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 March 31, 2005

[_]   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)

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

Yes [X]         No [_]


As of May 10, 2005, the latest practicable date, 1,432,648 shares of the
issuer's common shares, $.01 par value, were issued and outstanding.


Transitional Small Business Disclosure Format (Check One):

Yes [_]         No [X]


                                                                              1.
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
                              PEOPLES-SIDNEY FINANCIAL CORPORATION

                                             INDEX

                                                                                              Page
                                                                                              ----
<S>                                                                                            <C>
PART I - FINANCIAL INFORMATION

  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...........................................   15

  Item 3.   Controls and Procedures........................................................   22


Part II - Other Information

  Item 1.   Legal Proceedings..............................................................   23

  Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds....................   23

  Item 3.   Defaults Upon Senior Securities................................................   23

  Item 4.   Submission of Matters to a Vote of Security Holders............................   23

  Item 5.   Other Information..............................................................   23

  Item 6.   Exhibits.......................................................................   23


SIGNATURES ................................................................................   24

INDEX TO EXHIBITS..........................................................................   25


-------------------------------------------------------------------------------------------------
                                                                                               2.
</TABLE>
<PAGE>

                          PEOPLES-SIDNEY FINANCIAL CORPORATION
                              CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------

Item 1.  Financial Statements
                                                              March 31,         June 30,
                                                                2005              2004
                                                                ----              ----
                                                             (Unaudited)
<S>                                                         <C>              <C>
ASSETS
Cash and due from financial institutions                    $   1,318,606    $   1,327,745
Interest-bearing deposits in other financial institutions       3,936,307        4,705,943
Overnight deposits                                                     --        4,000,000
                                                            -------------    -------------
     Total cash and cash equivalents                            5,254,913       10,033,688
Securities available for sale                                   5,342,490        5,288,280
Federal Home Loan Bank stock                                    1,653,800        1,601,400
Loans, net of allowance of $808,000 and $752,900              120,694,309      115,651,910
Accrued interest receivable                                       757,819          670,521
Premises and equipment, net                                     2,098,319        2,124,986
Real estate owned                                                      --           99,085
Other assets                                                      312,636          301,160
                                                            -------------    -------------

     Total assets                                           $ 136,114,286    $ 135,771,030
                                                            =============    =============


LIABILITIES
Deposits                                                    $  87,108,703    $  86,764,253
Borrowed funds                                                 31,074,129       31,140,388
Accrued interest payable and other liabilities                    280,001          435,476
                                                            -------------    -------------
     Total liabilities                                        118,462,833      118,340,117

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                                     10,778,781       10,748,851
Retained earnings                                              11,694,378       11,642,982
Treasury stock, 352,727 shares, at cost                        (4,113,716)      (4,113,716)
Unearned employee stock ownership plan shares                    (623,507)        (727,121)
Accumulated other comprehensive income                           (102,337)        (137,937)
                                                            -------------    -------------
     Total shareholders' equity                                17,651,453       17,430,913
                                                            -------------    -------------

     Total liabilities and shareholders' equity             $ 136,114,286    $ 135,771,030
                                                            =============    =============


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

              See accompanying notes to consolidated financial statements.

                                                                                         3.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                       CONSOLIDATED STATEMENTS OF INCOME
                                                 (Unaudited)

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

                                                          Three Months Ended                Nine Months Ended
                                                               March 31,                        March 31,
                                                               ---------                        ---------
                                                          2005            2004             2005            2004
                                                          ----            ----             ----            ----
<S>                                                 <C>              <C>             <C>             <C>
Interest income
     Loans, including fees                          $   1,895,017    $   1,889,242   $   5,568,223   $    5,720,354
     Securities                                            48,506           58,256         144,964          189,175
     Demand, time and overnight deposits                   14,802            3,549          44,101           29,208
     Dividends on FHLB stock                               18,150           15,615          52,548           46,804
                                                    -------------    -------------   -------------   --------------
         Total interest income                          1,976,475        1,966,662       5,809,836        5,985,541

Interest expense
     Deposits                                             390,888          398,481       1,139,381        1,348,334
     Borrowed funds                                       404,888          414,750       1,221,717        1,261,325
                                                    -------------    -------------   -------------   --------------
         Total interest expense                           795,776          813,231       2,361,098        2,609,659
                                                    -------------    -------------   -------------   --------------

Net interest income                                     1,180,699        1,153,431       3,448,738        3,375,882

Provision for loan losses                                  30,278            5,198          57,747           29,183
                                                    -------------    -------------   -------------   --------------

Net interest income after provision
  for loan losses                                       1,150,421        1,148,233       3,390,991        3,346,699

Noninterest income
     Service fees and other charges                        30,612           33,164          95,284          100,490
     Gain (loss) on sale of real estate owned              (1,272)         (12,103)        (24,600)          (4,379)
                                                    -------------    -------------   -------------   --------------
         Total noninterest income                          29,340           21,061          70,684           96,111


Noninterest expense
     Compensation and benefits                            402,120          408,228       1,201,078        1,193,463
     Director fees                                         24,300           24,300          72,900           72,900
     Occupancy and equipment                              107,188          105,824         303,816          304,952
     Computer processing                                   64,369           64,119         185,089          187,197
     State franchise taxes                                 49,763           52,799         155,610          151,872
     Professional fees                                     23,319           25,680          87,822           91,346
     Other                                                 85,874           91,663         260,209          270,799
                                                    -------------    -------------   -------------   --------------
         Total noninterest expense                        756,933          772,613       2,266,524        2,272,529
                                                    -------------    -------------   -------------   --------------

Income before income taxes                                422,828          396,681       1,195,151        1,170,281

Income tax expense                                        152,500          147,000         431,000          433,900
                                                    -------------    -------------   -------------   --------------

Net income                                          $     270,328    $     249,681   $     764,151   $      736,381
                                                    =============    =============   =============   ==============

Earnings per common share - basic                   $        0.20    $       0.18    $        0.56   $         0.54
                                                    =============    ============    =============   ==============

Earnings per common share - diluted                 $        0.20    $       0.18    $        0.56   $         0.54
                                                    =============    ============    =============   ==============

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

                          See accompanying notes to consolidated financial statements.


