Our total assets were $1.376 billion at September 30, 2005, a decrease of $47 million, or 3.29%,
from $1.423 billion as of December 31, 2004. Our total loans, net of unearned income, were $903
million at September 30, 2005, a decrease of $32 million, or 3.37%, from $935 million as of
December 31, 2004. Our total deposits were $1.052 billion at September 30, 2005, a decrease of $15
million, or 1.40%, from $1.067 billion as of December 31, 2004. These declines reflect our strategy
of deleveraging the balance sheet and focusing on deposit and loan mix realignment which management
expects will improve net interest margin. Our total stockholders equity was $103.1 million at
September 30, 2005, an increase of $2.6 million, or 2.62%, from $100.5 million as of December 31,
2004.
On July 21, 2005, we announced we had bought out the employment contracts of our Chief Financial
Officer and our General Counsel, effective June 30, 2005. Under these agreements, in lieu of the
payments to which they would have been entitled under their employment agreements we paid these
officers a total of $2,392,343 on July 22, 2005. In addition, these officers became fully vested in
stock options and restricted stock previously granted to them and in benefits under their deferred
compensation agreements with us.
On June 17, 2005, our banking subsidiary filed an application to change its charter to a federal
savings bank charter under regulation by the Office of Thrift Supervision. The application was
accepted and the charter conversion became effective November 1, 2005. Through October 31, 2005,
our banking subsidiary was regulated by the Alabama Banking Department and the Federal Reserve.
On January 24, 2005, we announced that we had entered into a series of executive management change
agreements. These agreements set forth the employment of C. Stanley Bailey as Chief Executive
Officer and a director of the corporation and chairman of our banking subsidiary, C. Marvin Scott
as President of the corporation and our banking subsidiary, and Rick D. Gardner as Chief Operating
Officer of the corporation and our banking subsidiary. These agreements also provided for the
purchase by Mr. Bailey, Mr. Scott and Mr. Gardner, along with other investors, of 925,636 shares of
common stock of the corporation at $8.17 per share. We also entered into agreements with James A.
Taylor and James A. Taylor, Jr. under which they would continue to serve as Chairman of the Board
of the Corporation and as a director of the Corporation, respectively, but would cease their
employment as officers of the Corporation and officers and directors of our banking subsidiary. Mr.
Taylor, Jr. subsequently resigned as a director of the Corporation effective September 28, 2005 to
pursue other business opportunities.
Under the agreement with Mr. Taylor, in lieu of the payments to which he would have been entitled
under his employment agreement, we paid Mr. Taylor $3,940,155 on January 24, 2005, and are
scheduled to pay an additional $3,152,124 by January 24, 2006, and $788,031 by January 24, 2007.
The agreement also provides for the provision of certain insurance benefits to Mr. Taylor, the
transfer of a key man life insurance policy to Mr. Taylor, and the maintenance of such policy by
us for five years (with the cost of maintaining such policy included in the above amounts), in each
case substantially as required by his employment agreement. This obligation to provide such
payments and benefits to Mr. Taylor is absolute and will survive the death or disability of Mr.
Taylor.
Under the agreement with Mr. Taylor, Jr., in lieu of the payments to which he would have been
entitled under his employment agreement, we paid Mr. Taylor, Jr., $1,382,872 on January 24, 2005.
The agreement also provides for the provision of certain insurance benefits to Mr. Taylor, Jr. and
for the immediate vesting of his unvested incentive awards and deferred compensation in each case
substantially as required by his employment agreement. This obligation to provide such payments and
benefits to Mr. Taylor, Jr. is absolute and will survive the death or disability of Mr. Taylor, Jr.
In connection with the above described employment contract buyouts and management separation
transaction, we recognized pre-tax expenses of $15.4 million for the nine-month period ended
September 30, 2005. At September 30, 2005, we had $4.3 million of accrued liabilities related to
these agreements. See Note 24 to the Consolidated Financial Statements included in our Annual
Report on Form 10-K for the year ended December 31, 2004 for further information.
Management reviews the adequacy of the allowance for loan losses on a quarterly basis. The
provision for loan losses represents the amount determined by management to be necessary to
maintain the allowance for loan losses at a level capable of absorbing inherent losses in the loan
portfolio. Managements determination of the adequacy of the allowance for loan losses, which is
based on the factors and risk identification procedures discussed in the following pages, requires
the use of judgments and estimates that may change in the future. Changes in the factors used by
management to determine the adequacy of the allowance or the availability of new information could
cause
16
the allowance for loan losses to be increased or decreased in future periods. In addition, bank
regulatory agencies, as part of their examination process, may require that additions or reductions
be made to the allowance for loan losses based on their judgments and estimates.
Results of Operations
Our net income for the three-month period ended September 30, 2005 (third quarter of 2005) was
$137,000, compared to a net loss of $(830,000) for the three-month period ended September 30, 2004
(third quarter of 2004). Basic and diluted net income (loss) per common share was $.01 and $(.05),
respectively, for the third quarters of 2005 and 2004, based on weighted average common shares
outstanding for the respective periods. Return on average assets, on an annualized basis, was .04%
for the third quarter of 2005 compared to (.25)% for the third quarter of 2004. Return on average
stockholders equity, on an annualized basis, was .54% for the third quarter of 2005 compared to
(3.26)% for the third quarter of 2004.
The increase in our net income during the third quarter of 2005 compared to the third quarter of
2004 is the result of the $2.3 million loss on sale of loans recorded in the third quarter of 2004,
partially offset by an increase in the provision for loan losses and a decline in the fair value of
derivatives.
We incurred a $6.9 million net loss for the nine-month period ended September 30, 2005 (first
nine months of 2005), compared to $1.5 million in net income for the nine-month period ended
September 30, 2004 (first nine months of 2004). Net (loss) income per common share was $(.49) for
the first nine months of 2005 compared to $.07 per common share for the first nine months of 2004.
Return on average assets, on an annualized basis, was (.65)% for the first nine months of 2005
compared to .15% for the first nine months of 2004. Return on average stockholders equity, on an
annualized basis, was (9.09)% for the first nine months of 2005 compared to 1.94% for the first
nine months of 2004. Book value per share at September 30, 2005 was $5.22, compared to $5.31 as of
December 31, 2004. Tangible book value per share at September 30, 2005 was $4.60, compared to $4.62
as of December 31, 2004.
The decrease in our net income during the first nine months of 2005 compared to the first nine
months of 2004 is the result of certain nonoperating charges related to the management changes
which occurred in the first and second quarters of 2005, the recognition of losses in the bond
portfolio, losses on other real estate, losses from the sale of certain assets and an increase in
the provision for loan losses.
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
decreased $254,000, or 2.61%, to $9.5 million for the third quarter of 2005 compared to $9.7
million for the third quarter of 2004. Net interest income decreased primarily due to a $2.7
million increase in total interest income offset by a $3.0 increase in total interest expense. The
increase in total interest income is primarily due to a 67 basis point (bp) increase in the average
rate on loans and a $47 million increase in the average volume of investment securities. The
increase in the interest expense is primarily due to an 85 bp increase in interest-bearing
liabilities, which comprise, for the most part, demand and time deposits.
Average interest-earning assets for the third quarter of 2005 increased $71 million, or 6.1%, to
$1.234 billion from $1.163 billion in the third quarter of 2004. This increase in average
interest-earning assets was offset by a $72 million, or 6.5%, increase in average interest-bearing
liabilities, to $1.179 billion for the third quarter of 2005 from $1.107 billion for the third
quarter of 2004. The ratio of average interest-earning assets to average interest-bearing
liabilities was 104.7% and 105.1% for the third quarters of 2005 and 2004, respectively. Average
interest-bearing assets produced a taxable equivalent yield of 6.27% for the third quarter of 2005
compared to 5.74% for the third quarter of 2004.
