SCHEDULE 14A INFORMATION

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

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

Check the appropriate box:

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

                  THE PEOPLES HOLDING COMPANY
      ---------------------------------------------------
       (Name of Registrant as Specified In Its Charter)

    
                          THE PEOPLES HOLDING COMPANY
                                 P. O. BOX 709
                         TUPELO, MISSISSIPPI 38802-0709

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                          TO BE HELD ON APRIL 14, 1998

TO THE STOCKHOLDERS:

Notice is hereby given that the Annual Meeting of Stockholders of The Peoples
Holding Company (the "Company") will be held at the principal office of The
Peoples Bank & Trust Company at 209 Troy Street, Tupelo, Mississippi, on April
14, 1998, at 2:00 o'clock p.m. for the purpose of considering and voting on the
following matters:

        (1)  Authority  to elect as members of the board of  directors
        for the terms specified the five (5) nominees presented in the
        proxy material.

        (2) To consider  and act upon a proposal to amend the  articles of
        incorporation   to  increase  to  15,000,000   the  number  of
        authorized shares of common stock.

        (3) To  ratify  the  appointment  of Ernst  and  Young  LLP of
        Memphis,  Tennessee,  as independent  auditors for the Company
        for the current year.

        (4) To exercise  its  discretion  on any other  matters  which
        properly come before said meeting.

Information regarding the matters to be acted upon at the meeting is contained
in the Proxy Statement accompanying this Notice.

   BY ORDER OF THE BOARD OF DIRECTORS

March 23, 1998                  /s/ John W. Smith
                                -----------------
                              John W. Smith, President

                                    IMPORTANT
         WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK,
         SIGN, DATE, AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED
        PROXY IN THE ENVELOPE PROVIDED. IT REQUIRES NO POSTAGE IF MAILED
                             IN THE UNITED STATES.

                          THE PEOPLES HOLDING COMPANY

                                PROXY STATEMENT

          ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 14, 1998

                                  INTRODUCTION

   The  accompanying  Proxy  is  solicited  by and on  behalf  of the  Board  of
Directors of The Peoples  Holding  Company (the "Company") for use at the Annual
Meeting  of  Stockholders  to be held on April 14,  1998,  and any  adjournments
thereof.  The time and place of the  meeting  is set  forth in the  accompanying
Notice of Meeting. All expenses of preparing, printing and mailing the Proxy and
all materials used in the solicitation  thereof will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by personal interview
and telephone by directors, officers and other employees of the Company, none of
whom will receive additional  compensation for their services. The date on which
this Proxy Statement and the accompanying Proxy are first being sent or given to
Stockholders of the Company is March 23, 1998.

                             PURPOSE OF THE MEETING

The annual meeting will be held for the purpose of:
1. Electing five members of the Board of Directors of the Company
   for terms specified;
2. Approve an amendment to Article Four of the Articles of Incorporation to
   increase the authorized shares of common stock outstanding to fifteen
   million.
3. Voting on independent auditors for the Company for the current year;
4. Transacting such other matters as may properly come before the meeting.

                          VOTES REQUIRED FOR APPROVALS

   The Company has issued and outstanding  5,859,472 shares of Common Stock, par
value of $5.00 per share, which is the only class of stock outstanding. Only the
holders of record of Common  Stock of the  Company at the close of  business  on
March 20, 1998, are entitled to notice of and vote on the matters to come before
the Annual Meeting of Stockholders or any adjournment thereof.

   Presence,  in  person  or by  proxy,  of the  holders  of a  majority  of the
outstanding shares of Common Stock of the Company entitled to vote at the Annual
Meeting is  necessary to  constitute a quorum at the Meeting or any  adjournment
thereof.

   A  stockholder  is  entitled to one (1) vote,  in person or by proxy,  at the
Annual Meeting for each share of Common Stock of the Company

held of record in his or her name at the close of business  on the record  date,
March 20, 1998.

   Affirmative  vote of a majority of the outstanding  shares of Common Stock of
the Company is  required to elect  directors.  Each  shareholder  shall have the
right to vote,  allocable  to the  number  of shares  owned by him,  for as many
persons as there are directors to be elected, or to cumulate such votes and give
one candidate as many votes as the number of directors  multiplied by the number
of votes  allocable to his share equal, or to distribute such votes, on the same
principle,  among as many candidates as he shall see fit, without any conditions
precedent to such action.

   Affirmative  vote of a majority of outstanding  shares of Common Stock of the
Company is  required  to approve  the  proposed  amendment  to the  articles  of
incorporation.

   Affirmative  vote of a majority of outstanding  shares of Common Stock of the
Company is required to approve independent auditors.

   Stockholders  may designate a person or persons other than those named in the
enclosed  Proxy to vote their  shares at the Annual  Meeting or any  adjournment
thereof.  As to any other  matter or  business  which may be brought  before the
Annual Meeting or any  adjournment  thereof,  a vote may be cast pursuant to the
accompany  ing Proxy in  accordance  with the  judgment of the person or persons
voting the same,  but the management and Board of the Company do not know of any
other matters or business to come before the meeting.  Any  stockholder  has the
power  to  vote  his or her  Proxy  at any  time,  insofar  as it has  not  been
exercised,  by written  notice or subse  quently  dated  Proxy,  received by the
Company,  or by oral revocation given by the stockholder in person at the Annual
Meeting or any adjournment thereof.

