UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

  [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2001

  [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to ____________.

Commission File Number 0-22223
                       -------

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      ------------------------------------
        (Exact name of small business issuer as specified in its charter)

           Delaware                                           31-1499862
           --------                                           ----------
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                           Identification No.)

                     101 E. Court Street, Sidney, Ohio 45365
                     ---------------------------------------
                     (Address of principal executive offices)

                                 (937) 492-6129
                                 --------------
                           (Issuer's telephone number)


As of February 4, 2002, the latest  practicable  date,  1,475,038  shares of the
issuer's common shares, $.01 par value, were issued and outstanding.


Transitional Small Business Disclosure Format (Check One):

Yes [ ]            No [X]



<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION

                                      INDEX



<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----

PART I - FINANCIAL INFORMATION

<S>                                                                                                         <C>
  Item 1.     Financial Statements (Unaudited)

              Consolidated Balance Sheets.............................................................      3

              Consolidated Statements of Income ......................................................      4

              Consolidated Statements of Comprehensive Income.........................................      5

              Condensed Consolidated Statements of Changes in Shareholders' Equity....................      6

              Consolidated Statements of Cash Flows ..................................................      7

              Notes to Consolidated Financial Statements .............................................      8

  Item 2.     Management's Discussion and Analysis....................................................     14


Part II - Other Information

  Item 1.     Legal Proceedings.......................................................................     21

  Item 2.     Changes in Securities...................................................................     21

  Item 3.     Defaults Upon Senior Securities.........................................................     21

  Item 4.     Submission of Matters to a Vote of Security Holders.....................................     21

  Item 5.     Other Information.......................................................................     21

  Item 6.     Exhibits and Reports on Form 8-K........................................................     21


SIGNATURES ...........................................................................................     22

</TABLE>

--------------------------------------------------------------------------------

                                                                              2.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

Item 1.  Financial Statements
         --------------------
                                                                                  December 31,             June 30,
                                                                                     2001                    2001
                                                                                     ----                    ----
<S>                                                                             <C>                <C>
ASSETS
Cash and due from financial institutions                                        $     1,043,066    $      1,015,400
Interest-bearing deposits in other financial institutions                             3,085,036           4,335,495
Overnight deposits                                                                    3,000,000           1,000,000
                                                                                ---------------    ----------------
     Total cash and cash equivalents                                                  7,128,102           6,350,895

Time deposits in other financial institutions                                           300,000                  --
Securities available for sale                                                         4,997,530           3,001,715
Federal Home Loan Bank stock                                                          1,441,500           1,397,200
Loans, net                                                                          120,219,717         120,481,894
Accrued interest receivable                                                             918,415             921,864
Premises and equipment, net                                                           2,098,156           1,977,435
Other assets                                                                             88,797             173,398
                                                                                ---------------    ----------------

     Total assets                                                               $   137,192,217    $    134,304,401
                                                                                ===============    ================


LIABILITIES
Deposits                                                                        $    94,597,494    $     91,341,201
Borrowed funds                                                                       25,243,641          25,474,596
Accrued interest payable and other liabilities                                          315,587             338,991
                                                                                ---------------    ----------------
     Total liabilities                                                              120,156,722         117,154,788

SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares
  authorized, none issued and outstanding
Common stock, $.01 par value, 3,500,000 shares
  authorized, 1,785,375 shares issued                                                    17,854              17,854
Paid-in capital                                                                      10,693,865          10,705,048
Retained earnings                                                                    11,211,208          11,150,845
Treasury stock, 304,337 and 271,829 shares, at cost                                  (3,513,697)         (3,178,640)
Unearned employee stock ownership plan shares                                        (1,103,194)         (1,182,471)
Unearned management recognition plan shares                                            (270,078)           (365,394)
Accumulated other comprehensive income                                                     (463)              2,371
                                                                                ---------------    ----------------
     Total shareholders' equity                                                      17,035,495          17,149,613
                                                                                ---------------    ----------------

     Total liabilities and shareholders' equity                                 $   137,192,217    $    134,304,401
                                                                                ===============    ================

</TABLE>

--------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

                                                                              3.


<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    Three Months Ended            Six Months Ended
                                                                       December 31,                  December 31,
                                                                       ------------                  ------------
                                                                   2001           2000           2001           2000
                                                                   ----           ----           ----           ----

<S>                                                             <C>            <C>            <C>            <C>
Interest income
     Loans, including fees                                      $2,348,028     $2,371,752     $4,755,571     $4,666,803
     Securities                                                     62,514        147,836        112,320        297,262
     Demand, time and overnight deposits                            23,114         18,143         64,838         31,594
     Dividends on FHLB Stock                                        19,710         23,360         44,362         43,760
                                                                ----------     ----------     ----------     ----------
         Total interest income                                   2,453,366      2,561,091      4,977,091      5,039,419

Interest expense
     Deposits                                                    1,069,271      1,205,951      2,233,573      2,395,548
     Borrowed funds                                                387,041        399,120        775,619        746,075
                                                                ----------     ----------     ----------     ----------
         Total interest expense                                  1,456,312      1,605,071      3,009,192      3,141,623
                                                                ----------     ----------     ----------     ----------

Net interest income                                                997,054        956,020      1,967,899      1,897,796

Provision for loan losses                                           10,221         17,768         25,683         36,515
                                                                ----------     ----------     ----------     ----------

Net interest income after provision for loan losses                986,833        938,252      1,942,216      1,861,281

Noninterest income
     Service fees and other charges                                 35,480         25,646         68,369         53,561

Noninterest expense
     Compensation and benefits                                     412,765        377,544        819,927        754,317
     Director fees                                                  24,300         26,200         48,600         56,200
     Occupancy and equipment                                       105,739         81,523        213,421        162,437
     Computer processing expense                                    62,263         54,944        125,973        111,471
     State franchise taxes                                          47,590         44,725         95,159         89,450
     Professional fees                                              30,346         26,572         54,425         52,174
     Other                                                          79,038         78,856        170,621        153,079
                                                                ----------     ----------     ----------     ----------
         Total noninterest expense                                 762,041        689,977      1,528,126      1,379,128
                                                                ----------     ----------     ----------     ----------

Income before income taxes                                         260,272        273,921        482,459        535,714

Income tax expense                                                  99,300        104,100        183,900        203,900
                                                                ----------     ----------     ----------     ----------

Net income                                                      $  160,972     $  169,821     $  298,559     $  331,814
                                                                ==========     ==========     ==========     ==========

Earnings per common share - basic                               $     0.12     $     0.12     $     0.22     $     0.23
                                                                ==========     ==========     ==========     ==========

Earnings per common share - diluted                             $     0.12     $     0.12     $     0.22     $     0.23
                                                                ==========     ==========     ==========     ==========

</TABLE>

--------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

                                                                              4.



