U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)

 X       Quarterly report under Section 13 or 15(d)  of the Securities  Exchange
---      Act of 1934

For the quarterly period ended June 30, 2002

___      Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from ____________ to ____________

Commission file number   333-44161
                         ---------

                               PSB BANCGROUP, INC.
                               -------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)


          Florida                                                 59-3454146
--------------------------------                             ------------------
(State or Other Jurisdiction                                  (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)

                             500 South First Street
                            Lake City, Florida 32025
                            ------------------------
                    (Address of Principal Executive Offices)

                                 (386) 754-0002
                                 --------------
                (Issuer's Telephone Number, Including Area Code)


         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section  12, 13 or 15(d) of the  Exchange  Act 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 ___

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date;



Common stock, par value $.01 per share                            521,200 shares
--------------------------------------                            --------------
            (class)                                 Outstanding at July 22, 2002






<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY

                                      INDEX


<TABLE>
<S>                                                                                                          <C>
PART I. FINANCIAL INFORMATION

   Item 1. Financial Statements                                                                              Page
                                                                                                             ----

     Condensed Consolidated Balance Sheets -
       At June 30, 2002 (Unaudited) and At December 31, 2001....................................................2

     Condensed Consolidated Statements of Operations (Unaudited) -
       Three and Six Months ended June 30, 2002 and 2001........................................................3

     Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) -
       Six Months Ended June 30, 2002...........................................................................4

     Condensed Consolidated Statements of Cash Flows (Unaudited) -
       Six Months Ended June 30, 2002 and 2001..................................................................5

     Notes to Condensed Consolidated Financial Statements (Unaudited).........................................6-7

     Review by Independent Certified Public Accountants.........................................................8

     Report on Review by Independent Certified Public Accountants...............................................9

   Item 2.  Management's Discussion and Analysis of Financial Condition
     and Results of Operations..............................................................................10-15

PART II. OTHER INFORMATION

   Item 4.  Submission of Matters to a Vote of Security Holders................................................16

   Item 6.  Exhibits and Reports on Form 8-KSB.................................................................17

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350...............................................................18

SIGNATURES.....................................................................................................18
</TABLE>




                                       1
<PAGE>

                       PSB BANCGROUP, INC. AND SUBSIDIARY

                          PART I. FINANCIAL INFORMATION

                          Item 1. Financial Statements

                      Condensed Consolidated Balance Sheets


<TABLE>
                                                                                                                                 At
                                                                                                                       -------------
                                                                                                  June 30,              December 31,
                                                                                                  ---------------------------------
    Assets                                                                                           2002                      2001
    ------                                                                                           ----                      ----
                                                                                                                         (Unaudited)
<S>                                                                                           <C>                           <C>
Cash and due from banks                                                                       $    980,129                  637,587
Federal funds sold                                                                               2,100,000                  273,000
                                                                                                 ---------                ---------

              Total cash and cash equivalents                                                    3,080,129                  910,587

Securities available for sale                                                                    6,222,468                7,232,327
Loans, net of allowance for loan losses of $312,870
    in 2002 and $230,106 in 2001                                                                23,876,768               18,924,380
Premises and equipment, net                                                                      1,413,600                1,433,273
Foreclosed assets                                                                                    2,500                  231,203
Accrued interest receivable                                                                        197,877                  158,721
Federal Home Loan Bank stock, at cost                                                               60,000                   60,000
Deferred income taxes                                                                              446,177                  488,829
Other assets                                                                                       154,916                   88,817
                                                                                                 ---------                ---------

              Total assets                                                                    $ 35,454,435               29,528,137
                                                                                              ============               ==========

    Liabilities and Stockholders' Equity

Liabilities:
    Noninterest-bearing demand deposits                                                          2,791,597                2,336,826
    Savings, NOW and money-market deposits                                                       5,637,028                4,570,909
    Time deposits                                                                               21,256,571               17,114,024

              Total deposits                                                                    29,685,196               24,021,759

    Advance from Federal Home Loan Bank                                                          1,200,000                1,200,000
    Other liabilities                                                                              640,760                  482,293
                                                                                                 ---------                ---------

              Total liabilities                                                                 31,525,956               25,704,052
                                                                                                 ---------                ---------

Stockholders' equity:
    Preferred stock                                                                                      -                        -
    Common stock                                                                                     5,212                    5,179
    Additional paid-in capital                                                                   4,648,088                4,618,277
    Accumulated deficit                                                                           (791,298)                (839,907)
    Accumulated other comprehensive income                                                          66,477                   40,536
                                                                                                 ---------                ---------

              Total stockholders' equity                                                         3,928,479                3,824,085
                                                                                                 ---------                ---------

              Total liabilities and stockholders' equity                                      $ 35,454,435               29,528,137
                                                                                              ============               ==========
</TABLE>


See Accompanying Notes to Condensed Consolidated Financial Statements.



