EXHIBIT 10 (iii)

            Executive Employment Agreement and Stock
           Option Agreement of R. B. Robertson dated
                        September 1, 1997

<PAGE>

                    EXECUTIVE EMPLOYMENT AGREEMENT


     THIS AGREEMENT is made on the 1st day of September, 1997,
between PFC BANK, a Pennsylvania business corporation located at
Fourth Street and Ford Avenue, P. O. Box 311, Ford City,
Pennsylvania 16226, (the "Bank") and PEOPLES FINANCIAL CORP.,
INC., a Pennsylvania business corporation located at Fourth
Street and Ford Avenue, P. O. Box 311, Ford City, Pennsylvania
16226, (the "Corporation") and R. B. ROBERTSON, an adult
individual residing in Pennsylvania (the "Executive").

     WHEREAS, the Bank and Corporation desire to employ the
Executive as President and CEO of the Bank and Corporation under
the terms and conditions set forth herein; and

     WHEREAS, the Executive desires to serve the Bank and
Corporation in an executive capacity under the terms and
conditions set forth in this Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and intending to be legally bound
hereby, the parties agree as follows:

     1.  TERMS OF EMPLOYMENT.  The Bank and Corporation hereby
employ the Executive and the Executive hereby accepts employment
with the Bank and Corporation for a period of three (3) years

<PAGE>

beginning on September 1, 1997 and ending on August 31, 2000,
subject, however, to prior termination of this Agreement as set
forth below. 

     2.  POSITION AND DUTIES.  The Executive shall serve as the
President and CEO of the Bank and Corporation and a member of the
Board of Directors of the Bank and Corporation and shall have
supervision and control over, and responsibility for, the general
management and operation of the Bank and Corporation, and shall
have such other powers and duties as may from time to time be
prescribed by the Board of Directors of the Bank and Corporation,
provided that such duties are consistent with the Executive's
position as the President in charge of the general management of
the Bank and Corporation.

     3.  ENGAGEMENT IN OTHER EMPLOYMENT.  The Executive shall
devote all his working time, ability and attention to the
business  of the Bank and Corporation during the term of this
Agreement.  The Executive shall notify the Board of Directors of
the Bank and Corporation in writing and receive their written
consent before the Executive engages in any other business or
commercial activities, duties or pursuits, including, but not
limited to, directorships of other companies.  Under no
circumstances may the Executive engage in any business or
commercial activities, duties or pursuits which

                              - 2 -

<PAGE>

compete with the business or commercial activities of the Bank
and/or Corporation, nor may the Executive serve as a director or
officer or in any other capacity in a company which competes with
the Bank and/or Corporation.

     4.  COMPENSATION.
 
         (a)  Annual Direct Salary:  As compensation for services
rendered the Corporation under this Agreement, the Executive
shall be entitled to receive from the Corporation an annual
direct salary of One Hundred Thirty Thousand Eight Hundred
Ninety-Two($130,892.00) Dollars per year(the "Annual Direct
Salary"), payable in substantially equal monthly installments (or
such other more frequent intervals as may be determined by the
Board of Directors of the Corporation as payroll policy for
senior executive officers) prorated for any partial employment
period. 

         (b)  Bonus.  The Board of Directors may, in its sole
discretion, provide for payment of a yearly bonus to the
Executive in such an amount as it may deem appropriate to provide
incentive to the Executive and to reward the Executive for his
performance.

         (c)  Stock Option Agreement.  During the term of this
Agreement, and provided the Agreement is not earlier

                              - 3 -

<PAGE> 

terminated as set forth in Paragraph 9(c), Executive shall be
entitled to purchase up to 6,536 shares of stock of the
Corporation, pursuant to the terms of the Stock Option Agreement,
attached hereto as Exhibit A and incorporated herein by
reference.  Executive shall be responsible for any and all
federal state and local taxes resulting from his participation in
the Stock Option Agreement and purchase of stock thereunder.

