SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

 Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
                1934 For the Fiscal Year Ended December 31, 2000

                          Commission File No. 333-44161

                               PSB BANCGROUP, INC.

       A Florida Corporation (IRS Employer Identification No. 59-3454146)
                              500 South 1st Street
                               Lake City, FL 32025
                                 (904) 754-0002

Securities  Registered  Pursuant to Section 12(b) of the Securities exchange Act
of 1934:

                                      NONE
                                      ----

Securities  Registered  Pursuant to Section 12(g) of the Securities Exchange Act
of 1934:

                                      NONE
                                      ----

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  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X  No
                                       --    --
Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not  contained  in this  form,  and  will  not be  contained,  to the best of
Registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by  reference  in Part III of the Firm 10-KSB or any  amendment to
this Form 10-KSB. [ ]

Revenues for the fiscal year ended December 31, 2000: $1,065,696

The  aggregate  market  value  of the  common  stock of the  Registrant  held by
nonaffiliates  of  the  Registrant  (449,364  shares)  on  March  3,  2001,  was
approximately  $4,493,640.  As of such date, no organized trading market existed
for the common stock of the Registrant.  The aggregate market value was computed
by reference to recent trading activity of the common stock of the registrant at
$10.00 per share.  For the purposes of this  response,  directors,  officers and
holders  of 5% or more of the  Registrant's  common  stock  are  considered  the
affiliates of the Registrant at that date.

The number of shares  outstanding of the Registrant's  common stock, as of March
3, 2001: 516,784 shares of $0.01 par value common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

1.     Portions  of  the  Audited Consolidated Financial Statements for the year
       ended December 31, 2000. (Part II)

2.     Portions  of Proxy Statement for the 2001 Annual Meeting of Shareholders.
       (Part III)



<PAGE>




                               TABLE OF CONTENTS

Consolidated--  PSB  BancGroup,  Inc.,  and its  subsidiary  are  referred to as
("Registrant").



                                                                     Page Number

PART I
Item 1     Business.......................................................     3
Item 2     Properties.....................................................    12
Item 3     Legal Proceedings..............................................    12
Item 4     Submission of Matters to a Vote of Security Holders............    12

PART II
Item 5     Market for Common Equity and Related Stockholder Matters.......    12
Item 6     Management's Discussion and Analysis of Financial Condition and
           Results of Operations..........................................    12
Item 7     Financial Statements and Supplementary Data.................... 22(1)
Item 8     Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure............................    22

PART III
Item 9     Directors and Executive Officers of the Registrant............. 22(2)
Item 10    Executive Compensation......................................... 22(2)
Item 11    Security Ownership of Certain Beneficial Owners and Management. 23(2)
Item 12    Certain Relationships and Related Transactions.................... 23

PART IV
Item 13    Exhibits, Financial Statement Schedules, and Reports on........... 23
           Form 8-KSB

--------------------------------
(1)  These  items  are  incorporated  by  reference  from  Registrant's  Audited
         Consolidated Financial Statements for the year ended December 31, 2000.

(2)  The material  required  by Items 9  through  11 is hereby  incorporated  by
         reference from  Registrant's  definitive  Proxy  Statement  pursuant to
         Instruction G of Form 10-KSB.



                                       2
<PAGE>





                                     PART I

ITEM 1. - BUSINESS

General

PSB BancGroup, Inc. ("PSB") is a one-bank holding company as defined by the Bank
Holding  Company Act of 1956, as amended.  PSB, which is  headquartered  in Lake
City,  Florida,  owns 100% of the issued and outstanding common stock of Peoples
State  Bank  ("Bank").  Collectively,  PSB and the Bank are  referred  to as the
"Company."

PSB was incorporated under the laws of the State of Florida on June 30, 1997, to
acquire  100  percent  of the  shares  to be  issued  by  the  Bank  during  its
organizational  stage and to  enhance  the  Bank's  ability  to serve its future
customers'  requirements for financial  services.  PSB provides  flexibility for
expansion of the Company's  banking business  through  possible  acquisitions of
other financial institutions and to provide additional  banking-related services
which a traditional commercial bank may not provide under present laws.

Subsidiaries

As of  December  31,  2000,  PSB had  one  subsidiary,  Peoples  State  Bank,  a
state-chartered commercial bank. The Bank opened for business on April 28, 1999.

The Bank is a full service  commercial  bank,  without  trust  powers.  The Bank
provides such consumer services as U.S. Savings Bonds,  travelers  checks,  bank
checks and cashier's  checks.  The Bank offers a full range of  interest-bearing
and noninterest-bearing deposit accounts, which include:

                     Commercial and Retail Checking Accounts
                   Competitively Priced Money Market Accounts
                         Individual Retirement Accounts
               Regular Interest Bearing Statement Savings Accounts
                          U.S. Certificates of Deposit

The Bank also offers a wide range of loan products, which include:

                                Commercial Loans
                                Real Estate Loans
                                 Consumer Loans

Forward-Looking Statements

This  report  contains  certain  "forward-looking"  statements,  as such term is
defined  in the  Private  Securities  Litigation  Reform  Act of  1995 or by the
Securities and Exchange Commission in its rules, regulations and releases, which
represent the Company's expectations or beliefs,  including, but not limited to,
statements concerning the Company's operations, economic performance,  financial
condition, growth and acquisition strategies, investments and future operational
plans. For this purpose, any statements contained herein that are not statements
of  historical  fact may be deemed  to be  forward-looking  statements.  Without
limiting the generality of the foregoing, words such as "may", "will", "expect",
"relieve", "anticipate",  "intent", "could", "estimate", "might", or "continue",
or the  negative  or other  variations  thereof or  comparable  terminology  are
intended to  identify  forward-looking  statements.  These  statements  by their
nature involve substantial risks and uncertainties,  certain of which are beyond
our control, and actual results may differ materially, depending on a variety of
important factors,  including uncertainty related to our operations,  mergers or
acquisitions,  governmental  regulation,  the value of the  assets and any other
factors  discussed in this and other  Company  filings with the  Securities  and
Exchange Commission.




                                       3
<PAGE>


                             SELECTED FINANCIAL DATA

                   At December 31, or for the Year then Ended
                (Dollars in thousands, except per share figures)

                                                                2000      1999
                                                                ----      ----
     At Year End:
     Cash and Cash Equivalents                               $   600   $ 3,258
     Securities                                                3,896     2,475
     Loans, Net                                               11,154     4,235
     All Other Assets                                          2,090       828
                                                               -----    ------
     Total Assets                                            $17,740   $10,796
                                                              ======    =======

     Deposit Accounts                                        $13,102   $ 6,560
     All Other Liabilities                                       670        59
     Stockholders' Equity                                      3,968     4,177
                                                              ------     -----
     Total Liabilities and Stockholders' Equity              $17,740   $10,796
                                                              ======    =======

     For the Year:
     Total Interest Income                                      $990   $   366
     Total Interest Expense                                      470        91
                                                                ----       ---
     Net Interest Income                                         520       275
     Provision for Loan Losses                                   101        42
                                                                 ---       ---
     Net Interest Income After Provision for Loan Losses         419       233
     Noninterest Income                                           75        12
     Noninterest Expenses                                        936       574
                                                                 ---       ---
     Loss Before Income Tax Credit                              (442)     (329)
     Income Tax Benefit                                         (169)     (124)
                                                                 ---       ---
     Net Loss                                                $  (273)  $  (205)
                                                                 ===       ===
     Basic Loss Per Share                                    $  (.53)  $  (.49)
                                                                 ===       ===
     Diluted Loss Per Share                                  $  (.53)  $  (.49)
                                                                 ===       ===