                                       2
<PAGE>

                       PSB BANCGROUP, INC. AND SUBSIDIARY

           Condensed Consolidated Statements of Operations (Unaudited)


<TABLE>
                                                                                Three Months Ended             Six Months Ended
                                                                                     June 30,                      June 30,
                                                                                -------------------           -------------------
                                                                                2002           2001           2002           2001
                                                                                ----           ----           ----           ----
<S>                                                                         <C>              <C>             <C>            <C>
Interest income:
     Loans                                                                  $ 439,657        295,159         821,779        566,565
     Securities                                                                89,442         70,592         182,688        133,366
     Other interest-earning assets                                              5,326         23,663          10,259         45,731
                                                                              -------        -------         -------        -------

               Total interest income                                          534,425        389,414       1,014,726        745,662
                                                                              -------        -------         -------        -------

Interest expense:
     Deposits                                                                 208,580        229,995         418,565        433,812
     Borrowings                                                                13,009              -          25,789          2,362
                                                                              -------        -------         -------        -------

               Total interest expense                                         221,589        229,995         444,354        436,174
                                                                              -------        -------         -------        -------

Net interest income                                                           312,836        159,419         570,372        309,488

               Provision for loan losses                                       68,341         76,493         101,723        142,040
                                                                               ------         ------         -------        -------

Net interest income after provision for loan losses                           244,495         82,926         468,649        167,448
                                                                              -------         ------         -------        -------

Noninterest income:
     Service charges on deposit accounts                                       34,249         21,284          62,446         34,728
     Other service charges and fees                                            13,609          3,806          24,028          8,928
     Gain on sale of foreclosed assets                                          3,179              -          11,255              -
     Other                                                                     20,755         11,874          33,429         24,276
                                                                               ------         ------          ------         ------

               Total noninterest income                                        71,792         36,964         131,158         67,932
                                                                               ------         ------         -------         ------

Noninterest expenses:
     Salaries and employee benefits                                           124,054        114,781         235,914        229,443
     Occupancy expense                                                         36,419         40,512          71,709         79,241
     Professional fees                                                         18,674         19,273          35,555         35,753
     Data processing                                                           31,183         24,326          63,267         48,117
     Advertising and marketing                                                 16,008          9,416          30,837         21,039
     Other                                                                     43,718         47,270          86,916         78,030
                                                                               ------         ------          ------         ------

               Total noninterest expenses                                     270,056        255,578         524,198        491,623
                                                                              -------        -------         -------        -------

               Earnings (loss) before income tax provision
                  (benefit)                                                    46,231       (135,688)         75,609       (256,243)

Income tax provision (benefit)                                                 16,500        (53,000)         27,000        (99,000)
                                                                               ------        -------          ------        -------

               Net earnings (loss)                                          $  29,731        (82,688)         48,609       (157,243)
                                                                            =========        =======         =======        =======

Earnings (loss) per share, basic and diluted                                $     .06           (.16)            .09           (.30)
                                                                            =========        =======         =======        =======

Weighted-average number of shares
     outstanding, basic and diluted                                           520,828        516,784         519,449        516,355
                                                                            =========        =======         =======        =======

Dividends per share                                                         $       -              -               -              -
                                                                            =========        =======         =======        =======
</TABLE>


See Accompanying Notes to Condensed Consolidated Financial Statements.



                                       3
<PAGE>

                       PSB BANCGROUP, INC. AND SUBSIDIARY

       Condensed Consolidated Statement of Changes in Stockholders' Equity

                     For the Six Months Ended June 30, 2002


<TABLE>
                                                                                                         Accumulated
                                                                                                            Other
                                                                          Additional                       Compre-       Total
                                                    Common Stock           Paid-In       Accumulated       hensive   Stockholders'
                                                 Shares       Amount       Capital         Deficit         Income       Equity
                                                 ------       ------       -------         -------         ------       ------

<S>                                              <C>         <C>           <C>            <C>              <C>        <C>
Balance at December 31, 2001                     517,884     $   5,179     4,618,277      (839,907)        40,536     3,824,085

Comprehensive income:
         Net earnings (unaudited)                      -             -             -        48,609              -        48,609

         Net change in unrealized
             gain on securities
             available for sale,
             net of income tax
             provision of $15,652
             (unaudited)                               -             -             -             -         25,941        25,941

Comprehensive income
         (unaudited)                              74,550

Proceeds from issuance of common
         stock, exercise of warrants
         (unaudited)                               3,316            33        29,811             -              -        29,844
                                                 -------     ---------     ---------       -------         -------    ---------

Balance at June 30, 2002
         (unaudited)                             521,200     $   5,212     4,648,088      (791,298)        66,477     3,928,479
                                                 =======     =========     =========      ========         ======     =========
</TABLE>



See Accompanying Notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY

           Condensed Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
                                                                                                            Six Months Ended
                                                                                                                 June 30,
                                                                                                   ---------------------------------
                                                                                                        2002                  2001
                                                                                                        ----                  ----
<S>                                                                                                <C>                     <C>
Cash flows from operating activities:
     Net earnings (loss)                                                                           $    48,609             (157,243)
     Adjustments to reconcile net earnings (loss) to net cash provided
       by operating activities:
         Depreciation                                                                                   29,477               27,299
         Provision for loan losses                                                                     101,723              142,040
         Deferred income tax provision (benefit)                                                        27,000              (99,000)
         Net amortization of fees, costs, premiums and discounts                                       (32,793)             (11,196)
         Gain on sale of foreclosed assets                                                             (11,255)                   -
         Increase in accrued interest receivable                                                       (39,156)              (5,983)
         Increase in other assets                                                                      (66,099)              (7,489)
         Increase in other liabilities                                                                 158,467              248,147
                                                                                                   -----------            ---------