                      PRINCIPAL HOLDERS OF VOTING SECURITY

   The Company has only Common  Stock  outstanding  and as of February 25, 1998,
the Company had 2,456  stockholders of record. To the knowledge of management of
the Company,  no stockholder owns beneficially more than five (5) percent of the
Company's  outstanding  Common  Stock.  As of February 25, 1998,  policy  making
officers and directors as a group beneficially owned, directly and indirectly, a
total of three  hundred  and twenty  four  thousand,  six hundred and ninety six
(324,696) shares,  or five and fifty four hundredths  (5.54%) of total shares of
Common Stock outstanding.

                             ELECTION OF DIRECTORS

   The charter of incorporation and bylaws of the Company provide for a board of
not less than seven nor more than twenty  members to be  determined  annually by
the  affirmative  vote of a majority  of the entire  Board of  Directors  of the
Company.  The number of directors is currently fixed at fourteen,  and the Board
of Directors has voted to fix the number of members at fourteen for the ensuing

year.  The Board of  Directors is divided into three  classes  having  staggered
terms.  Five of the  directors  whose terms end in 1998 have been  nominated for
re-election to another term.

   The five persons  named below will be  nominated  for election to serve terms
for the period  indicated below and until their succes sors are duly elected and
qualified. It is the intention of the persons named in the proxy to vote for the
election of the five  nominees.  The following  table sets forth the name,  age,
principal  occupation or position,  periods of service as a director,  number of
shares of company stock  beneficially  owned and certain other information as to
said directors and nominees:

NAME; AGE;                                     SHARES OF COMPANY STOCK
POSITION; and                                    OWNED DIRECTLY and
PRINCIPAL                      DIRECTOR           (INDIRECTLY) and
OCCUPATION                     SINCE(1)        PERCENTAGE OF TOTAL (2)

                  NOMINEES FOR THREE-YEAR TERMS ENDING IN 2001:

John M. Creekmore; 42;          1997               1,221         *
attorney                                            (230)

John W. Smith; 62;              1978               9,015         *
 President, The Peoples                           (3,744)
 Holding Company and
 The Peoples Bank and
 Trust Company

Jimmy S. Threldkeld; 65;        1974              23,239         *
 President, JCO, Inc.,                                (0)
 real estate development

Robert H. Weaver; 66;           1980              81,697        1.58%
 attorney, Watkins,                              (10,872) (3)
 Ludlam & Stennis

J. Larry Young; 59;             1982                 262         *
 pharmacist and partner,                            (262)
 Ramsey-Young Pharmacy

                      DIRECTORS WITH TERMS ENDING IN 1999:

William M. Beasley; 46;         1989              26,392         *
  attorney, Mitchell, Voge,                       (7,588)
  Beasley and Corban

Marshall H. Dickerson; 48;      1997                 235         *
  owner and manager,                                  (0)
  Dickerson Furniture Company

A. M. Edwards, Jr.; 71;         1983               5,761         *
 attorney, Edwards, Storey,                       (5,761)
 Marshall & Helveston

Eugene B. Gifford, Jr.; 63;     1987              38,138         *
 attorney, Gifford and                           (15,202)
 Allred

                      DIRECTORS WITH TERMS ENDING IN 2000:

George H. Booth, II; 44;        1994               3,178         *
 Secretary, Tupelo                                    (0)
 Hardware Company (whole-
 sale and retail hardware)

Frank B. Brooks; 54;            1989              13,144         *
 farmer                                             (679)

Robert C. Leake; 65;            1973              19,449         *
 President, Leake &                               (9,472)
 Goodlett, Inc. (building
 supplies and contractors)
 Chairman, Board of Directors
 of The Peoples Holding Company
 and The Peoples Bank and
 Trust Company

C. Larry Michael; 52;           1997               2,052         *
 President, Transport Trailer                         (0)
 Service, Inc., Rent-A-Box, Inc.,
 and Precision Machine and Metal
 Fabrication, Inc.

J. Heywood Washburn; 67;        1982              23,103         *
 self-employed, investor                         (24,000)

(1) The  Company  was  formed in 1982.  Dates  stated  for  years  prior to 1982
indicate  the first year of service as a director of The Peoples  Bank and Trust
Company.  Persons who were  serving as  directors  of The Peoples Bank and Trust
Company in 1982 also became directors of the Company at that time.

(2)  Less than 1% ownership is marked with an asterisk (*).

(3)  Excludes  9,573  shares  owned by his wife for which Mr.  Weaver  disclaims
beneficial ownership.

   All of the directors and nominees for the terms listed above  presently serve
on both the Board of  Directors  of the Company and of The Peoples  Bank & Trust
Company. All shares of the Bank are owned by the Company.

                    COMPENSATION, MEETINGS AND COMMITTEES OF
                             THE BOARD OF DIRECTORS

   Compensation of Directors.  Directors who are officers of the Company receive
no  additional  compensation  for  their  service  as  directors.  The  Board of
Directors fixes the  compensation for outside  directors and currently,  outside
directors  are paid a monthly fee of $300.00 plus an  additional  monthly fee of
$250.00 for each regular board  meeting they attend.  Directors are also paid an
additional  fee of $250.00 for each  committee  meeting or special  called board
meeting which they attend. The Chairman of the Board is paid $1,833.33 per month
plus a fee of $250.00 for each committee meeting which he attends.

