FIRST NILES FINANCIAL, INC. DECLARES
                   SPECIAL CASH DISTRIBUTION TO SHAREHOLDERS


     NILES, OHIO -The Board of Directors of First Niles Financial,  Inc. (Nasdaq
SmallCap:  FNFI),  the  holding  company  for  Home  Federal  Savings  and  Loan
Association of Niles,  today declared a special cash  distribution  of $6.00 per
share to  shareholders  of record as of the close of business  on  November  29,
1999,  payable  on  December  13,  1999.  Management  believes  that the  entire
distribution will constitute a non-taxable  return of capital,  although the tax
treatment cannot be confirmed until the Company determines its operating results
for the tax year ending December 31, 1999.  Once known,  the Company will notify
shareholders by letter. The portion of the distribution that does not qualify as
a tax-free  return of capital,  if any, will be treated as a dividend,  which is
generally taxable as ordinary income to shareholders.

     William Stephens, President and Chief Executive Officer, stated "Ever since
the Company  raised net proceeds of  approximately  $16.9 million in its initial
public  offering in October 1998, the Board of Directors has been evaluating the
strategic options available to deploy those proceeds to enhance the value of our
shareholders'  investment.  After  thorough  deliberation  and  analysis  of the
Company's  capital  position  and  anticipated   future  needs,  the  Board  has
determined  that  distributing  capital  to  shareholders  as a return  on their
initial  investment is the best available  course of action at this time. At the
end of September  1999,  the Company's  equity to asset ratio was  approximately
34.3%. This special  distribution will reduce that ratio to approximately 25.3%,
leaving the Company with considerable capital to support future growth."

     In accordance with NASD regulations,  the ex-dividend date for this special
distribution  will be December 14, 1999, the first business day after payment of
the  special  distribution.  Shareholders  who  sell  their  shares  before  the
ex-dividend  date  transfer  the right to receive the cash  distribution  to the
buyers of the  shares.  Persons  who buy or sell  Company  common  stock  before
December 14, 1999,  should  consult their brokers  regarding the timing of their
transaction and the effect of the ex-dividend date on their right to receive the
special capital distribution.

     First Niles Financial, Inc. is the holding company for Home Federal Savings
and Loan  Association  of Niles.  Home Federal  Savings and Loan  Association of
Niles operates one  full-service  office in Niles,  Ohio. At September 30, 1999,
the Company had total assets of $84.2 million and shareholders'  equity of $28.8
million on a  consolidated  basis.  On November 11, 1999,  the Company's  common
stock closed at $15.875 per share on the Nasdaq SmallCap Market.

FOR MORE INFORMATION CONTACT                             FOR IMMEDIATE RELEASE
William L. Stephens, President                         Date: November 15, 1999
or Lawrence Safarek, Vice President
at (330) 652-2539