8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934

_________________________

Date of Report (date of earliest event reported):  August 3, 2006

PSB Holdings, Inc.

(Exact name of registrant as specified in its charter)

Wisconsin

0-26480

39-1804877

(State or other

(Commission File

(IRS Employer

jurisdiction of

Number)

Identification

incorporation)

Number)

1905 W. Stewart Avenue

Wausau, WI 54401

(Address of principal executive offices, including Zip Code)

(715) 842-2191

Registrant's telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

£

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 23.425)

£

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

£

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

£

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Section 1 – Registrant’s Business and Operations

Item 1.01

Entry into a Material Definitive Agreement

On August 3, 2006, PSB Holdings, Inc.’s (“PSB”) principal subsidiary, Peoples State Bank (“Peoples”), entered into an agreement with David K. Kopperud which terminated Mr. Kopperud’s existing employment agreement and provided for his continued employment through 2007 under new terms.  Mr. Kopperud served as President and CEO of PSB and Peoples until July 1, 2006 and continues to serve as a director of both companies.

Under the new agreement, for the period beginning July 1, 2006 and ending on December 31, 2006, Mr. Kopperud will assist in the transition of Peoples’ new President and CEO, Peter W. Knitt, and assist the bank in maintaining its relationships with significant customers.  During this period, Mr. Kopperud will continue to be compensated on the same basis and continue to be eligible for the same benefits as were in effect under his prior employment agreement dated January 1, 2003, as amended April 13, 2005.

Mr. Kopperud will continue to be employed by the Peoples during 2007 at a salary to be determined by the Board of Directors in December, 2006 in connection with its annual review of personnel matters.  During 2007, he will be entitled to participate in the bank’s health and welfare benefits plans and its 401(k) plan on the same basis as other employees.  

For so long as Mr. Kopperud continues to serve Peoples under this agreement, he will continue to serve as a director of the bank and will be nominated by the Board of Directors of PSB for reelection to its board.

Mr. Kopperud may terminate his employment at any time.  Peoples may terminate his employment for “cause” as defined in the prior employment.  

Item 9.01

Financial Statements and Exhibits

Exhibit 99.1

Employment Agreement between Peoples State Bank and David K. Kopperud

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 hereunto duly authorized.

PSB HOLDINGS, INC.

Date:  August 4, 2006

By:  SCOTT M. CATTANACH

Scott M. Cattanach

Treasurer

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EXHIBIT INDEX

to

FORM 8-K

of

PSB HOLDINGS, INC.

dated August 3, 2006

Pursuant to Section 102(d) of Regulation S-T

(17 C.F.R. Section 232.102(d))

Exhibit 99.1

Employment Agreement between Peoples State Bank and David K. Kopperud

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EX-99.1

Exhibit 99.1

July 28, 2006

Mr. David K. Kopperud

Peoples State Bank

1905 W. Stewart Avenue

Wausau, WI  54401

Dear Dave:

This letter sets forth the understanding reached by you and the Board of Directors concerning your continued employment by Peoples State Bank (the “Bank”) and service on the boards of directors of the Bank and the holding company.  The elements of that understanding are set forth below.

1.

The employment agreement between you and the Bank dated January 1, 2003 and amended April 13, 2005 (your “Prior Agreement”) is terminated effective as of July 1, 2006.

2.

For the period beginning July 1, 2006 and ending on December 31, 2006, you will perform such duties as the Board deems appropriate to facilitate the transition of your replacement as President and CEO and to maintain the Bank’s relationships with significant customers.  During this period, you will provide forty (40) hours of service per week to the Bank and will continue to be compensated on the same basis and continue to be eligible for the same benefits as were in effect under your Prior Agreement.  Acknowledging that you are entitled to twenty-six (26) personal days per year, and had used fifteen (15) of those prior to July 1, 2006, you will be entitled to eleven (11) personal days from July 1 through the balance of 2006.

3.

You will continue to be employed by the Bank during 2007 at a salary to be determined by the Board of Directors in December, 2006 in connection with its annual review of personnel matters.  During 2007, you will be entitled to participate in the Bank’s health and welfare benefits plans and its 401(k) plan on the same basis as other employees.  You will be expected to work on a basis of thirty-two (32) hours per week and perform such duties as the Board may direct, and your personal days will be determined by the Board of Directors.

4.

For so long as you continue to serve the Bank under this agreement, you will continue to serve as a director of the Bank and will be nominated by the Board of Directors of PSB Holdings, Inc. for reelection to that board.

5.

Your employment may be terminated by you at any time.  The Bank may terminate your employment for “cause” as defined in your Prior Agreement at any time.  You and the Board have agreed to discuss your continued role after 2007, but neither you nor the Bank has any employment obligation with respect to the period after 2007.

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We are pleased that we have reached an agreement that allows you to meet your personal goals and assist the Bank in its management transition.  Please indicate your agreement with the elements of your agreement with the Board as described above by signing and returning the enclosed copy of this letter.

Very truly yours,

PATRICK L. CROOKS

Patrick L. Crooks

Chairman of the Board

I hereby acknowledge and agree to the above terms of my employment by Peoples State Bank.

August 3, 2006

DAVID K. KOPPERUD

David K. Kopperud

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