UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q

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 1-13253

THE PEOPLES HOLDING COMPANY
-------------------------------------------------------
(Exact name of the registrant as specified in its charter)

MISSISSIPPI 64-0676974
------------------------ --------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)

209 Troy Street, P. O. Box 709, Tupelo, Mississippi 38801
----------------------------------------------------------
(Address of principal executive offices)

Registrant's telephone number including area code 601-680-1001

Indicate by check 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, and (2) has been subject to such filing requirements
for the past 90 days.
YES__X__NO_____

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as to the latest practicable date.

Common stock, $5 Par Value, 3,906,675 shares outstanding
as of November 12, 1997

THE PEOPLES HOLDING COMPANY
INDEX

PART 1. FINANCIAL INFORMATION PAGE

Item 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996............. 3
Consolidated Statements of Income - Nine Months
Ended September 30, 1997 and 1996.................... 4
Consolidated Statements of Income - Three Months
Ended September 30, 1997 and 1996.................... 4
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1997 and 1996........ 5
Notes to Consolidated Financial Statements................ 6

Item 2.

Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 7

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings....................................... 12

Item 6.(b)

Reports on Form 8-K..................................... 12

Signatures.............................................. 12

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30 DECEMBER 31
1997 1996
------------ -----------
(Unaudited) (Note 1)

Assets
Cash and due from banks ................ $ 37,750,511 $ 38,374,641
Federal Fund Sold ...................... 8,500,000
---------- ----------
37,750,511 46,874,641

Interest bearing balances with banks .... 195,638 1,824,031

Securities held-to-maturity (market
value-$55,597,670 and $52,334,931
at September 30, 1997 and December 31,
1996, respectively) .................. 54,916,391 52,051,251

Securities available-for-sale (amortized
cost-$206,058,086 and $193,696,615 at
September 30, 1997 and
December 31, 1996, respectively) .... 206,718,210 194,058,997

Loans .................................. 610,453,313 562,752,505
Allowance for loan losses ........... (9,509,604) (9,309,354)
----------- ------------
Net Loans ..................... 600,943,709 553,443,151

Premises and equipment ................. 22,307,934 21,559,955
Other assets ........................... 23,654,105 23,277,326
----------- ------------
Total Assets .................. $ 946,486,498 $ 893,089,352
=========== ============
Liabilities
Deposits:
Noninterest-bearing ................. $ 115,110,442 $ 118,638,526
Certificates of deposit exceeding
$100,000 ........................ 91,048,221 89,435,562
Interest bearing .................... 586,007,708 564,767,920
------------ ------------
Total Deposits ............ 792,166,371 772,842,008

Treasury tax and loan note account ..... 9,843,339 6,354,142
Borrowings ............................. 35,408,161 11,174,638
Other liabilities ...................... 13,042,564 12,157,744
------------ ------------
Total Liabilities ......... 850,460,435 802,528,532

Shareholders' Equity
Common Stock, $5 par value-7,500,000
authorized, 3,906,675 shares
issued and outstanding at
September 30, 1997 and
December 31, 1996, respectively ....... 19,533,375 19,533,375
Additional paid-in capital .............. 39,875,796 39,875,796
Unrealized gains on securities
available-for-sale, net of tax ........ . 413,898 227,214
Retained earnings ....................... 36,202,994 30,924,435
------------ ------------
Total Shareholders' Equity .... 96,026,063 90,560,820
------------ ------------
Total Liabilities and
Shareholders' Equity ........ $ 946,486,498 $ 893,089,352
============ ============

See Notes to Consolidated Financial Statements

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

NINE MONTHS ENDED SEPTEMBER 30 THREE MONTHS ENDED SEPTEMBER 30
1997 1996 1997 1996
---- ---- ---- ----
(Unaudited) (Unaudited)

Interest Income
Loans ................................ $ 40,994,008 $ 37,534,320 $ 14,230,002 $ 12,764,539
Securities:
Taxable ......................... 9,943,123 9,152,374 3,331,861 3,068,053
Tax-exempt ...................... 2,169,936 2,116,570 738,664 768,450

Other ................................ 429,910 671,362 69,914 126,852
------- ------- ----- -----
Total interest income ...... 53,536,977 49,474,626 18,370,441 16,727,894

