|   | ý | QUARTERLY                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   |  ̈ | TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
|--------|--------|--------------------------------------------------------------------------------|

**PEOPLES-SIDNEY      FINANCIAL CORPORATION**

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

----

----

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                                                | 15     |
|                                          |                                                                                                     |   |
|   Item                3.            | Controls                and Procedures                                                                   | 23     |
|                                          |                                                                                                     |   |
|                                          |                                                                                                     |   |
| PART                II - OTHER INFORMATION    |                                                                                                     |
|                                          |                                                                                                     |   |
|   Item                1.            | Legal                Proceedings                                                                         | 24     |
|                                          |                                                                                                     |   |
|   Item                2.            | Unregistered                Sales of Equity Securities and Use of                Proceeds                | 24     |
|                                          |                                                                                                     |   |
|   Item                3.            | Defaults                Upon Senior Securities                                                           | 24     |
|                                          |                                                                                                     |   |
|   Item                4.            | Submission                of Matters to a Vote of Security                Holders                        | 24     |
|                                          |                                                                                                     |   |
|   Item                5.            | Other                Information                                                                         | 25     |
|                                          |                                                                                                     |   |
|   Item                6.            | Exhibits                                                                                                 |   |
|                                          |                                                                                                     |   |
|                                          |                                                                                                     |   |
| SIGNATURES                                    |                                                                                                     | 26     |
|                                          |                                                                                                     |   |
| INDEX                TO EXHIBITS              | 27                                                                                                       |

----

----

*Index*

PEOPLES-SIDNEY      FINANCIAL CORPORATION

CONSOLIDATED      BALANCE SHEETS

----

Item      1.Financial      Statements

|                                                                     |   | December                31, |        | June                30, |   |
|--------------------------------------------------------------------------|--------|-----------------------------|-------------|-------------------------|--------|
|                                                                     |   | 2006                        |        | 2006                    |   |
|                                                                     |   | (Unaudited)                 |        |                    |   |
| **ASSETS**                                                               |   |                        |        |                    |   |   |   |
| Cash                and due from financial institutions                  |   | $                           | 1,157,091   |                    | $      | 899,313 |   |
| Interest-bearing                deposits in other financial institutions |   |                        | 3,408,326   |                    |   | 3,815,616 |   |
| Total                cash and cash equivalents                           |   |                        | 4,565,417   |                    |   | 4,714,929 |   |
| Securities                available for sale                             |   |                        | 4,853,140   |                    |   | 5,250,170 |   |
| Federal                Home Loan Bank stock                         |   |                        | 1,820,800   |                    |   | 1,768,100 |   |
| Loans,                net of allowance of $696,000 and $893,600          |   |                        | 123,771,943 |                    |   | 124,171,193 |   |
| Accrued                interest receivable                               |   |                        | 839,702     |                    |   | 827,725 |   |
| Premises                and equipment, net                          |   |                        | 1,902,220   |                    |   | 1,974,672 |   |
| Other                real estate owned                                   |   |                        | --          |                    |   | 100,421 |   |
| Other                assets                                              |   |                        | 108,681     |                    |   | 240,258 |   |
|                                                                     |   |                        |        |                    |   |   |   |
| Total                assets                                              |   | $                           | 137,861,903 |                    | $      | 139,047,468 |   |
|                                                                     |   |                        |        |                    |   |   |   |
|                                                                     |   |                        |        |                    |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**            |   |                        |        |                    |   |   |   |
| Deposits                                                                 |   | $                           | 80,861,326  |                    | $      | 82,819,038 |   |
| Borrowed                funds                                            |   |                        | 39,606,691  |                    |   | 38,511,268 |   |
| Accrued                interest payable and other liabilities            |   |                        | 460,892     |                    |   | 460,821 |   |
| Total                liabilities                                         |   |                        | 120,928,909 |                    |   | 121,791,127 |   |
|                                                                     |   |                        |        |                    |   |   |   |
| Common                stock in ESOP subject to repurchase obligation     |   |                        | 1,671,935   |                    |   | 1,756,829 |   |
|                                                                     |   |                        |        |                    |   |   |   |
| 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           |   |                        | 16,675      |                    |   | 16,675 |   |
| Additional                paid-in capital                                |   |                        | 9,166,508   |                    |   | 9,065,163 |   |
| Retained                earnings                               |   |                        | 11,767,242  |                    |   | 11,764,118 |   |
| Treasury                stock, 424,327 and 392,727 shares, at cost       |   |                        | (5,198,322  | )                       |   | (4,725,278 | ) |
| Unearned                employee stock ownership plan shares             |   |                        | (395,322    | )                       |   | (457,602 | ) |
| Accumulated                other comprehensive loss                      |   |                        | (95,722     | )                       |   | (163,564 | ) |
| Total                shareholders’ equity                          |   |                        | 15,261,059  |                    |   | 15,499,512 |   |
|                                                                     |   |                        |        |                    |   |   |   |
| Total                liabilities and shareholders’ equity          |   | $                           | 137,861,903 |                    | $      | 139,047,468 |   |

