U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

                     For the fiscal year ended June 30, 2002


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

            For the transition period from ___________ to ___________


                           Commission File No. 0-22223

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                    ---------------------------------------
                 (Name of small business issuer in its charter)


           Delaware                                          31-1499862
----------------------------------                     -------------------------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                         Identification Number)


                    101 East Court Street, Sidney, Ohio 45365
                    -----------------------------------------
              (Address of principal executive offices) (Zip Code)

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


         Securities registered under Section 12(b) of the Exchange Act:

                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $0.01 per share
                                (Title of class)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days.
Yes [X] No [ ]

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [   ]

     Issuer's revenues for the fiscal year ended June 30, 2002 were: $9,681,311.

     At August 31,  2002,  there were issued and  outstanding  1,459,147  of the
Registrant's Common Shares.

     The  aggregate  market  value  of the  Registrant's  voting  stock  held by
nonaffiliates of the Issuer as of August 31, 2002 was $14,056,000.


                       DOCUMENTS INCORPORATED BY REFERENCE

Parts II and IV of Form 10-KSB - Portions of the Annual  Report to  Stockholders
for the fiscal year ended June 30, 2002.

Part III of Form 10-KSB - Portions of Proxy Statement for 2002 Annual Meeting of
Stockholders.

Transitional Small Business Disclosure Form (check one):
Yes [   ]        No [ X ]

--------------------------------------------------------------------------------
                                       1
<PAGE>

                                      INDEX

                                   FORM 10-KSB

<TABLE>
<CAPTION>
                                                                              Page(s)

PART I

<S>                                                                           <C>
  Item 1.   Description of Business                                           3-36

  Item 2.   Description of Property                                            37

  Item 3.   Legal Proceedings                                                  37

  Item 4.   Submission of Matters to a Vote of Security Holders                37


PART II

  Item 5.   Market for Common Equity and Related Shareholder Matters           38

  Item 6.   Management's Discussion and Analysis of Financial Condition
            and Results of Operation                                           38

  Item 7.   Financial Statements                                               38

  Item 8.   Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosure                                38


PART III

  Item 9.   Directors, Executive Officers, Promoters and Control Persons;
            Compliance with Section 16(a) of the Exchange Act                  39

  Item 10.  Executive Compensation                                             39

  Item 11.  Security Ownership of Certain Beneficial Owners and Management
            and Related Stockholder Matters                                    39

  Item 12.  Certain Relationships and Related Transactions                     40

  Item 13.  Exhibits and Reports on Form 8-K                                   41


Signatures                                                                     43

Exhibits                                                                       46

</TABLE>

                                       2
<PAGE>

                                     PART I

ITEM 1 - DESCRIPTION OF BUSINESS

General

         Peoples-Sidney   Financial   Corporation   ("Peoples")  is  a  Delaware
corporation,  which was  organized in 1997 by Peoples  Federal  Savings and Loan
Association of Sidney  ("Association") for the purpose of becoming a savings and
loan holding company, together referred to as the Corporation.  Peoples owns all
of the capital stock of the Association issued in connection with the completion
of the Association's conversion from the mutual to stock form of organization on
April 25, 1997. Unless the context otherwise requires,  all references herein to
the Corporation include Peoples and the Association on a consolidated basis. The
Association,   Peoples'   only   subsidiary,   was   organized  in  1886  as  an
Ohio-chartered  mutual  association  and  converted  to  a  federally  chartered
association in 1958.

         The  Association  is primarily  engaged in the  business of  attracting
savings  deposits from the general  public and investing such funds in permanent
mortgage  loans secured by one- to four-family  residential  real estate located
primarily  in  Shelby  County,  Ohio,  and the  contiguous  counties  of  Logan,
Auglaize, Miami, Darke and Champaign. The Association conducts business from its
main office in Sidney,  Ohio and its full-service  branches in Sidney,  Anna and
Jackson Center, Ohio. The Association also originates loans for the construction
of one- to four-family  real estate,  loans secured by multi-family  real estate
(over four units) and nonresidential real estate,  consumer and commercial loans
and  invests  in  U.S.  government  obligations,   mortgage-backed  and  related
securities,  interest bearing deposits in other financial institutions and other
investments permitted by applicable law.

         The  Association's  operations  are  regulated  by the Office of Thrift
Supervision  ("OTS").  The Association is a member of the Federal Home Loan Bank
System ("FHLB  System") and a stockholder of the Federal Home Loan Bank ("FHLB")
of  Cincinnati.  The  Association  is also a member of the  Savings  Association
Insurance  Fund  ("SAIF") and its deposit  accounts are insured up to applicable
limits by the Federal Deposit Insurance Corporation ("FDIC").  Accordingly,  the
Association is also subject to regulation and oversight by the FDIC.

         The executive  offices of the  Corporation  are located at 101 E. Court
Street, Sidney, Ohio 45365 and its telephone number is (937) 492-6129.

Forward-Looking Statements

         When used in this Form 10-KSB and in future filings by the  Corporation
with the Securities and Exchange  Commission ("SEC"), in the Corporation's press
releases or other public or shareholder  communications,  and 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"  or  similar   expressions   are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995. Such statements are subject to certain risks and
uncertainties,  including, among other things, changes in economic conditions in
the  Corporation's  market  area,  changes in policies by  regulatory  agencies,
fluctuations in interest  rates,  demand for loans in the  Corporation's  market
area and competition,  that could cause actual results to differ materially from
historical   earnings  and  those  presently   anticipated  or  projected.   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.  The
Corporation  wishes to advise readers that the factors listed above could affect
the Corporation's financial performance and could cause the Corporation's actual
results for future periods to differ  materially from any opinions or statements
expressed with respect to future periods in any current statements.

                                       3

<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

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

Lending Activities

         General:   The  principal   lending  activity  of  the  Corporation  is
originating  for its portfolio  first mortgage  loans secured by  owner-occupied
one- to four-family  residential  properties located in its primary market area.
In addition, in order to increase the yield and/or the interest rate sensitivity
of its portfolio and in order to provide more  comprehensive  financial services
to families  and  businesses  in the  Corporation's  primary  market  area,  the
Corporation also originates construction or development, commercial real estate,
consumer,  land, multi-family and commercial business loans. The Corporation may
adjust or discontinue any product offering to respond to competitive or economic
factors.


                                       4
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         Loan Portfolio  Composition:  The following  information sets forth the
composition  of the  Corporation's  loan  portfolio  in  dollar  amounts  and in
percentages  (before  deductions  for loans in process,  deferred  loan fees and
allowance for loan losses) as of the dates indicated.

<TABLE>
<CAPTION>
                                                                         June 30,
                              ----------------------------------------------------------------------------------------------
                                     2002               2001               2000               1999               1998
                              ------------------ ------------------  ----------------  -----------------  ------------------
                               Amount  Percent   Amount  Percent    Amount  Percent    Amount   Percent   Amount   Percent
                               ------  -------   ------  -------    ------  -------    ------   -------   ------   -------
                                                                  (Dollars in Thousands)
<S>                           <C>       <C>     <C>       <C>      <C>       <C>      <C>        <C>     <C>         <C>
Real estate loans
-----------------
  One- to four-family         $ 96,007   76.94% $ 96,718   78.14%  $ 92,117   77.72% $ 84,166     79.51%  $ 79,691    82.37%
  Construction and
    development                  7,097    5.69     6,131    4.95      8,088    6.82     5,930      5.60      6,776     7.00
  Commercial                    10,111    8.10    10,025    8.10     10,048    8.48     9,408      8.89      6,608     6.83
  Multi-family                   1,913    1.53     1,239    1.00      1,300    1.10     1,359      1.28        655     0.68
  Land                           1,310    1.05     1,370    1.11        992    0.84       867      0.82        868     0.90
                              --------   -----  --------   -----   --------   -----  --------     -----   --------    -----
     Total real estate
           loans               116,438   93.31   115,483   93.30    112,545   94.96   101,730     96.10     94,598    97.78
                              --------   -----  --------   -----   --------   -----  --------     -----   --------    -----
Other loans
-----------
  Consumer
    Automobile                   3,122    2.50     3,090    2.50      2,474    2.09     1,744      1.65      1,124     1.16
    Deposit account                506     .41       276    0.22        215    0.18       223      0.21        257     0.27
    Other                          997     .80     1,292    1.04        882    0.74       771      0.73        672     0.69
                              --------   -----  --------   -----   --------   -----  --------     -----   --------    -----
     Total consumer
       loans                     4,625    3.71     4,658    3.76      3,571    3.01     2,738      2.59      2,053     2.12
                              --------   -----  --------   -----   --------   -----  --------     -----   --------    -----

  Commercial business
    loans                        3,717    2.98     3,630    2.94      2,406    2.03     1,393      1.31        101     0.10
                              --------   -----  --------   -----   --------   -----  --------     -----   --------    -----
  Total loans                  124,780  100.00%  123,771  100.00%   118,522  100.00%  105,861    100.00%    96,752   100.00%
                              --------  ======  --------  ======   --------  ======  --------    ======  --------    ======

Less:
-----
  Loans in process              (2,516)           (2,367)            (3,036)           (2,311)              (2,079)
  Deferred loan fees              (331)             (261)              (245)             (218)                (195)
  Allowance for loan
    losses                        (708)             (661)              (591)             (529)                (426)
                              --------          --------           --------          --------             --------
         Total loan
           Receivable, net    $121,225          $120,482           $114,650          $102,803             $ 94,052
                              ========          ========           ========          ========             ========
</TABLE>


                                       5
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The following table shows the composition of the  Corporation's  loan portfolios
by fixed- and adjustable-rate at the dates indicated.


<TABLE>
<CAPTION>
                                                                               June 30,
                                    ----------------------------------------------------------------------------------------------
                                           2002               2001               2000               1999               1998
                                    ------------------ ------------------  ----------------  -----------------  ------------------
                                     Amount  Percent    Amount  Percent    Amount  Percent    Amount   Percent   Amount   Percent
                                     ------  -------    ------  -------    ------  -------    ------   -------   ------   -------
                                                                        (Dollars in Thousands)
<S>                                 <C>       <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>      <C>
Fixed-rate loans:
  Real estate
    One- to four-family             $  45,687   36.61%  $  36,480  29.47%  $  33,148  27.97%   $ 31,611  29.86%  $ 24,628  25.46%
    Construction and
      development                       4,455    3.57       1,619   1.31       3,336    2.81      2,512   2.37      1,643   1.70
    Commercial                          1,171     .94       1,626   1.31       1,577    1.33        600   0.57        386   0.40
    Multi-family                           --      --          --     --          --      --         --     --         --     --
    Land                                  385     .31         479   0.39         177    0.15         20   0.02         80   0.08
                                    ---------   -----   ---------  -----   ---------  -----    --------  -----   --------  -----
       Total real estate loans         51,698   41.43      40,204  32.48      38,238   32.26     34,743  32.82     26,737  27.64
  Consumer loans                        4,625    3.71       4,658   3.76       3,571    3.01      2,738   2.59      2,053   2.12
  Commercial business loans             2,108    1.69       2,003   1.62       1,296    1.09        641   0.60        101   0.10
                                    ---------   -----   ---------  -----   ---------  -----    --------  -----   --------  -----
       Total fixed-rate loans          58,431   46.83      46,865  37.86      43,105   36.36     38,122  36.01     28,891  29.86

Adjustable-rate loans:
  Real estate
    One- to four-family                50,320   40.33      60,238  48.67      58,969   49.75     52,555  49.65     55,063  56.91
    Construction and
      development                       2,642    2.12       4,512   3.64       4,752    4.01      3,418   3.23      5,133   5.30
    Commercial                          8,940    7.16       8,399   6.79       8,471    7.15      8,808   8.32      6,222   6.43
    Multi-family                        1,913    1.53       1,239   1.00       1,300    1.10      1,359   1.28        655    .68
    Land                                  925     .74         891   0.72         815    0.69        847   0.80        788    .82
                                    ---------   -----   ---------  -----   ---------  -----    --------  -----   --------  -----
           Total real estate loans     64,740   51.88      74,031  60.82      74,307   62.70     66,987  63.28     67,861  70.14
  Consumer loans                           --      --          --     --          --      --         --     --         --     --
  Commercial business loans             1,609    1.29       1,627   1.32       1,110    0.94        752   0.71         --     --
                                    ---------   -----   ---------  -----   ---------  -----    --------  -----   --------  -----

        Total adjustable-
          rate loans                   66,349   53.17      75,658  62.14      75,417   63.64     67,739  63.99     67,861  70.14
                                    ---------   -----   ---------  -----   ---------  -----    --------  -----   --------  -----

  Total loans                         124,780  100.00%    123,771 100.00%    118,522  100.00%   105,861 100.00%    96,752 100.00%
                                    ---------  ======   --------- ======   ---------  ======   -------- =======  -------- ======

Less:
  Loans in process                  $  (2,516)          $  (2,367)         $  (3,036)          $ (2,311)         $ (2,079)
  Deferred loan fees                     (331)               (261)              (245)              (218)             (195)
  Allowance for loan losses              (708)               (661)              (591)              (529)             (426)
                                    ---------           ---------          ---------           --------          --------
    Total loans
      receivable, net               $ 121,225           $ 120,482          $ 114,650           $102,803          $ 94,052
                                    =========           =========          =========           ========          ========
</TABLE>


                                       6
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The following  schedule presents the contracted  maturities of the Corporation's
loan  portfolio at June 30, 2002.  The schedule  does not reflect the effects of
possible  prepayments or enforcement of the due-on-sale  clauses. The amortizing
loans,  such as one- to four-family  and installment  loans,  the entire current
principal balance as show as being due at maturity.


