<PAGE>

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

                            ----------------------
                                  FORM 10-QSB
                            ----------------------


(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the quarterly period ending June 30, 2001
                                -------------

                                      or

(_) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the transition period from _________ to _________

Commission File Number           0-25355
                       ------------------------------

                              PFSB BANCORP, INC.
       -----------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

       Missouri                                              31-1627743
-------------------------------                              -------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

123 W. Lafayette St., P.O. Box 72, Palmyra, MO       63461
----------------------------------------------     ----------
(Address of principal executive offices)           (Zip Code)

        573-769-2134
---------------------------
(Issuer's telephone number)



As of August 12, 2001, there were 417,022 shares of the Registrant's Common
Stock, $.01 par value per share, outstanding.


Transitional Small Business Disclosure Format

                   Yes _________ No     X
                                    ---------
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                                  FORM 10-QSB
                                 JUNE 30, 2001

INDEX                                                                       PAGE
-----                                                                       ----

PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)

  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                               1

  CONSOLIDATED STATEMENTS OF INCOME                                            2

  CONSOLIDATED STATEMENTS OF CASH FLOWS                                        3

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                 4-6

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS                                7-10

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

ITEM 1. LEGAL PROCEEDINGS                                                     11

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                             11

ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                       11

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                   11

ITEM 5. OTHER INFORMATION                                                     11

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                      11

SIGNATURES                                                                    12

<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                            (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                      June 30,     September 30,
                                                                                                        2001           2000
                                                                                                   ------------------------------
ASSETS                                                                                               (Unaudited)    (Unaudited)
   <S>                                                                                               <C>           <C>
   Cash (includes interest-bearing deposits of $4,276 and $3,490, respectively)                         $ 4,530         $ 3,792
   Investment securities:
       Available-for-sale, at fair value                                                                  7,542           8,870
       Held-to-maturity (fair value of $2,252 and $7,217, respectively)                                   2,244           7,427
   Mortgage-backed securities held-to-maturity (fair value of $4,677 and $3,008 respectively)             4,757           3,099
   Stock in Federal Home Loan Bank of Des Moines ("FHLB")                                                   427             403
   Loans receivable, net (allowance for loan losses of $288 and $280 respectively)                       47,366          44,529
   Accrued interest receivable                                                                              485             600
   Premises and equipment                                                                                 1,043           1,082
   Foreclosed real estate                                                                                    --             105
   Other assets                                                                                              46             137
                                                                                                        -------         -------

                                                          TOTAL ASSETS                                  $68,440         $70,044
                                                                                                        =======         =======

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
   Deposits                                                                                             $59,295         $56,385
   Advances from FHLB                                                                                        --           4,250
   Advances from borrowers for property taxes and insurance                                                  55              51
   Dividends Payable                                                                                         62              --
   Other liabilities                                                                                         78              95
                                                                                                        -------         -------

                                                       TOTAL LIABILITIES                                 59,490          60,781

STOCKHOLDERS' EQUITY
   Common stock, $.01 par value per share; 5,000,000 authorized, 559,000 issued                               6               6
   Additional paid-in capital                                                                             4,936           4,929
   Retained earnings-substantially restricted                                                             6,241           6,348
   Unrealized loss on securities, net of taxes                                                              (52)           (197)
   Unearned ESOP shares                                                                                    (346)           (380)
   Unearned SBIP shares                                                                                    (176)           (206)
   Treasury stock, at cost (141,978 and 107,208 shares of common stock, respectively)                    (1,659)         (1,237)
                                                                                                        -------         -------

                                                   TOTAL STOCKHOLDERS' EQUITY                             8,950           9,263
                                                                                                        -------         -------

                                           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $68,440         $70,044
                                                                                                        =======         =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -1-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
               (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                   Three Months Ended    Nine Months Ended
                                                                                        June 30,             June 30,
                                                                                     2001       2000       2001      2000
                                                                                   ---------------------------------------
                                                                                                 (Unaudited)
<S>                                                                                 <C>        <C>        <C>       <C>
INTEREST INCOME
   Mortgage loans                                                                   $  883     $  794     $2,582    $2,344
   Consumer and other loans                                                              9         12         32        30
   Interest-bearing deposits                                                            19         17         88        43
   Investment securities                                                               202        257        697       795
   Mortgage-backed securities                                                           57         54        155       166
                                                                                    ------     ------     ------    ------

