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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K/A
AMENDMENT NO. 2
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER 0-25033
THE BANC CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 63-1201350
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
17 NORTH 20TH STREET 35203
BIRMINGHAM, ALABAMA (Zip Code)
(Address of Principal Executive Offices)
(205) 327-3600
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Titles of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
The aggregate market value of the voting common stock held by
non-affiliates of the registrant as of March 11, 2005, based on a closing price
of $10.97 per share of Common Stock, was $205,646,988.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date: the number of shares
outstanding as of March 3, 2005, of the registrant's only issued and outstanding
class of common stock, its $.001 per share par value common stock, was
18,746,307.
DOCUMENTS INCORPORATED BY REFERENCE
No documents are incorporated by reference in this Amendment No. 2 on Form
10-K/A to Annual Report on Form 10-K.
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EXPLANATORY NOTE
We are filing this Amendment No. 2 on Form 10-K/A to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2004 to:
- Amend the information previously reported under Item 9A to include our
report on management's assessment of our internal control over financial
reporting and the report of our independent registered public accountants
attesting to such report, pursuant to the Securities and Exchange
Commission's exemptive order allowing eligible issuers an extension of
time to file such reports and attestations.
- Provide the information required under Items 10, 11, 12, 13 and 14 of
Form 10-K. In the original filing of our Form 10-K for the fiscal year
ended December 31, 2004, we indicated that such information would be
incorporated by reference from the proxy statement relating to our 2005
Annual Meeting of Stockholders. While such information will also be
contained in the proxy statement, such information is filed herewith and
will not be incorporated by reference from the proxy statement.
As required by Rule 12b-15 under the Securities Exchange Act of 1934, we are
also filing currently dated certifications of our Chief Executive Officer and
Chief Financial Officer. No other information in our Annual Report on Form 10-K
is amended or updated by this Amendment No. 2.
2
PART II
ITEM 9A. CONTROLS AND PROCEDURES.
CEO AND CFO CERTIFICATION
Appearing immediately following the Signatures section of this report are
Certifications of our Chief Executive Officer ("CEO") and our Chief Financial
Officer ("CFO"). 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 9A 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 SEC's rules and forms, and that such information is accumulated and
communicated to our management, including our CEO and CFO, 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 conducted an evaluation (the "Evaluation") as of the end of the period
covered by this annual report 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 CFO. Based upon the
Evaluation, our CEO and CFO have concluded that, subject to the limitations
noted below, our disclosure controls and procedures are effective to ensure that
material information relating to The Banc Corporation and its subsidiaries is
made known to management, including the CEO and CFO, particularly during the
period when our periodic reports are being prepared.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Section 404 of the Sarbanes-Oxley Act of 2002 requires public companies, in
their annual reports on Form 10-K, to provide reports on their management's
assessment of such companies' internal control over financial reporting and for
such companies' independent registered public accountants to attest to such
reports by management. Our management is responsible for establishing and
maintaining adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our
internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles, and includes those policies and procedures that
- Pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our
assets;
- Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with GAAP,
and that our receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and
- Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could
have a material effect on the financial statements.
Our management has implemented a process to monitor and assess both the
design and operating effectiveness of our internal control over financial
reporting. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness as to future financial reporting periods are subject
to the risk that controls may become
3
inadequate because of changes in conditions or that the degree of compliance
with the policies and procedures may deteriorate.
Under the supervision of and with the participation of our Chief Executive
Officer and Chief Financial Officer, management has conducted a review,
evaluation and assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2004, using the criteria set forth for
effective internal control over financial reporting as described in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on such review, evaluation and
assessment, our management believes that we maintained effective internal
control over financial reporting as of December 31, 2004.
Our independent registered public accounting firm, Carr, Riggs & Ingram
LLC, has issued an attestation report on such management's assessment, which is
set forth below.
4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders of The Banc Corporation:
We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that The Banc
Corporation and Subsidiaries (Corporation) maintained effective internal control
over financial reporting as of December 31, 2004, based on criteria established
in Internal Control -- Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Corporation's
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on
management's assessment and an opinion on the effectiveness of the Corporation's
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
In our opinion, management's assessment that The Corporation maintained
effective internal control over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on criteria established in
Internal Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Also in our opinion, The
Corporation maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2004, based on criteria established
in Internal Control -- Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated statement
of financial condition as of December 31, 2004 and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
the year then ended of The Corporation, and our report dated March 15, 2005,
expressed an unqualified opinion.
/s/ Carr, Riggs & Ingram, LLC
Montgomery, Alabama
April 20, 2005
5
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the quarter ended December 31, 2004, there were no changes in our
internal control over financial reporting identified in connection with
management's evaluation of internal control over financial reporting as of
December 31, 2004 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information about our directors and
executive officers:
NAME AGE POSITION WITH THE BANC CORPORATION
---- --- ----------------------------------
James R. Andrews, M.D. ................... 62 Director
C. Stanley Bailey......................... 56 Director, Chief Executive Officer
Roger Barker(1)(2)(3)..................... 58 Director
Duane K. Bickings......................... 53 Chief Credit Officer
W. T. Campbell, Jr. ...................... 58 Director
David R. Carter........................... 53 Director, Executive Vice President and
Chief Financial Officer
K. Earl Durden............................ 66 Director, Vice Chairman
Rick D. Gardner........................... 45 Chief Operating Officer
Thomas E. Jernigan, Jr.(1)................ 40 Director
Randall E. Jones.......................... 50 Director
James Mailon Kent, Jr.(1)................. 64 Director, Vice Chairman
F. Hampton McFadden, Jr. ................. 42 Executive Vice President, General Counsel
and Secretary
Ronald W. Orso, M.D. ..................... 59 Director
Harold W. Ripps........................... 66 Director
C. Marvin Scott........................... 55 President
Jerry M. Smith(2)(3)...................... 65 Director
Michael E. Stephens(2)(3)................. 61 Director
Larry D. Striplin, Jr. ................... 75 Director, Vice Chairman
Marie Swift............................... 63 Director
James A. Taylor........................... 62 Director, Chairman of the Board
James A. Taylor, Jr. ..................... 40 Director
---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee
James R. Andrews, M.D. has practiced as an orthopedic surgeon specializing
in sports-related injuries for over 25 years. He has been a director of The Banc
Corporation since September 1998. Dr. Andrews also served on the Board of
Directors of HealthTronics Surgical Services, Inc., a publicly traded provider
of surgical services, through 2004, and previously served as Chairman of the
Board and President of Aloha Racing Foundation, an America's Cup racing
syndicate, which was liquidated in bankruptcy.
C. Stanley Bailey joined The Banc Corporation as Chief Executive Officer
and a Director in January 2005. During 2004, he was Chairman and Chief Executive
Officer of Silver Acquisition Corp., Overland Park, Kansas. Mr. Bailey was
founder, chairman and chief executive officer of Superior Financial Corp.,
Little Rock, Arkansas, a financial services company that was the parent company
of Superior Bank, from late 1997 until the sale of the company in late 2003.
