UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

[X]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF 1934
        FOR THE FISCAL YEAR ENDED June 30, 2000

                                       OR

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

        For the transition period from                  to
                                       ----------------    ----------------


                         Commission File Number 0-22223


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


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


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


Issuer's telephone number, including area code:          (937) 492-6129
                                                --------------------------------

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None
                                     ------

           Securities Registered Pursuant to Section 12(g) of the 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  herein,  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. [_]

           State  the  issuer's  revenues  for  its  most  recent  fiscal  year:
$9,239,247.

           The aggregate market value of the voting stock held by non-affiliates
of the  registrant,  computed by reference to the closing price of such stock on
the NASDAQ System on August 31, 2000, was $9.4 million. (The exclusion from such
amount of the market value of the shares owned by any person shall not be deemed
an  admission  by  the  registrant  that  such  person  is an  affiliate  of the
registrant.)

           As of August 31, 2000,  there were issued and  outstanding  1,578,315
shares of the Registrant's Common Stock


                       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, 2000.

           Part III of Form 10-KSB - Portions of Proxy Statement for 2000 Annual
Meeting of Stockholders.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE)
      YES [_]        NO [X]


<PAGE>



                                     PART I

Item 1.  Description of Business

General

           Peoples-Sidney  Financial  Corporation  (the "Company") is a Delaware
corporation  which  was  organized  in 1997 by  Peoples  Federal  Savings & Loan
Association of Sidney ("Peoples  Federal" or the  "Association") for the purpose
of  becoming a savings and loan  holding  company.  The Company  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
Company include the Company and the Association on a consolidated  basis, except
that  information  as of a date  prior to April  25,  1997  relates  only to the
Association.  The Association,  the Company's 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 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  (the "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  Company  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  Company
with the Securities and Exchange  Commission (the "SEC"), in the Company'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  Company's  market  area,  changes  in  policies  by  regulatory   agencies,
fluctuations  in interest rates,  demand for loans in the Company's  market area
and  competition,  that could cause  actual  results to differ  materially  from
historical  earnings and those presently  anticipated or projected.  The Company
wishes  to  caution   readers   not  to  place   undue   reliance  on  any  such
forward-looking  statements,  which speak only as of the date made.  The Company
wishes  to advise  readers  that the  factors  listed  above  could  affect  the
Company's financial performance and could cause the Company's actual results for
future periods to differ  materially  from any opinions or statements  expressed
with respect to future periods in any current statements.

           The  Company  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.

                                       -2-

<PAGE>


Lending Activities

           General.  The  principal  lending  activity  of  the  Association  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  Association's  primary  market area,  Peoples
Federal also originates  construction  or  development,  commercial real estate,
consumer,  land, multi-family and commercial business loans. The Association may
adjust or discontinue any product offering to respond to competitive or economic
factors.

                                       -3-

<PAGE>



           Loan Portfolio Composition.  The following information sets forth the
composition  of the  Association'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,
                                   ------------------------------------------------------------------------------
                                                2000                   1999                        1998
                                   ------------------------------------------------------------------------------
                                       Amount     Percent       Amount      Percent         Amount     Percent
                                   ------------------------------------------------------------------------------
                                                               (Dollars in Thousands)
<S>                                  <C>           <C>         <C>          <C>             <C>         <C>
Real Estate Loans:
-----------------
 One- to four-family...............  $ 92,117      77.72%      $ 84,166     79.51%          $79,691     82.37%
 Construction and development......     8,088       6.82          5,930      5.60             6,776      7.00
 Commercial........................    10,048       8.48          9,408      8.89             6,608      6.83
 Multi-family......................     1,300       1.10          1,359      1.28               655      0.68
 Land..............................       992       0.84            867      0.82               868      0.90
                                     --------     ------      ---------    ------           -------    ------
     Total real estate loans.......   112,545      94.96        101,730     96.10            94,598     97.78
                                     --------     ------      ---------    ------           -------    ------

Other Loans:
-----------
 Consumer Loans:
  Automobile.......................     2,474       2.09          1,744      1.65             1,124      1.16
  Deposit account..................       215       0.18            223      0.21               257      0.27
  Other............................       882       0.74            771      0.73               672      0.69
                                     --------     ------      ---------    ------           -------    ------
     Total consumer loans..........     3,571       3.01          2,738      2.59             2,053      2.12
                                     --------     ------      ---------    ------           -------    ------

 Commercial business loans.........     2,406       2.03          1,393      1.31               101      0.10
                                     --------     ------      ---------    ------           -------    ------

     Total loans...................   118,522     100.00%       105,861    100.00%           96,752    100.00%
                                     --------     ======      ---------    ======           -------    ======

Less:
----
 Loans in process..................    (3,036)                   (2,311)                     (2,079)
 Deferred loan fees................      (245)                     (218)                       (195)
 Allowance for loan losses.........      (591)                     (529)                       (426)
                                     --------                  --------                     -------
 Total loans receivable, net.......  $114,650                  $102,803                     $94,052
                                     ========                  ========                     =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                               June 30,
                                   --------------------------------------------------------------
                                                    1997                        1996
                                   --------------------------------------------------------------
                                          Amount        Percent        Amount           Percent
                                   --------------------------------------------------------------
                                                         (Dollars in Thousands)
<S>                                        <C>           <C>           <C>              <C>
Real Estate Loans:
-----------------
 One- to four-family...............        $75,808       82.24%        $65,448          79.60%
 Construction and development......          6,551        7.10           7,091           8.63
 Commercial........................          5,843        6.34           5,302           6.45
 Multi-family......................            219        0.24             485           0.59
 Land..............................          1,447        1.57           1,342           1.63
                                           -------      ------         -------         ------
     Total real estate loans.......         89,868       97.49          79,668          96.90
                                           -------      ------         -------         ------

Other Loans:
-----------
 Consumer Loans:
  Automobile.......................          1,215        1.32           1,274           1.55
  Deposit account..................            351        0.38             167           0.20
  Other............................            719        0.78           1,027           1.25
                                           -------      ------         -------         ------
     Total consumer loans..........          2,285        2.48           2,468           3.00
                                           -------      ------         -------         ------

 Commercial business loans.........             29        0.03              81           0.10
                                          --------      ------  -      -------         ------

     Total loans...................         92,182      100.00%         82,217         100.00%
                                           -------      ======          ------         ======

Less:
----
 Loans in process..................         (2,703)                     (3,508)
 Deferred loan fees................           (158)                       (169)
 Allowance for loan losses.........           (397)                       (307)
                                           -------                     -------
 Total loans receivable, net.......        $88,924                     $78,233
                                           =======                     =======
</TABLE>

                                       -4-

<PAGE>



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


<TABLE>
<CAPTION>
                                                                                 June 30,
                                           -----------------------------------------------------------------------------------------
                                                        2000                       1999                          1998
                                           -----------------------------------------------------------------------------------------

