UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q

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

For the quarter ended September 30, 1999
Commission File Number 1-13253

THE PEOPLES HOLDING COMPANY
-------------------------------------------------------
(Exact name of the registrant as specified in its charter)

MISSISSIPPI 64-0676974
------------------------ --------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)

209 Troy Street, P. O. Box 709, Tupelo, Mississippi 38801
----------------------------------------------------------
(Address of principal executive offices)

Registrant's telephone number including area code 601-680-1001

Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES__X__NO_____

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as to the latest practicable date.

Common stock, $5 Par Value, 6,232,384 shares outstanding
as of November 12, 1999

THE PEOPLES HOLDING COMPANY
INDEX

PART 1. FINANCIAL INFORMATION PAGE

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets -
September 30, 1999 and December 31, 1998............. 3

Condensed Consolidated Statements of Income - Three Months
and Nine Months Ended September 30, 1999 and 1998.... 4

Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998........ 5

Notes to Condensed Consolidated Financial Statements....... 6

Item 2.

Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 10

Item 3.

Quantitative and Qualitative Disclosures
About Market Risk.................................... 15

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.......................................... 15

Item 2.

Changes in Securities...................................... 15

Item 6.(b)

Reports on Form 8-K........................................ 15

Signatures................................................... 16

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Restated)
SEPTEMBER 30 DECEMBER 31
1999 1998
------------ -----------
(Unaudited) (Note 1)

Assets
Cash and due from banks .................. $ 36,935 $ 32,453

Interest bearing balances with banks ..... 280 6,105

Securities held-to-maturity (market
value-$83,534 and $80,868 at
September 30, 1999 and December 31,
1998, respectively) ................... 84,776 79,176

Securities available-for-sale (amortized
cost-$196,015 and $213,138 at
September 30, 1999 and December 31,
1998, respectively) ................... 192,764 214,463

Loans, net of unearned income ............ 786,490 729,157
Allowance for loan losses ............. (10,460) (9,744)
---------- ---------
Net Loans ....................... 776,030 719,413

Premises and equipment ................... 27,659 26,634
Other assets ............................. 33,429 29,551
---------- ---------
Total Assets .................... $ 1,151,873 $ 1,107,795
========== =========
Liabilities
Deposits:
Noninterest-bearing ................... $ 133,833 $ 152,496
Certificates of deposit exceeding
$100,000 .......................... 134,648 129,347
Interest bearing ...................... 718,369 678,452
---------- ---------
Total Deposits .............. 986,850 960,295

Treasury tax and loan note account ....... 8,644 2,455
Borrowings ............................... 25,496 20,020
Other liabilities ........................ 14,974 14,816
---------- ---------
Total Liabilities ........... 1,035,964 997,586

Shareholders' Equity
Common Stock, $5 par value - 15,000,000
shares authorized, 6,232,384 and
6,191,854 shares issued and outstanding
at September 30, 1999 and December 31,
1998, respectively ..................... 31,162 30,959
Additional paid-in capital ............... 44,367 43,289
Treasury Stock, at cost................... (373) 0
Accumulated other comprehensive income ... (2,038) 830
Retained earnings ........................ 42,791 35,131
---------- ---------
Total Shareholders' Equity ..... 115,909 110,209
---------- ---------
Total Liabilities and
Shareholders' Equity ......... $ 1,151,873 $ 1,107,795
========== =========

See Notes to Condensed Consolidated Financial Statements

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)

NINE MONTHS ENDED SEPTEMBER 30 THREE MONTHS ENDED SEPTEMBER 30
(Restated) (Restated)
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)

Interest Income
Loans ................................ $ 49,621 $ 46,850 $ 16,644 $ 16,024
Securities:
Taxable ......................... 9,207 10,248 3,093 3,483
Tax-exempt ...................... 3,081 2,689 1,052 957

Other ................................ 520 687 100 121
------- ------- ------- -------
Total interest income ...... 62,429 60,474 20,889 20,585

Interest Expense
Time deposits exceeding $100,000 ..... 3,193 3,382 1,143 1,198
Other deposits ....................... 23,269 23,312 7,757 8,007
Borrowings .......................... 1,232 1,114 391 380
------- ------- ------- -------
Total interest expense ..... 27,694 27,808 9,291 9,585
---------- ---------- ---------- ----------
Net interest income ........ 34,735 32,666 11,598 11,000

