##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC
 Form 10-Q/A
 AMENDMENT NO. 1 TO
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005
 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
 
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    63-1201350(State or Other Jurisdiction of Incorporation)
    
    (IRS Employer Identification No.)
  
 (Address of Principal Executive Offices)
  
 (Registrants Telephone Number, Including Area Code)
  þ o
  o þ o
  o þ
  Class
    
    Outstanding as of June 30, 2005Common stock, $.001 par value
    
    19,551,411




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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-31.01 SECTION 302 CERTIFICATION OF THE CEOEX-31.02 SECTION 302 CERTIFICATION OF THE PFOEX-32.01 SECTION 906 CERTIFICATION OF THE CEOEX-32.02 SECTION 906 CERTIFICATION OF THE PFO    Table of Contents   Accounting for Derivative Instruments and
Hedging Activities
      2




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 
 Item 1. FINANCIAL STATEMENTS
 THE BANC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS)
 (Restated)June 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCash and due from banks
    
    $
    29,651
    
    
    $
    23,489Interest-bearing deposits in other banks
    
    
    4,769
    
    
    
    11,411Federal funds sold
    
    
    7,595
    
    
    
    11,000Investment securities available for sale
    
    
    264,178
    
    
    
    288,308Mortgage loans held for sale
    
    
    29,822
    
    
    
    8,095Loans, net of unearned income
    
    
    903,456
    
    
    
    934,868Less: Allowance for loan losses
    
    
    (12,263
    )
    
    
    (12,543
    )Net loans
    
    
    891,193
    
    
    
    922,325Premises and equipment, net
    
    
    55,782
    
    
    
    60,434Accrued interest receivable
    
    
    6,084
    
    
    
    6,237Stock in FHLB and Federal Reserve Bank
    
    
    11,821
    
    
    
    11,787Cash surrender value of life insurance
    
    
    38,614
    
    
    
    38,369Other assets
    
    
    43,758
    
    
    
    41,673TOTAL ASSETS
    
    $
    1,383,267
    
    
    $
    1,423,128LIABILITIES AND STOCKHOLDERS EQUITYDepositsNoninterest-bearing
    
    $
    95,972
    
    
    $
    89,487Interest-bearing
    
    
    943,820
    
    
    
    977,719TOTAL DEPOSITS
    
    
    1,039,792
    
    
    
    1,067,206Advances from FHLB
    
    
    146,090
    
    
    
    156,090Federal funds borrowed and security repurchase agreements
    
    
    38,157
    
    
    
    49,456Notes payable
    
    
    3,860
    
    
    
    3,965Junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    
    31,959
    
    
    
    31,959Accrued expenses and other liabilities
    
    
    21,222
    
    
    
    13,913TOTAL LIABILITIES
    
    
    1,281,080
    
    
    
    1,322,589Stockholders EquityConvertible preferred stock, par value $.001 per share; authorized
5,000,000 shares; shares issued and outstanding -0- and 62,000,
respectively
    
    
    
    
    
    
    Common stock, par value $.001 per share; authorized 35,000,000
shares; shares issued 19,805,956 and 18,025,932, respectively;
outstanding 19,551,411 and 17,749,846, respectively
    
    
    20
    
    
    
    18Surplus  preferred
    
    
    
    
    
    
    6,193 common stock
    
    
    84,589
    
    
    
    68,428Retained earnings
    
    
    20,267
    
    
    
    29,591Accumulated other comprehensive loss
    
    
    (648
    )
    
    
    (1,094
    )Treasury stock, at cost
    
    
    (341
    )
    
    
    (390
    )Unearned ESOP stock
    
    
    (1,651
    )
    
    
    (1,758
    )Unearned restricted stock
    
    
    (49
    )
    
    
    (449
    )TOTAL STOCKHOLDERS EQUITY
    
    
    102,187
    
    
    
    100,539TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,383,267
    
    
    $
    1,423,128
  3




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THE BANC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)INTEREST INCOMEInterest and fees on loans
    
    $
    15,590
    
    
    $
    13,691
    
    
    $
    30,468
    
    
    $
    27,258Interest on
investment securitiesTaxable
    
    
    2,945
    
    
    
    2,109
    
    
    
    5,870
    
    
    
    3,822Exempt from Federal income tax
    
    
    59
    
    
    
    26
    
    
    
    117
    
    
    
    41Interest on federal funds sold
    
    
    109
    
    
    
    41
    
    
    
    191
    
    
    
    75Interest and dividends on other investments
    
    
    254
    
    
    
    231
    
    
    
    497
    
    
    
    396Total interest income
    
    
    18,957
    
    
    
    16,098
    
    
    
    37,143
    
    
    
    31,592INTEREST EXPENSEInterest on deposits
    
    
    6,528
    
    
    
    4,505
    
    
    
    12,565
    
    
    
    8,782Interest on other borrowed funds
    
    
    1,881
    
    
    
    1,456
    
    
    
    3,738
    
    
    
    3,122Interest on subordinated debentures
    
    
    699
    
    
    
    626
    
    
    
