<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 6, 1998
THE PEOPLES BANCTRUST COMPANY, INC.
-----------------------------------
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
Alabama 0-13653 63-0896239
------- ------- ----------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation
File Number) Identification No.)
</TABLE>
310 Broad Street, Selma, Alabama 36701
---------------------------------------
(Address of Principal Executive Offices)
(334) 875-1000
--------------
Registrant's telephone number, including area code
Not Applicable
- -------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- --------------------------------------------------------------------------
On March 6, 1998, The Peoples BancTrust Company, Inc. ("BancTrust")
consummated the acquisition of Merchants & Planters Bancshares, Inc.
("Bancshares"), through the merger of BancTrust's wholly owned subsidiary,
Peoples Acquisition Corp., with and into Bancshares (the "Merger"). The Merger
was completed pursuant to an Agreement and Plan of Reorganization previously
filed with BancTrust's Report on Form 8-K dated December 2, 1997 (Commission
File No. 0-113653). This Form 8-K/A includes certain financial information
required under Item 7 that was not contained in the previously filed Form 8-K
dated March 6, 1997 (Commission File No. 0-13653).
(a) Financial Statements of Business Acquired.
-----------------------------------------
Consolidated Financial Statements for Bancshares for the year ended
December 31, 1997 are attached hereto as Exhibit 99.1 and are incorporated
herein by reference.
(b) Pro Forma Financial Information
-------------------------------
Unaudited Pro Forma Financial Information reflecting the Merger is attached
hereto as Exhibit 99.2 and is incorporated herein by reference. Included in
such Pro Forma Financial Information are (i) a Condensed Pro Forma Statement of
Condition (Unaudited) as of December 31, 1997 and (ii) Condensed Pro Forma
Statements of Income (Unaudited) for the year ended December 31, 1997.
The Pro Forma Financial Information is not necessarily indicative of the
consolidated financial position or results of future operations of the combined
entity or the actual results that would have been achieved had the Merger been
consummated prior to the periods indicated. The Pro Forma Financial Information
should be read in conjunction with and is qualified in its entirety by the
separate historical consolidated financial statements and notes thereto of
BancTrust included in its Annual Report on Form 10-K for the year ended December
31, 1997 (Commission File No. 0-13653) and the historical consolidated financial
statements and notes thereto of Bancshares included in Item 7(a) of this Form 8-
K/A.
(c) Exhibits.
--------
23 Consent of Independent Accountants.
99.1 Consolidated Financial Statements for Merchants & Planters
Bancshares, Inc. for the year ended December 31, 1997.
99.2 Unaudited pro forma combined financial information consisting
of:
(i) Condensed Pro Forma Statement of Condition (Unaudited)
as of December 31, 1997; and
(ii) Condensed Pro Forma Statements of Income (Unaudited) for
the year ended December 31, 1997.
2
<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 15, 1998 By: /s/Richard P. Morthland
-----------------------
Richard P. Morthland
Chairman of the Board and Chief
Executive Officer
3
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of The Peoples BancTrust Company, Inc. on Form S-3 (File No. 33-60935) and Form
S-8 (File No. 333-43363) of our report dated January 12, 1998, on our audit of
the consolidated financial statements of Merchants & Planters Bancshares, Inc.
and Subsidiary as of December 31, 1997, and for the year ended December 31,
1997.
/s/ Donaldson, Holman & West, P.C.
Birmingham, Alabama
May 12, 1998
4
<PAGE>
EXHIBIT 99.1
Donaldson, Holman & West, P.C.
Certified Public Accounts . Business and Financial Consultants
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
Merchants & Planters Bancshares, Inc.
Montevallo, Alabama
We have audited the accompanying consolidated balance sheet of Merchants &
Planters Bancshares, Inc. and Subsidiary as of December 31, 1997, and the
related consolidated statements of operations, changes in 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.
We conducted our audit in accordance with generally accepted auditing standards.