                                                                                                                 4.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                  (Unaudited)

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

                                                          Three Months Ended                Nine Months Ended
                                                               March 31,                        March 31,
                                                               ---------                        ---------
                                                          2005            2004             2005            2004
                                                          ----            ----             ----            ----
<S>                                                 <C>              <C>             <C>             <C>
Net income                                          $     270,328    $     249,681   $     764,151   $      736,381

Other comprehensive income (loss)
     Unrealized holding gains and (losses) on
       available-for-sale securities                      (66,820)         118,190          53,941          (54,540)
     Tax effect                                            22,718          (40,185)        (18,341)          18,544
                                                    -------------    -------------   -------------   --------------
         Other comprehensive income (loss)                (44,102)          78,005          35,600          (35,996)
                                                    -------------    -------------   -------------   --------------

Comprehensive income                                $     226,226    $     327,686   $     799,751   $      700,385
                                                    =============    =============   =============   ==============


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

                            See accompanying notes to consolidated financial statements.


                                                                                                                 5.


</TABLE>
<PAGE>
<TABLE>
<CAPTION>

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

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

                                                          Three Months Ended                Nine Months Ended
                                                               March 31,                        March 31,
                                                               ---------                        ---------
                                                          2005            2004             2005            2004
                                                          ----            ----             ----            ----
<S>                                                 <C>              <C>             <C>             <C>
Balance, beginning of period                        $  17,574,556    $  17,258,687   $  17,430,913   $   17,384,280

Net income for period                                     270,328          249,681         764,151          736,381

Cash dividends, $.14 per share for the
  three months ended March 31, 2005
  and 2004, $.52 and $.50 per share for the
  nine months ended March 31, 2005 and 2004              (191,896)        (190,165)       (712,755)        (681,626)

Purchase of 6,853 shares of treasury
  stock for the nine months ended March 31, 2004,
   at cost                                                     --               --              --          (92,516)

Commitment to release 2,944 and 3,091
  employee stock ownership plan shares for
  the three months ended March 31, 2005 and 2004
  and 8,831 and 9,273 employee stock
  ownership plan shares for the nine months
  ended March 31, 2005 and 2004, at fair value             42,567           51,298         133,544          136,983

Change in fair value on securities available for
  sale, net of tax                                        (44,102)          78,005          35,600          (35,996)
                                                    -------------    -------------   -------------   --------------

Balance, end of period                              $  17,651,453    $  17,447,506   $  17,651,453   $   17,447,506
                                                    =============    =============   =============   ==============

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

                            See accompanying notes to consolidated financial statements.


                                                                                                                 6.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                        PEOPLES-SIDNEY FINANCIAL CORPORATION
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   (Unaudited)

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

                                                                                          Nine Months Ended
                                                                                               March 31,
                                                                                               ---------
                                                                                       2005               2004
                                                                                       ----               ----
<S>                                                                               <C>               <C>
Cash flows from operating activities
     Net income                                                                   $      764,151    $       736,381
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                                    139,593            145,671
         Provision for loan losses                                                        57,747             29,183
         Loss on sale of real estate owned                                                24,600              4,379
         FHLB stock dividends                                                            (52,400)           (46,700)
         Compensation expense for ESOP shares                                            133,544            136,983
         Change in:
              Accrued interest receivable and other assets                               (99,043)           (60,188)
              Accrued expense and other liabilities                                     (173,816)          (251,498)
              Deferred loan fees                                                           2,526             17,346
                                                                                  --------------    ---------------
                  Net cash from operating activities                                     796,902            711,557

Cash flows from investing activities
     Proceeds from maturities/calls of securities available for sale                          --          4,000,000
     Proceeds from sales of securities available for sale                                     --          2,000,000
     Net change in loans                                                              (5,212,315)        (2,028,120)
     Premises and equipment expenditures                                                (112,926)          (446,415)
     Proceeds from sale of real estate owned                                             184,128            358,250
                                                                                  --------------    ---------------
         Net cash from investing activities                                           (5,141,113)         3,883,715

Cash flows from financing activities
     Net change in deposits                                                              344,450         (5,872,615)
     Repayments of long-term FHLB advances                                            (1,566,259)        (1,697,086)
     Net change in short-term FHLB advances                                              500,000                 --
     Proceeds from long-term FHLB advances                                             1,000,000          1,000,000
     Cash dividends paid                                                                (712,755)          (681,626)
     Purchase of treasury stock                                                               --            (92,516)
                                                                                  --------------    ---------------
         Net cash from financing activities                                             (434,564)        (7,343,843)
                                                                                  --------------    ---------------

Net change in cash and cash equivalents                                               (4,778,775)        (2,748,571)

Cash and cash equivalents at beginning of period                                      10,033,688         12,300,598
                                                                                  --------------    ---------------

Cash and cash equivalents at end of period                                        $    5,254,913    $     9,552,027
                                                                                  ==============    ===============

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                                 $    2,350,950    $     2,622,342
         Income taxes                                                                    425,000            442,000

Noncash transactions
     Transfer from loans to other real estate owned                               $      109,643    $       296,654

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

                           See accompanying notes to consolidated financial statements.

                                                                                                                 7.
</TABLE>
<PAGE>

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

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:  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 March 31, 2005 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 for
Form  10-QSB  and,  therefore,  do not  purport  to  contain  all the  necessary
financial  disclosures  required by accounting  principles 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, 2004,  included in the  Corporation's  2004 Annual Report on Form 10-KSB for
the  fiscal  year  ended  June 30,  2004.  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.