----

----

*Index*

CONSOLIDATED      STATEMENTS OF INCOME

----

|                                                                           |   | Three                Months Ended |      | Six                Months Ended |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------|-----------|---------------------------------|--------|
|                                                                           |   | December                31,       |      | December                31,     |   |
|                                                                           |   | 2006                              |      | 2005                            |   | 2006 |   | 2005 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |
| Interest                income                                                 |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Loans,                including fees                                           |   | $                                 | 2,137,853 |                            | $      | 1,985,128 |   | $ | 4,237,961 |   | $ | 3,932,971 |   |
| Securities                                                                     |   |                              | 53,146    |                            |   | 52,465 |   |   | 108,736 |   |   | 105,499 |   |
| Demand,                time and overnight deposits                             |   |                              | 31,213    |                            |   | 30,347 |   |   | 59,021 |   |   | 55,569 |   |
| Dividends                on Federal Home Loan Bank Stock                       |   |                              | 27,127    |                            |   | 24,557 |   |   | 52,752 |   |   | 45,125 |   |
| Total                interest income                                           |   |                              | 2,249,339 |                            |   | 2,092,497 |   |   | 4,458,470 |   |   | 4,139,164 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Interest                expense                                                |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Deposits                                                                       |   |                              | 518,191   |                            |   | 430,038 |   |   | 1,013,210 |   |   | 863,689 |   |
| Borrowed                funds                                                  |   |                              | 544,807   |                            |   | 451,452 |   |   | 1,075,640 |   |   | 884,574 |   |
| Total                interest expense                                          |   |                              | 1,062,998 |                            |   | 881,490 |   |   | 2,088,850 |   |   | 1,748,263 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Net                interest income                                             |   |                              | 1,186,341 |                            |   | 1,211,007 |   |   | 2,369,620 |   |   | 2,390,901 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Provision                for loan losses                                       |   |                              | (21,145   | )                               |   | 862 |   |   | (69,097 | ) |   | 17,776 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Net                interest income after provision for loan losses   |   |                              | 1,207,486 |                            |   | 1,210,145 |   |   | 2,438,717 |   |   | 2,373,125 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Noninterest                income                                              |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Service                fees and other charges                        |   |                              | 32,571    |                            |   | 33,503 |   |   | 64,932 |   |   | 68,153 |   |
| Gain                (loss) on sale of real estate owned                        |   |                              | --        |                            |   | -- |   |   | (120 | ) |   | 657 |   |
| Total                noninterest income                                        |   |                              | 32,571    |                            |   | 33,503 |   |   | 64,812 |   |   | 68,810 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Noninterest                expense                                             |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Compensation                and benefits                                       |   |                              | 427,449   |                            |   | 422,016 |   |   | 863,540 |   |   | 849,835 |   |
| Director                fees                                                   |   |                              | 24,300    |                            |   | 24,300 |   |   | 48,600 |   |   | 48,600 |   |
| Occupancy                and equipment                                         |   |                              | 88,245    |                            |   | 89,306 |   |   | 177,296 |   |   | 190,324 |   |
| Computer                processing                                             |   |                              | 91,690    |                            |   | 79,475 |   |   | 182,687 |   |   | 166,243 |   |
| Professional                services                                           |   |                              | 38,005    |                            |   | 49,273 |   |   | 82,213 |   |   | 102,497 |   |
| State                franchise taxes                                           |   |                              | 54,450    |                            |   | 49,761 |   |   | 108,900 |   |   | 99,524 |   |
| Other                                                                          |   |                              | 81,126    |                            |   | 83,203 |   |   | 158,514 |   |   | 163,630 |   |
| Total                noninterest expense                                       |   |                              | 805,265   |                            |   | 797,334 |   |   | 1,621,750 |   |   | 1,620,653 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Income                before income taxes                                      |   |                              | 434,792   |                            |   | 446,314 |   |   | 881,779 |   |   | 821,282 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Income                tax expense                                              |   |                              | 154,800   |                            |   | 161,000 |   |   | 312,300 |   |   | 296,400 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Net                income                                                      |   | $                            | 279,992   |                            | $      | 285,314 |   | $ | 569,479 |   | $ | 524,882 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Earnings                per common share - basic                               |   | $                                 | 0.21      |                            | $      | 0.21 |   | $ | 0.42 |   | $ | 0.38 |   |
|                                                                           |   |                              |      |                            |   |   |   |   |   |   |   |   |   |
| Earnings                per common share - diluted                             |   | $                                 | 0.21      |                            | $      | 0.21 |   | $ | 0.42 |   | $ | 0.38 |   |

----

----

*Index*

CONSOLIDATED      STATEMENTS OF COMPREHENSIVE INCOME

----

|                                                     |   | Three                Months Ended |    | Six                Months Ended |   |
|----------------------------------------------------------|--------|-----------------------------------|---------|---------------------------------|--------|
|                                                     |   | December                31,       |    | December                31,     |   |
|                                                     |   | 2006                              |    | 2005                            |   | 2006 |   | 2005 |   |
|                                                     |   |                              |    |                            |   |   |   |   |   |
|                                                     |   |                              |    |                            |   |   |   |   |   |
| Net                income                                |   | $                                 | 279,992 |                            | $      | 285,314 |   | $ | 569,479 |   | $ | 524,882 |   |
|                                                     |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
| Other                comprehensive income (loss)         |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
| Unrealized                holding gains and (losses) on  |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
|   available-for-sale                securities |   |                              | 7,725   |                            |   | (23,540 | ) |   | 102,790 |   |   | (97,070 | ) |
| Tax                effect                                |   |                              | (2,626  | )                               |   | 8,004 |   |   | (34,948 | ) |   | 33,004 |   |
| Other                comprehensive income (loss)         |   |                              | 5,099   |                            |   | (15,536 | ) |   | 67,842 |   |   | (64,066 | ) |
|                                                     |   |                              |    |                            |   |   |   |   |   |   |   |   |   |
| Comprehensive                income                      |   | $                                 | 285,091 |                            | $      | 269,778 |   | $ | 637,321 |   | $ | 460,816 |   |