<TABLE>
<CAPTION>

                                           Real Estate
                             --------------------------------------
                               One- to Four-
                                Family and          Multi-family,
                             Construction and        Commercial                             Commercial
                                Development           and Land             Consumer           Business             Total
                             -----------------    -----------------    ----------------   ----------------     ---------------
                                      Weighted             Weighted            Weighted           Weighted            Weighted
                                      Average              Average              Average           Average             Average
                             Amount     Rate       Amount   Rate        Amount   Rate     Amount    Rate       Amount   Rate
                             ------     ----       ------   ----        ------   ----     ------    ----       ------   ----
<C>                         <C>         <C>       <C>       <C>         <C>      <C>      <C>       <C>        <C>      <C>
                                                              (Dollars in Thousands)
1 year or less*             $    376    6.60%     $   494   8.25%       $  903   6.97%    $  577    6.53%      $2,350   7.07%
Over 1 year - 3 years            301    7.54          236   7.66         1,448   9.07      1,498    7.00        3,483   7.95
Over 3 years - 5 years           539    7.36          106   7.08         1,951   8.02      1,077    7.63        3,673   7.78
Over 5 years - 10 years        5,271    7.38        1,209   6.94           214   7.26        565    7.08        7,259   7.28
Over 10 years - 20 years      51,721    7.14        6,666   6.96           109   8.53         --      --       58,496   7.12
Over 20 years                 44,896    7.19        4,623   7.02            --     --         --      --       49,519   7.18
                            --------    ----      -------   ----        ------   ----     ------    ----     --------   ----
       Total                $103,104    7.17%     $13,334   7.04%       $4,625   8.12%    $3,717    7.12%    $124,780   7.19%
                            ========    ====      =======   ====        ======   ====     ======    ====     ========   ====
</TABLE>

*Include demand loans, loans having no stated maturity and overdraft loans.

The  total  amount  of loans due  after  June 30,  2003 that have  predetermined
interest rates is $56,912,  while the total amount of loans due after such dates
which have floating or adjustable interest rates is $65,518.

                                       7
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         Under federal law, the aggregate  amount of loans that the  Association
is  permitted  to  make to any  one  borrower  is  generally  limited  to 15% of
unimpaired capital and surplus (25% if the security for such loan has a "readily
ascertainable" value or 30% for certain residential  development loans). At June
30,  2002,  based  on  the  above  limitation,   the  Association's   regulatory
loan-to-one  borrower limit was approximately  $2.15 million.  On the same date,
the  Association  had no borrowers with  outstanding  balances in excess of this
amount.  As of June 30, 2002, the largest dollar amount of  indebtedness  of one
borrower or group of related borrowers was $1,373,486,  secured by multiple one-
to four-family real estate properties.  The next largest loan to one borrower or
group of related  borrowers had an  outstanding  balance of $889,529 at June 30,
2002 and is secured by  multiple  one-to  four-family  real  estate  properties,
commercial real estate and land. As of June 30, 2002, such loans were performing
in accordance with their terms.

         Loan  applications  are  accepted  by  salaried  loan  officers  at the
Association's  offices.  Loan  applications  are  presented  for approval to the
Executive Committee of the Board of Directors or to the full Board of Directors,
depending on loan amount. All loans of $100,000 or more are approved by the full
Board of  Directors.  Decisions  on loan  applications  are made on the basis of
detailed applications and property valuations (consistent with the Association's
written  appraisal  policy),  by qualified  independent  appraisers  (unless the
Association's  exposure  will be $25,000  or less).  The loan  applications  are
designed  primarily to  determine  the  borrower's  ability to repay and include
length  of   employment,   past  credit   history  and  the  amount  of  current
indebtedness.  Significant  items on the application are verified through use of
credit reports,  financial  statements,  tax returns and/or  confirmations.  The
Association is an equal opportunity lender.

         Generally,  the Association requires an attorney's title opinion on its
mortgage  loans as well as fire and  extended  coverage  casualty  insurance  in
amounts  at least  equal to the  principal  amount  of the loan or the  value of
improvements  on the property,  depending on the type of loan.  The  Association
also requires flood insurance to protect the property securing its interest when
the property is located in a flood plain.

One- to Four-Family Residential Real Estate Lending

         The cornerstone of the Association's  lending program has long been the
origination of long-term  permanent loans secured by mortgages on owner-occupied
one- to four-family  residences.  At June 30, 2002, $96.0 million,  or 76.94% of
the  Association's  loan  portfolio,  consisted  of  permanent  loans on one- to
four-family  residences.  At that date, the average outstanding residential loan
balance was $64,219 and the largest outstanding residential loan had a principal
balance of $408,935.  Virtually all of the residential  loans  originated by the
Association are secured by properties located in the Association's market area.

         The Association  originates fixed-rate residential loans in amounts and
at  rates   that  are   monitored   for   compliance   with  the   Association's
asset/liability   management  policy.   Currently,  the  Association  originates
fixed-rate  loans with  maturities  of up to 20 years for  retention  in its own
portfolio.  Limiting the  contractual  term to 20 years,  as opposed to the more
traditional  30 year period,  allows for  accelerated  principal  repayment  and
equity  build  up for the  borrower.  Currently,  all  such  loans  are  made on
owner-occupied  properties.  All fixed-rate  loans originated by the Association
are retained and serviced by it. At June 30,  2002,  the  Association  had $45.7
million  of  fixed-rate   permanent  one-to   four-family   residential   loans,
constituting 36.61% of the Association's loan portfolio at such date.


                                       8
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         The  Association  has  offered  ARM  loans at rates,  terms and  points
determined in accordance with market and competitive  factors. The Association's
current one- to four-family  residential  ARMs are fully  amortizing  loans with
contractual maturities of up to 30 years. Applicants are qualified using a fully
indexed rate, and no ARMs allow for negative amortization. The interest rates on
the ARMs originated by the  Association  are generally  subject to adjustment at
one,  three,  and  five-year  intervals  based  on a margin  over the  analogous
Treasury  Securities  Constant  Maturity  Index.  Decreases  or increases in the
interest rate of the  Association's  ARMs are  generally  limited to 6% above or
below the  initial  interest  rate  over the life of the loan,  and up to 2% per
adjustment  period.  The Association's  ARMs are not convertible into fixed-rate
loans, and do not contain  prepayment  penalties.  ARM loans may be assumed on a
case-by-case basis with the Association's  consent.  At June 30, 2002, the total
balance  of one- to  four-family  ARMs  was  $50.3  million,  or  40.33%  of the
Corporation's  loan  portfolio.  All  ARMs  originated  by the  Association  are
retained and serviced by it.

         In 1992, the Association  initiated a program specifically  tailored to
first-time homebuyers. These loans are made on a five-year adjustable basis with
a term up to 30 years. The margin,  which is lower than other products currently
offered,  is 200 basis  points.  Additionally,  somewhat  higher  debt-to-income
ratios are permitted,  although  mandatory  escrows for taxes and insurance,  an
acceptable  credit  rating  and an  employment  history of at least one year are
required.  The maximum loan amount under this program,  which  requires that the
property  be  owner-occupied,  is  currently  $75,000  unless  Board of Director
approval is obtained,  which can be the lesser of the  purchase  price or 90% of
appraised  value.  At June 30, 2002,  the  Association  had  approximately  $3.4
million of first-time homebuyer loans in its portfolio.

         As discussed  above,  the  Association  evaluates  both the  borrower's
ability to make  principal,  interest  and escrow  payments and the value of the
property  that will  secure the loan.  The  Association  originates  residential
mortgage loans with loan-to-value  ratios up to 90%. On mortgage loans exceeding
a 90%  loan-to-value  ratio at the time of  origination,  the  Association  will
generally require private mortgage insurance in an amount intended to reduce the
Association's exposure to less than 90% of the appraised value of the underlying
property.

         The  Association's   residential  mortgage  loans  customarily  include
due-on-sale  clauses  giving  the  Association  the  right to  declare  the loan
immediately due and payable in the event that, among other things,  the borrower
sells or otherwise disposes of the property subject to the mortgage and the loan
is not repaid.

         The Association  uses the same  underwriting  standards for home equity
lines of credit as it uses for one- to four-family  residential  mortgage loans.
The Association's home equity lines of credit are originated in amounts,  which,
together with the amount of the first  mortgage,  generally do not exceed 80% of
the appraised  value of the property  securing the loan.  At June 30, 2002,  the
Association  had  $550,000  of home  equity  lines of credit  and an  additional
$832,000 of funds committed, but undrawn, under such lines.



                                       9
<PAGE>



ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Construction and Development Lending

         The  Association  makes  construction  loans  to  individuals  for  the
construction  of their primary or secondary  residences and loans to builders or
developers for the construction of single-family  homes,  multi-family units and
commercial real estate  projects.  Loans to individuals for the  construction of
their  residences  typically run for 12 months.  The borrower pays interest only
during the construction  period.  Residential  construction  loans are generally
underwritten  pursuant to the same  guidelines  used for  originating  permanent
residential  loans. At June 30, 2002, the Association had 37 construction  loans
with  outstanding  aggregate  balances of $6.0  million  secured by  residential
property.  Of this amount,  $5.5 million in loans were  outstanding  directly to
borrowers  intending to live in the properties upon completion of  construction.
At that same date, the Association had three construction loans with outstanding
aggregate  balances  of  $466,000  secured  by one- to  four-family  residential
properties  constructed by builders who have pre-sold their houses to individual
purchasers.

         The  Association  makes loans to builders and developers to finance the
construction  of residential  property.  Such loans  generally  have  adjustable
interest rates based upon prime or treasury  indexes with terms ranging from six
months to one year.  The proceeds of the loan are advanced  during  construction
based upon the percentage of completion as determined by an inspection. The loan
amount normally does not exceed 85% of projected  completed value for homes that
have been  pre-sold to the  ultimate  occupant.  For loans to  builders  for the
construction  of homes  not yet  presold,  which may  carry a higher  risk,  the
loan-to-value  ratio is generally  limited to 80%.  Whether the  Association  is
willing to provide  permanent  takeout financing to the purchaser of the home is
determined  independently of the construction loan by separate underwriting.  In
the event that upon completion the house is not sold, the builder is required to
make principal and interest  payments  until the house is sold. The  Association
also makes a limited number of commercial  real estate  construction  loans with
the loan amount  generally not to exceed 75% of the completed value. At June 30,
2002, the Association had $1.1 million,  or 0.91%, of gross loans  receivable in
this category.

         Construction and development  lending generally affords the Association
an opportunity to receive  interest at rates higher than those  obtainable  from
residential  lending and to receive higher  origination  and other loan fees. In
addition,   such  loans  are  generally   made  for   relatively   short  terms.
Nevertheless,  construction  lending to persons  other than  owner-occupants  is
generally  considered  to  involve a higher  level of  credit  risk than one- to
four-family  permanent residential lending due to the concentration of principal
in a limited  number of loans and borrowers and the effects of general  economic
conditions on construction  projects,  real estate  developers and managers.  In
addition,  the  nature of these  loans is such that they are more  difficult  to
evaluate  and  monitor.  The  Association's  risk of loss on a  construction  or
development loan is dependent  largely upon the accuracy of the initial estimate
of the  property's  value upon  completion of the project and the estimated cost
(including  interest)  of the  project.  If the  estimate of value  proves to be
inaccurate,  the Association  may be confronted,  at or prior to the maturity of
the loan,  with a project  with a value  which is  insufficient  to assure  full
repayment  and/or the possibility of having to make  substantial  investments to
complete  and sell the  project.  Because  defaults in  repayment  may not occur
during the construction period, it may be difficult to identify problem loans at
an early stage.  When loan payments  become due, the cash flow from the property
may not be adequate to service the debt. In such cases,  the  Association may be
required to modify the terms of the loan.

