FORM 10-QSB

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

 (Mark One)

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

For the quarterly period ended December 31, 1999

[   ]     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 (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

Yes [   ]         No [ X ]

As of February 7, 2000, the latest  practicable  date,  1,637,122  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>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
--------------------------------------------------------------------------------


Item 1.  Financial Statements

<TABLE>
<CAPTION>
                                                               December 31,        June 30,
                                                                  1999               1999
                                                              -------------      -------------
<S>                                                           <C>                <C>
ASSETS

Cash and due from banks                                       $   2,552,952      $   1,298,357
Interest-bearing deposits in other financial institutions         1,289,683            634,621
Overnight deposits                                                     --                 --
                                                              -------------      -------------
     Total cash and cash equivalents                              3,842,635          1,932,978
Time deposits in other financial institutions                       100,000            400,000
Securities available for sale                                     8,603,959          7,858,111
Federal Home Loan Bank stock                                        951,300            907,700
Loans receivable, net                                           109,274,096        102,802,845
Accrued interest receivable                                         833,554            759,913
Premises and equipment, net                                       1,959,878          1,985,608
Other assets                                                        144,883            235,104
                                                              -------------      -------------

     Total assets                                             $ 125,710,305      $ 116,882,259
                                                              =============      =============


LIABILITIES

Deposits                                                      $  89,311,579      $  84,310,492
Borrowed funds                                                   18,700,000         14,800,000
Accrued interest payable and other liabilities                      230,411            409,550
                                                              -------------      -------------
     Total liabilities                                          108,241,990         99,520,042

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                                       10,767,778         10,779,941
Retained earnings                                                10,675,058         10,643,040
Treasury stock, 120,753 shares at cost                           (1,766,399)        (1,766,399)
Unearned employee stock ownership plan shares                    (1,433,985)        (1,520,139)
Unearned management recognition plan shares                        (651,376)          (746,692)
Accumulated other comprehensive income                             (140,615)           (45,388)
                                                              -------------      -------------
     Total shareholders' equity                                  17,468,315         17,362,217
                                                              -------------      -------------

     Total liabilities and shareholders' equity               $ 125,710,305      $ 116,882,259
                                                              =============      =============

</TABLE>
          See accompanying notes to consolidated financial statements.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                Three Months Ended             Six Months Ended
                                                   December 31,                   December 31,
                                            -------------------------     -------------------------
                                               1999           1998           1999           1998
                                            ----------     ----------     ----------     ----------
<S>                                         <C>            <C>            <C>            <C>
Interest income
    Loans, including fees                   $2,076,814     $1,929,743     $4,084,790     $3,802,046
    Securities                                 146,869         57,509        277,014        121,542
    Interest-bearing demand, time and
      overnight deposits                        19,897         25,251         60,757         73,978
    Dividends on Federal Home Loan Bank

      stock                                     16,307         15,207         32,894         30,676
                                            ----------     ----------     ----------     ----------
       Total interest income                 2,259,887      2,027,710      4,455,455      4,028,242

Interest expense
    Deposits                                 1,066,617        978,473      2,078,478      1,956,414
    Borrowed funds                             260,924        111,838        511,713        220,152
                                            ----------     ----------     ----------     ----------
       Total interest expense                1,327,541      1,090,311      2,590,191      2,176,566
                                            ----------     ----------     ----------     ----------

Net interest income                            932,346        937,399      1,865,264      1,851,676

Provision for loan losses                       10,698         16,139         27,999         52,919
                                            ----------     ----------     ----------     ----------

Net interest income after provision for
  loan losses                                  921,648        921,260      1,837,265      1,798,757

Noninterest income
    Service fees and other charges              19,680         20,123         42,413         34,414

Noninterest expense
    Compensation and benefits                  393,704        405,330        758,129        788,364
    Director fees                               30,000         30,000         60,000         60,000
    Occupancy and equipment                     76,003         73,348        153,710        120,650
    Computer processing expense                 49,782         41,303         97,261         84,185
    FDIC deposit insurance premiums             12,777         11,424         24,980         23,334
    State franchise taxes                       74,343         76,100        149,666        144,456
    Professional fees                           27,942         26,795         57,419         60,166
    Other                                       79,207         92,712        156,876        184,332
                                            ----------     ----------     ----------     ----------
       Total noninterest expense               743,758        757,012      1,458,041      1,465,487
                                            ----------     ----------     ----------     ----------

Income before income taxes                     197,570        184,371        421,637        367,684

Income tax expense                              81,893         66,660        174,709        132,797
                                            ----------     ----------     ----------     ----------

Net income                                  $  115,677     $  117,711     $  246,928     $  234,887
                                            ==========     ==========     ==========     ==========

