SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

Peoples Financial Corporation
(Name of Registrant as Specified In Its Charter)

Peoples Financial Corporation
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined)

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

PEOPLES FINANCIAL CORPORATION
211 Lincoln Way East
Massillon, Ohio 44646
(330) 832-7441

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Notice is hereby given that the 1999 Annual Meeting of Shareholders of
Peoples Financial Corporation ("PFC") will be held at the main office of Peoples
Federal Savings and Loan Association of Massillon, 211 Lincoln Way East,
Massillon, Ohio 44646, on January 27, 1999, at 2:00 p.m., Eastern Time (the
"Annual Meeting"), for the following purposes, all of which are more completely
set forth in the accompanying Proxy Statement:

1. To re-elect three directors of PFC for terms expiring in 2001;

2. To ratify the selection of Grant Thornton LLP as the auditors of PFC for
the current fiscal year; and

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

Only shareholders of PFC of record at the close of business on December 4,
1998, will be entitled to receive notice of and to vote at the Annual Meeting
and at any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING MAY BE ASSURED. The giving of a proxy does not affect your right to vote
in person in the event you attend the Annual Meeting.

By Order of the Board of Directors

Massillon, Ohio
December 29, 1998 Paul von Gunten, President

PEOPLES FINANCIAL CORPORATION
211 Lincoln Way East
Massillon, Ohio 44646
(330) 832-7441

PROXY STATEMENT

PROXIES

The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Peoples Financial Corporation, an Ohio corporation ("PFC"), for use
at the 1999 Annual Meeting of Shareholders of PFC to be held at the main office
of Peoples Federal Savings and Loan Association of Massillon ("Peoples
Federal"), 211 Lincoln Way East, Massillon, Ohio 44646, on January 27, 1999, at
2:00 p.m., Eastern Time, and at any adjournments thereof (the "Annual Meeting").
Without affecting any vote previously taken, the Proxy may be revoked by a
shareholder by execution of a later dated proxy which is received by PFC before
the Proxy is exercised or by giving notice of revocation to PFC in writing or in
open meeting before the Proxy is exercised. Attendance at the Annual Meeting
will not, of itself, revoke a proxy.

Each properly executed Proxy received prior to the Annual Meeting and not
revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:

FOR the re-election of Victor C. Baker, Vincent G. Matecheck and Paul
von Gunten as directors of PFC for terms expiring in 2001; and

FOR the ratification of the selection of Grant Thornton LLP ("Grant
Thornton") as the auditors of PFC for the current fiscal year.

Proxies may be solicited by the directors, officers and other employees of PFC
and Peoples Federal, in person or by telephone, telecopy, telegraph or mail,
only for use at the Annual Meeting. Such Proxies will not be used for any other
meeting. The cost of soliciting Proxies will be borne by PFC.

Only shareholders of record as of the close of business on December 4, 1998
(the "Voting Record Date"), are entitled to vote at the Annual Meeting. Each
such shareholder will be entitled to cast one vote for each share owned. PFC's
records disclose that, as of the Voting Record Date, there were 1,335,785 votes
entitled to be cast at the Annual Meeting.

This Proxy Statement is first being mailed to the shareholders of PFC on or
about December 29, 1998.

VOTE REQUIRED

Election of Directors

Under Ohio law and PFC's Code of Regulations (the "Regulations"), the three
nominees receiving the greatest number of votes will be elected as directors.
Each shareholder will be entitled to cast one vote for each share owned. Shares
as to which the authority to vote is withheld are not counted toward the
election of directors or toward the election of the individual nominees
specified in the enclosed Proxy. If the enclosed Proxy is signed and dated by
the shareholder but no vote is specified thereon, the shares held by such
shareholder will be voted FOR the re-election of the three nominees.

