FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

    (Mark One)
      [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 2003

                                      OR

      [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

            For the transition period from __________ to __________


                       Commission file number:  0-26480

                              PSB HOLDINGS, INC.
              (Exact name of registrant as specified in charter)

               WISCONSIN                       39-1804877
        (State of incorporation)(I.R.S. Employer Identification Number)

                           1905 West Stewart Avenue
                            Wausau, Wisconsin 54401
                    (Address of principal executive office)

       Registrant's telephone number, including area code: 715-842-2191

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

                              Yes   X     No ___

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
                             Yes ___     No   X

  The number of common shares outstanding at October 23, 2003 was 1,651,069.
<PAGE>
                              PSB HOLDINGS, INC.

                                   FORM 10-Q

                       Quarter Ended September 30, 2003


                                                                       Page No.
PART I.     FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Consolidated Balance Sheets
                  September 30, 2003 (unaudited) and December 31,
                  2002 (derived from audited financial statements)          1

                  Consolidated Statements of Income
                  Three Months and Nine Months Ended September 30, 2003
                  and 2002 (unaudited)                                      2

                  Consolidated Statement of Changes in Stockholders' Equity
                  Nine Months Ended September 30, 2003 (unaudited)          3

                  Consolidated Statements of Cash Flows
                  Nine Months Ended September 30, 2003 and 2002 (unaudited) 4

                  Notes to Consolidated Financial Statements                6

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

         Item 3.  Quantitative and Qualitative Disclosures About
                  Market Risk                                              27

         Item 4.  Controls and Procedures                                  27


PART II. OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K                         28
                                            i
<PAGE>
                        PART I.  FINANCIAL INFORMATION

<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS


PSB HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS
September 30, 2003 unaudited,  December 31, 2002 derived from audited financial statements)
                                                                      Sept. 30,     December 31,
(dollars in thousands, except per share data)                           2003            2002
<S>                                                                <C>             <C>
ASSETS
Cash and due from banks                                            $      12,377   $      15,890
Interest-bearing deposits and money market funds                           4,669           5,490
Federal funds sold                                                             -             172
Cash and cash equivalents                                                 17,046          21,552
Securities available for sale (at fair value)                             69,988          81,056
Federal Home Loan Bank stock (at cost)                                     2,402           2,264
Loans held for sale                                                          179             949
Loans receivable, net of allowance for loan losses of $3,692
   and $3,158, respectively                                              297,655         256,015
Accrued interest receivable                                                1,700           1,732
Foreclosed assets, net                                                       183             573
Premises and equipment                                                     6,481           6,158
Mortgage servicing rights, net                                               749             697
Other assets                                                                 635             472
TOTAL ASSETS                                                        $    397,018   $     371,468
LIABILITIES
Non-interest-bearing deposits                                       $     46,700   $      45,458
Interest-bearing deposits                                                263,405         252,373
   Total deposits                                                        310,105         297,831
Federal Home Loan Bank advances                                           43,000          38,000
Other borrowings                                                          10,483           3,302
Accrued expenses and other liabilities                                     2,030           3,033
   Total liabilities                                                     365,618         342,166
STOCKHOLDERS' EQUITY
Common stock - no par value with a stated value of $1 per share:
   Authorized - 3,000,000 shares
   Issued - 1,804,850 shares                                                1,805          1,805
Additional paid-in capital                                                  7,150          7,150
Retained earnings                                                          24,627         21,607
Unrealized gain on securities available for sale, net of tax                  891          1,306
Treasury stock, at cost - 153,781 and 138,748 shares, respectively         (3,073)        (2,566)
   Total stockholders' equity                                              31,400         29,302
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $     397,018  $     371,468
</TABLE>
                                            1
<PAGE>
<TABLE>
<CAPTION>

PSB HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME
                                                     Three Months Ended          Nine Months Ended
(dollars in thousands,                                   September 30,            September 30,
except per share data - unaudited)                     2003         2002        2003         2002
<S>                                                  <C>          <C>         <C>         <C>
Interest income:
   Interest and fees on loans                        $   4,594    $   4,627   $  13,466   $   13,466
   Interest on securities:
      Taxable                                              359          665       1,475        2,033
      Tax-exempt                                           232          223         676          674
   Other interest and dividends                             56           86         175          203
         Total interest income                           5,241        5,601      15,792       16,376
Interest expense:
   Deposits                                              1,368        1,733       4,312        5,195
   FHLB advances                                           506          577       1,520        1,712
   Other borrowings                                         61           35         154          115
         Total interest expense                          1,935        2,345       5,986        7,022
Net interest income                                      3,306        3,256       9,806        9,354
Provision for loan losses                                  240          450         705          810
Net interest income after provision for loan losses      3,066        2,806       9,101        8,544
Noninterest income:
   Service fees                                            323          334         951          890
   Gain on sale of mortgage loans                          718          310       1,871          642
   Mortgage loan servicing, net                            (63)          17        (372)          36
   Investment and insurance sales commissions              115           93         303          189
   Net loss on sale of securities                          (19)           -         (19)           -
   Other noninterest income                                 69           87         257          251
         Total noninterest income                        1,143          841       2,991        2,008
Noninterest expense:
   Salaries and employee benefits                        1,508        1,320       4,343        3,735
   Occupancy                                               286          267         859          832
   Data processing and other office operations             131          153         418          413
   Advertising and promotion                                45           63         133          254
   Other noninterest expenses                              365          294       1,119          921
        Total noninterest expense                        2,335        2,097       6,872        6,155
Income before provision for income taxes                 1,874        1,550       5,220        4,397
Provision for income taxes                                 639          499       1,704        1,364
Net income                                          $    1,235    $   1,051   $   3,516   $    3,033
Basic earnings per share                            $     0.75    $    0.63   $    2.12   $     1.81
Diluted earnings per share                          $     0.74    $    0.63   $    2.10   $     1.81
</TABLE>
                                            2
<PAGE>
<TABLE>
<CAPTION>
PSB HOLDINGS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Nine months ended September 30, 2003 - unaudited
                                                                              Unrealized
                                                                              Gain (Loss)
                                                Additional                   on Securities
                                    Common       Paid-in       Retained        Available       Treasury
(dollars in thousands)              Stock        Capital       Earnings        For Sale          Stock         Totals
<S>                              <C>           <C>            <C>         <C>              <C>              <C>
Balance January 1, 2003          $   1,805   $   7,150     $  21,607   $      1,306     $      (2,566)   $   29,302

Comprehensive income:
   Net income                                                  3,516                                          3,516
   Unrealized loss on securities
   available for sale, net of tax                                             (427)                            (427)
   Reclassification adjustment
   for security loss included
   in net income, net of tax                                                    12                               12

      Total comprehensive income                                                                              3,101

Purchase of treasury stock                                                                       (553)         (553)
Distribution of treasury stock in
   settlement of liability to
   Company directors                                                                               46            46
Cash dividends declared $.30
    per share                                                   (496)                                          (496)

Balance September 30, 2003       $   1,805   $     7,150   $  24,627   $       891      $      (3,073)   $   31,400
</TABLE>
                                            3
<PAGE>
<TABLE>
<CAPTION>
PSB HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2003 and 2002 - unaudited

                                                                            2003            2002
<S>                                                                <C>             <C>
Cash flows from operating activities:

   Net income                                                      $       3,516   $       3,033
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for depreciation and net amortization                   1,495             500
         Provision for loan losses                                           705             810
         Gain on sale of mortgage loans                                   (1,871)           (642)
         Provision for servicing right valuation allowance                    28               -
         Loss on sale of premises and equipment                                -              30
         (Gain) loss on sale of foreclosed assets                             37             (27)
         Loss on sale of securities                                           19               -
         FHLB stock dividends                                               (138)            (85)
         Changes in operating assets and liabilities:
            Accrued interest receivable                                       32             (33)
            Other assets                                                      95            (129)
            Other liabilities                                               (957)           (815)