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 financial statements referred to above present fairly, in
all material respects, the financial position of Merchants & Planters
Bancshares, Inc. and Subsidiary as of December 31, 1997, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Donaldson, Holman & West, P.C.
January 12, 1998
5
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1997
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and due from banks $ 1,933,987
Federal funds sold 3,405,000
----------------
Total cash and cash equivalents 5,338,987
Investment securities
Available for sale 15,304,302
Held to maturity 16,505,923
Loans, less allowance for loan losses 27,980,377
Property and equipment, net 367,931
Accrued interest receivable 683,545
Other assets 162,823
----------------
$ 66,343,888
================
Liabilities and Stockholders' Equity
------------------------------------
Deposits
Demand 5,800,282
Interest bearing demand 4,091,054
Now accounts 6,065,540
Savings 12,277,443
Time deposits $100,000 and over 2,342,665
Other time deposits 24,216,028
----------------
54,793,012
Accrued interest, taxes, and other liabilities 892,393
Total liabilities 55,685,405
----------------
Commitments and contingent liabilities (Note 7)
Stockholders' equity
Common stock, $1 par value, 24,000 shares
authorized, 23,165 shares issued and 21,156
outstanding 23,165
Preferred stock, $50 par value, 28 shares
authorized,issued, and outstanding 1,400
Additional paid-in capital 1,097,510
Retained earnings 9,796,403
Unrealized gain on securities available for sale 77,633
Treasury stock, 2,009 shares, at cost (337,628)
----------------
Total stockholders' equity 10,658,483
----------------
$ 66,343,888
================
</TABLE>
6
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statement of Operations
Year ended December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Interest income
Interest and fees on loans $ 2,601,258
Interest on investment securities
U.S. treasury securities 591,195
Obligations of other U.S. government agencies 995,559
Obligations of state and political subsidiaries 466,534
Other securities 12,652
Interest on federal funds sold 141,118
----------------
4,808,316
Interest expense
Interest on deposits 2,296,974
----------------
Net interest income 2,511,342
Provision for loan losses 38,400
----------------
Net interest income after provision for loan losses 2,472,942
Noninterest income
Net gain on sale of securities 5,978
Service fees 305,528
Other 63,519
----------------
375,025
Non interest expense
Salaries and employee benefits 1,009,662
Occupancy and equipment 164,728
Other operating expense 473,604
----------------
1,647,994
----------------
Income before income taxes 1,199,973
Income taxes 343,396
----------------
Net income $ 856,577
================
Net income per share of common stock $ 40.48
================
Weighted average shares outstanding 21,159
================
</TABLE>
See accompanying notes.
7
<PAGE>
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
ON INVESTMENT
COMMON STOCK PREFERRED STOCK ADDITIONAL SECURITIES
--------------- -----------------
PAR PAR PAID-IN RETAINED AVAILABLE TREASURY
SHARES VALUE SHARES VALUE CAPITAL EARNINGS FOR SALE STOCK TOTAL
------ ------- ------- --------- ---------- ---------- --------- --------- ----------
Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of year 23,165 $23,165 28 $1,400 $1,097,510 $9,098,566 $21,685 $(325,694) $ 9,916,632
Net income - - - - - 856,577 - - 856,577
Dividends paid
Common stock - - - - - (158,670) - - (158,670)
Preferred stock - - - - - (70) - - (70)
Purchase of treasury stock - - - - - - - (11,934) (11,934)
Change in unrealized gain
on investments - - - - - - 55,948 - 55,948
------ ------- ------- --------- ---------- ---------- --------- --------- -----------
End of year 23,165 $23,165 28 $1,400 $1,097,510 $9,796,403 $ 77,633 $(337,628) $10,658,483
====== ======= ======= ========= ========== ========== ========= ========= ===========
</TABLE>
8
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statement of Cash Flows
Year ended December 31, 1997
<TABLE>
<S> <C>
Cash flows from operating activities
Net income $ 856,577
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization 71,948
Provision for loan losses 38,400
Deferred income taxes (10,397)
Gain on sale of securities (5,978)
Changes in operating assets and liabilties
Decrease in other assets 52,449
Increase in accrued interest receivable (13,387)
Increase in accrued interest, taxes and other liabilities 152,971
--------------
Net cash provided by operting activities 1,142,583
Cash flows from investing activities
Maturities and redemptions of securities available-for sale 5,026,007
Maturities and redemptions of securities held-to-maturity 3,484,064
Purchases of available-for-sale securities (4,896,281)
Purchases of securities held-to-maturity (1,540,674)
Net increase in loans (1,623,238)
Purchases of property and equipment (32,630)
--------------
Net cash provided by investing activities 417,248
Cash flows from financing activities
Net (decrease) in deposits (83,212)
Dividends paid (158,740)
Purchase of treasury stock (11,934)
--------------
Net cash used in financing activities (253,886)
Net increase in cash and cash equivalents 1,305,945
Cash and cash equivalents
Beginning of year 4,033,042
--------------
End of year $ 5,338,987
==============
Supplemental disclosure of cash flow information
Interest paid $ 2,287,027
==============
Income taxes paid $ 351,498
==============
</TABLE>
See accompanying notes.
