##### 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 SEPTEMBER 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
 12b-2
 Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
  o þ
  Class
    
    Outstanding as of September 30, 2005Common stock, $.001 par value
    
    19,775,886




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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)September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCash and due from banks
    
    $
    22,140
    
    
    $
    23,489Interest-bearing deposits in other banks
    
    
    7,341
    
    
    
    11,411Federal funds sold
    
    
    25,565
    
    
    
    11,000Investment securities available for sale
    
    
    257,080
    
    
    
    288,308Mortgage loans held for sale
    
    
    17,447
    
    
    
    8,095Loans, net of unearned income
    
    
    903,398
    
    
    
    934,868Less: Allowance for loan losses
    
    
    (12,024
    )
    
    
    (12,543
    )Net loans
    
    
    891,374
    
    
    
    922,325Premises and equipment, net
    
    
    55,957
    
    
    
    60,434Accrued interest receivable
    
    
    6,238
    
    
    
    6,237Stock in FHLB and Federal Reserve Bank
    
    
    11,821
    
    
    
    11,787Cash surrender value of life insurance
    
    
    38,804
    
    
    
    38,369Other assets
    
    
    42,552
    
    
    
    41,673TOTAL ASSETS
    
    $
    1,376,319
    
    
    $
    1,423,128LIABILITIES AND STOCKHOLDERS EQUITYDepositsNoninterest-bearing
    
    $
    91,265
    
    
    $
    89,487Interest-bearing
    
    
    961,176
    
    
    
    977,719TOTAL DEPOSITS
    
    
    1,052,441
    
    
    
    1,067,206Advances from FHLB
    
    
    146,090
    
    
    
    156,090Federal funds borrowed and security repurchase agreements
    
    
    20,861
    
    
    
    49,456Notes payable
    
    
    3,808
    
    
    
    3,965Junior subordinated debentures owed to unconsolidated subsidiary trusts
    
    
    31,959
    
    
    
    31,959Accrued expenses and other liabilities
    
    
    17,983
    
    
    
    13,913TOTAL LIABILITIES
    
    
    1,273,142
    
    
    
    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 20,023,756 and 18,025,932, respectively;
outstanding 19,775,886 and 17,749,846, respectively
    
    
    20
    
    
    
    18Surplus - preferred
    
    
    
    
    
    
    6,193- common stock
    
    
    86,446
    
    
    
    68,428Retained earnings
    
    
    20,403
    
    
    
    29,591Accumulated other comprehensive loss
    
    
    (1,755
    )
    
    
    (1,094
    )Treasury stock, at cost
    
    
    (341
    )
    
    
    (390
    )Unearned ESOP stock
    
    
    (1,597
    )
    
    
    (1,758
    )Unearned restricted stock
    
    
    
    
    
    
    (449
    )TOTAL STOCKHOLDERS EQUITY
    
    
    103,176
    
    
    
    100,539TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,376,319
    
    
    $
    1,423,128
 3




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THE BANC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    
    
    
    
    (Restated)INTEREST INCOMEInterest and fees on loans
    
    $
    16,063
    
    
    $
    14,244
    
    
    $
    46,531
    
    
    $
    41,502Interest on investment securitiesTaxable
    
    
    2,919
    
    
    
    2,270
    
    
    
    8,789
    
    
    
    6,092Exempt from Federal income tax
    
    
    62
    
    
    
    47
    
    
    
    179
    
    
    
    88Interest on federal funds sold
    
    
    163
    
    
    
    32
    
    
    
    354
    
    
    
    107Interest and dividends on other investments
    
    
    272
    
    
    
    157
    
    
    
    769
    
    
    
    553Total interest income
    
    
    19,479
    
    
    
    16,750
    
    
    
    56,622
    
    
    
    48,342INTEREST EXPENSEInterest on deposits
    
    
    7,346
    
    
    
    4,859
    
    
    
    19,911
    
    
    
    13,641Interest on other borrowed funds
    
    
    1,927
    
    
    
    1,510
    
    
    
    5,665
    
    
    
    4,632Interest on subordinated debentures
    
    
    732
    
    
    
    653
    
    
    
    2,116
    
    
    
    1,905Total interest expense
    
    
    10,005
    
    
    
    7,022
    
    
    
    27,692
    
    
    
    20,178NET INTEREST INCOME
    
    
    9,474
    
    
    
    9,728
    
    
    
    28,930
    
    
    
    28,164Provision for loan losses
    
    
    500
    
    
    
    
    
    
    
    2,750
    
    
    
    NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES
    
    
    8,974
    
    
    
    9,728
    
    
    
    26,180
    
    
    
    28,164NONINTEREST INCOMEService charges and fees on deposits
    
    
    1,239
    
    
    
    1,526
    
    
    
    3,517
    
    
    
    4,314Mortgage banking income
    
    
    693
    
    
    
    463
    
    
    
    1,901
    
    
    
    1,250Investment security (losses) gains
    
    
    
    
    
    
    (4
    )
    
    
    (977
    )
    
    
    424Change in fair value of derivatives
    
    
    (863
    )
    
    
    
    
    
    
    (160
    )
    
    
    Gain on sale of branches
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    739Increase in cash surrender value of life insurance
    
    
    389
    
    
    
    399
    
    
    
    1,131
    
    
    
    1,212Insurance proceeds
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    Other income
    
    
    479
    
    
    
    345
    
    
    
    1,466
    
    
    
    1,357TOTAL NONINTEREST INCOME
    
    
    1,937
    
    
    
    2,729
    
    
    
    11,878
    
    
    
    9,296NONINTEREST EXPENSESalaries and employee benefits
    
    
    6,048
    
    
    
    5,925
    
    
    
    17,377
    
    
    
    17,382Occupancy, furniture and equipment expense
    
    
    1,898
    
    
    
    1,982
    
    
    
    5,938
    
    
    
    6,034Management separation costs
    
    
    64
    
    
    
    
    
    
    
    15,402
    
    
    
    Loss on sale of loans
    
    
    
    
    
    
    2,260
    
    
    
    
    
    
    
    2,260Other operating expenses
    
    
    3,028
    
    
    
    3,605
    
    
    
    11,126
    
    
    
    10,409TOTAL NONINTEREST EXPENSE
    
    
    11,038
    
    
    
    13,772
    
    
    
    49,843
    
    
    
    36,085Income (loss) before income taxes
    
    
    (127
    )
    
    
    (1,315
    )
    
    
    (11,785
    )
    
    
    1,375INCOME TAX EXPENSE (BENEFIT)
    
    
    (264
    )
    
    
    (485
    )
    
    
    (4,909
    )
    
    
    (87
    )NET INCOME (LOSS)
    
    
    137
    
    
    
    (830
    )
    
    
    (6,876
    )
    
    
    1,462PREFERRED STOCK DIVIDENDS
    
    
    
    
    
    
    
    
    
    
    305
    
    
    
    217EFFECT OF EARLY CONVERSION OF PREFERRED STOCK
    
    
    
    
    
    
    
    
    
    
    2,006
    
    
    
    NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS
    
    $
    137
    
    
    $
    (830
    )
    
    $
    (9,187
    )
    
    $
    1,245BASIC NET INCOME (LOSS) PER COMMON SHARE
    
    $
    0.01
    
    
    $
    (0.05
    )
    
    $
    (0.49
    )
    
    $
    0.07DILUTED NET INCOME (LOSS) PER COMMON SHARE
    
    $
    0.01
    
    
    $
    (0.05
    )
    
    $
    (0.49
    )
    
    $
    0.07WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    
    
    19,625
    
    
    
    17,590
    
    
    
    18,920
    
    
    
    17,576WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
ASSUMING DILUTION
    
    
    20,240
    
    
    
    17,590
    
    
    
    18,920
    
    
    
    17,741
  4




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THE BANC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(DOLLARS IN THOUSANDS)
 Nine Months EndedSeptember 302005
    
    
    2004NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES
    
    $
    (6,540
    )
    
    $
    5,970CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease (increase) in interest-bearing deposits in other banks
    
    
    4,071
    
    
    
    (659
    )Net increase in federal funds sold
    
    
    (14,565
    )
    
    
    (33,000
    )Proceeds from sales of securities available for sale
    
    
    57,150
    
    
    
    83,613Proceeds from maturities of investment securities available for sale
    
    
    26,274
    
    
    
    45,826Purchases of investment securities available for sale
    
    
    (54,765
    )
    
    
    (214,270
    )Net decrease (increase) in loans
    
    
    30,332
    
    
    
    (79,779
    )Purchases of premises and equipment
    
    
    (1,654
    )
    
    
    (3,222
    )Proceeds from sales of premises and equipment
    
    
    3,243
    
    
    
    Net cash paid in branch sale
    
    
    
    
    
    
    (6,626
    )Purchase of life insurance
    
    
    
    
    
    
    (5,000
    )Increase in other investments
    
    
    (34
    )
    
