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 quarterly period ended September 30, 2001
                         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 38802-0709
          ------------------------------------------------------------
                    (Address of principal executive offices)

         Registrant's telephone number including area code 662-680-1001

 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, 5,722,741 shares outstanding
                             as of November 9, 2001

                                       1

                          THE PEOPLES HOLDING COMPANY
                                      INDEX

PART 1.  FINANCIAL INFORMATION                                       PAGE

         Item 1.

            Condensed Consolidated Financial Statements (Unaudited)

            Condensed Consolidated Balance Sheets -
                 September 30, 2001 and December 31, 2000.............  3

            Condensed Consolidated Statements of Income - Three Months
                 and Nine Months Ended September 30, 2001 and 2000....  4

            Condensed Consolidated Statements of Cash Flows -
                 Nine Months Ended September 30, 2001 and 2000........  5

            Notes to Condensed Consolidated Financial Statements......  6

         Item 2.

            Management's Discussion and Analysis of Financial
                 Condition and Results of Operations..................  9

         Item 3.

            Quantitative and Qualitative Disclosures
                 About Market Risk.................................... 13

PART II. OTHER INFORMATION

         Item 1.

             Legal Proceedings........................................ 14

         Item 2.

             Changes in Securities.................................... 14

         Item 6.(a) and (b)

             Exhibits and Reports on Form 8-K......................... 14

         Signatures................................................... 14

                                       2

                   THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)

                                               SEPTEMBER 30      DECEMBER 31
                                                   2001             2000
                                               ------------      -----------
                                                (Unaudited)        (Note 1)
                                                          
Assets
   Cash and due from banks ..................  $      44,710     $    27,676
   Interest-bearing balances with banks .....         29,369          29,141
                                                  ----------       ---------
                Cash and Cash Equivalents ...         74,079          56,817

   Securities available-for-sale ............        286,001         192,916

   Securities held-to-maturity (fair
      value - $0 and $85,981 at
      September 30, 2001 and December 31,
      2000, respectively) ...................                         85,658

   Loans, net of unearned income ............        827,041         815,854
      Allowance for loan losses .............        (11,166)        (10,536)
                                                  ----------       ---------
                Net Loans ...................        815,875         805,318

   Premises and equipment, net ..............         28,862          30,105
   Other assets .............................         58,687          41,126
                                                  ----------       ---------
            Total Assets ....................  $   1,263,504     $ 1,211,940
                                                  ==========       =========
Liabilities
   Deposits:
      Noninterest-bearing ...................  $     160,687     $   131,718
      Interest-bearing ......................        926,912         914,887
                                                  ----------       ---------
                Total Deposits ..............      1,087,599       1,046,605

   Treasury tax and loan note account .......          6,731           4,603
   Advances from the Federal Home Loan Bank .         24,424          19,946
   Other liabilities ........................         19,451          19,125
                                                  ----------       ---------
                Total Liabilities ...........      1,138,205       1,090,279

Shareholders' Equity
   Common Stock, $5 par value - 15,000,000
     shares authorized, 6,212,284 shares
     issued; 5,757,799 and 6,056,899 shares
     outstanding at September 30, 2001 and
     December 31, 2000, respectively ........         31,061          31,061
   Treasury stock, at cost ..................        (11,078)         (3,688)
   Additional paid-in capital ...............         39,850          39,931
   Retained earnings ........................         60,962          54,423
   Accumulated other comprehensive income ...          4,504             (66)
                                                  ----------       ---------
                Total Shareholders' Equity ..        125,299         121,661
                                                  ----------       ---------
            Total Liabilities and
               Shareholders' Equity .........  $   1,263,504     $ 1,211,940
                                                  ==========       =========

See Notes to Condensed Consolidated Financial Statements

                                       3

                   THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                        (in thousands, except share data)

                                             NINE MONTHS ENDED SEPTEMBER 30  THREE MONTHS ENDED SEPTEMBER 30
                                                   2001           2000            2001           2000
                                                   ----           ----            ----           ----
                                                       (Unaudited)                    (Unaudited)
                                                                                
