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

                                   FORM 10-QSB

 (Mark One)

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

For the quarterly period ended December 31, 2002

[ ] 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 January 31, 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]



<PAGE>

<TABLE>
<CAPTION>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION


                                     INDEX






PART I - FINANCIAL INFORMATION                                                               Page

<S>           <C>                                                                              <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........................................... 15

  Item 3.     Controls and Procedures........................................................ 21


Part II - Other Information

  Item 1.     Legal Proceedings.............................................................. 22

  Item 2.     Changes in Securities.......................................................... 22

  Item 3.     Defaults Upon Senior Securities................................................ 22

  Item 4.     Submission of Matters to a Vote of Security Holders............................ 22

  Item 5.     Other Information.............................................................. 22

  Item 6.     Exhibits and Reports on Form 8-K............................................... 22


SIGNATURES .................................................................................. 23

CERTIFICATIONS............................................................................... 24

</TABLE>

                                                                               2

<PAGE>

<TABLE>
<CAPTION>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

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


Item 1.  Financial Statements
         ---------------------                                    December 31,           June 30,
                                                                      2002                 2002
                                                                      ----                 ----
ASSETS
<S>                                                              <C>                  <C>
Cash and due from financial institutions                         $   1,102,291        $  1,018,337
Interest-bearing deposits in other financial institutions            3,898,671           3,770,677
Overnight deposits                                                   3,500,000             800,000
                                                                 -------------        ------------
     Total cash and cash equivalents                                 8,500,962           5,589,014
Time deposits in other financial institutions                        2,000,000                  --
Securities available for sale                                        5,046,500           3,525,750
Federal Home Loan Bank stock                                         1,509,100           1,474,600
Loans, net                                                         119,036,302         121,224,773
Accrued interest receivable                                            828,594             834,744
Premises and equipment, net                                          1,929,874           2,028,995
Real estate owned                                                       76,537                  --
Other assets                                                           114,258             176,432
                                                                 -------------        ------------

     Total assets                                                $ 139,042,127        $134,854,308
                                                                 =============        ============


LIABILITIES
Deposits                                                         $  92,752,221        $ 94,786,623
Borrowed funds                                                      28,755,145          22,455,813
Accrued interest payable and other liabilities                         339,039             417,664
                                                                 -------------        ------------
     Total liabilities                                             121,846,405         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                                          10,692,028          10,689,800
Retained earnings                                                   11,446,830          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                         (948,065)         (1,023,928)
Unearned management recognition plan shares                            (79,430)           (174,746)
Accumulated other comprehensive income                                  30,690              16,995
                                                                 -------------        ------------
     Total shareholders' equity                                     17,195,722          17,194,208
                                                                 -------------        ------------
     Total liabilities and shareholders' equity                  $ 139,042,127        $134,854,308
                                                                 =============        ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                                                               3
<PAGE>

<TABLE>
<CAPTION>
                        PEOPLES-SIDNEY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                         Three Months Ended                Six Months Ended
                                                             December 31,                     December 31,
                                                             ------------                     ------------
                                                          2002              2001             2002            2001
                                                          ----              ----             ----            ----

Interest income
<S>                                                 <C>              <C>             <C>             <C>
     Loans, including fees                          $   2,142,893    $   2,348,028   $   4,342,161   $    4,755,571
     Securities                                            37,009           62,514          82,279          112,320
     Demand, time and overnight deposits                   21,016           23,114          27,423           64,838
     Dividends on FHLB Stock                               16,925           19,710          34,580           44,362
                                                    -------------    -------------   -------------   --------------
         Total interest income                          2,217,843        2,453,366       4,486,443        4,977,091

Interest expense
     Deposits                                             751,825        1,069,271       1,581,228        2,233,573
     Borrowed funds                                       380,852          387,041         712,560          775,619
                                                    -------------    -------------   -------------   --------------
         Total interest expense                         1,132,677        1,456,312       2,293,788        3,009,192
                                                    -------------    -------------   -------------   --------------

Net interest income                                     1,085,166          997,054       2,192,655        1,967,899

