**UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549**
_______________________________________________

**FORM 10-QSB**

| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
| | ---------------------------------------------------------------------------------------
| | For the quarterly period ended September 30, 2002                                      
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934     
| | For the transition period from ____________ to _____________.                          



---

|Delaware(State or other jurisdiction ofincorporation or organization)     |  | 34-1870418(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------- |  | ----------------------------------------------
|55 North Main Street, Niles, Ohio(Address of principal executive offices) |  | 44446(Zip Code)                               

Issuer's telephone number, including area code: (330) 652-2539

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No

Shares of common stock, par value $.01 per share, outstanding as of November 1, 2002: 1,468,870

Transitional Small business Disclosure Format (check one): Yes      No

**PART I - FINANCIAL INFORMATION**

**Item 1.	            Financial Statements**

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITIONFIRST NILES FINANCIAL, INC. AND SUBSIDIARY(In thousands, except share data)

|                                                                                    | September 30,2002 |   | December 31,2001 |  
|----------------------------------------------------------------------------------- | ----------------- | - | ---------------- | -
|ASSETS                                                                              | (Unaudited)       |   |                  |  
|Cash and cash equivalents:                                                         
|Noninterest bearing                                                                 | $ 2,054           |   | $ 1,167          |  
|Interest bearing                                                                    | 3,897             |   | 5,080           
|Total cash and equivalents                                                          | 5,951             |   | 6,247            |  
|Securities available for sale -   at market                                         | 44,503            |   | 39,080           |  
|Securities to be held to maturity -   at cost                                       | 4,981             |   | 8,866            |  
|Loans receivable, net of allowance   for loan losses of $750 and $676               | 40,118            |   | 39,508           |  
|Accrued interest receivable                                                         | 732               |   | 735              |  
|Federal Home Loan Bank stock, at cost                                               | 1,041             |   | 1,005            |  
|Real estate investment, limited partnership -  at equity                            | 163               |   | 208              |  
|Premises and equipment, at cost less  accumulated depreciation                      | 342               |   | 348              |  
|TOTAL ASSETS                                                                        | $97,927           |   | $96,107          |  
|
|LIABILITIES                                                                        
|Deposits                                                                            | $59,188           |   | $57,061          |  
|Accrued interest payable                                                            | 141               |   | 173              |  
|Accounts payable and other liabilities                                              | 1,338             |   | 1,240            |  
|Federal Home Loan Bank advances                                                     | 19,500            |   | 19,500           |  
|Federal income tax payable                                                          | 16                |   | -                |  
|Deferred federal income tax liability                                               | 177               |   | 167              |  
|TOTAL LIABILITIES                                                                   | 80,360            |   | 78,141           |  
|SHAREHOLDERS' EQUITY                                                               
|
|Preferred stock, $.01 par value, authorized  500,000 shares; none outstanding       | -                 |   | -                |  
|Common stock, $.01 par value, authorized  6,000,000 shares; 1,754,411 shares issued | 18                |   | 18               |  
|Paid in capital                                                                     | 6,810             |   | 6,797            |  
|Retained earnings                                                                   | 13,682            |   | 13,506           |  
|Net unrealized gains on securities  available for sale                              | 1,411             |   | 1,337            |  
|Common stock purchased by the Employee  Stock Ownership Plan                        | (935              | ) | (935             | )
|Treasury stock - 281,341 shares and 238,343 shares                                  | (3,419            | ) | (2,757           | )
|TOTAL SHAREHOLDERS' EQUITY                                                          | 17,567            |   | 17,966           |  
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                          | $97,927           |   | $96,107          |  

