AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND BETWEEN

THE PEOPLES BANCTRUST COMPANY, INC.

AND

BANCTRUST FINANCIAL GROUP, INC.

Dated as of

May 21, 2007

TABLE OF CONTENTS

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made and entered into as of May 21, 2007 by and between THE PEOPLES BANCTRUST COMPANY, INC. (“ Peoples ”), a corporation organized and existing under the laws of the State of Alabama, with its principal office located in Selma, Alabama, and BANCTRUST FINANCIAL GROUP, INC. (“ BancTrust” ), a corporation organized and existing under the laws of the State of Alabama, with its principal office located in Mobile, Alabama.

Preamble

The Boards of Directors of Peoples and BancTrust are of the opinion that the transactions described herein are in the best interests of the Parties and their respective shareholders. This Agreement provides for the merger of Peoples with and into BancTrust. At the effective time of such merger, the outstanding shares of the capital stock of Peoples shall be converted into the right to receive cash and shares of the common stock of BancTrust (except as provided herein). As a result, shareholders of Peoples shall become shareholders of BancTrust and the subsidiaries of Peoples shall continue to conduct their respective businesses and operations as subsidiaries of BancTrust. The transactions described in this Agreement are subject to the approvals of the shareholders of Peoples and BancTrust, the Board of Governors of the Federal Reserve System and certain state regulatory authorities, and to the satisfaction of certain other conditions described in this Agreement. It is the intention of the Parties to this Agreement that the Merger for federal income tax purposes shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code.

As a condition and inducement to BancTrust’s willingness to enter into this Agreement, each of Peoples’ directors and certain Peoples’ shareholders are executing and delivering to BancTrust an agreement in substantially the form of Exhibit 1-A or Exhibit 1-B hereto, as applicable. As a condition and inducement to Peoples’ willingness to enter into this Agreement, each of BancTrust’s directors is executing and delivering to Peoples an agreement in substantially the form of Exhibit 1-C hereto. Such agreements are herein referred to individually as a “ Support Agreement ” and collectively as “ Support Agreements .”

NOW, THEREFORE , in consideration of the above and the mutual warranties, representations, covenants and agreements set forth herein, the Parties agree as follows:

DEFINITIONS

Except as otherwise provided herein, the capitalized terms set forth below (in their singular and plural forms as applicable) shall have the following meanings:

“ABCA” shall mean the Alabama Business Corporation Act.

“Acquisition Proposal” with respect to a Party shall mean any tender offer or exchange offer or any proposal for a merger, acquisition of all of the stock or assets of, or other business combination involving such Party or any of its Subsidiaries or the acquisition of a substantial equity interest in, or a substantial portion of the assets of, such Party or any of its Subsidiaries.

“Acquisition Transaction” shall mean (a) the merger, consolidation or other business combination of BancTrust with or into another person or a reorganization or recapitalization of BancTrust, or (b) the direct or indirect acquisition by a person (including a “group” within the meaning of Section 13(d)(3) of the 1934 Act) not theretofore an Affiliate of BancTrust of (1) more than fifty percent (50%) of the voting securities of BancTrust, (2) the right to elect more than fifty percent (50%) of the BancTrust board of directors or (3) all or substantially all of BancTrust’s assets.

“Affiliate” of a Person shall mean: (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person; (ii) any officer, director, partner, employer, or direct or indirect beneficial owner of any 10% or greater equity or voting interest of such Person; or (iii) any other Person for which a Person described in clause (ii) acts in any such capacity.

“Agreement” shall mean this Agreement and Plan of Merger, including the Exhibits delivered pursuant hereto and incorporated herein by reference. References to “the date of this Agreement,” “the date hereof” and words of similar import shall refer to the date this Agreement was first executed, May 21, 2007.

“Allowances” shall have the meaning provided in Section 5.10 of this Agreement.

“Articles of Merger” shall mean the Articles of Merger to be executed by BancTrust and filed with the Secretary of State of the State of Alabama relating to the Merger as contemplated by Section 1.1 of this Agreement.

“Assets” of a Person shall mean all of the assets, properties, businesses and rights of such Person of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued or contingent, or otherwise relating to or utilized in such Person’s business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located.

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“Average Closing Price” shall have the meaning provided in Section 3.1 of this Agreement.

“BancTrust Common Stock” shall mean the $.01 par value common stock of BancTrust.

“BancTrust Companies” shall mean, collectively, BancTrust and all BancTrust Subsidiaries.

“BancTrust Disclosure Memorandum” shall mean the written information entitled “BancTrust Disclosure Memorandum” delivered to Peoples prior to the execution of this Agreement describing in reasonable detail the matters contained therein.

“BancTrust Financial Statements” shall mean (i) the consolidated balance sheets (including related notes and schedules) of BancTrust as of March 31, 2007 (unaudited) and December 31, 2006 (audited), and the related statements of income, changes in shareholders’ equity, and cash flows (including related notes and schedules) for the three (3) months ended March 31, 2007 (unaudited) and the year ended December 31, 2006 (audited), as delivered by BancTrust to Peoples, and (ii) the consolidated balance sheets of BancTrust (including related notes and schedules, if any) and related statements of income, changes in shareholders’ equity, and cash flows (including related notes and schedules, if any) delivered by BancTrust to Peoples with respect to periods ending subsequent to March 31, 2007.

“BancTrust Subsidiaries” shall mean the Subsidiaries of BancTrust and any corporation, bank, savings association, or other organization acquired as a Subsidiary of BancTrust in the future and owned by BancTrust at the Effective Time.

