<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

(x)  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended March 31, 2002 or

( ) Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from _______________.

                                  No. 000-24601
                            ------------------------
                            (Commission File Number)

                                PSB BANCORP, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

        Pennsylvania                                       23-2930740
  ------------------------                          ------------------------
  (State of Incorporation)                          (IRS Employer ID Number)

    11 Penn Center, Suite 2601
1835 Market Street, Philadelphia, PA                        19103
----------------------------------------                 ----------
(Address of Principal Executive Offices)                 (Zip Code)

                                 (215) 979-7900
                         -------------------------------
                         (Registrant's Telephone Number)

Securities registered pursuant to Section 12(b) of the Exchange Act:  none

Securities registered pursuant to Section 12(g) of the Exchange Act: Common
Stock, (no par value per share).

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

Number of shares outstanding as of May 14, 2002

     Common Stock (no par value)                        4,534,611
     ---------------------------                   --------------------
         (Title of Class)                          (Outstanding Shares)



<PAGE>

                         PSB Bancorp, Inc.
                            FORM 10-Q

               For the Quarter Ended March 31, 2002

                         Table of Contents

                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION.

Item 1.  Financial Statements

         Consolidated Statements of Financial Condition
         as of March 31, 2002 (Unaudited) and
         December 31, 2001                                                    1

         Consolidated Statements of Income (Unaudited)
         for the Three Month Periods Ended March 31, 2002
         and 2001                                                             3

         Consolidated Statements of Cash Flows (Unaudited)
         for the Three Month Periods Ended March 31, 2002
         and 2001                                                             5

         Consolidated Statements of Comprehensive Income
         (Unaudited) for the Three Month Periods Ended
         March 31, 2002 and 2001                                              6

         Notes to Consolidated Financial Statements                           7

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

PART II. Other Information                                                   19

         Exhibits and Reports on Form 8-K



<PAGE>
Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                                PSB BANCORP, INC
                        STATEMENTS OF FINANCIAL CONDITION
                                 (In thousands)

                                                    March 31,    December  31,
                                                      2002            2001
                                                  -----------    -------------
                                                  (unaudited)      (audited)
ASSETS
  Cash and due from banks                           $  3,717        $  3,825
  Interest earning deposits with banks                29,484           3,293
  Federal funds sold                                  42,461          47,638

          Total cash and cash equivalents             75,662          54,756

  Loans held for sale                                 13,541          17,142
  Investment securities available-for-
    sale, at fair value                               66,855          69,934
  Investment securities held-to-maturity
    (fair value of $7,066 and $2,346)                  7,067           2,310
  Federal Home Loan Bank stock - at cost               1,093           1,093
  Federal Reserve Bank stock - at cost                   320             320
  Loans                                              302,298         300,051
  Less allowance for possible loan losses             (2,952)         (2,871)

          Net loans                                  299,346         297,180

  Accrued interest receivable                          1,961           1,884
  Premises and equipment, net                          2,406           2,508
  Bank owned life insurance (BOLI)                    11,303          11,161
  Other assets                                         5,364           9,356
                                                    --------        --------
     TOTAL ASSETS                                   $484,918        $467,644
                                                    ========        ========

LIABILITIES
  Deposits
    Non-interest bearing                            $ 36,133        $ 25,983
    Interest bearing                                 387,630         378,577
                                                    --------        --------
  Total deposits                                     423,763         404,560

  Securities sold under agreements to repurchase      13,306          13,298
  Advances from borrowers for taxes and insurance      2,588           3,111
  Accrued interest payable                                67              42
  Goodwill, net                                            0           1,679
  Other liabilities                                    2,050           3,539
                                                    --------        --------
     Total liabilities                               441,774         426,229
                                                    --------        --------

SHAREHOLDERS' EQUITY
 Common stock authorized, 15,000,000 shares no par
  value, 4,534,611 shares issued and outstanding
  on March 31, 2002 and December 31, 2001             41,866          40,994
  Retained earnings                                    3,442           1,768
  Accumulated other comprehensive income                  35             167
  Employee stock ownership plan                       (1,821)         (1,136)
  Treasury stock, at cost, 72,325 shares
     on March 31, 2002 and December 31, 2001            (378)           (378)
                                                    --------        --------
     Total shareholders' equity                       43,144          41,415
                                                    --------        --------
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $484,918        $467,644
                                                    ========        ========

The accompanying notes are an integral part of these financial statements.

