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

                                   FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 2003

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

For the transition period from __________ to ____________.

Commission File Number 0-22223

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

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

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

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

As of May 5, 2003, the latest practicable date, 1,443,302 shares of the issuer's
common shares, $.01 par value, were issued and outstanding.

Transitional Small Business Disclosure Format (Check One):

Yes |_|     No |X|

                                                                              1.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----

PART I - FINANCIAL INFORMATION

<S>                                                                                                        <C>
  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....................................................     16

  Item 3.     Controls and Procedures.................................................................     23

Part II - Other Information

  Item 1.     Legal Proceedings.......................................................................     24

  Item 2.     Changes in Securities...................................................................     24

  Item 3.     Defaults Upon Senior Securities.........................................................     24

  Item 4.     Submission of Matters to a Vote of Security Holders.....................................     24

  Item 5.     Other Information.......................................................................     24

  Item 6.     Exhibits and Reports on Form 8-K........................................................     24

SIGNATURES ...........................................................................................     25

CERTIFICATIONS........................................................................................     26

</TABLE>

                                                                              2.

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

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

Item 1.  Financial Statements

<TABLE>
<CAPTION>
                                                                                   March 31,            June 30,
                                                                                     2003                 2002
                                                                                     ----                 ----
ASSETS
<S>                                                                            <C>                  <C>
Cash and due from financial institutions                                       $     860,168        $   1,018,337
Interest-bearing deposits in other financial institutions                          4,510,104            3,770,677
Overnight deposits                                                                 8,000,000              800,000
                                                                               -------------        -------------
     Total cash and cash equivalents                                              13,370,272            5,589,014
Securities available for sale                                                      7,537,835            3,525,750
Federal Home Loan Bank stock                                                       1,523,900            1,474,600
Loans, net                                                                       117,916,080          121,224,773
Accrued interest receivable                                                          809,041              834,744
Premises and equipment, net                                                        1,881,466            2,028,995
Real estate owned                                                                     70,580                   --
Other assets                                                                         225,309              176,432
                                                                               -------------        -------------

     Total assets                                                              $ 143,334,483        $ 134,854,308
                                                                               =============        =============

LIABILITIES
Deposits                                                                       $  93,182,061        $  94,786,623
Borrowed funds                                                                    32,572,110           22,455,813
Accrued interest payable and other liabilities                                       259,178              417,664
                                                                               -------------        -------------
     Total liabilities                                                           126,013,349          117,660,100

SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares
  authorized, none issued and outstanding                                                 --                   --
Common stock, $.01 par value, 3,500,000 shares
  authorized, 1,785,375 shares issued                                                 17,854               17,854
Additional paid-in capital                                                        10,697,141           10,689,800
Retained earnings                                                                 11,486,851           11,371,950
Treasury stock, 342,073 and 321,228 shares, at cost                               (3,964,185)          (3,703,717)
Unearned employee stock ownership plan shares                                       (910,134)          (1,023,928)
Unearned management recognition plan shares                                          (31,772)            (174,746)
Accumulated other comprehensive income                                                25,379               16,995
                                                                               -------------        -------------
     Total shareholders' equity                                                   17,321,134           17,194,208
                                                                               -------------        -------------

     Total liabilities and shareholders' equity                                $ 143,334,483        $ 134,854,308
                                                                               =============        =============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                              3.

<PAGE>

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

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

<TABLE>
<CAPTION>
                                                               Three Months Ended                Nine Months Ended
                                                                     March 31,                        March 31,
                                                                     ---------                        ---------
                                                                2003            2002             2003            2002
                                                                ----            ----             ----            ----

<S>                                                          <C>             <C>             <C>             <C>
Interest income
     Loans, including fees                                   $2,091,303      $2,291,218      $6,433,464      $7,046,789
     Securities                                                  50,226          57,924         132,505         170,244
     Demand, time and overnight deposits                         20,321          22,209          47,744          87,047
     Dividends on FHLB Stock                                     14,884          15,995          49,464          60,357
                                                             ----------      ----------      ----------      ----------
         Total interest income                                2,176,734       2,387,346       6,663,177       7,364,437

Interest expense
     Deposits                                                   675,800         969,725       2,257,028       3,203,298
     Borrowed funds                                             412,007         378,758       1,124,567       1,154,377
                                                             ----------      ----------      ----------      ----------
         Total interest expense                               1,087,807       1,348,483       3,381,595       4,357,675
                                                             ----------      ----------      ----------      ----------

Net interest income                                           1,088,927       1,038,863       3,281,582       3,006,762

Provision for loan losses                                        15,310          13,658          56,147          39,341
                                                             ----------      ----------      ----------      ----------

Net interest income after provision
for loan losses                                               1,073,617       1,025,205       3,225,435       2,967,421

Noninterest income
     Service fees and other charges                              31,559          29,325         100,550          97,694

Noninterest expense
     Compensation and benefits                                  422,784         412,830       1,275,435       1,232,757
     Director fees                                               24,300          24,300          72,900          72,900
     Occupancy and equipment                                    112,452         115,883         329,784         329,304
     Computer processing expense                                 65,466          68,722         192,063         194,695
     State franchise taxes                                       48,577          45,137         138,852         140,296
     Professional fees                                           22,398          19,631          75,494          74,056
     Other                                                       86,753          86,551         256,115         257,172
                                                             ----------      ----------      ----------      ----------
         Total noninterest expense                              782,730         773,054       2,340,643       2,301,180
                                                             ----------      ----------      ----------      ----------

Income before income taxes                                      322,446         281,476         985,342         763,935

Income tax expense                                              119,700         107,200         365,600         291,100
                                                             ----------      ----------      ----------      ----------
Net income                                                   $  202,746      $  174,276      $  619,742      $  472,835
                                                             ==========      ==========      ==========      ==========
Earnings per common share - basic                            $     0.15      $     0.13      $     0.45      $     0.34
                                                             ==========      ==========      ==========      ==========
Earnings per common share - diluted                          $     0.15      $     0.13      $     0.45      $     0.34
                                                             ==========      ==========      ==========      ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                              4.

