EXHIBIT 13

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                  Sidney, Ohio

                                  ANNUAL REPORT
                                  June 30, 2002



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                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                                  Sidney, Ohio

                                  ANNUAL REPORT
                                  June 30, 2002




                                    CONTENTS




TO OUR SHAREHOLDERS......................................................   F-2

BUSINESS OF PEOPLES-SIDNEY FINANCIAL CORPORATION.........................   F-4

MARKET PRICE OF THE CORPORATION'S COMMON SHARES
  AND RELATED SHAREHOLDER MATTERS........................................   F-4

SELECTED CONSOLIDATED FINANCIAL INFORMATION
  AND OTHER DATA.........................................................   F-6

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS....................................   F-8

REPORT OF INDEPENDENT AUDITORS ..........................................  F-21

CONSOLIDATED FINANCIAL STATEMENTS

           Consolidated Balance Sheets ..................................  F-22

           Consolidated Statements of Income ............................  F-23

           Consolidated Statements of Changes in Shareholders' Equity ...  F-24

           Consolidated Statements of Cash Flows ........................  F-27

           Notes To Consolidated Financial Statements ...................  F-29

SHAREHOLDER INFORMATION..................................................  F-48

CORPORATE INFORMATION....................................................  F-49

                                                                             F-1
<PAGE>


BUSINESS OF PEOPLES-SIDNEY FINANCIAL CORPORATION

Peoples-Sidney  Financial  Corporation  ("Peoples"),  a unitary  thrift  holding
company  incorporated  under the laws of the State of Delaware,  owns all of the
issued  and  outstanding  capital  stock of  Peoples  Federal  Savings  and Loan
Association ("Association"),  a savings and loan association chartered under the
laws of the United States together referred to as the Corporation.  On April 25,
1997,  Peoples  acquired all of the common stock issued by the Association  upon
its conversion from a mutual savings and loan association to a stock savings and
loan association ("Conversion"). Peoples' activities have been limited primarily
to holding the common shares of the Association.


Serving the Sidney, Ohio area since 1886, the Association conducts business from
its main office at 101 East Court Street, Sidney, Ohio and full-service branches
in Sidney, Anna, and Jackson Center,  Ohio. The Association's  business involves
attracting deposits from the general public and using such deposits to originate
one- to four-family  permanent and construction  residential mortgages and, to a
lesser  extent,   commercial  real  estate,  consumer,  land,  multi-family  and
commercial  business  loans in its market area,  consisting  primarily of Shelby
County  and  contiguous  counties  in Ohio.  The  Association  also  invests  in
securities consisting primarily of U.S. government obligations,  mortgage-backed
and related securities and various types of short-term liquid assets.

As a savings  and loan  holding  company,  Peoples  is  subject  to  regulation,
supervision  and  examination by the Office of Thrift  Supervision of the United
States  Department of the Treasury  ("OTS").  As a savings and loan  association
chartered  under the laws of the United  States,  the  Association is subject to
regulation,  supervision  and  examination  by the OTS and the  Federal  Deposit
Insurance Corporation (the "FDIC"). The FDIC insures deposits in the Association
up to applicable  limits.  The  Association is also a member of the Federal Home
Loan Bank of Cincinnati ("FHLB").


MARKET PRICE OF THE CORPORATION'S COMMON SHARES AND
  RELATED SHAREHOLDER MATTERS

The Corporation had 1,459,147 common shares outstanding on August 31, 2002, held
of  record  by  834   shareholders.   Price  information  with  respect  to  the
Corporation's  common shares is quoted on The NASDAQ National Market System. The
high and low daily closing  prices for the common shares of the  Corporation  as
quoted by The NASDAQ Stock Market,  Inc. and cash  dividends paid by quarter are
shown below.

<TABLE>
<CAPTION>

                            September 30,    December 31,      March 31,        June 30,
                                2001            2001             2002             2002
                                ----            ----             ----             ----

         <S>                <C>              <C>              <C>              <C>
         High               $   10.30        $   10.65        $   11.25        $   12.20
         Low                     9.50             9.57            10.40            10.95
         Cash Dividends           .08              .09              .09              .09
</TABLE>
<TABLE>
<CAPTION>

                            September 30,    December 31,       March 31,        June 30,
                                2000            2000              2001             2001
                                ----            ----              ----             ----
<S>                          <C>             <C>              <C>              <C>
         High                $   8.50        $    8.00        $    9.00        $    9.83
         Low                     6.88             7.25             8.00             8.63
         Cash Dividends           .07              .08              .08              .08
</TABLE>


                                                                             F-4
<PAGE>


Peoples'  primary source of funds with which to pay dividends to shareholders is
from dividends  received from the  Association.  In addition to certain  federal
income tax considerations,  OTS regulations impose limitations on the payment of
dividends and other capital  distributions  by savings  associations.  Under OTS
regulations applicable to converted savings associations, the Association is not
permitted to pay a cash dividend on its common shares if its regulatory  capital
would,  as a result of payment  of such  dividend,  be reduced  below the amount
required for the Liquidation Account (the account established for the purpose of
granting a limited  priority claim on the assets of the Association in the event
of  complete  liquidation  to  those  members  of  the  Association  before  the
Conversion  who  maintain  a  savings  account  at  the  Association  after  the
Conversion),  or applicable  regulatory capital  requirements  prescribed by the
OTS.


A  subsidiary  of a savings and loan  holding  company  must file a notice or an
application  with the OTS before it can  declare  and pay a dividend  (1) if the
proposed  distribution would cause total distributions for that calendar year to
exceed net income for that year to date plus the savings association's  retained
net income for the preceding two years; (2) if the savings  association will not
be at least adequately  capitalized following the capital  distribution;  (3) if
the  proposed   distribution  would  violate  a  prohibition  contained  in  any
applicable statute, regulations or agreement between the savings association and
the OTS (or the FDIC), or a condition  imposed on the savings  association in an
OTS-approved  application or notice; or, (4) if the savings  association has not
received  certain  favorable  examination  ratings  from the OTS.  If a  savings
association  subsidiary  of a  holding  company  is  not  required  to  file  an
application,  it must file a notice with the OTS. At year-end 2002, no amount is
available  to pay  dividends  from the  Association  to  Peoples  without  prior
approval from the OTS.


                                                                             F-5
<PAGE>



SELECTED CONSOLIDATED FINANCIAL
  INFORMATION AND OTHER DATA

The following tables set forth certain  information  concerning the consolidated
financial  condition and earnings of and other data regarding the Corporation at
the dates and for the periods indicated.

<TABLE>
<CAPTION>

Selected Financial Condition                                     At June 30,
  and Other Data:                           2002        2001        2000        1999         1998
                                            ----        ----        ----        ----         ----
                                                              (In thousands)
<S>                                       <C>         <C>         <C>         <C>         <C>
Total amount of:
         Assets                           $134,854    $134,304    $129,287    $116,882    $105,903
         Time deposits in other
           financial institutions               --          --          --         400         100
         Securities available for sale       3,526       3,002       8,447       7,858       4,016
         FHLB stock                          1,475       1,397       1,023         908         847
         Loans, net (1)                    121,225     120,482     114,650     102,803      94,053
         Deposits                           94,787      91,341      93,057      84,310      79,054
         Borrowed funds                     22,456      25,475      19,000      14,800       7,000
         Shareholders' equity               17,194      17,150      16,960      17,362      19,626

</TABLE>

<TABLE>
<CAPTION>
                                                               Year ended June 30,
                                            -------------------------------------------------------
Selected Operations Data:                     2002       2001        2000       1999         1998
-------------------------                     ----       ----        ----       ----         ----
                                                                (In thousands)

       <S>                                  <C>         <C>         <C>         <C>         <C>
       Interest income                      $ 9,667     $10,130     $ 9,170     $ 8,117     $ 8,067
       Interest expense                       5,579       6,266       5,376       4,353       3,944
                                            -------     -------     -------     -------     -------
       Net interest income                    4,088       3,864       3,794       3,764       4,123
       Provision for loan losses                 52          73          61         104          41
                                            -------     -------     -------     -------     -------
       Net interest income after
         provision for loan losses            4,036       3,791       3,733       3,660       4,082
       Noninterest income                       130         204          68          77          63
       Noninterest expense                    3,066       2,837       2,787       2,873       2,205
                                            -------     -------     -------     -------     -------
       Income before income taxes             1,100       1,158       1,014         864       1,940
       Income tax expense                       393         418         378         354         707
                                            -------     -------     -------     -------     -------
       Net income                           $   707     $   740     $   636     $   510     $ 1,233
                                            =======     =======     =======     =======     =======

       Earnings per common
         share - basic                      $   .51     $   .52     $   .43     $   .32     $   .74
                                            =======     =======     =======     =======     =======
       Earnings per common
         share - diluted                    $   .51     $   .52     $   .43     $   .32     $   .74
                                            =======     =======     =======     =======     =======
       Dividends declared per share (2)     $   .35     $   .31     $   .28     $   .28     $  4.26
                                            =======     =======     =======     =======     =======

</TABLE>


                                                                             F-6

<PAGE>

<TABLE>
<CAPTION>


Selected Financial Ratios and Other Data:
-----------------------------------------

Performance Ratios:                                   2002         2001          2000          1999         1998
                                                      ----         ----          ----          ----         ----
<S>                                                 <C>          <C>           <C>           <C>          <C>
         Return on assets (ratio of net
           income to average total assets)            0.52%        0.56%         0.51%         0.47%         1.17%
         Return on equity (ratio of net
           income to average equity)                  4.15         4.33          3.70          2.73          4.77
         Dividend payout ratio (2)(7)                68.63        59.62         65.12         87.50        575.68
         Interest rate spread (3)                     2.57         2.38          2.53          2.82          2.78
         Net interest margin (4)                      3.09         3.01          3.14          3.58          4.01
         Ratio of operating expense to
           average total assets                       2.25         2.15          2.23          2.65          2.10
         Ratio of average interest-earning
           assets to average interest-bearing
           liabilities                                1.12x       1.13x         1.14x         1.18x          1.32x
Quality Ratios:
         Nonperforming assets to total
           assets at end of period (5)                0.79%        0.94%         0.81%         0.65%         0.91%
         Allowance for loan losses to
           nonperforming loans                       66.12        52.32         56.59         70.03         44.41
         Allowance for loan losses to
           gross loans (6)                            0.57         0.53          0.50          0.50          0.44
Capital Ratios:
         Shareholders' equity to total
           assets at end of period                   12.75        12.77         13.12         14.85         18.53
         Average equity to average assets            12.49        12.92         13.77         17.24         24.59
Other Data:
         Number of full service offices                  4            4             3             3             1
</TABLE>


(1)  Loans are shown net of net  deferred  loan fees,  loans in process  and the
     allowance for loan losses.
(2)  The dividends for 1998 include a $4.00 per share special  dividend of which
     $3.99 was a return of capital distribution.
(3)  The average  interest rate spread  represents  the  difference  between the
     weighted average yield on interest-earning  assets and the weighted average
     cost of interest-bearing liabilities.
(4)  The net interest  margin  represents  net  interest  income as a percent of
     average interest-earning assets.
(5)  Nonperforming  assets consist of nonperforming loans and foreclosed assets.
     Nonperforming  loans consist of all accruing loans 90 days or more past due
     and all nonaccrual loans.
(6)  Gross loans are stated at unpaid principal balances.
(7)  Dividends declared per share divided by basic earnings per common share.


                                                                             F-7
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The  following  is  management's  analysis  of  the  Corporation's  consolidated
financial  condition  and  consolidated  results of operations as of and for the
year ended June 30, 2002,  compared to prior years.  This discussion is designed
to provide a more  comprehensive  review of the operating  results and financial
position  than  could  be  obtained  from  an  examination  of the  consolidated
financial statements alone. This analysis should be read in conjunction with the
consolidated  financial  statements  and  related  footnotes  and  the  selected
financial data included elsewhere in this report.

The Corporation  provides  financial services through its main office in Sidney,
Ohio,  and  branch  offices in Sidney,  Anna,  and  Jackson  Center,  Ohio.  The
Corporation's   primary  deposits  products  are  checking,   savings  and  term
certificate accounts, and its primary lending products are residential mortgage,
commercial  and  installment  loans.  Substantially  all  loans are  secured  by
specific items of collateral including business assets, consumer assets and real
estate.  Commercial  loans  are  expected  to be  repaid  from  cash  flow  from
operations of businesses.  Real estate loans are secured by both residential and
commercial real estate. Substantially all revenues and services are derived from
financial  institution  products  and services in Shelby  County and  contiguous
counties.


Forward-Looking Statements

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

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

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


Comparison of Financial Condition at June 30, 2002 and June 30, 2001

Total assets at June 30, 2002 were $134.9 million  compared to $134.3 million at
June 30, 2001, an increase of $550,000,  or 0.41%.  The increase in total assets
was primarily due to an increase in loans and securities,  funded by an increase
in deposits and a decline in cash and cash equivalents.



                                                                             F-8
<PAGE>


Cash and cash  equivalents  decreased from $6.4 million at June 30, 2001 to $5.6
million at June 30, 2002 primarily due to the purchase of additional  securities
and loan funding.

The securities  portfolio,  which is classified as available for sale, increased
$524,000  from June 30,  2001 to June 30,  2002.  The  Corporation  had  nominal
activity in its securities  portfolio during 2002, except for the calls of three
government agency  securities,  which were replaced with three securities of the
same type.

Federal  Home Loan Bank stock  increased  from $1.4  million at June 30, 2001 to
$1.5 million at June 30, 2002 due to stock dividends received during the period.

