##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR
THE TRANSITION PERIOD FROM
_________  TO _________
 Commission File number 0-25033
 The Banc Corporation
  Delaware
    
    63-1201350(State or Other Jurisdiction of Incorporation)
    
    (IRS Employer Identification No.)
  
   
   R £
  £ R £
  £ R
  Class
    
    Outstanding as of March 31, 2006Common stock, $.001 par value
    
    20,084,587




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TABLE OF CONTENTS  PART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITSSIGNATURESEX-2.01 AGREEMENT AND PLAN OF MERGEREX-31.01 SECTION 302 CERTIFICATION OF THE CEOEX-31.02 SECTION 302 CERTIFICATION OF THE CFOEX-32.01 SECTION 906 CERTIFICATION OF THE CEOEX-32.02 SECTION 906 CERTIFICATION OF THE CFO    Table of Contents  
  
  
 March 31,
    
    
    December 31,2006
    
    
    2005(UNAUDITED)ASSETSCash and due from banks
    
    $
    29,412
    
    
    $
    35,088Interest-bearing deposits in other banks
    
    
    8,668
    
    
    
    9,772Federal funds sold
    
    
    4,905
    
    
    
    Investment securities available for sale
    
    
    238,706
    
    
    
    242,595Mortgage loans held for sale
    
    
    17,711
    
    
    
    21,355Loans, net of unearned income
    
    
    989,576
    
    
    
    963,253Less: Allowance for loan losses
    
    
    (11,999
    )
    
    
    (12,011
    )Net loans
    
    
    977,577
    
    
    
    951,242Premises and equipment, net
    
    
    56,388
    
    
    
    56,017Accrued interest receivable
    
    
    6,638
    
    
    
    7,081Stock in FHLB
    
    
    10,272
    
    
    
    10,966Cash surrender value of life insurance
    
    
    39,535
    
    
    
    39,169Goodwill and intangible assets
    
    
    12,018
    
    
    
    12,090Other assets
    
    
    30,137
    
    
    
    30,094TOTAL ASSETS
    
    $
    1,431,967
    
    
    $
    1,415,469LIABILITIES AND STOCKHOLDERS EQUITYDepositsNoninterest-bearing
    
    $
    95,584
    
    
    $
    92,342Interest-bearing
    
    
    982,269
    
    
    
    951,354TOTAL DEPOSITS
    
    
    1,077,853
    
    
    
    1,043,696Advances from FHLB
    
    
    166,090
    
    
    
    181,090Federal funds borrowed and security repurchase agreements
    
    
    31,006
    
    
    
    33,406Notes payable
    
    
    3,703
    
    
    
    3,755Junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    
    31,959
    
    
    
    31,959Accrued expenses and other liabilities
    
    
    15,553
    
    
    
    16,498TOTAL LIABILITIES
    
    
    1,326,164
    
    
    
    1,310,404STOCKHOLDERS EQUITYCommon stock, par value $.001 per share; authorized 35,000,000 shares;
shares issued 20,351,736 and 20,221,456, respectively;
outstanding 20,084,587 and 19,980,261, respectively
    
    
    20
    
    
    
    20Surplus
    
    
    88,743
    
    
    
    87,979Retained earnings
    
    
    22,344
    
    
    
    21,494Accumulated other comprehensive loss
    
    
    (3,505
    )
    
    
    (2,544
    )Treasury stock, at cost
    
    
    (310
    )
    
    
    (341
    )Unearned ESOP stock
    
    
    (1,489
    )
    
    
    (1,543
    )TOTAL STOCKHOLDERS EQUITY
    
    
    105,803
    
    
    
    105,065TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,431,967
    
    
    $
    1,415,469
  2




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Three Months EndedMarch 31,2006
    
    
    2005INTEREST INCOMEInterest and fees on loans
    
    $
    18,418
    
    
    $
    14,878Interest on taxable securities
    
    
    2,760
    
    
    
    2,925Interest on tax exempt securities
    
    
    78
    
    
    