   Net cash provided by operating activities                               2,961           2,642

Cash flows from investing activities:

   Proceeds from sale and maturities of:
      Securities held to maturity                                              -             682
      Securities available for sale                                       40,016           8,848
   Payment for purchase of:
      Securities held to maturity                                              -          (1,537)
      Securities available for sale                                      (30,122)        (12,857)
   Net increase in loans                                                 (40,345)        (14,919)
   Capital expenditures                                                     (702)         (1,638)
   Proceeds from sale of premises and equipment                                -              29
   Proceeds from sale of foreclosed assets                                   280             278
   Net cash used in investing activities                                 (30,873)        (21,114)
</TABLE>
                                            4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<S>                                                                  <C>         <C>
Cash flows from financing activities:

   Net increase in non-interest-bearing deposits                         1,242           1,809
   Net increase in interest-bearing deposits                            11,032          13,148
   Proceeds from long-term FHLB advances                                15,000               -
   Repayments of long-term FHLB advances                               (10,000)
   Net increase (decrease) in other borrowings                           7,181            (813)
   Dividends paid                                                         (496)           (320)
   Proceeds from issuance of stock options                                   -              52
   Purchase of treasury stock                                             (553)           (329)

   Net cash provided by financing activities                            23,406          13,547

Net decrease in cash and cash equivalents                               (4,506)         (4,925)
Cash and cash equivalents at beginning                                  21,552          25,550

Cash and cash equivalents at end                                    $   17,046   $      20,625

Supplemental cash flow information:

Cash paid during the period for:
      Interest                                                      $    6,205   $       7,330
      Income taxes                                                       1,650           1,300

Noncash investing and financing activities:

      Loans charged off                                             $      206   $         321
      Loans transferred to foreclosed assets                               178             397
      Loans originated on sale of foreclosed assets                        251             331
      Distribution of treasury stock in settlement of liability
         to Company directors                                               46              60
</TABLE>
                                            5


                              PSB Holdings, Inc.
                  Notes to Consolidated Financial Statements


NOTE 1 - GENERAL

In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to present fairly PSB Holdings,
Inc.'s ("Company") financial position, results of its operations, and cash
flows for the periods presented, and all such adjustments are of a normal
recurring nature.  The consolidated financial statements include the accounts
of all subsidiaries.  All material intercompany transactions and balances are
eliminated. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.

These interim consolidated financial statements have been prepared according to
the rules and regulations of the Securities and Exchange Commission and,
<PAGE>
therefore, certain information and footnote disclosures normally presented in
accordance with generally accepted accounting principles have been omitted or
abbreviated.  The information contained in the consolidated financial
statements and footnotes in the Company's 2002 annual report on Form 10-K,
should be referred to in connection with the reading of these unaudited interim
financial statements.

In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period.  Actual results could differ significantly from those estimates.
Estimates that are susceptible to significant change include the determination
of the allowance for loan losses, mortgage servicing right asset, and the
valuation of investment securities.

NOTE 2 - CHANGES IN ACCOUNTING PRINCIPLE

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets."  SFAS No. 141 requires the use of the purchase method of accounting
for business combinations initiated after June 30, 2001.  SFAS No. 142
addresses how intangible assets acquired outside of a business combination
should be accounted for upon acquisition and how goodwill and other intangible
assets should be accounted for after they have been initially recognized.  SFAS
No. 142 eliminates the amortization for goodwill and other intangible assets
with indefinite lives.  Other intangible assets with a finite life will be
amortized over their useful life.  Goodwill and other intangible assets with
indefinite useful lives shall be tested for impairment annually or more
frequently if events or changes in circumstances indicate that the asset may be
impaired.  SFAS No. 142 is effective for fiscal years beginning after December
15, 2001.  The Corporation's adoption of SFAS No. 142 on January 1, 2002 had no
impact on the consolidated financial statements as of the date of adoption.
                                            6

NOTE 3 - STOCK-BASED COMPENSATION

The Company records expense relative to stock-based compensation using the
"intrinsic value method".  Since the exercise price is equal to the fair value
of the Company's common stock on the date of the award, the intrinsic value of
the Company's stock options is "zero" at the time of the award and no expense
is recorded.

As permitted by generally accepted accounting principles, the Company has not
adopted the "fair value method" of expense recognition for stock-based
compensation awards.  Rather, the effects of the fair value method on the
Company's earnings are presented on a pro forma basis.  Because no grants of
stock options were made during the three months and nine months ended September
30, 2003, there was no pro forma impact to net income or earnings per share
during these periods.  However, there were grants of 4,614 stock options (with
an exercise price of $17.65 per share) during the quarter ended June 30, 2002.
Had compensation cost for the option grants been determined in accordance with
the "fair value method", net income would have decreased approximately $9,228
during the nine months ended September 30, 2002, and reduced earnings per share
by less than $.01 per share.
<PAGE>
Under the terms of an incentive stock option plan adopted during 2001, shares
of unissued common stock are reserved for options to officers and key employees
at prices not less than the fair market value of the shares at the date of the
grant.  These options expire 10 years after the grant date.  As of September
30, 2003, 26,892 options outstanding were eligible to be exercised at a
weighted average exercise price of $16.80 per share.  No additional shares of
common stock remain reserved for future grants under the option plan approved
by the shareholders.

NOTE 4 - EARNINGS PER SHARE

Basic earnings per share of common stock are based on the weighted average
number of common shares outstanding during the period.  Diluted earnings per
share is calculated by dividing net income by the weighted average number of
shares adjusted for the dilutive effect of outstanding stock options.
Presented below are the calculations for basic and diluted earnings per share:
<TABLE>
<CAPTION>
                                                            Three months ended           Nine months ended
(dollars in thousands, except per share data)                  September 30,               September 30,
(unaudited)                                              2003             2002          2003            2002
<S>                                           <C>              <C>              <C>             <C>
Net income                                    $         1,235  $         1,051  $        3,516  $        3,033

Weighted average shares outstanding                 1,651,265        1,672,836       1,659,326       1,676,942
Effect of dilutive stock options outstanding           13,353            4,712          11,892           3,108
Diluted weighted average shares outstanding         1,664,618        1,677,548       1,671,218       1,680,050
Basic earnings per share                      $          0.75  $          0.63  $         2.12  $         1.81
Diluted earnings per share                    $          0.74  $          0.63  $         2.10  $         1.81
</TABLE>
                                            7

NOTE 5 - COMPREHENSIVE INCOME

Generally accepted accounting principles require comprehensive income and its
components, as recognized under the accounting standards, to be displayed in a
financial statement with the same prominence as other financial statements.
The disclosure requirements with respect to the Form 10-Q have been included in
the Company's consolidated statement of changes in stockholders' equity.
Comprehensive income totaled the following for the periods indicated:
<TABLE>
<CAPTION>
                                                   Three months ended                 Nine months ended
                                                      September 30,                    September 30,
     (dollars in thousands - unaudited)           2003           2002               2003          2002
<S>                                         <C>            <C>               <C>             <C>
Net income                                  $     1,235    $      1,051      $      3,516    $      3,033
Unrealized loss on securities
  available for sale, net of tax                   (602)           (187)             (427)            244
Reclassification adjustment for security             12                                12
  loss included in net income, net of tax
Comprehensive income                        $       645    $        864      $      3,101    $      3,277
</TABLE>
NOTE 6 - LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loans receivable are stated at unpaid principal balances plus net deferred loan
origination costs less loans in process and the allowance for loan losses.
<PAGE>
Interest on loans is credited to income as earned.  Interest income is not
accrued on loans where management has determined collection of such interest is
doubtful or those loans which are past due 90 days or more as to principal or
interest payments.  When a loan is placed on nonaccrual status, previously
accrued but unpaid interest deemed uncollectible is reversed and charged
against current income.  After being placed on nonaccrual status, additional
income is recorded only to the extent that payments are received or the
collection of principal becomes reasonably assured.  Interest income
recognition on loans considered to be impaired under current accounting
standards is consistent with the recognition on all other loans.