Loans increased  $743,000 from $120.5 million at June 30, 2001 to $121.2 million
at June 30, 2002. The Corporation had increases in multi-family  residential and
construction  loans  offset by a  decrease  in 1-4 family  residential  mortgage
loans.  The increase in  multi-family  and  construction  loans is reflective of
attractive  loan  rates  and  products  compared  to  local   competition.   The
Corporation's  1-4 family  residential  mortgage loans decreased  $710,000 as of
June 30, 2002 compared to June 30, 2001 as a result of  intensified  refinancing
caused by decreasing interest rates.  Non-mortgage loans,  comprised of consumer
and commercial  loans,  remained  stable and  represented a small portion of the
entire loan portfolio with 6.7% of gross loans at June 30, 2002 and 2001.

Premises and  equipment  increased  $52,000 from  $1,977,000 at June 30, 2001 to
$2,029,000  at June 30, 2002.  The increase  resulted  from regular  fixed asset
purchases in the course of business.

Total  deposits  increased  $3.5 million from $91.3  million at June 30, 2001 to
$94.8  million at June 30, 2002.  The increase was primarily in money market and
savings  accounts.  The overall  growth in  deposits  has  occurred  despite the
dramatic  decline in interest rates.  Continuing  volatility in the stock market
has prompted some  investors to seek  financial  institution  deposit  products.
Customers  seeking more  liquidity in the current low interest rate  environment
have shifted  their funds into  transaction  accounts.  Certificates  of deposit
decreased  $3.3 million from $63.8  million at June 30, 2001 to $60.5 million at
June 30, 2002 primarily due to maturities of 15-month  certificates,  which were
not renewed due to a decrease in interest rates.

Borrowed  funds totaled $22.5 million at June 30, 2002 and $25.5 million at June
30, 2001. The decrease  resulted from a repayment of an advance  maturing in May
2002  as well as  regular  scheduled  payments  on the  select-payment  mortgage
matched advances.  See Note 8 to the consolidated  financial  statements for the
detail  of all the  Corporation's  FHLB  advances  and the  scheduled  principal
payments. Based on the FHLB stock owned by the Association at June 30, 2002, the
Association  had the  ability  to obtain  borrowings  up to a  maximum  of $29.5
million.  However, the Association can obtain advances up to the lower of 50% of
the Association's total assets or 80% of the Association's pledgable residential
mortgage  loan  portfolio by purchasing  more FHLB stock.  Based upon the 50% of
total assets  limitation,  management  estimates the maximum borrowing  capacity
from the FHLB to be  approximately  $67.4  million  at June  30,  2002  with the
purchase of more FHLB stock.

Total  shareholders'  equity  increased  $45,000  from June 30, 2001 to June 30,
2002.  The nominal  increase is due to the continued  purchase of treasury stock
and paying out a  substantial  portion of the  Corporation's  2002  earnings  in
dividends.  Maintaining  capital at the  current  level is part of  Management's
capital planning strategy.

While the current interest rate environment remains at the lowest levels in many
years,  Management  continues to focus on interest rate spread.  Loan demand has
been very strong as  borrowers  continue to take  advantage  of lower fixed rate
loans.  On the deposit side,  consumers have begun to place deposits into liquid
funds,  i.e.  passbook  and money  market  accounts in lieu of  certificates  of
deposit due to the low rate  environment.  As the economy  begins to recover and
interest  rates  rise,  Management  anticipates  that  deposits  will  flow into
certificates of deposit.

                                  (Continued)
                                                                             F-9
<PAGE>


Comparison of Financial Condition at June 30, 2001 and June 30, 2000

Total assets at June 30, 2001 were $134.3 million  compared to $129.3 million at
June 30,  2000,  an increase of $5.0  million,  or 3.9%.  The  increase in total
assets was  primarily  due to an  increase  in loans,  funded by an  increase in
borrowed funds and a decline in securities.

Cash and cash  equivalents in other financial  institutions  increased from $2.2
million  at June 30,  2000 to $6.4  million  at June 30,  2001.  The  additional
liquidity was primarily due to a $4 million FHLB mortgage-matched  advance taken
in June 2001.

The securities  portfolio,  which is classified as available for sale, decreased
$5.4 million from June 30, 2000 to June 30, 2001.  The  Corporation  had nominal
activity in its  securities  portfolio  during 2001,  except for the sale of its
mortgaged-backed security. Management elected to sell this security to realize a
$99,000 gain from an increase in market value and increase liquidity for lending
opportunities.

Federal  Home Loan Bank stock  increased  from $1.0  million at June 30, 2000 to
$1.4 million at June 30, 2001 due to stock  dividends and purchases  required to
increase borrowings.

Loans  increased  $5.8  million  from $114.7  million at June 30, 2000 to $120.5
million at June 30,  2001.  The  Corporation  experienced  increases  in one- to
four-family residential mortgage loans, consumer loans and commercial loans. The
increase and continued growth in one- to four-family  residential mortgage loans
is  reflective  of  attractive  loan  rates  and  products   compared  to  local
competition.  A significant  portion of the loan growth occurred during the last
quarter of the fiscal year due to the decrease in interest rates.

The  Corporation's  consumer loan portfolio  increased $1.1 million between June
30, 2000 and June 30, 2001. Commercial loans increased $1.2 million between June
30, 2000 and June 30, 2001.  The increases  were  primarily  related to new auto
loans and commercial lines of credit  originated at the  Association's  Anna and
Jackson  Center branch  locations.  Even with the increase,  non-mortgage  loans
remain a small portion of the entire loan portfolio and represented only 6.7% of
gross loans at June 30, 2001 compared to 5.0% at June 30, 2000.

Premises and equipment increased $0.1 million from $1.9 million at June 30, 2000
to $2.0 million at June 30, 2001. The increase  resulted from the  Association's
new branch in the new Wal-Mart Superstore in Sidney.

Total  deposits  decreased  $1.7 million from $93.0  million at June 30, 2000 to
$91.3 million at June 30, 2001.  The decrease was primarily due to a large jumbo
certificate of deposit for $901,000, which matured and was withdrawn, as well as
a decline in 15-month  certificates  of deposit.  The  Corporation had offered a
special  interest  rate on a  15-month  certificate  of  deposit  from July 1999
through  October 1999 that resulted in  approximately  $17.2 million of 15-month
certificates  of deposit  with  scheduled  maturities  ranging from October 2000
through  January  2001.  Although a large  percentage  of the maturing  15-month
certificates  of deposit renewed in a current  certificate of deposit  offering,
some were withdrawn.  The  Corporation  did experience  growth in three-year and
four-year certificates of deposit.  Management believes this increase was due to
customers  wanting to lock in at higher  interest rates in a declining  interest
rate environment combined with the sluggish performance of the stock market. NOW
accounts,  money market  accounts and savings  accounts all increased since June
30, 2000,  while  noninterest-bearing  demand  deposits  declined since June 30,
2000.  With the new branch in the  Wal-Mart  Superstore,  management  expects an
increase in transaction deposit accounts.

Borrowed  funds totaled $25.5 million at June 30, 2001 and $19.0 million at June
30, 2000. The additional  borrowings  were taken to fund ongoing loan demand and
replace withdrawn  certificates of deposit. Based on the FHLB stock owned by the
Association  at June  30,  2001,  the  Association  had the  ability  to  obtain
borrowings up to a maximum of $27.9 million. However, the Association can obtain
advances up to the lower of 50% of the Association's  total assets or 80% of the
Association's  pledgable  residential

                                  (Continued)

                                                                            F-10
<PAGE>

mortgage  loan  portfolio by purchasing  more FHLB stock.  Based upon the 50% of
total assets  limitation,  management  estimates the maximum borrowing  capacity
from the FHLB to be approximately $67.2 million at June 30, 2001.

Total shareholders' equity increased $0.2 million from $17.0 million at June 30,
2000 to $17.2  million at June 30,  2001.  The  nominal  increase  is due to the
purchase  of  treasury  stock  and  paying  out a  substantial  portion  of  the
Corporation's  2001  earnings in dividends.  Maintaining  capital at the current
level is part of Management's capital planning strategy.

Results of Operations

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

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


Comparison of Results of Operations for the
  Year Ended June 30, 2002 and June 30, 2001

Net Income.  The  Corporation  earned net income of $707,000  for the year ended
June 30, 2002  compared  to net income of  $740,000  for the year ended June 30,
2001. The decrease in net income was primarily due to an increase in noninterest
expense and a decrease in noninterest income, partially offset by an increase in
net interest income.

Net Interest Income.  Net interest income totaled  $4,088,000 for the year ended
June 30,  2002  compared  to  $3,864,000  for the year ended June 30,  2001,  an
increase of $224,000, or 5.8%. The increase was the result of an increase in the
volume of interest-earning assets combined with a decrease in the cost of funds.

Interest and fees on loans decreased $216,000,  or 2.3%, from $9,489,000 for the
year ended June 30, 2001 to  $9,273,000  for the year ended June 30,  2002.  The
decrease in interest income was due to lower interest rates on  interest-earning
assets partially  offset by an increase in average loans  receivable  during the
year. The yield earned on loans  decreased from 8.04% for 2001 to 7.70% for 2002
due to the  decreasing  interest rate  environment  that occurred  during fiscal
2002.

Interest earned on securities  totaled $216,000 for the year ended June 30, 2002
compared  to  $457,000   for  the  year  ended  June  30,   2001.   Interest  on
interest-bearing  demand,  time and  overnight  deposits  with  other  financial
institutions  increased to $100,000 for the year ended June 30, 2002 compared to
$91,000 for the year ended June 30, 2001. The decrease in interest on securities
was the result of lower average balance of securities  combined with lower yield
earned on  securities.  The increase in interest  earned on deposits  with other
financial  institutions  was primarily the result of higher average  balances of
those funds  partially  offset by a decrease in the average yield earned on such
investments.

Dividends on FHLB stock  decreased over the comparable  period due to a decrease
in amounts paid by FHLB.

                                  (Continued)

                                                                            F-11
<PAGE>

Interest  paid on deposits  decreased  $682,000 for the year ended June 30, 2002
compared to the year ended June 30, 2001.  Deposits were higher at June 30, 2002
than the  June 30,  2001  total  and the  average  balance  of  interest-bearing
deposits  increased  from 2001 to 2002.  On the other hand,  the average cost of
deposits  decreased from 5.27% for the year ended June 30, 2001 to 4.38% for the
year ended June 30, 2002, resulting in the decrease in deposit interest expense.

Interest  paid on borrowed  funds  remained  stable at $1.5 million for the year
ended June 30, 2002 and 2001.  Although the average  balance of  borrowings  was
higher during 2002 than the 2001 average,  the expense remained almost unchanged
due to lower average cost of borrowed  funds  resulting from lower interest rate
environment  that  occurred for fiscal 2002.  For further  discussion  about the
Corporation's  interest-rate  risk  management,  see  the  Asset  and  Liability
Management section.


In the months ahead,  Management will continue to focus on overall cost of funds
and overall loan  yields.  As the economy  recovers and interest  rates begin to
rise,  we  understandably  will see a shift from liquid  savings  deposits  into
longer term certificates of deposit bearing higher rates. In addition, a variety
of lending  programs will be offered to meet the market  competition  as well as
maintain our interest rate spread position.

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

The provision  for loan losses for the year ended June 30, 2002 totaled  $52,000
compared to $73,000 for the year ended June 30, 2001, a decrease of $21,000,  or
28.9%. The allowance for loan losses totaled  $708,000,  or 0.57% of gross loans
receivable and 66.12% of total  nonperforming  loans at June 30, 2002,  compared
with  $661,000,  or  0.53%  of  gross  loans  receivable  and  52.32%  of  total
nonperforming loans at June 30, 2001. Charge-offs experienced by the Corporation
have primarily related to consumer and other non-real estate loans. As indicated
previously,  such loans make up a small portion of the Corporation's  total loan
portfolio. The Corporation's low historical charge-off history is the product of
a variety of factors, including the Corporation's underwriting guidelines, which
generally require a loan-to-value or projected  completed value ratio of 90% for
purchase or construction of one- to four-family  residential  properties and 75%
for commercial real estate and land loans,  established  income  information and
defined ratios of debt to income.

Noninterest income.  Noninterest  income,  which includes service fees and other
miscellaneous  income  and  gains  or  losses  on  sale  of   available-for-sale
securities,  totaled  $131,000  for the year ended  June 30,  2002  compared  to
$204,000 for the year ended June 30, 2001.  Although the  Corporation had higher
income from service charges on NOW accounts due to the increase in the number of
accounts,  total noninterest  income decreased due to absence of gain on sale of
available-for-sale securities in 2002 as compared with 2001.

Noninterest  expense.  Noninterest expense totaled $3,066,000 for the year ended
June 30,  2002  compared  to  $2,837,000  for the year ended June 30,  2001,  an
increase of $229,000,  or 8.10%.  The  increase is  primarily  related to higher
compensation  and benefits,  occupancy  and  equipment  and computer  processing
expense.