               Net cash provided by operating activities                                               215,973              136,575
                                                                                                   -----------            ---------

Cash flows used in investing activities:
     Purchase of securities available for sale                                                               -             (999,219)
     Proceeds from principal repayments and maturities of
         securities available for sale                                                               1,081,298                2,637
     Purchase of premises and equipment                                                                 (9,804)             (31,538)
     Net increase in loans                                                                          (4,854,173)          (3,890,647)
     Purchase of Federal Home Loan Bank stock                                                                -              (10,400)
     Proceeds from sales of foreclosed assets                                                           42,967                    -
                                                                                                   -----------            ---------

               Net cash used in investing activities                                                (3,739,712)          (4,929,167)
                                                                                                   -----------            ---------

Cash flows from financing activities:
     Net increase in deposits                                                                        5,663,437            7,332,569
     Net decrease in federal funds purchased                                                                 -             (245,000)
     Net proceeds from issuance of common stock                                                         29,844                9,000
                                                                                                   -----------            ---------

               Net cash provided by financing activities                                             5,693,281            7,096,569
                                                                                                   -----------            ---------

Net increase in cash and cash equivalents                                                            2,169,542            2,303,977

Cash and cash equivalents at beginning of period                                                       910,587              599,621
                                                                                                   -----------            ---------

Cash and cash equivalents at end of period                                                         $ 3,080,129            2,903,598
                                                                                                   ===========            =========

Supplemental disclosure of cash flow information:
     Cash paid during the period for:
         Interest                                                                                  $   497,637              364,931
                                                                                                   ===========            =========

         Income taxes                                                                              $         -                    -
                                                                                                   ===========            =========

     Noncash transactions:
         Accumulated other comprehensive income, change
               in unrealized gain on securities available for sale,
               net of tax                                                                          $    25,941               38,986
                                                                                                   ===========            =========

         Transfer of loans to foreclosed assets                                                    $    10,009                    -
                                                                                                   ===========            =========

         Loans made on sales of foreclosed assets                                                  $   207,000                    -
                                                                                                   ===========            =========
</TABLE>


See Accompanying Notes to Condensed Consolidated Financial Statements.



                                       5
<PAGE>

                       PSB BANCGROUP, INC. AND SUBSIDIARY

        Notes to Condensed Consolidated Financial Statements (unaudited)


(1)  Description of Business and Basis of Presentation
     General.  In  the  opinion  of  management,   the  accompanying   condensed
         consolidated  financial statements contain all adjustments  (consisting
         principally of normal recurring  accruals)  necessary to present fairly
         the financial  position at June 30, 2002, the results of operations for
         the three- and six-month  periods ended June 30, 2002 and 2001 and cash
         flows for the  six-month  periods  ended  June 30,  2002 and 2001.  The
         results of operations  for the three and six months ended June 30, 2002
         are not  necessarily  indicative  of the results to be expected for the
         year ending December 31, 2002.

     PSB BancGroup,  Inc.  ("PSB") was  incorporated  on June 30, 1997. PSB owns
         100% of the outstanding common stock of Peoples State Bank (the "Bank")
         (collectively the "Company"). PSB was organized simultaneously with the
         Bank and its only  business is the ownership and operation of the Bank.
         The Bank is a Florida state-chartered  commercial bank and its deposits
         are  insured by the Federal  Deposit  Insurance  Corporation.  The Bank
         opened  for  business  on April 28,  1999 and  provides  a  variety  of
         community  banking  services to businesses and individuals  through its
         banking office located in Lake City, Florida.

(2)  Loan Impairment and Loan Losses
     No  loans were  identified  as impaired at or during the  six-months  ended
         June 30,  2002.  The average  net  investment  in  collateral-dependent
         impaired loans and interest income  recognized and received on impaired
         loans  during  the three- and  six-months  ended June 30,  2001 were as
         follows:


<TABLE>
                                                                                        Three Months       Six Months
                                                                                           Ended             Ended
                                                                                          June 30,          June 30,
                                                                                          --------          --------
                                                                                            2001              2001
                                                                                            ----              ----

<S>                                                                                       <C>                <C>
               Average investment in impaired loans                                       $ 352,552          176,276
                                                                                          =========          =======

               Interest income recognized on impaired loans                               $   2,403            2,403
                                                                                          =========          =======

               Interest income received on impaired loans                                 $   2,403            2,403
                                                                                          =========          =======
</TABLE>

                                                                     (continued)





                                       6
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY

   Notes to Condensed Consolidated Financial Statements (unaudited), Continued


(2)  Loan Impairment and Loan Losses, Continued
     The activity in the allowance for loan losses is as follows:


