FORM 10-Q


                                        SECURITIES AND EXCHANGE COMMISSION

                                              Washington, D. C. 20549



                                    QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

                                      OF THE SECURITIES EXCHANGE ACT OF 1934

                                        FOR THE QUARTER ENDED JUNE 30, 1997



                                           Commission File Number 0-4518




                                              DEPOSIT GUARANTY CORP.
                             (Exact Name Of Registrant As Specified In Charter)


          Mississippi                                    64-0472169
(State or other Jurisdiction of                (IRS Employer Identification
     Incorporation or Organization)               Number)



                                    210 East Capitol Street, Jackson, MS 39201
                                     (Address Of Principal Executive Offices)
                                                    (Zip Code)


                                                   (601) 354-8564
                                          (Registrant's Telephone Number)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                          YES      X      NO

                              Shares Of Common Stock, No Par Value, Outstanding
                                       As Of June 30, 1997: 40,781,431



<PAGE>

<TABLE>
<CAPTION>


      PART I.  Financial Information
      ITEM 1.  Financial Statements
      Deposit Guaranty Corp. and Subsidiaries
      Condensed Consolidated Statements of Condition
      (In Thousands Except Share Data)
                                                              June 30,                         December 31,
                                                                1997                                 1996
                                                             ----------                        ------------
     <S>                                                      <C>                               <C>
     Assets
        Cash and due from banks                                $393,166                           $385,009
        Interest-bearing bank balances                            2,178                              1,732
        Federal funds sold and securities
              purchased under agreements to resell               39,025                             47,640
        Trading account securities                                1,749                              2,505
        Securities available for sale                         1,387,604                          1,462,038
        Investment securities (fair value:
              1997 - $174,592  ; 1996 - $152,412 )              170,540                            145,087
        Loans, net of unearned income                         4,273,777                          3,979,877
              Less:   Allowance for possible loan losses        (69,483)                           (62,205)
                                                            ------------                        -----------
              Net loans                                       4,204,294                          3,917,672
        Bank premises and equipment                             165,461                            148,327
       Goodwill and other intangibles                           128,452                             89,239
        Other assets                                            196,073                            183,648
                                                             -----------                        -----------
              Total assets                                   $6,688,542                         $6,382,897
                                                             ===========                        ===========

      Liabilities
        Deposits:
              Noninterest-bearing                            $1,258,150                         $1,160,914
              Interest-bearing                                4,057,651                          3,864,835
                                                             -----------                        -----------
              Total deposits                                  5,315,801                          5,025,749

        Federal funds purchased, securities
              sold under agreements to repurchase
              and other short-term borrowings                   565,865                            543,029
        Long-term liabilities                                    99,426                             99,405
        Other liabilities                                       106,705                            133,448
                                                             -----------                        -----------
              Total liabilities                               6,087,797                          5,801,631


      Stockholders' equity
        Cumulative preferred stock, no par value,
              authorized:  25,000,000 shares of class A
              voting; and 25,000,000 shares of class B
              non-voting; issued and outstanding:  none              --                                 --
        Common stock, no par value, authorized
              100,000,000 shares; issued and outstanding:
              1997 - 40,781,431 shares; 1996 - 39,185,394
              shares                                             22,360                             21,491
        Surplus                                                 155,096                            174,995
        Retained earnings                                       425,972                            383,211
        Market valuation for securities available for
              sale, net of income taxes                          (2,683)                             1,569
                                                              ----------                        ----------

              Total stockholders' equity                        600,745                            581,266
                                                             -----------                        -----------
              Total liabilities and stockholders' equity     $6,688,542                         $6,382,897
                                                             ===========                        ===========


</TABLE>




<PAGE>







<TABLE>
<CAPTION>

PART I.  Financial Information
ITEM 1.  Financial Statements (Continued)
Deposit Guaranty Corp. and Subsidiaries
Condensed Consolidated Statements of Earnings
(In Thousands Except Share Data)

                                                                       Three Months Ended                  Six Months Ended
                                                                            June 30,                             June 30,
                                                             ------------------------------             -------------------------
                                                               1997                  1996                 1997              1996
                                                             ------------------------------             -------------------------


