FORM 10-QSB

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

 (Mark One)

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

                  For Quarterly Period ended March 31, 1999

  [ ]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

           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)

Check whether the small business issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the  Securities  Exchange Act during the past 12
months (or for such shorter period that the small  business  issuer was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.

                            Yes   [ X ]     No  [   ]


As of May 11,  1999,  the  latest  practicable  date,  1,753,234  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







                                                                                


PART I - FINANCIAL INFORMATION

  Item 1.   Financial Statements (Unaudited)

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

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

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

            Condensed Consolidated Statements of Changes in Shareholders' Equity

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

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

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


PART II - OTHER INFORMATION

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

  Item 2.   Changes in Securities and Use of Proceeds...........................

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

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

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

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


SIGNATURES .....................................................................

<PAGE>
<TABLE>
<CAPTION>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

 
Item 1.  Financial Statements
                                                                 March 31,         June 30,
                                                                  1999               1998
                                                              -------------      -------------
<S>                                                           <C>                <C>          
ASSETS
Cash and amounts due from depository institutions             $     927,132      $     655,188
Interest-bearing deposits in other financial institutions           553,518          2,292,065
Overnight deposits                                                     --            2,000,000
                                                              -------------      -------------
     Total cash and cash equivalents                              1,480,650          4,947,253

Time deposits in other financial institutions                       100,000            100,000
Securities available for sale                                     3,993,280          4,015,890
Federal Home Loan Bank stock available for sale                     892,200            846,500
Loans receivable, net                                            99,909,845         94,052,531
Accrued interest receivable                                         774,207            722,401
Premises and equipment, net                                       2,023,041            973,403
Other assets                                                        255,758            245,339
                                                              -------------      -------------

     Total assets                                             $ 109,428,981      $ 105,903,317
                                                              =============      =============


LIABILITIES
Deposits                                                      $  83,679,604      $  79,053,686
Borrowed funds                                                    7,000,000          7,000,000
Accrued expense and other liabilities                               268,929            223,615
                                                              -------------      -------------
     Total liabilities                                           90,948,533         86,277,301

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
Additional paid-in capital                                       10,778,469         10,717,991
Retained earnings                                                10,659,079         10,581,096
Treasury stock, 32,141 shares at cost                              (611,400)              --
Unearned management recognition plan shares                        (794,383)              --
Unearned employee stock ownership plan shares                    (1,564,867)        (1,702,114)
Unrealized gain on securities available for sale                     (4,304)            11,189
                                                              -------------      -------------
     Total shareholders' equity                                  18,480,448         19,626,016
                                                              -------------      -------------

     Total liabilities and shareholders' equity               $ 109,428,981      $ 105,903,317
                                                              =============      =============
</TABLE>
          See accompanying notes to consolidated financial statements.

<PAGE>
<TABLE>
<CAPTION>
                                 PEOPLES-SIDNEY FINANCIAL CORPORATION
                                   CONSOLIDATED STATEMENTS OF INCOME
                                              (Unaudited)


                                             Three Months Ended               Nine Months Ended
                                                   March 31,                        March 31,
                                        ----------------------------      ---------------------------
                                            1999             1998             1999            1998
                                        -----------      -----------      -----------     -----------
<S>                                     <C>              <C>              <C>             <C>        
Interest income
     Loans, including fees              $ 1,917,451      $ 1,882,434      $ 5,719,497     $ 5,585,430
     Securities                              49,287           61,030          170,829         187,318
     Interest-bearing deposits and
       overnight deposits                    24,829           65,887           98,807         236,602
     Dividends on Federal Home
       Loan Bank stock                       15,139           14,131           45,815          42,253
                                        -----------      -----------      -----------     -----------
         Total interest income            2,006,706        2,023,482        6,034,948       6,051,603

Interest expense
     Deposits                               956,098          984,109        2,912,512       2,977,100
     Other borrowings                       114,437             --            334,589            --
                                        -----------      -----------      -----------     -----------
         Total interest expense           1,070,535          984,109        3,247,101       2,977,100
                                        -----------      -----------      -----------     -----------

Net interest income                         936,171        1,039,373        2,787,847       3,074,503
Provision for loan losses                   (12,001)          (9,383)          40,918          26,377
                                        -----------      -----------      -----------     -----------

Net interest income after
  provision for loan losses                 948,172        1,048,756        2,746,929       3,048,126

Noninterest income
     Service charges and other fees          18,495           15,369           52,909          46,490
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                 PEOPLES-SIDNEY FINANCIAL CORPORATION
                                   CONSOLIDATED STATEMENTS OF INCOME
                                              (Unaudited)


                                             Three Months Ended               Nine Months Ended
                                                   March 31,                        March 31,
                                        ----------------------------      ---------------------------
                                            1999             1998             1999            1998
                                        -----------      -----------      -----------     -----------
<S>                                     <C>              <C>              <C>             <C>        
Noninterest expense
     Compensation and benefits              337,570          257,870        1,125,934         725,670
     Occupancy and equipment                 83,484           38,504          204,134         120,175
     Computer processing expense             49,385           43,168          133,570         117,096
     FDIC deposit insurance
       premiums                              12,256           11,935           35,590          36,766
     State franchise taxes                   69,704           67,259          214,160         137,420
     Professional fees                       25,241           18,763           85,407          72,967
     Other                                  109,230          110,468          353,562         319,708
                                        -----------      -----------      -----------     -----------
         Total noninterest expense          686,870          547,967        2,152,357       1,529,802
                                        -----------      -----------      -----------     -----------

Income before income tax expense            279,797          516,158          647,481       1,564,814

Income tax expense                          100,860          183,700          233,657         556,846
                                        -----------      -----------      -----------     -----------

Net income                              $   178,937      $   332,458      $   413,824     $ 1,007,968
                                        ===========      ===========      ===========     ===========

Earnings per common share - basic       $      0.11      $      0.20      $      0.26     $      0.61
                                        ===========      ===========      ===========     ===========

Earnings per common share - diluted     $      0.11      $      0.20      $      0.26     $      0.61
                                        ===========      ===========      ===========     ===========
</TABLE>
          See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
                                        PEOPLES-SIDNEY FINANCIAL CORPORATION
                                   CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                     (Unaudited)


