<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 December 31, 1999
                               -------------------

                                      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.)

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

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

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

                   Yes    X      No
                      ---------    --------



As of February 9, 2000, there were 475,150 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 SUBSIDIARY
                                  FORM 10-QSB
                               DECEMBER 31, 1999

<TABLE>
<CAPTION>
INDEX                                                                          PAGE
-----                                                                          ----
<S>                                                                            <C>

PART I - FINANCIAL STATEMENTS
-----------------------------

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 OR
         PLAN OF OPERATION                                                     7-9

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

ITEM 1.  LEGAL PROCEEDINGS                                                      10

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                              10

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                        10

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    10

ITEM 5.  OTHER INFORMATION                                                      10

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

SIGNATURES                                                                      12
</TABLE>
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                     December 31,   September 30,
                                                                                                         1999           1999
                                                                                                     -------------  -------------
ASSETS                                                                                                (Unaudited)    (Unaudited)
<S>                                                                                                  <C>            <C>
   Cash (includes interest-bearing deposits of $1,615 and $1,867, respectively)                           $ 2,263        $ 2,341
    Investment securities:
       Available-for-sale, at fair value                                                                    9,737          9,816
       Held-to-maturity (fair value of $7,205 and $7,255, respectively)                                     7,485          7,484
    Mortgage-backed securities held-to-maturity (fair value of $3,425 and $3,574, respectively)             3,523          3,650
    Stock in Federal Home Loan Bank of Des Moines ("FHLB")                                                    391            391
    Loans receivable, net (allowance for loan losses of $280 at December 31, 1999 and                      41,806         41,385
       September 30,1999)
    Accrued interest receivable                                                                               443            617
    Premises and equipment                                                                                    607            521
    Foreclosed real estate                                                                                     47            100
    Other assets                                                                                              160            140
                                                                                                          -------        -------

                                     TOTAL ASSETS                                                         $66,462        $66,445
                                                                                                          =======        =======

LIABILITIES AND EQUITY

LIABILITIES
   Deposits                                                                                                52,552         53,139
    Advances from FHLB                                                                                      4,000          2,500
    Advances from borrowers for property taxes and insurance                                                   28             52
    Dividends Payable                                                                                          71             --
    Other Liabilities                                                                                         154            109
                                                                                                          -------        -------

                                     TOTAL LIABILITIES                                                    $56,805        $55,800

EQUITY
    Common stock, $.01 par value per share; 5,000,000 authorized                                                6              6
       559,000 issued
    Additional paid-in capital                                                                              4,976          4,975
    Retained earnings-substantially restricted                                                              6,312          6,317
    Unrealized gain on securities, net of taxes                                                              (278)          (228)
    Unearned ESOP shares                                                                                     (414)          (425)
    Treasury Stock at cost 83,850 shares of common stock                                                     (945)            --
                                                                                                          -------        -------

                                     TOTAL EQUITY                                                         $ 9,657        $10,645
                                                                                                          -------        -------

                              TOTAL LIABILITIES AND EQUITY                                                $66,462        $66,445
                                                                                                          =======        =======
</TABLE>



See accompanying notes to consolidated financial statements.

                                      -1-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                           Three Months Ended
                                                                                                              December 31,
                                                                                                          1999           1998
                                                                                                              (Unaudited)
<S>                                                                                                      <C>            <C>
INTEREST INCOME:
   Mortgage loans                                                                                        $  769         $  765
   Consumer and other loans                                                                                   9              9
   Interest-bearing deposits                                                                                 14             30
   Investment securities                                                                                    270            188
   Mortgage-backed securities                                                                                57             42
                                                                                                         ------         ------

TOTAL INTEREST INCOME                                                                                    $1,119         $1,034

INTEREST EXPENSE:
   Deposits                                                                                                 637            686
   Advances from FHLB                                                                                        41              8
                                                                                                         ------         ------

TOTAL INTEREST EXPENSE                                                                                   $  678         $  694
                                                                                                         ------         ------

NET INTEREST INCOME                                                                                         441            340

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

NET-INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                                         441            340