     Ratios and Other Data:
     Return on Average Assets                                  (1.96%)   (3.32%)
     Return on Average Equity                                  (7.10%)   (6.71%)
     Average Equity to Average Assets                          27.60%    49.42%
     Interest-Rate Spread During the Period                     3.25%     2.10%
     Net Yield on Average Interest-Earning Assets               4.47%     4.64%
     Noninterest Expenses to Average Assets                     6.72%     9.30%
     Ratio of Average Interest-Earning Assets to
        Average Interest-Bearing Liabilities                    1.30%     2.65%
     Nonperforming Loans and Foreclosed Real Estate as
        A Percentage of Total Assets at End of Year                -         -
     Allowance for Loan Losses as a Percentage
        Of Total Loans at End of Year                           1.23%      .99%
     Total Number of Banking Offices                               1         1
     Total Shares Outstanding at End of Year                 515,784   514,478
     Book Value Per Share at End of Year                     $  7.69   $  8.12



                                       4
<PAGE>


Market Area and Competition

Our primary service area is Lake City, Florida.  Lake City has been experiencing
steady growth in both population and banking deposits in recent years and is the
primary  commercial  and  residential  center  located in the  Northern  part of
Columbia  County,  Florida.  Columbia  County  maintains  a  steady  commercial,
industrial and agricultural  base, which has been expanding in recent years. The
largest employers in the County include:






      *   Columbia County School                   *   Homes of Merit
      *   VA Medical Center                        *   Lake City Medical Center
      *   Florida Department of Transportation     *   Wal-Mart
      *   Columbia Correctional Center             *   Anderson Columbia Company

Agricultural  activities in Columbia County center around the cattle, timber and
other farming operations.
There is strong competition among financial institutions in Lake City. There are
six  commercial  banking  offices and one  savings  and loan  office  within our
primary  service  area.  There  are  five  commercial  banks  with a total of 11
branches  operating in Lake City. Of these five banks,  one is affiliated with a
major bank holding company.  There are no savings associations  headquartered in
Lake City,  however,  one savings  association  and one credit union operate two
branches  in Lake City and one credit  union is  headquartered  here.  Financial
products  are now  provided by  financial  institutions  located  outside of the
primary  service  area through the  Internet.  The Company  also  competes  with
non-financial  institutions  such  as  insurance  companies,   consumer  finance
companies,  brokerage  houses and other  business  entities that now target once
traditional banking business.

We believe that we can meet these  competitive  challenges by providing  prompt,
personalized service to our customers. "People" answer our telephones, not voice
mail and customers are notified promptly as to whether we can satisfy their loan
requests.

Investments

As of December 31, 2000, investment securities, Federal Home Loan Bank Stock and
interest-earning  deposits in other banks comprised  approximately  22.1% of the
Company's  assets.  Net loans  comprised  approximately  62.9% of the  Company's
assets. To date, we have invested  primarily in obligations of the United States
or obligations  guaranteed as to principal and interest by the United States, In
addition,  the Company enters into Federal Funds transactions with its principal
correspondent banks, and acts as a seller of such funds.

Deposits

We  offer a wide  range  of  interest-bearing  and  noninterest-bearing  deposit
accounts,  including  commercial  and retail  checking  accounts,  money  market
accounts,  individual  retirement  accounts,  regular interest bearing statement
savings accounts and certificate of deposits with fixed and variable rates and a
range of maturity  date  options.  The sources of our  deposits  are  residents,
businesses  and  employees of  businesses  within our market area.  Deposits are
generated  through the personal  solicitation  of our  officers  and  directors,
direct mail solicitation and advertisements published in the local media. We pay
competitive interest rates on time and savings deposits to meet our loan funding
needs.  See  "ITEM  6. -  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, Asset and Liability Management."


                                       5
<PAGE>


Loan Portfolio

We offer a full  complement  of  lending  services,  which  include  commercial,
consumer/installment and real estate loans.

Commercial  lending is directed  principally toward businesses whose demands for
funds fall  within our legal  lending  limits  and which are  potential  deposit
customers of the Bank. This category of loans includes loans made to individual,
partnership  or corporate  borrowers.  These loans are obtained for a variety of
business  purposes.  Particular  emphasis  is  placed  on  loans  to  small  and
medium-sized businesses.

Real  estate  loans  consist  of  residential  and  commercial  first and second
mortgage loans.

Consumer  loans  consist  primarily  of  installment  loans to  individuals  for
personal,   family  and  household  purposes,   including  automobile  loans  to
individuals  and  pre-approved  lines of  credit.  This  category  of loans also
includes term loans secured by second  mortgages on the  residences of borrowers
for a variety of  purposes  including  home  improvements,  education  and other
personal expenditures.

Our general practice is to not accrue interest on loans delinquent over 90 days,
unless fully  secured and in the process of  collection.  The accrued and unpaid
interest  is  reversed  against  current  income  and  thereafter   interest  is
recognized  only to the extent  payments  are  received.  Non-accrual  loans are
restored to accrual basis when  interest and principal  payments are current and
prospects for recovery are no longer in doubt.

As of December  31,  2000,  there were no loans where  known  information  about
possible credit problems of borrowers  caused  management to have serious doubts
as to the ability of such  borrowers to comply with their present loan repayment
terms.

The  majority  of our loans are  secured  by real  estate  in  Columbia  County,
Florida.  Accordingly,  the ultimate  collectibility of a substantial portion of
the loan portfolio is susceptible to changes in market conditions in the County.
See "ITEM 6. - MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS, Asset and Liability Management."

Loan Loss Reserves

In considering the adequacy of our allowance for loan losses, we considered that
as of December 31, 2000,  59.2% of our  outstanding  loans are in the commercial
loan category,  including  loans secured by commercial  real estate.  Commercial
loans are  generally  considered  by  management to have greater risk than other
categories  of loans in our  loan  portfolio.  However,  the  majority  of these
commercial  loans at  December  31,  2000,  were made on a secured  basis,  with
collateral consisting primarily of real estate, accounts receivable,  inventory,
assignment of mortgages and equipment.  We believe that the secured condition of
the  preponderant  portion of our commercial loan portfolio  reduces any risk of
loss inherently present in commercial loans.

Our consumer loan portfolio at December 31, 2000,  consisted  primarily of lines
of credit and installment loans secured by automobiles, boats and other consumer
goods.  We believe that the risk  associated  with these types of loans has been
adequately provided for in our loan loss reserve.

Residential real estate mortgage loans constituted 24.8% of outstanding loans at
December 31, 2000.  These loans are  considered  to have minimal risk due to the
fact that they represent  conventional  residential  real estate mortgages where
the amount of the original  loan does not exceed 80% of the  appraisal  value of
the collateral or is otherwise covered by private mortgage insurance.



                                       6
<PAGE>

The Bank's Board of Directors  monitors the loan  portfolio  monthly in order to
enable it to  evaluate  the  adequacy  of the  allowance  for loan  losses.  The
allowance for loan losses represents the cumulative total of monthly  provisions
for loan losses plus  recoveries  of amounts  previously  charged off,  less net
charge-offs.  The allowance for loan losses is  established  through a provision
for loan losses charged to expense.  Loans are charged off against the allowance
when management believe the collectibility of principal is unlikely. The monthly
provision for loan losses is based on our judgment,  after considering known and
inherent risks in the portfolio,  past loss  experience of the Company,  adverse
situations  that may affect the borrower's  ability to repay,  assumed values of
the  underlying  collateral  securing  the loans,  the current  and  prospective
financial condition of the borrower, and the prevailing and anticipated economic
condition of the local market.

The Company maintains an allowance for loan losses at a level that we believe is
sufficient to absorb all estimated  losses in the loan portfolio.  The allowance
for loan losses is made up of two primary  components:  (i) amounts allocated to
loans based on collateral type and (ii) amounts  allocated for loans reviewed on
an individual basis in accordance with a credit risk grading system. At December
31, 2000,  $139,000 or 1.23% of  outstanding  loans had been  allocated for loan
losses.

