ITEM 1. BUSINESS
THE PEOPLES BANCTRUST COMPANY, INC. AND THE PEOPLES BANK AND TRUST COMPANY
The Peoples BancTrust Company, Inc. ("BancTrust") is a bank holding company incorporated under the laws of the State of Alabama in April 1984. BancTrust is registered under the Bank Holding Company Act of 1956, as amended (the "Holding Company Act"). BancTrust is the holding company for The Peoples Bank and Trust Company ("Peoples Bank"), which was chartered by the State of Alabama in 1902 and acquired by BancTrust in April 1985.
BancTrust and Peoples Bank are headquartered in Selma, Alabama. Peoples Bank conducts a general commercial and full-service retail banking business in Dallas, Autauga, Butler, Bibb and Elmore counties and surrounding areas of Alabama. In addition, Peoples Bank offers trust and financial management services. Peoples Bank provides banking services to individuals, corporations and others. Peoples Bank's services also include the sale of traveler's checks, the rental of safe deposit facilities, collection of domestic and foreign items, issuance of cashier's checks and money orders, 24-hour Automated Teller Machine ("ATM") service, bank by mail and night depository and other customary banking services. Peoples Bank makes commercial, personal, construction and real estate loans and accepts both demand and time deposits. Peoples Bank offers a wide variety of other financial products through its brokerage department and insurance agency.
Peoples Bank is a member of the Federal Deposit Insurance Corporation ("FDIC"), and its deposit accounts are insured by the Bank Insurance Fund ("BIF") to a maximum of $100,000 for each insured depositor. Peoples Bank is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the "FRB") and the State Banking Department of the State of Alabama (the "Banking Department"). There are also various requirements and restrictions under the laws of the United States of America and the State of Alabama which affect the operations of Peoples Bank. These laws include usury requirements, restrictions relating to investments and other requirements. See "Regulation, Supervision and Governmental Policy."
BancTrust's executive offices and the main office of Peoples Bank are located at 310 Broad Street, Selma, Alabama 36701. Peoples Bank also operates four branches in Selma, three branches in Prattville, two branches in Greenville and one branch in each of Plantersville, Georgiana, McKenzie, Centreville, Millbrook and Montevallo, Alabama. BancTrust's telephone number is (334) 875-1000.
ACQUISITIONS
On March 6, 1998, BancTrust announced that, as of such date, it had consummated the acquisition of Merchants & Planters Bancshares, Inc. ("Bancshares"), the parent company of Merchants & Planters Bank, an Alabama commercial bank based in Montevallo, Alabama ("Merchants Bank"). BancTrust paid $20,085,083 in cash for the outstanding shares of common stock of Bancshares, representing consideration of $949.38 per share. The acquisition was approved by the shareholders of Bancshares at a special meeting of stockholders on March 5, 1998. The operations Merchants Bank have not been merged with those of Peoples Bank. BancTrust currently expects to consummate the merger of Merchants Bank into Peoples Bank by mid-April, 1998.
On December 11, 1997, BancTrust and Elmore County Bancshares, Inc. ("Elmore County"), the holding company for The Bank of Tallassee, executed a definitive agreement for the merger of Elmore County with and into BancTrust. In the merger, BancTrust will issue shares of its common stock in exchange for the outstanding common stock of Elmore County. Based on the terms of the definitive agreement, it is currently estimated that BancTrust will issue 3.1075 shares of its common stock for each outstanding share of Elmore County common stock. Such exchange ratio is based on the unaudited book value of Elmore County as of September 30, 1997. The acquisition is subject to a number of conditions, including receipt of all regulatory and shareholder approvals.
LENDING ACTIVITIES
Loan Composition. The following table sets forth a five-year ---------------- comparison of major categories of BancTrust's loans.
- ---------- (1) Includes real estate-construction loans.
The above loans include agricultural loans totaling approximately $16.5 million, $16.2 million, $15.6 million, $13.6 million and $7.9 million at December 31, 1997, 1996, 1995, 1994 and 1993, respectively. Such agricultural loans do not include other business or personal loans the proceeds of which were used for non-agricultural purposes, with the primary source of repayment being a farm commodity (e.g., timber). See Note 5 of Notes to Consolidated Financial Statements in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 which is incorporated herein by reference.
Loan Maturities. The following table reflects at December 31, 1997 --------------- the dollar amount of loans maturing or subject to rate adjustment based on their contractual terms to maturity. Loans with fixed rates are reflected based upon the contractual repayment schedule while loans with variable interest rates are reflected based upon the contractual repayment schedule up to the contractual rate adjustment date. Demand loans, loans having no stated schedule of repayments and loans having no stated maturity are reported as due within three months.
- ---------- (1) Includes real estate-construction loans of $4.4 million, all of which mature within one year.
Note 5 of Notes to Consolidated Financial Statements in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) is incorporated herein by reference.
Commercial and Industrial Loans. BancTrust's primary lending activity ------------------------------- consists of the origination of commercial and industrial loans. Such loans are generally originated in BancTrust's primary lending area. BancTrust's commercial and industrial loans are made for a variety of business purposes, including working capital, inventory and equipment and capital expansion. At December 31, 1997, commercial and industrial loans outstanding totaled $91. 9 million, or 35.5% of BancTrust's total net loan portfolio. The terms for commercial and industrial loans are generally less than one year. Commercial and industrial loan applications must be supported by current financial information on the borrower and, where appropriate, by adequate collateral. Approval of the loans is subject to the borrower qualifying for the loan under BancTrust's underwriting standards. These types of loans are generally considered to be a higher credit risk than other loans originated by BancTrust.
