Edgar Filing: BANC CORP

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 19, 2001

REGISTRATION NO. 333-69734

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE BANC CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 6711 63-1201350
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)

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17 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 327-3600
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
F. HAMPTON MCFADDEN, JR.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE BANC CORPORATION, 17 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 327-3600
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
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COPIES TO:

ROBERT E. LEE GARNER A. GEORGE IGLER
HASKELL SLAUGHTER YOUNG & REDIKER, L.L.C. IGLER & DOUGHERTY, P.A.
1200 AMSOUTH/HARBERT PLAZA 1501 EAST PARK AVENUE
1901 SIXTH AVENUE NORTH TALLAHASSEE, FLORIDA 32301
BIRMINGHAM, ALABAMA 35203 (850) 878-2411
(205) 251-1000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.

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PROPOSED MERGER -- YOUR VOTE IS VERY IMPORTANT

CF Bancshares Stockholders:

The Board of Directors of CF Bancshares, Inc. has approved the acquisition
of CF Bancshares by The Banc Corporation. The acquisition will be structured as
a merger of a subsidiary of The Banc Corporation into CF Bancshares with CF
Bancshares surviving as a wholly-owned subsidiary of The Banc Corporation.

If we complete the acquisition, for each share of CF Bancshares common
stock you own, you will receive either (1) a number of shares of The Banc
Corporation common stock based on a conversion formula, or (2) at your election,
cash as described in this prospectus-proxy statement. You will be entitled to
receive at least $90.00 in cash or that amount in The Banc Corporation common
stock for each share of CF Bancshares common stock that you own if we complete
the merger. The amount of cash, if elected, or the number of shares of The Banc
Corporation common stock or a combination of both that you will receive will be
increased based on 50% of the net earnings of CF Bancshares from June 30, 2001
to the closing date. For a discussion of the conversion formula and the election
option to receive cash instead of The Banc Corporation common stock, see "The
Merger -- Terms of the CF Bancshares Merger" and "Procedures for Making a Cash
Election."

We expect that the merger will not qualify as a tax-free reorganization
under the Internal Revenue Code, in which case all CF Bancshares stockholders
will recognize gain or loss for federal income tax purposes upon the exchange of
their shares of CF Bancshares for The Banc Corporation common stock or cash. You
should carefully read the material federal tax consequences beginning on page 22
of this prospectus proxy statement.

CF Bancshares has scheduled a special meeting for its stockholders to vote
on the merger to be held at CF Bancshares' executive offices located at 401
Cecil G. Costin, Sr. Boulevard, Port St. Joe, Florida 32457 at 5:00 p.m., on
November 28, 2001. We cannot complete the merger without the approval of the
holders of a majority of the outstanding shares of CF Bancshares. Your board of
directors unanimously recommends that you vote 'FOR' the merger.

The Banc Corporation common stock is quoted on the Nasdaq Stock Market
under the symbol "TBNC."

YOUR VOTE IS IMPORTANT. PLEASE TAKE THE TIME TO VOTE ON THE PROPOSALS BY
COMPLETING AND MAILING THE ENCLOSED PROXY CARD, EVEN IF YOU PLAN TO ATTEND THE
STOCKHOLDERS' MEETING. THIS PROSPECTUS-PROXY STATEMENT PROVIDES YOU WITH
DETAILED INFORMATION ABOUT THE PROPOSED MERGER. IN ADDITION, YOU MAY OBTAIN
INFORMATION ABOUT THE BANC CORPORATION FROM DOCUMENTS THAT WE HAVE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. WE ENCOURAGE YOU TO READ THIS ENTIRE
DOCUMENT CAREFULLY. YOU SHOULD ALSO CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 9 OF THIS PROSPECTUS-PROXY STATEMENT.

NEITHER THE SECURITIES EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS-PROXY STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES BEING OFFERED BY THE BANC
CORPORATION ARE NOT BANK ACCOUNTS OR DEPOSITS, NOT FEDERALLY INSURED BY THE FDIC
AND NOT INSURED BY ANY OTHER STATE OR FEDERAL AGENCY.

This prospectus-proxy statement is dated October 19, 2001, and is first
being mailed to stockholders of CF Bancshares on or about October 19, 2001.

CF BANCSHARES, INC.
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD NOVEMBER 28, 2001

5:00 P.M.

401 CECIL G. COSTIN, SR. BOULEVARD
PORT ST. JOE, FLORIDA 32457

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CF Bancshares, Inc. will hold a special meeting of stockholders at CF
Bancshares' executive offices located at 401 Cecil G. Costin, Sr. Boulevard,
Port St. Joe, Florida 32457 at 5:00 p.m., on November 28, 2001. At the special
meeting, the following matters will be presented for stockholder vote:

1. Merger. A proposal to approve a Reorganization Agreement and Plan
of Merger, dated as of August 30, 2001, by and among The Banc Corporation,
a Delaware corporation headquartered in Birmingham, Alabama, TBC Merger
Corporation, a Florida corporation, The Bank, an Alabama banking
corporation, Citizens Federal Savings Bank of Port St. Joe, a
federally-chartered savings association and CF Bancshares, a Florida
corporation, and the transactions contemplated thereby. The Plan of Merger,
which describes the merger in more detail, is included in the accompanying
prospectus-proxy statement as Annex A.

2. Adjournment. The adjournment of the special meeting to solicit
additional proxies in the event there are not sufficient votes to approve
the merger.

If the proposed merger is completed, TBC Merger Corporation will merge into
CF Bancshares, with CF Bancshares as the surviving corporation and a
wholly-owned subsidiary of The Banc Corporation. The Banc Corporation will then
merge CF Bancshares into The Banc Corporation. CF Bancshares stockholders will
receive either cash or the number of shares of The Banc Corporation common stock
calculated as discussed in the attached prospectus-proxy statement for each
share of CF Bancshares common stock they own. CF Bancshares then will cease to
exist as a separate corporate entity. Consummation of the merger is subject to
certain conditions, including the approval and adoption of the Plan of Merger by
holders of at least a majority of the CF Bancshares common stock entitled to
vote at the special meeting.

Stockholders of CF Bancshares have a right to dissent from the proposed
merger and obtain payment in cash of the appraised or fair value of their shares
of CF Bancshares common stock by complying with the applicable provisions of
Florida law. The full text of Sections 607.1301 through 607.1320 of the Florida
Statutes, which describes the procedures to be followed by stockholders who
choose to dissent under Florida law, are included as Annex B to the
prospectus-proxy statement and should be read carefully.

Only stockholders of record at the close of business on October 17, 2001,
will be entitled to notice of and to vote at the CF Bancshares special meeting
or any adjournments or postponements thereof.

The Board of Directors of CF Bancshares unanimously recommends that holders
of CF Bancshares common stock vote "FOR" the proposals listed above.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU OWN. EVEN IF YOU PLAN TO ATTEND THE
SPECIAL MEETING, WE URGE YOU TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE. IF YOU ATTEND
THE SPECIAL MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN
MAY BE REVOKED BY YOU AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER DESCRIBED
IN THE PROSPECTUS-PROXY STATEMENT.

BY ORDER OF THE BOARD OF DIRECTORS

Sincerely,

/s/ GREG JOHNSON
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Greg Johnson
President and Chief Executive Officer

October 19, 2001

FORWARD-LOOKING STATEMENTS

Each company makes forward-looking statements in this prospectus-proxy
statement that are subject to risks or uncertainties that could cause actual
results to differ materially from those contemplated by the forward-looking
statements. These forward-looking statements include information about possible
or assumed future results of operations or performance of the combined company
after the proposed mergers, future economic performance, plans and objectives of
management for future operations and other financial items that are based on the
beliefs and assumptions made by and currently available to management. When we
use the words "estimate," "project," "intend," "anticipate," "expect" and
similar expressions, we are making forward-looking statements. Many possible
events or factors could affect the future financial results and performance of
each of our companies and the combined company after the proposed mergers. This
could cause results or performance to differ materially from those expressed in
our forward-looking statements. You are cautioned not to place undue reliance on
these forward looking statements, which speak only to the date of this
prospectus-proxy statement. In addition, you should consider carefully these
risks when you vote on the merger. These events could include any of the
following:

- Our revenues following the merger may be lower or our costs may be
greater than expected, or we may not fully or timely realize our expected
cost savings from the merger;

- We may have more trouble integrating acquired businesses or retaining key
personnel or customers than expected;

- Competitive pressures among depository or other financial institutions
may increase significantly;

- General economic or business conditions may be less favorable than
expected either nationally or in the states where the companies do
business;

- Adverse changes may occur in the market for stocks of smaller or
community banks;

- We may have more trouble obtaining regulatory approvals for the proposed
mergers than expected;

- It may be more expensive, or take longer, than expected to integrate our
information systems; and

- Legislative or regulatory changes may adversely affect our business.

All subsequent written and oral forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in the paragraph above. For
additional information, please refer to the discussion under "Risk Factors" on
page 9.

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YOU SHOULD RELY ONLY ON INFORMATION PROVIDED IN THIS PROSPECTUS-PROXY
STATEMENT. NEITHER THE BANC CORPORATION NOR CF BANCSHARES HAS AUTHORIZED ANYONE
ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. THE INFORMATION IN THIS
PROSPECTUS-PROXY STATEMENT ABOUT THE BANC CORPORATION AND ITS SUBSIDIARIES HAS
BEEN SUPPLIED BY THE BANC CORPORATION; THE INFORMATION IN THIS PROSPECTUS-PROXY
STATEMENT ABOUT CF BANCSHARES AND CITIZENS FEDERAL HAS BEEN SUPPLIED BY CF
BANCSHARES. ALTHOUGH NEITHER THE BANC CORPORATION NOR CF BANCSHARES HAS ACTUAL
KNOWLEDGE THAT WOULD INDICATE THAT ANY STATEMENTS OR INFORMATION (INCLUDING
FINANCIAL STATEMENTS) RELATING TO THE OTHER PARTY CONTAINED HEREIN ARE
INACCURATE OR INCOMPLETE, NEITHER THE BANC CORPORATION, ON THE ONE HAND, NOR CF
BANCSHARES, ON THE OTHER HAND, WARRANTS THE ACCURACY OR COMPLETENESS OF SUCH
STATEMENTS OR INFORMATION AS THEY RELATE TO ANY OTHER PARTY. THE BANC
CORPORATION IS NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE
OFFER IS NOT PERMITTED. CF BANCSHARES IS NOT SOLICITING PROXIES IN ANY STATE
WHERE THE SOLICITATION OF PROXIES IS NOT PERMITTED.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS.................................. i
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... v
SUMMARY OF PROSPECTUS-PROXY STATEMENT....................... 1
The Companies............................................. 1
The Banc Corporation................................... 1
CF Bancshares, Inc. ................................... 1
The Merger................................................ 1
Reasons for the Merger.................................... 2
Management of the Surviving Corporation................... 2
The Special Meeting....................................... 2
Recommendation to CF Bancshares Stockholders.............. 2
Vote Required............................................. 2
Material Federal Income Tax Consequences.................. 2
What CF Bancshares Stockholders Will Receive.............. 3
What Will You Receive if You Elect Cash................... 3
Other Interests of Officers and Directors of CF Bancshares
in the Merger.......................................... 4
Conditions to the Merger.................................. 4
No Solicitation By CF Bancshares.......................... 4
Regulatory Approvals...................................... 4
Termination of the Plan of Merger......................... 4
Accounting Treatment...................................... 5
Dissenters' Rights of CF Bancshares Stockholders.......... 5
Differences in Stockholders' Rights....................... 5
Risk Factors.............................................. 5
Selected Historical and Pro Forma Financial Data.......... 6
Market Information and Dividend Policy.................... 6
Listing of The Banc Corporation Common Stock.............. 7
Comparative Per Share Information......................... 7
RISK FACTORS................................................ 9
Our ability to sustain growth involves risks.............. 9
We cannot predict loan losses or the adequacy of allowance
for loan losses........................................ 9
Fluctuations in interest rates may affect our interest
income................................................. 9
Geographic concentration and significance of local
economic conditions may affect our profitability....... 10
We are subject to extensive governmental regulation....... 10
Our Restated Certificate of Incorporation and Bylaws and
Delaware law may prevent takeover by another company... 10
Issuance of preferred stock may have possible adverse
effects................................................ 11
There are restrictions on our ability to pay dividends.... 11
We are dependent on key management........................ 11
The banking industry is highly competitive................ 12
Our Management holds a large portion of The Banc
Corporation common stock............................... 12
Possible volatility of stock price may affect the market
price of The Banc Corporation common stock............. 12
Stockholders may experience risks relating to federal
income taxes........................................... 12
THE SPECIAL MEETING......................................... 13
Date, Place and Time...................................... 13
Record Date, Quorum and Voting............................ 13
Vote Required............................................. 13
Voting and Revocation of Proxies.......................... 13
Solicitation of Proxies................................... 14
THE MERGER.................................................. 15
Terms of the Merger....................................... 15
Cash Election Option...................................... 16
Procedures for Making a Cash Election..................... 16

Exchange of Certificates.................................................................................. 17
Background of and Reasons for the Merger; Recommendation of CF Bancshares Board of Directors.............. 18
Effective Time of the Merger.............................................................................. 20
Conditions to the Merger.................................................................................. 20
Representations and Covenants............................................................................. 21
Regulatory Approvals...................................................................................... 21
Business Pending the Merger............................................................................... 21
Resale of The Banc Corporation Common Stock by Affiliates................................................. 22
Interests of Certain Persons in the Merger................................................................ 23
Accounting Treatment...................................................................................... 24
Material Federal Income Tax Consequences.................................................................. 24
No Solicitation of Transactions........................................................................... 25
Expenses.................................................................................................. 26
Indemnification........................................................................................... 26
Rights of Dissenting Stockholders......................................................................... 26
OPERATIONS AND MANAGEMENT OF THE BANC CORPORATION AFTER THE MERGER.......................................... 28
Operations................................................................................................ 28
Management................................................................................................ 28
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS............................................. 29
SELECTED FINANCIAL DATA -- THE BANC CORPORATION............................................................. 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- THE BANC
CORPORATION............................................................................................... 36
Basis of Presentation..................................................................................... 36
Recent Developments....................................................................................... 36
Forward Looking Statements................................................................................ 36
Financial Overview........................................................................................ 37
Results of Operations..................................................................................... 37
Six Months Ended June 30, 2001, compared with six months ended June 30, 2000........................... 37
Year Ended December 31, 2000, compared with year ended December 31, 1999............................... 38
Year Ended December 31, 1999, compared with year ended December 31, 1998............................... 40
Net Interest Income....................................................................................... 41
Market Risk -- Interest Rate Sensitivity.................................................................. 43
Liquidity................................................................................................. 44
Financial Condition....................................................................................... 44
Impact of Inflation....................................................................................... 53
BUSINESS OF THE BANC CORPORATION............................................................................ 54
General................................................................................................... 54
Strategy.................................................................................................. 55
Lending Activities........................................................................................ 55
Loan Portfolio......................................................................................... 56
Credit Procedures and Review........................................................................... 56
Deposits.................................................................................................. 57
Competition............................................................................................... 57
Employees................................................................................................. 57
Supervision and Regulation................................................................................ 57
Instability of Regulatory Structure....................................................................... 61
Effect on Economic Environment............................................................................ 61
Properties................................................................................................ 61
Legal Proceedings......................................................................................... 62
MANAGEMENT OF THE BANC CORPORATION.......................................................................... 63
Directors and Executive Officers.......................................................................... 63

iii

Certain Information Concerning the Board of Directors and
its Committees......................................... 66
Executive Compensation.................................... 67
Employment Agreements..................................... 69
Director Compensation..................................... 71
Management Matters........................................ 71
Compensation Committee Interlocks and Insider
Participation.......................................... 71
Certain Transactions and Relationships.................... 72
PRINCIPAL STOCKHOLDERS OF THE BANC CORPORATION.............. 73
SELECTED FINANCIAL DATA -- CF BANCSHARES.................... 75
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- CF BANCSHARES................ 76
Basis of Presentation..................................... 76
Forward Looking Statements................................ 76
Pending Acquisition....................................... 76
Financial Overview........................................ 76
Results of Operations..................................... 76
Six months ended June 30, 2001, Compared with six
months Ended June 30, 2000............................ 76
Year ended December 31, 2000, Compared with Year Ended
December 31, 1999..................................... 77
Year Ended December 31, 1999, Compared with Year Ended
December 31, 1998..................................... 78
Net Interest Income....................................... 79
Market Risk -- Interest Rate Sensitivity.................. 81
Liquidity................................................. 82
Financial Condition....................................... 82
Impact of Inflation....................................... 88
BUSINESS OF CF BANCSHARES................................... 89
Principal Stockholders.................................... 89
Management of CF Bancshares............................... 90
Market for CF Bancshares Common Stock..................... 91
COMPARISON OF RIGHTS OF CF BANCSHARES STOCKHOLDERS AND THE
BANC CORPORATION STOCKHOLDERS............................. 92
Classes and Series of Capital Stock....................... 92
Size and Election of the Board of Directors............... 92
Removal of Directors...................................... 93
Dividends................................................. 93
Conversion and Dissolution................................ 93
Amendment or Repeal of the Incorporation Documents and
Bylaws................................................. 94
Special Meetings of Stockholders.......................... 94
Liability of Directors.................................... 95
DESCRIPTION OF CAPITAL STOCK OF THE BANC CORPORATION........ 95
Authorized Capital Stock.................................. 95
The Banc Corporation Common Stock......................... 96
The Banc Corporation Preferred Stock...................... 96
Certain Provisions of the Corporation's Certificate of
Incorporation and Delaware Law......................... 96
Limitations on Liability of Officers and Directors........ 97
Transfer Agent and Registrar.............................. 98
EXPERTS..................................................... 98
LEGAL MATTERS............................................... 98
FINANCIAL STATEMENTS........................................ F-1
Annex A Reorganization Agreement and Plan of Merger........ A-1
Annex B Dissenters' Rights under the Florida Business
Corporation Act........................................... B-1

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHAT SHOULD I DO NOW?

A: After carefully reviewing this document, please indicate on your proxy card
how you want to vote and sign and date your proxy card. Mail your signed
proxy card in the enclosed return envelope as soon as possible to ensure
that your shares are represented at the special meeting.

If you sign, date and send in your proxy and do not indicate how you want
to vote, your proxy will be voted in favor of the merger. If you do not
sign and send in your proxy and if you do not attend and cast your vote in
person at the special meeting, it will have the same effect as a vote
against the merger.

Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER?

A: We expect that the merger will not qualify as a tax-free reorganization
under the Internal Revenue Code. If the merger does not qualify as a
reorganization, all of the CF Bancshares stockholders will recognize gain
or loss for federal income tax purposes upon the exchange of their shares
of CF Bancshares for The Banc Corporation common stock or cash. However,
the merger may qualify as a reorganization if the amount of cash elected to
be received is less than 60% of the total consideration. If that occurs, a
CF Bancshares stockholder who receives The Banc Corporation common stock
may have the amount of gain that he recognizes for federal income tax
purposes limited to the amount of cash, if any, that he receives in the
merger. To review the tax consequences in greater detail, see pages 24 and
25.

Q: HOW DO I ELECT TO RECEIVE CASH?

A: If you wish to receive cash instead of The Banc Corporation common stock
for any or all of your shares of CF Bancshares common stock, you must
properly complete the cash election form and follow the instructions for
making a cash election that we describe on page 16 of this prospectus-proxy
statement.

Q: HOW CAN I RECEIVE THE BANC CORPORATION COMMON STOCK?

A: If you wish to receive The Banc Corporation common stock for any or all of
your shares of CF Bancshares common stock, you must follow the instructions
for exchanging your certificates that we describe on page 3, 15 and 17 of
this prospectus-proxy statement.

Q: WHAT WILL I RECEIVE?

A: The number of shares of The Banc Corporation common stock or, if you elect,
the amount of cash you will receive for your shares of CF Bancshares common
stock will not be finalized until the Closing Date. You will be entitled to
receive at least $90.00 in cash or that amount in The Banc Corporation
common stock for each share of CF Bancshares common stock that you own. The
amount of cash, if elected, or the number of shares of The Banc Corporation
common stock that you will receive will be increased based on 50% of the
net earnings of CF Bancshares from June 30, 2001 to the closing date. The
number of shares of Corporation common stock you will receive for the
shares of CF Bancshares common stock that you own is calculated in three
steps. The maximum number of shares of The Banc Corporation common stock
that could be exchanged is calculated by dividing the purchase price of
$15,250,000 plus 50% of the net earnings of CF Bancshares from June 30,
2001, until the closing date by the closing date trading price. The closing
date trading price is the average of the last sales price for The Banc
Corporation common stock on Nasdaq for the 20 consecutive trading days
ending three trading days prior to the special meetings. The number of
shares of The Banc Corporation common stock that you will receive in
exchange for your shares of CF Bancshares common stock is equal to the
product of (1) the number of shares of CF Bancshares common stock owned by
you, multiplied by (2) the quotient of the maximum number of shares of The
Banc Corporation common stock that could be issued, divided by the total
number of shares of CF Bancshares common stock outstanding, which, as of
August 30, 2001, was 169,345 shares.

Q: CAN I CHANGE OR REVOKE MY CASH ELECTION ONCE I HAVE MAILED MY SIGNED FORM?

A: Yes. You can change or revoke your cash election in writing at any time
prior to the election deadline of .

Q: WHAT ARE THE CONSEQUENCES IF I DO NOT PROPERLY COMPLETE AND RETURN THE CASH
ELECTION FORM?

A: If you do not make a proper or timely election to receive cash, you will
receive The Banc Corporation common stock in exchange for all of your
shares of CF Bancshares stock in the merger.

Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways. First, you can send
a written notice stating that you would like to revoke your proxy. Second,
you can complete and submit a new proxy card. If you choose either of these
two methods, you must submit your notice of revocation or your new proxy
card to CF Bancshares at the address below. Third, you can attend the
special meeting and vote in person. Simply attending the meeting, however,
will not revoke your proxy.

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. After the merger is completed, we will send you written instructions on
exchanging your stock certificates for cash and/or common stock of The Banc
Corporation.

Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A: We are working towards completing the merger as quickly as possible. In
addition to stockholder approval, we must also obtain regulatory approvals.
We hope to complete the merger by December 31, 2001.

Q: WHO CAN HELP ANSWER MY QUESTIONS?

A: If you have more questions about the merger, you should contact:

Greg Johnson, President
CF Bancshares, Inc.
401 Cecil G. Costin, Sr. Boulevard
Port St. Joe, Florida 32457
Telephone: 850-277-1416

SUMMARY OF PROSPECTUS-PROXY STATEMENT

This summary highlights selected information from this document and may not
contain all of the information that is important to you. You should read
carefully this entire document and the documents to which we have referred you.
This will help you to understand the merger and related matters fully and their
legal terms.

THE COMPANIES

(See pages 54 and 89)

The Banc Corporation. The Banc Corporation is a registered financial
holding company headquartered in Birmingham, Alabama and incorporated under
Delaware law. The Banc Corporation provides banking and other financial services
in Alabama and Florida through its banking subsidiary, The Bank. The Bank, an
Alabama banking corporation headquartered in Birmingham, Alabama, is
wholly-owned by The Banc Corporation and has 22 locations in Alabama and nine in
the panhandle area of Florida. The Florida branches of The Bank operate as
Emerald Coast Bank, a division of The Bank, and C&L Bank, a division of The
Bank. One additional branch of The Bank is scheduled to open in Florida in the
fall of 2001. TBC Merger Corporation, a Florida corporation, is a wholly owned
subsidiary of The Banc Corporation.

As of June 30, 2001, The Banc Corporation had assets of approximately $1.16
billion, loans of approximately $912.1 million, deposits of approximately $910.3
million and stockholders equity of approximately $77.8 million.

The principal executive offices of The Banc Corporation are:

The Banc Corporation
17 North 20th Street
Birmingham, Alabama 35203
(205) 327-3600

CF Bancshares, Inc. CF Bancshares, established in 1996, is a registered
thrift holding company and incorporated under Florida law. Through its
subsidiary, Citizens Federal Savings Bank of Port St. Joe, CF Bancshares
provides community banking services in Port St. Joe, Apalachicola and Mexico
Beach, Florida. As of June 30, 2001, CF Bancshares had total assets of
approximately $105.2 million, loans of approximately $88.2 million, deposits of
approximately $80.2 million and stockholders' equity of approximately $8.1
million.

The principal executive offices of CF Bancshares are:

CF Bancshares, Inc.
401 Cecil G. Costin, Sr. Boulevard
Port St. Joe, Florida 32457
Telephone: 850-277-1416

THE MERGER
(See page 15)

If the conditions for completing the merger are satisfied, TBC Merger
Corporation will merge with CF Bancshares, and CF Bancshares will be the
surviving corporation and become a wholly-owned subsidiary of The Banc
Corporation. After this merger, CF Bancshares will be merged into The Banc
Corporation. In a related transaction, Citizens Federal will be merged into The
Bank. Certain officers of Citizens Federal will become officers of The Bank, and
the directors of Citizens Federal will become advisory directors for the current
Citizens Federal branches.

We have attached the Plan of Merger to this prospectus-proxy statement as
Annex A. The plan of merger is the legal document that establishes the terms and
conditions of the merger, and you should read the entire document.

REASONS FOR THE MERGER
(See pages 18 through 20)

The boards of directors of The Banc Corporation and CF Bancshares have
identified various benefits that are likely to result from the merger. The
boards of directors expect the merger to:

- enhance the franchise and resources of the companies;

- increase the presence of The Banc Corporation in certain geographic
areas;

- increase the profitability of The Banc Corporation's operations through
cost savings, operating efficiencies, economies of scale, lower financing
costs and stronger market positions; and

- provide liquidity to the stockholders of CF Bancshares who do not elect
to receive cash by giving them a security for which there is a public
trading market.

These and other reasons identified by each board for recommending and
approving the merger are explained in greater detail on pages 18 through 20 of
this document.

MANAGEMENT OF THE SURVIVING CORPORATION
(See page 28)

After the mergers, The Banc Corporation will be managed by the same Board
of Directors and executive officers as before the mergers.

THE SPECIAL MEETING
(See page 13)

The special meeting to vote on the proposed merger will be held on the
date, time and place as follows:

CF Bancshares, Inc.

November 28, 2001

5:00 p.m.

401 Cecil G. Costin, Sr. Boulevard
Port St. Joe, Florida 32457

RECOMMENDATION TO CF BANCSHARES STOCKHOLDERS

The Board of Directors of CF Bancshares believes that the merger is in the
best interests of CF Bancshares and its stockholders and recommends that
stockholders vote "FOR" the approval and adoption of the Plan of Merger.

VOTE REQUIRED

To approve the merger, a majority of the CF Bancshares common stock
entitled to vote at the meeting must vote in favor of the Plan of Merger. The
directors of CF Bancshares, who collectively own approximately 17.1% of the
outstanding CF Bancshares common stock, have appointed James A. Taylor as their
proxy to vote their shares in favor of the Plan of Merger.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES
(See pages 24 and 25)

The Banc Corporation and CF Bancshares expect that the merger will not
qualify as a reorganization under the Internal Revenue Code. If the merger does
not qualify as a reorganization, all of the CF Bancshares stockholders will
recognize gain or loss for federal income tax purposes upon the exchange of
their shares of CF Bancshares for The Banc Corporation common stock. However,
the merger may qualify as a reorganization if the amount of cash elected be
received is less than 60% of the total consideration. If that occurs, a CF
Bancshares stockholder who receives The Banc Corporation common stock may have
the amount of gain that he recognizes for federal income tax purposes limited to
the amount of cash, if any, that he receives in the

merger. The tax consequences of the merger to you will depend on the facts of
your own situation. You are advised to consult your tax advisor as to the tax
consequences of the merger to you.

WHAT CF BANCSHARES STOCKHOLDERS WILL RECEIVE
(See page 15)

When the merger is completed, CF Bancshares' stockholders will have the
right to receive cash, The Banc Corporation common stock or a combination of
cash and The Banc Corporation common stock in exchange for their shares of CF
Bancshares common stock. You will be entitled to receive at least $90.00 in cash
or that amount in The Banc Corporation common stock for each share of CF
Bancshares common stock that you own. The amount of cash, if elected, or the
number of shares of The Banc Corporation common stock that you will receive will
be increased based on 50% of the net earnings of CF Bancshares from June 30,
2001 to the closing date.

Except to the extent that you make a successful election to receive cash in
the merger as described below, each share of CF Bancshares common stock you own
will be converted into shares of The Banc Corporation common stock. The number
of shares of The Banc Corporation common stock that you will receive in exchange
for your shares of CF Bancshares common stock is calculated as follows:

- Step 1. Total number of shares to be exchanged.

The maximum number of shares of The Banc Corporation common stock to be
exchanged is calculated by (a) dividing $15,250,000 plus 50% of the net
earnings of CF Bancshares from June 30, 2001 to the Closing by (b) the
closing date trading price. The closing date trading price is the average
of the last sales price for The Banc Corporation common stock on Nasdaq,
for the 20 consecutive trading days ending three trading days before the
special meeting.

- Step 2. The exchange ratio.

The exchange ratio is the maximum number of shares of The Banc Corporation
common stock that could be exchanged divided by the total number of shares
of CF Bancshares common stock outstanding which, as of August 30, 2001,
was 169,345.

- Step 3. Number of shares you will receive.

You will receive the number of shares of The Banc Corporation common stock
equal to the number of shares of CF Bancshares common stock that you own
multiplied by the exchange ratio.

The number of shares of The Banc Corporation common stock you will receive
for your shares of CF Bancshares common stock will not be finalized until three
days before the closing date. The amount of merger consideration is based on the
negotiations between CF Bancshares and The Banc Corporation giving consideration
to the factors set forth in "The Merger -- Background of the Merger." In view of
the wide variety of factors considered in connection with its evaluation of the
merger, the CF Bancshares Board of Directors did not quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination.

WHAT WILL YOU RECEIVE IF YOU ELECT CASH
(See pages 15 and 16)

You will have the opportunity to elect to receive cash in the merger
instead of The Banc Corporation common stock for some or all of your shares of
CF Bancshares common stock. If you make a cash election, you will receive cash
for each share of CF Bancshares common stock you own. The amount of cash you
will receive is calculated by dividing $15,250,000, plus the additional
consideration based on 50% of the net income of CF Bancshares from June 30, 2001
to the closing date by the number of shares of CF Bancshares common stock
outstanding. This number will be the cash value for each share of CF Bancshares
common stock. If you do not elect to receive cash, you will receive shares of
The Banc Corporation common stock in exchange for your CF Bancshares common
stock.

You should not send in your stock certificates until instructed to do so
after the merger is completed.

OTHER INTERESTS OF OFFICERS AND DIRECTORS OF CF BANCSHARES IN THE MERGER
(See page 23)

You should be aware that the officers and directors of CF Bancshares, all
of whom are also stockholders of CF Bancshares, have interests in the merger
that are different from or in addition to your interests. If the merger is
consummated, Greg Johnson, currently the Chief Executive Officer, President and
a director of CF Bancshares, may enter into an employment contract with The Banc
Corporation.

The directors of CF Bancshares will become advisory directors of the
current Citizens Federal branches after the merger and will receive directors'
fees. In addition, The Banc Corporation will continue CF Bancshares' current
coverage regarding officers' and directors' liability insurance for at least
four years for the current officers and directors of CF Bancshares.

CONDITIONS TO THE MERGER
(See page 20)

The completion of the merger depends upon a number of conditions, including
the following:

- Approval of the Plan of Merger by the CF Bancshares stockholders;

- No law shall have been enacted or injunction entered that effectively
prohibits the merger;

- The registration statement filed with the SEC with respect to the shares
of The Banc Corporation common stock to be received by the CF Bancshares
stockholders shall have been declared effective;

- The shares of The Banc Corporation common stock to be received by the CF
Bancshares stockholders shall have been listed on Nasdaq;

- Receipt of all necessary regulatory approvals and consents;

Except for stockholder approval and other legal requirements, any condition
to the CF Bancshares merger may be waived by the company entitled to assert the
condition.

NO SOLICITATION BY CF BANCSHARES
(See page 25)

CF Bancshares has agreed that it will not initiate or encourage any
discussions regarding a business combination of CF Bancshares with any other
party.

REGULATORY APPROVALS
(See page 21)

The merger must be approved by the Board of Governors of the Federal
Reserve System and the Alabama Banking Department. We have filed all of the
required notices and applications with the Federal Reserve and the Alabama
Banking Department.

TERMINATION OF THE PLAN OF MERGER

The Banc Corporation and CF Bancshares can agree to terminate the Plan of
Merger without completing the merger. Either The Banc Corporation or CF
Bancshares can terminate the Plan of Merger if any of the following occurs:

- The merger is not completed by March 31, 2002;

- The approval of the CF Bancshares stockholders is not received;

- A court or other governmental authority permanently prohibits the merger;

- The other party breaches any of its representation, warranties or
obligations under the Plan of Merger, and as a result of such breach, one
of the conditions to the merger cannot be satisfied;

- The other party materially breaches any of its representations or
warranties or obligations under the Plan of Merger and the breach cannot
be cured within 30 days after notice of the breach; or

- The Board of Directors of The Banc Corporation or CF Bancshares
withdraws, modifies or amends its approval of the Plan of Merger or
recommends an alternative transaction.

ACCOUNTING TREATMENT
(See page 24)

We expect the merger to be treated for accounting and financial reporting
purposes as a purchase, meaning that the assets and liabilities of CF Bancshares
will be recorded at their estimated fair values and combined with the historical
basis of The Banc Corporation. Therefore, the financial statements of The Banc
Corporation issued after the merger will reflect these values from CF Bancshares
and will not be restated retroactively to reflect the historical financial
position or results of operations of CF Bancshares. Goodwill or other intangible
assets may be created by the excess of the purchase price over the net fair
value of CF Bancshares' assets and liabilities.

DISSENTERS' RIGHTS OF CF BANCSHARES STOCKHOLDERS
(See pages 26 through 28)

You have the right to dissent from the merger under Florida law and receive
payment in cash of the "fair value" of your shares if you do not vote in favor
of the merger and give written notice to CF Bancshares before to the special
meeting that you plan to exercise dissenters' rights.

DIFFERENCES IN STOCKHOLDERS' RIGHTS
(See pages 92 through 95)

When the merger is completed, unless you make a successful election to
receive cash consideration in the merger in exchange for all of your shares of
CF Bancshares common stock, you will become a stockholder of The Banc
Corporation. The rights of The Banc Corporation stockholders differ from the
rights of CF Bancshares stockholders in certain significant ways as a result of
provisions in The Banc Corporation's restated certificate of incorporation,
bylaws and Delaware law.

RISK FACTORS
(See pages 9 through 12)

See "Risk Factors" for a discussion of certain risk factors related to the
merger and the combined companies.

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(See page 29)

The table below presents certain unaudited condensed and consolidated
historical financial and operating data for The Banc Corporation and certain
unaudited pro forma condensed financial and operating data for The Banc
Corporation after giving effect to (1) the merger as if it had occurred as of
June 30, 2001, and (2) the pro forma adjustments described in the Notes to the
Unaudited Pro Forma Condensed Financial Statements of The Banc Corporation which
appear elsewhere in this prospectus-proxy statement. The amount of pro forma
combined net income for the six months ended June 30, 2001, shown below,
reflects adjustments which give effect to factors attributable to the merger.
The pro forma net income assumes that the mergers were consummated at January 1,
2001. The pro forma financial information should be read in conjunction with the
financial statements and footnotes thereto appearing elsewhere in this
prospectus-proxy statement. The pro forma condensed statement of financial
condition information and net income are not necessarily indicative of the
combined financial position at consummation of the mergers or the results of
operations following consummation of the merger.

AS OF AND FOR THE
SIX MONTHS ENDED
JUNE 30, 2001
-----------------------
PRO FORMA
ACTUAL COMBINED
---------- ----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)

Assets...................................................... $1,155,374 $1,277,728
Loans, net of unearned income............................... 912,114 1,000,267
Deposits.................................................... 910,343 991,257
Stockholders' equity........................................ 77,751 82,401
Net income.................................................. 2,974 2,927
Leverage ratio.............................................. 7.61% 7.55%
Tier 1 risk-based capital ratio............................. 9.36% 9.34%
Total risk-based capital ratio.............................. 10.39% 10.33%

MARKET INFORMATION AND DIVIDEND POLICY

The Banc Corporation's common stock trades on the Nasdaq National Market
under the ticker symbol "TBNC." CF Bancshares common stock is not publicly
traded. As of September 18, 2001, there were approximately 920 record holders of
The Banc Corporation common stock. On August 8, 2001, the last full trading day
before the public announcement of the transaction, The Banc Corporation common
stock closed at $7.00 per share as reported by Nasdaq. The last private trade of
CF Bancshares was $45.71 per share on July 16, 2001.

The following table sets forth, for the calendar periods indicated, the
range of high and low sales prices:

HIGH LOW
------ -----

1999
First Quarter............................................. $12.81 $9.75
Second Quarter............................................ 10.94 9.38
Third Quarter............................................. 12.25 9.63
Fourth Quarter............................................ 11.63 6.38
2000
First Quarter............................................. 8.00 6.00
Second Quarter............................................ 6.63 4.63
Third Quarter............................................. 8.00 5.00
Fourth Quarter............................................ 7.75 4.94
2001
First Quarter............................................. 6.38 5.25
Second Quarter............................................ 7.10 5.00
Third Quarter (through October 15, 2001).................. 7.75 6.00

On December 31, 2000, the last sale price for the common stock of The Banc
Corporation was $5.25 per share.

The Banc Corporation has never paid any dividends on our common stock, and
there can be no assurances that we will pay dividends in the future. We conduct
our principal business through our subsidiaries, primarily The Bank. We derive
cash available to pay dividends primarily, if not entirely, from dividends paid
to The Banc Corporation by The Bank. Certain state and federal legal and
regulatory restrictions limit The Bank's ability to pay dividends to The Banc
Corporation. The Banc Corporation's ability to pay dividends to its stockholders
will depend on The Banc Corporation's earnings and financial condition,
liquidity and capital requirements, the general economic and regulatory climate,
The Banc Corporation's ability to service any equity or debt obligations senior
to The Banc Corporation common stock and other factors deemed relevant by The
Banc Corporation's Board of Directors.

LISTING OF THE BANC CORPORATION COMMON STOCK

The Banc Corporation will list the shares of The Banc Corporation common
stock to be issued in connection with the merger with the Nasdaq National Market
System under the trading symbol "TBNC."

COMPARATIVE PER SHARE INFORMATION

The following summary presents selected information about The Banc
Corporation's and CF Bancshares' income per share and book value per share in
comparison with pro forma information giving effect to the merger. The selected
financial information should be read in conjunction with the consolidated
financial statements of The Banc Corporation, the historical consolidated
financial statements of CF Bancshares and the related notes thereto. See "Index
to Financial Statements."

The following information is not necessarily indicative of the combined
results of operations or combined financial position that would have resulted
had the merger been consummated at the beginning of the periods indicated, nor
is it necessarily indicative of the future combined results of operations or
financial position.

YEAR ENDED SIX MONTHS
DECEMBER 31, 2000 ENDED JUNE 30, 2001(1)
----------------- ----------------------

NET INCOME PER COMMON SHARE
The Banc Corporation
Historical(2)........................................... $ .30 $ .21
Proforma Combined(1)(3)................................. .27 .20
CF Bancshares
Historical(2)........................................... $4.77 $ 2.93
Proforma Equivalent (1)(4)(5)........................... 3.58 2.65
DIVIDENDS DECLARED PER COMMON SHARE
The Banc Corporation
Historical(2)........................................... $ -- $ --
Proforma Combined(1)(3)................................. -- --
CF Bancshares
Historical(2)........................................... $1.50 $ .75
Proforma Equivalent(1)(4)(5)............................ -- --
BOOK VALUE PER COMMON SHARE
The Banc Corporation
Historical(2)........................................... $ 5.46
Proforma Combined(1)(3)................................. 5.52
CF Bancshares
Historical(2)........................................... $47.92
Proforma Equivalent(1)(4)(5)............................ 73.25

---------------

(1) Unaudited.
(2) The historical numbers for December 31, 2000 are audited.

(3) Represents proforma combined The Banc Corporation and CF Bancshares
information as if the purchase occurred on January 1, 2000 and 2001, for net
income per share, and June 30, 2001 for book value per share.

(4) Proforma equivalent per common share data is calculated by multiplying the
proforma combined amounts by the estimated exchange ratio of 13.265.
(5) The estimated exchange ratio has been calculated assuming total
consideration of $15.5 million and a closing date trading price of $6.90.
The proforma combined amounts assumes 30% of the merger consideration will
be stock.

RISK FACTORS

If the merger is consummated, you may receive shares of The Banc
Corporation common stock in exchange for your shares of CF Bancshares common
stock, unless you make a successful election to receive cash consideration for
all of your shares of CF Bancshares common stock. You should be aware of the
risks and uncertainties associated with an investment in The Banc Corporation
common stock. Specifically, there are risks and uncertainties that could affect
our future financial results and that may cause our future earnings and
financial condition to be less favorable than our expectations.

Some of the risks and uncertainties involved in an investment in The Banc
Corporation common stock relate to economic conditions generally and would
affect other financial institutions in similar ways. These aspects are discussed
above under the heading "Forward Looking Statements." This section addresses
particular risks and uncertainties that are specific to The Banc Corporation.

OUR ABILITY TO SUSTAIN GROWTH INVOLVES RISKS

We believe our future growth will depend on our ability to expand our
business through:

- internal growth;

- the opening of new branch offices in new and existing markets; and

- the acquisition of other financial institutions or branches.

Furthermore, our continued growth and profitability depend on our ability:

- to manage our growth and control expenses;

- to attract and retain skilled employees;

- to support our growth with equity or debt offerings, at an acceptable
cost;

- to maintain strong asset quality through proper underwriting; and

- to expand the capabilities of our management information systems.

Our growth could have a material adverse effect on our financial condition
and results of operations if we are not able to manage our growth successfully
or to address adequately all of the changing demands our growth may create.

WE CANNOT PREDICT LOAN LOSSES OR THE ADEQUACY OF OUR ALLOWANCE FOR LOAN LOSSES

Lending money is an essential part of the banking business. However,
borrowers do not always repay their loans. We attempt to maintain an appropriate
allowance for loan losses to provide for potential losses in our loan portfolio.

There is no precise method of predicting loan losses; therefore, there can
be no assurance that the allowance for loan losses will be sufficient to absorb
future loan losses. Excess loan losses could have a material adverse effect on
our financial condition and results of operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- The Banc
Corporation -- Allocation of the Allowance for Loan Losses."

FLUCTUATIONS IN INTEREST RATES MAY AFFECT OUR INTEREST INCOME

Our operating results are dependent to a significant degree on our net
interest income. Net interest income is the difference between interest and fee
income from earning assets and interest paid on deposits and borrowed funds and
it will change as interest rates fluctuate and the mix and volume of earning
assets and interest bearing liabilities change. Interest rates are largely
dependent on the rate of interest charged by the Federal Reserve for funds it
makes available to institutions. Changes in interest rates may have an adverse
effect on the deposit levels, net interest margin, loan demand or the business
and earnings of The Banc

Corporation and its subsidiaries. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- The Banc Corporation."

GEOGRAPHIC CONCENTRATION AND SIGNIFICANCE OF LOCAL ECONOMIC CONDITIONS MAY
AFFECT OUR PROFITABILITY

Substantially all of The Bank's deposits and assets at June 30, 2001, were
derived either from operations in Alabama or from operations in markets in
Florida which depend to a large extent on tourism. Consequently, our
profitability may be negatively affected by factors that have a significant
impact on general economic conditions and tourism, including weather. See
"Business of The Banc Corporation."

Our success depends on overall conditions in the geographic markets served
by The Bank. Although current economic conditions in these markets are
favorable, there is no assurance that favorable economic conditions will
continue. Adverse changes in economic or other conditions in the geographic
markets that The Bank serves would likely impair The Bank's ability to collect
loans and could otherwise negatively affect our financial condition and results
of operations. See "Business of The Banc Corporation."

WE ARE SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION

Financial holding companies and banks operate in a highly regulated
environment and are subject to extensive supervision and examination by several
federal and state regulatory agencies. We are subject to the Bank Holding
Company Act of 1956 and to regulation, supervision and examination by the
Federal Reserve Board. The Bank is subject to primary supervision, regulation
and examination by the Alabama Department of Banking and the Federal Reserve
Board. Regulatory agencies such as the Federal Reserve Board and the Alabama
State Banking Department can prohibit or place significant restrictions on The
Bank's operations or force The Bank to take prompt corrective action if the
agencies deem The Bank's activities to be unsafe or unsound. Banking regulations
are intended primarily for the protection of depositors and consumers, rather
than for the benefit of stockholders. We are subject to changes in federal and
state law, as well as changes in regulatory and governmental policies, income
tax laws and accounting principles. We cannot predict the future effect of any
of those potential changes, but they could materially adversely affect our
business and operations.

From time to time, legislation is proposed or enacted that would increase
the cost of doing business, limit or expand permissible activities or affect the
competitive balance between banks and other financial and non-financial
institutions. Congress, the Alabama legislature and various state and federal
bank regulatory agencies frequently propose changes to the laws and regulations
governing the operations and taxation of banks and other financial institutions.
Laws such as the Riegle-Neal Interstate Banking and Branching Efficiency Act,
which facilitated interstate branching and bank acquisitions, and the
Gramm-Leach-Bliley Financial Modernization Act of 1999, which substantially
broadened non-banking activities in which bank holding companies may engage, are
expected to increase branching and merger activity and enhance competition among
financial institutions. It is impossible to predict the likelihood of additional
changes and the effects these changes might have on The Banc Corporation and its
subsidiaries. See "Supervision and Regulation."

OUR RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW MAY
PREVENT TAKEOVER BY ANOTHER COMPANY

Our Restated Certificate of Incorporation, its Bylaws and Delaware law all
contain provisions that could discourage potential acquisition proposals, delay
or prevent a change in control of The Banc Corporation and limit the price that
investors may be willing to pay in the future for shares of The Banc Corporation
common stock. The Banc Corporation's Restated Certificate of Incorporation
divides the Board of Directors of The Banc Corporation into three classes
serving staggered terms. One class is elected each year and no more than
one-third of the seats on our Board of Directors will be up for election at each
annual meeting of stockholders. The classification of our Board of Directors
could make it more difficult for a company to acquire control of The Banc
Corporation. Additionally, we can issue, without further stockholder approval,
preferred stock with rights and privileges that could be senior to The Banc
Corporation common stock.

Further, Delaware law, subject to certain exceptions, prohibits The Banc
Corporation, without approval of the Board of Directors of The Banc Corporation,
from engaging in a broad range of business combinations

with any "interested stockholder" for a period of three years following the date
that such stockholder became an interested stockholder. An "interested
stockholder" is generally a stockholder who owns 15% of the outstanding The Banc
Corporation common stock. See "Management of The Banc Corporation -- Classified
Board of Directors," "Description of Capital Stock -- Certain Provisions of The
Banc Corporation's Certificate of Incorporation and Delaware Law" and
"-- Possible Adverse Effects of the Issuance of Preferred Stock."

ISSUANCE OF PREFERRED STOCK MAY HAVE POSSIBLE ADVERSE EFFECTS

The Banc Corporation is authorized to issue up to 5,000,000 shares of
preferred stock, with a par value of $.001 per share. The Board of Directors of
The Banc Corporation may designate the rights and preferences of The Banc
Corporation preferred stock. If preferred stock were to be issued by The Banc
Corporation, its effects on the holders of The Banc Corporation common stock
could include the following:

- reduction of the amount of money otherwise available for the payment of
dividends on The Banc Corporation common stock if dividends are payable
on The Banc Corporation preferred stock;

- restrictions on dividends on The Banc Corporation common stock if
dividends on The Banc Corporation preferred stock are in arrears;

- dilution of the voting power of The Banc Corporation common stock if The
Banc Corporation preferred stock has voting rights, including a possible
"veto" power;

- dilution of the equity interest of holders of The Banc Corporation common
stock if The Banc Corporation preferred stock is convertible, and is
converted into The Banc Corporation common stock; and

- restrictions on the rights of holders of The Banc Corporation common
stock to share in The Banc Corporation's assets upon liquidation until
satisfaction of any liquidation preference granted to the holders of The
Banc Corporation preferred stock.

Holders of The Banc Corporation common stock have no preemptive rights to
purchase or otherwise acquire any The Banc Corporation preferred stock that may
be issued. See "Description of Capital Stock of The Banc Corporation."

THERE ARE RESTRICTIONS ON OUR ABILITY TO PAY DIVIDENDS

We must comply with Delaware law and federal bank regulations before we can
pay dividends. Our Board of Directors must authorize the payment of dividends
and there must be sufficient income to pay dividends. We conduct our principal
business operations through our subsidiaries. We will derive cash available to
pay dividends primarily, if not entirely, from dividends paid by our
subsidiaries. The Bank is regulated by Alabama laws restricting the declaration
and payment of dividends to 90% of annual net income until its surplus funds
equal at least 20% of its capital stock. The Bank has surplus in excess of this
amount. As a member of the Federal Reserve System, The Bank is also subject to
dividend limitations imposed by the Federal Reserve. Federal law further
prohibits an insured institution from making any capital distribution, including
dividends, if after making the distribution, the distribution would not satisfy
one or more of its minimum capital requirements. Moreover, the federal bank
regulatory agencies also have the general authority to limit dividends paid by
insured banks if such payments may be deemed to constitute an unsafe and unsound
banking practice. We have never paid dividends, and there can be no assurance
that we will pay dividends in the future.