9
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The Company is a one-bank holding company, which operates in Montevallo,
Alabama. The Company's primary source of revenue is providing loans to
individuals and business in the Shelby County area of Alabama.
USE OF ESTIMATES
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.
PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the Company and its
consolidated subsidiary, Merchants & Planters Bank. All significant intercompany
accounts and transactions have been eliminated.
CASH EQUIVALENTS
For purposes of reporting cash flows, the cash and cash equivalents include cash
on hand, amounts due from banks, and federal funds sold.
INVESTMENT SECURITIES
Investment securities are comprised of securities classified as available for
sale and held to maturity, in conjunction with the adoption of FASB 115,
resulting in investment securities available for sale being carried at market
value and investment securities held to maturity being carried at cost, adjusted
for amortization of premiums and accretion of discounts.
Gains or losses on disposition are based on the net proceeds and the adjusted
carrying amount of the securities sold, using the specific identification
method.
LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans are stated at the amount of unpaid principal, reduced by allowance for
loan losses. Loans are charged against the allowance for loan losses when
management believes that the collectibility of the principal is unlikely. The
allowance is an amount that management believes
10
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
will be adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of loans and prior
loan loss experience. The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans, and current economic conditions that
may affect the borrowers' ability to pay. Accrual of interest is discontinued on
a loan when management believes, after considering economic and business
conditions and collection efforts, that the borrowers' financial condition is
such that collection of interest is doubtful. Fees and related costs on loans
are amortized over the term of the loan as required by generally accepted
accounting principles.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation computed
principally on the straight-line and the declining balance method over the
estimated useful lives of the assets, which are 30 years for building, 3 to 20
years for furniture and equipment. Expenditures for maintenance and repairs are
expensed as incurred while renewals and betterments are capitalized.
Depreciation expense for 1997 was $71,948.
INCOME TAXES
The tax effect of transactions is recorded at current tax rates in the periods
the transactions are reported for financial statement purposes. Deferred income
taxes are established for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled. The Company files its federal income tax returns on a consolidated
basis and its state income tax returns on a separate basis.
NOTE 2 - PENDING MERGER
Merchants and Planters Bancshares, Inc. and The Peoples BancTrust Company, Inc.
entered into an agreement to merge the two companies. The agreement provides
that, upon consummation of the merger, each outstanding share of Merchants &
Planters Bancshares, Inc. common stock shall be automatically cancelled and
cease to be an issued and outstanding share of Bancshares common stock, and
converted into and represent only the right to receive from The Peoples
BancTrust Company, Inc. $949.38 per share. The merger will be accounted for as a
purchase. The merger is subject to regulatory and shareholder approval and is
anticipated to be consummated in March 1998.
11
<PAGE>
MERCHANTS & PLANTERS BANSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
NOTE 3 - INVESTMENT SECURITIES
Amortized costs and approximate market values of investment securities are
summarized as follows at December 31, 1997.