Loan origination fees and certain direct loan origination costs are deferred
and amortized to income over the contractual life of the underlying loan.

The allowance for loan losses is established through a provision for loan
losses charged to expense.  Loans are charged against the allowance for loan
losses when management believes that the collectibility of the principal is
unlikely.  Management believes the allowance for loan losses is adequate to
cover probable credit losses relating to specifically identified loans, as well
as probable credit losses inherent in the balance of the loan portfolio.  In
accordance with current accounting standards, the allowance is provided for
losses that have been incurred as of the balance sheet date.  The allowance is
based on past events and current economic conditions, and does not include the
effects of expected losses on specific loans or groups of loans that are
related to future events or expected changes in economic conditions.  While
management uses
                                            8
the best information available to make its evaluation, future
adjustments to the allowance may be necessary if there are significant changes
in economic conditions.

The allowance for loan losses includes specific allowances related to
commercial loans which have been judged to be impaired as defined by current
accounting standards.  A loan is impaired when, based on current information,
it is probable that the Company will not collect all amounts due in accordance
with the contractual terms of the loan agreement.  Management has determined
that commercial, financial, agricultural, and commercial real estate loans that
have a nonaccrual status or have had their terms restructured meet this
definition.  Large groups of homogenous loans, such as residential mortgage and
consumer loans, are collectively evaluated for impairment.  Specific allowances
are based on discounted cash flows of expected future payments using the loans'
initial effective interest rate or the fair value of collateral if the loan is
collateral dependent.

In addition, various regulatory agencies periodically review the allowance for
loan losses.  These agencies may require the subsidiary Bank to make additions
to the allowance for loan losses based on their judgments of collectibility
based on information available to them at the time of their examination.

Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or estimated market value in the aggregate and are
carried as "Loans held for sale" on the balance sheet.  Net unrealized losses
are recognized through a valuation allowance by charges to income.  Gains and
losses on the sale of loans held for sale are determined using the specific
identification method using quoted market prices.
<PAGE>
NOTE 7 - FORECLOSED REAL ESTATE

Real estate properties acquired through, or in lieu of, loan foreclosure are to
be sold and are initially recorded at fair value (after deducting estimated
costs to sell) at the date of foreclosure, establishing a new cost basis.
Costs related to development and improvement of property are capitalized,
whereas costs related to holding property are expensed.  After foreclosure,
valuations are periodically performed by management and the real estate is
carried at the lower of carrying amount or fair value less estimated costs to
sell.  Revenue and expenses from operations and changes in any valuation
allowance are included in loss on foreclosed real estate.
                                            9

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

The following discussion and analysis is presented to assist in the
understanding and evaluation of the Company's financial condition and results
of operations.  It is intended to complement the unaudited financial
statements, footnotes, and supplemental financial data appearing elsewhere in
this Form 10-Q and should be read in conjunction therewith.  Dollar amounts are
in thousands, except per share amounts.

Forward-looking statements have been made in this document that are subject to
risks and uncertainties.  While the Company believes these forward-looking
statements are based on reasonable assumptions, all such statements involve
risk and uncertainties that could cause actual results to differ materially
from those contemplated in this report.  The assumptions, risks, and
uncertainties relating to the forward-looking statements in this report include
those described under the caption "Cautionary Statements Regarding Forward-
Looking Information" in Part I of the Company's Form 10-K for the year ended
December 31, 2002 and, from time to time, in the Company's other filings with
the Securities and Exchange Commission.

BALANCE SHEET

At September 30, 2003, total assets were $397,018, an increase of $36,713, or
10.2%, over September 30, 2002.  Gross loans (including loans held for sale and
unamortized direct loan origination costs) were $301,526 at September 30, 2003,
growing $45,846 over September 30, 2002 for an increase of 17.9%.  Book value
of investment securities was $69,988 at September 30, 2003, a decrease of
$5,685 or 7.5% from September 30, 2002.  The decline in securities was due
primarily to prepayments of principal on mortgage-backed securities prompted by
historically low long-term mortgage rates seen during the second quarter of
2003.  Asset growth since September 30, 2002 was funded by an increase in
deposits of $21,513, or 7.5%, an increase in other short-term borrowings of
$6,969, or 298.3%, and an additional FHLB advance of $5 million, or 13.2%.
<PAGE>
<TABLE>
<CAPTION>
Table 1:  Period-End Loan Composition

                                                September 30,            September 30,         December 31, 2002
                                             Dollars      Dollars     Percentage of total               Percentage
(dollars in thousands)                         2003         2002        2003      2002       Dollars     of total
<S>                                         <C>          <C>           <C>        <C>      <C>             <C>
Commercial, industrial and agricultural     $   70,928   $   66,463     23.5%      26.0%   $   64,529       24.8%
Commercial real estate mortgage                140,266      106,902     46.5%      41.7%      114,982       44.2%
Residential real estate mortgage                73,291       64,823     24.3%      25.4%       61,948       23.8%
Residential real estate loans held for sale        179            -      0.1%       0.0%          949        0.4%
Consumer home equity                             8,637         6,601     2.9%       2.6%        7,274        2.8%
Consumer and installment                         8,225        10,891     2.7%       4.3%       10,440        4.0%

Totals                                      $  301,526   $   255,680   100.0%     100.0%   $  260,122      100.0%
</TABLE>
                                            10

The amount of residential real estate mortgages held increased from the year
earlier period and prior quarter by a substantial amount, but continues to
reflect a lower percentage of the total loan portfolio.  The increase in
residential mortgages during 2003 is from the Company retaining some 15 year
fixed rate mortgages rather than selling the principal to the secondary market.
These mortgages were retained as part of an asset-liability management strategy
to maximize net interest margin without a significant increase in interest rate
risk due to the current cash and projected liquidity position in light of
interest sensitivity of the entire balance sheet and opportunities for re-
investment of investment security cash flows into loans or other new
securities.  The amount of 15 year fixed rate mortgages originated by the
program during 2003 was approximately $12.0 million with an average yield of
4.95%.  Approximately one-half of this production was funded by maturing and
prepaid mortgage backed investment securities during this period.  This program
was discontinued during August 2003 and all 15 year fixed rate mortgage loans
originated by the Company are currently sold to other investors on the
secondary market to eliminate the associated interest rate risk.

As the Company reallocated resources to handle demand for residential real
estate loans prompted by historically low interest rates, it experienced
substantial repayments of consumer retail installment loans that were not
replaced.  In its markets, the Company faces substantial competition from
credit unions and other financial institutions for retail installment lending
such as auto loans.  The Company renewed efforts during 2003 to retain some
market share in consumer lending by educating a wider range of bank staff
eligible to originate consumer loans and changing the primary delivery channel
from traditional loan officers to personal bankers and other retail customer
contact staff.  Home equity loans are actively promoted to high quality
individual borrowers with low interest rates as compared to local competitors.