   Meetings and Attendance.  The Board of Directors of the Company met ten times
during 1997.  No director  attended  less than 75% of the aggregate of the total
number of  meetings  held by the  Board of  Directors  and the  total  number of
meetings held by all committees of the board on which they served.  The Board of
Directors of the Bank met twelve times during 1997.

     Executive  Committee.  The Executive  Committee has charge over all matters
under the  direction  and  control of the Board of  Directors  which may require
attention between regular meetings of the Board of Directors. The members of the
Executive Committee are Robert C. Leake, Chairman, A. M. Edwards, Jr., Eugene B.
Gifford,  Jr.,  John W.  Smith,  Jimmy S.  Threldkeld  and J. Larry  Young.  The
committee met thirteen times during 1997 with no member  attending less than 75%
of the meetings.

     The  Board of  Directors  of the  Company  performs  the  functions  of the
Compensation  Committee,  the Personnel Committee and the Nominating  Committee.
Mr.  Smith does not  attend or  participate  in board  meetings  when  executive
salaries and other executive benefits are discussed and approved. The members of
the board that make up the  Compensation  Committee and the Personnel  Committee
are:  William  M.  Beasley,  George  H.  Booth,  II,  Frank B.  Brooks,  John M.
Creekmore,  Marshall H. Dickerson,  A. M. Edwards,  Jr., Eugene B. Gifford, Jr.,
Robert C. Leake, C.Larry Michael, John W. Smith, Jimmy S. Threldkeld, J. Heywood
Washburn, Robert H. Weaver and J. Larry Young.

   Compensation  Committee Interlocks and Insider  Participation.  John W. Smith
serves on the board which acts as the Compensation Committee. He does not attend
or participate in any board meetings when executive  salaries or other executive
benefits are discussed and approved.

     Audit Committee.  The Audit Committee of the Board of Directors of the Bank
also  functions  as the Audit  Committee  of the  Company and is composed of the
following  directors:  J. Larry  Young,  Chairman,  George H.  Booth,  II, A. M.
Edwards,  Jr.,  Eugene B.  Gifford,  Jr.,  and J.  Heywood  Washburn.  The Audit
Committee is an independent commit tee made up entirely of outside directors who
are independent of management of the Company. The Audit Committee meets with the
internal  auditors  and  with  the  independent  public  accountant  and reports
regularly to the Board of Directors. The Audit Committee met twelve times during
1997.

                        PROPOSED AMENDMENT TO ARTICLES OF
                            INCORPORATION INCREASING
                      NUMBER OF AUTHORIZED SHARES OF STOCK

   The  Board  of  Directors  has  proposed  an  amendment  to the  Articles  of
Incorporation,  as  previously  amended,  and  directed  that the  amendment  be
submitted to the  shareholders  for approval.  The amendment  would increase the
number of authorized shares of common stock from 7,500,000 to 15,000,000.

   Full text of the proposed resolution and amendment is as follows:

     RESOLVED, that Article Fourth of the Articles of Incorporation
     of The Peoples Holding Company, as previously amended, be amended to
     read as follows:

     FOURTH: The aggregate number of shares which the
     corporation shall have authority to issue is Fifteen
     Million (15,000,000) shares of common stock, all of one
     class, having a par value of Five Dollars ($5.00) each.

   Of the  7,500,000  authorized  shares of common stock,  5,859,472  shares are
presently  issued and  outstanding.  The Board of  Directors  believes  that the
proposed  increase  in the  number of  authorized  shares of common  stock  will
benefit the Company by  improving  its  flexibility  when  responding  to future
business  needs and  opportunities.  The  additional  authorized  shares will be
available for issuance from time to time in connection with further stock splits
in the form of stock dividends, financings, acquisitions and for other corporate
purposes which the Board of Directors may deem advisable.

   The common stock of the Company was split three-for- two in 1997. Two hundred
and six  thousand  and  twenty-five  (206,025)  shares of stock  were  issued in
connection with the Lakes Capital  Corporation  (Bank of Water Valley) merger in
1987, and 91,226 shares were issued in connection with the merger with New South
Capital Corporation (New South Bank) in 1994.

   If the amendment is approved,  the increased  number of authorized  shares of
common stock, as well as the presently  authorized but unissued shares of common
stock,  might be  utilized  in a  transaction  which  could  have the  effect of
delaying  or  preventing  a change of  control of the  Company,  which some or a
majority of the stockholders may consider desirable.  Such stock could be issued
to third  parties to  discourage a takeover  attempt or to dilute the  ownership
interest of a substantial stockholder who opposes board policies.

   The Articles of Incorporation contain certain provisions which might have the
effect of delaying or  preventing a change in control of the Company,  such as a
classified  board of directors  and approval by not less than eighty  percent of
the outstanding shares of certain transactions involving a shareholder owning or
controlling twenty percent or more of the voting stock of the Company. The Board
of Directors does not presently  intend to propose other changes to the Articles
of  Incorporation  which might be construed  to have the effect of  discouraging
takeover  attempts,  and  neither is the Board  aware of any  present  effort or
threat to obtain control of the Company.

   The  Board  of  Directors  unanimously  recommends  that  you  vote  FOR this
proposal.