WE ARE DEPENDENT ON KEY MANAGEMENT

Our development, and its prospects for success depend, to a significant
degree, on the efforts of James A. Taylor, our Chairman of the Board and Chief
Executive Officer. There is no assurance that Mr. Taylor's services will remain
available to The Banc Corporation indefinitely or that we will be successful
under his

management. We maintain key employee insurance on Mr. Taylor in the amount of $6
million. See "Management of The Banc Corporation" and "Principal Stockholders of
The Banc Corporation."

THE BANKING INDUSTRY IS HIGHLY COMPETITIVE

The Bank competes with many types of financial institutions including other
commercial banks, savings associations, credit unions, mortgage banking
companies, securities brokerage companies, insurance companies and money market
mutual funds operating in Alabama, the Florida panhandle and elsewhere. Many of
these competitors have substantially greater resources and lending limits than
The Banc Corporation and The Bank and offer certain services that The Banc
Corporation and The Bank may not provide. In addition, non-depository
institution competitors are generally not subject to the extensive regulation
applicable to The Banc Corporation and The Bank. Insurance companies and
securities firms may now own banks and offer banking products, in competition
with The Banc Corporation. Our long-term success will depend on the ability of
the our subsidiaries to compete successfully with other financial institutions
in their respective market areas. See "Business of The Banc
Corporation -- Competition."

OUR MANAGEMENT HOLDS A LARGE PORTION OF THE BANC CORPORATION COMMON STOCK

As of August 31, 2001, directors and executive officers owned or controlled
approximately 30.8% of the outstanding shares of The Banc Corporation common
stock. See "Principal Stockholders of The Banc Corporation." Accordingly, if the
directors and executive officers were to act in concert, they would likely
control the Board of Directors and therefore the business and policies of The
Banc Corporation. As a result, The Banc Corporation's management has significant
control of The Banc Corporation.

POSSIBLE VOLATILITY OF STOCK PRICE MAY AFFECT THE MARKET PRICE OF THE BANC
CORPORATION COMMON STOCK

The Banc Corporation common stock trades on the Nasdaq National Market
System under the symbol "TBNC." This Nasdaq listing of The Banc Corporation
common stock provides a public market for holders of The Banc Corporation common
stock to sell their securities. Because The Banc Corporation common stock has
been listed on Nasdaq since December 10, 1998, The Banc Corporation common stock
has a limited trading history. We cannot guarantee that:

- the market for The Banc Corporation common stock on Nasdaq will be
liquid;

- you will be able to sell your The Banc Corporation common stock; or

- you will be able to sell your The Banc Corporation common stock at any
particular price.

Even with a public market on Nasdaq for the holders of The Banc Corporation
common stock, the market price of The Banc Corporation common stock could
fluctuate significantly due to variations in quarterly and yearly results of
operations, general trends in the banking industry and other factors. Stocks of
financial institutions are particularly affected by changes in interest rates.
Additionally, in recent years and especially in recent months, there have been
price and volume fluctuations in the stock market that have often been unrelated
or disproportionate to the operating performance of affected companies. These
broad fluctuations might adversely affect the market price of The Banc
Corporation common stock.

STOCKHOLDERS MAY EXPERIENCE RISKS RELATING TO FEDERAL INCOME TAXES

We expect that the merger will not qualify as a tax-free reorganization
under the Internal Revenue Code. In which case, all CF Bancshares stockholders
will recognize gain or loss for federal income tax purposes upon the exchange of
their shares of CF Bancshares for The Banc Corporation common stock or cash.
However, the merger may qualify as a reorganization if the amount of cash
elected to be received is less than 60% of the total consideration. If that
occurs, a CF Bancshares stockholder who receives Corporation common stock may
have the amount of gain that he recognizes for federal income tax purposes
limited to the amount of cash, if any, that he receives in the merger. See "The
Merger -- Material Federal Income Tax Consequences."

THE SPECIAL MEETING

This prospectus-proxy statement is being furnished to CF Bancshares
stockholders in connection with the solicitation of proxies by the CF Bancshares
Board of Directors for use at the CF Bancshares special meeting to consider and
vote upon the approval of the Plan of Merger. Each copy of this prospectus-proxy
statement mailed or delivered to CF Bancshares stockholders is accompanied by a
proxy card for use at the CF Bancshares special meeting.

This prospectus-proxy statement is also furnished to CF Bancshares
stockholders as a prospectus in connection with the issuance of shares of The
Banc Corporation common stock upon consummation of the merger.

DATE, PLACE AND TIME

The CF Bancshares special meeting is to be held at the principal executive
offices of CF Bancshares located at 401 Cecil G. Costin, Sr. Boulevard, Port St.
Joe, Florida 32457, on November 28, 2001, at 5:00 p.m.

RECORD DATE, QUORUM AND VOTING

The CF Bancshares Board of Directors has fixed the close of business on
October 17, 2001, as the record date for the determination of the CF Bancshares
stockholders entitled to receive notice of and to vote at the CF Bancshares
special meeting. The presence, in person or by Proxy, of the holders of a
majority of the shares of CF Bancshares common stock entitled to vote at the CF
Bancshares special meeting will constitute a quorum. Each stockholder of record
as of the CF Bancshares record date is entitled to one vote for each share then
held.

VOTE REQUIRED

As of the CF Bancshares record date, there were 169,345 shares of CF
Bancshares common stock outstanding. Approval and adoption of the Plan of Merger
requires the affirmative vote of a majority of all outstanding shares of CF
Bancshares common stock, each of which is entitled to one vote. CF Bancshares
common stock entitled to vote thereon; as a result, failures to vote and
abstentions will be the equivalents of votes against the Plan of Merger.
Accordingly, approval and adoption of the Plan of Merger at the CF Bancshares
special meeting will require the affirmative vote of the holders of at least
84,673 shares of CF Bancshares common stock.

As of the CF Bancshares record date, directors and executive officers of CF
Bancshares beneficially owned an aggregate of 30,682 shares, or approximately
18.1% of the CF Bancshares common stock, outstanding on such date. The directors
of CF Bancshares, who collectively own approximately 17.1% of the outstanding
shares of CF Bancshares common stock, have appointed James A. Taylor as their
proxy to vote the shares of CF Bancshares common stock beneficially owned by
them for the Plan of Merger. See "The Merger -- Conditions to the Merger."

VOTING AND REVOCATION OF PROXIES

Shares of CF Bancshares common stock represented by a proxy properly signed
and received at or prior to the CF Bancshares special meeting, unless
subsequently revoked, will be voted in accordance with the instructions thereon.
IF A PROXY IS PROPERLY EXECUTED AND RETURNED WITHOUT INDICATING ANY VOTING
INSTRUCTIONS, SHARES OF CF BANCSHARES COMMON STOCK REPRESENTED BY THE PROXY WILL
BE VOTED FOR APPROVAL AND ADOPTION OF THE PLAN OF MERGER. Any proxy given
pursuant to the solicitation may be revoked by the person giving the proxy at
any time before the proxy is voted by filing an instrument revoking it or by
delivering a duly executed proxy bearing a later date to CF Bancshares before or
at the CF Bancshares special meeting, or by voting in person at the CF
Bancshares special meeting. Attendance at the CF Bancshares special meeting will
not in and of itself constitute a revocation of a proxy. Only votes cast FOR
approval of the Plan of Merger or other matters constitute affirmative votes.
Abstentions and votes that are withheld will, therefore, have the same

effect as votes AGAINST approval of the Plan of Merger, so it is important that
you return your proxy properly executed.

SOLICITATION OF PROXIES

In addition to solicitation by mail, directors, officers and employees of
CF Bancshares, who will not be specifically compensated for such services, may
solicit proxies from the stockholders of CF Bancshares personally or by
telephone or other forms of communication. Except as otherwise provided in the
Plan of Merger, CF Bancshares will bear its own expenses in connection with the
solicitation of proxies for the CF Bancshares special meeting. See "The
Merger -- Expenses."

CF BANCSHARES STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR
PROXY CARDS. THE PROCEDURE FOR THE EXCHANGE OF SHARES AFTER THE MERGER IS
CONSUMMATED IS DESCRIBED AT PAGES 16 THROUGH 18 IN THIS PROSPECTUS-PROXY
STATEMENT. SEE "THE MERGER -- PROCEDURE FOR MAKING A CASH ELECTION AND EXCHANGE
OF CERTIFICATES."

THE MERGER

We describe below the principal provisions of the Plan of Merger and the
merger of TBC Merger Corporation and CF Bancshares. This description is not
complete and is qualified in its entirety by reference to the Plan of Merger,
the full text of which is attached hereto as Annex A. All CF Bancshares
stockholders should read Annex A carefully in its entirety.

On August 30, 2001, The Banc Corporation, TBC Merger Corporation, The Bank,
CF Bancshares and Citizens Federal Savings Bank of Port St. Joe entered into a
Reorganization Agreement and Plan of Merger pursuant to which TBC Merger
Corporation will be merged with and into CF Bancshares. As of June 30, 2001, CF
Bancshares had total assets of approximately $105.2 million, loans of
approximately $88.2 million, deposits of approximately $80.2 million and
stockholders' equity of approximately $8.1 million. CF Bancshares and its
subsidiary bank, Citizens Federal, are based in Port St. Joe, Florida. See
"Business of CF Bancshares" and "Unaudited Pro Forma Condensed Consolidated
Financial Information."

TERMS OF THE MERGER

TBC Merger Corporation will merge into CF Bancshares and CF Bancshares will
be the surviving corporation and become a wholly-owned subsidiary of The Banc
Corporation. The Banc Corporation intends to then cause the merger of CF
Bancshares into The Banc Corporation. The Restated Certificate of Incorporation
and the Bylaws of The Banc Corporation in effect at the effective time of the
merger will govern The Banc Corporation until amended or repealed in accordance
with applicable law. The Banc Corporation shall continue as the surviving
corporation under the name "The Banc Corporation" after the merger is completed.

At the time we complete the merger, each share of CF Bancshares common
stock will be converted into the right to receive a pro rata share of the total
merger consideration, which is $15,250,000, plus 50% of any net earnings of CF
Bancshares from June 30, 2001, through the Closing Date. You may elect to
receive all or a portion of your pro rata share of the merger consideration in
cash, as discussed below under "Cash Election Option," or in shares of The Banc
Corporation common stock.

If you would like to receive The Banc Corporation common stock for your pro
rata share of the merger consideration or you do not properly elect to receive
cash for all or part of your pro rata share of the merger consideration, your
shares of CF Bancshares common stock will be converted into the right to receive
The Banc Corporation common stock. The maximum number of shares of The Banc
Corporation common stock to be issued in the merger is equal to the total merger
consideration divided by the closing date trading price. The closing date
trading price will be the average last sales price for The Banc Corporation
common stock listed on Nasdaq for 20 consecutive trading days ending three
trading days before the special meeting. The number of shares of The Banc
Corporation common stock to be exchanged for each share of CF Bancshares common
stock will be determined by dividing the maximum number of shares of new The
Banc Corporation common stock that could be issued by the total number of shares
of issued and outstanding CF Bancshares common stock. The number of shares of
The Banc Corporation common stock that you will receive in exchange for your
shares of CF Bancshares common stock is equal to the product of (1) the number
of shares of CF Bancshares common stock owned by you multiplied by (2) the
quotient of the maximum number of shares of The Banc Corporation common stock
that could be issued, divided by the total number of shares of CF Bancshares
common stock outstanding, which, as of August 30, 2001, was 169,345 shares.

You will be entitled to receive at least $90.00 in cash or that amount in
The Banc Corporation common stock for each share of CF Bancshares common stock
that you own if we complete the merger. The number of shares of The Banc
Corporation common stock or the amount of cash you will receive will be
increased based on the total merger consideration which will not be finalized
until the Closing Date. The actual number of shares of The Banc Corporation
common stock to be issued will be determined by the number of CF Bancshares
shareholders who elect to receive cash.

If the closing date trading price is $6.90, the exchange ratio will be
13.265 shares of The Banc Corporation common stock for each share of CF
Bancshares common stock.

CASH ELECTION OPTION

Instead of receiving The Banc Corporation common stock in the merger, you
may elect to receive cash consideration in exchange for any or all of your
shares of CF Bancshares common stock. If you do not elect to receive cash, you
will automatically receive shares of The Banc Corporation common stock in
exchange for your shares of CF Bancshares common stock. The cash election must
be made according to the procedures described below. Stockholders will receive
cash for each share of CF Bancshares common stock that they own for which a
proper cash election is made. The amount of cash you will receive for each share
of CF Bancshares common stock for which you elect to receive cash is calculated
by dividing $15,250,000, plus 50% of the net earning of CF Bancshares from June
30, 2001, to the Closing Date by the number of shares of CF Bancshares common
stock outstanding.

PROCEDURES FOR MAKING A CASH ELECTION

An election form, along with a letter of transmittal, will be delivered to
each holder of record of common stock within five business days of the effective
time of the merger by SunTrust Bank, or such other exchange agent as may be
designated by The Banc Corporation, who will serve as the exchange agent in
connection with the exchange of cash and shares under the Plan of Merger (the
"Exchange Agent"). The election form specifies that delivery will be effected,
and risk of loss and title to the certificates represents shares of CF
Bancshares common stock will pass, only upon proper delivery of those
certificates to the exchange agent.

Each election form permits a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of CF Bancshares
common stock to elect to receive cash with respect to all or a portion of such
holder's CF Bancshares common stock.

Any shares of CF Bancshares common stock with respect to which the holder
has not made a valid cash election on or before the election deadline, which is
5:00 p.m., Eastern Time, 60 days after the date election forms are mailed to CF
Bancshares stockholders, will be converted into shares of The Banc Corporation
common stock upon completion of the merger.

The Banc Corporation will make available one or more election forms as may
be reasonably requested by all persons who become holders (or beneficial owners)
of CF Bancshares common stock between the record date for the special meeting
and the close of business on the business day before the election deadline.

A cash election will be properly made only if the exchange agent actually
receives a properly completed election form by the election deadline. You must
submit with your election form the CF Bancshares common stock certificate(s) (or
customary affidavits and indemnification regarding the loss or destruction of
such certificates or the guaranteed delivery of such certificates) that
represent the shares of CF Bancshares common stock you are electing to receive
cash in respect of, together with the duly executed transmittal materials
included in the election form. You may revoke or change your election form at or
prior to the election deadline. In the event an election form is revoked prior
to the election deadline, the shares of CF Bancshares common stock represented
by such election form will be treated like other shares of CF Bancshares common
stock with respect to which no cash election is made. Subject to the terms of
the Plan of Merger and of the election form, the exchange agent will have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in the
election forms, and any good faith decisions of the exchange agent regarding
such matters will be binding and conclusive. In the event an election that was
timely made contains material defects, the exchange agent shall notify you and
you will have 20 business days to provide the exchange agent a properly
completed election form.

IF YOU WISH TO RECEIVE CASH FOR ANY OR ALL OF YOUR SHARES OF CF BANCSHARES
COMMON STOCK, THE EXCHANGE AGENT MUST RECEIVE YOUR ELECTION FORM AND YOUR STOCK
CERTIFICATE(S) (OR CUSTOMARY AFFIDAVITS AND INDEMNIFICATION REGARDING THE LOSS
OR DESTRUCTION OF SUCH CERTIFICATES OR THE GUARANTEED DELIVERY OF SUCH
CERTIFICATES) WITH THE APPROPRIATE TRANSMITTAL MATERIALS PRIOR TO THE ELECTION
DEADLINE.

EXCHANGE OF CERTIFICATES

Within five business days after the effective time, the Exchange Agent will
mail to each CF Bancshares stockholder of record (1) the election form, (2) a
letter of transmittal and (3) instructions for use in effecting the surrender of
the certificates representing shares of CF Bancshares common stock in exchange
for certificates representing shares of The Banc Corporation common stock or
cash. The letter of transmittal will specify that delivery will be effected, and
risk of loss and title to the certificates will pass, only upon delivery of the
certificates to The Banc Corporation. When a CF Bancshares stockholder
surrenders his certificate to the Exchange Agent, together with a properly
completed letter of transmittal, and any other documents as may be necessary,
that stockholder shall receive in exchange a certificate representing that
number of whole shares of The Banc Corporation common stock to which that
stockholder is entitled, if any, and a check for the amount to be paid instead
of any fractional share of The Banc Corporation common stock, or a check for
those shares for which a cash election was made. The Exchange Agent shall
deliver the merger consideration to CF Bancshares stockholders within fifteen
business days of receipt of their certificates of CF Bancshares common stock,
duly executed and in proper form for transfer.

If a transfer of ownership of CF Bancshares common stock is not registered
in the transfer records of CF Bancshares, a certificate representing the proper
number of shares of The Banc Corporation common stock may be issued to a person
other than the person in whose name the certificate so surrendered is
registered, if the certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting the issuance shall pay any
transfer or other taxes required by reason of the issuance of shares of The Banc
Corporation common stock to a person other than the registered holder of the
certificate or establish to the satisfaction of The Banc Corporation that such
tax has been paid or is not applicable.

Until surrendered as contemplated by the Plan of Merger, each certificate
shall be deemed at any time after the effective time to represent only the right
to receive such shareholder's pro rata share of the merger consideration under
the terms of the Plan of Merger. No interest will be paid or will accrue on any
cash payable in lieu of any fractional shares of The Banc Corporation common
stock. After the merger is completed, to the extent permitted by law and except
to the extent a stockholder will receive cash for his shares of CF Bancshares
common stock, holders of record of CF Bancshares common stock at the time we
complete the merger will be entitled to vote at any meeting of The Banc
Corporation stockholders the number of shares of The Banc Corporation common
stock into which their respective shares of CF Bancshares common stock are
converted after the effective time, regardless of whether such holders have
received their certificates representing The Banc Corporation common stock in
accordance with the Plan of Merger.

No dividend or other distribution payable after the completion of the
merger with respect to The Banc Corporation common stock, however, will be paid
to the holder of any unsurrendered CF Bancshares certificate until the holder
properly surrenders such certificate along with the properly completed
transmittal materials. Upon surrender, all undelivered dividends and other
distributions and, if applicable, a check for the amount to be paid instead of
any fractional share interest will be delivered to such stockholder, in each
case without interest. No certificates or scrip representing fractional shares
of The Banc Corporation common stock will be issued upon conversion of CF
Bancshares common stock, and the fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of The Banc Corporation.
Notwithstanding any other provision of the Plan of Merger, each holder of CF
Bancshares common stock exchanged pursuant to the merger who would otherwise
have been entitled to receive a fraction of a share of The Banc Corporation
common stock will receive cash instead of fractional shares of The Banc
Corporation common stock.

At the effective time, CF Bancshares stockholders will cease to be, and
shall have no rights as, CF Bancshares stockholders other than:

- the right to receive the number of shares of The Banc Corporation common
stock into which the shares of CF Bancshares common stock have been
converted or, if elected, cash,

- any fractional share payment,

- any dividends or other distributions to which they may be entitled under
the CF Bancshares Plan of Merger, or

- the right to perfect dissenter's rights, if such have been properly
exercised.

Neither The Banc Corporation, CF Bancshares nor the Exchange Agent will be
liable to any holder of CF Bancshares common stock for any shares of The Banc
Corporation common stock or any related dividends or other distributions or cash
in lieu of fractional shares delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.

BACKGROUND OF AND REASONS FOR THE MERGER; RECOMMENDATION OF CF BANCSHARES BOARD
OF DIRECTORS

Background of the Merger. During the last several years, there have been
significant developments in the banking and financial services industry. These
developments have included the increased emphasis and dependence on automation
and specialization of products and services, increased competition from other
financial institutions, and a trend toward consolidation.

Over the last several years, CF Bancshares has occasionally received
informal inquiries from financial institutions and financial institution holding
companies, including The Banc Corporation, regarding potential merger or
acquisition transactions. CF Bancshares' business philosophy has been centered
around being an independent company, providing personalized financial services
in Port St. Joe and the Florida panhandle, under the direction of a local Board
of Directors. None of the informal inquiries it received were at a price or on
such terms as to cause CF Bancshares to abandon its corporate philosophy and
pursue a business combination.

James A. Taylor, Chairman of the Board and Chief Executive Officer of The
Banc Corporation, during a conversation with Jed Hiers, president of The Bank's
Florida operation in early June, discussed the possibility of approaching one of
three different financial institutions in the Florida panhandle. After their
conversation, Mr. Taylor requested that Mr. Hiers contact Greg Johnson, Chief
Executive Officer of CF Bancshares and Citizens Federal.

In mid-July 2001, Mr. Hiers contacted Mr. Johnson, and inquired about the
possibility of an acquisition of CF Bancshares by The Banc Corporation. Although
this inquiry was informal and indefinite, Mr. Taylor and other officers of The
Banc Corporation held several follow-up telephone conversations with Mr. Johnson
during which they described The Banc Corporation's Florida strategy and
operations, explained the reason for The Banc Corporation's interest in CF
Bancshares and requested an informal meeting in July 2001 to explore whether a
business combination would be mutually beneficial.

After various discussions, CF Bancshares' Board of Directors authorized Mr.
Johnson to proceed with negotiations. On July 31, 2001, the CF Bancshares Board
held a meeting at which it considered The Banc Corporation's offer of
$15,250,000, in cash or stock, for all of the outstanding shares of CF
Bancshares common stock.

On July 30, 2001, Messrs. Taylor, James A. Taylor, Jr., David Carter, Jed
Hiers and Thomas Flowers attended a board meeting of CF Bancshares in Port St.
Joe, Florida. During the meeting, the Board of Directors made a formal
presentation of the price at which CF Bancshares would consider. Mr. Taylor
discussed with the board of CF Bancshares the interest of The Banc Corporation
in the Florida market, specifically the panhandle region. Mr. Taylor informed
the CF Bancshares board of directors that The Banc Corporation had seven
branches already in the Florida panhandle with three new branches to be
completed by year-end along the Emerald Coast as part of the Emerald Coast Bank
division of The Bank. Mr. Taylor also informed the board that there were no
branches currently under construction in Alabama and that The Banc Corporation
was serious about dedicating appropriate capital and resources to the Florida
market. Mr. Taylor further offered that the markets served by Citizens Federal
were similar to many of The Bank's existing markets, specifically the C&L Bank
division of The Bank. The CF Bancshares Board of Directors discussed with Mr.
Taylor the commitment to a community banking philosophy and the decentralization
of a majority of the decision making at the local bank level. Mr. Taylor
informed the board that most of the loan decisions would continue to be made
locally; however, policies, procedures and other important "back room" functions

would be centralized. Mr. Taylor then stressed the importance of Greg Johnson
staying with The Bank after the merger and also requested that the Board of
Directors of CF Bancshares commit to continuing as advisory directors of the
Citizens Federal branches of The Bank if a transaction could be worked out.

After several hours of negotiations, the Board of Directors of CF
Bancshares and Messrs. Taylor, Taylor, Jr. and Carter on behalf of The Banc
Corporation, agreed in principle on the amount of consideration that The Banc
Corporation would be willing to offer CF Bancshares stockholders and the terms
of the merger. The basic terms of the transaction were memorialized in a letter
of intent which was presented to the board of directors of CF Bancshares. Upon
review of the proposed letter of intent, including review by counsel, CF
Bancshares and The Banc Corporation executed a final letter of intent on July
31, 2001 which reflected total consideration of $15,250,000, plus 50% of any
earnings of CF Bancshares from June 30, 2001 until the closing date. The letter
of intent also provided for "due diligence" reviews of each company by the other
and a confidentiality agreement.

On August 9, 2001, The Banc Corporation announced through a press release
that the letter of intent had been signed. On August 24, 2001, Greg Johnson and
CF Bancshares' outside counsel traveled to The Banc Corporation's corporate
headquarters to conduct a "due diligence" review of The Banc Corporation
operations. Between August 1, 2001, and August 30, 2001, numerous telephonic
conferences regarding the terms and conditions of the Plan of Merger were held
among management and corporate counsel for both parties. During this time, the
parties exchanged a number of drafts of the Plan of Merger, written comments and
response letters.

Senior management representatives for both companies also discussed the
terms of the Plan of Merger, revisiting the impact the proposed transaction
would have on CF Bancshares' shareholders, employees and the community and on
the companies' existing third party contracts and customer service in general.
The entire Board of Directors of CF Bancshares agreed to remain with The Banc
Corporation as advisory directors of the Citizen Federal branches after the
completion of the merger. On August 29, 2001, the CF Bancshares Board met to
review and consider a final draft of the Plan of Merger. Satisfied that it
contained all the material terms of the transaction, the Board authorized Mr.
Johnson to complete the final negotiations and also authorized CF Bancshares'
Chairman of the Board David May to execute the Plan of Merger on behalf of CF
Bancshares. On August 30, 2001, CF Bancshares and The Banc Corporation executed
the Plan of Merger.

Reasons for the Merger. In approving the merger, the directors of CF
Bancshares considered a number of factors. Without assigning any relative or
specific weights to the factors, the board of directors of CF Bancshares
considered the following material factors:

1. The financial terms of the proposed merger, including the value of
the consideration offered, the premium to book value paid the ratio of The
Banc Corporation's offer price to CF Bancshares' earnings and the prices
paid in comparable transactions in Florida and the Southeastern United
States over the last year. The CF Bancshares Board also considered the
price and timing of the offer.

2. The future prospects of CF Bancshares and possible alternatives to
the proposed merger, including the prospects of continuing as an
independent institution.

3. Information with respect to the financial condition, results of
operations, business and prospects of CF Bancshares and the current
industry, economic and market conditions.

4. The terms and structure of the proposed merger, in particular, the
fact that CF Bancshares' shareholders would be permitted to elect to
receive either cash or The Banc Corporation common stock.

5. The Banc Corporation's commitment to close the transaction by no
later than the first quarter of 2002.

6. The business and financial condition and earnings prospects of The
Banc Corporation. In this regard, the Board also considered The Banc
Corporation's commitment to the Florida banking market and the prospects
for additional growth in the Florida market.

The terms of the merger were the result of arm's-length negotiations
between representatives of CF Bancshares and representatives of The Banc
Corporation. Based upon the consideration of the foregoing factors, the Board of
Directors of CF Bancshares unanimously approved the merger as being in the best
interests of CF Bancshares, its stockholders and its other constituencies.

THE CF BANCSHARES BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CF
BANCSHARES STOCKHOLDERS VOTE FOR APPROVAL OF THE PLAN OF MERGER AND THE MERGER.

EFFECTIVE TIME OF THE MERGER

Subject to the provisions of the Plan of Merger, Articles of Merger shall
be duly executed and, on the closing date, or as soon thereafter as reasonably
practicable, filed with the Florida Secretary of State in accordance with
Florida law. It is presently anticipated that such filings will be made as soon
as practicable after the special meeting and that the effective time will occur
upon the filings, although there can be no assurance as to whether or when the
merger will occur.

CONDITIONS TO THE MERGER

The Plan of Merger is subject to a number of conditions, some of which are
mutual and others of which are applicable to either The Banc Corporation or CF
Bancshares. Though most of the conditions will not be satisfied until
immediately before the effective time of the merger, the companies believe that
they are currently in material compliance with the conditions.

The obligation of The Banc Corporation to complete the merger is subject to
the following conditions:

- No material adverse changes shall have occurred in the business,
operations or financial condition of CF Bancshares.

- Except as otherwise provided therein, the representations and warranties
of CF Bancshares contained in the Plan of Merger shall be true and
correct.

- CF Bancshares shall have performed and complied with all covenants,
agreements and conditions required by the Plan of Merger.

- The Banc Corporation shall have received an opinion of CF Bancshares'
legal counsel, Igler & Dougherty, P.A., as to certain legal matters.

The obligation of CF Bancshares to consummate the merger is subject to,
among others, the following conditions:

- No material adverse changes shall have occurred in the business,
operations or financial condition of The Banc Corporation.

- Except as otherwise provided therein, the representations and warranties
of The Banc Corporation contained in the Plan of Merger shall be true and
correct.

- The Banc Corporation shall have performed and complied with all
covenants, agreements and conditions required by the Plan of Merger to be
performed or complied with in all material respects.

- CF Bancshares shall have received an opinion of Haskell Slaughter Young &
Rediker, L.L.C., legal counsel for The Banc Corporation, as to certain
legal matters.

The obligation of each of The Banc Corporation and CF Bancshares to
consummate the merger is subject to certain additional conditions, including the
following:

- The Registration Statement shall have been declared effective and shall
not be subject to a stop order of the SEC, and all applicable federal
securities and state blue sky laws shall have been complied with.

- The shares of The Banc Corporation common stock to be issued in
connection with the CF Bancshares merger shall have been approved for
listing on Nasdaq.

- No legal proceeding shall have been threatened or pending before any
court, administrative or governmental agency which, in the reasonable
opinion of CF Bancshares or The Banc Corporation, presents a significant
risk of restraint or prohibition of the transactions contemplated by the
Plan of Merger or the attainment of material damages or other relief
against CF Bancshares or its stockholders or The Banc Corporation or its
stockholders in connection therewith.

- The merger shall have been approved by holders of majority of the
outstanding CF Bancshares common stock entitled to vote thereon.

- Receipt of all authorizations, approvals and consents of any third
parties as well as the expiration of applicable waiting periods,
including federal or state governmental or regulatory bodies and
officials, necessary for the consummation of the Plan of Merger and for
the continuation in all material respects of the business of The Banc
Corporation and CF Bancshares, without interruption after the effective
time, in substantially the manner in which such business is now
conducted, and no such authorizations or approvals shall contain any
conditions or restrictions that CF Bancshares or The Banc Corporation
reasonably believes will materially restrict or limit the business or
activities of The Banc Corporation or have a material adverse effect on
their businesses, operations or financial conditions taken as a whole.

Before or at the effective time, either The Banc Corporation or CF
Bancshares, or both, acting through their respective Boards of Directors, chief
executive officers or other authorized officers, may:

- waive any default in the performance of any term of the Plan of Merger by
the other party,

- waive or extend the time for the compliance or fulfillment by the other
party of any and all of its obligations under the Plan of Merger, and

- waive any of the conditions precedent to the obligations of such party
under the Plan of Merger, except any condition (such as required
regulatory or CF Bancshares stockholder approval) that, if not satisfied,
would result in the violation of any applicable law or governmental
regulation.

REPRESENTATIONS AND COVENANTS

In the Plan of Merger, The Banc Corporation and CF Bancshares have each
made a number of representations regarding the organization and capital
structures of the respective companies and their subsidiaries, their operations,
financial condition and other matters, including their authority to enter into
the Plan of Merger and to consummate the merger.

REGULATORY APPROVALS

The merger must be approved by the Federal Reserve Board and the Alabama
Department of Banking. The Banc Corporation filed its merger applications with
the Federal Reserve Board and the Alabama Department of Banking on October 15,
2001.

Certain persons, such as states' attorneys general and private parties,
could challenge the merger as violative of the antitrust laws and seek to enjoin
the consummation of the merger and, in the case of private persons, also seek to
obtain treble damages. There can be no assurance that a challenge to the merger
on antitrust grounds will not be made or, if such a challenge is made, that it
will not be successful. Neither The Banc Corporation nor CF Bancshares intends
to seek any further stockholder approval or authorization of the Plan of Merger
as a result of any action that it may take to resist or resolve any antitrust or
other objections, unless required to do so by applicable law.

BUSINESS PENDING THE MERGER

The Plan of Merger provides that, during the period from the date of the
Plan of Merger to the effective time, except as provided in the Plan of Merger,
CF Bancshares and The Banc Corporation will conduct their business in the
ordinary course in material compliance with all applicable laws. CF Bancshares
will use its reasonable best efforts to preserve intact its business
organizations, to keep available to The Banc Corporation

and the surviving corporation the services of the present employees of CF
Bancshares and maintain the goodwill of customers, suppliers and others having
business dealings with CF Bancshares.

Under the Plan of Merger until the closing, CF Bancshares will not do the
following:

- encumber any asset or enter into any transaction or make any contract or
commitment relating to its properties, assets or businesses, other than
in the ordinary course of business, including but not limited to,
contracts less than $50,000.

- change its articles of incorporation or bylaws.

- change the number of shares of capital stock of CF Bancshares issued and
outstanding or cause any material change in its capital structure.

- enter into any contract or commitment (other than for deposits, loan
commitments and investments or the sale of other real estate owned in the
ordinary course of business) extending for more than one year or
involving payment of more than $50,000 in any one contract or related
series of contracts or otherwise materially affecting its business.

- enter into any employment agreement or other agreement with any employee
or increase any employee's salary or benefits except for normal annual
increases as agreed to by The Banc Corporation in writing, or modify or
amend any employee benefit plan.

- pay dividends or make distributions with respect to CF Bancshares stock,
except as provided by the Plan of Merger.

- make any loan other than in the ordinary course of business including,
but not limited to, loans less than $50,000 without providing The Banc
Corporation with all relevant documents related thereto and giving The
Banc Corporation a reasonable opportunity to review such loan and comment
thereon.

- sell the securities it owns or purchase any new securities, except those
sold in the ordinary course of business, without The Banc Corporation's
approval.

- obligate CF Bancshares under all employment, severance or other
agreements between CF Bancshares and its respective employees related to
the termination of such agreements in excess of the amounts described in
the employment agreements.

- take any action or violate any law applicable to CF Bancshares or to the
conduct of its business which causes any material adverse effect upon
business of CF Bancshares.

Until the closing date, The Banc Corporation will not do the following:

- encumber any asset or enter any transaction or make any contract or
commitment relating to its properties, assets or business, other than in
the ordinary course of business.

- change its certificate of incorporation or bylaws.

- take any action or violate any law applicable to The Banc Corporation to
the conduct of its business which causes any material adverse effect upon
business of The Banc Corporation.

RESALE OF THE BANC CORPORATION COMMON STOCK BY AFFILIATES

The Banc Corporation common stock to be issued to CF Bancshares
stockholders in connection with the merger will be registered under the
Securities Act. The Banc Corporation common stock received by the CF Bancshares
stockholders upon consummation of the merger will be freely transferable under
the Securities Act, except for shares issued to any person who may be deemed an
"affiliate" of CF Bancshares or The Banc Corporation within the meaning of Rule
145 under the Securities Act. "Affiliates" are generally defined as persons who
control, are controlled by, or are under common control with CF Bancshares or
The Banc Corporation at the time of the CF Bancshares special meeting.
Affiliates generally include directors, some executive officers and major
stockholders of The Banc Corporation and CF Bancshares. In addition, affiliates
of CF Bancshares or The Banc Corporation must sell their shares of The Banc
Corporation common stock

acquired in connection with the merger in compliance with Rule 145 or another
applicable exemption from the registration requirements of the Securities Act.

In general, under Rule 145, for one year following the effective time, an
affiliate (together with certain related persons) would be entitled to sell
shares of The Banc Corporation common stock acquired in the merger only through
unsolicited "broker transactions" or in transactions directly with a "market
maker," as such terms are defined in Rule 144 under the Securities Act.
Additionally, during the one-year period, the number of shares to be sold by an
affiliate (together with certain related persons and certain persons acting in
concert) within any three-month period for purposes of Rule 145 may not exceed
the greater of 1% of the outstanding shares of The Banc Corporation common stock
or the average weekly trading volume of the stock during the four calendar weeks
preceding such sale. Rule 145 would remain available to affiliates only if The
Banc Corporation remained current with its information filings with the SEC
under the Securities Exchange Act. One year after the effective time, a person
who was an affiliate of CF Bancshares would be able to sell shares of The Banc
Corporation common stock without the manner of sale or volume limitations,
provided that The Banc Corporation was current with its Securities Exchange Act
information filings and such affiliate was no longer an affiliate of The Banc
Corporation. Two years after the effective time, a person who was an affiliate
of CF Bancshares would be able to sell shares of The Banc Corporation common
stock without any restrictions so long as the affiliate was not, and had not
been for at least three months before selling, an affiliate of The Banc
Corporation.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of the Board of Directors of CF
Bancshares with respect to the Plan of Merger and the transactions contemplated
thereby, CF Bancshares stockholders should be aware that certain members of the
management of CF Bancshares and the Board of Directors of CF Bancshares have
certain interests in the merger that are in addition to the interests of CF
Bancshares stockholders generally.

The Banc Corporation may enter into an employment agreement with Greg
Johnson. Mr. Johnson would serve as President of The Bank -- Port St. Joe. The
agreement also provides that Mr. Johnson would receive other benefits such as
life and health insurance, participation in retirement plans, dues for various
civic clubs, standard vacation days, and participation in other executive
compensation plans. The agreement will be for a term of three years. If Mr.
Johnson is terminated for any reason other than cause, as defined in the
agreement, Mr. Johnson would be entitled to receive his annual compensation for
the remaining term of the agreement and may not, directly or indirectly, carry
on or do similar business or solicit similar business with any customer of The
Bank. The terms of the agreement between The Banc Corporation and Mr. Johnson
will be the result of arm's length negotiations.

Pursuant to the CF Bancshares Plan of Merger, The Banc Corporation will
maintain for four years after the effective time CF Bancshares' current policy,
or a similar policy, of directors' and officers' liability insurance with
respect to matters occurring before the effective time for the benefit of the
individuals who, at or before the effective time, were directors or officers of
CF Bancshares.

The directors of CF Bancshares will become advisory directors of the
current Citizens Federal branches after the merger and will receive directors'
fees.

As of the record date, directors and executive officers of CF Bancshares
beneficially owned an aggregate of 30,682 shares of CF Bancshares common stock,
representing 18.1% of the shares outstanding. If the merger is completed and all
the directors and executive officers of CF Bancshares elect to receive only The
Banc Corporation common stock, they will receive between 18.1% and 100% of the
stock issued to CF Bancshares stockholders in the merger. The directors of CF
Bancshares have appointed James A. Taylor, the Chairman of the Board of The Banc
Corporation, as proxy to vote their shares of CF Bancshares common stock for the
Plan of Merger. See "Business of CF Bancshares -- Management of CF Bancshares."

ACCOUNTING TREATMENT

We expect the merger to be treated for accounting and financial reporting
purposes as a purchase, meaning that the assets and liabilities of CF Bancshares
will be recorded at their estimated fair values and combined with the historical
basis of The Banc Corporation. Therefore, the financial statements of The Banc
Corporation issued after the merger will reflect these values from CF Bancshares
and will not be restated retroactively to reflect the historical financial
position or results of operations of CF Bancshares. Goodwill and/or other
intangible assets may be created by the excess of the purchase price over the
net fair value of CF Bancshares' assets and liabilities.

The unaudited pro forma financial information contained in this
prospectus-proxy statement has been prepared using the purchase accounting
method to account for the merger. See "Unaudited Pro Forma Condensed
Consolidated Financial Information."

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

Neither The Banc Corporation nor CF Bancshares has requested an advance
ruling from the Internal Revenue Service ("IRS") or a legal opinion from counsel
as to the federal income tax consequences of the CF Bancshares merger. This
discussion is based on the facts described in this prospectus-proxy statement
and the Internal Revenue Code of 1986 (the "Code"), Treasury Regulations
currently in effect thereunder, current administrative rulings and practice by
the IRS and judicial authority, all of which are subject to change which could
affect the validity of this discussion. The IRS may take a position which is
contrary to one or more positions set forth in this discussion.

Likely Recognition Treatment for the CF Bancshares Stockholders. If the
merger does not qualify as a reorganization under Section 368 of the Code (and
the Corporation and CF Bancshares expect that it will not so qualify as
discussed below under Section 368 Reorganization Status), all of the CF
Bancshares stockholders will recognize gain or loss for federal income tax
purposes upon the exchange of their shares of CF Bancshares for the common stock
of The Banc Corporation and/or the cash they elect to receive in lieu of the
common stock of The Banc Corporation. The amount of gain or loss a CF Bancshares
stockholder will recognize will equal the difference between (i) the sum of the
fair market value of the common stock of The Banc Corporation he receives and
the amount of cash he elects to receive in the merger, and (ii) the adjusted
basis of the CF Bancshares stockholder in his CF Bancshares shares exchanged in
the merger.

If, contrary to the expectations of The Banc Corporation and CF Bancshares,
the amount of cash elected to be received is less than the 60% level referred to
below, the transaction may qualify as a reorganization under Section
368(a)(1)(A), and a CF Bancshares stockholder who receives, in whole or in part,
stock of The Banc Corporation may have the amount of the gain that he recognizes
limited to the amount of cash, if any, that he receives.

Disposition of The Banc Corporation Common Stock. If, as expected, the CF
Bancshares merger does not qualify as a reorganization under Section 368, a CF
Bancshares stockholder who receives stock in The Banc Corporation in the CF
Bancshares merger will have a cost basis therein equal to its fair market value
at the time of the merger. If, contrary to such expectation, the CF Bancshares
merger qualifies as a reorganization under Section 368, a CF Bancshares
stockholder who receives stock in The Banc Corporation in the CF Bancshares
merger will have a basis therein equal to his basis in his CF Bancshares shares
exchanged minus the amount of cash he elects to receive plus the amount of gain,
if any, he recognizes.

In either case, CF Bancshares stockholders will recognize gain or loss for
federal income tax purposes upon a sale or exchange of their common stock of The
Banc Corporation. The amount of gain or loss a CF Bancshares stockholder will
recognize will equal the difference between (1) the amount of cash and fair
market value of other property received in the sale or exchange of such stock,
and (2) the adjusted basis of the CF Bancshares stockholder in his The Banc
Corporation common stock.

Section 368 Reorganization Status. The federal income tax consequences of
the merger are dependent on whether the merger qualifies as a reorganization
under Section 368 of the Internal Revenue Code. The Banc Corporation and CF
Bancshares believe that, under the form of the merger as a reverse subsidiary

merger of TBC Merger Corporation into CF Bancshares, followed by the liquidation
of CF Bancshares into The Banc Corporation (by means of merger under state
corporate law), the requirements and conditions of Section 368(a)(1)(A) are
applicable for purposes of determining whether the CF Bancshares merger will
qualify as a reorganization under Section 368. Under certain "continuity of
proprietary interest" rules, the merger will not qualify as a reorganization if
the total amount of cash elected to be received by CF Bancshares stockholders is
more than a certain percentage of the total consideration received by the CF
Bancshares stockholders in the merger. The Banc Corporation and CF Bancshares
believe such percentage to be approximately 60%.

The Banc Corporation and CF Bancshares expect that some CF Bancshares
stockholders will elect to receive, in whole or in part, cash in lieu of stock
of The Banc Corporation, and that the total amount of the cash that is elected
will exceed 60% of the total consideration in the merger. If this is the case,
The Banc Corporation and CF Bancshares expect that the merger followed by the
liquidation of CF Bancshares will not qualify under Section 368(a)(1)(A) as a
reorganization.

Corporate Level Tax Consequences. If, as expected, the merger does not
qualify as a reorganization under Section 368, The Banc Corporation and CF
Bancshares believe and expect that, pursuant to Section 334(b), The Banc
Corporation will obtain a basis in the assets of CF Bancshares that The Banc
Corporation receives in the liquidation of CF Bancshares that is equal to the
basis of CF Bancshares in those assets, and that CF Bancshares will not have any
gain or loss recognition for federal income tax purposes on the transfer of
those assets to The Banc Corporation. The foregoing treatment requires that, in
the merger, at least 80% in vote and value of CF Bancshares shares be acquired
from stockholders who are not The Banc Corporation or The Bank or a "related
party" to The Banc Corporation or The Bank (as determined by reference to
Section 318(a) but excluding Section 318(a)(4)). Such treatment is also
dependent on an election not being made under Section 338 by The Banc
Corporation and CF Bancshares. Upon due inquiry, The Banc Corporation and CF
Bancshares believe that the requirement of the second preceding sentence will be
satisfied. The Banc Corporation and CF Bancshares intend not to make an election
under Section 338.

If, contrary to the expectations of The Banc Corporation and CF Bancshares,
the amount of cash elected to be received is less than the 60% level referred to
above, the transaction may qualify as a reorganization under Section
368(a)(1)(A), and, in this case, The Banc Corporation and CF Bancshares believe
the same corporate level tax result will obtain as described above, to wit, The
Banc Corporation will obtain a basis in the assets of CF Bancshares equal to the
basis of CF Bancshares in those assets, and CF Bancshares will not have any gain
or loss recognition for federal income tax purposes on the transfer of those
assets to The Banc Corporation.

The Banc Corporation and CF Bancshares believe that (i) the planned merger
of Citizens Federal into The Bank will qualify as a reorganization under Section
368(a)(1)(A), (ii) The Bank will obtain a basis in the assets of Citizens
Federal that it receives in the merger that is equal to the basis of Citizens
Federal in those assets, and (iii) Citizens Federal will not have any gain or
loss recognition on the transfer of those assets to The Bank.

The discussion above is intended only as a summary of the material federal
income tax consequences of the merger and the Citizens Federal merger and is not
a complete analysis or listing of potential tax effects relevant to a decision
whether to vote in favor of approval and adoption of the Plan of Merger.

YOU ARE URGED TO CONSULT YOUR PERSONAL TAX AND FINANCIAL ADVISORS AS TO THE
SPECIFIC FEDERAL INCOME TAX CONSEQUENCES TO YOU, BASED ON YOUR OWN PARTICULAR
STATUS AND CIRCUMSTANCES, AND ALSO AS TO ANY STATE, LOCAL, FOREIGN OR OTHER TAX
CONSEQUENCES ARISING OUT OF THE MERGER.

NO SOLICITATION OF TRANSACTIONS

Under the Plan of Merger, CF Bancshares is restricted in its ability to
participate in discussions and negotiate with any person concerning any proposal
to acquire CF Bancshares upon a merger, purchase of assets, purchase of or
tender offer for CF Bancshares common stock or similar acquisition transaction.
CF Bancshares has also agreed, except to the extent legally required for the
Board of Directors of

CF Bancshares to discharge its fiduciary duties, not to make any information
regarding CF Bancshares available to any person for the purpose of affecting or
causing a merger, consolidation or disposition of CF Bancshares, or its assets
or common stock.

EXPENSES

The Banc Corporation and CF Bancshares shall pay their own costs and
expenses incurred in connection with the merger.

INDEMNIFICATION

The Banc Corporation's Restated Certificate of Incorporation and Bylaws
provide for the elimination of directors' liability for monetary damages arising
from a breach of certain fiduciary obligations and for the indemnification of
directors, officers and agents to the full extent permitted by Delaware law.
These provisions generally provide for indemnification in the absence of gross
negligence or willful misconduct and cannot be amended without the affirmative
vote of a majority of the outstanding shares of The Banc Corporation common
stock entitled to vote thereon.

By operation of law under Delaware law and Florida law, all rights to
indemnification for acts or omissions occurring prior to the effective time now
existing in favor of the current or former directors or officers of CF
Bancshares as provided in its articles of incorporation or bylaws shall survive
the merger and shall continue in effect in accordance with their terms.

RIGHTS OF DISSENTING STOCKHOLDERS

The following discussion is not a complete statement of the law relating to
dissenters' rights and is qualified in its entirety by reference to Annex B,
which contains the full text of Sections 607.1301 through 607.1320 of the
Florida Business Corporation Act. Pursuant to Sections 607.1301 through
607.1320, any stockholder of a corporation has the right to dissent from, and
obtain payment of the "fair value" of his or her shares in the event of a
consummation of a plan of merger to which the corporation is a party if the
stockholder is entitled to vote on the merger. A person having a beneficial
interest in CF Bancshares common stock which is held of record in the name of
another person, such as a broker or nominee, must act promptly to cause the
record stockholder to timely and properly follow the steps summarized below to
perfect whatever dissenters' rights the beneficial stockholder may have.

Sections 607.1301 through 607.1320 of the Florida Business Corporation Act
provide for rights of appraisal of the value of the shares for which the
stockholder of record (1) has delivered notice in writing to CF Bancshares
before the vote is taken that he or she intends to demand a cash payment for his
shares if the merger is consummated and (2) does not vote in favor of the
merger. A proxy or vote against the merger does not constitute such notice of
intent to demand payment. A stockholder may dissent as to less than all of the
shares registered in his name. The rights of a partial dissenter are determined
as if the shares as to which such holder dissents and other shares held by the
holder are registered in different names of CF Bancshares stockholders. Within
10 days after the CF Bancshares special meeting, The Banc Corporation will send
to each CF Bancshares stockholder who has given such dissent notice to CF
Bancshares a written notice of the authorization of the Plan of Merger by the CF
Bancshares stockholders. Within 20 days after the date of such notice the
stockholder must submit a notice of election to dissent and a written demand for
payment of the fair value of his shares to The Banc Corporation. Simultaneously
with the filing of the election to dissent, the CF Bancshares stockholder shall
submit his certificates representing shares of CF Bancshares common stock to The
Banc Corporation for notation thereon that such demand has been made.

The dissenters notice should be sent to:

CF Bancshares, Inc.
401 Fifth Street
Port St. Joe, Florida 32457

Upon filing a notice of election to dissent, the CF Bancshares stockholder
shall thereafter be entitled only to payment as provided under Section 607.1301
through 607.1320 of the Florida Business Corporations Act, and the CF Bancshares
stockholder shall not be entitled to vote or exercise any other rights of a CF
Bancshares stockholder. A notice of election to dissent may be withdrawn in
writing by the CF Bancshares stockholder at any time before an offer to pay for
his shares is made by The Banc Corporation. After The Banc Corporation makes
such an offer, the notice of election to dissent may not be withdrawn unless The
Banc Corporation consents thereto.