<PAGE>

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

<TABLE>
<CAPTION>
                                                                Three Months Ended                Nine Months Ended
                                                                     March 31,                        March 31,
                                                                     ---------                        ---------
                                                                2003            2002             2003            2002
                                                                ----            ----             ----            ----

<S>                                                          <C>             <C>             <C>             <C>
Net income                                                   $  202,746      $  174,276      $  619,742      $  472,835

Other comprehensive income (loss)
     Unrealized holding gains and (losses) on
       available-for-sale securities                             (8,045)        (42,588)         12,705         (46,883)
     Tax effect                                                   2,734          14,480          (4,321)         15,941
                                                             ----------      ----------      ----------      ----------
         Other comprehensive income (loss)                       (5,311)        (28,108)          8,384         (30,942)
                                                             ----------      ----------      ----------      ----------

Comprehensive income                                         $  197,435      $  146,168      $  628,126      $  441,893
                                                             ==========      ==========      ==========      ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                              5.
<PAGE>

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

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                          Three Months Ended                    Nine Months Ended
                                                               March 31,                            March 31,
                                                               ---------                            ---------
                                                          2003            2002                 2003            2002
                                                          ----            ----                 ----            ----

<S>                                                 <C>               <C>               <C>               <C>
Balance, beginning of period                        $17,195,722       $17,035,495       $17,194,208       $17,149,613

Net income for period                                   202,746           174,276           619,742           472,835

Cash dividends, $.12 and $.09 per share
 for the three months ended March 31,
 2003 and 2002, $.37 and $.26 per share
 for the nine months ended March 31,
 2003 and 2002                                         (162,725)         (124,223)         (504,841)         (362,419)

Purchase of 6,000 shares of treasury
 stock for the three months ended March
 31, 2002; and 20,845 and 38,508 shares
 of treasury stock for the nine months
 ended March 31, 2003 and 2002, at cost                    --             (65,400)         (260,468)         (400,457)

Commitment to release 2,856 management
 recognition plan shares for the three
 months ended March 31, 2003 and 2002
 and 8,568 management recognition plan
 shares for the nine months ended March
 31, 2003 and 2002                                       47,658            47,658           142,974           142,974

Commitment to release 3,233 and 3,378
 employee stock ownership plan shares
 for the three months ended March 31,
 2003 and 2002 and 9,699 and 10,134
 employee stock ownership plan shares
 for the nine months ended March 31,
 2003 and 2002, at fair value                            43,044            36,595           121,135           104,689

Change in fair value on securities
 available for sale, net of tax                          (5,311)          (28,108)            8,384           (30,942)
                                                    -----------       -----------       -----------       -----------

Balance, end of period                              $17,321,134       $17,076,293       $17,321,134       $17,076,293
                                                    ===========       ===========       ===========       ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                              6.
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                                                          Nine Months Ended
                                                                                               March 31,
                                                                                               ---------
                                                                                       2003               2002
                                                                                       ----               ----
<S>                                                                            <C>                  <C>
Cash flows from operating activities
     Net income                                                                $   619,742          $  472,835
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                              155,450             157,307
         Provision for loan losses                                                  56,147              39,341
         Loss on sale of real estate owned                                           1,711                  --
         FHLB stock dividends                                                      (49,300)            (60,200)
         Compensation expense for ESOP shares                                      121,135             104,689
         Compensation expense for MRP shares                                       142,974             142,974
         Change in
              Accrued interest receivable and other assets                         (23,174)            (13,368)
              Accrued expense and other liabilities                               (162,807)            (58,893)
              Deferred loan fees                                                    23,119              51,295
                                                                               -----------          ----------
                  Net cash from operating activities                               884,997             835,980

Cash flows from investing activities
     Proceeds from maturities/calls of securities available for sale             5,500,000           1,500,000
     Purchases of securities available for sale                                 (9,499,380)         (2,500,000)
     Purchases of time deposits in other financial institutions                 (2,000,000)           (300,000)
     Maturities of time deposits in other financial institutions                 2,000,000             300,000
     Net change in loans                                                         3,082,310             164,936
     Premises and equipment expenditures                                            (7,921)           (239,736)
     Proceeds from sale of real estate owned                                        74,826                  --
                                                                               -----------          ----------
         Net cash from investing activities                                       (850,165)         (1,074,800)

Cash flows from financing activities
     Net change in deposits                                                     (1,604,562)          4,324,381
     Repayments of long-term FHLB advances                                        (383,703)           (348,757)
     Net change in short-term FHLB advances                                       (500,000)                 --
     Proceeds from long-term FHLB advances                                      11,000,000                  --
     Cash dividends paid                                                          (504,841)           (362,419)
     Purchase of treasury stock                                                   (260,468)           (400,457)
                                                                               -----------          ----------
         Net cash from financing activities                                      7,746,426           3,212,748
                                                                               -----------          ----------

Net change in cash and cash equivalents                                          7,781,258           2,973,928

Cash and cash equivalents at beginning of period                                 5,589,014           6,350,895
                                                                               -----------          ----------

Cash and cash equivalents at end of period                                     $13,370,272          $9,324,823
                                                                               ===========          ==========

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                              $ 3,431,626          $4,336,668
         Income taxes                                                              461,000             281,000
Noncash transactions
     Transfer from loans to other real estate owned                            $   147,117          $       --
</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                              7.

<PAGE>

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

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

These interim  consolidated  financial statements are prepared without audit and
reflect all adjustments  which,  in the opinion of management,  are necessary to
present fairly the financial  position of the  Corporation at March 31, 2003 and
its results of  operations  and cash flows for the periods  presented.  All such
adjustments are normal and recurring in nature.  The  accompanying  consolidated
financial  statements have been prepared in accordance with the  instructions of
Form  10-QSB  and,  therefore,  do not  purport  to  contain  all the  necessary
financial  disclosures  required by accounting  principles generally accepted in
the  United  States  of  America  that  might  otherwise  be  necessary  in  the
circumstances, and should be read in conjunction with the consolidated financial
statements and notes thereto of the  Corporation  for the fiscal year ended June
30, 2002,  included in the  Corporation's  2002 Annual Report on Form 10-KSB for
the  fiscal  year  ended  June 30,  2002.  Reference  is made to the  accounting
policies of the  Corporation  described in the notes to  consolidated  financial
statements  contained in such report. The Corporation has consistently  followed
these policies in preparing this Form 10-QSB.

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

Use of Estimates:  To prepare financial statements in conformity with accounting
principles generally accepted in the United States of America,  management makes
estimates and assumptions  based on available  information.  These estimates and
assumptions  affect  the  amounts  reported  in  the  financial  statements  and
disclosures  provided,  and future results could differ.  The allowance for loan
losses and fair values of  financial  instruments  are  particularly  subject to
change.