SEE ACCOMPANYING NOTES



|                                                            | 2002   | 2001   | 2002   | 2001  
|----------------------------------------------------------- | ------ | ------ | ------ | ------
|Interest income:                                           
|Loans receivable                                           
|First mortgage loans                                        | $668   | $683   | $1,998 | $2,038
|Consumer and other loans                                    | 41     | 37     | 115    | 95    
|Mortgage-backed and related securities                      | 133    | 177    | 429    | 560   
|Investments                                                 | 573    | 586    | 1,702  | 1,535 
|Interest-bearing deposits                                   | 33     | 47     | 92     | 171   
|TOTAL INTEREST INCOME                                       | 1,448  | 1,530  | 4,336  | 4,399 
|Interest expense:                                          
|Deposits                                                    | 415    | 544    | 1,319  | 1,633 
|Borrowings                                                  | 225    | 216    | 668    | 505   
|TOTAL INTEREST EXPENSE                                      | 640    | 760    | 1,987  | 2,138 
|NET INTEREST INCOME                                         | 808    | 770    | 2,349  | 2,261 
|Provision for loan losses                                   | 12     | 30     | 66     | 90    
|NET INTEREST INCOME AFTER        
PROVISION FOR LOAN LOSSES | 796    | 740    | 2,283  | 2,171 
|Noninterest income:                                        
|Gain on sale of securities                                  | 74     | 75     | 112    | 198   
|Service fees and other income                               | 14     | 8      | 38     | 27    
|TOTAL NONINTEREST INCOME                                    | 88     | 83     | 150    | 225   
|Noninterest expense:                                       
|Equity in loss of limited partnership                       | 10     | 9      | 46     | 28    
|General and administrative:                                
|Compensation and benefits                                   | 276    | 257    | 833    | 1,053 
|Occupancy and equipment                                     | 22     | 19     | 65     | 55    
|Federal deposit insurance premiums                          | 2      | 2      | 7      | 7     
|Legal and audit                                             | 39     | 18     | 135    | 80    
|Franchise taxes                                             | 41     | 59     | 129    | 177   
|Other operating expense                                     | 68     | 62     | 216    | 200   
|TOTAL NONINTEREST EXPENSE                                   | 458    | 426    | 1,431  | 1,600 
|INCOME BEFORE INCOME TAXES                                  | 426    | 397    | 1,002  | 796   
|Federal income taxes                                        | 130    | 117    | 292    | 217   
|NET INCOME                                                  | $  296 | $  280 | $  710 | $  579
|EARNINGS PER SHARE                                          | $ 0.22 | $ 0.19 | $ 0.51 | $ 0.40
|DILUTED EARNINGS PER SHARE                                  | $ 0.21 | $ 0.19 | $ 0.51 | $ 0.40

SEE ACCOMPANYING NOTES.



|                                    | Nine Months Ended | September 30,
|----------------------------------- | ----------------- | -------------
|                                    | 2002              | 2001         
|Net income                          | $  710            |              
|Other comprehensive income:        
|Unrealized gains on securities:    
|Unrealized gains arising for period | 391               |              
|Related income tax                  | 133               |              
|                                    | 258               |              
|Reclassification adjustment:       
|Gain included in net income         | (277              | )            
|Related income tax                  | 94                |              
|                                    | (183              | )            
|Other comprehensive income          | 75                |              
|COMPREHENSIVE INCOME                | $ 785             |              

SEE ACCOMPANYING NOTES.



|                                                                                                           | 2002    | 2001
|---------------------------------------------------------------------------------------------------------- | ------- | ----
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                      
|Net income                                                                                                 | $ 710   |     
|Adjustments to reconcile net income to net cash  provided by operating activities                         
|Deferred income taxes                                                                                      | (29     | )   
|Depreciation                                                                                               | 25      |     
|Amortization of deferred loan fees and costs                                                               | (5      | )   
|Amortization of discounts and premiums on      investments and mortgage-backed and      related securities | (23     | )   
|Recognition and Retention Plan shares                                                                      | -       |     
|Gain on sale of securities                                                                                 | (112    | )   
|ESOP shares allocated                                                                                      | -       |     
|Equity in loss of limited partnership                                                                      | 46      |     
|Provision for loan losses                                                                                  | 66      |     
|Federal Home Loan Bank stock dividends                                                                     | (35     | )   
|                                                                                                           | 643     |     
|Net increase (decrease) in accrued interest
    receivable, prepaid expenses and other assets              | 15      |     
|Net increase in accrued interest,     accounts payable and other liabilities                               | 87      |     
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                  | 745     |     
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                      
|Proceeds from sale of securities available for sale                                                        | 5,757   |     
|Purchase of FHLB stock                                                                                     | -       |     
|Purchase of securities available for sale                                                                  | (17,987 | )   
|Proceeds from maturity of securities available
  for sale                                                  | 7,047   |     
|Proceeds from principal payments on   
mortgage-backed and related securities                              | 3,895   |     
|Net (increase) decrease in interest-bearing  deposits with banks                                           | 1,182   |     
|Net increase in loans                                                                                      | (671    | )   
|Additions to premises and equipment                                                                        | (19     | )   
|NET CASH USED IN INVESTING ACTIVITIES                                                                      | (796    | )   
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                      
|Net increase in savings accounts, MMDAs  and NOW accounts                                                  | 2,159   |     
|Net increase (decrease) in certificates of  deposit                                                        | (32     | )   
|Purchase of treasury shares                                                                                | (764    | )   
|Cash dividends paid on common stock                                                                        | (535    | )   
|Proceeds from FHLB Advances                                                                                | -       |     
|Common stock options exercised                                                                             | 110     |     
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                  | 938     |     
|NET INCREASE (DECREASE) IN CASH                                                                            | 887     |     
|CASH AT BEGINNING OF PERIOD                                                                                | 1,167   |     
|CASH AT END OF PERIOD                                                                                      | $2,054  |     
|Cash paid during the period for:                                                                          
|Interest                                                                                                   | $2,019  |     
|Income taxes                                                                                               | $  299  |     

SEE ACCOMPANYING NOTES



NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies followed by First Niles Financial,
Inc. ("First Niles") are in accordance with accounting principles generally accepted in the United States of America and conform to general
practices within the savings and loan industry.