Interest Income
      Loans ................................   $   53,919     $   54,145     $   17,773     $   18,704
      Securities:
           Taxable .........................        9,380          8,949          3,030          3,019
           Tax-exempt ......................        3,004          3,099            991          1,017

      Other ................................          669            269             83              3
                                                  -------        -------        -------        -------
                Total interest income ......       66,972         66,462         21,877         22,743

Interest Expense
      Deposits .............................       31,276         30,707          9,548         10,891
      Borrowings  ..........................        1,090          1,581            359            554
                                                  -------        -------        -------        -------
                Total interest expense .....       32,366         32,288          9,907         11,445
                                               ----------     ----------     ----------     ----------
                Net interest income ........       34,606         34,174         11,970         11,298

Provision for loan losses ..................        3,475          4,068          1,225          1,389
                                                ---------      ---------      ---------      ---------
                Net interest income after
                provision for loan losses ..       31,131         30,106         10,745          9,909

Noninterest income:
      Service charges on deposit accounts ..        8,569          7,302          2,961          2,479
      Fees and commissions .................        5,276          3,640          1,842          1,468
      Trust revenue ........................          660            802            130            267
      Gains on sale of securities ..........           87                            42
      Other ................................        3,156          2,053          1,197            678
                                                  -------        -------        -------        -------
                Total noninterest income ...       17,748         13,797          6,172          4,892

Noninterest expenses:
      Salaries and employee benefits .......       19,285         16,811          6,862          5,860
      Data processing.......................        2,629          2,414            902            788
      Net occupancy ........................        2,402          2,305            797            840
      Equipment ............................        2,195          2,181            733            720
      Other ................................        7,792          7,893          2,579          2,566
                                                ---------      ---------      ---------      ---------
                Total noninterest expenses .       34,303         31,604         11,873         10,774
                                               ----------     ----------     ----------     ----------

Income before income taxes .................       14,576         12,299          5,044          4,027
Income taxes ...............................        3,845          3,401          1,202          1,113
                                                ---------      ---------      ---------      ---------
                Net income .................   $   10,731     $    8,898     $    3,842     $    2,914
                                               ==========     ==========     ==========     ==========

Basic and diluted earnings per share  ......       $ 1.81         $ 1.45         $ 0.66         $ 0.48
                                                   ======         ======         ======         ======

Weighted average shares outstanding  .......    5,925,326      6,121,553      5,793,822      6,082,559
                                                =========      =========      =========      =========

 See Notes to Condensed Consolidated Financial Statements

                                          4

                   THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (in thousands, except share data)

                                                  NINE MONTHS ENDED SEPTEMBER 30
                                                      2001             2000
                                                      ----             ----
                                                           (Unaudited)
                                                           
Operating Activities
          Net Cash Provided (Used) by Operating
                Activities ..................... $     (2,071)   $     10,778

Investing Activities
      Purchases of securities
           available-for-sale ..................      (71,398)        (26,031)
      Proceeds from sales of securities
           available-for-sale ..................       13,208
      Proceeds from calls/maturities of
           securities available-for-sale .......       58,214          11,133
      Purchases of securities held-to-maturity .                       (2,000)
      Proceeds from calls/maturities of
           securities held-to-maturity .........                        2,858
      Net increase in loans ....................      (69,181)        (55,038)
      Proceeds from sales of loans .............       53,544          27,404
      Proceeds from sales of premises
           and equipment .......................           33             297
      Purchases of premises and equipment ......       (1,023)         (3,239)
      Business combinations ....................                         (518)
                                                   ----------      ----------
          Net Cash Used in Investing
                Activities .....................      (16,603)        (45,134)