<TABLE>
                                                                    Three Months Ended           Six Months Ended
                                                                         June 30,                     June 30,
                                                                -------------------------    ------------------------
                                                                   2002            2001        2002             2001
                                                                   ----            ----        ----             ----

<S>                                                             <C>               <C>         <C>             <C>
                Balance at beginning of period                  $ 258,441         204,771     230,106         139,224
                Provision for loan losses                          68,341          76,493     101,723         142,040
                Net charge-offs                                   (13,912)        (72,642)    (18,959)        (72,642)
                                                                ---------         -------     -------         -------

                Balance at end of period                        $ 312,870         208,622     312,870         208,622
                                                                =========         =======     =======         =======
</TABLE>

(3)  Earnings (Loss) Per Share
     Basic and diluted earnings (loss) per share have been computed on the basis
         of the  weighted-average  number of shares of common stock  outstanding
         during  the  periods.   The   Company's   outstanding   stock   options
         (aggregating 10,000) are not dilutive.

(4) Regulatory Matters
     The Bank  is  required  to  maintain  certain  minimum  regulatory  capital
         requirements.  The  following  is a  summary  at June  30,  2002 of the
         regulatory  capital  requirements  and the Bank's  actual  capital on a
         percentage basis:

<TABLE>
                                                                                                            Regulatory
                                                                                              Actual        Requirement
                                                                                              ------        -----------

<S>                                                                                           <C>              <C>
                Total capital to risk-weighted assets                                         13.45%           8.00%
                Tier I capital to risk-weighted assets                                        12.26%           4.00%
                Tier I capital to average total assets - leverage ratio                        9.59%           4.00%
</TABLE>






                                       7
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY

               Review by Independent Certified Public Accountants


Hacker,   Johnson  &  Smith  PA,  the  Company's  independent  certified  public
accountants,  have made a limited  review of the  financial  data as of June 30,
2002,  and for the three- and  six-month  periods  ended June 30,  2002 and 2001
presented in this  document,  in accordance  with  standards  established by the
American Institute of Certified Public Accountants.

Their  report  furnished  pursuant to Article 10 of  Regulation  S-X is included
herein.























                                       8
<PAGE>


          Report on Review by Independent Certified Public Accountants



The Board of Directors
PSB BancGroup, Inc.
Lake City, Florida:


     We have reviewed the accompanying  condensed  consolidated balance sheet of
PSB  BancGroup,  Inc. and  Subsidiary  (the  "Company") as of June 30, 2002, the
related  condensed  consolidated  statements  of  operations  for the three- and
six-month   periods  ended  June  30,  2002  and  2001,  the  related  condensed
consolidated  statement  of changes in  stockholders'  equity for the  six-month
period ended June 30, 2002 and the related condensed consolidated  statements of
cash  flows for the  six-month  periods  ended  June 30,  2002 and  2001.  These
financial statements are the responsibility of the Company's management.

     We conducted our reviews in accordance  with  standards  established by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing  standards  generally  accepted in the United States of
America,  the objective of which is the  expression of an opinion  regarding the
financial  statements taken as a whole.  Accordingly,  we do not express such an
opinion.

     Based on our reviews,  we are not aware of any material  modifications that
should be made to the condensed  consolidated  financial  statements referred to
above for them to be in conformity with accounting principles generally accepted
in the United States of America.

     We have previously audited, in accordance with auditing standards generally
accepted in the United States of America,  the consolidated  balance sheet as of
December  31,  2001,  and the related  consolidated  statements  of  operations,
changes  in  stockholders'  equity  and cash  flows for the year then ended (not
presented  herein);  and in our report  dated  January 28, 2002 we  expressed an
unqualified opinion on those consolidated financial statements.  In our opinion,
the information set forth in the  accompanying  condensed  consolidated  balance
sheet as of December 31, 2001, is fairly stated,  in all material  respects,  in
relation to the consolidated balance sheet from which it has been derived.




HACKER, JOHNSON & SMITH PA
Orlando, Florida
July 23, 2002



                                       9
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

                Comparison of June 30, 2002 and December 31, 2001


General

PSB BancGroup,  Inc. ("PSB") was incorporated on June 30, 1997. PSB owns 100% of
the  outstanding  common stock of Peoples State Bank (the "Bank")  (collectively
the  "Company").  PSB was  organized  simultaneously  with the Bank and its only
business is the  ownership  and  operation of the Bank.  The Bank is a (Florida)
state-chartered  commercial  bank and its  deposits  are  insured by the Federal
Deposit  Insurance  Corporation.  The Bank opened for business on April 28, 1999
and  provides  a  variety  of  community  banking  services  to  businesses  and
individuals through its banking office located in Lake City, Florida.