“BHC Act” shall mean the federal Bank Holding Company Act of 1956, as amended.

“Cash Payment” shall have the meaning provided in Section 3.1(b) of this Agreement.

“Cash Option Consideration” shall have the meaning provided in Section 3.6 of this Agreement

“Closing” shall mean the closing of the transactions contemplated hereby, as described in Section 1.2 of this Agreement.

“Consent” shall mean any consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit.

“Contract” shall mean any written or oral agreement, arrangement, authorization, commitment, contract, indenture, instrument, lease, obligation, plan, practice, restriction, understanding or undertaking of any kind or character, or other document to which any Person is a party or that is binding on any Person or its capital stock, Assets or business.

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“CRA” shall have the meaning provided in Section 5.14 of this Agreement.

“Creditor’s Laws” shall have the meaning provided in Section 5.2(a) of this Agreement.

“Default” shall mean (i) any breach or violation of or default under any Contract, Order or Permit, (ii) any occurrence of any event that with the passage of time or the giving of notice or both would constitute a breach or violation of or default under any Contract, Order or Permit, or (iii) any occurrence of any event that with or without the passage of time or the giving of notice would give rise to a right to terminate or revoke, change the current terms of, or renegotiate, or to accelerate, increase, or impose any Liability under, any Contract, Order or Permit, where, in any such event, such Default is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on a Party.

“Determination Date” shall have the meaning provided in Section 3.1 of this Agreement.

“Effective Time” shall mean the date and time at which the Merger becomes effective as defined in Section 1.3 of this Agreement.

“Environmental Laws” shall mean all Laws which are administered, interpreted or enforced by the United States Environmental Protection Agency and state and local agencies with jurisdiction over pollution or protection of the environment.

“Equitable Discretion” shall have the meaning provided in Section 5.2(a) of this Agreement.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate” shall have the meaning provided in Section 5.20 of this Agreement.

“ ERISA Plan” shall have the meaning provided in Section 5.20 of this Agreement.

“Exchange Agent” shall have the meaning provided in Section 4.1 of this Agreement.

“Exchange Ratio” shall have the meaning given such term in Section 3.1 of this Agreement.

“Exhibits” shall mean the numbered Exhibits to this Agreement, which Exhibits are hereby incorporated by reference herein and made a part hereof, and may be referred to in this Agreement and any other related instrument or document without being attached thereto.

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“GAAP” shall mean generally accepted accounting principles in the United States of America, consistently applied during the periods involved.

“Hazardous Material” shall mean (i) any hazardous substance, hazardous material, hazardous waste, regulated substance or toxic substance (as those terms are defined by any applicable Environmental Laws) and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum products or oil (and specifically shall include asbestos requiring abatement, removal or encapsulation pursuant to requirements of governmental authorities and any polychlorinated biphenyls).

“Intellectual Property” shall have the meaning provided in Section 5.13(a) of this Agreement.

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

“Knowledge” as used with respect to a Person shall mean the actual Knowledge of the Chairman, President, Chief Financial Officer, Chief Accounting Officer, Chief Credit Officer, General Counsel, if any, any Assistant or Deputy General Counsel, if any, or any Executive Vice President of such Person.

“Law” shall mean any code, law, ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a Person or its Assets, Liabilities or business, including, without limitation, those promulgated, interpreted or enforced by any of the Regulatory Authorities.

“Liability” shall mean any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including, without limitation, costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the ordinary course of business) of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise.

“Lien” shall mean any conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation, restriction, security interest, title retention or other security arrangement, or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any property or property interest, other than (i) Liens for current property Taxes not yet delinquent, (ii) for depository institution Subsidiaries of a Party, pledges to secure deposits and other Liens incurred in the ordinary course of the banking business, and (iii) Liens which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on a Party.

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“Litigation” shall mean any action, arbitration, cause of action, claim, complaint, criminal prosecution, demand letter, governmental or other examination or investigation, hearing, inquiry, administrative or other proceeding, or notice (written or oral) by any Person alleging potential Liability or requesting information relating to or affecting a Party, its business, its Assets (including, without limitation, Contracts related to it), or the transactions contemplated by this Agreement, but shall not include regular, periodic examinations of depository institutions and their Affiliates by Regulatory Authorities.

“Loan Property” shall mean any property owned by the Party in question or by any of its Subsidiaries or in which such Party or Subsidiary holds a security interest, and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

“Material” and derivations thereof for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question; provided that any specific monetary amount stated in this Agreement shall determine Materiality in that instance.

“Material Adverse Effect” on a Party shall mean any effect that is material and adverse on (a) the financial position or business of such Party and its Subsidiaries, taken as a whole, or (b) the ability of such Party to perform its obligations under this Agreement or to consummate the Merger or the other transactions contemplated by this Agreement, provided that “Material Adverse Effect” shall not be deemed to include any effect of (i) changes in banking and similar Laws of general applicability or interpretations thereof by courts or governmental authorities, (ii) changes in generally accepted accounting principles or regulatory accounting principles generally applicable to banks and their holding companies or changes in accounting methods of, or elections of such methods by, a Party, (iii) changes resulting from changes in interest rates and/or general economic conditions, (iv) the Merger (including the announcement thereof) and compliance with, or engaging in transactions required or expressly permitted by, the provisions of this Agreement (including without limitation, the payment of any fees or costs in connection with this Agreement and the transactions contemplated hereby, including payments to be made pursuant to employment and severance agreements that have been Previously Disclosed or are made or entered into with the prior informed written consent of BancTrust in the manner provided in Section 7.2 of this Agreement); or (v) other actions that are taken with the prior informed written consent of the other Party in contemplation of the transactions contemplated hereby, provided that the effect of any such action is reasonably foreseeable.

