EMPLOYMENT AGREEMENT
                                  BY AND AMONG

                               PEOPLES STATE BANK

                                       AND

                               PSB BANCGROUP, INC.

                                       AND

                                 WESLEY T. SMALL

         THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into this 9th day of
November 1999, by and among PEOPLES STATE BANK, a Florida  chartered  commercial
bank ("Bank"),  PSB BANCGROUP,  INC.,  the Bank's parent  holding-company  and a
Florida Corporation ("Corporation"), and WESLEY T. SMALL ("Employee"). The Bank,
the  Corporation  and the  Employee are  collectively  referred to herein as the
"Parties."

                                    RECITALS

         WHEREAS,  the Bank and the  Corporation  wish to retain Employee as the
Bank's  President  and  Chief  Executive  Officer  to  perform  the  duties  and
responsibilities  as are described in this  Agreement and as the Bank's Board of
Directors ("Board") may assign to Employee from time to time; and

         WHEREAS,  Employee  desires to become employed by the Bank and to serve
as the Bank's President and Chief Executive Officer in accordance with the terms
and provisions of this Agreement.

         NOW,  THEREFORE,  in consideration of the mutual  agreements  contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereto represent, warrant, undertake,
covenant and agree as follows:

                                 OPERATIVE TERMS

         1.  Employment  and Term.  The Bank shall employ  Employee and Employee
shall be  employed  pursuant  to the  terms of this  Agreement  to  perform  the
services  specified in Section 2 herein. The initial term of employment shall be
for a period of twelve (12) months, commencing on November 15, 1999.

         Upon mutual written agreement,  the Parties may extend the term of this
Agreement  for two six- month periods (the  "Extensions").  Prior to agreeing to
either of the Extensions, the Board shall review Employee's performance and this
Agreement.

         In the event the Employee  gives notice of  termination  of employment,
the  Bank may  elect,  at its sole  option,  to have the term of this  Agreement
expire  immediately  or upon the thirtieth  (30th) day following the delivery to
the Bank and the Corporation of such notice of termination.  Except as otherwise
provided in the following paragraph with respect to a voluntary  termination for
Good Reason, a voluntary employment  termination by the Employee shall result in
the  termination  of the  rights  and  obligations  of the  Parties  under  this
Agreement;  provided, however, that the terms and provisions of Section 12 shall
continue to apply.

Exhibit 10.6

                                        1


<PAGE>



         In the event the Bank desires to involuntarily terminate the employment
of Employee (for purposes of this Agreement,  a voluntary employment termination
by the Employee for Good Reason shall be treated as an  involuntary  termination
of the  Employee's  employment  without  Cause),  the Bank shall  deliver to the
Employee a notice of termination, and the following provisions shall apply:

                  (a) In the event the  involuntary  termination  is for  Cause,
                  this Agreement  shall terminate  immediately  upon delivery to
                  the Employee of such notice of termination. Such a termination
                  for Cause shall  result in the  termination  of all rights and
                  obligations of the Parties under this Agreement.

                  (b) In the event the involuntary termination is without Cause,
                  the  Employee  shall be  entitled  to  receive  the  severance
                  benefits set forth in Sections 9(f) and 9(g) herein.

         2.       Position, Responsibilities and Duties.   During the term of
this Agreement, Employee shall serve in the following capacities and shall
fulfill the following responsibilities and duties:

                  (a)  Specific  Duties:  Employee  shall  serve  as the  Bank's
                  President and Chief Executive Officer, through election by the
                  Board. In such capacity,  Employee shall have the same powers,
                  duties and  responsibilities  of supervision and management of
                  the Bank usually  accorded to a President and Chief  Executive
                  Officer  of  similar  financial  institutions.   In  addition,
                  Employee  shall use his best efforts to perform the duties and
                  responsibilities  enumerated  in this  Agreement and any other
                  duties  assigned  to  Employee by the Board and to utilize and
                  develop  contacts and customers to enhance the business of the
                  Bank.  Specifically,  Employee  shall devote his full business
                  time and attention and use his best efforts to accomplish  and
                  fulfill the following duties and responsibilities,  as well as
                  other  duties  assigned to  Employee  from time to time by the
                  Board:

                           (i)      manage Bank personnel;

                           (ii)     serve on such committees as appointed by the
                                    Board from time to time;

                           (iii)    supervise all Bank activities;

                           (iv)     work closely with the Bank's  Executive Vice
                                    President,  Robert W. Woodard,  specifically
                                    in the area of Bank operations;

                           (v)      keep  the  Board   informed   of   important
                                    developments     concerning    the    Bank's
                                    activities,    industry   developments   and
                                    regulatory initiatives affecting the Bank;

                           (vi)     maintain  adequate  expense records relating
                                    to  Employee's  activities  on behalf of the
                                    Bank;

