================================================================================

                     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 September 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 October 18, 2002

================================================================================


<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY

                                      INDEX


<TABLE>
PART I. FINANCIAL INFORMATION
<S>                                                                                                          <C>
   Item 1. Financial Statements                                                                              Page
                                                                                                             ----

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

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

     Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) -
       Nine Months Ended September 30, 2002 and 2001............................................................4

     Condensed Consolidated Statements of Cash Flows (Unaudited) -
       Nine Months Ended September 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

   Item 3.  Controls and Procedures............................................................................16

PART II. OTHER INFORMATION

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

SIGNATURES.....................................................................................................18

CERTIFICATIONS..............................................................................................18-20
</TABLE>




                                       1
<PAGE>



                       PSB BANCGROUP, INC. AND SUBSIDIARY

                          PART I. FINANCIAL INFORMATION

                          Item 1. Financial Statements

                      Condensed Consolidated Balance Sheets


<TABLE>
                                                                                                                               At
                                                                                                                 -----------------
                                                                                              September 30,           December 31,
                                                                                              -------------           ------------
    Assets                                                                                            2002                   2001
                                                                                                      ----                   ----
                                                                                                           (Unaudited)

<S>                                                                                           <C>                         <C>
Cash and due from banks                                                                       $    876,216                637,587
Federal funds sold                                                                                  82,000                273,000
                                                                                              ------------           ------------

              Total cash and cash equivalents                                                      958,216                910,587

Securities available for sale                                                                    6,346,005              7,232,327
Loans, net of allowance for loan losses of $335,391
    in 2002 and $230,106 in 2001                                                                26,476,083             18,924,380
Premises and equipment, net                                                                      1,412,215              1,433,273
Foreclosed assets                                                                                   46,763                231,203
Accrued interest receivable                                                                        181,836                158,721
Federal Home Loan Bank stock, at cost                                                               60,000                 60,000
Deferred income taxes                                                                              395,656                488,829
Other assets                                                                                       169,778                 88,817
                                                                                              ------------           ------------

              Total assets                                                                    $ 36,046,552             29,528,137
                                                                                              ============           ============

    Liabilities and Stockholders' Equity

Liabilities:
    Noninterest-bearing demand deposits                                                          2,751,062              2,336,826
    Savings, NOW and money-market deposits                                                       6,521,724              4,570,909
    Time deposits                                                                               20,872,488             17,114,024
                                                                                              ------------           ------------

              Total deposits                                                                    30,145,274             24,021,759

    Advance from Federal Home Loan Bank                                                          1,200,000              1,200,000
    Other liabilities                                                                              688,780                482,293
                                                                                              ------------           ------------

              Total liabilities                                                                 32,034,054             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                                                                           (744,607)              (839,907)
    Accumulated other comprehensive income                                                         103,805                 40,536
                                                                                              ------------           ------------

              Total stockholders' equity                                                         4,012,498              3,824,085
                                                                                              ------------           ------------

              Total liabilities and stockholders' equity                                      $ 36,046,552             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                  Nine Months Ended
                                                                             September 30,                      September 30,
                                                                     ---------------------------         --------------------------
                                                                         2002             2001              2002              2001
                                                                         ----             ----              ----              ----
<S>                                                                  <C>                 <C>             <C>                <C>
Interest income:
     Loans                                                           $  472,180          341,090         1,293,959          907,655
     Securities                                                          75,373           68,989           258,061          202,355
     Other interest-earning assets                                        7,253           17,000            17,512           62,731
                                                                     ----------       ----------        ----------       ----------

               Total interest income                                    554,806          427,079         1,569,532        1,172,741
                                                                     ----------       ----------        ----------       ----------

Interest expense:
     Deposits                                                           203,542          242,679           622,107          676,491
     Borrowings                                                          13,076                -            38,865            2,362
                                                                     ----------       ----------        ----------       ----------

               Total interest expense                                   216,618          242,679           660,972          678,853
                                                                     ----------       ----------        ----------       ----------

Net interest income                                                     338,188          184,400           908,560          493,888

               Provision for loan losses                                 30,097           17,402           131,820          159,442
                                                                     ----------       ----------        ----------       ----------

Net interest income after provision
     for loan losses                                                    308,091          166,998           776,740          334,446
                                                                     ----------       ----------        ----------       ----------

