U. S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    Form 10-Q
(Mark one)
     [X]      QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended    June 30, 2000
                                              -----------------

     [ ]      TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              For the transition period from                 to
                                             ---------------    ---------------

                         Commission file number   33-88802
                                                ------------


                          PEOPLES FINANCIAL CORP., INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

          Pennsylvania                                    25-1469914
--------------------------------------------------------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

               Ford Street and Fourth Avenue, Ford City, PA 16226
               --------------------------------------------------
                    (Address of principal executive offices)

                                 (724) 763-1221
                           ---------------------------
                           (Issuer's telephone number)


--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes   XX   No
     ----

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable dates:      August 1, 2000
                                                     --------------------

     As of August 1, 2000, there were 1,665,412 shares of the Registrant's
common stock, $0.30 par value, outstanding.

<PAGE>


PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY

<TABLE>
<CAPTION>

INDEX                                                                                                        PAGE
-----                                                                                                        ----
<S>           <C>                                                                                            <C>
PART I.       FINANCIAL INFORMATION

ITEM 1.       Financial Statements

              Consolidated Balance Sheets -
              June 30, 2000 (unaudited), December 31, 1999 and June 30, 1999 (unaudited). . . . . . . .        1

              Consolidated Statements of Income -
              Six months ended June 30, 2000 and 1999 (unaudited) . . . . . . . . . . . . . . . . . . .        2

              Consolidated Statements of Income -
              Three months ended June 30, 2000 and 1999 (unaudited) . . . . . . . . . . . . . . . . . .        3

              Consolidated Statements of Cash Flows -
              Six months ended June 30, 2000 and 1999 (unaudited) . . . . . . . . . . . . . . . . . . .        4

              Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .        5

ITEM 2.       Management's Discussion and Analysis of
              Financial Condition and Results of Operation. . . . . . . . . . . . . . . . . . . . . . .        7

ITEM 3.       Quantitative and Qualitative Disclosure about Market Risk . . . . . . . . . . . . . . . .       12

PART II.      OTHER INFORMATION

ITEM 1.       Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       13

ITEM 2.       Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       13

ITEM 3.       Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       13

ITEM 4.       Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . .       13

ITEM 5.       Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       13

ITEM 6.       Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . . . . . . . . . . . . . . .       13

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       15
</TABLE>

<PAGE>



PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                        June 30,                                  June 30,
                                                                          2000               December 31            1999
ASSETS                                                                 (Unaudited)               1999           (Unaudited)
                                                                      -------------         -------------       ------------
<S>                                                                   <C>                   <C>                 <C>
     Cash and due from banks                                          $  12,330,115         $  33,079,733       $ 12,675,588
     Federal funds sold                                                   3,900,000             5,600,000          9,150,000
     Available-for-sale securities                                       23,761,720            27,766,282         33,572,947
     Held-to-maturity securities                                         39,478,619            32,054,044         32,068,118
     Federal Home Loan Bank stock, at cost                                1,408,400             1,408,400          1,101,000
     Loans receivable, net                                              206,877,349           196,539,392        187,284,819
     Premises and equipment, net                                          2,955,790             2,988,549          3,172,800
     Other assets                                                         2,545,424             2,278,696          3,155,596
                                                                      -------------         -------------       ------------

          Total Assets                                                $ 293,257,417         $ 301,715,096      $ 282,180,868
                                                                      =============         =============      =============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
     Deposits
          Non-interest bearing                                        $  32,386,091         $  28,375,696       $ 27,041,958
          Interest bearing                                              216,429,399           217,697,740        203,874,257
                                                                      -------------         -------------       ------------
          Total deposits                                                248,815,490           246,073,436        230,916,215

     FHLB Borrowings                                                              0             8,000,000                  0
     Accrued interest and other liabilities                               7,276,779             8,965,412         11,212,271
                                                                      -------------         -------------       ------------

          Total Liabilities                                             256,092,269           263,038,848        242,128,486

STOCKHOLDERS' EQUITY
     Common stock, par value                                                531,916               531,916            530,608
     Surplus                                                              3,832,083             3,832,083          3,750,044
     Retained earnings                                                   23,670,383            22,552,636         20,666,178
     Accumulated other comprehensive income                               9,130,766            11,759,613         15,105,552
                                                                      -------------         -------------       ------------
          Total stockholders' equity                                     37,165,148            38,676,248         40,052,382
                                                                      -------------         -------------       ------------

          Total Liabilities and Stockholders Equity                   $ 293,257,417         $ 301,715,096      $ 282,180,868
                                                                      =============         =============      =============
</TABLE>


       The accompanying notes are an integral part of these consolidated
                             financial statements.