Earnings per common share - basic           $     0.08     $     0.07     $     0.17     $     0.14
                                            ==========     ==========     ==========     ==========

Earnings per common share - diluted         $     0.08     $     0.07     $     0.17     $     0.14
                                            ==========     ==========     ==========     ==========
</TABLE>
          See accompanying notes to consolidated financial statements.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                            Three Months Ended           Six Months Ended
                                                               December 31,                December 31,
                                                        ------------------------      ------------------------
                                                           1999          1998           1999           1998
                                                        ---------      ---------      ---------      ---------
<S>                                                     <C>            <C>            <C>            <C>
Net income                                              $ 115,677      $ 117,711      $ 246,928      $ 234,887

Other comprehensive income

    Unrealized holding gain (loss) on available for
      sale securities arising during the period          (101,752)       (17,206)      (144,283)        (4,363)
    Tax effect                                             34,596          5,850         49,056          1,484
                                                        ---------      ---------      ---------      ---------
       Other comprehensive income                         (67,156)       (11,356)       (95,227)        (2,879)
                                                        ---------      ---------      ---------      ---------

Comprehensive income                                    $  48,521      $ 106,355      $ 151,701      $ 232,008
                                                        =========      =========      =========      =========


</TABLE>




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

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                             Six Months
                                                                                          Ended December 31,
                                                                                          ------------------
                                                                                      1999                1998
                                                                                      ----                ----
<S>                                                                             <C>                <C>
Balance, beginning of period                                                    $    17,362,217    $     19,626,016

Net income for period                                                                   246,928             234,887

Cash dividends, $.14 per share in 1999 and 1998                                        (214,910)           (226,671)

Purchase of 72,500 shares in 1998 of treasury
  stock, at cost                                                                             --          (1,283,437)

Commitment to release 5,712 management recognition plan shares                           95,316                  --

Commitment to release 7,343 and 7,624 employee stock ownership
  plan shares in 1999 and 1998, at fair value                                            73,991             140,479

Change in fair value on securities available for sale, net of tax                       (95,227)             (2,879)
                                                                                ---------------    ----------------

Balance, end of period                                                          $    17,468,315    $     18,488,395
                                                                                ===============    ================
</TABLE>




          See accompanying notes to consolidated financial statements.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                           Six Months Ended
                                                                             December 31,
                                                                     ----------------------------
                                                                         1999            1998
                                                                     -----------      -----------
<S>                                                                  <C>              <C>
Cash flows from operating activities
     Net income                                                      $   246,928      $   234,887
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                     76,976           45,242
         Provision for loan losses                                        27,999           52,919
         FHLB stock dividends                                            (32,800)         (30,600)
         Compensation expense for ESOP shares                             73,991          140,479
         Compensation expense for MRP shares                              95,316             --
         Change in:
              Accrued interest receivable and other assets               (36,986)         133,233
              Accrued expense and other liabilities                      (78,221)         161,120
              Deferred loan fees                                          16,713            8,311
                                                                     -----------      -----------
                  Net cash from operating activities                     389,916          745,591

Cash flows from investing activities

     Purchases of securities available for sale                       (2,000,000)            --
     Maturities and calls of securities available for sale             1,000,000          500,000
     Principal repayments on mortgage-backed securities                  111,573             --
     Purchases of time deposits in other financial institutions       (1,000,000)        (500,000)
     Maturities of time deposits in other financial institutions       1,300,000             --
     Net increase in loans                                            (6,515,963)      (3,355,603)
     Premises and equipment expenditures                                 (51,246)      (1,097,027)
     Purchase of FHLB stock                                              (10,800)            --
                                                                     -----------      -----------
         Net cash from investing activities                           (7,166,436)      (4,452,630)

Cash flows from financing activities

     Net change in deposits                                            5,001,087        2,835,175
     Net change in short-term borrowings                              (1,100,000)         700,000
     Proceeds from long-term borrowings                                5,000,000             --
     Cash dividends paid                                                (214,910)        (226,671)
     Purchase of treasury stock                                             --         (1,283,437)
                                                                     -----------      -----------
         Net cash from financing activities                            8,686,177        2,025,067
                                                                     -----------      -----------

Net change in cash and cash equivalents                                1,909,657       (1,681,972)

Cash and cash equivalents at beginning of period                       1,932,978        4,947,253
                                                                     -----------      -----------

Cash and cash equivalents at end of period                           $ 3,842,635      $ 3,265,281
                                                                     ===========      ===========

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                    $ 2,590,731      $ 2,180,326
         Income taxes                                                    273,000           21,000

Noncash transactions

     Transfer from loans to other real estate owned                         --             62,444
</TABLE>

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

These interim  consolidated  financial statements are prepared without audit and
reflect all adjustments  which,  in the opinion of management,  are necessary to
present  fairly the financial  position of the  Corporation at December 31, 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, 1999, included in its 1999 Annual
Report.  Reference  is  made  to the  accounting  policies  of  the  Corporation
described in the notes to  consolidated  financial  statements  contained in its
1999 Annual Report. The Corporation has consistently  followed these policies in
preparing this Form 10-QSB.