Noninterest income:
     Service charges on deposit accounts                                 33,365           21,373            95,811           56,101
     Other service charges and fees                                      15,911            3,956            39,939           12,884
     Gain on sale of foreclosed assets                                        -                -            11,255                -
     Other                                                               19,847           19,360            53,276           43,636
                                                                     ----------       ----------        ----------       ----------

               Total noninterest income                                  69,123           44,689           200,281          112,621
                                                                     ----------       ----------        ----------       ----------

Noninterest expenses:
     Salaries and employee benefits                                     148,861          113,348           384,775          342,791
     Occupancy expense                                                   41,803           36,231           113,512          115,472
     Professional fees                                                   14,800           17,603            50,355           53,356
     Data processing                                                     32,351           26,564            95,618           74,681
     Advertising and marketing                                           16,071           10,338            46,908           31,377
     Other                                                               48,637           38,252           135,553          116,282
                                                                     ----------       ----------        ----------       ----------

               Total noninterest expenses                               302,523          242,336           826,721          733,959
                                                                     ----------       ----------        ----------       ----------

               Earnings (loss) before income
                 tax provision (benefit)                                 74,691          (30,649)          150,300         (286,892)

Income tax provision (benefit)                                           28,000          (11,000)           55,000         (110,000)
                                                                     ----------       ----------        ----------       ----------

               Net earnings (loss)                                   $   46,691          (19,649)           95,300         (176,892)
                                                                     ==========       ==========        ==========       ==========

Earnings (loss) per share, basic and diluted                         $      .09             (.04)              .18             (.34)
                                                                     ==========       ==========        ==========       ==========

Weighted-average number of shares
     outstanding, basic and diluted                                     521,200          517,016           520,039          516,573
                                                                     ==========       ==========        ==========       ==========

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


See Accompanying Notes to Condensed Consolidated Financial Statements.



                                       3
<PAGE>



                       PSB BANCGROUP, INC. AND SUBSIDIARY

      Condensed Consolidated Statements of Changes in Stockholders' Equity

              For the Nine Months Ended September 30, 2002 and 2001


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

<S>                                              <C>        <C>            <C>            <C>              <C>        <C>
Balance at December 31, 2000                     515,784    $    5,158     4,599,398      (677,354)        40,569     3,967,771
                                                                                                                     ----------

Comprehensive income (loss):
         Net loss (unaudited)                          -             -             -      (176,892)             -      (176,892)

         Net change in unrealized
             gain on securities
             available for sale,
             net of income taxes
             of $34,146 (unaudited)                    -             -             -             -         56,596        56,596
                                                                                                                     ----------

Comprehensive income (loss)
         (unaudited)                                                                                                   (120,296)
                                                                                                                     ----------

Proceeds from issuance of common
         stock, exercise of warrants
         (unaudited)                               2,100            21        18,879             -              -        18,900
                                              ----------    ----------    ----------    ----------     ----------    ----------

Balance at September 30, 2001
         (unaudited)                             517,884    $    5,179     4,618,277      (854,246)        97,165     3,866,375
                                              ==========    ==========    ==========    ==========     ==========    ==========


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

Comprehensive income:
         Net earnings (unaudited)                      -             -             -        95,300              -        95,300

         Net change in unrealized
             gain on securities
             available for sale,
             net of income tax
             provision of $38,173
             (unaudited)                               -             -             -             -         63,269        63,269
                                                                                                                     ----------

Comprehensive income
         (unaudited)                                                                                                    158,569
                                                                                                                     ----------
Proceeds from issuance of common
         stock, exercise of warrants
         (unaudited)                               3,316            33        29,811             -              -        29,844
                                              ----------    ----------    ----------    ----------     ----------    ----------

Balance at September 30, 2002
         (unaudited)                             521,200    $    5,212     4,648,088      (744,607)       103,805     4,012,498
                                              ==========    ==========    ==========    ==========     ==========    ==========
</TABLE>


See Accompanying Notes to Condensed Consolidated Financial Statements.