Correspondent Banking

Correspondent  banking involves the providing of services by one bank to another
bank which cannot  provide that service for itself from an economic or practical
standpoint.   We  purchase  correspondent  services  offered  by  larger  banks,
including  check  collections,  purchase  or sale  of  Federal  Funds,  security
safekeeping,  investment  services,  coin and  currency  supplies,  overline and
liquidity  loan  participations  and  sales of loans to or  participations  with
correspondent banks.

Data Processing

Our data  processing  servicing  agreement  is with  The  InterCept  Group.  The
servicing  agreement  provides us with a full range of data processing  services
including an automated  general ledger,  deposit  accounting,  commercial,  real
estate and installment lending data processing, central information file ("CIF")
and ATM processing.  Under our data processing servicing agreement,  the Company
pays a  monthly  fee  based on the  type,  kind and  volume  of data  processing
services provided, priced at a stipulated rate schedule.

Employees

The Company  currently  employs 10 full time persons,  including  four officers.
Additional persons will be hired as needed.

Monetary Policies

The  results  of  operations  of the Bank are  affected  by credit  policies  of
monetary authorities, particularly the Federal Reserve Board. The instruments of
monetary  policy  employed  by the Federal  Reserve  Board  include  open market
operations in U.S. Government securities, changes in the discount rate on member
bank borrowings,  changes in reserve  requirements  against member bank deposits
and limitations on interest rates which member banks may pay on time and savings
deposits.  In view of changing  conditions  in the  national  economy and in the
money  market,  as  well  as  the  effect  of  action  by  monetary  and  fiscal
authorities,  including the Federal  Reserve Board, no prediction can be made as
to possible future changes in interest rates,  deposit levels,  loan demands, or
the business and earnings of the Company.


                                       7
<PAGE>



Supervision and Regulation

General.  The Company operates in a highly regulated  environment.  Our business
-------
activities,  which  are  governed  by  statute,  regulation  and  administrative
policies, are supervised by the Federal Reserve Board, the Florida Department of
Banking and Finance ("Department") and the Federal Deposit Insurance Corporation
("FDIC").

The banking industry is highly  regulated,  with numerous federal and state laws
and regulations  governing its  activities.  The following is a brief summary of
the more recent legislation which affect the Company:

In 1999,  financial  services  regulation  was  significantly  reformed with the
adoption  of the  Gramm-Leach-Bliley  Act  ("GLA").  The  GLA  provides  for the
streamlining  of the  regulatory  oversight  functions  of the  various  federal
banking  regulators.  Of  significance,  the GLA permits Bank Holding  Companies
("BHC")  that are  well  managed,  well  capitalized  and  that  have at least a
satisfactory  Community  Reinvestment Act rating to operate as Financial Holding
Companies  ("FHC").  In addition to activities that are permissible for BHCs and
their  subsidiaries,  the GLA permits FHCs and their subsidiaries to engage in a
wide  variety  of  other  activities  that  are  "financial  in  nature"  or are
incidental to financial activities.  These new activities may enable the Company
to consider and engage in new lines of business.

The GLA also requires  financial  institutions  to permit,  with few exceptions,
their  customers to "opt out" of having  their  personal  financial  information
shared with  nonaffiliated  third parties.  The GLA bars financial  institutions
from disclosing  customer  account numbers to direct marketers and mandates that
institutions   provide  annual  disclosure  to  their  customers  regarding  the
institution's privacy policies and procedures.

PSB is regulated by the Federal  Reserve Board under the BHC Act, which requires
every BHC to obtain the prior  approval  of the  Federal  Reserve  Board  before
acquiring more than 5% of the voting shares of any bank or all or  substantially
all of the assets of a bank,  and before merging or  consolidating  with another
BHC. The Federal  Reserve  Board  (pursuant to regulation  and published  policy
statements)  has  maintained  that a BHC must  serve as a  source  of  financial
strength to its  subsidiary  banks.  In adhering  to the Federal  Reserve  Board
policy,  PSB may be required to provide financial support for the Bank at a time
when, absent such Federal Reserve Board policy, PSB may not deem it advisable to
provide such assistance.

As a BHC,  PSB is  required  to file with the  Federal  Reserve  Board an annual
report of its  operations  at the end of each  fiscal  year and such  additional
information  as the Federal  Reserve Board may require  pursuant to the BHC Act.
The Federal Reserve Board may also make examinations of PSB and the Bank.

Having  completed a public  offering with its shares of common stock  registered
under  the  Securities  Act of 1933,  PSB has  chosen  to file  periodic  public
disclosure reports with the Securities and Exchange  Commission  pursuant to the
Securities Exchange Act of 1934, and the regulations promulgated thereunder.

Form 10-KSB is a required annual report that must contain a complete overview of
the Company's business, financial, management,  regulatory, legal, ownership and
organizational status. PSB must file Form 10-KSB by March 31 of each year.

Similarly,  Form 10-QSB, must contain information  concerning PSB on a quarterly
basis.  Although  Form  10-KSB  requires  the  inclusion  of  audited  financial
statements,  unaudited  statements  are sufficient for inclusion on Form 10-QSB.
Any significant  non-recurring  events that occur during the subject quarter, as
well as changes in securities,  any defaults and the submission of any maters to
a vote of security holders, must also be reported on Form 10-QSB.



                                       8
<PAGE>

Additionally,  if any  of six  significant  events  (a  change  in  control,  an
acquisition or disposition of significant assets, bankruptcy or receivership,  a
change in certifying  accountant,  any  resignation  of directors or a change in
fiscal year end) occurs in a period  between the filing of Form 10-KSB or a Form
10-QSB, such event must be reported on a Form 8-KSB within 15 days of the event.

When communicating with shareholders,  PSB's proxy  solicitations for its Annual
Meetings of Shareholders must contain certain detailed disclosures regarding the
current  status of PSB. In addition,  PSB's Annual  Report must contain  certain
information, including audited financial statements, similar to what is found on
Form 10-KSB.

Individual  directors,  officers  and  owners of more  than 10% of PSB's  common
stock,  must also file  individual  disclosures  of the amount of PSB securities
(stock,  options or warrants) they  beneficially  own and of any transactions in
such  securities  to which  they are  parties.  The  initial  status of all such
individuals was reported on Form 3, securities transactions are reported on Form
4 as they  occur,  and an  annual  report  of  ownership  is filed on Form 5. In
certain instances,  the filing of a Form 4 or a Form 5 can relieve the reporting
individual of their duty to file the other.

As a state-chartered  bank, we are subject to the supervision of the Department,
the FDIC and the Federal Reserve Board. With respect to expansion,  the Bank may
establish branch offices anywhere within the State of Florida.  The Bank is also
subject to the Florida banking and usury laws restricting the amount of interest
which it may  charge  in  making  loans  or other  extensions  of  credit.  As a
subsidiary  of PSB,  the Bank is subject to  restrictions  under  federal law in
dealing  with PSB and other  affiliates,  if any.  These  restrictions  apply to
extensions  of credit  to an  affiliate,  investments  in the  securities  of an
affiliate and the purchase of assets from an affiliate.

Loans and  extensions  of credit by state  banks are  subject  to legal  lending
limitations.  Under  state  law,  a state  bank may  grant  unsecured  loans and
extensions  of  credit  in an amount  up to 15% of its  unimpaired  capital  and
surplus to any person. In addition,  a state bank may grant additional loans and
extensions of credit to the same person up to 10% of its unimpaired  capital and
surplus,  provided that the transactions are fully secured.  This 10% limitation
is separate from,  and in addition to, the 15%  limitation for unsecured  loans.
Loans and  extensions  of credit may exceed the  general  lending  limit if they
qualify under one of several exceptions.

