<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q
                              __________________
                                        
                                        
(MARK ONE)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
     OF THE SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended March 31, 1999

     OR

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

     Commission File Number:  O-13653


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

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

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

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

     Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter time 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
                                              ------

     As of the close of business on May 6, 1999, 5,148,138 shares of
registrant's Common Stock, par value $.10 per share, were outstanding.
<PAGE>
 
                        PART I - FINANCIAL INFORMATION
                                        
ITEM 1.   FINANCIAL STATEMENTS
 
              THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
                     CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                In Thousands
                                                                March 31, 1999               December 31, 1998
                                                          -----------------------       ------------------------
                                                                 (Unaudited)
<S>                                                       <C>                           <C>
ASSETS:
Cash and due from banks                                           $ 28,956                     $ 23,669  
Federal funds sold and securities purchased under                                                        
   agreements to resell                                              5,030                       12,598  
                                                                  --------                     --------  
Total cash and cash equivalents                                     33,986                       36,267  
                                                                                                         
Securities available for sale                                      137,695                      137,572  
                                                                                                         
Loans, net of unearned income                                      363,309                      356,639  
Allowance for loan losses                                           (4,294)                      (4,291) 
                                                                  --------                     --------  
Net loans                                                          359,015                      352,348  
                                                                                                         
Premises and equipment                                              11,742                       10,806  
Intangibles                                                          9,586                        9,803  
Other real estate, net                                                 426                          530  
Other assets                                                         9,349                       10,483  
                                                                  --------                     --------  
   Total assets                                                   $561,799                     $557,809  
                                                                  ========                     ========  
                                                                                                         
LIABILITIES AND STOCKHOLDERS' EQUITY:                                                                    
Noninterest-bearing deposits                                      $ 65,156                     $ 68,162  
Interest-bearing deposits                                          395,584                      392,647  
                                                                  --------                     --------  
   Total deposits                                                  460,740                      460,809  
                                                                                                         
Federal funds purchased and securities sold under                                                        
   agreement to repurchase                                          11,330                       11,811  
Other borrowed funds                                                26,898                       22,454  
Other liabilities                                                    6,257                        6,015  
                                                                  --------                     --------  
  Total liabilities                                                505,225                      501,089  
                                                                                                         
Common stock                                                           519                          519  
Additional paid-in capital                                           6,286                        6,286  
Treasury stock                                                        (637)                        (637) 
Retained earnings                                                   50,451                       49,844  
Accumulated other comprehensive income,                                                                  
  net of tax                                                           (45)                         708  
                                                                  --------                     --------  
  Total stockholders' equity                                        56,574                       56,720  
                                                                  --------                     --------  
  Total liabilities and stockholders' equity                      $561,799                     $557,809  
                                                                  ========                     ========   
</TABLE>

See Notes to the Unaudited Condensed Consolidated Financial Statements

                                       1
<PAGE>
 
              THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                            In thousands except for
                                                           share and per share data
                                                              Three Months Ended
                                                                   March 31,
                                                       -------------------------------
                                                            1999              1998
                                                            ----              ----       
<S>                                                    <C>                <C>
Interest and fees on loans                               $    8,184       $    7,060
Interest and dividends on investment securities               2,004            1,826
Other interest income                                           199              319
                                                         ----------       ----------
  Total interest income                                      10,387            9,205
                                                                          
Interest on deposits                                          3,952            3,779
Interest on borrowed funds                                      421              164
                                                         ----------       ----------
  Total interest expense                                      4,373            3,943
                                                         ----------       ----------
  Net interest income                                         6,014            5,262
                                                                          
Provision for loan losses                                       732              276
                                                         ----------       ----------
  Net interest income after provision for                                 
    loan losses                                               5,282            4,986
                                                                          
Net securities gains                                             40               14
Other income                                                  1,557            1,348
Other expense                                                 5,349            4,243
                                                         ----------       ----------
  Income before income taxes                                  1,530            2,105
                                                                          
Provision for income taxes                                      484              660
                                                         ----------       ----------
  Net income                                             $    1,046       $    1,445
                                                         ==========       ==========
                                                                          
Basic weighted average number of                                          
   shares outstanding                                     5,148,138        5,130,133
                                                                          
Diluted weighted average number of shares                 5,152,130        5,158,170
   outstanding                                                            
Basic net income per share                               $     0.20       $     0.28
                                                         ==========       ==========
Diluted net income per share                             $     0.20       $     0.28
                                                         ==========       ==========
Dividends per share                                      $    0.085       $     0.08
                                                         ==========       ==========
</TABLE>

See Notes to the Unaudited Condensed Consolidated Financial Statements.