<PAGE>

PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          Six Months Ended June 30,
                                                                                     -----------------------------------
Interest Income                                                                          2000                   1999
                                                                                     ------------            -----------
<S>                                                                                  <C>                     <C>
  Loans                                                                              $  8,180,751            $ 7,282,465
  Investment securities                                                                 1,660,648              1,454,295
  Interest-bearing deposits                                                               303,879                136,974
  Federal funds sold                                                                      265,196                203,124
                                                                                     ------------            -----------
          Total interest income                                                        10,410,474              9,076,858

Interest Expense
  Deposits                                                                              5,387,254              4,582,209
  FHLB Borrowings                                                                          21,836                      0
                                                                                     ------------            -----------
          Total interest expense                                                        5,409,090              4,582,209
                                                                                     ------------            -----------
Net Interest Income                                                                     5,001,384              4,494,649
Provision for Loan Losses                                                                  30,000                 90,000
                                                                                     ------------            -----------
Net Interest Income after Provision for Loan Losses                                     4,971,384              4,404,649

Other Income
  Service fees                                                                            253,569                269,373
  Net investment gains                                                                      8,301              1,623,111
  Other                                                                                    42,201                 25,897
                                                                                     ------------            -----------
                                                          Total other income              304,071              1,918,381

Other Expenses
  Salaries                                                                              1,008,116                919,680
  Pension and other employee benefits                                                     453,369                452,551
  Occupancy expense                                                                       550,227                553,931
  Legal and professional                                                                   65,965                 75,452
  Regulatory fees                                                                          42,889                 29,121
  Data processing                                                                         103,267                 95,691
  Other                                                                                   774,532                886,925
                                                                                     ------------            -----------
                                                        Total other expenses            2,998,365              3,013,351


Income Before Income Taxes                                                              2,277,090              3,309,679

Provision for Income Taxes                                                                627,427                992,424
                                                                                     ------------            -----------
Net Income                                                                           $  1,649,663            $ 2,317,255
                                                                                     ============            ===========
Net Income per Share of Common Stock                                                    $    0.93              $    1.31
                                                                                     ============            ===========
Net Income per Share of Common Stock (fully diluted)                                    $    0.93              $    1.31
                                                                                     ============            ===========
Weighted Average Shares Used in Computing Net Income
  per Share of Common Stock                                                             1,773,052              1,768,694
                                                                                     ============            ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

<PAGE>

PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                           Three Months Ended June 30,
                                                                       ------------------------------------
Interest Income                                                             2000                   1999
                                                                       -------------          -------------
<S>                                                                    <C>                    <C>
  Loans                                                                $   4,166,662          $   3,707,883
  Investment securities                                                      886,067                697,213
  Interest-bearing deposits                                                  110,861                108,898
  Federal funds sold                                                         131,200                110,843
                                                                       -------------          -------------
          Total interest income                                            5,294,790              4,624,837

Interest Expense
  Deposits                                                                 2,703,941              2,341,347
  FHLB Borrowings                                                                  0                      0
                                                                       -------------          -------------
          Total interest expense                                           2,703,941              2,341,347
                                                                       -------------          -------------
Net Interest Income                                                        2,590,849              2,283,490
Provision for Loan Losses                                                     15,000                 30,000
                                                                       -------------          -------------
Net Interest Income after Provision for Loan Losses                        2,575,849              2,253,490

Other Income
  Service fees                                                               129,140                139,491
  Net investment gains                                                             0                  7,904
  Other                                                                       19,457                  9,709
                                                                       -------------          -------------
          Total other income                                                 148,597                157,104
Other Expenses
  Salaries                                                                   543,704                458,762
  Pension and other employee benefits                                        219,233                225,040
  Occupancy expense                                                          286,912                281,993
  Legal and professional                                                      51,493                 34,347
  Regulatory fees                                                             21,414                 14,583
  Data processing                                                             62,499                 47,638
  Other                                                                      386,758                491,702
                                                                       -------------          -------------
         Total other expenses                                              1,572,013              1,554,065