                                       4
<PAGE>



                       PSB BANCGROUP, INC. AND SUBSIDIARY

           Condensed Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
                                                                                                            Nine Months Ended
                                                                                                              September 30,
                                                                                                            -----------------
                                                                                                       2002                   2001
                                                                                                       ----                   ----
<S>                                                                                               <C>                      <C>
Cash flows from operating activities:
     Net earnings (loss)                                                                          $    95,300              (176,892)
     Adjustments to reconcile net earnings (loss) to net cash
       provided by (used in) operating activities:
         Depreciation                                                                                  46,497                41,629
         Provision for loan losses                                                                    131,820               159,442
         Deferred income tax provision (benefit)                                                       55,000              (110,000)
         Net amortization of fees, costs, premiums and discounts                                      (44,110)                5,240
         Gain on sale of foreclosed assets                                                            (11,255)                    -
         (Increase) decrease in accrued interest receivable                                           (23,115)                8,134
         (Increase) decrease in other assets                                                          (80,961)                3,060
         Increase in other liabilities                                                                206,487                19,831
                                                                                                  -----------           -----------

               Net cash provided by (used in) operating activities                                    375,663               (49,556)
                                                                                                  -----------           -----------

Cash flows used in investing activities:
     Purchase of securities available for sale                                                     (1,053,320)           (1,985,939)
     Proceeds from principal repayments and maturities of securities
         available for sale                                                                         2,082,162             1,003,966
     Purchase of premises and equipment                                                               (25,439)              (31,538)
     Net increase in loans                                                                         (7,527,763)           (6,585,667)
     Proceeds from sales of foreclosed assets                                                          42,967                     -
     Purchase of Federal Home Loan Bank stock                                                               -               (10,400)
                                                                                                  -----------           -----------

               Net cash used in investing activities                                               (6,481,393)           (7,609,578)
                                                                                                  -----------           -----------

Cash flows from financing activities:
     Net increase in deposits                                                                       6,123,515             9,880,588
     Net decrease in federal funds purchased                                                                -              (245,000)
     Net proceeds from issuance of common stock                                                        29,844                18,900
                                                                                                  -----------           -----------

               Net cash provided by financing activities                                            6,153,359             9,654,488
                                                                                                  -----------           -----------

Net increase in cash and cash equivalents                                                              47,629             1,995,354

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

Cash and cash equivalents at end of period                                                        $   958,216             2,594,975
                                                                                                  ===========           ===========

Supplemental disclosure of cash flow information:
   Cash paid during the period for:
         Interest                                                                                 $   724,800               588,369
                                                                                                  ===========           ===========

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

     Noncash transactions-
         Accumulated other comprehensive income, change
               in unrealized gain  on securities available
               for sale, net of tax                                                               $    63,269                56,596
                                                                                                  ===========           ===========

         Transfer of loans to foreclosed assets                                                   $    54,272                     -
                                                                                                  ===========           ===========

         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 September 30, 2002, the results of operations
         for the three- and nine-month periods ended September 30, 2002 and 2001
         and cash flows for the nine-month  periods ended September 30, 2002 and
         2001.  The results of  operations  for the three and nine months  ended
         September 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  nine-months  ended
         September 30, 2002. The average net investment in  collateral-dependent
         impaired loans and interest income  recognized and received on impaired
         loans during the three- and  nine-months  ended September 30, 2001 were
         as follows (in thousands):

                                                   Three Months     Nine Months
                                                       Ended           Ended
                                                   September 30,   September 30,
                                                   -------------   -------------
                                                       2001             2001
                                                       ----             ----

       Average investment in impaired loans           $  237             183
                                                      ======             ===

       Interest income recognized on impaired loans   $   -                2
                                                      ======             ===

       Interest income received on impaired loans     $   -                2
                                                      ======             ===

                                                                     (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             Nine Months Ended
                                                           September 30,                 September 30,
                                                    ------------------------         ---------------------
                                                       2002           2001            2002           2001
                                                       ----           ----            ----           ----

<S>                                                 <C>              <C>             <C>           <C>
            Balance at beginning of period          $ 312,870        208,622         230,106       139,224
            Provision charged to operations            30,097         17,402         131,820       159,442
            Net (charge-offs) recoveries               (7,576)           197         (26,535)      (72,445)
                                                    ---------        -------         -------       -------

            Balance at end of period                $ 335,391        226,221         335,391       226,221
                                                    =========        =======         =======       =======
</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 September 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                               12.88%             8.00%
            Tier I capital to risk-weighted assets                              11.70%             4.00%
            Tier I capital to average total assets - leverage ratio              9.38%             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 September
30, 2002, and for the three- and nine-month periods ended September 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 September 30, 2002, the
related  condensed  consolidated  statements  of  operations  for the three- and
nine-month  periods ended September 30, 2002 and 2001 and the related  condensed
consolidated  statements of changes in  stockholders'  equity and cash flows for
the  nine-month  periods  ended  September  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
October 18, 2002



