<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                --------------
                                   FORM 10-K
(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, 1997

                                      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 ($31.25 per share) at which the
stock was sold on March 14, 1998, was approximately $54,977,500.  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, 1998, 3,428,744 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, 1997.

Part III:
Portions of the definitive proxy statement for the Annual Meeting of the
Shareholders to be held on April 14, 1998.
<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, 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.
<PAGE>

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.

<TABLE>
<CAPTION>
                                                                           At December 31,
                                            ------------------------------------------------------------------------------
                                                 1997            1996            1995            1994            1993
                                            --------------  --------------  --------------  --------------  --------------
<S>                                         <C>             <C>             <C>             <C>             <C>
                                                                            (In thousands)
Commercial and industrial.................        $ 91,903        $ 82,001        $ 61,984        $ 48,829        $ 42,006
Real estate - mortgage(1).................          88,246          72,037          57,359          50,092          43,685
Personal..................................          71,978          70,619          71,695          66,170          51,299
Overdrafts and credit line................           7,036           5,245           5,090           4,365           4,929
                                                  --------        --------        --------        --------        --------
 Total loans..............................        $259,163        $229,902        $196,128        $169,456        $141,919
                                                  ========        ========        ========        ========        ========
Less:
 Unearned discount........................        $    386        $  1,532        $  4,996        $  6,478        $  4,943
 Allowance for loan losses................           2,750           2,484           2,005           2,039           2,205
                                                  --------        --------        --------        --------        --------
  Total loans, net........................        $256,027        $225,886        $189,127        $160,939        $134,771
                                                  ========        ========        ========        ========        ========
</TABLE>
----------
(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.
<PAGE>

          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.

<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...........    $ 59,194      $12,485         $17,363           $ 2,724   $ 91,766
Real estate-mortgage (1)............      33,728       25,061          24,359             4,967     88,115
Personal, overdrafts and
 credit lines.......................      11,461       15,225          49,082             3,128     78,896
                                        --------      -------         -------           -------   --------
                                        $104,383      $52,771         $90,804           $10,819   $258,777
                                        ========      =======         =======           =======   ========

Loans with fixed interest rates.....    $ 24,683      $21,633         $57,813           $ 8,714   $112,843
Loans with variable interest rates..      79,700       31,138          32,991             2,105    145,934
                                                      -------         -------           -------   --------
                                        $104,383      $52,771         $90,804           $10,819   $258,777
                                        ========      =======         =======           =======   ========
</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, 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.
<PAGE>

          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:

<TABLE>
<CAPTION>
                                                                         At December 31,
                                                           -------------------------------------------
                                                            1997     1996     1995     1994     1992
                                                           -------  -------  -------  -------  -------
<S>                                                        <C>      <C>      <C>      <C>      <C>
                                                                         (In thousands)

Loans accounted for on a nonaccrual basis................   $1,701   $1,679   $1,503   $1,348   $2,055
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......................       69      294      301      275      295
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......................................       54       77       96       72      131
The amount of interest income on nonaccrual and
 restructured loans that was included in net income for
 the period..............................................       26       22       36       21       34
</TABLE>

     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.
<PAGE>

     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.

<TABLE>
<CAPTION>
           Loan Category/Collateral                                             Amount
           ------------------------                                        -----------------
                                                                            (In thousands)
           <S>                                                             <C>
           Commercial and Industrial:
            Collateralized by Real Estate..................................           $3,327
            Collateralized by Other (1)....................................            4,076
            Unsecured......................................................              114
                                                                                      ------
            Total Commercial and Industrial................................            7,517
                                                                                      ------
           Real Estate-Mortgage
           Personal:
            Collateralized by Real Estate..................................            1,182
            Collateralized by Other........................................               95
            Unsecured......................................................              292
                                                                                      ------
            Total Real Estate-Mortgage.....................................            1,569
                                                                                      ------
                Total......................................................           $9,086
                                                                                      ======
</TABLE>
----------
(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.
<PAGE>