    
    (545
    )Net cash provided (used) by investing activities
    
    
    50,052
    
    
    
    (213,662
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net (decrease) increase in deposit accounts
    
    
    (14,925
    )
    
    
    149,878Net (decrease) increase in FHLB advances and other borrowed funds
    
    
    (38,595
    )
    
    
    67,973Payments made on long term debt
    
    
    (158
    )
    
    
    (157
    )Proceeds from sale of common stock
    
    
    9,122
    
    
    
    49Cash dividends paid
    
    
    (305
    )
    
    
    (217
    )Net cash (used) provided by financing activities
    
    
    (44,861
    )
    
    
    217,526Net (decrease) increase in cash and due from banks
    
    
    (1,349
    )
    
    
    9,834Cash and due from banks at beginning of period
    
    
    23,489
    
    
    
    31,679CASH AND DUE FROM BANKS AT END OF PERIOD
    
    $
    22,140
    
    
    $
    41,513
  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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September 30, 2005Condensed Consolidated Statement of Condition
    
    As previously(In thousands)
    
    Reported
    

RestatedOther assets
    
    $
    42,492
    
    
    $
    42,552Interest-bearing deposits
    
    
    961,016
    
    
    
    961,176Retained earnings
    
    
    20,504
    
    
    
    20,403
 For the three months ended
    
    For the nine months endedSeptember 30, 2005
    
    September 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
    
    $
    
    
    
    $
    (863
    )
    
    $
    
    
    
    $
    (160
    )Income (loss) before income tax expense (benefit)
    
    
    736
    
    
    
    (127
    )
    
    
    (11,625
    )
    
    
    (11,785
    )Income tax expense (benefit)
    
    
    56
    
    
    
    (264
    )
    
    
    (4,849
    )
    
    
    (4,909
    )Net income (loss)
    
    
    680
    
    
    
    137
    
    
    
    (6,776
    )
    
    
    (6,876
    )Net income (loss) applicable to common
stockholders
    
    
    680
    
    
    
    137
    
    
    
    (9,087
    )
    
    
    (9,187
    )Basic and diluted net income (loss) per common
share
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    (0.48
    )
    
    $
    (0.49
    )
  Note 2  RECENT ACCOUNTING PRONOUNCEMENTS
  7




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Note 3  RECENT DEVELOPMENTS
     8




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9




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Note 4  ASSET SALES
   Note 5  SEGMENT REPORTING
   Alabama
    
    FloridaRegion
    
    Region
    
    Combined(Restated)
    
    
    
    
    
    (Restated)Three months ended September 30, 2005Net interest income
    
    $
    6,277
    
    
    $
    3,197
    
    
    $
    9,474Provision for loan losses
    
    
    503
    
    
    
    (3
    )
    
    
    500Noninterest income (1)
    
    
    1,917
    
    
    
    20
    
    
    
    1,937Noninterest expense (2)(3)
    
    
    9,986
    
    
    
    1,052
    
    
    
    11,038Income tax (benefit) expense
    
    
    (968
    )
    
    
    704
    
    
    
    (264
    )Net (loss) income
    
    
    (1,327
    )
    
    
    1,464
    
    
    
    137Total assets
    
    
    1,149,436
    
    
    
    226,883
    
    
    
    1,376,319Three months ended September 30, 2004Net interest income
    
    $
    6,955
    
    
    $
    2,773
    
    
    $
    9,728Provision for loan losses (1)
    
    
    18
    
    
    
    (18
    )
    
    
    Noninterest income (1)
    
    
    2,418
    
    
    
    311
    
    
    
    2,729Noninterest expense (2)
    
    
    12,674
    
    
    
    1,098
    
    
    
    13,772Income tax (benefit) expense
    
    
    (1,883
    )
    
    
    1,398
    
    
    
    (485
    )Net (loss) income
    
    
    (1,436
    )
    
    
    606
    
    
    
    (830
    )Total assets (1)
    
    
    1,133,525
    
    
    
    247,768
    
    
    
    1,381,293Nine months ended September 30, 2005Net interest income
    
    $
    19,812
    
    
    $
    9,118
    
    
    $
    28,930Provision for loan losses
    
    
    2,615
    
    
    
    135
    
    
    
    2,750Noninterest income (1)
    
    
    11,205
    
    
    
    673
    
    
    
    11,878Noninterest expense (2)(3)
    
    
    46,616
    
    
    
    3,227
    
    
    
    49,843Income tax (benefit) expense
    
    
    (6,813
    )
    
    
    1,904
    
    
    