                                                Amount      Percent          Amount     Percent          Amount        Percent
                                           -----------------------------------------------------------------------------------------
                                                                                             (Dollars in Thousands)
<S>                                           <C>            <C>           <C>            <C>             <C>           <C>
Fixed-Rate Loans:
----------------
 Real estate:
  One- to four-family......................   $  33,148      27.97%        $  31,611      29.86%          $24,628       25.46%
  Construction and development.............       3,336       2.81             2,512       2.37             1,643        1.70
  Commercial...............................       1,577       1.33               600       0.57               386        0.40
  Multi-family.............................         ---        ---               ---        ---               ---         ---
  Land.....................................         177       0.15                20       0.02                80        0.08
                                              ---------     ------         ---------    -------           -------     -------
     Total real estate loans...............      38,238      32.26            34,743      32.82            26,737       27.64
 Consumer loans............................       3,571       3.01             2,738       2.59             2,053        2.12
 Commercial business loans.................       1,296       1.09               641       0.60               101        0.10
                                              ---------     ------         ---------    -------           -------     -------
     Total fixed-rate loans................      43,105      36.36            38,122      36.01            28,891       29.86

Adjustable-Rate Loans:
---------------------
 Real estate:
  One- to four-family......................      58,969      49.75            52,555      49.65            55,063       56.91
  Construction and development.............       4,752       4.01             3,418       3.23             5,133        5.30
  Commercial...............................       8,471       7.15             8,808       8.32             6,222        6.43
  Multi-family.............................       1,300       1.10             1,359       1.28               655        0.68
  Land.....................................         815       0.69               847       0.80               788        0.82
                                              ---------     ------         ---------    -------           -------     -------
     Total real estate loans...............      74,307      62.70            66,987      63.28            67,861       70.14
Consumer Loans.............................         ---        ---               ---        ---               ---         ---
Commercial Business Loans..................       1,110       0.94               752       0.71               ---         ---
                                              ---------     ------         ---------    -------           -------     -------
     Total adjustable-rate loans...........      75,417      63.64            67,739      63.99            67,861       70.14
                                               --------     ------         ---------    -------           -------     -------
     Total loans...........................     118,522     100.00%          105,861     100.00%           96,752      100.00%
                                                            ======                       ======                        ======

Less:
----
 Loans in process..........................      (3,036)                      (2,311)                      (2,079)
 Deferred loan fees........................        (245)                        (218)                        (195)
 Allowance for loan losses.................        (591)                        (529)                        (426)
                                              ---------                     --------                      -------
    Total loans receivable, net............    $114,650                     $102,803                      $94,052
                                               ========                     ========                      =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  June 30,
                                                ----------------------------------------------
                                                         1997                     1996
                                                ----------------------------------------------

                                                  Amount       Percent      Amount     Percent
                                                ----------------------------------------------

<S>                                               <C>            <C>        <C>          <C>
Fixed-Rate Loans:
----------------
 Real estate:
  One- to four-family......................       $21,836        23.69%     $17,166      20.88%
  Construction and development.............           949         1.03          775       0.94
  Commercial...............................           259         0.28          179       0.22
  Multi-family.............................           ---          ---          ---        ---
  Land.....................................           184         0.20           20       0.02
                                                  -------      -------     --------     ------
     Total real estate loans...............        23,228        25.20       18,140      22.06
 Consumer loans............................         2,285         2.48        2,468       3.00
 Commercial business loans.................            29         0.03           81       0.10
                                                  -------      -------     --------     ------
     Total fixed-rate loans................        25,542        27.71       20,689      25.16

Adjustable-Rate Loans:
---------------------
 Real estate:
  One- to four-family......................        53,972        58.55       48,282      58.73
  Construction and development.............         5,602         6.07        6,316       7.68
  Commercial...............................         5,584         6.06        5,123       6.23
  Multi-family.............................           219         0.24          485       0.59
  Land.....................................         1,263         1.37        1,322       1.61
                                                  -------      -------     --------     ------
     Total real estate loans...............        66,640        72.29       61,528      74.84
Consumer Loans.............................           ---          ---          ---        ---
Commercial Business Loans..................           ---          ---          ---        ---
                                                  -------      -------     --------     ------
     Total adjustable-rate loans...........        66,640        72.29       61,528      74.84
                                                  -------      -------      -------     ------
     Total loans...........................        92,182       100.00%      82,217     100.00%
                                                                ======                  ======

Less:
----
 Loans in process..........................        (2,703)                   (3,508)
 Deferred loan fees........................          (158)                     (169)
 Allowance for loan losses.................          (397)                     (307)
                                                  -------                   -------
    Total loans receivable, net............       $88,924                   $78,233
                                                  =======                   =======
</TABLE>


                                      -5-

<PAGE>

           The following  schedule  presents the  contractual  maturities of the
Association's loan portfolio at June 30, 2000. The schedule does not reflect the
effects of possible  prepayments  or enforcement  of  due-on-sale  clauses.  The
amortizing loans, such as one-to  four-family and installment  loans, the entire
current principal balance as shown as being due at maturity.

<TABLE>
<CAPTION>
                                                           Real Estate
                                ------------------------------------------------------------
                                     One- to Four-Family and               Multi-family,
                                   Construction and Development         Commercial and Land                     Consumer
                                ----------------------------------------------------------------------------------------------------
                                                   Weighted                         Weighted                             Weighted
                                                    Average                         Average                              Average
                                       Amount        Rate             Amount         Rate              Amount             Rate
                                ----------------------------------------------------------------------------------------------------
                                                                                                   (Dollars in Thousands)
<S>                                  <C>             <C>            <C>              <C>              <C>                  <C>
1 year or less(1)..............      $    148        8.36%          $    13           7.34%           $   489              9.14%
Over 1 year - 3 years..........         1,030        8.12               297           8.39              1,048              9.48
Over 3 years - 5 years.........           507        8.33               191           7.86              1,743              8.78
Over 5 years -
 10 years......................         5,338        7.99             1,692           7.61                195              7.27
Over 10 years -
 20 years......................        39,853        7.63             7,100           7.75                 96              8.73
Over 20 years..................        53,329        7.67             3,047           7.80                ---               ---
                                     --------        ----           -------           ----           --------              ----
    Total......................      $100,205        7.68%          $12,340           7.76%          $  3,571              8.95%
                                     ========        ====           =======           ====           ========              ====
</TABLE>

<TABLE>
<CAPTION>



                                              Commercial Business                      Total
                                -------------------------------------------------------------------------
                                                            Weighted                             Weighted
                                                            Average                              Average
                                          Amount             Rate              Amount             Rate
                                -------------------------------------------------------------------------

<S>                                      <C>                  <C>           <C>                   <C>
1 year or less(1)..............           $  172              9.85%          $    822             9.12%
Over 1 year - 3 years..........              933              9.50              3,308              8.96
Over 3 years - 5 years.........            1,139              9.34              3,580              8.85
Over 5 years -
 10 years......................              162              9.78              7,387              7.92
Over 10 years -
 20 years......................              ---               ---             47,049              7.65
Over 20 years..................              ---               ---             56,376              7.68
                                          ------              ----           --------             -----
    Total......................           $2,406              9.47%          $118,522             7.76%
                                          ======              ====           ========             =====
</TABLE>

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

    (1) Includes  demand  loans,  loans having no stated  maturity and overdraft
        loans.

      The total amount of loans due after June 30, 2001 which have predetermined
interest rates is $42,417,  while the total amount of loans due after such dates
which have floating or adjustable interest rates is $75,283.