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------ ----------------- ------------------ --------------
<S> <C> <C> <C> <C>
Held to maturity Obligations of other U.S.
government agencies and
corporations $ 10,713,323 $ 97,519 $ (25,603) $ 10,785,239
Other securities 5,792,600 108,415 (5,977) 5,895,038
--------------- -------------- ------------ ----------------
16,505,923 205,934 (31,580) 16,680,277
--------------- -------------- ------------ ----------------
Available-for-sale-securities
U. S. Treasury Securities 7,739,694 46,530 (7,920) 7,778,304
Obligations of other U.S.
government agencies and
corporations 4,589,668 36,431 (4,124) 4,621,975
Other securities 2,849,726 85,723 (31,426) 2,904,023
--------------- -------------- ------------ ---------------
15,179,088 168,684 (43,470) 15,304,302
--------------- -------------- ------------ ---------------
$ 31,685,011 $ 374,618 $ (75,050) $ 31,984,579
=============== ============== ============ ===============
</TABLE>
The amortized costs and approximate market values of investment securities at
December 31, 1997, by expected maturity are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
HELD-TO-MATURITY SECURITIES AVAILABLE-FOR-SALE SECURITIES
-------------------------------------------- -----------------------------------------
AMORTIZED AMORTIZED
COST FAIR VALUE COST FAIR VALUE
-------------------- --------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Due in one year or less $ 2,960,443 $ 2,957,287 $ 2,398,531 $ 2,371,291
Due from one to five years 3,947,047 4,018,999 8,604,142 8,651,795
Due from five to ten years 2,598,669 2,622,108 2,177,532 2,237,595
Due after ten years 704,494 716,517 500,000 521,512
----------------- ---------------- --------------- -------------
10,210,653 10,314,911 13,680,205 13,782,193
Mortgage backed securities 6,295,270 6,365,366 1,498,884 1,522,109
----------------- ---------------- --------------- -------------
$ 16,505,923 $ 16,680,277 $ 15,179,089 $ 15,304,302
================= ================ =============== =============
</TABLE>
Securities carried at approximately $5,483,846 were pledged to secure deposits
and for other purposes.
12
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
A summary of loan classification at December 31, 1997 as follows:
<TABLE>
<S> <C>
Commercial $ 4,593,062
Real estate 18,129,305
Installment 5,287,155
Credit card 396,599
------------------
28,406,121
Allowance for loan losses (425,744)
$ 27,980,377
==================
</TABLE>
Changes in the allowance for loan losses for the year ended December 31, 1997,
were as follows:
<TABLE>
<S> <C>
Balance
Beginning of year $ 384,680
Provision for loan losses 38,400
Recoveries on loans previously charged off 26,284
Loans charged off (23,620)
-------------
End of year $ 425,744
=============
</TABLE>
Most of the Company's business activity is with customers located within Shelby
County, Alabama. As of December 31, 1997, the Company had a concentration of
credit risk aggregating approximately $18,129,305 in loans secured by real
estate.
NOTE 5 - PROPERTY AND EQUIPMENT
A summary of property and equipment at December 31, 1997, follows:
<TABLE>
<S> <C>
Land $ 70,090
Building and improvements 801,742
Furniture and equipment 876,299
------------
Total cost 1,748,131
Less accumulated depreciation 1,380,200
------------
Net book value $ 367,931
============
</TABLE>
Total depreciation expense for December 31, 1997, was $71,948.