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

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 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 bases 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 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 MRP shares and the additional  common shares  issuable under
stock options.
<PAGE>
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              Six Months Ended
                                                          ------------------              ----------------
                                                             December 31,                   December 31,
                                                             ------------                   ------------
                                                       1999             1998             1999            1998
                                                    -----------      -----------      -----------      -----------
<S>                                                 <C>              <C>              <C>              <C>
Basic Earnings Per Common Share
  Numerator
    Net income                                      $   115,677      $   117,711      $   246,928      $   234,887
                                                    ===========      ===========      ===========      ===========
  Denominator
    Weighted average common shares
      outstanding                                     1,664,622        1,740,641        1,664,622        1,755,232
    Less:  Average unallocated ESOP shares             (124,044)        (139,081)        (125,880)        (140,987)
    Less:  Average unearned MRP shares                  (40,463)            --            (41,891)            --
                                                    -----------      -----------      -----------      -----------
    Weighted average common shares
      outstanding for basic earnings per
      common share                                    1,500,115        1,601,560        1,496,851        1,614,245
                                                    ===========      ===========      ===========      ===========

  Basic earnings per common share                   $      0.08      $      0.07      $      0.17      $      0.14
                                                    ===========      ===========      ===========      ===========

Diluted Earnings Per Common Share
  Numerator
    Net income                                      $   115,677      $   117,111      $   246,928      $   234,887
                                                    ===========      ===========      ===========      ===========
  Denominator
    Weighted average common shares
      outstanding for basic earnings per
      common share                                    1,500,115        1,601,560        1,496,851        1,614,245
    Add:  Dilutive effects of average unearned
      MRP shares                                           --               --               --               --
    Add:  Dilutive effects of assumed exercises
      of stock options                                     --               --               --               --
                                                    -----------      -----------      -----------      -----------
    Weighted average common shares and
      dilutive potential common shares
      outstanding                                     1,500,115        1,601,560        1,496,851        1,614,245
                                                    ===========      ===========      ===========      ===========

  Diluted earnings per common share                 $      0.08      $      0.07      $      0.17      $      0.14
                                                    ===========      ===========      ===========      ===========
</TABLE>

Unearned MRP shares and stock options  granted did not have a dilutive effect on
EPS for the three and six months  ended  December  31, 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.  For the three
and six months ended  December 31, 1998,  stock  options  granted did not have a
dilutive effect on EPS as the exercise price of outstanding  options was greater
than the average market price for the period. Unearned MRP shares did not have a
dilutive  effect on EPS, as no shares had been  purchased  by the MRP plan as of
December 31, 1998.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities"  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
changes  in fair  value or cash  flows.  SFAS 133 does not  allow  hedging  of a
security which is classified as held to maturity.  Accordingly, upon adoption of
SFAS 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.
SFAS 133, as amended by SFAS 137, is effective for fiscal years  beginning after
June 15, 2000 with early adoption  encouraged  for any fiscal quarter  beginning
July 1, 1998 or later,  with no  retroactive  application.  Management  does not
expect the adoption SFAS 133 to have a significant  impact on the  Corporation's
financial statements.

 NOTE 2 - SECURITIES

Securities were as follows:
<TABLE>
<CAPTION>
                                                                Gross           Gross          Estimated
                                               Amortized     Unrealized      Unrealized          Fair
                                                 Cost           Gains          Losses            Value
                                           ---------------    ----------    -----------     --------------
<S>                                        <C>                <C>           <C>             <C>
         December 31, 1999
         -----------------
         Securities available for sale
             U.S. Government agencies      $     3,998,530    $       --    $   (84,230)    $    3,914,300
             Mortgage-backed securities          4,818,482            --       (128,823)         4,689,659
                                           ---------------    ----------    -----------     --------------

                Total                      $     8,817,012    $       --    $  (213,053)    $    8,603,959
                                           ===============    ==========    ===========     ==============

         June 30, 1999
         -------------
         Securities available for sale
             U.S. Government agencies      $     2,998,229    $       --    $   (41,509)    $    2,956,720
             Mortgage-backed securities          4,928,652            --        (27,261)         4,901,391
                                           ---------------    ----------    -----------     --------------

                Total                      $     7,926,881    $       --    $   (68,770)    $    7,858,111
                                           ===============    ==========    ===========     ==============
</TABLE>
<PAGE>
NOTE 2 - SECURITIES (Continued)