                                       9
<PAGE>



                       PSB BANCGROUP, INC. AND SUBSIDIARY

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

             Comparison of September 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 nine months ended September 30, 2002, the Company's primary source of
funds  consisted of a net increase in deposits of $6.1 million and proceeds from
principal  repayments  and  maturities of securities  available for sale of $2.1
million. The Company used its capital resources principally to fund existing and
continuing loan commitments.  At September 30, 2002, the Company had commitments
to originate  loans,  including  unfunded lines of credit and standby letters of
credit,  totaling  $4.4  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  September  30,  2002,  the Company had
approximately  $15.9  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 September 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>
                                                                         Nine Months                      Nine Months
                                                                            Ended         Year Ended         Ended
                                                                        September 30,    December 31,    September 30,
                                                                           2002              2001            2001
                                                                        -------------    ------------    -------------
<S>                                                                        <C>               <C>             <C>
            Average equity as a percentage
               of average assets                                           11.63%            15.78%          17.00%

            Equity to total assets at end of period                        11.17%            12.95%          14.17%

            Return on average assets (1)                                     .38%             (.66%)         (1.02%)

            Return on average equity (1)                                    3.24%            (4.18%)         (6.02%)

            Noninterest expenses to average assets (1)                      3.27%             3.99%           4.25%

            Nonperforming loans and foreclosed assets as
               a percentage of total assets at end of period                 .90%              .85%            .77%

----------
<FN>
(1) Annualized for the nine months ended September 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 September 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                                         $ 25,397         472         7.43%    $ 16,265       341        8.39%
   Securities                                       5,410          75         5.55        4,438        69        6.22
   Other interest-earning assets (1)                1,550           7         1.81        1,927        17        3.53
                                                 --------       -----                  --------      ----

       Total interest-earning assets               32,357         554         6.85       22,630       427        7.55
                                                                -----                                ----

Noninterest-earning assets (2)                      3,245                                 3,112
                                                 --------                              --------

       Total assets                              $ 35,602                              $ 25,742
                                                 ========                              ========

Interest-bearing liabilities:
   Savings, NOW, money-market
       deposit accounts                             6,422          21         1.31        4,420        29        2.62
   Time deposits                                   20,495         182         3.55       15,239       214        5.62
   Other borrowings (3)                             1,202          13         4.33            -         -          -
                                                 --------       -----                  --------     -----

       Total interest-bearing liabilities          28,119         216         3.07       19,659       243        4.94
                                                                -----                               -----

Noninterest-bearing demand deposits                 2,858                                 1,859
Noninterest-bearing liabilities                       655                                   361
Stockholders' equity                                3,970                                 3,863
                                                 --------                              --------

       Total liabilities and
           stockholders' equity                  $ 35,602                              $ 25,742
                                                 ========                              ========

Net interest income                                             $ 338                               $ 184
                                                                =====                               =====

Interest-rate spread (4)                                                      3.78%                              2.61%
                                                                              ====                               ====

Net interest margin (5)                                                       4.18%                              3.25%
                                                                              ====                               ====

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>
                                                                   Nine Months Ended September 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                                       $ 23,096         1,294       7.47%    $ 15,559       908        7.78%
   Securities                                     6,220           258       5.53        4,242       202        6.35
   Other interest-earning assets (1)              1,209            18       1.99        1,860        63        4.52
                                               --------       -------                --------   -------

       Total interest-earning assets             30,525         1,570       6.86       21,661     1,173        7.22
                                                              -------                           -------

Noninterest-earning assets (2)                    3,155                                 1,381
                                               --------                              --------

       Total assets                            $ 33,680                              $ 23,042
                                               ========                              ========

Interest-bearing liabilities:
   Savings, NOW, money-market
       deposit accounts                           5,850            62       1.41        3,852        76        2.63
   Time deposits                                 19,430           560       3.84       13,358       601        6.00
   Other borrowings (3)                           1,206            39       4.31           42         2        6.35
                                               --------       -------               ---------   -------

       Total interest-bearing liabilities        26,486           661       3.33       17,252       679        5.25
                                                              -------                           -------

Noninterest-bearing demand deposits               2,763                                 1,559
Noninterest-bearing liabilities                     513                                   314
Stockholders' equity                              3,918                                 3,917
                                               --------                              --------