                                  (Continued)
                                                                            F-12
<PAGE>

Compensation and benefits expense increased $97,000, or 6.26% due to an increase
in the number of  personnel  related to the opening of the Sidney  branch in the
new  Super  Wal-Mart  store in June  2001,  normal  annual  salary  adjustments,
increased  hospitalization  premiums  and  higher  expense  associated  with the
Corporation's  ESOP.  ESOP  expense was higher in 2002 due to the  Corporation's
higher  average  stock price  during the period.  Occupancy  and  equipment  and
computer  processing  expense  increased  due  to  the  overall  growth  of  the
Corporation  and the costs  associated  with the opening of the Sidney branch in
the new Super Wal-Mart store.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable to income before income taxes.  Income tax expense totaled $393,000
for the year ended June 30, 2002  compared  to $418,000  for the year ended June
30, 2001, a decrease of $25,000,  or 5.83%.  The  effective tax rates were 35.7%
and 36.1% for the years ended June 30, 2002 and 2001, respectively. The decrease
in the effective tax rate  primarily  relates to the  Corporation's  stock-based
benefit  plans and  their  relative  tax  impact  resulting  from  lower  pretax
earnings,  combined with the Corporation's  higher average stock price in fiscal
2002.


Comparison of Results of Operations for the
  Year Ended June 30, 2001 and June 30, 2000

Net Income.  The  Corporation  earned net income of $740,000  for the year ended
June 30, 2001  compared  to net income of  $636,000  for the year ended June 30,
2000.  The  increase  in net  income was  primarily  due to an  increase  in net
interest income combined with the realized gain on the sale of a mortgage-backed
security, partially offset by an increase in noninterest expenses.

Net Interest Income.  Net interest income totaled  $3,864,000 for the year ended
June 30,  2001  compared  to  $3,794,000  for the year ended June 30,  2000,  an
increase of $70,000,  or 1.8%. The increase was the result of an increase in the
volume of  interest-earning  assets  partially  offset by a decrease  in the net
interest margin.

Interest and fees on loans  increased  $1,041,000 or 12.3%,  from $8,448,000 for
the year ended June 30, 2000 to $9,489,000 for the year ended June 30, 2001. The
increase in interest income was due to higher average loans receivable,  related
primarily to the  origination of new one- to four-family  residential,  consumer
and  commercial  loans and increase in the overall yield of the loan  portfolio.
The yield earned on loans increased from 7.75% for 2000 to 8.04% for 2001.

Interest earned on securities  totaled $457,000 for the year ended June 30, 2001
compared  to  $577,000   for  the  year  ended  June  30,   2000.   Interest  on
interest-bearing  demand,  time and  overnight  deposits  with  other  financial
institutions  increased to $91,000 for the year ended June 30, 2001  compared to
$78,000 for the year ended June 30, 2000. The decrease in interest on securities
was the result of lower average  balance of  securities,  partially  offset by a
higher yield earned on securities. The increase in interest-earning deposits was
the result of higher  average  balances  of those  funds and an  increase in the
average yield earned on such investments.

Dividends on FHLB stock increased over the comparable  period,  primarily due to
an increase in the number of shares of FHLB stock owned.


Interest  paid on deposits  increased  $457,000 for the year ended June 30, 2001
compared to the year ended June 30, 2000.  Although  deposits were lower at June
30, 2001 than the June 30, 2000 total, the average balance for  interest-bearing
deposits  increased from 2000 to 2001. The higher average balance  combined with
an increase in the average  cost of deposits  from 4.86% for the year ended June
30, 2000 to 5.27% for the year ended June 30, 2001,  resulted in the increase in
deposit interest expense.

                                  (Continued)

                                                                            F-13
<PAGE>


Interest paid on borrowed  funds totaled  $1,508,000 for the year ended June 30,
2001  compared  to  $1,076,000  for the year  ended  June 30,  2000.  Management
increased  its  borrowings  from  the  FHLB  during  2001 to fund  loan  growth.
Additionally, the average cost of borrowings was higher in 2001 than 2000 due to
the higher  interest rate  environment  that occurred for the majority of fiscal
2001.

During the last part of fiscal  2001,  short-term  interest  rates  declined 275
basis  points.  However,  the impact on the  Corporation  was not evident  until
fiscal 2002 when its interest-earning  assets and  interest-bearing  liabilities
repriced at current rates.

Provision for Loan Losses. The provision for loan losses for the year ended June
30, 2001 totaled  $73,000  compared to $61,000 for the year ended June 30, 2000,
and  increase of  $12,000,  or 19.6%.  The  allowance  for loan  losses  totaled
$661,000,  or 0.53% of gross loans  receivable and 52.3% of total  nonperforming
loans  at June 30,  2001,  compared  with  $591,000,  or  0.50%  of gross  loans
receivable and 56.6% of total nonperforming loans at June 30, 2000.

Noninterest income.  Noninterest  income,  which includes service fees and other
miscellaneous  income  and  gains  or  losses  on  sale  of   available-for-sale
securities,  totaled  $204,000  for the year ended  June 30,  2001  compared  to
$68,000 for the year ended June 30,  2000.  The primary  reason for the increase
was the  $99,000  gain on sale of  available-for-sale  securities  compared to a
$16,000 loss realized in 2000.  Additionally,  the Corporation had higher income
from  service  charges  on NOW  accounts  due to the  increase  in the number of
accounts.

Noninterest  expense.  Noninterest expense totaled $2,837,000 for the year ended
June 30,  2001  compared  to  $2,787,000  for the year ended June 30,  2000,  an
increase of  $50,000,  or 1.8%.  The  increase  is  primarily  related to higher
compensation  and benefits;  occupancy and  equipment;  and computer  processing
expense partially offset by lower Director fees and state franchise taxes.

Compensation and benefits expense increased $57,000,  or 3.8% due to an increase
in the number of  personnel,  normal  annual  salary  adjustments  and increased
hospitalization premiums. These increases were partially offset by lower expense
associated  with the  Corporation's  ESOP. ESOP expense was lower in 2001 due to
the  Corporation's  lower average  stock price during the period.  Occupancy and
equipment and computer processing expense increased due to the overall growth of
the Corporation  and the costs  associated with the opening of the Sidney branch
in the new Super Wal-Mart store in June 2001.  Director fees declined due to the
retirement of a Director in October 2000. This Director was not replaced.  State
franchise  taxes decreased  $55,000,  or 22.8%.  The Association  pays franchise
taxes  on a  calendar-year  basis  based  on its  net  worth  at  June 30 of the
preceding year. The  Association  paid a large dividend to Peoples prior to June
30, 1999. As a result,  the  Association  lowered its franchise  taxes beginning
January 1, 2000.  Fiscal 2000 only had one-half year impact of the lower capital
levels compared to the full-year for fiscal 2001.

Income  Tax  Expense.   The  volatility  of  income  tax  expense  is  primarily
attributable  to the change in income before  income  taxes.  Income tax expense
totaled  $418,000 for the year ended June 30, 2001  compared to $378,000 for the
year ended June 30, 2000,  an increase of $40,000,  or 10.3%.  The effective tax
rates  were  36.1%  and  37.3%  for the  years  ended  June 30,  2001 and  2000,
respectively.  The decrease in the effective tax rate  primarily  relates to the
Corporation's  stock-based benefit plans and their relative tax impact resulting
from higher pretax earnings, combined with the Corporation's lower average stock
price in fiscal 2001.

                                  (Continued)


                                                                            F-14
<PAGE>


Yields Earned and Rates Paid. The following table sets forth certain information
relating to the  Corporation's  average  balance  sheet and reflects the average
yield  on  interest-earning  assets  and the  average  cost of  interest-bearing
liabilities  for the  periods  indicated.  Such  yields and costs are derived by
dividing income or expense by the average balances of interest-earning assets or
interest-bearing liabilities,  respectively,  for the periods presented. Average
balances are derived from average daily  balances.  Nonaccruing  loans have been
included in the table as loans carrying a zero yield.

<TABLE>
<CAPTION>
                                                                        Year ended June 30,
                               ---------------------------------------------------------------------------------------------------
                                               2002                             2001                            2000
                               -------------------------------   ------------------------------  ---------------------------------
                                 Average     Interest              Average    Interest             Average    Interest
                               outstanding    earned/   Yield/   outstanding   earned/   Yield/  outstanding   earned/     Yield/
                                 balance       paid      rate      balance      paid      rate     balance      paid        rate
                                 -------       ----      ----      -------      ----      ----     -------      ----        ----
                                                                       (Dollars in thousands)
<S>                             <C>         <C>          <C>      <C>         <C>          <C>     <C>         <C>          <C>
ASSETS:
Interest-earning assets:
     Interest-earning
       deposits                 $  6,562    $    100     1.53%    $  2,425    $    91      3.74%   $  2,203    $   78       3.53%
     Securities available
       for sale (1)                3,845         216     5.65        6,605        457      6.88       8,344       577       6.76
     Loans (2)                   120,487       9,273     7.70      117,990      9,489      8.04     109,030     8,448       7.75
     FHLB stock                    1,430          78     5.43        1,262         93      7.34         942        67       7.16
                                 -------       -----               -------     ------               -------     -----
         Total interest-
           earning assets        132,324       9,667     7.31      128,282     10,130      7.89     120,519     9,170       7.60
                                 -------       -----               -------     ------               -------     -----

Noninterest-earning
  assets:
     Cash and due from
       banks                       1,026                               923                            1,257
     Premises and
       equipment, net              2,092                             1,887                            1,947
     Accrued interest and
       other assets                1,046                             1,152                            1,006
                                --------                          --------                         --------

         Total noninterest-
           earning assets          4,164                             3,962                            4,210
                                --------                          --------                         --------

Total assets                    $136,488                          $132,244                         $124,729
                                ========                          ========                         ========
</TABLE>



                                                                            F-15
<PAGE>


<TABLE>
<CAPTION>
                                                                        Year ended June 30,
                               ---------------------------------------------------------------------------------------------------
                                               2002                             2001                            2000
                               -------------------------------   ------------------------------  ---------------------------------
                                 Average     Interest              Average    Interest             Average    Interest
                               outstanding    earned/   Yield/   outstanding   earned/   Yield/  outstanding   earned/     Yield/
                                 balance       paid      rate      balance      paid      rate     balance      paid        rate
                                 -------       ----      ----      -------      ----      ----     -------      ----        ----
                                                                       (Dollars in thousands)

LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing
  liabilities:
<S>                             <C>         <C>          <C>      <C>         <C>          <C>     <C>         <C>          <C>
     Savings deposits           $ 21,364    $    489     2.29%    $ 18,211     $    555    3.05%   $ 18,738    $    572     3.05%
     Demand and NOW
       deposits                    8,315         129     1.55        6,798          190    2.78       6,719         189     2.81
     Certificate accounts         63,264       3,457     5.47       65,192        4,013    6.16      63,078       3,539     5.61
                                 -------       -----               -------        -----             -------       -----
     Total deposits               92,943       4,075     4.38       90,201        4,758    5.27      88,535       4,300     4.86
     Borrowed funds               24,836       1,504     6.05       23,477        1,508    6.42      17,603       1,076     6.11
                                 -------       -----               -------        -----             -------       -----
         Total interest-
          bearing liabilities    117,779       5,579     4.74      113,678        6,266    5.51     106,138       5,376     5.07
                                 -------       -----               -------        -----             -------       -----

Noninterest-bearing
  liabilities
     Demand deposits                 825                               647                              691
     Accrued interest
       payable and other
       liabilities                   834                               830                              722
                                     ---                               ---                              ---
         Total noninterest-
           bearing
           liabilities             1,659                             1,477                            1,413
                                   -----                             -----                            -----

Total liabilities                119,438                           115,155                          107,551

Total shareholders'
  equity                          17,050                            17,089                           17,178
                                  ------                            ------                           ------

Total liabilities and
  shareholders'
  equity                        $136,488                          $132,244                         $124,729
                                ========                          ========                         ========

Net interest income;
  interest rate
  spread (3)                                $  4,088     2.57%                 $  3,864    2.38%               $  3,794     2.53%
                                            ========     ====                  ========    ====                ========     ====

Net earning assets              $ 14,545                          $ 14,604                         $ 14,381
                                ========                          ========                         ========
Net interest margin (4)                                  3.09%                             3.01%                            3.14%
                                                         ====                              ====                             ====
Average interest-earning
  assets to interest-
  bearing liabilities               1.12x                             1.13x                            1.14x
                                ========                          ========                         ========
</TABLE>


(1)  Average balance  includes  unrealized gains and losses while yield is based
     on amortized cost.
(2)  Calculated net of deferred loan fees, loan discounts,  loans in process and
     allowance for loan losses and includes nonperforming loans.
(3)  Net interest rate spread  represents  the  difference  between the yield on
     interest-earning assets and the cost of interest-bearing liabilities.
(4)  Net  interest  margin  represents  net interest  income  divided by average
     interest-earning assets.

