DIMECO, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 23, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints L. Jill George and
Cheryl A. Smith and each and any of them, proxies of the undersigned, with
full power of substitution, to vote all of the shares of Dimeco, Inc. (the
"Company") that the undersigned may be entitled to vote at the Annual Meeting
of Shareholders of the Company to be held at the main office of The Dime Bank,
820 Church Street, Honesdale, Pennsylvania 18431, on Thursday, April 23, 1998,
at 2:00 p.m., prevailing time, and at any adjournment or postponement thereof
as follows:

1. ELECTION OF CLASS C DIRECTORS

William E. Schwarz, Henry M. Skier and Gerald J. Weniger

[ ] For all nominees listed [ ] WITHHOLD AUTHORITY
above (except as marked to vote on all nominees
to the contrary below) listed above

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)

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

2. Ratification of the selection of S. R. Snodgrass, A.C., Certified Public
Accountants, as the auditors of the Company for the year ending
December 31, 1998.

[ ] FOR [ ] AGAINST

3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.

THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSAL 2.

Dated , 1998
---------------------------

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

--------------------------------------
Signature(s)

Number of Shares Held of
Record on March 16, 1998:
-------------

THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY TO THE COMPANY IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE
THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER MUST
SIGN.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO THE SHAREHOLDERS OF DIMECO, INC.:

Notice is hereby given that the Annual Meeting of Shareholders of Dimeco,
Inc. (the "Company") will be held at 2:00 p.m., prevailing time, on Thursday,
April 23, 1998, at the main office of The Dime Bank, 820 Church Street,
Honesdale, Pennsylvania 18431, for the following purposes:

1. To elect three Class C directors to serve for a three-year term and
until their successors are duly elected and qualified;

2. To ratify the selection of S. R. Snodgrass, A.C., Certified Public
Accountants, of Wexford, Pennsylvania, as the independent auditors of the
Company for the fiscal year ending December 31, 1998; and

3. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.

Only those shareholders of record at the close of business, at 5:00 p.m.,
on Monday, March 16, 1998, will be entitled to notice of and to vote at the
Annual Meeting.

A copy of the Company's Annual Report for the fiscal year ended
December 31, 1997, is being mailed with this notice.

You are urged to mark, sign, date and promptly return your proxy so that
your shares may be voted in accordance with your wishes and in order that the
presence of a quorum may be assured. The prompt return of your signed proxy,
regardless of the number of shares you hold, will aid the Company in reducing
the expense of additional proxy solicitation. The giving of such proxy does
not affect your right to vote in person if you attend the meeting.

By Order of the Board of Directors

Joseph J. Murray
President & Chief Executive Officer

April 1, 1998

PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 23, 1998

GENERAL

INTRODUCTION, DATE, PLACE AND TIME OF MEETING

This Proxy Statement is furnished for the solicitation by the Board
of Directors of Dimeco, Inc. (the "Company"), a Pennsylvania business
corporation, of proxies to be voted at the Annual Meeting of Shareholders of
the Company to be held at the main office of The Dime Bank, 820 Church Street,
Honesdale, Pennsylvania 18431, on Thursday, April 23, 1998, at 2:00 p.m.,
prevailing time, or at any adjournment or postponement of the Annual Meeting.

The main office of the Company is located at The Dime Bank, 820
Church Street, Honesdale, Pennsylvania 18431. The telephone number for the
Company is (717) 253-1970. All inquiries should be directed to Joseph J.
Murray, President and Chief Executive Officer. This Proxy Statement and the
enclosed form of proxy (the "Proxy") are first being sent to shareholders of
the Company on or about April 1, 1998.

SOLICITATION

Shares represented by proxies on the accompanying Proxy, if properly
signed and returned, will be voted in accordance with the specifications made
thereon by the shareholders. Any Proxy not specifying to the contrary will be
voted FOR the election of the three nominees for Class C director named below
and FOR the approval of S. R. Snodgrass, A.C., Certified Public Accountants,
as the independent auditors for the fiscal year ending December 31, 1998.
Execution and return of the enclosed Proxy will not affect a shareholder's
right to attend the Annual Meeting and vote in person.