                           (vii)    recommend  marketing efforts to increase the
                                    business of the Bank;


Exhibit 10.6

                                        2


<PAGE>



                           (viii)   coordinate  with the Bank's  Executive  Vice
                                    President,   other  officers,   accountants,
                                    auditors and counsel to the extent necessary
                                    to further the business of the Bank, keeping
                                    in  compliance   with  government  laws  and
                                    regulations  and otherwise  keeping the Bank
                                    in as good a financial  and legal posture as
                                    possible; and

                           (ix)     conduct and undertake all other  activities,
                                    responsibilities,    and   duties   normally
                                    expected to be undertaken  and  accomplished
                                    by a President and Chief  Executive  Officer
                                    of a financial  institution similar in scope
                                    and operation to the Bank's business.

                  (b) General  Duties:  During the term of this  Agreement,  and
                  except for illness,  vacation  periods and leaves of absences,
                  Employee  shall  devote all of his  working  time,  attention,
                  skill and best efforts to accomplish  and  faithfully  perform
                  all of the duties  assigned to Employee on a full-time  basis.
                  Employee shall, at all times, conduct himself in a manner that
                  will reflect  positively upon the Bank.  Employee shall obtain
                  such licenses,  certificates,  accreditations and professional
                  memberships  and  designations  as  the  Bank  may  reasonably
                  require.  Employee shall join and maintain  membership in such
                  social and civic  organizations as Employee or the Board deems
                  appropriate to foster the Bank's contacts and business network
                  in the community.

         3.       Compensation.   During the term of this Agreement, Employee
shall be compensated as follows:

                  (a) Base Salary:  Employee  shall  receive an annual salary of
                  $75,000  (the  "Base  Salary")  in  equal   installments,   in
                  accordance with the Bank's standard payroll practices, reduced
                  appropriately  by deductions  for federal  income  withholding
                  taxes,  social security taxes and other deductions required by
                  applicable laws. The Bank may adjust the Base Salary from time
                  to time  based  upon  the  Board's  evaluation  of  Employee's
                  performance.  In no event,  however,  will the Base  Salary be
                  reduced without Employee's written concurrence.

                  (b)  Benefit  Plans:  During the term of this  Agreement,  the
                  Employee  will be entitled to  participate  in and receive the
                  benefits of any profit-sharing  plans, 401(k) plans,  deferred
                  compensation  plans,  or other plans,  benefits and privileges
                  given  to  employees  and  executives  of the Bank  which  are
                  currently  in effect at the  execution  of this  Agreement  or
                  which may come into  existence  thereafter,  to the extent the
                  Employee is otherwise eligible and qualifies to so participate
                  in and receive such benefits or privileges. The Bank shall not
                  make any changes in such plans,  benefits or privileges  which
                  would  adversely  affect  the  Employee's  rights or  benefits
                  thereunder,  unless such change  occurs  pursuant to a program
                  applicable to all executive officers (Vice President or above)
                  of the Bank and does not result in a  proportionately  greater
                  adverse change in the rights of or benefits to the Employee as
                  compared with any other executive officer of the Bank. Nothing
                  paid to the Employee under any plan or  arrangement  presently
                  in effect or made  available  in the future shall be deemed to
                  be in lieu of the Base Salary payable to the Employee pursuant
                  to Section 3 herein.

Exhibit 10.6

                                        3


<PAGE>



         4.       Payment of Business Expenses.  Employee is authorized to incur
reasonable  expenses in performing his duties.  The Bank will reimburse Employee
for authorized expenses,  according to the Bank's established policies, promptly
after Employee's presentation of an itemized account of such expenditures.

         5.       Vacation.  Employee  is  entitled  to  three  (3)  weeks  paid
vacation time per year on a non-cumulative  basis. Two (2) weeks of the vacation
must be taken during two (2) consecutive weeks.

         6.       Fringe Benefits.


                  (a) Medical  Benefits:  Employee is entitled to participate in
                  all medical  and health  care  benefit  plans  through  health
                  insurance,  corporate funds,  medical  reimbursement  plans or
                  other plans, if any, provided,  or to be provided, by the Bank
                  for its employees.

                  (b) Club  Memberships  and Education:  The Bank will reimburse
                  Employee for membership dues for joining service organizations
                  such as the Rotary  Club or Kiwanis  Club.  The Bank will also
                  reimburse  Employee  for  admission  or  attendance  fees  for
                  educational meetings or seminars offered by such organizations
                  as the Florida Bankers Association.

         7.       Disability/Illness.

                  (a) Illness:  Employee  shall be paid his full Base Salary for
                  any period of his illness or  incapacity:  provided  that such
                  illness  or  incapacity  does not  render  Employee  unable to
                  perform his duties under this  Agreement  for a period  longer
                  than  three  (3)  consecutive  months.  At  the  end  of  such
                  three-month   period,   the  Bank  may  terminate   Employee's
                  employment and this Agreement.