                                       1
<PAGE>
                                PSB BANCORP, INC
                        CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)

                                                              Three months ended
                                                                   March 31,
                                                              ------------------
                                                               2002        2001
                                                              ------      ------
                                                                 (unaudited)
INTEREST INCOME
  Loans, including fees                                       $6,303      $3,799
  Investment securities                                        1,157       1,081
  Deposits with banks                                            196         209
                                                              ------      ------
    Total interest income                                      7,656       5,089

INTEREST EXPENSE
  Interest on deposits                                         3,383       2,574
  Interest on borrowings                                          81         190
                                                              ------      ------
    Total interest expense                                     3,464       2,764

      Net interest income                                      4,192       2,325

PROVISION FOR LOAN LOSSES                                        304          --
                                                              ------      ------
      Net interest income after provision
        for loan losses                                        3,888       2,325
                                                              ------      ------

NON-INTEREST INCOME                                            1,102         271
                                                              ------      ------
NON-INTEREST EXPENSES
  Salaries and employee benefits                               2,183         979
  Occupancy and equipment                                        397         314
  Other operating                                              1,739         675
                                                              ------      ------
    Total non-interest expenses                                4,319       1,968
                                                              ------      ------

    Income before income taxes                                   671         628
      and extraordinary gain

INCOME TAXES                                                     326          75

    Income before extraordinary gain                             345         553

EXTRAORDINARY GAIN                                             1,329           0
                                                              ------      ------
NET INCOME                                                    $1,674      $  553
                                                              ======      ======

  Net income per common share

    Basic:

      Income before extraordinary gain                        $  .08      $  .14
 Extraordinary gain                                              .32           -
                                                              ------      ------
 Net income                                                   $  .40      $  .14
                                                              ======      ======
    Diluted:

      Income before extraordinary gain                        $  .08      $  .14
      Extraordinary gain                                         .31           -
                                                              ------      ------
      Net income                                              $  .39      $  .14
                                                              ======      ======

The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>
                                PSB BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           March 31,
                                                                     --------------------
                                                                        2002        2001
                                                                     --------    --------
                                                                          (Unaudited)
<S>                                                                  <C>
CASH FLOWS BY OPERATING ACTIVITIES:
  Net income                                                         $  1,674    $    553
                                                                     --------    --------
  Adjustments to reconcile net income to net cash provided
    by (used in) operating activities:
      Amortization of premium/discount on mortgage-backed
        securities                                                         49         170
    (Write-up) write-down of equity investment                            (12)        102
    Depreciation and amortization                                         143          89
    Extraordinary gain- goodwill                                       (1,329)          0
    Write-down of real estate owned                                         0           3
    Proceeds from sale of loans                                        31,206           0
    Originations of loans held for sale                               (27,605)       (424)
    Provisions for possible loan losses                                   304           0
    Deferred taxes                                                       (326)        264
    Compensation expense-Employee Stock Ownership Plan                    186          21
    Change in assets and liabilities:
      (Increase) decrease in accrued interest receivable                  (77)        (40)
      (Increase) decrease in other assets                               1,652        (299)
       Increase in accrued interest payable                                25           5
      (Decrease) Increase in accrued expenses                          (1,489)        159
                                                                      -------    --------
    Net cash provided by operating activities                           4,401         603
                                                                      -------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of investment securities, available-for-sale                (5,000)    (10,962)
  Proceeds from maturities and calls of investment securities           5,058       8,822
  Increase in loans, net                                               (2,247)     (6,819)
  Proceeds from sale of real estate                                        48           0
  Capital expenditures                                                    (42)        (66)
                                                                      -------    --------
    Net cash (used in) investing activities                            (2,183)     (9,025)
                                                                      -------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase in deposits                                                 19,203       6,632
  Change in advances for borrowers' taxes and insurance                  (523)       (538)
  Change in securities purchased under agreements to resell                 8          74
                                                                      -------    --------
    Net cash provided by financing activities                          18,688       6,168
                                                                      -------    --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                   20,906      (2,254)

  Cash and cash equivalents, beginning of period                       54,756      17,906
                                                                     --------    --------
CASH AND CASH EQUIVALENTS, END OF PERIOD                               75,662      15,652
                                                                     ========    ========
</TABLE>
                                       3
<PAGE>
                                PSB BANCORP, INC.
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                 (In thousands)

                                                             Three Months Ended
                                                                   March 31,
                                                             ------------------
                                                                2002     2001
                                                              -------   ------
                                                                 (Unaudited)

Net income                                                    $1,674    $  553

Other comprehensive income, net of tax:
  Accumulated comprehensive gain (loss),
    investments available for sale                              (132)      512
                                                              ------    ------
Other comprehensive income                                      (132)      512
                                                              ------    ------
Comprehensive income                                          $1,542    $1,065
                                                              ======    ======

                                       4

<PAGE>
                                PSB BANCORP, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                 March 31, 2002
                                  (UNAUDITED)

1.   Basis of Presentation

     This quarterly report presents the consolidated financial statements of PSB
     Bancorp, Inc.("PSB") and its subsidiaries.

