A COPY OF THE COMPANY’S 2004 ANNUAL REPORT TO SHAREHOLDERS WHICH INCLUDES THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) IS ENCLOSED WITH THIS PROXY STATEMENT. IF SUCH ANNUAL REPORT IS NOT SO INCLUDED, PLEASE ADDRESS NOTIFICATION TO M. SCOTT PATTERSON, SECRETARY, THE PEOPLES BANCTRUST COMPANY, INC., P.O. BOX 799, SELMA, ALABAMA 36702-0799.

PROPOSAL I — ELECTION OF DIRECTORS

With respect to the election of directors, each shareholder of record on the voting record date is entitled to one vote for each share of Common Stock held. There are no cumulative voting rights.

The Articles of Incorporation and Bylaws of the Company each provide that the number of directors of the Company shall be a variable range which is fixed at a minimum number of three and a maximum number of eighteen, the exact number to be fixed or changed from time to time, within the minimum and maximum, by the Board of Directors. The Board of Directors has determined that the number of directors be ten persons effective at the Annual Meeting. Directors are elected to serve until the next annual meeting of the shareholders and until their successors are elected and qualified. There are no arrangements or understandings between the Company and any person pursuant to which such person has been or will be elected a director.

At the Annual Meeting ten directors will be elected. The Nominating and Corporate Governance Committee of the Board of Directors has nominated all current directors, except Dr. Clyde B. Cox, Jr. who will not stand for election at the Annual Meeting, for a term of one year and until their successors are elected and have qualified. Subsequent to the Annual Meeting, Dr. Cox will become a director emeritus of the Bank. It is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election as directors of each of the nominees listed below for a one-year term, unless otherwise directed by the shareholder. The Board of Directors believes that each of such nominees will stand for election and will serve if elected as a director. However, if any person nominated is unable to serve or for good cause will not serve, the proxies will be voted for the election of such other person or persons as the Nominating and Corporate Governance Committee may recommend, or the size of the Board of Directors may be reduced to eliminate the vacancy.

Alabama law provides that directors shall be elected by a majority of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present when the vote is taken.

Directors

The following table sets forth certain information with respect to the Company’s directors and nominees.

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The principal occupation(s) and business experience for the past five years of each director and nominee are set forth below:

Clyde B. Cox, Jr. is a retired surgeon.

Johnny Crear is retired. Previously, he was President of Crear, Inc., the operator of a convalescent home.

Harry W. Gamble, Jr. is a member of the law firm of Gamble, Gamble, Calame and Chittom, L.L.C.

Ted M. Henry is Chairman and Chief Executive Officer of Henry Brick Company, Inc. Mr. Henry was elected Chairman of the Board of Directors of each of the Company and the Bank effective January 1, 2003.

Elam P. Holley, Jr. served as President and Chief Operating Officer of the Bank from 1994 until January 1, 2003, when he was elected President and Chief Executive Officer. Mr. Holley served as President and Chief Operating Officer of the Company from 1997 until January 1, 2003, when he was elected President and Chief Executive Officer.

Edith Morthland Jones has served as film liaison for the Selma-Dallas County Chamber of Commerce since 1988. Prior to that, she served as Director of Tourism and Travel for the Selma-Dallas County Chamber of Commerce. She is the daughter of Rex J. Morthland, the sister of Richard P. Morthland and the sister-in-law of M. Scott Patterson, Executive Vice President, Investment Officer and Secretary of the Bank and Executive Vice President and Secretary of the Company.

D. Joseph McInnes has served as Director of Transportation for the Department of Transportation of the State of Alabama since January 21, 2003. Prior to his current position, he had a 25 year career at Blount International, Inc., serving as Executive Vice President, Chief Administrative Officer and Corporate Secretary, as well as other positions. He has also served as President and Director of The Blount Foundation, Inc., as Chairman and Director of The Roberts and Mildred Blount Foundation, Inc., and Chairman, Chief Executive Officer, and Director of The Blount Cultural Park, Inc.

Thomas E. Newton is a partner in the commercial real estate development firm of Newton, Oldacre, and McDonald, L.L.C., Prattville, Alabama.

David Y. Pearce has been the owner of Pearce Catfish Farms since 1971 and President of Pearce Catfish Farms, Inc. since 1993.

Julius E. Talton, Jr. is President of Talton Communications, Inc. an internet service provider. He is the son of Julius E. Talton, Sr.