    58Interest on federal funds sold
    
    
    35
    
    
    
    82Interest and dividends on other investments
    
    
    358
    
    
    
    243Total interest income
    
    
    21,649
    
    
    
    18,186INTEREST EXPENSEInterest on deposits
    
    
    8,413
    
    
    
    6,037Interest on other borrowed funds
    
    
    2,471
    
    
    
    1,844Interest on subordinated debentures
    
    
    761
    
    
    
    698Total interest expense
    
    
    11,645
    
    
    
    8,579NET INTEREST INCOME
    
    
    10,004
    
    
    
    9,607Provision for loan losses
    
    
    600
    
    
    
    750NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    9,404
    
    
    
    8,857NONINTEREST INCOMEService charges and fees on deposits
    
    
    1,031
    
    
    
    1,112Mortgage banking income
    
    
    531
    
    
    
    446Investment securities losses
    
    
    
    
    
    
    (909
    )Change in fair value of derivatives
    
    
    70
    
    
    
    (230
    )Increase in cash surrender value of life insurance
    
    
    420
    
    
    
    351Other income
    
    
    450
    
    
    
    477TOTAL NONINTEREST INCOME
    
    
    2,502
    
    
    
    1,247NONINTEREST EXPENSESSalaries and employee benefits
    
    
    5,869
    
    
    
    5,402Occupancy, furniture and equipment expense
    
    
    1,847
    
    
    
    1,981Management separation costs
    
    
    
    
    
    
    12,377Other operating expenses
    
    
    3,090
    
    
    
    3,562TOTAL NONINTEREST EXPENSES
    
    
    10,806
    
    
    
    23,322Income (loss) before income taxes
    
    
    1,100
    
    
    
    (13,218
    )INCOME TAX EXPENSE (BENEFIT)
    
    
    250
    
    
    
    (5,057
    )NET INCOME (LOSS)
    
    $
    850
    
    
    $
    (8,161
    )BASIC NET INCOME (LOSS) PER COMMON SHARE
    
    $
    0.04
    
    
    $
    (0.44
    )DILUTED NET INCOME (LOSS) PER COMMON SHARE
    
    $
    0.04
    
    
    $
    (0.44
    )WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    
    
    20,015
    
    
    
    18,406WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, ASSUMING DILUTION
    
    
    20,673
    
    
    
    18,406
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Three Months EndedMarch 31,2006
    
    
    2005NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
    
    $
    6,043
    
    
    $
    (20,000
    )CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in interest-bearing deposits in other banks
    
    
    1,104
    
    
    
    2,831Net (increase) decrease in federal funds sold
    
    
    (4,905
    )
    
    
    4,000Proceeds from maturities of investment securities available for sale
    
    
    3,193
    
    
    
    15,489Purchases of investment securities available for sale
    
    
    (877
    )
    
    
    (5,040
    )Net increase in loans
    
    
    (26,323
    )
    
    
    (5,690
    )Proceeds
from sales of premises and equipment
    
    
    
    
    
    
    2,243Purchases of
premises and equipment
    
    
    (1,145
    )
    
    
    (150
    )Increase in other investments
    
    
    (192
    )
    
    
    (43
    )Net cash provided by investing activities
    
    
    (29,145
    )
    
    
    13,640CASH FLOWS FROM FINANCING ACTIVITIES:Net increase in deposit accounts
    
    
    34,157
    
    
    
    12,130Net decrease in FHLB advances and other borrowed funds
    
    
    (17,400
    )
    
    
    (11,643
    )Payments made on notes payable
    
    
    (52
    )
    
    
    (53
    )Proceeds from sale of common stock
    
    
    721
    
    
    
    7,455Net cash provided by financing activities
    
    
    17,426
    
    
    
    7,889Net (decrease) increase in cash and due from banks
    
    
    (5,676
    )
    
    
    1,529Cash and due from banks at beginning of period
    
    
    35,088
    
    
    