The Company is subject to regulatory capital requirements imposed by the Federal
Reserve Board,  the FDIC and the Department.  Both the Federal Reserve Board and
the FDIC  have  established  risk-based  capital  guidelines  for  bank  holding
companies and banks which make regulatory capital requirements more sensitive to
differences  in risk  profiles  of various  banking  organizations.  The capital
adequacy  guidelines  issued by the  Federal  Reserve  Board are applied to bank
holding  companies on a  consolidated  basis with the banks owned by the holding
company.  The FDIC's  risk  capital  guidelines  apply  directly  to state banks
regardless  of whether they are a subsidiary  of a bank  holding  company.  Both
agencies'  requirements  (which are substantially  similar) provide that banking
organizations  must have capital  equivalent to 8% of weighted risk assets.  The
risk weights  assigned to assets are based primarily on credit risks.  Depending
upon the riskiness of a particular asset, it is assigned to a risk category. For
example,  securities  with  an  unconditional  guarantee  by the  United  States
government  are  assigned to the lowest risk  category.  A risk weight of 50% is
assigned  to loans  secured by  owner-occupied  one to four  family  residential
mortgages.  The  aggregate  amount of assets  assigned to each risk  category is
multiplied  by the risk  weight  assigned  to that  category  to  determine  the
weighted  values,  which are added  together to  determine  total  risk-weighted
assets.  At  December  31,  2000,  our total  risk-based  capital  and Tier 1 to
risk-weighted assets capital ratios were 27.24% and 26.17%,  respectively.  Both
the Federal  Reserve Board and the FDIC have also  implemented  minimum  capital



                                       9
<PAGE>

leverage ratios to be used in tandem with the risk-based guidelines in assessing
the overall  capital  adequacy of bank and bank holding  companies.  Under these
rules,  banking  institutions  are  required  to  maintain  a ratio of 3% Tier 1
capital  to total  assets  (net of  goodwill).  Tier 1 capital  includes  common
stockholders  equity,  noncumulative  perpetual  preferred  stock  and  minority
interests in the equity accounts of consolidated subsidiaries.

Both the  risk-based  capital  guidelines  and the  leverage  ratio are  minimum
requirements,  applicable only to top-rated banking  institutions.  Institutions
operating at or near these levels are  expected to have  well-diversified  risk,
excellent asset quality,  high liquidity,  good earnings and in general, have to
be considered strong banking  organizations,  rated composite 1 under the CAMELS
rating system for banks or the BOPEC rating  system for bank holding  companies.
Institutions  with lower  ratings and  institutions  with high levels of risk or
experiencing  or anticipating  significant  growth would be expected to maintain
ratios 100 to 200 basis points above the stated minimums.

The Federal Deposit  Insurance  Corporation  Improvement Act of 1991 ("FDICIA"),
created five "capital categories" ("well capitalized," "adequately capitalized,"
"undercapitalized,"    "significantly    undercapitalized"    and    "critically
undercapitalized")  which  are  defined  in the  FDICIA  and  which  are used to
determine the severity of corrective  action the appropriate  regulator may take
in the event an institution  reaches a given level of  undercapitalization.  For
example, an institution which becomes  "undercapitalized"  must submit a capital
restoration plan to the appropriate  regulator  outlining the steps it will take
to become  adequately  capitalized.  Upon approving the plan, the regulator will
monitor the institution's compliance.  Before a capital restoration plan will be
approved,  any entity controlling a bank (i.e., a BHC) must guarantee compliance
with the plan until the  institution  has been  adequately  capitalized for four
consecutive calendar quarters. The liability of the BHC is limited to the lesser
of 5% of the  institution's  total  assets or the amount  which is  necessary to
bring the institution into compliance with all capital  standards.  In addition,
"undercapitalized"  institutions will be restricted from paying management fees,
dividends  and other  capital  distributions,  will be subject to certain  asset
growth  restrictions  and will be required  to obtain  prior  approval  from the
appropriate regulator to open new branches or expand into new lines of business.
As an  institution  drops to lower  capital  levels,  the extent of action to be
taken  by  the  appropriate  regulator  increases,   restricting  the  types  of
transactions in which the  institution  may engage and ultimately  providing for
the appointment of a receiver for certain  institutions  deemed to be critically
undercapitalized.

The FDICIA  requires  each federal  banking  agency to prescribe for all insured
depository  institutions  and their  holding  companies  standards  relating  to
internal controls,  information  systems and audit systems,  loan documentation,
credit underwriting,  interest rate risk exposure,  asset growth,  compensation,
fees and benefits and such other  operational  and  managerial  standards as the
agency deems appropriate.  In addition,  the federal banking regulatory agencies
are required to prescribe by regulation standards specifying:

      *  maximum classified assets to capital ratios;
      *  minimum earnings sufficient to absorb losses without impairing capital;
      *  to the extent feasible,  a  minimum ratio of market value to book value
         for publicly traded shares of depository institutions or the depository
         institution holding companies; and
      *  such other standards relating to asset quality,  earnings and valuation
         as the agency deems appropriate.

Finally,  each federal  banking  agency is required to prescribe  standards  for
employment contracts and other compensation  arrangements of executive officers,
employees,   directors  and  principal   shareholders   of  insured   depository
institutions   that  would   prohibit   compensation   and  benefits  and  other
arrangements that are excessive or that could lead to a material  financial loss
for the institution. If an insured depository institution or its holding company
fails to meet any of its  standards  described  above,  it will be  required  to
submit to the  appropriate  federal  banking agency a plan  specifying the steps



                                       10
<PAGE>

that will be taken to cure the deficiency.  If an institution fails to submit an
acceptable plan or fails to implement the plan, the appropriate  federal banking
agency will require the institution or holding company to correct the deficiency
and, until corrected,  may impose restrictions on the institution or the holding
company including any of the restrictions applicable under the prompt corrective
action provisions of the FDICIA.

In response  to the  directive  issued  under the FDICIA,  the  regulators  have
adopted regulations which, among other things,  prescribe the capital thresholds
for each of the five capital categories established by the FDICIA. The following
table reflects the capital thresholds:
<TABLE>

                                                              Total Risk -          Tier I Risk -        Tier I
                                                            Based Capital          Based Capital        Leverage
                                                                Ratio                  Ratio               Ratio
                                                            ---------------        --------------       ---------
<S>                       <C>                                   <C>                      <C>                <C>
         Well capitalized (1)                                   10%                      6%                 5%
         Adequately capitalized (1)                              8%                      4%                 4%(2)
         Undercapitalized (3)                                 <  8%                   <  4%              <  4%
         Significantly Undercapitalized (3)                   <  6%                   <  3%              <  3%
         Critically Undercapitalized                             -                       -               <  2%

<FN>
         (1)      An institution must meet all three minimums.
         (2)      3%  for composite 1-rated institutions, subject to appropriate
                  federal banking agency guidelines.
         (3)      An  institution  falls  into  this category if it is below the
                  specified capital level for any of the three capital measures.
</FN>
</TABLE>

Based  upon the  above  regulatory  ratios,  the Bank is  considered  to be well
capitalized.

The  FDICIA  also  provided  that  banks  must  meet new  safety  and  soundness
standards. In order to comply with the FDICIA, the Federal Reserve Board and the
FDIC  adopted  a rule  which  institutes  guidelines  defining  operational  and
managerial standards relating to internal controls,  loan documentation,  credit
underwriting,  interest  rate  exposure,  asset  growth,  director  and  officer
compensation,  asset  quality,  earnings and stock  valuation.  Both the capital
standards and the safety and soundness  standards  which the Act implements were
designed to bolster and protect the deposit insurance fund.

Under the Riegle-Neal  Interstate  Banking and Branching  Efficiency Act of 1994
("Riegle Act"),  restrictions  on interstate  acquisitions of banks by BHCs were
repealed on September 29, 1995, such that any  out-of-state BHC would be able to
acquire and  consolidate  any  Florida-based  bank,  subject to certain  deposit
percentage and other  restrictions  on or after the effective date of the Riegle
Act. The  legislation  also provides  that,  unless an individual  state elected
beforehand either:


          *    to accelerate the effective date; or
          *    to prohibit out-of-state banks from operating interstate branches
               within its territory.