Provision for loan losses                                  24,508           10,221          40,837           25,683
                                                    -------------    -------------   -------------   --------------

Net interest income after provision for loan losses     1,060,658          986,833       2,151,818        1,942,216

Noninterest income
     Service fees and other charges                        35,490           35,480          68,991           68,369

Noninterest expense
     Compensation and benefits                            425,526          412,765         852,651          819,927
     Director fees                                         24,300           24,300          48,600           48,600
     Occupancy and equipment                              105,321          105,739         217,332          213,421
     Computer processing expense                           63,609           62,263         126,597          125,973
     State franchise taxes                                 45,137           47,590          90,275           95,159
     Professional fees                                     27,681           30,346          53,096           54,425
     Other                                                 80,008           79,038         169,362          170,621
                                                    -------------    -------------   -------------   --------------
         Total noninterest expense                        771,582          762,041       1,557,913        1,528,126
                                                    -------------    -------------   -------------   --------------

Income before income taxes                                324,566          260,272         662,896          482,459

Income tax expense                                        120,500           99,300         245,900          183,900
                                                    -------------    -------------   -------------   --------------

Net income                                          $     204,066    $     160,972   $     416,996   $      298,559
                                                    =============    =============   =============   ==============

Earnings per common share - basic                   $        0.15    $        0.12    $       0.31   $         0.22
                                                    =============    =============   =============   ==============

Earnings per common share - diluted                 $        0.15    $        0.12    $       0.31   $         0.22
                                                    =============    =============   =============   ==============
</TABLE>

                                                                               4

<PAGE>
<TABLE>
<CAPTION>

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

----------------------------------------------------------------------------------------------------------------
                                                          Three Months Ended           Six Months Ended
                                                             December 31,                 December 31,
                                                             ------------                 ------------
                                                       2002           2001             2002             2001
                                                       ----           ----             ----             ----


<S>                                                 <C>            <C>               <C>             <C>
Net income                                          $ 204,066      $   160,972       $  416,996      $   298,559

Other comprehensive income (loss)
     Unrealized holding gains and (losses) on
       available-for-sale securities                    2,180          (57,755)          20,750           (4,295)
     Tax effect                                          (741)          19,637           (7,055)           1,461
                                                    ---------      -----------       ----------      -----------
         Other comprehensive income (loss)              1,439          (38,118)          13,695           (2,834)
                                                    ---------      -----------       ----------      -----------

Comprehensive income                                $ 205,505      $   122,854       $  430,691      $   295,725
                                                    =========      ===========       ==========      ===========
</TABLE>

                                                                               5
<PAGE>
<TABLE>
<CAPTION>

                     PEOPLES-SIDNEY FINANCIAL CORPORATION
                  CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                                   (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                         Three Months Ended                Six Months Ended
                                                             December 31,                     December 31,
                                                             ------------                     ------------
                                                          2002            2001            2002            2001
                                                          ----            ----            ----            ----


<S>                                                 <C>              <C>             <C>              <C>
Balance, beginning of period                        $  17,321,920    $  17,171,128   $  17,194,208    $   17,149,613

Net income for period                                     204,066          160,972         416,996           298,559

Cash dividends, $.16 and $.09 per share for
 the three months ended December 31, 2002
 and 2001, $.25 and $.17 per share for the six
 months ended December 31, 2002 and 2001                 (218,646)        (125,574)       (342,116)         (238,196)

Purchase of 15,845 and 20,508 shares of
 treasury stock for the three months
 ended December 31, 2002 and 2001; and
 20,845 and 32,508 shares of treasury
 stock for the six months ended December 31,
 2002 and 2001, at cost                                  (200,468)        (215,707)       (260,468)         (335,057)

Commitment to release 2,856 management
 recognition plan shares for the three
 months ended December 31, 2002 and 2001
 and 5,712 management recognition plan
 shares for the six months ended December 31,
 2002 and 2001                                             47,658           47,658          95,316            95,316