----

----

*Index*

CONDENSED      CONSOLIDATED STATEMENTS OF CHANGES IN 

----

|                                                                       |   | Three                Months Ended |       | Six                Months Ended |   |
|----------------------------------------------------------------------------|--------|-----------------------------------|------------|---------------------------------|--------|
|                                                                       |   | December                31,       |       | December                31,     |   |
|                                                                       |   | 2006                              |       | 2005                            |   | 2006 |   | 2005 |   |
|                                                                       |   |                              |       |                            |   |   |   |   |   |
|                                                                       |   |                              |       |                            |   |   |   |   |   |
| Balance,                beginning of period                                |   | $                                 | 15,537,264 |                            | $      | 17,682,467 |   | $ | 15,499,512 |   | $ | 17,761,391 |   |
|                                                                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Net                income for period                                       |   |                              | 279,992    |                            |   | 285,314 |   |   | 569,479 |   |   | 524,882 |   |
|                                                                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Cash                dividends, $.26 and $.25 per share for                 |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   the                three months ended December 31, 2006        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   and                2005, $.42 and $.40 per share for the six   |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   months                ended December 31, 2006 and 2005         |   |                              | (349,771   | )                               |   | (338,739 | ) |   | (566,355 | ) |   | (544,983 | ) |
|                                                                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Purchase                of 23,220 and 20,000 shares of                     |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   treasury                stock for the three months             |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   ended                December 31, 2006 and 2005, and           |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   31,600                and 27,500 shares of treasury stock      |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   for                the six months ended December 31, 2006      |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   and                2005, at cost                               |   |                              | (347,344   | )                               |   | (320,000 | ) |   | (473,044 | ) |   | (424,062 | ) |
|                                                                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Commitment                to release 2,654 and 2,799                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   employee                stock ownership plan shares for the    |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   three                months ended December 31, 2006 and 2005,  |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   and                5,308 and 5,598 employee stock              |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   ownership                plan shares for the six months        |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   ended                December 31, 2006 and 2005, at fair value |   |                              | 39,134     |                            |   | 42,647 |   |   | 78,731 |   |   | 82,991 |   |
|                                                                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Change                in fair value of common stock subject                |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   to                repurchase obligation for the three and six  |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   months                ended December 31, 2006                  |   |                              | 96,685     |                            |   | -- |   |   | 84,894 |   |   | -- |   |
|                                                                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Change                in fair value on securities available for            |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
|   sale,                net of tax                                |   |                              | 5,099      |                            |   | (15,536 | ) |   | 67,842 |   |   | (64,066 | ) |
|                                                                       |   |                              |       |                            |   |   |   |   |   |   |   |   |   |
| Balance,                end of period                                      |   | $                                 | 15,261,059 |                            | $      | 17,336,153 |   | $ | 15,261,059 |   | $ | 17,336,153 |   |

----

----

*Index*

CONSOLIDATED      STATEMENTS OF CASH FLOWS

----

|                                                                     |   | Six                Months Ended |       |
|--------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                     |   | December                31,     |       |
|                                                                     |   | 2006                            |       | 2005 |   |
| Cash                flows from operating activities                      |   |                            |       |   |   |   |   |
| Net                income                                                |   | $                               | 569,479    |   | $ | 524,882 |   |
| Adjustments                to reconcile net income to net cash from      |   |                            |       |   |   |   |   |
|   operating                activities                          |   |                            |       |   |   |   |   |
| Depreciation                                                             |   |                            | 81,024     |   |   | 91,167 |   |
| Provision                for loan losses                                 |   |                            | (69,097    | ) |   | 17,776 |   |
| Net                accretion on securities                               |   |                            | (180       | ) |   | (180 | ) |
| (Gain)                loss on sale of real estate owned                  |   |                            | 120        |   |   | (657 | ) |
| FHLB                stock dividends                                      |   |                            | (52,700    | ) |   | (45,000 | ) |
| Compensation                expense for ESOP shares                      |   |                            | 78,731     |   |   | 82,991 |   |
| Change                in:                                                |   |                            |       |   |   |   |   |
| Accrued                interest receivable and other assets              |   |                            | 84,652     |   |   | 153,760 |   |
| Accrued                expense and other liabilities                     |   |                            | 71         |   |   | 47,693 |   |
| Deferred                loan fees                                        |   |                            | (18,305    | ) |   | 9,513 |   |
| Net                cash from operating activities                        |   |                            | 673,795    |   |   | 881,945 |   |
|                                                                     |   |                            |       |   |   |   |   |
| Cash                flows from investing activities                      |   |                            |       |   |   |   |   |
| Proceeds                from maturities of available for sale securities |   |                            | 500,000    |   |   | -- |   |
| Net                change in loans                                       |   |                            | 486,652    |   |   | (1,601,970 | ) |
| Premises                and equipment expenditures                       |   |                            | (8,572     | ) |   | (35,548 | ) |
| Proceeds                from sale of real estate owned                   |   |                            | 100,301    |   |   | 49,940 |   |
| Net                cash from investing activities                        |   |                            | 1,078,381  |   |   | (1,587,578 | ) |
|                                                                     |   |                            |       |   |   |   |   |
| Cash                flows from financing activities                      |   |                            |       |   |   |   |   |
| Net                change in deposits                                    |   |                            | (1,957,712 | ) |   | (2,334,083 | ) |
| Net                change in short-term FHLB advances                    |   |                            | (3,000,000 | ) |   | 3,000,000 |   |
| Repayments                of long-term FHLB advances                     |   |                            | (904,577   | ) |   | (1,013,776 | ) |
| Proceeds                from long-term FHLB advances                     |   |                            | 5,000,000  |   |   | 2,000,000 |   |
| Cash                dividends paid                                       |   |                            | (566,355   | ) |   | (544,983 | ) |
| Purchase                of treasury stock                                |   |                            | (473,044   | ) |   | (424,062 | ) |
| Net                cash from financing activities                        |   |                            | (1,901,688 | ) |   | 683,096 |   |
|                                                                     |   |                            |       |   |   |   |   |
| Net                change in cash and cash equivalents                   |   |                            | (149,512   | ) |   | (22,537 | ) |
|                                                                     |   |                            |       |   |   |   |   |
| Cash                and cash equivalents at beginning of period          |   |                            | 4,714,929  |   |   | 5,321,196 |   |
|                                                                     |   |                            |       |   |   |   |   |
| Cash                and cash equivalents at end of period                |   | $                               | 4,565,417  |   | $ | 5,298,659 |   |
|                                                                     |   |                            |       |   |   |   |   |
| Supplemental                disclosures of cash flow information         |   |                            |       |   |   |   |   |
| Cash                paid during the period for                           |   |                            |       |   |   |   |   |
| Interest                                                                 |   | $                               | 2,071,828  |   | $ | 1,731,020 |   |
| Income                taxes                                              |   |                            | 315,000    |   |   | 170,000 |   |
|                                                                     |   |                            |       |   |   |   |   |
| Noncash                transactions                                      |   |                            |       |   |   |   |   |
| Transfer                from loans to other real estate owned            |   | $                               | --         |   | $ | 49,283 |   |