Within 10 days after the expiration of the period in which CF Bancshares
stockholders may file their notices of election to dissent, or within 10 days
after the merger is completed, whichever is later (but in no case later than 90
days from the CF Bancshares stockholder's special meeting), The Banc Corporation
will offer to pay each dissenting CF Bancshares stockholder who has demanded
payment in accordance with Sections 607.1301 through 607.1320 of the Florida
Business Corporation Act an amount which The Banc Corporation estimated to be
the fair value of the shares, and each dissenting CF Bancshares stockholder who
has demanded payment in accordance with Sections 607.1301 through 607.1320 of
the Florida Business Corporation Act may agree to accept such offer of payment.
"Fair Value" means the value of the shares as of the close of business on the
day prior to the CF Bancshares stockholders' special meeting, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.

If within 30 days after The Banc Corporation makes an offer of payment to
any such CF Bancshares stockholder and the CF Bancshares stockholder accepts the
same, payment for his or her shares shall be made within ninety (90) days after
the making of such offer or the CF Bancshares closing date, whichever is later.
Upon receiving payment, such dissenting CF Bancshares stockholder ceases to have
any interest in the shares.

If The Banc Corporation fails to make such offer within 10 days after the
expiration of the period in which CF Bancshares stockholders may file their
notices of election to dissent, or within 10 days after the merger is completed,
or if The Banc Corporation makes the offer and any dissenting CF Bancshares
stockholder fails to accept the same within the period of 30 days thereafter,
then The Banc Corporation, within 30 days after receipt of written demand from
any dissenting CF Bancshares stockholder given within 60 days after the date on
which the merger is completed, shall, or at its election at any time within such
period of sixty (60) days may, file an action in any court of competent
jurisdiction in Gulf County, Florida, requesting that the fair value of such
shares be determined. The court shall also determine whether each dissenting CF
Bancshares stockholder, as to whom The Banc Corporation requests the court to
make such determination, is entitled to receive payment for his or her shares.
If The Banc Corporation fails to file an action, any dissenting CF Bancshares
stockholder may do so in the name of The Banc Corporation. All dissenting CF
Bancshares stockholders (whether or not residents of the state of Florida),
other than CF Bancshares stockholders who have agreed with The Banc Corporation
as to the value of their shares, shall be made parties to the proceeding as an
action against their shares. All CF Bancshares stockholders who are proper
parties to the proceeding are entitled to judgment against the Corporation for
the amount of the fair value of their shares. The Banc Corporation shall pay
each dissenting CF Bancshares stockholder the amount found to be due him or her
within 10 days after final determination of the proceedings. Upon payment of the
judgment, the dissenting CF Bancshares stockholder shall cease to have any
interest in such shares. The judgment may, at the discretion of the court,
include a fair rate of interest, to be determined by the court. The costs and
expenses of any such proceeding shall be determined by the court and shall be
assessed against The Banc Corporation, but all or any part of such costs and
expenses may be apportioned and assessed as the court deems equitable against
any or all of the dissenting CF Bancshares stockholders who are parties to the
proceeding, to whom The Banc Corporation has made an offer to pay for the
shares, if the court finds that the action of such CF Bancshares stockholders in
failing to accept such offer was arbitrary, vexatious, or not in good faith.

A CF Bancshares stockholder who dissents and obtains payment under these
procedures may not challenge the merger unless the merger is unlawful or
fraudulent with respect to the stockholder or CF Bancshares.

IF A CF BANCSHARES STOCKHOLDER FAILS TO COMPLY WITH ANY REQUIREMENTS OF THE
PROVISIONS RELATING TO DISSENTERS' RIGHTS OF APPRAISAL THAT FAILURE WILL RESULT
IN A FORFEITURE OF THAT CF BANCSHARES STOCKHOLDER'S APPRAISAL RIGHTS.

References in this discussion to applicable statutes are summaries of
portions of those statutes, do not purport to be complete and are qualified in
their entirety by reference to applicable law. Sections 607.1301 through
607.1320 of the Florida Business Corporations Act are attached to this
prospectus-proxy statement as Annex B. YOU SHOULD READ ANNEX B CAREFULLY IF YOU
INTEND TO EXERCISE YOUR DISSENTERS' RIGHTS.

OPERATIONS AND MANAGEMENT OF THE BANC CORPORATION

AFTER THE MERGER

OPERATIONS

After consummation of the merger, CF Bancshares will become a wholly-owned
subsidiary of The Banc Corporation and will be subsequently merged with and into
The Banc Corporation. The surviving corporation will operate under the name "The
Banc Corporation" and will continue to engage in the banking business through
its banking subsidiary. The Banc Corporation will then cause Citizens Federal to
merge with and into The Bank. The surviving subsidiary bank will operate under
the name "The Bank." The operations of the merged companies will be integrated
where appropriate with the operations of The Banc Corporation and The Bank.

MANAGEMENT

After the consummation of the merger, The Banc Corporation will be managed
by the same Board of Directors and executive officers as existed prior to the
merger. In addition, The Banc Corporation expects that Mr. Johnson will be
employed as President of The Bank -- Port St. Joe.

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

We are providing the following unaudited pro forma condensed consolidated
financial statements to aid you in your analysis of the financial aspects of the
proposed merger. The unaudited pro forma condensed consolidated statement of
financial condition gives effect to the proposed purchase transaction as if it
had occurred on June 30, 2001. The unaudited pro forma condensed consolidated
statements of income for the six months ended June 30, 2001 and the year ended
December 31, 2000 give effect to the merger of The Banc Corporation and CF
Bancshares, as if the purchase transaction had occurred January 1, 2001 and
2000. The statements include pro forma adjustments as described in the notes
accompanying the financial statements.

We derived this information from the unaudited consolidated financial
statements for the six months ended June 30, 2001 and the audited consolidated
financial statements for the year ended December 31, 2000 of The Banc
Corporation and CF Bancshares. The unaudited pro forma condensed consolidated
financial statements should be read in conjunction with the unaudited and
audited historical consolidated financial statements and related notes of The
Banc Corporation and CF Bancshares which are included in this prospectus-proxy
statement.

The unaudited pro forma condensed consolidated financial information is
presented for illustrative purposes only and does not purport to be indicative
of the operating results or financial position that would have actually occurred
if the consolidation had been in effect on the dates indicated, nor is it
indicative of the future operating results or financial position of the
consolidated company. The pro forma adjustments are based on the information and
assumptions available at the time of the printing of this prospectus-proxy
statement.

THE BANC CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (UNAUDITED)

JUNE 30, 2001
-----------------------------------------------------------------------------
HISTORICAL PRO FORMA
------------------------------------------ ADJUSTMENTS
THE CF ------------------ PRO FORMA
BANC CORPORATION BANCSHARES COMBINED DR. CR. COMBINED
---------------- ---------- ---------- ------- ------- ----------
(IN THOUSANDS)

ASSETS
Cash and due from banks...... $ 36,500 $ 3,859 $ 40,359(A) $16,000(A) $ 7,000 $ 49,359
Interest bearing deposits in
other banks................ 593 6,024 6,617 6,617
Federal funds sold........... 48,315 -- 48,315 48,315
Investment securities
available for sale......... 74,329 -- 74,329 74,329
Investment securities
held-to-maturity........... -- 2,756 2,756(B) 49 2,805
Mortgage loans held for
sale....................... 2,445 -- 2,445 2,445
Loans, net of unearned
income..................... 912,114 88,153 1,000,267 1,000,267
Less: Allowance for loan
losses..................... (9,509) (342) (9,851) (9,851)
---------- -------- ---------- ----------
Net loans........... 902,605 87,811 990,416 990,416
---------- -------- ---------- ----------
Premises and equipment,
net........................ 45,167 2,387 47,554(B) 505 48,059
Accrued interest
receivable................. 8,144 711 8,855 8,855
Stock in FHLB and Federal
Reserve Bank............... 8,250 813 9,063 9,063
Other assets................. 29,026 872 29,898(C) 7,567 37,465
---------- -------- ---------- ----------
Total assets........ $1,155,374 $105,233 $1,260,607 $1,277,728
========== ======== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing........ $ 103,560 $ 7,547 $ 111,107 $ 111,107
Interest-bearing........... 806,783 72,631 879,414 (B) 736 880,150
---------- -------- ---------- ----------
Total deposits...... 910,343 80,178 990,521 991,257
Advances from FHLB........... 136,100 16,250 152,350 152,350
Other borrowed funds......... 2,026 -- 2,026 2,026
Note payable................. 7,000 -- 7,000(A) 7,000(D) 10,850 10,850
Accrued expenses and other
liabilities................ 7,154 690 7,844 7,844
---------- -------- ---------- ----------
Total liabilities... 1,062,623 97,118 1,159,741 1,164,327
Guaranteed preferred
beneficial interests in the
Corporation's subordinated
debentures................. 15,000 -- 15,000 (A) 16,000 31,000
Stockholders' Equity
Common stock................. 14 2 16(F) 2 14
Surplus...................... 47,756 1,436 49,192(F) 1,436(E) 4,650 52,406
Retained Earnings............ 30,613 6,677 37,290(F) 6,677 30,613
Accumulated other
comprehensive income....... 88 -- 88 88
Treasury stock, at cost...... (720) -- (720) (720)
---------- -------- ---------- ----------
Total stockholders'
equity............ 77,751 8,115 85,866 82,401
---------- -------- ---------- ------- ------- ----------
Total liabilities
and stockholders'
equity............ $1,155,374 $105,233 $1,260,607 $39,236 $39,236 $1,277,728
========== ======== ========== ======= ======= ==========

THE BANC CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

FOR THE PERIOD ENDING JUNE 30, 2001
--------------------------------------------------------------------------------
HISTORICAL
---------------------------------------- PRO FORMA ADJUSTMENTS
THE CF ------------------------- PRO FORMA
BANC CORPORATION BANCSHARES COMBINED DR. CR. COMBINED
---------------- ---------- -------- ----------- ----------- ---------
(IN THOUSANDS)

Interest income:
Interest and fees on
loans..................... $41,210 $3,772 $44,982 $44,982
Interest on investment
securities
Taxable................... 2,824 118 2,942 2,942
Exempt from Federal income
tax.................... 294 -- 294 294
Interest on federal funds
sold...................... 903 -- 903 903
Interest and dividends on
other investments......... 377 107 484 484
------- ------ ------- -------
Total interest
income.......... 45,608 3,997 49,605 49,605
Interest expense:
Interest on deposits........ 21,748 1,903 23,651 (G) 250 23,401
Interest on other borrowed
funds..................... 3,892 434 4,326(H) 380 4,706
------- ------ ------- -------
Total interest
expense......... 25,640 2,337 27,977 28,107
------- ------ ------- -------
Net interest
income.......... 19,968 1,660 21,628 21,498
Provision for loan losses... 1,630 96 1,726 1,726
------- ------ ------- -------
Net interest
income after
provision for
loan losses..... 18,338 1,564 19,902 19,772
Noninterest income.......... 4,296 263 4,559 4,559
Gain on sale of
securities................ 157 -- 157 157
------- ------ ------- -------
Total noninterest
income.......... 4,453 263 4,716 4,716
Noninterest expenses:
Salaries and employee
benefits.................. 9,558 494 10,052 10,052
Occupancy, furniture and
equipment expense......... 3,472 237 3,709(G) 6 3,715
Other operating expenses.... 4,832 303 5,135(I) 83 5,218
------- ------ ------- -------
Total noninterest
expenses........ 17,862 1,034 18,896 18,985
------- ------ ------- -------
Distributions on trust
preferred securities...... 795 -- 795(J) 606 1,401
Income before
income taxes.... 4,134 793 4,927 4,102
Income tax expense.......... 1,160 296 1,456 (K) 281 1,175
------- ------ ------- -------
Net income........ $ 2,974 $ 497 $ 3,471 $ 2,927
======= ====== ======= =======
Basic and diluted net income
per share................. $ 0.21 $ 2.93 $ 0.20
======= ====== =======
Average common shares
outstanding............... 14,308 169 14,982
======= ====== =======
Average common shares
outstanding, assuming
dilution.................. 14,311 169 14,985
======= ====== =======

THE BANC CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

FOR THE YEAR ENDING DECEMBER 31, 2000
----------------------------------------------------------------------
HISTORICAL PRO FORMA
---------------------------------------- ADJUSTMENTS
THE CF ------------- PRO FORMA
BANC CORPORATION BANCSHARES COMBINED DR. CR. COMBINED
---------------- ---------- -------- ----- --- ---------
(IN THOUSANDS)

Interest income:
Interest and fees on loans.... $68,467 $6,519 $74,986 $74,986
Interest on investment
securities:
Taxable.................... 4,314 203 4,517 4,517
Exempt from Federal income
tax...................... 737 -- 737 737
Interest on federal funds
sold....................... 930 -- 930 930
Interest and dividends on
other investments.......... 587 210 797 797
------- ------ ------- -------
Total interest
income.............. 75,035 6,932 81,967 81,967
Interest expense:
Interest on deposits.......... 34,967 3,404 38,371 (G) 500 37,871
Interest on other borrowed
funds...................... 4,954 599 5,553(H) 760 6,313
------- ------ ------- -------
Total interest
expense............. 39,921 4,003 43,924 44,184
------- ------ ------- -------
Net interest income... 35,114 2,929 38,043 37,783
Provision for loan losses....... 4,961 100 5,061 5,061
------- ------ ------- -------
Net interest income
after provision for
loan losses......... 30,153 2,829 32,982 32,722
Noninterest income.............. 7,691 504 8,195 8,195
Gain on sale of securities...... 131 -- 131 131
------- ------ ------- -------
Total noninterest
income.............. 7,822 504 8,326 8,326
Noninterest expenses:
Salaries and employee
benefits................... 16,101 1,020 17,121 17,121
Occupancy, furniture and
equipment expense.......... 5,893 423 6,316(G) 13 6,329
Other operating expenses...... 10,124 608 10,732(I) 167 10,899
------- ------ ------- -------
Total noninterest
expenses............ 32,118 2,051 34,169 34,349
------- ------ ------- -------
Distributions on trust preferred
securities.................... 504 -- 504(J) 1,211 1,715
Income before income
taxes............... 5,353 1,282 6,635 4,984
Income tax expense.............. 996 476 1,472 (K) 561 911
------- ------ ------- -------
Net income............ $ 4,357 $ 806 $ 5,163 $ 4,073
======= ====== ======= =======
Basic and diluted net income per
share......................... $ 0.30 $ 4.77 $ 0.27
======= ====== =======
Average common shares
outstanding................... 14,384 169 15,068
======= ====== =======
Average common shares
outstanding, assuming
dilution...................... 14,387 169 15,061
======= ====== =======

THE BANC CORPORATION

NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION.

The Unaudited Pro Forma Condensed Consolidated Statement of Financial
Condition and Unaudited Pro Forma Condensed Consolidated Income Statement give
effect to the merger of The Banc Corporation and CF Bancshares in a business
combination accounted for as a purchase. As a result of the merger, TBC Merger
Corporation will merge with CF Bancshares, and CF Bancshares will be the
surviving corporation and become a wholly-owned subsidiary of The Banc
Corporation. CF Bancshares will then be merged into The Banc Corporation. The
merger agreement provides that each share of CF Bancshares will be converted
into the right to receive either shares of The Banc Corporation common stock or
cash.

The pro forma condensed consolidated financial statements assume that 70%
of the CF Bancshares stockholders will elect to receive cash consideration and
that 30% will elect to receive The Banc Corporation common shares. The pro forma
condensed consolidated financial statements assume an exchange ratio of 13.265
shares of The Banc Corporation common stock for one share of CF Bancshares
common stock. The exchange ratio was estimated for pro forma purposes assuming
total consideration of $15.5 million and a closing date trading price of $6.90.

Described below is the pro forma estimate of the total purchase price of
the transaction as well as the adjustments to allocate the purchase price based
on preliminary estimates of the fair values of the assets and liabilities of CF
Bancshares.

(IN THOUSANDS)
--------------

Total estimated consideration (stock and cash).............. $15,500
Percentage of shares to be acquired by exchange of stock.... 30%
-------
Estimated fair value of shares issued to CF Bancshares
shareholders.............................................. $ 4,650
The Banc Corporation estimated share price.................. 6.90
-------
Total number of The Banc Corporation shares to be issued to
CF Bancshares shareholders................................ 674
=======
Equity of CF Bancshares..................................... $ 8,115
-------
Excess of cost over book value.............................. 7,385
Adjustments to carrying values of:
Premises and equipment.................................... 505
Investment securities held-to-maturity.................... 49
Interest bearing deposits................................. (736)
-------
Goodwill and other intangible assets........................ $ 7,567
=======

NOTE 2. ADJUSTMENTS.

The purchase accounting and pro forma adjustments related to the unaudited
pro forma condensed consolidated statements of income and statement of financial
condition are described below.

(A) On July 16, 2001, The Banc Corporation received $16.0 million in
proceeds from the issuance of trust preferred securities. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Recent Developments" for further discussion. The Banc
Corporation used $7.0 million of the proceeds from the trust preferred
securities to pay down an existing line of credit.

(B) Purchase adjustments will be recorded to increase the carrying
value of investment securities held-to-maturity, premises and equipment,
and interest-bearing deposits to the extent that the fair value of the net
assets acquired exceeds the carrying value.

THE BANC CORPORATION

NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(C) To record goodwill, including the core deposit intangible,
resulting from the purchase of CF Bancshares. Goodwill is calculated as the
difference between the purchase price and the fair value of CF Bancshares
net assets as of June 30, 2001. Included in goodwill is the core deposit
intangible, which management estimates to be approximately 2% of CF
Bancshares total deposits or $1.67 million.

(D) Management estimates that $10.85 million of the cash needed for
the purchase will be borrowed on an existing line of credit. The actual
amount of the cash required will vary depending on the elections of CF
Bancshares shareholders.

(E) Approximately 674,000 shares, with a par value of $.001 per share,
of The Banc Corporation common stock will be issued assuming a stock
election of 30%, an exchange ratio of 13.265 and a measurement date value
of $6.90.

(F) Elimination of CF Bancshares historical stockholder's equity
accounts.

(G) Amortization or depreciation relating to the CF Bancshares fair
value adjustments.

(H) Increase in interest expense related to increased borrowings of
$10.85 million assumed to be incurred to finance the purchase of CF
Bancshares. Management assumes a rate of 7% based on the terms of the
credit agreement.

(I) Amortization of the core deposit intangible. The Banc Corporation
will amortize the core deposit intangible of $1.67 million on a
straight-line basis over 10 years. In accordance with the provisions of
Statement of Financial Accounting Standards No. 141 and 142, the goodwill
will not be amortized.

(J) Recording the interest expense on the trust preferred securities
assuming an annual interest of 7.57%, the interest rate at date of
issuance.

(K) The income tax effect of the pro forma adjustments reflected in
the income statements federal statutory rate of 34%.

SELECTED FINANCIAL DATA -- THE BANC CORPORATION

The following table sets forth selected financial data for The Banc
Corporation from its consolidated financial statements and should be read in
conjunction with the related consolidated financial statements and notes
thereto. See "The Banc Corporation and Subsidiaries Consolidated Financial
Statements."

JUNE 30, DECEMBER 31,(1)
--------------------- ------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- -------- ---------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS)

SELECTED STATEMENT OF FINANCIAL CONDITION
DATA:
Total assets................................. $1,155,374 $908,105 $1,029,215 $827,427 $630,089 $461,956 $359,533
Loans, net of unearned income................ 912,114 713,922 808,145 632,777 431,931 282,902 213,533
Investment securities........................ 74,329 79,118 95,705 70,916 98,208 98,885 93,590
Deposits..................................... 910,343 742,930 827,304 682,517 531,070 395,222 313,514
Stockholders' Equity......................... 77,751 71,037 74,875 68,848 65,967 53,716 40,873
SELECTED STATEMENT OF INCOME DATA:
Interest income.............................. 45,608 34,566 75,035 55,557 42,472 33,705 25,207
Interest expense............................. 25,640 17,504 39,921 26,749 20,206 15,793 11,486
---------- -------- ---------- -------- -------- -------- --------
Net interest income...................... 19,968 17,062 35,114 28,808 22,266 17,912 13,721
Provision for loan losses.................... 1,630 1,597 4,961 2,850 4,657 2,685 1,236
Noninterest income........................... 4,453 3,524 7,822 6,164 4,081 3,019 2,646
Merger related costs......................... -- -- -- 744 1,466 -- --
Other noninterest expense.................... 17,862 16,126 32,118 27,938 20,663 14,776 12,031
Distributions on trust preferred
securities................................. 795 -- 504 -- -- -- --
---------- -------- ---------- -------- -------- -------- --------
Income (loss) before income taxes.......... 4,134 2,863 5,353 3,440 (439) 3,470 3,100
Income tax expense (benefit)................. 1,160 767 996 520 (724) 1,074 917
---------- -------- ---------- -------- -------- -------- --------
Net income................................. $ 2,974 $ 2,096 $ 4,357 $ 2,920 $ 285 $ 2,396 $ 2,183
========== ======== ========== ======== ======== ======== ========
PER SHARE DATA:
Net income -- basic.......................... $ 0.21 $ 0.14 $ 0.30 $ 0.20 $ 0.02 $ 0.23 $ 0.23
-- diluted........................ 0.21 0.14 0.30 0.20 0.02 0.22 0.23
PERFORMANCE RATIOS:
Return on average assets(2).................. 0.54% 0.49% 0.48% 0.41% 0.05% 0.58% 0.71%
Return on average equity(2).................. 7.87 6.12 6.03 4.33 0.51 5.57 6.12
ASSETS QUALITY RATIOS:
Allowance for loan losses to nonperforming
loans...................................... 130.98% 129.85% 90.85% 216.22% 172.93% 146.42% 111.49%
Allowance for loan losses to loans, net of
unearned income............................ 1.04 1.25 1.11 1.27 1.50 1.32 1.18
Nonperforming loans to loans, net of unearned
income..................................... 0.80 0.96 1.22 0.59 0.58 0.90 1.06
Net loan charge-offs to average loans(2)..... 0.25 0.22 0.57 0.90 0.67 0.58 0.45

---------------

(1) The selected financial data includes the financial data for Emerald Coast
Bancshares, Inc. since the date of its inception, August 30, 1996.
(2) Interim period ratios are annualized.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- THE BANC CORPORATION

BASIS OF PRESENTATION

The following is a narrative discussion and analysis of significant changes
in The Banc Corporation's results of operations and financial condition. This
discussion should be read in conjunction with the consolidated financial
statements and selected financial data included elsewhere in this
prospectus-proxy statement.

The principal subsidiary of The Banc Corporation is The Bank, a bank
organized and existing under the laws of Alabama and headquartered in
Birmingham, Alabama which operates 31 banking offices throughout Alabama and the
panhandle of Florida. Other subsidiaries of The Banc Corporation include TBC
Capital Statutory Trust II ("TBC Capital II"), a Connecticut statutory trust,
TBC Capital Statutory Trust III, a Delaware business trust, ("TBC Capital III")
and Morris Avenue Management Group, Inc. ("MAMG"), an Alabama corporation, all
of which are wholly owned. TBC Capital II and TBC Capital III are special
purpose entities formed solely to issue cumulative trust preferred securities.
MAMG is a real estate management company formed to manage all The Banc
Corporation's real properties.

Acquisitions. The acquisition of other banking organizations during 1998
and 1999 contributed significantly to The Banc Corporation's early-stage
development. During the fourth quarter of 1998, Commerce Bank of Alabama and the
banking subsidiaries of Commercial Bancshares of Roanoke, Inc., City National
Corporation and First Citizens Bancshares, Inc. were merged with the into The
Bank. Emerald Coast Bank became a subsidiary of The Banc Corporation on February
12, 1999, as a result of the merger of Emerald Coast Bancshares, Inc. with The
Banc Corporation. C&L Bank became a subsidiary of The Banc Corporation as a
result of The Banc Corporation's acquisitions of C&L Bank of Blountstown and C&L
Banking Corporation and its bank subsidiary, C&L Bank of Bristol on June 30,
1999. The banking subsidiary of Bankers Trust of Alabama, Inc. was merged into
The Bank on July 13, 1999. On June 16, 2000, Emerald Coast Bank and C&L Bank
merged into The Bank. The Bank also acquired three new branches in Southeast
Alabama in 1999.

RECENT DEVELOPMENTS

On July 16, 2001, TBC Capital III received approximately $16 million in a
pooled trust preferred offering. TBC Capital III used these proceeds to purchase
a like amount of junior deferrable debentures issued by The Banc Corporation. As
of date of issuance the interest rate on the securities was 7.57% per annum. The
stated interest rate is the six month LIBOR plus 375 basis points. The interest
rate on the securities is re-priced every six months and has a 12% per annum
ceiling. The Banc Corporation used a portion of the proceeds to pay off its
outstanding line of credit and invest additional capital into its subsidiary,
The Bank. The Banc Corporation plans to use the remaining proceeds for general
corporate purposes.

FORWARD LOOKING STATEMENTS

This discussion contains information and forward-looking statements that
are based on The Banc Corporation's belief as well as certain assumptions made
by, and information currently available to, The Banc Corporation with respect to
its ability to achieve the operating results it expects relating to the
recently-completed acquisitions; the ability of The Banc Corporation to achieve
anticipated cost savings and revenue enhancements with respect to the acquired
operations; the assimilation of the acquired operations by The Banc Corporation,
including installing The Banc Corporation's centralized policy oversight, credit
review and management systems at the acquired institutions; the absence of
material contingencies related to the acquired operations; the ability to
maintain strong asset quality through proper underwriting; the adequacy of the
allowance for loan losses; the ability of The Banc Corporation to resolve any
pending litigation on acceptable terms; the effect of legal proceedings on The
Banc Corporation's financial condition, results of operations and liquidity and
market risk disclosures, as well as other information. The risks and
uncertainties that may affect operations, performance, growth projections and
the results of The Banc Corporation's business include, but

are not limited to, fluctuations in the economy, the relative strength and
weakness in the commercial and consumer sector and in the real estate market,
the actions taken by the Federal Reserve Board for the purpose of managing the
economy, interest rate movements, the impact of competitive products, services
and pricing, timely development by The Banc Corporation of technology
enhancements for its products and operating systems, legislation and similar
matters. Although management of The Banc Corporation believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to be correct. Actual
results may vary materially from those anticipated, estimated, projected or
expected.

FINANCIAL OVERVIEW

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

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

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2001, COMPARED WITH SIX MONTHS ENDED JUNE 30, 2000.

The growth in net income during the first six months of 2001 compared to
the first six months of 2000 is primarily the result of an increase in net
interest income. Net interest income is the difference between the income earned
on interest earning assets and interest paid on interest bearing liabilities
used to support such assets. Net interest income increased $2.9 million, or
17.0% to $20.0 million for the first six months of 2001 from $17.1 million for
the first six months of 2000. The increase in net interest income was offset by
an increase in noninterest expense. During the first six months of 2001,
noninterest expenses increased $1.7 million, or 10.8% to $17.8 million compared
to $16.1 million for the first six months of 2000.

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

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

The provision for loan losses was $1.6 million for the first six months of
2001 and 2000. The provision for loan losses represents the amount determined by
management necessary to maintain the allowance for loan losses at a level
capable of absorbing inherent losses in the loan portfolio, plus estimated
losses associated with off-balance sheet credit instruments such as letters of
credit and unfunded lines of credit. The allowance for loan losses at June 30,
2001, totaled $9.5 million, or 1.04% of total loans, compared to $9.0 million,
or 1.11% of

total loans at December 31, 2000. The Banc Corporation prepares an analysis to
assess the risk in the loan portfolio and to determine the adequacy of the
allowance for loan losses. Generally, The Banc Corporation estimates the
allowance using factors such as historical loss experience based on volume and
types of loans, volume and trends in delinquencies and nonaccruals, national and
local economic conditions and other pertinent information.

Noninterest income increased $929,000, or 26.4% to $4.5 million for the
first six months of 2001 from $3.5 million for the first six months of 2000.
This increase is primarily attributable to growth in service charge income
related to the increase in the volume of deposits, gains from the sale of real
estate and the sale of investment securities. Gains from the sale of real estate
totaled $388,000 and gains from the sale of investment securities totaled
$157,000 during the first six-months of 2001.

Noninterest expense increased $1.7 million, or 10.8% to $17.8 million for
the first six months of 2001 from $16.1 million for the first six months of
2000. Salaries and benefits, the largest component of noninterest expenses,
increased $1.7 million, or 22.1% to $9.6 million for the first six months of
2001 from $7.8 million for the first six months of 2000. The increase in
salaries and benefits primarily resulted from the addition of personnel in the
lending, administrative and operations areas. All other noninterest expenses
remained level at $8.3 million for the first six months of 2001 and 2000.

During the first six months of 2001, The Banc Corporation recognized
$795,000 of accrued distributions on the $15.0 million principal amount of 10.6%
cumulative preferred trust securities issued September 7, 2000, through its
wholly-owned trust subsidiary, TBC Capital II.

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

YEAR ENDED DECEMBER 31, 2000, COMPARED WITH YEAR ENDED DECEMBER 31, 1999

The Banc Corporation's net income increased $1.5 million, or 51.8% to $4.4
million in the year ended December 31, 2000, from $2.9 million in the year ended
December 31, 1999. This increase is due primarily to increases in The Banc
Corporation's net interest income and noninterest income, offset by increases in
the provision for loan losses and noninterest expenses. The Banc Corporation's
return on average assets in 2000 was .48%, compared to .41% in 1999. Return on
average equity was 6.03% in 2000 compared to 4.33% in 1999. Average equity to
average assets was 7.92% in 2000 compared to 9.36% in 1999.

Net interest income increased $6.3 million, or 21.9% to $35.1 million for
the year ended December 31, 2000, from $28.8 million for the year ended December
31, 1999 as interest income increased $19.5 million, or 35.1%, and interest
expense increased $13.2 million, or 49.2%. The increase in net interest income
is primarily attributable to a $174.7 million, or 32.6% increase in average
loans to $710.4 million during 2000, from $535.8 million during 1999. This
increase was offset by a $171.6 million, or 30.3% increase in average
interest-bearing liabilities to $737.2 million during 2000, from $565.6 million
during 1999.

The Banc Corporation's net interest spread and net interest margin were
3.83% and 4.36%, respectively, in 2000, compared to 3.98% and 4.55% in 1999. The
15 basis point decline in net interest spread is primarily the result of an
increase in volume and rates of interest bearing liabilities during 2000, offset
in part by increased volume and yields in the loan portfolio. The rise in volume
and rates of interest bearing liabilities is primarily the result of an increase
in time deposits, which constituted a significant source of funding for the
increase in loan volume. A portion of these deposits was raised through brokers,
with the remaining funds generated through branch offices. Time deposits
typically carry higher interest rates than other sources of deposit funding;
however, these funds were necessary to meet the loan demands of new market areas
and larger metropolitan market areas.

The provision for loan losses was $5.0 million for the year ended December
31, 2000 compared to $2.9 million in 1999. The provision for loan losses
represents the amount determined by management necessary to maintain the
allowance for loan losses at a level capable of absorbing inherent losses in the
loan portfolio. The
38

Banc Corporation had net charge-offs of $4.1 million in 2000, resulting in a
ratio of net charge-offs to average loans of .57%, compared to $4.8 million or
.90% in 1999. Net charge-offs, as a percentage of the provision for loan losses,
were 81.98% in 2000, compared to 169.89% in 1999. Net charge-offs during 2000
are more reflective of historical averages because net charge-offs during 1999
included the charge-off of loans acquired in a business combination and a
significant loss from a single commercial loan customer. The Banc Corporation
believes that in future periods loan losses should reflect amounts, exclusive of
1999, that are similar to its historical averages.

Noninterest income increased $1.7 million, or 26.9% to $7.8 million in
2000, from $6.1 million in 1999, primarily as the result of increased income
from mortgage banking operations, additional customer service charges and other
income. Income from mortgage banking operations was $1.7 million, or 21.1% of
total noninterest income, an increase of $245,000 from $1.4 million in 1999.
Income from customer service charges and fees was $4.0 million, or 50.6% of
total noninterest income, an increase of $636,000, or 20.0% from $3.4 million in
1999, primarily due to the increase in the volume of customer deposits. Other
noninterest income was $2.1 million, or 26.2% of total noninterest income, an
increase of $729,000, or 55.1% from $1.3 million in 1999. This increase in other
noninterest income is primarily due to an increase in the cash surrender value
of single premium life insurance and miscellaneous fees and commissions.

Noninterest expense increased $3.4 million, or 12.0% to $32.1 million in
2000 from $28.7 million in 1999. Salaries and employee benefits increased $2.7
million, or 20.0% to $16.1 million in 2000 compared to $13.4 million in 1999.
The increase in salaries and benefits primarily resulted from the acquisition of
new banks and branches and the addition of personnel in the administration and
operation areas. As of December 31, 2000, The Banc Corporation had 394 employees
compared to 364 as of December 31, 1999. The 1999 acquisition of new banks and
branches will affect the comparison of all categories of noninterest expenses
since the 1999 amounts only reflect the noninterest expenses related to these
acquisitions since the purchase date. All other noninterest expenses increased
$756,000, or 5.0% to $16.0 million, compared to $15.3 million in 1999. This
increase in other expenses included a $651,000 increase in occupancy expenses, a
$170,000 increase in professional fees and a $338,000 increase in goodwill
amortization. Occupancy expenses increased during 2000 as a result of increased
depreciation and maintenance related to The Banc Corporation's headquarters and
The Bank's operations center. The increase in goodwill amortization relates to
purchase acquisitions closed in the third and fourth quarters of 1999.
Professional fees increased primarily due to increased auditing, consulting and
legal services necessary for a growing financial institution.

Income before provision for income taxes increased $2.0 million, or 55.6%
to $5.4 million in 2000, from $3.4 million in 1999.

During the year ended December 31, 2000, The Banc Corporation recognized
$504,000 of accrued distributions on the $15.0 million principal amount of 10.6%
cumulative trust preferred securities issued September 7, 2000 through its
wholly-owned trust subsidiary, TBC Trust II.

The Banc Corporation's income tax expense was $996,000 and $520,000 in 2000
and 1999, respectively. The primary difference in the effective tax rate and the
federal statutory rate (34%) for 2000 and 1999 arose from the recognition of a
rehabilitation tax credit of $1.3 million and $731,000, respectively, generated
from the restoration of The Banc Corporation's headquarters, the John A. Hand
building.

The Banc Corporation's determination of the realization of deferred tax
assets is based upon management's judgment of various future events and
uncertainties, including the timing and amount of future income earned by its
subsidiaries and the implementation of various tax planning strategies to
maximize realization of the deferred tax assets. The Banc Corporation believes
that its subsidiaries will be able to generate sufficient operating earnings to
realize the deferred tax benefits. In addition, a portion of the amount of the
deferred tax asset that can be realized in any year is subject to certain
statutory federal income tax limitations. The Banc Corporation periodically
evaluates the realizability of the deferred tax assets and, if necessary,
adjusts any valuation allowance accordingly.

YEAR ENDED DECEMBER 31, 1999, COMPARED WITH YEAR ENDED DECEMBER 31, 1998

The Banc Corporation's net income increased $2.6 million to $2.9 million in
the year ended December 31, 1999, from $285,000 in the year ended December 31,
1998. This increase is due primarily to increases in The Banc Corporation's net
interest income and noninterest income, partially offset by an increase in
noninterest expenses. The Banc Corporation's return on average assets in 1999
was .41%, compared to .05% in 1998. Return on average equity was 4.33% in 1999
compared to .51% in 1998. Average equity to average assets was 9.36% in 1999
compared to 10.46% in 1998.

The Banc Corporation incurred nonrecurring merger related costs of $744,000
and $1.5 million during 1999 and 1998, respectively. Without these nonrecurring
expenses, operating earnings for the year ended December 31, 1999 would have
been $3.6 million, an increase of $1.8 million from 1998 operating earnings of
$1.8 million. These nonrecurring expenses consisted primarily of professional
fees for legal and accounting services.

Net interest income increased $6.5 million, or 29.4% to $28.8 million for
the year ended December 31, 1999, from $22.3 million for the year ended December
31, 1998 as interest income increased $13.1 million, or 30.8%, and interest
expense increased $6.5 million, or 32.4%. The increase in net interest income is
primarily attributable to a $195.0 million, or 57.2% increase in average loans
to $535.8 million during 1999, from $340.8 million during 1998. This increase
was partially offset by a $159.9 million, or 39.4% increase in average
interest-bearing liabilities to $565.6 million during 1999, from $405.7 million
during 1998.

The Banc Corporation's net interest spread and net interest margin were
3.98% and 4.55%, respectively, in 1999, compared to 3.96% and 4.73% in 1998. The
18 basis point decline in net interest margin is primarily the result of lower
yields in the loan portfolio during 1999 offset in part by a lower average rate
on interest bearing liabilities. The lower yields in the loan portfolio are
primarily the result of an increase in volume in the Birmingham market where
competition produces lower yielding loans than in smaller markets. However, the
lower yields are offset by an increase in the volume of loans produced in the
larger market.

The provision for loan losses was $2.9 million for the year ended December
31, 1999, compared to $4.7 million in 1998. The provision for loan losses
represents the amount determined by management necessary to maintain the
allowance for loan losses at a level capable of absorbing inherent losses in the
loan portfolio. The Banc Corporation had net charge-offs of $4.8 million in
1999, resulting in a ratio of net charge-offs to average loans of .90%. This
compares to $2.3 million, or .67% in 1998. Net charge-off loans as a percentage
of the provision for loan losses was 169.89% in 1999, compared to 49.39% in
1998. The increase in net charge-off loans resulted primarily from the
charge-off of loans acquired in a business combination and charge-offs related
to a single commercial loan customer.

Noninterest income increased $2.1 million, or 51.0% to $6.2 million in
1999, from $4.1 million in 1998, primarily as the result of increased income
from mortgage banking operations and additional customer service charges and
fees. Income from mortgage banking operations was $1.4 million, or 22.9% of
total noninterest income, an increase of $1.2 million from $232,000 in 1998,
primarily due to the mortgage banking department of the bank operating for the
full year. Income from customer service charges and fees was $3.3 million, or
54.3% of total noninterest income, an increase of $343,000, or 11.4% from $3.0
million in 1998, primarily due to the increase in the volume of customer
deposits. Also included in other noninterest income for 1999 is $383,000
attributable to the increase in the cash surrender value of single premium life
insurance policies purchased during 1999 and $342,000 gain from the sale of real
estate.

Noninterest expense increased $6.6 million, or 29.6% to $28.7 million in
1999 from $22.1 million in 1998. Salaries and employee benefits increased $2.8
million, or 26.3% to $13.4 million in 1999 compared to $10.6 million in 1998.
The increase in salaries and benefits primarily resulted from the acquisition of
new banks and branches and the addition of personnel in the administration and
operation areas. All other noninterest expenses increased $3.8 million, or 32.7%
to $15.3 million, compared to $11.5 million in 1998. This increase in other
expenses included a $1.8 million increase in occupancy expenses, a $1.0 million
increase in professional fees and $907,000 in foreclosure losses. Occupancy
expenses increased during 1999 as a result of The Banc Corporation incurring a
full year of depreciation, rental expense and maintenance on buildings and
equipment

either acquired or leased since the acquisitions. Professional fees increased
primarily due to increased auditing, consulting and legal services necessary for
a growing financial institution. The majority of the foreclosure losses
represent payments made by The Banc Corporation to secure certain rights in
properties acquired in foreclosure from a single commercial account.

Income before provision for income taxes increased $3.9 million to $3.4
million in 1999, from a $439,000 pre-tax loss in 1998.

The Banc Corporation's income tax expense (benefit) was $520,000 and
($724,000) in 1999 and 1998, respectively. The primary difference in the
effective tax rate and the federal statutory rate (34%) for 1999 and 1998 arose
from the recognition of a rehabilitation tax credit of $730,000 and $1.7
million, respectively, generated from the restoration of The Banc Corporation's
headquarters, the John A. Hand building.

NET INTEREST INCOME

The largest component of The Banc Corporation's net income is its net
interest income, which is the difference between the income earned on interest
earning assets and interest paid on deposits and borrowings used in support of
such assets. Net interest income is determined by the rates earned on The Banc
Corporation's interest earning assets, rates paid on its interest-bearing
liabilities, the relative amounts of interest earning assets and
interest-bearing liabilities, the degree of mismatch, and the maturity and
repricing characteristics of its interest-earning assets and interest-bearing
liabilities. Net interest income divided by average interest-earning assets
represents The Banc Corporation's net interest margin.

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

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

YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
2000 1999 1998
--------------------------- --------------------------- ---------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
-------- ------- ------ -------- ------- ------ -------- ------- ------
(DOLLARS IN THOUSANDS)

ASSETS
Earning assets:
Loans, net of unearned income(1)...... $710,414 $68,467 9.64% $535,754 $49,244 9.19% $340,813 $34,310 10.07%
Investment securities
Taxable............................. 66,028 4,314 6.53 68,240 4,141 6.07 90,727 5,493 6.05
Tax-exempt.......................... 14,930 1,117 7.48 18,373 1,400 7.62 18,391 1,402 7.62
-------- ------- -------- ------- -------- -------
Total investment securities..... 80,958 5,431 6.71 86,613 5,541 6.40 109,118 6,895 6.32
Federal funds sold.................. 14,618 930 6.36 15,136 763 5.04 27,189 1,492 5.49
Other investments................... 8,886 587 6.61 5,701 485 8.51 3,475 252 7.25
-------- ------- -------- ------- -------- -------
Total interest-earning assets... 814,876 75,415 9.25 643,204 56,033 8.71 480,595 42,949 8.94
Non interest-earning assets:
Cash and due from banks............... 28,836 32,771 22,019
Premises and equipment................ 41,598 28,738 23,465
Accrued interest and other assets..... 34,718 21,583 10,313
Allowance for loan losses............. (8,524) (6,361) (5,653)
-------- -------- --------
Total assets.................... $911,504 $719,935 $530,739
======== ======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities
Demand deposits....................... $172,579 6,541 3.79% $149,755 $ 5,129 3.42% $106,691 $ 3,529 3.31%
Savings deposits...................... 35,141 1,052 2.99 32,248 938 2.91 30,155 889 2.95
Time deposits......................... 443,686 27,374 6.17 333,720 18,034 5.40 257,360 15,198 5.91
Other borrowings...................... 85,783 4,954 5.78 49,850 2,648 5.31 11,543 590 5.11
-------- ------- -------- ------- -------- -------
Total interest-bearing
liabilities................... 737,189 39,921 5.42 565,573 26,749 4.73 405,749 20,206 4.98%
Non interest-bearing liabilities:
Demand deposits....................... 91,420 81,500 61,624
Accrued interest and other
liabilities......................... 5,696 5,454 7,831
Guaranteed preferred beneficial
interest in debentures.............. 5,000 -- --
Stockholders' equity.................. 72,199 67,408 55,535
-------- -------- --------
Total liabilities and
stockholders' equity.......... $911,504 $719,935 $530,739
======== ======== ========
Net interest income/net interest
spread................................ 35,494 3.83% 29,284 3.98% 22,743 3.96%
==== ==== =====
Net yield on earning assets............. 4.36% 4.55% 4.73%
==== ==== =====
Taxable equivalent adjustment:
Investment securities(2).............. 380 476 477
------- ------- -------
Net interest income............. $35,114 $28,808 $22,266
======= ======= =======

---------------

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

Analysis of Changes in Net Interest Income. The following table sets
forth, on a taxable equivalent basis, the effect which the varying levels of
earning assets and interest-bearing liabilities and the applicable rates have
had on changes in net interest income for the years ended December 31, 2000 and
1999.

YEAR ENDED DECEMBER 31,(1)
--------------------------------------------------------------
2000 VS 1999 1999 VS 1998
----------------------------- ------------------------------
CHANGES DUE TO CHANGES DUE TO
INCREASE ---------------- INCREASE -----------------
(DECREASE) RATE VOLUME (DECREASE) RATE VOLUME
---------- ------ ------- ---------- ------- -------
(DOLLARS IN THOUSANDS)

Increase (decrease) in:
Income from earning assets:
Interest and fees on loans........ $19,223 $2,510 $16,713 $14,934 $(3,224) $18,158
Interest on securities:
Taxable...................... 173 309 (136) (1,352) 18 (1,370)
Tax-exempt................... (283) (25) (258) (2) -- (2)
Interest on federal funds......... 167 194 (27) (729) (114) (615)
Interest on other investments..... 102 (126) 228 233 50 183
------- ------ ------- ------- ------- -------
Total interest income........ 19,382 2,862 16,520 13,084 (3,270) 16,354
------- ------ ------- ------- ------- -------
Expense from interest-bearing
liabilities:
Interest on demand deposits.......... 1,412 586 826 1,600 122 1,478
Interest on savings deposits......... 114 27 87 49 (12) 61
Interest on time deposits............ 9,340 2,821 6,519 2,836 (1,395) 4,231
Interest on other borrowings......... 2,306 252 2,054 2,058 24 2,034
------- ------ ------- ------- ------- -------
Total interest expense....... 13,172 3,686 9,486 6,543 (1,261) 7,804
------- ------ ------- ------- ------- -------
Net interest income.......... $ 6,210 $ (824) $ 7,034 $ 6,541 $(2,009) $ 8,550
======= ====== ======= ======= ======= =======

---------------

(1) The change in interest due to both rate and volume has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the changes in each.

MARKET RISK -- INTEREST RATE SENSITIVITY

Market risk is the risk of loss arising from adverse changes in the fair
value of financial instruments due to a change in interest rates, exchange rates
and equity prices. The Banc Corporation's primary market risk is interest rate
risk.

The primary objective of asset/liability management is to manage interest
rate risk and achieve reasonable stability in net interest income throughout
interest rate cycles. This is achieved by maintaining the proper balance of
interest rate sensitive earning assets and interest rate sensitive liabilities.
The relationship of rate sensitive earning assets to rate sensitive liabilities
is the principal factor in projecting the effect that fluctuating interest rates
will have on future net interest income. Rate sensitive earning assets and
interest-bearing liabilities are those that can be repriced to current market
rates within a relatively short time period.

During the next twelve months, approximately $127.0 million more
interest-bearing liabilities than interest-earning assets can be repriced to
current market rates. As a result, the one-year cumulative gap (the ratio of
rate sensitive assets to rate sensitive liabilities) at December 31, 2000 was
.80, indicating a liability sensitive position. The Banc Corporation's gap
position is closely matched during the first ninety days of 2001 with a gap
ratio of .96. For the period ending December 31, 2001, The Banc Corporation's
interest rate risk model, which relies on management's growth assumptions,
indicates that projected net interest income will increase on an annual basis by
8.9%, or approximately $3.8 million, assuming an instantaneous increase in
interest rates of 200 basis points. Assuming an instantaneous decrease of 200
basis points, projected net interest income is expected to decrease on an annual
basis by 11.3%, or approximately $4.9 million. The effect on net interest income
produced by these scenarios is within The Banc Corporation's policy.

The Banc Corporation attempts to manage the one-year gap position as close
to even as possible. This ensures The Banc Corporation of avoiding wide
variances in case of a rapid change in its interest rate environment. Also,
certain products that are classified as being rate sensitive do not reprice on a
contractual basis. These products include regular savings, interest-bearing
transaction accounts, money market and now accounts. The rates paid on these
accounts are typically not related directly to market interest rates and
management exercises some discretion in adjusting these rates as market rates
change. In the event of a rapid shift in interest rates, management would
attempt to take certain actions to mitigate the negative impact to net interest
income. These actions include but are not limited to, restructuring of
interest-earning assets, seeking alternative funding sources and entering into
interest rate swap agreements.

The Banc Corporation evaluates interest rate sensitivity risk and then
formulates guidelines regarding asset generation and repricing, funding sources
and pricing and off-balance sheet commitments in order to decrease interest rate
sensitivity risk. The Banc Corporation uses computer simulations to measure the
net interest income effect of various interest rate scenarios. The modeling
reflects interest rate changes and the related impact on net interest income
over specified periods of time.

LIQUIDITY

The goal of liquidity management is to provide adequate funds to meet
changes in loan demand or any potential unexpected deposit withdrawals.
Additionally, management strives to maximize its earnings by investing its
excess funds in securities and other securitized loan assets with maturities
matching its offsetting liabilities. See the "Selected Loan Maturity and
Interest Rate Sensitivity" and the "Maturity Distribution of Investment
Securities" tables.

Historically, The Banc Corporation has maintained a high loan-to-deposit
ratio. To meet it's short-term liquidity needs, The Banc Corporation maintains
core deposits and has borrowing capacity through the Federal Home Loan Bank
("FHLB"), federal funds lines and a line of credit with a regional bank.
Long-term liquidity needs are met primarily through these sources, the repayment
of loans, and the maturity or sale of investment securities, including
short-term investments.

FINANCIAL CONDITION

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

Loans. Loans are the largest category of earning assets and typically
provide higher yields than other types of earning assets. Loans involve inherent
credit and liquidity risks which management attempts to control and
counterbalance. At December 31, 2000, total loans net of unearned income were
$808.2 million, an increase of $175.4 million from $632.8 million at December
31, 1999. This compares to increases of $200.9 million during 1999 from $431.9
million at December 31, 1998 and $149.0 million during 1998 from $282.9 million
at December 31, 1997. For the three-year period ended December 31, 2000, these
increases represent an annual compound growth rate of 41.9% with loans averaging
$710.4 million during 2000 compared to $535.8 million during 1999 and $340.8
million during 1998. The average yield of the loan portfolio was 9.64%, 9.19%
and 10.07% for the periods ending December 31, 2000, 1999 and 1998,
respectively. Loan growth during the three-year period ended December 31, 2000
was generated primarily through internal growth in the Birmingham, Alabama and
Florida markets. During this period approximately $42 million in loan growth was
attributable to cash purchases of existing banks and branches.