<S>                                                       <C>                   <C>                   <C>             <C>
Interest income
      Interest and fees on loans                             $92,065               $79,314              $182,704        $156,451
      Interest on investment securities:
           Taxable                                             2,909                 2,597                 6,037           5,395
           Exempt from Federal income tax                          2                     0                     3               0
      Interest on securities available for sale:
           Taxable                                            21,417                15,429                44,876          35,399
           Exempt from Federal income tax                      2,656                 3,053                 5,308           5,811
      Interest on trading account securities                      68                    94                    90             213
      Interest on Federal funds sold and securities
           purchased under agreements to resell                  560                 4,089                 1,474           6,067
      Interest on bank balances                                   36                   147                    43             258
                                                             -----------------------------              -------------------------
           Total interest income                             119,713               104,723               240,535         209,594
                                                             -----------------------------              -------------------------
Interest expense
      Interest on deposits                                    40,897                37,000                82,037          74,376
      Interest on Federal funds purchased, securities
           sold under agreements to repurchase and
           other short-term borrowings                         6,955                 6,661                13,714          14,992
      Interest on long-term debt                               1,580                 1,074                 3,057           1,074
                                                             -----------------------------              ------------------------
           Total interest expense                             49,432                44,735                98,808          90,442
                                                             -----------------------------              ------------------------
Net interest income                                           70,281                59,988               141,727         119,152
      Provision for possible loan losses                       1,875                 1,335                 3,750           2,670
                                                             -----------------------------              ------------------------
Net interest income after provision for
      possible loan losses                                    68,406                58,653               137,977         116,482
                                                             -----------------------------              ------------------------
Other operating income
      Service charges on deposit accounts                     10,169                 8,682                20,128          16,899
      Fees for trust services                                  4,664                 3,852                 9,327           7,677
      Gains on investment securities                             540                   487                   626              73
      Other service charges, commissions
           and fees                                           14,589                13,750                29,391          27,786
      Other                                                    1,780                 1,146                 2,921           5,148
                                                             -----------------------------               -----------------------
           Total other operating income                       31,742                27,917                62,393          57,583
                                                             -----------------------------               -----------------------
Other operating expense
      Salaries and employee benefits                          35,738                30,806                70,865          62,023
      Net occupancy                                            4,748                 3,766                 9,450           7,431
      Equipment                                                4,793                 4,198                 9,863           8,348
      Service fees                                             4,427                 4,328                 7,696           7,338
      Communication                                            3,125                 2,547                 6,164           5,000
      FDIC assessment                                            172                    89                   336              91
      Advertising and public relations                         2,590                 2,465                 5,076           4,910
      Amortization of intangibles                              2,768                 1,530                 5,475           3,062
      Other                                                    8,472                 6,326                18,224          14,257
                                                             -----------------------------               -----------------------
           Total other operating expense                      66,833                56,055               133,149         112,460
                                                             -----------------------------               -----------------------
Income before income taxes                                    33,315                30,515                67,221          61,605
      Income tax expense                                      11,384                10,079                22,678          19,680
                                                             -----------------------------               -----------------------
Net income                                                   $21,931               $20,436               $44,543         $41,925
                                                             =============================               =======================

Net income per share                                           $0.54                 $0.53                 $1.08           $1.09
Weighted average shares outstanding                       40,490,608            38,193,210            41,340,885      38,387,754

</TABLE>






<TABLE>
<CAPTION>


PART I. Financial Information
ITEM 1. Financial Statements (Continued)
Condensed Consolidated Statements of Cash Flows
(In Thousands)

                                                                                      Six Months Ended June 30,
                                                                            --------------------------------------------
                                                                                  1997                            1996
<S>                                                                          <C>                                  <C>
                                                                            --------------------------------------------
Cash flows from operating activities:
Net income                                                                   $    44,541                          41,925
Adjustments to reconcile net income to net
  cash provided (used) by operating activities:
           Provision for possible loan losses                                      3,750                           2,670
           Provision for possible losses on other real estate                        576                              73
           Provision for depreciation and amortization                            18,711                          14,702
           Provision for deferred income tax expense (benefit)                     1,566                              61
           Amortization (accretion) of premium (discount) on
              investment securities, net                                              21                             136
           Accretion of discount on securities available for sale, net            (1,026)                         (2,050)
           Accretion of discount on long-term debt                                    21                              --
           Deferred loan fees and costs                                           (1,508)                         (1,105)
           Decrease in other liabilities                                          (8,143)                          2,917
           (Increase) decrease in other assets                                   (10,596)                         (3,447)
           Net cash received from (paid for) loans held for resale                40,603                          (9,095)
           (Gains) losses on securities available for sale                           812                             (73)
           Gains on sales of investment securities                                (1,438)                             --
           Other, net                                                                497                           3,792
                                                                             ------------                     -----------
             Net cash provided by operating activities                            88,387                          50,506
                                                                             ------------                     -----------

