SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14a
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for use of the
Commission only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE BANC CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
The filing fee of $_______ was calculated on the basis of the information that
follows:
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4. Proposed maximum Aggregate value of transaction:
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PRELIMINARY COPY
THE BANC CORPORATION
17 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
May , 2005
Dear Stockholder:
On behalf of the Board of Directors and management of The Banc Corporation,
we cordially invite you to attend the Annual Meeting of Stockholders to be held
at our corporate training facility in our principal executive offices at 17
North 20th Street, Birmingham, Alabama 35203, on June 15, 2005, at 10:00 a.m.
Central Daylight Time. The attached Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting.
Regardless of whether you plan to attend, please mark, sign, date and return the
enclosed proxy as soon as possible in the envelope provided. If you attend the
Annual Meeting, which we hope you will, you may vote in person even if you have
previously mailed a proxy card.
Sincerely,
C. Stanley Bailey
Chief Executive Officer
THE BANC CORPORATION
17 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2005
To the Stockholders of The Banc Corporation:
You are hereby notified that the 2005 Annual Meeting of Stockholders (the
"Annual Meeting") of The Banc Corporation, a Delaware corporation, will be held
at our corporate training facility in our principal executive offices at 17
North 20th Street, Birmingham, Alabama 35203, on Wednesday, June 15, 2005, at
10:00 a.m. Central Daylight Time, for the following purposes:
1. To consider and vote upon a proposed amendment to the Corporation's
Restated Certificate of Incorporation to increase the number of authorized
shares of common stock from 25 million shares to 35 million shares.
2. To consider and vote upon a proposed amendment to the Corporation's
Restated Certificate of Incorporation to declassify the Corporation's Board
of Directors so that all directors are elected annually.
3. To elect 13 directors to serve a term of one year or until their
respective successors are elected and qualified, or until their earlier
death, resignation or removal, unless Proposal Number Two above is not
approved.
If Proposal Number Two above is not approved, then to elect eight
directors as follows (who, with the five continuing directors whose class
terms extend to 2006 or 2007, as the case may be, will comprise a
thirteen-member board): five directors to the Class of 2008, to serve a
term of three years, one director to fill a vacancy in the Class of 2007,
to serve a term of two years, and two directors to fill vacancies in the
Class of 2006, to serve a term of one year, or, in each case, until their
respective successors are elected and qualified, or until their earlier
death, resignation or removal.
4. To ratify the appointment of Carr, Riggs & Ingram, LLC as
independent auditors of The Banc Corporation for the year ending December
31, 2005.
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting;
however, only stockholders of record at the close of business on April 29, 2005,
are entitled to notice of and to vote at the Annual Meeting, or any adjournments
thereof. Regardless of whether you plan to attend the meeting, please mark,
sign, date and return the enclosed proxy in the enclosed prepaid envelope as
soon as possible. If you attend the annual meeting in person, you may revoke
your proxy in person. Attendance at the meeting does not of itself revoke your
proxy.
In accordance with Delaware law, a list of stockholders entitled to vote at
the Annual Meeting shall be open to the examination of any stockholder, for any
purpose relating to the Annual Meeting, during ordinary business hours at The
Banc Corporation's principal executive offices at 17 North 20th Street,
Birmingham, Alabama, from June 4, 2005 through June 14, 2005, and the list shall
be available for inspection at the Annual Meeting by any stockholder who is
present.
By Order of the Board of Directors
F. Hampton McFadden, Jr.
Secretary
DATED: May , 2005
THE BANC CORPORATION
17 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
PROXY STATEMENT
FOR 2005 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2005
INTRODUCTION
We are furnishing this Proxy Statement to the holders of The Banc
Corporation common stock, par value $.001 per share, in connection with our
solicitation of proxies to be used at the 2005 Annual Meeting of Stockholders to
be held on Wednesday, June 15, 2005, at 10:00 a.m., Central Daylight Time, at
our corporate training facility in our principal executive offices at 17 North
20th Street, Birmingham, Alabama 35203 (the "Annual Meeting") and any
adjournment thereof. The enclosed proxy is solicited on behalf of our Board of
Directors. This Proxy Statement and the accompanying proxy card are being mailed
to stockholders on or about May , 2005.
STOCKHOLDERS ENTITLED TO VOTE
Only stockholders of record at the close of business on April 29, 2005, are
entitled to receive notice of and to vote at the Annual Meeting. Our only class
of voting stock outstanding is our common stock, par value $.001 per share. As
of the close of business on April 29, 2005, the number of shares of common stock
outstanding and entitled to vote at the Annual Meeting was 18,729,408.
VOTE REQUIRED
Each share of common stock is entitled to one vote on all matters. There
are no cumulative voting rights. Before any business may be transacted at the
Annual Meeting, a quorum must be present. A majority of our outstanding shares
of common stock which are entitled to vote at the annual meeting, represented in
person or by proxy, shall constitute a quorum for the transaction of business.
Assuming a quorum is present,
- The proposed amendments to our Restated Certificate of Incorporation
(Proposals One and Two) require approval by the holders of a majority of
our issued and outstanding shares of common stock.
- The election of directors requires a plurality of the votes cast.
- The proposal to ratify the appointment of independent auditors must be
approved by a majority of the votes cast.
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
but will not be counted as votes cast on any matter except with respect to
Proposals One and Two. Since those proposals require the affirmative vote of a
majority of all outstanding shares of our common stock, abstentions and broker
non-votes will have the same effect as a vote against such proposals.
HOW TO VOTE YOUR SHARES
To vote at the Annual Meeting, you may attend the Annual Meeting and vote
your shares in person or vote by signing and returning the enclosed proxy card
in the envelope provided. Shares of common stock represented by the accompanying
proxy card will be voted in accordance with your voting instructions if the
proxy card is properly executed and is received by us prior to the time of
voting and is not revoked. Where specific choices are not indicated on the proxy
card, proxies will be voted in accordance with the recommendations of the Board
of Directors.
HOW TO REVOKE YOUR PROXY
Sending in a signed proxy card will not affect your right to attend the
Annual Meeting and vote in person. You may revoke your proxy at any time before
it is voted at the Annual Meeting by:
- giving written notice to the Secretary of The Banc Corporation that you
wish to revoke your proxy,
- executing and delivering to the Secretary of The Banc Corporation a
later-dated proxy, or
- attending, giving notice and voting in person at the Annual Meeting.
SOLICITATION
We will bear the costs of soliciting proxies. Some of our officers and
employees (or those of our subsidiaries) may use their personal efforts to make
additional requests for the return of proxies by telephone, mail or otherwise
and may receive proxies on our behalf. They will receive no additional
compensation for making any solicitations. We expect to reimburse brokers,
banks, custodians and other nominees for their reasonable out-of-pocket expenses
in handling proxy materials for beneficial owners of our common stock. If
management deems it necessary, we may also retain the services of a professional
proxy solicitor to aid in the solicitation of proxies from brokers, banks,
custodians and other nominees for which we will pay a fee that we expect will
not exceed $5,000 plus reimbursement for expenses.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any matters, other than those set forth in the foregoing Notice of
Annual Meeting of Stockholders, that may be brought before the Annual Meeting.