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

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                            -------------------------------------------------------------------
                                                1997          1996          1995          1994          1993
                                            ------------  ------------  ------------  ------------  ------------

<S>                                         <C>           <C>           <C>           <C>           <C>
Balance at beginning of year..............  $ 2,484,122   $ 2,004,891    $2,039,578    $2,204,807    $1,897,695

Charge-offs:
 Commercial and industrial................      210,871       151,700       388,115       184,455       440,911
 Real estate-mortgage (1).................       56,785        29,256        20,300        34,256        10,413
 Personal.................................    1,803,978     1,701,439     1,198,805       906,959       932,071
 Overdraft and credit line................       29,919        56,826        14,226        22,302        27,045
                                            -----------   -----------    ----------    ----------    ----------
  Total charge-offs.......................    2,101,553     1,939,221     1,621,446     1,147,972     1,410,440

Recoveries:
 Commercial and industrial................       31,831        18,270        51,359       113,259       395,319
 Real estate-mortgage.....................       23,537        48,876        20,763        21,747       105,989
 Personal.................................      569,026       510,770       665,065       495,000       529,529
 Overdraft and credit line................       11,388         5,725         1,571         4,737        15,023
                                            -----------   -----------    ----------    ----------    ----------
  Total recoveries........................      635,782       583,641       738,758       634,743     1,045,860

Net charge-offs...........................   (1,465,771)   (1,355,580)     (882,688)     (513,229)     (364,580)
Additions charged to operations...........    1,732,000     1,834,811       848,001       348,000       483,605
Addition due to acquisition...............           --            --            --            --       188,087
                                            -----------   -----------    ----------    ----------    ----------
Balance at end of year....................  $ 2,750,351   $ 2,484,122    $2,004,891    $2,039,578    $2,204,807
                                            ===========   ===========    ==========    ==========    ==========

Ratio of net charge-offs to average loans
 outstanding, net of unearned
 discounts, during the period.............          .65%          .69%          .46%          .32%          .28%
                                            ===========   ===========    ==========    ==========    ==========
</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,
                                  -----------------------------------------------------------------------------------------
                                             1997                            1996                            1995
                                  --------------------------       -------------------------       ------------------------
                                       %          Amount                %          Amount              %          Amount
                                  -----------  -------------       -----------  ------------       ----------  ------------
<S>                               <C>          <C>                 <C>          <C>                <C>         <C>
Commercial and industrial.......          35%         $  963               26%        $  645              38%        $  762
Real estate mortgage (1)........          11%            298               12%           298              18%           361
Personal........................          53%          1,462               60%         1,490              42%           842
Overdraft and credit line.......           1%             27                2%            51               2%            40
                                         ---          ------              ---         ------             ---         ------
 Total Allowance................         100%         $2,750              100%        $2,484             100%        $2,005
                                         ===          ======              ===         ======             ===         ======
<CAPTION>
                                                       At December 31,
                                  ----------------------------------------------------------
                                           1994                            1993
                                  --------------------------       -------------------------
                                      %           Amount               %           Amount
                                  ----------   -------------       ----------   ------------
<S>                               <C>          <C>                 <C>          <C>
Commercial and industrial.......          40%         $  816               42%        $  926
Real estate mortgage (1)........          15%            307               31%           684
Personal........................          43%            877               25%           551
Overdraft and credit line.......           2%             40                2%            44
                                         ---          ------              ---         ------
 Total Allowance................         100%         $2,040              100%        $2,205
                                         ===          ======              ===         ======
</TABLE>
<PAGE>

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.