13
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
NOTE 6 - INCOME TAXES
The components of income tax expense for the year ended December 31, 1997, is as
follows:
<TABLE>
<S> <C>
Current tax provision
Federal $ 295,998
State 57,795
----------------
353,793
Deferred tax provision
Federal (9,303)
State (1,094)
----------------
(10,397)
----------------
$ 343,396
===============
</TABLE>
The effects of temporary differences that give rise to significant portions of
the deferred tax assets and deferred tax liabilities at December 31, 1997, are
presented below:
<TABLE>
<S> <C>
Deferred tax assets:
Allowance for loan losses $ 123,054
Fixed Assets 2,389
Market valuation reserve 11,070
Loss on foreclosures 45,600
--------------
182,113
Deferred tax liabilities:
Market valuation reserve (58,651)
--------------
$ 123,462
==============
</TABLE>
A reconciliation of income tax computed at the federal statutory income tax rate
to total income taxes is as follows for the year ended December 31, 1997:
<TABLE>
<S> <C>
Pre-tax income $ 1,199,973
================
Income tax computed at federal statutory rate $ 407,991
Increase (decrease) resulting from:
Nondeductible expenses 35,287
State income taxes, net of federal benefit 54,408
Tax exempt interest (144,746)
Other, net (9,544)
----------------
$ 343,396
----------------
</TABLE>
14
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
NOTE 7 - OTHER FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company has entered into off-balance-sheet
financial instruments consisting of commitments to extend credit, commercial
letters of credit and standby letters of credit. Such financial instruments are
recorded in the financial statements when they are funded or related fees are
incurred or received. At December 31, 1997, commitments under standby letters of
credit and guarantees aggregated $22,200.
The Company is not a defendant in legal actions arising from normal business
activities.
NOTE 8 - RELATED PARTY TRANSACTIONS
Certain officers, directors, and principal shareholders, were indebted to the
Company at December 31, 1997, in the aggregate amount of $1,707,445.
NOTE 9 - RESTRICTIONS ON RETAINED EARNINGS
The Company is subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval. At December 31, 1997,
approximately $2,078,390 of retained earnings was available for dividend
declarations without prior regulatory approval.
NOTE 10 - PROFIT SHARING PLAN
The Company has a 401(k) profit sharing plan (the Plan) which it has offered to
employees who have met certain eligibility requirements. Contributions under the
Plan are discretionary and are determined annually by the Company's Board of
Directors. The Company's contributions to the Plan totaled $42,276 for the year
ended December 31, 1997.
NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table shows the estimated fair value and the related carrying
values of the Company's financial instruments at December 31, 1997. Items, which
are not financial instruments, are not included.
<TABLE>
<CAPTION>
Carrying Estimated
Amount Fair value
-------------------- -------------------
<S> <C> <C>
Cash and due from banks $ 1,933,987 $ 1,933,987
Federal funds sold 3,405,000 3,405,000
Investment securities available for sale 15,179,089 15,304,302
Investment securities held to maturity 16,505,923 16,680,277
Loans, net of allowance for loan losses 27,980,377 28,309,020
Accrued interest receivable 683,545 683,545
Deposit liabilities 54,793,012 54,688,175
</TABLE>
15
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
For purposes of the above disclosures of estimated fair value, the following
assumptions were used as of December 31, 1997. The estimated fair value for cash
and due from banks and federal funds sold is considered to approximate cost. The
estimated fair value for investment securities are based on quoted market values
for the individual securities or for equivalent securities. In the case of fixed
and annually adjustable rate loans, the prevailing market rates in effect as of
December 31, 1997, for similar loans with similar maturities, were used as
discount rates in calculating the present values of these loans. For financial
assets and liabilities whose interest rates are contractually precluded from
floating directly with market rates, market values are calculated in all cases
as the present value of anticipated future cash flows, discounted using an
appropriate rate. Market values for time deposits likewise represent the sum of
discounted future cash flows where the discount rates are market value
certificate of deposit rates for the various maturities then prevailing at
December 31, 1997.
While these estimates of fair value are based on management's judgment of the
most appropriate factors, there is no assurance that were the Company to have
disposed of such items at December 31, 1997, the estimated fair values would
necessarily have been achieved at that date, since market values may differ
depending on various circumstances. The estimated fair values at December 31,
1997, should not necessarily be considered to apply at subsequent dates.