                                       2
<PAGE>
 
              THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
           CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                        In Thousands
                                                                        (Unaudited)
                                                                     Three Months Ended
                                                                         March 31,
                                                         ---------------------------------------
                                                                 1999                  1998
                                                                 ----                  ----
<S>                                                      <C>                  <C>
Net income                                                   $     1,046           $     1,438
Other comprehensive income:                                                                   
  Unrealized  losses on available for sale                        (1,103)                 (330)
       securities during the period                                                           
  Less: reclassification adjustments for net gains                                          
       included in net income                                         40                     0
                                                         ---------------      ---------------- 
Other comprehensive losses                                        (1,143)                 (330)
Income tax benefit related to items of other                        
       comprehensive income losses                                  (389)                 (112)                           
                                                         ---------------      ----------------  
Other comprehensive losses, net of tax                              (754)                 (218)
                                                         ---------------      ----------------  
Comprehensive income, net of tax                             $       291           $     1,220 
                                                         ===============      ================
</TABLE>

See Notes to the Unaudited Condensed Consolidated Financial Statements

              THE PEOPLES BANCTRUST COMPANY, INC., SELMA, ALABAMA
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                              In Thousands
                                                                                               (Unaudited)
                                                                                      Three Months Ended March 31, 
                                                                             ----------------------------------------
                                                                                     1999                     1998 
                                                                             -------------------      --------------- 
<S>                                                                           <C>                     <C>          
Net cash provided  by operating activities                                        $  3,877                 $  2,613
                                                                                                                   
Cash flows from investing activities                                                                               
 Proceeds from sales of securities available for sale                                8,723                   11,060
 Proceeds from maturities and calls of securities                                                                  
 available for sale                                                                 12,450                   14,950
 Purchase of securities available for sale                                         (22,467)                 (23,029)
 Net decrease (increase) in loans                                                   (6,917)                  23,913)
 Purchases of bank premises and equipment                                           (1,608)                    (894
 Proceeds from sale of bank premises and equipment                                     228                        0
 Investment in other real estate and equipment                                       (22)                       0
 Proceeds from sale of other real estate owned                                           0                       24
 Acquisition of bank, net of cash received                                               0                  (10,317)
 Investment in low income housing projects                                               0                     (676
                                                                             -------------------      --------------- 
                                                                                                                   
  Net cash provided (used) by investing activities                                  (9,613)                  15,031
                                                                                                                   
Cash flows from financing activities                                                                               
 Net increase (decrease) in deposits                                                   (69)                   9,935
 Net increase in borrowed funds                                                      3,963                    6,705
 Dividends paid                                                                       (439)                    (413)
                                                                             -------------------      --------------- 
                                                                                                                   
  Net cash provided by financing activities                                          3,455                   16,227
                                                                                                                   
Net increase (decrease) in cash and cash equivalents                                (2,281)                  33,871
Cash and cash equivalents at beginning of period                                    36,267                   25,799
                                                                             -------------------      --------------- 
Cash and cash equivalents at end of period                                        $ 33,986                 $ 59,670
                                                                                                                   
Supplemental disclosure of cash information:                                                                       
 Cash paid during the period for:                                                                                  
  Interest                                                                        $  4,369                 $  3,749
</TABLE> 

                                       3

<PAGE>
 
  Taxes                                       $      0                 $    375
                                                             
See Notes to the Unaudited Condensed Consolidated Financial Statements 

                                       4
<PAGE>
 
              THE PEOPLES BANCTRUST COMPANY, INC. AND SUBSIDIARY 
                                                                 
Notes to the Unaudited Condensed Consolidated Financial Statements (Unaudited)
                                                                              
Accounting Policies:                                                          
                                                         
     The accompanying unaudited consolidated financial statements of The Peoples
BancTrust Company, Inc, (the "Company") and its subsidiary, The Peoples Bank and
Trust Company ("Peoples Bank"), have been prepared in accordance with generally
accepted accounting principles for interim information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The results of operations are not
necessarily indicative of the results of operations for the full year or any
other interim periods. Financial statements for prior periods have been restated
to reflect the 1998 merger with Elmore County Bancshares, Inc., -accounted for
using the pooling-of-interests method of accounting. The 1998 acquisition of
Merchants & Planters Bancshares, Inc. was accounted for as a purchase, and is
reflected in the financial position and results of operations of the Company
since the acquisition date. For further information refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.