<TABLE>
<CAPTION>
                                                                           At December 31,
                                                             --------------------------------------------
                                                                  1997           1996           1995
                                                             --------------  -------------  -------------
Securities Available-for-Sale                                               (In thousands)
-----------------------------
<S>                                                          <C>             <C>            <C>
U.S. Treasury, U.S. Agencies and corporations..............         $49,036        $52,961        $56,888
Obligations of states and political subdivisions...........           1,894          2,050          2,875
Corporate and other securities.............................          18,807         27,682         37,824
                                                                    -------        -------        -------
                                                                    $69,737        $82,693        $97,587
                                                                    =======        =======        =======
</TABLE>

       Corporate and other securities as of December 31, 1997, were comprised of
the following:

<TABLE>
<CAPTION>
                                                                                       Securities Available
                                                                                             For Sale
                                                                                      ---------------------
                                                                                          (In thousands)
              <S>                                                                     <C>
              Corporate notes.........................................................              $ 2,344
              Collateralized mortgage obligations.....................................               11,153
              Mortgage backed securities..............................................                  156
              Mutual funds............................................................                2,327
              Common stock............................................................                2,827
                                                                                                    -------
                                                                                                    $18,807
                                                                                                    =======
</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, 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.

<TABLE>
<CAPTION>
                                                          Maturity (in years)
                                   ----------------------------------------------------------------
                                                                                                      No Specific Due
                                   0-3 Months   4-12 Months   Over 1 to 5   Over 5 to 10    Over 10         Date
                                   -----------  ------------  ------------  -------------  ---------  ---------------
<S>                                <C>          <C>           <C>           <C>            <C>        <C>
U.S. Treasury, U.S. agencies and
 corporations....................      $4,415        $2,242       $37,940         $1,106   $  --      $  --
Obligations of states and
 political subdivisions..........         445           184           326            802        106                 --
Corporate and other securities...         984           552         4,574            379     13,457              2,225
                                       ------        ------       -------         ------    -------             ------
Total............................      $5,844        $2,978       $42,840         $2,287    $13,563             $2,225
                                       ======        ======       =======         ======    =======             ======
Weighted average yield (%)(1)....        5.70%         6.28%         6.40%          7.00%      7.00%              8.60%
                                       ======        ======       =======         ======    =======             ======
</TABLE>
----------
(1) Yields on tax-exempt obligations have been computed on a tax-equivalent
    basis using an incremental rate of 34%.
<PAGE>

          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.

<TABLE>
<CAPTION>
                                                       Certificates of            Other Time
Maturity Period                                            Deposits                Deposits
---------------                                     --------------------     ------------------
                                                                   (In thousands)
<S>                                                   <C>                      <C>
Three months or less................................             $14,517                $10,841
Over three through six months.......................               5,241                  4,898
Over six through twelve months......................               2,345                     --
Over twelve months..................................               1,098                     --
                                                                 -------                -------
 Total..............................................             $23,201                $15,739
                                                                 =======                =======
</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,
                                       ------------------------------------------------------------
                                              1997                 1996                 1995
                                       -------------------  -------------------  -------------------
                                        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............................   $ 45,968       --%   $ 42,529       --%   $ 42,206       --%
Interest bearing demand deposits.....     66,543     3.48%     65,211     3.52%     64,419     3.82%
Savings deposits.....................     27,829     2.87%     28,882     2.87%     30,351     3.00%
Time deposits........................    144,743     5.49%    134,354     5.53%    129,866     5.71%
                                        --------             --------             --------
 Total deposits......................   $285,083     3.88%   $270,976     3.89%   $266,842     4.04%
                                        ========             ========             ========
</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
<PAGE>

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.

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                   -------------------------------------------------
                                                         1997             1996             1995
                                                   ----------------  --------------  ----------------
<S>                                                <C>               <C>             <C>
Return on assets:
Net income/average total assets..................             1.20%           1.12%             1.03%
Return on equity:
Net income/average equity........................            10.95%          11.01%            10.51%
Dividend payout ratio:
Dividends declared per share/net income
 per share.......................................            26.50%          25.72%            28.65%
Equity to assets ratio:
Average equity/average total assets..............            10.85%          10.13%             9.77%
</TABLE>

* 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.
<PAGE>

     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
<PAGE>

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.
<PAGE>

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
<PAGE>

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.
<PAGE>

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.  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.  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
<PAGE>

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.  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.
<PAGE>

     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.  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.
<PAGE>

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.  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.
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