From 1971 through 1997, he served in various executive
6
management positions with AmSouth Bancorporation, Birmingham, Alabama and
Hancock Holding Company, Gulfport, Mississippi, a bank holding company.
Roger Barker has been Vice President and Chief Financial Officer of the
Buffalo Rock Company, a distributor and bottler of soft drink products, for over
five years. He has been a director of The Banc Corporation since December 2003
and has served as a director of The Bank since 1998.
Duane K. Bickings joined The Banc Corporation as Chief Credit Officer in
January 2005. He served as a consultant to The Banc Corporation during 2004 and
early 2005. Mr. Bickings served as Chief Credit Officer of Superior Financial
Corp. from 2001 through 2003. He held various management positions with Bank of
America and predecessors from 1979 until 2001.
W. T. Campbell, Jr. is a practicing attorney with the firm of Campbell and
Douglas in Sylacauga, Alabama, with over 30 years of experience. He has been a
director of The Banc Corporation since October 1998.
David R. Carter has been Executive Vice President and Chief Financial
Officer of The Banc Corporation since September 1998, and also served as
President and Chief Executive Officer of The Bank from December 2002 until
January 2005. Mr. Carter has served as a director of The Banc Corporation since
December 1998. From 1981 through 1997, he served in various executive management
positions with Trustmark, a Jackson, Mississippi-based bank holding company, and
Roxco, Ltd., a regional construction company.
K. Earl Durden is the Chairman and Chief Executive Officer and a director
of Rail Management Corporation, where he has been an officer and director since
1980. Mr. Durden also serves as Chairman and a director of the following
companies: Copper Basin Railway, Inc., KWT Railway, Galveston Railway, Inc. and
Grizzard Transfer, Inc., a small trucking company. He currently serves as a Vice
Chairman of the Board of Directors and has been a director of The Banc
Corporation since December 1998.
Rick D. Gardner joined The Banc Corporation as Chief Operating Officer in
January 2005. During 2004, he was Chief Operating Officer of Silver Acquisition
Corp., Overland Park, Kansas. Mr. Gardner was an officer of Superior Financial
Corp. from 1998 through late 2003, serving as Chief Administrative Officer and,
previously, as Chief Financial Officer. From 1981 through 1998, he served,
first, as an accountant with Grant Thornton and then in various executive
management positions with Metmor Financial, Overland Park, Kansas, and First
Commercial Mortgage Company, Little Rock, Arkansas.
Thomas E. Jernigan, Jr. has been the President of Marathon Corporation, a
privately held investment management company based in Birmingham, Alabama, for
over five years. He has been a director of The Banc Corporation since September
1998.
Randall E. Jones is the owner and President of Randy Jones Insurance
Agency, Inc., representing Nationwide Insurance Company since 1978. He has been
a director of The Banc Corporation since November 1998.
James Mailon Kent, Jr. has been the owner of Mailon Kent Insurance Agency
in Birmingham, Alabama for over 20 years. He has been a director of The Banc
Corporation since September 1998 and has served as Vice Chairman since December
1998.
F. Hampton McFadden, Jr. has served as Executive Vice President, General
Counsel and Secretary of The Banc Corporation and The Bank since January 2001.
For more than five years prior to joining The Banc Corporation, Mr. McFadden was
engaged in the private practice of law in Birmingham, Alabama, most recently as
a member of the law firm now known as Haskell Slaughter Young & Rediker, LLC.
Ronald W. Orso, M.D. has practiced in the field of obstetrics and
gynecology for over 25 years. He has been a director of The Banc Corporation
since September 1998.
Harold W. Ripps founded and has been an executive of The Rime Companies,
Birmingham, Alabama, a real estate development, construction and management
firm, since 1969. He has been a director of The Banc Corporation since September
1998. He has served as a trustee of Colonial Properties Trust Diversified REIT
since 1995.
7
C. Marvin Scott joined The Banc Corporation as President in January 2005.
During 2004, he was President of Silver Acquisition Corp., Overland Park,
Kansas. Mr. Scott served as President and Chief Operating Officer of Superior
Financial Corp. from April 1998 through late 2003. From 1971 through 1997, he
served in various executive management positions with Crestar, a Richmond,
Virginia-based bank holding corporation, AmSouth Bank and Hancock Holding
Company.
Jerry M. Smith has been Chairman and President of First National Bank of
Alachua in Alachua, Florida since 1971. He has been a director of The Banc
Corporation since September 1999. Mr. Smith is also a director of the Federal
Reserve Bank of Atlanta -- Jacksonville Branch and Independent Bankers' Bank of
Florida in Orlando, Florida.
Michael E. Stephens has been a private investor for more than five years
and is the Chairman and Chief Executive Officer of S Enterprises, Inc., Indian
Springs, Alabama. He has been a director of The Banc Corporation since September
1998.
Larry D. Striplin, Jr. is Chairman and Chief Executive Officer of
Nelson-Brantley Glass Contractors, Inc. and Chairman and Chief Executive Officer
of Circle 'S' Industries, Inc., both located in Birmingham, Alabama. He has been
a director of The Banc Corporation since September 1998. Mr. Striplin is a
director of Kulicke & Soffa Industries, Inc., a publicly traded manufacturer of
electronic equipment, and served as a director of HEALTHSOUTH Corporation, a
publicly traded healthcare services company, from 1999 until April 2004.
Marie Swift served as Executive Vice President of The Bank -- Birmingham
from September 2003 until her retirement in 2005. She previously served as
President of The Bank-Warrior from January 1998 until September 2003. She has
been a director of The Banc Corporation since September 1998.
James A. Taylor has been a private investor since January 2005. He has been
Chairman of the Board of The Banc Corporation since its incorporation in 1998
and also served as Chief Executive Officer from 1998 until January 2005 and as
President in 1998 and from February 1999 until September 2000. From 1981 through
1998, he served in various executive management positions with Alabama National
BanCorporation and its predecessors and Warrior Capital Corporation. Mr. Taylor
is also a director of Southern Energy Homes, Inc., a producer of manufactured
housing, and SAL Trust Preferred Fund I, a closed-end investment company. Mr.
Taylor is the father of James A. Taylor, Jr., a director of The Banc
Corporation.
James A. Taylor, Jr. has been a private investor since January 2005. He was
President and Chief Operating Officer of The Banc Corporation from September
2000 until January 2005 and previously served as Executive Vice President,
General Counsel and Secretary of The Banc Corporation and The Bank from
September 1998 until September 2000. Mr. Taylor has served as a director of The
Banc Corporation since December 1998. Prior to that, beginning in 1991, he was
in private practice with a law firm in Birmingham, Alabama, serving as outside
general counsel to a publicly held bank holding company and then was a senior
legal officer for another publicly held company. Mr. Taylor is the son of James
A. Taylor, Chairman of the Board of The Banc Corporation.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held a total of five meetings during 2004 and acted
by unanimous written consent twice during 2004. During 2004, each of the
directors attended at least 80% of the aggregate of (i) the total number of
Board of Directors' meetings and (ii) the total number of meetings held by all
Board committees on which he or she served during the period for which he or she
was serving as a director or committee member. The Board of Directors has
determined that the following nine directors are "independent directors" under
Rule 4200 of the NASDAQ Stock Market Marketplace Rules: Messrs. Barker,
Jernigan, Jones, Kent, Ripps, Stephens and Striplin and Drs. Andrews and Orso.