Interest Expense
Time deposits exceeding $100,000 ..... 3,734,644 2,857,708 1,324,979 1,014,664
Other deposits ....................... 18,770,200 17,730,990 6,505,095 5,842,221
Borrowings .......................... 952,403 300,842 325,709 157,168
------- ------- ------ ------
Total interest expense ..... 23,457,247 20,889,540 8,155,783 7,014,053
---------- ---------- --------- ---------
Net interest income ........ 30,079,730 28,585,086 10,214,658 9,713,841

Provision for loan losses .................. 1,709,999 1,894,808 569,999 634,358
--------- --------- ------- -------
Net interest income after
provision for loan losses .. 28,369,731 26,690,278 9,644,659 9,079,483

Noninterest income:
Service charges on deposit accounts .. 4,991,342 4,888,371 1,703,669 1,676,670
Fees and commissions ................. 1,589,998 1,299,305 598,878 462,852
Trust revenue ........................ 449,100 405,000 149,700 135,000
Security gains ....................... 155,256 191,723 77,545 30,300
Other ................................ 1,582,188 1,176,964 529,613 380,427
------- ------- ------- -------
Total noninterest income ... 8,767,884 7,961,363 3,059,405 2,685,249

Noninterest expenses:
Salaries and employee benefits ....... 14,587,616 13,984,828 5,141,501 4,727,575
Net occupancy ........................ 1,865,637 1,649,284 618,275 530,204
Equipment ............................ 1,328,908 1,146,504 470,791 399,860
Other ................................ 8,295,430 8,075,320 2,868,765 2,843,150
--------- --------- --------- ---------
Total noninterest expenses . 26,077,591 24,855,936 9,099,332 8,500,789
---------- ---------- --------- ---------

Income before income taxes ................. 11,060,024 9,795,705 3,604,732 3,263,943
Income taxes ............................... 3,281,193 2,946,622 1,057,456 985,198
--------- --------- --------- ---------
Net income ................. $ 7,778,831 $ 6,849,083 $ 2,547,276 $ 2,278,745
========== ========== ============ ============

Earnings per share ........................ $ 1.99 $ 1.75 $ .65 $ .58
====== ====== ====== ======

Weighted average shares outstanding ....... 3,906,675 3,906,675 3,906,675 3,906,675
========= ========= ========= =========

See Notes to Consolidated Financial Statements

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30
1997 1996
---- ----
(Unaudited)

Operating Activities
Net Income ............................. $ 7,778,831 $ 6,849,083
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses .............. 1,709,999 1,894,808
Provision for depreciation and
amortization ...................... 1,727,168 1,604,176
Net amortization of
securities premiums/discounts ..... 689,489 84,331
Losses (gains) on sales/calls of
securities ........................ 40,990 (191,723)
Increase in other liabilities .......... 884,820 1,205,183
Deferred income taxes (credits)......... (57,495) 180,740
Losses (gains) on sales of
premises and equipment ............ 154,812 (78,651)
Increase in other assets ............... (17,970) (1,087,010)
-------- --------
Net Cash Provided by Operating
Activities ................... 12,910,644 10,460,937

Investing Activities
Net decrease in balances
with other banks .................. 1,628,393 8,706,776
Proceeds from maturities/calls of
securities held-to-maturity ....... 3,169,191 2,361,056
Proceeds from maturities/calls of
securities available-for-sale ..... 47,238,184 42,748,943
Proceeds from sales of
securities available-for-sale ..... 48,987,655 23,691,723
Purchases of securities
held-to-maturity .................. (6,512,000) (7,367,988)
Purchases of securities
available-for-sale ................ (108,840,120) (95,791,972)
Net increase in loans .................. (50,038,207) (28,253,132)
Proceeds from sales of premises
and equipment ..................... 120,458 84,636
Purchases of premises and equipment .... (2,335,139) (1,546,377)
---------- ----------
Net Cash Used in Investing
Activities ................... (66,581,585) (55,366,335)