                  (b) Disability: If the Bank terminates this Agreement pursuant
                  to  Employee's  disability  as  determined  under Section 7(a)
                  herein,  the  Bank  shall  pay to  Employee,  as a  disability
                  payment,  an amount equal to  Employee's  monthly Base Salary,
                  payable  in  accordance  with  the  Bank's  standard   payroll
                  practices,  commencing  on the  effective  date of  Employee's
                  termination and ending on the earlier of:

                            (i)     the date Employee returns to full time
                                    employment in  his capacity as the Bank's
                                    President and Chief Executive Officer;

                           (ii)     Employee's full time employment by another
                                    financial institution;

                           (iii)    three  (3)  months  after  the  date of such
                                    termination,  after which  Employee  will be
                                    entitled  to  receive   benefits  under  any
                                    disability  insurance  plan  provided by the
                                    Bank; or

                           (iv)     the date of Employee's death.

         The Bank may satisfy its obligations under this Section, at its option,
         through the purchase of disability  insurance.  The  provisions of such
         policy will  control  the amounts  paid to  Employee.  Such  disability
         insurance will be coordinated  with any disability plans made available
         to Employee pursuant to Section 6 herein.

Exhibit 10.6

                                        4


<PAGE>



                  (c) Continuation of Coverages: During any period of illness or
         disability,   the  Bank  will  continue  any  other  life,  health  and
         disability  coverages  for  Employee  substantially  identical  to  the
         coverages  maintained  prior to Employee's  termination for disability.
         Such coverages shall cease upon the earlier of:

                           (i)      Employee's full time employment by another
                                    financial institution;

                           (ii)     one (1) year after the date of such
                                    termination (with the exception of
                                    disability insurance coverage); or

                           (iii)    the date of Employee's death.

                  (d) No Reduction  in Base  Salary:  During the period in which
         Employee is disabled or subject to illness or incapacity, other than as
         described  in Section  7(b)  herein,  there  shall be no  reduction  in
         Employee's Base Salary.

         8. Death During Employment. In the event of Employee's death during the
term of this  Agreement,  the Bank's  obligation to Employee shall be limited to
the portion of  Employee's  compensation  which would be payable up to the first
working  day  of the  first  month  after  Employee's  death,  except  that  any
compensation  payable to Employee under any benefit plan  maintained by the Bank
will be paid pursuant to its terms.

         9.       Termination.

                  (a)  Illness,   Incapacity  or  Death:  This  Agreement  shall
                  terminate  upon  Employee's  illness,  incapacity  or death in
                  accordance with the provisions of Sections 7 and 8 herein.

                  (b) Termination  for Cause:  The Bank shall have the right, at
                  any time, upon prior written notice of termination  satisfying
                  the  requirements  of  Section  11 herein,  to  terminate  the
                  Employee's  employment  hereunder,  including  termination for
                  Cause.  For the  purpose of this  Agreement,  termination  for
                  Cause  shall  mean   termination   for  personal   dishonesty,
                  incompetence, willful misconduct, material breach of fiduciary
                  duty, intentional failure to perform the duties stated in this
                  Agreement,  willful  violation of any law,  rule or regulation
                  (other than traffic violations or similar  offenses),  willful
                  violation of a final cease-and-desist  order, personal default
                  on indebtedness to a third party which is not corrected within
                  30 days  from  the date of  default,  willful  or  intentional
                  breach or negligence or misconduct in the  performance of such
                  duties or material  breach of any provision of this  Agreement
                  as determined by a court of competent jurisdiction or in final
                  agency action by a federal or state  regulatory  agency having
                  jurisdiction  over the Bank. For purposes of this Section,  no
                  act,  or  failure  to act,  on the  Employee's  part  shall be
                  considered  "willful"  unless done,  or omitted to be done, by
                  him not in good faith and without  reasonable  belief that his
                  action  or  omission  was in the best  interest  of the  Bank;
                  provided  that any act or omission  to act by the  Employee in
                  reasonable  reliance  upon an  opinion  of counsel to The Bank
                  shall not be deemed to be  willful.  In the event  Employee is
                  terminated  for  Cause,   Employee  shall  have  no  right  to
                  compensation  or other benefits for any period after such date
                  of termination.