Commitment to release 3,233 and 3,378
 employee stock ownership plan shares for
 the three months ended December 31, 2002
 and 2001 and 6,466 and 6,756 employee
 stock ownership plan shares for the six months
 ended December 31, 2002 and 2001, at fair value           39,753           35,136          78,091            68,094

Change in fair value on securities available for
  sale, net of tax                                          1,439          (38,118)         13,695            (2,834)
                                                    -------------    -------------   -------------    --------------

Balance, end of period                              $  17,195,722    $  17,035,945   $  17,195,722    $   17,035,495
                                                    =============    =============   =============    ==============
</TABLE>

                                                                               6
<PAGE>
<TABLE>
<CAPTION>


                                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                 (Unaudited)

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


                                                                                          Six Months Ended
                                                                                             December 31,
                                                                                             ------------
                                                                                       2002               2001
                                                                                       ----               ----
Cash flows from operating activities
<S>                                                                                  <C>           <C>
     Net income                                                                      $  416,996    $     298,559
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                                   103,479          104,341
         Provision for loan losses                                                       40,837           25,683
         FHLB stock dividends                                                           (34,500)         (44,300)
         Compensation expense for ESOP shares                                            78,091           68,094
         Compensation expense for MRP shares                                             95,316           95,316
         Change in
              Accrued interest receivable and other assets                               68,324           87,941
              Accrued expense and other liabilities                                     (85,680)         (21,944)
              Deferred loan fees                                                         16,503           34,016
                                                                                     ----------    ---------------
                  Net cash from operating activities                                    699,366          647,706

Cash flows from investing activities
     Purchases of time deposits in other financial institutions                      (2,000,000)        (300,000)
     Proceeds from maturities/calls of securities available for sale                  2,500,000          500,000
     Purchases of securities available for sale                                      (4,000,000)      (2,500,000)
     Net change in loans                                                              2,054,594          202,478
     Premises and equipment expenditures                                                 (4,358)        (225,062)
                                                                                     ----------    ---------------
              Net cash from investing activities                                     (1,449,764)      (2,322,584)

Cash flows from financing activities
     Net change in deposits                                                          (2,034,402)       3,256,293
     Repayments of long-term FHLB advances                                             (200,668)        (230,955)
     Net change in short-term FHLB advances                                            (500,000)             --
     Proceeds from long-term FHLB advances                                            7,000,000              --
     Cash dividends paid                                                               (342,116)        (238,196)
     Purchase of treasury stock                                                        (260,468)        (335,057)
                                                                                     ----------    ---------------
         Net cash from financing activities                                           3,662,346        2,452,085
                                                                                     ----------    ---------------

Net change in cash and cash equivalents                                               2,911,948          777,207

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

Cash and cash equivalents at end of period                                           $8,500,962    $   7,128,102
                                                                                     ==========    ===============

Supplemental disclosures of cash flow information
     Cash paid during the period for
         Interest                                                                    $2,344,502    $   2,992,088
         Income taxes                                                                   316,000          181,000

Noncash transactions
         Transfer from loans to other real estate owned                              $   76,537    $         --

</TABLE>

                                                                               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 December 31, 2002
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. The adoption of this statement will result in
more prominent disclosure of the Corporation's stock option plan.


NOTE 2 - SECURITIES AVAILABLE FOR SALE

Securities available for sale were as follows.

                                                     Gross         Gross
                                      Fair         Unrealized   Unrealized
                                      Value           Gains        Losses
                                      -----           -----        ------
December 31, 2002
  U.S. Government agencies          $  5,046,500   $   46,500   $      --
                                    ============   ==========   ==========

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

Contractual  maturities  of  securities  available for sale at December 31, 2002
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        $3,041,410
      Due after five years through ten years        2,005,090
                                                   ----------

                                                   $5,046,500
                                                   ==========

No securities were sold during the three or six-month periods ended December 31,
2002 and 2001. No securities were pledged as collateral at December 31, 2002 or
June 30, 2002.
--------------------------------------------------------------------------------
                                  (Continued)
                                                                               9
<PAGE>


NOTE 3 - LOANS

Loans were as follows.