                                       -6-

<PAGE>


           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,  2000,  based  on  the  above  limitation,   the  Association's   regulatory
loan-to-one borrower limit was approximately $2.1 million. On the same date, the
Association had no borrowers with outstanding balances in excess of this amount.
As of June 30, 2000, the largest dollar amount of  indebtedness  to one borrower
or group of  related  borrowers  was  $1,748,000,  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 $1,537,000 at June 30,
2000 and is secured by  multiple  one-to  four-family  real  estate  properties,
commercial real estate and land. As of June 30, 2000, 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, 2000, $92.1 million,
or 77.72% 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 $59,700 and the largest  outstanding  residential
loan had a principal balance of $332,000. Virtually all of the residential loans
originated  by  Peoples  Federal  are  secured  by  properties  located  in  the
Association's market area.

           Peoples Federal  originates  fixed-rate  residential loans in amounts
and  at  rates  which  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,  2000,  the  Association  had $33.1
million  of  fixed-rate   permanent  one-to   four-family   residential   loans,
constituting 27.97% of the Association's loan portfolio at such date.

           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 Peoples  Federal 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, 2000, the total
balance  of one- to  four-family  ARMs  was  $59.0  million,  or  49.75%  of the
Association's  loan  portfolio.  All  ARMs  originated  by the  Association  are
retained and serviced by it.

                                       -7-

<PAGE>


           The  Association  also  offers  the  "7/1"  ARM  loan.  This  product
maintains a constant  interest rate and payment for the first seven years of the
loan.  Amortizable  for up to 30 years,  the loan will adjust  beginning  in the
eighth year,  subject to the rate caps  discussed  above.  At June 30, 2000, the
Association  had $65,000 in "7/1" loans.  In 1992, the  Association  initiated a
program specifically tailored to first time home buyers. 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,  2000,  the  Association  had
approximately $4.2 million of first-time home buyer 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.  Peoples  Federal  originates  residential
mortgage loans with loan-to-value  ratios up to 90%. On mortgage loans exceeding
an 90%  loan-to-value  ratio at the time of  origination,  Peoples  Federal 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, 2000,  the
Association  had  $473,000  of home  equity  lines of credit  and an  additional
$615,000 of funds committed, but undrawn, under such lines.

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, 2000, the Association had 55 construction  loans
with  outstanding  aggregate  balances  of  $7,248,000  secured  by  residential
property.  Of this  amount,  $6,643,000  in loans were  outstanding  directly to
borrowers  intending to live in the properties upon completion of  construction.
At that same date, the Association had four construction  loans with outstanding
aggregate  balances  of  $605,000  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 90% 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 on
substantially  the same terms as loans to builders and developers to finance the
construction of residential property.

           Development loans, which include loans to develop vacant or raw land,
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

                                       -8-

<PAGE>



for residential  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 the construction cost estimate of an independent  architect or engineer
who inspects the project in connection with significant  disbursement  requests.
As lots are sold, a portion of the sale price is applied to the principal of the
outstanding loan. Interest payments are required at regular intervals (quarterly
or semi-annually)  and loan terms typically are written for three years. At June
30, 2000, the Association had $840,000,  or 0.71% 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,
2000, the Association's largest commercial real estate loan totaled $636,000. At
that date,  the  Association  had 87  commercial  real  estate  loans,  totaling
$10,048,000 or 8.48% of gross loans receivable.

           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.

                                       -9-

<PAGE>


           The table below sets forth by type of security property the estimated
number, loan amount and outstanding balance of Peoples Federal's commercial real
estate loans at June 30, 2000.


                                                                 Outstanding
                                    Number of     Original        Principal
                                      Loans      Loan Amount       Balance
                                --------------------------------------------
                                          (Dollars in Thousands)


Office.........................       20         $  3,036         $   2,465
Retail.........................        5              979               739
Farm real estate...............       54            7,056             5,856
Churches.......................        8            1,381               988
                                    ----         --------         ---------
   Total.......................       87         $ 12,452         $  10,048
                                     ===         ========         =========


           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
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, 2000,  multi-family  loans totaled $1.3 million,  or
1.10% 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.

Land Lending

           Peoples Federal 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 three years and have maximum loan- to-
value ratios of 75%. At June 30, 2000, the Association had $992,000, or 0.84% of
gross loans receivable, in land loans.

           Land lending  generally  affords the  Association  an  opportunity to
receive interest at rates higher than those obtainable from residential lending.
In addition,  land loans are limited to a maximum 75% loan-to-value and are made
with fixed and  adjustable  rates of interest  and for  relatively  short terms.
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, 2000,  the  Association's  consumer  loans totaled $3.6
million, or 3.01% of the Association's gross loan portfolio.


                                      -10-

<PAGE>


           Peoples Federal 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, 2000, automobile loans totaled $2.5 million, or
2.09% 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.

           Consumer  loans may entail  greater  risk than  residential  mortgage
loans, particularly in the case of consumer loans which 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 did experience substantial growth in 2000 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 five
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, 2000,  commercial  business loans totaled $2.4 million,  or 2.03% of
the Association's gross loans receivable.

                                      -11-

<PAGE>


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.

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


<TABLE>
<CAPTION>
                                                                   Year Ended June 30,
                                                         --------------------------------------
                                                          2000             1999         1998
                                                         --------------------------------------
                                                                     (In thousands)
<S>                                                       <C>           <C>           <C>
Originations by type:
---------------------
 Adjustable rate:
  Real estate - one- to four-family, construction and
       development and land                               $ 18,079      $ 14,661      $ 16,076
                  - commercial                                 830         3,178         2,839
                  - multi-family                                --           752           470
  Non-real estate - consumer                                    --            --            --
                           - commercial business             1,873         1,411            --
                                                          --------      --------      --------
         Total adjustable-rate                              20,782        20,002        19,385
 Fixed rate:
  Real estate - one- to four-family, construction and
       development and land                                  9,126        15,781         8,247
                  - commercial                                 643           598           266
                  - multi-family                                --            --            --
  Non-real estate - consumer                                 3,262         2,885         1,923
                           - commercial business             1,047           702           122
                                                          --------      --------      --------
         Total fixed-rate                                   14,078        19,966        10,558
                                                          --------      --------      --------
         Total loans originated                             34,860        39,968        29,943

  Principal repayments                                     (22,834)      (30,841)      (24,670)
Increase in other items, net(1)                                (90)         (188)          (66)
                                                          --------      --------      --------
         Net increase                                     $ 11,936      $  8,939      $  5,207
                                                          ========      ========      ========
</TABLE>

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

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


Delinquencies and Non-Performing Assets

           Delinquency  Procedures.  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

                                      -12-

<PAGE>


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.

           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, they are 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 Peoples Federal 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.

           The following table sets forth the Association's  loan  delinquencies
by type, by amount and by percentage of type at June 30, 2000.

