<PAGE>

                                    FORM 10-K
                        SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C. 20549

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the fiscal year ended December 31, 1996

                                      OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the transition period from _____________________ to ________________

Commission file number  0-13653
                        ------------

                      THE PEOPLES BANCTRUST COMPANY, INC.
                   ----------------------------------------
            (Exact name of registrant as specified in its charter)

         Alabama                                        63-0896239
--------------------------------          -----------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

  310 Broad Street, Selma, Alabama                        36701
----------------------------------------  -----------------------------------
(Address of principal executive offices)                (Zip Code)

     Registrant's telephone number, including area code:  (334) 875-1000.

      Securities registered pursuant to Section 12(b) of the Act:  None.

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $.10 per share
                    --------------------------------------
                               (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required  to  file  such  reports), and (2) has been subject to such filing
requirements for the past 90 days.    YES  X   NO
                                         -----    -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

The registrant's voting stock is traded on the NASDAQ SmallCap Market.  The
aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price ($33.00 per share) at which the
stock was sold on March 14, 1997, was approximately $13,770,306.  For purposes
of this calculation, the term "affiliate" refers to all executive officers and
directors of the registrant and all stockholders beneficially owning more than
10% of the registrant's Common Stock.

As of the close of business on March 14, 1997, 1,693,694 shares of the
registrant's Common Stock were outstanding.

                      Documents Incorporated By Reference

Part II:
Annual Report to Stockholders for the year ended December 31, 1996.

Part III:
Portions of the definitive proxy statement for the Annual Meeting of the
Shareholders to be held on April 8, 1997.
<PAGE>

                              PART I
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 and Butler 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, four branches in Prattville, two branches in Greenville and
one branch in each of Plantersville, Georgiana and McKenzie, Alabama.
BancTrust's telephone number is (334) 875-1000.

LENDING ACTIVITIES

  Loan Composition.  The following table sets forth, in dollar amounts and in
  ----------------
percentages, a five-year comparison of major categories of BancTrust's loans.

<TABLE>
<CAPTION>

                                                   At December 31,
                              -------------------------------------------------------
                                  1996       1995       1994       1993       1992
                                ---------  ---------  ---------  ---------  ---------
                                                   (In thousands)
<S>                             <C>        <C>        <C>        <C>        <C>
Commercial and industrial        $ 82,001   $ 61,984   $ 48,829   $ 42,006   $ 37,039
Real estate - mortgage(1)          72,037     57,359     50,092     43,685     38,141
Personal                           70,619     71,695     66,170     51,299     38,465
Overdrafts and credit line          5,245      5,090      4,365      4,929      3,514
                                 --------   --------   --------   --------   --------
   Total loans                   $229,902   $196,128   $169,456   $141,919   $117,159
                                 ========   ========   ========   ========   ========
Less:
   Unearned discount             $  1,532   $  4,996   $  6,478   $  4,943   $  3,907
   Allowance for loan losses        2,484      2,005      2,039      2,205      1,898
                                 --------   --------   --------   --------   --------
       Total loans, net          $225,886   $189,127   $160,939   $134,771   $111,354
                                 ========   ========   ========   ========   ========

</TABLE>
(1)  Includes real estate-construction loans.

                                       2
<PAGE>

  The above loans include agricultural loans totaling approximately $16.2
million, $15.6 million, $13.6 million, $7.9 million and $7.2 million at December
31, 1996, 1995, 1994, 1993 and 1992, respectively.  See Note 5 of Notes to
Consolidated Financial Statements in BancTrust's Annual Report to Stockholders
for the year ended December 31, 1996 which is incorporated herein by reference.