    1,384
    
    
    
    1,252Total interest expense
    
    
    9,108
    
    
    
    6,587
    
    
    
    17,687
    
    
    
    13,156NET INTEREST INCOME
    
    
    9,849
    
    
    
    9,511
    
    
    
    19,456
    
    
    
    18,436Provision for loan losses
    
    
    1,500
    
    
    
    
    
    
    
    2,250
    
    
    
    NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES
    
    
    8,349
    
    
    
    9,511
    
    
    
    17,206
    
    
    
    18,436NONINTEREST INCOMEService charges and fees on deposits
    
    
    1,166
    
    
    
    1,397
    
    
    
    2,278
    
    
    
    2,788Mortgage banking income
    
    
    762
    
    
    
    383
    
    
    
    1,208
    
    
    
    787Investment security (losses) gains
    
    
    (68
    )
    
    
    37
    
    
    
    (977
    )
    
    
    428Change in fair value of derivatives
    
    
    933
    
    
    
    
    
    
    
    703
    
    
    
    Gain on sale of branches
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    739Increase in cash surrender value of life insurance
    
    
    391
    
    
    
    410
    
    
    
    742
    
    
    
    813Insurance proceeds
    
    
    5,000
    
    
    
    
    
    
    
    5,000
    
    
    
    Other income
    
    
    510
    
    
    
    572
    
    
    
    987
    
    
    
    1,012TOTAL NONINTEREST INCOME
    
    
    8,694
    
    
    
    2,799
    
    
    
    9,941
    
    
    
    6,567NONINTEREST EXPENSESSalaries and employee benefits
    
    
    5,927
    
    
    
    5,871
    
    
    
    11,329
    
    
    
    11,457Occupancy, furniture and equipment expense
    
    
    2,059
    
    
    
    2,094
    
    
    
    4,040
    
    
    
    4,052Management separation costs
    
    
    2,961
    
    
    
    
    
    
    
    15,338
    
    
    
    Other operating expenses
    
    
    4,536
    
    
    
    3,202
    
    
    
    8,098
    
    
    
    6,804TOTAL NONINTEREST EXPENSES
    
    
    15,483
    
    
    
    11,167
    
    
    
    38,805
    
    
    
    22,313Income (loss) before income taxes
    
    
    1,560
    
    
    
    1,143
    
    
    
    (11,658
    )
    
    
    2,690INCOME TAX EXPENSE (BENEFIT)
    
    
    412
    
    
    
    79
    
    
    
    (4,645
    )
    
    
    398NET INCOME (LOSS)
    
    
    1,148
    
    
    
    1,064
    
    
    
    (7,013
    )
    
    
    2,292PREFERRED STOCK DIVIDENDS
    
    
    305
    
    
    
    217
    
    
    
    305
    
    
    
    217EFFECT OF EARLY CONVERSION OF PREFERRED STOCK
    
    
    2,006
    
    
    
    
    
    
    
    2,006
    
    
    
    NET (LOSS) INCOME APPLICABLE TO COMMON
STOCKHOLDERS
    
    $
    (1,163
    )
    
    $
    847
    
    
    $
    (9,324
    )
    
    $
    2,075BASIC NET (LOSS) INCOME PER COMMON SHARE
    
    $
    (0.06
    )
    
    $
    0.05
    
    
    $
    (0.50
    )
    
    $
    0.12DILUTED NET (LOSS) INCOME PER COMMON SHARE
    
    $
    (0.06
    )
    
    $
    0.05
    
    
    $
    (0.50
    )
    
    $
    0.11WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    
    
    18,726
    
    
    
    17,578
    
    
    
    18,562
    
    
    
    17,569WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
ASSUMING DILUTION
    
    
    18,726
    
    
    
    18,487
    
    
    
    18,562
    
    
    
    18,532
  4




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THE BANC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(DOLLARS IN THOUSANDS)
 Six Months EndedJune 302005
    
    
    2004NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES
    
    $
    (20,929
    )
    
    $
    5,028CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease (increase) in interest-bearing deposits in other banks
    
    
    6,642
    
    
    
    (4,926
    )Net decrease (increase) in federal funds sold
    
    
    3,405
    
    
    
    (18,000
    )Proceeds from sales of securities available for sale
    
    
    57,150
    
    
    
    71,720Proceeds from maturities of investment securities available for sale
    
    
    20,105
    
    
    
    36,105Purchases of investment securities available for sale
    
    
    (53,609
    )
    
    
    (161,819
    )Net decrease (increase) in loans
    
    
    31,603
    
    
    
    (39,344
    )Purchases of premises and equipment
    
    
    (511
    )
    
    
    (2,801
    )Proceeds from sales of premises and equipment
    
    
    3,055
    
    
    
    579Net cash paid in branch sale
    
    
    
    
    
    
    (6,626
    )Purchase of life insurance
    
    
    
    
    
    
    (5,000
    )Increase in other investments
    
    
    (34
    )
    
    
    (1,744
    )Net cash provided (used) by investing activities
    
    
    67,806
    
    
    