                      THE PEOPLES BANCTRUST COMPANY, INC.
                      INTEREST RATE SENSITIVITY POSITION
                               DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                      ------------------------------------------------------------------------------------------
                                                                     EXPECTED MATURITY DATE
                                        1998       1999       2000       2001       2002     THEREAFTER     TOTAL     FAIR VALUE
                                      --------    -------    -------   --------   --------   ----------   ---------   ----------
                                                                      (Dollars in thousands)
<S>                                  <C>         <C>        <C>        <C>        <C>        <C>          <C>         <C>
Interest-Earning Assets:
--------------------------------
FEDERAL FUNDS SOLD UNDER
 AGREEMENTS TO RESELL...........      $  6,677   $     --   $     --   $     --   $     --     $     --    $  6,677     $  6,677
  Average interest rate.........          5.40%        --%        --%        --%        --%          --%       5.40%
LOANS, NET OF UNEARNED
INTEREST........................      $157,154    $31,944    $19,471   $ 18,266   $ 21,123     $ 10,819    $258,777     $261,927
  Average interest rate.........          9.30%      9.60%      9.33%      8.78%      8.73%        8.70%       9.24%
INVESTMENT SECURITIES...........      $  8,822    $14,994    $10,710   $ 12,852   $  4,284     $ 18,075    $ 69,737     $ 69,737
   Average interest rate........          5.90%      6.11%     6.255%      6.77%      6.85%        7.20%       6.24%
TOTAL INTEREST-EARNING ASSETS...      $172,653    $46,938    $30,181   $ 31,118   $ 25,407     $ 28,894    $335,191     $338,341

Interest-Bearing Liabilities:
--------------------------------
SAVINGS.........................      $  1,052    $   785    $   785   $    523   $    307     $ 22,699    $ 26,150     $ 26,150
  Average interest rate.........          2.75%      2.75%      2.75%      2.75%      2.75%        2.75%       2.75%
TIME DEPOSITS...................      $120,301    $24,333    $ 6,312   $  4,172   $     --     $     --    $155,118     $155,738
  Average interest rate.........          5.18%      5.95%      6.29%      6.22%      4.88%        0.00%       4.83%
MONEY MARKET AND  TRANSACTION
 ACCOUNTS.......................      $  2,656    $ 1,992    $ 1,992   $  1,328   $  1,328     $ 57,647    $ 66,943     $ 66,943
   Average interest rate........          3.48%      3.48%      3.48%      3.48%      3.48%        3.48%       3.48%
FEDERAL FUNDS PURCHASED UNDER
 AGREEMENTS TO REPURCHASE.......      $ 13,642    $    --    $    --   $     --   $     --     $     --    $ 13,642     $ 13,642
  Average interest rate.........          5.40%        --%        --%        --%        --%          --%       5.40%
FEDERAL HOME LOAN BANK ADVANCES.      $    209    $    94    $    --   $     --   $  3,824     $  4,170    $  8,297     $  8,297
  Average interest rate.........          5.65%      6.02%      0.00%      0.00%      6.38%        6.81%       6.50%
TOTAL INTEREST-BEARING
 LIABILITIES....................      $137,860    $27,204    $ 9,089   $  6,023   $  5,459     $ 84,516    $270,150     $270,770

Interest sensitivity gap........      $ 34,793    $19,735    $21,092   $ 25,095   $ 19,948     $(55,622)   $ 65,041
Cumulative interest sensitive
 gap............................      $ 34,793    $56,528    $77,620   $102,715   $122,663     $ 65,041    $130,083
Interest sensitive gap to
  total assets..................          9.63%      5.46%      5.84%      6.94%      5.52%     (15.39)%      18.00%
Cumulative interest sensitive
 gap to total assets............          9.63%      5.09%     20.93%     27.87%     33.39%       18.00%      36.00%
                                ------------------------------------------------------------------------------------------------
</TABLE>

(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.
<PAGE>

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.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 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 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.  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.  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.  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.  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.
<PAGE>

                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.
<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 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
<PAGE>

                                    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

                                       2