Income Taxes:  Income tax expense is based on the effective tax rate expected to
be  applicable  for the  entire  year.  Income  tax  expense is the total of the
current year income tax due or refundable  and the change in deferred tax assets
and liabilities. Deferred tax assets and liabilities are the expected future tax
amounts for the temporary differences between the carrying amounts and tax basis
of assets  and  liabilities,  computed  using  enacted  tax rates.  A  valuation
allowance,  if needed,  reduces deferred tax assets to the amount expected to be
realized.

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


                                  (Continued)


                                                                              8.
<PAGE>

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

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

New  Accounting  Pronouncements:  SFAS No.  148,  "Accounting  for  Stock  Based
Compensation - Transition and Disclosure," was issued in December 2002. SFAS No.
148 amends SFAS No. 123 to provide  alternative methods of a voluntary change to
the fair value based method of accounting for stock-based employee compensation.
It also amends the disclosure  requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial  statements about the method of
accounting for stock-based  employee  compensation  and the offset of the method
used on reported  results.  The  provisions of this  statement are effective for
annual  financial  statements  for  fiscal  years  ending  and  interim  periods
beginning  after  December 15, 2002. As a result,  the following  information is
provided.

Employee  compensation  expense  under stock option plans is reported  using the
intrinsic  value method.  No stock-based  compensation  cost is reflected in net
income,  as all options  granted had an exercise  price equal to or greater than
the  market  price of the  underlying  common  stock at the date of  grant.  The
following  table  illustrates the effect on net income and earnings per share if
expense  was  measured  using  the fair  value  recognition  provisions  of FASB
Statement No. 123, Accounting for Stock-Based Compensation.

<TABLE>
<CAPTION>
                                                        Three Months Ended                  Nine Months Ended
                                                             March 31,                          March 31,
                                                             ---------                          ---------
                                                      2003              2002              2003              2002
                                                    --------          --------          --------          --------

<S>                                                 <C>               <C>               <C>               <C>
Net income as reported                              $202,746          $174,276          $619,742          $472,835
Deduct: Stock-based compensation expense
  determined under fair value based method            52,884            52,884           158,652           158,652
                                                    --------          --------          --------          --------

Pro forma net income                                $149,862          $121,392          $461,090          $314,183
                                                    ========          ========          ========          ========

Basic earnings per share as reported                $   0.15          $   0.13          $   0.45          $   0.34
Pro forma basic earnings per share                      0.11              0.09              0.34              0.23

Diluted earnings per share as reported              $   0.15          $   0.13          $   0.45          $   0.34
Pro forma diluted earnings per share                    0.11              0.09              0.34              0.23
</TABLE>


                                  (Continued)


                                                                              9.
<PAGE>

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

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

NOTE 2 - SECURITIES AVAILABLE FOR SALE

Securities available for sale were as follows.

<TABLE>
<CAPTION>
                                                                         Gross             Gross
                                                        Fair          Unrealized        Unrealized
                                                        Value            Gains            Losses
                                                        -----            -----            ------

<S>                                                 <C>               <C>               <C>
March 31, 2003
    U.S. Government agencies                        $ 7,537,835       $    45,955       $    (7,500)
                                                    ===========       ===========       ===========

June 30, 2002
    U.S. Government agencies                        $ 3,525,750       $    28,080       $    (2,330)
                                                    ===========       ===========       ===========
</TABLE>

Contractual  maturities of securities  available for sale at March 31, 2003 were
as follows.  Actual  maturities may differ from contractual  maturities  because
borrowers may have the right to call or prepay  obligations with or without call
or prepayment penalties.

                                                                         Fair
                                                                         Value
                                                                     -----------
           Due after one year through five years                     $ 4,040,010
           Due after five years through ten years                      3,497,825
                                                                     -----------
                                                                     $ 7,537,835
                                                                     ===========

No securities  were sold during the three or nine-month  periods ended March 31,
2003 and 2002.  No  securities  were pledged as  collateral at March 31, 2003 or
June 30, 2002.


                                  (Continued)


                                                                             10.

<PAGE>

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

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

NOTE 3 - LOANS

Loans were as follows.

<TABLE>
<CAPTION>
                                                                                   March 31,            June 30,
                                                                                     2003                 2002
                                                                                     ----                 ----
<S>                                                                            <C>                  <C>
   Mortgage loans:
     1-4 family residential                                                    $  91,869,148        $  96,006,970
     Multi-family residential                                                      1,862,474            1,913,649
     Commercial real estate                                                       10,592,692           10,111,114
     Real estate construction and
       development                                                                 6,991,916            7,096,855
     Land                                                                          1,342,043            1,309,677
                                                                               -------------        -------------
         Total mortgage loans                                                    112,658,273          116,438,265
  Consumer loans                                                                   4,270,745            4,625,413
  Commercial loans                                                                 3,952,557            3,716,760
                                                                               -------------        -------------
         Total loans                                                             120,881,575          124,780,438
  Less:
     Allowance for loan losses                                                      (758,000)            (708,000)
     Loans in process                                                             (1,852,842)          (2,516,131)
     Deferred loan fees                                                             (354,653)            (331,534)
                                                                               -------------        -------------

                                                                               $ 117,916,080        $ 121,224,773
                                                                               =============        =============
</TABLE>

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

<TABLE>
<CAPTION>
                                                        Three Months Ended                 Nine Months Ended
                                                             March 31,                         March 31,
                                                             ---------                         ---------
                                                      2003             2002               2003          2002
                                                      ----             ----               ----          ----

<S>                                                 <C>               <C>               <C>               <C>
Balance at beginning of period                      $740,000          $685,000          $708,000          $660,800
Provision for losses                                  15,310            13,658            56,147            39,341
Charge-offs                                           (1,873)           (4,140)          (10,951)           (5,941)
Recoveries                                             4,563               482             4,804               800
                                                    --------          --------          --------          --------

Balance at end of period                            $758,000          $695,000          $758,000          $695,000
                                                    ========          ========          ========          ========
</TABLE>

Nonperforming loans were as follows.