TOTAL INTEREST INCOME                                                               $1,170     $1,134     $3,554    $3,378

INTEREST EXPENSE
   Deposits                                                                            763        641      2,321     1,921
   Advances from FHLB                                                                    5         57         93       158
                                                                                    ------     ------     ------    ------

TOTAL INTEREST EXPENSE                                                              $  768     $  698     $2,414    $2,079
                                                                                    ------     ------     ------    ------

NET INTEREST INCOME                                                                    402        436      1,140     1,299

PROVISION FOR LOAN LOSSES                                                                8         --          8        --
                                                                                    ------     ------     ------    ------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                    394        436      1,132     1,299

NON-INTEREST INCOME
   Service charges and other fees                                                       17         15         49        42
   Loss from foreclosed assets                                                         (19)        (1)       (32)      (12)
   Loss from sale of fixed assets                                                       --         (3)        --        (3)
   Gain from sale of investments                                                         8         --         10        --
   Other income                                                                         12          1         28         9
                                                                                    ------     ------     ------    ------

TOTAL NON-INTEREST INCOME                                                               18         12         55        36

NON-INTEREST EXPENSE
   Employee salaries and benefits                                                      194        196        604       545
   Occupancy costs                                                                      43         40        131       111
   Advertising                                                                          11         15         33        37
   Data processing                                                                      23         25         72        72
   Federal insurance premiums                                                            4          3          8        14
   Professional fees                                                                    25         41        110       112
   Directors' fees                                                                      19         17         52        47
   Other expenses                                                                       49         66        158       175
                                                                                    ------     ------     ------    ------

TOTAL NON-INTEREST EXPENSE                                                             368        403      1,168     1,113
                                                                                    ------     ------     ------    ------

INCOME  BEFORE INCOME TAXES                                                             44         45         19       222

INCOME TAXES (INCOME TAX BENEFIT)                                                        9         14         (4)       75
                                                                                    ------     ------     ------    ------

NET INCOME                                                                          $   35     $   31     $   23    $  147
                                                                                    ======     ======     ======    ======

BASIC INCOME  PER SHARE                                                             $ 0.10     $ 0.08     $ 0.06    $ 0.33
                                                                                    ======     ======     ======    ======
DILUTED INCOME  PER SHARE                                                           $ 0.09     $ 0.08     $ 0.06    $ 0.33
                                                                                    ======     ======     ======    ======
</TABLE>

See accompanying notes to Consolidated Financial Statements

                                      -2-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                     Nine Months Ended
                                                                                                          June 30
                                                                                                      2001      2000
                                                                                                     -----------------
                                                                                                        (Unaudited)
<S>                                                                                                  <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                                           $    23   $   147
   Adjustments to reconcile net income to net cash provided by operating activities
   Depreciation and amortization                                                                          63        46
   Amortization of premiums and discounts                                                                 (1)       (2)
   Loss on sale of premises and equipment                                                                 --         3
   Gain on sale of investments                                                                           (10)       --
   Loss on sale of foreclosed real estate                                                                 28        10
   ESOP shares released                                                                                   40        36
   Amortization of SBIP                                                                                   31        11
   Changes to assets and liabilities increasing (decreasing) cash flows
      Accrued interest receivable                                                                        115       138
      Other assets                                                                                        90       (11)
      Other liabilities                                                                                 (106)        2
                                                                                                     -------   -------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                273       380

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from maturities and calls of investment securities, held-to-maturity                       5,189        60
   Purchase of investment securities, available-for-sale                                              (6,868)       --
   Proceeds from maturities and calls of investment securities, available-for-sale                     8,437     1,000
   Purchase of mortgage-backed securities                                                             (2,098)       --
   Principal collected on mortgage-backed securities                                                     437       418
   Purchase of FHLB stock                                                                                (24)      (12)
   Loans originated, net of repayments                                                                  (807)   (1,161)
   Purchase of mortgage loans                                                                         (2,071)     (511)
   Proceeds from sale of education loans                                                                  41        35
   Purchase of premises and equipment                                                                    (24)     (624)
   Proceeds from sales of foreclosed real estate                                                          76         3
   Expenditures on foreclosed real estate                                                                  2        (1)
   Proceeds from sale of premises and equipment                                                           --         2
                                                                                                     -------   -------