For the third quarter of 2005 as compared to the third quarter of 2004, the increase in total
interest expense is attributable to an 85 bp increase in the average interest rate paid on
interest-bearing liabilities and a $72 million increase in the volume of average interest-bearing
liabilities. The average rate paid on interest-bearing liabilities was 3.37% for the third quarter
of 2005, compared to 2.52% for the third quarter of 2004. Our net interest spread and net interest
margin were 2.90% and 3.06%, respectively, for the third quarter of 2005, compared to 3.22% and
3.34% for the third quarter of 2004.
17
Net interest income increased $0.8 million, or 2.8%, to $29.0 million for the first nine months of
2005 compared to $28.2 million for the first nine months of 2004. Net interest income increased
primarily due to an $8.3 million increase in total interest income offset by a $7.5 million
increase in total interest expense. The increase in total interest income is primarily due to a
$61.5 million increase in the average volume of loans and a $80.9 million increase in the average
volume of investment securities.
Average interest-earning assets for the first nine months of 2005 increased $132 million, or 11.8%,
to $1.251 billion from $1.119 billion in the first nine months of 2004. This increase in average
interest-earning assets was offset by a $133 million, or 12.5%, increase in average
interest-bearing liabilities, to $1.198 billion for the first nine months of 2005 from $1.065
billion for the first nine months of 2004. The ratio of average interest-earning assets to average
interest-bearing liabilities was 104.4% and 105.1% for the first nine months of 2005 and 2004,
respectively. Average interest-bearing assets produced a taxable equivalent yield of 6.06% for the
first nine months of 2005 compared to 5.78% for the first nine months of 2004.
For the nine-month period ended September 30, 2005 compared to the nine-month period ended
September 30, 2004, the increase in total interest expense is attributable to a 56 bp increase in
the average interest rate paid on interest-bearing liabilities and a $133 million increase in the
volume of average interest-bearing liabilities. The average rate paid on interest-bearing
liabilities was 3.09% for the first nine months of 2005, compared to 2.53% for the first nine
months of 2004. Our net interest spread and net interest margin were 2.97% and 3.10%, respectively,
for the first nine months of 2005, compared to 3.25% and 3.37% for the first nine months of 2004.
Average Balances, Income, Expense and Rates. The following table depicts, on a taxable equivalent
basis for the periods indicated, certain information related to our average balance sheet and
average yields on assets and average costs of liabilities. Average yields are calculated by
dividing income or expense by the average balance of the corresponding assets or liabilities.
Average balances have been calculated on a daily basis.
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
|
(Dollars in thousands) |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned income(1) |
|
$ |
931,598 |
|
|
$ |
16,063 |
|
|
|
6.84 |
% |
|
$ |
918,093 |
|
|
$ |
14,244 |
|
|
|
6.17 |
% |
Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
253,960 |
|
|
|
2,919 |
|
|
|
4.56 |
|
|
|
206,422 |
|
|
|
2,270 |
|
|
|
4.37 |
|
Tax-exempt(2) |
|
|
6,897 |
|
|
|
94 |
|
|
|
5.40 |
|
|
|
5,201 |
|
|
|
71 |
|
|
|
5.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities |
|
|
260,857 |
|
|
|
3,013 |
|
|
|
4.58 |
|
|
|
211,623 |
|
|
|
2,341 |
|
|
|
4.40 |
|
Federal funds sold |
|
|
18,904 |
|
|
|
163 |
|
|
|
3.42 |
|
|
|
9,435 |
|
|
|
32 |
|
|
|
1.35 |
|
Other investments |
|
|
22,743 |
|
|
|
272 |
|
|
|
4.74 |
|
|
|
23,480 |
|
|
|
157 |
|
|
|
2.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
1,234,102 |
|
|
|
19,511 |
|
|
|
6.27 |
|
|
|
1,162,631 |
|
|
|
16,774 |
|
|
|
5.74 |
|
Noninterest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
34,991 |
|
|
|
|
|
|
|
|
|
|
|
26,906 |
|
|
|
|
|
|
|
|
|
Premises and equipment |
|
|
55,849 |
|
|
|
|
|
|
|
|
|
|
|
58,309 |
|
|
|
|
|
|
|
|
|
Accrued interest and other assets |
|
|
84,175 |
|
|
|
|
|
|
|
|
|
|
|
83,046 |
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
|
|
(12,368 |
) |
|
|
|
|
|
|
|
|
|
|
(20,433 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,396,749 |
|
|
|
|
|
|
|
|
|
|
$ |
1,310,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
$ |
362,520 |
|
|
|
2,094 |
|
|
|
2.29 |
|
|
$ |
276,490 |
|
|
|
860 |
|
|
|
1.24 |
|
Savings deposits |
|
|
25,178 |
|
|
|
9 |
|
|
|
0.14 |
|
|
|
29,081 |
|
|
|
10 |
|
|
|
0.14 |
|
Time deposits |
|
|
579,977 |
|
|
|
5,243 |
|
|
|
3.59 |
|
|
|
588,166 |
|
|
|
3,989 |
|
|
|
2.70 |
|
Other borrowings |
|
|
179,306 |
|
|
|
1,927 |
|
|
|
4.26 |
|
|
|
181,055 |
|
|
|
1,510 |
|
|
|
3.32 |
|
Subordinated debentures |
|
|
31,959 |
|
|
|
732 |
|
|
|
9.09 |
|
|
|
31,959 |
|
|
|
653 |
|
|
|
8.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
1,178,940 |
|
|
|
10,005 |
|
|
|
3.37 |
|
|
|
1,106,751 |
|
|
|
7,022 |
|
|
|
2.52 |
|
Noninterest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
94,219 |
|
|
|
|
|
|
|
|
|
|
|
90,803 |
|
|
|
|
|
|
|
|
|
Accrued interest and other liabilities |
|
|
22,112 |
|
|
|
|
|
|
|
|
|
|
|
11,661 |
|
|
|
|
|
|
|
|
|
Stockholders equity |
|
|
101,478 |
|
|
|
|
|
|
|
|
|
|
|
101,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders equity |
|
$ |
1,396,749 |
|
|
|
|
|
|
|
|
|
|
$ |
1,310,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/net interest spread |
|
|
|
|
|
|
9,506 |
|
|
|
2.90 |
% |
|
|
|
|
|
|
9,752 |
|
|
|
3.22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net yield on earning assets |
|
|
|
|
|
|
|
|
|
|
3.06 |
% |
|
|
|
|
|
|
|
|
|
|
3.34 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities(2) |
|
|
|
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
9,474 |
|
|
|
|
|
|
|
|
|
|
$ |
9,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made
for these loans in the calculation of yields. |
|
(2) |
|
Interest income and yields are presented on a fully taxable equivalent basis using a tax rate
of 34%. |
The following table sets forth, on a taxable equivalent basis, the effect that the varying
levels of our interest-earning assets and interest-bearing liabilities and the applicable rates
have had on the changes in net interest income for the three months ended September 30, 2005 and
2004.
