<PAGE>

                    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         September 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: November 1, 2000
                                                      ----------------

        As of November 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 -
          September 30, 2000 (unaudited), December 31, 1999 and September 30, 1999
          (unaudited).....................................................................    1

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

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

          Consolidated Statements of Cash Flows -
          Nine months ended September 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 (UNAUDITED)

<TABLE>
<CAPTION>

                                                                            September 30,          December 31         September 30,
ASSETS                                                                           2000                  1999                 1999
                                                                            -------------         -------------        -------------
<S>                                                                         <C>                   <C>                  <C>
     Cash and due from banks                                                $  11,460,805         $  33,079,733        $  23,214,834
     Federal funds sold                                                         5,375,000             5,600,000           10,100,000
     Available-for-sale securities                                             25,728,119            27,766,282           30,105,099
     Held-to-maturity securities                                               37,948,716            32,054,044           32,058,244
     Federal Home Loan Bank stock, at cost                                      1,408,400             1,408,400            1,408,400
     Loans receivable, net                                                    211,571,569           196,539,392          195,829,029
     Premises and equipment, net                                                2,846,570             2,988,549            3,094,343
     Other assets                                                               2,533,231             2,278,696            2,398,618
                                                                            -------------         -------------        -------------
           Total Assets                                                     $ 298,872,410         $ 301,715,096        $ 298,208,567
                                                                            =============         =============        =============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
     Deposits
          Non-interest bearing                                              $  29,320,582         $  28,375,696        $  26,860,147
          Interest bearing                                                    221,267,063           217,697,740          214,062,779
                                                                            -------------         -------------        -------------
          Total deposits                                                      250,587,645           246,073,436          240,922,926
     FHLB Borrowings                                                            5,000,000             8,000,000            8,000,000
     Accrued interest and other liabilities                                     8,114,715             8,965,412           10,214,460
                                                                            -------------         -------------        -------------

          Total Liabilities                                                   263,702,360           263,038,848          259,137,386

STOCKHOLDERS' EQUITY
     Common stock, par value                                                      531,916               531,916              531,916
     Surplus                                                                    3,832,083             3,832,083            3,832,083
     Retained earnings                                                         24,326,408            22,552,636           21,687,337
     Accumulated other comprehensive income                                    10,428,589            11,759,613           13,019,845

     Less: Treasury stock at cost                                              (3,948,946)                    0                    0
                                                                            -------------         -------------        -------------
          Total stockholders' equity                                           35,170,050            38,676,248           39,071,181
                                                                            -------------         -------------        -------------

          Total Liabilities and Stockholders' Equity                        $ 298,872,410         $ 301,715,096        $ 298,208,567
                                                                            =============         =============        =============

</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>
                                                         Nine Months Ended September 30,
                                                         -------------------------------
Interest Income                                               2000             1999
                                                          -----------      -----------
<S>                                                       <C>              <C>
  Loans                                                   $12,510,353      $11,222,527
  Investment securities                                     2,546,610        2,247,135
  Interest-bearing deposits                                   371,999          225,763
  Federal funds sold                                          362,262          331,377
                                                          -----------      -----------
          Total interest income                            15,791,224       14,026,802

Interest Expense
  Deposits                                                  8,217,913        7,017,106
  FHLB Borrowings                                              28,742           17,982
                                                          -----------      -----------
          Total interest expense                            8,246,655        7,035,088
                                                          -----------      -----------
Net Interest Income                                         7,544,569        6,991,714
Provision for Loan Losses                                      45,000          120,000
                                                          -----------      -----------
Net Interest Income after Provision for Loan Losses         7,499,569        6,871,714

Other Income
  Service fees                                                369,083          408,207
  Net investment gains                                          8,633        2,274,686
  Other                                                        63,885           32,348
                                                          -----------      -----------
          Total  other income                                 441,601        2,715,241

Other Expenses
  Salaries                                                  1,471,581        1,455,769
  Pension and other employee benefits                         688,786          664,811
  Occupancy expense                                           811,749          842,847
  Legal and professional                                      104,171          101,684
  Regulatory fees                                              66,441           46,769
  Data processing                                             161,128          119,876
  Other                                                     1,111,930        1,302,459
                                                          -----------      -----------
          Total other expenses                              4,415,786        4,534,215

Income Before Income Taxes                                  3,525,384        5,052,740