----

----

*Index*

NOTES TO CONSOLIDATED FINANCIAL            STATEMENTS

----

**NOTE      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

*Index*

----

**NOTE      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES **

*Share      Based Payment*

**NOTE      2 - SECURITIES AVAILABLE FOR SALE**

|                                          |   |   |      | Gross      |   | Gross      |   |
|-----------------------------------------------|--------|--------|-----------|------------|--------|------------|--------|
|                                          |   | Fair   |      | Unrealized |   | Unrealized |   |
|                                          |   | Value  |      | Gains      |   | Losses     |   |
| December                31, 2006              |   |   |      |       |   |       |   |   |   |   |
| U.S.                Government agencies       |   | $      | 4,853,140 |       | $      | --         |   | $ | (145,034 | ) |
|                                          |   |   |      |       |   |       |   |   |   |   |
| June                30, 2006                  |   |   |      |       |   |       |   |   |   |   |
|  U.S.                Government agencies |   | $      | 5,250,170 |       | $      | --         |   | $ | (247,824 | ) |

|                                                  |   | Fair   |      |
|-------------------------------------------------------|--------|--------|-----------|
|                                                  |   | Value  |      |
|                                                  |   |   |      |
| Due                after one year through five years  |   | $      | 2,968,760 |   |
| Due                after five years through ten years |   |   | 1,884,380 |   |
|                                                  |   |   |      |   |
|                                                  |   | $      | 4,853,140 |   |

----

----

*Index*

----

**NOTE      2 - SECURITIES AVAILABLE FOR SALE**
**)**

|                                           |   | Less                than 12 Months |    | 12                Months or More |   | Total       |   |
|------------------------------------------------|--------|------------------------------------|---------|----------------------------------|--------|-------------|--------|
|                                           |   | Fair                               |    | Unrealized                       |   | Fair        |   | Unrealized |   | Fair |   | Unrealized |   |
| Description                of Securities  |   |  Value                        |    |  Loss                       |   |  Value |   |  Loss |   |  Value |   |  Loss |   |
|                                           |   |                               |    |                             |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December                31, 2006               |   |                               |    |                             |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |                               |    |                             |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agencies        |   | $                                  | --      |                             | $      | --          |   | $ | 4,853,140 |   | $ | (145,034 | ) | $ | 4,853,140 |   | $ | (145,034 | ) |
|                                           |   |                               |    |                             |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| June                30, 2006                   |   |                               |    |                             |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |                               |    |                             |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agencies        |   | $                                  | 497,970 |                             | $      | (2,030      | )      | $ | 4,752,200 |   | $ | (245,794 | ) | $ | 5,250,170 |   | $ | (247,824 | ) |

**NOTE      3 - LOANS**

|                                        |   | December                31, |        | June                30, |   |
|---------------------------------------------|--------|-----------------------------|-------------|-------------------------|--------|
|                                        |   | 2006                        |        | 2006                    |   |
| Mortgage                loans:              |   |                        |        |                    |   |   |   |
| 1-4                family residential       |   | $                           | 90,072,077  |                    | $      | 90,115,467 |   |
| Multi-family                residential     |   |                        | 3,385,704   |                    |   | 2,861,027 |   |
| Commercial                real estate       |   |                        | 12,953,382  |                    |   | 12,972,451 |   |
| Real                estate construction and |   |                        |        |                    |   |   |   |
|   development                     |   |                        | 1,450,627   |                    |   | 2,982,155 |   |
| Land                                        |   |                        | 2,974,093   |                    |   | 2,362,925 |   |
| Total                mortgage loans         |   |                        | 110,835,883 |                    |   | 111,294,025 |   |
| Consumer                loans               |   |                        | 5,758,643   |                    |   | 6,402,995 |   |
| Commercial                loans             |   |                        | 8,240,467   |                    |   | 7,753,128 |   |
| Total                loans                  |   |                        | 124,834,993 |                    |   | 125,450,148 |   |
| Less:                                       |   |                        |        |                    |   |   |   |
| Allowance                for loan losses    |   |                        | (696,000    | )                       |   | (893,600 | ) |
| Deferred                loan fees           |   |                        | (367,050    | )                       |   | (385,355 | ) |
|                                        |   |                        |        |                    |   |   |   |
|                                        |   | $                           | 123,771,943 |                    | $      | 124,171,193 |   |