                                                           Three Months Ended             Nine Months Ended
                                                                 March 31,                     March 31,
                                                       ----------------------------   -----------------------------
                                                            1999           1998            1999           1998
                                                       ------------    ------------   ------------   --------------
<S>                                                    <C>             <C>            <C>            <C>           
Net income                                             $    178,937    $    332,458   $    413,824   $    1,007,968

Other comprehensive income
     Unrealized gain (loss) on available for
       sale securities arising during the
       period                                               (19,112)         (6,664)       (23,475)           3,584
     Tax effect                                               6,498           2,265          7,982           (1,219)
                                                       ------------    ------------   ------------   --------------
         Other comprehensive income                         (12,614)         (4,399)       (15,493)           2,365
                                                       ------------    ------------   ------------   --------------

Comprehensive income                                   $    166,323    $    328,059   $    398,331   $    1,010,333
                                                       ============    ============   ============   ==============

</TABLE>
          See accompanying notes to consolidated finanical statements.
<PAGE>
<TABLE>
<CAPTION>
                                  PEOPLES-SIDNEY FINANCIAL CORPORATION
                             CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
                                          SHAREHOLDERS' EQUITY
                                               (Unaudited)

 
                                                                                   Nine Months
                                                                                  Ended March 31,
                                                                         ------------------------------
                                                                              1999              1998
                                                                         ------------      ------------
<S>                                                                      <C>               <C>         
Balance, beginning of period                                             $ 19,626,016      $ 25,711,713

Net income for period                                                         413,824         1,007,968

Cash dividends, $.21 per share in 1999, $.19 per share in 1998               (335,841)         (314,022)

Purchase of 32,141 shares of treasury stock, at cost                         (611,400)             --

Establish 57,128 shares for management recognition plan                      (953,293)             --

Commitment to release 9,523 management recognition plan shares                158,910              --

Commitment to release 11,436 and 8,076 employee stock ownership plan
  shares in 1999 and 1998, at fair value                                      197,725           138,276

Change in fair value on securities available for sale, net of tax             (15,493)            2,365
                                                                         ------------      ------------

Balance, end of period                                                   $ 18,480,448      $ 26,546,300
                                                                         ============      ============

</TABLE>
                 See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
                             PEOPLES FEDERAL SAVINGS LOAN ASSOCIATION
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (Unaudited)

                                                                           Nine Months Ended
                                                                                March 31,
                                                                     ----------------------------
                                                                         1999             1998
                                                                     -----------      -----------
<S>                                                                  <C>              <C>        
Cash flows from operating activities
     Net income                                                      $   413,824      $ 1,007,968
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                     84,844           37,687
         Provision for loan losses                                        40,918           26,377
         Gain on sale of other real estate owned                          (3,086)
         FHLB stock dividends                                            (45,700)         (42,100)
         Compensation expense on ESOP shares                             197,725          138,276
         Compensation expense on MRP shares                              158,910             --
         Change in
              Accrued interest receivable and other assets               (63,245)        (163,463)
              Accrued expense and other liabilities                       53,295          (23,801)
              Deferred loan fees                                          17,022           23,310
                                                                     -----------      -----------
                  Net cash from operating activities                     854,507        1,004,254

Cash flows from investing activities
     Purchases of securities available for sale                       (1,999,844)      (1,999,141)
     Maturities of securities available for sale                       2,000,000             --
     Maturities of securities held to maturity                              --          2,000,000
     Purchases of time deposits in other financial institutions         (500,000)      (3,000,000)
     Maturities of time deposits in other financial institutions         500,000        6,000,000
     Net increase in loans                                            (5,977,698)      (4,306,080)
     Premises and equipment expenditures                              (1,134,482)        (175,059)
     Proceeds from sale of real estate owned                              65,530             --
                                                                     -----------      -----------
         Net cash from investing activities                           (7,046,494)      (1,480,280)

Cash flows from financing activities
     Net increase in deposits                                          4,625,918        1,567,974
     Cash dividends paid                                                (335,841)        (314,022)
     Purchase of treasury stock                                         (611,400)            --
     Purchase of shares for management recognition plan                 (953,293)            --
                                                                     -----------      -----------
         Net cash from financing activities                            2,725,384        1,253,952
                                                                     -----------      -----------

Net change in cash and cash equivalents                               (3,466,603)         777,926

Cash and cash equivalents at beginning of period                       4,947,253        2,795,826
                                                                     -----------      -----------

Cash and cash equivalents at end of period                           $ 1,480,650      $ 3,573,752
                                                                     ===========      ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                             PEOPLES FEDERAL SAVINGS LOAN ASSOCIATION
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (Unaudited)

                                                                           Nine Months Ended
                                                                                March 31,
                                                                     ----------------------------
                                                                         1999             1998
                                                                     -----------      -----------
<S>                                                                  <C>              <C>        
Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                    $ 3,242,250      $ 2,982,098
         Income taxes                                                     91,000          546,000

     Noncash transactions
         Transfer from loans to real estate owned                         62,444             --

</TABLE>
                         See accompanying notes to financial statements.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 Peoples-Sidney  Financial  Corporation
(the  "Corporation")  at March 31, 1999 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 generally
accepted  accounting  principles  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,  1998,  included  in its  1998  Annual  Report.  Reference  is  made  to the
accounting  policies of the  Corporation  described in the notes to consolidated
financial  statements  contained in its 1998 Annual Report.  The Corporation has
consistently followed these policies in preparing this Form 10-QSB.

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

The Corporation's and  Association's  revenues,  operating income and assets are
primarily from the financial  institution  industry.  The Association is engaged
primarily in the business of making  residential real estate loans and accepting
deposits.  Its  operations  are  conducted  through its main  office  located in
Sidney,  Ohio, and branches in Anna and Jackson Center,  Ohio. The Association's
market area consists of Shelby and surrounding counties in Ohio.