                               EXECUTIVE OFFICERS

   All  executive  officers of the Company are elected by the Board of Directors
and hold office for a term of one year and thereafter until their successors are
elected and  qualified.  The  following  information  with  respect to executive
officers of the Company is provided:

NAME                  AGE    POSITION HELD AND YEAR FIRST ELECTED

John W. Smith         62     Director and Executive Vice President
                             of the Company from July, 1983, until
                             July,  1993,  and  Director  and  President
                             since August, 1993.

                             Director and Executive Vice President
                             of the Bank from 1978 and 1976,
                             respectively, until August, 1993, and
                             Director and President since August,
                             1993.

    The  Administrative  Committee  of the  Employee  Stock  Ownership  Plan  is
composed of three  participants  of the Plan,  none of whom are in the executive
management of the Company.

                           SUMMARY COMPENSATION TABLE
                               ANNUAL COMPENSATION

NAME                                              OTHER     ALL
AND                                               ANNUAL   OTHER
PRINCIPAL                                         COMPEN-  COMPEN-
POSITIONS               YEAR  SALARY(1) BONUS(1)  SATION   SATION

John W. Smith           1997  $226,692  $ 9,754      (2)       (3)
President and           1996  $215,000  $28,566      (2)       (3)
CEO since               1995  $190,000  $35,087      (2)       (3)
August, 1993

All Policy              1997  $402,417  $ 9,754                (3)
Making Officers         1996  $363,200  $28,566                (3)
and Directors           1995  $337,000  $35,087                (3)
as a Group (14)

   Compensation for the executive officers was set based on an evaluation of the
salary  records of the peer group of bank holding  companies in the state and in
the region and on the performance of the Company.

   (1)  Salary  and bonus  forms of  compensation  are  composed  of salary  and
directors'  fees paid  currently and salary and  directors'  fees the payment of
which  was  deferred  under  either  the  Directors'  Deferred  Fee  Plan or the
Executive Deferred Compensation Plan.

   (2) No disclosure is necessary of the aggregate  amount of personal  benefits
if less than the lesser of $50,000.00 or 10% of the cash compensation  disclosed
in the cash  compensation  table.  Officers  and  employees  use their  personal
automobiles for bank business and are reimbursed at a rate of $.315 per mile.

   (3) See pages regarding,  Directors' Deferred Fee Plan and Executive Deferred
Compensation Plan.

COMPENSATION COMMITTEE

     The  Board  of  Directors  of the  Company  performs  the  function  of the
Compensation Committee.  Mr. Smith recuses himself during the board meeting when
the executive  salaries and other executive benefits are discussed and approved.
The members of the board that make up the Compensation  Committee are: Robert C.
Leake,  Chairman,  William M. Beasley,  George H. Booth, II, Frank B. Brooks, C.
Larry Michael,  Marshall H.  Dickerson,  A. M. Edwards,  Jr., Eugene B. Gifford,
Jr., John M. Creekmore,  Jimmy S.  Threldkeld,  J. Heywood  Washburn,  Robert H.
Weaver, and J. Larry Young.

     The Company has designed its executive compensation program for the purpose
of attracting  and  retaining  executives  who will  contribute to the Company's
success through achieving designated goals that have been approved by the Board.
The Company's  executive  compensation  program consists of a base salary and an
annual incentive.

     The base salary is  determined by evaluating  the  responsibilities  of the
position, the experience of the executive, and the executive's  performance.  In
addition,  peer  comparisons  are made for comparable  positions in the relevant
marketplace.  The Committee  reviews the  executive's  salary  periodically  and
adjusts it to reflect  changes in the market  place as well as the  individual's
performance and responsibilities.

     The  performance of the Company  reached a new high for 1997.  Earnings per
share was up in excess of 12%,  combined with loan and deposit  growth of 11.58%
and 8.03%, respectively. Both net charge-offs and nonperforming loans were down.
In addition, the Company met the regulatory  requirements for a well capitalized
rating.

     During 1997, the Company changed its incentive from an ROA based program to
one that  determines the executive's  incentive based upon economic  improvement
from the prior year. This plan is referred to as "Performance  Compensation  for
Stakeholders".  The executive's participation in that program is the same as for
all other employees.  The incentive  compensation is based on economic standards
for growth,  profitability,  asset quality, and productivity.  Each of these key
performance  indicator  categories are  quantified in  determining  the economic
improvement achieved by the Company.

     Under the  incentive  plan, a minimum  threshold is set before an incentive
will be paid.  The reward pool ranges from 33% to 48% of the Company's  economic
improvement.  (Economic  improvement  is defined as the  increase  in net income
before taxes and incentive in the current year over that of the prior year based
on the achievement of the key performance indicators). The incentive paid to the
executive  for 1997  was  based on a  reward  pool of  approximately  34% of the
economic improvement.  This equated to a percentage of the executive's salary of
4.38%.

     Other benefits that are provided to the executive include the participation
in a Company-wide  medical plan, money purchase pension plan,  401(k),  deferred
compensation,  and ESOP.  (The Bank's defined benefit pension plan, in which the
executive  participated,  was  curtailed by the Bank and benefit  accruals  were
frozen as of December 31, 1996).  These benefits are offered to other  employees
of The Peoples Bank & Trust Company, subsidiary.

EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

   The Bank adopted an Employee Stock  Ownership Plan effective as of January 1,
1981,  and the Company  adopted said plan  effective as of November 1, 1983. The
plan has  subsequently  been amended to comply with all law  changes.  This plan
covers all employees  who have attained the age of twenty-one  and have at least
one year of continuous service. The non-officer  directors of the Company do not
participate  in the Plan. The Bank set aside $100,000 in 1997 for this Plan. The
amount set aside is used to purchase shares of the Company stock and other stock
which is held in trust for the employees  until  retirement,  death, or break in
service.  The Plan  presently  owns  369,945  shares of the common  stock of the
Company or 6.31% of the total outstanding shares.  These shares are voted by the
employees  participating in the Plan. Eligible employees participate in the Plan
based on their salary compared to total eligible salaries for the year. Benefits
are distributed in the form of shares held for the employee's account.

     At the beginning of 1997,  the Plan held 248,902  shares of common stock of
the Company.  Between January 1, 1997, and December 31, 1997,  4,462  additional
shares were  purchased  less 6,734 shares  distributed to retired and terminated
participants,  and in addition,  123,315  shares were  received as a result of a
fifty percent stock dividend issued by the Bank as of January 1, 1998;  bringing
the total at the end of 1997, restated for the fifty percent stock dividend,  to
369,945 shares. All Company stock purchased for the Plan was either purchased on
the open market or from terminated ESOP participants. John W. Smith participated
in the  contribution  to the Employee Stock Ownership Plan, and his share of the
contribution for 1997 was approximately $1,275.

PENSION PLAN

   The Pension Plan of the Bank has been  adopted by the Company.  Listed in the
table below are the Retirement  Benefits estimated to be paid to participants in
the Company's  Pension Plan at normal  retirement  date, age 65. The Non-Officer
Directors of the Company do not  participate  in the Plan. The Plan allows early
and  delayed  retirement.  The  Company  elected to adopt  Financial  Accounting
Standards Board Statements (FASB) No. 87 and No. 88 in 1986. The Pension expense
since 1986 has been computed under those  statements,  resulting in income under
FASB Statement No. 87 of $40,486.00 in 1997. The Company's  funding policy is to
contribute  annually an amount that falls within the minimum and maximum  amount
determined by consulting  actuaries in accordance  with the Employee  Retirement
Income Security Act of 1974. The Company did not make a contribution to the Plan
for  1997.   Said   evaluation  is  based  on  data   concerning  all  employees
participating  in the Plan as a group.  The actuary  does not compute and assign
any part of a total contribution as the current cost of retirement  benefits for
a specific employee.

     During 1996, the Pension Plan was curtailed,  freezing participant accruals
under the plan as of  December  31,  1996.  Effective  January 1, 1997,  a money
purchase  pension plan and a 401(K) plan were  established  to take the place of
the Defined Benefit Plan.

   The table below shows the estimated  maximum current  benefits  payable under
the  curtailed  Pension  Plan  assuming  retirement  at age 65 of persons in the
specified remuneration and years of service classification.

                         ESTIMATED CURRENT ANNUAL PENSION
   FINAL AVERAGE         BENEFITS FOR REPRESENTATIVE YEARS
ANNUAL COMPENSATION               OF SERVICE
- -------------------     ----------------------------------
                           15          20              25

     10,000              2,100       2,800           3,500
     20,000              4,200       5,600           7,000
     30,000              7,110       9,480          11,850
     40,000             10,110      13,480          16,850
     50,000             13,110      17,480          21,850
     60,000             16,110      21,480          26,850
     80,000             22,110      29,480          36,850
    100,000             28,110      37,480          46,850
    120,000             34,110      45,480          56,850
    140,000             40,110      53,480          66,850
    160,000             46,110      61,480          76,850
    180,000             52,110      69,480          86,850
    200,000             58,110      77,480          96,850
    220,000             64,110      85,480         104,055

Assumption--Age 65, no survivor annuity,  straight life, 10 year certain, annual
Covered Compensation of $21,000.

   The estimated  credited years of service and the compensation  covered by the
Plan, where required, for each of the individuals named in the Cash Compensation
Table are as follows:  John Smith, 30  ($245,258.46).  (For Plan years beginning
after December 31, 1993, certain limitations on compensation will apply if still
applicable  at  the  retirement  of  the  participant.   Currently  the  maximum
compensation  amount  is  $160,000.00.)  As  previously  stated,  this  plan was
curtailed in 1996 and John Smith's monthly pension benefit under the normal form
of settlement is $5,822.65 per month for ten years certain.

   John  Smith has a  three-year  employment  contract  with the  Company.  This
employment  contract shall not be effective unless there is a final consummation
of a takeover  transaction which is not recommended by the affirmative vote of a
majority of the Board of Directors.  The annual  compensation  to be paid during
the term of the contract shall be the same amount as the officer's  salary as of
his final date of employment  immediately  preceding  the effective  date of the
employment  contract,  together with all Pension Plan,  Employee Stock Ownership
Plan,  Executive  Deferred  Compensation Plan and other fringe benefits to which
the officer is entitled.

     The   Company   also  has   employment   contracts   with   six   executive
vice-presidents  of a subsidiary  of the Company.  These  contracts  will not be
effective  unless there is a change of control of the Company and the  executive
is  terminated  for other than cause or elects to terminate his  employment  for
good reason. A severance amount of up to 2.99 times the executive's compensation
could be payable as a result of such termination.

