<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 March 31, 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 May 7, 2001, there were 416,304 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
                                MARCH 31, 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                                   11-12

SIGNATURES                                                                    13

<PAGE>

                      PFSB BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                                       March 31,    September 30,
                                                                                                            2001             2000
                                                                                                   ------------------------------
<S>                                                                                                   <C>           <C>
ASSETS                                                                                                (Unaudited)    (Unaudited)

   Cash (includes interest-bearing deposits of $4,449 and $3,490, respectively)                          $ 4,726          $ 3,792
   Investment securities:
       Available-for-sale, at fair value                                                                   7,699            8,870
       Held-to-maturity (fair value of $5,400 and $7,217, respectively)                                    5,384            7,427
   Mortgage-backed securities held-to-maturity (fair value of $2,818 and $3,008 respectively)              2,838            3,099
   Stock in Federal Home Loan Bank of Des Moines ("FHLB")                                                    427              403
   Loans receivable, net (allowance for loan losses of $280 at March 31, 2001 and                         44,839           44,529
       September 30, 2000)
   Accrued interest receivable                                                                               553              600
   Premises and equipment                                                                                  1,061            1,082
   Foreclosed real estate                                                                                     37              105
   Other assets                                                                                                8              137
                                                                                                         -------          -------

                                               TOTAL ASSETS                                              $67,572          $70,044
                                                                                                         =======          =======

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
   Deposits                                                                                              $57,753          $56,385
   Advances from FHLB                                                                                        750            4,250
   Advances from borrowers for property taxes and insurance                                                   35               51
   Other liabilities                                                                                          18               95
                                                                                                         -------          -------

TOTAL LIABILITIES                                                                                         58,556           60,781

STOCKHOLDERS' EQUITY
   Common stock, $.01 par value per share; 5,000,000 authorized, 559,000 issued                                6                6
   Additional paid-in capital                                                                              4,934            4,929
   Retained earnings-substantially restricted                                                              6,268            6,348
   Unrealized (loss) on securities, net of taxes                                                              11             (197)
   Unearned ESOP shares                                                                                     (358)            (380)
   Unearned SBIP shares                                                                                     (178)            (206)
   Treasury stock, at cost (142,696 and 107,208 shares of common stock, respectively)                     (1,667)          (1,237)
                                                                                                         -------          -------

                                         TOTAL STOCKHOLDERS' EQUITY                                        9,016            9,263
                                                                                                         -------          -------

                                TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $67,572          $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     Six Months Ended
                                                                                        March 31,              March 31,
                                                                                       2001       2000       2001       2000
                                                                                --------------------------------------------
<S>                                                                                <C>         <C>        <C>        <C>
                                                                                                  (Unaudited)
INTEREST INCOME
   Mortgage loans                                                                    $  853     $  781     $1,699     $1,550
   Consumer and other loans                                                              10          9         23         18
   Interest-bearing deposits                                                             25         12         69         26
   Investment securities                                                                238        268        495        538
   Mortgage-backed securities                                                            49         55         98        112
                                                                                     ------     ------     ------     ------

TOTAL INTEREST INCOME                                                                $1,175     $1,125     $2,384     $2,244

INTEREST EXPENSE
   Deposits                                                                             777        643      1,558      1,280
   Advances from FHLB                                                                    24         60         88        101
                                                                                     ------     ------     ------     ------

TOTAL INTEREST EXPENSE                                                               $  801     $  703     $1,646     $1,381
                                                                                     ------     ------     ------     ------

NET INTEREST INCOME                                                                     374        422        738        863

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

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                                     374        422        738        863

NON-INTEREST INCOME
   Service charges and other fees                                                        16         15         32         27
   Profit (loss) from foreclosed assets                                                 (11)       (10)       (13)       (11)
   Gain (loss) from sale of investments                                                   2         --          2         --
   Other income (loss)                                                                    6          5         16          8
                                                                                     ------     ------     ------     ------