Currently,  adequately  capitalized  and  managed  BHCs are able to  consolidate
multiple  interstate  banks.  De  novo  branching  by an  out-of-state  bank  is
permitted only if it is expressly  permitted by the laws of the host state.  The
authority of a bank to establish and operate  branches  within a state continues
to  be  subject  to  applicable  state  branching  laws.   Florida  has  adopted
legislation  which permits  interstate  acquisitions  and interstate  branching.
Florida law prohibits de novo branching into Florida by out-of-state banks.

The scope of regulation and permissible  activities of the Company is subject to
change by future federal and state legislation.




                                       11
<PAGE>



ITEM 2. - DESCRIPTION OF PROPERTY

The Bank's permanent  facility is located at 500 South First Street,  Lake City,
Florida. The facility is a one-story, 5,487 square foot bank building.

ITEM 3. - LEGAL PROCEEDINGS

There are no material proceedings known to the Company to be contemplated by any
governmental authority; nor are there material proceedings known to the Company,
pending  or  contemplated,  in which any  director,  officer,  affiliate  or any
principal  security  holder  of  the  Company,  or any  associate  of any of the
foregoing is a party or has an interest adverse to the Company.

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                     PART II


ITEM 5. - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

During  the  period  covered  by this  report  and to  date,  there  has been no
established public trading market for Registrant's common stock.

As of March 3, 2001, the approximate number of holders of record of PSB's common
stock was 200.  The exact  number is not known since some of the shares are held
by brokers in street name. To date, PSB has not paid any dividends on its common
stock.  It is the present policy of the Board of Directors to reinvest  earnings
for such period of time as is necessary to ensure the success of the  operations
of the  Company.  There  are no  current  plans  to  initiate  payment  of  cash
dividends,  and future  dividend  policy  will depend on our  earnings,  capital
requirements,  financial  condition and other factors considered relevant by the
Board of Directors of the Company.

The Bank is  restricted in its ability to pay  dividends  under Florida  banking
laws and by regulations of the Federal Deposit Insurance  corporation.  Pursuant
to Section 658.37, Florida Statutes, a state bank may not pay dividends from its
capital.  All  dividends  must be paid out of net  profits  then on hand,  after
charging off bad debts,  depreciation,  and other worthless  assets.  Payment of
dividends  out of net  profits is further  limited by Federal  regulation  which
prohibits  the  payment of  dividends,  if such  payment  would bring the Bank's
capital below required levels.

ITEM 6. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

                          Years Ended December 31, 2000

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,
PSB and the Bank are referred to as the  "Company".  PSB's only  business is the
ownership and operation of the Bank.




                                       12
<PAGE>

The Bank is a  Florida  state-chartered  commercial  bank and its  deposits  are
insured  by  the  Federal  Deposit  Insurance  Corporation.  The  Bank  provides
community  banking  services to businesses and  individuals in Columbia  County,
Florida.

Credit Risk

Our primary business is making  commercial,  business,  consumer and real estate
loans.  That  activity  entails  potential  loan losses,  the magnitude of which
depend on a variety of economic factors affecting borrowers which are beyond our
control.  While  underwriting  guidelines and credit review procedures have been
instituted to protect the Company from avoidable credit losses, some losses will
inevitably occur. At December 31, 2000, the Company had no nonperforming assets.
During the year ended  December  31,  2000,  the  Company  charged off $4,000 in
loans. The Company had no charge-offs during 1999.

The following table presents information regarding the Company's total allowance
for losses, as well as the allocation of such amounts to the various  categories
of loans (dollars in thousands):

                                                    At December 31,
                                                    Loans to Total
                                                ----------------------
                                                2000                1999
                                                -----               ----
                                        Amount       Loans    Amount       Loans
                                        ------       -----    ------       -----
   Commercial Real Estate Loans            $ 63      35.8%      $ 23       53.9%
   Residential Real Estate Loans             34      24.8          5       13.0
   Commercial Loans                          37      23.4          8       18.0
   Consumer Loans                             5      16.0          6       15.1
                                           ----      ----        ---       ----

   Total Allowance for Loan Losses         $139     100.0%      $ 42      100.0%
                                            ===     =====       ====      =====

The allowance for loan losses  represented  1.23% of the total loans outstanding
at December 31, 2000.





                                       13
<PAGE>





The  following  table sets forth the composition of the Company's loan portfolio
(dollars in thousands):
                                          At December 31,        At December 31,
                                               2000                     1999
                                          ---------------        ---------------
                                                    % of                   % of
                                       Amount       Total    Amount        Total
                                       ------       -----    ------        -----
   Commercial Real Estate             $ 4,049       35.8%   $ 2,311        53.9%
   Residential Real Estate              2,810       24.8        558        13.0
   Commercial                           2,646       23.4        770        18.0
   Consumer                             1,816       16.0        645        15.1
                                        -----       ----      -----        ----

                                       11,321      100.0%     4,284       100.0%
                                                   =====                  =====
   Less:
   Net Deferred Loan Fees                 (28)                   (7)

   Allowance for Loan Losses             (139)                  (42)
                                         -----

   Loans, net                         $11,154               $ 4,235
                                       ======                 =====



Liquidity and Capital Resources

The Company's  primary  source of cash during the year ended  December 31, 2000,
was from net  deposit  inflows  of $6.5  million.  Cash  was used  primarily  to
purchase investment securities, to originate loans and to fund construction of a
permanent  building.  Outstanding loan commitments at December 31, 2000, totaled
$1.1 million and we exceeded our regulatory liquidity requirements.

The following  table sets forth the carrying  value of the Company's  securities
portfolio:

                                                           At December 31
                                                           --------------
                                                            (In thousands)
                                                        2000               1999
                                                        ----               ----
     Securities Available for Sale -
     U.S. Government Agency Securities                 $ 3,566           $ 1,475
              Mortgage-backed Security                     330                 -
                                                        ------             -----
              Total                                    $ 3,896           $ 1,475
                                                        ======             =====
     Securities Held to Maturity -
     U.S. Government Agency Securities                 $     -           $ 1,000
                                                             -                 -
                                                        ------             =====
              Total                                    $     -           $ 1,000
                                                        ======             =====





                                       14
<PAGE>








The following  table sets forth,  by maturity  distribution at December 31, 2000
and 1999, certain information  pertaining to the securities portfolio as follows
(dollars in thousands):
<TABLE>

                                                                            After One Year
At December 31, 2000:                           One Year or Less             to Five Years                Total
                                                ----------------            --------------                -----
                                             Carrying      Average       Carrying      Average      Carrying      Average
                                              Value         Yield         Value         Yield        Value         Yield
                                             --------      -------       --------      -------      --------      -------
Securities Available For Sale -
     U.S. Government Agency
<S>                                          <C>            <C>           <C>           <C>          <C>           <C>
         Securities                          $1,000         5.94%         $2,566        6.35%        $3,566        6.21%
                                             =======        =====         ======        =====
     Mortgage-backed Security                                                                           330        5.50
                                                                                                      -----
         Total                                                                                       $3,896        6.17%
                                                                                                     ======        ====



                                                                            After One Year
At December 31, 1999:                           One Year or Less             to Five Years                 Total
                                                ----------------            --------------                 -----
                                             Carrying      Average       Carrying      Average      Carrying      Average
                                              Value         Yield         Value         Yield        Value         Yield
                                             --------      -------       --------      -------      --------      -------
Securities Available For Sale -
     U.S. Government Agency
         Securities                           $  -             - %        $1,475        6.45%        $1,475        6.45%
                                               ====          ====         ======        ====         ======        ====
Securities Held To Maturity -
     U.S. Government Agency
         Securities                           $ 500          5.21%        $  500        5.58%        $1,000        5.39%
                                              =====          ====          =====        ====         ======        ====

</TABLE>

Results of Operations

Our operating  results  depend  primarily on the Company's net interest  income,
which is the difference between interest income on  interest-earning  assets and
interest  expense  on  interest-bearing  liabilities,  consisting  primarily  of
deposits.  Net interest  income is determined by the  difference  between yields
earned on interest-earning assets and rates paid on interest-bearing liabilities
("interest-rate spread") and the relative amounts of interest-earning assets and
interest-bearing   liabilities.   Our   interest-rate   spread  is  affected  by
regulatory, economic and competitive factors that influence interest rates, loan
demand and deposit flows. In addition, our net earnings are also affected by the
level of nonperforming loans and foreclosed real estate, as well as the level of
its  noninterest  income,  and its  noninterest  expense,  such as salaries  and
employee benefits, occupancy and equipment costs and income taxes.