       Total liabilities and
           stockholders' equity                $ 33,680                              $ 23,042
                                               ========                                =======

Net interest income                                           $   909                           $   494
                                                              =======                           =======

Interest-rate spread (4)                                                    3.53%                              1.97%
                                                                            ====                               ====

Net interest margin (5)                                                     3.97%                              3.04%
                                                                            ====                               ====

Ratio of average interest-earning assets to
   average interest-bearing liabilities            1.15                                 1.26
                                                   ====                                 ====

----------
<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 September 30, 2002 and 2001


     General. Net earnings  for the three months ended  September  30, 2002 were
         $46,691 or $.09 per basic and diluted  share  compared to a net loss of
         $19,649 or $.04 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 September 30,
         2002 was  $554,806  compared to  $427,079  for the three  months  ended
         September  30, 2001.  Interest  income earned on loans was $472,180 for
         the three months ended  September 30, 2002 compared to $341,090 for the
         three-month period ended September 30, 2001. The increase was due to an
         increase in the average loan portfolio balance to $25.4 million for the
         three  months  ended  September  30,  2002 from $16.3  million  for the
         comparable  period  in 2001,  partially  offset  by a  decrease  in the
         average  yield earned from 8.39% to 7.43%.  Interest  income  earned on
         securities  was $75,373 for the three months ended  September  30, 2002
         compared to $68,989 for the  comparable  2001 period.  The increase was
         due to an increase in the average  security  portfolio  balance to $5.4
         million for the three months ended September 30, 2002 from $4.4 million
         for the comparable 2001 period,  partially  offset by a decrease in the
         average yield earned from 6.22% to 5.55%.

     Interest Expense. Interest expense for the three months ended September 30,
         2002 was  $216,618  compared to  $242,679  for the three  months  ended
         September  30, 2001.  The decrease was due to a decrease in the average
         cost of  interest-bearing  liabilities  from 4.94% for the three months
         ended  September 30, 2001 to 3.07% for the three months ended September
         30, 2002,  partially  offset by an increase in the average balance from
         $19.7  million for the three months ended  September  30, 2001 to $28.1
         million for the three months ended September 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
         September 30, 2002 and 2001 of $30,097 and $17,402,  respectively.  The
         allowance   for  loan  losses  was  $335,391  at  September  30,  2002.
         Management believes the allowance is adequate at September 30, 2002.

     Noninterest  Income.  Noninterest  income was $69,123 for the three  months
         ended September 30, 2002 compared to $44,689 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 $302,523 for the three months
         ended  September  30, 2002  compared to $242,336  for the three  months
         ended September 30, 2001. This increase relates to the overall increase
         in the volume of service.

     Income Taxes. The income tax provision for the three months ended September
         30, 2002 was $28,000 (an effective rate of 37.5%) compared to an income
         tax benefit of $11,000 in 2001 (an effective rate of 35.9%).



                                       14
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY


Comparison of the Nine-Month Periods Ended September 30, 2002 and 2001

     General. Net earnings  for the nine months  ended  September  30, 2002 were
         $95,300 or $.18 per basic and diluted  share  compared to a net loss of
         $176,892 or $.34 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 nine months ended  September 30,
         2002 was  $1,569,532  compared to $1,172,741  for the nine months ended
         September 30, 2001.  Interest income earned on loans was $1,293,959 for
         the nine months ended  September  30, 2002 compared to $907,655 for the
         nine-month  period ended September 30, 2001. The increase was due to an
         increase in the average loan portfolio balance to $23.1 million for the
         nine  months  ended  September  30,  2002 from  $15.6  million  for the
         comparable  period  in 2001,  partially  offset  by a  decrease  in the
         average  yield earned from 7.78% to 7.47%.  Interest  income  earned on
         securities  was $258,061 for the nine months ended  September  30, 2002
         compared to $202,355 for the comparable  2001 period.  The increase was
         due to an increase in the average  security  portfolio  balance to $6.2
         million for the nine months ended  September 30, 2002 from $4.2 million
         for the comparable 2001 period,  partially  offset by a decrease in the
         average yield earned from 6.35% to 5.53%.