Contractual  maturities  of  securities  at  December  31, 1999 were as follows.
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.  Securities not due at a single maturity,  primarily  mortgage-backed
securities, are shown separately.
<TABLE>
<CAPTION>
                                                                                             Estimated
                                                                          Amortized            Fair
                                                                            Cost               Value
                                                                       --------------    ---------------
<S>                                                                    <C>               <C>
        Securities available for sale
           Due after one year through five years                       $    3,998,530    $     3,914,300
           Mortgage-backed securities                                       4,818,482          4,689,659
                                                                       --------------    ---------------

                                                                       $    8,817,012    $     8,603,959
                                                                       ==============    ===============
</TABLE>

No securities  were sold during the three or six months ended  December 31, 1999
and 1998. No securities  were pledged as collateral at December 31, 1999 or June
30, 1999.

NOTE 3 - LOANS RECEIVABLE

Loans receivable were as follows:
<TABLE>
<CAPTION>
                                              December 31,           June 30,
                                                 1999                  1999
                                             -------------        -------------
<S>                                          <C>                  <C>
Mortgage loans:
     1-4 family residential                  $  89,111,580        $  84,165,483
     Multi-family residential                    1,329,101            1,358,906
     Commercial real estate                      9,807,587            9,407,998
     Real estate construction and
       development                               7,983,262            5,930,241
     Land                                          834,749              866,988
                                             -------------        -------------
         Total mortgage loans                  109,066,279          101,729,616
Consumer and other loans                         4,770,667            4,131,469
                                             -------------        -------------
         Total loans receivable                113,836,946          105,861,085
Less:
     Allowance for loan losses                    (557,407)            (528,898)
     Loans in process                           (3,770,757)          (2,311,369)
     Deferred loan fees                           (234,686)            (217,973)
                                             -------------        -------------

                                             $ 109,274,096        $ 102,802,845
                                             =============        =============
</TABLE>
<PAGE>
NOTE 3 - LOANS RECEIVABLE (Continued)

Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
                                      Three Months Ended            Six Months Ended
                                      ------------------            ----------------
                                         December 31,                 December 31,
                                         ------------                 ------------
                                      1999          1998           1999          1998
                                   ---------     ---------      ---------     ---------
<S>                                <C>           <C>            <C>           <C>
Balance at beginning of period     $ 546,199     $ 446,145      $ 528,898     $ 425,642
Provision for losses                  10,698        16,139         27,999        52,919
Charge-offs                             --          (6,344)          --         (22,621)
Recoveries                               510           562            510           562
                                   ---------     ---------      ---------     ---------

Balance at end of period           $ 557,407     $ 456,502      $ 557,407     $ 456,502
                                   =========     =========      =========     =========
</TABLE>

As of and for the three and six months ended  December 31, 1999 and 1998,  loans
considered impaired within the scope of SFAS No. 114 were not material.

NOTE 4 - BORROWED FUNDS

At December 31, 1999 and June 30, 1999, the  Association  had a cash  management
line of credit  enabling it to borrow up to $8,000,000 and  $5,360,000  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. $1,700,000 borrowings were outstanding on this line of credit at December
31, 1999, with an interest rate of 4.75%. Borrowings outstanding on this line of
credit at June 30, 1999 were $2,800,000 with interest rates of 4.90% and 6.02%.

As a member  of the FHLB  system,  the  Association  has the  ability  to obtain
borrowings up to a maximum total of $19,026,000 at December 31, 1999,  including
the cash management line-of-credit.  Advances from the Federal Home Loan Bank at
December 31, 1999 and June 30, 1999 were as follows:
<TABLE>
<CAPTION>
                                                                          December 31,         June 30,
                                                                              1999               1999
                                                                              ----               ----
<S>                                                                    <C>                <C>
         4.90% FHLB cash management advance,
           due September 17, 1999                                      $            --    $      2,300,000
         4.90% FHLB cash management advance,
           due September 22, 1999                                                   --             300,000
         6.02% FHLB cash management advance,
           due September 28, 1999                                                   --             200,000
         Variable-rate FHLB cash management advances,
           4.75% at December 31, 1999                                        1,700,000                  --
         5.84% FHLB advance, due April 4, 2000                               5,000,000                  --
         6.13% FHLB advance, due June 25, 2008                               7,000,000           7,000,000
         6.00% FHLB advance, due June 11, 2009                               5,000,000           5,000,000
                                                                       ---------------    ----------------
                                                                       $    18,700,000    $     14,800,000
                                                                       ===============    ================
</TABLE>

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

NOTE 5 - 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,  the ultimate  disposition of these matters is not
expected  to have a  material  effect  on  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,  credit and
interest rate risk in excess of amounts reported in the financial statements.