                                                December 31,          June 30,
                                                   2002                 2002
                                                   ----                 ----
    Mortgage loans:
     1-4 family residential                    $  92,170,673      $  96,006,970
     Multi-family residential                      1,879,834          1,913,649
     Commercial real estate                       10,166,046         10,111,114
     Real estate construction and
       development                                 8,723,415          7,096,855
     Land                                          1,328,945          1,309,677
                                               -------------      -------------
         Total mortgage loans                    114,268,913        116,438,265
Consumer loans                                     4,360,683          4,625,413
Commercial loans                                   4,062,756          3,716,760
                                               -------------      -------------
         Total loans                             122,692,352        124,780,438
Less:
     Allowance for loan losses                      (740,000)          (708,000)
     Loans in process                             (2,568,013)        (2,516,131)
     Deferred loan fees                             (348,037)          (331,534)
                                               -------------      -------------

                                               $ 119,036,302      $ 121,224,773
                                               =============      =============

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

<TABLE>
<CAPTION>

                                         Three Months Ended        Six Months Ended
                                              December 31,            December 31,
                                           2002         2001       2002       2001

<S>                                   <C>          <C>          <C>         <C>
     Balance at beginning of period   $ 719,000    $ 676,500    $708,000    $660,800
     Provision for losses                24,508       10,221      40,837      25,683
     Charge-offs                         (3,508)      (1,801)     (9,078)     (1,801)
     Recoveries                            --             80         241         318
                                      ---------    ---------    ---------    --------

     Balance at end of period         $ 740,000    $ 685,000    $740,000    $685,000
                                      =========    =========    =========    ========
</TABLE>

Nonperforming loans were as follows.

                                                         December 31,   June 30,
                                                            2002          2002
                                                        ----------    ----------

     Loans past due over 90 days still on accrual     $  516,000     $ 472,000
     Nonaccrual loans                                  1,345,000       598,000

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

As of  December  31,  2002 and June 30,  2002 and for the three  months  and six
months ended December 31, 2002 and 2001, impaired loans were not material.
--------------------------------------------------------------------------------
                                  (Continued)
                                                                             10.

<PAGE>


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

NOTE 4 - BORROWED FUNDS

At December 31, 2002 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 December 31, 2002
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  $65,451,000  including the cash  management
line of credit. Advances from the Federal Home Loan Bank were as follows.
<TABLE>
<CAPTION>

                                                                          December 31,         June 30,
                                                                              2002               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                                              1,574,436           1,635,638
         5.35% select pay mortgage-matched advance, final
           maturity July 1, 2011                                             3,199,101           3,320,175
         3.92% select pay mortgage-matched advance, final
           maturity November 1, 2012                                           993,180                  --
         4.09% select pay mortgage-matched advance, final
           maturity November 1, 2017                                           995,966                  --
         4.72% select pay mortgage-matched advance, final
           maturity November 1, 2022                                         2,992,462                  --
         4.38% select pay mortgage-matched advance, final
           maturity December 1, 2022                                         1,000,000                  --
         3.92% select pay mortgage-matched advance, final
           maturity December 1, 2022                                         1,000,000                  --
                                                                       ---------------    ----------------

                                                                       $    28,755,145    $     22,455,813
                                                                       ===============    ================
</TABLE>

Advances under the borrowing  agreements are  collateralized by a blanket pledge
of the Association's residential 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)
                                                                             11.


<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 December 31,
                           2003                             $    1,607,862
                           2004                                  1,442,383
                           2005                                  1,293,625
                           2006                                  1,159,903
                           2007                                  1,039,703
                        Thereafter                              22,211,669
                                                            --------------
                                                            $   28,755,145
                                                            ==============

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

                                  (Continued)
                                                                             12.