Financing Activities
Net increase (decrease) in
noninterest-bearing deposits ...... (3,528,084) 1,745,022
Net increase in certificate of deposits
exceeding $100,000 ................. 1,612,659 13,179,421
Net increase in other
interest-bearing deposits .......... 21,239,788 3,265,982
Net increase in treasury
tax and loan note account ......... 3,489,197 7,599,505
Net increase in borrowings ............. 24,233,523 5,721,845
Cash dividends paid .................... (2,500,272) (2,192,469)
---------- ----------
Net Cash Provided by Financing
Activities ................... 44,546,811 29,319,306
---------- ----------
Decrease in Cash
and Cash Equivalents ......... (9,124,130) (15,586,092)
Cash and Cash Equivalents at
beginning of period ............... 46,874,641 63,918,819
---------- ----------
Cash and Cash Equivalents at
end of period ..................... $ 37,750,511 $ 48,332,727
============ ============
Non-cash transactions:
Transfer of loans to other real
estate .............................. $ 827,650 $ 1,405,909
============ ============

See Notes to Consolidated Financial Statements

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997

Note 1 Basis of Presentation:

The consolidated balance sheet at December 31, 1996, has been derived from the
audited financial statements at that date. The accompanying unaudited
consolidated financial statements reflect all adjustments (consisting only of
normally recurring accruals) which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented. The
statements should be read in conjunction with the notes to consolidated
financial statements included in the Registrant's annual report for the year
ended December 31, 1996. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been omitted in accordance with
the rules of the Securities and Exchange Commission.

Note 2 Earnings Per Share

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share". Statement No. 128
simplifies the calculation of earnings per share (EPS) standards, and is
effective for both interim and annual periods ending after December 15, 1997.
The Company does not believe that the adoption of this statement will have a
material effect on its consolidated financial position or results of operations.

Note 3 Other Accounting Pronouncements

In June 1997, the FASB issued SFAS No. 130, "Reporting Comrehensive Income."
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The Statement was developed in response to financial
statement users' concerns about the increasing number of items that bypass the
income statement, such as changes in value of available-for-sale securities, and
the effort required to analyze them. Because this Statement addresses how
supplemental financial information is disclosed in annual and interim reports,
the adoption will have no material impact on the financial statements. SFAS No.
130 will become effective in 1998.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
reporting of financial information from operating segments, using the management
approach, in annual and interim financial statements. This Statement requires
that financial information be reported on the basis that it is reported
internally for evaluating segment performance and deciding how to allocate
resources to segments. Because this Statement addresses how supplemental
financial information is disclosed in annual and interim reports, the adoption
will have no material impact on the financial statements. SFAS No. 131 will
become effective in 1998.

THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

This Form 10-Q may contain or incorporate by reference statements which may
constitute "forward-looking statements' within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21 of the Securities
Exchange Act of 1934, as amended. Prospective investors are cautioned that
any such forward-looking statements are not guarantees for future
performance and involve risks and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking
statements. Important factors currently known to management that could cause
actual results to differ materially from those in forward-looking statements
include significant fluctuations in interest rates, inflation, economic
recession, significant changes in the federal and state legal and regulatory
environment, significant underperformance in the Company's portfolio of
outstanding loans, and competition in the Company's markets. The Company
undertakes no obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events or
changes to future operating results over time.

Financial Condition
- -------------------

Total assets of The Peoples Holding Company grew from $893,089,352 on December
31, 1996, to $946,486,498 on September 30, 1997, or 5.98% for the nine month
period. Total securities increased from $246,110,248 on December 31, 1996, to
$261,634,601 on September 30, 1997, with the majority of growth in US Government
Agencies and Mortgage-backed securities. Loans, net of unearned income,
increased $47,700,808 or 8.48%. Approximately $23,580,000 of the increase in
loans was in the third quarter of 1997. The increase in loan demand was
temporarily funded by short term borrowings from the Federal Home Loan Bank.

Total deposits for the first nine months of 1997 grew from $772,842,008 on
December 31, 1996 to $792,166,371 on September 30, 1997, or an increase of
2.50%, with the majority of growth in time deposits. Borrowings increased
$24,233,523 at September 30, 1997 compared to December 31, 1996, due to loan
demand in the third quarter of 1997. The short term borrowings from the Federal
Home Loan Bank have been repaid subsequent to September 30, 1997.

The equity capital to total assets ratio was 10.15% and 10.14% for September 30,
1997 and December 31, 1996, respectively. Capital grew 6.03% from December 31,
1996 to September 30, 1997 due to record earnings. In addition, the Company
continued paying higher dividends in 1997 compared to 1996.

