<PAGE>

                                                                    Exhibit 10.5

                        INCENTIVE STOCK OPTION AGREEMENT
                                    UNDER THE
                                 PSB GROUP, INC.
                          2004 STOCK COMPENSATION PLAN

     THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made as of this
_______________ day of ___________________, _____, between PSB Group, Inc., a
Michigan corporation (the "Company"), ______ and (the "Optionee").

     WHEREAS, the Company wishes to further align the interests of the Optionee
with those of shareholders;

     WHEREAS, on ____________ (the "Grant Date"), the Committee for the) PSB
Group, Inc. Stock Compensation Plan (the "Committee") granted incentive stock
options to certain employees of the Company, including the Optionee; and

     WHEREAS, the parties desire to document the terms of stock option grants;

     NOW THEREFORE, the parties agree as follows:

     1. GRANT OF OPTIONS. The Company has granted Incentive Stock Options to
purchase 5,000 shares of Stock, which are intended to satisfy the requirements
of Section 422 of the Internal Revenue Code, to the Optionee (the "Options").
Once vested, each Option is exercisable at a price of $____ per share of the
Company's Stock (the "Option Price").

     2. VESTING OF OPTIONS. Options are not exercisable until they vest. Except
as otherwise provided herein, Options to purchase ________ shares of Stock shall
be exercisable as of [1st Anniversary of Grant Date], Options to purchase
________ shares of Stock shall be exercisable as of [2nd Anniversary of Grant
Date] and Options to purchase ________ shares of Stock shall be exercisable as
of [3rd Anniversary of Grant Date]. All Options which have not previously vested
shall immediately vest and become fully exercisable upon the Disability or death
of the Optionee. Upon the effective date of a Change in Control of the Company,
all Options shall become fully and immediately exercisable.

     3. EXPIRATION OF OPTIONS. Unless otherwise determined by the Committee, to
the extent not previously exercised, the Options will expire on the earliest of,
(a) the tenth anniversary of the Grant Date; (b) ninety days after the date that
the Optionee ceases to be an Eligible Participant for any reason other than
Cause, death, Disability or Retirement; (c) immediately upon the Optionee's
termination of employment for Cause; (d) one year after the date that the
Optionee ceases to be an Eligible Participant by reason of such person's
Retirement, death or Disability; provided, however, that the ISO will convert to
an NSO if exercised more than twelve months after Disability or more than three
months after Retirement.

<PAGE>

     4. OPTIONEE RIGHTS. No rights or privileges of a shareholder of the Company
are conferred by reason of the granting of the Options. The Optionee will not
become a shareholder of the Company with respect to the Option Stock unless and
until the Options have been properly exercised and the Option Price fully paid
for the number of the Options exercised.

     5. TRANSFERABILITY. The Options are not transferable, except by the laws of
descent and distribution, however, the Committee has the discretion to allow for
other Transfers of Options, but only to the extent provided in the Plan and only
when such Transfer would be considered a completed gift for tax purposes. If an
Option is transferred, it will continue to be subject to the terms and
conditions of this Agreement, together with the Plan, and may not be transferred
again. If the Options are transferable during the Optionee's lifetime, the
Optionee will remain responsible for all applicable withholding taxes upon the
exercise of any transferred Options and will, prior to transferring any Options,
notify the Company of the anticipated Transfer. The Company shall not be
required to provide to the transferee any notice of termination of any of the
Options. If the Optionee transfers an Option and dies before a transferred
Option has been exercised, the Option will automatically terminate upon the
earlier of one year from the date of the Optionee's death or the expiration of
the Option pursuant to this Agreement.

