -------
     Net cash provided by (used in) financing activities       (599)      1,250
                                                            -------     -------
Decrease in cash and cash equivalents                        (5,625)       (796)

Cash and cash equivalents at beginning of period              8,758       3,754
                                                            -------     -------
Cash and cash equivalents at end of period                  $ 3,133     $ 2,958
                                                            =======     =======

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                                                                               6

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (Dollars in thousands, except per share data)
                                   (Unaudited)

--------------------------------------------------------------------------------


Supplemental disclosures of cash flow information
  Cash paid during the period for
    Interest                                                $   422     $   441
    Income taxes                                                  5          80














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                                                                               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
March 31, 1997 and 1996,  and the results of its  operations  and cash flows for
the three-month periods then ended.

NOTE 2 - CONVERSION

On November 26, 1996,  Preferred  Savings Bank ("Bank")  converted  from a state
chartered  mutual savings bank to a federally  chartered stock savings bank. The
Bank issued all of its common stock to PS Financial, Inc. ("Company") and at the
same time the  Company  issued  2,182,125  shares of common  stock at $10.00 per
share to the ESOP,  certain  depositors of the Bank, and certain  members of the
general public, all pursuant to a plan of conversion ("Conversion").

The ESOP purchased  174,570 shares of common stock  representing 8% of the total
issued  shares.  The ESOP borrowed  $1,745,700  from the Company to purchase the
stock  using the  stock as  collateral  for the  loan.  The loan is to be repaid
principally from the Bank's  contributions to the ESOP over a period of up to 40
years.

NOTE 3 - CAPITAL REQUIREMENTS

Pursuant to federal  regulations,  savings institutions must meet three separate
capital  requirements.  The  following  is a summary  of the  Bank's  regulatory
capital at March 31, 1997.

                                       Tangible        Core       Risk based
                                        Capital       Capital       Capital
                                        -------       -------       -------
                                                  (In thousands)

    Regulatory capital                  $22,459       $22,459       $22,645

    Minimum capital requirement           1,006         2,013         1,936
                                        -------       -------       -------
    Excess regulatory capital over
      minimum requirement               $21,453       $20,446       $20,709
                                        =======       =======       =======

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                                                                               8

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
          MANAGEMENT'S DSICUSSION AND ANAYLISIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

Comparison of Financial Condition at March 31, 1997 and December 31, 1996

Total assets of $75.1 million were unchanged from December 31, 1996 to March 31,
1997.

The Bank's net loans  receivable  by $335,000 from $35.9 million at December 31,
1996 to  $35.6  million  at March  31,  1997.  Interest  bearing  term  deposits
decreased  $99,000  from  $248,000 at December 31, 1996 to $149,000 at March 31,
1997.

Securities  available-for-sale  increased by $3.0 million from $24.1  million at
December  31, 1996 to $27.2  million at March 31, 1997.  In  addition,  mortgage
backed  securities  increased  by $3.0 million from $4.7 million at December 31,
1996 to $7.7 at March 31, 1997. These increases were mainly offset by a decrease
in cash and cash  equivalents  of $5.6 million from $8.7 million at December 31,
1996 to $3.1 million at March 31, 1997 as conversion  proceeds  were  reinvested
into higher yielding assets.

Total liabilities at March 31, 1997 were $42.6 million compared to $43.0 million
at December 31, 1996,  an decrease of $344,000.  The decrease of $8,000 in other
liabilities  was primarily due to a $263,000  decrease in advance  payments from
borrowers  for  taxes and  insurance  due to the  payment  of taxes in the first
quarter  partially offset by a $154,000  increase in current and deferred income
taxes payable and $101,000 increase in accrued interest payable.

Equity at March 31, 1997 was $32.5 million compared to $32.1 million at December
31, 1996,  an increase of $329,000,  or 1.0%,  due  primarily to net earnings of
$430,000  partially  offset by an increase in the unrealized  loss on securities
available-for-sale of $101,000.

Comparison  of  Operating  Results for the Three Months Ended March 31, 1997 and
March 31, 1996

General

Net earnings for the three months ended March 31, 1997 were $430,000, a increase
of $142,000,  or 49.3%, from net earnings of $288,000 for the three months ended
March 31, 1996. The increase in net earnings is primarily due to the increase in
the net interest margin  resulting from the investment of cash proceeds from the
issuance of common stock in the conversion from a mutual savings bank to a stock
savings bank.

Interest Income

Interest  income for the three  months  ended  March 31,  1997 was $1.4  million
compared to $1.1 million for the three months ended March 31, 1996,  an increase
of $275,000  or 24.9%.  The  increase  in  interest  income was the result of an
increase in the average balance of  interest-earning  assets primarily due to an
increase  in  the  average   balance  of   securities   available-for-sale   and
mortgage-backed  securities.  The increase in the average  balance was partially
offset by the decrease in yield on interest-earning  assets for the three months
ended March 31, 1997. This decrease was primarily due to a decrease in the yield
on loans and US treasury and agency

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                                                                               9

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
          MANAGEMENT'S DSICUSSION AND ANAYLISIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

securities.  The  decrease  in loan  yields  are the  result  of  repayments  on
higher-yielding  15 year  mortgages  being  replaced by  lower-yielding  balloon
mortgages.