                                                    March 31,       June 30,
                                                      2003            2002
                                                      ----            ----

Loans past due over 90 days still on accrual      $  329,000      $  472,000
Nonaccrual loans                                   1,093,000         598,000

Nonperforming   loans  include  smaller  balance   homogeneous  loans,  such  as
residential  mortgage and consumer  loans that are  collectively  evaluated  for
impairment.  As of March 31, 2003 and June 30, 2002 and for the three months and
nine months ended March 31, 2003 and 2002, impaired loans were not material.


                                   (Continued)


                                                                             11.
<PAGE>

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

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

NOTE 4 - BORROWED FUNDS

At March 31, 2003 and June 30, 2002, the  Association had a cash management line
of credit enabling it to borrow up to $8,000,000 from the Federal Home Loan Bank
of Cincinnati  ("FHLB").  All cash management advances have an original maturity
of 90 days. The line of credit must be renewed on an annual basis. There were no
outstanding  borrowings on this line of credit at March 31, 2003 and $500,000 in
outstanding borrowings at June 30, 2002.

As a member  of the FHLB  system,  the  Association  has the  ability  to obtain
borrowings up to a maximum total of  $66,191,000  including the cash  management
line of credit. Advances from the Federal Home Loan Bank were as follows.

<TABLE>
<CAPTION>
                                                                       March 31,         June 30,
                                                                         2003              2002
                                                                         ----              ----

<S>                                                                   <C>              <C>
      Cash management advance, variable rate
       2.15% at June 30, 2002                                         $      --        $   500,000
      6.13% FHLB fixed-rate advance, due June 25, 2008                  7,000,000        7,000,000
      6.00% FHLB convertible advance, fixed-rate until
        June 2004, due June 11, 2009                                    5,000,000        5,000,000
      6.27% FHLB convertible advance, fixed-rate until
        September 2003, due September 8, 2010                           5,000,000        5,000,000
      5.30% select pay mortgage-matched advance, final
        maturity May 1, 2011                                            1,537,062        1,635,638
      5.35% select pay mortgage-matched advance, final
        maturity July 1, 2011                                           3,125,153        3,320,175
      3.92% select pay mortgage-matched advance, final
        maturity November 1, 2012                                         972,586             --
      3.55% select pay mortgage-matched advance, final
        maturity March 1, 2013                                          1,000,000             --
      4.09% select pay mortgage-matched advance, final
        maturity November 1, 2017                                         983,782             --
      4.72% select pay mortgage-matched advance, final
        maturity November 1, 2022                                       2,969,671             --
      4.38% select pay mortgage-matched advance, final
        maturity December 1, 2022                                         992,136             --
      3.92% select pay mortgage-matched advance, final
        maturity December 1, 2022                                         991,720             --
      3.64% select pay mortgage-matched advance, final
        maturity March 1, 2023                                          3,000,000             --
                                                                      -----------      -----------

                                                                      $32,572,110      $22,455,813
                                                                      ===========      ===========
</TABLE>

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

The interest rates on the convertible  advances are fixed for a specified number
of years,  then convertible to a variable rate at the option of the FHLB. If the
convertible option is exercised, the advance may be prepaid without penalty. The
select pay  mortgage-matched  advances  require  monthly  principal and interest
payments and annual additional principal payments.


                                   (Continued)


                                                                             12.
<PAGE>

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

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

NOTE 4 - BORROWED FUNDS (Continued)

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

                  Year ended March 31,
                         2004                                  $ 2,078,842
                         2005                                    1,878,802
                         2006                                    1,677,768
                         2007                                    1,519,095
                         2008                                    1,370,430
                      Thereafter                                24,047,173
                                                               -----------

                                                               $32,572,110
                                                               ===========

NOTE 5 - OFF-BALANCE-SHEET ACTIVITIES

Loss  contingencies,  including claims and legal actions arising in the ordinary
course of business,  are recorded as liabilities  when the likelihood of loss is
probable and an amount or range of loss can be reasonably estimated.  Management
does not believe there now are such matters that will have a material  effect on
the financial statements.

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

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

<TABLE>
<CAPTION>
                                             March 31,                      June 30,
                                               2003                           2002
                                               ----                           ----
                                      Fixed         Variable            Fixed     Variable
                                      Rate            Rate              Rate        Rate
                                      ----            ----              ----        ----

<S>                                <C>             <C>              <C>           <C>
      Nonresidential               $  238,000      $      --        $  696,000    $  --
      Residential real estate       3,135,000        935,000           400,000       --
      Interest rates               5.38-6.25%      5.00-7.50%       6.75-7.00%       --
</TABLE>

Commitments  to make loans are  generally  made for a period of 30 days or less.
The maximum maturity for fixed-rate loan commitments was 20 years.

The  Corporation  also had unused  commercial  and home  equity  lines of credit
approximating $3,567,000 and $3,156,000 at March 31, 2003 and June 30, 2002.

At March 31,  2003 and June 30,  2002,  the  Corporation  was  required  to have
$2,528,000  and  $1,700,000  on  deposit  with  its  correspondent  banks  as  a
compensating clearing requirement.


                                   (Continued)


                                                                             13.
<PAGE>

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

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

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

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

NOTE 6 - EARNINGS PER SHARE

A reconciliation  of the numerators and denominators  used in the computation of
the basic  earnings  per common  share and diluted  earnings per common share is
presented below:

<TABLE>
<CAPTION>
                                                          Three Months Ended             Nine Months Ended
                                                          ------------------             -----------------
                                                               March 31,                     March 31,
                                                               ---------                     ---------
                                                         2003           2002            2003           2002
                                                         ----           ----            ----           ----
<S>                                                 <C>               <C>               <C>               <C>
Basic Earnings Per Common Share

      Net income                                    $   202,746       $   174,276       $   619,742       $   472,835
                                                    ===========       ===========       ===========       ===========

      Weighted average common shares
        outstanding                                   1,443,302         1,476,971         1,451,562         1,491,641
      Less:  Average unallocated ESOP shares            (79,179)          (92,329)          (82,413)          (95,707)
      Less:  Average unearned MRP shares                 (3,332)          (14,757)           (6,188)          (17,613)
                                                    -----------       -----------       -----------       -----------
      Weighted average common shares
        outstanding for basic earnings
        per common share                              1,360,791         1,369,885         1,362,961         1,378,321
                                                    ===========       ===========       ===========       ===========

      Basic earnings per common share               $      0.15       $      0.13       $      0.45       $      0.34
                                                    ===========       ===========       ===========       ===========
</TABLE>