  Loan Maturities.  The following table reflects at December 31, 1996 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.
<TABLE>
<CAPTION>

                                      0-3 Months  4-12 Months  One-Five Years  After Five Years    Total
                                      ----------  -----------  --------------  ----------------  ---------
                                                                 (In thousands)
<S>                                   <C>         <C>          <C>             <C>               <C>
Commercial and industrial                $63,266      $ 6,338         $20,205      $ 3,393        $ 93,202
Real estate-mortgage (1)                  23,926       11,861          23,422        9,248          68,457
Personal, overdrafts and credit lines     12,250       12,145          43,685          163          68,243
                                         -------       -------         -------      -------        --------
                                         $99,442      $30,344         $87,312      $12,804        $229,902
                                         =======      =======         =======      =======        ========
Loans with fixed interest rates          $23,515      $12,439         $55,590      $10,313        $101,857
Loans with variable interest rates        75,927       17,905          31,722        2,491         128,045
                                         -------      -------         -------      -------        --------
                                         $99,442      $30,344         $87,312      $12,804        $229,902
                                         =======      =======         =======      =======        ========

</TABLE>
(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, 1996 (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, 1996, commercial and industrial loans outstanding totaled $82.0
million, or 35.7% 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, 1996, BancTrust had $72.0 million, or 31.3% of its
total net loan portfolio, in real estate mortgage loans.

  Personal Loans.  At December 31, 1996, BancTrust's personal loan portfolio
  --------------
totaled $75.9 million, or 33.0% 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

                                       3
<PAGE>

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, 1996,
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:
<TABLE>
<CAPTION>

                                                                                       At December 31,
                                                                         -------------------------------------------
                                                                           1996     1995     1994     1993     1992
                                                                         -------  -------  -------  -------  -------
                                                                                       (In thousands)
<S>                                                                      <C>      <C>      <C>      <C>      <C>
Loans accounted for on a nonaccrual basis                                 $1,679   $1,503   $1,348   $2,055   $2,851
Accruing loans which are contractually past due 90 days
   or more as to interest or principal payments                               --       --       --       71       --
Accruing loans, the terms of which have been
   restructured to provide a reduction or deferral of
   interest or principal because of a  deterioration in the
   financial position of the borrower                                        294      301      275      295      338
The gross interest income that would have been
   recorded in the period then ended if the nonaccrual
   and restructured loans had been current in accordance
   with their original terms and had been outstanding
   through the period or since origination, if  held for
   part of the period                                                         77       96       72      131      164
The amount of interest income on nonaccrual and
   restructured loans that was included in net income for
   the period                                                                 22       36       21       34       27

</TABLE>

  Management of BancTrust has identified certain loans aggregating approximately
$10.9 million at December 31, 1996 (including loans identified in the above
table) which it has determined require special attention due to potential
weaknesses.  The largest five loans aggregated approximately $5.7 million and
ranged in size from $2.2 million to $487,000.  No other loan exceeded
$1,453,000.  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.

                                       4
<PAGE>

  The following table sets forth BancTrust's potential problem loans at December
31, 1996 by loan category and the amount and type of collateral securing such
loans.

<TABLE>
<CAPTION>

Loan Category/Collateral                 Amount
------------------------             --------------
                                     (In thousands)
<S>                                  <C>
Commercial and Industrial:
    Collateralized by Real Estate          $ 5,658
    Collateralized by Other (1)              3,085
    Unsecured                                  371
                                           -------
                                             9,114
                                           -------

Real Estate-Mortgage
Personal:
    Collateralized by Real Estate            1,362
    Collateralized by Other                    122
                                               252
                                           -------
    Unsecured                                1,737
                                           -------
       Total                               $10,851
                                           =======

</TABLE>
(1)  Includes approximately $2.2 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, 1996 (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.

                                       5
<PAGE>

  The following is a summary of activity in the allowance for loan losses for
the periods:

<TABLE>
<CAPTION>

                                                                Year Ended December 31,
                                        ---------------------------------------------------------------------
                                              1996          1995          1994          1993          1992
                                          ------------  ------------  ------------  ------------  ------------
<S>                                       <C>           <C>           <C>           <C>           <C>
Balance at beginning of year              $ 2,004,891    $2,039,578    $2,204,807    $1,897,695    $1,264,191

Charge-offs:
    Commercial and industrial                 151,700       388,115       184,455       440,911       558,946
    Real estate-mortgage (1)                   29,256        20,300        34,256        10,413        57,855
    Personal                                1,701,439     1,198,805       906,959       932,071       977,806
    Overdraft and credit line                  56,826        14,226        22,302        27,045        37,277
                                          -----------    ----------    ----------    ----------    ----------
       Total charge-offs                    1,939,221     1,621,446     1,147,972     1,410,440     1,651,884