     Interest Expense.  Interest expense for the nine months ended September 30,
         2002 was  $660,972  compared  to  $678,853  for the nine  months  ended
         September  30, 2001.  The decrease was due to a decrease in the average
         cost of  interest-bearing  liabilities  from 5.25% for the nine  months
         ended  September 30, 2001 to 3.33% for the nine months ended  September
         30,  2002,  partially  offset by an  increase  in the  average  balance
         outstanding  from $17.3 million for the nine months ended September 30,
         2001 to $26.5 million for the nine months ended September 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  nine  months  ended
         September 30, 2002 and 2001 of $131,820 and $159,442, respectively. The
         allowance   for  loan  losses  was  $335,391  at  September  30,  2002.
         Management believes the allowance is adequate at September 30, 2002.

     Noninterest  Income.  Noninterest  income was  $200,281 for the nine months
         ended September 30, 2002 compared to $112,621 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 $826,721 for the nine months
         ended September 30, 2002 compared to $733,959 for the nine months ended
         September 30, 2001.  This increase  relates to the overall  increase in
         the volume of service.

     Income Taxes.  The income tax provision for the nine months ended September
         30, 2002 was $55,000 (an effective rate of 36.6%) compared to an income
         tax benefit of $110,000 in 2001 (an effective rate of 38.3%).



                                       15
<PAGE>



                       PSB BANCGROUP, INC. AND SUBSIDIARY



Item 3.  Controls and Procedures

a.       Evaluation of disclosure controls and procedures. The Company maintains
         ------------------------------------------------
         controls and procedures designed to ensure that information required to
         be disclosed in the reports that the Company files or submits under the
         Securities Exchange Act of 1934 is recorded, processed,  summarized and
         reported  within the time  periods  specified in the rules and forms of
         the Securities and Exchange Commission.  Based upon their evaluation of
         those  controls and procedures  performed  within 90 days of the filing
         date of this report,  the Chief Executive and Chief Financial  officers
         of the Company  concluded  that the Company's  disclosure  controls and
         procedures were adequate.

b.       Changes in internal controls.  The Company made no significant  changes
         ----------------------------
         in its internal  controls or in other factors that could  significantly
         affect these controls subsequent to the date of the evaluation of those
         controls by the Chief Executive and Chief Financial officers.









                                       16
<PAGE>



                       PSB BANCGROUP, INC. AND SUBSIDIARY

                           PART II. OTHER INFORMATION


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 exhibits marked with a sextuple  asterisk  (******) were previously
         filed as part of PSB's Form  10-QSB as filed with the SEC on August 13,
         2001 and is 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

                99.1                CEO Certification required under Section 906
                                    of Sarbanes-Oxley Act of 2002

                99.2                CFO Certification required under Section 906
                                    of Sarbanes-Oxley Act of 2002

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



                                       17
<PAGE>


                       PSB BANCGROUP, INC. AND SUBSIDIARY


                                   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:  October 31, 2002              By:   /s/ Robert W. Woodard
      --------------------------         ---------------------------------------
                                         Robert W. Woodard,  President and Chief
                                         Executive Officer




Date:  October 31, 2002              By:  /s/ Thomas M. Riherd, II
      --------------------------         ---------------------------------------
                                         Thomas M. Riherd, II, Chief Financial
                                         Officer


                                 CERTIFICATIONS
                                 --------------


         I,       Robert W. Woodard, certify, that:

         1.       I have  reviewed this  quarterly  report on Form 10-QSB of PSB
                  BancGroup, Inc.;

         2.       Based on my knowledge,  this quarterly report does not contain
                  any untrue  statement  of a  material  fact or omit to state a
                  material fact necessary to make the statements  made, in light
                  of the  circumstances  under which such  statements were made,
                  not  misleading  with  respect to the  period  covered by this
                  quarterly report;

         3.       Based on my  knowledge,  the financial  statements,  and other
                  financial  information  included  in  this  quarterly  report,
                  fairly   present  in  all  material   respects  the  financial
                  condition,  results  of  operations  and  cash  flows  of  the
                  registrant  as of,  and for,  the  periods  presented  in this
                  quarterly report;

         4.       The  registrant's   other   certifying   officers  and  I  are
                  responsible  for  establishing   and  maintaining   disclosure
                  controls  and  procedures  (as defined in  Exchange  Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  (a)    designed  such  disclosure  controls and  procedures to
                         ensure  that  material   information  relating  to  the
                         registrant, including its consolidated subsidiaries, is
                         made  known  to us by  others  within  those  entities,
                         particularly  during the period in which this quarterly
                         report is being prepared;

                  (b)    evaluated  the   effectiveness   of  the   registrant's
                         disclosure  controls and procedures as of a date within


