An exclusive interview with Dick Morthland on changes at a

local institution

BY VICTOR INGE

THE SELMA TIMES-JOURNAL

He admits his departure could have been conceived as being ousted, with the bank’s stock price down, and members of the board of directors considering “going in a different direction.”

That’s a phrase more suited to a firing meeting, heard just as the employee realizes they’re being let go.

But Richard Morthland has dealt with his departure from The Peoples Bank & Trust Company, a Selma institution his grandfather helped build, and his father helped transform. The bank’s pending merger with BancTrust has cleared the biggest obstacle, shareholder approval, and now it’s just a matter of time.

Morthland talked candidly in an exclusive interview though the Securities and Exchange Commission prohibits him from discussing pending matters regarding the merger due to laws regulating the industry.

He was confident the merger was what was best for the bank, its shareholders and the community. The name will change to BancTrust. Most of the employees will have their jobs, with even more room for advancement within the new company.

“I think it’s going to work for the good of our customer base,” Morthland said. “This is not a Dick Morthland thing. If there’s a role for me, it’ll be fine. If not, it’s in capable hands.”

Morthland’s departure in November 2002 had all the makings of a takeover, as family members reportedly encouraged him to step aside. Morthland insists facts were misrepresented to his family and the best thing for the institution was for him to “leave quietly.”

Peoples’ Chairman of the Board Ted Henry, in a letter to stockholders, was critical of Morthland’s record at the bank saying, “During the last five years under Mr. Morthland, the value of a share of Peoples stock declined from $21.93 to $11.65.” He also said it was necessary to restructure the bank’s loan portfolio after Morthland left.

Morthland offered no response to Henry’s statement other than to say, “I think my record speaks for itself.”

He did say the bank’s stock prices were affected by the terrorist attacks of Sept. 11, 2001, as was the entire market.

His exodus would be brief.

A capital group from New York, looking to invest in the bank, purchased the Blount family block of stock, and made an additional $20 million available for expansion purposes. When the expansion did not take place, the investors became displeased with the bank’s lack of direction. The Morthlands and Endurance Capital Investors, now owning about a third of the stock, filed with the SEC noting displeasure with the way things were going, and were nominating a new slate of directors.

At that point, the board called off the shareholder meeting where a new slate of directors would be elected, and contacted BancTrust concerning a merger. Teaming with the investors, the ousted banker regained controlling interest of the family business.

The Morthland History and Peoples Bank

The bank, a home grown product founded in 1902, has helped many businesses in Selma and throughout the region. Since then, it has expanded as far east as Auburn/Opelika. Morthland’s father, the late Rex J. Morthland, served as president of the Alabama Banker’s Association in 1968.

Rex Morthland earned a degree in economics from the University of California at Los Angeles and a master’s degree in economics from the University of California at Berkeley. While studying at the University of Chicago, where he was awarded a Ph.D. in economics, he met and married Ann Cooper Plant, a Selma native who was also living in Chicago.

During World War II, Rex Morthland served in Europe as a major in the U.S. Army, as a pilot in the air corps, while his wife and children lived in Selma with her parents, Mr. and Mrs. William Henry Plant. Following the war in 1946, Plant convinced him to make Selma his home and join him in the management of The Peoples Bank & Trust Company where Plant was the president and chairman of the board.

In 1953, he succeeded Plant as president of the Peoples Bank at Mr. Plant’s death. Rex Morthland served the bank until his retirement, when he was titled “chairman emeritus.” He died in November 2006.

Richard Morthland had worked at the bank since he was 16, during his summer vacations from school. He went to work full-time in 1963. During the years he headed the bank’s growth, it mushroomed from $75 million to $750 million, with 26 offices across central Alabama.

Morthland helped to sustain some of the larger homegrown industries, and helped recruit and sustain others. He was also in the fabric of the civic community, and helped to start the Economic Development Authority. He was a member of the board of the Alabama Department of Banking.

Future Morthlands

Will Morthland never wanted to work in banking. The former Selma High kicker went to UAB and by his own admission wanted to become a physical therapist.

“I wanted to repair rotator cuffs,” said Will, who now works as branch manager of Wachovia Bank on Citizens Parkway in Selma. He ended up majoring in financial management.

His ascension to management hasn’t been due to his last name. Will’s first job was with the Alabama Banking Department.

“The travel was too rigorous, so I went to work at Regions Bank doing internal audits,” he said.

The New Deal

W. Bibb Lamar Jr., president and chief executive officer of BancTrust Financial Group, and Ted Henry, chairman of The Peoples BancTrust Company Inc., announced shareholder approval of “an Agreement and Plan of Merger” providing for the merger of Peoples into BancTrust, with BancTrust as the surviving corporation.

The current board of directors at Peoples Bank will be dissolved. However, BancTrust may appoint a local board once the merger clears final approval.

Paul Davis, veteran Alabama newspaper publisher and longtime friend of Morthland, said he was shocked when he learned Morthland was forced out. “He’s a great man,” Davis said. “That bank was his life. It hurt him like I’d never seen.”

Davis attended the shareholder meeting in Selma when the vote to accept the merger was taken. The meeting was brief. Davis, who recently acquired the newspaper in Tallassee, said Morthland “was crushed” after he was forced to resign. He said it was good to see his old friend in good spirits.

“I believe 82 percent of the shareholders voted for it,” Davis said of the merger with BancTrust. “There were a few that were opposed, but I think that percentage was like 2 percent. The rest may not have voted.”

BancTrust has obtained the credit to fund the $38 million of the merger consideration on terms previously announced. Although there are certain routine contingencies, which still must be satisfied prior to the completion of the merger, BancTrust and Peoples expect those contingencies to be satisfied and that the merger will be completed on Oct. 15, 2007, according to a news release.

BancTrust will pay Peoples’ shareholders $6.375 in cash plus 1.0614 shares of BancTrust common stock for each share of Peoples common stock.

BancTrust Financial Group, Inc. is a bank holding company with 21 offices operating under the name BankTrust in eight counties in the southern half of Alabama and 10 offices throughout northwest Florida. The Peoples BancTrust Company, Inc. is the parent company of The Peoples Bank and Trust, which has 23 offices located in south central Alabama.