Exposure to credit loss if the other  party does not perform is  represented  by
the  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 of the commitments are expected to
expire without being used, the total  commitments do not  necessarily  represent
future cash requirements.

As of December 31, 1999 and June 30, 1999, the  Corporation  had  commitments to
make fixed-rate commercial and residential real estate mortgage loans at current
market rates approximating  $51,000 and $375,000,  and variable-rate  commercial
and residential real estate mortgage loans at current market rates approximating
$328,000 and $394,000.  Loan commitments are generally for 30 days. The interest
rate on  fixed-rate  commitments  was 8.5% at December  31, 1999 and ranged from
7.00% to 7.75% at June 30, 1999. The interest rates on variable-rate commitments
ranged from 7.25% to 8.50% at  December  31, 1999 and 7.00% to 7.75% at June 30,
1999.

The  Corporation  also had unused lines of credit  approximating  $1,835,000 and
$1,434,000 at December 31, 1999 and June 30, 1999.

At December 31, 1999 and June 30,  1999,  the  Association  was required to have
$482,000 and $532,000 on deposit with its correspondent  banks as a compensating
clearing requirement.

The Association entered into employment  agreements with certain officers of the
Corporation.  The  agreements  provide  for a term of one to three  years  and a
salary  and  performance  review by the Board of  Directors  not less often than
annually,  as well as  inclusion  of the  employee in any  formally  established
employee benefit,  bonus,  pension and profit-sharing plans for which management
personnel are eligible.  The  agreements  provide for extensions for a period of
one year on each annual  anniversary date, subject to review and approval of the
extension by disinterested members of the Board of Directors of the Association.
The employment agreements also provide for vacation and sick leave.
<PAGE>
NOTE 6 - EMPLOYEE STOCK OWNERSHIP PLAN

The Corporation offers an employee stock ownership plan ("ESOP") for the benefit
of substantially  all employees of the  Corporation.  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  Peoples in order to  acquire  common  shares of
Peoples.  The loan is secured by the shares purchased with the loan proceeds and
will be repaid  by the 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.  When loan
payments are made, ESOP shares are allocated to  participants  based on relative
compensation.

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 $34,740
and $62,776 for the three  months  ended  December 31, 1999 and 1998 and $73,991
and $140,479 for the six months ended December 31, 1999 and 1998.

ESOP shares as of December 31, 1999 and June 30, 1999 were as follows:
<TABLE>
<CAPTION>
                                                       December 31,    June 30,
                                                          1999           1999
                                                       ----------     ----------
<S>                                                    <C>            <C>
Allocated shares                                           39,279         39,279
Shares committed to be released for allocation              7,343           --
Unreleased shares                                         122,208        129,551
                                                       ----------     ----------
    Total ESOP shares                                     168,830        168,830
                                                       ==========     ==========

Fair value of unreleased shares                        $1,069,320     $1,295,510
                                                       ==========     ==========

</TABLE>
<PAGE>
NOTE 7 - STOCK OPTION AND INCENTIVE PLAN

The Stock  Option and  Incentive  Plan was approved by the  shareholders  of the
Corporation  on May 22,  1998.  The Board of  Directors  has granted  options to
purchase shares of common stock at exercise prices ranging from $16.01 to $18.75
to certain  employees,  officers and directors of the Corporation.  The exercise
price for 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.  141,824  options  were
outstanding  at  December  31,  1999 and  June 30,  1999.  28,365  options  were
exercisable at December 31, 1999 and June 30, 1999. In addition,  36,714 options
to purchase common stock are reserved for future grants at December 31, 1999 and
June 30, 1999.

NOTE 8 - 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  Corporation  with an  ownership
interest in the  Corporation in a manner  designed to compensate  such directors
and key employees for services to the 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 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.  At December 31, 1999 and June 30, 1999,  11,429  shares have
vested.  In the event of the death or disability of a participant or a change in
control of the Corporation,  the participant's  shares will be deemed earned and
nonforfeitable  upon such  date.  At June 30,  1999,  there were  14,287  shares
reserved  for future  awards and held as treasury  stock.  Compensation  expense
related to MRP shares is based upon the cost of the shares,  which  approximates
fair value at the date of grant.  For the three months  ended  December 31, 1999
and 1998,  compensation  expense totaled $47,658 and $60,000. for the six months
ended  December  31, 1999 and 1998,  compensation  expense  totaled  $95,316 and
$120,000.
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

