DEPOSIT GUARANTY CORP, S-4/A, 1997-04-21

DEPOSIT GUARANTY CORP
S-4/A, 1997-04-21
NATIONAL COMMERCIAL BANKS

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<PAGE> 1

Filed with the SEC on April 21, 1997 Registration No. 333-23627

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------------

AMENDMENT NO. 1 TO

FORM S-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

------------------------------

DEPOSIT GUARANTY CORP.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
MISSISSIPPI 6711 64-072169
(State or other jurisdiction (Primary Standard Industrial (IRS Employer Identi-
of incorporation or Classification Code Number) fication Number)
organization)
</TABLE>

ARLEN L. MCDONALD
210 EAST CAPITOL STREET 210 EAST CAPITOL STREET
POST OFFICE BOX 730 POST OFFICE BOX 730
JACKSON, MISSISSIPPI 39205 JACKSON, MISSISSIPPI 39205
TELEPHONE NUMBER: (601) 354-8497 TELEPHONE NUMBER: (601) 354-8497
(Address, including zip code, (Name, address, including zip
and telephone number, including code, and telephone number,
area code of registrant's including area code of agent
principal executive offices) for service)

Copy to:

L. Keith Parsons, Esq.
Watkins Ludlam & Stennis, P.A.
633 North State Street
Post Office Box 427
Jackson, Mississippi 39205-0427
Telephone Number: (601) 949-4701

Approximate date of commencement of proposed sale of securities to the public:
The Effective Date of the merger of Deposit Guaranty National Bank into Deposit
Guaranty Interim Bank as described in the attached Information
Statement/Prospectus.

If the securities being registered on this form are being offered in
conjunction with the formation of a holding company and there is compliance
with General Instruction G, check the following box. /__/

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.

<PAGE> 2
DEPOSIT GUARANTY CORP.

CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
Caption or Location
in Information
Items in Form S-4 Statement/Prospectus
- ----------------- --------------------
<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus....................... Cover Page of Registration
Statement; Cross Reference Sheet;
Cover Page of the Information
Statement/Prospectus

2. Inside Front and Outside Back
Cover Pages of Prospectus........ Available Information;
Incorporation of Certain Documents
by Reference; Table of Contents

3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information...................... Summary

4. Terms of the Transaction......... Summary; The Merger; Comparative
Rights of Shareholders

5. Pro Forma Financial Information.. Not Applicable

6. Material Contracts with the
Company Being Acquired........... Not Applicable

7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be Under-
writers.......................... Not Applicable

8. Interest of Named Experts and
Counsel.......................... Not Applicable

9. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities... Not Applicable

10. Information with Respect to
S-3 Registrants.................. Available Information;
Incorporation of Certain Documents
by Reference
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
11. Incorporation of Certain
Information by Reference......... Available Information;
Incorporation of Certain Documents
by Reference

12. Information with Respect to S-2
or S-3 Registrants............... Not Applicable

13. Incorporation of Certain Infor-
mation by Reference.............. Not Applicable

14. Information with Respect to
Registrants Other Than S-2 or
S-3 Registrants.................. Not Applicable

15. Information with Respect to S-3
Companies........................ Not Applicable

16. Information with Respect to S-2
or S-3 Companies................. Not Applicable

17. Information with Respect to
Companies Other Than S-2 or
S-3 Companies.................... Summary; Market for and Dividends
on Deposit Guaranty National Bank
Common Stock; Management's
Discussion and Analysis of
Financial Condition and Results of
Operations for the Years Ended
December 31, 1996, 1995 and 1994
Deposit Guaranty National Bank and
Subsidiaries; Business of the
Bank; Index to Deposit Guaranty
National Bank Financial Statements

18. Information if Proxies, Consents
or Authorizations Are to be
Solicited........................ Not Applicable

19. Information if Proxies, Consents
or Authorizations Are Not to be
Solicited or in an Exchange
Offer............................ Incorporation of Certain Documents
by Reference; Summary;
Introduction; Dissenters' Rights;
Stock Ownership of Certain
Beneficial Owners and Management
of Deposit Guaranty National Bank
</TABLE>
<PAGE> 4
DEPOSIT GUARANTY NATIONAL BANK
210 EAST CAPITOL STREET
POST OFFICE BOX 1200
JACKSON, MISSISSIPPI 39215-1200

April 25, 1997

To Our Shareholders:

You are cordially invited to attend a Special Meeting (the "Meeting")
of Shareholders of Deposit Guaranty National Bank (the "Bank") to be held at
2:00 p.m., local time, on May 28, 1997 in the Board of Directors' Room, Fourth
Floor, Deposit Guaranty Plaza, Jackson, Mississippi.

At the Meeting you will be asked to consider and vote upon the
proposal to approve a Plan of Reorganization and Bank Merger Agreement (the
"Merger Agreement"), dated as of April 21, 1997, by and among Deposit Guaranty
Corp., a Mississippi corporation ("Deposit Guaranty"), Deposit Guaranty Interim
National Bank ("Interim Bank"), a national bank and a wholly-owned subsidiary
of Deposit Guaranty, and the Bank, pursuant to which (a) the Bank will merge
into Interim Bank (the "Merger"), and (b) each outstanding share of Bank common
stock will be converted into 9.667 shares of Deposit Guaranty common stock as
more fully described in the accompanying Information Statement/Prospectus.
Based on the closing price of Deposit Guaranty common stock on the New York
Stock Exchange on April 18, 1997 of $31.25, the value of 9.667 shares of Deposit
Guaranty common stock on that date was $302.09.

The Board of Directors of the Bank believes the Merger is in the best
interests of the Bank and its shareholders and unanimously recommends that you
vote for approval of the Merger Agreement. The reasons for such recommendation
are set forth in the accompanying Information Statement/Prospectus.

We urge you to read the enclosed materials carefully so that you can
evaluate the Merger for yourself.

Very truly yours,

E. B. Robinson, Jr.,
Chairman and CEO
<PAGE> 5
DEPOSIT GUARANTY NATIONAL BANK
210 EAST CAPITOL STREET
POST OFFICE BOX 1200
JACKSON, MISSISSIPPI 39215-1200

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of Deposit Guaranty National Bank:

Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Deposit Guaranty National Bank (the "Bank") will be held in
the Board of Directors' Room, Fourth Floor, Deposit Guaranty Plaza, Jackson,
Mississippi on May 28, 1997 at 2:00 p.m., local time, for the purpose of
considering and voting upon the following matters:

1. To consider and vote upon the proposal to approve a Plan of
Reorganization and Bank Merger Agreement (the "Merger
Agreement"), dated as of April 21, 1997, by and among Deposit
Guaranty Corp., a Mississippi corporation ("Deposit Guaranty"),
Deposit Guaranty Interim National Bank ("Interim Bank"), a
national bank and a wholly-owned subsidiary of Deposit Guaranty,
and the Bank, pursuant to which (a) the Bank will merge into
Interim Bank (the "Merger"), and (b) each outstanding share of
Bank common stock will be converted into 9.667 shares of Deposit
Guaranty common stock as more fully described in the accompanying
Information Statement/Prospectus; and

2. To transact such other business as may lawfully come before the
meeting or any adjournment or postponement thereof.

DISSENTING SHAREHOLDERS WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF
12 U.S.C. Section 215A WILL BE ENTITLED TO RECEIVE THE VALUE OF THEIR SHARES IN
CASH.

Only shareholders of record as of the close of business on April 7, 1997
are entitled to vote at the Meeting.

By Order of the Board of Directors

J. Clifford Harrison, Secretary

April 25, 1997
Jackson, Mississippi

<PAGE> 6
PROSPECTUS INFORMATION STATEMENT

DEPOSIT GUARANTY CORP. DEPOSIT GUARANTY NATIONAL BANK

- ------------------- ---------------

659,811 SHARES OF SPECIAL MEETING OF
COMMON STOCK, NO PAR VALUE SHAREHOLDERS TO BE HELD
MAY 28, 1997

The Information Statement/Prospectus is being furnished as an
Information Statement to the holders of shares of Deposit Guaranty National
Bank (the "Bank") Common Stock (the "Bank Common Stock") in connection with the
special meeting (the "Meeting") of the Bank's shareholders to be held in the
Board of Directors' Room, Fourth Floor, Deposit Guaranty Plaza, Jackson,
Mississippi on May 28, 1997 at 2:00 p.m., local time. At the Meeting,
shareholders of the Bank will vote upon a proposal to approve a Plan of
Reorganization and Bank Merger Agreement (the "Merger Agreement"), dated as of
April 21, 1997, by and among Deposit Guaranty Corp., a Mississippi corporation
("Deposit Guaranty"), Deposit Guaranty Interim National Bank ("Interim Bank"),
a national bank and a wholly- owned subsidiary of Deposit Guaranty, and the
Bank, pursuant to which (a) the Bank will merge into Interim Bank (the
"Merger"), and (b) each outstanding share of Bank Common Stock will be
converted into 9.667 shares of common stock, no par value, of Deposit Guaranty
("Deposit Guaranty Common Stock"). Based on the closing price of Deposit
Guaranty Common Stock on the New York Stock Exchange on April 18, 1997 of
$31.25, the value of 9.667 shares of Deposit Guaranty Common Stock on that date
was $302.09.

Deposit Guaranty has filed a Registration Statement on Form S-4 with
the Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering up to
659,811 shares of Deposit Guaranty Common Stock to be issued in connection with
the Merger. This document also constitutes a Prospectus of Deposit Guaranty
with respect to the shares of Deposit Guaranty Common Stock to be issued upon
consummation of the Merger.

This Information Statement/Prospectus is first being mailed to
shareholders of the Bank on or about April 25, 1997.

No person is authorized to give any information or to make any
representation concerning the Merger not contained in this Information
Statement/Prospectus and, if given or made, such information or representation
should not be relied upon as having been authorized. This Information
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase the securities offered by this Information
Statement/Prospectus, or the solicitation of a proxy, in any jurisdiction, to
or from any person to whom it is unlawful to make such offer or solicitation of
an offer or proxy solicitation in such jurisdiction. Neither the delivery of
this Information Statement/Prospectus nor any distribution of the securities
made under this Information Statement/Prospectus shall, under any
circumstances, create any implication that there has been no change in the
information set forth herein since the date of this Information
Statement/Prospectus.

This Information Statement/Prospectus does not cover any resales of
Deposit Guaranty Common Stock to be received by the Bank's shareholders upon
consummation of the Merger, and no person is authorized to make use of this
Information Statement/Prospectus in connection with any such resale.

-------------------------

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

THE SECURITIES TO BE ISSUED PURSUANT TO THIS INFORMATION STATEMENT/PROSPECTUS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

-------------------------

The date of this Information Statement/Prospectus is April 25, 1997.

<PAGE> 7
AVAILABLE INFORMATION

Deposit Guaranty is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files periodic reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by Deposit Guaranty can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street NW, Washington, D.C. 20549 and at the Commission's
Regional Offices located in the Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New
York 10048 and they are also available to the public at the web site maintained
by the Commission at "http://www.sec.gov." Copies of such material can also be
obtained from the Commission's Public Reference Section, Judiciary Plaza, 450
Fifth Street NW, Washington, D.C. 20549, at prescribed rates. In addition,
material filed by Deposit Guaranty can be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which
the Deposit Guaranty Common Stock is listed (symbol: DEP).

Deposit Guaranty has filed with the Commission a Registration
Statement on Form S-4 (the "Registration Statement") under the Securities Act
with respect to the common stock offered by this Information
Statement/Prospectus. This Information Statement/Prospectus does not contain
all the information set forth in the Registration Statement, certain portions
of which have been omitted pursuant to the Rules and Regulations of the
Commission, and to which portions reference is hereby made for further
information with respect to Deposit Guaranty and the securities offered hereby.

AS INDICATED BELOW, THIS INFORMATION STATEMENT/PROSPECTUS INCORPORATES
BY REFERENCE CERTAIN INFORMATION WITH RESPECT TO DEPOSIT GUARANTY, WHICH IS NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH INFORMATION OR
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE HEREIN, ARE AVAILABLE WITHOUT CHARGE, UPON THE
WRITTEN OR ORAL REQUEST OF ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS INFORMATION STATEMENT/PROSPECTUS IS DELIVERED. IN ORDER TO ENSURE TIMELY
DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 20, 1997, AND
SUCH REQUESTS SHOULD BE DIRECTED TO DEPOSIT GUARANTY'S PRINCIPAL EXECUTIVE
OFFICES AT 210 EAST CAPITOL STREET, JACKSON, MISSISSIPPI 39201, ATTENTION:
ARLEN L. MCDONALD, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
TELEPHONE NUMBER (601) 354-8497.

<PAGE> 8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by Deposit Guaranty with the Commission are
hereby incorporated by reference:

(1) Deposit Guaranty's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;

(2) The description of capital stock contained in Item 14 of Deposit
Guaranty's Registration Statement on Form 10 filed April 21,
1970, Item 4 of Deposit Guaranty's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1982, Item 4 of Deposit
Guaranty's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1986, Item 4 of Deposit Guaranty's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1987, and Item 3 of
Deposit Guaranty's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996 relating to the description of Deposit
Guaranty's Common Stock.

All documents filed by Deposit Guaranty pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
date of the Meeting of shareholders of the Bank are hereby incorporated by
reference into this Information Statement/Prospectus and shall be deemed a part
hereof from the date of filing of such documents.

Any statement contained in a document incorporated by reference shall
be deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
<PAGE> 9
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of the Meeting; Record Date . . . . . . . . . 1
Purpose of the Meeting . . . . . . . . . . . . . . . . . . . . . . . 1
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recommendation of the Board of Directors . . . . . . . . . . . . . . 2
Valuation of Bank Common Stock . . . . . . . . . . . . . . . . . . . 2
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . 2
Other Conditions to Consummation of the Merger . . . . . . . . . . . 2
Exchange of Deposit Guaranty National Bank Certificates;
No Fractional Shares. . . . . . . . . . . . . . . . . . . . . . 2
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . 3
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . 3
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 3
Recent Market Prices . . . . . . . . . . . . . . . . . . . . . . . . 3
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . 3
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 3
Deposit Guaranty National Bank and Subsidiaries - Selected
Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . 4
Deposit Guaranty Corp. and Subsidiaries - Selected Financial Data . 5
Comparative Per Share Information . . . . . . . . . . . . . . . . . 6

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Structure and Terms of the Merger . . . . . . . . . . . . . . . . . 7
Background of and Reasons for the Merger . . . . . . . . . . . . . . 7
Valuation of Bank Common Stock . . . . . . . . . . . . . . . . . . . 8
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . 9
Other Conditions to the Merger . . . . . . . . . . . . . . . . . . . 9
Exchange of Deposit Guaranty National Bank Certificates . . . . . . 9
Amendment; Termination . . . . . . . . . . . . . . . . . . . . . . . 10
Resales of Deposit Guaranty Common Stock . . . . . . . . . . . . . . 10
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . 11
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . 11
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . 11

DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . 13
Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . . 13
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 13
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . 14
Vacancies in the Board of Directors . . . . . . . . . . . . . . . . 14
Supermajority Voting Requirements; Business Combinations; Control
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . 15
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Shareholders' Appraisal Rights . . . . . . . . . . . . . . . . . . . 15
Shareholders' Inspection Rights . . . . . . . . . . . . . . . . . . 16
</TABLE>

<PAGE> 10

<TABLE>
<S> <C>
Amendment of the Articles of Incorporation or Bylaws . . . . . . . . 16
Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . 16
Shareholder Proposals and Nominations . . . . . . . . . . . . . . . 16

MARKET FOR AND DIVIDENDS ON DEPOSIT GUARANTY NATIONAL BANK COMMON STOCK . . . 17

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF DEPOSIT
GUARANTY NATIONAL BANK . . . . . . . . . . . . . . . . . . . . . . 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
DEPOSIT GUARANTY NATIONAL BANK AND SUBSIDIARIES . . . . . . . . . . 18

BUSINESS OF THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF DEPOSIT GUARANTY
NATIONAL BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

EXHIBIT A - PLAN OF REORGANIZATION AND BANK MERGER AGREEMENT

EXHIBIT B - DISSENTERS' RIGHTS PROVISIONS OF 12 U.S.C. Section 215a
</TABLE>

<PAGE> 11
SUMMARY

The following is a brief summary of certain information contained
elsewhere in this Information Statement/Prospectus and the documents
incorporated herein by reference. This summary is necessarily incomplete and
is subject to and qualified in its entirety by reference to the more detailed
information and financial statements contained elsewhere in this Information
Statement/Prospectus, including the Exhibits and the documents incorporated in
this Information Statement/Prospectus by reference. Certain capitalized terms
used in this summary are defined elsewhere in this Information
Statement/Prospectus.

DATE, TIME AND PLACE OF THE MEETING; RECORD DATE

A special meeting (the "Meeting") of the shareholders of Deposit
Guaranty National Bank (the "Bank") will be held on May 28, 1997, at 2:00 p.m.
in the Board of Directors' Room, Fourth Floor, Deposit Guaranty Plaza, Jackson,
Mississippi. The Board of Directors of the Bank has fixed the close of business
on April 7 , 1997, as the record date (the "Record Date") for determining
holders of outstanding shares of common stock of the Bank ("Bank Common Stock")
entitled to notice of and to vote at the Meeting. Only holders of Bank Common
Stock of record on the books of the Bank at the close of business on the Record
Date are entitled to vote at the Meeting or at any adjournment or postponement
thereof. As of the Record Date, there were 3,225,181 shares of Bank Common
Stock issued and outstanding, each of which is entitled to one vote. See
"Introduction."

PURPOSE OF THE MEETING

The purpose of the Meeting is to vote upon a proposal to approve a
Plan of Reorganization and Bank Merger Agreement (the "Merger Agreement"),
dated as of April 21, 1997, by and among Deposit Guaranty Corp., a Mississippi
corporation ("Deposit Guaranty"), Deposit Guaranty Interim National Bank
("Interim Bank"), a national bank and a wholly-owned subsidiary of Deposit
Guaranty, and the Bank, pursuant to which (a) the Bank will merge into Interim
Bank (the "Merger"), and (b) each outstanding share of Bank Common Stock will
be converted into 9.667 shares (the "Exchange Ratio") of common stock, no par
value, of Deposit Guaranty ("Deposit Guaranty Common Stock"). Based on the
closing price of Deposit Guaranty Common Stock on the New York Stock Exchange
on April 18, 1997 of $31.25, the value of 9.667 shares of Deposit Guaranty
Common Stock on that date was $302.09.

VOTE REQUIRED

The Merger must be approved by two-thirds of the outstanding shares of
Interim Bank and the Bank. Deposit Guaranty, which owns all of the outstanding
shares of common stock of Interim Bank and 97.9% of the outstanding shares of
Bank Common Stock, intends to vote its shares in favor of the Merger. Deposit
Guaranty is not soliciting proxies in connection with the Meeting.

THE PARTIES

Deposit Guaranty Corp. Deposit Guaranty is a bank holding company
headquartered at 210 East Capitol Street, Jackson, Mississippi 39201, telephone
(601) 354-8497. Its principal subsidiaries are Deposit Guaranty National Bank,
a national banking association with its principal office in Jackson,
Mississippi; Commercial National Bank, a national banking association with its
principal office in Shreveport, Louisiana; Deposit Guaranty National Bank of
Louisiana, a national banking association with its principal office in Hammond,
Louisiana; Merchants National Bank, a national banking association with its
principal office in Fort Smith, Arkansas; and three (3) full-service mortgage
banking firms, Deposit Guaranty Mortgage Company, headquartered in Jackson,
Mississippi, McAfee Mortgage Company, headquartered in Lubbock, Texas and First
Mortgage Corp., headquartered in Omaha, Nebraska. Deposit Guaranty, through
its subsidiaries, provides comprehensive corporate, commercial, correspondent
and individual banking services, mortgage loan servicing, and personal and
corporate trust services.

As of December 31, 1996, Deposit Guaranty had total assets of $6.4
billion, total deposits of $5.0 billion, total loans of $4.0 billion and
shareholders' equity of $581 million. Based on total assets at December 31,
1996, Deposit Guaranty ranked first among Mississippi-based bank holding
companies.

1
<PAGE> 12
The principal executive office of Deposit Guaranty is located at 210
East Capitol Street, Jackson, Mississippi 39201, and its telephone number is
(601) 354-8497.

Deposit Guaranty Interim National Bank Interim Bank is an interim
national bank organized for the purpose of facilitating the Merger. After the
Merger, Interim Bank as the surviving bank will continue the business of the
Bank and its name will be changed to Deposit Guaranty National Bank.

Deposit Guaranty National Bank The Bank is a national bank
headquartered at 210 East Capitol Street, Jackson, Mississippi. The Bank
provides a full complement of consumer and commercial banking services
throughout Mississippi.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Bank Board of Directors unanimously approved the Merger Agreement
and recommends that the Bank's shareholders vote FOR the approval of the Merger
Agreement. See "The Merger -- Background of and Reasons for the Merger."

VALUATION OF BANK COMMON STOCK

To assist in determining the Exchange Ratio, Deposit Guaranty and the
Bank obtained a valuation of the Bank Common Stock held by Bank shareholders
other than Deposit Guaranty from Ray & Collins Associates, Inc. See "The
Merger -- Valuation of Bank Common Stock."

REGULATORY APPROVALS

It is a condition to the consummation of the Merger that all required
regulatory approvals, including the approval of the Office of the Comptroller
of the Currency (the "OCC") , be obtained. OCC approval is anticipated in
April, 1997, although there can be no assurance that such approval will be
forthcoming or as to the conditions to or timing of such approval. See "The
Merger -- Regulatory Approvals."

OTHER CONDITIONS TO CONSUMMATION OF THE MERGER

In addition to approval of the shareholders of the Bank and Interim
Bank, and regulatory approval, the respective obligations of each party under
the Merger Agreement are subject, among other conditions, to (i) the absence of
any order, decree or injunction of a court or agency of competent jurisdiction
enjoining or prohibiting consummation of the Merger, (ii) receipt of an opinion
of Watkins Ludlam & Stennis, P.A. substantially to the effect that the
transactions contemplated by the Merger Agreement will be treated for federal
income tax purposes as a tax-free reorganization under Section 368 of the Code,
and (iii) the receipt of customary legal opinions.

EXCHANGE OF DEPOSIT GUARANTY NATIONAL BANK CERTIFICATES; NO FRACTIONAL SHARES

As soon as practicable after the Effective Date, the Bank acting as
the exchange agent will mail to each holder of record of Bank Common Stock, a
letter of transmittal and instructions for use in effecting the surrender of
the certificates which, immediately prior to the Effective Date, represented
outstanding shares of Bank Common Stock in exchange for certificates
representing Deposit Guaranty Common Stock. See "The Merger -- Exchange of
Deposit Guaranty National Bank Certificates." Cash will be paid in lieu of any
fractional share interests in Deposit Guaranty Common Stock. See "The Merger -
- - Structure and Terms of the Merger." Certificates representing Bank Common
Stock should not be surrendered until the transmittal form is received.

EFFECTIVE DATE

It is expected that the Effective Date will occur in the Spring of
1997; however, there can be no assurance that the conditions to the Merger will
be satisfied or waived so that the Merger can be consummated. See "The Merger
- -- Effective Date" and "The Merger -- Other Conditions to the Merger."

2
<PAGE> 13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Consummation of the Merger is conditioned upon receipt of an opinion
of counsel substantially to the effect that the Merger will be treated, for
federal income tax purposes, as a tax-free reorganization, with the result
that, no gain or loss will be recognized by the Bank or by holders of Bank
Common Stock who exchange all of their Bank Common Stock solely for Deposit
Guaranty Common Stock pursuant to the Merger (except with respect to cash, if
any, received in lieu of fractional shares). The Bank's shareholders are urged
to consult their own tax advisors as to the specific tax consequences to them
of the Merger. See "The Merger -- Certain Federal Income Tax Consequences."

ACCOUNTING TREATMENT

The acquisition of shares from minority interests will be accounted
for using the purchase method of accounting. See "The Merger --Accounting
Treatment."

DISSENTERS' RIGHTS

Pursuant to federal law, the Bank's shareholders will have dissenters'
rights as a result of the Merger and, thus, will be entitled to be paid cash
for the value of their Bank shares by complying with specific procedures. See
"Dissenters Rights" and Exhibit B hereto.

RECENT MARKET PRICES

On April 18, 1997, the business day preceding the date that Deposit
Guaranty, Interim Bank and the Bank entered into the Merger Agreement, the
closing sales price for one (1) share of Deposit Guaranty Common Stock, as
quoted on the New York Stock Exchange, was $31.25. No assurance can be given as
to the market price of Deposit Guaranty Common Stock on the Effective Date.

Bank Common Stock is not actively traded, and there is no established
market for Bank Common Stock. On April 7, 1997, there were 61 holders of
record of Bank Common Stock.

RECENT DEVELOPMENTS

The Boards of Directors of Deposit Guaranty and its bank subsidiaries
have approved a plan to merge Deposit Guaranty's Louisiana bank subsidiaries,
Deposit Guaranty National Bank of Louisiana and Commercial National Bank, and
it's Arkansas bank subsidiary, Merchants National Bank, into the Bank. These
mergers are subject to, among other conditions, regulatory approval and
consummation of the Merger. Under the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994, these mergers cannot be consummated until
after June 1, 1997. The mergers of Jefferson Guaranty Bank in Metairie,
Louisiana and Capital Bank in Monroe, Louisiana into Deposit Guaranty National
Bank of Louisiana were consummated on January 3, 1997 and March 31, 1997,
respectively. Deposit Guaranty has also entered into agreements to acquire Bank
of Commerce and Citizens Savings Association, F.A. in Baton Rouge, Louisiana.
These mergers are also subject to, among other conditions, regulatory approval
and are expected to be consummated in the summer of 1997.

SELECTED FINANCIAL DATA

The following selected financial data for Deposit Guaranty and the
Bank have been derived from the consolidated financial statements of Deposit
Guaranty and the Bank. The information set forth below should be read in
conjunction with the consolidated financial statements of Deposit Guaranty and
the Bank incorporated by reference or included elsewhere herein.

