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

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

                                   FORM 10-QSB

   (Mark One)

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

     For the quarterly period ended December 31, 2000

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

     For the transition period from __________ to ____________.

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

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

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

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

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

As of February 9, 2001, the latest  practicable  date,  1,541,315  shares of the
issuer's common shares, $.01 par value, were issued and outstanding.

Transitional Small Business Disclosure Format (Check One):

Yes   [ ]       No   [X]


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

                                       18
<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
--------------------------------------------------------------------------------

                                      INDEX
                                                                           Page
                                                                           ----
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...........................  14


Part II - Other Information

  Item 1.  Legal Proceedings..............................................  20

  Item 2.  Changes in Securities and Use of Proceeds......................  20

  Item 3.  Defaults Upon Senior Securities................................  20

  Item 4.  Submission of Matters to a Vote of Security Holders............  20

  Item 5.  Other Information..............................................  20

  Item 6.  Exhibits and Reports on Form 8-K...............................  20


SIGNATURES ...............................................................  21


                                       2

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

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


Item 1.  Financial Statements
<TABLE>
<CAPTION>

                                                                                 December 31,           June 30,
                                                                                     2000                 2000
                                                                                     ----                 ----
<S>                                                                             <C>                <C>
ASSETS

Cash and due from financial institutions                                        $       903,522    $        820,629
Interest-bearing deposits in other financial institutions                             1,603,094             885,364
Overnight deposits                                                                           --             500,000
                                                                                ---------------    ----------------
     Total cash and cash equivalents                                                  2,506,616           2,205,993
Securities available for sale                                                         8,518,982           8,446,681
Federal Home Loan Bank stock                                                          1,348,300           1,023,000
Loans, net                                                                          119,035,568         114,649,700
Accrued interest receivable                                                             952,917             893,569
Premises and equipment, net                                                           1,895,307           1,890,886
Other assets                                                                             85,242             177,387
                                                                                ---------------    ----------------

     Total assets                                                               $   134,342,932    $    129,287,216
                                                                                ===============    ================


LIABILITIES

Deposits                                                                        $    90,321,567    $     93,056,941
Borrowed funds                                                                       26,500,000          19,000,000
Accrued interest payable and other liabilities                                          287,001             270,477
                                                                                ---------------    ----------------
     Total liabilities                                                              117,108,568         112,327,418

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                                                           10,725,514          10,754,463
Retained earnings                                                                    10,969,290          10,856,394
Treasury stock, 227,260 and 207,060 shares, at cost                                  (2,793,689)         (2,636,295)
Unearned employee stock ownership plan shares                                        (1,265,151)         (1,347,800)
Unearned management recognition plan shares                                            (460,727)           (556,043)
Accumulated other comprehensive income (loss)                                            41,273            (128,775)
                                                                                ---------------    ----------------
     Total shareholders' equity                                                      17,234,364          16,959,798
                                                                                ---------------    ----------------

     Total liabilities and shareholders' equity                                 $   134,342,932    $    129,287,216
                                                                                ===============    ================
</TABLE>

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

                See accompanying notes to consolidated financial

                                       3

<PAGE>


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

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

<TABLE>
<CAPTION>

                                                           Three Months Ended               Six Months Ended
                                                              December 31,                    December 31,
                                                              ------------                    ------------
                                                          2000            1999             2000            1999
                                                          ----            ----             ----            ----
<S>                                                 <C>              <C>             <C>             <C>
Interest income

     Loans, including fees                          $   2,371,752    $   2,076,814   $   4,666,803   $    4,084,790
     Securities                                           147,836          146,869         297,262          277,014
     Demand, time and overnight deposits                   18,143           19,897          31,594           60,757
     Dividends on Federal Home Loan Bank

       Stock                                               23,360           16,307          43,760           32,894
                                                    -------------    -------------   -------------   --------------
         Total interest income                          2,561,091        2,259,887       5,039,419        4,455,455

Interest expense

     Deposits                                           1,205,951        1,066,617       2,395,548        2,078,478
     Borrowed funds                                       399,120          260,924         746,075          511,713
                                                    -------------    -------------   -------------   --------------
         Total interest expense                         1,605,071        1,327,541       3,141,623        2,590,191
                                                    -------------    -------------   -------------   --------------

Net interest income                                       956,020          932,346       1,897,796        1,865,264

Provision for loan losses                                  17,768           10,698          36,515           27,999
                                                    -------------    -------------   -------------   --------------

Net interest income after provision for loan losses       938,252          921,648       1,861,281        1,837,265