    (131,856
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net (decrease) increase in deposit accounts
    
    
    (26,711
    )
    
    
    82,144Net (decrease) increase in FHLB advances and other borrowed funds
    
    
    (21,299
    )
    
    
    39,326Payments made on long term debt
    
    
    (105
    )
    
    
    (105
    )Proceeds from sale of common stock
    
    
    7,705
    
    
    
    49Cash dividends paid
    
    
    (305
    )
    
    
    (217
    )Net cash (used) provided by financing activities
    
    
    (40,715
    )
    
    
    121,197Net increase (decrease) in cash and due from banks
    
    
    6,162
    
    
    
    (5,631
    )Cash and due from banks at beginning of period
    
    
    23,489
    
    
    
    31,679CASH AND DUE FROM BANKS AT END OF PERIOD
    
    $
    29,651
    
    
    $
    26,048
  5




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1- BASIS OF PRESENTATION
   Restated Results of Operations and Financial Condition
 Accounting for Derivative Instruments and Hedging Activities
    6




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Condensed ConsolidatedStatement of Condition
    
    June 30, 2005(In thousands)
    
    As previously Reported
    
    


RestatedOther assets
    
    $
    44,018
    
    
    $
    43,758Interest-bearing deposits
    
    
    944,523
    
    
    
    943,820Retained earnings
    
    
    19,824
    
    
    
    20,267
 For the three months ended
    
    
    For the six months endedJune 30, 2005
    
    
    June 30, 2005Condensed Consolidated Statement of Operations
    
    As previously
    
    
    
    
    
    
    As previously(In thousands, except per share data)
    
    Reported
    
    

Restated
    
    
    Reported
    
    


RestatedChange in fair value of derivatives
    
    $
    
    
    
    $
    933
    
    
    $
    
    
    
    $
    703Income (loss) before income tax expense (benefit)
    
    
    627
    
    
    
    1,560
    
    
    
    (12,361
    )
    
    
    (11,658
    )Income tax expense (benefit)
    
    
    67
    
    
    
    412
    
    
    
    (4,905
    )
    
    
    (4,645
    )Net income (loss)
    
    
    560
    
    
    
    1,148
    
    
    
    (7,456
    )
    
    
    (7,013
    )Net loss applicable to common
stockholders
    
    
    (1,751
    )
    
    
    (1,163
    )
    
    
    (9,767
    )
    
    
    (9,324
    )Basic and
diluted net loss per common
share
    
    $
    (0.09
    )
    
    $
    (0.06
    )
    
    $
    (0.53
    )
    
    $
    (0.50
    )
  Note 2  RECENT ACCOUNTING PRONOUNCEMENTS
  7




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Note 3  RECENT DEVELOPMENTS
      8




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Note 4  ASSET SALES
   Note 5  SEGMENT REPORTING
   Alabama
    
    
    FloridaRegion
    
    
    Region
    
    
    Combined(Restated)
    
    
    
    
    
    
    (Restated)Three months ended June 30, 2005Net interest income
    
    $
    6,757
    
    
    $
    3,092
    
    
    $
    9,849Provision for loan losses
    
    
    1,379
    
    
    
    121
    
    
    
    1,500Noninterest income (1)
    
    
    8,365
    
    
    
    329
    
    
    
    8,694Noninterest expense (2)(3)
    
    
    14,456
    
    
    
    1,027
    
    
    
    15,483Income tax (benefit) expense
    
    
    (206
    )
    
    
    618
    
    
    
    412Net (loss) income
    
    
    (507
    )
    
    
    1,655
    
    
    
    1,148Total assets
    
    
    1,108,062
    
    
    
    275,205
    
    
    
    1,383,267Three months ended June 30, 2004Net interest income
    
    $
    6,886
    
    
    $
    2,625
    
    
    $
    9,511Provision for loan losses (1)
    
    
    984
    
    
    
    (984
    )
    
    
    Noninterest income (1)
    
    
    2,467
    
    
    
    332
    
    
    
    2,799Noninterest expense (2)
    
    
    8,743
    
    
    
    2,424
    
    
    
    11,167Income tax (benefit) expense
    
    
    (377
    )
    
    
    456
    
    
    
    79Net income
    
    
    3
    
    
    
    1,061
    
    
    
    1,064Total assets (1)
    
    
    1,063,265
    
    
    
    224,771
    
    
    
    1,288,036Six months ended June 30, 2005Net interest income
    
    $
    13,535
    
    
    $
    5,921
    
    
    $
    19,456Provision for loan losses
    
    
    2,112
    
    
    
    138
    
    
    
    2,250Noninterest income (1)
    
    
    9,288
    
    
    
    653
    
    
    
    9,941Noninterest expense (2)(3)
    
    
    36,630
    
    
    
    2,175
    
    
    
    38,805Income tax (benefit) expense
    
    
    (5,845
    )
    
    
    1,200
    
    
    
    (4,645
    )
 9




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##### Table of Contents



Alabama
    
    
    FloridaRegion
    
    
    Region
    
    
    Combined(Restated)
    
    
    
    
    