----

----

*Index*

----

**NOTE      3 - LOANS **

|                                          |   | Three                Months Ended |     | Six                Months Ended |   |
|-----------------------------------------------|--------|-----------------------------------|----------|---------------------------------|--------|
|                                          |   | December                31,       |     | December                31,     |   |
|                                          |   | 2006                              |     | 2005                            |   | 2006 |   | 2005 |   |
|                                          |   |                              |     |                            |   |   |   |   |   |
| Balance                at beginning of period |   | $                                 | 840,000  |                            | $      | 852,400 |   | $ | 893,600 |   | $ | 835,500 |   |
| Provision                for losses           |   |                              | (21,145  | )                               |   | 862 |   |   | (69,097 | ) |   | 17,776 |   |
| Charge-offs                                   |   |                              | (123,711 | )                               |   | (14,506 | ) |   | (129,711 | ) |   | (14,617 | ) |
| Recoveries                                    |   |                              | 856      |                            |   | 244 |   |   | 1,208 |   |   | 341 |   |
|                                          |   |                              |     |                            |   |   |   |   |   |   |   |   |   |
| Balance                at end of period       |   | $                                 | 696,000  |                            | $      | 839,000 |   | $ | 696,000 |   | $ | 839,000 |   |

|                                                                                 |   | December                31, |   | June                30, |   |
|--------------------------------------------------------------------------------------|--------|-----------------------------|--------|-------------------------|--------|
|                                                                                 |   | 2006                        |   | 2006                    |   |
|                                                                                 |   |                        |   |                    |   |
| Period-end                impaired loans with no allowance for loan losses allocated |   | $                           | --     |                    | $      | -- |   |
| Period-end                impaired loans with allowance for loan losses allocated    |   |                        | 33,000 |                    |   | 232,000 |   |
| Amount                of the allowance allocated to impaired loans                   |   |                        | 21,000 |                    |   | 209,000 |   |

|                                                        |   | Three                Months Ended |   | Six                Months Ended |   |
|-------------------------------------------------------------|--------|-----------------------------------|--------|---------------------------------|--------|
|                                                        |   | December                31,       |   | December                31,     |   |
|                                                        |   | 2006                              |   | 2005                            |   | 2006 |   | 2005 |   |
|                                                        |   |                              |   |                            |   |   |   |   |   |
| Average                of impaired loans during the period  |   | $                                 | 33,000 |                            | $      | 205,000 |   | $ | 100,000 |   | $ | 195,000 |   |
| Interest                income recognized during the period |   |                              | 171    |                            |   | 3,735 |   |   | 1,870 |   |   | 7,009 |   |
| Cash-basis                interest income recognized        |   |                              | 171    |                            |   | 905 |   |   | 1,870 |   |   | 2,031 |   |

|                                                        |   |                        |      |                    |   |
|-------------------------------------------------------------|--------|-----------------------------|-----------|-------------------------|--------|
|                                                        |   | December                31, |      | June                30, |   |
|                                                        |   | 2006                        |      | 2006                    |   |
|                                                        |   |                        |      |                    |   |
| Loans                past due over 90 days still on accrual |   | $                           | 348,000   |                    | $      | 375,000 |   |
| Nonaccrual                loans                             |   |                        | 1,596,000 |                    |   | 1,525,000 |   |

----

----

*Index*

----

**NOTE      4 - BORROWED FUNDS**

|                                                                       |   | December                31, |       | June                30, |   |
|----------------------------------------------------------------------------|--------|-----------------------------|------------|-------------------------|--------|
|                                                                       |   | 2006                        |       | 2006                    |   |
| Cash                management advance, variable rate 5.34%                |   |                        |       |                    |   |   |   |
|   at                December 31, 2006 and 5.43% at June 30, 2006 |   | $                           | 500,000    |                    | $      | 3,500,000 |   |
| 4.88%                FHLB fixed-rate advance, due January 25, 2008         |   |                        | 2,000,000  |                    |   | 2,000,000 |   |
| 6.13%                FHLB fixed-rate advance, due June 25, 2008            |   |                        | 7,000,000  |                    |   | 7,000,000 |   |
| 5.16%                FHLB fixed-rate advance, due March 13, 2009           |   |                        | 3,000,000  |                    |   | 3,000,000 |   |
| 6.00%                FHLB convertible advance, fixed-rate until            |   |                        |       |                    |   |   |   |
|   March                2007, due June 11, 2009                   |   |                        | 5,000,000  |                    |   | 5,000,000 |   |
| 4.42%                FHLB fixed-rate advance, due July 9, 2010             |   |                        | 2,000,000  |                    |   | 2,000,000 |   |
| 6.27%                FHLB convertible advance, fixed-rate until            |   |                        |       |                    |   |   |   |
|   March                2007, due September 8, 2010               |   |                        | 5,000,000  |                    |   | 5,000,000 |   |
| 5.12%                FHLB fixed-rate advance, due October 31, 2011         |   |                        | 5,000,000  |                    |   | -- |   |
| 5.30%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                May 1, 2011                            |   |                        | 598,950    |                    |   | 658,357 |   |
| 5.35%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                July 1, 2011                           |   |                        | 1,239,310  |                    |   | 1,507,849 |   |
| 3.92%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                November 1, 2012                       |   |                        | 519,846    |                    |   | 587,902 |   |
| 3.55%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                March 1, 2013                          |   |                        | 665,827    |                    |   | 712,991 |   |
| 4.10%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                March 1, 2015                          |   |                        | 682,546    |                    |   | 716,967 |   |
| 4.09%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                November 1, 2017                       |   |                        | 515,223    |                    |   | 593,068 |   |
| 3.31%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                April 1, 2019                          |   |                        | 618,773    |                    |   | 638,925 |   |
| 4.72%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                November 1, 2022                       |   |                        | 2,112,457  |                    |   | 2,269,998 |   |
| 4.38%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                December 1, 2022                       |   |                        | 703,121    |                    |   | 755,928 |   |
| 3.92%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                December 1, 2022                       |   |                        | 562,464    |                    |   | 638,874 |   |
| 3.64%                select pay mortgage-matched advance, final            |   |                        |       |                    |   |   |   |
|   maturity                March 1, 2023                     |   |                        | 1,888,174  |                    |   | 1,930,409 |   |
|                                                                       |   |                        |       |                    |   |   |   |
|                                                                       |   | $                           | 39,606,691 |                    | $      | 38,511,268 |   |