Noninterest income

     Service fees and other charges                        25,646           19,680          53,561           42,413

Noninterest expense

     Compensation and benefits                            377,544          393,704         754,317          758,129
     Director fees                                         26,200           30,000          56,200           60,000
     Occupancy and equipment                               81,523           76,003         162,437          153,710
     Computer processing expense                           54,944           49,782         111,471           97,261
     FDIC deposit insurance premiums                        4,752           12,777           9,544           24,980
     State franchise taxes                                 44,725           74,343          89,450          149,666
     Professional fees                                     26,572           27,942          52,174           57,419
     Other                                                 73,717           79,207         143,535          156,876
                                                    -------------    -------------   -------------   --------------
         Total noninterest expense                        689,977          743,758       1,379,128        1,458,041
                                                    -------------    -------------   -------------   --------------

Income before income taxes                                273,921          197,570         535,714          421,637

Income tax expense                                        104,100           81,893         203,900          174,709
                                                    -------------    -------------   -------------   --------------

Net income                                          $     169,821    $     115,677   $     331,814   $      246,928
                                                    =============    =============   =============   ==============

Earnings per common share - basic                   $        0.12    $       0.08    $        0.23   $        0.17
                                                    =============    ============    =============   ==============

Earnings per common share - diluted                 $        0.12    $       0.08    $        0.23   $        0.17
                                                    =============    ============    =============   =============
</TABLE>

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

                See accompanying notes to consolidated financial

                                       4

<PAGE>


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

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

                                                           Three Months Ended               Six Months Ended
                                                              December 31,                    December 31,
                                                              ------------                    ------------
                                                          2000            1999             2000            1999
                                                          ----            ----             ----            ----
<S>                                                 <C>              <C>             <C>             <C>
Net income                                          $     169,821    $     115,677   $     331,814   $      246,928

Other comprehensive income (loss)
     Unrealized holding gains and (losses) on
       available-for-sale securities                      161,508         (101,752)        257,649         (144,283)
     Tax effect                                           (54,913)          34,596         (87,601)          49,056
                                                    -------------    -------------   -------------   --------------
         Other comprehensive income (loss)                106,595          (67,156)        170,048          (95,227)
                                                    -------------    -------------   -------------   --------------

Comprehensive income                                $     276,416    $      48,521   $     501,862   $      151,701
                                                    =============    =============   =============   ==============
</TABLE>


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

                See accompanying notes to consolidated financial

                                      5


<PAGE>

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

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

<TABLE>
<CAPTION>
                                                          Three Months Ended                Six Months Ended
                                                              December 31,                    December 31,
                                                              ------------                    ------------
                                                          2000            1999             2000            1999
                                                          ----            ----             ----            ----
<S>                                                 <C>              <C>             <C>             <C>
Balance, beginning of period                        $  17,099,045    $  17,444,851   $  16,959,798   $   17,362,217

Net income for period                                     169,821          115,677         331,814          246,928

Cash dividends,  $.08 and $.07 per share for the
  three months ended December 31,  2000 and
  1999, $.15 and $.14 per share for the six months

  ended December 31, 2000 and 1999                       (116,476)        (107,455)       (218,918)        (214,910)

Purchase of 12,700 and 20,200 shares of
  treasury stock for the three and six months
  ended December 31, 2000, at cost                        (99,269)              --        (157,394)              --

Commitment to release  2,856  management
  recognition  plan shares for the three
  months ended December 31, 2000 and 1999 and 5,712
  management  recognition plan shares for the
  six months ended December 31, 2000 and 1999              47,658           47,658          95,316           95,316

Commitment to release 3,522 and 3,672
  employee  stock  ownership plan shares for the
  three months ended December 31, 2000 and 1999
  and 7,044 and 7,624 employee stock
  ownership plan shares for the six months
  ended December 31, 2000 and 1999, at fair value          26,990           34,740          53,700          73,991

Change in fair value on securities available for
  sale, net of tax                                        106,595          (67,156)        170,048          (95,227)
                                                    -------------    -------------   -------------   --------------
Balance, end of period                              $  17,234,364    $  17,468,315   $  17,234,364   $   17,468,315
                                                    =============    =============   =============   ==============
</TABLE>

--------------------------------------------------------------------------------
                See accompanying notes to consolidated financial

                                       6

<PAGE>


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

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

<TABLE>
<CAPTION>
                                                                                          Six Months Ended
                                                                                             December 31,
                                                                                            ------------
                                                                                       2000               1999
                                                                                       ----               ----
<S>                                                                               <C>               <C>
Cash flows from operating activities

