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 SEPTEMBER 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 September 30, 1997:  40,813,741




<PAGE>

  PART I.  Financial Information
  ITEM 1.  Financial Statements
  Deposit Guaranty Corp. and Subsidiaries
  Condensed Consolidated Statements of Condition
  (In Thousands Except Share Data)
                                                  September 30,   December 31,
                                                      1997            1996
                                                  ----------------------------
  Assets
    Cash and due from banks                          $425,158        $385,009
    Interest-bearing bank balances                      3,629           1,732
    Federal funds sold and securities
      purchased under agreements to resell             52,060          47,640
    Trading account securities                          1,211           2,505
    Securities available for sale                   1,347,767       1,462,038
    Investment securities (fair value:
      1997 - $181,025 ; 1996 - $152,412 )             178,253         145,087
    Loans, net of unearned income                   4,353,431       3,979,877
      Less:   Allowance for possible loan losses      (65,065)        (62,205)
                                                   ----------      ----------
      Net loans                                     4,288,366       3,917,672
                                                   ----------      ----------
    Bank premises and equipment                       169,870         148,327
   Goodwill and other intangibles                     141,906          90,182
    Other assets                                      231,212         182,705
                                                   ----------      ----------
      Total assets                                 $6,839,432      $6,382,897
                                                   ==========      ==========

  Liabilities
    Deposits:
      Noninterest-bearing                          $1,251,547      $1,160,914
      Interest-bearing                              4,031,804       3,864,835
                                                   ----------      ----------
      Total deposits                                5,283,351       5,025,749
    Federal funds purchased, securities
      sold under agreements to repurchase
      and other short-term borrowings                 614,569         543,029
    Long-term liabilities                             176,444          99,405
    Other liabilities                                 140,982         133,448
                                                   ----------       ---------
      Total liabilities                             6,215,346       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 - 40,813,741 shares; 1996 - 39,185,394
      shares                                           22,345          21,491
    Surplus                                           156,716         174,995
    Retained earnings                                 441,079         383,211
    Market valuation for securities available for
      sale, net of income taxes                         3,946           1,569
                                                   ----------       ---------

      Total stockholders' equity                      624,086         581,266
                                                   ----------       ---------
                                                 
      Total liabilities and stockholders' equity   $6,839,432      $6,382,897
                                                   ==========      ==========


<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      Nine Months Ended
                                                 September  30,          September 30,
                                              ------------------     ------------------
                                                 1997     1996          1997     1996
                                              -------    -------     --------   -------

<S>                                           <C>        <C>        <C>        <C>       
Interest income
  Interest and fees on loans                  $95,640    $85,231    $278,344   $241,682
  Interest on investment securities:
    Taxable                                     3,505      2,449       9,542      7,844
    Exempt from Federal income tax                  1         --           4         --
  Interest on securities available for sale:
    Taxable                                    20,376     18,316      65,252     53,715
    Exempt from Federal income tax              2,406      2,824       7,714      8,635
  Interest on trading account securities           57         85         147        298
  Interest on Federal funds sold and securities
    purchased under agreements to resell          427      1,801       1,815      7,868
  Interest on bank balances                        46         45          89        303
                                              -----------------------------------------
    Total interest income                     122,458    110,751     362,907    320,345
                                              -----------------------------------------
Interest expense
  Interest on deposits                         41,036     38,346     123,073    112,722
  Interest on Federal funds purchased,
    securities sold under agreements to 
    repurchase and other short-term borrowings  7,759      6,154      21,387     21,146
  Interest on long-term debt                    2,215      1,506       5,272      2,580
                                              -----------------------------------------
    Total interest expense                     51,010     46,006     149,732    136,448
                                              -----------------------------------------
Net interest income                            71,448     64,745     213,175    183,897
  Provision for possible loan losses            1,875      1,335       5,625      4,005
                                              -----------------------------------------
Net interest income after provision for
  possible loan losses                         69,573     63,410     207,550    179,892
                                              -----------------------------------------
Other operating income
  Service charges on deposit accounts          10,961      9,107      31,089     26,006
  Fees for trust services                       4,664      3,924      13,991     11,601
  Gains on securities transactions                838          6       1,464         79
  Other service charges, commissions
    and fees                                   16,430     14,305      45,821     42,091
  Other                                         2,183      2,007       5,104      7,155
                                              -----------------------------------------
    Total other operating income               35,076     29,349      97,469     86,932
                                              -----------------------------------------
Other operating expense
  Salaries and employee benefits               35,119     32,413     105,984     94,436
  Net occupancy                                 4,969      4,182      14,419     11,613
  Equipment                                     5,049      4,479      14,912     12,827
  Service fees                                  4,518      4,099      12,214     11,437
  Communication                                 3,045      2,792       9,209      7,792
  Advertising and public relations              2,830      2,479       7,906      7,389
  Amortization of intangibles                   3,141      1,877       8,616     4,939
  Other                                        10,557      6,946      29,117     21,294
                                              -----------------------------------------
    Total other operating expense              69,228     59,267     202,377    171,727
                                              -----------------------------------------
Income before income taxes                     35,421     33,492     102,642     95,097
  Income tax expense                           12,158     11,292      34,837     30,972
                                              -----------------------------------------
Net income                                    $23,263    $22,200     $67,805    $64,125
                                              =========================================