<TABLE>
<CAPTION>

                                                     Loans Delinquent For:
                           -----------------------------------------------------------------

                                      60-89 Days                         90 Days and Over         Total Delinquent Loans
                           ----------------------------------  -----------------------------  -----------------------------------

                                                    Percent                          Percent                          Percent
                                                    of Loan                          of Loan                          of Loan
                             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......     11       $557        0.60%         18      $951         1.03%       29    $1,508         1.64%
  Construction and
   development.............     --         --          --          --        --           --        --        --           --
  Commercial...............     --         --          --           1        10         0.10         1        10         0.10
  Multi-family.............     --         --          --          --        --           --        --        --           --
  Land.....................     --         --          --          --        --           --        --        --           --
Consumer...................      3          5        0.14           1         1         0.03         4         6         0.17
Commercial business........     --         --          --          --        --           --        --        --           --
                                --       ----        ----          --      ----         ----        --    ------         ----

     Total.................     14       $562        0.47%         20      $962         0.81%       34    $1,524         1.29%
                                ==       ====        ====          ==      ====         ====        ==    ======         ====
</TABLE>


           Classification  of  Assets.  Federal  regulations  require  that each
savings institution classify its own 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.


                                      -13-

<PAGE>


           On the basis of management's  review of its assets, at June 30, 2000,
the Association had classified a total of $757,000 of its loans, as follows:

<TABLE>
<CAPTION>


                             One- to Four-    Commercial
                                 Family       Real Estate        Land         Consumer     Total
                          -----------------------------------------------------------------------
                                                              (In Thousands)

<S>                            <C>                 <C>           <C>            <C>         <C>
Substandard..............      $756                $---          $ ---          $ ---       $756
Doubtful.................       ---                 ---            ---            ---        ---
Loss.....................       ---                 ---            ---              1          1
                               ----                ----          -----           ----       ----
                               $756                $---          $ ---          $   1       $757
                               ====                ====          =====          =====       ====
</TABLE>


           Peoples Federal'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.

                                      -14-

<PAGE>



           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.

<TABLE>
<CAPTION>

                                                                         June 30,
                                                 -------------------------------------------------------
                                                  2000        1999        1988         1997       1996
                                                 -------------------------------------------------------
                                                                 (Dollars in Thousands)
<S>                                              <C>         <C>         <C>         <C>         <C>
Non accruing loans:
  One- to four-family                            $  756      $  302      $  713      $  705      $  564
  Construction and development                       --          --          --          --          --
  Commercial real estate                             --          13          --          14         211
  Multi-family                                       --          --          --          --          --
  Land                                               --          --          --          --          51
  Consumer                                           --          --          --          --          --
  Commercial business                                --          --          --          --          --
                                                 ------      ------      ------      ------      ------
     Total                                          756         315         713         719         826
                                                 ------      ------      ------      ------      ------

Accruing loans delinquent more than 90 days:
  One- to four-family                               278         389         235         143         326
  Construction and development                       --          --          --          --          --
  Commercial real estate                             10          --          --          --          58
  Multi-family                                       --          --          --          --          --
  Land                                               --          --          --          --          --
  Consumer                                            1          51          11           5          11
  Commercial business                                --          --          --          --          --
                                                 ------      ------      ------      ------      ------
     Total                                          289         440         246         148         395
                                                 ------      ------      ------      ------      ------

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

Total non performing assets                      $1,045      $  755      $  959      $  867      $1,221
                                                 ======      ======      ======      ======      ======
Total as a percentage of total assets              0.81%       0.65%       0.91%       0.84%       1.41%
                                                 ======      ======      ======      ======      ======
</TABLE>


           For the year ended June 30, 2000 gross  interest  income  which would
have been recorded had the non accruing  loans been current in  accordance  with
their  original  terms  amounted  to $54,470.  The amount  that was  included in
interest income on such loans was $39,698 for the year ended June 30, 2000.

           Other Assets of Concern.  As of June 30, 2000, 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 non performing asset categories.


                                      -15-

<PAGE>


           Allowance for Loan Losses. Management estimates the allowance balance
required  based on past loan loss  experience,  known and inherent  risks in the
portfolio,   information  about  specific  borrower   situations  and  estimated
collateral values, current 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.

           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, credit card, 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. Loans are evaluated for impairment when payments are
delayed,  typically  90  days or  more,  or when  it is  probable  that  not all
principal  and  interest  payments  will be  collected  in  accordance  with the
original terms of the loan.

           As of June 30, 2000, the Association's allowance for loan losses as a
percent  of gross  loans  receivable  and as a percent  of  nonperforming  loans
amounted  to  0.50  % and  56.59%,  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.


                                      -16-

<PAGE>



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


<TABLE>
<CAPTION>
                                                                                     Year Ended June 30,
                                                         --------------------------------------------------------------------
                                                                2000           1999           1998          1997         1996
                                                         --------------------------------------------------------------------
                                                                                    (Dollars in Thousands)
<S>                                                             <C>            <C>            <C>           <C>         <C>
Balance at beginning of period..........................        $529           $426           $397          $307        $ 251

Charge-offs:
  One- to four-family...................................         ---            ---              7           ---            9
  Construction and development..........................         ---            ---            ---           ---          ---
  Commercial real estate................................         ---            ---            ---           ---          ---
  Multi-family..........................................         ---            ---            ---           ---          ---
  Consumer..............................................         ---             23              8            22            6
  Commercial business...................................         ---            ---            ---           ---          ---
                                                           ---------        -------          -----         -----       ------
                                                                 ---             23             15            22           15
                                                           ---------        -------          -----         -----       ------

Recoveries:
  One- to four-family...................................         ---             19            ---           ---            1
  Construction and development..........................         ---            ---            ---           ---          ---
  Commercial real estate................................         ---            ---            ---           ---          ---
  Multi-family..........................................         ---            ---            ---           ---          ---
  Consumer..............................................           1              3              3             9            2
  Commercial business...................................         ---            ---            ---           ---          ---
                                                            --------        -------          -----         -----       ------
                                                                   1             22              3             9            3
                                                           ---------        -------          -----         -----       ------

Net charge-offs (recoveries)............................          (1)             1             12            13           12
Additions charged to operations.........................          61            104             41           103           68
                                                               -----          -----         ------          ----       ------
Balance at end of period................................        $591           $529           $426          $397         $307
                                                                ====           ====           ====          ====         ====

Ratio of net charge-offs during the period to
 average loans outstanding(1) during the period.........        ---%            ---%          0.01%         0.02%        0.02%
                                                              =====            ====           ====          ====         ====

Ratio of net charge-offs during the period to
 nonperforming assets at the end of the period..........      (0.10)%          0.08%          1.33%         1.49%        0.98%
                                                             ======            ====           ====          ====         ====

</TABLE>

------------
(1) Calculated net of deferred loan fees, loan  discounts,  loans in process and
    allowance for loan losses.