Real Estate Mortgage Loans. BancTrust also originates one-to-four -------------------------- family, owner-occupied residential mortgage loans secured by property located in BancTrust's primary market area. The majority of BancTrust's residential mortgage loans consists of loans secured by owner-occupied, single-family residences. At December 31, 1997, BancTrust had $88.2 million, or 34.1% of its total net loan portfolio, in real estate mortgage loans.
Personal Loans. At December 31, 1997, BancTrust's personal loan -------------- portfolio totaled $72.0 million, or 27.8% of BancTrust's total net loan portfolio. BancTrust's personal loan portfolio is comprised of automobile loans (including automobile loans requested by dealers), home improvement loans, unsecured personal notes, mobile home loans, boat loans, credit card loans, and loans secured by savings deposits. Although personal loans tend to have a higher risk of default than other loans, management believes that its loan loss experience with its personal loan portfolio is favorable. However, the performance of such loans will be affected by the local economy.
Lending Limits. BancTrust's limit for unsecured loans to individual -------------- customers is 10% of the capital accounts of BancTrust. The limit for unsecured and secured loans combined to individual customers is 20% of the capital accounts of BancTrust, subject to certain terms and conditions. For customers desiring loans in excess of BancTrust's lending limits, BancTrust may loan on a participation basis, with its correspondent banks taking the amount of the loan in excess of BancTrust's lending limits. In other cases, BancTrust may refer such borrowers to larger banks or other lending institutions.
Nonaccrual, Past Due, Restructured and Potential Problem Loans. -------------------------------------------------------------- BancTrust classifies its problem loans into four categories: non-accrual loans, past-due loans, restructured loans, and potential problem loans. At December 31, 1997, there were no material amounts of potential problem loans which were not included in the other three categories of problem loans.
When management determines that a loan no longer meets the criteria for performing loans and that collection of interest appears doubtful, the loan is placed on nonaccrual status. All loans which are 90 days past due are considered nonaccrual, unless they are adequately secured and there is reasonable assurance of full collection of principal and interest. Management closely monitors all loans which are contractually 90 days past due, restructured or on nonaccrual status. These loans are summarized as follows:
Management of BancTrust has identified certain loans aggregating approximately $9.1 million at December 31, 1997 (including loans identified in the above table) which it has determined require special attention due to potential weaknesses. The largest five loans aggregated approximately $3.7 million and ranged in size from $912,000 million to $603,000. It is management's opinion that the allowance for loan losses (see below) is adequate to absorb potential losses related to such loans. Aggressive efforts continue to reduce principal, secure additional collateral and improve the overall payment status of these loans.
The following table sets forth BancTrust's potential problem loans at December 31, 1997 by loan category and the amount and type of collateral securing such loans.
- ---------- (1) Includes approximately $1.8 million of loans collateralized by accounts receivable, inventory, furniture and fixtures and automobile dealer floor plans.
Loan Loss Experience. Notes 1 and 5 of Notes to Consolidated -------------------- Financial Statements contained in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) are incorporated herein by reference.
The allowance for possible loan losses at BancTrust is maintained at a level which, in management's opinion, is adequate to absorb all potential losses on loans then present in the loan portfolio. The amount of the allowance is affected by: (1) loan charge-offs, which decrease the allowance; (2) recoveries on loans previously charged-off, which increase the allowance; and (3) the provision of possible loan losses charged to income, which increase the allowance. In determining the provision for possible loan losses, it is necessary for management to monitor fluctuations in the allowance resulting from actual charge-offs and recoveries, and to periodically review the size and composition of the loan portfolio in light of current and anticipated economic conditions in an effort to evaluate portfolio risks. Ultimately, the amount of the provision is that amount sufficient to maintain the allowance at a level which reflects management's judgment of those risks.
The following is a summary of activity in the allowance for loan losses for the periods:
- ---------- (1) Includes real estate-construction loans.
The following table presents an allocation of BancTrust's allowance for loan losses at the dates indicated:
INVESTMENT ACTIVITIES
Securities by Category. Investments are classified as either held-to- ---------------------- maturity, trading or available-for-sale securities. See Note 1 of Notes to Consolidated Financial Statements. There were no securities classified as held- to-maturity or trading at December 31, 1995, 1996 and 1997. The following table sets forth the amount of securities available-for-sale by major categories held by BancTrust at December 31, 1997, 1996 and 1995.
Corporate and other securities as of December 31, 1997, were comprised of the following:
All rated corporate notes are in the A1 to AAA range. One non-rated security, an in-state general obligation bond, was issued by a public utility company. All collateralized mortgage obligations are either guaranteed by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation or have AAA ratings. Common stock holdings include investments in the Federal Reserve Bank, Federal Home Loan Bank and another local bank, which is closely monitored by management.
Management considers all of the above securities to have a relatively low level of risk.
For information regarding the amortized cost and approximate market value of securities at December 31, 1997, 1996 and 1995, see Note 4 of Notes to Consolidated Financial Statements contained in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) which is incorporated herein by reference.
Maturity Distributions of Securities. The following table sets forth the ------------------------------------ distributions of maturities of securities at amortized cost as of December 31, 1997.
- ---------- (1) Yields on tax-exempt obligations have been computed on a tax-equivalent basis using an incremental rate of 34%.
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. For information regarding the amortized cost and approximate market value of securities at December 31, 1997, by contractual maturity, see Note 4 of Notes to Consolidated Financial Statements contained in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) which is incorporated herein by reference.
DEPOSITS
Deposits are the primary source of funds for BancTrust. BancTrust's deposits consist of checking accounts, regular savings deposits, NOW accounts, Money Market Accounts, market rate Certificates of Deposit and Jumbo Certificates of Deposit. Deposits are attracted from individuals, partnerships and corporations in BancTrust's market area. In addition, BancTrust obtains deposits from state and local entities and, to a lesser extent, U.S. Government and other depository institutions. BancTrust does not accept brokered deposits. As of December 31, 1997, BancTrust's total deposits were $298.1 million.