To prepare financial statements in conformity with generally accepted accounting
principles,  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 sum of the  current-year  income
tax due or  refundable  and the change in deferred  tax assets and  liabilities.
Deferred tax assets and  liabilities  are expected  future tax  consequences  of
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.  Unallocated ESOP shares
are not considered outstanding for this calculation. Management Recognition Plan
("MRP")  shares are considered  outstanding  as they become vested.  Diluted EPS
shows the  dilutive  effect of  unearned  MRP shares and the  additional  common
shares issuable under stock options.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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                Nine Months Ended
                                                          March 31,                          March 31,
                                                 ----------------------------      ----------------------------
                                                    1999             1998             1999             1998
                                                 -----------      -----------      -----------      -----------
<S>                                              <C>              <C>              <C>              <C>        
Basic Earnings Per Common Share
    Numerator
      Net income                                 $   178,937      $   332,458      $   413,824      $ 1,007,968
                                                 ===========      ===========      ===========      ===========
    Denominator
      Weighted average common shares
        outstanding                                1,755,987        1,785,375        1,788,751        1,785,375
      Less:  Average unallocated ESOP shares        (135,269)        (126,572)        (139,081)        (129,177)
      Less:  Average nonvested MRP shares            (49,035)            --            (51,891)            --
                                                 -----------      -----------      -----------      -----------
      Weighted average common shares
        outstanding for basis earnings per
        common share                               1,571,683        1,658,803        1,597,779        1,656,198
                                                 ===========      ===========      ===========      ===========

    Basic earnings per common share              $      0.11      $      0.20      $      0.26      $      0.61
                                                 ===========      ===========      ===========      ===========

Diluted Earnings Per Common Share
    Numerator
      Net income                                 $   178,937      $   332,453      $   413,824      $ 1,007,968
                                                 ===========      ===========      ===========      ===========
    Denominator
      Weighted average common shares
        outstanding for basic earnings per
        common share                               1,571,683        1,658,803        1,597,779        1,656,198
      Add:  Dilutive effects of average
        nonvested MRP shares                            --               --                233             --
      Add:  Dilutive effects of assumed
        exercises of stock options                      --               --              5,632             --
                                                 -----------      -----------      -----------      -----------
      Weighted average common shares
        and dilutive potential common
        shares outstanding                         1,571,683        1,658,803        1,603,644        1,656,198
                                                 ===========      ===========      ===========      ===========

    Diluted earnings per common share            $      0.11      $      0.20      $      0.26      $      0.61
                                                 ===========      ===========      ===========      ===========
</TABLE>
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Unearned MRP shares and stock options  granted did not have a dilutive effect on
EPS for the three and nine months  ended March 31, 1999 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 period.  Unearned MRP shares
and stock options did not have a dilutive effect on the weighted  average shares
outstanding  for the three and nine  months  ended March 31, 1998 as neither MRP
shares or stock options were granted until May 22, 1998.

Under a new accounting standard adopted on July 1, 1998,  Statement of Financial
Accounting  Standards  ("SFAS")  No.  130,  "Reporting   Comprehensive  Income,"
comprehensive income is reported for all periods.  Comprehensive income includes
both net income  and other  comprehensive  income.  Other  comprehensive  income
includes the change in unrealized  gains and losses on securities  available for
sale that is also recognized as a separate component of equity.

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information," was issued in June 1997. This Standard  significantly  changes the
way public business  enterprises  report information about operating segments in
annual  financial  statements,  and requires those  enterprises  report selected
information  about reportable  segments in interim  financial  reports issued to
shareholders.  It also  establishes  standards  for  related  disclosures  about
products and services, geographic areas and major customers. SFAS No. 131 uses a
"management approach" to disclose financial and descriptive information about an
enterprise's   reportable   operating  segments  which  is  based  on  reporting
information the way management  organizes the segments within the enterprise for
making operating decisions and assessing performance.  For many enterprises, the
management  approach  will likely  result in more segments  being  reported.  In
addition,  the Standard requires significantly more information be disclosed for
each  reportable  segment than is presently  being reported in annual  financial
statements.  The Standard  also  requires  selected  information  be reported in
interim financial statements.  SFAS No. 131 will be effective beginning with the
Corporation's 1999 annual financial statements.  Adoption of the Standard is not
expected to have a significant impact on the Corporation's financial statements.

SFAS No. 132,  "Employers'  Disclosures about Pensions and Other  Postretirement
Benefits,"  will also be  effective  in fiscal  1999.  SFAS No.  132  amends the
disclosure  requirements of previous  pension and other  postretirement  benefit
accounting  standards by requiring  additional  disclosures  about such plans as
well as eliminating some disclosures no longer considered  useful.  SFAS No. 132
also allows  greater  aggregation  of  disclosures  for employers  with multiple
defined benefit plans. SFAS No. 132 is not expected to have a significant impact
on the Corporation's financial statements.

SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
will be  effective in fiscal  2000.  SFAS No. 133  requires  companies to record
derivatives  on the  balance  sheet as assets or  liabilities,  measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies for hedge  accounting.  The key criterion for hedge accounting is that
the  hedging  relationship  must be highly  effective  in  achieving  offsetting
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

changes in fair value or cash  flows.  SFAS No. 133 does not allow  hedging of a
security which is classified as held to maturity,  accordingly, upon adoption of
SFAS No. 133,  companies  may  reclassify  any security from held to maturity to
available  for sale if they wish to be able to hedge the security in the future.
Management  does not expect  the  adoption  SFAS No.  133 to have a  significant
impact on the Corporation's financial statements.

SFAS No. 134,  "Accounting  for  Mortgage-backed  Securities  Retained after the
Securitization   of  Mortgage  Loans  Held  for  Sale  by  a  Mortgage   Banking
Enterprise,"  was effective on January 1, 1999. SFAS No. 134 amends SFAS No. 65,
"Accounting  for  Certain  Mortgage  Banking  Activities"  by  changing  the way
companies  involved in mortgage banking account for certain securities and other
interests they retain after securitizing mortgage loans that were held for sale.
SFAS  No.  134  allows  any   retained   mortgage-backed   securities   after  a
securitization of mortgage loans held for sale to be classified based on holding
intent in  accordance  with SFAS No.  115  except  in cases  where the  retained
mortgage-backed   security  is  committed  to  be  sold  before  or  during  the
securitization  process  in  which  case  it  must  be  classified  as  trading.
Previously,  under SFAS No. 65, all  retained  mortgage-backed  securities  were
required to be  classified  as trading.  SFAS No. 134 did not have a significant
impact on the Corporation's financial statements.