Loans, net of unearned income, totaled $912.1 million at June 30, 2001, an
increase of 12.9%, or $103.9 million from $808.2 million at December 31, 2000,
with average loans totaling $859.0 million for the first six months of 2001
compared to $670.0 million for the first six months of 2000. Of the $103.9
million increase in loans, 56.0%, or $57.8 million were produced by branches in
the Alabama region, the other 44.0%,
44

or $46.1 million were produced by branches in the Florida region. Loans, net of
unearned income, comprised 87.2% of interest-earning assets at June 30, 2001,
compared to 87.8% at December 31, 2000. The loan portfolio produced an average
yield of 9.7% and 9.5% for the first six months of 2001 and 2000, respectively.

DISTRIBUTION OF LOANS BY CATEGORY

DECEMBER 31,
JUNE 30, ----------------------------------------------------
2001 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)

Commercial, industrial and
agricultural..................... $267,856 $245,154 $207,620 $158,855 $ 96,783 $ 74,083
Real estate -- construction........ 164,358 100,448 59,496 36,121 17,730 5,604
Real estate -- mortgage............ 387,613 373,509 282,717 152,732 115,790 87,474
Consumer........................... 88,478 84,129 74,769 75,796 51,471 45,701
Other.............................. 4,574 5,725 8,802 9,671 2,995 2,861
-------- -------- -------- -------- -------- --------
Total loans.............. 912,879 808,965 633,404 433,175 284,769 215,723
Unearned income.................... (765) (820) (627) (1,244) (1,867) (2,190)
Allowance for loan losses.......... (9,509) (8,959) (8,065) (6,466) (3,741) (2,522)
-------- -------- -------- -------- -------- --------
Net loans................ $902,605 $799,186 $624,712 $425,465 $279,161 $211,011
======== ======== ======== ======== ======== ========

The repayment of loans as they mature is a source of liquidity for The Banc
Corporation. The following table sets forth The Banc Corporation's loans in
selected categories maturing within specified intervals at December 31, 2000.

SELECTED LOAN MATURITY AND INTEREST RATE SENSITIVITY

RATE STRUCTURE FOR LOANS
MATURING
MATURITY OVER ONE YEAR
------------------------------------------------ ---------------------------
OVER ONE YEAR FLOATING OR
ONE YEAR THROUGH FIVE OVER PREDETERMINED ADJUSTABLE
OR LESS YEARS FIVE YEARS TOTAL INTEREST RATE RATE
-------- ------------- ---------- -------- ------------- -----------
(DOLLARS IN THOUSANDS)

Commercial, industrial and
agricultural................ $121,491 $114,549 $ 9,114 $245,154 $101,069 $22,594
Real estate -- construction... 69,834 25,753 4,861 100,448 22,771 7,843
-------- -------- ------- -------- -------- -------
$191,325 $140,302 $13,975 $345,602 $123,840 $30,437
======== ======== ======= ======== ======== =======

The information presented in the above table is based on the contractual
maturities of the individual loans, including loans which may be subject to
renewal at their contractual maturity. Renewal of such loans is subject to
review and credit approval, as well as modification of terms upon their
maturity. Consequently, management believes this treatment presents fairly the
maturity and repricing structure of the loan portfolio.

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

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

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

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

The loan review function is centralized and independent of the lending
function. Review results are reported to the Audit Committee of the Board of
Directors as well as to The Banc Corporation's independent auditors.

The Banc Corporation historically has allocated its allowance for loan
losses to specific loan categories. Although the allowance is allocated, it is
available to absorb losses in the entire loan portfolio.

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

DECEMBER 31,
----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------- ----------------- ----------------- ----------------- --------------------
PERCENT PERCENT PERCENT PERCENT PERCENT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
IN EACH IN EACH IN EACH IN EACH IN EACH
CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ -------- ------ -------- ------ -------- ------ -------- ------ -----------
(DOLLARS IN THOUSANDS)

Domestic
Commercial, industrial
and agricultural..... $5,689 30.3% $4,460 32.8% $3,119 36.7% $1,583 34.0% $ 983 34.3%
Real estate --
Construction......... 392 12.4 223 9.4 181 8.3 151 6.2 70 2.6
Real estate --
mortgage............. 916 46.2 871 44.6 826 35.3 1,296 40.7 919 40.6
Consumer............... 1,822 10.4 2,452 11.8 2,295 17.5 686 18.1 532 21.2
Other.................. 50 .7 -- 1.4 -- 2.2 -- 1.0 -- 1.3
Unallocated............ 90 -- 59 -- 45 -- 25 -- 18 --
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
$8,959 100.0% $8,065 100.0% $6,466 100.0% $3,741 100.0% $2,522 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====

Net charge-offs decreased 16.0% from $4.8 million in 1999 to $4.1 million
in 2000. The ratio of net charge-offs to average loans has averaged .67% for the
five year period ended December 31, 2000, with a ratio of .57% in 2000 and .90%
in 1999. Historically, net charge-offs have been more significant for commercial
and consumer loans. Net charge-off loans during 2000 are more reflective of
historical averages because net charge-off loans during 1999 included the
charge-off of loans acquired in a purchase business combination and a
significant loss from a single commercial loan customer. The Banc Corporation
believes that in future periods loan losses should reflect amounts that are
similar to its historical averages, exclusive of 1999. Net charge-offs were $1.1
million for the first six months of 2001. Net charge-offs to average loans on an
annualized basis totaled .25% for the first six months of 2001.

The allowance as a percentage of loans at December 31, 2000 was 1.11%. The
allowance as a percentage of loans for the five-year period ending December 31,
2000 has averaged 1.25%. Allowance for loan losses as a percentage of
non-performing loans decreased to 90.85% at December 31, 2000 from 216.22% at
December 31, 1999. Nonperforming loans increased $6.2 million to $9.9 million as
of December 31, 2000 from $3.7 million as of December 31, 1999. As a percent of
net loans, nonperforming loans increased from .59% at December 31, 1999 to 1.22%
at December 31, 2000. The increase in nonperforming loans during 2000 includes a
single credit, secured by real estate, totaling $4.9 million which management
believes is fully recoverable. The allowance for loan losses as a percent of
nonperforming loans, excluding this credit, was 181.6% as of December 31, 2000.

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

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

SUMMARY OF LOAN LOSS EXPERIENCE

YEAR
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)

Allowance for loan losses at beginning of
year...................................... $ 8,065 $ 6,466 $ 3,741 $ 2,522 $ 2,072
Allowance of acquired bank.................. -- 3,591 368 -- --
Charge-offs:
Commercial, industrial and agricultural... 3,133 4,531 1,256 795 114
Real estate............................... 756 286 359 81 56
Consumer.................................. 726 975 1,291 883 789
-------- -------- -------- -------- --------
Total charge-offs................. 4,615 5,792 2,906 1,759 959
Recoveries:
Commercial, industrial and agricultural... 193 418 108 42 24
Real estate............................... 87 172 86 23 5
Consumer.................................. 268 360 412 228 144
-------- -------- -------- -------- --------
Total recoveries.................. 548 950 606 293 173
Net charge-offs............................. 4,067 4,842 2,300 1,466 786
Provision for loan losses................... 4,961 2,850 4,657 2,685 1,236
-------- -------- -------- -------- --------
Allowance for loan losses at end of year.... $ 8,959 $ 8,065 $ 6,466 $ 3,741 $ 2,522
======== ======== ======== ======== ========
Loans at end of period, net of unearned
income.................................... $808,145 $632,777 $431,931 $282,902 $213,533
Average loans, net of unearned income....... 710,414 535,754 340,813 254,146 175,772
Ratio of ending allowance to ending loans... 1.11% 1.27% 1.50% 1.32% 1.18%
Ratio of net charge-offs to average loans... 0.57% 0.90% 0.67% 0.58% 0.45%
Net charge-offs as a percentage of:
Provision for loan losses................. 81.98% 169.89% 49.39% 54.60% 63.59%
Allowance for loan losses................. 45.40% 60.04% 35.57% 39.19% 31.17%
Allowance for loan losses as a percentage of
nonperforming loans....................... 90.85% 216.22% 172.93% 146.42% 111.49%

Nonperforming Loans. The following table represents The Banc Corporation's
nonperforming loans for the dates indicated.

NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS

DECEMBER 31,
JUNE 30, ------------------------------------------
2001 2000 1999 1998 1997 1996
-------- ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)

Nonaccrual.................................... $5,717 $9,340 $3,097 $1,496 $1,169 $1,562
Past due (contractually past due 90 days or
more)....................................... 1,543 334 575 2,243 1,386 700
Restructured.................................. -- 187 58 -- -- --
------ ------ ------ ------ ------ ------
$7,260 $9,861 $3,730 $3,739 $2,555 $2,262
====== ====== ====== ====== ====== ======

borrower's financial condition is such that the collection of interest is
doubtful. When a loan is placed on nonaccrual status, all interest which has
been accrued on the loan but remains unpaid is reversed and deducted from
earnings as a reduction of reported interest income. No additional interest
income is accrued on the loan balance until the collection of both principal and
interest becomes reasonably certain. When a problem loan is finally resolved,
there may ultimately be an actual write-down or charge-off of the principal
balance of the loan, which may necessitate additional charges to earnings.

Investment Securities. The investment securities portfolio is an important
component of The Banc Corporation's total earning assets. Total securities
averaged $81.0 million in 2000, compared to $86.6 million in 1999 and $109.1
million in 1998. The investment securities portfolio produced average tax
equivalent yields of 6.71%, 6.40% and 6.32% for the years ended December 31,
2000, 1999 and 1998, respectively. At December 31, 2000, The Banc Corporation's
securities portfolio had an amortized cost of $96.3 million and a fair value of
$91.3 million.

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

The following table sets forth the amortized costs of the securities held
by The Banc Corporation at the dates indicated.

Investment Portfolio

HELD TO MATURITY AVAILABLE FOR SALE
------------------------ ---------------------------
DECEMBER 31,
------------------------------------------------------
2000 1999 1998 2000 1999 1998
------ ------ ------ ------- ------- -------
(DOLLARS IN THOUSANDS)

U.S. Treasury and agencies.................. $ -- $ -- $ -- $39,407 $11,645 $20,965
State and political subdivisions............ 2,867 3,711 4,124 12,844 13,991 18,345
Mortgage-backed securities.................. 1,522 1,766 2,602 38,091 42,292 48,894
Other investments........................... -- -- -- 1,516 1,090 3,095
------ ------ ------ ------- ------- -------
Total investment securities....... $4,389 $5,477 $6,726 $91,858 $69,018 $91,299
====== ====== ====== ======= ======= =======

The following table shows the scheduled maturities and average yields of
securities held at December 31, 2000.

MATURITY DISTRIBUTION OF INVESTMENT SECURITIES

MATURING
---------------------------------------------------------------------------------------
AFTER ONE BUT AFTER FIVE BUT
WITHIN ONE WITHIN FIVE WITHIN TEN
YEAR YEARS YEARS AFTER TEN YEARS TOTAL
--------------- --------------- --------------- --------------- ---------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
(DOLLARS IN THOUSANDS)

Securities available for
sale:
U.S. Agencies.......... $13,917 6.13% $ 6,444 5.87% $18,050 6.55% $ 996 6.80% $39,407 6.30%
State and political
subdivision.......... 175 4.97 1,481 6.49 1,252 4.83 9,936 5.25 12,844 5.35
Mortgage-backed
securities........... 278 6.33 3,370 6.13 4,012 7.00 30,431 5.83 38,091 5.98
Other securities....... -- -- 401 6.42 266 5.51 849 9.88 1,516 8.20
------- ------- ------- ------- -------
Total........... $14,370 6.12% $11,696 6.05% $23,580 6.52% $42,212 5.80% $91,858 6.07%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Securities held to
maturity:
State and political
subdivision.......... $ 860 4.95% $ 1,737 4.76% $ 270 5.37% $ -- --% $ 2,867 4.87%
Mortgage-backed
securities........... 7 5.77 23 7.50 102 7.15 1,390 6.64 1,522 6.69
------- ------- ------- ------- -------
Total........... $ 867 4.96% $ 1,760 4.83% $ 372 5.65% $ 1,390 6.64% $ 4,389 5.50%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====

Short-Term Investments. Short-term investments as of December 31, 2000
consisted of federal funds sold of $3.1 million compared to $5.8 million as of
December 31, 1999. Federal funds sold averaged $14.6 million during 2000,
compared to $15.1 million in 1999 and $27.2 million in 1998 and produced average
yields of 6.36%, 5.04% and 5.49%, respectively. Federal funds are a primary
source of The Banc Corporation's liquidity and are generally invested on an
overnight basis. In addition to federal funds sold, The Banc Corporation will
also invest in short-term commercial paper. As of December 31, 2000, The Banc
Corporation did not hold any commercial paper, compared to $14.5 million as of
December 31, 1999, all of which matured January, 2000.

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

In addition to liquidity management, The Banc Corporation also utilizes
short-term investments when the level of funds committed to lending and the
investment portfolio change or the level of deposit generation changes.

Deposits. During 2000, average total deposits increased $145.6 million, or
24.4% to $742.8 million, from $597.2 million in 1999. During 1999, average total
deposits increased $141.4 million, or 31.0% from $455.8 million in 1998, which
increased $94.7 million, or 26.2% from $361.1 million in 1997. The increase in
average deposits for the three-year period ended December 31, 2000 represents an
average annual compound growth rate of 27.2%. Deposit growth during this
three-year period has been generated primarily through internal growth in The
Banc Corporation's various markets. Deposit growth attributed to the cash
purchase of existing banks and branches totaled approximately $94.0 million
during the same period.

The following table sets forth average deposits of The Banc Corporation by
category for the periods indicated.

AVERAGE DEPOSITS

AVERAGE FOR THE YEAR
---------------------------------------------------------------------------
2000 1999 1998
----------------------- ----------------------- -----------------------
AVERAGE AVERAGE AVERAGE
AMOUNT AVERAGE AMOUNT AVERAGE AMOUNT AVERAGE
OUTSTANDING RATE PAID OUTSTANDING RATE PAID OUTSTANDING RATE PAID
----------- --------- ----------- --------- ----------- ---------
(DOLLARS IN THOUSANDS)

Noninterest bearing demand
deposits........................ $ 91,420 --% $ 81,500 --% $ 61,624 --%
Interest-bearing demand
deposits........................ 172,579 3.79 149,755 3.42 106,691 3.31
Savings deposits.................. 35,141 2.99 32,248 2.91 30,155 2.95
Time deposits..................... 443,686 6.17 333,720 5.40 257,360 5.91
-------- ---- -------- ---- -------- ----
Total average
deposits.............. $742,826 4.71% $597,223 4.04% $455,830 4.30%
======== ==== ======== ==== ======== ====

Noninterest bearing deposits totaled $88.9 million at December 31, 2000, an
increase of 6.2%, or $5.2 million from $83.7 million at December 31, 1999. Of
the $5.1 million increase in noninterest bearing deposits, 41.2%, or $2.1
million were generated in branches located in the Alabama region, the other
58.8%, or $3.0 million were generated in branches in the Florida region.
Noninterest bearing deposits comprised 10.8% of total deposits at, December 31,
2000, compared to 12.3% at December 31, 1999.

Interest bearing deposits totaled $738.4 million at December 31, 2000, an
increase of 23.3%, or $139.6 million from $598.8 million at December 31, 1999.
The $139.6 million increase in interest bearing deposits from December 31, 1999
was generated primarily in branches located in the Alabama region and includes
brokered deposits totaling $46.1 million. These brokered deposits carry an
average rate of 6.8% and mature as follows: second quarter 2001, $25.9 million;
fourth quarter 2001, $14.9 million; and second quarter 2002, $5.3 million.

During 2000, average interest bearing deposits increased $135.7 million, or
26.3% to $651.4 million, from $515.7 million in 1999, compared to an increase
during 1999 of $121.5 million, or 30.8% from $394.2 million in 1998, which
increased $83.1 million, or 26.7% from $311.1 million in 1997. Interest bearing
deposits comprised 89.2% of total deposits at December 31, 2000, compared to
87.7% at December 31, 1999 and carried an average rate of 5.37%, 4.65% and 4.97%
for the years ended December 31, 2000, 1999 and 1998, respectively.

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

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

Deposits, and particularly core deposits, have historically been The Banc
Corporation's primary source of funding and have enabled The Banc Corporation to
meet successfully both its short-term and long-term liquidity needs. These core
deposits represent 71.4% of The Banc Corporation's total deposits at December
31, 2000. The Banc Corporation anticipates that such deposits will continue to
be its primary source of funding in the future. The Banc Corporation's
loan-to-deposit ratio was 97.7% at December 31, 2000, compared to 92.7%

at December 31, 1999. The maturity distribution of The Banc Corporation's time
deposits over $100,000 at December 31, 2000 is shown in the following table.

MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE

AT DECEMBER 31, 2000,
---------------------------------------------------
UNDER 3-6 6-12 OVER
3 MONTHS MONTHS MONTHS 12 MONTHS TOTAL
-------- ------- ------- --------- --------
(DOLLARS IN THOUSANDS)

$61,432 $49,365 $75,360 $50,490 $236,647
======= ======= ======= ======= ========

Approximately 26.0% of The Banc Corporation's time deposits over $100,000
had scheduled maturities within three months. The Banc Corporation believes that
large denomination certificate of deposit customers tend to be extremely
sensitive to interest rate levels, making these deposits less reliable sources
of funding for liquidity planning purposes than core deposits.

Borrowed Funds. During 2000, average borrowed funds increased $35.9
million, or 72.1% to $85.8 million, from $49.9 million during 1999, which
increased $38.3 million, or 331.9% from $11.5 million during 1998. The average
rate paid on borrowed funds during 2000, 1999 and 1998 was 5.78%, 5.31% and
5.11%, respectively. Because of a relatively high loan-to-deposit ratio, the
existence and stability of these funding sources are critical to The Banc
Corporation's maintenance of short-term and long-term liquidity.

Borrowed funds as of December 31, 2000 consist primarily of advances from
the FHLB. The following is a summary, by year of maturity, of advances from the
FHLB as of December 31, 2000 and 1999 (in thousands):

2000 1999
------------------------ -----------------------
WEIGHTED WEIGHTED
YEAR AVERAGE RATE BALANCE AVERAGE RATE BALANCE
---- ------------ -------- ------------ -------

2000................................ --% $ -- 6.07% $ 1,000
2003................................ 4.99 15,660 5.05 17,660
2004................................ 5.21 25,000 5.21 25,000
2005................................ 6.32 32,800 -- --
2008................................ 5.52 2,500 5.52 2,500
2009................................ 5.25 2,000 5.18 16,340
2010................................ 6.18 26,340 -- --
-------- -------
Total..................... 5.78% $104,300 5.20% $62,500
==== ======== ==== =======

The above schedule is by contractual maturity. Certain advances are subject
to call dates as follows: year 2001, $21,340,000; 2002, $58,000,000; 2003,
$18,160,000, 2004, $2,000,000 and 2005, $4,800,000.

The advances are secured by FHLB stock, agency securities and a blanket
lien on certain residential real estate loans, all with a carrying value of
approximately $171.8 million at December 31, 2000. The Banc Corporation has
approximately $32.0 million remaining in unused lines of credit with the FHLB
subject to the availability of qualified collateral.

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

As of December 31, 2000, The Banc Corporation had available $15.0 million
under a line of credit with a regional bank. Interest is one and one quarter
(1.25%) percentage points in excess of the applicable LIBOR Index Rate. The line
matured May 1, 2001. This line was renewed during second quarter of 2001 at an
interest rate of one and three quarters (1.75%) percentage points in excess of
the applicable LIBOR Index Rate. As of June 30, 2001, The Banc Corporation had
outstanding $7.0 million under this line of credit which matures May 1, 2002.
The funds were used as a capital contribution during the first six months of
2001.

The Banc Corporation also has available as of December 31, 2000
approximately $25.3 million in unused federal funds lines of credit with
regional banks, subject to certain restrictions and collateral requirements.

Guaranteed Preferred Beneficial Interest in The Banc Corporation's
Subordinated Debentures. On September 7, 2000, TBC Capital Statutory Trust II
("TBC Capital"), a Connecticut statutory trust wholly-owned by The Banc
Corporation, received $15,000,000 in proceeds in exchange for $15,000,000
principal amount of TBC Capital's 10.6% cumulative trust preferred securities in
a pooled trust preferred private placement. The proceeds were used to purchase
an equal principal amount of 10.6% subordinated debentures of The Banc
Corporation. The Banc Corporation has fully and unconditionally guaranteed all
obligations of TBC Capital on a subordinated basis with respect to the preferred
securities. Subject to certain limitations, the preferred securities qualify as
Tier 1 capital and are presented in the Consolidated Statement of Financial
Condition as "Guaranteed preferred beneficial interests in The Banc
Corporation's subordinated debentures." The sole asset of TBC Capital is the
subordinated debentures issued by The Banc Corporation. Both the preferred
securities of TBC Capital and the subordinated debentures of The Banc
Corporation each have 30-year lives. However, both The Banc Corporation and TBC
Capital have a call option after ten years, subject to regulatory approval, or
earlier depending upon certain changes in tax or investment company laws, or
regulatory capital requirements.

A portion of the proceeds from the offering was used to repay approximately
$10,400,000 of borrowings under The Banc Corporation's line of credit with the
balance to be used for general corporate purposes including additional capital
investment in The Bank.

Stockholders' Equity. Stockholders' equity increased $6.0 million during
2000 to $74.9 million at December 31, 2000 from $68.9 million at December 31,
1999. The increase in stockholders' equity during 2000 primarily consisted of
$4.4 million net income and $1.9 million unrealized gain on securities available
for sale, net of taxes.

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

Regulatory Capital. The table below represents The Banc Corporation's and
its subsidiary's actual regulatory and minimum regulatory capital requirements
at December 31, 2000 (dollars in thousands):

FOR CAPITAL
ADEQUACY TO BE WELL
ACTUAL PURPOSES CAPITALIZED
--------------- --------------- ---------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----

Total Risk-Based Capital
The Banc Corporation................. $92,534 11.36% $65,173 8.00% $81,466 10.00%
The Bank............................. 83,457 10.22 65,302 8.00 81,627 10.00
Tier 1 Risk-Based Capital
The Banc Corporation................. 83,577 10.26 32,587 4.00 48,880 6.00
The Bank............................. 74,500 9.13 32,651 4.00 48,976 6.00
Leverage Ratio
The Banc Corporation................. 83,577 8.47 39,490 4.00 49,362 5.00
The Bank............................. 74,500 7.61 39,180 4.00 48,974 5.00

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

FOR CAPITAL
ADEQUACY TO BE WELL
ACTUAL PURPOSES CAPITALIZED
--------------- --------------- ---------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----

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

IMPACT OF INFLATION

Unlike most industrial companies, the assets and liabilities of financial
institutions such as The Banc Corporation are primarily monetary in nature.
Therefore, interest rates have a more significant effect on The Banc
Corporation's performance than do the effects of changes in the general rate of
inflation and changes in prices. In addition, interest rates do not necessarily
move in the same direction or in the same magnitude as the prices of goods and
services. The Banc Corporation seeks to manage the relationships between
interest sensitive assets and liabilities in order to protect against wide
interest rate fluctuations, including those resulting from inflation.

BUSINESS OF THE BANC CORPORATION

GENERAL

The Banc Corporation is a bank holding company registered under the Bank
Holding Company Act of 1956 ("BHCA") and, effective March 13, 2000, a financial
holding company under the Gramm-Leach-Bliley Act of 1999 ("GLBA"). The Banc
Corporation is incorporated under the laws of Delaware and headquartered in
Birmingham, Alabama. The Banc Corporation had assets of approximately $1.16
billion, loans of approximately $912.1 million, deposits of approximately $910.3
million and stockholders' equity of approximately $77.8 million at June 30,
2001. The Banc Corporation offers a broad range of banking and related services
in 31 locations in Alabama and the Florida panhandle.

The Banc Corporation was established in April 1998 so that Warrior Capital
Corporation could merge into The Banc Corporation on September 24, 1998, and
thereby change its name to "The Banc Corporation" and its domicile from Alabama
to Delaware. Since then, The Banc Corporation has grown primarily through
internal growth and the strategic acquisition of existing community banks and
branches. The Banc Corporation completed its last acquisition in October 1999.
The Corporation has also opened four de novo offices in Alabama and closed three
redundant branches since inception.

The principal subsidiary of The Banc Corporation is The Bank, an Alabama
banking corporation. The Bank is headquartered in Birmingham, Alabama and is
wholly owned by The Banc Corporation. The Bank became a subsidiary of The Banc
Corporation as a result of the Warrior merger. The Bank was known as Warrior
Savings Bank until February 1998. The Bank has been in business as a full
service commercial and retail bank since it was established in 1957 and had five
branches at the time of the Warrior merger. During the fourth quarter of 1998,
Commerce Bank of Alabama, Inc. and the banking subsidiaries of Commercial
Bancshares of Roanoke, Inc., City National Corporation and First Citizens
Bancshares, Inc., were merged with and into The Bank, expanding its market
areas. The Bank acquired three new branches in 1999. The Bank currently has 22
locations in Alabama. On February 3, 2000, The Bank was converted from an
Alabama state chartered nonmember bank to a state chartered member of the
Federal Reserve System under the supervision and regulation of the State of
Alabama Banking Department and the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board").

On June 16, 2000, two of The Banc Corporation's subsidiaries, Emerald Coast
Bank, a federally chartered thrift, and C&L Bank, a Florida banking corporation,
were merged into The Banc Corporation's largest subsidiary, The Bank. The former
locations of Emerald Coast Bank operate as Emerald Coast Bank, a division of The
Bank, and the former locations of C&L Bank operate as C&L Bank, a division of
The Bank.

Prior to its merger with The Bank, Emerald Coast Bank was originally a
Florida state bank formed on August 30, 1996, and was converted into a federally
chartered thrift in 1999. Emerald Coast Bank became a subsidiary of The Banc
Corporation on February 12, 1999, as a result of the merger of Emerald Coast
Bancshares, Inc. with The Banc Corporation. Emerald Coast Bank has six locations
in Panama City Beach, Destin, Seagrove and Bay Point, Florida. The Bank expects
to open one additional branch of its Emerald Coast division in Florida during
the fall of 2001. Emerald Coast Financial Management, Inc., a Florida
corporation and a subsidiary of The Bank provides investment services and
insurance to The Bank's customers and others.

Prior to its merger with The Bank, C&L Bank was a Florida banking
corporation headquartered in Bristol, Florida, and had been in operation since
1975. C&L Bank became a subsidiary of The Banc Corporation as a result of The
Banc Corporation's acquisitions of C&L Banking Corporation and its bank
subsidiary, C&L Bank of Bristol, and C&L Bank of Blountstown on June 30, 1999.
C&L Bank has three locations in the panhandle region of Florida.

The principal executive offices of The Banc Corporation and The Bank are
located at 17 North 20th Street, Birmingham, Alabama 35203, and the telephone
number is (205) 327-3600. As used in this prospectus-proxy statement, the terms
"we" and "our" refers to The Banc Corporation and its respective subsidiaries
and affiliates, including The Bank, unless the context requires otherwise.

STRATEGY

Operations. The Bank targets individuals and local and regional businesses
that prefer local bank decision making and personalized service. To implement
this strategy, we operate on a decentralized basis with respect to deposit
gathering and credit decisions, emphasizing local knowledge and authority to
make credit decisions. The individual presidents of The Bank are responsible for
the day-to-day operations and decisions for the branches under his or her
supervision. We supplement this decentralized management approach with
centralized risk management, policy oversight, credit review, audit and
management systems. We implement these administrative and operations policies at
each of our locations while retaining local management and advisory directors to
capitalize on their knowledge of the local community. We believe this strategy
enables The Bank to generate high yielding loans and to attract and retain low
cost core deposits that provide a large portion of our funding requirements.

We focus on commercial, consumer, residential mortgage and real estate
construction lending to customers in our local markets. We also offer a variety
of deposit programs to individuals and to businesses and other organizations at
interest rates generally consistent with local market conditions. In addition,
we offer individual retirement accounts and investment services, safe deposit
and night depository facilities and additional services such as the sale of
traveler's checks, money orders and cashier's checks.

Market Areas. We are headquartered in Birmingham, Alabama. We also operate
branches in: Albertville, Andalusia, Boaz, Childersburg, Decatur, Frisco City,
Gadsden, Guntersville, Huntsville, Kinston, Madison, Mignon, Monroeville,
Morris, Mt. Olive, Opp, Rainbow City, Roanoke, Samson, Sylacauga, and Warrior,
Alabama, and the panhandle region of Florida, including Destin, Panama City
Beach, Seagrove, Bay Point, Altha, Blountstown and Bristol. The Bank expects to
open one additional branch of its Emerald Coast Bank division during 2001. The
Mignon branch is scheduled to be consolidated into the Sylacauga branch on
November 30, 2001.

Growth. Our future growth depends primarily on the expansion of the
business of The Bank through internal growth and the opening of new branch
offices in new and existing markets. The Bank will also consider the strategic
acquisition of other financial institutions and branches with relatively high
earnings or exceptional growth potential. Our ability to grow profitably from
internal growth depends primarily on our ability to attract and retain low cost
and core deposits coupled with the continued opportunity to generate high
yielding, quality loans. Our ability to grow profitably through the opening or
acquisition of new branches will depend primarily on, among other things, our
ability to identify profitable, growing markets and branch locations within such
markets, attract necessary deposits to operate such branches profitably and to
locate sound loans and investment opportunities within such markets.

We evaluate business combination opportunities and conduct discussions, due
diligence activities and negotiations in connection with those opportunities. As
a result, business combination transactions involving cash, debt or equity
securities might occur from time to time. Any future business combination or
series of business combinations that we might undertake may be material, in
terms of assets acquired or liabilities assumed, to our financial condition. Any
future acquisition is subject to approval by the appropriate bank regulatory
agencies. See "Supervision and Regulation."

LENDING ACTIVITIES

General. We offer a range of lending services, including real estate,
consumer and commercial loans, primarily to individuals and businesses and other
organizations that are located in or conduct a substantial portion of their
business in our market areas. Our total loans at June 30, 2001, were $912
million, or 87.2% of total earning assets. The interest rates we charge on loans
vary with the risk, maturity and amount of the loan and are subject to
competitive pressures, money market rates, availability of funds and government
regulations. We do not have any foreign loans or loans for highly leveraged
transactions.

Loan Portfolio

Real Estate Loans. Loans secured by real estate are a significant
component of our loan portfolio, constituting $387.6 million, or 42.5% of total
loans at June 30, 2001. The primary type of real estate loan is single family
first mortgage loans, typically structured with fixed or adjustable interest
rates, based on market conditions. Fixed rate loans usually have terms of five
years or less, with payments through the date of maturity generally based on a
15 to 30-year amortization schedule. Adjustable rate loans generally have a term
of 15 years. We typically charge an origination fee on these loans.

Nonresidential mortgage loans include commercial, industrial and raw land
loans. The commercial real estate loans are primarily used to provide financing
for retail establishments, offices and manufacturing facilities. We generally
require nonresidential mortgage loans to have an 80% loan-to-value ratio and
usually underwrite commercial loans on the basis of the borrower's cash flow and
ability to service the debt from earnings, rather than on the basis of the value
of the collateral. Terms are typically three to five years and may have payments
through the date of maturity based on a 15 to 30 year amortization schedule.
Construction loans usually have a term of twelve months and generally require
personal guarantees.

Commercial, Industrial, and Agricultural Loans. We make loans for
commercial purposes in various lines of business. These loans are typically made
on terms up to 5 years at fixed or variable rates and are secured by accounts
receivable, inventory or, in the case of equipment loans, the financed
equipment. We attempt to reduce our credit risk on commercial loans by limiting
the loan to value ratio to 85% on loans secured by accounts receivable, 50% on
loans secured by inventory and 75% on loans secured by equipment. We also, from
time to time, make unsecured commercial loans. Commercial, industrial and
agricultural loans constituted $267.8 million, or 29.3% of our loan portfolio at
June 30, 2001.

Consumer Loans. Consumer lending includes installment lending to
individuals in our market areas and consists primarily of loans to purchase
automobiles, recreational vehicles, mobile homes and appliances. Consumer loans
constituted $88.4 million, or 9.7% of our loan portfolio at June 30, 2001.
Consumer loans are underwritten based on the borrower's income, current debt,
credit history and collateral. Terms generally range from four to five years on
automobile loans and one to three years on other consumer loans.

Credit Procedures and Review

Loan Approval. There are credit risks associated with making any loan.
These include prepayment risks, risks resulting from uncertainties in the future
value of collateral, risks resulting from changes in economic and industry
conditions and risks inherent in dealing with individual borrowers. In
particular, longer maturities increase the risk that economic conditions will
change and adversely affect collectability.

We use generally recognized loan underwriting criteria and attempt to
minimize loan losses through various means. In particular, on larger credits, we
generally rely on the cash flow of a debtor as the source of repayment and
secondarily on the value of the underlying collateral. In addition, we attempt
to utilize shorter loan terms in order to reduce the risk of a decline in the
value of such collateral.

We address repayment risks by adhering to internal credit policies and
procedures that include officer and customer lending limits, a multi-layered
loan approval process that includes senior management of The Bank and The Banc
Corporation for larger loans, periodic documentation examination and follow-up
procedures for any exceptions to credit policies. The point in our loan approval
process at which a loan is approved depends on the size of the borrower's credit
relationship with us.

Loan Review. We have a loan review process designed to promote early
identification of credit quality problems. A risk rating system is employed
whereby each loan is assigned a rating which corresponds to the perceived credit
risk. Risk ratings are subject to independent review by a centralized loan
review department which also performs ongoing, independent review of the risk
management process including underwriting, documentation and collateral control.
Regular reports are made to senior management and the Board of Directors
regarding credit quality as measured by assigned risk ratings and other
measures, including, but not limited to, the level of past due percentages and
non-performing assets. The loan review function is centralized

and independent of the lending function. Review results are reported to the
Audit Committee of the Board of Directors of The Banc Corporation as well as to
The Banc Corporation's independent auditors.

DEPOSITS

Core deposits are our principal source of funds, consisting of demand
deposits, interest-bearing transaction accounts, savings deposits and
certificates of deposit. Transaction accounts include checking, money market and
NOW accounts that provide The Bank with a source of fee income and
cross-marketing opportunities, as well as a low-cost source of funds. Time and
savings accounts also provide a relatively stable and low-cost source of
funding. The largest source of funds for The Bank is certificates of deposit.
Certificates of deposit in excess of $100,000 are held primarily by customers in
our market areas.

Deposit rates are set periodically by the Asset Liability Management
Committee which includes senior management of The Bank and The Banc Corporation.
We believe our rates are competitive with those offered by competing
institutions in their market areas; however, we focus on customer service, not
high rates, to attract and retain deposits.

COMPETITION

We encounter strong competition both in making loans and attracting
deposits. Competition among financial institutions is based upon interest rates
offered on deposit accounts, interest rates charged on loans and other credit
and service charges. Customers also consider the quality and scope of the
services rendered, the convenience of banking facilities and, in the case of
loans to commercial borrowers, relative lending limits, and may also consider
the fact that other banks offer different services. In addition, most of our
non-bank competitors are not subject to the same extensive federal regulations
that govern bank holding companies and federally insured banks. See "Supervision
and Regulation." Competition may further intensify if additional financial
services companies enter markets in which we conduct business.

EMPLOYEES

As of December 31, 2000, we employed approximately 394 individuals
primarily at The Bank. We believe that our employee relations have been and
continue to be good.

SUPERVISION AND REGULATION

The Banc Corporation is a bank holding company registered with the Federal
Reserve Board under the BHCA and, effective March 13, 2000, a financial holding
company under the GLBA. We are subject to the supervision, examination and
reporting requirements of the Federal Reserve Board, the BHCA and the GLBA. The
BHCA and other federal laws subject bank holding companies to particular
restrictions on the types of activities in which they may engage and to a range
of supervisory requirements and activities, including regulatory enforcement
actions for violations of laws and regulations.

The supervision and regulation of bank holding companies and their
subsidiaries are intended primarily for the protection of depositors, the
deposit insurance funds of the Federal Deposit Insurance Corporation (the
"FDIC") and the banking system as a whole, not for the protection of bank
holding company stockholders or creditors. The banking agencies have broad
enforcement power over bank holding companies and banks, including the power to
impose substantial fines and other penalties for violation of laws and
regulations. The following description summarizes some of the laws to which we
are subject. References herein to applicable statutes and regulations are brief
summaries thereof, do not purport to be complete and are qualified in their
entirety by reference to such statutes and regulations.

The Bank, an Alabama state chartered bank and member of the Federal Reserve
System, is subject to the regulation, supervision and examination by the Federal
Research Board and Alabama Banking Department.

Gramm-Leach-Bliley Act. The GLBA became law on November 12, 1999, and key
provisions affecting bank holding companies became effective March 11, 2000. The
GLBA enables bank holding companies to acquire insurance companies and
securities firms and effectively repeals depression-era laws which prohibited
57

the affiliation of banks and these other financial services entities under a
single holding company. Certain qualified bank holding companies and other types
of financial service entities may elect to become financial holding companies
under the new law. Financial holding companies are permitted to engage in
activities considered financial in nature, as defined in the GLBA, and may
engage in a broader range of activities than bank holding companies or banks.
The GLBA will enable financial holding companies to offer a wide variety of
financial service, or services incident to financial services, including
banking, securities underwriting, merchant banking and insurance (both
underwriting and agency services). The new financial services authorized by the
GLBA also may be engaged in by a "financial subsidiary" of a national or state
bank, with the exception of insurance or annuity underwriting, insurance company
portfolio investments, real estate investment and development, and merchant
banking, all of which must be conducted under the financial holding company.

To become a financial holding company, a bank holding company must provide
notice to the Federal Reserve Board of its desire to become a financial holding
company, and certify to the Federal Reserve Board that each of its bank
subsidiaries is "well-capitalized," "well-managed" and has at least a
"satisfactory" rating under the CRA. These requirements are also necessary to
maintain financial holding company status. On February 12, 2000, we filed our
election to become a financial holding company with the Federal Reserve Board.
Our election was effective as of March 13, 2000.

Regulatory Restrictions on Dividends. Various federal and state statutory
provisions limit the amount of dividends The Bank can pay to The Banc
Corporation without regulatory approval. Approval of the Federal Reserve Board
is required for payment of any dividend by a state chartered bank that is a
member of the Federal Reserve System if the total of all dividends declared by
the bank in any calendar year would exceed the total of its net profits (as
defined by regulatory agencies) for that year combined with its retained net
profits for the proceeding two years. In addition, a state member bank may not
pay a dividend in an amount greater than its net profits then on hand. State
member banks may also be subject to similar restrictions imposed by the laws of
the states in which they are chartered.

Under Alabama law, a bank may not pay a dividend in excess of 90% of its
net earnings until the bank's surplus is equal to at least 20% of its capital.
The Bank is also required by Alabama law to obtain the prior approval of the
Superintendent of the State Banking Department of Alabama for its payment of
dividends if the total of all dividends declared by The Bank in any calendar
year will exceed the total of (1) the Bank's net earnings (as defined by
statute) for that year, plus (2) its retained net earnings for the preceding two
years, less any required transfers to surplus. In addition, no dividends may be
paid from The Bank's surplus without the prior written approval of the
Superintendent.

In addition, federal bank regulatory authorities have authority to prohibit
the payment of dividends by bank holding companies if their actions constitute
unsafe or unsound practices. The Federal Reserve Board has issued a policy
statement on the payment of cash dividends by bank holding companies, which
expresses the Federal Reserve Board's view that a bank holding company
experiencing earnings weaknesses should not pay cash dividends that exceed its
net income or that could only be funded in ways that weaken the bank holding
company's financial health, such as by borrowing. The ability of The Bank and
The Banc Corporation to pay dividends in the future is currently, and could be
further, influenced by bank regulatory policies and capital guidelines.

As of December 31, 2000, an aggregate of approximately $6.5 million was
available for payment of dividends by The Bank to The Banc Corporation under
applicable restrictions, without obtaining regulatory approval.

Source of Strength. Under Federal Reserve Board policy, a bank holding
company is expected to act as a source of financial strength to its banking
subsidiaries and commit resources to their support. This support may be required
by the Federal Reserve Board at times when, absent this policy, a bank holding
company may not be inclined to provide it. A bank holding company, in certain
circumstances, could be required to guarantee the capital plan of an
undercapitalized banking subsidiary. In addition, any capital loans by a bank
holding company to any of its depository institution subsidiaries are
subordinate in right of payment to deposits and to certain other indebtedness of
the banks.
58

Under the Federal Deposit Insurance Act ("FDIA"), an FDIC-insured
depository institution can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC in connection with (1) the
default of a commonly controlled FDIC-insured depository institution or (2) any
assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the appointment of a conservator or receiver and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC's
claim for damages is superior to claims of stockholders of the insured
depository institution or its holding company but is subordinate to claims of
depositors, secured creditors and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution.

Safe and Sound Banking Practices. Bank holding companies are not permitted
to engage in unsafe or unsound banking practices. The Federal Reserve Board has
broad authority to prohibit activities of bank holding companies and their
non-banking subsidiaries which represent unsafe or unsound banking practices or
which constitute violations of laws or regulations, and can assess civil money
penalties for certain activities conducted on a knowing and reckless basis, if
those activities caused a substantial loss to a depository institution. The
penalties can be as high as $1,000,000 for each day the activity continues.

Capital Adequacy Requirements. The Banc Corporation and The Bank are
required to comply with the capital adequacy standards established by the
Federal Reserve Board and, The Bank is subject to additional requirements of the
FDIC and the Alabama Banking Department. The Federal Reserve Board has adopted
two basic measures of capital adequacy for bank holding companies: a risk based
measure and a leverage measure. All applicable capital standards must be
satisfied for a bank holding company to be in compliance.

The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.

The minimum guideline for the ratio (the "Total Risk-Based Capital Ratio")
of total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8%. At least half
of Total Capital must comprise common stock, minority interests in the equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred stock,
and a limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist of
subordinated debt, other preferred stock, and a limited amount of loan loss
reserves ("Tier 2 Capital").

In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less
goodwill and certain other intangible assets, of 3% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3%, plus an additional cushion of 100 to 200 basis
points. Our Leverage Ratio was 7.61% at June 30, 2001. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve Board has indicated that it will
consider a tangible Tier 1 Capital Leverage Ratio (deducting all intangibles)
and other indicia of capital strength in evaluating proposals for expansion or
new activities.

The federal bank regulatory agencies' risk-based and leverage ratios are
minimum supervisory ratios generally applicable to banking organizations that
meet certain specified criteria, assuming that they have the highest regulatory
rating. Banking organizations not meeting these criteria are expected to operate
with capital positions well above the minimum ratios. The federal and state bank
regulatory agencies may set capital requirements for a particular banking
organization that are higher than the minimum ratios when circumstances warrant.
Federal Reserve Board guidelines also provide that banking organizations
experiencing

internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets.

The Bank was in compliance with the applicable minimum capital requirements
as of June 30, 2001. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- The Banc Corporation." Failure to meet
capital guidelines could subject The Bank to a variety of enforcement remedies
by federal bank regulatory agencies, including termination of deposit insurance
by the FDIC, and to certain restrictions on business.

As of June 30, 2001, both The Banc Corporation and The Bank were "well
capitalized."

Branching. The BHCA, as amended by the interstate banking provisions of
the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), repealed the prior statutory restrictions on
interstate banking, so that The Banc Corporation may acquire a bank located in
any other state, and any bank holding company located outside Alabama may
lawfully acquire any Alabama-based bank regardless of state law to the contrary,
in either case subject to certain deposit-percentage minimums, aging
requirements and other restrictions. In addition, the Interstate Banking Act
generally provided that after June 1, 1997, national and state-chartered banks
may branch interstate through acquisitions of banks in other states.

Alabama and other states have laws relating specifically to acquisitions of
banks, bank holding companies and other types of financial institutions. Alabama
law sets five years as the minimum age of banks which may be acquired.

Restrictions on Transactions With Affiliates and Insiders. Transactions
between The Bank and its affiliates, including The Banc Corporation, are subject
to Sections 23A and 23B of the Federal Reserve Act. In general, Section 23A
imposes limits on the amount of such transactions, and also requires certain
levels of collateral for loans to affiliated parties. It also limits the amount
of advances to third parties which are collateralized by the securities or
obligations of The Banc Corporation or any of its subsidiaries. Section 23B of
the Federal Reserve Act generally requires that certain transactions between a
bank and its respective affiliates be on terms substantially the same, or at
least as favorable to such bank, as those prevailing at the time for comparable
transactions with or involving other nonaffiliated persons.

The restrictions on loans to directors, executive officers, principal
stockholders and their related interests (collectively referred to herein as
"insiders") contained in the Federal Reserve Act and Regulation O apply to all
federally insured institutions and their subsidiaries and holding companies.
These restrictions include limits on loans to one borrower and conditions that
must be met before such a loan can be made. There is also an aggregate
limitation on all loans to insiders and their related interests. These loans
cannot exceed the institution's total unimpaired capital and surplus, and the
FDIC may determine that a lesser amount is appropriate. Insiders are subject to
enforcement actions for knowingly accepting loans in violation of applicable
restrictions. State banking laws also have similar provisions.

FDIC Insurance Assessments. Pursuant to FDICIA, the FDIC adopted a
risk-based assessment system for insured depository institutions that takes into
account the risks attributable to different categories and concentrations of
assets and liabilities. The system assigns an institution to one of three
capital categories: (1) well capitalized; (2) adequately capitalized; and (3)
undercapitalized. These three categories are substantially similar to the prompt
corrective action categories described above, with the "undercapitalized"
category including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. An institution is also assigned by the FDIC to one of three
supervisory subgroups within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the institution's primary federal regulator and information which
the FDIC determines to be relevant to the institution's financial condition and
the risk posed to the deposit insurance funds (which may include, if applicable,
information provided by the institution's state supervisor). An institution's
insurance assessment rate is then determined based on the capital category and
supervisory category to which it is assigned. Under the risk-based assessment
system,

there are nine assessment risk classifications (i.e., combinations of capital
groups and supervisory subgroups) to which different assessment rates are
applied.

Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.

Community Reinvestment Act. The Bank is subject to the CRA. The CRA and
the regulations issued thereunder are intended to encourage banks to help meet
the credit needs of their service area, including low and moderate income
neighborhoods, consistent with the safe and sound operations of the banks. These
regulations also provide for regulatory assessment of a bank's record in meeting
the needs of its service area when considering applications to establish
branches, merger applications and applications to acquire the assets and assume
the liabilities of another bank. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") requires federal banking agencies to make
public a rating of a bank's performance under the CRA. In the case of a bank
holding company, the CRA performance record of the banks involved in the
transaction are reviewed by federal banking agencies in connection with the
filing of an application to acquire ownership or control of shares or assets of
a bank or thrift or to merge with any other bank holding company. An
unsatisfactory record can substantially delay or block the transaction. The
Bank, and previously C&L Bank and Emerald Coast Bank, had received a
satisfactory CRA rating from federal banking agencies.

Consumer Laws and Regulations. In addition to the laws and regulations
discussed herein, The Bank is also subject to certain consumer laws and
regulations that are designed to protect consumers in transactions with banks.
While the list set forth herein is not exhaustive, these laws and regulations
include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds
Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity
Act, the Fair Housing Act, the Fair Credit Reporting Act and the Settlement
Procedures Act among others. These laws and regulations mandate certain
disclosure requirements and regulate the manner in which financial institutions
must deal with customers when taking deposits, making loans to or engaging in
other types of transactions with such customers.

INSTABILITY OF REGULATORY STRUCTURE

Various bills are routinely introduced in the United States Congress, and
state legislatures with respect to the regulation of financial institutions.
Certain of these proposals, if adopted, could significantly change the
regulations of banks and the financial services industry. The Banc Corporation
cannot predict whether any of these proposals will be adopted or, if adopted,
how these proposals would affect The Banc Corporation.

EFFECT ON ECONOMIC ENVIRONMENT

The policies of regulatory authorities, especially the monetary policy of
the Federal Reserve Board, have a significant effect on the operating results of
bank holding companies and their subsidiaries. Among the means available to the
Federal Reserve Board to affect the money supply are open market operations in
U.S. Government securities, changes in the discount rate on member bank
borrowings and changes in reserve requirements against member bank deposits.
These means are used in varying combinations to influence overall growth and
distribution of bank loans, investments and deposits, and their use may affect
interest rates charged on loans or paid for deposits.

Federal Reserve Board monetary policies have materially affected the
operating results of commercial banks in the past and are expected to continue
to do so in the future. The nature of future monetary policies and the effect of
such policies on the business and earnings of The Banc Corporation and its
subsidiaries cannot be predicted.

PROPERTIES

The corporate headquarters of The Banc Corporation are located at 17 North
20th Street, Birmingham, Alabama. As of December 21, 1999, The Banc Corporation
and The Bank, who jointly own the building, converted the building into
condominiums known as The Bank Condominiums. The Banc Corporation owns

the Bank Unit, which consists of 4 floors of the building, including a branch of
The Bank and The Banc Corporation's headquarters, and intends to sell or lease
the remaining condominium units for commercial or residential use.

The Banc Corporation and its subsidiaries operate through 32 office
facilities, including its operations center. Of these, 24 are owned by The Banc
Corporation or one of its subsidiaries and 8 are leased. Rental expense on the
leased properties totaled approximately $537,000 in 2000.