The following table indicates the amount of BancTrust's certificates of deposit and other time deposits of $100,000 or more by time remaining until maturity as of December 31, 1997.
The following table sets forth the average balances and average interest rates based on daily balances for deposits for the periods indicated.
COMPETITION
In order to compete effectively, BancTrust relies substantially on local commercial activity; personal contacts by its directors, officers, other employees and shareholders; personalized services; and its reputation in the communities it serves.
BancTrust is presently competing in its market area with four Alabama holding companies. It also competes with four independent banks, several credit unions, and various other nonbank financial companies.
The banking business in Alabama generally, and BancTrust's primary service areas specifically, are highly competitive with respect to both loans and deposits. BancTrust competes with many larger banks and other financial institutions which have offices over a wide geographic area. These larger institutions have certain inherent advantages, such as the ability to finance wide ranging advertising campaigns and promotions and to allocate their investment assets to regions offering the highest yield and demand. They also offer services such as international
banking, which are not offered directly by BancTrust (but could be offered indirectly through correspondent institutions); and by virtue of their larger total capitalization (legal lending limits to an individual consumer or corporation are limited to a percentage of BancTrust's total capital accounts), such banks have substantially higher lending limits than does BancTrust. Other entities, both governmental and in private industry, raise capital through the issuance and sale of debt and equity securities and thereby indirectly compete with BancTrust in the acquisition of deposits.
Under the federal Bank Holding Company Act of 1956 (the "Holding Company Act"), as amended by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Riegle-Neal Act"), Alabama banks and their holding companies may be acquired by out-of-state banks or their holding companies, and Alabama banks and their holding companies may acquire out-of-state banks without regard to whether the transaction is prohibited by the laws of any state. Under the Riegle-Neal Act and Alabama law, the FRB may not approve the acquisition of a bank in Alabama if such bank has not been in existence for at least five years or, if following the acquisition, the acquiring bank holding company and its depository institution affiliates would control 30% or more of the deposits in depository institutions in Alabama. In addition, the Riegle-Neal Act authorized the federal banking agencies, effective June 1, 1997, to approve interstate merger transactions without regard to whether such transactions are prohibited by the law of any state, unless the home state of one of the banks opts out of the Riegle-Neal Act by adopting a law that applies equally to all out-of-state banks and expressly prohibits merger transactions involving out-of- state banks. Alabama has enacted legislation that expressly authorized, effective May 31, 1997, Alabama banks to participate in interstate mergers in accordance with the Riegle-Neal Act. The effect of the Riegle-Neal Act may be to increase competition within the State of Alabama among banking institutions located in Alabama and from banking companies located anywhere in the country.
EMPLOYEES
As of December 31, 1997, BancTrust employed 230 persons, including executive officers, loan officers, bookkeepers, tellers and others. None of BancTrust's employees are presently represented by a union or covered under a collective bargaining agreement. Management of BancTrust considers that their employee relations are excellent.
RETURN ON EQUITY AND ASSETS
The following table shows the percentage return on equity and assets of BancTrust for the years ended December 31, 1997, 1996 and 1995.
* Earnings per share has been restated to reflect a two-for-one stock split effected in the form of a stock dividend in March 1995 and a two-for-one stock split effected in the form of a stock dividend in June 1997.
REGULATION, SUPERVISION AND GOVERNMENTAL POLICY
The following is a brief summary of certain statutes, rules and regulations affecting BancTrust and Peoples Bank. A number of other statutes and regulations have an impact on their operations. The following summary of applicable statutes and regulations does not purport to be complete and is qualified in its entirety by reference to such statutes and regulations.
Bank Holding Company Regulation. BancTrust is registered as a bank holding ------------------------------- company under the Holding Company Act and, as such, subject to supervision and regulation by the FRB. A bank holding company is required to furnish to the FRB an annual report of its operations at the end of each fiscal year and to furnish such additional information as the FRB may require pursuant to the Holding Company Act. BancTrust is also subject to regular examination by the FRB.
Under the Holding Company Act, a bank holding company must obtain the prior approval of the FRB before (i) acquiring direct or indirect ownership or control of any voting shares of any bank or bank holding company if, after such acquisition, the bank holding company would directly or indirectly own or control more than 5% of such shares; (2) acquiring all or substantially all of the assets of another bank or bank holding company; or (3) merging or consolidating with another bank holding company.
The Holding Company Act, as amended by the Riegle-Neal Act, generally permits the FRB to approve interstate bank acquisitions by bank holding companies without regard to any prohibitions of state law. See "Competition".
Under the Holding Company Act, any company must obtain approval of the FRB prior to acquiring control of the BancTrust or Peoples Bank. For purposes of the Holding Company Act, "control" is defined as ownership of more than 25% of any class of voting securities of BancTrust or Peoples Bank, the ability to control the election of a majority of the directors, or the exercise of a controlling influence over management or policies of the BancTrust or Peoples Bank.
The Change in Bank Control Act and the regulations of the FRB thereunder require any person or persons acting in concert (except for companies required to make application under the Holding Company Act), to file a written notice with the FRB before such person or persons may acquire control of the BancTrust or Peoples Bank. The Change in Bank Control Act defines "control" as the power, directly or indirectly, to vote 25% or more of any voting securities or to direct the management or policies of a bank holding company or an insured bank.