Net income per share                            $0.57      $0.57       $1.65      $1.66
Weighted average shares outstanding        40,836,406 39,247,818  41,170,877 38,620,170



</TABLE>



<PAGE>

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

                                                 Nine Months Ended September 30,
                                                -------------------------------

                                                             1997          1996
                                                        ---------     ---------
Cash flows from operating activities:
Net income                                              $  67,805     $  64,125
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Provision for possible loan losses                      5,625         4,005
    Provision for possible losses on other real estate        687           119
    Provision for depreciation and amortization            29,072        22,143
    Provision for deferred income tax expense               2,675         1,093
    Amortization (accretion) of premium (discount) on
       investment securities, net                            (171)          424
    Accretion of discount on securities available 
    for sale, net                                          (1,481)       (2,701)
    Accretion of discount on long-term debt                    33            11
    Deferred loan fees and costs                           (2,248)       (1,865)
    Increase (decrease) in other liabilities                5,387        (8,395)
    Increase in other assets                               (4,659)       (5,838)
    Net cash received from loans held for resale           56,255         1,804
    (Gains) losses on securities available for sale           299           (79)
    Gains on sales of investment securities                (1,763)          --
    Other, net                                              4,097         3,029
                                                        ----------    ----------
      Net cash provided by operating activities           161,613        77,875
                                                        ----------    ----------

Cash flows from investing activities:
Net increase in interest-bearing bank balances             (1,834)       (3,751)
Proceeds from sales of securities available for sale      983,244     1,148,382
Proceeds from sales of investment securities               46,433          --
Proceeds from maturities and principal repayments of 
  investment securities                                    14,279        35,961
Proceeds from maturities and principal repayments of 
  securities available  for sale                          136,993       489,557
Purchases of investment securities                        (86,060)      (51,844)
Purchases of securities available for sale               (916,175)   (1,649,407)
Net  decrease in Federal funds sold and securities
  purchased under agreements to resell                     59,425       262,656
Net increase in loans                                     (68,520)     (243,804)
Proceeds from sales of other real estate                    2,749         3,818
Purchases of bank premises and equipment                  (18,974)      (13,766)
Proceeds from sales of bank premises and equipment            778           341
Payment for purchase of common stock of acquired
  company and other acquisition costs                     (28,952)       (3,586)
Cash and due from banks of acquired companies              38,365         5,772
                                                        ----------    ----------
    Net cash provided (used) by investing activities      161,751       (19,671)
                                                        ----------    ----------