If other matters requiring a vote of the stockholders arise, the persons
designated as proxies will vote the shares of common stock represented by the
proxies in accordance with their judgment on such matters.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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 current directors and our four most highly compensated executive
officers, (b) all current directors and executive officers as a group, (c) each
stockholder known by us to be the beneficial owner of more than 5% of our
outstanding common stock and (d) each nominee for director who is not a current
director. 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 PERCENTAGE(1)(2)
OF 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) *
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) 1.20%
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, Jr. ..................................... 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).................................................. 5,767,894(26) 28.39%
James M. Link............................................... 0 *
Barry Morton................................................ 230,300(27) 1.23%
James C. White, Sr. ........................................ 8,000 *
---------------
* 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.
3
(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
and 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 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. Information regarding Forest Hill Capital, LLC is
based on the Schedule 13D dated March 9, 2005.
4
(26) Includes 1,448,757 shares subject to options that are exercisable within 60
days and 166,875 shares of restricted stock.
(27) Includes 14,000 shares subject to options that are exercisable with 60 days
and 2,500 shares of restricted stock.
The following current and retiring directors and director nominees 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; Larry D. Striplin, Jr., 2,500 shares; and Barry
Morton, 5,000 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.
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PROPOSAL NUMBER ONE
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
On March 15, 2005, our Board of Directors approved an amendment to Article
IV, Section 4.1 of our Restated Certificate of Incorporation to increase the
number of authorized shares of common stock of The Banc Corporation from 25
million to 35 million. Such approval by the Board is subject to the approval of
such amendment by the holders of a majority of the outstanding shares of our
common stock. A copy of the proposed amendment is attached to this Proxy
Statement as Annex A.
INCREASE IN AUTHORIZED COMMON STOCK
The Board of Directors recommends that the stockholders approve the
proposed amendment because it considers such amendment to be in the best
long-term and short-term interests of The Banc Corporation, its stockholders and
its other constituencies. The proposed increase in the number of authorized
shares of common stock will ensure that a sufficient number of shares will be
available, if needed, for issuance in connection with any possible future
transactions approved by the Board of Directors, including, among others, stock
splits, stock dividends, stock incentive plans, acquisitions and other corporate
purposes. The Board of Directors believes that the availability of the
additional shares for such purposes without delay or the necessity for a special
stockholders' meeting (except as may be required by applicable law or regulatory
authorities or by the rules of the Nasdaq National Market) will be beneficial to
The Banc Corporation by providing it with the flexibility to consider and
respond to future business opportunities and needs as they arise. The
availability of such additional shares will also enable us to act promptly when
the Board of Directors determines that the issuance of additional shares of
common stock is advisable. It is possible that shares of common stock may be
issued at a time and under circumstances that may increase or decrease earnings
per share and increase or decrease the book value per share of shares currently
outstanding.
Except for issuance upon conversion of our outstanding preferred stock or
upon exercise of currently outstanding stock options, or in connection with
future options or awards under our Third Amended and Restated 1998 Stock
Incentive Plan, we do not have any immediate plans, agreements, arrangements,
commitments or understandings with respect to the issuance of any additional
shares of our common stock, including those which would be authorized upon
approval of the proposed amendment.
Under our Restated Certificate of Incorporation, we currently have
authority to issue 25 million shares of common stock, par value $.001 per share,
of which 19,000,394 shares were issued and 18,729,408 shares (including 157,500
shares of restricted stock) outstanding as of April 29, 2005. In addition, as of
such date, approximately (a) 775,000 shares were reserved for issuance upon
conversion of our outstanding preferred stock, (b) 2,270,374 shares were
reserved for issuance under our Third Amended and Restated 1998 Stock Incentive
Plan, under which options to purchase a total of 1,634,009 shares were
outstanding, and an additional 49,375 shares approved for restricted stock
grants and (c) 1,690,937 shares were reserved for issuance under other stock
options granted by The Banc Corporation. After giving effect to such reserved
shares, approximately 1,263,295 shares were available for issuance on such date.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends that stockholders vote FOR
the adoption of the amendment to the Restated Certificate of Incorporation to
increase the number of authorized shares of our common stock from 25 million to
35 million. The affirmative vote of the holders of a majority of the outstanding
shares of common stock entitled to vote at the Annual Meeting will be necessary
for the approval of such amendment.
6
PROPOSAL NUMBER TWO
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO DECLASSIFY THE BOARD OF DIRECTORS
On March 15, 2005, our Board of Directors approved an amendment to Article
V, Section 5.2 of our Restated Certificate of Incorporation to delete such
Section 5.2, thereby eliminating the classification of our Board of Directors so
that each director would stand for election annually. A copy of the proposed
amendment (the "Declassification Amendment") is attached to this Proxy Statement
as Annex B. If the Declassification Amendment is adopted, we will file a
Restated Certificate of Incorporation reflecting such amendment with the
Secretary of State of the State of Delaware promptly after the Annual Meeting,
and the amendment will become effective upon such filing.
DECLASSIFICATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders approve the
Declassification Amendment because it considers such amendment to be in the best
long-term and short-term interests of The Banc Corporation, its stockholders and
its other constituencies. The Board of Directors believes that the classified
board structure has provided certain advantages to The Banc Corporation,
including the preservation of some degree of continuity of service by directors,
which in turn facilitates long-term planning and enhances the ability of the
Board of Directors to implement business strategies. The classified board
structure was originally intended to increase the commitment of members of the
Board of Directors, and the Board believes that it also protects stockholders
against potentially coercive takeover tactics where a party might attempt to
acquire control of The Banc Corporation on terms that do not offer the greatest
value to all stockholders.
On the other hand, a classified board structure can reduce the
accountability of directors. The election of directors is the primary means for
stockholders to influence corporate governance policies, and a classified board
structure means that stockholders are unable to evaluate and elect all directors
on an annual basis. Moreover, classified boards may discourage takeover
proposals and proxy contests that could have the effect of increasing
stockholder value. As a result, a number of corporations have determined that
better principles of corporate governance require that all directors of a
corporation should be elected annually.
In connection with the Board of Directors' overall plan to restructure The
Banc Corporation's corporate governance, eight of our current directors are
retiring from the Board as of this Annual Meeting. Five new candidates, along
with eight incumbent directors, are being nominated for election to the Board of
Directors.