NON-INTEREST INCOME (LOSS):
   Service charges and other fees                                                                            12             15
   Income (loss) from foreclosed assets                                                                      (1)            (8)
   Gain (loss) on disposal of premises & equipment                                                           --             52
   Gain (loss) on sale of investment                                                                         --              4
   Other                                                                                                      3              2
                                                                                                         ------         ------

TOTAL NON-INTEREST INCOME                                                                                    14             65

NON-INTEREST EXPENSE:
   Employee salaries and benefits                                                                           169            166
   Occupancy costs                                                                                           35             33
   Advertising                                                                                               11              7
   Data processing                                                                                           22             24
   Federal insurance premiums                                                                                 8              8
   Other                                                                                                    104             60
                                                                                                         ------         ------

TOTAL NON-INTEREST EXPENSE                                                                                  349            298
                                                                                                         ------         ------

INCOME BEFORE INCOME TAXES                                                                                  106            107

INCOME TAXES                                                                                                 39             38
                                                                                                         ------         ------

NET INCOME                                                                                                   67             69
                                                                                                         ======         ======

NET INCOME PER SHARE                                                                                     $ 0.14              *
                                                                                                         ======         ======
</TABLE>

*Operating as Palmyra Saving & Building Association, F.A., a mutual institution.

See accompanying notes to Consolidated Financial Statements

                                      -2-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                             Three Months Ended
                                                                                                                December 31,
                                                                                                              1999       1998
                                                                                                            ---------  ---------
<S>                                                                                                         <C>        <C>
                                                                                                                (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income:                                                                                                   $   67    $    69
   Adjustments to reconcile net income to net cash provided by operating activities
   Depreciation and amortization                                                                                  16         20
   Amortization of premiums and discounts                                                                         (1)        (1)
   Loan fee amortization and payoffs                                                                              --         (2)
   Gain (loss) on sale of investments                                                                             --         (4)
   ESOP shares released                                                                                           11         --
   Changes to assets and liabilities increasing (decreasing) cash flows:
      Accrued interest receivable                                                                                175         44
      Other assets                                                                                               (20)      (121)
      Other liabilities                                                                                           75         38
                                                                                                              ------    -------

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                                                 323         (9)

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of investment securities, held-to-maturity                                                            --     (1,998)
   Proceeds from maturities and calls of investment securities, held-to-maturity                                  --      2,330
   Purchase of investment securities, available-for-sale                                                          --     (1,997)
   Proceeds from maturities and calls of investment securities, available-for-sale                                --      1,345
   Principal collected on mortgage-backed securities                                                             126        140
   Loans originated, net of repayments                                                                          (323)       700
   Purchase of mortgage loans                                                                                    (67)      (786)
   Proceeds from sale of education loans                                                                          19         15
   Purchase of premises and equipment                                                                           (102)       (11)
   Proceeds from sales of foreclosed real estate                                                                   3         --
   Expenditures on foreclosed real estate                                                                         (1)        --
   Proceeds from sale of premises and equipment                                                                   --        100
                                                                                                              ------    -------

NET CASH USED BY INVESTING ACTIVITIES                                                                         $ (345)   $  (162)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in deposits                                                                          (587)     1,599
   Advances from FHLB
      Borrowings                                                                                                1500         --
   Net increase (decrease) in advances for taxes and insurance                                                   (24)       (25)
   Purchase of treasury stock                                                                                   (945)        --
                                                                                                              ------    -------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                              $  (56)   $ 1,574

NET INCREASE (DECREASE) IN CASH                                                                                  (78)     1,403

CASH, BEGINNING OF PERIOD                                                                                      2,341      2,268
                                                                                                              ------    -------

CASH, END OF PERIOD                                                                                           $2,263    $ 3,671
                                                                                                              ======    =======
</TABLE>



                                      -3-
<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARY

                  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 December 31, 1999, interim financial statements.

The results of operations for the period ended December 31, 1999, 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 dated
September 30, 1999.