                                  (Continued)
                                                                            F-16
<PAGE>


The table below  describes  the extent to which  changes in  interest  rates and
changes in volume of interest-earning  assets and  interest-bearing  liabilities
have affected the  Corporation's  interest  income and expense  during the years
indicated.  For each category of  interest-earning  assets and  interest-bearing
liabilities,  information is provided on changes  attributable to (1) changes in
volume (multiplied by prior year rate), (2) changes in rate (multiplied by prior
year volume) and (3) total changes in rate and volume.  The combined  effects of
changes in both volume and rate, that are not separately  identified,  have been
allocated proportionately to the change due to volume and change due to rate:

<TABLE>
<CAPTION>
                                                                                       Year ended June 30,
                                                           ------------------------------------------------------------------------
                                                                          2002 vs. 2001                     2001 vs. 2000
                                                           ---------------------------------      ---------------------------------
                                                                 Increase                               Increase
                                                                (decrease)                             (decrease)
                                                                  due to                                 due to
                                                           -------------------                    -------------------
                                                            Volume        Rate        Total        Volume       Rate         Total
                                                            ------        ----        -----        ------       ----         -----
                                                                                         (In thousands)
<S>                                                        <C>          <C>          <C>          <C>          <C>         <C>
Interest income attributable to:
         Interest-earning deposits                         $    86      $   (77)     $     9      $     8      $    5      $    13
         Securities available for sale                        (170)         (71)        (241)        (130)         10         (120)
         Loans receivable                                      198         (414)        (216)         712         329        1,041
         FHLB stock                                             11          (26)         (15)          24           2           26
                                                           -------      -------      -------      -------      ------      -------
                  Total interest-earning assets            $   125      $  (588)     $  (463)     $   614      $  346      $   960
                                                           =======      =======      =======      =======      ======      =======

Interest expense attributable to:
         Savings deposits                                  $    86      $  (152)     $   (66)     $   (16)     $   (1)         (17)
         Demand and NOW deposits                                36          (97)         (61)           2          (1)           1
         Certificates accounts                                (116)        (440)        (556)         122         352          474
         Borrowed funds                                         85          (89)          (4)         375          57          432
                                                           -------      -------      -------      -------      ------      -------
                  Total interest-bearing liabilities       $    91      $  (778)        (687)     $   483      $  407          890
                                                           =======      =======      =======      =======      ======      =======

Net interest income                                                                  $   224                               $    70
                                                                                     =======                               =======
</TABLE>


Asset and Liability Management

The Association,  like other financial institutions, is subject to interest rate
risk to the extent that its interest-earning assets reprice differently than its
interest-bearing  liabilities.  As part of its  effort  to  monitor  and  manage
interest rate risk,  the  Association  uses the "net  portfolio  value"  ("NPV")
methodology adopted by the OTS as part of its capital regulations.  Although the
Association is not currently  subject to NPV regulation  because such regulation
does not  apply to  institutions  with  less than  $300  million  in assets  and
risk-based  capital  in  excess  of  12%,  application  of NPV  methodology  may
illustrate the Association's interest rate risk.

Generally,  NPV is the  discounted  present  value  of  the  difference  between
incoming cash flows on interest-earning and other assets and outgoing cash flows
on  interest-bearing  and other liabilities.  The application of the methodology
attempts  to  quantify  interest  rate risk as the  change in the NPV that would
result from a theoretical 200 basis point (1 basis point equals 0.01%) change in
market interest rates.  Both a 200 basis point increase in market interest rates
and a 200 basis point decrease in market interest rates are  considered.  If the
NPV would  decrease  by more than 2% of the present  value of the  institution's
assets with either an increase or a decrease in market  rates,  the  institution
must  deduct  50%  of the  amount  of  decrease  in  excess  of  such  2% in the
calculation of the institution's risk-based capital.

                                  (Continued)

                                                                            F-17
<PAGE>

At March 31, 2002, the most recent date with  available  data, 2% of the present
value of the Association's assets was $2,797,000. Because the interest rate risk
of a 200 basis point  decrease in market  interest rates (which was greater than
the interest rate risk of a 200 basis point  increase) was $677,000 at March 31,
2002, the Association would not have been required to make additional deductions
from its capital in  determining  whether  the  Association  met its  risk-based
capital requirement.


Presented  below,  as of March 31,  2002,  is an analysis  of the  Association's
interest-rate  risk as  measured  by  changes in the NPV for  instantaneous  and
sustained  parallel  shifts of 100 basis points in market  interest  rates.  The
table below  represents the new Thrift Bulletin 13a reporting  requirements  and
the new target limits set by the  Association.  As illustrated in the table, the
Association is more sensitive to declining rates than increasing  rates. This is
primarily the result of decreases in short-term  interest rates by 2% since July
2001. The decrease in interest rates to current levels is being monitored by the
Board of  Directors  and  management  and is being viewed as an  opportunity  to
lengthen  maturities of Federal Home Loan Bank advances at lower interest rates.
These advances may be used to match the origination of new fixed-rate mortgages.
Management is continuing efforts to lengthen  maturities of deposit  liabilities
and to lower the overall cost of funds  through  reduced  interest  rates as the
market permits. The greatest interest rates sensitivity this quarter is 96 basis
points if interest rates are down 200 basis points for a net portfolio  value of
14.38%.  This is  significantly  less than the same  quarter last year when they
were 353 basis  points if  interest  rates were down 200 basis  points for a net
portfolio value of 7.67%.  This change is primarily the result of changes in the
prepayment rate tables used by our processor,  IPS Sendero and the  non-maturity
deposit  accounts  being valued at FHLB rates  instead of being  carried at book
value as they had in the past.  Overall falling rates are not considered to be a
problem with interest rates at near historical  levels. The greater risk appears
to be from rising interest rates in the future.



                                                            Target Limit
                          Economic Value         NPV Ratio  Under Asset
                          --------------         ---------   Liability
      Change         Market Value  Market Value     MVE/     Management
     In Rates           Equity       Assets         MVTA       Policy
     --------           ------       ------         ----       ------
                      (Dollars in thousands)
       +400           $ 19,283     $128,269        15.03%         4%
       +300             20,288      131,427        15.44          4
       +200             20,898      134,310        15.56          6
       +100             21,256      137,074        15.51          7
       STATIC           21,452      139,819        15.34
       -100             21,382      142,241        15.03          7
       -200             20,775      144,434        14.38          6
       -300             19,272      146,054        13.19          4
       -400             16,462      147,017        11.20          4

As with any method of measuring  interest rate risk,  certain  shortcomings  are
inherent  in  the  NPV  approach.  For  example,  although  certain  assets  and
liabilities may have similar maturities or periods of repricing,  they may react
in different  degrees to changes in market  interest  rates.  Also, the interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes in market  interest  rates,  while interest rates on other types may lag
behind  changes in market rates.  Further,  in the event of a change in interest
rates, expected rates of prepayment on loans and mortgage-backed  securities and
early  withdrawal  levels from  certificates  of deposit  would  likely  deviate
significantly from those assumed in making risk calculations.


                                  (Continued)
                                                                            F-18
<PAGE>



Liquidity and Capital Resources

The Corporation's liquidity, primarily represented by cash and cash equivalents,
is a  result  of  its  operating,  investing  and  financing  activities.  These
activities  are  summarized  below for the years ended June 30,  2002,  2001 and
2000.

                                                          Year Ended June 30,
                                                    ---------------------------
                                                      2002       2001      2000
                                                      ----       ----      ----

Net income                                            $ 707     $ 740      $636
Adjustments to reconcile net income to net
  cash from operating activities                        744       352       355
                                                    -------   -------  --------
Net cash from operating activities                    1,451     1,092       991
Net cash from investing activities                   (1,628)     (718)  (12,372)
Net cash from financing activities                     (585)    3,771    11,654
                                                    -------   -------  --------
Net change in cash and cash equivalents                 762     4,145       273
Cash and cash equivalents at beginning of period      6,351     2,206     1,933
                                                    -------   -------  --------
Cash and cash equivalents at end of period          $ 5,589   $ 6,351  $  2,206
                                                    =======   =======  ========



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

The  Association  is  subject  to  various   regulatory   capital   requirements
administered  by  the  federal  regulatory  agencies.   Under  capital  adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Association  must meet specific  capital  guidelines  that involve  quantitative
measures of the Association's assets,  liabilities and certain off-balance-sheet
items as calculated under regulatory  accounting  practices.  The  Association's
capital amounts and classifications are also subject to qualitative judgments by
the regulators  about the  Association's  components,  risk weightings and other
factors.  Failure to meet minimum  capital  requirements  can  initiate  certain
mandatory  actions that, if undertaken,  could have a direct  material effect on
the Corporation's  financial  statements.  At June 30, 2002 and 2001, management
believes the  Association  complies with all  regulatory  capital  requirements.
Based on the Association's  computed  regulatory capital ratios, the Association
is considered well capitalized  under the Federal Deposit  Insurance Act at June
30, 2002 and 2001. No conditions or events have occurred  subsequent to the last
notification  by  regulators  that  management  believes  would have changed the
Association's category.

The following table  summarizes the  Association's  minimum  regulatory  capital
requirements and actual capital at June 30, 2002.

<TABLE>
<CAPTION>
                                                                               Excess of Actual
                                                                             Capital Over Current
                              Actual capital          Current requirement         Requirement       Applicable
                              --------------          -------------------         -----------
                            Amount     Percent       Amount       Percent      Amount    Percent    Asset Total
                            ------     -------       ------       -------      ------    -------    -----------
                                                            (Dollars in thousands)
<S>                       <C>            <C>        <C>            <C>       <C>           <C>       <C>
Total risk-based
  capital                 $ 15,073       17.1%      $  7,049       8.0%      $  8,024      9.1%      $ 88,109
Tier 1 risk-based
  capital                   14,365       16.3          3,524       4.0         10,841     12.3         88,109
Core capital                14,365       10.6          5,396       4.0          8,969      6.6        134,890
Tangible capital            14,365       10.6          2,023       1.5         12,342      9.1        134,890

</TABLE>


                                  (Continued)

                                                                            F-19
<PAGE>

Impact of New Accounting Standards

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

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

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

Impact of Inflation and Changing Prices

The  Consolidated  Financial  Statements  and Notes  included  herein  have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America ("GAAP").  Presently,  GAAP requires the Corporation to
measure financial  position and operating results primarily in terms of historic
dollars.  Changes in the  relative  value of money due to inflation or recession
are generally not considered.

In  management's  opinion,  changes  in  interest  rates  affect  the  financial
condition of a financial institution to a far greater degree than changes in the
inflation  rate.  While interest rates are greatly  influenced by changes in the
inflation  rate, they do not change at the same rate or in the same magnitude as
the inflation rate. Rather,  interest rate volatility is based on changes in the
expected  rate of  inflation,  as well as on  changes  in  monetary  and  fiscal
policies.

                                  (Continued)
                                                                            F-20
<PAGE>



                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Shareholders
Peoples-Sidney Financial Corporation
Sidney, Ohio


We have audited the accompanying  consolidated  balance sheets of Peoples-Sidney
Financial Corporation as of June 30, 2002 and 2001, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years in the period ended June 30, 2002.  These  financial  statements
are the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of  Peoples-Sidney
Financial  Corporation  as of June 30,  2002 and 2001,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
June 30, 2002, in conformity with accounting  principles  generally  accepted in
the United States of America.



                                               /s/ Crowe, Chizek and Company LLP
                                               --------------------------------
                                               Crowe, Chizek and Company LLP

Columbus, Ohio
July 11, 2002



                                                                            F-21
<PAGE>

<TABLE>
<CAPTION>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             June 30, 2002 and 2001

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


                                                                     2002             2001
                                                                     ----             ----
<S>                                                            <C>               <C>
ASSETS
Cash and due from financial institutions                       $   1,018,337     $   1,015,400
Interest-bearing deposits in other financial institutions          3,770,677         4,335,495
Overnight deposits                                                   800,000         1,000,000
                                                                ------------      ------------
         Total cash and cash equivalents                           5,589,014         6,350,895

Securities available for sale                                      3,525,750         3,001,715
Federal Home Loan Bank stock                                       1,474,600         1,397,200
Loans, net                                                       121,224,773       120,481,894
Accrued interest receivable                                          834,744           921,864
Premises and equipment, net                                        2,028,995         1,977,435
Other assets                                                         176,432           173,398
                                                                ------------      ------------
         Total assets                                          $ 134,854,308     $ 134,304,401
                                                               =============     =============


LIABILITIES
Deposits                                                       $  94,786,623     $  91,341,201
Borrowed funds                                                    22,455,813        25,474,596
Accrued interest payable and other liabilities                       417,664           338,991
                                                                ------------      ------------
         Total liabilities                                       117,660,100       117,154,788

SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares authorized,
  none issued and outstanding                                             --                --
Common stock, $.01 par value, 3,500,000 shares authorized,
  1,785,375 shares issued                                             17,854            17,854
Additional paid-in capital                                        10,689,800        10,705,048
Retained earnings                                                 11,371,950        11,150,845
Treasury stock, 321,228 and 271,829 shares at cost                (3,703,717)       (3,178,640)
Unearned employee stock ownership plan shares                     (1,023,928)       (1,182,471)
Unearned management recognition plan shares                         (174,746)         (365,394)
Accumulated other comprehensive income                                16,995             2,371
                                                                ------------      ------------
         Total shareholders' equity                               17,194,208        17,149,613
                                                                ------------      ------------

         Total liabilities and shareholders' equity            $ 134,854,308     $ 134,304,401
                                                               =============     =============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                                                            F-22
<PAGE>

<TABLE>
<CAPTION>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                    Years Ended June 30, 2002, 2001 and 2000

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


                                                                      2002            2001            2000
                                                                      ----            ----            ----
<S>                                                                <C>            <C>              <C>
Interest income
         Loans, including fees                                     $9,273,433      $9,489,584      $8,448,175
         Securities                                                   216,044         456,934         577,292
         Demand, time and overnight deposits                          100,352          90,806          77,798
         Dividends on Federal Home Loan Bank stock                     77,616          92,670          67,490
                                                                   ----------     -----------  --------------
                  Total interest income                             9,667,445      10,129,994       9,170,755

Interest expense
         Deposits                                                   4,075,347       4,757,395       4,299,957
         Borrowed funds                                             1,503,717       1,508,215       1,076,346
                                                                   ----------     -----------  --------------
                  Total interest expense                            5,579,064       6,265,610       5,376,303
                                                                   ----------     -----------  --------------

Net interest income                                                 4,088,381       3,864,384       3,794,452

Provision for loan losses                                              52,341          73,565          61,503
                                                                   ----------     -----------  --------------

Net interest income after provision for loan losses                 4,036,040       3,790,819       3,732,949