         (d)  Contingent Compensation.  During the term of his
employment under this Agreement, and provided the Agreement is
not earlier terminated as set forth in Paragraph 9(c), Executive
shall receive contingent compensation in the amount of a
$83,333.33 lump sum payment, minus applicable withholdings,  on
September 26, 1997 September 2, 1998 and September 2, 1999.  If
the Executive shall, after September 2, 1998, become disabled as
defined in Paragraph 9, and shall survive but remain disabled on
a continuous basis until January 1, 1999, the remaining payment
shall be accelerated from September 2, 1999 to January 1, 1999. 
Executive shall be responsible for any and all federal state and
local taxes resulting from this contingent compensation
arrangement and shall indemnify and hold the Bank and/or
Corporation harmless

                              - 4 -

<PAGE>

for any and all tax liability resulting from the establishment of
this contingent compensation arrangement.

         (e)  Disability Benefits.  If Executive becomes disabled
as the result of a non-work related illness, injury or
impairment, Executive may participate in the Bank's short and
long term disability plans pursuant to the terms and conditions
set forth in each plan.  Executive understands and agrees that
these plans and policies may be amended or terminated at the
discretion of the Bank and/or Corporation.  

         (f)  Vacation/Time Off.  Executive's vacation/time off
benefits shall accrue in accordance with the Bank's vacation/time
off policy.

      5.  OFFICES.  The Executive agrees to serve without
additional compensation as a director on the Board of Directors
of the Bank and Corporation and, if elected or appointed thereto,
without additional compensation in one or more offices of the
Bank and Corporation, and/or in one or more offices or as a
director of any of the Bank and/or Corporation's non-banking
subsidiaries; provided, however, the Executive shall not be
required to serve in such additional offices or as a director of
the Bank and/or Corporation or any subsidiary if such service
would expose him to adverse financial consequences.

                              - 5 -

<PAGE>

     6.  DIRECTORS AND OFFICERS LIABILITY INSURANCE.  The Bank
and/or Corporation shall use its best efforts to obtain such
insurance coverage for the Executive under an insurance policy
covering officers and directors of the Bank and Corporation
against lawsuits, arbitrations or other legal or regulatory
proceedings; however, nothing herein shall be construed to
require the Bank and/or Corporation to obtain such insurance, if
the Board of Directors of the Bank and/or Corporation determine
that such coverage cannot be obtained at a commercially
reasonable price.

     7.  UNAUTHORIZED DISCLOSURE.  During the employment of
Executive, or at any later time, the Executive shall not, without
the written consent of the Board of Directors of the Bank and
Corporation or a person authorized thereby, knowingly disclose to
any person, other than an employee of the Bank and Corporation or
a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive
of his duties as an executive of the Bank and Corporation, any
material confidential information obtained by him while in the
employ of the Bank and Corporation with respect to any of the
Bank and/or Corporation's services, products, improvements,
formulas, designs or styles, processes, customers, methods of
distribution or any business practices the disclosure of which
could be or will be

                              - 6 -

<PAGE>

materially damaging to the Bank and/or Corporation provided,
however, that confidential information shall not include any
information known generally to the  public (other than as a
result of unauthorized disclosure by the Executive) or any
information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to
that conducted by the Bank and Corporation.

     8.  RESTRICTIVE COVENANT.  The Executive covenants and
agrees as follows:  the Executive shall not directly or
indirectly, within the marketing area of the Bank and/or
Corporation (defined as an area within one hundred (100) miles
radius surrounding of Ford City, Pennsylvania), enter into or
engage generally in direct or indirect competition with the Bank
and/or Corporation or any subsidiary of the Bank and/or
Corporation, either as an individual on his own or as a partner
or joint venturer, or as a director, officer, shareholder,
employee, agent, independent contractor, lessor or creditor of or
for any other person, for a period of one (1) year after the date
of termination of his employment.  The existence of any claim or
cause of action of the Executive against the Bank and/or
Corporation, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Bank
and/or Corporation of this covenant.  The Executive agrees

                              - 7 -

<PAGE>

that any breach of the restrictions set forth in this Paragraph
will result in irreparable injury to the Bank and/or Corporation
for which it shall have no adequate remedy at law and the Bank
and/or Corporation shall be entitled to injunctive relief in
order to enforce the provisions hereof.  In the event that this
Paragraph shall be determined by any court of competent
jurisdiction to be unenforceable in part by reason of it being
too great a period of time or covering too great a geographic
area, it shall be in full force and effect as to that period of
time or geographic area determined to be reasonable by the court.