     The Company's financial statements reflect all adjustments and disclosures
     which management believes are necessary for a fair presentation of interim
     results. The result of operations for the quarter presented does not
     necessarily indicate the results that PSB will achieve for all of 2002. You
     should read these interim financial statements in conjunction with the
     consolidated financial statements and accompanying notes that are presented
     in the PSB Bancorp, Inc. Annual Report on Form 10-K for the year ended
     December 31, 2002.

     The financial information in this quarterly report has been prepared in
     accordance with PSB's customary accounting practices; these financial
     statements have not been audited. Certain information and footnote
     disclosures required under generally accepted accounting principles have
     been condensed or omitted, as permitted by rules and regulations of the
     Securities and Exchange Commission.

2.   Business Combinations

     On July 20, 2001, SFAS No. 141, "Business Combinations," and SFAS No. 142,
     "Goodwill and Intangible Assets" were issued. SFAS No. 141 is effective for
     all business combinations completed after June 30, 2001. SFAS No. 142 is
     effective for fiscal years beginning after December 15, 2001; however,
     certain provisions of this Statement apply to goodwill and other intangible
     assets acquired between July 1, 2001 and the effective date of SFAS No.
     142. PSB has adopted the provisions of SFAS 142. On January 1, 2002, after
     the revaluation of certain deferred assets relating to the acquisition of
     Jade, PSB recognized an extraordinary gain of $1.329 million which
     represented the remaining unamortized portion of negative goodwill.

     In accordance with APB 16, "Business combinations", the company has a
     twelve month look back period from the date of acquisition to evaluate the
     assigned values of all assets acquired from JADE Financial Corp. In
     connection with APB 16 the company is continuing the evaluation of these
     assets until June 29, 2002 for any additional adjustments.

     NOTE A - EARNINGS PER SHARE

     The following table illustrates the required disclosure of the
     reconciliation of the numerators and denominators of the basic and diluted
     EPS computation.

     The computation of earnings for the first quarter of 2002 was $1,674,000 or
     $0.39 per diluted share, compared to earnings of $553,000, or $0.14 per
     diluted share for the first quarter of 2001. This represents an increase in
     net income of 203% and a 171% increase in diluted earnings per share.


                                       5
<PAGE>

                                          Three months ended March 31, 2002
                                      ----------------------------------------
                                                       Weighted
                                         Income     average shares   Per share
                                      (numerator)    (denominator)     amount
                                      -----------   --------------   ---------
                                        (In thousands, except per share data)
Basic earnings per share
  Income before extraordinary
    gain                                 $  345          4,152         $0.08

  Extraordinary gain
                                         $1,329             --         $0.32
                                         ------          -----         -----
  Income available to common
    stockholders                         $1,674          4,152         $0.40

  Effect of dilutive securities
  Stock options                              --             63          (.01)
                                         ------          -----         -----
Diluted earnings per share
  Income available to common
    stockholders plus effect of
    dilutive securities                  $1,674          4,215         $0.39
                                         ======          =====         =====

     The computation of diluted earnings per share for all periods excludes
     1,371,200 options issued in connection with the 1999 First Bank
     acquisition, which have been deemed invalid by management.

     No options were anti-dilutive at March 31, 2002.

                                          Three months ended March 31, 2001
                                      ----------------------------------------
                                                        Weighted
                                         Income     average shares   Per share
                                      (numerator)    (denominator)     amount
                                      -----------   --------------   ---------
                                        (In thousands, except per share data)
Basic earnings per share
  Income available to common
    stockholders                         $553            3,966         $0.14
  Effect of dilutive securities
    Stock options                          --                5            --

Diluted earnings per share
  Income available to common
    stockholders plus
    effect of dilutive securities        $553            3,971         $0.14

     At March 31, 2001, there were 166,592 options to purchase shares of common
     stock with exercise prices ranging from $5.35 to $5.375 per share that were
     not included in the computation of diluted EPS for the three month period
     ended March 31, 2001 because the exercise price was greater than the
     average market price of the common stock.







                                       6
<PAGE>

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

RESULTS OF OPERATIONS

General

     PSB Bancorp, Inc. ("PSB") is the bank holding company for First Penn Bank
(the "Bank") a state chartered commercial bank. The Bank's results of operations
depend primarily on its net interest income, which is the difference between
interest income on its interest-earning assets, and interest expense on its
interest-bearing liabilities. The Bank's interest-earning assets consist
primarily of loans receivable and investment securities, while its
interest-bearing liabilities consist primarily of deposits and borrowings. The
Bank's net income is also affected by its provision for loan losses and its
level of non-interest income as well as its non-interest expense, such as salary
and employee benefits, occupancy costs and charges relating to non-performing
and other classified assets.

Net Income

     The Bank's net income totaled $1.7 million and $553,000 for the three
months ended March 31, 2002 and 2001, respectively. Basic and diluted earnings
per share for the three months ended March 31, 2002 were $0.40 and $.0.39
respectively, compared to $0.14 and $0.14 per share for the three months ended
March 31, 2001, respectively. The Bank's net income for the three-month period
ended March 31, 2002 includes a one-time extraordinary gain of $1.3 million
related to the recognition of the negative goodwill associated with the
acquisition of Jade Financial Corp. ("Jade") in June, 2001.