                                   (Continued)


                                                                             14.
<PAGE>

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

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

NOTE 6 - EARNINGS PER SHARE (Continued)

<TABLE>
<CAPTION>
     Diluted Earnings Per Common Share

<S>                                                 <C>               <C>               <C>               <C>
Net income                                          $   202,746       $   174,276       $   619,742       $   472,835
                                                    ===========       ===========       ===========       ===========

Weighted average common shares
  outstanding for basic earnings
  per common share                                    1,360,791         1,369,885         1,362,961         1,378,321
Add:  Dilutive effects of average
  unearned MRP shares                                      --                --                --                --
Add:  Dilutive effects of assumed
   exercises of stock options                              --                --                --                --
                                                    -----------       -----------       -----------       -----------
Weighted average common shares
   and dilutive potential common
  shares outstanding                                  1,360,791         1,369,885         1,362,961         1,378,321
                                                    ===========       ===========       ===========       ===========

Diluted earnings per common share                   $      0.15       $      0.13       $      0.45       $      0.34
                                                    ===========       ===========       ===========       ===========
</TABLE>

Unearned MRP shares and stock options  granted did not have a dilutive effect on
EPS for the  three and nine  months  ended  March 31,  2003 and 2002 as the fair
value  of the  MRP  shares  on the  date of  grant  and the  exercise  price  of
outstanding options was greater than the average market price for the period. As
of March 31, 2003 and 2002, there were 140,824 options outstanding that were not
dilutive.


                                   (Continued)


                                                                             15.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Item 2.  Management's Discussion and Analysis

Introduction

In the  following  pages,  management  presents an analysis of the  consolidated
financial  condition of the  Corporation as of March 31, 2003,  compared to June
30, 2002,  and results of  operations  for the three and nine months ended March
31, 2003, compared with the same periods in 2002. This discussion is designed to
provide a more comprehensive  review of operating results and financial position
than could be obtained from an  examination of the financial  statements  alone.
This  analysis  should  be  read  in  conjunction  with  the  interim  financial
statements and related footnotes included herein.

Forward-Looking Statements

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

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

Financial Condition

Total assets at March 31, 2003 were $143.3 million compared to $134.9 million at
June 30,  2002,  an increase of $8.4  million,  or 6.3%.  The  increase in total
assets  was due  primarily  to an  increase  in cash  and cash  equivalents  and
securities funded by an increase in borrowed funds.

Cash and cash equivalents  increased $7.8 million, from $5.6 million at June 30,
2002 to $13.4 million at March 31, 2003, and securities  increased $4.0 million,
from $3.5 million to $7.5 million at the same dates.

Loans  decreased  $3.3  million  from $121.2  million at June 30, 2002 to $117.9
million  at March 31,  2003.  The  decrease  in loans was  primarily  in one- to
four-family residential loans, which decreased $4.1 million. Other mortgage loan
categories  had nominal  changes.  The  overall  net  decrease in total loans is
reflective of the low interest rate  environment  which has encouraged  mortgage
customers to shop for 30 year fixed rate products not  currently  offered by the
Corporation.


                                   (Continued)


                                                                             16.

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

The  Corporation's  consumer and  commercial  loan  portfolio had modest changes
between  June 30, 2002 and March 31,  2003.  Non-mortgage  loans  remain a small
portion of the entire  loan  portfolio  and  represented  6.8% and 6.7% of gross
loans at March 31, 2003 and June 30, 2002.

Total  deposits  decreased  $1.6 million from $94.8  million at June 30, 2002 to
$93.2  million  at March 31,  2003.  The  largest  decrease  was in  certificate
accounts which  decreased $4.9 million.  The  Corporation  also had decreases in
other   deposit    categories   as   NOW   accounts    decreased   $31,000   and
noninterest-bearing  demand accounts  decreased  $9,000,  while savings accounts
increased  $2.6  million  and money  market  accounts  increased  $746,000.  The
increases in savings and money market  accounts  resulted from depost  customers
repositioning their money into short-term liquid accounts.  The overall decrease
in deposit  accounts is  reflective  of the low interest  rate  environment  and
economic  conditions  as  customers  search for  higher  rates or elect to spend
rather than save.

Borrowed  funds  increased  $10.1  million  from $22.5  million at June 30, 2002
compared  to $32.6  million  at March  31,  2003.  The  Corporation's  intent in
borrowing $11 million in FHLB advances was to secure low,  long-term  fixed rate
funding to satisfy  anticipated  spring and summer mortgage loan demand and as a
hedge in a rising rate environment.  These borrowings have largely been invested
in overnight deposits and short-term  securities.  However,  interest rates have
remained  low and new loan  demand has been weak as mortgage  customers  seek to
refinance  current  balances  for lower  fixed  rates and longer  terms than the
Corporation currently offers. As a result, the Corporation expects to experience
portfolio  shrinkage and to endure some margin  compression until demand for its
mortgage  products  increases.  Management  is  currently  exploring  additional
mortgage  products to address this issue.  Management  is also  exploring  other
investment options to utilize the additional funds provided from the increase in
borrowings.  Borrowings  at March 31, 2003  consisted  of  long-term  fixed-rate
advances,  convertible  fixed-rate  advances  and  select  pay  mortgage-matched
advances.  Based on the FHLB stock owned by the  Corporation  at March 31, 2003,
the  Corporation  had the ability to obtain  borrowings up to a maximum total of
$66.2 million.

Results of Operations

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

The Corporation's net income primarily depends on its net interest income, which
is the difference  between  interest income earned on  interest-earning  assets,
such as loans and securities and interest expense  incurred on  interest-bearing
liabilities,  such as deposits and borrowings.  The level of net interest income
is dependent on the interest  rate  environment  and volume and  composition  of
interest-earning  assets and  interest-bearing  liabilities.  Net income is also
affected by provisions for loan losses,  service  charges,  gains on the sale of
assets and other income, noninterest expense and income taxes.

Three Months Ended March 31, 2003 Compared to the Three Months Ended March 31,
2002

Net Income.  The Corporation  earned net income of $203,000 for the three months
ended March 31, 2003  compared to $174,000  for the three months ended March 31,
2002. The increase of $29,000,  or 16.3%,  in net income was primarily due to an
increase  in net  interest  income  partially  offset by a slight  increases  in
noninterest expense, provision for loan losses and income taxes.