Commitments and Contingencies:                           
             
          The Company and its subsidiaries are from time to time defendants in
legal actions arising from normal business activities. Management does not
anticipate that the ultimate liability arising from litigation outstanding at
March 31, 1999, will have a materially adverse effect on the Company's financial
statements. 

                                       5
<PAGE>
 
Derivatives and Hedging Activities:

          In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133, effective for all
fiscal quarters of fiscal years beginning after June 15, 1999, establishes
accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. It also
establishes the condition under which a derivative should be designated as
hedging a specific type of exposure and requires the company to establish at the
inception of the hedge the method and measurement approach used to assess its
effectiveness.

          The Company does not believe the adoption of SFAS 133 will have a
significant impact on its financial statements and disclosures as it does not
currently possess any derivative instruments.

Mortgage-Backed Securities:

          In October, 1998, the FASB issued SFAS No. 134, Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise, and amendment of FASB Statement
No. 65, (SFAS 134). SFAS 134 amends prior guidance to require that after the
securitization of mortgage loans held for sale, an entity engaged in mortgage
banking activities classify the resulting mortgage-backed securities or other
retained interests based on its ability and intent to sell or hold these
investments. This statement is effective for the first fiscal quarter after
December 15, 1998. Since the Company does not securitize mortgage loans, no
financial statement impact has resulted from adopting this statement.

Earning Per Share:

          The following table reflects the reconciliation of the numerator and
denominator of the basic EPS computation to the diluted EPS computation for the
three months ended March 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                        1999
                                             Y-T-D               Y-T-D
                                             -----               -----
                                             Basic              Diluted
<S>                                         <C>                 <C>
Net income                                  $1,046              $1,046
Average shares outstanding                   5,148               5,148
 Effect of dilutive securities options                               4
                                                                ------
Diluted average shares outstanding                               5,152
Earnings per share:                                             
 Net income                                 $ 0.20              $ 0.20
                                                               
                                                               
                                                        1998    
                                             Y-T-D               Y-T-D
                                             -----              -----
                                                                
Net income                                  $1,438              $1,438
Average shares outstanding                   5,130               5,130
 Effect of dilutive securities options                              28
                                                                ------
Diluted average shares outstanding                               5,158
Earnings per share:                                             
 Net income                                 $ 0.28              $ 0.28
</TABLE>

                                       6
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

                                    GENERAL

     The following analysis focuses on the financial condition of The Peoples
BancTrust Company, Inc. (the "Company"), and should be read in conjunction with
the consolidated financial statements included in this report.

     Management's discussion and analysis includes certain forward-looking
statements addressing, among other things, the Company's prospects for earnings,
asset growth and net interest margin. Forward-looking statements are accompanied
by, and identified with, such terms as "anticipates," "believes," "expects,"
"intends," and similar phrases. Management's expectations for the Company's
future necessarily involve a number of assumptions and estimates. Factors that
could cause actual results to differ from the expectations expressed herein are:
substantial changes in interest rates, and changes in the general economy;
changes in the Company's strategies for credit-risk management, interest-rate
risk management and investment activities. Accordingly, any forward-looking
statements included herein do not purport to be predictions of future events or
circumstances and may not be realized.

     Financial statements for prior periods have been restated to reflect the
1998 merger with Elmore County Bancshares, Inc., accounted for using the 
pooling-of-interests method of accounting. The 1998 acquisition of Merchants &
Planters Bancshares, Inc. ("M&P") was accounted for as a purchase, and is
reflected in the financial position and results of operations of the Company
since the acquisition date.

                              FINANCIAL CONDITION

     Total consolidated assets of the Company and its subsidiary, The Peoples
Bank and Trust Company ("Peoples Bank"), totaled $561,799,000 at March 31, 1999,
an increase of $3,990,000 from the December 31, 1998 total of $557,809,000.
Earning assets at March 31, 1999 were $501,740,000 as compared to $502,518,000
at December 31, 1998.