Cash flows from financing activities:
Net decrease in deposits                                 (308,513)       (5,837)
Net increase (decrease) in Federal funds purchased,
  securities sold under agreements to repurchase,
  and other short-term borrowings                          63,739       (98,463)
Proceeds from issuance of long-term debt                     --          99,381
Federal Home Loan Bank advances                            75,000          --
Proceeds from the exercise of common stock options          2,415         2,441
Purchases of common stock                                 (91,696)      (32,713)
Cash dividends paid                                       (24,160)      (17,764)
                                                        ----------    ----------
    Net cash used by financing activities                (283,215)      (52,955)
                                                        ----------    ----------

    Increase in cash and due from banks                    40,149         5,249

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

    Cash and due from banks at end of period          $   425,158   $   348,955
                                                      ============  ============


<PAGE>


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 $24.6 million  and $28.8 million during
the nine month periods ended September 30, 1997 and 1996, respectively.

Interest:
The Company paid $146.5  million and $136.0  million in interest on deposits and
other  borrowings  during the nine month  periods  ended  September 30, 1997 and
1996, respectively.

Acquisitions:
During the first nine 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
                                                          ========

During the first nine months of 1997, the Company exchanged 1.568 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.

During the first nine months of 1997, the Company  exchanged .423 million shares
of common stock, in a purchase business combination,  for all of the outstanding
common shares of NBC Financial  Corporation.  The following  reflects the assets
acquired and liabilities assumed (in thousands):

    Fair value of assets acquired                          $74,103

    Fair value of common stock issued and/or cash paid
       for common stock and other acquisition costs         13,079
                                                           -------

    Liabilities assumed                                    $61,024
                                                           =======

Also during the first nine months of 1997, the Company  acquired,  in a purchase
business combination,  the common stock of Citisave Financial  Corporation.  The
following  reflects the cash paid,  assets acquired and liabilities  assumed (in
thousands):

    Fair value of assets acquired                          $82,904

    Fair value of common stock issued and/or cash paid
       for common stock and other acquisition costs         18,934
                                                           -------

    Liabilities assumed                                    $63,970
                                                           =======


<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 consolidated  financial  statements of its wholly-owned  subsidiary,
Deposit  Guaranty  Louisiana  Corp.  and its  wholly-owned  subsidiary,  Deposit
Guaranty National Bank and the financial statements of G & W Life Insurance Co.,
a  wholly-owned   subsidiary.   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.  

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.

<PAGE>
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,  as amended,  on the September 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
assets.  The transaction was accounted for as a purchase  business  combination.
The results of operations of this acquired company,  which are not material, are
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,  Louisiana.  CitiSave
Financial  Corporation  is the 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, are
included in the 1997 financial statements from the date of purchase.

On September 24, 1997, Deposit Guaranty entered into a definitive agreement to 
acquire Victory Bancshares, Inc. located in Memphis, Tennessee. The acquisition
of Victory Bank, with approximately $115 million in total assets, is expected 
to be consummated during the first quarter of 1998.  The number of shares of 
Deposit Guaranty common stock to be exchanged for all of the outstanding shares
of Victory Bancshares will be between 745,650 and 808,435 based on the exchange
ratio which will be calculated based on the average market price of Deposit 
Guaranty common stock on the twenty consecutive trading days prior to the 
effective date.  The acquisition of Victory Bancshares is expected to be 
accounted for as a pooling of interests.

<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 September  30,  1997,  and the related
condensed consolidated statements of earnings for the three-month and nine-month
periods ended  September 30, 1997 and 1996, the related  condensed  consolidated
statements of cash flows for the nine-month periods ended September 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
October 21, 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 nine-month periods 
ended September 30, 1997 and 1996.  This discussion should be read in 
conjunction with the condensed consolidated financial statements included in 
Part I, Item I.