Net Interest Income and Average Balances

     Net interest income is the key component of the Bank's profitability and is
managed in coordination with its interest rate sensitivity position. Net
interest income for the first quarter of 2002 was $4.2 million compared to $2.3
million, for the first quarter of 2001, an increase of 82.61%. This increase in
net interest income is related to an increase in volume of interest earning
assets due to the acquisition of Jade and a 113 basis point increase in the net
interest spread primarily due to a 226 basis point decrease in the rate paid on
interest-bearing liabilities. The Bank's net interest margin increased by 11
basis points for the three month period ended March 31, 2002 compared to the
three month period ended March 31, 2001 due primarily to the previously
discussed increase in the interest rate spread.

         Overall, average total interest-earning assets provided a yield of
6.90% for the three months ended March 31, 2002, compared to 8.03% for the same
period in 2001. The average yield for the three months ended March 31, 2002
decreased in all asset classes except for investments and mortgage-backed
securities and was due primarily to declining interest rates generally. The most
significant rate drop was a 220 basis point drop in the yield on
interest-earning deposits. Average total loans of $320.9 million for the three
months ended March 31, 2002, provided a yield of 7.86% for the period, compared
to average total loans of $159.6 million for the three months ended March 31,
2001, which provided a yield of 9.52% for the period. The increase in average
total loans was primarily due to the acquisition of the loan portfolio of Jade.
The decrease of 166 basis points in the yield on the Bank's loan portfolio had
the greatest effect on the 113 basis point decline in the average yield on
interest-earning assets.

     Average total interest-bearing liabilities increased from $196.5 million to
$411.7 million or 109.52%, for the three months ended March 31, 2002 compared to
the corresponding quarter in 2001. The average rate on total interest-bearing
liabilities decreased 226 basis points from 5.63% for the three months ended
March 31, 2001 to 3.37% for the three months ended March 31, 2002. The change in
total interest-bearing liabilities was primarily due to the acquisition of the
interest-bearing liabilities of Jade.

Average Balance Sheets and Rate/Yield Analysis

     Net interest income is affected by changes in both average interest rates
and average volumes of interest-earning assets and interest-bearing liabilities.
The following tables present the average daily balances of assets, liabilities
and shareholders' equity and the respective interest earned or paid on
interest-earning assets and interest-bearing liabilities, as well as average
rates for the period indicated:

                                       7
<PAGE>
<TABLE>
<CAPTION>
                                                       Three Months Ended March 31,
                                      -----------------------------------------------------------
                                                  2002                           2001
                                      ----------------------------   ---------------------------
                                       Average              Yield/    Average              Yield/
                                       Balance   Interest    Rate     Balance   Interest    Rate
                                      --------   --------   ------   --------   --------   ------
                                                          (Dollars in thousands)
<S>                                  <C>         <C>        <C>      <C>       <C>        <C>
ASSETS
Interest-earning assets:
  Interest-earning deposits           $ 50,583    $  196     1.55%   $ 22,279   $  209      3.75%
  Investment securities                 10,542       180     6.83      26,386      385      5.84
  Mortgage-backed securities            61,899       977     6.31      45,184      696      6.16
  Net loans                            320,903     6,303     7.86     159,607    3,799      9.52
    Total interest-earning assets      443,927    $7,656     6.90%    253,456   $5,089      8.03%
Noninterest-earning assets              32,354                          5,810
    Total assets                      $476,281                       $259,266

LIABILITIES
Interest-bearing liabilities:
  Now checking accounts               $ 11,751    $   48     1.63%   $ 15,622   $   53      1.36%
  Money market accounts                 44,603       322     2.89      10,921      101      3.70
  Savings deposits                     114,837       501     1.75      28,868      205      2.84
  Certificates                         227,174     2,512     4.42     127,591    2,215      6.94
    Total deposits                     398,365     3,383     3.40     183,002    2,574      5.63
  Borrowed money                        13,304        81     2.44      13,458      190      5.65
    Total interest bearing
      liabilities                      411,669     3,464     3.37%    196,460    2,764      5.63%
Non-interest-bearing liabilities        22,333                         26,128
    Total liabilities                  434,002                        222,588
Shareholders' equity                    42,279                         36,678
    Total liabilities and
      shareholders' equity            $476,281                       $259,266
Net interest income                               $4,192                        $2,325
Interest rate spread                                         3.53%                          2.40%
Net yield on interest-earning assets                         3.78%                          3.67%
Ratio of interest-earning assets to
  interest-bearing liabilities                               1.08x                         1.29x
</TABLE>
Provision for Loan Losses