NOTE 2 - CONSUMMATION OF THE CONVERSION TO A STOCK SAVINGS AND
  LOAN ASSOCIATION WITH THE CONCURRENT FORMATION OF A HOLDING
  COMPANY

On November  8, 1996,  the Board of  Directors  of the  Association  unanimously
adopted  a Plan of  Conversion  to  convert  from a  federally-chartered  mutual
savings and loan  association  to a  federally-chartered  stock savings and loan
association with the concurrent  formation of a holding company,  Peoples-Sidney
Financial  Corporation.  The  conversion  was  consummated on April 25, 1997, by
amending  the  Association's  charter and selling the holding  company's  common
stock in an amount  equal to the market  value of the  Association  after giving
effect to the  conversion.  Common  shares of the  Corporation  were  offered in
accordance  with the plan of conversion.  A total of 1,785,375  common shares of
the  Corporation  were sold at $10.00 per share and net  proceeds  from the sale
were $17,217,944 after deducting the costs of conversion.

The Corporation retained 50% of the net proceeds from the sale of common shares.
The  remainder of the net proceeds  were invested in capital stock issued by the
Association to the Corporation as a result of the conversion.

At the time of conversion,  the Association established a liquidation account in
an amount  equal to its  regulatory  capital as of the latest  practicable  date
prior to the conversion.  In the event of a complete liquidation,  each eligible
depositor  will be  entitled  to  receive a  distribution  from the  liquidation
account in an amount  proportionate to the current adjusted  qualifying balances
for accounts then held.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 2 - CONSUMMATION OF THE CONVERSION TO A STOCK SAVINGS AND
  LOAN ASSOCIATION WITH THE CONCURRENT FORMATION OF A HOLDING
  COMPANY (Continued)

Under Office of Thrift  Supervision  (OTS)  regulations,  limitations  have been
imposed on all "capital  distributions" by savings institutions,  including cash
dividends.  The regulation  establishes a three-tiered  system of  restrictions,
with greatest flexibility afforded to thrifts that are both well capitalized and
given favorable qualitative examination ratings by the OTS.


NOTE 3 - SECURITIES

Securities were as follows:
<TABLE>
<CAPTION>
                                                            Gross          Gross        Estimated
                                           Amortized     Unrealized     Unrealized        Fair
                                             Cost           Gains          Losses         Value
                                          ----------     ----------     ----------     -----------
<S>                                       <C>            <C>            <C>            <C>            

March 31, 1999
Securities available for sale
  U.S. Government agencies                $3,999,801     $    3,163     $   (9,684)     $3,993,280
                                          ==========     ==========     ==========      ==========

June 30, 1998
Securities available for sale
  U.S. Government agencies                $3,998,936     $   21,459     $   (4,505)     $4,015,890
                                          ==========     ==========     ==========      ==========
</TABLE>
Amortized  cost and  estimated  fair values of  securities at March 31, 1999, by
contractual  maturity,  are shown  below.  Actual  maturities  could 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>       

Securities available for sale
           Due in one year or less                     $  999,957     $1,000,780
           Due after one year through five years        2,999,844      2,992,500
                                                       ----------     ----------

                                                       $3,999,801     $3,993,280
                                                       ==========     ==========
</TABLE>
No  securities  were sold during the three or nine month periods ended March 31,
1999 and 1998.  No  securities  were pledged as  collateral at March 31, 1999 or
June 30, 1998.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 4 - LOANS RECEIVABLE

Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
                                                 March 31,            June 30,
                                                   1999                 1998
                                             -------------        -------------
<S>                                          <C>                  <C>          
Mortgage loans:
     1-4 family residential                  $  82,568,887        $  79,690,787
     Multi-family residential                    1,277,717              654,871
     Commercial real estate                      9,040,324            6,608,207
     Real estate construction and
       development                               5,751,784            6,776,389
     Land                                          650,497              867,755
         Total mortgage loans                   99,289,209           94,598,009
Consumer and other loans                         3,394,019            2,154,474
                                             -------------        -------------
         Total loans receivable                102,683,228           96,752,483
Less:
     Allowance for loan losses                    (464,062)            (425,642)
     Loans in process                           (2,096,926)          (2,078,937)
     Deferred loan fees                           (212,395)            (195,373)
                                             -------------        -------------

                                             $  99,909,845        $  94,052,531
                                             =============        =============
</TABLE>
Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
                                       Three Months Ended           Nine Months Ended
                                            March 31,                    March 31,
                                   ------------------------      ------------------------
                                      1999           1998           1999          1998
                                   ---------      ---------      ---------      ---------
<S>                                <C>            <C>            <C>            <C>      
Balance at beginning of period     $ 456,502      $ 418,075      $ 425,642      $ 397,159
Provision for losses                 (12,001)        (9,383)        40,918         26,377
Charge-offs                             --             --          (22,621)       (15,036)
Recoveries                            19,561          1,856         20,123          2,048
                                   ---------      ---------      ---------      ---------

Balance at end of period           $ 464,062      $ 410,548      $ 464,062      $ 410,548
                                   =========      =========      =========      =========
</TABLE>
As of and for the three and nine months  ended  March 31,  1999 and 1998,  loans
considered impaired within the scope of SFAS No. 114 were not material.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 5 - OTHER BORROWINGS

At March 31, 1999 and June 30, 1998, the  Association had a cash management line
of credit enabling it to borrow up to $5,360,000 and $5,100,000 from the Federal
Home Loan Bank  (FHLB) of  Cincinnati.  The line of credit must be renewed on an
annual basis. There were no borrowings outstanding at March 31, 1999 or June 30,
1998. As a member of the Federal Home Loan Bank system,  the Association has the
ability to obtain  additional  borrowings up to a maximum total of approximately
$17,844,000,  including the line of credit.  The  Association had one fixed-rate
borrowing, with an interest rate of 6.13%, totaling $7,000,000 at March 31, 1999
and June 30,  1998.  The  original  term of the  borrowing  was 120 months  with
interest due monthly and principal due upon maturity on June 25, 2008.  Advances
under the borrowing  agreements  are  collateralized  by a blanket pledge of the
Association's  residential  mortgage loan portfolio and its FHLB stock. 

NOTE 6 - COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS WITH
  OFF-BALANCE-SHEET RISK

Various  contingent  liabilities are not reflected in the financial  statements,
including  claims and legal actions  arising in the ordinary course of business.
In the opinion of management,  after  consultation with legal counsel,  ultimate
disposition  of these  matters is not expected to have a material  effect on the
Corporation's financial condition or results of operations.