3
<PAGE> 14

DEPOSIT GUARANTY NATIONAL BANK AND SUBSIDIARIES - SELECTED FINANCIAL DATA
(In Thousands Except Share Data)

<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income $ 315,030 $ 304,325 $ 240,564 $ 237,490 $ 254,988
Interest expense 129,065 128,677 94,009 96,765 121,040
- ------------------------------------------------------------------------------------------------------------
Net interest income 185,965 175,648 146,555 140,725 133,948
Provision for possible loan losses 4,000 2,000 2,000 -- 8,878
- ------------------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses 181,965 173,648 144,555 140,725 125,070
Other operating income 84,860 67,654 70,871 57,719 51,798
Other operating expenses 163,450 152,057 134,205 130,545 126,596
- ------------------------------------------------------------------------------------------------------------
Income before income taxes 103,375 89,245 81,221 67,899 50,272
Income tax expense 33,790 30,190 26,871 19,210 10,425
- ------------------------------------------------------------------------------------------------------------
Net income $ 69,585 $ 59,055 $ 54,350 $ 48,689 $ 39,847

============================================================================================================

NET INCOME PER SHARE $ 21.58 $ 18.31 $ 16.85 $ 15.10 $ 12.35
CASH DIVIDENDS PER SHARE 7.39 5.86 5.07 4.92 4.29
WEIGHTED AVERAGE SHARES OUTSTANDING 3,225,181 3,225,181 3,225,181 3,225,181 3,225,181

STATEMENT OF CONDITION - AVERAGES
Total assets $ 4,335,312 $ 4,148,895 $ 3,799,581 $ 3,774,205 $ 3,718,208
Earning assets 3,917,763 3,727,518 3,435,276 3,423,278 3,351,918
Securities available for sale 742,737 95,259 512,776 923,395 --
Investment securities 96,547 938,678 492,224 304,164 1,165,267
Loans 2,873,432 2,593,239 2,113,413 1,952,513 1,880,506
Deposits 3,413,428 3,298,543 3,102,841 3,050,063 3,016,781
Total stockholders' equity 404,586 360,577 324,568 280,944 249,357

SELECTED RATIOS
Return on average assets 1.60% 1.42% 1.43% 1.29% 1.07%
Return on average equity 17.20 16.38 16.75 17.33 15.98
Net interest margin-tax equivalent 4.90 4.84 4.41 4.27 4.18
Efficiency ratio 59.05 61.25 60.32 64.04 66.42
Loans to deposits 84.18 78.62 68.11 64.01 62.95
Allowance for possible loan
losses to loans 1.37 1.40 1.67 2.08 2.18
Net charge-offs (recoveries)
to average loans .09 .12 .32 (.03) .99
Dividend payout 34.24 32.00 30.09 32.58 34.74
Average equity to average assets 9.33 8.69 8.54 7.44 6.71
Leverage ratio 8.96 8.00 8.15 7.61 6.99
Tier 1 risk-based 12.07 10.96 11.25 12.23 11.68
Total risk-based 13.32 12.19 12.50 13.49 12.93
</TABLE>

4
<PAGE> 15

DEPOSIT GUARANTY CORP. AND SUBSIDIARIES - SELECTED FINANCIAL DATA
(In Thousands Except Share Data)

<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income $ 432,222 $ 402,704 $ 307,272 $ 299,327 $ 322,114
Interest expense 182,688 173,432 125,881 124,687 155,459
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 249,534 229,272 181,391 174,640 166,655
Provision for possible loan losses 5,340 2,160 (4,750) (16,000) 10,378
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
possible loan losses 244,194 227,112 186,141 190,640 156,277
Other operating income 117,245 91,989 93,499 74,781 67,977
Other operating expenses 237,208 211,452 180,047 171,567 164,470
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 124,231 107,649 99,593 93,854 59,784
Income tax expense 40,621 35,029 32,463 27,302 14,270
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 83,610 $ 72,620 $ 67,130 $ 66,552 $ 45,514

========================================================================================================================

NET INCOME PER SHARE
Primary $ 2.16 $ 1.89 $ 1.90 $ 1.89 $ 1.34
Fully diluted 2.16 1.89 1.90 1.89 1.30
CASH DIVIDENDS PER SHARE .715 .605 .530 .465 .400
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary 38,760,192 38,431,162 35,336,124 35,299,704 34,067,328
Fully diluted 38,760,192 38,431,162 35,336,124 35,299,704 34,930,564

STATEMENT OF CONDITION - AVERAGES
Total assets $ 6,026,548 5,571,697 $ 4,940,977 $ 4,826,726 $ 4,777,596
Earning assets 5,395,343 4,961,261 4,413,938 4,333,740 4,275,345
Securities available for sale 1,293,830 186,194 712,184 1,308,634 --
Investment securities 130,255 1,365,070 718,891 396,011 1,616,658
Loans 3,774,490 3,273,408 2,581,724 2,293,416 2,261,034
Deposits 4,750,894 4,438,797 3,997,038 3,867,669 3,876,927
Long-term debt 67,888 -- -- -- 6,320
Total stockholders' equity 551,754 498,023 429,967 367,592 315,833

SELECTED RATIOS
Return on average assets 1.39% 1.30% 1.36% 1.38% .95%
Return on average equity 15.15 14.58 15.61 18.10 14.41
Net interest margin-tax equivalent 4.77 4.75 4.24 4.18 4.12
Efficiency ratio 63.35 64.62 64.22 67.23 67.68
Loans to deposits 79.45 73.75 64.59 59.30 58.32
Allowance for possible loan
losses to loans 1.56 1.64 1.95 2.56 3.30
Net charge-offs (recoveries)
to average loans .10 .12 .10 (.14) 1.02
Dividend payout 33.10 32.01 27.89 24.67 29.96
Average equity to average assets 9.15 8.94 8.70 7.62 6.61
Leverage ratio 8.23 7.87 8.43 8.13 6.80
Tier 1 risk-based 11.42 11.05 12.49 13.28 12.00
Total risk-based 12.67 12.30 13.75 14.54 13.27
</TABLE>

All share data reflects a 2 for 1 stock split declared in 1996.

The dividend payout ratio is calculated using historical Deposit Guaranty Corp.
dividends per share.

5
<PAGE> 16

COMPARATIVE PER SHARE INFORMATION

<TABLE>
<CAPTION>
DEPOSIT
HISTORICAL GUARANTY AND DGNB
---------- DGNB PRO PRO FORMA
DEPOSIT FORMA EQUIVALENT
PER COMMON SHARE GUARANTY DGNB COMBINED (a) (b)
- ---------------- -------- ---- ------------ ----------
<S> <C> <C> <C> <C>
NET INCOME (c)
For the year ended December 31,
1996 $2.16 $21.58 $2.15 $20.80
1995 1.89 18.31 1.88 18.17

COMMON STOCK DIVIDENDS (d)
For the year ended December 31,
1996 .72 7.39 .72 6.91
1995 .61 5.86 .61 5.85

BOOK VALUE (e)
As of December 31,
1996 14.83 131.19 15.36 148.44
1995 13.91 120.73 14.44 139.59
</TABLE>

(a) In accordance with generally accepted accounting principles, Deposit
Guaranty Corp. will account for the acquisition of the minority interests
using the purchase accounting method. Deposit Guaranty Corp. has been
authorized to purchase in the open market up to 100% of the Deposit
Guaranty Corp. common stock to be issued in the merger. The pro forma
calculation assumes a 100% repurchase.

(b) Pro forma equivalent amounts are computed by multiplying the pro forma
combined amounts by the conversion number of 9.667.

(d) Pro forma cash dividends represent historical cash dividends of Deposit
Guaranty Corp.

(e) Book value per common share is based on total period-end shareholders'
equity.

6
<PAGE> 17
INTRODUCTION

At the Meeting, shareholders will consider and vote upon a proposal to
approve the Merger Agreement, by and among Deposit Guaranty, Interim Bank and
the Bank pursuant to which the Bank will merge into Interim Bank, and each
share of Bank Common Stock issued and outstanding immediately prior to the
Effective Date of the Merger (except Dissenting Shares, as hereinafter defined)
will be converted into and exchangeable for shares of Deposit Guaranty Common
Stock.

The Board of Directors of the Bank has fixed the close of business on
April 7, 1997 as the Record Date for determining holders of outstanding shares
of Bank Common Stock entitled to notice of and to vote at the Meeting. Only
holders of Bank Common Stock of record on the books of the Bank at the close of
business on the Record Date are entitled to vote at the Meeting or at any
adjournment or postponement thereof. As of the Record Date, there were
3,225,181 shares of Bank Common Stock issued and outstanding, each of which is
entitled to one vote. A majority of the outstanding shares of Bank Common
Stock is necessary to constitute a quorum of the shareholders to take action at
the Meeting.

The Merger must be approved by two-thirds (2/3) of the outstanding
shares of Interim Bank and the Bank. Deposit Guaranty, which owns all of the
outstanding shares of common stock of Interim Bank and 97.9% of the outstanding
shares of Bank Common Stock, intends to vote its shares in favor of the Merger.
Deposit Guaranty is not soliciting proxies in connection with the Meeting.

THE MERGER

The description of the Merger Agreement included in this Information
Statement/Prospectus is qualified in its entirety by reference to the Merger
Agreement, which is incorporated herein by reference and a copy of which is
attached hereto as Exhibit A.

STRUCTURE AND TERMS OF THE MERGER

Pursuant to the Merger Agreement the Bank will merge into Interim
Bank, and each outstanding share of Bank Common Stock will be converted into
9.667 shares (the "Exchange Ratio") of Deposit Guaranty Common Stock. Based on
the closing price of Deposit Guaranty Common Stock on the New York Stock
Exchange on April 18, 1997 of $31.25, the value of 9.667 shares of Deposit
Guaranty Common Stock on that date was $302.09. If prior to the Effective Date
Deposit Guaranty should split or combine Deposit Guaranty Common Stock, or pay
a stock dividend or other distribution in Deposit Guaranty Common Stock, then
the Exchange Ratio shall be appropriately adjusted to reflect such split,
combination, dividend or distribution.

The Exchange Ratio was fixed by the Boards of Directors of Deposit
Guaranty and the Bank after considering the valuation of Bank Common Stock
received from Ray & Collins which is described below. See "The Merger --
Valuation of Bank Common Stock." These Boards believe the Exchange Ratio is
fair to the shareholders of the Bank. The maximum number of shares which may
be issued on consummation of the Merger will constitute approximately 1.62% of
the shares of Deposit Guaranty Common Stock outstanding immediately after the
Effective Date. This calculation is based on the number of shares of Deposit
Guaranty Common Stock outstanding on the Record Date.

No fractional shares of Deposit Guaranty Common Stock will be issued
in the Merger. Deposit Guaranty shall pay in lieu of any fractional share an
amount in cash determined by multiplying (i) the closing sale price of Deposit
Guaranty Common Stock on the date immediately preceding the Effective Date as
quoted on the New York Stock Exchange, by (ii) the fraction of a share of
Deposit Guaranty Common Stock to which holder of Bank Common Stock would
otherwise be entitled.

BACKGROUND OF AND REASONS FOR THE MERGER

Deposit Guaranty was formed in 1968 and in 1969 it acquired most of
the outstanding shares of the Bank through a voluntary exchange offer. In the
exchange offer some Bank shareholders did not exchange their shares and as a
result, Deposit Guaranty did not acquire one hundred percent ownership of the
Bank. Currently, of the 3,225,181 shares of the Bank outstanding, 68,254 or
2.12 % are held by shareholders other than Deposit Guaranty. By acquiring one
hundred percent ownership of the Bank, Deposit Guaranty can lessen certain
administrative and legal burdens. The acquisition of the minority interest in
the Bank will also simplify the proposed merger of the Bank and Deposit
Guaranty's Louisiana and Arkansas bank subsidiaries and facilitate future bank
acquisitions. See "Summary -- Recent Developments."

7
<PAGE> 18
THE BOARD OF DIRECTORS OF THE BANK HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, BELIEVES THAT THE MERGER AGREEMENT IS IN THE BEST INTERESTS OF THE
BANK'S SHAREHOLDERS AND RECOMMENDS THAT ALL SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE MERGER AGREEMENT.

VALUATION OF BANK COMMON STOCK

To assist in determining the Exchange Ratio, Deposit Guaranty and the
Bank obtained a valuation dated February 6, 1997 of the fair market value of
Bank Common Stock from Ray & Collins Associates, Inc. ("Ray & Collins"). As
requested by Deposit Guaranty and the Bank, the valuation gave Ray & Collins'
opinion as to the fair market value of the Bank Common Stock before and after
the application of any minority discount to shares held by minority
shareholders of the Bank. Ray & Collins is based in Dallas, Texas, and
specializes in the fair market valuation of financial institutions with an
emphasis on regional banking associations, both publicly and privately held,
including valuations of minority holdings. Deposit Guaranty selected Ray &
Collins based on its experience and expertise in banking associations and
minority holdings.

In connection with the valuation, Ray & Collins, among other things:
(i) reviewed the news release dated January 21, 1997 detailing the financial
statements of Deposit Guaranty by quarters for the years ended December 31,
1996 and 1995; (ii) reviewed the annual reports of Deposit Guaranty for the
years ended December 31, 1995 to 1991; (iii) reviewed the Consolidated Report
of Condition and Income for the Bank as reported to the Federal Financial
Institutions Council for the calendar years 1996 to 1992; (iv) reviewed various
recently issued research reports concerning Deposit Guaranty written by members
of the financial community; (v) reviewed draft analysis of possible conversion
methods calculated by the staff of Deposit Guaranty; (vi) met with senior
management of Deposit Guaranty and the Bank to outline the scope of the
project; (vi) compared the operating results of Deposit Guaranty and the Bank
with other analogous regional banking organizations; and (vii) performed such
other analyses and examinations as Ray & Collins deemed appropriate.

Ray & Collins determined that the best measure of the fair value of
Bank Common Stock can be extrapolated from the valuation ratios associated with
the active trading market for Deposit Guaranty Common Stock. The ratios
considered were the price to book value multiple, the price to earnings
multiple, and dividend return. Based on recent trading prices at the time of
the valuation, and a 52-week range of prices of approximately $31.50 to
$27.00, Ray & Collins determined that $30.00 was a representative price for
Deposit Guaranty Common Stock. Based on earnings of $2.16 per share for 1996,
a book value of $14.83 per share at December 31, 1996, and an indicted annual
dividend of $.80 per share, the price to book value ratio was 2.02X, the price
to earnings ratio was 13.89X and the dividend return was 2.75%. Ray & Collins
then applied these ratios to the Bank's earnings of $21.58 per share for 1996,
book value of $131.22 at year end 1996, and indicated annual dividend of $8.24,
resulting in the range of values set forth in the table below.

MARKET VALUATION MULTIPLES FOR DEPOSIT GUARANTY
APPLIED TO BANK COMMON STOCK

<TABLE>
<CAPTION>
Ratio - Deposit Guaranty Bank Per Share Resulting Market Value
<S> <C> <C> <C>
Price to Earnings 13.89X $21.58 $299.75
Price to Book Value 2.02X 131.22 265.06

Dividend Return 2.75% 8.24 299.64
</TABLE>

The application of these multiples resulted in range of values from
approximately $265.06 to $299.75, and an average value of $288.15. Ray &
Collins gave equal weight to all three valuation multiples and opined that the
fair market value for Bank Common Stock at that time was $290.00 per share.

Ray & Collins noted that a minority discount is applied to minority
shares to compensate for their lack of liquidity and marketability, and lack of
a controlling interest, and expressed the opinion that under the present
circumstances a minority discount of 15% would be appropriate. This discount
would result in a discounted fair market value of $246.50 per share for the
minority shares of Bank Common Stock.

8
<PAGE> 19
The Board of Directors of Deposit Guaranty and the Bank determined the
Exchange Ratio based on the ratio of the assumed price of Deposit Guaranty
Common Stock used by Ray & Collins to determine the valuation multiples of
$30.00 per share to the fair market value of $290.00 per share of Bank Common
Stock as determined by Ray & Collins. The Exchange Ratio computed on this
basis approximated the result obtained by Deposit Guaranty staff by comparing
the book value of Deposit Guaranty and the Bank and the dividends paid by
Deposit Guaranty and the Bank.

Deposit Guaranty will pay approximately $3,000 to Ray & Collins for
the valuation of the Bank Common Stock. Otherwise, neither Deposit Guaranty
nor the Bank has paid any fees to Ray & Collins during the past two years.

EFFECTIVE DATE

Unless Deposit Guaranty, Interim Bank and the Bank otherwise agree,
the Merger will be consummated as soon as practicable following receipt of
shareholder approval and necessary regulatory approvals and satisfaction or
waiver of the other conditions to the Merger. It is expected that the
Effective Date will occur in May, 1997; however, there can be no assurance that
the conditions to the Merger will be satisfied or waived so that the Merger can
be consummated. See "The Merger -- Regulatory Approvals" and "The Merger --
Other Conditions to the Merger."

REGULATORY APPROVALS

Consummation of the Merger is conditioned on approval by all required
regulatory authorities, including approval by the OCC. OCC approval is
anticipated in April, 1997, although there can be no assurance that such
approval will be forthcoming or as to the conditions to or timing of such
approval. The Board of Governors of the Federal Reserve System and the Federal
Deposit Insurance Corporation must also review the Merger and comment on the
competitive factors involved. The Merger may not be consummated until the
expiration of fifteen (15) days after approval by the OCC has been obtained.
During this 15-day period, the United States Department of Justice, if it
objects to the proposed Merger for antitrust reasons, may file suit to enjoin
the Merger.

OTHER CONDITIONS TO THE MERGER

EXCHANGE OF DEPOSIT GUARANTY NATIONAL BANK CERTIFICATES

On the Effective Date, each Bank shareholder will cease to have any
rights as a shareholder of the Bank and his or her sole rights will pertain to
the shares of Deposit Guaranty Common Stock to which such holder's shares of
Bank Common Stock shall have been converted pursuant to the Merger, except for
the right to receive cash for any fractional shares.

As soon as practical after the Effective Date, the Bank acting as the
exchange agent will mail to each holder of record of Bank Common Stock a letter
of transmittal and instructions for effecting the surrender of the stock
certificates which, immediately prior to the Effective Date, represented
outstanding shares of Bank Common Stock in exchange for certificates
representing shares of Deposit Guaranty Common Stock. SHAREHOLDERS OF THE BANK
ARE REQUESTED NOT TO SURRENDER THEIR BANK CERTIFICATES FOR EXCHANGE UNTIL SUCH
LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED. Upon surrender of a
certificate for exchange and cancellation to the exchange agent, together with
such letter of transmittal, duly executed, the holder of such certificate shall
be entitled to receive in exchange therefor: (i) a certificate representing
that number of whole shares of Deposit Guaranty Common Stock to which such
holder of Bank Common Stock shall have become entitled pursuant to the
provisions hereof, and (ii) a check representing the amount of cash in lieu of
fractional shares, if any, which such holder has the right to receive in
respect of the certificates surrendered, and such certificates shall forthwith
be canceled.

Deposit Guaranty will not pay former shareholders of Bank, who become
holders of Deposit Guaranty Common Stock pursuant to the Merger, any dividends
or other distributions that may have become payable to holders of record of
Deposit Guaranty Common

9
<PAGE> 20
Stock following the Effective Date until they have surrendered their
certificates evidencing ownership of shares of Bank Common Stock along with a
properly completed letter of transmittal.

The Bank's shareholders who cannot locate their certificates are urged
to promptly contact J. Clifford Harrison, Secretary of the Bank, Post Office
Box 1200, Jackson, Mississippi 39215-1200, telephone number (601) 354-8303. A
new certificate will be issued to replace the lost certificate(s) only upon
execution by the shareholder of an affidavit certifying that his or her
certificate(s) cannot be located and an agreement to indemnify Deposit Guaranty
and its transfer agents and registrars against any claim that may be made
against Deposit Guaranty by the owner of the certificate(s) alleged to have
been lost or destroyed. Deposit Guaranty may also require the shareholder to
post a bond in such sum as is sufficient to support the shareholders' agreement
to indemnify Deposit Guaranty.

AMENDMENT; TERMINATION

The Merger Agreement may be amended at any time before or after its
approval by the shareholders of the Bank by written agreement of Interim Bank,
the Bank and Deposit Guaranty, except that no amendment may be made that
changes the amount or kind of consideration to be received by shareholders of
the Bank.

The Merger Agreement may be terminated at any time prior to the
Effective Date (i) by any party, if any action, suit, proceeding or claim has
been instituted, made or threatened relating to the proposed Merger which shall
make consummation of the Merger inadvisable in the opinion of the Board of
Directors of the Bank, Interim Bank or Deposit Guaranty; (ii) by any party, if
any action, consent or approval, governmental or otherwise, which is, or in the
opinion of counsel for the Bank, Interim Bank or Deposit Guaranty may be,
necessary to permit or enable the resulting bank, upon and after the Merger, to
conduct all or any part of the business and activities of the Bank up to the
time of the Merger, in the manner in which such activities and business are
then conducted, shall not have been obtained; (iii) by the Bank, if there shall
be a material adverse change in the consolidated financial condition of Deposit
Guaranty from that reflected in Deposit Guaranty's financial statements for the
period ended December 31, 1996; (iv) by the mutual consent of all parties, if
for any other reason consummation of the Merger is inadvisable in the opinion
of the Board of Directors of the Bank, Interim Bank and Deposit Guaranty; and
(v) by any party, in the event dissenters' rights are exercised with respect to
more than fifty percent (50%) of the shares of Bank Common Stock held by
shareholders other than Deposit Guaranty.

RESALES OF DEPOSIT GUARANTY COMMON STOCK

The shares of Deposit Guaranty Common Stock to be issued to the
holders of Bank Common Stock pursuant to the Merger Agreement are being
registered under the Securities Act pursuant to a Registration Statement on
Form S-4, of which this Information Statement/Prospectus is a part, thereby
allowing such shares to be freely transferred without restriction by persons
who will not be "affiliates" of Deposit Guaranty or who were not "affiliates"
of the Bank within the meaning of Rule 145 under the Securities Act. In
general, affiliates of the Bank include its executive officers and directors
and any person who controls, is controlled by or is under common control with
the Bank. Holders of Bank Common Stock who are affiliates of the Bank will not
be able to resell the Deposit Guaranty Common Stock received by them in the
Merger unless the Deposit Guaranty Common Stock is registered for resale under
the Securities Act, is sold in compliance with Rule 145 under the Securities
Act or is sold in compliance with another exemption from the registration
requirements of the Securities Act.

Pursuant to Rule 145 under the Securities Act, the sale of Deposit
Guaranty Common Stock held by former affiliates of the Bank will be subject to
certain restrictions. Such persons may sell Deposit Guaranty Common Stock under
Rule 145 only if (i) Deposit Guaranty has filed all reports required to be
filed by it under Section 13 or 15(d) of the Exchange Act during the preceding
twelve months, (ii) such Deposit Guaranty Common Stock is sold in a "broker's
transaction," which is defined in Rule 144 under the Securities Act as a sale
in which (a) the seller does not solicit or arrange for orders to buy the
securities, (b) the seller does not make any payment other than to the broker,
(c) the broker does no more than execute the order and receive a normal
commission and (d) the broker does not solicit customer orders to buy the
securities, and (iii) such sale and all other sales made by such person within
the preceding three months do not exceed the greater of (x) one percent (1%) of
the outstanding shares of Deposit Guaranty Common Stock or (y) the average
weekly trading volume of Deposit Guaranty Common Stock on the New York Stock
Exchange during the four-week period preceding the sale. Any affiliate of the
Bank who is not an affiliate of Deposit Guaranty after the Merger may sell
Deposit Guaranty Common Stock without restriction following the second
anniversary of the Effective Date.

10
<PAGE> 21
EXPENSES AND FEES

All out-of-pocket costs and expenses incurred in connection with the
Merger shall be paid by the party incurring such costs and expenses.

ACCOUNTING TREATMENT

Deposit Guaranty will account for the acquisition of shares from
minority interests using the purchase method of accounting. Accordingly, under
generally accepted accounting principles the difference between the fair value
of Deposit Guaranty Common Stock issued to minority shareholders and the
carrying amount of the minority interests in the Bank's net assets will be
recorded as an intangible asset on Deposit Guaranty's financial statements.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following discussion of the principal federal income tax
consequences of the Merger is based on provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the regulations thereunder, judicial
authority, and administrative rulings and practice as of the date hereof or
before the Effective Date. Consummation of the Merger is conditioned on the
receipt by Deposit Guaranty, Interim Bank and the Bank of an opinion of counsel
to the effect that the Merger will be treated, for federal income tax purposes,
as a tax-free reorganization under Section 368(a) of the Code.

Any Bank shareholder who, pursuant to the Merger, exchanges all of the
Bank Common Stock that such holder owns solely for Deposit Guaranty Common
Stock will not recognize any gain or loss upon such exchange. The aggregate
tax basis of Deposit Guaranty Common Stock received by such a holder in
exchange for Bank Common Stock will equal such holder's tax basis in the Bank
Common Stock surrendered. If such shares of Bank Common Stock are held as
capital assets at the Effective Date, the holding period of the Deposit
Guaranty Common Stock received will include the holding period of the Bank
Common Stock surrendered therefor. The Bank's shareholders should consult their
tax advisors as to the determination of their tax basis and holding period in
any one share of Deposit Guaranty Common Stock, as several methods of
determination may be available.

To avoid the expense and inconvenience to Deposit Guaranty of issuing
fractional shares, no fractional shares of Deposit Guaranty Common Stock will
be issued pursuant to the Merger. Any Bank shareholder who receives cash
pursuant to the Merger in lieu of a fractional share interest will be treated
as having received such fractional share pursuant to the Merger, and then as
having exchanged such fractional share for cash in a redemption by Deposit
Guaranty subject to the provisions and limitations of Section 302 of the Code.
If the Deposit Guaranty Common Stock represents a capital asset in the hands of
the shareholder, then the shareholder will generally recognize capital gain or
loss on such a deemed redemption of the fractional share in an amount
determined by the difference between the amount of cash received for such
fractional share and the shareholder's tax basis in the fractional share.

The Bank's shareholders who perfect dissenters' rights and receive
cash in exchange for their Bank Common Stock will be treated, under Code
Sections 302(a) and 302(b)(3), as receiving such payment in complete redemption
of the Bank Common Stock subject to the proceeding, provided such shareholder
does not actually or constructively own (under Code Section 318) any Bank
Common Stock after the redemption. Such deemed redemption may also be subject
to Section 302(a) of the Code if such deemed redemption is "substantially
disproportionate" with respect to the Bank shareholder who exercises
dissenters' rights, or is "not essentially equivalent to a dividend," with the
result that a shareholder who exercises dissenters' rights will recognize gain
or loss equal to the difference between the amount realized and such
shareholder's tax basis in the Bank Common Stock subject to the proceeding.
Any such gain or loss recognized on such redemption will be treated as capital
gain or loss if the Bank Common Stock with respect to which dissenters' rights
were exercised were held as capital assets. Each Bank shareholder who
contemplates exercising dissenters' rights should consult a tax advisor as to
the possibility that all or a portion of the payment received pursuant to the
dissenters' proceeding will be treated as dividend income.

