##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC

Form 10-Q

|           |  |                                                                                                                                     
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|(Mark One) | 
|          
|          
|          
|          
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
|          
|          
|          
|          
|           |  | OR                                                                                                                                  
|          
|          
|          
|          
|[   ]      |  | 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.)

17 North 20th Street, Birmingham, Alabama 35203(Address of Principal Executive Offices)

(205) 326-2265(Registrants Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]      No [    ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                              |  |                                 |            | 
|----------------------------- |  | ------------------------------- | ---------- | 
|Class                         |  | Outstanding as of June 30, 2001
|                              |  |                                
|Common stock, $.001 par value |  |                                 | 14,248,721 | 





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TABLE OF CONTENTS



|                              |                                                                                               |  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I. Financial Information
|                              | Item 1. Financial Statements                                                                 
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                            
|Part II. Other Information   
|Signatures                   



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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)

|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |              |         |         |           | 
|-------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ------------------------------------------ | ------- | ----------- | --------- | ------------ | ------- | ------- | --------- | 
|                                                                                       |  |                                                                                                                                                               |                |                                            |         | June 30,    |           | December 31,
|                                                                                       |  |                                                                                                                                                               |                |                                            |         | 2001        |           | 2000        
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                       |  |                                                                                                                                                               |                |                                            |         | (Unaudited) |           | (Note 1)    
|Assets                                                                                 |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Cash and due from banks                                                                |  | $                                                                                                                                                             | 36,500         |                                            |         | $           | 36,691    |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Interest bearing deposits in other banks                                               |  |                                                                                                                                                               | 593            |                                            |         |             | 2,427     |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Federal funds sold                                                                     |  |                                                                                                                                                               | 48,315         |                                            |         |             | 3,120     |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Investment securities available for sale                                               |  |                                                                                                                                                               | 74,329         |                                            |         |             | 91,316    |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Investment securities held-to-maturity                                                 |  |                                                                                                                                                               |               |                                            |         |             | 4,389     |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Mortgage loans held for sale                                                           |  |                                                                                                                                                               | 2,445          |                                            |         |             | 4,324     |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Loans, net of unearned income                                                          |  |                                                                                                                                                               | 912,114        |                                            |         |             | 808,145   |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Less: Allowance for loan losses                                                        |  |                                                                                                                                                               | (9,509         | )                                          |         |             | (8,959    | )           
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                       |  |                                                                                                                                                               |                | Net loans                                  |         |             | 902,605   |              |         |         | 799,186   | 
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|Premises and equipment, net                                                            |  |                                                                                                                                                               | 45,167         |                                            |         |             | 43,957    |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Accrued interest receivable                                                            |  |                                                                                                                                                               | 8,144          |                                            |         |             | 8,615     |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Stock in FHLB and Federal Reserve Bank                                                 |  |                                                                                                                                                               | 8,250          |                                            |         |             | 6,922     |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Other assets                                                                           |  |                                                                                                                                                               | 29,026         |                                            |         |             | 28,268    |             
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                       |  |                                                                                                                                                               |                | Total assets                               |         | $           | 1,155,374 |              |         | $       | 1,029,215 | 
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|Liabilities and Stockholders Equity                                                   |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Deposits                                                                               |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Noninterest-bearing                                                                                                                                           |                | $                                          | 103,560 |             |           | $            | 88,910  |        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Interest-bearing                                                                                                                                              |                |                                            | 806,783 |             |           |              | 738,394 |        
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                       |  |                                                                                                                                                               | Total deposits |                                            |         | 910,343     |           |              |         | 827,304 |          
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Advances from FHLB                                                                     |  |                                                                                                                                                               | 136,100        |                                            |         |             | 104,300   |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Other borrowed funds                                                                   |  |                                                                                                                                                               | 2,026          |                                            |         |             | 534       |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Note payable                                                                           |  |                                                                                                                                                               | 7,000          |                                            |         |             |          |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Accrued expenses and other liabilities                                                 |  |                                                                                                                                                               | 7,154          |                                            |         |             | 7,202     |             
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                       |  |                                                                                                                                                               |                | Total liabilities                          |         |             | 1,062,623 |              |         |         | 939,340   | 
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Guaranteed preferred beneficial interests in the Corporations
subordinated debentures |  |                                                                                                                                                               | 15,000         |                                            |         |             | 15,000    |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Stockholders Equity                                                                   |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Preferred stock, par value $.001 per share; authorized 5,000,000 shares;
shares issued -0-                                                                    |                |                                            |        |             |           |              |        |        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Common stock, par value $.001 per share; authorized 25,000,000 shares;
shares issued 14,385,021; outstanding 14,248,721 shares in 2001 and
14,345,021 in 2000 |                |                                            | 14      |             |           |              | 14      |        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Surplus                                                                                                                                                       |                |                                            | 47,756  |             |           |              | 47,756  |        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Retained Earnings                                                                                                                                             |                |                                            | 30,613  |             |           |              | 27,640  |        
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Accumulated other comprehensive income (loss)                                                                                                                 |                |                                            | 88      |             |           |              | (325    | )      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       |  | Treasury stock, at cost - 136,300 and 40,000 shares, respectively                                                                                             |                |                                            | (720    | )           |           |              | (210    | )      
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                       |  |                                                                                                                                                               |                | Total stockholders equity                 |         |             | 77,751    |              |         |         | 74,875    | 
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             
|                                                                                       |  |                                                                                                                                                               |                | Total liabilities and stockholders equity |         | $           | 1,155,374 |              |         | $       | 1,029,215 | 
|                                                                                       |  |                                                                                                                                                               |                |                                            |         |             |           |             

See Notes to Condensed Consolidated Financial Statements.





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##### Table of Contents



The Banc Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)

|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |        |  |        |        | 
|---------------------------------------------------- | ------------------------------ | - | -------------------------- | --------------------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ----- | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ------ | 
|                                                     |                                |   |                            |                                                           |  | Three Months Ended |        | Six Months Ended
|                                                     |                                |   |                            |                                                           |  | June 30,           |        | June 30,        
|                                                     |                                |   |                            |                                                           |  |                    |        |                 
|                                                     |                                |   |                            |                                                           |  | 2001               |        | 2000             |  | 2001  |        | 2000  
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |       
|Interest income                                      |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|Interest and fees on loans                           |                                | $ | 20,929                     |                                                           |  | $                  | 16,446 |                  |  | $     | 41,210 |        |  | $      | 31,647 |       
|                                                    
|                                                    
|                                                    
|                                                    
|Interest on investment securities                    |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Taxable                        |   |                            | 1,367                                                     |  |                    |        | 948              |  |       |        | 2,824  |  |        |        | 1,902  | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Exempt from Federal income tax |   |                            | 120                                                       |  |                    |        | 184              |  |       |        | 294    |  |        |        | 375    | 
|                                                    
|                                                    
|                                                    
|                                                    
|Interest on federal funds sold                       |                                |   | 441                        |                                                           |  |                    | 170    |                  |  |       | 903    |        |  |        | 372    |       
|                                                    
|                                                    
|                                                    
|                                                    
|Interest and dividends on other investments          |                                |   | 190                        |                                                           |  |                    | 169    |                  |  |       | 377    |        |  |        | 270    |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     | Total interest income          |   |                            | 23,047                                                    |  |                    |        | 17,917           |  |       |        | 45,608 |  |        |        | 34,566 | 
|                                                    
|                                                    
|                                                    
|                                                    
|Interest expense                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|Interest on deposits                                 |                                |   | 10,688                     |                                                           |  |                    | 8,035  |                  |  |       | 21,748 |        |  |        | 15,291 |       
|                                                    
|                                                    
|                                                    
|                                                    
|Interest on other borrowed funds                     |                                |   | 2,027                      |                                                           |  |                    | 1,185  |                  |  |       | 3,892  |        |  |        | 2,213  |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     | Total interest expense         |   |                            | 12,715                                                    |  |                    |        | 9,220            |  |       |        | 25,640 |  |        |        | 17,504 | 
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     |                                |   |                            | Net interest income                                       |  |                    | 10,332 |                  |  |       | 8,697  |        |  |        | 19,968 |        |  |        | 17,062 | 
|                                                    
|                                                    
|                                                    
|                                                    
|Provision for loan losses                            |                                |   | 835                        |                                                           |  |                    | 709    |                  |  |       | 1,630  |        |  |        | 1,597  |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     |                                |   |                            | Net interest income after provision for loan losses       |  |                    | 9,497  |                  |  |       | 7,988  |        |  |        | 18,338 |        |  |        | 15,465 | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Noninterest income                                   |                                |   | 2,103                      |                                                           |  |                    | 1,877  |                  |  |       | 4,296  |        |  |        | 3,524  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Gain on sale of securities                           |                                |   | 120                        |                                                           |  |                    |       |                  |  |       | 157    |        |  |        |       |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     |                                |   | Total noninterest income   |                                                           |  | 2,223              |        |                  |  | 1,877 |        |        |  | 4,453  |        |        |  | 3,524  |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Noninterest expenses                                 |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|Salaries and employee benefits                       |                                |   | 4,965                      |                                                           |  |                    | 4,031  |                  |  |       | 9,558  |        |  |        | 7,827  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Occupancy, furniture and equipment expense           |                                |   | 1,746                      |                                                           |  |                    | 1,451  |                  |  |       | 3,472  |        |  |        | 2,891  |       
|                                                    
|                                                    
|                                                    
|                                                    
|Other operating expenses                             |                                |   | 2,685                      |                                                           |  |                    | 2,793  |                  |  |       | 4,832  |        |  |        | 5,408  |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     |                                |   | Total noninterest expenses |                                                           |  | 9,396              |        |                  |  | 8,275 |        |        |  | 17,862 |        |        |  | 16,126 |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     |                                |   |                            | Income
before distributions on trust preferred securities |  |                    | 2,324  |                  |  |       | 1,590  |        |  |        | 4,929  |        |  |        | 2,863  | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Distributions on trust preferred securities          |                                |   | 397                        |                                                           |  |                    |       |                  |  |       | 795    |        |  |        |       |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     |                                |   |                            | Income
before income taxes                                |  |                    | 1,927  |                  |  |       | 1,590  |        |  |        | 4,134  |        |  |        | 2,863  | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Income tax expense                                   |                                |   | 532                        |                                                           |  |                    | 396    |                  |  |       | 1,160  |        |  |        | 767    |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|                                                     |                                |   |                            | Net income                                                |  | $                  | 1,395  |                  |  | $     | 1,194  |        |  | $      | 2,974  |        |  | $      | 2,096  | 
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|Basic and diluted net income per share               |                                | $ | 0.10                       |                                                           |  | $                  | 0.08   |                  |  | $     | 0.21   |        |  | $      | 0.14   |       
|                                                     |                                |   |                            |                                                           |  |                    |        |                  |  |       |        |        |  |        |        |       
|Average common shares outstanding                    |                                |   | 14,271                     |                                                           |  |                    | 14,385 |                  |  |       | 14,308 |        |  |        | 14,385 |       
|                                                    
|                                                    
|                                                    
|                                                    
|Average common shares outstanding, assuming dilution |                                |   | 14,275                     |                                                           |  |                    | 14,386 |                  |  |       | 14,311 |        |  |        | 14,387 |       

See Notes to Condensed Consolidated Financial Statements.