While there is no policy requiring their attendance, directors are encouraged to
attend the Annual Meeting of Stockholders. Six members of the Board of Directors
attended the 2004 Annual Meeting.
The Board of Directors currently has three standing committees: the Audit
Committee, the Compensation Committee and the Nominating Committee.
8
AUDIT COMMITTEE
The Audit Committee is responsible for overseeing our accounting and
financial reporting processes and the audits of our financial statements. Among
other things, the Audit Committee is responsible for the appointment, retention,
compensation and oversight of our independent auditors, reviews significant
audit and accounting policies and practices, meets with our independent auditors
concerning, among other things, the scope of audits and reports, approves the
provision of services by our independent auditors and reviews the performance of
overall accounting and financial controls. The Audit Committee currently
consists of Messrs. Barker, Jernigan, Jr. and Kent. During 2004, there were nine
meetings of the Audit Committee.
Each of the members of the Audit Committee is an independent director, as
defined under NASDAQ Rule 4200, and meets the standards required by Rule
10A-3(b)(1) under the Securities Exchange Act of 1934. The Board of Directors
has determined that Mr. Barker qualifies as an "audit committee financial
expert", under the Rules of the Securities and Exchange Commission. In January
2004, the Board of Directors adopted a revised Audit Committee Charter, a copy
of which was attached as Appendix A to the Proxy Statement relating to our 2004
Annual Meeting of Stockholders.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for reviewing the performance of
all of our officers and recommending to the Board of Directors annual salary and
bonus amounts for them. The Compensation Committee also administers the Third
Amended and Restated 1998 Incentive Stock Plan of The Banc Corporation and the
Commerce Bank of Alabama Stock Option Plan. The Compensation Committee currently
comprises Messrs. Barker, Smith and Stephens, all of whom are independent
directors as defined under NASDAQ Rule 4200. During 2004, the Compensation
Committee held four meetings.
NOMINATING COMMITTEE
The Nominating Committee recommends to the Board of Directors and evaluates
potential candidates to serve as directors of The Banc Corporation. The
Nominating Committee was established in March 2004 and consists of Messrs.
Barker, Smith and Stephens. Each of the members of the Nominating Committee is
an independent director, as defined under NASDAQ Rule 4200. The Nominating
Committee met once during 2004.
The Nominating Committee has a written charter, adopted by the Board in
March 2004, which was attached as Appendix B to the Proxy Statement relating to
our 2004 Annual Meeting of Stockholders. The Nominating Committee is charged
with developing and recommending criteria to be considered in identifying and
evaluating potential candidates to serve as directors of The Banc Corporation as
well as establishing policies and procedures for identifying, recruiting,
interviewing and recommending to the Board qualified candidates to serve as
directors. The Committee will also develop and recommend to the Board criteria
to be used in reviewing and evaluating candidates recommended by shareholders of
The Banc Corporation and is responsible for reviewing and evaluating such
candidates and making recommendations to the Board. The Nominating Committee is
currently developing such criteria, policies and procedures.
DIRECTOR COMPENSATION
All non-employee directors receive $1,500 compensation for each meeting of
the board attended and a retainer of $1,500 per quarter for serving as
directors. In addition, all non-employee directors who are members of standing
or ad hoc committee of the Board of Directors receive $100 per committee
meeting. Directors are eligible to receive grants of stock options and
restricted stock under the Third Amended and Restated 1998 Stock Incentive Plan
of The Banc Corporation.
The following directors have entered into Deferred Compensation Agreements
with us originally effective as of September 1, 1999: Andrews, Campbell, Carter,
Durden, Jernigan, Jr., Jones, Kent, Orso, Ripps, Stephens, Striplin, Swift,
Taylor and Taylor, Jr. Directors Taylor, Kent and Jernigan also have Deferred
Compensation Agreements with The Bank. With the exception of the agreements
relating to Mr. Taylor,
9
Mr. Taylor, Jr. and Mr. Carter, these agreements provide that we will establish
and fund investments in a Deferral Account for the director as provided in the
agreements. Upon termination of a director's service other than by reason of
death or following a change in control, we will pay the director within 60 days
of termination the amount equal to the Deferral Account Balance. If the director
is terminated following a change in control, we must pay the director the
primary and secondary benefits. The primary benefit is the Deferral Account
balance at the end of the plan year immediately preceding the director's
termination of service, which is payable to the director in ten equal annual
installments. The secondary benefit is the amount equal to the growth in the
Deferral Account and must be paid within 60 days of the end of each plan year.
The agreements relating to Mr. Taylor, Mr. Taylor, Jr. and Mr. Carter were
amended in 2004 to provide for payment of a defined benefit based on
then-current projections rather than the variable benefit applicable to the
other directors.
CODE OF ETHICS
We have adopted a code of ethics that applies to all of our employees,
including our principal executive, financial and accounting officers. A copy of
our code of ethics is available on our website. We intend to disclose
information about any amendments to, or waivers from, our code of ethics that
are required to be disclosed under applicable Securities and Exchange Commission
regulations by providing appropriate information on our website. If at any time
our code of ethics is not available on our website, we will provide a copy of it
free of charge upon written request.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors and persons who beneficially own more than 10% of a registered
class of our equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
beneficial owners of more than 10% of our common stock are required by SEC
regulations to furnish The Banc Corporation with copies of all Section 16(a)
forms that they file. Based on a review of the copies of the forms furnished to
us, or written representations that no reports on Form 5 were required, we
believe that during 2004, all of our officers, directors and greater-than-10%
beneficial owners complied with all applicable filing requirements except Roger
D. Barker, an outside director. Due to an inadvertent error in obtaining his
electronic filing codes from the Securities and Exchange Commission, Mr. Barker
did not timely file his Form 3, which was due in December 2003, and a report on
Form 4 due June 17, 2004, relating to grants of stock options covering an
aggregate of 5,000 shares.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
Executive Officer Compensation. The following table presents certain
information concerning compensation paid or accrued for services rendered to The
Banc Corporation in all capacities during the years ended December 31, 2004,
2003 and 2002, for our chief executive officer and our other most highly
compensated executive officers whose total annual salary and bonus in the last
fiscal year exceeded $100,000. These
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executive officers are referred to collectively as the "named executive
officers." Mr. Taylor and Mr. Taylor, Jr. ceased to be executive officers of The
Banc Corporation in January 2005.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------------
----------------------------------------- RESTRICTED SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION HELD YEAR SALARY ($) BONUS ($) COMPENSATION(1) AWARDS(2) OPTIONS (#) COMPENSATION
------------------ ---- ---------- ---------- --------------- ---------- ----------- ------------
James A. Taylor........... 2004 $500,480 -- $127,080 -- 85,000 $158,459(3)
Chairman of the Board
and 2003 469,120 $1,117,000 157,444 -- -- $157,763(3)
Chief Executive Officer 2002 456,154 -- 124,698 $350,000 100,000 $459,026(4)
James A. Taylor, Jr. ..... 2004 $354,200 $ 75,000 $ 61,731 -- 45,000
President and Chief 2003 354,085 $ 100,000 37,733 -- --
Operating Officer and 2002 333,200 -- 36,495 $105,000 50,000
Director
David R. Carter........... 2004 $292,200 $ 60,000 $ 21,789 -- 30,000
Executive Vice
President, 2003 292,084 $ 100,000 23,113 -- --
Chief Financial Officer 2002 272,200 -- 36,290 $105,000 20,000
and Director
F. Hampton McFadden,
Jr. .................... 2004 $264,000 $ 50,000 $ 23,862 -- 25,000
Executive Vice
President, 2003 263,885 $ 35,000 29,490 -- --
General Counsel and 2002 246,000 -- 20,651 -- 10,000
Secretary
---------------
(1) Represents the dollar value of insurance premiums we paid with respect to
life, health, dental and disability insurance, an automobile allowance,
imputed income from deferred compensation and other fringe benefits for the
benefit of the named executive officer.