LEGAL PROCEEDINGS

While we may from time to time be a party to various legal proceedings
arising from the ordinary course of our business, we believe that, other than as
set forth below, there are no proceedings threatened or pending against The Banc
Corporation at this time that will individually, or in the aggregate, materially
or adversely effect The Banc Corporation's business, financial condition or
results of operations.

The Bank is currently a defendant in various legal proceedings pending in
state court arising out of certain losses that occurred in our Decatur branch in
late 1999. When we discovered the loss, we moved immediately to collect monies
and other assets from individuals and entities that we identified as being
connected, directly or indirectly, to our loss. This resulted in a recovery of
some of our losses, primarily through the transfer to The Bank of various
assets, including the assets of one business directly involved in our loss.
Subsequently, some of those individuals abandoned their agreement to work with
The Bank and brought suit alleging various causes of action and requesting the
return of assets that they had previously turned over to The Bank. Additionally,
other individuals, who allege that they suffered a related loss have brought
suits making various claims on certain of the assets that were delivered to The
Bank. These cases include: Bill Steenson and Jason Steenson v. The Bank, et al,
Case No. CV 99-907; Hames v. The Bank, et al, Case No. CV 99-899; John C. Moses
v. The Bank, et al, Case No. CV 00-158; Preston Peete v. The Bank, et al, Case
No. CV 00-804. The Steenson case has now been settled, and the case has been
dismissed. The Bank has executed a settlement agreement in the Moses case
recently and is in the process of consummating that settlement. Neither of these
settlements is expected to have a material adverse effect on our financial
condition or our results of operations. On August 29, 2001, Community Spirit
Bank amended its previously filed complaint to include The Bank as a defendant
in the case styled Community Spirit Bank v. Howard Jackson d/b/a Magestic Auto
Sales, et al., CV 99-195 filed in the Circuit Court of Franklin County.
Community Spirit Bank alleges various causes of action against The Bank and one
of its former officers arising out of the same facts that caused The Bank's loss
as discussed above. Community Spirit Bank is claiming compensatory damages of
$1.3 million and additional compensatory and punitive damages. The Bank has put
its insurance carriers on notice and intends to vigorously defend these claims.
We believe that we have strong claims and defenses in each lawsuit in which we
are involved. While we believe that we will prevail in each lawsuit, there can
be no assurance that the outcome of the pending, or any future, litigation,
either individually or in the aggregate, will not have a material adverse effect
on our financial condition of our results of operations.

MANAGEMENT OF THE BANC CORPORATION

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information about the executive
officers and directors of The Banc Corporation as of September 1, 2001:

NAME AGE POSITION WITH CORPORATION
---- --- -------------------------

James R. Andrews, M.D. ............ 59 Director
Neal R. Berte, Ed.D. .............. 61 Director
David R. Carter.................... 49 Executive Vice President, Chief Financial Officer
and Director
W. T. Campbell, Jr. ............... 54 Director
Peter N. Dichiara(2)............... 45 Director
K. Earl Durden(2).................. 65 Director
John F. Gittings................... 54 Director
Steven C. Hays..................... 44 Director
Thomas E. Jernigan, Jr.(2)......... 36 Director
Randall E. Jones................... 48 Director
James Mailon Kent, Jr.(1).......... 60 Vice Chairman
Mayer Mitchell..................... 68 Director
Ronald W. Orso, M.D.(1)............ 55 Director
Harold W. Ripps.................... 62 Director
Richard M. Scrushy................. 49 Director
Jerry M. Smith..................... 62 Director
Michael E. Stephens................ 58 Director
Larry D. Striplin, Jr.(1).......... 71 Vice Chairman
Marie Swift........................ 59 Director
James A. Taylor.................... 59 Chairman and Chief Executive Officer
James A. Taylor, Jr. .............. 36 President, Chief Operating Officer and Director
Johnny Wallis...................... 72 Director

---------------

(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

James R. Andrews, M.D. has been a director of The Banc Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
October 1997 until it was merged into The Banc Corporation on September 24,
1998. Dr. Andrews served as a director of Alabama National BanCorporation from
1989 until 1996. Dr. Andrews has practiced as an orthopedic surgeon specializing
in sports-related injuries for over 25 years.

Neal R. Berte, Ed.D. has been a director of The Banc Corporation since
September 1998. Dr. Berte has been the President of Birmingham-Southern College
since 1975.

W.T. Campbell, Jr. has been a director of The Banc Corporation since
October 30, 1998. Mr. Campbell served as President of City National Corporation
and Chairman of the Board of Directors of City National from 1984 until it was
merged into The Banc Corporation on October 30, 1998, and was a director of City
National Bank. Mr. Campbell is a practicing attorney in Sylacauga, Alabama with
the firm of Campbell and Douglas.

David R. Carter has been Executive Vice President and Chief Financial
Officer of The Banc Corporation since September 1998. Mr. Carter has served as a
Director of The Banc Corporation since December 1998. Mr. Carter served as
Executive Vice President and Chief Financial Officer of Warrior Capital
Corporation from April 1998 until September 1998. Mr. Carter served as a
consultant to Warrior Capital Corporation from January 1998 until April 1998.
From June 1995 through December 1997, Mr. Carter served as the Chief

Financial Officer of Roxco, Ltd., a regional construction company. From February
1981 through January 1995, Mr. Carter served in various capacities with
Trustmark, a publicly-traded bank holding company based in Jackson, Mississippi,
including Chief Financial Officer from September 1988 until January 1995.

Peter N. Dichiara has been a director of The Banc Corporation since
September 1998 and served as a director of Warrior Capital Corporation from 1984
until it was merged into The Banc Corporation on September 24, 1998. Mr.
Dichiara has been the President of City Wholesale Grocery, a grocery supply
company based in Birmingham, Alabama since October 1983.

K. Earl Durden has been a director of The Banc Corporation since December
5, 1998. Mr. Durden served as a Director of Emerald Coast Bancshares, Inc. from
its inception in 1996 until it was merged into The Banc Corporation on February
12, 1999. Mr. Durden is the President, Chief Executive Officer and a director of
Rail Management Corporation. Mr. Durden also serves as President and a director
of the following companies: Copper Basin Railway, Inc., KWT Railway, Galveston
Railway, Inc. and Grizzard Transfer, Inc., a small trucking company. Mr. Durden
also served as Chairman, Executive Committee member and a director of the
American Short Line and Regional Railroad Association. Mr. Durden has been
heavily involved in the acquisition, ownership, start up and operation of short
line railroads for the past twenty years.

Steven C. Hays has been a director of The Banc Corporation since November
6, 1998. Mr. Hays served as a director of Commerce Bank of Alabama, Inc. from
April 1995 until it was merged into The Bank on November 6, 1998. Mr. Hays also
served as Executive Vice President of Steel Processing Services, Inc. from 1981
until the sale of the company in 1993. He presently manages a number of personal
investments.

Thomas E. Jernigan, Jr. has been a director of The Banc Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
December 1997 until it was merged into The Banc Corporation on September 24,
1998. Mr. Jernigan has been the President of Marathon Corporation, a
privately-held investment management company based in Birmingham, Alabama for
over two years. Mr. Jernigan has held various positions with Marathon
Corporation since 1989. Mr. Jernigan's father, Thomas E. Jernigan, holds the
title of "Director Emeritus," a non-voting position.

Randall E. Jones has been a director of The Banc Corporation since November
6, 1998. Mr. Jones served as a director of Commerce Bank of Alabama, Inc. from
April 1995 until it was merged into The Bank on November 6, 1998. Mr. Jones is
the owner and President of Randy Jones Insurance Agency, Inc., representing
Nationwide Insurance Company since 1978. He is a past president of the
Albertville Rotary Club and the Albertville Chamber of Commerce.

James Mailon Kent, Jr. has been a director of The Banc Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
October 1997 until it was merged into The Banc Corporation on September 24,
1998. Mr. Kent has served as Vice Chairman of The Banc Corporation since
December 1998. Mr. Kent served as a director of Alabama National BanCorporation
from 1988 until 1996 and served as Vice Chairman of Alabama National
BanCorporation from 1988 until 1994. Mr. Kent has been the owner of Mailon Kent
Insurance Agency in Birmingham, Alabama for over 20 years.

Mayer Mitchell has been a director of The Banc Corporation since September
1998 and served as a director of Warrior Capital Corporation from December 1997
until it was merged into The Banc Corporation on September 24, 1998. He served
as Chairman and Chief Executive Officer of The Mitchell Company, a real estate
development firm based in Mobile, Alabama, from September 1955 until his
retirement from the company on December 31, 1986. He is currently a co-owner of
Mitchell Brothers, Inc., a private investment company. Mr. Mitchell is a former
National President and Chairman of the Board of Directors of the American Israel
Public Affairs Committee ("AIPAC") and a past member of the Board of Directors
of AmSouth Bank N.A. of Mobile and Altus Bank of Mobile.

Ronald W. Orso, M.D. has been a director of The Banc Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
October 1997 until it was merged into The Banc Corporation on September 24,
1998. Dr. Orso served as a director of Alabama National BanCorporation from 1988
until 1997. Dr. Orso has practiced in the field of obstetrics and gynecology for
over 23 years. He is the past

Chairman of the Department of Obstetrics and Gynecology and the past president
of the Medical Staff at Baptist Medical Center in Birmingham.

Harold W. Ripps has been a director of The Banc Corporation since September
1998 and served as a director of Warrior Capital Corporation from December 1997
until it was merged into The Banc Corporation on September 24, 1998. He has
served as a trustee of Colonial Properties Trust since 1995. In 1969, Mr. Ripps
founded The Rime Companies, a real estate development, construction and
management firm, headquartered in Birmingham, Alabama, specializing in the
development of multi-family properties. Mr. Ripps has served The Rime Companies
in an executive capacity since that time.

Richard M. Scrushy has been a member of the Board of Directors of The Banc
Corporation since September 1998. Since 1984, Mr. Scrushy has been Chairman of
the Board and Chief Executive Officer of HEALTHSOUTH Corporation. Mr. Scrushy
has been a director of Caremark Rx, Inc., formerly MedPartners, Inc., since
January 1993 and served as its Chairman of the Board of Directors from January
1998 through October 1998.

Jerry M. Smith has been a director of The Banc Corporation since September,
1999. Mr. Smith served as a member of the Board of Directors of C&L Bank of
Bristol from 1975 until it was acquired by The Banc Corporation on June 30,
1999, and as a member of the Board of Directors of C&L Bank of Blountstown from
1987 until it was acquired by The Banc Corporation and merged into C&L Bank of
Bristol on June 30, 1999. Mr. Smith has been Chairman and President of First
National Bank of Alachua in Alachua, Florida since 1971.

Michael Stephens has been a director of The Banc Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
December 1997 until it was merged into The Banc Corporation on September 24,
1998. He founded ReLife, Inc., a publicly-traded rehabilitation company based in
Birmingham, Alabama, and was its Chairman and Chief Executive Officer from 1986
until 1994. Mr. Stephens also serves on the Boards of Directors of
Rehabilitation Designs of America based in Kansas City, Kansas, and
PsychPartners, Inc. based in Birmingham, Alabama. He is currently the Chairman
and Chief Executive Officer of S Enterprises, Inc.

Larry D. Striplin, Jr. has been a member of the Board of Directors of The
Banc Corporation since September 1998 and served as a director of Warrior
Capital Corporation from October 1997 until it was merged into The Banc
Corporation on September 24, 1998. Mr. Striplin has served as Vice Chairman of
The Banc Corporation since December 1998. Since October 1995, Mr. Striplin has
been the Chairman and Chief Executive Officer of Nelson-Brantley Glass
Contractors, Inc. and Chairman and Chief Executive Officer of Clearview
Properties, Inc. Until October 1995, Mr. Striplin had been Chairman of the Board
and Chief Executive Officer of Circle "S" Industries, Inc., a privately-owned
bonding wire manufacturer. Mr. Striplin is a member of the Board of Directors of
HEALTHSOUTH Corporation, a publicly-traded provider of rehabilitative health
care services, Kulicke & Soffa Industries, Inc., a publicly-traded manufacturer
of electronic equipment.

Marie Swift has been a director of The Banc Corporation since September
1998 and served as a director of Warrior Capital Corporation from its
incorporation in 1982 until it was merged into The Banc Corporation on September
24, 1998. Ms. Swift served as Secretary of The Banc Corporation from September
1998 to December 1998. Ms. Swift has been President of The Bank-Warrior since
January 1998. Prior to that, she served as Senior Vice President of Warrior
Savings Bank from 1982 until 1998.

James A. Taylor has been Chairman of the Board and Chief Executive Officer
of The Banc Corporation since its incorporation in 1998. Mr. Taylor served as
President of The Banc Corporation from its incorporation until November 1998 and
from February 1999 until September, 2000. Mr. Taylor served as Chairman of the
Board, President and Chief Executive Officer of Warrior Capital Corporation from
October 1997 until it was merged into The Banc Corporation on September 24,
1998. Mr. Taylor was Founder, Chairman of the Board and Chief Executive Officer
of Alabama National BanCorporation, a publicly-traded bank holding company based
in Birmingham, Alabama, from its incorporation in 1986 until his retirement in
April 1996. From 1981 until 1996, Mr. Taylor served as Chairman of the Board and
Chief Executive Officer of various banks and

bank holding companies that ultimately comprised Alabama National
BanCorporation. Mr. Taylor is also on the Board of Directors of Southern Energy
Homes, Inc., a producer of manufactured housing, and the American Sports
Medicine Institute.

James A. Taylor, Jr. has been President and Chief Operating Officer of The
Banc Corporation since September 2000. Mr. Taylor has served as a Director of
The Banc Corporation since December 1998. Mr. Taylor served as Executive Vice
President, General Counsel and Secretary of the Corporation from September 1998
until September 2000. Mr. Taylor served as Executive Vice President, General
Counsel and Secretary of The Bank from December 1998 until November 1999. Mr.
Taylor was a director of Warrior Capital Corporation from October 1997 until it
was merged into The Banc Corporation on September 24, 1998 and served as
Executive Vice President and General Counsel of Warrior Capital Corporation from
April 1998 until September 1998. From June 1996 until April 1998, Mr. Taylor
served as Vice President -- Legal Services for MedPartners, Inc., now Caremark
Rx, Inc. From July 1994 until December 1996, Mr. Taylor served as outside
general counsel to Alabama National BanCorporation. From August 1990 until March
1996, Mr. Taylor was in private practice with a law firm in Birmingham, Alabama.
Mr. Taylor is the son of James A. Taylor. From November 1, 1999 until April
2000, Mr. Taylor also served as a Senior Vice President of Vesta Insurance
Group, Inc.

T. Mandell Tillman has been a director of The Banc Corporation since
November 6, 1998. Mr. Tillman was a director of Commerce Bank of Alabama from
April 1995 until it was merged into The Bank on November 6, 1998. Mr. Tillman
has served as Chairman of the Board of Real Property Services, Inc. since 1985.
He holds the MAI and CRE designations.

Johnny Wallis has been a director of The Banc Corporation since September
1998 and served as director of Warrior Capital Corporation from its
incorporation in 1982 until it was merged into The Banc Corporation on September
24, 1998. Mr. Wallis served as the Chairman of the Board, President and Chief
Executive Officer of Warrior Capital Corporation until October 1997. Mr. Wallis
served as President of The Bank until January 1998 and served as Chairman of the
Board of The Bank-Warrior until June 30, 2000.

CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES

Pursuant to The Banc Corporation's Restated Certificate of Incorporation
and Bylaws, the Board of Directors is divided into three classes, with each
class being as nearly equal in number as reasonably possible. One class, which
includes Messrs. Taylor, Berte, Carter, Kent and Striplin and Drs. Andrews and
Orso, holds office for a term that will expire at the annual meeting of
shareholders in 2004; a second class, which includes Messrs. Campbell, Durden,
Gittings, Jernigan, Jr., Mitchell, Ripps, Taylor, Jr. and Tillman, holds office
for a term that will expire at the annual meeting of stockholders to be held in
2002; and a third class, which includes, Messrs. Dichiara, Hays, Jones, Scrushy,
Smith, Stephens and Wallis and Ms. Swift, holds office for a term that will
expire at the annual meeting of stockholders to be held in 2003. Each director
holds office for the three-year term to which he or she is elected and until his
or her successor is duly elected and qualified. At each annual meeting of The
Banc Corporation's stockholders, the successors to the class of directors whose
terms expire at such meeting will be elected to hold office for a term expiring
at the annual meeting of stockholders held in the third year following the year
of their election. The Board of Directors elects officers annually. Those
officers serve at the discretion of the Board of Directors.

The Board of Directors currently has two committees: the Audit Committee
and the Compensation Committee. The Board of Directors as a whole acts in place
of a nominating committee.

The Audit Committee is responsible for reviewing and supervising the
financial controls of The Banc Corporation. The Audit Committee makes
recommendations to the Board of Directors with respect to The Banc Corporation's
financial statements and the appointment of independent auditors, reviews
significant audit and accounting policies and practices, meets with The Banc
Corporation's independent public accountants concerning, among other things, the
scope of audits and reports, and reviews the performance of overall accounting
and financial controls of The Banc Corporation. The Audit Committee consists of
Messrs. Dichiara, Durden and Jernigan. During 2000, there were six meetings of
the Audit Committee.

The Compensation Committee is responsible for reviewing the performance of
the officers of The Banc Corporation and recommending to the Board of Directors
annual salary and bonus amounts for all officers of The Banc Corporation. The
Compensation Committee also administers the Amended and Restated 1998 Incentive
Stock Plan of The Banc Corporation and the Commerce Bank of Alabama Stock Option
Plan. The Compensation Committee consists of Messrs. Kent and Striplin and Dr.
Orso. During 2000, there were four meetings of the Compensation Committee. See
"Executive Compensation and Other Information."

The Board of Directors as a whole acts in place of a nominating committee.
The Banc Corporation's Bylaws provide that nomination for the office of director
may be made by stockholders only if written notice of such proposed nominations
are delivered to or mailed and received at the principal executive offices of
The Banc Corporation 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 the
stockholders, 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 Banc 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 proposed nominee to be named as a
nominee and to serve as a director, if elected. The Banc Corporation may require
any proposed nominee to furnish such other information as may reasonably be
required by The Banc Corporation to determine the eligibility of such proposed
nominee to serve as a director of The Banc Corporation.

EXECUTIVE 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, 2000,
1999 and 1998, for the chief executive officer and the four other most highly
compensated executive officers of The Banc Corporation 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."

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION HELD YEAR SALARY ($) BONUS ($) COMPENSATION(1) OPTIONS (#)
-------------------------------- ---- ---------- --------- --------------- ------------

James A. Taylor.......................... 2000 $400,000 $ -- $188,029 15,000
Chairman of the Board and 1999 250,000 150,000 72,909 75,000
Chief Executive Officer 1998 161,111 96,667 31,113 125,000
James A. Taylor, Jr.(2).................. 2000 $221,291 $ -- $ 19,648 15,000
President and Chief Operating Officer 1999 164,742 -- 57,760 15,000
and Director 1998 108,000 25,000 14,000 50,000
David R. Carter(3)....................... 2000 $188,822 $ -- $ 11,159 50,000
Executive Vice President, Chief 1999 162,000 -- 56,604 15,000
Financial Officer and Director 1998 162,000 25,000 8,968 50,000
Larry R. Mathews(4)...................... 2000 $ 98,542 $ 39,417 $ 3,505 75,000
Vice Chairman of the Board
and Chairman of the Board
and Chief Executive Officer of The
Bank
W. T. Campbell, Jr.(5)................... 2000 $137,742 -- $ 13,662 2,500
Director and Chairman of 1999 137,442 -- 12,742 --
The Bank of Sylacauga 1998 22,500 -- -- 5,000

---------------

(1) Represents the dollar value of board fees received and insurance premiums
paid by The Banc Corporation with respect to life, health, dental and
disability insurance and automobile allowance for the benefit of the named
executive officer.

(2) Mr. Taylor, Jr. received $13,500 in consultation fees prior to his
employment in 1998, which is included in his reported 1998 salary.
(3) Mr. Carter received $40,500 in consultation fees prior to his employment in
1998, which is included in his reported 1998 salary.

(4) Mr. Mathews served as Chairman of the Board and Chief Executive Officer of
The Bank, The Banc Corporation's principal subsidiary from July 2000 until
August 2001.

(5) Mr. Campbell has served as Director and Chairman of The Bank -- Sylacauga
since November 1998. Mr. Campbell was Chairman of City National Corporation
prior to its merger with The Bank in November 1998.

Option Grants in 2000. The following table contains information concerning
the grant of stock options under the Second Amended and Restated 1998 Stock
Incentive Plan of The Banc Corporation, and the Commerce Bank of Alabama
Incentive Stock Option Plan to the named executive officers.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------------- ALTERNATIVE TO
PERCENT OF (F) AND (G):
NUMBER OF TOTAL GRANT DATE
SECURITIES OPTIONS/ VALUE
UNDERLYING SARS --------------
OPTIONS/ GRANTED TO EXERCISE GRANT DATE
SARS EMPLOYEES OF PRESENT
GRANTED IN FISCAL BASE PRICE EXPIRATION VALUE
NAME (#) YEAR ($/SH) DATE $ (1)
---- ---------- ---------- ---------- ---------- --------------

James A. Taylor............................ 15,000 3.99% $6.00 6/20/10 $ 39,450
James A. Taylor, Jr........................ 15,000 3.99 6.00 6/20/10 39,450
David R. Carter............................ 15,000 3.99 6.00 6/20/10 39,450
Larry R. Mathews........................... 75,000 19.95 6.31 7/13/10 207,750
W. T. Campbell, Jr......................... 2,500 .66 6.00 6/20/10 6,575

---------------

(1) The fair value of the options granted was based upon the Black-Scholes
pricing model. The Banc Corporation used the following weighted average
assumptions for 2000: A risk free interest rate of 5.34%, a volatility
factor of .30%, a weighted average expected to be of options (in years) of 6
and a dividend yield of 0%.

Aggregated Option Exercises in 2000 and Option Values at Year End. The
following table provides information with respect to options exercised by the
named executive officers during 2000 and the number and value of securities
underlying unexercised options held by the named executive officers at December
31, 2000.

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....................... -- -- 108,000/107,000 --
James A. Taylor, Jr................... -- -- 39,000/41,000 --
David R. Carter....................... -- -- 39,000/41,000 --
Larry R. Mathews...................... -- -- 15,000/60,000 --
W. T. Campbell........................ -- -- 3,000/7,000 --

EMPLOYMENT AGREEMENTS

James A. Taylor. The Banc Corporation entered into an employment agreement
with Mr. Taylor dated as of November 1, 1997. Under the terms of his employment
agreement, Mr. Taylor will serve as Chairman of the Board and Chief Executive
Officer of The Banc Corporation and Chairman of the Board of The Bank. In
addition, Mr. Taylor will be nominated to serve as a director of The Banc
Corporation and each of its subsidiaries. Mr. Taylor will receive a minimum
annual base compensation of $250,000 plus an incentive payment of 15% of the
base amount per quarter. In addition, he is entitled to receive other benefits
including a car allowance and country club dues and may participate in other
executive compensation plans. The term of the agreement is for three years which
is renewable daily for an additional three-year term. If Mr. Taylor is
terminated for any reason other than "cause" as defined in the agreement
(including constructive termination), he shall receive three years base
compensation, director's fees and all benefits or their cash equivalents. In
addition, he would be entitled to a "gross-up" payment to cover any excise tax
imposed on any severance

payment to him. Mr. Taylor's employment agreement has been amended to include as
part of his compensation the rental payments for the condominium The Banc
Corporation provides for Mr. Taylor as a residence.

The Banc Corporation entered into a deferred compensation agreement with
Mr. Taylor on July 23, 1998. That agreement provides that The Banc Corporation
shall fund the premium of two life insurance policies on Mr. Taylor's life which
will provide a split dollar benefit to The Banc Corporation and Mr. Taylor's
estate in the event of his death. Upon the termination of Mr. Taylor's
employment for reasons other than death or Cause (as defined in the agreement),
Mr. Taylor will become entitled to receive 15 annual payments in the approximate
amount of $140,000 commencing April 15, 2007.

James A. Taylor, Jr. The Banc Corporation has entered into an employment
agreement with James A. Taylor, Jr., dated as of September 19, 2000. Under his
employment agreement, Mr. Taylor, Jr. will serve as the President and Chief
Operating Officer of The Banc Corporation. In addition, Mr. Taylor, Jr. will be
nominated to serve as a director of The Banc Corporation and its subsidiaries.
Mr. Taylor, Jr. will receive a base salary of $216,500 per year plus an
incentive payment of 10% of the base amount per quarter. In addition, he is
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. Taylor, Jr. is terminated for any reason
other than "cause" as defined in the agreement (including constructive
termination), he shall receive three years base compensation fees and all
benefits or their cash equivalents. In addition, he would be entitled to a
"gross up" payment to cover any excise tax imposed on any severance payment to
him.

David R. Carter. The Banc Corporation has entered into an employment
agreement with David R. Carter, effective as of September 19, 2000. Under his
employment agreement, Mr. Carter will serve as the Executive Vice President and
Chief Financial Officer of The Banc Corporation and Executive Vice President and
Chief Financial Officer of The Bank. In addition, Mr. Carter will receive a base
salary of $216,500 per year plus an incentive payment of 5% of the base amount
per quarter. In addition, he is 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, director's fees and all benefits or their cash equivalents. In
addition, he would be entitled to a "gross up" payment to cover any excise tax
imposed on any severance payment to him.

W.T. Campbell, Jr. The Banc Corporation has entered into a three year
employment agreement with Mr. Campbell dated as of October 30, 1998. Under his
employment agreement, Mr. Campbell will serve as the Chairman of the Board for
The Bank of Sylacauga. Mr. Campbell will receive a minimum annual salary of
$135,000. The agreement provides that Mr. Campbell will be entitled to receive
other benefits including a life insurance policy and may participate in other
executive compensation plans. The agreement is terminable by The Banc
Corporation only upon prior notice for a period equal to the remaining term. If
Mr. Campbell is terminated for any reason other than "cause" as defined in this
agreement, Mr. Campbell shall receive his annual compensation for three years
following termination and may not, directly or indirectly, carry on, engage in
or solicit similar business with any customer of The Banc Corporation in any
county where The Banc Corporation or its subsidiaries do business.

John F. Gittings. The Banc Corporation has entered into a three year
employment agreement with Mr. Gittings dated as of October 30, 1998. Mr.
Gittings serves as Chief Executive Officer of The Bank-Monroeville and receives
a minimum annual salary of $100,000. The agreement provides that Mr. Gittings
will be entitled to receive other benefits including life insurance, an
automobile and may participate in other executive compensation plans. The Banc
Corporation may terminate the agreement only upon prior notice for a period
equal to the remaining term of the agreement. If Mr. Gittings is terminated for
any reason other than "cause" as defined in the agreement, Mr. Gittings shall
receive his annual compensation for three years following termination and may
not, directly or indirectly, carry on, engage in or solicit similar business
with a customer of The Banc Corporation in any county where The Banc Corporation
or its subsidiaries do business.

Marie Swift. The Bank has entered into a three year employment agreement
with Ms. Swift dated as of January 1, 2001. Ms. Swift serves as President of The
Bank of Warrior. The term of the agreement is for three years and will be
reviewed annually by the Board of Directors. Ms. Swift receives a base salary of
$100,000 per year plus any bonus which may be approved by The Bank's Board of
Directors. In addition, The Bank must provide Ms. Swift an automobile.

DIRECTOR COMPENSATION

Directors of The Banc Corporation receive $1,500 compensation for each
meeting of the board attended and a retainer of $1,500 per quarter for serving
as directors of The Banc Corporation. Directors are eligible to receive the
grant of stock options under the Second Amended and Restated 1998 Stock
Incentive Plan of The Banc Corporation. Directors who are officers or employees
of The Banc Corporation or its subsidiaries waive receipt of all fees, including
the quarterly returns, for attending board meetings.

The following directors of The Banc Corporation have entered into Deferred
Compensation Agreements with The Banc Corporation effective as of September 1,
1999; Andrews, Berte, Campbell, Carter, Dichiara, Durden, Gittings, Hays,
Jernigan, Jones, Kent, Orso, Ripps, Scrushy, Stephens, Swift, Taylor, Taylor,
Jr., Tillman. Directors Taylor, Kent and Jernigan also have Deferred
Compensation Agreements with The Bank. These agreements provide that The Banc
Corporation will establish and fund investments and a Deferral Account for the
director as provided in the agreement. Upon termination of a director's
employment other than death or following a change in control, The Banc
Corporation shall pay the director within 60 days of termination the amount
equal to the Deferral Account Balance. If the director is terminated following a
change in control, The Banc Corporation 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 directors 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 Deferred Account and must be
paid within 60 days of the end of each plan year.

MANAGEMENT MATTERS

There are no arrangements or understandings known to The Banc Corporation
between any of the directors, nominees for director or executive officers of The
Banc Corporation 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 following directors of The Banc Corporation were
elected or nominated to the Board of Directors in connection with certain
acquisitions: Steven C. Hays, Randall E. Jones and Mandell Tillman -- Commerce
Bank of Alabama, Inc.; W.T. Campbell, Jr. -- City National Corporation; Earl
Durden -- Emerald Coast Bancshares Inc.; and Jerry M. Smith -- C&L Banking
Corporation and C&L Bank of Blountstown. See "Management of Corporation",
"Executive Compensation" and "Employment Agreements".

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Kent, Jr., Striplin, Jr. and Dr. Orso comprise the Compensation
Committee. 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 Bank has entered into transactions with their directors, executive
officers, significant stockholders and 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 of The Bank involve more than normal credit risk or
present other unfavorable features.

On February 12, 1999, Emerald Coast Bancshares, Inc. was merged with and
into The Banc Corporation. As a result of the merger, K. Earl Durden, who became
a director of The Banc Corporation on December 15, 1998, received 205,534 shares
of The Banc Corporation common stock.

Emerald Coast Land Management leases three branches to Emerald Coast Bank.
The rent payments in 2000 totaled $472,751. Emerald Coast Land Management is
owned by former certain directors and officers of Emerald Coast Bank including
K. Earl Durden, a current director of The Banc Corporation.

PRINCIPAL STOCKHOLDERS OF THE BANC CORPORATION

The following table sets forth, to the best of The Banc Corporation's
knowledge, certain information regarding beneficial stock ownership of The Banc
Corporation as of September 1, 2001, by: (a) each director and named executive
officer of The Banc Corporation, (b) all directors and executive officers as a
group, and (c) each stockholder known by The Banc Corporation to be the
beneficial owner of more than 5% of the outstanding common stock of The Banc
Corporation. Except as otherwise indicated, each person or entity listed below
has sole voting and investment power with respect to all shares shown to be
beneficially owned by him or it except to the extent such power is shared by a
spouse under applicable law.

NUMBER OF SHARES OF PERCENTAGE(1)(2)
THE CORPORATION OF COMMON
NAME POSITION HELD COMMON STOCK STOCK OWNED
---- ------------- ------------------- ----------------

James A. Taylor.......... Chairman of the Board and Chief 784,902(3)(4) 5.45%
Executive Officer
James Mailon Kent, Jr.... Vice Chairman 220,002(5) 1.54%
Larry D. Striplin, Jr.... Vice Chairman 234,002(5)(6) 1.62%
James A. Taylor, Jr. .... President, Chief Operating 224,402(7) 1.57%
Officer and Director
David R. Carter.......... Executive Vice President, Chief 63,002(7) *
Financial Officer and Director
James R. Andrews, M.D.... Director 300,000(8) 2.10%
Neal R. Berte, Ed.D...... Director 29,000(8) *
W. T. Campbell, Jr. ..... Director 425,467(8)(9) 2.99%
Peter N. Dichiara........ Director 215,000(8)(10) 1.51%
K. Earl Durden........... Director 429,068(8)(11) 3.01%
John F. Gittings......... Director 61,513(12)(13) *
Steven C. Hays........... Director 79,096(8)(14) *
Thomas E. Jernigan, Jr... Director 30,000(5) *
Randall E. Jones......... Director 53,079(8) *
Mayer Mitchell........... Director 110,000(8)(15) *
Ronald W. Orso, M.D. .... Director 229,000(8)(16) 1.60%
Harold W. Ripps.......... Director 215,000(8) 1.51%
Richard M. Scrushy....... Director 230,000(8) 1.61%
Jerry M. Smith........... Director 179,585(17) 1.26%
Michael E. Stephens...... Director 240,353(8) 1.68%
Marie Swift.............. Director 58,600(8) *
T. Mandell Tillman....... Director 58,874(8)(18) *
Johnny Wallis............ Director 106,120(8) *
All executive officers
and directors as a
group (23 persons)..... 4,575,067(19) 31.23%

---------------

(1) Except as otherwise noted herein, percentage is determined on the basis of
14,305,021 shares of The Banc 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.

(2) Percent 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.
(3) Does not include 32,100 shares owned by his wife, or 30,000 shares owned by
his son, Brett Taylor of which he disclaims ownership. Mr. Taylor's address
is 17 North 20th Street, Birmingham, Alabama 35203.
(4) Includes 126,000 shares subject to options.
(5) Includes 8,000 shares subject to options.
(6) Includes 6,000 shares as custodian for minor children.
(7) Includes 42,000 shares subject to options.
(8) Includes 4,000 shares subject to options.
(9) Includes 17,143 shares held by wife and 42,432 shares held by his minor
children.
(10) Includes 210,000 shares held by City Wholesale Grocery, Inc. of which he is
President.
(11) Includes 203,534 shares held as co-trustee.
(12) Includes 5,000 shares subject to options.
(13) Includes 900 shares held by wife.
(14) Includes 4,046 shares held for benefit of his minor children.
(15) Includes 105,000 shares held by Mitchell Holdings, L.P., of which Mr.
Mitchell is president of a general partner, Mitchell Investment Holdings,
Inc.
(16) Includes 210,000 shares held by Birmingham OB/GYN Pension Plan of which he
is Trustee.
(17) Includes 3,000 shares subject to options.
(18) Includes 4,670 shares held for benefit of children and 2,785 shares held by
spouse.
(19) Includes 399,000 shares subject to options.

SELECTED FINANCIAL DATA -- CF BANCSHARES

The following table sets forth selected financial data for CF Bancshares,
Inc. and should be read in conjunction with the related consolidated financial
statements and notes thereto. See "CF Bancshares, Inc. and Subsidiaries
Consolidated Financial Statements."

JUNE 30, DECEMBER 31,
------------------ -----------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
(DOLLARS IN THOUSANDS)

SELECTED STATEMENT OF FINANCIAL CONDITION
DATA:
Total assets............................. $105,233 $90,556 $94,720 $75,222 $69,047 $69,134 $69,164
Loans, net of unearned income............ 88,153 77,972 82,529 66,701 60,585 60,862 60,770
Investment securities.................... 2,756 2,332 3,209 1,814 -- 385 635
Deposits................................. 80,178 71,505 73,103 60,146 55,936 61,660 60,285
Stockholders' Equity..................... 8,115 7,437 7,743 7,185 6,584 6,277 5,928
SELECTED STATEMENT OF INCOME DATA:
Interest income.......................... 3,997 3,178 6,932 5,414 5,501 5,576 5,191
Interest expense......................... 2,337 1,767 4,003 2,956 3,023 3,099 2,811
-------- ------- ------- ------- ------- ------- -------
Net interest income.................... 1,660 1,411 2,929 2,458 2,478 2,477 2,380
Provision for loan losses................ 96 43 100 173 74 128 54
Noninterest income....................... 263 255 504 1,043 364 512 285
Other noninterest expense................ 1,034 1,029 2,051 2,055 1,750 1,501 1,767
-------- ------- ------- ------- ------- ------- -------
Income before income taxes............. 793 594 1,282 1,273 1,018 1,360 844
Income taxes............................. 297 220 476 472 379 501 309
-------- ------- ------- ------- ------- ------- -------
Net income............................. $ 496 $ 374 $ 806 $ 801 $ 639 $ 859 $ 535
======== ======= ======= ======= ======= ======= =======
PER SHARE DATA:
Net income -- basic...................... $ 2.93 $ 2.21 $ 4.77 $ 4.75 $ 3.82 $ 5.07 $ 3.11
-- diluted.................... 2.93 2.21 4.76 4.74 3.78 5.07 3.11
Dividends per share...................... 0.75 0.75 1.50 1.25 2.00 2.00 1.50
PERFORMANCE RATIOS:
Return on average assets(1).............. 0.99% 0.90% 0.93% 1.10% 0.92% 1.23% 0.80%
Return on average equity(1).............. 12.64 10.70 10.82 11.62 9.89 14.07 9.21
ASSETS QUALITY RATIOS:
Allowance for loan losses to
nonperforming loans.................... 61.84% 150.00% 74.87% 324.14% 99.04% 68.68% 19.11%
Allowance for loan losses to loans, net
of unearned income..................... 0.39 0.32 0.35 0.42 0.34 0.32 0.21
Nonperforming loans to loans, net of
unearned income........................ 0.63 0.21 0.47 0.13 0.34 0.46 1.11
Net loan charge-offs to average
loans(1)............................... 0.10 0.21 0.12 0.15 0.10 0.11 0.04

---------------

(1) Interim period ratios are annualized

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- CF BANCSHARES

BASIS OF PRESENTATION

The following is a narrative discussion and analysis of significant changes
in CF Bancshares, Inc., ("CF Bancshares") results of operations and financial
condition. This discussion should be read in conjunction with the consolidated
financial statements and selected financial data included elsewhere in this
document.

CF Bancshares has two wholly-owned subsidiaries; it's banking subsidiary is
Citizens Federal Savings Bank of Port St. Joe, a federally-chartered savings
bank headquartered in Port St. Joe, Florida which operates 3 banking offices in
the panhandle of Florida. CF Bancshares' nonbanking subsidiary is Citizens
Properties, Inc., which was established in 1997 as a property management and
development company; its only current business activity is the ownership of
three developed lots.

FORWARD LOOKING STATEMENTS

This discussion contains information and forward-looking statements that
are based on CF Bancshares' belief as well as certain assumptions made by, and
information currently available to, CF Bancshares. This risks and uncertainties
that may affect operations, performance, growth projections and the results of
CF Bancshares' business include, but are not limited to, fluctuations in the
economy, the relative strength and weakness in the commercial and consumer
sector and in the real estate market, the actions taken by the Federal Reserve
Board for the purpose of managing the economy, interest rate movements, the
impact of competitive products, services and pricing, timely development by CF
Bancshares of technology enhancements for its products and operating systems,
legislation and similar matters. Although management of CF Bancshares believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. Actual results may vary materially from those anticipated, estimated,
projected or expected.

PENDING ACQUISITION

On August 30, 2001, CF Bancshares entered into the Plan of Merger to merge
with The Banc Corporation. Under the terms of the Plan of Merger, The Banc
Corporation will pay either cash or exchange shares of The Banc Corporation
common stock for all outstanding shares of CF Bancshares. The merger is subject
to both regulatory and stockholder approval.

FINANCIAL OVERVIEW

Total assets of the CF Bancshares were $ 105.2 million at June 30, 2001, an
increase of $ 10.5 million, or 11.1%, from $94.7 million at December 31, 2000.
Total deposits were $80.2 million at June 30, 2001, an increase of $7.1 million,
or 9.7%, from $73.1 million at December 31, 2000. Total stockholders' equity was
$8.1 million at June 30, 2001, an increase of $372,000, or 4.8%, from $7.7
million as of December 31, 2000.

Net earnings for the six-month period ended June 30, 2001 was $496,000,
compared to $374,000, for the six-month period ended June 30, 2000, an increase
of $122,000, or 32.6%. Basic and diluted net earnings per share was $2.93 and
$2.21 for the first six months of 2001 and 2000, respectively. Return on average
assets, on an annualized basis, was .99% for the first six months of 2001
compared to .90% for the first six months of 2000. Return on average
stockholders' equity, on an annualized basis, was 12.64% for the first six
months of 2001 compared to 10.70% for first six months of 2000. Book value per
share at June 30, 2001 was $47.92 compared to $45.81 at December 31, 2000.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2001, COMPARED WITH SIX MONTHS ENDED JUNE 30,
2000

The growth in net earnings during the first six months of 2001 compared to
the first six months of 2000 is primarily the result of an increase in net
interest income. Net interest income is the difference between the
76

income earned on interest-earning assets and interest paid on interest-bearing
liabilities used to support such assets. Net interest income increased $249,000
or 17.7% to $1.7 million, for the first six months of 2001 from $1.4 million,
for the first six months of 2000. The increase in net interest income was
partially offset by an increase in the provision for loan losses. During the
first six months of 2001, the provision for loan losses increased $53,000, or
123.3% to $96,000, compared to $ 43,000, for the first six months of 2000.

Average interest-earning assets for the first six months of 2001 increased
$15.7 million, or 20.1% to $93.5 million from $77.8 million in the first six
months of 2000. This growth in average interest-earning assets during the first
six months of 2001 was funded by a $15.7 million increase in average
interest-bearing liabilities. Average interest-bearing liabilities were $86.8
million during the first six months of 2001 compared to $71.1 million during the
first six months of 2000. Average interest bearing assets produced an average
yield of 8.62% and 8.21% for the first six months of 2001 and 2000,
respectively. The average rate paid on interest bearing liabilities was 5.43%
for the first six months of 2001 compared to 5.00% for the first six months of
2000. CF Bancshares' net interest-rate spread and net interest margin were 3.19%
and 3.58%, respectively, for the first six months of 2001, compared to 3.21% and
3.65% for the first six months of 2000.

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

Noninterest income increased $8,000, or 3.1%, to $ 263,000 for the first
six months of 2001 from $255,000 for the first six months of 2000. This increase
is primarily attributable to growth in service charge income. Income from
service charges on deposits was $169,000, or 64.3% of total noninterest income,
an increase of $25,000 from $144,000 in 2000.

Noninterest expense remained level at $1.03 million for the first six
months of 2001 and 2000. Salaries and benefits, the largest component of
noninterest expenses, decreased $13,000, or 2.6%, to $494,000 for the first six
months of 2001 from $507,000 for the first six months of 2000.

CF Bancshares' income tax expense was $296,000 and $221,000 for the first
six months of 2001 and 2000, respectively. This represents a 37% effective tax
rate for CF Bancshares.

During the first six months of 2001, the provision for loan losses
increased $53,000, or 123.3% to $96,000, compared to $43,000, for the first six
months of 2000. The provision for loan losses represents the amount determined
by management necessary to maintain the allowance for loan losses at a level
capable of absorbing losses in the loan portfolio, plus estimated losses
associated with off-balance sheet credit instruments such as letters of credit
and unfunded lines of credit. The allowance for loan losses at June 30, 2001,
totaled $342,000, or .39% of total loans, compared to $289,000, or .35% of total
loans at December 31, 2000. CF Bancshares prepares an analysis to assess the
risk in the loan portfolio and to determine the adequacy of the allowance for
loan losses. Generally, CF Bancshares estimates the allowance using factors such
as historical loss experience based on volume and types of loans, volume and
trends in delinquencies and nonaccruals, national and local economic conditions
and other pertinent information.

YEAR ENDED DECEMBER 31, 2000, COMPARED WITH YEAR ENDED DECEMBER 31, 1999

CF Bancshares' net earnings increased $5,000, or .62% to $806,000 for the
year ended December 31, 2000, from $801,000 for the year ended December 31,
1999. This increase is due primarily to increases in CF Bancshares' net interest
income offset by declines in noninterest income and the provision for loan
losses. CF Bancshares' return on average assets in 2000 was .91%, compared to
1.10% in 1999. Return on average equity was 10.80% in 2000 compared to 11.63% in
1999. Average equity to average assets was 8.46% in 2000 compared to 9.43% in
1999.

Net interest income increased $471,000, or 19.2% to $2.9 million for the
year ended December 31, 2000, from $2.5 million for the year ended December 31,
1999 as interest income increased $1.5 million, or 28.0%, and interest expense
increased $1.0 million, or 35.4%. The increase in net interest income is
primarily attributable to a $14.5 million, or 22.9% increase in average loans to
$77.7 million during 2000, from $63.2
77

million during 1999. This increase was offset by a $14.0 million or 22.7%
increase in average interest-bearing liabilities to $76.0 million during 2000,
from $62.0 million during 1999.

CF Bancshares' net interest-rate spread and net interest margin were 3.07%
and 3.52%, respectively, in 2000, compared to 3.26% and 3.64% in 1999. The 19
basis point decline in net interest-rate spread is primarily the result of an
increase in rates paid on interest-bearing liabilities during 2000, offset in
part by increased volume and yields earned on the loan portfolio. The rise in
volume and rates of interest bearing liabilities is primarily the result of an
increase in time deposits, which constituted a significant source of funding for
the increase in loan volume. Time deposits typically carry higher interest rates
than other sources of deposit funding, however, these funds were necessary to
meet loan demand.

The provision for loan losses was $100,000 for the year ended December 31,
2000 compared to $173,000 in 1999. The provision for loan losses represents the
amount determined by management necessary to maintain the allowance for loan
losses at a level capable of absorbing losses in the loan portfolio. CF
Bancshares had net charge-offs of $93,000 in 2000, resulting in a ratio of net
charge-offs to average loans of .12%, compared to $97,000 or .15% in 1999. Net
charge-offs, as a percentage of the provision for loan losses, were 93.00% in
2000, compared to 56.07% in 1999.

Noninterest income decreased $539,000, or 51.7% to $504,000 in 2000, from
$1.0 million in 1999, primarily as the result of a $591,000 decline in the gain
from the sale of developed real estate. Income from service charges on deposits
was $298,000, or 59.1% of total noninterest income, an increase of $42,000 from
$256,000 in 1999. Income from other service charges and fees was $163,000, or
32.3% of total noninterest income, an increase of $25,000 or 18.1% from $138,000
in 1999, primarily due to income received from printing customer checks
in-house.

Noninterest expense remained level at $2.1 million for the years ended
December 31, 2000 and 2001. Salaries and employee benefits decreased $76,000, or
6.9% to $1.02 million in 2000 compared to $1.10 million in 1999. The decrease in
salaries and benefits primarily resulted from the completion of the funding of
directors retirement plan in the early part of 2000. At December 31, 2000, CF
Bancshares had 26 employees compared to 25 at December 31, 1999. All other
noninterest expenses increased $72,000, or 7.5% to $1.03 million, compared to
$959,000 in 1999. This increase in other expenses included a $41,000 increase in
occupancy expenses. Occupancy expenses increased during 2000 as a result of the
opening of the new Apalachicola office in June, 1999.

CF Bancshares' income tax expense was $476,000 and $472,000 in 2000 and
1999, respectively. This represents a 37% tax rate for CF Bancshares.

YEAR ENDED DECEMBER 31, 1999, COMPARED WITH YEAR ENDED DECEMBER 31, 1998

CF Bancshares' net earnings increased $162,000 to $801,000 in the year
ended December 31, 1999, from $639,000 in the year ended December 31, 1998. This
increase is due primarily to increases in CF Bancshares' noninterest income,
offset by increases in the provision for loans losses and noninterest expenses.
CF Bancshares' return on average assets in 1999 was 1.10%, compared to .92% in
1998. Return on average equity was 11.63% in 1999 compared to 9.94% in 1998.
Average equity to average assets was 9.43% in 1999 compared to 9.25% in 1998.

Net interest income decreased $20,000, or .8% to $2.46 million for the year
ended December 31, 1999, from $2.48 million for the year ended December 31, 1998
as interest income decreased $87,000, or 1.6%, and interest expense decreased
$67,000, or 2.2%. The decrease in net interest income is primarily attributable
to a decline in the average yield earned on loans offset by a decline in the
average rate paid on time deposits. The decline in rates was partially offset by
an increase in the volume of loans and a decrease in the volume of time
deposits.

CF Bancshares' net interest rate spread and net interest margin were 3.26%
and 3.64%, respectively, in 1999, compared to 3.33% and 3.81% in 1998. The 9
basis point decline in net interest margin is primarily the result of lower
yields in the loan portfolio during 1999 offset in part by a lower average rate
on interest bearing

liabilities. The lower yields in the loan portfolio are primarily the result of
reduction in interest rates on adjustable rate loans which comprise
approximately 70% of the loan portfolio.

The provision for loan losses was $173,000 for the year ended December 31,
1999 compared to $74,000 in 1998. The provision for loan losses represents the
amount determined by management necessary to maintain the allowance for loan
losses at a level capable of absorbing losses in the loan portfolio. CF
Bancshares had net charge-offs of $97,000 in 1999, resulting in a ratio of net
charge-offs to average loans of .15%. This compares to $61,000 or .10% in 1998.
Net charge-off loans as a percentage of the provision for loan losses was 56.07%
in 1999, compared to 82.43% in 1998. The increase in net charge-off loans
resulted primarily from a decline in the economic conditions created by the
closing of the primary employer in the area.

Noninterest income increased $679,000, or 186.5% to $1.04 million in 1999,
from $364,000 in 1998, primarily as the result of $614,000 in gains from the
sale of developed real estate. During 1999, CF Bancshares' Citizens Properties,
Inc. developed a subdivision on Cape San Blas, Florida, consisting of 17 lots.
During the year ended December 31, 1999 a majority of the lots were sold for a
gain of $614,000. Income from service charges on deposit accounts was $256,000,
or 24.5% of total noninterest income, an increase of $23,000 from $233,000 in
1998. Income from other service charges and fees was $138,000, or 13.2% of total
noninterest income, an increase of $25,000 or 22.1% from $113,000 in 1998.