“Merger” shall mean the merger of Peoples with and into BancTrust referred to in Section 1.1 of this Agreement.

“Merger Consideration” shall have the meaning provided in Section 3.1(b).

“NASD” shall mean the National Association of Securities Dealers, Inc.

“Nasdaq” shall mean the Nasdaq Stock Market, LLC.

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“1933 Act” shall mean the Securities Act of 1933, as amended.

“1934 Act” shall mean the Securities Exchange Act of 1934, as amended.

“Order” shall mean any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling, or writ of any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency or Regulatory Authority.

“Participation Facility” shall mean any facility in which the Party in question or any of its Subsidiaries participates in the management and, where required by the context, includes the owner or operator or such property, but only with respect to such property.

“Party” shall mean either Peoples or BancTrust, and “Parties” shall mean both Peoples and BancTrust.

“Peoples Benefit Plans” shall have the meaning set forth in Section 5.20 of this Agreement.

“Peoples Common Stock” shall mean the $.10 par value common stock of Peoples.

“Peoples Companies” shall mean, collectively, Peoples and all Peoples Significant Subsidiaries.

“Peoples Disclosure Memorandum” shall mean the written information entitled “Peoples Disclosure Memorandum” delivered to BancTrust prior to the execution of this Agreement describing in reasonable detail the matters contained therein.

“Peoples Financial Statements” shall mean (i) the consolidated balance sheets (including related notes and schedules) of Peoples as of March 31, 2007 (unaudited) and December 31, 2006 (audited), and the related statements of income, changes in shareholders’ equity, and cash flows (including related notes and schedules) for the three (3) months ended March 31, 2007 (unaudited) and the year ended December 31, 2006 (audited), as delivered by Peoples to BancTrust, and (ii) the consolidated balance sheets of Peoples (including related notes and schedules, if any) and related statements of income, changes in shareholders’ equity, and cash flows (including related notes and schedules, if any) delivered by Peoples to BancTrust with respect to periods ending subsequent to March 31, 2007.

“Peoples Representatives” shall have the meaning set forth in Section 8.8(a) of this Agreement.

“Peoples Subsidiaries” shall mean the Subsidiaries of Peoples, which shall include the Peoples Subsidiaries described in Section 5.5 of this Agreement and any corporation, bank, savings association, or other organization acquired as a Subsidiary of Peoples in the future and owned by Peoples at the Effective Time.

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“Permit” shall mean any federal, state, local, or foreign governmental approval, authorization, certificate, easement, filing, franchise, license, notice, permit, or right to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person or its securities, Assets or business.

“Person” shall mean a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, group acting in concert, or any person acting in a representative capacity.

“Previously Disclosed” shall mean information delivered in the Peoples Disclosure Memorandum or the BancTrust Disclosure Memorandum, as applicable.

“Proxy Statement” shall mean the joint proxy statement used by each of Peoples and BancTrust to solicit the approval of its shareholders of the transactions contemplated by this Agreement and shall include the prospectus used by BancTrust in connection with the issuance of BancTrust Common Stock to holders of Peoples Common Stock and which shall be filed with the SEC as part of the Registration Statement.

“Registration Statement” shall mean the Registration Statement on Form S-4, or other appropriate form, including any pre-effective or post-effective amendments or supplements thereto, filed with the SEC by BancTrust under the 1933 Act in connection with the transactions contemplated by this Agreement.

“Regulatory Authorities” shall mean, collectively, the Federal Trade Commission, the United States Department of Justice, the Board of the Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, all state regulatory agencies having jurisdiction over the Parties and their respective Subsidiaries, the NASD, and the SEC.

“Risk Management Instruments” shall have the meaning set forth in Section 5.9 of this Agreement.

“SEC” shall mean the United States Securities and Exchange Commission.

“SEC Documents” shall mean all reports and registration statements filed, or required to be filed, by a Party or any of its Subsidiaries with any Regulatory Authority pursuant to the Securities Laws.

“Securities Laws” shall mean the 1933 Act, the 1934 Act, the Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules and regulations of any Regulatory Authority promulgated thereunder.

“Shareholders’ Meetings” shall mean the respective meetings of the shareholders of BancTrust and Peoples to be held pursuant to Section 8.1 of this Agreement, including any adjournment or adjournments thereof.

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“Software” shall have the meaning provided in Section 5.10(a) of this Agreement.

“Subsidiary” and “Significant Subsidiary” have the meanings ascribed to those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.

“Suitable Financing” shall mean financing to fund the cash portion of the Merger Consideration and the other expenses of BancTrust incurred in connection with the Merger, (a) in the form of a transaction whereby BancTrust forms a wholly owned trust subsidiary to undertake a private or otherwise exempt offering of trust preferred securities in an amount not less than $38 million at an interest rate not to exceed 7.75% per annum, or (b) in the form of a loan or securities offering for such purpose that is approved by: (i) both Peoples and BancTrust, which approval shall not be unreasonably withheld by either, (ii) by their respective financial advisors who are providing the fairness opinions described in Sections 9.2(f) and 9.3 (f) of this Agreement, and (iii) by the applicable Regulatory Authorities who are required to approve the Merger.

