<PAGE>
                                                                       EXHIBIT 3


                    CERTIFICATE OF DESIGNATION OF PREFERENCES
               AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
                             OF THE BANC CORPORATION


         The undersigned, James A. Taylor, Jr. and F. Hampton McFadden, Jr., the
duly elected and acting President and Secretary, respectively, of The Banc
Corporation, a Delaware corporation (the "Corporation"), do hereby certify that,
pursuant to the authority conferred upon the Board of Directors (the "Board of
Directors") by the Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), on March 18, 2003, the Board of Directors
adopted the following resolution creating a series of preferred stock designated
as Series A Convertible Preferred Stock:

         Whereas, pursuant to Article IV of the Certificate of Incorporation
authority was expressly vested in the Board of Directors pursuant to Section 151
of the General Corporation Law of the State of Delaware (the "DGCL") to
authorize preferred stock with such powers, designations, preferences and
relative participation, optional or other special rights, classifications,
limitations or restrictions thereof as said Board of Directors may deem
appropriate; and

         Whereas, this Board of Directors now desires to fix and deem such
matters with respect to the Corporation's capital stock classified as Series A
Convertible Preferred Stock consisting of 1,000,000 shares with a $.001 per
share par value;

         NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:

         Description of Series A Convertible Preferred Stock. The Series A
Convertible Preferred Stock of the Corporation (the "Series A Convertible
Preferred Stock," sometimes referred to herein as the "Series A Convertible
Preferred Shares") shall consist of 1,000,000 shares, each share having the par
value of $.001 per share. All Series A Convertible Preferred Shares shall be
identical with each other in all respects.

SECTION 1.      DIVIDENDS ON SERIES A CONVERTIBLE PREFERRED STOCK.

         1.1    General Dividend Obligation. The Corporation shall pay to the
holders of the Series A Convertible Preferred Stock, out of the assets of the
Corporation at any time available for the payment of dividends under the
provisions of the DGCL, preferential dividends at the times and in the amounts
provided for herein.

         1.2    Accrual of Dividends. Dividends on each Series A Convertible
Preferred Share shall not be cumulative. Dividends shall accrue on each Series A
Convertible Preferred Share (at the rate and in the manner prescribed in this
Subsection 1.2 and in Subsections 1.3 and 1.4 hereof) from and including the
date of issuance of such Series A Convertible Preferred Share to and including
the date that is the earliest to occur of (a) the date on which payment equal to
the Redemption Price (as hereinafter defined) of such Series A Convertible
Preferred Share shall have been paid in the manner prescribed in Section 2
hereof; or (b) the date on which such Series



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A Convertible Preferred Share shall have become converted into shares of
Corporation Common Stock (the "Common Stock") in the manner prescribed in
Section 4 hereof. For purposes of this Section, the date on which the
Corporation shall initially issue any Series A Convertible Preferred Share shall
be deemed to be the "date of issuance" of such Series A Convertible Preferred
Share regardless of how many times transfer of such Series A Convertible
Preferred Share shall be made on stock records maintained by or for the
Corporation and regardless of the number of certificates which may be issued to
evidence such Series A Convertible Preferred Share (whether by reason of
transfers of such Series A Convertible Preferred Share or for any other reason).

         1.3    Payment of Dividends. Dividends shall accrue on the Liquidation
Value (as defined in Subsection 3.1) of each Series A Convertible Preferred
Share at a per annum rate of interest, reset semi-annually on June 1 and
December 1 each year beginning December 1, 2003, equal to LIBOR, as determined
on the immediately preceding LIBOR determination date as set by the Board of
Directors, plus 575 basis points, provided that the rate of interest may not
exceed 12.5%. Dividends shall be payable on the Series A Convertible Preferred
Stock on each June 1 and December 1, beginning December 1, 2003, and each such
day is herein called a "Dividend Payment Date." On each Dividend Payment Date
all dividends which shall have accrued on each Series A Convertible Preferred
Share then outstanding during the six months ending upon such Dividend Payment
Date shall be deemed to become "due" for all purposes of this Subsection 1.3
regardless of whether the Corporation shall be able or legally permitted to pay
such dividend on such Dividend Payment Date. If any dividend on any Series A
Convertible Preferred Share shall for any legally permissible reason not be paid
at the time such dividend shall become due, then such dividend shall pass and
not cumulate. In the event that any dividends remain accrued but unpaid at the
time of any conversion or redemption of any of the Series A Convertible
Preferred Stock as set forth herein, such accrued but unpaid dividends shall be
paid in accordance with this paragraph, notwithstanding such conversion or
redemption.

