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 13, 1999

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 13, 1999, 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 four (4)
         nominees presented in the proxy material.

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

         (3)  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

                                   /s/  John W. Smith
March 22, 1999               -------------------------------------
                                        John W. Smith
                                  Vice Chairman of the Board,
                             President and Chief Executive Officer

                                    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 13, 1999

                                  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 13,  1999,  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 22, 1999.

                             PURPOSE OF THE MEETING

The annual meeting will be held for the purpose of:
1.  Electing four members of the Board of Directors of the Company
    for terms specified;
2.  Voting on independent auditors for the Company for the current
    year;
3.  Transacting such other matters as may properly come before
    the meeting.

                          VOTES REQUIRED FOR APPROVALS

     The Company has issued and  outstanding  5,844,472  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 19, 1999, 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 19, 1999.

     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 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
accompanying  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  subsequently  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 24, 1999,
the Company had 2,579  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 24, 1999,  policy  making
officers and directors as a group beneficially owned, directly and indirectly, a
total of three hundred and six thousand,  two hundred and eighty-five  (306,285)
shares,  or five and twenty-four  hundredths  percent (5.24%) 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.  Three of the directors  whose terms end in 1999 have been  nominated for
re-election  to another term, and H. Joe Trulove has been nominated for election
to succeed A. M. Edwards, Jr., who is retiring from the Board.

     The four persons  named below will be nominated for election to serve terms
for the period  indicated below and until their  successors are duly elected and
qualified. It is the intention of the persons named in the Proxy to vote for the
election of the four  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 2002:

William M. Beasley; 47;         1989              21,392         *
  attorney; Phelps                               (11,381)
  Dunbar, LLP

Marshall H. Dickerson; 49;      1997                 239         *
  owner and manager;                                  (0)
  Dickerson Furniture Company

Eugene B. Gifford, Jr.; 64;     1987              38,939         *
  attorney; Gifford and                          (16,160)
  Allred

H. Joe Trulove; 61;                                7,860         *
  West Point Operations                               (0)
  Manager; York Casket Company;
  formerly President; West
  Point Casket Company

                      DIRECTORS WITH TERMS ENDING IN 2001:

John M. Creekmore; 43;          1997               1,246         *
  attorney                                          (234)

John W. Smith; 63;              1978              10,015         *
  Vice Chairman of the Board,                     (3,744)
  President and Chief Executive
  Officer; The Peoples
  Holding Company and
  The Peoples Bank and
  Trust Company

Jimmy S. Threldkeld; 66;        1974              24,239         *
  President; JCO, Inc.,                               (0)
  real estate development

Robert H. Weaver; 67;           1980              81,497      1.39%
  attorney; Watkins                                   (0) (3)
  Ludlam & Stennis

J. Larry Young; 60;             1982               2,947         *
  retired pharmacist,                               (262)
  formerly partner;
  Ramsey-Young Pharmacy

                      DIRECTORS WITH TERMS ENDING IN 2000:

George H. Booth, II; 45;        1994               3,244         *
  Secretary; Tupelo                                   (0)
  Hardware Company (whole-
  sale and retail hardware)

Frank B. Brooks; 55;            1989              13,144         *
  farmer                                            (692)

Robert C. Leake; 66;            1973              17,549         *
  President; Leake &                              (9,772)
  Goodlett, Inc. (building
  supplies and contractors);
  Chairman of the Board of 
  Directors; The Peoples 
  Holding Company and The 
  Peoples Bank and Trust Company

C. Larry Michael; 53;           1997               2,486         *
  President; Transport Trailer                        (0)
  Service, Inc., Rent-A-Box, Inc.,
  and Precision Machine and Metal
  Fabrication, Inc.

J. Heywood Washburn; 68;        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  10,872  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 and
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 eight
times during 1998.  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 thirteen times during 1998.
 
     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 fifteen times during 1998 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;  Frank B.  Brooks;  Jimmy S.
Threldkeld; Eugene B. Gifford, Jr.; and J. Heywood Washburn. The Audit Committee
is an  independent  committee  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 ten times during
1998.

                               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         63     Director and Executive Vice President
                             of the Company from July 1983 until
                             August 1993; Director and President
                             since August 1993, and Vice Chairman
                             of the Board since April 1997.
 
                             Director and Executive Vice President
                             of the Bank from 1978 and 1976,
                             respectively, until August 1993;
                             Director, President, and Chief
                             Executive Officer since August 1993,
                             and Vice Chairman of the Board since
                             April 1997.

     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           1998  $240,000  $     0      (2)       (3)
President and           1997  $226,692  $ 9,754      (2)       (3)
CEO since               1996  $215,000  $28,566      (2)       (3)
August 1993

All Policy-             1998  $429,099  $     0                (3)
Making Officers         1997  $402,417  $ 9,754                (3)
and Directors           1996  $363,200  $28,566                (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 that were 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 $.325 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 executive's  base salary is set after a thorough review of his progress
toward  achieving  objectives  identified in the Bank's  strategic  plan.  Those
objectives  include  profits,  growth in assets,  cost control,  quality of loan
portfolio,  technology  enhancements,   customer  service,  bank  expansion  and
progress  achieved  in the  implementation  of the Bank's  major  reorganization
assisted by the Sheshunoff group.