Unless an exemption applies under the applicable law and regulations,
the exchange agent will be required to withhold thirty-one percent (31%) of any
cash payments to which a shareholder or other payee is entitled pursuant to the
Merger unless the shareholder or other payee provides its taxpayer
identification number (social security number or employer identification
number) and certifies that such number is correct. Each shareholder and, if
applicable, each other payee should complete and sign the substitute Form W-9
included as part of the transmittal letter so as to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is established in a manner satisfactory to Deposit
Guaranty and the exchange agent.

11
<PAGE> 22
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER WITHOUT REGARD TO THE PARTICULAR
FACTS AND CIRCUMSTANCES OF EACH BANK SHAREHOLDER. BANK SHAREHOLDERS ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.

DISSENTERS' RIGHTS

The Bank is being merged into Interim Bank pursuant to 12 U.S.C.
Section 215a. Pursuant to this law, any shareholder of the Bank who has voted
against the Merger at the Meeting or who has given notice in writing at or
prior to the Meeting to the presiding officer that he/she dissents from the
Merger shall be entitled to receive the value of the shares so held by him/her
when the Merger is approved by the OCC upon written request made to the
resulting banking association at any time before 30 days after the date of
consummation of the Merger, accompanied by the surrender of his/her stock
certificates.

The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the Merger, by an appraisal made by a
committee of three persons composed of (1) one selected by the vote of the
holders of the majority of the stock the owners of which are entitled to
payment in cash; (2) one selected by the directors of the resulting banking
association; and (3) one selected by the two so selected. The valuation agreed
upon by any two of the three appraisers shall govern. If the value so fixed
shall not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five days after being notified of the
appraised value of his/her shares, appeal to the OCC, who shall cause a
reappraisal to be made which shall be final and binding as to the value of the
shares.

If, within 90 days from the date of consummation of the Merger, for
any reason one or more of the appraisers is not selected, or the appraisers
fail to determine the value of such shares, the OCC shall, upon written request
of any interested party, cause an appraisal to be made, which shall be final
and binding on all parties. The expenses of the OCC in making the reappraisal
or appraisal, as the case may be, shall be paid by the resulting banking
association. The value of the shares ascertained shall be promptly paid to the
dissenting shareholders by the resulting banking association.

ANY BANK SHAREHOLDER WHO DESIRES TO EXERCISE DISSENTERS' RIGHTS SHOULD
CAREFULLY REVIEW EXHIBIT B AND IS URGED TO CONSULT SUCH SHAREHOLDER'S LEGAL
ADVISOR BEFORE EXERCISING OR ATTEMPTING TO EXERCISE SUCH RIGHTS.

12
<PAGE> 23
COMPARATIVE RIGHTS OF SHAREHOLDERS

The Bank is incorporated under federal law as a national bank and
Deposit Guaranty is incorporated in the State of Mississippi. If the Merger is
consummated, shareholders of the Bank, whose rights as shareholders are
currently governed by the National Bank Act, Title 12, United States Code,
Chapters 1 and 2 (the "National Bank Act") and by the Bank's Articles of
Association (the "Bank Articles") and Bylaws, will, upon consummation of the
Merger, become shareholders of Deposit Guaranty and their rights as such will
be governed by Mississippi law and by Deposit Guaranty's Articles of
Incorporation (the "Deposit Guaranty Articles") and Bylaws.

Certain significant differences between the rights of shareholders of
the Bank and shareholders of Deposit Guaranty are set forth below. This
summary is not intended to be relied upon as an exhaustive list or a detailed
description of the provisions discussed and is qualified in its entirety by the
National Bank Act and the Mississippi Business Corporation Act (the
"Mississippi BCA") and by the Articles of Incorporation or Association and
Bylaws of each of the Bank and Deposit Guaranty, respectively, to which the
Bank's shareholders are referred.

AUTHORIZED CAPITAL

DEPOSIT GUARANTY NATIONAL BANK. Under the Bank Articles, the Bank has
3,225,181 shares of authorized Bank Common Stock having a par value of $5.00
per share and no authorized preferred stock. The Bank may, with the approval
of the OCC and by a vote of shareholders holding a majority of the outstanding
shares of the Bank, authorize preferred stock of one or more classes and make
such amendments to the Bank Articles as may be necessary for this purpose.

DEPOSIT GUARANTY. Under the Deposit Guaranty Articles, Deposit
Guaranty has 150,000,000 shares of authorized stock divided into three classes
as follows: 100,000,000 shares of Common Stock, no par value; 25,000,000
shares of Class A Voting Preferred Stock, no par value; and 25,000,000 shares
of Class B Non-Voting Preferred, no par value.

BOARD OF DIRECTORS

DEPOSIT GUARANTY NATIONAL BANK. Consistent with the National Bank
Act, the Bank Articles and Bylaws provide that the Board of Directors shall
consist of not less than five (5) nor more than twenty-five (25) shareholders,
the exact number of directors within such minimum and maximum limits to be
fixed and determined from time to time by resolution of a majority of the full
Board of Directors or by resolution of the shareholders at any annual or
special meeting thereof. Every director must, during his whole term of
service, be a citizen of the United States, and at least two-thirds (2/3) of
the directors must have resided and continue to reside in the State of
Mississippi, or within one hundred miles of the main office of the Bank for at
least one year immediately preceding their election and during their
continuance in office. Every director must own in his own right either shares
of the capital stock of the Bank, the aggregate par value of which is not less
than one thousand dollars ($1,000), or stock in another company which has
control over the Bank within the meaning of Section 1841 of Title 12 of the
United States Code with either an aggregate par value, an aggregate
shareholders' equity or an aggregate fair market value of at least one thousand
dollars ($1,000). Any director who ceases to be the owner of the required
number of shares of stock or who becomes in any manner disqualified, is
required under the National Bank Act and the Bylaws to vacate his place.
Otherwise, directors hold office for one year, and until their successors have
been elected and qualified. The Board of Directors of the Bank currently
consists of sixteen (16) members. The directors of the Bank are elected each
year at the annual meeting of the shareholders.

DEPOSIT GUARANTY. The Deposit Guaranty Articles and Bylaws provide
that the Board of Directors shall consist of not less than nine (9) nor more
than twenty-five (25) directors, the exact number to be determined from time to
time by resolution adopted by affirmative vote of a majority of the entire
Board of Directors. The Bylaws state that each director shall hold in his own
right stock of Deposit Guaranty, the aggregate par, book or market value of
which is not less than one thousand dollars ($1,000) as of the date of the
director's election. The Deposit Guaranty Articles and Bylaws have no
residence requirements for directors. The Articles and Bylaws state that each
director shall hold office until his term expires and until his successor shall
have been elected and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal. The Board of Directors of Deposit
Guaranty currently consists of twelve (12) members. Under the Deposit Guaranty
Articles, the directors are divided into three (3) classes with each class
consisting of as nearly as possible one-third (1/3) of the total number of
directors constituting the entire Board of Directors. The directors serve
three year terms and the elections of each class are staggered so that only one
class of directors is elected at each annual meeting of the shareholders.

13
<PAGE> 24
REMOVAL OF DIRECTORS

DEPOSIT GUARANTY NATIONAL BANK. The Bank Articles and Bylaws do not
have any provisions regarding removal of directors.

DEPOSIT GUARANTY. Deposit Guaranty's Articles provide that Deposit
Guaranty shareholders may remove a director with or without cause, but only at
a meeting expressly called for that purpose and upon the affirmative vote of
the holders of at least eighty percent (80%) of the voting power of all shares
of stock entitled to vote generally in the election of directors, and in the
event that less than the entire Board is to be removed, not one of the
directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the class
of directors of which he is a part.

VACANCIES IN THE BOARD OF DIRECTORS

DEPOSIT GUARANTY NATIONAL BANK. In accordance with the National Bank
Act, the Bank Articles and Bylaws provide that any vacancy in the Board of
Directors shall be filled by appointment by the remaining directors at any
regular meeting of the Board of Directors or at a special meeting called for
that purpose.

DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, any vacancy,
including one occurring as a result of an increase in the number of directors,
may be filled only by the shareholders at the annual meeting of the
shareholders.

SUPERMAJORITY VOTING REQUIREMENTS; BUSINESS COMBINATIONS; CONTROL SHARES

DEPOSIT GUARANTY NATIONAL BANK. The National Bank Act requires a two-
thirds (2/3) vote of shareholders for certain transactions concerning
liquidation, conversion, merger, consolidation or sale of substantially all of
the assets of the Bank and for increasing or decreasing the capital stock of
the Bank. The Bank Articles and Bylaws do not contain any special provisions
regarding business combinations.

DEPOSIT GUARANTY. The Mississippi BCA states that in the absence of a
greater requirement in the articles of incorporation, a sale, lease, exchange
or other disposition of all, or substantially all of a corporation's property
requires approval by a majority of the shares entitled to vote on the
transaction. The Deposit Guaranty Articles do not provide for a greater than
majority vote on such a transaction.

The Deposit Guaranty Articles require that any Business Combination
(as defined below) involving Deposit Guaranty or a subsidiary of Deposit
Guaranty and an Interested Shareholder (as defined below), or any affiliate or
associate of an Interested Shareholder or any person that following such
transaction would be an affiliate or associate of an Interested Shareholder be
approved by the affirmative vote of at least eighty percent (80%) of the votes
entitled to be cast by the holders of all the then outstanding shares of voting
stock of Deposit Guaranty, excluding shares held by the Interested Shareholder,
unless the transaction is approved by a majority of the Continuing Directors
(as defined below) or unless certain fair price and procedural requirements are
satisfied.

An "Interested Shareholder" is defined to include any person (other
than Deposit Guaranty, certain Deposit Guaranty subsidiaries, employee benefit
plans of Deposit Guaranty and the trustees of such plans) who (a) is or has
announced a plan to become the beneficial owner of ten percent (10%) or more of
the voting stock of Deposit Guaranty, or (b) is an affiliate or associate of
Deposit Guaranty who has, within the past two (2) years, been the beneficial
owner of ten percent (10%) or more of Deposit Guaranty's voting stock. A
person is the "beneficial owner" of voting stock which such person, directly or
indirectly, owns or has the right to acquire or vote.

A "Business Combination" includes the following: (a) a merger or
consolidation of Deposit Guaranty or any subsidiary with an Interested
Shareholder; (b) any sale, disposition or other arrangement (including
investments, loans, advances, guarantees, extensions of credit, creation of
security interests and joint ventures) with or for the benefit of an Interested
Shareholder involving assets or securities having a fair market value (or
involving aggregate commitments) of $10,000,000 or more or constituting more
than five percent (5%) of the book value of the total assets (in the case of
transactions involving assets or commitments other than capital stock) or five
percent (5%) of the shareholders' equity (in the case of transactions involving
capital stock) of the entity in question, as reflected in the most recent
fiscal year-end consolidated balance sheet of such entity existing at the time
the shareholders of Deposit Guaranty would be required to approve or authorize
such transaction; (c) the adoption of any plan or proposal for the liquidation
or dissolution of Deposit Guaranty for any amendment to Deposit Guaranty's
Bylaws; or (d) any reclassification of securities, recapitalization, merger
with a subsidiary or other transaction which has the effect, directly or
indirectly, or increasing an Interested Shareholder's proportionate share of
the outstanding capital stock of Deposit Guaranty or a subsidiary.

14
<PAGE> 25
A "Continuing Director" means: (a) any member of the Deposit Guaranty
Board of Directors who is not affiliated with an Interested Shareholder and who
either (i) was a Deposit Guaranty director prior to the time the Interested
Shareholder became an Interested Shareholder, or (ii) was a Deposit Guaranty
director on April 30, 1986 and has been a Deposit Guaranty director
continuously since; and (b) any successor of a Continuing Director who is not
affiliated with an Interested Shareholder and who was recommended or elected to
succeed the Continuing Director by a majority of the Continuing Directors.

PREEMPTIVE RIGHTS

DEPOSIT GUARANTY NATIONAL BANK. Under the Bank Articles, if the
capital stock of the Bank is increased by the sale of additional shares, each
shareholder has a preemptive right to subscribe for such additional shares in
proportion to the number of shares of said capital stock owned by him at the
time the increase is authorized by the shareholders, unless another time
subsequent to the date of the shareholders' meeting is specified in a
resolution adopted by the shareholders at the time the increase is authorized,
except when the shares are issued to effect a merger or consolidation; to
effect an acquisition of assets; for consideration other than cash; to satisfy
conversion rights, or other rights or options; or pursuant to any employee
stock option or stock purchase plan.

DEPOSIT GUARANTY. The Deposit Guaranty Articles provide that
shareholders shall have no preemptive right to acquire unissued or treasury
shares of Deposit Guaranty, or obligations of Deposit Guaranty convertible into
such shares.

DIVIDENDS

DEPOSIT GUARANTY NATIONAL BANK. The National Bank Act provides that
the directors of a national banking association may, quarterly, semiannually or
annually, declare a dividend of so much of the undivided profits of the bank,
subject to the limitations of the National Bank Act, as they shall judge
expedient, except that until the surplus fund of such bank shall equal its
common capital, no dividends shall be declared unless there has been carried to
the surplus fund not less than one-tenth (1/10) part of the bank's net income
of the preceding half year in the case of quarterly or semiannual dividends, or
not less than one-tenth (1/10) part of its net income of the preceding two
consecutive half-year periods in the case of annual dividends. The approval of
the OCC shall be required if the total of all dividends declared by such
association in any calendar year shall exceed the total of its net income of
that year combined with its retained net income of the preceding two years,
less any required transfers to surplus or a fund for the retirement of any
preferred stock.

DEPOSIT GUARANTY. The source of funds for payment of dividends by
Deposit Guaranty is its subsidiaries. Because the primary subsidiaries of
Deposit Guaranty are financial institutions, payments made by such subsidiaries
of Deposit Guaranty to its shareholders are limited by law and regulations of
bank regulatory authorities.

The Mississippi BCA provides that no distributions, including dividend
distributions, may be made if, after giving it effect the corporation would not
be able to pay its debts as they become due in the usual course of business, or
the corporation's total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders who have superior preferential rights upon
dissolution. The Deposit Guaranty Articles provide that dividends on Class A
Voting Preferred Stock and Class B Non-Voting Preferred Stock (collectively the
"Preferred Stock") shall be paid as declared by the Board of Directors in
accordance with applicable law before any dividend shall be paid upon the
Common Stock. Dividends on Preferred Stock shall be cumulative, so that if for
any period the same shall not be paid, the right thereto shall accumulate as
against the Common Stock, and all arrears so accumulated shall be paid before
any dividend shall be paid upon the Common Stock. Whenever accumulated
dividends on the Preferred Stock have been paid, the Board of Directors may
declare dividends on the Common Stock out of any remaining legally available
funds.

SHAREHOLDERS' APPRAISAL RIGHTS

DEPOSIT GUARANTY NATIONAL BANK. The National Bank Act provides for
appraisal rights for conversion of national banks into state banks, and
consolidation and mergers of national banks. See "Dissenters' Rights."

DEPOSIT GUARANTY. The Mississippi BCA provides appraisal rights to
shareholders in any of the following corporate actions: (1) a merger if
shareholder approval is required or if the corporation is a subsidiary that
merges with its parent; (2) a plan of share exchange if the corporation is
being acquired and the shareholder is entitled to vote; (3) a sale or exchange
of all or substantially all of the property of the corporation that is not in
the usual and regular course of business, but not including a court ordered
sale or sale pursuant to a plan where the shareholders will receive proceeds
within one (1) year after the date of sale; (4) an amendment to the articles of
incorporation that materially and adversely affects rights in respect of
dissenter's shares; and (5) any corporate action taken pursuant

15
<PAGE> 26
to a shareholder vote to the extent the articles of incorporation, bylaws or a
resolution of the board of directors provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their shares.

SHAREHOLDERS' INSPECTION RIGHTS

DEPOSIT GUARANTY NATIONAL BANK. Pursuant to the National Bank Act,
the president and cashier of every national banking association shall cause to
be kept at all times a full and correct list of the names and residences of all
the shareholders in the bank, and the number of shares held by each, in the
office where its business is transacted. Such list shall be subject to the
inspection of all the shareholders and creditors of the bank, and the officers
authorized to assess taxes under State authority, during business hours of each
day in which the business may be legally transacted. A copy of such list,
verified by the oath of such president or cashier, shall be transmitted to the
OCC within ten (10) days of any demand therefor made by him.

DEPOSIT GUARANTY. The Mississippi BCA provides that any shareholder
may inspect the shareholders' list if the demand is made in good faith and for
a proper purpose. Such shareholder must describe his purpose with reasonable
particularity and establish that the list is directly connected to his purpose.
Moreover, the shareholders' list must be available for inspection by any
shareholder beginning two (2) days after notice of a shareholders' meeting is
given and continuing until the meeting takes place.

AMENDMENT OF THE ARTICLES OF INCORPORATION OR BYLAWS

DEPOSIT GUARANTY NATIONAL BANK. The Bank Articles may be amended at
any regular or special meeting of the shareholders by the affirmative vote of
the holders of the majority of the shares. The Bylaws may be amended, altered
or repealed at any regular meeting of the Board of Directors by a majority of
the total number of the directors.

DEPOSIT GUARANTY. Under the Mississippi BCA, the board of directors
has the power to amend or repeal the bylaws of a Mississippi corporation such
as Deposit Guaranty, unless such power is expressly reserved for the
shareholders. Deposit Guaranty's Articles provide that an amendment to the
Bylaws relating to composition of the Board of Directors and removal of
directors must be approved by the affirmative vote of at least eighty percent
(80%) of the shareholders (the same proportion required in order to effect the
removal of a director), excluding (except for purposes of determining whether a
quorum is present) those shares beneficially owned by any Interested
Shareholder. The affirmative vote of at least eighty percent (80%) of the
shareholders is also required to amend the provisions of the Deposit Guaranty
Articles requiring a supermajority approval of Business Combinations.
Amendments to the Deposit Guaranty Articles that result in Dissenters' Rights
require the affirmative vote of a majority of the outstanding shares entitled
to vote on the amendment. Otherwise, the Deposit Guaranty Articles may be
amended by a majority vote of the shares present at a meeting where a quorum is
present.

SPECIAL MEETINGS OF SHAREHOLDERS

DEPOSIT GUARANTY NATIONAL BANK. The Bank Articles and Bylaws provide
that special meetings of the shareholders may be called for any purpose at any
time by the Board of Directors or by three or more shareholders owning, in the
aggregate, not less than twenty-five percent (25%) of the stock of the Bank.

DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, special meetings
of the shareholders, for any purpose or purposes, may be called by the Chairman
of the Board, the President or the Board of Directors, or upon the written
request of shareholders holding in the aggregate not less than ten percent
(10%) of the total voting power entitled to vote on an issue.

SHAREHOLDER PROPOSALS AND NOMINATIONS

DEPOSIT GUARANTY NATIONAL BANK. The Bank Articles and Bylaws do not
provide a procedure for shareholder proposals. Any shareholder entitled to
vote in an election of directors may submit nominations for election to the
Board of Directors. The Bank Articles and Bylaws require shareholder
nominations to be in writing and delivered to the President of the Bank and to
the OCC not less than fourteen (14) days nor more than fifty (50) days prior to
any meeting of shareholders called for the election of directors. These
Articles and Bylaw provisions also require information to be supplied about
both the shareholder making such nomination or proposal and the person
nominated.

DEPOSIT GUARANTY. Deposit Guaranty's Bylaws provide procedures that
must be followed to properly bring a proposal before a shareholders meeting or
to nominate candidates for election as directors. At least sixty (60) days
prior notice to the Secretary of Deposit Guaranty is required if a shareholder
intends to nominate an individual for election to the Board of Directors or
propose any

16
<PAGE> 27
shareholder action. These Bylaw provisions also require information to be
supplied about both the shareholder making such nomination or proposal and the
person nominated.

MARKET FOR AND DIVIDENDS ON DEPOSIT GUARANTY NATIONAL BANK COMMON STOCK

There is no established trading market for Bank Common Stock. As of
December 31, 1996 there were 61 holders of record of Bank Common Stock. The
following table sets forth the cash dividends per share declared in each
calendar quarter of 1995 and 1996.

<TABLE>
<CAPTION>
PERIOD CASH DIVIDENDS DECLARED
<S> <C>
1995

First Quarter 1.31

Second Quarter 1.43

Third Quarter 1.43

Fourth Quarter 1.69

1996

First Quarter 1.69

Second Quarter 1.82

Third Quarter 1.82

Fourth Quarter 2.06
</TABLE>

As a national bank, the Bank is subject to certain limitations on the
payment of dividends. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Years Ended December 31, 1996, 1995
and 1994 Deposit Guaranty National Bank and Subsidiaries -- Capital and
Dividends" and "Notes to the Consolidated Financial Statements of Deposit
Guaranty National Bank."

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF DEPOSIT GUARANTY NATIONAL BANK

Deposit Guaranty owns 3,156,927 shares of Bank Common Stock, which
constitutes 97.9% of the outstanding shares of Bank Common Stock. No director
or executive officer of the Bank owns shares of Bank Common Stock.

17
<PAGE> 28
INFORMATION CONCERNING DEPOSIT GUARANTY NATIONAL BANK

The Bank offers complete banking and trust services to the commercial,
industrial and agricultural areas it serves at __ locations throughout
Mississippi. The Bank is the second largest bank in Mississippi. The Bank
owns Deposit Guaranty Mortgage Company and its subsidiary, First Mortgage
Corporation. The mortgage companies act as mortgage bankers and engage in
mortgage lending, brokerage and servicing in the Mississippi, Louisiana,
Arkansas, Nebraska and Oklahoma markets. The Bank also owns Deposit Guaranty
Investments, Inc., which provides investment advice and brokerage services.

18
<PAGE> 29

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
DEPOSIT GUARANTY NATIONAL BANK AND SUBSIDIARIES

OVERVIEW

Net income for 1996 achieved record levels both in total and on a
per-share basis. The Bank's reported net income of $69.6 million for 1996 is
$10.5 million, or 18%, greater than that reported for 1995. On a per share
basis, earnings increased 18% over the same period to $21.58. Several factors
contributed to these favorable results including increases in earning assets
and fee income. The return on average assets and return on average equity
increased 18 basis points to 1.60% and 82 basis points to 17.20%, respectively,
from 1995 to 1996.

The volume of earning assets continued to rise throughout 1996 due to
both acquisitions and growth in funds gathered from deposits in existing
markets. Earning asset growth was concentrated in loans as demand continued to
be strong throughout 1996. The net interest margin remains strong and,
combined with a 5% increase in average earning assets, produced a steady
increase in net interest income.

At the end of 1996, total assets were $4.5 billion which represents an
increase of $78 million, from December 31, 1995. Average total assets for 1996
increased 4%, or $186 million, from 1995 to $4.3 billion.

The capital ratios remain well above the minimum regulatory guidelines.
The leverage ratio at December 31, 1996 was 8.96%. The tier 1 capital and
total risk-based capital ratios at December 31, 1996 were 12.07% and 13.32%,
respectively. The capital ratios of the Bank categorize it as "well
capitalized" according to the Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA).

The following table sets forth certain information regarding the Bank's
results of operations for the periods indicated (in thousands except share
amounts)

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income $ 315,030 $ 304,325 $ 240,564 $ 237,490 $ 254,988
Interest expense 129,065 128,677 94,009 96,765 121,040
---------- ---------- ---------- ---------- ----------
Net interest income 185,965 175,648 146,555 140,725 133,948
Provision for possible loan losses 4,000 2,000 2,000 -- 8,878
---------- ---------- ---------- ---------- ----------
Net interest income after provision for
possible loan losses 181,965 173,648 144,555 140,725 125,070
Other operating income 84,860 67,654 70,871 57,719 51,798
Other operating expenses 163,450 152,057 134,205 130,545 126,596
---------- ---------- ---------- ---------- ----------
Income before income taxes 103,375 89,245 81,221 67,899 50,272
Income tax expense 33,790 30,190 26,871 19,210 10,425
---------- ---------- ---------- ---------- ----------
Net income $ 69,585 $ 59,055 $ 54,350 $ 48,689 $ 39,847
========== ========== ========== ========== ==========

NET INCOME PER SHARE $ 21.58 $ 18.31 $ 16.85 $ 15.10 $ 12.35
CASH DIVIDENDS PER SHARE 7.39 5.86 5.07 4.92 4.29
WEIGHTED AVERAGE SHARES OUTSTANDING 3,225,181 3,225,181 3,225,181 3,225,181 3,225,181

SELECTED RATIOS
Return on average assets 1.60% 1.42% 1.43% 1.29% 1.07%
Return on average equity 17.20 16.38 16.75 17.33 15.98
Dividend payout 34.24 32.00 30.09 32.58 34.74
Average equity to average assets 9.33 8.69 8.54 7.44 6.71
</TABLE>

19
<PAGE> 30
A portion of the growth during the past three years comes from strategic
acquisitions in new markets and acquisitions designed to enhance the Bank's
presence in existing markets. The Bank completed the following acquisitions
during the three year period from 1994 through 1996.

On May 18, 1994, the Bank acquired First Columbus National Bank located
in Columbus, Mississippi, with assets of $209 million. This acquisition was
accounted for as a purchase business combination and was included in the
financial statements from the date of acquisition.

On March 10, 1995, the Bank purchased the Coahoma County, Mississippi
operations of a local Mississippi bank. This acquisition added $82 million in
assets.

On August 8, 1995, the purchase of First Mortgage Corp., located in
Omaha, Nebraska was completed. This acquisition was accounted for as a
purchase business combination. First Mortgage Corp. had a $1.1 billion
mortgage servicing portfolio and six production offices in Nebraska and
Oklahoma.

On June 29, 1996, the Bank purchased McAfee Mortgage and Investment
Company, located in Lubbock, Texas in a transaction accounted for as a purchase
business combination. McAfee Mortgage and Investment Company has fifteen
offices located throughout Texas and originated approximately $240 million in
mortgage loans in 1995.

The summary of quarterly results of operations is presented in the
following table (in thousands except per share data).