Interest Expense

Interest expense for the three months ended March 31, 1997 was $424,000 compared
to $436,000 for the three months ended March 31, 1996, a decrease of $12,000, or
2.8%. The decrease of interest  expense was primarily due to the decrease in the
average  balance of  interest-bearing  deposits for the three months ended March
31, 1997 compared to the three months ended March 31, 1996.  The decrease in the
average balance was partially offset by an increase in the average cost of funds
for deposits. The increase in the cost of funds was primarily due to the changes
in the current rate environment.

Provision for Loan Losses

The Bank's  provision  for loan losses was zero for the three months ended March
31,  1997 and 1996.  At March 31,  1997,  the Bank's  allowance  for loan losses
totaled  $186,000,  or .5% of total  loans.  The  amount  of the  provision  and
allowance  for  estimated  losses on loans is  influenced  by  current  economic
conditions,  actual loss experience,  industry trends and other factors, such as
adverse  economic  conditions,  including  declining real estate values,  in the
Bank's market area. In addition,  various  regulatory  agencies,  as an integral
part of their examination process,  periodically review the Bank's allowance for
loan  losses.  Such  agencies  may require the Bank to provide  additions to the
allowance  based upon  judgments  which  differ  from those of  management.  The
absence of a loan loss  provision  for the three months ended March 31, 1997 and
1996 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 at March 31,  1997  increased  slightly to $2.6  million
compared to $2.4 million at March 31, 1996. Non-accruing loans at March 31, 1997
totaled $1.1 million compared to $1.7 million at March 31, 1996.

Noninterest Income

Noninterest  income  for the  three  months  ended  March 31,  1997 was  $24,000
compared to $14,000 for the three months ended March 31, 1996.  The increase was
primarily due to a net gain of $6,000 on sales of securities in 1997.

Noninterest Expense

Noninterest  expense  was  $280,000  for the three  months  ended March 31, 1997
compared to $211,000 for the three  months ended March 31, 1996,  an increase of
$69,000.  The  increase  was  primarily  a  result  of  a  $52,000  increase  in
compensation and benefits, including the

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                                                                              10

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
          MANAGEMENT'S DSICUSSION AND ANAYLISIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

implementation  of an ESOP,  and an  increase  of  $26,000  in  other  operating
expenses, offset in part by a decrease in Federal deposit insurance premiums.

Income Taxes

Income taxes were $269,000 for the three months ended March 31, 1997 compared to
$183,000 for the three months ended March 31, 1996,  an increase of $86,000,  or
47%.  The  increase  was  primarily  a result of a $228,000  increase  in pretax
earnings.

Impact of New Accounting Standards

In June 1996, the FASB issued  Statement of Financial  Accounting  Standards No.
125  ("SFAS  No.  125"),   "Accounting  for  Transfers  and  Extinguishments  of
Liabilities."  SFAS No. 125  provides  accounting  and  reporting  standard  for
transfers and servicing of financial assets and  extinguishments of liabilities.
SFAS  No.  125  requires  a  consistent  application  of a  financial-components
approach  that  focuses on  control.  Under that  approach,  after a transfer of
financial  assets,  an entity  recognizes the financial and servicing  assets it
controls and the liabilities it has incurred, and derecognizes  liabilities when
extinguished.  SFAS No.  125 also  supersedes  SFAS No.  122 and  requires  that
servicing  assets and  liabilities be  subsequently  measured by amortization in
proportion to and over the period of estimated net servicing  income or loss and
requires assessment for asset impairment or increases  obligation based on their
fair values.  SFAS No. 125 applies to transfers  and  extinguishments  occurring
after December 31, 1996, and early or retroactive  application is not permitted.
Because the volume and variety of certain  transactions  will make it  difficult
for some entities to comply,  some  provision have been delayed by SFAS No. 127.
The  adoption  of SFAS No. 125 did not have a material  impact on the results of
operations or financial condition of the Bank.

On March 3,  1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement 128, "Earnings Per Share", which is effective for financial statements
beginning  with year end 1997.  Statement  128  simplifies  the  calculation  of
earnings  per share  (EPS) by  replacing  primary  EPS with basic  EPS.  It also
requires  dual  presentation  of basic EPS and  diluted  EPS for  entities  with
complex  capital  structures.  Basic EPS include no dilution  and is computed by
dividing income available to common shareholders by the weighted-average  common
shares  outstanding for the period.  Diluted EPS reflects the potential dilution
of securities that could share in earnings,  such as stock options,  warrants or
other common stock equivalents. The Company expects Statement 128 to have little
impact on its  earnings  per share  calculations  in future  years,  other  than
changing  terminology  from  primary EPS to basic EPS. All prior period EPS data
will be restated to conform with the new presentation.

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  purposed  of these  safe  harbor
provisions.

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                                                                              11

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS
          MANAGEMENT'S DSICUSSION AND ANAYLISIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

--------------------------------------------------------------------------------

Forward-looking statements,  which are based on certain assumptions 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.















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                                                                              12

<PAGE>

                               PS FINANCIAL, INC.
                                CHICAGO, ILLINOIS


Part II  Other Information

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

         a.  Exhibits - None
         b.  Reports on Form 8-K - none


                                   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)



                                        By: /s/Kimberly Rooney
                                        -----------------------------
                                        Kimberly Rooney
                                        Chief Executive Officer
                                        (Principal Executive Officer)
                                        May 19, 1997



                                        By: /s/Jeffery Przybyl
                                        -----------------------------
                                        Jeffery Przybyl
                                        Chief Financial Officer
                                        May 19, 1997


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                                                                              13