    23,489CASH AND DUE FROM BANKS AT END OF PERIOD
    
    $
    29,412
    
    
    $
    25,018
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Accounting for Derivative Instruments and Hedging Activities
   Accounting
for Certain Hybrid Financial Instruments Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities  a replacement of FASB Statement
No. 125,
  Accounting for Servicing of Financial Assets
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Alabama
    
    
    FloridaRegion
    
    
    Region
    
    
    CombinedThree months ended March 31, 2006Net interest income
    
    $
    6,360
    
    
    $
    3,644
    
    
    $
    10,004Provision for loan losses
    
    
    789
    
    
    
    (189
    )
    
    
    600Noninterest income
    
    
    2,256
    
    
    
    246
    
    
    
    2,502Noninterest expense (1)
    
    
    9,714
    
    
    
    1,092
    
    
    
    10,806Income (benefit) tax expense
    
    
    (706
    )
    
    
    956
    
    
    
    250Net (loss) income
    
    
    (1,181
    )
    
    
    2,031
    
    
    
    850Total assets
    
    
    1,129,776
    
    
    
    302,191
    
    
    
    1,431,967Three months ended March 31, 2005Net interest income
    
    $
    6,778
    
    
    $
    2,829
    
    
    $
    9,607Provision for loan losses
    
    
    733
    
    
    
    17
    
    
    
    750Noninterest income
    
    
    923
    
    
    
    324
    
    
    
    1,247Noninterest expense (1) (2)
    
    
    22,174
    
    
    
    1,148
    
    
    
    23,322Income (benefit) tax expense
    
    
    (5,639
    )
    
    
    582
    
    
    
    (5,057
    )Net (loss) income
    
    
    (9,567
    )
    
    
    1,406
    
    
    
    (8,161
    )Total assets
    
    
    1,151,859
    
    
    
    275,075
    
    
    
    1,426,934
 
 (1)
    
    Noninterest expense for the Alabama region includes all expenses for the holding company,
which have not been prorated to the Florida region.(2)
    
    See Notes 4 and 12 concerning the amount of management
separation costs and loss on the
sale of assets. 
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Three Months EndedMarch 31,2006
    
    
    2005Numerator:For basic and diluted, net income (loss)
    
    $
    850
    
    
    $
    (8,161
    )Denominator:For basic, weighted average common shares outstanding
    
    
    20,015
    
    
    
    18,406Effect of dilutive stock options
    
    
    658
    
    
    
    Average diluted common shares outstanding
    
    
    20,673
    
    
    
    18,406Basic and diluted net income (loss) per common share
    
    $
    .04
    
    
    $
    (.44
    )
           8




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March 31,
    
    
    December 31,2006
    
    
    2005(In thousands)10.6% junior subordinated debentures owed to TBC Capital Statutory
Trust II due September 7, 2030
    
    $
    15,464
    
    
    $
    15,4646-month LIBOR plus 3.75% junior subordinated debentures owed to TBC Capital
Statutory Trust III July 25, 2031
    
    
    16,495
    
    
    
    16,495Total junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    $
    31,959
    
    
    $
    31,959
       9




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March 31, 2006Allocated shares
    
    
    82,028Estimated shares committed to be released
    
    
    6,675Unreleased shares
    
    
    184,697Total ESOP shares
    
    
    273,400Fair value of unreleased shares
    
    $
    3,239,790
 Share-Based Payment Accounting for Stock-Based Compensation , Accounting for Stock Issued to Employees
   Risk-free interest rate
    
    
    4.85
    %Volatility factor
    
    
    .48
    %Weighted average life of options (in years)
    
    
    7.00Dividend yield
    
    
    0.00
    %
  10




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Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateNumber
    
    
    Price
    
    
    Term
    
    
    Intrinsic ValueUnder option,
beginning of period
    
    
    3,031,946
    
    
    $
    7.81Granted
    
    
    25,000
    
    
    
    11.35Exercised
    
    
    (110,985
    )
    