Income Before Income Taxes                                                 1,152,433                856,529

Provision for Income Taxes                                                   303,690                221,782
                                                                       -------------          -------------
Net Income                                                             $     848,743          $     634,747
                                                                       =============          =============
Net Income per Share of Common Stock                                   $        0.48          $        0.36
                                                                       =============          =============
Net Income per Share of Common Stock (fully diluted)                   $        0.48          $        0.36
                                                                       =============          =============
Weighted Average Shares Used in Computing Net Income
  per Share of Common Stock                                                1,773,052              1,768,694
                                                                       =============          =============
</TABLE>


       The accompanying notes are an integral part of these consolidated
                             financial statements.

<PAGE>

PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  Six Months Ended June 30,
                                                                            --------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                             2000                    1999
                                                                            -------------            -------------
<S>                                                                         <C>                      <C>
Net Income                                                                  $   1,649,663            $   2,317,255
Adjustments to reconcile net cash from operating activities:
Depreciation and amortization                                                     274,993                  313,441
Net investment security gains                                                      (8,301)              (1,623,111)
Net accretion/amortization of
 premiums and discounts                                                            (9,504)                  11,500
Provision for loan losses                                                          30,000                   90,000
Loss on sale / disposal of assets                                                  20,331                   93,399
Reinvestment of stock dividends                                                         0                  (52,854)
Increase (decrease) in cash due to changes in assets and liabilities:
         Other assets                                                             (31,139)                (729,964)
         Accrued interest and other liabilities                                  (595,964)                 161,922
                                                                            -------------            -------------

     Net Cash From Operating Activities                                         1,330,079                  581,588

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from sales of securities available for sale                             29,760                1,755,743
  Proceeds from maturities of securities held to maturity                       7,895,000                6,680,000
  Purchase of securities held to maturity                                     (15,310,071)              (6,113,220)
  Purchase of FHLB stock                                                                0                 (259,500)
  Net loans made to customers                                                 (10,375,261)             (12,683,867)
  Purchases of Premises and equipment                                            (243,996)                (145,196)
                                                                            -------------            -------------

   Net Cash Used By Investing Activities                                      (18,004,568)             (10,766,040)

CASH FLOWS FROM FINANCING ACTIVITIES
  Repayments of FHLB Borrowings                                                (8,000,000)                       0
  Net increase in deposits                                                      2,756,787               17,559,823
  Dividends paid                                                                 (531,916)                (459,860)
                                                                            -------------            -------------
Net Cash From Financing Activities                                             (5,775,129)              17,099,963
                                                                            -------------            -------------

Net Change in Cash and Cash Equivalents                                       (22,449,618)               6,915,511

Cash and Cash Equivalents at Beginning of Period                               38,679,734               14,910,077
                                                                            -------------            -------------

Cash and Cash Equivalents at End of Period                                  $  16,230,116            $  21,825,588
                                                                            =============            =============
</TABLE>


       The accompanying notes are an integral part of these consolidated
                             financial statements.

<PAGE>

PEOPLES FINANCIAL CORP., INC.  AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include Peoples
Financial Corp., Inc., (the Corporation) and its wholly owned subsidiary, PFC
Bank (the Bank), and have been prepared in accordance with generally accepted
accounting principles for interim financial information and the instructions to
Form 10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements and should be read in conjunction with the Corporation's consolidated
year-end financial statements, including notes thereto, which are included in
the Corporation's 1999 Annual Report on Form 10-K. In the opinion of the
Corporation, the unaudited consolidated interim financial statements contain all
significant adjustments necessary to present fairly the financial position as of
June 30, 2000 and 1999, the results of operation for the three and six months
ended June 30, 2000 and 1999 and cash flows for the six months ended June 30,
2000 and 1999.

NOTE B - EARNINGS PER SHARE
Shares used in the earnings per share computation are the weighted average
number of shares outstanding during the periods in question.

NOTE C - RECLASSIFICATIONS
Certain previously reported items have been reclassified to conform to the
current year's classifications. The reclassifications have no effect on total
assets, total liabilities and stockholders' equity, or net income.

NOTE D - COMPREHENSIVE INCOME
Total comprehensive income for the six months ended June 30, 2000 and 1999 was
$(979,184) and $(61,898), respectively.