The cost of preparing, assembling, mailing and soliciting proxies
will be borne by the Company. In addition to the use of the mails, certain
directors, officers and employees of the Company intend to solicit proxies
personally, by telephone and by facsimile. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to forward
proxy solicitation material to the beneficial owners of stock held of record
by these persons, and, upon request therefor, the Company will reimburse them
for their reasonable forwarding expenses.

RIGHT OF REVOCATION

A shareholder who returns a Proxy may revoke it at any time before
it is voted by: (1) delivering written notice of revocation to Gerald J.
Weniger, Secretary, Dimeco, Inc., 820 Church Street, Honesdale, Pennsylvania
18431, telephone: (717) 253-1970; (2) executing a later-dated Proxy and
giving written notice thereof to the Secretary of the Company; or (3) voting
in person after giving written notice to the Secretary of the Company.

VOTING SECURITIES, RECORD DATE AND QUORUM

At the close of business on March 16, 1998, the Company had
outstanding 726,987 shares of common stock, $.50 par value per share (the
"Common Stock"). The presence, in person or by proxy, of a majority of the
outstanding shares of the Common Stock will constitute a quorum at the Annual
Meeting.

Only holders of Common Stock of record at the close of business on
March 16, 1998 will be entitled to notice of and to vote at the Annual
Meeting. Cumulative voting rights do not exist with respect to the election
of directors. On all matters to come before the Annual Meeting, each share of
Common Stock is entitled to one vote.

PRINCIPAL BENEFICIAL OWNERS OF THE COMPANY'S STOCK

PRINCIPAL OWNER

As of March 16, 1998 there was no person who owned of record or who
is known by the Board of Directors to be the beneficial owner of more than
five percent (5%) of the Company's outstanding Common Stock.

BENEFICIAL OWNERSHIP BY OFFERCER, DIRECTORS AND NOMINEES

The following table sets forth as of March 16, 1998, the amount and
percentage of the Common Stock of the Company beneficially owned by each
director, each nominee and all officers and directors of the Company as a
group. All shares reported have been rounded to the nearest whole share.

Name of Individual Amount and Nature of Percent of
or Identity of Group Beneficial Ownership(1)(2) Class(3)

John S. Kiesendahl(5)(9) 8,354 1.15%
Joseph J. Murray(4)(10) 1,406 -----
Thomas A. Peifer(4)(7) 6,880 -----
William E. Schwarz(6) 5,550 -----
Henry M. Skier(6)(8) 29,154 4.01%
Gerald J. Weniger(6) 4,896 -----

All Officers and Directors as a
Group (8 persons in total) 57,942 7.97%

- --------------------------------------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in
the General Rules and Regulations of the Securities and Exchange
Commission ("SEC") and may include securities owned by or for the
individual's spouse and minor children and any other relative who has the
same home, as well as securities to which the individual has or shares
voting or investment power or has the right to acquire beneficial
ownership within 60 days after March 16, 1998. Beneficial ownership may
be disclaimed as to certain of the securities. (2) Information furnished
by the Directors and the Company.
(3) Less than one percent (1%) unless otherwise indicated.
(4) A Class A Director Whose Term Expires in 1999 .
(5) A Class B Director Whose Term Expires in 2000.
(6) A Class C Director Whose Term Expires in 1998 and a nominee for Class C
Director Whose Term Expires in 2001.
(7) All shares are held jointly with his spouse.
(8) Includes 28,906 shares held individually by Mr. Skier and 248 shares are
held by Mr. Skier as custodian for his two children.
(9) Includes 1,552 shares held individually by Mr. Kiesendahl and 6,802
held by Woodloch Pines, Inc., of which Mr. Kiesendahl is the President.
(10) Includes 1,382 shares held jointly by Mr. Murray with his spouse and 12
shares held individually by each of two children who reside with Mr.
Murray.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities (in this case the
Company's Common Stock), to file reports of ownership and changes in ownership
with the Securities and Exchange Commission, (the "SEC"). Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms that
they file.