<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                          Three Months Ended                Six Months Ended
                                                             December 31,                     December 31,
                                                             ------------                     ------------
                                                          2001            2000             2001            2000
                                                          ----            ----             ----            ----


<S>                                                 <C>              <C>             <C>             <C>
Net income                                          $     160,972    $     169,821   $     298,559   $      331,814

Other comprehensive income (loss)
     Unrealized holding gains and (losses) on
       available-for-sale securities                      (57,755)         161,508          (4,295)         257,649
     Tax effect                                            19,637          (54,913)          1,461          (87,601)
                                                    -------------    -------------   -------------   --------------
         Other comprehensive income (loss)                (38,118)         106,595          (2,834)         170,048
                                                    -------------    -------------   -------------   --------------

Comprehensive income                                $     122,854    $     276,416   $     295,725   $      501,862
                                                    =============    =============   =============   ==============

</TABLE>

--------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.


                                                                              5.


<PAGE>



                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                                   (Unaudited)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                            Three Months Ended                   Six Months Ended
                                                                December 31,                       December 31,
                                                                ------------                       ------------
                                                           2001             2000              2001              2000
                                                           ----             ----              ----              ----


<S>                                                   <C>               <C>               <C>               <C>
Balance, beginning of period                          $ 17,171,128      $ 17,099,045      $ 17,149,613      $ 16,959,798

Net income for period                                      160,972           169,821           298,559           331,814

Cash dividends, $.09 and $.08 per share for
  the three months ended December 31, 2001
  and 2000, $.17 and $.15 per share for the six
  months ended December 31, 2001 and 2000                 (125,574)         (116,476)         (238,196)         (218,918)

Purchase of 20,508 and 12,700 shares of
  treasury stock for the three months
  ended December 31, 2001 and 2000; and
  32,508 and 20,200 shares of treasury stock
  for the six months ended December 31, 2001
  and 2000, at cost                                       (215,707)          (99,269)         (335,057)         (157,394)

Commitment to release 2,856 management
  recognition plan shares for the three months
  ended December 31, 2001 and 2000 and 5,712
  management recognition plan shares for the
  six months ended December 31, 2001 and 2000               47,658            47,658            95,316            95,316

Commitment to release 3,378 and 3,522
  employee stock ownership plan shares for the
  three months ended December 31, 2001 and 2000
  and 6,756 and 7,044 employee stock
  ownership plan shares for the six months
  ended December 31, 2001 and 2000, at fair value           35,136            26,990            68,094            53,700

Change in fair value on securities available for
  sale, net of tax                                         (38,118)          106,595            (2,834)          170,048
                                                      ------------      ------------      ------------      ------------

Balance, end of period                                $ 17,035,495      $ 17,234,364      $ 17,035,495      $ 17,234,364
                                                      ============      ============      ============      ============

</TABLE>

--------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

                                                                              6.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                          Six Months Ended
                                                                                            December 31,
                                                                                            ------------
                                                                                       2001              2000
                                                                                       ----              ----
<S>                                                                               <C>               <C>
Cash flows from operating activities
     Net income                                                                   $      298,559    $       331,814
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                                    104,341             79,023
         Provision for loan losses                                                        25,683             36,515
         FHLB stock dividends                                                            (44,300)           (43,600)
         Compensation expense on ESOP shares                                              68,094             53,700
         Compensation expense on MRP shares                                               95,316             95,316
         Change in
              Accrued interest receivable and other assets                                87,941             30,008
              Accrued expense and other liabilities                                      (21,944)           (71,077)
              Deferred loan fees                                                          34,016              6,551
                                                                                  --------------    ---------------
                  Net cash from operating activities                                     647,706            518,250

Cash flows from investing activities
     Proceeds from maturities/calls of securities available for sale                     500,000                 --
     Purchases of securities available for sale                                       (2,500,000)                --
     Principal repayments on mortgage-backed securities                                       --            188,137
     Purchases of time deposits in other financial institutions                         (300,000)                --
     Net change in loans                                                                 202,478         (4,428,934)
     Premises and equipment expenditures                                                (225,062)           (83,444)
     Purchases of FHLB stock                                                                  --           (281,700)
                                                                                  --------------    ---------------
         Net cash from investing activities                                           (2,322,584)        (4,605,941)

Cash flows from financing activities
     Net change in deposits                                                            3,256,293         (2,735,374)
     Net change in short-term borrowings                                                      --          2,500,000
     Repayments of long-term FHLB borrowings                                            (230,955)                --
     Proceeds from long-term FHLB borrowings                                                  --          5,000,000
     Cash dividends paid                                                                (238,196)          (218,918)
     Purchase of treasury stock                                                         (335,057)          (157,394)
                                                                                  --------------    ---------------
         Net cash from financing activities                                            2,452,085          4,388,314
                                                                                  --------------    ---------------

Net change in cash and cash equivalents                                                  777,207            300,623

Cash and cash equivalents at beginning of period                                       6,350,895          2,205,993

                                                                                  --------------    ---------------
Cash and cash equivalents at end of period                                        $    7,128,102    $     2,506,616
                                                                                  ==============    ===============

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                                 $    2,992,088    $     3,121,126
         Income taxes                                                                    181,000            210,000

</TABLE>

--------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

                                                                              7.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The  accompanying   consolidated   financial   statements  include  accounts  of
Peoples-Sidney   Financial   Corporation   ("Peoples")   and  its   wholly-owned
subsidiary,  Peoples Federal  Savings and Loan  Association  ("Association"),  a
federal  stock  savings  and  loan  association,  together  referred  to as  the
Corporation.  All significant  intercompany  transactions and balances have been
eliminated.