    
    6.15Forfeited
    
    
    (4,043
    )
    
    
    9.06Under option, end of period
    
    
    2,941,918
    
    
    $
    7.90
    
    
    
    7.96
    
    
    $
    11,622,410Exercisable at end of period
    
    
    2,921,918
    
    
    $
    7.88
    
    
    
    7.95
    
    
    $
    11,612,410Weighted-average fair value
per option of options
granted during the period
    
    $
    6.36
    For the three-month periodendedMarch 31,2005Net loss:As reported
    
    $
    (8,161
    )Pro forma
    
    
    (10,322
    )Loss per common share:As reported
    
    $
    (.44
    )Pro forma
    
    
    (.56
    )Diluted loss per common share:As reported
    
    $
    (.44
    )Pro forma
    
    
    (.56
    )
 11




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March 31,2005Risk-free interest rate
    
    
    4.34
    %Volatility factor
    
    
    .41Weighted average life of options
    
    
    7.0Dividend yield
    
    
    0.00
           12




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Average Balances Income, Expense and Rates
 15




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Three Months Ended March 31,2006
    
    
    2005Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income(1)
    
    $
    996,773
    
    
    $
    18,418
    
    
    
    7.49
    %
    
    $
    953,891
    
    
    $
    14,878
    
    
    
    6.33
    %Investment securitiesTaxable
    
    
    243,907
    
    
    
    2,760
    
    
    
    4.59
    
    
    
    276,595
    
    
    
    2,925
    
    
    
    4.29Tax-exempt(2)
    
    
    8,452
    
    
    
    118
    
    
    
    5.67
    
    
    
    6,632
    
    
    
    88
    
    
    
    5.38Total investment securities
    
    
    252,359
    
    
    
    2,878
    
    
    
    4.63
    
    
    
    283,227
    
    
    
    3,013
    
    
    
    4.31Federal funds sold
    
    
    3,005
    
    
    
    35
    
    
    
    4.72
    
    
    
    13,589
    
    
    
    82
    
    
    
    2.45Other investments
    
    
    18,309
    
    
    
    358
    
    
    
    7.93
    
    
    
    26,380
    
    
    
    243
    
    
    
    3.74Total interest-earning assets
    
    
    1,270,446
    
    
    
    21,689
    
    
    
    6.92
    
    
    
    1,277,087
    
    
    
    18,216
    
    
    
    5.78Noninterest-earning assets:Cash and due from banks
    
    
    28,607
    
    
    
    
    
    
    
    
    
    
    
    27,483Premises and equipment
    
    
    56,229
    
    
    
    
    
    
    
    
    
    
    
    59,959Accrued interest and other assets
    
    
    76,835
    
    
    
    
    
    
    
    
    
    
    
    79,797Allowance for loan losses
    
    
    (12,105
    )
    
    
    
    
    
    
    
    
    
    
    (12,802
    )Total assets
    
    $
    1,420,012
    
    
    
    
    
    
    
    
    
    
    $
    1,431,524LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    328,886
    
    
    $
    2,150
    
    
    
    2.65
    
    
    $
    302,756
    
    
    $
    1,110
    
    
    
    1.49Savings deposits
    
    
    21,068
    
    
    
    8
    
    
    
    0.15
    
    
    
    28,214
    
    
    
    11
    
    
    
    0.16Time deposits
    
    
    615,253
    
    
    
    6,255
    
    
    
    4.12
    
    
    
    658,162
    
    
    
    4,916
    
    
    
    3.03Other borrowings
    
    
    211,993
    
    
    
    2,471
    
    
    
    4.73
    
    
    
    202,603
    
    
    
    1,857
    
    
    
    3.72Subordinated debentures
    
    
    31,959
    
    
    
    761
    
    
    
    9.66
    
    
    
    31,959
    
    
    
    685
    
    
    
    8.69Total interest-bearing liabilities
    
    
    1,209,159
    
    
    
    11,645
    
    
    
    3.91
    
    
    
    1,223,694
    
    
    