----

----

*Index*

----

**NOTE      4 - BORROWED FUNDS **

| Year                ended December 31, |   |   |       |
|----------------------------------------|--------|--------|------------|
| 2007                                   |   | $      | 2,224,760  |   |
| 2008                                   |   |   | 10,516,733 |   |
| 2009                                   |   |   | 9,338,541  |   |
| 2010                                   |   |   | 8,185,537  |   |
| 2011                                   |   |   | 5,924,845  |   |
| Thereafter                             |   |   | 3,416,275  |   |
|                                   |   |   |       |   |
|                                   |   | $      | 39,606,691 |   |

**NOTE      5 - OFF-BALANCE-SHEET ACTIVITIES**

|                                                                |   | December                31, |      | June                30, |   |
|---------------------------------------------------------------------|--------|-----------------------------|-----------|-------------------------|--------|
|                                                                |   | 2006                        |      | 2006                    |   |
|                                                                |   |                        |      |                    |   |
| 1-4                family residential real estate - fixed rate      |   | $                           | 211,000   |                    | $      | 239,000 |   |
| 1-4                family residential real estate - variable rate   |   |                        | 197,000   |                    |   | 448,000 |   |
| Multi-family                residential real estate - variable rate |   |                        | 330,000   |                    |   | -- |   |
| Commercial                real estate - variable rate               |   |                        | 367,000   |                    |   | -- |   |
| Commercial                lines of credit - variable rate           |   |                        | 4,960,000 |                    |   | 4,213,000 |   |
| Home                equity lines of credit - variable rate          |   |                        | 896,000   |                    |   | 913,000 |   |

----

----

*Index*

----

**NOTE      5 - OFF-BALANCE-SHEET ACTIVITIES **

**NOTE      6 - EARNINGS PER SHARE**

|                                                         |   | Three                  Months Ended |      | Six                  Months Ended |   |
|--------------------------------------------------------------|--------|-------------------------------------|-----------|-----------------------------------|--------|
|                                                         |   | December                  31,       |      | December                  31,     |   |
|                                                         |   | 2006                                |      | 2005                              |   | 2006 |   | 2005 |   |
| Basic                  Earnings Per Common Share             |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Net                  income                                  |   | $                                   | 279,992   |                              | $      | 285,314 |   | $ | 569,479 |   | $ | 524,882 |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Weighted                  average common shares              |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|   outstanding                                      |   |                                | 1,370,690 |                              |   | 1,410,365 |   |   | 1,378,663 |   |   | 1,418,735 |   |
| Less:                  Average unallocated ESOP shares       |   |                                | (35,015   | )                                 |   | (45,992 | ) |   | (36,342 | ) |   | (47,392 | ) |
| Weighted                  average common shares              |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|   outstanding                  for basic earnings  |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|   per                  common share                |   |                                | 1,335,675 |                              |   | 1,364,373 |   |   | 1,342,321 |   |   | 1,371,343 |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per common share             |   | $                                   | 0.21      |                              | $      | 0.21 |   | $ | 0.42 |   | $ | 0.38 |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Diluted                  Earnings Per Common Share           |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Net                  income                                  |   | $                                   | 279,992   |                              | $      | 285,314 |   | $ | 569,479 |   | $ | 524,882 |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Weighted                  average common shares              |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|   outstanding                  for basic earnings  |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|   per                  common share                |   |                                | 1,335,675 |                              |   | 1,364,373 |   |   | 1,342,321 |   |   | 1,371,343 |   |
| Add:                  Dilutive effects of assumed            |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|                     exercises of stock options     |   |                                | --        |                              |   | -- |   |   | -- |   |   | -- |   |
| Weighted                  average common shares              |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|                     and dilutive potential common  |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|   shares                  outstanding              |   |                                | 1,335,675 |                              |   | 1,364,373 |   |   | 1,342,321 |   |   | 1,371,343 |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Diluted                  earnings per common share           |   | $                                   | 0.21      |                              | $      | 0.21 |   | $ | 0.42 |   | $ | 0.38 |   |
|                                                         |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Stock                  options not considered in calculation |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
|   because                  they were not dilutive  |   |                                | 128,898   |                              |   | 128,898 |   |   | 128,898 |   |   | 128,898 |   |