In the third quarter of 1997, the Company's shares began trading on the American
Stock Exchange (AMEX), under the symbol PHC.

Results of Operations-September 30, 1997 compared to September 30, 1996
- -----------------------------------------------------------------------
The Company's net income for the nine month period ending September 30, 1997,
was $7,778,831 representing an increase of $929,748 or 13.57% over net income
for the nine month period ending September 30, 1996 which totaled $6,849,083.
The majority of the increase in net income for the nine month period in 1997
compared to 1996 came from usual and customary deposit gathering and lending
operations. Effective September 30, 1996, the Company was assessed a one-time
charge of approximately $240,000 ($150,000 net of tax) by the Federal Deposit
Insurance Corporation (FDIC) to re-capitalize the Savings Association Insurance
Fund (SAIF). All Oakar financial institutions, those banks holding deposits that
are insured by the SAIF, were assessed based on their deposit base at March 31,
1995. The annualized returns on average assets for the nine month periods ending
September 30, 1997 and 1996 were 1.13% and 1.06%, respectively.

Net income was $2,547,276 and $2,278,745 for the three months ending September
30, 1997 and 1996, respectively. The increase in net income is due to normal
lending and deposit operations, combined with the SAIF assessment at September
30, 1996, previously mentioned.

Net interest income, the difference between interest earned on assets and the
cost of interest-bearing liabilities, is the largest component of the Company's
net income. The primary items of concern in managing net interest income are the
mix and maturity balance between interest-sensitive assets and related
liabilities. Net interest income for the nine month periods ending September 30,
1997 and 1996 was $30,079,730 and $28,585,086, respectively. Net interest income
was $10,214,658 and $9,713,841 for the three month periods ending September 30,
1997 and 1996, respectively. Earning assets averaged $853.1 million for the nine
month period ending September 30, 1997, compared to $786.6 million for the same
period in 1996. Net interest margin was 4.91% and 5.08% for the nine month
periods ending September 30, 1997 and 1996, respectively. The decrease in net
interest margin is due to the increase in the volume and rate of costing
liabilities in 1997 and an increase in short-term borrowings in the third
quarter of 1997 to fund loan growth.

The provision for loan losses charged to operating expense is an amount which,
in the judgement of management, is necessary to maintain the allowance for loan
losses at a level that is adequate to meet the inherent risks of losses on the
Company's current portfolio of loans. The appropriate level of the allowance is
based on a quarterly analysis of the loan portfolio including consideration of
such factors as the risk rating of individual credits, size and diversity of the
portfolio, economic conditions, prior loss experience, and the results of
periodic credit reviews by internal loan review and regulators. The provision
for loan losses totaled $1,709,999 and $1,894,808 for the nine month periods
ending September 30, 1997 and 1996, respectively. The allowance for loan losses
as a percentage of loans outstanding was 1.56% and 1.65% as of September 30,
1997 and December 31, 1996, respectively. Net charge-offs to average loans was
.25% and .32% for the nine month periods ending September 30, 1997 and 1996,
respectively.

Noninterest income was $8,767,884 for the nine month period ending September 30,
1997, compared to $7,961,363 for the same period in 1996, or an increase of
10.13%. The increase between 1997 and 1996 is mainly due to fees associated with
the increase in loans and deposits. The increase in fees and commissions are a
result of increases in document preparation fees and student loan fees, while an
increase in merchant processing and credit card revenue increased other income.
The increase in deposits at September 30, 1997 compared to the same period in
1996 resulted in an increase in service charges. Noninterest income for the
quarter ending September 30, 1997 increased $374,156 or 13.93% compared to the
same period in 1996. As previously noted, the increase is mainly due to
increased loan demand and deposit growth.

Noninterest expenses were $26,077,591 for the nine month period ending September
30, 1997, compared to $24,855,936 for the same period in 1996, or an increase of
4.91%. Significant increases in noninterest expenses, comparing the nine months
ending September 30, 1997 to same period in 1996, include incentive
compensation, depreciation of new premises and equipment, credit card costs
related to the introduction of a new affinity card, and computer processing
costs associated with loan and deposit growth. The remaining components of
noninterest expenses reflect normal increases for banking related expenses and
general inflation in the cost of services and supplies purchased by the Company.
Noninterest expenses for the quarter ending September 30, 1997 increased
$598,543 or 7.04% compared to the same period in 1996. The significant increases
mirror the same increases for the nine month period in 1997 compared to 1996.