                                      -17-

<PAGE>



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

<TABLE>
<CAPTION>

                                                                              June 30,
                          ----------------------------------------------------------------------------------------------------------
                                         2000                                 1999                                  1998
                          ----------------------------------------------------------------------------------------------------------
                                                     Percent                            Percent                           Percent
                                                    of Loans                            of Loans                         of Loans
                              Amount      Loan       in Each       Amount     Loan      in Each        Amount     Loan     in Each
                                of       Amounts    Category         of      Amounts    Category         of      Amounts  Category
                            Loan Loss      by       to Total     Loan Loss     by       to Total     Loan Loss     by     to Total
                            Allowance   Category      Loans      Allowance  Category     Loans       Allowance  Category    Loans
                          ----------------------------------------------------------------------------------------------------------
                                                                       (Dollars in Thousands)

<S>                          <C>      <C>             <C>         <C>      <C>           <C>          <C>       <C>         <C>
One- to four-family.......   $388     $ 92,117         77.72%     $346     $  84,166      79.51%      $335      $79,691     82.37%
Construction and
development...............     20        8,088          6.82        13         5,930       5.60         16        6,776      7.00
Commercial real
  estate..................     25       10,048          8.48        32         9,408       8.89         15        6,608      6.83
Multi-family..............      3        1,300          1.10         4         1,359       1.28          2          655      0.68
Land......................      3          992          0.84         3           867       0.82          2          868      0.90
Consumer..................     94        3,571          3.01       103         2,738       2.59         56        2,053      2.12
Commercial
  business................     58        2,406          2.03        28         1,393       1.31        ---          101      0.10
Unallocated...............    ---          ---           ---       ---           ---        ---        ---          ---       ---
                             ----     --------        ------      ----      --------     ------       ----      -------    ------

     Total................   $591     $118,522        100.00%     $529      $105,861     100.00%      $426      $96,752    100.00%
                             ====     ========        ======      ====      ========     ======       ====      =======    ======

</TABLE>

<TABLE>
<CAPTION>

                                                                  June 30,
                            -----------------------------------------------------------------------------------
                                                  1997                                  1996
                            ------------------------------------------------------------------------------------
                                                          Percent                                  Percent
                                                          of Loans                                 of Loans
                                  Amount        Loan      in Each         Amount        Loan       in Each
                                    of        Amounts     Category          of         Amounts     Category
                                Loan Loss        by       to Total      Loan Loss        by        to Total
                                Allowance     Category     Loans        Allowance     Category      Loans
                          -----------------------------------------------------------------------------------
                                                           (Dollars in Thousands)

<S>                               <C>        <C>          <C>            <C>           <C>            <C>
One- to four-family.......        $316       $75,808       82.24%        $ 211         $65,448        79.60%
Construction and
development...............          14         6,551        7.10             4           7,091         8.63
Commercial real
  estate..................          15         5,843        6.34            36           5,302         6.45
Multi-family..............         ---           219        0.24             1             485         0.59
Land......................           3         1,447        1.57             2           1,342         1.63
Consumer..................          49         2,285        2.48            53           2,468         3.00
Commercial
  business................         ---            29        0.03           ---              81         0.10
Unallocated...............         ---           ---         ---           ---             ---          ---
                                  ----      -------      ------          -----         -------       ------

     Total................        $397      $92,182      100.00%         $ 307         $82,217       100.00%
                                  ====      ========     ======          =====         =======       ======

</TABLE>

                                      -18-

<PAGE>


Investment Activities

           As part of its asset/liability  management strategy,  the Association
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, 2000, the Association did not own any securities
of a single issuer which 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.

           The  Association  is  required by federal  regulations  to maintain a
minimum amount of liquid assets that may be invested in specified securities and
is also  permitted  to make  certain  other  securities  investments.  Cash flow
projections are regularly reviewed and updated to assure that adequate liquidity
is provided.  As of June 30, 2000,  the  Association's  liquidity  ratio (liquid
assets as a percentage of net withdrawable  savings and current  borrowings) was
10.6% as compared to the OTS requirement of 4.0%.

           As of June 30, 2000 the  Association  had  securities  totaling $ 8.4
million  classified as available for sale while there were no classified as held
to maturity.  As future  securities are acquired,  the  Association may elect to
classify them as either available for sale or held to maturity.

                                      -19-

<PAGE>



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

<TABLE>
<CAPTION>
                                                                                             June 30,
                                                      ------------------------------------------------------------------------------
                                                                    2000                       1999                    1998
                                                      ------------------------------------------------------------------------------
                                                          Carrying       % of         Carrying       % of        Carrying    % of
                                                            Value        Total          Value        Total         Value     Total
                                                      ------------------------------------------------------------------------------
                                                                               (Dollars in Thousands)
<S>                                                         <C>                       <C>                       <C>
Securities and time deposits:
  U.S. government securities..........................      $   ---        ---%       $   ---        ---%      $   ---        ---%
  Federal agency obligations held to maturity.........          ---        ---            ---        ---           ---        ---
  Federal agency obligations available for sale.......        3,896      41.15          2,957      32.26         4,016      80.92
  Time deposits.......................................          ---        ---            400       4.36           100       2.01
                                                             ------     ------       --------     ------        ------     ------
     Subtotal.........................................        3,896      41.15          3,357      36.62         4,116      82.93
Mortgage-Backed Securities............................        4,550      48.05          4,901      53.47           ---        ---
FHLB stock............................................        1,023      10.80            908       9.91           847      17.07
                                                             ------     ------       --------     ------        ------     ------
     Total securities, time deposits, mortgaged-
         backed securities and FHLB stock.............       $9,469     100.00%        $9,166     100.00%       $4,963     100.00%
                                                             ======     ======         ======     ======        ======     ======
Average remaining life of securities
  and time deposits...................................    4.86 years                  2.77 years                   3.01 years

Other interest-earning assets:
  Interest-bearing deposits with banks................       $  885      63.91%      $    635     100.00%       $2,292      53.40%
  Overnight deposits..................................          500      36.09            ---        ---         2,000      46.60
                                                             ------     ------       --------     ------        ------     ------
     Total............................................       $1,385     100.00%      $    635     100.00%       $4,292     100.00%
                                                             ======     ======       ========     ======        ======     ======
</TABLE>

                                                                 -20-

<PAGE>


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

<TABLE>
<CAPTION>

                                                                        June 30, 2000
                                     -------------------------------------------------------------------------------------------
                                        Less Than                 1 to 5              5 to 10             Total Securities
                                         1 Year                   Years                Years              and Time Deposits
                                     -----------------------------------------------------------------------------------------
                                      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>
Time deposit ....................     $   --     $   --     $   --      $   --      $   --      $   --      $   --      $   --
Federal agency obligations
available for sale ..............         --         --      2,999       2,918         998         978       3,997       3,896
Mortgage-Backed Securities ......         --         --         --          --          --          --       4,645       4,550
                                      ------     ------     ------      ------      ------      ------      ------      ------
Total securities and time deposit     $   --     $   --     $2,999      $2,918      $  998      $  978      $8,642      $8,446
                                      ======     ======     ======      ======      ======      ======      ======      ======

Weighted average yield ..........     ---%       ---%         6.24%       6.24%       8.00%       8.00%       6.85%       6.85%
                                      ======     ======     ======      ======      ======      ======      ======      ======
</TABLE>


           Mortgage-Backed    Securities.   The   Association   had   one   GNMA
mortgage-backed  security at June 30, 2000.  From time to time, the  Association
may purchase such securities to supplement loan production, leverage its capital
position or manage its assets/liability structure.

Sources of Funds

           General.  The  Association'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. Peoples Federal 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.