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--Earnings Per Share
--------------------------

Earnings per share data is not relevant for any period prior to September 30,
1998 since the Company had no stockholders prior to the initial stock offering
completed March 31, 1999.  Basic earnings per share is computed by dividing
income available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings 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.  There were no
potentially dilutive securities outstanding as of December 31, 1999.


                                                          Three Months Ended
                                                              December 31,
                                                          1999          1998
                                                          ----          ----
                                                            (In thousands,
                                                      except per share amounts)

Basic earnings per share:

   Income available to common shareholders                  $  67             *
                                                            =====         =====

   Average common shares outstanding                          487             *
                                                            =====         =====

   Basic earnings per share                                 $0.14             *
                                                            =====         =====

                                      -4-
<PAGE>

                       PFSB BANCORP, INC. AND SUBSIDIARY
                  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 December 31, 1999 is as follows:

   Shares committed for release                                           3,354

   Unreleased shares                                                     41,366
                                                                       --------

   TOTAL                                                                 44,720
                                                                       ========

   Fair value of unreleased shares                                     $444,685
                                                                       ========

                                      -5-
<PAGE>

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



NOTE E--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 month periods ended December 31,
1999 and 1998, 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 month periods ended December 31, 1999 and
1998 is summarized as follows:


                                                            Three Months Ended
                                                                December 31,
                                                            1999           1998
                                                            ----           ----
                                                          (Dollars in thousands)

Net Income                                                  $  67         $  69

Other comprehensive income:
   Net unrealized holding gains (losses) on investments
    in debt and equity securities available-for-sale          (50)          (21)

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

Total other comprehensive income                            $  17         $  48
                                                            =====         =====

                                      -6-
<PAGE>

                       PFSB BANCORP, INC. AND SUBSIDIARY
Item 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS
                             OR PLAN OF OPERATION


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 periods ended December 31, 1999 and 1998 as
well as those material changes in liquidity and capital resources that have
occurred since September 30, 1999.

Financial Condition at December 31, 1999 and September 30, 1999
---------------------------------------------------------------

Total assets increased $17,000 to $66.5 million at December 31, 1999.  There was
a $421,000 increase in loans receivable, a $78,000 decrease in cash, a $78,000
decrease in investment securities, and a $127,000 decrease in mortgage-backed
securities for the period from September 30, 1999 to December 31, 1999.  The
increase in loans receivable was funded by FHLB advances.

Total liabilities increased $1.0 million at December 31, 1999 as compared to
September 30, 1999.  The reason for the increase was in increase in outstanding
FHLB advances of $1.5 million, and increase in dividends payable of $71,000, and
a decrease in deposits of $587,000.  The increase in FHLB advances were used to
fund loans and the decrease in deposits.  The dividends payable at December 31,
1999 were paid to the Company's stockholders on January 25, 2000.

Stockholders equity at December 31, 1999 decreased $988,000 to $9,657,000 or
14.5% of total assets, as compared to $10,645,000  at September 30, 1999.  This
decrease was due to a 15% stock buy-back completed in December 1999.  PFSB
Bancorp, Inc. bought back 83,850 shares at an average price of $11.27 per share.

The construction of the new office building in Kahoka, Missouri is proceeding on
schedule.  The expected completion date is April 2000 with an anticipated total
cost for the building and equipment of $589,000.

Results of Operations for the Three Months Ended December 31, 1999 and 1998
---------------------------------------------------------------------------

Net income for the three months ended December 31, 1999 decreased $2,000
compared to the three months ended December 31,

                                      -7-
<PAGE>

                       PFSB BANCORP, INC. AND SUBSIDIARY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
                             OR PLAN OF OPERATION
                                  (Continued)


1998. Net interest income increased $101,000 or 29.9%, while non-interest income
decreased $52,000 or 79.3%. Non-interest expense increased $51,000 or 17.2%, and
income taxes increased $1,000 for the three months ended December 31, 1999
compared to the same period ended December 31, 1998.