<TABLE>
<CAPTION>
Quarter Ended
-------------
Dec. 31 Sep. 30 Jun. 30 Mar. 31
------- ------- ------- -------
<S> <C> <C> <C> <C>
1996
Interest income $ 80,201 $ 79,400 $ 77,843 $ 77,586
Net interest income 47,871 47,994 45,559 44,541
Provision for possible loan losses 1,000 1,000 1,000 1,000
Gains (losses) on securities available for sale (103) 27 405 (293)
Income before income taxes 23,707 28,715 26,224 24,729
Net income 15,762 19,083 17,655 17,085
Net income per share 4.89 5.92 5.47 5.30

1995
Interest income $ 80,199 $ 79,332 $ 75,243 $ 69,551
Net interest income 45,621 45,232 43,206 41,589
Provision for possible loan losses -- 1,000 1,000 --
Gains (losses) on securities available for sale 743 119 -- --
Income before income taxes 20,099 25,585 21,675 21,886
Net income 13,110 16,909 14,488 14,548
Net income per share 4.06 5.24 4.49 4.52
</TABLE>

Identification of the changes in the significant components of earnings
from quarter-to-quarter aids in understanding the results of operations. Loan
growth throughout 1996, increasing yields and a lengthening of the securities
portfolio combined with an increase in interest-earning assets contributed to
the increase in net interest income in the third and fourth quarters. The drop
in income before tax from the third quarter of 1996 to the fourth quarter was
caused by an increase in expense including incentive compensation and
management and service fees charged by Deposit Guaranty Corp.

During 1995, loan growth throughout each quarter combined with a general
increase in interest-earning assets contributed to the increase in net interest
income. The Bank recorded a provision for possible loan losses of $1 million
in the second and third quarters primarily as a result of loan growth. In the
third quarter, a $3.0 million refund of insurance premiums was recorded as a
result of the FDIC lowering the premium rate on insured deposits. In the
fourth quarter, a charge of $3.5 million was recorded for the estimated cost of
a proposed settlement of a class action suit concerning collateral protection
insurance. The suit was settled with no additional expense incurred in 1996.

20
<PAGE> 31
NET INTEREST INCOME

The following table shows the major categories of interest-earning
assets and interest-bearing liabilities with their corresponding average
balances, related interest income or expense and the resulting yield or rate
for 1996, 1995 and 1994 (dollars in thousands).

<TABLE>
<CAPTION>
1996 1995
---- ----
Interest Average Interest
Average Income/ Yield/ Average Income/
ASSETS Balance Expense Rate Balance Expense
----------- ---------- ---- --------- ----------
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 2,873,432 $ 249,231 8.67% $ 2,593,239 $ 227,435
Investment securities:
Taxable 96,547 7,700 7.98 845,603 59,691
Exempt from
Federal income tax -- -- -- 93,075 10,478
Securities available for sale:
Taxable 605,620 39,480 6.52 82,727 4,848
Exempt from
Federal income tax 137,117 13,394 9.77 12,532 1,106
Trading account securities 4,101 339 8.27 2,806 209
Federal funds sold and
securities purchased under
agreements to resell 196,039 10,601 5.41 75,987 4,453
Interest-bearing bank balances 4,907 272 5.54 21,549 1,040
----------- ----------- ---- ----------- -----------
Total interest-earning assets 3,917,763 321,017 8.19 3,727,518 309,260
----------- -----------
Noninterest-earning assets:
Cash and due from banks 223,756 245,240
Bank premises and equipment 86,776 85,963
Other assets 139,802 126,202
Allowance for possible
loan losses (39,195) (39,708)
Unrealized gain on securities
available for sale 6,410 3,680
----------- -----------
Total assets $ 4,335,312 $ 4,148,895
=========== ===========

<CAPTION>
1995 1994
---- ----
Average Interest Average
Yield/ Average Income/ Yield/
Rate Balance Expense Rate
---- ----------- ---------- ----
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans 8.77% $ 2,113,413 $ 167,435 7.92%
Investment securities:
Taxable 7.06 385,773 26,875 6.97
Exempt from
Federal income tax 11.26 106,451 11,852 11.13
Securities available for sale:
Taxable 5.86 512,349 26,307 5.13
Exempt from
Federal income tax 8.82 426 40 9.39
Trading account securities 7.45 2,618 181 6.91
Federal funds sold and
securities purchased under
agreements to resell 5.86 192,732 7,952 4.13
Interest-bearing bank balances 4.83 121,514 4,963 4.08
------------- ----------- ----------- ---------
Total interest-earning assets 8.30 3,435,276 245,605 7.15
------------- -----------
Noninterest-earning assets:
Cash and due from banks 226,409
Bank premises and equipment 78,912
Other assets 87,252
Allowance for possible
loan losses (40,234)
Unrealized gain on securities
available for sale 11,966
-----------
Total assets $ 3,799,581
===========
</TABLE>

(continued)

21
<PAGE> 32
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Interest Average Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
LIABILITIES Balance Expense Rate Balance Expense Rate Balance Expense Rate
----------- ---------- ---- ----------- ---------- ---- ----------- ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing liabilities:
Savings and interest-bearing
transaction deposits $ 1,352,557 $ 34,596 2.56% $ 1,290,012 $ 35,340 2.74% $ 1,250,371 $ 28,489 2.28%
Time deposits 1,320,967 71,051 5.38 1,284,241 68,399 5.33 1,175,705 53,103 4.52
Federal funds purchased,
securities sold under
agreements to repurchase
and other short-term
borrowings 461,468 23,418 5.07 458,055 24,938 5.44 347,930 12,417 3.57
----------- ---------- ---- ----------- ---------- ---- ----------- ---------- ----
Total interest-bearing
liabilities 3,134,992 129,065 4.12 3,032,308 128,677 4.24 2,774,006 94,009 3.39
---------- ---------- ----------
Noninterest-bearing
liabilities:
Deposits 739,904 724,290 676,765
Other liabilities 55,830 31,720 24,242
----------- ----------- -----------
Total liabilities 3,930,726 3,788,318 3,475,013
Stockholders' equity 404,586 360,577 324,568
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 4,335,312 $ 4,148,895 $ 3,799,581
=========== =========== ===========
Net interest income/
margin - tax equivalent 191,952 4.90% 180,583 4.84% 151,596 4.41%
---------- ==== ---------- ==== ---------- ====
Tax equivalent adjustment:
Loans 1,812 1,467 1,437
Investment securities -- 3,085 3,556
Securities available
for sale 4,115 340 14
Other 60 43 34
---------- ---------- ----------
Total tax equivalent
adjustment 5,987 4,935 5,041
---------- ---------- ----------
Net interest income $ 185,965 $ 175,648 $ 146,555
========== ========== ==========
</TABLE>

For purposes of these computations, nonaccruing loans are included in
the daily average loan amounts outstanding. Interest income and average
yields on tax-exempt assets have been calculated on a fully tax equivalent
basis using a tax rate of 35% for all years.

Net interest income is the largest component of net income and
represents the income earned on interest-earning assets less the cost of
interest-bearing liabilities. This major source of income represents the
earnings from the primary business of gathering funds from deposit and other
sources and investing those funds in loans and securities. The long-term
objective is to manage those assets and liabilities to provide the largest
possible amount of income, while balancing interest-rate, credit, liquidity and
capital risks.

22
<PAGE> 33
Net interest income is presented in this discussion on a tax-equivalent
basis, so that the income from assets exempt from Federal income taxes is
adjusted based on a statutory marginal Federal income tax rate of 35%. The tax
equivalent net interest margin (margin) provides an indication of the
efficiency of the earnings from balance-sheet activities and is calculated by
dividing the tax-equivalent net interest income by the average balance of
interest-earning assets. The margin is affected by changes in the spread
between interest-earning asset yields and interest-bearing liability costs
(interest spread) and by the percentage of interest-earning assets funded by
interest-bearing liabilities (liability funding).

Tax equivalent net interest income increased by $11.4 million, or 6%,
primarily due to a 5% increase in the level of interest-earning assets, funded
by a 3% increase in deposit balances. Continued strong loan demand improved
the earning asset mix and further contributed to the favorable results in net
interest income as average loans increased as a percentage of average earning
assets to 73% in 1996 from 70% in 1995. The margin also improved 6 basis
points to 4.90% in 1996.

Interest rates on both sides of the balance sheet dropped reflecting the
lower average market rate environment in 1996. Loan yields declined 10 basis
points from 1995 and the securities portfolio yield declined 14 basis points to
7.22%. The improvements in asset mix partially offset these decreases
resulting in an 11 basis point decline in the yield on average earning assets
from 1995 to 1996. The decline in average yield on earning assets, however,
was offset by an 12 basis point drop in rates paid on interest-bearing
liabilities. While the rate on time deposits increased 5 basis points in
1996, rates on savings and interest bearing transaction accounts dropped 18
basis points from 1995. The interest spread, the difference between the yield
on interest-earning assets and the rate on interest-bearing liabilities,
increased slightly from 4.06% in 1995 to 4.07% in 1996.

A drop in the proportionate level of nonearning assets contributed
favorably to the 1996 margin as these funds were invested in earning assets.
In 1996, the Bank managed to reduce the proportionate level of nonearning
assets to 9.6% of average total assets from 10.2% in 1995. The reduction in
the relative level of nonearning assets is primarily related to the reduction
of Federal reserve balances maintained on certain deposits. The mix of
interest-bearing liabilities during 1996 remained substantially the same as
1995.

The increase in net interest income in 1995 from 1994 reflects an
increase in average loan volumes of 23%. Both yields on earning assets and
rates paid on interest-bearing liabilities increased significantly between 1994
and 1995, however the increase in rates on funding sources did not keep pace
with the increase in earning asset yields. During this period, the net
interest margin increased from 4.41% in 1994 to 4.84% in 1995.

The following table sets forth, for the periods indicated, a summary of
the changes in interest income and expense resulting from changes in volume and
changes in rates (in thousands).

<TABLE>
<CAPTION>
1996 Compared To 1995 1995 Compared To 1994
Increase (Decrease) Due To Increase (Decrease) Due To
-------------------------------- -------------------------------
Volume Rate Net Volume Rate Net
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME ON
Loans $ 24,574 $ (2,778) $ 21,796 $ 38,014 $ 21,986 $ 60,000
Investment securities:
Taxable (52,876) 885 (51,991) 32,037 779 32,816
Exempt from Federal income tax (10,478) -- (10,478) (1,489) 115 (1,374)
Securities available for sale:
Taxable 30,650 3,982 34,632 (22,059) 600 (21,459)
Exempt from Federal income tax 10,983 1,305 12,288 1,137 (71) 1,066
Trading account securities 97 33 130 13 15 28
Federal funds sold and securities purchased
under agreements to resell 7,038 (890) 6,148 (4,818) 1,319 (3,499)
Interest-bearing bank balances (803) 35 (768) (4,083) 160 (3,923)
-------- -------- -------- -------- -------- --------
Total $ 9,185 $ 2,572 $ 11,757 $ 38,752 $ 24,903 $ 63,655
-------- -------- -------- -------- -------- --------
</TABLE>

(continued)

23
<PAGE> 34
<TABLE>
<CAPTION>
1996 Compared To 1995 1995 Compared To 1994
Increase (Decrease) Due To Increase (Decrease) Due To
-------------------------------- -------------------------------
Volume Rate Net Volume Rate Net
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EXPENSE ON
Savings and interest-bearing
transaction deposits $ 1,713 $ (2,457) $ (744) $ 903 $ 5,948 $ 6,851
Time deposits 1,954 698 2,652 4,902 10,394 15,296
Federal funds purchased, securities
sold under agreements to repurchase,
and other short-term borrowings 186 (1,706) (1,520) 3,930 8,591 12,521
-------- -------- -------- -------- -------- --------
Total 3,853 (3,465) 388 9,735 24,933 34,668
-------- -------- -------- -------- -------- --------
Changes in net interest income
- tax equivalent $ 5,332 $ 6,037 $ 11,369 $ 29,017 $ (30) $ 28,987
======== ======== ======== ======== ======== ========
</TABLE>

The increase (decrease) due to changes in average balances reflected in
the above table was calculated by applying the preceding year's rate to the
current year's change in the average balance. The increase (decrease) due to
changes in average rates was calculated by applying the current year's change
in the average rates to the current year's average balance. Using this method
of calculating increases (decreases), any increase or decrease due to both
changes in average balances and rates is reflected in the changes attributable
to average rate changes.

INTEREST RATE SENSITIVITY

Net interest income is managed through the Asset/Liability Management
(ALM) process. A Deposit Guaranty Corp. board committee establishes ALM
policy guidelines that limit the potential variation in net interest income and
the economic value of equity due to market interest rate swings. The Deposit
Guaranty Corp. Asset/Liability Committee, comprised of executive management,
sets the day-to-day operating guidelines and approves strategies affecting net
interest income and coordinates activities within board policy limits for the
Bank.

Simulation of the effects of interest rate changes on net income is a
broader measure of interest rate risk profile than the static interest
sensitive gap position and is therefore the primary tool used by the Bank. A
computer simulation model is used to simulate the effect of complex
interactions of customer choices, product promotions, and potential market
interest rate scenarios.

Board policy limits the amount of interest rate risk the Bank can take
by establishing variation limits to net interest income and economic value of
equity based on simulations with specific assumptions. The Bank supplements
these with a number of other simulations which measure key sensitivities to
several specific rate scenarios as well as potential competitive issues related
to loan and deposit volume levels and pricing.

Board policy limits the negative variation of net interest income and
economic value of equity to 10% and 20% respectively. Specific guidelines for
each method are followed to evaluate the interest rate risk position to provide
a consistent comparative analysis. A baseline forecast of net interest income
and economic value of equity is established assuming a stable interest rate
environment. For net interest income variation, simulations are run trending
interest rates up and down 200 basis points over the nest twelve months from
the baseline forecast. At December 31, 1996, this analysis indicated a
negative variation of approximately 2% with a 10% policy limitation for an
increase in rates. For variation in economic value of equity, simulations are
run assuming interest rates move up and down immediately by 200 basis points
and assume no management action. This rate shock, while unlikely in
management's' opinion, provides insight into some components of interest rate
risk for the bank. At December 31, this measure indicated approximately 12%
negative variation in the economic value of equity with an increase in external
market interest rates compared to a policy limit of 20%.

Given the various methods used to measure and manage interest rate risk,
the Bank believes its interest rate risk profile is in appropriate balance with
its profit objectives.

The following table reflects the interest sensitivity of the Bank over
various periods as of December 31, 1996, based on contractual maturities as of
that date (dollars in thousands):

24
<PAGE> 35
<TABLE>
<CAPTION>
0-3 4-12 1-5 Over 5
Months Months Years Years Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans $ 654,888 $ 574,231 $ 1,243,731 $ 472,854 $ 2,945,704
Investment securities 50 -- 77 112,855 112,982
Securities available for sale 1,527 4,258 342,209 510,634 858,628
Trading account securities 2,469 -- -- -- 2,469
Federal funds sold and securities
purchased under agreements to resell 104,900 -- -- -- 104,900
Interest-bearing bank balances 1,281 -- -- -- 1,281
----------- ----------- ----------- ----------- -----------
Total interest-earning assets 765,115 578,489 1,586,017 1,096,343 4,025,964
Noninterest-earning assets -- -- -- 484,534 484,534
----------- ----------- ----------- ----------- -----------
Total assets $ 765,115 $ 578,489 $ 1,586,017 $ 1,580,877 $ 4,510,498
=========== =========== =========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Savings deposits $ 1,385,854 -- -- -- $ 1,385,854
Time deposits 339,200 609,811 380,278 838 1,330,127
Short-term borrowings 409,180 -- -- -- 409,180
Notes payable to affiliates -- 35,000 -- -- 35,000
----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities 2,134,234 644,811 380,278 838 3,160,161
Noninterest-bearing deposits 173,809 78,101 237,613 366,694 856,217
Other liabilities -- -- -- 71,001 71,001
Stockholders' equity -- -- -- 423,119 423,119
----------- ----------- ----------- ----------- -----------
Total liabilities and
stockholders' equity $ 2,308,043 $ 722,912 $ 617,891 $ 861,652 $ 4,510,498
=========== =========== =========== =========== ===========

Interest rate contracts $ 407,622 $ (101,015) $ (291,847) $ (14,760)
Interest sensitive gap (1,135,306) (245,438) 676,279 704,465
Cumulative interest sensitive gap (1,135,306) (1,380,744) (704,465) --
Cumulative interest sensitive gap
as a percent of total assets (25.17)% (30.61)% (15.60)% --
</TABLE>

DERIVATIVE ACTIVITIES

RISK MANAGEMENT DERIVATIVES

Derivative instruments were used in 1996 and 1995 primarily as a means
of protecting the economic value of equity. The specific types of derivatives
used were interest rate swaps, forward contracts, interest rate caps and floors
and other option contracts.

The following table identifies the year end open positions for the
Bank's risk management interest rate contracts at December 31, 1996 (dollars in
thousands):

<TABLE>
<CAPTION>
Pay Rate Receive Rate
------------- -------------
Fair Underlying
Maturity Notional Value Rate Index Rate Index Asset/Liability
-------- ----- ---- ----- ---- ----- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS
Pay fixed:
2007 $ 22,622 $(182) 6.65% Fixed 5.56% LIBOR Mortgage Loans
INTEREST RATE CAPS
1997 100,000 7 6.88 -- -- -- Time deposits
</TABLE>

(continued)

25
<PAGE> 36
<TABLE>
<CAPTION>
Pay Rate Receive Rate
------------- -------------
Fair Underlying
Maturity Notional Value Rate Index Rate Index Asset/Liability
-------- ----- ---- ----- ---- ----- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE FLOORS
1998 $ 50,000 $ 21 5.00% -- -- -- Commercial loans
2000 80,000 811 6.00 -- -- -- Commercial loans
2001 185,000 1,739 5.25 -- -- -- Commercial loans
</TABLE>

Interest rate swaps were the primary instruments used to manage interest
rate risk. These are contractual agreements between counterparties to exchange
interest streams based on notional principal amounts over a set period of time.
The notional amount does not represent an amount at risk, but is used as a
basis for determining the actual cash flows related to the interest rate
contracts. As of December 31, 1996, the notional value of interest rate swap
contracts totaled $22.6 million compared to $233.9 million at December 31,
1995. This amount represents an agreement where the Bank pays a fixed rate of
6.65% on a notional amount of $22.6 million. As of December 31, 1996 and 1995,
there would be no cost to replace this contract if the counterparty defaults.
All interest rate swap counterparties are required to have collateral
arrangements with the Bank. A stress test is used to determine the effect of
market movements on the value of the interest rate swaps. The stress test
estimates the value of the instrument assuming a parallel 300 basis point shift
in rates.

The following table shows the interest rate swap activity (notional
amounts) for 1996 (in thousands):

<TABLE>
<CAPTION>
1996
Interest
December 31, December 31, Income
Maturity 1995 Purchased Matured 1996 (Expense)
- ------------ -------- --------- -------- -------- --------
<C> <C> <C> <C> <C> <C>
PAY FIXED
1996 $ 90,000 $ -- $ 90,000 $ -- $ (73)
2007 23,910 -- 1,288 22,622 (255)
-------- -------- -------- -------- --------
Total 113,910 -- 91,288 22,622 (328)
-------- -------- -------- -------- --------

RECEIVE FIXED
1996 40,000 -- 40,000 -- (148)
-------- -------- -------- -------- --------
Total 40,000 -- 40,000 -- 719
-------- -------- -------- -------- --------

Total swaps $153,910 $ -- $131,288 $ 22,622 $ 391
======== ======== ======== ======== ========
</TABLE>

Interest rate caps were purchased during 1994 to limit the future
funding rates on floating rate deposit accounts resulting from forecasted
rising interest rates. These interest rate caps were based on the three month
LIBOR rate and assigned to certificates of deposits with maturities of three
months or less. As of December 31, 1996 and 1995, the notional value of
interest rate cap contracts totaled $100 million. The interest rate caps have
one year maturities and a fair value of $7 thousand at December 31, 1996.

Interest rate floors were purchased during 1995 and 1996 to limit any
loss resulting from falling interest rates. These interest rate floors were
based on the three month LIBOR rate and assigned to floating rate commercial
loans. As of December 31, 1996, the Bank had outstanding interest rate floor
contracts with a total notional value of $315 million compared to $130 million
outstanding at December 31, 1995. The interest rate floors have two to five
year maturities and a fair value of $2.8 million at December 31, 1996.

Forward commitments are contracts for the delayed delivery of
securities, foreign currencies or money market instruments in which the seller
agrees to make delivery of a specified instrument at a specified future date
and a specified price or yield. Credit risk may arise from the possibility
that counterparties may not have the ability to fulfill their commitments.
Market risk arises from the movements in interest rates and security values.
The majority of the forward commitments represent agreements to sell mortgage
loans. As of December 31, 1996, the contract amounts for forward commitments
totaled $131 million compared to $144 million at December 31,1995 and $37
million at December 31, 1994.

26
<PAGE> 37
TRADING DERIVATIVES

A Eurodollar futures and options trading account is used in order to
maintain an active presence in the Eurodollar futures and options markets.
Position limits were established for the account in order to provide for a
tightly controlled trading environment. At December 31, 1996, the trading
account had no open contracts compared to contracts with a notional value of
$300 million and a net loss of $28 thousand at December 31, 1995. Eurodollar
trading activity during 1996 was minimal.

DERIVATIVE CONTROLS

Various controls are utilized to manage the risks associated with
derivative instruments. These controls include specific internal policies,
tracking systems, and legal contracts in conjunction with management oversight,
internal and external audits, and regulatory compliance examinations. These
reviews are performed on a continuous basis.

Management and board oversight is achieved through strict internal
policy and operating guidelines which include specific approvals for each
transaction. Specific operating limits have been established for common
derivative transactions. Additionally, certain transactions require approval
from the executive committee. An on-site compliance officer reports directly
to the Deposit Guaranty Corp.'s Board of Directors.

An automated derivatives management system is used to generate position,
pricing, and risk management reports. This system generates reports used to
maintain accurate and timely information on all derivative positions.

Derivatives credit risk is minimal. Each counterparty has executed a
bi-lateral collateral agreement with the Bank. Collateral agreements are
designed to protect against possible default by the counterparties. Active
counterparties are required to post collateral on any net positive market value
above $100 thousand on an ongoing basis. As of December 31, 1996, counterparty
collateral with a fair value of $6.3 million was being held.

SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES

The securities portfolio is the second largest component of
interest-earning assets at $971.6 million on December 31, 1996 compared to
$783.4 million at year-end 1995. The securities portfolio includes securities
classified as available for sale and for investment purposes. These two
segments of the securities portfolio are managed to optimize their long-term
total return.

Securities available for sale are subject to sale prior to their
contractual maturities allowing the Bank the ability to respond to changes in
the interest rate environment. This portfolio can also be a secondary
liquidity source and provide a balance to interest rate and credit risks in
other categories of the balance sheet. Securities available for sale are
accounted for at fair value with unrealized gains or losses excluded from
earnings and reported as a separate component of stockholders' equity, net of
deferred income taxes. The investment securities portfolio consists of debt
securities which the Bank has the positive intent and ability to hold to
maturity and is carried at amortized cost.

The carrying amounts of securities available for sale and investment
securities are presented as of the dates indicated (in thousands):
<TABLE>
<CAPTION>
December 31,
------------
SECURITIES AVAILABLE FOR SALE 1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
U.S. Treasury and other U.S. Government agencies $405,999 $475,071 $ --
Obligations of states and political subdivisions 134,898 120,219 1,872
Mortgage-backed securities 317,731 85,334 80
-------- -------- --------
Total securities available for sale 858,628 680,624 1,952
-------- -------- --------
INVESTMENT SECURITIES
U.S. Treasury and other U.S. Government agencies -- -- 699,439
Obligations of states and political subdivisions -- -- 104,890
Mortgage-backed securities 43,602 57,580 122,578
Other securities 69,380 45,154 34,237
-------- -------- --------
Total investment securities 112,982 102,734 961,144
-------- -------- --------
TOTAL SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES $971,610 $783,358 $963,096
======== ======== ========
</TABLE>

27
<PAGE> 38
Securities available for sale increased $178 million to $858.6 million
at December 31, 1996, compared to December 31, 1995. Investment securities at
December 31, 1996 were $113 million, an increase of $10.2 million compared to
year-end 1995. During the fourth quarter of 1995, the Bank reevaluated the
securities classifications as allowed by the FASB's supplemental guidance to
SFAS No. 115. As a result, approximately 80% of the Bank's investment
securities were reclassified to securities available for sale. The
reclassification provided greater flexibility to take advantage of significant
changes or anticipated changes in interest rates and to manage liquidity.

Securities, excluding mortgage-backed securities, maturing within five
years or less at December 31, 1996, represented 31% of total securities.
Mortgage-backed securities at year-end 1996 were 37% of total securities.
Securities exempt from Federal income taxes represented 14% of year-end total
securities in 1996 and 1995 compared to 15% in 1994.

Average securities decreased $195 million, or 19%, in 1996 from 1995's
average balance compared to an increase of $29 million in 1995 from 1994's
average balance. As a percent of average interest-earning assets, average
securities continued to decline to 21% in 1996 compared to 27% in 1995 and 29%
in 1994. This decrease in the relative level of securities was a result of
increased loan demand.

The following table shows the maturities and weighted average yields of
the Bank's securities available for sale and investment securities at December
31, 1996 (dollars in thousands):

<TABLE>
<CAPTION>
Maturing
------------------------------------------------------
After After
Within One Year Five Years Mortgage-
One But Within But Within After Backed
AVERAGE AMOUNT: Year Five Years Ten Years Ten Years Securities
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and other U.S. Government agencies $ -- $ 274,654 $ 131,345 $ -- $ --
Obligations of states and political subdivisions 6,137 12,135 29,315 87,311 --
Mortgage-backed securities -- -- -- -- 317,731
----------- ----------- ----------- ----------- -----------
Total securities available for sale 6,137 286,789 160,660 87,311 317,731
----------- ----------- ----------- ----------- -----------
INVESTMENT SECURITIES
Mortgage-backed securities -- -- -- -- 43,602
Other securities 1,172 7,475 44,827 15,906 --
----------- ----------- ----------- ----------- -----------
Total investment securities 1,172 7,475 44,827 15,906 43,602
----------- ----------- ----------- ----------- -----------
TOTAL SECURITIES AVAILABLE FOR SALE AND
INVESTMENT SECURITIES $ 7,309 $ 294,264 $ 205,487 $ 103,217 $ 361,333
=========== =========== =========== =========== ===========

WEIGHTED AVERAGE YIELD:
SECURITIES AVAILABLE FOR SALE
U.S. Treasury and other U.S. Government agencies -% 6.34% 6.33% -% -%
Obligations of states and political subdivisions 10.79 10.63 11.07 9.44 --
Mortgage-backed securities -- -- -- -- 7.04
----------- ----------- ----------- ----------- -----------
Total securities available for sale 10.79 6.52 7.19 9.44 7.04
----------- ----------- ----------- ----------- -----------
INVESTMENT SECURITIES
Mortgage-backed securities -- -- -- -- 9.98
Other securities 8.65 6.28 4.29 6.54 --
----------- ----------- ----------- ----------- -----------
Total investment securities 8.65 6.28 4.29 6.54 9.98
----------- ----------- ----------- ----------- -----------
TOTAL SECURITIES AVAILABLE FOR SALE AND
INVESTMENT SECURITIES 10.45% 6.51% 6.56% 8.99% 7.39%
=========== =========== =========== =========== ===========
</TABLE>

LOANS

The loan portfolio, is the largest component of earning assets and is
also the highest yielding. Quality growth in the loan portfolio over the past
three years has been a key driver in the Bank's overall financial performance.
Loans totaled $2.9 billion at

28
<PAGE> 39
December 31, 1996, an increase of 7%, or $183.5 million, from the balance at
December 31, 1995. During 1995, the portfolio grew approximately 16% from the
balances reported for 1994.

