3-29-05 0720



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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

Amendment No. 2



(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, 2004



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 incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|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. ̈



Indicate
by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) YES ̈NO x.



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 ($14.15 per share) at which the stock was sold on, June 30, 2004, was approximately
$57,193,593. 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 24, 2005, 5,587,783 shares of the registrants
Common Stock were outstanding.



Documents Incorporated By
Reference



Part III:



Portions of the definitive proxy statement for the Annual Meeting of the Shareholders.



---



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Purpose of Amendment No. 2



This Amendment No. 2 on Form 10-K/A to the Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as
previously amended by Amendment No. 1 (the Form 10-K), is being filed for the purpose of amending and restating Item 8 and Item 15 of the Form 10-K to amend the Report of Prior Independent Registered Public Accounting Firm rendered by
PricewaterhouseCoopers LLP for the fiscal years ended December 31, 2003 and 2002 to revise the report in accordance with Auditing Standard No. 1 of the Public Company Accounting Oversight Board (United States).



In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, the
complete text of Items 8 and 15, as amended and restated, including the complete text of the financial statements required by and incorporated by reference in Item 8, is set forth herein. No changes have been made to the Consolidated Financial
Statements, Notes to the Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm rendered by Mauldin & Jenkins, LLC for the fiscal year ended December 31, 2004 included in the Form 10-K.



In connection with the filing of this Amendment No. 2, the Company is
including currently dated consents of its independent registered public accounting firm and its prior independent registered public accounting firm, and currently dated certifications. The remainder of the Companys Form 10-K is unchanged and
is not reproduced in this Amendment No. 2. This Amendment No. 2 does not reflect events occurring after the date of filing of the original Form 10-K, or amend or update other disclosures therein.



|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------



The Consolidated Financial Statements and related notes thereto, along with related financial schedules as listed in Item 15.-Exhibits and Financial
Statement Schedules have been included in this report, and should be referred to in their entirety. The table below sets forth certain quarterly supplementary financial information.



SELECTED QUARTERLY FINANCIAL DATA 2004 - 2003

(Dollars in thousands, except for per share amounts)



|                                         |  |         |         |         |   |         |  |   |         |   |         |   |         |  |         |         |         |   |         |  |   |         |  |   |        
|---------------------------------------- |  | ------- | ------- | ------- | - | ------- |  | - | ------- | - | ------- | - | ------- |  | ------- | ------- | ------- | - | ------- |  | - | ------- |  | - | -------
|                                         |  | 2004    |         | 2003   
|                                         |  | Dec. 31 |         | Sep. 30 |   | Jun. 30 |  |   | Mar. 31 |   | Dec. 31 |   | Sep. 30 |  | Jun. 30 |         | Mar. 31
|Net interest income                      |  | $       | 6,437   |         | $ | 6,213   |  | $ | 6,372   |   |         | $ | 6,472   |  | $       | 6,690   |         | $ | 6,473   |  | $ | 6,562   |  | $ | 7,102  
|Provision for loan losses                |  |         |        |         |   |        |  |   | (575    | ) |         |   | 426     |  |         | 1,018   |         |   | 2,280   |  |   | 876     |  |   | 1,532  
|Income before income tax                 |  |         | 1,916   |         |   | 2,045   |  |   | 2,027   |   |         |   | 2,025   |  |         | 2,681   |         |   | 337     |  |   | 1,998   |  |   | 2,286  
|Provision for income tax                 |  |         | 544     |         |   | 272     |  |   | 588     |   |         |   | 567     |  |         | 577     |         |   | 102     |  |   | 623     |  |   | 662    
|Net income                               |  |         | 1,372   |         |   | 1,773   |  |   | 1,439   |   |         |   | 1,458   |  |         | 2,104   |         |   | 235     |  |   | 1,375   |  |   | 1,624  
|Net income per share (basic and diluted) |  | $       | 0.24    |         | $ | 0.32    |  | $ | 0.26    |   |         | $ | 0.26    |  | $       | 0.38    |         | $ | 0.04    |  | $ | 0.25    |  | $ | 0.29   
|Cash dividends declared per share        |  |         | 0.11    |         |   | 0.11    |  |   | 0.11    |   |         |   | 0.11    |  |         | 0.11    |         |   | 0.11    |  |   | 0.11    |  |   | 0.11   
|                                         |  |         |         |         |   |         |  |   |         |   |         |   |         |  |         |         |         |   |         |  |   |         |  |   |        
|Total Assets                             |  | $       | 792,249 |         | $ | 779,266 |  | $ | 762,416 |   |         | $ | 781,168 |  | $       | 778,581 |         | $ | 785,792 |  | $ | 767,342 |  | $ | 759,417
|                                         |  |         |         |         |   |         |  |   |         |   |         |   |         |  |         |         |         |   |         |  |   |         |  |   |        



During the quarter
ended September, 30, 2004, BancTrust made certain adjustments to its deferred income tax assets and liabilities, thereby resulting in a comparatively lower provision for income taxes that in the preceding two quarters.



2



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|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



(a)(1) The following consolidated financial statements of BancTrust included herein (beginning on page F-1), are as follows.



|   |  |                                                                                                                  |  |                 
|-- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----------------
|1. |  | Reports of Independent Registered Public Accounting Firms.                                                       |  | - Filed herewith
|2. |  | Consolidated Balance Sheets - December 31, 2004 and 2003.                                                        |  | - Filed herewith
|3. |  | Consolidated Statements of Income for the Years Ended December 31, 2004, 2003 and 2002.                          |  | - Filed herewith
|4. |  | Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2004, 2003 and 2002.            |  | - Filed herewith
|5. |  | Consolidated Statements of Changes in Stockholders Equity for the Years Ended December 31, 2004, 2003 and 2002. |  | - Filed herewith
|6. |  | Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002.                      |  | - Filed herewith
|7. |  | Notes to Consolidated Financial Statements.                                                                      |  | - Filed herewith



(a)(2) All schedules
for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.



(a)(3) The following exhibits either are filed as part of this Report or are incorporated herein by reference:



Exhibit No. 3. Articles of Incorporation and Bylaws



| | (i) | Articles of Incorporation  incorporated herein by reference to Exhibit 3(i) to the Registrants Annual Report on Form 10-K for the year ended December 31, 1997.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Bylaws  Filed as Exhibit 3(ii) in Amendment No. 1 on Form 10-K/A
| | ---- | -----------------------------------------------------------------



Exhibit No. 10.1. Stock Option Plans



| | (i) | 1992 Stock Option Plan - Incorporated herein by reference to Exhibit 10 to the Registrants Annual Report on Form 10-K for the year ended December 31, 1992.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | 1999 Stock Option Plan  Incorporated herein by reference to Exhibit 99.1 to the Registrants Registration Statement on Form S-8 (File No. 333-77109).
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------



Exhibit No. 10.2. Executive Supplemental
Retirement Plans



| | (i) | Agreement dated July 17, 2001, by and between The Peoples Bank and Trust Company and Richard P. Morthland  Incorporated herein by reference to Exhibit 10.2 to the
Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2001.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



3



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| | (ii) | Agreement dated July 17, 2001, by and between The Peoples Bank and Trust Company and Elam P. Holley, Jr. Incorporated herein by reference to Exhibit 10.2 to the Registrants
Annual Report on Form 10-K for the fiscal year ended December 31, 2001.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Exhibit No. 10.3. Agreement with Richard P. Morthland  Incorporated herein by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, dated December 17, 2002.



Exhibit No. 10.4 Dividend Reinvestment and Stock Purchase Plan 
Incorporated herein by reference to the Registrants Registration Statement on Form S-3 (File No. 33-60935).



Exhibit No. 14. - Incorporated herein by reference to Exhibit 14 to the Registrants Annual Report on Form 10-K for the fiscal year ended December
31, 2003.



Exhibit No. 21. - Incorporated herein by reference
to Exhibit 21 to the Registrants Annual Report on Form 10-K December 31, 2001.



Exhibit No. 23.1 Consent of Mauldin & Jenkins Certified Public Accountants, LLC. - Filed herewith



Exhibit No. 23.2 Consent of PricewaterhouseCoopers LLP. - Filed herewith



Exhibit No. 31.1. Certification of Principal Executive Officer pursuant to Exchange Act Rule 12a  14(a) or 15d
 14(a). - Filed herewith



Exhibit No. 31.2.
Certification of Principal Financial Officer pursuant to Exchange Act Rule 12a  14(a) or 15d  14(a). - Filed herewith



Exhibit No. 32.1. Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes  Oxley Act of 2002. -
Filed herewith



|(b) | Exhibits to this Form 10-K/A are attached or incorporated by reference as stated above.
|--- | ---------------------------------------------------------------------------------------



|(c) | None.
|--- | -----



4



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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: August 29, 2005 |  |  |  | By:                                 |  | /s/ Elam P. Holley, Jr.
|                      |  |  |  |                                     |  |                         |  | Elam P. Holley, Jr.                  
|                      |  |  |  |                                     |  |                         |  | President and Chief Executive Officer



5



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The Peoples BancTrust

Company, Inc. and Subsidiary



Consolidated Financial
Statements

As of December 31, 2004 and 2003 and

For Each of the Three Years Ended December 31, 2004,

2003 and 2002.



F-1



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REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM



To the Board of Directors

The Peoples BancTrust Company, Inc.

Selma, Alabama



We have audited the accompanying consolidated balance sheet of The Peoples BancTrust Company, Inc. and Subsidiary as of
December 31, 2004 and the related consolidated statements of income, comprehensive income, stockholders equity and cash flows for the year then ended. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audit. The financial statements of The Peoples BancTrust Company, Inc. and Subsidiary as of December 31, 2003 and for each of the two years in the period ended
December 31, 2003 were audited by other auditors, whose report dated February 27, 2004 expressed an unqualified opinion on those statements.



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



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of The Peoples BancTrust Company, Inc. and Subsidiary as of December 31, 2004 and the results of their operations and their cash flows for the year then
ended, in conformity with U.S. generally accepted accounting principles.



/s/
Mauldin & Jenkins, LLC

Birmingham, Alabama

February 18,
2005



F-2



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Report of Independent Registered Public
Accounting Firm



To the Board of Directors

The Peoples BancTrust Company, Inc.



In our opinion, the consolidated balance sheet as of December 31, 2003 and the related consolidated statements of income, comprehensive income, stockholders equity
and cash flows for each of the two years in the period ended December 31, 2003 present fairly, in all material respects, the financial position, results of operations and cash flows of The Peoples BancTrust Company, Inc. and its subsidiary (the
Company) at December 31, 2003 and for each of the two years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the
Companys management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP



Birmingham, Alabama

February 27, 2004



F-3



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The Peoples BancTrust Company, Inc. and Subsidiary

Consolidated Balance Sheets

December 31, 2004 and 2003



|                                                          |  |      |             |   |      |   |             |  
|--------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                          |  | 2004 |             |   | 2003 |  
|Assets                                                    |  |      |             |   |      |   |             |  
|Cash and due from banks                                   |  | $    | 46,176,624  |   |      | $ | 57,433,194  |  
|Federal funds sold and resell agreements                  |  |      | 17,000,000  |   |      |   | 2,048,000   |  
|                                                          |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                 |  |      | 63,176,624  |   |      |   | 59,481,194  |  
|                                                          |  |     
|Available-for-sale securities                             |  |      | 253,744,320 |   |      |   | 225,134,664 |  
|                                                          |  |     
|Loans, net of unearned income                             |  |      | 438,018,731 |   |      |   | 461,404,660 |  
|Allowance for loan losses                                 |  |      | (9,042,942  | ) |      |   | (11,994,862 | )
|                                                          |  |      |             |   |      |   |             |  
|Loans, net                                                |  |      | 428,975,789 |   |      |   | 449,409,798 |  
|                                                          |  |     
|Bank premises and equipment                               |  |      | 36,435,545  |   |      |   | 34,553,446  |  
|Less accumulated depreciation                             |  |      | (18,069,791 | ) |      |   | (17,460,153 | )
|                                                          |  |      |             |   |      |   |             |  
|Bank premises and equipment, net                          |  |      | 18,365,754  |   |      |   | 17,093,293  |  
|                                                          |  |     
|Other real estate, net                                    |  |      | 2,005,817   |   |      |   | 2,395,302   |  
|Interest receivable                                       |  |      | 3,298,296   |   |      |   | 3,484,219   |  
|Intangible assets acquired, net                           |  |      | 6,860,794   |   |      |   | 7,088,000   |  
|Deferred income taxes                                     |  |      | 2,069,831   |   |      |   | 3,376,635   |  
|Income taxes receivable                                   |  |      | 1,263,011   |   |      |   |            |  
|Other assets                                              |  |      | 12,488,442  |   |      |   | 11,118,347  |  
|                                                          |  |      |             |   |      |   |             |  
|Total Assets                                              |  | $    | 792,248,678 |   |      | $ | 778,581,452 |  
|                                                          |  |      |             |   |      |   |             |  
|Liabilities and Stockholders Equity                      |  |      |             |   |      |   |             |  
|                                                          |  |     
|Liabilities:                                              |  |      |             |   |      |   |             |  
|Deposits:                                                 |  |      |             |   |      |   |             |  
|Demand-noninterest bearing                                |  | $    | 78,641,169  |   |      | $ | 74,254,186  |  
|Demand-interest bearing                                   |  |      | 247,507,341 |   |      |   | 210,547,676 |  
|Savings                                                   |  |      | 40,072,920  |   |      |   | 38,645,889  |  
|Time                                                      |  |      | 299,431,549 |   |      |   | 320,308,961 |  
|                                                          |  |      |             |   |      |   |             |  
|Total deposits                                            |  |      | 665,652,979 |   |      |   | 643,756,712 |  
|                                                          |  |     
|Federal funds purchased and repurchased agreements        |  |      |            |   |      |   | 1,816,000   |  
|Other borrowed funds                                      |  |      | 48,312,571  |   |      |   | 54,874,496  |  
|Interest payable                                          |  |      | 1,381,269   |   |      |   | 1,514,169   |  
|Dividends payable                                         |  |      | 1,567       |   |      |   | 5,653       |  
|Income taxes payable                                      |  |      |            |   |      |   | 830,661     |  
|Other liabilities                                         |  |      | 1,857,802   |   |      |   | 3,004,817   |  
|                                                          |  |      |             |   |      |   |             |  
|Total liabilities                                         |  |      | 717,206,189 |   |      |   | 705,802,508 |  
|                                                          |  |     
|Stockholders equity:                                     |  |      |             |   |      |   |             |  
|Common stock                                              |  |      | 558,455     |   |      |   | 556,478     |  
|Additional paid-in capital                                |  |      | 11,406,301  |   |      |   | 11,144,938  |  
|Accumulated other comprehensive (loss) income, net of tax |  |      | (947,477    | ) |      |   | 643,339     |  
|Retained earnings                                         |  |      | 64,025,210  |   |      |   | 60,434,189  |  
|                                                          |  |      |             |   |      |   |             |  
|Total stockholders equity                                |  |      | 75,042,489  |   |      |   | 72,778,944  |  
|                                                          |  |      |             |   |      |   |             |  
|Total liabilities and stockholders equity                |  | $    | 792,248,678 |   |      | $ | 778,581,452 |  
|                                                          |  |      |             |   |      |   |             |  



The accompanying notes
are an integral part of these financial statements.