                                   (Continued)


                                                                             17.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Net Interest Income. Net interest income totaled $1,089,000 for the three months
ended March 31, 2003 compared to $1,039,000 for the three months ended March 31,
2002,  representing an increase of $50,000, or 4.8%. The increase was the result
of a larger decrease in interest expense on deposits and borrowed funds compared
to the decline in interest income on loans and other sources of interest income.

Interest and fees on loans decreased  $200,000,  or 8.7% from $2,291,000 for the
three months ended March 31, 2002 to $2,091,000 for the three months ended March
31, 2003.  The decrease in interest  income was due primarily to a lower average
yield earned on loans due to the lower interest rate environment  coupled with a
decrease in the average balance.  The yield on loans declined from 7.64% for the
three  months ended March 31, 2002 to 7.07% for the three months ended March 31,
2003.

Interest on securities decreased $8,000 due to a lower average interest rate for
the current three month period partially offset by a higher average balance.

Interest  paid on deposits  decreased  $294,000,  or 30.3% from $970,000 for the
three  months  ended March 31, 2002 to $676,000 for the three months ended March
31, 2003. The decrease  resulted from a lower average interest rate coupled with
a lower average balance of deposits.  The average cost of deposits declined from
4.19% for the three  months  ended March 31, 2002 to 2.99% for the three  months
ended March 31, 2003.

Interest  paid on borrowed  funds  totaled  $412,000  for the three months ended
March 31, 2003  compared to $379,000  for the three months ended March 31, 2002.
The increase in interest  expense on borrowed funds resulted from an increase in
the  average  balance of  borrowed  funds  offset  slightly by a decrease in the
average rate paid for borrowings.

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

The  provision for loan losses for the three months ended March 31, 2003 totaled
$15,000  compared to $14,000 for the three  months  ended  March 31,  2002.  The
modest  increase  resulted  from an increase in  nonperforming  loans  partially
offset by a decline in the overall loan  portfolio  balance.  The  allowance for
loan losses totaled $758,000,  or 0.64% of gross loans receivable,  net of loans
in process and deferred loan origination  fees and 53.3% of total  nonperforming
loans at  March  31,  2003,  compared  with  $708,000,  or 0.58% of gross  loans
receivable, net of loans in process and deferred loan origination fees and 66.2%
of total  nonperforming loans at June 30, 2002.  Charge-offs  experienced by the
Corporation have primarily  related to consumer and other non-real estate loans.
The Corporation's low historical  charge-off history is the product of a variety
of factors, including the Corporation's underwriting guidelines, which generally
require a loan-to-value  or projected  completed value ratio of 80% for purchase
or  construction  of  one- to  four-family  residential  properties  and 75% for
commercial  real  estate and land  loans,  established  income  information  and
defined ratios of debt to income.


                                   (Continued)


                                                                             18.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and  increased  $3,000 from  $29,000 for the three  months
ended March 31, 2002 to $32,000 for the three months ended March 31, 2003.

Noninterest  expense.  Noninterest expense totaled $783,000 for the three months
ended March 31, 2003  compared to $773,000  for the three months ended March 31,
2002,  an increase of  $10,000.  The  increase  was the result of  increases  in
compensation  and benefits  primarily  related to increases in health care costs
and the impact of the Corporation's  increased stock price on the Employee Stock
Ownership Plan ("ESOP").

Income Tax  Expense.  Income tax expense  totaled  $120,000 for the three months
ended March 31, 2003  compared to $107,000  for the three months ended March 31,
2002, representing an increase of $13,000. The increase in income tax expense is
reflective  of the  increase  in net income  before  income  taxes for the three
months ended March 31, 2003 as compared to the three months ended  September 30.
2002.  The  effective  tax rate was 37.1% and 38.1% for the three  months  ended
March 31, 2003 and 2002.

Nine Months Ended March 31, 2003 Compared to the Nine Months Ended March 31,
2002

Net Income.  The  Corporation  earned net income of $620,000 for the nine months
ended March 31, 2003  compared to $473,000  for the nine months  ended March 31,
2002.  The  increase  in net  income was  primarily  due to an  increase  in net
interest income  partially offset by a slight increase in the provision for loan
losses, noninterest expense and income taxes.

Net Interest Income.  Net interest income totaled $3,282,000 for the nine months
ended March 31, 2003 compared to $3,007,000  for the nine months ended March 31,
2002. The increase of $275,000,  or 9.1%, was the result of a larger decrease in
interest  expense on  deposits  and  borrowed  funds  compared to the decline in
interest income on loans and other sources of interest income.

Interest and fees on loans decreased  $613,000,  or 8.7% from $7,047,000 for the
nine months ended March 31, 2002 to  $6,433,000  for the nine months ended March
31, 2003.  The decrease in interest  income was due primarily to a lower average
yield earned on loans due to the lower  interest rate  environment  as well as a
decrease in the average  balance of loans.  The average yield on loans  declined
from 7.78% for the nine months ended March 31, 2002 to 7.17% for the nine months
ended March 31, 2003.

Interest on securities,  demand, and overnight deposits totaled $180,000 for the
nine months ended March 31, 2003  compared to $257,000 for the nine months ended
March 31, 2002.  The decrease of $77,000  resulted from a decline in the average
interest rates partially  offset by an increase in the average  balances for the
current nine month period.

Interest paid on deposits  decreased  $946,000 or 29.5% from  $3,203,000 for the
nine months ended March 31, 2002 to  $2,257,000  for the nine months ended March
31, 2003. The decrease resulted from a lower average interest rate combined with
a lower average balance of deposits.  The average cost of deposits declined from
4.58% for the nine  months  ended  March 31,  2002 to 3.26% for the nine  months
ended March 31, 2003.

Interest  paid on borrowed  funds totaled  $1,125,000  for the nine months ended
March 31, 2003 compared to $1,154,000  for the nine months ended March 31, 2002.
The decrease in interest  expense on borrowed  funds resulted from a decrease in
the  average  rate paid for  borrowings  partially  offset by an increase in the
average balance of borrowings.


                                   (Continued)


                                                                             19.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Provision  for Loan Losses.  The  provision  for loan losses for the nine months
ended March 31,  2003  totaled  $56,000  compared to $39,000 for the nine months
ended March 31,  2002.  The  increase in the  provision  for loan losses was the
result of an  increase in  nonperforming  loans  during the  current  nine month
period. The increase in nonperforming loans is reflective of a slowing economy.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and totaled  $101,000  for the nine months ended March 31,
2003 and $98,000 for the nine months ended March 31, 2002.