Five of our eight incumbent directors' terms on the currently classified
Board continue to the 2006 or the 2007 annual meetings, as the case may be
("Continuing Directors"). The Continuing Directors, consistent with their
support of the immediate implementation of the Declassification Amendment, have
agreed not to serve out their full remaining terms and, instead, to stand for
election, with the other nominees, to a one-year term if the Declassification
Amendment is approved. Thus, if the stockholders approve the Declassification
Amendment, all directors will stand for election to a one-year term at this
Annual Meeting. For such purpose, and in such event, the Board of Directors has
nominated all persons identified under "Proposal Number Three -- Election of
Directors" below for election as directors for a one-year term ending at the
2006 Annual meeting or until their successors are duly elected and qualified.
Alternatively, in the event the Declassification Amendment is not approved,
the Board of Directors has nominated eight directors as follows (who, with the
five Continuing Directors whose class terms extend to 2006 or 2007, as the case
may be, will comprise a thirteen-member board): five candidates for election to
the class of 2008; one candidate to fill a vacancy in the class of 2007 created
by retirement; and two candidates to fill vacancies in the class of 2006 created
by retirement. If elected, such nominees would serve until the annual meeting of
their respective class years or until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends that stockholders vote FOR
the adoption of the amendment to the Restated Certificate of Incorporation to
declassify the Board of Directors. The affirmative vote of the holders of a
majority of the outstanding shares of common stock entitled to vote at the
Annual Meeting will be necessary for the approval of such amendment.
PROPOSAL NUMBER THREE
ELECTION OF DIRECTORS
Under our Restated Certificate of Incorporation and Bylaws, our Board of
Directors is divided into three classes, with one class to be elected at each
annual meeting of stockholders and to serve for a term of three years. If the
Declassification Amendment, described above, is approved, our Board of Directors
will cease to be classified, and each director will stand for election annually.
As described above, if the Declassification Amendment is approved, all of
the nominees for director identified below will stand for election at this
Annual Meeting, to serve for a term expiring at the 2006 Annual Meeting or until
their successors are duly elected and qualified, or until their earlier death,
resignation or removal.
The Board of Directors has no reason to believe that any of the persons
named will be unable to serve if elected. If any nominee is unable to serve as a
director, the enclosed Proxy will be voted for a substitute nominee selected by
the Board of Directors. The election of directors requires a plurality of the
votes cast by the holders of our common stock. A "plurality" means that the
individuals who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be chosen at the meeting.
Consequently, any shares not voted (whether by abstention, broker non-vote or
otherwise) have no impact on the election of directors.
NOMINEES FOR DIRECTOR(1)
For each nominee's beneficial ownership of common stock, see "Security
Ownership of Certain Beneficial Owners and Management." Set forth below is
certain additional information regarding each nominee:
NAME(2) AGE POSITION WITH THE BANC CORPORATION
------- --- ----------------------------------
C. Stanley Bailey......................... 56 Chief Executive Officer; Director
Roger Barker.............................. 58 Director
K. Earl Durden............................ 66 Director
Rick D. Gardner........................... 45 Chief Operating Officer; Nominee for
Director
Thomas E. Jernigan, Jr. .................. 40 Director
James Mailon Kent, Jr. ................... 64 Director
James M. Link............................. 63 Nominee for Director
Barry Morton.............................. 67 Nominee for Director
C. Marvin Scott........................... 55 President; Nominee for Director
Michael E. Stephens....................... 61 Director
James A. Taylor........................... 62 Director, Chairman of the Board
James A. Taylor, Jr. ..................... 40 Director
James C. White, Sr. ...................... 57 Nominee for Director
---------------
(1) If the Declassification Amendment is not adopted, the directors whose class
terms extend to 2006 or 2007, as the case may be, together with the persons
nominated to fill the class of 2008 and the vacancies in the classes of 2007
and 2006, if elected, will serve in classes as follows: Class of 2008 --
8
Messrs. Durden, Gardner, Jernigan, Link, and Taylor, Jr.; Class of
2007 -- Messrs. Kent, Scott, Stephens and Taylor; and Class of
2006 -- Messrs. Bailey, Barker, Morton and White.
(2) Mr. Barker is a member of the Audit and Compensation Committee; Messrs.
Jernigan and Kent are members of the Audit Committee; and Mr. Stephens is a
member of the Compensation and Nominating Committees.
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 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.
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.
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.
James M. Link, Lieutenant General, U.S. Army (retired), has served as
President of Teledyne Brown Engineering, Inc., Huntsville, Alabama, a subsidiary
of Teledyne Technologies, Inc., since July 2001. He previously served as Senior
Vice President, Applied Technology Group, of Science Applications International
Corporation, Huntsville, Alabama. He completed his military career as Deputy
Commanding General, U.S. Army Materiel Command, from 1998 -- 2000. Additionally,
he is a director of Dewey Electronics Corporation. General Link also serves in
various leadership positions with numerous community, educational and
philanthropic organizations, including among others: Chairman-elect of the
Huntsville/Madison County Chamber of Commerce; member of the University of
Alabama in Huntsville Foundation Board of Trustees; Co-chairman of the
Huntsville Regional Economic Growth Initiative; Co-chairman of the Tennessee
Valley BRAC Committee; and member of the Board of the Huntsville/Madison County
United Way Campaign.
Barry Morton is Chairman and Chief Executive Officer of The Robins & Morton
Group, Birmingham, Alabama, one of the largest contractors in the United States.
Before becoming Chairman and Chief Executive Officer, he served for 15 years as
President of Robins & Morton. He has served for more than five years as a
director of The Bank.
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
9
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.
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.
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 late 1997 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.
James C. White, Sr. has served as Managing Partner of Banks, Finley, White
& Co., Certified Public Accountants, Birmingham, Alabama, one of the nation's
largest and oldest minority-owned certified public accounting firms, since the
firm's inception in 1973. He has served as a director of The Bank since 2004.
SUBJECT TO THE FOREGOING, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE FOR THE ELECTION OF ALL NOMINEES IDENTIFIED ABOVE IF THE DECLASSIFICATION
AMENDMENT IS ADOPTED. THE ENCLOSED PROXY WILL BE VOTED IN FAVOR OF THOSE
NOMINEES UNLESS OTHER INSTRUCTIONS ARE GIVEN.
IF THE DECLASSIFICATION AMENDMENT IS NOT ADOPTED, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF (A) ALL NOMINEES IDENTIFIED
ABOVE AS MEMBERS OF THE CLASS OF 2008, (B) MR. SCOTT TO FILL A VACANCY CREATED
BY RETIREMENT IN THE CLASS OF 2007, AND (C) MR. MORTON AND MR. WHITE TO FILL
VACANCIES CREATED BY RETIREMENT IN THE CLASS OF 2006. IN SUCH EVENT, THE
ENCLOSED PROXY WILL BE VOTED IN FAVOR OF THOSE NOMINEES UNLESS OTHER
INSTRUCTIONS ARE GIVEN.