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##### Table of Contents



The Banc Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flow (Unaudited)
(Dollars in thousands)

|                                               |                                                                      |                                           |        |                  |          |      |        |         |         |  
|---------------------------------------------- | -------------------------------------------------------------------- | ----------------------------------------- | ------ | ---------------- | -------- | ---- | ------ | ------- | ------- | -
|                                               |                                                                      |                                           |        | Six Months Ended
|                                               |                                                                      |                                           |        | June 30,        
|                                               |                                                                      |                                           |        |                 
|                                               |                                                                      |                                           |        | 2001             |          | 2000
|                                               |                                                                      |                                           |        |                  |          |     
|Net
cash provided by operating activities      |                                                                      | $                                         | 6,684  |                  |          | $    | 3,201  |        
|                                               |                                                                      |                                           |       
|Cash flows from investing activities:          |                                                                      |                                           |        |                  |          |      |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net decrease in interest bearing deposits in other banks             |                                           |        | 1,834            |          |      |        | 71      |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net (increase) decrease in federal funds sold                        |                                           |        | (45,195          | )        |      |        | 535     |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net decrease in short-term investments                               |                                           |        |                 |          |      |        | 14,499  |        
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from sales of securities available for sale                 |                                           |        | 26,299           |          |      |        |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from maturities of investment securities available for sale |                                           |        | 34,712           |          |      |        | 4,062   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Purchases of investment securities available for sale                |                                           |        | (38,456          | )        |      |        | (12,692 | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from maturities of investment securities held to maturity   |                                           |        |                 |          |      |        | 532     |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net increase in loans                                                |                                           |        | (104,639         | )        |      |        | (81,316 | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Purchases of premises and equipment                                  |                                           |        | (2,923           | )        |      |        | (6,686  | )      
|                                              
|                                              
|                                              
|                                              
|                                               | Other investing activities                                           |                                           |        | (1,328           | )        |      |        | (1,900  | )      
|                                               |                                                                      |                                           |        |                  |          |      |        |        
|                                               |                                                                      | Net cash used by investing activities     |        |                  | (129,696 | )    |        |         | (82,895 | )
|                                               |                                                                      |                                          
|Cash flows from financing activities:          |                                                                      |                                           |        |                  |          |      |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net increase in deposit accounts                                     |                                           |        | 83,039           |          |      |        | 60,413  |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net increase in FHLB advance and other borrowings                    |                                           |        | 33,292           |          |      |        | 15,635  |        
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from note payable                                           |                                           |        | 7,000            |          |      |        | 2,580   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Purchase of treasury stock                                           |                                           |        | (510             | )        |      |        |        |        
|                                               |                                                                      |                                           |        |                  |          |      |        |        
|                                               |                                                                      | Net cash provided by financing activities |        |                  | 122,821  |      |        |         | 78,628  |  
|                                               |                                                                      |                                           |        |                  |          |      |        |        
|Net decrease in cash and due from banks        |                                                                      |                                           | (191   | )                |          |      | (1,066 | )      
|                                              
|                                              
|                                              
|                                              
|Cash and due from banks at beginning of period |                                                                      |                                           | 36,691 |                  |          |      | 31,825 |        
|                                               |                                                                      |                                           |        |                  |          |      |        |        
|Cash and due from banks at end of period       |                                                                      | $                                         | 36,500 |                  |          | $    | 30,759 |        
|                                               |                                                                      |                                           |        |                  |          |      |        |        

See Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions for Form 10-Q, and,
therefore, do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles. For a summary of
significant accounting policies that have been consistently followed, see Note
1 to the Consolidated Financial Statements included in Form 10-K for the year
ended December 31, 2000. It is managements opinion that all adjustments,
consisting of only normal and recurring items necessary for a fair
presentation, have been included. Operating results for the three and
six month periods
ended June 30, 2001, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001.

The statement of financial condition at December 31, 2000, has been derived
from the audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.

NOTE 2  RECENT ACCOUNTING PRONOUNCEMENT

Financial Accounting Standards Statement (FAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, requires all derivatives to be
recorded on the statement of financial condition at fair value and establishes
standard accounting methodologies for hedging activities. The statement is
effective for the Corporations fiscal year ending December 31, 2001. The
adoption of this statement did not have a material impact on the accompanying
financial statements.

The transition provisions of FAS No. 133 provide that at the date of initial
application (January 1, 2001), debt securities categorized as held-to-maturity
may be transferred into the available-for-sale category without calling into
question the Corporations intent to hold other debt securities until maturity.
As such, on January 1, 2001, the Corporation transferred debt securities with a
carrying value of $4,389,000 and a market value of $4,317,000 to the
available-for-sale category.

In June 2001, the Financial Accounting Standards
Board issued Statements of Financial Accounting Standards
No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Statement
141 also specifies criteria that intangible assets acquired in a
purchase business combination must meet to be recognized and reported
apart from goodwill. Statement 142 will require that goodwill and
intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in
accordance with the provisions of Statement 142. Statement 142 will
also require that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to the
estimated residual values, and reviewed for impairment in accordance
with the FASB's Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of (Statement 121).

The Company will apply the new rules on accounting
for goodwill and other intangible assets beginning in the first
quarter of 2002. Application of the nonamortization provisions of the
Statement is expected to result in an increase in net income of
approximately $393,000 ($.03 per share) per year. During the first
quarter of 2002, the Company will perform the first of the required
impairment tests of
goodwill and intangible assets with indefinite lives and has not yet determined what the effect of these tests will
be on the earnings and financial position of the Company.

NOTE 3  SEGMENT REPORTING

The Corporation has two reportable segments, the Alabama Region and the Florida
Region. The Alabama Region consists of operations located throughout the state
of Alabama. The Florida Region consists of operations located in the panhandle
region of Florida. The Corporations reportable segments are managed as
separate business units because they are located in different geographic areas.
Both segments derive revenues from the delivery of financial services. These
services include commercial loans, mortgage loans, consumer loans, deposit
accounts and other financial services.

The Corporation evaluates performance and allocates resources based on profit
or loss from operations. There are no material intersegment sales or transfers.
Net interest revenue is used as the basis for performance evaluation rather
than its components, total interest revenue and total interest expense. The
accounting policies used by each reportable segment are the same as those
discussed in Note 1 to the Consolidated Financial Statements included in the
Form 10-K for the year ended December 31, 2000. All costs have been allocated
to the reportable segments. Therefore, combined amounts agree to the
consolidated totals.





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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED

NOTE 3  SEGMENT REPORTING  CONTINUED

|                                 |                                             |            |   |         |       |         |   |          |       |  |   |           |       | 
|-------------------------------- | ------------------------------------------- | ---------- | - | ------- | ----- | ------- | - | -------- | ----- |  | - | --------- | ----- | 
|                                 |                                             |            |   | Alabama |       | Florida |   |          |       | 
|                                 |                                             |            |   | Region  |       | Region  |   | Combined
|                                 |                                             |            |   |         |       |         |   |         
|Three months ended June 30, 2001
|                                
|                                
|                                
|                                
|                                 | Net interest income                         |            | $ | 6,523   |       |         | $ | 3,809    |       |  | $ | 10,332    |      
|                                
|                                
|                                
|                                
|                                 | Provision for loan losses                   |            |   | 635     |       |         |   | 200      |       |  |   | 835       |      
|                                
|                                
|                                
|                                
|                                 | Noninterest income                          |            |   | 2,075   |       |         |   | 148      |       |  |   | 2,223     |      
|                                
|                                
|                                
|                                
|                                 | Noninterest expense                         |            |   | 7,099   |       |         |   | 2,297    |       |  |   | 9,396     |      
|                                
|                                
|                                
|                                
|                                 | Distributions on trust preferred securities |            |   | 397     |       |         |   |         |       |  |   | 397       |      
|                                
|                                
|                                
|                                
|                                 | Income tax expense                          |            |   | 90      |       |         |   | 442      |       |  |   | 532       |      
|                                
|                                
|                                
|                                
|                                 |                                             | Net income |   |         | 377   |         |   |          | 1,018 |  |   |           | 1,395 | 
|                                
|                                
|                                
|                                
|                                 | Total assets                                |            |   | 864,116 |       |         |   | 291,258  |       |  |   | 1,155,374 |      
|                                
|                                
|                                
|                                
|                                
|Three months ended June 30, 2000
|                                
|                                
|                                
|                                
|                                 | Net interest income                         |            | $ | 5,612   |       |         | $ | 3,085    |       |  | $ | 8,697     |      
|                                
|                                
|                                
|                                
|                                 | Provision for loan losses                   |            |   | 450     |       |         |   | 259      |       |  |   | 709       |      
|                                
|                                
|                                
|                                
|                                 | Noninterest income                          |            |   | 1,424   |       |         |   | 453      |       |  |   | 1,877     |      
|                                
|                                
|                                
|                                
|                                 | Noninterest expense                         |            |   | 6,296   |       |         |   | 1,979    |       |  |   | 8,275     |      
|                                
|                                
|                                
|                                
|                                 | Income tax (benefit) expense                |            |   | (103    | )     |         |   | 499      |       |  |   | 396       |      
|                                
|                                
|                                
|                                
|                                 |                                             | Net income |   |         | 393   |         |   |          | 801   |  |   |           | 1,194 | 
|                                
|                                
|                                
|                                
|                                 | Total assets                                |            |   | 647,202 |       |         |   | 260,903  |       |  |   | 908,105   |      
|                                
|                                
|                                
|                                
|                                
|Six months ended June 30, 2001  
|                                
|                                
|                                
|                                
|                                 | Net interest income                         |            | $ | 13,036  |       |         | $ | 6,932    |       |  | $ | 19,968    |      
|                                
|                                
|                                
|                                
|                                 | Provision for loan losses                   |            |   | 1,100   |       |         |   | 530      |       |  |   | 1,630     |      
|                                
|                                
|                                
|                                
|                                 | Noninterest income                          |            |   | 3,741   |       |         |   | 712      |       |  |   | 4,453     |      
|                                
|                                
|                                
|                                
|                                 | Noninterest expense                         |            |   | 13,667  |       |         |   | 4,195    |       |  |   | 17,862    |      
|                                
|                                
|                                
|                                
|                                 | Distributions on trust preferred securities |            |   | 795     |       |         |   |         |       |  |   | 795       |      
|                                
|                                
|                                
|                                
|                                 | Income tax expense                          |            |   | 200     |       |         |   | 960      |       |  |   | 1,160     |      
|                                
|                                
|                                
|                                
|                                 |                                             | Net income |   |         | 1,015 |         |   |          | 1,959 |  |   |           | 2,974 | 
|                                
|                                
|                                
|                                
|                                
|Six months ended June 30, 2000  
|                                
|                                
|                                
|                                
|                                 | Net interest income                         |            | $ | 11,263  |       |         | $ | 5,799    |       |  | $ | 17,062    |      
|                                
|                                
|                                
|                                
|                                 | Provision for loan losses                   |            |   | 1,054   |       |         |   | 543      |       |  |   | 1,597     |      
|                                
|                                
|                                
|                                
|                                 | Noninterest income                          |            |   | 2,726   |       |         |   | 798      |       |  |   | 3,524     |      
|                                
|                                
|                                
|                                
|                                 | Noninterest expense                         |            |   | 12,534  |       |         |   | 3,592    |       |  |   | 16,126    |      
|                                
|                                
|                                
|                                
|                                 | Income tax (benefit) expense                |            |   | (138    | )     |         |   | 905      |       |  |   | 767       |      
|                                
|                                
|                                
|                                
|                                 |                                             | Net income |   |         | 539   |         |   |          | 1,557 |  |   |           | 2,096 | 