F-4



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The Peoples BancTrust Company, Inc. and Subsidiary

Consolidated Statements of Income

Years Ended December 31, 2004, 2003 and 2002



|                                                                                 |  |      |            |   |      |   |            |  |   |           
|-------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- |  | - | ----------
|                                                                                 |  | 2004 |            |   | 2003 |   | 2002      
|Interest income:                                                                 |  |      |            |   |      |   |            |  |   |           
|Interest and fees on loans and bankers acceptances                               |  | $    | 28,028,661 |   |      | $ | 32,117,459 |  | $ | 35,979,548
|Interest and dividends on investment securities:                                 |  |      |            |   |      |   |            |  |   |           
|U.S. Government securities                                                       |  |      | 4,325,817  |   |      |   | 2,811,771  |  |   | 2,502,475 
|Obligations of state and political subdivisions and industrial development bonds |  |      |            |   |      |   |            |  |   |           
|Nontaxable                                                                       |  |      | 8,594      |   |      |   | 63,272     |  |   | 146,346   
|Taxable                                                                          |  |      | 35,998     |   |      |   | 85,072     |  |   | 95,538    
|Other securities and interest-bearing deposits                                   |  |      | 4,314,637  |   |      |   | 3,477,574  |  |   | 5,116,792 
|Interest on federal funds sold and resell agreements                             |  |      | 155,507    |   |      |   | 244,333    |  |   | 125,222   
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Total interest income                                                            |  |      | 36,869,214 |   |      |   | 38,799,481 |  |   | 43,965,921
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Interest expense:                                                                |  |      |            |   |      |   |            |  |   |           
|Interest on deposits                                                             |  |      | 9,038,890  |   |      |   | 9,538,964  |  |   | 11,176,184
|Interest on federal funds purchased and other borrowed funds                     |  |      | 2,336,630  |   |      |   | 2,433,227  |  |   | 3,245,535 
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Total interest expense                                                           |  |      | 11,375,520 |   |      |   | 11,972,191 |  |   | 14,421,719
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Net interest income                                                              |  |      | 25,493,694 |   |      |   | 26,827,290 |  |   | 29,544,202
|                                                                                 |  |      |           
|Provision for loan losses                                                        |  |      | (149,164   | ) |      |   | 5,705,915  |  |   | 7,203,743 
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Net interest income after provision for loan loss                                |  |      | 25,642,858 |   |      |   | 21,121,375 |  |   | 22,340,459
|                                                                                 |  |      |           
|Noninterest income:                                                              |  |      |            |   |      |   |            |  |   |           
|Trust department income                                                          |  |      | 890,621    |   |      |   | 829,830    |  |   | 650,003   
|Service charges on deposit accounts                                              |  |      | 4,749,168  |   |      |   | 5,219,084  |  |   | 5,397,708 
|Net securities gains                                                             |  |      | 724,859    |   |      |   | 1,068,698  |  |   | 762,132   
|Other noninterest income                                                         |  |      | 2,567,997  |   |      |   | 4,654,829  |  |   | 3,078,089 
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Total noninterest income                                                         |  |      | 8,932,645  |   |      |   | 11,772,441 |  |   | 9,887,932 
|                                                                                 |  |      |           
|Noninterest expense:                                                             |  |      |            |   |      |   |            |  |   |           
|Salaries and wages                                                               |  |      | 11,838,559 |   |      |   | 11,461,721 |  |   | 11,694,678
|Pensions and other employee benefits                                             |  |      | 2,049,789  |   |      |   | 2,018,049  |  |   | 1,524,584 
|Occupancy and equipment expenses                                                 |  |      | 4,865,438  |   |      |   | 5,091,275  |  |   | 4,435,040 
|Other noninterest expenses                                                       |  |      | 7,808,744  |   |      |   | 7,020,552  |  |   | 7,201,853 
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Total noninterest expense                                                        |  |      | 26,562,530 |   |      |   | 25,591,597 |  |   | 24,856,155
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Income before provision for income taxes                                         |  |      | 8,012,973  |   |      |   | 7,302,219  |  |   | 7,372,236 
|                                                                                 |  |      |           
|Provision for income taxes                                                       |  |      | 1,970,877  |   |      |   | 1,964,700  |  |   | 2,235,065 
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Net income                                                                       |  | $    | 6,042,096  |   |      | $ | 5,337,519  |  | $ | 5,137,171 
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Earnings per share                                                               |  |      |            |   |      |   |            |  |   |           
|Basic net income per share                                                       |  | $    | 1.08       |   |      | $ | 0.96       |  | $ | 0.92      
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Diluted net income per share                                                     |  | $    | 1.08       |   |      | $ | 0.96       |  | $ | 0.92      
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Basic weighted average number of shares outstanding                              |  |      | 5,574,190  |   |      |   | 5,562,867  |  |   | 5,562,784 
|                                                                                 |  |      |            |   |      |   |            |  |   |           
|Diluted weighted average number of shares outstanding                            |  |      | 5,593,040  |   |      |   | 5,587,802  |  |   | 5,577,986 
|                                                                                 |  |      |            |   |      |   |            |  |   |           



The accompanying notes
are an integral part of these financial statements.



F-5



---



The Peoples BancTrust Company, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2004, 2003 and 2002



|                                                                                     |  |      |            |   |      |   |            |      |  |   |           |  
|------------------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                                                                     |  | 2004 |            |   | 2003 |   |            | 2002 | 
|Net income                                                                           |  | $    | 6,042,096  |   |      | $ | 5,337,519  |      |  | $ | 5,137,171 |  
|Other comprehensive income:                                                          |  |      |            |   |      |   |            |      |  |   |           |  
|Unrealized (losses) gains on securities available for sale during the period         |  |      | (1,796,244 | ) |      |   | (979,357   | )    |  |   | 2,805,281 |  
|Less: reclassification adjustment for net gains included in net income               |  |      | 724,859    |   |      |   | 1,068,698  |      |  |   | 762,132   |  
|                                                                                     |  |      |            |   |      |   |            |      |  |   |           |  
|Other comprehensive (loss) income                                                    |  |      | (2,521,103 | ) |      |   | (2,048,055 | )    |  |   | 2,043,149 |  
|Income tax benefit (provision) related to items of other comprehensive (loss) income |  |      | 930,287    |   |      |   | 755,732    |      |  |   | (755,965  | )
|                                                                                     |  |      |            |   |      |   |            |      |  |   |           |  
|Other comprehensive (loss) income, net of tax                                        |  |      | (1,590,816 | ) |      |   | (1,292,323 | )    |  |   | 1,287,184 |  
|                                                                                     |  |      |            |   |      |   |            |      |  |   |           |  
|Comprehensive income, net of tax                                                     |  | $    | 4,451,280  |   |      | $ | 4,045,196  |      |  | $ | 6,424,355 |  
|                                                                                     |  |      |            |   |      |   |            |      |  |   |           |  



The accompanying notes
are an integral part of these financial statements.



F-6



---



The Peoples BancTrust Company, Inc. and Subsidiary

Consolidated Statements of Changes in Stockholders Equity

Years Ended December 31, 2004, 2003 and 2002



|                                                                                                                                         |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | -------------------------- | - | ---------- | ---------------------------------------------------- |  | - | ---------------- | - |  | ----- | ---------- | - |  | - | ---------- | -
|                                                                                                                                         |  | Common Stock |         |   | Additional Paid-In Capital |   |            | AccumulatedOtherComprehensiveIncome (Loss)net of Tax |  |   | RetainedEarnings |   |  | Total |           
|Balance December 31, 2001                                                                                                                |  | $            | 556,278 |   |                            | $ | 11,144,924 |                                                      |  | $ | 648,478          |   |  | $     | 54,799,129 |   |  | $ | 67,148,809 |  
|Net income                                                                                                                               |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       | 5,137,171  |   |  |   | 5,137,171  |  
|Cash dividends declared ($.43 per share)                                                                                                 |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       | (2,391,997 | ) |  |   | (2,391,997 | )
|Common stock issued (18 shares)                                                                                                          |  |              | 2       |   |                            |   | 209        |                                                      |  |   |                  |   |  |       |            |   |  |   | 211        |  
|Change in accumulated other comprehensive income, net of tax                                                                             |  |              |         |   |                            |   |            |                                                      |  |   | 1,287,184        |   |  |       |            |   |  |   | 1,287,184  |  
|                                                                                                                                         |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   |            |  
|Balance December 31, 2002                                                                                                                |  | $            | 556,280 |   |                            | $ | 11,145,133 |                                                      |  | $ | 1,935,662        |   |  | $     | 57,544,303 |   |  | $ | 71,181,378 |  
|                                                                                                                                         |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   |            |  
|Net income                                                                                                                               |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       | 5,337,519  |   |  |   | 5,337,519  |  
|Cash dividends declared ($.44 per share)                                                                                                 |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       | (2,447,633 | ) |  |   | (2,447,633 | )
|Common stock issued (9,240 shares)                                                                                                       |  |              | 924     |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   | 924        |  
|Common stock retired (7,260 shares)                                                                                                      |  |              | (726    | ) |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   | (726       | )
|Net impact of common stock tendered for common stock options exercised and common stock purchased through the dividend reinvestment
plan |  |              |         |   |                            |   | (195       | )                                                    |  |   |                  |   |  |       |            |   |  |   | (195       | )
|Change in accumulated other comprehensive income, net of tax                                                                             |  |              |         |   |                            |   |            |                                                      |  |   | (1,292,323       | ) |  |       |            |   |  |   | (1,292,323 | )
|                                                                                                                                         |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   |            |  
|Balance December 31, 2003                                                                                                                |  | $            | 556,478 |   |                            | $ | 11,144,938 |                                                      |  | $ | 643,339          |   |  | $     | 60,434,189 |   |  | $ | 72,778,944 |  
|                                                                                                                                         |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   |            |  
|Net income                                                                                                                               |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       | 6,042,096  |   |  |   | 6,042,096  |  
|Cash dividends declared ($.44 per share)                                                                                                 |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       | (2,451,075 | ) |  |   | (2,451,075 | )
|Common stock issued (24,184 shares)                                                                                                      |  |              | 2,418   |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   | 2,418      |  
|Common stock retired (4,416 shares)                                                                                                      |  |              | (441    | ) |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   | (441       | )
|Net impact of common stock tendered for common stock options exercised and common stock purchased through the dividend reinvestment
plan |  |              |         |   |                            |   | 261,363    |                                                      |  |   |                  |   |  |       |            |   |  |   | 261,363    |  
|Change in accumulated other comprehensive income, net of tax                                                                             |  |              |         |   |                            |   |            |                                                      |  |   | (1,590,816       | ) |  |       |            |   |  |   | (1,590,816 | )
|                                                                                                                                         |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   |            |  
|Balance December 31, 2004                                                                                                                |  | $            | 558,455 |   |                            | $ | 11,406,301 |                                                      |  | $ | (947,477         | ) |  | $     | 64,025,210 |   |  | $ | 75,042,489 |  
|                                                                                                                                         |  |              |         |   |                            |   |            |                                                      |  |   |                  |   |  |       |            |   |  |   |            |  



The accompanying notes
are an integral part of these financial statements.