Based solely on its review of the copies of such forms received by
it, or on written representations from certain reporting persons that no Forms
5 were required for those persons, the Company believes that during the period
January 1, 1997 through December 31, 1997 all filing requirements applicable
to its officers, directors and greater than ten-percent shareholders were
complied with.

ELECTION OF DIRECTORS

The Company has a classified Board of Directors with staggered
three-year terms of office. In a classified board, the directors are
generally divided into separate classes of equal number with the terms of the
separate classes expiring in successive years. The Company's Board is divided
into three classes. Thus, at the 1998 Annual Meeting of Shareholders,
successors to the current Class C directors whose term expire in 1998 shall be
elected to hold office for a term of three years.

In addition, there is no cumulative voting for the election of
directors. Each share of Common Stock is entitled to cast only one vote for
each nominee. For example, if a shareholder owns 100 shares of Common Stock,
he or she may cast up to 100 votes for each of the nominees for director in
the class to be elected. Election of a nominee to the office of director will
require an affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting.

Unless otherwise instructed, the proxy holders will vote the Proxies
received by them for the election of the three nominees for Class C Director
named below. If any nominee should become unavailable for any reason, Proxies
will be voted in favor of a substitute nominee as the Board of Directors of
the Company shall determine. The Board of Directors has no reason to believe
the nominees named will be unable to serve if elected. Any vacancy occurring
on the Board of Directors of the Company for any reason may be filled by a
majority of the directors then in office until the expiration of the term of
vacancy.

INFORMATION AS TO NOMINEES,
DIRECTORS AND EXECUTIVE OFFICERS

The following table contains certain information with respect to the
nominees for Class C director and the current Class A and Class B director(s)
whose terms of office expire in 1998, 1999 and 2000, respectively.

Age as of Principal Occupation Director Since
Name March 16, 1998 for Past Five Years Company/Bank
- ---- -------------- ------------------- -------------

NOMINEES FOR CLASS C DIRECTORS WHOSE TERM WILL EXPIRE
IN 2001 AND CURRENT CLASS C DIRECTORS WHOSE TERM EXPIRES IN 1998
- ----------------------------------------------------------------

William E. Schwarz 55 President - Edw. J. Schwarz, Inc. 1992/1971
(automobile dealership)

Henry M. Skier 57 President and Treasurer - 1992/1982
A.M. Skier Agency, Inc.
(independent insurance agency)

Gerald J. Weniger 67 President - Weniger Electronics, 1992/1986
Inc. (retail electronic
appliances and equipment)

CLASS A DIRECTORS WHOSE TERM EXPIRES IN 1999
- --------------------------------------------

Joseph J. Murray 58 President and Chief Executive 1992/1991
Officer of the Company and
the Bank

Thomas A. Peifer 55 Superintendent of the 1992/1987
Wallenpaupack Area
School District

CLASS B DIRECTORS WHOSE TERM EXPIRES IN 2000
- --------------------------------------------

John S. Kiesendahl 51 President - Woodloch 1992/1985
Pines, Inc. (resort)

During 1997, the Board of Directors of the Company held nine
meetings. Directors received no additional remuneration for attendance at
meetings of the Board of Directors of the Company. The Board of Directors of
the Bank held 31 meetings.

Each of the Directors, with the exception of Messrs. Skier and
Weniger attended at least 75% of the total number of meetings of the Company.
Each of the Directors attended at least 75% of the total number of meetings of
the Bank's Board of Directors and of the committees on which they serve.

At present, the Board of Directors of the Company has no standing
committees. The Company does not have a nominating committee. A shareholder
who desires to propose an individual for consideration by the Board of
Directors as a nominee for director should submit a proposal in writing to the
Secretary of the Company in accordance with Section 10.1 of the Company's
By-laws.

EXECUTIVE COMPENSATION

The following table sets forth the total compensation for services
in all capacities paid by the Company and the Bank during 1997, 1996, and 1995
to the Company's and the Bank's President and Chief Executive Officer. No
other officer of the Company and the Bank had total annual salary and bonus
that exceeded $100,000 during 1997, 1996 or 1995.