Noninterest expense.  Noninterest expense totaled $2,341,000 for the nine months
ended March 31, 2003 compared to $2,301,000  for the nine months ended March 31,
2002,  an  increase  of  $40,000.  The change was the result of an  increase  in
compensation and benefits  primarily related to an increase in health care costs
and the impact of the Corporation's increased stock price on the ESOP.

Income Tax  Expense.  Income tax expense  totaled  $366,000  for the nine months
ended March 31, 2003  compared to $291,000  for the nine months  ended March 31,
2002, representing an increase of $75,000. The increase in income tax expense is
reflective of the increase in net income before income taxes for the nine months
ended March 31, 2003 as compared to the nine months  ended March 31,  2002.  The
effective  tax rate was 37.1% and 38.1% for the nine months ended March 31, 2003
and 2002.

Liquidity and Capital Resources

The Corporation's liquidity, primarily represented by cash and cash equivalents,
is a result of operating,  investing and financing activities.  These activities
are summarized below for the nine months ended March 31, 2003 and 2002.

<TABLE>
<CAPTION>
                                                                           Nine Months
                                                                         Ended March 31,
                                                                         ---------------
                                                                      2003             2002
                                                                      ----             ----
                                                                     (Dollars in thousands)

<S>                                                              <C>                 <C>
Net income                                                       $    620            $    473
Adjustments to reconcile net income to net cash from
  operating activities                                                265                 363
                                                                 --------            --------
Net cash from operating activities                                    885                 836
Net cash from investing activities                                   (850)             (1,075)
Net cash from financing activities                                  7,746               3,213
                                                                 --------            --------
Net change in cash and cash equivalents                             7,781               2,974
Cash and cash equivalents at beginning of period                    5,589               6,351
                                                                 --------            --------

Cash and cash equivalents at end of period                       $ 13,370            $  9,325
                                                                 ========            ========
</TABLE>

The  Corporation's  principal  sources of funds are deposits,  loan  repayments,
maturities of securities and other funds provided by operations. While scheduled
loan  repayments and maturing  investments are relatively  predictable,  deposit
flows and early loan prepayments are more influenced by interest rates,  general
economic conditions and competition.  The Corporation  maintains  investments in
liquid assets based on  management's  assessment of the (1) need for funds,  (2)
expected deposit flows, (3) yields available on short-term liquid assets and (4)
objectives of the asset/liability management program.


                                   (Continued)


                                                                             20.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

The  Corporation  also has the  ability to borrow  from the FHLB up to a maximum
total of $66,191,000 including the cash management line of credit. See Note 4 of
the Notes to Consolidated Financial Statements for a detail of the Corporation's
borrowings from the FHLB at March 31, 2003.

At March 31, 2003,  the  Corporation  had  commitments  to originate  fixed-rate
commercial  and   residential   real  estate  loans   totaling   $3,373,000  and
variable-rate nonresidential and residential real estate mortgage loans totaling
$935,000. Loan commitments are generally for 30 days. See Note 5 of the Notes to
Consolidated  Financial  Statements  for a  detail  of  the  Corporation's  loan
commitments  at March 31,  2003.  The Office of Thrift  Supervision  regulations
require the Corporation's  insured subsidiary to maintain a safe and sound level
of liquid assets. The Corporation considers its liquidity sufficient to meet its
outstanding  short and long-term  needs,  and believes it is in compliance  with
regulatory requirements.

The  Association  is also  subject to various  regulatory  capital  requirements
administered  by  the  federal  regulatory  agencies.   Under  capital  adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Association  must meet specific  capital  guidelines  that involve  quantitative
measures of the Association's assets,  liabilities and certain off-balance-sheet
items as calculated under regulatory  accounting  practices.  The  Association's
capital amounts and classifications are also subject to qualitative judgments by
the regulators  about the  Association's  components,  risk weightings and other
factors.  Failure to meet minimum  capital  requirements  can  initiate  certain
mandatory  actions that, if undertaken,  could have a direct  material effect on
the  Corporation's  financial  statements.  At March 31, 2003 and June 30, 2002,
management  believes  the  Association  complies  with  all  regulatory  capital
requirements. Based on the Association's computed regulatory capital ratios, the
Association is considered well capitalized  under the Federal Deposit  Insurance
Act at March 31, 2003 and June 30, 2002.  No  conditions or events have occurred
subsequent to the last notification by regulators that management believes would
have changed the Association's category.


                                   (Continued)


                                                                             21.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

At March 31, 2003 and June 30, 2002, the  Association's  actual capital  levels,
minimum required levels and levels to be considered "well  capitalized"  were as
follows.

<TABLE>
<CAPTION>
                                                                                                 To Be
                                                                                           Well Capitalized
                                                                   For Capital          Under Prompt Corrective
                                         Actual                 Adequacy Purposes         Action Regulations
                                         ------                 -----------------         ------------------
                                  Amount         Ratio        Amount         Ratio       Amount          Ratio
                                  ------         -----        ------         -----       ------          -----

<S>                              <C>              <C>        <C>              <C>       <C>              <C>
(Dollars in Thousands)
March 31, 2003
Total capital (to risk-
  weighted assets)               $16,047          18.0%      $ 7,122          8.0%      $ 8,903          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           15,300          17.2         3,561          4.0         5,342           6.0
Tier 1 (core) capital (to
  adjusted total assets)          15,300          10.7         5,734          4.0         7,168           5.0
Tangible capital (to
  adjusted total assets)          15,300          10.7         2,150          1.5           N/A

June 30, 2002
Total capital (to risk-
  weighted assets)               $15,073          17.1%      $ 7,049          8.0%      $ 8,811          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           14,365          16.3         3,524          4.0         5,287           6.0
Tier 1 (core) capital (to
  adjusted total assets)          14,365          10.6         5,396          4.0         6,745           5.0
Tangible capital (to
  adjusted total assets)          14,365          10.6         2,023          1.5           N/A
</TABLE>


                                                                             22.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                             CONTROLS AND PROCEDURES

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

Item 3.  Controls and Procedures

With  the   participation   and  under  the  supervision  of  the  Corporation's
management,  including  the  Corporation's  Chief  Executive  Officer  and Chief
Financial  Officer,  and  within 90 days of the  filing  date of this  quarterly
report,  the  Corporation's  Chief Executive Officer and Chief Financial Officer
have   evaluated  the   effectiveness   of  the  design  and  operation  of  the
Corporation's  disclosure  controls and  procedures  (as defined in Exchange Act
Rules 13a-14(c) and 15(d)-14(c)) and, based on their evaluation,  have concluded
that the  disclosure  controls  and  procedures  are  effective.  There  were no
significant  changes in the Corporation's  internal controls or in other factors
that could  significantly  affect these controls subsequent to the date of their
evaluation,   including  any  corrective   action  with  regard  to  significant
deficiencies and material weaknesses.