“Superior Proposal” shall mean a bona fide written Acquisition Proposal which the Peoples board of directors concludes in good faith to be more favorable from a financial point of view to its shareholders than the Merger and the other transactions contemplated hereby (1) after receiving the advice of its financial advisors, (2) after taking into account the likelihood of consummation of the proposed transaction on the terms set forth therein (as compared to, and with due regard for, the terms herein) and (3) after taking into account all legal (with the advice of outside counsel), financial (including the financing terms of any such proposal), regulatory (including the advice of outside counsel regarding the potential for regulatory approval of any such proposal) and other aspects of such proposal and any other relevant factors permitted under applicable law.

“Surviving Corporation” shall mean BancTrust as the surviving corporation resulting from the Merger.

“Takeover Laws” shall have the meaning provided in Section 5.27 of this Agreement.

“Taxes” shall mean any federal, state, county, local, foreign and other taxes, assessments, charges, fares, and impositions, including interest and penalties thereon or with respect thereto.

“Trading Day” shall mean a day on which the Global Select Market of Nasdaq is open for trading activities.

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ARTICLE ONE

TRANSACTIONS AND TERMS OF MERGER

1.1 Merger . Subject to the terms and conditions of this Agreement, at the Effective Time, Peoples shall be merged with and into BancTrust in accordance with the provisions of Article 11 of the ABCA and with the effect provided in Section 11.06 of the ABCA (the “ Merger ”). BancTrust shall be the Surviving Corporation resulting from the Merger and shall continue to be governed by the Laws of the State of Alabama. The Merger shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the respective Boards of Directors of Peoples and BancTrust.

1.2 Time and Place of Closing . The Closing will take place at 9:00 A.M. on the third business day (unless the Parties agree to another time or date) after satisfaction or waiver of the conditions set forth in Article Nine, other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions (the “ Closing Date ”). The place of Closing shall be at the offices of Hand Arendall, L.L.C., Mobile, Alabama, or such other place as may be mutually agreed upon by the Parties.

1.3 Effective Time . The Merger and other transactions contemplated by this Agreement shall become effective on the date and at the time the Articles of Merger become effective with the Secretary of State of the State of Alabama (the “ Effective Time ”).

ARTICLE TWO

TERMS OF MERGER

2.1 Articles of Incorporation . The Articles of Incorporation of BancTrust in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation immediately following the Effective Time until otherwise amended or repealed.

2.2 Bylaws . The Bylaws of BancTrust in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation immediately following the Effective Time until otherwise amended or repealed.

2.3 Directors and Officers . The directors of BancTrust in office immediately prior to the Effective Time shall serve as the directors of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of the Surviving Corporation. The officers of BancTrust in office immediately prior to the Effective Time, shall serve as the officers of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of the Surviving Corporation.

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ARTICLE THREE

MANNER OF CONVERTING SHARES

3.1 Conversion of Shares . Subject to the provisions of this Article Three, at the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, the shares of the constituent corporations shall be converted as follows:

(a) Each share of BancTrust Common Stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding from and after the Effective Time.

(b) In accordance with the adjustment mechanisms set forth below, each share of Peoples Common Stock (excluding shares to be cancelled pursuant to Section 3.3 of this Agreement and shares held by shareholders who perfect their dissenters’ rights of appraisal as provided in Section 3.4 of this Agreement) issued and outstanding at the Effective Time shall cease to be outstanding and shall be converted into the right to receive the following Merger Consideration.

(c) So long as the Average Closing Price is not greater than $21.428, or less than $18.019, then each share of Peoples Common Stock shall be converted into the right to receive aggregate Merger Consideration equal to $25.50, comprised of:

(d) In the event that the Average Closing Price is greater than $21.428, but less than or equal to $26.471, then each share of Peoples Common Stock shall be converted into the right to receive aggregate Merger Consideration comprised of:

(e) In the event that the Average Closing Price is less than $18.019, then each share of Peoples Common Stock shall be converted into the right to receive aggregate Merger Consideration comprised of:

(f) In the event that the Average Closing Price is less than $15.584, Peoples shall have the right to terminate this Agreement, as provided in Article Ten hereof.

(g) In the event that the Average Closing Price is greater than $26.471, then each share of Peoples Common Stock shall be converted into the right to receive aggregate Merger Consideration equal to $30.00, comprised of:

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$23.625

the Average Closing Price

(h) For purposes of this Agreement:

(i) “ Exchange Ratio ” means the quotient, rounded to the nearest 1/10,000, equal to the product of (x) $19.125, divided by (y) the Average Closing Price (as defined below);

(ii) “ Average Closing Price ” means the average of the daily last sale prices of BancTrust Common Stock as reported on Nasdaq for the ten (10) consecutive full Trading Days in which shares of BancTrust Common Stock are traded on Nasdaq ending at the close of trading on the Determination Date, rounded to the nearest 1/10 ^th of one cent; and

(iii) “ Determination Date ” means the third Trading Day prior to the date on which the Effective Time occurs.

3.2 Anti-Dilution Provisions . If Peoples changes the number of shares of Peoples Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend or similar recapitalization with respect to such stock and the record date therefor (in the case of a stock dividend) or the effective date thereof (in the case of a stock split or similar recapitalization for which a record date is not established) shall be prior to the Effective Time, the Exchange Ratio shall, to the extent necessary, be proportionately adjusted. If BancTrust changes the number of shares of BancTrust Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, or similar recapitalization with respect to such stock and the record date therefor (in the case of a stock dividend) or the effective date thereof (in the case of a stock split or similar recapitalization for which a record date is not established) shall be prior to the Effective Time, the Exchange Ratio shall, to the extent necessary, be proportionately adjusted.