     9.  TERMINATION.

         (a)  Death.  The Executive's employment hereunder shall
terminate upon his death.

         (b)  Disability.
 
              (1) Suspension of Compensation.  If, as a result of
             physical or mental injury or impairment, Executive
             is unable to perform all of the essential job
             functions of his position on a full time basis with
             or without a reasonable accommodation and without
             posing a direct threat to himself and others, for a
             period of thirty (30) days, all obligations of Bank
             and Corporation to  pay Executive an Annual Direct
             Salary as set forth in

                              - 8 -

<PAGE>

             Paragraph 4(a) of this Agreement are suspended. 
             Executive shall be entitled, pursuant to the
             established disability plan or program of the Bank
             to apply for disability benefits under those
             programs.

              (2) Disability Termination.  Executive agrees that
             should he remain unable to perform all the essential
             functions of his position on a full time basis, with
             or without a reasonable accommodation and without
             posing a direct threat to himself or others, after
             sixty five (65) days, the Bank and Corporation will
             suffer an undue hardship by continuing Executive in
             his position.  Upon this event, all compensation and
             employment obligations of the Bank and Corporation
             under this Agreement shall cease (with the exception
             of Executive's rights under the Bank's then existing
             short term and long term disability plans, the stock
             option benefits described in Paragraph 4(c), the
             contingent compensation benefits described in
             Paragraph 4(d)), and this Agreement shall terminate.

         (c)  Cause.  The Corporation may terminate the
Executive's employment hereunder for "Cause."  As used in this
Agreement, "Cause" for Termination means conduct, activities or
performance by Executive which, in the judgment of the Bank

                              - 9 -

<PAGE>

and/or Corporation, based upon the information then in its
possession, is detrimental to the Bank's and/or Corporation's
interests, business, goodwill or reputation.  Both Executive and
the Bank and/or Corporation recognize that it is not possible to
describe every circumstance in which "Cause" for termination
would exist.  By way of illustration only, the Executive and Bank
and/or Corporation agree that "Cause" for Termination of
Executive Employment includes, but is not limited to:  violation
of any law (other than minor traffic offenses); excessive
absenteeism; Executive's failure or refusal to perform his duties
or obligations under this Agreement; failure to correct, to the
Bank's and/or Corporation's satisfaction, within fifteen (15)
days after written notice to Executive of such deficiency or
deficiencies, any deficiency in Executive's performance under
this Agreement; violation of Executive's confidentiality,
noncompetition and outside activities obligations under this
Agreement; insubordination; theft or abuse of company property or
of the property of its customers, employees, contractors or
business associates; dishonesty; working while intoxicated;
violation of the Bank's and/or Corporation's rules, policies,
procedures or practices; abuse of benefits or privileges of

                              - 10 -

<PAGE>


employment; unprofessional conduct toward or unlawful
discrimination against the Bank's and/or Corporation's employees,
customers, business associates, contractors or visitors; the
breach of Executive's fiduciary duty to the Bank and/or
Corporation involving personal profit; the willful violation of
any law, rule or regulation governing banks or bank officers or
the issuance of any final cease and desist order issued by a bank
regulatory authority, any of which directly and materially harms
the business of the Bank; and unauthorized conduct which creates
a risk of loss or liability to the Bank and/or Corporation or of
damaging Bank's and Corporation's reputation or interests.


         (d)  Termination by Executive.  The Executive may
terminate his employment hereunder, for Good Reason.  The term
"Good Reason" shall only mean: (i) any assignment to the
Executive, without his consent, of any duties other than those
contemplated by, or any limitation of the powers of the Executive
not contemplated by Paragraph 2 hereof, or (ii) any removal of
the Executive from or any failure to re-elect the Executive to
any of the positions indicated in Paragraph 2 hereof, except in
connection with termination of the Executive's employment as a
result of Executive's disability

                               - 11 -

<PAGE>

or for Cause, or (iii) a reduction of the Executive's Annual
Direct Salary as provided in Paragraph 4(a) hereof, or (iv) any
other material breach by the Corporation of this Agreement,
provided that the Executive shall have given the Board of
Directors thirty (30) days written notice of such breach and such
breach shall not have been cured within such thirty (30) day
period after receipt of notice, or (v) any Change of Control (as
defined herein).