     The provision for loan losses represents the charge against earnings that
is required to fund the allowance for loan losses. The Bank determines the level
of the allowance for loan losses through a regular review of the loan portfolio.
Management's evaluation of the adequacy of the allowance for loan losses is
based upon an examination of the portfolio as well as such factors as declining
trends, the volume of loan concentrations, adverse situations that may affect
the borrowers ability to pay, prior loss experience within the portfolio,
current economic conditions and the results of the most recent regulatory
examinations. The adequacy of the loan loss allowance is reviewed monthly by the
Bank's Board of Directors. See "Asset Quality - Allowance for Loan Losses." The
Bank had an allowance for loan losses of $3.0 million and $2.9 million for the
three months ended March 31, 2002 and 2001, respectively. Additionally, the Bank
had charge-offs of $252,000 and recoveries of $29,000 against the allowance for
loan losses during the three-month period ended March 31, 2002, compared to
$0.00 in charge-offs and $0.00 in recoveries for the three month period ended
March 31, 2001.

Non-interest Income

     Non-interest income consists of gain on sale of loans, loan fees, service
fees, rental income and other miscellaneous income. Non-interest income
increased by $831,000, or 306.64%, to $1.1 million for the three months ended
March 31, 2002, from $271,000 for the three months ended March 31, 2001. The
increase for the three month period ended March 31, 2002 was a result of
increases in service fees on deposit accounts, credit card fees, return check
fees, and the sale of loans. The acquisition of the fee-bearing deposit accounts
of Jade provided a major source of additional non-interest income.

                                       8
<PAGE>

Non-interest Expense

     Non-interest expense principally consists of employees' compensation and
benefits, deposit insurance premiums, marketing, and premises and occupancy
costs. Non-interest expense was $4.3 million for the first quarter of 2002
compared to $2.0 million for the first quarter 2001. The increase in
non-interest expense is primarily due to additional salary and employee benefits
resulting from the consolidation in staffing associated with the acquisition of
Jade Financial Corp. Other operating also increased as a direct result of the
Bank's marketing strategy to increase the volume of the commercial loan
portfolio and the cross-selling of new products.

Provision for Income Taxes

     The income tax provision for the three-month period ended March 31, 2002
was $326,000, compared to $75,000 for the same period in 2001. PSB effective tax
rate increased for the first quarter of 2002 compared to the prior period due to
the prior utilization of the net operating loss carryforwards available of
approximately $1.8 million, from the First Bank of Philadelphia acquisition and
subsequently the acquisition of Jade Financial Corp.

     The company still has future loss carryforwards available of $484,650, each
year for the next five years.

Liquidity and Interest Rate Sensitivity

     The maintenance of adequate liquidity and the mitigation of interest rate
risk is integral to the management of the Bank's balance sheet. Liquidity
represents the ability to meet potential cash outflows resulting from deposit
customers who need to withdraw funds or borrowers who need available credit.
Interest rate sensitivity focuses on the impact of fluctuating interest rates
and the re-pricing characteristics of rate sensitive assets and liabilities on
net interest income.

     The Bank's asset/liability management committee monitors the level of
short-term assets and liabilities to maintain an appropriate balance between
liquidity, risk and return. Liquidity is derived from various sources that
includes increases in core deposits, sales of certificates of deposits, the
amortization and prepayment of loans and mortgage-backed securities, maturities
of investment securities and other short-term investments. The liquidity
position of the Bank is also strengthened by a $196.3 million credit facility
with the Federal Home Loan Bank ("FHLB"). Advances are secured by all FHLB stock
and qualifying mortgage loans. The Bank had no outstanding borrowings from the
FHLB as of March 31, 2002.

     Maximizing cash flow over time is crucial to the maintenance of adequate
liquidity. The Bank's total cash flow is a product of its operating activities,
investing activities and financing activities. During the three months ended
March 31, 2002, net cash provided by operating activities was $4.4 million,
compared to net cash provided by operating activities of $603,000 for the same
period of 2001. During the three months ended March 31, 2002, net cash used in
investing activities was $2.2 million, compared to net cash used in investing
activities of $9.0 million for the same period of 2001. Financing activities
provided net cash of $18.7 million during the three months ended March 31, 2002,
compared to $6.2 million in net cash provided by financing activities for the
same period of 2001. The net result of these items was a $20.9 million increase
in cash and cash equivalents for the three months ended March 31, 2002 compared
to cash and cash equivalents at March 31, 2001.

                                       9
<PAGE>

     Interest rate sensitivity is closely related to liquidity because each is
directly affected by the maturity of assets and liabilities. Rate sensitivity
also deals with exposure to fluctuations in interest rates and its effect on net
interest income. The primary function of the Bank's interest rate sensitivity
management is to reduce exposure to interest rate risk through an appropriate
balance between interest-earning assets and interest-bearing liabilities. The
goal is to minimize fluctuations in the net interest margin of the Bank due to
general changes in interest rates.