Item 2.  Management's Discussion and Analysis

Introduction

In the  following  pages,  management  presents an analysis of the  consolidated
financial condition of the Corporation as of December 31, 1999, compared to June
30, 1999,  and results of operations for the three and six months ended December
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 December 31, 1999 were $125.7 million compared to $116.9 million
at June 30, 1999,  an increase of $8.8 million,  or 7.6%.  The increase in total
assets was due to increases in loans,  cash and cash  equivalents and securities
available for sale funded by proceeds from increased deposits and borrowings.
<PAGE>

Loans receivable  increased $6.5 million from $102.8 million at June 30, 1999 to
$109.3  million at December 31, 1999.  The increase was primarily in real estate
construction  and  development  loans which  increased  $2.1 million and one- to
four-family  residential  loans which  increased $4.9 million.  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 $639,000 between
June 30, 1999 and December 31, 1999.  The increase was primarily  related to new
auto loans and commercial  business loans. Even with the increase,  consumer and
other loans remain a small portion of the entire loan portfolio and  represented
only 4.2% and 3.9% of gross loans at December 31, 1999 and June 30, 1999.

Cash and cash  equivalents  increased $1.9 million and securities  available for
sale increased $746,000 primarily as temporary earning sources until loan growth
utilizes all the funds provided from deposit growth and also to provide for Year
2000 contingencies.

Total  deposits  increased  $5.0 million from $84.3  million at June 30, 1999 to
$89.3 million at December 31, 1999.  The deposit  growth was the result of a new
15-month certificate of deposit.  This product totaled $12.3 million at December
31, 1999.  Other  certificate  of deposit  accounts  declined $6.1 million.  NOW
accounts declined  $82,000,  savings accounts declined $900,000 and money market
accounts  declined  $128,000  since June 30,  1999.  Noninterest-bearing  demand
deposits had little change since June 30, 1999.

Borrowed funds were $18.7 million at December 31, 1999 compared to $14.8 million
at June 30,  1999.  Borrowings  at December  31,  1999  consisted  primarily  of
long-term fixed-rate advances.

Results of Operations

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

The Corporation's net income primarily depends on its net interest income, which
is the difference  between  interest income earned on  interest-earning  assets,
such as loans and securities and interest expense  incurred on  interest-bearing
liabilities,  such as deposits and 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.
<PAGE>

Three Months Ended December 31, 1999 Compared to Three Months Ended
December 31, 1998

Net Income.  Net income before income taxes was $198,000 for the quarter  ending
December  31,  1999,  compared to $184,000  for the same period in 1998,  a 7.2%
increase.  Net income for the three months ended  December 31, 1999 was $116,000
compared  to  $118,000  in 1998.  The  decrease  in net income  for the  quarter
represents an increase in federal  income tax accruals due to an increase in the
effect tax rate  primarily  relating to the  Corporation's  stock-based  benefit
plans.

Net Interest  Income.  Net interest income totaled $932,000 for the three months
ended December 31, 1999 compared to $937,000 for the three months ended December
31, 1998. The slight  decrease was due to a decrease in the net interest  margin
almost entirely offset by an increase in average earning assets.

Interest and fees on loans increased  $147,000,  or 7.6% from $1,930,000 for the
three months ended  December 31, 1998 to  $2,077,000  for the three months ended
December 31, 1999.  The increase in interest  income was due to a higher average
balance of loans  partially  offset by a decline  in the yield  earned on loans.

Interest  earned on  securities  increased  $89,000 for the three  months  ended
December 31, 1999 as compared to the same period in the prior year. The increase
was the result of having a much higher  balance in  securities  than a year ago.
Securities   were   increased  and  funded  with   borrowings  to  leverage  the
Corporation's capital position.

Interest  earned  on  interest-bearing   demand,  time  and  overnight  deposits
decreased  $5,000 due to the higher levels of  noninterest-earning  cash on hand
required for Year 2000 planning purposes.

Interest paid on deposits  increased $88,000 for the three months ended December
31, 1999 compared to the three months ended  December 31, 1998. The average rate
paid on  deposits  declined.  However,  the effect of an increase in the average
balance of deposits offset the decrease in the average cost.

Interest  paid on borrowed  funds  totaled  $261,000  for the three months ended
December 31, 1999  compared to $112,000 for the three months ended  December 31,
1998. The increase in interest  expense on borrowed funds resulted from a higher
average balance of borrowed funds.

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  which is  considered
adequate  to absorb  probable  losses in the loan  portfolio.  The amount of the
provision is based on  management's  monthly  review of the loan  portfolio  and
consideration of such factors as historical loss experience,  general prevailing
economic  conditions,  changes in the size and composition of the loan portfolio
and specific borrower  considerations,  including the ability of the borrower to
repay the loan and the estimated value of the underlying collateral.
<PAGE>

The  provision  for loan losses for the three  months  ended  December  31, 1999
totaled  $11,000  compared to $16,000 for the three  months  ended  December 31,
1998. No charge-offs  occurred  during the three months ended December 31, 1999,
which was the primary  reason for the decline in the  provision for loan losses.
Past  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  allowance  for loan losses  totaled  $557,000,  or .51% of loans
receivable,  net of loans in process, at December 31, 1999 compared to $529,000,
or .51% of loans receivable, net of loan in process, at June 30, 1999.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous income and totaled $20,000 for the three months ended December 31,
1999 and 1998.