Exhibit 10.6

                                        5


<PAGE>



                  (c) Involuntary Termination:  If the Employee is terminated by
                  the  Bank  other  than  for  Cause  or in  connection  with  a
                  Change-in-Control  of the  Corporation  (as defined in Section
                  9[e]  herein),  Employee's  right to  compensation  and  other
                  benefits  under  this  Agreement  shall  be as  set  forth  in
                  Sections 9(f)(i) and 9(g) herein. In the event the Employee is
                  terminated by the Bank in connection with a  Change-in-Control
                  of the Corporation, Employee's right to compensation and other
                  benefits  under  this  Agreement  shall  be as  set  forth  in
                  Sections 9(f)(ii) and 9(h) herein.

                  (d)  Termination  for Good Reason:  Employee may terminate his
                  employment  hereunder  for Good  Reason.  For purposes of this
                  Agreement,  "Good Reason" shall mean (i) a failure by the Bank
                  to comply with any material provision of this Agreement, which
                  failure has not been cured within ten business (10) days after
                  a notice of such  noncompliance has been given by the Employee
                  to the Bank; or (ii) subsequent to a Change-in-Control  of the
                  Corporation  as defined in Section 9(e) herein and without the
                  Employee's express written consent, any of the following shall
                  occur:   the   assignment   to  the  Employee  of  any  duties
                  inconsistent   with   the   Employee's   positions,    duties,
                  responsibilities and status with the Bank immediately prior to
                  a  Change-in-Control  of  the  Corporation;  a  change  in the
                  Employee's reporting responsibilities, titles or offices as in
                  effect  immediately  prior  to a  Change-in-  Control  of  the
                  Corporation;  any removal of the Employee from, or any failure
                  to re-elect the Employee to, any of such positions,  except in
                  connection   with  a  termination  of  employment  for  Cause,
                  disability,  death,  or removal  pursuant to Sections  9(a) or
                  9(b) herein; a reduction by the Bank in the Employee's  annual
                  salary as in effect  immediately prior to a Change-in- Control
                  of the  Corporation;  the  failure of the Bank to  continue in
                  effect any bonus, benefit or compensation plan, life insurance
                  plan, health and accident plan or disability plan in which the
                  Employee is participating  at the time of a  Change-in-Control
                  of the  Corporation,  or the  taking of any action by the Bank
                  which would adversely  affect the Employee's  participation in
                  or materially reduce the Employee's benefits under any of such
                  plans, or the transfer of the Employee to any location outside
                  of Columbia  County,  Florida or the assignment of substantial
                  duties  to  the  Employee  to be  completed  outside  Columbia
                  County, Florida.

                  (e)  Change-in-Control:  "Change-in-Control" is defined herein
                  to mean an event where a person:  (i) directly or  indirectly,
                  or acting through one or more other persons, owns, controls or
                  has  power  to vote  more  than  50% of any  class of the then
                  outstanding  voting  securities  of the  Corporation;  or (ii)
                  controls in any manner the  election of the  directors  of the
                  Corporation.    For    purposes   of   this    Agreement,    a
                  Change-in-Control  shall be  deemed  not to have  occurred  in
                  connection with a reorganization,  consolidation, or merger of
                  the Corporation  where the  stockholders  of the  Corporation,
                  immediately  before the consummation of the transaction,  will
                  own over 50% of the total combined voting power of all classes
                  of stock entitled to vote of the surviving entity  immediately
                  after the transaction.

                  (f)      Severance Payment:

                           (i)      If  the   Employee   shall   terminate   his
                                    employment  for Good  Reason as  defined  in
                                    Section 9(d)  herein,  or if the Employee is
                                    terminated  by the Bank for other than Cause
                                    pursuant  to Section  9(c)  herein,  then in
                                    lieu of any further  salary  payments to the
                                    Employee for periods  subsequent to the date


Exhibit 10.6

                                        6


<PAGE>



                                    of termination, the Employee shall be paid,
                                    as severance, twelve (12) months Base Salary

                           (ii)     In  the  event   Employee's   employment  is
                                    terminated  as  a  result  of  a  Change-in-
                                    Control  or  a   Change-in-Control   of  the
                                    Corporation occurs within twelve (12) months
                                    of the Employees' involuntary termination or
                                    termination for Good Reason,  Employee shall
                                    be entitled to a severance  payment equal to
                                    his current Base Salary.  Any payment  under
                                    Section  9(f)(i) and 9(f)(ii)  shall be made
                                    in    substantially    equal    semi-monthly
                                    installments  on the fifteenth and last days
                                    of each month until paid in full.