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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  CONTINUED

NOTE 4  NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income
per common share (in thousands, except per share amounts):

|                                                      |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|----------------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                                      |  | Three Months Ended |        | Six Months Ended
|                                                      |  | June 30            |        | June 30         
|                                                      |  |                    |        |                 
|                                                      |  | 2001               |        | 2000             |  | 2001 |        | 2000
|                                                      |  |                    |        |                  |  |      |        |     
|Numerator:                                            |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|                                                     
|                                                     
|                                                     
|                                                     
|For basic and diluted, net income                     |  | $                  | 1,395  |                  |  | $    | 1,194  |      |  | $ | 2,974  |  |  | $ | 2,096  | 
|                                                      |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Denominator:                                          |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|                                                     
|                                                     
|                                                     
|                                                     
|For basic, weighted average common shares
outstanding |  |                    | 14,271 |                  |  |      | 14,385 |      |  |   | 14,308 |  |  |   | 14,385 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Effect of dilutive stock options                      |  |                    | 4      |                  |  |      | 1      |      |  |   | 3      |  |  |   | 2      | 
|                                                      |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Average diluted common shares outstanding             |  |                    | 14,275 |                  |  |      | 14,386 |      |  |   | 14,311 |  |  |   | 14,387 | 
|                                                      |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 
|Basic and diluted net income per share                |  | $                  | .10    |                  |  | $    | .08    |      |  | $ | .21    |  |  | $ | .14    | 
|                                                      |  |                    |        |                  |  |      |        |      |  |   |        |  |  |   |        | 

NOTE 5  COMPREHENSIVE INCOME

Total comprehensive income was $1,300,000 and $3,387,000, respectively, for
the three and six-month periods ended June 30, 2001, compared to $1,337,000 and
$2,189,000, respectively, for the three and six-month periods ended June 30,
2000. Total comprehensive income consists of net income and the unrealized gain
or loss on the Corporations available for sale securities portfolio arising
during the period.

NOTE 6  INCOME TAXES

The primary difference between the effective tax rate and the federal statutory
rate in 2001 and 2000 is due to the recognition of rehabilitation tax credits
generated from the restoration of the Corporations headquarters, the John A.
Hand Building.

NOTE 7  GUARANTEED PREFERRED BENEFICIAL INTERESTS IN THE CORPORATIONS
SUBORDINATED DEBENTURES

On September 7, 2000, TBC Capital Statutory Trust II (TBC Capital), a
Connecticut statutory trust established by the Corporation, received
$15,000,000 in proceeds in exchange for $15,000,000 principal amount of TBC
Capitals 10.6% cumulative trust preferred securities in a pooled trust
preferred private placement. The proceeds were used to purchase an equal
principal amount of 10.6% subordinated debentures of the Corporation. The
Corporation has fully and unconditionally guaranteed all obligations of TBC
Capital on a subordinated basis with respect to the preferred securities. The
Corporation accounts for TBC Capital as minority interest. Subject to certain
limitations, the preferred securities qualify as Tier 1 capital and are
presented in the Condensed Consolidated Statement of Financial Condition as
Guaranteed preferred beneficial interests in the Corporations subordinated
debentures. The sole asset of TBC Capital is the subordinated debentures
issued by the Corporation. Both the preferred securities of TBC Capital and the
subordinated debentures of the Corporation each have 30-year lives. However,
both the Corporation and TBC Capital have a





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##### Table of Contents



call option after ten years, subject to regulatory approval, or earlier
depending upon certain changes in tax or investment company laws, or regulatory
capital requirements.




ITEM 2.      MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Basis of Presentation

The following is a discussion and analysis of June 30, 2001 consolidated
financial condition of the Corporation and results of operations for the three
and six-month periods ended June 30, 2001 and 2000. All significant
intercompany accounts and transactions have been eliminated. The accounting and
reporting policies of the Corporation conform with generally accepted
accounting principles.

This information should be read in conjunction with the Corporations unaudited
consolidated financial statements and related notes appearing elsewhere in this
report and Managements Discussion and Analysis of Financial Condition and
Results of Operations, appearing in the Corporations Annual Report on Form
10-K for the year ended December 31, 2000.

Financial Overview

Total assets of the Corporation were $1.16 billion at June 30, 2001, an
increase of $126.2 million, or 12.2%, from $1.03 billion as of December 31,
2000. Total deposits were $910.3 million at June 30, 2001, an increase of $83.0
million, or 10.0% from $827.3 million as of December 31, 2000. Total
stockholders equity was $77.8 million at June 30, 2001, an increase of $2.9
million, or 3.8% from $74.9 million as of December 31, 2000.

Net income for the three-month period ended June 30, 2001 (second quarter of
2001) was $1.4 million compared to $1.2 million for the three-month period
ended June 30, 2000 (second quarter of 2000), an increase of $201,000 or 16.8%.
Basic and diluted net income per share were $.10 and $.08 for the second
quarters of 2001 and 2000, respectively. Net income for the six-month period
ended June 30, 2001 (first six months of 2001) was $3.0 million compared to
$2.1 million for the six-month period ended June 30, 2000 (first six months of
2000), an increase of $878,000 or 41.9%. Basic and diluted net income per share
was $.21 and $.14 for the first six months of 2001 and 2000, respectively.
Return on average assets, on an annualized basis, was .54% for the first six
months of 2001 compared to .49% for the first six months of 2000. Return on
average stockholders equity, on an annualized basis, was 7.87% for the first
six months of 2001 compared to 6.12% for first six months of 2000. Book value
per share at June 30, 2001 was $5.46 compared to $5.22 as of December 31, 2000.

Results of Operations

The growth in net income during the first six months of 2001 compared to the
first six months of 2000 is primarily the result of an increase in net interest
income. Net interest income is the difference between the income earned on
interest earning assets and interest paid on interest bearing liabilities used
to support such assets. Net interest income increased $1.6 million, or 18.8% to
$10.3 million for the second quarter of 2001 from $8.7 million for the second
quarter of 2000. Net interest income increased $2.9 million, or 17.0% to $20.0
million for the first six months of 2001 from $17.1 million for the first six
months of 2000. The increase in net interest income was offset by an increase
in noninterest expense of $1.1 million, or 13.6% to $9.4 million for the
second quarter of 2001 compared to $8.3 million for the second quarter of 2000.
During the first six months of 2001, noninterest expenses increased $1.7
million, or 10.8% to $17.9 million compared to $16.1 million for the first six
months of 2000.





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##### Table of Contents



Average interest-earning assets for the second quarter of 2001 increased $248.5
million, or 31.7% to $1,032.5 million from $784.1 million in the second quarter
of 2000. This growth in average interest-earning assets was funded by a $211.5
million increase in average interest-bearing liabilities to $945.0 million for
the second quarter of 2001 from $733.5 million for the second quarter of 2000.
Average interest bearing assets produced a tax equivalent yield of 8.98% for
the second quarter of 2001 compared to 9.24% for the second quarter of 2000.
The average rate paid on interest bearing liabilities was 5.40% for the second
quarter of 2001 compared to 5.06% for the second quarter of 2000. The
Corporations net interest spread and net interest margin were 3.58% and 4.04%,
respectively, for the second quarter of 2001, compared to 4.18% and 4.51% for
the second quarter of 2000.

Average interest-earning assets for the first six months of 2001 increased
$245.0 million, or 32.0% to $1.01 billion from $765.0 million in the first six
months of 2000. This growth in average interest-earning assets during the first
six months of 2001 was funded by a $220.7 million increase in average
interest-bearing liabilities to $907.9 million from $687.2 million during the
first six months of 2000. Average interest bearing assets produced a tax
equivalent yield of 9.14% for the first six months of 2001 and 2000. The
average rate paid on interest bearing liabilities was 5.69% for the first six
months of 2001 compared to 5.12% for the first six months of 2000. The
Corporations net interest spread and net interest margin were 3.45% and 4.02%,
respectively, for the first six months of 2001, compared to 4.02% and 4.54% for
the first six months of 2000.

The decline in net interest spread and margin is primarily the result of a rise
in the volume of higher cost sources of funds such as certificates of deposit,
brokered deposits and Federal Home Loan Bank borrowings. These funds were
needed to meet strong loan demand, which accounted for the increase in the
average interest earning assets during the first six months and second quarter
of 2001.

The following table depicts, on a tax-equivalent basis for the periods
indicated, certain information related to the Corporations average balance
sheet and its average yields on assets and average costs of liabilities. Such
yields are derived by dividing income or expense by the average balance of the
corresponding assets or liabilities. Average balances have been derived from
daily averages.