     6. COMPANY'S REPURCHASE OPTION AND OPTIONEE'S PUT OPTION.

     (a) The Company's Repurchase Option. In the event that Optionee acquires
Option Stock pursuant to a valid exercise pursuant to this Agreement, then the
Company shall have the right to repurchase such Option Stock upon the Optionee
ceasing to be an Eligible Participant for any reason, provided that the Company
determines that the Option Stock is not then readily tradable, as such term is
used for purposes of the Peoples State Bank 401(k), Profit Sharing Plan and
Employee Stock Ownership Plan (the "ESOP") and as determined pursuant to Code
Section 401(a)(28)(C) ("Readily Tradable"). The repurchase price per share shall
be the appraised value per share of the Company's common stock held by the
Peoples State Bank 401(k), Profit Sharing Plan and ESOP as of the appraisal date
that most recently precedes the date of the Company's election to repurchase.
The Company may exercise its repurchase option at any time prior to the later of
(i) 6 months following the Optionee's exercise of Options pursuant to this
Agreement; or (ii) 6 months following the date on which the Optionee ceases to
be an Eligible Person. Within 30 days following the date the Company exercises
its repurchase option, the Optionee shall deliver any certificates issued to
Optionee for such Option Stock and the Company shall pay Optionee the purchase
price determined under this Section 6 within 7 days following the date on which
the Company receives such certificates. The Optionee acknowledges that the
failure to comply with Optionee's obligations under this Section 6(a) shall
cause the Company irreparable harm and agrees that the Company shall be entitled
to specific performance and injunctive relief in addition to any other relief to
which the Company may be entitled.

     (b) The Optionee's Put Option. In the event that Optionee acquires Option
Stock pursuant to a valid exercise pursuant to this Agreement and the Optionee
ceases to be an Eligible Participant, then the Participant, or the Participant's
beneficiary shall have the right to require the


                                       2

<PAGE>

Company to repurchase such Option Stock (the "Put Option"), provided that the
Company determines that the Option Stock is not then Readily Tradable. The
repurchase price shall be the appraised value of the Company's common stock held
by ESOP as of the appraisal date that most recently precedes the date of the
Optionee's election to repurchase. The Optionee may exercise Optionee's Put
Option at any time prior to the later of (i) 6 months following the Optionee's
exercise of Options pursuant to this Agreement; or (ii) 6 months following the
date on which the Optionee ceases to be an Eligible Participant. In order for
the exercise of a Put Option to be valid, the Optionee, concurrent with the
exercise of the Put Option, must deliver any certificates issued to Optionee for
such Option Stock. The Company shall pay Optionee the purchase price determined
under this Section 6 within 7 days following the date on which the Company
receives such certificates.

     7. TERMS OF OPTIONS. This Agreement, and the Options issued to the
Optionee, are subject to all of the terms and conditions set forth herein and in
the Plan, as may be amended from time to time, a copy of which has been provided
to Optionee. To the extent that any conflict may exist between any term or
provision of this Agreement and any term or provision of the Plan, the Plan
shall govern. Capitalized terms referenced, but not defined herein, will have
the meaning attributed to them by the Plan. THE OPTIONEE ACKNOWLEDGES THAT HE OR
SHE HAS READ THE PLAN AND AGREES TO BE BOUND BY ITS TERMS. Pursuant to the Plan,
the Committee has authorized the Option Price and any applicable tax withholding
liability associated with exercise of the Options to be payable in cash, or by
netting or withholding Option Stock granted pursuant to the Options being
exercised, subject to the Optionee's attestation that the Optionee has, for at
least 6 months, owned Stock with a Fair Market Value equal to the amount of the
exercise price due to the Company.

     8. MISCELLANEOUS. This Agreement, together with the Plan, sets forth the
complete agreement of the parties concerning the subject matter hereof,
superseding all prior agreements, negotiations and understandings. Nothing
contained in this Agreement will confer upon the Optionee any right with respect
to the continuation of his or her status as an Employee or an Eligible
Participant. This Agreement shall be binding upon, and shall inure to the
benefit of, the Company and the Optionee, and their respective heirs, personal
legal representatives and successors. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto; provided, however, that the Optionee hereby covenants and agrees to
execute any amendment to this Agreement which shall be required or desirable (in
the opinion of the Company or its counsel) in order to comply with the laws
governing this Agreement. This Agreement will be governed by the substantive law
of the State of Michigan and may be executed in counterparts.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set


                                       3

<PAGE>

forth above.