F-7



---



The Peoples BancTrust Company, Inc. and Subsidiary

Consolidated Statements of Cash Flows

Years Ended December 31, 2004, 2003 and 2002



|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|---------------------------------------------------------------------------- |  | ---- | ------------ | - | ---- | - | ------------ | ---- |  | - | ------------ | -
|                                                                             |  | 2004 |              |   | 2003 |   |              | 2002 | 
|Cash flows from operating activities                                         |  |      |              |   |      |   |              |      |  |   |              |  
|Net income                                                                   |  | $    | 6,042,096    |   |      | $ | 5,337,519    |      |  | $ | 5,137,171    |  
|Adjustments to reconcile net income to cash provided by operating activities |  |      |              |   |      |   |              |      |  |   |              |  
|Provision for loan losses                                                    |  |      | (149,164     | ) |      |   | 5,705,915    |      |  |   | 7,203,743    |  
|Depreciation, amortization and accretion                                     |  |      | 2,638,544    |   |      |   | 3,324,925    |      |  |   | 3,171,966    |  
|Increase (decrease) in the unearned discount                                 |  |      | 39,634       |   |      |   | (224,398     | )    |  |   | (367,643     | )
|Deferred income taxes, net                                                   |  |      | 1,095,364    |   |      |   | (470,161     | )    |  |   | (1,320,170   | )
|Loss (gain) on sales of OREO                                                 |  |      | 225,250      |   |      |   | (1,258,820   | )    |  |   | (109,053     | )
|Gain on sales of securities                                                  |  |      | (724,859     | ) |      |   | (1,068,698   | )    |  |   | (762,132     | )
|Write down of other real estate and equipment                                |  |      | 36,475       |   |      |   | 37,001       |      |  |   | 46,480       |  
|Decrease (increase) in assets                                                |  |      |              |   |      |   |              |      |  |   |              |  
|Interest receivable                                                          |  |      | 163,301      |   |      |   | 647,646      |      |  |   | 652,525      |  
|Income taxes receivable                                                      |  |      | (1,177,632   | ) |      |   |             |      |  |   |             |  
|Other assets                                                                 |  |      | (957,760     | ) |      |   | 3,223,456    |      |  |   | (2,168,128   | )
|(Decrease) increase in other liabilities                                     |  |      |              |   |      |   |              |      |  |   |              |  
|Interest payable                                                             |  |      | (132,900     | ) |      |   | (409,919     | )    |  |   | (1,077,356   | )
|Minimum required contributions to defined benefits pension plan              |  |      | (1,008,624   | ) |      |   | (963,993     | )    |  |   | (340,080     | )
|Income taxes payable                                                         |  |      | (830,661     | ) |      |   | 413,478      |      |  |   | (124,691     | )
|Other liabilities                                                            |  |      | (2,438,104   | ) |      |   | 1,434,357    |      |  |   | 577,405      |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Net cash provided by operating activities                                    |  |      | 2,820,960    |   |      |   | 15,728,308   |      |  |   | 10,520,037   |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Cash flows from investing activities                                         |  |      |              |   |      |   |              |      |  |   |              |  
|Proceeds from sales of available for sales securities                        |  |      | 84,010,036   |   |      |   | 78,170,073   |      |  |   | 91,807,044   |  
|Proceeds from maturities and calls of available for sale securities          |  |      | 73,210,590   |   |      |   | 82,307,067   |      |  |   | 58,037,952   |  
|Purchases of available for sale securities                                   |  |      | (187,985,554 | ) |      |   | (223,879,206 | )    |  |   | (160,429,892 | )
|Net decrease (increase) in loans                                             |  |      | 23,615,040   |   |      |   | 32,032,718   |      |  |   | (43,365,031  | )
|Excess contributions to defined benefits pension plan                        |  |      | (2,000,000   | ) |      |   |             |      |  |   |             |  
|Purchases of bank premises and equipment                                     |  |      | (3,646,794   | ) |      |   | (4,006,231   | )    |  |   | (1,372,702   | )
|Proceeds from sales of other real estate and equipment                       |  |      | 2,404,572    |   |      |   | 8,023,748    |      |  |   | 2,149,257    |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Net cash used in investing activities                                        |  |      | (10,392,110  | ) |      |   | (27,351,831  | )    |  |   | (53,173,372  | )
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Cash flows from financing activities                                         |  |      |              |   |      |   |              |      |  |   |              |  
|Net increase in deposits                                                     |  |      | 21,896,267   |   |      |   | 46,784,929   |      |  |   | 34,713,786   |  
|(Decrease) increase in borrowings                                            |  |      | (8,377,925   | ) |      |   | (10,787,487  | )    |  |   | 8,778,275    |  
|Dividends paid                                                               |  |      | (2,251,762   | ) |      |   | (2,475,333   | )    |  |   | (2,398,059   | )
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Net cash provided by financing activities                                    |  |      | 11,266,580   |   |      |   | 33,522,109   |      |  |   | 41,094,002   |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Increase (decrease) in cash and cash equivalents                             |  |      | 3,695,430    |   |      |   | 21,898,586   |      |  |   | (1,559,333   | )
|Cash and cash equivalents                                                    |  |      |              |   |      |   |              |      |  |   |              |  
|Beginning of year                                                            |  |      | 59,481,194   |   |      |   | 37,582,608   |      |  |   | 39,141,941   |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|End of year                                                                  |  | $    | 63,176,624   |   |      | $ | 59,481,194   |      |  | $ | 37,582,608   |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Supplemental disclosure of cash flow information                             |  |      |              |   |      |   |              |      |  |   |              |  
|Cash paid during the year for                                                |  |      |              |   |      |   |              |      |  |   |              |  
|Interest                                                                     |  | $    | 11,508,420   |   |      | $ | 11,562,272   |      |  | $ | 15,499,075   |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Income taxes                                                                 |  | $    | 1,519,000    |   |      | $ | 1,855,000    |      |  | $ | 3,679,926    |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  
|Non-cash investing activities                                                |  |      |              |   |      |   |              |      |  |   |              |  
|Transfer of loans to other real estate                                       |  | $    | 2,293,004    |   |      | $ | 2,077,114    |      |  | $ | 7,161,515    |  
|                                                                             |  |      |              |   |      |   |              |      |  |   |              |  



The accompanying notes
are an integral part of these financial statements.



F-8



---



The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004, 2003 and 2002



|1. | Significant Accounting Policies
|-- | -------------------------------



Basis of Consolidation



The consolidated financial statements included herein are those of The Peoples BancTrust Company, Inc. (the Company) and its wholly owned subsidiary, The
Peoples Bank and Trust Company (the Bank). The Company operates primarily in the retail banking industry. The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany transactions and
balances have been eliminated in consolidation.



Nature of
Operations



The Company operates as a single-segment
retail banking enterprise with twenty-four offices in rural and suburban communities in central Alabama. The Companys primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and
middle-income individuals.



Use of Estimates in the
Preparation of Financial Statements



The preparation of
financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Securities



Securities are classified as either held-to-maturity, trading, or available-for-sale securities.



Securities held-to-maturity are securities for which management has the
ability and intent to hold on a long-term basis or until maturity. These securities are carried at amortized cost, adjusted for amortization of premiums and accretion of discounts to the earlier of the maturity or call date.



Securities available-for-sale represent those securities intended to be held
for an indefinite period of time, including securities that management intends to use as part of its asset/liability strategy, or that may be sold in response to changes in interest rates, changes in prepayment risk, the need to increase regulatory
capital or other similar factors. Securities available-for-sale are recorded at market value with unrealized gains and losses, net of any tax effect, added or deducted directly from stockholders equity.



Securities carried in trading accounts are carried at market value with
unrealized gains and losses reflected in income.



At December
31, 2004 and 2003, the Company classified all securities as available-for-sale as part of an asset and liability strategy to maximize the flexibility of its investment portfolio.



Realized and unrealized gains and losses are based on the specific identification method.



F-9



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



Loans



Loans are stated at face value, net of unearned discount and the allowance for loan losses. Unearned discounts on
installment loans are recognized as income over the terms of the loans by the interest method. Interest on other loans is credited to operations based on the principal amount outstanding. Nonrefundable fees and costs associated with originating or
acquiring loans are recognized by the interest method as a yield adjustment over the life of the corresponding loan.



Allowance for Loan Losses



The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Increases and decreases in the
allowance due to changes in the measurement of the impaired loans are included in the provision for loan losses. Loans continue to be classified as impaired unless they are brought fully current and the collection of scheduled interest and principal
is considered probable. When a loan or portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent recoveries, if any, are credited to the allowance.



Managements periodic evaluation of the adequacy of the allowance also
considers unimpaired loans and takes into consideration the Banks loan loss experience for pools of homogeneous loans, known and inherent risks in the portfolio, adverse situations that may affect the borrowers ability to repay, and
current economic conditions. While management believes that it has established the allowance in accordance with generally accepted accounting principles and has taken into account the views of its regulators and the current economic environment,
there can be no assurance that in the future the Banks regulators or its economic environment will not require further increases in the allowance.



A loan is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of the loan agreement. Uncollateralized loans are measured for impairment based on the present value of expected future cash flows discounted at the historical effective
interest rate, while all collateral-dependent loans are measured for impairment based on the fair value of the collateral.



The Company uses several factors in determining if a loan is impaired. Internal asset classification procedures include a thorough review of significant
loans and lending relationships and include the accumulation of related data. This data includes loan payment status, borrowers financial data, and borrowers operating factors such as cash flows and operating income or loss.



At December 31, 2004 and 2003, the recorded investment in loans for which
impairment has been recognized totaled approximately $6,587,000 and $15,312,000, respectively. These loans had a corresponding valuation allowance of approximately $557,000 at December 31, 2004 and $1,486,000 at December 31, 2003. The impaired loans
were measured for impairment using the fair value of the collateral, as substantially all of these loans were collateral dependent. The average recorded investment in impaired loans during 2004 and 2003 was approximately $10,144,000 and $10,479,000,
respectively. The Company recognized approximately $793,000, $554,000 and $305,000 of interest on impaired loans during 2004, 2003 and 2002, respectively.



F-10



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



Income Recognition on Impaired and Nonaccrual Loans



Loans, including impaired loans, are generally classified as nonaccrual if
they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well-collateralized and in the process of collection. If a loan or a portion of a loan is classified as doubtful or is
partially charged off, the loan is generally classified as nonaccrual. At the discretion of management, loans that are on a current payment status or past due less than 90 days may also be classified as nonaccrual if repayment in full of principal
and/or interest is in doubt.



Loans may be returned to accrual
status when all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance (generally a minimum of six
months) by the borrower, in accordance with the contractual terms of interest and principal.



While a loan is classified as nonaccrual and the future collectibility of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to principal outstanding,
except in the case of loans with scheduled amortizations where the payment is generally applied to the oldest payment due. When the future collection of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the
case where a nonaccrual loan has been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Receipts in excess of that amount
are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered.



Bank Premises and Equipment



Office equipment, vehicles, and buildings are stated at cost less accumulated depreciation computed on the straight-line, declining-balance and other
accelerated methods over the estimated useful lives of the assets. Gains or losses on disposition are recorded in other operating income on the date of disposition, based upon the difference between the net proceeds and the adjusted carrying value
of the assets sold or retired. Maintenance and repairs are charged to expense as incurred, while renewals and betterments are capitalized. Estimated useful lives range from seven to forty years for buildings and improvements, and three to five years
for furniture and equipment.



Other Real Estate



Other real estate is stated at the lower of the appraised
value, less estimated costs to sell the property, or outstanding loan balance at the time of foreclosure. Any subsequent write-downs are charged against operating expenses. Operating expenses of such properties, net of related income are included in
other expenses.



Goodwill and Other Intangible Assets



Goodwill represents the excess of the cost of an
acquisition over the fair value of the net assets acquired. Other intangible assets represent purchased assets that also lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset
is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) 142, Goodwill and Other Intangible
Assets. Under the provisions of SFAS No. 142, goodwill and other intangible assets with indefinite useful lives will no longer be amortized, but instead are tested for impairment as of the date of adoption and at least annually. Intangible
assets that have finite lives continue to be amortized over their estimated useful lives and also



F-11



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



continue to be subject to impairment testing. All of the Companys other intangible assets have finite lives and are amortized on an accelerated basis
over a period of no more than ten years. Prior to the adoption of SFAS 142, the Companys goodwill was amortized over a period of 25 years using the straight-line method. Note 7 includes a summary of the Companys goodwill and other
intangible assets as well as further detail about the impact of the adoption of SFAS 142.



Income Taxes



Deferred
tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income taxes.



Earnings Per Share



Basic earnings per share are computed by dividing net income by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings per share are computed by dividing net income by the sum of the
weighted-average number of shares of common stock outstanding and dilutive potential common shares. Potential common shares consist of stock options, and are determined using the treasury stock method



Stock-Based Compensation



SFAS No. 123, Accounting for Stock-Based Compensation, defines a fair
value based method of accounting for an employee stock option or similar equity instrument. However, SFAS No. 123 allows an entity to continue to measure compensation costs for those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees. Entities electing to remain with the accounting in Opinion No. 25 must make pro forma disclosures of net income and earnings per share as if the fair value based
method of accounting defined in SFAS No. 123 had been applied. Under the fair value based method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting
period. Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted market price of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock. The Company has
elected to continue to measure compensation cost for its stock option plans under the provisions in APB Opinion 25 and has calculated the fair value of outstanding options for purposes of pro forma disclosure utilizing the Black-Scholes
option-pricing model.



The Company did not grant stock options
in 2004. The Companys options granted in 2003 and 2002 became fully vested one year after their respective grant dates.