Noninterest income
         Service fees and other charges                               130,866         104,652          84,273
         Gain (loss) on sale of available for sale securities              --          98,912         (15,781)
                                                                   ----------     -----------  --------------
                  Total noninterest income                            130,866         203,564          68,492

Noninterest expense
         Compensation and benefits                                  1,644,187       1,547,347       1,490,680
         Director fees                                                 97,200         104,800         120,000
         Occupancy and equipment                                      449,276         340,056         312,827
         Computer processing                                          267,821         229,581         204,123
         Professional services                                         97,615         103,412          92,679
         State franchise taxes                                        185,434         184,609         239,118
         Other                                                        324,941         326,970         328,019
                                                                   ----------     -----------  --------------
                  Total noninterest expense                         3,066,474       2,836,775       2,787,446
                                                                   ----------     -----------  --------------

Income before income taxes                                          1,100,432       1,157,608       1,013,995

Income tax expense                                                    393,224         417,554         378,397
                                                                   ----------     -----------  --------------

Net income                                                         $  707,208     $   740,054  $      635,598
                                                                   ==========     ===========  ==============

Earnings per common share - basic                                  $      .51     $       .52  $          .43
                                                                   ==========     ===========  ==============
Earnings per common share - diluted                                $      .51     $       .52  $          .43
                                                                   ==========     ===========  ==============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                            F-23

<PAGE>

<TABLE>
<CAPTION>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                    Years Ended June 30, 2002, 2001 and 2000

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

                                                      Additional                                Unearned     Unearned
                                           Common      Paid-In       Retained     Treasury        ESOP          MRP
                                            Stock      Capital       Earnings       Stock        Shares       Shares
                                            -----      -------       --------       -----        ------       ------
<S>                                       <C>        <C>           <C>          <C>          <C>           <C>
Balance, July 1, 1999                     $  17,854  $ 10,779,941  $ 10,643,040 $(1,766,399) $(1,520,139)  $(746,692)

Comprehensive income:

   Net income for the year ended
     June 30, 2000                               --            --       635,598           --            --          --

   Change in net unrealized gain (loss) on
     securities available for sale, net of
     reclassification and tax effects            --            --            --           --            --          --

       Total comprehensive income

Cash dividends - $.28 per share                  --            --      (422,244)          --            --          --

Commitment to release 14,687 employee
  stock ownership plan shares                    --       (25,478)           --           --       172,339          --

Purchase of 86,307 treasury shares,
  at cost                                        --            --            --     (869,896)           --          --

11,425 shares earned under
  management recognition plan                    --            --            --           --            --     190,649

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

Balance, June 30, 2000                    $  17,854  $ 10,754,463  $ 10,856,394  $(2,636,295)  $(1,347,800)  $(556,043)
                                          =========  ============  ============  ===========   ===========   =========
</TABLE>

<TABLE>
<CAPTION>

                                           Accumulated
                                              Other
                                          Comprehensive
                                          Income (Loss)    Total
                                          -------------    -----
<S>                                        <C>         <C>
Balance, July 1, 1999                      $ (45,388)  $ 17,362,217

Comprehensive income:

   Net income for the year ended
     June 30, 2000                                --        635,598

   Change in net unrealized gain (loss) on
     securities available for sale, net of
     reclassification and tax effects        (83,387)       (83,387)
                                                            -------
       Total comprehensive income                           552,211

Cash dividends - $.28 per share                   --       (422,244)

Commitment to release 14,687 employee
  stock ownership plan shares                     --        146,861

Purchase of 86,307 treasury shares,
  at cost                                         --       (869,896)

11,425 shares earned under
  management recognition plan                     --        190,649

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

Balance, June 30, 2000                     $(128,775)  $ 16,959,798
                                           =========   ============
</TABLE>


                                  (Continued)

                                                                            F-24
<PAGE>

<TABLE>
<CAPTION>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)
                    Years Ended June 30, 2002, 2001 and 2000

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

                                                      Additional                                Unearned     Unearned
                                           Common      Paid-In       Retained     Treasury        ESOP          MRP
                                            Stock      Capital       Earnings       Stock        Shares       Shares
                                            -----      -------       --------       -----        ------       ------
<S>                                       <C>        <C>           <C>          <C>          <C>           <C>

Balance, July 1, 2000                      $ 17,854  $ 10,754,463  $ 10,856,394 $(2,636,295) $(1,347,800)    $(556,043)

Comprehensive income:


   Net income for the year ended
     June 30, 2001                               --            --       740,054          --           --            --

   Change in unrealized gain (loss) on
     securities available for sale, net of
     reclassification and tax effects            --            --            --          --           --            --

       Total comprehensive income

Cash dividends - $.31 per share                  --            --      (445,603)         --           --            --

Commitment to release 14,090 employee
  stock ownership plan shares                    --       (49,415)           --          --      165,329            --

Purchase of 64,769 treasury shares,
  at cost                                        --            --            --    (542,345)          --            --

11,425 shares earned under
  management recognition plan                    --            --            --          --           --       190,649
                                           --------  ------------  ------------ -----------  -----------     ---------

Balance, June 30, 2001                     $ 17,854  $ 10,705,048  $ 11,150,845 $(3,178,640) $(1,182,471)    $(365,394)
                                           ========  ============  ============ ===========  ===========     =========
</TABLE>

<TABLE>
<CAPTION>
                                            Accumulated
                                                Other
                                            Comprehensive
                                            Income (Loss)     Total
                                            -------------     -----
<S>                                           <C>          <C>

Balance, July 1, 2000                         $(128,775)   $ 16,959,798

Comprehensive income:


   Net income for the year ended
     June 30, 2001                                   --         740,054

   Change in unrealized gain (loss) on
     securities available for sale, net of
     reclassification and tax effects           131,146         131,146
                                                           ------------
       Total comprehensive income                               871,200

Cash dividends - $.31 per share                      --        (445,603)

Commitment to release 14,090 employee
  stock ownership plan shares                        --         115,914

Purchase of 64,769 treasury shares,
  at cost                                            --        (542,345)

11,425 shares earned under
  management recognition plan                        --         190,649
                                              ---------    ------------

Balance, June 30, 2001                        $   2,371    $ 17,149,613
                                              =========    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                  (Continued)

                                                                            F-25
<PAGE>

<TABLE>
<CAPTION>

                     PEOPLES-SIDNEY FINANCIAL CORPORATION
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)
                    Years Ended June 30, 2002, 2001 and 2000

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


                                                       Additional                             Unearned        Unearned
                                            Common      Paid-In       Retained    Treasury      ESOP            MRP
                                             Stock      Capital       Earnings      Stock      Shares          Shares
                                             -----      -------       --------      -----      ------          ------

<S>                                        <C>       <C>           <C>          <C>          <C>             <C>
Balance, July 1, 2001                      $ 17,854  $ 10,705,048  $ 11,150,845 $(3,178,640) $(1,182,471)    $(365,394)


Comprehensive income:

   Net income for the year ended
     June 30, 2002                               --            --       707,208          --           --            --

   Change in unrealized gain (loss) on
     securities available for sale, net of
     reclassification and tax effects            --            --            --          --           --            --

       Total comprehensive income

Cash dividends - $.35 per share                  --            --      (486,103)         --           --            --

Commitment to release 13,512 employee
  stock ownership plan shares                    --       (15,248)           --          --      158,543            --

Purchase of 49,399 treasury shares,
  at cost                                        --            --            --    (525,077)          --            --

11,426 shares earned under
  management recognition plan                    --            --            --          --           --       190,648
                                           --------  ------------  ------------ -----------  -----------     ---------
Balance, June 30, 2002                     $ 17,854  $ 10,689,800  $ 11,371,950 $(3,703,717) $(1,023,928)    $(174,746)
                                           ========  ============  ============ ===========  ===========     =========
</TABLE>


<TABLE>
<CAPTION>
                                             Accumulated
                                                 Other
                                            Comprehensive
                                             Income (Loss)       Total
                                             -------------       -----

<S>                                          <C>             <C>
Balance, July 1, 2001                        $ 2,371         $ 17,149,613


Comprehensive income:

   Net income for the year ended
     June 30, 2002                                --              707,208

   Change in unrealized gain (loss) on
     securities available for sale, net of
     reclassification and tax effects         14,624               14,624
                                                             ------------
       Total comprehensive income                                 721,832

Cash dividends - $.35 per share                   --             (486,103)

Commitment to release 13,512 employee
  stock ownership plan shares                     --              143,295

Purchase of 49,399 treasury shares,
  at cost                                         --             (525,077)

11,426 shares earned under
  management recognition plan                     --              190,648
                                             -------         ------------
Balance, June 30, 2002                       $16,995         $ 17,194,208
                                             =======         ============
</TABLE>

                                  (Continued)

                                                                            F-26
<PAGE>

<TABLE>
<CAPTION>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Years Ended June 30, 2002, 2001 and 2000



                                                                     2002            2001             2000
                                                                     ----            ----             ----
<S>                                                             <C>             <C>             <C>
Cash flows from operating activities
   Net income                                                   $   707,208     $   740,054     $    635,598
   Adjustments to reconcile net income to net cash
     from operating activities
        Depreciation                                                211,186         164,078          156,886
        Provision for loan losses                                    52,341          73,565           61,503
        Loss on sale of real estate owned                                --          12,066               --
        Loss (gain) on sale of securities available for sale             --         (98,912)          15,781
        FHLB stock dividends                                        (77,400)        (92,500)         (67,300)
        Deferred taxes                                              (49,082)        (22,664)         (29,183)
        Compensation expense for ESOP shares                        143,295         115,914          146,861
        Compensation expense for MRP shares                         190,648         190,649          190,649
        Change in:
            Accrued interest receivable and other assets             82,208         (91,867)         (75,939)
            Accrued interest payable and other liabilities          120,222          85,498          (71,249)
            Deferred loan fees                                       70,571          15,651           27,339
                                                                 ----------        --------      -----------
                     Net cash from operating activities           1,451,197       1,091,532          990,946

Cash flows from investing activities
   Purchase of securities available for sale                     (2,500,000)     (2,000,000)      (2,997,813)
   Proceeds from maturities of securities
     available for sale                                           2,000,000       3,000,000        1,000,000
   Principal repayments on mortgage-
     backed securities available for sale                                --         339,731          287,215
   Proceeds from sale of securities
     available for sale                                                  --       4,408,534          984,219
   Purchase of time deposits in other financial
     institutions                                                        --              --       (1,000,000)
   Proceeds from maturities of time deposits
     in other financial institutions                                     --              --        1,400,000
   Purchase of Federal Home Loan Bank stock                              --        (281,700)         (48,000)
   Net increase in loans                                           (865,791)     (6,059,224)     (11,935,697)
   Premises and equipment expenditures                             (262,746)       (250,627)         (62,164)
   Proceeds from sale of real estate owned                               --         125,748               --
                                                                 ----------        --------      -----------
            Net cash from investing activities                   (1,628,537)       (717,538)     (12,372,240)

</TABLE>

          See accompanying notes to consolidated financial statements.


                                                                            F-27
<PAGE>

<TABLE>
<CAPTION>
                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                    Years ended June 30, 2002, 2001 and 2000


                                                                  2002             2001             2000
                                                                  ----             ----             ----
<S>                                                           <C>             <C>              <C>
Cash flows from financing activities
         Net change in deposits                               $ 3,445,422     $ (1,715,740)    $  8,746,449
         Proceeds from long-term FHLB advances                         --       11,000,000        7,000,000
         Repayments of long-term FHLB advances                 (3,518,783)      (4,525,404)              --
         Net change in short-term FHLB advances                   500,000               --       (2,800,000)
         Cash dividends paid                                     (486,103)        (445,603)        (422,244)
         Purchase of treasury shares                             (525,077)        (542,345)        (869,896)
                                                              -----------     ------------     ------------
                  Net cash from financing activities             (584,541)       3,770,908       11,654,309
                                                              -----------     ------------     ------------

Net change in cash and cash equivalents                          (761,881)       4,144,902          273,015

Cash and cash equivalents at beginning of year                  6,350,895        2,205,993        1,932,978
                                                              -----------     ------------     ------------

Cash and cash equivalents at end of year                      $ 5,589,014     $  6,350,895     $  2,205,993
                                                              ===========     ============     ============

Supplemental cash flow information
                  Interest paid                               $ 5,548,361     $  6,250,033     $  5,385,712
                  Income taxes paid                               396,000          455,000          448,000

Supplemental noncash disclosures
                  Transfer from loans to real estate owned             --          137,814               --

</TABLE>


          See accompanying notes to consolidated financial statements.



                                                                            F-28
<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

Cash  Flows:  Cash and cash  equivalents  are  defined  as cash,  deposits  with
financial  institutions,  overnight  deposits and time  deposits  with  original
maturities of 90 days or less.  Overnight deposits are sold for one-day periods.
Net cash  flows  are  reported  for loan and  deposit  transactions,  as well as
short-term  borrowings under its cash management line of credit with the Federal
Home Loan Bank of Cincinnati.

Securities:  Securities  are  classified  as held to  maturity  and  carried  at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Securities are classified as available for sale when they might be
sold before maturity.  Securities  available for sale are carried at fair value,
with unrealized holding gains or losses reported in other comprehensive  income.
Other securities such as Federal Home Loan Bank stock are carried at cost.

Interest  income  includes  amortization of premiums and accretion of discounts.
Realized  gains  and  losses on sales of  securities  are  determined  using the
amortized  cost of the specific  security  sold.  Securities are written down to
fair value when a decline in fair value is not temporary.