ATTEST:                                 PSB GROUP, INC.


                                        By:
                                            ------------------------------------


                                        Optionee:
                                                  ------------------------------


                                       4

<PAGE>

                       NONQUALIFIED STOCK OPTION AGREEMENT
                                    UNDER THE
                     PSB GROUP, INC. STOCK COMPENSATION PLAN
                              (DIRECTOR AGREEMENT)

     THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made as of
this _______________ day of ___________________, _____, between PSB Group, Inc.,
a Michgan corporation (the "Company"), ______ and (the "Optionee").

     WHEREAS, the Company wishes to further align the interests of the Optionee
with those of shareholders;

     WHEREAS, on _____________ (the "Grant Date"), the Committee for the PSB
Group, Inc. Stock compensation plan (the "Committee") granted nonqualified stock
options to certain directors of the Company, including the Optionee; and

     WHEREAS, the parties desire to document the terms of stock option grants;

     NOW THEREFORE, the parties agree as follows:

     1. GRANT OF OPTIONS. The Company has granted nonqualified stock options to
purchase _____ shares of Stock to the Optionee (the "Options"). Once vested,
each Option is exercisable at a price of $______ per share of the Company's
Stock (the "Option Price").

     2. VESTING OF OPTIONS. Except as otherwise provided herein, Options to
purchase ______ shares of Stock shall be exercisable as of [1st Anniversary of
Grant Date], Options to purchase ______ shares of Stock shall be exercisable as
of [2nd Anniversary of Grant Date] and Options to purchase ______ shares of
Stock shall be exercisable as of [3rd Anniversary of Grant Date]. All Options
which have not previously vested shall immediately vest and become fully
exercisable upon the Disability or death of the Optionee. Upon the effective
date of a Change in Control of the Company, all Options shall become fully and
immediately exercisable.

     3. EXPIRATION OF OPTIONS. Unless otherwise determined by the Committee, to
the extent not previously exercised, the Options will expire on the earliest of,
(a) the tenth anniversary of the Grant Date; (b) ninety days after the date that
the Optionee ceases to be an Eligible Participant for any reason other than
Cause, death, Disability or Retirement; (c) immediately upon the Optionee's
termination of service as a director for Cause; (d) one year after the date that
the Optionee ceases to be an Eligible Participant by reason of such person's
Retirement, death or Disability.

     4. OPTIONEE RIGHTS. No rights or privileges of a shareholder of the Company
are conferred by reason of the granting of the Options. The Optionee will not
become a shareholder of the Company with respect to the Option Stock unless and
until the Options have been properly exercised and the Option Price fully paid
for the number of the Options exercised.

     5. TRANSFERABILITY. The Options are not transferable, except by the laws of
descent and

<PAGE>

distribution, however, the Committee has the discretion to allow for other
Transfers of Options, but only to the extent provided in the Plan and only when
such Transfer would be considered a completed gift for tax purposes. If an
Option is transferred, it will continue to be subject to the terms and
conditions of this Agreement, together with the Plan, and may not be transferred
again. If the Options are transferable during the Optionee's lifetime, the
Optionee will remain responsible for all applicable withholding taxes upon the
exercise of any transferred Options and will, prior to transferring any Options,
notify the Company of the anticipated Transfer. The Company shall not be
required to provide to the transferee any notice of termination of any of the
Options. If the Optionee transfers an Option and dies before a transferred
Option has been exercised, the Option will automatically terminate upon the
earlier of one year from the date of the Optionee's death or the expiration of
the Option pursuant to this Agreement.