F-12



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The Companys actual and pro forma information follows:



|                                                                                                                     |  |                         |           |   |      |   |           |      |  |   |           |  
|-------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                                                     |  | Year Ended December 31, |          
|                                                                                                                     |  | 2004                    |           |   | 2003 |   |           | 2002 | 
|Net income                                                                                                           |  |                         |           |   |      |   |           |      |  |   |           |  
|As reported                                                                                                          |  | $                       | 6,042,096 |   |      | $ | 5,337,519 |      |  | $ | 5,137,171 |  
|Deducts:                                                                                                             |  |                         |           |   |      |   |           |      |  |   |           |  
|Total stock-based employee compensation expense determined under fair value based methods for all awards, net of tax |  |                         | (52,634   | ) |      |   | (141,532  | )    |  |   | (177,317  | )
|                                                                                                                     |  |                         |           |   |      |   |           |      |  |   |           |  
|Pro forma net income                                                                                                 |  | $                       | 5,989,462 |   |      | $ | 5,195,987 |      |  | $ | 4,959,854 |  
|                                                                                                                     |  |                         |           |   |      |   |           |      |  |   |           |  
|Basic earnings per share                                                                                             |  |                         |           |   |      |   |           |      |  |   |           |  
|As reported                                                                                                          |  | $                       | 1.08      |   |      | $ | 0.96      |      |  | $ | 0.92      |  
|Pro forma                                                                                                            |  | $                       | 1.07      |   |      | $ | 0.93      |      |  | $ | 0.89      |  
|                                                                                                                     |  |                         |          
|Diluted earnings per share                                                                                           |  |                         |           |   |      |   |           |      |  |   |           |  
|As reported                                                                                                          |  | $                       | 1.08      |   |      | $ | 0.96      |      |  | $ | 0.92      |  
|Pro forma                                                                                                            |  | $                       | 1.07      |   |      | $ | 0.93      |      |  | $ | 0.89      |  



The fair value of
each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. The following weighted-average assumptions were used for options granted in 2003 and 2002 respectively: dividend yield of 2.75 percent and 3.39
percent; expected volatility of 41.32 percent and 43.6 percent; risk-free interest rate of 3.55 percent and 2.36 percent; and expected life of 6.45 years and 4.11 years. The weighted average fair value of options granted during 2003 and 2002 was
$6.78 and $4.97 respectively.



Advertising Costs



Advertising costs are expensed as incurred.



Cash and Cash Equivalents



For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks, federal funds sold, securities purchased under agreements to resell, and interest-bearing deposits in banks.



Accounting for Derivatives and Hedging Activities



As part of the Companys overall interest rate risk management, the Company occasionally uses derivative instruments. Under the guidelines of SFAS
133, Accounting for Derivative Instruments and Hedging Activities, as amended, all derivative instruments are required to be carried at fair value on the balance sheet. SFAS 133 provides special hedge accounting provisions, which permit the
change in the fair value of the hedged item related to the risk being hedged to be recognized in earnings in the same period and in the same income statement line as the change in fair value of the derivative.



F-13



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair
value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges under SFAS 133. Derivative instruments designated in a hedge relationship to mitigate exposure to
variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management
objective and strategy for undertaking each hedge transaction.



Derivative instruments that are used as part of the Companys interest-rate risk-management strategy consist primarily of interest-rate swaps. Interest-rate swaps generally involve the exchange of fixed-rate and variable-rate interest
payments between two parties, based on a notional principal amount, interest rate index and maturity date. The Company is exposed to credit and market risk by using derivative instruments. If the counterparty fails to perform, credit risk is equal
to the extent of the fair-value gain in a derivative. The Company minimizes the credit (or repayment) risk in derivative instruments by entering into transactions with high quality counterparties. Market risk is the adverse effect that a change in
interest rates, or implied volatility rates has on the value of a financial instrument. The Company manages the market risk by using derivatives for hedging purposes, and then monitoring the effectiveness of the hedges.



Recently Issued Accounting Standards



In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. The Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities
under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The Statement is effective for contracts entered into or modified after June 30, 2003, with certain exceptions, and for hedging relationships designated after
June 30, 2003. In addition, the provisions of the statement, with certain exceptions, were required to be applied prospectively. The initial implementation of the Statement did not have a material affect on the Companys consolidated financial
position or consolidated results of operations and management does not anticipate any such impact in the future.



In December 2003, the American Institute of Certified Public Accountants (AICPA) issued Statement of Position (SOP) 03-3,
Accounting for Certain Loans or Debt Securities Acquired in a Transfer. This SOP addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investors initial investment in loans
or debt securities (loans) acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes such loans acquired in purchase business combinations and applies to all nongovernmental entities, including
not-for-profit organizations. This SOP does not apply to loans originated by the entity. This SOP limits the yield that may be accreted (accretable yield) to the excess of the investors estimate of undiscounted expected principal, interest,
and other cash flows (cash flows expected at acquisition to be collected) over the investors initial investment in the loan. This SOP requires that the excess of contractual cash flows over cash flows expected to be collected (nonaccretable
difference) not be recognized as an adjustment of yield, loss accrual, or valuation allowance. This SOP prohibits carrying over or creation of valuation allowances in the initial accounting of all loans acquired in a transfer that are
within the scope of this SOP. The prohibition of the valuation allowance carryover applies to the purchase of an individual loan, a pool of loans, a group of loans, and loans acquired in a purchase business combination. This SOP is effective for



F-14



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



loans acquired in fiscal years beginning after December 15, 2004. The changes required by this SOP are not expected to have a material impact on results of
operations, financial position, or liquidity of the Company.



In December 2004, the Financial Accounting Standards Board (FASB) published FASB Statement No. 123 (revised 2004), Share-Based Payment (FAS 123(R) or the Statement). FAS 123(R) requires that the
compensation cost relating to share-based payment transactions, including grants of employee stock options, be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. FAS
123(R) covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. FAS 123(R) is a replacement of FASB
Statement No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related interpretive guidance.



The effect of the Statement will be to require entities to measure the cost
of employee services received in exchange for stock options based on the grant-date fair value of the award, and to recognize the cost over the period the employee is required to provide services for the award. FAS 123(R) permits entities to use any
option-pricing model that meets the fair value objective in the Statement.



The Company will be required to apply FAS 123(R) as of the beginning of its first interim period that begins after June 15, 2005, which will be the quarter ending September 30, 2005.



FAS 123(R) allows two methods for determining the effects of the transition:
the modified prospective transition method and the modified retrospective method of transition. Under the modified prospective transition method, an entity would use the fair value based accounting method for all employee awards granted, modified,
or settled after the effective date. As of the effective date, compensation cost related to the nonvested portion of awards outstanding as of that date would be based on the grant-date fair value of those awards as calculated under the original
provisions of Statement No. 123; that is, an entity would not remeasure the grant-date fair value estimate of the unvested portion of awards granted prior to the effective date of FAS 123(R). An entity will have the further option to either apply
the Statement to only the quarters in the period of adoption and subsequent periods, or apply the Statement to all quarters in the fiscal year of adoption. Under the modified retrospective method of transition, an entity would revise its previously
issued financial statements to recognize employee compensation cost for prior periods presented in accordance with the original provisions of Statement No. 123. The provisions of this statement are not expected to have a material impact on results
of operations, financial position, or liquidity of the Company.



|2. | Restricted Cash Balances
|-- | ------------------------



Aggregate reserves in the form of deposits with the Federal Reserve Bank of approximately $13,061,000 and $12,433,000 were maintained to satisfy federal
regulatory requirements at December 31, 2004 and 2003, respectively.



F-15



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|3. | Capital and Preferred Stock
|-- | ---------------------------



The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.10 per share, which have been designated as Non-cumulative Non-voting
Directors Preferred Stock, Series A. No preferred stock is outstanding at either December 31, 2004 or 2003.



|4. | Securities
|-- | ----------



The amortized cost and approximate market values of available-for-sale securities at December 31, 2004 and 2003 are as follows:



|                                                               |  |                |             |                      |   |                       |  |   |                         |   |  |   |            
|-------------------------------------------------------------- |  | -------------- | ----------- | -------------------- | - | --------------------- |  | - | ----------------------- | - |  | - | -----------
|                                                               |  | 2004          
|Type                                                           |  | Amortized Cost |             | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | ApproximateMarket Value
|U.S. Treasury Securities                                       |  | $              | 13,960,608  |                      | $ |                      |  | $ | (210,918                | ) |  | $ | 13,749,690 
|Obligations of other U.S. government agencies and corporations |  |                | 113,963,507 |                      |   | 3,824                 |  |   | (894,778                | ) |  |   | 113,072,553
|Obligations of state and political subdivisions                |  |                |            |                      |   |                      |  |   |                        |   |  |   |           
|Mortgage backed securities                                     |  |                | 117,628,661 |                      |   | 215,664               |  |   | (876,724                | ) |  |   | 116,967,601
|Corporate and other securities                                 |  |                | 9,700,285   |                      |   | 258,760               |  |   | (4,569                  | ) |  |   | 9,954,476  
|                                                               |  |                |             |                      |   |                       |  |   |                         |   |  |   |            
|                                                               |  | $              | 255,253,061 |                      | $ | 478,248               |  | $ | (1,986,989              | ) |  | $ | 253,744,320
|                                                               |  |                |             |                      |   |                       |  |   |                         |   |  |   |            
|                                                               | 
|                                                               |  | 2003          
|Type                                                           |  | Amortized Cost |             | GrossUnrealizedGains |   | GrossUnrealizedLosses |  |   | ApproximateMarket Value
|U.S. Treasury Securities                                       |  | $              | 3,018,259   |                      | $ | 32,054                |  | $ |                        |   |  | $ | 3,050,313  
|Obligations of other U.S. government agencies and corporations |  |                | 117,571,353 |                      |   | 1,129,493             |  |   | (413,430                | ) |  |   | 118,287,416
|Obligations of state and political subdivisions                |  |                | 1,903,686   |                      |   | 53,905                |  |   |                        |   |  |   | 1,957,591  
|Mortgage backed securities                                     |  |                | 81,340,175  |                      |   | 178,498               |  |   | (146,854                | ) |  |   | 81,371,819 
|Corporate and other securities                                 |  |                | 20,288,826  |                      |   | 178,699               |  |   |                        |   |  |   | 20,467,525 
|                                                               |  |                |             |                      |   |                       |  |   |                         |   |  |   |            
|                                                               |  | $              | 224,122,299 |                      | $ | 1,572,649             |  | $ | (560,284                | ) |  | $ | 225,134,664
|                                                               |  |                |             |                      |   |                       |  |   |                         |   |  |   |            



F-16



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The amortized cost and approximate market value of available-for-sale securities at December 31,
2004, by contractual maturity, are shown below. 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.



|                                       |  |                               |             |              |   |            
|-------------------------------------- |  | ----------------------------- | ----------- | ------------ | - | -----------
|                                       |  | Available-for-sale Securities
|                                       |  | Cost                          |             | Market Value
|Due in one year or less                |  | $                             | 1,003,285   |              | $ | 1,001,951  
|Due after one year through five years  |  |                               | 106,983,353 |              |   | 106,136,745
|Due after five years through ten years |  |                               | 20,937,209  |              |   | 20,678,710 
|Mortgage backed securities             |  |                               | 117,628,661 |              |   | 116,967,601
|Equity securities                      |  |                               | 8,700,553   |              |   | 8,959,313  
|                                       |  |                               |             |              |   |            
|                                       |  | $                             | 255,253,061 |              | $ | 253,744,320
|                                       |  |                               |             |              |   |            



Included within
corporate and other securities are $765,085 and $772,249 in marketable equity securities at December 31, 2004 and 2003, respectively. Also included within corporate and other securities are $3,646,800 and $2,717,300 of Federal Home Loan Bank stock
at December 31, 2004 and 2003, respectively, and $574,131 and $635,400 of Federal Reserve Bank stock at December 31, 2004 and 2003 respectively.



The following table reflects BancTrusts investments gross unrealized losses and market value, aggregated by investment category and length of
time that individual securities have been in a continuous unrealized loss position, at December 31, 2004 and 2003.



F-17



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|-------------------------------------------------------------- |  | ------------------- | ----------- | ---------------- | ----------------- | ---------- | ------------ |  | ---------------- | ---------- |  | - | -------- | -
|2004                                                           | 
|                                                               |  |                    
|                                                               |  | Less Than 12 Months |             |                  | 12 Months or More |           
|Type                                                           |  | Market Value        |             | UnrealizedLosses |                   |            | Market Value |  | UnrealizedLosses |           
|U.S. Treasury Securities                                       |  | $                   | 13,749,690  |                  | $                 | (210,918   | )            |  | $                |           |  | $ |         |  
|Obligations of other U.S. government agencies and corporations |  |                     | 96,176,102  |                  |                   | (822,780   | )            |  |                  | 4,926,639  |  |   | (71,998  | )
|Obligations of state and political subdivisions                |  |                     |            |                  |                   |           |              |  |                  |           |  |   |         |  
|Mortgage backed securities                                     |  |                     | 77,637,353  |                  |                   | (732,645   | )            |  |                  | 5,972,983  |  |   | (144,079 | )
|Corporate and other securities                                 |  |                     | 995,163     |                  |                   | (4,569     | )            |  |                  |           |  |   |         |  
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|Total temporarily impaired securities                          |  | $                   | 188,558,308 |                  | $                 | (1,770,912 | )            |  | $                | 10,899,622 |  | $ | (216,077 | )
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|                                                               |  |                     |            
|                                                               |  | Total               |             |                  |                   |            |              | 
|                                                               |  | Market Value        |             | UnrealizedLosses |                   |            |              |  |                  |           
|U.S. Treasury Securities                                       |  | $                   | 13,749,690  |                  | $                 | (210,918   | )            |  |                  |            |  |   |          |  
|Obligations of other U.S. government agencies and corporations |  |                     | 101,102,741 |                  |                   | (894,778   | )            |  |                  |            |  |   |          |  
|Obligations of state and political subdivisions                |  |                     |            |                  |                   |           |              |  |                  |            |  |   |          |  
|Mortgage backed securities                                     |  |                     | 83,610,336  |                  |                   | (876,724   | )            |  |                  |            |  |   |          |  
|Corporate and other securities                                 |  |                     | 995,163     |                  |                   | (4,569     | )            |  |                  |            |  |   |          |  
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|Total temporarily impaired securities                          |  | $                   | 199,457,930 |                  | $                 | (1,986,989 | )            |  |                  |            |  |   |          |  
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|                                                              
|2003                                                           | 
|                                                               |  |                    
|                                                               |  | Less Than 12 Months |             |                  | 12 Months or More |           
|Type                                                           |  | Market Value        |             | UnrealizedLosses |                   |            | Market Value |  | UnrealizedLosses |           
|U.S. Treasury Securities                                       |  | $                   |            |                  | $                 |           |              |  | $                |           |  | $ |         |  
|Obligations of other U.S. government agencies and corporations |  |                     | 118,287,417 |                  |                   | (413,430   | )            |  |                  |           |  |   |         |  
|Obligations of state and political subdivisions                |  |                     |            |                  |                   |           |              |  |                  |           |  |   |         |  
|Mortgage backed securities                                     |  |                     | 81,371,819  |                  |                   | (146,854   | )            |  |                  |           |  |   |         |  
|Corporate and other securities                                 |  |                     |            |                  |                   |           |              |  |                  |           |  |   |         |  
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|Total temporarily impaired securities                          |  | $                   | 199,659,236 |                  | $                 | (560,284   | )            |  | $                |           |  | $ |         |  
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|                                                               |  |                     |            
|                                                               |  | Total               |             |                  |                   |            |              | 
|                                                               |  | Market Value        |             | UnrealizedLosses |                   |            |              |  |                  |           
|U.S. Treasury Securities                                       |  | $                   |            |                  | $                 |           |              |  |                  |            |  |   |          |  
|Obligations of other U.S. government agencies and corporations |  |                     | 118,287,417 |                  |                   | (413,430   | )            |  |                  |            |  |   |          |  
|Obligations of state and political subdivisions                |  |                     |            |                  |                   |           |              |  |                  |            |  |   |          |  
|Mortgage backed securities                                     |  |                     | 81,371,819  |                  |                   | (146,854   | )            |  |                  |            |  |   |          |  
|Corporate and other securities                                 |  |                     |            |                  |                   |           |              |  |                  |            |  |   |          |  
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  
|Total temporarily impaired securities                          |  | $                   | 199,659,236 |                  | $                 | (560,284   | )            |  |                  |            |  |   |          |  
|                                                               |  |                     |             |                  |                   |            |              |  |                  |            |  |   |          |  