TOTAL NON-INTEREST INCOME                                                                13         10         37         24

NON-INTEREST EXPENSE
   Employee salaries and benefits                                                       209        180        410        349
   Occupancy costs                                                                       44         36         88         71
   Advertising                                                                            9         11         22         22
   Data processing                                                                       26         25         49         47
   Federal insurance premiums                                                             1          3          4         11
   Professional fees                                                                     47         38         85         71
   Directors' fees                                                                       18         15         33         30
   Other expenses                                                                        53         53        109        109
                                                                                     ------     ------     ------     ------

TOTAL NON-INTEREST EXPENSE                                                              407        361        800        710
                                                                                     ------     ------     ------     ------

INCOME (LOSS) BEFORE INCOME TAXES                                                       (20)        71        (25)       177

INCOME TAXES (INCOME TAX BENEFIT)                                                       (11)        22        (13)        61
                                                                                     ------     ------     ------     ------

NET INCOME (LOSS)                                                                    $   (9)    $   49     $  (12)    $  116
                                                                                     ======     ======     ======     ======

BASIC INCOME (LOSS) PER SHARE                                                        $(0.02)     $0.11     $(0.03)     $0.25
                                                                                     ======     ======     ======     ======
DILUTED INCOME (LOSS) PER SHARE                                                      $(0.02)     $0.11     $(0.03)     $0.25
                                                                                     ======     ======     ======     ======
</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>
                                                                                                              Six Months Ended
                                                                                                                  March 31
                                                                                                                2001       2000
                                                                                                          ---------------------
<S>                                                                                                          <C>        <C>
                                                                                                                (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                                                   $   (12)   $   116
   Adjustments to reconcile net income to net cash provided by operating activities
   Depreciation and amortization                                                                                  42         31
   Amortization of premiums and discounts                                                                         (3)        (2)
   Loss on sale of foreclosed real estate                                                                         11         10
   ESOP shares released                                                                                           27         23
   SBIP shares released                                                                                           28         --
   Changes to assets and liabilities increasing (decreasing) cash flows
      Accrued interest receivable                                                                                 47         16
      Other assets                                                                                               127         (6)
      Other liabilities                                                                                         (197)        64
                                                                                                             -------    -------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                         70        252

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from maturities and calls of investment securities, held-to-maturity                               2,045         40
   Purchase of investment securities, available-for-sale                                                        (998)        --
   Proceeds from maturities and calls of investment securities, available-for-sale                             2,500      1,000
   Principal collected on mortgage-backed securities                                                             260        251
   (Purchase) Redemption of FHLB stock                                                                           (24)       (12)
   Loans originated, net of repayments                                                                           403       (808)
   Purchase of mortgage loans                                                                                   (746)      (329)
   Proceeds from sale of education loans                                                                          34         35
   Purchase of premises and equipment                                                                            (21)      (353)
   Proceeds from sales of foreclosed real estate                                                                  57          3
   Expenditures on foreclosed real estate                                                                         --         (1)
                                                                                                             -------    -------

NET CASH USED BY INVESTING ACTIVITIES                                                                        $ 3,510    $  (174)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits                                                                                    1,368        156
   Advances from FHLB
      Borrowings                                                                                                  --      3,000
      Repayments                                                                                              (3,500)    (2,500)
   Net increase (decrease) in advances for taxes and insurance                                                   (16)       (17)
   Dividends paid                                                                                                (68)       (72)
   Purchase of treasury stock                                                                                   (430)      (945)
                                                                                                             -------    -------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                             $(2,646)   $  (378)
                                                                                                             -------    -------
NET INCREASE (DECREASE) IN CASH                                                                                  934       (300)
CASH, BEGINNING OF PERIOD                                                                                      3,792      2,341
                                                                                                             -------    -------
CASH, END OF PERIOD                                                                                          $ 4,726    $ 2,041
                                                                                                             =======    =======
</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 March 31, 2001, interim financial statements.