Provision for loan losses .................. 2,551 1,935 530 646
--------- --------- --------- ---------
Net interest income after
provision for loan losses .. 32,184 30,731 11,068 10,354
Noninterest income:
Service charges on deposit accounts .. 6,190 5,381 2,188 1,824
Fees and commissions ................. 2,038 1,825 728 710
Trust revenue ........................ 630 540 210 180
Gains on sale of securities and loans. 4,197 709 39 282
Other ................................ 2,390 2,003 744 639
------- ------- ------- -------
Total noninterest income ... 15,445 10,458 3,909 3,635

Noninterest expenses:
Salaries and employee benefits ....... 16,353 15,703 5,754 5,268
Net occupancy ........................ 2,219 2,084 742 740
Equipment ............................ 1,596 1,502 459 505
Other ................................ 10,819 9,603 3,382 3,254
--------- --------- --------- ---------
Total noninterest expenses . 30,987 28,892 10,337 9,767
---------- ---------- ---------- ----------

Income before income taxes ................. 16,642 12,297 4,640 4,222
Income taxes ............................... 5,078 3,522 1,448 1,212
--------- --------- --------- ---------
Net income ................. $ 11,564 $ 8,775 $ 3,192 $ 3,010
========== ========== ========== ==========

Basic and diluted earnings per share ...... $ 1.86 $ 1.41 $ 0.51 $ 0.49
====== ====== ====== ======

Weighted average shares outstanding ....... 6,203,218 6,204,164 6,222,421 6,204,164
========= ========= ========= =========

See Notes to Condensed Consolidated Financial Statements

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)

NINE MONTHS ENDED SEPTEMBER 30
(Restated)
1999 1998
---- ----
(Unaudited)

Operating Activities
Net Cash Provided by Operating
Activities .................... $ 10,558 $ 12,415

Investing Activities
Net decrease in balances
with other banks ................... 6,270 15,134
Proceeds from maturities/calls of
securities held-to-maturity ........ 5,026 5,879
Proceeds from maturities/calls of
securities available-for-sale ...... 95,098 47,655
Proceeds from sales of
securities available-for-sale ...... 12,382 16,242
Purchases of securities
held-to-maturity ................... (10,586) (20,857)
Purchases of securities
available-for-sale ................. (90,504) (101,006)
Net increase in loans ................... (89,929) (93,183)
Proceeds from sales of loans ............ 34,873 54,375
Proceeds from sales of premises
and equipment ...................... 235 530
Purchases of premises and equipment ..... (2,886) (3,645)
---------- ----------
Net Cash Used in Investing
Activities .................... (40,021) (78,876)

Financing Activities
Net increase (decrease) in
noninterest-bearing deposits ........ (18,662) 2,198
Net increase in
interest-bearing deposits ........... 45,218 55,536
Net increase in treasury tax
and loan note account and federal
funds purchased ..................... 9,389 2,343
Net increase in borrowings .............. 2,276 5,188
Acquisition of treasury stock ........... (373) (541)
Cash dividends paid ..................... (3,903) (3,199)
---------- ----------
Net Cash Provided by Financing
Activities ................... 33,945 61,525
---------- ----------
Increase (Decrease) in Cash
and Cash Equivalents ......... 4,482 (4,936)

Cash and Cash Equivalents at
beginning of period ............... 32,453 39,349
---------- ----------
Cash and Cash Equivalents at
end of period ..................... $ 36,935 $ 34,413
========== ==========
Non-cash transactions:
Transfer of loans to other real
estate .............................. $ 410 $ 1,159
========== ==========

See Notes to Condensed Consolidated Financial Statements

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1999
(in thousands, except share data)

Note 1 Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine-month period ended September 30,
1999 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1999.

For further information, refer to the consolidated financial statements and
footnotes thereto included in The Peoples Holding Company and Subsidiary's
(collectively, the Company) annual report on Form 10-K for the year ended
December 31, 1998.

The historical financial information presented in this Form 10-Q has been
restated to include the results of Inter-City Federal Bank for Savings (Inter-
City). Inter-City was acquired in a pooling-of-interests transaction on
March 26, 1999. In accordance with the pooling-of-interests method of
accounting, no adjustments have been made to the historical carrying amounts of
assets and liabilities of Inter-City. However, the financial information has
been restated to include the results of Inter-City for all stated periods prior
to the combination.