The accompanying unaudited financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore do not
include information or footnotes necessary for a complete presentation of
financial position, results of operations and cash flows in conformity
with accounting principles generally accepted in the United States of
America.  Management believes that all normal recurring adjustments that
are necessary for a fair presentation of interim period financial
information have been reflected in these financial statements.  The
results of operations for the interim periods discussed herein are not
necessarily indicative of the results that may be expected for a full
year.  These interim financial statements should be read in conjunction
with the consolidated financial statements and notes included in the
First Niles Financial, Inc. Annual Report on Form 10-KSB for the year
ended December 31, 2001.

NOTE B -- STOCK CONVERSION

On October 26, 1998, First Niles began trading as a public company on the
Nasdaq SmallCap Market.  First Niles issued 1,754,411 shares, $.01 par
value common stock, at $10.00 per share, raising $15.5 million, net of
shares acquired by the newly formed Employee Stock Ownership Plan (the
"ESOP") and net of the costs of the conversion.  Home Federal Savings and
Loan Association of Niles converted to a federal stock savings and loan
association and simultaneously received proceeds of $8.5 million in
exchange for all of its common stock to First Niles.  This transaction
was accounted for using historical cost in a manner similar to that in a
pooling of interests.

NOTE C -- EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the
weighted-average shares outstanding, during the period, less weighted-average shares in the ESOP that are unallocated and not committed to be
released.  Diluted earnings per share reflect the potential effect of
stock options and is calculated using the treasury stock method.  At
September 30, 2002 the market price of First Niles stock exceeded the
exercise price of all outstanding options; the resulting dilution,
however, did not result in a reduction from basic earnings per share, as
rounded to the nearest whole cent for the nine month period ended
September 30, 2002, but did result in a reduction for the three month
period ended September 30, 2002.



The following table sets forth the computation of earnings per share and
diluted earnings per share for the three and nine month periods ended
September 30, 2002 and September 30, 2001 (income in thousands):

|                                                  | September 30, | September 30,
|------------------------------------------------- | ------------- | -------------
|                                                  | 2002          | 2001         
|BASIC                                            
|Net income                                        | $ 296         | $ 280        
|Earnings applicable to basic   earnings per share | $   296       | $   280      
|Average common shares                             | 1,478,590     | 1,560,815    
|Less average unallocated  ESOP shares             | 117,939       | 137,471      
|Average common shares  outstanding - basic        | 1,360,652     | 1,423,344    
|Average common shares  outstanding - diluted      | 1,385,606     | 1,423,344    
|Earnings per share - basic                        | $0.22         | $0.19        
|diluted                                           | $0.21         | $0.19        



**General**

First Niles Financial, Inc., a Delaware corporation, was formed in July 1998 to act as the
holding company for Home Federal Saving and Loan Association of Niles upon the
completion of Home Federal's conversion from mutual to stock form.  The conversion was
completed on October 26, 1998.  All references to First Niles or Home Federal, unless
otherwise indicated, on or before October 26, 1998, refer to Home Federal before its
conversion from mutual to stock form.  References in this Form 10-QSB to "we", "us", and
"our" refer to First Niles and/or Home Federal as the context requires.

Our principal business consists of attracting retail deposits from the general public and
investing those funds primarily in permanent and construction loans secured by first
mortgages on owner-occupied, one-to-four family residences.  We also originate, to a lesser
extent, loans secured by first mortgages on non-owner-occupied one-to-four family
residences, permanent and construction commercial and multi-family real estate loans, and
consumer loans, including home equity lines of credit.  Excess funds are generally invested
in investment securities and mortgage-backed and related securities.  Additionally, we
borrow funds from the FHLB and reinvest the proceeds in investment securities at favorable
interest rate spreads.

The following discussion compares our consolidated financial condition at September 30,
2002 to December 31, 2001 and the results of operations for the three month and nine month
periods ended September 30, 2002 with the same periods ended September 30, 2001.  This
discussion should be read in conjunction with the consolidated financial statements and
footnotes included herein.