NET CASH USED BY INVESTING ACTIVITIES                                                                $ 2,290   $  (791)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits                                                                            2,911       (27)
   Advances from FHLB
      Borrowings                                                                                          --     3,750
      Repayments                                                                                      (4,250)   (2,500)
   Net increase (decrease) in advances for taxes and insurance                                             4        (1)
   Dividends paid                                                                                        (68)      (71)
   Purchase of treasury stock                                                                           (422)   (1,237)
   Purchase of treasury shares for SBIP                                                                   --      (280)
                                                                                                     -------   -------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                     $(1,825)  $  (366)
                                                                                                     -------   -------
NET INCREASE (DECREASE) IN CASH                                                                          738      (777)
CASH, BEGINNING OF PERIOD                                                                              3,792     2,340
                                                                                                     -------   -------
CASH, END OF PERIOD                                                                                  $ 4,530   $ 1,563
                                                                                                     =======   =======
</TABLE>

See accompanying notes to Consolidated Financial Statements

                                      -3-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE A--Basis of Presentation
-----------------------------

The accompanying unaudited, consolidated financial statements have been prepared
by the PFSB Bancorp, Inc. (the "Company") in accordance with instructions to
Form 10-QSB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation are
reflected in the June 30, 2001, interim financial statements.

The results of operations for the period ended June 30, 2001, are not
necessarily indicative of the operating results for the full year. The
accompanying consolidated financial statements and related notes of PFSB
Bancorp, Inc. should be read in conjunction with the audited financial
statements and related notes included in the Company's Annual Report for the
year ended September 30, 2000.

NOTE B--Formation of Holding Company and Conversion to Stock Form
-----------------------------------------------------------------

On March 31, 1999, the Company became the holding company for Palmyra Savings
(the "Bank) upon the Bank's conversion from a federally chartered mutual savings
association to a federally chartered capital stock savings bank. The conversion
was accomplished through the sale and issuance by the Company of 559,000 shares
of common stock at $10 per share. Proceeds from the sale of common stock, net of
expenses incurred of $608,237, were $4,981,763, inclusive of $447,200 related to
shares held by Palmyra Savings' Employee Stock Ownership Plan ("ESOP"). The
financial statements included herein have not been restated as a result of the
consummation of the conversion.


NOTE C--Net Income (Loss) Per Share
-----------------------------------

Basic income per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted income per common share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock.


<TABLE>
<CAPTION>
                                                                                   Three Months Ended        Nine Months Ended
                                                                                        June 30,                  June 30,
                                                                                    2001      2000           2001          2000
                                                                                 --------------------------------------------------
                                                                                  (In thousands, except    (In thousands,  except
                                                                                    per share amounts)       per share amounts)

<S>                                                                                <C>      <C>          <C>            <C>
Basic earnings per share:

   Income available to common shareholders                                           $  35     $  31         $  23         $ 147
                                                                                     =====     =====         =====         =====

   Average common shares outstanding                                                   367       406           381           442
                                                                                     =====     =====         =====         =====

   Basic income per share                                                            $0.10     $0.08         $0.06         $0.33
                                                                                     =====     =====         =====         =====

   Diluted income per share                                                          $0.09     $0.08         $0.06         $0.33
                                                                                     =====     =====         =====         =====
</TABLE>

                                      -4-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)