Daniel P. Wilbanks is engaged in the practice of family dentistry in Tallassee, Alabama. Dr. Wilbanks served as a director of Elmore County Bancshares, Inc., the holding company for The Bank of Tallassee, prior to their merger in 1998 with the Company and the Bank, respectively.

Corporate Governance and Other Matters

Board of Director and Shareholder Meetings . The Board of Directors met 12 times during the fiscal year ended December 31, 2004. All directors attended at least 75% of the Board of Directors meetings and assigned committee meetings in 2004. The Company encourages directors attendance at its annual shareholder meetings and requests that directors make reasonable efforts to attend such meetings. All of the members of the Board of Directors attended the 2004 annual meeting of the shareholders.

Board of Director Independence . Each year, the Board of Directors reviews the relationships that each director has with the Company and with other parties. Only those directors who do not have any of the categorical relationships that preclude them from being independent within the meaning of applicable Nasdaq rules and who the Board of Directors affirmatively determines have no relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director are considered to be “independent directors.” The Board of Directors has reviewed a number of factors to evaluate the independence of each of its members. These factors include its members’ relationships with the Company and its competitors, suppliers and customers; their relationships with management and other directors; the relationships their current and former employers have with the Company; and the relationships between the Company and other companies of which the Company’s Board

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members are directors or executive officers. After evaluating these factors, the Board of Directors has determined that Drs. Cox and Wilbanks and Messrs. Crear, Henry, McInnes, Newton, Pearce and Talton are independent directors of the Company within the meaning of applicable National Association of Securities Dealers, Inc. (“NASD”) listing standards.

Independent members of the Board of Directors of the Company met in executive session without management present four times during the fiscal year ended December 31, 2004, and are scheduled to do so at least two times per year.

Shareholder Communications . Shareholders may communicate directly with members of the Board of Directors or the individual chairman of standing Board of Directors committees by writing directly to those individuals at the following address: 310 Broad Street, Selma, Alabama 36701. The Company’s general policy is to forward, and not to intentionally screen, any mail received at the Company’s corporate office that is sent directly to an individual, unless the Company believes the communication may pose a security risk. The Board of Directors reserves the right to revise this policy in the event it is abused, becomes unworkable or otherwise does not efficiently serve the policy’s purpose.

Code of Ethics . The Board of Directors has adopted a Code of Ethics that applies to all officers, other employees and directors. A link to the Code of Ethics is on the Investor Relations portion of the Company’s website at http://www.peoplesbt.com .

Committees of the Board of Directors

The Board of Directors has a standing Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. The Board of Directors has determined that all of the directors who serve on these committees are independent within the meaning of applicable Securities and Exchange Commission (“SEC”) rules and NASD listing standards. The Board of Directors has adopted a charter for each of the three standing committees.

Audit Committee . The current members of the Audit Committee are Mr. Crear, who serves as the chairman, and Messrs. Henry and Talton. Each of the members of the committee is independent within the meaning of applicable SEC and Nasdaq rules. The Board of Directors has determined that Mr. Henry is an “audit committee financial expert” as defined in Item 401(h) of Regulation S-K.

The Audit Committee has oversight responsibility for the quality and integrity of the Company’s financial statements. The Audit Committee meets privately with the independent auditors, has the sole authority to retain and dismiss the independent auditors and reviews their performance and independence from management. The independent auditors have unrestricted access and report directly to the committee. The Audit Committee met 12 times during 2004. The primary functions of the Audit Committee are to oversee: (i) the audit of the financial statements of the Company provided to the SEC, the shareholders and the general public; (ii) the Company’s internal financial and accounting processes; and (iii) the independent audit process. Additionally, the Audit Committee has responsibilities relating to: (i) registered public accounting firms; (ii) complaints relating to accounting, internal accounting controls or auditing matters; (iii) authority to engage advisors; and (iv) funding as determined by the audit committee. These and other aspects of the Audit Committee’s authority are more particularly described in the Audit Committee Charter adopted by the Board of Directors and attached as Appendix A to the Company’s Proxy Statement furnished in connection with the 2004 annual meeting of the shareholders and filed with the SEC on April 9, 2004.

The Audit Committee has adopted a formal policy concerning approval of audit and non-audit services to be provided to the Company by its independent auditor. The policy requires that all services to be provided by the independent auditor, including audit services and permitted audit-related and non-audit services, must be pre-approved by the Audit Committee. The Audit Committee pre-approved all audit and non-audit services provided during 2004.

