MOBILE, Ala. - Two Alabama banking companies that in January had announced plans to merge said late Tuesday that the deal is off.

South Alabama Bancorp in Mobile and Peoples BancTrust Co. of Selma had planned to merge as equals in a deal valued at $61 million.

F. Michael John, the chief financial officer of $575 million-asset South Alabama Bancorp, said the decision to terminate the deal was made after both companies agreed that a merger "was not in the best interest of the shareholders, customers, and employees."

South Alabama reported 2000 earnings of $7.4 million, up 11% from 1999. The Peoples BancTrust Co. has yet to report its 2000 earnings.

The merger would have formed a the seventh-largest banking company in Alabama. Southern Alabama shareholders would have owned 55% of the stock.

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