NOTE E - INVESTMENT SECURITIES

Available-for-sale securities consist of the following:

<TABLE>
<CAPTION>
                                                                        June 30, 2000
                                            --------------------------------------------------------------------
                                             Amortized          Unrealized         Unrealized          Market
                                               Cost                Gains             Losses            Value
                                            -----------        ------------        -----------      ------------
<S>                                         <C>                <C>                 <C>              <C>
     Equity securities                      $ 9,927,227        $ 13,882,215        $  (47,722)      $ 23,761,720

                                                                       December 31, 1999
                                            --------------------------------------------------------------------
                                             Amortized          Unrealized         Unrealized          Market
                                               Cost                Gains             Losses            Value
                                            -----------        ------------        -----------      ------------
     Equity securities                      $ 9,948,686        $ 17,873,106        $  (55,510)      $ 27,766,282

                                                                        June 30, 1999
                                            --------------------------------------------------------------------
                                             Amortized          Unrealized         Unrealized          Market
                                               Cost                Gains             Losses            Value
                                            -----------        ------------        -----------      ------------
     Equity securities                      $10,489,712        $ 23,110,540        $  (27,305)      $ 33,572,947
</TABLE>

<PAGE>

NOTE E - INVESTMENT SECURITIES - Continued

Held-to-maturity securities consist of the following:

<TABLE>
<CAPTION>
                                                                        June 30, 2000
                                            --------------------------------------------------------------------
                                             Amortized          Unrealized         Unrealized          Market
                                               Cost                Gains             Losses            Value
                                            -----------        ------------        -----------      ------------
<S>                                         <C>                <C>                 <C>              <C>
     U.S. Treasury securities               $20,952,581        $   62,906          $  (96,573)      $ 20,918,914
     U.S. government agencies                18,361,215             5,485            (124,662)        18,242,038
     State and political subdivisions           164,823                 -              (3,254)           161,569
                                            --------------------------------------------------------------------
                                            $39,478,619        $   68,391          $ (224,489)      $ 39,322,521
                                            ====================================================================

<CAPTION>
                                                                       December 31, 1999
                                            --------------------------------------------------------------------
                                             Amortized          Unrealized         Unrealized          Market
                                               Cost                Gains             Losses            Value
                                            -----------        ------------        -----------      ------------
<S>                                         <C>                <C>                 <C>              <C>
     U.S. Treasury securities               $23,333,589          $   65,356        $  (92,432)      $ 23,306,513
     U.S. government agencies                 8,460,770                   -          (236,083)         8,224,687
     State and political subdivisions           259,685                 971            (1,346)           259,310
                                            --------------------------------------------------------------------
                                            $32,054,044          $   66,327        $ (329,861)      $ 31,790,510
                                            ====================================================================

<CAPTION>
                                                                         June 30, 1999
                                            --------------------------------------------------------------------
                                             Amortized          Unrealized         Unrealized          Market
                                               Cost                Gains             Losses            Value
                                            -----------        ------------        -----------      ------------
<S>                                         <C>                <C>                 <C>              <C>
     U.S. Treasury securities               $24,833,045        $    252,287        $  (45,806)      $ 25,039,526
     U.S. government agencies                 6,775,375                   -           (72,250)         6,703,125
     State and political subdivisions           459,698                 106            (3,079)           456,725
                                            --------------------------------------------------------------------
                                            $32,068,118        $    252,393        $ (121,135)      $ 32,199,376
                                            ====================================================================
</TABLE>

<PAGE>


PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

FINANCIAL CONDITION

For the six months ended June 30, 2000, the Corporation's total assets decreased
from December 31, 1999 by $8.5 million resulting primarily from a decrease of
approximately $22.4 million in liquid assets such as cash and due from banks and
federal funds sold in addition to a decrease of over $4.0 million in
available-for-sale securities. These decreases were the result of the full
payoff of $8.0 million in short-term borrowings and a reduction in market values
of the available-for-sale security portfolio. These decreases are offset
slightly by an increase in loans of over $10.3 million and held-to-maturity
securities of over $7.4 million. The Corporation's total assets increased over
June 30, 1999 by $11.1 million resulting from increases of $19.6 million in net
loans and $7.4 million in held-to-maturity securities partially offset by
decreases in available-for-sale securities of nearly $9.8 million and cash and
due from banks and federal funds of nearly $5.6 million.