The portfolio mix at December 31, 1996 consists of 49% real estate
loans, 29% commercial, financial and agricultural loans and 22% consumer loans,
which is substantially unchanged from the portfolio mix at December 31, 1995.
Diversification of the loan portfolio is a means of reducing the risks
associated with fluctuations in economic conditions. At December 31, 1996,
there were no concentrations of 10% or more of total loans in any single
industry.

Loans outstanding at the indicated dates are shown in the following
table classified by type of loan (in thousands):

<TABLE>
<CAPTION>
December 31,
------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 851,545 $ 820,357 $ 771,123 $ 581,518 $ 610,600
Real estate - construction 113,649 91,951 78,663 62,999 70,188
Real estate - mortgage 1,336,823 1,250,863 988,978 923,169 814,520
Consumer 643,687 599,044 538,251 466,491 417,812
---------- ---------- ---------- ---------- ----------

$2,945,704 $2,762,215 $2,377,015 $2,034,177 $1,913,120
========== ========== ========== ========== ==========
</TABLE>

Loans secured by real estate are the largest category of loans at $1.5
billion at year-end 1996. The largest sub-section of the real estate loan
portfolio is loans secured by one-to-four family residential properties. Loans
to businesses for intermediate and longer term financing of land and buildings
represent the second largest component within the real estate portfolio. The
mix of the real estate portfolio is substantially unchanged from that reported
in prior years with the exception of a slight increase in the proportion of
loans secured by one-to-four family residential properties.

The following table shows the composition of real estate loans
outstanding at December 31, 1996 (dollars in thousands):

<TABLE>
<CAPTION>
Percent of Percent of
Balance Real Estate Loans Loans
---------- ---------------- ---------
<S> <C> <C> <C>
Commercial real estate
Construction and land development $ 113,649 7.8% 3.9%
Multifamily 56,268 3.9 1.9
Nonfarm residential 459,554 31.7 15.6
---------- ---------- ----------
629,471 43.4 21.4
---------- ---------- ----------
Residential and farmland
Residential 737,475 50.8 25.0
Farmland 83,526 5.8 2.8
---------- ---------- ----------
821,001 56.6 27.8
---------- ---------- ----------
$1,450,472 100.0% 49.2%
========== ========== ==========
</TABLE>

One-to-four family residential property loans are underwritten to take
into consideration family incomes available to service debt, credit histories
and the value of the properties being financed. While this group is considered
low risk, it can be adversely impacted by economic patterns.

Loans to businesses for the financing of land and buildings are
underwritten taking into consideration the quantity and quality of the
business' cash flow, its future prospects and the property's value. Sufficient
margin in the financed property is required should liquidation of the property
become necessary to repay the loan.

Construction and land development loans are made in familiar markets to
developers and builders who have a proven record of success. These loans are
underwritten through the use of feasibility studies, sensitivity analysis of
absorption rates and financial analysis of the developers. Sources of
repayment may be pre-committed permanent loans, sales of developed properties
or an interim or mini-permanent loan commitment. These types of loans are
monitored by on-site inspections and architects'

29
<PAGE> 40
reports. They are considered more risky than the other real estate loans due
to their ultimate repayment being sensitive to interest rate changes, general
economic conditions and the availability of long-term financing.

Commercial, financial and agricultural loans increased to $852 million
at December 31, 1996 from $820 million and $771 million at year-end 1995 and
1994, respectively. The commercial, financial and agricultural loan portfolio
is a diverse group of loans to small, medium and large businesses in a variety
of different industries. The purposes of these loans vary from supporting
seasonal working capital needs to the term financing of equipment. These loans
are underwritten by a thorough evaluation of the prospective borrower's
management, financial condition and the business' ability to generate
sufficient cash flow to repay the debt in an orderly manner. While some of the
short term loans may be made on an unsecured basis, most are secured by assets
having an adequate equity margin. Additionally, most loans to closely held
corporations are guaranteed by their owners.

Various Federal and State loan guarantee programs are used to provide
credit enhancements for loans to small businesses. The use of these programs
enables financing to be provided in amounts and on terms which might not be
otherwise available to the small business. All guaranteed loans are subject to
the same underwriting criteria as other types of loans as the use of guarantee
programs is considered a secondary source of repayment.

The commercial loan portfolio is sufficiently diverse to minimize the
impact of a decline in a single industry. It is geographically concentrated
so it is exposed to the risk of a general downturn in the economies of the
markets in which the Bank operates.

Consumer loans increased 7%, from December 31, 1995 which represents a
substantial slow down from the rate of growth experienced over the past three
years. The decline in the growth rate of the consumer loan portfolio reflects
a national trend of slowing consumer demand.

The consumer loan portfolio is composed of installment loans, home
equity loans, unsecured revolving credit products, and other similar types of
credit facilities. Consumer credits are underwritten using a computer based
multiple discriminant analysis which is commonly called credit scoring. This
analysis considers factors such as income, debt levels and credit history.
This system provides uniformity in the decision making process and better
quality control during the process.

The needs of low to moderate income borrowers is an area of continued
focus and efforts are ongoing to expand the credit facilities tailored to their
special needs. An extensive branch network brings loan officers in close
contact with small business customers and consumers. The expanded use of
government credit enhancement programs has improved the ability to meet the
needs of small businesses and differentiate the Bank from competitors.
Consumer credit products will continue to be aggressively marketed and new ones
developed utilizing the high level of technology available, however the Bank
will continue to maintain a close watch on both local and national delinquency
trends.

The following table shows the amounts of loans, excluding consumer and
real estate mortgage loans, in certain categories outstanding as of December
31, 1996 which, based on remaining scheduled repayments of principal, are due
in the periods indicated. Also, the amounts due after one year are classified
according to their sensitivity to changes in interest rates (in thousands):

<TABLE>
<CAPTION>
Maturing
-------------------------------------------------
After One
Within But Within After
One Year Five Years Five Years Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 459,932 $ 307,971 $ 83,642 $ 851,545
Real estate - construction 69,089 44,560 -- 113,649
---------- ---------- ---------- ----------
$ 529,021 $ 352,531 $ 83,642 $ 965,194
========== ========== ========== ==========
</TABLE>

(continued)

30
<PAGE> 41
<TABLE>
<CAPTION>
Interest Sensitivity
------------------------------------
Fixed Variable
Rate Rate Total
---------- ---------- ----------
<S> <C> <C> <C>
Due after one, but within five years $ 250,755 $ 101,776 $ 352,531
Due after five years 59,547 24,095 83,642
---------- ---------- ----------
$ 310,302 $ 125,871 $ 436,173
========== ========== ==========
</TABLE>

DEPOSITS

The primary funding source for loans and investments is deposit
liabilities. The mix and repricing alternatives can significantly affect the
cost of this source of funds and therefore impact the margin. Strategies used
to manage deposit liabilities are designed to be flexible so that changes can
be made in consideration of interest rate movements and liquidity issues.
Local retail and commercial customers provide the majority of deposits.

Average deposits increased $115 million to $3.4 billion in 1996 compared
to $3.3 billion in 1995, and $3.1 billion in 1994. Average time deposits
increased $39 million from the $1.3 billion reported in 1995. Average savings
deposits and average demand deposits increased $63 million and $13 million,
respectively, in 1996 compared to 1995. Both average savings deposits and
average demand deposits approximate 40% and 20% of average total deposits for
1996 compared to 1995. The deposit mix has remained substantially unchanged
during the last two years.

The daily average amounts of deposits for the periods indicated are
summarized in the following table (in thousands):

<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Demand deposits $ 702,224 $ 688,903 $ 641,753
Savings and interest-bearing transaction deposits 1,352,557 1,290,012 1,250,371
Time deposits 1,358,647 1,319,628 1,210,717
---------- ---------- ----------
Total $3,413,428 $3,298,543 $3,102,841
========== ========== ==========
</TABLE>

Maturities of time certificates of deposit of $100 thousand or more
outstanding at December 31, 1996, are summarized in the following table (in
thousands):

<TABLE>
<S> <C>
TIME REMAINING UNTIL MATURITY
3 months or less $ 94,466
Over 3 through 6 months 44,855
Over 6 through 12 months 44,098
Over 12 months 55,502
----------
Total $ 238,921
==========
</TABLE>

LIQUIDITY

Liquidity for a financial institution can be expressed in terms of
maintaining sufficient funds available to meet both expected and unanticipated
obligations in a cost effective manner. Adequate liquidity allows the Bank to
meet the demands of both the borrower and the depositor on a timely basis, as
well as pursue other business opportunities as they arise. Thus, liquidity is
maintained through the Bank's ability to convert assets into cash, manage the
maturities of liabilities and generate funds on a short-term basis either
through the national Federal funds market, backup lines of credit, or through
the national CD market.

Short-term investments totaling $ 107.4 million at December 31, 1996
provide one source of the Bank's liquidity. Cash flows from repayments and
maturities from the securities and loan portfolios provide an additional
source. At December 31, 1996, $1.2 billion, or 42% of total loans, have
contractual maturities of one year or less. Additional liquidity can be
achieved through the sale of securities classified as available for sale.

31
<PAGE> 42
The Bank relies largely on core deposits to fund loan demand and
long-term investments. Core deposits, defined as total deposits less time
deposits of $100 thousand or more, have increased, ending the year at $3.3
billion which compares to $3.2 billion at the end of 1995. Additional funding
is provided from an established federal funds market within Mississippi and
other contiguous states. Although the Bank prefers to meet liquidity
requirements through internally generated funding sources and through the
matching of maturities of assets and liabilities, it also maintains funding
relationships with numerous other financial institutions.

The following table presents a summary of the Bank's short-term
borrowings, which is mostly comprised of Federal funds purchased and securities
sold under agreements to repurchase, at December 31 for each of the last three
years by category and the corresponding interest rates (dollars in thousands):

<TABLE>
<CAPTION>
Daily Average Maximum
December 31 Average Interest Month-End
Balance Balance Rate Balance
--------- --------- ------ ----------
<S> <C> <C> <C> <C>
1996 $ 409,180 $ 450,515 5.1% $ 641,283
1995 544,014 458,055 5.4 544,014
1994 473,933 374,930 3.6 473,934
</TABLE>

The consolidated statements of cash flows can be used to review cash
flows from operating, investing and financing activities. Cash and cash
equivalents increased $35 million during 1996 to $282.8 million at December 31,
1996. Net cash provided by operating activities of $101.3 million for 1996
represents a substantial increase from net cash used by operating activities
of $828 thousand reported for 1995. Cash flows from operating activities
includes net income, adjusted for various noncash charges to income, as well as
changes in certain balance sheet items. The increase in net cash provided by
operating activities from 1995 to 1996 was primarily due to a large cash use to
fund mortgage loans held for sale during 1995. This was also the cause of the
decrease in net cash provided by operating activities from 1994 to 1995.

Investing activities, primarily loans and securities, used cash of $30
million in 1996. This use of cash was mostly to finance an increase in loan
and securities volumes and was partially offset by cash provided by decreases
in short term investments. In 1995, investing activities used cash of $253
million. This use of cash was largely a result of increased loan demand and
increases in short-term investments. These uses of cash were partially offset
by cash provided by decreases in securities and interest-bearing bank balances.

Financing activities are the primary funding source of investing
activities. Financing activities include the gathering of deposits and use of
purchased funds. Financing activities used $36.5 million in 1996 and provided
$249.2 million in cash in 1995.

Dividends paid by the Bank are subject to certain regulations
controlling national banks that restrict the amount of dividends that may be
distributed. The Bank has available for payment of dividends in 1997, without
prior regulatory approval, $85.9 million plus its net profits for 1997.

CREDIT RISK MANAGEMENT

Asset quality is managed by utilizing a credit process that has as its
basis the separation of the credit administration function from the line
lending function. This process includes a system of loan committees to review
and approve loans, a system of credit quality review committees that monitors
the progress of action plans on loans requiring special attention and an
independent loan review function which reports to the Directors' Loan Review
Committee. Additionally, the Credit Administration Division works to ensure
that the credit process is carried out in accordance with credit policies.
This process assists in the early identification of problem or potential
problem credits and assists in determining the adequacy of the allowance for
possible loan losses.

32
<PAGE> 43
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES

In conjunction with the credit process, the allowance for possible loan
losses (allowance) is maintained at a level that is considered sufficient to
absorb potential losses in the loan portfolio. The allowance is adjusted by
the provision for possible loan losses (provision) and is increased by
recoveries of previously charged-off loans and decreased by loan charge-offs.
The provision is the adjustment to expense necessary to maintain the allowance
at an adequate level. Various factors are taken into consideration in
determining the amount of the provision and the adequacy of the allowance.
These factors include: 1) management's analysis of current and future economic
conditions and their anticipated impact on specific borrowers; 2) the current
level of classified and criticized assets and the associated risk factors with
each; 3) past due and nonperforming assets; 4) the current level of the
allowance in relation to total loans and to historical and current loss levels;
and 5) growth and composition of the loan portfolio.

The following table summarizes the activity in the allowance for
possible loan losses over the past five years (dollars in thousands):

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for possible loan losses - beginning balance $ 38,677 $ 39,688 $ 42,253 $ 41,750 $ 51,463
Charge-offs:
Commercial, financial and agricultural 612 959 7,530 1,334 15,695
Real estate - construction 119 169 132 40 80
Real estate - mortgage 2,271 1,072 1,297 1,282 2,359
Consumer 6,857 6,425 4,228 4,722 6,552
----------- ----------- ----------- ----------- -----------
Total charge-offs 9,859 8,625 13,187 7,378 24,686
----------- ----------- ----------- ----------- -----------
Recoveries:
Commercial, financial and agricultural 2,634 1,756 1,673 2,046 483
Real estate - construction 16 268 599 1,385 538
Real estate - mortgage 1,676 581 1,064 751 656
Consumer 3,067 3,009 3,163 3,699 4,418
----------- ----------- ----------- ----------- -----------
Total recoveries 7,393 5,614 6,499 7,881 6,095
----------- ----------- ----------- ----------- -----------
Net charge-offs (recoveries) 2,466 3,011 6,688 (503) 18,591
Provision for possible loan losses 4,000 2,000 2,000 -- 8,878
Additions due to acquisitions -- -- 2,123 -- --
----------- ----------- ----------- ----------- -----------
Allowance for possible loan losses - ending balance $ 40,211 $ 38,677 $ 39,688 $ 42,253 $ 41,750
=========== =========== =========== =========== ===========

Total loans outstanding:
End of year $ 2,945,704 $ 2,762,215 $ 2,377,015 $ 2,034,177 $ 1,913,120
=========== =========== =========== =========== ===========

Average $ 2,873,432 $ 2,593,239 $ 2,113,413 $ 1,952,513 $ 1,880,506
=========== =========== =========== =========== ===========

Ratios:
Allowance for possible loan losses to end of year total loans 1.37% 1.40% 1.67% 2.08% 2.18%
Allowance for possible loan losses to net charge-offs 1,631 1,285 593 NM 225
Allowance for possible loan losses to nonperforming loans 452 252 174 165 418
Net charge-offs (recoveries) to average total loans .09 .12 .32 (.03) .99
Recoveries to prior year charge-offs 85.72 42.57 88.09 31.93 31.70
</TABLE>

NM - Not Meaningful

As a result of management's assessment of the adequacy of the allowance
and the increased loan growth in 1996, a $4.0 million provision for possible
loan losses was recorded compared to a $2.0 million provision in 1995 and 1994.
An addition to the allowance of $2.1 million resulted from acquisitions in
1994.

33
<PAGE> 44
Net charge-offs remain low at .09% of average loans in 1996 compared to
.12% and .32% of average loans in 1995 and 1994, respectively. Net
charge-offs were $2.5 million for 1996 compared to $3.0 million in 1995 and
$6.7 million in 1994.

The allowance at December 31, 1996 was $40.2 million, or 1.37% of total
loans compared to $38.7 million, or 1.40% of total loans at December 31, 1995
and $39.7 million, or 1.67% of total loans at December 31, 1994. While future
losses are difficult to predict, management believes that the current level of
the allowance is adequate to cover possible losses in the loan portfolio based
on the Bank's allowance methodology.

The following table presents, for analysis purposes only, the allocation
of the allowance by loan categories with respect to individual credits,
historical losses, foreseeable economic conditions and other factors pertaining
to specific industries (dollars in thousands):

<TABLE>
<CAPTION>
December 31,
------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
LOAN LOSS ALLOCATION

Commercial, financial and agricultural $11,595 $ 8,437 $11,990 $14,081 $10,603
Real estate - construction 1,216 1,273 940 1,346 2,580
Real estate - mortgage 8,675 10,104 9,221 7,926 9,803
Consumer 8,349 7,898 7,319 6,871 5,794
Unallocated 10,376 10,965 10,218 12,029 12,970
------- ------- ------- ------- -------
$40,211 $38,677 $39,688 $42,253 $41,750
======= ======= ======= ======= =======
</TABLE>

PERCENTAGE OF LOANS OUTSTANDING

<TABLE>
<S> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural 28.9% 29.7% 32.4% 28.6% 31.9%
Real estate - construction 3.9 3.3 3.3 3.1 3.7
Real estate - mortgage 45.3 45.2 41.5 45.4 42.6
Consumer 21.9 21.8 22.8 22.9 21.8
======== ======== ======== ======== ========
100.0% 100.0% 100.0% 100.0% 100.0%
======== ======== ======== ======== ========
</TABLE>

NONPERFORMING ASSETS

Nonperforming assets consist of loans on which interest is no longer
accrued (nonaccrual), certain restructured loans where the interest rate or
other terms have been materially changed due to the financial condition of the
borrowers (restructured), and other real estate. A loan is placed on
nonaccrual when management believes there is reasonable uncertainty about the
full collection of both principal and interest, or when the loan is
contractually past due ninety days or more, not well secured and not in process
of collection. The policy regarding nonperforming loans is to take
appropriate, timely and aggressive action when necessary to reach a timely
resolution.

The amounts of the Bank's nonperforming assets at the indicated dates
are shown in the following table (in thousands):

<TABLE>
<CAPTION>
December 31,
------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 8,891 $ 15,337 $ 22,799 $ 25,640 $ 9,956
Restructured loans -- -- -- -- 41
-------- -------- -------- -------- --------
Nonperforming loans 8,891 15,337 22,799 25,640 9,997
Other real estate 2,643 3,139 3,467 7,485 28,207
-------- -------- -------- -------- --------
Nonperforming assets $ 11,534 $ 18,476 $ 26,266 $ 33,125 38,204
======== ======== ======== ======== ========

Accruing loans past due 90 days or more $ 7,441 $ 4,084 $ 2,777 $ 2,433 $ 3,315
======== ======== ======== ======== ========
</TABLE>

(continued)

34
<PAGE> 45
<TABLE>
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratios:
Nonperforming assets to loans plus other real estate .39% .67% 1.10% 1.62% 1.96%
Nonperforming assets to total assets .26 .42 .65 .87 .87
</TABLE>

Interest income of approximately $1 million on nonaccrual and
restructured loans at December 31, 1996 would have been recorded in 1996 if
such loans had been in compliance with their original terms. Interest income
actually recorded on such loans in 1996 was $722 thousand.

Nonperforming assets decreased $6.9 million to $11.5 million at year-end
1996 compared to year-end 1995. These decreases were primarily attributable to
cash collections, property sales and restoration of loans to performing status,
while a portion was also due to charge-offs. The year-end 1996 total is
comprised of $8.9 million of nonaccrual and $2.6 million of other real estate.
The Bank had no restructured loans at year-end 1996, 1995 and 1994.

An additional $289 thousand of outstanding loans were not considered
nonperforming at December 31, 1996, but the borrowers, in management's
assessment, are experiencing financial difficulties severe enough that serious
doubt exists as to the borrowers' continued ability to comply with the present
terms of these loans.

CAPITAL AND DIVIDENDS

Net income for 1996, 1995 and 1994 added $69.6 million, $59.1 million
and $54.4 million, respectively, to capital. Capital was decreased by
dividends of $23.8 million, $18.9 million and $16.4 million declared in 1996,
1995, and 1994, respectively. Capital includes the unrealized gains on
securities available for sale, net of deferred taxes, which were $1.5 million
at December 31, 1996 compared to $13.5 million at December 31, 1995. Average
stockholders' equity to average assets for 1996 was 9.33% compared to 8.69% in
1995 and 8.54% in 1994.

The Office of the Comptroller of the Currency (OCC) has established
risk-based capital guidelines for national banks. Under the risk-based capital
guidelines, the minimum ratio of total capital to risk-weighted assets (total
capital) is 8%. At least half of the total capital is to be comprised of tier
I capital. Under these guidelines, the Bank's tier I capital and total
capital ratios were 12.07% and 13.32%, respectively, at December 31, 1996
compared to 10.96% and 12.19%, respectively, at December 31, 1995 and 11.25%
and 12.50%, respectively, at December 31, 1994. The Bank's strategy related to
risk-based capital is to maintain capital levels which will be sufficient to
qualify as "well capitalized". Maintaining capital ratios at the "well
capitalized" level avoids certain restrictions which, for example, could impact
the Bank's FDIC assessments, trust services and asset/liability management. At
December 31, 1996, the tier I and total capital ratios for the Bank were well
above the minimum 6% and 10% levels required to be categorized as a "well
capitalized" insured depository institution.

The Federal Reserve Board and the OCC have established minimum leverage
ratios for national banks requiring such banking organizations to maintain tier
1 capital of at least 4% of the quarterly average assets (net of the allowance
for possible loan losses) less goodwill and other nonqualifying intangible
assets. FDICIA also established a minimum leverage ratio requirement of 5% for
"well capitalized" institutions. The leverage ratios for December 31, 1996 and
1995 were 8.96% and 8.00%, respectively.

Capital adequacy is continuously monitored to ensure that appropriate
levels of capital are maintained to meet both current operating needs and
anticipated future requirements. The capital guidelines play a crucial role in
a banking organization's plans for business, asset allocations, acquisitions,
and expansion.

The approval of the Comptroller of the Currency (OCC) is required if the
total of all dividends declared by a national bank in any calendar year exceeds
the total of its net profits for that year combined with its retained net
profits of the preceding two years. In 1997, the Bank has available for
payment of dividends, without approval of the Comptroller of the Currency,
$85.9 million plus its net profits for 1997.

35
<PAGE> 46
OTHER OPERATING INCOME

Growth in noninterest related sources of income is one of the Bank's key
long-term strategies. The strategy is to develop new sources of noninterest
related income and to reprice services and products to manage their
profitability. Other operating income includes fees for trust services,
deposit service charges, mortgage loan servicing fees, income from
broker/dealer services and many other corporate and retail products.

During 1996, other operating income was $84.9 million compared to $67.7
million in 1995, an increase of $17.2 million. Other operating income for 1996
included additional revenue of $6.3 million resulting from the adoption of a
new accounting pronouncement. Excluding this item, other operating income
increased $ 10.9 million, or 16%, from 1995 to 1996. Approximately $3.9
million of the increase in other operating income for 1996 was due to
acquisitions. The remaining increase was due to a 10% increase in core fee
revenue sources.

Service charges on deposit accounts has historically represented one of
the primary sources of other operating income. Revenues in this area increased
approximately $1.4 million to $25.4 million in 1996 compared to 1995. This
increase was primarily the result of continuing growth in business volumes.
Fees for trust services increased 4%, to $9.9 million, net of acquisitions, in
1996 from $9.5 million in 1995. This increase was the result of new trust
business and an increase in the value of assets under management.

Other service charges, commissions and fees increased $15.1 million, or
49%, from $31.0 million in 1995 to $46.1 million in 1996. Approximately $3.5
million of this increase was a result of fee income generated by the acquired
companies. The adoption of SFAS No. 122 resulted in an increase in mortgage
loan origination income of $6.3 million for 1996 as compared to 1995. The
written covered call option program earned $1.2 million due to premiums
received on expired written option contracts. The remainder of the increase
resulted from increased income from broker/dealer services, mortgage loan
servicing and customer utilization of other retail services. Other income
increased $1.1 million, or 45%, to $3.4 million in 1996 as compared to 1995.

During 1995, other operating income decreased $3.2 million to $67.7
million compared to $70.9 million in 1994. Other operating income for 1995
included gains on sales of securities available for sale of $862 thousand
compared to $10.8 million for 1994. Excluding these gains, other operating
income increased $6.7 million, or 11% from 1994 to 1995. Approximately $1.8
million of this increase was due to acquisitions with the balance of the
increase due to increases in core fee revenue sources. Revenue from service
charges on deposits increased $2.3 million to $24.0 million primarily as a
result of continuing increase in business volumes. Fees for trust services
increased 5% to $9.5 million in 1995 compared to 1994 as a result of new
business. Other service charges, commissions and fees increased $4.3 million,
or 16%, to $31.0 million in 1995. Approximately $1.9 million of this increase
was the result of fee income generated from acquired companies. The remaining
increase resulted from increased income from core business services.

OTHER OPERATING EXPENSE

Enhancing operational efficiency without sacrificing quality of service
to customers continues to be a priority. A key measure used in the banking
industry to assess the level of noninterest expense is the efficiency ratio,
which is defined as noninterest expense divided by the sum of tax-equivalent
net interest income plus noninterest income. The efficiency ratio measures the
level of expense required to generate one dollar of revenue. Improvement in
the efficiency ratio is measured by a reduction in the percentage reported.
The efficiency ratios for 1996, 1995, and 1994 were 59.05%, 61.25% and 60.32%,
respectively.

Other operating expense increased $11.4 million, or 7%, to $163.5
million in 1996 compared to 1995. Other operating expense for 1995 included
the accrual of $3.5 million for the estimated cost of a proposed settlement of
a class action suit concerning collateral protection insurance which was
settled in 1996 at no additional cost. Approximately $9.4 million of the
increase in 1996 can be attributed to acquisitions. Excluding acquisitions and
nonrecurring charges in both years, expenses grew at a 4% rate in 1996 verses
1995.