SUMMARY COMPENSATION TABLE(1)

Annual Compensation
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Name and Fiscal Other Annual All Other
Principal Position Year Salary($) Bonus($) Compensation($) Compensation ($)
- ----------------------------------------------------------------------------------------------------

Joseph J. Murray, 1997 132,592 8,000 45,132(2) -
President and Chief 1996 100,511 10,047 41,275(3) -
Executive Officer of 1995 96,140 6,730 36,361(4) 2,166(5)
the Company and Bank
====================================================================================================

(1) From January 1, 1995 through December 31, 1997, the Company did not pay
any long-term compensation in the form of stock options, stock
appreciation rights, restricted stock or any other long-term
compensation, nor did it make any long-term incentive plan payments.
Accordingly, no such information is presented in the Summary Compensation
Table set forth above.
(2) Includes $26,405 vested benefit in salary continuation plan, a $9,324
contribution to Mr. Murray's 401(k) profit-sharing plan, $7,351 as the
incremental costs for an automobile made available to Mr. Murray and
$2,052 representing various medical, disability and life insurance
premiums.
(3) Includes $24,260 vested benefit in a salary continuation plan, a $7,962
contribution to Mr. Murray's 401(k) profit-sharing plan, $6,398 as the
incremental costs for an automobile made available to Mr. Murray and
$2,655 representing various medical, disability and life insurance
premiums.
(4) Includes $22,290 vested benefit in a salary continuation plan, a 6,389
contribution to Mr. Murray's 401(k) profit-sharing plan, $5,097 as the
incremental costs for an automobile made available to Mr. Murray and
$2,585 representing various medical, disability and life insurance
premiums.
(5) Represents the Bank's contribution to the pension plan on behalf of Mr.
Murray.

SALARY CONTINUATION PLAN FOR EXECUTIVE OFFICERS

Joseph J. Murray has served as the Company's and the Bank's President and
Chief Executive Officer since 1993 and Executive Vice President and Chief
Executive Officer of the Bank since 1986. Maureen H. Beilman has served as
the Company's and the Bank's Treasurer since 1993, the Bank's Secretary since
1997 and the Company's Assistant Secretary since 1997 and as Controller of the
Bank since 1988. Gary C. Beilman has served as Vice President of the Company
since 1993 and as Vice President of the Bank since 1989. As a result of
these officers' active involvement and experience in the affairs of the Bank,
the Bank has depended upon, and continues to depend upon, their continued
employment. The Bank does not maintain employment contracts or key man
insurance, other than in connection with the salary continuation plans below,
with respect to Messrs. Murray and Beilman and Ms. Beilman. However, in 1995,
the Bank entered into agreements to establish a non-qualified salary
continuation plan (the "Salary Continuation Plan") for these officers. If an
officer continues to serve as an officer of the Bank until he or she attains
age sixty-five (65), the Bank agrees to pay that officer 120 guaranteed
consecutive monthly payments commencing on the first day of the month
following the officer's 65th birthday. If the officer attains sixty-five (65)
years of age, but dies before receiving all of the guaranteed monthly payments
or dies before age sixty-five (65) while serving as an officer, then the Bank
will make the remaining payments to that officer's designated beneficiary or
to the representative of his or her estate. The Bank has obtained life
insurance (designating the Bank as beneficiary) on the life of each
participating officer in an amount which is intended to cover the Bank's
obligations under the Salary Continuation Plan, based upon certain actuarial
assumptions. In 1997, the Bank accrued $35,440 as an expense for the Salary
Continuation Plan. Income realized from increases in the cash surrender
values of the life insurance policies in 1997 was $54,922.

REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

The Board of Directors of Dimeco, Inc. is responsible for the governance
of the Company and its subsidiary, The Dime Bank. In fulfilling its fiduciary
duties, the Board of Directors acts in the best interests of the Company's
shareholders, customers and the communities served by the Company and the
Bank. To accomplish the strategic goals and objectives of the Company, the
Board of Directors engages competent persons who undertake to accomplish these
objectives with integrity in a cost-effective manner. The compensation of
these individuals is part of the Board of Directors' fulfillment of its
duties to accomplish the Company's strategic mission. The Bank provides
compensation to the employees of the Company and the Bank.