         1.4    Distribution of Partial Dividend Payments. If at any time the
Corporation shall pay less than the total amount of dividends due on outstanding
Series A Convertible Preferred Stock at the time of such payment, such payment
shall be distributed among the holders of the Series A Convertible Preferred
Stock so that an equal amount shall be paid with respect to each outstanding
Series A Convertible Preferred Share.

SECTION 2.      REDEMPTION.

         From the date of issuance, in the case of an event described in
Subsection 3.2 hereof and, otherwise, on or after June 1, 2003, the Corporation
shall have the right, at its option and by resolution of its Board of Directors,
at any time it may lawfully do so, to redeem all or any portion of the
outstanding Series A Convertible Preferred Shares. Each Series A Convertible
Preferred Share to be so redeemed shall be redeemed against payment of an amount
in cash equal to the Liquidation Value of such Series A Convertible Preferred
Share multiplied by the following redemption premiums, plus, in each case, all
accrued but unpaid dividends thereon to the date fixed for redemption (the
"Redemption Price").

         If redeemed during the twelve-month period beginning June 1:



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<TABLE>


<S>                             <C>          <C>                        <C>
                  2003           105%*        2006                        102%
                  2004           104%         2007                        101%
                  2005           103%         2008 and thereafter         100%
</TABLE>

* The Series A Convertible Preferred Stock may be redeemed by the Corporation
prior to April 1, 2004 for 106%, if prior to April 1, 2004, the Corporation
shall enter into a merger, consolidation or reorganization in which the
Corporation is not the surviving entity.

         In the event the Corporation elects to redeem less than all of the
outstanding Series A Convertible Preferred Shares, it shall effect such
redemption ratably according to the number of Series A Convertible Preferred
Shares held by each holder of the then outstanding Series A Convertible
Preferred Stock.

         Notice of such redemption (the "Redemption Notice") specifying the date
fixed for said redemption (the "Redemption Date"), the Redemption Price, the
place where the amount to be paid upon redemption is payable and the date on
which Conversion Rights (as hereinafter defined) as to such Series A Convertible
Preferred Shares terminate and calling upon such holder to surrender his
certificate or certificates representing the Series A Convertible Preferred
Shares to be redeemed to the Corporation in the manner and at the place to be
designated in such Redemption Notice, shall be mailed, postage prepaid, at least
forty-five (45) days but not more than ninety (90) days prior to said Redemption
Date to the holders of record of the Series A Convertible Preferred Stock at
their respective addresses as the same shall appear on the books of the
Corporation. On or after the Redemption Date, each holder of shares of the
Series A Convertible Preferred Stock to be redeemed shall surrender his
certificate or certificates representing such Series A Convertible Preferred
Shares to the Corporation in the manner and at the place designated in the
Redemption Notice, and thereupon the amount payable upon redemption shall be
paid to the order of the person whose name appears on such certificate or
certificates as the owner thereof. In the event that less than all of the Series
A Convertible Preferred Shares represented by such certificate or certificates
are redeemed, a new certificate shall be issued representing the unredeemed
Series A Convertible Preferred Shares. All Series A Convertible Preferred Shares
so redeemed shall be canceled and retired and not reissued.

         If the Redemption Notice shall have been so mailed, and if, on or
before the Redemption Date specified in such notice, all funds necessary for
such redemption shall have been set aside by the Corporation, separate and apart
from its other funds, in trust for the account of the holders of the Series A
Convertible Preferred Shares to be redeemed, so as to be and to continue to be
available therefor, then, on and after said Redemption Date, notwithstanding
that any certificate for Series A Convertible Preferred Shares so called for
redemption shall not have been surrendered for cancellation, the Series A
Convertible Preferred Shares so called for redemption represented by any such
unsurrendered certificate shall be deemed to be no longer outstanding, the right
to receive dividends thereon shall cease, and all rights with respect to such
Series A Convertible Preferred Shares so called for redemption shall forthwith
cease and terminate, except the right of the holders thereof to receive out of
the funds so set aside in trust the amount payable on redemption thereof but
without any interest.



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         If the funds of the Corporation legally available for redemption on any
Redemption Date are insufficient to redeem the total number of Series A
Convertible Preferred Shares to be redeemed on such Redemption Date, those funds
which are legally available will be used to redeem the maximum possible number
of Series A Convertible Preferred Shares ratably among the holders of such
Series A Convertible Preferred Shares to be redeemed. The Series A Convertible
Preferred Shares not redeemed shall remain outstanding and entitled to all the
rights and preferences provided herein.

SECTION 3.      PREFERENCE ON LIQUIDATION.