**Comparison of Financial Condition at September 30, 2002 and December 31, 2001**

Total assets increased by $1.8 million, or 1.9%, to $97.9 million at September 30, 2002 from
$96.1 million at December 31, 2001.  This increase was primarily reflected in a $1.5 million
increase in total securities and a $610,000 increase in net loans receivable, partially offset by
a $296,000 decrease in cash and cash equivalents.

The aforementioned increase in assets was funded by a $2.1 million increase in total
deposits.  The increase in deposits was comprised of a $2.2 million increase in savings
accounts and NOW accounts, partially offset by a decline of $32,000 in certificates of
deposit.

Shareholders' equity at September 30, 2002 was $17.6 million, a $399,000, or 2.2% decrease
from December 31, 2001.  The decrease in shareholders' equity, was primarily the result of a
the repurchase of $764,000 in common stock and the payment of $535,000 in common stock
dividends, partially offset by $710,000 in net income, $110,000 received

Book value per share was $11.93 at September 30, 2002, compared to $11.85 at December
31, 2001.   At September 30, 2002 and December 31, 2001, there were 1,473,070 and
1,516,068 shares of common stock outstanding, respectively.

Nonperforming loans, consisting of nonaccruing loans and loans delinquent more than 90
days, totaled $1.2 million at September 30, 2002, or 1.2% of total assets, compared to $1.4
million, or 1.5% of total assets as of December 31, 2001.  The allowance for loan losses was
$750,000 at September 30, 2002, representing coverage of 62.7% of non-performing loans
and 1.9% of net loans receivable.  At December 31, 2001, the allowance for loan losses
represented coverage of 48.1% of nonperforming loans and 1.7% of net loans receivable.
Management believes that the current level of the allowance for loan losses remains adequate
to absorb losses resulting from uncollectible loans.  At September 30, 2002 we had no
foreclosed assets as compared to $53,000 at December 31, 2001.

**Results of Operations for the Three-Month Period Ended September 30, 2002 as
Compared to September 30, 2001**

**General.** Our results of operations depend primarily on our net interest income, which is
determined by (i) the difference between interest earned on interest-earning assets, consisting
primarily of mortgage loans, collateralized mortgage obligations, other investments and
interest-bearing deposits in other institutions, and interest expense on interest-bearing
liabilities, primarily deposits and borrowings, and (ii) the relative amounts of our interest-earning assets and interest-bearing liabilities.  The level of non-interest income, such as fees
received from customer deposit account service charges and gains on sales of investments,
and the level of non-interest expense, such as federal deposit insurance premiums, salaries
and benefits, office occupancy costs, and data processing costs, also affect our results of
operations.  Finally, our results of operations may also be affected significantly by general
economic and competitive conditions, particularly changes in market interest rates,
government policies and actions of regulatory authorities, all of which are beyond our
control.

**Net Income.** For the three months ended September 30, 2002, First Niles recorded net
income of $296,000, an increase of $16,000, or 5.7% as compared to the same period in
2001.  This net income resulted in an annualized return on average assets of 1.21% as
compared to 1.20% in the same period one year ago.  The annualized return on shareholders'
equity for the three months ended September 30, 2002 was 6.59% compared to 6.15% for the
three months ended September 30, 2001.  Earnings per share and diluted earnings per share
for the three months ended September 30, 2002 was $0.22 and $0.21,

**Net Interest Income.**Net interest income increased by $38,000, or 4.9%, for the three
month period ended September 30, 2002 as compared to the respective 2001 period.  For the
three months ended September 30, 2002 the interest rate spread was 2.81% as compared to
2.55% for the same period one year prior.  The major factor leading to the expansion in net
interest rate spread over the past year was steadily declining market interest rates, which
effected the liability side of our balance sheet to a greater extent than the asset side.  The net
interest margin for the current period was 3.37% as compared to 3.36% for the same period
one year ago.

For the three months ended September 30, 2002, total interest income decreased by $82,000,
or 5.4%, as compared to the same period in 2001.  Specifically, interest income on interest
bearing deposits, mortgage-backed and related securities and investments decreased a
collective $71,000 for the three month period ended September 30, 2002 as compared to the
same period in 2001.  Interest income on first mortgage loans decreased $15,000 in the three
month periods being compared.  The aforementioned decline in interest income in all
categories mentioned was primarily due to the decline in market interest rates experienced on
a comparative period basis.   The only category experiencing an increase in interest income
was consumer and other loans, which increased $4,000, primarily due to modestly higher
average balances.