Financing Activities
      Net increase (decrease) in
          noninterest-bearing deposits .........       28,969          (3,581)
      Net increase in
          interest-bearing deposits ............       12,025          61,116
      Net increase in
          short-term borrowings ................        2,128           1,668
      Proceeds from other borrowings ...........        6,000           2,104
      Repayments of other borrowings ...........       (1,522)        (21,398)
      Acquisition of treasury stock ............       (7,390)         (4,791)
      Cash dividends paid ......................       (4,193)         (4,007)
      Other financing activities ...............          (81)
                                                   ----------      ----------
          Net Cash Provided by Financing
                Activities .....................       35,936          31,111
                                                   ----------      ----------
            Increase (Decrease) in Cash
                and Cash Equivalents ...........       17,262          (3,245)

      Cash and Cash Equivalents at
           beginning of period .................       56,817          43,871
                                                   ----------      ----------
      Cash and Cash Equivalents at
           end of period ....................... $     74,079    $     40,626
                                                 ============    ============
Supplemental Disclosures:
  Non-cash transactions:
     Transfer of loans to other real estate .... $      2,104    $      1,458
     Transfer of premises and equipment to
        other assets ...........................          181
                                                 ============    ============

See Notes to Condensed Consolidated Financial Statements

                                       5

                  THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 2001
                        (in thousands, except share data)

Note 1 Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the nine month period ended September 30,
2001 are not necessarily  indicative of the results that may be expected for the
year ended December 31, 2001.

For further  information,  refer to the  consolidated  financial  statements and
footnotes  thereto  included in The  Peoples  Holding  Company and  Subsidiary's
(collectively,  the  Company)  annual  report  on Form  10-K for the year  ended
December 31, 2000.

Note 2  Comprehensive Income

For the quarters ended September 30, 2001 and 2000, total  comprehensive  income
amounted to $5,613 and $4,187,  respectively.  For the nine month  periods ended
September 30, 2001 and 2000, total comprehensive  income amounted to $15,301 and
$9,931, respectively.  Total comprehensive income consists of net income and the
change in the unrealized gain (loss) on securities available for sale.

Note 3  Segment Reporting

The  operating  segments  for the three  months  ended and the nine months ended
September 30, 2001 are the same as prior years. However, we changed our internal
reporting  mechanism to more closely match expenses with the revenues  generated
by each  segment.  Accordingly,  prior  periods'  segment  information  has been
adjusted to reflect the current method of management  reporting as though it had
been in place for all periods presented.

Segment  information  for the nine months ended  September 30, 2001 and 2000, is
presented below.

Nine Months Ended September 30, 2001
                                        Specialized
                              Branches    Products     All Other     Total
                              --------   ----------    ---------   ---------
Net interest income ........ $  32,481    $   1,269    $    856   $   34,606
Provision for loan loss ....     3,399            0          76        3,475
                               -------      -------     -------      -------
Net interest income after
  provision for loan loss ..    29,082        1,269         780       31,131

Non-interest income ........    11,033        5,792         923       17,748
Non-interest expense .......    23,071        5,186       6,046       34,303
                               -------      -------     -------      -------
Income (loss) before taxes .    17,044        1,875      (4,343)      14,576
Income taxes ...............         0            0       3,845        3,845
                               -------      -------     -------      -------
Net income (loss)........... $  17,044    $   1,875    $ (8,188)  $   10,731
                               =======      =======     =======      =======

                                       6

Nine Months Ended September 30, 2000
                                        Specialized
                              Branches    Products     All Other     Total
                              --------   ----------    ---------   ---------
Net interest income ........ $  32,306    $     923    $    945   $   34,174
Provision for loan loss ....     3,659           82         327        4,068
                               -------      -------     -------      -------
Net interest income after
  provision for loan loss ..    28,647          841         618       30,106

Non-interest income ........     9,509        3,917         371       13,797
Non-interest expense .......    21,400        3,884       6,320       31,604
                               -------      -------     -------      -------
Income (loss) before taxes .    16,756          874      (5,331)      12,299
Income taxes ...............         0            0       3,401        3,401
                               -------      -------     -------      -------
Net income (loss)........... $  16,756    $     874    $ (8,732)  $    8,898
                               =======      =======     =======      =======

Segment  information  for the three months ended September 30, 2001 and 2000, is
presented below.