Cash flows from investing activities:
Net increase in interest-bearing bank balances                                      (445)                         (4,007)
Proceeds from sales of securities available for sale                             577,407                         916,647
Proceeds from sales of investment securities                                      11,421                          27,126
Proceeds from maturities and principal repayments of investment securities        27,560                              --
Proceeds from maturities and principal repayments of securities available
      for sale                                                                   101,686                         316,001
Purchases of investment securities                                               (62,189)                        (11,595)
Purchases of securities available for sale                                      (529,691)                     (1,355,227)
Net decrease in Federal funds sold and securities
      purchased under agreements to resell                                        68,160                         354,843
Net increase in loans                                                            (55,133)                       (210,727)
Proceeds from sales of other real estate                                           1,691                           2,233
Purchases of bank premises and equipment                                         (13,097)                         (9,880)
Proceeds from sales of bank premises and equipment                                   195                             173
Payment for purchase of common stock of acquired company
      and other acquisition costs                                                (10,017)                            (15)
Cash and due from banks of acquired companies                                     32,851                           5,143
                                                                             ------------                      -----------
           Net cash used by investing activities                                 150,399                          30,715
                                                                             ------------                      -----------

Cash flows from financing activities:
Net decrease in deposits                                                        (153,107)                        (84,884)
Net increase (decrease) in Federal funds purchased,
      securities sold under agreements to repurchase,
      and other short-term borrowings                                             15,034                         (93,429)
Repayment of line of credit to fund loans held for resale                             --                              --
Proceeds from issuance of long-term debt                                               0                          99,381
Proceeds from the exercise of common stock options                                 1,777                           1,768
Purchases of common stock                                                        (78,327)                        (20,469)
Cash dividends paid                                                              (16,006)                        (11,307)
                                                                             ------------                     -----------
           Net cash provided (used) by financing activities                     (230,629)                       (108,940)
                                                                             ------------                     -----------

           Increase (decrease) in cash and due from banks                          8,157                         (27,719)

           Cash and due from banks at beginning of period                        385,009                         343,706
                                                                             ------------                     ----------

           Cash and due from banks at end of period                         $    393,166                     $   315,987
                                                                            =============                    ===========

</TABLE>







PART I. Financial Information
ITEM 1. Financial Statements (Continued)
Condensed Consolidated Statements of Cash Flows
(In Thousands Except Share Data)




Income taxes:
The Company made income tax payments of $20.9 million and $20.3  million  during
the six month period ended June 30, 1997 and 1996, respectively.

Interest:
The Company  paid $98.7  million and $89.7  million in interest on deposits  and
other  borrowings  during the six month  period  ended  June 30,  1997 and 1996,
respectively.

Acquisitions:
During the first six months of 1997, the Company  exchanged 1.760 million shares
of common stock,  in a purchase  business  combination,  for all the outstanding
common shares of Jefferson  Guaranty Bancorp.  The following reflects the assets
acquired and liabilities assumed (in thousands):

  Fair value of assets acquired                                $336,188

  Fair value of common stock issued and/or cash paid
     for common stock and other acquisition costs               (50,165)
                                                               ---------

  Liabilities assumed                                         ($286,023)
                                                              ==========

Also during the first six months of 1997,  the Company  exchanged  1.569 million
shares of common stock, in a pooling of interests business combination,  for all
the  common  shares  of  First  Capital  Bancorp,   Inc.  which  had  assets  of
approximately $186 million at December 31, 1996.






<PAGE>



PART I.  Financial Information
ITEM 1.  Financial Statements
Deposit Guaranty Corp. and Subsidiaries
Notes to Condensed Consolidated Financial Statements

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all  information  and  footnotes  necessary for a fair  presentation  of
financial  position,  results of operations  and cash flows in  conformity  with
generally accepted accounting principles.  All adjustments which, in the opinion
of management,  are necessary for a fair presentation of financial  position and
results  of  operations  have  been  made.  These  adjustments  are of a normal,
recurring nature .

The  condensed  consolidated  financial  statements  of Deposit  Guaranty  Corp.
include the financial  statements of Deposit Guaranty  Louisiana Corp. and G & W
Life Insurance Co.,  wholly-owned  subsidiaries.  All  significant  intercompany
accounts and transactions have been eliminated in consolidation.

NOTE B - DERIVATIVE FINANCIAL INSTRUMENTS

Trading  Instruments:  Derivative  financial  instruments  held for  trading are
recorded at fair value.  These  instruments  are used by the Company to generate
additional  noninterest  income.  Realized  and  unrealized  gains and losses on
trading  positions  are  recognized in  noninterest  income during the period in
which the gain or loss occurs. Interest revenue and expense arising from trading
instruments are included in other operating income. Due to the immaterial impact
of  trading  instruments  on  the  Company's  financial  statements,  additional
disclosures are not required.