     10.  DEFINITION OF CHANGE OF CONTROL.  For purposes of this
Agreement, the term "Change of Control" shall mean:  A change in
control (other than one occurring by reason of an acquisition of
the Corporation by Executive) of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A and any successor rule or regulation promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act") if
Corporation were subject to the Exchange Act reporting
requirements; provided that, without limiting the foregoing, such
a change in control shall be deemed to have occurred if; 

         (a)  any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than the Corporation
or any "person" who on the date hereof is a director or officer
of the Corporation is or becomes the "beneficial owner" (as

                              - 12 -

<PAGE> 

defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing
twenty-five percent
(25%) or more of the combined voting power of the Corporation's
then
outstanding securities, or 

         (b) during any period of two consecutive years during
the term of Executive's employment under this Agreement,
individuals who at the beginning of such period constitute the
Board of Directors of the Corporation cease for any reason to
constitute at least a majority thereof, unless the election of
each director who was not a director at the beginning of such
period has been approved in advance by directors representing at
least two-thirds of the directors then in office who were
directors at the beginning of the period.

     11.  DEFINITION OF DATE OF CHANGE OF CONTROL.  For purposes
of this Agreement, the date of Change of Control shall mean:

         (a)  the first date on which a single person and/or
entity, or group of affiliated persons and/or entities, acquire
the beneficial ownership of twenty-five percent (25%) or more of
the Corporation's voting securities, or

         (b)  the date of the transfer of all or substantially
all of the Corporation's assets, or

                             - 13 -

<PAGE>

         (c)  the date on which a merger, consolidation or
combination is consummated, as applicable, or

         (d)  the date on which individuals who formerly
constituted a majority of the Board of Directors of the
Corporation ceased to be a majority.

     12.  PAYMENTS UPON TERMINATION.

         (a)  If the Executive's employment shall be terminated
for Cause, or by termination of the Agreement through nonrenewal,
the Bank and/or Corporation shall pay the Executive or his estate
his full Annual Direct Salary through the date of termination at
the rate in effect at the time of termination and any other
amounts owing to the Executive at the date of termination, and
the Bank and/or Corporation shall have no further obligations to
the Executive under this Agreement.

         (b)  If the Executive's employment is terminated by the
Bank and/or Corporation (other than pursuant to Paragraphs 9(a),
9(b) or 9(c) hereof or as a result of nonrenewal of this
Agreement), or if the Executive shall terminate his employment
for Good Reason, then the Bank and/or Corporation shall pay the
Executive his full Annual Direct Salary from the date of

                              - 14 -

<PAGE>

termination through the last day of the term of this Agreement
and shall have no other obligation to Executive.

         (c)  If the Executive's employment shall be terminated
by the Bank and/or Corporation because of Executive's disability,
the Executive shall have no further right to payment other than
those rights set forth in the Bank's then existing short term and
long term disability plans, and the stock option and contingent
compensation benefits as set forth in Paragraph 4(c) and 4(d)
respectively.

         (d)  If the Executive's employment shall be terminated
because of his death, the Bank and/or corporation shall pay the
Executive or his estate his full Annual Direct Salary through the
date of termination at the rate in effect at the time of
termination and any other amounts owing to the Executive and,
with the exception of those stock option and contingent
compensation benefits set forth in Paragraphs 4(c) and 4(d), the
Bank and corporation shall have no further obligations to
Executive under this Agreement.

         (e)  Golden Parachute Limitation. Should the payments
described in this Paragraph be considered by state or federal
bank regulators to be "golden parachute payments" as defined in
12 C.F.R. Section 359, et seq. and 12 U.S.C.S. Section 1828(k),
the Bank

                              - 15 -

<PAGE>


and Corporation are relieved from any and all liability for those
payments considered to be golden parachute payments.