10
EXECUTIVE OFFICERS
The following table sets forth certain information about current executive
officers of The Banc Corporation and The Bank:
NAME AGE POSITION
---- --- --------
C. Stanley Bailey...................... 56 Chief Executive Officer; Director -- The Banc
Corporation
Duane K. Bickings...................... 53 Chief Credit Officer -- The Banc Corporation
David R. Carter........................ 53 Executive Vice President and Chief Financial Officer;
Director -- The Banc Corporation
Rick D. Gardner........................ 45 Chief Operating Officer -- The Banc Corporation
George Hall............................ 47 Chief Banking Officer -- The Bank
David R. Hiden......................... 43 Chief Information Officer -- The Bank
F. Hampton McFadden, Jr. .............. 42 Executive Vice President, General Counsel and
Secretary -- The Banc Corporation
C. Marvin Scott........................ 55 President -- The Banc Corporation
Information concerning Mr. Bailey, Mr. Gardner and Mr. Scott is set forth
above under "Nominees for Director". With the exception of Mr. Hall and Mr.
Hiden, who are officers of The Bank alone, all persons identified above hold the
same positions with The Bank as with The Banc Corporation.
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.
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.
George J. Hall joined The Bank in 2004 as Chief Banking Officer. From 1996
to 2002, he was an executive with Compass Bancshares, Inc., first as City
President in Montgomery, Alabama, then as President and CEO of the New Mexico
Bank. From 1983 to 1996, Mr. Hall served in various executive management
positions with first, Wachovia Bank and Trust and then Boston Five Cents Savings
Bank and First Bank NH.
David R. Hiden began work with The Bank in 2005 as Chief Information
Officer. From 2001 through 2003, he was Chief Information Officer, Superior
Bank, Ft. Smith, Arkansas, and from 1999 through 2000, he was IT Director First
American/AmSouth, Nashville, Tennessee. From 1979 through 1999, Mr. Hiden worked
for Barnett Bank/Bank of America, Jacksonville, Florida, where his last position
was Director, Operations Systems.
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.
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 and retiring directors were
11
"independent directors" under Rule 4200 of the NASDAQ Stock Market Marketplace
Rules during 2004: Messrs. Barker, Jernigan, Kent, and Stephens and retiring
directors James R. Andrews, M.D., Randall E. Jones, Ronald W. Orso, M.D., Harold
W. Ripps and Larry D. Striplin, Jr. For 2005, the Board has determined that
Messrs. Barker, Jernigan, Kent and Stephens and director nominees Link, Morton
and White are "independent directors". 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.
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. See "Report 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 Second
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 Mr. Jerry M. Smith, a retiring director, and Messrs. Stephens and
Barker, all of whom are independent directors as defined under NASDAQ Rule 4200.
During 2004, the Compensation Committee held four meetings. See "Executive
Compensation and Other Information -- Compensation Committee Report on Executive
Compensation."
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.
Smith, a retiring director, Stephens and Barker. 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
12
responsible for reviewing and evaluating such candidates and making
recommendations to the Board. The Nominating Committee is currently developing
such criteria, policies and procedures.
Our Bylaws provide that nominations for the office of director may be made
by stockholders only if written notice of such proposed nominations is delivered
to or mailed and received at our principal executive offices not less than 60
days nor more than 90 days prior to the meeting at which the election is to be
held; provided, however, that in the event that less than 70 days' notice, or
prior public disclosure, of the date of the meeting, is given, or made, to
stockholders, then notice by a stockholder, to be timely, must be so delivered
or mailed and received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person the stockholder proposes to nominate for election or
re-election as a director (i) the person's name, age, business address, and
residence address, (ii) the person's principal occupation or employment, (iii)
the class and number of shares of the Corporation that the person beneficially
owns and (iv) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder; and (b) as to the
stockholder giving the notice, (i) the name and record address of the
stockholder, (ii) the class or series and number of shares of capital stock of
The Banc Corporation that are owned beneficially or of record by the
stockholder, (iii) a description of all arrangements or understandings between
the stockholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
the stockholder, (iv) a representation that such stockholder intends to appear
in person or by proxy at the meeting to nominate the persons named in such
notice, and (v) any other information relating to the stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for the election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each person proposed be named as a nominee and to serve as a director, if
elected. We may require any proposed nominee to furnish such other information
as may reasonably be required to determine the eligibility of such proposed
nominee to serve as a director.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
The Board of Directors provides a process for stockholders to send
communications to the Board of Directors. Stockholders may send written
communications to the Board of Directors addressed to the Board of Directors (or
to an individual director), Attention: Secretary, The Banc Corporation, 17 North
20th Street, Birmingham, Alabama 35203. All communications will be compiled by
the Secretary of The Banc Corporation and submitted to the Board of Directors or
the individual directors.
DIRECTOR COMPENSATION
During 2004, all non-employee directors received $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 received $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. Effective July 2005, non-employee directors will
receive an annual retainer of $10,000, meeting fees of $1,500 per Board meeting,
and committee meeting fees of $1,500 per meeting for committee chairs and $1,000
per meeting for committee members, and will have the option of receiving such
fees in cash or common stock and of deferring receipt of such fees.
The following current directors and retiring directors 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, 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
13
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. We have begun discussions with our continuing directors, other
than Messrs. Taylor and Taylor, Jr., about changing the term of their deferred
compensation agreements such that the annual cost of their agreements to The
Banc Corporation will be diminished.
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.
14
EXECUTIVE COMPENSATION AND OTHER INFORMATION
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 $100,000. These executive officers are referred to
collectively as the "named executive officers." Mr. Taylor and Mr. Taylor, Jr.
ceased to be executive officers of The Banc Corporation in January 2005.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------------------- -----------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION HELD YEAR SALARY($) BONUS($) COMPENSATION(1) AWARDS(2) OPTIONS(#) COMPENSATION
-------------------------------- ---- --------- ---------- --------------- ---------- ---------- ------------
James A. Taylor................ 2004 $500,480 -- $127,080 -- 85,000 $158,459(3)
Chairman of the Board 2003 469,120 $1,117,000 157,444 -- -- $157,763(3)
and 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 Operating 2003 354,085 $ 100,000 37,733 -- --
Officer and Director 2002 333,200 -- 36,495 $105,000 50,000
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 Secretary 2002 246,000 -- 20,651 -- 10,000
---------------
(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 $123,450
(3) Payment of insurance premiums on Mr. Taylor's key man life insurance policy
maintained by The Banc Corporation.
(4) During the first quarter of 2002, The Banc Corporation transferred to Mr.
Taylor a 50% interest in the key man life insurance policy The Banc
Corporation maintains on Mr. Taylor. This amount includes the cash value of
50% of the insurance policy transferred to Mr. Taylor during the first
quarter of 2002, 50% of the cost of the insurance policy premiums plus a
"gross-up" payment to make the transaction tax neutral to Mr. Taylor. Mr.
Taylor had no life insurance policy prior to this transfer even though his
employment agreements beginning in 1997 have provided for a life insurance
policy. These amounts were non-cash compensation.