Ratification of Selection of Auditors

The affirmative vote of the holders of a majority of the shares of PFC
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Grant Thornton as the auditors of PFC for the current fiscal
year. Shares that are held by a nominee for a beneficial owner and that are
represented in person or by proxy at the Annual Meeting but not voted with
respect to such ratification ("Non-votes") will have the same effect as a vote
against the approval of such ratification, as will abstentions. If, however, a
shareholder has signed and dated a proxy in the form of the enclosed Proxy but
has not voted on the ratification of the selection of Grant Thornton by checking
an appropriate block on the Proxy, such person's shares will be voted FOR the
ratification of the selection of Grant Thornton and will not be considered
Non-votes.

VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the only
persons known to PFC to own beneficially more than five percent of the
outstanding common shares of PFC as of December 4, 1998:

Amount and Nature of Percent of
Name and Address Beneficial Ownership Shares Outstanding

United National Bank 134,884 (1) 10.10%
& Trust Company
P.O. Box 24190
Canton, OH 44701

Jeffrey S. Halis 132,384 (2) 9.91%
500 Park Avenue
Fifth Floor
New York, NY 10022

Paul von Gunten (3) 107,767 (4) 8.07%

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

(1) Consists of 50,101 shares held in trust for the Peoples Financial
Corporation Recognition and Retention Plan and Trust, and 84,783 shares
held in trust for the Peoples Financial Corporation Employee Stock
Ownership Plan (the "ESOP"). Of the shares held by the ESOP, 38,855 have
been allocated to the accounts of participants, who have voting power with
respect to allocated shares.

(2) Based upon a Schedule 13D provided by Mr. Halis to PFC.

(3) Mr. von Gunten may be contacted at the address of PFC.

(4) Includes 8,109 shares allocated to Mr. von Gunten's ESOP account, with
respect to which Mr. von Gunten has voting but not investment power.

The following table sets forth certain information with respect to the
number of common shares of PFC beneficially owned by each director of PFC and by
all directors and executive officers of PFC as a group as of December 4, 1998:

Amount and Nature of
Beneficial Ownership
Sole Voting and Shared Voting and Percent of
Name and Address (1) Investment Power Investment Power Shares Outstanding
- -------------------- ---------------- ---------------- ------------------

Victor C. Baker 12,016 (2) - .90%
James P. Bordner 5,316 (2) 4,100 .70
Vincent G. Matecheck 13,716 (2) 100 1.03
Thomas E. Shelt 22,016 (2) 5,775 2.08
Vince E. Stephan 13,516 (2) - 1.01
Paul von Gunten 99,658 21,109 (3) 9.04
All directors and executive officers
of PFC as a group (7 people) 169,472 (4) 36,258 (5) 15.27

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

(1) Each of the persons listed in this table may be contacted at the address of
PFC.

(2) Includes 1,920 shares that may be acquired currently upon the exercise of
options.

(3) Includes 8,109 shares allocated to Mr. von Gunten's ESOP account, with
respect to which Mr. von Gunten has voting but not investment power.

(4) Includes 1,728 shares that may be acquired currently by an executive
officer upon the exercise of options.

(5) Includes 11,283 shares allocated to the ESOP accounts of executive
officers, with respect to which such persons have voting but not investment
power.

PROPOSAL ONE - ELECTION OF DIRECTORS

Election of Directors

The Regulations provide for a Board of Directors consisting of six persons
divided into two classes. In accordance with Section 2.02 of the Regulations,
nominees for election as directors may be proposed only by the directors or by a
shareholder entitled to vote for directors if such shareholder has submitted a
written nomination to the Secretary of PFC by the later of the November 30th
immediately preceding the annual meeting of shareholders or the sixtieth day
before the first anniversary of the most recent annual meeting of shareholders
held for the election of directors. Each such written nomination must state the
name, age, business or residence address of the nominee, the principal
occupation or employment of the nominee, the number of common shares of PFC
owned either beneficially or of record by each such nominee and the length of
time such shares have been so owned.