Total interest expense decreased by $120,000, or 15.8%, as compared to the same period one
year prior.  This decrease was primarily due to steadily declining market interest rates.  Total
interest on deposits decreased $129,000 on a period to period basis.  The cost of funds for
the quarter ended September 30, 2002 was 3.25%, an 87 basis point decrease from the 4.12%
experienced during the same quarter one year ago.  A significant drop in the average interest
rate paid on certificates of deposit was the primary contributor to the decline in the cost of
funds on a period to period basis.  Certificates of deposits had an average weighted cost of
3.54% for the three months ended September 30, 2002 as compared to 5.17% at September
30, 2001, a decline of 163 basis points.

**Provision for Loan Losses**.  For the three months ended September 30, 2002 there was a
$12,000 provision for loan losses, $18,000 less than for the same period in 2001.   The provision for loan losses is a result of management's periodic analysis of risks  inherent
in our loan portfolio from time to time, as well as the adequacy of the  allowance for loan
losses.  It is our policy to provide valuation allowances for estimated

losses on loans based upon past loss experience, current trends in the level  of delinquent and specific problem
loans, loan concentrations to single borrowers, adverse situations that may affect the
borrower's ability to repay, the estimated value  of any underlying collateral, and current and
anticipated economic conditions in our  market area.  Accordingly, the calculation of the
adequacy of the allowance for loan  losses is not based directly on the level of non-performing assets.

Management will continue to monitor the allowance for loan losses and make future
additions to the allowance through the provision for loan losses as economic conditions
dictate.  Although we maintain the allowance for loan losses at a level which we consider to
be adequate to provide for losses, there can be no assurance that future losses will not exceed
estimated amounts or that additional provisions for  loan losses will not be required in future
periods.  In addition, management's determination as to the amount of the allowance for loan
losses is subject to review  by the Office of Thrift Supervision and the Federal Deposit
Insurance Corporation,  as part of their examination process, which may result in the
establishment of an additional allowance.

**Noninterest Income**.  Noninterest income of $88,000 for the three months ended September
30, 2002 was $5,000 higher than during the same period in 2001.  This increase was
primarily the result of a $6,000 increase in service fees and other income.  The increase in service fees and other income was primarily attributable to a $5,000
premium received for writing covered call options on shares of Freddie Mac stock that we
own.

**Noninterest Expense**.  Noninterest expense increased $32,000, or 7.5%, for the three months
ended September 30, 2002 as compared to the same period in 2001.  This increase was
primarily attributable to a $19,000 increase in compensation expense and a $21,000 increase
in legal and audit fees.  The increase in compensation expense was primarily attributable to
higher Employee Stock Ownership Plan costs and higher health insurance premiums.  These
increases were partially offset by an $18,000 decrease in franchise taxes as compared to the
same quarter one year ago.  This decrease was related to reduced capital levels at the
subsidiary level.

**Federal Income Taxes**.  The provision for federal income taxes increased by $13,000 in the
three months ended September 30, 2002 as compared to the same period in 2001, resulting in
a tax provision of $130,000.  The increase in the provision for federal income taxes as
compared to the same period in 2001 was primarily due to a $29,000 increase in pre-tax
income from period to period.  The effective tax rate in the current three month period was
30.5%.  For the respective three-month period, one year prior, the effective tax rate was
29.5%.  The above effective tax rates differ from the statutory rate of 34% primarily due to
tax credits arising from our ownership interest in a low income housing project.  The tax
credits from this program are expected to be available through 2006.

**Results of Operations for the Nine-Month Periods Ended September 30, 2002 as
Compared to September 30, 2001**

**Net Income.**First Niles recorded net income of $710,000 for the nine months ended
September 30, 2002.  This net income resulted in an annualized return on average assets for
the nine-month period of 0.98% and an annualized return on average shareholders' equity of
5.34%.  Net income increased by $131,000, or 22.6% for the nine months ended September
30, 2002 as compared to the nine months ended September 30, 2001.  The increase in net
income for these comparable periods was primarily due to a $169,000 decrease in noninterest expense, a $88,000 increase in net interest income, and a $24,000 decrease in the
provision for loan losses partially offset by a $75,000 decrease in total noninterest income
and a $75,000 increase in federal income tax expense.  The decrease in noninterest income
during the current period as compared to the same period in 2001 was primarily the result of
a $86,000 decrease in gain on sale of investments.

Earnings per share, on both a basic and diluted basis, for the nine months ended September
30, 2002 was $0.51, compared to $0.40 for the same nine month period in 2001.

**Net Interest Income.**Net interest income increased by $88,000, or 3.9% for the nine months
ended September 30, 2002 as compared to the respective 2001 period.  For the nine months
ended September 30, 2002 total interest income decreased by $63,000 and total interest
expense decreased by $151,000 as compared to the same period in 2001.  For the nine
months ended September 30, 2002 the interest rate spread was 2.68% as compared to 2.60%
for the nine months ended September 30, 2001.   For the nine months ended September 30,
2002 the net interest margin was 3.32% as compared to 3.55% for the nine months ended
September 30, 2001.