The Holding Company Act also prohibits, with certain exceptions, a bank holding company from acquiring direct or indirect ownership or control of more than 5% of the voting shares of a company that is not a bank or a bank holding company, or from engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or providing services for its subsidiaries. The principal exceptions to these prohibitions involve certain non-bank activities which, by statute or by FRB regulation or order, have been identified as activities closely related to the business of banking or managing or controlling banks. The activities of BancTrust and of its non-bank subsidiaries are subject to these legal and regulatory limitations under the Holding Company Act and the FRB's regulations thereunder. Notwithstanding the FRB's prior approval of specific nonbanking activities, the FRB has the power to order a holding company or its subsidiaries to terminate any activity, or to terminate its ownership or control of any subsidiary, when it has reasonable cause to believe that the continuation of such activity or such ownership or control constitutes a serious risk to the financial safety, soundness or stability of any bank subsidiary of that holding company.
The FRB has adopted guidelines regarding the capital adequacy of bank holding companies, which require bank holding companies to maintain specified minimum ratios of capital to total assets and capital to risk-weighted assets. See "-- Capital Requirements."
The FRB has the power to prohibit dividends by bank holding companies if their actions constitute unsafe or unsound practices. The FRB has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the FRB's view that a bank holding company should pay cash dividends only to the extent that the company's net income for the past year is sufficient to cover both the cash dividends and a rate of earning retention that is consistent with the company's capital needs, asset quality, and overall financial condition.
Bank Regulation. As an Alabama banking institution, Peoples Bank is --------------- subject to regulation, supervision and regular examination by the Banking Department. Peoples Bank is a member of the Federal Reserve System and thus is subject to supervision and regular examination by the FRB under the applicable provisions of the Federal Reserve Act and the FRB's regulations. The deposits of Peoples Bank are insured by the FDIC to the maximum extent provided by law (a maximum of $100,000 for each insured depositor). Alabama and federal banking laws and regulations control, among other things, Peoples Bank's required reserves, investments, loans, mergers and
consolidations, issuance of securities, payment of dividends, and establishment of branches and other aspects of Peoples Bank's operations.
The approval of regulatory authorities is required if the total of all the dividends declared by the Bank in any calendar year exceeds the Bank's net income as defined for that year combined with its retained net income for the preceding two calendar years. The Bank obtained regulatory approval as applicable for the payment of dividends in 1996 and 1995.
Peoples Bank is subject to various regulatory capital requirements administered by the federal banking agencies, including the FRB's capital adequacy guidelines for state-chartered banks that are members of the Federal Reserve System ("state member banks"). Failure to meet minimum capital requirements can initiate certain mandatory -- and possibly additional discretionary -- actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. See "--Capital Requirements."
Under joint regulations of the federal banking agencies, including the FRB, state member banks must adopt and maintain written policies that establish appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards, prudent underwriting standards, including loan-to-value limits, that are clear and measurable, loan administration procedures and documentation, approval and reporting requirements. A bank's real estate lending policy must reflect consideration of the Interagency Guidelines for Real Estate Lending Policies (the "Interagency Guidelines") that have been adopted by the federal bank regulators. The Interagency Guidelines, among other things, call upon depository institutions to establish internal loan-to-value limits for real estate loans that are not in excess of the loan- to-value limits specified in the Guidelines for the various types of real estate loans. The Interagency Guidelines state that it may be appropriate in individual cases to originate or purchase loans with loan-to-value ratios in excess of the supervisory loan-to-value limits. The aggregate amount of loans in excess of the supervisory loan-to-value limits, however, should not exceed 100% of total capital and the total of such loans secured by commercial, agricultural, multifamily and other non-one-to-four family residential properties should not exceed 30% of total capital.
As a federally insured bank, Peoples Bank is subject to FDIC deposit insurance assessments. The FDIC has established a risk-based deposit insurance assessment system for insured depository institutions, under which insured institutions are assigned assessment risk classifications based upon capital levels and supervisory evaluations. Under these regulations, the FDIC set the 1997 annual insurance assessment rates for BIF-insured banks like Peoples Bank from $0 for well-capitalized banks in the highest supervisory subgroup to 0.27% of insured deposits for undercapitalized banks in the lowest supervisory subgroup. Peoples Bank was a "well-capitalized" bank as of December 31, 1997.
On September 30, 1996, President Clinton signed into law the Deposit Insurance Funds Act of 1996 (the "1996 Act"), which, among other things, (i) recapitalized the Savings Association Insurance Fund ("SAIF") by imposing a special one-time assessment on SAIF-insured institutions, (ii) from January 1, 1997 through December 31, 1999, requires BIF member banks to pay one-fifth of the assessment rate imposed upon savings institutions to cover the annual payments on the bonds issued by the Financing Corporation ("FICO") and (iii) from January 1, 2000 until the date the FICO bonds are retired, will require BIF members and SAIF members to pay FICO assessments on a pro rata basis. In accordance with the 1996 Act's requirements, the FDIC has set the 1997 FICO assessment rate for BIF member banks at .013% of insured deposits. The annual FICO assessment will remain at approximately the same rate until December 31, 1999, following which date BIF and SAIF members will be subject to assessments at the same rate (estimated at .024% of insured deposits).
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") required the federal bank regulatory agencies to prescribe, by regulation, non-capital safety and soundness standards for all insured depository institutions and depository institution holding companies. The FRB and the other federal banking agencies have adopted guidelines prescribing safety and soundness standards pursuant to FDICIA. The safety and soundness guidelines establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, and compensation, fees and benefits. In general the guidelines require, among other things, the maintenance of appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines. In addition, pursuant to FDICIA, the FRB and the other banking agencies have proposed guidelines for asset quality and earnings standards.
Under the proposed standards, a bank would be required to maintain systems, commensurate with its size and the nature and scope of its operations, to identify problem assets and prevent deterioration in those assets as well as to evaluate and monitor earnings and ensure that earnings are sufficient to maintain adequate capital and reserves.
Supervision, regulation and examination of BancTrust and Peoples Bank by the bank regulatory agencies are intended primarily for the protection of depositors rather than for holders of BancTrust stock or of BancTrust as the holder of the stock of Peoples Bank.