3.3 Shares Held by Peoples or BancTrust . Each of the shares of Peoples Common Stock held by any Peoples Company or by any BancTrust Company, in each case other than in a fiduciary capacity or as a result of debts previously contracted, shall be canceled and retired at the Effective Time, and no consideration shall be issued in exchange therefor.

3.4 Dissenting Shareholders . Any holder of shares of Peoples Common Stock or BancTrust Common Stock who perfects his dissenters’ rights of appraisal in accordance with and as contemplated by Article 13 of the ABCA shall be entitled to receive the value of such shares in cash as determined pursuant to such provision of Law; provided, however, that no such payment shall be made to any dissenting shareholder unless and until such dissenting shareholder has complied with the applicable provisions of the ABCA. If after the Effective Time a dissenting shareholder of Peoples fails to perfect, or effectively withdraws or loses, his or her right to appraisal and of payment for his or her shares, the Surviving Corporation shall issue and deliver the consideration to which

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such holder of shares of Peoples Common Stock is entitled under this Article Three (without interest) upon surrender by such holder of the certificate or certificates representing shares of Peoples Common Stock held by such holder.

3.5 Fractional Shares . Notwithstanding any other provision of this Agreement, each holder of shares of Peoples Common Stock exchanged pursuant to the Merger, who would otherwise have been entitled to receive a fraction of a share of BancTrust Common Stock (after taking into account all certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of BancTrust Common Stock multiplied by the Average Closing Price of one share of BancTrust Common Stock rounded to the nearest cent. No such holder will be entitled to dividends, voting rights, or any other rights as a shareholder in respect of any fractional shares.

3.6 Stock Options . At any time prior to the date on which the Effective Time occurs, each option to acquire shares of Peoples Common Stock may be purchased or acquired by Peoples or exercised for cash by the holder of such option in accordance with its terms. Notwithstanding anything in any Peoples Stock Option Plan (as defined below) to the contrary, at the Effective Time each option to purchase Peoples Common Stock (a “ Peoples Stock Option ”) granted pursuant to the Peoples 1992 Stock Option Plan or the Peoples 1999 Stock Option Plan (collectively, the “ Peoples Stock Option Plan ”) which is outstanding and unexercised immediately prior thereto shall automatically become vested and shall be cancelled and converted into the right to receive the Cash Option Consideration. “ Cash Option Consideration ” shall mean with respect to each Peoples Stock Option, a cash payment equal to the difference between (a) the dollar value of the Merger Consideration calculated using the Average Closing Price of BancTrust Common Stock and (b) the exercise price of such Stock Option as Previously Disclosed.

ARTICLE FOUR

EXCHANGE OF SHARES

4.1 Exchange Procedures . Promptly after the Effective Time, the Surviving Corporation shall cause its transfer agent (or a depository or trust institution of recognized standing selected by BancTrust and reasonably satisfactory to Peoples) (the “ Exchange Agent ”) to mail to the former shareholders of Peoples appropriate transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the certificates theretofore representing shares of Peoples Common Stock shall pass, only upon proper delivery of such certificates to the Exchange Agent). After the Effective Time, each holder of shares of Peoples Common Stock (other than shares to be canceled pursuant to Section 3.3 of this Agreement or as to which dissenters’ rights of appraisal have been perfected as provided in Section 3.4 of this Agreement) issued and outstanding at the Effective Time shall surrender the certificate or certificates representing such shares to the Exchange Agent (or shall furnish customary documentation and indemnity if any such certificates are lost, stolen or destroyed) and shall promptly thereafter receive in exchange therefor the Merger Consideration provided in Section 3.1 of this Agreement, together with all undelivered dividends or distributions in respect of the shares of BancTrust Common Stock received (without interest thereon) pursuant to Section 4.2 of this Agreement. To the extent required by Section 3.5 of this Agreement, each holder of shares of Peoples Common Stock issued and outstanding at the Effective Time also

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shall receive, upon surrender of the certificate or certificates representing such shares, cash in lieu of any fractional share of BancTrust Common Stock to which such holder may be otherwise entitled (without interest). The Surviving Corporation shall not be obligated to deliver the Merger Consideration to which any former holder of Peoples Common Stock is entitled as a result of the Merger until such holder surrenders his certificate or certificates representing the shares of Peoples Common Stock for exchange as provided in this Section 4.1. The certificate or certificates of Peoples Common Stock so surrendered shall be duly endorsed as the Exchange Agent may require. Any other provision of this Agreement notwithstanding, neither the Surviving Corporation nor the Exchange Agent shall be liable to a holder of Peoples Common Stock for any amounts paid or property delivered in good faith to a public official pursuant to any applicable abandoned property Law.