The fundamental philosophy of the Company's and the Bank's compensation
program is to offer competitive compensation opportunities for all employees
based on the individual's contribution and personal performance. The
compensation program is administered by a Compensation Committee comprised of
all outside directors. The objectives of the Committee are to establish a
fair compensation policy to govern executive officers' base salaries and
incentive plans to attract and motivate competent, dedicated and ambitious
managers whose efforts will enhance the products and services of the Company,
the results of which will be improved profitability, increased dividends to
our shareholders and subsequent appreciation in market value of our shares.

The compensation of the Company's and Bank's top executive officers is
reviewed and approved annually by the Board of Directors. The top executives
whose compensation is determined by the committee include the president and
chief executive officer, the controller and treasurer and all other vice
presidents. As a guideline for review in determining base salaries, the
committee uses information composed of a Pennsylvania peer group," L.R. Webber
Associates, Inc. Survey Report" which includes peer group banks with assets
of $100,000 to $199,999.

PRESIDENT AND CHIEF EXECUTIVE OFFICER COMPENSATION

The Board of Directors has determined that the CEO's 1997 compensation of
$132,592 is appropriate in light of the following Company performance
accomplishments over the past five years: (1) a ninety-five percent (95%)
increase in net income; (2) an eighteen percent (18%) increase in return on
equity; and (3) a thirty-two percent (32%) increase in assets. There is,
however, no direct correlation between the CEO's compensation, the CEO's
increase in compensation and any of the above criteria, nor is there any
weight given by the committee to any of the above specific individual
criteria. Such increase in the CEO' compensation is based on the committee's
subjective determination after review of all information, including the above,
that it deems relevant.

EXECUTIVE OFFICERS

The Board of Directors establishes the compensation of the Company's and
the Bank's executive officers. Compensation increases were determined by the
committee based on its subjective analysis of each individual's contribution
to the Company's strategic goals and objectives. In determining whether
strategic goals have been achieved, the Board of Directors considers among
numerous factors, the following; the Company's performance as measured by
earnings, revenues, return on assets, return on equity, market share, total
assets and non-performing loans. Although performance and increases in
compensation were measured in light of these factors, there is no direct
correlation between any such criteria in the committee's analysis. The
determination by the committee is subjective after review of all information,
including the above, it deems relevant.

Total compensation opportunities available to the employees of the Bank
are influenced by general labor market conditions, the specific
responsibilities of the individual and the individual's contributions to the
Company's success. Individuals are reviewed annually on a calendar year
basis. The Bank strives to offer compensation that is competitive with that
offered by employers of comparable size in our industry. Through these
compensation policies, the Company strives to meet its strategic goals and
objectives to its constituencies and provide compensation that is fair and
meaningful to its employees.

Submitted By The Board of Directors Acting
as the Executive Compensation Committee:

Joseph J. Murray John S. Kiesendahl
William E. Schwarz Thomas A. Peifer
Gerald J. Weniger Henry M. Skier

BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

Joseph J. Murray, President and Chief Executive Officer of the Company
and the Bank is a member of the Board of Directors. Mr. Murray makes
recommendations to the Board of Directors regarding compensation for all
employees. The recommendations are submitted to the entire Board of
Directors to be voted upon to establish compensation policies. Mr. Murray
does not participate in the discussions and decision relating to his base
salary and cash bonus.

DIRECTORS' OOMPENSATION

Each outside Director of the Bank received, in 1997, $11,000 for his
services as a Director. In 1997, the Directors of the Bank received $66,000,
in the aggregate, for attendance at Board meetings. Directors received no
remuneration for attendance at meetings of the Board of Directors of the
Company.