Salaries and employee benefits, which account for 46% of other operating
expense, increased $9.5 million in 1996 compared to 1995. Approximately, $5.4
million of this increase is related to acquisitions. Excluding the effects of
acquisitions, salaries and employee benefits increased $4.1 million, or 6% in
1996.

36
<PAGE> 47
Combined net occupancy and equipment expense increased $1.4 million over
1995, primarily as a result of an increase in depreciation, rentals and
maintenance for banking facilities acquired through acquisitions and the cost
of increased automation to more effectively and efficiently deliver products
and services to our customers.

Service fees increased $926 thousand to $8.8 million in 1996 compared to
1995 largely as a result of increased professional and consulting fees in a
continuing effort to enhance products and their delivery to the customer, and
to provide efficiencies within the organization. This investment is expected
to be returned through increased operational efficiencies and enhanced revenue
in future periods. The FDIC assessment decreased $3.7 million from 1995 to
1996. This decrease was the result of the FDIC reducing the premium rate on
insured deposits.

Other expense increased $2.6 million, to $43.7 million in 1996 compared
to $41.1 million in 1995. Included in the 1995 other expense balance is the
$3.5 million litigation accrual. Other expense increased primarily as a result
of costs related to acquisitions, including $500 thousand due to amortization
of goodwill, core deposit intangibles and purchased mortgage servicing rights.

Other operating expense increased $17.9 million, or 13%, in 1995
compared to 1994. Approximately $4.7 million of the increase in 1995 can be
attributed to acquisitions. Salaries and employee benefits, which account for
44% of other operating expense for 1995, increased $6.8 million, or 11%, in
1995 compared to 1994. Combined net occupancy and equipment expense increased
$2.1 million over 1994 primarily due to acquisitions and the cost of increased
automation. The FDIC assessment decreased $3.0 million, or 44%, from 1994 to
1995 as a result of the FDIC lowering the premium rate on insured deposits.
Other expense increased $9.3 million, to $41.1 million in 1995, of which $2
million, or 17% of the increase, is related to acquisitions and $3.5 million
relates to the litigation accrual.

INCOME TAXES

Income tax expense was $33.8 million in 1996, compared to $30.2 million
in 1995 and $26.9 million in 1994. The increase in tax expense between 1996
and 1995 was primarily the result of increased pre-tax earnings. The effective
tax rate was 33% for 1996, 1995 and 1994. These effective tax rates are lower
than the statutory income tax rate primarily due to tax exempt interest income
received on certain loans and debt securities.

OUTLOOK

The Bank's growth closely follows the economy of the Mississippi area.
Mississippi's economy remains stable along with the other southern states.
Consumer spending and commercial loan demand have been steady, leaving the Bank
with three straight years of solid loan growth.

Much of the growth in the Mississippi economy has been driven by
advances in the gaming industry. Hotel/lodging and other industries that
benefit from the increase in tourism drawn by gaming have also seen strong
growth in 1996. Construction spending continues to be strong and is expected
to remain strong well into 1997.

As a result of the favorable economic outlook, loan volumes are expected
to continue to grow but at a more moderate level in 1997 as compared to 1996.
Most of the recent growth in the loan portfolio has come from consumers and
small middle market businesses, a trend that is expected to continue through
1997. Deposits began to grow after several years of being flat during 1996.
This trend is expected to continue at a slow to moderate pace in 1997.

The net interest margin has remained strong for the past two years and
is expected to remain so in 1997. Loan demand continues to exceed the growth
in deposits, contributing favorably to the net interest margin, although loan
and deposit spreads are expected to narrow somewhat in 1997.

Loan quality continued to improve throughout 1996 and is expected to
remain stable through 1997. Loan quality indicators are well within
management's acceptable ranges and are consistent with the current state of the
banking industry as a whole.

37
<PAGE> 48
The emphasis on fee income in 1996 paid off in substantial growth in
this revenue source. Further growth in fee income is expected in 1997 as the
Bank continues to explore nontraditional ways to provide services to an
expanding customer base as well as ways to enhance the wide range of existing
banking services offered. Expense control continues to be an area of intense
focus. Consolidation of the back-office is critical to improving operating
efficiency with such changes being transparent to the customer.

BUSINESS OF THE BANK

The Bank is headquartered in Jackson, Mississippi and engages in the
general banking business and activities closely related to banking, as
authorized by the banking laws of the United States and the regulations issued
pursuant thereto. Complete banking and trust services are offered to the
commercial, industrial and agricultural areas which it serves through 109
branches throughout Mississippi.

Deposit Guaranty's mortgage business includes McAfee Mortgage and
Investment Company, headquartered in Lubbock, Texas with branches located
throughout Texas; Deposit Guaranty Mortgage Company, a Mississippi business
corporation with branches throughout Mississippi and Louisiana; and First
Mortgage Corporation headquartered in Omaha, Nebraska, with branches in
Nebraska, Oklahoma, Arkansas and Iowa. The mortgage companies act as mortgage
bankers, engaging in mortgage lending, brokerage and servicing.

The Bank provides investment advice and brokerage services through its
subsidiaries, Deposit Guaranty Investments, Inc. and ParkSouth Corporation.

LEGAL OPINION

Watkins Ludlam & Stennis, P.A., of Jackson, Mississippi has rendered its
opinion that the shares of Deposit Guaranty Common Stock to be issued in
connection with the Merger have been duly authorized and if and when issued
pursuant to the terms of the Merger Agreement, will be validly issued, fully
paid and non-assessable.

EXPERTS

The consolidated financial statements of Deposit Guaranty as of December
31, 1996, and 1995 and for each of the years in the three-year period ended
December 31, 1996, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, also incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1994,
consolidated financial statements refers to a change in the method of
accounting for debt securities.

The consolidated financial statements of the Bank as of December 31,
1996, and for the year ended, have been included herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, also included herein, and upon the authority of
said firm as experts in accounting and auditing.

OTHER MATTERS

As of the date of this Information Statement/Prospectus, the Board of
Directors of Deposit Guaranty National Bank knows of no matters which will be
presented for consideration at the Meeting other than as set forth in the
notice of such Meeting attached to this Information Statement/Prospectus.

38
<PAGE> 49
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS OF DEPOSIT GUARANTY NATIONAL BANK

<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report F-2

Consolidated Statements of Condition as of
December 31, 1996 and 1995 (unaudited) F-3

Consolidated Statements of Earnings for the Years
Ended December 31, 1996, 1995 (unaudited)
and 1994 (unaudited) F-4

Consolidated Statements of Changes in Stockholders'
Equity for the Years ended December 31, 1996,
1995 (unaudited) and 1994 (unaudited) F-5

Consolidated Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 (unaudited)
and 1994 (unaudited) F-6

Notes to Consolidated Financial Statements F-7
</TABLE>

F-1
<PAGE> 50

Independent Auditors' Report

The Board of Directors and Stockholders
Deposit Guaranty National Bank:

We have audited the accompanying consolidated statement of condition of Deposit
Guaranty National Bank and subsidiaries as of December 31, 1996, and the
related consolidated statements of earnings, changes in stockholders' equity,
and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Bank's management. Our responsibility
is to express an opinion on these consolidated financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Deposit Guaranty
National Bank and subsidiaries as of December 31, 1996, and the results of
their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.

Jackson, Mississippi KPMG Peat Marwick LLP
February 5, 1997

F-2
<PAGE> 51
Consolidated Statements of Condition
Deposit Guaranty National Bank

<TABLE>
<CAPTION>
(In Thousands Except Share Data)
December 31,
--------------------------
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 282,752 $ 248,205
Interest-bearing bank balances 1,281 --
Federal funds sold and securities purchased under agreements to resell 104,900 441,015
Trading account securities 2,469 1,413
Securities available for sale 858,628 680,624
Investment securities (fair value: 1996-$ 118,967; 1995-$ 104,719) 112,982 102,734
Loans 2,945,704 2,762,215
Less: Allowance for possible loan losses (40,211) (38,677)
----------- -----------
Net loans 2,905,493 2,723,538
Bank premises and equipment 86,702 85,831
Other assets 155,291 149,166
----------- -----------

Total assets $ 4,510,498 $ 4,432,526
=========== ===========

LIABILITIES
Deposits:
Noninterest-bearing $ 856,217 $ 826,082
Interest-bearing 2,715,981 2,618,912
----------- -----------
Total deposits 3,572,198 3,444,994
Federal funds purchased, securities sold under agreements
to repurchase and other short-term borrowings 409,180 544,014
Notes payable to affiliates 35,000 --
Other liabilities 71,001 54,132
----------- -----------
Total liabilities 4,087,379 4,043,140
----------- -----------

STOCKHOLDERS' EQUITY
Common stock, $5 par value, authorized, issued
and outstanding: 3,225,181 shares 16,126 16,126
Surplus 158,865 158,865
Retained earnings 246,664 200,912
Unrealized gain on securities available
for sale, net of deferred income taxes 1,464 13,483
----------- -----------
Total stockholders' equity 423,119 389,386
----------- -----------

Total liabilities and stockholders' equity $ 4,510,498 $ 4,432,526
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 52
CONSOLIDATED STATEMENTS OF EARNINGS
Deposit Guaranty National Bank

(In Thousands Except Share Data)

Year Ended December 31,
-----------------------
1996 1995 1994
---------- ---------- ----------
(unaudited) (unaudited)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 247,419 $ 225,968 $ 165,998
Interest on investment securities:
Taxable 7,700 59,691 26,875
Exempt from Federal income tax -- 7,393 8,296
Interest on securities available for sale:
Taxable 39,480 4,848 26,307
Exempt from Federal income tax 9,279 766 26
Interest on trading account securities 279 166 147
Interest on Federal funds sold and securities
purchased under agreements to resell 10,601 4,453 7,952
Interest on bank balances 272 1,040 4,963
---------- ---------- ----------
Total interest income 315,030 304,325 240,564
---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits 105,647 103,739 81,592
Interest on Federal funds purchased, securities
sold under agreements to repurchase and other
short-term borrowings 22,782 24,938 12,417
Notes payable to affiliates 636 -- --
---------- ---------- ----------
Total interest expense 129,065 128,677 94,009
---------- ---------- ----------
Net interest income 185,965 175,648 146,555
Provision for possible loan losses 4,000 2,000 2,000
---------- ---------- ----------
Net interest income after provision for
possible loan losses 181,965 173,648 144,555
---------- ---------- ----------
OTHER OPERATING INCOME
Service charges on deposit accounts 25,394 23,962 21,613
Fees for trust services 9,867 9,471 9,061
Gains on securities available for sale 36 862 10,766
Other service charges, commissions and fees 46,116 30,973 26,677
Other 3,447 2,386 2,754
---------- ---------- ----------
Total other operating income 84,860 67,654 70,871
---------- ---------- ----------
OTHER OPERATING EXPENSE
Salaries and employee benefits 75,945 66,419 59,611
Net occupancy 9,953 9,010 8,575
Equipment 8,433 7,937 6,249
Service fees 8,816 7,890 7,326
Communication 6,468 5,920 6,030
FDIC assessment 89 3,748 6,753
Advertising and public relations 5,842 5,537 5,666
Mortgage servicing rights amortization 4,204 4,447 2,174
Other 43,700 41,149 31,821
---------- ---------- ----------
Total other operating expense 163,450 152,057 134,205
---------- ---------- ----------
Income before income taxes 103,375 89,245 81,221
Income tax expense 33,790 30,190 26,871
---------- ---------- ----------
Net income $ 69,585 $ 59,055 $ 54,350
========== ========== ==========
Net income per share $ 21.58 $ 18.31 $ 16.85
Weighted average shares outstanding 3,225,181 3,225,181 3,225,181
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 53
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Deposit Guaranty National Bank

(In Thousands Except Share Data)

Unrealized
Gain on
Securities
Common Retained Available
Stock Surplus Earnings For Sale
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 $ 16,126 $ 158,865 $ 122,742 $ --

Net income for 1994 -- -- 54,350 --
Cash dividends declared ($ 5.07 per share) -- -- (16,351) --
Cumulative effect of a change in accounting
principle, net of deferred income taxes
of $14,095 -- -- -- 22,755
Net change in unrealized gain on securities
available for sale, net of deferred income
taxes of $ 13,304 -- -- -- (21,478)
--------- --------- -------- ----------
BALANCE, DECEMBER 31, 1994 16,126 158,865 160,741 1,277

Net income for 1995 -- -- 59,055 --
Cash dividends declared ($ 5.85 per share) -- -- (18,884) --
Net change in unrealized gain on securities
available for sale, net of deferred income
taxes of $7,561 -- -- -- 12,206
--------- --------- -------- ----------
BALANCE, DECEMBER 31, 1995 16,126 158,865 200,912 13,483

Net income for 1996 -- -- 69,585 --
Cash dividends declared ($ 7.39 per share) -- -- (23,833) --
Net change in unrealized gain on securities
available for sale, net of deferred income
taxes of $7,445 -- -- -- (12,019)
--------- --------- -------- ----------
BALANCE, DECEMBER 31, 1996 $ 16,126 $ 158,865 $ 246,664 $ 1,464
========= ========= ========= ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 54
CONSOLIDATED STATEMENTS OF CASH FLOWS
Deposit Guaranty National Bank

<TABLE>
<CAPTION>
(In Thousands) Year Ended December 31,
-----------------------
1996 1995 1994
----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 69,585 $ 59,055 $ 54,350
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for possible loan losses 4,000 2,000 2,000
Provision for possible losses on other real estate 43 113 28
Provision for depreciation and amortization 18,045 16,723 11,235
Provision for deferred income tax expense (benefit) 2,844 (2,534) 172
Amortization (accretion) of premium (discount) on investment
securities, net 503 (15,152) (11,545)
Accretion of discount on securities available for sale, net (2,535) (462) (1,680)
Deferred loan fees and costs (1,874) (2,072) (2,278)
Increase (decrease) in other liabilities 22,214 13,198 (8,308)
(Increase) decrease in other assets (1,872) (26,065) 17,493
Net cash received from (paid for) loans held for resale (12,645) (44,459) 134,846
Gains on securities available for sale (36) (862) (10,766)
Other, net 3,065 (311) (4,480)
----------- ----------- -----------
Net cash provided (used) by operating activities 101,337 (828) 181,067
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing bank balances (1,281) 125,298 (65,298)
Proceeds from sales of securities available for sale 640,014 290,953 1,145,696
Proceeds from maturities and principal repayments of
investment securities 28,981 510,231 208,381
Proceeds from maturities and principal repayments of securities
available for sale 321,995 113,589 445,675
Purchases of investment securities (40,720) (394,367) (736,052)
Purchases of securities available for sale (1,145,158) (304,711) (696,130)
Net (increase) decrease in Federal funds sold and securities
purchased under agreements to resell 336,115 (259,220) (39,140)
Net increase in loans (158,410) (311,779) (386,082)
Proceeds from sales of other real estate 2,140 1,917 7,272
Purchases of bank premises and equipment (11,165) (12,624) (9,784)
Proceeds from sales of bank premises and equipment 157 550 2,728
Payment for purchase of common stock of acquired companies and
other acquisition costs (3,571) (16,225) (50,465)
Cash and due from banks of acquired companies 629 3,355 14,073
----------- ----------- -----------
Net cash used by investing activities (30,274) (253,033) (159,126)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 127,204 229,752 (45,536)
Net increase (decrease) in Federal funds purchased, securities
sold under agreements to repurchase, and
other short-term borrowings (141,065) 70,080 59,027
Repayment of line of credit -- (32,955) --
Cash dividends paid (22,655) (17,642) (16,110)
----------- ----------- -----------
Net cash provided (used) by financing activities (36,516) 249,235 (2,619)
----------- ----------- -----------
Increase (decrease) in cash and due from banks 34,547 (4,626) 19,322
Cash and due from banks at beginning of year 248,205 252,831 233,509
----------- ----------- -----------
Cash and due from banks at year end $ 282,752 $ 248,205 $ 252,831
=========== =========== ===========
</TABLE>

INCOME TAXES: The Bank made income tax payments of $32.7 million, $29.3
million and $28.1 million to its parent company during the years ended December
31, 1996, 1995 and 1994, respectively.

INTEREST: The Bank paid $129.7 million, 127.2 million and $94.4 million in
interest on deposits and other borrowings during the years ended December 31,
1996, 1995 and 1994, respectively.

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DEPOSIT GUARANTY NATIONAL BANK AND SUBSIDIARIES
(INFORMATION PRESENTED FOR 1995 AND 1994 IS UNAUDITED)

NOTE 1 - BUSINESS, BASIS OF FINANCIAL STATEMENT PRESENTATION, ACCOUNTING
POLICIES AND RECENT PRONOUNCEMENTS

BUSINESS

The Bank and its subsidiaries are engaged in the general banking
business and activities closely related to banking and provide these services
primarily to customers in Mississippi. The Bank is subject to the regulations
of certain federal agencies and undergoes periodic examinations by those
regulatory authorities.

BASIS OF FINANCIAL STATEMENT PRESENTATION

The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the consolidated
financial statements, the Bank is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the dates of
the statements of condition and the reported amounts of revenues and expenses
for the years then ended. Actual results could differ significantly from those
estimates.

Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the allowance for
possible loan losses and the valuation of real estate acquired in connection
with foreclosures or in satisfaction of loans. In connection with the
determination of the allowance for possible loan losses and real estate owned,
the Bank obtains independent appraisals for significant properties.

ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements of the Bank include Deposit
Guaranty National Bank and its wholly owned subsidiaries Deposit Guaranty
Mortgage Company and its subsidiary First Mortgage Corp., McAfee Mortgage and
Investment Company, and Deposit Guaranty Investments, Inc., (collectively
referred to as the Bank). The Bank is a 98%-owned subsidiary of Deposit
Guaranty Corp. (the Corp.). All significant intercompany accounts and
transactions have been eliminated in consolidation.

CASH EQUIVALENTS

The Bank considers only cash and amounts due from banks to be cash
equivalents.

TRADING ACCOUNT SECURITIES

Trading account securities are reported at fair value. Realized and
unrealized gains or losses on trading account securities are reflected in other
operating income.

SECURITIES AVAILABLE FOR SALE

Securities available for sale prior to maturity are reported at fair
value with unrealized gains and losses excluded from earnings and reported as a
separate component of stockholders' equity, net of related deferred income
taxes. Premiums are amortized and discounts are accreted using the interest
method. The amortization of premiums and accretion of discounts on
mortgage-backed securities are periodically adjusted to reflect the actual
prepayment experience of the underlying mortgage loans. Gains or losses on
sales of these securities, computed based on the carrying value of the specific
securities sold, are classified as gains on securities available for sale in
other operating income.

F-7
<PAGE> 56
INVESTMENT SECURITIES

Investment securities are securities which the Bank has the positive
intent and ability to hold to maturity. Investment securities are stated at
cost, adjusted for amortization of premiums and accretion of discounts using
the interest method. The amortization of premiums and accretion of discounts
on mortgage-backed securities are periodically adjusted to reflect the actual
prepayment experience of the underlying mortgage loans. Gains and losses on
sales of investment securities are computed based on the adjusted cost of the
specific securities sold.

DERIVATIVE FINANCIAL INSTRUMENTS

TRADING INSTRUMENTS: Derivative financial instruments held for trading
are recorded at fair value. These instruments are used by the Bank to generate
additional noninterest income. Realized and unrealized gains and losses on
trading positions are recognized in noninterest income during the period in
which the gain or loss occurs. Interest revenue and expense arising from
trading instruments are included in other operating income.

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

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

Premiums paid for interest rate caps and floors qualifying for hedge
accounting are deferred and classified with the assets and liabilities hedged
and are amortized to interest income and expense over the life of the
instrument.

INTEREST AND FEES ON LOANS

Interest on loans is recognized based on the interest method. The
recognition of interest is suspended on commercial loans when principal or
interest is past due ninety days or more and collateral is inadequate to cover
principal and interest or when, in the opinion of management, full collection
is unlikely. Interest on such loans is subsequently recognized only in the
period in which payments are received, and in certain situations, such payments
are applied to reduce principal when loans are unsecured or collateral values
are deficient. A nonaccrual loan is returned to accrual status provided all
principal and interest amounts are reasonably assured of repayment within a
reasonable period and the borrower has demonstrated sustained payment
performance. Nonrefundable loan fees and direct origination costs are deferred
and amortized over the life of the loan as an adjustment of the yield.
Commitment fees are deferred and recognized as noninterest income over the
commitment period.

ALLOWANCE FOR POSSIBLE LOAN LOSSES

The allowance for possible loan losses is maintained at a level
considered adequate to provide for reasonably foreseeable potential losses on
loans. The allowance is based on management's evaluation of the loan portfolio
considering economic conditions, volume and composition of the loan portfolio,
past experience and other relevant factors.

Effective January 1, 1995, the Bank adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan." SFAS No. 114 requires a creditor to measure impaired
and restructured loans at the present value of expected future cash flows,
discounted at the loan's effective interest rate, or as a practical expedient,
at the loan's observable market price or the fair value of the collateral if
the loan is collateral dependent. The difference between the impaired loan's
carrying value and the fair value is recognized as a valuation adjustment. The
Bank also adopted the provisions of SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures" on January 1, 1995.
SFAS No. 118 amends SFAS No. 114 by allowing creditors to use existing methods
for recognizing interest

F-8
<PAGE> 57
income on impaired loans and by requiring additional disclosures. These
statements did not have a material impact on the consolidated financial
statements.

OTHER REAL ESTATE OWNED

Other real estate owned includes assets that have been acquired in
satisfaction of debt. Other real estate owned is reported in other assets and
is recorded at the lower of cost or estimated fair value less estimated costs
to sell. Any valuation adjustments required prior to foreclosure are charged
to the allowance for possible loan losses. Subsequent to acquisition, losses
on the periodic revaluation of the property are charged to current period
earnings as other operating expense. Costs of operating and maintaining the
properties, net of related income and gains (losses) on their disposition, are
charged to other operating expense as incurred.

Expenditures to complete or improve properties are capitalized if the
expenditures are expected to be recovered upon the ultimate sale of the
property.

BANK PREMISES AND EQUIPMENT

Bank premises and equipment are stated at cost. Depreciation and
amortization are computed principally using the straight-line method over the
estimated useful lives of the assets. Any gain or loss resulting from
disposition is included in other operating income. Expenditures for
maintenance and repairs are charged to other operating expense and renewals and
betterments are capitalized.

Effective January 1, 1996, the Bank adopted the provisions of SFAS No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles to be held and used by the Bank be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Measurement of an
impairment loss for long-lived assets and identifiable intangibles that an
entity expects to hold and use is based on the fair value of the asset. This
statement requires that the majority of long-lived assets and certain
identifiable intangibles to be disposed of be reported at the lower of carrying
amount or fair value less cost to sell. The adoption of SFAS No. 121 did not
have a material impact on the consolidated financial statements.

INTANGIBLE ASSETS

Goodwill, representing the excess of the cost of acquisitions over the
fair value of the net assets acquired, is amortized using the straight-line
method over periods not exceeding 15 years. Core deposit intangibles represent
the net present value of the future economic benefits related to the use of
deposits assumed and are amortized on a straight-line basis generally over 10
years.

Bank management reviews its intangible assets for possible impairment
when there is a significant event that may detrimentally impact the underlying
basis of the asset.

Mortgage servicing rights represent the right to receive future
servicing income. Mortgage servicing rights are amortized over the period of,
and in proportion to, estimated net servicing income. At least annually, Bank
management evaluates the carrying amount of its servicing rights by analyzing
the discounted cash flows of such assets under current market conditions.

Effective January 1, 1996, the Bank adopted the provisions of SFAS No.
122 "Accounting for Mortgage Servicing Rights, an Amendment to SFAS No. 65."
SFAS No. 122 provides guidance for recognition of mortgage servicing rights as
an asset when mortgage loans are sold or securitized and servicing rights
retained. This statement also requires that an impairment of mortgage
servicing rights be measured as the difference between the carrying amount of
the servicing rights and their current fair values. SFAS No. 122 is applied
prospectively; therefore, the Bank's prior period financial statements do not
reflect the adoption of this pronouncement. The effect of this change for the
year ended December 31, 1996 was to increase net income by $3.3 million, net of
income taxes.

POSTRETIREMENT BENEFITS

The Bank accounts for postretirement and postemployment health care and
life insurance benefits using the full accrual method which recognizes the cost
of providing the benefits over the active service period of the employee.

F-9
<PAGE> 58
Effective January 1, 1994, the Bank adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 112, established standards
for accounting and reporting the cost of benefits provided by an employer to
its former or inactive employees after employment but before retirement. SFAS
No. 112 requires an employer to recognize an obligation for such benefits if
certain conditions are met. This statement did not have a material impact on
the consolidated financial statements.

INCOME TAXES

The Corp. files consolidated income tax returns which include the
results of operations of the Bank. Income taxes are allocated to the Bank as
if it filed separate income tax returns at the maximum applicable tax rate.
The Bank pays allocated current income taxes to the Corp.

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which the deferred
tax assets or liabilities are expected to be settled or realized.

NET INCOME PER SHARE

Net income per share is based on the weighted average number of shares
outstanding during each year.

RECENT PRONOUNCEMENTS

In June, 1996, the Financial Accounting Standards Board (FASB) issued
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," This statement establishes accounting and
reporting standards for transfers and servicing of financial assets and
extinguishment of liabilities. SFAS No. 125 requires that an entity recognize
the financial and servicing assets it controls and the liabilities it has
incurred. The entity will derecognize financial assets when control has been
surrendered and derecognize liabilities when extinguished. Consistent
standards are provided by this statement for distinguishing transfers of
financial assets that are sales from transfers that are secured borrowings.
This statement, as amended by SFAS No. 127, "Deferral of the Effective Date of
Certain Provisions of FASB Statement No. 125," is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996, and is effective after December 31, 1997, for
repurchase agreements, dollar-roll agreements, securities lending, and similar
transactions. The adoption of this statement will not have a material impact
on the consolidated financial statements.

NOTE 2 - CASH AND DUE FROM BANKS

The Bank is required to maintain average reserve balances with the
Federal Reserve Bank based on a percentage of deposits. The average amount of
those reserves for the year ended December 31, 1996, was approximately $14
million.

NOTE 3 - ACQUISITIONS

On May 18, 1994, the Bank acquired the outstanding common stock of First
Columbus Financial Corporation, a $209 million asset bank holding company, for
$50 million cash. The transaction was accounted for as a purchase. The
results of operations of this acquired company, which are not material, are
included in the financial statements from the date of acquisition.

On March 10, 1995, the Bank purchased the Coahoma County, Mississippi,
operations of a local Mississippi bank. This acquisition added assets of
approximately $82 million.