The decrease in total liabilities of approximately $6.9 million from December
31, 1999 to June 30, 2000 is primarily attributable to a decrease in short term
borrowings of $8.0 million offset slightly by an increase in deposits of $2.7
million. The increase in total liabilities of $14.0 million from June 30, 1999
to June 30, 2000 is primarily attributable to an increase in deposits of $17.9
million offset by a decrease in other liabilities of $3.9 million.

As of June 30, 2000, PFC Bank, the Corporation's wholly owned subsidiary, had a
ratio of non-performing loans to total loans of 0.19% as compared to a ratio of
0.12% as of December 31, 1999 and 0.15% at June 30, 1999. Non-performing loan
totals at June 30, 2000 were $385,000 that were delinquent more than 90 days or
held on non-accrual status as compared to $233,000 and $290,000 at December 31,
1999 and June 30, 1999, respectively. At June 30, 2000, the allowance for
possible loan losses was $1,393,000, which represented 0.67% of net loans as
compared to 0.70% at December 31, 1999 and 0.71% at June 30, 1999.
Non-performing loans totaled 3.67% of the allowance for possible loan losses, as
compared to 0.51% at December 31, 1999 and 7.86% at June 30, 1999.

In management's opinion, the allowance for possible loan losses at June 30, 2000
is adequate to absorb future loan losses based on information presently known.
Management cannot assure, however, that additions to the allowance will not be
required in the future to cover losses that are presently unforeseen.


<PAGE>


RESULTS OF OPERATIONS

Net Income

For the six-month period ended June 30, 2000, the Corporation recognized net
income of $1.6 million, a decrease of $668,000 compared with the same period in
the prior year. This decrease is attributable to a decrease of $1.6 million in
capital gains taken from the sale of available-for-sale securities offset by an
increase in net interest income of $507,000 and a decrease in income tax
provisions of $365,000. Net income for the three-month period ended June 30,
2000 totaled $0.8 million an increase of $214,000 compared with the three-months
ended June 30, 1999. This increase was primarily attributable to an increase in
net interest income of over $307,000 offset by an increase in provision for
income taxes of $82,000 and a decrease in fee income of $10,000.

The operating results of the Corporation are largely dependent upon the net
income generated by its subsidiary, PFC Bank. PFC Bank has the benefit of a
substantially appreciated available-for-sale investment portfolio, the strategic
liquidation of portions of which enable the Corporation to absorb the negative
effects of interest rate fluctuation and still maintain profitable operations.

Net Interest Income

Interest income for the six-month period ended June 30, 2000 was $10.4 million,
an increase of over $1.3 million from the six-month period ended June 30, 1999.
This increase is primarily attributed to a $898,000 increase in interest on the
loan portfolio in addition to an increase of $435,000 in interest on
investments, interest-bearing deposits and federal funds sold. Interest expense
for the six-month period ended June 30, 2000 was approximately $5.4 million, a
$827,000 increase over the same six-month period ended June 30, 1999. Management
attributes this increase primarily to the $12.6 million increase in interest
bearing deposits since June 30, 1999. For the three-month period ended June 30,
2000, interest income was $5.3 million, a $670,000 increase as compared to the
three-month period ended June 30, 1999. This increase is due to increases in
interest on loans of $459,000 and investments, interest-bearing deposits and
federal funds sold of $211,000. Interest expense for the three-months ended June
30, 2000 of $2.7 million is an increase over the same period in 1999 of $363,000
due to an increase in interest bearing deposits

Provision for Loan Losses

The provision for loan losses is based upon management's ongoing assessment of
the inherent risk of loss in the outstanding loan portfolio. Management's risk
assessment is based on the evaluation of individual loans, past loss experience,
current economic conditions, and other relevant factors. While management uses
the best information available to make such evaluations, future adjustments to
the allowance for possible loan losses may be necessary. PFC Bank continues to
monitor its loan portfolio on a regular basis and will make additions to its
allowance based on its determination of the necessary level of the allowance.
For the six-month period ended June 30, 2000, PFC Bank recorded $30,000 to the
provision for loan losses as compared to $90,000 for the same period in the
previous year. Net charge-offs for the six month period ended June 30, 2000
amounted to $15,000 as compared to $4,800 for the six-month period ended June
30, 1999. For the three-month period ended June 30, 2000, PFC Bank recorded
$15,000 to the provision for loan losses as compared to $30,000 for the same
period in


<PAGE>

the previous year. Net charge-offs for the three-month period ended June 30,
2000 amounted to $5,000 as compared to $200 for the three-month period ended
June 30, 1999.