Commercial Real Estate Lending

         The  Association's  commercial  real estate loan portfolio  consists of
loans  secured  by a variety  of  non-residential  properties  including  retail
facilities,  small office buildings,  farm real estate and churches. At June 30,
2002, the Association's largest commercial real estate loan totaled $518,628. At
that date,  the  Association  had 82  commercial  real  estate  loans,  totaling
$10,111,000, or 8.10% of gross loans receivable.


                                       10
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         The  Association   has  originated  both   adjustable-  and  fixed-rate
commercial real estate loans, although most current originations have adjustable
rates. Rates on the Association's  adjustable-rate  commercial real estate loans
generally  adjust  in  a  manner  consistent  with  the  Association's  one-  to
four-family  residential ARMs,  although  five-year  adjustment  periods are not
currently  offered.  Commercial real estate loans are generally  underwritten in
amounts of up to 75% of the appraised value of the underlying property.

         Appraisals  on  properties   securing   commercial  real  estate  loans
originated by the Association are performed by a qualified independent appraiser
at the time  the  loan is made.  In  addition,  the  Association's  underwriting
procedures  generally  require  verification  of the borrower's  credit history,
income and financial statements,  banking  relationships,  references and income
projections for the property. Personal guarantees are generally obtained for the
Association's commercial real estate loans.  Substantially all of the commercial
real estate  loans  originated  by the  Association  are  secured by  properties
located within the Association's market area.

         The table below sets forth by type of security  property the  estimated
number, loan amount and outstanding balance of the Association's commercial real
estate loans at June 30, 2002.

                                         Original       Outstanding
                           Number of       Loan          Principal
                            Loans         Amount          Balance
                            -----         ------          -------
                                  (Dollars in Thousands)
         Office               6          $ 1,007          $   626
         Retail               7            1,288              665
         Farm real estate    20            4,000            3,726
         Churches            49            6,460            5,094
                           ----          -------          -------
                Total        82          $12,755          $10,111
                           ====          =======          =======

     Commercial real estate loans generally  present a higher level of risk than
loans  secured by one- to  four-family  residences.  This greater risk is due to
several factors, including the concentration of principal in a limited number of
loans and  borrowers,  the  effects of  general  economic  conditions  on income
producing  properties and the increased  difficulty of evaluating and monitoring
of these  types of  loans.  Furthermore,  the  repayment  of  loans  secured  by
commercial real estate is typically  dependent upon the successful  operation of
the related  real estate  project.  If the cash flow from the project is reduced
(for example, if leases are not obtained or renewed),  the borrower's ability to
repay the loan may be impaired.

Multi-Family Lending

         The Association has historically made permanent  multi-family  loans in
its  primary  market  area.   However,   the  amount  of  such  loans  has  been
insignificant.  At June 30, 2002,  multi-family  loans totaled $1.9 million,  or
1.53% of gross loans receivable.

         The Association's multi-family loan portfolio includes loans secured by
five or more unit residential  buildings  located primarily in the Association's
market area.


                                       11
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Land Lending

         Land loans include loans to develop  vacant or raw land and are made to
various builders and developers with whom the Association has had  long-standing
relationships.  All of such loans are secured by land zoned for  residential  or
commercial  developments  and  located  within the  Association's  market  area.
Proceeds are used for excavation,  utility  placements and street  improvements.
Disbursements  related to acquisition and  development  land loans are typically
based on inspections to determine the progress of the project. As lots are sold,
a portion of the sale price is applied to the principal of the outstanding  loan
in order to ensure the loan is paid in full prior to all lots in the development
being sold.  Interest payments are required at regular  intervals  (quarterly or
semi-annually) and loan terms typically are written for three years. At June 30,
2002, the Association had $363,000 of loans receivable in this category.

         The  Association  also makes loans to individuals who purchase and hold
land for various reasons,  such as the future construction of a residence.  Such
loans are generally  originated  with terms of five years and have maximum loan-
to- value ratios of 85% for loans on improved  residential building lots and 75%
on undeveloped  acreage.  At June 30, 2002, the Association had $947,000 in land
loans to individuals.

         Land  lending  generally  affords the  Association  an  opportunity  to
receive interest at rates higher than those obtainable from residential lending.
Nevertheless,  land lending is generally considered to involve a higher level of
credit  risk due to the fact that funds are  advanced  upon the  security of the
land, which is of uncertain value prior to its development.

Consumer Lending

         Management  believes  that offering  consumer  loan  products  helps to
expand the  Association's  customer  base and to create  stronger  ties with its
existing  customer  base. In addition,  because  consumer  loans  generally have
shorter terms to maturity and carry higher rates of interest than do residential
mortgage  loans,  they can be valuable  asset/liability  management  tools.  The
Association currently originates  substantially all of its consumer loans in its
market area. At June 30, 2002,  the  Association's  consumer  loans totaled $4.6
million, or 3.71% of the Association's gross loan portfolio.

         The Association  offers a variety of secured consumer loans,  including
automobile loans,  loans secured by savings deposits and home improvement loans.
Although the  Association  primarily  originates  consumer loans secured by real
estate,  deposits or other  collateral,  the  Association  also makes  unsecured
personal loans.

         The largest component of the Association's  consumer lending program is
automobile  loans. At June 30, 2002,  automobile loans totaled $3.1 million,  or
2.50% of gross loans  receivable.  The  Association  makes loans directly to the
consumer  to aid in the  purchase  of new and  used  vehicles,  which  serve  as
collateral  for the  loan.  The  Association  also  employs  other  underwriting
criteria discussed below in deciding whether to extend credit.

         The terms of other types of consumer  loans vary  according to the type
of  collateral,  length of contract and  creditworthiness  of the borrower.  The
underwriting  standards employed by the Association for consumer loans include a
determination  of  the  applicant's  payment  history  on  other  debts  and  an
assessment of the borrower's ability to meet payments on the proposed loan along
with his  existing  obligations.  In  addition  to the  creditworthiness  of the
applicant,  the underwriting  process also includes a comparison of the value of
the security, if any, in relation to the proposed loan amount.

                                       12
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         Consumer loans may entail greater risk than residential mortgage loans,
particularly  in the case of  consumer  loans that are  unsecured  or secured by
rapidly  depreciable assets such as automobiles.  In such cases, any repossessed
collateral  for defaulted  consumer  loans may not provide  adequate  sources of
repayment  for  the  outstanding  loan  balances  as a  result  of  the  greater
likelihood  of  damage,  loss,  or  depreciation.  In  addition,  consumer  loan
collections are dependent on the borrower's continuing financial stability,  and
thus  are  more  likely  to  be  affected  by  adverse  personal  circumstances.
Furthermore,  the  application  of various  federal  and state  laws,  including
federal and state bankruptcy and insolvency laws, may limit the amount which can
be recovered on such loans.

Commercial Business Lending

         In order to increase the yield and  interest  rate  sensitivity  of its
loan  portfolio  and in order to  satisfy  the  demand  for  financial  services
available  to  individuals  and  businesses  in its  primary  market  area,  the
Association  has  maintained a small  portfolio of  commercial  business  loans.
Although the portfolio  remains a small  percentage of gross loans  outstanding,
the  Association  has  experienced  substantial  growth  over the last few years
primarily from the new branch  facilities.  Unlike  residential  mortgage loans,
which  generally  are  made  on the  basis  of the  borrower's  ability  to make
repayment from his or her employment and other income,  and which are secured by
real  property  whose value tends to be more  easily  ascertainable,  commercial
business  loans are generally of higher risk and typically are made on the basis
of the borrower's ability to make repayment from the cash flow of the borrower's
business. As a result, the availability of funds for the repayment of commercial
business  loans may be  substantially  dependent  on the success of the business
itself (which, in turn, may be dependent upon the general economic environment).
During the past six years, the Association has made commercial business loans to
businesses such as small retail  operations,  small  manufacturing  concerns and
professional  firms. The Association's  commercial  business loans almost always
include personal guarantees and are usually, but not always, secured by business
assets,  such as accounts  receivable,  equipment,  inventory  and real  estate.
However,  the  collateral  securing the loans may  depreciate  over time, may be
difficult  to appraise  and may  fluctuate  in value based on the success of the
business.

         Most of the Association's  commercial business loans have terms ranging
from three months to one year and may carry fixed or adjustable  interest rates.
The  underwriting  process for  commercial  business  loans  generally  includes
consideration of the borrower's financial statements,  tax returns,  projections
of future business operations and inspection of the subject collateral,  if any.
At June 30, 2002,  commercial  business loans totaled $3.7 million,  or 2.98% of
the Association's gross loans receivable.

Originations, Purchases and Sales of Loans

         The  Association   originates  real  estate  and  other  loans  through
employees located at the Association's offices.  Walk-in customers and referrals
from real  estate  brokers  and  builders  are also  important  sources  of loan
originations.  The  Association  has  historically  not utilized the services of
mortgage or loan brokers,  nor purchased or sold loans from or to other lenders.
While a portfolio  lender,  the Association may in the future evaluate loan sale
opportunities as they arise and make sales depending on market conditions.



                                       13
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         The following table shows the loan origination and repayment activities
of the Corporation for the periods indicated.

<TABLE>
<CAPTION>
                                                           Year Ended June 30,
                                                   ------------------------------------
                                                     2002         2001         2000
                                                     ----         ----         ----
                                                             (in thousands)
<S>                                               <C>           <C>           <C>
Originations by type:
  Adjustable rate:
         Real estate:
           One- to four-family, construction,
             development and land                 $ 10,690      $ 15,285      $ 18,079
           Commercial                                2,861         1,704           830
           Multi-family                              1,084            --            --
         Nonreal estate:
           Consumer                                     --            --            --
           Commercial business                         498         1,928         1,873
                                                  --------      --------      --------
                 Total adjustable rate              15,133        18,917        20,782

  Fixed rate:
         Real estate:
           One- to four-family, construction,
             development and land                   25,317         9,311         9,126
           Commercial                                  294           345           643
           Multi-family                                 --            --            --
         Nonreal estate
           Consumer                                  2,398         4,053         3,262
           Commercial business                       1,190         1,123         1,047
                                                  --------      --------      --------
                 Total fixed rate                   29,199        14,832        14,078
                                                  --------      --------      --------
                 Total loans originated             44,332        33,749        34,860

       Principal repayments                        (43,348)      (27,467)      (22,834)
Increase in other items, net*                         (118)         (223)          (90)
                                                  --------      --------      --------
                           Net increase           $    866      $  6,059      $ 11,936
                                                  ========      ========      ========

</TABLE>


* Includes  provision  for loan  losses,  net  charge-offs,  net  deferred  loan
origination fees and transfers to foreclosed assets.

Delinquencies and Nonperforming Assets

         When a  borrower  fails  to make a  required  payment  on a  loan,  the
Association  attempts to cure the delinquency by contacting the borrower. A late
notice is sent on all loans over 30 days delinquent. Another late notice is sent
60 days  after  the due date  followed  by a letter  from the  President  of the
Association.

         If the  delinquency  is not cured by the 90th day,  the customer may be
provided  written  notice  that the  account  will be  referred  to counsel  for
collection and foreclosure, if necessary. A good faith effort by the borrower at
this time will defer  foreclosure  for a reasonable  length of time depending on
individual circumstances.  The Association may agree to accept a deed in lieu of
foreclosure.  If it becomes  necessary  to  foreclose,  the  property is sold at
public sale and the Association may bid on the property to protect its interest.
The decision to foreclose  is made by the Senior Loan Officer  after  discussion
with the members of the Executive Committee or Board of Directors.

                                       14
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         Consumer loans are  charged-off if they remain  delinquent for 120 days
unless the borrower and lender agree on a payment plan. If terms of the plan are
not met, the customer's  loan is then subject to charge-off.  The  Association's
procedures  for  repossession  and sale of  consumer  collateral  are subject to
various requirements under Ohio consumer protection laws.