    (4,909
    )Net (loss) income
    
    
    (11,401
    )
    
    
    4,525
    
    
    
    (6,876
    )Nine months ended September 30, 2004Net interest income
    
    $
    20,168
    
    
    $
    7,996
    
    
    $
    28,164Provision for loan losses (1)
    
    
    1,974
    
    
    
    (1,974
    )
    
    
    Noninterest income (1)
    
    
    8,283
    
    
    
    1,013
    
    
    
    9,296Noninterest expense (2)
    
    
    30,086
    
    
    
    5,999
    
    
    
    36,085Income tax (benefit) expense
    
    
    (2,364
    )
    
    
    2,277
    
    
    
    (87
    )Net income
    
    
    (1,245
    )
    
    
    2,707
    
    
    
    1,462
 10




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(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 INCOME (LOSS) PER COMMON SHARE
  Three Months EndedSeptember 30,
    
    
    Nine Months EndedSeptember 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)Numerator:Net income (loss)
    
    $
    137
    
    
    $
    (830
    )
    
    $
    (6,876
    )
    
    $
    1,462Less preferred dividends
    
    
    
    
    
    
    
    
    
    
    305
    
    
    
    217Less effect of preferred stock conversion
    
    
    
    
    
    
    
    
    
    
    2,006
    
    
    
    For basic and diluted, net income (loss)
applicable to common stockholders
    
    $
    137
    
    
    $
    (830
    )
    
    $
    (9,187
    )
    
    $
    1,245Denominator:For basic, weighted average common
shares outstanding
    
    
    19,625
    
    
    
    17,590
    
    
    
    18,920
    
    
    
    17,576Effect of dilutive stock options,
restricted stock and convertible
preferred
    
    
    615
    
    
    
    
    
    
    
    
    
    
    
    165Weighted average common shares outstanding,
assuming dilution
    
    
    20,240
    
    
    
    17,590
    
    
    
    18,920
    
    
    
    17,741Basic net income (loss) per common share
    
    $
    .01
    
    
    $
    (.05
    )
    
    $
    (.49
    )
    
    $
    .07Diluted net income (loss) per common share
    
    $
    .01
    
    
    $
    (.05
    )
    
    $
    (.49
    )
    
    $
    .07
   Note 7  COMPREHENSIVE (LOSS) INCOME (Restated)
   11




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Note 8  INCOME TAXES
  Note 9  JUNIOR SUBORDINATED DEBENTURES
    September 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
    12




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September 30, 2005Allocated shares
    
    
    55,328Estimated shares committed to be released
    
    
    20,025Unreleased shares
    
    
    198,047Total ESOP shares
    
    
    273,400Fair value of unreleased shares
    
    $
    2,953,000
    13




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##### Table of Contents



For the Three Months Ended
    
    For the Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004(Restated)
    
    
    
    
    
    (Restated)Net income (loss):As reported
    
    $
    137
    
    
    $
    (830
    )
    
    $
    (6,876
    )
    
    $
    1,462Pro forma
    
    
    (200
    )
    
    
    (1,230
    )
    
    
    (10,929
    )
    
    
    557Earnings (loss) per common share:As reported
    
    $
    .01
    
    
    $
    (.05
    )
    
    $
    (.49
    )
    
    $
    .07Pro forma
    
    
    (.01
    )
    
    
    (.07
    )
    
    
    (.70
    )
    
    
    .02Diluted earnings (loss) per
common share:As reported
    
    $
    .01
    
    
    $
    (.05
    )
    
    $
    (.49
    )
    
    $
    .07Pro forma
    
    
    (.01
    )
    
    
    (.07
    )
    
    
    (.70
    )
    
    
    .02
  September 302005
    
    2004Risk-free interest rate
    
    
    4.33
    %
    
    
    4.56
    %Volatility factor
    
    
    .44
    
    
    
    .32Weighted average life of options
    
    
    7.00
    
    
    
    3.50Dividend yield
    
    
    0.00
    
    
    
    0.00
 14




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Basis of Presentation
   Restated Results of Operations and Financial Condition
 Accounting for
Derivative Instruments and Hedging Activities
    Overview
  15




---



##### Table of Contents



16
    Table of Contents  Results of Operations
        17
    Table of Contents  Average Balances 18
    Table of Contents   Three Months Ended September 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)
    
    $
    931,598
    
    
    $
    16,063
    
    
    
    6.84
    %
    
    $
    918,093
    
    
    $
    14,244
    
    
    
    6.17
    %Investment securitiesTaxable
    
    
    253,960
    
    
    