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2005 vs 2004 (1) |
|
|
|
Increase |
|
|
Changes Due To |
|
|
|
(Decrease) |
|
|
Rate |
|
|
Volume |
|
|
|
(Dollars in thousands) |
|
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
Income from interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
1,819 |
|
|
$ |
1,602 |
|
|
$ |
217 |
|
Interest on securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
649 |
|
|
|
103 |
|
|
|
546 |
|
Tax-exempt |
|
|
23 |
|
|
|
|
|
|
|
23 |
|
Interest on federal funds |
|
|
131 |
|
|
|
79 |
|
|
|
52 |
|
Interest on other investments |
|
|
115 |
|
|
|
120 |
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
2,737 |
|
|
|
1,904 |
|
|
|
833 |
|
|
|
|
|
|
|
|
|
|
|
Expense from interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest on demand deposits |
|
|
1,234 |
|
|
|
902 |
|
|
|
332 |
|
Interest on savings deposits |
|
|
(1 |
) |
|
|
|
|
|
|
(1 |
) |
Interest on time deposits |
|
|
1,254 |
|
|
|
1,310 |
|
|
|
(56 |
) |
Interest on other borrowings |
|
|
417 |
|
|
|
432 |
|
|
|
(15 |
) |
Interest subordinated debentures |
|
|
79 |
|
|
|
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
2,983 |
|
|
|
2,723 |
|
|
|
260 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
(246 |
) |
|
$ |
(819 |
) |
|
$ |
573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The change in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts of the changes in
each. |
The following table depicts, on a taxable equivalent basis for the periods indicated, certain
information related to our average balance sheet and our average yields on assets and average costs
of liabilities. Average yields are calculated by dividing income or expense by the average balance
of the corresponding assets or liabilities. Average balances have been calculated on a daily basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
|
(Dollars in thousands) |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned income(1) |
|
$ |
943,550 |
|
|
$ |
46,531 |
|
|
|
6.59 |
% |
|
$ |
882,030 |
|
|
$ |
41,502 |
|
|
|
6.29 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
260,734 |
|
|
|
8,789 |
|
|
|
4.51 |
|
|
|
183,468 |
|
|
|
6,092 |
|
|
|
4.44 |
|
Tax-exempt(2) |
|
|
6,716 |
|
|
|
271 |
|
|
|
5.39 |
|
|
|
3,109 |
|
|
|
133 |
|
|
|
5.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment securities |
|
|
267,450 |
|
|
|
9,060 |
|
|
|
4.53 |
|
|
|
186,577 |
|
|
|
6,225 |
|
|
|
4.46 |
|
Federal funds sold |
|
|
16,134 |
|
|
|
354 |
|
|
|
2.93 |
|
|
|
13,832 |
|
|
|
107 |
|
|
|
1.03 |
|
Other investments |
|
|
23,551 |
|
|
|
769 |
|
|
|
4.37 |
|
|
|
36,534 |
|
|
|
553 |
|
|
|
2.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
1,250,685 |
|
|
|
56,714 |
|
|
|
6.06 |
|
|
|
1,118,973 |
|
|
|
48,387 |
|
|
|
5.78 |
|
Noninterest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
32,212 |
|
|
|
|
|
|
|
|
|
|
|
27,716 |
|
|
|
|
|
|
|
|
|
Premises and equipment |
|
|
57,325 |
|
|
|
|
|
|
|
|
|
|
|
58,154 |
|
|
|
|
|
|
|
|
|
Accrued interest and other assets |
|
|
83,712 |
|
|
|
|
|
|
|
|
|
|
|
81,650 |
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
|
|
(12,649 |
) |
|
|
|
|
|
|
|
|
|
|
(23,064 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,411,285 |
|
|
|
|
|
|
|
|
|
|
$ |
1,263,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2005 |
|
|
2004 |
|
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
|
(Dollars in thousands) |
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
$ |
333,912 |
|
|
|
4,849 |
|
|
|
1.94 |
|
|
$ |
257,805 |
|
|
|
2,354 |
|
|
|
1.22 |
|
Savings deposits |
|
|
26,812 |
|
|
|
30 |
|
|
|
0.15 |
|
|
|
29,487 |
|
|
|
34 |
|
|
|
0.15 |
|
Time deposits |
|
|
614,288 |
|
|
|
15,032 |
|
|
|
3.27 |
|
|
|
570,182 |
|
|
|
11,253 |
|
|
|
2.64 |
|
Other borrowings |
|
|
190,589 |
|
|
|
5,665 |
|
|
|
3.97 |
|
|
|
175,443 |
|
|
|
4,632 |
|
|
|
3.53 |
|
Subordinated debentures |
|
|
31,959 |
|
|
|
2,116 |
|
|
|
8.85 |
|
|
|
31,959 |
|
|
|
1,905 |
|
|
|
7.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
1,197,560 |
|
|
|
27,692 |
|
|
|
3.09 |
|
|
|
1,064,876 |
|
|
|
20,178 |
|
|
|
2.53 |
|
Noninterest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
93,936 |
|
|
|
|
|
|
|
|
|
|
|
86,417 |
|
|
|
|
|
|
|
|
|
Accrued interest and other liabilities |
|
|
18,636 |
|
|
|
|
|
|
|
|
|
|
|
11,500 |
|
|
|
|
|
|
|
|
|
Stockholders equity |
|
|
101,153 |
|
|
|
|
|
|
|
|
|
|
|
100,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
1,411,285 |
|
|
|
|
|
|
|
|
|
|
$ |
1,263,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/net interest spread |
|
|
|
|
|
|
29,022 |
|
|
|
2.97 |
% |
|
|
|
|
|
|
28,209 |
|
|
|
3.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net yield on earning assets |
|
|
|
|
|
|
|
|
|
|
3.10 |
% |
|
|
|
|
|
|
|
|
|
|
3.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable equivalent adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities(2) |
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
28,930 |
|
|
|
|
|
|
|
|
|
|
$ |
28,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made
for these loans in the calculation of yields. |
|
(2) |
|
Interest income and yields are presented on a fully taxable equivalent basis using a tax rate
of 34%. |
The following table sets forth, on a taxable equivalent basis, the effect that the varying levels
of our interest-earning assets and interest-bearing liabilities and the applicable rates have had
on changes in net interest income for the nine months ended September 30, 2005 and 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2005 vs 2004 (1) |
|
|
|
Increase |
|
|
Changes Due To |
|
|
|
(Decrease) |
|
|
Rate |
|
|
Volume |
|
|
|
(Dollars in thousands) |
|
Increase (decrease) in: |
|
|
|
|
|
|
|
|
|
|
|
|
Income from interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
5,029 |
|
|
$ |
2,042 |
|
|
$ |
2,987 |
|
Interest on securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
2,697 |
|
|
|
97 |
|
|
|
2,600 |
|
Tax-exempt |
|
|
138 |
|
|
|
(9 |
) |
|
|
147 |
|
Interest on federal funds |
|
|
247 |
|
|
|
227 |
|
|
|
20 |
|
Interest on other investments |
|
|
216 |
|
|
|
466 |
|
|
|
(250 |
) |
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
8,327 |
|
|
|
2,823 |
|
|
|
5,504 |
|
|
|
|
|
|
|
|
|
|
|
Expense from interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest on demand deposits |
|
|
2,495 |
|
|
|
1,663 |
|
|
|
832 |
|
Interest on savings deposits |
|
|
(4 |
) |
|
|
|
|
|
|
(4 |
) |
Interest on time deposits |
|
|
3,779 |
|
|
|
2,854 |
|
|
|
925 |
|
Interest on other borrowings |
|
|
1,033 |
|
|
|
610 |
|
|
|
423 |
|
Interest subordinated debentures |
|
|
211 |
|
|
|
211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
7,514 |
|
|
|
5,338 |
|
|
|
2,176 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
813 |
|
|
$ |
(2,515 |
) |
|
$ |
3,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The change in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts of the changes in
each. |
21
Noninterest income. Noninterest income decreased $792,000, or 29.0%, to $1.9 million for the third
quarter of 2005 from $2.7 million for the third quarter of 2004. This decline is primarily due to a
decline in fair value during the quarter of our derivatives (See Note 1 to the financial
statements). Mortgage banking income increased $230,000, or 49.7%, to $693,000 in the third quarter
of 2005 from $463,000 in the third quarter of 2004. This increase in mortgage banking income was
offset by a decrease in service charges on deposits of $287,000 in the third quarter of 2005. This
decrease is primarily due to a loss of transaction accounts from 2004 to 2005. Management is
currently pursuing new accounts and customers through direct marketing and other promotional
efforts to increase this source of revenue. Service charges on deposit accounts increased $73,000,
or 6.3%, in the third quarter of 2005 over second quarter of 2005.