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 yield; (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;  (v) net interest  margin.  Average  balances are based on average daily
balances.




                            [TABLE FOLLOWS THIS PAGE]


                                       15
<PAGE>

<TABLE>

                                                         Year Ended December 31, 2000              Year Ended December 31, 1999
                                                         ----------------------------              ----------------------------
                                                                                                          Interest
                                                   Average     Interest and      Average       Average      and       Average
                                                   Balance       Dividends      Yield/Rate     Balance    Dividends   Yield/Rate
                                                   -------     ------------     ----------     -------    ---------   ----------
                                                                               (Dollars in thousands)
Interest-Earning Assets:
<S>                                                <C>              <C>              <C>        <C>         <C>          <C>
  Loans                                            $ 7,305          $  716           9.80%      $1,357      $ 131        9.65%
  Securities                                         3,226             207           6.42%         930         58        6.24%
  Other Interest-Earning Assets (1)                  1,090              67           6.15%       3,661        177        4.83%
                                                     -----              --                       -----        ---
         Total Interest-Earning Assets              11,621             990           8.52%       5,948        366        6.15%
                                                                       ===                                    ---
Noninterest-Earning Assets                           2,313                                         236
                                                     -----                                         ---
Total Assets                                        13,934                                       6,184
                                                    ======                                       =====
Interest-Bearing Liabilities:
   Savings, Money Market and
NOW Deposits                                       $ 2,424           $  74           3.05%      $  813      $ 20         2.46%
   Certificates of Deposit                           6,443             394           6.11%       1,297        59         4.55%
   Other Borrowings                                     38               2           7.89%         136        12         8.82%
                                                    ------           -----                         ---        --         ----
Total Interest-Bearing Liabilities                   8,905             470           5.27%       2,246        91         4.05%
                                                                       ---                                    --
Noninterest Bearing Demand Deposits                  1,056                                         614

Other Noninterest-Bearing Liabilities                  127                                         268

Stockholders' Equity                                 3,846                                       3,056
                                                     -----                                       -----

Total Liabilities and Stockholders' Equity
                                                   $13,934                                      $6,184
                                                    ======                                       =====
Net Interest/Dividend Income                                         $ 520                                  $275
                                                                       ===                                   ===
Interest-Rate Spread (2)                                                             3.25%                               2.10%
                                                                                     =====                               =====
Net Interest Margin (3)                                                              4.47%                               4.64%
                                                                                     =====                               =====
Ratio of Average Interest -Earning Assets to
Average Interest-Bearing Liabilities                  1.30                                        2.65
                                                      ====                                        ====
-----------------------------

<FN>
(1)  Includes  interest-bearing  deposits,  federal  funds and federal home loan
bank stock sold.
(2)  Interest-rate spread represents the difference between the average yield on
interest-earning  assets and the average cost of  interest-bearing  liabilities.
(3)  Net   interest   margin  is  net  interest   income   dividend  by  average
interest-earning assets.
</FN>
</TABLE>


Rate/Volume Analysis

The following table sets forth certain information regarding changes in interest
income and  interest  expense for the periods  indicated.  For each  category of
interest-earning  assets  and  interest-bearing   liabilities,   information  is
provided  on  changes  attributable  to:  (1)  changes  in rate  (change in rate
multiplied by prior volume),  (2) changes in volume (change in volume multiplied
by prior  rate) and (3) changes in  rate-volume  (change in rate  multiplied  by
change in volume).


                           [TABLE FOLLOWS THIS PAGE]


                                       16
<PAGE>



<TABLE>



                                                               Year Ended December 31, 2000 vs. 1999:
                                                                        Increase (Decrease) Due to

                                                          Rate         Volume         Rate/           Total
                                                          ----         ------         Volume          -----
                                                                                      ------
                                                                           (In thousands)
Interest-earning assets:
<S>                                                      <C>           <C>           <C>             <C>
         Loans                                           $   2         $ 574         $     9         $  585
         Securities                                          2           143               4            149
         Other interest-earning assets                      48          (124)             (34)         (110)
                                                          ----           ---               --           ---

                  Total                                     52           593              (21)          624
                                                          ----           ---               --           ---

Interest-bearing liabilities:
   Deposits:
         Savings, money-market and NOW deposits              5            39               10            54
         Certificates of deposit                            20           234               81           335
         Other Borrowings                                   (1)           (9)               -           (10)
                                                          ----           ---              ---           ---

                  Total                                     24           264               91           379
                                                          ----           ---               --           ---

Net change in net interest income                        $  28         $ 329         $   (112)       $  245
                                                          ====           ===              ===           ===
</TABLE>



         Results of Operations For Year Ended December 31, 2000 and 1999

General. Net loss for the year ended December 31, 2000, was $273,110 or $.53 per
     basic and  diluted  share  compared  to a net loss of  $205,437 or $.49 per
     basic  and  diluted  share  for the  comparable  period  in 1999  The  Bank
     commenced  operations on April 28, 1999. At December 31, 2000,  the Company
     had not achieved the asset size to operate profitably.

Interest  Income  and Expense.  Interest income increased $623,464 from $336,992
     for  the year  ended  December  31, 1999  to  $990,456  for  the year ended
     December 31,  2000.  Interest income on loans increased $585,442, primarily
     due  to an increase in the average loan portfolio balance. Interest  income
     on  securities  increased  $149,358  primarily  due  to  an increase in the
     average securities  portfolio  balance.  Interest income on  other interest
     earning assets decreased  $111,336 due to a decrease in the average balance
     of other interest earning assets.

     Interest expense on deposits increased $388,796,  from $79,226 for the year
     ended  December 31, 1999 to $468,022 for the year ended  December 31, 2000.
     Interest expense on deposits increased  primarily due to an increase in the
     average balance of deposit accounts.

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



                                       17
<PAGE>

     for the year ended December 31, 2000 of $100,818 and the allowance for loan
     losses was $139,224 at December 31, 2000. Management believes the allowance
     is adequate at December 31, 2000.

Noninterest  Expense.  Noninterest  expense  was  $936,459  for  the  year ended
     December  31, 2000,  compared to $574,814  for the year ended  December 31,
     1999.  Noninterest expense increased primarily due to the overall growth of
     the Company.

Income Tax Benefit.  The income tax benefit for the year ended December 31, 2000
     was  $169,000  (an  effective  rate  of  38.2%)  compared  to  $124,000 (an
     effective tax rate of 37.6%) for the year ended December 31, 1999.

Asset and Liability Management

As part of our  asset and  liability  management,  the  Company  has  emphasized
establishing and implementing internal  asset-liability  decision processes,  as
well as communications  and control  procedures to aid in managing our earnings.
We believe that these  processes and procedures  provide the Company with better
capital planning, asset mix and volume controls,  loan-pricing  guidelines,  and
deposit  interest-rate  guidelines,  which should result in tighter controls and
less exposure to interest-rate risk.