     Net income                                                                   $      331,814    $       246,928
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                                     79,023             76,976
         Provision for loan losses                                                        36,515             27,999
         FHLB stock dividends                                                            (43,600)           (32,800)
         Compensation expense for ESOP shares                                             53,700             73,991
         Compensation expense for MRP shares                                              95,316             95,316
         Change in
              Accrued interest receivable and other assets                                30,008            (36,986)
              Accrued expense and other liabilities                                      (71,077)           (78,221)
              Deferred loan fees                                                           6,551             16,713
                                                                                  --------------    ---------------
                  Net cash from operating activities                                     518,250            389,916

Cash flows from investing activities

     Purchases of securities available for sale                                               --         (2,000,000)
     Maturities and calls securities available for sale                                       --          1,000,000
     Principal repayments on mortgage-backed securities                                  188,137            111,573
     Purchases of time deposits in other financial institutions                               --         (1,000,000)
     Maturities of time deposits in other financial institutions                              --          1,300,000
     Net increase in loans                                                            (4,428,934)        (6,515,963)
     Premises and equipment expenditures                                                 (83,444)           (51,246)
     Purchases of FHLB stock                                                            (281,700)           (10,800)
                                                                                  --------------    ---------------
         Net cash from investing activities                                           (4,605,941)        (7,166,436)

Cash flows from financing activities

     Net change in deposits                                                           (2,735,374)         5,001,087
     Net change in short-term borrowings                                               2,500,000         (1,100,000)
     Proceeds from long-term borrowings                                                5,000,000          5,000,000
     Cash dividends paid                                                                (218,918)          (214,910)
     Purchase of treasury stock                                                         (157,394)                --
                                                                                  --------------    ---------------
         Net cash from financing activities                                            4,388,314          8,686,177
                                                                                  --------------    ---------------

Net change in cash and cash equivalents                                                  300,623          1,909,657

Cash and cash equivalents at beginning of period                                       2,205,993          1,932,978
                                                                                  --------------    ---------------

Cash and cash equivalents at end of period                                        $    2,506,616    $     3,842,635
                                                                                  ==============    ===============

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                                 $    3,121,126    $     2,590,731
         Income taxes                                                                    210,000            273,000
</TABLE>


--------------------------------------------------------------------------------
                See accompanying notes to consolidated financial

                                       7

<PAGE>

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

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


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

These interim  consolidated  financial statements are prepared without audit and
reflect all adjustments  which,  in the opinion of management,  are necessary to
present  fairly the financial  position of the  Corporation at December 31, 2000
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,  2000,   included  in  the
Corporation's  2000 Annual  Report on Form 10-KSB for the fiscal year ended June
30,  2000.  Reference  is made to the  accounting  policies  of the  Corporation
described in the notes to consolidated  financial  statements  contained in such
report.  The Corporation has  consistently  followed these policies in preparing
this Form 10-QSB.

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

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 basis of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.

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


--------------------------------------------------------------------------------
                                   (Continued)

                                       8

<PAGE>

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

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


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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,

                                                               2000            1999         2000           1999
                                                               ----            ----         ----           ----
<S>                                                         <C>           <C>            <C>            <C>
     Basic Earnings Per Common Share

       Numerator

         Net income                                         $  169,821    $   115,677    $   331,814    $   246,928
                                                            ==========    ===========    ===========    ===========
       Denominator

         Weighted average common shares
           outstanding                                       1,567,300      1,664,622      1,572,563      1,664,622
         Less:  Average unallocated ESOP shares               (109,581)      (124,044)      (111,342)      (125,880)
         Less:  Average unearned MRP shares                    (29,038)       (40,463)       (30,466)       (41,891)
                                                            ----------    -----------    -----------    -----------
         Weighted average common shares
           outstanding for basic earnings per
           common share                                      1,428,681      1,500,115      1,430,755      1,496,851
                                                            ==========    ===========    ===========    ===========

       Basic earnings per common share                      $    0.12     $      0.08    $      0.23    $     0.17
                                                            =========     ===========    ===========    ==========

     Diluted Earnings Per Common Share

       Numerator

         Net income                                         $  169,821    $   115,677    $   331,814    $   246,928
                                                            ==========    ===========    ===========    ===========
       Denominator

         Weighted average common shares
           outstanding for basic earnings per
           common share                                      1,428,681      1,500,115      1,430,755      1,496,851
         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                                       1,428,681      1,500,115      1,430,755      1,496,851
                                                            ==========    ===========    ===========    ===========

       Diluted earnings per common share                    $    0.12     $      0.08    $      0.23      $    0.17
                                                            =========     ===========    ===========      =========
</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, 2000 and 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 periods.
As of  December  31,  2000 and 1999,  there were  140,824  and  141,824  options
outstanding that were not dilutive.