    8,579
    
    
    
    2.84Noninterest-bearing liabilities:Demand deposits
    
    
    91,027
    
    
    
    
    
    
    
    
    
    
    
    95,483Accrued interest and other liabilities
    
    
    14,466
    
    
    
    
    
    
    
    
    
    
    
    11,429Stockholders equity
    
    
    105,359
    
    
    
    
    
    
    
    
    
    
    
    100,918Total liabilities and stockholders equity
    
    $
    1,420,011
    
    
    
    
    
    
    
    
    
    
    $
    1,431,524Net interest income/net interest spread
    
    
    
    
    
    
    10,044
    
    
    
    3.01
    %
    
    
    
    
    
    
    9,637
    
    
    
    2.94
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.21
    %
    
    
    
    
    
    
    
    
    
    
    3.06
    %Taxable equivalent adjustment:Investment securities(2)
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    30Net interest income
    
    
    
    
    
    $
    10,004
    
    
    
    
    
    
    
    
    
    
    $
    9,607
 
 (1)
    
    Nonaccrual loans are included in loans, net of unearned income. No adjustment has been
made for these loans in the calculation of yields.(2)
    
    Interest income and yields are presented on a fully taxable equivalent basis using a tax rate
of 34 percent. 
 16




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Three Months Ended March 31 (1)2006 vs. 2005Increase
    
    

Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    3,540
    
    
    $
    2,843
    
    
    $
    697Interest on securities:Taxable
    
    
    (165
    )
    
    
    196
    
    
    
    (361
    )Tax-exempt
    
    
    30
    
    
    
    5
    
    
    
    25Interest on federal funds
    
    
    (47
    )
    
    
    44
    
    
    
    (91
    )Interest on other investments
    
    
    115
    
    
    
    207
    
    
    
    (92
    )Total interest income
    
    
    3,473
    
    
    
    3,295
    
    
    
    178Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    1,040
    
    
    
    936
    
    
    
    104Interest on savings deposits
    
    
    (3
    )
    
    
    (1
    )
    
    
    (2
    )Interest on time deposits
    
    
    1,339
    
    
    
    1,676
    
    
    
    (337
    )Interest on other borrowings
    
    
    614
    
    
    
    524
    
    
    
    90Interest on subordinated debentures
    
    
    76
    
    
    
    76
    
    
    
    Total interest expense
    
    
    3,066
    
    
    
    3,211
    
    
    
    (145
    )Net interest income
    
    $
    407
    
    
    $
    84
    
    
    $
    323
 
 (1)
    
    The change in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts of the changes in
each. Noninterest income
 Noninterest expenses
 Income tax expense
  17




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Provision for Loan Losses
    Short-term liquid assets
 Investment Securities
 Loans
 18




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March 31, 2006
    
    
    December 31, 2005Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial and industrial
    
    $
    127,040
    
    
    
    12.8
    %
    
    $
    135,454
    
    
    
    14.0
    %Real estate  construction and land development
    
    
    366,087
    
    
    
    36.9
    
    
    
    326,418
    
    
    
    33.8Real estate  mortgageSingle-family
    
    
    253,292
    
    
    
    25.6
    
    
    
    243,183
    
    
    
    25.2Commercial
    
    
    197,904
    
    
    
    20.0
    
    
    
    210,611
    
    
    
    21.8Other
    
    
    27,256
    
    
    
    2.8
    
    
    
    27,503
    
    
    
    2.9Consumer
    
    
    19,182
    
    
    
    1.9
    
    
    
    21,122
    
    
    
    2.2Other
    
    
    364
    
    
    
    .0
    
    
    
    498
    
    
    
    .1Total loans
    
    
    991,125
    
    
    
    100.0
    %
    
    
    964,789
    
    
    
    100.0
    %Unearned income
    
    
    (1,549
    )
    
    
    
    
    
    
    (1,536
    )Allowance for loan losses
    
    
    (11,999
    )
    
    
    
    
    