         Real estate  acquired by the  Association as a result of foreclosure or
by deed in lieu of  foreclosure  is  classified as real estate owned until it is
sold.  When property is acquired by foreclosure or deed in lieu of  foreclosure,
it is  initially  recorded  at  fair  value  at the  date  of  acquisition.  Any
write-down  resulting  therefrom  is charged to the  allowance  for loan losses.
Subsequent  decreases  in the value of the  property  are charged to  operations
through the  creation of a valuation  allowance.  After  acquisition,  all costs
incurred  in  maintaining  the  property  are  expensed.  Costs  relating to the
development  and  improvement of the property,  however,  are capitalized to the
extent of estimated fair value.





                                       15
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The following table sets forth the Corporation's  loan delinquencies by type, by
amount and by percentage of type at June 30, 2002.

<TABLE>
<CAPTION>
                                                  Loans Delinquent For:
                                      -------------------------------------------
                                         60-89 Days            90 Days and Over                   Total Delinquent Loans
                                         ----------            ----------------                   ----------------------
                                      Number    Amount    Category  Number  Amount  Category    Number    Amount   Category
                                      ------    ------    --------  ------  ------  --------    ------    ------   --------
                                                                     (Dollars in Thousands)
<S>                                      <C>   <C>          <C>       <C>   <C>       <C>         <C>    <C>          <C>
Real estate:
       One- to four-family               10    $  591       0.62%     17    $  908    0.95%       27     $ 1,499      1.57%
       Construction and development       1        63       0.88      --        --      --         1          63      0.88
       Commercial                         1        46       0.45      --        --      --         1          46      0.45
       Multi-family                      --        --         --      --        --      --        --          --        --
       Land                              --        --         --       1        13    0.97         1          13      0.97
Consumer                                 13        82       1.76       2         9    0.19        15          91      1.85
Commercial Business                       1        29       0.80       1       141    3.79         2         170      4.59
                                       ----    ------       ----    ----    ------    ----    ----       --------      ----
              Total                      26    $  811       0.65%     21    $1,071    0.86%     47       $  1,882      1.51%
                                       ====    ======       ====    ====    ======    ====    ====       ========      ====

</TABLE>


                                       16
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Classification of Assets:  Federal  regulations require that savings institution
classify  its  assets  on a regular  basis.  In  addition,  in  connection  with
examinations of savings  institutions,  OTS and FDIC examiners have authority to
identify  problem  assets and, if  appropriate,  require them to be  classified.
There are three  classifications for problem assets:  Substandard,  Doubtful and
Loss.   Substandard   assets  have  one  or  more  defined  weaknesses  and  are
characterized by the distinct possibility that the Association will sustain some
loss if the deficiencies are not corrected.  Doubtful assets have the weaknesses
of substandard assets, with the additional  characteristics  that the weaknesses
make collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable,  and there is a high possibility of loss. An
asset  classified as Loss is considered  uncollectible  and of such little value
that  continuance as an asset on the balance sheet of the  institution,  without
establishment of a specific valuation allowance or charge-off, is not warranted.
Assets  classified  as  Substandard  or  Doubtful  require  the  institution  to
establish  prudent  general  allowances for loan losses.  If an asset or portion
thereof is  classified  as Loss,  the  institution  may  charge-off  such amount
against  the loan loss  allowance.  If an  institution  does not  agree  with an
examiner's  classification of an asset, it may appeal this  determination to the
District Director of the OTS.

On the  basis of  management's  review  of its  assets,  at June 30,  2002,  the
Association had classified a total of $613,000 of its loans, as follows:

<TABLE>
<CAPTION>
                                  One-      Commercial
                                To Four-      Real
                                 Family       Estate        Land       Consumer       Total
                                 ------       ------        ----       --------       -----
                                                        (in thousands)
<S>                               <C>           <C>         <C>          <C>          <C>
Substandard                       $586          $--         $ 13         $ 13         $612
Doubtful                           --            --           --           --           --
Loss                               --            --           --            1            1
                                  ----          ---         ----         ----         ----
                                  $586          $--         $ 13         $ 14         $613
                                  ====           ==         ====         ====         ====


</TABLE>

The Association's  classified assets consist of the (i) nonperforming  loans and
(ii) loans and other assets of concern  discussed herein. As of the date hereof,
these asset classifications are consistent with those of the OTS and FDIC.

The table below sets forth the amounts and categories of non-performing  assets.
Interest  income on loans is accrued  over the term of the loans  based upon the
principal outstanding except where serious doubt exists as to the collectibility
of a loan, in which case the accrual of interest is discontinued.  For all years
presented,  the  Association  has had no  troubled  debt  restructurings  (which
involve  forgiving  a portion of interest  or  principal  on any loans or making
loans at a rate  materially less than that of market rates).  Foreclosed  assets
include assets acquired in settlement of loans.



                                       17
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

<TABLE>
<CAPTION>
                                                                        June 30,
                                          ---------------------------------------------------------------
                                             2002          2001           2000         1999         1998
                                             ----          ----           ----         ----         ----
                                                                (dollars in thousands)
        <S>                                 <C>            <C>            <C>            <C>          <C>
         Nonaccruing loans
                One- to four-family        $  585         $  764         $  756         $302         $713
                Construction and
                  Development                  --             --             --           --           --
                Commercial real estate         --             --             --           13           --
                Multi-family                   --             --             --           --           --
                Land                           13             --             --           --           --
                Consumer                       --             --             --           --           --
                Commercial business            --             --             --           --           --
                                           ------         ------         ------         ----         ----
                       Total                  598            764            756          315          713

         Accruing loans delinquent
           more than 90 days
                One- to four-family           323            252            278          389          235
                Construction and
                  Development                  --             --             --           --           --
                Commercial real estate         --             --             10           --           --
                Multi-family                   --             --             --           --           --
                Land                           --             59             --           --           --
                Consumer                        9             41              1           51           11
                Commercial business           141            146             --           --           --
                                           ------         ------         ------         ----         ----
                       Total                  473            498            289          440          246

         Foreclosed assets
                One- to four-family            --             --             --           --           --
                Construction and
                  development                  --             --             --           --           --
                Commercial real estate         --             --             --           --           --
                Multi-family                   --             --             --           --           --
                Land                           --             --             --           --           --
                Consumer                       --             --             --           --           --
                Commercial business            --             --             --           --           --
                                           ------         ------         ------         ----         ----
                       Total                   --             --             --           --           --
                                           ------         ------         ------         ----         ----

         Total nonperforming assets        $1,071         $1,262         $1,045         $755         $959
                                           ======         ======         ======         ====         ====
         Total as a percentage of
           total assets                      0.79%          0.94%          0.81%        0.65%        0.91%
                                           ======         ======         ======         ====         ====
</TABLE>

         For the year ended June 30, 2002 gross interest income which would have
been recorded had the  nonaccruing  loans been current in accordance  with their
original  terms  amounted to $45,079.  The amount that was  included in interest
income on such loans was $26,488 for the year ended June 30, 2002.

         Other Assets of Concern:  As of June 30, 2002, the  Association  had no
assets  that are not now  disclosed  because  of  known  information  about  the
possible  credit  problems of the  borrowers  or the cash flows of the  security
property  which would cause  management to have some doubts as to the ability of
the borrowers to comply with present loan  repayment  terms and which may result
in the future inclusion of such items in the nonperforming asset categories.

         Allowance for Loan Losses:  Management  estimates the allowance balance
required  based on past loan  loss  experience,  the  nature  and  volume of the
portfolio,   information  about  specific  borrower   situations  and  estimated
collateral values,  economic conditions,  and other factors.  Allocations of the
allowance may be made for specific loans,  but the entire allowance is available
for any loan that, in management's judgment, should be charged-off.


                                       18
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         Loan  impairment  is reported  when full payment under the terms of the
loan is not expected. Impairment is evaluated in total for smaller-balance loans
of similar  nature such as first  mortgage  loans secured by one- to four-family
residences,  residential construction loans, automobile,  home equity and second
mortgage loans.  Commercial loans and mortgage loans secured by other properties
are evaluated  individually for impairment.  If a loan is impaired, a portion of
the  allowance for loan losses is allocated so that the loan is reported net, at
the present value of estimated  future cash flows using the loan's existing rate
or at the fair value of  collateral  if  repayment  is expected  solely from the
collateral.

         As of June 30, 2002, the  Association's  allowance for loan losses as a
percent  of gross  loans  receivable  and as a percent  of  nonperforming  loans
amounted  to  0.57%  and  66.12%,  respectively.   In  light  of  the  level  of
nonperforming assets to total assets and the nature of these assets,  management
believes  that the  allowance  for loan  losses is  adequate.  While  management
believes that it uses the best information  available to determine the allowance
for loan losses, unforeseen market conditions could result in adjustments to the
allowance for loan losses, and net earnings could be significantly  affected, if
circumstances differ substantially from the assumptions used in making the final
determination.

         The  following  table  sets  forth  an  analysis  of the  Corporation's
allowance for loan losses.

                                           Year ended June 30,
                                -----------------------------------------------
                                2002      2001      2000        1999      1998
                                ----      ----      ----        ----      ----
                                          (dollars in thousands)

Balance at beginning of period  $661      $591      $ 529       $426      $397

Charge-offs
       One- to four-family        --        --         --         --         7
       Construction and
         Development              --        --         --         --        --
       Commercial real estate     --        --         --         --        --
       Multi-family               --        --         --         --        --
       Consumer                    6         5         --         23         8
       Commercial business        --        --         --         --        --
                                ----      ----      -----       ----      ----
                                   6         5         --         23        15
                                ----      ----      -----       ----      ----
Recoveries
       One- to four-family        --        --         --         19        --
       Construction and
         Development              --        --         --         --        --
       Commercial real estate     --        --         --         --        --
       Multi-family               --        --         --         --        --
       Consumer                    1         1          1          3         3
       Commercial business        --        --         --         --        --
                                ----      ----      -----       ----      ----
                                   1         1          1         22         3
                                ----      ----      -----       ----      ----

Net charge-offs                    5         4         (1)         1        12
Additions charged to
  operations                      52        74         61        104        41
                                ----      ----      -----       ----      ----
Balance at end of period        $708      $661      $ 591       $529      $426
                                ====      ====      =====       ====      ====
Ratio of net charge-offs
  during the period to
  average loans outstanding*
  during the period              --%       --%        --%        --%      0.01%
                                ====      ====      =====       ====      ====
Ratio of net charge-offs
  during the period to
  nonperforming assets at the
  end of the period             0.48%     0.33%     (0.10)%     0.08%     1.33%
                                ====      ====      =====       ====      ====


*    Calculated net of deferred loan fees, loan discounts,  loans in process and
     allowance for loan losses.


                                       19
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The distribution of the Corporation's allowance for losses on loans at the dates
indicated is summarized as follows:

<TABLE>
<CAPTION>
                                                                       June 30,
                             -------------------------------------------------------------------------------------------
                                          2002                            2001                         2000
                             ---------------------------    ---------------------------    -----------------------------
                             Allowance  Category   Loans    Allowance   Category   Loans   Allowance  Category     Loans
                             ---------  --------   -----    ---------   --------   -----   ---------  --------     -----
<S>                             <C>     <C>        <C>         <C>      <C>        <C>       <C>      <C>          <C>
One- to four-family             $411    $ 96,007   76.94%      $416     $ 96,718   78.14%    $388     $ 92,117     77.72%
Construction and development      21       7,097    5.69         18        6,131    4.95       20        8,088      6.82
Commercial real estate            31      10,111    8.10         29       10,025    8.10       25       10,048      8.48
Multi-family                       6       1,913    1.53          3        1,239    1.00        3        1,300      1.10
Land                               6       1,310    1.05          4        1,370    1.11        3          992      0.84
Consumer                         113       4,625    3.71        111        4,658    3.76       94        3,571      3.01
Commercial business              120       3,717    2.98         80        3,630    2.94       58        2,406      2.03
Unallocated                       --          --      --         --           --      --       --           --     --
                                ----    --------  ------       ----     --------  ------     ----     --------    ------

       Total                    $708    $124,780  100.00%      $661     $123,771  100.00%    $591     $118,522    100.00
                                ====    ========  ======       ====     ========  ======     ====     ========    ======
</TABLE>


<TABLE>
<CAPTION>
                                                          June 30,
                               -----------------------------------------------------------------
                                             1999                               1998
                               -----------------------------     -------------------------------
                               Allowance   Category    Loans     Allowance    Category    Loans
                               ---------   --------    -----     ---------    --------    -----
<S>                              <C>      <C>          <C>          <C>       <C>         <C>
One- to four-family              $346     $ 84,166     79.51%       $335      $79,691     82.37%
Construction and development       13        5,930      5.60          16        6,776      7.00
Commercial real estate             32        9,408      8.89          15        6,608      6.83
Multi-family                        4        1,359      1.28           2          655      0.68
Land                                3          867      0.82           2          868      0.90
Consumer                          103        2,738      2.59          56        2,053      2.12
Commercial business                28        1,393      1.31          --          101      0.10
Unallocated                        --           --     --             --           --        --
                                 ----     --------    ------        ----      -------    ------

       Total                     $529     $105,861    100.00%       $426      $96,752    100.00%
                                 ====     ========    ======        ====      =======    ======
</TABLE>


                                       20
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Investment Activities

         As part of its  asset/liability  management  strategy,  the Corporation
invests in U.S. Government and agency obligations and mortgage-backed securities
to supplement its lending activities.  The Association's  investment policy also
allows for  investments  in overnight  funds and  certificates  of deposit.  The
Association may consider the expansion of investments  into other  securities if
deemed appropriate. At June 30, 2002, the Corporation did not own any securities
of a single issuer that  exceeded 10% of the  Association's  equity,  other than
U.S.  Government or federal agency  obligations.  See Note 2 of the Notes to the
Consolidated  Financial  Statements  for  additional  information  regarding the
Association's securities portfolio.