--------------------------------------------------------------------------------
                                   (Continued)

                                       9

<PAGE>

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

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


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 that 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 deferred by SFAS 137 and  amended by SFAS 138,  was  effective  for
fiscal years  beginning  after June 15,  2000.  The adoption of SFAS 133 did not
have a significant impact on the Corporation's financial statements.

 NOTE 2 - SECURITIES AVAILABLE FOR SALE

Securities available for sale were as follows:

<TABLE>
<CAPTION>
                                                                Gross           Gross          Estimated
                                               Amortized     Unrealized      Unrealized          Fair
                                                 Cost           Gains          Losses            Value
                                                 ----           -----          ------            -----
<S>                                        <C>                <C>           <C>             <C>
December 31, 2000
------------------
    U.S. Government agencies               $     3,997,147    $   14,487    $   (11,954)    $    3,999,680
    Mortgage-backed securities                   4,459,300        60,002             --          4,519,302
                                           ---------------    ----------    -----------     --------------

       Total                               $     8,456,447    $   74,489    $   (11,954)    $    8,518,982
                                           ===============    ==========    ===========     ==============

June 30, 2000
-------------
    U.S. Government agencies               $     3,996,736    $       --    $  (100,336)    $    3,896,400
    Mortgage-backed securities                   4,645,059            --        (94,778)         4,550,281
                                           ---------------    ----------    -----------     --------------

       Total                               $     8,641,795    $       --    $  (195,114)    $    8,446,681
                                           ===============    ==========    ===========     ==============
</TABLE>


Contractual  maturities  of  securities  available for sale at December 31, 2000
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.  Securities not due at a single maturity,
primarily mortgage-backed securities, are shown separately.


                                                                 Estimated
                                                 Amortized         Fair
                                                   Cost            Value

      Due after one year through five years    $   2,999,134    $  2,987,180
      Due after five years through ten years         998,013       1,012,500
      Mortgage-backed securities                   4,459,300       4,519,302
                                               -------------    ------------

                                               $   8,456,447    $  8,518,982
                                               =============    ============

No  securities  were sold during the  three-month  and  six-month  periods ended
December 31, 2000 and 1999. No securities were pledged as collateral at December
31, 2000 or June 30, 2000.


--------------------------------------------------------------------------------
                                   (Continued)

                                       10


<PAGE>

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

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



NOTE 3 - LOANS

Loans were as follows:

                                                    December 31,       June 30,
                                                       2000             2000
                                                       ----             ----
           Mortgage loans:
                1-4 family residential            $  96,240,668   $  92,116,695
                Multi-family residential              1,270,126       1,300,151
                Commercial real estate               10,227,901      10,047,775
                Real estate construction and
                  development                         6,802,351       8,088,290
                Land                                  1,001,740         991,864
                                                    -----------      ----------
                    Total mortgage loans            115,542,786     112,544,775
           Consumer loans                             4,433,066       3,571,071
           Commercial loans                           2,758,634       2,406,064
                                                  -------------   -------------
                    Total loans                     122,734,486     118,521,910
           Less:
                Allowance for loan losses              (623,500)       (591,350)
                Loans in process                     (2,823,555)     (3,035,548)
                Deferred loan fees                     (251,863)       (245,312)
                                                  -------------   -------------

                                                  $ 119,035,568   $ 114,649,700
                                                  =============   =============

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

<TABLE>
<CAPTION>
                                               Three Months Ended,       Six Months Ended
                                                    December 31             December 31,
                                                    -----------             ------------
                                                2000          1999         2000       1999
                                                ----          ----         ----       ----
<S>                                          <C>          <C>          <C>         <C>
        Balance at beginning of period       $ 605,600    $  546,199   $ 591,350   $ 528,898
        Provision for losses                    17,768        10,698      36,515      27,999
        Charge-offs                                 --            --      (4,563)         --
        Recoveries                                 132           510         198         510
                                             ---------    ----------   ---------   ---------

        Balance at end of period             $ 623,500    $  557,407   $ 623,500   $ 557,407
                                             =========    ==========   =========   =========
</TABLE>

Nonperforming loans were as follows:

                                                        December 31,   June 30,
                                                           2000         2000
                                                           ----         ----

         Loans past due over 90 days still on accrual  $ 561,000     $ 289,000
         Nonaccrual loans                                824,000       756,000

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

As of  December  31,  2000 and June 30,  2000 and for the three  months  and six
months ended  December 31, 2000 and 1999, no loans were required to be evaluated
for impairment on an individual loan basis within the scope of SFAS No. 114.