                  (g)  Additional  Severance  Benefits:  Unless the  Employee is
                  terminated for Cause pursuant to Section 9(b) herein, pursuant
                  to Section  10(b)  herein,  or  pursuant to a  termination  of
                  employment  by the Employee  for other than Good  Reason,  the
                  Bank  shall  maintain  in  full  force  and  effect,  for  the
                  continued  benefit of the Employee for the  remaining  term of
                  this Agreement,  or twelve (12) months  (whichever is longer),
                  all Employee  benefit plans and programs in which the Employee
                  was entitled to participate  immediately  prior to the date of
                  termination;  provided, however, that the Employee's continued
                  participation   is  possible   under  the  general  terms  and
                  provisions of such plans and programs. Further, the Bank shall
                  pay for the same or  similar  benefits  if such  benefits  are
                  available to the Employee on an individual or group basis as a
                  result of  contractual  or statutory  provisions  requiring or
                  permitting such  availability  including,  but not limited to,
                  health insurance covered under COBRA.

                  (h) Mitigation: Employee shall not be required to mitigate the
                  amount of any payment  provided for in Sections  9(f) and 9(g)
                  of this Agreement by seeking other employment or otherwise.

         10.      Required  Provisions by  Regulation.  The Parties  acknowledge
that the laws and regulations governing the Bank require that certain provisions
be provided in each  employment  agreement  with  officers and  employees of the
Bank. The Parties agree to be bound by the following provisions:

                  (a)  Suspension/Temporary  Prohibition:  If  the  Employee  is
                  suspended and/or temporarily  prohibited from participating in
                  the  conduct of the Bank's  affairs by a notice  served  under
                  Section  655.037  Florida  Statutes or under  Section  8(e) or
                  (g)(1)  of  the  Federal  Deposit  Insurance  Act  [12  U.S.C.
                  ss.1818(e)(3)  and (g)(1)] the Bank's  obligations  under this
                  Agreement  shall be  suspended  as of the date of such service
                  unless stayed by appropriate  proceedings.  If the charges and
                  the notice are dismissed, the Bank may in its discretion:

                        (i)   pay the Employee all or part of his compensation
                              withheld while the obligations under this
                              Agreement are suspended; and

                        (ii)  reinstate (in whole or part) any of the Bank's
                              obligations which were suspended.

                  (b) Permanent  Prohibition:  If the Employee is removed and/or
                  permanently  prohibited from  participating  in the conduct of
                  the Bank's affairs by an order issued under Section

Exhibit 10.6

                                        7


<PAGE>



                  655.037  Florida  Statutes or Section 8(e)(4) or (g)(1) of the
                  Federal  Deposit  Insurance  Act [12 U.S.C.  ss.1818(e)(4)  or
                  (g)(1)],  all of the Bank's  obligations  under this Agreement
                  shall terminate as of the effective date of the order, but the
                  Employee's vested rights, if any shall not be affected.

                  (c) Default  Under FDIA: If the Bank is in default [as defined
                  in Section 3(x)(1) of the Federal Deposit  Insurance Act], all
                  obligations  under this  Agreement  shall  terminate as of the
                  date of default,  but this  subsection of this Agreement shall
                  not affect the Employee's vested rights if any.

                  (d)  Regulatory   Termination:   All  obligations  under  this
                  Agreement  shall be  terminated,  except to the extent  that a
                  determination   has  been  made  that   continuation  of  this
                  Agreement is necessary for continued operation of the Bank:

                           (i)      by the Director or his or her  designee,  at
                                    the  time  the  Federal  Deposit   Insurance
                                    Corporation    ("FDIC")   enters   into   an
                                    agreement  to  provide  assistance  to or on
                                    behalf  of  the  Bank  under  the  authority
                                    contained  in Section  13(c) of the  Federal
                                    Deposit Insurance Act; or

                           (ii)     by the  Department or the Director or his or
                                    her designee,  at the time the Department or
                                    the Director or his or her designee approves
                                    a  supervisory  merger to  resolve  problems
                                    related to operation of the Bank or when the
                                    Bank's  determined  by the Director to be in
                                    unsafe or unsound condition.

                           Any  of  the  Employee's  rights  that  have  already
                           vested,  however,  shall  not  be  affected  by  such
                           action.  For  purposes  of  this  subsection  of this
                           Agreement,   the  term  "Director"   shall  mean  the
                           Director of the FDIC.

         11.      Notice of Termination.

                  (a) Employee's  Notice:  Employee  shall have the right,  upon
                  prior written  notice of  termination  of not less than thirty
                  (30) days,  to terminate  his  employment  hereunder.  In such
                  event,  Employee  shall  have  no  right  after  the  date  of
                  termination to  compensation  or other benefits as provided in
                  this Agreement,  unless such termination is for "Good Reason",
                  as defined in Section 9(d) herein.  If the Employee provides a
                  notice of termination for Good Reason, the date of termination
                  shall be the date on which the notice of termination is given.