Some  financial  instruments  are used in the normal  course of business to meet
financing needs of customers and reduce exposure to interest rate changes. These
financial  instruments include commitments to extend credit,  standby letters of
credit and financial guarantees.  These involve, to varying degrees, more credit
risk than the amount reported in the financial statements.

Exposure to credit loss if the other  party does not perform is  represented  by
contractual  amount for commitments to extend credit,  standby letters of credit
and  financial  guarantees  written.  The  same  credit  policies  are  used for
commitments  and  conditional  obligations as are used for loans.  The amount of
collateral  obtained,  if deemed  necessary,  on extension of credit is based on
management's   credit  evaluation  and  generally  consists  of  residential  or
commercial real estate.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there  is  no  violation  of  any  condition   established  in  the  commitment.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require payment of a fee. Since many  commitments are expected to expire
without being used, total  commitments do not necessarily  represent future cash
requirements.

As of March 31, 1999 and June 30, 1998, the  Corporation had commitments to make
fixed-rate  commercial  and  residential  real estate  mortgage loans at current
market rates totaling $863,000 and $621,000,  and  variable-rate  commercial and
residential  real  estate  mortgage  loans  at  current  market  rates  totaling
$1,146,000  and  $687,000.  Loan  commitments  are  generally  for 30 days.  The
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

interest rates on fixed-rate commitments ranged from 7.00% to 8.00% at March 31,
1999 and 7.50% to 8.25% at June 30, 1998.  The interest  rates on  variable-rate
commitments  ranged  from 6.75% to 7.75% at March 31, 1999 and 7.25% to 8.00% at
June 30,  1998.  The  Corporation  also had  unused  lines  of  credit  totaling
$1,723,000 and $548,000 at March 31, 1999 and June 30, 1998.

At March 31, 1999 and June 30,  1998,  compensating  balances  of  $464,000  and
$299,000  were  required as deposits  with various  correspondent  banks.  These
balances do not earn interest.


NOTE 7 - EMPLOYEE STOCK OWNERSHIP PLAN

The Corporation offers an employee stock ownership plan ("ESOP") for the benefit
of substantially  all employees of the Corporation and Association.  During July
1997,  the ESOP  received a favorable  determination  letter  from the  Internal
Revenue Service on the qualified status of the ESOP under applicable  provisions
of the Internal Revenue Code.

The ESOP borrowed  funds from the  Corporation in order to acquire common shares
of the  Corporation.  The loan is secured by shares purchased with loan proceeds
and will be repaid  by ESOP  with  funds  from the  Association's  discretionary
contributions  to the  ESOP  and  earnings  on ESOP  assets.  All  dividends  on
unallocated  shares  received by the ESOP are used to pay debt  service.  Shares
purchased with loan proceeds are held in a suspense account for allocation among
participants as the loan is repaid. As payments are made and shares are released
from the suspense  account,  such shares will be validly issued,  fully paid and
nonassessable.

During  fiscal  1998,  the  Corporation  declared  and  paid a $4.00  per  share
distribution of which $3.99 was a tax free return of capital  distribution.  The
ESOP  received  approximately  $539,000 on 134,262  unallocated  shares from the
return of capital  distribution.  The ESOP used the proceeds to purchase  26,000
additional  shares.  The additional shares are held in suspense and allocated to
participants in a manner similar to the shares originally in the ESOP.

Shares  pledged as  collateral  are  reported  as  unearned  ESOP  shares in the
Consolidated  Balance  Sheets.  As shares  are  released  from  collateral,  the
Corporation  reports  compensation  expense equal to the current market price of
the  shares  and  the  shares   become   outstanding   for  earnings  per  share
computations.  Dividends on allocated ESOP shares are recorded as a reduction of
retained  earnings;  dividends  on  unallocated  ESOP  shares are  recorded as a
reduction of debt and accrued interest.  ESOP  compensation  expense was $57,246
and  $197,725  for the  three  and  nine  months  ended  March  31,  1999.  ESOP
compensation  expense  was $53,850  and  $138,276  for the three and nine months
ended March 31, 1998.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 7 - EMPLOYEE STOCK OWNERSHIP PLAN (Continued)


The ESOP shares as of March 31, 1999 and June 30, 1998 were as follows:
<TABLE>
<CAPTION>
                                                        March 31,       June 30,
                                                          1999            1998
                                                       ----------     ----------
<S>                                                    <C>            <C>   
Allocated shares                                           24,031         24,031
Shares committed to be released for allocation             11,436           --
Unreleased shares                                         133,363        144,799
                                                       ----------     ----------
    Total ESOP shares                                     168,830        168,830
                                                       ==========     ==========

Fair value of unreleased shares                        $1,700,378     $2,588,282
                                                       ==========     ==========
</TABLE>
NOTE 8 - STOCK OPTION AND INCENTIVE PLAN

The Stock  Option and  Incentive  Plan was approved by the  shareholders  of the
Corporation on May 22, 1998. Through March 31, 1999, the Board of Directors have
granted options to purchase  141,824 shares of common stock at an exercise price
ranging from $16.01 to $18.75 to certain  employees,  officers and  directors of
the  Association  and  Corporation.  Options granted prior to June 10, 1998 were
reduced by the $3.99  return of capital  distribution.  One-fifth of the options
awarded become first exercisable on each of the first five  anniversaries of the
date of grant.  The option  period  expires 10 years from the date of grant.  No
options were exercisable at March 31, 1999 or June 30, 1998. In addition, 36,714
options to purchase common stock are reserved for future grants.

NOTE 9 - MANAGEMENT RECOGNITION PLAN

A Management  Recognition Plan ("MRP") was adopted by the Board of Directors and
approved  by the  shareholders  of the  Corporation  on May 22, 1998 to purchase
71,415  common  shares,  which  is  equal  to 4% of the  common  shares  sold in
connection  with the  conversion.  The MRP will be used as a means of  providing
directors and certain key employees of the Association  and Corporation  with an
ownership  interest in the  Corporation in a manner  designed to compensate such
directors and key employees for services to the Association and Corporation.