For the nine months ended September 30, 2002 the yield on interest earning assets was
6.12% a decline of 73 basis points from the 6.85% experienced during the comparative
period in 2001.  The overall cost of funds was 3.44% for the nine months ended September
30, 2002 as compared to 4.25% for the none months ended September 30, 2001, a decline of
81 basis points.   These declines were generally attributable to a decline in market interest
rates that has occurred over the past year.

**Provision for Loan Losses.**  The provision for loan losses in the nine months ended
September 30, 2002 was $66,000, compared to $90,000 in the nine months ended September
30, 2001.

**Noninterest Income.**Noninterest income totaled $150,000 for the nine months ended
September 30, 2002 as compared to $225,000 during the same period in 2001.  Gain on sale
of investment securities was $112,000 for the nine months ended September 30, 2002 as
compared to $198,000 for the nine months ended September 30, 2001.  The sale of interest
bearing investments securities, including mutual funds, and the sale of 500 shares of Freddie
Mac stock were the primary contributors to the gain on sale of investment securities recorded
for the nine month period ended September 30, 2002.  The sale of 3,000 shares of Freddie
Mac stock accounted for most of the gain on sale of investments recorded during the nine

month period in 2001.  Service fees and other income increased to $38,000 during the nine
months ended September 30, 2002 as compared to $27,000 for the nine months ended
September 30, 2001.   The increase in service fees and other income was primarily
attributable to a $11,000 in premiums received for writing covered call options on shares of
Freddie Mac stock that we own.

**Noninterest Expense.**Noninterest expense decreased $169,000, or 10.6%, for the nine
months ended September 30, 2002 as compared to the same period one year earlier.
Compensation and benefits and franchise taxes declined by $220,000 and $48,000,
respectively, from comparative period to comparative period.  These decreases were partially
offset by a $55,000 increase in legal and audit fees, an $18,000 increase in equity in loss of
limited partnership, a $10,000 increase in occupancy and equipment expense and a $16,000
increase in other operating expense.  The decrease in compensation and benefits was primarily the result of a $280,000 expense during the
comparative period in 2001 that was attributable to the vesting of restricted shares awarded
to officers, directors and employees in 1998 under the Company's Recognition and
Retention Plan, as approved by shareholders.  There was no comparable expense during the
nine month period ended September 30, 2002.  Increased Employee Stock Ownership Plans
cost and higher health insurance premiums partially offset the aforementioned decrease in
compensation and benefits.  The decrease in franchise taxes was related to decreased capital
levels at the subsidiary level.

**Federal Income Taxes.**The provision for federal income taxes increased by $75,000 for the
nine months ended September 30, 2002 as compared to the same period in 2001.  The
increase in the provision for federal income taxes was primarily due to an increase in pre-tax
income of $206,000.   The effective tax rate was 29.1% for the nine month period ended
September 30, 2002 compared to 27.3% in the same period one year earlier. The above effective tax rates differ from the statutory rate of 34% primarily due to tax
credits arising from our ownership interest in a low income housing tax credit project.  The
tax credits from this program are expected to be available through 2006.

**Liquidity and Capital Resources**

Our main source of funds are deposits, borrowings and loan and securities repayments.
While scheduled loan repayments and maturing investments are relatively predictable,
deposit flows and loan prepayments are more influenced by interest rates, general economic
conditions and competition.  Safe and sound banking practices require us to maintain cash
and eligible investments at levels that assure our ability to meet demands for deposit
withdrawals and the repayment requirements of short-term borrowings, if any.  We believe
that sufficient funds are available for us to meet our current liquidity needs.  Total cash and
cash equivalents amounted to $6.0 million at September 30, 2002.

We use our capital resources to meet ongoing commitments to fund various types of deposit
withdrawals, to invest in securities, to fund existing and future loan commitments, to
maintain liquidity, and to meet operating expenses.  At September 30,

2002 we had
outstanding commitments to extend credit totaling $4.7 million, including $2.4 million of
unused consumer lines of credit.

Home Federal is required to maintain minimum regulatory capital sufficient to meet tangible,
core and risk-based capital ratios of  1.5%, 4.0% and 8.0%, respectively.  As of September
30, 2002, Home Federal significantly exceeded its regulatory capital requirements, with
tangible, core, and risk-based capital ratios of 14.87%, 14.87% and 37.76%, respectively.