Noninterest income increased $2.6 million, or 27.8%, to $11.9 million for the first nine months of
2005 from $9.3 million for the first nine months of 2004, primarily due to $5.0 million in
insurance proceeds received in the second quarter of 2005, offset by losses we realized in 2005 on
our investment portfolio compared to gains on the sale of investments and our Morris branch in
2004. The investment portfolio losses were realized primarily in the first quarter of 2005 as a
result of a $50 million sale of bonds in the investment portfolio. We reinvested the proceeds in
bonds intended to enhance the yield and cash flows of our investment securities portfolio. The new
investment securities were classified as available for sale. Service charges on deposits decreased
$797,000, or 18.5%, to $3.5 million in the first nine months of 2005 from $4.3 million in the first
nine months of 2004. As discussed above, this decrease is primarily due to a loss of transaction
accounts from 2004 to 2005. Mortgage banking income increased $651,000, or 50.1%, to $1.9 million
in the first nine months of 2005 from $1.3 million in the first nine months of 2004.
Noninterest expense. Noninterest expense decreased $2.7 million, or 19.9%, to $11.0 million for
third quarter of 2005 from $13.8 million for the third quarter of 2004. This decrease is primarily
due to the loss that was incurred on sale of loans in the third quarter of 2004.
Noninterest expense increased $13.7 million, or 38.2%, to $49.8 million for first nine months of
2005 from $36.1 million for the first nine months of 2004. This increase is primarily due to the
management separation costs of $15.4 million incurred in the first six months of 2005. The
management separation charges primarily include severance payments, accelerated vesting of
restricted stock and deferred compensation agreements, employment contract buy-outs and
professional fees (see Note 3 to the condensed consolidated financial statements). This is
partially offset by the decrease in loss on the sales of loans from third quarter 2004. All other
noninterest expense increased $717,000, or 6.9%, to $11.1 million for the first nine months of 2005
from $10.4 million for the first nine months of 2004, primarily due to the $355,000 loss on the
sale of our corporate aircraft in the first quarter of 2005 and the additional $1.0 million of
other real estate losses in the second quarter of 2005.
Income tax expense. Our income tax benefit was $264,000 for the third quarter of 2005, compared to
an income tax benefit of $485,000 for the third quarter of 2004. We recognized an income tax
benefit of $4.9 million for the first nine months of 2005, compared to $87,000 for the first nine
months of 2004. The primary difference in the effective rate and the federal statutory rate (34%)
for the three- and nine-month periods ended September 30, 2005 and 2004 is due to certain
tax-exempt income from investments and insurance policies.
Provision for Loan Losses. The provision for loan losses represents the amount determined by
management to be necessary to maintain the allowance for loan losses at a level capable of
absorbing inherent losses in the loan portfolio. Management reviews the adequacy of the allowance
on a quarterly basis. The allowance for loan loss calculation is segregated into various segments
that include classified loans, loans with specific allocations and pass rated loans. A pass rated
loan is generally characterized by a very low to average risk of default and is a loan in which
management perceives there is a minimal risk of loss. Loans are rated using an eight-point scale,
with loan officers having the primary responsibility for assigning the risk ratings and for the
timely reporting of changes in the risk ratings. These processes, and the assigned risk ratings,
are subject to review by our internal loan review function and senior management. Based on the
assigned risk ratings, the criticized and classified loans in the portfolio are segregated into the
following regulatory classifications: Special Mention, Substandard, Doubtful or Loss. Generally,
regulatory reserve percentages are applied to these categories to estimate the amount of loan loss
allowance, adjusted for previously mentioned risk factors. Impaired loans are reviewed specifically
and separately under Statement of Financial Accounting Standards No. 114 (SFAS 114) to determine
the appropriate reserve allocation. Management compares the investment in an impaired loan against
the present value of expected future cash flows
22
discounted at the loans effective interest rate, the loans observable market price, or the fair
value of the collateral, if the loan is collateral-dependent, to determine the specific reserve
allowance. Reserve percentages assigned to non-rated loans are based on historical charge-off
experience adjusted for other risk factors. To evaluate the overall adequacy of the allowance to
absorb losses inherent in our loan portfolio, management considers historical loss experience based
on volume and types of loans, trends in classifications, volume and trends in delinquencies and
non-accruals, economic conditions and other pertinent information. Based on future evaluations,
additional provisions for loan losses may be necessary to maintain the allowance for loan losses at
an appropriate level. See Financial Condition Allowance for Loan Losses for additional
discussion.
The provision for loan losses was $500,000 for the third quarter of 2005 and $2.75 million for the
first nine months of 2005. The third quarter 2005 provision was less than the second quarter 2005
provision primarily due to the payoff of two classified loans which had approximately $750,000 in
allocated allowance. We did not record a provision for loan loss in the first nine months of 2004.
During the first nine months of 2005, we had net charged-off loans totaling $3.3 million, compared
to net charged-off loans of $12.4 million in the first nine months of 2004. The annualized ratio of
net charged-off loans to average loans was .46% in the first nine months of 2005 compared to 1.87%
for the first nine months of 2004. The allowance for loan losses totaled $12.0 million, or 1.33% of
loans, net of unearned income, at September 30, 2005 compared to $12.5 million, or 1.34% of loans,
net of unearned income, at December 31, 2004. See Allowance for Loan Losses for additional
discussion.
Financial Condition
Total assets were $1.376 billion at September 30, 2005, a decrease of $47 million, or 3.29%, from
$1.423 billion as of December 31, 2004. Average total assets for the first nine months of 2005
totaled $1.411 billion, which was supported by average total liabilities of $1.310 billion and
average total stockholders equity of $101 million.
Short-term liquid assets. Short-term liquid assets (cash and due from banks, interest-bearing
deposits in other banks and federal funds sold) increased $9.1 million, or 19.8%, to $55.0 million
at September 30, 2005 from $45.9 million at December 31, 2004. At September 30, 2005, short-term
liquid assets comprised 4.0% of total assets, compared to 3.2% at December 31, 2004. We continually
monitor our liquidity position and will increase or decrease our short-term liquid assets as we
deem necessary.
Investment Securities. Total investment securities decreased $31.2 million, or 10.8%, to $257.1
million at September 30, 2005, from $288.3 million at December 31, 2004. Mortgage-backed
securities, which comprised 37.7% of the total investment portfolio at September 30, 2005,
increased $36.2 million, or 59.8%, to $96.8 million from $60.6 million at December 31, 2004.
Investments in U.S. agency securities, which comprised 42.1% of the total investment portfolio at
September 30, 2005, decreased $71.7 million, or 39.9%, to $108.1 million from $179.8 million at
December 31, 2004. During the second quarter of 2005, we closed on the sale of $50 million in bonds
and reinvested the proceeds in bonds intended to enhance the yield and cash flows of our investment
securities portfolio. The new investment securities were classified as available for sale. The
total investment portfolio at September 30, 2005 comprised 21.0% of all interest-earning assets,
compared to 22.8% at December 31, 2004, and produced an average taxable equivalent yield of 4.56%
for the third quarter of 2005, compared to 4.37% for the third quarter of 2004 and 4.51% for the
first nine months of 2005 and 4.44% for the first nine months of 2004.