(2) These restricted stock awards were approved by the Board of Directors in
2001 but were not granted until April 2002. The awards vest in three equal
installments on April 1, 2005, April 1, 2006 and April 1, 2007. The amounts
shown in the table reflect the market value at date of grant. Dividends are
paid on restricted shares. The following table provides information about
the restricted shares as of December 31, 2004:
AGGREGATE NUMBER OF VALUE BASED ON YEAR
NAME RESTRICTED SHARES HELD END STOCK PRICE ($8.23)
---- ---------------------- -----------------------
James A. Taylor............................... 50,000 $411,500
James A. Taylor, Jr. ......................... 15,000 $123,450
David R. Carter............................... 15,000 $123,450
(3) Payment of insurance premiums on Mr. Taylor's key man life insurance policy
maintained by The Banc Corporation.
(4) During the first quarter of 2002, The Banc Corporation transferred to Mr.
Taylor a 50% interest in the key man life insurance policy The Banc
Corporation maintains on Mr. Taylor. This amount includes the cash value of
50% of the insurance policy transferred to Mr. Taylor during the first
quarter of 2002, 50% of the cost of the insurance policy premiums plus a
"gross-up" payment to make the transaction tax neutral to Mr. Taylor. Mr.
Taylor had no life insurance policy prior to this transfer even though his
employment agreements beginning in 1997 have provided for a life insurance
policy. These amounts were non-cash compensation.
11
Option Grants in 2004. The following table contains information concerning
the grant of stock options under the Third Amended and Restated 1998 Stock
Incentive Plan, and the Commerce Bank of Alabama Incentive Stock Option Plan to
the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
ALTERNATIVE TO
INDIVIDUAL GRANTS (F) AND (G):
------------------------------- GRANT DATE
NUMBER OF PERCENT OF TOTAL VALUE
SECURITIES OPTIONS/SARS --------------
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) FISCAL YEAR (1) ($/SH) DATE ($)(2)
---- ------------ ---------------- -------- ---------- --------------
James A. Taylor................... 85,000 16.80% $6.25 6/15/14 $268,600
James A. Taylor, Jr. ............. 45,000 8.89% 6.25 6/15/14 142,200
David R. Carter................... 30,000 5.93% 6.25 6/15/14 94,800
F. Hampton McFadden, Jr. ......... 25,000 4.94% 6.25 6/15/14 79,000
---------------
(1) We granted options to purchase 506,000 shares of common stock to our
employees and directors during 2004.
(2) The fair value of the options granted was based upon the Black-Scholes
pricing model. The Banc Corporation used the following weighted average
assumption for 2004: a risk free interest rate of 4.56%, a volatility factor
of .32%, a weighted average life of options of 7 years and a dividend yield
of 0%.
Aggregated Option Exercises in 2004 and Option Values at Year End. The
following table provides information with respect to options exercised by the
named executive officers during 2004 and the number and value of securities
underlying unexercised options held by the named executive officers at December
31, 2004.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS AT FISCAL OPTIONS/SARS AT
ACQUIRED ON REALIZED YEAR-END (#) FISCAL YEAR-END ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ -------- ------------------------- -------------------------
James A. Taylor............. -- $ -- 320,000/80,000 $488,150/85,600
James A. Taylor, Jr. ....... -- -- 142,000/33,000 $221,510/31,740
David R. Carter............. -- -- 109,000/21,000 $181,730/25,020
F. Hampton McFadden, Jr. ... -- -- 87,000/18,000 $151,740/26,960
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information as of December 31, 2004,
relating to our equity compensation plans pursuant to which grants of options,
restricted stock units or other rights to acquire shares may be granted in the
future.
NUMBER OF SHARES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE ISSUED UPON WEIGHTED-AVERAGE EQUITY COMPENSATION
EXERCISE OF EXERCISE PRICE OF PLANS (EXCLUDING
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN (A))
------------- -------------------- -------------------- -----------------------
(A) (B) (C)
Equity Compensation Plans Approved by
Security Holders(1)................. 1,625,500 $6.75 702,991
Equity Compensation Plans not Approved
by Security Holders(2).............. 29,009 $6.24 --
--------- ----- -------
Total................................. 1,654,509 $6.63 702,991
========= ----- -------
12
---------------
(1) This number excludes 142,500 shares of restricted stock granted under the
Third Amended and Restated 1998 Stock Incentive Plan of The Banc
Corporation.
(2) Shares authorized and issued under the Commerce Bank of Alabama Stock Option
Plan, which we assumed in the merger with Commerce Bank of Alabama in
November 1998. We do not intend to grant any additional options under this
plan.
Third Amended and Restated 1998 Stock Incentive Plan. The objectives of
the Third Amended and Restated 1998 Stock Incentive Plan of The Banc Corporation
are to further our growth and development by (i) encouraging selected
participants who contribute or are expected to contribute materially to our
success to obtain shares of our common stock and to encourage them to promote
our best interests and (ii) affording us a means of attracting qualified
personnel. The plan authorizes the grant of incentive stock options,
nonqualified stock options and other awards, including stock appreciation
rights, restricted stock and performance shares. The plan covers 2,500,000
shares of our common stock. As of December 31, 2004, the Compensation Committee
has granted options to purchase 1,625,500 shares of our common stock and
restricted stock awards covering 142,500 shares of our common stock which remain
outstanding. Those shares may be, in whole or in part, authorized but unissued
shares or issued shares that we have reacquired.