MONEY PURCHASE PENSION PLAN

    The Company adopted a Money Purchase Pension Plan effective as of January 1,
1997.  The plan covers all employees who have attained the age of twenty-one and
have at least one year of continuous service.  The non-officer  directors of the
Company do not participate in this plan. The contribution  amount is 5% of total
compensation  plus an  additional  5% of  compensation  in excess of the  social
security wage base.

401(K) PLAN

    The Company  adopted a 401(K) plan effective as of January 1, 1997. The plan
     covers all employees  who have  attained the age of twenty-one  and have at
least one year of continuous service.  The non-officer  directors of the Company
do not  participate  in this plan.  Employees may  contribute up to 10% of their
compensation  and the  Company  will  match  100% of this  contribution  up to a
maximum of 3%.

BENEFIT RESTORATION PLAN

   Effective  May 1, 1991,  The Peoples  Bank and Trust  Company  established  a
Benefit  Restoration  Plan.  Due to  subsequent  changes in the federal tax laws
governing  the  integration  of social  security  benefits into the pension plan
formula, The Peoples Bank & Trust Company again amended The Peoples Bank & Trust
Company Pension Plan, and on December 13, 1994, restated the Benefit Restoration
Plan effective January 1, 1994. This plan is an unfunded  non-qualified deferred
compensation  plan  maintained  solely  for the  purpose  of  restoring  certain
benefits for officers  covered under The Peoples Bank and Trust Company  Pension
Plan who  experienced  a decrease of $50 or more in the  present  value of their
pension  benefits  and had a $100 or more  decrease in the  projected  amount of
their future benefits  resulting from an amendment to the Plan which revised the
plan's Social  Security  integration  formula in order to comply with recent IRS
regulations.  The plan will pay the  eligible  employees a benefit  equal to the
difference  in what  their  benefit  is under the  revised  plan and what  their
benefit would have been under the plan prior to its amendment.

   The normal  retirement age under the Benefit  Restoration  Plan is age 65 and
the  employee is eligible  for early  retirement  upon  reaching  the age of 55,
provided the  employee  has 15 years of service  with the bank. A death  benefit
equal to a 50% joint and  survivor  annuity  will be payable  to the  employee's
spouse in the  event of his or her  death.  During  1997,  the bank  contributed
$60,742 to this plan. Due to the curtailment of The Peoples Bank & Trust Company
Pension Plan,  this plan was amended in 1996 in order to freeze  accruals  under
this plan as of December 31, 1995.

INCENTIVE COMPENSATION PLAN

  The Board of  Directors of the Bank  adopted an  Incentive  Compensation  Plan
titled  "Performance  Compensation for Stakeholders",  to be effective for 1997.
Incentive benefits will be paid to eligible officers and employees after the end
of each  calendar  year and shall be determined  based on  established  criteria
relating to growth,  profitability,  asset quality and productivity.  Management
sets key  performance  indicators(KPI)for  all applicable  profit  centers.  The
centers are  rewarded for improved  economic  benefit to the Bank.  Based on the
amount  of  improved  economic  benefit  derived  from  the  center,   incentive
compensation  is calculated as a percentage of salary.  The President is covered
under this plan.

The Performance  Compensation for Stakeholders covers all eligible employees. An
employee is credited for the pro-rata  amount of time employed  during the year.
Employees  must be employed by the bank at  December 31 to be  eligible.  During
1997, the bank contributed $775,000 to this plan.

DIRECTORS' DEFERRED FEE PLAN AND
EXECUTIVE DEFERRED COMPENSATION PLAN

   (3) On November  12,  1985,  the Board of  Directors  adopted the  Directors'
Deferred Fee Plan and the  Executive  Deferred  Compensation  Plan,  hereinafter
referred to as Part A, and  effective  January 1, 1989,  eligible  directors and
employees were given the opportunity to defer additional compensation under Part
B of these  Plans.  Under the terms of the  Plans,  non-employee  directors  and
eligible  employees may elect to defer,  respectively,  up to 100% of directors'
fees and retainers and up to 10% of salary, as approved from time to time by the
Administrative  Committee  of the Plans.  Amounts  deferred  under Part A of the
Plans accrue  interest  annually at 130% of the Moody's  Average  Corporate Bond
Rate for the month of October preceding  December 31 of each preceding year, and
amounts  deferred  under Part B of the Plans  accrue  interest  annually  at the
Moody's Average Corporate Bond Rate for the month of October preceding  December
31 of each  preceding  year.  If a  Participant  remains an employee or director
until his or her normal  retirement  date and shall then retire,  the Company is
obligated to pay to the  Participant  an amount  equal to the amount  originally
deferred  under Part A as annually  compounded  by 130% of the  Moody's  Average
Corporate  Bond  Rate and at the  Moody's  Average  Corporate  Bond Rate for the
amount  originally  deferred  under  Part  B  until  the  Participant's   normal
retirement date. That result will then continue to be annually compounded by the
appropriate  percentage (130% in the case of Part A and 100% in the case of Part
B) of the Moody's  Average  Corporate Bond Rate being used at the time of normal
retirement until the time the total retirement benefit,  which will generally be
paid  monthly  over  a  fifteen-year  period,  is  completed.  If a  Participant
terminates  his or her  employment  prior to normal  retirement,  he or she will
receive a termination benefit upon the earlier of (i) the Participant's death or
(ii)  attainment of his or her early  retirement  date or (iii) at the time said
Participant  ceases his or her  employment if such date is later than his or her
early  retirement  date.  This benefit  shall be  determined  by  improving  the
Participant's  deferrals under Part A by the Moody's Average Corporate Bond Rate
and under Part B by 75% of the  Moody's  Average  Corporate  Bond Rate,  each as
compounded  on an annual  basis if said  Participant  has been an  employee or a
director for less than ten years or if employment is discontinued  for cause and
by 130% and 100%,  respectively,  of the Moody's Average  Corporate Bond Rate as
compounded  on an  annual  basis if said  Participant  has been an  employee  or
director for ten or more years with such amount being  computed from the date of
entry to the termination date of the Participant.  This benefit will normally be
paid monthly over a fifteen-year period.