The Board of Directors proposes the re-election of the following persons to
serve until the Annual Meeting of Shareholders in 2001 and until their
successors are duly elected and qualified or until their earlier resignation,
removal from office or death:

Director of Director of Peoples
Name Age (1) Positions Held PFC Since (2) Federal Since
- ---- ------- -------------- ------------- -------------

Victor C. Baker 75 Director 1995 1984
Vincent G. Matecheck 53 Director, Secretary and Attorney 1995 1987
Paul von Gunten 72 Director, President and Chief 1995 1968
Executive Officer

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

(1) As of December 4, 1998.

(2) Messrs. Baker, Matecheck and von Gunten became directors of PFC in
connection with the conversion of Peoples Federal from mutual to stock form
and the formation of PFC as the holding company for Peoples Federal (the
"Conversion").

If any nominee is unable to stand for election, any proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.

The following directors will continue to serve as directors of PFC
after the Annual Meeting for the terms indicated:

Director of Director of Peoples
Name Age (1) Positions Held PFC Since (2) Term Expires Federal Since
---- ------- -------------- ------------- ------------ -------------

James P. Bordner 56 Director 1995 2000 1992
Thomas E. Shelt 65 Director 1995 2000 1978
Vince E. Stephan 82 Director and Chairman 1995 2000 1970
of the Board

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

(1) As of December 4, 1998.

(2) Messrs. Bordner, Shelt and Stephan became directors of PFC in connection
with the Conversion.

Mr. Baker retired in 1982 after owning and operating Sunny Slope Orchard, a
family operated, wholesale and retail fruit market, bakery and sweet shop
located in Massillon, Ohio, for 40 years.

Mr. Matecheck has served as legal counsel to Peoples Federal since 1992. A
lawyer in private practice, Mr. Matecheck is also the Secretary and a director
of P. J. Bordner and Company, Inc., and Polymer Packaging, Inc., of Canton,
Ohio; a partner of Federal Avenue Office Building Company; a director of Gordy
Graybill, Inc.; and the former President and a current member of the Board of
Trustees of the United Way of Western Stark County.

Mr. von Gunten has been employed by Peoples Federal since 1948 and has
served as President and Chief Executive Officer since 1979. Mr. von Gunten has
served as President of PFC since 1995.

Mr. Bordner has been the President of P. J. Bordner and Company, Inc., a
grocery store chain in Massillon, Ohio, since 1980.

Mr. Shelt was employed by Peoples Federal from 1961 until his retirement in
December 1994. For the last fifteen years of his employment, he served as Vice
President. He is currently engaged in farming and real estate investment.

Mr. Stephan has been Chairman of the Board of Peoples Federal since 1989.
He is Vice President of Manchester Hardware, Inc., a hardware store located in
Manchester, Ohio, and retired in 1980 after serving for 25 years as an insurance
agent for Nationwide Company in Canal Fulton, Ohio. Mr. Stephan currently
operates a family farm.

Meetings of Directors

The Board of Directors of PFC met nine times for regularly scheduled and
special meetings during the fiscal year ended September 30, 1998. Each director
attended at least 75% of the aggregate of such meetings and meetings of all
committees of the Board of Directors of which he is a member.

Committees of Directors

The Board of Directors of PFC does not have a nominating committee or a
compensation committee. Nominees for election to the Board of Directors are
selected by the entire Board of Directors.

The Board of Directors of PFC has an Audit Committee. The Audit Committee
recommends audit firms to the full Board of Directors and reviews and approves
the annual independent audit report. The members of the Audit Committee are
Messrs. Baker, Bordner and Shelt. The Audit Committee met one time during the
fiscal year ended September 30, 1998.

Executive Officers

In addition to Mr. von Gunten, the President of both PFC and Peoples
Federal, and Mr. Matecheck, the Secretary of PFC, the following persons are
executive officers of PFC and Peoples Federal and hold the designated positions:

Name Age (1) Position(s) Held

William P. Hart 60 Vice President of Peoples Federal
Linda L. Fowler 54 Secretary of Peoples Federal
James R. Rinehart 55 Treasurer of PFC and Peoples Federal
Cindy A. Wagner 46 Assistant Treasurer of Peoples Federal

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

(1) As of December 4, 1998

Mr. Hart joined Peoples Federal in January 1996. Prior to joining Peoples
Federal, Mr. Hart was employed by Citizens Savings Bank in Canton, Ohio, serving
as Vice President of Loan Originations since 1978. For the past 21 years, Mr.
Hart has served on the Board of Trustees of the Building Industry Association of
Stark County.