     The blending of fixed and floating rate loans and investments to match the
re-pricing and maturity characteristics of the various funding sources is a
continuous process in an attempt to minimize any fluctuations in net interest
income. The composition of the balance sheet is designed to minimize any
significant fluctuation in net interest income and to maximize liquidity.
Management believes that the accessibility to FHLB borrowings will provide the
flexibility to assist in keeping fluctuations in net interest income under
control and to maintain an adequate liquidity position.

Capital Adequacy

     On March 31, 2002, the Bank's regulatory capital dollars and ratios are as
follows. These ratios exceed the requirements for classification as a "well
capitalized" institution, the industry's highest capital category.
<TABLE>
<CAPTION>
                                                  At March 31,        At December 31,
                                  Well Cap-          2002                  2001
                                  italized   ---------------------   ---------------------
                                   Ratios       PSB        Bank         PSB        Bank
                                 ---------   ---------   ---------   ---------   ---------
<S>                              <C>         <C>         <C>         <C>         <C>
Tier I Capital                               $ 43,076    $ 33,891    $ 41,212    $ 32,574
Tier II Capital                                 2,952       2,952       2,871       2,871
                                             --------    --------    --------    --------
Total Qualifying Capital                     $ 46,028    $ 36,843    $ 44,083    $ 35,445

Risk Adjusted Total Assets                   $306,853    $305,394    $304,977    $303,527

Tier I Risk Based Capital Ratio     6.00%       14.04%      11.10%      13.51%      10.73%
Total Risk Based Capital Ratio     10.00%       15.00%      12.06%      14.45%      11.68%
Leverage Ratio                      5.00%        9.04%       7.16%       8.86%       7.03%

Average Assets                                476,281     473,430     465,071     463,469
</TABLE>
FINANCIAL CONDITION

General

     The Bank's total assets increased $17.3 million or 3.70% from $467.6
million at December 31, 2001 to $484.9 million at March 31, 2002. The increase
in assets was primarily due to an increase in interest earning deposits with
banks.

     At March 31, 2002 the Bank's net loan portfolio totaled $299.3 million
compared to $297.2 million at December 31, 2001. The increase in the net loan
portfolio is primarily attributable to an increase in the volume of commercial
real estate loans. (In the table below, commercial real estate loans are
classified as "Nonresidential").

                                       10
<PAGE>

     The following tables summarize the loan portfolio of the Bank by loan
category and amount at March 31, 2002 compared to December 31, 2001,
respectively. From time to time, TransNational Mortgage Corp., a subsidiary of
First Penn Bank, has originated and sold mortgage loans to third party investors
within the Bank's financial reporting periods. Similarly, student loans are
frequently originated and sold within the Bank's financial reporting periods.
Such mortgage and student loans are not reflected in the financial tables and
financial statements pertaining to a particular period to the extent that such
loans were sold prior to any period end. The loan categories correspond to the
Bank's general classifications (in thousands, except for percentage):
<TABLE>
<CAPTION>
                                      At March 31,        At December 31,
                                          2002                2001
                                   ------------------   ------------------
                                     Amount   Percent    Amount    Percent    Variance   % Change
                                   --------   -------   --------   -------   ---------   --------
<S>                               <C>        <C>       <C>        <C>       <C>         <C>
Real Estate Loans:
  One-to four-family*              $115,911    38.28%   $126,484    42.08%   $(10,573)     -8.36%
  Construction loans                 28,997     9.58%     24,501     8.15%      4,496      18.35%
  Five or more family residence       2,136     0.70%      2,201     0.74%        (65)     -2.95%
  Nonresidential                     67,965    22.44%     58,601    19.50%      9,364      15.98%

Commercial loans                     25,212     8.33%     23,908     7.95%      1,304       5.45%
SBA loans                            10,438     3.45%      9,934     3.30%        504       5.07%
Student loans                        34,199    11.29%     33,800    11.24%        399       1.18%
Consumer loans                       17,959     5.93%     21,174     7.04%     (3,215)    -15.18%
                                   --------   ------    --------   ------    --------     ------
    Total loans                    $302,817   100.00%   $300,603   100.00%   $  2,214       0.74%
                                   ========   ======    ========   ======    ========     ======
Less:
  Unearned fees and discounts      $    519             $    552
  Undisbursed loan proceeds              --                   --
  Allowance for loan losses           2,952                2,871
                                   --------             --------
  Net Loans                        $299,346             $297,180
                                   ========            =========
</TABLE>
* Does not include loans held for sale

     Total investment securities of PSB Bancorp Inc (including mortgage-backed
securities) increased $1.70 million, or 2.35%, to $73.9 million at March 31,
2002, from $72.2 million at December 31, 2001.

     Cash and cash equivalents, including interest-earning deposits with banks,
increased $20.9 million or 38.14% to $75.7 million at March 31, 2002, from $54.8
million at December 31, 2001. The primary change in cash and cash equivalents
was the increase in the Bank's deposit balances.