Recoveries:
    Commercial and industrial                  18,270        51,359       113,259       395,319     1,002,883
    Real estate-mortgage                       48,876        20,763        21,747       105,989       124,874
    Personal                                  510,770       665,065       495,000       529,529       421,811
    Overdraft and credit line                   5,725         1,571         4,737        15,023        10,988
                                          -----------    ----------    ----------    ----------    ----------
       Total recoveries                       583,641       738,758       634,743     1,045,860     1,560,556

Net charge-offs                            (1,355,580)     (882,688)     (513,229)     (364,580)      (91,328)
Additions charged to operations             1,834,811       848,001       348,000       483,605       724,832
Addition due to acquisition                        --            --            --       188,087            --
                                          -----------    ----------    ----------    ----------    ----------
Balance at end of year                    $ 2,484,122    $2,004,891    $2,039,578    $2,204,807    $1,897,695
                                          ===========    ==========    ==========    ==========    ==========
Ratio of net charge-offs to average
    loans outstanding, net of unearned
    discounts, during the period                   69%           46%           32%           28%          .08%
                                          ===========    ==========    ==========    ==========    ==========
</TABLE>
(1)  Includes real estate-construction loans.

  The following table presents an allocation of BancTrust's allowance for loan
losses at the dates indicated:
<TABLE>
<CAPTION>

                                           At December 31,
                           ---------------------------------------------
                                 1996           1995           1994
                           ---------------  -------------  -------------
                              %    Amount    %    Amount    %    Amount
                             ----  -------  ----  -------  ----  -------
<S>                          <C>   <C>      <C>   <C>      <C>   <C>
Commercial and industrial     26%   $  645   38%   $  762   40%   $  816
Real estate mortgage (1)      12%      298   18%      361   15%      307
Personal                      60%    1,490   42%      842   43%      877
Overdraft and credit line      2%       51    2%       40    2%       40
                             ---    ------  ---    ------  ---    ------
   Total Allowance           100%   $2,484  100%   $2,005  100%   $2,040
                             ===    ======  ===    ======  ===    ======
</TABLE>

<TABLE>
<CAPTION>

                                   At December 31,
                           ------------------------------
                                  1993           1992
                           ---------------  -------------
<S>                        <C>     <C>      <C>   <C>
                              %    Amount    %    Amount
                             ---   -------  ---   -------

Commercial and industrial     42%   $  926   47%   $  892
Real estate mortgage (1)      31%      684   28%      532
Personal                      25%      551   23%      436
Overdraft and credit line      2%       44    2%       38
                             ---    ------  ---    ------
   Total Allowance           100%   $2,205  100%   $1,898
                             ===    ======  ===    ======
</TABLE>

                                       6
<PAGE>

INVESTMENT ACTIVITIES

  Securities by Category.  The following table sets forth the amount of
  ----------------------
securities by major categories held by BancTrust at December 31, 1996, 1995 and
1994.

<TABLE>
<CAPTION>

                                                 At December 31,
                                          ------------------------------
                                            1996       1995       1994
Investment Securities                     ---------  ---------  --------
---------------------                             (In thousands)
<S>                                       <C>        <C>        <C>

U.S. Treasury, U.S. Agencies and          $     --     $   --    $23,949
 corporations
Obligations of states and political             --         --      2,151
 subdivisions
Corporate and other securities                  --         --      1,087
                                          --------   --------    -------
                                           $    --(1)   $  --(1) $27,187
                                          ========   ========    =======

</TABLE>

(1)  There were no investment securities at December 31, 1995 and 1996.

<TABLE>
<CAPTION>

                                                      At December 31,
                                          ---------------------------------------
Securities Available for Sale               1996         1995           1994
-------------------------------            --------  --------------  -------------
                                                    (In thousands)
<S>                                       <C>       <C>             <C>
U.S. Treasury, U.S. Agencies and           $52,961       $56,888        $60,882
 corporations
Obligations of states and political          2,050         2,875          1,680
 subdivisions
Corporate and other securities              27,682        37,824         13,246
                                           -------       -------        -------
                                           $82,693       $97,587        $75,808
                                           =======       =======        =======
</TABLE>


  Corporate and other securities as of December 31, 1996, were comprised of the
following:

<TABLE>
<CAPTION>

                                                    Securities Available
                                                         For Sale
                                                  -----------------------
                                                      (In thousands)
<S>                                               <C>
Corporate notes                                           $ 4,911
Collateralized mortgage obligations                         6,836
Mortgage backed securities                                  2,594
Mutual funds                                                1,570
Common stock                                                1,771
                                                          -------
                                                          $27,682
                                                          =======
</TABLE>

  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, 1996, 1995 and 1994, see Note 4 of Notes to
Consolidated Financial Statements contained in BancTrust's Annual Report to
Stockholders for the year ended December 31, 1996 (Exhibit No. 13) which is
incorporated herein by reference.

                                       7
<PAGE>

  Maturity Distributions of Securities.  The following table sets forth the
  ------------------------------------
distributions of maturities of securities at amortized cost as of December 31,
1996.

<TABLE>
<CAPTION>
                                                                          Maturity (in years)
                                            -----------------------------------------------------------------   No specific
                                            0-3 Months   4-12 Months   Over 1 to 5   Over 5 to 10    Over 10      Due Date
                                            -----------  ------------  ------------  -------------  ---------   -----------
<S>                                         <C>          <C>           <C>           <C>            <C>        <C>
U.S. Treasury, U.S. agencies and corps          $4,957        $2,517       $44,241         $1,200   $   --       $     --
Obligations of states and
   political subdivisions                          500           207           380            870        115           --
Corporate and other securities                   1,105           620         5,334            411     17,009        3,559
                                                ------        ------       -------         ------    -------       ------
Total                                           $6,562        $3,344       $49,955         $2,481    $17,124       $3,559
                                                ======        ======       =======         ======    =======       ======
Weighted average yield (%)(1)                     5.05%         5.14%         6.15%          5.74%      5.96%        6.15%
                                                ======        ======       =======         ======    =======       ======

</TABLE>
(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, 1996, 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, 1996
(Exhibit No. 13) which is incorporated herein by reference.

  On January 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115).  SFAS 115 modifies accounting principles
for accounting and reporting for investments in equity securities that have
readily determinable fair values and for all investments in debt securities.
SFAS 115 requires that those investments be classified as either held-to-
maturity, trading or available-for-sale securities.  Debt securities that
BancTrust has the positive intent and ability to hold to maturity are classified
as held-to-maturity securities and reported at amortized cost.  Debt and equity
securities that are bought and held principally for the purpose of selling them
in the near term are classified as trading securities and reported at fair
value, with unrealized gains and losses included in earnings.  Debt and equity
securities not classified as either held-to-maturity or trading securities are
classified as available-for-sale securities and reported at fair value, with
unrealized gains and losses excluded from earnings and reported in a separate
component of stockholders' equity.  At December 31, 1996, securities available-
for-sale had a net unrealized loss of $219,000 (net of tax benefits of
$113,000).

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,
1996, BancTrust's total deposits were $288.4 million.

                                       8
<PAGE>

  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, 1996.

<TABLE>
<CAPTION>

                                Certificates   Other Time
Maturity Period                  of Deposits    Deposits
---------------                 ------------   ----------
                                      (In thousands)
<S>                             <C>            <C>
Three months or less              $11,856        $ 8,854
Over three through six months       4,280          4,000
Over six through twelve months      1,915             --
Over twelve months                    897             --
                                  -------        -------
     Total                        $18,948        $12,854
                                  =======        =======
</TABLE>

  The following table sets forth the average balances and average interest rates
based on daily balances for deposits for the periods indicated.

<TABLE>
<CAPTION>

                                                       Year Ended December 31,
                                   --------------------------------------------------------------
                                           1996                 1995                 1994
                                    -------------------  -------------------  -------------------
                                     Average   Average    Average   Average    Average   Average
                                    Deposits     Rate    Deposits     Rate    Deposits     Rate
                                    ---------  --------  ---------  --------  ---------  --------
                                                         (Dollars in thousands)
<S>                                 <C>        <C>       <C>        <C>       <C>        <C>
Non-interest bearing demand
   deposits                          $ 42,529       --%   $ 42,206       --%   $ 40,637      -- %
Interest bearing demand deposits       65,211     3.52%     64,419     3.82%     65,951     3.50%
Savings deposits                       28,882     2.87%     30,351     3.00%     31,393     2.86%
Time deposits                         134,354     5.53%    129,866     5.71%    112,984     4.29%
                                     --------             --------             --------
   Total deposits                    $270,976     3.89%   $266,842     4.04%   $250,965     3.83%
                                     ========             ========             ========
</TABLE>