Nature of Operations:  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
commercial  and  residential  real estate.  Commercial  loans are expected to be
repaid from cash flow from operations of businesses.  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.

Use of Estimates:  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 actual results could differ.  The allowance for loan
losses and fair values of  financial  instruments  are  particularly  subject to
change.

Income Taxes:  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.

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

                                  (Continued)

                                                                              8.
<PAGE>

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

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings Per Common Share: Basic earnings per common share ("EPS") is net income
-------------------------
divided by the weighted average number of common 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 additional common shares upon exercise of stock options.

Stock-Based Compensation: Employee compensation expense under stock option plans
------------------------
is reported using the intrinsic value method.  No stock-based  compensation cost
is reflected in net income,  as all options  granted had an exercise price equal
to or greater than the market price of the  underlying  common stock at the date
of grant.  All outstanding  options  finished vesting during the year ended June
30, 2003.


NOTE 2 - SECURITIES AVAILABLE FOR SALE

Securities available for sale were as follows.

                                                        Gross          Gross
                                          Fair       Unrealized     Unrealized
                                          Value         Gains         Losses
                                          -----         -----         ------
March 31, 2005
--------------
    U.S. Government agencies        $   5,342,490   $      3,750  $    (158,804)
                                    =============   ============  =============

June 30, 2004
-------------
    U.S. Government agencies        $   5,288,280   $     13,280  $    (222,275)
                                    =============   ============  =============

Contractual  maturities of securities  available for sale at March 31, 2005 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.

                                                                   Fair
                                                                   Value
                                                                   -----

         Due after one year through five years                $    2,481,560
         Due after five years through ten years                    2,860,930
                                                              --------------

                                                              $    5,342,490

There were no sales of  securities  available for sale during the three and nine
months ended March 31, 2005. Proceeds from the sale of securities  available for
sale  totaled  $2,000,000  during the three and nine months ended March 31, 2005
and 2004.  There was no gain or loss realized on this sale.  No securities  were
pledged as collateral at March 31, 2005 or June 30, 2004.

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

                                  (Continued)

                                                                              9.
<PAGE>

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

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

NOTE 2 - SECURITIES AVAILABLE FOR SALE (Continued)

Securities  with  unrealized  losses  at March  31,  2005  and  June  30,  2004,
aggregated by investment category and length of time that individual  securities
have been in a continuous unrealized loss position, are as follows.

<TABLE>
<CAPTION>
                                   Less than 12 Months           12 Months or More                Total
                                   -------------------           -----------------                -----
                                    Fair       Unrealized        Fair       Unrealized      Fair        Unrealized
Description of Securities           Value        Loss            Value         Loss         Value         Loss
-------------------------           -----        ----            -----         ----         -----         ----
<S>                             <C>            <C>           <C>           <C>           <C>            <C>
March 31, 2005
--------------

U.S. Government agencies        $  1,977,810   $ (21,764)    $  2,860,930  $  (137,040)  $  4,838,740   $  (158,804)
                                ============   =========     ============  ===========   ============   ===========

June 30, 2004
-------------

U.S. Government agencies        $  2,949,380   $ (50,109)    $  1,825,620  $  (172,166)  $  4,775,000   $  (222,275)
                                ============   =========     ============  ===========   ============   ===========
</TABLE>

Unrealized  losses on the investment  securities  have not been  recognized into
income  because the securities  are of high credit  quality,  management has the
intent and ability to hold for the foreseeable  future,  and the decline in fair
value is largely due to changes in interest rates. The fair value is expected to
recover as the securities approach their maturity date or reset date.


NOTE 3 - LOANS

Loans were as follows.

                                             March 31,        June 30,
                                               2005             2004
                                               ----             ----
      Mortgage loans:
           1-4 family residential         $  92,541,607    $  89,974,734
           Multi-family residential           1,304,704        1,330,844
           Commercial real estate            12,649,289       11,847,794
           Real estate construction and
             development                      3,839,195        3,056,172
           Land                               1,559,009        1,694,844
                                          -------------    -------------
               Total mortgage loans         111,893,804      107,904,388
      Consumer loans                          4,746,075        4,211,193
      Commercial loans                        5,237,797        4,662,070
                                          -------------    -------------
               Total loans                  121,877,676      116,777,651
      Less:
           Allowance for loan losses           (808,000)        (752,900)
           Deferred loan fees                  (375,367)        (372,841)
                                          -------------    -------------

                                          $ 120,694,309    $ 115,651,910
                                          =============    =============

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

                                  (Continued)

                                                                             10.
<PAGE>

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

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

NOTE 3 - LOANS (Continued)

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

<TABLE>
<CAPTION>
                                             Three Months Ended             Nine Months Ended
                                                  March 31,                     March 31,
                                                  ---------                     ---------
                                           2005             2004           2005          2004
                                           ----             ----           ----          ----
<S>                                     <C>            <C>            <C>             <C>
Balance at beginning of period          $    777,700   $    757,900   $    752,900    $    766,000
Provision for losses                          30,278          5,198         57,747          29,183
Charge-offs                                       --        (34,353)        (2,669)        (66,877)
Recoveries                                        22            255             22             694
                                        ------------   ------------   ------------    ------------

Balance at end of period                $    808,000   $    729,000   $    808,000    $    729,000
                                        ============   ============   ============    ============

<CAPTION>

Impaired loans were as follows.