Liquidity and Capital Resources

During the six months ended June 30, 2002, the Company's primary source of funds
consisted  of a net  increase  in deposits of $5.7  million  and  proceeds  from
principal  repayments  and  maturities of securities  available for sale of $1.1
million. The Company used its capital resources principally to fund existing and
continuing  loan  commitments.  At June 30, 2002, the Company had commitments to
originate  loans,  including  unfunded  lines of credit and  standby  letters of
credit,  totaling  $3.4  million.  Management  believes the Company has adequate
resources to fund all its commitments and that substantially all of its existing
commitments  will be  funded  in  2002.  At  June  30,  2002,  the  Company  had
approximately  $17.5  million  in time  deposits  maturing  in one year or less.
Management  also believes  that, if so desired,  it can adjust the rates on time
deposits to retain deposits in a changing interest rate environment.

As a  Florida-chartered  commercial  bank,  the Bank is  required  to maintain a
liquidity  reserve of at least 15% of its total  transaction  accounts and 8% of
its total  nontransaction  accounts less those deposits of certain public funds.
The  liquidity  reserve may  consist of cash on hand,  cash on demand with other
correspondent banks and other investments and short-term  marketable  securities
as  defined,  such as  federal  funds  sold  and  United  States  securities  or
securities  guaranteed  by the  United  States.  As of June 30,  2002,  the Bank
exceeded all liquidity requirements to which it was subject.











                                       10
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY



The  following  ratios  and  rates  are  presented  for the  dates  and  periods
indicated:

<TABLE>
                                                                    Six Months                          Six Months
                                                                         Ended         Year Ended            Ended
                                                                       June 30,       December 31,         June 30,
                                                                         2002             2001                2001
                                                                    ----------        -----------       ----------
<S>                                                                     <C>               <C>                <C>
Average equity as a percentage
   of average assets                                                    11.85%            15.78%             17.98%

Equity to total assets at end of period                                 11.08%            12.95%             15.46%

Return on average assets (1)                                              .30%             (.66%)            (1.44%)

Return on average equity (1)                                             2.51%            (4.18%)            (8.01%)

Noninterest expenses to average assets (1)                               3.20%             3.99%              4.50%

Nonperforming loans and foreclosed assets as
   a percentage of total assets at end of period                          .16%              .85%              1.26%


----------
<FN>
(1)      Annualized for the six months ended June 30.
</FN>
</TABLE>










                                       11
<PAGE>




                       PSB BANCGROUP, INC. AND SUBSIDIARY

Results of Operations

The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend  income of the Company from
interest-earning  assets and the resultant average yields; (ii) the total dollar
amount of interest  expense on  interest-bearing  liabilities  and the resultant
average costs; (iii) net  interest/dividend  income; (iv) interest-rate  spread;
and (v) net interest margin.

<TABLE>
                                                                      Three Months Ended June 30,
                                               --------------------------------------------------------------------
                                                             2002                               2001
                                               ---------------------------------    -------------------------------
                                                            Interest   Average                 Interest   Average
                                                Average       and        Yield/     Average      and        Yield/
                                                Balance    Dividends      Rate      Balance   Dividends      Rate
                                                -------    ---------      ----      -------   ---------      ----
                                                                      (Dollars in thousands)
<S>                                            <C>               <C>      <C>     <C>               <C>      <C>
Interest-earning assets:
   Loans                                       $ 23,667          440      7.44%   $  13,377         295      8.82%
   Securities                                     6,153           90      5.85        4,449          70      6.29
   Other interest-earning assets (1)                996            5      2.01        2,091          24      4.59
                                               --------        -----              ---------         ---

       Total interest-earning assets             30,816          535      6.94       19,917         389      7.81
                                                               -----                                ---

Noninterest-earning assets (2)                    3,078                               3,278
                                               --------                            --------

       Total assets                            $ 33,894                            $ 23,195
                                               ========                            ========

Interest-bearing liabilities:
   Savings, NOW, money-market
       deposit accounts                           5,761           20      1.39        3,796          24      2.53
   Time deposits                                 19,737          189      3.83       13,567         206      6.07
   Other borrowings (3)                           1,215           13      4.28            -           -         -
                                               --------        -----              ---------         ---

       Total interest-bearing liabilities        26,713          222      3.32       17,363         230      5.30
                                                               -----                                ---

Noninterest-bearing demand deposits               2,792                               1,467
Noninterest-bearing liabilities                     529                                 467
Stockholders' equity                              3,860                               3,898
                                               --------                            --------

       Total liabilities and
           stockholders' equity                $ 33,894                            $ 23,195
                                               ========                            ========

Net interest income                                            $ 313                              $ 159
                                                               =====                              =====

Interest-rate spread (4)                                                  3.62%                              2.51%
                                                                          ====                               ====

Net interest margin (5)                                                   4.06%                              3.19%
                                                                          ====                               ====

Ratio of average interest-earning assets to
   average interest-bearing liabilities            1.15                               1.15
                                                   ====                               ====


----------
<FN>
(1)      Includes Federal Home Loan Bank stock and federal funds sold.
(2)      Includes nonaccrual loans.
(3)      Includes  advance  from  Federal  Home  Loan  Bank  and  federal  funds
         purchased.
(4)      Interest-rate  spread  represents  the  difference  between the average
         yield   on   interest-earning   assets   and   the   average   rate  of
         interest-bearing liabilities.
(5)      Net  interest  margin is  annualized  net  interest  income  divided by
         average interest-earning assets.
</FN>
</TABLE>



                                       12
<PAGE>

                       PSB BANCGROUP, INC. AND SUBSIDIARY


The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest and dividend  income of the Company from
interest-earning  assets and the resultant average yields; (ii) the total dollar
amount of interest  expense on  interest-bearing  liabilities  and the resultant
average cost; (iii) net interest income; (iv) interest-rate  spread; and (v) net
interest margin.