    
    (Restated)Net (loss) income
    
    
    (10,074
    )
    
    
    3,061
    
    
    
    (7,013
    )Six months ended June 30, 2004Net interest income
    
    $
    13,213
    
    
    $
    5,223
    
    
    $
    18,436Provision for loan losses (1)
    
    
    1,956
    
    
    
    (1,956
    )
    
    
    Noninterest income (1)
    
    
    5,865
    
    
    
    702
    
    
    
    6,567Noninterest expense (2)
    
    
    17,412
    
    
    
    4,901
    
    
    
    22,313Income tax (benefit) expense
    
    
    (481
    )
    
    
    879
    
    
    
    398Net income
    
    
    191
    
    
    
    2,101
    
    
    
    2,292
 
 (1)
    
    See Notes 3 and 4 concerning branch sales and insurance proceeds. Also, in January 2004,
certain loans were transferred from the Florida segment to the Corporations special assets
department, which is included in the Alabama segment.(2)
    
    Noninterest expense for the Alabama region includes all expenses for the holding company,
which have not been prorated to the Florida region.(3)
    
    See Notes 3 and 4 concerning the amount of management separation charges and loss on the sale
of assets. Note 6  NET (LOSS) INCOME PER COMMON SHARE
  Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)Numerator:Net income (loss)
    
    $
    1,148
    
    
    $
    1,064
    
    
    
    (7,013
    )
    
    
    2,292Less preferred dividends
    
    
    305
    
    
    
    217
    
    
    
    305
    
    
    
    217Less effect of preferred stock conversion
    
    
    2,006
    
    
    
    
    
    
    
    2,006
    
    
    
    For basic and diluted, net (loss) income applicable to
common stockholders
    
    $
    (1,163
    )
    
    $
    847
    
    
    $
    (9,324
    )
    
    $
    2,075Denominator:For basic, weighted average common shares outstanding
    
    
    18,726
    
    
    
    17,578
    
    
    
    18,562
    
    
    
    17,569Effect of dilutive stock options, restricted stock and
convertible preferred
    
    
    
    
    
    
    909
    
    
    
    
    
    
    
    963Weighted average common shares outstanding, assuming dilution
    
    
    18,726
    
    
    
    18,487
    
    
    
    18,562
    
    
    
    18,532Basic net (loss) income per common share
    
    $
    (.06
    )
    
    $
    .05
    
    
    $
    (.50
    )
    
    $
    .12Diluted net (loss) income per common share
    
    $
    (.06
    )
    
    $
    .05
    
    
    $
    (.50
    )
    
    $
    .11
   Note 7
 COMPREHENSIVE INCOME (LOSS) (Restated)
  10




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Note 8  INCOME TAXES
  Note 9  JUNIOR SUBORDINATED DEBENTURES
    June 30, 2005
    
    
    December 31, 200410.6% 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
   Note 10  STOCKHOLDERS EQUITY
    11




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June 30, 2005Allocated shares
    
    
    55,328Estimated shares committed to be released
    
    
    13,350Unreleased shares
    
    
    204,722Total ESOP shares
    
    
    273,400Fair value of unreleased shares
    
    $
    2,166,000








12




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For the Three Months Ended
    
    
    For the Six Months EndedJune 30, 2005
    
    
    June 30, 2004
    
    
    June 30, 2005
    
    
    June 30, 2004(Restated)
    
    
    
    
    
    
    (Restated)Net income (loss):As reported
    
    $
    1,148
    
    
    $
    1,064
    
    
    $
    (7,013
    )
    
    $
    2,292Pro forma
    
    
    (407
    )
    
    
    666
    
    
    
    (10,729
    )
    
    
    1,787(Loss) earnings per common share:As reported
    
    $
    (.06
    )
    
    $
    .05
    
    
    $
    (.50
    )
    
    $
    .12Pro forma
    
    
    (.15
    )
    
    
    .03
    
    
    
    (.70
    )
    
    
    .09Diluted (loss) earnings per common share:As reported
    
    $
    (.06
    )
    
    $
    .05
    
    
    $
    (.50
    )
    
    $
    .11Pro forma
    
    
    (.15
    )
    
    
    .02
    
    
    
    (.70
    )
    
    
    .08
  June 302005
    
    2004Risk-free interest rate
    
    
    4.34
    %
    
    
    4.69
    %Volatility factor
    
    
    .41
    
    
    
    .41Weighted average life of options
    
    
    7.00
    
    
    
    7.00Dividend yield
    
    
    0.00
    
    
    
    0.00
 13




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .
    Restated Results of Operations and Financial Condition
 Accounting for
Derivative Instruments and Hedging Activities
       14




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15




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16




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##### Table of Contents



Average Balances, Income, Expense and Rates
 Three Months Ended June 30,2005
    
    
    2004Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income(1)
    
    $
    945,407
    
    
    $
    15,590
    
    
    
    6.61
    %
    
    $
    869,376
    
    
    $
    13,691
    
    
    
    6.33
    %Investment securitiesTaxable
    
    
    251,876
    
    
    