During the fourth quarter of 1996, the Company acquired  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.  During  the third  quarter of 1997,  the  Company  acquired  NBC
Financial  Corporation  with assets of  approximately  $70 million and  CitiSave
Financial Corporation with total assets of $75 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 $457 million,  or 7%, to $6.839 billion at September 30,
1997,  compared to $6.383  billion at December 31, 1996  primarily due to merger
activity.  Securities  decreased  $81  million,  or 5%,  to  $1.526  billion  at
September 30, 1997. Total loans increased $374 million, or 9%, to $4.353 billion
at September 30, 1997.  Excluding the effect of acquisitions and transactions in
loans held for sale, total loans grew $69 million, or 2%, from December 31, 1996
to September 30, 1997.  Securities available for sale decreased $114 million, or
8%, to $1.348  billion at September 30, 1997 primarily due to loan volume growth
at a faster pace than deposit volumes.  Other assets increased $100 million,  or
37%,  to  $373  million  at  September  30,  1997,  primarily  as  a  result  of
approximately $60 million in acquisition-related intangible assets.

Total deposits increased $258 million, or 5%, to $5.283 billion at September 
30, 1997.  Excluding the effect of the acquisitions, total deposits exhibited a
$309 million, or 6% decrease from December 31, 1996 to September 30, 1997.  
Approximately $112 million or 36% of the decrease is due to a seasonal increase
in deposits, mostly public funds and corporate accounts, that built up in late 
December of 1996 and cleared out the following month. Average deposit volumes, 
as a result, do not show as significant a decrease over the same period because 
period end amounts tend to more dramatically reflect the volatility of seasonal
accounts.  Over the same period, average deposit volumes declined only 3% in 
comparison.

Long-term  liabilities  increased  $77  million,  or  78%,  to $176  million  at
September  30, 1997  compared to December 31, 1996,  as a result of Federal Home
Loan Bank advances of $75 million.

The three floating rate, $25 million advances have original maturities of seven
years.  In order to better manage interest rate risk, these advances were 
converted to fixed rate instruments using interest rate swap contracts.


<PAGE>


Total stockholders' equity increased $43 million to $624 million at September 
30, 1997 primarily as a result of $44 million in earnings retained and a $2.5 
million increase in the fair value of securities available for sale, net of 
income taxes.  The effect of stock issued for acquisitions was more than offset
by repurchase of a like number of shares as issued in the acquisitions 
accounted for using the purchase method of accounting during late 1996 and 
1997.  Also included in the increase in equity was $2.5 million in stock 
options exercised.

As of September 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 at September 30, 1996.


Net Income

Net  income  for the third  quarter  of 1997  increased  $1.1  million  to $23.3
million,  due to an  increase  in  business  volumes  resulting  primarily  from
acquisitions.  Earnings per share, however,  remained flat at $.57 per share for
both the third quarters of 1997 and 1996 due to the effect of additional  shares
outstanding from the acquisition accounted for as a pooling of interests and due
to the timing of share repurchases relating to purchase accounting transactions.
An increase in earning assets resulted in a 10% increase in net interest income.
Noninterest income increased $5.7 million, or 19%, to $35.1 million in the third
quarter of 1997 compared to the same period in 1996, while  noninterest  expense
increased  $10.0  million,  or 17%  including  the  effect  of  amortization  of
intangibles  relating to recent  acquisitions.  Third  quarter  earnings show an
improving  trend  from the first two  quarters  of 1997 as core loan  growth has
begun to accelerate and fee income,  primarily deposit service charges and other
service fees, has begun to increase.

Net income for the nine months ended  September 30, 1997 was $67.8  million,  or
$1.65 per share,  compared to $64.1  million,  or $1.66 per share,  for the same
period  in  1996.  Net  interest  income  increased  due  to an  11%  growth  in
interest-earning assets, primarily average loan volumes.  Noninterest income for
the nine months ended September 30, 1997 increased by $10.5 million,  or 12%, to
$97.5 million.  Noninterest  income for the nine month period in 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 $13.2 million.  Approximately  68% of the increase
was  the  due  to  acquisitions.  Excluding  acquisitions,   noninterest  income
increased $3.3 million,  or 4%, for the nine months ended  September 30, 1997 as
compared  to the same  period in 1996.  Noninterest  expense  for the nine month
period ended September 30, 1997 increased  $30.7 million,  or 18%, from the same
period in 1996. This increase was due primarily to acquisitions.