These interim  consolidated  financial statements are prepared without audit and
reflect all adjustments  which,  in the opinion of management,  are necessary to
present  fairly the financial  position of the  Corporation at December 31, 2001
and its results of operations and cash flows for the periods presented. All such
adjustments are normal and recurring in nature.  The  accompanying  consolidated
financial  statements have been prepared in accordance with the  instructions of
Form  10-QSB  and,  therefore,  do not  purport  to  contain  all the  necessary
financial  disclosures  required by accounting  principals generally accepted in
the  United  States  of  America  that  might  otherwise  be  necessary  in  the
circumstances, and should be read in conjunction with the consolidated financial
statements and notes thereto of the  Corporation  for the fiscal year ended June
30, 2001,  included in the  Corporation's  2001 Annual Report on Form 10-KSB for
the  fiscal  year  ended  June 30,  2001.  Reference  is made to the  accounting
policies of the  Corporation  described in the notes to  consolidated  financial
statements  contained in such report. The Corporation has consistently  followed
these policies in preparing this Form 10-QSB.

The Corporation  provides  financial services through its main office in Sidney,
Ohio, and branch offices in Sidney,  Anna and Jackson Center,  Ohio. Its primary
deposit products are checking,  savings and term certificate  accounts,  and its
primary lending  products are residential  mortgage,  commercial and installment
loans.  Substantially  all loans are  secured by  specific  items of  collateral
including business assets, consumer assets and real estate. Commercial loans are
expected to be repaid from cash flow from operations of businesses.  Real estate
loans are secured by both residential and commercial real estate.  Substantially
all revenues and services are derived from  financial  institution  products and
services in Shelby  County and  contiguous  counties.  Management  considers the
Corporation to operate primarily in one segment, banking.

To  prepare  financial  statements  in  conformity  with  accounting  principles
generally  accepted in the United States of America,  management makes estimates
and assumptions based on available information.  These estimates and assumptions
affect  the  amounts  reported  in  the  financial  statements  and  disclosures
provided,  and future results could differ. The allowance for loan losses,  fair
values of financial  instruments and status of  contingencies  are  particularly
subject to change.

Income tax expense is based on the  effective tax rate expected to be applicable
for the entire year.  Income tax expense is the total of the current year income
tax due or  refundable  and the change in deferred  tax assets and  liabilities.
Deferred tax assets and  liabilities are the expected future tax amounts for the
temporary  differences  between the carrying amounts and tax basis of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.

Basic  earnings per share ("EPS") is based on net income divided by the weighted
average number of shares outstanding during the period. Employee stock ownership
plan ("ESOP")  shares are considered  outstanding  for this  calculation  unless
unearned.  Management recognition plan ("MRP") shares are considered outstanding
as they become vested.  Diluted EPS shows the dilutive  effect of MRP shares and
the additional common shares issuable under stock options.

--------------------------------------------------------------------------------

                                  (Continued)

                                                                              8.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Standards ("SFAS") No. 141, "Business  Combinations." SFAS No. 141
requires all business  combinations  within its scope to be accounted  for using
the purchase method, rather than the pooling-of-interests method. The provisions
of this Statement  apply to all business  combinations  initiated after June 30,
2001.  The  adoption  of  this  statement  will  only  have  an  impact  on  the
Corporation's financial statements if it enters into a business combination.

Also in June 2001,  FASB  issued SFAS No. 142,  "Goodwill  and Other  Intangible
Assets,"  which  addresses the accounting for such assets arising from prior and
future  business  combinations.  Upon the adoption of this  Statement,  goodwill
arising from business combinations will no longer be amortized,  but rather will
be assessed regularly for impairment,  with any such impairment  recognized as a
reduction  to earnings in the period  identified.  Other  identified  intangible
assets,  such as core deposit intangible  assets,  will continue to be amortized
over their  estimated  useful lives.  The  Corporation is required to adopt this
Statement on July 1, 2002,  and early adoption is permitted on July 1, 2001. The
adoption  of this  Statement  will  not  have  an  impact  on the  Corporation's
financial statements, as it does not have any intangible assets.


NOTE 2 - SECURITIES AVAILABLE FOR SALE

Securities available for sale were as follows:

<TABLE>
<CAPTION>
                                                                Gross          Gross          Estimated
                                               Amortized      Unrealized     Unrealized         Fair
                                                 Cost           Gains          Losses           Value
                                                 ----           -----          ------           -----
<S>                                        <C>                <C>           <C>             <C>
December 31, 2001
-----------------
    U.S. Government agencies               $     4,998,232    $   26,688    $   (27,390)    $    4,997,530
                                           ===============    ==========    ===========     ==============


June 30, 2001
-------------
    U.S. Government agencies               $     2,998,122    $   18,288    $   (14,695)    $    3,001,715
                                           ===============    ==========    ===========     ==============

</TABLE>

Contractual  maturities  of  securities  available for sale at December 31, 2001
were as  follows.  Actual  maturities  may differ  from  contractual  maturities
because  borrowers  may have the  right to call or  prepay  obligations  with or
without call or prepayment penalties.


<TABLE>
<CAPTION>
                                                                                            Estimated
                                                                          Amortized            Fair
                                                                            Cost               Value
                                                                            ----               -----
           <S>                                                         <C>               <C>
           Due after one year through five years                       $    3,000,000    $     2,978,940
           Due after five years through ten years                           1,998,232          2,018,590
                                                                       --------------    ---------------

                                                                       $    4,998,232    $     4,997,530
                                                                       ==============    ===============

</TABLE>

No  securities  were sold during the  three-month  and  six-month  periods ended
December 31, 2001 and 2000. No securities were pledged as collateral at December
31, 2001 or June 30, 2001.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                              9.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

--------------------------------------------------------------------------------

NOTE 3 - LOANS

<TABLE>
<CAPTION>
Loans were as follows:

                                                                          December 31,        June 30,
                                                                              2001              2001
                                                                              ----              ----
          <S>                                                           <C>               <C>
           Mortgage loans:
                1-4 family residential                                  $    96,759,090   $     96,717,463
                Multi-family residential                                      1,271,443          1,239,141
                Commercial real estate                                       10,799,387         10,025,284
                Real estate construction and
                  development                                                 4,682,662          6,131,040
                Land                                                          1,079,547          1,370,376
                                                                        ---------------   ----------------
                    Total mortgage loans                                    114,592,129        115,483,304
           Consumer loans                                                     4,493,447          4,657,828
           Commercial loans                                                   3,590,278          3,629,987
                                                                        ---------------   ----------------
                    Total loans                                             122,675,854        123,771,119
           Less:
                Allowance for loan losses                                      (685,000)          (660,800)
                Loans in process                                             (1,476,158)        (2,367,462)
                Deferred loan fees                                             (294,979)          (260,963)
                                                                        ---------------   ----------------

                                                                        $   120,219,717   $    120,481,894
                                                                        ===============   ================

</TABLE>

Activity in the allowance for loan losses is summarized as follows:

<TABLE>
<CAPTION>
                                                           Three Months Ended               Six Months Ended
                                                              December 31,                     December 31,
                                                              ------------                     ------------
                                                          2001            2000             2001            2000
                                                          ----            ----             ----            ----

        <S>                                         <C>              <C>             <C>             <C>
        Balance at beginning of period              $     676,500    $     605,600   $     660,800   $      591,350
        Provision for losses                               10,221           17,768          25,683           36,515
        Charge-offs                                        (1,801)              --          (1,801)          (4,563)
        Recoveries                                             80              132             318              198
                                                    -------------    -------------   -------------   --------------
        Balance at end of period                    $     685,000    $     623,500   $     685,000   $      623,500
                                                    =============    =============   =============   ==============

</TABLE>
Nonperforming loans were as follows:

<TABLE>
<CAPTION>

                                                                          December 31,         June 30,
                                                                              2001               2001
                                                                              ----               ----

         <S>                                                            <C>               <C>
         Loans past due over 90 days still on accrual                   $       651,000   $        498,000
         Nonaccrual loans                                                       900,000            764,000

</TABLE>

Nonperforming   loans  include  smaller  balance   homogeneous  loans,  such  as
residential  mortgage and consumer  loans that are  collectively  evaluated  for
impairment.

As of  December  31,  2001 and June 30,  2001 and for the three  months  and six
months ended  December  31, 2001 and 2000,  loans  required to be evaluated  for
impairment on an individual loan basis were not material.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             10.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

--------------------------------------------------------------------------------

NOTE 4 - BORROWED FUNDS

At December 31, 2001 and June 30, 2001, the  Association  had a cash  management
line of credit enabling it to borrow up to $8,000,000 from the Federal Home Loan
Bank of  Cincinnati  ("FHLB").  All cash  management  advances  have an original
maturity of 90 days.  The line of credit must be renewed on an annual basis.  No
borrowings were outstanding on this line of credit at December 31, 2001 and June
30, 2001.

As a member  of the FHLB  system,  the  Association  has the  ability  to obtain
borrowings up to a maximum total of  $28,830,000,  including the cash management
line-of-credit  based  upon its  current  FHLB  stock  ownership.  However,  the
Association  can  obtain  advances  up to the lower of 50% of the  Association's
total assets or 80% of the  Association's  pledgable  residential  mortgage loan
portfolio by  purchasing  more FHLB stock.  Advances  from the Federal Home Loan
Bank at December 31, 2001 and June 30, 2001 were as follows:

<TABLE>
<CAPTION>
                                                                           December 31,        June 30,
                                                                              2001               2001
                                                                              ----               ----

         <S>                                                          <C>                <C>
         7.40% FHLB fixed-rate advance, due May 2, 2002                $     2,500,000    $      2,500,000
         6.13% FHLB fixed-rate advance, due June 25, 2008                    7,000,000           7,000,000
         6.00% FHLB convertible advance, fixed-rate until
           June 2004, due June 11, 2009                                      5,000,000           5,000,000
         6.27% FHLB convertible advance, fixed-rate until
           September 2003, due September 8, 2010                             5,000,000           5,000,000
         5.30% select pay mortgage-matched advance, final
           maturity May 1, 2011                                              1,897,025           1,974,596
         5.35% select pay mortgage-matched advance, final
           maturity July 1, 2011                                             3,846,616           4,000,000
                                                                       ---------------    ----------------
                                                                       $    25,243,641    $     25,474,596
                                                                       ===============    ================

</TABLE>

Advances under the borrowing  agreements are  collateralized by a blanket pledge
of the Association's residential mortgage loan portfolio and its FHLB stock.

The interest rates on the convertible  advances are fixed for a specified number
of years,  then convertible to a variable rate at the option of the FHLB. If the
convertible option is exercised, the advance may be prepaid without penalty. The
select pay  mortgage-matched  advances  require  monthly  principal and interest
payments and annual additional principal payments.

Maturities of FHLB advances for the next fives years and thereafter were:

                  Year ended December  31,
                           2002                                   $    3,507,047
                           2003                                          884,358
                           2004                                          775,054
                           2005                                          677,742
                           2006                                          591,167
                        Thereafter                                    18,808,273
                                                                  --------------

                                                                  $   25,243,641
                                                                  ==============


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             11.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

--------------------------------------------------------------------------------

NOTE 5 - OFF-BALANCE-SHEET ACTIVITIES

Loss  contingencies,  including claims and legal actions arising in the ordinary
course of business,  are recorded as liabilities  when the likelihood of loss is
probable and an amount or range of loss can be reasonably estimated.  Management
does not believe there now are such matters that will have a material  effect on
the financial statements.

Some financial instruments,  such as loan commitments,  credit lines, letters of
credit and overdraft  protection,  are issued to meet customer  financing needs.
These are  agreements to provide  credit or to support the credit of others,  as
long as  conditions  established  in the  contract  are met,  and  usually  have
expiration dates.  Commitments may expire without being used.  Off-balance-sheet
risk to credit loss exists up to the face amount of these instruments,  although
material losses are not  anticipated.  The same credit policies are used to make
such  commitments  as are used for  loans,  including  obtaining  collateral  at
exercise of the commitment.