4.2 Rights of Former Peoples Shareholders . At the Effective Time, the stock transfer books of Peoples shall be closed as to holders of Peoples Common Stock immediately prior to the Effective Time and no transfer of Peoples Common Stock by any such holder shall thereafter be made or recognized. Until surrendered for exchange in accordance with the provisions of Section 4.1 of this Agreement, each certificate theretofore representing shares of Peoples Common Stock (“ Peoples Certificate ”), other than shares to be canceled pursuant to Sections 3.3 and 3.4 of this Agreement, shall from and after the Effective Time represent for all purposes only the right to receive the Merger Consideration provided in Sections 3.1 and 3.5 of this Agreement in exchange therefor. To the extent permitted by Law, former shareholders of record of Peoples shall be entitled to vote after the Effective Time at any meeting of Surviving Corporation shareholders the number of whole shares of BancTrust Common Stock into which their respective shares of Peoples Common Stock are converted, regardless of whether such holders have exchanged their Peoples Certificates for certificates representing BancTrust Common Stock in accordance with the provisions of this Agreement. Whenever a dividend or other distribution is declared by the Surviving Corporation on the BancTrust Common Stock, the record date for which is at or after the Effective Time, the declaration shall include dividends or other distributions on all shares issuable pursuant to this Agreement. Notwithstanding the preceding sentence, any person holding any Peoples Certificate at or after six (6) months after the Effective Time (the “ Cutoff ”) shall not be entitled to receive any dividend or other distribution payable after the Cutoff to holders of BancTrust Common Stock, which dividend or other distribution is attributable to such persons BancTrust Common Stock represented by said Peoples Certificate held after the Cutoff, until such person surrenders said Peoples Certificate for exchange as provided in Section 4.1 of this Agreement. However, upon surrender of such Peoples Certificate, both the BancTrust Common Stock certificate (together with all such undelivered dividends or other distributions, without interest) and any undelivered cash payments to be paid as consideration under Section 3.1(b) or for fractional share interests (without interest) shall be delivered and paid with respect to each share represented by such Peoples Certificate.

ARTICLE FIVE

REPRESENTATIONS AND WARRANTIES OF PEOPLES

Before entry into this Agreement, Peoples delivered to BancTrust the Peoples Disclosure Memorandum, setting forth, among other things, items the disclosure of which is

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necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this Article Five or to one or more of its covenants contained in Article Seven; provided that the inclusion of an item in the Peoples Disclosure Memorandum as an exception to a representation or warranty will not by itself be deemed an admission by Peoples that such item is Material or was required to be disclosed therein. While Peoples has used its reasonable best efforts to identify in the Peoples Disclosure Memorandum the particular representation or warranty or covenant to which each such disclosure or exception relates, each such disclosure or exception shall be deemed disclosed for purposes of all representations and warranties in Article Five, all covenants in Article Seven and the Disclosure Memorandum.

For all purposes of this Agreement, no representation or warranty of Peoples contained in Article Five (other than the representations and warranties contained in Section 5.4 which shall be true in all Material respects) will be deemed untrue, and no party will be deemed to have breached a representation or warranty, as a consequence of the existence of any fact, event or circumstance unless such fact, circumstance or event, individually or taken together with all other facts, events or circumstances inconsistent with any representation or warranty contained in Article Five, has had or is reasonably likely to have a Material Adverse Effect with respect to Peoples or with respect to BancTrust following the Merger.

Except as Previously Disclosed, Peoples hereby represents and warrants to BancTrust as follows:

5.1 Organization, Standing, and Power . Peoples is a corporation duly organized, validly existing and in good standing under the Laws of the State of Alabama, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Material Assets. Peoples is duly qualified or licensed to transact business as a foreign corporation in good standing in those other States of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed. Peoples has delivered or made available to BancTrust complete and correct copies of its Articles of Incorporation and Bylaws and the articles of incorporation, bylaws and other, similar governing instruments of each of its Subsidiaries, in each case as amended through the date hereof.

5.2 Authority; No Breach By Agreement .

(a) Peoples has the corporate power and authority necessary to execute, deliver and, subject to Article Nine hereof, perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized by all necessary corporate action in respect thereof on the part of Peoples, subject to the approval of this Agreement by the holders of Peoples Common Stock in accordance with the ABCA. Subject to such requisite shareholder approval, this Agreement represents a legal, valid, and binding obligation of Peoples, enforceable against Peoples in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting the enforcement of creditors’ rights generally (“ Creditor’s Laws ”) and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought (“ Equitable Discretion ”)).

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(b) Neither the execution and delivery of this Agreement by Peoples, nor the consummation by Peoples of the transactions contemplated hereby, nor compliance by Peoples with any of the provisions hereof, will (i) conflict with or result in a breach of any provision of Peoples’ Articles of Incorporation or Bylaws, or (ii) constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any Asset of any Peoples Company under, any Contract or Permit of any Peoples Company, or, (iii) subject to receipt of the requisite approvals referred to in Section 9.1(b) of this Agreement, violate any Law or Order applicable to any Peoples Company or any of their respective Assets.

(c) Other than in connection or compliance with the provisions of the Securities Laws, applicable state corporate and securities Laws, and other than Consents required from Regulatory Authorities, and other than notices to or filings with the Internal Revenue Service or the Pension Benefit Guaranty Corporation with respect to any employee benefit plans, no notice to, filing with, or Consent of, any public body or authority is necessary for the consummation by Peoples of the Merger and the other transactions contemplated in this Agreement.

5.3 Reports . Since January 1, 2003, or the date of organization if later, each Peoples Company has timely filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii) any applicable state securities or banking authorities. As of their respective dates, each of such reports and documents, including the financial statements, exhibits, and schedules thereto, complied in all Material respects with all applicable Laws. As of its respective date, or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing, each such report and document did not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.

5.4 Capital Stock .

(a) The authorized capital stock of Peoples consists only of 9,000,000 shares of voting common stock, par value $.10, and 1,000,000 shares of preferred stock, par value $0.10, of which, as of the date of this Agreement, 5,929,561 shares of voting common stock are issued and outstanding and no shares of preferred stock are issued and outstanding. All of the issued and outstanding shares of capital stock of Peoples are duly and validly issued and outstanding and are fully paid and nonassessable under the ABCA. None of the outstanding shares of capital stock of Peoples has been issued in violation of any preemptive rights of the current or past shareholders of Peoples.