The results of operations for the period ended March 31, 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 (loss) 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 (loss) 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           Six Months Ended
                                                                                       March 31,                   March 31,
                                                                                   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 (loss) available to common shareholders                                  $   (9)      $  49         $  (12)          $ 116
                                                                                   ======       =====         ======           =====

   Average common shares outstanding                                                  378         434            387             460
                                                                                   ======       =====         ======           =====

   Basic income (loss) per share                                                   $(0.02)      $0.11         $(0.03)          $0.25
                                                                                   ======       =====         ======           =====

   Diluted income (loss) per share                                                 $(0.02)      $0.11         $(0.03)          $0.25
                                                                                   ======       =====         ======           =====

</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 March 31, 2001 is as follows:


   Shares committed for release                       1,118
   Shares released                                    7,826
   Unreleased shares                                 35,776
                                                   --------

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

   Fair value of unreleased shares                 $447,200
                                                   ========


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 March 31, 2001, 1,864 options had vested,
all of which vested upon Director Slavin's retirement from the Board on
January 25, 2001.

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 March 31, 2001.  This includes 782 shares belonging to
Director Slavin which vested upon his retirement from the Board on January 25,
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 six month periods ended
March 31, 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 six month periods ended March 31, 2001
and 2000 is summarized as follows:

<TABLE>
<CAPTION>
                                                                                     Three Months Ended          Six Months Ended
                                                                                           March 31,                 March 31,
                                                                                       2001         2000         2001         2000
                                                                                ----------------------------------------------------
                                                                                     (Dollars in thousands)   (Dollars in thousands)
<S>                                                                                  <C>            <C>       <C>             <C>
Net Income (Loss)                                                                      $  (9)       $  49        $ (12)       $ 116

Other comprehensive income:
  Net unrealized holding gains (losses) on investments
   in debt and equity securities available-for-sale                                       70           12          209          (38)


  Adjustments for net securities (gains) losses realized
   in net income, net of applicable income taxes                                          (1)          --           (1)          --
                                                                                       -----        -----        -----        -----

Total other comprehensive income                                                       $  60        $  61        $ 196        $  78
                                                                                       =====        =====        =====        =====
</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 six month periods ended March 31, 2001
and 2000 as well as those material changes in liquidity and capital resources
that have occurred since September 30, 2000.

Financial Condition at March 31, 2001 and September 30, 2000
------------------------------------------------------------

Total assets decreased $2.5 million to $67.6 million at March 31, 2001.  There
was a $934,000 increase in cash, a $3.2 million decrease in investment
securities, a $261,000 decrease in mortgage-backed securities, a $310,000
increase in loans receivable, a $47,000 decrease in accrued interest receivable,
a $68,000 decrease in foreclosed real estate, and a $129,000 decrease in other
assets.  There were $4.5 million in securities which were called in the period,
$45,000 in securities which matured, and $1.0 million in securities which were
purchased.  These calls, maturities, and purchases, along with the quarterly
mark to market adjustment and the repayment of $3.5 million in FHLB advances
accounted for a large portion of the change in cash and investment securities.
The remainder of the decreases were due to stock repurchases in the amount of
$430,000.  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 $2.2 million to $58.6 million at March 31, 2001 as
compared to September 30, 2000.  The decrease was due to the repayment of $3.5
million in FHLB advances partially offset by a $1.4 million increase in
deposits.

Stockholders' equity at March 31, 2001 decreased $247,000 to $9.0 million or
13.3% of total assets, as compared to $9.3 million at September 30, 2000.  A
decrease in retained earnings of $80,000 was due to a $12,000 loss in earnings
and stock dividend expense of $68,000, while treasury stock increased $430,000.
These decreases in equity were partially offset by a decrease in unrealized loss
on securities for the period of $208,000, and a decrease in unearned ESOP and
SBIP shares of $50,000.