Our Compensation Committee, which administers the Third Amended and
Restated 1998 Stock Incentive Plan, may grant options or other awards to
employees, officers, directors, consultants, agents, independent contractors and
other persons who contributed or are expected to contribute materially to our
success. The Compensation Committee, subject to the approval of the board of
directors and the provisions of the plan, has full power to determine the types
of awards to be granted, to select the individuals to whom awards will be
granted, to fix the number of shares that each optionee may purchase, to set the
terms and conditions of each option, and to determine all other matters relating
to the plan.
The Commerce Bank of Alabama Stock Incentive Compensation Plan. We assumed
the Commerce Bank of Alabama Incentive Compensation Plan in our acquisition of
Commerce Bank of Alabama on November 6, 1998. This plan authorized the grant of
incentive and nonqualified options to purchase common stock of The Banc
Corporation. As of December 31, 2004, there were options outstanding under this
plan to purchase 29,009 shares of common stock at a price of $6.24 per share. We
have not granted and do not intend to grant any additional options under this
plan.
EMPLOYMENT AGREEMENTS
C. Stanley Bailey. Mr. Bailey and The Banc Corporation have entered into
an Employment Agreement, dated January 24, 2005, under which The Banc
Corporation has agreed to employ Mr. Bailey as Chief Executive Officer of The
Banc Corporation and The Bank for a term expiring January 31, 2008. The
Employment Agreement automatically renews for successive one-year extensions on
each anniversary of the commencement of the term unless either party gives the
other 30 days' prior written notice of nonrenewal. Under the Employment
Agreement, Mr. Bailey is entitled to an initial base salary at the annual rate
of $400,000 per year and to an annual target bonus of 50% of his base salary,
subject to the achievement of agreed-upon performance goals. Mr. Bailey is also
entitled to participate in other bonus or long-term incentive plans applicable
to similarly situated executive officers, and to participate in such insurance,
medical and other employee benefit plans as may be provided to such executive
officers. The Banc Corporation is also required to provide Mr. Bailey with
certain other benefits, including a term life insurance policy in the amount of
at least $1 million, an automobile and customary automobile-related benefits,
and initiation fees, dues and assessments for approved club memberships, and to
pay certain relocation expenses. The agreement restricts Mr. Bailey's ability to
engage in various activities competitive with The Banc Corporation's business
for one year after Mr. Bailey ceases to be employed by The Banc Corporation.
If Mr. Bailey's employment is terminated other than for Cause (as defined)
or as a result of his death or disability, or if Mr. Bailey terminates the
agreement as a result of certain adverse changes in his functions, duties or
responsibilities or of another material breach by The Banc Corporation of its
obligations, Mr. Bailey is entitled to continued compensation at the
then-current rate (including bonus compensation) for the then-remaining term of
the agreement, provided that Mr. Bailey may elect to receive such payment in a
lump sum
13
discounted to present value using a 6% discount rate, and to the continuation of
other benefits during such remaining term. If Mr. Bailey's employment is
terminated as a result of his disability, he is entitled to continued
compensation at his then-current rate (including bonus compensation) and the
continuation of other benefits for one year. If Mr. Bailey's employment by The
Banc Corporation is terminated within two years following a Change in Control
(as defined), other than for Cause or as a result of his death, disability or
retirement, or if Mr. Bailey terminates such employment following the occurrence
of specified events within two years after a Change in Control, Mr. Bailey will
be entitled to receive a lump sum payment equal to three times the sum of (i)
his then-current base salary plus (ii) the target bonus he would have been
entitled to receive, and he will be entitled to receive other benefits specified
in the agreement. In addition, he will be entitled to a gross-up payment equal
to the amount of any excise taxes imposed upon him as a result of such payments
upon termination following a Change in Control.
The agreement obligates The Banc Corporation to appoint Mr. Bailey to the
Board of Directors of The Banc Corporation, and further provides that Mr. Bailey
will be appointed as Chairman of the Board of The Banc Corporation at such time,
if any, as James A. Taylor ceases to serve as Chairman of the Board.
C. Marvin Scott and Rick D. Gardner. Mr. Scott and Mr. Gardner have
entered into employment agreements with The Banc Corporation and the Bank
providing for terms substantially identical to those described above with
respect to Mr. Bailey, except that (a) Mr. Scott's initial annual base salary is
$300,000 and Mr. Gardner's initial annual base salary is $250,000; (b) The Banc
Corporation is obligated to provide term life insurance policies to Mr. Scott in
the amount of $750,000 and to Mr. Gardner in the amount of $600,000; and (c)
each of Mr. Scott and Mr. Gardner will be appointed as a director of The Banc
Corporation effective on or before December 31, 2005, if then permitted by the
NASDAQ Stock Market Marketplace Rules, or, if not so permitted on or before
December 31, 2005, then as soon thereafter as is permitted by the NASDAQ Stock
Market Marketplace Rules.
Stock Option Grants to Messrs. Bailey, Scott and Gardner. Under their
respective employment agreements, The Banc Corporation is obligated to grant,
and has granted as of January 24, 2005, options to acquire 711,970 shares of
common stock to Mr. Bailey, 355,985 shares to Mr. Scott, and 355,985 shares to
Mr. Gardner, each at an exercise price of $8.17 per share, the market price on
the date of grant. Such options have a ten-year term. Such options vest and
become exercisable as follows:
- 50% on April 24, 2005;
- 20% on the later of (x) the date on which the average closing price per
share of The Banc Corporation common stock over a
15-consecutive-trading-day period (the "Market Value price") is at least
$10 but less than $12, and (y) June 29, 2005 (the "Alternate Vesting
Date");
- 15% on the later of (x) the date on which the Market Value price is at
least $12 but less than $14, and (y) the Alternate Vesting Date; and
- 15% on the later of (x) the date on which the Market Value price is at
least $14, and (y) the Alternate Vesting Date.
- To the extent not otherwise vested, on January 24, 2010.
If an executive's employment is terminated for any reason other than (i)
voluntarily by the executive (other than after a Change in Control) or (i) by
The Banc Corporation with Cause, (a) the portion of such options that becomes
vested on April 24, 2005 will immediately vest, to the extent not previously
vested, (b) if the Alternate Vesting Date has not occurred but any Market Value
price has been reached, the shares that would vest upon attainment of such
Market Value price will be immediately vested notwithstanding that the Alternate
Vesting Date has not yet occurred, and (c) vesting will continue through any
remaining term of the employment agreement in accordance with its terms.
David R. Carter. We have entered into an employment agreement with David
R. Carter, effective as of September 19, 2000. Under his employment agreement,
Mr. Carter serves as the Executive Vice President and Chief Financial Officer of
The Banc Corporation and Executive Vice President and Chief Financial Officer of
The Bank. Mr. Carter will receive a base salary of $243,500 per year plus an
incentive payment of
14
5% of the base amount per quarter. He is also entitled to receive other
benefits, including a car allowance and country club or athletic club dues, and
may participate in all other executive compensation plans. The term of the
agreement is three years, which is renewable daily for an additional three-year
period. If Mr. Carter is terminated for any reason other than "cause" as defined
in the agreement (including constructive termination), he shall receive three
years' base compensation, directors' fees and all benefits or their cash
equivalents. He would be entitled to a "gross up" payment to cover any excise
tax imposed on any severance payment to him.