NOTE D--Employee Stock Ownership Plan
-------------------------------------

In connection with the conversion to stock form, Palmyra Savings established an
ESOP for the exclusive benefit of participating employees (all salaried
employees who have completed at least 1000 hours of service in a twelve-month
period and have attained the age of 21). The ESOP borrowed funds from the
Company in an amount sufficient to purchase 44,720 shares (8% of the Common
Stock issued in the stock offering). The loan is secured by the shares purchased
and will be repaid by the ESOP with funds from contributions made by Palmyra
Savings, dividends received by the ESOP and any other earnings on ESOP assets.
Contributions will be applied to repay interest on the loan first, and then the
remainder will be applied to principal. The loan is expected to be repaid in
approximately 10 years. Shares purchased with the loan proceeds are held in a
suspense account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account are
allocated among participants in proportion to their compensation relative to
total compensation of all active participants. Participants will vest in their
accrued benefits under the employee stock ownership plan at the rate of 20% per
year, beginning upon the completion of two years of service. Vesting is
accelerated upon retirement, death or disability of the participant. Forfeitures
will be reallocated to remaining plan participants. Benefits may be payable upon
retirement, death, disability or separation from service. Since Palmyra Savings'
annual contributions are discretionary, benefits payable under the ESOP cannot
be estimated.

The Company accounts for its ESOP in accordance with Statement of Position
("SOP") 93-6, Employers Accounting for Employee Stock Ownership Plans.
Accordingly, the debt of the ESOP is eliminated in consolidation and the shares
pledged as collateral are reported as unearned ESOP shares in the consolidated
statements of financial condition. Contributions to the ESOP shall be sufficient
to pay principal and interest currently due under the loan agreement. As shares
are committed to be released from collateral, the Company reports compensation
expense equal to the average market price of the shares for the respective
period, and the shares become outstanding for earnings per share computations.
Dividends on allocated ESOP shares are recorded as a reduction of retained
earnings; dividends on unallocated ESOP shares are recorded as a reduction of
debt and accrued interest.

A summary of ESOP shares at June 30, 2001 is as follows:

   Shares committed for release                                        2,236
   Shares released                                                     7,826
   Unreleased shares                                                  34,658
                                                                    --------
                                   TOTAL                              44,720
                                                                    ========

   Fair value of unreleased shares                                  $408,964
                                                                    ========

NOTE E--Stock Based Compensation Plans
--------------------------------------

The Board of Directors adopted and the shareholders subsequently approved
(January 27, 2000) the PFSB Bancorp, Inc. 2000 Stock-Based Incentive Plan
("SBIP").  The purpose of the SBIP is to attract and retain qualified personnel
in key positions, provide officers, employees and non-employee directors of the
Company and Palmyra Savings, with a proprietary interest in the Company as an
incentive to contribute to the success of the Company, promote the attention of
management to other stockholder's concerns, and reward employees for outstanding
performance.

The SBIP authorizes the granting of options to purchase common stock of the
Company and awards of restricted shares of common stock.  Subject to certain
adjustments to prevent dilution of awards to participants, the number of shares
of common stock reserved for awards under the SBIP is 78,260 shares, consisting
of 55,900 shares reserved for options and 22,360 shares reserved for restricted
stock awards.  All employees and non-employee directors of the Company and its
affiliates are eligible to receive awards under the SBIP.  The SBIP is
administered by a committee consisting of members of the Board of Directors who
are not employees of the Company or its affiliates.

                                      -5-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)


On April 6, 2000, the Company granted options for 44,720 shares at $10.25 per
share and awarded the 22,360 shares reserved for restricted stock awards.

The options will enable the recipient to purchase stock at the exercise price
above. The options vest over three years following the date of grant and are
exercisable for up to 10 years. As of June 30, 2001, 16,154 options had vested,
and 1,218 options were exercised.

The restricted stock awards do not require any payment by the recipient and vest
over five years following the date of the award. The Company funded the
restricted stock awards with Treasury Stock which was purchased at a price above
the fair market value of the Company's stock at the award date resulting in an
increase in additional paid-in capital of $50,316. Amortization of the awards
resulted in a charge to compensation and benefit expense of $16,419 for the
three month period ended June 30, 2001.

The Company adopted SFAS No. 123, Accounting for Stock-Based Compensation, which
permits entities to recognize, as expense over the vesting period, the fair
value of all stock-based awards on the date of grant. Alternatively, SFAS No.
123 allows entities to disclose pro forma net income and income per share as if
the fair value-based method defined in SFAS No. 123 has been applied, while
continuing to apply the provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, under which
compensation expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price.