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


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>
                                                  December 31,                    June 30,
                                                      2002                          2002
                                                      ----                          ----
                                                 Fixed       Variable        Fixed       Variable
                                                 Rate          Rate          Rate          Rate
                                                 ----          ----          ----          ----

<S>                                          <C>           <C>           <C>           <C>
         Nonresidential                      $  250,000    $       --    $   696,000   $     --
         Residential real estate                771,000       507,000        400,000         --
         Interest rates                       6.00-6.75%    6.00-6.25%     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 $3,382,000 and $3,156,000 at December 31, 2002 and June 30, 2002.

At December 31, 2002 and June 30,  2002,  the  Corporation  was required to have
$2,058,000  and  $1,700,000  on  deposit  with  its  correspondent  banks  as  a
compensating clearing requirement.

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



--------------------------------------------------------------------------------
                                  (Continued)
                                                                             13.

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
--------------------------------------------------------------------------------
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             Six Months Ended
                                                                 December 31,                  December 31,
                                                                 ------------                  ------------
                                                             2002           2001            2002           2001
                                                             ----           ----            ----           ----
     Basic Earnings Per Common Share

<S>                                                       <C>            <C>            <C>             <C>
           Net income                                     $   204,066    $   160,972    $   416,996     $   298,559
                                                          ===========    ===========    ===========     ===========

           Weighted average common shares
             outstanding                                    1,451,242      1,490,783      1,455,602       1,498,817
           Less:  Average unallocated ESOP shares             (82,413)       (95,707)       (84,029)        (97,396)
           Less:  Average unearned MRP shares                  (6,188)       (17,613)        (7,616)        (19,041)
                                                          -----------     ----------      ---------       ---------
           Weighted average common shares
             outstanding for basic earnings
             per common share                               1,362,641      1,377,463      1,363,957       1,382,380
                                                           ===========    ===========    ===========     ==========

           Basic earnings per common share                $     0.15     $      0.12    $      0.31     $      0.22
                                                          ===========    ===========    ===========     ===========
     Diluted Earnings Per Common Share

           Net income                                     $   204,066    $   160,972    $   416,996     $   298,559
                                                          ===========    ===========    ===========     ===========
           Weighted average common shares
             outstanding for basic earnings
             per common share                               1,362,641      1,377,463      1,363,957       1,382,380
           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                             1,362,641      1,377,463      1,363,957       1,382,380
                                                          ===========    ===========    ===========     ===========
           Diluted earnings per common share              $     0.15     $      0.12    $      0.31     $      0.22
                                                          ===========    ===========    ===========     ===========
</TABLE>

Unearned MRP shares and stock options  granted did not have a dilutive effect on
EPS for the three and six months  ended  December  31, 2002 and 2001 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 December 31, 2002 and 2001, there were 140,824 options  outstanding that were
not dilutive.



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

                                                                             14.

<PAGE>

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

Item 2.  Management's Discussion and Analysis

Introduction

In the  following  pages,  management  presents an analysis of the  consolidated
financial condition of the Corporation as of December 31, 2002, compared to June
30, 2002,  and results of operations for the three and six months ended December
31, 2002, compared with the same periods in 2001. This discussion is designed to
provide a more comprehensive  review of operating results and financial position
than could be obtained from an  examination of the financial  statements  alone.
This  analysis  should  be  read  in  conjunction  with  the  interim  financial
statements and related footnotes included herein.

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

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

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


Financial Condition

Total assets at December 31, 2002 were $139.0 million compared to $134.9 million
at June 30, 2002,  an increase of $4.1 million,  or 3.1%.  The increase in total
assets was due to an increase in cash and cash  equivalents,  time  deposits and
securities funded by an increase in borrowed funds.

Cash and cash equivalents  increased $2.9 million,  time deposits increased $2.0
million and  securities  increased  $1.5 million as a temporary  earning  source
until loan growth  utilizes  the funds  provided  from the  increase in borrowed
funds.

Loans  decreased  $2.2  million  from $121.2  million at June 30, 2002 to $119.0
million at December  31, 2002.  The  decrease in loans was  primarily in one- to
four-family  residential loans, which decreased $3.8 million partially offset by
an increase of $1.6 million in real estate  construction and development  loans.
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.



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

                                                                             15.

