Deposit Guaranty Corp. of Jackson, Miss., is reportedly fielding bids to sell out, and merger advisers think Regions Financial Corp. and Union Planters Corp. are the most likely buyers.

"Regions talked to Deposit about a year and a half ago. The timing just wasn't right, but there is still a lot of good chemistry between those companies," said Barry P. Taff, a partner in Silver, Freedman & Taff, a Washington law firm.

Deposit Guaranty recently enlisted Credit Suisse First Boston Corp. to find a buyer. Since Nov. 17 its stock has shot up to $49 per share from just over $37, a whopping 32% gain.

The process is being watched closely because there are still numerous midsize banks in the South, and the price Deposit Guaranty fetches will establish a benchmark minimum takeover value for banks in neighboring states.

Regions is based in Montgomery, Ala., and Union Planters in Memphis. Mr. Taff advised Magna Bancorp in the Hattiesburg, Miss., thrift's $323 million sale to Union Planters earlier this year.

Investment bankers consider Mississippi among the country's least desirable banking markets. As a result, a bank in Tennessee or Louisiana could likely demand more than Deposit Guaranty gets.

"The phenomenal price CoreStates received for selling has got everyone hot and bothered down here," said the chief financial officer of a southern regional bank. "It's like everybody's saliva is going."

Few observers believe Deposit Guaranty will attract a serious bid from a bank outside the Deep South. But that group includes NationsBank Corp., First Union Corp., as well as Banc One Corp., which recently agreed to buy First Commerce Corp. of New Orleans.

Most said the buyer would likely be a southern regional with $10 billion to $30 billion of assets, such as Regions, Union Planters, Amsouth Bancorp, SouthTrust Corp., or Hibernia Corp.

That is because Deposit Guaranty, which has $6.8 billion of assets and operates 137 branches in Mississippi, Louisiana, and Arkansas, is too small to generate much interest among the biggest players, sources said.

"Union Planters is the most desirable franchise in the area," said one source. "They've been on a buying spree lately, so they've got a platform in Mississippi and several other states. If you want Mississippi, you'd get that through them plus some faster-growing markets."

Deposit Guaranty has a book value of $15.29 per share. If the bank sells for 3.5 times book-a typical rate for big bank sales lately-the company would fetch $53.515 per share, or about $2.2 billion.

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