INVESTMENTS

     Total investment securities were $137,695,000 at March 31, 1999 as compared
to $137,572,000 on December 31, 1998. This represents a slight increase over
December 31, 1998 of $123,000.

     At year end 1998, and March 31, 1999, the entire investment portfolio was
classified as "available for sale", resulting in the portfolio being marked-to-
market. At December 31, 1998, the portfolio had a net unrealized gain of
$708,000 as compared to a net unrealized loss of $45,000 at March 31, 1999.

SHORT TERM INVESTMENTS

     Short term investments (primarily federal funds and securities purchased
under agreements to resell) totaled $5,030,000 at March 31, 1999 as compared to
$12,598,000 at December 31, 1998. This is a decrease of $7,568,000. This sharp
decrease is the result of increased liquidity needs, which are largely the
result of higher loan demand during the first quarter ended March 31, 1999.
Management constantly monitors these funds, seeking alternative uses for them.

                                       7
<PAGE>
 
LOANS

     Loans, net of unearned income, increased $6,670,000 from year-end 1998 to
$363,309,000 at March 31, 1999. This rise in loan volume is the result of
increased loan demand in both the commercial and real estate loan areas.

ALLOWANCE FOR LOAN LOSSES

     In making loans, the Company recognizes the fact that credit losses will
occur, and that the risk of loss will vary with, among other things, the type of
loan being made and the credit-worthiness of the borrower and the collateral of
the security for the loan. The allowance for loan losses is maintained at a
level believed to be adequate by management to absorb potential losses in the
Company's portfolio.

     Management's determination of allowance adequacy is based, among other
things, on estimates of the historical loan loss experience, evaluations of
economic conditions in general and in various sectors of the Company's customer
base, and periodic reviews of loan portfolio quality by the Company's personnel,
and other relevant factors. Generally reserves will be provided for loans where
the ultimate collection is considered questionable by management after reviewing
the current status of loans which are contractually past due, structurally
deficient or economically depreciating, and considering the net realizable value
of the security of the loan or guarantees, if applicable. Management will
continue to monitor the Company's asset quality and will charge off loans
against the allowance for loan losses when appropriate or provide specific loss
reserves when necessary. Because the allowance is based on assumptions and
subjective judgement, it is not necessarily indicative of the actual charge-offs
which may ultimately occur.

     The Company's allowance for loan losses totaled $4,294,000 at March 31,
1999 as compared to $4,291,000 at December 31, 1998. The resulting ratios of
allowance to total loans net of unearned interest were 1.18% and 1.20% as of
March 31, 1999 and December 31, 1998, respectively. The amount of loans
determined by management to require special attention due to potential
weaknesses as of March 31, 1999 was $8,985,000, a $101,000 decrease from the
$9,086,000 reported at year end 1998. A total of $6,158,000 in business loans
were classified at March 31, 1999, with $1,427,000 in agricultural, $1,364,000
in real estate and $36,000 in personal. Standing at 2.47% of the total loan
portfolio, management believes the level of classified loans to be acceptable.
Management monitors fluctuations of the loan portfolio in light of charge-offs
and recoveries, as well as anticipated economic conditions.

DEPOSITS

     At March 31, 1999, total deposits had decreased $69,000 to $460,740,000
from their December 31, 1998 total of $460,809,000. Analysis of the decrease,
indicates that between December 31, 1998 and March 31, 1999 non-interest bearing
deposits decreased $3,006,000 while interest-bearing deposits increased
$2,937,000.

LIQUIDITY

     The Company has periodic needs for short-term borrowings. At March 31,
1999, short-term borrowings in the form of federal funds purchased and
securities sold under agreement to repurchase totaled $11,330,000, as opposed to
$11,881,000 at December 31, 1998. Other borrowed funds increased $4,444,000 to
$26,898,000 during the period. The balance of other borrowed funds is comprised
of borrowings from the Federal Home Loan Bank to fund various large commercial
loans.

                                       8
<PAGE>
 
STOCKHOLDERS' EQUITY

     Total stockholders' equity at March 31, 1999 was $56,574,000 compared to
$56,720,000 at year end 1998. This reduction in stockholders' equity results
from year to date earnings of $1,046,000, $755,000 in unrealized losses on
available for sale securities and $437,000 in common stock dividends.