During 2003, commercial real estate mortgages increased primarily from new
commercial construction and financing owner occupied commercial retail
buildings, factories, and warehouses.  Non-real estate commercial and
industrial loans have experienced a shift in which personal property and
equipment secured loans have declined while cash flow business lines of credit
have increased.
<PAGE>
The loan portfolio is the Company's primary asset subject to credit risk.  The
Company's process for monitoring credit risks includes weekly analysis of loan
quality, delinquencies, non-performing assets, and potential problem loans.
Loans are placed on a nonaccrual status when they become contractually past due
90 days or more as to interest or principal payments.  All interest accrued but
not collected for loans (including applicable impaired loans) that are placed
on nonaccrual or charged off is reversed against interest income.  The interest
on these loans is accounted for on the cash basis until qualifying for return
to accrual status.  Loans are returned to accrual status when all the principal
and interest amounts contractually due have been collected and there is
reasonable assurance that repayment according to the contractual terms will
continue.

The aggregate amount of nonperforming assets decreased $1,280 to $3,455 at
September 30, 2003 from $4,735 at September 30, 2002, primarily because of
fewer loans on nonaccrual status.  However, nonperforming assets have increased
$449 from $3,006 at December 31, 2002.  Total
                                            11
nonperforming assets as a percentage of total assets continues to be favorable
with .87% and .81% at September 30, 2003 and December 31, 2002, respectively.

The Company ceases to accrue interest on loans which are 90 days past due and
considers them nonperforming loans until the borrower has made up any late
payments and is able to continue required payments in the future.
Nonperforming loans also include restructured loans until 6 consecutive monthly
payments are received under the new loan terms.  The Company continues to
aggressively manage past due customers and lowered the level of nonperforming
loans to gross loans from 1.74% at September 2002 to 1.09% at September 2003.
The Company also tracks delinquencies on a contractual basis quarter to
quarter.  Loans contractually delinquent 30 days or more as a percentage of
gross loans were 1.02% at September 2003 compared to .87% at December 2002 and
1.24% at September 2002.  The allowance for loan losses was 1.23% of gross
loans at September 2003 compared to 1.33% at September 2002.  Management
reviews the activity in individual identified problem loans weekly and adjusts
for the adequacy of loan loss reserves quarterly.

At September 30, 2002 nonaccrual loans included $587 of loan principal to a
borrower secured by non real-estate commercial collateral.  During September
2002, the Company was notified of the borrower's bankruptcy.  The Bank was not
the lead lender in the commercial relationship, and due to inadequate
collateral protection, an additional $270 of loan loss provisions were recorded
during the quarter ended September 30, 2002 to cover estimated principal losses
not specifically identified and reserved previously.  During October 2002, a
charge-off of $376 was authorized and recorded.  The remaining principal
balance on this relationship was fully reserved in the allowance for loan
losses from provisions made prior to September 30, 2002.
<PAGE>
<TABLE>
<CAPTION>
Table 2:  Allowance for Loan Losses

                                           Three months ended      Nine months ended
                                               September 30,          September 30,
(dollars in thousands)                        2003       2002       2003       2002
<S>                                        <C>         <C>        <C>        <C>
Allowance for loan losses at beginning     $ 3,517     $ 3,254    $ 3,158    $ 2,969

Provision for loan losses                      240         450        705        810
Recoveries on loans previously charged-off      13          11         35         59
                                               (78)       (321)      (206)      (444)
Loans charged off

Allowance for loan losses at end           $ 3,692     $ 3,394    $ 3,692    $ 3,394
</TABLE>
Nonperforming assets include: 1) loans that are either contractually past due
90 days or more as to interest or principal payments, on a nonaccrual status,
or the terms of which have been
                                            12
renegotiated to provide a reduction or deferral of interest or principal
(restructured loans) and 2) foreclosed assets.
<TABLE>
<CAPTION>
Table 3:  Nonperforming Assets

                                                      Sept. 30,           Dec. 31,
(dollars in thousands)                         2003           2002          2002
<S>                                        <C>            <C>           <C>
Nonaccrual loans                           $    2,775     $    3,784    $    1,786
Accruing loans past due 90 days or more             7              -             -
Restructured loans not on nonaccrual              490            655           647

Total nonperforming loans                       3,272          4,439         2,433
Foreclosed assets                                 183            296           573

Total nonperforming assets                 $    3,455     $    4,735    $    3,006

Nonperforming loans as a % of gross
   loans receivable                              1.09%          1.74%         0.94%

Total nonperforming assets as a % of total
   Assets                                        0.87%          1.31%         0.81%
</TABLE>
LIQUIDITY

Liquidity refers to the ability of the Company to generate adequate amounts of
cash to meet the Company's need for cash at a reasonable cost.  The Company
manages its liquidity to provide adequate funds to support borrowing needs and
deposit flow of its customers.  Management views liquidity as the ability to
raise cash at a reasonable cost or with a minimum of loss and as a measure of
balance sheet flexibility to react to marketplace, regulatory, and competitive
changes.  Deposit growth is the primary source of funding.  Retail core and
time deposits as a percentage of total funding sources were 72.0% at September
30, 2003, and 75.2% at September 30, 2002.  Wholesale funding and broker and
<PAGE>
national certificates of deposit represent the balance of the Company's total
funding needs.  Company use of brokered jumbo deposits has increased since
September 2002 and accounted for 2.2% of the decline in retail deposits as a
percentage of total funding sources.
                                            13
<TABLE>
<CAPTION>
Table 4: Period-end Deposit Composition


                                                           September 30,
                                                    2003                2002
(dollars in thousands)                           $      %           $            %
<S>                                    <C>             <C>      <C>          <C>
Non-interest bearing demand            $     46,700     15.1%   $    43,316    15.0%
Interest-bearing demand and savings           45,257    14.6%        32,848    11.4%
Money market deposits                         70,747    22.8%        74,119    25.6%
Retail time deposits less than $100           59,180    19.0%        60,656    21.0%
Retail time deposits $100 and over            39,968    12.9%        37,424    13.0%
Broker & national time deposits
   less than $100                             11,011     3.6%        12,946     4.5%
Broker & national time deposits $100
   and over                                   37,242    12.0%        27,283     9.5%

Totals                                 $     310,105   100.0%   $   288,592   100.0%
</TABLE>
The interest rate paid on money market deposits is adjustable based on the
Company's discretion but generally tracks the movements of national money
market funds.  As short-term interest rates have decreased during 2002 and
2003, the yield on this account has declined substantially.  Deposits due to
investors as part of the Company's secondary market loan servicing activities
included in total non-interest bearing deposits was approximately $2.4 million
at September 30, 2003 compared to $4.5 million at September 30, 2002.  As a
source of low cost long-term deposits and in connection with a new full service
retail location in Rhinelander, Wisconsin, the Company is aggressively seeking
commercial non-interest bearing deposits as well as consumer core deposits.
<TABLE>
<CAPTION>
Table 5: Summary of Changes by Significant Deposit Source

                                                      September 30,        Change from prior year
(dollars in thousands)                            2003           2002            $         %
<S>                                        <C>             <C>           <C>            <C>
Total time deposits $100 and over          $       77,210  $     64,707  $    12,503    19.3%
Total broker and national time deposits            48,253        40,229        8,024    19.9%
Total retail time deposits                         99,148        98,080        1,068     1.1%
Core deposits, including money market
   Deposits                                       162,704       150,283       12,421     8.3%
</TABLE>
The Company's retail deposit offices are in locations that demand consumer
retail deposit rates generally greater than national rates for equivalent
certificate of deposit terms.  To fund larger commercial loan originations or
acquire other large blocks of funding, the Company actively
                                            14
purchases broker and other national time deposits.  The Company actively
manages such deposits to control the potential volatility of such funds while
<PAGE>
lowering overall deposit borrowing costs. Consequently, broker and national
deposits increased substantially over the prior year, while local retail
deposits have shown modest growth in comparison.  Company policy is to limit
broker and national time deposits to 20% of total assets.  As of September
30, 2003 broker and national time deposits were 12.2% of total assets.