<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
The  Corporation's  consumer and commercial loan portfolio  remained  relatively
unchanged between June 30, 2002 and December 31, 2002. Non-mortgage loans remain
a small portion of the entire loan  portfolio and  represented  6.9% and 6.7% of
gross loans at December 31, 2002 and June 30, 2002.

Total  deposits  decreased  $2.0 million from $94.8  million at June 30, 2002 to
$92.8  million at December 31,  2002.  The largest  decrease was in  certificate
accounts which  decreased $3.4 million.  The  Corporation  also had decreases in
other   deposit    categories   as   NOW   accounts   decreased   $333,000   and
noninterest-bearing  demand accounts decreased $107,000,  while savings accounts
increased $1.2 million and money market accounts increased $600,000. 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  $6.3  million  from $22.5  million at June 30,  2002
compared to $28.8  million at December 31,  2002.  The  Corporation  borrowed an
additional  $7.0  million  in  select  pay  mortgage-matched  advances  to  take
advantage of the low interest rate  environment  and as a hedge in a rising rate
scenario. These borrowings have been temporarily invested in overnight deposits,
time deposits and securities until loan demand utilizes the funds. Borrowings at
December  31, 2002  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 December 31, 2002, the  Corporation  had the
ability to obtain borrowings up to a maximum total of $65.5 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 December 31, 2002 Compared to the Three Months Ended December
31, 2001

Net Income.  The Corporation  earned net income of $204,000 for the three months
ended December 31, 2002 compared to $161,000 for the three months ended December
31, 2001.  The increase of $43,000,  or 26.8% in net income was primarily due to
an increase in net  interest  income  partially  offset by a slight  increase in
noninterest expense and provision for loan losses.

Net Interest Income. Net interest income totaled $1,085,000 for the three months
ended December 31, 2002 compared to $997,000 for the three months ended December
31, 2001  representing  an increase of $88,000,  or 8.8%.  The  increase was the
result of a larger  decrease in interest  expense on deposits and borrowed funds
than interest income on loans and other sources of interest income.

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

                                  (Continued)
                                                                             16.

<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
Interest and fees on loans decreased  $205,000,  or 8.7% from $2,348,000 for the
three months ended  December 31, 2001 to  $2,143,000  for the three months ended
December 31, 2002. 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.

Interest on securities  decreased $26,000 due to a lower average balance for the
current three month period combined with a decline in interest rates.

Interest paid on deposits  decreased  $317,000 or 29.7% from  $1,069,000 for the
three  months  ended  December  31, 2001 to $752,000  for the three months ended
December 31, 2002.  The decrease  resulted  from a lower  average  interest rate
coupled with a lower average balance of deposits.

Interest  paid on borrowed  funds  totaled  $381,000  for the three months ended
December 31, 2002  compared to $387,000 for the three months ended  December 31,
2001.  The  decrease  in  interest  expense on borrowed  funds  resulted  from a
decrease  in the  average  rate paid for  borrowings  despite an increase in the
average balance of borrowed funds.

Provision  for Loan Losses.  The  Corporation  maintains  an allowance  for loan
losses in an amount  that,  in  management's  judgment,  is  adequate  to absorb
probable  losses  in the loan  portfolio.  While  management  utilizes  its best
judgment and information  available,  the ultimate  adequacy of the allowance is
dependent  upon  a  variety  of  factors,   including  the  performance  of  the
Corporation's  loan  portfolio,  the economy,  changes in real estate values and
interest  rates  and  the  view  of  the  regulatory   authorities  toward  loan
classifications.  The  provision  for loan losses is determined by management as
the amount to be added to the  allowance  for loan losses after net  charge-offs
have been deducted to bring the allowance to a level 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  December  31, 2002
totaled  $25,000  compared to $10,000 for the three  months  ended  December 31,
2001.  The  increase  in the  provision  for  losses was due to an  increase  in
nonperforming loans. The allowance for loan losses totaled $740,000, or 0.60% of
gross loans  receivable and 39.8% of total  nonperforming  loans at December 31,
2002,  compared with $708,000,  or 0.57% of gross loans  receivable 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.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and remained unchanged for the three months ended December
31, 2002 and December 31, 2001.