                                                                                 March 31,          June 30,
                                                                                   2005              2004
                                                                                   ----              ----
<S>                                                                           <C>              <C>
Period-end impaired loans with no allowance for loan losses allocated         $         --     $          --
Period-end impaired loans with allowance for loan losses allocated                 166,000           129,000
Amount of the allowance allocated to impaired loans                                134,000           129,000

<CAPTION>

                                                          Three Months Ended                Nine Months Ended
                                                               March 31,                        March 31,
                                                               ---------                        ---------
                                                          2005            2004             2005            2004
                                                          ----            ----             ----            ----
<S>                                                 <C>              <C>             <C>             <C>
Average of impaired loans during the period         $     141,000    $          --   $     153,000   $           --
Interest income recognized during the period                1,550               --           6,926               --
Cash-basis interest income recognized                         566               --           1,635               --

</TABLE>

Nonperforming loans were as follows.

                                                   March 31,     June 30,
                                                      2005         2004
                                                      ----         ----

Loans past due over 90 days still on accrual     $   662,000  $   587,000
Nonaccrual loans                                     911,000      624,000

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

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

                                  (Continued)

                                                                             11.
<PAGE>

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

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

NOTE 4 - BORROWED FUNDS

At March 31, 2005 and June 30, 2004, 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.  There were
$500,000 in outstanding  borrowings on this line of credit at March 31, 2005 and
there were no outstanding borrowings at June 30, 2004.

As a member  of the FHLB  system,  the  Association  has the  ability  to obtain
borrowings up to a maximum total of $66.2 million  including the cash management
line of credit. Advances from the Federal Home Loan Bank were as follows.

<TABLE>
<CAPTION>
                                                        March 31,      June 30,
                                                          2005           2004
                                                          ----           ----
<S>                                                  <C>            <C>
Cash management advance, variable rate 3.02%
  at March 31, 2005                                   $    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 2005, due June 11, 2009                           5,000,000     5,000,000
6.27% FHLB convertible advance, fixed-rate until
  June 2005, due September 8, 2010                       5,000,000     5,000,000
5.30% select pay mortgage-matched advance, final
  maturity May 1, 2011                                     987,874     1,087,505
5.35% select pay mortgage-matched advance, final
  maturity July 1, 2011                                  2,022,294     2,466,217
3.92% select pay mortgage-matched advance, final
  maturity November 1, 2012                                722,342       823,214
3.55% select pay mortgage-matched advance, final
  maturity March 1, 2013                                   827,309       893,507
4.10% select pay mortgage-matched advance, final
 maturity March 1, 2015                                  1,000,000            --
4.09% select pay mortgage-matched advance, final
  maturity November 1, 2017                                714,179       828,866
3.31% select pay mortgage-matched advance, final
  maturity April 1, 2019                                   952,069       991,393
4.72% select pay mortgage-matched advance, final
  maturity November 1, 2022                              2,506,557     2,709,021
4.38% select pay mortgage-matched advance, final
  maturity December 1, 2022                                835,741       903,923
3.92% select pay mortgage-matched advance, final
  maturity December 1, 2022                                747,208       854,173
3.64% select pay mortgage-matched advance, final
  maturity March 1, 2023                                 2,258,556     2,582,569
                                                      ------------  ------------

                                                      $ 31,074,129  $ 31,140,388
                                                      ============  ============
</TABLE>

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

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

                                  (Continued)

                                                                             12.
<PAGE>

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

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

NOTE 4 - BORROWED FUNDS(Continued)

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 prepayment
fee. The select pay  mortgage-matched  advances  require  monthly  principal and
interest payments and annual additional principal payments.

Maturities  of FHLB  advances  for the next five  years and  thereafter  were as
follows.

      Year ended March 31,
               2006                                   $    2,640,132
               2007                                        1,875,767
               2008                                        1,649,439
               2009                                        8,455,183
               2010                                        6,288,063
            Thereafter                                    10,165,545
                                                      --------------

                                                      $   31,074,129
                                                      ==============


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 of 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.

                                                         March 31,     June 30,
                                                           2005          2004
                                                           ----          ----

1-4 family residential real estate - fixed rate         $   145,000   $  299,000
1-4 family residential real estate - variable rate          319,000      212,000
Commercial real estate - variable rate                           --      265,000
Commercial lines of credit                                2,736,000    3,186,000
Home equity lines of credit                                 910,000      823,000

The interest rate on fixed-rate commitments ranged from 6.625% to 7.25% at March
31,  2005 and 5.88% to 6.75% at June 30,  2004.  Commitments  to make  loans are
generally  made  for a period  of 30 days or  less.  The  maximum  maturity  for
fixed-rate commitments range from 10 years to 20 years.

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

                                  (Continued)

                                                                             13.
<PAGE>

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

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

NOTE 5 - OFF-BALANCE-SHEET ACTIVITIES (Continued)

At March 31,  2005 and June 30,  2004,  the  Corporation  was  required  to have
$1,094,000  and  $3,454,000  on  deposit  with  its  correspondent  banks  as  a
compensating clearing requirement.

The Corporation entered into employment agreements with certain of its officers.
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.


NOTE 6 - EARNINGS PER SHARE

The factors used in the earnings per share computation follow.