Loans. Loans, net of unearned income, totaled $903.4 million at September 30, 2005, a decrease of
3.5%, or $31.5 million, from $934.9 million at December 31, 2004. Mortgage loans held for sale
totaled $17.5 million at September 30, 2005, an increase of $9.4 million from $8.1 million at
December 31, 2004. Average loans, including mortgage loans held for sale, totaled $931.6 million
for the third quarter of 2005 compared to $918.1 million for the third quarter of 2004. Average
loans, including mortgage loans held for sale, totaled $943.6 million for the first nine months of
2005 compared to $882.0 million for the first nine months of 2004. Loans, net of unearned income,
comprised 73.89% of interest-earning assets at September 30, 2005, compared to 73.88% at December
31, 2004. Mortgage loans held for sale comprised 1.4% of interest-earning assets at September 30,
2005, compared to .6% at December 31, 2004. The loan portfolio produced an average yield of 6.84%
for the third quarter of 2005 and 6.59% for the first nine months of 2005, compared to 6.17% for the third quarter and 6.29% for the first
nine months of
23
2004. The following table details the distribution of our loan portfolio by category as of
September 30, 2005 and December 31, 2004 (in thousands):
Distribution of Loans by Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005 |
|
|
December 31, 2004 |
|
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
Percent |
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
of |
|
|
|
Amount |
|
|
Total |
|
|
Amount |
|
|
Total |
|
Commercial and industrial |
|
$ |
124,997 |
|
|
|
13.8 |
% |
|
$ |
131,979 |
|
|
|
14.1 |
% |
Real estate construction and land development |
|
|
259,843 |
|
|
|
28.7 |
|
|
|
249,188 |
|
|
|
26.6 |
|
Real estate mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family |
|
|
235,233 |
|
|
|
26.0 |
|
|
|
250,718 |
|
|
|
26.8 |
|
Commercial |
|
|
229,882 |
|
|
|
25.4 |
|
|
|
242,279 |
|
|
|
25.9 |
|
Other |
|
|
28,164 |
|
|
|
3.1 |
|
|
|
25,745 |
|
|
|
2.7 |
|
Consumer |
|
|
19,970 |
|
|
|
2.2 |
|
|
|
28,431 |
|
|
|
3.0 |
|
Other |
|
|
6,604 |
|
|
|
.8 |
|
|
|
8,045 |
|
|
|
.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
|
|
904,693 |
|
|
|
100.0 |
% |
|
|
936,385 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned income |
|
|
(1,295 |
) |
|
|
|
|
|
|
(1,517 |
) |
|
|
|
|
Allowance for loan losses |
|
|
(12,024 |
) |
|
|
|
|
|
|
(12,543 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loans |
|
$ |
891,374 |
|
|
|
|
|
|
$ |
922,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits. Noninterest-bearing deposits totaled $91.3 million at September 30, 2005, an increase of
2.0%, or $1.8 million, from $89.5 million at December 31, 2004. Noninterest-bearing deposits
comprised 8.7% of total deposits at September 30, 2005, compared to 8.4% at December 31, 2004. Of
total noninterest-bearing deposits $66.4 million, or 73%, were in our Alabama branches while $24.9
million, or 27%, were in our Florida branches.
Interest-bearing
deposits totaled $961.2 million at September 30, 2005, a decrease of 1.7%, or
$16.5 million, from $977.7 million at December 31, 2004. Our average interest-bearing deposits for
the third quarter of 2005 totaled $967.7 million compared to $893.7 million for the third quarter
of 2004, an increase of $73.9 million, or 8.3%. Interest-bearing deposits averaged $975.0 million
for the first nine months of 2005 compared to $857.5 million for the first nine months of 2004, an
increase of $117.5 million, or 13.7%.
The average rate paid on all interest-bearing deposits was 3.01% during the third quarter of 2005
compared to 2.16% for the third quarter of 2004 and 2.73% during the first nine months of 2005
compared to 2.12% for the first nine months of 2004. Of total
interest-bearing deposits $690.8
million, or 72%, were in the Alabama branches while $270.4 million, or 28%, were in the Florida
branches.
Borrowings. Advances from the Federal Home Loan Bank (FHLB) totaled $146.1 million at September
30, 2005 and $156.1 million at December 31, 2004. Borrowings from the FHLB were used primarily to
fund growth in the loan portfolio and have a weighted average rate of approximately 3.88% at
September 30, 2005. The advances are secured by FHLB stock, agency securities and a blanket lien on
certain residential real estate loans and commercial loans. The FHLB has issued for the benefit of
our banking subsidiary a $20,000,000 irrevocable letter of credit in favor of the Chief Financial
Officer of the State of Florida to secure certain deposits of the State of Florida. The letter of
credit may be terminated January 6, 2006 upon sixty days prior notice; otherwise, it will
automatically extend for a successive one-year term.
During the third quarter of 2005, $58 million in advances from the FHLB were restructured. This
restructuring is expected to reduce interest expense approximately $620,000 during the first
twelve-month period and then $426,000 per year thereafter. In conjunction with this restructuring,
we entered a $15 million one-year interest rate swap, under which we will pay a 4.33% fixed amount
on the 28th day of March, June, September and December beginning December 28, 2005 and receive a
floating amount equal to the three-month LIBOR rate.
Junior Subordinated Debentures. We have sponsored two trusts, TBC Capital Statutory Trust II (TBC
Capital II) and TBC Capital Statutory Trust III (TBC Capital III), of which we own 100% of the
common equity. The trusts were formed for the purpose of issuing mandatory redeemable trust
preferred securities to third-party investors and investing the proceeds from the sale of such
trust preferred securities solely in our junior subordinated debt securities (the debentures). The
debentures held by each trust are the sole assets of that trust. Distributions on the trust
preferred securities issued by each trust are payable semi-annually at a rate per annum equal to
the interest rate
24
being earned by the trust on the debentures held by that trust. The trust preferred securities are
subject to mandatory redemption, in whole or in part, upon repayment of the debentures. We have
entered into agreements which, taken collectively, fully and unconditionally guarantee the trust
preferred securities subject to the terms of each of the guarantees. The debentures held by the TBC
Capital II and TBC Capital III capital trusts are first redeemable, in whole or in part, by us on
September 7, 2010 and July 25, 2006, respectively.
The trust preferred securities held by the trusts qualify as Tier 1 capital under Federal Reserve
Board guidelines.
Consolidated debt obligations related to subsidiary trusts holding solely our debentures follow:
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005 |
|
|
December 31, 2004 |
|
|
|
(In Thousands) |
|
10.6% junior
subordinated debentures owed
to TBC Capital Statutory
Trust II due September 7,
2030 |
|
$ |
15,464 |
|
|
$ |
15,464 |
|
6-month LIBOR plus 3.75%
junior subordinated
debentures owed to TBC
Capital Statutory Trust III
due July 25, 2031 |
|
|
16,495 |
|
|
|
16,495 |
|
|
|
|
|
|
|
|
Total junior subordinated
debentures owed to
unconsolidated subsidiary
trusts |
|
$ |
31,959 |
|
|
$ |
31,959 |
|
|
|
|
|
|
|
|
As of September 30, 2005 and December 31, 2004, the interest rate on the $16,495,000 subordinated
debentures was 7.67% and 5.74%, respectively.
Prior to the conversion of our subsidiarys charter to a federal savings bank charter, we were
required to obtain regulatory approval prior to paying any dividends on these trust preferred
securities. The Federal Reserve approved the timely payment of our semi-annual distributions on our
trust preferred securities in January, March, July and September 2005.
Allowance for Loan Losses. We maintain an allowance for loan losses within a range we believe is
adequate to absorb estimated losses inherent in the loan portfolio. We prepare a quarterly analysis
to assess the risk in the loan portfolio and to determine the adequacy of the allowance for loan
losses. Generally, we estimate the allowance using specific reserves for impaired loans, and other
factors, such as historical loss experience based on volume and types of loans, trends in
classifications, volume and trends in delinquencies and non-accruals, economic conditions and other
pertinent information. The level of allowance for loan losses to net loans will vary depending on
the quarterly analysis.