Ms. Fowler has been employed by Peoples Federal since 1962. She served as
Treasurer from 1986 to 1991 and has served as Secretary since 1991. Ms. Fowler
is the Treasurer and a member of the Board of Trustees of the Massillon Downtown
Merchants' Association and the Vice President and a member of the Board of
Directors of the Massillon Club.

Mr. Rinehart has served as the Treasurer of PFC since 1995. Mr. Rinehart
has also been employed by Peoples Federal since May 1994 and has served as the
Treasurer of Peoples Federal since March 1996. Prior to joining Peoples Federal,
Mr. Rinehart was an accountant with Hall, Kistler & Company P.L.L. ("Hall,
Kistler") for 29 years.

Ms. Wagner has been employed by Peoples Federal in various capacities since
1986, as an officer since 1991, and as Assistant Treasurer since March 1996. Ms.
Wagner is a member of the Board of Trustees of the Massillon Downtown Merchants'
Association and is the Treasurer and a member of the Board of Directors of the
Massillon Club.

Section 16(a) Beneficial Ownership Reporting Requirements

Under the federal securities laws, PFC's directors, executive officers and
persons holding more than ten percent of the common shares of PFC are required
to report their ownership of common shares and any changes in such ownership to
the Securities and Exchange Commission (the "SEC") and to PFC. Based upon a
review of such reports, PFC must disclose any failure to file such reports
timely in Proxy Statements used in connection with annual meetings of
shareholders. PFC has determined that no failure to file such reports timely
occurred during fiscal year 1998.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

Executive Compensation

The following table presents certain information regarding the cash
compensation received by the President and Chief Executive Officer of PFC and
Peoples Federal. No other executive officer of PFC received compensation in
excess of $100,000 during the fiscal years ended September 30, 1998, 1997 and
1996:

SUMMARY COMPENSATION TABLE

Annual Compensation Long Term Compensation
Awards
----------------------------
Name and Principal Year Salary ($)(1) Bonus ($) Restricted Securities All Other
Position Stock Awards Underlying Compensation
($) Options/
SARs(#)

Paul von Gunten 1998 $120,381 $13,000 - - $51,064(2)
President and 1997 115,647 14,000 $190,848(3) 28,806(4) 49,456(5)
Chief Executive 1996 113,648 12,500 - - 17,556(5)
Officer

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

(1) Includes salary of $111,331, $107,247 and $103,148 and directors' fees of
$9,050, $8,400 and $10,500 in fiscal years 1998, 1997 and 1996,
respectively. Does not include amounts attributable to other miscellaneous
benefits received by executive officers. The cost to PFC or Peoples Federal
of providing such benefits to Mr. von Gunten was less than 10% of his cash
compensation.

(2) Consists of Peoples Federal's contribution to Mr. von Gunten's 401(k)
defined contribution plan account in the amount of $1,310 and premiums
totaling $889 paid by Peoples Federal for insurance against the death or
long term disability of Mr. von Gunten payable to a beneficiary designated
by Mr. von Gunten, as well as the $48,865 aggregate value at the date of
allocation of shares allocated to the ESOP account of Mr. von Gunten.

(3) Represents the value of the common shares of PFC awarded to Mr. von Gunten
pursuant to PFC's RRP, determined by multiplying the number of shares
awarded on March 19, 1997, by $16.00 per share, the fair market value on
such date based on the mean between the closing high bid and low asked
quotation reported on The Nasdaq SmallCap Market. One-fifth of the awarded
shares will be earned and delivered on each anniversary of the date of the
award commencing on March 19, 1998.