The contractual amount of financial instruments with  off-balance-sheet risk was
as follows:

<TABLE>
<CAPTION>
                                              December 31,                                  June 30,
                                                 2001                                         2001
                                                 ----                                         ----
                                       Fixed               Variable               Fixed                Variable
                                       Rate                  Rate                  Rate                  Rate
                                       ----                  ----                  ----                  ----
     <S>                           <C>                  <C>                   <C>                   <C>
     Nonresidential                $         --         $          --         $    412,000          $    113,000
     Residential real estate            816,000                39,000                   --               600,000
     Interest rates                       6.75%                  6.0%             7.00-7.25%           7.00 -7.50%

</TABLE>

Commitments  to make loans are  generally  made for a period of 30 days or less.
The maximum maturity for fixed-rate loan commitments was 20 years.

The  Corporation  also had unused  commercial  and home  equity  lines of credit
approximating $2,363,000 and $2,539,000 at December 31, 2001 and June 30, 2001.

At December 31, 2001 and June 30,  2001,  the  Association  was required to have
$1,249,000  and  $698,000  on  deposit  with  its   correspondent   banks  as  a
compensating clearing requirement.

The Association entered into employment  agreements with certain officers of the
Corporation.  The  agreements  provide  for a term of one to three  years  and a
salary  and  performance  review by the Board of  Directors  not less often than
annually,  as well as  inclusion  of the  employee in any  formally  established
employee benefit,  bonus,  pension and profit-sharing plans for which management
personnel are eligible.  The  agreements  provide for extensions for a period of
one year on each annual  anniversary date, subject to review and approval of the
extension by disinterested members of the Board of Directors of the Association.
The employment agreements also provide for vacation and sick leave.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             12.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

--------------------------------------------------------------------------------

NOTE 6 - EARNINGS PER COMMON SHARE

A reconciliation  of the numerators and denominators  used in the computation of
the basic  earnings  per common  share and diluted  earnings per common share is
presented below:

<TABLE>
<CAPTION>

                                                               Three Months Ended            Six Months Ended
                                                                  December 31,                 December 31,
                                                               2001            2000         2001           2000
     <S>                                                    <C>           <C>            <C>            <C>
     Basic Earnings Per Common Share
       Numerator
         Net income                                         $  160,972    $   169,821    $   298,559    $   331,814
                                                            ==========    ===========    ===========    ===========
       Denominator
         Weighted average common shares
           outstanding                                       1,490,783      1,567,300      1,498,817      1,572,563
         Less:  Average unallocated ESOP shares                (95,707)      (109,581)       (97,396)      (111,342)
         Less:  Average unearned MRP shares                    (17,613)       (29,038)       (19,041)       (30,466)
                                                            ----------    -----------    -----------    -----------
         Weighted average common shares
           outstanding for basic earnings per
           common share                                      1,377,463      1,428,681      1,382,380      1,430,755
                                                             =========      =========      =========      =========

       Basic earnings per common share                       $    0.12    $      0.12    $      0.22    $     0.23
                                                             =========    ===========    ===========    ==========

     Diluted Earnings Per Common Share
       Numerator
         Net income                                         $  160,972    $   169,821    $   298,559    $   331,814
                                                            ==========    ===========    ===========    ===========
       Denominator
         Weighted average common shares
           outstanding for basic earnings per
           common share                                      1,377,463      1,428,681      1,382,380      1,430,755
         Add:  Dilutive effects of average unearned
           MRP shares                                               --             --             --             --
         Add:  Dilutive effects of assumed exercises
           of stock options                                         --             --             --             --
                                                            ----------    -----------    -----------    -----------
         Weighted average common shares and
           dilutive potential common shares
           outstanding                                       1,377,463      1,428,681      1,382,380      1,430,755
                                                             =========      =========      =========      =========

       Diluted earnings per common share                     $    0.12    $      0.12    $      0.22      $    0.23
                                                             =========    ===========    ===========      =========

</TABLE>
Unearned MRP shares and stock options  granted did not have a dilutive effect on
EPS for the three and six months  ended  December  31, 2001 and 2000 as the fair
value  of the  MRP  shares  on the  date of  grant  and the  exercise  price  of
outstanding  options was greater than the average  market price for the periods.
As of December 31, 2001 and 2000,  there were 140,824 options  outstanding  that
were not dilutive.


--------------------------------------------------------------------------------

                                                                             13.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

Item 2.  Management's Discussion and Analysis
         ------------------------------------
Introduction

In the  following  pages,  management  presents an analysis of the  consolidated
financial condition of the Corporation as of December 31, 2001, compared to June
30, 2001,  and results of operations for the three and six months ended December
31, 2001, compared with the same periods in 2000. This discussion is designed to
provide a more comprehensive  review of operating results and financial position
than could be obtained from an  examination of the financial  statements  alone.
This  analysis  should  be  read  in  conjunction  with  the  interim  financial
statements and related footnotes included herein.

When used in this  discussion  or future  filings  by the  Corporation  with the
Securities   and   Exchange   Commission,   or  other   public  or   shareholder
communications,  or in oral  statements  made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated,"  "estimate,"  "project," "believe" or similar
expressions  are intended to identify  "forward-looking  statements"  within the
meaning of the Private Securities Litigation Reform Act of 1995. The Corporation
wishes  to  caution   readers   not  to  place   undue   reliance  on  any  such
forward-looking statements,  which speak only as of the date made, and to advise
readers  that  various  factors,   including   regional  and  national  economic
conditions,  changes in levels of market interest rates, credit risks of lending
activities   and   competitive   and  regulatory   factors,   could  affect  the
Corporation's  financial  performance and could cause the  Corporation's  actual
results  for future  periods to differ  materially  from  those  anticipated  or
projected.

The Corporation is not aware of any trends,  events or  uncertainties  that will
have or are  reasonably  likely  to have a  material  effect  on its  liquidity,
capital resources or operations  except as discussed herein.  The Corporation is
not aware of any current  recommendations  by regulatory  authorities that would
have such effect if implemented.

The Corporation does not undertake,  and specifically disclaims,  any obligation
to  publicly  release  the  result  of any  revisions  that  may be  made to any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.


Financial Condition

Total assets at December 31, 2001 were $137.2 million compared to $134.3 million
at June 30, 2001,  an increase of $2.9 million,  or 2.2%.  The increase in total
assets was due to an increase in securities and cash and cash equivalents funded
by an increase in deposits.