15
Option Grants in 2004. The following table contains information concerning
the grant of stock options under the Third Amended and Restated 1998 Stock
Incentive Plan, and the Commerce Bank of Alabama Incentive Stock Option Plan to
the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
ALTERNATIVE
INDIVIDUAL GRANTS TO (F) AND
------------------------------------------------------- (G): GRANT
NUMBER OF PERCENT OF TOTAL DATE VALUE
SECURITIES OPTIONS/SARS -----------
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR(1) ($/SH) DATE VALUE($)(2)
---- ------------ ---------------- -------- ---------- -----------
James A. Taylor........................ 85,000 16.80% $6.25 6/15/14 $268,600
James A. Taylor, Jr. .................. 45,000 8.89% 6.25 6/15/14 142,200
David R. Carter........................ 30,000 5.93% 6.25 6/15/14 94,800
F. Hampton McFadden, Jr. .............. 25,000 4.94% 6.25 6/15/14 79,000
---------------
(1) We granted options to purchase 506,000 shares of common stock to our
employees and directors during 2004.
(2) The fair value of the options granted was based upon the Black-Scholes
pricing model. The Banc Corporation used the following weighted average
assumption for 2004: a risk free interest rate of 4.56%, a volatility factor
of .32%, a weighted average life of options of 7 years and a dividend yield
of 0%.
Aggregated Option Exercises in 2004 and Option Values at Year End. The
following table provides information with respect to options exercised by the
named executive officers during 2004 and the number and value of securities
underlying unexercised options held by the named executive officers at December
31, 2004.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END
SHARES VALUE (#) ($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE 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
16
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
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
UPON EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN 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
========= ===== =======
---------------
(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
17
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 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");
18
- 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 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.
19
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.
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 through 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
20
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 through January 2006 subject to the following limitation. The
agreement acknowledges that Mr. Taylor, Jr. may in the future serve as an
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.
MANAGEMENT MATTERS
There are no arrangements or understandings known to us between any of our
directors, nominees for director or executive officers and any other person
pursuant to which any such person was or is to be nominated or elected as a
director or an executive officer except as otherwise disclosed herein. The
employment agreements for Mr. Bailey provides that he will be nominated to serve
as a director of The Banc Corporation, and the employment agreements for Messrs.
Scott and Gardner provide that they will be nominated to serve as directors of
The Banc Corporation 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. See "Executive Compensation and Other
Information -- Prior Employment Agreements with James A. Taylor and James A.
Taylor, Jr.," above for a description of agreements relating to their
continuation on the Board through 2007 and 2006, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee comprises Messrs. Jerry M. Smith, a retiring
director, and Messrs. Stephens and Barker. None of the members of the
Compensation Committee is a former or current officer or employee of The Banc
Corporation or any of its subsidiaries.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
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.
21
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.
STOCKHOLDER RETURN COMPARISON
Below is a line graph comparing the closing price of our common stock, the
Nasdaq Composite Index and the Nasdaq Financial Index. The following graph
assumes $100 invested in the common stock and in each index.
COMPARISON OF CUMULATIVE TOTAL RETURN
THE BANC CORPORATION, NASDAQ COMPOSITE INDEX
AND NASDAQ FINANCIAL INDEX
DECEMBER 31, 1998 -- DECEMBER 31, 2004
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------------------------------------------------
12/10/98 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
--------------------------------------------------------------------------------------------------------------------
The Banc
Corporation 100.00 99.50 61.00 42.00 55.60 62.08 68.00 65.84
Nasdaq Composite
Index 100.00 108.77 201.86 122.55 96.75 66.75 99.38 107.65
Nasdaq Financial
Index 100.00 104.98 95.57 106.09 109.65 105.55 135.21 151.91
--------------------------------------------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee is responsible for establishing a compensation
plan that will enable The Banc Corporation to compete effectively for the
services of qualified officers and key employees, to give those employees
appropriate incentive to pursue the maximization of long-term stockholder value
and to recognize those employees' success in achieving both qualitative and
quantitative goals for the benefit of The Banc Corporation. The Compensation
Committee makes recommendations as to appropriate levels of compensation for
specific individuals, as well as compensation and benefit programs for The Banc
Corporation as a whole.
22
Compensation Philosophy and Policies for Executive Officers
The Compensation Committee believes that executives of The Banc Corporation
should be rewarded based upon their success in meeting certain operational
goals, improving earnings and generating returns for stockholders. The
Compensation Committee strives to establish levels of compensation that take
these factors into account and provide appropriate recognition for past
achievement and incentive for future success. The Compensation Committee
recognizes that the market for executives with expertise and experience in the
banking industry is highly competitive. In order to attract and retain qualified
executives, the Compensation Committee believes that The Banc Corporation must
offer compensation at competitive levels. In addition, the Compensation
Committee believes that The Banc Corporation's stock incentive plans offer its
executives meaningful equity participation in The Banc Corporation's common
stock. The Compensation Committee feels that the mix of cash compensation and
equity participation will be effective in stimulating The Banc Corporation's
executives to meet both long-term and short-term goals.
The Banc Corporation's compensation program has two basic components: (i)
base salary and (ii) cash and equity-based incentive compensation.
Base Salary: The Banc Corporation feels that it has been successful in
attracting and retaining key executives. The Banc Corporation believes that its
compensation package has been and will continue to be instrumental in its
success. The Compensation Committee endeavors to establish base salary levels
for key executives that are consistent with those provided for similarly
situated executives of other publicly-held financial institutions, taking into
account each executive's areas and level of responsibility. The Banc Corporation
does not maintain a reference record of where its compensation stands with
respect to other publicly-held financial institutions.
Incentive Compensation: The Compensation Committee also recommends cash
incentive compensation for executives, based upon each executive's success in
meeting qualitative and quantitative performance goals established by the Board
of Directors and each executive's superiors. Bonus determinations are made on a
case-by-case basis, and there is no fixed relationship between any particular
performance factor and the amount of a given executive's bonus. The Compensation
Committee also believes that exceptional performance by an executive related to
specific projects or goals set by the Board of Directors and senior management
should be rewarded with special cash bonuses that are awarded from time to time
as circumstances indicate. The Compensation Committee believes that this
approach is more favorable to The Banc Corporation and provides more effective
incentives than determining bonuses on the basis of a formulary approach.
For 2005 and subsequent years, the Compensation Committee has approved a
Management Incentive Plan, which is intended to recognize and reward senior
officers of The Banc Corporation and its subsidiaries and affiliates
("Participants") who have contributed to the enhancement of stockholder value
through the achievement of corporate and personal performance goals during each
plan year.
Under the terms of the Management Incentive Plan, Participants will be
recommended by the Chief Executive Officer and approved by the Compensation
Committee of the Board of Directors, with Participants being notified by
February 15 of each plan year of their eligibility to participate in the Plan
for such year. For each such year, the Compensation Committee will establish a
threshold level of corporate financial and operational performance, and
achievement of such thresholds is a prerequisite for any award payments with
respect to such year. Participants will jointly establish with their respective
supervisors individual performance goals for each such year. Participants will
be assigned to specific potential award levels ranging from 15% to 50% of their
respective base salaries, and will be eligible to earn up to 125% of their
potential award levels depending upon corporate performance. Awards will be made
in a lump sum distribution by March 15 of the year following the plan year. The
Compensation Committee has discretion to increase the earned award payment or
award a discretionary payment in lieu of the award payment.