(4) Represents the number of common shares of PFC underlying options granted to
Mr. von Gunten pursuant to PFC's 1997 Stock Option and Incentive Plan (the
"Stock Option Plan"), as adjusted due to a return of capital paid by PFC in
September 1997. "SARs" stands for "Stock Appreciation Rights." PFC does not
have a plan that provides for the grant of SARs.

(5) Consists of Peoples Federal's contribution to Mr. von Gunten's 401(k)
defined contribution plan account in the amount of $12,878 and $17,347 and
premiums totaling $889 and $209 paid by Peoples Federal for insurance
against the death or long-term disability of Mr. von Gunten payable to a
beneficiary designated by Mr. von Gunten in fiscal years 1997 and 1996,
respectively. The 1997 amount also includes the $35,689 aggregate value at
the date of allocation of shares allocated to the ESOP account of Mr. von
Gunten in fiscal year 1997.

Stock Option Plan

At the 1997 Annual Meeting of the Shareholders of PFC, the shareholders
approved the Stock Option Plan. The Board of PFC reserved 149,101 common shares,
which is equal to 10% of the common shares issued in connection with the
Conversion, for issuance by PFC upon the exercise of options to be granted to

certain directors, officers and employees of Peoples Federal and PFC from time
to time under the Stock Option Plan. Options to purchase 107,371 common shares
of PFC were awarded pursuant to the Stock Option Plan. Due to a return of
capital distribution in September 1997, the number of shares reserved for the
Stock Option Plan was increased to 192,042, and the number of awarded shares was
adjusted to 137,427.

The Stock Option Plan is administered by the Stock Option Committee (the
"Committee"), which may grant options under the Stock Option Plan at such times
as it deems most beneficial to Peoples Federal and PFC on the basis of the
individual participant's position and duties and the value of the individual's
service and responsibilities to Peoples Federal and PFC. Options granted to the
officers and employees under the Stock Option Plan may be "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), which, if certain conditions are met, permits
the optionees to delay the recognition of federal taxable income on the shares
received upon the exercise of the options. Options granted under the Stock
Option Plan to directors who are not employees of PFC or Peoples Federal will
not qualify under the Code and thus will not be ISOs ("Non-qualified Stock
Options").

The option exercise price for ISOs and Non-qualified Stock Options is
determined by the Committee at the time of option grant. The exercise price for
an option, must not be less than 100% of the fair market value of the shares on
the date of the grant; provided, however, for an employee who owns more than 10%
of PFC's outstanding common shares, the exercise price of an ISO may not be less
than 110% of the fair market value of the shares on the date of the grant, and
the ISO shall not be exercisable after the expiration of five years from the
date it is granted. No stock option will be exercisable after the expiration of
ten years from the date of grant. An option cannot be transferred or assigned
other than by will or in accordance with the laws of descent and distribution.
Termination for cause, as defined in the Stock Option Plan, will result in the
annulment of any outstanding options.

The following table sets forth information regarding the number and value
of unexercised options held by Mr. von Gunten at September 30, 1998:

Aggregated Option/SAR Exercises In Last Fiscal Year and 9/30/98 Option/SAR Values

Number of
Securities
Underlying
Unexercised Value of Unexercised
Options/SARs at In-the-Money
9/30/98 (#) Options/SARs at
9/30/98 ($)

Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------

Paul von Gunten 5,761 71,494 0/23,045 (1)

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

(1) Such options are not deemed to have any value as of September 30, 1998,
because their exercise price of $12.41 (as adjusted in fiscal year 1998 to
reflect a return of capital paid in September 1997) exceeded the $11.50
closing sale price.

Recognition and Retention Plan and Trust

At the 1997 Annual Meeting of the Shareholders of PFC, the shareholders of
PFC approved the RRP. With funds contributed by PFC, the RRP purchased 59,640
shares of PFC's common stock, 47,712 of which were awarded to directors and
executive officers of PFC and Peoples Federal in March 1997.