     6. COMPANY'S REPURCHASE OPTION AND OPTIONEE'S PUT OPTION.

     (a) The Company's Repurchase Option. In the event that Optionee acquires
Option Stock pursuant to a valid exercise pursuant to this Agreement, then the
Company shall have the right to repurchase such Option Stock upon the Optionee
ceasing to be an Eligible Participant for any reason, provided that the Company
determines that the Option Stock is not then readily tradable, as such term is
used for purposes of the Peoples State Bank 401(k), Profit Sharing Plan and
Employee Stock Ownership Plan (the "ESOP") and as determined pursuant to Code
Section 401(a)(28)(C) ("Readily Tradable"). The repurchase price per share shall
be the appraised value per share of the Company's common stock held by the
Peoples State Bank 401(k), Profit Sharing Plan and ESOP as of the appraisal date
that most recently precedes the date of the Company's election to repurchase.
The Company may exercise its repurchase option at any time prior to the later of
(i) 6 months following the Optionee's exercise of Options pursuant to this
Agreement; or (ii) 6 months following the date on which the Optionee ceases to
be an Eligible Person. Within 30 days following the date the Company exercises
its repurchase option, the Optionee shall deliver any certificates issued to
Optionee for such Option Stock and the Company shall pay Optionee the purchase
price determined under this Section 6 within 7 days following the date on which
the Company receives such certificates. The Optionee acknowledges that the
failure to comply with Optionee's obligations under this Section 6(a) shall
cause the Company irreparable harm and agrees that the Company shall be entitled
to specific performance and injunctive relief in addition to any other relief to
which the Company may be entitled.

     (b) The Optionee's Put Option. In the event that Optionee acquires Option
Stock pursuant to a valid exercise pursuant to this Agreement and the Optionee
ceases to be an Eligible Participant, then the Participant, or the Participant's
beneficiary shall have the right to require the Company to repurchase such
Option Stock (the "Put Option"), provided that the Company determines that the
Option Stock is not then Readily Tradable. The repurchase price shall be the
appraised value of the Company's common stock held by ESOP as of the appraisal
date that most recently precedes the date of the Optionee's election to
repurchase. The Optionee may exercise Optionee's Put Option at any time prior to
the later of (i) 6 months following the Optionee's exercise of Options pursuant
to this Agreement; or (ii) 6 months following the date on which the Optionee


                                       2

<PAGE>

ceases to be an Eligible Participant. In order for the exercise of a Put Option
to be valid, the Optionee, concurrent with the exercise of the Put Option, must
deliver any certificates issued to Optionee for such Option Stock. The Company
shall pay Optionee the purchase price determined under this Section 6 within 7
days following the date on which the Company receives such certificates.

     7. TERMS OF OPTIONS. This Agreement, and the Options issued to the
Optionee, are subject to all of the terms and conditions set forth herein and in
the Plan, as may be amended from time to time, a copy of which has been provided
to Optionee. To the extent that any conflict may exist between any term or
provision of this Agreement and any term or provision of the Plan, the Plan
shall govern. Capitalized terms referenced, but not defined herein, will have
the meaning attributed to them by the Plan. THE OPTIONEE ACKNOWLEDGES THAT HE OR
SHE HAS READ THE PLAN AND AGREES TO BE BOUND BY ITS TERMS. Pursuant to the Plan,
the Committee has authorized the Option Price and any applicable tax withholding
liability associated with exercise of the Options to be payable in cash, or by
netting or withholding Option Stock granted pursuant to the Options being
exercised, subject to the Optionee's attestation that the Optionee has, for at
least 6 months, owned Stock with a Fair Market Value equal to the amount of the
exercise price due to the Company.

     8. MISCELLANEOUS. This Agreement, together with the Plan, sets forth the
complete agreement of the parties concerning the subject matter hereof,
superseding all prior agreements, negotiations and understandings. Nothing
contained in this Agreement will confer upon the Optionee any right with respect
to the continuation of his or her status as a Director or an Eligible
Participant. This Agreement shall be binding upon, and shall inure to the
benefit of, the Company and the Optionee, and their respective heirs, personal
legal representatives and successors. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto; provided, however, that the Optionee hereby covenants and agrees to
execute any amendment to this Agreement which shall be required or desirable (in
the opinion of the Company or its counsel) in order to comply with the laws
governing this Agreement. This Agreement will be governed by the substantive law
of the State of Michigan and may be executed in counterparts.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

                                        PSB GROUP, INC.