Risk  Management  Instruments:   As  part  of  its  asset/liability   management
activities,  the Company may enter into interest rate futures,  forwards,  swaps
and option contracts.  These derivative financial instruments are categorized as
risk management  instruments and are carried at fair value unless the instrument
qualifies  for  hedge  accounting  treatment.  Fair  value  adjustments  on risk
management  instruments carried at fair value are reflected in operating income.
Gains and losses realized on futures and forward contracts  qualifying as hedges
are deferred and amortized  over the terms of the related  assets or liabilities
and are  included  as  adjustments  to  interest  income  or  interest  expense.
Settlements on interest rate swaps and option  contracts are recognized over the
lives of the agreements as adjustments to interest income or interest expense.

Interest rate contracts used in connection with the securities portfolio that is
designated  as  available  for sale are  carried  at fair  value  with gains and
losses,  net  of  applicable  deferred  income  taxes,  reported  in a  separate
component of stockholders'  equity,  consistent with the reporting of unrealized
gains and losses on such securities.



<PAGE>





Premiums  paid for  interest  rate  caps  qualifying  for hedge  accounting  are
included in deposits and are amortized to interest  expense over the life of the
caps. Premiums paid for interest rate floors qualifying for hedge accounting are
included in commercial  loans and are amortized to interest income over the life
of the floors.  Due to the immaterial  impact of risk management  instruments on
the Company's financial statements, additional disclosures are not required.


NOTE C - CONTINGENCIES

The Company's subsidiary,  Deposit Guaranty National Bank (DGNB), is a defendant
in a case in which the plaintiffs are beneficiaries of a trust for which DGNB is
the  trustee.  In an  amended  complaint,  the  plaintiffs  claim  that DGNB was
negligent in its dealings with the trust property,  breached its trust duties by
allegedly abusing its discretion and negligently handling trust assets,  engaged
in self dealing,  and was grossly  negligent in its handling of the trusts.  The
case  seeks  actual  damages  for waste of trust  assets  and loss of income and
punitive  damages,  both in an  unspecified  amount to be  proven at trial,  and
attorney fees and court costs.  While the ultimate outcome of the lawsuit cannot
be predicted with certainty,  management  denies all liability and believes that
the ultimate  resolution  of this matter will not have a material  effect on the
Company's consolidated financial statements.


In addition,  the Company is subject to numerous  other  pending and  threatened
legal actions arising in the normal course of business,  and management believes
that the ultimate resolution of these matters will not have a material effect on
the Company's consolidated financial statements.


NOTE D - ACCOUNTING CHANGES

Effective  January 1, 1997,  the Company  adopted the provisions of Statement of
Financial  Accounting  Standards  (SFAS) No. 125,  "Accounting for Transfers and
Servicing of Financial Assets and  Extinguishments of Liabilities" as amended by
SFAS No. 127,  "Deferral of the  Effective  Date of Certain  Provisions  of FASB
Statement No. 125." SFAS No. 125 establishes  accounting and reporting standards
for  transfers  and  servicing  of  financial  assets  and   extinguishment   of
liabilities.  It further  requires  that an entity  recognize  the financial and
servicing  assets it controls and the  liabilities it has incurred,  derecognize
financial assets when control has been surrendered,  and derecognize liabilities
when  extinguished.  Consistent  standards  are provided by this  statement  for
distinguishing  transfers of financial assets that are sales from transfers that
are secured borrowings.  This statement, as amended, was effective for transfers
and servicing of financial assets and  extinguishments  of liabilites  occurring
after  December  31,  1996,  and is  effective  after  December  31,  1997,  for
repurchase agreements, dollar- roll agreements,  securities lending, and similar
transactions.  The  effect of this  statement  on the June 30,  1997,  financial
statements was not material.  The adoption of the provisions delayed by SFAS No.
127 are not expected to have a material impact on the Company's financial 
position or results of operations.





<PAGE>






NOTE E - ACQUISITIONS

On January 3, 1997, the Company  exchanged a combination of 1,759,688  shares of
its  common  stock and $10  million  cash for all of the  outstanding  shares of
Jefferson   Guaranty  Bancorp,   a  $300  million  asset  bank  holding  company
headquartered  in  Metairie,  Louisiana,  in a  transaction  accounted  for as a
purchase  business  combination.  The  results of  operations  of this  acquired
company,  which are not material,  are included in the 1997 financial statements
from the date of purchase.

On March 31, 1997, the Company  exchanged  1,568,466  shares of its common stock
for all of the outstanding shares of First Capital Bancorp, Inc., a $186 million
asset bank holding company  headquartered in Monroe Louisiana,  in a transaction
accounted  for as a pooling of  interests.  The  results of  operations  of this
acquired  company,  which are not material,  are included in the 1997  financial
statements  from January 1, 1997.  Prior years'  financial  statements  were not
restated as the changes would have been immaterial.