         (f)  Nonrenewal of Agreement and Severance Allowance: 
In the event the Executive serves the full term of this
Agreement, and the Bank and/or Corporation do not offer to renew
this Agreement, the Executive shall not be entitled to any
severance allowance whatsoever and the Bank and/or Corporation
shall have no further obligations to the Executive under this
Agreement.

     13.  CONSULTING ARRANGEMENT.

     Upon expiration of this Agreement on September 1, 2000,
provided that this Agreement has not been previously terminated
pursuant to Paragraphs 9(a), 9(b), 9(c), and 9(d) and provided
there has been no change in control as set forth in Paragraphs 10
and 11, the Executive and Bank and Corporation agree that the
Bank and Corporation intend to purchase the services of Executive
as a consultant.

     In his capacity as consultant, the Executive shall be
considered an independent contractor, and shall not receive a
salary; Executive shall not be considered an employee of the Bank
or Corporation, and Executive shall not be entitled to any of the
benefits normally made available full time to Bank and/or

                              - 16 -

<PAGE>

Corporation employees.  In addition, the Executive shall no
longer participate in any of the salary continuation, contingent 
compensation, stock purchase or other benefit plans or
arrangements described in this Agreement.

     In his capacity as consultant, the Executive shall assist
the Bank and/or Corporation in their marketing endeavors, shall
advise the respective Boards of the Bank and/or Corporation on
various matters, and shall provide other services as the Bank
and/or Corporation require.  For so long as Executive performs
these services as consultant, the Bank or Corporation shall pay
Executive $1,666.67 per month.  The term of Executive's services
as consultant shall be consecutive one month terms, and can
terminate at any time with thirty (30) days written notice by
either party.  If not previously terminated, the consulting
arrangement set forth in this Paragraph shall terminate
automatically after thirty six (36) months.  Executive agrees
that, during the term of the consulting arrangement and for a
period of twelve (12) months thereafter, he shall continue to
honor the Nondisclosure (Paragraph 7) and the Restrictive
Covenant (Paragraph 8) provisions of this Agreement.

     14.  DAMAGES FOR BREACH OF CONTRACT/WAIVER OF JURY TRIAL. In
the event of a breach of this Agreement by either the Corporation

                              - 17 -

<PAGE>

or the Executive, each hereby waive to the fullest extent
permitted by law the right to a trial by jury and to assert any
claim against the others for punitive or exemplary damages. 
Furthermore, Executive hereby waives any and all rights to assert
claims or recover damages in an amount in excess of that set
forth in Paragraph 12(b).

     15.  NOTICE.  For the purposes of this Agreement, notices
and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:

     If to the Executive:         R.B. Robertson

                                                , PA

     If to the Bank:              PFC Bank
                                  Fourth and Ford Streets
                                  Ford City, PA  16226

     If to the Corporation:       PEOPLES FINANCIAL CORP., INC.
                                  Fourth and Ford Streets
                                  Box 311
                                  Ford City, PA  16226

or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.

     16.  SUCCESSORS.  This Agreement shall inure to the benefit
of and be binding upon the Executive, his personal
representatives,

                              - 18 -

<PAGE>

heirs or assigns and to the Bank and/or Corporation and any of
successors or assigns of the Bank and/or Corporation.

     17.  SEVERABILITY.  If any provision of this Agreement is
declared unenforceable by a judicial or administrative body for
any reason, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect.

     18.  AMENDMENT.  This Agreement may be amended or cancelled
only by mutual agreement of the parties in writing.

     19.  ATTORNEY'S FEES AND COSTS.  If any action at law is
necessary to enforce or interpret the terms of this  Agreement,
the prevailing party shall not be entitled to reasonable
attorney's fees, costs, or disbursements.

     20.  PAYMENT OF MONEY DUE DECEASED EXECUTIVE.  If the
Executive dies prior to the expiration of the term of employment,
any monies that may be due him from the Corporation and/or Bank
under this Agreement as of the date of death shall be paid to the
executor, administrator, or other personal representative of the
Executive's estate or the beneficiaries or legatees entitled to
such monies under the decedent Executive's last will or
applicable testate laws.  