As permitted under SFAS No. 123, "Accounting for Stock-Based Compensation" the
Company has elected to apply the recognition provisions of Accounting Principles
Board Opinion No. 25, under which compensation expense is recorded on the date
of grant only if the current market price of the underlying stock exceeds the
exercise price. Accordingly, adoption of SFAS No. 123 will have no impact on the
Company's consolidated financial position or results of operations.

NOTE F--Comprehensive Income
----------------------------

On October 1, 1998 the Company adopted the provisions of Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income", which
established standards for reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses) in a full set of general-
purpose financial statements. For the three and nine month periods ended June
30, 2001 and 2000, unrealized holding gains and losses on investments in debt
and equity securities available-for-sale were the Company's only other
comprehensive income component.

Comprehensive income for the three and nine month periods ended June 30, 2001
and 2000 is summarized as follows:

<TABLE>
<CAPTION>
                                                                                    Three Months Ended        Nine Months Ended
                                                                                         June 30,                  June 30,
                                                                                     2001        2000          2001        2000
                                                                                ----------------------------------------------------
                                                                                  (Dollars in thousands)    (Dollars in thousands)
<S>                                                                                <C>         <C>          <C>         <C>
Net Income                                                                           $  35       $  31        $  23       $ 147

Other comprehensive income:
  Net unrealized holding gains (losses) on investments
   in debt and equity securities available-for-sale                                    (58)         21          151         (17)

  Adjustments for net securities (gains) losses realized
   in net income, net of applicable income taxes                                        (5)         --           (6)         --
                                                                                     -----       -----        -----       -----

Total other comprehensive income (loss)                                              $ (28)      $  52        $ 168       $ 130
                                                                                     =====       =====        =====       =====
</TABLE>

                                      -6-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward Looking Statements
--------------------------

This report contains forward-looking statements within the meaning of the
federal securities laws. These statements are not historical facts, rather they
are statements based on the PFSB Bancorp, Inc.'s (the "Company's") current
expectations regarding its business strategies and their intended results and
its future performance. Forward-looking statements are preceded by terms such as
"expects," "believes," "anticipates," "intends," and similar expressions.
Forward-looking statements are not guarantees of future performance. Numerous
risks and uncertainties could cause or contribute to the Company's actual
results; performance and achievements to be materially different from those
expressed or implied by the forward-looking statements. Factors that may cause
or contribute to these differences include, without limitation, general economic
conditions, including changes in market interest rates and changes in monetary
and fiscal policies of the federal government; legislative and regulatory
changes; and other factors disclosed periodically in the Company's filings with
the Securities and Exchange Commission. Because of the risks and uncertainties
inherent in forward-looking statements, readers are cautioned not to place undue
reliance on them, whether included in this report or made elsewhere from time to
time by the Company or on its behalf. The Company assumes no obligation to
update any forward-looking statements.

General
-------

The Company is a Missouri corporation that was organized for the purpose of
becoming the holding company for Palmyra Savings ("Bank") upon the Bank's
conversion from a federal mutual savings association to a federal stock savings
bank. The Bank's conversion was completed on March 31, 1999. The Bank's business
consists principally of attracting retail deposits from the general public and
using these funds to originate and purchase residential mortgage loans generally
located in Missouri.

The Company's operating results depend primarily on its net interest income,
which is the difference between the income it receives from its loans and
investments, and the interest paid on deposits and borrowings. Non-interest
income and expenses also affect the Company's operating results. Non-interest
income would include such items as loan service fees, service charges, and other
fees. Non-interest expense would include such items as salaries and benefits,
occupancy costs, data processing expenses, and other expenses.

The discussion and analysis included herein covers material changes in results
of operations during the three month and nine month periods ended June 30, 2001
and 2000 as well as those material changes in liquidity and capital resources
that have occurred since September 30, 2000.