    2,945
    
    
    
    4.69
    
    
    
    183,643
    
    
    
    2,109
    
    
    
    4.62Tax-exempt(2)
    
    
    6,616
    
    
    
    89
    
    
    
    5.40
    
    
    
    2,744
    
    
    
    39
    
    
    
    5.72Total investment securities
    
    
    258,492
    
    
    
    3,034
    
    
    
    4.71
    
    
    
    186,387
    
    
    
    2,148
    
    
    
    4.64Federal funds sold
    
    
    15,851
    
    
    
    109
    
    
    
    2.76
    
    
    
    17,670
    
    
    
    41
    
    
    
    .93Other investments
    
    
    21,571
    
    
    
    254
    
    
    
    4.72
    
    
    
    47,945
    
    
    
    231
    
    
    
    1.94Total interest-earning assets
    
    
    1,241,321
    
    
    
    18,987
    
    
    
    6.14
    
    
    
    1,121,378
    
    
    
    16,111
    
    
    
    5.78Noninterest-earning assets:Cash and due from banks
    
    
    29,032
    
    
    
    
    
    
    
    
    
    
    
    30,783Premises and equipment
    
    
    57,211
    
    
    
    
    
    
    
    
    
    
    
    58,129Accrued interest and other assets
    
    
    87,290
    
    
    
    
    
    
    
    
    
    
    
    83,443Allowance for loan losses
    
    
    (12,783
    )
    
    
    
    
    
    
    
    
    
    
    (23,308
    )Total assets
    
    $
    1,402,071
    
    
    
    
    
    
    
    
    
    
    $
    1,270,425LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    335,803
    
    
    
    1,645
    
    
    
    1.96
    
    
    $
    258,926
    
    
    
    813
    
    
    
    1.26Savings deposits
    
    
    27,078
    
    
    
    10
    
    
    
    0.15
    
    
    
    28,987
    
    
    
    11
    
    
    
    0.15Time deposits
    
    
    605,584
    
    
    
    4,873
    
    
    
    3.23
    
    
    
    578,039
    
    
    
    3,681
    
    
    
    2.56Other borrowings
    
    
    190,113
    
    
    
    1,881
    
    
    
    3.97
    
    
    
    173,170
    
    
    
    1,456
    
    
    
    3.38Subordinated debentures
    
    
    31,959
    
    
    
    699
    
    
    
    8.77
    
    
    
    31,959
    
    
    
    626
    
    
    
    7.88Total interest-bearing liabilities
    
    
    1,190,537
    
    
    
    9,108
    
    
    
    3.07
    
    
    
    1,071,081
    
    
    
    6,587
    
    
    
    2.47Noninterest-bearing liabilities:Demand deposits
    
    
    92,120
    
    
    
    
    
    
    
    
    
    
    
    87,153Accrued interest and other liabilities
    
    
    18,356
    
    
    
    
    
    
    
    
    
    
    
    11,643Stockholders equity
    
    
    101,058
    
    
    
    
    
    
    
    
    
    
    
    100,548Total liabilities and
stockholders equity
    
    $
    1,402,071
    
    
    
    
    
    
    
    
    
    
    $
    1,270,425Net interest income/net interest spread
    
    
    
    
    
    
    9,879
    
    
    
    3.07
    %
    
    
    
    
    
    
    9,524
    
    
    
    3.31
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.19
    %
    
    
    
    
    
    
    
    
    
    
    3.42
    %Taxable equivalent adjustment:Investment securities(2)
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    13Net interest income
    
    
    
    
    
    $
    9,849
    
    
    
    
    
    
    
    
    
    
    $
    9,511
 
 (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%.  17




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##### Table of Contents



Three Months Ended June 30 (1)2005 Vs 2004Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    1,899
    
    
    $
    638
    
    
    $
    1,261Interest on securities:Taxable
    
    
    836
    
    
    
    33
    
    
    
    803Tax-exempt
    
    
    50
    
    
    
    (2
    )
    
    
    52Interest on federal funds
    
    
    68
    
    
    
    73
    
    
    
    (5
    )Interest on other investments
    
    
    23
    
    
    
    201
    
    
    
    (178
    )Total interest income
    
    
    2,876
    
    
    
    943
    
    
    
    1,933Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    832
    
    
    
    542
    
    
    
    290Interest on savings deposits
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Interest on time deposits
    
    
    1,192
    
    
    
    1,008
    
    
    
    184Interest on other borrowings
    
    
    425
    
    
    
    272
    
    
    
    153Interest subordinated debentures
    
    
    73
    
    
    
    73
    
    
    
    Total interest expense
    
    
    2,521
    
    
    
    1,895
    
    
    
    626Net interest income
    
    $
    355
    
    
    $
    (952
    )
    
    $
    1,307
 
 (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. 18




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##### Table of Contents



Six Months Ended June 30,2005
    
    
    2004Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)ASSETSInterest-earning assets:Loans, net of unearned income(1)
    
    $
    949,626
    
    
    $
    30,468
    
    
    
    6.47
    %
    
    $
    863,800
    
    
    $
    27,258
    
    
    