     21.  LAW GOVERNING.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.

                              - 19 -

<PAGE>

     22.  ENTIRE AGREEMENT.  This Agreement supersedes any and
all agreements, either oral or in writing, between the parties
with respect to the employment of the Executive by the Bank
and/or Corporation, and this Agreement contains all the covenants
and agreements between the parties with respect to the employment
of Executive by the Bank and/or Corporation.

     IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Agreement to be duly
executed in their respective names and, in the case of the
Corporation, by its authorized representatives the day and year
above mentioned.

ATTEST:                            PFC BANK


/s/ Brian Henry                 By /s/ Frank T. Baker
---------------------------        --------------------------
Brian Henry, Secretary             Frank T. Baker


ATTEST:                            PEOPLES FINANCIAL CORP., INC.


/s/ Brian Henry                 By /s/ Frank T. Baker
---------------------------        ---------------------------
Brian Henry, Secretary             Frank T. Baker


WITNESS:


/s/ James L. Kifer                 /s/ R. B. Robertson
--------------------------         ---------------------------
James L. Kifer                     R. B. Robertson


                              - 20 -

<PAGE>
                                                   Exhibit A-1

                 NON-QUALIFIED STOCK OPTION AGREEMENT

     This Agreement, dated as of September 1, 1997, is delivered
to R. B. Robertson, an adult individual (the "Executive") 
pursuant to the resolution of the Board of Directors of Peoples
Financial Corp., Inc. ( the "Corporation") dated August 20, 1997
( the "Plan"), and as modified by the Consent to Corporate Action
effective as of September 1, 1997.

     Subject to the terms of the Executive Employment Agreement,
the Corporation hereby grants  and gives to the Executive the
option and right, but not the obligation, to purchase from the
Corporation up to six thousand five hundred thirty six (6,536)
shares of common stock of  the Corporation, having a par value of
$.30 per share, at the purchase price of Thirty Eight Dollars and
Twenty Five Cents ($38.25) for each such share (being the fair
market value  as of the date hereof), and under and subject to
the terms and provisions set forth in this Agreement, the
Executive Employment Agreement and the Plan.  The parties intend
that the options granted by this Agreement are and shall be
Non-Qualified Options and not incentive stock options, as defined
in Section 422 of the Internal Revenue Code of 1986, as amended.

     The options shall vest under and subject to the terms of the
Executive Employment Agreement according to the following
schedule:

              * 2,178 shares on the date hereof;

              * 2,179 shares on September 2, 1998; and

              * 2,179 shares on September 2, 1999; provided,
                however, that should Recipient become disabled
                prior to December 31, 1998, and survive until
                January 1, 1999, but remain disabled on a
                continuous basis, the vesting scheduled shall
                accelerate so that this option will vest on
                January 1, 1999 instead of on September 2, 1999.

     Subject to the other provisions of the Executive Employment
Agreement, this Agreement and the Plan, the options hereby
granted and which become vested as set forth above, shall remain
exercisable for one (1) year from the date the option vests: 
Notwithstanding any other provisions of this Agreement or the
Plan, the options and all rights under this Agreement, to the
extent not exercised, shall terminate and be null and void at
12:00 o'clock midnight (Eastern prevailing time) on August 31,
2002.

<PAGE>
                                              Exhibit A - 1

     The options granted by this Agreement shall be exercisable
during  the lifetime of the Executive and only by the Executive
and shall not be salable, transferable, or assignable by the
Executive except by his Will or pursuant to applicable laws of
descent and distribution. 

     If Executive is terminated for Cause by the Bank and/or
Corporation, as set forth in the Executive Employment Agreement,
Executive shall forfeit all options under this Non-Qualified
Stock Option Agreement, including both non-vested options and
those options which are vested and have not been exercised, and
the Corporation shall have no further obligation to Executive
under this Agreement.