                                        By:
                                            ------------------------------------


                                        Optionee:
                                                  ------------------------------


                                       3

<PAGE>

                       NONQUALIFIED STOCK OPTION AGREEMENT
                                    UNDER THE
                     PSB GROUP, INC. STOCK COMPENSATION PLAN
                              (EXECUTIVE AGREEMENT)

     THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made as of
this _______________ day of ___________________, _____, between PSB Group, Inc.,
a Michgan corporation (the "Company"), ______ and (the "Optionee").

     WHEREAS, the Company wishes to further align the interests of the Optionee
with those of shareholders;

     WHEREAS, on _____________ (the "Grant Date"), the Committee for the PSB
Group, Inc. Stock compensation plan (the "Committee") granted nonqualified stock
options to certain employees of the Company, including the Optionee; and

     WHEREAS, the parties desire to document the terms of stock option grants;

     NOW THEREFORE, the parties agree as follows:

     1. GRANT OF OPTIONS. The Company has granted nonqualified stock options to
purchase _____ shares of Stock to the Optionee (the "Options"). Once vested,
each Option is exercisable at a price of $______ per share of the Company's
Stock (the "Option Price").

     2. VESTING OF OPTIONS. Except as otherwise provided herein, Options to
purchase ______ shares of Stock shall be exercisable as of [1st Anniversary of
Grant Date], Options to purchase ______ shares of Stock shall be exercisable as
of [2nd Anniversary of Grant Date] and Options to purchase ______ shares of
Stock shall be exercisable as of [3rd Anniversary of Grant Date]. All Options
which have not previously vested shall immediately vest and become fully
exercisable upon the Disability or death of the Optionee. Upon the effective
date of a Change in Control of the Company, all Options shall become fully and
immediately exercisable.

     3. EXPIRATION OF OPTIONS. Unless otherwise determined by the Committee, to
the extent not previously exercised, the Options will expire on the earliest of,
(a) the tenth anniversary of the Grant Date; (b) ninety days after the date that
the Optionee ceases to be an Eligible Participant for any reason other than
Cause, death, Disability or Retirement; (c) immediately upon the Optionee's
termination of service as an employee for Cause; (d) one year after the date
that the Optionee ceases to be an Eligible Participant by reason of such
person's Retirement, death or Disability.

     4. OPTIONEE RIGHTS. No rights or privileges of a shareholder of the Company
are conferred by reason of the granting of the Options. The Optionee will not
become a shareholder of the Company with respect to the Option Stock unless and
until the Options have been properly exercised and the Option Price fully paid
for the number of the Options exercised.

<PAGE>

     5. TRANSFERABILITY. The Options are not transferable, except by the laws of
descent and distribution, however, the Committee has the discretion to allow for
other Transfers of Options, but only to the extent provided in the Plan and only
when such Transfer would be considered a completed gift for tax purposes. If an
Option is transferred, it will continue to be subject to the terms and
conditions of this Agreement, together with the Plan, and may not be transferred
again. If the Options are transferable during the Optionee's lifetime, the
Optionee will remain responsible for all applicable withholding taxes upon the
exercise of any transferred Options and will, prior to transferring any Options,
notify the Company of the anticipated Transfer. The Company shall not be
required to provide to the transferee any notice of termination of any of the
Options. If the Optionee transfers an Option and dies before a transferred
Option has been exercised, the Option will automatically terminate upon the
earlier of one year from the date of the Optionee's death or the expiration of
the Option pursuant to this Agreement.