In  conjunction  with the  adoption  of the MRP on May 22,  1998,  the  Board of
Directors awarded 57,128 shares to certain directors,  officers and employees of
the  Association  and  Corporation.  No  shares  had  been  previously  awarded.
One-fifth of such shares will be earned and  nonforfeitable on each of the first
five  anniversaries  of the date of the  award.  In the  event  of the  death or
disability of a participant, however, the participant's shares will be deemed to
be earned  and  nonforfeitable  upon such date.  At March 31,  1999 and June 30,
1998, there were 14,287 shares reserved for future awards.  Compensation expense
related to MRP shares is based  upon the cost of the  shares.  For the three and
nine months ended March 31,  1999,  the  Corporation  has  compensation  expense
totaling $18,910 and $138,910 based upon the cost of the number of shares earned
during the period.  No compensation  expense was recognized during the three and
nine months ended March 31, 1998.
<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  financial
condition of  Peoples-Sidney  Financial  Corporation (the  "Corporation")  as of
March 31, 1999,  compared to June 30, 1998,  and results of  operations  for the
three and nine months  ended March 31, 1999,  compared  with the same periods in
1998.  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  which  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 March 31, 1999 were $109.4 million compared to $105.9 million at
June 30,  1998,  an increase of $3.5  million,  or 3.3%.  The  increase in total
assets was due to  increases in loans and  premises  and  equipment  funded by a
decrease in overnight deposits and interest-bearing  deposits in other financial
institutions and proceeds from increased deposits.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Loans  receivable  increased $5.8 million from $94.1 million at June 30, 1998 to
$99.9 million at March 31, 1999.  The increase was primarily in commercial  real
estate loans which increased $2.4 million, one- to four-family residential loans
which increased $2.9 million and multi-family  residential loans which increased
$600,000.  These increases were partially  offset by a $1.0 million  decrease in
real  estate  construction  and  development  loans.  Changes in other  types of
mortgage  loans were not  significant.  The overall  increase in total  mortgage
loans is reflective of a strong local economy coupled with attractive loan rates
and  products  compared to local  competition.  Expansion  into new market areas
through the Association's two new Branch banking  facilities also contributed to
the growth.

The  Corporation's  consumer  and other loan  portfolio  increased  $1.2 million
between June 30, 1998 and March 31,  1999.  Despite the  increase,  consumer and
other loans remain a small portion of the entire loan portfolio and  represented
only 3.3% and 2.2% of gross loans at March 31, 1999 and June 30, 1998.

Premises and equipment increased $1.0 million from $1.0 million at June 30, 1998
to $2.0 million at March 31, 1999. The increase resulted because the Corporation
constructed  a new,  full-service  branch  banking  office  in Anna,  Ohio.  The
Corporation  also  purchased  equipment  and  made  leasehold   improvements  in
connection  with the opening of a new,  leased branch  banking office in Jackson
Center, Ohio.

Total  deposits  increased  $4.6 million from $79.1  million at June 30, 1998 to
$83.7 million at March 31, 1999. The  Corporation  experienced  increases in all
types of deposits,  however,  the majority of the growth was in negotiable order
of withdraw  ("NOW") and money market demand deposit  accounts,  which increased
$1.7 million,  and  certificates of deposit,  which increased $2.0 million.  The
growth is the  result of regular  interest  rate  promotions  as well as special
promotions  offered in  connection  with the opening of new branch  locations in
Anna and Jackson Center, Ohio.

Borrowed  funds  were $7.0  million  at March 31,  1999 and June 30,  1998.  The
advance  carries a fixed  interest  rate and can be prepaid at any time  without
penalty.  Additional  advances may be obtained from the FHLB to fund future loan
growth and liquidity as needed.


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.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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 other  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.

Net Income.  The Corporation  earned net income of $179,000 and $414,000 for the
three and nine months ended March 31, 1999  compared to $332,000 and  $1,008,000
for the three and nine months ended March 31,  1998.  The decrease in net income
was primarily due to a decrease in net interest income combined with an increase
in  noninterest  expense.

Net Interest Income. Net interest income totaled $936,000 and $2,788,000 for the
three and nine months ended March 31, 1999 compared to $1,039,000 and $3,075,000
for the three and nine  months  ended March 31,  1998.  The  decreases  were the
result of additional interest paid on borrowed funds.

Interest and fees on loans increased $35,000 and $134,000, or 1.9% and 2.4% from
$1,882,000  and $5,585,000 for the three and nine months ended March 31, 1998 to
$1,917,000  and  $5,719,000  for the three and nine months ended March 31, 1999.
The  increase in interest  income was due to higher  average  loans  receivable,
related  primarily to the  origination of new commercial real estate and one- to
four-family residential loans.

Interest  earned on  interest-bearing  demand and overnight  deposits  decreased
$41,000  and  $138,000  for the three and nine  months  ended  March 31, 1999 as
compared to the same  periods in the prior year.  The decrease was the result of
lower  average  balances  coupled with a decrease in the average yield earned on
such investments.

Interest paid on deposits  decreased  $28,000 and $65,000 for the three and nine
months  ended March 31, 1999  compared to the three and nine months  ended March
31, 1998. There was little change in the interest paid on deposits as the mix of
the deposit portfolio  remained fairly stable.  The effect of an increase in the
average  balance of deposits was offset by a decrease in the average  cost.  The
average  cost of deposits  decreased  from 5.09% for the nine months ended March
31, 1998 to 4.84% for the nine months ended March 31, 1999.

Interest paid on borrowed funds totaled  $114,000 and $335,000 for the three and
nine months ended March 31, 1999.  There were no borrowings  during the three or
nine months ended March 31, 1998. The Corporation  borrowed $7.0 million under a
ten year,  fixed-rate,  interest only advance from the FHLB at the end of fiscal
1998 to fund a $4.00 per share  distribution  of capital  totaling $7.1 million.
The Corporation  paid the distribution of capital on June 26, 1998 as a means to
reduce the excess capital provided from the stock conversion.

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 inherent in the loan portfolio.  While  management uses its best
judgment and information  available,  the ultimate  adequacy of the allowance is
dependent on a variety of factors,  including  performance of the  Corporation's
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

loan  portfolio,  the economy,  changes in real estate values and interest rates
and  the  view  of  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 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 size and
composition  of  the  loan  portfolio  and  specific  borrower   considerations,
including  ability of the borrower to repay the loan and the estimated  value of
the underlying collateral.