F. Hampton McFadden, Jr. We have entered into an employment agreement with
F. Hampton McFadden, Jr. effective as of January 15, 2001. Under his employment
agreement, Mr. McFadden serves as the Executive Vice President and General
Counsel and Secretary of The Banc Corporation and The Bank. Mr. McFadden will
receive a base salary of $220,000 per year plus an incentive payment of 5% of
the base amount per quarter. He is also entitled to receive other benefits,
including a car allowance and country club or athletic club dues, and may
participate in all other executive compensation plans. The term of the agreement
is three years, which is renewable daily for an additional three-year period. If
Mr. McFadden is terminated for any reason other than "cause" as defined in the
agreement (including constructive termination), he shall receive three years'
base compensation and all benefits or their cash equivalents. He would be
entitled to a "gross up" payment to cover any excise tax imposed on any
severance payment to him.
Standstill Agreements with Messrs. Carter and McFadden. In addition, on
January 24, 2005, we entered into certain Employment Agreement Standstill
Agreements ("standstill agreements") with Messrs. Carter and McFadden (the
"executives"). The management changes described above gave the executives the
right to exercise certain provisions under their employment agreements. Under
the standstill agreements, the executives have agreed to remain in their present
positions and their employment agreements remain in full force. We and the
executives have agreed as part of the standstill agreements to discuss any
proposed changes in the executives' continued employment relationship with us.
At any time following the first anniversary of the standstill agreements, if we
and the executive have not reached a new agreement, such executive may terminate
his employment for any reason and receive all rights, payments, privileges and
benefits currently provided for under his employment agreement.
Deferred Compensation Agreements. We have entered into deferred
compensation agreements with Messrs. Carter, McFadden, Taylor and Taylor, Jr.
These agreements provide that we will pay the executive officers a defined
benefit over a period of years following their attainment of the retirement age
specified in the individual agreements, subject to applicable vesting periods.
In general, the vested percentages are payable whether or not the executive
remains employed through such retirement age.
PRIOR EMPLOYMENT AGREEMENTS WITH JAMES A. TAYLOR AND JAMES A. TAYLOR, JR.
The Banc Corporation was a party to an Employment Agreement, dated January
1, 2002, with James A. Taylor, formerly Chairman of the Board and Chief
Executive Officer of The Banc Corporation, and an Employment Agreement, dated
September 19, 2000, with James A. Taylor, Jr., formerly President and Chief
Operating Officer of The Banc Corporation. These agreements are described in The
Banc Corporation's previous filings with the Securities and Exchange Commission,
including The Banc Corporation's Proxy Statement in connection with its 2004
Annual Meeting of Stockholders. Under these agreements, the transactions
described above triggered various obligations of The Banc Corporation to Mr.
Taylor and Mr. Taylor, Jr. In order to resolve certain issues that arose in the
construction of provisions of the agreements and to facilitate the equity
investment and management transition described above, Mr. Taylor and Mr. Taylor,
Jr. engaged in discussions with a committee of independent directors appointed
by The Banc Corporation's Board of Directors and, after such discussions,
entered into new agreements with The Banc Corporation which supersede the
obligations of The Banc Corporation under their employment agreements and which
provide for payments to Mr. Taylor of a lesser amount over a longer period of
time than would have been provided for under his employment agreement. Material
terms of the new agreements are described below.
15
Agreement with James A. Taylor. The Banc Corporation's employment
agreement with Mr. Taylor entitled him to certain payments based on his current
compensation upon the occurrence of specified circumstances, and gave him the
option to demand the discounted present value of such payments in a lump sum.
The transactions described above would have triggered The Banc Corporation's
obligations to make such payments to Mr. Taylor. On January 24, 2005, The Banc
Corporation entered into an agreement with Mr. Taylor that provided that, in
lieu of the payments to which he would have been entitled under his employment
agreement, The Banc Corporation would pay to Mr. Taylor $3,940,154.90 on January
24, 2005, $3,152,123.92 on January 24, 2006, and $788,030.98 on 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 The Banc Corporation 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. The Banc
Corporation's obligation to provide such payments and benefits to Mr. Taylor is
absolute and will survive the death or disability of Mr. Taylor.
The agreement provides for various covenants by Mr. Taylor that were not
contained in his employment agreement, including an agreement that Mr. Taylor
will not engage in specified activities that are or could be competitive with
the business of The Banc Corporation or The Bank so long as he is receiving any
benefits under the agreement or providing services to The Banc Corporation or
the Bank, as a director, consultant, employee or otherwise, and an agreement
that he will not sell any shares of The Banc Corporation's common stock or other
securities of The Banc Corporation for a year without the prior written consent
of The Banc Corporation. The agreement also contains customary covenants by Mr.
Taylor concerning noninterference, nonsolicitation and nondisparagement. Mr.
Taylor is permitted to be a passive investor (a) owning up to 5% of publicly
traded entities which may be competitors of The Banc Corporation or The Bank and
(b) owning up to 10% of any bank(s) in which James A. Taylor, Jr. acts in an
executive capacity, in each case without relinquishing his position as Chairman
and a director of The Banc Corporation.
Mr. Taylor will continue to serve as non-executive Chairman of the Board of
The Banc Corporation until January 2007.
Agreement with James A. Taylor, Jr. The Banc Corporation's employment
agreement with Mr. Taylor, Jr. entitled him to certain payments based on his
current compensation upon the occurrence of specified circumstances, and gave
him the option to demand the discounted present value of such payments in a lump
sum. The transactions described above would have triggered The Banc
Corporation's obligations to make such payments to Mr. Taylor, Jr. On January
24, 2005, The Banc Corporation entered into an agreement with Mr. Taylor, Jr.
that provided that, in lieu of the payments to which he would have been entitled
under his employment agreement, The Banc Corporation would pay to Mr. Taylor,
Jr., $1,382,872.17 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. The Banc Corporation's
obligation to provide such payments and benefits to Mr. Taylor, Jr. is absolute
and will survive the death or disability of Mr. Taylor.
The agreement provides for various covenants by Mr. Taylor, Jr. that were
not contained in his employment agreement, including an agreement that Mr.
Taylor, Jr. will not engage in specified activities that are or could be
competitive with the business of The Banc Corporation or The Bank so long as he
is receiving any benefits under the agreement or providing services to The Banc
Corporation or the Bank, as a director, consultant, employee or otherwise, and
an agreement that he will not sell any shares of The Banc Corporation's common
stock or other securities of The Banc Corporation for a year without the prior
written consent of The Banc Corporation. The agreement also contains customary
covenants by Mr. Taylor, Jr. concerning noninterference, nonsolicitation and
nondisparagement. Mr. Taylor, Jr. is permitted to be a passive investor owning
up to 5% of publicly traded entities which may be competitors of The Banc
Corporation or The Bank.