The RRP is administered by the RRP Committee of the Board of Directors of
PFC. Subject to express provisions of the RRP, the RRP Committee determines
which directors and employees of Peoples Federal and PFC are eligible to receive
awards of PFC common shares under the RRP, which eligible persons will be
awarded shares under the RRP and the number of shares to be awarded.

Unless the RRP Committee specifies a longer period of time, one-fifth of
the RRP shares awarded to a recipient will be earned and nonforfeitable on each
of the first five anniversaries of the date of the awards. Until shares awarded

are earned by the participant, such shares will be forfeited in the event that
the participant ceases to be either a director, an officer or an employee of PFC
or Peoples Federal. In the event of the death or disability of a participant,
however, the participant's shares will be deemed to be earned and nonforfeitable
upon such date.

RRP shares will be distributed as soon as practicable after they are
earned. All plan shares which have been awarded but not earned will be voted in
the discretion of the RRP Trustee appointed by the RRP Committee.

Employment Agreements

On November 15, 1996, Peoples Federal entered into an employment agreement
with Mr. von Gunten (the "Employment Agreement"). The Employment Agreement
provides for a term of three years, a salary of not less than $102,408 and a
performance review by the Board of Directors not less often than annually. The
Employment Agreement also provides for the inclusion of Mr. von Gunten in any
formally established employee benefit, bonus, pension and profit-sharing plans
for which senior management personnel are eligible.

The Employment Agreement is terminable by Peoples Federal at any time. In
the event of termination by Peoples Federal for "just cause," as defined in the
Employment Agreement, Mr. von Gunten will have no right to receive any
compensation or other benefits for any period after such termination. In the
event of termination by Peoples Federal other than for just cause, at the end of
the term of the Employment Agreement or in connection with a "change of
control," as defined in the Employment Agreement, Mr. von Gunten will be
entitled to a continuation of salary payments for a period of time equal to the
term of the Employment Agreement and a continuation of benefits substantially
equal to those being provided at the date of termination of employment until the
earliest to occur of (1) the end of the term of the Employment Agreement or (2)
the date on which Mr. von Gunten becomes employed full-time by another employer.

The Employment Agreement also contains provisions with respect to the
occurrence of the following within one year of a "change of control": (1) the
termination of employment of Mr. von Gunten for any reason other than just
cause, retirement or termination at the end of the term of the Employment
Agreement; (2) a material change in the capacity or circumstances in which Mr.
von Gunten is employed; or (3) a material reduction in his responsibilities,
authority, compensation or other benefits provided under the Employment
Agreement. In the event of any such occurrence, Mr. von Gunten will be entitled
to receive an amount equal to three times his average annual compensation for
the three taxable years immediately preceding the termination of employment. In
addition, Mr. von Gunten will be entitled to continued coverage under all
benefit plans until the earliest of the end of the term of the Employment
Agreement or the date on which he is included in another employer's benefit
plans as a full-time employee. The maximum which Mr. von Gunten may receive
under such provisions, however, is limited to an amount that will not result in
the imposition of a penalty tax pursuant to Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), and an amount that will not
violate applicable restrictions of the Office of Thrift Supervision (the "OTS").
A "change of control," as defined in the Employment Agreement, generally refers
to the acquisition by any person or entity of the ownership or power to vote 10%
or more of the voting stock of Peoples Federal or PFC, the control of the
election of a majority of the directors of Peoples or PFC or the exercise of a
controlling influence over the management or policies of Peoples Federal or PFC.

Directors' Compensation

PFC currently pays no directors' fees. Each director of Peoples Federal
receives a retainer fee of $2,400 for service as a director, plus $500 for each
monthly meeting attended. The Chairman of the Board and the Vice Chairman of the
Board also receive additional monthly fees of $600 and $350, respectively.

Certain Transactions

During the fiscal year ended September 30, 1998, Peoples Federal retained
the services of Vincent G. Matecheck, an attorney engaged in private practice in
the Massillon area. Mr. Matecheck is a director of Peoples Federal and PFC,
serves as the Secretary of PFC and serves as general counsel to Peoples Federal.
During fiscal years 1998, 1997 and 1996, Mr. Matecheck was paid $15,942, $14,166
and $16,199, respectively, for services rendered as general counsel to Peoples
Federal.