Provision for Income Taxes                                    969,885        1,466,098
                                                          -----------      -----------
Net Income                                                $ 2,555,499      $ 3,586,642
                                                          ===========      ===========
Net Income per Share of Common Stock                      $      1.47      $      2.03
                                                          ===========      ===========
Net Income per Share of Common Stock (fully diluted)      $      1.47      $      2.03
                                                          ===========      ===========
Weighted Average Shares Used in Computing Net Income
  per Share of Common Stock                                 1,737,961        1,769,173
                                                          ===========      ===========
</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 September 30,
                                                            --------------------------------
Interest Income                                                  2000              1999
                                                              ----------        ----------
<S>                                                           <C>               <C>
  Loans                                                       $4,329,602        $3,940,062
  Investment securities                                          885,962           792,840
  Interest-bearing deposits                                       68,120            88,789
  Federal funds sold                                              97,066           128,253
                                                              ----------        ----------
          Total interest income                                5,380,750         4,949,944

Interest Expense
  Deposits                                                     2,830,659         2,434,897
  FHLB Borrowings                                                  6,906            17,982
                                                              ----------        ----------
          Total interest expense                               2,837,565         2,452,879
                                                              ----------        ----------
Net Interest Income                                            2,543,185         2,497,065
Provision for Loan Losses                                         15,000            30,000
                                                              ----------        ----------
Net Interest Income after Provision for Loan Losses            2,528,185         2,467,065

Other Income
  Service fees                                                   115,514           138,834
  Net investment gains                                               332           651,575
  Other                                                           21,684             6,451
                                                              ----------        ----------
          Total other income                                     137,530           796,860
Other Expenses
  Salaries                                                       463,465           536,089
  Pension and other employee benefits                            235,417           212,259
  Occupancy expense                                              261,522           288,916
  Legal and professional                                          38,206            26,232
  Regulatory fees                                                 23,552            17,648
  Data processing                                                 57,861            24,185
  Other                                                          337,398           415,535
                                                              ----------        ----------
         Total other expenses                                  1,417,421         1,520,864

Income Before Income Taxes                                     1,248,294         1,743,061

Provision for Income Taxes                                       342,458           473,674
                                                              ----------        ----------
Net Income                                                    $  905,836        $1,269,387
                                                              ==========        ==========
Net Income per Share of Common Stock                          $     0.54        $     0.72
                                                              ==========        ==========
Net Income per Share of Common Stock (fully diluted)          $     0.54        $     0.72
                                                              ==========        ==========
Weighted Average Shares Used in Computing Net Income
  per Share of Common Stock                                    1,668,922         1,770,115
                                                              ==========        ==========
</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>
                                                                                Nine Months Ended September 30,
                                                                               ----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                                2000                 1999
                                                                               ------------          ------------
<S>                                                                            <C>                   <C>
Net Income                                                                     $  2,555,499          $  3,586,642
Adjustments to reconcile net cash from operating activities:
Depreciation and amortization                                                       407,073               609,617
Net investment security gains                                                        (8,633)           (2,274,686)
Net accretion/amortization of
 premiums and discounts                                                             (24,269)               21,374
Provision for loan losses                                                            45,000               120,000
Loss on sale / disposal of assets                                                    20,231                93,399
Reinvestment of stock dividends                                                           0               (52,854)
Increase (decrease) in cash due to changes in assets and liabilities:
         Other assets                                                              (283,267)               24,181
         Accrued interest and other liabilities                                    (165,017)              238,565
                                                                               ------------          ------------
     Net Cash From Operating Activities                                           2,546,617             2,366,238

CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from sales of securities available for sale                               29,760             2,638,087
  Proceeds from maturities of securities held to maturity                         9,440,000             6,680,000
  Purchase of securities held to maturity                                       (15,310,071)           (6,213,220)
  Purchase of FHLB stock                                                                  0              (566,900)
  Net loans made to customers                                                   (15,087,709)          (21,307,333)
  Purchases of premises and equipment                                              (270,794)             (235,590)
                                                                               ------------          ------------
   Net Cash Used By Investing Activities                                        (21,198,814)          (19,004,956)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from (repayments of) FHLB Borrowings                                  (3,000,000)            8,000,000
  Net increase in deposits                                                        4,538,942            27,568,216
  Proceeds from issuance of common stock                                                  0                83,347
  Dividends paid                                                                   (781,727)             (708,088)
  Purchase of treasury stock                                                     (3,948,946)                    0
                                                                               ------------          ------------
Net Cash From (used by) Financing Activities                                     (3,191,731)           34,943,475
                                                                               ------------          ------------
Net Change in Cash and Cash Equivalents                                         (21,843,928)           18,304,757
Cash and Cash Equivalents at Beginning of Period                                 38,679,733            14,910,077
                                                                               ------------          ------------
Cash and Cash Equivalents at End of Period                                     $ 16,835,805          $ 33,214,834
                                                                               ============          ============
</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
September 30, 2000 and 1999, the results of operation for the three and nine
months ended September 30, 2000 and 1999 and cash flows for the nine months
ended September 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 nine months ended September 30, 2000 and 1999
was $1,224,475 and $(878,218), respectively.