Unused credit advances from the Federal Home Loan Bank of Chicago available to
the Company at September 30, 2003 totaled approximately $34 million based on an
open line of credit and securities available for pledging for advances.  In
addition, the Company had unused commitments from other correspondent banks for
federal funds purchased up to $19.9 million.  The primary alternative funding
sources utilized are Federal Home Loan Bank advances, federal funds purchased,
repurchase agreements from a base of individuals, businesses and public
entities, and brokered time deposits.  The Company believes its current
liquidity position and sources of funds for liquidity management is adequate.

Table 6 below presents maturity repricing information as of September 30, 2003.
The following repricing methodologies should be noted:

1.    Money market deposit accounts are considered fully repriced within 90
      days.  NOW and savings accounts are considered "core" deposits as they
      are generally insensitive to interest rate changes.  These deposits are
      considered to reprice beyond 5 years.

2.    Nonaccrual loans are considered to reprice beyond 5 years.

3.    Assets and liabilities with contractual calls or prepayment options are
      repriced according to the likelihood of the call or prepayment being
      exercised in the current interest rate environment.

4.    Impact of rising or falling interest rates is based on a parallel yield
      curve change that is fully implemented within a 12 month time horizon.
                                            15
<PAGE>
<TABLE>
<CAPTION>
Table 6: Interest Rate Sensitivity Gap Analysis

                                                             September 30, 2003
(dollars in thousands)        0-90 Days   91-180 days   181-365 days  1-2 yrs.  Bynd 2-5 yrs. Beyond 5 yrs. Total
<S>                          <C>         <C>          <C>          <C>         <C>          <C>        <C>
Earning assets:
    Loans                    $ 110,354   $  21,297    $   42,432   $  51,038   $  61,331    $  15,074  $  301,526
    Securities                   3,780       4,658         9,004      18,126      18,067       16,353      69,988
    FHLB stock                   2,402           -             -           -           -            -       2,402
    Other earning assets         4,669           -            -            -           -            -       4,669

Total                        $ 121,205   $  25,955    $   51,436   $  69,164   $  79,398    $  31,427  $  378,585
Cumulative rate
  sensitive assets           $ 121,205   $ 147,160    $  198,596   $ 267,760   $ 347,158    $ 378,585

Interest-bearing liabilities
    Interest-bearing         $  91,698   $  17,351    $   48,178   $  22,974   $  33,691    $  49,513  $  263,405
    deposits
    FHLB advances               16,000           -             -      19,000       8,000            -      43,000
    Other borrowings             2,907       1,644          3,728          -       2,204            -      10,483

Total                        $ 110,605   $  18,995    $    51,906  $  41,974   $  43,895    $  49,513  $  316,888
Cumulative interest
  sensitive liabilities      $ 110,605   $ 129,600    $   181,506  $ 223,480   $ 267,375    $ 316,888

Interest sensitivity gap for
    the individual period    $  10,600   $   6,960    $      (470) $  27,190   $  35,503    $ (18,086)

Ratio of rate sensitive assets
    to rate sensitive
    liabilities for
    the individual period        109.6%      136.6%          99.1%     164.8%      180.9%        63.5%

Cumulative interest
  sensitivity gap            $  10,600   $  17,560    $    17,090  $   44,280  $  79,783    $  61,697

Cumulative ratio of rate
  sensitive assets
    to rate sensitive            109.6       113.5%         109.4%      119.8%     129.8%       119.5%
    liabilities
</TABLE>
If interest rates rose 200 basis points or fell 100 basis points, the 365 day
cumulative ratio of rate sensitive assets to rate sensitive liabilities would
change from 109.4% to 103.7% (if up 200 basis points) and 113.3% (if down 100
basis points), respectively.  The Asset/Liability Committee uses financial
modeling techniques that measure the interest rate risk.  Policies established
by the Bank's Asset/Liability Committee are intended to limit exposure of
earnings at risk.  A formal liquidity contingency plan exists that directs
management to the least expensive liquidity sources to fund sudden and
unanticipated liquidity needs.  The Company also uses various policy measures
to assess adequacy of the Company's liquidity and interest rate risk as
described below.
                                            16
<PAGE>
Basic Surplus

The Company measures basic surplus as the amount of existing net liquid assets
(after deducting short-term liabilities and coverage for anticipated deposit
funding outflows during the next 30 days) divided by total assets.  The basic
surplus calculation does not consider unused but available correspondent bank
federal funds purchased, as those funds are subject to availability based on
the correspondent bank's own liquidity needs and therefore are not guaranteed
contractual funds.  The Company's basic surplus, including available open line
of credit FHLB advances not yet utilized at September 30, 2003 and 2002 was
7.4% and 14.0%, respectively and above the 5% minimum required by policy.

Interest Rate Risk Limits

The Company balances the need for liquidity with the opportunity for increased
net interest income available from longer term loans held for investment and
securities.  To measure the impact on net interest income from interest rate
changes, the Company models interest rate simulations on a quarterly basis.
Company policy is that projected net interest income over the next 12 months
will not be reduced by more than 15% given a change in interest rates of up to
200 basis points.  At September 30, 2003, net interest income for the next 12
months was projected to increase 1.64% if rates increased 200 basis points, and
was projected to decrease 1.55% if rates decreased 100 basis points, which is
less than the 15% required by policy and was considered acceptable by
management.  At September 30, 2002, net interest income for the next 12 months
was projected to decrease 1.88% if rates increased 200 basis points, and was
projected to decrease 1.75% if rates decreased 100 basis points.

Core Funding Utilization

To assess whether interest rate sensitivity beyond one year helps mitigate or
exacerbate the short-term rate sensitive position, a quarterly measure of core
funding utilization is made.  Core funding is defined as liabilities with a
maturity in excess of 60 months and capital.  "Core" deposits including DDA,
NOW and non-maturity savings accounts (except money market accounts) are also
considered core long-term funding sources.  The core funding utilization ratio
is defined as assets with a maturity in excess of 60 months divided by core
funding.  The Company's target for the core funding utilization ratio is to
remain at 80% or below given the same 200 basis point changes in rates that
apply to the guidelines for interest rate risk limits exposure described
previously.  At September 30, 2003, the Company's core funding utilization
ratio was projected to be 44.6% if rates increased 200 basis points and was
therefore within policy requirements.  At September 30, 2002, the Company's
core funding utilization ratio was projected to be 42.0% if rates increased 200
basis points.

CAPITAL RESOURCES

Stockholders' equity at September 30, 2003 increased $3,310 to $31,400, or
11.8% from $28,090 at September 30, 2002.  Stockholders' equity included
unrealized gains on securities available for sale, net of their tax effect, of
$891 at September 30, 2003 compared to unrealized gains of $735 at September
30, 2002.
                                            17
The adequacy of the Company's capital is regularly reviewed to ensure
sufficient capital is available for current and future needs and is in
<PAGE>
compliance with regulatory guidelines.  As of September 30, 2003, and 2002, the
Subsidiary Bank's Tier 1 risk-based capital ratio, total risk-based capital,
and Tier 1 leverage ratio were well in excess of regulatory minimums and were
classified as "well-capitalized".  Management expects the Company to remain
well-capitalized during the remainder of 2003 based on planned asset growth.

The Company maintains an annual, ongoing share repurchase program of up to 1%
of outstanding shares per year.  During the quarter ended September 30, 2003,
the Company completed the annual repurchase program and repurchased 400 shares
at an average price of $34.00 per share.  For all of 2003, 16,700 shares were
repurchased at an average price of $33.10 per share.  For the remainder of
2003, management anticipates retaining capital to support asset growth while
continuing a cash dividend to shareholders.