In addition to cash incentive compensation, The Banc Corporation utilizes
equity-based compensation in the form of stock options and other awards to
encourage its executives to meet operational goals and maximize long-term
stockholder value. Because the value of stock options granted to an executive is
directly related to
23
The Banc Corporation's success in enhancing its market value over time, the
Compensation Committee believes that its stock option programs are effective in
aligning the interests of management and stockholders.
The Compensation Committee determines stock option grants and other awards
valued in whole or in part by reference to or otherwise based on the value of
The Banc Corporation's common stock. Under The Banc Corporation's incentive
compensation plans, specific grants are determined taking into account an
executive's current responsibilities and historical performance, as well as the
executive's perceived contribution to The Banc Corporation's results of
operations. Awards are also used to provide an incentive to newly-promoted
officers at the time that they are asked to assume greater responsibilities. In
evaluating award grants, the Compensation Committee considers prior grants and
shares currently held, as well as the recipient's success in meeting operational
goals and the recipient's level of responsibility. However, no fixed formula is
utilized to determine particular grants. The Compensation Committee believes
that the opportunity to acquire a significant equity interest in The Banc
Corporation will be a strong motivation for the executives to pursue the
long-term interests of The Banc Corporation and will promote longevity and
retention of key executives. Information relating to stock options granted to
the five most highly-compensated executive officers of The Banc Corporation is
set forth under "Executive Compensation and Other Information" in this Proxy
Statement.
The Omnibus Budget Reconciliation Act of 1993 contains a provision under
which a publicly traded corporation is sometimes precluded from taking a federal
income tax deduction for compensation in excess of $1,000,000 that is paid to
the chief executive officer and the four other most highly-compensated
executives of a corporation during its tax year. Compensation in excess of
$1,000,000 continues to be deductible if that compensation is "performance
based" within the meaning of that term under Section 162(m) of the Internal
Revenue Code. The Compensation Committee is aware of the potential effects of
the Code. The Committee has chosen not to distort its methodology and
application of the factors it believes pertinent so as to ensure that all
executive compensation is deductible under Section 162(m). While the
Compensation Committee intends that The Banc Corporation's compensation plans
will meet, to the extent practical, the prerequisites for deductibility under
Section 162(m), if it develops that a portion of the compensation of one or more
executive officers is not deductible under Section 162(m), then the Compensation
Committee expects that The Banc Corporation would honor its obligations to the
executive officers under the compensation arrangements approved by the
Compensation Committee.
The Compensation Committee will continue to review and evaluate
compensation programs at least annually. When and where appropriate, the
Compensation Committee will consult with independent compensation consultants,
legal advisors and The Banc Corporation's independent auditors with respect to
the proper design of the program toward achieving The Banc Corporation's
objectives.
Chief Executive Officer Compensation: The Compensation Committee
determines our chief executive officer's equity-based compensation and reports
to the Board of Directors on other compensation arrangements with the chief
executive officer. In addition, the Compensation Committee recommends to the
Board of Directors the level of non-equity incentive compensation that is
appropriate for the chief executive officer with respect to each fiscal year of
The Banc Corporation. In making such recommendation, the Compensation Committee
takes into account The Banc Corporation's performance in the marketplace, its
success in meeting strategic goals and its success in meeting monthly and annual
performance goals established by the Board of Directors. Again, ultimate
compensation decisions are not made in a formulary manner, but in a manner which
takes into account The Banc Corporation's competitive position, its position in
the financial markets and its ability to achieve its performance goals. The
Compensation Committee believes that it is important to ensure that, if The Banc
Corporation's chief executive officer is successful in leading The Banc
Corporation to achieve the goals set by the Board of Directors, his compensation
will be at a level commensurate with that of chief executive officers of
similarly-situated publicly held financial institutions.
James A. Taylor served as The Banc Corporation's chief executive officer
from inception until January 24, 2005, when he stepped down from that position
and C. Stanley Bailey became chief executive officer. During 2004, the
Compensation Committee applied the policies and procedures described above in
determining Mr. Taylor's equity compensation and recommending his other
compensation arrangements to
24
the Board of Directors. In connection with the new agreement with Mr. Taylor
relating to his transition out of the chief executive officer role and the
establishment of Mr. Bailey's employment agreement, both of which are described
elsewhere in this Proxy Statement, the Compensation Committee took into account
the recommendations of a special committee of independent directors (consisting
of Messrs. Stephens, Kent and Barker) charged by the Board of Directors with
reviewing and negotiating the proposed arrangements with Mr. Taylor and Mr.
Bailey, and consulted extensively with BrinTech, an independent compensation
consultant. The Compensation Committee believes that the transition arrangements
with Mr. Taylor were reasonable, appropriate and beneficial to The Banc
Corporation and its stockholders, taking into account Mr. Taylor's service and
the terms of his existing employment agreement. In addition, the Compensation
Committee believes that the new arrangements with Mr. Bailey provide appropriate
incentive for Mr. Bailey to take appropriate steps to enhance stockholder value
and are consistent with the goals and policies outlined above.
Conclusion
The Compensation Committee believes that the compensation of The Banc
Corporation's executives during 2004 was appropriate. It is the intent of the
Compensation Committee to ensure that The Banc Corporation's compensation
programs continue to motivate its executives and reward them for being
responsive to the long-term interests of The Banc Corporation and its
stockholders. The Compensation Committee will continue to review and evaluate
compensation programs at least annually.
The foregoing report is submitted by the following directors of The Banc
Corporation, comprising all of the members of the Compensation Committee of the
Board of Directors during 2004.
Roger Barker
Jerry Smith
Michael E. Stephens, Chairman
25
REPORT OF THE AUDIT COMMITTEE
The members of the Audit Committee are "independent directors", as defined
under NASDAQ Rule 4200, and meet the standards required by Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934. The Audit Committee oversees The Banc
Corporation's financial reporting process and internal controls on behalf of the
Board of Directors and is responsible for the appointment, retention, oversight
and compensation of the corporation's independent auditors and the approval of
services they perform. Management has the primary responsibility for
establishing and maintaining systems of internal controls and for the
preparation of the financial statements and other financial information included
in The Banc Corporation's Annual Report. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the consolidated financial
statements with management, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles, generally accepted in the
United States, their judgments as to the quality, not just the acceptability, of
The Banc Corporation's accounting principles and such other matters as are
required to be discussed with the Audit Committee under auditing standards
generally accepted in the United States. In addition, the Audit Committee has
discussed with the independent auditors their independence from management and
The Banc Corporation, including the matters in the written disclosures required
by the Independence Standards Board.