Noninterest expense increased $305,000, or 17.4% to $2.06 million in 1999
from $1.75 million in 1998. Salaries and employee benefits increased $198,000 or
22.1% to $1.10 million in 1999 compared to $898,000 in 1998. The increase in
salaries and benefits primarily resulted from the funding of the directors
retirement plan. All other noninterest expenses increased $107,000, or 12.6% to
$959,000, compared to $852,000 in 1998. This increase includes a $120,000
increase in occupancy expenses. Occupancy expenses increased during 1999 as a
result of the opening of the new Apalachicola office and the installation of new
data processing equipment.

CF Bancshares' income tax expense was $472,000 and $379,000 in 1999 and
1998, respectively. This represents a 37% tax rate for CF Bancshares.

NET INTEREST INCOME

The largest component of CF Bancshares' net earnings is its net interest
income, which is the difference between the income earned on interest earning
assets and interest paid on deposits and borrowings used in support of such
assets. Net interest income is determined by the rates earned on CF Bancshares'
interest earning assets, rates paid on its interest-bearing liabilities, the
relative amounts of interest earning assets and interest-bearing liabilities,
the degree of mismatch, and the maturity and repricing characteristics of its
interest-earning assets and interest-bearing liabilities. Net interest income
divided by average interest-earning assets represents CF Bancshares' net
interest margin.

Average Balances, Income, Expenses and Rates. The following tables depict
for the periods indicated, certain information related to the CF Bancshares'
average balance sheet and its average yields on assets and average costs of
liabilities. Such yields are derived by dividing income or expense by the
average balance of the corresponding assets or liabilities. Average balances
have been derived from monthly averages.

CONSOLIDATED AVERAGE BALANCES, INTEREST/INCOME/EXPENSE AND YIELD/RATES

YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
2000 1999 1998
-------------------------- -------------------------- --------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------- ------- ------ ------- ------- ------ ------- ------- ------
(DOLLARS IN THOUSANDS)

ASSETS
Earning assets:
Loans, net of unearned
income(1)....................... $77,660 $6,519 8.39% $63,189 $5,173 8.19% $59,785 $5,214 8.72%
Securities........................ 2,511 203 8.08 800 60 7.50 90 6 6.67
Other............................. 2,932 210 7.16 3,476 182 5.24 5,102 281 5.51
------- ------ ---- ------- ------ ---- ------- ------ ----
Total interest-earning
assets.................... 83,103 6,932 8.34 67,465 5,415 8.03 64,977 5,501 8.47
Noninterest-earning assets:
Cash and due from banks........... 2,249 2,991 2,530
Premises and equipment............ 2,184 1,969 1,444
Accrued interest and other
assets.......................... 991 807 775
Allowance for loan losses......... (270) (215) (200)
------- ------- -------
Total assets................ $88,257 $73,017 $69,526
======= ======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Savings and NOW accounts.......... $15,650 440 2.81% $14,478 $ 415 2.87% $13,063 $ 372 2.85%
Money market deposits............. 6,454 277 4.29 6,022 216 3.59 4,093 154 3.76
Time deposits..................... 43,587 2,687 6.16 35,003 1,975 5.64 38,641 2,328 6.02
FHLB advances..................... 10,313 599 5.81 6,458 350 5.42 3,000 169 5.63
------- ------ ------- ------ ------- ------
Total interest-bearing
liabilities............... 76,004 4,003 5.27 61,961 2,956 4.77 58,797 3,023 5.14
Noninterest-bearing liabilities:
Demand deposits................... 4,307 3,838 4,001
Accrued interest and other
liabilities..................... 482 333 297
Stockholders' equity.............. 7,464 6,885 6,431
------- ------- -------
Total liabilities and
stockholders' equity...... $88,257 $73,017 $69,526
======= ======= =======
Net interest income/net interest
rate spread....................... $2,929 3.07% $2,459 3.26% $2,478 3.33%
====== ==== ====== ==== ====== ====
Net yield on earning assets......... 3.52% 3.64% 3.81%
==== ==== ====

---------------

(1) Nonaccrual loans are included in loans net of unearned income. No adjustment
has been made for these loans in the calculation of yields.

YEAR ENDED DECEMBER 31(1)
----------------------------------------------------------
2000 VS 1999 1999 VS 1998
---------------------------- ---------------------------
CHANGES DUE TO CHANGES DUE TO
INCREASE --------------- INCREASE --------------
(DECREASE) RATE VOLUME (DECREASE) RATE VOLUME
---------- ----- ------- ---------- ----- ------
(DOLLARS IN THOUSANDS)

Increase (decrease) in:
Income from earning assets:
Loans.................................. $1,346 $130 $1,216 $ (41) $(328) $ 287
Securities............................. 143 5 138 54 1 53
Other.................................. 28 60 (32) (99) (13) (86)
------ ---- ------ ----- ----- -----
Total interest income............. 1,517 195 1,322 (86) (340) 254
------ ---- ------ ----- ----- -----
Expense from interest-bearing liabilities:
Savings and NOW accounts............... 25 (9) 34 43 3 40
Money market deposits.................. 61 45 16 62 (7) 69
Time deposits.......................... 712 195 517 (353) (142) (211)
FHLB advances.......................... 249 27 222 181 (7) 188
------ ---- ------ ----- ----- -----
Total interest expense............ 1,047 258 789 (67) (153) 86
------ ---- ------ ----- ----- -----
Net interest income............... $ 470 $(63) $ 533 $ (19) $(187) $ 168
====== ==== ====== ===== ===== =====

---------------

(1) The change in interest due to both rate and volume has been allocated to
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the changes in each.

MARKET RISK -- INTEREST RATE SENSITIVITY

Market risk is the risk of loss arising from adverse changes in the fair
value of financial instruments due to a change in interest rates, exchange rates
and equity prices. CF Bancshares' primary market risk is interest rate risk.

The primary objective of asset/liability management is to manage interest
rate risk and achieve reasonable stability in net interest income throughout
interest rate cycles. This is achieved by maintaining the proper balance of
interest rate sensitive earning assets and interest rate sensitive liabilities.
The relationship of rate sensitive earning assets to rate sensitive liabilities
is the principal factor in projecting the effect that fluctuating interest rates
will have on future net interest income and the fair value of CF Bancshares'
assets and liabilities. Rate sensitive earning assets and interest-bearing
liabilities are those that can be repriced to current market rates within a
relatively short time period.

CF Bancshares evaluates interest rate sensitivity risk and then formulates
guidelines regarding asset generation and repricing, funding sources and pricing
and off-balance sheet commitments in order to decrease interest rate sensitivity
risk. CF Bancshares uses computer simulations to measure the net effect on the
fair market value of its assets and liabilities of various interest rate
scenarios. A fair market value analysis of CF Bancshares' assets and liabilities
calculated under an instantaneous 100 basis point increase in rates estimates a
$49,000 decline in market value as of December 31, 2000. A like decrease will
increase market value $78,000. As of June 30, 2001 an instantaneous increase of
100 basis points will cause an estimated $540,000 decline in market value; a
like decrease will increase market value $416,000. These simulated computations
should not be relied upon as indicative of actual future results. Further, the
computations do not contemplate certain actions that management may undertake in
response to future changes in interest rates.

LIQUIDITY

Historically, CF Bancshares has maintained a high loan-to-deposit ratio. To
meet its short-term liquidity needs, CF Bancshares maintains core deposits and
has borrowing capacity through the Federal Home Loan Bank ("FHLB"). Long-term
liquidity needs are met primarily through these sources, the repayment of loans,
and the maturity or sale of investment securities.

FINANCIAL CONDITION

Total assets of the CF Bancshares were $ 105.2 million at June 30, 2001, an
increase of $ 10.5 million, or 11.1%, from $94.7 million at December 31, 2000.
The increase in total assets was funded by an increase in deposits and
borrowings from the Federal Home Loan Bank ("FHLB"). CF Bancshares believes that
FHLB borrowings are a reliable and relatively inexpensive source of funding when
compared to market deposit rates in the markets in which the CF Bancshares
conducts its business.

Loan growth during the period ended December 31, 2000 was generated
primarily in commercial real estate and consumer loans. At December 31, 2000,
commercial real estate loans were $23.3 million, an increase of $7.5 million
from $15.8 million at December 31, 1999. Consumer loans were $12.2 million at
December 31, 2000, an increase of $7.0 million from $5.2 million at December 31,
1999. Consumer loans increased because of CF Bancshares' concentrated efforts in
home equity loans and in single family improved lot loans.

Loans, net of unearned income, totaled $88.2 million at June 30, 2001, an
increase of 6.8%, or $5.6 million from $82.5 million at December 31, 2000, with
average loans totaling $86.4 million for the first six months of 2001 compared
to $73.3 million for the first six months of 2000. Loans, net of unearned
income, comprised 90.2% of interest-earning assets at June 30, 2001, compared to
93.7% at December 31, 2000. The loan portfolio produced an average yield of
8.80% and 8.84% for the first six months of 2001 and 2000, respectively.

DISTRIBUTION OF LOANS BY CATEGORY

DECEMBER 31
-----------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
(IN THOUSANDS)

Residential real estate.......................... $42,517 $41,415 $37,815 $39,466 $41,833
Commercial real estate........................... 23,250 15,788 12,180 8,969 6,908
Consumer......................................... 12,231 5,283 7,186 8,661 9,772
Commercial....................................... 4,355 2,569 1,514 1,789 1,161
Real estate construction......................... 3,807 3,806 2,968 3,475 2,655
------- ------- ------- ------- -------
Total loans............................ 86,160 68,861 61,663 62,360 62,329
Unearned income.................................. (108) (80) (64) (60) (63)
Undisbursed portion of loans in process.......... (3,522) (2,080) (1,015) (1,438) (1,496)
Allowance for loan losses........................ (289) (282) (206) (193) (129)
------- ------- ------- ------- -------
Net loans...................................... $82,241 $66,419 $60,378 $60,669 $60,641
======= ======= ======= ======= =======

The repayment of loans as they mature is a source of liquidity for CF
Bancshares. The following table sets forth CF Bancshares' loans in selected
categories maturing within specified intervals at December 31, 2000.

SELECTED LOAN MATURITY AND INTEREST RATE SENSITIVITY

RATE STRUCTURE FOR LOANS
MATURITY MATURING
--------------------------------------------------- OVER ONE YEAR
OVER ONE YEAR -------------------------------
ONE YEAR THROUGH FIVE PREDETERMINED FLOATING OR
OR LESS YEARS OVER FIVE YEARS TOTAL INTEREST RATE ADJUSTABLE RATE
-------- ------------- --------------- ------ ------------- ---------------
(IN THOUSANDS)

Commercial................ $ 159 $ 966 $3,230 $4,355 $1,033 $3,163
Real estate
construction............ 3,751 56 -- 3,807 56 --
------ ------ ------ ------ ------ ------
$3,910 $1,022 $3,230 $8,162 $1,089 $3,163
====== ====== ====== ====== ====== ======

The information presented in the above table is based on the contractual
maturities of the individual loans, including loans, which may be subject to
renewal at their contractual maturity. Renewal of such loans is subject to
review and credit approval, as well as modification of terms upon their
maturity. Consequently, management believes this treatment presents fairly the
maturity and repricing structure of the loan portfolio.

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

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

CF Bancshares historically has allocated its allowance for loan losses to
specific loan categories. Although the allowance is allocated, it is available
to absorb losses in the entire loan portfolio.

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

DECEMBER 31
-------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------- ----------------- ----------------- ----------------- -----------------
PERCENT PERCENT PERCENT PERCENT PERCENT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
IN EACH IN EACH IN EACH IN EACH IN EACH
CATEGORY CATEGORY CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ -------- ------ -------- ------ -------- ------ -------- ------ --------
(DOLLARS IN THOUSANDS)

Domestic
Residential real
estate............... $ 29 49.4% $ 28 60.1% $ 20 61.3% $ 19 63.3% $ 12 67.1%
Commercial real
estate............... 29 27.0 28 22.9 20 19.8 19 14.4 12 11.1
Consumer............... 86 14.2 85 7.7 60 11.7 60 13.9 40 15.7
Commercial............. 130 5.0 135 3.7 100 2.5 90 2.9 62 1.9
Real estate
construction......... 15 4.4 6 5.6 6 4.7 5 5.5 3 4.2
---- ----- ---- ----- ---- ----- ---- ----- ---- -----
$289 100.0% $282 100.0% $206 100.0% $193 100.0% $129 100.0%
==== ===== ==== ===== ==== ===== ==== ===== ==== =====

Net charge-offs were $93,000 for the year ended December 31, 2000 compared
to $97,000 for the year ended December 31, 1999. The ratio of net charge-offs to
average loans has averaged .10% for the five year period ended December 31,
2000, with a ratio of .12% in 2000 and .15% in 1999. Historically, net
charge-offs have been more significant for commercial and consumer loans. Net
charge-offs were $43,000 for the first six months of 2001. Net charge-offs to
average loans on an annualized basis were .10% for the first six months of 2001.

The allowance as a percentage of loans at December 31, 2000 was .35%. The
allowance as a percentage of loans for the five-year period ending December 31,
2000 has averaged .33%. Allowance for loan losses as a percentage of
nonperforming loans decreased to 74.87% at December 31, 2000 from 324.14% at
December 31, 1999. Nonperforming loans increased $299,000 to $386,000 at
December 31, 2000 from $87,000 at December 31, 1999. As a percent of net loans,
nonperforming loans increased from .13% at December 31, 1999 to .47% at December
31, 2000.

The allowance as a percentage of loans at June 30, 2001 was .39% compared
to .35% at December 31, 2000. Allowance for loan losses as a percentage of
nonperforming loans decreased to 61.84% at June 30, 2001 from 74.87% at December
31, 2000, as nonperforming loans increased to $553,000 at June 30, 2001 from
$386,000 at December 31, 2000. As a percent of net loans, nonperforming loans
increased from .47% at December 31, 2000 to .63% at June 30, 2001.

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

SUMMARY OF LOAN LOSS EXPERIENCE

YEAR
-----------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)

Allowance for loan losses at beginning of
year....................................... $ 282 $ 206 $ 193 $ 129 $ 100
Charge-offs:
Commercial................................. 34 -- 53 -- --
Real estate................................ 2 47 -- -- --
Consumer................................... 79 70 22 71 33
------- ------- ------- ------- -------
Total charge-offs.................. 115 117 75 71 33
Recoveries:
Commercial................................. -- -- -- -- --
Real estate................................ -- -- 6 7 --
Consumer................................... 22 20 8 -- 8
------- ------- ------- ------- -------
Total recoveries................... 22 20 14 7 8
Net charge-offs.............................. 93 97 61 64 25
Provision for loan losses.................... 100 173 74 128 54
------- ------- ------- ------- -------
Allowance for loan losses at end of year..... $ 289 $ 282 $ 206 $ 193 $ 129
======= ======= ======= ======= =======

Loans at end of period, net of unearned
income..................................... $82,530 $66,701 $60,584 $60,862 $60,770
Average loans, net of unearned income........ 77,660 63,189 59,785 60,816 57,528
Ratio of ending allowance to ending loans.... .35% .42% .34% .32% .21%
Ratio of net charge-offs to average loans.... .12% .15% .10% .11% .04%
Net charge-offs as a percentage of:
Provision for loan losses.................. 93.00% 56.07% 82.43% 50.00% 46.30%
Allowance for loan losses.................. 32.18% 34.40% 29.61% 33.16% 19.38%
Allowance for loan losses as a percentage of
nonperforming loans........................ 74.87% 324.14% 99.04% 68.68% 19.11%

Nonperforming Loans. The following table represents CF Bancshares'
nonperforming loans for the dates indicated.

NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS

DECEMBER 31,
JUNE 30, --------------------------------
2000 2000 1999 1998 1997 1996
-------- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

Nonaccrual............................................. $553 $386 $87 $ -- $ -- $ --
Past due (contractually past due 90 days or more)...... -- -- -- 208 281 675
---- ---- --- ---- ---- ----
$553 $386 $87 $208 $281 $675
==== ==== === ==== ==== ====

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

Securities. As of December 31, 2000 and 1999, CF Bancshares carried in its
held-to-maturity securities portfolio mortgage-backed securities totaling $3.2
million and $1.8 million, respectively. As of December 31, 1998 CF Bancshares
did not hold any securities.

The following table shows the scheduled maturities and average yields of
securities held at December 31, 2000.

MATURITY DISTRIBUTION OF INVESTMENT SECURITIES

MATURING
----------------------------------------------------------------------------------
AFTER ONE BUT AFTER FIVE BUT
WITHIN ONE WITHIN FIVE WITHIN TEN AFTER TEN
YEAR YEARS YEARS YEARS TOTAL
-------------- -------------- -------------- -------------- --------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)

Securities held to maturity:
Mortgage-backed securities............. $ -- --% $144 9.88% $ -- --% $3,066 8.89% $3,209 8.89%
==== ==== ==== ==== ==== ==== ====== ==== ====== ====

Short-Term Investments. Short-term investments as of December 31, 2000
consisted of overnight funds of $1.7 million compared to $940,000 at December
31, 1999.

In addition to liquidity management, the CF Bancshares also utilizes
short-term investments when the level of funds committed to lending and the
investment portfolio change, or the level of deposit generation changes.

Deposits. During 2000, average total deposits increased $10.7 million, or
20.0%, to $70.0 million, from $59.3 million in 1999. During 1999, average total
deposits decreased $457,000, or .8% from $59.8 million in 1998. Deposit growth
has been generated primarily internal growth in CF Bancshares' various markets.

The following table sets forth average deposits of CF Bancshares by
category for the periods indicated.

AVERAGE DEPOSITS

2000 1999 1998
----------------------- ----------------------- -----------------------
AVERAGE AVERAGE AVERAGE
AMOUNT AVERAGE AMOUNT AVERAGE AMOUNT AVERAGE
OUTSTANDING RATE PAID OUTSTANDING RATE PAID OUTSTANDING RATE PAID
----------- --------- ----------- --------- ----------- ---------
(DOLLARS IN THOUSANDS)

Noninterest-bearing demand
deposits...................... $ 4,307 --% $ 3,838 --% $ 4,001 --%
Interest-bearing savings and
NOW........................... 15,650 2.81 14,478 2.87 13,063 2.85
Interest-bearing money market... 6,454 4.29 6,022 3.59 4,093 3.76
Time deposits................... 43,587 6.16 35,003 5.64 38,641 6.02
------- ---- ------- ---- ------- ----
Total average
deposits............ $69,998 4.86% $59,341 4.39% $59,798 4.43%
======= ==== ======= ==== ======= ====

Noninterest-bearing deposits totaled $3.5 million at December 31, 2000, an
increase of 17.7%, or $520,000 from $2.9 million at December 31, 1999.
Noninterest bearing deposits comprised 4.7% of total deposits at, December 31,
2000, compared to 4.9% at December 31, 1999.

Interest-bearing deposits totaled $69.6 million at December 31, 2000, an
increase of 21.7%, or $12.4 million from $57.2 million at December 31, 1999. The
$12.5 million increase in interest bearing deposits from December 31, 1999 was
generated primarily in through time deposits.

During 2000, average interest-bearing deposits increased $10.2 million, or
18.4% to $65.7 million, from $55.5 million in 1999. During 1999, average
interest-bearing deposits decreased $294,000, or 18.4%, to $55.5 million, from
$55.8 million in 1998. Interest bearing deposits comprised 95.3% of total
deposits at December 31, 2000, compared to 95.1% at December 31, 1999 and
carried an average rate of 5.18%, 4.70% and 5.11% for the years ended December
31, 2000, 1999 and 1998, respectively.

Noninterest-bearing deposits totaled $7.5 million at June 30, 2001, an
increase of 118.6%, or $4.1 million from $3.5 million at December 31, 2000.
Noninterest-bearing deposits comprised 9.4% of total deposits at June 30, 2001,
compared to 4.7% at December 31, 2000.

Interest-bearing deposits totaled $72.6 million at June 30, 2001, an
increase of 4.3%, or $3.0 million from $69.6 million at December 31, 2000, with
interest bearing deposits averaging $71.9 million for the first six months of
2001 compared to $62.4 million for the first six months of 2000. The $3.0
million increase in interest bearing deposits during the first six months of
2001 is comprised primarily of interest bearing NOW and money-market accounts.
The average rate paid on all interest-bearing deposits during the first six
months of 2001 was 5.34% compared to 4.95% for the first six months of 2000.

Deposits, and particularly core deposits, have historically been the CF
Bancshares' primary source of funding and have enabled CF Bancshares to meet
successfully both its short-term and long-term liquidity needs. These core
deposits represent 77.6% of the CF Bancshares' total deposits at December 31,
2000. CF Bancshares anticipates that such deposits will continue to be its
primary source of funding in the future. CF Bancshares' loan-to-deposit ratio
was 113.9% at December 31, 2000, compared to 110.9% at December 31, 1999. The
maturity distribution of the CF Bancshares' time deposits over $100,000 at
December 31, 2000 is shown in the following table.

MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE

UNDER 3 3-6 6-12 OVER
MONTHS MONTHS MONTHS 12 MONTHS TOTAL
------- ------ ------ --------- -------
(IN THOUSANDS)

$3,189 $3,073 $2,999 $7,119 $16,380
====== ====== ====== ====== =======

Approximately 19.5% of CF Bancshares' time deposits over $100,000 had
scheduled maturities within three months. CF Bancshares believes that large
denomination certificate of deposit customers tend to be extremely sensitive to
interest rate levels, making these deposits less reliable sources of funding for
liquidity planning purposes than core deposits.

Borrowed Funds. During 2000, average borrowed funds increased $3.9
million, or 59.7% to $10.3 million, from $6.4 million during 1999, which
increased $3.4 million, or 115.3% from $3.0 million during 1998. The average
rate paid on borrowed funds during 2000, 1999 and 1998 was 5.81%, 5.42% and
5.63%, respectively. Because of a relatively high loan-to-deposit ratio, the
existence and stability of these funding sources are critical to CF Bancshares'
maintenance of short-term and long-term liquidity.

Borrowed funds as of December 31, 2000 consisted of advances from the FHLB.
The following is a summary, by year of maturity, of advances from the FHLB as of
December 31, 2000 and 1999 (in thousands):

2000 1999
---------------------- ----------------------
WEIGHTED WEIGHTED
YEAR AVERAGE RATE BALANCE AVERAGE RATE BALANCE
---- ------------ ------- ------------ -------

2000........................................ --% $ -- 6.22% $1,000
2003........................................ 4.79 3,000 4.79 3,000
2005........................................ 7.07 2,000 -- --
2006........................................ 6.70 250 6.70 250
2008........................................ 5.95 3,000 5.95 3,000
2010........................................ 6.41 5,000 -- --
------- ------
Total....................................... $13,250 $7,250
======= ======

The advances are secured by FHLB stock and a blanket lien on certain
residential real estate loans. CF Bancshares has remaining approximately $6.6
million in unused lines of credit with the FHLB subject to the availability of
qualified collateral as June 30, 2001.

Advances from the FHLB increased $3.0 million to $16.3 million at June 30,
2001 from $13.3 million at December 31, 2000. Borrowings from the FHLB were used
primarily to fund growth in the loan portfolio.

Stockholder's Equity. Stockholder's equity increased $557,000 during 2000
to $7.7 million at December 31, 2000 from $7.2 million at December 31, 1999. The
increase in stockholder's equity during 2000 primarily consisted of $806,000 in
net earnings, less $253,000 in dividends.

At June 30, 2001, total stockholders' equity was $8.1 million, an increase
of $372,000 from $7.7 million at December 31, 2000. The increase in
stockholder's equity during 2001 primarily consisted of $496,000 in net
earnings, net of $127,0000 in dividends.

Regulatory Capital. The table below represents the CF Bancshares' banking
subsidiary's actual regulatory and minimum regulatory capital requirements at
December 31, 2000 (dollars in thousands):

FOR CAPITAL
ADEQUACY TO BE WELL
ACTUAL PURPOSES CAPITALIZED
-------------- -------------- --------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----

Total Risk-Based Capital........................ $7,507 12.66% $4,742 8.00% $5,928 10.00%
Tier 1 Risk-Based Capital....................... 7,218 12.18 2,371 4.00 3,557 6.00
Leverage Capital................................ 7,218 7.69 3,756 4.00 4,695 5.00

IMPACT OF INFLATION

Unlike most industrial companies, the assets and liabilities of financial
institutions such as the CF Bancshares are primarily monetary in nature.
Therefore, interest rates have a more significant effect on the CF Bancshares'
performance than do the effects of changes in the general rate of inflation and
changes in prices. In addition, interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services. CF
Bancshares seeks to manage the relationships between interest sensitive assets
and liabilities in order to protect against wide interest rate fluctuations,
including those resulting from inflation.

BUSINESS OF CF BANCSHARES

CF Bancshares is a unitary thrift holding company organized under the laws
of the State of Florida. CF Bancshares is headquartered in Port St. Joe, Florida
and operates primarily through its wholly-owned banking subsidiary, Citizens
Federal Savings Bank of Port St. Joe, a federally-chartered savings bank. CF
Bancshares', Citizens Federal's and Citizens Properties' corporate headquarters
are located at 401 Cecil G. Costin, Sr. Boulevard, Port St. Joe, Florida 32456
and their telephone number is (850) 227-1416.

Citizens Federal was originally chartered in 1956 as a federal mutual
savings and loan association. Citizens Federal converted to a stock savings bank
in 1991. Citizens Federal conducts business from its corporate office in Port
St. Joe, Florida and its two full-service branch offices in Apalachicola and
Mexico Beach, Florida. Citizens Federal is principally engaged in the business
of attracting deposits from the general public and originating residential
mortgage loans and, to a lesser extent, commercial real estate and consumer
loans. In addition, a small portion of its assets are invested in securities.
Citizens Federal is a member of the Federal Home Loan Bank of Atlanta and its
deposit accounts are insured by the Federal Deposit Insurance Corporation.

No material portion of the deposits of Citizens Federal has been obtained
from a single or small group of customers and the loss of any customer's
deposits or a small group of customers' deposits would not have a material
adverse effect on the business of Citizens Federal.

Citizens Properties was established on July 29, 1997, as a property
management and development company. Citizens' Properties' primary activity has
been the development of a residential subdivision in CF Bancshares' principal
market area. At June 30, 2001, Citizens Properties only business activity was
the ownership of three developed lots.

At June 30, 2001, CF Bancshares had consolidated total assets of
approximately $105.2 million, approximately $8.1 in stockholder's equity and
approximately 26 full-time employees.

PRINCIPAL STOCKHOLDERS

The following table contains information regarding the only people known to
us to be the beneficial owners of 5% or more of the outstanding shares of CF
Bancshares common stock as of the record date.

NUMBER OF PERCENT
NAME OF BENEFICIAL OWNER SHARES(1) OF CLASS
------------------------ --------- --------

Margaret Costin............................................. 8,840 5.2%
P.O. Box 98
Port St. Joe, Florida 32457
Dwight I. Marshall.......................................... 8,699 5.5
956 West Gorrie Drive
St. George Island, Florida 32328
W. Hoyt Smithwick........................................... 9,000 5.3
2430 Tuxedo Place
Albany, Georgia 31707

---------------

(1) "Beneficial Ownership" includes shares for which an individual, directly or
indirectly, has or shares voting or investment power or both. All the listed
persons have sole voting and investment power over the shares listed
opposite their names unless otherwise indicated in the notes below.
Beneficial ownership as reported in the table has been determined in
accordance with Rule 13d-3 of the Securities Exchange Act. The percentages
are based on 169,345 shares outstanding.

MANAGEMENT OF CF BANCSHARES

Information relating to the business experience, age and beneficial
ownership of CF Bancshares common stock for CF Bancshares directors and officers
is set forth below.

Charles A. Costin,(1) age 40, is a director 6,363 shares of common stock,(2)
and the Corporate Secretary of CF 3.8% common stock outstanding
Bancshares. He has served as a director
since CF Bancshares' incorporation in 1996.
Mr. Costin also serves as a director and as
the Corporate Secretary for Citizens
Federal. He has been a director of Citizens
Federal since 1989. Mr. Costin is also a
director and the Corporate Secretary for
Citizens Properties, Inc., a wholly-owned
subsidiary of CF Bancshares. He is a
graduate of the University of Florida and
Nova Law School and is an attorney in the
law firm of Costin and Costin in Port St.
Joe.
Greg Johnson, age 54, is the President, 7,352 shares of common stock,(2)
Chief Executive Officer and a director of 4.4% common stock outstanding
CF Bancshares. He also serves as the
President, Chief Executive Officer and a
director of Citizens Federal, positions he
has held since 1989. Mr. Johnson is also
the President and Chief Executive Officer
of Citizens Properties, Inc.
Jasper LeRoy Smith, age 53, was first 3,955 shares of common stock,(2)
elected to the Board of Directors of CF 2.3% of common stock outstanding
Bancshares and Citizens Federal effective
October 1, 1999. He also serves as a
director of Citizens Properties, Inc. Mr.
Smith has been an insurance agent for the
past 27 years. He is the owner and
President of Hannon Insurance Agency, Inc.,
Port St. Joe. Mr. Smith is a graduate of
the University of Alabama.
David B. May, age 68, is the Chairman of 6,246 shares of common stock,(2)
the Boards of CF Bancshares and Citizens 3.7% of common stock outstanding
Federal. Mr. May has been a director of
Citizens Federal since 1975. He is also the
Chairman of the Board of Citizens
Properties, Inc. Mr. May is a graduate of
the University of Missouri and is a
certified real estate appraiser. He is the
retired former owner and operator of the
Western Auto Associates Store in Port St.
Joe.

---------------

(1) Stuart L. Shoaf and Charles A. Costin are brothers-in-law.
(2) Includes all shares of common stock owned by each director's spouse, or as
custodian or trustee for minor children, and all shares over which such
individual effectively exercises sole voting or investment power.

Stuart L. Shoaf,(1) age 48, is a director 5,071 shares of common stock,(2)
and the Treasurer of CF Bancshares, 3.0% of common stock outstanding
Citizens Federal and Citizens Properties,
Inc. Mr. Shoaf is President of St. Joe
Natural Gas Co., Inc. and a graduate of the
University of Tennessee.
Mary Kathleen Leibold, age 49, is the 1,695 shares of common stock,(2)
Senior Vice President and Chief Financial 1.00% of common stock outstanding
Officer for both CF Bancshares and Citizens
Federal. She has been an officer of
Citizens Federal since 1995 and of CF
Bancshares since 1996.
All Directors and Executive Officers as a 30,682 shares of common stock,(2)
Group (Six Persons) 18.1% of common stock outstanding

MARKET FOR CF BANCSHARES COMMON STOCK

CF Bancshares' authorized capital stock consists of 5,000,000 shares of
common stock, of which 169,345 are issued and outstanding, and 1,000,000 shares
of preferred stock of which no shares are outstanding. There is no organized
trading market for CF Bancshares common stock. When shares are traded, they are
traded in privately-negotiated transactions. CF Bancshares is aware that trades
have occurred in the past few years. The last trade of which CF Bancshares is
aware occurred July 16, 2001 for $45.71 per share.

CF Bancshares' policy has been to pay a cash dividend whenever feasible,
after taking into account CF Bancshares' capital needs and the attainment of
corporate goals. CF Bancshares paid dividends two times a year in 1999 and 2000
totaling $1.25 per share in 1999 and $1.50 per share in 2000. CF Bancshares paid
a dividend of $.75 per share in February 2001.

COMPARISON OF RIGHTS OF CF BANCSHARES STOCKHOLDERS

AND THE BANC CORPORATION STOCKHOLDERS

CF Bancshares is incorporated in Florida, and The Banc Corporation is
incorporated in Delaware. After the merger, the former CF Bancshares
stockholders will have their rights and obligations as The Banc Corporation
stockholders governed by Delaware law. A summary comparison of the material
rights of a stockholder under The Banc Corporation's Restated Certificate of
Incorporation and Bylaws and the rights of a CF Bancshares stockholder under the
CF Bancshares' Articles of Incorporation and Bylaws is described below. The
information set forth below is qualified in its entirety by reference to
Restated Certificate of Incorporation and Bylaws of The Banc Corporation and to
the Articles of Incorporation and the Bylaws of CF Bancshares.

CLASSES AND SERIES OF CAPITAL STOCK

CF Bancshares. Pursuant to the CF Bancshares Articles of Incorporation, CF
Bancshares is authorized to issue 5,000,000 shares of common stock, par value of
$.01 per share, and 1,000,000 shares of preferred stock, par value of $.01 per
share. As of August 31, 2001, there were 169,345 shares of CF Bancshares common
stock issued and outstanding.

The Banc Corporation. The Banc Corporation is authorized by its Restated
Certificate of Incorporation to issue up to 30,000,000 shares of capital stock,
of which 25,000,000 shares are designated common stock, par value $.001 per
share, and 5,000,000 shares are designated preferred stock, par value $.001 per
share. As of June 30, 2001, there were 14,248,721 shares of The Banc Corporation
common stock outstanding. In addition, 1,500,000 shares of The Banc Corporation
common stock have been reserved for future option grants under The Banc
Corporation's stock option plans. The Board of Directors has the authority to
issue The Banc Corporation preferred stock in one or more series and fix the
rights, preferences, privileges and restrictions for each such series, without
any further vote or action by the stockholders. As of June 30, 2001, there were
no shares of preferred stock of The Banc Corporation issued and outstanding, and
the Board of Directors does not currently intend to issue shares of preferred
stock.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock will be
subject to the Restated Certificate of Incorporation of The Banc Corporation
which authorizes substantially more shares of common stock and preferred stock.

SIZE AND ELECTION OF THE BOARD OF DIRECTORS

CF Bancshares. The Articles of Incorporation of CF Bancshares provide that
the CF Bancshares Board of Directors shall consist of not more than 15, but not
less than 3, members and divides the Board into three classes as nearly equal as
possible, with staggered terms. The Board of Directors of CF Bancshares shall
fix the size of the Board by resolution. Directors of CF Bancshares are elected
by a plurality of votes cast at annual meetings of stockholders.

The Banc Corporation. The Restated Certificate of Incorporation of The
Banc Corporation divides the Board of Directors into three classes as nearly
equal in number as is reasonably possible, with staggered terms. With a
classified board of directors, at least two annual meetings of stockholders,
instead of one, will be required to effect a change in the majority of the Board
of Directors. The Bylaws provide that the Board of Directors shall consist of
not more than 30 directors, nor less than three directors. The Board of
Directors shall fix the size of the board by the resolution. Directors of The
Banc Corporation are elected by a plurality of votes cast at the annual meeting
of stockholders.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock with
respect to the size and composition of the Board of Directors of The Banc
Corporation will be governed by the Restated Certificate of Incorporation of The
Banc Corporation described in the preceding paragraph.

REMOVAL OF DIRECTORS

CF Bancshares. CF Bancshares' Articles of Incorporation provide that a
director may be removed from office by the affirmative vote of the holders of at
least 60% of the outstanding shares of capital stock entitled to vote generally
for the election of directors.

The Banc Corporation. The Banc Corporation's Bylaws provide that a
director may be removed with or without cause by the vote of the holders of a
majority of the shares of The Banc Corporation common stock entitled to vote at
an election of directors, except as otherwise provided by applicable law.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock will be
able to remove a director from the Board of Directors only by a vote of the
holders of a majority of the shares of The Banc Corporation common stock
entitled to vote at an election of directors, except as otherwise provided by
applicable law.

DIVIDENDS

CF Bancshares. Pursuant to the Florida Business Corporation Act, a board
of directors may from time to time make distributions to its stockholders,
subject to restrictions in its articles of incorporation, provided that no
distribution may be made if, after giving it effect, (1) the corporation would
not be able to pay its debts as they become due in the usual course of business,
or (2) the corporation's total assets would be less than the sum of its total
liabilities plus (unless the articles of incorporation permit otherwise) the
amount that would be needed, if the corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.

The Banc Corporation. The Restated Certificate of Incorporation of The
Banc Corporation authorizes the Board of Directors to declare a dividend to
distribute to the stockholders, without a vote of the stockholders, any portion
of the assets of The Banc Corporation which are available under Delaware law for
distribution.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock with
respect to the payment of dividends will be governed by the Restated Certificate
of Incorporation of The Banc Corporation.

CONVERSION AND DISSOLUTION

CF Bancshares. The CF Bancshares common stock cannot be converted into any
other type of stock. The CF Bancshares Articles of Incorporation authorize the
issuance of preferred stock; however, no preferred stock designation has been
filed, nor is any preferred stock outstanding.

The Banc Corporation. The Banc Corporation common stock cannot be
converted into any other type of stock of The Banc Corporation. The Restated
Certificate of Incorporation of The Banc Corporation authorizes the issuance of
5,000,000 shares of preferred stock, par value $.001 per share, and provides
that shares of preferred stock may have the voting powers, preferences and other
special rights (including, without limitation, the right to convert the shares
of preferred stock into shares of The Banc Corporation common stock) as
described in the Restated Certificate of Incorporation of The Banc Corporation
or resolutions providing for the issuance of preferred stock of The Banc
Corporation. If the Board of Directors designated a series of preferred stock,
such preferred stock could be entitled to preferential payments in the event of
dissolution of The Banc Corporation.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock with
respect to conversion and dissolution will be subject to subordination to any
preferred stock designated by the Board of Directors of The Banc Corporation to
be entitled to preferential payments in the event of dissolution of The Banc
Corporation.

AMENDMENT OR REPEAL OF THE INCORPORATION DOCUMENTS AND BYLAWS

CF Bancshares. The Florida Business Corporation Act generally provides
that a Florida corporation's articles of incorporation may be amended in certain
minor respects without stockholder action, but the Florida Business Corporation
Act requires most amendments to be adopted by the affirmative vote of a majority
of the shares entitled to vote thereon upon recommendation of the board of
directors. Unless the Florida Business Corporation Act requires a greater vote,
amendments may be adopted by a majority of the votes cast, a quorum being
present. The Florida Business Corporation Act also permits a board of directors
to amend or repeal the bylaws unless the Florida Business Corporation Act or the
stockholders provide otherwise. The stockholders entitled to vote have
concurrent power to amend or repeal the bylaws. CF Bancshares' Articles of
Incorporation provide that certain provisions including those relating to:

- calling special meetings of the shareholders;

- the composition and structure of the Board of Directors;

- approval of certain business combination transactions;

- indemnification of officers or directors; and

- amendment of the Articles of Incorporation

may only be amended by the affirmative vote of the holders of at least 66% of
the voting power of the shares of capital stock entitled to vote generally in
the election of directors.

The Banc Corporation. Under Delaware law, unless its certificate of
incorporation or bylaws require a greater vote, amendment of a corporation's
certificate of incorporation generally requires the approval of the holders of a
majority of the outstanding stock entitled to vote thereon. If the amendment
would increase or decrease the number of authorized shares of any class or
series or the par value of such shares or would adversely affect the shares of
such class or series, the approval of the holders of a majority of the
outstanding stock of such class or series is required to amend the certificate
of incorporation. The Banc Corporation's Restated Certificate of Incorporation
and Bylaws impose no greater voting requirement.

The Banc Corporation's Restated Certificate of Incorporation and Bylaws
provide that The Banc Corporation's Bylaws may be altered, amended or repealed
by a vote of a majority of the entire Board of Directors of the Corporation, or
by a majority of the outstanding stock entitled to vote thereon.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock with
respect to amendment or repeal of The Banc Corporation's Restated Certificate of
Incorporation or Bylaws will be governed by the provisions described in the
preceding paragraphs.

SPECIAL MEETINGS OF STOCKHOLDERS

CF Bancshares. CF Bancshares' Articles of Incorporation provide that a
special meeting of shareholders may be called by a resolution adopted by a
majority of the total number of authorized directors, the Chairman of the Board,
the President or by shareholders owning at least 20% of the outstanding shares
of CF Bancshares.

The Banc Corporation. The Bylaws of The Banc Corporation provide that a
special meeting of The Banc Corporation's stockholders, unless otherwise
prescribed by law, may be called at any time by the Chairman of the Board,
President or by order of the Board of Directors. Special meetings of
stockholders prescribed by law for the election of directors shall be called by
the Board of Directors, the Chairman of the Board, the President or the
Secretary whenever "required" to do so by applicable law.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock with
respect to the calling of special meetings of stockholders will be governed by
The Banc Corporation's Bylaws.

LIABILITY OF DIRECTORS

CF Bancshares. The Florida Business Corporation Act generally provides
that a director is not personally liable for monetary damages to the corporation
or any other person for any statement, vote, decision or failure to act
regarding corporate management or policy, unless: (i) the director breached or
failed to perform his duties as a director and (ii) the director's breach of or
failure to perform those duties constitutes: (1) a violation of the criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful; (2) a
transaction from which the director derived an improper personal benefit, either
directly or indirectly; (3) an unlawful distribution; (4) conscious disregard
for the best interest of the corporation, or willful misconduct; or (5)
recklessness or an act or omission which was committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety or property. This provision would absolve directors of CF
Bancshares of personal liability for negligence in the performance of their
duties, including gross negligence. It would not permit a director to be
exculpated, however, from liability for actions involving conflicts of interest
or breaches of the traditional "duty of loyalty" to CF Bancshares and its
stockholders, and it would not affect the availability of injunctive or other
equitable relief as a remedy. CF Bancshares' Articles of Incorporation provide
for the highest level of indemnification permitted by law.

The Banc Corporation. Delaware law permits a corporation to include a
provision in its certificate of incorporation eliminating or limiting the
personal liability of a director or officer to a corporation or its stockholders
for damages for breach of the director's fiduciary duty, subject to certain
limitations. The Restated Certificate of Incorporation of The Banc Corporation
includes such a provision which, as described below, limits the liability to the
fullest extent permitted under applicable law.

The Restated Certificate of Incorporation of The Banc Corporation provides
that a director will not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability:

- for any breach of the director's duty of loyalty to The Banc Corporation
or its stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- under Section 174 of Delaware law, which concerns unlawful payments of
dividends or expenditures of funds for unlawful stock purchases or
redemptions; or

- for any transaction from which the director derived an improper personal
benefit.

While these provisions provide directors with protection from awards of
monetary damages for breaches of their duty of care, they do not eliminate such
duty. Accordingly, these provisions will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care. The provisions described above apply to an
officer of The Banc Corporation only if he or she is a director of The Banc
Corporation and is acting in his or her capacity as director, and do not apply
to officers of The Banc Corporation who are not directors.

Therefore, as a consequence of and following the merger, the holders of CF
Bancshares common stock exchanged for The Banc Corporation common stock with
respect to the liability of directors will be governed by the provisions of the
Restated Certificate of Incorporation of The Banc Corporation described above.

DESCRIPTION OF CAPITAL STOCK OF THE BANC CORPORATION

AUTHORIZED CAPITAL STOCK

The Restated Certificate of Incorporation of The Banc Corporation provides
that The Banc Corporation may issue 5,000,000 shares of preferred stock, par
value $.001 per share, and 25,000,000 shares of common stock, par value $.001
per share.

THE BANC CORPORATION COMMON STOCK

Holders of The Banc Corporation common stock are entitled to one vote for
each share held of record on all matters to be submitted to a vote of the
stockholders and do not have pre-emptive rights. Cumulative voting is not
permitted. This means that the holders of shares entitled to exercise more than
50 percent of the voting rights in the election of directors, for example, will
be able to elect all The Banc Corporation's directors.

The holders of The Banc Corporation common stock are entitled to dividends
and other distributions as and if declared by the Board of Directors of The Banc
Corporation out of funds legally available. See "Summary of Prospectus -- Proxy
Statement -- Market and Market Prices." All outstanding shares of The Banc
Corporation common stock are, and the shares to be issued in the merger will be,
when issued pursuant to the Plan of Merger, fully paid and nonassessable. Upon
the liquidation, dissolution or winding up of The Banc Corporation, the holders
of The Banc Corporation common stock would be entitled to share pro rata in the
distribution of all assets, if any, of The Banc Corporation remaining after
payment or provision for payment of all The Banc Corporation's debts and
obligations and preferred liquidation payments, if any, to holders of any
outstanding shares of The Banc Corporation preferred stock. Shares of The Banc
Corporation common stock are not subject to any redemption provisions and are
not convertible into any other security or other property of The Banc
Corporation. No share of The Banc Corporation common stock is subject to any
call or assessment.

THE BANC CORPORATION PREFERRED STOCK

The Board of Directors of The Banc Corporation, without further stockholder
authorization, is authorized to issue shares of preferred stock in one or more
series. The Board of Directors shall determine and fix the rights, preferences
and privileges of each series, including dividend rights and preferences over
dividends on The Banc Corporation common stock and one or more series of
preferred stock, conversion rights, voting rights (in addition to those provided
by law), redemption rights and the terms of any sinking fund therefore, and
rights upon liquidation, dissolution or winding up, including preferences over
The Banc Corporation common stock and one or more series of preferred stock of
The Banc Corporation. Although The Banc Corporation has no present plans to
issue any shares of preferred stock, the issuance of shares of preferred stock
of The Banc Corporation, or the issuance of rights to purchase such shares, may
have the effect of delaying, deferring or preventing a change in control of The
Banc Corporation or an unsolicited acquisition proposal.

CERTAIN PROVISIONS OF THE BANC CORPORATION'S CERTIFICATE OF INCORPORATION AND
DELAWARE LAW

Classified Board of Directors. The Restated Certificate of Incorporation
and the Bylaws of The Banc Corporation provide for the Board of Directors of The
Banc Corporation to be divided into three classes of directors, as nearly equal
in number as is reasonably possible, with staggered three-year terms. One class
of directors is elected every year. See "Management of The
Corporation -- Classified Board of Directors."

The Banc Corporation believes that classification of the Board of Directors
into three classes will help to assure the continuity and stability of the Board
of Directors and the business strategies and policies as determined by the Board
of Directors, since, generally, a majority of the directors at any given time
will have had prior experience as directors of The Banc Corporation. The Banc
Corporation believes that this, in turn, will permit the Board of Directors to
more effectively represent the interests of stockholders.

With three classes, at least two annual meetings of stockholders, instead
of one, will generally be required to effect a change in the majority of the
Board of Directors of Banc Corporation. This classification may discourage proxy
contests for the election of directors or purchases of a substantial block of
The Banc Corporation common stock because classification tends to prevent a
change in control in a relatively short period of time. This classification
could also have the effect of discouraging a third party from making a tender
offer or otherwise attempting to obtain control of The Banc Corporation. Under
Delaware law, unless the certificate of incorporation otherwise provides, a
director on a classified board may be removed by the stockholders of the
corporation only for cause. The Banc Corporation's Restated Certificate of
Incorporation does not provide otherwise.

Advance Notice Provisions for Stockholder Proposals and Stockholder
Nominations of Directors. The Banc Corporation's Restated Certificate of
Incorporation provides that at an annual meeting of stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting business must be (1)
specified in the notice of posting (or any supplement thereof, given by or at
the direction of the Board of Directors), (2) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (3) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of The Banc
Corporation.

Delaware Takeover Statute. The Banc Corporation is subject to Section 203
of Delaware law which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any of a broad range of business combinations with
any "interested stockholder" for a period of three years following the date that
such stockholder became an interested stockholder, unless:

- before that date, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder;

- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned;

- by persons who are directors and also officers; and

- by employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or

- on or after such date, the business combination is approved by the board
of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder. An "interested stockholder" is defined as any
person that is (a) the owner of 15% or more of the outstanding voting
stock of the corporation or (b) an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the three-year period
immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder.

LIMITATIONS ON LIABILITY OF OFFICERS AND DIRECTORS

The Restated Certificate of Incorporation of The Banc Corporation contains
a provision eliminating or limiting director liability to The Banc Corporation
and its stockholders for monetary damages arising from acts or omissions in the
director's capacity as a director. The provision does not, however, eliminate or
limit the personal liability of a director:

- for any breach of such director's duty of loyalty to The Banc Corporation
or its stockholders.

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law.

- under the Delaware statutory provision making directors personally
liable, under a negligence standard, for unlawful dividends or unlawful
stock purchases or redemptions.

- for any transaction from which the director derived an improper personal
benefit.

This provision offers persons who serve on the Board of Directors of The
Banc Corporation protection against awards of monetary damages resulting from
breaches of their duty of care except as indicated above. As a result of this
provision, the ability of The Banc Corporation or a stockholder of The Banc
Corporation to successfully prosecute an action against a director for a breach
of his duty of care is limited. However, the provision does not affect the
availability of equitable remedies such as an injunction or rescission based
upon a

director's breach of his duty of care. The SEC has taken the position that the
provision will have no effect on claims arising under the federal securities
laws.

In addition, the Restated Certificate of Incorporation and the Bylaws of
The Banc Corporation provide for mandatory indemnification rights, subject to
limited exceptions, to any director, officer, employee or agent of The Banc
Corporation who by reason of the fact that he or she is a director, officer,
employee or agent of The Banc Corporation, is involved in a legal proceeding of
any nature. Such indemnification rights include reimbursement for expenses
incurred by such director, officer, employee or agent in advance of the final
disposition of such proceeding in accordance with the applicable provisions of
Delaware law.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for The Banc Corporation common stock is
SunTrust Bank, Atlanta, 58 Edgewood Avenue, Room 275, Atlanta, Georgia 30303,
404-588-7831.

EXPERTS

The consolidated financial statements of The Banc Corporation at December
31, 2000 and 1999 and for each of the three years in the period ended December
31, 2000, appearing in this prospectus-proxy statement have been audited by
Ernst & Young, LLP, independent auditors, to the extent indicated in their
report thereon also appearing elsewhere herein which as to the year 1998, are
based in part on the reports of Saltmarsh Cleaveland & Gund and Williams Cox
Weidner and Cox, independent auditors. Such consolidated financial statements
have been included in reliance upon such reports given on the authority of such
firm as experts in accounting and auditing.