On June 30, 1997,  the Company  exchanged  422,529 shares of its common stock 
for all of the  outstanding  shares of NBC  Financial  Corporation,  a bank  
holding company located in Baton Rouge,  Louisiana,  with  approximately  $70 
million in total  assets.  The  transaction  was  accounted  for  as  a  
purchase  business combination.  This aquisition, which was not material, will
be included in the Company's financial statements beginning July 1, 1997. 

On July 31, 1997, the Company paid $18.9 million cash for the outstanding 
common  shares of CitiSave Financial  Corporation of Baton Rouge, La. CitiSave 
Financial Corporation, parent company of Citizens Savings Association, F.A., 
which has six banking  offices in Baton Rouge and $75 million in total assets.
The transaction was accounted for as a purchase business combination.  The 
results of operations of this acquired company,  which are not material,  will
be included in the 1997 financial statements from the date of purchase.













<PAGE>




                     INDEPENDENT AUDITORS' REPORT




The Board of Directors
Deposit Guaranty Corp.:

We have  reviewed the condensed  consolidated  statement of condition of Deposit
Guaranty Corp. and  subsidiaries as of June 30, 1997, and the related  condensed
consolidated  statements of earnings for the three-month  and six-month  periods
ended June 30, 1997 and 1996, the related condensed  consolidated  statements of
cash flows for the six-month periods ended June 30, 1997 and 1996.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information  consists  principally of applying  analytical  review procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards, the consolidated statement of condition of Deposit Guaranty Corp. and
subsidiaries as of December 31, 1996, and the related consolidated statements of
earnings,  changes  in  stockholders'  equity,  and cash flows for the year then
ended (not presented herein); and in our report dated February 5, 1997 (February
20,  1997  as  to  Note  3),  we  expressed  an  unqualified  opinion  on  those
consolidated financial statements.  In our opinion, the information set forth in
the accompanying  condensed  consolidated  statement of condition as of December
31, 1996,  is fairly  presented,  in all material  respects,  in relation to the
consolidated statement of condition from which it has been derived.


 /S/ KPMG PEAT MARWICK LLP
--------------------------
     KPMG PEAT MARWICK LLP


Jackson, Mississippi
July 15, 1997



<PAGE>




PART I.  Financial Information
ITEM 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations
             Deposit Guaranty Corp. and Subsidiaries

The  following  discussion  reviews the  financial  condition and the results of
operations of Deposit  Guaranty Corp. (the Company) for the three-month  periods
ended March 31, 1997 and 1996.  This  discussion  should be read in  conjunction
with the condensed consolidated financial statements included in Part I, Item I.

Subsequent to the second quarter of 1996, the Company  acquired Bank of Gonzales
Holding  Company  with  $126  million  in  total  assets,  McAfee  Mortgage  and
Investment  Company  with  approximately  $240 million in annual  mortgage  loan
originations,  and Tuscaloosa Bancshares, Inc. with total assets of $41 million.
During the first  quarter  of 1997,  the  Company  acquired  Jefferson  Guaranty
Bancorp with total assets of approximately $300 million. These transactions were
accounted for as purchases  and the results of operations of these  entities are
included in the financial  statements from the  acquisition  dates. On March 31,
1997, the Company acquired First Capital  Bancorp,  Inc., a bank holding company
with $186 million in total  assets.  This  transaction  was  accounted  for as a
pooling of interests and is included in the  financial  statements as of January
1,  1997.  Prior  years  were  not  restated  as the  changes  would  have  been
immaterial.  The  aforementioned  acquisitions  affect the  comparability of the
financial statements.


Balance Sheet

Total assets increased $306 million to $6.689 billion at June 30, 1997, compared
to $6.383  billion  at  December  31,  1996  primarily  due to merger  activity.
Securities  decreased  $49 million,  or 3%, to $1.558  billion at June 30, 1997.
Total loans  increased $294 million,  or 7%, to $4.274 billion at June 30, 1997.
Excluding  the effect of the  acquisitions,  total loans would have  exhibited a
slight  decrease from December 31, 1996 to June 30, 1997,  reflecting a slowdown
from the steady pace of growth experienced in prior periods.  Federal funds sold
and securities purchased under agreements to resell decreased 18% to $39 million
at June 30, 1997. Other assets increased $52 million, or 19%, to $325 million at
June 30, 1997, primarily as a result of  acquisition-related  intangible assets.
Total  deposits  increased  $290 million,  or 6%, to $5.316  billion at June 30,
1997.  Excluding  the effect of the  acquisitions,  total  deposits  exhibited a
slight  decrease  from  December  31, 1996 to June 30, 1997.  Other  liabilities
decreased  $27  million,  or 20%, to $107  million at June 30, 1997  compared to
December  31,  1996.Total  stockholders'  equity  increased  $20 million to $601
million at June 30,  1997  primarily  as a result of $28.8  million in  earnings
retained and a $4.3 million  decrease in the fair value of securities  available
for sale,  net of income  taxes.  The effect of stock  issued  for  acquisitions
increased equity $71.4 million which was more than offset by a decrease of $78.3
million  resulting  from the  repurchase of shares issued in those  acquisitions
accounted for using the purchase method of accounting for