NOTE E - INVESTMENT SECURITIES

Available-for-sale securities consist of the following:

<TABLE>
<CAPTION>
                                                                     September 30, 2000
                                           -----------------------------------------------------------------------
                                               Amortized           Unrealized         Unrealized          Market
                                                  Cost                Gains             Losses            Value
                                           -----------------------------------------------------------------------
<S>                                           <C>                 <C>                 <C>              <C>
     Equity securities                        $ 9,927,227         $15,840,965         $  (40,073)      $25,728,119

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


                                                                     September 30, 1999
                                           -----------------------------------------------------------------------
                                               Amortized          Unrealized          Unrealized          Market
                                                  Cost               Gains              Losses            Value
                                           -----------------------------------------------------------------------
     Equity securities                        $10,182,024         $19,961,064         $  (37,989)      $30,105,099
</TABLE>


<PAGE>


NOTE E - INVESTMENT SECURITIES - Continued

Held-to-maturity securities consist of the following:

<TABLE>
<CAPTION>
                                                                     September 30, 2000
                                           -----------------------------------------------------------------------
                                               Amortized           Unrealized          Unrealized        Market
                                                  Cost                Gains              Losses          Value
                                           -----------------------------------------------------------------------
<S>                                           <C>                 <C>                 <C>              <C>
     U.S. Treasury securities                 $19,453,415         $   113,353         $  (41,857)      $19,524,911
     U.S. government agencies                  18,375,473              99,899           (213,965)       18,261,407
     State and political subdivisions             119,828                   -             (1,090)          118,738
                                           -----------------------------------------------------------------------
                                              $37,948,716         $   213,252          $(256,912)      $37,905,056
                                           =======================================================================

                                                                     December 31, 1999
                                           -----------------------------------------------------------------------
                                               Amortized           Unrealized          Unrealized        Market
                                                  Cost                Gains              Losses          Value
                                           -----------------------------------------------------------------------
     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
                                           =======================================================================

                                                                    September 30, 1999
                                           -----------------------------------------------------------------------
                                               Amortized           Unrealized          Unrealized        Market
                                                  Cost                Gains              Losses          Value
                                           -----------------------------------------------------------------------
     U.S. Treasury securities                 $24,824,511         $   200,812          $ (39,671)      $24,985,652
     U.S. government agencies                   6,773,959                   -           (140,629)        6,633,330
     State and political subdivisions             459,774               1,855               (871)          460,758
                                           -----------------------------------------------------------------------
                                              $32,058,244         $   202,667          $(181,171)      $32,079,740
                                           =======================================================================
</TABLE>

NOTE  F - TREASURY STOCK

In July 2000, the Corporation purchased 107,640 shares of its stock. The stock
is recorded at cost as treasury stock as of September 30, 2000.

<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 nine months ended September 30, 2000, the Corporation's total assets
decreased from December 31, 1999 by $2.8 million resulting primarily from a
decrease of approximately $21.8 million in liquid assets such as cash and due
from banks and federal funds sold in addition to a decrease of over $2.0 million
in available-for-sale securities. These decreases were the result of the
transfer of liquid assets into loans and securities and a reduction in borrowed
funds in addition to a reduction in market values of the available-for-sale
security portfolio. These decreases are offset slightly by an increase in loans
of over $15.0 million and held-to-maturity securities of nearly $5.9 million.
The Corporation's total assets increased over September 30, 1999 by $0.7 million
resulting from increases of $15.7 million in net loans and $5.9 million in
held-to-maturity securities partially offset by decreases in available-for-sale
securities of nearly $4.4 million and cash and due from banks and federal funds
of nearly $16.5 million.

The increase in total liabilities of approximately $0.7 million from December
31, 1999 to September 30, 2000 is primarily attributable to an increase in
deposits of $4.5 million partially offset by decreases in short term borrowings
of $3.0 million and other liabilities of $0.8 million. The increase in total
liabilities of $4.6 million from September 30, 1999 to September 30, 2000 is
primarily attributable to an increase in deposits of $9.7 million offset by
decreases in short term borrowings of $3.0 million and other liabilities of $2.1
million.

As of September 30, 2000, PFC Bank, the Corporation's wholly owned subsidiary,
had a ratio of non-performing loans to total loans of 0.17% as compared to a
ratio of 0.12% as of December 31, 1999 and 0.10% at September 30, 1999.
Non-performing loans that were delinquent more than 90 days or held on
non-accrual status at September 30, 2000 were $369,000 as compared to $233,000
and $198,000 at December 31, 1999 and September 30, 1999, respectively. At
September 30, 2000, the allowance for possible loan losses was $1,408,000, which
represented 0.67% of net loans as compared to 0.70% at December 31, 1999 and
0.69% at September 30, 1999. Non-performing loans were 9.02% of the allowance
for possible loan losses, as compared to 0.51% at December 31, 1999 and 4.59% at
September 30, 1999.