The return on average assets for the nine month period ended September 30, 1997
was 1.35% compared to 1.43% for the same period in 1996.  The return on equity 
ratio, which measures how effectively the Company has been able to generate 
earnings on its capital, was 14.95% for the nine month period ended September 
30, 1997 compared to 15.82% for the same period in 1996.

Net Interest Income

Net interest income for the third quarter of 1997 was $71.4 million, an increase
of $6.7  million  from the  third  quarter  of 1996  which  resulted  from a 10%
increase in average  interest-earning  assets which was mainly  concentrated  in
loans.  Average loan volumes  during the third  quarter of 1997  increased  $490
million,  or 13%,  compared to the third  quarter of 1996.  Acquisitions  caused
approximately   75%  of  the  increase  in  average  loan   volumes.   Excluding
acquisitions,  average loans increased $127 million,  or 3%, for the nine months
ended  September  30, 1997  compared to the same period in 1996.  Although  loan
growth  had been flat for the last  quarter  of 1996 and the first six months of
1997,  it began to pick up in the third  quarter with an increase of 5% over the
second quarter of 1997, net of acquisitions  and changes in loans held for sale.
Average total loans, the most profitable interest-earning asset, as a percentage
of total interest-earning assets, increased from 71% during the third quarter of
1996 to 73% during the same period in 1997. The net interest  margin remained at
4.90% for the third quarters of 1997 and 1996.


<PAGE>


Net  interest  income for the nine  months  ended  September  30,  1997 was $213
million,  an increase of $29.3 million,  or 16%, from the $184 million  reported
for the first nine months of 1996. The increase in net interest  income resulted
from  an  11%  increase  in  interest-earning  assets  and  a  17  basis  points
improvement in the net interest margin.

The increase in earning assets occurred mostly in the loan portfolio which 
accounts for 92% of the 11% increase in average earning asset volumes.  This 
increase in average loan volumes can be attributed primarily to acquisitions.  
The earning asset mix shows improvement with average total loans, as a 
percentage of total interest-earning assets, increasing from 70% for the nine 
month period ended September 30, 1996 to 72% during the same period in 1997.

The  tax-equivalent  net interest margin increased from 4.73% for the nine month
period  ended  September  30,  1996  to  4.90%  for the  same  period  in  1997.
Improvement in the yield on the securities portfolio accounts for 7 basis points
of the  increase  in the net  interest  margin  while  improvement  on the  loan
portfolio  yield  accounts for 3 basis points.  Lower rates on interest  bearing
deposits account for another 5 basis points of the improved net interest margin.
The remaining improvement is due to the more favorable earning asset mix.


Other Operating Income

Other operating income for the third quarter of 1997 increased $5.7 million, or
20%, to $35.1 million as a result of acquisitions and an 11% growth in core 
business lines.  Approximately 35% of the increase can be attributed to 
acquisitions. The remaining increase represents growth in fees from core 
business lines, primarily service charges on deposit accounts and other retail
service fees.  Gains on securities transactions increased over $800 thousand 
during the nine month period ended September 30, 1997 as compared to the same 
period in 1996.

Other  operating  income for the nine month period ended  September  30, 1997 as
compared to the same period in 1996 increased  $10.5  million,  or 12%, to $97.5
million.  Comparability  between  the  nine  month  periods  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 $13.2 million, approximately 68% as a result of
acquisitions and 32% from a 4% growth in core business lines.


<PAGE>

Other Operating Expense

Other operating expense for the third quarter of 1997 was $69.2 million, an 
increase of $10.0 million, or 17%, over the third quarter of 1996 primarily as 
a result of acquisitions.  Approximately 69% of this increase was due to 
acquisitions.  Excluding the $6.7 million increase due to acquisitions, other 
operating expense increased approximately $3.0 million, or 5% in 1997 compared 
to 1996.  This increase was primarily as a result of increases in the 
amortization of mortgage servicing rights.  The amortization of mortgage 
servicing rights during the third quarter in 1997 increased $1.0 million 
compared to the same period in 1996 as a result of increased activity in this 
area.  Personnel expense, excluding acquisitions, for the third quarter of 1997
increased only $468 thousand or 1% compared to the third quarter of 1996, 
primarily as a result of annual merit increases.