Capital Requirements. The FRB has established guidelines with respect to -------------------- the maintenance of appropriate levels of capital by registered bank holding companies and state member banks. The regulations of the FRB impose two sets of capital adequacy requirements: minimum leverage rules, which require bank holding companies and banks to maintain a specified minimum ratio of capital to total assets, and risk-based capital rules, which require the maintenance of specified minimum ratios of capital to "risk-weighted" assets.
The regulations of the FRB require bank holding companies and state member banks to maintain a minimum leverage ratio of "Tier 1 capital" (as defined in the risk-based capital guidelines discussed in the following paragraphs) to total assets of 3.0%. Although setting a minimum 3.0% leverage ratio, the regulations state that only the strongest bank holding companies and banks, with composite examination ratings of 1 under the rating system used by the federal bank regulators, would be permitted to operate at or near such minimum level of capital. All other bank holding companies and banks are expected to maintain a leverage ratio of at least 1% to 2% above the minimum ratio, depending on the assessment of an individual organization's capital adequacy by its primary regulator. Any bank or bank holding company experiencing or anticipating significant growth would be expected to maintain capital well above the minimum levels. In addition, the FRB has indicated that whenever appropriate, and in particular when a bank holding company is undertaking expansion, seeking to engage in new activities or otherwise facing unusual or abnormal risks, it will consider, on a case-by-case basis, the level of an organization's ratio of tangible Tier 1 capital (after deducting all intangibles) to total assets in making an overall assessment of capital.
The risk-based capital rules of the FRB require bank holding companies and state member banks to maintain minimum regulatory capital levels based upon a weighing of their assets and off-balance sheet obligations according to risk. The risk-based capital rules have two basic components: a core capital (Tier 1) requirement and a supplementary capital (Tier 2) requirement. Core capital consists primarily of common stockholders' equity, certain perpetual preferred stock (which must be noncumulative with respect to banks), and minority interests in the equity accounts of consolidated subsidiaries; less intangible assets (primarily goodwill), with limited exceptions for mortgage servicing rights and purchased credit card relationships. Supplementary capital elements include, subject to certain limitations, the allowance for losses on loans and leases; perpetual preferred stock that does not qualify for Tier 1 and long-term preferred stock with an original maturity of at least 20 years from issuance; hybrid capital instruments, including perpetual debt and mandatory convertible securities; and subordinated debt and intermediate-term preferred stock. The risk-based capital regulations assign balance sheet assets and credit equivalent amounts of off-balance sheet obligations to one of four broad risk categories based principally on the degree of credit risk associated with the obligor. The assets and off-balance sheet items in the four risk categories are weighted at 0%, 20%, 50% and 100%. These computations result in the total risk-weighted assets.
The risk-based capital regulations require all banks and bank holding companies to maintain a minimum ratio of total capital to total risk-weighted assets of 8%, with at least 4% as core capital. For the purpose of calculating these ratios: (i) supplementary capital will be limited to no more than 100% of core capital; and (ii) the aggregate amount of certain types of supplementary capital will be limited. In addition, the risk-based capital regulations limit the allowance for loan losses includable as capital to 1.25% of total risk- weighted assets.
Under FDICIA, the federal banking agencies were required to revise their risk-based capital standards to ensure that such standards take adequate account of interest rate risk, concentration of credit risk and the risks of nontraditional activities. The FRB and the other banking agencies have amended the risk-based capital standards to take account of a bank's concentration of credit risk, the risk of nontraditional activities, and a bank's exposure to declines in the economic value of its capital resulting from changes in interest rates. The revised capital guidelines do not, however, codify a measurement framework for assessing the level of a bank's interest rate exposure. In addition, the FRB and the other banking agencies have adopted a joint policy statement requiring that banks adopt
comprehensive policies and procedures for managing interest rate risk and setting forth general standards for such internal policies.
The FRB has issued final regulations that classify insured depository institutions by capital levels and provide that the FRB will take various prompt corrective actions to resolve the problems of any state member bank that fails to satisfy the capital standards. Under such regulations, a "well-capitalized" bank is one that is not subject to any regulatory order or directive to meet any specific capital level and that has or exceeds the following capital levels: a total risk-based capital ratio of 10%, a Tier 1 risk-based capital ratio of 6%, and a leverage ratio of 5%. An "adequately capitalized" bank is one that does not qualify as "well capitalized" but meets or exceeds the following capital requirements: a total risk-based capital of 8%, a Tier 1 risk-based capital ratio of 4%, and a leverage ratio of either (i) 4% or (ii) 3% if the bank has the highest composite examination rating. A bank not meeting these criteria is treated as "undercapitalized," "significantly undercapitalized," or "critically undercapitalized" depending on the extent to which the bank's capital levels are below these standards. A bank that fails within any of the three "undercapitalized" categories will be subject to certain severe regulatory sanctions required by FDICIA and the regulations of the FRB. As of December 31, 1997, Peoples Bank was categorized as "well-capitalized."
See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 12 of Notes to Consolidated Financial Statements contained in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) which is incorporated herein by reference.
Effects of Governmental Policy. The earnings and business of BancTrust and ------------------------------ Peoples Bank have been and will be affected by the policies of various regulatory authorities of the United States, particularly the FRB. Important functions of the FRB, in addition to those enumerated above, include the regulation of the supply of money in light of general economic conditions within the United States. The instruments of monetary policy employed by the FRB for these purposes influence in various ways the overall level of investments, loans, other extensions of credit and deposits, and the interest rates paid on liabilities and received on interest-earning assets.