    2,919
    
    
    
    4.56
    
    
    
    206,422
    
    
    
    2,270
    
    
    
    4.37Tax-exempt(2)
    
    
    6,897
    
    
    
    94
    
    
    
    5.40
    
    
    
    5,201
    
    
    
    71
    
    
    
    5.43Total investment securities
    
    
    260,857
    
    
    
    3,013
    
    
    
    4.58
    
    
    
    211,623
    
    
    
    2,341
    
    
    
    4.40Federal funds sold
    
    
    18,904
    
    
    
    163
    
    
    
    3.42
    
    
    
    9,435
    
    
    
    32
    
    
    
    1.35Other investments
    
    
    22,743
    
    
    
    272
    
    
    
    4.74
    
    
    
    23,480
    
    
    
    157
    
    
    
    2.66Total interest-earning assets
    
    
    1,234,102
    
    
    
    19,511
    
    
    
    6.27
    
    
    
    1,162,631
    
    
    
    16,774
    
    
    
    5.74Noninterest-earning assets:Cash and due from banks
    
    
    34,991
    
    
    
    
    
    
    
    
    
    
    
    26,906Premises and equipment
    
    
    55,849
    
    
    
    
    
    
    
    
    
    
    
    58,309Accrued interest and other assets
    
    
    84,175
    
    
    
    
    
    
    
    
    
    
    
    83,046Allowance for loan losses
    
    
    (12,368
    )
    
    
    
    
    
    
    
    
    
    
    (20,433
    )Total assets
    
    $
    1,396,749
    
    
    
    
    
    
    
    
    
    
    $
    1,310,459LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    362,520
    
    
    
    2,094
    
    
    
    2.29
    
    
    $
    276,490
    
    
    
    860
    
    
    
    1.24Savings deposits
    
    
    25,178
    
    
    
    9
    
    
    
    0.14
    
    
    
    29,081
    
    
    
    10
    
    
    
    0.14Time deposits
    
    
    579,977
    
    
    
    5,243
    
    
    
    3.59
    
    
    
    588,166
    
    
    
    3,989
    
    
    
    2.70Other borrowings
    
    
    179,306
    
    
    
    1,927
    
    
    
    4.26
    
    
    
    181,055
    
    
    
    1,510
    
    
    
    3.32Subordinated debentures
    
    
    31,959
    
    
    
    732
    
    
    
    9.09
    
    
    
    31,959
    
    
    
    653
    
    
    
    8.13Total interest-bearing liabilities
    
    
    1,178,940
    
    
    
    10,005
    
    
    
    3.37
    
    
    
    1,106,751
    
    
    
    7,022
    
    
    
    2.52Noninterest-bearing liabilities:Demand deposits
    
    
    94,219
    
    
    
    
    
    
    
    
    
    
    
    90,803Accrued interest and other liabilities
    
    
    22,112
    
    
    
    
    
    
    
    
    
    
    
    11,661Stockholders equity
    
    
    101,478
    
    
    
    
    
    
    
    
    
    
    
    101,244Total liabilities and
stockholders equity
    
    $
    1,396,749
    
    
    
    
    
    
    
    
    
    
    $
    1,310,459Net interest income/net interest spread
    
    
    
    
    
    
    9,506
    
    
    
    2.90
    %
    
    
    
    
    
    
    9,752
    
    
    
    3.22
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.06
    %
    
    
    
    
    
    
    
    
    
    
    3.34
    %Taxable equivalent adjustment:Investment securities(2)
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    24Net interest income
    
    
    
    
    
    $
    9,474
    
    
    
    
    
    
    
    
    
    
    $
    9,728
 
 (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
    Table of Contents  Three Months Ended September 30,2005 vs 2004 (1)Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    1,819
    
    
    $
    1,602
    
    
    $
    217Interest on securities:Taxable
    
    
    649
    
    
    
    103
    
    
    
    546Tax-exempt
    
    
    23
    
    
    
    
    
    
    
    23Interest on federal funds
    
    
    131
    
    
    
    79
    
    
    
    52Interest on other investments
    
    
    115
    
    
    
    120
    
    
    
    (5
    )Total interest income
    
    
    2,737
    
    
    
    1,904
    
    
    
    833Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    1,234
    
    
    
    902
    
    
    
    332Interest on savings deposits
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Interest on time deposits
    
    
    1,254
    
    
    
    1,310
    
    
    
    (56
    )Interest on other borrowings
    
    
    417
    
    
    
    432
    
    
    
    (15
    )Interest subordinated debentures
    
    
    79
    
    
    