<TABLE>
<CAPTION>
                                                        Three Months Ended             Nine Months Ended
                                                        ------------------             -----------------
                                                             March 31,                      March 31,
                                                             ---------                      ---------
                                                        2005           2004            2005           2004
                                                        ----           ----            ----           ----
<S>                                                 <C>            <C>            <C>            <C>
     Basic Earnings Per Common Share
           Net income                               $   270,328    $   249,681    $   764,151    $   736,381
                                                    ===========    ===========    ===========    ===========

           Weighted average common shares
             outstanding                              1,432,648      1,432,648      1,432,648      1,435,962
           Less:  Average unallocated ESOP shares       (54,607)       (66,603)       (57,551)       (69,694)
                                                    -----------    -----------    -----------    -----------
           Weighted average common shares
             outstanding for basic earnings
             per common share                         1,378,041      1,366,045      1,375,097      1,366,268
                                                    ===========    ===========    ===========    ===========

           Basic earnings per common share          $      0.20    $      0.18    $      0.56    $      0.54
                                                    ===========    ===========    ===========    ===========

     Diluted Earnings Per Common Share
           Net income                               $   270,328    $   249,681    $   764,151    $   736,381
                                                    ===========    ===========    ===========    ===========

           Weighted average common shares
             outstanding for basic earnings
             per common share                         1,378,041      1,366,045      1,375,097      1,366,268
           Add:  Dilutive effects of assumed
             exercises of stock options                      --          3,972            122          1,324
                                                    -----------    -----------    -----------    -----------
           Weighted average common shares
             and dilutive potential common
             shares outstanding                       1,378,041      1,370,017      1,375,219      1,367,592
                                                    ===========    ===========    ===========    ===========

           Diluted earnings per common share        $      0.20    $      0.18    $      0.56    $      0.54
                                                    ===========    ===========    ===========    ===========

Stock options not considered in calculation
  because they were not dilutive                        140,824          1,245          1,245          1,245

</TABLE>

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

                                  (Continued)

                                                                             14.

<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 March 31, 2005,  compared to June
30, 2004,  and results of  operations  for the three and nine months ended March
31, 2005, compared with the same periods in 2004. 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.

Forward-Looking Statements

When  used  in this  filing  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 March 31, 2005 were $136.1 million compared to $135.8 million at
June 30,  2004,  an increase of $0.3  million.  The increase in total assets was
primarily due to an increase in loans of $5.0 million,  which was funded by cash
and cash  equivalents,  which  decreased by $4.7 million,  and by deposits which
increased by $300,000.

As the Federal Reserve Board continues to analyze market adjustments in interest
rates to control inflationary pressures, depositors and borrowers alike continue
to make a shift  in the  type of  instrument  that  suits  their  immediate  and
long-term  needs. We are currently  seeing  increases in money market and demand
deposits as well as longer term  certificates  of deposit.  On the lending side,
many  borrowers  are  again  considering  adjustable  rate  mortgages  as market
interest  rates have pushed  fixed rate  mortgages to higher  levels.  We expect
rates to continue to increase during our fourth fiscal quarter.

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

                                  (Continued)

                                                                             15.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Cash and cash equivalents  decreased $4.7 million from $10.0 million at June 30,
2004 to $5.3  million  at March  31,  2005.  These  funds  were used to fund the
increase in loans and repay FHLB advances.

The securities  portfolio,  which is classified as available for sale, increased
$54,000,  from  $5,288,000 at June 30, 2004 to $5,342,000 at March 31, 2005. The
increase is related to an increase  in the fair market  value of the  securities
during the reporting period as no securities transactions occurred.

Federal Home Loan Bank stock increased  $53,000 from $1,601,000 at June 30, 2004
to $1,654,000 at March 31, 2005 as a result of normal dividend payments.

Loans  increased  $5.0  million  from $115.7  million at June 30, 2004 to $120.7
million at March 31, 2005. The most significant change was in one to four-family
residential  loans,  which increased $2.5 million from $90.0 million at June 30,
2004 to $92.5 million at March 31,2005.  Commercial  real estate loans increased
$0.8 million and real estate and  construction  and development  loans increased
$0.7 million from June 30, 2004 to March 31, 2005. Consumer and commercial loans
also provided  increases to the loan  portfolio  with growth of $0.5 million and
$0.5  million  respectively  from June 30,  2004 to March 31,  2005.  Other loan
categories had nominal changes.

Premises and  equipment  decreased $ 27,000 from  $2,125,000 at June 30, 2004 to
$2,098,000 at March 31, 2005. This decrease resulted from normal depreciation of
existing assets partially offset by equipment purchases and routine improvements
to the office building.

Total  deposits  increased  $0.3 million from $86.8  million at June 30, 2004 to
$87.1 million at March 31, 2005  primarily due to an increase of $1.8 million in
money market  accounts and an increase of $0.4  million in  commercial  checking
accounts.  NOW accounts  also  increased  $0.1  million.  These  increases  were
partially  offset by decreases of $1.2 million in passbook  savings accounts and
$0.7 million in certificate accounts. However, even though total certificates of
deposit decreased,  there were increases to some of the longer-term  certificate
accounts.

Borrowed  funds  decreased   $66,000  from  $31,140,000  at  June  30,  2004  to
$31,074,000  at March 31,  2005.  This  decrease  was the  result  of  scheduled
repayments  of the  long-term  advances  which offset the addition of a $500,000
million cash management advance.

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.  Demand for real estate loans and other types
of loans  influence  lending  activities,  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)

                                                                             16.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Three Months  Ended March 31, 2005  Compared to the Three Months Ended March 31,
2004

Net Income.  The Corporation  earned net income of $270,000 for the three months
ended March 31, 2005  compared to $250,000  for the three months ended March 31,
2004.  The increase of $20,000 in net income was primarily due to an increase in
net  interest  income  and  noninterest   income  coupled  with  a  decrease  in
noninterest  expense  partially  offset by an increase in the provision for loan
losses and an increase in income tax expense.

Net Interest Income. Net interest income totaled $1,181,000 for the three months
ended March 31, 2005 compared to $1,153,000 for the three months ended March 31,
2004,  representing  an increase of $28,000.  The  increase was the result of an
increase in interest  income on coupled  with a decrease in interest  expense on
deposits and borrowed funds.

Interest and fees on loans increased $6,000 from $1,889,000 for the three months
ended March 31, 2004 to  $1,895,000  for the three  months ended March 31, 2005.
The increase in interest income was due primarily to a higher average balance of
loans  partially  offset by a decline in the average yield  earned.  The average
balance of loans  increased to $119.7 million with an average yield of 6.33% for
the three months ended March 31, 2005 from an average  balance of $117.7 with an
average yield of 6.42% for the same three month period last year.