Securities  increased  $2.0  million  and cash and  cash  equivalents  increased
$777,000 at December  31,  2001 as  compared  to June 30,  2001  primarily  as a
temporary  earning  source until loan growth  utilizes the funds  provided  from
deposit growth.

Loans decreased  $300,000 from $120.5 million at June 30, 2001 to $120.2 million
at December 31, 2001. The decrease was primarily in real estate construction and
development  loans,  which  decreased $1.4 million.  This decrease was partially
offset by an increase of $800,000 in commercial  real estate loans.  The overall
decrease in total  mortgage  loans is reflective of a slowing  economy marked by
fewer new housing starts.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             14.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

The  Corporation's  consumer  loan  and  commercial  loan  portfolios  decreased
$164,000 and $40,000,  respectively between June 30, 2001 and December 31, 2001.
The decrease in these loan  categories is also due to a general slow down in the
economy. Non-mortgage loans remain a small portion of the entire loan portfolio,
representing  6.6% and 6.7% of gross  loans at  December  31,  2001 and June 30,
2001.

Premises and equipment  increased  $121,000 from  $1,977,000 at June 30, 2001 to
$2,098,000 at December 31, 2001.  The increase  resulted from the  Association's
new branch located in the new Wal-Mart Superstore in Sidney.

Total  deposits  increased  $3.3 million from $91.3  million at June 30, 2001 to
$94.6  million at December  31,  2001.  The  increase  was  primarily  due to an
increase of $1.5 million in savings accounts. The Corporation also had increases
in all other deposit  categories as money market  accounts  increased  $950,000,
certificates of deposit  accounts  increased  $509,000,  NOW accounts  increased
$262,000, and  noninterest-bearing  demand deposits increased $64,000 since June
30, 2001.  The growth in deposits has occurred  despite the dramatic  decline in
interest  rates  that has  transpired  during  the last half of  calendar  2001.
Customer  preference has shifted from stock market type  investments  due to its
volatility to financial institution deposit products.

Borrowed funds were $25.2 million at December 31, 2001 compared to $25.5 million
at June 30,  2001.  Borrowings  at December  31,  2001  consisted  of  long-term
fixed-rate   advances,   convertible   fixed-rate   advances   and   select  pay
mortgage-matched  advances.  The only activity  during the six months related to
scheduled principal repayments on select pay mortgage-matched advances. Based on
the FHLB stock owned by the  Association at December 31, 2001,  the  Association
had the ability to obtain  borrowings  up to a maximum  total of $28.8  million.
However,  the  Association  can  obtain  advances  up to the lower of 50% of the
Association's  total assets or 80% of the  Association's  pledgable  residential
mortgage  loan  portfolio by purchasing  more FHLB stock.  Based upon the 50% of
total assets  limitation,  management  estimates the maximum borrowing  capacity
from the FHLB to be approximately $67.2 million at December 31, 2001.


Results of Operations

The  operating  results of the  Corporation  are  affected  by general  economic
conditions,  monetary and fiscal  policies of federal  agencies  and  regulatory
policies of agencies that regulate  financial  institutions.  The  Corporation's
cost of funds is  influenced  by interest  rates on  competing  investments  and
general  market rates of interest.  Lending  activities are influenced by demand
for real  estate  loans and other  types of loans,  which in turn is affected by
interest  rates at which such loans are made,  general  economic  conditions and
availability of funds for lending activities.

The Corporation's net income primarily depends on its net interest income, which
is the difference  between  interest income earned on  interest-earning  assets,
such as loans and securities and interest expense  incurred on  interest-bearing
liabilities,  such as deposits and borrowings.  The level of net interest income
is dependent on the interest  rate  environment  and volume and  composition  of
interest-earning  assets and  interest-bearing  liabilities.  Net income is also
affected by provisions for loan losses,  service  charges,  gains on the sale of
assets and other income, noninterest expense and income taxes.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             15.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

Three Months Ended December 31, 2001 Compared to the Three Months Ended December
31, 2000

Net Income.  The Corporation  earned net income of $161,000 for the three months
ended December 31, 2001 compared to $170,000 for the three months ended December
31,  2000.  The  decrease  in net income was  primarily  due to an  increase  in
noninterest  expense  almost  entirely  offset by an  increase  in net  interest
income, noninterest income and a decrease in the provision for loan losses.

Net Interest  Income.  Net interest income totaled $997,000 for the three months
ended December 31, 2001 compared to $956,000 for the three months ended December
31,  2000.  The  increase  of $41,000  was the result of a decrease  in interest
expense on deposits and  borrowings  partially  offset by a decrease in interest
income on securities and loans.

Interest  and fees on loans  decreased  $24,000  from  $2,372,000  for the three
months ended December 31, 2000 to $2,348,000 for the three months ended December
31, 2001. The decrease in interest and fee income occurred primarily as a result
of a decrease  in the average  interest  yield on loans  partially  offset by an
increase in the average balance.

Interest on securities decreased $85,000 for the three months ended December 31,
2001  compared to the three  months ended  December  31, 2000.  The decrease was
largely due to a decline in the average  balance of  securities  which  resulted
from the sale of a  mortgage-backed  security during the third quarter of fiscal
2001, coupled with a decrease in the average interest rate.

Interest paid on deposits decreased $137,000 for the three months ended December
31, 2001  compared to the three  months ended  December  31, 2000.  Beginning in
October, 2001 the Association  significantly adjusted the interest rates offered
on all deposit  accounts to  appropriately  reflect  the current  interest  rate
environment.  This  resulted in a decrease in the average  interest rate paid on
deposits during the current quarter somewhat offset by a higher average balance.

Interest  paid on borrowed  funds  totaled  $387,000  for the three months ended
December 31, 2001  compared to $399,000  for the three ended  December 31, 2000.
The decrease of $12,000 in interest  expense on borrowed  funds  resulted from a
decrease in the average rate paid for  borrowings  despite a slight  increase in
the average balance.