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

                                       9
<PAGE>

depository institution affiliates would control 30% or more of the deposits in
depository institutions in Alabama.  In addition, the Riegle-Neal Act authorizes
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 authorizes, 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, 1996, BancTrust employed 226 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, 1996, 1995 and 1994.
<TABLE>
<CAPTION>

                                          Year Ended December 31,
                                          ------------------------
                                           1996    1995     1994
                                          ------  ------  --------
<S>                                       <C>     <C>     <C>
Return on assets:
Net income/average total assets            1.12%   1.03%      .82%
Return on equity:
Net income/average equity                 11.01%  10.51%     8.30%
Dividend payout ratio:
Dividends declared per share/net income
   per share                              25.72%  28.65%    18.18%*
Equity to assets ratio:
Average equity/average total assets       10.13%   9.77%     9.88%
</TABLE>

*   Earnings per share has been restated to reflect a two-for-one stock split
    effected in the form of a stock dividend on March 15, 1995.

                                       10
<PAGE>

LIQUIDITY AND RATE SENSITIVITY

  The following table sets forth the maturity distribution of BancTrust's
interest-earning assets and interest-bearing liabilities as of December 31,
1996, BancTrust's interest rate sensitivity gap (i.e., interest rate sensitive
assets less interest rate sensitive liabilities), BancTrust's cumulative
interest rate sensitivity gap, the ratio of interest-earning assets to interest-
bearing liabilities, and BancTrust's cumulative interest rate sensitivity gap
ratio.  For purposes of the table, except for fixed-rate installment loans and
savings deposits, an asset or liability is considered rate sensitive within a
specified period when it matures or could be repriced within such period in
accordance with its contractual terms.  Regular savings and NOW accounts are
considered core deposits and are included in the "Over One Year" category, based
upon run off rates determined by the percentage of original deposits remaining.

<TABLE>
<CAPTION>

                                          0-3 Months   4-12 Months   Over One Year     Total
                                          -----------  ------------  --------------  ----------
                                                        (Dollars in thousands)
<S>                                       <C>          <C>           <C>             <C>
Interest-Earning Assets:
Loans                                       $ 97,730       $45,489        $ 86,683    $229,902
Securities                                    12,462         4,745          65,486      82,693
Other assets                                   3,912            --              --       3,912
                                            --------       -------        --------    --------
     Total                                  $141,104       $50,234        $152,169    $316,507
                                            ========       =======        ========    ========
Interest-Bearing Liabilities:
Deposits                                    $ 56,313       $29,417        $155,530    $241,260
Borrowings                                    11,925            --           6,412      18,337
                                            --------       -------        --------    --------
     Total                                  $ 68,238       $29,417        $161,942    $259,597
                                            ========       =======        ========    ========
Interest Sensitivity Gap                    $ 45,866       $20,817        $ (9,773)   $ 56,910
                                            ========       =======        ========    ========
Cumulative Interest Sensitivity Gap         $ 45,866       $66,683        $ 56,910    $ 56,910
                                            ========       =======        ========    ========
Ratio of Interest-Earning Assets to
     Interest-Bearing Liabilities             167.2%         170.8%           94.0%      121.9%
                                            ========       =======        ========    ========
Ratio of Cumulative Gap to Total Assets         13.4%         19.4%           16.6%       16.6%
                                            ========       =======        ========    ========
</TABLE>

  At December 31, 1996, BancTrust had a positive cumulative interest rate
sensitivity gap of $66.7 million at 12 months.  As a result, at December 31,
1996, rising interest rates would increase the net interest margin in earnings
over the following 12 months.  Falling rates would decrease the net interest
margin and earnings over the same period.

  The foregoing table does not necessarily indicate the impact of general
interest rate movements on BancTrust's net interest yield because the repricing
of various categories of assets and liabilities is discretionary and is subject
to competition and other pressures.  As a result, various assets and liabilities
indicated as repricing within the same period may in fact reprice at different
times and at different levels.