<TABLE>
                                                                      Six Months Ended June 30,
                                               --------------------------------------------------------------------
                                                              2002                               2001
                                               ---------------------------------     ------------------------------
                                                            Interest   Average                 Interest   Average
                                                Average       and        Yield/     Average      and        Yield/
                                                Balance    Dividends      Rate      Balance   Dividends      Rate
                                                -------    ---------      ----      -------   ---------      ----
                                                               (Dollars in thousands)
<S>                                            <C>               <C>      <C>      <C>              <C>      <C>
Interest-earning assets:
   Loans                                       $ 21,926          822      7.50%    $ 12,629         567      8.98%
   Securities                                     6,632          183      5.52        4,142         133      6.42
   Other interest-earning assets (1)              1,035           10      1.93        1,826          46      5.04
                                               --------        -----               --------         ---

       Total interest-earning assets             29,593        1,015      6.86       18,597         746      8.02
                                                               -----                                ---

Noninterest-earning assets (2)                    3,123                               3,235
                                               --------                            --------

       Total assets                            $ 32,716                            $ 21,832
                                               ========                            ========

Interest-bearing liabilities:
   Savings, NOW, money-market
       deposit accounts                           5,471           41      1.50        3,563          47      2.64
   Time deposits                                 18,888          378      4.00       12,401         387      6.24
   Other borrowings (3)                           1,208           26      4.30           63           2      6.35
                                               --------        -----               --------        ----

       Total interest-bearing liabilities        25,567          445      3.48       16,027         436      5.44
                                                               -----                               ----

Noninterest-bearing demand deposits               2,716                               1,407
Noninterest-bearing liabilities                     557                                 473
Stockholders' equity                              3,876                               3,925
                                               --------                            --------

       Total liabilities and
           stockholders' equity                $ 32,716                            $ 21,832
                                               ========                            ========

Net interest income                                            $ 570                              $ 310
                                                               =====                              =====

Interest-rate spread (4)                                                  3.38%                              2.58%
                                                                          ====                               ====

Net interest margin (5)                                                   3.85%                              3.33%
                                                                          ====                               ====

Ratio of average interest-earning assets to
   average interest-bearing liabilities            1.15                               1.16
                                                   ====                               ====

----------
<FN>
(1)      Includes Federal Home Loan Bank stock and federal funds sold.
(2)      Includes nonaccrual loans.
(3)      Includes  advance  from  Federal  Home  Loan  Bank  and  federal  funds
         purchased.
(4)      Interest-rate  spread  represents  the  difference  between the average
         yield   on   interest-earning   assets   and   the   average   rate  of
         interest-bearing liabilities.
(5)      Net  interest  margin is  annualized  net  interest  income  divided by
         average interest-earning assets.
</FN>
</TABLE>




                                       13
<PAGE>

                       PSB BANCGROUP, INC. AND SUBSIDIARY


Comparison of the Three-Month Periods Ended June 30, 2002 and 2001


   General. Net earnings for the three months ended June 30, 2002 was $29,731 or
         $.06 per basic and diluted  share  compared to a net loss of $82,688 or
         $.16 per basic and diluted share for the comparable period in 2001. The
         increase in net earnings was primarily due to increases in net interest
         income and  noninterest  income,  partially  offset by an  increase  in
         noninterest expenses.

   Interest Income. Interest income for the three months ended June 30, 2002 was
         $534,425 compared to $389,414 for the three months ended June 30, 2001.
         Interest income earned on loans was $439,657 for the three months ended
         June 30, 2002  compared to $295,159  for the  three-month  period ended
         June 30, 2001.  The increase was due to an increase in the average loan
         portfolio  balance to $23.7 million for the three months ended June 30,
         2002 from $13.4 million for the  comparable  period in 2001,  partially
         offset by a decrease in the average yield earned from 8.82% to 7.44%.

   Interest Expense.  Interest  expense for the three months ended June 30, 2002
         was  $221,589  compared to $229,995 for the three months ended June 30,
         2001.  The  decrease  was  due to a  decrease  in the  average  cost of
         interest-bearing liabilities from 5.30% for the three months ended June
         30, 2001 to 3.32% for the three months  ended June 30, 2002,  partially
         offset by an increase in the average balance from $17.4 million for the
         three months ended June 30, 2001 to $26.7  million for the three months
         ended June 30, 2002.