<PAGE>



business combinations.  Also included in the increase in equity was $1.8
million in stock options exercised.

As of June 30, 1997,  the Company had interest rate swap  contracts with a total
notional value of $122 million compared to $123 million at December 31, 1996 and
$124 million at June 30, 1996.


Net Income

Net income for the second quarter of 1997  increased $1.5 million,  or $ .01 per
share,  to $21.9  million,  or $ .54 per share,  due to an  increase in business
volumes resulting primarily from acquisitions. An increase in earning assets and
a 20 basis point  improvement in interest spreads resulted in an 17% increase in
net interest income. Noninterest income increased $3.8 million, or 14%, to $31.7
million in the second quarter of 1997 compared to the same period in 1996, while
noninterest  expense  increased  $10.7  million,  or 19% including the effect of
amortization of intangibles relating to recent acquisitions.

Net income for the six months  ended June 30, 1997 was $44.5  million,  or $1.08
per share, compared to $41.9 million, or $1.09 per share, for the same period in
1996.  Net interest  income  increased  due to a 12% growth in  interest-earning
assets,  mostly in average loan  volumes.  Noninterest  income for the first six
months of 1997  increased by $4.8 million to $62.4 million.  Noninterest  income
for the first six months of 1996 included a gain of $2.7 million  resulting from
the disposition of assets related to lease financing transactions. Excluding the
1996 gain on the lease  transactions,  noninterest income increased $7.5 million
primarily as a result of acquisitions.

The return on average assets for the first six months of 1997 was 1.34% compared
to 1.42% for the same period in 1996.  The return on equity  ratio  measures how
effectively  the  Company has been able to  generate  earnings  on its  capital.
During the first six months of 1997, the Company earned 14.89% on average common
stockholders' equity compared to 15.86% for the same period in 1996.


Net Interest Income

Net  interest  income  for the  second  quarter  of 1997 was $70.3  million,  an
increase of $10.3 million from the second  quarter of 1996  primarily  resulting
from an 11% growth in average  interest-earning assets which was concentrated in
loans.  Average loan volumes during the second quarter of 1997 increased  $546.9
million,  or 15%,  compared to the second quarter of 1996.  Acquisitions  caused
approximately 95% of the increase in average loan volumes.  Average total loans,
the  most   profitable   interest-earning   asset,  as  a  percentage  of  total
interest-earning  assets increased from 70% during the second quarter of 1996 to
72%  during  the same  period in 1997.  The net  interest  margin for the second
quarter of 1997 was 4.90%, increasing from 4.68% for the second quarter of 1996.
This increase is primarily due to a 20 basis point increase in the



<PAGE>



interest spread, the difference between the yield on interest-earning assets and
the rate  paid on  interest-bearing  liabilities,  as the  yields  on loans  and
securities increased while rates paid on deposits declined slightly.

Net  interest  income for the first six months of 1997 was  $141.7  million,  an
increase of 19%, from $119.2  million for the first six months of 1996 primarily
resulting from an 12% increase in interest-earning assets. Approximately 91% was
due to increased  average loan volumes  which  increased  16% to $4.2 billion in
1997 as compared to $3.7 billion in 1995.  This increase in average loan volumes
can  be  attributed  primarily  to  acquisitions.  Average  total  loans,  as  a
percentage of total interest-earning assets, increased from 69% during the first
six months of 1996 to 71% during the same period in 1997.

The  tax-equivalent  net interest margin  increased from 4.65% for the first six
months of 1996 to 4.90% for the same period in 1997. This increase in the margin
is primarily due to an increase in the interest spread. The interest spread, the
difference  between  the yield on  interest-earning  assets and the rate paid on
interest-bearing  liabilities,  increased  28 basis points from 3.88% in 1996 to
4.16% in 1997 due to the yields on loans and securities  increasing  while rates
paid on deposits decreased.