We manage and control 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 and approval procedures, sets limits on
credit concentration and enforces regulatory requirements. In addition, Credit Risk Management,
LLC, an independent loan review firm, supplements our existing internal loan review function.
Loan portfolio concentration risk is reduced through concentration limits for borrowers, collateral
types and geographical diversification. Concentration risk is measured and reported to senior
management and the board of directors on a regular basis.
The allowance for loan loss calculation is segregated into various segments that include classified
loans, loans with specific allocations and pass rated loans. A pass rated loan is generally
characterized by a very low to average risk of default and in which management perceives there is a
minimal risk of loss. Loans are rated using an eight-point scale with the loan officer having the
primary responsibility for assigning risk ratings and for the timely reporting of changes in the
risk ratings. These processes, and the assigned risk ratings, are subject to review by the internal
loan review function and senior management. Based on the assigned risk ratings, the criticized and
classified loans in the portfolio are segregated into the following regulatory classifications:
Special Mention, Substandard, Doubtful or Loss. Generally, regulatory reserve percentages (5%,
Special Mention; 15%, Substandard; 50%, Doubtful; 100%, Loss) are applied to these categories to
estimate the amount of loan loss allowance required, adjusted for previously mentioned risk
factors.
Impaired loans are specifically reviewed loans for which it is probable that we will be unable to
collect all amounts due according to the terms of the loan agreement. Impairment is measured by
comparing the recorded investment in
25
the loan with the present value of expected future cash flows discounted at the loans effective
interest rate, at the loans observable market price or the fair value of the collateral if the
loan is collateral dependent. A valuation allowance is provided to the extent that the measure of
the impaired loans is less than the recorded investment. A loan is not considered impaired during a
period of delay in payment if we continue to expect that all amounts due will ultimately be
collected. Larger groups of homogenous loans such as consumer installment and residential real
estate mortgage loans are collectively evaluated for impairment.
Reserve percentages assigned to pass rated homogeneous loans are based on historical
charge-off experience adjusted for current trends in the portfolio and other risk factors.
As stated above, risk ratings are subject to independent review by the internal loan review, which
also performs ongoing, independent review of the risk management process. The risk management
process includes underwriting, documentation and collateral control. Loan review is centralized and
independent of the lending function. The loan review results are reported to the Audit Committee of
the board of directors and senior management. We have also established a centralized loan
administration services department to serve our entire bank. This department will provide
standardized oversight for compliance with loan approval authorities and bank lending policies and
procedures, as well as centralized supervision, monitoring and accessibility.
The following table summarizes certain information with respect to our allowance for loan losses
and the composition of charge-offs and recoveries for the periods indicated.
Summary of Loan Loss Experience
|
|
|
|
|
|
|
|
|
|
|
Nine-Month |
|
|
|
|
|
|
Period Ended |
|
|
Year Ended |
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2005 |
|
|
2004 |
|
|
|
(Dollars in thousands) |
|
Allowance for loan losses at beginning of period |
|
$ |
12,543 |
|
|
$ |
25,174 |
|
Charge-offs: |
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
1,417 |
|
|
|
7,690 |
|
Real estate construction and land development |
|
|
354 |
|
|
|
765 |
|
Real estate mortgage |
|
|
|
|
|
|
|
|
Single-family |
|
|
601 |
|
|
|
1,012 |
|
Commercial |
|
|
1,131 |
|
|
|
5,820 |
|
Other |
|
|
26 |
|
|
|
86 |
|
Consumer |
|
|
631 |
|
|
|
1,881 |
|
Other |
|
|
255 |
|
|
|
87 |
|
|
|
|
|
|
|
|
Total charge-offs |
|
|
4,415 |
|
|
|
17,341 |
|
Recoveries: |
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
285 |
|
|
|
1,468 |
|
Real estate construction and land development |
|
|
36 |
|
|
|
4 |
|
Real estate mortgage |
|
|
|
|
|
|
|
|
Single-family |
|
|
329 |
|
|
|
470 |
|
Commercial |
|
|
135 |
|
|
|
737 |
|
Other |
|
|
97 |
|
|
|
97 |
|
Consumer |
|
|
211 |
|
|
|
549 |
|
Other |
|
|
53 |
|
|
|
410 |
|
|
|
|
|
|
|
|
Total recoveries |
|
|
1,146 |
|
|
|
3,735 |
|
|
|
|
|
|
|
|
Net charge-offs |
|
|
3,269 |
|
|
|
13,606 |
|
Provision for loan losses |
|
|
2,750 |
|
|
|
975 |
|
|
|
|
|
|
|
|
Allowance for loan losses at end of period |
|
$ |
12,024 |
|
|
$ |
12,543 |
|
|
|
|
|
|
|
|
Loans at end of period, net of unearned income |
|
$ |
903,398 |
|
|
$ |
934,868 |
|
Average loans, net of unearned income |
|
|
943,550 |
|
|
|
894,406 |
|
Ratio of ending allowance to ending loans |
|
|
1.33 |
% |
|
|
1.34 |
% |
Ratio of net charge-offs to average loans (1) |
|
|
.46 |
% |
|
|
1.52 |
% |
Net charge-offs as a percentage of: |
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
118.87 |
% |
|
|
1395.49 |
% |
Allowance for loan losses (1) |
|
|
36.35 |
% |
|
|
108.47 |
% |
Allowance for loan losses as a percentage of nonperforming loans |
|
|
196.21 |
% |
|
|
169.36 |
% |
26
The allowance for loan losses as a percentage of loans, net of unearned income, at September 30,
2005 was 1.33%, compared to 1.34% as of December 31, 2004. The allowance for loan losses as a
percentage of nonperforming loans increased to 196.21% at September 30, 2005 from 169.36% at
December 31, 2004.
Net charge-offs were $3.3 million for the first nine months of 2005. Net charge-offs to average
loans on an annualized basis totaled 0.46% for the first nine months of 2005. Net commercial loan
charge-offs totaled $1,132,000, or 34.6% of total net charge-off loans, for the first nine months
of 2005, compared to 45.7% of total net charge-off loans for the year 2004. Net commercial real
estate loan charge-offs totaled $996,000, or 30.5% of total net charge-off loans, for the first
nine months of 2005 compared to 37.4% of total net charge-off loans for the year 2004. Net single
family real estate loan charge-offs totaled $272,000, or 8.3% of total net charge-off loans, for
the first nine months of 2005 compared to 4.0% of total net charge-off loans for the year 2004. Net
consumer loan charge-offs totaled $420,000, or 12.8% of total net charge-off loans, for the first
nine months of 2005 compared to 9.8% of total net charge-off loans for the year 2004.
Nonperforming Assets. Nonperforming assets decreased $4.1 million, to $8.3 million as of September
30, 2005 from $12.4 million as of December 31, 2004. As a percentage of net loans plus
nonperforming assets, nonperforming assets decreased from 1.32% at December 31, 2004 to 0.91% at
September 30, 2005. The following table represents our nonperforming assets for the dates
indicated.
Nonperforming Assets
|
|
|
|
|
|
|
|
|
|
|
September 30, 2005 |
|
|
December 31, 2004 |
|
|
|
(Dollars in thousands) |
|
Nonaccrual |
|
$ |
6,022 |
|
|
$ |
6,344 |
|
Accruing loans 90 days or more delinquent |
|
|
34 |
|
|
|
431 |
|
Restructured |
|
|
72 |
|
|
|
631 |
|
|
|
|
|
|
|
|
Total nonperforming loans |
|
|
6,128 |
|
|
|
7,406 |
|
Other real estate owned |
|
|
2,156 |
|
|
|
4,906 |
|
Repossessed assets |
|
|
|
|
|
|
103 |
|
|
|
|
|
|
|
|
Total nonperforming assets |
|
$ |
8,284 |
|
|
$ |
12,415 |
|
|
|
|
|
|
|
|
Nonperforming loans as a percent of loans |
|
|
.68 |
% |
|
|
.79 |
% |
|
|
|
|
|
|
|
Nonperforming assets as a percent of
loans plus nonperforming assets |
|
|
0.91 |
% |
|
|
1.32 |
% |
|
|
|
|
|
|
|
Loans past
due 30 days or more, net of non-accruals, improved to .41% at September 30, 2005 from .88% at December 31, 2004.