----

----

*Index*

----

Item      2.  
Management’s      Discussion and Analysis

**Introduction**

**Overview      and Outlook**

**Forward-Looking      Statements**

**Financial      Condition**

----

----

*Index*

----

**Results      of Operations**

----

----

*Index*

----

**Three      Months Ended December 31, 2006 Compared to the Three Months Ended December      31,      2005**

**Net      Income.**

**Net      Interest Income.**

----

----

*Index*

----

**Provision      for Loan Losses.**

**Noninterest      income.**

**Noninterest      expense.**

----

----

*Index*

----

**Income      Tax Expense.**

**Six      Months Ended December 31, 2006 Compared to the Six Months Ended December 31,      2005**

**Net      Income.**

**Net      Interest Income.**

**Provision      for Loan Losses.**

----

----

*Index*

----

**Noninterest      income.**

**Noninterest      expense.**

**Income      Tax Expense.**

----

----

*Index*

----

**Liquidity      and Capital Resources**

|                                                                |   | Six                Months             |   |
|---------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                |   | Ended                December 31,     |   |
|                                                                |   | 2006                                  |   | 2005 |   |
|                                                                |   | (Dollars                in thousands) |   |
|                                                                |   |                                  |   |   |   |
| Net                income                                           |   | $                                     | 569    |   | $ | 525 |   |
| Adjustments                to reconcile net income to net cash from |   |                                  |   |   |   |   |   |
|   operating                activities                     |   |                                  | 105    |   |   | 357 |   |
| Net                cash from operating activities                   |   |                                  | 674    |   |   | 882 |   |
| Net                cash from investing activities                   |   |                                  | 1,078  |   |   | (1,587 | ) |
| Net                cash from financing activities                   |   |                                  | (1,902 | ) |   | 683 |   |
| Net                change in cash and cash equivalents              |   |                                  | (150   | ) |   | (22 | ) |
| Cash                and cash equivalents at beginning of period     |   |                                  | 4,715  |   |   | 5,321 |   |
|                                                                |   |                                  |   |   |   |   |   |
| Cash                and cash equivalents at end of period           |   | $                                     | 4,565  |   | $ | 5,299 |   |

----

----

*Index*

----

|                                              |   |                                  |   |                             |   |                              |   |                                   |   | To                Be |   |
|---------------------------------------------------|--------|---------------------------------------|--------|----------------------------------|--------|-----------------------------------|--------|----------------------------------------|--------|----------------------|--------|
|                                              |   |                                  |   |                             |   |                              |   |                                   |   | Well-Capitalized     |   |
|                                              |   |                                  |   |                             |   | For                Capital        |   | Under                Prompt Corrective |   |
|                                              |   | Actual                                |   | Adequacy                Purposes |   | Action                Regulations |   |
|                                              |   | Amount                                |   | Ratio                            |   | Amount                            |   | Ratio                                  |   | Amount               |   | Ratio |   |
|                                              |   | (Dollars                in Thousands) |   |
| December                31, 2006                  |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
| Total                capital (to risk-            |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   weighted                assets)       |   | $                                     | 16,530 |                             |   | 19.1                              | %      | $                                      | 6,939  |                 |   | 8.0 | % | $ | 8,674 |   |   | 10.0 | % |
| Tier                1 (core) capital (to          |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   risk-weighted                assets)  |   |                                  | 16,057 |                             |   | 18.5                              |   |                                   | 3,469  |                 |   | 4.0 |   |   | 5,204 |   |   | 6.0 |   |
| Tier                1 (core) capital (to          |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   adjusted                total assets) |   |                                  | 16,057 |                             |   | 11.6                              |   |                                   | 5,525  |                 |   | 4.0 |   |   | 6,907 |   |   | 5.0 |   |
| Tangible                capital (to               |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   adjusted                total assets) |   |                                  | 16,057 |                             |   | 11.6                              |   |                                   | 2,072  |                 |   | 1.5 |   |   | N/A |   |   |   |   |
|                                              |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
| June                30, 2006                      |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
| Total                capital (to risk-            |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   weighted                assets)       |   | $                                     | 16,048 |                             |   | 18.9                              | %      | $                                      | 6,779  |                 |   | 8.0 | % | $ | 8,473 |   |   | 10.0 | % |
| Tier                1 (core) capital (to          |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   risk-weighted                assets)  |   |                                  | 15,368 |                             |   | 18.1                              |   |                                   | 3,389  |                 |   | 4.0 |   |   | 5,084 |   |   | 6.0 |   |
| Tier                1 (core) capital (to          |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   adjusted                total assets) |   |                                  | 15,368 |                             |   | 11.0                              |   |                                   | 5,576  |                 |   | 4.0 |   |   | 6,970 |   |   | 5.0 |   |
| Tangible                capital (to               |   |                                  |   |                             |   |                              |   |                                   |   |                 |   |   |   |   |   |   |   |   |   |
|   adjusted                total assets) |   |                                  | 15,368 |                             |   | 11.0                              |   |                                   | 2,091  |                 |   | 1.5 |   |   | N/A |   |   |   |   |

----

----

*Index*

----

Item      3. Controls      and Procedures

**Disclosure      Controls**

----

----

*Index*

PART      II - OTHER INFORMATION

----

| Item                1. | Legal                Proceedings |
|------------------------|----------------------------------|

| Item                2. | Unregistered                Sales of Equity Securities and Use of                Proceeds |
|------------------------|-------------------------------------------------------------------------------------------|

|     Period                                            |    Total                    Number ofSharesPurchased |    Average                    PricePaidPer                    Share | Total                    Number ofShares                    PurchasedAs                    Part ofPubliclyAnnounced                    PlansOr                    programs | MaximumNumber                    of SharesThat                    May Yet BePurchased                    UnderThe                    Plan or Programs |
|---------------------------------------------------------------------------|---------------------------------------------------------------------|------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
| October                    1, 2006 -October                    31, 2006   |  5,000                                                         |  $14.95                                                                       |  5,000                                                                                                                                                                |  18,220                                                                                                                                          |
| November                    l, 2006 -November                    30, 2006 |  18,220                                                        |  $14.96                                                                       |  18,220                                                                                                                                                               |  --                                                                                                                                              |
| December                    1, 2006 -December                    31, 2006 |  --                                                            |  --                                                                           |  --                                                                                                                                                                   |  --                                                                                                                                              |
| Total                                                                     | 23,220                                                              | $14.96                                                                             | 23,220                                                                                                                                                                     | --                                                                                                                                                    |

| Item                3. | Defaults                Upon Senior Securities |
|------------------------|------------------------------------------------|

|   | Not                applicable. |
|--------|--------------------------------|