    79
    
    
    
    Total interest expense
    
    
    2,983
    
    
    
    2,723
    
    
    
    260Net interest income
    
    $
    (246
    )
    
    $
    (819
    )
    
    $
    573
 
 (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.  Nine Months Ended September 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)
    
    $
    943,550
    
    
    $
    46,531
    
    
    
    6.59
    %
    
    $
    882,030
    
    
    $
    41,502
    
    
    
    6.29
    %Investment securities:Taxable
    
    
    260,734
    
    
    
    8,789
    
    
    
    4.51
    
    
    
    183,468
    
    
    
    6,092
    
    
    
    4.44Tax-exempt(2)
    
    
    6,716
    
    
    
    271
    
    
    
    5.39
    
    
    
    3,109
    
    
    
    133
    
    
    
    5.71Total investment securities
    
    
    267,450
    
    
    
    9,060
    
    
    
    4.53
    
    
    
    186,577
    
    
    
    6,225
    
    
    
    4.46Federal funds sold
    
    
    16,134
    
    
    
    354
    
    
    
    2.93
    
    
    
    13,832
    
    
    
    107
    
    
    
    1.03Other investments
    
    
    23,551
    
    
    
    769
    
    
    
    4.37
    
    
    
    36,534
    
    
    
    553
    
    
    
    2.02Total interest-earning assets
    
    
    1,250,685
    
    
    
    56,714
    
    
    
    6.06
    
    
    
    1,118,973
    
    
    
    48,387
    
    
    
    5.78Noninterest-earning assets:Cash and due from banks
    
    
    32,212
    
    
    
    
    
    
    
    
    
    
    
    27,716Premises and equipment
    
    
    57,325
    
    
    
    
    
    
    
    
    
    
    
    58,154Accrued interest and other assets
    
    
    83,712
    
    
    
    
    
    
    
    
    
    
    
    81,650Allowance for loan losses
    
    
    (12,649
    )
    
    
    
    
    
    
    
    
    
    
    (23,064
    )Total assets
    
    $
    1,411,285
    
    
    
    
    
    
    
    
    
    
    $
    1,263,429
 20
    Table of Contents  Nine Months Ended September 30,2005
    
    
    2004Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in thousands)LIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    333,912
    
    
    
    4,849
    
    
    
    1.94
    
    
    $
    257,805
    
    
    
    2,354
    
    
    
    1.22Savings deposits
    
    
    26,812
    
    
    
    30
    
    
    
    0.15
    
    
    
    29,487
    
    
    
    34
    
    
    
    0.15Time deposits
    
    
    614,288
    
    
    
    15,032
    
    
    
    3.27
    
    
    
    570,182
    
    
    
    11,253
    
    
    
    2.64Other borrowings
    
    
    190,589
    
    
    
    5,665
    
    
    
    3.97
    
    
    
    175,443
    
    
    
    4,632
    
    
    
    3.53Subordinated debentures
    
    
    31,959
    
    
    
    2,116
    
    
    
    8.85
    
    
    
    31,959
    
    
    
    1,905
    
    
    
    7.96Total interest-bearing liabilities
    
    
    1,197,560
    
    
    
    27,692
    
    
    
    3.09
    
    
    
    1,064,876
    
    
    
    20,178
    
    
    
    2.53Noninterest-bearing liabilities:Demand deposits
    
    
    93,936
    
    
    
    
    
    
    
    
    
    
    
    86,417Accrued interest and other liabilities
    
    
    18,636
    
    
    
    
    
    
    
    
    
    
    
    11,500Stockholders equity
    
    
    101,153
    
    
    
    
    
    
    
    
    
    
    
    100,636Total liabilities and stockholders equity
    
    $
    1,411,285
    
    
    
    
    
    
    
    
    
    
    $
    1,263,429Net interest income/net interest spread
    
    
    
    
    
    
    29,022
    
    
    
    2.97
    %
    
    
    
    
    
    
    28,209
    
    
    
    3.25
    %Net yield on earning assets
    
    
    
    
    
    
    
    
    
    
    3.10
    %
    
    
    
    
    
    
    
    
    
    
    3.37
    %Taxable equivalent adjustment:Investment securities(2)
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    45Net interest income
    
    
    
    
    
    $
    28,930
    
    
    
    
    
    
    
    
    
    
    $
    28,164
 
 (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%.  Nine Months Ended September 30,2005 vs 2004 (1)Increase
    
    
    Changes Due To(Decrease)
    