The Audit Committee discussed with The Banc Corporation's internal and
independent auditors the overall scope and plans for their respective audits.
The Audit Committee meets with the internal and independent auditors, with and
without management present, to discuss the results of their examinations, their
evaluations of The Banc Corporation's internal controls, and the overall quality
of The Banc Corporation's financial reporting.
Based on the Audit Committee's discussions with management and the
independent auditors, as described above, and upon its review of the
representations of management and the report of the independent auditors, the
Audit Committee recommended to the Board of Directors that The Banc
Corporation's audited consolidated financial statements be included in the
annual report on Form 10-K for the fiscal year ended December 31, 2004, as filed
with the SEC.
The Audit Committee also selected Carr Riggs & Ingram, LLC, subject to
stockholder ratification, to be employed as The Banc Corporation's independent
auditors to perform the annual audit and to report on, as may be required, the
consolidated financial statements which may be filed by The Banc Corporation
with the SEC during the ensuing year.
The Audit Committee of The Banc Corporation
Roger Barker, Chairman
Thomas E. Jernigan, Jr.
James Mailon Kent, Jr.
26
PROPOSAL NUMBER FOUR
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
Subject to ratification by the stockholders, the Board of Directors has
re-appointed Carr, Riggs & Ingram, LLC, Montgomery, Alabama, as independent
auditors to audit The Banc Corporation's financial statements for the current
fiscal year. Management expects representatives of Carr, Riggs & Ingram, LLC to
be present at the Annual Meeting. They will have an opportunity to make a
statement if they desire to do so, and they are expected to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE RATIFICATION OF CARR RIGGS & INGRAM, LLC AS INDEPENDENT AUDITORS FOR THE
CURRENT FISCAL YEAR.
CHANGE IN INDEPENDENT AUDITORS
As disclosed in June 2004, after discussion between the Audit Committee of
our Board of Directors and representatives of Ernst & Young LLP, which
previously served as the independent auditors for The Banc Corporation, the
Audit Committee and Ernst & Young LLP reached a mutual decision that Ernst &
Young LLP would not stand for re-election to audit our financial statements for
the fiscal year ending December 31, 2004.
For the fiscal years ended December 31, 2003 and 2002, Ernst & Young LLP's
reports on our financial statements did not contain any adverse opinion or
disclaimer of opinion, nor were such reports qualified or modified as to
uncertainty, audit scope or accounting principles. In addition, during the
fiscal years ended December 31, 2003 and 2002 and through June 14, 2004, (1)
there were no disagreements between The Banc Corporation and Ernst & Young LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement(s), if not
resolved to the satisfaction of Ernst & Young LLP, would have caused it to make
reference to the subject matter of the disagreement(s) in connection with its
report, and (2) there were no "reportable events", as defined in Item 304(a)(1)
(v) of the Securities and Exchange Commission's Regulation S-K, except that, as
described below, certain matters relating to our internal controls as they
existed during the fiscal year ended December 31, 2002 were identified that we
and Ernst & Young LLP treated as material weaknesses in internal controls for
such year, as more fully described in Item 14 of our Annual Report on Form 10-K
for such year. No material weaknesses were identified for the fiscal year ended
December 31, 2003, the last fiscal year with respect to which Ernst & Young
served as our independent auditors.
The matters relating to our internal controls as they existed during the
fiscal year ended December 31, 2002 that we and Ernst & Young LLP treated as
material weaknesses for such year related to the following areas:
1. Internal controls governing loan approval and loan officers'
ability to originate loans in excess of authorized lending limits;
2. Internal controls governing monitoring of loan risk ratings by loan
officers and a lack of timely review of the loan portfolio by our
independent loan review function; and
3. Internal controls relating to the monitoring of past due loans to
ensure all loans over 90 days delinquent are appropriately considered for
nonaccrual status.
Prior to the discovery of the Bristol, Florida bank group situation
described in our Annual Report on Form 10-K for the fiscal year ended December
31, 2002, which ultimately caused us to restate our financial statements for the
second and third quarters of 2002, we were in the process of enhancing our
internal control for financial reporting.
In July 2002, we established a Loan Administration Services department. We
hired an experienced loan administration officer as the head of that department
and staffed the department with both current employees and new hires with
specific expertise in loan administration services. During 2003, we expanded
that department as we broadened its responsibilities and completed the
centralization of all loan files in order to
27
provide an enhanced degree of centralized supervision, monitoring and
accountability. We also added a new software program that interfaces
automatically with loan review data and our loan platform and tracks exceptions
with the loan portfolio. This software provides for regular and frequent
follow-up tracking during the term of the loan. Our Loan Administration Services
Department reviews all Loan Approval Forms on each new loan to identify any
loans that may be over a loan officer's lending limits.
In addition, throughout our banking operations we reduced the size of loans
that could be authorized by individuals, as well as reducing the number of
individuals with loan authority. We named regional credit officers who are
accountable for loans in each of our operating regions. Further, during the
first half of 2003, we increased our loan review staff. During the third quarter
of 2003, we engaged an independent loan review firm, Credit Risk Management, LLC
("CRM"), which provides independent loan reviews and other loan review services
throughout the Southeast. CRM reviewed approximately $290 million in commercial
loans that had not previously been reviewed during 2003. The combined coverage
of our loan portfolio from internal loan reviews and the CRM review in the first
three quarters of 2003 was 71%, including 90% of the loans in the Bristol
portfolio. We have subsequently contracted with CRM to conduct ongoing
supplemental loan reviews on our behalf, which reviews have largely superseded
the peer review process and serve as a complement to our internal loan review
function.
Management and loan review personnel meet at least monthly to review loan
risk rating downgrades and upgrades recommended by loan officers, as well as
charge-off and non-accrual recommendations. We have undertaken other regular
monitoring and review activities to identify loans that appear reasonably likely
to become past due and to review proposed actions to be taken with respect to
all credits rated 5 ("special mention") or worse, indicating that the credits
represent a higher risk to us. We believe these above-described actions
remediated the material weaknesses. As noted above, no material weaknesses were
identified as of December 31, 2003.
Ernst & Young LLP has furnished us with a letter addressed to the SEC in
which Ernst & Young LLP states that it agrees with the statements in the first
three paragraphs above (including the numbered subsections of the third
paragraph) and with the statements in this paragraph. We filed this letter as an
exhibit to our Current Report on Form 8-K dated June 14, 2004, as amended.
Effective June 14, 2004, our Audit Committee engaged Carr Riggs & Ingram,
LLC to serve as our independent accountants. During the fiscal years ended
December 31, 2003 and 2002 and through June 14, 2004, The Banc Corporation did
not consult Carr Riggs & Ingram, LLC regarding either:
(i) the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit opinion
that might be rendered on our financial statements, and neither a written
report was provided to us nor oral advice was provided that Carr Riggs &
Ingram, LLC concluded was an important factor considered by The Banc
Corporation in reaching a decision as to the accounting, auditing or
financial reporting issue; or
(ii) Any matter that was either the subject of a disagreement (as
defined in paragraph (a)(1)(iv) and the related instructions to Item 304 of
Regulation S-K) or a reportable event (as described in paragraph (a)(1)(v)
of Item 304 of Regulation S-K).