The matching of assets and  liabilities  may be analyzed by examining the extent
to which such  assets and  liabilities  are  "interest  rate  sensitive"  and by
monitoring  an  institution's  interest  rate  sensitivity  "gap".  An  asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest-rate sensitivity
gap  is  defined  as  the  difference   between   interest-earning   assets  and
interest-bearing  liabilities  maturing or repricing within a given period.  The
gap  ratio is  computed  as  RSA/RSL.  A gap  ratio of 1.0%  represents  perfect
matching.  A gap  is  considered  negative  when  the  amount  of  interest-rate
sensitive liabilities exceeds interest-rate sensitive assets. During a period of
rising  interest  rates,  a negative  gap would  adversely  affect net  interest
income, while a positive gap would result in an increase in net interest income.
During a period of falling  interest  rates,  a negative  gap would result in an
increase in net interest income, while a positive gap would adversely affect net
interest income.

In order to minimize the potential for adverse effects of material and prolonged
increases in interest rates on the results of operations, we continue to monitor
asset and  liability  management  policies to better  match the  maturities  and
repricing terms of its interest-earning assets and interest-bearing liabilities.
Such policies have consisted  primarily of: (i)  emphasizing  the origination of
adjustable-rate  loans;  (ii)  maintaining a stable core deposit base; and (iii)
maintaining  a  significant  portion  of  liquid  assets  (cash  and  short-term
securities).

The  following  table sets froth certain  information  relating to the Company's
interest-earning  assets and interest-bearing  liabilities at December 31, 2000,
that are estimated to mature or are scheduled to reprice within the period shown
(dollars in thousands):


                            [TABLE FOLLOWS THIS PAGE]



                                       18
<PAGE>


<TABLE>






                                                               More Than       More Than    More Than    More
                                                              Three Months    Six Months    One Year     Than      Over
                                                   Three           to           to One      to Five      Five      Ten
                                                   Months      Six Months        Year        Years       Years     Years   Total
                                                   ------     ------------    ----------    ---------    -----     -----   -----
     Loans (1):
<S>                                               <C>          <C>            <C>           <C>         <C>       <C>      <C>
          Variable Rate                           $ 2,453      $   367        $   769       $ 4,182     $   88    $    -   $ 7,859
          Fixed Rate                                  170          183            367         2,268        241       233     3,462
                                                    -----          ---           ----         -----        ---       ---     -----
                Total Loans                         2,623          550          1,136         6,450        329       233    11,321
     Interest-Bearing Deposits                          5            -              -             -          -         -         5
     Securities (2)                                     -            -            999         2,897          -        14     3,910
                                                    -----          ---          -----         -----        ---       ---    ------
                                                        -
                Total Rate-Sensitive Assets       $ 2,628      $   550        $ 2,135       $ 9,347     $  329    $  247   $15,236
                                                   ======          ===          =====         =====        ===       ===    ======
     Deposit Accounts (3):
        Savings, NOW and Money Market
          Deposits                                $ 2,954      $     -        $     -       $     -     $    -    $    -   $ 2,954
        Time Deposits                               2,115        1,110          4,618         1,094          -         -     8,937
        Federal Funds Purchased                       245            -              -             -          -         -       245
                                                    -----        -----          -----         -----        ---       ---



                Total Rate-Sensitive              $ 5,314      $ 1,110        $ 4,618       $ 1,094     $    -    $    -   $12,136
                                                    =====        =====          =====         =====        ===       ===    ======
     Liabilities
     GAP Repricing Differences                    $(2,686)     $  (560)       $(2,483)      $ 8,253     $  329    $  247   $ 3,100
                                                    =====          ===          =====         =====        ===       ===     =====
     Cumulative GAP                               $(2,686)     $(3,246)       $(5,729)      $ 2,524     $2,853    $3,100   $ 3,100
                                                    =====        =====          =====         =====      =====     =====     =====
     Cumulative GAP/Total Assets                    (15.1)%      (18.3)%        (32.3)%        14.2%      16.1%     17.5%  $ 3,100
                                                     ====         ====           ====          ====       ====      ====     =====
       --------------------------
<FN>
(1)  In  preparing  the table above,  adjustable-rate  loans are included in the
period in which the interest rates are next scheduled to adjust,  rather than in
the period in which the loans mature. Fixed-rate loans are scheduled,  including
repayment, according to their maturities.

(2)  Securities are scheduled through the maturity dates,  includes Federal Home
Loan Bank stock.

(3) Money  market,  NOW,  and  savings  deposits  are  regarded  as  readily
accessible, withdrawable accounts. All other time deposits are scheduled through
the maturity dates.
</FN>
</TABLE>

The following table reflects the contractual  principal  repayments by period of
the Company's loan portfolio at December 31, 2000 (in thousands):

<TABLE>

                                                             Residential    Commercial Real
                                               Commercial      Mortgage        Estate         Consumer
  Years Ending December 31,                      Loans          Loans           Loans           Loans       Total
  -------------------------                    ----------    -----------    ---------------   --------      ------
<S>                                             <C>            <C>               <C>           <C>         <C>
  2001                                          $ 1,649        $   231           $ 1,976       $  773      $ 4,629
  2002                                              279            146               164          357          946
  2003                                              261            136               159          311          867
  2004                                              271            493             1,050          248        2,062
  2005 & Beyond                                     186          1,804               700          127        2,817
                                                    ---          -----               ---          ---        -----
  Total                                         $ 2,646        $ 2,810           $ 4,049       $1,816      $11,321
                                                  =====          =====             =====        =====       ======

</TABLE>



Of the $6.7  million of loans due after  2001,  35.5% of these  loans have fixed
interest rates and 64.5% have adjustable interest rates.



                                       19
<PAGE>




The following  table sets forth total loans  originated  and repaid at the dates
indicated (in thousands):

                                                        Year Ended December 31,
                                                     2000                  1999
                                                     ----                  ----
     Originations:
     Commercial Loans                               $1,437               $  810
     Commercial Real Estate Loans                    2,923                2,402
              Residential Mortgage Loans             2,201                  725
     Consumer Loans                                  1,697                  685
                                                     -----                -----
                                                     8,258                4,622
     Total Loans Originated                         (1,221)                (338)
     Principal Reductions                            -----                  ---
                                                    $7,037               $4,284
     Increase In Total Loans                         =====                ======

The  following  table sets forth  information  with  respect to  activity in the
Company's allowance for credit losses during the period indicated:

                                                         Year Ended December 31,
                                                          2000             1999
                                                          ----             ----
                                                             (In thousands)

     Allowance of beginning of period                     $ 42            $   -
                                                           ---              ---

     Charge-offs:
          Commercial real estate loans                    $  -            $   -
          Residential real estate loans                      -                -
          Commercial loans                                   -                -
          Consumer loans                                    (4)               -
                                                           ---              ---
                       Total charge-offs                    (4)               -
                                                           ---              ---
     Recoveries:
          Commercial real estate loans                    $  -            $   -
          Residential real estate loans                      -                -
          Commercial loans                                   -                -
          Consumer loans                                     -                -
                                                           ---              ---
                       Total recoveries                      -                -
                                                           ---              ---
     Provision for loan losses charged to operations     $ 101            $  42
                                                           ---              ---
     Allowance at end of period                          $ 139            $  42
                                                           ===              ===

     Ratio of net charge-offs during the period
     to average loans outstanding during period            .05%               -
                                                           ===              ===
     Allowance for loan losses as a percentage
     of non-performing loans                                 0%               0%
                                                           ===              ===



                                       20
<PAGE>






The following  table shows the  distribution  of, and certain other  information
relating to, the Company's deposit accounts by type (dollars in thousands):