   Provision for Loan  Losses.  The  provision  for loan  losses is  charged  to
         operations   to  increase  the  total   allowance  to  a  level  deemed
         appropriate  by  management  and is based  upon the  volume and type of
         lending  conducted by the Company,  industry  standards,  the amount of
         nonperforming  loans and general economic  conditions,  particularly as
         they relate to the Company's market areas, and other factors related to
         the  collectibility  of  the  Company's  loan  portfolio.  The  Company
         recorded a provision  for loan losses for the three  months  ended June
         30, 2002 and 2001 of $68,341 and $76,493,  respectively.  The allowance
         for loan losses was $312,870 at June 30, 2002.  Management believes the
         allowance is adequate at June 30, 2002.

   Noninterest Income. Noninterest income was $71,792 for the three months ended
         June 30, 2002  compared to $36,964 for the  comparable  period in 2001.
         The largest increase related to service charges on deposit accounts due
         to the increase in deposit accounts.

   Noninterest  Expense.  Noninterest  expense was $270,056 for the three months
         ended June 30, 2002  compared to $255,578  for the three  months  ended
         June 30, 2001.  This  increase  relates to the overall  increase in the
         volume of service.

   IncomeTaxes.  The income tax  provision  for the three  months ended June 30,
         2002 was $16,500 (an effective rate of 35.7%) compared to an income tax
         benefit of $53,000 in 2001 (an effective rate of 39.1%).



                                       14
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY


Comparison of the Six-Month Periods Ended June 30, 2002 and 2001

   General. Net  earnings  for the six months ended June 30, 2002 was $48,609 or
         $.09 per basic and diluted share  compared to a net loss of $157,243 or
         $.30 per basic and diluted share for the comparable period in 2001. The
         increase in net earnings was primarily due to increases in net interest
         income and  noninterest  income,  partially  offset by an  increase  in
         noninterest expenses.

   Interest Income.  Interest  income for the six months ended June 30, 2002 was
         $1,014,726 compared to $745,662 for the six months ended June 30, 2001.
         Interest  income  earned on loans was $821,779 for the six months ended
         June 30, 2002 compared to $566,565 for the six-month  period ended June
         30,  2001.  The  increase  was due to an increase  in the average  loan
         portfolio  balance to $21.9  million for the six months  ended June 30,
         2002 from $12.6 million for the  comparable  period in 2001,  partially
         offset by a decrease in the average yield earned from 8.98% to 7.50%.

   Interest Expense. Interest expense for the six months ended June 30, 2002 was
         $444,354  compared to $436,174  for the six months ended June 30, 2001.
         The  increase  was  due  to an  increase  in  the  average  balance  of
         interest-bearing  liabilities  from  $16.0  million  for the six months
         ended June 30, 2001 to $25.6  million for the six months ended June 30,
         2002, partially offset by a decrease in the average cost from 5.44% for
         the six months  ended June 30,  2001 to 3.48% for the six months  ended
         June 30, 2002.

   Provision for Loan  Losses.  The  provision  for loan  losses is  charged  to
         operations   to  increase  the  total   allowance  to  a  level  deemed
         appropriate  by  management  and is based  upon the  volume and type of
         lending  conducted by the Company,  industry  standards,  the amount of
         nonperforming  loans and general economic  conditions,  particularly as
         they relate to the Company's market areas, and other factors related to
         the  collectibility  of  the  Company's  loan  portfolio.  The  Company
         recorded a provision  for loan losses for the six months ended June 30,
         2002 and 2001 of $101,723 and $142,040, respectively. The allowance for
         loan losses was  $312,870 at June 30,  2002.  Management  believes  the
         allowance is adequate at June 30, 2002.

   Noninterest Income.  Noninterest income was $131,158 for the six months ended
         June 30, 2002  compared to $67,932 for the  comparable  period in 2001.
         The largest increase related to service charges on deposit accounts due
         to the increase in deposit accounts.

   Noninterest  Expense.  Noninterest  expense was  $524,198  for the six months
         ended June 30, 2002  compared to $491,623 for the six months ended June
         30, 2001. This increase  relates to the overall  increase in the volume
         of service.

   IncomeTaxes.  The income tax provision for the six months ended June 30, 2002
         was  $27,000  (an  effective  rate of 35.7%)  compared to an income tax
         benefit of $99,000 in 2001 (an effective rate of 38.6%).



                                       15
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY

                           PART II. OTHER INFORMATION


Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders (the "Annual Meeting") of PSB BancGroup, Inc.
was held on April 16, 2002, to consider the election of three directors each for
a term of three years,  the adoption of the Second Amended and Restated  Warrant
Plan  and the  ratification  of the  appointment  of the  Company's  independent
auditors for the year ending December 31, 2002.

At the Annual  Meeting,  347,879 shares were present in person or by proxy.  The
following is a summary and tabulation of the matters that were voted upon at the
Annual Meeting:

   Proposal I.