         As of June 30,  2002  the  Corporation  had  securities  totaling  $3.5
million  classified  as  available  for  sale  while  there  were no  securities
classified  as  held  to  maturity.  As  future  securities  are  acquired,  the
Corporation  may elect to classify them as either  available for sale or held to
maturity.



                                       21
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The following table sets forth the composition of the Corporation's  investments
in securities and time deposits at the dates indicated.

<TABLE>
<CAPTION>
                                                                             June 30,
                                                ---------------------------------------------------------------
                                                          2002                 2001                 2000
                                                          ----                 ----                 ----

                                                 Carrying      % of    Carrying    % of    Carrying     % of
                                                   Value       Total    Value      Total    Value       Total
                                                 --------      -----   --------    -----   --------     ------
                                                                      (dollars in thousands)
<S>                                                <C>         <C>      <C>        <C>      <C>         <C>
Securities and time deposits
  Federal agency obligations available for sale    $3,526      70.51%   $3,002     68.24%   $3,896      41.15%
  Time deposits                                        --         --        --        --        --         --
                                                   ------     ------    ------    ------    ------     ------
         Subtotal                                   3,526      70.51     3,002     68.24     3,896      41.15

Mortgage-backed securities                             --         --        --        --     4,550      48.05
FHLB stock                                          1,475      29.49     1,397     31.76     1,023      10.80
  Total securities, time deposits,                 ------     ------    ------    ------    ------     ------
    mortgage-backed securities and FHLB stock      $5,001     100.00%   $4,399    100.00%   $9,469     100.00%
                                                   ======     ======    ======    ======    ======     ======

Average remaining life of securities               4.39 years           5.93 years          4.86 years
Other interest-earning assets
  Interest-bearing deposits with banks             $3,771       82.5%   $4,335     81.26%   $  885      63.91%
  Overnight deposits                                  800       17.5     1,000     18.74       500      36.09
                                                   ------     ------    ------    ------    ------     ------
           Total                                   $4,571     100.00%   $5,335    100.00%   $1,385     100.00%
                                                   ======     ======    ======    ======    ======     ======
</TABLE>

                                       22
<PAGE>



ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The  composition  and maturities of the time deposit and securities  portfolios,
excluding FHLB stock, are indicated in the following table.

<TABLE>
<CAPTION>
                                                                    June 30, 2002
                              -----------------------------------------------------------------------------------------------
                               Less than 1 year          1 to 5 years           5 to 10 years             Total Securities
                              -------------------    --------------------    ---------------------     ----------------------
                              Amortized     Fair      Amortized    Fair       Amortized      Fair      Amortized       Fair
                                Cost       Value        Cost       Value         Cost        Value        Cost         Value
                                ----       -----        ----       -----         ----        -----        ----         -----
                                                                  (dollars in thousands)
<S>                           <C>        <C>        <C>          <C>          <C>          <C>          <C>          <C>
Federal agency obligations
       available for sale     $    --    $     --   $   2,500    $   2,506    $   1,000    $   1,020    $   3,500    $   3,526
                              =======    ========    =========   =========    =========    =========    =========    =========
Weighted average yield             --%         --%       4.19%        4.19%        6.16%        6.16%        4.75%        4.75%

</TABLE>


                                       23
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Sources of Funds

         General.  The  Corporation's  primary  sources  of funds are  deposits,
amortization  and  prepayment  of  loan  principal,  maturities  of  securities,
short-term  investments  and  funds  provided  from  operations  as well as FHLB
advances.

         Deposits. The Association offers a variety of deposit accounts having a
wide range of interest rates and terms.  The  Association's  deposits consist of
passbook accounts, statement savings, NOW accounts, Christmas club, money market
and  certificate  accounts.  The  Association  relies  primarily on advertising,
including newspaper and radio, competitive pricing policies and customer service
to attract and retain these deposits. Neither premiums nor brokered deposits are
utilized.

         The flow of deposits is influenced  significantly  by general  economic
conditions,   changes  in  money  market  and  prevailing   interest  rates  and
competition.

         The variety of deposit  accounts offered by the Association has allowed
it to be  competitive  in  obtaining  funds and to respond with  flexibility  to
changes in consumer  demand.  The  Association  has become more  susceptible  to
short-  term  fluctuations  in deposit  flows,  as  customers  have  become more
interest rate conscious.  The Association manages the pricing of its deposits in
keeping  with  its   asset/liability   management,   profitability   and  growth
objectives. Based on its experience, the Association believes that its passbook,
demand and NOW accounts are relatively stable sources of deposits.  However, the
ability of the Association to attract and maintain certificate deposits, and the
rates paid on these  deposits,  has been and will  continue to be  significantly
affected by market conditions.

The following table sets forth the savings flows at the  Corporation  during the
periods indicated.

                                         Year Ended June 30,
                                 -------------------------------------
                                  2002           2001           2000
                                  ----           ----           ----
                                        (dollars in thousands)

Opening balance                $  91,341      $  93,057      $  84,310
Deposits                         134,335        119,868        123,137
Withdrawals                     (134,420)      (125,698)      (118,056)
Interest credited                  3,531          4,114          3,666
                               ---------      ---------      ---------
Ending balance                 $  94,787      $  91,341      $  93,057
                               =========      =========      =========

Net increase (decrease)        $   3,446      $  (1,716)     $   8,747
                               =========      =========      =========

Percent increase (decrease)         3.77%         (1.84)%        10.37%
                               =========      =========      =========


                                       24
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The  following  table sets forth the dollar  amount of savings  deposits  in the
various  types of  deposit  programs  offered  by the  Corporation  at the dates
indicated.

<TABLE>
<CAPTION>

                                                                                  June 30,
                                          ---------------------------------------------------------------------------
                                                           2002                    2001                   2000
                                                     ------------------      ------------------    ------------------
                                          Weighted
                                          Average
                                          Rate at               Percent                Percent                Percent
                                          June 30,                of                     of                     of
                                           2002      Amount      Total        Amount    Total       Amount      Total
                                           ----      ------      -----        ------    -----       ------      -----
                                                                            (dollars in thousands)
<S>                                         <C>      <C>        <C>          <C>       <C>          <C>        <C>
Transactions and savings deposits
       Noninterest-bearing demand             --%    $   850      0.90%      $   662     0.73%      $   871      0.93%
       Savings account                      1.98      23,949     25.24        19,354    21.18        18,889     20.29
       NOW accounts                         0.74       6,614      6.97         5,817     6.36         4,940      5.31
       Money market accounts                1.90       2,887      3.04         1,713     1.87         1,563      1.68
                                                     -------    ------       -------   ------       -------    ------
              Total noncertificates         1.68      34,300     36.15        27,546    30.14        26,263     28.21
                                                     -------    ------       -------   ------       -------    ------

Certificates
       2.00 - 3.99%                         2.68      20,966     22.10           195     0.21            --        --
       4.00 - 5.99%                         4.76      17,366     18.31        21,288    23.29        23,528     25.27
       6.00 - 7.99%                         6.79      22,155     23.35        42,312    46.30        43,266     46.48
                                                     -------    ------       -------   ------       -------    ------
              Total certificates            4.78      60,487     63.76        63,795    69.80        66,794     71.75
                                                     -------    ------       -------   ------       -------    ------
              Accrued interest                            81      0.09            50     0.06            35      0.04
                                                     -------    ------       -------   ------       -------    ------
              Total deposits                3.66%    $94,868    100.00%      $91,391   100.00%      $93,092    100.00%
                                            ====     =======    ======       =======   ======       =======    ======
</TABLE>


                                       25
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

The following table shows rate and maturity  information  for the  Corporation's
certificates of deposit as of June 30, 2002.

<TABLE>
<CAPTION>
                                       2.00-       4.00-        6.00-                      Percent
                                       3.99%       5.99%        7.99%        Total         of Total
                                       -----       -----        -----        -----         --------
                                                       (dollars in thousands)
<S>                                  <C>          <C>          <C>          <C>             <C>
Certificate accounts maturing in
  quarter ending
       September 30, 2002            $ 3,360      $ 7,273      $ 3,502      $14,135         23.37%
       December 31, 2002               3,490        1,749        3,921        9,160         15.14
       March 31, 2003                  2,592          596        3,079        6,267         10.36
       June 30, 2003                   3,592          248        3,362        7,202         11.91
       September 30, 2003              2,941        1,617        1,762        6,320         10.45
       December 31, 2003               1,152        1,497        2,044        4,693          7.76
       March 31, 2004                    642        1,387           45        2,074          3.43
       June 30, 2004                   1,581          183          415        2,179          3.60
       September 30, 2004                594           41          532        1,167          1.93
       December 31, 2004                 726           --          186          912          1.51
       March 31, 2005                    113           20          172          305          0.50
       June 30, 2005                      61           27          695          783          1.29
       September 30, 2005                 --           51        1,113        1,164          1.92
       December 31, 2005                  19           71        1,226        1,316          2.18
       March 31, 2006                     33           82          101          216          0.36
       June 30, 2006                      25          253           --          278          0.46
       September 30, 2006                 --           65           --           65          0.11
       December 31, 2006                  14          122           --          136          0.22
       March 31, 2007                     31           --           --           31          0.05
       June 30, 2007                      --        2,084           --        2,084          3.45
                                     -------      -------      -------      -------        ------
              Total                  $20,966      $17,366      $22,155      $60,487        100.00%
                                     =======      =======      =======      =======        ======

              Percent of total         34.66%       28.71%       36.63%
</TABLE>


         At June 30, 2002, the  Association  had  approximately  $5.5 million in
certificate accounts in amounts of $100,000 or more maturing as follows:

                                                        Weighted
                                                         Average
         Maturity Period                    Amount        Rate
         ---------------                    ------        ----
                                           (dollars in thousands)

Three months or less                        $1,533        4.16%
Over three through six months                1,042        5.67
Over six through 12 months                   1,394        3.78
Over 12 months                               1,567        5.76
                                            ------        ----
       Total                                $5,536        4.80%
                                            ======        ====

         For additional information regarding Corporation's deposits, see Note 7
of Notes to Consolidated Financial Statements.


                                       26
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Borrowings

         The  Corporation's  other available  sources of funds include  advances
from the FHLB of  Cincinnati  and other  borrowings.  As a member of the FHLB of
Cincinnati,  the  Association  is required  to own capital  stock in the FHLB of
Cincinnati  and is authorized to apply for advances from the FHLB of Cincinnati.
Each  FHLB  credit  program  has its own  interest  rate,  which may be fixed or
variable,  and range of  maturities.  The FHLB of  Cincinnati  may prescribe the
acceptable  uses for these  advances,  as well as limitations on the size of the
advances and repayment provisions.

         The  following  table  sets forth the  maximum  month-end  balance  and
average balance of FHLB advances for the periods indicated.

<TABLE>
<CAPTION>
                                                                     Year Ended June 30,
                                                                     -------------------
                                                                 2002       2001        2000
                                                                 ----       ----        ----
                                                                   (dollars in thousands)
<S>                                                            <C>         <C>         <C>
        Balance at end of period
               FHLB advances                                   $22,456     $25,475     $19,000
        Maximum balance at any month-end during the period
               FHLB advances                                    25,462      26,500      19,800

        Average balance for the period
               FHLB advances                                    24,836      23,477      17,603
               Weighted average rate                              6.05%       6.42%       6.11%
</TABLE>

Service Corporations

         As a  federally  chartered  savings  association,  the  Association  is
permitted by OTS  regulations to invest up to 2% of its assets,  or $2.7 million
at June 30, 2002 in the stock of, or loans to, service corporation subsidiaries.
As of such date, the Association had no investments in service corporations.