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Compensation Committee . The members of the Compensation Committee of the Company and the Bank are Mr. Henry, who serves as the chairman, and Messrs. Crear, Newton and Pearce, each of whom is a non-employee director and is also independent within the meaning of NASD listing standards. The Compensation Committee met three times during 2004. The functions of the Compensation Committee include making recommendations to the Board of Directors concerning compensation, including incentive compensation, of the executive officers. The Compensation Committee also administers the 1999 Stock Option Plan.

Nominating and Corporate Governance Committee . The independent members of the Board of Directors serve as the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for evaluating and recommending individuals for election or re-election to the Board of Directors, including those recommendations submitted by shareholders, the evaluation of the performance of the Board of Directors and its committees, and the evaluation and recommendation of corporate governance policies. The Nominating and Corporate Governance Committee Charter, attached as Appendix B to the Company’s Proxy Statement furnished in connection with the 2004 annual meeting of the shareholders and filed with the SEC on April 9, 2004, is not currently available on the Company’s website. In 2004, the Nominating and Corporate Governance Committee held one meeting.

It is a policy of the Nominating and Corporate Governance Committee that candidates for director possess the highest personal and professional integrity, have demonstrated exceptional ability and judgment and have skills and expertise appropriate for the Company and serving the long-term interests of the Company’s shareholders. The committee’s process for identifying and evaluating nominees is as follows: (1) in the case of incumbent directors whose terms of office are set to expire, the committee reviews such directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance, and any related of party transactions with the Company during the applicable time period; and (2) in the case of new director candidates, the committee first conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board of Directors. The committee meets to discuss and consider such candidates’ qualifications, including whether the nominee is independent within the meaning of Nasdaq rules, and then selects a candidate for recommendation to the Board of Directors by majority vote. In seeking potential nominees, the Nominating and Corporate Governance Committee uses its and management’s network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. To date, the Nominating and Corporate Governance Committee has not paid a fee to any third party to assist in the process of identifying or evaluating director candidates, nor has the committee rejected a timely director nominee from a shareholder(s) holding more than 5% of the Company’s voting stock.

The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders, provided the shareholders follow the procedures set forth in the Company’s Bylaws. The committee does not intend to alter the manner in which it evaluates candidates, including the criteria set forth above, based on whether the candidate was recommended by a shareholder or otherwise.

The Company’s Bylaws provide that, to be timely, a shareholder’s notice of nomination must be delivered to or mailed and received at the principal executive offices of the Company not less than 30 days nor more than 90 days prior to an annual meeting; provided, however, that in the event that less than 45 days’ notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder, to be timely, must be so received not later than close of business on the 15 ^th day following the date on which notice is mailed or prior public disclosure is made of the date of the annual meeting. A shareholder’s notice of nomination must also set forth (i) as to each person who the shareholder proposes to nominate for election as a director, (a) the name, age, business address and residence address of such person, (b) the principal occupation or employment of such person, (c) the class and number of shares of the Company which are beneficially owned by such person, and (d) any other information relating to such person that is required to be disclosed in solicitations or proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A, or any successor regulation, under the Securities Exchange Act of 1934 (including without limitation such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (ii) as to the shareholder giving notice, (a) the name and address, as they appear on the Company’s books, of such shareholder, and (b) the class and number of shares of the Company which are beneficially owned by such shareholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Company that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee. Shareholder nominations may be proposed by any shareholder eligible to vote at an annual meeting, provided the notice is timely and complies with the informational requirements of the Bylaws. To be timely under the Bylaws, nominations by any shareholder eligible to vote at the Annual Meeting must be received by the Company on or before April 10, 2005.

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The Nominating and Corporate Governance Committee may reject any nomination by a shareholder not made in accordance with the requirements of the Company’s Bylaws. Notwithstanding the foregoing procedures, if neither the Board of Directors nor such committee makes a determination as to the validity of any nominations by a shareholder, the chairman of the annual meeting shall, if the facts warrant, determine at the annual meeting whether the nomination was made in accordance with the terms of the Bylaws.

Executive Committees. The Board of Directors of each of the Company and the Bank has established an Executive Committee which, when the Board of the Company or the Bank is not in session, may exercise all of the authority of the Board except to the extent that such authority is limited by Alabama law or Board resolution. Members of the Executive Committee of each of the Company and the Bank are Ted M. Henry (Chairman), Harry W. Gamble, Jr. and David Y. Pearce. During 2004, the Executive Committee of the Company and the Bank each conducted 11 meetings.