--------------------------------------------------------------------------------
                                   (Continued)

                                       11


<PAGE>

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

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


NOTE 4 - BORROWED FUNDS

At December 31, 2000 and June 30, 2000, 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.
$2,500,000 in borrowings were outstanding on this line of credit at December 31,
2000. No cash management line of credit  borrowings were outstanding at June 30,
2000.

Based on the FHLB stock owned by the  Association  at  December  31,  2000,  the
Association  has the  ability  to obtain  borrowings  up to a  maximum  total of
$26,966,000,   including  the  cash  management  line-of-credit.   However,  the
Association  can  obtain  advances  up to the lower of 50% of the  Association's
total assets or 80% of the  Association's  pledgable  residential  mortgage loan
portfolio by  purchasing  more FHLB stock.  Advances  from the Federal Home Loan
Bank at December 31, 2000 and June 30, 2000 were as follows:

<TABLE>
<CAPTION>
                                                                 December 31,         June 30,
                                                                     2000               2000
                                                                     ----               ----
<S>                                                           <C>                <C>
    Variable-rate FHLB cash management advances,
    6.75% at December 31, 2000                                $     2,500,000    $             --
    7.15% FHLB fixed-rate advance, due May 2, 2001                  2,500,000           2,500,000
    7.41% FHLB fixed-rate advance, due May 15, 2001                 2,000,000           2,000,000
    7.40% FHLB fixed-rate advance, due May 2, 2002                  2,500,000           2,500,000
    6.13% FHLB fixed-rate advance, due June 25, 2008                7,000,000           7,000,000
    6.00% FHLB fixed-rate advance, due June 11, 2009                5,000,000           5,000,000
    6.27% FHLB fixed-rate advance, due September 8, 2010            5,000,000                  --
                                                              ---------------    ----------------
                                                              $    26,500,000    $     19,000,000
                                                              ===============    ================
</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 - OFF-BALANCE-SHEET ACTIVITIES

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


--------------------------------------------------------------------------------
                                   (Continued)

                                       12

<PAGE>

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

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


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

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

<TABLE>
<CAPTION>
                                          December 31,                           June 30,
                                              2000                                 2000
                                              ----                                 ----
                                   Fixed             Variable             Fixed           Variable
                                   Rate                Rate               Rate              Rate
                                   ----                ----               ----              ----
<S>                             <C>               <C>                <C>                <C>
     Nonresidential             $         --      $     170,000      $         --       $         --
     Residential real estate         124,000            170,000            15,000            879,000
     Interest rates              8.75 - 9.25%       8.00 - 9.00%             9.00%       8.25 - 9.50%
</TABLE>

Commitments  to make loans are  generally  made for a period of 30 days or less.
Maturities for fixed-rate loan commitments range from 10 years to 20 years.

The  Corporation  also had unused  commercial  and home  equity  lines of credit
approximating $2,527,000 and $2,200,000 at December 31, 2000 and June 30, 2000.

At December 31, 2000 and June 30,  2000,  the  Association  was required to have
$346,000 and $419,000 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.

NOTE 6 - 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 an exercise  price  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 $3.99
to adjust for the  return of  capital  distribution.  One-fifth  of the  options
awarded become  exercisable on each of the first five  anniversaries of the date
of grant.  The option  period  expires 10 years from the date of grant.  140,824
options were outstanding at December 31, 2000 and June 30, 2000.  56,330 options
were  exercisable  at December 31, 2000 and June 30, 2000.  In addition,  37,714
options to purchase common stock were reserved for future grants at December 31,
2000 and June 30, 2000.


--------------------------------------------------------------------------------
                                   (Continued)

                                       13


<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------


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

Introduction

In the  following  pages,  management  presents an analysis of the  consolidated
financial condition of Peoples-Sidney  Financial Corporation (the "Corporation")
as of December 31, 2000,  compared to June 30, 2000,  and results of  operations
for the three and six months ended  December 31,  2000,  compared  with the same
periods in 1999.  This  discussion  is designed to provide a more  comprehensive
review of operating  results and financial  position than could be obtained from
an examination of the financial  statements  alone. This analysis should be read
in  conjunction  with the interim  financial  statements  and related  footnotes
included herein.

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

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

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

Financial Condition

Total assets at December 31, 2000 were $134.3 million compared to $129.3 million
at June 30, 2000,  an increase of $5.0 million,  or 3.9%.  The increase in total
assets  was due to an  increase  in loans  funded  by  proceeds  from  increased
borrowings.