Although Peoples Federal makes loans to its employees and directors on the
same terms as those of comparable loans to other persons, People Federal
requires employees and directors to pay interest at a rate of one percent less

than the rate required of other customers while such employees and directors
serve Peoples Federal in their respective capacities. Should the service of an
employee or director cease for any reason, Peoples Federal will discontinue the
one percent reduction and enforce the nominal terms of the loan.

Peoples Federal made a mortgage loan to Mr. Matecheck with such a favorable
rate on June 6, 1996. The loan was secured by his personal residence and
originated in the amount of $350,000 at a rate of 7.65%, before the 1%
reduction. The loan was refinanced on November 9, 1998, in the amount of
$228,000 at a rate of 6.625%, before the 1% reduction.

No other loans which, in the aggregate to one person, exceeded $60,000
at any time during the two years ended September 30, 1998, were made to
directors or executive officers of PFC on preferential terms. None of the
outstanding loans to directors or executive officers involve more than the
normal risk of collectibility or present other unfavorable features, and all are
current in accordance with their terms.

PROPOSAL TWO - SELECTION OF AUDITORS

The Board of Directors has selected Grant Thornton as the auditors of PFC
and Peoples Federal for the current fiscal year and recommends that the
shareholders ratify such selection. Management expects that a representative of
Grant Thornton will be present at the Annual Meeting, will have the opportunity
to make a statement if he or she so desires and will be available to respond to
appropriate questions.

PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS

Any proposals of shareholders intended to be included in the proxy
statement for the 2000 Annual Meeting of Shareholders of PFC should be sent to
PFC by certified mail and must be received by PFC not later than August 31,
1999. In addition, if a shareholder intends to present a proposal at the 2000
Annual Meeting without including the proposal in the proxy materials related to
that meeting, and if the proposal is not received by November 12, 1999, then the
proxies designated by the Board of Directors of PFC for the 2000 Annual Meeting
of Shareholders of PFC may vote in their discretion on any such proposal any
shares for which they have been appointed proxies without mention of such matter
in the proxy statement or on the proxy card for such meeting.

Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.

By Order of the Board of Directors

Massillon, Ohio
December 15, 1998 Paul von Gunten, President

REVOCABLE PROXY

PEOPLES FINANCIAL CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF PEOPLES FINANCIAL CORPORATION

The undersigned shareholder of Peoples Financial Corporation ("PFC")
hereby constitutes and appoints Vince E. Stephan and James P. Bordner, or either
of them, as the Proxy or Proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Annual Meeting of Shareholders
of PFC to be held at 211 Lincoln Way East, Massillon, Ohio 44646, on January 27,
1999, at 2:00 p.m., Eastern Time (the "Annual Meeting"), all of the shares of
PFC which the undersigned is entitled to vote at the Annual Meeting, or at any
adjournment thereof, on each of the following proposals, all of which are
described in the accompanying Proxy Statement:

1. The election of three directors for terms expiring in 2001:

FOR all nominees WITHHOLD authority to
listed below vote for all nominees
(except as marked to the listed below:
contrary below):

Victor C. Baker
Vincent G. Matecheck
Paul von Gunten

(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).

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2. The ratification of the selection of Grant Thornton LLP, certified public
accountants, as the auditors of PFC for the current fiscal year.

FOR AGAINST ABSTAIN

3. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournments thereof.

The Board of Directors recommends a vote "FOR" the nominees and the
proposals listed above.

Important: Please sign and date this proxy on the reverse side.

This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. Unless otherwise specified, the shares
will be voted FOR proposals 1 and 2.

All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Annual Meeting and of the accompanying Proxy
Statement is hereby acknowledged.

Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.

- ---------------------------- ------------------------------
Signature Signature

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Print or Type Name Print or Type Name

Dated: _____________________ Dated: _______________________

PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.