     Risk-based capital regulations require all bank holding companies and banks
to achieve and maintain a minimum total capital to risk-weighted assets ratio of
8.00%, at least half of which must be in the form of Tier 1 capital (consisting
of stockholders' equity less goodwill). The following table indicates the
Company's Tier 1 capital ratio and total capital ratio at March 31, 1999 were
12.48% and 13.62%, respectively. The Company maintained, at March 31, 1999, a
leverage ratio of Tier 1 capital to total assets of 8.58% compared to the
minimum regulatory standard of 4.00% required of the strongest companies and
banks. In addition, the table indicates that the ratios of the Company's
subsidiary bank also well exceed the minimum requirements of the regulation.

<TABLE>
<CAPTION>
                                                          Risk-Based Capital Ratios & Leverage Ratios               
                                                                      As of March 31, 1999                          
                                             -------------------------------------------------------------------    
                                                                                                                    
                                                                      Dollars in Thousands                          
RISK-BASED CAPITAL RATIOS                                                                                           
-------------------------                                                                                           
                                                                                                                    
                                                  The Company                                 Bank                       
                                             --------------------------------      ----------------------------    
<S>                                          <C>           <C>                     <C>           <C>               
Tier 1 Capital                                $ 47,033     12.48%                     $ 47,215        12.64%    
Tier 1 Capital - Minimum Required               15,072      4.00%                       14,947         4.00%    
                                              --------     -----                      --------        -----     
Excess                                        $ 31,961      8.48%                     $ 32,268         8.64%    
                                                                                                                
Total Capital                                 $ 51,326     13.62%                     $ 51,508        13.78%    
Total Capital - Minimum Required                30,144      8.00%                       22,420         6.00%    
                                              --------     -----                      --------        -----     
Excess                                        $ 21,182      5.62%                     $ 29,088         7.78%    
                                                                                                                
Net risk-weighted assets                      $376,796                                $373,673                  
                                                                                                                
LEVERAGE RATIOS                                                                                                 
---------------                                                                                                 
Total Tier 1 Capital                          $ 47,033      8.58%                     $ 47,215         8.67%    
Minimum Leverage Requirement                    21,929      4.00%                       21,784         4.00%    
                                              --------     -----                      --------        -----     
Excess                                        $ 25,104      4.58%                     $ 25,431         4.67%    
                                                                                                                
Average Total Assets,                                                                                           
      Net of all intangibles                  $548,231                                $544,610                  
</TABLE> 

                            RESULTS OF OPERATIONS 

THREE MONTHS ENDED MARCH 31, 1999, COMPARED TO THREE MONTHS ENDED MARCH 31, 
1998 

     The Company's profitability, like that of many financial institutions, is
dependent to a large extent upon its net interest income. Simply stated, net
interest income is the difference between interest income on interest-earning
assets, such as loans and investments, and interest expense on interest bearing
liabilities, such as deposits and borrowings.

     Interest income for the first quarter of 1999 (the "1999 quarter") was
$10,387,000 compared to $9,205,000 for the same quarter of 1998 (the "1999
quarter"). This increase of $1,182,000 is due entirely to the increased volume
of both loans and investment securities, given that the combined average yield
on the two portfolios fell from 8.61% for the 1998 quarter, to 8.38% for the
1999 quarter.

                                       9
<PAGE>
 
     The average volume of the Company's securities portfolio increased to
$137,757,000 for the 1999 quarter from $119,485,000 for the 1998 quarter.
Interest income on investments totaled $2,004,000 for the 1999 quarter as
compared to $1,826,000 for the same period in 1998. The increase in income from
investment securities is entirely the result of higher volume, as the average
yield on this portfolio fell from 6.11% for the 1998 quarter, to 5.82% for the
1999 quarter.

     Interest income from business loans totaled $2,049,000 for the 1999
quarter, compared to $2,278,000 for the 1998 quarter. The decrease is the result
of a reduction of the average yield earned on these loans between the 1998 and
1999 quarters.

     Personal loan interest income increased to $2,948,000 for the 1999 quarter
from $2,217,000 for the same period in 1998. The average volume of personal
loans for the 1999 quarter was $106,515,000 whereas for the 1998 quarter it was
$81,414,000. It is this increase in the average volume that accounts for the
increased interest earned in the personal loan portfolio.