Three Months Ended September 30, 2001
                                        Specialized
                              Branches    Products     All Other     Total
                              --------   ----------    ---------   ---------
Net interest income ........ $  11,278    $     434    $    258   $   11,970
Provision for loan loss ....     1,203            0          22        1,225
                               -------      -------     -------      -------
Net interest income after
  provision for loan loss ..    10,075          434         236       10,745

Non-interest income ........     3,699        1,990         483        6,172
Non-interest expense .......     7,902        1,686       2,285       11,873
                               -------      -------     -------      -------
Income (loss) before taxes .     5,872          738      (1,566)       5,044
Income taxes ...............         0            0       1,202        1,202
                               -------      -------     -------      -------
Net income (loss) .......... $   5,872    $     738    $ (2,768)  $    3,842
                               =======      =======     =======      =======

Three Months Ended September 30, 2000
                                        Specialized
                              Branches    Products     All Other     Total
                              --------   ----------    ---------   ---------
Net interest income ........ $  10,961    $     148    $    189   $   11,298
Provision for loan loss ....     1,250           28         111        1,389
                               -------      -------     -------      -------
Net interest income after
  provision for loan loss ..     9,711          120          78        9,909

Non-interest income ........     3,257        1,555          80        4,892
Non-interest expense .......     7,303        1,536       1,935       10,774
                               -------      -------     -------      -------
Income (loss) before taxes .     5,665          139      (1,777)       4,027
Income taxes ...............         0            0       1,113        1,113
                               -------      -------     -------      -------
Net income (loss) .......... $   5,665    $     139    $ (2,890)  $    2,914
                               =======      =======     =======      =======

                                       7

Note 4  Other Accounting Pronouncements

On January 1, 2001, we adopted  Financial  Accounting  Standards Board Statement
No. 133,  "Accounting  for Derivative  Instruments  and Hedging  Activities." As
permitted   with  the   adoption  of  this   Statement,   we   transferred   our
held-to-maturity securities to securities available-for-sale on January 1, 2001.
At the time of the  transfer,  the  held-to-maturity  securities  had a carrying
value  of  $85,658  and a market  value  of  $85,981.  The  adoption  of the new
Statement did not have a material impact on our earnings or financial position.

In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards No. 141, "Business  Combinations," and No. 142,
"Goodwill and Other  Intangible  Assets,"  effective for fiscal years  beginning
after  December  15,  2001.  Under  the new  rules,  goodwill  will no longer be
amortized but will be subject to annual  impairment tests in accordance with the
Statements.  Other  intangible  assets will continue to be amortized  over their
useful lives.

We will apply the new rules on  accounting  for  goodwill  and other  intangible
assets  beginning in the first quarter of 2002. We have  evaluated the impact of
the application of the nonamortization  provisions of the Statement.  The effect
of these  provisions will be an increase to income before taxes of approximately
$785 for the year ended  December  31, 2002.  During  2002,  we will perform the
first of the required  impairment  tests of goodwill as of January 1, 2002,  and
have not yet  determined  what the effect of these tests will be on our earnings
and financial position.

Note 5  Subsequent Events

As of September 30, 2001, we had repurchased  299,100 shares of our common stock
during the year.  Subsequent  to that time,  we purchased an  additional  35,058
shares of our common stock.  As of November 9, 2001, we had  repurchased a total
of 334,158 shares of our common stock during the year.

                                       8

                   THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
                        (in thousands, except share data)

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 21E 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 our portfolio of outstanding  loans, and competition in our
markets.  We  undertake  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  increased  from  $1,211,940  on
December 31, 2000,  to  $1,263,504  on September 30, 2001, or 4.25% for the nine
month period. On September 30, 2001, average earning assets were $1,116,677,  or
90.95% of total  average  assets,  compared  to  $1,104,549,  or 92.26% of total
average  assets on December 31,  2000.  Increases in other real estate owned and
the  purchase  of bank owned life  insurance  contributed  to the  reduction  of
average earning assets as a percentage of average total assets.