F-18



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The securities above consist of government agency debentures and mortgage-backed securities. Because
of the creditworthiness of the issuers and because the future direction of interest rates is unknown, the impairments are deemed to be temporary.



Gross gains of $809,537, $1,207,961, and $785,614, and gross losses of $84,678, $139,263, and $23,482 were realized on the sales of debt securities for
2004, 2003, and 2002, respectively.



Securities with a
carrying value of approximately $131,974,000 and $146,205,000 were pledged as collateral for public funds deposits and repurchase agreements at December 31, 2004 and 2003, respectively.



F-19



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|5. | Loans
|-- | -----



The major categories of loans at December 31, 2004 and 2003 are as follows:



|                           |  |      |             |      |   |            
|-------------------------- |  | ---- | ----------- | ---- | - | -----------
|                           |  | 2004 |             | 2003
|Commercial and Industrial  |  | $    | 83,314,433  |      | $ | 127,703,477
|Real estate mortgage       |  |      | 307,363,138 |      |   | 281,078,936
|Personal                   |  |      | 46,693,158  |      |   | 51,764,875 
|Overdrafts and credit line |  |      | 1,381,081   |      |   | 1,790,167  
|                           |  |      |             |      |   |            
|                           |  |      | 438,751,810 |      |   | 462,337,455
|                           |  |      |             |      |   |            
|Less:                      |  |      |             |      |   |            
|Unearned discount          |  |      | 733,079     |      |   | 932,795    
|Allowance for loan losses  |  |      | 9,042,942   |      |   | 11,994,862 
|                           |  |      |             |      |   |            
|                           |  | $    | 428,975,789 |      | $ | 449,409,798
|                           |  |      |             |      |   |            



The Banks
lending is concentrated throughout Dallas, Autauga, Butler, Bibb, Elmore, Shelby, Tallapoosa, Lee, Jefferson and Tuscaloosa counties in Alabama; the repayment of these loans is, in part, dependent on the economic conditions in these areas of the
state. Management does not believe the loan portfolio contains concentrations of credit risk either geographically, or by borrower, which would expose the Bank to unacceptable amounts of risk. The above loans included agricultural loans totaling
approximately $2,952,000 and $3,808,000 for 2004 and 2003, respectively. Management continually evaluates the potential risk in this segment of the portfolio in determining the adequacy of the allowance for possible loan losses.



The Bank evaluates each customers credit worthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the Bank, upon extension of credit is based on managements credit evaluation of the customer. Collateral held varies, but may include accounts receivable, inventory, property,
plant and equipment, residential real estate and income-producing commercial properties. No additional credit risk exposure relating to outstanding loan balances exists beyond the amounts shown in the consolidated balance sheets as of December 31,
2004.



Loans on which the accrual of interest has been
discontinued amounted to approximately $2,121,000, $2,204,000, and $6,128,000 for 2004, 2003, and 2002, respectively. Had these loans had been current throughout their terms, interest income would have increased approximately $119,000, $272,000, and
$267,000 in 2004, 2003, and 2002, respectively.



F-20



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



Changes in the allowance for loan losses were as follows:



|                                |  |      |            |   |      |   |            |      |  |   |            |  
|------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                |  | 2004 |            |   | 2003 |   |            | 2002 | 
|Balance, beginning of year      |  | $    | 11,994,862 |   |      | $ | 10,256,805 |      |  | $ | 7,666,046  |  
|Provision charged to operations |  |      | (149,164   | ) |      |   | 5,705,915  |      |  |   | 7,203,743  |  
|Loan charged off                |  |      | (4,409,406 | ) |      |   | (5,543,615 | )    |  |   | (5,248,693 | )
|Recoveries                      |  |      | 1,606,650  |   |      |   | 1,575,757  |      |  |   | 635,709    |  
|                                |  |      |            |   |      |   |            |      |  |   |            |  
|Balance, end of year            |  | $    | 9,042,942  |   |      | $ | 11,994,862 |      |  | $ | 10,256,805 |  
|                                |  |      |            |   |      |   |            |      |  |   |            |  



|6. | Bank Premises and Equipment
|-- | ---------------------------



Bank premises and equipment and accumulated depreciation at December 31, 2004 and 2003 are summarized as follows:



|                                                 |  |      |            |      |   |           
|------------------------------------------------ |  | ---- | ---------- | ---- | - | ----------
|                                                 |  | 2004 |            | 2003
|Buildings                                        |  | $    | 16,330,606 |      | $ | 16,383,104
|Furniture and equipment                          |  |      | 14,195,757 |      |   | 14,396,109
|Land improvements                                |  |      | 581,723    |      |   | 585,541   
|Construction in progress, substantially complete |  |      | 1,327,016  |      |   | 148,996   
|                                                 |  |      |            |      |   |           
|                                                 |  |      | 32,435,102 |      |   | 31,513,750
|Less accumulated depreciation                    |  |      | 18,069,791 |      |   | 17,460,153
|                                                 |  |      |            |      |   |           
|                                                 |  |      | 14,365,311 |      |   | 14,053,597
|Land                                             |  |      | 4,000,443  |      |   | 3,039,696 
|                                                 |  |      |            |      |   |           
|                                                 |  | $    | 18,365,754 |      | $ | 17,093,293
|                                                 |  |      |            |      |   |           



F-21



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|7. | Goodwill and Other Intangible Assets
|-- | ------------------------------------



The Company has amortizable finite-lived intangible assets capitalized on its balance sheet in the form of core deposits and other intangibles. Intangible
assets (including goodwill) at December 31, 2004 and 2003 are as follows:



|                                 |  |                         |           |                         |   |                  |  |   |          
|-------------------------------- |  | ----------------------- | --------- | ----------------------- | - | ---------------- |  | - | ---------
|                                 |  | As of December 31, 2004
|                                 |  | GrossCarryingAmount     |           | AccumulatedAmortization |   | NetCarryingValue
|Acquired intangible assets:      |  |                         |           |                         |   |                  |  |   |          
|Core deposits                    |  | $                       | 2,871,712 |                         | $ | 2,254,475        |  | $ | 617,237  
|Other                            |  |                         | 212,804   |                         |   | 172,470          |  |   | 40,334   
|                                 |  |                         |           |                         |   |                  |  |   |          
|Total acquired intangible assets |  | $                       | 3,084,516 |                         | $ | 2,426,945        |  | $ | 657,571  
|                                 |  |                         |           |                         |   |                  |  |   |          
|Non-amortizing goodwill:         |  | $                       | 8,136,833 |                         | $ | 1,933,610        |  | $ | 6,203,223
|                                 |  |                         |           |                         |   |                  |  |   |          
|                                 | 
|                                 |  | As of December 31, 2003
|                                 |  | GrossCarryingAmount     |           | AccumulatedAmortization |   | NetCarryingValue
|Acquired intangible assets:      |  |                         |           |                         |   |                  |  |   |          
|Core deposits                    |  | $                       | 2,871,712 |                         | $ | 2,057,897        |  | $ | 813,815  
|Other                            |  |                         | 212,804   |                         |   | 141,842          |  |   | 70,962   
|                                 |  |                         |           |                         |   |                  |  |   |          
|Total acquired intangible assets |  | $                       | 3,084,516 |                         | $ | 2,199,739        |  | $ | 884,777  
|                                 |  |                         |           |                         |   |                  |  |   |          
|Non-amortizing goodwill:         |  | $                       | 8,136,833 |                         | $ | 1,933,610        |  | $ | 6,203,223
|                                 |  |                         |           |                         |   |                  |  |   |          



Amortization expense
on finite-lived intangible assets totaled approximately $227,000, $281,000, and $232,000 for 2004, 2003, and 2002, respectively. Aggregate amortization expense of currently recorded core deposits and other intangibles is expected to be as follows
through December 31, 2007:



|      |  |              |         |                  |   |        |  |   |        
|----- |  | ------------ | ------- | ---------------- | - | ------ |  | - | -------
|      |  | CoreDeposits |         | AcquisitionCosts |   | Total 
|2005  |  | $            | 225,153 |                  | $ | 30,543 |  | $ | 255,696
|2006  |  | $            | 196,042 |                  |   | 9,791  |  |   | 205,833
|2007  |  | $            | 196,042 |                  |   |       |  |   | 196,042
|      |  |              |         |                  |   |        |  |   |        
|Total |  | $            | 617,237 |                  | $ | 40,334 |  | $ | 657,571
|      |  |              |         |                  |   |        |  |   |        



F-22



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|8. | Derivatives
|-- | -----------



During 2002, the Company entered into an interest rate swap in an effort to mitigate exposure to fluctuations in the fair market value of a fixed rate
borrowing. Pursuant to the agreement, the Company will receive payment from its counterparty for interest it is being charged on a $12,000,000 loan from the Federal Home Loan Bank of Atlanta (FHLB), which bears an interest rate of 6.85 percent. In
turn, on a specified day each calendar quarter, the Company will pay its counterparty an amount equal to the one month London Inter-Bank Offering Rate (LIBOR) plus 2.61 percent.



As allowed by SFAS 133, the interest rate swap qualifies for treatment under the short-cut method of accounting; therefore,
fluctuations in the fair value of the interest rate swap will be fully offset by fluctuations in the fair value of the underlying debt and have no effect on the results of operations of the Company.



|                   |  |   |                 |  |   |            |  |                          
|------------------ |  | - | --------------- |  | - | ---------- |  | -------------------------
|December 31, 2004 
|Derivative Type    |  |   | Notional Amount |  |   | Fair Value |  | Liability Hedged         
|Interest rate swap |  | $ | 12,000,000      |  | $ | 94,463     |  | Fixed Rate FHLB borrowing
|                  
|December 31, 2003 
|Derivative Type    |  |   | Notional Amount |  |   | Fair Value |  | Liability Hedged         
|Interest rate swap |  | $ | 12,000,000      |  | $ | 450,720    |  | Fixed Rate FHLB borrowing



|9. | Deposits
|-- | --------



Certificates of deposit of less than $100,000 totaled $171,411,236 at December 31, 2004, while certificates of deposit of $100,000 or more totaled
$128,020,313. At December 31, 2003, certificates of deposit of less than $100,000 totaled $152,114,563, while certificates of deposits of $100,000 or more totaled $134,609,476. The scheduled maturities of certificates of deposit at December 31, 2004
were as follows:



|           |  |      |            
|---------- |  | ---- | -----------
|           |  | 2004
|2005       |  | $    | 212,970,639
|2006       |  |      | 59,177,181 
|2007       |  |      | 19,166,285 
|2008       |  |      | 5,424,553  
|2009       |  |      | 2,664,814  
|Thereafter |  |      | 28,077     
|           |  |      |            
|           |  | $    | 299,431,549
|           |  |      |            



F-23



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|10. | Borrowed Funds
|--- | --------------



Borrowed funds are summarized as follows:



|                                                     |  |      |            |      |   |           
|---------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                     |  | 2004 |            | 2003
|FHLB borrowings and associated derivative valuations |  | $    | 46,500,989 |      | $ | 54,016,961
|Securities sold under agreements to repurchase       |  |      |           |      |   | 1,816,000 
|Borrowings from The Bankers Bank of Atlanta          |  |      | 1,000,000  |      |   |          
|Other                                                |  |      | 811,582    |      |   | 857,535   
|                                                     |  |      |            |      |   |           
|                                                     |  | $    | 48,312,571 |      | $ | 56,690,496
|                                                     |  |      |            |      |   |           



The Company is a
member of the Federal Home Loan Bank of Atlanta (FHLB). At December 31, 2004 and 2003, the Company had FHLB borrowings outstanding of $46,406,525 and $53,566,241, respectively. Based on current collateral, the Company had $6,053,233 of additional
borrowing capacity with the FHLB at December 31, 2004. FHLB has a blanket lien on the Companys 1-4 family mortgage loans in the amount of the outstanding debt. These borrowings bear interest rates of 2.04 percent to 7.45 percent and mature
from 2005 to 2018.