                                      -21-

<PAGE>


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



                                                 Year Ended June 30,
                            ---------------------------------------------------
                                   2000           1999                 1998
                            ---------------------------------------------------
                                            (Dollars in Thousands)

Opening balance............     $ 84,310          $79,054             $77,045
Deposits...................      123,137           90,648              87,133
Withdrawals................      118,056           88,585              88,401
Interest credited..........        3,666            3,193               3,277
                                --------          -------            --------

Ending balance.............     $ 93,057          $84,310             $79,054
                                ========          =======             =======

Net increase ..............     $  8,747          $ 5,256             $ 2,009
                                ========          =======             =======

Percent increase                  10.37%            6.65%               2.61%
                                  =====             ====                ====




                                      -22-

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                        June 30,
                                                         ---------------------------------------------------------------------------
                                                                 2000                    1999                      1998
                                                         ---------------------------------------------------------------------------
                                           Weighted
                                            Average
                                            Rate at                   Percent                 Percent                      Percent
                                         June 30, 2000  Amount       of Total     Amount      of Total       Amount        of Total
                                       ---------------------------------------------------------------------------------------------
                                                                         (Dollars in Thousands)
<S>                                          <C>        <C>            <C>        <C>           <C>           <C>            <C>
Transactions and Savings Deposits:
---------------------------------

Noninterest Bearing Demand                     --      $   871          0.93%    $   650         0.77%       $   169          0.22%
Savings Accounts .........                   3.05%      18,889         20.29      19,544        23.17         18,456         23.34
NOW Accounts .............                   1.55        4,940          5.31       4,874         5.78          3,362          4.25
Money Market Accounts ....                   3.75        1,563          1.68       1,846         2.19            982          1.24
                                                       -------      --------     -------      -------        -------      --------

Total Non-Certificates ...                   2.80       26,263         28.21      26,914        31.91         22,969         29.05
                                                       -------      --------     -------      -------        -------      --------

Certificates:
------------

 0.00 -  1.99%............                     --           --            --          --           --             --            --
 2.00 -  3.99%............                     --           --            --          19         0.02             --            --
 4.00 -  5.99%............                   5.23       23,528         25.27      41,767        49.51         36,060         45.59
 6.00 -  7.99%............                   6.28       43,266         46.48      15,610        18.51         20,025         25.32
 8.00 -  9.99%............                     --           --            --          --           --             --            --
10.00% and over ..........                     --           --            --          --           --             --            --
                                                      --------       -------     -------       ------       --------       -------

Total Certificates .......                   5.91       66,794         71.75      57,396        68.04         56,085         70.91
                                                      --------      --------     -------      -------        -------      --------
Accrued Interest .........                     --           35          0.04          44         0.05             35         0 .04
                                                      --------      --------     -------      -------        -------      --------
Total Deposits ...........                   5.06%    $ 93,092        100.00%    $84,354       100.00%       $79,089        100.00%
                                                      ========      ========     =======      =======        =======      ========
</TABLE>



                                      -23-

<PAGE>



           The  following  table  shows rate and  maturity  information  for the
Association's certificates of deposit as of June 30, 2000.

<TABLE>
<CAPTION>


                                          2.00-          4.00-            6.00-                      Percent
                                          3.99%          5.99%            7.99%        Total         of Total
                                     -------------------------------------------------------------------------------------
                                                                         (Dollars in Thousands)
Certificate accounts
    maturing
in quarter ending:
-----------------
<S>                                         <C>         <C>           <C>             <C>             <C>
September 30, 2000..................        $ ---       $ 6,010        $ 3,335        $ 9,345          13.99%
December 31, 2000...................          ---         4,353         10,703         15,056          22.54
March 31, 2001......................          ---         4,030          8,099         12,129          18.16
June 30, 2001.......................          ---         2,918          5,252          8,170          12.23
September 30, 2001..................          ---         1,661          2,491          4,152           6.22
December 31, 2001...................          ---         1,338          2,081          3,419           5.12
March 31, 2002......................          ---           958            314          1,272           1.90
June 30, 2002.......................          ---           821            868          1,689           2.53
September 30, 2002..................          ---            97          2,557          2,654           3.97
December 31, 2002...................          ---           449          2,647          3,090           4.63
March 31, 2003......................          ---           104          1,220          1,324           1.98
June 30, 2003.......................          ---            51          1,315          1,366           2.04
September 30, 2003..................          ---           241            947          1,188           1.98
December 31, 2003...................          ---           194            239            433           0.65
March 31, 2004......................          ---           219             37            256           0.38
June 30, 2004.......................          ---            71            357            428           0.65
September 30, 2004..................          ---            13            ---             13           0.02
December 31, 2004...................          ---           ---              6              6           0.01
March 31, 2005......................          ---           ---            153            153           0.23
June 30, 2005.......................          ---           ---            651            651           0.97
                                            -----       -------        -------        -------          -----
   Total............................        $ ---       $23,528        $43,266        $66,794            100%
                                            =====       =======        =======        =======          =====

    Percent of total................          ---%         35.2%          64.8%
                                            =====       =======        =======
</TABLE>


           At June 30, 2000 the  Association had  approximately  $6.3 million in
certificate accounts in amounts of $100,000 or more maturing as follows:


                                                                 Weighted
             Maturity Period                     Amount         Average Rate
-----------------------------------------------------------------------------
                                              (Dollars in
                                               Thousands)

Three months or less......................       $1,312            5.97%
Over three through six months.............        1,959            5.93
Over six through 12 months................        1,170            6.24
Over 12 months............................        1,871            6.52
                                                 ------            ----
Total.....................................       $6,312            6.17%
                                                 ======            ====


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


                                      -24-

<PAGE>


           Borrowings.  Peoples  Federal'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,
                                                      ----------------------------------------------
                                                           2000             1999            1998
                                                      ----------------------------------------------
                                                                   (Dollars in Thousands)
<S>                                                        <C>              <C>              <C>
Balance at period end:
---------------------
  FHLB advances......................................      $19,000          $14,800          $7,000
  Weighted average rate..............................         6.35%            5.87%           6.13%
Maximum balance at any month end during the period:
  FHLB advances......................................      $19,800          $14,800          $7,000

Average balance for the period:
------------------------------
  FHLB advances......................................      $17,603           $7,764          $   96
  Weighted average rate..............................         6.11%            6.05%           6.25%
</TABLE>


Service Corporations

           As a federally  chartered  savings  association,  Peoples  Federal is
permitted by OTS  regulations to invest up to 2% of its assets,  or $2.6 million
at June 30, 2000 in the stock of, or loans to, service corporation subsidiaries.
As of such date, Peoples Federal had no investments in service corporations.


                                   REGULATION

General

           Peoples Federal 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.  Accordingly,  Peoples  Federal is subject to
broad federal regulation and oversight extending to all its operations.  Peoples
Federal 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 Peoples Federal, the
Company also is subject to federal regulation and oversight.  The purpose of the
regulation  of the Company and other  savings and loan  holding  companies is to
protect  subsidiary  savings  associations.  Peoples  Federal 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, and the deposits of Peoples
Federal are insured by the FDIC.  As a result,  the FDIC has certain  regulatory
and examination authority over Peoples Federal.

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

Federal Regulation of Savings Associations

           The OTS has  extensive  authority  over  the  operations  of  savings
associations.  As part of this  authority,  Peoples  Federal 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 Peoples  Federal was as of
December  31, 1999.  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

                                      -25-

<PAGE>


total  assets,  to  fund  the  operations  of the  OTS.  The  Association's  OTS
assessment for the fiscal year ended June 30, 2000 was $35,000.