    6.35
    %Investment securities Taxable
    
    
    264,178
    
    
    
    5,870
    
    
    
    4.48
    
    
    
    170,639
    
    
    
    3,822
    
    
    
    4.50Tax-exempt(2)
    
    
    6,624
    
    
    
    177
    
    
    
    5.39
    
    
    
    2,030
    
    
    
    62
    
    
    
    6.14Total investment securities
    
    
    270,802
    
    
    
    6,047
    
    
    
    4.50
    
    
    
    172,669
    
    
    
    3,884
    
    
    
    4.52Federal funds sold
    
    
    14,726
    
    
    
    191
    
    
    
    2.62
    
    
    
    16,055
    
    
    
    75
    
    
    
    0.94Other investments
    
    
    23,962
    
    
    
    497
    
    
    
    4.18
    
    
    
    42,257
    
    
    
    396
    
    
    
    1.88Total interest-earning assets
    
    
    1,259,116
    
    
    
    37,203
    
    
    
    5.96
    
    
    
    1,094,781
    
    
    
    31,613
    
    
    
    5.81Noninterest-earning assets:Cash and due from banks
    
    
    30,748
    
    
    
    
    
    
    
    
    
    
    
    29,002Premises and equipment
    
    
    58,076
    
    
    
    
    
    
    
    
    
    
    
    58,076Accrued interest and other assets
    
    
    83,525
    
    
    
    
    
    
    
    
    
    
    
    82,192Allowance for loan losses
    
    
    (12,792
    )
    
    
    
    
    
    
    
    
    
    
    (24,396
    )Total assets
    
    $
    1,418,673
    
    
    
    
    
    
    
    
    
    
    $
    1,239,655LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    319,371
    
    
    
    2,755
    
    
    
    1.74
    
    
    $
    248,361
    
    
    
    1,494
    
    
    
    1.21Savings deposits
    
    
    27,643
    
    
    
    21
    
    
    
    0.15
    
    
    
    29,692
    
    
    
    24
    
    
    
    0.16Time deposits
    
    
    631,728
    
    
    
    9,789
    
    
    
    3.12
    
    
    
    561,091
    
    
    
    7,264
    
    
    
    2.60Other borrowings
    
    
    196,323
    
    
    
    3,738
    
    
    
    3.84
    
    
    
    172,606
    
    
    
    3,122
    
    
    
    3.64Subordinated debentures
    
    
    31,959
    
    
    
    1,384
    
    
    
    8.73
    
    
    
    31,959
    
    
    
    1,252
    
    
    
    7.88Total interest-bearing liabilities
    
    
    1,207,024
    
    
    
    17,687
    
    
    
    2.95
    
    
    
    1,043,709
    
    
    
    13,156
    
    
    
    2.53Noninterest-bearing liabilities:Demand deposits
    
    
    93,792
    
    
    
    
    
    
    
    
    
    
    
    84,200Accrued interest and other liabilities
    
    
    16,870
    
    
    
    
    
    
    
    
    
    
    
    11,419Stockholders equity
    
    
    100,987
    
    
    
    
    
    
    
    
    
    
    
    100,327Total liabilities and stockholders equity
    
    $
    1,418,673
    
    
    
    
    
    
    
    
    
    
    $
    1,239,655Net interest income/net interest spread
    
    
    
    
    
    
    19,516
    
    
    
    3.01
    %
    
    
    
    
    
    
    18,457
    
    
    
    3.28
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.13
    %
    
    
    
    
    
    
    
    
    
    
    3.39
    %Taxable equivalent adjustment:Investment securities(2)
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    21Net interest income
    
    
    
    
    
    $
    19,456
    
    
    
    
    
    
    
    
    
    
    $
    18,436
 
 (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%. 19




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##### Table of Contents



Six Months Ended June 30 (1)2005 vs 2004Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    3,210
    
    
    $
    513
    
    
    $
    2,697Interest on securities:Taxable
    
    
    2,048
    
    
    
    
    
    
    
    2,048Tax-exempt
    
    
    115
    
    
    
    (2
    )
    
    
    117Interest on federal funds
    
    
    116
    
    
    
    117
    
    
    
    (1
    )Interest on other investments
    
    
    101
    
    
    
    201
    
    
    
    (100
    )Total interest income
    
    
    5,590
    
    
    
    829
    
    
    
    4,761Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    1,261
    
    
    
    763
    
    
    
    498Interest on savings deposits
    
    
    (3
    )
    
    
    (1
    )
    
    
    (2
    )Interest on time deposits
    
    
    2,525
    
    
    
    1,550
    
    
    
    975Interest on other borrowings
    
    
    616
    
    
    
    176
    
    
    
    440Interest subordinated debentures
    
    
    132
    
    
    
    132
    
    
    
    Total interest expense
    
    
    4,531
    
    
    
    2,620
    
    
    
    1,911Net interest income
    
    $
    1,059
    
    
    $
    (1,791
    )
    
    $
    2,850
 
 (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 expense
  20




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##### Table of Contents



Income tax expense
 Provision for Loan Losses
    Short-term liquid assets
 Investment Securities
 21