In management's opinion, the allowance for possible loan losses at September 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 nine-month period ended September 30, 2000, the Corporation recognized
net income of $2.6 million, a decrease of $1.0 million compared with the same
period in the prior year. This decrease is attributable to a decrease of $2.3
million in capital gains taken from the sale of available-for-sale securities
offset by an increase in net interest income of $553,000 and decreases in income
tax provisions of $496,000, operating expenses of $118,000 and provisions for
loan losses of $75,000. Net income for the three-month period ended September
30, 2000 totaled $906,000, a decrease of $364,000 compared with the three-months
ended September 30, 1999. This decrease was primarily attributable to an
decrease in capital gains taken from the sale of available-for-sale securities
of $651,000 partially offset by decreases in provision for income taxes of
$131,000 and other expenses of $103,000 and an increase in net interest income
of $46,000.

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 nine-month period ended September 30, 2000 was $15.8
million, an increase of nearly $1.8 million from the nine-month period ended
September 30, 1999. This increase is primarily attributed to a $1.3 million
increase in interest on the loan portfolio in addition to an increase of
$477,000 in interest on investments, interest-bearing deposits and federal funds
sold. Interest expense for the nine-month period ended September 30, 2000 was
over $8.2 million, a $1.2 million increase over the same nine-month period ended
September 30, 1999. Management attributes this increase primarily to the $7.2
million increase in interest bearing deposits since September 30, 1999. For the
three-month period ended September 30, 2000, interest income was $5.4 million, a
$431,000 increase as compared to the three-month period ended September 30,
1999. This increase is due to increases in interest on loans of $390,000 and
investments, interest-bearing deposits and federal funds sold of $41,000.
Interest expense for the three-months ended September 30, 2000 of $2.8 million
is an increase over the same period in 1999 of $385,000 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


<PAGE>

allowance based on its determination of the necessary level of the allowance.
For the nine-month period ended September 30, 2000, PFC Bank recorded $45,000 to
the provision for loan losses as compared to $120,000 for the same period in the
previous year. Net charge-offs for the nine month period ended September 30,
2000 amounted to $15,000 as compared to $12,000 for the nine-month period ended
September 30, 1999. For the three-month period ended September 30, 2000, PFC
Bank recorded $15,000 to the provision for loan losses as compared to $30,000
for the same period in the previous year. Net charge-offs for the three-month
period ended September 30, 2000 amounted to $500 as compared to $8,000 for the
three-month period ended September 30, 1999.

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

                                Nine-Months Ended              Year Ended
                                September 30, 2000          December 31, 1999
                                ------------------          -----------------

Balance, beginning of period           $1,378                   $1,238
Provision                                  45                      150
Charge-offs                               (30)                     (48)
Recoveries                                 15                       38
                                       ------                   ------
Balance, end of period                 $1,408                   $1,378
                                       ======                   ======

Other Income

Other income for the nine-month period ended September 30, 2000 was
approximately $442,000, a decrease of $2.3 million compared to the nine-month
period ended September 30, 1999. This decrease is attributable to capital gains
from the sale of available-for-sale securities of $9,000 for the nine-month
period ended September 30, 2000 as compared with capital gains of $2.3 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 September 30, 2000 was $138,000, a decrease of $659,000
as compared to the same period in 1999. This decrease is also the result of a
decrease in capital gains from the sale of available-for-sale securities.

Other Expenses

Total other expenses decreased over $118,000 for the nine-month period ended
September 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 $191,000 and occupancy expenses of $31,000 offsetting increases in salaries
and employee benefits of $40,000, data processing fees of $41,000, regulatory
fees of $20,000 and legal and professional expenses of $3,000. Other expenses
for the three months ended September 30, 2000 of $1.4 million decreased $103,000
over the three-month period ended September 30, 1999. This decrease was the
result of decreases in miscellaneous operating expenses of $78,000, salaries and
employee benefits of $50,000 and occupancy expense of $27,000 offset slightly by
increases in data processing fees of $34,000, legal and professional fees of
$12,000 and regulatory fees of $6,000.


<PAGE>

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

Provision for Income Taxes

The Corporation's provision for income taxes was $970,000 for the nine-month
period ended September 30, 2000, as compared to $1,466,000 for the same period
ended September 30, 1999. During the three-month period ended September 30,
2000, the Corporation's provision for income taxes was $342,000, as compared to
$474,000 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:

                          September 30        December 31         September 30
                              2000                1999                1999
                          ----------------------------------------------------
Leverage Ratio               8.45%                9.27%               9.47%

Risk-Based Capital          17.44%               20.55%              20.41%

Tier I Capital              12.88%               15.13%              14.52%


<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 Corporation'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 Corporation'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
third quarter of 2000.

ITEM 5.  Other Information
Not applicable.

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 September 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:     November 3, 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>