Provision  for Loan Losses.  The  Corporation  maintains  an allowance  for loan
losses in an amount  that,  in  management's  judgment,  is  adequate  to absorb
probable  losses  in the loan  portfolio.  While  management  utilizes  its best
judgment and information  available,  the ultimate  adequacy of the allowance is
dependent  upon  a  variety  of  factors,   including  the  performance  of  the
Corporation's  loan  portfolio,  the economy,  changes in real estate values and
interest  rates  and  the  view  of  the  regulatory   authorities  toward  loan
classifications.  The  provision  for loan losses is determined by management as
the amount to be added to the  allowance  for loan losses after net  charge-offs
have been deducted to bring the allowance to a level that is considered adequate
to absorb probable losses in the loan portfolio.  The amount of the provision is
based on management's  monthly review of the loan portfolio and consideration of
such  factors  as  historical  loss  experience,   general  prevailing  economic
conditions,  changes  in the size and  composition  of the  loan  portfolio  and
specific borrower considerations, including the ability of the borrower to repay
the loan and the estimated value of the underlying collateral.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             16.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

The  provision  for loan losses for the three  months  ended  December  31, 2001
totaled  $10,000  compared to $18,000 for the three  months  ended  December 31,
2000.  The allowance for loan losses totaled  $685,000,  or 0.56% of gross loans
receivable and 44.2% of total nonperforming loans at December 31, 2001, compared
with  $661,000,   or  0.53%  of  gross  loans  receivable  and  52.3%  of  total
nonperforming loans at June 30, 2001. Charge-offs experienced by the Corporation
have  primarily  related  to  consumer  and other  non-real  estate  loans.  The
Corporation's low historical  charge-off  history is the product of a variety of
factors,  including the Corporation's  underwriting guidelines,  which generally
require a loan-to-value  or projected  completed value ratio of 80% for purchase
or  construction  of  one- to  four-family  residential  properties  and 75% for
commercial  real  estate and land  loans,  established  income  information  and
defined ratios of debt to income.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous income and totaled $35,000 for the three months ended December 31,
2001 and $26,000 for the three months ended  December 31, 2000. The increase was
primarily due to an increase in service charges on deposit accounts.

Noninterest  expense.  Noninterest expense totaled $762,000 for the three months
ended December 31, 2000 compared to $690,000 for the three months ended December
31, 2000, an increase of $72,000.  The increase was the result of the additional
personnel, occupancy and advertising costs associated with the new branch office
in the new Wal-Mart Superstore in Sidney, which opened in June 2001.

Income Tax Expense Income tax expense totaled $99,000 for the three months ended
December 31, 2001  compared to $104,000 for the three months ended  December 31,
2000,  representing an decrease of $5,000.  The effective tax rate was 38.2% and
38.0% for the three months ended December 31, 2001 and 2000.

Six Months Ended December 31, 2001 Compared to the Six Months Ended December 31,
2000

Net Income.  The  Corporation  earned net income of $299,000  for the six months
ended  December 31, 2001 compared to $332,000 for the six months ended  December
31, 2000. The decrease of $33,000 in net income was primarily due to an increase
in noninterest  expense  partially offset by an increase in net interest income,
noninterest income and a decrease in the provision for loan losses.

Net Interest Income.  Net interest income totaled  $1,968,000 for the six months
ended December 31, 2001 compared to $1,898,000 for the six months ended December
31,  2000.  The  increase  of $70,000  was the result of a decrease  in interest
expense on deposits  coupled with an increase in interest income on loans offset
by a decrease in interest earned on securities.

Interest and fees on loans  increased  $89,000 to $4,756,000  for the six months
ended  December 31, 2001 from  $4,667,000  for the six months ended December 31,
2000.  Even though the average  interest  yield has decreased,  the  Association
realized an increase in the average balance of the loan portfolio  compared to a
year ago.  Also  contributing  to the  increase in income was an increase in fee
income resulting from increased  refinancing  activity brought on by a declining
interest rate environment.

Interest  earned on  securities  decreased  $185,000  for the six  months  ended
December 31, 2001 compared to the same period last year. The decrease is largely
due to a decrease in the average  balance of securities  resulting from the sale
of  mortgage-backed  security  during the third quarter of the fiscal year ended
June 30, 2001. Additionally, the average interest rate earned on securities also
decreased as compared to the same period a year ago.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             17.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

Interest paid on deposits  decreased  $162,000 for the six months ended December
31, 2001 compared to the six months ended  December 31, 2000. Due to a declining
rate environment, the Association adjusted the rates offered on deposit accounts
resulting in a decrease in the average interest rate paid during the current six
month  period.  However,   despite  declining  interest  rates  the  Association
experienced  an  increase in the average  balance of  deposits  which  partially
offset the effect of lower rates.

Provision  for Loan  Losses.  The  provision  for loan losses for the six months
ended December 31, 2001 totaled  $25,683  compared to $36,515 for the six months
ended December 31, 2000.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and totaled  $68,000 for the six months ended December 31,
2001 and $54,000 for the six months ended  December  31, 2000.  The increase was
primarily due to an increase in service charges on transaction accounts.

Noninterest  expense.  Noninterest expense totaled $1,528,000 for the six months
ended December 31, 2001 compared to $1,379,000 for the six months ended December
31,  2000,  an increase of $149,000.  The  increase was directly  related to the
additional  cost of personnel,  occupancy and  advertising  associated  with the
opening of a new branch office  during June 2001 in the new Wal-Mart  Superstore
in Sidney.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable  to the  change in income  before  income  taxes and the impact the
Corporation's stock price has on the stock-based  employee benefit plans. Income
tax expense totaled $184,000 for the six months ended December 31, 2001 compared
to $204,000 for the six months ended December 31, 2000,  representing a decrease
of $20,000.  The effective tax rate was 38.1% for the six months ended  December
31, 2001 and 2000.