Loans  increased  $4.4  million  from $114.6  million at June 30, 2000 to $119.0
million at December 31, 2000.  The increase was primarily in one- to four-family
residential  loans, which increased $4.1 million.  Real estate  construction and
development  loans  decreased  $1.3  million due to  conversion  into  permanent
one-to-four  family  loans.  Changes in other types of  mortgage  loans were not
significant.  The overall  increase in total  mortgage  loans is reflective of a
strong local economy coupled with attractive loan rates and products compared to
local competition. Expansion into new market areas through the Association's two
new branch-banking facilities also contributed to the growth.



--------------------------------------------------------------------------------
                                   (Continued)

                                       14

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------


The Corporation's  consumer loan portfolio  increased  $862,000 between June 30,
2000 and  December  31,  2000.  The  increase  was spread  evenly among loans on
deposit accounts, single payment personal notes and automobile loans. Commercial
loans increased $353,000 as the Corporation has gradually increased the emphasis
on this type of lending.  Non-mortgage  loans  represented only 5.9% and 5.0% of
gross loans at December 31, 2000 and June 30, 2000.

Total  deposits  decreased  $2.7 million from $93.0  million at June 30, 2000 to
$90.3  million at December 31, 2000.  The decrease was  primarily due to a large
jumbo  certificate  of deposit for $901,000,  which matured and was withdrawn as
well as a decline in 15-month certificates of deposit. The Corporation had run a
special  interest  rate 15-month  certificate  of deposit from July 1999 through
October  1999  that  resulted  in   approximately   $17.2  million  of  15-month
certificates  of deposit  with  scheduled  maturities  ranging from October 2000
through  January  2001.  Although a large  percentage  of the maturing  15-month
certificates  of deposit renewed in a current  certificate of deposit  offering,
some  were   withdrawn.   Management   expects  the  majority  of  the  15-month
certificates of deposit  maturing in January 2001 to renew with the Corporation.
NOW accounts  increased  $581,000 and savings accounts  declined  $914,000 since
June 30, 2000. Money market accounts and noninterest-bearing demand deposits had
little change since June 30, 2000.

Borrowed funds were $26.5 million at December 31, 2000 compared to $19.0 million
at June 30,  2000.  Borrowings  at December  31, 2000  consisted of 24.0 million
long-term  fixed-rate  advances and 2.5 million  short-term  variable  rate cash
managed line of credit.  The  additional  borrowings  were taken to fund ongoing
loan demand and replace  withdrawn  certificates  of deposit.  Based on the FHLB
stock owned by the  Association  at December 31, 2000, the  Association  had the
ability to obtain borrowings up to a maximum total of $26,966,000.  However, the
Association  can  obtain  advances  up to the lower of 50% of the  Association's
total assets or 80% of the  Association's  pledgable  residential  mortgage loan
portfolio  by  purchasing  more FHLB stock.  Based upon the 50% of total  assets
limitation, management estimates the maximum borrowing capacity from the FHLB to
be approximately $64,694,000 at December 31, 2000.

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  b.3etween 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.

Three Months Ended December 31, 2000 Compared to the Three Months Ended December
31, 1999

Net Income.  The Corporation  earned net income of $170,000 for the three months
ended December 31, 2000 compared to $116,000 for the three months ended December
31,  1999.  The increase in net income was  primarily  due to an increase in net
interest income and a decrease in noninterest expense.

--------------------------------------------------------------------------------
                                   (Continued)

                                       15

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------


Net Interest  Income.  Net interest income totaled $956,000 for the three months
ended December 31, 2000 compared to $932,000 for the three months ended December
31, 1999.  The increase was the result of higher  income on loans and FHLB Stock
dividends  partially  offset by an increase in interest  expense on deposits and
borrowings.

Interest and fees on loans increased $295,000,  or 14.2% from $2,077,000 for the
three months ended  December 31, 1999 to  $2,372,000  for the three months ended
December 31, 2000.  The increase in interest  income was due to a higher average
balance of loans coupled with an increase in the yield earned on loans.

Dividends on Federal Home Loan Bank Stock increased  $7,000 for the three months
ended  December  31, 2000 as compared to the same period in the prior year.  The
increase  was the  result  of  having a  higher  balance  of  stock  owed by the
Association than a year ago.

Interest paid on deposits increased $139,000 for the three months ended December
31, 2000  compared to the three  months ended  December  31, 1999.  The increase
resulted from an increase in the average rate paid on deposits  combined with an
increase in the average balance of deposits.