Noninterest  expense.  Noninterest expense totaled $744,000 for the three months
ended December 31, 1999 compared to $757,000 for the three months ended December
31,  1998,  a decrease of $13,000,  or 1.8%.  The  decrease  was the result of a
decrease in employee  stock-based  benefit plan related  expenses coupled with a
reduction in other expenses.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable  to the change in income before  income  taxes.  Income tax expense
totaled $82,000 for the three months ended December 31, 1999 compared to $67,000
for the three  months  ended  December  31,  1998,  representing  an increase of
$15,000, or 22.9%. This increase is due to an increase in the effective tax rate
primarily relating to the Corporation's stock-based benefit plans. The effective
tax rate was 41.5% and 36.2% for the three  months  ended  December 31, 1999 and
December 31, 1998.

Six Months Ended December 31, 1999 Compared to the Six Months Ended
December 31, 1998

Net Income.  The  Corporation  earned net income of $247,000  for the six months
ended  December 31, 1999 compared to $235,000 for the six months ended  December
31,  1998.  The increase in net income was  primarily  due to an increase in net
interest  income and lower  provision  for loan losses  offset by an increase in
income tax expense.

Net Interest Income.  Net interest income totaled  $1,865,000 for the six months
ended December 31, 1999 compared to $1,852,000 for the six months ended December
31, 1998.  The increase was the result of higher income on loans and  securities
partially offset by an increase in interest expense on deposits and borrowings.

Interest and fees on loans increased  $283,000,  or 7.4% from $3,802,000 for the
six months  ended  December  31,  1998 to  $4,085,000  for the six months  ended
December 31, 1999.  The increase in interest  income was due to a higher average
balance of loans partially offset by a decline in the yield earned on loans.
<PAGE>

Interest  earned on  securities  increased  $155,000  for the six  months  ended
December 31, 1999 as compared to the same period in the prior year. The increase
was the result of having a much higher average balance of securities than a year
ago.  Securities  were  increased  and funded with  borrowings  to leverage  the
Corporation's capital position.

Interest paid on deposits  increased  $122,000 for the six months ended December
31, 1999  compared to the six months ended  December 31, 1998.  The average rate
paid on  deposits  declined.  However,  the effect of an increase in the average
balance of deposits offset the decrease in the average cost.

Interest  paid on  borrowed  funds  totaled  $512,000  for the six months  ended
December 31, 1999  compared to $220,000  for the six months  ended  December 31,
1998. The increase in interest  expense on borrowed funds resulted from a higher
average balance of borrowed funds offset slightly by a lower cost.

The provision for loan losses for the six months ended December 31, 1999 totaled
$28,000  compared to $53,000 for the six months  ended  December  31,  1998.  No
charge-offs  occurred  during the six months ended December 31, 1999,  which was
the primary reason for the decline in the provision for loan losses.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and totaled  $42,000 for the six months ended December 31,
1999 and $34,000 for the six months ended  December  31, 1998.  The increase was
primarily due to an increase in service charges on deposit accounts.

Noninterest  expense.  Noninterest expense totaled $1,458,000 for the six months
ended December 31, 1999 compared to $1,465,000 for the six months ended December
31,  1998,  a decrease  of $7,000,  or 0.5%.  The  decrease  was the result of a
decrease in employee  stock-based  benefit plan related  expenses coupled with a
reduction in other expenses.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable  to the change in income before  income  taxes.  Income tax expense
totaled $175,000 for the six months ended December 31, 1999 compared to $133,000
for the six months ended December 31, 1998, representing an increase of $42,000,
or 31.6%.  The  effective  tax rate was 41.4% and 36.1% for the six months ended
December 31, 1999 and December 31, 1998.
<PAGE>

Liquidity and Capital Resources

The Corporation's liquidity, primarily represented by cash and cash equivalents,
is a result of operating,  investing and financing activities.  These activities
are summarized below for the six months ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>