Banking is a business which depends on interest rate differentials. In general, the difference between the interest paid by Peoples Bank on its deposits and its other borrowings and the interest received by Peoples Bank on loans extended to customers and securities held in its investment portfolios comprises the major portion of Peoples Bank's earnings. The earnings and gross income of Peoples Bank thus have been and will be subject to the influence of economic conditions generally, both domestic and foreign, and also to monetary and fiscal policies of the United States and its agencies, particularly the FRB. The nature and timing of any future changes in such policies and their impact on Peoples Bank are not predictable.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, including all documents incorporated herein by reference, contains forward-looking statements. Additional written or oral forward-looking statements may be made by BancTrust from time to time in filings with the Securities and Exchange Commission or otherwise. The words "believe," "expect," "seek," and "intend" and similar expressions identify forward-looking statements, which speak only as of the date the statement is made. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may include, but are not limited to, projections of income or loss, expenditures, acquisitions, plans for future operations, financing needs or plans relating to services of BancTrust, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.
BancTrust does not undertake, and specifically disclaims, any obligation to publicly release the results of revisions which may be made to forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
ITEM 2.
ITEM 2. PROPERTIES
BancTrust's principal executive offices and Peoples Bank's main office are located at 310 Broad Street, Selma, Alabama in a building owned by Peoples Bank. At March 14, 1998, Peoples Bank and Merchants & Planters Bank maintained 17 branches in Dallas, Autauga, Butler, Bibb, Elmore and Shelby counties, of which five are leased.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Management currently is not aware of any material legal proceedings to which BancTrust or Peoples Bank is a party or to which any of their property is subject, except as follows:
1. Monica Hasley v. The Peoples Bank and Trust Company, et al., Circuit ----------------------------------------------------------- Court of Macon County, Alabama, Civil Action No. CV-96-252. This case was filed November 13, 1996. This action involved two collateral protection insurance certificates issued in connection with a loan by Peoples Bank to the Plaintiff. The Plaintiff alleged that Peoples Bank improperly forced-placed insurance coverage on the Plaintiff's vehicle and sought compensatory and punitive damages in unspecified amounts based on several alleged theories of recovery, including fraud and deceit. Peoples Bank denied the allegations of the complaint. The case was subsequently settled and the suit dismissed.
2. William L. Ammons, d/b/a Ammons Construction Company v. Peoples Bank -------------------------------------------------------------------- and Trust Company, Circuit Court of Dallas County, Alabama, Case No. CV-95-295. - ----------------- This case was filed on October 18, 1995. The Plaintiff, a contractor, was constructing a house for a customer of Peoples Bank who had borrowed construction monies for that purpose. Peoples Bank customer sued the contractor, alleging that he failed to complete the construction. The contractor has brought this action contending that Peoples Bank owes funds for the construction to him as a third party beneficiary. He has further alleged misrepresentation by Peoples Bank and is seeking unspecified compensatory and punitive damages. A jury trial has been demanded. Peoples Bank denies the allegations of the complaint. The owner and contractor are in separate litigation over the same issues, and this case has been put on administrative hold pending the outcome of that case.
3. Raymond Lee Moseley v. The Peoples Bank and Trust Company, et al, ---------------------------------------------------------------- Circuit Court of Autauga County, Alabama, Civil Action No. CV-97-169-B. This suit was served on Peoples Bank on August 4, 1997. The complaint alleges that Peoples Bank improperly sold credit life insurance and accidental death insurance to the Plaintiff, and seeks compensatory and punitive damages in unspecified amounts. The causes of action alleged include breach of contract, fraud, fraudulent suppression and concealment, money had and received, conversion, conspiracy, and negligent and wanton hiring, training, and supervision. The complaint also seeks class action status for all persons who purchased credit life insurance form the defendants under circumstances similar to those alleged in the complaint. Peoples Bank's insurance carriers are providing a defense under a reservation of rights. Peoples
Bank denies the allegations of the complaint. No depositions or other significant discovery have taken place, except for the production of certain documents.
While Peoples Bank denies liability in each of cases No. 2 and 3 above, Peoples Bank recognizes that the possibility of exposure to liability exists. In each case, the monetary damage, if any, to any individual plaintiff or potential individual plaintiff, should Peoples Bank be determined to be liable, would be relatively minimal. Consequently, Peoples Bank considers that punitive damages, should any be awarded, which Peoples Bank denies is justified, should bear a reasonable relationship to compensatory damages and that, therefore, any such damage awards in such cases would not be such as would have a reasonable probability of a material adverse effect against Peoples Bank. Nevertheless, substantial punitive damages have been awarded in the State of Alabama in cases where relatively small amounts of actual damages have occurred, and jury verdicts within the State of Alabama have been unpredictable. Further, the level of potential exposure for compensatory damages may be considerably higher if a plaintiff can establish mental anguish or emotional distress from the actions complained of. Consequently, Peoples Bank is unable to determine with certainty the eventual outcome of potential exposure in such cases.
4. Sara F. Lolley and Rita Carter v. The Peoples BancTrust Company, Inc., ---------------------------------------------------------------------- The Peoples Bank and Trust Company, et al, United States District Court for the - ----------------------------------------- Middle District of Alabama, Northern Division, Civil Action No. CV-97-W-1775-N. This suit was served on Peoples Bank on January 9, 1998. The suit alleges violations of Title VII of the Civil Rights Act based on alleged sexual harassment by an officer of Peoples Bank. The complaint, in addition to the claims of sexual harassment, avers several causes of actions related to the alleged sexual harassment, including maintaining a hostile work environment, retaliation, and conspiracy to condone impermissible conduct and impede litigation. Punitive and compensatory damages, as well as other relief, are sought. The complaint joins Peoples Bank's directors and certain officers as defendants, for whom Peoples Bank is providing a defense. It is Peoples Bank's position that there is no basis for this lawsuit against Peoples Bank or its officers and directors. Motions to dismiss the directors and officers have been filed, which are pending. There has been no discovery nor any scheduling of discovery.