Interest  paid on borrowed  funds  totaled  $399,000  for the three months ended
December 31, 2000  compared to $261,000  for the three ended  December 31, 1999.
The  increase  in  interest  expense on borrowed  funds  resulted  from a higher
average balance of borrowed funds combined with an increase in the rate paid for
borrowings.

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

The  provision  for loan losses for the three  months  ended  December  31, 2000
totaled  $17,768  compared to $10,698 for the three  months  ended  December 31,
1999.  The  allowance  for loan losses  totaled  $623,500 or .51% of gross loans
receivable and 45.0% of total nonperforming loans at December 31, 2000, compared
with  $591,000,   or  0.50%  of  gross  loans  receivable  and  56.6%  of  total
nonperforming loans at June 30, 2000. Charge-offs experienced by the Corporation
have  primarily  related  to  consumer  and other  non-real  estate  loans.  The
Corporation's low historical  charge-off  history is the product of a variety of
factors,  including the Corporation's  underwriting guidelines,  which generally
require a loan-to-value  or projected  completed value ratio of 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.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous income and totaled $26,000 for the three months ended December 31,
2000 and $20,000 for the three months ended  December 31, 1999. The increase was
primarily due to an increase in service charges on deposit accounts.


--------------------------------------------------------------------------------
                                   (Continued)

                                       16

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------


Noninterest  expense.  Noninterest expense totaled $690,000 for the three months
ended December 31, 2000 compared to $744,000 for the three months ended December
31,  1999,  a decrease of $54,000,  or 7.2%.  The  decrease  was the result of a
decrease  in  compensation   and  benefits  and  franchise  taxes  paid  by  the
Association.  Compensation  and  benefits  decreased  due to the impact that the
Corporation's  lower  average stock price had on the  Corporation's  stock-based
benefit plans.  The Association  pays franchise  taxes on a calendar-year  basis
based on its net  worth at June 30 of the  preceding  year.  The  lower  capital
levels at the  Association  at June 30, 1999,  after the large  dividend paid to
Peoples  prior to June 30, 1999,  resulted in lower  franchise  taxes  beginning
January 1, 2000.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable  to the  change in income  before  income  taxes and the impact the
Corporation's stock price has on the stock-based  employee benefit plans. Income
tax expense  totaled  $104,000  for the three  months  ended  December  31, 2000
compared to $82,000 for the three months ended  December 31, 1999,  representing
an increase of $22,000. The effective tax rate was 38.0% and 41.5% for the three
months ended December 31, 2000 and 1999.

Six Months Ended December 31, 2000 Compared to the Six Months Ended December 31,
1999

Net Income.  The  Corporation  earned net income of $332,000  for the six months
ended  December 31, 2000 compared to $247,000 for the six months ended  December
31,  1999.  The increase in net income was  primarily  due to an increase in net
interest income and a decrease in noninterest expense.

Net Interest Income.  Net interest income totaled  $1,898,000 for the six months
ended December 31, 2000 compared to $1,865,000 for the six months ended December
31, 1999.  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 $582,000,  or 14.2% from $4,085,000 for the
six months  ended  December  31,  1999 to  $4,667,000  for the six months  ended
December 31, 2000.  The increase in interest  income was due to a higher average
balance of loans coupled with an increase in the yield earned on loans.

Interest  earned  on  securities  increased  $20,000  for the six  months  ended
December 31, 2000 as compared to the same period in the prior year. The increase
was the result of having a higher yield than a year ago.

Interest paid on deposits  increased  $317,000 for the six months ended December
31, 2000  compared to the six months  ended  December  31,  1999.  The  increase
resulted from an increase in the average rate paid on deposits  combined with an
increase in the average balance of deposits.

Interest  paid on  borrowed  funds  totaled  $746,000  for the six months  ended
December 31, 2000 compared to $512,000 for the six ended  December 31, 1999. The
increase in interest  expense on borrowed  funds  resulted from a higher average
balance  of  borrowed  funds  combined  with an  increase  in the rate  paid for
borrowings.

Provision  for Loan  Losses.  The  provision  for loan losses for the six months
ended December 31, 2000 totaled  $36,515  compared to $27,999 for the six months
ended December 31, 1999.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and totaled  $54,000 for the six months ended December 31,
2000 and $42,000 for the six months ended  December  31, 1999.  The increase was
primarily due to an increase in service charges on deposit accounts.