Effective with the $.30 dividend declared June 17, 2003, the Company intends to
equalize the amounts of the semi-annual cash dividends.  Accordingly, under the
dividend policy, the Company expects that the dividend to be paid in January,
2004 may be less than the January 2003 dividend, but that the total dividends
to be paid in July 2003 and January 2004 will exceed the $.565 per share total
dividends paid in July 2002 and January 2003.  The Company also reaffirmed its
goal of increasing its shareholder dividend on an annual basis subject to
operating results and financial condition of the Company.
<TABLE>
<CAPTION>
Table 7:  Capital Ratios - Consolidated Holding Company

                                                                     September 30,     Dec 31.
                                                                    2003      2002      2002
<S>                                                                <C>       <C>       <C>
Tier 1 capital to period end tangible assets (leverage ratio)       7.68%     7.59%     7.55%
Tier 1 capital to adjusted risk-weighted assets                     9.79%    10.33%    10.25%
Total capital to adjusted risk-weighted assets                     10.97%    11.58%    11.41%
</TABLE>
On November 19, 2002, the Company's shareholders approved an increase in
authorized shares from 1,000,000 to 3,000,000, allowing the Board of Directors
to effect a 2 for 1 stock split paid on December 2, 2002.  All references in
the accompanying financial statements and statistical analysis to the number of
common shares and per share amounts for 2002 have been restated to reflect the
split.

PREMISES AND EQUIPMENT

The Company announced during July 2003 the construction of a new bank and
financial services office and administrative headquarters located on property
adjacent to the existing Wausau, Wisconsin, main office location.  Construction
of the 32,000 square foot office and drive-through canopy began during August
with completion anticipated by the end of the second quarter 2004.  The
existing Wausau main office which has been used since the Bank opened in 1962
and as most recently expanded during 1992 will be razed.  Building project
costs including necessary
                                            18
furniture, fixtures, and equipment are estimated to be $4.4 million.  Annual
depreciation expense after this investment in fixed assets and equipment is
estimated to increase $165 ($100 after income tax benefits).  As of November 6,
2003, approximately $749 had been spent on the project ($451 was spent by
September 30, 2003).  The amount of interest capitalized as project costs by
September 30, 2003 was insignificant.
<PAGE>
RESULTS OF OPERATIONS

Net income for the quarter ended September 30, 2003 totaled $1,235, or $.75 for
basic earnings per share, and $.74 for diluted earnings per share.
Comparatively, net income for the quarter ended September 30, 2002 was $1,051,
or $.63 per share for basic and diluted earnings per share. Operating results
for the third quarter 2003 generated an annualized return on average assets of
1.26% and an annualized return on average equity of 15.76%, compared to 1.17%
and 15.00% for the comparable period in 2002.

The following Table 8 presents consolidated quarterly summary financial data of
PSB Holdings, Inc. and Subsidiary.
                                            19
<PAGE>
<TABLE>
<CAPTION>
Table 8: Financial Summary

(dollars in thousands, except per share data)                        Quarter ended
                                          Sept. 30,       June 30,        March 31,        Dec. 31,       Sept. 30,
EARNINGS AND DIVIDENDS:                     2003            2003            2003             2002           2002
<S>                                   <C>            <C>               <C>           <C>             <C>
    Net interest income               $     3,306    $     3,268       $     3,232   $      3,288    $      3,256
    Provision for loan losses         $       240    $       240       $       225   $        300    $        450
    Other noninterest income          $     1,143    $       726       $     1,122   $      1,040    $        841
    Other noninterest expense         $     2,335    $     2,220       $     2,317   $      2,072    $      2,097
    Net income                        $     1,235    $     1,057       $     1,224   $      1,332    $      1,051
    Basic earnings per share          $      0.75    $      0.64       $      0.73   $       0.80    $       0.63
    Diluted earnings per share        $      0.74    $      0.63       $      0.73   $       0.80    $       0.63
    Dividends declared per share      $         -    $     0.300       $         -   $      0.375    $          -
    Net book value per share          $     19.02    $     18.63       $     18.24   $      17.59    $      16.83
    Dividend payout ratio                    0.00%         46.88%             0.00%         46.88%           0.00%
    Average common shares outstanding   1,651,265      1,661,142         1,665,729       1,667,341      1,672,836

BALANCE SHEET - AVERAGE BALANCES:
    Loans receivable, net of
    allowances for loss               $   288,448    $   265,863       $   256,715   $     255,591   $    249,691
    Assets                            $   389,267    $   371,537       $   365,906   $     363,507   $    355,224
    Deposits                          $   307,752    $   292,698       $   289,635   $     291,049   $    283,889
    Stockholders' equity              $    31,085    $    30,670       $    29,848   $      28,677   $     27,792

PERFORMANCE RATIOS:
    Return on average assets (1)             1.26%          1.14%             1.36%           1.45%          1.17%
    Return on average stockholders'
      equity (1)                            15.76%         13.82%            16.63%          18.43%         15.00%
    Average tangible stockholders'
      equity to average assets               7.70%          7.92%             7.84%           7.71%          7.61%
    Net loan charge-offs to average
      loans                                  0.02%          0.01%             0.03%           0.21%          0.12%
    Nonperorming loans to gross loans        1.09%          1.06%             1.13%           0.94%          1.74%
    Allowance for loan losses to gross
      loans                                  1.23%          1.26%             1.28%           1.22%          1.33%
    Net interest rate margin (1)(2)          3.67%          3.83%             3.89%           3.89%          3.95%
    Net interest rate spread (1)(2)          3.21%          3.34%             3.42%           3.36%          3.43%
    Service fee revenue as a percent
    of average demand deposits (1)           2.48%          2.83%             2.99%           2.98%          3.41%
    Noninterest income as a percent
      of gross revenue                      17.90%         12.13%            17.49%          15.81%         13.05%
    Efficiency ratio (2)                    50.94%         53.86%            51.67%          46.42%         49.52%
    Noninterest expenses to average
       assets (1)                            2.38%          2.40%             2.57%           2.26%          2.34%

STOCK PRICE INFORMATION:
    High                              $      34.24   $     34.00       $     27.25   $       25.00   $      21.05
    Low                               $      33.00   $     30.00       $     23.75   $       20.55   $      19.18
    Market value at quarter-end       $      33.50   $     33.25       $     27.25   $       25.00   $      20.58
<FN>
(1) Annualized
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent
    basis using a tax rate of 34%.
</TABLE>
                                            20
<PAGE>
NET INTEREST INCOME

Net interest income is the most significant component of earnings. Tax adjusted
net interest income increased $47 from $3,394 for the quarter ended September
30, 2002 to $3,441 for the current quarter ended September 30, 2003. For the
comparable 9-month periods ending September 30, 2003 and 2002, tax adjusted net
interest income increased $437, comprised of an increased $1,213 from
additional asset volume, but decreased $776 due to declining net interest
margin. Quarterly tax-adjusted net interest margin as a percent of average
interest earning assets decreased from 3.95 % in September 2002 to 3.67 % in
September 2003. Net interest margin was 3.95 % for the year ended December 31,
2002.

During 2002, the Company benefited from a falling interest rate environment as
deposits and short-term borrowings repriced faster at lower rates than loans
with longer terms and maturities. However, the prolonged low interest rate
environment through September 30, 2003 has put more pressure on loan and asset
yields than on already low cost of funds. In addition, the Company has
positioned itself for an eventual increase in interest rates by extending
maturities of certain liabilities at a higher cost. The Company continues to be
asset sensitive as seen in Table 6 with a 365 day cumulative ratio of rate
sensitive assets to rate sensitive liabilities of 109.4%. In the near term, the
Company expects net interest margin to stabilize as loan and security assets
have received the majority of anticipated prepayments due to declining interest
rates.  In addition, the Company expects the prime to remain the same in the
near term.