On August 8, 1995, the Bank purchased First Mortgage Corp. located in
Omaha, Nebraska for $15.8 million in a purchase business combination. At the
acquisition date, First Mortgage Corp. had a $1.1 billion mortgage servicing
portfolio and six production offices in Nebraska and Oklahoma. The results of
operations of this acquired company, which are not material, are included in
the financial statements from the date of acquisition.

F-10
<PAGE> 59
On June 29, 1996, the Bank purchased McAfee Mortgage and Investment
Company, located in Lubbock, Texas, in a transaction accounted for as a
purchase business combination. McAfee Mortgage and Investment Company had
fifteen offices located throughout Texas and originated approximately $240
million in mortgage loans in 1995. The results of operations of this acquired
company which are not material, are included in the 1996 financial statements
from the date of acquisition.

The following table reflects cash paid, assets acquired and liabilities
assumed (in thousands):

<TABLE>
<CAPTION>
1996 1995 1994
---------- ------------- ----------
McAfee First Columbus
Mortgage First Financial
Company Mortgage Corp. Corporation
---------- ------------- ----------
<S> <C> <C> <C>
Fair value of assets acquired $ 18,073 $ 59,388 $ 230,775
Cash paid for common stock and
other acquisition costs 3,571 16,225 50,465
---------- ---------- ----------

Liabilities assumed $ 14,502 $ 43,163 $ 180,310
========== ========== ==========
</TABLE>

NOTE 4 - RELATED PARTY TRANSACTIONS

The Corp. provides management and other services on behalf of the Bank
including executive management, the audit and accounting functions, credit
administration and data processing. The cost of those services is charged to
the Corp.'s subsidiaries on a reimbursement basis through a service and
management fee. During 1996, 1995 and 1994, such service and management fees
paid to the Corp. were $28.6 million, $24.6 million, and $23.8 million,
respectively. Management believes that such fees are reasonable and would not
be materially different if they had been incurred with unaffiliated third
parties.

At December 31, 1996, the Bank had notes payable to other subsidiaries
of the Corp. of $35.0 million. There were no notes payable to affiliates at
December 31, 1995.

The Bank acted as a counterparty on an interest rate contract with
another subsidiary of the Corp. In exchange for this service, the Bank
received a minimal fee from the subsidiary bank of $10 thousand. The notional
value of this interest rate contract at December 31, 1996 was $15.0 million.
The Bank entered into an offsetting contract with an unaffiliated third party.
Both contracts are reflected in the amounts disclosed in notes 15 and 16.

F-11
<PAGE> 60
NOTE 5 - SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES

The amortized cost and estimated fair value of securities available for
sale, and investment securities follow (in thousands):

<TABLE>
<CAPTION>
December 31,
----------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
SECURITIES AVAILABLE FOR SALE Cost Gains Losses Value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1996
U.S. Treasury and other U.S. Government agencies $ 410,063 $ 1,583 $ (5,647) $ 405,999
Obligations of states and political subdivisions 130,218 5,680 (1,000) 134,898
Mortgage-backed securities 316,803 1,836 (908) 317,731
--------- --------- --------- ---------
$ 857,084 $ 9,099 $ (7,555) $ 858,628
========= ========= ========= =========

1995
U.S. Treasury and other U.S. Government agencies $ 463,515 $ 11,556 $ -- $ 475,071
Obligations of states and political subdivisions 112,387 7,902 (70) 120,219
Mortgage-backed securities 83,907 1,427 -- 85,334
--------- --------- --------- ---------
$ 659,809 $ 20,885 $ (70) $ 680,624
========= ========= ========= =========

INVESTMENT SECURITIES

1996
Mortgage-backed securities $ 43,602 $ 3,597 $ -- $ 47,199
Other securities 69,380 2,423 (35) 71,768
--------- --------- --------- ---------
$ 112,982 $ 6,020 $ (35) $ 118,967
========= ========= ========= =========

1995
Mortgage-backed securities $ 57,580 $ 2,111 $ (660) $ 59,031
Other securities 45,154 545 (11) 45,688
--------- --------- --------- ---------
$ 102,734 $ 2,656 $ (671) $ 104,719
========= ========= ========= =========
</TABLE>

The amortized cost and estimated fair value of securities available for
sale and investment securities at December 31, 1996, by contractual maturity,
are shown below (in thousands). Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
December 31, 1996
-----------------
Securities Available for Sale Investment Securities
--------------------------------- ---------------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Due in one year or less $ 5,776 $ 6,137 $ 1,172 $ 1,242
Due after one year through five years 287,923 286,789 7,475 7,470
Due after five years through ten years 162,152 160,660 44,827 47,093
Due after ten years 84,430 87,311 15,906 15,963
--------------- --------------- --------------- ---------------

540,281 540,897 69,380 71,768
Mortgage-backed securities 316,803 317,731 43,602 47,199
--------------- --------------- --------------- ---------------

$ 857,084 $ 858,628 $ 112,982 $ 118,967
=============== =============== =============== ===============
</TABLE>

F-12
<PAGE> 61
Gross gains of $6.6 million, $991 thousand, and $24.2 million and gross
losses of $6.6 million, $129 thousand, and $13.4 million were realized on sales
of securities available for sale in 1996, 1995, and 1994, respectively.
Included in gross gains for 1996 and 1995 were $107 thousand and $796 thousand,
respectively related to premiums received for exercised written option
contracts on securities available for sale. Included in gross gains and gross
losses for 1994 were $8.4 million and $179 thousand, respectively, related to
the termination of interest rate swap agreements and sales of securities
associated with such agreements.

Securities available for sale and investment securities with a carrying
amount of $694.7 million (fair value $696.7 million) at December 31, 1996, and
$503.9 million (fair value $520.2 million) at December 31, 1995, were pledged
to secure public and trust deposits, for repurchase agreements, and for other
purposes.

NOTE 6 - LOANS

The Bank makes commercial, financial, agribusiness, real estate and
consumer loans to customers. Although the Bank has a diversified loan
portfolio, the majority of its loan portfolio is concentrated in the state of
Mississippi. Loans held for sale at December 31, 1996 and 1995 were $200.8
million and $173.6 million, respectively. The Bank services mortgage loans,
and at December 31, 1996, 1995 and 1994, the loan servicing portfolio
approximated $3.8 billion, $3.5 billion and $2.0 billion, respectively. The
composition of the loan portfolio follows (in thousands):

<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---------- ----------
<S> <C> <C>
Commercial, financial and agricultural $ 851,545 $ 820,357
Real estate - construction 113,649 91,951
Real estate - mortgage 1,336,823 1,250,863
Consumer 643,687 599,044
---------- ----------
Total loans $2,945,704 $2,762,215
========== ==========
</TABLE>

In the ordinary course of business, the Bank makes loans to directors
and principal officers of the Corp. and its subsidiaries, as well as other
related parties. In the opinion of management, such loans are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other parties. A
summary of changes in such loans during 1996 follows (in thousands):

<TABLE>
<S> <C>
Balance at January 1 $ 58,483
Additions 180,968
Reductions (including participations sold) (192,946)
---------
Balance at December 31 $ 46,505
=========
</TABLE>

Transactions in the allowance for possible loan losses follow (in
thousands):

<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Balance at January 1 $ 38,677 $ 39,688 $ 42,253
Additions due to acquisitions -- -- 2,123
Loans charged-off (9,859) (8,625) (13,187)
Recoveries on loans previously charged-off 7,393 5,614 6,499
---------- ---------- ----------
Net charge-offs (2,466) (3,011) (6,688)
Provision for possible loan losses 4,000 2,000 2,000
---------- ---------- ----------
Balance at December 31 $ 40,211 $ 38,677 $ 39,688
========== ========== ==========
</TABLE>

The Bank's total recorded investment in impaired loans as of December
31, 1996 and 1995 was $6.6 million and $13.2 million, respectively. Included
in the balance of impaired loans at December 31, 1996 and 1995 is $3.1 million
and $4.6 million which have related allowances of $512 thousand and $2.0
million, respectively for estimated credit losses determined in accordance with
the provisions of SFAS No. 114. The remaining $3.5 million and $10.0 million
of the balance of impaired loans at December 31, 1996 and 1995, respectively do
not require an allowance under the provisions of SFAS No. 114 since the
estimated future cash

F-13
<PAGE> 62
flows or the collateral value was considered sufficient to cover any future
deficiencies in loan payments. However, a general allowance for possible loan
losses is available to absorb any losses on these loans. The average recorded
investment in impaired loans for the years ended December 31, 1996 and 1995 was
$9.6 million and $14.7 million, respectively. All impaired loans are on
nonaccrual status and are subject to the nonaccrual method for interest income
recognition. There was no interest income recognized in 1996 and 1995 on loans
identified as impaired.

Loans on nonaccrual status amounted to approximately $8.9 million at
December 31, 1996 and $15.3 million at December 31, 1995. The effect on
interest income of nonaccrual loans was not material at December 31, 1996, 1995
or 1994. Restructured loans were not significant in 1996 and there were no
restructured loans in 1995 and 1994.

Other real estate owned amounted to approximately $2.6 million at
December 31, 1996 and $3.1 million at December 31, 1995. Transactions in the
allowance for possible losses on other real estate follow (in thousands):

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance at January 1 $ 966 $ 1,022 $ 1,205
Provision charged to expense 43 113 75
Losses charged to the allowance (683) (169) (258)
------- ------- -------
Balance at December 31 $ 326 $ 966 $ 1,022
======= ======= =======
</TABLE>

NOTE 7 - BANK PREMISES AND EQUIPMENT

A summary of bank premises and equipment follows (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
Land $ 17,067 $ 16,741
Buildings and leasehold improvements 106,629 101,366
Furniture and equipment 62,353 60,588
--------- ---------
186,049 178,695
Less: Accumulated depreciation and amortization (99,347) (92,864)
--------- ---------
Bank premises and equipment, net $ 86,702 $ 85,831
========= =========
</TABLE>

NOTE 8 - LEASES

Operating leases (primarily for branch bank space) expire at various
dates. Most of these leases may be renewed beyond their present expiration
dates. Future minimum payments under noncancelable operating leases with
initial or remaining terms of one year or more at December 31, 1996, follow (in
thousands):

<TABLE>
<S> <C>
1997 $ 1,653
1998 1,259
1999 793
2000 489
2001 308
Thereafter 1,458
-------
Total minimum lease payments $ 5,960
=======
</TABLE>

At December 31, 1996, the Bank leases office space to others with
expirations at various dates through 2005. These leases have an average term
of approximately three years and require total minimum rentals of approximately
$7.5 million. Most of these subleases may be renewed beyond their present
expiration dates.

F-14
<PAGE> 63
Rental expense of $3.7 million in 1996, $2.8 million in 1995, and $1.9
million in 1994 included amounts for short-term cancelable leases and minimum
rentals under operating leases.

NOTE 9 - DEPOSITS

The aggregate amount of short-term jumbo certificates of deposit, each
with a minimum denomination of $100,000, was approximately $238.9 million and
$249.4 at December 31, 1996 and 1995, respectively.

NOTE 10 - BORROWED FUNDS

Federal funds purchased and securities sold under agreements to
repurchase generally mature within one to four days from the transaction date.
Other borrowed funds consist of term federal funds purchased and treasury tax
and loan deposits and generally are repaid within one to 120 days from the
transaction date.

Information concerning securities sold under agreements to repurchase is
summarized as follows (in thousands):

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Average balance during the year $219,569 $224,894
Maximum month-end balance during the year 278,417 269,722
Average interest rate during the year 4.77% 5.04%
</TABLE>

The securities underlying repurchase agreements remain under the
Company's control.

NOTE 11 - INCOME TAXES

Total income tax expense was allocated as follows (in thousands):

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Income before income taxes $ 33,790 $ 30,190 $ 26,871
Stockholders' equity, for compensation expense for tax purposes in
excess of amount recognized for financial reporting purposes (358) (223) (23)
Stockholders' equity, for unrealized gains on securities
available for sale for financial reporting purposes,
including impact of adopting SFAS No. 115 (7,445) 7,561 791
-------- -------- --------
$ 25,987 $ 37,528 $ 27,639
======== ======== ========
</TABLE>

The current and deferred components of income tax expense follow (in
thousands):

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current: Federal $ 28,866 $ 30,151 $ 24,086
State 2,080 2,573 2,483
Deferred: Federal 2,415 (2,171) 262
State 429 (363) 40
-------- -------- --------
$ 33,790 $ 30,190 $ 26,871
======== ======== ========
</TABLE>

The differences between the income tax expense shown on the consolidated
statements of earnings and the amounts computed by applying the Federal income
tax rate of 35% to income before income taxes follow (in thousands):

F-15
<PAGE> 64
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Amount computed at statutory tax rates $ 36,181 $ 31,236 $ 28,427
Increases (decreases):
Tax exempt interest income (3,860) (3,365) (3,531)
Amortization of intangible assets 615 568 109
State income taxes, net 1,631 1,437 1,640
Other, net (777) 314 226
---------- ---------- ----------

$ 33,790 $ 30,190 $ 26,871
========== ========== ==========
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the net deferred tax asset follow (in thousands):

<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---------- ----------
<S> <C> <C>
Deferred tax assets
Allowance for possible loan losses $ 16,271 $ 15,584
Other real estate owned 163 375
Litigation reserve -- 1,339
Capitalized fees and costs 792 891
Deferred compensation 630 543
Other 1,826 2,907
---------- ----------
Total gross deferred tax asset 19,682 21,639
---------- ----------

Deferred tax liabilities
Bank premises and equipment 4,362 4,644
Pension plan 807 683
Core deposit intangibles 2,144 2,509
Mortgage servicing rights 7,970 3,651
Unrealized gain on securities available for sale 907 8,352
State income taxes 126 72
Other 190 677
---------- ----------
Total gross deferred tax liability 16,506 20,588
---------- ----------
Net deferred tax asset $ 3,176 $ 1,051
========== ==========
</TABLE>

There was no valuation allowance for the gross deferred tax asset as of
December 31, 1996, 1995 and 1994.

The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of historical
taxable income and anticipated future taxable income over the periods which the
deferred tax assets are deductible, management believes it is more likely than
not the Bank will realize the benefits of these deductible differences.

Income taxes resulting from securities transactions of $38 thousand,
$302 thousand, and $3.8 million in 1996, 1995 and 1994, respectively.

F-16
<PAGE> 65
NOTE 12 - EMPLOYEE BENEFIT PLANS

The Bank participates in the following employee benefit plans of the
Corp.:

- A defined benefit pension plan based upon age, length of
employment and hours of service covering substantially all
employees;
- A retirement savings plan covering substantially all employees;
and
- Employee stock purchase plan available to all full-time employees
who have attained legal majority and have one year of continuous
service.

Employee benefit expense (income) related to these plans follows (in
thousands):

<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Pension plan $ (323) $ (10) $ (558)
Retirement savings plan 1,761 1,580 1,532
Other plans 366 228 493
--------- --------- ---------
$ 1,804 $ 1,798 $ 1,467
========= ========= =========
</TABLE>

Benefits under the defined benefit pension plan are based on years of
service and the employee's compensation during the last five years of
employment. The Bank's funding policy is to contribute an amount which will
satisfy the minimum funding requirements of ERISA and will not exceed the
maximum tax-deductible amount allowed by the IRS. The annual contribution is
determined by an enrolled actuary and incorporates benefits earned to date and
in the future and is allocated to each of the Corp.'s subsidiaries based upon
the ratio of each subsidiary's total salary dollars to the Corp.'s total
consolidated salary dollars. As of December 31, 1996 and 1995, the fair value
of the plan assets which are primarily corporate securities, exceeded the
accumulated benefit obligation. Information relating to the defined benefit
pension plan's funding status is not separately available for the Bank.

The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligations was 7.25% in 1996 and 1995.
The rate of increase in future compensation was 5.0% in 1996 and 1995. The
expected long-term rate of return on plan assets was 9.0% in 1996 and 1995.

Under the retirement savings plan, the Bank automatically contributes an
amount equal to 2% of each participant's base salary to the plan. A
participant, in addition, may elect to contribute up to 10% of base salary to
the plan. The Bank contributes an additional amount to the plan equal to 50%
of the participant's contribution up to 5% of base salary. Effective January
1, 1997, employees can contribute up to 15% of base salary.

Participants in the employee stock purchase plan may contribute up to 5%
of their base salary. The Bank's contribution to each participant's account is
25% of the participant's contribution. Common stock of Deposit Guaranty Corp.
is purchased for the plan on the open market.

The Bank also provides certain health care and life insurance benefits
for retired employees. For those employees who have retired and active
employees eligible to retire, as of January 1, 1993, the Bank shares in the
cost of these benefits. Employees eligible to retire are those age 55 with 10
years of service. The Bank pays 50% of the cost of these benefits for the
retiree and covered spouse until the retiree becomes Medicare eligible (age
65). After the retiree attains age 65, the retiree pays the full cost of these
benefits. Active employees not eligible to retire before January 1, 1993, pay
the full cost of coverage for these benefits at retirement. The plan is
unfunded.

The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25% in 1996 and 1995. The assumed health care cost
trend rate used in measuring the accumulated postretirement benefit obligation
was 10.6% in 1996 and 11.4% in 1995, graded down to 9.8% in 1997 and graded
down each year to an ultimate rate of 5% in 2008. If the health care cost
trend rate assumptions were increased by 1%, the accumulated postretirement
benefit obligation as of December 31, 1996, would be increased by 1.23%. The
effect of this change on the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for 1996 would be an
increase of .99%.

F-17
<PAGE> 66
NOTE 13 - EQUITY RESTRICTIONS

The Bank is subject to certain regulations controlling national banks
that restrict the amount of dividends that may be distributed and the amount of
loans that may be made by the banks to their parent company.

The approval of the Comptroller of the Currency is required if the total
of all dividends declared by a national bank in any calendar year exceeds the
total of its net profits, as defined, for that year combined with its retained
net profits of the preceding two years. The Bank has available for payment of
dividends in 1997, without regulatory approval, $85.9 million plus its net
profits for 1997.

NOTE 14 - REGULATORY MATTERS

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
and 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 (set forth in
the table below) of Total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of December 31, 1996,
that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 1996, the most recent notification from the Office of
the Comptroller of the Currency 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 as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the institution's category.

The Bank's actual capital amounts and ratios are also presented in the
table.

<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
----------------- ----------------- ------------------------
Amount Rate Amount Rate Amount Rate
------ ----- ------ ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital greater than greater than
(to Risk Weighted Assets): $ 430,478 13.32% $ 258,584 or = to 8.00% $ 323,230 or = to 10.00%

Tier 1 Capital greater than greater than
(to Risk Weighted Assets): 390,267 12.07 129,292 or = to 4.00 193,938 or = to 6.00

Tier 1 Capital greater than greater than
(to Average Assets): 390,267 8.96 174,206 or = to 4.00 217,758 or = to 5.00

As of December 31, 1995:
Total Capital greater than greater than
(to Risk Weighted Assets): 382,106 12.19 250,699 or = to 8.00 313,374 or = to 10.00

Tier 1 Capital greater than greater than
(to Risk Weighted Assets): 343,430 10.96 125,349 or = to 4.00 188,024 or = to 6.00

Tier 1 Capital greater than greater than
(to Average Assets): 343,430 8.00 171,745 or = to 4.00 214,682 or = to 5.00

</TABLE>

F-18
<PAGE> 67
NOTE 15 - OFF-BALANCE SHEET RISK, COMMITMENTS AND CONTINGENCIES

The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit, standby and commercial
letters of credit, securities lent, futures and forward contracts, interest
rate contracts and options. Those instruments involve, to varying degrees,
elements of credit and/or interest rate risk in excess of the amounts
recognized in the consolidated financial statements. The contract or notional
amounts of those instruments reflect the extent of involvement the Bank has in
particular classes of financial instruments.

The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby and commercial letters of credit is represented by the contractual
notional amount of those instruments. The Bank uses the same credit policies
in making commitments and conditional obligations as it does for on-balance
sheet instruments. For futures, forward contracts, interest rate contracts,
and options, the contract or notional amounts do not represent exposure to
credit loss. Credit risk for those instruments is controlled by limits and
monitoring procedures.

COMMITMENTS
At December 31, 1996, the financial instruments whose contract amounts
represent credit risk and those whose notional or contract amounts exceed the
amount of on-balance sheet credit risk are listed in the following table (in
thousands):

<TABLE>
<CAPTION>
Contract
Amount
-----------
<S> <C>
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $ 1,029,355
Standby letters of credit 86,719
Commercial letters of credit 4,354
Financial instruments whose notional or
contract amounts exceed the amount
of credit risk:
Commitments to purchase securities 34,560
Commitments to sell securities 2,285
</TABLE>

Commitments to extend credit are agreements to lend money with fixed
expiration dates or other termination clauses. The Bank periodically
reassesses the customers' creditworthiness through ongoing credit reviews.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. Collateral is obtained based on the Bank's assessment of the
customer's creditworthiness.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. The credit risk and
collateralization policy involved in issuing standby letters of credit is
essentially the same as that involved in extending loans to customers.

The Bank issues commercial letters of credit which are short-term
commitments used to finance commercial contracts for the shipment of goods.
Under these instruments, the Bank substitutes its own creditworthiness for that
of the customer by committing to pay a third party under certain contractual
conditions. These instruments are collateralized by the goods being shipped.

Commitments to purchase and sell securities, futures and forward contracts
are contracts for delayed delivery of securities, foreign currencies or money
market instruments in which the seller agrees to make delivery of a specified
instrument at a specified future date, at a specified price or yield. Risks
arise from the possible inability of counterparties to meet the terms of their
contracts and from movements in interest rates and securities values.

F-19
<PAGE> 68
DERIVATIVES

The Bank maintains an active trading account in Eurodollar futures and
options in order to maintain a presence in those markets. Trading activities
are confined to relatively small dollar limits on exchange-traded instruments.
Trading activities in those instruments resulted in a net loss of $25 thousand
for 1996. There were no notional amounts outstanding at December 31, 1996.

The Bank sometimes acts as a counterparty on interest rate contracts with
another subsidiary of the Corp. These written contracts are always offset by
interest rate contracts purchased from counterparties outside of the Corp. In
exchange for this service, the Bank will receive a minimal fee from the
subsidiary bank. The total notional value of these written contracts was $15
million as of year-end 1996 with a net unrealized loss of $234 thousand.

Trading instruments are recorded at fair value, with realized and unrealized
gains and losses recognized in other operating income. Exposure to market risk
is managed in accordance with risk limits set by senior management. All
positions are netted for risk-management purposes. Credit risk is minimized by
using only exchange-traded futures and options, utilizing a position netting
strategy, and requiring that all positions be fully collateralized.

Risk management derivative instruments are used to manage the Bank's exposure
to interest rate and market risk. The notional or contract amounts on these
instruments normally exceed the amount of credit risk to the Bank. The 1996
year-end positions of the Bank in these instruments are summarized in the
following table (in thousands):

<TABLE>
<CAPTION>
Contract or
Notional Amount
---------------
<S> <C>
Interest rate swap agreements $ 22,622
Interest rate caps 100,000
Interest rate floors 315,000
Forward contracts 130,500
</TABLE>

Interest rate swap agreements are entered into by the Bank primarily to
manage interest rate exposure. These are contractual agreements between
counterparties to exchange interest streams based on notional principal amounts
over a set period of time. Interest rate swap agreements normally involve the
exchange of fixed and floating rate interest payment obligations without the
exchange of the underlying principal amounts. The notional or principal amount
does not represent an amount at risk, but is used only as a basis for
determining the actual cash flows related to the interest rate contracts.
Market risk, due to potential fluctuations in interest rates, is inherent in
swap agreements. As of December 31, 1996, the Bank had no aggregate estimated
cost of replacement ( the cost of replacing an existing contract if the
counterparty defaults) for the interest rate swap contracts. All interest rate
swap counterparties have collateral arrangements with the Bank.

Interest-rate caps with three-year maturities were purchased during 1994 in
order to protect net interest income in the event of further increases in
interest rates, and were assigned to certificates of deposit with maturities of
three months or less. The interest rate caps allow the Bank to limit its
exposure to unfavorable interest fluctuations over and above a "capped" rate.
A premium is paid for this protection. The risk assumed by the Bank is limited
to the amount of the premium and not the notional amount of the interest rate
cap. At December 31, 1996, the unamortized portion of the interest rate cap
premium was $751 thousand.

Interest-rate floors with five-year maturities were purchased during 1995 in
anticipation of decreases in interest rates, and were assigned to commercial
loans. The interest-rate floors allow the Bank to limit its exposure to
unfavorable interest fluctuations below a particular rate. A premium is paid
for this protection. The risk assumed by the Bank is limited to the amount of
the premium and not the notional amount of the interest-rate floor. At
December 31, 1996, the unamortized portion of the interest-rate floor was $2.4
million.

Futures and forward contracts are contracts for the delayed delivery of
securities in which the seller agrees to make delivery of a specified
instrument at a specified future date, at a specified price or yield. Risks
arise from the possible inability of the counterparties to meet the terms of
their contracts and from movements in interest rates and securities values.
The Bank intends to offset or close out open positions prior to settlement;
therefore, the total contract amounts of futures and forward contracts

F-20
<PAGE> 69
represent the extent of the Bank's involvement. The Bank is subject only to
the change in value of the instruments. Futures contracts settle in cash
daily, therefore there is minimal risk to the Bank.

The Bank was a party to a small number of foreign exchange spot and forward
transactions during 1996 and 1995. These contracts generally involve the
exchange of United States currency for a foreign currency. Spot
foreign-exchange transactions normally settle within two business days, and
forward transactions can settle up to a year in the future. At December 31,
1996, the Bank had no foreign exchange contracts outstanding.

Option contracts allow the holder of the option to purchase or sell a
financial instrument from the seller or writer of the option at a specified
price within a specified period of time. The Bank has sold options on
securities held in the available for sale securities portfolio during the year.
The premiums received on those options totaled $1.6 million. Options which
have been sold do not expose the Bank to credit risk. At December 31, 1996,
the Bank had no option contracts outstanding.

LITIGATION

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

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

NOTE 16 - FAIR VALUES OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
requires that the Bank disclose estimated fair values for its financial
instruments. Because no market exists for a significant portion of the
financial instruments, fair value estimates are based on judgment regarding
future expected loss experience, current economic conditions, and other
factors.

These estimates are subjective in nature and involve uncertainties and
matters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions significantly affect the estimates and as
such, the derived fair value may not be indicative of the value negotiated in
an actual sale and may not be comparable for the Bank versus other financial
institutions.