--------------------------------------------------------------------------------
                                   (Continued)

                                       17

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------


Noninterest  expense.  Noninterest expense totaled $1,379,000 for the six months
ended December 31, 2000 compared to $1,458,000 for the six months ended December
31,  1999,  a decrease of $79,000,  or 5.4%.  The  decrease  was the result of a
decrease in franchise taxes paid by the Association.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable  to the  change in income  before  income  taxes and the impact the
Corporation's stock price has on the stock-based  employee benefit plans. Income
tax expense totaled $204,000 for the six months ended December 31, 2000 compared
to $175,000 for the six months ended December 31, 1999, representing an increase
of $29,000.  The effective tax rate was 38.1% and 41.4% for the six months ended
December 31, 2000 and 1999.

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, 2000 and 1999.

                                                                Six Months
                                                            Ended December 31,

                                                           2000            1999
                                                           ----            ----
                                                         (Dollars in thousands)

Net income                                              $     332     $     247
Adjustments to reconcile net income to net cash from
  operating activities                                        186           143
                                                        ---------     ---------
Net cash from operating activities                            518           390
Net cash from investing activities                         (4,606)       (7,166)
Net cash from financing activities                          4,389         8,686
                                                        ---------     ---------
Net change in cash and cash equivalents                       301         1,910
Cash and cash equivalents at beginning of period            2,206         1,933
                                                        ---------     ---------
Cash and cash equivalents at end of period              $   2,507     $   3,843
                                                        =========     =========

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, 2000, the Association's  regulatory  liquidity was 10.9%.
At such date, the Corporation had commitments to originate fixed-rate commercial
and residential real estate loans totaling $124,000 and variable-rate commercial
and residential real estate mortgage loans totaling  $340,000.  Loan commitments
are generally for 30 days. The  Corporation  considers its liquidity and capital
reserves  sufficient to meet its outstanding short and long-term needs. See Note
5 of the Notes to Consolidated Financial Statements.

--------------------------------------------------------------------------------
                                   (Continued)

                                       18

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------


The  Association  is  subject  to  various   regulatory   capital   requirements
administered  by  the  federal  regulatory  agencies.   Under  capital  adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Association  must meet specific  capital  guidelines  that involve  quantitative
measures of the Association's assets,  liabilities and certain off-balance-sheet
items as calculated under regulatory  accounting  practices.  The  Association's
capital amounts and classifications are also subject to qualitative judgments by
the regulators  about the  Association's  components,  risk weightings and other
factors.  Failure to meet minimum  capital  requirements  can  initiate  certain
mandatory  actions that, if undertaken,  could have a direct  material effect on
the Corporation's financial statements.  At December 31, 2000 and June 30, 2000,
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,  2000 and June 30,  2000.  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, 2000 and June 30, 2000, 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, 2000
Total capital (to risk-
  weighted assets)             $  15,311         17.3%    $  7,085          8.0%     $    8,857          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           14,689         16.6        3,543          4.0           5,314           6.0
Tier 1 (core) capital (to
  adjusted total assets)          14,689         10.9        5,373          4.0           6,716           5.0
Tangible capital (to

  adjusted total assets)          14,689         10.9        2,015          1.5             N/A

June 30, 2000
Total capital (to risk-
  weighted assets)             $  14,773         17.2%    $  6,858          8.0%     $    8,572          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           14,183         16.5        3,429          4.0           5,143           6.0
Tier 1 (core) capital (to
  adjusted total assets)          14,183         10.9        5,183          4.0           6,479           5.0
Tangible capital (to

  adjusted total assets)          14,183         10.9        1,944          1.5             N/A
</TABLE>




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                                       19



<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  13,  2000 the  Annual  Meeting  of  Shareholders  of the
           Corporation was held. The following members of the Board of Directors
           of the  Corporation  were re-elected by the votes set forth below for
           the terms expiring in 2003:

           Harry N. Faulkner        FOR:  1,245,264         WITHHELD:  45,662
           John W. Sargeant         FOR:  1,240,332         WITHHELD:  50,594

           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, 2001

           FOR:  1,273,970         AGAINST:  13,100             ABSTAIN:  3,856

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

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

           (a) Form 8-K was  filed on  October  19,  2000  under  Item 5,  Other
               Events', the Corporation reported the issuance of a press release
               to announce the quarterly earnings and declare a dividend.


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                                       20


<PAGE>


                                   SIGNATURES

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


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

Date:      February 10, 2001                 /s/ Douglas Stewart
     ---------------------------             ------------------------------
                                             Douglas Stewart
                                             President

Date:      February 10, 2001                 /s/ Debra Geuy
     ---------------------------             ------------------------------
                                             Debra Geuy
                                             Chief Financial Officer