The following is a summary of nonperforming loans by category for the dates shown:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2005 |
|
|
2004 |
|
|
|
(Dollars in thousands) |
|
Commercial and industrial |
|
$ |
1,799 |
|
|
$ |
2,445 |
|
Real estate construction and land development |
|
|
64 |
|
|
|
187 |
|
Real estate mortgages |
|
|
|
|
|
|
|
|
Single-family |
|
|
2,070 |
|
|
|
2,060 |
|
Commercial |
|
|
1,858 |
|
|
|
2,273 |
|
Other |
|
|
107 |
|
|
|
183 |
|
Consumer |
|
|
230 |
|
|
|
250 |
|
Other |
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
Total nonperforming loans |
|
$ |
6,128 |
|
|
$ |
7,406 |
|
|
|
|
|
|
|
|
A delinquent loan is 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 borrowers 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 during the
current period but remains unpaid is reversed and deducted from earnings as a reduction of reported
interest income; any prior period accrued and unpaid interest is reversed and charged against the
allowance for loan losses. 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 to the
allowance for loan losses, which may necessitate additional charges to earnings.
27
Impaired Loans. At September 30, 2005, the recorded investment in impaired loans totaled $4.7
million, with approximately $1.6 million in allowance for loan losses specifically allocated to
impaired loans. This represents a decrease of $400,000 from $5.1 million at December 31, 2004. The
following is a summary of impaired loans and the specifically allocated allowance for loan losses
by category as of September 30, 2005:
|
|
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
Specific |
|
|
|
Balance |
|
|
Allowance |
|
Commercial and industrial |
|
$ |
1,845 |
|
|
$ |
658 |
|
Real estate construction and land development |
|
|
64 |
|
|
|
25 |
|
Real estate mortgages |
|
|
|
|
|
|
|
|
Commercial |
|
|
2,687 |
|
|
|
868 |
|
Other |
|
|
107 |
|
|
|
53 |
|
|
|
|
|
|
|
|
Total |
|
$ |
4,703 |
|
|
$ |
1,604 |
|
|
|
|
|
|
|
|
Potential Problem Loans. In addition to nonperforming loans, management has identified $1.0 million
in potential problem loans as of September 30, 2005 compared to $2.4 million as of December 31,
2004. Potential problem loans are loans where known information about possible credit problems of
the borrowers causes management to have doubts as to the ability of such borrowers to comply with
the present repayment terms and may result in disclosure of such loans as nonperforming.
Stockholders Equity. At September 30, 2005, total stockholders equity was $103.2 million, an
increase of $2.7 million from $100.5 million at December 31, 2004. The increase in stockholders
equity during the first nine months of 2005 resulted primarily from a net loss of $6.8 million and
other comprehensive loss of $661,000 offset by issuance, vesting and forfeitures of restricted
stock totaling $737,000 and additional net proceeds of $7.3 million resulting from the sale in
January 2005 of 925,636 shares of our common stock at $8.17 per share, the then-current market
price, to the new members of the management team and other investors in a private placement. Also,
276,984 stock options have been exercised for a total of $1.8 million in proceeds. As of September
30, 2005, we had 20,023,756 shares of common stock issued and 19,775,886 outstanding. As of
September 30, 2005, there were 49,823 shares held in treasury at a cost of $341,000.
Effective June 30, 2005, 62,000 shares of our convertible preferred stock were converted into
775,000 shares of common stock at a conversion price of $8.00 per share. As a result of such
conversion, the excess of the market value of the common stock issued at the date of conversion
over the aggregate issue price is reflected as a reduction in retained earnings with a
corresponding increase in surplus, thereby reducing net income applicable to common stockholders
for purposes of calculating earnings per common share. This non-cash charge did not affect total
stockholders equity.
We adopted a leveraged employee stock ownership plan (the ESOP) effective May 15, 2002, that
covers all eligible employees who are at least 21 years old and have completed a year of service.
As of September 30, 2005, the ESOP has been internally leveraged with 273,400 shares of our common
stock purchased in the open market and classified as a contra-equity account, Unearned ESOP
shares, in stockholders equity.
On January 29, 2003, the ESOP trustees finalized a $2,100,000 promissory note to reimburse us for
the funds used to leverage the ESOP. The unreleased shares and our guarantee secure the promissory
note, which has been classified as long-term debt on our statement of financial condition. As the
debt is repaid, shares are released from collateral based on the proportion of debt service.
Principal payments on the debt are $17,500 per month for 120 months. The interest rate is adjusted
annually to the Wall Street Journal prime rate. Released shares are allocated to eligible employees
at the end of the plan year based on the employees eligible compensation to total compensation. We
recognize compensation expense during the period as the shares are earned and committed to be
released. As shares are committed to be released and compensation expense is recognized, the shares
become outstanding for basic and diluted earnings per share computations. The amount of
compensation expense we report is equal to the average fair value of the shares earned and
committed to be released during the period. Compensation expense that we recognized during the
periods ended September 30, 2005 and 2004 was $135,000 and $142,000, respectively. The ESOP shares
as of September 30, 2005, were as follows:
28
|
|
|
|
|
|
|
September 30, 2005 |
|
Allocated shares |
|
|
55,328 |
|
Estimated shares committed to be released |
|
|
20,025 |
|
Unreleased shares |
|
|
198,047 |
|
|
|
|
|
Total ESOP shares |
|
|
273,400 |
|
|
|
|
|
Fair value of unreleased shares |
|
$ |
2,953,000 |
|
|
|
|
|
Regulatory Capital. The table below represents our and our subsidiarys regulatory and minimum
regulatory capital requirements at September 30, 2005 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
|
|
|
|
|
|
|
|
|
|
Adequacy |
|
To Be Well |
|
|
Actual |
|
Purposes |
|
Capitalized |
|
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
Total Risk-Based Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation |
|
$ |
126,629 |
|
|
|
11.81 |
% |
|
$ |
85,798 |
|
|
|
8.00 |
% |
|
$ |
107,248 |
|
|
|
10.00 |
% |
The Bank |
|
|
124,114 |
|
|
|
11.76 |
|
|
|
84,427 |
|
|
|
8.00 |
|
|
|
105,534 |
|
|
|
10.00 |
|
Tier 1 Risk-Based Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation |
|
|
114,511 |
|
|
|
10.68 |
|
|
|
42,899 |
|
|
|
4.00 |
|
|
|
64,349 |
|
|
|
6.00 |
|
The Bank |
|
|
112,090 |
|
|
|
10.62 |
|
|
|
42,214 |
|
|
|
4.00 |
|
|
|
63,321 |
|
|
|
6.00 |
|
Leverage Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation |
|
|
114,511 |
|
|
|
8.32 |
|
|
|
55,021 |
|
|
|
4.00 |
|
|
|
68,777 |
|
|
|
5.00 |
|
The Bank |
|
|
112,090 |
|
|
|
8.22 |
|
|
|
54,556 |
|
|
|
4.00 |
|
|
|
68,196 |
|
|
|
5.00 |
|
Liquidity
Our 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, we have access to purchased funds from several regional financial institutions, brokered
and internet deposits, and may borrow from the Federal Home Loan Bank under a blanket floating lien
on certain commercial loans and residential real estate loans. Also, we have established certain
repurchase agreements with a large financial institution. 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. Management places constant
emphasis on the maintenance of adequate liquidity to meet conditions that might reasonably be
expected to occur. Management believes it has established sufficient sources of funds to meet its
anticipated liquidity needs.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements made by us or on our behalf. Some of the disclosures in this Quarterly Report on Form
10-Q, including any statements preceded by, followed by or which include the words may, could,
should, will, would, hope, might, believe, expect, anticipate, estimate,
intend, plan, assume or similar expressions constitute forward-looking statements.