     Interest income earned on real estate loans totaled $2,954,000 for the 1999
quarter as compared to $2,364,000 for the 1998 quarter. The average volume of
real estate loans increased to $133,854,000 from $110,131,000 between the 1999
and 1998 quarters. The increased interest income earned on real estate loans is
due to both an increase in the average balance, and higher average yields
realized in the portfolio as well.

     The average volume of interest-bearing deposits increased to $393,883,000
for the 1999 quarter from $334,762,000 for the 1998 quarter. Interest paid on
these deposits totaled $3,952,000 for the 1999 quarter, as compared to
$3,779,000 for the 1998 quarter.

     Non-interest income for the 1999 quarter totaled $1,557,000 as compared to
$1,348,000 for the same period in 1998.  This increase is mainly attributable to
higher fee income generated from having a larger customer base in the 1999
quarter than in the 1998 quarter.

     Non-interest expenses increased $1,100,000 to $5,349,000 for the 1999
quarter from $4,249,000 for the 1998 quarter.  The largest categories
contributing to the increase in non-interest expense were salaries and benefits,
and intangible asset amortization, both of which were primarily the result of
the M&P acquisition late in the 1998 quarter.

     Income before taxes for the 1999 quarter was $1,530,000, compared to
$2,105,000 for the same period in 1998.  The income tax provision decreased
between the quarters by $176,000 to $484,000.  The resulting 1999 quarter net
income was $1,046,000, versus net income for the 1998 quarter of $1,445,000.
Earnings per share for the 1999 quarter was $.20, compared to $.28 for the same
quarter of 1998.


YEAR 2000 RISK ASSESSMENT AND ACTION PLAN

     The Company is aware of the current concerns throughout the business
community of reliance upon computer software that does not properly recognize
the Year 2000 in date formats, often referred to as the "Year 2000 Problem."
The Year 2000 Problem is the result of software being written using two digits
rather than four digits to define the applicable year (i.e., "99" rather than
"1999").  A failure by a business to properly identify and correct a Year 2000
Problem in its operations could result in system failures or miscalculations.
In turn, this could result in disruptions of operations, including among other
things a temporary inability to process transactions, or otherwise engage in
routine business transactions on a day-to-day basis.

     Management has implemented a Company-wide initiative for preparing its
systems, applications and equipment for functioning in the year 2000 and beyond.
Most phases of the year 2000 project are substantially complete.

     The Company continues to monitor efforts to ready internal systems to
correct the Year 2000 Problem.  Highest priority has been assigned to those
systems determined to be critical to the ongoing operations of the 

                                       10
<PAGE>
 
Company. Programming changes and listing of critical systems, affiliates and
equipment were completed by December 31, 1998. Of eight critical systems
identified, six have been thoroughly and successfully tested for Year 2000
compliance. The remaining two systems have been replaced. The replacement
systems have been independently tested and certified Year 2000 compliant.

     The Company has modified its credit risk assessment to include
consideration of incremental risk that may be faced by the inability of
customers to address the Year 2000 Problem. The Company has developed policies
and procedures to help identify potential customer related risks to the Company,
and to gain a better understanding of how its customers are managing their own
risks associated with the Year 2000 Problem. Additionally, the Company has
implemented a process for assessing the readiness of its major vendors and
affiliates.

     Although the Company believes it will be fully compliant, the risk of
system failures cannot be eliminated. Also, the Company cannot guarantee the
performance of third parties as to which it has material relationships. The
Company has completed the assessment of worst case scenarios resulting from the
Year 2000 issue, and has developed Business Resumption Contingency Plans to deal
with potential interruptions related to the Year 2000 event affecting banking
functions (cash delivery, deposit/loan servicing, etc). Testing of these
contingency plans is to begin in July of 1999. Elements of the these Plans
include, among other detailed plans, the installation of a self-contained power
plant in the event of non-compliance by the Company's electricity provider and
the implementation of security procedures not dependent on automatic devices.
Manual systems are being established that will allow the Company to provide its
customers with a basic level of service in the event of major systems failures.