Loans:  Loans  that  management  has the  intent  and  ability  to hold  for the
foreseeable  future or until  maturity or payoff are  reported at the  principal
balance  outstanding,  less net  deferred  loan fees,  loans in process  and the
allowance for loan losses.

Interest income is reported on the interest method and includes  amortization of
net deferred loan fees over the loan term.  Interest income is not reported when
full loan repayment is in doubt, typically when the loan is impaired or payments
are past due over 90 days.  Payments  received  on such  loans are  reported  as
principal reductions.

                                  (Continued)

                                                                            F-29
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Allowance  for Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance for probable  incurred  credit losses,  increased by the provision for
loan losses and decreased by charge-offs less recoveries.  Management  estimates
the allowance  balance required based on past loan loss  experience,  the nature
and volume of the portfolio,  information about specific borrower situations and
estimated collateral values, economic conditions, and other factors. Allocations
of the allowance  may be made for specific  loans,  but the entire  allowance is
available for any loan that, in  management's  judgment,  should be charged-off.
Loan losses are charged  against the  allowance  when  management  believes  the
uncollectibility of a loan balance is confirmed.

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

Foreclosed  Assets:  Assets acquired  through or instead of loan foreclosure are
initially recorded at fair value at acquisition,  establishing a new cost basis.
Any  reduction to fair value from the carrying  value of the related loan at the
time the  property is  acquired is  accounted  for as a loan  charge-off.  After
acquisition,  a valuation  allowance reduces the reported amount to the lower of
the initial amount or fair value less costs to sell. Expenses,  gains and losses
on disposition,  and changes in the valuation allowance are reported in net gain
or loss on other  real  estate.  The  Corporation  had no  foreclosed  assets at
year-end 2002 or 2001.

Premises and Equipment:  Asset cost is reported net of accumulated depreciation.
Depreciation  expense is calculated using the straight-line  method based on the
estimated  useful lives of the assets.  These assets are reviewed for impairment
when events indicate the carrying amount may not be recoverable. Maintenance and
repairs are charged to expense as incurred and improvements are capitalized.

Stock Compensation:  Employee  compensation  expense under stock option plans is
reported if options  are granted  below  market  price at grant date.  Pro forma
disclosures  of net income and earnings per share are shown using the fair value
method to measure expense using an option-pricing model to estimate fair value.

Employee Stock  Ownership  Plan: The cost of shares issued to the Employee Stock
Ownership Plan ("ESOP"),  but not yet allocated to  participants,  is shown as a
reduction of shareholders'  equity.  Compensation expense is based on the market
price of shares as they are  committed to be released to  participant  accounts.
Dividends  on  allocated  ESOP shares  reduce  retained  earnings;  dividends on
unearned ESOP shares reduce debt and accrued interest.

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

                                  (Continued)

                                                                            F-30
<PAGE>

                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentration  of  Credit  Risk:  The  Corporation's   loan  portfolio  consists
principally of long-term  conventional  loans secured by first mortgage deeds on
single-family  residences  located in its primary  lending area of Shelby County
and its contiguous  counties.  Mortgage loans comprise  approximately 93% of the
Corporation's loan portfolio at June 30, 2002 and 2001.

Financial  Instruments:  Financial  instruments include off-balance sheet credit
instruments,  such as commitments  to make loans and standby  letters of credit,
issued  to meet  customer-financing  needs.  The face  amount  for  these  items
represents  the exposure to loss,  before  considering  customer  collateral  or
ability to repay. Such financial instruments are recorded when they are funded.

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

Dividend Restriction:  Financial institution regulations require the maintenance
of certain  capital  levels and may limit the  amount of  dividends  that may be
paid. For detail on dividend  restrictions and regulatory capital  requirements,
see a separate Note.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive   income  (loss).   Other  comprehensive  income  (loss)  includes
unrealized  gains and losses on securities  available  for sale,  which are also
recognized as a separate component of equity.

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

Fair Values of Financial  Instruments:  Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately.  Fair value estimates involve uncertainties and matters of
significant  judgment  regarding  interest rates,  credit risk,  prepayments and
other factors,  especially in the absence of broad markets for particular items.
Changes in assumptions or in market  conditions could  significantly  affect the
estimates.

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

                                  (Continued)
                                                                            F-31

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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

Reclassification:  Reclassification  of  certain  amounts  in  the  prior  years
consolidated  financial  statements  has  been  made  to  conform  to  the  2002
presentation.


NOTE 2 - SECURITIES AVAILABLE FOR SALE

Securities available for sale at year-end were as follows.

                                                 Gross        Gross
                                     Fair      Unrealized   Unrealized
                                     Value        Gains       Losses
                                     -----        -----       ------
2002
----
U.S. Government agencies           $3,525,750    $28,080    $ (2,330)
                                   ==========    =======    ========

2001
----
U.S. Government agencies           $3,001,715    $18,288    $(14,695)
                                   ==========    =======    ========


Contractual maturities of securities available for sale at year-end 2002 were as
follows.  Actual  maturities  may differ  from  contractual  maturities  because
borrowers may have the right to call or prepay  obligations with or without call
or prepayment penalties.

                                                              Fair
                                                              Value
                                                              -----

        Due after one year through five years              $ 2,505,800
        Due after five years through ten years               1,019,950
                                                           -----------
                                                           $ 3,525,750
                                                           ===========


                                  (Continued)
                                                                            F-32

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000




NOTE 2 - SECURITIES AVAILABLE FOR SALE (Continued)

No securities were pledged as collateral at year-end 2002 or 2001.

Sales of available for sale securities were as follows.


                                         2002        2001          2000
                                         ----        ----          ----
Proceeds                               $   --    $ 4,408,534    $ 984,219
Gross gains                                --         98,912           --
Gross losses                               --             --       15,781


NOTE 3 - LOANS

Year-end loans were as follows.

<TABLE>
<CAPTION>
                                                                  2002             2001
                                                                  ----             ----
        <S>                                                 <C>               <C>
       Mortgage loans:
                1-4 family residential                      $  96,006,970     $  96,717,463
                Multi-family residential                        1,913,649         1,239,141
                Commercial real estate                         10,111,114        10,025,284
                Real estate construction and development        7,096,855         6,131,040
                Land                                            1,309,677         1,370,376
                                                            -------------     -------------
                         Total mortgage loans                 116,438,265       115,483,304
       Consumer loans                                           4,625,413         4,657,828
       Commercial loans                                         3,716,760         3,629,987
                                                            -------------     -------------
                         Total loans                          124,780,438       123,771,119
       Less:
                Allowance for loan losses                        (708,000)         (660,800)
                Loans in process                               (2,516,131)       (2,367,462)
                Deferred loan fees                               (331,534)         (260,963)
                                                            -------------     -------------

                                                            $ 121,224,773     $ 120,481,894
                                                            =============     =============
</TABLE>


Activity in the allowance for loan losses was as follows.

                                          2002          2001          2000
                                          ----          ----          ----
       Balance at beginning of year    $ 660,800     $ 591,350     $528,898
       Provision for losses               52,341        73,565       61,503
       Charge-offs                        (5,941)       (4,563)          --
       Recoveries                            800           448          949
                                       ---------     ---------     --------
       Balance at end of year          $ 708,000     $ 660,800     $591,350
                                       =========     =========     ========


                                  (Continued)
                                                                            F-33

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000


NOTE 3 - LOANS (Continued)

Nonperforming loans at year-end were as follows.

                                                         2002        2001
                                                         ----        ----

       Loans past due over 90 days still on accrual    $472,000    $498,000
       Nonaccrual loans                                 598,000     764,000

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

As of June 30, 2002 and 2001,  and for the years ended June 30,  2002,  2001 and
2000,  loans required to be evaluated for impairment on an individual loan basis
were not material.

Loans to  executive  officers,  directors  and  companies  with  which  they are
affiliated  aggregating  $60,000 or more to any one  related  party for the year
ended June 30, 2002, were as follows.

       Balance at beginning of period          $   416,839
       New loans                                     6,700
       Principal repayments                        (27,603)
                                               -----------

       Balance at end of period                $   395,936
                                               ===========


NOTE 4 - ACCRUED INTEREST RECEIVABLE

Year-end accrued interest receivable was as follows.

                                       2002        2001
                                       ----        ----

       Loans                         $787,821    $852,070
       Securities                      46,923      69,794
                                     --------    --------

                                     $834,744    $921,864
                                     ========    ========


NOTE 5 - PREMISES AND EQUIPMENT

Year-end premises and equipment was as follows.

                                         2002          2001
                                         ----          ----

       Land                          $  225,166    $  225,166
       Buildings and improvements     2,027,879     1,856,903
       Furniture and equipment        1,443,801     1,352,030
       Automobile                        22,416        22,416
                                     ----------    ----------
                Total cost            3,719,262     3,456,515
       Accumulated depreciation       1,690,267     1,479,080
                                     ----------    ----------

                                     $2,028,995    $1,977,435
                                     ==========    ==========

                                  (Continued)
                                                                            F-34

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 5 - PREMISES AND EQUIPMENT (Continued)

The Jackson Center branch facility is leased under an operating lease that began
in September  1998.  The lease term is for ten years.  At the  conclusion of the
fifth  year,  the rent  shall be  adjusted  by the  cumulative  increase  in the
Consumer Price Index over the previous five years with a maximum increase of 15%
for the remaining five years of the lease term. The lease agreement  includes an
option to purchase the property at any time during the lease term.

The  Association  entered  into a lease for a branch in the  Super  Wal-Mart  in
Sidney that  commenced  in June 2001.  The lease term is for five years with two
five-year  renewal options.  Annual rent is $31,800 for the first five years and
increases to $39,750 annually for the first five-year renewal period and $49,688
annually for the second five-year  renewal period.  Total rental expense for the
two branch offices was $56,071, $25,243 and $24,271 for the years ended June 30,
2002, 2001 and 2000.

Rental  commitments  under  these  noncancelable  operating  leases,  assuming a
maximum  increase of 15% after year five on the Jackson  Center  lease,  were as
follows.

          Year ending June 30,
                  2003                           $  56,071
                  2004                              57,584
                  2005                              57,886
                  2006                              56,914
                  2007                              26,086
                  Thereafter                        30,434
                                                 ---------
                                                 $ 284,975
                                                 =========


NOTE 6 - FEDERAL INCOME TAXES

Income tax expense was as follows.

                                         2002           2001          2000
                                         ----           ----          ----

       Current                        $ 442,306     $ 440,218     $ 407,580
       Deferred                         (49,082)      (22,664)      (29,183)
                                      ---------     ---------     ---------

                                      $ 393,224     $ 417,554     $ 378,397
                                      =========     =========     =========


                       (Continued)
                                                                            F-35

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000


NOTE 6 - FEDERAL INCOME TAXES (Continued)

Year-end  deferred  tax  assets and  deferred  tax  liabilities  were due to the
following.

<TABLE>
<CAPTION>
                                                                 2002          2001
                                                                 ----          ----
       <S>                                                    <C>           <C>
       Items giving rise to deferred tax assets
          Deferred loan fees                                  $ 104,007     $  75,788
          Reserve for delinquent interest                         6,495         4,115
          Allowance for loan losses                             174,869       125,896
          Accrued ESOP expense                                   28,829        25,012
          Accrued MRP expense                                     5,401         5,401
                                                              ---------     ---------
                   Total deferred tax assets                    319,601       236,212

       Items giving rise to deferred tax liabilities
          Unrealized gain on securities available for sale       (8,755)       (1,221)
          Depreciation                                          (97,883)      (89,892)
          FHLB stock dividends                                 (194,888)     (168,572)
                                                              ---------     ---------
                   Total deferred tax liabilities              (301,526)     (259,685)
                                                              ---------     ---------

                   Net deferred tax asset (liability)         $  18,075     $ (23,473)
                                                              =========     =========
</TABLE>


Effective  tax rates differ from federal  statutory  rates  applied to financial
statement income due to the following.

<TABLE>
<CAPTION>
                                                                   2002           2001          2000
                                                                   ----           ----          ----
       <S>                                                      <C>            <C>            <C>
       Income taxes computed at the statutory
         tax rate on pretax income                              $ 374,147      $ 393,587      $344,758
       Add tax effect of:
              ESOP fair value book expense and tax deduction       10,215           (741)        8,082
              MRP cost in excess of fair value                     13,506         24,072        25,102
              Nondeductible expenses and other                     (4,644)           636           455
                                                                ---------      ---------      --------

                                                                $ 393,224      $ 417,554      $378,397
                                                                =========      =========      ========

       Statutory tax rate                                            34.0%          34.0%         34.0%
                                                                =========      =========      ========
       Effective tax rate                                            35.7%          36.1%         37.3%
                                                                =========      =========      ========

</TABLE>


In August  1996,  legislation  was enacted  that  repeals the reserve  method of
accounting  used by many thrifts to calculate their bad debt reserve for federal
income tax  purposes.  Therefore,  small  thrifts such as the  Association  must
recapture  that  portion of the reserve  that exceeds the amount that could have
been taken under the experience  method for tax years  beginning  after December
31, 1987.  The  legislation  also requires  thrifts to account for bad debts for
federal income tax purposes on the same basis as commercial  banks for tax years
beginning  after  December 31, 1995.  The recapture is occurring over a six-year
period,  the  commencement  of which was delayed  until the first  taxable  year
beginning  after  December  31,  1997,   because  the  Association  met  certain
residential lending requirements. At June 30, 2002 and 2001, the Association had
approximately  $194,000 and $291,000 in bad debt  reserves  subject to recapture
for federal  income tax  purposes.  The  deferred tax  liability  related to the
recapture  has been  previously  established.  In fiscal 2002,  2001,  and 2000,
$97,000 bad debt reserves were recaptured.