Interest on securities  decreased  $9,000 due to a lower average balance for the
current  three-month  period partially offset by a higher average interest rate.
This was offset by an $11,000 increase in interest on demand, time and overnight
deposits  resulting from an increase in the average interest rate as compared to
the prior period.

Interest  paid on deposits  decreased  $7,000 from $398,000 for the three months
ended March 31, 2004 to $391,000 for the three months ended March 31, 2005.  The
decrease resulted from a lower average balance of deposits.  The average balance
of deposits  declined  from $86.5  million for the three  months ended March 31,
2004 to $85.6 million for the three months ended March 31 2005. The average cost
of funds remained unchanged at 1.85% for both three-month periods.

Interest  paid on borrowed  funds  totaled  $405,000  for the three months ended
March 31, 2005  compared to $415,000  for the three months ended March 31, 2004.
The decrease in interest  expense on borrowed  funds resulted from a decrease in
the average balance of borrowed funds. The average rate paid for borrowings also
remained unchanged at 5.33% for both three-month periods.

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  incurred  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)

                                                                             17.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

The  provision for loan losses for the three months ended March 31, 2005 totaled
$30,000  compared  to $5,000 for the three  months  ended  March 31,  2004.  The
increase  of $25,000 in the  provision  for losses was due to an increase in the
total  outstanding  balance of loans  coupled with an increase in the balance of
loans placed on nonaccrual during the current three-month period compared to the
same period a year ago. The allowance for loan losses totaled $808,000, or 0.67%
of gross loans  receivable  net of deferred loan  origination  fees and 51.4% of
total nonperforming loans at March 31, 2005, compared with $729,000, or 0.62% of
gross loans receivable, net of deferred loan origination fees and 38.0% of total
nonperforming  loans at March 31, 2004. The Corporation  experienced  $34,000 in
net charge-offs  during the prior year three-month  period primarily  related to
one- to  four-family  residential  loans and no  charge-offs  during the current
three-month period.  Overall, the Corporation's  charge-off history remains very
modest and 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,   other
miscellaneous  income and the net gain or loss on the sale of real estate  owned
and  increased  $8,000 from $21,000 for the three months ended March 31, 2004 to
$29,000 for the three  months ended March 31, 2005. A decrease of $11,000 in net
losses on the sale of real estate  owned  offset a decrease of $2,000 in service
fees and other income.

Noninterest  expense.  Noninterest expense totaled $757,000 for the three months
ended March 31, 2005  compared to $773,000  for the three months ended March 31,
2004, a decrease of $16,000. The decrease was primarily related to a decrease in
compensation  and  benefits  expense  coupled  with  a  net  decrease  in  other
noninterest  expenses.  There was a  decrease  of  $9,000  in ESOP  compensation
expense  resulting  from the impact of a lower  average  stock price on the ESOP
plan and a decrease of $4,000 in real estate  owned  expense  during the current
three-month period as compared to the same period last year.

Income Tax  Expense.  Income tax expense  totaled  $153,000 for the three months
ended March 31, 2005  compared to $147,000  for the three months ended March 31,
2004,  representing an increase of $6,000. The increase in income tax expense is
reflective  of the  increase  in net income  before  income  taxes for the three
months  ended March 31, 2005 as  compared  to the three  months  ended March 31,
2004.  The  effective  tax rate was 36.1% and 37.1% for the three  months  ended
March 31, 2005 and 2004.

Nine Months  Ended March 31,  2005  Compared to the Nine Months  Ended March 31,
2004

Net Income.  The  Corporation  earned net income of $764,000 for the nine months
ended March 31, 2005  compared to $736,000  for the nine months  ended March 31,
2004,  representing  an increase of $28,000.  An increase in net interest income
and a decrease in  noninterest  expense were offset,  in part, by an increase in
the  provision for loan losses and a decrease in  noninterest  income during the
current nine-month period.

Net Interest Income.  Net interest income totaled $3,449,000 for the nine months
ended March 31, 2005 compared to $3,376,000  for the nine months ended March 31,
2004, an increase of $73,000.  The increase was the result of a larger  decrease
in interest  expense on deposits and borrowed  money  compared to the decline in
interest income on loans and securities.

Interest and fees on loans decreased  $152,000,  or 2.7% from $5,720,000 for the
nine months ended March 31, 2004 to  $5,568,000  for the nine months ended March
31, 2005.  The decrease in interest  income was due primarily to a lower average
yield  earned on loans  due to the lower  interest  rate  environment  partially
offset by an increase in the average  balance.  The yield on loans declined from
6.53% for the nine  months  ended  March 31,  2004 to 6.30% for the nine  months
ended March 31, 2005.

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

                                  (Continued)

                                                                             18.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Interest on securities  decreased $44,000 due to a lower average balance for the
current nine-month period partially offset by a slightly higher average interest
rate.

Dividends on FHLB Stock and interest on demand,  and overnight  deposits totaled
$97,000  for the nine months  ended  March 31, 2005  compared to $76,000 for the
nine months  ended March 31,  2004.  The  increase of $21,000  resulted  from an
increase in the average  dividend and  interest  yield as well as an increase in
the average balance of FHLB stock, partially offset by a decrease in the average
balances of demand and overnight deposits for the current nine month period.

Interest paid on deposits decreased  $209,000,  or 15.5% from $1,348,000 for the
nine months ended March 31, 2004 to  $1,139,000  for the nine months ended March
31, 2005. The decrease  resulted from a lower average interest rate coupled with
a lower average balance of deposits.  The average cost of deposits declined from
2.01% for the nine  months  ended  March 31,  2004 to 1.77% for the nine  months
ended March 31, 2005.