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.

                                       11
<PAGE>

  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, 1995, and 1994.

                                       12
<PAGE>

  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 and
FDIC, 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 1996
insurance assessment rates for BIF-insured banks like Peoples Bank from $2,000
per year 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, 1996.

  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 insurance assessment
rates payable by BIF member banks for the first half of 1997, however, remain
fixed at 0% to 0.27%, depending on an individual bank's risk classification.

  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.

                                       13
<PAGE>

  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.  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.  On June 26, 1996, the
FRB and the other banking agencies 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.
Unlike an earlier proposal by the federal banking agencies, the joint policy
statement does not contain a standardized measure of or explicit capital charge
for interest rate risk.

                                       14
<PAGE>

  The FRB has issued final regulations that classify insured depository
institutions by capital levels and provide that the applicable agency will take
various prompt corrective actions to resolve the problems of any institution
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, 1996, Peoples Bank was categorized as "well-capitalized" by
the FDIC.

  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, 1996 (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.

ITEM 2. PROPERTIES

  The following is a brief description of each of BancTrust's facilities.

  The Main Bank Building, located at 310 Broad Street in Selma, is a masonry and
  ----------------------
brick two-story building consisting of 40,000 square feet.  The building was
renovated and enlarged in 1978.  At that time, seven drive-up windows and two
walk-up windows were built.  The property includes parking from Broad Street
through to Washington Street and around the building.  Peoples Bank owns the
building.  In December 1987, Peoples Bank acquired a brick building adjoining
the parking lot for future expansion.   In addition to office space utilized by
Peoples Bank, portions of this building are currently being leased to non-bank
tenants.  In May 1989, Peoples Bank acquired a frame building adjacent to the
parking lot for future expansion.  This structure has been converted to use as a
warehouse for supplies and equipment.

  The Selma Mall Branch, located at 1383 Highland Avenue in Selma, is a masonry
  ---------------------
and brick one-story building consisting of 2,200 square feet.  The branch has
four paying and receiving windows, three drive-up windows and two walk-up
windows.  The land is leased.  The lease expiration date was December 31, 2006.

  The Wal-Mart Branch is located within the Wal-Mart Shopping Center at 1501
  -------------------
Alabama Highway 14 East, Selma, Alabama.  This branch was previously located in
the Winn Dixie Marketplace.  This office, consisting of approximately 517 square
feet, is located adjacent to the main entrance of the Wal-Mart store and
provides four teller windows, new

                                       15
<PAGE>

accounts/reception and a Branch Manager. These quarters have been leased for an
initial five-year period expiring September 6, 2000, with an option for two
additional five year periods.

  The Satterfield Plaza Branch, located on the West Dallas side of the
  ----------------------------
Satterfield Plaza parking lot in Selma, is a frame, one-story building with two
drive-up windows.  The space consists of 308 square feet, and the land is
leased.  The lease expiration date is December 1998.  The lease may be extended
for seven successive terms of five years each.

  The Post Office Branch, located at 801 Alabama Avenue in Selma, was purchased
  ----------------------
by Peoples Bank from the Resolution Trust Corporation in July of 1994.  The
branch, which was formerly the Selma Branch of Altus Federal Savings Bank, is a
masonry and brick two-story building consisting of approximately 7,000 square
feet.  The branch has two paying and receiving windows and one drive-up window.
Portions of the building are currently being leased to nonbank tenants.

  The Plantersville Branch, located at the intersection of Highway 22 North and
  ------------------------
Oak Street in Plantersville, is a frame one-story building consisting of two
paying and receiving windows and one drive-up window.  The building consists of
approximately 1,300 square feet and is owned by Peoples Bank.

  The Greenville Bank Branch, located at 300 East Commerce Street in Greenville,
  --------------------------
is a masonry and brick one-story building situated on an entire city block and
consists of approximately 6,400 square feet.  The site consists of drive-up
teller lanes and parking.  This branch has five paying and receiving windows and
three drive-up windows.  Peoples Bank owns the building which was renovated in
1987 and 1993.