At December 31, 2004, borrowed funds,
including the current portion, are scheduled to mature as follows:



|           |  |   |           
|---------- |  | - | ----------
|2005       |  | $ | 19,353,280
|2006       |  |   | 1,194,277 
|2007       |  |   | 3,140,093 
|2008       |  |   | 7,068,957 
|2009       |  |   | 748,320   
|Thereafter |  |   | 16,807,644
|           |  |   |           
|           |  | $ | 48,312,571
|           |  |   |           



At December 31, 2004,
the Company has unused lines of credit with unaffiliated financial institutions totaling approximately $80 million.



F-24



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|11. | Income Taxes
|--- | ------------



The Company and the Bank file a consolidated income tax return. The consolidated provision (benefit) for income taxes is as follows:



|         |  |   |            |  
|-------- |  | - | ---------- | -
|2004     |  |   |            |  
|Current  |  | $ | 875,513    |  
|Deferred |  |   | 1,095,364  |  
|         |  |   |            |  
|         |  | $ | 1,970,877  |  
|         |  |   |            |  
|2003     |  |   |            |  
|Current  |  | $ | 2,714,084  |  
|Deferred |  |   | (749,384   | )
|         |  |   |            |  
|         |  | $ | 1,964,700  |  
|         |  |   |            |  
|2002     |  |   |            |  
|Current  |  | $ | 3,555,235  |  
|Deferred |  |   | (1,320,170 | )
|         |  |   |            |  
|         |  | $ | 2,235,065  |  
|         |  |   |            |  



Temporary differences
and carryforwards which give rise to a significant portion of deferred tax assets and liabilities at December 31 are as follows:



|                                                  |  |      |            |   |      |   |            |  
|------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                  |  | 2004 |            |   | 2003 |  
|Allowance for loan losses                         |  | $    | 3,462,543  |   |      | $ | 4,718,718  |  
|Pension expense                                   |  |      | (252,610   | ) |      |   | 569,995    |  
|Intangible assets                                 |  |      | (181,671   | ) |      |   | (234,364   | )
|Bank premises and equipment                       |  |      | (1,359,057 | ) |      |   | (1,060,497 | )
|Investments                                       |  |      | (136,524   | ) |      |   | (347,832   | )
|Unrealized loss / (gain) on investment securities |  |      | 561,264    |   |      |   | (369,025   | )
|Other                                             |  |      | (24,114    | ) |      |   | 99,640     |  
|                                                  |  |      |            |   |      |   |            |  
|                                                  |  | $    | 2,069,831  |   |      | $ | 3,376,635  |  
|                                                  |  |      |            |   |      |   |            |  



The Company did not
establish a valuation allowance related to the net deferred tax asset due to taxes paid within the carry-back period being sufficient to offset future deductions resulting from the reversal of these temporary differences.



F-25



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The provision for income taxes is different from the amount computed by applying the federal income
tax statutory rate to income before provision for income taxes. The reasons for this difference, as a percentage of pre-tax income, are as follows:



|                                  |  |      |   |  |      |   |  |      |  
|--------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                  |  | 2004 |   |  | 2003 |   |  | 2002 |  
|Federal income tax statutory rate |  | 34.0 | % |  | 34.0 | % |  | 34.0 | %
|Tax exempt income                 |  | (0.6 | ) |  | (0.8 | ) |  | (1.2 | )
|Bank owned life insurance         |  | (1.4 | ) |  | (1.8 | ) |  | (1.7 | )
|State income taxes                |  | 2.3  |   |  | 1.8  |   |  | 1.7  |  
|Income tax credits                |  | (5.3 | ) |  | (6.2 | ) |  | (6.1 | )
|Deferred tax adjustments          |  | (3.8 | ) |  |     |   |  |     |  
|Other                             |  | (0.6 | ) |  | 0.1  |   |  | 3.6  |  
|                                  |  |      |   |  |      |   |  |      |  
|Effective tax rate                |  | 24.6 | % |  | 27.1 | % |  | 30.3 | %
|                                  |  |      |   |  |      |   |  |      |  



|12. | Benefit Plans
|--- | -------------



The Company has a noncontributory defined benefit pension plan (the Pension Plan) covering substantially all of its employees. The Companys policy
is to contribute annually an amount that can be deducted for federal income tax purposes using the projected unit credit method of actuarial computation. Actuarial computations for financial reporting purposes are also based on the projected unit
credit method.



F-26



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The reconciliation of the beginning and ending balances of the projected benefit obligation and plan
assets, as well as disclosure of the Pension Plans funded status for the year ended December 31, 2004 and 2003 is as follows:



|                                                   |  |      |             |   |      |   |             |  
|-------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                   |  | 2004 |             |   | 2003 |  
|Change in benefit obligation                       |  |      |             |   |      |   |             |  
|Benefit obligation, beginning of year              |  | $    | 10,900,009  |   |      | $ | 9,450,221   |  
|Service cost                                       |  |      | 680,830     |   |      |   | 645,757     |  
|Interest cost                                      |  |      | 688,372     |   |      |   | 631,473     |  
|Actuarial gain                                     |  |      | 737,051     |   |      |   | 531,247     |  
|Benefits paid                                      |  |      | (302,891    | ) |      |   | (286,343    | )
|Administrative expenses paid                       |  |      | (79,248     | ) |      |   | (72,346     | )
|                                                   |  |      |             |   |      |   |             |  
|Benefit obligation, end of year                    |  | $    | 12,624,123  |   |      | $ | 10,900,009  |  
|                                                   |  |      |             |   |      |   |             |  
|Change in plan assets                              |  |      |             |   |      |   |             |  
|Fair value of plan assets, beginning of year       |  | $    | 7,400,197   |   |      |   | 5,854,227   |  
|Actual return on plan assets                       |  |      | 674,807     |   |      |   | 940,666     |  
|Employer contributions                             |  |      | 3,008,624   |   |      |   | 963,993     |  
|Benefits paid                                      |  |      | (302,891    | ) |      |   | (286,343    | )
|Administrative expenses paid                       |  |      | (79,248     | ) |      |   | (72,346     | )
|                                                   |  |      |             |   |      |   |             |  
|Fair value of plan assets, end of year             |  | $    | 10,701,489  |   |      | $ | 7,400,197   |  
|                                                   |  |      |             |   |      |   |             |  
|Reconciliation of funded status                    |  |      |             |   |      |   |             |  
|Projected benefit obligation                       |  | $    | (12,624,123 | ) |      |   | (10,900,009 | )
|Plan assets at fair value                          |  |      | 10,701,489  |   |      |   | 7,400,197   |  
|                                                   |  |      |             |   |      |   |             |  
|Funded status                                      |  |      | (1,922,634  | ) |      |   | (3,499,812  | )
|Unrecognized loss                                  |  |      | 2,736,275   |   |      |   | 2,137,163   |  
|Unrecognized prior service costs                   |  |      | (153,632    | ) |      |   | (181,554    | )
|                                                   |  |      |             |   |      |   |             |  
|Accrued benefit asset / (liability) at December 31 |  | $    | 660,009     |   |      | $ | (1,544,203  | )
|                                                   |  |      |             |   |      |   |             |  



The accumulated
benefit obligation for the plan was $10,099,549 and $8,611,897 at December 31, 2004 and 2003, respectively. The Company assesses its funded position quarterly.



Weighted-average assumptions used to determine benefit obligations at December 31



|                                    |  |      |   |  |      |  
|----------------------------------- |  | ---- | - |  | ---- | -
|                                    |  | 2004 |   |  | 2003 |  
|Discount rate                       |  | 6.00 | % |  | 6.30 | %
|Rate of compensation increase       |  | 5.00 | % |  | 5.00 | %
|Expected long-term return on assets |  | 7.50 | % |  | 8.00 | %



Primary assumptions
used to actuarially determine net pension expense



|                                    |  |      |   |  |      |   |  |      |  
|----------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                    |  | 2004 |   |  | 2003 |   |  | 2002 |  
|Discount rate                       |  | 6.30 | % |  | 6.80 | % |  | 7.25 | %
|Expected long-term return on assets |  | 7.50 | % |  | 8.00 | % |  | 8.00 | %
|Compensation increase rate          |  | 5.00 | % |  | 5.00 | % |  | 5.00 | %



F-27



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The components of net pension expense for the years ended December 31, 2004, 2003, and 2002 are as
follows:



|                                      |  |      |          |   |      |   |          |      |  |   |          |  
|------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                      |  | 2004 |          |   | 2003 |   |          | 2002 | 
|Components of net annual benefit cost |  |      |          |   |      |   |          |      |  |   |          |  
|Service cost                          |  | $    | 680,830  |   |      | $ | 645,757  |      |  | $ | 575,258  |  
|Interest cost                         |  |      | 688,372  |   |      |   | 631,473  |      |  |   | 572,355  |  
|Expected return on assets             |  |      | (655,551 | ) |      |   | (488,591 | )    |  |   | (498,731 | )
|Prior service cost amortization       |  |      | (27,922  | ) |      |   | (27,922  | )    |  |   | (27,922  | )
|Net loss amortization                 |  |      | 118,683  |   |      |   | 98,591   |      |  |   |         |  
|                                      |  |      |          |   |      |   |          |      |  |   |          |  
|Net annual benefit cost               |  | $    | 804,412  |   |      | $ | 859,308  |      |  | $ | 620,960  |  
|                                      |  |      |          |   |      |   |          |      |  |   |          |  



The Companys
estimates of future market returns by asset category are lower than actual long-term historical returns in order to generate a conservative forecast. Overall, the Company projected that the funds could achieve a 7.5 percent net return over time from
the above asset allocation strategy.



The pension plans
weighted-average asset allocations at December 31, 2004, and 2003, by asset category are as follows:



|                  |  |                                         |   |  |        |  
|----------------- |  | --------------------------------------- | - |  | ------ | -
|                  |  | Percentage of PlanAssets atDecember 31, |  
|                  |  | 2004                                    |   |  | 2003   |  
|Asset Category    |  |                                         |   |  |        |  
|Equity securities |  | 52.35                                   | % |  | 57.72  | %
|Debt securities   |  | 34.19                                   | % |  | 37.45  | %
|Other             |  | 13.46                                   | % |  | 4.83   | %
|                  |  |                                         |   |  |        |  
|                  |  | 100.00                                  | % |  | 100.00 | %
|                  |  |                                         |   |  |        |  



At both December 31,
2004 and 2003, there were no shares of the Companys common stock included in plan assets.



The pension plan seeks to grow the plan assets in relation to the benefit obligations to participants and beneficiaries, while prudently managing the risk
of a decrease in the plan assets relative to those liabilities. The Plan Committee and the Investment Managers maintain the fund in compliance with all applicable laws governing the operation of pension plans, including ERISA and its fiduciary
standards.



F-28



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The assets of the Plan are invested in a broadly diversified portfolio that includes the following
asset classes in the respective allocation levels:



|             |  |         |   |  |         |  
|------------ |  | ------- | - |  | ------- | -
|             |  | Minimum |   |  | Maximum |  
|Equities     |  | 40      | % |  | 60      | %
|Fixed income |  | 40      | % |  | 60      | %
|Cash         |  | 10      | % |  | 50      | %



Expected future
benefit payments from plan are as follows:



|                                |  |                         |          
|------------------------------- |  | ----------------------- | ---------
|Fiscal Year Ending December
31, |  | ExpectedBenefitPayments
|2005                            |  | $                       | 337,300  
|2006                            |  |                         | 347,900  
|2007                            |  |                         | 493,800  
|2008                            |  |                         | 576,100  
|2009                            |  |                         | 617,000  
|2010 through 2014               |  | $                       | 4,165,700



During 2001, the
Company adopted a non-qualified Executive Supplemental Retirement Plan (the Executive Plan) and entered into agreements with certain executive officers under which the Company will make payments to the executives upon their retirement, or to the
executives beneficiaries upon their death. The Executive Plan supplements the benefits payable to the executives under the Pension Plan, and is based upon the accumulated after-tax income from specified life insurance contracts. Cash values of
the underlying life insurance contracts, of which the Company is the sole beneficiary, were approximately $1,648,000 and $1,571,000 at December 31, 2004 and 2003, respectively. Accrued benefits under the Executive Plan were approximately $207,000
and $183,000 at December 31, 2004 and 2003, respectively.



Effective January 1, 1998, the Company established a qualified employee benefit plan under Section 401(k) of the Internal Revenue Code covering substantially all employees. Employees can contribute up to 15 percent of their salary to the
plan on a pre-tax basis and the Company matches participants contributions up to the first 1.5 percent of each participants salary. The Companys matching contribution charged to operations related to this plan was approximately
$93,000, $96,000 and $85,000 for the years ended December 31, 2004, 2003 and 2002 respectively.



During 1987, the Company established an Employee Stock Ownership Plan (ESOP), a tax-qualified, defined contribution plan which covers substantially all
employees. Contributions are determined by the Board of Directors of the Company. Contributions made to the ESOP by the Company totaled $-0- for the years ended 2004, 2003 and 2002. As of December 31, 2004 and 2003, the ESOP held 78,443 and 80,792
shares of common stock in the Company, respectively.