**Cautionary Forward-looking Statements**

This document, including information incorporated by reference, contains, and filings by the
Company on Form 10-KSB, Form 10-QSB, and Form 8-K and future oral and written
statements by the Company and its management may contain, forward-looking statements
about First Niles and its subsidiary which we believe are within the meaning of the Private
Securities Litigation Reform Act of 1995.  These forward-looking statements include,
without limitation, statements with respect to anticipated future operating and financial
performance, growth opportunities, interest rates, cost savings and funding advantages
expected or anticipated to be realized by management.  Words such as  "may", "could",
"should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan" and similar
expressions are intended to identify forward-looking statements.  Forward-looking
statements by the Company and management are based on beliefs, plans, objectives, goals,
expectations, anticipations, estimates and intentions of management and are not guarantees
of future performance.  The Company disclaims any obligation to update or revise any
forward-looking statements based on the occurrence of future events, the receipt of new
information, or otherwise.  The important factors we discuss below and elsewhere in this
document, as well as other factors discussed under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in this document and
identified in our filings with the SEC and those presented elsewhere by our management
from time to time, could cause actual results to differ materially from those indicated by the
forward-looking statements made in this document:

The following factors, many of which are subject to change based on various other factors
beyond our control, could cause our financial performance to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in such forward-looking
statements:

- the strength of the United States economy in general and the strength of the
local economies in which we conduct operations;
- the effects of, and changes in, trade, monetary and fiscal policies and laws,
 including interest rate policies of the Federal Reserve Board;
- inflation, interest rate, market and monetary fluctuations;
- the timely development of and acceptance of our new products and services
 and the perceived overall value of these products and services by users,
including the features, pricing and quality compared to competitors' products and
services;

14NEXT PAGE
- the willingness of users to substitute competitors' products and services for
 our products and services;
- our success in gaining regulatory approval of our products and services,
when required;
- the impact of changes in financial services' laws and regulations (including
 laws concerning taxes, banking, securities and insurance);
- the impact of technological changes;
- acquisitions;
- changes in consumer spending and saving habits; and
- our success at managing the risks involved in the foregoing.

**Item 3. CONTROLS AND PROCEDURES**

**(a) Evaluation of Disclosure Controls and Procedures:** An evaluation of the
Company's disclosure controls and procedures (as defined in Section 13(a)-14(c) of the
Securities Exchange Act of 1934 (the "Act") was carried out under the supervision and with
the participation of the Company's Chief Executive Officer, Chief Financial Officer and
several other members of the Company's senior management within the 90-day period
proceeding the filing date of this quarterly report.  The Company's Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures as currently in effect are effective in ensuring that the information required to be
disclosed by the Company in the reports it files or submits under the Act is (I) accumulated
and communicated to the Company's management (including the Chief Executive Officer
and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.****

**(b) Changes in Internal Controls:**In the quarter ended September 30, 2002, the
Company did not make any significant changes in, nor take any corrective actions regarding,
its internal controls or other factors that could significantly affect these controls.

**PART II - OTHER INFORMATION**

|**Item 1.** | **Legal Proceedings:**                                           
|----------- | -----------------------------------------------------------------
|            | **There are no matters required to be reported under this item.**
|**Item 2.** | **Changes in Securities:**                                       
|            | **There are no matters required to be reported under this item.**
|**Item 3.** | **Defaults Upon Senior Securities:**                             

|            | **There are no matters required to be reported under this item.**
|----------- | -----------------------------------------------------------------
|**Item 4.** | **Submission of Matters to a Vote of Security Holders:**         
|            | **There are no matters required to be reported under this item.**
|**Item 5.** | **Other Information:**                                           
|            | **There are no matters required to be reported under this item.**
|**Item 6.** | **Exhibits and Reports on Form 8-K:**                            
|            | **(a)	The following exhibit is filed herewith:**                 
|           
|            | **See Exhibit Index**                                            
|            | **(b)	Reports on Form 8-K:**                                     

**SIGNATURES**

**In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.**

|          |                       | **FIRST NILES FINANCIAL, INC.Registrant**
|--------- | --------------------- | -----------------------------------------
|**Date:** | **November 14, 2002** | **By:**                                  
|          |                       |                                          
|          |                       |                                          
|          |                       |                                          
|         
|**Date:** | **November 14, 2002** | **By:**                                  
|          |                       |                                          
|          |                       |                                          
|          |                       |                                          

**CERTIFICATIONS**

I, William L. Stephens, Principal Executive Officer, certify that:

1.  I have reviewed this quarterly report on Form 10-QSB of First Niles Financial, Inc. (The
"Registrant");

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light****of the circumstances under which statements were made, not misleading with respect to the
period covered by this quarterly report;