(b) There are no other shares of capital stock or other equity securities of Peoples outstanding and, other than pursuant to Peoples Benefit Plans, the Peoples dividend reinvestment plan and as Previously Disclosed, no outstanding options, warrants, scrip, rights to subscribe to, calls, or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock of Peoples or contracts, commitments, understandings, or arrangements by which Peoples is or may be bound to issue additional shares of its capital stock or options, warrants, or rights to purchase or acquire any additional shares of its capital stock.

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5.5 Peoples Subsidiaries . Peoples has Previously Disclosed all of the Peoples Subsidiaries as of the date of this Agreement. Except as Previously Disclosed, Peoples or one of its Subsidiaries owns all of the issued and outstanding shares of capital stock of each Peoples Subsidiary. No equity securities of any Peoples Subsidiary are or may become required to be issued by reason of any options, warrants, scrip, rights to subscribe to, calls, or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock of any such Subsidiary, and there are no Contracts by which any Peoples Subsidiary is bound to issue additional shares of its capital stock or options, warrants, or rights to purchase or acquire any additional shares of its capital stock or by which any Peoples Company is or may be bound to transfer any shares of the capital stock of any Peoples Subsidiary. There are no Contracts relating to the rights of any Peoples Company to vote or to dispose of any shares of the capital stock of any Peoples Subsidiary. All of the shares of capital stock of each Peoples Subsidiary held by a Peoples Company are fully paid and nonassessable under the applicable corporation Law of the jurisdiction in which such Subsidiary is incorporated or organized and are owned by the Peoples Company free and clear of any Lien. Each Peoples Subsidiary is either a bank or a corporation, and is duly organized, validly existing, and in good standing under the Laws of the jurisdiction in which it is incorporated or organized, and has the corporate power and authority necessary for it to own, lease and operate its Assets and to carry on its business as now conducted. Each Peoples Subsidiary is duly qualified or licensed to transact business as a foreign corporation in good standing in the States of the United States and foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed. Each Peoples Subsidiary that is a depository institution is an “insured institution” as defined in the Federal Deposit Insurance Act and applicable regulations thereunder, and its deposits are fully insured by the Federal Deposit Insurance Corporation pursuant to the provisions of said act and regulations; and the businesses of any non-bank Subsidiaries of Peoples are permitted to subsidiaries of registered bank holding companies.

5.6 Financial Statements . Peoples has delivered or made available to BancTrust prior to the execution of this Agreement copies of all Peoples Financial Statements for periods ended March 31, 2007 and December 31, 2006 and will deliver or make available to BancTrust copies of all Peoples Financial Statements prepared subsequent to the date hereof. The Peoples Financial Statements (as of the dates thereof and for the periods covered thereby) (i) are or, if dated after the date of this Agreement, will be in accordance with the books and records of the Peoples Companies, which are or will be, as the case may be, complete and correct and which have been or will have been, as the case may be, maintained in accordance with good business practices, and (ii) present or will present, as the case may be, fairly the consolidated financial position of the Peoples Companies as of the dates indicated and the consolidated results of operations, changes in shareholders’ equity, and cash flows of the Peoples Companies for the periods indicated, all in accordance with GAAP. The foregoing representations, insofar as they relate to the unaudited interim financial statements of Peoples for the three (3) months ended March 31, 2007 and subsequent unaudited interim financial statements, are subject in all cases to normal year-end adjustments and the omission of footnote disclosure.

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5.7 Absence of Certain Changes or Events . Since March 31, 2007, except as disclosed in the Peoples Financial Statements or as Previously Disclosed, (i) there have been no events, changes or occurrences which have had, or are reasonably likely to have had, individually or in the aggregate, a Material Adverse Effect on Peoples and its Subsidiaries taken as a whole, and (ii) the Peoples Companies have not taken any action, or failed to take any action, prior to the date of this Agreement, which action or failure, if taken after the date of this Agreement, would represent or result in a Material breach or violation of any of the covenants and agreements of Peoples provided in Article Seven of this Agreement.

5.8 Risk Management Instruments . All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements (collectively, the “ Risk Management Instruments ”), whether entered into for Peoples’ own account or for the account of one or more of the Peoples Subsidiaries or their customers, were entered into (i) to the Knowledge of Peoples, in accordance with all applicable laws, rules, regulations and regulatory policies and (ii) with counterparties believed to be financially responsible at the time; and each of the Risk Management Instruments constitutes the valid and legally binding obligation of Peoples or the Peoples Subsidiary, enforceable in accordance with the terms of such Risk Management Instrument (except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and except that the availability of equitable remedies (including specific performance) is within the discretion of the appropriate court), and is in full force and effect. The Peoples Companies have duly performed in all Material respects all of their Material obligations under Risk Management Instruments to the extent such obligations to perform have accrued and are not in Material breach, violation or default thereunder; and, to the Knowledge of Peoples, there are no Material breaches, violations or defaults, or allegations or assertions of any Material breaches, violations or defaults, by any other party thereunder.