Activity in the allowance for loan losses was as follows (in thousands):

                                    Six-Months Ended             Year Ended
                                      June 30, 2000           December 31, 1999
                                    ----------------          -----------------

Balance, beginning of period              $1,378                    $1,238
Provision                                     30                       150
Charge-offs                                  (26)                      (48)
Recoveries                                    11                        38
                                          ------                    ------
Balance, end of period                    $1,393                    $1,378
                                          ======                    ======

Other Income

Other income for the six-month period ended June 30, 2000 was approximately
$304,000, a decrease of $1.6 million compared to the six-month period ended June
30, 1999. This decrease is attributable to capital gains from the sale of
available-for-sale securities of $8,000 for the six-month period ended June 30,
2000 as compared with capital gains of $1.6 million for the same period of 1999.
These net gains were primarily the result of the liquidation of a portion of PFC
Bank's stock portfolio. Other income for the three-month period ended June 30,
2000 was $149,000, a decrease of $8,000 as compared to the same period in 1999.


Other Expenses

Total other expenses decreased $15,000 for the six-month period ended June 30,
2000 when compared to the same period in the prior year. This decrease was the
result of decreases in various miscellaneous operating expenses of $116,000 and
legal and professional fees of $10,000, offsetting increases in salaries and
employee benefits of $89,000, regulatory fees of $14,000 and data processing
fees of $8,000. Other expenses for the three months ended June 30, 2000 of $1.6
million increased $18,000 over the three-month period ended June 30, 1999. This
increase was the result of increases in salaries and employee benefits of
$79,000, legal and professional expenses of $17,000 and data processing expenses
of $15,000 offset slightly by decreases in miscellaneous expenses of $93,000.

Maintaining a focus on operating cost control has become increasingly important
and the Corporation has succeeded in maintaining a relatively stable overhead
burden.

<PAGE>


Provision for Income Taxes

The Corporation incurred a provision for income taxes of $627,000 for the
six-month period ended June 30, 2000, as compared to $992,000 for the same
period ended June 30, 1999. During the three-month period ended June 30, 2000,
the Corporation incurred a provision for income taxes of $304,000 as compared to
$222,000 for the same period the previous year. State tax liabilities are
incurred both by PFC Bank, in the form of Pennsylvania Bank Shares tax, and by
the Corporation, as a separate entity.

Liquidity

Liquidity is the availability of funds to meet the daily requirements of the
business. For financial institutions, demand for funds comes principally from
extensions of credit and withdrawal of deposits. Liquidity is provided by asset
maturities, sales of investment securities, deposit growth or short-term
borrowings. Liquidity measures are formally reviewed by management monthly, and
they continue to show adequate liquidity in all areas of the organization.

Capital Adequacy

PFC Bank is subject to various regulatory capital requirements administered by
federal banking agencies. Quantitative measures established by regulation to
ensure capital adequacy require the Bank to maintain minimum amounts and ratios
of total capital and Tier I capital to risk-weighted assets and leverage ratio.
Equity and risk-based capital ratios for the Bank exceed these minimums ratios
and are as follows:

                              June 30          December 31          June 30
                                2000               1999               1999
                              -------          -----------          -------

Leverage Ratio                 10.02%              9.27%              9.54%

Risk-Based Capital             19.34%             20.55%             21.18%

Tier I Capital                 15.18%             15.13%             14.36%


<PAGE>

Regulatory Activity

In recent years, Pennsylvania enacted a law to permit state chartered banking
institutions to sell insurance. This follows a U.S. Supreme Court decision in
favor of nationwide insurance sales by banks. The decision also bars states from
blocking insurance sales by national banks in towns with populations of no more
than 5,000. PFC Bank does not currently have plans to enter the insurance field
but continues to review this option.