The  securities  portfolio is utilized as a means of liquidity,  an  alternative
earning source for excess funds,  and collateral on pledges for certain types of
deposits.  Securities  increased from $278,574 on December 31, 2000, to $286,001
on  September  30, 2001.  During the first  quarter,  we changed the  investment
strategy  lessening  the  percentage  of the  portfolio  being held in  Treasury
securities.  This change  afforded us the  opportunity  to increase our yield by
moving  from  Treasury   securities   into  other  agency  and   mortgage-backed
securities.  In order to provide more liquidity and  asset-liability  management
flexibility,  and as permitted by Financial Accounting Standards Board Statement
No.  133,  upon   adoption,   we  moved  all   held-to-maturity   securities  to
available-for-sale.

The loan portfolio represents the largest component of our assets. Loans, net of
unearned  income,  increased  $11,187,  or 1.37%,  from $815,854 at December 31,
2000,  to $827,041 at September 30, 2001.  Due to a slowing  economy and despite
the efforts by the Federal  Reserve in  substantially  dropping  interest rates,
loan demand remains soft in our market. The third quarter, however,  experienced
the largest loan growth for the year primarily due to commercial loans. Consumer
debt continues to decrease  principally as the result of curtailing the indirect
loan  portfolio.  The average loan to average  deposit  ratio has declined  from
79.44% at September 30, 2000, to 76.85% at September 30, 2001.

                                       9

Our  primary  source  of  funding  continues  to be  deposits  generated  in the
communities served by the Bank. Total deposits for the first nine months of 2001
increased  from  $1,046,605 on December 31, 2000, to $1,087,599 on September 30,
2001,  or an  increase  of 3.92%.  Due to the low  interest  rates being paid on
deposits,  and the consumer  perception  that interest  rates have reached their
bottom,  depositors are keeping their  accounts very liquid.  Our deposit growth
has occurred in both money market and interest-bearing transaction accounts as a
result of this customer behavior.

Total  shareholders'  equity  increased  from  $121,661 on December 31, 2000, to
$125,299 on  September  30,  2001,  or 2.99% for the nine month  period.  Equity
capital to total assets was 9.92% and 10.04% at September 30, 2001, and December
31,  2000,  respectively.  The growth in capital  from  increased  earnings  and
increased  unrealized  portfolio  gains  related to recent  declines in interest
rates has been  offset by the  repurchase  of  approximately  300,000  shares of
common  stock during 2001.  In the second  quarter,  we made a tender offer that
resulted in the acquisition of approximately 221,000 shares of our common stock.
Cash dividends  declared  increased from $.23 per share for the first quarter of
2001 to $.24 per share for the second and third  quarters  of 2001,  marking the
15th consecutive year of cash dividend increases.

Results of Operations

For the three month  periods ended  September 30, 2001 and 2000,  net income was
$3,842 and $2,914,  respectively,  up 31.84%.  Earnings  per share for the third
quarter of 2001 were $0.66 , an increase of 37.50% from $0.48 for the comparable
period a year ago. Our net income for the nine month period ended  September 30,
2001, was $10,731, representing an increase of $1,833, or 20.60% over net income
for the nine month  period  ended  September  30, 2000,  which  totaled  $8,898.
Earnings per share for the nine-month period ended September 30, 2001, increased
24.83% to $1.81 from $1.45 for the comparable period a year ago. The increase in
net  income for the three and nine  month  periods  ended  September  30,  2001,
compared  to the same  periods for 2000,  resulted  from  continued  emphasis on
improving  net  interest  margin  and  loan  quality,  diversifying  sources  of
noninterest income, and maintaining  noninterest  expense control.  Earnings per
share  were  also  positively  impacted  by a  decrease  in our  average  shares
outstanding due to our 2001 share repurchases.  The annualized return on average
assets for the nine month periods ending  September 30, 2001 and 2000, was 1.16%
and 1.00%, respectively,  while the annualized return on average equity over the
same periods was 11.44% and 10.17%, respectively.