                                   REGULATION

General

         The  Association  is a federally  chartered  savings  association,  the
deposits of which are federally  insured and backed by the full faith and credit
of the United States  Government up to applicable  limits.  The  Association  is
subject  to  broad  federal  regulation  and  oversight  extending  to  all  its
operations,   principally  by  its  primary  federal  regulator,  the  OTS.  The
Association  is a member of the FHLB of  Cincinnati  and is  subject  to certain
limited  regulation  by the Board of  Governors  of the Federal  Reserve  System
("Federal  Reserve  Board").  As the  savings  and loan  holding  company of the
Association,  Peoples  also is  subject  to federal  regulation  and  oversight,
principally  by the OTS.  The  purpose of the  regulation  of Peoples  and other
savings  and  loan   holding   companies  is  to  protect   subsidiary   savings
associations.  The Association is a member of the SAIF,  which together with the
Bank Insurance Fund (the "BIF") are the two deposit insurance funds administered
by the FDIC.  As a  result,  the FDIC has  certain  regulatory  and  examination
authority over the Association.

         Certain of these regulatory requirements and restrictions are discussed
below or elsewhere in this document.


                                       27
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Federal Regulation of Savings Associations

         The  OTS  has  extensive  authority  over  the  operations  of  savings
associations,   such  as  the  Association.  As  part  of  this  authority,  the
Association is required to file periodic  reports with the OTS and is subject to
periodic  examinations by the OTS and the FDIC. The last regular OTS examination
of the  Association  was as of  June  30,  2001.  When  these  examinations  are
conducted by the OTS and the FDIC, the examiners may require the  Association to
provide  for  higher  general  or  specific  loan  loss  reserves.  All  savings
associations  are subject to a  semi-annual  assessment,  based upon the savings
association's total assets, to fund the operations of the OTS. The Association's
OTS assessment for the fiscal year ended June 30, 2002 was $41,000.

         The OTS also  has  extensive  enforcement  authority  over all  savings
institutions and their holding companies, including the Association and Peoples.
This enforcement  authority includes,  among other things, the ability to assess
civil  money  penalties,  to issue  cease-and-desist  or  removal  orders and to
initiate  injunctive  actions.  In  general,  these  enforcement  actions may be
initiated  for  violations  of  laws  and  regulations  and  unsafe  or  unsound
practices.  Other  actions or  inactions  may provide the basis for  enforcement
action,  including  misleading or untimely  reports  filed with the OTS.  Except
under certain  circumstances,  public disclosure of final enforcement actions by
the OTS is required.

         In addition,  the  investment,  lending and branching  authority of the
Association  is prescribed by federal law and it is prohibited  from engaging in
any activities not permitted by such laws. For example, the permissible level of
investment   by  federal   associations,   subject   to  safety  and   soundness
restrictions,  (1) in loans  secured by  non-residential  real  property may not
exceed  400% of total  capital,  (2) in  commercial  loans may not exceed 20% of
assets,  provided  that  amounts  in excess  of 10% of assets  may only be small
business  loans,  (3) related to leasing of tangible  personal  property may not
exceed  10% of  assets,  and (4) in loans for  personal,  family  and  household
purposes when combined with commercial paper and corporate debt securities,  may
not  exceed 35% of  assets.  Federal  savings  associations  are also  generally
authorized to branch nationwide. The Association is in compliance with the noted
restrictions.  Federal  associations such as the Association may designate under
which investment authority (or basket) it made a loan or investment if that loan
or investment is authorized under different sections of the law.

         The    Association's    general    permissible    lending   limit   for
loans-to-one-borrower  is equal to the greater of $500,000 or 15% of  unimpaired
capital  and  surplus  (except  for  loans  fully  secured  by  certain  readily
marketable  collateral,  in  which  case  this  limit  is  increased  to  25% of
unimpaired  capital and surplus).  At June 30, 2002, the  Association's  lending
limit under this restriction was $2.15 million. The Association is in compliance
with the loans-to-one-borrower limitation.

         The OTS, as well as the other  federal  banking  agencies,  has adopted
guidelines  establishing  safety and soundness standards on such matters as loan
underwriting and  documentation,  asset quality,  earnings  standards,  internal
controls and audit  systems,  interest rate risk exposure and  compensation  and
other  employee  benefits.  Any  institution  that  fails to comply  with  these
standards must submit a compliance plan.

Insurance of Accounts and Regulation by the FDIC

         The  Association is a member of the SAIF,  which is administered by the
FDIC.  Deposits  are  insured  up to  applicable  limits  by the  FDIC  and such
insurance  is  backed  by  the  full  faith  and  credit  of the  United  States
Government.  As insurer,  the FDIC  imposes  deposit  insurance  premiums and is
authorized to conduct  examinations of and to require  reporting by FDIC-insured
institutions. It also may prohibit any FDIC-insured institution from engaging in
any activity the FDIC  determines  by regulation or order to pose a serious risk
to the SAIF or the BIF. The FDIC also has the authority to initiate  enforcement
actions


                                       28
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS (Continued)

against savings  associations,  after giving the OTS an opportunity to take such
action,  and may  terminate  the deposit  insurance  if it  determines  that the
institution  has  engaged in unsafe or unsound  practices  or is in an unsafe or
unsound condition.

         The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums  based upon their  level of
capital and supervisory evaluation. Under the system, institutions classified as
well  capitalized  (i.e., a core capital ratio of at least 5%, a ratio of Tier 1
or core capital to  risk-weighted  assets  ("Tier 1  risk-based  capital") of at
least 6% and a risk-based  capital ratio of at least 10%) and considered healthy
pay the  lowest  premium  while  institutions  that  are  less  than  adequately
capitalized (i.e., core or Tier 1 risk-based capital ratios of less than 4% or a
risk-based  capital  ratio  of less  than  8%)  and  considered  of  substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions is made by the FDIC for each semi-annual  assessment  period. As of
June 30, 2002, the Association was designated as a well-capitalized institution.

Regulatory Capital Requirements

         Federally insured savings  associations,  such as the Association,  are
required  to  maintain  a  minimum  level  of  regulatory  capital.  The OTS has
established  capital  standards,  including a tangible  capital  requirement,  a
leverage  ratio  (or  core  capital)   requirement  and  a  risk-based   capital
requirement applicable to such savings associations.  These capital requirements
must be  generally  as  stringent as the  comparable  capital  requirements  for
national  banks.  The OTS is also  authorized to impose capital  requirements in
excess of these standards on individual associations on a case-by-case basis.

         The capital  regulations  require  tangible capital of at least 1.5% of
adjusted total assets (as defined by  regulation).  Tangible  capital  generally
includes  common   stockholders'   equity  and  retained  income,   and  certain
noncumulative  perpetual  preferred stock and related income.  In addition,  all
intangible  assets,  other than a limited amount of purchased mortgage servicing
rights,  must be deducted from tangible capital for calculating  compliance with
the  requirement.  At June 30, 2002, the Association did not have any intangible
assets.

         The OTS regulations establish special  capitalization  requirements for
savings associations that own subsidiaries.  In determining  compliance with the
capital requirements,  all subsidiaries engaged solely in activities permissible
for national  banks or engaged in certain other  activities  solely as agent for
its customers are  "includable"  subsidiaries  that are consolidated for capital
purposes in proportion to the association's  level of ownership.  For excludable
subsidiaries the debt and equity  investments in such  subsidiaries are deducted
from assets and capital. The Association does not have any subsidiaries.

         At June  30,  2002,  the  Association  had  tangible  capital  of $14.4
million, or 10.6% of adjusted total assets, which is approximately $12.3 million
above the minimum requirement of 1.5% of adjusted total assets in effect on that
date.

         The capital  standards also effective  require core capital equal to at
least 4% of adjusted total assets.  Core capital generally  consists of tangible
capital plus certain intangible assets,  including a limited amount of purchased
credit card  receivables.  At June 30, 2002,  the  Association  had core capital
equal to $14.4 million, or 10.6% of adjusted total assets, which is $9.0 million
above the minimum leverage ratio requirement of 4% as in effect on that date.


                                       29
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         The OTS risk-based  requirement  requires savings  associations to have
total capital of at least 8% of risk-weighted  assets. Total capital consists of
core capital, as defined above, and supplementary capital. Supplementary capital
consists of certain  permanent  and  maturing  capital  instruments  that do not
qualify as core capital and general  valuation loan and lease loss allowances up
to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used
to satisfy the risk-based  requirement  only to the extent of core capital.  The
OTS is  also  authorized  to  require  a  savings  association  to  maintain  an
additional  amount of total capital to account for  concentration of credit risk
and the risk of  non-traditional  activities.  At June 30, 2002, the Association
had  $708,000  of  general  loss   reserves,   which  was  less  than  1.25%  of
risk-weighted assets.

         Certain  exclusions from capital and assets are required to be made for
the purpose of calculating  total  capital.  Such  exclusions  consist of equity
investments  (as  defined  by  regulation)  and that  portion  of land loans and
nonresidential  construction  loans in excess of an 80% loan-to-value  ratio and
reciprocal  holdings of qualifying capital  instruments.  The Association had no
such exclusions from capital and assets at June 30, 2002.

         In  determining  the  amount  of  risk-weighted   assets,  all  assets,
including certain  off-balance sheet items, will be multiplied by a risk weight,
ranging from 0% to 100%,  based on the risk  inherent in the type of asset.  For
example,  the OTS has assigned a risk weight of 50% for  prudently  underwritten
permanent  one- to  four-family  first lien mortgage loans not more than 90 days
delinquent  and having a loan to value ratio of not more than 80% at origination
unless insured to such ratio by an insurer approved by the FNMA or FHLMC.

         On June 30, 2002,  the  Association  had total capital of $15.1 million
(including   $14.4   million  in  core  capital  and   $708,000  in   qualifying
supplementary  capital)  and  risk-weighted  assets of $88.1  million,  or total
capital of 17.1% of risk-weighted assets. This amount was $8.0 million above the
8% requirement in effect on that date.

         The OTS and the FDIC are authorized  and,  under certain  circumstances
required, to take certain actions against savings associations that fail to meet
their  capital  requirements.  The OTS is  generally  required to take action to
restrict the activities of an "undercapitalized  association" (generally defined
to be  one  with  less  than  either  a 4%  core  capital  ratio,  a 4%  Tier  1
risked-based  capital  ratio  or an  8%  risk-based  capital  ratio).  Any  such
association  must  submit a  capital  restoration  plan and  until  such plan is
approved by the OTS may not increase its assets,  acquire  another  institution,
establish a branch or engage in any new  activities,  and generally may not make
capital   distributions.   The  OTS  is  authorized  to  impose  the  additional
restrictions that are applicable to significantly undercapitalized associations.

         As a condition to the  approval of the capital  restoration  plan,  any
company  controlling  an  undercapitalized  association  must agree that it will
enter  into  a  limited  capital  maintenance  guarantee  with  respect  to  the
institution's achievement of its capital requirements.

         Any savings  association  that fails to comply with its capital plan or
is  "significantly  undercapitalized"  (i.e.,  Tier 1 risk-based or core capital
ratios of less than 3% or a  risk-based  capital  ratio of less than 6%) must be
made  subject  to one or more of  additional  specified  actions  and  operating
restrictions  which may cover all aspects of its operations and include a forced
merger  or  acquisition  of  the   association.   An  association  that  becomes
"critically  undercapitalized" (i.e., a tangible capital ratio of 2% or less) is
subject to further mandatory restrictions on its activities in addition to those
applicable to significantly  undercapitalized associations. In addition, the OTS
must appoint a receiver (or conservator  with the concurrence of the FDIC) for a
savings  association,  with certain limited exceptions,  within 90 days after it
becomes critically  undercapitalized.  Any undercapitalized  association is also
subject to the general enforcement  authority of the OTS and the FDIC, including
the appointment of a conservator or a receiver.

                                       30
<PAGE>

ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         The OTS is also generally  authorized to reclassify an association into
a lower capital category and impose the restrictions applicable to such category
if the institution is engaged in unsafe or unsound  practices or is in an unsafe
or unsound condition.

         The  imposition by the OTS or the FDIC of any of these  measures on the
Association  may  have  a  substantial  adverse  effect  on its  operations  and
profitability.