     The   performance  of  those  factors  are  as  follows.   From  a  profits
point-of-view, earnings per share was $1.94, up 6.8% over the prior year. Growth
in  assets  was 9.5%  with  net  charge-offs  to  average  loans  of .32%.  The
Sheshunoff  group was  engaged to assist the  Company in  managing  its costs by
restructuring  the delivery system. As the result of fees paid to the consultant
and for severance packages for employees that had been displaced, the efficiency
ratio,  64.5%,  was  up  slightly.   During  1998,  the  Company  initiated  the
installation  of a wide area  network  along with  other  software  products  to
enhance the servicing of the customer base more effectively and efficiently.

     In  addition  to  the  above  factors,  peer  comparisons,   through  the
Mississippi Bankers Association survey, 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  Company has an  incentive  program  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).  Based on the  Bank's
performance  in the key  performance  indicator  categories  not  exceeding  the
minimum threshold, no incentive was paid to the executive for 1998.

     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  Plan, 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 $300,000 in 1998 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  358,260  shares of the Common  Stock of the
Company or 6.13% 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 1998,  the Plan held 369,945  shares of Common Stock of
the Company.  Between January 1, 1998, and December 31, 1998,  3,352  additional
shares were purchased  less 15,037 shares  distributed to retired and terminated
participants,  bringing  the  total at the end of 1998 to  358,260  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 1998 was approximately $3,625.

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 $99,742.00 in 1998. 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  1998.   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  ($240,000.00).  (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.

     The  Company has  employment  contracts  with John Smith and 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  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 1998, the Bank accrued  $70,525
for 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," in 1997. Incentive benefits
are paid to eligible  officers and employees after the end of each calendar year
and  are  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 1998, the Bank contributed $250,960.56 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
1998 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, 1998,  there were six  directors  and
fifteen  officers  participating  in Part A of the Plan and twelve directors and
thirty-two officers  participating in Part B of the Plan. During 1998, $3,603.96
was paid from the Directors'  Deferred Fee Plan as widows'  benefits of deceased
directors and $40,829.64 was paid in benefits to retired directors.  In addition
$50,490.00  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 1998 by the  individuals  in the groups  specified  in the cash
compensation  table are included in the totals  disclosed in the table.  Amounts
accrued during 1998, including deferrals,  were as follows: Mr. Smith, $4,654.64
in Part A and  $8,842.00  in Part B; all  executives  and  directors,  including
retired  executives  and  directors  as  a  group,  $85,249.61  in  Part  A  and
$306,620.49 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

                          1993     1994     1995      1996     1997      1998

THE PEOPLES HOLDING CO.   $100   $109.35  $126.47   $167.29   $240.48   $222.27

REGIONAL SOUTHEAST BANKS   100     98.95   146.35    186.82    323.28    307.89

AMERICAN STOCK EXCHANGE    100     88.33   113.86    120.15    144.57    142.61

     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, 1998,  as well as the American  Stock
Exchange  (AMEX)  market  index and an industry  group of 48 Regional  Southeast
Banks.

     Note:  The graph above  assumes $100 is invested on January 1, 1994, in The
Peoples Holding Company stock; and an identical amount in the AMEX market index;
and the peer group of bank  holding  companies,  the  Regional  Southeast  Banks
Industry Index.

     Media General Financial Services,  who provided the Company with peer group
index figures for prior years,  went through an internal  restructuring of their
industry group classification system in 1998. As a result, the index figures for
the old peer group,  East South  Central  Banks,  are no longer  available.  The
Company is now  categorized  in a similar  industry  group,  Regional  Southeast
Banks.

     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 1998.

                             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 13, 1999.

                    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 Meeting of Stockholders  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
1997,  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,  Corban,  and Morris 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 was a partner in said law firm during a portion of 1998.  The
Company and its subsidiary paid this firm fees and expenses totaling $183,651.37
during 1998.

     During 1998,  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 1998, 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 1998,
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 CHIEF  FINANCIAL
OFFICER.

                                 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
                                  Vice Chairman of the Board,
                             President and Chief Executive Officer

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,II,
                        A.M. Edwards, Jr., Eugene B. Gifford, Jr., and J. 
                        Heywood Washburn as Proxies, each with the power to 
                        appoint his or her substitute, 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 19,
                        1999, at the Annual Meeting of Shareholders to be held
                        on April 13, 1999, or any adjournment thereof.

(1)  Election of Directors.
     NOMINEES:

     FOR THREE-YEAR TERM ENDING IN 2002: William M. Beasley; Marshall H.
      Dickerson; Eugene B. Gifford, Jr.; and H. Joe Trulove.

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

(3)  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 AND 2.

Please sign below exactly as your name appears on back of this 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 ____________________, 1999    __________________________________
                                                Signature
 
                                    __________________________________
                                        Signature if held jointly

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