Quarterly yield on earning assets decreased 95 basis points to 5.73% compared
to 6.68% at September 30, 2002.  Similarly, the costs for interest-bearing
liabilities decreased 73 basis points to 2.52% from 3.25% at September 30,
2002. Management believes short-term term interest rates to be at the bottom of
the current interest rate cycle.  In addition, long-term interest rates are
expected to increase modestly as the national economy improves growth
prospects. Management believes it is well positioned for future rate increases,
as well as continued stable rate environments relative to competitors. Refer to
the previous discussion on management of net interest margin and the liquidity
for the Company's strategies and positions in this area.
                                            21
<PAGE>
<TABLE>
<CAPTION>
Table 9A: Net Interest Income Analysis (Quarter)

(dollars in thousands)                     Quarter ended Sept. 30, 2003      Quarter ended Sept. 30, 2002
                                       Average                   Yield/   Average                   Yield/
                                       Balance       Interest     Rate    Balance       Interest     Rate
<S>                                 <C>           <C>             <C>    <C>           <C>         <C>
Assets
Interest-earning assets:
   Loans (1)(2)                     $  292,023    $      4,609    6.26%  $  252,879    $  4,650    7.30%
   Taxable securities                   48,500             359    2.94%      50,678         665    5.21%
   Tax-exempt securities (2)            22,744             352    6.14%      20,431         338    6.56%
   FHLB stock                            2,391              38    6.31%       2,234          27    4.79%
   Other                                 6,457              18    1.11%      14,698          59    1.59%
   Total (2)                           372,115           5,376    5.73%     340,920       5,739    6.68%

Non-interest-earning assets:
   Cash and due from banks              11,439                                8,529
   Premises and equipment,
      net                                6,302                                5,692
   Other assets                          2,986                                3,271
   Allowance for loan
      losses                            (3,575)                             (3,188)
   Total                            $  389,267                           $ 355,224

Liabilities & stockholders' equity
Interest-bearing liabilities:
   Savings and demand
      deposits                      $    42,589   $         63    0.59%  $  34,110     $     88    1.02%
   Money market deposits                 69,230            161    0.92%     72,555          267    1.46%
   Time deposits                        144,298          1,144    3.15%    138,413        1,378    3.95%
   FHLB borrowings                       38,707            506    5.19%     38,000          577    6.02%
   Other borrowings                       9,684             61    2.50%      3,363           35    4.13%
   Total                                304,508          1,935    2.52%    286,441        2,345    3.25%

Non-interest-bearing liabilities:
   Demand deposits                       51,635                             38,811
   Other liabilities                      2,039                              2,180
   Stockholders' equity                  31,085                             27,792
   Total                            $   389,267                         $  355,224

Net interest income                                      3,441                            3,394
Rate spread                                                       3.21%                            3.43%
Net yield on interest-earning assets                              3.67%                            3.95%
<FN>
(1) Nonaccrual loans are included in the daily average loan balances outstanding.
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent
    basis using a tax rate of 34%.
</TABLE>
                                            22
<PAGE>
<TABLE>
<CAPTION>
Table 9B: Net Interest Income Analysis (YTD)

(dollars in thousands)                     Nine months ended Sept 30, 2003      Nine months ended Sept. 30, 2002
                                          Average                    Yield/     Average                   Yield/
                                          Balance        Interest     Rate      Balance       Interest     Rate
<S>                                   <C>            <C>               <C>   <C>           <C>             <C>
Assets
Interest-earning assets:
   Loans (1)(2)                       $  273,854     $    13,509       6.60% $  246,040    $    13,525     7.35%
   Taxable securities                     53,871           1,475       3.66%     49,901          2,033     5.45%
   Tax-exempt securities (2)              22,003           1,024       6.22%     20,400          1,021     6.69%
   FHLB stock                              2,345             111       6.33%      2,204             81     4.91%
   Other                                   7,424              64       1.15%      9,893            122     1.65%
   Total (2)                             359,497          16,183       6.02%    328,438         16,782     6.83%

Non-interest-earning assets:
   Cash and due from banks                10,200                                  9,023
   Premises and equipment,
      Net                                  6,229                                  5,226
   Other assets                            3,125                                  3,231
   Allowance for loan
      Losses                              (3,396)                                (3,140)
   Total                              $  375,655                             $  342,778

Liabilities & stockholders' equity
Interest-bearing liabilities:
   Savings and demand
      Deposits                        $    39,255    $       182      0.62%  $   32,018    $       267     1.11%
   Money market deposits                   68,449            520      1.02%      73,312            818     1.49%
   Time deposits                          142,783          3,610      3.38%     130,834          4,110     4.20%
   FHLB borrowings                         38,238          1,520      5.31%      38,000          1,712     6.02%
   Other borrowings                         7,823            154      2.63%       3,521            115     4.37%
   Total                                  296,548          5,986      2.70%     277,685          7,022     3.38%

Non-interest-bearing liabilities:
   Demand deposits                         46,307                                36,178
   Other liabilities                        2,265                                 2,009
   Stockholders' equity                    30,535                                26,906
   Total                              $   375,655                            $  342,778

Net interest income                                       10,197                                 9,760
Rate spread                                                           3.32%                                3.45%
Net yield on interest-earning assets                                  3.79%                                3.97%
<FN>
(1) Nonaccrual loans are included in the daily average loan balances outstanding.
(2) The yield on tax-exempt loans and securities is computed on a tax-equivalent
    basis using a tax rate of 34%.
</TABLE>
                                            23
<PAGE>
<TABLE>
<CAPTION>

Table 10: Interest Expense and Expense Volume and Rate Analysis
Nine months ended September 30, 2003

                                                             2003 compared to 2002
                                                        increase (decrease) due to (1)
(dollars in thousands)                         Volume               Rate                Net
<S>                                    <C>                 <C>                 <C>
Interest earned on:
      Loans (2)                        $      1,529        $     (1,545)       $          (16)
      Taxable securities                        162                (720)                 (558)
      Tax-exempt securities (2)                  80                 (77)                    3
      FHLB stock                                  5                  25                    30
      Other interest income                     (30)                (28)                  (58)

Total                                         1,746              (2,345)                 (599)

Interest paid on:
      Savings and demand deposits                 60               (145)                  (85)
      Money market deposits                      (54)              (244)                 (298)
      Time deposits                              375               (875)                 (500)
      FHLB borrowings                             11               (203)                 (192)
      Other borrowings                           141               (102)                   39

Total                                            533             (1,569)               (1,036)

Net interest earnings                  $       1,213       $       (776)       $          437
<FN>
(1) The change in interest due to both rate and volume has been allocated to volume and rate changes
in proportion to the relationship of the absolute dollar amounts of the change in each.
(2) The yield on tax-exempt loans and investment securities has been adjusted to its fully taxable
Equivalent using a 34% tax rate.
</TABLE>

PROVISION FOR LOAN LOSSES

Management determines the adequacy of the provision for loan losses based on
past loan experience, current economic conditions, and composition of the loan
portfolio.  Accordingly, the amount charged to expense is based on management's
evaluation of the loan portfolio.  It is the Company's policy that when
available information confirms that specific loans and leases, or portions
thereof, including impaired loans, are uncollectible, these amounts are
promptly charged off against the allowance.  The provision for loan losses was
$240 for the three months ended September 30, 2003, and $450 for the three
months ended September 30, 2002.  Net charge-offs as a percentage of average
loans outstanding were .02% and .12% during the three months ended September
30, 2003 and 2002, respectively. Refer to the discussion of a large problem
loan relationship at September 2002 under the Balance Sheet discussion
following Table 1: Period-End Loan Composition.
                                            24
Nonperforming loans are reviewed to determine exposure for potential loss
within each loan category.  The adequacy of the allowance for loan losses is
assessed based on credit quality and other pertinent loan portfolio
information.  The adequacy of the allowance and the provision for loan losses
<PAGE>
is consistent with the composition of the loan portfolio and recent credit
quality history.