  The Butler Square Branch, located at Butler Square Mall in Greenville, is a
  ------------------------
masonry and brick one-story building with a partial basement located on the
street side of the Butler Square Shopping Mall.  This branch has five paying and
receiving windows and three drive-up windows.  The space consists of 4,600
square feet.  Peoples Bank owns the building.

  The Georgiana Branch, located at 132 North Miranda in Georgiana, is a masonry
  --------------------
and brick one-story building with a wraparound parking lot.  This branch has
three paying and receiving windows and two drive-up windows.  The space consists
of 2,800 square feet.  Peoples Bank leases the building.  The termination date
of the lease is March 1997.

  The McKenzie Branch, located in the corner property of U.S. Highway 31 and a
  -------------------
state road in McKenzie, is a masonry and brick one-story building.  This branch
has three paying and receiving windows and one drive-up window.  The space
consists of 2,700 square feet and is owned by Peoples Bank.

  The Prattmont Branch, located at 801 South Memorial Drive in Prattville, is a
  --------------------
masonry one-story building consisting of approximately 2,200 square feet.  The
branch has five paying and receiving windows and two drive-up windows.  The
building and land are owned by Peoples Bank.

  The Prattville East Branch, located at 1805 East Main Street in Prattville, is
  --------------------------
a masonry and brick one-story building consisting of approximately 2,500 square
feet.  The branch has five paying and receiving windows and two drive-up
windows.  Peoples Bank owns the land and building.

  The Prattville Downtown Branch, located at 148 East Main Street in Prattville,
  ------------------------------
is a masonry and brick one-story building consisting of approximately 9,600
square feet.  Peoples Bank owns the building which was constructed in 1972, the
44,430 square foot lot on which the building is located and an adjacent vacant
lot.  The site has two drive-up windows and eight paying and receiving windows.

  The Prattville Marketplace Branch, is located within the Winn Dixie facility
  ---------------------------------
in the Winn Dixie Marketplace #527, Midtown Shopping Center, Prattville,
Alabama.  This office, consisting of approximately 385 square feet, is located
adjacent to the main entrance of the Winn Dixie Store and provides three teller
windows, new accounts/reception, and a Branch Manager.  These quarters have been
leased for an initial five-year period expiring May 15, 2000, with an option for
two additional five-year periods.

                                       16
<PAGE>

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 vs. 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 involves two collateral protection insurance
certificates issued in connection with a loan by Peoples Bank to the plaintiff.
The plaintiff alleges that Peoples Bank improperly forced-placed insurance
coverage on the plaintiff's vehicle and seeks compensatory and punitive damages
in unspecified amounts based on several alleged theories of recovery, including
fraud and deceit.  Peoples Bank denies the allegations of the complaint.  A
motion to move the case from Macon County to Dallas County, Alabama, has been
granted.  Discovery is proceeding.  The case is being defended by Peoples Bank's
insurer.

  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 now brings this action contending that Peoples Bank owes funds for
the construction to him as a third party beneficiary.  He further alleges
misrepresentation by Peoples Bank and seeks unspecified compensatory and
punitive damages.  A jury trial is 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.

  See Note 9 of Notes to Consolidated Financial Statements contained in
BancTrust's Annual Report to Stockholders for the year ended December 31, 1996
(Exhibit 13) which is incorporated herein by reference.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders of BancTrust through a solicitation
of proxies or otherwise.

EXECUTIVE OFFICERS OF THE REGISTRANT

  RICHARD P. MORTHLAND, 55, is currently Chairman of the Board and Chief
Executive Officer and a Director of Peoples Bank, and President, Chief Executive
Officer and a Director of BancTrust.  Mr. Morthland has been an officer of
Peoples Bank since 1965 and a Director since February 1977.

  ELAM P. HOLLEY, JR., 46, is currently President, Chief Administrative Officer
and a Director of Peoples Bank, and Secretary and a Director of BancTrust.  Mr.
Holley has been an officer of Peoples Bank since November 1975 and a Director
since January, 1988.

  ANDREW C. BEARDEN, JR., 50, is currently Senior Vice President --
Retail/Operations Division of Peoples Bank 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, 48, is currently Senior 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, 54, is currently Senior Vice President-Financial Services
Division, Secretary and Investment Officer of Peoples Bank and Assistant
Secretary of BancTrust.  Mr. Patterson has been in these positions since
November

                                       17
<PAGE>

1985. 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, 63, 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.