AUDIT FEES
The aggregate fees of Ernst & Young for professional services rendered for
the audit of The Banc Corporation's financial statements for the fiscal year
ended December 31, 2003 were $688,800.
The aggregate fees of Carr, Riggs & Ingram 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 for The Banc Corporation's Quarterly Reports on Form 10-Q and
statutory audits for the fiscal year ended December 31, 2004 were $370,000.
28
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.
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 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.
STOCKHOLDER PROPOSALS FOR
NEXT ANNUAL MEETING OF STOCKHOLDERS
Any proposals that our stockholders wish to have included in our proxy
statement and form of proxy for the 2006 annual meeting of stockholders must be
received by us no later than the close of business on February 15, 2006. You may
also submit a proposal for presentation at the annual meeting of stockholders to
be held in 2006, but not to have the proposal included in our proxy statement
and form of proxy relating to that meeting. If notice of any such proposal is
not received by us by the close of business on February 15, 2006, then we will
not address the proposal in our proxy statement relating to that meeting, and
all proxies solicited and received by the Board of Directors will be deemed to
have confirmed discretionary authority to vote on any such proposal. Any
proposals should be sent to:
The Banc Corporation
17 North Twentieth Street
Birmingham, Alabama 35203
Attention: F. Hampton McFadden, Jr., Secretary
29
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors does not
know of any business which will be presented for consideration at the Annual
Meeting other than that specified herein and in the Notice of Annual Meeting of
Stockholders, but if other matters are presented, it is the intention of the
persons designated as proxies to vote in accordance with their judgments on such
matters.
Please SIGN, DATE and RETURN the enclosed Proxy promptly.
By Order of the Board of Directors
F. Hampton McFadden, Jr.
Secretary
Birmingham, Alabama
May __, 2005
30
ANNEX A
PROPOSED AMENDMENT TO ARTICLE IV, SECTION 4.1 OF THE RESTATED
CERTIFICATE OF INCORPORATION OF THE BANC CORPORATION, AS
APPROVED BY THE BOARD OF DIRECTORS ON MARCH 15, 2005
RESOLVED, that, subject to the approval by the affirmative vote of the
holders of a majority of the issued and outstanding common stock of the
Corporation at the 2005 Annual Meeting of Stockholders of the Corporation, the
first paragraph of Article IV, Section 4.1 of the Restated Certificate of
Incorporation of the Corporation shall be and read as follows:
SECTION 4.1 Authorization of Capital. The total number of shares of all
classes of capital stock which the Corporation shall have authority to issue is
Forty Million (40,000,000) shares, comprising Thirty-Five Million (35,000,000)
shares of Common Stock, with a par value of $.001 per share, and Five Million
(5,000,000) shares of Preferred Stock, with a par value of $.001 per share, as
the Board of Directors may decide to issue pursuant to Section 4.3, which
constitutes a total authorized capital of all classes of capital stock of Forty
Thousand Dollars ($40,000.00).
A-1
ANNEX B
PROPOSED AMENDMENT TO ARTICLE V, SECTION 5.2 OF THE RESTATED
CERTIFICATE OF INCORPORATION OF THE BANC CORPORATION, AS
APPROVED BY THE BOARD OF DIRECTORS ON MARCH 15, 2005
RESOLVED, that, subject to the approval by the affirmative vote of the
holders of a majority of the issued and outstanding common stock of the
Corporation at the 2005 Annual Meeting of Stockholders of the Corporation,
Article V, Section 5.2 of the Restated Certificate of Incorporation of the
Corporation shall be deleted and the remaining sections of Article V shall be
renumbered accordingly.
B-1
PRELIMINARY COPY
PROXY THE BANC CORPORATION PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE BANC CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 15, 2005
The undersigned hereby appoints C. Stanley Bailey and C. Marvin Scott, either
one of whom may act without joinder of the other, with full power of
substitution and ratification, attorneys-in-fact and Proxies of the undersigned
to vote all shares of common stock of The Banc Corporation which the undersigned
is entitled to vote at the 2005 Annual Meeting of Stockholders to be held at
10:00 a.m. Central Daylight Time on Tuesday, June 15, 2005, at our principal
executive offices at 17 North 20th Street, Birmingham, Alabama 35203, and at any
and all adjournments thereof:
1.AMENDMENT TO INCREASE AUTHORIZED CAPITAL STOCK. To amend the Corporation's
Restated Certificate of Incorporation to increase the number of authorized
shares of common stock to 35 million shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2.AMENDMENT TO DECLASSIFY BOARD OF DIRECTORS. To amend the Corporation's
Restated Certificate of Incorporation to declassify the Board of Directors so
that all Directors are elected annually.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3.ELECTION OF DIRECTORS. To elect as Directors for a one-year term ending on the
date of the Annual Meeting of Stockholders in 2006 the following individuals
(provided, however, that if Proposal 2 above is not approved, a vote "FOR" the
nominees below will constitute a vote to elect Messrs. Durden, Gardner,
Jernigan, Link and Taylor, Jr. for a three-year term ending at the 2008 Annual
Meeting, Mr. Scott for a two-year term ending at the 2007 Annual Meeting, and
Messrs. Morton and White to a one-year term ending at the 2006 Annual Meeting,
with all other nominees who are current Directors continuing to serve for
their current terms expiring in 2006 or 2007).
C. Stanley Bailey James Mailon Kent, Jr Michael E. Stephens Roger Barker
James A. Taylor K. Earl Durden Barry Morton James A. Taylor, Jr.
C. Marvin Scott James C. White, Sr. Thomas E. Jernigan, Jr.
C. Stanley Bailey James M. Link
James A. Taylor Rick D. Gardner
C. Marvin Scott
[ ] FOR [ ] WITHHOLD
INSTRUCTIONS: To withhold vote for any individual(s) nominated as Directors in
Item 1 above write names below:
--------------------------------------------------------------------------------
4.RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the appointment
of Carr, Riggs & Ingram, LLC as independent auditor to audit The Banc
Corporation's financial statements for the 2005 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, Proxies are authorized to vote upon such other business
as may properly come before the 2005 Annual Meeting of Stockholders.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS INDICATED, THE SHARES WILL BE VOTED FOR ALL DIRECTOR
NOMINEES AND FOR ALL PROPOSALS. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
OF THE DIRECTOR NOMINEES AND FOR ALL PROPOSALS.
Dated: , 2005
----------------------------
--------------------------------------------
(Print Name)
--------------------------------------------
(Signature of Stockholder(s)
PLEASE DATE, SIGN AND RETURN THIS PROXY TO THE
BANC CORPORATION IN THE ENCLOSED ENVELOPE. THANK
YOU.