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##### Table of Contents



CONSOLIDATED AVERAGE BALANCE INTEREST/INCOME/EXPENSE
AND YIELD/RATES TAXABLE EQUIVALENT BASIS

|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |      |      |      | 
|--------------------------------------- | --------------------------------------------------------------------------------- | ------------------ | ------------------------------------------ | ------- | --------------------------- | --------- | ------- | ------ | ------ | ------ | ------- | ---- | ------- | ---- | ------ | ------- | ------ | ------- | ----- | ------ | --- | ------ | ---- | ---- | ---- | ---- | 
|                                        |                                                                                   |                    |                                            |         | Three Months Ended June 30,
|                                        |                                                                                   |                    |                                            |         |                            
|                                        |                                                                                   |                    |                                            |         | 2001                        |           | 2000   
|                                        |                                                                                   |                    |                                            |         |                             |           |        
|                                        |                                                                                   |                    |                                            |         | Average                     |           | Income/ |        | Yield/ |        | Average |      | Income/ |      | Yield/
|                                        |                                                                                   |                    |                                            |         | Balance                     |           | Expense |        | Rate   |        | Balance |      | Expense |      | Rate  
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |       
|                                        |                                                                                   |                    |                                            |         | (Dollars in thousands)     
|ASSETS                                 
|                                       
|                                       
|                                       
|                                       
|                                       
|Earning assets:                         |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Loans, net of unearned income (1)                                                 |                    | $                                          | 880,223 |                             |           | $       | 20,929 |        |        |         | 9.54 | %       |      | $      | 687,344 |        |         | $     | 16,446 |     |        |      | 9.62 | %   
|                                       
|                                       
|                                       
|                                       
|                                        | Investment securities                                                            
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Taxable            |                                            |         | 90,584                      |           |         |        | 1,367  |        |         |      | 6.05    |      |        |         | 56,342 |         |       |        | 948 |        |      |      | 6.77 |     
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Tax-exempt (2)     |                                            |         | 10,075                      |           |         |        | 182    |        |         |      | 7.25    |      |        |         | 16,398 |         |       |        | 279 |        |      |      | 6.84 |     
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                        |                                                                                   |                    | Total investment securities                |         |                             | 100,659   |         |        |        | 1,549  |         |      |         | 6.17 |        |         |        | 72,740  |       |        |     | 1,227  |      |      |      | 6.78 | 
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Federal funds sold |                                            |         | 39,529                      |           |         |        | 441    |        |         |      | 4.47    |      |        |         | 12,445 |         |       |        | 170 |        |      |      | 5.49 |     
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Other investments  |                                            |         | 12,087                      |           |         |        | 190    |        |         |      | 6.31    |      |        |         | 11,522 |         |       |        | 169 |        |      |      | 5.90 |     
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                        |                                                                                   |                    | Total interest-earning assets              |         |                             | 1,032,498 |         |        |        | 23,109 |         |      |         | 8.98 |        |         |        | 784,051 |       |        |     | 18,012 |      |      |      | 9.24 | 
|                                       
|                                       
|                                       
|                                       
|Noninterest-earning assets:             |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and due from banks                                                           |                    |                                            | 40,956  |                             |           |         |        |        |        |         |      |         |      |        | 32,158  |        |         |       |        |     |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Premises and equipment                                                            |                    |                                            | 44,628  |                             |           |         |        |        |        |         |      |         |      |        | 40,965  |        |         |       |        |     |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued interest and other assets                                                 |                    |                                            | 37,476  |                             |           |         |        |        |        |         |      |         |      |        | 33,577  |        |         |       |        |     |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Allowance for loan losses                                                         |                    |                                            | (9,496  | )                           |           |         |        |        |        |         |      |         |      |        | (8,826  | )      |         |       |        |     |        |      |      |     
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                        |                                                                                   |                    | Total assets                               |         | $                           | 1,146,062 |         |        |        |        |         |      |         |      |        |         | $      | 881,925 |       |        |     |        |      |      |      |      | 
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                       
|LIABILITIES AND STOCKHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|Interest-bearing liabilities:           |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Demand deposits                                                                   |                    | $                                          | 239,728 |                             |           |         | 2,288  |        |        |         | 3.83 |         |      | $      | 187,558 |        |         |       | 1,410  |     |        |      | 3.02 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Savings deposits                                                                  |                    |                                            | 31,148  |                             |           |         | 156    |        |        |         | 2.01 |         |      |        | 35,234  |        |         |       | 262    |     |        |      | 2.99 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Time deposits                                                                     |                    |                                            | 530,403 |                             |           |         | 8,244  |        |        |         | 6.23 |         |      |        | 429,459 |        |         |       | 6,362  |     |        |      | 5.96 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Other borrowings                                                                  |                    |                                            | 143,718 |                             |           |         | 2,027  |        |        |         | 5.66 |         |      |        | 81,274  |        |         |       | 1,186  |     |        |      | 5.87 |     
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                        |                                                                                   |                    | Total interest-bearing liabilities         |         |                             | 944,997   |         |        |        | 12,715 |         |      |         | 5.40 |        |         |        | 733,525 |       |        |     | 9,220  |      |      |      | 5.06 | 
|                                       
|                                       
|                                       
|                                       
|Noninterest-bearing liabilities:        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Demand deposits                                                                   |                    |                                            | 100,952 |                             |           |         |        |        |        |         |      |         |      |        | 72,650  |        |         |       |        |     |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued interest and other liabilities                                            |                    |                                            | 7,756   |                             |           |         |        |        |        |         |      |         |      |        | 5,382   |        |         |       |        |     |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Guaranteed preferred beneficial
interest in Corporations
subordinated debentures |                    |                                            | 15,000  |                             |           |         |        |        |        |         |      |         |      |        |        |        |         |       |        |     |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Stockholders equity                                                              |                    |                                            | 77,357  |                             |           |         |        |        |        |         |      |         |      |        | 70,368  |        |         |       |        |     |        |      |      |     
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                        |                                                                                   |                    | Total liabilities and
stockholders equity |         | $                           | 1,146,062 |         |        |        |        |         |      |         |      |        |         | $      | 881,925 |       |        |     |        |      |      |      |      | 
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|Net interest income/net interest
spread |                                                                                   |                    |                                            |         |                             |           | 10,394  |        |        |        | 3.58    | %    |         |      |        |         |        |         | 8,792 |        |     |        | 4.18 | %   
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|Net yield on earning assets             |                                                                                   |                    |                                            |         |                             |           |         |        |        |        | 4.04    | %    |         |      |        |         |        |         |       |        |     |        | 4.51 | %   
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|Taxable equivalent adjustment:          |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Investment securities (2)                                                         |                    |                                            |         |                             |           |         | 62     |        |        |         |      |         |      |        |         |        |         |       | 95     |     |        |      |      |     
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     
|                                        |                                                                                   |                    | Net interest income                        |         |                             |           |         |        | $      | 10,332 |         |      |         |      |        |         |        |         |       |        | $   | 8,697  |      |      |      |      | 
|                                        |                                                                                   |                    |                                            |         |                             |           |         |        |        |        |         |      |         |      |        |         |        |         |       |        |     |        |      |     



|(1) |  | Nonaccrual loans are included in loans net of unearned income. No
adjustment has been made for these loans in the calculation of yields.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Interest income and yields are presented on a fully taxable equivalent
basis using a tax rate of 34 percent.                            





---



##### Table of Contents



The following table sets forth, on a taxable equivalent basis, the effect
that the varying levels of earning assets and interest-bearing liabilities and
the applicable rates have had on changes in net interest income for the three
months ended June 30, 2001 and 2000.

|                                           |                              |                               |                        |       |                                |       |      |     |                |      |   |       |       |       |  
|------------------------------------------ | ---------------------------- | ----------------------------- | ---------------------- | ----- | ------------------------------ | ----- | ---- | --- | -------------- | ---- | - | ----- | ----- | ----- | -
|                                           |                              |                               |                        |       | Three Months Ended June 30 (1)
|                                           |                              |                               |                        |       |                               
|                                           |                              |                               |                        |       | 2001 vs 2000                  
|                                           |                              |                               |                        |       |                               
|                                           |                              |                               |                        |       |                                |       |      |     | Changes Due to
|                                           |                              |                               |                        |       | Increase                       |       |     
|                                           |                              |                               |                        |       | (Decrease)                     |       | Rate |     | Volume        
|                                           |                              |                               |                        |       |                                |       |      |     |               
|                                           |                              |                               |                        |       | (Dollars in thousands)        
|Increase (decrease) in:                    |                              |                               |                        |       |                                |       |      |     |                |      |   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Income from earning assets:  |                               |                        |       |                                |       |      |     |                |      |   |       |      
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest and fees on loans    |                        | $     | 4,483                          |       |      | $   | (137           | )    |   | $     | 4,620 |      
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest on securities:       |                        |       |                                |       |      |     |                |      |   |       |       |      
|                                          
|                                          
|                                          
|                                          
|                                           |                              |                               | Taxable                |       |                                | 419   |      |     |                | (110 | ) |       |       | 529   |  
|                                          
|                                          
|                                          
|                                          
|                                           |                              |                               | Tax-exempt             |       |                                | (97   | )    |     |                | 16   |   |       |       | (113  | )
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest on federal funds     |                        |       | 271                            |       |      |     | (37            | )    |   |       | 308   |      
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest on other investments |                        |       | 21                             |       |      |     | 12             |      |   |       | 9     |      
|                                           |                              |                               |                        |       |                                |       |      |     |                |      |   |       |       |      
|                                           |                              |                               | Total interest income  |       |                                | 5,097 |      |     |                | (256 | ) |       |       | 5,353 |  
|                                           |                              |                               |                        |       |                                |       |      |     |                |      |   |      
|Expense from interest-bearing liabilities: |                              |                               |                        |       |                                |       |      |     |                |      |   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on demand deposits  |                               |                        | 878   |                                |       |      | 431 |                |      |   | 447   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on savings deposits |                               |                        | (106  | )                              |       |      | (78 | )              |      |   | (28   | )    
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on time deposits    |                               |                        | 1,882 |                                |       |      | 304 |                |      |   | 1,578 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on other borrowings |                               |                        | 841   |                                |       |      | (44 | )              |      |   | 885   |      
|                                           |                              |                               |                        |       |                                |       |      |     |                |      |   |      
|                                           |                              |                               | Total interest expense |       |                                | 3,495 |      |     |                | 613  |   |       |       | 2,882 |  
|                                           |                              |                               |                        |       |                                |       |      |     |                |      |   |      
|                                           |                              |                               | Net interest income    |       | $                              | 1,602 |      |     | $              | (869 | ) |       | $     | 2,471 |  
|                                           |                              |                               |                        |       |                                |       |      |     |                |      |   |      



---

|(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.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents



CONSOLIDATED AVERAGE BALANCE INTEREST/INCOME/EXPENSE
AND YIELD/RATES TAXABLE EQUIVALENT BASIS

|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |      |      |      | 
|--------------------------------------- | --------------------------------------------------------------------------------- | ------------------ | ------------------------------------------ | ------- | ------------------------- | --------- | ------- | ------ | ------ | ------ | ------- | ---- | ------- | ---- | ------ | ------- | ------ | ------- | ------ | ------ | ----- | ------ | ---- | ---- | ---- | ---- | 
|                                        |                                                                                   |                    |                                            |         | Six Months Ended June 30,
|                                        |                                                                                   |                    |                                            |         |                          
|                                        |                                                                                   |                    |                                            |         | 2001                      |           | 2000   
|                                        |                                                                                   |                    |                                            |         |                           |           |        
|                                        |                                                                                   |                    |                                            |         | Average                   |           | Income/ |        | Yield/ |        | Average |      | Income/ |      | Yield/
|                                        |                                                                                   |                    |                                            |         | Balance                   |           | Expense |        | Rate   |        | Balance |      | Expense |      | Rate  
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |       
|                                        |                                                                                   |                    |                                            |         | (Dollars in thousands)   
|ASSETS                                 
|                                       
|                                       
|                                       
|                                       
|Earning assets:                         |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Loans, net of unearned income (1)                                                 |                    | $                                          | 858,981 |                           |           | $       | 41,210 |        |        |         | 9.67 | %       |      | $      | 669,543 |        |         | $      | 31,647 |       |        |      | 9.51 | %   
|                                       
|                                       
|                                       
|                                       
|                                        | Investment securities                                                            
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Taxable            |                                            |         | 91,079                    |           |         |        | 2,824  |        |         |      | 6.25    |      |        |         | 58,838 |         |        |        | 1,902 |        |      |      | 6.50 |     
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Tax-exempt (2)     |                                            |         | 12,051                    |           |         |        | 445    |        |         |      | 7.45    |      |        |         | 15,190 |         |        |        | 568   |        |      |      | 7.52 |     
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                        |                                                                                   |                    | Total investment securities                |         |                           | 103,130   |         |        |        | 3,269  |         |      |         | 6.39 |        |         |        | 74,028  |        |        |       | 2,470  |      |      |      | 6.71 | 
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Federal funds sold |                                            |         | 36,132                    |           |         |        | 903    |        |         |      | 5.04    |      |        |         | 12,407 |         |        |        | 372   |        |      |      | 6.03 |     
|                                       
|                                       
|                                       
|                                       
|                                        |                                                                                   | Other investments  |                                            |         | 11,767                    |           |         |        | 377    |        |         |      | 6.46    |      |        |         | 9,024  |         |        |        | 270   |        |      |      | 6.02 |     
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                        |                                                                                   |                    | Total interest-earning assets              |         |                           | 1,010,010 |         |        |        | 45,759 |         |      |         | 9.14 |        |         |        | 765,002 |        |        |       | 34,759 |      |      |      | 9.14 | 
|                                       
|                                       
|                                       
|                                       
|Noninterest-earning assets:             |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and due from banks                                                           |                    |                                            | 29,618  |                           |           |         |        |        |        |         |      |         |      |        | 23,717  |        |         |        |        |       |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Premises and equipment                                                            |                    |                                            | 44,243  |                           |           |         |        |        |        |         |      |         |      |        | 40,052  |        |         |        |        |       |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued interest and other assets                                                 |                    |                                            | 40,704  |                           |           |         |        |        |        |         |      |         |      |        | 34,352  |        |         |        |        |       |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Allowance for loan losses                                                         |                    |                                            | (9,363  | )                         |           |         |        |        |        |         |      |         |      |        | (8,492  | )      |         |        |        |       |        |      |      |     
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                        |                                                                                   |                    | Total assets                               |         | $                         | 1,115,212 |         |        |        |        |         |      |         |      |        |         | $      | 854,631 |        |        |       |        |      |      |      |      | 
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                       
|LIABILITIES AND STOCKHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|Interest-bearing liabilities:           |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Demand deposits                                                                   |                    | $                                          | 201,388 |                           |           |         | 4,267  |        |        |         | 4.27 |         |      | $      | 166,920 |        |         |        | 3,024  |       |        |      | 3.64 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Savings deposits                                                                  |                    |                                            | 32,243  |                           |           |         | 386    |        |        |         | 2.41 |         |      |        | 34,729  |        |         |        | 509    |       |        |      | 2.95 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Time deposits                                                                     |                    |                                            | 541,782 |                           |           |         | 17,095 |        |        |         | 6.36 |         |      |        | 408,821 |        |         |        | 11,757 |       |        |      | 5.78 |     
|                                       
|                                       
|                                       
|                                       
|                                        | Other borrowings                                                                  |                    |                                            | 132,518 |                           |           |         | 3,892  |        |        |         | 5.92 |         |      |        | 76,741  |        |         |        | 2,214  |       |        |      | 5.80 |     
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                        |                                                                                   |                    | Total interest-bearing liabilities         |         |                           | 907,931   |         |        |        | 25,640 |         |      |         | 5.69 |        |         |        | 687,211 |        |        |       | 17,504 |      |      |      | 5.12 | 
|                                       
|                                       
|                                       
|                                       
|Noninterest-bearing liabilities:        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Demand deposits                                                                   |                    |                                            | 108,301 |                           |           |         |        |        |        |         |      |         |      |        | 92,424  |        |         |        |        |       |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|Accrued interest and other liabilities  |                                                                                   |                    | 7,800                                      |         |                           |           |         |        |        |        |         |      |         |      | 6,094  |         |        |         |        |        |       |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Guaranteed preferred beneficial
interest in Corporations
subordinated debentures |                    |                                            | 15,000  |                           |           |         |        |        |        |         |      |         |      |        |        |        |         |        |        |       |        |      |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Stockholders equity                                                              |                    |                                            | 76,180  |                           |           |         |        |        |        |         |      |         |      |        | 68,902  |        |         |        |        |       |        |      |      |     
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                        |                                                                                   |                    | Total liabilities and
stockholders equity |         | $                         | 1,115,212 |         |        |        |        |         |      |         |      |        |         | $      | 854,631 |        |        |       |        |      |      |      |      | 
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|Net interest income/net interest
spread |                                                                                   |                    |                                            |         |                           |           | 20,119  |        |        |        | 3.45    | %    |         |      |        |         |        |         | 17,255 |        |       |        | 4.02 | %   
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|Net yield on earning assets             |                                                                                   |                    |                                            |         |                           |           |         |        |        |        | 4.02    | %    |         |      |        |         |        |         |        |        |       |        | 4.54 | %   
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|Taxable equivalent adjustment:          |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                       
|                                       
|                                       
|                                       
|                                        | Investment securities (2)                                                         |                    |                                            |         |                           |           |         | 151    |        |        |         |      |         |      |        |         |        |         |        | 193    |       |        |      |      |     
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     
|                                        |                                                                                   |                    | Net interest income                        |         |                           |           |         |        | $      | 19,968 |         |      |         |      |        |         |        |         |        |        | $     | 17,062 |      |      |      |      | 
|                                        |                                                                                   |                    |                                            |         |                           |           |         |        |        |        |         |      |         |      |        |         |        |         |        |        |       |        |      |     



|(1) |  | Nonaccrual loans are included in loans net of unearned income. No
adjustment has been made for these loans in the calculation of yields.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Interest income and yields are presented on a fully taxable equivalent
basis using a tax rate of 34 percent.                            





---



##### Table of Contents



The following table sets forth, on a taxable equivalent basis, the effect
which the varying levels of earning assets and interest-bearing liabilities and
the applicable rates have had on changes in net interest income for the six
months ended June 30, 2001 and 2000.

|                                           |                              |                               |                        |       |                              |        |      |       |                |        |   |       |       |        |  
|------------------------------------------ | ---------------------------- | ----------------------------- | ---------------------- | ----- | ---------------------------- | ------ | ---- | ----- | -------------- | ------ | - | ----- | ----- | ------ | -
|                                           |                              |                               |                        |       | Six Months Ended June 30 (1)
|                                           |                              |                               |                        |       |                             
|                                           |                              |                               |                        |       | 2001 vs 2000                
|                                           |                              |                               |                        |       |                             
|                                           |                              |                               |                        |       |                              |        |      |       | Changes Due to
|                                           |                              |                               |                        |       | Increase                     |        |     
|                                           |                              |                               |                        |       | (Decrease)                   |        | Rate |       | Volume        
|                                           |                              |                               |                        |       |                              |        |      |       |               
|                                           |                              |                               |                        |       | (Dollars in thousands)      
|Increase (decrease) in:                    |                              |                               |                        |       |                              |        |      |       |                |        |   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Income from earning assets:  |                               |                        |       |                              |        |      |       |                |        |   |       |      
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest and fees on loans    |                        | $     | 9,563                        |        |      | $     | 537            |        |   | $     | 9,026 |       
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest on securities:       |                        |       |                              |        |      |       |                |        |   |       |       |       
|                                          
|                                          
|                                          
|                                          
|                                           |                              |                               | Taxable                |       |                              | 922    |      |       |                | (76    | ) |       |       | 998    |  
|                                          
|                                          
|                                          
|                                          
|                                           |                              |                               | Tax-exempt             |       |                              | (123   | )    |       |                | (5     | ) |       |       | (118   | )
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest on federal funds     |                        |       | 531                          |        |      |       | (70            | )      |   |       | 601   |       
|                                          
|                                          
|                                          
|                                          
|                                           |                              | Interest on other investments |                        |       | 107                          |        |      |       | 21             |        |   |       | 86    |       
|                                           |                              |                               |                        |       |                              |        |      |       |                |        |   |       |       |       
|                                           |                              |                               | Total interest income  |       |                              | 11,000 |      |       |                | 407    |   |       |       | 10,593 |  
|                                           |                              |                               |                        |       |                              |        |      |       |                |        |   |      
|Expense from interest-bearing liabilities: |                              |                               |                        |       |                              |        |      |       |                |        |   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on demand deposits  |                               |                        | 1,243 |                              |        |      | 567   |                |        |   | 676   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on savings deposits |                               |                        | (123  | )                            |        |      | (88   | )              |        |   | (35   | )    
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on time deposits    |                               |                        | 5,338 |                              |        |      | 1,259 |                |        |   | 4,079 |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest on other borrowings |                               |                        | 1,678 |                              |        |      | 46    |                |        |   | 1,632 |      
|                                           |                              |                               |                        |       |                              |        |      |       |                |        |   |      
|                                           |                              |                               | Total interest expense |       |                              | 8,136  |      |       |                | 1,784  |   |       |       | 6,352  |  
|                                           |                              |                               |                        |       |                              |        |      |       |                |        |   |      
|                                           |                              |                               | Net interest income    |       | $                            | 2,864  |      |       | $              | (1,377 | ) |       | $     | 4,241  |  
|                                           |                              |                               |                        |       |                              |        |      |       |                |        |   |      



---

|(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 increased $346,000, or 18.4% to $2.2 million for the second
quarter of 2001 from $1.9 million for the second quarter of 2000. Noninterest
income increased $929,000, or 26.4% to $4.5 million for the first six months of
2001 from $3.5 million for the first six months of 2000. These increases are
primarily attributable to growth in service charge income related to the
increase in the volume of deposits, gains from the sale of real estate and the
sale of investment securities. Gains from the sale of real estate totaled
$247,000 and $141,000 in the first and second quarters of 2001, respectively.
Gains from the sale of investment securities totaled $37,000 and $120,000 in
the first and second quarters of 2001, respectively.