The provision for loan losses for the three and nine months ended March 31, 1999
totaled $(12,000) and $41,000 compared to $(9,000) and $26,000 for the three and
nine months ended March 31, 1998.  Charge-offs  experienced  by the  Corporation
have primarily related to consumer and other non-real estate loans. As indicated
previously,  such loans make up an  insignificant  portion of the  Corporation's
total loan portfolio. 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 90% 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. Notwithstanding the historical
charge-off history, as well as a low volume of nonperforming  loans,  management
believes it is prudent to continue to increase the  allowance for loan losses as
total loans increase.  The loan growth  experienced by the Corporation from June
30, 1998 to March 31, 1999 was  concentrated  in the commercial  real estate and
one- to four-family  residential  loan area.  Since  commercial real estate loan
types  inherently  carry more risk than one- to  four-family  real estate loans,
management  believes  it is  prudent  to  provide  for  potential  losses,  even
considering  the  stability  in the level of  nonperforming  loans.  However,  a
negative provision was recorded for the three months ended March 31, 1999 as the
Association received a recovery of $16,000 on a loan charged-off in prior years.
Management anticipates it will continue its provisions to the allowance for loan
losses as loan growth continues. The allowance for loan losses totaled $464,000,
or .45% of gross loans  receivable,  at March 31, 1999 compared to $426,000,  or
 .44% of gross loans receivable, at June 30, 1998.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and  totaled  $18,000  and  $53,000 for the three and nine
months  ended  March 31,  1999 and  $15,000  and  $46,000 for the three and nine
months ended March 31, 1998.

Noninterest expense. Noninterest expense totaled $687,000 and $2,152,000 for the
three and nine months ended March 31, 1999  compared to $548,000 and  $1,530,000
for three and nine months  ended  March 31,  1998,  an increase of $139,000  and
$622,000,  or 25.3% and 40.7%.  The  increases  were the result of  increases in
compensation  and benefits,  occupancy and equipment,  state franchise taxes and
other expenses.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Compensation and benefits expense increased  $80,000 and $400,000,  or 31.0% and
55.2%,  for the three and nine months ended March 31, 1999  compared to the same
periods in 1998. The increases are the result of normal, annual merit increases,
the addition of new employees and the added expense of employee  benefit  plans.
The expense  related to the ESOP  increased  due to an increase in the number of
ESOP shares  expected to be  allocated  to  participants  in 1999.  Compensation
expense  related to the ESOP was  $57,000  and  $198,000  for the three and nine
months  ended March 31, 1999  compared to $54,000 and $138,000 for the three and
nine months ended March 31, 1998. The Corporation  also implemented a Management
Recognition  Plan ("MRP") in May 1998 for which the expense  totaled $19,000 and
$139,000  for the three and nine months  ended  March 31,  1999.  Occupancy  and
equipment  expense  increased  $45,000  and  $84,000  due to the added  costs of
opening  two new branch  offices  during the nine months  ended March 31,  1999.
State  franchise  taxes  increased  $77,000 for the nine months  ended March 31,
1999,  due to higher  capital  levels at the  Association  and  earnings  at the
Corporation. The third and fourth quarters of fiscal 1998 were the first periods
impacted by the capital raised in the conversion.  The increase in other expense
was attributable to various miscellaneous items.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable  to the change in income before  income  taxes.  Income tax expense
totaled $101,000 and $234,000 for the three and nine months ended March 31, 1999
compared to $184,000  and $557,000 for the three and nine months ended March 31,
1998,  representing  decreases of $83,000 and $323,000,  or 45.1% and 58.0%. The
effective tax rate was 36.0% and 36.1% for the three and nine months ended March
31,  1999,  and  35.6%  for the  three and nine  months  ended  March 31,  1998.

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 nine months ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
                                                               Nine Months
                                                              Ended March 31,
                                                          ----------------------
                                                            1999            1998
                                                          (Dollars in thousands)
<S>                                                        <C>          <C>    
Net income                                                 $   414      $ 1,008
Adjustments to reconcile net income to net cash from
  operating activities                                         441           (4)
                                                           -------      -------
Net cash from operating activities                             855        1,004
Net cash from investing activities                          (7,046)      (1,480)
Net cash from financing activities                           2,725        1,254
                                                           -------      -------
Net change in cash and cash equivalents                     (3,466)         778
Cash and cash equivalents at beginning of period             4,947        2,796
                                                           -------      -------
Cash and cash equivalents at end of period                 $ 1,481      $ 3,574
                                                           =======      =======
</TABLE>
<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.

OTS regulations  presently  require the Association to maintain an average daily
balance of investments in United States Treasury, federal agency obligations and
other  investments  in an  amount  equal  to 4% of the sum of the  Association's
average  daily  balance of net  withdrawable  deposit  accounts  and  borrowings
payable in one year or less.  The  liquidity  requirement,  which may be changed
from  time to  time  by the OTS to  reflect  changing  economic  conditions,  is
intended to provide a source of relatively liquid funds on which the Association
may rely, if necessary,  to fund deposit withdrawals or other short-term funding
needs. At March 31, 1999, the  Association's  regulatory  liquidity was 8.2%. At
such date, the Corporation had  commitments to originate  fixed-rate  commercial
and residential real estate loans totaling $863,000 and variable-rate commercial
and residential real estate mortgage loans totaling $1,146,000. 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
6 of the Notes to Consolidated Financial Statements.

The  Association  is required by  regulations  to meet certain  minimum  capital
requirements,   which  must  be  generally  as  stringent  as  the  requirements
established for commercial banks.  Failure to meet minimum capital  requirements
can initiate certain mandatory actions that, if undertaken,  could have a direct
material  affect on the  Association's  financial  statements.  Current  capital
requirements  call for tangible  capital of 1.5% of adjusted total assets,  core
capital (which,  for the  Association,  consists solely of tangible  capital) of
3.0%  of  adjusted  total  assets  and  risk-based   capital  (which,   for  the
Association,  consists of core capital and general valuation allowances) of 8.0%
of risk-weighted  assets (assets are weighted at percentage  levels ranging from
0% to 100% depending on their relative risk). The following table indicates that
the  requirement for core capital is 4.0% because that is the level that the OTS
prompt  corrective  action  regulations  require  to  be  considered  adequately
capitalized. At March 31, 1999, and June 30, 1998, 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 applicable  requirements at March 31, 1999 and June 30, 1998.  Management is
not aware of any matter  after the latest  regulatory  exam that would cause the
Association's capital category to change.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