Interest  paid on borrowed  funds totaled  $1,222,000  for the nine months ended
March 31, 2005 compared to $1,261,000  for the nine months ended March 31, 2004.
The decrease of $39,000 in interest  expense on borrowed  funds  resulted from a
decrease in the average balance of borrowed funds.

Provision  for Loan Losses.  The  provision  for loan losses for the nine months
ended March 31,  2005  totaled  $58,000  compared to $29,000 for the nine months
ended March 31, 2004.  The increase of $29,000 in the  provision  for losses was
due to an  increase in the total  outstanding  balance of loans  coupled  with a
larger  increase  in  nonperforming  and  nonaccrual  loans  during the  current
nine-month period compared to the same period a year ago.

Noninterest   income.   Noninterest   income   includes   service  fees,   other
miscellaneous  income and the gain or loss  realized  on the sale of real estate
owned and  decreased  $25,000  from  $96,000 for the nine months ended March 31,
2004 to $71,000 for the nine months ended March 31, 2005. This decrease resulted
primarily from a pre-tax loss of $27,000 relating to a valuation  adjustment and
subsequent  loss on a property  held in real  estate  owned  during the  current
nine-month period.

Noninterest expense.  Noninterest expense totaled $2,267,000 for the nine months
ended March 31, 2005 compared to $2,273,000  for the nine months ended March 31,
2004.  The decrease of $6,000 was primarily  related to an overall  reduction of
noninterest  expenses  partially  offset by normal increases in compensation and
benefits.

Income Tax  Expense.  Income tax expense  totaled  $431,000  for the nine months
ended March 31, 2005  compared to $434,000  for the nine months  ended March 31,
2004,  representing a decrease of $3,000.  The decrease in income tax expense is
reflective of a decrease in the effective tax rate offset in part by an increase
in income before  income  taxes.  The effective tax rate was 36.1% and 37.1% for
the nine months ended March 31, 2005 and 2004 respectively.


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

                                  (Continued)

                                                                             19.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

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, 2005 and 2004.

                                                               Nine Months
                                                             Ended March 31,
                                                             ---------------
                                                           2005          2004
                                                           ----          ----
                                                         (Dollars in thousands)

Net income                                               $    764      $    736
Adjustments to reconcile net income to net cash from
  operating activities                                         33           (25)
                                                         --------      --------
Net cash from operating activities                            797           711
Net cash from investing activities                         (5,141)        3,884
Net cash from financing activities                           (435)       (7,344)
                                                         --------      --------
Net change in cash and cash equivalents                    (4,779)       (2,749)
Cash and cash equivalents at beginning of period           10,034        12,301
                                                         --------      --------

Cash and cash equivalents at end of period               $  5,255      $  9,552
                                                         ========      ========

The  Corporation's  principal  sources of funds are deposits,  loan  repayments,
maturities of securities and other funds provided by operations. 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 Corporation  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.  Management believes that
loan  repayments  and  other  sources  of  funds  will be  adequate  to meet the
Corporation's foreseeable liquidity needs.

The  Corporation  also has the  ability to borrow  from the FHLB up to a maximum
total of $66.2 million including the cash management line of credit.  See Note 4
of  the  Notes  to  Consolidated  Financial  Statements  for  a  detail  of  the
Corporation's borrowings from the FHLB at March 31, 2005.

At March 31, 2005,  the  Corporation  had  commitments  to originate  fixed-rate
residential real estate loans totaling  $145,000 and  variable-rate  residential
real estate loans totaling $319,000. Loan commitments are generally for 30 days.
See Note 5 of the Notes to Consolidated Financial Statements for a detail of the
Corporation's  loan  commitments  at  March  31,  2005.  The  Office  of  Thrift
Supervision regulations require the Corporation's insured subsidiary to maintain
a safe and sound level of liquid assets. The Corporation considers its liquidity
and capital  reserves  sufficient  to meet its  outstanding  short and long-term
needs, and believes it is in compliance with regulatory requirements.

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.  Capital amounts and
classifications  are also subject to  qualitative  judgments by the  regulators.
Failure to meet minimum capital requirements can initiate regulatory action.

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

                                  (Continued)

                                                                             20.

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and capital restoration plans are required.

At March  31,  2005  and June 30,  2004,  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 March 31, 2005 and June
30,  2004.  No  conditions  or  events  have  occurred  subsequent  to the  last
notification  by  regulators  that  management  believes  would have changed the
Association's category.

At March 31, 2005 and June 30, 2004, the  Association's  actual capital  levels,
minimum required levels and levels to be considered "well  capitalized"  were as
follows.

<TABLE>
<CAPTION>
                                                                                                 To Be
                                                                                           Well Capitalized
                                                                 For Capital            Under Prompt Corrective
                                         Actual               Adequacy Purposes           Action Regulations
                                         ------               -----------------           ------------------
                                  Amount         Ratio      Amount         Ratio         Amount          Ratio
                                  ------         -----      ------         -----         ------          -----
                                                           (Dollars in Thousands)
                                                           ----------------------
<S>                            <C>               <C>      <C>               <C>      <C>                 <C>
March 31, 2005
--------------
Total capital (to risk-
  weighted assets)             $  16,594         20.5%    $  6,465          8.0%     $    8,081          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           15,810         19.6        3,232          4.0           4,849           6.0
Tier 1 (core) capital (to
  adjusted total assets)          15,810         11.6        5,452          4.0           6,815           5.0
Tangible capital (to
  adjusted total assets)          15,810         11.6        2,044          1.5             N/A

June 30, 2004
-------------
Total capital (to risk-
  weighted assets)             $  15,448         20.0%    $  6,176          8.0%     $    7,720          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           14,855         19.2        3,088          4.0           4,632           6.0
Tier 1 (core) capital (to
  adjusted total assets)          14,855         10.9        5,440          4.0           6,801           5.0
Tangible capital (to
  adjusted total assets)          14,855         10.9        2,040          1.5             N/A

</TABLE>

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

                                  (Continued)

                                                                             21.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                             CONTROLS AND PROCEDURES
--------------------------------------------------------------------------------

Item 3.  Controls and Procedures
         -----------------------

Any control system,  no matter how well designed and operated,  can provide only
reasonable   (not  absolute)   assurance  that  its  objectives   will  be  met.
Furthermore,  no evaluation of controls can provide absolute  assurance that all
control issues and instances of fraud, if any, have been detected.