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

|   | On                October 13, 2006 the Annual Meeting of Shareholders of the Corporation                was                held. The following members of the Board of Directors of the Corporation                were elected by the votes set forth below for the terms expiring                in                2009. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|

|   | Harry                N. Faulkner   | FOR:  1,096,238 | WITHHELD:                30,435 |   |
|--------|------------------------------------|---------------------------|---------------------------------|--------|
|   | Jeffery                S. Sargeant | FOR:  1,120,435 | WITHHELD:                6,238  |   |
|   |                               |                      |                            |   |

|   | The                following members of the Board of Directors of the Corporation continued                in office. |
|--------|-----------------------------------------------------------------------------------------------------------------------|

|   |                             | Term                Expires |   |
|--------|----------------------------------|-----------------------------|--------|
|   | Richard                T. Martin | 2008                        |   |
|   | James                W. Kerber   | 2007                        |   |
|   | Douglas                Stewart   | 2007                        |   |

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

|   | Ratification                of the selection of Crowe, Chizek and Company LLC as the auditors                of the                Corporation for the fiscal year ending June 30,                2007. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | FOR:                1,101,246 | AGAINST:                18,677 | ABSTAIN:                6,750 |
|--------|-------------------------------|--------------------------------|-------------------------------|

----

----

*Index*

----

| Item                5. | Other                Information |
|------------------------|----------------------------------|

|   | None. |
|--------|-------|

| Item6. | Exhibits |
|--------|----------|

----

----

*Index*

SIGNATURES

----

| Date:  | February                13, 2007 |   | /s/                Douglas Stewart                   |
|--------|----------------------------------|--------|------------------------------------------------------|
|   |                             |   | Douglas                Stewart                       |
|   |                             |   | President                and Chief Executive Officer |
|   |                             |   |                                                 |
|   |                             |   |                                                 |
|   |                             |   |                                                 |
|   |                             |   |                                                 |
|   |                             |   |                                                 |
| Date:  | February                13, 2007 |   | /s/                Debra Geuy                        |
|   |                             |   | Debra                Geuy                            |
|   |                             |   | Chief                Financial Officer               |
|   |                             |   |                                                 |

----

----

*Index*

INDEX      TO EXHIBITS

| EXHIBITNUMBER |   |  DESCRIPTION                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                        |
|---------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1           |   | Articles                of Incorporation of Peoples-Sidney                Financial Corporation                                                                                      |   | Incorporated                by reference to the Registration Statement on Form S-1 filed by                Peoples-Sidney Financial Corporation on January 27, 1997 (the “S-1”) with                the Securities and Exchange Commission (the “SEC”), Exhibit                3.1. |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 3.2           |   | Bylaws                of Peoples-Sidney Financial Corporation                                                                                                                        |   | Incorporated                by reference to the S-1, Exhibit 3.2.                                                                                                                                                                                                                                           |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 10.1          |   | Employee                Stock Ownership Plan                                                                                                                                         |   | Incorporated                by reference to the S-1, Exhibit 10.1                                                                                                                                                                                                                                           |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 10.2          |   | Form                of Employment Agreement with Douglas Stewart                                                                                                                     |   | Incorporated                by Pre-Effective Amendment No. 1 to the S-1 filed with the SEC on                March                12, 1997, Exhibit 10.2                                                                                                                                                    |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 10.3          |   | Form                of Employment Agreements with David R. Fogt, Gary N. Fullenkamp and                Debra                A. Geuy                                                  |   | Incorporated                by Pre-Effective Amendment No. 1 to the S-1 filed with the SEC on                March                12, 1997, Exhibit 10.3                                                                                                                                                    |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 10.4          |   | Form                of Severance Agreement with Steve Goins                                                                                                                          |   | Incorporated                by Pre-Effective Amendment No. 1 to the S-1 filed with the SEC on                March                12, 1997, Exhibit 10.4                                                                                                                                                    |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 10.5          |   | 401                (k) Plan                                                                                                                                                          |   | Incorporated                by Pre-Effective Amendment No. 1 to the S-1 filed with the SEC on                March                12, 1997, Exhibit 10.5                                                                                                                                                    |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 10.6          |   | Peoples-Sidney                Financial Corporation Amended and Restated 1998 Stock Option and                Incentive                Plan                                          |   | Filed                as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the                fiscal year ended June 30, 1999 (File No. 0-22223) and incorporate                herein                by reference.                                                                      |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 10.7          |   | Peoples-Sidney                Financial Corporation Amended and Restated 1998 Management Recognition                Plan                                                             |   | Filed                as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the                fiscal year ended June 30, 1999 (File No. 0-22223) and incorporate                herein                by reference.                                                                      |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 11            |   | Statement                Regarding                Computation of Earnings per Share                                                                                                  |   | See                Notes 1 and 6 to the consolidated financial statements, which are                incorporated herein by reference.                                                                                                                                                                       |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 31.1          |   | Certification                of Principal Executive Officer Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                 |   |                                                                                                                                                                                                                                                                                                        |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 31.2          |   | Certification                of Principal Financial Officer Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                 |   |                                                                                                                                                                                                                                                                                                        |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |
| 32            |   | Certifications                of the Chief Executive Officer and the Chief Financial Officer Pursuant                to                Section 906 of the Sarbanes-Oxley Act of 2002 |   |                                                                                                                                                                                                                                                                                                        |
|          |   |                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                        |

----