Mr. Taylor, Jr. will continue to serve as a director of The Banc
Corporation until January 2006 subject to the following limitations. The
agreement acknowledges that Mr. Taylor, Jr. may in the future serve as an
16
investor, director and officer of a de novo bank or bank(s) in certain specified
areas, but provides that he must resign as a director of The Banc Corporation
immediately upon initiating any such undertaking.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth, to the best of our knowledge, certain
information regarding our beneficial stock ownership as of April 29, 2005, by:
(a) each of our directors and our four most highly compensated executive
officers, (b) all directors and executive officers as a group, and (c) each
stockholder known by us to be the beneficial owner of more than 5% of our
outstanding common stock. Except as otherwise indicated, each person listed
below has sole voting and investment power with respect to all shares shown to
be beneficially owned by him or her.
NUMBER OF SHARES OF PERCENTAGE(1)(2)
THE CORPORATION OF COMMON
NAME COMMON STOCK STOCK OWNED
---- ------------------- ----------------
James R. Andrews, M.D. ..................................... 311,500(3) 1.66%
C. Stanley Bailey........................................... 763,065(4) 3.97%
Roger Barker................................................ 45,750(5) *
Duane K. Bickings........................................... 136,833(6) *
W.T. Campbell, Jr. ......................................... 419,023(7) 2.23%
David R. Carter............................................. 155,042(8) 0.82%
K. Earl Durden.............................................. 493,068(9) 2.63%
Rick D. Gardner............................................. 310,388(10) 1.63%
Thomas E. Jernigan, Jr. .................................... 48,002(11) *
Randall E. Jones............................................ 71,367(12) *
James Mailon Kent, Jr. ..................................... 293,002(13) 1.56%
F. Hampton McFadden, Jr. ................................... 128,500(14) *
Ronald W. Orso, M.D. ....................................... 261,134(15) 1.39%
Harold W. Ripps............................................. 226,500(16) 1.21%
C. Marvin Scott............................................. 402,187(17) 2.12%
Jerry M. Smith.............................................. 192,085(18) 1.02%
Michael E. Stephens......................................... 251,853(19) 1.34%
Larry D. Striplin........................................... 273,671(20) 1.46%
Marie Swift................................................. 76,600(21) *
James A. Taylor............................................. 1,046,902(22) 5.48%
James A. Taylor, Jr. ....................................... 376,077(23) 1.99%
Tontine Financial Partners, L.P. ........................... 1,163,637(24) 6.46%
55 Railroad Avenue, 3rd Floor
Greenwich, Connecticut 06830
Forest Hill Capital, LLC.................................... 989,520(25) 5.30%
100 Morgan Keegan Drive, Suite 430
Little Rock, Arkansas 72202
All executive officers and directors as a group (21
persons).................................................. 5,767,984(26) 28.39%
---------------
* Less than 1%.
(1) Except as otherwise noted herein, percentage is determined on the basis of
18,729,408 shares of Corporation common stock outstanding plus securities
deemed outstanding pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Under Rule 13d-3, a
person is deemed to be a beneficial owner of any security owned by certain
family members and any security of which that person has the right to
acquire beneficial ownership within 60 days, including, without limitation,
shares of The Banc Corporation common stock subject to currently
exercisable options. An asterisk indicates beneficial ownership of less
than one percent.
17
(2) Ownership percentage for each named individual is calculated by treating
any shares subject to options that are held by the named individual and
that are exercisable within the next 60 days as if outstanding, but
treating such option shares held by others and treating shares subject to
options held by the named individual but not exercisable within 60 days as
not outstanding. If ownership of restricted stock is shown, the individual
has sole voting power, but no power of disposition.
(3) Includes 14,000 shares subject to options that are exercisable within 60
days and 2,500 shares of restricted stock.
(4) Includes 498,379 shares subject to options that are exercisable within 60
days.
(5) Includes 14,000 shares subject to options that are excisable within 60
days, 2,500 shares of restricted stock.
(6) Includes 124,594 shares subject to options that are exercisable within 60
days.
(7) Includes 14,000 shares subject to options that are exercisable within 60
days, 2,500 shares of restricted stock, 17,143 shares held by his wife and
42,432 shares held by his minor children.
(8) Includes 122,000 shares subject to options that are exercisable within 60
days and 22,500 shares of restricted stock.
(9) Includes 23,500 shares subject to options that are exercisable within 60
days, 2,500 shares of restricted stock and 203,534 shares held as
co-trustee.
(10) Includes 249,189 shares subject to options that are exercisable within 60
days.
(11) Includes 23,000 shares subject to options that are exercisable within 60
days and 5,000 shares of restricted stock.
(12) Includes 14,000 shares subject to options that are excisable within 60 days
and 2,500 shares of restricted stock.
(13) Includes 23,000 shares subject to options that are exercisable within 60
days and 2,500 shares of restricted stock.
(14) Includes 101,000 shares subject to options that are exercisable within 60
days and 7,500 shares of restricted stock.
(15) Includes 14,000 shares subject to options that are exercisable within 60
days, 2,500 shares of restricted stock and 210,000 shares held by
Birmingham OB/GYN Pension Plan, of which Dr. Orso is Trustee.
(16) Includes 14,000 shares subject to options that are excisable within 60 days
and 2,500 shares of restricted stock.
(17) Includes 249,189 shares subject to options that are exercisable within 60
days.
(18) Includes 14,000 shares subject to options that are excisable within 60 days
and 2,500 shares of restricted stock.
(19) Includes 14,000 shares subject to options that are excisable within 60 days
and 2,500 shares of restricted stock.
(20) Includes 31,000 shares subject to options that are exercisable within 60
days and 5,000 shares of restricted stock.
(21) Includes 16,500 shares subject to options that are exercisable within 60
days and 2,500 shares of restricted stock.
(22) Includes 360,000 shares subject to options that are exercisable within 60
days and 75,000 shares of restricted stock. Does not include 32,100 shares
owned by his wife, of which he disclaims beneficial ownership.
(23) Includes 155,000 shares subject to options that are exercisable within 60
days and 24,375 shares of restricted stock.
(24) Shares held by Tontine Financial Partners, L.P. Tontine Management, L.L.C.
is the general partner of Tontine Financial Partners, L.P. and Tontine
Management, L.L.C. Tontine Financial Partners, L.P. and Tontine Management,
L.L.C. claim shared power with their principals to vote and to dispose of
all shares. Information regarding Tontine Financial Partners, L.P. and
Tontine Management, L.L.C. is based on the Schedule 13D dated August 25,
2003.
(25) Shares held by (i) Forest Hill Select Fund, L.P. of which Forest Hill
Capital, LLC is the general partner, (ii) Forest Hill Select Offshore Fund,
Ltd. of which Forest Hill Capital, LLC acts as investment advisor and (iii)
a managed account to which Forest Hill Capital, LLC acts as investment
advisor. Forest Hill Capital, LLC and its principal claim power to vote and
dispose of all shares.