<TABLE>
                                                          At December 31,
                                        -----------------------------------------------
                                                2000                        1999
                                        ---------------------       -------------------
                                                       % of                       % of
                                        Amount       Deposits       Amount      Deposits
                                        ------       --------       ------      --------
<S>                                    <C>              <C>         <C>           <C>
Noninterest-Bearing Demand Deposits    $ 1,211          9.3%        $ 907         13.8%
NOW Deposits                               789          6.0           749         11.5
Money Market Deposits                    1,885         14.4         1,410         21.5
Savings Deposits                           280          2.1           108          1.6
                                         -----          ---           ---          ---
Subtotal                                 4,165         31.8         3,174         48.4
                                         -----         ----         -----         ----
Certificate of Deposits:
5.00% - 5.99%                              579          4.4           944         14.4
6.00% - 6.99%                            8,145         62.2         2,018         30.7
7.00% - 7.99%                              213          1.6           424          6.5
                                         -----          ---           ---          ---
Total Certificates of Deposit (1)        8,937         68.2         3,386         51.6
                                         -----         ----         -----         ----
Total Deposit                          $13,102        100.0%      $ 6,560        100.0%
                                        ======        =====         =====        =====
--------------------------
<FN>
(1)abIncluded  individual  retirement  accounts  ("IRAs")  totaling $653,000 and
     $264,000 at December 31, 2000 and 1999,  respectively,  all of which are in
     the form of certificates of deposit.
</FN>
</TABLE>


Jumbo certificates ($100,000 and over) mature as follows (in thousands):

                                                               At December 31,
                                                             -------------------
                                                              (In thousands)
                                                         2000               1999
                                                         ----               ----
            Due Three Months or Less                   $  323             $    -
            Due Over Three Months to Six Months           730                400
            Due Over Six Months to One Year               978                801
            Due Over One Year                             200                  -
                                                          ---              -----
            Total                                      $2,231             $1,201
                                                       ======             ======




                                       21
<PAGE>


The following  table sets forth the net deposit flows of the Company  during the
year indicated:

                                                               At December 31,
                                                             -------------------
                                                               (In thousands)
                                                             2000          1999
                                                             ----          ----
             Net increase before interest credited         $6,884        $6,599
             Net increase credited                           (342)          (39)
                                                              ---           ---
             Net deposit increase                           6,542         6,560
                                                            =====         =====


Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in
accordance with GAAP,  which requires the measurement of financial  position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time, due to inflation.  Unlike most
industrial  companies,  substantially  all of the assets and  liabilities of the
Company  are  monetary  in  nature.  As a  result,  interest  rates  have a more
significant  impact on the  Company's  performance  than the  effects of general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction or in the same  magnitude as the prices of goods and  services,  since
such prices are affected by inflation to a larger extent than interest rates.

ITEM 7. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Registrant  hereby  incorporates  by  reference  the  Report of the  Independent
Auditors and the 1999 and 2000 Audited  Consolidated  Financial Statements filed
as Exhibit 22.1 under Item 13 herein.

ITEM 8. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE MATTERS

None.

                                    PART III

ITEM 9. - DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

Registrant hereby  incorporates by reference the sections entitled  "Election of
Directors"  and "Board of Directors  Meeting"  contained at pages 4 through 7 of
the Proxy Statement filed as Exhibit 99.1 under Item 13 herein.

ITEM 10. - EXECUTIVE COMPENSATION

Registrant  hereby  incorporates  by reference the section  entitled  "Executive
Compensation"  contained at pages 7 through 10 of the Proxy  Statement  filed as
Exhibit 99.1 under Item 13 herein.




                                       22
<PAGE>





ITEM 11. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)      Security Ownership of Certain Beneficial Owners
         Registrant  hereby  incorporates  by reference  the  sections  entitled
         "Security  Ownership  of Certain  beneficial  Owners" and  "Election of
         Directors"  contained at pages 2 through 7 of the Proxy Statement filed
         as Exhibit 99.1 under Item 13 herein.

(b)      Security Ownership of Management
         Registrant  hereby  incorporates  by  reference  the  section  entitled
         "Election  of  Directors"  contained  at pages 4 through 7 of the Proxy
         Statement filed as Exhibit 99.1 under Item 13 herein.

(c)      Changes in Control
         Management  is not aware of any  arrangements,  including any pledge by
         any person of securities of Registrant,  which the operation of may, at
         a subsequent date, result in a change of control of the Company.


ITEM 12. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Bank has $869,000 of loans  outstanding  to the PSB's  directors,  executive
officers,  their  associates  and  members  of the  immediate  families  of such
directors and executive officers.

                                     PART IV


ITEM 13. - EXHIBITS AND REPORTS ON FORM 8-K


(a)  Exhibits.  The  following  exhibits  are  filed  with  or  incorporated  by
     --------
     reference  into this report.  The  exhibits  which are  denominated  by: an
     asterisk  (*)  were  previously   filed  as  a  part  of,  and  are  hereby
     incorporated  by reference from PSB's  Registration  Statement on Form SB-2
     under  the  Securities  Act  of  1933,  and  declared  effective  with  the
     Securities and Exchange  Commission  ("SEC") on June 8, 1998,  Registration
     No.  333-44161;  two asterisks (**) were previously filed as a part of, and
     are hereby  incorporated by reference from PSB's Form 10-KSB filed with the
     SEC on March 21, 2000; and three asterisks (***) were filed with PSB's Form
     14-A filed with the SEC on March 23, 2001. The exhibit  numbers  correspond
     to the exhibit numbers in the referenced documents.

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

     *  3.1       Articles of Incorporation of PSB
     *  3.2       Bylaws of PSB
     *  4.1       Specimen Common Stock Certificate
     *  4.2       Specimen Warrant Certificate
     *  4.4       PSB's January 9, 1998 Warrant Plan
     * 10.1       Employment  Agreement  by  and  among PSB, the Bank and Robert
                  W. Woodard
     * 10.2       Land Purchase Agreement
    ** 10.3       Employment  Agreement  by  and  among PSB, the Bank and Wesley
                  T. Small
       22.1       Audited  Consolidated Financial Statements for the years ended
                  December 31, 2000 and 1999
   *** 99.1       PSB's 2000 Annual Meeting Proxy Statement



(b)  Reports  on Form 8-KSB.  Registrant  did not file any reports on Form 8-KSB
     ----------------------
during the last quarter of 2000.




                                       23
<PAGE>




                                   SIGNATURES
                                   ----------

Pursuant to the requirements of Section 15(d) 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.

Dated: March 23, 2001            By:      /s/ Alton C. Milton, Sr.
                                          --------------------------------------
                                          Alton C. Milton, Sr.
                                          Chairman of the Board

Dated: March 23, 2001            By:      /s/ Robert W. Woodard
                                          --------------------------------------
                                          Robert W. Woodard
                                          Chief Executive Officer, President and
                                              Principal Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the Registrant and in
the capacities and on the dates indicated:


/s/ John W. Burns, III                                            March 23, 2001
--------------------------------------------
JOHN W. BURNS, III
Class I Director


/s/ Robert M. Eadie                                               March 23, 2001
--------------------------------------------
ROBERT M. EADIE
Class I Director


/s/ Shipla U. Mhatre                                              March 23, 2001
--------------------------------------------
SHIPLA U. MHATRE
Class II Director


/s/ Alton C. Milton, Jr.                                          March 23, 2001
--------------------------------------------
ALTON C. MILTON, JR.
Class II Director


/s/ Alton C. Milton, Sr.                                          March 23, 2001
--------------------------------------------
ALTON C. MILTON, SR.
Chairman of the Board and Class III Director


/s/ Andrew T. Moore                                               March 23, 2001
--------------------------------------------
ANDREW T. MOORE
Class III Director


/s/ Robert W. Woodard                                             March 23, 2001
--------------------------------------------
ROBERT W. WOODARD
Chief Executive Officer, President
       and Principal Financial Officer


         SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY  REGISTRANTS  WHICH HAVE NOT  REGISTERED  SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.

                 PSB's Audited Consolidated Financial Statements
                  are included as Exhibits 22.1 of this filing.




                                       24