                  (b) Specificity:  Any termination of the Employee's employment
                  by the Bank or by Employee  shall be  communicated  by written
                  notice of termination to the other Party hereto.  For purposes
                  of this  Agreement,  a "notice  of  termination"  shall mean a
                  dated   notice   which   shall:   (i)  indicate  the  specific
                  termination  provision in the Agreement  relied upon; (ii) set
                  forth in reasonable detail the facts and circumstances claimed
                  to  provide  a  basis  for   termination   of  the  Employee's
                  employment  under the  provision so  indicated;  and (iii) set
                  forth the date of  termination,  which  shall be not less than
                  thirty (30) days nor more than forty-five (45) days after such
                  notice  of  termination  is  given,  except in the case of the


Exhibit 10.6

                                        8


<PAGE>



                  Bank's termination of the Employee's  employment for Cause, in
                  which case date of  termination  shall be the date such notice
                  of termination is given.

                  (c) Delivery of Notices:  All notices  given or required to be
                  given  herein  shall  be in  writing,  sent by  United  States
                  first-class  certified or registered mail, postage prepaid, by
                  way  of  overnight  carrier  or by  hand  delivery.  If to the
                  Employee  (or to the  Employee's  spouse  or  estate  upon the
                  Employee's   death)   notice  shall  be  sent  to   Employee's
                  last-known  address,  and if to the Bank and the  Corporation,
                  notice   shall   be  sent  to   their   respective   corporate
                  headquarters.   All  such  notices  shall  be  effective  when
                  deposited  in the mail if sent via first-  class  certified or
                  registered  mail, or upon delivery if by hand delivery or sent
                  via overnight  carrier.  Any Party, by notice in writing,  may
                  change or designate the place for receipt of all such notices.

         12. Post-Termination  Obligations.  The Bank shall pay to Employee such
compensation as is required pursuant to this Agreement;  provided,  however, any
such payment shall be subject to Employee's post-termination  cooperation.  Such
cooperation shall include the following:

                           (i)      Employee shall furnish such  information and
                                    assistance as may be reasonably  required by
                                    the Bank or the  Corporation  in  connection
                                    with any  litigation  or  settlement  of any
                                    dispute   between   the  Bank   and/or   the
                                    Corporation  and a borrower and/or any other
                                    third parties  (including without limitation
                                    serving  as a  witness  in  court  or  other
                                    proceedings);

                           (ii)     Employee  shall provide such  information or
                                    assistance    to   the   Bank   and/or   the
                                    Corporation    in   connection    with   any
                                    regulatory   examination  by  any  state  or
                                    federal regulatory agency;

                           (iii)    Employee shall keep the Bank's trade secrets
                                    and  other   proprietary   or   confidential
                                    information  secret  to the  fullest  extent
                                    practicable,  subject to compliance with all
                                    applicable laws.

         Upon submission of proper receipts,  the Bank shall promptly  reimburse
Employee for any  reasonable  expenses in current by Employee in complying  with
the provisions of this Section.

         13.  Attorneys' Fees.  In the event that any claim or controversy
hereunder is the subject of any litigation or  arbitration  between or among the
Parties,  the  prevailing  party shall be entitled to an award of all reasonable
costs, including attorneys' fees.

         14.  Indebtedness.  If  during  the  term of this  Agreement,  Employee
becomes indebted to the Bank for any reason, the Bank may, at its election,  set
off and collect any sums due Employee out of any amounts  which the Bank may owe
Employee  from his Base  Salary  or other  compensation.  Furthermore,  upon the
termination  of  this  Agreement,   all  sums  owed  by  Employee  shall  become
immediately due and payable. Employee shall pay all expenses and attorneys' fees
actually or necessarily  incurred by the Bank in connection  with any collection
proceeding  for  Employee's  indebtedness  to  us.  Notwithstanding  any  of the
foregoing,  any indebtedness to us secured by a mortgage on Employee's residence
shall not be subject to the foregoing  provisions,  and shall be governed by the
loan documents evidencing such indebtedness.

Exhibit 10.6

                                        9


<PAGE>



         15. Maintenance of Trade Secrets and Confidential Information. Employee
shall use his best efforts and utmost  diligence to guard and protect all of the
Bank's trade secrets and  confidential  information.  Employee shall not, either
during the term or after  termination of this  Agreement,  for whatever  reason,
use, in any capacity,  or divulge or disclose in any manner, to any Person,  the
identity of the Bank's customers,  or its customer lists,  methods of operation,
marketing and promotional methods,  processes,  techniques,  systems,  formulas,
programs  or other trade  secrets or  confidential  information  relating to the
Bank's business.  Upon  termination of this Agreement or Employee's  employment,
for any reason,  Employee shall  immediately  return and deliver to the Bank all
records and papers and all matters of whatever  nature which bear trade  secrets
or confidential information relating to the Bank.