    
    (12,011
    )Net loans
    
    $
    977,577
    
    
    
    
    
    
    $
    951,242
 Deposits
  Borrowings
 Junior Subordinated Debentures
  19




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##### Table of Contents



March 31, 2006
    
    
    December 31, 2005(In thousands)10.6% junior subordinated debentures owed to TBC Capital Statutory
Trust II due September 7, 2030
    
    $
    15,464
    
    
    $
    15,4646-month LIBOR plus 3.75% junior subordinated debentures owed to TBC Capital
Statutory Trust III due July 25, 2031
    
    
    16,495
    
    
    
    16,495Total junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    $
    31,959
    
    
    $
    31,959
   Derivatives.
      Allowance for Loan Losses
 20




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21




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Three-Month
    
    
    Three-MonthPeriod Ended
    
    
    Period Ended
    
    
    Year EndedMarch 31,
    
    
    March 31,
    
    
    December 31,2006
    
    
    2005
    
    
    
    2005(Dollars in thousands)Allowance for loan losses at beginning of period
    
    $
    12,011
    
    
    $
    12,543
    
    
    $
    12,543Charge-offs:Commercial and industrial
    
    
    281
    
    
    
    41
    
    
    
    2,097Real estate  construction and land development
    
    
    43
    
    
    
    1
    
    
    
    358Real estate  mortgageSingle-family
    
    
    275
    
    
    
    87
    
    
    
    795Commercial
    
    
    14
    
    
    
    210
    
    
    
    1,432Other
    
    
    11
    
    
    
    
    
    
    
    85Consumer
    
    
    220
    
    
    
    125
    
    
    
    630Other
    
    
    
    
    
    
    91
    
    
    
    345Total charge-offs
    
    
    844
    
    
    
    555
    
    
    
    5,742Recoveries:Commercial and industrial
    
    
    81
    
    
    
    82
    
    
    
    413Real estate  construction and land development
    
    
    1
    
    
    
    10
    
    
    
    37Real estate  mortgageSingle-family
    
    
    32
    
    
    
    29
    
    
    
    335Commercial
    
    
    24
    
    
    
    1
    
    
    
    526Other
    
    
    32
    
    
    
    10
    
    
    
    118Consumer
    
    
    62
    
    
    
    48
    
    
    
    280Other
    
    
    
    
    
    
    39
    
    
    
    1Total recoveries
    
    
    232
    
    
    
    219
    
    
    
    1,710Net charge-offs
    
    
    612
    
    
    
    336
    
    
    
    4,032Provision for loan losses
    
    
    600
    
    
    
    750
    
    
    
    3,500Allowance for loan losses at end of period
    
    $
    11,999
    
    
    $
    12,957
    
    
    $
    12,011Loans at end of period, net of unearned income
    
    $
    989,576
    
    
    $
    942,391
    
    
    $
    963,253Average loans, net of unearned income
    
    
    996,773
    
    
    
    953,891
    
    
    
    947,212Ratio of ending allowance to ending loans
    
    
    1.21
    %
    
    
    1.37
    %
    
    
    1.25
    %Ratio of net charge-offs to average loans (1)
    
    
    0.25
    %
    
    
    .14
    %
    
    
    0.43
    %Net charge-offs as a percentage of:Provision for loan losses
    
    
    102.00
    %
    
    
    44.80
    %
    
    
    115.20
    %Allowance for loan losses (1)
    
    
    20.69
    %
    
    
    10.52
    %
    
    
    33.57
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    290.53
    %
    
    
    183.97
    %
    
    
    252.76
    %
 
 (1)
    
    Annualized.    Nonperforming Assets
 22




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##### Table of Contents



March 31,
    
    
    December 31,2006
    
    
    2005(Dollars in Thousands)Nonaccrual
    
    $
    4,130
    
    
    $
    4,550Accruing loans 90 days or more delinquent
    
    
    
    
    
    
    49Restructured
    
    
    
    
    
    
    153Total nonperforming loans
    
    
    4,130
    
    
    