                                                                Six Months
                                                             Ended December 31,
                                                             ------------------
                                                             1999         1998
                                                           -------      -------
                                                          (Dollars in thousands)
<S>                                                        <C>          <C>
Net income                                                 $   247      $   235
Adjustments to reconcile net income to net cash from
  operating activities                                         143          511
                                                           -------      -------
Net cash from operating activities                             390          746
Net cash from investing activities                          (7,166)      (4,453)
Net cash from financing activities                           8,686        2,025
                                                           -------      -------
Net change in cash and cash equivalents                      1,910       (1,682)
Cash and cash equivalents at beginning of period             1,933        4,947
                                                           -------      -------
Cash and cash equivalents at end of period                 $ 3,843      $ 3,265
                                                           =======      =======
</TABLE>

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 December 31, 1999, the Association's  regulatory  liquidity was 13.2%.
At such date, the Corporation had commitments to originate fixed-rate commercial
and residential real estate loans totaling $51,000 and variable-rate  commercial
and residential real estate mortgage loans totaling  $328,000.  Loan commitments
are generally for 30 days. The  Corporation  considers its liquidity and capital
reserves  sufficient to meet its outstanding short and long term needs. See Note
5 of the Notes to Consolidated Financial Statements.
<PAGE>

The  Association  is  subject  to  various   regulatory   capital   requirements
administered  by  the  federal  regulatory  agencies.   Under  capital  adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Association  must meet specific  capital  guidelines  that involve  quantitative
measures of the Association's assets,  liabilities and certain off-balance-sheet
items as calculated under regulatory  accounting  practices.  The  Association's
capital amounts and classifications are also subject to qualitative judgments by
the regulators  about the  Association's  components,  risk weightings and other
factors.  Failure to meet minimum  capital  requirements  can  initiate  certain
mandatory  actions that, if undertaken,  could have a direct  material effect on
the Corporation's financial statements.  At December 31, 1999 and June 30, 1999,
management  believes  the  Association  complies  with  all  regulatory  capital
requirements. Based on the Association's computed regulatory capital ratios, the
Association is considered well capitalized  under the Federal Deposit  Insurance
Act at  December  31,  1999 and June 30,  1999.  No  conditions  or events  have
occurred  subsequent  to the last  notification  by regulators  that  management
believes would have changed the Association's category.

At December 31, 1999 and June 30, 1999, 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>
December 31, 1999
Total capital (to risk-
  weighted assets)             $  14,160         17.4%    $  6,522          8.0%     $    8,152          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           13,605         16.7        3,261          4.0           4,891           6.0
Tier 1 (core) capital (to
  adjusted total assets)          13,605         10.8        5,037          4.0           6,296           5.0
Tangible capital (to

  adjusted total assets)          13,605         10.8        1,889          1.5             N/A

June 30, 1999
Total capital (to risk-
  weighted assets)             $  13,634         18.0%    $  6,069          8.0%     $    7,586          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           13,152         17.3        3,035          4.0           4,552           6.0
Tier 1 (core) capital (to
  adjusted total assets)          13,152         11.2        4,677          4.0           5,847           5.0
Tangible capital (to
  adjusted total assets)          13,152         11.2        1,754          1.5             N/A
</TABLE>
<PAGE>
Year 2000

The  Corporation  did not  experience  any Year  2000  related  computer  system
problems,  nor is the Corporation  aware of any Year 2000 related  problems with
any of its loan  customers  which would impact their  ability to meet their debt
service requirements. The Corporation did not experience any significant unusual
deposit activity from its customers.
<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
           ---------------------------------------------------
           On October 8, 1999,  the Annual  Meeting of the  Shareholders  of the
           Corporation was held. The following members of the Board of Directors
           of the  Corporation  were  reelected by the votes set forth below for
           the terms expiring in 2002:

           Richard T. Martin     FOR:  1,350,274            WITHHELD:  22,236
           Robert W. Bertsch     FOR:  1,348,913            WITHHELD:  23,597

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

           Ratification of the selection of Crowe, Chizek and Company LLP as the
           auditors of the Corporation for the fiscal year ending June 30, 2000

           FOR:  1,368,975       AGAINST:  456              ABSTAIN:  3,259

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  October  21,  1999.  Under  Item 5, Other
                Events,  the Corporation  issued a press release  announcing the
                Corporation's  first quarter earnings for the fiscal year ending
                June 30, 2000 and the declaration of a cash dividend.

(c)             Form 8-K was filed on  December  29,  1999.  Under Item 5, Other
                Events,  the  Corporation  issued a press  release  announcing a
                stock repurchase program of 5% of its outstanding stock over the
                next six months in the open market.


<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:      February 10, 2000                    /s/ Douglas Stewart
           -----------------                    -------------------------
                                                Douglas Stewart
                                                President

Date:      February 10, 2000                    /s/ Debra Geuy
           -----------------                    -------------------------
                                                Debra Geuy
                                                Chief Financial Officer
<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                INDEX TO EXHIBITS
--------------------------------------------------------------------------------

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


   27           Financial Data Schedule