Net interest  income,  the difference  between interest earned on assets and the
cost of  interest-bearing  liabilities,  is the largest component of net income.
The  primary  concerns  in  managing  net  interest  income  are the mix and the
repricing  of  rate-sensitive  assets  and  liabilities.  Recent  changes in the
pricing  environment  coupled with the pricing  strategies enacted by management
have  improved net interest  margin,  which was 4.58% for the three month period
ended  September  30, 2001,  compared to 4.37% for the same period in 2000.  Net
interest  margin for the nine month period ended  September 30, 2001,  was 4.44%
compared to 4.43% for the same  period  during  2000.  Net  interest  income has
improved  each  quarter  during  2001  primarily  as a result of the  risk-based
pricing of loans,  the change in the investment mix, and the falling of interest
rates  paid  on  deposit  accounts.  The  improvement  in  net  interest  margin
contributed  to a higher net  interest  income for the three month  period ended
September 30, 2001, of $11,970, compared to $11,298 for the same period of 2000.
Net interest  income for the nine month  periods  ended  September  30, 2001 and
2000, was $34,606 and $34,174, respectively.

                                       10

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 our
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.  For the three month  periods
ended  September 30, 2001 and 2000, the provision for loan losses totaled $1,225
and $1,389,  respectively.  The  provision  for loan losses  totaled  $3,475 and
$4,068  for  the  nine  month  periods  ended   September  30,  2001  and  2000,
respectively.  An  additional  $700 was charged to the provision for loan losses
during the second  quarter of 2000 to improve  the  allowance  for loan  losses,
which had  fallen  below  desirable  levels due to loan  growth and some  credit
deteriorations.  The  allowance  for  loan  losses  as  a  percentage  of  loans
outstanding  was 1.35% and 1.29% as of September 30, 2001 and December 31, 2000,
respectively.  Net  charge-offs  to average loans was .35% and .36% for the nine
month periods  ending  September 30, 2001 and 2000,  respectively.  The level of
non-performing  loans  declined  from 1.09% at September  30, 2000,  to 0.62% at
September 30, 2001,  resulting in the coverage  ratio  improving from 124.75% to
218.20% at September 30, 2000 and 2001, respectively.

Significant  effort has been directed toward improving  noninterest  income. For
the three month periods ended September 30, 2001 and 2000,  noninterest  income,
excluding   gains  from  the  sales  of  securities,   was  $6,130  and  $4,892,
respectively,  up 25.30%.  Noninterest income, excluding gains from the sales of
securities,  was $17,661 for the nine month period  ending  September  30, 2001,
compared to $13,797 for the same period in 2000,  or an increase of 28.01%.  Our
continued  emphasis on sales of specialized  products and services accounted for
the majority of the increase in  noninterest  income  between 2001 and 2000. The
increase also reflects insurance  commissions that were not recognized until the
second  and  fourth  quarters  of 2000  with the  acquisitions  of The  Southern
Insurance Group and The Dominion Insurance Agency, respectively. Excluding gains
from the sales of  securities  and the  additional  fee  income  related  to the
insurance companies,  growth in noninterest income was 20.86% for the nine month
period  ended  September  30,  2001,  compared  to  the  same  period  in  2000.
Non-sufficient  fund fees  accounted for the majority of the increase in service
charges.  Improvements within fees and commissions  included mortgage loan fees,
loan document preparation fees, PC banking fees, and cash management fees. Other
noninterest  income  reflects  increases in value from the June 2001 purchase of
bank owned life insurance and gains on the sale of mortgage loans.

Noninterest  expense for the three month period ended  September  30, 2001,  was
$11,873,  compared  to $10,774  for the same  period  during  2000.  Noninterest
expense was $34,303 for the nine month period ended September 30, 2001, compared
to $31,604 for the same period in 2000,  or an increase of 8.54%.  Excluding the
impact of the  acquisition  of the insurance  companies,  we experienced a 5.72%
growth in noninterest  expense,  which was due largely to the employee incentive
plan and normal  salary  increases.  The  remaining  components  of  noninterest
expense  reflect  normal  increases  for banking  related  expenses  and general
inflation in the cost of services and supplies purchased by us.