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##### Table of Contents



Loans
 Distribution of Loans by Category
 June 30, 2005
    
    
    December 31, 2004Percent
    
    
    
    
    
    
    Percentof
    
    
    
    
    
    
    ofAmount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial and industrial
    
    $
    115,775
    
    
    
    12.8
    %
    
    $
    131,979
    
    
    
    14.1
    %Real estate
 construction and land development
    
    
    259,054
    
    
    
    28.6
    
    
    
    249,188
    
    
    
    26.6Real estate
 mortgage Single-family
    
    
    238,903
    
    
    
    26.4
    
    
    
    250,718
    
    
    
    26.8Commercial
    
    
    236,275
    
    
    
    26.1
    
    
    
    242,279
    
    
    
    25.9Other
    
    
    26,634
    
    
    
    2.9
    
    
    
    25,745
    
    
    
    2.7Consumer
    
    
    21,481
    
    
    
    2.4
    
    
    
    28,431
    
    
    
    3.0Other
    
    
    6,699
    
    
    
    .8
    
    
    
    8,045
    
    
    
    .9Total loans
    
    
    904,821
    
    
    
    100.0
    %
    
    
    936,385
    
    
    
    100.0
    %Unearned income
    
    
    (1,365
    )
    
    
    
    
    
    
    (1,517
    )Allowance for loan losses
    
    
    (12,263
    )
    
    
    
    
    
    
    (12,543
    )Net loans
    
    $
    891,193
    
    
    
    
    
    
    $
    922,325
 Deposits
   Borrowings
 22




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##### Table of Contents



Junior Subordinated Debentures
   June 30, 2005
    
    
    December 31, 2004(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
   Allowance for Loan Losses
     23




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##### Table of Contents



Summary of Loan Loss Experience
 Six-MonthPeriod Ended
    
    
    Year EndedJune 30,
    
    
    December 31,2005
    
    
    2004(Dollars in thousands)Allowance for loan losses at beginning of period
    
    $
    12,543
    
    
    $
    25,174Charge-offs:Commercial and industrial
    
    
    1,161
    
    
    
    7,690Real estate
 construction and land development
    
    
    74
    
    
    
    765Real estate
 mortgage Single-family
    
    
    499
    
    
    
    1,012Commercial
    
    
    995
    
    
    
    5,820Other
    
    
    20
    
    
    
    86Consumer
    
    
    380
    
    
    
    1,881Other
    
    
    254
    
    
    
    87Total charge-offs
    
    
    3,383
    
    
    
    17,341Recoveries:Commercial and industrial
    
    
    210
    
    
    
    1,468Real estate
 construction and land development
    
    
    25
    
    
    
    4Real estate
 mortgage Single-family
    
    
    282
    
    
    
    470Commercial
    
    
    124
    
    
    
    737Other
    
    
    73
    
    
    
    97Consumer
    
    
    97
    
    
    
    549Other
    
    
    42
    
    
    
    410Total recoveries
    
    
    853
    
    
    
    3,735Net charge-offs
    
    
    2,530
    
    
    
    13,606Provision for loan losses
    
    
    2,250
    
    
    
    975Allowance for loan losses at end of period
    
    $
    12,263
    
    
    $
    12,543Loans at end of period, net of unearned income
    
    $
    903,456
    
    
    $
    934,868Average loans, net of unearned income
    
    
    949,626
    
    
    
    894,406Ratio of ending allowance to ending loans
    
    
    1.36
    %
    
    
    1.34
    %Ratio of net charge-offs to average loans (1)
    
    
    .54
    %
    
    
    1.52
    %Net charge-offs as a percentage of:Provision for loan losses
    
    
    112.44
    %
    
    
    1395.49
    %Allowance for loan losses (1)
    
    
    41.60
    %
    
    
    108.47
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    195.08
    %
    
    
    169.36
    %
 
 (1)
    
    Annualized.  24




---



##### Table of Contents



Nonperforming Assets
 Nonperforming Assets
 June 30, 2005
    
    
    December 31, 2004Total
    
    
    Total(Dollars in thousands)Nonaccrual
    
    $
    6,073
    
    
    $
    6,344Accruing loans 90 days or more delinquent
    
    
    123
    
    
    
    431Restructured
    
    
    90
    
    
    
    631Total nonperforming loans
    
    
    6,286
    
    
    
    7,406Other real estate owned
    
    
    1,484
    
    
    
    4,906Repossessed assets
    
    
    
    
    
    
    103Total nonperforming assets
    
    $
    7,770
    
    
    $
    12,415Nonperforming loans as a percent of loans
    
    
    .70
    %
    
    
    .79
    %Nonperforming assets as a percent of loans plus nonperforming assets
    
    
    0.86
    %
    
    
    1.32
    %
   June 30,
    
    
    December 31,2005
    
    
    2004(Dollars in thousands)Commercial and industrial
    
    $
    1,413
    
    
    $
    2,445Real estate
 construction and land development
    
    
    155
    
    
    