Congress recently enacted legislative reforms to modernize the financial
services industry, including repealing the Glass Steagall Act, which prohibits
commercial banks from engaging in the securities industry. Consequently, equity
underwriting activities of banks may increase in the near future. However, the
Corporation does not currently anticipate entering into these activities.

Management estimates that changes in PFC Bank's FDIC assessment rate, resulting
from the enactment of the Deposit Insurance Funds Act of 1996, will adversely
impact the results of operations net of income taxes. Prior to this enactment,
PFC Bank was not required to pay any FDIC assessment. Although the Bank is in
the minimum assessment bracket, income will be impacted in the amount of $50,000
for the year ended December 31, 2000. The act also provides regulatory relief to
the financial services industry relative to environmental risks, frequency of
examinations, and simplification of forms and disclosures.

From time to time, various types of federal and state legislation have been
proposed that could result in additional regulation of, and restrictions on, the
business of the Corporation and of PFC Bank. Management cannot predict whether
such legislation will be adopted or, if adopted, how such legislation would
affect the business of the Corporation and PFC Bank. As a consequence of the
extensive regulation of commercial banking activities in the United States, the
Corporation's and PFC Bank's business is particularly susceptible to federal
legislation and regulations that may increase the costs of doing business.
Except as specifically described above, Management believes that the affect of
the provisions of the aforementioned legislation on liquidity, capital
resources, and results of operation of the Corporation will be immaterial.
Management is not aware of any other current specific recommendations by
regulatory authorities or proposed legislation, which, if they were implemented,
would have a material adverse effect upon liquidity, capital resources, or
results of operation, although the general cost of compliance with the numerous
and multiple federal and state laws and regulations does have, and in the future
may have, a negative impact on the Corporation's results of operations.

Further, the business of the Corporation is also affected by the state of the
financial services industry in general. As a result of legal and industry
changes, Management expects the industry will continue to experience an increase
in consolidations and mergers as the financial services industry strives for
greater cost efficiencies and market share. Management also expects increased
diversification of financial products and services offered by the Bank and its
competitors. Management believes that such consolidations and mergers, and
diversification of products and services may enhance PFC Bank's competitive
position as a community bank.

<PAGE>

Forward-Looking Statements

From time to time, the Corporation may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and development
activities and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Corporation notes that a variety of
factors could cause the Corporation's actual results and experience to differ
materially from the anticipated results or other expectations expressed in the
Corporation's forward-looking statements. The risks and uncertainties that may
affect the operations, performance, development and results of the Corporation's
business include the following: general economic conditions, including their
impact on capital expenditures; business conditions in the banking industry; the
regulatory environment; rapidly changing technology and evolving banking
industry standards; competitive factors, including increased competition with
community, regional and national financial institutions; new service and product
offerings by competitors and price pressures; and similar items.

Gramm-Leach-Bliley Act

On November 12, 1999 President Clinton signed into law the Gramm-Leach-Bliley
Financial Modernization Act. The Act has a profound impact on the financial
services industry.

o    The Act repeals prior legislation to permit commercial banks to affiliate
     with securities firms and insurance companies. More importantly, the Act
     significantly expands the authority of each of these financial industries
     to engage in a full array of financial services. Thus, each industry may
     now engage in activities previously reserved to one or the other.

o    The Act authorizes bank holding companies meeting defined standards to
     engage in a substantially broader range of non-banking activities than was
     permissible before the legislation passed.

o    A new hierarchy of existing state and federal regulators will monitor both
     the bank and the corporation. The Act coordinates the efforts of these
     regulators. The goal is to lessen regulatory burden and prevent duplication
     of examination efforts.

Also, all financial institutions are required to take reasonable precautions to
protect the security and confidentiality of personal customer information. The
bank or corporation may only share customer information with its affiliates
under certain circumstances.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company's interest rate risk position
since December 31, 1999. Other types of market risk, such as foreign currency
exchange rate risk and commodity price risk, do not arise in the normal course
of the Company's business activities.

<PAGE>

PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY

PART II.  OTHER INFORMATION



ITEM 1.  Legal Proceedings

  Not applicable

ITEM 2.  Changes in Securities

  Not applicable

ITEM 3.  Defaults Upon Senior Securities

  Not applicable

ITEM 4.  Submission of Matters to a Vote of Security Holders

There was no submission of matters brought to a vote of security holders in the
second quarter of 2000.