     Total liabilities increased $15.6 million or 3.66% to $441.8 million at
March 31, 2002 from $426.2 million at December 31, 2001. The increase in total
liabilities reflects the additional deposits garnered by the Bank due to an
aggressive marketing and pricing campaign and a general shift of consumer
investing preferences from the equity markets to bank deposit accounts.

Asset Quality

Delinquent Loans

     When a borrower fails to make a required payment on a loan, the Bank
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made on the 15th day after a payment is due. In most
cases, deficiencies are cured promptly. If a delinquency extends beyond 30 days,
the loan and payment history is carefully reviewed, additional notices are sent
to the borrower and efforts are made to collect the loan. While the Bank
generally prefers to work with borrowers to resolve such problems, when the
account becomes 90 days delinquent, the Bank does institute foreclosure or other
proceedings, as necessary, to minimize any potential loss.

                                       11
<PAGE>

Non-Performing Assets

    The Bank's level of non-performing assets increased $277,000, or 6.38% to
$5.0 million at March 31, 2002, from $4.7 million at December 31, 2001. As a
matter of policy, the accrual of loan interest is discontinued if management
believes that, after considering economic and business conditions and collection
efforts, the borrower's financial condition is such that collection of interest
becomes doubtful. This is normally done when a loan reaches 90 days delinquent.
At this time, all accrued but unpaid interest is reversed. There are occasional
exceptions if the loans are in the process of collection and the loan is fully
secured.

     The following table sets forth non-performing assets as of March 31, 2002
and December 31, 2001 (dollars in thousands):

                                                At March 31,   At December 31,
                                                    2002             2001
                                                ------------   ---------------
Loans past due 90 days or more
  as to interest or principal
  and accruing interest                           $   --           $   --
Nonaccrual loans                                   4,372            4,130
Loans restructured to provide a
  reduction or deferral of
  interest or principal                               --               --
                                                  ------           ------
Total nonperforming loans                          4,372            4,130
Real estate owned (REO)                              583              548
                                                  ------           ------
    Total nonperforming assets                    $4,955           $4,678
                                                  ======           ======

Nonperforming loans to total
  loans                                             1.38%            1.30%
Nonperforming assets to total
  assets                                            1.02%            1.00%
Allowance for loan losses to
  total Loans                                       0.93%            0.91%
Allowance for loan losses to
  nonperforming loans                              67.52%           69.52%
Allowance for loan losses to
  nonperforming assets                             59.58%           61.37%
Net charge-offs as a percentage
  of total loans                                    0.08%            0.25%

Allowance for Loan Losses

     The provision for loan losses is an amount charged against earnings to fund
the allowance for possible future losses on existing loans. In order to
determine the amount of the provision for loan losses, the Bank conducts a
monthly review of the loan portfolio to evaluate overall credit quality. In
establishing its allowance for loan losses, management considers the size and
risk exposure for each segment of the loan portfolio, past loss experience,
current indicators such as the present levels and trends of delinquency rates
and collateral values, and the potential losses for future periods. The
provisions are based on management's review of the economy, interest rates,
general market conditions, and in certain instances, an estimate of net
realizable value (or fair value) of the collateral, as applicable, considering
the current and anticipated future operating environment. These estimates are
particularly susceptible to changes that may result in a material adjustment to
the allowance for loan losses. As adjustments become identified, they are
reported in earnings for the period in which they become known. Management
believes that it makes an informed judgment based upon available information.
The adequacy of the allowance is reviewed monthly by the Board of Directors.

     It is the objective of the Bank's evaluation process to establish the
following components of the allowance for loan losses: a specific allocation for
certain identified loans, a general allocation for pools of loans based on risk
rating, and a general allocation for inherent loan portfolio losses. Management
performs current evaluations of its criticized and classified loan portfolios
and assigns specific reserves that reflects the current risk to the Bank. As a
general rule, special mention assets will have a minimum reserve of 5%,
substandard assets will have a minimum reserve of 10%, and doubtful assets will
have a minimum reserve of 50%. A general reserve allocation is applied for pools
of loans based on risk rating for all loans not specifically reserved for as
described previously.

Quantitative and Qualitative Disclosures About Market Risk

     There has been no material change in PSB's market risk exposure since
December 31, 2001.

                                       12
<PAGE>

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

          The response to this item is incorporated by reference to PSB's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on April
1, 2002.

Item 2. Changes in Securities

        None

Item 3. Defaults upon Senior Securities

        Not Applicable

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

          The response to this item is incorporated by reference to PSB's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on April
1, 2002.

Item 5. Other Information.

         None

Item 6. Exhibits and Reports on Form 8-K

        (a)  Exhibit Index.

