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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

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Delaware		63-1201350
(State or Other Jurisdiction of Incorporation)		(IRS Employer Identification No.)

17 North 20th Street, Birmingham, Alabama 35203

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(Address of Principal Executive Offices)

(205) 326-2265

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(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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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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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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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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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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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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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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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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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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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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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.

 

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     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

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(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.

 

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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.

 

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     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

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(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.

 

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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.

 

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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:

 

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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

 

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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.

 

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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.

 

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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.

 

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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 Bank et 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.

 

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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

 

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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)