Noninterest expense increased $1.1 million, or 13.6% to $9.4 million for
second quarter of 2001 from $8.3 million for the second quarter of 2000.
Noninterest expense increased $1.7 million, or 10.8% to $17.9 million for the
first six months of 2001 from $16.1 million for the first six months of 2000.
Salaries and benefits, the largest component of noninterest expenses, increased
$934,000, or 23.2%, to $5.0 million for the second quarter of 2001 from $4.0
million for the second quarter of 2000. Salaries and benefits increased $1.7
million, or 22.1%, to $9.6 million for the first six months of 2001 from $7.8
million for the first six months of 2000. The increase in salaries and benefits
primarily resulted from the addition of personnel in the lending,
administrative, including audit and loan reviews and operations areas.

All other noninterest expenses increased $187,000, or 4.4% to $4.4 million, for
the second quarter of 2001 from $4.2 million for the second quarter of 2000.
All other noninterest expenses remained level at $8.3 million for the first six
months of 2001 and 2000.





---



##### Table of Contents



Income tax expense was $532,000 for the second quarter of 2001, compared to
$396,000 for the second quarter of 2000. Income tax expense was $1.2 million
for the first six months of 2001, compared to $767,000 for the first six months
of 2000. The primary difference in the effective tax rate and the federal
statutory rate (34%) is due to the recognition of a rehabilitation tax credit
generated from the restoration of the Corporations headquarters, the John A.
Hand Building.

Provision for Loan Losses

The provision for loan losses was $835,000 for the second quarter of 2001
compared to $709,000 for the second quarter of 2000. The provision for loan losses
was $1.6 million for the first six months of 2001 and 2000. The provision for
loan losses represents the amount determined by management necessary to
maintain the allowance for loan losses at a level capable of absorbing inherent
losses in the loan portfolio, plus estimated losses associated with off-balance
sheet credit instruments such as letters of credit and unfunded lines of
credit. The allowance for loan losses at June 30, 2001, totaled $9.5 million,
or 1.04% of total loans, compared to $9.0 million, or 1.11% of total loans at
December 31, 2000. The Corporation prepares an analysis to assess the risk in
the loan portfolio and to determine the adequacy of the allowance for loan
losses. Generally, the Corporation estimates the allowance using factors such
as historical loss experience based on volume and types of loans, volume and
trends in delinquencies and nonaccruals, national and local economic conditions
and other pertinent information.

The Corporation manages and controls risk in the loan portfolio through
adherence to credit standards established by the Board of Directors and
implemented by senior management. These standards are set forth in a formal
loan policy, which establishes loan underwriting/approval procedure, sets
limits on credit concentration and enforces regulatory requirements.

Loan portfolio concentration risk is reduced through concentration limits for
borrowers and collateral types and through geographical diversification.
Concentration risk is measured and reported to senior management and the Board
of Directors on a regular basis.

A risk rating system is employed whereby each loan is assigned a rating which
corresponds to the perceived credit risk. Risk ratings are subject to
independent review by the Corporations Loan Review Department, which also
performs ongoing, independent review of the risk management process that
includes underwriting, documentation and collateral control. Regular reports
are made to senior management and the Board of Directors regarding credit
quality as measured by assigned risk ratings and other measures, including, but
not limited to, the level of past due percentages and nonperforming assets.

The loan review function is centralized and independent of the lending
function. Review results are reported to the Audit Committee of the Board of
Directors.

Financial Condition

Total assets of the Corporation were $1.16 billion at June 30, 2001, an
increase of $126.2 million, or 12.2% from $1.03 billion as of December 31,
2000. The increase in total assets was funded by an increase in deposits and
borrowings from the Federal Home Loan Bank (FHLB). The Corporation believes
that FHLB borrowings are a reliable and relatively inexpensive source of
funding when compared to market deposit rates in the Birmingham, Alabama market
and other markets in which the Corporation conducts its business.





---



##### Table of Contents



Short-term liquid assets (cash and due from banks, interest-bearing deposits in
other banks and federal funds sold) increased $43.2 million, or 102.2% to
$85.4 million at June 30, 2001 from $42.2 million at December 31, 2000. This
increase resulted primarily from the purchase of federal funds sold. At June
30, 2001, short-term liquid assets comprised 7.4% of total assets compared to
4.1% at December 31, 2000. The Corporation continually monitors its liquidity
position and will increase or decrease its short-term liquid assets as
necessary.

Total investment securities decreased $17.0 million, or 18.6% to $74.3 million
at June 30, 2001, from $91.3 million at December 31, 2000. Mortgage-backed
securities, which comprised 72.6% of the total investment portfolio at June 30,
2001, increased $16.2 million, or 42.9% to $53.9 million from $39.3 million at
December 31, 2000. Investments in U.S. Treasury and agency securities, which
comprised 15.1% of the total investment portfolio at June 30, 2001, decreased
$28.0 million, or 71.4% to $11.2 million from $39.2 million at December 31,
2000. The total investment portfolio at June 30, 2001 comprised 7.1% of all
interest-earning assets compared to 10.4% at December 31, 2000. The investment
portfolio produced an average tax equivalent yield of 6.2% and 6.8% for the
second quarters of 2001 and 2000, respectively, and a 6.4% and 6.7% yield for
the first six months of 2001 and 2000, respectively.

Loans, net of unearned income, totaled $912.1 million at June 30, 2001, an
increase of 12.9%, or $103.9 million from $808.2 million at December 31, 2000,
with average loans totaling $880.2 million for the second quarter of 2001
compared to $687.3 million for the second quarter of 2000. Average loans
totaled $859.0 million for the first six months of 2001 compared to $670.0
million for the first six months of 2000. Of the $103.9 million increase in
loans, 56.0%, or $57.8 million were produced by branches in the Alabama region,
the other 44.0%, or $46.1 million were produced by branches in the Florida
region. Loans, net of unearned income, comprised 87.2% of interest-earning
assets at June 30, 2001, compared to 87.8% at December 31, 2000. The loan
portfolio produced an average yield of 9.5% and 9.6% for the second quarters of
2001 and 2000, respectively, and a 9.7% and 9.5% yield for the first six months
of 2001 and 2000, respectively. The following table details the distribution of
the loan portfolio by category as of June 30, 2001 and December 31, 2000:
Table of Contents

Distribution of Loans by Category

(Dollars in thousands)

|                                        |             |   |               |         |                   |  |            |       |       |   |         |         |            |  |      |       |  
|--------------------------------------- | ----------- | - | ------------- | ------- | ----------------- |  | ---------- | ----- | ----- | - | ------- | ------- | ---------- |  | ---- | ----- | -
|                                        |             |   | June 30, 2001 |         | December 31, 2000
|                                        |             |   |               |         |                  
|                                        |             |   |               |         |                   |  | Percent of |       |       |   |         |         | Percent of
|                                        |             |   | Amount        |         | Total             |  | Amount     |       | Total
|                                        |             |   |               |         |                   |  |            |       |      
|Commercial, industrial and agricultural |             | $ | 267,856       |         |                   |  | 29.3       | %     |       | $ | 245,154 |         |            |  | 30.3 | %    
|                                       
|                                       
|                                       
|                                       
|Real estate  construction              |             |   | 164,358       |         |                   |  | 18.0       |       |       |   | 100,448 |         |            |  | 12.4 |      
|                                       
|                                       
|                                       
|                                       
|Real estate  mortgage                  |             |   | 387,613       |         |                   |  | 42.5       |       |       |   | 373,509 |         |            |  | 46.2 |      
|                                       
|                                       
|                                       
|                                       
|Consumer                                |             |   | 88,478        |         |                   |  | 9.7        |       |       |   | 84,129  |         |            |  | 10.4 |      
|                                       
|                                       
|                                       
|                                       
|Other                                   |             |   | 4,574         |         |                   |  | .5         |       |       |   | 5,725   |         |            |  | .7   |      
|                                        |             |   |               |         |                   |  |            |       |       |   |         |         |            |  |      |      
|                                        | Total loans |   |               | 912,879 |                   |  |            | 100.0 | %     |   |         | 808,965 |            |  |      | 100.0 | %
|                                        |             |   |               |         |                   |  |            |       |       |   |         |         |            |  |      |      
|Unearned income                         |             |   | (765          | )       |                   |  |            |       |       |   | (820    | )       |            |  |      |      
|                                       
|                                       
|                                       
|                                       
|Allowance for loan losses               |             |   | (9,509        | )       |                   |  |            |       |       |   | (8,959  | )       |            |  |      |      
|                                        |             |   |               |         |                   |  |            |       |       |   |         |         |            |  |      |      
|                                        | Net loans   |   | $             | 902,605 |                   |  |            |       |       |   | $       | 799,186 |            |  |      |       |  
|                                        |             |   |               |         |                   |  |            |       |       |   |         |         |            |  |      |      

Noninterest bearing deposits totaled $103.6 million at June 30, 2001, an
increase of 16.5%, or $14.7 million from $88.9 million at December 31, 2000.
Noninterest bearing deposits comprised 11.4% of total deposits at June 30,
2001, compared to 10.8% at December 31, 2000.

Interest bearing deposits totaled $806.8 million at June 30, 2001, an increase
of 9.3%, or $68.4 million from $738.4 million at December 31, 2000, with
interest bearing deposits averaging $801.3 million for the second quarter of
2001 compared to $652.3 million for the second quarter of 2000. Average
interest bearing deposits totaled $775.4 million for the first six months of
2001 compared to $610.5 million for the first six months of 2000. The $68.4
million increase in interest bearing deposits during the first six months of
2001 is comprised primarily of interest bearing demand accounts. The average
rate paid on all interest bearing deposits during the second quarter of 2001
was 5.4% compared to 5.0% for the second quarter of 2000. The average rate paid
on all interest bearing deposits during the first six months of 2001 was 5.7%
compared to 5.0% for the first six months of 2000.