Limitations on Dividends and Other Capital Distributions

         OTS regulations  impose various  restrictions  on savings  associations
with respect to their ability to make  distributions  of capital,  which include
dividends,  stock  redemptions  or  repurchases,   cash-out  mergers  and  other
transactions charged to the capital account. Assuming the absence of supervisory
problems,  OTS regulations generally permit a federal savings association to pay
dividends in any calendar  year equal to net income for that year plus  retained
earnings  for the  preceding  two years  less any  dividends  paid.  Based  upon
dividends the Association has paid to the Peoples,  no additional  dividends may
be paid by the Association to the Peoples without OTS approval.

Qualified Thrift Lender Test

         All savings  associations,  including the Association,  are required to
meet a qualified  thrift lender  ("QTL") test to avoid certain  restrictions  on
their operations.  This test requires a savings association to have at least 65%
of  its  portfolio  assets  (as  defined  by  regulation)  in  qualified  thrift
investments  on a monthly  average  for nine out of every 12 months on a rolling
basis. As an alternative, the savings association may maintain 60% of its assets
in those assets specified in Section 7701(a)(19) of the Internal Revenue Code of
1986, as amended (the "Code").  Under either test, such assets primarily consist
of residential housing related loans and investments.

         Any savings association that fails to meet the QTL test must convert to
a national bank charter, unless it requalifies as a QTL and thereafter remains a
QTL. If an  association  does not  requalify  and  converts  to a national  bank
charter,  it must remain  SAIF-insured  until the FDIC permits it to transfer to
the BIF.  If such an  association  has not yet  requalified  or  converted  to a
national  bank,  its  new  investments  and  activities  are  limited  to  those
permissible  for both a  savings  association  and a  national  bank,  and it is
limited to national bank branching  rights in its home state.  In addition,  the
association is immediately  ineligible to receive any new FHLB borrowings and is
subject to national  bank limits for payment of dividends.  If such  association
has not requalified or converted to a national bank within three years after the
failure,  it must  divest  of all  investments  and  cease  all  activities  not
permissible  for a  national  bank.  In  addition,  it must repay  promptly  any
outstanding FHLB borrowings,  which may result in prepayment  penalties.  If any
association  that fails the QTL test is  controlled by a holding  company,  then
within one year after the failure,  the holding  company must register as a bank
holding  company  and  become  subject  to  all  restrictions  on  bank  holding
companies. See -"Regulation of Peoples."




                                       31
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Community Reinvestment Act

         Under the  Community  Reinvestment  Act  ("CRA"),  every  FDIC  insured
institution has a continuing and affirmative obligation consistent with safe and
sound banking  practices to help meet the credit needs of its entire  community,
including  low and moderate  income  neighborhoods.  The CRA does not  establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's  discretion to develop the types of products and services
that it believes are best suited to its particular  community,  consistent  with
the CRA. The CRA requires the OTS, in  connection  with the  examination  of the
Association,  to assess the institution's  record of meeting the credit needs of
its community and to take such record into account in its  evaluation of certain
applications,  such  as a  merger  or  the  establishment  of a  branch,  by the
Association. An unsatisfactory rating may be used as the basis for the denial of
an application by the OTS.

         Due to the heightened attention being given to the CRA in recent years,
the  Association may be required to devote  additional  funds for investment and
lending in its local community.  The Association was examined for CRA compliance
in 2000 and received a rating of satisfactory.

Transactions with Affiliates

         Generally,   transactions   between  a  savings   association   or  its
subsidiaries  and its affiliates are required to be on terms as favorable to the
association as transactions with non-affiliates.  In addition,  certain of these
transactions,  such as loans to an affiliate,  are restricted to a percentage of
the association's capital. Affiliates of the Association include Peoples and any
company  that is under  common  control with the  Association.  In  addition,  a
savings  association  may not lend to any affiliate  engaged in  activities  not
permissible  for a bank  holding  company  or  acquire  the  securities  of most
affiliates.  The  OTS  has the  discretion  to  treat  subsidiaries  of  savings
associations as affiliates on a case-by-case basis.

         Certain  transactions with directors,  officers or controlling  persons
are also subject to conflict of interest  regulations enforced by the OTS. These
conflict of interest  regulations and other statutes also impose restrictions on
loans to such persons and their  related  interests.  Among other  things,  such
loans must be made on terms  substantially the same as for loans to unaffiliated
individuals.

Regulation of Peoples

         Peoples  is a unitary  savings  and loan  holding  company  subject  to
regulatory  oversight  by the OTS. As such,  Peoples is required to register and
file reports with the OTS and is subject to regulation  and  examination  by the
OTS.  In  addition,  the OTS has  enforcement  authority  over  Peoples  and its
nonsavings  association  subsidiaries  that also  permits the OTS to restrict or
prohibit  activities  that are determined to be a serious risk to the subsidiary
savings association.

         As a  unitary  savings  and  loan  holding  company  that  has  been in
existence  prior to May 4, 1999,  Peoples  generally  is not subject to activity
restrictions.  If Peoples acquires  control of another savings  association as a
separate  subsidiary,  it  would  become a  multiple  savings  and loan  holding
company,  and the activities of Peoples and any of its subsidiaries  (other than
the  Association or any other  SAIF-insured  savings  association)  would become
subject to such restrictions.



                                       32
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         If the Association fails the QTL test, Peoples must obtain the approval
of the OTS prior to continuing after such failure, directly or through its other
subsidiaries,  any  business  activity  other than those  approved  for multiple
savings and loan holding companies or their  subsidiaries.  In addition,  within
one year of such failure the Peoples must  register as, and will become  subject
to, the  restrictions  applicable  to bank  holding  companies.  The  activities
authorized  for a bank holding  company are more limited than are the activities
authorized  for a unitary or multiple  savings  and loan  holding  company.  See
"-Qualified Thrift Lender Test."

Federal Securities Law

         The  common  stock of  Peoples  is  registered  with the SEC  under the
Securities  Exchange Act of 1934, as amended (the  "Exchange  Act").  Peoples is
subject to the information, proxy solicitation, insider trading restrictions and
other requirements of the SEC under the Exchange Act.

         Peoples' stock held by persons who are affiliates  (generally officers,
directors  and  principal  stockholders)  of Peoples  may not be resold  without
registration  unless sold in accordance  with certain  resale  restrictions.  If
Peoples meets specified current public information requirements,  each affiliate
of Peoples is able to sell in the public market, without registration, a limited
number of shares in any three-month period.

Federal Reserve System

         The Federal  Reserve  Board  requires all  depository  institutions  to
maintain   noninterest-bearing   reserves  at  specified  levels  against  their
transaction accounts (primarily checking,  NOW and Super NOW checking accounts).
At  June  30,  2002,  the  Association  was in  compliance  with  these  reserve
requirements.  The balances maintained to meet the reserve  requirements imposed
by the Federal Reserve Board may be used to satisfy liquidity  requirements that
may be imposed by the OTS. See "-Liquidity."

         Savings  associations are authorized to borrow from the Federal Reserve
Bank  "discount   window,"  but  Federal  Reserve  Board   regulations   require
associations to exhaust other reasonable alternative sources of funds, including
FHLB borrowings, before borrowing from the Federal Reserve Bank.

Federal Home Loan Bank System

         The Association is a member of the FHLB of Cincinnati,  which is one of
12 regional FHLBs that administers the home financing credit function of savings
associations.  Each FHLB  serves as a reserve  or central  bank for its  members
within its assigned  region.  It is funded  primarily from proceeds derived from
the sale of  consolidated  obligations  of the FHLB  System.  It makes  loans to
members (i.e., advances) in accordance with policies and procedures, established
by the board of directors of the FHLB, which are subject to the oversight of the
Federal  Housing  Finance  Board.  All advances from the FHLB are required to be
fully secured by  sufficient  collateral as determined by the FHLB. In addition,
all  long-term  advances  are  required to provide  funds for  residential  home
financing.

         As a member, the Association is required to purchase and maintain stock
in the FHLB of Cincinnati.  At June 30, 2002, the  Association had $1,475,000 in
FHLB stock, which was in compliance with this requirement.


                                       33
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

         For the  year  ended  June  30,  2002,  dividends  paid by the  FHLB of
Cincinnati  to the  Association  totaled  $77,600,  which  constitutes a $15,000
decrease over the amount of dividends  received in fiscal year 2001. The $17,300
dividend  for the quarter  ended June 30, 2002  reflects an  annualized  rate of
4.75%.

Federal and State Taxation

         In addition to the regular income tax, corporations,  including savings
associations such as the Association, generally are subject to a minimum tax. An
alternative  minimum tax is imposed at a minimum tax rate of 20% on  alternative
minimum  taxable  income,  which is the sum of a  corporation's  regular taxable
income (with certain  adjustments) and tax preference  items, less any available
exemption.  The alternative  minimum tax is imposed to the extent it exceeds the
corporation's  regular  income tax and net  operating  losses can offset no more
than 90% of alternative minimum taxable income.  However, as provided in the Job
Creation and Worker  Assistance Act of 2002,  this 90% limitation does not apply
to net operating  losses  originated in tax years ending during  calendar  years
2001 and 2002.

         A portion of the  Association's  reserves  for losses on loans may not,
without adverse tax consequences,  be utilized for the payment of cash dividends
or other distributions to a shareholder (including  distributions on redemption,
dissolution or  liquidation) or for any other purpose (except to absorb bad debt
losses). As of June 30, 2002, the portion of the Association's  reserves subject
to this treatment for tax purposes totaled approximately $2.2 million.

         Peoples  and the  Association  file  consolidated  federal  income  tax
returns on a fiscal year basis using the accrual method of accounting.

         The  Corporation  has  been  audited  by the  IRS,  or the  statute  of
limitations  for  assessment  has  closed,  with  respect to federal  income tax
returns through June 30, 1998. With respect to years examined by the IRS, either
all  deficiencies   have  been  satisfied  or  sufficient   reserves  have  been
established to satisfy asserted deficiencies.  In the opinion of management, any
examination  of still  open  returns  (including  returns  of  subsidiaries  and
predecessors of, or entities merged into the Corporation)  would not result in a
deficiency that could have a material adverse effect on the financial  condition
of the Corporation.

         Ohio  Taxation:  The  Association  conducts  its  business  in Ohio and
consequently  is  subject  to the Ohio  corporate  franchise  tax.  A  financial
institution  subject  to the Ohio  corporate  franchise  tax  levied by the Ohio
Revised  Code  pays a tax  equal to 1.3 times its  apportioned  net  worth.  The
apportionment  factor  consists  of  a  gross  receipts  factor,  determined  by
reference to the total receipts of the financial institution from all sources, a
property factor,  determined by reference to the net book value of all loans and
fixed assets owned by the financial  institution and a payroll  factor.  Peoples
also files an Ohio franchise tax return and pays tax on its Ohio taxable income.

         Delaware Taxation:  As a Delaware holding company,  Peoples is exempted
from Delaware corporate income tax but is required to file an annual report with
and pay an annual fee to the State of  Delaware.  Peoples is also  subject to an
annual franchise tax imposed by the State of Delaware.


                                       34
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Impact of New Accounting Standards

         In June 2001, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 142,  "Goodwill  and
Other Intangible Assets," which addresses the accounting for such assets arising
from  prior  and  future  business  combinations.  Upon  the  adoption  of  this
Statement,  goodwill  arising  from  business  combinations  will no  longer  be
amortized,  but rather will be assessed regularly for impairment,  with any such
impairment recognized as a reduction to earnings in the period identified. Other
identified  intangible  assets,  such as core deposit  intangible  assets,  will
continue to be amortized over their estimated  useful lives. The Corporation was
required to adopt this Statement on July 1, 2002. The adoption of this Statement
did not have an impact on the Corporation's financial statements, as it does not
have any intangible assets.

         In August  2001,  the FASB  issued SFAS No.  144,  "Accounting  for the
Impairment  or  Disposal of  Long-Lived  Assets,"  which  amends SFAS No. 121 by
addressing  business  segments  accounted for as a discontinued  operation under
Accounting  Principles  Board  Opinion  No. 30.  This  Statement  was  effective
beginning July 1, 2002.  The effect of this Statement on the financial  position
and results of operations of the Corporation was not material.