Exhibit No.      Document
-----------      --------

 2.1             Agreement and Plan of Reorganization, dated as of March 19,
                 1999, between PSB Bancorp, Inc. and First Bank of Philadelphia.
                 (incorporated herein by reference to Exhibit 2.1 of the S-4
                 Registration Statement of PSB Bancorp, Inc. filed June 25,
                 1999).

 2.2             Agreement and Plan of Reorganization, dated as of November 2,
                 2000, between PSB Bancorp, Inc., PSB Merger Sub, Inc. and Jade
                 Financial Corp. (incorporated herein by reference to
                 Registration Statement of PSB Bancorp, Inc. filed on January
                 16, 2001.)

 3.1             Articles of Incorporation of PSB Bancorp, Inc. (incorporated
                 herein by reference to Exhibit 3.1 of the SB-2 Registration
                 Statement of PSB Bancorp, Inc. filed October 9, 1997).

 3.2             Bylaws of PSB Bancorp, Inc. (incorporated herein by reference
                 to Exhibit 3.2 of the SB-2 Registration Statement of PSB
                 Bancorp, Inc. filed October 9, 1997).

 10.1*           First Penn Bank's Retirement Plan (incorporated herein by
                 reference to Exhibit 10.1 of the SB-2 Registration Statement of
                 PSB Bancorp, Inc. filed October 9, 1997).

 10.2*           First Penn Bank's Cash or Deferred Profit Sharing Plan
                 (incorporated herein by reference to Exhibit 10.2 of the SB-2
                 Registration Statement of PSB Bancorp, Inc. filed October 9,
                 1997).

 10.3*           First Penn Bank's Profit Sharing Plan (incorporated herein by
                 reference to Exhibit 10.3 of the SB-2 Registration Statement of
                 PSB Bancorp, Inc filed October 9, 1997).

 10.4*           Employment Agreement with Vincent J. Fumo (incorporated herein
                 by reference to Exhibit 7.1 of the SB-2 Registration Statement
                 of PSB Bancorp, Inc filed October 9, 1997).

                                       13
<PAGE>

 10.5*           Employment Agreement with Anthony DiSandro (incorporated herein
                 by reference to Exhibit 7.2 of the SB-2 Registration Statement
                 of PSB Bancorp, Inc filed October 9, 1997).

 10.6*           First Penn Bank's Employee Stock Ownership Plan (incorporated
                 herein by reference to Exhibit 10.4 of the SB-2 Registration
                 Statement of PSB Bancorp, Inc. filed on October 9, 1997).

 10.7            Lease Agreement between Eleven Colonial Penn Plaza Associates
                 and First Penn Bank, dated as of October 10, 1995 (incorporated
                 herein by reference to Exhibit 10.7 of Form S-1, Amendment No.
                 3 of PSB Bancorp, Inc. filed May 5, 1998).

 10.8            Lease Agreement between Eleven Colonial Penn Plaza Associates
                 and First Penn Bank, dated as of October 12, 1995 (incorporated
                 herein by reference to Exhibit 10.8 of Form S-1, Amendment No.
                 3 of PSB Bancorp, Inc. filed on May 5, 1998).

 10.9*           First Penn Bank's Stock Option Plan (incorporated herein by
                 reference to Exhibit 10.9 of the S-4 Registration Statement of
                 PSB Bancorp, Inc. filed June 25, 1999).

 10.10*          First Penn Bank's Management Recognition Plan (incorporated
                 herein by reference to Exhibit 10.10 of the S-4 Registration
                 Statement of PSB Bancorp, Inc. filed June 25, 1999).

 10.11*          Employment Agreement for John J O'Connell. (incorporated herein
                 by reference to Exhibit 10.11 of PSB's Annual Report on Form
                 10-K filed on April 1, 2002).

 10.12*          Employment Agreement for Mario L. Incollingo (incorporated
                 herein by reference to Exhibit 10.12 of PSB's Annual Report on
                 Form 10-K filed on April 1, 2002).

 10.13*          PSB Bancorp, Inc. 2001 Stock Incentive Plan (incorporated
                 herein by reference to Exhibit 10.13 of PSB's Annual Report on
                 Form 10-K filed on April 1, 2002).

 21              Schedule of Subsidiaries (incorporated herein by reference to
                 Exhibit 21 of PSB's Annual Report on Form 10-K filed on April
                 1, 2002).

------------
*  Denotes a management contract or compensatory plan or arrangement.

          (b)  Reports on Form 8-K

               (1) Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 31, 2002.



                                       14
<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 dully authorized.

                              PSB BANCORP, INC


                              By:/s/Anthony DiSandro
                                 --------------------------------
                                 Anthony DiSandro,
                                 President, Chief Executive
                                   Officer & Director


                              By:/s/Karen Washington
                                 --------------------------------
                                 Karen Washington
                                 (Principal Financial Officer and
                                   Chief Accounting Officer)

May 14, 2002




                                       15