                                                                             23.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           PART II - OTHER INFORMATION

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

Item 1.     Legal Proceedings

            None.

Item 2.     Changes in Securities

            None.

Item 3.     Defaults Upon Senior Securities

            Not applicable.

Item 4.     Submission of Matters to a Vote of Security Holders
            None.

Item 5.     Other Information

            None.

Item 6.     Exhibits and Reports on Form 8-K

            (a)   Form 8-K was filed on January  16,  2003.  Under Item 5, Other
                  Events,  the  Corporation  reported  the  issuance  of a press
                  release to  announce  the  quarterly  earnings  and  declare a
                  regular dividend for the period ending March 31, 2003.


                                                                             24.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                   SIGNATURES

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

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

Date:    May 14, 2003                     /s/ Douglas Stewart
       --------------------------         --------------------------------------
                                          Douglas Stewart
                                          President and Chief Executive Officer

Date:    May 14, 2003                     /s/ Debra Geuy
       --------------------------         --------------------------------------
                                          Debra Geuy
                                          Chief Financial Officer



                                                                             25.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                  CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas Stewart, certify that:

1)    I have reviewed  this  quarterly  report on Form 10-QSB of  Peoples-Sidney
      Financial Corporation;

2)    Based on my knowledge,  this quarterly  report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the  circumstances  under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3)    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  quarterly  report,  fairly  present in all
      material respects the financial condition,  results of operations and cash
      flows of the  registrant  as of, and for,  the periods  presented  in this
      quarterly report;

4)    The  registrant's  other  certifying  officers and I are  responsible  for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed  such  disclosure  controls and  procedures  to ensure that
            material  information  relating  to the  registrant,  including  its
            consolidated  subsidiaries,  is made  known to us by  others  within
            those  entities,  particularly  during  the  period  in  which  this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented  in  this  quarterly  report  our  conclusions  about  the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5)    The registrant's other certifying officers and I have disclosed,  based on
      our most recent  evaluation,  to the  registrant's  auditors and the audit
      committee of  registrant's  board of directors (or persons  performing the
      equivalent function):

      a)    all significant  deficiencies in the design or operation of internal
            controls which could adversely  affect the  registrant's  ability to
            record,  process,  summarize  and  report  financial  data  and have
            identified for the registrant's  auditors any material weaknesses in
            internal controls; and

      b)    any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal controls; and

6)    The registrant's  other  certifying  officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other  factors  that could  significantly  affect  internal
      controls  subsequent to the date of our most recent evaluation,  including
      any  corrective  actions  with  regard  to  significant  deficiencies  and
      material weaknesses.

Date:    May 14, 2003
         ------------

/s/ Douglas Stewart
-------------------
Douglas Stewart
President and Chief Executive Officer


                                                                             26.
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Debra A. Geuy, certify that:

1)    I have reviewed  this  quarterly  report on Form 10-QSB of  Peoples-Sidney
      Financial Corporation;

2)    Based on my knowledge,  this quarterly  report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the  circumstances  under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3)    Based on my  knowledge,  the  financial  statements,  and other  financial
      information  included  in this  quarterly  report,  fairly  present in all
      material respects the financial condition,  results of operations and cash
      flows of the  registrant  as of, and for,  the periods  presented  in this
      quarterly report;

4)    The  registrant's  other  certifying  officers and I are  responsible  for
      establishing  and  maintaining  disclosure  controls  and  procedures  (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed  such  disclosure  controls and  procedures  to ensure that
            material  information  relating  to the  registrant,  including  its
            consolidated  subsidiaries,  is made  known to us by  others  within
            those  entities,  particularly  during  the  period  in  which  this
            quarterly report is being prepared;

      b)    evaluated the effectiveness of the registrant's  disclosure controls
            and  procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented  in  this  quarterly  report  our  conclusions  about  the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5)    The registrant's other certifying officers and I have disclosed,  based on
      our most recent  evaluation,  to the  registrant's  auditors and the audit
      committee of  registrant's  board of directors (or persons  performing the
      equivalent function):

      a)    all significant  deficiencies in the design or operation of internal
            controls which could adversely  affect the  registrant's  ability to
            record,  process,  summarize  and  report  financial  data  and have
            identified for the registrant's  auditors any material weaknesses in
            internal controls; and

      b)    any fraud,  whether or not  material,  that  involves  management or
            other  employees  who have a  significant  role in the  registrant's
            internal controls; and

6)    The registrant's  other  certifying  officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other  factors  that could  significantly  affect  internal
      controls  subsequent to the date of our most recent evaluation,  including
      any  corrective  actions  with  regard  to  significant  deficiencies  and
      material weaknesses.

Date:    May 14, 2003
         ------------

/s/ Debra A. Geuy
-----------------
Debra A. Geuy
Chief Financial Officer and Treasurer


                                                                             27.
<PAGE>

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

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

      3.2          Bylaws of Peoples-Sidney Financial
                   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                      Incorporated by  Pre-Effective  Amendment No. 1 to the S-1
                   Douglas Stewart                                        filed with the SEC on March 12, 1997, Exhibit 10.2

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

     10.4          Form of Severance Agreement with                       Incorporated by  Pre-Effective  Amendment No. 1 to the S-1
                   Steve Goins                                            filed with the SEC on March 12, 1997, Exhibit 10.4

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

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

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

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

     99.1          Certification  of the Chief  Executive
                   Officer  Pursuant  to  Section  906 of
                   the Sarbanes-Oxley Act of 2002

     99.2          Certification  of the Chief  Financial
                   Officer  Pursuant  to  Section  906 of
                   the Sarbanes-Oxley Act of 2002
</TABLE>


                                                                             28.