At March 31, 1999 and June 30, 1998, the Association's actual capital levels and
minimum required levels were:
<TABLE>
<CAPTION>


                                                                   Minimum                      Minimum
                                                               Required To Be               Required To Be
                                                           Adequately Capitalized          Well Capitalized
                                                           Under Prompt Corrective      Under Prompt Corrective
                                         Actual              Action Regulations           Action Regulations
                                  --------------------      --------------------         ---------------------
                                  Amount         Ratio      Amount         Ratio         Amount          Ratio
                                  ------         -----      ------         -----         ------          -----
                                                             (Dollars in Thousands)
<S>                            <C>               <C>      <C>               <C>      <C>                 <C>  
March 31, 1999
Total capital (to risk
  weighted assets)             $  16,406         22.2%    $  5,902          8.0%     $    7,377          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           15,947         21.6        2,951          4.0           4,426           6.0
Tier 1 (core) capital (to
  adjusted total assets)          15,947         14.6        4,380          4.0           5,475           5.0
Tangible capital (to
  adjusted total assets)          15,947         14.6        1,642          1.5             N/A

June 30, 1998
Total capital (to risk
  weighted assets)             $  18,743         27.6%    $  5,426          8.0%     $    6,783          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           18,330         27.0        2,713          4.0           4,070           6.0
Tier 1 (core) capital (to
  adjusted total assets)          18,330         17.3        4,240          4.0           5,300           5.0
Tangible capital (to
  adjusted total assets)          18,330         17.3        1,590          1.5             N/A
</TABLE>

In May 1998, the Board of Directors of the  Corporation  authorized the purchase
of up to 5% of the Corporation's  outstanding  common shares over a twelve month
period  to  commence  on July 1,  1998.  The  shares  will be  purchased  in the
over-the-counter  market.  The number of shares to be purchased and the price to
be paid will depend on the availability of shares,  the prevailing market prices
and any other  considerations  which may,  in the  opinion of the  Corporation's
Board of Directors or management,  affect the advisability of purchasing shares.
The 5% repurchase was completed on January 22, 1999.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Year 2000 Issue

The Corporation's  lending and deposit  activities are almost entirely dependent
upon  computer  systems  which  process and record  transactions,  although  the
Corporation can  effectively  operate with manual systems for brief periods when
its electronic systems  malfunction or cannot be accessed.  The Corporation uses
the services of a  nationally-recognized  data  processing  service  bureau that
specializes in data  processing for financial  institutions.  In addition to its
basic operating  activities,  the Corporation's  facilities and  infrastructure,
such as security systems and communications equipment, are dependent, to varying
degrees, upon computer systems.

The  Corporation is aware of the potential  Year 2000 related  problems that may
affect the computers that control or operate  Corporation's  operating  systems,
facilities  and  infrastructure.  In 1997,  the  Corporation  began a process of
identifying  any Year  2000  related  problems  that may be  experienced  by its
computer-operated  or  computer-dependent  systems. The Corporation has examined
its computer  hardware and software and  determined  it will cost  approximately
$13,000 to make such systems Year 2000 compliant.  The Corporation has contacted
the  companies  that supply or service the  Corporation's  computer-operated  or
computer-dependent  systems  to obtain  confirmation  that each  system  that is
material to the  operations of the  Corporation  is either  currently  Year 2000
compliant or is expected to be Year 2000 compliant. With respect to systems that
cannot  presently be  confirmed as Year 2000  compliant,  the  Corporation  will
continue  to work with the  appropriate  supplier or servicer to ensure all such
systems will be rendered  compliant in a timely manner,  with minimal expense to
the  Corporation  or  disruption  of the  Corporation's  operations.  All of the
identified computer systems affected by the Year 2000 issue are currently in the
renovation,  validation or implementation  phase of the process of becoming Year
2000 compliant.  The Corporation has identified various companies whose services
are deemed critical to the mission of the  Corporation  and received  assurances
that such companies will be Year 2000 compliant. As a contingency plan, however,
the Corporation has determined that if such service providers were to have their
systems fail, the Corporation  would implement manual systems until such systems
could be  re-established.  The  Corporation  does not anticipate that such short
term manual systems would have a material  adverse  effect on the  Corporation's
operations.  The expense of any change in suppliers or servicers is not expected
to be material to the Corporation.  At this time, however,  the expense that may
be incurred by the  Corporation  in  connection  with Year 2000 issues cannot be
determined.

In addition to the possible expense related to its own systems,  the Corporation
could  incur  losses if loan  payments  are  delayed  due to Year 2000  problems
affecting  any of the  Corporation's  significant  borrowers  or  impairing  the
payroll  systems of large  employers in the  Corporation's  primary market area.
Because the  Corporation's  loan portfolio is highly  diversified with regard to
individual  borrowers  and types of  businesses  and the  Corporation's  primary
market area is not  significantly  dependent on one  employer or  industry,  the
Corporation  does not expect any  significant  or  prolonged  Year 2000  related
difficulties will affect net earnings or cash flow. At this time,  however,  the
expense that may be incurred by the  Corporation  in  connection  with Year 2000
issues cannot be determined.
<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           PART II - OTHER INFORMATION

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


Item 1.    Legal Proceedings
           None.

Item 2.    Changes in Securities and Use of Proceeds
           None.

Item 3.    Defaults Upon Senior Securities
           Not applicable.

Item 4.    Submission of Matters to a Vote of Security Holders
           There were no matters  brought to a vote of security  holders  during
           the quarter ended March 31, 1999.

Item 5.    Other Information
           None.

Item 6.    Exhibits and Reports on Form 8-K
           (a)   Exhibit No. 27:  Financial Data Schedule
           (b)  Form 8-K was filed on  February  2,  1999.  Under  Item 5, Other
                Events, the Corporation reported the issuance of a press release
                to announce the completion of its repurchase of 5% of its common
                stock.




<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:      May 11, 1999                            /s/ Douglas Stewart
                                                   -------------------
                                                   Douglas Stewart
                                                   President





Date:      May 11, 1999                            /s/ Debra Geuy
                                                   --------------
                                                   Debra Geuy
                                                   Chief Financial Officer

<PAGE>
                                INDEX TO EXHIBITS


             EXHIBIT
             NUMBER                              DESCRIPTION  
             ------                              -----------   


                27                          Financial Data Schedule