Liquidity and Capital Resources

The Corporation's liquidity, primarily represented by cash and cash equivalents,
is a result of operating,  investing and financing activities.  These activities
are summarized below for the six months ended December 31, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                         Six Months
                                                                     Ended December 31,
                                                                     ------------------
                                                                    2001            2000
                                                                    ----            ----
                                                                  (Dollars in thousands)

<S>                                                            <C>              <C>
Net income                                                     $        299     $        332
Adjustments to reconcile net income to net cash from
  operating activities                                                  349              186
                                                               ------------     ------------
Net cash from operating activities                                      648              518
Net cash from investing activities                                   (2,323)          (4,606)
Net cash from financing activities                                    2,452            4,389
                                                               ------------     ------------
Net change in cash and cash equivalents                                 777              301
Cash and cash equivalents at beginning of period                      6,351            2,206
                                                               ------------     ------------
Cash and cash equivalents at end of period                     $      7,128     $      2,507
                                                               ============     ============

</TABLE>


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             18.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

The  Corporation's  principal  sources of funds are deposits,  loan  repayments,
maturities of securities and other funds provided by operations. The Association
also has the ability to borrow from the FHLB.  While  scheduled loan  repayments
and maturing  investments  are relatively  predictable,  deposit flows and early
loan  prepayments  are more  influenced  by  interest  rates,  general  economic
conditions and  competition.  The  Association  maintains  investments in liquid
assets based on management's  assessment of the (1) need for funds, (2) expected
deposit  flows,  (3)  yields  available  on  short-term  liquid  assets  and (4)
objectives of the asset/liability management program.

At December 31, 2001, the Corporation  had  commitments to originate  fixed-rate
commercial and residential real estate loans totaling $816,000 and variable-rate
commercial and  residential  real estate mortgage loans totaling  $39,000.  Loan
commitments are generally for 30 days. The  Corporation  considers its liquidity
and capital  reserves  sufficient  to meet its  outstanding  short and long-term
needs. See Note 5 of the Notes to Consolidated Financial Statements.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             19.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

--------------------------------------------------------------------------------

The  Association  is  subject  to  various   regulatory   capital   requirements
administered  by  the  federal  regulatory  agencies.   Under  capital  adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Association  must meet specific  capital  guidelines  that involve  quantitative
measures of the Association's assets,  liabilities and certain off-balance-sheet
items as calculated under regulatory  accounting  practices.  The  Association's
capital amounts and classifications are also subject to qualitative judgments by
the regulators  about the  Association's  components,  risk weightings and other
factors.  Failure to meet minimum  capital  requirements  can  initiate  certain
mandatory  actions that, if undertaken,  could have a direct  material effect on
the Corporation's financial statements.  At December 31, 2001 and June 30, 2001,
management  believes  the  Association  complies  with  all  regulatory  capital
requirements. Based on the Association's computed regulatory capital ratios, the
Association is considered well capitalized  under the Federal Deposit  Insurance
Act at  December  31,  2001 and June 30,  2001.  No  conditions  or events  have
occurred  subsequent  to the last  notification  by regulators  that  management
believes would have changed the Association's category.

At December 31, 2001 and June 30, 2001, the Association's  actual capital levels
and minimum required levels were:

<TABLE>
<CAPTION>

                                                                                             To Be Well
                                                                                         Capitalized Under
                                                                 For Capital             Prompt Corrective
                                         Actual               Adequacy Purposes          Action Regulations
                                         ------               -----------------          ------------------
                                 Amount          Ratio     Amount          Ratio       Amount           Ratio
                                 ------          -----     ------          -----       ------           -----
                                                             (Dollars in Thousands)
<S>                            <C>               <C>      <C>               <C>      <C>                 <C>
December 31, 2001
-----------------
Total capital (to risk-
  weighted assets)             $  14,431         16.2%    $  7,145          8.0%     $    8,931          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           13,765         15.4        3,572          4.0           5,359           6.0
Tier 1 (core) capital (to
  adjusted total assets)          13,765         10.0        5,491          4.0           6,864           5.0
Tangible capital (to
  adjusted total assets)          13,765         10.0        2,059          1.5                           N/A

June 30, 2001
-------------
Total capital (to risk-
  weighted assets)             $  13,934         15.6%    $  7,168          8.0%     $    8,961          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           13,277         14.8        3,584          4.0           5,376           6.0
Tier 1 (core) capital (to
  adjusted total assets)          13,277          9.9        5,374          4.0           6,718           5.0
Tangible capital (to
  adjusted total assets)          13,277          9.9        2,015          1.5                           N/A

</TABLE>

On October 16, 2001,  the Board of Directors  announced  the  completion  of the
Corporation's  fourth stock repurchase  program through purchasing 78,915 shares
in the open market  over the past  several  months.  In  addition,  the Board of
Directors   authorized  the  commencement  of  the  Corporation's   fifth  stock
repurchase  program  whereby a total of 74,800  shares will be  purchased in the
open market as conditions permit over the next twelve months.


--------------------------------------------------------------------------------

                                  (Continued)

                                                                             20.


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           PART II - OTHER INFORMATION

--------------------------------------------------------------------------------

Item 1.   Legal Proceedings
          -----------------
          None.

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
          ---------------------------------------------------

          On  October  12,  2001  the  Annual  Meeting  of  Shareholders  of the
          Corporation was held. The following  members of the Board of Directors
          of the  Corporation  were  re-elected by the votes set forth below for
          the terms expiring in 2004:

          James W. Kerber                  FOR:  1,219,404 WITHHELD:  9,725
          Douglas Stewart                  FOR:  1,222,304 WITHHELD:  6,825

          One  other  matter  submitted  to  the  Shareholders,  for  which  the
          following votes were cast:

          Ratification of the selection of Crowe,  Chizek and Company LLP as the
          auditors of the Corporation for the fiscal year ending June 30, 2002.

          FOR:  1,216,384           AGAINST:  2,200             ABSTAIN:  10,545

Item 5.   Other Information
          -----------------
          None.

Item 6.   Exhibits and Reports on Form 8-K
          --------------------------------
          (a)  Form 8-K was  filed on  October  17,  2001  under  Item 5,  Other
               Events', the Corporation reported the issuance of a press release
               to announce the  quarterly  earnings and declare a dividend.  The
               Corporation  also  announced  the  completion  of a stock buyback
               program and the commencement of another 5% buyback.

--------------------------------------------------------------------------------


                                                                             21.


<PAGE>


                                   SIGNATURES

--------------------------------------------------------------------------------

Pursuant to the  requirement of the  Securities  Exchange Act of 1934, the small
business  issuer has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.




Date:      February 11, 2002                         /s/ Douglas Stewart
           -----------------                             -----------------------
                                                         Douglas Stewart
                                                         President





Date:      February 11, 2002                         /s/ Debra Geuy
           -----------------                             -----------------------
                                                         Debra Geuy
                                                         Chief Financial Officer