F-29



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|13. | Noninterest income and expense
|--- | ------------------------------



Components of other noninterest income that exceed 1% of total revenue for each of the years ended December 31, 2004, 2003 and 2002 are as follows:



|                                                         |  |      |           |      |   |           |  |   |          
|-------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                                         |  | 2004 |           | 2003 |   | 2002     
|Gains on sales of other real estate owned, net of losses |  | $    |          |      | $ | 1,258,820 |  | $ | 109,053  
|Rental income on Other real estate owned                 |  | $    | 46,683    |      | $ | 712,896   |  | $ | 201,115  
|All other items of noninterest income                    |  |      | 2,521,314 |      |   | 2,683,113 |  |   | 2,767,921
|                                                         |  |      |           |      |   |           |  |   |          
|Total other noninterest income                           |  | $    | 2,567,997 |      | $ | 4,654,829 |  | $ | 3,078,089
|                                                         |  |      |           |      |   |           |  |   |          



Components of other
noninterest expense that exceed 1% of total revenue for each of the years ended December 31, 2004, 2003 and 2002 are as follows:



|                                                         |  |      |           |      |   |           |  |   |          
|-------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                                         |  | 2004 |           | 2003 |   | 2002     
|Losses on sales or other real estate owned, net of gains |  | $    | 225,250   |      | $ |          |  | $ |         
|Loss on loan sale                                        |  |      | 550,549   |      |   |          |  |   |         
|All other items of noninterest expense                   |  |      | 7,032,945 |      |   | 7,020,552 |  |   | 7,201,853
|                                                         |  |      |           |      |   |           |  |   |          
|Total other noninterest expense                          |  | $    | 7,808,744 |      | $ | 7,020,552 |  | $ | 7,201,853
|                                                         |  |      |           |      |   |           |  |   |          



|14. | Commitments and Contingencies
|--- | -----------------------------



The Bank leases certain buildings, equipment and land under noncancelable operating leases which require various minimum annual rentals.



The total minimum rental commitment at December 31, 2004 under the leases is
as follows:



|     |  |   |        
|---- |  | - | -------
|2005 |  | $ | 382,695
|2006 |  |   | 257,071
|2007 |  |   | 128,751
|2008 |  |   | 26,777 
|     |  |   |        
|     |  | $ | 795,294
|     |  |   |        



The total rental
expense was approximately $535,000, $664,000, and $527,000 in 2004, 2003, and 2002, respectively.



The Company is from time to time a defendant in legal actions from normal business activities. Management does not anticipate that the ultimate liability
arising from litigation outstanding at December 31, 2004 will have a materially adverse effect on the Companys financial statements.



F-30



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|15. | Related Party Transactions
|--- | --------------------------



Certain directors and officers of the Company and its subsidiary bank, including their immediate families and companies in which they are principal
owners, were loan customers of the Bank in the ordinary course of business. Such loans had outstanding balances of $4,075,977 and $6,879,312 at December 31, 2004 and 2003, respectively. A summary of the loan activity with these related parties
during 2004 is shown below:



|                           |  |   |          
|-------------------------- |  | - | ---------
|Balance, beginning of year |  | $ | 6,879,312
|Additions                  |  |   | 2,848,459
|Reductions                 |  |   | 5,651,794
|                           |  |   |          
|Balance, end of year       |  | $ | 4,075,977
|                           |  |   |          



During 2004, 2003,
and 2002, the Company paid legal fees of approximately $146,000, $105,000, and $121,000, respectively, to a law firm in which a partner of the firm serves on the board of directors of the Company.



During 2002, the Company entered into a contractual agreement for consulting
services with a former executive officer and director. Amounts contractually due in 2005 and 2006 are $125,000, and $100,000, respectively.



F-31



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|16. | Earnings Per Share
|--- | ------------------



The following table reflects the reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the
diluted EPS computation:



|                                        |  |        |           |        |           |                 |   |     
|--------------------------------------- |  | ------ | --------- | ------ | --------- | --------------- | - | ----
|                                        |  | Income |           | Shares |           | Per-ShareAmount
|For the year ended December 31, 2004    |  |        |           |        |           |                 |   |     
|Basic EPS                               |  |        |           |        |           |                 |   |     
|Income available to common stockholders |  | $      | 6,042,096 |        | 5,574,190 |                 | $ | 1.08
|                                        |  |        |           |        |           |                 |   |     
|Effect of dilutive securities           |  |        |           |        |           |                 |   |     
|Stock options                           |  |        |           |        | 18,850    |                 |   |     
|                                        |  |        |           |        |           |                 |   |     
|Diluted EPS                             |  | $      | 6,042,096 |        | 5,593,040 |                 | $ | 1.08
|                                        |  |        |           |        |           |                 |   |     
|                                        |  |        |          
|For the year ended December 31, 2003    |  |        |           |        |           |                 |   |     
|Basic EPS                               |  |        |           |        |           |                 |   |     
|Income available to common stockholders |  | $      | 5,337,519 |        | 5,562,867 |                 | $ | 0.96
|                                        |  |        |           |        |           |                 |   |     
|Effect of dilutive securities           |  |        |           |        |           |                 |   |     
|Stock options                           |  |        |           |        | 24,935    |                 |   |     
|                                        |  |        |           |        |           |                 |   |     
|Diluted EPS                             |  | $      | 5,337,519 |        | 5,587,802 |                 | $ | 0.96
|                                        |  |        |           |        |           |                 |   |     
|                                        |  |        |          
|For the year ended December 31, 2002    |  |        |           |        |           |                 |   |     
|Basic EPS                               |  |        |           |        |           |                 |   |     
|Income available to common stockholders |  | $      | 5,137,171 |        | 5,562,784 |                 | $ | 0.92
|                                        |  |        |           |        |           |                 |   |     
|Effect of dilutive securities           |  |        |           |        |           |                 |   |     
|Stock options                           |  |        |           |        | 15,202    |                 |   |     
|                                        |  |        |           |        |           |                 |   |     
|Diluted EPS                             |  | $      | 5,137,171 |        | 5,577,986 |                 | $ | 0.92
|                                        |  |        |           |        |           |                 |   |     



|17. | Regulatory Matters
|--- | ------------------



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. When necessary, the Bank obtained regulatory approval as applicable for the payment of dividends in 2004, 2003, and 2002.



The Company is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatoryand possibly additional discretionaryactions by regulators that, if undertaken, could have a direct material effect
on the Companys financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Companys
assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Companys capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.



F-32



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



Quantitative measures established by regulation to ensure capital adequacy require the Company to
maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management
believes, as of December 31, 2004, that the Company meets all capital adequacy requirements to which it is subject.



As of December 31, 2004, the most recent notification from the Federal Deposit Insurance Corporation, categorized the Company as well capitalized under
the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum total risk-based, Tier I risk-based, and Tier I capital ratios as set forth in the table below. There are no conditions
or events since that notification that management believes have changed the institutions category.



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



|                                         |  |                        |  |       |                              |  |        |                                                               |       |   |  |        |  |       |  
|---------------------------------------- |  | ---------------------- |  | ----- | ---------------------------- |  | ------ | ------------------------------------------------------------- | ----- | - |  | ------ |  | ----- | -
|                                         |  | The Company            | 
|                                         |  | Actual                 |  |       | For Capital AdequacyPurposes |  |        | To Be Well CapitalizedUnder PromptCorrective ActionProvisions |      
|                                         |  | Amount                 |  | Ratio |                              |  | Amount |                                                               | Ratio |   |  | Amount |  | Ratio |  
|                                         |  | (dollars in thousands) | 
|As of December 31, 2004                  |  |                        |  |       |                              |  |        |                                                               |       |   |  |        |  |       |  
|Total Capital (to Risk Weighted Assets)  |  | 76,238                 |  | 14.70 | %                            |  | 41,502 |                                                               | 8.00  | % |  | 51,878 |  | 10.00 | %
|Tier 1 Capital (to Risk Weighted Assets) |  | 69,715                 |  | 13.44 | %                            |  | 20,751 |                                                               | 4.00  | % |  | 31,127 |  | 6.00  | %
|Tier 1 Capital (to Average Assets)       |  | 69,715                 |  | 9.03  | %                            |  | 30,871 |                                                               | 4.00  | % |  | 38,589 |  | 5.00  | %
|As of December 31, 2003                  |  |                        |  |       |                              |  |        |                                                               |       |   |  |        |  |       |  
|Total Capital (to Risk Weighted Assets)  |  | 72,009                 |  | 13.27 | %                            |  | 43,413 |                                                               | 8.00  | % |  | 54,266 |  | 10.00 | %
|Tier 1 Capital (to Risk Weighted Assets) |  | 65,151                 |  | 12.01 | %                            |  | 21,706 |                                                               | 4.00  | % |  | 32,560 |  | 6.00  | %
|Tier 1 Capital (to Average Assets)       |  | 65,151                 |  | 8.46  | %                            |  | 30,821 |                                                               | 4.00  | % |  | 38,526 |  | 5.00  | %
|                                         | 
|                                         |  | The Bank               | 
|                                         |  | Actual                 |  |       | For Capital AdequacyPurposes |  |        | To Be Well CapitalizedUnder PromptCorrective ActionProvisions |      
|                                         |  | Amount                 |  | Ratio |                              |  | Amount |                                                               | Ratio |   |  | Amount |  | Ratio |  
|                                         |  | (dollars in thousands) | 
|As of December 31, 2004                  |  |                        |  |       |                              |  |        |                                                               |       |   |  |        |  |       |  
|Total Capital (to Risk Weighted Assets)  |  | 73,956                 |  | 14.32 | %                            |  | 41,318 |                                                               | 8.00  | % |  | 51,648 |  | 10.00 | %
|Tier 1 Capital (to Risk Weighted Assets) |  | 67,461                 |  | 13.06 | %                            |  | 20,659 |                                                               | 4.00  | % |  | 30,989 |  | 6.00  | %
|Tier 1 Capital (to Average Assets)       |  | 67,461                 |  | 8.75  | %                            |  | 30,826 |                                                               | 4.00  | % |  | 38,533 |  | 5.00  | %
|As of December 31, 2003                  |  |                        |  |       |                              |  |        |                                                               |       |   |  |        |  |       |  
|Total Capital (to Risk Weighted Assets)  |  | 72,565                 |  | 13.42 | %                            |  | 43,243 |                                                               | 8.00  | % |  | 54,053 |  | 10.00 | %
|Tier 1 Capital (to Risk Weighted Assets) |  | 65,734                 |  | 12.16 | %                            |  | 21,621 |                                                               | 4.00  | % |  | 32,432 |  | 6.00  | %
|Tier 1 Capital (to Average Assets)       |  | 65,734                 |  | 8.54  | %                            |  | 30,793 |                                                               | 4.00  | % |  | 38,491 |  | 5.00  | %



F-33



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|18. | Financial Instruments With Off-Balance-Sheet Risk
|--- | -------------------------------------------------



The Bank is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated
statements of financial condition. The contract amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments.



The Banks exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for
commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet
instruments.



Commitments to extend credit are agreements to
lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank had approximately $56,376,000 and $53,562,000 in commitments to extend credit at December 31, 2004 and 2003,
respectively. The Bank evaluates each customers credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on managements credit evaluation of the
customer. Collateral held varies, but may include certificates of deposit, marketable securities, real estate, and other collateral.



Irrevocable standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The collateral varies but may include certificates of deposit, marketable securities, real estate, and other collateral for those commitments for which collateral is deemed necessary. The Bank had
approximately $23,221,000 and $22,187,000 in irrevocable standby letters of credit at December 31, 2004 and 2003, respectively.



|19. | Fair Value of Financial Instruments
|--- | -----------------------------------



The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate
that value:



Cash and Cash Equivalents



For those short-term instruments, the carrying amount is a reasonable
estimate of fair value.



Securities Available for Sale



For debt securities and marketable equity securities,
fair values are based on quoted market prices or dealer quotes.



F-34



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



Loans



The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings and for the same remaining maturities.



Deposits



The fair
value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits
of similar remaining maturities.



Securities Sold Under
Agreements to Repurchase



The carrying amount is a
reasonable estimate of fair value.



FHLB Borrowings



The fair value of this debt is estimated based on rates
currently available to the Company for borrowings with similar terms and remaining maturities.



Derivatives



Interest
rate swaps are recorded on the balance sheet at fair value, based on dealer quoted prices.



Commitments to Extend Credit and Irrevocable Standby Letters of Credit



The value of these unrecognized financial instruments is estimated based on the deferred fee income associated with the commitments. Such fee income is
not material to the Companys financial statements at December 31, 2004 and 2003 and therefore, the fair value of these commitments is not presented.