Financial Condition at June 30, 2001 and September 30, 2000
-----------------------------------------------------------

Total assets decreased $1.6 million to $68.4 million at June 30, 2001. There was
a $738,000 increase in cash, a $6.5 million decrease in investment securities, a
$1.7 million increase in mortgage-backed securities, a $2.8 million increase in
loans receivable, a $115,000 decrease in accrued interest receivable, a $39,000
decrease in premises and equipment, a $105,000 decrease in foreclosed real
estate, and a $91,000 decrease in other assets. There were $13.3 million in
securities which were called in the period, $65,000 in securities which matured,
$250,000 which were sold, and $6.9 million in securities which were purchased.
The $6.5 million decrease in investment securities was used to fund the $1.7
million increase in mortgage-backed securities, the $2.8 million increase in
loans receivable, and the $738,000 increase in cash. The decrease in accrued
interest receivable was due primarily to the decrease in investment securities,
which was partially offset by the increase in mortgage-backed securities and the
increase in loans receivable. The decrease in foreclosed real estate was due to
the sale of an REO property, and the majority of the decrease in other assets
was due to the change in deferred taxes due the mark to market adjustment to
investment securities.

Total liabilities decreased $1.3 million to $59.5 million at June 30, 2001 as
compared to September 30, 2000. The decrease was due to the repayment of $4.3
million in FHLB advances partially offset by a $2.9 million increase in
deposits.

                                      -7-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


Stockholders' equity at June 30, 2001 decreased $313,000 to $8.9 million or
13.1% of total assets, as compared to $9.3 million at September 30, 2000.  A
decrease in retained earnings of $107,000 was due to earnings of $23,000 and
stock dividend expense of $130,000, while treasury stock increased $422,000.
These decreases in equity were partially offset by a decrease in unrealized loss
on securities for the period of $145,000, and a decrease in unearned ESOP and
SBIP shares of $64,000.

Non-performing assets include non-accrual loans, loans 90 days or more
delinquent and still accruing interest, foreclosed real estate and other
repossessed assets. The following table presents non-performing assets for the
periods indicated.


<TABLE>
<CAPTION>
                                                                                               June 30,       September 30,
                                                                                                 2001             2000
                                                                                             --------------------------------
<S>                                                                                            <C>             <C>
Non-accrual loans......................................................................         $ 282            $  151
Loans past due 90 days or more and still accruing interest ............................            --                --
Foreclosed real estate and other repossessed assets ...................................            --               105
                                                                                                -----             -----
     Total non-performing assets ......................................................         $ 282             $ 256
                                                                                                =====             =====
</TABLE>

Non-accrual loans at June 30, 2001 and September 30, 2000 consisted primarily of
residential real estate loans.

Results of Operations for the Three Months Ended June 30, 2001 and 2000
-----------------------------------------------------------------------

Net Income - Net income increased $4,000 to $35,000 for the quarter ended June
30, 2001 as compared to net income of $31,000 for the quarter ended June 30,
2000.  Basic income per share increased from $0.08 for the 2000 quarter end to
$0.10 for the 2001 quarter end.

Net Interest Income - Net interest income decreased $34,000 to $402,000 for the
three months ended June 30, 2001. Interest income increased $36,000 for the
three month period ended June 30, 2001 as compared to the three month period
ended June 30, 2000, while interest expense increased $70,000, resulting in a
decrease in net interest income of $34,000. The increase in interest income was
due to an increase in loans receivable of $4.3 million, and an increase in
mortgage-backed investments of $1.5 million, along with a decrease in investment
securities of $6.4 million. Interest expense increased $70,000 from the three
month period ended June 30, 2001 as compared to the same period ended June 30,
2000. This was primarily due to the increase in deposit expense of $122,000,
partially offset by a decrease in interest expense on FHLB advances $52,000. The
increase in deposit expense was a direct result of an increase in deposits,
primarily certificates of deposit, of $6.2 million. The decrease in interest on
advances was the result of a decrease in outstanding advances.

Provision for Loan Losses - The allowance for loan losses increased $8,000 from
June 30, 2000 to June 30, 2001. The increase was mainly due to the increase in
the loan portfolio. Management believes the overall allowance is adequate at
June 30, 2001 to meet any potential losses in the loan portfolio at that date.