     If the Executive ceases to be employed by the Corporation or
any subsidiary thereof (as defined in Section 424 of the Internal
Revenue Code of 1986, as amended), subject to the limitations set
forth herein, and the limitations set forth in Executive
Employment Agreement, the Executive may exercise his options
hereunder during its remaining term for a period of three (3)
months after the date of such cessation of employment to the
extent that the option hereunder was then and remains
exercisable, unless such employment cessation was due to a Change
of Control, as that term is defined in the Executive Employment
Agreement or the Executive's disability (as defined in the
Executive Employment Agreement, in which case the three (3) month
period shall be twelve (12) months.  If the Executive dies while
employed by the Corporation or a subsidiary thereof (as defined
in Section 424 of the Internal Revenue Code of 1986, as amended),
the qualified personal representatives of the Executive, or any
persons who acquire the options hereunder pursuant to the Will of
the Executive or laws of descent and distribution, may exercise
the options after the options vest hereunder during their
remaining term for a period of not more than twelve (12) months
after the date of the Executive's death to the extent that the
option hereunder was then and remains exercisable.

     If the Executive desires to exercise his vested options
under this Agreement, the Executive shall do so by properly
completing, signing, and returning to the Secretary of the
Corporation, or to the person designated by said Corporate
Secretary, the Notice of Exercise in the form attached to and
made a part of this Agreement, together with full, good and
proper payment by the Executive for the common shares being
purchased hereunder in legal tender of the United States of
America.  The Corporation may withhold issuance and delivery to
the Executive of any or all stock certificate or certificates for
such shares being purchased hereunder until full collection by
the Corporation or its depository of full payment for such shares
and until there is full compliance with and satisfaction of all
applicable terms and provisions of and under the Plan and this
Agreement.  The Corporation may require that  the Executive
remit, in cash,  an amount sufficient to satisfy fully any
federal, state and other jurisdictions' income and other tax
withholding requirements. The Executive shall have no rights or
powers with respect to any shares of the common stock purchased
hereunder unless and until one or more stock certificates for
shares are issued and delivered to the Executive. 

<PAGE>
                                              Exhibit A-1

     Nothing in this Agreement or in the Plan confers upon the
Executive any right to continue in the employment of, or maintain
any particular relationship with the Corporation or its
subsidiaries or affiliates, or limit or affect any rights, powers
or privileges that the Corporation or its affiliates may have to
supervise, discipline and terminate the Executive, his employment
and other relationships.

     The options granted by this Agreement are and shall be under
and subject to all of the terms and provisions of the Executive
Employment Agreement, this Agreement, and the Plan, and may be
exercised only as, when, during the time or times, and in the
manner provided in the Executive Employment Agreement, this
Agreement and the Plan.  The terms and provisions of the Plan are
hereby incorporated by reference in and as a part of this
Agreement, and this Agreement in all respects shall be
interpreted and construed in accordance with the Executive
Employment Agreement.   The Executive acknowledges that he has
received a copy of the Executive Employment Agreement and Plan
and has read and is familiar with their provisions.  The 
provisions of this Agreement shall be interpreted and construed
under and enforced in accordance with the laws of the
Commonwealth of Pennsylvania, except to the extent preempted by
the laws of the United States of America, which to that extent
shall govern.

     The Corporation has duly executed this Agreement as of the
date first above written.  


Attest:                         PEOPLES FINANCIAL CORP., INC.


------------------------     By /s/ Frank T. Baker
                                -----------------------------
                                Frank T. Baker

<PAGE>
                                              Exhibit A-2

                    Acceptance by Executive
                    ----------------------- 

     The undersigned Executive, R. B. Robertson, intending to be
legally bound, hereby accepts and agrees to the terms and
provisions of the preceding Agreement and the Resolutions of the
Board of Directors of the Corporation, dated August 20, 1997, and
the Consent to Corporate Action effective as of September 1, 1997
relating thereto.