     As of December 31, 1998 the Company had incurred approximately $105,000 in
direct compliance costs associated with the Year 2000 Problem.  The Company
estimates that $375,000 will be the total direct compliance costs through the
Year 2000.  The Company does not separately track internal costs incurred for
year 2000 compliance; such costs are primarily related to payroll expenditures.
Funding for such costs has been, and will continue to be derived from normal
operating cash flow.

     The oversight committee for the Year 2000 project consists of upper
management and mission critical personnel.  This committee monitors the progress
of the Year 2000 project, and reports their findings to the operations committee
of the board of directors.
 


                      IMPACT OF NEW ACCOUNTING STANDARDS

         See Notes to the Unaudited Condensed Consolidated Financial Statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Interest sensitivity is one measure of the vulnerability of earnings to
changes in the general level of interest rates. Whenever interest-earning assets
reprice to market interest rates at a different pace than interest-bearing
liabilities, interest income performance will be affected favorably or
unfavorably during periods of changes in general interest rates. Management is
unable to predict future changes in market rates and their impact on the
Company's profitability. Management believes, however, that the Company's
current rate sensitivity position is well matched, indicating the assumption of
minimal interest rate risk. Management does not believe there to have been any
material shift in the relationship between the maturity characteristics of
interest-earning assets, and interest-bearing liabilities since December 31,
1998, and, consequently, no material change in interest rate risk exposure.

                                       11
<PAGE>
 
                          PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          Management currently is not aware of any material legal proceedings to
which the Company or Peoples Bank is a party, or to which any of their property
is subject, except as follows:

          George Edward Marsh v. The Peoples Bank and Trust Company, et al., 
          ------------------------------------------------------------------  
Circuit Court of Jefferson County, Alabama, civil Action No. CV-99-1153. This
suit was filed on February 26, 1999, against Peoples Bank, Osborne & Osborne,
Inc., and Mountain Life Insurance Company, together with certain fictitious
defendants. The complaint alleges that Peoples Bank and co-defendants
fraudulently and unlawfully sold credit life insurance and accidental death
insurance to the plaintiff. In addition to the allegations relating to credit
life insurance and accidental death insurance, the complaint alleges that
Peoples Bank wrongfully issued a writ of garnishment against the plaintiff,
after the plaintiff had taken a Chapter 7 bankruptcy. The complaint seeks
compensatory and punitive damages in unspecified amounts. The causes of action
specifically include breach of contract, fraud, fraudulent suppression,
conversion, conspiracy, and negligent and wanton hiring, training and
supervision. Peoples Bank denies the allegations of the complaint. No discovery
or other actions have yet been taken in this case. The allegations in this case
are similar to those in the case of Raymond Lee Moseley, et al. v. The Peoples
                                    ------------------------------------------
Bank and Trust Company, et al., filed in the Circuit Court of Autauga County, 
-------------------------------       
Alabama, on August 4, 1997, which was settled on a class action basis. Plaintiff
Marsh is one of the persons who opted out of that settlement. Peoples Bank has
settled the potential claims of substantially all of the other opt-outs.
Settlement discussions have not yet taken place with respect to this case.

     While Peoples Bank denies liability in the above case, the possibility of
exposure to liability exists. To date, the plaintiff in the lawsuit has not
specified any alleged actual or compensatory damages. The level of potential
exposure for compensatory damages increases if a plaintiff establishes at trial
mental anguish or emotional distress from the actions complained of. Also,
substantial punitive damages have been awarded in the State of Alabama in cases
where relatively small amounts of actual damages have occurred, and jury
verdicts within the State of Alabama have been unpredictable in this regard.
Consequently, although the Company cannot estimate with certainty, at this time,
the eventual outcome or potential exposure in the above case, the Company does
not currently anticipate that the ultimate liability arising from such
proceeding will have a materially adverse effect on the Company's financial
statements.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits
               Exhibit 27 - Financial Data Schedule (SEC use only)

          (b)  Not applicable.

                                       12
<PAGE>
 
ITEM. 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                                       13
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                              The Peoples BancTrust Company, Inc.


Date:  May 14, 1999           /s/ Richard P. Morthland
                              -------------------------------------
                              Richard P. Morthland
                              Chairman and Chief Executive Officer
          
          
Date:   May 14, 1999          /s/ Andrew C. Bearden
                              -------------------------------------
                              Andrew C. Bearden
                              Executive Vice President and
                              Chief Financial Officer
                              (Principal Accounting Officer)