3.  Based on my knowledge, the consolidated financial statements, and other financial
information included in this quarterly report, fairly present in all material aspects the
consolidated financial condition, results of operations and cash flows of the Registrant as of,
and for, the periods presented in this quarterly report;

4.  The Registrant's other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the Registrant and we have:

> a) designed such disclosure controls and procedures to ensure that material
> information relating to the Registrant, including its consolidated subsidiaries,
> is made known to us by others within those entities, particularly during the
> period in which this quarterly report is being prepared;
> 
> 
> b) evaluated the effectiveness of the Registrant's disclosure controls and
> procedures as of a date within 90 days prior to the filing date of this quarterly
> report (the "Evaluation Date"); and
> 
> c) presented in this quarterly report our conclusions about the effectiveness of
> the disclosure controls and procedures based on our evaluation of the
> Evaluation Date;

5.  The Registrant's other certifying officer and I have disclosed, based on our most recent
evaluation, to the Registrant's auditors and the audit committee of Registrant's board of
directors (or persons performing the equivalent function):

> a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant's ability to record, process, summarize and
> report financial data and have identified for the Registrant's auditors any material
> weaknesses in internal controls; and
> 
> b) any fraud, whether or not material, that involves management or other
> employees who have a significant role in the Registrant's internal controls;
> and

6.  The Registrant's other certifying officer and I have indicated in this quarterly report
whether or not there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 14, 2002

/s/ William L. Stephens

---

I, George W. Swift, Principal Financial Officer, certify that:

1.  I have reviewed this quarterly report on Form 10-QSB of First Niles Financial, Inc. (The
"Registrant");

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which statements were made, not misleading with respect to the
period covered by this quarterly report;

3.  Based on my knowledge, the consolidated financial statements, and other financial
information included in this quarterly report, fairly present in all material aspects the
consolidated financial condition, results of operations and cash flows of the Registrant as of,
and for, the periods presented in this quarterly report;

4.  The Registrant's other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the Registrant and we have:

> a) designed such disclosure controls and procedures to ensure that material
> information relating to the Registrant, including its consolidated subsidiaries,
> is made known to us by others within those entities, particularly during the
> period in which this quarterly report is being prepared;
> 
> b) evaluated the effectiveness of the Registrant's disclosure controls and
> procedures as of a date within 90 days prior to the filing date of this quarterly
> report (the "Evaluation Date"); and
> 
> c) presented in this quarterly report our conclusions about the effectiveness of
> the disclosure controls and procedures based on our evaluation of the
> Evaluation Date;

5.  The Registrant's other certifying officer and I have disclosed, based on our most recent
evaluation, to the Registrant's auditors and the audit committee of Registrant's board of
directors (or persons performing the equivalent function):

> a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant's ability to record, process, summarize and
> report financial data and have identified for the Registrant's auditors any material
> weaknesses in internal controls; and
> 
> b) any fraud, whether or not material, that involves management or other
> employees who have a significant role in the Registrant's internal controls;
> and

6.  The Registrant's other certifying officer and I have indicated in this quarterly report
whether or not there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.

Date:  November 14, 2002

/s/ George J. Swift

---



|ExhibitNumber | Document                                                                                                                                                                                                                                                                                                        
|------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3             | The Certificate of Incorporation and Bylaws, filed on July 10, 1998 as
Exhibits 3.1 and 3.2, respectively, to Registrant's Registration Statement on
Form SB-2 (File No. 333-58883), are incorporated by reference.                                                                                             
|4             | Registrant's Specimen Stock Certificate, filed on  July 10, 1998 as Exhibit 4
to Registrant's Registration Statement on Form SB-2 (File No. 333-58883), is
incorporated by reference.                                                                                                                           
|10.1          | Employment Agreement between Registrants operating bank subsidiary and
William L. Stephens, George J. Swift and Lawrence Safarek filed as Exhibits
10.1, 10.2 and 10.3 to Registrant's Report on Form 10-KSB for the fiscal year
ended December 31, 1998 (File No. 0-24849, is incorporated herein by
reference.
|10.2          | Registrant's 1999 Stock Option and Incentive Plan, filed on November 12,
1999 as Appendix A to  Registrant's  Proxy Statement on Schedule 14A (File
No. 0-24849), is incorporated herein by reference.                                                                                                          
|10.3          | Registrant's 1999 Recognition and Retention Plan filed on November 12,
1999 as Appendix B to  Registrant's  Proxy Statement on Schedule 14A (File
No. 000-24849), is incorporated herein by reference.                                                                                                          
|11            | Statement Regarding Computation of Per Share Earnings (See Note C of the
Notes to Consolidate Financial Statements included in this Quarterly Report
on Form 10-QSB).                                                                                                                                           
|99.1          | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.