    
    Rate
    
    
    Volume(Dollars in thousands)Increase (decrease) in:Income from interest-earning assets:Interest and fees on loans
    
    $
    5,029
    
    
    $
    2,042
    
    
    $
    2,987Interest on securities:Taxable
    
    
    2,697
    
    
    
    97
    
    
    
    2,600Tax-exempt
    
    
    138
    
    
    
    (9
    )
    
    
    147Interest on federal funds
    
    
    247
    
    
    
    227
    
    
    
    20Interest on other investments
    
    
    216
    
    
    
    466
    
    
    
    (250
    )Total interest income
    
    
    8,327
    
    
    
    2,823
    
    
    
    5,504Expense from interest-bearing liabilities:Interest on demand deposits
    
    
    2,495
    
    
    
    1,663
    
    
    
    832Interest on savings deposits
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Interest on time deposits
    
    
    3,779
    
    
    
    2,854
    
    
    
    925Interest on other borrowings
    
    
    1,033
    
    
    
    610
    
    
    
    423Interest subordinated debentures
    
    
    211
    
    
    
    211
    
    
    
    Total interest expense
    
    
    7,514
    
    
    
    5,338
    
    
    
    2,176Net interest income
    
    $
    813
    
    
    $
    (2,515
    )
    
    $
    3,328
 
 (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. 21
    Table of Contents  Noninterest income
  Noninterest expense
  Income tax expense
 Provision for Loan Losses
 22
    Table of Contents  Financial Condition
  Short-term liquid assets
 Investment Securities
 Loans
 23
    Table of Contents  Distribution of Loans by Category
 September 30, 2005
    
    
    December 31, 2004Percent
    
    
    
    
    
    
    Percentof
    
    
    
    
    
    
    ofAmount
    
    
    Total
    
    
    Amount
    
    
    TotalCommercial and industrial
    
    $
    124,997
    
    
    
    13.8
    %
    
    $
    131,979
    
    
    
    14.1
    %Real estate  construction and land development
    
    
    259,843
    
    
    
    28.7
    
    
    
    249,188
    
    
    
    26.6Real estate  mortgageSingle-family
    
    
    235,233
    
    
    
    26.0
    
    
    
    250,718
    
    
    
    26.8Commercial
    
    
    229,882
    
    
    
    25.4
    
    
    
    242,279
    
    
    
    25.9Other
    
    
    28,164
    
    
    
    3.1
    
    
    
    25,745
    
    
    
    2.7Consumer
    
    
    19,970
    
    
    
    2.2
    
    
    
    28,431
    
    
    
    3.0Other
    
    
    6,604
    
    
    
    .8
    
    
    
    8,045
    
    
    
    .9Total loans
    
    
    904,693
    
    
    
    100.0
    %
    
    
    936,385
    
    
    
    100.0
    %Unearned income
    
    
    (1,295
    )
    
    
    
    
    
    
    (1,517
    )Allowance for loan losses
    
    
    (12,024
    )
    
    
    
    
    
    
    (12,543
    )Net loans
    
    $
    891,374
    
    
    
    
    
    
    $
    922,325
 Deposits
   Borrowings
  Junior Subordinated Debentures
 24
    Table of Contents  September 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
     25
    Table of Contents  Summary of Loan Loss Experience
 Nine-MonthPeriod Ended
    
    
    Year EndedSeptember 30,
    
    
    December 31,2005
    
    
    2004(Dollars in thousands)Allowance for loan losses at beginning of period
    
    $
    12,543
    
    
    $
    25,174Charge-offs:Commercial and industrial
    
    
    1,417
    
    
    
    7,690Real estate  construction and land development
    
    
    354
    
    
    
    765Real estate  mortgageSingle-family
    
    
    601
    
    
    
    1,012Commercial
    
    
    1,131
    
    
    
    5,820Other
    
    
    26
    
    
    
    86Consumer
    
    
    631
    
    
    
    1,881Other
    
    
    255
    
    
    
    87Total charge-offs
    
    
    4,415
    
    
    
    17,341Recoveries:Commercial and industrial
    
    
    285
    
    
    
    1,468Real estate  construction and land development
    
    
    36
    
    
    
    4Real estate  mortgageSingle-family
    
    
    329
    
    
    
    470Commercial
    
    
    135
    
    
    
    737Other
    
    
    97
    
    
    
    97Consumer
    
    
    211
    
    
    
    549Other
    
    
    53
    
    
    
    410Total recoveries
    
    
    1,146
    
    
    
    3,735Net charge-offs
    
    
    3,269
    
    
    
