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

                                       1

                           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

                                       2

                   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

                                       3

                                   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                                

                                                         4

                   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                  

                                       5

                  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.

                                       6

                   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. 

                                       7

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.

                                       8

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.

                                       9

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.

                                       10

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.

                                       11

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

                                      12

  

 9
 1000

                   9-MOS
                          DEC-31-1997
                               SEP-30-1997
                                           37751
                             196
                                     0
                                     0
                     206718
                           54916
                             55598
                                         610453
                                       9510
                                  946486
                                      792166
                                     10633
                              13043
                                      15009
                                0
                                          0
                                         19533
                                       76493
                  946486
                                  40994
                                12113
                                   430
                                 53537
                               22505
                               23457
                            30080
                                     1710
                                   0
                                  26078
                                  11060
                       11060
                                      0
                                            0
                                      7779
                                     1.99
                                     1.99
                                    4.91
                                       1277
                                      2686
                                     0
                                      0
                                  9309
                                     1965
                                       456
                                 9510
                              9510
                                  0
                           9510