The consolidated financial statements of CF Bancshares appearing in this
prospectus-proxy statement have been audited by Hacker, Johnson & Smith, P.A.
Such consolidated financial statements have been included in reliance upon such
report on the authority of such firm as an expert in accounting and auditing.

LEGAL MATTERS

The validity of the shares of The Banc Corporation common stock to be
issued to the stockholders of CF Bancshares pursuant to the merger will be
passed upon by Haskell Slaughter Young & Rediker, L.L.C., Birmingham, Alabama.
As of June 30, 2001, representatives of Haskell Slaughter Young & Rediker,
L.L.C., beneficially owned 53,850 shares of The Banc Corporation common stock.

INDEX TO FINANCIAL STATEMENTS

THE BANC CORPORATION AND SUBSIDIARIES
Report of Independent Auditors.............................. F-2
Consolidated Statements of Financial Condition for the years
ended December 31, 2000 and 1999.......................... F-6
Consolidated Statements of Income for the years ended
December 31, 2000, 1999 and 1998.......................... F-7
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998.......................... F-8
Consolidated Statements of Changes in Stockholders'
Equity.................................................... F-10
Notes to Consolidated Financial Statements.................. F-11
Condensed Consolidated Statements of Financial Condition for
the six months ended June 30, 2001........................ F-36
Condensed Consolidated Statements of Income for the six
months ended June 30, 2001 and 2000....................... F-37
Condensed Consolidated Statements of Cash Flow for the six
months ended June 30, 2001 and 2000....................... F-38
Notes to Condensed Consolidated Financial Statements........ F-39
CF BANCSHARES, INC. AND SUBSIDIARIES
Independent Auditors' Report................................ F-42
Consolidated Balance Sheets for the years ended December 31,
2000 and 1999............................................. F-43
Consolidated Statements of Earnings for the years ended
December 31, 2000, 1999 and 1998.......................... F-44
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 2000, 1999 and 1998.............. F-45
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998.......................... F-46
Notes to Consolidated Financial Statements, December 31,
2000 and 1999 for the years in ended December 31, 2000,
1999 and 1998............................................. F-47
Condensed Consolidated Balance Sheets (Unaudited) for the
six months ended June 30, 2001............................ F-59
Condensed Consolidated Statements of Earnings (Unaudited)
for the six months ended June 30, 2001 and 2000........... F-60
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited) for the six months ended June 30, 2001........ F-61
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the six months ended June 30, 2001 and 2000........... F-62
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................... F-63

F-1

REPORT OF INDEPENDENT AUDITORS

Board of Directors
The Banc Corporation

We have audited the accompanying consolidated statements of financial
condition of The Banc Corporation and Subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the consolidated
financial statements of Emerald Coast Bancshares, Inc., C&L Bank of Blountstown
and C&L Banking Corporation as of and for the year ended December 31, 1998,
which statements combined reflect net interest income constituting 33% of the
related consolidated totals in 1998. Those statements were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to data included for Emerald Coast Bancshares, Inc, C&L Bank of
Blountstown and C&L Banking Corporation, is based solely on the reports of the
other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of The Banc Corporation and Subsidiaries at
December 31, 2000 and 1999, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States.

Ernst & Young LLP

Birmingham, Alabama
March 1, 2001

F-2

REPORT OF INDEPENDENT AUDITORS

Board of Directors
The Banc Corporation

We have audited and reported on the consolidated statements of financial
condition of Emerald Coast Bancshares, Inc. and Subsidiary as of December 31,
1998 and 1997 and the consolidated statements of operations, changes in
stockholders' equity, and cash flows for the years ended December 31, 1998 and
1997, prior to their inclusion in the consolidated financial position of The
Banc Corporation and Subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 1998. These consolidated financial
statements are the responsibility of the management of Emerald Coast Bancshares,
Inc. and Subsidiary. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Emerald Coast
Bancshares, Inc. and Subsidiary as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1998 and 1997 in conformity with generally accepted
accounting principles.

Saltmarsh Cleaveland & Gund

Pensacola, Florida
March 19, 1999

F-3

REPORT OF INDEPENDENT AUDITORS

Board of Directors
The Banc Corporation

We have audited and reported on the statements of financial condition of C
& L Bank of Blountstown as of December 31, 1998 and 1997, and the related
statements of income, changes in stockholders' equity, and cash flows for the
years then ended December 31, 1998 and 1997. These financial statements are the
responsibility of the management of C & L Bank of Blountstown. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C & L Bank of Blountstown as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.

Williams, Cox, Weidner and Cox

March 3, 1999
Marianna, Florida

F-4

REPORT OF INDEPENDENT AUDITORS

Board of Directors
The Banc Corporation

We have audited and reported on the statements of financial condition of C
& L Bank of Bristol as of December 31, 1998 and 1997, and the statements of
income, changes in stockholders' equity, and cash flows for the years then ended
December 31, 1998 and 1997. These financial statements are the responsibility of
the management of C & L Bank of Bristol. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C & L Bank of Bristol as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

William, Cox, Weidner and Cox

March 3, 1999

Marianna, Florida

F-5

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31,
----------------------
2000 1999
---------- --------
(AMOUNTS IN THOUSANDS)

ASSETS
Cash and due from banks..................................... $ 36,691 $ 31,825
Interest bearing deposits in other banks.................... 2,427 1,862
Federal funds sold.......................................... 3,120 5,843
Short-term commercial paper................................. -- 14,484
Securities available for sale............................... 91,316 65,439
Securities held to maturity (fair value of $4,317,000 and
$5,411,000 in 2000 and 1999, respectively)................ 4,389 5,477
Mortgage loans held for sale................................ 4,324 2,127
Loans....................................................... 808,965 633,404
Unearned income............................................. (820) (627)
---------- --------
Loans, net of unearned income............................... 808,145 632,777
Allowance for loan losses................................... (8,959) (8,065)
---------- --------
Net loans......................................... 799,186 624,712
Premises and equipment, net................................. 43,957 37,734
Accrued interest receivable................................. 8,615 6,286
Stock in FHLB and Federal Reserve Bank...................... 6,922 3,461
Other assets................................................ 28,268 28,177
---------- --------
$1,029,215 $827,427
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing demand................................ $ 88,910 $ 83,733
Interest bearing demand................................... 178,221 160,044
Savings................................................... 33,886 33,998
Time deposits $100,000 and over........................... 236,647 180,641
Other time................................................ 289,640 224,101
---------- --------
Total deposits.................................... 827,304 682,517
Advances from FHLB.......................................... 104,300 62,500
Other borrowed funds........................................ 534 295
Notes payable............................................... -- 7,104
Accrued expenses and other liabilities...................... 7,202 6,163
---------- --------
Total liabilities................................. 939,340 758,579
Guaranteed preferred beneficial interests in the
Corporation's subordinated debentures..................... 15,000 --
Stockholders' equity:
Preferred stock, par value $.001 per share; shares
authorized 5,000,000; shares issued -0-................ -- --
Common stock, par value $.001 per share; shares authorized
25,000,000; shares issued 14,385,021; outstanding
14,345,021 in 2000 and 14,385,021 in 1999.............. 14 14
Surplus................................................... 47,756 47,756
Retained earnings......................................... 27,640 23,283
Accumulated other comprehensive loss...................... (325) (2,205)
Treasury stock, at cost -- 40,000 and -0- shares,
respectively........................................... (210) --
---------- --------
Total stockholders' equity........................ 74,875 68,848
---------- --------
$1,029,215 $827,427
========== ========

See notes to consolidated financial statements.

F-6

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31,
---------------------------
2000 1999 1998
------- ------- -------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)

Interest income:
Interest and fees on loans................................ $68,467 $49,244 $34,310
Interest on taxable securities............................ 4,314 4,141 5,493
Interest on tax exempt securities......................... 737 924 925
Interest on federal funds sold............................ 930 763 1,492
Interest and dividends on other investments............... 587 485 252
------- ------- -------
Total interest income............................. 75,035 55,557 42,472
Interest expense:
Interest on deposits...................................... 34,967 24,101 19,616
Interest expense on advances from FHLB and other borrowed
funds.................................................. 4,954 2,648 590
------- ------- -------
Total interest expense............................ 39,921 26,749 20,206
------- ------- -------
Net interest income......................................... 35,114 28,808 22,266
Provision for loan losses................................... 4,961 2,850 4,657
------- ------- -------
Net interest income after provision for loan losses......... 30,153 25,958 17,609
Noninterest income:
Service charges and fees.................................. 3,986 3,350 3,007
Mortgage banking income................................... 1,654 1,409 232
Securities gains.......................................... 131 83 279
Other..................................................... 2,051 1,322 563
------- ------- -------
Total noninterest income.......................... 7,822 6,164 4,081
Noninterest expense:
Salaries and employee benefits............................ 16,101 13,421 10,629
Occupancy and equipment................................... 5,893 5,242 3,432
Merger related costs...................................... - 744 1,466
Other..................................................... 10,124 9,275 6,602
------- ------- -------
Total noninterest expenses........................ 32,118 28,682 22,129
------- ------- -------
Distributions on trust preferred securities................. 504 - -
------- ------- -------
Income (loss) before income taxes........................... 5,353 3,440 (439)
Income tax expense (benefit)................................ 996 520 (724)
------- ------- -------
Net income.................................................. $ 4,357 $ 2,920 $ 285
======= ======= =======
Average common shares outstanding........................... 14,384 14,335 13,115
Average common shares outstanding, assuming dilution........ 14,387 14,362 13,210
Basic net income per common share........................... $ .30 $ .20 $ .02
Diluted net income per common share......................... .30 .20 .02

See notes to consolidated financial statements.

F-7

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
---------------------------------
2000 1999 1998
--------- --------- ---------

OPERATING ACTIVITIES:
Net income.................................................. $ 4,357 $ 2,920 $ 285
Adjustments to reconcile net income to net cash provided by
operations:
Depreciation.............................................. 2,598 2,194 1,786
Net (accretion) amortization of securities................ (371) (69) 301
Gain on sale of securities available for sale............. (131) (83) (279)
Provision for loan losses................................. 4,961 2,850 4,657
Decrease in accrued interest receivable................... (2,329) (1,055) (326)
Deferred income tax (benefit) expense..................... (1,286) 46 (1,977)
(Increase) decrease in mortgage loans held for sale....... (2,197) 2,772 (4,899)
Other operating activities, net........................... 2,429 (826) 1,382
--------- --------- ---------
Net cash provided by operating activities......... 8,031 8,749 930
INVESTING ACTIVITIES:
(Increase) decrease in interest bearing deposits in other
banks..................................................... (565) (814) 435
Decrease in federal funds sold.............................. 2,723 22,422 19,705
Decrease (increase) in short-term commercial paper.......... 14,719 (14,151) --
Proceeds from sale of subsidiary's net assets............... -- 3,392 --
Proceeds from sales of securities available for sale........ 4,578 18,283 65,170
Proceeds from maturities of securities available for sale... 13,244 19,426 39,509
Proceeds from maturities of securities held to maturity..... 1,076 1,231 15,926
Purchase of securities available for sale................... (40,385) (12,499) (78,833)
Purchase of securities held to maturity..................... -- -- (23,520)
Net increase in loans....................................... (179,647) (178,349) (138,013)
Net cash received (paid) in business combinations........... -- 11,893 (5,786)
Purchase of premises and equipment.......................... (9,605) (8,312) (14,740)
Proceeds from sale of bank premises......................... -- -- 3,795
Other investing activities, net............................. (3,461) (9,804) (3,447)
--------- --------- ---------
Net cash used in investing activities............. (197,323) (147,282) (119,799)

F-8

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31,
------------------------------
2000 1999 1998
-------- -------- --------
(AMOUNTS IN THOUSANDS)

FINANCING ACTIVITIES:
Net increase in demand and savings deposits................. 23,242 6,450 67,170
Net increase in time deposits............................... 121,545 87,392 33,068
Increase in FHLB advances................................... 41,800 39,340 23,160
Net (decrease) increase in note payable..................... (7,104) 7,104 --
Payments of other borrowed funds............................ (115) (3,405) (4,529)
Proceeds from trust preferred securities.................... 15,000 -- --
Proceeds from issuance and reissuance of common stock....... -- 2,170 12,279
Purchase of treasury stock.................................. (210) -- --
Dividends paid by pooled subsidiary......................... -- -- (231)
-------- -------- --------
Net cash provided by financing activities................... 194,158 139,051 130,917
-------- -------- --------
Increase in cash and due from banks......................... 4,866 518 12,048
Cash and due from banks at beginning of year................ 31,825 31,307 19,259
-------- -------- --------
Cash and due from banks at end of year...................... $ 36,691 $ 31,825 $ 31,307
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest.................................................. $ 38,132 $ 25,888 $ 19,710
Income taxes.............................................. 1,523 1,168 1,042
Sale of subsidiary's net assets financed by the
Corporation............................................... -- 2,202 --
Assets acquired in business combinations.................... -- 60,097 43,413
Liabilities assumed in business combinations................ -- 58,353 36,113
Minority interest in subsidiary acquired by issuing common
stock..................................................... -- 95 130

See notes to consolidated financial statements.

F-9

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

ACCUMULATED
OTHER
COMPREHENSIVE TOTAL
COMMON RETAINED INCOME TREASURY STOCKHOLDERS'
STOCK SURPLUS EARNINGS (LOSS) STOCK EQUITY
------ ------- -------- ------------- -------- -------------

Balance at January 1, 1998......... $12 $33,085 $20,358 $ 261 $ -- $53,716
Comprehensive income:
Net income.................... -- -- 285 -- -- 285
Other comprehensive loss net
of tax benefit of $111;
unrealized losses on
securities available for
sale, arising during the
period, net of
reclassification
adjustment.................. -- -- -- (163) -- (163)
-------
Comprehensive income............. 122
Issuance of 1,526,054 shares of
common stock, net of direct
costs......................... 2 12,116 -- -- -- 12,118
Stock options exercised.......... -- 177 -- -- -- 177
Restricted shares issued by
pooled subsidiary............. -- 114 -- -- -- 114
Redemption of common stock by
pooled subsidiary............. -- -- (49) -- -- (49)
Dividends declared by pooled
subsidiaries.................. -- -- (231) -- -- (231)
--- ------- ------- ------- ----- -------
Balance at December 31, 1998....... 14 45,492 20,363 98 -- 65,967
Comprehensive income:
Net income.................... -- -- 2,920 -- -- 2,920
Other comprehensive loss net
of tax benefit of $1,459;
unrealized losses on
securities available for
sale, arising during the
period, net of
reclassification
adjustment.................. -- -- -- (2,303) -- (2,303)
-------
Comprehensive income............. 617
Issuance of 174,500 shares of
common stock, net of direct
costs......................... -- 1,628 -- -- -- 1,628
Stock options exercised.......... -- 636 -- -- -- 636
--- ------- ------- ------- ----- -------
Balance at December 31, 1999....... 14 47,756 23,283 (2,205) -- 68,848
Comprehensive income:
Net income.................... -- -- 4,357 -- -- 4,357
Other comprehensive loss net
of tax benefit of $1,155;
unrealized gains on
securities available for
sale, arising during the
period, net of
reclassification
adjustment.................. -- -- -- 1,880 -- 1,880
-------
Comprehensive income............. 6,237
Purchase of 40,000 shares of
treasury stock................ -- -- -- -- (210) (210)
--- ------- ------- ------- ----- -------
Balance at December 31, 2000....... $14 $47,756 $27,640 $ (325) $(210) $74,875
=== ======= ======= ======= ===== =======

See notes to consolidated financial statements.

F-10

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Banc Corporation ("Corporation"), through its subsidiaries, provides a
full range of banking and bank-related services to individual and corporate
customers across Alabama and the panhandle of Florida. The accounting and
reporting policies of the Corporation conform with generally accepted accounting
principles and to general practice within the banking industry. The following
summarizes the most significant of these policies.

BASIS OF PRESENTATION

The Corporation's consolidated financial statements have been retroactively
restated to reflect the pooling of interest business combinations with Emerald
Coast Bancshares, Inc. ("Emerald"), which was consummated in the first quarter
of 1999, and C&L Banking Corporation ("C&L") and C&L Bank of Blountstown
("Blountstown"), which were consummated in the second quarter of 1999. In
addition, Blountstown was immediately merged into C&L's subsidiary to form a
single bank subsidiary, the C&L Bank of Bristol.

On July 13, 1999, the Corporation acquired BankersTrust of Alabama, Inc.
("BankersTrust") in a business combination accounted for as a purchase. As such,
the Corporation's consolidated financial statements include the results of
operations of BankersTrust only from its date of acquisition. See Note 14 for
more disclosure regarding the Corporation's business combinations.

In June, 2000, the Corporation combined its three banking subsidiaries to
form a single bank. This merger did not have any effect on the current or prior
year consolidated financial statements.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements and notes to
consolidated financial statements include the accounts of the Corporation and
its wholly-owned or majority-owned subsidiaries. All significant intercompany
transactions or balances have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For the purpose of presentation in the statements of cash flows, cash and
cash equivalents are defined as those amounts included in the statements of
financial condition caption "Cash and Due from Banks."

The Corporation's banking subsidiary is required to maintain average
reserve balances with the Federal Reserve Bank based on a percentage of
deposits. The average amount of the reserves at December 31, 2000 was
$4,421,000.

INVESTMENT SECURITIES

Investment securities are classified as either held to maturity, available
for sale or trading at the time of purchase. The Corporation defines held to
maturity securities as debt securities which management has the positive intent
and ability to hold to maturity.

F-11

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

Held to maturity securities are reported at cost, adjusted for amortization
of premiums and accretion of discounts that are recognized in interest income
using the effective yield method.

Securities available for sale are reported at fair value and consist of
bonds, notes, debentures, and certain equity securities not classified as
trading securities nor as securities to be held to maturity. Unrealized holding
gains and losses, net of deferred taxes, on securities available for sale are
excluded from earnings and reported in accumulated other comprehensive income
(loss) within stockholders' equity.

Gains and losses on the sale of securities available for sale are
determined using the specific-identification method.

LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are stated at the amount of unpaid principal, reduced by unearned
discount and an allowance for loan losses. Interest income with respect to loans
is accrued on the principal amount outstanding, except for interest on certain
consumer loans, which is recognized over the term of the loan using a method
which approximates a level yield.

Accrual of interest is discontinued on loans which are past due greater
than ninety days unless the loan is well secured and in the process of
collection. "Well secured," means that the debt must be secured by collateral
having sufficient realizable value to discharge the debt, including accrued
interest, in full. "In the process of collection," means that collection of the
debt is proceeding in due course either through legal action or other collection
effort that is reasonably expected to result in repayment of the debt in full
within a reasonable period of time, usually within one hundred eighty days of
the date the loan became past due. Any unpaid interest previously accrued on
these loans is reversed from income. Interest payments received on these loans
are applied as a reduction of the loan principal balance.

Impaired loans are specifically reviewed loans for which it is probable
that the Corporation will be unable to collect all amounts due according to the
terms of the loan agreement. Impairment is measured by comparing the recorded
investment in the loan with the present value of expected future cash flows
discounted at the loan's effective interest rate, at the loans observable market
price, or the fair value of the collateral if the loan is collateral dependent.
A valuation allowance is provided to the extent that the measure of the impaired
loans is less than the recorded investment. A loan is not considered impaired
during a period of delay in payment if the ultimate collectibility of all
amounts due is expected. Larger groups of homogenous loans such as consumer
installment and residential real estate mortgage loans are collectively
evaluated for impairment. Payments received on impaired loans for which the
ultimate collectibility of principal is uncertain are generally applied first as
principal reductions.

The allowance for loan loss is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes the collectibility of principal is unlikely. The
allowance is the amount that management believes will be adequate to absorb
possible losses on existing loans which may become uncollectible.

Management reviews the adequacy of the allowance on a monthly basis. The
allowance for classified loans is established based on risk ratings assigned by
loan officers. Loans are risk rated using a seven point scale, and loan officers
are responsible for the timely reporting of changes in the risk ratings. This
process, and the assigned risk ratings, are subject to review by the
Corporation's internal loan review function. Based on the assigned risk ratings,
the loan portfolio is segregated into the regulatory classifications of: Special
Mention, Substandard, Doubtful or Loss. Regulatory reserve percentages are
applied to these categories to estimate the amount of loan loss. Reserve
percentages assigned to non-rated loans are based on historical charge-off
experience adjusted for geographic location and other risk factors.

F-12

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

Significant problem credits are individually reviewed by management.
Generally, these loans are commercial or real estate construction loans selected
for review based on their balance, assigned risk rating, payment history, and
other risk factors at the time of management's review. Losses are estimated on
each loan based on management's review. These individually reviewed credits are
excluded from the classified loan loss calculation discussed above.

To evaluate the overall adequacy of the allowance to absorb losses inherent
in the Corporation's loan portfolio, the Corporation considers general economic
conditions, geographic concentrations, and changes in the nature and volume of
the loan portfolio. Management's assessment of these conditions is reflected in
the portion of the allowance that is unallocated.

MORTGAGE LOANS HELD FOR SALE

Mortgage loans held for sale are carried at the lower of cost or market,
determined on a net aggregate basis. Differences between the carrying amount of
mortgage loans held for sale and the amounts received upon sale are credited or
charged to income at the time the proceeds of the sale are collected. The fair
values are based on quoted market prices of similar loans, adjusted for
differences in loan characteristics.

PREMISES AND EQUIPMENT

Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is computed over the estimated service lives of the
assets using straight-line and accelerated methods, generally using five to
forty years for premises and five to ten years for furniture and equipment.

Expenditures for maintenance and repairs are charged to operations as
incurred; expenditures for renewals and betterments are capitalized and written
off by depreciation charges. Property retired or sold is removed from the asset
and related accumulated depreciation accounts and any profit or loss resulting
therefrom is reflected in the statement of income.

INTANGIBLE ASSETS

Intangible assets, primarily goodwill, are included in other assets, net of
amortization calculated on a straight-line basis over a fifteen-year period.

The Corporation reviews on a regular basis the carrying value of goodwill
to determine if any impairment has occurred or if the period of recoverability
has changed. If this review indicates that goodwill will not be recoverable, the
carrying value of the goodwill will be written off in the current period. At
December 31, 2000 and 1999 goodwill, net of accumulated amortization totaled
$6,648,000 and $7,219,000, respectively.

OTHER REAL ESTATE

Other real estate, acquired through partial or total satisfaction of loans,
is carried at the lower of cost or net realizable value in other assets. At the
date of acquisition, losses are charged to the allowance for loan losses.
Subsequent gains or losses on the sale or losses from the valuation of other
real estate are included in other expense. Other real estate totaled $2,706,000
and $2,185,000 at December 31, 2000 and 1999, respectively.

INCOME TAXES

The consolidated financial statements are prepared on the accrual basis.
The Corporation accounts for income taxes using the liability method pursuant to
Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes. Under this method, deferred tax assets and liabilities are
F-13

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to reverse.

OFF BALANCE SHEET FINANCIAL INSTRUMENTS

In the ordinary course of business the Corporation has entered into off
balance sheet financial instruments consisting of commitments to extend credit,
commitments under credit card arrangements and commercial letters of credit and
standby letters of credit. Such financial instruments are recorded in the
financial statements when they become payable.

PER SHARE AMOUNTS

Earnings per share computations are based on the weighted average number of
shares outstanding during the periods presented.

Diluted earnings per share computations are based on the weighted average
number of shares outstanding during the period, plus the dilutive effect of
stock options.

STOCK-BASED COMPENSATION

SFAS No. 123, Accounting for Stock-Based Compensation (Statement 123)
establishes a "fair value" based method of accounting for stock-based
compensation plans and allows entities to adopt that method of accounting for
their employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic value
based method of accounting prescribed by the Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees (Opinion 25). The
Corporation has elected to follow Opinion 25 and related interpretations in
accounting for its employee stock options. Under Opinion 25, because the
exercise price of the Corporation's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.

Statement 123 requires the disclosure of pro forma net income and earnings
per share determined as if the Corporation had accounted for its employee stock
options under the fair value method of that statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model. Option valuation models require the input of subjective assumptions.
Because these assumptions are subjective, the effects of applying Statement 123
for pro forma disclosures are not likely to be representative of the effects on
reported net income for future years (see Note 9).

RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and for Hedging Activities", as amended by Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities -- Deferral of the Effective Date of FASB Statement No.
133", requires derivative instruments be carried at fair value on the statement
of financial condition. The statement continues to allow derivative instruments
to be used to hedge various risks and sets forth specific criteria to be used to
determine when hedge accounting can be used. The statement also provides for
offsetting changes in fair value or cash flows of both the derivative and the
hedged asset or liability to be recognized in earnings in the same period;
however, any changes in fair value or cash flow that represent the ineffective
portion of a hedge are required to be recognized in earnings and cannot be
deferred. For derivative instruments not accounted for as hedges, changes in
fair value are required to be recognized in earnings.

F-14

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

The Corporation will adopt the provisions of this statement, as amended,
for its quarterly and annual reporting beginning January 1, 2001, the
statement's effective date. Because the Corporation has not entered into any
derivative transactions, the adoption of this statement will not have a material
impact on the financial statements.

In September, 2000, Statement of Financial Accounting Standards No. 140,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" (Statement 140), was issued by the FASB. Statement 140 replaces
Statement 125, issued in June 1996. Statement 140 revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. Statement 140 is effective for
transfers occurring after March 31, 2001. However, the expanded disclosures
about securitizations and collateral are effective for fiscal years ending after
December 15, 2000. The adoption of Statement 140 will not have a material impact
on the Corporation's financial condition or results of operations.

2. INVESTMENT SECURITIES

The amounts at which investment securities are carried and their
approximate fair values at December 31, 2000 are as follows:

GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)

Investment securities available for sale:
U.S. agency securities............................... $ 39,407 $ 33 $196 $39,244
State, county and municipal securities............... 12,844 69 91 12,822
Mortgage-backed securities........................... 38,091 109 462 37,738
Corporate debt....................................... 401 3 -- 404
Other securities..................................... 1,115 -- 7 1,108
-------- ---- ---- -------
Total........................................ $ 91,858 $214 $756 $91,316
======== ==== ==== =======
Investment securities held to maturity:
State, county and municipal securities............... $ 2,867 $ 38 $ -- $ 2,905
Mortgage-backed securities........................... 1,522 5 115 1,412
-------- ---- ---- -------
Total........................................ $ 4,389 $ 43 $115 $ 4,317
======== ==== ==== =======

F-15

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. INVESTMENT SECURITIES -- (CONTINUED)

The amounts at which investment securities are carried and their
approximate fair values at December 31, 1999 are as follows:

GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)

Investment securities available for sale:
Equity securities.................................... $ 370 $ -- $ 33 $ 337
U.S. Treasury and agency securities.................. 11,645 -- 650 10,995
State, county and municipal securities............... 13,991 93 1,043 13,041
Mortgage-backed securities........................... 42,292 38 1,975 40,355
Corporate debt....................................... 453 -- 9 444
Other securities..................................... 267 -- -- 267
-------- ---- ------ -------
Total........................................ $ 69,018 $131 $3,710 $65,439
======== ==== ====== =======
Investment securities held to maturity:
State, county and municipal securities............... $ 3,711 $ 20 $ 3 $ 3,728
Mortgage-backed securities........................... 1,766 2 85 1,683
-------- ---- ------ -------
Total........................................ $ 5,477 $ 22 $ 88 $ 5,411
======== ==== ====== =======

Securities with an amortized cost of $77,427,000 and $36,450,000 at
December 31, 2000 and 1999, respectively, were pledged to secure United States
government deposits and other public funds and for other purposes as required or
permitted by law.

The amortized cost and estimated fair values of investment securities at
December 31, 2000, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

SECURITIES HELD SECURITIES AVAILABLE
TO MATURITY FOR SALE
---------------------- ----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------- ---------- --------- ----------
(IN THOUSANDS)

Due in one year or less................................ $ 860 $ 861 $14,092 $14,104
Due after one year through five years.................. 1,737 1,766 8,327 8,293
Due after five years through ten years................. 270 278 19,568 19,476
Due after ten years.................................... -- -- 11,780 11,705
Mortgage-backed securities............................. 1,522 1,412 38,091 37,738
------ ------ ------- -------
$4,389 $4,317 $91,858 $91,316
====== ====== ======= =======

Gross realized gains on sales of investment securities available for sale
in 2000, 1999 and 1998 were $169,000, $170,000 and $391,000, respectively, and
gross realized losses for the same periods were $38,000, $87,000 and $112,000,
respectively.

F-16

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. INVESTMENT SECURITIES -- (CONTINUED)

The components of other comprehensive income (loss) for the years ended
December 31, 2000 and 1999 are as follows:

PRE-TAX INCOME TAX NET OF
AMOUNT (BENEFIT) EXPENSE INCOME TAX
-------- ----------------- ----------
(IN THOUSANDS)

2000
Unrealized gain on available for sale securities.......... $ 3,166 $ 1,205 $ 1,961
Less: reclassification adjustment for gains realized in
net income.............................................. 131 50 81
------- ------- -------
Net unrealized gain.................................. $ 3,035 $ 1,155 $ 1,880
======= ======= =======
1999
Unrealized loss on available for sale securities.......... $(3,679) $(1,427) $(2,252)
Less: reclassification adjustment for gains realized in
net income.............................................. 83 32 51
------- ------- -------
Net unrealized loss.................................. $(3,762) $(1,459) $(2,303)
======= ======= =======
1998
Unrealized gain on available for sale securities.......... $ 5 $ - $ 5
Less: reclassification adjustment for gains realized in
net income.............................................. 279 111 168
------- ------- -------
Net unrealized loss.................................. $ (274) $ (111) $ (163)
======= ======= =======

3. LOANS

At December 31, 2000 and 1999 the composition of the loan portfolio was as
follows:

2000 1999
-------- --------
(IN THOUSANDS)

Commercial, industrial and agricultural..................... $245,154 $207,620
Real estate -- construction................................. 100,448 59,496
Real estate -- mortgage..................................... 373,509 282,717
Consumer.................................................... 84,129 74,769
All other loans............................................. 5,725 8,802
-------- --------
Total loans................................................. $808,965 $633,404
======== ========

At December 31, 2000 and 1999 the Corporation's recorded investment in
loans considered to be impaired under SFAS No. 114 was $18,000,000 and
$12,111,000, respectively. At December 31, 2000 and 1999, there was
approximately $3,000,000 in the allowance for loan losses specifically allocated
to impaired loans. The average recorded investment in impaired loans during
2000, 1999 and 1998 was approximately $15,100,000, $6,484,000 and $598,000,
respectively. Interest income recognized on loans considered impaired totaled
approximately $1,284,000 and $431,000 for the years ended December 31, 2000 and
1999, respectively. No material amount of interest income was recognized on
impaired loans for the year ended December 31, 1998.

The Corporation has no commitments to loan additional funds to the
borrowers whose loans are on nonaccrual.

F-17

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. ALLOWANCE FOR LOAN LOSSES

A summary of the allowance for loan losses for the years ended December 31,
2000, 1999 and 1998 follows:

2000 1999 1998
------- ------- -------
(IN THOUSANDS)

Balance at beginning of year.............................. $ 8,065 $ 6,466 $ 3,741
Allowance of acquired bank................................ -- 3,591 368
Provision for loan losses................................. 4,961 2,850 4,657
Loan charge-offs.......................................... (4,615) (5,792) (2,906)
Recoveries................................................ 548 950 606
------- ------- -------
Balance at end of year.................................... $ 8,959 $ 8,065 $ 6,466
======= ======= =======

5. PREMISES AND EQUIPMENT

Components of premises and equipment at December 31, 2000 and 1999 are as
follows:

2000 1999
-------- -------
(IN THOUSANDS)

Land........................................................ $ 5,371 $ 5,096
Premises.................................................... 34,154 26,335
Furniture and equipment..................................... 13,607 12,303
-------- -------
53,132 43,734
Less accumulated depreciation and amortization.............. (10,470) (7,822)
-------- -------
Net book value of premises and equipment in service......... 42,662 35,912
Real estate under renovation or held for sale............... 1,295 1,822
-------- -------
Total............................................. $ 43,957 $37,734
======== =======

Depreciation expense for the years ended December 31, 2000, 1999 and 1998
was $2,598,000, $2,194,000 and $1,786,000, respectively.

The Corporation leases certain Florida branch buildings under operating
leases expiring through 2003. The leases require payment of taxes, insurance and
maintenance costs in addition to rental payments. In addition, three of the four
building leases have two five-year renewal options.

Future minimum lease payments under the operating leases are summarized as
follows:

YEAR ENDING DECEMBER 31,
------------------------

2001...................................................... $ 473
2002...................................................... 457
2003...................................................... 255
------
Total minimum lease payments...................... $1,185
======

Rental expense relating to operating leases amounted to approximately
$757,003, $734,000 and $299,000 for the years ended December 31, 2000, 1999 and
1998, respectively.

F-18

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. DEPOSITS

The following schedule details interest expense on deposits:

YEAR ENDED DECEMBER 31,
---------------------------
2000 1999 1998
------- ------- -------
(IN THOUSANDS)

Interest-bearing demand................................... $ 6,541 $ 5,129 $ 3,529
Savings................................................... 1,052 938 889
Time deposits $100,000 and over........................... 8,257 7,275 4,721
Other time................................................ 19,117 10,759 10,477
------- ------- -------
Total........................................... $34,967 $24,101 $19,616
======= ======= =======

At December 31, 2000, the scheduled maturities of time deposits are as
follows (in thousands):

2001........................................................ $403,801
2002........................................................ 77,842
2003........................................................ 23,218
2004........................................................ 5,775
2005 and thereafter......................................... 15,651
--------
$526,287
========

7. BORROWED FUNDS

The following is a summary, by year of maturity, of advances from the
Federal Home Loan Bank ("FHLB") as of December 31, 2000 and 1999 (in thousands):

2000 1999
----------------------- ----------------------
WEIGHTED WEIGHTED
YEAR AVERAGE RATE BALANCE AVERAGE RATE BALANCE
---- ------------ -------- ------------ -------

2000........................................ -% $ - 6.07% $ 1,000
2003........................................ 4.99 15,660 5.05 17,660
2004........................................ 5.21 25,000 5.21 25,000
2005........................................ 6.32 32,800 - -
2008........................................ 5.52 2,500 5.52 2,500
2009........................................ 5.25 2,000 5.18 16,340
2010........................................ 6.18 26,340 - -
-------- -------
Total............................. 5.78 $104,300 5.20 $62,500
======== =======

The above schedule is by contractual maturity. Call dates for the above are
as follows: 2001, $21,340,000; 2002, $58,000,000; 2003, $18,160,000; 2004,
$2,000,000 and 2005, $4,800,000.

The advances are secured by FHLB stock, agency securities and a blanket
lien on certain residential real estate loans all with a carrying value of
approximately $171,776,000 at December 31, 2000.

As of December 31, 1999 the Corporation had borrowed $7,104,000 under a
$15,000,000 line of credit with a regional bank. Interest is one and one-quarter
(1.25%) percentage points in excess of the applicable LIBOR Index Rate and the
line matures May 1, 2001. The loan agreement contains various covenants
pertaining to the maintenance of regulatory capital, specified levels of
classified assets and the amount of stockholders' equity. The Corporation was in
compliance with all covenants as of December 31, 1999. As of December 31, 2000
there were no outstanding balances under this line.

F-19

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. GUARANTEED PREFERRED BENEFICIAL INTEREST IN THE CORPORATION'S SUBORDINATED
DEBENTURES

On September 7, 2000, TBC Capital Statutory Trust II ("TBC Capital"), a
Connecticut statutory trust established by the Corporation, received $15,000,000
in proceeds in exchange for $15,000,000 principal amount of TBC Capital's 10.6%
cumulative trust preferred securities in a pooled trust preferred private
placement. The proceeds were used to purchase an equal principal amount of 10.6%
subordinated debentures of the Corporation. The Corporation has fully and
unconditionally guaranteed all obligations of TBC Capital on a subordinated
basis with respect to the preferred securities. The Corporation accounts for TBC
Capital as a minority interest. Subject to certain limitations, the preferred
securities qualify as Tier I capital and are presented in the Consolidated
Statement of Financial Condition as "Guaranteed preferred beneficial interests
in the Corporation's subordinated debentures." The sole asset of TBC Capital is
the subordinated debentures issued by the Corporation. Both the preferred
securities of TBC Capital and the subordinated debentures of the Corporation
each have 30-year lives. However, both the Corporation and TBC Capital have a
call option after ten years, subject to regulatory approval, or earlier,
depending upon certain changes in tax or investment company laws, or regulatory
capital requirements.

A portion of the proceeds from the offering were used to repay
approximately $10,400,000 of borrowings under the Corporation's line of credit
with the balance to be used for general corporate purposes including additional
capital investment in the Corporation's bank subsidiary.

9. STOCK OPTION PLAN

The Corporation has established a stock option plan for directors and
certain key employees that provide for the granting of incentive and
nonqualified options to purchase up to 1,500,000 shares of the Corporation's
common stock. The terms of the options granted are determined by the
compensation committee of the Board of Directors. All options granted have a
maximum term of ten years, and the option price per share of options granted
cannot be less than the fair market value of the Corporation's common stock on
the grant date. All options granted under this plan vest 20% on the grant date
and an additional 20% annually on the anniversary of the grant date.

In addition, the Corporation assumed the Commerce Bank of Alabama Incentive
Stock Compensation Plan ("Commerce Plan") concurrent with the Commerce merger.
Options to purchase 82,396 shares of the Corporation's common stock have been
granted under this plan, of which, 52,227 were exercised during 1999. No
additional options may be granted under this plan.

F-20

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. STOCK OPTION PLAN -- (CONTINUED)

For purposes of the following disclosures, the number and exercise prices
for options granted under the Commerce Plan have been converted to equivalent
amounts for the Corporation based on the exchange ratios in the merger.

DECEMBER 31,
------------------------------------------------------------------
2000 1999 1998
--------------------- -------------------- -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE NUMBER PRICE
--------- --------- -------- --------- ------- ---------

Under option, beginning of year..... 715,669 $10.68 620,806 $ 9.52 202,589 $ 4.70
Granted........................... 376,000 6.13 239,000 10.64 466,677 10.87
Exercised......................... -- -- (134,137) 4.74 (48,460) 3.65
Forfeited......................... (110,160) 10.19 (10,000) 11.00 -- --
--------- -------- -------
Under option, end of year........... 981,509 8.99 715,669 10.68 620,806 9.52
========= ======== =======
Exercisable at end of year.......... 425,809 256,569 255,606
========= ======== =======
Weighted-average fair value per
option of options granted during
the year.......................... $ 2.69 $ 5.40 $ 5.49
========= ======== =======

A further summary about options outstanding at December 31, 2000 is as
follows:

OPTIONS OUTSTANDING
---------------------------------------------------------------------------------------------
WEIGHTED-
AVERAGE
NUMBER CONTRACTUAL NUMBER
EXERCISE PRICE OUTSTANDING LIFE IN YEARS EXERCISABLE
-------------- ----------- ------------- -----------

$ 6.00.......................................... 226,500 9.55 45,300
6.24.......................................... 29,009 5.50 29,009
6.31.......................................... 125,000 9.46 25,000
7.00.......................................... 10,000 9.80 2,000
10.50.......................................... 150,500 8.62 60,200
11.00.......................................... 440,500 8.80 264,300
------- -------
981,509 425,809
======= =======

F-21

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. STOCK OPTION PLAN -- (CONTINUED)

The Corporation recognizes compensation cost for stock-based employee
compensation awards in accordance with APB Opinion No. 25, Accounting for Stock
Issued to Employees. The Corporation recognized no compensation cost for
stock-based employee compensation awards for the years ended December 31, 2000,
1999 and 1998. If the Corporation had recognized compensation cost in accordance
with SFAS No. 123, net income and earnings per share would have been reduced as
follows (amounts in thousands, except per share data):

DECEMBER 31,
-----------------------
2000 1999 1998
------ ------ -----

Net income (loss):
As reported............................................... $4,357 $2,920 $ 285
Pro forma................................................. 3,344 2,379 (119)
Basic net income (loss) per share:
As reported............................................... .30 .20 .02
Pro forma................................................. .23 .17 (.01)
Diluted net income (loss) per share:
As reported............................................... .30 .20 .02
Pro forma................................................. .23 .17 (.01)

The fair value of the options granted was based upon the Black-Scholes
pricing model. The Corporation used the following weighted-average assumptions
for:

2000 1999 1998
---- ---- ----

Risk free interest rate..................................... 5.34% 6.12% 6.44%
Volatility factory.......................................... .30% .39% .42%
Weighted average life of options (in years)................. 6.00 6.50 6.00
Dividend yield.............................................. 0.00% 0.00% 0.00%

10. RETIREMENT PLANS

Warrior Savings Bank ("Warrior"), which merged with the Corporation on
September 24, 1998, sponsored a defined benefit plan ("Plan") that provides
retirement, disability and death benefits. All employees of Warrior over age 21
were eligible to participate in the plan after the completion of one year of
service. The Corporation contributed amounts to the pension funds sufficient to
satisfy funding requirements of the Employee Retirement Income Security Act. The
net periodic pension costs and the prepaid pension costs related to the Plan are
not material to the Corporation's financial condition and results of operations.
This plan was terminated in July 2000 and final distributions will be made in
the first quarter of the year 2001.

The Corporation sponsors a profit-sharing plan that permits participants to
make contributions by salary reduction pursuant to Section 401(k) of the
Internal Revenue Code. This plan covers substantially all employees who meet
certain age and length of service requirements. The Corporation matches
contributions at its discretion. The Corporation's contributions to the plan
were $108,000, $108,000 and $199,000 in 2000, 1999 and 1998, respectively.

The Corporation has nonqualified benefit plans that are designed to provide
retirement and death benefits to certain executive officers and directors. The
benefit amounts are based on the excess amount earned on single premium life
insurance policies owned by the Corporation. Under the plan, the Corporation
recovers both its investment and opportunity costs before allocating any
benefits to the participants. Benefit payments to participants are not
guaranteed since they are dependent on the excess earnings generated by the life
insurance policies. Payments under these plans are scheduled to begin in 2003
for some participants who will

F-22

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. RETIREMENT PLANS -- (CONTINUED)

reach retirement age. In connection with the plans, the Corporation has
purchased single premium life insurance policies with cash surrender values of
approximately $12,200,000 and $11,500,000 at December 31, 2000 and 1999,
respectively. Compensation expense related to these plans totaled $401,000 and
$140,000 for 2000 and 1999, respectively.

11. INCOME TAXES

The components of the income tax expense (benefit) are as follows (in
thousands):

2000 1999 1998
------ ---- -------

Current:
Federal................................................... $1,768 $320 $ 706
State..................................................... 514 154 92
------ ---- -------
Total current expense....................................... 2,282 474 798
Deferred tax (benefit) expense.............................. (1,286) 46 (1,522)
------ ---- -------
Total income tax expense (benefit)................ $ 996 $520 $ (724)
====== ==== =======

Significant components of the Corporation's deferred tax assets and
liabilities as of December 31, 2000 and 1999 are as follows (in thousands):

2000 1999
------ ------

Deferred tax assets:
Rehabilitation tax credit................................. $2,823 $2,468
Provision for loan losses................................. 2,633 1,664
Alternative minimum tax credit carryover.................. 143 143
Unrealized loss on securities............................. 217 1,372
Other..................................................... 464 171
------ ------
Total deferred tax assets................................... 6,280 5,818
Deferred tax liabilities:
Difference in book and tax basis of premises and
equipment.............................................. 2,186 1,928
Depreciation.............................................. 586 602
Other..................................................... 182 93
------ ------
Total deferred tax liabilities.............................. 2,954 2,623
------ ------
Net deferred tax asset............................ $3,326 $3,195
====== ======

F-23

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. INCOME TAXES -- (CONTINUED)

The effective tax rate differs from the expected tax using statutory rate
of 34%. Reconciliation between the expected tax and the actual income tax
expense (benefit) follows (in thousands):

2000 1999 1998
------ ------ -------

Expected tax (benefit) at 34% of income before taxes........ $1,820 $1,170 $ (146)
Add (deduct):
Rehabilitation tax credit................................. (1,259) (731) (1,737)
State income taxes, net of federal tax benefit............ 351 102 20
Effect of interest income exempt from Federal income
taxes.................................................. (267) (346) (338)
Nondeductible merger costs................................ - 253 447
Basis reduction........................................... 428 251 590
Increase in cash surrender value of life insurance........ (190) (117) -
Valuation allowance....................................... - (200) 200
Other items -- net........................................ 113 138 240
------ ------ -------
Income tax expense (benefit)................................ $ 996 $ 520 $ (724)
====== ====== =======

The Corporation has available at December 31, 2000 unused rehabilitation
tax credits that can be carried forward and utilized against future taxable
income. Unused credits and expiration dates are as follows:

YEAR OF
EXPIRATION AMOUNT
---------- ------

2019........................................................ $ 831
2020........................................................ 738
2021........................................................ 1,254
------
$2,823
======

This credit was established as a result of the restoration and enhancement
of the John A. Hand Building, which is designated as an historical structure and
serves as the corporate headquarters for the Corporation. This credit is equal
to 20% of certain qualified expenditures incurred by the Corporation prior to
December 31, 2000. The Corporation is required to reduce its tax basis in the
John A. Hand Building by the amount of the credit.

Applicable income tax expense of $48,000, $32,000 and $111,000 on
securities gains for the years ended December 31, 2000, 1999 and 1998,
respectively, is included in income taxes.

12. RELATED PARTY TRANSACTIONS

The Corporation has entered into transactions with its directors, executive
officers, significant stockholders and their affiliates (related parties). 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. The aggregate amount of loans to such
related parties at December 31, 2000 and 1999 were $19,900,000 and $25,975,000,
respectively. Activity during the year ended December 31, 2000 is summarized as
follows (in thousands):

BALANCE BALANCE
DECEMBER 31, OTHER DECEMBER 31,
1999 ADVANCES REPAYMENTS CHANGES 2000
------------ -------- ---------- ------- ------------

$25,975 $ 9,121 $(10,134) $(5,062) $19,900
======= ======= ======== ======= =======

F-24

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. RELATED PARTY TRANSACTIONS -- (CONTINUED)

At December 31, 2000, the deposits of such related parties in the
subsidiary banks amounted to approximately $7,777,000.

In July 1998, Emerald sold the land and building of its main office
building and two branch offices to an entity under the control of certain
members of Emerald's Board of Directors for their fair value of approximately
$3,794,700. The sales were accounted for under a sale-leaseback arrangement. The
deferred gain on the sales amounted to $87,000 and is being amortized into
income over the lease terms. At December 31, 2000, the deferred gain amounted to
approximately $45,000. Terms of the leases are described in Note 5. Rental
expense under these operating leases amounted to approximately $473,000 and
$459,000 in 2000 and 1999, respectively.

13. COMMITMENTS AND CONTINGENCIES

The consolidated financial statements do not reflect the Corporation's
various commitments and contingent liabilities which arise in the normal course
of business and which involve elements of credit risk, interest rate risk and
liquidity risk. These commitments and contingent liabilities are commitments to
extend credit and standby letters of credit. The following is a summary of the
Corporation's maximum exposure to credit loss for loan commitments and standby
letters of credit (in thousands):

DECEMBER 31,
------------------
2000 1999
-------- -------

Commitments to extend credit................................ $109,872 $68,693
Standby letters of credit................................... 6,454 4,121

Commitments to extend credit and standby letters of credit all include
exposure to some credit loss in the event of nonperformance of the customer. The
Corporation's credit policies and procedures for credit commitments and
financial guarantees are the same as those for extension of credit that are
recorded in the consolidated statement of financial condition. Because these
instruments have fixed maturity dates, and because many of them expire without
being drawn upon, they do not generally present any significant liquidity risk
to the Corporation.

The Corporation is party to litigation and claims arising in the normal
course of business. Management, after consultation with legal counsel, believes
that the liabilities, if any, arising from such litigation and claims will not
be material to the consolidated financial statements.

14. MERGERS AND ACQUISITIONS AND MERGER RELATED COSTS

The Corporation completed the following business combinations during 1999
and 1998:

ACCOUNTING
DATE INSTITUTION TOTAL ASSETS CONSIDERATION TREATMENT
---- ----------- ------------- ------------- ----------
(IN MILLIONS)

February 12, 1999 Emerald Coast Bancshares, $ 92 1,379,978 shares of Pooling
Inc. common stock
June 30, 1999 C & L Banking Corporation 49 1,289,454 shares of Pooling
common stock
June 30, 1999 C& L Bank of Blountstown 56 838,902 shares of Pooling
common stock
July 13, 1999 BankersTrust of Alabama, 35 $1,584,000 cash Purchase
Inc.

F-25

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. MERGERS AND ACQUISITIONS AND MERGER RELATED COSTS -- (CONTINUED)

ACCOUNTING
DATE INSTITUTION TOTAL ASSETS CONSIDERATION TREATMENT
---- ----------- ------------- ------------- ----------
(IN MILLIONS)

September 24, 1998 Warrior Capital 84 5,448,000 shares of Pooling
Corporation common stock
October 16, 1998 Commercial Bancshares of 42 $7,300,000 cash Purchase
Roanoke, Inc.
October 30, 1998 City National Corporation 84 2,026,579 shares of Pooling
common stock
October 30, 1998 First Citizens Bancorp, 35 652,859 shares of Pooling
Inc. common stock
November 6, 1998 Commerce Bank of Alabama 105 1,547,198 shares of Pooling
common stock

In addition, on November 4, 1999, the Corporation purchased three branches
in south Alabama with assets totaling approximately $22,000,000 for $1,565,000
in cash.