    13,606Provision for loan losses
    
    
    2,750
    
    
    
    975Allowance for loan losses at end of period
    
    $
    12,024
    
    
    $
    12,543Loans at end of period, net of unearned income
    
    $
    903,398
    
    
    $
    934,868Average loans, net of unearned income
    
    
    943,550
    
    
    
    894,406Ratio of ending allowance to ending loans
    
    
    1.33
    %
    
    
    1.34
    %Ratio of net charge-offs to average loans (1)
    
    
    .46
    %
    
    
    1.52
    %Net charge-offs as a percentage of:Provision for loan losses
    
    
    118.87
    %
    
    
    1395.49
    %Allowance for loan losses (1)
    
    
    36.35
    %
    
    
    108.47
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    196.21
    %
    
    
    169.36
    %
 
 (1)
    
    Annualized. 26
    Table of Contents  Nonperforming Assets
 Nonperforming Assets
 September 30, 2005
    
    
    December 31, 2004(Dollars in thousands)Nonaccrual
    
    $
    6,022
    
    
    $
    6,344Accruing loans 90 days or more delinquent
    
    
    34
    
    
    
    431Restructured
    
    
    72
    
    
    
    631Total nonperforming loans
    
    
    6,128
    
    
    
    7,406Other real estate owned
    
    
    2,156
    
    
    
    4,906Repossessed assets
    
    
    
    
    
    
    103Total nonperforming assets
    
    $
    8,284
    
    
    $
    12,415Nonperforming loans as a percent of loans
    
    
    .68
    %
    
    
    .79
    %Nonperforming assets as a percent of
loans plus nonperforming assets
    
    
    0.91
    %
    
    
    1.32
    %
   September 30,
    
    
    December 31,2005
    
    
    2004(Dollars in thousands)Commercial and industrial
    
    $
    1,799
    
    
    $
    2,445Real estate  construction and land development
    
    
    64
    
    
    
    187Real estate  mortgagesSingle-family
    
    
    2,070
    
    
    
    2,060Commercial
    
    
    1,858
    
    
    
    2,273Other
    
    
    107
    
    
    
    183Consumer
    
    
    230
    
    
    
    250Other
    
    
    
    
    
    
    8Total nonperforming loans
    
    $
    6,128
    
    
    $
    7,406
  27
    Table of Contents  Impaired Loans
 Outstanding
    
    
    SpecificBalance
    
    
    AllowanceCommercial and industrial
    
    $
    1,845
    
    
    $
    658Real estate  construction and land development
    
    
    64
    
    
    
    25Real estate  mortgagesCommercial
    
    
    2,687
    
    
    
    868Other
    
    
    107
    
    
    
    53Total
    
    $
    4,703
    
    
    $
    1,604
 Potential Problem Loans
 Stockholders Equity.
    28
    Table of Contents  September 30, 2005Allocated shares
    
    
    55,328Estimated shares committed to be released
    
    
    20,025Unreleased shares
    
    
    198,047Total ESOP shares
    
    
    273,400Fair value of unreleased shares
    
    $
    2,953,000
 Regulatory Capital
 For CapitalAdequacy
    
    To Be WellActual
    
    Purposes
    
    CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal Risk-Based CapitalCorporation
    
    $
    126,629
    
    
    
    11.81
    %
    
    $
    85,798
    
    
    
    8.00
    %
    
    $
    107,248
    
    
    
    10.00
    %The Bank
    
    
    124,114
    
    
    
    11.76
    
    
    
    84,427
    
    
    
    8.00
    
    
    
    105,534
    
    
    
    10.00Tier 1 Risk-Based CapitalCorporation
    
    
    114,511
    
    
    
    10.68
    
    
    
    42,899
    
    
    
    4.00
    
    
    
    64,349
    
    
    
    6.00The Bank
    
    
    112,090
    
    
    
    10.62
    
    
    
    42,214
    
    
    
    4.00
    
    
    
    63,321
    
    
    
    6.00Leverage CapitalCorporation
    
    
    114,511
    
    
    
    8.32
    
    
    
    55,021
    
    
    
    4.00
    
    
    
    68,777
    
    
    
    5.00The Bank
    
    
    112,090
    
    
    
    8.22
    
    
    
    54,556
    
    
    
    4.00
    
    
    
    68,196
    
    
    
    5.00
 Liquidity
  Forward-Looking Statements
    29
    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
    30
    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.
  
 Item 5.
OTHER INFORMATION
  31
    Table of Contents  Item 6. EXHIBITS
  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.
 32
    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) 33