5.9 Investments . Except for securities pledged for reverse repurchase agreements, interest rate swap, cap and floor contracts or pledged to secure public trust funds and except as Previously Disclosed, none of the investments reflected in the audited consolidated balance sheet of Peoples as of December 31, 2006 under the heading “Investment securities available-for-sale,” and none of the investments by the Peoples Companies since December 31, 2006, and none of the assets reflected in the audited consolidated balance sheet of Peoples as of December 31, 2006 or in any unaudited consolidated balance sheet of Peoples furnished to BancTrust after December 31, 2006 under the heading “Cash and due from banks” is subject to any restriction, whether contractual or statutory, that Materially impairs the ability of Peoples or any of the Peoples Subsidiaries freely to dispose of such investment at any time. With respect to all repurchase agreements of which any Peoples Company is a party, such Peoples Company has a valid, perfected first lien or security interest in the government securities or other collateral securing each such repurchase agreement which equals or exceeds the amount of the debt secured by such collateral under such agreement.

5.10 Allowances for Possible Loan Losses . The allowances for possible loan losses (the “ Allowances ”) shown on the consolidated balance sheets of Peoples included in the most recent Peoples Financial Statements dated prior to the date of this Agreement were, and the Allowances to be shown on the consolidated balance sheets of Peoples to be included in the Peoples Financial Statements as of dates subsequent to the execution of this Agreement will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines).

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5.11 Tax Matters .

(a) All Tax returns required to be filed by or on behalf of any of the Peoples Companies have been timely filed or requests for extensions have been timely filed, granted, and have not expired for periods ended on or before December 31, 2006, and on or before the date of the most recent fiscal year end immediately preceding the Effective Time. All Tax returns filed are complete and accurate in all Material respects. All Taxes shown on filed returns have been paid. As of the date of this Agreement, there is no audit examination, deficiency, or refund Litigation with respect to any Taxes, except as reserved against in the Peoples Financial Statements delivered prior to the date of this Agreement or as Previously Disclosed. All Taxes and other Liabilities due with respect to completed and settled examinations or concluded Litigation have been paid.

(b) As of the date of this Agreement, none of the Peoples Companies has executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax due (excluding such statutes that relate to years currently under examination by the Internal Revenue Service or other applicable taxing authorities) that is currently in effect.

(c) Adequate provision for any Taxes due or to become due for any of the Peoples Companies for the period or periods through and including the date of the respective Peoples Financial Statements has been made and is reflected on such Peoples Financial Statements.

(d) Deferred Taxes of the Peoples Companies have been provided for in accordance with GAAP.

(e) Peoples is in compliance with, and its records contain the information and documents (including properly completed IRS Forms W-9) necessary to comply with applicable information reporting and Tax Withholding Requirements under federal, state and local Tax Laws in all Material respects, and such records identify the accounts subject to backup withholding under § 3406 of the Internal Revenue Code.

(f) To the Knowledge of Peoples, none of the Peoples Companies has made any payments, is obligated to make any payments, or is a party to any contract, agreement or other arrangement that could obligate it to make any payments that would be disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue Code.

5.12 Internal Controls; Disclosure Controls . The Peoples Companies have maintained a system of internal accounting controls sufficient to provide reasonable assurances that (a) all Material transactions are executed in accordance with management’s general or specific authorizations, (b) all Material transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets, (c) access to Peoples’ Material assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals, and appropriate action is taken with respect to any differences. To the extent

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required, the Peoples Companies have devised and maintained a system of disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the 1934 Act sufficient to insure that information required to be disclosed by Peoples in the reports that it files or submits under the 1934 Act is accumulated and communicated to Peoples’ management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

5.13 Intellectual Property .

(a) Except as Previously Disclosed, to the Knowledge of Peoples, a Peoples Company owns, licenses or otherwise has the right to use, in each case free and clear of all Material Liens, all applications, trademarks, service marks, trademark or service mark registrations and applications, trade names, logos, designs, Internet domain names and slogans, together with the goodwill related to the foregoing, copyrights, copyright registrations, and copyright applications, Software (as defined below), technology, trade secrets and other confidential information, know-how, proprietary processes, formulae, algorithms, models and methodologies, licenses, agreements and all other Material proprietary rights (collectively, the “ Intellectual Property ”) which are used in and material to the business of the Peoples Companies as it currently is conducted. “ Software ” means any and all (A) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (B) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (C) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, (D) the technology supporting and content contained on any owned Internet site(s), and (E) all documentation, including user manuals and training materials, relating to any of the foregoing. The ownership of, license to, or right to use such Intellectual Property or Software of the Peoples Companies (i) has not been challenged in any prior litigation to which any Peoples Company was a party, (ii) is not being challenged in any pending litigation to which any Peoples Company is a party and (iii) to the Knowledge of Peoples, is not the subject of any threatened or proposed litigation against any Peoples Company. Provided that the required consents and prior notices as Previously Disclosed are obtained or given (as the case may be), the consummation of the transactions contemplated hereby will not result in the loss or impairment of any such Intellectual Property or Software of any Peoples Company.

(b) Except as Previously Disclosed, to the Knowledge of Peoples, the conduct of the business of the Peoples Companies as currently conducted does not, in any Material respect, infringe upon (either directly or indirectly, such as through contributory infringement or inducement to infringe), dilute, misappropriate or otherwise violate any Intellectual Property owned and controlled by any third party.

(c) Except as Previously Disclosed, to the Knowledge of Peoples, no third party is misappropriating, infringing, diluting or violating any Material Intellectual Property owned by or licensed to or by any Peoples Company, and no such claims have been made against a third party by any Peoples Company.

(d) Except as Previously Disclosed, to the Knowledge of Peoples, each Material item of Software which is used by any Peoples Company in connection with the operation

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of its businesses as currently conducted is either (A) owned by a Peoples Company, or (B) currently in the public