                                      -7-
<PAGE>

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


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>
                                                                                             March 31,        September 30,
                                                                                                2001               2000
                                                                                             -----------------------------
<S>                                                                                          <C>              <C>
Non-accrual loans ................................................................              $165               $151
Loans past due 90 days or more and still accruing interest .......................                --                 --
Foreclosed real estate and other repossessed assets ..............................                37                105
                                                                                                ----               ----
     Total non-performing assets .................................................              $202               $256
                                                                                                ====               ====
</TABLE>

Non-accrual loans at March 31, 2001 and September 30, 2000 consisted primarily
of residential real estate loans.

Results of Operations for the Three Months Ended March 31, 2001 and 2000
------------------------------------------------------------------------

Net Income - There was a net loss of $9,000 for the quarter ended March 31, 2001
as compared to net income of $49,000 for the quarter ended March 31, 2000.
Basic income per share decreased from $0.11 for the 2000 quarter end to $(0.02)
for the 2001 quarter end.

Net Interest Income - Net interest income decreased $48,000 to $374,000 for the
three months ended March 31, 2001.  Interest income increased $50,000 for the
three month period ended March 31, 2001 as compared to the three month period
ended March 31, 2000, while interest expense increased $98,000, resulting in a
decrease in net interest income of $48,000.  The increase in interest income was
due to an increase in loans receivable of $2.3 million, which was partially
offset by a decrease in mortgage-backed investments of $560,000, along with a
decrease in investment securities of $3.1 million.  Interest expense increased
$98,000 from the three month period ended March 31, 2001 as compared to the same
period ended March 31, 2000.  This was primarily due to the increase in deposit
expense of $134,000.  The increase in deposit expense was a direct result of an
increase in deposits, primarily certificates of deposit, of $4.5 million and an
increase in the cost of deposits from 4.91% to 5.34% from March 31, 2000 to
March 31, 2001.

Provision for Loan Losses - The allowance for  loan losses remained unchanged
from March 31, 2000 to March 31, 2001.  Management believes the overall
allowance is adequate to meet any potential losses in the loan portfolio.

Noninterest Income - Total noninterest income increased $3,000 to $13,000 for
March 31, 2001. This increase was primarily due to $2,000 in gains from
investment calls that took place in the quarter ended March 31, 2001.

Noninterest Expense - Total noninterest expense increased $46,000 to $407,000
for March 31, 2001.  Of the increase, $29,000 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 $8,000 primarily due to costs associated with the
Kahoka branch office building opened in the spring of 2000.  There was also a
$9,000 increase in professional fees.

Income Taxes - Income taxes decreased from a $22,000 tax expense for the quarter
ended March 31,2000 to a $11,000 tax benefit for the three month period ended
March 31, 2001.  This was a result of lower income before income taxes in 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 Six Months Ended March 31, 2001 and 2000
----------------------------------------------------------------------

Net Income - There was a net loss of $12,000 for the six month period ended
March 31, 2001 as compared to net income of $116,000 for the same period ended
March 31, 2000.  Basic income per share decreased from $0.25 for the 2000 period
end to $(0.03) for the 2001 period end.

Net Interest Income - Net interest income decreased $125,000 to $738,000 for the
six months ended March 31, 2001.  Interest income increased $140,000 for the six
month period ended March 31, 2001 as compared to the six month period ended
March 31, 2000, while interest expense increased $265,000, resulting in a
decrease in net interest income of $125,000.  The increase in interest income
was due to an increase in loans receivable of $2.3 million, which was partially
offset by a decrease in mortgage-backed investments of $560,000, along with a
decrease in investment securities of $3.1 million.  Interest expense increased
$265,000 from the six month period ended March 31, 2001 as compared to the same
period ended March 31, 2000.  This was primarily due to an increase in deposit
expense of $278,000 was partially offset by a decrease in interest on advances
of $13,000.  The increase in deposit expense was a direct result of an increase
in deposits, primarily certificates of deposit, of $4.5 million and an increase
in the cost of deposits from 4.91% to 5.34% from March 31, 2000 to March 31,
2001.  The decrease in interest on advances was the result of a decrease in
outstanding advances.