Disclosure Controls

Based upon that  evaluation,  our Chief  Executive  Officer and Chief  Financial
Officer  concluded  that as of  March  31,  2005  our  disclosure  controls  and
procedures  were  effective  to  provide  reasonable   assurance  that  (i)  the
information  required  to be  disclosed  by  us in  this  Report  was  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms,  and (ii)  information  required to be disclosed by us in
our reports that we file or submit under the  Exchange  Act is  accumulated  and
communicated to our management,  including our principal executive and principal
financial officers,  or persons performing similar functions,  as appropriate to
allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

There  have not been any  changes in the  Corporation's  internal  control  over
financial  reporting  (as such term is defined in Rules  13a-15(f) and 15d-15(f)
under the Exchange Act) during the fiscal  quarter to which this report  relates
that have materially  affected,  or are reasonably likely to materially  affect,
the Corporation's internal control over financial reporting.

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

                                  (Continued)

                                                                             22.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           PART II - OTHER INFORMATION

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

Item 1.  Legal Proceedings
         -----------------
         The Company is not involved in any pending legal proceedings other than
         routine legal proceedings occurring in the ordinary course of business,
         which,  in the  aggregate,  involved  amounts  which are believed to be
         immaterial to the  consolidated  financial  condition and operations of
         the Company.

Item 2.  Unregistered Sales of Equity 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
         ---------------------------------------------------
         None.

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

Item 6.  Exhibits
         --------
         (a) (1) Exhibits 31.1 and 31.2: Section 302 Certifications
         (2) Exhibit 32: Section 906 Certifications

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

                                  (Continued)

                                                                             23.

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION

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

                                   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 16, 2005                       /s/ Douglas Stewart
       -------------------------           -------------------------------------
                                           Douglas Stewart
                                           President and Chief Executive Officer





Date:   May 16, 2005                       /s/ Debra Geuy
       -------------------------           -------------------------------------
                                           Debra Geuy
                                           Chief Financial Officer



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

                                  (Continued)

                                                                             24.
<PAGE>
<TABLE>
<CAPTION>
                                     PEOPLES-SIDNEY FINANCIAL CORPORATION
                                              INDEX TO EXHIBITS

EXHIBIT
NUMBER        DESCRIPTION
------        -----------
<S>          <C>                                          <C>
3.1           Articles of Incorporation of                Incorporated  by reference to the  Registration  Statement
              Peoples-Sidney Financial                    on Form S-1 filed by Peoples-Sidney  Financial Corporation
              Corporation                                 on January 27, 1997 (the  "S-1") with the  Securities  and
                                                          Exchange Commission (the "SEC"), Exhibit 3.1.

3.2           Bylaws  of  Peoples-Sidney   Financial      Incorporated by reference to the S-1, Exhibit 3.2.
              Corporation

10.1          Employee Stock Ownership Plan               Incorporated by reference to the S-1, Exhibit 10.1

10.2          Form  of  Employment   Agreement  with      Incorporated by  Pre-Effective  Amendment No. 1 to the S-1
              Douglas Stewart                             filed with the SEC on March 12, 1997, Exhibit 10.2

10.3          Form  of  Employment  Agreements  with      Incorporated by  Pre-Effective  Amendment No. 1 to the S-1
              David R. Fogt,  Gary N. Fullenkamp and      filed with the SEC on March 12, 1997, Exhibit 10.3
              Debra A. Geuy
10.4          Form  of  Severance   Agreement   with      Incorporated by  Pre-Effective  Amendment No. 1 to the S-1
              Steve Goins                                 filed with the SEC on March 12, 1997, Exhibit 10.4

10.5          401 (k) Plan                                Incorporated by  Pre-Effective  Amendment No. 1 to the S-1
                                                          filed with the SEC on March 12, 1997, Exhibit 10.5

10.6          Peoples-Sidney  Financial  Corporation      Filed as an exhibit to the  Registrant's  Annual Report on
              Amended   and   Restated   1998  Stock      Form  10-KSB for the fiscal year ended June 30, 1999 (File
              Option and Incentive Plan                   No. 0-22223) and incorporate herein by reference.

10.7          Peoples-Sidney  Financial  Corporation      Filed as an exhibit to the  Registrant's  Annual Report on
              Amended and Restated  1998  Management      Form  10-KSB for the fiscal year ended June 30, 1999 (File
              Recognition Plan                            No. 0-22223) and incorporate herein by reference.

11            Statement  Regarding   Computation  of      See Note 6 to the consolidated financial statements.
              Earnings per Share

31.1          Certification  of Principal  Executive
              Officer  Pursuant  to  Section  302 of
              the Sarbanes-Oxley Act of 2002

31.2          Certification  of Principal  Financial
              Officer  Pursuant  to  Section  302 of
              the Sarbanes-Oxley Act of 2002

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

                                                                                                                 25.
</TABLE>
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                INDEX TO EXHIBITS

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

32            Certifications  of the Chief Executive
              Officer   and  the   Chief   Financial
              Officer  Pursuant  to  Section  906 of
              the Sarbanes-Oxley Act of 2002

















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


                                                                             26.