     If a Participant  shall die after he or she begins  receiving a benefit but
before  receiving  180  installments  of his or her benefit,  the amount will be
continued  to the  Participant's  beneficiary  until the  balance of 180 monthly
payments  have been  made.  If a  Participant  dies  prior to the time he or she
begins receiving a benefit,  his or her beneficiary is entitled to the higher of
the Pre- Retirement Death Benefit or the Participant's Accrued Benefit under the
Plan. This benefit will normally be paid monthly over a fifteen-year period.

   The Plans are administered by an Administrative  Committee which is appointed
by the Board,  and the  Committee has the authority to amend the Plans or extend
them for  additional  years,  subject to the right of the Board to terminate the
Plans.  The  committee  has approved  deferrals  under the Plans for 1997 at the
rates provided for under the terms of the Plans. The Plans are unfunded,  and it
is anticipated  that they will result in no cost to the Company over the term of
the Plans because life insurance  policies on the lives of the Participants have
been  purchased in amounts  estimated to be sufficient to pay benefits under the
Plans.  The  Company  is both the owner  and  beneficiary  of all the  insurance
policies.  On December 31, 1997,  there were six directors and fifteen  officers
participat ing in Part A of the Plan and ten directors and  thirty-six  officers
participating  in Part B of the Plan.  During 1997,  $3,603.96 was paid from the
Directors'  Deferred  Fee Plan as widows'  benefits  of deceased  directors  and
$31,431.00 was paid in benefits to retired directors. In addition $50,453.88 was
paid in benefits to retired non-executive  officers,  and $45,691.20 was paid to
the widow of a deceased non-executive  officer.  Amounts deferred during 1997 by
the  individuals  in the groups  specified  in the cash  compensation  table are
included in the totals  disclosed  in the table.  Amounts  accrued  during 1997,
including  deferrals,  were  as  follows:  Mr.  Smith,  $4,474.35  in Part A and
$8,364.04 in Part B; all executives and directors,  including retired executives
and directors as a group, $92,440.42 in Part A and $271,589.19 in Part B.

OTHER BENEFITS

   The company has adopted certain  broad-based  employee benefit plans in which
executive  officers  participate and certain other  retirement,  life and health
insurance plans providing customary personal benefits.  The benefits under these
plans are not tied to company  performance.  The executive  officer named in the
Summary Compensation Table participates in the other benefits described above.

                                PERFORMANCE GRAPH

                           1992    1993     1994      1995      1996      1997

THE PEOPLES HOLDING CO.   $100   $127.96  $139.93   $161.83   $214.07   $307.73

EAST SOUTH CENTRAL BANKS   100    105.70   106.13    142.61    184.25    326.12

AMERICAN STOCK EXCHANGE    100    118.81   104.95    135.28    142.74    171.76

   This graph sets  forth the  cumulative  total  shareholder  return  (assuming
reinvestment of dividends) to The Peoples Holding Company's  shareholders during
the  five-year  period ended  December 31, 1997,  as well as the American  Stock
Exchange  (AMEX)  market  index and an industry  group of 35 East South  Central
Banks.

   Note:  The graph above  assumes  $100 is invested on January 1, 1993,  in The
Peoples Holding Company stock; and an identical amount in the AMEX market index;
and The peer  group of bank  holding  companies,  The East South  Central  Banks
Industry Index.

   There can be no assurance that the Company's stock  performance will continue
into the future with the same or similar trends depicted in the graph above. The
Company  will  not  make  nor  endorse  any   predictions  as  to  future  stock
performance.

                          TRANSACTIONS WITH MANAGEMENT

   The Bank has had in the past,  and  expects  to have in the  future,  banking
transactions in the ordinary  course of its business with  directors,  officers,
stockholders of the Company and their associates,  on the same terms,  including
interest rates and collateral on loans, as those prevailing at the same time for
comparable  transactions with others,  and do not involve more than normal risks
of  collectibility  or  present  other  unfavorable  features.  Other than these
transactions, there were no material transactions with this group during 1997.

                             SHAREHOLDERS' PROPOSALS

   Proposals  of security  holders  intended to be presented at the next meeting
must be received by the Company for inclusion in the Company's  Proxy  Statement
and form of Proxy relating to that meeting by December 8, 1997.