F-35



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The estimated fair values of the Companys financial instruments at December 31, 2003 and 2002
are as follows:



|                                               |  |                |             |            |   |                |  |            |             |  |   |            
|---------------------------------------------- |  | -------------- | ----------- | ---------- | - | -------------- |  | ---------- | ----------- |  | - | -----------
|                                               |  | 2004           |             | 2003      
|                                               |  | CarryingAmount |             | Fair Value |   | CarryingAmount |  | Fair Value
|Financial assets:                              |  |                |             |            |   |                |  |            |             |  |   |            
|Cash and cash equivalents                      |  | $              | 63,176,624  |            | $ | 63,176,624     |  | $          | 59,481,194  |  | $ | 59,481,194 
|Investment securities:                         |  |                |             |            |   |                |  |            |             |  |   |            
|Available for sale                             |  |                | 253,744,320 |            |   | 253,744,320    |  |            | 225,134,664 |  |   | 225,134,664
|Loans                                          |  |                | 438,018,731 |            |   | 434,102,197    |  |            | 461,404,660 |  |   | 464,323,491
|                                               |  |                |             |            |   |                |  |            |             |  |   |            
|                                               |  | $              | 754,939,675 |            | $ | 751,023,141    |  | $          | 746,020,518 |  | $ | 748,939,349
|                                               |  |                |             |            |   |                |  |            |             |  |   |            
|Financial liabilities:                         |  |                |             |            |   |                |  |            |             |  |   |            
|Deposits                                       |  | $              | 665,652,979 |            | $ | 667,189,872    |  | $          | 643,756,712 |  | $ | 642,022,752
|Securities sold under agreements to repurchase |  |                |            |            |   |               |  |            | 1,816,000   |  |   | 1,816,076  
|Borrowed funds                                 |  |                | 48,312,571  |            |   | 51,371,069     |  |            | 54,874,496  |  |   | 56,899,830 
|                                               |  |                |             |            |   |                |  |            |             |  |   |            
|                                               |  | $              | 713,965,550 |            | $ | 718,560,941    |  | $          | 700,447,208 |  | $ | 700,738,658
|                                               |  |                |             |            |   |                |  |            |             |  |   |            
|Derivatives:                                   |  |                |             |            |   |                |  |            |             |  |   |            
|Interest rate swap                             |  | $              | 94,463      |            | $ | 94,463         |  | $          | 450,720     |  | $ | 450,720    
|                                               |  |                |             |            |   |                |  |            |             |  |   |            



|20. | Stock Option Plan
|--- | -----------------



As of December 31, 2004, the Company had one stock option plan (the Plan) under which 550,000 shares of common stock have been reserved for issue to
certain employees and officers through incentive stock options and board members through nonqualified stock options. Options granted under the Plan may have vesting provisions based upon continued service from the date of grant. Options issued under
the Plan will have an exercise price not less than fair market value of the stock at the date of grant. Upon a change in control, as defined in the Plan, options become fully exercisable.



F-36



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



A summary of the status of the Companys plan as of December 31, 2004, 2003, and 2002, and
changes during the years ending on those dates is presented below:



|                                 |  |         |   |      |                              |       |        |         |   |                              |   |        |  |         |                              |  |   |      
|-------------------------------- |  | ------- | - | ---- | ---------------------------- | ----- | ------ | ------- | - | ---------------------------- | - | ------ |  | ------- | ---------------------------- |  | - | -----
|                                 |  | 2004    |   | 2003 |                              | 2002 
|                                 |  | Shares  |   |      | WeightedAverageExercisePrice |       | Shares |         |   | WeightedAverageExercisePrice |   | Shares |  |         | WeightedAverageExercisePrice
|Outstanding at beginning of year |  | 154,114 |   |      | $                            | 13.51 |        | 165,425 |   |                              | $ | 14.56  |  | 135,880 |                              |  | $ | 15.01
|Granted                          |  |        |   |      |                              |      |        | 28,638  |   |                              |   | 12.83  |  | 35,705  |                              |  |   | 13.08
|Exercised                        |  | (7,964  | ) |      |                              |       |        | (8,400  | ) |                              |   |        |  |         |                              |  |   |      
|Expired / forfeited              |  | (8,540  | ) |      |                              |       |        | (31,549 | ) |                              |   |        |  | (6,160  | )                            |  |   |      
|                                 |  |         |   |      |                              |       |        |         |   |                              |   |        |  |         |                              |  |   |      
|Outstanding at end of year       |  | 137,610 |   |      | $                            | 14.10 |        | 154,114 |   |                              | $ | 13.51  |  | 165,425 |                              |  | $ | 14.56
|                                 |  |         |   |      |                              |       |        |         |   |                              |   |        |  |         |                              |  |   |      
|Options exercisable at year-end  |  | 137,610 |   |      | $                            | 14.10 |        | 125,476 |   |                              | $ | 14.20  |  | 96,635  |                              |  | $ | 16.84
|                                 |  |         |   |      |                              |       |        |         |   |                              |   |        |  |         |                              |  |   |      



F-37



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



The following table summarizes information about the Plans stock options at December 31, 2004:



|                         |  |                              |  |                                         |  |                              |       |                              |         |                              |   |      
|------------------------ |  | ---------------------------- |  | --------------------------------------- |  | ---------------------------- | ----- | ---------------------------- | ------- | ---------------------------- | - | -----
|                         |  | Options Outstanding          |  | Options Exercisable                    
|                         |  | NumberOutstandingat 12/31/04 |  | WeightedAverageRemainingContractualLife |  | WeightedAverageExercisePrice |       | NumberExercisableat 12/31/04 |         | WeightedAverageExercisePrice
|                         |  |                              |  | (years)                                 |  |                              |       |                              |         |                             
|Range of Exercise Prices |  |                              |  |                                         |  |                              |       |                              |         |                              |   |      
|$6.82                    |  | 1,760                        |  | 0.04                                    |  | $                            | 6.82  |                              | 1,760   |                              | $ | 6.82 
|$9.03                    |  | 6,160                        |  | 1.04                                    |  |                              | 9.03  |                              | 6,160   |                              |   | 9.03 
|$10.23 to $11.59         |  | 17,489                       |  | 5.14                                    |  |                              | 11.35 |                              | 17,489  |                              |   | 11.35
|$11.31 to $11.62         |  | 20,997                       |  | 6.11                                    |  |                              | 11.34 |                              | 20,997  |                              |   | 11.34
|$11.75 to $14.60         |  | 24,632                       |  | 7.09                                    |  |                              | 12.91 |                              | 24,632  |                              |   | 12.91
|$12.83                   |  | 24,838                       |  | 8.06                                    |  |                              | 12.83 |                              | 24,838  |                              |   | 12.83
|$13.98 to $17.55         |  | 17,204                       |  | 4.13                                    |  |                              | 17.06 |                              | 17,204  |                              |   | 17.06
|$14.09                   |  | 11,660                       |  | 2.06                                    |  |                              | 14.09 |                              | 11,660  |                              |   | 14.09
|$26.59                   |  | 12,870                       |  | 3.05                                    |  |                              | 26.59 |                              | 12,870  |                              |   | 26.59
|                         |  |                              |  |                                         |  |                              |       |                              |         |                              |   |      
|                         |  | 137,610                      |  | 5.33                                    |  | $                            | 14.10 |                              | 137,610 |                              | $ | 14.10
|                         |  |                              |  |                                         |  |                              |       |                              |         |                              |   |      



|21. | Dividend Reinvestment and Share Purchase Plan
|--- | ---------------------------------------------



In 1998, the Company adopted a dividend reinvestment and share purchase plan. Under the plan, all holders of record of common stock are eligible to
participate in the plan. Participants in the plan may direct the plan administrator to invest cash dividends declared with respect to all or any portion of their common stock. Participants may also make optional cash payments that will be invested
through the plan. All cash dividends paid to the plan administrator are invested within 30 days of cash dividend payment date. Cash dividends and optional cash payments will be used to purchase common stock of the Company in the open market, from
newly-issued shares, from shares held in treasury, in negotiated transactions, or in any combination of the foregoing. The purchase price of the shares of common stock is based on the average market price for a specified period of time immediately
preceding the dividend payment date. All administrative costs are borne by the Company. For the years ended December 31, 2004 and 2003, 16,271 and 15,729 shares were purchased under the plan, respectively.



F-38



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



|22. | The Peoples BancTrust Company, Inc. (Parent Company Only)
|--- | ---------------------------------------------------------



Presented below and on the following pages are the financial statements of The Peoples BancTrust Company, Inc. (parent company only).



BALANCE SHEETS

December 31, 2004 and 2003



|                                                                                                                                             |  |      |            |   |      |   |           
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------
|                                                                                                                                             |  | 2004 |            |   | 2003
|Assets                                                                                                                                       |  |      |            |   |      |   |           
|Cash and due from banks*                                                                                                                     |  | $    | 625,113    |   |      | $ | 472,986   
|Investment in subsidiary bank, The Peoples Bank and Trust Company*                                                                           |  |      | 73,215,939 |   |      |   | 73,361,752
|Land                                                                                                                                         |  |      | 1,003,247  |   |      |   |          
|Pension asset                                                                                                                                |  |      | 659,729    |   |      |   |          
|Other assets                                                                                                                                 |  |      | 778,745    |   |      |   | 710,702   
|                                                                                                                                             |  |      |            |   |      |   |           
|Total assets                                                                                                                                 |  | $    | 76,282,773 |   |      | $ | 74,545,440
|                                                                                                                                             |  |      |            |   |      |   |           
|Liabilities and Stockholders Equity                                                                                                         |  |      |            |   |      |   |           
|Dividends payable                                                                                                                            |  |      | 1,567      |   |      |   | 5,653     
|Borrowed funds                                                                                                                               |  |      | 1,000,000  |   |      |   | 50,000    
|Other liabilities                                                                                                                            |  |      | 238,717    |   |      |   | 1,710,843 
|                                                                                                                                             |  |      |            |   |      |   |           
|Total liabilities                                                                                                                            |  |      | 1,240,284  |   |      |   | 1,766,496 
|                                                                                                                                             |  |      |            |   |      |   |           
|Common stock, $.10 par value; 9,000,000 shares authorized; 5,584,547 and 5,562,802 shares issued at December 31, 2004 and 2003,
respectively |  |      | 558,455    |   |      |   | 556,478   
|Additional paid-in capital                                                                                                                   |  |      | 11,406,301 |   |      |   | 11,144,938
|Accumulated, other comprehensive (loss) income, net of tax                                                                                   |  |      | (947,477   | ) |      |   | 643,339   
|Retained earnings                                                                                                                            |  |      | 64,025,210 |   |      |   | 60,434,189
|                                                                                                                                             |  |      |            |   |      |   |           
|Total stockholders equity                                                                                                                   |  |      | 75,042,489 |   |      |   | 72,778,944
|                                                                                                                                             |  |      |            |   |      |   |           
|Total liabilities and stockholders equity                                                                                                   |  | $    | 76,282,773 |   |      | $ | 74,545,440
|                                                                                                                                             |  |      |            |   |      |   |           



|* | Eliminated in consolidation
|- | ---------------------------



F-39



---

The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



STATEMENTS OF INCOME AND RETAINED EARNINGS

For the Years Ended December 31, 2004, 2003 and 2002



|                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                       |  | 2004 |            |   | 2003 |   |            | 2002 | 
|Cash dividends received or receivable from subsidiary* |  | $    | 4,200,000  |   |      | $ | 4,440,000  |      |  | $ | 3,860,906  |  
|Equity in subsidiarys undistributed net income*       |  |      | 3,500,042  |   |      |   | 2,633,034  |      |  |   | 2,954,537  |  
|Other income                                           |  |      | 20,103     |   |      |   | 14,590     |      |  |   | 28,392     |  
|Salaries and benefits                                  |  |      | (1,331,000 | ) |      |   | (1,425,617 | )    |  |   | (1,262,053 | )
|Other expenses                                         |  |      | (347,049   | ) |      |   | (324,488   | )    |  |   | (444,611   | )
|                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                             |  |      | 6,042,096  |   |      |   | 5,337,519  |      |  |   | 5,137,171  |  
|                                                       |  |      |           
|Retained earnings, beginning of year                   |  |      | 60,434,189 |   |      |   | 57,544,303 |      |  |   | 54,799,129 |  
|Less: cash dividends declared                          |  |      | (2,451,075 | ) |      |   | (2,447,633 | )    |  |   | (2,391,997 | )
|                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Retained earnings, end of year                         |  | $    | 64,025,210 |   |      | $ | 60,434,189 |      |  | $ | 57,544,303 |  
|                                                       |  |      |            |   |      |   |            |      |  |   |            |  



|* | Eliminated in consolidation
|- | ---------------------------



F-40



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The Peoples BancTrust Company, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004,
2003, and 2002



STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2004, 2003 and 2002



|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                  |  | 2004 |            |   | 2003 |   |            | 2002 | 
|Operating activities                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                        |  | $    | 6,042,096  |   |      | $ | 5,337,519  |      |  | $ | 5,137,171  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Subsidiary income in excess of dividends                                          |  |      | (3,500,042 | ) |      |   | (2,633,034 | )    |  |   | (2,954,537 | )
|Decrease (increase) in other assets                                               |  |      | 9,275      |   |      |   | (69,330    | )    |  |   | (31,866    | )
|Minimum required contributions to defined benefits pension plan                   |  |      | (1,008,624 | ) |      |   | (963,993   | )    |  |   | (340,080   | )
|Increase (decrease) in other liabilities                                          |  |      | 876,770    |   |      |   | 786,667    |      |  |   | 661,035    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                         |  |      | 2,419,475  |   |      |   | 2,457,829  |      |  |   | 2,471,723  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Investing activities                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Land purchased                                                                    |  |      | (1,003,247 | ) |      |   |           |      |  |   |           |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in investing activities                                             |  |      | (1,003,247 | ) |      |   |           |      |  |   |           |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Financing activities                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Dividends paid                                                                    |  |      | (2,251,762 | ) |      |   | (2,475,333 | )    |  |   | (2,398,060 | )
|Increase in borrowed funds                                                        |  |      | 950,000    |   |      |   | 50,000     |      |  |   |           |  
|Proceeds from issuance of common stock                                            |  |      | 37,661     |   |      |   |           |      |  |   | 211        |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                             |  |      | (1,264,101 | ) |      |   | (2,425,333 | )    |  |   | (2,397,849 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Increase in cash and cash equivalents                                             |  |      | 152,127    |   |      |   | 32,496     |      |  |   | 73,874     |  
|                                                                                  |  |      |           
|Cash and cash equivalents                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|Beginning of year                                                                 |  |      | 472,986    |   |      |   | 440,490    |      |  |   | 366,616    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|End of year                                                                       |  | $    | 625,113    |   |      | $ | 472,986    |      |  | $ | 440,490    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  



|* | Eliminated in consolidation
|- | ---------------------------



F-41