In addition, other assets and liabilities of the Company that are not defined as
financial instruments are not included in the above disclosures. Also,
non-financial instruments are typically not recognized in the financial
statements nevertheless may have value but are not included in the above
disclosures. These include the estimated earning power of core deposit accounts,
the trained work force, customer goodwill and similar items.
NOTE 12 - REGULATORY MATTERS
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 and liabilities as calculated under regulatory accounting practices. The
Company's capital amounts and classification are also subject to qualitative
judgements by the regulators about components, risk, weightings, and other
factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) and Tier 1 capital (as defined in the regulations) to risk weighted
assets (as defined). Management believes, as of December 31, 1997, that the
Company meets all capital adequacy requirements to which it is subject.
16
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
<TABLE>
<CAPTION>
FOR CAPITAL
ACTUAL ADEQUACY PURPOSES:
-------------------------- -----------------------------
AMOUNT RATIO AMOUNT RATIO
-------------------------- --------------- -----------
<S> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital
(to Risk Weighted Assets) $ 10,921,376 36.2% $ 2,416,080 greater than or equal to 8.0%
Tier I Capital
(to Risk Weighted Assets) $ 10,542,631 34.9% $ 1,208,040 greater than or equal to 4.0%
Tier I Capital
(to Average Assets) $ 10,542,631 15.9% $ 2,647,400 greater than or equal to 4.0%
<CAPTION>
TO BE WELL CAPITALIZED
UNDER PROMPT CORRECTIVE
ACTION PROVISIONS:
-----------------------------
AMOUNT RATIO
-------------- -----------
<S> <C> <C>
As of December 31, 1997:
Total Capital
(to Risk Weighted Assets) $ 3,020,100 Greater than or equal to 10.0%
Tier I Capital
(to Risk Weighted Assets) $ 1,812,060 Greater than or equal to 6.0%
Tier I Capital
(to Average Assets) $ 3,309,250 Greater than or equal to 5.0%
</TABLE>
NOTE 13 - MERCHANTS & PLANTERS BANCSHARES, INC. (PARENT COMPANY ONLY)
Presented below and on the following pages are the financial statements of
Merchants & Planters Bancshares, Inc.:
Statement of Financial Condition
December 31, 1997
Assets
<TABLE>
<S> <C>
Cash* $ 9,089
Investment in subsidiary, net of valuation reserve
of $77,633* 10,647,994
---------------
$ 10,657,083
===============
Liabilities and Stockholders' Equity
Stockholders' equity
Common stock $1 par value, 24,000
shares authorized, 23,165 shares
issued and 21,156 shares outstanding $ 23,165
Additional paid-in capital 1,097,510
Retained earnings 9,796,403
Unrealized gain on investments 77,633
Treasury stock, 2,009 shares, at cost (337,628)
---------------
$ 10,657,083
===============
</TABLE>
- -------------------
*Eliminated during consolidation.
17
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
<TABLE>
<S> <C>
Cash dividends received from subsidiary* $ 213,950
Equity in undistributed earnings of subsidiary* 681,802
Expenses
Professional fees 37,884
Travel 1,109
Taxes 252
------------
39,245
------------
Net income $ 856,507
============
</TABLE>
Statement of Retained Earnings
Year ended December 31, 1997
<TABLE>
<S> <C>
Retained earnings
Beginning of year $ 9,098,566
Net income 856,507
Less dividends paid 158,670
-------------
End of year $ 9,796,403
==============
</TABLE>
Statement of Cash Flows
Year ended December 31, 1997
<TABLE>
<S> <C>
Cash flows from operating activities
Net income $ 856,507
Adjustments to reconcile net income
provided by operating activities
Undistributed earnings of subsidiary* 681,802
------------
Net cash provided by operating activities 174,705
Cash flows from investing activities
Purchase of treasury stock (11,934)
Cash flows from financing activities
Dividends paid (158,670)
------------
Net increase in cash 4,101
Cash
Beginning of year 4,988
------------
End of year $ 9,089
============
</TABLE>
- ----------------------------
* Eliminated during consolidation.