Note 2 Mergers and Acquisitions

On June 24, 1999, the Company purchased Reed-Johnson Insurance Agency, Inc.
(Reed-Johnson) with the issuance of 40,530 shares of the Company's common stock.
Located in Tupelo, Mississippi, Reed-Johnson is an independent insurance agency
representing property and casualty companies and providing personal and
business coverages. Reed-Johnson has retained its name and staff and operates
as a wholly owned subsidiary of The Peoples Bank and Trust Company. The
transaction has been accounted for under the purchase method of accounting.

On March 26, 1999, the Company exchanged 347,382 shares of common stock for all
of the outstanding shares of Inter-City, which is located in Louisville,
Mississippi. The transaction has been accounted for under the pooling-of-
interests method of accounting.

The following tables present selected financial information, split between the
Company and Inter-City for the nine months ended and three months ended
September 30, 1999 and 1998, respectively.

Nine Months Ended
September 30
1999 1998
------------------
Revenue
The Peoples Holding Company............... $ 77,010 $ 68,303
Inter-City Federal Bank for Savings (1)... 864 2,629
------- -------
$ 77,874 $ 70,932
======= =======
Net Income
The Peoples Holding Company............... $ 11,693 $ 8,503
Inter-City Federal Bank for Savings (1)... (129) 272
------- -------
$ 11,564 $ 8,775
======= =======

(1) The 1999 amounts reflect the results of operations from January 1, 1999
through March 26, 1999. The results of operations from March 27, 1999 through
September 30, 1999 are included in The Peoples Holding Company amounts.

Three Months Ended
September 30
1999 1998
------------------
Revenue
The Peoples Holding Company............... $ 24,798 $ 23,328
Inter-City Federal Bank for Savings ...... 0 892
------- -------
$ 24,798 $ 24,220
======= =======
Net Income
The Peoples Holding Company............... $ 3,192 $ 2,933
Inter-City Federal Bank for Savings ...... 0 77
------- -------
$ 3,192 $ 3,010
======= =======

Note 3 Comprehensive Income

For the nine month periods ended September 30, 1999 and 1998, total
comprehensive income amounted to $8,696 and $11,115, respectively. For the
quarters ended September 30, 1999 and 1998, total comprehensive income amounted
to $3,209 and $5,010, respectively.

Note 4 Segment Reporting

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which established standards for the
reporting of financial information from operating segments in annual and
interim financial statements. SFAS No. 131 requires that financial information
be reported on the same basis that it is reported internally for evaluating
segment performance and allocating resources to segments. Because SFAS No. 131
addresses how supplemental financial information is disclosed in annual and
interim reports, its adoption had no impact on the financial condition or
operating results of the Company.

Segment information for the nine months ended September 30, 1999 and 1998, is
presented below.

Nine Months Ended September 30, 1999
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 31,726 $ 2,972 $ 37 $ 34,735
Provision for loan loss .... 1,297 1,128 126 2,551
------- ------- ------- -------
Net interest income after
provision for loan loss .. 30,429 1,844 (89) 32,184

Non-interest income ........ 8,339 5,760 1,346 15,445
Non-interest expense ....... 17,996 3,188 9,803 30,987
------- ------- ------- -------
Income before income taxes . 20,772 4,416 (8,546) 16,642
Income taxes ............... 0 0 5,078 5,078
------- ------- ------- -------
Net income (loss) .......... $ 20,772 $ 4,416 $(13,624) $ 11,564
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 411 $ (411) $ 0 $ 0
======= ======= ======= =======

Nine Months Ended September 30, 1998
Specialized
Branches Products All Other Total
-------- ----------- --------- ---------
Net interest income ........ $ 29,890 $ 2,589 $ 187 $ 32,666
Provision for loan loss .... 1,292 524 119 1,935
------- ------- ------- -------
Net interest income after
provision for loan loss .. 28,598 2,065 68 30,731

Non-interest income ........ 7,346 2,307 805 10,458
Non-interest expense ....... 18,414 3,140 7,338 28,892
------- ------- ------- -------
Income before income taxes . 17,530 1,232 (6,465) 12,297
Income taxes ............... 0 0 3,522 3,522
------- ------- ------- -------
Net income (loss) .......... $ 17,530 $ 1,232 $ (9,987) $ 8,775
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 356 $ (356) $ 0 $ 0
======= ======= ======= =======

Segment information for the three months ended September 30, 1999 and 1998, is
presented below.