         3.1    Series A Preference. In the event of any liquidation,
dissolution, involuntary or voluntary corporate reorganization under the federal
bankruptcy laws or similar state laws, or winding up of the Corporation, the
holders of Series A Convertible Preferred Shares then outstanding shall be
senior to any other class or series of capital stock of the Corporation, and
shall be entitled to be paid out of the assets and surplus funds of the
Corporation available for distribution to its stockholders, and before any
payment shall be made to the holders of any shares of Common Stock, an amount
equal to $100.00 per Series A Convertible Preferred Share (the "Liquidation
Value") plus declared but unpaid dividends thereon (on a non-cumulative basis)
to the date fixed for distribution. If upon any such liquidation, dissolution,
bankruptcy or winding up of the Corporation the assets and surplus funds of the
Corporation available for distribution to its shareholders shall be insufficient
to pay the holders of the Series A Convertible Preferred Stock the full amounts
to which they are entitled, the holders of the Series A Convertible Preferred
Stock shall share ratably in the distribution of such assets and surplus funds
in proportion to the full preferential amounts to which each such holder is
otherwise entitled.

         3.2    Effect of Merger or Asset Sale. The merger or consolidation of
the Corporation into or with another corporation or other entity or any other
corporate reorganization in which the Corporation shall not be the continuing or
surviving entity of such consolidation, merger or reorganization, the sale of
all or substantially all the assets of the Corporation, or a transaction or
series of related transactions by the Corporation in which in excess of fifty
percent (50%) of the Corporation's voting power is transferred, shall not be
deemed to be a liquidation, dissolution, bankruptcy or winding up of the
Corporation for purposes of this Section 3.

SECTION 4.      CONVERSION.

         The holders of the Series A Convertible Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):

         4.1    Right to Convert. Each Series A Convertible Preferred Share
shall be convertible, at the option of the holder thereof, without payment of
additional consideration, at any time beginning June 1, 2008, at the office of
the Corporation or the transfer agent, if any, for such Series A Convertible
Preferred Stock, into fully-paid and nonassessable shares of Common Stock as set
forth in Subsections 4.2 and 4.5 hereof. Notwithstanding the foregoing, in the
event of the mailing of a Redemption Notice with respect to any Series A





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Convertible Preferred Share pursuant to Section 2 hereof, the Conversion Rights
shall terminate as to the number of Series A Convertible Preferred Shares
designated for redemption at the close of business on the fifth day prior to the
Redemption Date, unless default is made in payment of the Redemption Price, in
which case the Conversion Rights for such Series A Convertible Preferred Shares
shall continue until such default is remedied.

         4.2    Conversion Price. The Series A Convertible Preferred Stock shall
be convertible into the number of shares of Common Stock which result from
dividing the Conversion Price, as hereinafter defined, in effect at the time of
conversion into the Liquidation Value. The price at which shares of Common Stock
shall be deliverable upon conversion of Series A Convertible Preferred Stock
shall initially be $8.00 per share of Common Stock (the "Conversion Price").
Such initial Conversion Price shall be subject to adjustment as hereinafter
provided.

         4.3    Mechanics of Conversion. Before any holder of the Series A
Convertible Preferred Stock shall be entitled to convert the same into full
shares of Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of the transfer
agent, if any, for such Series A Convertible Preferred Stock, and shall give
written notice to the Corporation at such office that he elects to convert the
same. The Corporation shall, as soon as practicable thereafter, issue and
deliver to such holder, at such office and in his name as shown on such
surrendered certificate or certificates, a certificate or certificates for the
number of shares of Common Stock into which such converted Series A Convertible
Preferred Shares were convertible on the Conversion Date, as hereinafter
defined. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the Series A Convertible
Preferred Shares (the "Conversion Date"). The person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of the Conversion Date.

         4.4    Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of Series A Convertible Preferred Shares. If
more than one Series A Convertible Preferred Share shall be surrendered for
conversion at any one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of Series A Convertible Preferred Shares so surrendered.
Instead of any fractional shares of Common Stock which would otherwise be
issuable upon conversion of any Series A Convertible Preferred Shares, the
Corporation shall pay a cash adjustment in respect of such fractional interest
in an amount equal to that fractional interest of the then current market price.