  THOMAS J. GAY, 54, is currently Regional President of the Autauga County
Division of Peoples Bank, a title he assumed upon the merger of The Citizens
Bank, Prattville, Alabama into Peoples Bank in 1994.  Mr. Gay had been employed
by The Citizens Bank since 1962.

  WILLIAM S. JOHNSON, 47, 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.

  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.  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, 1996 (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, 1996 (Exhibit 13) which is
incorporated herein by reference.

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, 1996 (Exhibit No. 13) which is incorporated herein by reference.

                                       18
<PAGE>

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, 1996 (Exhibit No. 13)
which is incorporated herein by reference.

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, 1996 (Exhibit No. 13) which are incorporated herein by reference.

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

  Not applicable.

                                    PART III

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 14, 1997, 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 14, 1997, and the Item 405
disclosure therein under "Section 16(a) Beneficial Ownership Reporting" which is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

  Information regarding executive compensation is omitted from this Report as
BancTrust has filed a definitive proxy statement dated March 14, 1997, and the
information included therein under "Election of Directors" which is incorporated
herein by reference.

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 14, 1997, and the information
included therein under "Stock Ownership of Management" and "Principal Holders of
Common Stock" which is incorporated herein by reference.

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 14, 1997, 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. 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, 1996, are
incorporated herein by reference in Item 8 of this Report.  The

                                       19
<PAGE>

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, 1996 and 1995.

       3.   Consolidated Statements of Income for the Years Ended December 31,
            1996, 1995 and 1994.

       4.   Consolidated Statements of Changes in Stockholders' Equity for the
            Years Ended December 31, 1996, 1995 and 1994.

       5.   Consolidated Statements of Cash Flows for the Years Ended December
            31, 1996, 1995 and 1994.

       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. 3. Articles of Incorporation and Bylaws
                      ------------------------------------

       (i)  Articles of Incorporation - incorporated herein by reference to
            Exhibit 3(i) to Registrant's Quarterly Report on Form 10-Q for the
            quarter ended June 30, 1995.

       (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, 1996, 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

  (b)  Not applicable.

  (c)  Exhibits to this Form 10-K are attached or incorporated by reference as
       stated above.

  (d)  None.

                                       20
<PAGE>

                                   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 31, 1997                By:  /s/ Richard P. Morthland
                                         ------------------------
                                         Richard P. Morthland
                                         Director, President 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.

DATE:  SIGNATURE AND TITLE:


/s/ Richard P. Morthland              March 31, 1997
------------------------
Richard P. Morthland
Director, President and Chief
Executive Officer
(Principal Executive Officer)


/s/ Andrew C. Bearden, Jr.            March 31, 1997
--------------------------
Andrew C. Bearden, Jr.
Chief Financial Officer


/s/ Virginia L. Sellers               March 31, 1997
-----------------------
Virginia L. Sellers
Treasurer
(Principal Accounting Officer)


/s/ Julius R. Brown                   March 31, 1997
-------------------
Julius R. Brown
Director


/s/ Clyde B. Cox, Jr.                 March 31, 1997
---------------------
Clyde B. Cox, Jr.
Director

                                       21
<PAGE>

/s/ Harry W. Gamble, Jr.              March 31, 1997
------------------------
Harry W. Gamble, Jr.
Director


/s/ Ted M. Henry                      March 31, 1997
----------------
Ted M. Henry
Director


/s/ Elam P. Holley, Jr.               March 31, 1997
-----------------------
Elam P. Holley, Jr.
Director


/s/ Edie M. Jones                     March 31, 1997
-----------------
Edie M. Jones
Director


/s/ A.D. Lovelady                     March 31, 1997
-----------------
A.D. Lovelady
Director


/s/ Thomas E. Newton                  March 31, 1997
--------------------
Thomas E. Newton
Director


/s/ David Y. Pearce                   March 31, 1997
-------------------
David Y. Pearce
Director


/s/ C. Ernest Smith                   March 31, 1997
-------------------
C. Ernest Smith
Director


/s/ Julius E. Talton                  March 31, 1997
--------------------
Julius E. Talton
Director

                                       22