Other Operating Income

Other operating  income for the second quarter of 1997 increased $3.8 million to
$31.7 million  primarily as a result of acquisitions and growth in core business
lines. Approximately 68% of the increase can be attributed to acquisitions.  The
remaining  increase  represents  a 4% growth in fees from core  business  lines,
primarily service charges on deposit accounts and other retail service fees.

Other operating  income for the first six months of 1997 as compared to the same
period in 1996 increased $4.8 million to $62.4  million.  Comparability  between
the first six months of 1997 and 1996 is  impacted by a $2.7  million  gain from
the  disposition of assets from expired lease  financing  transactions  in 1996.
Excluding the $2.7 million gain in 1996,  other operating  income increased $7.5
million, primarily as a result of acquisitions (approximately 70%) and 5% growth
in core business lines.

Other Operating Expense

Other  operating  expense for the second quarter of 1997 was $66.8  million,  an
increase of $10.8 million,  or 19%, over the second quarter of 1996 primarily as
a  result  of   acquisitions.   Excluding  the  $7.1  million  increase  due  to
acquisitions,  other operating expense increased  approximately $3.7 million, or
7% in 1997  compared  to 1996.  This  increase  was  primarily  as a  result  of
underlying  increases  in  personnel  expense.   Personnel  expense,   excluding
acquisitions,  for the second  quarter of 1997  increased  $1.4 million,  or 4%,
compared to the second  quarter of 1996,  primarily  as a result of annual merit
increases.  Other  operating  expense  for the six months  ended  June 30,  1997
increased $20.7 million to $133.2 million in 1997 compared to $112.5 million for



<PAGE>



the same period in 1996.  Approximately  $14.8  million of this  increase  was a
result of  acquisitions.  The  remaining  increase  is  primarily  the result of
increases  in personnel  expenses.  Excluding  the effects of the  acquisitions,
personnel expenses increased $1.8 million, or 3%, during the first six months of
1997 compared to the same period in 1996 as a result of annual merit increases.

Credit Quality

The provision  for possible loan losses was $1.9 million for the second  quarter
of 1997 compared to a $1.3 million provision for the second quarter of 1996. The
allowance for possible loan losses at June 30, 1997,  was $69.5 million or 1.63%
of total loans and 264% of  nonperforming  loans  outstanding  compared to $62.2
million or 1.56% of total loans and 364% of nonperforming  loans at December 31,
1996. Net charge-offs for the second quarter of 1997 were $1.8 million,  or .17%
of average  loans,  compared  to second  quarter  1996 net  charge-offs  of $1.6
million, or .17% of average loans.

Year-to-date net charge-offs were $3.3 million for 1997 compared to $2.7 million
for 1996. Nonperforming loans increased $4 million, primarily as a result of one
credit, to $26.3 million at June 30, 1997, compared to $17.1 million at December
31, 1996 and $20.8 million at June 30, 1996.

Capital

Total stockholders' equity increased $19.5 million to $600.7 million at June 30,
1997  primarily  due to  earnings  retained.  The  effect  of  stock  issued  in
acquisitions  was somewhat  offset by the Company's  repurchase of shares of its
common stock. The Company's  common stock repurchase  program is for the purpose
of offsetting the shares issued in specific  purchase  accounting  acquisitions.
The Company  maintains  risk-based  capital levels well in excess of the minimum
guidelines adopted by the Federal Reserve Board for bank holding companies.  The
Company's  tier 1 capital and total  risk-based  capital ratios at June 30, 1997
were 10.14% and 11.39%, respectively. This compares to a tier 1 capital ratio of
11.42% and total  risk-based  capital ratio of 12.67% at December 31, 1996.  The
Company's  leverage  ratio  was  7.31% at June  30,  1997  compared  to 8.23% at
December 31, 1996.

The Company's banking  subsidiaries have maintained  leverage,  tier 1 and total
risk-based  capital  ratios  well  above the 5%, 6% and 10%  minimum  guidelines
necessary  to  be  categorized   as  "well   capitalized"   insured   depository
institutions  under the  guidelines set forth by the Federal  Deposit  Insurance
Corporation  Improvement Act of 1991. Deposit Guaranty National Bank's leverage,
tier 1 and total  risk-based  capital  ratios  were 7.75%,  11.60%,  and 12.85%,
respectively for June 30, 1997 compared to 8.96%, 12.07%, and 13.32% at December
31, 1996.  Commercial  National  Bank's  leverage,  tier 1 and total  risk-based
capital ratios were 9.44%,  13.06%,  and 14.32%,  respectively for June 30, 1997
compared to 9.05%, 11.54%, and 12.79% at December 31, 1996.