    187Real estate
 mortgagesSingle-family
    
    
    2,499
    
    
    
    2,060Commercial
    
    
    1,847
    
    
    
    2,273Other
    
    
    114
    
    
    
    183Consumer
    
    
    258
    
    
    
    250Other
    
    
    
    
    
    
    8Total nonperforming loans
    
    $
    6,286
    
    
    $
    7,406
  25




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##### Table of Contents



Impaired Loans
 Outstanding
    
    
    SpecificBalance
    
    
    AllowanceCommercial and industrial
    
    $
    1,511
    
    
    $
    621Real estate
 construction and land development
    
    
    155
    
    
    
    38Real estate
 mortgagesCommercial
    
    
    2,984
    
    
    
    701Other
    
    
    113
    
    
    
    57Total
    
    $
    4,763
    
    
    $
    1,417
 Potential Problem Loans
 Stockholders Equity
    June 30, 2005Allocated shares
    
    
    55,328Estimated shares committed to be released
    
    
    13,350Unreleased shares
    
    
    204,722Total ESOP shares
    
    
    273,400Fair value of unreleased shares
    
    $
    2,166,000
 26




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##### Table of Contents



Regulatory Capital
 For CapitalAdequacy
    
    To Be WellActual
    
    Purposes
    
    CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal Risk-Based CapitalCorporation
    
    $
    125,250
    
    
    
    11.70
    %
    
    $
    85,657
    
    
    
    8.00
    %
    
    $
    107,072
    
    
    
    10.00
    %The Bank
    
    
    123,376
    
    
    
    11.73
    
    
    
    84,112
    
    
    
    8.00
    
    
    
    105,141
    
    
    
    10.00Tier 1 Risk-Based CapitalCorporation
    
    
    112,171
    
    
    
    10.48
    
    
    
    42,829
    
    
    
    4.00
    
    
    
    64,243
    
    
    
    6.00The Bank
    
    
    111,113
    
    
    
    10.57
    
    
    
    42,056
    
    
    
    4.00
    
    
    
    63,084
    
    
    
    6.00Leverage CapitalCorporation
    
    
    112,171
    
    
    
    8.12
    
    
    
    55,241
    
    
    
    4.00
    
    
    
    69,051
    
    
    
    5.00The Bank
    
    
    111,113
    
    
    
    8.11
    
    
    
    54,796
    
    
    
    4.00
    
    
    
    68,494
    
    
    
    5.00
        27




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##### Table of Contents



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
   
 Item 4. CONTROLS AND PROCEDURES
 CEO AND
PFO CERTIFICATION
  EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
     28




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
    
    The stockholders voted to approve an amendment to our Restated Certificate of
Incorporation increasing the number of authorized shares of common stock from 25 million to
35 million. The votes on this proposal were as follows:
 For
    
    Against
    
    Abstain14,633,306
    
    540,556
    
    2,131
 
    
    The stockholders voted to approve an amendment to our Restated Certificate of
Incorporation to declassify the Board of Directors and require all directors to stand for
election annually. The votes on this proposal were as follows:
 For
    
    Against
    
    Abstain15,143,604
    
    29,030
    
    3,359
 29




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##### Table of Contents




    
    The stockholders voted to elect the following persons as directors, each to serve a
one-year term:
 Name
    
    For
    
    WithheldC. Stanley Bailey
    
    
    15,146,819
    
    
    
    29,174Roger Barker
    
    
    14,990,544
    
    
    
    185,449K. Earl Durden
    
    
    15,088,419
    
    
    
    87,574Rick D. Gardner
    
    
    15,146,819
    
    
    
    29,174Thomas E. Jernigan, Jr.
    
    
    14,987,785
    
    
    
    188,208James Mailon Kent, Jr.
    
    
    15,032,160
    
    
    
    143,833James M. Link
    
    
    15,029,044
    
    
    
    146,949Barry Morton
    
    
    15,108,319
    
    
    
    67,674C. Marvin Scott
    
    
    15,146,819
    
    
    
    29,174Michael E. Stephens
    
    
    15,088,419
    
    
    
    87,574James A. Taylor
    
    
    14,656,212
    
    
    
    519,781James A. Taylor, Jr.
    
    
    14,610,453
    
    
    
    565,540James C. White, Sr.
    
    
    14,987,785
    
    
    
    188,208
 
    
    The stockholders voted to ratify the appointment of Carr, Riggs & Ingram, LLC as the
independent registered public accounting firm to audit the Corporations financial
statements for the year ending December 31, 2005. The votes on this proposal were as
follows:
 For
    
    Against
    
    Abstain15,144,786
    
    10,828
    
    50,379
 
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
      30




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##### Table of Contents



SIGNATURES
  The Banc Corporation
               (Registrant)Date: February 17, 2006
    
    By:
    
    /s/ C. Stanley BaileyC. Stanley BaileyChief Executive Officer
 Date: February 17, 2006
    
    By:
    
    /s/ James C. GossettJames C. GossettChief Accounting Officer(Principal Financial and Accounting Officer)
 31