The Selma Times-Journal

In a filing Monday with the Securities and Exchange Commission, a group known as “Stockholders for Progress” added its own list of candidates to the board of directors of Peoples BancTrust Company, the parent company of The Peoples Bank and Trust Company headquartered in Selma.

The group is led by former CEO Richard Morthland, who owns 14 percent of the company’s stock.

In the filing, the group said, “We believe that the Board of Directors … has not acted in the best interests of the stockholders, and has failed to take advantage of significant corporate opportunities, at substantial cost to the stockholders in terms of stockholder value.”

The filing also stated that Morthland and other members of the Morthland family may “engage in discussions or negotiations… to encourage a sale, merger, change of control or other fundamental transaction.”

In its filing, the group “Stockholders for Progress” listed their nominees to the board and plans to present the candidates at the company’s annual meeting.

The annual meeting had been scheduled for May 8, but has been postponed. A new annual meeting date for the meeting has not been set.

The slate of candidates include George Needham of Valley Grande; George Walthall Jr. of Prattville; Gary Fuller of Eclectic; Rickman Williams Jr. of Selma; Kenneth Chesser of Georgiana; Kaye Williams of Alexandria, Va.; William Walker of Dadeville; Barry Holt of Montgomery and Bobby Leach of Centreville.

When contacted, Morthland declined to comment, citing SEC rules that prevented him from doing so.

In December 2006, Peoples BankTrust announced it had retained Sandler O’Neill to assist its board in evaluating strategic alternatives available to the company including

a possible sale or merger of the bank.

In a letter to shareholders that was filed with the SEC earlier this month, Ted Henry, Peoples’ chairman of the board, said that while the bank was in the process of retaining Sandler O’Neill, “Peoples received an unsolicited proposal from another bank holding company to acquire Peoples at a substantial premium. This proposal was instigated by Mr. Morthland.”

The letter further said that before negotiations with the unnamed bank holding company could continue, the proposal to purchase Peoples was withdrawn because “the prospective acquirer’s stock price declined approximately 15 percent.”

Henry alluded to rumors that Peoples had declined the offer, which he said in the letter were false.

He went on to say the Board had determined that shareholder value could be maximized best by continuing to operate independently and by expanding lending operations and the bank’s “footprint into strategic locations with superior demographics for growth.”

He added that in 2006 the bank’s loan portfolio had grown 28 percent resulting in record

net income and a 21 percent growth in earnings per share, which he said the results were “in stark contrast to the results under Mr. Morthland’s tenure as CEO, where in his final five years, the value of a share of Peoples’ stock had declined from $21.93 to $11.65” making it necessary to restructure the bank’s loan portfolio.

Attempts to reach Henry for further comment were unsuccessful.

Peoples announced earnings Tuesday that showed net income for the three months ending March 31, of $2.2 million compared to $2.5 million for the same period in 2006 with net interest income for the quarter totaling $7.5 million, compared to $6.9 million in the 2006 quarter. Earnings per share were 37 cents compared with 42 cents for the same period last year.

“We believe our first quarter results contain some encouraging information with regard to core earnings,” said Don J. Giardina, president and chief executive officer, in a news release. “Both net interest income and non-interest income increased over first quarter 2006, and while salaries and benefits expense increased; it was primarily the result of our continued expansion into higher growth markets.”

Giardina also said in the release the company had adopted an accounting standard that allowed the company to restructure the majority of its investment securities portfolio to achieve significantly higher yields.

“We continue to focus heavily on expansion efforts,” Giardina said. “We believe opportunities exist both within the state and beyond to serve some very attractive and dynamic markets. Our business plan calls for growth, both internal and via strategic acquisitions, that will allow us to further leverage our infrastructure and increase operating efficiencies and economies of scale.”

Peoples Bank & Trust Co. has 23 offices in 10 counties in Alabama and has more than $900 million in assets.