18
Information regarding Mark A. Lee and Forest Hill Capital, LLC is based on
the Schedule 13D dated March 9, 2005.
(26) Includes 1,573,351 shares subject to options that are exercisable within 60
days and 166,875 shares of restricted stock.
The following directors are the beneficial owners of shares of The Banc
Corporation's Series A Convertible Preferred Stock (the "Series A Preferred
Stock"): K. Earl Durden, 10,000 shares; Michael E. Stephens, 1,000 shares; W. T.
Campbell, Jr., 500 shares; James Mailon Kent, Jr., 10,000 shares; and Larry D.
Striplin, Jr., 2,500 shares. The Series A Preferred Stock does not have voting
rights. Each share of the Series A Preferred Stock is convertible at the
holder's option into 12.5 shares of common stock of The Banc Corporation
beginning June 1, 2008 and may be redeemed earlier by The Banc Corporation at
the redemption prices set forth in the Certificate of Designations of the Series
A Preferred Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Banc Corporation and The Bank have entered into transactions with
certain directors or officers of The Banc Corporation or their affiliates. Such
transactions were made in the ordinary course of business on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other customers,
and did not, in the opinion of management involve more than normal credit risk
or present other unfavorable features.
Brett Taylor was the vice president of Morris Avenue Management Group,
Inc., a wholly-owned subsidiary of The Banc Corporation until April 30, 2005.
Mr. Taylor's salary for 2004 was $80,355. Mr. Taylor is the son of James A.
Taylor and the brother of James A. Taylor, Jr.
The law firm of Campbell and Douglas performed legal services for The Bank
in Sylacauga, Alabama during 2004 and received fees of $6,192 for such services.
W. T. Campbell, Jr., is a partner of Campbell and Douglas. It is anticipated
that Mr. Campbell will continue to perform legal services for The Bank in
Sylacauga, Alabama from time to time.
The Mailon Kent Insurance Agency received commissions of approximately
$180,400 from the sale of insurance to The Banc Corporation during 2004.
The Banc Corporation believes that all the foregoing transactions were made
on terms and conditions reflective of arms' length transactions.
See "Executive Compensation and Other Information -- Prior Employment
Agreements with James A. Taylor and James A. Taylor, Jr.," above.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
AUDIT FEES
The aggregate fees of Ernst & Young LLP for professional services rendered
for the audit of The Banc Corporation's financial statements for the fiscal year
ended December 31, 2003 and for the reviews of the financial statements for The
Banc Corporation's Quarterly Reports on Form 10-Q and statutory audits for the
fiscal year ended December 31, 2003 were $688,800.
The aggregate fees of Carr, Riggs & Ingram LLC for professional services
rendered for the audit of The Banc Corporation's financial statements for the
fiscal year ended December 31, 2004 and for the reviews of the financial
statements included in The Banc Corporation's Quarterly Reports on Form 10-Q and
statutory audits for the fiscal year ended December 31, 2004 were $370,000.
AUDIT RELATED FEES
The aggregate "audit related fees" of Ernst & Young for the fiscal year
ended December 31, 2003 were $33,500. Audit related fees primarily consist of
fees relating to benefit plan audits and internal controls reviews.
19
The aggregate "audit related fees" of Carr, Riggs & Ingram for the fiscal
year ended December 31, 2004 were $15,000. Audit related fees primarily consist
of fees relating to benefit plan audits.
TAX FEES
The aggregate tax fees paid to Ernst & Young for the fiscal year ended
December 31, 2003 were $123,890. Tax fees include federal and state tax
compliance fees.
The aggregate tax fees paid to Carr, Riggs & Ingram for the fiscal year
ended December 31, 2004 were $0.
ALL OTHER FEES
The aggregate fees billed by Ernst & Young for all other services rendered
to The Banc Corporation, other than services described above, for the fiscal
year ended December 31, 2003 were $46,324. All other fees relate primarily to
real estate advisory services.
The aggregate fees billed by Carr, Riggs & Ingram for all other services
rendered to The Banc Corporation, other than services described above, for the
fiscal year ended December 31, 2004 were $0.
PRE-APPROVAL POLICIES
The Audit Committee of our Board of Directors pre-approves all audit and
non-audit services provided by the independent auditors. These services may
include audit services, audit related services, tax services and other services.
The Audit Committee pre-approved all of the services for the audit fees
described above. The Audit Committee regularly monitors the services provided by
the independent auditors for both audit and non-audit services. None of the
services described above were approved by the Audit Committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
The Audit Committee has considered whether the provision of the services
covered above is compatible with maintaining Carr, Riggs & Ingram's independence
and has concluded that it is.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(b) Exhibits
The exhibits required by Regulation S-K are set forth in the following list
and are filed by attachment to this Amendment No. 2 on Form 10-K/A to Annual
Report on Form 10-K as indicated below.
(23) Consent of Carr, Riggs & Ingram LLC
(31) Certifications of Chief Executive Officer and Chief
Financial Officer pursuant to Rule 13a-14(a)
(32) Certifications of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 2 on
Form 10-K/A to Annual Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE BANC CORPORATION
By /s/ David R. Carter
------------------------------------
David R. Carter
Executive Vice President and
Chief Financial Officer
May 2, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chief Executive Officer (Principal May 2, 2005
------------------------------------------------------ Executive Officer)
C. Stanley Bailey
/s/ David R. Carter Executive Vice President, Chief May 2, 2005
------------------------------------------------------ Financial Officer and Director
David R. Carter (Principal Financial and
Accounting Officer)
* Chairman of the Board May 2, 2005
------------------------------------------------------
James A. Taylor
* Vice Chairman May 2, 2005
------------------------------------------------------
James Mailon Kent, Jr.
* Vice Chairman May 2, 2005
------------------------------------------------------
Larry D. Striplin, Jr.
* Vice Chairman May 2, 2005
------------------------------------------------------
K. Earl Durden
* Director May 2, 2005
------------------------------------------------------
James R. Andrews, M.D.
* Director May 2, 2005
------------------------------------------------------
Roger Barker
* Director May 2, 2005
------------------------------------------------------
W. T. Campbell, Jr.
* Director May 2, 2005
------------------------------------------------------
Thomas E. Jernigan, Jr.
21
SIGNATURE TITLE DATE
--------- ----- ----
* Director May 2, 2005
------------------------------------------------------
Randall E. Jones
* Director May 2, 2005
------------------------------------------------------
Ronald W. Orso, M.D.
* Director May 2, 2005
------------------------------------------------------
Harold W. Ripps
* Director May 2, 2005
------------------------------------------------------
Jerry M. Smith
* Director May 2, 2005
------------------------------------------------------
Michael E. Stephens
* Director May 2, 2005
------------------------------------------------------
Marie Swift
* Director May 2, 2005
------------------------------------------------------
James A. Taylor, Jr.
*By /s/ David R. Carter
------------------------------------------------
David R. Carter
Attorney-in-Fact
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