Advances from the Federal Home Loan Bank (FHLB) increased $31.8 million to
$136.1 million at June 30, 2001 from $104.3 million at December 31, 2000.
Borrowings from the FHLB were used primarily to fund growth in the loan
portfolio. The advances are secured by FHLB stock, agency securities and a
blanket lien on certain residential real estate loans.

As of June 30, 2001, the Corporation had outstanding $7.0 million under a
$15.0 million line of credit with a regional bank. Interest is one and three
quarters (1.75%) percentage points in excess of the applicable LIBOR Index
Rate. The line matures May 1, 2002. The funds were used as a capital
contribution to the Corporations banking subsidiary during the first six
months of 2001.

On September 7, 2000, TBC Capital Statutory Trust II (TBC Capital), a
Connecticut statutory trust established by the Corporation, received
$15,000,000 in proceeds in exchange for $15,000,000 principal amount of TBC
Capitals 10.6% cumulative trust preferred securities in a pooled trust
preferred private placement. The proceeds were used to purchase an equal
principal amount of 10.6% subordinated debentures of the Corporation. The
Corporation has fully and unconditionally guaranteed all obligations of TBC
Capital on a subordinated basis with respect to the preferred securities. The
Corporation accounts for TBC Capital as a minority interest. Subject to certain
limitations, the preferred securities qualify as Tier 1 capital and are
presented in the Condensed Consolidated Statement of Financial Condition as
Guaranteed preferred beneficial interests in the Corporations subordinated
debentures. The sole asset of TBC Capital is the subordinated





---



##### Table of Contents



debentures issued by the Corporation. Both the preferred securities of TBC
Capital and the subordinated debentures of the Corporation each have 30-year
lives. However, both the Corporation and TBC Capital have a call option after
ten years, subject to regulatory approval, or earlier depending upon certain
changes in tax or investment company laws, or regulatory capital requirements.

At June 30, 2001, total stockholders equity was $77.8 million, an increase of
$2.9 million from $74.9 million at December 31, 2000. The increase in
stockholders equity resulted primarily from total comprehensive income for the
first six months of 2001. In September of 2000 the Corporations board of
directors approved a stock buyback plan in an amount not to exceed $10,000,000.
As of June 30, 2001, 136,300 shares of common stock have been repurchased and
are held as treasury stock at a cost of $720,000. In the first six months of
2001, the Corporation has repurchased 96,300 shares at a total cost of
$510,000.

Allowance for Loan Losses

The Corporation maintains an allowance for loan losses at a level it believes
is adequate to absorb estimated losses inherent in the loan portfolio, plus
estimated losses associated with off-balance sheet credit instruments such as
letters of credits and unfunded lines of credit. The Corporation prepares an
analysis to assess the risk in the loan portfolio and to determine the adequacy
of the allowance for loan losses. Generally, the Corporation estimates the
allowance using factors such as historical loss experience based on volume and
types of loans, volume and trends in delinquencies and non-accruals, national
and local economic conditions and other pertinent information.

The Corporation manages and controls risk in the loan portfolio through
adherence to credit standards established by the Board of Directors and
implemented by senior management. These standards are set forth in a formal
loan policy, which establishes loan underwriting/approval procedure, sets
limits on credit concentration and enforces regulatory requirements.

Loan portfolio concentration risk is reduced through concentration limits for
borrowers and collateral types and through geographical diversification.
Concentration risk is measured and reported to senior management and the Board
of Directors on a regular basis.

A risk rating system is employed whereby each loan is assigned a rating which
corresponds to the perceived credit risk. Risk ratings are subject to
independent review by a Loan Review Department, which also performs ongoing,
independent review of the risk management process that includes underwriting,
documentation and collateral control. Regular reports are made to senior
management and the Board of Directors regarding credit quality as measured by
assigned risk ratings and other measures, including, but not limited to, the
level of past due percentages and nonperforming assets.

The loan review function is centralized and independent of the lending
function. Review results are reported to the Audit Committee of the Board of
Directors.

The allowance as a percentage of loans at June 30, 2001 was 1.04% compared to
1.11% as of December 31, 2000. Allowance for loan losses as a percentage of
nonperforming loans increased to 131.0% at June 30, 2001 from 90.9% at December
31, 2000, as nonperforming loans decreased to $7.3 million at June 30, 2001
from $9.9 million at December 31, 2000. As a percent of net loans,
nonperforming loans decreased from 1.22% at December 31, 2000 to .80% at June
30, 2001.





---



##### Table of Contents



Net charge-offs were $1.1 million for the first six months of 2001. Net
charge-offs to average loans on an annualized basis totaled .25% for the first
six months of 2001. The ratio of net charge-offs to average loans has
averaged .67% for the five year period ended December 31, 2000, with a ratio of .57% in
2000 and .90% in 1999. Historically, net charge-offs have been more significant
for commercial and consumer loans. Net charge-off loans during 2000 are more
reflective of historical averages because net charge-off loans during 1999
included the charge-off of loans acquired in a purchase business combination
and a significant loss from a single commercial loan customer. The Corporation
believes that in future periods loan losses should reflect amounts that are
similar to its historical averages, exclusive of 1999.

The following table summarizes certain information with respect to the
Corporations allowance for loan losses and the composition of charge-offs and
recoveries for the periods indicated.

Summary of Loan Loss Experience

|                                                                 |                                         |                   |         |                        |       |              |         |       |       | 
|---------------------------------------------------------------- | --------------------------------------- | ----------------- | ------- | ---------------------- | ----- | ------------ | ------- | ----- | ----- | 
|                                                                 |                                         |                   |         | Six-Month period       |       |              |         |      
|                                                                 |                                         |                   |         | Ended                  |       | Year Ended  
|                                                                 |                                         |                   |         | June 30,               |       | December 31,
|                                                                 |                                         |                   |         | 2001                   |       | 2000        
|                                                                 |                                         |                   |         |                        |       |             
|                                                                 |                                         |                   |         | (Dollars in thousands)
|                                                                
|Allowance for loan losses at beginning of year                   |                                         | $                 | 8,959   |                        |       | $            | 8,065   |      
|                                                                
|                                                                
|                                                                
|                                                                
|Charge-offs:                                                     |                                         |                   |         |                        |       |              |         |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Commercial, industrial and agricultural |                   |         | 579                    |       |              |         | 3,133 |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Real estate                             |                   |         | 158                    |       |              |         | 756   |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer                                |                   |         | 631                    |       |              |         | 726   |      
|                                                                 |                                         |                   |         |                        |       |              |         |      
|                                                                 |                                         | Total charge-offs |         |                        | 1,368 |              |         |       | 4,615 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Recoveries:                                                      |                                         |                   |         |                        |       |              |         |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Commercial, industrial and agricultural |                   |         | 27                     |       |              |         | 193   |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Real estate                             |                   |         | 83                     |       |              |         | 87    |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Consumer                                |                   |         | 178                    |       |              |         | 268   |      
|                                                                 |                                         |                   |         |                        |       |              |         |      
|                                                                 |                                         | Total recoveries  |         |                        | 288   |              |         |       | 548   | 
|                                                                
|                                                                
|                                                                
|                                                                
|Net charge-offs                                                  |                                         |                   | 1,080   |                        |       |              | 4,067   |      
|                                                                
|                                                                
|                                                                
|                                                                
|Provision for loan losses                                        |                                         |                   | 1,630   |                        |       |              | 4,961   |      
|                                                                 |                                         |                   |         |                        |       |              |         |      
|Allowance for loan losses at end of year                         |                                         | $                 | 9,509   |                        |       | $            | 8,959   |      
|                                                                 |                                         |                   |         |                        |       |              |         |      
|                                                                
|Loans at end of period, net of unearned income                   |                                         | $                 | 912,114 |                        |       | $            | 808,145 |      
|                                                                
|                                                                
|                                                                
|                                                                
|Average loans, net of unearned income                            |                                         |                   | 858,981 |                        |       |              | 710,414 |      
|                                                                
|                                                                
|                                                                
|                                                                
|Ratio of ending allowance to ending loans                        |                                         |                   | 1.04    | %                      |       |              | 1.11    | %    
|                                                                
|                                                                
|                                                                
|                                                                
|Ratio of net charge-offs to average loans (1)                    |                                         |                   | .25     | %                      |       |              | .57     | %    
|                                                                
|                                                                
|                                                                
|                                                                
|Net charge-offs as a percentage of:                              |                                         |                   |         |                        |       |              |         |      
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Provision for loan losses               |                   |         | 66.26                  | %     |              |         | 81.98 | %    
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Allowance for loan losses(1)            |                   |         | 22.90                  | %     |              |         | 45.40 | %    
|                                                                
|                                                                
|                                                                
|                                                                
|Allowance for loan losses as a percentage
of nonperforming loans |                                         |                   | 130.98  | %                      |       |              | 90.85   | %    



|(1) |  | Annualized.
|--- |  | -----------





---



##### Table of Contents



The following table represents the Corporations nonperforming loans for the
dates indicated (dollars in thousands).

Nonaccrual, Past Due and Restructured Loans

|                                                  |  |          |       |              |  |   |       | 
|------------------------------------------------- |  | -------- | ----- | ------------ |  | - | ----- | 
|                                                  |  | June 30, |       | December 31,
|                                                  |  | 2001     |       | 2000        
|                                                  |  |          |       |             
|Nonaccrual                                        |  | $        | 5,717 |              |  | $ | 9,340 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Past due (contractually past due 90 days or more) |  |          | 1,543 |              |  |   | 334   | 
|                                                 
|                                                 
|                                                 
|                                                 
|Restructured                                      |  |          |      |              |  |   | 187   | 
|                                                  |  |          |       |              |  |   |       | 
|                                                  |  | $        | 7,260 |              |  | $ | 9,861 | 
|                                                  |  |          |       |              |  |   |       | 

A delinquent loan is generally placed on nonaccrual status when it becomes 90
days or more past due and management believes, after considering economic and
business conditions and collection efforts, that the borrowers financial
condition is such that the collection of interest is doubtful. When a loan is
placed on nonaccrual status, all interest which has been accrued on the loan
but remains unpaid is reversed and deducted from earnings as a reduction of
reported interest income. No additional interest income is accrued on the loan
balance until the collection of both principal and interest becomes reasonably
certain. When a problem loan is finally resolved, there may ultimately be an
actual write-down or charge-off of the principal balance of the loan, which may
necessitate additional charges to earnings.

Regulatory Capital.