Income tax  expense was $3,845 for the nine month  period  ended  September  30,
2001,  (with an  effective  tax rate of  26.38%)  compared  to  $3,401  (with an
effective  tax rate of 27.65%) for the same period in 2000. We have been able to
achieve this lower effective tax rate by investing in tax-exempt  securities and
assets. We have also invested in assets that provide tax credits. We continue to
monitor our tax position and its impact on future earnings.

                                       11

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.  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 we meet the liquidity  requirements  deemed
appropriate by management and regulators.

Another  source  available  for meeting  liquidity  needs is  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, we 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. Historically, we have not
relied upon these sources to meet long-term liquidity needs. Funds obtained 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.

On April 16,  2001, a tender offer was  announced  to  repurchase  up to 604,312
shares of our common stock at $23.00 per share.  On May 15, 2001,  we funded the
repurchase of approximately 221,000 shares of our common stock under this tender
offer from cash and the liquidation of short-term investments.

Capital Resources

We are 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 our
financial  statements.  Under capital  adequacy  guidelines  and the  regulatory
framework for prompt corrective action, we must meet specific capital guidelines
that  involve  quantitative  measures  of our assets,  liabilities,  and certain
off-balance-sheet items as calculated under regulatory accounting practices. Our
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 us to maintain  minimum  balances 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, 2001,  we met all capital  adequacy
requirements to which we are subject.

                                       12

As of September 30, 2001, the most recent  notification from the Federal Deposit
Insurance  Corporation  (FDIC)  categorized  us as well  capitalized  under  the
regulatory  framework for prompt  corrective  action.  To be categorized as well
capitalized,  we 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 and do not differ  materially from that of the
Company.

                                                Actual
                                                Amount    Ratio
                                                ------    -----
                                            (in thousands)
As of September 30, 2001
         Total Capital ....................   $ 121,101   14.4%
           (to Risk Weighted Assets)
         Tier I Capital ...................   $ 110,555   13.1%
           (to Risk Weighted Assets)
         Tier I Capital ...................   $ 110,555    9.0%
           (to Adjusted Average Assets)

As of December 31, 2000
         Total Capital ....................   $ 122,165   15.1%
           (to Risk Weighted Assets)
         Tier I Capital ...................   $ 112,022   13.8%
           (to Risk Weighted Assets)
         Tier I Capital ...................   $ 112,022    9.4%
           (to Adjusted Average Assets)

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

Book value per share was $21.76 and $20.09 at September  30, 2001,  and December
31,  2000,  respectively.

Our capital policy is to evaluate future needs based on growth,  earnings trends
and anticipated acquisitions.

                   THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no  significant  changes to our disclosure on  quantitative  and
qualitative   disclosures  about  market  risk  since  December  31,  2000.  For
additional information, see our Form 10-K for the year ended December 31, 2000.

                                       13

Part II.  OTHER INFORMATION

   Item 1.     Legal Proceedings

               There have been no  material  proceedings  against us during the
               quarter ending September 30, 2001.

   Item 2.     Changes in Securities

               On April 16,  2001,  we  filed  Form SC TO-I with the Securities
               and Exchange Commission announcing a tender offer to repurchase
               up to 604,312 shares of our common  stock at $23.00 per share.
               We repurchased 220,556 shares of our common stock on May 15,
               2001, through the tender offer.

               Excluding the shares of common stock repurchased through the
               tender offer, we have repurchased an additional 113,602
               shares of our common stock through November 9, 2001, at an
               average price of $30.69 per share.

               These transactions reduced the outstanding shares of our common
               stock from 6,056,899 at December 31, 2000, to 5,722,741 at
               November 9, 2001.

Item 6.(b)  Reports on Form 8-K

               There were no reports filed on Form 8-K during the third quarter
               of 2001.

                                   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 13, 2001              /s/ E. Robinson McGraw
                                   ---------------------------
                                        E. Robinson McGraw
                                 President & Chief Executive Officer

                                      14