DIRECTOR DEFERRED COMPENSATION PLANS

The Bank has entered into agreements with two Directors to establish
non-qualified deferred compensation plans (the "Director Deferred Compensation
Plans"). Mr. Skier is deferring substantially all of the payment of his
directors' fees described above. The plan is equal to a sum of money measured
by the collateral assignment portion between the Director and the Bank
accruing during the term of his appointment in connection with the Director's
agreement with the Bank. If the Directors's appointment is terminated due to
his death or disability while still named as a Director of the Bank, the Bank
shall make the payment at the termination of service, if disabled, or to his
beneficiary, if deceased. The plan for Mr. Kiesendahl is recorded by the Bank
in a deferred compensation account for his benefit. He is entitled to receive
all amounts credited to the account as of the date of termination of service.
If termination is due to his death, his beneficiary will be entitled to
receive all amounts credited to the account as of the date of his death,
either in installments or as a lump sum, at the Bank's discretion. Mr.
Kiesendahl chose not to defer any portion of his director's fees during 1997.
Although Messrs. Skier and Kiesendahl are the only Directors who have entered
into these agreements as of this date, the Bank has offered these plans to all
Directors and may enter into substantially similar plans with its remaining
Directors.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There have been no material transactions since January 1, 1997, nor are
any such transactions currently proposed, to which the Company or the Bank was
or is to be a party and in which any director or executive officer of the
Company, or any beneficial owner of more than 5% of the Common Stock of the
Company (or any associate thereof, respectively), had or will have a material
interest. The Company and the Bank have engaged in and intend to continue to
engage in banking and financial transactions in the ordinary course of
business with directors and executive officers of the Company and the Bank and
their respective associates on comparable terms and with similar interest
rates as those prevailing from time to time for other non-affiliated customers
of the Company and the Bank. Total loans outstanding from the Company and the
Bank, at December 31, 1997, to the Company's and the Bank's officers and
directors as a group and members of their immediate families and companies in
which they had an ownership interest of 10% or more was

$3,041,740 or 20.9% of the Bank's total equity capital accounts. The largest
amount of indebtedness outstanding at any time during fiscal year 1997 to the
above identified group was $3,083,541, which was 23.0% of the Bank's total
equity capital accounts. Such loans do not involve more than the normal risk
of collectibility nor do they present other unfavorable features.

PRINCIPAL OFFICERS OF THE COMPANY

The following table sets forth selected information about the principal
officers of the Company, each of whom is selected by the Board of Directors
and each of whom holds office at the discretion of the Board of Directors.
All reported shares have been rounded to the nearest whole share.

Bank Number of Age as of
Held Employee Company Shares March 16,
Name Office/Position with Bank Since Since Beneficially Owned 1998
- ---- ------------------------- ----- ------- ------------------ ------

William E. Schwarz Chairman 1993 (1) 5,550 55

Joseph J. Murray President and CEO 1993 1986(2) 1,406 58

Gerald J. Weniger Secretary 1993 (1) 4,896 67

Maureen H. Beilman Treasurer and Asst. Secretary 1993 1988(2) 844 42

Gary C. Beilman Vice President 1994 1989(2) 858 43

___________________________
(1) Messrs. Schwarz and Weniger have never been full-time employees of the
Bank.
(2) Messrs. Murray and Beilman and Ms. Beilman are full-time employees of
the Bank. Mr. Beilman is Ms. Beilman's brother-in-law.

PRINCIPAL OFFICERS OF THE BANK

The following table sets forth selected information about the principal
officers of the Bank, each of whom is selected by the Board of Directors of
the Bank and each of whom holds office at the discretion of the Board of
Directors of the Bank. All shares reported have been rounded to the nearest
share.

William E. Schwarz Chairman 1986 (1) 5,550 55

Joseph J. Murray President and CEO 1993 1986 1,406 58

Gerald J. Weniger Assistant Secretary 1991 (1) 4,896 67

Gary C. Beilman(2) Vice President 1989 1989 858 43

Maureen H. Beilman(2) Controller, Secretary 1988 1988 844 42
and Treasurer

____________________________
(1) Messrs. Schwarz and Weniger have never been full-time employees of the
Bank.
(2) Mr. Beilman is Ms. Beilman's brother-in-law.

RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

Unless instructed to the contrary, it is intended that votes will be cast
pursuant to the proxies for the ratification of the selection of S. R.
Snodgrass, A.C., Certified Public Accountants, of Wexford, Pennsylvania
("Snodgrass"), as the Company's independent public accountants for its fiscal
year ending December 31, 1998. The Company has been advised by Snodgrass that
none of its members has any financial interest in the Company. Ratification
of Snodgrass will require an affirmative vote of a majority of the shares of
Common Stock represented at the Annual Meeting. Snodgrass served as the
Company's independent public accountants for the Company's 1997 fiscal year.

In addition to performing customary audit services, Snodgrass assisted
the Company with the preparation of its federal and state tax returns,
provided consulting services and provided assistance in connection with
regulatory matters, charging the Company for such services at its customary
hourly billing rates. These non-audit services were approved by the Company's
and the Bank's Board of Directors, after due consideration of the effect of
the performance thereof on the independence of the accountants and after the
conclusion by the Company's and the Bank's Board of Directors that there was
no effect on the independence of the accountants. Snodgrass has been hired by
the Bank's Board of Directors to perform internal audit services for 1998.
The issue of independence as it pertains to the external audit services
provided by Snodgrass has been reviewed by the Board of Directors. They
believe that this arrangement will not compromise the independence of
Snodgrass in their role as external auditor.

In the event that the shareholders do not ratify the selection of
Snodgrass as the Company's independent public accountants for the 1998 fiscal
year, another accounting firm will be chosen to provide independent public
accountant audit services for the 1998 fiscal year. The Board of Directors
recommends that the shareholders vote FOR the ratification of the selection of
Snodgrass as the auditors for the Company for the year ending December 31,
1998.

It is understood that even if the selection of Snodgrass is ratified, the
Board of Directors, in its discretion, may direct the appointment of a new
independent auditing firm at any time during the year if the Board of
Directors determines that such a change would be in the best interest of the
Company and its shareholders.

LEGAL PROCEEDINGS

GENERAL

In the opinion of the management of the Company, there are no proceedings
pending to which the Company and the Bank is a party or to which its property
is subject, which, if determined adversely to the Company and the Bank, would
be material in relation to the Company's and the Bank's undivided profits or
financial condition. There are no proceedings pending other than ordinary
routine litigation incident to the business of the Company and the Bank. In
addition, no material proceedings are pending or are known to be threatened or
contemplated against the Company and the Bank by government authorities.

ANNUAL REPORT

A copy of the Company's Annual Report for its fiscal year ended December
31, 1997, is being mailed with this Proxy Statement. A representative of
Snodgrass, the accounting firm which examined the financial statements in the
Annual Report, will attend the Annual Meeting. This representative of
Snodgrass will have the opportunity to make a statement, if he or she desires
to do so, and will be available to respond to any appropriate questions
presented by shareholders at the Annual Meeting.

SHAREHOLDER PROPOSALS

Any shareholder, who in accordance with and subject to the provisions of
the proxy rules of the SEC, wishes to submit a proposal for inclusion in the
Company's Proxy Statement for its 1999 Annual Meeting of Shareholders must
deliver such proposal in writing to the Secretary of Dimeco, Inc. at the
principal executive offices of the Company at The Dime Bank, 820 Church
Street, Honesdale, Pennsylvania 18431, not later than Wednesday, December 2,
1998.

OTHER MATTERS

The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Annual Meeting
of Shareholders, but if any matters are properly presented, it is the
intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their judgment.

ADDITIONAL INFORMATION

Upon written request of any shareholder, a copy of the Company's report
on Form 10-KSB for its fiscal year ended December 31, 1997, including the
financial statements and the schedules thereto, required to be filed with the
SEC, may be obtained, without charge, from Maureen H. Beilman, Treasurer,
Dimeco, Inc., 820 Church Street, Honesdale, Pennsylvania 18431, telephone:
(717) 253-1970.

In addition, a copy of the Annual Disclosure Statement of The Dime
Bank may also be obtained, without charge, from Maureen H. Beilman, Treasurer.