Three Months Ended September 30, 1999
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 10,755 $ 843 $ 0 $ 11,598
Provision for loan loss .... 451 37 42 530
------- ------- ------- -------
Net interest income after
provision for loan loss .. 10,304 806 (42) 11,068

Non-interest income ........ 2,857 499 553 3,909
Non-interest expense ....... 5,609 811 3,917 10,337
------- ------- ------- -------
Income before income taxes . 7,552 494 (3,406) 4,640
Income taxes ............... 0 0 1,448 1,448
------- ------- ------- -------
Net income (loss) .......... $ 7,552 $ 494 $ (4,854) $ 3,192
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 138 $ (138) $ 0 $ 0
======= ======= ======= =======

Three Months Ended September 30, 1998
Specialized
Branches Products All Other Total
-------- ---------- --------- ---------
Net interest income ........ $ 10,000 $ 898 $ 102 $ 11,000
Provision for loan loss .... 403 197 46 646
------- ------- ------- -------
Net interest income after
provision for loan loss .. 9,597 701 56 10,354

Non-interest income ........ 2,488 846 301 3,635
Non-interest expense ....... 6,281 1,066 2,420 9,767
------- ------- ------- -------
Income before income taxes . 5,804 481 (2,063) 4,222
Income taxes ............... 0 0 1,212 1,212
------- ------- ------- -------
Net income (loss) .......... $ 5,804 $ 481 $ (3,275) $ 3,010
======= ======= ======= =======
Intersegment revenue
(expense) ................ $ 118 $ (118) $ 0 $ 0
======= ======= ======= =======

Note 5 Subsequent Events

As of September 30, 1999, the Company had repurchased 12,000 shares of its
common stock in the open market during the year. Subsequent to that time, the
Company purchased an additional 5,600 shares of its common stock. As of
November 12, 1999, the Company had repurchased a total of 17,600 shares of the
Company's stock during the year at an average price of $31.49 per share.

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(in thousands, except share data)

This Form 10-Q may contain, or incorporate by reference, statements which may
constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Prospective investors are cautioned that
any such forward-looking statements are not guarantees for future
performance and involve risks and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking
statements. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include significant fluctuations in interest rates, inflation, economic
recession, significant changes in the federal and state legal and regulatory
environment, significant underperformance in the Company's portfolio of
outstanding loans, and competition in the Company's markets. The Company
undertakes no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or
changes to future operating results over time.

Financial Condition

Total assets of The Peoples Holding Company grew from $1,107,795 on December 31,
1998, to $1,151,873 on September 30, 1999, or 3.98% for the nine month period.
Total securities decreased from $293,639 on December 31, 1998, to $277,540 on
September 30, 1999. While U. S. Government Treasury and Agency securities and
mortgage-backed securities have declined within the portfolio, state, county,
and municipal securities have increased since the beginning of the year. This
change in the mix was used to enhance portfolio yields.

Total loans, net of unearned income, increased $57,333, or 7.86%, from the
beginning of the year despite the sale of approximately $19,000 of credit card
loans during the second quarter of 1999. Most of the loan growth has come from
commercial loan accounts.

Total deposits have grown from $960,295 on December 31, 1998, to $986,850 on
September 30, 1999, or an increase of 2.77%, with the majority of growth in
public fund checking and time deposits.

Equity capital to total assets was 10.06% and 9.95% for September 30, 1999 and
December 31, 1998, respectively. Capital grew 5.17% from December 31, 1998 to
September 30, 1999. While earnings and the acquisition of Reed-Johnson have
improved capital, the growth has been curtailed due to the change in accumulated
comprehensive income relating to unrealized portfolio losses as interest rates
rose and the purchase of 12,000 shares of Company stock. Cash dividends for the
first three quarters of 1999 have been $.21 per share, an increase from $.19 per
share during the fourth quarter of 1998.

Results of Operations

The Company's net income for the nine month period ending September 30, 1999,
was $11,564, representing an increase of $2,789, or 31.78%, over net income
for the nine month period ending September 30, 1998, which totaled $8,775.
Improvements in net income during the third quarter have been generated from the
usual and customary deposit gathering and lending operations. System-wide
changes made earlier in the year as a result of the Sheshunoff consulting
engagement have also contributed to improved earnings. The largest identifiable
impact on annual net income has been the effect of the sale and liquidation of
the credit card loan portfolio. The after tax net effect of the sale was
$1,893, which included the gain on the sale, the satisfaction of the data
processing contract, and an increase to the provision for loan losses related
to the sale. Eliminating the effects of the sale, core earnings of $9,671 for
the nine month period ending September 30, 1999, were up $896, or 10.21%, over
the same period of 1998. Net income was $3,192 and $3,010 for the quarters
ending September 30, 1999 and 1998, respectively. The annualized return on
average assets for the nine month periods ending September 30, 1999 and 1998,
was 1.30% and 1.11%, respectively.