         The FASB also  recently  issued SFAS No. 145 and SFAS No. 146. SFAS 145
covers  debt   extinguishments   and  leases,  and  made  some  minor  technical
corrections.  Gains and losses on  extinguishments of debt, always treated as an
extraordinary  item  under a  previous  standard,  will no longer be  considered
extraordinary,  except  under very  limited  conditions.  If a capital  lease is
modified to an operating,  it will be treated as a  sale-leaseback  instead of a
new lease.  SFAS No. 146 covers  accounting  for costs  associated  with exit or
disposal  activities,  such as lease  termination  costs or  employee  severance
costs. The Statement  replaces  Emerging Issues Task Force ("EITF") 94-3, and is
to be applied  prospectively  to exit or  disposal  activities  initiated  after
December  31,  2002.  It  requires  these costs to be  recognized  when they are
incurred  rather than at date of  commitment  to an exit or disposal  plan.  The
Corporation  does not expect the adoption of these  Standards to have a material
effect.

Competition

         The Association experiences strong competition both in originating real
estate loans and in attracting  deposits.  This competition arises from a highly
competitive market area with numerous savings institutions and commercial banks,
as well as credit  unions,  mortgage  bankers and national and local  securities
firms.  The  Association  competes  for  loans  principally  on the basis of the
interest  rates and loan fees it charges,  the types of loans it originates  and
the quality of services it provides to borrowers.

         The Association attracts all of its deposits through the communities in
which its offices are  located;  therefore,  competition  for those  deposits is
principally from other savings institutions, commercial banks, securities firms,
money market and mutual funds and credit unions located in the same communities.
The ability of the  Association  to attract and retain  deposits  depends on its
ability to provide an investment  opportunity that satisfies the requirements of
investors as to rate of return, liquidity,  risk, convenient locations and other
factors.  The  Association  competes for these deposits by offering a variety of
deposit  accounts  at  competitive  rates,   convenient  business  hours  and  a
customer-oriented staff.

Employees

         At  June  30,  2002,  the  Association  had a  total  of  29  full-time
employees,  12 of whom have been  employed  by the  Association  for at least 10
years,  and 8  part-time  employees.  None of the  Association's  employees  are
represented  by  any  collective  bargaining  group.  Management  considers  its
employee relations to be good.


                                       35
<PAGE>


ITEM 1 - DESCRIPTION OF BUSINESS  (Continued)

Executive Officers of the Registrant Who are Not Directors

         The following information as to the business experience during the past
five years is supplied with respect to the executive officers of Peoples and the
Association  who  do  not  serve  on  Peoples'  or the  Association's  Board  of
Directors.  Executive  officers  are  elected  annually  to  serve  until  their
successors  are  elected  or until  they  resign or are  removed by the Board of
Directors. There are no arrangements or understandings between the persons named
and any other person pursuant to which such officers were elected.

         David R. Fogt.  Mr. Fogt,  age 51, is Vice  President of Operations and
Financial  Services  of the  Association.  He is  responsible  for  the  overall
administration  of the  Association  with  direct  responsibilities  in consumer
lending  and  asset  and  liability  management.  He has  been  employed  by the
Association since 1983.

         Gary N.  Fullenkamp.  Mr.  Fullenkamp,  age 46,  is Vice  President  of
Mortgage Loans and Corporate Secretary of the Association. He is responsible for
mortgage  lending  operations of the  Association,  including  underwriting  and
processing of mortgage loan  activity.  He has been employed by the  Association
since 1979.

         Debra A.  Geuy.  Mrs.  Geuy,  age 44, is Chief  Financial  Officer  and
Treasurer of the  Association.  She is responsible  for overseeing the financial
functions of the  Association.  She has been employed by the  Association  since
1978.



                                       36
<PAGE>


ITEM 2 - DESCRIPTION OF PROPERTY

         The  following  table sets forth  information  concerning  the main and
branch offices and a drive-in  facility of the Association at June 30, 2002. The
Association  believes that its current facilities are adequate.  The Association
also maintains a 24-hour ATM at its main and both branch office locations.

                                                                      Net Book
                                                                      Value at
                                             Year          Owned       June 30,
                                            Opened       or Leased       2002
                                            ------       ---------       ----
        Main Office
               101 East Court Street         1917          Owned     $ 239,300
               Sidney, Ohio  45365

        Drive-In
               232 South Ohio Avenue         1971          Owned     $ 158,500
               Sidney, Ohio  45365

        Anna Branch
               403 South Pike Street         1998          Owned     $ 577,490
               Anna, Ohio  45302

        Jackson Center Branch
               115 East Pike Street          1998          Leased    $  74,302
               Jackson Center, Ohio 45334

        Sidney Wal-Mart Branch
               2400 West Michigan Avenue     2001          Leased    $ 195,708
               Sidney, Ohio  45365

         The Association's  depositor and borrower customer files are maintained
by an  independent  data  processing  company.  The net  book  value of the data
processing and computer  equipment  utilized by the Association at June 30, 2002
was approximately $261,844.


ITEM 3 - LEGAL PROCEEDINGS

         From  time to  time,  the  Association  is  involved  as  plaintiff  or
defendant  in various  legal  proceedings  arising  in the normal  course of its
business.  While the ultimate outcome of these various legal proceedings  cannot
be predicted with certainty, it is the opinion of management that the resolution
of these legal actions  should not have a material  effect on the  Association's
financial position or results of operations.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was  submitted  to a vote of  security  holders,  through the
solicitation of proxies or otherwise, during the quarter ended June 30, 2002.


                                       37
<PAGE>


                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND
  RELATED SHAREHOLDER MATTERS

         Page 4 of Peoples' 2002 Annual Report to Stockholders,  attached hereto
as Exhibit 13, is incorporated herein by reference.


ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS OF OPERATION

         Pages 8 through 19 of the Peoples' 2002 Annual Report to  Stockholders,
attached hereto as Exhibit 13, are incorporated herein by reference.


ITEM 7 - FINANCIAL STATEMENTS

         Pages 21 through 47 of the Peoples' 2002 Annual Report to Stockholders,
attached hereto as Exhibit 13, are incorporated herein by reference.


ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
  ON ACCOUNTING AND FINANCIAL DISCLOSURE

                  Not applicable.


                                       38
<PAGE>


                                    PART III


ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
  PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors

         Information  concerning  directors of Peoples is incorporated herein by
reference  from Peoples'  definitive  Proxy  Statement for the Annual Meeting of
Stockholders  to be held in 2002,  which was filed with the SEC on September 10,
2002.

Executive Officers

         Information  concerning  the executive  officers of Peoples who are not
directors is incorporated by reference from Part I of this Form 10-KSB under the
caption "Executive Officers of the Registrant Who Are Not Directors."

Section 16(a) Beneficial Ownership Reporting Compliance

         Information   concerning   compliance   with  Section  16(a)  reporting
requirements by Peoples' directors and executive officers is incorporated herein
by reference from the Peoples' definitive Proxy Statement for the Annual Meeting
of  Stockholders  to be held in 2002,  which was filed with the SEC on September
10, 2002.


ITEM 10 - EXECUTIVE COMPENSATION

         Information concerning executive compensation is incorporated herein by
reference  from Peoples'  definitive  Proxy  Statement for the Annual Meeting of
Stockholders to be held in 2002,  which has been filed with the SEC on September
10, 2002.


ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
  AND MANAGEMENT AND RELATED STOCKHOLDERS

         Information  concerning security ownership of certain beneficial owners
and  management is  incorporated  herein by reference  from Peoples'  definitive
Proxy Statement for the Annual Meeting of Stockholders to be held in 2002, which
has been filed with the SEC on September 10, 2002.


                                       39
<PAGE>


         The following table provides information as of June 30, 2002 related to
our equity compensation plans in effect at that time.

<TABLE>
<CAPTION>

                                  Equity Compensation Plan Information

--------------------------------------------------------------------------------------------------------
                                  (a)                     (b)                      (c)
------------------------  ----------------------  --------------------  --------------------------------

                                                                           Number of securities
                                                                           remaining available for
                          Number of securities                             future issuance under
                          to be issued upon       Weighted-average         equity compensation
                          exercise of             exercise price of        plans (excluding securities
Plan Category             outstanding options     outstanding options      reflected in column (a))
------------------------  ----------------------  --------------------  --------------------------------
<S>                       <C>                     <C>                      <C>
Equity compensation
plans approved by
security holders.         140,824                  $16.03                 37,714
------------------------  ----------------------  --------------------  --------------------------------
</TABLE>


ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information   concerning  certain  relationships  and  related  transactions  is
incorporated  herein by reference from Peoples'  definitive  Proxy Statement for
the Annual Meeting of Stockholders to be held in 2002, which has been filed with
the SEC on September 10, 2002.


                                       40
<PAGE>



ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>


(a)    EXHIBITS
                                                                                    Incorporation
                                                                                         by
                                                                                    Reference to
    Regulation S-B                                                                 Prior Filing or
       Exhibit                                                                     Exhibit Number
       Number                      Description of Document                         Attached Hereto
       ------                      -----------------------                         ---------------
         <S>    <C>                                                                       <C>
         3(i)   Certificate of Incorporation                                              *

         3(ii)  By-Laws                                                                   *

         4      Instruments defining the rights of holders, including indentures          *

        10.1    Employee Stock Ownership Plan                                             *

        10.2    Form of Employment Agreement with Douglas Stewart                         *

        10.3    Forms of  Employment  Agreements  with David R. Fogt,  Gary N.
                Fullenkamp,  Debra A. Geuy and
                Steven Goins                                                              *

        10.4    401(k) Plan                                                               *

        10.5    Incentive Bonus Plan                                                      *

        10.6    Peoples-Sidney Financial Corporation Amended and Restated 1998
                Stock Option and Incentive Plan                                          **

        10.7    Peoples-Sidney Financial Corporation Amended and Restated 1998
                Management Recognition Plan                **

        11      Statement re: computation of per-share earnings                 See Note 16 to the Consolidated
                                                                                Financial Statements on page F-44
                                                                                  of the 2002 Annual Report
                                                                                 Stockholders attached hereto
                                                                                        as Exhibit 13

        13      Annual report to Stockholders                                            13

        21      Subsidiaries of Registrant                                               21

        23      Consents of experts and counsel                                          23

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

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

</TABLE>


                                       41
<PAGE>



*    Filed as an exhibit to the  Registrant's  Form S-1  registration  statement
     (File No. 333-20461) and incorporated herein by reference.

**   Filed as an exhibit to the  Registrant's  Annual  Report on Form 10-KSB for
     the fiscal  year ended June 30,  1999 (File No.  0-22223)  and  incorporate
     herein by reference.




(b)           REPORTS ON FORM 8-K

         During the  quarter  ended June 30,  2002,  Peoples  filed one  Current
Report on Form 8-K. On April 16, 2002,  under Item 5 therein,  Peoples  reported
the  issuance of a press  release  announcing  Peoples  earnings for the quarter
ended March 31, 2002 and the declaration of a cash dividend.



                                       42
<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused this report to be signed on its behalf by the under
signed, thereunto duly authorized.

                  September 26, 2002   PEOPLES-SIDNEY FINANCIAL CORPORATION
                       Date
                                       By:   /s/ DOUGLAS STEWART
                                             -----------------------------
                                             Douglas Stewart
                                             President, CEO and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities indicated on September 27, 2002.

                                   Signatures

<TABLE>
<CAPTION>
<S>     <C>                                       <C>
/s/ DOUGLAS STEWART                               /s/ JAMES W. KERBER
------------------------                          -------------------
Douglas Stewart                                   James W. Kerber
Douglas Stewart, President, CEO and Director      Director


/s/ RICHARD T. MARTIN                             /s/ JOHN W. SARGEANT
--------------------------                        ---------------------
Richard T. Martin                                 John W. Sargeant
Chairman of the Board                             Director


/s/ HARRY N. FAULKNER                             /s/ DEBRA A. GEUY
---------------------                             ------------------
Harry N. Faulkner                                 Debra A. Geuy
Director                                          Chief Financial Officer and Treasurer

</TABLE>

                                       43

<PAGE>



                                  Certification
  (Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended)

I, Douglas Stewart, certify that:

1.   I have  reviewed  this  annual  report  on Form  10-KSB  of  Peoples-Sidney
     Financial Corporation;

2.   Based on my  knowledge,  this  annual  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 annual report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual report;


Date: September 26, 2002

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


                                       44

<PAGE>



                                  Certification
  (Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended)

I, Debra Geuy, certify that:

1.   I have  reviewed  this  annual  report  on Form  10-KSB  of  Peoples-Sidney
     Financial Corporation;

2.   Based on my  knowledge,  this  annual  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 annual report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual report;


Date: September 26, 2002                            /s/ Debra A. Geuy
                                                    -----------------
                                                    Debra A. Geuy
                                                    Chief Financial Officer

                                       45