The table below represents the regulatory and minimum regulatory capital
requirements of the Corporation and its subsidiary at June 30, 2001 (dollars in
thousands):

|                          |             |  |        |        |          |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |       |  
|------------------------- | ----------- |  | ------ | ------ | -------- |  | ----------- | ----- | ----- |  | ----------- | ------ | ---------- |  |  | ---- | - |  | - | ------ |  |  |  | ----- | -
|                          |             |  |        |        |          |  |             |       |       |  | For Capital |        |            |  |  |      |   |  |  
|                          |             |  |        |        |          |  |             |       |       |  | Adequacy    |        | To Be Well
|                          |             |  | Actual |        | Purposes |  | Capitalized
|                          |             |  |        |        |          |  |            
|                          |             |  | Amount |        | Ratio    |  | Amount      |       | Ratio |  | Amount      |        | Ratio     
|                          |             |  |        |        |          |  |             |       |       |  |             |        |           
|Total Risk-Based Capital  |             |  |        |        |          |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                         
|                         
|                         
|                         
|                          | Corporation |  | $      | 95,834 |          |  |             | 10.39 | %     |  | $           | 73,768 |            |  |  | 8.00 | % |  | $ | 92,210 |  |  |  | 10.00 | %
|                         
|                         
|                         
|                         
|                          | The Bank    |  |        | 94,962 |          |  |             | 10.39 |       |  |             | 73,089 |            |  |  | 8.00 |   |  |   | 91,361 |  |  |  | 10.00 |  
|                         
|                         
|                         
|                         
|Tier 1 Risk-Based Capital |             |  |        |        |          |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                         
|                         
|                         
|                         
|                          | Corporation |  |        | 86,325 |          |  |             | 9.36  |       |  |             | 36,884 |            |  |  | 4.00 |   |  |   | 55,324 |  |  |  | 6.00  |  
|                         
|                         
|                         
|                         
|                          | The Bank    |  |        | 85,453 |          |  |             | 9.35  |       |  |             | 36,545 |            |  |  | 4.00 |   |  |   | 54,817 |  |  |  | 6.00  |  
|                         
|                         
|                         
|                         
|Leverage Capital          |             |  |        |        |          |  |             |       |       |  |             |        |            |  |  |      |   |  |   |        |  |  |  |      
|                         
|                         
|                         
|                         
|                          | Corporation |  |        | 86,325 |          |  |             | 7.61  |       |  |             | 45,353 |            |  |  | 4.00 |   |  |   | 56,691 |  |  |  | 5.00  |  
|                         
|                         
|                         
|                         
|                          | The Bank    |  |        | 85,453 |          |  |             | 7.59  |       |  |             | 45,042 |            |  |  | 4.00 |   |  |   | 56,303 |  |  |  | 5.00  |  

Liquidity

The Corporations principal sources of funds are deposits, principal and
interest payments on loans, federal funds sold and maturities and sales of
investment securities. In addition to these sources of liquidity, the
Corporation has access to purchased funds from several regional financial
institutions and may borrow from a regional financial institution under a line
of credit, and from the Federal Home Loan Bank under a blanket floating lien on
certain residential real estate loans. While scheduled loan repayments and
maturing investments are relatively predictable, interest rates, general
economic conditions and competition primarily influence deposit flows and early
loan payments. The management of the Corporation places constant emphasis on
the maintenance of adequate liquidity to meet conditions that might reasonably
be expected to occur.





---



##### Table of Contents



Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q, which are not
historical facts, are forward-looking statements. In addition, the
Corporation, through its senior management, from time to time makes
forward-looking public statements concerning its expected future operations and
performance and other developments.
Such forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Additionally, such forward-looking statements are based on the Corporations
belief as well as certain assumptions made by, and information currently
available to, the Corporation with respect to its ability to achieve the
operating results it expects relating to the recently-completed acquisitions;
one-time costs associated with the recently-completed acquisitions; the ability
of the Corporation to achieve anticipated cost savings and revenue enhancements
with respect to the acquired operations; the assimilation of the acquired
operations by the Corporation, including installing the Corporations
centralized policy oversight, credit review and management systems at the
acquired institutions; the absence of material contingencies related to the
acquired operations; the adequacy of the allowance for loan losses; the ability
of the Corporation to resolve any pending litigation on acceptable terms; the
effect of legal proceedings on the Corporations financial condition, results
of operations and liquidity; and market risk disclosures, as well as other
information. The risks and uncertainties that may affect operations,
performance, growth projections and the results of the Corporations business
include, but are not limited to, fluctuations in the economy, the relative
strength and weakness in the commercial and consumer sector and in the real
estate market, the actions taken by the Federal Reserve Board for the purpose
of managing the economy, interest rate movements, the impact of competitive
products, services and pricing, timely development by the Corporation of
technology enhancements for its products and operating systems, legislation and
similar matters. Although management of the Corporation believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to be correct.
Prospective investors are cautioned that any such forward-looking statements
are not guaranties of future performance, and involve risks and uncertainties,
and that actual results may differ materially from those contemplated by such
forward-looking statements.




ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The information set forth under the caption Item 7. Managements Discussion
and Analysis of Financial Condition and Results of Operations  Market
Risk  Interest Sensitivity included in the Corporations Annual Report on Form
10-K for the year ended December 31, 2000, is hereby incorporated herein by
reference.




Part II.    Other Information

Item 1.     Legal Proceedings

A trial date is set for August 27, 2001 in John C. Moses v. The Banket al,
Case No 00-150, which is pending in the Circuit Court of Morgan County Alabama,
on all counts, including plaintiffs claims for punitive damages. While we
believe that we will prevail in this lawsuit, there can be no assurance,
especially given the unpredictability of punitive damages awards, that the
litigation will not have a material adverse effect on our financial condition
or results of operations.





---



##### Table of Contents



Item 2.     Changes in Securities and Use of Proceeds

None.

Item 3.     Defaults Upon Senior Securities

None

Item 4.     Submission of Matters to a Vote of Security Holders

On June 19, 2001 the Annual Meeting of Stockholders of the Corporation was held
at which shares of common stock represented at the Annual Meeting were voted in
favor of the directors listed below as follows:

|         |  |                        |  |         |            |  |  |  |        |  |  |  | 
|-------- |  | ---------------------- |  | ------- | ---------- |  |  |  | ------ |  |  |  | 
|Director |  | For                    |  | Against
|         |  |                        |  |        
|1.       |  | James A. Taylor        |  |         | 10,242,157 |  |  |  | 64,284 | 
|        
|        
|        
|        
|2.       |  | Neal R. Berte, Ed. D.  |  |         | 10,242,157 |  |  |  | 64,284 | 
|        
|        
|        
|        
|3.       |  | David R. Carter        |  |         | 10,242,157 |  |  |  | 64,284 | 
|        
|        
|        
|        
|4.       |  | James Mailon Kent, Jr. |  |         | 10,242,157 |  |  |  | 64,284 | 
|        
|        
|        
|        
|5.       |  | Larry D. Striplin, Jr. |  |         | 10,242,157 |  |  |  | 64,284 | 
|        
|        
|        
|        
|6.       |  | James R. Andrews, M.D. |  |         | 10,242,157 |  |  |  | 64,284 | 
|        
|        
|        
|        
|7.       |  | Ronald W. Orso, M.D.   |  |         | 10,241,328 |  |  |  | 65,113 | 

In addition to the directors elected at the meeting, the following individuals
will continue to serve as directors until the end of their respective terms:

|                        |  |                     
|----------------------- |  | --------------------
|W. T. Campbell, Jr.     |  | Harold W. Ripps     
|                       
|                       
|                       
|                       
|Peter N. DiChiara       |  | Richard M. Scrushy  
|                       
|                       
|                       
|                       
|K. Earl Durden          |  | Jerry M. Smith      
|                       
|                       
|                       
|                       
|John F. Gittings        |  | Michael E. Stephens 
|                       
|                       
|                       
|                       
|Steven C. Hayes         |  | Marie Swift         
|                       
|                       
|                       
|                       
|Thomas E. Jernigan, Jr. |  | James A. Taylor, Jr.
|                       
|                       
|                       
|                       
|Randall E. Jones        |  | T. Mandell Tillman  
|                       
|                       
|                       
|                       
|Larry R. Matthews       |  | Johnny Wallis       
|                       
|                       
|                       
|                       
|Mayer Mitchell          |  |                     

In addition, shares of common stock represented at the Annual Meeting were
voted in favor of the ratification of Ernst & Young LLP as independent auditors
as follows:

|           |  |         |        |         |  |  |        |  | 
|---------- |  | ------- | ------ | ------- |  |  | ------ |  | 
|For        |  | Against |        | Abstain
|           |  |         |        |        
|10,220,469 |  |         | 43,373 |         |  |  | 42,599 | 





---



##### Table of Contents



Item 5.     Other Information

On July 16, 2001, TBC Capital Statutory Trust III, a Delaware statutory trust
established by the Corporation, received approximately $16 million in a pooled trust
preferred offering. As of the date of issuance, the interest rate on the securities was 7.57%. The stated rate is the six month LIBOR plus 375 basis points. The securities are re-priced each six months and have a 12% ceiling.
The Corporation used a portion of the debt to pay off its
outstanding line of credit and invest additional capital into its subsidiary,
The Bank. The Corporation plans to use the remaining proceeds for general
corporate purposes.

Item 6.     Exhibits and Reports on Form 8-K

|    |  |                     | 
|--- |  | ------------------- | 
|(a) |  | Exhibits:          
|   
|   
|   
|   
|    |  | None               
|   
|   
|   
|   
|(b) |  | Report on Form 8-K:
|   
|   
|   
|   
|    |  | None               




Signatures

Pursuant with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                          |  |                                                      |  |                                   | 
|------------------------- |  | ---------------------------------------------------- |  | --------------------------------- | 
|                          |  |                                                      |  | The Banc Corporation
(Registrant)
|                         
|                         
|                         
|                         
|                         
|Date:     August 14, 2001 |  | By:                                                  |  | /s/ James A. Taylor, Jr.         
|                          |  |                                                      |  |                                  
|                         
|                         
|                         
|                         
|                          |  | James A. Taylor, Jr.                                
|                         
|                         
|                         
|                         
|                          |  | President and Chief Operating Officer               
|                         
|                         
|                         
|                         
|                         
|                         
|Date:     August 14, 2001 |  | By:                                                  |  | /s/ David R. Carter              
|                          |  |                                                      |  |                                  
|                          |  | David R. Carter                                     
|                         
|                         
|                         
|                         
|                          |  | Executive Vice President and Chief Financial Officer
|                         
|                         
|                         
|                         
|                          |  | (Principal Accounting Officer)