Net interest income, the difference between interest earned on assets and the
cost of interest-bearing liabilities, is the largest component of the Company's
net income. The primary concerns in managing net interest income are the
mix and the maturities of rate-sensitive assets and liabilities. Net interest
margin was 4.67% and 4.72% for the nine month periods ending September 30, 1999
and 1998, respectively. The decline in net interest margin is due in large part
to the current pricing environment. Despite the decrease in net interest
margin, our continued growth in volume has allowed net interest income to
increase over prior performance. As average earning assets increased from
$977,464 for the nine month period ending September 30, 1998, to $1,055,023 for
the same period in 1999, net interest income grew from $32,666 for the nine
month period ending September 30, 1998, to $34,735 for the same period in 1999.
For the three month periods ending September 30, 1999 and 1998, net interest
income was $11,598 and $11,000, respectively.

The provision for loan losses charged to operating expense is an amount which,
in the judgement of management, is necessary to maintain the allowance for loan
losses at a level that is adequate to absorb probable losses on the
Company's current portfolio of loans. The appropriate level of the allowance is
based on a quarterly analysis of the loan portfolio including consideration of
such factors as the risk rating of individual credits, size and diversity of the
portfolio, economic conditions, prior loss experience, and the results of
periodic credit reviews by internal loan review and regulators. The provision
for loan losses totaled $2,551 and $1,935 for the nine month periods ending
September 30, 1999 and 1998, respectively. A one time charge of $523 has been
added to the provision for loan losses relating to the sale of the credit card
portfolio. For the quarters ending September 30, 1999 and 1998, the provision
for loan losses totaled $530 and $646, respectively. The allowance for loan
losses as a percentage of loans outstanding was 1.33% and 1.34% as of
September 30, 1999 and December 31, 1998, respectively. Net charge-offs to
average loans was .24% and .21% for the nine month periods ending September 30,
1999 and 1998, respectively.

Including a pre-tax gain of $3,715 on the sale of credit cards, noninterest
income increased $4,987, or 47.69%, to $15,445 for the nine month period ending
September 30, 1999, when compared to $10,458 for the same period in 1998.
Excluding all gains from the sales of securities and loans, noninterest income
was $11,248 for the nine month period ending September 30, 1999, compared to
$9,749 for the same period in 1998, or an increase of 15.38%. The increase
between core noninterest income for 1999 and 1998 is due to fees associated
with the increases in loans and deposits and the increased emphasis in sales of
miscellaneous services and products such as financial investment alternatives
and cash management.

While non-sufficient fund fees accounted for the majority of the increase in
service charges, other increases were the result of annuity sales, mortgage
loan fees, merchant processing, interchange fees, skip payment fees, and loan
document preparation fees. Noninterest income, excluding gains from the sales
of securities and loans, for the quarter ending September 30, 1999, increased
$517, or 15.42%, compared to the same period in 1998 due in part to the
aforementioned items.

Noninterest expenses were $30,987 for the nine month period ending September 30,
1999, compared to $28,892 for the same period in 1998, or an increase of
7.25%. Significant increases in noninterest expenses between these periods
include depreciation of new premises and equipment, computer processing costs
associated with technology enhancements, and fees related to the Inter-City
acquisition. The remaining components of noninterest expenses reflect normal
increases for banking related expenses and general inflation in the cost of
services and supplies purchased by the Company. Noninterest expenses for the
quarter ending September 30, 1999, increased $570, or 5.84%, compared to the
same period in 1998.

Income tax expense was $5,078 for the nine month period ending September 30,
1999, compared to $3,522 for the same period in 1998. The Company also
continues to invest in assets whose earnings are given favorable tax treatment.

As the year 2000 approaches, an issue impacting all companies has emerged
regarding how existing application software programs and operating systems can
accommodate this date value. The "year 2000" problem is pervasive and complex
as virtually every computer operation will be affected in some way by the
rollover of the two digit value to 00. The issue is whether computer systems
will properly recognize date sensitive information when the year changes to
2000. Management has been working with its software vendors to assure that the
Company will be prepared for the year 2000. While the Company believes its
planning efforts are adequate to address its year 2000 concerns, there can be
no guarantee that the systems of other companies, such as those of our loan
customers, will be converted on a timely basis which could have a material
effect on the Company. The Company has not incurred significant operating
expenses nor will it be required to invest heavily in computer system
improvements to be year 2000 compliant.