Noninterest Income - Total noninterest income increased $6,000 to $18,000 for
June 30, 2001. $2,000 of the increase was an increase in service charges and
fees collected, $8,000 was gains on called investment securities, and $10,000
was a one time insurance premium refund. These increases were partially offset
by losses on foreclosed real estate of $18,000.

Noninterest Expense - Total noninterest expense decreased $35,000 to $368,000
for June 30, 2001. Of this decrease, $4,000 was due to a decrease in advertising
expense, $16,000 was due to a decrease in professional fees, and $17,000 was due
to a decrease in other operating expenses. The decrease in professional fees and
other operating expenses was due to consulting expenses incurred in the third
quarter of 2000 that were not realized in 2001.

Income Taxes - Income taxes decreased from a $14,000 tax expense for the quarter
ended June 30,2000 to a $9,000 tax expense for the quarter ended June 30, 2001.

                                      -8-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


Results of Operations for the Nine Months Ended June 30, 2001 and 2000
----------------------------------------------------------------------

Net Income - Net income for the nine months ended June 30, 2001 decreased
$124,000 compared to the nine months ended June 30, 2000.  Net interest income
decreased $159,000, while non-interest income increased $19,000.  Non-interest
expense increased $55,000, and income taxes decreased $79,000 for the nine
months ended June 30, 2001 compared to the same period ended June 30, 2000.
Basic income per share decreased from $0.33 for the 2000 period end to $0.06 for
the 2001 period end.

Net Interest Income - Net interest income decreased $159,000 to $1,140,000 for
the nine months ended June 30, 2001. Interest income increased $176,000 for the
nine month period ended June 30, 2001 as compared to the nine month period ended
June 30, 2000, while interest expense increased $335,000, resulting in a
decrease in net interest income of $159,000. The increase in interest income was
due to an increase in loans receivable of $4.3 million and an increase in
mortgage-backed investments of $1.5 million, along with a decrease in investment
securities of $6.4 million. Interest expense increased $335,000 for the nine
month period ended June 30, 2001 as compared to the same period ended June 30,
2000. This was primarily due to an increase in deposit expense of $400,000 was
partially offset by a decrease in interest on advances of $65,000. The increase
in deposit expense was a direct result of an increase in deposits, primarily
certificates of deposit, of $6.2 million. The decrease in interest on advances
was the result of a decrease in outstanding advances.

Provision for Loan Losses - The allowance for loan losses increased $8,000 from
June 30, 2000 to June 30, 2001. The increase was mainly due to the increase in
the loan portfolio. Management believes the overall allowance is adequate at
June 30, 2001 to meet any potential losses in the loan portfolio at that date.

Noninterest Income - Total noninterest income increased $19,000 to $55,000 for
June 30, 2001. $7,000 of the increase was an increase in service charges and
fees collected, $10,000 was gains on called investment securities, $10,000 was a
one time insurance premium refund, and $8,000 was due to several non-recurring
transactions that took place in the quarter ended December 31, 2000. These
increases were partially offset by losses on foreclosed real estate of $20,000.

Noninterest Expense - Total noninterest expense increased $55,000 to $1,168,000
June 30, 2001. Of the increase, $59,000 was due to increased employee cost which
included compensation expenses which are associated with the addition of the
Stock-Based Incentive Plan and a 20% increase in employee insurance costs.
Occupancy costs increased $20,000 primarily due to costs associated with the
Kahoka branch office building opened in the spring of 2000, while other
operating expenses decreased $17,000.

Income Taxes - Income taxes decreased from a $75,000 tax expense for the nine
month period ended June 30,2000 to a $4,000 tax benefit for the nine month
period ended June 30, 2001. This was a result of lower income before income
taxes in 2001

Liquidity and Capital Resources
-------------------------------

The Company's primary sources of funds are maturities and prepayments of
investment securities, customer deposits, proceeds from principal and interest
payments on loans and Federal Home Loan Bank of Des Moines advances. While
investment securities maturities and scheduled amortization of loans are a
predictable source of funds, deposit flows, investment securities prepayments
and mortgage prepayments are greatly influenced by general interest rates,
economic conditions and competition.