18
<PAGE>
EXHIBIT 99.2
THE PEOPLES BANCTRUST COMPANY, INC. AND SUBSIDIARIES
CONSENSED PRO FORMA STATEMENT OF CONDITION (Unaudited)
(In Thousands)
The following summary includes (i) the condensed consolidated statement
of condition of BancTrust as of December 31, 1997, (ii) the condensed
consolidated statement of condition of Bancshares as of December 31, 1997, (iii)
adjustments to give effect to the completed purchase method business combination
with Bancshares, and (iv) the pro forma combined condensed statement of
condition of BancTrust and subsidiaries as if such combination had occurred on
December 31, 1997.
19
<PAGE>
This pro forma summary should be read in conjunction with the
accompanying notes and the separate consolidated statements of condition of
BancTrust incorporated by reference herein and of Bancshares, which are included
herein. The pro forma information provided below may not be indicative of future
results.
<TABLE>
<CAPTION>
December 31, 1997
------------------------------------------------------------
Consolidated Consolidated
The Peoples Merchants Pro Forma
BancTrust & Planters Adjustments Combined
Company, Inc. Bancshares, Inc. (Deductions) Total
------------- ---------------- ------------ ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks................................ $ 13,984 $ 1,934 $ 15,918
Federal funds sold and
securities purchased under
agreements to resell.................................. 6,677 3,405 10,082
Securities available for sale.......................... 69,737 15,304 ($10,085)(1) 92,212
750 (1)
16,506 (2)
Investment securities.................................. 0 16,506 (16,506)(2) 0
Loans, net of unearned income.......................... 258,777 28,406 287,183
Allowance for loan losses.............................. (2,750) (426) (3,176)
---------- ---------- -------- --------
Loans.................................................. 256,027 27,980 284,007
Bank premises and equipment, net....................... 6,589 368 1,382 (1) 8,339
Other real estate owned, net........................... 243 0 243
Intangibles............................................ 666 0 9,096 (1) 9,762
Other assets........................................... 7,439 847 8,286
--------- --------- -------- --------
Total assets........................................... $ 361,362 $ 66,344 $ 1,143 $428,849
========= ========= ======= ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Noninterest-bearing deposits........................... $ 49,897 $ 5,800 $ 55,697
Interest-bearing deposits.............................. 248,211 48,993 297,204
Federal funds purchased and
securities sold under
agreements to repurchase.............................. 13,642 0 13,642
Other borrowed funds................................... 8,297 0 $10,000 (1) 18,297
Other liabilities...................................... 4,083 892 1,802 (1) 6,777
--------- --------- ------- -------
Total liabilities...................................... 324,130 55,685 11,802 391,617
Common stock........................................... 347 23 (23) 347
Preferred stock........................................ 0 1 (1)(1) 0
Additional paid in capital............................. 6,739 1,098 (1,098)(1) 6,739
Treasury stock......................................... (1,136) (338) 338 (1) (1,136)
Retained earnings...................................... 31,407 9,797 (9,797)(1) 31,407
Net unrealized gain (loss) on
securities............................................ (125) 78 (78)(1) (125)
--------- --------- -------- --------
Total equity........................................... 37,232 10,659 (10,659) 37,232
--------- --------- -------- --------
Total liabilities and equity........................... $ 361,362 $ 66,344 $ 1,143 $428,849
========= ========= ======= ========
Capital ratios:
Capital ratio......................................... 10.91% 7.18%
Tangible leverage ratio............................... 10.88% 6.90%
Tier One capital ratio*............................... 13.50% 8.88%
Total capital ratio*.................................. 14.51% 9.91%
</TABLE>
*Based on risk-weighted assets.