<PAGE>



Liquidity

Liquidity for a financial  institution  can be expressed in terms of maintaining
sufficient funds available to meet both expected and  unanticipated  obligations
in a cost  effective  manner.  Liquidity  is  maintained  through the  Company's
ability to convert assets into cash,  manage the  maturities of liabilities  and
generate funds on a short-term basis,  either through the national Federal funds
market,  backup lines of credit, or through the National CD market.  The Company
relies  largely  on  core  deposits,   which  consist  of  total  deposits  less
certificates of deposit  greater than or equal to $100,000,  to fund loan demand
and long-term investments.

Accounting Changes

In February  1997,  the FASB issued SFAS No.  128,  "Earnings  per Share."  This
Statement  establishes standards for computing and presenting earnings per share
by simplifying the standards  previously  found in APB Opinion No. 15, "Earnings
per Share." SFAS No. 128 replaces the presentation of primary earnings per share
with a presentation  of basic earnings per share and requires dual  presentation
of basic and diluted earnings per share on the face of the income statement.

It further  requires a  reconciliation  of the numerator and  denominator of the
basic  earnings per share  computation  to the numerator and  denominator of the
diluted earnings per share computation.  SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997,  including interim
periods.  The  adoption  of this  statement  is not  expected to have a material
impact on the Company's financial statements.

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income."
This Statement establishes standards for reporting  comprehensive income and its
components in a full set of general-purpose financial statements.  SFAS No. 130,
requires  that all items that are  required to be  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement displayed with the same prominence as other financial statements.  The
statement requires that the Company classify items of other comprehensive income
by their  nature and  display  the  accumulated  balance of other  comprehensive
income separately from retained  earnings and additional  paid-in capital in the
equity  section of the  Statement of  Condition.  SFAS No. 130 is effective  for
fiscal years  beginning  after December 15, 1997. The adoption of this statement
will not have a material impact on the financial statements.

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  about Segments of an
Enterprise  and Related  Information."  SFAS No. 131  requires  that the Company
report  financial and  descriptive  information  about its reportable  segments.
Financial  information  is  required to be reported on the basis that it is used
internally  for  evaluating  segment  performance  and  deciding how to allocate
resources to segments.  This  Statement  also requires  that the Company  report
descriptive  information  about the way the operating  segments were determined,
the  products  and  services  provided by the  operating  segments,  differences
between the measurements used in



<PAGE>



reporting  segment  information  and  those  used  in  the  Company's  financial
statements,  and changes in the  measurement  of segment  amounts from period to
period. SFAS No. 131 is effective for financial statements for periods beginning
after December 15, 1997. The adoption of this statement will not have a material
impact on the financial statements.






<PAGE>



PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

There have been no material changes to the legal proceedings described in Item 3
of the Registrant's  annual report on Form 10 -K (file number 0-4518) filed with
the Commission for the fiscal year ended December 31, 1996 and in Part II., Item
1 of the Quarterly Report on Form 10- Q for the quarter ended March 31, 1997.


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual  meeting of  security-holders  of the  company  was held on April 15,
1997. The following nominees were elected as directors:


                                   Total Votes for      Total Votes Withheld
  Nominee                             Nominee               for Nominee
-----------                        ---------------      ---------------------

Class A Director
--------------------
(to serve until
1999 Annual Meeting)

1.  Richard D. McRae, Jr.            24,737,828                62,783

Class B Directors
--------------------
(to serve until
2000 Annual Meeting)

1.  Haley R. Barbour                 24,703,347                97,264
2.  William R. James                 24,733,977                66,634
3.  Booker T. Jones                  24,604,417               196,194
4.  E.B. Robinson, Jr.               24,731,698                68,913
5.  J. Kelley Williams               24,737,050                63,561

Class C Director
----------------------
(to serve until
1998 Annual Meeting)

1.  Sharon S. Greener                24,731,300                69,311

The term of office for the following directors continued after the meeting:

Richard H. Bremer, Howard L. McMillan and John N. Palmer (Class A), Warren A.
Hood, Jr., Charles L. Irby, and W.R. Newman, III (Class C).











<PAGE>



PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit Index


                                                                       Exhibit
         Exhibit                                                       Number


Statements re: computation of per share
earnings                                                                (11)

Letters re: unaudited interim financial
information                                                             (15)

Financial data schedule                                                 (27)










(b) No  reports on Form 8-K have been filed  during the  quarter  ended June 30,
1997.



                                                    SIGNATURES




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






                                      DEPOSIT GUARANTY CORP.
                                            (Registrant)



DATE:   August 14, 1997                 By: /s/Stephen E. Barker
                                        ---------------------
                                        Stephen E. Barker
                                        Controller and Principal
                                        Accounting Officer and
                                        Authorized Officer