Palmyra Savings must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to fund loan originations and deposit
withdrawals, to satisfy other financial commitments and to take advantage of
investment opportunities. Palmyra Savings generally maintains sufficient cash
and short-term investments to meet short-term liquidity needs. At June 30, 2001,
cash and interest-bearing deposits totaled $4.5 million, or 7.0% of total
assets, and investment securities classified as available-for-sale totaled $7.5
million.

                                      -9-
<PAGE>

                     PFSB BANCORP, INC. AND SUBSIDIARIES
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)


The Bank's primary investing activity is the origination and purchase of one- to
four-family mortgage loans. At June 30, 2001, the Bank had outstanding loan
commitments totaling $3.2 million and had undisbursed loans in process totaling
$545,000. Certificates of deposit that are scheduled to mature in less than one
year from June 30, 2001 totaled $29.5 million. Historically, the Bank has been
able to retain a significant amount of its deposits as they mature. Management
believes it has adequate resources to fund all loan commitments from savings
deposits, loan payments, maturities of investment securities and the ability to
obtain advances from the Federal Home Loan Bank.

Office of Thrift Supervision regulations require Palmyra Savings to maintain
specific amounts of regulatory capital. As of June 30, 2001 Palmyra Savings
complied with all regulatory capital requirements stated below. The following
table summarizes Palmyra Savings' capital ratios and the ratios required by
regulation at June 30, 2001.

<TABLE>
<CAPTION>
                                                                                 To Be Well Capitalized
                                                              For Capital        Under Prompt Corrective
                                            Actual         Adequacy Purposes        Action Provisions
                                        --------------    ------------------    ------------------------
                                        Amount  Ratio      Amount    Ratio         Amount       Ratio
                                        ------  ------    --------  --------    ------------  ----------
                                                            (Dollars in thousands)

<S>                                    <C>                <C>         <C>          <C>           <C>
As of June 30, 2001
  Total Risk-Based Capital
  (to Risk Weighted Assets)             $8,456  24.75%      $2,733      8.0%          $3,416       10.0%
  Tier 1 Capital
  (to Risk Weighted Assets)             $8,168  23.91%      $1,366      4.0%          $2,050        6.0%
  Tier 1 Capital
  (to Adjusted Assets)                  $8,168  11.92%      $2,055      3.0%          $3,425        5.0%
  Tangible Capital
  (to Adjusted Assets)                  $8,168  11.92%      $1,027      1.5%            N/A          N/A
</TABLE>

                                      -10-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                          PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

Neither the Company nor Palmyra Savings is a party to any material legal
proceedings at this time.  From time to time Palmyra Savings is involved in
various claims and legal actions arising in the ordinary course of business.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

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.  Exhibits

    3.1  Articles of Incorporation of PFSB Bancorp, Inc.*

    3.2  Bylaws of PFSB Bancorp, Inc.*

    4.0  Form of Stock Certificate of PFSB Bancorp, Inc.*

    10.1 Employment Agreement with Eldon R. Mette * *

    10.2 Employment Agreement with Ronald L. Nelson * *

    10.3 PFSB Bancorp, Inc. 2000 Stock-Based Incentive Plan * * *

b.  Reports on Form 8-K

    None



*      Incorporated by reference from the Form SB-2 (Registration No. 333-
       69191), as amended, as filed on December 18, 1998.

* *    Incorporated by reference from the Form 10-QSB for the quarter ended
       March 31, 1999, as filed on May 17, 1999.

* * *  Incorporated by reference from the Definitive Proxy Statement for the
       2000 Annual Meeting of Stockholders, as filed on December 15, 1999.

                                      -11-
<PAGE>

                                  SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                       PFSB Bancorp, Inc.


         Date:  August 14, 2001  By:/s/ Eldon R. Mette
                                    --------------------------------------
                                        Eldon R. Mette
                                        President and Chief Executive Officer



         Date:  August 14, 2001  By:/s/ Ronald L. Nelson
                                    --------------------------------------
                                        Ronald L. Nelson
                                        Vice President, Treasurer
                                        and Secretary

                                      -12-