20
<PAGE>
MERCHANTS & PLANTERS BANCSHARES, INC
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1997
COMPLETED BUSINESS COMBINATION
Merchants & Planters Bancshares, Inc. (Purchase)
(1) To assign the amount by which the estimated value of BancTrust's
investment in Bancshares is in excess of the historical carrying value of the
net assets acquired, based on the estimated fair value of such assets:
<TABLE>
<S> <C>
Equity in carrying value of net assets of Bancshares.................................................... $10,659
Adjustments to state assets at fair value:
Write-up of bank premises and equipment............................................................ 1,382
Write-up of investment securities to market........................................................ 750
Recognition of core deposit intangible............................................................. 2,740
Tax effect of purchase adjustment....................................................................... (1,802)
Goodwill................................................................................................ 6,356
-------
9,426
Adjusted equity in carrying value of net assets....................................... $20,085
=======
Allocated as follows:
Other borrowed funds............................................................................... $10,000
Investment securities liquidated to finance acquisition............................................ 10,085
-------
$20,085
=======
(2) To reclassify investment securities of Bancshares to securities
available for sale in conformity with BancTrust's investment portfolio:
Investment securities available for sale....................................................... $16,506
Investment securities held to maturity......................................................... (16,506)
-------
$ 0
=======
</TABLE>
21
<PAGE>
THE PEOPLES BANCTRUST COMPANY, INC. AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENTS OF INCOME (Unaudited)
(In thousands)
The following summary includes (i) the condensed consolidated statements of
income of BancTrust and subsidiary for the year ended December 31, 1997, (ii)
the condensed consolidated statements of income of the completed business
combination with Bancshares for the year ended December 31, 1997, (iii)
adjustments to give effect to the purchase method business combination with
Bancshares, and (iv) the pro forma combined condensed statements of income of
BancTrust and subsidiaries as if such combination had occurred on January 1,
1997.
These pro forma statements should be read in conjunction with the
accompanying notes and the separate consolidated statements of income of
BancTrust, incorporated herein, and Bancshares, incorporated herein. The pro
forma information provided may not necessarily be indicative of future results.
22
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
-----------------------------------------------------------------
Consolidated Consolidated
The Peoples Merchants Pro Forma
BancTrust & Planters Adjustments Combined
Company, Inc. Bancshares (Deductions)(1) Total
------------- ---------- --------------- -----
<S> <C> <C> <C> <C>
Interest income...................... $ 27,418 $ 4,808 $ (565) $ 31,661
Interest expense..................... 11,765 2,297 675 14,737
---------- ---------- --------- ----------
Net interest income.................. 15,653 2,511 (1,240) 16,924
Provision for loan losses............ 1,732 38 1,770
---------- ---------- --------- ----------
Net interest income after
provision for loan losses......... 13,921 2,473 (1,240) 15,154
---------- ---------- --------- ----------
Noninterest income................... 4,136 375 4,511
Applicable income taxes.............. 12,099 1,648 894 14,641
---------- ---------- --------- ----------
Income before income taxes........... 5,958 1,200 (2,134) 5,024
Applicable income taxes.............. 1,955 343 (696) 1,602
---------- ---------- --------- ----------
Net income........................... $ 4,003 $ 857 $ (1,438) $ 3,422
========== ========== ========= ==========
Average diluted shares
outstanding....................... 3,426,660 21,159 (21,159) 3,426,660
Earnings per share -
diluted........................... $ 1.17 $ 40.08 $ 1.00
</TABLE>
23
<PAGE>
PRO FORMA ADJUSTMENTS: (IN THOUSANDS)
Completed business combination
(1) Adjustments applicable to the purchase method business combination with
Brancshares:
<TABLE>
<CAPTION>
Year Ended
December 31, 1997
---------------------
<S> <C>
Increase in expenses:
Interest expense on funds borrowed for transaction.................................... $ (675)
Amortization of core deposit tangible (10 year period, accelerated method)............ (548)
Depreciation of fixed asset write-up (15 year period)................................. (92)
Amortization of goodwill (25 year period)............................................. (254)
----------
(1,569)
Decrease in income:
Lost earnings from liquidation of investment securities............................... (565)
Net decrease in income before tax......................................................... (2,134)
Tax effect of the pro forma adjustments................................................... 696
----------
Net decrease in income.................................................................... $ (1,438)
==========
</TABLE>
24