         16.      Competitive Activities.

                  (a)  Limitation on Outside  Activities:  Employee  agrees that
                  during the term of this  Agreement,  except  with the  express
                  consent  of  the  Board,   Employee  will  not,   directly  or
                  indirectly, engage or participate in, become a director of, or
                  render advisory or other services for, or in connection  with,
                  or become  interested in, or make any financial  investment in
                  any firm, corporation,  business entity or business enterprise
                  competitive  with or to any  business  of the Bank;  provided,
                  however,  that  Employee  shall not be precluded or prohibited
                  from owning passive investments,  including investments in the
                  securities of other  financial  institutions,  so long as such
                  ownership does not require Employee to devote substantial time
                  to  management  or control of the  business or  activities  in
                  which Employee has invested.

                  (b) Agreement Not to Compete:  Employee  acknowledges  that by
                  virtue of his employment with the Bank,  Employee will acquire
                  an intimate  knowledge  of the  activities  and affairs of the
                  Bank, including trade secrets and other confidential  matters.
                  Employee,  therefore,  agrees  that  during  the  term of this
                  Agreement,  and for a period of eight (8) months (in the event
                  Employee does not receive severance  compensation) or fourteen
                  (14)  months (in the event  Employee  does  receive  severance
                  compensation)   following   the   termination   of  Employee's
                  employment  hereunder,  Employee  shall not  become  employed,
                  directly or  indirectly,  whether as an Employee,  independent
                  contractor, consultant, or otherwise, with a federally-insured
                  financial   institution  located  in,  or  with  any  business
                  enterprise,  business  entity  or  Person  whose  intent is to
                  organize  another  financial  institution in, Columbia County,
                  Florida.

                  Employee  further  agrees  that for a period  of  twelve  (12)
                  months  following the  termination  of  Employee's  employment
                  hereunder  for any  reason,  Employee  shall not  directly  or
                  indirectly  solicit the business of any then current  customer
                  of  the  Bank,  regardless  of  whether  or not  Employee  was
                  responsible for generating  such  customer's  business for the
                  Bank. This restriction  shall apply to both loan customers and
                  depositors of the Bank.

                  Employee    hereby   agrees   that   the   duration   of   the
                  anticompetitive  covenant set forth herein is reasonable,  and
                  its geographic scope is not unduly restrictive.

Exhibit 10.6

                                       10


<PAGE>



         17.      Remedies for Breach.

                  (a)  Arbitration:  The  Parties  agree  that,  except  for the
                  specific  remedies  for  injunctive  relief  as  contained  in
                  Section 17(b) and other equitable  relief,  any controversy or
                  claim  arising out of or relating  to this  Agreement,  or any
                  breach thereof, including,  without limitation, any claim that
                  this Agreement or any portion  thereof is invalid,  illegal or
                  otherwise voidable,  shall be submitted to binding arbitration
                  before  and in  accordance  with  the  Rules  of the  American
                  Arbitration  Association  and judgment upon the  determination
                  and/or  award of such  arbitrator  may be entered in any court
                  having  jurisdiction  thereof;  provided,  however,  that this
                  clause  shall not be construed to permit the award of punitive
                  damages  to  either  Party.   The  prevailing  Party  to  said
                  arbitration  shall  be  entitled  to an  award  of  reasonable
                  attorney's  fees.  The  venue  for  arbitration  shall  be  in
                  Columbia County, Florida.

                  (b) Injunctive Relief: The Parties  acknowledge and agree that
                  the  services  to be  performed  by  Employee  are special and
                  unique and that money damages cannot fully compensate the Bank
                  in the event of  Employee's  violation  of the  provisions  of
                  Section 16 of this  Agreement.  Thus, in the event of a breach
                  of any of the provisions of such Section, Employee agrees that
                  the  Bank,   upon   application   to  a  court  of   competent
                  jurisdiction,  shall be entitled to an injunction  restraining
                  Employee from any further breach of the terms and provision of
                  such Section.  Should the Bank prevail in an action seeking an
                  injunction restraining Employee,  Employee shall pay all costs
                  and  reasonable  attorneys'  fees  incurred by the Bank in and
                  relating to obtaining such injunction.  Such injunctive relief
                  may be obtained  without bond and Employee's  sole remedy,  in
                  the  event  of the  entry  of such  injunction,  shall  be the
                  dissolution of such injunction. Employee hereby waives any and
                  all claims for damages by reason of the  wrongful  issuance of
                  any such injunction.

                  (c) Cumulative  Remedies:  Notwithstanding any other provision
                  of this Agreement,  the injunctive relief described in Section
                  17(b)  herein  and all  other  remedies  provided  for in this
                  Agreement  which  are  available  to the Bank as a  result  of
                  Employee's  breach of this  Agreement,  are in addition to and
                  shall not limit any and all remedies  existing at or in equity
                  which may also be available to the Bank.