See Note 9 of Notes to Consolidated Financial Statements contained in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit 13) which is incorporated herein by reference.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of the Shareholders was held on October 28, 1997 to consider and vote upon a proposed amendment to Article IV of the Company's Articles of Incorporation to increase the Company's authorized common stock from 4,000,000 to 9,000,000 shares, and thereby to increase the total number of shares of authorized capital stock from 5,000,000 to 10,000,000 shares, of which 9,000,000 shares would be common stock and 1,000,000 shares would be preferred stock. The votes cast were as follows: for 2,904,474 and against 40,616. There were 2,067 abstentions and broker non-votes as to the matter.
EXECUTIVE OFFICERS OF THE REGISTRANT
RICHARD P. MORTHLAND, 56, is currently Chairman of the Board and Chief Executive Officer of Peoples Bank and BancTrust. Mr. Morthland has been an officer of Peoples Bank since 1965 and a Director since February 1977.
ELAM P. HOLLEY, JR., 47, is currently President, Chief Operating Officer and a Director of Peoples Bank and BancTrust. Mr. Holley has been an officer of Peoples Bank since November 1975 and a Director since January, 1988.
ANDREW C. BEARDEN, JR., 51, is currently Executive Vice President -- Retail/Operations Division of Peoples Bank and Executive Vice President and Chief Financial Officer of BancTrust. Mr. Bearden assumed these positions in 1991 and 1997, respectively. Prior to his current assignment, Mr. Bearden served as Vice President and Trust Officer of Peoples Bank. Mr. Bearden was in private practice as a certified public accountant prior to his employment with Peoples Bank in 1985.
JOHN G. CHISOLM, 49, is currently Executive Vice President - Commercial Division of Peoples Bank. Mr. Chisolm assumed this position in December 1992. He has been employed by Peoples Bank since 1979, primarily in the commercial lending area. Prior to his employment by Peoples Bank, Mr. Chisolm was employed by American National Bank and Trust Company, Chattanooga, Tennessee for seven years in its commercial lending division.
M. SCOTT PATTERSON, 55, is currently Executive Vice President-Financial Services Division, Secretary and Investment Officer of Peoples Bank and Secretary of BancTrust. Mr. Patterson has been in these positions with Peoples Bank since November 1985 and with BancTrust since April 1997. Prior to coming to Peoples Bank in October 1983, Mr. Patterson served for 20 years in the United States Air Force, retiring as a Lieutenant Colonel.
VIRGINIA L. SELLERS, 64, is currently Vice President and Treasurer of Peoples Bank and Treasurer of BancTrust. Mrs. Sellers has been an officer of Peoples Bank since 1985. Prior to her employment by Peoples Bank in 1985, Mrs. Sellers was Accounting Officer of SouthTrust Bank, Selma, Alabama for 20 years.
WILLIAM S. JOHNSON, 48, is currently Regional President of the Butler County Division of Peoples Bank. Prior to his coming to Peoples Bank in June 1993, Mr. Johnson was President of The Fort Deposit Bank in Fort Deposit, Alabama for eight years.
BOBBY LEACH, 49, is currently Regional President of the Bibb County Division of Peoples Bank. Mr. Leach has been in banking over 26 years, serving as President and Chief Executive Officer of the former Peoples Bank of Centreville for several years.
JEFFERSON G. RATCLIFFE, JR., 36, is currently Regional President of the Prattville/Millbrook Division of Peoples Bank. Mr. Ratcliffe joined Peoples Bank in 1985. Before being named to his present position, Mr. Ratcliffe served as Senior Lender and Commercial Lender for the Prattville/Millbrook Division of Peoples Bank.
Richard P. Morthland and M. Scott Patterson are brothers-in-law.
All officers serve at the discretion of the boards of directors of BancTrust or Peoples Bank. There are no known arrangements or understandings between any office and any other person pursuant to which he or she was or is to be selected as an officer.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
For information concerning holders of common stock, high and low prices and frequency and amount of dividends on BancTrust's Common Stock, see "Stock Dividend and Price Information" incorporated herein by reference to BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) which is incorporated herein by reference.
Although BancTrust has no established policy regarding dividends, BancTrust and Peoples Bank, prior to its acquisition by BancTrust in April 1985, have paid regular dividends in recent years. There can be no assurance, however, as to whether or in what amounts dividends might be declared by BancTrust in the future or whether such dividends, once declared, will continue. Future dividends are subject to the discretion of the Board of Directors and depend on a number of factors, including future earnings, financial condition, and capital requirements, along with economic and market conditions.
The primary source of BancTrust's revenues (including funds to pay dividends) is dividends from the Bank. Alabama law imposes certain restrictions on the ability of BancTrust and Peoples Bank to pay dividends. See Item 1. "Business--Regulation, Supervision and Governmental Policy" and Note 12 of Notes to Consolidated Financial Statements contained in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit 13) which is incorporated herein by reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Five Year Comparison of Selected Financial Data" in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) which is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) which is incorporated herein by reference.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
THE PEOPLES BANCTRUST COMPANY, INC. INTEREST RATE SENSITIVITY POSITION DECEMBER 31, 1997
(1) BancTrust has presented substantial balances of deposits as non-rate sensitive and/or not repricing within one year.