Income tax expense was $3,281,193 for the nine month period ending September 30,
1997, compared to $2,946,622 for the same period in 1996. The increase is due to
increased profits for the nine month period ending September 30, 1996 compared
to 1996. The Company continues to invest in assets whose earnings are given
favorable tax treatment, which lowered the indicated tax rate from 30.08% for
the nine months ending September 30, 1996 to 29.67% for the same period in 1997.

Liquidity Risk

Liquidity management is the ability to meet the cash flow requirements of
customers who may be either depositors wishing to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs.

Core deposits are a major source of funds used to meet cash flow needs.
Maintaining the ability to acquire these funds as needed in a variety of money
markets is a key to assuring liquidity. Approximately 89% of the Company's
deposits are composed of accounts with balances less than $100,000. When
evaluating the movement of these funds even during times of large interest
rate changes, it is apparent that the Company continues to attract deposits
that can be used to meet cash flow needs. Management continues to monitor the
liquidity and potentially volatile liabilities ratios to ensure compliance
with Asset-Liability Committee targets. These targets are set to ensure that
the Company meets the liquidity requirements deemed necessary by management
and regulators.

Other sources available for meeting the Company's liquidity needs include
available-for-sale securities. The available-for-sale portfolio is composed of
securities with a readily available market that can be used to convert to cash
if the need arises. In addition, the Company may maintain a federal funds
position that provides day-to-day funds to meet liquidity needs and may also
obtain advances from the Federal Home Loan Bank (FHLB) or the treasury tax and
loan note account, in order to meet liquidity needs. Historically, the Company
has not relied upon these sources to meet long-term liquidity needs. Sources of
funds derived from the FHLB are used primarily to match mortgage loan
originations in order to minimize interest rate risk, but may be used to provide
short-term funding.

Capital Resources

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios. All banks are required
to have core capital (Tier I) of at least 4% of risk-weighted assets (as
defined), 4% of average assets (as defined), and total capital of 8% of
risk-weighted assets (as defined). As of September 30, 1997, the Bank has met
all capital adequacy requirements to which it is subject.

As of September 30, 1997, the most recent notification from the Federal Deposit
Insurance Corporation (FDIC) categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage ratios of 10%, 6%, and 5%, respectively. In the opinion of
management, there are no conditions or events since the last notification that
have changed the institution's category. The Bank's actual capital amounts and
applicable ratios are as follows:

Actual
Amount Ratio
------ -----
(000)

As of September 30, 1997
Total Capital .................... $ 99,060 16.0%
(to Risk Weighted Assets)
Tier I Capital ................... $ 91,317 14.8%
(to Risk Weighted Assets)
Tier I Capital ................... $ 91,317 9.8%
(to Adjusted Average Assets)

As of December 31, 1996
Total Capital .................... $ 92,734 16.4%
(to Risk Weighted Assets)
Tier I Capital ................... $ 85,618 15.1%
(to Risk Weighted Assets)
Tier I Capital ................... $ 85,618 9.9%
(to Adjusted Average Assets)

Management recognizes the importance of maintaining a strong capital base. As
the above ratios indicate, the Company exceeds the requirements for a well
capitalized bank.

Book value per share was $24.58 and $23.18 at September 30, 1997 and December
31, 1996, respectively. Quarterly cash dividends were $.22 per share during the
third quarter of 1997, up from $.20 per share during the third quarter of 1996.

The Company's capital policy is to evaluate future needs based on growth,
earnings trends and anticipated acquisitions.

Effective August 18, 1997, the Company's shares began trading on the American
Stock Exchange (AMEX), under the symbol PHC. The first trade on AMEX lowered the
spread from $2.25 per share to $.375 per share. This decision was in line with
management's strategic initiatives to enhance the value of the Company's shares.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

There were no material proceedings pending at September 30,
1997, against the registrant or its subsidiary.

Item 6(b) Reports on Form 8-K

No reports on Form 8-K were filed in the third quarter ending
September 30, 1997.

SIGNATURES

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

THE PEOPLES HOLDING COMPANY
---------------------------
Registrant

DATE: November 12, 1997 /s/ John W. Smith
---------------------------
John W. Smith
President & Chief Executive Officer