     6. COMPANY'S REPURCHASE OPTION AND OPTIONEE'S PUT OPTION.

     (a) The Company's Repurchase Option. In the event that Optionee acquires
Option Stock pursuant to a valid exercise pursuant to this Agreement, then the
Company shall have the right to repurchase such Option Stock upon the Optionee
ceasing to be an Eligible Participant for any reason, provided that the Company
determines that the Option Stock is not then readily tradable, as such term is
used for purposes of the Peoples State Bank 401(k), Profit Sharing Plan and
Employee Stock Ownership Plan (the "ESOP") and as determined pursuant to Code
Section 401(a)(28)(C) ("Readily Tradable"). The repurchase price per share shall
be the appraised value per share of the Company's common stock held by the
Peoples State Bank 401(k), Profit Sharing Plan and ESOP as of the appraisal date
that most recently precedes the date of the Company's election to repurchase.
The Company may exercise its repurchase option at any time prior to the later of
(i) 6 months following the Optionee's exercise of Options pursuant to this
Agreement; or (ii) 6 months following the date on which the Optionee ceases to
be an Eligible Person. Within 30 days following the date the Company exercises
its repurchase option, the Optionee shall deliver any certificates issued to
Optionee for such Option Stock and the Company shall pay Optionee the purchase
price determined under this Section 6 within 7 days following the date on which
the Company receives such certificates. The Optionee acknowledges that the
failure to comply with Optionee's obligations under this Section 6(a) shall
cause the Company irreparable harm and agrees that the Company shall be entitled
to specific performance and injunctive relief in addition to any other relief to
which the Company may be entitled.

     (b) The Optionee's Put Option. In the event that Optionee acquires Option
Stock pursuant to a valid exercise pursuant to this Agreement and the Optionee
ceases to be an Eligible Participant, then the Participant, or the Participant's
beneficiary shall have the right to require the Company to repurchase such
Option Stock (the "Put Option"), provided that the Company determines that the
Option Stock is not then Readily Tradable. The repurchase price shall be the
appraised value of the Company's common stock held by ESOP as of the appraisal
date that most recently precedes the date of the Optionee's election to
repurchase. The Optionee may exercise Optionee's Put Option at any time prior to
the later of (i) 6 months following the Optionee's exercise


                                       2

<PAGE>

of Options pursuant to this Agreement; or (ii) 6 months following the date on
which the Optionee ceases to be an Eligible Participant. In order for the
exercise of a Put Option to be valid, the Optionee, concurrent with the exercise
of the Put Option, must deliver any certificates issued to Optionee for such
Option Stock. The Company shall pay Optionee the purchase price determined under
this Section 6 within 7 days following the date on which the Company receives
such certificates.

     7. TERMS OF OPTIONS. This Agreement, and the Options issued to the
Optionee, are subject to all of the terms and conditions set forth herein and in
the Plan, as may be amended from time to time, a copy of which has been provided
to Optionee. To the extent that any conflict may exist between any term or
provision of this Agreement and any term or provision of the Plan, the Plan
shall govern. Capitalized terms referenced, but not defined herein, will have
the meaning attributed to them by the Plan. THE OPTIONEE ACKNOWLEDGES THAT HE OR
SHE HAS READ THE PLAN AND AGREES TO BE BOUND BY ITS TERMS. Pursuant to the Plan,
the Committee has authorized the Option Price and any applicable tax withholding
liability associated with exercise of the Options to be payable in cash, or by
netting or withholding Option Stock granted pursuant to the Options being
exercised, subject to the Optionee's attestation that the Optionee has, for at
least 6 months, owned Stock with a Fair Market Value equal to the amount of the
exercise price due to the Company.

     8. MISCELLANEOUS. This Agreement, together with the Plan, sets forth the
complete agreement of the parties concerning the subject matter hereof,
superseding all prior agreements, negotiations and understandings. Nothing
contained in this Agreement will confer upon the Optionee any right with respect
to the continuation of his or her status as an employee or an Eligible
Participant. This Agreement shall be binding upon, and shall inure to the
benefit of, the Company and the Optionee, and their respective heirs, personal
legal representatives and successors. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by the parties
hereto; provided, however, that the Optionee hereby covenants and agrees to
execute any amendment to this Agreement which shall be required or desirable (in
the opinion of the Company or its counsel) in order to comply with the laws
governing this Agreement. This Agreement will be governed by the substantive law
of the State of Michigan and may be executed in counterparts.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

ATTEST:                                 PSB GROUP, INC.


                                        By:
                                            ------------------------------------


                                        Optionee:
                                                  ------------------------------


                                       3