The Company successfully completed testing for its mission critical applications
processed by its third party service provider during the fourth quarter of 1998,
following the conversion to the expanded code for year 2000. Nearly all other
mission critical applications were successfully tested during the first quarter
of 1999 and testing for year 2000 compliance was substantially completed by
March 31, 1999. Contingency plans for year 2000 issues have been tested.
These contingency plans address potential business interruptions related to the
year 2000 as well as liquidity and cash availability contingencies as the
millennium approaches.

Liquidity Risk

Liquidity management is the ability to meet the cash flow requirements of
customers who may be either depositors wishing to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs.

Core deposits are a major source of funds used to meet cash flow needs.
Maintaining the ability to acquire these funds as needed in a variety of money
markets is a key to assuring liquidity. When evaluating the movement of these
funds even during times of large interest rate changes, it is apparent that the
Company continues to attract deposits that can be used to meet cash flow needs.
Management continues to monitor the liquidity and potentially volatile
liabilities ratios to ensure compliance with Asset-Liability Committee targets.
These targets are set to ensure that the Company meets the liquidity
requirements deemed necessary by management and regulators.

Another source available for meeting the Company's liquidity needs is
available-for-sale securities. The available-for-sale portfolio is composed of
securities with a readily available market that can be used to convert to cash
if the need arises. In addition, the Company maintains a federal funds
position that provides day-to-day funds to meet liquidity needs and may also
obtain advances from the Federal Home Loan Bank (FHLB) or the treasury tax and
loan note account. Historically, the Company has not relied upon these sources
to meet long-term liquidity needs. Sources of funds derived from the FHLB are
used primarily to match mortgage loan originations in order to minimize
interest rate risk, but may be used to provide short-term funding.

Capital Resources

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum balances and ratios. All banks are required
to have core capital (Tier I) of at least 4% of risk-weighted assets (as
defined), 4% of average assets (as defined), and total capital of 8% of
risk-weighted assets (as defined).

As of September 30, 1999, the most recent notification from the Federal Deposit
Insurance Corporation (FDIC) categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage ratios of 10%, 6%, and 5%, respectively. In the opinion of
management, there are no conditions or events since the last notification that
have changed the institution's category. The Bank's actual capital amounts and
applicable ratios are as follows:

Actual
Amount Ratio
------ -----
(000)
As of September 30, 1999
Total Capital .................... $ 122,081 15.5%
(to Risk Weighted Assets)
Tier I Capital ................... $ 112,217 14.2%
(to Risk Weighted Assets)
Tier I Capital ................... $ 112,217 9.8%
(to Adjusted Average Assets)

As of December 31, 1998
Total Capital .................... $ 112,850 15.2%
(to Risk Weighted Assets)
Tier I Capital ................... $ 103,577 14.0%
(to Risk Weighted Assets)
Tier I Capital ................... $ 103,577 9.8%
(to Adjusted Average Assets)

Management recognizes the importance of maintaining a strong capital base. As
the above ratios indicate, the Company exceeds the requirements for a well
capitalized bank.

Book value per share was $18.60 and $17.80 at September 30, 1999 and
December 31, 1998, respectively. Quarterly cash dividends were $.21 per share
for the first three quarters of 1999, up from $.19 per share during the fourth
quarter of 1998. All per-share figures have been restated to reflect the 50%
stock dividend issued January 20, 1998.

The Company's capital policy is to evaluate future needs based on growth,
earnings trends and anticipated acquisitions.

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes to our disclosure on quantitative and
qualitative disclosures about market risk since December 31, 1998. For
additional information, see the Company's Form 10-K for the year ended
December 31, 1998.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material proceedings against the Company
during the quarter ended September 30, 1999.

Item 2. Changes in Securities

On June 24, 1999, the Company purchased the business of
Reed-Johnson Insurance Agency, Inc. with the issuance of 40,530
shares of the Company's common stock. The transaction is being
accounted for under the purchase method of accounting, and
increased the outstanding shares of common stock of the Company
from 6,191,854 to 6,232,384.

Item 6(b) Reports on Form 8-K

There were no reports filed on Form 8-K during the third quarter
of 1999.

SIGNATURES

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

THE PEOPLES HOLDING COMPANY
---------------------------
Registrant

DATE: November 12, 1999 /s/ John W. Smith
---------------------------
John W. Smith
President & Chief Executive Officer