                                  (Continued)
                                                                            F-36

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000




NOTE 6 - FEDERAL INCOME TAXES (Continued)

Retained  earnings at June 30, 2002 and 2001 included  approximately  $2,174,000
for which no  provision  for  federal  income  taxes had been made.  This amount
represents the qualifying and  nonqualifying tax bad debt reserve as of December
31,  1987,  which is the end of the  Association's  base  year for  purposes  of
calculating  the bad debt  deduction  for tax  purposes.  The related  amount of
unrecognized deferred tax liability was approximately  $739,000 at June 30, 2002
and 2001.  If this  portion of  retained  earnings is used in the future for any
purpose  other  than to absorb  bad  debts,  it will be added to future  taxable
income.


NOTE 7 - DEPOSITS

Year-end deposits were as follows.

                                                    2002              2001
                                                    ----              ----
                  Noninterest-bearing
                    demand deposits            $    849,445      $    662,446
                  NOW accounts                    6,614,392         5,816,704
                  Money market accounts           2,887,180         1,713,300
                  Savings accounts               23,948,896        19,353,977
                  Certificates of deposit        60,486,710        63,794,774
                                               ------------      ------------

                                               $ 94,786,623      $ 91,341,201
                                               ============      ============

The aggregate  amount of certificates of deposit with a minimum  denomination of
$100,000 was $5,536,000 and $5,232,000 at June 30, 2002 and 2001,  respectively.
Deposits more than $100,000 are not insured by the FDIC.

The scheduled  maturities of certificates of deposit as of June 30, 2002 were as
follows.

        Year ended June 30,
               2003                                $  36,763,613
               2004                                   15,265,933
               2005                                    3,166,889
               2006                                    2,974,513
               2007                                    2,315,762
                                                   -------------

                                                   $  60,486,710
                                                   =============


NOTE 8 - BORROWED FUNDS

At June 30, 2002, the  Association had a cash management line of credit enabling
it to borrow up to  $8,000,000  from the  Federal  Home Loan Bank of  Cincinnati
("FHLB"). All cash management advances have an original maturity of 90 days. The
line of credit  must be renewed  on an annual  basis.  There were no  borrowings
outstanding on this line of credit at June 30, 2001.

As a member of the FHLB system,  the  Association  currently  has the ability to
obtain  borrowings  up to a maximum  total of  $29,492,000,  including  the cash
management  line of credit.  However,  the Association can obtain advances up to
the lower of 50% of the  Association's  total assets or 80% of the Association's
pledgable residential mortgage loan portfolio by purchasing more FHLB stock.

                                  (Continued)
                                                                            F-37

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 8 - BORROWED FUNDS (Continued)

Advances from the Federal Home Loan Bank at year-end were as follows.

<TABLE>
<CAPTION>
                                                                      2002         2001
                                                                      ----         ----
<S>                                                              <C>            <C>
       Cash management advance, variable rate
         2.15% at June 30, 2002                                  $   500,000    $        --
       7.40% fixed-rate advance, due May 2, 2002                          --      2,500,000
       6.13% fixed-rate advance, due June 25, 2008                 7,000,000      7,000,000
       6.00% convertible advance, fixed-rate until June 2004,
         due June 11, 2009                                         5,000,000      5,000,000
       6.27% convertible advance, fixed-rate until
         September 2003, due September 8, 2010                     5,000,000      5,000,000
       5.30% select pay mortgage-matched advance, final
         maturity May 1, 2011                                      1,635,638      1,974,596
       5.35% select pay mortgage-matched advance, final
         maturity July 1, 2011                                     3,320,175      4,000,000
                                                                 -----------    -----------

                                                                 $22,455,813    $25,474,596
                                                                 ===========    ===========
</TABLE>


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

The maximum  month-end  balance of advances  outstanding was $25,462,000 in 2002
and $26,500,000 in 2001. Average balances of borrowings  outstanding during 2002
and  2001  were  $24,836,000  and  $23,477,000.  Advances  under  the  borrowing
agreements  were  collateralized  by the  Association's  FHLB  stock  owned  and
$30,865,522 of qualifying mortgage loans.

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

                   Year ended June 30,
                          2003                           $    1,395,497
                          2004                                  785,627
                          2005                                  687,777
                          2006                                  600,692
                          2007                                  523,246
                       Thereafter                            18,462,974
                                                         --------------
                                                         $   22,455,813
                                                         ==============


                                   (Continued)
                                                                            F-38

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 9 - RETIREMENT PLANS

The Corporation maintains a 401(k) profit sharing plan. With certain exceptions,
all employees who have attained the age of 21 and who have completed one year of
employment,  during  which they worked at least  1,000  hours,  are  eligible to
participate in the plan. The  Corporation  provides a matching  contribution  on
behalf of participants who make elective  compensation  deferrals at the rate of
50% of the first 6% of participant  contributions up to a maximum match of 3% of
the participant's  compensation.  The Corporation may also contribute additional
amounts at its discretion.  Employee  contributions  are vested at all times and
the Corporation's  matching  contributions  vest evenly over 5 years of service.
The cash  contribution  and related  expense  included in salaries  and employee
benefits  was  $27,484,  $26,586 and $25,172 for the years ended June 30,  2002,
2001 and 2000.


NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN

The Corporation offers an employee stock ownership plan ("ESOP") for the benefit
of substantially all employees of the Corporation. The ESOP received a favorable
determination  letter from the Internal  Revenue Service on the qualified status
of the ESOP under  applicable  provisions of the Internal Revenue Code. The ESOP
borrowed  funds from Peoples in order to acquire  common shares of Peoples.  The
loan is secured  by the  shares  purchased  with the loan  proceeds  and will be
repaid by the ESOP with funds from the Association's discretionary contributions
to the ESOP,  dividends on unallocated  shares received by the ESOP and earnings
on ESOP  assets.  When loan  payments  are made,  ESOP shares are  allocated  to
participants  based on relative  compensation.  Dividends  on  allocated  shares
increase participant accounts.


ESOP  compensation  expense was  $143,295,  $115,914  and $146,861 for the years
ended June 30, 2002, 2001 and 2000.

Year-end ESOP shares were as follows.

                                                         2002            2001
                                                         ----            ----

                  Allocated shares                        81,568        68,056
                  Unreleased shares                       87,262       100,774
                                                      ----------      --------
                           Total ESOP shares             168,830       168,830
                                                      ==========      ========

                  Fair value of unreleased shares     $1,025,328      $957,353
                                                      ==========      ========


NOTE 11 - STOCK OPTION AND INCENTIVE PLAN

The Stock  Option and  Incentive  Plan was approved by the  shareholders  of the
Corporation  on May 22,  1998.  The Board of  Directors  has granted  options to
purchase shares of common stock to certain employees,  officers and directors of
the  Corporation.  One-fifth of the options awarded become first  exercisable on
each of the first five  anniversaries  of the date of grant.  The option  period
expires 10 years from the date of grant.

                                  (Continued)
                                                                            F-39

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 11 - STOCK OPTION AND INCENTIVE PLAN (Continued)

A summary of the activity in the plan was as follows.

<TABLE>
<CAPTION>
                                                  2002                 2001                2000
                                                  ----                 ----                ----
                                                       Weighted              Weighted               Weighted
                                                       Average               Average                Average
                                                       Exercise              Exercise               Exercise
                                            Shares      Price     Shares      Price     Shares       Price
                                            ------      -----     ------      -----     ------       -----
       <S>                                 <C>        <C>        <C>        <C>         <C>         <C>
       Outstanding at beginning of year    140,824    $ 16.03    140,824    $  16.03    141,824     $ 16.03
       Granted                                  --         --         --          --         --          --
       Exercised                                --         --         --          --         --          --
       Forfeited                                --         --         --          --     (1,000)      16.01
                                           -------    -------    -------    --------    -------     -------
       Outstanding at end of year          140,824    $ 16.03    140,824    $  16.03    140,824     $ 16.03
                                           =======    =======    =======    ========    =======     =======

       Options exercisable at year-end     112,659    $ 16.03     84,494    $  16.03     56,330     $ 16.03
       Remaining shares available
         for grant                          37,714                37,714                 37,714
</TABLE>


Options outstanding at year-end were as follows.

                                                  Weighted Average
                                                     Remaining
           Exercise                      Number      Contractual      Number
           Prices                      Outstanding      Life        Exercisable
           ------                      -----------      ----        -----------

           $16.01                        139,579      5.89 yrs         111,663
           $18.75                          1,245      5.95 yrs             996
                                         -------      --------         -------

           Outstanding at year-end       140,824      5.90 yrs         112,659
                                         =======      ========         =======


Pro forma  net  income  and  earnings  per  share  for  2002,  2001 and 2000 had
Statement of Financial  Accounting Standards No. 123 fair value method been used
to measure  compensation cost for stock options granted follows. No compensation
expense was recognized for the year ended June 30, 2002, 2001 and 2000.

                                                2002        2001        2000
                                                ----        ----        ----

    Net income as reported                   $ 707,208   $ 740,054   $ 635,598
    Pro forma net income                       495,672     528,518     425,988
    Basic earnings per share as reported           .51         .52         .43
    Pro forma basic earnings per share             .36         .37         .29
    Diluted earnings per share as reported         .51         .52         .43
    Pro forma diluted earnings per share           .36         .37         .29


                                  (Continued)
                                                                            F-40

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 12 - MANAGEMENT RECOGNITION PLAN

A Management  Recognition Plan ("MRP") was adopted by the Board of Directors and
approved  by the  shareholders  of the  Corporation  on May 22, 1998 to purchase
71,415  common  shares.  The MRP is used as a means of providing  directors  and
certain key  employees  of the  Corporation  with an  ownership  interest in the
Corporation in a manner  designed to compensate such directors and key employees
for services to the Corporation.

In  conjunction  with the  adoption  of the MRP on May 22,  1998,  the  Board of
Directors awarded 57,128 shares to certain directors,  officers and employees of
the Corporation. No shares had been previously awarded. One-fifth of such shares
is earned and nonforfeitable on each of the first five anniversaries of the date
of the award. At June 30, 2002 and 2001, 45,702 and 34,276,  shares have vested.
In the event of the death or disability of a participant  or a change in control
of the Corporation,  however, the participant's shares will be deemed earned and
nonforfeitable  upon such  date.  At June 30,  2002,  there were  14,287  shares
reserved  for future  awards and held as treasury  stock.  Compensation  expense
related to MRP shares is based upon the cost of the shares,  which  approximates
fair value at the date of grant.  Compensation expense totaled $190,649 for each
of the three years in the period ended June 30, 2002.




NOTE 13 - REGULATORY MATTERS


The  Association  is  subject  to  various   regulatory   capital   requirements
administered  by  the  federal  regulatory  agencies.   Under  capital  adequacy
guidelines  and the  regulatory  framework  for prompt  corrective  action,  the
Association  must meet specific  capital  guidelines  that involve  quantitative
measures of the Association's assets,  liabilities and certain off-balance-sheet
items as calculated under regulatory accounting  practices.  Capital amounts and
classifications  are also subject to  qualitative  judgments by the  regulators.
Failure to meet minimum capital requirements can initiate regulatory action.

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and capital restoration plans are required.

At June 30, 2002 and 2001, management believes the Association complies with all
regulatory capital requirements.  Based on the Association's computed regulatory
capital ratios, the Association is considered well capitalized under the Federal
Deposit  Insurance  Act at June 30, 2002 and 2001.  No conditions or events have
occurred  subsequent  to the last  notification  by regulators  that  management
believes would have changed the Association's category.

                                  (Continued)
                                                                            F-41

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 13 - REGULATORY MATTERS (Continued)



At year-end 2002 and 2001, the  Association's  actual capital levels and minimum
required levels were as follows.

<TABLE>
<CAPTION>
                                                                                                         To Be Well
                                                                                                      Capitalized Under
                                                                                   For Capital        Prompt Corrective-
                                                            Actual              Adequacy Purposes     Action Regulations
                                                            ------              -----------------     ------------------
                                                       Amount    Ratio           Amount     Ratio       Amount    Ratio
                                                       ------    -----           ------     -----       ------    -----
                                                                             (Dollars in thousands)
<S>                                                   <C>         <C>            <C>        <C>         <C>       <C>

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

2001
       Total capital (to risk-weighted assets)        $13,934     15.6%          $7,168     8.0%        $8,961    10.0%
       Tier 1 (core) capital (to risk-weighted
         assets)                                       13,277     14.8            3,584     4.0          5,376     6.0
       Tier 1 (core) capital (to adjusted
         total assets)                                 13,277      9.9            5,374     4.0          6,718     5.0
       Tangible capital (to adjusted total assets)     13,277      9.9            2,015     1.5            N/A

</TABLE>


The  Qualified  Thrift Lender test requires at least 65% of assets be maintained
in  housing-related  finance and other specified areas. If this test is not met,
limits are placed on growth,  branching,  new  investments,  FHLB  advances  and
dividends,  or the  Association  must  convert  to a  commercial  bank  charter.
Management believes the Association satisfies this test.

When  the  Association  converted  from  a  mutual  to a  stock  institution,  a
"liquidation  account"  was  established  at  $9,307,000,  which  was net  worth
reported in the conversion  prospectus.  Eligible depositors who have maintained
their  accounts,  less annual  reductions  to the extent they have reduced their
deposits,  would  receive a  distribution  from this account if the  Association
liquidated.  Dividends  may not reduce  shareholders'  equity below the required
liquidation account balance.