                    RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS

   The Board of Directors has selected the firm of Ernst & Young LLP,  Certified
Public Accountants, as independent auditors of the Company. In this capacity the
firm will audit the books and records of The Peoples Holding Company and provide
a written  opinion on the  financial  statements  of the  Company.  The firm has
served in this capacity since the Company's formation.  A representative of this
firm will  attend the  annual  stockholders  meeting  and will be  available  to
respond to  appropriate  questions.  Ernst & Young LLP  prepared the Federal and
State Income Tax Returns for the years 1980 through 1996, which were approved by
the Board of  Directors.  Cost of preparing  the tax returns was included in the
total bill and the actual cost is not readily determinable.

                         RELATIONSHIP WITH LEGAL COUNSEL

     The Company and its  subsidiary  have  retained  the law firm of  Mitchell,
Voge, Beasley and Corban as general counsel. W. P. Mitchell is a partner in said
law firm and is Chairman Emeritus of the Board of Directors of the Bank. William
M.  Beasley is also a partner in said law firm.  The Company and its  subsidiary
paid this firm fees and expenses totaling $137,843 during 1997.

     During 1997,  the Bank retained the firm of Edwards,  Storey,  Marshall and
Helveston as local counsel for the branch bank at West Point, Mississippi. A. M.
Edwards,  Jr. is a partner in said law firm.  During 1997, the bank retained the
firm of Gifford and Allred as local  counsel for the branch bank at  Booneville,
Mississippi. Eugene B. Gifford, Jr. is a partner in that law firm.
 
   During 1997,  the Bank retained  John M.  Creekmore as local counsel for the
branch bank at Amory, Mississippi.

                              FINANCIAL STATEMENTS

   THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO EACH STOCKHOLDER REQUESTING SUCH
A COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
THE SCHEDULES THEREOF REQUIRED TO BE FILED WITH THE COMMISSION  PURSUANT TO RULE
13 a-1 UNDER THE ACT FOR THE COMPANY'S  MOST RECENT FISCAL YEAR, TO A BENEFICIAL
OWNER OF ITS SECURITIES UPON RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. EACH
REQUEST MUST SET FORTH A GOOD FAITH  REPRESENTATION  THAT, AS OF THE RECORD DATE
FOR THE ANNUAL MEETING OF THE COMPANY'S SECURITY HOLDERS,  THE PERSON MAKING THE
REQUEST WAS A BENEFICIAL  OWNER OF SECURITIES  ENTITLED TO VOTE AT SUCH MEETING.
REQUEST  FOR THE ABOVE  INFORMATION  SHOULD BE DIRECTED  TO: THE PEOPLES  BANK &
TRUST COMPANY, P. O. BOX 709, TUPELO,  MISSISSIPPI 38802,  ATTENTION:  STUART R.
JOHNSON, EXECUTIVE VICE-PRESIDENT AND CONTROLLER.

                                 OTHER BUSINESS

   Management  at present  knows of no other  business to be brought  before the
meeting.  If further  business  is  properly  brought  before the  meeting or an
adjournment  thereof, it is the intention of management to vote the accompanying
proxies in accordance with management's judgment.

BY ORDER OF THE BOARD OF DIRECTORS

                                              /s/ John W. Smith
                                      ----------------------------------
                                           John W. Smith, President

APPENDIX A:

THE PEOPLES HOLDING COMPANY                 PROXY
P. O. Box 709                  THIS PROXY IS SOLICITED ON BEHALF OF
Tupelo, Mississippi 38802      THE BOARD OF DIRECTORS

                                The undersigned hereby appoints George H. Booth,
                        A.M.  Edwards,  Jr.,  Eugene B. Gifford,  and J. Heywood
                        Washburn as  proxies,each  with the power to appoint his
                        or her subtitute and hereby authorizes them to represent
                        and to vote,  as  designated  below,  all the  shares of
                        common  stock of The  Peoples  Holding  Company  held on
                        record  by the  undersigned  on March 20,  1998,  at the
                        annual meeting of  shareholders  to be held on April 14,
                        1998, or any adjournment thereof.

(1)  Election of Directors.
     NOMINEES:

     FOR THREE-YEAR TERM ENDING IN 2001: John M. Creekmore; John W. Smith;
     Jimmy S. Threldkeld; Robert H. Weaver; and J. Larry Young.

     VOTE FOR all nominees listed               VOTE WITHHELD for all
     (except as written to the                  nominees listed [_______]
     contrary below)   [_______]

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

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

(2) To approve a proposal to amend the articles of  incorporation to increase to
15,000,000 the authorized shares of common stock of the Company.
     FOR[____]  AGAINST[___]     ABSTAIN [__]

(3) To ratify the  appointment  of Ernst & Young LLP of Memphis,  Tennessee,  as
independent auditors for the Company for the current year.
     FOR[___]   AGAINST[___]     ABSTAIN[___]

(4) In their discretion,  the Proxies are authorized to vote such other business
as may properly come before the meeting.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER.  IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1,2 AND 3.

Please sign below exactly as name appears on back of proxy card. When shares are
held by joint tenants,  both should sign. If a corporation,  please sign in full
corporate  name by  President or other  authorized  officer.  If a  partnership,
please sign in partnership name by authorized person.

Dated ____________________, 1998    __________________________________
                                               Signature

                                    ----------------------------------
                                        Signature if held jointly

PLEASE MARK,  SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.