           The OTS also has  extensive  enforcement  authority  over all savings
institutions  and their holding  companies,  including  Peoples  Federal and the
Company. 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 laws and it is prohibited  from engaging in
any activities not permitted by such laws. For instance,  no savings institution
may invest in non-investment grade corporate debt securities.  In addition,  the
permissible  level of  investment  by federal  associations  in loans secured by
non-residential real property may not exceed 400% of total capital,  except with
approval of the OTS. Federal savings  associations are also generally authorized
to  branch  nationwide.   Peoples  Federal  is  in  compliance  with  the  noted
restrictions.

           Peoples   Federal'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, 2000, the  Association's  lending
limit under this restriction was $2.1 million.  Peoples Federal 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  which  fails to comply  with these
standards must submit a compliance plan.

Insurance of Accounts and Regulation by the FDIC

           Peoples Federal 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  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.

Regulatory Capital Requirements

           Federally insured savings associations,  such as Peoples Federal, 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.

                                      -26-

<PAGE>



           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, 2000, 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. Peoples Federal does not have any subsidiaries.

           At June 30,  2000,  Peoples  Federal  had  tangible  capital of $14.2
million, or 10.9% of adjusted total assets, which is approximately $12.2 million
above the minimum requirement of 1.5% of adjusted total assets in effect on that
date.

           The capital  standards also require core capital equal to at least 3%
of adjusted total assets.  Core capital  generally  consists of tangible capital
plus certain intangible  assets,  including a limited amount of purchased credit
card  receivables.  As a  result  of the  prompt  corrective  action  provisions
discussed  below,  however,  a savings  association must maintain a core capital
ratio  of at  least  4% to  be  considered  adequately  capitalized  unless  its
supervisory  condition  is such to allow it to maintain a 3% ratio.  At June 30,
2000,  Peoples  Federal had no  intangible  assets  which were  subject to these
tests.

           At June 30, 2000,  Peoples  Federal had core  capital  equal to $14.2
million,  or 10.9% of adjusted  total  assets,  which is $9.0 million  above the
minimum leverage ratio requirement of 4% as in effect on that date.

            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, 2000, Peoples Federal
had  $590,000  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.  Peoples Federal had no
such exclusions from capital and assets at June 30, 2000.

           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, 2000,  Peoples Federal had total capital of $14.8 million
(including   $14.2   million  in  core  capital  and   $590,000  in   qualifying
supplementary  capital)  and  risk-weighted  assets of $85.7  million,  or total
capital of 17.2% of risk-  weighted  assets.  This amount was $7.9 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,

                                      -27-

<PAGE>


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.

           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. 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.  Based
upon dividends the Association has paid to the Company, no additional  dividends
may be paid by the Association to the Company without OTS approval.

Liquidity

           All savings associations,  including Peoples Federal, are required to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. For a discussion of what Peoples Federal
includes  in  liquid  assets,  see  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
in the 2000  Annual  Report to  Stockholders  attached  hereto as Exhibit 13 and
incorporated by reference  herein.  This liquid asset ratio requirement may vary
from time to time  depending  upon economic  conditions and savings flows of all
savings associations. At the present time, the minimum liquid asset ratio is 4%.

Qualified Thrift Lender Test

           All savings associations,  including Peoples Federal, 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.  At June 30, 2000, the
Association met the test and has always met the test since its effectiveness.


                                      -28-

<PAGE>



           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 the Company."

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 Peoples
Federal,  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  Peoples
Federal. 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 1998 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 Peoples Federal include the Company and
any company which 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 the Company

           The Company is a unitary  savings and loan holding company subject to
regulatory  oversight  by the OTS. As such,  the Company 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 the Company and its
non-savings  association  subsidiaries which 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,  the Company generally
is not subject to activity  restrictions.  If the  Company  acquires  control of
another savings association as a separate subsidiary, it would become a multiple
savings and loan holding  company,  and the activities of the Company and any of
its subsidiaries (other than Peoples

                                      -29-

<PAGE>



Federal or any other SAIF-insured  savings  association) would become subject to
such restrictions  unless such other associations each qualify as a QTL and were
acquired in a supervisory acquisition.

           If Peoples  Federal  fails the QTL test,  the Company 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 Holding  Company 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."

           The  Company  must  obtain  approval  from the OTS  before  acquiring
control of any other SAIF-insured  association.  Such acquisitions are generally
prohibited  if they  result  in a  multiple  savings  and loan  holding  company
controlling  savings  associations  in  more  than  one  state.   However,  such
interstate  acquisitions are permitted based on specific state  authorization or
in a supervisory acquisition of a failing savings association.

Federal Securities Law

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

           Company stock held by persons who are affiliates (generally officers,
directors and principal  stockholders)  of the Company may not be resold without
registration unless sold in accordance with certain resale restrictions.  If the
Company meets specified current public information requirements,  each affiliate
of the Company 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,  2000,  Peoples  Federal  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

           Peoples  Federal 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,  Peoples  Federal is required to purchase  and  maintain
stock  in the  FHLB of  Cincinnati.  At  June  30,  2000,  Peoples  Federal  had
$1,023,000 in FHLB stock, which was in compliance with this requirement. In past
years,  Peoples  Federal has received  substantial  dividends on its FHLB stock.
Over the past five fiscal  years such  dividends  have  averaged  7.11% and were
7.16% for fiscal 2000.


                                      -30-

<PAGE>


           Under  federal law,  the FHLBs are required to provide  funds for the
resolution  of  troubled  savings  associations  and to  contribute  to low- and
moderately-priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income  housing
projects.  These  contributions  have  affected  adversely  the  level  of  FHLB
dividends  paid and could continue to do so in the future.  These  contributions
could also have an adverse  effect on the value of FHLB stock in the  future.  A
reduction in value of Peoples Federal's FHLB stock may result in a corresponding
reduction in Peoples Federal's capital.

           For the year  ended  June  30,  2000,  dividends  paid by the FHLB of
Cincinnati  to Peoples  Federal  totaled  $67,000,  which  constitutes  a $6,000
increase over the amount of dividends  received in fiscal year 1999. The $18,000
dividend  for the quarter  ended June 30, 2000  reflects an  annualized  rate of
7.35%, or 0.37% above the rate for fiscal 1999.

Federal and State Taxation

           In  addition  to the  regular  income  tax,  corporations,  including
savings associations such as Peoples Federal, 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.

           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, 2000, the portion of Peoples Federal's reserves subject
to this treatment for tax purposes totaled approximately $2.2 million.

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

           Peoples  Federal  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, 1996. 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, Peoples Federal) would not result in a
deficiency which could have a material adverse effect on the financial condition
of Peoples Federal.

           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% of 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.

           Delaware  Taxation.  As a Delaware  holding  company,  the Company 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.  The Company is also
subject to an annual franchise tax imposed by the State of Delaware. The Company
also files an Ohio franchise tax return and pays tax on its Ohio taxable income.