         18.  Assignment.  This  Agreement  shall inure to the benefit of and be
binding upon the Employee,  and to the extent  applicable,  his heirs,  assigns,
executors,  and personal  representatives,  and to the Bank and the Corporation,
and to the extent applicable,  their successors, and assigns, including, without
limitation,  any person,  partnership,  or corporation  which may acquire all or
substantially  all of the Bank's or the  Corporation's  assets and business,  or
with or into which the Bank or Corporation may be  consolidated  or merged,  and
this provision shall apply in the event of any subsequent merger, consolidation,
or  transfer,  unless  such  merger or  consolidation  or  subsequent  merger or
consolidation  is a  transaction  of the type which would result in  termination
under Sections 10(c) and 10(d) herein.

         19.      Miscellaneous.

                  (a)  Amendment  of  Agreement:  Unless as  otherwise  provided
                  herein,  this  Agreement may not be modified or amended except
                  in writing signed by the Parties.

Exhibit 10.6

                                       11


<PAGE>



                  (b) Certain Definitions:  For purposes of this Agreement,  the
                  following  terms  whenever  capitalized  herein shall have the
                  following meanings:

                           (i)      "Person"  shall  mean  any  natural  person,
                                    corporation,    partnership    (general   or
                                    limited),  trust,  association  or any other
                                    business entity.

                           (ii)     "Attorneys'  Fees"  shall  include the legal
                                    fees and disbursements  charged by attorneys
                                    and their  related  expenses,  court  costs,
                                    paralegal fees, etc. incurred in settlement,
                                    trial, appeal or in bankruptcy proceedings.

                  (c) Headings for Reference  Only: The headings of the Sections
                  and the Subsections  herein are included solely for convenient
                  reference   and  shall  not   control   the   meaning  of  the
                  interpretation of any of the provisions of this Agreement.

                  (d)  Governing  Law/Jurisdiction:   This  Agreement  shall  be
                  construed in  accordance  with and governed by the laws of the
                  State of Florida.  Any  litigation  involving  the Parties and
                  their rights and obligations hereunder shall be brought in the
                  appropriate court in Columbia County, Florida.

                  (e)  Severability:  If any of the provisions of this Agreement
                  shall be held  invalid for any reason,  the  remainder of this
                  Agreement  shall not be affected  thereby and shall  remain in
                  full force and effect in accordance  with the remainder of its
                  terms.

                  (f) Entire  Agreement:  This Agreement and all other documents
                  incorporated  or  referred  to  herein,   contain  the  entire
                  agreement  of the  Parties  and there are no  representations,
                  inducements or other  provisions other than those expressed in
                  writing   herein.   This  Agreement   amends,   supplants  and
                  supersedes any and all prior agreements between the Parties.

                  (g)  Waiver:  No course of conduct by the Parties and no delay
                  or omission of any Party to exercise  any right or power given
                  under this Agreement shall: (i) impair the subsequent exercise
                  of any right or power,  or (ii) be construed to be a waiver of
                  any default or any acquiescence in or consent to the curing of
                  any default while any other  default shall  continue to exist,
                  or be construed to be a waiver of such  continuing  default or
                  of any  other  right  or power  that  shall  theretofore  have
                  arisen.  Any power  and/or  remedy  granted by law and by this
                  Agreement to any Party  hereto may be  exercised  from time to
                  time, and as often as may be deemed expedient. All such rights
                  and powers shall be cumulative to the fullest extent permitted
                  by law.

                  (h) Pronouns:  As used herein,  words in the singular  include
                  the plural,  and the masculine include the feminine and neuter
                  gender, as appropriate.

                  (i) Recitals:  The Recitals set forth at the beginning of this
                  Agreement  shall  be  deemed  to  be  incorporated  into  this
                  Agreement by this reference as if fully set forth herein,  and
                  this Agreement  shall be interpreted  with reference to and in
                  light of such Recitals.

Exhibit 10.6

                                       12


<PAGE>


         IN WITNESS WHEREOF,  the Parties hereto have executed this Agreement as
of the day and year first written above.

EMPLOYEE                                       PEOPLES STATE BANK

 /s/ Wesley T. Small                           By: /s/ A. C. Milton
--------------------------                        ---------------------
Wesley T. Small, Employee                          A.C. Milton,
                                                   Chairman of the Board and
                                                   Acting Chief Executive
                                                   Officer and President

 /s/ Penny Cooper                                  /s/ Jimmie Kirk
--------------------------                        ----------------------
Witness                                            Witness


                                               PSB BANCGROUP, INC.

                                               By:  /s/ Robert W. Woodard
                                                    --------------------------
                                                    Robert W. Woodard,
                                                    President and Chief
                                                    Executive Officer



                                                     /s/ Jimmie Kirk
                                                     -------------------------
                                                     Witness

Exhibit 10.6

                                       13