Other operating expense for the nine months ended September 30, 1997 increased 
$30.7 million to $202.4 million in 1997 compared to $171.7 million for the same
period in 1996.  Approximately $21.4 million of this increase was a result of 
acquisitions. The remaining increase is primarily the result of increases in 
personnel expenses and the amortization of mortgage servicing rights.
Excluding the effects of the acquisitions, personnel expenses increased $2.4 
million, or 3%, during the first nine months of 1997 compared to the same 
period in 1996 as a result of annual merit increases.  The amortization of 
mortgage servicing rights during the nine month period ended September 30, 1997
increased $1.8 million compared to the same period in 1996 as a result of 
increased activity in this area.


<PAGE>


The Company is actively addressing operations concerns regarding the coming 
millennium change.  A committee has been formed to steer the process of 
identifying the systems, equipment, vendors and customers that may be affected 
by the year 2000 and developing a plan to be in complete compliance by December
31, 1998.  The cost to bring the Company's systems and equipment in compliance 
with the year 2000 issue is not expected to have a material effect on the 
Company's financial statements as most of the Company's systems are provided by
and will be upgraded by third party vendors and equipment upgrades will be 
minimal.


Credit Quality

The provision for possible loan losses was $1.9 million for the third quarter of
1997 compared to a $1.3 million  provision  for the third  quarter of 1996.  The
allowance for possible  loan losses at September 30, 1997,  was $65.1 million or
1.50% of total loans and 278% 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 third  quarter of 1997 were $7.0
million,  or  .65%  of  average  loans,  compared  to  third  quarter  1996  net
charge-offs of $317 thousand,  or .03% of average loans. Net charge-offs for the
third quarter of 1997 include a $5.2 million charge-off on a single credit.


Net charge-offs for the nine month period ended September 30, 1997
increased $6.4 million from $3.9 million for the year ended December 31, 1996.
The increase in  year-to-date  net  charge-offs  was primarily the result of the
charge off of $6.7 million on a single  credit, which $5.2 million was 
charged-off during the third quarter of 1997.  Nonperforming  loans  increased
$6.4 million to $23.4 million at September  30, 1997,  compared to $17.1 million
at December 31, 1996 and $16.4 million at September 30, 1996.


Capital

Total  stockholders'  equity  increased $43 million to $624 million at September
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 September 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 7.28% at September 30, 1997 compared to
8.23% at December 31, 1996.

The Company's  banking  subsidiary  has  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 8.18%,  10.82%,  and 12.07%,
respectively  for September 30, 1997  compared to 8.96%,  12.07%,  and 13.32% 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.  During the nine month period ended  September  30,
1997,  the Company  experienced  the continuing  trend of loan growth  exceeding
deposit growth which resulted in the loan to deposit ratio increasing above 80%.
The loan to deposit ratio was 82.40% at September 30, 1997 compared to 79.19% at
December 31, 1996 and 79.73% at September 30, 1996. Maturities in the securities
portfolio  are  expected  to be  adequate  to fund  continued  loan  demand.  In
addition, the Company has available $232 million in advances at the Federal Home
Loan Bank.

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.  If the Company 
had adopted SFAS No. 128 at September 30, 1997, basic earnings per share and 
diluted earnings per share for the nine month period would have been $1.65 and 
$1.63, respectively.


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 June 30, 1997.

<PAGE>


PART II.  OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibit Index


                                                                Table
        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  September
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:   November 14, 1997                  By: /s/Stephen E. Barker
                                               -----------------------------
                                               Stephen E. Barker
                                               Controller and Principal
                                               Accounting Officer and
                                               Authorized Officer