Impact of New Accounting Standards

           Statement  of  Financial   Accounting   Standards   (SFAS)  No.  133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities"  - SFAS 133
requires  companies  to record  derivatives  on the  balance  sheet as assets or
liabilities,  measured at fair value.  Gains or losses resulting from changes in
the values of those  derivatives  would be accounted for depending on the use of
the derivative and whether it qualifies for hedge accounting.  The key criterion
for hedge accounting is that the hedging  relationship  must be highly effective
in achieving  offsetting  changes in fair value or cash flows. SFAS 133 does not
allow  hedging  of  a  security   which  is  classified  as  held  to  maturity.
Accordingly, upon

                                      -31-

<PAGE>



adoption  of SFAS  133,  companies  may  reclassify  any  security  from held to
maturity to available  for sale if they wish to be able to hedge the security in
the  future.  SFAS 133, as amended by SFAS 137, is  effective  for fiscal  years
beginning  after June 15,  2000 with early  adoption  encouraged  for any fiscal
quarter  beginning  July 1,  1998 or  later,  with no  retroactive  application.
Management does not expect the adoption of SFAS 133 to have a significant impact
on the Company's financial statements.

Competition

           Peoples Federal  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 community in
which its  office is  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  community.
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,  2000,  the  Association  had a total  of 27  full-time
employees,  12 of which have been  employed  by Peoples  Federal for at least 10
years,  and 4  part-time  employees.  None of the  Association's  employees  are
represented  by  any  collective  bargaining  group.  Management  considers  its
employee relations to be good.

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 the
Company  and  the  Association  who  do not  serve  on the  Company's  Board  of
Directors. Executive officers of the Company 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 49, 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 Peoples
Federal since 1983.

           Gary N.  Fullenkamp.  Mr.  Fullenkamp,  age 44, 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 Peoples  Federal
since 1979.

           Debra A. Geuy.  Mrs.  Geuy,  age 42, 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 Peoples  Federal since
1978.

                                      -32-

<PAGE>


Item 2. Properties

           The following  table sets forth  information  concerning the main and
branch offices and a drive-in  facility of the Association at June 30, 2000. 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
                                                    Owned          Value at
                                       Year          or            June 30,
Location                              Opened       Leased            2000
--------
                                  ---------------------------------------------

Main Office:

101 East Court Street                  1917         Owned           $245,096
Sidney, Ohio 45365

Drive-In:

232 S. Ohio Avenue                     1971         Owned           $165,377
Sidney, Ohio 45365

Anna Branch:
403 South Pike Street                  1998         Owned           $609,351
Anna, Ohio 45302

Jackson Center Branch:
115 East Pike Street                   1998        Leased           $ 97,444
Jackson Center, Ohio 45334


           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,
2000 was approximately $200,000.

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.


                                      -33-

<PAGE>



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

           No matter was  submitted to a vote of security  holders,  through the
solicitations of proxies or otherwise, during the quarter ended June 30, 2000.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

           Page 4 of  the  Company's  2000  Annual  Report  to  Stockholders  is
incorporated herein by reference.

Item 6.    Management's Discussion and Analysis or Plan of Operation

           Pages  8  through  19  of  the   Company's   2000  Annual  Report  to
Stockholders are incorporated herein by reference.

Item 7.    Financial Statements

           Pages  20  through  45  of  the  Company's   2000  Annual  Report  to
Stockholders are incorporated herein by reference.

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

           There has been no Current  Report on Form 8-K filed  within 24 months
prior to the date of the most recent financial  statements reporting a change of
accountants and/or reporting disagreements on any matter of accounting principle
or financial statement disclosure.

                                    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 the  Company  is  incorporated
herein by reference from the Company's definitive Proxy Statement for the Annual
Meeting of Stockholders to be held in 2000, which has been filed with the SEC.

Executive Officers

           Information  concerning the executive officers of the Company 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 the Company's  directors and executive  officers is incorporated
herein by reference from the Company's definitive Proxy Statement for the Annual
Meeting of Stockholders to be held in 2000, which has been filed with the SEC.

Item 10.        Executive Compensation

           Information  concerning executive compensation is incorporated herein
by  reference  from the  Company's  definitive  Proxy  Statement  for the Annual
Meeting of Stockholders to be held in 2000, which has been filed with the SEC.

                                      -34-

<PAGE>



Item 11.        Security Ownership of Certain Beneficial Owners and Management

           Information  concerning  security  ownership  of  certain  beneficial
owners and  management is  incorporated  herein by reference  from the Company's
definitive  Proxy Statement for the Annual Meeting of Stockholders to be held in
2000, which has been filed with the SEC.

Item 12.        Certain Relationships and Related Transactions

           Information concerning certain relationships and related transactions
is  incorporated  herein  by  reference  from  the  Company's  definitive  Proxy
Statement for the Annual Meeting of Stockholders  to be held in 2000,  which has
been filed with the SEC.


                                      -35-

<PAGE>



Item 13.        Exhibits and Reports on Form 8-K

           (a)  Exhibits

<TABLE>
<CAPTION>


                                                                              Reference to
                                                                              Prior Filing
                                                                               or Exhibit
     Regulation                                                                  Number
     S-B Exhibit                                                                Attached
       Number                                 Document                           Hereto
----------------- ----------------------------------------------------------     ------
<S>     <C>       <C>                                                         <C>
          2       Plan of acquisition, reorganization, arrangement,               None
                  liquidation or succession
        3(i)      Certificate of Incorporation                                      *
        3(ii)     By-Laws                                                           *
          4       Instruments defining the rights of holders, including             *
                  indentures
          9       Voting trust agreement                                          None
        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      401k 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                 None
         13       Annual report to security holders                                13
         16       Letter on change in certifying accountant                       None
         18       Letter on change in accounting principles                       None
         21       Subsidiaries of Registrant                                       21
         22       Published report regarding matters submitted to vote            None
         23       Consents of experts and counsel                                  23
         24       Power of attorney                                           Not required
         27       Financial data schedule                                          27
         99       Additional exhibits                                         Not required
</TABLE>

------------------
*   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  incorporated  herein
    by reference.

           (b)  Reports on Form 8-K

           During the quarter ended June 30, 2000, the Company filed two Current
Reports on Form 8-K. On April 19, 2000,  under Item 5, the Company  reported the
issuance of a press release  announcing  the Company's  earnings for the quarter
ended March 31, 2000 and the declaration of a cash dividend.  On April 28, 2000,
under Item 5, the Company  reported the issuance of a press  release  announcing
the completion of a stock repurchase program.

                                      -36-

<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
undersigned, thereunto duly authorized.


                         PEOPLES-SIDNEY FINANCIAL CORPORATION



                         By:
                            ----------------------------------------------------
                                 Douglas Stewart
                                 President, Chief Executive Officer and Director
                                (Duly Authorized Representative)


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


                                      -37-

<PAGE>


---------------------------------------
Douglas Stewart                            James W. Kerber
President, Chief Executive Officer and     Director
Director
(Principal Executive Officer)

Date:                   , 2000             Date:                       , 2000
       -----------------------                  -----------------------------



Richard T. Martin                          John W. Sargeant
Chairman of the Board                      Director

Date:                   , 2000             Date:                       , 2000
       -----------------------                  -----------------------------



Robert W. Bertsch                          Debra A. Geuy
Director                                   Chief Financial Officer and Treasurer
                                          (Principal Financial and Accounting
                                           Officer)

Date:                   , 2000             Date:                       , 2000
       -----------------------                  -----------------------------



Harry N. Faulkner
Director

Date:                   , 2000
       -----------------------



                                 INDEX TO EXHIBITS


    Number
    ------
     13           Portions of Annual Report to Security Holders

     23           Consent of Crowe, Chizek and Company LLP

     21           Subsidiaries of the Registrant

     27           Financial Data Schedule