Noninterest  expense.  Noninterest expense totaled $772,000 for the three months
ended December 31, 2002 compared to $762,000 for the three months ended December
31,  2001,  an increase of $10,000.  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 plan.



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

                                                                             17.

<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
Income Tax  Expense.  Income tax expense  totaled  $121,000 for the three months
ended  December 31, 2002 compared to $99,000 for the three months ended December
31,  2001,  representing  an  increase of  $22,000.  The  increase in income tax
expense is  reflective of the increase in net income before income taxes for the
three  months  ended  December  31, 2002 as compared to the three  months  ended
September  30. 2001.  The  effective  tax rate was 37.1% and 38.2% for the three
months ended December 31, 2002 and 2001.

Six Months Ended December 31, 2002 Compared to the Six Months Ended December 31,
2001

Net Income.  The  Corporation  earned net income of $417,000  for the six months
ended  December 31, 2002 compared to $299,000 for the six months ended  December
31,  2001.  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 and noninterest expense.

Net Interest Income.  Net interest income totaled  $2,193,000 for the six months
ended December 31, 2002 compared to $1,968,000 for the six months ended December
31, 2001. The increase of $225,000, or 11.4% was the result of a larger decrease
in interest  expense on deposits and borrowed  funds than on interest  income on
loans and other sources of interest income.

Interest and fees on loans decreased  $414,000,  or 8.7% from $4,756,000 for the
three months ended  December 31, 2001 to  $4,342,000  for the three months ended
December 31, 2002. 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.

Interest on securities,  demand,  time and overnight deposits decreased due to a
decline in the average interest rates for the current three month period.

Interest paid on deposits  decreased  $653,000 or 29.2% from  $2,234,000 for the
six months  ended  December  31,  2001 to  $1,581,000  for the six months  ended
December 31, 2002.  The decrease  resulted  from a lower  average  interest rate
combined with a lower average balance of deposits.

Interest  paid on  borrowed  funds  totaled  $713,000  for the six months  ended
December 31, 2002  compared to $776,000  for the six months  ended  December 31,
2001.  The decrease in interest  expense on borrowed funds resulted from a lower
average  balance of borrowed  funds  coupled with a decrease in the average rate
paid for borrowings.

Provision  for Loan  Losses.  The  provision  for loan losses for the six months
ended December 31, 2002 totaled  $41,000  compared to $26,000 for the six months
ended  December 31, 2001.  The increase in the provision for loan losses was the
result of an  increase  in  nonperforming  loans  during the  current  six month
period.

Noninterest   income.   Noninterest  income  includes  service  fees  and  other
miscellaneous  income and totaled  $69,000 for the six months ended December 31,
2002 and $68,000 for the six months ended December 31, 2001.

Noninterest  expense.  Noninterest expense totaled $1,558,000 for the six months
ended December 31, 2002 compared to $1,528,000 for the six months ended December
31,  2001,  an increase of $30,000.  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 plan.

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

                                                                             18.

<PAGE>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------


Income Tax Expense. Income tax expense totaled $246,000 for the six months ended
December 31, 2002  compared to $184,000  for the six months  ended  December 31,
2001, representing an increase of $62,000. The increase in income tax expense is
reflective  of the increase in net income before income taxes for the six months
ended  December 31, 2002 as compared to the six months ended  December 31, 2001.
The effective tax rate was 37.1% and 38.1% for the six months ended December 31,
2002 and 2001.