Interest income increased $85,000 for the three month period ended December 31,
1999 as compared to the three month period ended December 31, 1998, while
interest expense decreased $16,000, providing an increase in net interest income
of $101,000.  The increase in interest income was due to an increase in
investment securities of $4.3 million which was partially offset by a decrease
in cash and interest bearing deposits of $611,000, an increase in mortgage-
backed investments of $1.1 million, and an increase in loans receivable of $1.4
million.  Investment yield decreased from 6.04% to 5.94%, and the cost of
deposits decreased from 4.99% to 4.76% for the period ended December 31, 1999
compared to the period ended December 31, 1998.

Total non-interest income decreased $52,000 for the three month period ended
December 31, 1999 as compared to the same period ended December 31, 1998.  This
was the result of a profit on the sale of an office building in December 1998.

Total non-interest expense increased $51,000 for the period.  Of the increase
$4,000 was due to increased employee costs, $4,000 was increased advertising
costs, and $14,000 was increased legal expense, and $14,000 was increased
accounting expense.  The remaining difference can be attributed to overall
rising costs.

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

Palmyra Savings' 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 December 31,
1999, cash and interest-bearing deposits totaled $2.3 million, or 3.4% of total
assets, and investment securities classified as available-for-sale totaled $9.7
million.  At December 31, 1999, the Bank had outstanding advances in the amount
of $4.0 million.

Office of Thrift Supervision regulations require savings institutions to
maintain an average daily balance of liquid assets equal to at least 4.0% of the
average daily balance of its net withdrawable deposits and short-term
borrowings.  The Bank's actual liquidity ratio at December 31, 1999 was 18.6%.

The Bank's primary investing activity is the origination and purchase of one- to
four-family mortgage loans.  At December 31, 1999, the Bank had outstanding loan
commitments totaling $392,000 and had undisbursed loans in process totaling
$566,000.  Certificates of deposit that are scheduled to mature in less than one
year from December 31, 1999 totaled $24.0 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 December 31,1999, Palmyra Savings
complied with all regulatory capital requirements with tangible, core and risk-
based capital ratios of 12.68%, 12.68% and 28.34%, respectively.  Effective
April 1, 1999 the regulatory core capital requirement increased to 4.0% for all
savings associations except those with the top examination rating.

Year 2000 Issues
----------------

Palmyra Savings is a user of computers, computer software and equipment
utilizing embedded microprocessors.  Industry experts were concerned that on
January 1, 2000, some date-sensitive systems would recognize the year 2000 as
1900, or not at all.  We have operated and evaluated our computer systems
following January 1, 2000 and have not identified any errors or experienced any

                                      -8-
<PAGE>

                       PFSB BANCORP, INC. AND SUBSIDIARY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
                             OR PLAN OF OPERATION
                                  (Continued)


computer system malfunctions.  The Company has not been informed of such
problems being experienced by any of its venders or customers.  However, some
banking industry experts remain concerned that some computers may not be able to
interpret additional dates in the year 2000 properly. We will continue to
monitor our computer systems to assess whether our systems are at risk and will
maintain contingency plans to prevent any potential system malfunction or
correct any system failures.

Nevertheless, it is too soon to conclude that there will be no future problems
resulting from the Year 2000.  The Company will continue to monitor its vendors
and its own internal systems to eliminate or minimize the impact any potential
computer problems will have on operations or cash flow.  The Company does not
believe at this time that these potential problems will materially impact the
ability of the Company to continue its operations, however, no assurance can be
given that this will be the case.

                                      -9-
<PAGE>

                       PFSB BANCORP, INC. AND SUBSIDIARY

                          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

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

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

None

ITEM 5. OTHER INFORMATION

None

                                      -10-
<PAGE>

                       PFSB BANCORP, INC. AND SUBSIDIARY

                          PART II - OTHER INFORMATION

                                  (Continued)

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.*

     27.0 Financial Data Schedule

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.

                                      -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: February 14, 2000       By: /s/ Eldon R. Mette
                                       -----------------------------------------
                                          Eldon R. Mette
                                          President and Chief Executive Officer



     Date: February 14, 2000       By: /s/ Ronald L. Nelson
                                       ----------------------------------------
                                          Ronald L. Nelson
                                          Vice President, Treasurer
                                          and Secretary

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