EMPLOYMENT AGREEMENT

THIS AGREEMENT, made June 30, 2006, by and between Peoples State Bank, Wausau, Wisconsin, a Wisconsin banking corporation (?the Bank?), and Peter W. Knitt, of Rhinelander, Wisconsin (?Mr. Knitt?).

WITNESSETH:

WHEREAS, the Bank has employed Mr. Knitt for several years as a Senior Vice President and Mr. Knitt has performed his duties in a highly satisfactory manner; and

WHEREAS, the Bank now wishes to employ Mr. Knitt as its President and Chief Executive Officer (?CEO?) and Mr. Knitt wishes to continue his employment by the Bank in such capacity and on the terms and conditions hereinafter provided;

NOW, THEREFORE, in consideration of the premises, covenants, and mutual agreements contained herein, the Bank and Mr. Knitt agree as follows:

1.

Employment.  Subject to the earlier termination of this agreement pursuant to the terms hereof, Mr. Knitt is hereby employed on the Commencement Date (as defined below) as the President and CEO of the Bank; provided, however, that Mr. Knitt may be employed in such other capacity as the Board of Directors of the Bank shall deem appropriate and in the best interests of the Bank.  Mr. Knitt agrees to serve in such capacity or capacities on the terms and conditions hereinafter set forth.

2.

Term.  The term of this agreement shall commence on July 1, 2006 (the ?Commencement Date?) and shall end at midnight on the Expiration Date.  For purposes of this agreement, the term ?Expiration Date? shall mean the first to occur of (a) the date of Mr. Knitt?s death, or (b) the later of (i) the third anniversary of the Commencement Date and (ii) the date to which the term of this agreement has most recently been extended pursuant to the following sentence.  On the third and each subsequent anniversary of the Commencement Date the term of this agreement shall automatically be extended for one calendar year; provided, however, that automatic extensions of the term of this agreement (and, consequently, the Expiration Date) pursuant to this sentence shall cease on the first to occur of (x) either the Bank or Mr. Knitt giving to the other, at any time on or after the Commencement Date, a written notice that no, or no further, as the case may be, automatic extensions of the term of this agreement shall thereafter occur, but the giving of such a notice shall not affect any previous extensions, or (y) Mr. Knitt?s 64th birthday.  The term ?Term of Employment? shall mean the period beginning on the Commencement Date and ending on the earlier of the Expiration Date or the date on which Mr Knitt?s employment is terminated pursuant to paragraphs 5 or 8.  

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3.

Extent of Services.  Mr. Knitt agrees to devote his full-time attention and efforts (except during vacation periods, periods of illness, and other approved absences as provided for in paragraph 4(g)) to the duties of any office held by him during the Term of Employment, provided, however, that Mr. Knitt?s devotion of a reasonable and de minimis portion of his attention or efforts to the management of his personal affairs during normal business hours shall not constitute a breach of the foregoing requirement.     

4.

Compensation and Reimbursement.

(a)

Salary.  The Bank shall pay to Mr. Knitt a salary based on an annual amount of $190,000.  The Bank may increase Mr. Knitt?s salary from the amount specified herein during the Term of Employment, but may not decrease Mr. Knitt?s salary from any previously established amount.  Mr. Knitt?s salary shall be payable at such times and in such installments as are consistent with the manner in which the salaries of other executive officers of the Bank are paid.

(b)

Incentive Compensation.  During the Term of Employment, Mr. Knitt shall be entitled to receive such additional compensation from the Bank as may be provided for officers under the terms of any incentive program from time to time maintained and in effect at the Bank for the President and CEO.

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