In addition, the fair value estimates are based on existing
on-and-off-balance sheet financial instruments without attempting to estimate
the value of anticipated future business and the value of assets and
liabilities that are not considered financial instruments. For example, the
Bank has significant fee generation businesses that are not considered
financial instruments and their value has not been incorporated into the fair
value estimates. Significant assets that are not considered financial assets
include trust services, the mortgage banking operation, brokerage network,
deferred tax assets, bank premises and equipment, core deposit intangibles and
goodwill. In addition, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in the estimates. Fair value estimates,
methods, and assumptions are set forth below.

CASH AND SHORT-TERM INVESTMENTS: The carrying amount is a reasonable estimate
of fair value for cash, interest-bearing bank balances, federal funds sold and
securities purchased under agreements to resell due to the maturity of those
instruments being less than six months.

F-21
<PAGE> 70
TRADING ACCOUNT SECURITIES: The carrying amount of trading account securities
is fair value which is based on quoted market prices, where available. If a
quoted market price is not available, fair value is estimated using quoted
market prices for similar securities.

SECURITIES AVAILABLE FOR SALE AND INVESTMENT SECURITIES: Fair values for
securities available for sale and investment securities are based on quoted
market prices, where available. If quoted market prices are not available,
fair values are based on quoted market prices of comparable instruments.

LOANS: The fair values are estimated for portfolios of loans with similar
characteristics. Loans are segregated by type such as commercial taxable and
nontaxable, residential mortgage and consumer. Each loan category is further
segmented into fixed and adjustable rate interest terms and by performing and
nonperforming categories.

The fair value of performing adjustable-rate loans is the carrying amount
adjusted for the discounted value of the expected future loan losses. The fair
value of performing fixed-rate loans is calculated by discounting cash flows
based on estimated scheduled maturities reduced by expected future loan losses.
The discount rate is estimated using the rate currently offered for similar
loans with similar maturities. The fair value of residential mortgage loans is
based on quoted market prices.

The fair value of nonperforming loans is calculated by discounting expected
cash flows as projected based on historical cash flows of such nonperforming
loans adjusted for expected loan losses. The discount rate is estimated using
the rates currently offered for acceptable credit quality loans with similar
maturities.

DEPOSITS: The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits and savings accounts, is equal to the
amount payable on demand, which is also their carrying amount. The fair value
of certificates of deposit is based on the discounted value of contractual cash
flows. The discount rate is estimated using the rates currently offered for
deposits of similar maturities.

SHORT-TERM BORROWINGS: The carrying amounts of federal funds purchased,
securities sold under agreements to repurchase and other short-term borrowings
approximate their fair values due to the short maturity of those instruments.

COMMITMENTS: The fair value of commercial commitments to extend credit and
letters of credit is the remaining unamortized amount of the prepaid fee
charged to enter into the agreement or the discounted cash flows of estimated
fees that will be charged over the life of the agreement taking into account
the remaining terms of the agreements and counterparties' credit standing. The
fair value of residential mortgage lending commitments is based on quoted
market prices considering expected funding, the contractual interest rates and
current market rates.

DERIVATIVES: Interest rate swaps, interest rate caps, interest rate floors,
futures, forwards, and option contracts are the primary derivative financial
instruments used by the Bank. The fair value of interest rate swap agreements,
interest rate caps, interest rate floors, futures, forwards, and option
contracts are obtained from market quotes. These values represent the
estimated amount the Bank would receive or pay to terminate the contracts or
agreements, taking into account current interest rates and, when appropriate,
the current creditworthiness of the counterparties. The estimated fair values
of the Bank's financial instruments are as follows (in thousands):

F-22
<PAGE> 71
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------- ------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Financial Assets:
Cash and short-term investments $ 388,933 $ 388,933 $ 689,220 $ 689,220
Trading account securities 2,469 2,469 1,413 1,431
Securities available for sale 858,628 858,628 680,624 680,624
Investment securities 112,982 118,967 102,734 104,719
Loans 2,905,493 2,914,851 2,723,538 2,740,082

Financial Liabilities:
Deposits 3,572,198 3,584,444 3,444,994 3,462,972
Short-term borrowings 515,181 515,181 598,146 598,146

Commitments:
Commitments to extend credit (1,198) (5,228) (1,443) (4,750)
Letters of credit -- (1,222) -- (1,034)
Commitments to purchase securities -- (898) -- 77
Commitments to sell securities -- (8) -- 58

Risk Management derivatives:
Interest rate swap agreements (16) (182) (23) (1,118)
Forward contracts -- 377 -- (1,623)
Interest rate caps 751 7 1,537 99
Interest rate floors 2,494 2,572 1,081 2,181
</TABLE>

F-23
<PAGE> 72
EXHIBIT A

PLAN OF REORGANIZATION AND BANK MERGER AGREEMENT

BY AND AMONG

DEPOSIT GUARANTY CORP.,

DEPOSIT GUARANTY INTERIM NATIONAL BANK

AND

DEPOSIT GUARANTY NATIONAL BANK
<PAGE> 73
PLAN OF REORGANIZATION AND BANK MERGER AGREEMENT

This Plan of Reorganization and Bank Merger Agreement ("Bank Merger
Agreement") is made and entered into as of April 21, 1997, by and between
DEPOSIT GUARANTY INTERIM NATIONAL BANK, Jackson, Mississippi, a national
banking association in organization under the laws of the United States
("Interim") and DEPOSIT GUARANTY NATIONAL BANK, Jackson, Mississippi, a
national banking association organized under the laws of the United States
("Bank"), each association acting by and through its Board of Directors, and
joined in by Deposit Guaranty Corp., Jackson, Mississippi, a Mississippi
business corporation ("DGC").

W I T N E S S E T H:

In consideration of the premises, and the covenants contained herein,
Interim, Bank and DGC hereby make, adopt and approve this Bank Merger Agreement
and prescribe the terms and conditions of the merger and the mode of carrying
the merger into effect, as follows:

SECTION 1. Merger; Capitalization. (a) On the date and at the
time (hereinafter sometimes called the "Effective Date") determined in
accordance with Section 10 hereof and subject to the terms and conditions
hereof, Bank shall be merged with and into Interim under Interim's Articles of
Association and Charter (hereinafter called "Resulting Bank" when in connection
with events following the merger).

(b) As of December 31, 1996, the Bank had capital of $16,125,905
divided into 3,225,181 shares of common stock authorized, each of $5.00 par
value ("Bank Common Stock"), surplus of $158,864,659 and undivided profits,
including capital reserves, of $248,197,248. As of April 21, 1997, Interim had
capital of $200,000 divided into 40,000 shares of common stock authorized,
each of $5.00 par value ("Interim Common Stock"), and surplus of $40,000. On
the Effective Date, the amount of capital of the Resulting Bank shall be
$200,000 divided into 40,000 shares of common stock, each of the par value of
$5.00, and on the Effective Date, the Resulting Bank shall have a surplus of
$174,790,564, plus the value of the consideration to be paid in the merger to
Bank shareholders other than DGC, and undivided profits, including capital
reserves, of $248,197,248 adjusted, however, for the results of operations of
the Bank between December 31, 1996 and the Effective Date and for any other
acquisitions which may be consummated between December 31, 1996 and the
Effective Date.

SECTION 2. Name of Resulting Bank. At the Effective Time, ARTICLE
FIRST of the Articles of Association of Interim which presently reads as
follows:

FIRST. The title of the Association shall be "Deposit Guaranty Interim
National Bank."

shall be deleted and a new ARTICLE FIRST shall be added to read as follows:

FIRST. The title of the Association shall be "Deposit Guaranty National
Bank."

SECTION 3. Operations After the Merger. Upon the Effective Date, the
Board of Directors and officers of the Resulting Bank shall consist of the
Board of Directors and officers of Bank immediately preceding the Effective
Date, the bylaws of Bank shall be the bylaws of the Resulting Bank, the main
office of the Resulting Bank shall be 210 East Capitol Street, Jackson,
Mississippi, each branch of Bank shall be a branch office of the Resulting
Bank, and the resolutions, guidelines and policies heretofore adopted by the
Board of Directors of Bank and in effect on the Effective Date shall continue
in full force and effect after the merger.

SECTION 4. Effect of the Merger. (a) Upon the Effective Date, the
corporate existence of Bank and Interim shall be merged into Interim and
continued in the Resulting Bank, thereafter known as Deposit Guaranty National
Bank and the Resulting Bank shall be deemed to be the same business and
corporate entity as Bank and Interim. All rights, franchises and interests of
Bank and Interim, respectively, in and to every type of property (real,
personal and mixed) and choses in action shall be deemed to be transferred to
and vested in the Resulting Bank without any deed or other transfer, and the
Resulting Bank, without any order or other action on the part of
<PAGE> 74
any court or otherwise, shall hold and enjoy the same and all rights of
property, franchises and interests, including appointments, designations and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar or transfer agent of stocks and bonds, guardian,
conservator, assignee, receiver, and in every other fiduciary capacity, in the
same manner and to the same extent as was held or enjoyed by Bank and Interim,
respectively, at the Effective Date.

(b) Upon the Effective Date, the Resulting Bank shall be liable for all
liabilities of Bank and Interim; and all deposits, debts, liabilities,
obligations and contracts of Bank and Interim, respectively, matured or
unmatured, whether accrued, absolute, contingent or otherwise, and whether or
not reflected or reserved against on balance sheets, books of account, or
records of Bank or Interim, as the case may be, shall be those of the Resulting
Bank, thereafter known as Deposit Guaranty National Bank, and shall not be
released or impaired by the merger; and all rights of creditors and other
obligees and all liens or property of either Bank or Interim shall be preserved
unimpaired.

(c) Upon the Effective Date, each branch office maintained by Bank as a
branch office immediately before the merger becomes effective, shall become a
branch office of the Resulting Bank.

(d) It is intended that the Bank Merger shall constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement shall
constitute a "plan of reorganization" within the meaning of Section 368 of the
Code.

SECTION 5. Conversion of Shares. (a) Upon the Effective Date each
share of Bank Common Stock issued and outstanding immediately prior to the
Effective Date, other than shares of Bank Common Stock owned by stockholders
who perfect dissenters' rights ("Dissenting Shares"), shall, by virtue of this
Bank Merger Agreement and without any action on the part of the holder thereof,
be converted into and exchangeable solely for 9.667 shares of common stock, no
par value, of DGC (the "DGC Common Stock") (the "Exchange Ratio") subject to
adjustment as provided herein and, in respect of fractional shares, subject to
Section 5(c) hereof. If prior to the Effective Date DGC should split or
combine DGC Common Stock, or pay a dividend or other distribution in DGC Common
Stock, then the Exchange Ratio shall be appropriately adjusted to reflect such
split, combination, dividend or distribution.

(b) Each outstanding certificate representing shares of the Bank at the
Effective Date shall thereafter represent shares of DGC at the above-described
Exchange Ratio and shall be exchanged by its holder for a new certificate
representing shares of DGC. As soon as practicable after the Effective Date,
the Bank, acting as exchange agent, shall mail to each holder of record, of a
certificate or certificates which immediately prior to the Effective Date
represented issued and outstanding shares of the Bank Common Stock (the
"Certificates"), a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing DGC Common Stock. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of shares of DGC Common Stock to which such holder of the Bank Common
Stock shall have become entitled pursuant to the provisions hereof, and the
Certificate so surrendered shall forthwith be canceled. Lost Certificates
shall be treated in accordance with the existing procedures of the Bank. No
dividends or other distributions declared after the Effective Date with respect
to DGC Common Stock and payable to the holders of record thereof after the
Effective Date shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate. Subject to the
effect, if any, of applicable law, after the subsequent surrender and exchange
of a Certificate, the record holder thereof shall be entitled to receive any
such dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to the shares of DGC Common Stock
into which the shares represented by such Certificate have been converted.

(c) No certificates or scrip representing fractional shares of DGC
Common Stock shall be issued upon the surrender for exchange of such
certificates, no dividend or distribution with respect to DGC Common Stock
shall

2
<PAGE> 75
be payable on or with respect to any fractional share, and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a shareholder of DGC. In lieu of any such fractional share, DGC
shall pay to each former shareholder of Bank who otherwise would be entitled to
receive a fractional share of DGC Common Stock an amount in cash determined by
multiplying (i) the closing sale price of a share of DGC Common Stock on the
date immediately proceeding the Effective Date as quoted on the New York Stock
Exchange, by (ii) the fraction of a share of DGC Common Stock to which such
holder would otherwise be entitled.

(d) If any certificate representing shares of DGC Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to
the exchange agent in advance any transfer or other taxes required by reason of
the issuance of a certificate representing shares of DGC Common Stock in any
name other than that of the registered holder of the Certificate surrendered,
or required for any other reason, or shall establish to the satisfaction of the
exchange agent that such tax has been paid or is not payable.

(e) After the Effective Date there shall be no transfers on the stock
transfer books of the Bank of the shares of the Bank Common Stock which are
outstanding immediately prior to the Effective Date. If, after the Effective
Date, Certificates representing such shares are presented for transfer to the
exchange agent, they shall be canceled and exchanged for certificates
representing shares of DGC Common Stock as provided herein.

(f) At the Effective Date, DGC shall be entitled to receive a dividend
out of capital surplus of Resulting Bank in an amount equal to the initial
capitalization of Interim immediately before the Effective Date.

(g) Shareholders of the Bank shall have the right to dissent and
receive the fair value of their shares as provided for in 12 U.S.C. Section
215a.

(h) Shares of DGC Common Stock issued to Bank shareholders shall be
registered under the Securities Act of 1933, as amended.

(i) No additional shares of Interim Common Stock shall be issued in
connection with the merger.

SECTION 6. Approval. This Bank Merger Agreement shall be submitted
to the shareholders of the Bank for ratification and confirmation at a meeting
to be called and held in accordance with the applicable provisions of law and
with its Articles of Association and bylaws. Bank shall proceed expeditiously
and shall cooperate fully in the procurement of any other consents and
approvals and in the taking of any other action, and the satisfaction of all
other requirements prescribed by law or otherwise, necessary for consummation
of the merger on the terms herein provided, including, without being limited
to, the preparation and submission of an application to the Comptroller of the
Currency.

SECTION 7. Conditions. The obligations of Bank and Interim to
consummate the merger are subject to the following conditions, any of which,
however, to the extent permitted by law, may be waived by Interim and Bank:

(a) This Bank Merger Agreement and the merger contemplated hereby shall
have been ratified and confirmed by the shareholders of Bank and Interim as and
to the extent required by law.

(b) All consents and approvals, including those of all regulatory
agencies having jurisdiction, shall have been procured, and all other
requirements prescribed by law which are necessary for consummation of the
merger shall have been satisfied.

3
<PAGE> 76
(c) None of the parties hereto shall be subject to any order, decree,
or injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the merger.

(d) Bank, Interim and DGC shall have received an opinion of Messrs.
Watkins Ludlam & Stennis, P.A. substantially to the effect that the
transactions contemplated by this Bank Merger Agreement will be treated for
federal income tax purposes as a tax-free reorganization under Section 368 of
the Code.

(e) A Registration Statement relating to the shares of DGC Common Stock
to be issued pursuant to this Bank Merger Agreement shall become effective
under the Securities Act of 1933 and shall not be subject to any stop order or
a threatened stop order. All necessary consents or permits from or
registrations or filings with state securities commissions shall have been
obtained or made.

(f) Bank, Interim and DGC shall have received from Messrs. Watkins
Ludlam & Stennis, P.A., an opinion, dated as of the Closing, in form and
substance satisfactory to Bank, Interim and DGC to the effect that:

(i) The authorized capital stock of DGC consists of 100,000,000
shares of DGC Common Stock, 25,000,000 shares of Class A Voting
Preferred Stock, no par value, and 25,000,000 shares of Class B
Non-Voting Preferred Stock, no par value. All shares of DGC
Common Stock to be issued to holders of Bank Common Stock will
be, when issued as described in this Bank Merger Agreement and
the Registration Statement, duly authorized and validly issued,
fully paid and non-assessable;

(ii) This Agreement has been duly and validly authorized,
executed and delivered by DGC, Interim and Bank and is a valid
and binding agreement enforceable against each of them, except
that enforcement may be limited by bankruptcy, reorganization,
insolvency and other similar laws and court decisions relating to
or affecting the enforcement of creditors' rights generally and
by general equitable principles. All corporate acts required on
the part of DGC, Interim and Bank for the consummation of the
merger have been taken;

(iii) The execution and delivery by Bank, Interim and DGC of
this Bank Merger Agreement, consummation by Bank, Interim and DGC
of the transaction contemplated hereby and compliance by Bank,
Interim and DGC with the provisions hereof will not violate the
Articles of Association or Incorporation of Bank, Interim and
DGC, as the case may be, or violate, result in a breach of, or
constitute a default under, any material lease, mortgage,
contract, agreement, instrument, judgment, order or decree to
which Bank, Interim and DGC is a party or to which they may be
subject;

(iv) The Registration Statement has become effective, and to
such counsel's knowledge, no stop order suspending its
effectiveness has been issued nor have any proceedings for that
purpose been instituted; and

(v) The Registration Statement and each amendment or supplement
thereto, as of their respective effective or issue date, complied
as to form in all material respects with the requirements of the
Securities Act of 1933 and the rules and regulations promulgated
thereunder, and we do not know of any contracts or documents
required to be filed as exhibits to the Registration Statement
which are not filed as required; it being understood that such
counsel need express no opinion as to the financial statements or
other financial or statistical data contained in or omitted from
the Registration Statement or the Proxy Statement.

SECTION 8. Counterparts. This Bank Merger Agreement may be executed
in two or more counterparts, each of which when executed and delivered by the
parties hereto shall be an original, but all of which together shall constitute
a single agreement.

4
<PAGE> 77
SECTION 9. Termination. This Bank Merger Agreement may be terminated
by resolution of the appropriate Board(s) of Directors and upon written notice
to the other parties:

(a) By any party, if any action, suit, proceeding or claim has been
instituted, made or threatened relating to the proposed merger which shall make
consummation of the merger inadvisable in the opinion of the Board of Directors
of Bank, Interim or DGC; or

(b) By any party, if any action, consent or approval, governmental or
otherwise, which is, or in the opinion of counsel for Bank, Interim or DGC may
be, necessary to permit or enable the Resulting Bank, upon and after the
merger, to conduct all or any part of the business and activities of the Bank
up to the time of the merger, in the manner in which such activities and
business are then conducted, shall not have been obtained; or

(c) By Bank, if there shall be a material adverse change in the
consolidated financial condition of DGC from that reflected in DGC's financial
statements for the period ended December 31, 1996; or

(d) By the mutual consent of all parties, if for any other reason
consummation of the merger is inadvisable in the opinion of the Board of
Directors of Bank, Interim and DGC; or

(e) By any party, in the event dissenters' rights are exercised with
respect to more than fifty percent (50%) of the shares of Bank Common Stock
held by shareholders other than DGC.

Upon termination by written notice as provided in this Section 9, this
Bank Merger Agreement shall be void and of no further effect, and there shall
be no liability by reason of this Bank Merger Agreement or the termination
thereof on the part of either the Bank, Interim, DGC or the directors,
officers, employees, agents or shareholders of any of them.

SECTION 10. Effective Date. Subject to the terms and upon satisfaction
of all requirements of law and the conditions specified in this Bank Merger
Agreement including, among other conditions, receipt of approval of the
Comptroller of the Currency, the merger shall become effective at the time
specified in the certificate to be issued by the Comptroller of the Currency
under its seal approving the merger.

SECTION 11. Expenses. All out-of-pocket costs and expenses incurred
in connection with this Bank Merger Agreement, and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.

SECTION 12. Amendment. Bank and Interim by mutual consent of their
respective Boards of Directors, to the extent permitted by law, may amend,
modify, supplement and interpret this Bank Merger Agreement in such a manner as
may be mutually agreed upon by them in writing at any time before or after
adoption thereof by shareholders of Bank or Interim; provided, however, that no
such amendment, modification or supplement shall change the amount or kind of
consideration to be issued by DGC to the shareholders of Bank, except by the
affirmative written consent of Bank's common shareholders.

SECTION 13. Binding Effect; No Third Party Beneficiaries. This Bank
Merger Agreement shall be binding upon and shall inure to the benefit of the
parties hereto; provided, however, that neither this Bank Merger Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other parties, and that
nothing in this Bank Merger Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by reason of
this Bank Merger Agreement.

SECTION 14. Governing Law. This Bank Merger Agreement shall be
governed by the laws of the United States of America and the laws of the State
of Mississippi, without giving effect to the principles of conflicts of laws
thereof.

5
<PAGE> 78
IN WITNESS WHEREOF, Bank, Interim and DGC have caused this Bank Merger
Agreement to be executed in counterparts by their respective duly authorized
officers and their corporate seals to be hereunto affixed as of the date first
above written, and a majority of the entire Boards of Directors of Bank and
Interim, have hereunto subscribed their names.

[SIGNATURES]

<PAGE> 79

EXHIBIT B

DISSENTERS' RIGHTS PROVISIONS OF 12 U.S.C. Section 215a

215a. MERGER OF NATIONAL BANKS OR STATE BANKS INTO NATIONAL BANKS.

. . . . .

(b) DISSENTING SHAREHOLDERS

If a merger shall be voted for at the called meetings by the necessary
majorities of the shareholders of each association or State bank participating
in the plan of merger, and thereafter the merger shall be approved by the
Comptroller, any shareholder of any association or State bank to be merged into
the receiving association who has voted against such merger at the meeting of
the association or bank of which he is a stockholder, or has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
from the plan of merger, shall be entitled to receive the value of the shares
so held by him when such merger shall be approved by the Comptroller upon
written request made to the receiving association at any time before thirty
days after the date of consummation of the merger, accompanied by the surrender
of his stock certificates.

The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the merger, by an appraisal made by a
committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the receiving
association; and (3) one selected by the two so selected. The valuation agreed
upon by any two of the three appraisers shall govern. If the value so fixed
shall not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five days after being notified of the
appraised value of his shares, appeal to the Comptroller, who shall cause a
reappraisal to be made which shall be final and binding as to the value of the
shares of the appellant.

(d) APPLICATION TO SHAREHOLDERS OF MERGING ASSOCIATIONS: APPRAISAL BY
COMPTROLLER; EXPENSES OF RECEIVING ASSOCIATION; SALE AND RESALE OF SHARES;
STATE APPRAISAL AND MERGER LAW

If, within ninety days from the date of consummation of the merger, for
any reason one or more of the appraisers is not selected as herein provided, or
the appraisers fail to determine the value of such shares, the Comptroller
shall upon written request of any interested party cause an appraisal to be
made which shall be final and binding on all parties. The expenses of the
Comptroller in making the reappraisal or the appraisal, as the case may be,
shall be paid by the receiving association. The value of the shares
ascertained shall be promptly paid to the dissenting shareholders by the
receiving association. The shares of stock of the receiving association which
would have been delivered to such dissenting shareholders had they not
requested payment shall be sold by the receiving association at an advertised
public auction, and the receiving association shall have the right to purchase
any of such shares at such public auction, if it is the highest bidder
therefor, for the purpose of reselling such shares within thirty days
thereafter to such person or persons and at such price not less than par as its
board of directors by resolution may determine. If the shares are sold at
public auction at a price greater than the amount paid to the dissenting
shareholders, the excess in such sale price shall be paid to such dissenting
shareholders. The appraisal of such shares of stock in any State bank shall be
determined in the manner prescribed by the law of the State in such cases,
rather than as provided in this section, if such provision is made in the State
law; and no such merger shall be in contravention of the law of the State under
which such bank is incorporated. The provisions of this subsection shall apply
only to shareholders of (and stock owned by them in) a bank or association
being merged into the receiving association.

. . . . .
<PAGE> 80
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Deposit Guaranty is incorporated under the laws of Mississippi.
Subarticle E of Article 8 of the Mississippi Business Corporation Act
prescribes the conditions under which indemnification may be obtained by a
present or former director or officer of Deposit Guaranty who incurs expenses
or liability as a consequence of matters arising out of his activities as a
director or officer.

Article Nine of Deposit Guaranty's Articles of Incorporation also
provides for indemnification of officers and directors under certain
circumstances. Deposit Guaranty has purchased a liability policy which, subject
to any limitations set forth in the policy, indemnifies Deposit Guaranty's
directors and officers for damages that they become legally obligated to pay as
a result of any negligent act, error or omission committed by such person in
his capacity as an officer or director.

ITEM 21. EXHIBITS

The following exhibits are furnished (or incorporated by reference) as a
part of this Registration Statement:

Exhibit Number Description
-------------- -----------
2* Plan of Reorganization and Bank Merger Agreement
included as Exhibit A to the Information Statement/
Prospectus contained herein

5* Opinion of Watkins Ludlam & Stennis, P.A. regarding
legality of common stock registered hereby

8* Opinion of Watkins Ludlam & Stennis, P.A. regarding
tax matters

23(a)* Consent of KPMG Peat Marwick LLP, independent
accountants, with respect to consolidated financial
statements of Deposit Guaranty Corp. and Deposit
Guaranty National Bank

23(b)* Consent of Watkins Ludlam & Stennis, P.A. is
contained in their opinion filed as Exhibit 5 to
this Registration Statement

23(c)* Consent of Ray & Collins Associates, Inc.

24* Power of attorney included as part of signature
page

*Previously filed.

ITEM 22. UNDERTAKINGS

(1) The Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.

(2) The Registrant hereby undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and issued in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new
<PAGE> 81
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) The Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

(4) The Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.

(5) The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(6) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 20 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE> 82
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Deposit
Guaranty has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Jackson, State of Mississippi on this the 18th day of April, 1997.

DEPOSIT GUARANTY CORP.

BY: /s/ E. B. ROBINSON, JR.
----------------------------------
E. B. Robinson, Jr.
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ E. B. ROBINSON, JR. Chairman of the Board April 18, 1997
- --------------------------- and Director (Principal
E. B. Robinson, Jr. Executive Officer)

* President and Director April 18, 1997
- ---------------------------
Howard L. McMillan, Jr.

* Executive Vice President April 18, 1997
- --------------------------- (Principal Financial Officer)
Arlen L. McDonald

* Controller (Principal April 18, 1997
- --------------------------- Accounting Officer)
Stephen E. Barker
</TABLE>

<PAGE> 83

* Director April 18, 1997
- ----------------------------
Richard H. Bremer

* Director April 18, 1997
- ----------------------------
Charles L. Irby

* Director April 18, 1997
- ----------------------------
Richard D. McRae, Jr.

* Director April 18, 1997
- ----------------------------
W. R. Newman, III

* Director April 18, 1997
- ----------------------------
John N. Palmer

*BY: /s/ E. B. ROBINSON, JR.
- ----------------------------
E. B. Robinson, Jr.
Attorney-in-Fact

</TABLE>