Provision for Loan Losses - The allowance for  loan losses remained unchanged
from March 31, 2000 to March 31, 2001.  Management believes the overall
allowance is adequate to meet any potential losses in the loan portfolio.

Noninterest Income - Total noninterest income increased $13,000 to $37,000 for
March 31, 2001. $5,000 of the increase was and increase in service charges and
fees collected, while the majority of the remainder was due to several non-
recurring transactions that took place in the quarter ended December 31, 2000.

Noninterest Expense - Total noninterest expense increased $90,000 to $800,000
March 31, 2001.  Of the increase, $61,000 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 $17,000 primarily due to costs associated with the
Kahoka branch office building opened in the spring of 2000, while professional
fees increased $14,000.

Income Taxes - Income taxes decreased from a $61,000 tax expense for the six
month period ended March 31,2000 to a $13,000 tax benefit for the six month
period ended March 31, 2001.  This was a result of lower income before income
taxes in 2001.

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.  Recent legislation repealed the OTS's minimum
liquidity ratio requirement.  OTS regulations now require the bank to maintain
sufficient liquidity to ensure its safe and sound operation.  Palmyra Savings
generally maintains sufficient cash and short-term investments to meet short-
term liquidity needs.  At March 31, 2001, cash and interest-bearing deposits
totaled $4.7 million, or 7.0% of total assets, and investment securities
classified as available-for-sale totaled $7.7 million.  At March 31, 2001, the
Bank had outstanding FHLB advances in the amount of $750,000.

                                      -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 March 31, 2001, the Bank had outstanding loan
commitments totaling $3.2 million and had undisbursed loans in process totaling
$473,000.  Certificates of deposit that are scheduled to mature in less than one
year from March 31, 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 March 31, 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 March 31, 2001.

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

As of March 31, 2001
  Total Risk-Based Capital
  (to Risk Weighted Assets)              $8,398   25.74%        $2,610      8.0%           $3,262        10.0%
  Tier 1 Capital
  (to Risk Weighted Assets)              $8,118   24.88%        $1,305      4.0%           $1,957         6.0%
  Tier 1 Capital
  (to Adjusted Assets)                   $8,118   12.01%        $2,028      3.0%           $3,379         5.0%
  Tangible Capital
  (to Adjusted Assets)                   $8,118   12.01%        $1,014      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

  On January 25, 2001, the Company held its annual meeting of stockholders for
the purpose of the election of Directors to three-year terms and the
ratification of Moore, Horton & Carlson, P.C. as the Company's independent
auditors.  The number of votes cast at the meeting as to each matter to be acted
upon was as follows:


                           Number of Votes   Number of Votes
Election of Directors            FOR            WITHHELD
------------------------   ---------------   ---------------
Robert M. Dearing.......       331,900            800
L. Edward Schaeffer.....       332,075            625

  The Directors whose terms continued and the years their terms expire are as
follows: Glenn J. Maddox (2002), Albert E. Davis (2002), James D. Lovegreen
(2003), Eldon R. Mette (2003) and Donald L. Slavin (2003).  Immediately after
the annual meeting of stockholders, Mr. Slavin retired from the Board of
Directors of the Company and the Board of Directors appointed Mark K. Bross as a
Director to serve a term expiring at the 2002 annual meeting of stockholders.


                                       Number of       Number of       Number of
                                         Votes           Votes           Votes
                                          FOR           AGAINST         ABSTAIN
                                       ---------       ---------       ---------
2. Ratification of Moore, Horton &
   Carlson, P.C. as the Company's
   Independent Auditors.............    325,450           7,000           225

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 * *

                                     -11-
<PAGE>

      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.

                                     -12-
<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:  May 14, 2001   By:/s/ Eldon R. Mette
                                  ---------------------------------------------
                                      Eldon R. Mette
                                      President and Chief Executive Officer



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

                                     -13-