                                       18
<PAGE>

                         90 days  prior  to the  filing  date of this  quarterly
                         report (the "Evaluation Date"); and

                  (c)    presented  in this  quarterly  report  our  conclusions
                         about the effectiveness of the disclosure  controls and
                         procedures based on our evaluation as of the Evaluation
                         Date;

         5.       The  registrant's   other  certifying   officers  and  I  have
                  disclosed,  based  on  our  most  recent  evaluation,  to  the
                  registrant's  auditors and the audit committee of registrant's
                  board of directors:

                  (a)    all significant deficiencies in the design or operation
                         of the internal  controls which could adversely  affect
                         the registrant's ability to record, process,  summarize
                         and report  financial data and have  identified for the
                         registrant's   auditors  any  material   weaknesses  in
                         internal controls; and

                  (b)    any  fraud,  whether  or not  material,  that  involves
                         management  or other  employees  who have a significant
                         role in the registrant's internal controls; and

         6.       The  registrant's   other  certifying   officers  and  I  have
                  indicated in this  quarterly  report whether or not there were
                  significant  changes in internal  controls or in other factors
                  that  could   significantly   affect  the  internal   controls
                  subsequent  to  the  date  of  our  most  recent   evaluation,
                  including any  corrective  actions with regard to  significant
                  deficiencies and material weaknesses.


        Date: October 31, 2002            By:   /s/ Robert W. Woodard
              ----------------            --------------------------------------
                                                Robert W. Woodard, President and
                                                  Chief Executive Officer


         I, Thomas M. Riherd, II, certify, that:

         1.       I have  reviewed this  quarterly  report on Form 10-QSB of PSB
                  BancGroup, Inc.;

         2.       Based on my knowledge,  this quarterly report does not contain
                  any untrue  statement  of a  material  fact or omit to state a
                  material fact necessary to make the statements  made, in light
                  of the  circumstances  under which such  statements were made,
                  not  misleading  with  respect to the  period  covered by this
                  quarterly report;

         3.       Based on my  knowledge,  the financial  statements,  and other
                  financial  information  included  in  this  quarterly  report,
                  fairly   present  in  all  material   respects  the  financial
                  condition,  results  of  operations  and  cash  flows  of  the
                  registrant  as of,  and for,  the  periods  presented  in this
                  quarterly report;

         4.       The  registrant's   other   certifying   officers  and  I  are
                  responsible  for  establishing   and  maintaining   disclosure
                  controls  and  procedures  (as defined in  Exchange  Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  (a)    designed  such  disclosure  controls and  procedures to
                         ensure  that  material   information  relating  to  the
                         registrant, including its consolidated subsidiaries, is
                         made  known  to us by  others  within  those  entities,


                                       19
<PAGE>

                         particularly  during the period in which this quarterly
                         report is being prepared;

                  (b)    evaluated  the   effectiveness   of  the   registrant's
                         disclosure  controls and procedures as of a date within
                         90 days  prior  to the  filing  date of this  quarterly
                         report (the "Evaluation Date"); and

                  (c)    presented  in this  quarterly  report  our  conclusions
                         about the effectiveness of the disclosure  controls and
                         procedures based on our evaluation as of the Evaluation
                         Date;

         5.       The  registrant's   other  certifying   officers  and  I  have
                  disclosed,  based  on  our  most  recent  evaluation,  to  the
                  registrant's  auditors and the audit committee of registrant's
                  board of directors:

                  (a)    all significant deficiencies in the design or operation
                         of the internal  controls which could adversely  affect
                         the registrant's ability to record, process,  summarize
                         and report  financial data and have  identified for the
                         registrant's   auditors  any  material   weaknesses  in
                         internal controls; and

                  (b)    any  fraud,  whether  or not  material,  that  involves
                         management  or other  employees  who have a significant
                         role in the registrant's internal controls; and

         6.       The  registrant's   other  certifying   officers  and  I  have
                  indicated in this  quarterly  report whether or not there were
                  significant  changes in internal  controls or in other factors
                  that  could   significantly   affect  the  internal   controls
                  subsequent  to  the  date  of  our  most  recent   evaluation,
                  including any  corrective  actions with regard to  significant
                  deficiencies and material weaknesses.



        Date: October 31, 2002                  By:  /s/ Thomas M. Riherd
              ----------------            --------------------------------------
                                                     Thomas M. Riherd, II, Chief
                                                     Financial Officer





                                       20