   The election of three directors, each for a term of three years:

<TABLE>
                                                                                                  Abstentions
                                                                                                   and Broker
                                                             For         Withheld       Against      Nonvotes
                                                             ---         --------       -------      --------

<S>                                                        <C>
           Alton C. Milton, Sr.                            347,879          -              -            -
                                                           =======       ========       =======      ========

           Andrew T. Moore                                 347,879          -              -            -
                                                           =======       ========       =======      ========

           Robert W. Woodard                               347,879          -              -            -
                                                           =======       ========       =======      ========
</TABLE>

   Proposal II:

   To approve the Second Amended and Restated Warrant Plan:

<TABLE>
                                                                                                  Abstentions
                                                                                                   and Broker
                                                             For         Withheld       Against      Nonvotes
                                                             ---         --------       -------      --------

<S>                                                        <C>
                                                           347,879          -              -            -
                                                           =======       ========       =======      ========
</TABLE>

   Proposal III:

   To  ratify  the  appointment  of Hacker,  Johnson & Smith PA as the Company's
   independent  auditors for the year ending  December 31, 2002:

<TABLE>
                                                                                                  Abstentions
                                                                                                   and Broker
                                                             For         Withheld       Against      Nonvotes
                                                             ---         --------       -------      --------

<S>                                                        <C>
                                                           347,879          -              -            -
                                                           =======       ========       =======      ========
</TABLE>



                                       16
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY




Item 6.  Exhibits and Reports on Form 8-KSB

(a)      Exhibits.  The  following  exhibits are filed with or  incorporated  by
         reference into this report.  The exhibits  marked by a single  asterisk
         (*) were previously filed as a part of PSB's Registration  Statement on
         Form SB-2, filed with the Securities and Exchange Commission ("SEC") on
         January  13,  1998,   Registration   No.   333-44161   and  are  hereby
         incorporated  by reference.  The exhibits  marked by a double  asterisk
         (**)  were  previously  filed as part of PSB's  Amendment  No. 3 to the
         Registration  Statement  on Form SB-2 as filed  with the SEC on May 20,
         1998,  Registration  No.  333-44161  and  are  hereby  incorporated  by
         reference. The exhibit marked by a triple asterisk (***) was previously
         filed as part of PSB's  Form  10-QSB  as filed  with the SEC on May 15,
         2000, and is hereby incorporated by reference.  The exhibit marked by a
         quadruple  asterisk  (****)  was  previously  filed  as part  of  PSB's
         Definitive  Schedule  14-A, as filed with the SEC on March 16, 2000 and
         is hereby incorporated by reference. The exhibits marked by a quintuple
         asterisk  (*****) were previously filed as part of PSB's Post Effective
         Amendment  No. 3 to the  Registration  Statement  on Form SB-2 as filed
         with the SEC on May 1, 2002 and are hereby  incorporated  by reference.
         The exhibit numbers correspond to the exhibit numbers in the referenced
         documents, except for Exhibit No. 10.7, which was designated Appendix A
         in the referenced Definitive Schedule 14-A.

                  Exhibit No.         Description of Exhibit
                  -----------         ----------------------

                         *3.1          Articles of Incorporation of PSB
                         *3.2          Bylaws of PSB
                         *4.1          Specimen Common Stock Certificate
                        **4.5          Amended and Restated Warrant Plan
                     *****4.7          Specimen Warrant Certificate
                        *10.1          Employment  Agreement  by  and among PSB,
                                       the Bank and Robert W. Woodard
                        *10.2          Land Purchase Agreement
                      **10.3           Addendum to Land Purchase Agreement
                       **10.4          Amended  Employment Agreement with Robert
                                       W. Woodard
                      ***10.6          Employment Agreement with Wesley T. Small
                     ****10.7          Amended  1998  Employee  Stock Option and
                                       Limited Rights Plan
                    *****10.8          Employee Severance  Agreement with Thomas
                                       M. Riherd
                         10.9          Sales  Agency  Agreement  with  Kendrick,
                                       Pierce Securities, Inc.
                        10.10          Escrow   and   Transfer   Agreement  with
                                       Independent Bankers' Bank of Florida

(b)      Reports on Form 8-KSB. There were no reports on Form 8-KSB filed during
         the three months ended June 30, 2002.





                                       17
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY


                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with PSB BancGroup,  Inc.'s  ("Company")  Quarterly Report on Form
10-QSB for the period ended June 30, 2002  ("Report"),  each of the  undersigned
certify that:

         1.       The Report fully  complies  with the  requirements  of Section
                  13(a) or 15(d) of the Securities Exchange Act of 1934; and

         2.       The information  contained in the Report fairly  presents,  in
                  all material respects,  the financial condition and results of
                  operations  of the  Company as of,  and for the period  ended,
                  June 30, 2002.



Date:  August 12, 2002            By:   /s/ Robert W. Woodard
       ---------------                  ---------------------
                                        Robert W. Woodard, President and Chief
                                        Executive Officer




Date:  August 9, 2002             By:  /s/ Thomas M. Riherd, II
       --------------                  ------------------------
                                       Thomas M. Riherd, II, Chief Financial
                                       Officer



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                  PSB BANCGROUP, INC.
                                     (Registrant)



Date:  August 12, 2002            By:   /s/ Robert W. Woodard
       ---------------                  --------------------------
                                      Robert W. Woodard, President and Chief
                                      Executive Officer




Date:  August 9, 2002             By:  /s/ Thomas M. Riherd, II
       --------------                  --------------------------
                                      Thomas M. Riherd, II,  Chief  Financial
                                      Officer



                                       18