NONINTEREST INCOME

Noninterest income grew $302 in the third quarter 2003 to $1,143 compared to
$841 in 2002.  Virtually all of this growth ($328) was from an increase of
income from the sale of long-term fixed rate mortgage loans, net of servicing
right amortization and provision for impairment.  The majority of loans sold to
outside investors continue to be serviced by the Bank directly with the
customer.  Gain on sale and servicing of such loans during the quarter was $655
in September 2003 compared to $327 during September 2002.  For the nine months
ended September 30, gain on sale and servicing fixed rate mortgages was $1,499
and $678 in 2003 and 2002, respectively.  During June 2003, additional expense
from a change in accounting estimate related to accounting for mortgage
servicing rights of $236 was recorded which reduced second quarter diluted
earnings by approximately $.09 per share.

Through September 30, 2003, the gain on sale and servicing of loans is more
than double the prior year's activity through September 30, 2002, and has
substantially enhanced income as interest margins declined during 2003.
Management does not expect the current level of mortgage refinancing income to
continue during the fourth quarter 2003.  The Company intends to replace this
fee income with ongoing servicing fees of the existing mortgage portfolio and
additional investment and insurance sales income.  During 2003, the Bank
increased the number of commissioned investment sales professionals on staff.
Investment and insurance sales commissions were $303 during the nine months
ended September 2003 compared to $189 in the same period ended September 2002.

On September 3, 2003, the Company announced formation of Peoples Insurance
Services LLC, a commercial property and casualty insurance agency and
brokerage.  The Company believes the commercial insurance products are a good
fit with the existing commercial loan customer base in addition to
opportunities available with non-customers in the local market area.  Mr. Jeff
Cole has been named President of Peoples Insurance Services and brings
experience in pricing insurance products in addition to experience in managing
and selling such insurance products.

At September 30, 2003, the Company serviced $148,738 of loans for outside
investors compared to $64,780 serviced at September 30, 2002.  The following
table summarizes the activity in mortgage servicing rights for the nine-month
period ended September 30, 2003.  The valuation allowance was recorded to
recognize impairment of the mortgage servicing right asset due to declines in
interest rates that may cause borrowers to prepay mortgage principal much
faster than estimated at the time the mortgage was originated.
                                            25
<PAGE>
<TABLE>
<CAPTION>
Table 11: Mortgage Servicing Rights Activity
Nine months ended September 30, 2003

                                                   Originated        Valuation
(dollars in thousands)                                MSR            Allowance           Total
<S>                                         <C>              <C>               <C>
January 1, 2003                             $           812  $         (115)   $            697

Originated servicing                                    714                                 714
Amortization charged to earnings                       (634)                               (634)
Valuation adjustment charged to earnings                (28)            (28)

September 30, 2003                          $           892  $         (143)   $            749
</TABLE>
As a FHLB Mortgage Partnership Finance loan servicer, the Company has provided
a credit enhancement guarantee to reimburse the FHLB for foreclosure losses in
excess of 1% of the original loan principal sold to the FHLB on an aggregate
pool basis.  At September 30, 2003, the maximum Company obligation on the
entire servicing portfolio for such guarantees would be approximately $493
(.33% of the serviced principal).  Due to historical strength of mortgage
borrowers in our markets, the original 1% of principal loss pool provided by
the FHLB, and current economic conditions, management believes the possibility
of losses under guarantees to the FHLB to be remote. Accordingly, no provision
for a recourse liability has been made for this recourse obligation on loans
currently serviced by the Company.

NONINTEREST EXPENSE

Noninterest operating expenses increased $238 to $2,335 in September 2003
compared to $2,097 during September 2002, an increase of 11.3%.  Increases in
employee salaries and benefits totaled $188 during the quarter ended September
30, 2003 compared to the prior year quarter, as bank employees were granted
inflationary and merit increases effective January 1, 2003 averaging 6.1%.  In
addition, the Company hired additional lenders in our Rhinelander market and
investment and insurance sales representatives during 2003 that have had a
significant impact.  Operating expenses as a percent of average assets
increased slightly to 2.38% during the third quarter September 2003 compared to
2.34% during September 2002.  Year to date, additional operating costs have
been offset by increased revenue, as the expense efficiency ratio improved to
52.11% for the nine months ended September 2003 compared to 52.30% in the prior
year.
                                            26

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the information provided in response to
Item 7A of the Company's Form 10-K for the year ended December 31, 2002.

ITEM 4.     INTERNAL CONTROLS AND PROCEDURES

As of the end of the period covered by this report, management, under the
supervision, and with the participation, of the Company's President and Chief
Executive Officer and the Chief Financial Officer, evaluated the effectiveness
of the design and operation of the Company's disclosure controls and procedures
<PAGE>
pursuant to Rule 13a-15(c) under the Securities Exchange Act of 1934.  Based
upon, and as of the date of such evaluation, the President and Chief Executive
Officer and the Chief Financial Officer concluded that the Company's disclosure
controls and procedures were effective in all material respects.  There have
been no significant changes in the Company's internal controls or in other
factors which could significantly affect internal controls subsequent to the
date the Company carried out its evaluation, nor were there any significant
deficiencies or material weaknesses identified which required any corrective
action to be taken.
                                            27

                          PART II - OTHER INFORMATION


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

(a)  Exhibits.

     Exhibits required by Item 601 of Regulation S-K.

     Exhibit
     Number                        Description

     31.1  Certification of CEO under Section 302 of Sarbanes-Oxley Act of 2002
     31.2  Certification of CFO under Section 302 of Sarbanes-Oxley Act of 2002
     32.1  Certifications under Section 906 of Sarbanes-Oxley Act of 2002

(b)   Reports on Form 8-K:

     Form 8-K dated September 3, 2003.  The Company filed a current report on
Form 8-K on September 3, 2003, to announce the commencement of commercial
insurance sales through a wholly-owned subsidiary, Peoples Insurance Services
LLC under Item 9.

     Form 8-K dated July 23, 2003.  The Company filed a current report on Form
8-K on July 23, 2003, reporting earnings for the second quarter ended June 30,
2003, under Item 5 and additional related disclosure under Items 9 and 12.

     Form 8-K dated July 14, 2003.  The Company filed a current report on Form
8-K on July 14, 2003, to announce the construction of a new regional financial
services office and administrative headquarters under Item 9.
                                            28
<PAGE>
                                  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 HOLDINGS, INC.



November 12, 2003                   SCOTT M. CATTANACH
                                    Scott M. Cattanach
                                    Treasurer

                                    (On behalf of the Registrant and as
                                    Principal Financial Officer)
                                            29

                                 EXHIBIT INDEX
                                      TO
                                   FORM 10-Q
                                      OF
                              PSB HOLDINGS, INC.
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
                 PURSUANT TO SECTION 102(D) OF REGULATION S-T
                        (17 C.F.R. Section 232.102(D))



The following exhibits are filed as part this report:

31.1  Certification of CEO under Section 302 of Sarbanes-Oxley Act of 2002
31.2  Certification of CFO under Section 302 of Sarbanes-Oxley Act of 2002
32.1  Certifications under Section 906 of Sarbanes-Oxley Act of 2002