OTS regulations limit capital distributions by savings associations.  Generally,
capital  distributions are limited to the current year to date undistributed net
income and prior two years' undistributed net income, as long as the institution
remains well capitalized after the proposed  distribution.  At year-end 2002, no
amount is  available  to pay  dividends  to the holding  company  without  prior
approval from the OTS.

                                  (Continued)
                                                                            F-42

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000


NOTE 14 - OFF-BALANCE-SHEET ACTIVITIES

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

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

<TABLE>
<CAPTION>

                                                         2002                        2001
                                                         ----                        ----
                                                   Fixed      Variable       Fixed         Variable
                                                   Rate         Rate         Rate            Rate
                                                   ----         ----         ----            ----

                  <S>                           <C>            <C>         <C>             <C>
                  Residential real estate       $ 696,000      $  --       $ 412,000       $ 113,000
                  Commercial real estate          400,000         --              --         600,000
                  Interest rates                6.75-7.00%        -- %     7.00-7.25%       7.00-7.50%
</TABLE>


Commitments  to make loans are  generally  made for a period of 30 days or less.
Maturities for fixed-rate loan commitments range from 10 years to 20 years.

The  Corporation  also had unused lines of credit  approximating  $3,156,000 and
$2,539,000 at year-end 2002 and 2001. The Corporation had outstanding letters of
credit with the FHLB totaling $300,000 pledged to secure public deposits at June
30, 2002.

At June 30, 2002 and 2001, the  Association  was required to have $1,700,000 and
$698,000 on deposit  with its  correspondent  banks as a  compensating  clearing
requirement.



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

                                  (Continued)
                                                                            F-43

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000


NOTE 15 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments at year-end were as follows.

<TABLE>
<CAPTION>

                                                       2002                            2001
                                                       ----                            ----
                                                              Estimated                        Estimated
                                             Carrying           Fair          Carrying           Fair
                                              Value            Value            Value            Value
                                              -----            -----            -----            -----
<S>                                       <C>              <C>             <C>               <C>
Financial assets:
         Cash and cash equivalents        $  5,589,014     $  5,589,014     $  6,350,895     $  6,350,895
         Securities available for sale       3,525,750        3,525,750        3,001,715        3,001,715
         Federal Home Loan Bank stock        1,474,600        1,474,600        1,397,200        1,397,200
         Loans, net                        121,224,773      121,956,727      120,481,894      120,362,408
         Accrued interest receivable           834,744          834,744          921,864          921,864

Financial liabilities:
         Deposits                          (94,786,623)     (96,203,892)     (91,341,201)     (93,162,447)
         Borrowed funds                    (22,455,813)     (23,454,145)     (25,474,596)     (25,216,937)
         Accrued interest payable              (80,962)         (80,962)         (50,259)         (50,259)
</TABLE>


The  estimated  fair value  approximates  carrying  amounts for all items except
those described below. Security fair values are based on market prices or dealer
quotes,  and if no such  information  is available,  on the rate and term of the
security and information about the issuer.  For fixed rate loans or deposits and
for  variable  rate loans or deposits  with  infrequent  repricing  or repricing
limits,  fair value is based on discounted cash flows using current market rates
applied to the estimated  life and credit risk.  Fair values for impaired  loans
are estimated  using  discounted  cash flow  analysis or  underlying  collateral
values. Fair value of debt is based on current rates for similar financing.  The
fair value of off-balance-sheet  items is based on the current fees or cost that
would be charged to enter into or  terminate  such  arrangements,  which are not
material.


NOTE 16 - EARNINGS PER SHARE

The factors used in the earnings per share computation follow.

<TABLE>
<CAPTION>
                                                       2002            2001             2000
                                                       ----            ----             ----
    <S>                                           <C>              <C>              <C>
    Basic Earnings Per Common Share

       Net income                                 $   707,208      $   740,054      $   635,598
                                                  ===========      ===========      ===========

       Weighted average common shares
         outstanding                                1,486,144        1,550,747        1,635,106
       Less:  Average unallocated ESOP shares         (94,018)        (107,819)        (122,208)
       Less:  Average nonvested MRP shares            (16,184)         (27,609)         (39,037)
                                                  -----------      -----------      -----------
       Weighted average common shares
         outstanding for basic earnings per
         common share                               1,375,942        1,415,319        1,473,861
                                                  ===========      ===========      ===========
       Basic earnings per common share            $       .51      $       .52      $       .43
                                                  ===========      ===========      ===========
</TABLE>


                                  (Continued)
                                                                            F-44

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000



NOTE 16 - EARNINGS PER SHARE (Continued)

<TABLE>
<CAPTION>
                                                   2002            2001           2000
                                                   ----            ----           ----
    <S>                                         <C>            <C>            <C>
    Diluted Earnings Per Common Share

       Net income                               $  707,208     $  740,054     $  635,598
                                                ==========     ==========     ==========

       Weighted average common shares
         outstanding for basic earnings per
         common share                            1,375,942      1,415,319      1,473,861
       Add:  Dilutive effects of average
         nonvested MRP shares                           --             --             --
       Add:  Dilutive effects of assumed
         exercises of stock options                     --             --             --
                                                ----------     ----------     ----------
       Weighted average common shares
         and dilutive potential common
         shares outstanding                      1,375,942      1,415,319      1,473,861
                                                =========     ==========     ==========
       Diluted earnings per common share        $      .51     $      .52     $      .43
                                                ==========     ==========     ==========
</TABLE>


Stock options  granted did not have a dilutive effect on EPS for the years ended
June 30, 2002,  2001 and 2000, as the exercise price of outstanding  options was
greater than the average market price for the periods. As of June 30, 2002, 2001
and 2000,  there  were  140,824  options  outstanding  that  were not  dilutive.
Unearned  MRP shares did not have a dilutive  effect on EPS for the years  ended
June 30,  2002,  2001 and 2000,  as the fair  value of MRP shares on the date of
grant was greater than the average market price for the periods.


NOTE 17 - OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes were as follows.

<TABLE>
<CAPTION>

                                                           2002           2001           2000
                                                           ----           ----           ----
<S>                                                     <C>            <C>            <C>
       Unrealized holding gains and (losses) on
         available-for-sale securities                  $  22,157      $ 297,619      $(142,125)
       Reclassification adjustments for (gains) and
         losses later recognized in income                     --        (98,912)        15,781
                                                        ---------      ---------      ---------
       Net unrealized gains and losses                     22,157        198,707       (126,344)
       Tax effect                                          (7,533)       (67,561)        42,957
                                                        ---------      ---------      ---------
       Other comprehensive income (loss)                $  14,624      $ 131,146      $ (83,387)
                                                        =========      =========      =========
</TABLE>



                                   (Continued)
                                                                            F-45

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000


NOTE 18 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Following  is  condensed  financial  information  of  Peoples-Sidney   Financial
Corporation  as of June 30, 2002 and 2001,  and for the  periods  ended June 30,
2002, 2001 and 2000.

<TABLE>
<CAPTION>
                            CONDENSED BALANCE SHEETS
                             June 30, 2002 and 2001
                                                                       2002                   2001
                                                                       ----                   ----
       <S>                                                         <C>                    <C>
       Assets
       Cash and cash equivalents                                   $ 1,998,187            $ 2,951,700
       Investment in subsidiary                                     14,381,744             13,279,448
       Loans receivable from ESOP                                      816,171                918,193
       Other assets                                                         --                    272
                                                                   -----------            -----------

                Total assets                                       $17,196,102            $17,149,613
                                                                   ===========            ===========
       Liabilities
       Other liabilities                                           $     1,894            $        --

       Shareholders' Equity                                         17,194,208             17,149,613
                                                                   -----------            -----------

                Total liabilities and shareholders' equity         $17,196,102            $17,149,613
                                                                   ===========            ===========
</TABLE>



<TABLE>
<CAPTION>
                         CONDENSED STATEMENTS OF INCOME
                                                                     2002               2001             2000
                                                                     ----               ----             ----
       <S>                                                       <C>                <C>               <C>
       Income:
              Dividend income from subsidiary                    $        --        $ 2,000,000       $       --
              Interest on loans                                       64,049             71,166           78,497
                                                                 -----------        -----------        ---------
                                                                      64,049          2,071,166           78,497
       Other expenses                                                 92,480             91,515          112,955
                                                                 -----------        -----------        ---------
       Income (loss) before taxes and undistributed earnings
         of subsidiary                                               (28,431)         1,979,651          (34,458)
       Income tax benefit                                            (17,182)            (8,510)         (13,307)
                                                                 -----------        -----------        ---------
       Income (loss) before undistributed earnings
         of subsidiary                                               (11,249)         1,988,161          (21,151)
       Equity in undistributed earnings of subsidiary
         (distributions in excess of earnings)                       718,457         (1,248,107)         656,749
                                                                 -----------        -----------        ---------

              Net income                                         $   707,208        $   740,054        $ 635,598
                                                                 ===========        ===========        =========
</TABLE>



                                  (Continued)
                                                                            F-46

<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          June 30, 2002, 2001 and 2000


NOTE 18 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION (Continued)

<TABLE>
<CAPTION>
                                   CONDENSED STATEMENTS OF CASH FLOWS

                                                                     2002            2001              2000
                                                                     ----            ----              ----
<S>                                                              <C>              <C>              <C>
       Cash flows from operating activities
              Net income                                         $   707,208      $   740,054      $   635,598
              Adjustments to reconcile net income to cash
                provided by operations:
              (Equity in undistributed income of subsidiary)
                distributions in excess of earnings                 (718,457)       1,248,107         (656,749)
              Net change in other assets and liabilities               2,166          (90,143)          68,592
                                                                 -----------      -----------      -----------
                     Net cash from operating activities               (9,083)       1,898,018           47,441

       Cash flows from investing activities
              Proceeds from loan principal repayments                102,022          102,021          102,022
                                                                 -----------      -----------      -----------
                     Net cash from investing activities              102,022          102,021          102,022

       Cash flows from financing activities
              Purchase of treasury shares                           (525,077)        (542,345)        (869,896)
              Cash dividends paid                                   (486,103)        (445,603)        (422,244)
              Dividends on unallocated ESOP shares                   (35,272)         (35,608)         (36,274)
                                                                 -----------      -----------      -----------
                     Net cash from financing activities           (1,046,452)      (1,023,556)      (1,328,414)
                                                                 -----------      -----------      -----------
       Net change in cash and cash equivalents                      (953,513)         976,483       (1,178,951)
       Cash and cash equivalents at beginning of year              2,951,700        1,975,217        3,154,168
                                                                 -----------      -----------      -----------

       Cash at end of year                                       $ 1,998,187      $ 2,951,700      $ 1,975,217
                                                                 ===========      ===========      ===========
</TABLE>

                                                                            F-47
<PAGE>


                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                             SHAREHOLDER INFORMATION


ANNUAL MEETING

The Annual Meeting of Shareholders will be held at 11:00 a.m.,  Sidney,  Ohio on
October 11, 2002 at the Holiday Inn, I-75 and S.R. 47, Sidney, Ohio.


STOCK LISTING

Peoples-Sidney  Financial  Corporation  common  stock is  traded  on the  NASDAQ
National Market under the symbol "PSFC."


SHAREHOLDERS AND GENERAL INQUIRIES                      TRANSFER AGENT

Douglas Stewart, President                          Registrar and Transfer Co.
Peoples-Sidney Financial Corporation                10 Commerce Drive
101 East Court Street                               Cranford, NJ  07016
P.O. Box 727
Sidney, Ohio 45365-3021
(937) 492-6129


ANNUAL AND OTHER REPORTS

A copy of Peoples-Sidney  Financial  Corporation's  Annual Report on Form 10-KSB
for the year ended June 30,  2002,  as filed with the  Securities  and  Exchange
Commission,  may be  obtained  without  charge by  contacting  Douglas  Stewart,
President and Chief Executive Officer, Peoples-Sidney Financial Corporation, 101
East Court Street, P.O. Box 727, Sidney, Ohio 45365-3021.

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                      PEOPLES-SIDNEY FINANCIAL CORPORATION
                              CORPORATE INFORMATION


CORPORATION AND ASSOCIATION ADDRESS
<C>                                                           <C>
101 East Court Street                                         Telephone:   (937) 492-6129
P.O. Box 727                                                  Fax:         (937) 498-4554
Sidney, Ohio 45365-3021


DIRECTORS OF THE BOARD

Douglas Stewart                                               Harry N. Faulkner
         President and Chief Executive Officer of                Partner in the law firm of Faulkner, Garmhausen,
         Peoples Federal Savings and Loan Association            Keister & Shenk LPA

John W. Sargeant                                              James W. Kerber
         Part Owner of Sidney Tool and Die Co. and               Owner of James W. Kerber CPA, a private
         BenSar Development, a warehouse provider                 practice accounting firm

Richard T. Martin (Chairman of the Board)
         Certified Public Accountant, in private practice


Officers of the Corporation and the
-----------------------------------
Association:
------------

Douglas Stewart, President & CEO
David R. Fogt, VP Financial Services and
  Operations
Gary N. Fullenkamp, VP Mortgage Loans
  and Corporate Secretary
Debra A. Geuy, Chief Financial Officer and   Treasurer



Special Counsel                                               Independent Auditors
---------------                                               --------------------

Katten Muchin Zavis                                           Crowe, Chizek and Company LLP
1025 Thomas Jefferson Street, N.W.                            One Columbus
East Lobby, Suite 700                                         10 West Broad Street
Washington, D.C. 20007-5201                                   Columbus, Ohio  43215

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