         4.5    Conversion Price Adjustments. In the event of any of the
following (a "Conversion Price Adjustment Event"): (a) any event described in
Section 3.2 hereof; (b) any issuance of Common Stock for less than 75% of the
then market value of the Common Stock; provided however that this clause (b)
shall not be deemed to include Common Stock issued pursuant to any Stock Option,
Restricted Stock or any other like employee benefit plan, agreement or contract;
(c) any issuance of a Common Stock dividend; (d) any subdivision of shares of
Common Stock; (e) any consolidation of shares of Common Stock; or (f) any other
event that would cause - (i) the number of shares of Common Stock or (ii) the
proportion of




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stockholders' equity represented by Common Stock -- to be received upon
conversion of a Series A Convertible Preferred Share to be less than it would
have been absent such event then:

         The Conversion Price shall be adjusted such that the holder of a
         Series A Preferred Share shall receive upon conversion of such share,
         that consideration equal in value and kind that such holder would have
         received had such holder converted his Series A Preferred Share
         immediately prior to the occurrence of the Conversion Price Adjustment
         Event.

         4.6    Statement Regarding Adjustments. Whenever the Conversion Price
shall be adjusted as provided in Subsection 4.5, the Corporation shall forthwith
file, at the office of the transfer agent, if any, for the Series A Convertible
Preferred Stock and at the principal office of the Corporation, a statement
showing in detail the facts requiring such adjustment and the Conversion Price
that shall be in effect after such adjustment, and the Corporation shall also
cause a copy of such statement to be sent by mail, first class postage prepaid,
to each holder of Series A Convertible Preferred Shares at the holder's address
appearing on the Corporation's records. Each such statement shall be signed by
the Corporation's independent public accountants, if applicable.

         4.7    Treasury Stock. For the purposes of this Section 4, the sale or
other disposition of Common Stock theretofore held in the Corporation's treasury
shall be deemed to be an issuance thereof.

         4.8    Costs. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock upon conversion of any Series A Convertible Preferred
Shares; provided that the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in a name other than that of the
holder of the Series A Convertible Preferred Shares in respect of which such
shares are being issued.

         4.9    Reservation of Shares. The Corporation shall reserve at all
times so long as any Series A Convertible Preferred Shares remain outstanding,
free from preemptive rights, out of its treasury stock (if applicable) or its
authorized but unissued shares of Common Stock, or both, solely for the purpose
of effecting the conversion of the Series A Convertible Preferred Shares,
sufficient shares of Common Stock to provide for the conversion of all
outstanding Series A Convertible Preferred Shares.

         4.10   Approvals. If any shares of Common Stock to be reserved for the
purpose of conversion of Series A Convertible Preferred Shares require
registration with or approval of any governmental authority under any federal or
state law before such shares may be validly issued or delivered upon conversion,
then the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be. If, and so
long as, any Common Stock into which the Series A Convertible Preferred Shares
are then convertible is listed on any national securities exchange, the
Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all shares of such
Common Stock issuable upon conversion.



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         4.11   Valid Issuance. All shares of Common Stock which may be issued
upon conversion of the Series A Convertible Preferred Shares will upon issuance
by the Corporation be duly and validly issued, fully paid and nonassessable and
free from all taxes (except as otherwise provided in Subsection 4.9), liens and
charges with respect to the issuance thereof, and the Corporation shall take no
action which will cause a contrary result (including without limitation, any
action which would cause the Conversion Price to be less than the par value, if
any, of the Common Stock).

SECTION 5.      VOTING RIGHTS.

         The holders of the Series A Preferred stock shall have no voting
rights.

SECTION 6.      PROTECTIVE PROVISIONS.

         So long as any Series A Convertible Preferred Share is outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the then
outstanding Series A Convertible Preferred Shares, alter or change the rights,
preferences or privileges of the Series A Convertible Preferred Stock as to
adversely affect such series.

         Nothing herein shall require the consent or approval of the holders of
the Corporation's Common Stock to modify, change, amend or otherwise alter the
provisions of this Certificate of Designation.



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         IN WITNESS WHEREOF, the undersigned have executed this certificate on
the 23rd day of May, 2003.


                                    By       /s/ James A. Taylor, Jr.
                                       ----------------------------------------
                                                     President and
                                                 Chief Operating Officer


                                    By       /s/ F. Hampton McFadden, Jr.
                                      ------------------------------------------
                                                Executive Vice President,
                                              General Counsel and Secretary


         The undersigned James A. Taylor, Jr., President and Chief Operating
Officer of The Banc Corporation, and F. Hampton McFadden, Jr., Executive Vice
President and Secretary of The Banc Corporation, each certify, that the matters
set forth in this certificate are true and correct.

         Executed as of May 23, 2003.


                                    By       /s/ James A. Taylor, Jr.
                                       ----------------------------------------
                                                     President and
                                                 Chief Operating Officer


                                    By       /s/ F. Hampton McFadden, Jr.
                                      ------------------------------------------
                                                Executive Vice President,
                                              General Counsel and Secretary


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