    4,752Other real estate owned
    
    
    1,437
    
    
    
    1,842Total nonperforming assets
    
    $
    5,567
    
    
    $
    6,594Nonperforming loans as a percent of loans
    
    
    0.42
    %
    
    
    0.49
    %Nonperforming assets as a percent of loans plus nonperforming assets
    
    
    0.56
    %
    
    
    0.68
    %
   March 31,
    
    
    December 31,2006
    
    
    2005(Dollars in thousands)Commercial and industrial
    
    $
    1,480
    
    
    $
    1,797Real estate  construction and land development
    
    
    414
    
    
    
    469Real estate  mortgagesSingle-family
    
    
    1,528
    
    
    
    1,639Commercial
    
    
    655
    
    
    
    675Other
    
    
    
    
    
    
    11Consumer
    
    
    53
    
    
    
    161Other
    
    
    
    
    
    
    Total nonperforming loans
    
    $
    4,130
    
    
    $
    4,752
  Impaired Loans
 OUTSTANDING
    
    
    SPECIFICBALANCE
    
    
    ALLOWANCECommercial and industrial
    
    $
    1,690
    
    
    $
    1,069Real estate  construction and land development
    
    
    424
    
    
    
    112Real estate  mortgagesCommercial
    
    
    1,328
    
    
    
    470Other
    
    
    
    
    
    
    Total
    
    $
    3,442
    
    
    $
    1,651
 Potential Problem Loans
 23




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Stockholders Equity
 Regulatory Capital.
 To Be WellFor Capital
    
    
    Capitalized UnderAdequacy
    
    
    Prompt CorrectiveActual
    
    

Purposes
    
    

ActionAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of March 31, 2006Tier 1 Core Capital (to Adjusted Total Assets)Corporation
    
    $
    118,451
    
    
    
    8.38
    %
    
    $
    56,545
    
    
    
    4.00
    %
    
    $
    70,681
    
    
    
    5.00
    %Superior Bank
    
    
    113,475
    
    
    
    8.09
    
    
    
    56,080
    
    
    
    4.00
    
    
    
    70,100
    
    
    
    5.00Total Capital (to Risk Weighted Assets)Corporation
    
    
    129,063
    
    
    
    11.17
    
    
    
    92,440
    
    
    
    8.00
    
    
    
    115,550
    
    
    
    10.00Superior Bank
    
    
    124,087
    
    
    
    10.85
    
    
    
    91,510
    
    
    
    8.00
    
    
    
    114,388
    
    
    
    10.00Tier 1 Capital (to Risk Weighted Assets)Corporation
    
    
    118,451
    
    
    
    10.25
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    69,330
    
    
    
    6.00Superior Bank
    
    
    113,475
    
    
    
    9.92
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    68,633
    
    
    
    6.00Tangible Capital (to Adjusted Total Assets)Corporation
    
    
    118,451
    
    
    
    8.38
    
    
    
    21,204
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/ASuperior Bank
    
    
    113,475
    
    
    
    8.09
    
    
    
    21,030
    
    
    
    1.50
    
    
    
    N/A
    
    
    
    N/A
        24




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2.01
    
    Agreement and Plan of Merger by and between Community Bancshares, Inc. and The Banc
Corporation, dated as of April 29, 2006.31.01
    
    Certification of principal executive officer pursuant to Rule 13a-14(a).31.02
    
    Certification of principal financial officer pursuant to 13a-14(a).32.01
    
    Certification of principal executive officer pursuant to 18 U.S.C. Section 1350.32.02
    
    Certification of principal financial officer pursuant to 18 U.S.C. Section 1350.
 
   The Banc Corporation
(Registrant)Date: May 10, 2006
    By:
    /s/ C. Stanley BaileyC. Stanley BaileyChief Executive Officer Date: May 10, 2006
    By:
    /s/  James C. GossettJames C. GossettChief Accounting Officer
(Principal Financial and Accounting Officer) 27