Liquidity and Capital Resources

The Corporation's liquidity, primarily represented by cash and cash equivalents,
is a result of operating,  investing and financing activities.  These activities
are summarized below for the six months ended December 31, 2002 and 2001.
<TABLE>
<CAPTION>

                                                                                               Six Months
                                                                                           Ended December 31,
                                                                                           ------------------
                                                                                            2002            2001
                                                                                            ----            ----
                                                                                         (Dollars in thousands)

<S>                                                                                   <C>              <C>
Net income                                                                            $     417        $     299
Adjustments to reconcile net income to net cash from                                  ---------        ---------
  operating activities                                                                      282              349
Net cash from operating activities                                                          699              648
Net cash from investing activities                                                       (1,449)          (2,323)
Net cash from financing activities                                                        3,662            2,452
                                                                                       ---------        ---------
Net change in cash and cash equivalents                                                   2,912              777
Cash and cash equivalents at beginning of period                                          5,589            6,351
                                                                                       ---------        ---------

Cash and cash equivalents at end of period                                            $   8,501      $     7,128
                                                                                      =========      ===========
</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.

The  Corporation  also has the  ability to borrow  from the FHLB up to a maximum
total of $65,451,000 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 December 31, 2002.

At December 31, 2002, the Corporation  had  commitments to originate  fixed-rate
commercial  and   residential   real  estate  loans   totaling   $1,021,000  and
variable-rate nonresidential and residential real estate mortgage loans totaling
$507,000. 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 December 31, 2002. The Office of Thrift  Supervision  regulations
require the Corporation's  insured subsidiary to maintain a safe and sound level
of liquid assets.  The Corporation  considers its liquidity and capital reserves
sufficient to meet its outstanding short and long-term needs, and believes it is
in compliance with regulatory requirements.

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

                                                                             19.

<PAGE>


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

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 December 31, 2002 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  December  31,  2002 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.

At December 31, 2002 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
                                  ------         -----      ------         -----         ------          -----
                                                            (Dollars in Thousands)

<S>                            <C>               <C>      <C>               <C>      <C>                 <C>
December 31, 2002
Total capital (to risk-
  weighted assets)             $  15,714         17.3%    $  7,277          8.0%     $    9,096          10.0%
Tier 1 (core) capital (to
  risk-weighted assets)           14,989         16.5        3,638          4.0           5,457           6.0
Tier 1 (core) capital (to
  adjusted total assets)          14,989         10.8        5,562          4.0           6,952           5.0
Tangible capital (to
  adjusted total assets)          14,989         10.8        2,086          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>


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

                                                                             20.

<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.
--------------------------------------------------------------------------------
                                                                             21.
<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
           ---------------------------------------------------

           On October 11,  2002 the Annual  Meeting of  Shareholders  of the
           Corporation  was  held.  The  following  member  of the  Board of
           Directors  of the  Corporation  was  re-elected  by the votes set
           forth below for the term expiring in 2005.

           Richard T. Martin         FOR:  1,193,169           WITHHELD:  8,676

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

           Ratification of the selection of Crowe, Chizek and Company LLP as
           the auditors of the  Corporation  for the fiscal year ending June
           30, 2003.

           FOR:  1,198,464           AGAINST:  781             ABSTAIN:  2,600

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

Item 6.    Exhibits and Reports on Form 8-K
           --------------------------------
          (a)  Form 8-K was filed on  October  17,  2002.  Under  Item 5,  Other
               Events, the Corporation  reported the issuance of a press release
               to  announce  the  quarterly  earnings  and declare a regular and
               special  dividend for the period  ending  December 31, 2002.  The
               Corporation  also  announced  the  extension of the current stock
               buyback program.

--------------------------------------------------------------------------------
                                                                             22.

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                   SIGNATURES

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


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




Date: February 12, 2003                   /s/ Douglas Stewart
      ------------------                  --------------------------------------
                                          Douglas Stewart
                                          President and Chief Executive Officer





Date:    February 12, 2003                /s/ Debra Geuy
         -----------------                --------------------------------------
                                          Debra Geuy
                                          Chief Financial Officer

--------------------------------------------------------------------------------
                                                                              23

<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:  February 12, 2003
      --------------------

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

                                                                              24
<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:  February 12, 2003
--------------------------

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

                                                                              25
<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              Incorporated by reference to the S-1, Exhibit 3.2.
           Financial Corporation

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

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

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

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

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

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

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

  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>


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

                                                                              26