Date: 9/1/97                  /s/ R. B. Robertson
      -------                 -----------------------------
                              R. B. Robertson


                              Executive's Social Security Number:
 
                              ###-##-####
                              ------------------------------

<PAGE>
                                              Exhibit A-3


                       NOTICE OF EXERCISE

                     OF NON-QUALIFIED OPTION

TO:  Secretary
     PEOPLES FINANCIAL CORPORATION, INC.
     Fourth Street and Ford Avenue
     P.O. Box 311
     Ford City, PA 16226     

     I, the undersigned, the Recipient and the holder of that
certain Non-Qualified Stock Option Agreement (the "Agreement"),
dated September 1, 1997, to purchase from Peoples Financial
Corporation, Inc. (the "Corporation") up to a total of 6,536
shares of the Corporation's common stock for the exercise price
of $38.25, which exercise price is the fair market value on the
date of grant, September 1, 1997, for each share, under and
subject to the provisions of the Executive Employment Agreement
and resolutions of the Board of Directors dated August 20, 1997
(the "Plan"), hereby do notify you of my intention and election
to exercise hereby my Option under said Agreement to purchase
2,178 shares of such common stock of Peoples Financial
Corporation, Inc. as provided in said Agreement and Plan.  I am
enclosing a personal check for the sum of $83,308.50,
representing full payment for such shares being purchased
hereunder at the above stated purchase price for each share under
this Agreement.  I understand agree that: (i) Peoples Financial
Corporation, Inc. may withhold issuance and delivery to me of any
or all stock certificate or certificates for such shares of
common stock being purchased hereunder until full collection by
Peoples Financial Corporation, Inc. or its depository of full
payment for such shares and until there is full compliance with
and satisfaction of all applicable terms and provisions of and
under the Plan and said Agreement; (ii) Peoples Financial
Corporation, Inc. may require me to remit to Peoples Financial
Corporation, Inc. an amount sufficient to satisfy fully any
federal, state, and other jurisdictions' income and other tax
withholding requirements prior to its issuance and delivery to me
of any stock certificate or certificates for such shares being
purchased hereunder; and (iii) I will have no rights or powers
with respect to any shares of such common stock being purchased
hereunder unless and until one or more stock certificates for the
shares are issued and delivered to me.

     I intend to be legally bound by this Notice and my exercise
of my stock option hereunder, which are and shall be irrevocable.

Social Security Number: ###-##-####      /s/ R. B. Robertson
                        -----------      ------------------------
                                         R. B. Robertson
                                            (Signature)


Date:    9/1/97                          R. B. Robertson
        --------                         ------------------------
                                          (Type or Print Name)

<PAGE>

                  PEOPLE'S FINANCIAL CORP., INC.
                            PFC BANK
               DIRECTORS CONSENT TO CORPORATE ACTION

     The undersigned, being all of the directors of the
above-named Bank and Corporation, entitled to vote at a meeting
thereof, do hereby consent to the adoption of the following
resolutions and to taking the corporate action hereinafter
specified as though same had been approved and adopted at a
meeting of Directors duly called and convened, this consent being
given pursuant to Section 1405(d) of the Banking Code of 1965, as
amended and Section 1727(b) of the Business Corporation Law of
1988.

     RESOLVED, that R. B. Robertson be and hereby is offered the
position of President and Chief Executive Officer of the Bank and
Corporation, upon the terms and conditions in the Executive
Employment Agreement, attached hereto and incorporated herein by
reference;

     BE IT FURTHER RESOLVED, that the Chairman of the Board of
Directors of the Bank and Corporation be and is hereby directed
and empowered to execute an Executive Employment Agreement with
R. B. Robertson with terms and conditions substantially identical
to the terms and conditions of the Executive Employment Agreement
attached hereto.

Dated: September 1, 1997


/s/ Frank T. Baker                 /s/ Frank L. Doverspike
--------------------------         -----------------------------
Frank T. Baker                     Frank L. Doverspike

/s/ Marlin F. Foreman              /s/ Brian Henry
--------------------------         -----------------------------
Marlin F. Foreman                  Brian Henry



/s/ Darl Hetrick                   /s/ Francis E. Kane
--------------------------         ----------------------------- 
Darl Hetrick                       Francis E. Kane


/s/ Raleigh B. Robertson           /s/ Raleigh B. Robertson, Jr.
--------------------------         ------------------------------
Raleigh B. Robertson               Raleigh B. Robertson, Jr.


/s/ J. Jack Sherman                /s/ Howard H. Shreckengost
--------------------------         ------------------------------
J. Jack Sherman                    Howard H. Shreckengost


/s/ William H. Toy
--------------------------
William H. Toy