The above table reflects a positive cumulative gap position in all maturity classifications. This is the result of core deposits being used to fund short term interest earing assets, such as loans and investment securities. A positive cumulative gap position implies that interest earning assets (loans and investments) will reprice at a faster rate than interest-bearing liabilities (deposits and debt). In a rising rate environment, this position will generally have a positive effect on earnings, while in a falling rate environment this position will generally have a negative effect on earnings. Other factors, however, including the speed at which assets and liabilities reprice in response to changes in market rates and the interplay of competitive factors, can also influence the overall impact on net income of changes in interest rates. Management believes that a rapid, significant and prolonged increase or decrease in rates could have a substantial impact on BancTrust's net interest margin. The actual interest rate sensitivity of BancTrust's assets and liabilities could vary significantly from the information set forth in this table due to market and other factors.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BancTrust's Consolidated Financial Statements together with the related notes and the report of Coopers & Lybrand LLP, independent public accountants, all as set forth in BancTrust's Annual Report to Stockholders for the year ended December 31, 1997 (Exhibit No. 13) which are incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors of BancTrust is omitted from this Report as BancTrust has filed a definitive proxy statement dated March 20, 1998, and the information included therein under "Election of Directors-Directors" is incorporated herein by reference. Information regarding the executive officers of BancTrust is included under separate caption in Part I of this Form 10-K. Item 405 of Regulation S-K disclosure is omitted from this Report as BancTrust has filed a definitive proxy statement dated March 20, 1998, and the Item 405 disclosure therein under "Section 16(a) Beneficial Ownership Reporting Compliance" which is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is omitted from this Report as BancTrust has filed a definitive proxy statement dated March 20, 1998, and the information included therein under "Election of Directors" which is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is omitted from this Report as BancTrust has filed a definitive proxy statement dated March 20, 1998, and the information included therein under "Stock Ownership of Management" and "Principal Holders of Common Stock" which is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is omitted from this Report as BancTrust has filed a definitive proxy statement dated March 20, 1998, and the information included therein under "Election of Directors--Compensation Committee Interlocks and Insider Participation" and "--Certain Transactions" which is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements of BancTrust included in the Annual Report to Stockholders for the year ended December 31, 1997, are incorporated herein by reference in Item 8 of this Report. The remaining information appearing in the Annual Report to Stockholders is not deemed to be filed as part of this Report, except as expressly provided herein.
1. Report of Independent Accountants.
2. Consolidated Balance Sheets - December 31, 1997 and 1996.
3. Consolidated Statements of Income for the Years Ended December 31, 1997, 1996 and 1995.
4. Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1997, 1996 and 1995.
5. Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995.
6. Notes to Consolidated Financial Statements.
(a)(2) All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
(a)(3) The following exhibits either are filed as part of this Report or are incorporated herein by reference:
Exhibit No. 2(i). Agreement and Plan of Reorganization dated as of December 2, 1997, by and among The Peoples BancTrust Company, Inc., The Peoples Bank and Trust Company, Merchants & Planters Bancshares, Inc. and Merchants & Planters Bank -- incorporated herein by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K dated December 5, 1997.
Exhibit No. 2(ii). Agreement and Plan of Merger and Reorganization dated as of December 11, 1997, by and among The Peoples BancTrust Company, Inc., The Peoples Bank and Trust Company, Elmore County Bancshares and The Bank of Tallahassee - incorporated herein by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K dated December 15, 1997.
Exhibit No. 3. Articles of Incorporation and Bylaws ------------------------------------
(i) Articles of Incorporation, as amended.
(ii) Bylaws - incorporated herein by reference to Exhibit 3(ii) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
Exhibit No. 10(i). 1992 Stock Option Plan ----------------------
Incorporated herein by reference to Exhibit 10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
Exhibit No. 13. Annual Report to Stockholders -----------------------------
Except for those portions of the Annual Report to Stockholders for the year ended December 31, 1997, which are expressly incorporated herein by reference, such Annual Report is furnished for the information of the Commission and is not to be deemed "filed" as part of this Report.
Exhibit No. 21. Subsidiaries of the Registrant ------------------------------
A list of subsidiaries of the Registrant is included as an exhibit to this Report.
Exhibit No. 23. Consent of Coopers & Lybrand LLP
Exhibit No. 27. Financial Data Schedule (SEC use only)
(b) The following reports on Form 8-K were filed during the quarter ended December 31, 1997.
1. Current Report on Form 8-K dated December 5, 1997, reporting under Item 5 thereof ("Other Events") the execution of a definitive agreement for the acquisition of Merchants & Planters Bancshares, Inc. by the Registrant.
2. Current Report on Form 8-K dated December 15, 1997, reporting under Item 5 thereof ("Other Events") the execution of a definitive agreement for the merger of Elmore County Bancshares, Inc. with and into the Registrant.
(c) Exhibits to this Form 10-K are attached or incorporated by reference as stated above.
(d) None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.
THE PEOPLES BANCTRUST COMPANY, INC. (Registrant)
Date: March 27, 1998 By: ----------------------------------------- Richard P. Morthland Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated and on the dates indicated.
SIGNATURE AND TITLE: DATE:
March 27, 1998 - --------------------------------- Richard P. Morthland Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
March 27, 1998 - --------------------------------- Andrew C. Bearden, Jr. Executive Vice President and Chief Financial Officer
March 27, 1998 - --------------------------------- Virginia L. Sellers Vice President and Treasurer (Principal Accounting Officer)
March 27, 1998 - --------------------------------- Julius R. Brown Director
March 27, 1998 - --------------------------------- Clyde B. Cox, Jr. Director
March 27, 1998 - --------------------------------- Harry W. Gamble, Jr. Director
March 27, 1998 - --------------------------------- Ted M. Henry Director
March 27, 1998 - --------------------------------- Elam P. Holley, Jr. Director, President and Chief Operating Officer
March 27, 1998 - --------------------------------- Edith M. Jones Director
March 27, 1998 - --------------------------------- A.D. Lovelady Director
March 27, 1998 - --------------------------------- Thomas E. Newton Director
March 27, 1998 - --------------------------------- David Y. Pearce Director
March 27, 1998 - --------------------------------- C. Ernest Smith Director
March 27, 1998 - --------------------------------- Julius E. Talton Director