These forward-looking statements implicitly and explicitly include the assumptions underlying the
statements and other information with respect to our beliefs, plans, objectives, goals,
expectations, anticipations, estimates, intentions, financial condition, results of operations,
future performance and business, including our expectations and estimates with respect to our
revenues, expenses, earnings, return on equity, return on assets, efficiency ratio, asset quality,
the adequacy of our allowance for loan losses and other financial data and capital and performance
ratios.
Although we believe that the expectations reflected in our forward-looking statements are
reasonable, these statements involve risks and uncertainties which are subject to change based on
various important factors (some of which are beyond our control). The following factors, among
others, could cause our financial performance to differ materially from our goals, plans,
objectives, intentions, expectations and other forward-looking statements: (1) the strength of the
United States economy in general and the strength of the regional and local economies in which we
conduct operations; (2) the effects of, and changes in, trade, monetary and fiscal policies and
laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (3)
inflation, interest rate, market and monetary fluctuations; (4) our ability to successfully
integrate the assets, liabilities, customers, systems and management we acquire or merge into our
operations; (5) our timely development of new products and services in a
29
changing environment, including the features, pricing and quality compared to the products and
services of our competitors; (6) the willingness of users to substitute competitors products and
services for our products and services; (7) the impact of changes in financial services policies,
laws and regulations, including policies, laws and regulations concerning taxes, banking,
securities and insurance, and the application thereof by regulatory bodies; (8) our ability to
resolve any legal proceeding on acceptable terms and its effect on our financial condition or
results of operations; (9) technological changes; (10) changes in consumer spending and savings
habits; and (11) regulatory, legal or judicial proceedings.
If one or more of the factors affecting our forward-looking information and statements proves
incorrect, then our actual results, performance or achievements could differ materially from those
expressed in, or implied by, forward-looking information and statements contained in this report.
Therefore, we caution you not to place undue reliance on our forward-looking information and
statements.
We do not intend to update our forward-looking information and statements, whether written or oral,
to reflect change. All forward-looking statements attributable to us are expressly qualified by
these cautionary statements.
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in our quantitative and qualitative disclosures about market
risk as of September 30, 2005 from those presented in our annual report on Form 10-K for the year
ended December 31, 2004.
The information set forth under the caption Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations-Market Risk-Interest Rate Sensitivity included in
our Annual Report on Form 10-K for the year ended December 31, 2004, is hereby incorporated herein
by reference.
Item 4.
CONTROLS AND PROCEDURES
CEO
AND PFO CERTIFICATION
Appearing as exhibits to this report are Certifications of our Chief Executive Officer (CEO) and
our Principal Financial Officer (PFO). The Certifications are required to be made by Rule 13a-14
of the Securities Exchange Act of 1934, as amended. This Item contains the information about the
evaluation that is referred to in the Certifications, and the information set forth below in this
Item 4 should be read in conjunction with the Certifications for a more complete understanding of
the Certifications.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms, and that such information
is accumulated and communicated to our management, including our CEO and PFO, as appropriate, to
allow timely decisions regarding required disclosure. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control
objectives.
We originally conducted an evaluation (the Evaluation) of the effectiveness of the design and
operation of our disclosure controls and procedures under the supervision and with the
participation of our management, including our CEO and our then-serving Chief Financial Officer
(CFO), as of September 30, 2005. Based upon the Evaluation, our CEO and CFO concluded that, as of
September 30, 2005, our disclosure controls and procedures were effective to ensure that material
information relating to The Banc Corporation and its subsidiaries is made known to management,
including the CEO and PFO, particularly during the period when our periodic reports are being
prepared.
In connection with the amendment to our financial statements described in the Introductory Note and
Items 1 and 2 of this Amendment No. 1, we re-evaluated our disclosure controls and procedures as of
September 30, 2005 and, in connection therewith, we identified the following material weakness in
our internal control over financial reporting with respect to accounting for hedge transactions: a
failure to ensure the correct application of generally accepted accounting principles, including
SFAS 133 and its related interpretations for certain derivative
transactions, as described in the Introductory Note, and failure to correct that error subsequently. Solely as a result of this
material weakness, we concluded that our disclosure controls and procedures were not effective as
of September 30, 2005.
30
Simultaneously with the filing of this Amendment No. 1, we filed an amendment on Form 10-K/A to our
Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as previously amended,
reflecting the same material weakness as of that date and, for that
reason, concluding that our internal control over financial reporting
and disclosure controls and procedures were not effective as of December 31, 2004. Other than as set
forth in that amendment and this Amendment no. 1, there have not been any changes in our internal
control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange
Act of 1934, as amended) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
PART II. OTHER INFORMATION
Item 1.
LEGAL PROCEEDINGS
While we are a party to various legal proceedings arising in the ordinary course of business, we
believe that there are no proceedings threatened or pending against us at this time that will
individually, or in the aggregate, materially adversely affect our business, financial condition or
results of operations. We believe that we have strong claims and defenses in each lawsuit in which
we are involved. While we believe that we will prevail in each lawsuit, there can be no assurance
that the outcome of any pending, or any future, litigation, either individually or in the
aggregate, will not have a material adverse effect on our financial condition or our results of
operations.
Item 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
As previously disclosed by the Corporation, the Corporation offered those of its continuing
directors who had previously entered into Deferred Compensation Agreements with the Corporation the
opportunity to receive shares of the Corporations common stock in full satisfaction of all
benefits otherwise payable under such Deferred Compensation Agreements and in exchange for the
termination of such Deferred Compensation Agreements. In that connection, the Corporation has
agreed to issue to those continuing directors who elected to accept the Corporations offer an
aggregate of 34,995 shares of common stock, to be issued as of July 30, 2005 and to be valued at
$10.61 per share, the closing price per share of the Corporations common stock as reported on the
NASDAQ National Market System on that date. The shares are being issued in reliance on the
exemption provided by Section 4(2) of the Securities Act of 1933 as an issuance of securities not
involving any public offering. The shares issued to each participating director were based on the
value of such directors Deferral Account balance under the applicable Deferred Compensation
Agreement. The termination of such agreements relieves the Corporation of an ongoing obligation to
provide a variable deferred compensation benefit to such directors. The Corporation will receive no
cash proceeds from the issuance of such shares.
Item 3.
DEFAULTS UPON SENIOR SECURITIES
None.
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 5.
OTHER INFORMATION
None.
31
Item 6. EXHIBITS
(a) Exhibit:
31.01 |
|
Certification of principal executive officer pursuant to Rule 13a-14(a). |
|
31.02 |
|
Certification of principal financial officer pursuant to 13a-14(a). |
|
32.01 |
|
Certification of principal executive officer pursuant to 18 U.S.C. Section 1350. |
|
32.02 |
|
Certification of principal financial officer pursuant to 18 U.S.C. Section 1350. |
32
SIGNATURES
Pursuant to 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: February 17, 2006 |
By: |
/s/ C. Stanley Bailey
|
|
|
|
C. Stanley Bailey |
|
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
Date: February 17, 2006 |
By: |
/s/ James C. Gossett
|
|
|
|
James C. Gossett |
|
|
|
Chief Accounting Officer
(Principal Financial and Accounting Officer) |
|
|
33