ITEM 5.  Other Information

On July 6, 2000 the Corporation repurchased 107,640 shares of its common stock
at a price of $36.10 per share from the Paul L. Dunmire Trust Under Agreement
for C. Edward Dunmire and S. Esther Dunmire Trust Under Agreement for the
Benefit of C. Edward Dunmire. This stock will be held as treasury stock.

ITEM 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits


         3.1      Registrant's Articles of Incorporation.
                  (Incorporated by reference in Registrant's January 27, 1995,
                  filing on Form S-4).

         3.2      Registrant's By-Laws.
                  (Incorporated by reference in Registrant's January 27, 1995,
                  filing on Form S-4).

         10.1     Agreement between R.B. Robertson and Bank.
                  (Incorporated by Reference in the Registrant's September 30,
                  1997 filing on Form 10-QSB).

         10.2     Settlement Agreement.
                  (Incorporated by Reference in the Registrant's December 31,
                  1996 filing on Form 10-KSB).

<PAGE>

PEOPLES FINANCIAL CORP., INC. AND SUBSIDIARY

PART II. OTHER INFORMATION (cont.)

ITEM 6.  Exhibits and Reports on Form 8-K (cont.)

         10.3     General Release
                  (Incorporated by Reference in the Registrant's December 31,
                  1996 filing on Form 10-KSB).

         10.4     Amendment to Executive Employment Agreement dated October 20,
                  1999, between R.B. Robertson and Bank.
                  (Incorporated by Reference to Registrant's September 30, 1999
                  filing of Form 10Q).

         10.5     Amendment to Executive Employment Agreement dated
                  November 17, 1999 between R.B. Robertson, PFC Bank and
                  Peoples Financial Corp., Inc.
                  (Incorporated by Reference to the Registrant's December 31,
                  1999 filing of Form 10-K).

         11       Statement re: Computation of Earnings Per Share.
                  (included herein at Part I, Item 1, Page 2 of this Form 10-Q).

         27       Financial Data Schedule


  (b)    Reports on Form 8-K

                  The Registrant did note file any current reports on Form 8-K
                  during the quarter ended June 30, 2000.

<PAGE>

                                   SIGNATURES


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

Dated:     August 2, 2000
        --------------------



                                                  PEOPLES FINANCIAL CORP., INC.
                                                                   (Registrant)



S/R.B. Robertson
------------------------------------------
R.B. Robertson
President & Chief Executive Officer


S/James L. Kifer
------------------------------------------
James L. Kifer
Executive Vice President & Asst. Secretary

<PAGE>
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
                                                                                                  PAGE NO.
                                                                                                IN MANUALLY
                                                                                                   SIGNED
                                                                                                 EXHIBIT NO.
                                                                                                  ORIGINAL
                                                                                                ------------
<S>     <C>      <C>
(a)      The following Exhibits are files herewith or incorporated by reference
         as a part of this Annual Report.

         3.1      Registrant's Articles of Incorporation.
                  (Incorporated by reference in Registrant's January 27, 1995
                  filing of Form S-4).

         3.2      Registrant's By-Laws.
                  (Incorporated by reference in Registrant's January 27, 1995
                  filing of Form S-4).

         10.1     Agreement between R.B. Robertson and Bank.
                  (Incorporated by Reference in the Registrant's September 30,
                  1997 filing of Form 10-QSB).

         10.2     Settlement Agreement.
                  (Incorporated by Reference in the Registrant's December 31,
                  1996 filing of Form 10-KSB).

         10.3     General Release
                  (Incorporated by Reference in the Registrant's December 31,
                  1996 filing of Form 10-KSB).

         10.4     Amendment to Executive Employment Agreement dated October 20,
                  1999, between R.B. Robertson and Bank
                  (Incorporated by Reference to Registrant's September 30, 1999
                  filing of Form 10-Q).

         10.5     Amendment to Executive Employment Agreement dated November 17,
                  1999 between R.B. Robertson, PFC Bank and Peoples Financial
                  Corp., Inc.
                  (Incorporated by Reference to the Registrant's December 31,
                  1999 filing of Form 10-K).

         11       Statement re: Computation of Earnings Per Share.
                  (included herein at Part I, Item 1, Page 2 of this Form 10-Q).

         27       Financial Data Schedule                                                              17
</TABLE>