The following table presents financial information contributed by the
pooled companies during 1999 prior to the consummation of the mergers (in
thousands):

NET INTEREST
1999 INCOME NET INCOME
---- ------------ ----------

Emerald..................................................... $ 474 $ 58
C&L......................................................... 1,162 319
Blountstown................................................. 989 166

The following table presents net interest income, net income and basic net
income per common share of the combining entities in the 1999 pooling
transactions on a historical and combined basis for the year 1998 (amounts in
thousands, except per share data):

Net interest income:
Corporation............................................... $14,942
Emerald................................................... 3,149
C&L....................................................... 2,154
Blountstown............................................... 2,021
-------
Combined.................................................... $22,266
=======
Net (loss) income:
Corporation............................................... $ (439)
Emerald................................................... 72
C&L....................................................... 576
Blountstown............................................... 76
-------
Combined.................................................... $ 285
=======
Basic net (loss) income per equivalent share of Corporation:
Corporation............................................... $ (.04)
Emerald................................................... .06
C&L....................................................... .46
Blountstown............................................... .09
Combined.................................................... .02

F-26

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. MERGERS AND ACQUISITIONS AND MERGER RELATED COSTS -- (CONTINUED)

On July 13, 1999, the Corporation acquired BankersTrust of Alabama, Inc.
("BankersTrust") in a business combination accounted for as a purchase.
BankersTrust was a one-bank holding company operating in north Alabama. The net
assets of BankersTrust included loans of $25,000,000 and deposits of
$36,000,000. The total cost of the acquisition was $1,624,000, which exceeded
the fair value of the net assets of BankersTrust by $5,125,000. The excess is
being amortized on a straight-line basis over 15 years. On October 16, 1998, the
Corporation acquired Commercial Bancshares of Roanoke ("Roanoke") in a business
combination accounted for as a purchase. Roanoke was a one-bank holding company
operating in east Alabama. The Corporation's consolidated financial statements
include the results of operations of BankersTrust and Roanoke only from the
dates of acquisition.

The following unaudited summary information presents the consolidated
results of operations of the Corporation on a pro forma basis, as if
BankersTrust had been acquired on January 1, 1998. The pro forma summary does
not necessarily reflect the results of operations that would have occurred if
the acquisition had occurred as of the beginning of the periods presented, or of
results that may occur in the future.

1999 1998
------- -------

Interest income............................................. $57,117 $47,917
Interest expense............................................ 27,648 23,166
------- -------
Net interest income....................................... 29,469 24,751
Provision for loan losses................................... 5,847 6,200
Noninterest income.......................................... 6,349 6,858
Noninterest expense......................................... 30,676 26,470
------- -------
Loss before income taxes.................................. (705) (1,061)
Income tax expense (benefit)................................ 441 (537)
------- -------
Net loss.................................................... $(1,146) $ (524)
======= =======
Basic and diluted net loss per common share................. $ (.08) $ (.04)
======= =======

The following is a summary of pre-tax nonrecurring merger related costs
incurred by the Corporation during 1999 and 1998:

1999 1998
---- ------

Professional and other fees................................. $744 $1,314
Obsolete equipment write-off................................ -- 152
---- ------
$744 $1,466
==== ======

15. REGULATORY RESTRICTIONS

A source of funds available to the Corporation is the payment of dividends
by its subsidiary. Banking regulations limit the amount of dividends that may be
paid without prior approval of the subsidiary's regulatory agency. Approximately
$6,535,000 in retained earnings are available to be paid as dividends by the
subsidiary at December 31, 2000.

The Corporation and its subsidiary are subject to various regulatory
capital requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could have
a direct material effect on the Corporation's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Corporation and its subsidiary must meet specific capital guidelines
that involve quantitative measures of the Corporation's and its subsidiary's
assets, liabilities, and

F-27

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. REGULATORY RESTRICTIONS -- (CONTINUED)

certain off-balance sheet items as calculated under regulatory accounting
practices. The Corporation's and its subsidiary's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Corporation and its subsidiary to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier I capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier I capital (as
defined) to average assets (as defined). Management believes, as of December 31,
2000 and 1999 that the Corporation and its subsidiary meet all capital adequacy
requirements to which they are subject.

As of December 31, 2000, the most recent notification from the Federal
Reserve Bank categorized the Corporation and its subsidiary as well capitalized
under the regulatory framework for prompt corrective action. To be categorized
as well capitalized the Corporation and its subsidiary must maintain minimum
total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in
the table. There are no conditions or events since that notification that
management believes have changed the institution's category:

TO BE
FOR CAPITAL WELL CAPITALIZED
ADEQUACY UNDER PROMPT
ACTUAL PURPOSES CORRECTIVE ACTION
--------------- --------------- -----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- -------- ------

AS OF DECEMBER 31, 2000:
Total Capital (to Risk Weighted Assets)
Corporation........................... $92,534 11.36% $65,173 8.00% $81,466 10.00%
The Bank.............................. 83,457 10.22 65,302 8.00 81,627 10.00
Tier I Capital (to Risk Weighted Assets)
Corporation........................... 83,577 10.26 32,587 4.00 48,880 6.00
The Bank.............................. 74,500 9.13 32,651 4.00 48,976 6.00
Tier I Capital (to Average Assets)
Corporation........................... 83,577 8.47 39,490 4.00 49,362 5.00
The Bank.............................. 74,500 7.61 39,180 4.00 48,974 5.00
AS OF DECEMBER 31, 1999:
Total Capital (to Risk Weighted Assets)
Corporation........................... $71,288 10.61% $53,746 8.00% $67,182 10.00%
The Bank.............................. 73,763 10.96 53,837 8.00 67,296 10.00
Tier I Capital (to Risk Weighted Assets)
Corporation........................... 63,224 9.41 26,873 4.00 40,309 6.00
The Bank.............................. 66,270 9.85 26,919 4.00 40,378 6.00
Tier I Capital (to Average Assets)
Corporation........................... 63,224 7.74 32,671 4.00 40,839 5.00
The Bank.............................. 66,270 8.11 32,695 4.00 40,378 5.00

16. FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Corporation in
estimating fair values of financial instruments as disclosed herein:

Cash and short-term instruments. The carrying amounts of cash and
short-term instruments, including interest bearing deposits in other banks,
federal funds sold and short-term commercial paper, approximate their fair
value.

F-28

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. FAIR VALUES OF FINANCIAL INSTRUMENTS -- (CONTINUED)

Securities available for sale and securities held to maturity. Fair
values for securities are based on quoted market prices. The carrying
values of stock in FHLB and Federal Reserve Bank approximate fair values.

Mortgage loans held for sale. The carrying amounts of mortgage loans
held for sale approximate their fair value.

Net loans. Fair values for variable-rate loans that reprice
frequently and have no significant change in credit risk are based on
carrying values. Fair values for certain mortgage loans (for example,
one-to-four family residential), and other consumer loans are based on
quoted market prices of similar loans sold in conjunction with
securitization transactions, adjusted for differences in loan
characteristics. Fair values for commercial real estate and commercial
loans are estimated using discounted cash flow analyses using interest
rates currently being offered for loans with similar terms to borrowers of
similar credit quality. Fair values for impaired loans are estimated using
discounted cash flow analyses or underlying collateral values, where
applicable.

Accrued interest receivable. The carrying amounts of accrued interest
receivable approximate their fair values.

Deposits. The fair values disclosed for demand deposits are, by
definition, equal to the amount payable on demand at the reporting date
(that is, their carrying amounts). The carrying amounts of variable-rate,
fixed-term money market accounts and certificates of deposit ("CDs")
approximate their fair values at the reporting date. Fair values for
fixed-rate CDs are estimated using a discounted cash flow calculation that
applies interest rates currently being offered on certificates to a
schedule of aggregated expected monthly maturities on time deposits.

Advances from FHLB. Rates currently available to the Corporation for
debt with similar terms and remaining maturities are used to estimate fair
value of existing debt.

Note payable and other borrowed funds. The carrying amounts of note
payable and other borrowed funds approximate their fair values.

Guaranteed preferred beneficial interest in the Corporation's
subordinated debentures. Rates currently available to the Corporation for
preferred offerings with similar terms and maturities are used to estimate
fair value.

Off-balance sheet items. The fair values of commitments to extend
credit and standby letters of credit are not material to the Corporation's
financial condition.

Limitations. Fair value estimates are made at a specific point of
time and are based on relevant market information which is continuously
changing. Because no quoted market prices exist for a significant portion
of the Corporation's financial instruments, fair values for such
instruments are based on management's assumptions with respect to future
economic conditions, estimated discount rates, estimates of the amount and
timing of future cash flows, expected loss experience, and other factors.
These estimates are subjective in nature involving uncertainties and
matters of significant judgment; therefore, they cannot be determined with
precision. Changes in the assumptions could significantly affect the
estimates.

F-29

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. FAIR VALUES OF FINANCIAL INSTRUMENTS -- (CONTINUED)

The estimated fair values of the Corporation's financial instruments are as
follows:

DECEMBER 31, 2000 DECEMBER 31, 1999
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
(IN THOUSANDS)

Financial assets:
Cash and due from banks............................. $ 36,691 $ 36,691 $ 31,825 $ 31,825
Interest bearing deposits in other banks............ 2,427 2,427 1,862 1,862
Federal funds sold.................................. 3,120 3,120 5,843 5,843
Short-term commercial paper......................... -- -- 14,484 14,484
Securities available for sale....................... 91,316 91,316 65,439 65,439
Securities held to maturity......................... 4,389 4,317 5,477 5,411
Mortgage loans held for sale........................ 4,324 4,324 2,127 2,127
Net loans........................................... 799,186 800,614 624,712 626,842
Stock in FHLB and Federal Reserve Bank.............. 6,922 6,922 3,461 3,461
Accrued interest receivable......................... 8,615 8,615 6,286 6,286
Financial liabilities:
Deposits............................................ 827,304 834,915 682,517 682,882
Advances from FHLB.................................. 104,300 105,359 62,500 59,959
Other borrowed funds................................ 534 534 295 295
Note payable........................................ -- -- 7,104 7,104
Guaranteed preferred beneficial interest in the
Corporation's subordinated debentures............ 15,000 14,285 -- --

17. OTHER NONINTEREST EXPENSE

Other noninterest expense consisted of the following (in thousands):

YEAR ENDED DECEMBER 31,
----------------------------
2000 1999 1998
------- ------ -------

Professional fees........................................... $ 2,366 $2,196 $ 1,159
Directors fees.............................................. 653 789 760
Insurance and assessments................................... 638 478 354
Postage, stationery and supplies............................ 1,100 1,161 889
Advertising................................................. 562 372 420
Foreclosure losses.......................................... 910 907 --
Other operating expense..................................... 3,895 3,372 3,020
------- ------ -------
Total............................................. $10,124 $9,275 $ 6,602
======= ====== =======

18. CONCENTRATIONS OF CREDIT RISK

All of the Corporation's loans, commitments and standby letters of credit
have been granted to customers in the Corporation's market area. The
concentrations of credit by type of loan or commitment are set forth in Notes 3
and 13, respectively.

The Corporation maintains cash balances and federal funds sold at several
financial institutions. Cash balances at each institution are insured by the
Federal Deposit Insurance Corporation (the "FDIC") up to $100,000. At various
times throughout the year cash balances held at these institutions will exceed
federally

F-30

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18. CONCENTRATIONS OF CREDIT RISK -- (CONTINUED)

insured limits. The Bank's management monitors these institutions on a quarterly
basis in order to determine that the institutions meet "well-capitalized"
guidelines as established by the FDIC.

19. NET INCOME PER SHARE

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

2000 1999 1998
------ ------ -------

Numerator:
For basic and diluted, net income......................... $4,357 $2,920 $ 285
====== ====== =======
Denominator:
For basic, weighted average common shares outstanding..... 14,384 14,335 13,115
Effect of dilutive stock options.......................... 3 27 95
------ ------ -------
Average common shares outstanding, assuming dilution...... 4,387 14,362 13,210
====== ====== =======
Basic net income per common share........................... $ .30 $ .20 $ .02
====== ====== =======
Diluted net income per common share......................... $ .30 $ .20 $ .02
====== ====== =======

20. PARENT COMPANY

The condensed financial information for The Banc Corporation (Parent
Company only) is presented as follows (in thousands):

DECEMBER 31,
-----------------
2000 1999
------- -------

STATEMENTS OF FINANCIAL CONDITION
Assets:
Cash...................................................... $ 1,844 $ 278
Investment in subsidiaries................................ 81,117 71,621
Loans..................................................... -- 200
Intangibles, net.......................................... 245 276
Premises and equipment -- net............................. 6,514 3,637
Other assets.............................................. 1,649 867
------- -------
$91,369 $76,879
======= =======
Liabilities:
Note payable.............................................. $ -- $ 7,104
Accrued expenses and other liabilities.................... 1,030 927
Subordinated debentures................................... 15,464 --
Stockholders' equity........................................ 74,875 68,848
------- -------
$91,369 $76,879
======= =======

F-31

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. PARENT COMPANY -- (CONTINUED)

YEAR ENDED DECEMBER 31,
----------------------------
2000 1999 1998
------- ------- --------

STATEMENTS OF INCOME
Income:
Dividends from subsidiaries............................ $ 16 $ -- $ 2,429
Interest............................................... 50 133 199
Other income........................................... 1,278 837 515
------- ------- --------
1,344 970 3,143
Expense:
Directors' fees........................................ 54 140 194
Salaries and benefits.................................. 1,103 965 529
Occupancy expense...................................... 240 439 250
Interest expense....................................... 930 210 81
Other.................................................. 1,173 1,302 1,124
------- ------- --------
3,500 3,056 2,178
------- ------- --------
(Loss) income before income taxes and equity in
undistributed earnings of subsidiaries................. (2,156) (2,086) 965
Income tax benefit....................................... 1,072 1,100 1,321
------- ------- --------
(Loss) income before equity in undistributed earnings of
subsidiaries........................................... (1,084) (986) 2,286
Equity in undistributed earnings (loss) of
subsidiaries........................................... 5,441 3,906 (2,001)
------- ------- --------
Net income............................................... $ 4,357 $ 2,920 $ 285
======= ======= ========

F-32

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. PARENT COMPANY -- (CONTINUED)

YEAR ENDED DECEMBER 31,
----------------------------
2000 1999 1998
------- ------- --------

STATEMENTS OF INCOME
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................... $ 4,357 $ 2,920 $ 285
Adjustments to reconcile net income to net cash (used)
provided by operating activities:
Amortization and depreciation expense.................. 148 275 171
Equity in undistributed (earnings) loss of
subsidiaries........................................ (5,441) (3,906) 2,001
Gain on sale of property............................... (165) (342) --
Increase (decrease) in other liabilities............... 842 (1,587) 786
Increase in other assets............................... (1,324) (21) (1,181)
------- ------- --------
Net cash (used) provided by operating activities......... (1,583) (2,661) 2,062
NET CASH USED IN INVESTING ACTIVITIES
Purchases of premises and equipment...................... (3,387) (3,810) (9,102)
Proceeds from sale of property........................... 450 300 --
Net cash paid in acquisition............................. -- (1,372) (5,390)
Maturity of investment securities available for sale..... -- -- 500
Sale of investment securities available for sale......... -- -- 246
Proceeds from other receivables.......................... -- 329
Capital contribution to subsidiaries..................... (2,064) (3,995) (5,000)
------- ------- --------
Net cash used in investing activities.................... (5,001) (8,877) (18,417)
CASH USED IN FINANCING ACTIVITIES
Dividends paid by pooled subsidiaries.................... -- -- (170)
Proceeds from issuance of common stock................... -- 2,170 12,281
Purchase of treasury stock............................... (210) -- --
(Decrease) increase in notes payable..................... (7,104) 7,104 --
Proceeds from issuance of subordinated debentures........ 15,464 -- --
------- ------- --------
Net cash provided by financing activities................ 8,150 9,274 12,111
Net increase (decrease) in cash.......................... 1,566 (2,264) (4,244)
Cash at beginning of year................................ 278 2,542 6,786
------- ------- --------
Cash at end of year...................................... $ 1,844 $ 278 $ 2,542
======= ======= ========

F-33

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

21. SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

A summary of the unaudited results of operations for each quarter of 2000
and 1999 follows (in thousands, except per share data):

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------

2000
Total interest income............................. $16,649 $17,917 $19,515 $20,954
Total interest expense............................ 8,284 9,220 10,835 11,582
Net interest income............................... 8,365 8,697 8,680 9,372
Provision for loan losses......................... 888 709 1,869 1,495
Securities gains (losses)......................... -- (3) 76 58
Distributions on trust preferred securities....... -- -- -- 504
Income before income taxes........................ 1,273 1,590 1,330 1,160
Net income........................................ 902 1,194 1,367 894
Basic and diluted net income per share............ .06 .08 .10 .06
1999
Total interest income............................. $11,915 $12,851 $14,580 $16,211
Total interest expense............................ 5,609 6,078 6,930 8,132
Net interest income............................... 6,306 6,773 7,650 8,079
Provision for loan losses......................... 244 298 1,445 863
Securities gains (losses)......................... (20) 79 6 18
Merger related costs.............................. 69 622 53 --
Income before income taxes........................ 980 816 1,107 537
Net income........................................ 812 579 755 774
Basic and diluted net income per share............ .06 .04 .05 .05

22. SEGMENT REPORTING

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

F-34

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

22. SEGMENT REPORTING -- (CONTINUED)

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

ALABAMA FLORIDA
REGION REGION COMBINED
-------- -------- ----------

2000
Net interest income......................................... $ 22,807 $ 12,307 $ 35,114
Provision for loan losses................................... 3,526 1,435 4,961
Noninterest income.......................................... 6,326 1,496 7,822
Noninterest expense......................................... 25,324 6,794 32,118
Distributions on trust preferred securities................. 504 -- 504
Income tax (benefit) expense................................ (778) 1,774 996
Net income.................................................. 557 3,800 4,357
Total assets................................................ 767,559 261,656 1,029,215
1999
Net interest income......................................... $ 19,321 $ 9,487 $ 28,808
Provision for loan losses................................... 3,186 (336) 2,850
Noninterest income.......................................... 4,606 1,558 6,164
Noninterest expense......................................... 21,646 7,036 28,682
Income tax (benefit) expense................................ (1,068) 1,588 520
Net income.................................................. 163 2,757 2,920
Total assets................................................ 590,751 236,676 827,427
1998
Net interest income......................................... $ 14,942 $ 7,324 $ 22,266
Provision for loan losses................................... 3,094 1,563 4,657
Noninterest income.......................................... 2,617 1,464 4,081
Noninterest expense......................................... 15,926 6,203 22,129
Income tax (benefit) expense................................ (1,022) 298 (724)
Net (loss) income........................................... (439) 724 285
Total assets................................................ 440,845 189,244 630,089

F-35

THE BANC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS)

JUNE 30,
2001
-----------
(UNAUDITED)

ASSETS
Cash and due from banks..................................... $ 36,500
Interest bearing deposits in other banks.................... 593
Federal funds sold.......................................... 48,315
Investment securities available for sale.................... 74,329
Investment securities held-to-maturity...................... --
Mortgage loans held for sale................................ 2,445
Loans, net of unearned income............................... 912,114
Less: Allowance for loan losses............................. (9,509)
----------
Net loans......................................... 902,605
----------
Premises and equipment, net................................. 45,167
Accrued interest receivable................................. 8,144
Stock in FHLB and Federal Reserve Bank...................... 8,250
Other assets................................................ 29,026
----------
TOTAL ASSETS...................................... $1,155,374
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing....................................... $ 103,560
Interest-bearing.......................................... 806,783
----------
TOTAL DEPOSITS.................................... 910,343
Advances from FHLB.......................................... 136,100
Other borrowed funds........................................ 2,026
Note payable................................................ 7,000
Accrued expenses and other liabilities...................... 7,154
----------
TOTAL LIABILITIES................................. 1,062,623
Guaranteed preferred beneficial interests in the
Corporation's subordinated debentures..................... 15,000
Stockholders' Equity
Preferred stock, par value $.001 per share; authorized
5,000,000 shares; shares issued -0-.................... --
Common stock, par value $.001 per share; authorized
25,000,000 shares; shares issued 14,385,021;
outstanding 14,248,721 shares in 2001 and 14,345,021 in
2000................................................... 14
Surplus................................................... 47,756
Retained Earnings......................................... 30,613
Accumulated other comprehensive income (loss)............. 88
Treasury stock, at cost -- 136,300 and 40,000 shares,
respectively........................................... (720)
----------
TOTAL STOCKHOLDERS' EQUITY........................ 77,751
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $1,155,374
==========

See Notes to Condensed Consolidated Financial Statements.

F-36

THE BANC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

SIX MONTHS ENDED
JUNE 30,
-----------------
2001 2000
------- -------

INTEREST INCOME
Interest and fees on loans.................................. $41,210 $31,647
Interest on investment securities
Taxable................................................... 2,824 1,902
Exempt from Federal income tax............................ 294 375
Interest on federal funds sold.............................. 903 372
Interest and dividends on other investments................. 377 270
------- -------
Total interest income............................. 45,608 34,566
INTEREST EXPENSE
Interest on deposits........................................ 21,748 15,291
Interest on other borrowed funds............................ 3,892 2,213
------- -------
Total interest expense............................ 25,640 17,504
------- -------
NET INTEREST INCOME............................... 19,968 17,062
Provision for loan losses................................... 1,630 1,597
------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES........................................... 18,338 15,465
Noninterest income.......................................... 4,296 3,524
Gain on sale of securities.................................. 157 --
------- -------
TOTAL NONINTEREST INCOME.......................... 4,453 3,524
NONINTEREST EXPENSES
Salaries and employee benefits.............................. 9,558 7,827
Occupancy, furniture and equipment expense.................. 3,472 2,891
Other operating expenses.................................... 4,832 5,408
------- -------
TOTAL NONINTEREST EXPENSES........................ 17,862 16,126
------- -------
INCOME BEFORE DISTRIBUTIONS ON TRUST PREFERRED
SECURITIES....................................... 4,929 2,863
Distributions on trust preferred securities................. 795 --
------- -------
INCOME BEFORE INCOME TAXES........................ 4,134 2,863
Income tax expense.......................................... 1,160 767
------- -------
NET INCOME........................................ $ 2,974 $ 2,096
======= =======
BASIC AND DILUTED NET INCOME PER SHARE...................... $ 0.21 $ 0.14
======= =======
AVERAGE COMMON SHARES OUTSTANDING........................... 14,308 14,385
AVERAGE COMMON SHARES OUTSTANDING, ASSUMING DILUTION........ 14,311 14,387

See Notes to Condensed Consolidated Financial Statements.

F-37

THE BANC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(DOLLARS IN THOUSANDS)

SIX MONTHS ENDED
JUNE 30,
--------------------
2001 2000
--------- --------

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

See Notes to Condensed Consolidated Financial Statements.

F-38

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

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

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENT

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

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

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

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

NOTE 3. SEGMENT REPORTING

F-39

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. SEGMENT REPORTING -- (CONTINUED)

revenues from the delivery of financial services. These services include
commercial loans, mortgage loans, consumer loans, deposit accounts and other
financial services.

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

ALABAMA FLORIDA
REGION REGION COMBINED
-------- -------- ----------

Six months ended June 30, 2001
Net interest income....................................... $ 13,036 $ 6,932 $ 19,968
Provision for loan losses................................. 1,100 530 1,630
Noninterest income........................................ 3,741 712 4,453
Noninterest expense....................................... 13,667 4,195 17,862
Distributions on trust preferred securities............... 795 -- 795
Income tax expense........................................ 200 960 1,160
Net income........................................ 1,015 1,959 2,974
Six months ended June 30, 2000
Net interest income....................................... $ 11,263 $ 5,799 $ 17,062
Provision for loan losses................................. 1,054 543 1,597
Noninterest income........................................ 2,726 798 3,524
Noninterest expense....................................... 12,534 3,592 16,126
Income tax (benefit) expense.............................. (138) 905 767
Net income........................................ 539 1,557 2,096

NOTE 4. NET INCOME PER SHARE

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

SIX MONTHS ENDED
JUNE 30,
-----------------
2001 2000
------- -------

Numerator:
For basic and diluted, net income......................... $ 2,974 $ 2,096
======= =======
Denominator:
For basic, weighted average common shares outstanding..... 14,308 14,385
Effect of dilutive stock options.......................... 3 2
------- -------
Average diluted common shares outstanding................... 14,311 14,387
======= =======
Basic and diluted net income per share...................... $ .21 $ .14
======= =======

F-40

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5. INCOME TAXES

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

NOTE 6. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN THE CORPORATION'S
SUBORDINATED DEBENTURES

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

F-41

INDEPENDENT AUDITORS' REPORT

The Board of Directors
CF Bancshares, Inc.
Port St. Joe, Florida:

We have audited the consolidated balance sheets of CF Bancshares, Inc. and
Subsidiaries (the "Company") at December 31, 2000 and 1999, and the related
consolidated statements of earnings, stockholders' equity and cash flows for
each of the years in the three-year period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
at December 31, 2000 and 1999, and the results of its operations and cash flows
for each of the years in the three-year period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America.

HACKER, JOHNSON & SMITH PA

Tampa, Florida
February 23, 2001

F-42

CF BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AT DECEMBER 31,
-------------------------
2000 1999
----------- -----------

ASSETS
Cash and due from banks..................................... $ 2,784,258 $ 2,280,765
Interest-bearing deposits with banks........................ 1,709,783 940,950
----------- -----------
Total cash and cash equivalents................... 4,494,041 3,221,715
Securities held to maturity (fair value of $3,351,714 and
$1,884,030)............................................... 3,209,308 1,813,696
Loans, net of allowance for loan losses of $289,041 and
$282,257.................................................. 82,241,009 66,419,097
Federal Home Loan Bank stock, at cost....................... 662,500 386,900
Premises and equipment, net................................. 2,467,718 2,121,061
Foreclosed real estate...................................... 135,000 135,000
Accrued interest receivable................................. 566,915 408,354
Income taxes receivable..................................... 105,349 --
Deferred income taxes....................................... 151,000 188,000
Other assets................................................ 687,256 527,781
----------- -----------
Total............................................. $94,720,096 $75,221,604
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits....................... $ 3,451,583 $ 2,931,691
Savings and NOW deposits.................................. 14,943,816 14,868,503
Money-market deposits..................................... 6,543,800 5,862,963
Time deposits............................................. 48,164,193 36,483,276
----------- -----------
Total deposits.................................... 73,103,392 60,146,433
Federal Home Loan Bank advances........................... 13,250,000 7,250,000
Income taxes payable...................................... -- 143,029
Other liabilities......................................... 624,197 496,684
----------- -----------
Total liabilities................................. 86,977,589 68,036,146
----------- -----------
Commitments and contingencies (Notes 8 and 14)
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued or outstanding................. -- --
Common stock, $.01 par value, 5,000,000 shares authorized,
169,015 and 168,555 shares issued and outstanding...... 1,690 1,686
Additional paid-in capital................................ 1,432,258 1,427,662
Retained earnings......................................... 6,308,559 5,756,110
----------- -----------
Total stockholders' equity........................ 7,742,507 7,185,458
----------- -----------
Total............................................. $94,720,096 $75,221,604
=========== ===========

See accompanying Notes to Consolidated Financial Statements.

F-43

CF BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

YEAR ENDED DECEMBER 31,
------------------------------------
2000 1999 1998
---------- ---------- ----------

Interest income:
Loans.................................................... $6,519,499 $5,173,047 $5,214,357
Securities held to maturity.............................. 202,675 59,557 5,598
Other.................................................... 209,814 182,278 280,714
---------- ---------- ----------
Total interest income............................ 6,931,988 5,414,882 5,500,669
---------- ---------- ----------
Interest expense:
Deposits................................................. 3,403,613 2,606,362 2,853,694
Federal Home Loan Bank advances.......................... 599,285 350,085 169,494
---------- ---------- ----------
Total interest expense........................... 4,002,898 2,956,447 3,023,188
---------- ---------- ----------
Net interest income.............................. 2,929,090 2,458,435 2,477,481
Provision for loan losses.................................. 100,470 173,043 73,585
---------- ---------- ----------
Net interest income after provision for loan
losses......................................... 2,828,620 2,285,392 2,403,896
---------- ---------- ----------
Noninterest income:
Service charges on deposit accounts...................... 298,427 255,678 233,209
Other service charges and fees........................... 163,085 137,519 112,608
Gain on sale of developed real estate.................... 22,762 614,414 --
Other.................................................... 19,539 34,909 17,875
---------- ---------- ----------
Total noninterest income......................... 503,813 1,042,520 363,692
---------- ---------- ----------
Noninterest expenses:
Salaries and employee benefits........................... 1,019,589 1,096,100 897,469
Occupancy expense........................................ 422,642 381,915 261,700
Data processing.......................................... 112,329 103,521 98,788
Legal and professional................................... 48,376 69,169 60,709
Federal deposit insurance premium........................ 12,971 33,535 37,030
Stationary and office supplies........................... 71,200 59,161 51,033
Other.................................................... 363,445 311,487 343,263
---------- ---------- ----------
Total noninterest expenses....................... 2,050,552 2,054,888 1,749,992
---------- ---------- ----------
Earnings before income taxes............................... 1,281,881 1,273,024 1,017,596
Income taxes..................................... 475,909 472,497 379,065
---------- ---------- ----------
Net earnings............................................... $ 805,972 $ 800,527 $ 638,531
========== ========== ==========
Earnings per share:
Basic.................................................... $ 4.77 $ 4.75 $ 3.82
========== ========== ==========
Diluted.................................................. $ 4.76 $ 4.74 $ 3.78
========== ========== ==========

See accompanying Notes to Consolidated Financial Statements.

F-44

CF BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

COMMON STOCK ADDITIONAL TOTAL
---------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------- ------ ---------- ---------- -------------

Balance at December 31, 1997.............. 167,053 $1,671 $1,412,657 $4,862,377 $6,276,705
Net earnings............................ -- -- -- 638,531 638,531
Cash dividends paid, at $2 per share.... -- -- -- (334,657) (334,657)
Shares issued........................... 325 3 3,247 -- 3,250
------- ------ ---------- ---------- ----------
Balance at December 31, 1998.............. 167,378 1,674 1,415,904 5,166,251 6,583,829
Net earnings............................ -- -- -- 800,527 800,527
Cash dividends paid, at $1.25 per
share................................ -- -- -- (210,668) (210,668)
Shares issued........................... 1,177 12 11,758 -- 11,770
------- ------ ---------- ---------- ----------
Balance at December 31, 1999.............. 168,555 1,686 1,427,662 5,756,110 7,185,458
------- ------ ---------- ---------- ----------
Net earnings............................ -- -- -- 805,972 805,972
Cash dividends paid, at $1.50 per
share................................ -- -- -- (253,523) (253,523)
Shares issued........................... 460 4 4,596 -- 4,600
------- ------ ---------- ---------- ----------
Balance at December 31, 2000.............. 169,015 $1,690 $1,432,258 $6,308,559 $7,742,507
======= ====== ========== ========== ==========

See accompanying Notes to Consolidated Financial Statements.

F-45

CF BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
----------------------------------------
2000 1999 1998
------------ ----------- -----------

Cash flows from operating activities:
Net earnings......................................... $ 805,972 $ 800,527 $ 638,531
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation...................................... 246,310 231,093 159,699
Provision for loan losses......................... 100,470 173,043 73,585
Amortization of premiums on securities held to
maturity........................................ 25,575 4,875 --
Deferred income tax provision (credit)............ 37,000 (145,000) (118,000)
(Increase) decrease in accrued interest receivable
and other assets................................ (318,036) (120,601) 16,632
Proceeds from sale of development lots............ 59,092 1,616,500 --
Cost of development of real estate................ (36,330) (1,002,086) --
Gain on sale of developed lots.................... (22,762) (614,414) --
Gains on sale of foreclosed real estate........... (6,866) (21,550) (8,079)
Increase in other liabilities..................... 127,513 219,620 178,537
(Decrease) increase in income taxes payable....... (143,029) 143,029 (173,718)
(Increase) decrease in income taxes receivable.... (105,349) 42,194 (42,194)
------------ ----------- -----------
Net cash provided by operating activities.... 769,560 1,327,230 724,993
------------ ----------- -----------
Cash flows from investing activities:
Principal paydowns of securities held to maturity.... 354,352 94,146 --
Net decrease in interest-bearing deposits with
banks............................................. -- 450,000 425,000
Purchase of securities held to maturity.............. (1,775,539) (1,912,717) --
Proceeds from maturities of securities held to
maturity.......................................... -- -- 385,000
Net (increase) decrease in loans..................... (15,928,104) (6,404,580) 198,288
(Purchase) sale of Federal Home Loan Bank stock...... (275,600) 31,500 --
Net purchases of premises and equipment.............. (592,967) (701,890) (667,125)
Proceeds from the sale of foreclosed real estate..... 10,000 128,874 1,000
Net expenditures on foreclosed real estate........... 2,588 39,233 (4,680)
------------ ----------- -----------
Net cash provided by (used in) investing
activities................................. (18,205,270) (8,275,434) 337,483
------------ ----------- -----------
Cash flows from financing activities:
Net increase (decrease) in deposits.................. 12,956,959 4,210,603 (5,724,080)
Cash dividends paid.................................. (253,523) (210,668) (334,657)
Net increase in Federal Home Loan Bank advances...... 6,000,000 1,000,000 5,400,000
Issuance of common stock............................. 4,600 11,770 3,250
------------ ----------- -----------
Net cash provided by (used in) financing
activities................................. 18,708,036 5,011,705 (655,487)
------------ ----------- -----------
Net increase (decrease) in cash and cash
equivalents................................ 1,272,326 (1,936,499) 406,989
Cash and cash equivalents at beginning of year....... 3,221,715 5,158,214 4,751,225
------------ ----------- -----------
Cash and cash equivalents at end of year............. $ 4,494,041 $ 3,221,715 $ 5,158,214
============ =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest............... $ 3,947,715 $ 2,956,385 $ 3,023,325
============ =========== ===========
Cash paid during the year for income taxes........... $ 687,287 $ 432,274 $ 712,977
============ =========== ===========
Supplemental disclosure of noncash investing activity:
Transfers from loans to foreclosed real estate....... $ 49,222 $ 292,581 $ 195,726
============ =========== ===========
Transfers from foreclosed real estate to loans....... $ 43,500 $ 101,849 $ 176,659
============ =========== ===========

See accompanying Notes to Consolidated Financial Statements.

F-46

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999 AND FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD
ENDED DECEMBER 31, 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

CF Bancshares, Inc. (the "Holding Company") is a unitary thrift holding
company and its current business is the ownership and operation of Citizens
Federal Savings Bank of Port St. Joe (the "Savings Bank") and Citizens
Properties, Inc. Collectively the entities are referred to as the "Company." The
Savings Bank provides a variety of community banking services to small and
middle-market businesses and individuals through its three banking offices
located in Bay, Gulf and Franklin Counties, Florida. Citizens Properties, Inc.
was formed for the purpose of holding and managing foreclosed real estate and to
purchase and develop real estate.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Holding
Company and its subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.

USE OF ESTIMATES

In preparing consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Material estimates that are
particularly susceptible to significant change in the near term relate to the
determination of the allowance for loan losses and deferred tax assets.

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, cash and cash
equivalents include cash and balances due from banks and interest-bearing
deposits with banks, both of which mature within ninety days.

SECURITIES HELD TO MATURITY

Securities for which the Company has the positive intent and ability to
hold to maturity are reported at cost, adjusted for premiums and discounts that
are recognized in interest income using the interest method over the period to
maturity.

LOANS

Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or pay-off are reported at their
outstanding principal adjusted for any charge-offs, the allowance for loan
losses, and any deferred fees or costs on originated loans and unamortized
premiums or discounts on purchased loans.

Discounts and premiums on purchased residential real estate loans are
amortized to income using the interest method over the remaining period to
contractual maturity, adjusted for anticipated prepayments.

Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield of the related loan.

The accrual of interest on loans is discontinued at the time the loan is
ninety days delinquent unless the loan is well-collateralized and in process of
collection. In all cases, loans are placed on nonaccrual or charged-off at an
earlier date if collection of principal or interest is considered doubtful.

F-47

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

All interest accrued but not collected for loans that are placed on
nonaccrual or charged-off is reversed against interest income. The interest on
these loans is accounted for on the cash-basis or cost-recovery method, until
qualifying for return to accrual. Loans are returned to accrual status when all
the principal and interest amounts contractually due are brought current and
future payments are reasonably assured.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established as losses are estimated to
have occurred through a provision for loan losses charged to earnings. Loan
losses are charged against the allowance when management believes the
uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any,
are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management
and is based upon management's periodic review of the collectibility of the
loans in light of historical experience, the nature and volume of the loan
portfolio, adverse situations that may affect the borrower's ability to repay,
estimated value of any underlying collateral and prevailing economic conditions.
This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.

A loan is considered impaired when, based on current information and
events, it is probable that the Company will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement. Factors considered by management in determining impairment
include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Loans that experience
insignificant payment delays and payment shortfalls generally are not classified
as impaired. Management determines the significance of payment delays and
payment shortfalls on a case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the length of the
delay, the reasons for the delay, the borrower's prior payment record, and the
amount of the shortfall in relation to the principal and interest owed.
Impairment is measured on a loan by loan basis for commercial loans by either
the present value of expected future cash flows discounted at the loan's
effective interest rate, the loan's obtainable market price, or the fair value
of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively
evaluated for impairment. Accordingly, the Company does not separately identify
individual consumer and residential loans for impairment disclosures.

FORECLOSED REAL ESTATE

Real estate acquired through, or in lieu of, foreclosure, is initially
recorded at the lower of fair value or the loan balance plus acquisition costs
at the date of foreclosure. After foreclosure, valuations are periodically
performed by management and the real estate is carried at the lower of carrying
amount or fair value less cost to sell. Revenue and expenses from operations and
changes in the valuation allowance are included in earnings.

INCOME TAXES

Deferred income tax assets and liabilities are recorded to reflect the tax
consequences on future years of temporary differences between revenues and
expenses reported for financial statement and those reported for income tax
purposes. Deferred tax assets and liabilities are measured using the enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be realized or settled. Valuation allowances are
provided against assets which are not likely to be realized.

F-48

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

PREMISES AND EQUIPMENT

Land is carried at cost. Buildings and improvements and furniture, fixtures
and equipment are stated at cost less accumulated depreciation. Depreciation is
computed on the straight-line method over the estimated useful lives of the
assets.

TRANSFER OF FINANCIAL ASSETS

Transfers of financial assets are accounted for as sales, when control over
the assets has been surrendered. Control over transferred assets is deemed to be
surrendered when (1) the assets have been isolated from the Company, (2) the
transferee obtains the right (free of conditions that constrain it from taking
advantage of that right) to pledge or exchange the transferred assets, and (3)
the Company does not maintain effective control over the transferred assets
through an agreement to repurchase them before their maturity.

OFF-BALANCE-SHEET INSTRUMENTS

In the ordinary course of business the Company has entered into
off-balance-sheet financial instruments consisting of commitments to extend
credit, unused lines of credit and standby letters of credit. Such financial
instruments are recorded in the financial statements when they are funded.

STOCK COMPENSATION PLANS

Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, encourages all entities to adopt a fair value based
method of accounting for employee stock compensation plans, whereby compensation
cost is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period.
However, it also allows an entity to continue to measure compensation cost for
those plans using the intrinsic value based method of accounting prescribed by
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, whereby compensation cost is the excess, if any, of the quoted market
price of the stock at the grant date (or other measurement date) over the amount
an employee must pay to acquire the stock. Stock options issued under the
Company's stock option plan have no intrinsic value at the grant date, and under
Opinion No. 25 no compensation cost is recognized for them. The Company has
elected to continue with the accounting methodology in Opinion No. 25.

EARNINGS PER SHARE

Basic earnings per share is computed on the basis of the weighted-average
number of common shares outstanding. Diluted earnings per share is computed
based on the weighted-average number of shares outstanding plus the effect of
outstanding stock options, computed using the treasury stock method.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating fair values of financial instruments:

Cash and Cash Equivalents. The carrying amounts of cash and cash
equivalents approximate their fair value.

Securities. Fair values for securities are based on quoted market
prices.

Loans. For variable-rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying
values. Fair values for fixed-rate mortgage, consumer, commercial real

F-49

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

estate and commercial loans are estimated using discounted cash flow
analyses, using Office of Thrift Supervision ("OTS") pricing model. Fair
values for impaired loans are estimated using discounted cash flow analyses
or underlying collateral values, where applicable.

Federal Home Loan Bank Stock. Fair value of the Company's investment
in Federal Home Loan Bank stock is based on its redemption value, which is
its cost of $100 per share.

Deposit Liabilities. The fair values disclosed for demand, NOW,
money-market and savings deposits are, by definition, equal to the amount
payable on demand at the reporting date (that is, their carrying amounts).
Fair values for fixed-rate certificates of deposit are estimated using the
OTS pricing model.

Accrued Interest Receivable. The carrying amounts of accrued interest
approximate their fair values.

Off-Balance-Sheet Instruments. Fair values for off-balance-sheet
lending commitments are based on fees currently charged to enter into
similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing.

FUTURE ACCOUNTING REQUIREMENTS

Financial Accounting Standards 133 -- Accounting for Derivative Investments
and Hedging Activities (as amended) requires companies to record derivatives on
the balance sheet as assets or liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivatives and whether they qualify
for hedge accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. The Company will be required to adopt this Statement
January 1, 2001. Management does not anticipate that this Statement will have a
material impact on the Company.

RECLASSIFICATION

For comparability, certain amounts in the 1999 and 1998 financial
statements have been reclassified to conform to the 2000 presentation.

2. SECURITIES HELD TO MATURITY

Securities have been classified according to management's intent. The
carrying amount of securities and their approximate fair values are summarized
as follows:

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------

AT DECEMBER 31, 2000 --
Mortgage-backed securities............... $3,209,308 $142,406 $ -- $3,351,714
========== ======== ==== ==========
AT DECEMBER 31, 1999 --
Mortgage-backed securities............... $1,813,696 $ 70,334 $ -- $1,884,030
========== ======== ==== ==========

There were no sales of securities during 2000, 1999 or 1998.

The Company has pledged certain securities and deposits as collateral for
public deposits. At December 31, 2000 securities with a carrying value of
$4,620,000 were pledged for such purposes.

F-50

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. LOANS

The components of loans consist of the following:

AT DECEMBER 31,
-------------------------
2000 1999
----------- -----------

Residential real estate..................................... $42,517,348 $41,414,925
Commercial real estate...................................... 23,249,864 15,787,883
Consumer.................................................... 12,230,819 5,283,495
Commercial.................................................. 4,355,328 2,568,660
Real estate construction.................................... 3,806,831 3,806,300
----------- -----------
Subtotal............................................... 86,160,190 68,861,263
Deduct:
Net deferred loan fees, premiums and discounts............ (107,519) (80,270)
Undisbursed portion of loans in process................... (3,522,621) (2,079,639)
Allowance for loan losses................................. (289,041) (282,257)
----------- -----------
$82,241,009 $66,419,097
=========== ===========

An analysis of the change in the allowance for loan losses is summarized as
follows:

YEAR ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
--------- --------- --------

Balance at beginning of year......................... $ 282,257 $ 206,152 $192,893
Provision charged to earnings........................ 100,470 173,043 73,585
Loans charged off.................................... (115,401) (117,749) (75,013)
Recoveries........................................... 21,715 20,811 14,687
--------- --------- --------
Balance at end of year............................... $ 289,041 $ 282,257 $206,152
========= ========= ========

There were no impaired loans during 2000, 1999 or 1998.

4. PREMISES AND EQUIPMENT, NET

Premises and equipment consist of the following:

AT DECEMBER 31,
------------------------
2000 1999
----------- ----------

Land........................................................ $ 706,849 $ 246,320
Buildings and improvements.................................. 1,778,527 1,778,527
Furniture, fixtures and equipment........................... 1,009,244 892,911
----------- ----------
Total at cost..................................... 3,494,620 2,917,758
Less accumulated depreciation............................... (1,026,902) (796,697)
----------- ----------
Premises and equipment, net....................... $ 2,467,718 $2,121,061
=========== ==========

5. LOAN SERVICING

Loans serviced for others are not included in the accompanying consolidated
balance sheets and totaled approximately $767,000 and $912,000 at December 31,
2000 and 1999, respectively. There are no custodial escrow balances maintained
in connection with the loan servicing.

F-51

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. DEPOSIT ACCOUNTS

The aggregate amount of time deposits with a minimum denomination of
$100,000 was approximately $16.4 million and $9.3 million at December 31, 2000
and 1999, respectively.

At December 31, 2000, the scheduled maturities of time deposits are as
follows:

MATURING IN THE YEAR ENDING AMOUNT
--------------------------- -----------

2001........................................................ $30,618,674
2002........................................................ 9,269,605
2003........................................................ 2,798,627
2004........................................................ 1,900,136
2005........................................................ 3,577,151
-----------
$48,164,193
===========

7. FEDERAL HOME LOAN BANK ADVANCES

Federal Home Loan Bank of Atlanta ("FHLB") advances are collateralized by
all of the Company's FHLB stock and a blanket lien on mortgage loans and are as
follows:

DECEMBER 31,
WEIGHTED-AVERAGE -----------------------
MATURING IN THE YEAR ENDING INTEREST RATE 2000 1999
--------------------------- ---------------- ----------- ---------

2000........................................... 6.22% $ -- 1,000,000
2003........................................... 4.79% 3,000,000 3,000,000
2005........................................... 7.07% 2,000,000 --
2006........................................... 6.70% 250,000 250,000
2008........................................... 5.95% 3,000,000 3,000,000
2010........................................... 6.41% 5,000,000 --
----------- ---------
$13,250,000 7,250,000
=========== =========

8. FINANCIAL INSTRUMENTS

The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments are commitments to extend credit, unused lines of
credit and standby letters of credit and may involve, to varying degrees,
elements of credit and interest-rate risk in excess of the amount recognized in
the consolidated balance sheet. The contract amounts of these instruments
reflect the extent of involvement the Company has in these financial
instruments.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of those instruments. The Company uses the
same credit policies in making commitments as it does for on-balance-sheet
instruments.

Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit to customers is essentially the same as
that involved in extending loan facilities to customers.

Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since some of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The

F-52

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. FINANCIAL INSTRUMENTS -- (CONTINUED)

Company evaluates each customer's credit worthiness on a case-by-case basis. The
amount of collateral obtained if deemed necessary by the Company upon extension
of credit is based on management's credit evaluation of the counterparty.

The estimated fair values of the Company's financial instruments at
December 31, were as follows (in thousands):

2000 1999
----------------- -----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------ -------- ------

Financial assets:
Cash and cash equivalents.......................... $4,494 4,494 3,222 3,222
Securities held to maturity........................ 3,209 3,352 1,814 1,884
Loans.............................................. 82,241 82,669 66,419 66,326
Federal Home Loan Bank stock....................... 135 135 135 135
Accrued interest receivable........................ 567 567 408 408
Financial liabilities:
Deposit liabilities................................ 73,103 73,393 60,146 60,414
Federal Home Loan Bank advances.................... 13,250 13,343 7,250 7,043

A summary of the amounts of the Company's financial instruments with off
balance sheet risk follows:

AT DECEMBER 31,
2000
---------------

Commitments to extend credit............................... $1,990,000
==========
Unused lines of credit..................................... $2,989,000
==========
Standby letters of credit.................................. $ 90,000
==========

9. CREDIT RISK

The Company grants real estate and consumer loans to customers primarily in
Bay, Gulf and Franklin Counties, Florida. Therefore, the Company's exposure to
credit risk is significantly affected by changes in the economies of Bay, Gulf
and Franklin Counties.

F-53

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES

Allocations of Federal and state income taxes between current and deferred
portions is as follows:

CURRENT DEFERRED TOTAL
-------- -------- -------

YEAR ENDED DECEMBER 31, 2000:
Federal................................................. $374,598 32,000 406,598
State................................................... 64,311 5,000 69,311
-------- -------- -------
Total......................................... $438,909 37,000 475,909
======== ======== =======
YEAR ENDED DECEMBER 31, 1999:
Federal................................................. 539,512 (124,000) 415,512
State................................................... 77,985 (21,000) 56,985
-------- -------- -------
Total......................................... $617,497 (145,000) 472,497
======== ======== =======
YEAR ENDED DECEMBER 31, 1998:
Federal................................................. 438,470 (101,000) 337,470
State................................................... 58,595 (17,000) 41,595
-------- -------- -------
Total......................................... $497,065 (118,000) 379,065
======== ======== =======

The reasons for the differences between the statutory Federal income tax
rate and the effective tax rates are summarized as follows:

2000 1999 1998
---------------------- ---------------------- ----------------------
% OF PRETAX % OF PRETAX % OF PRETAX
AMOUNT EARNINGS AMOUNT EARNINGS AMOUNT EARNINGS
-------- ----------- -------- ----------- -------- -----------

Tax provision at
statutory rate......... $435,839 34.0% $432,828 34.0% $345,983 34.0%
Increases (reductions)
in taxes resulting
from:
State taxes, net of
Federal benefit... 45,745 3.6 37,611 3.0 27,453 2.7
Other, net.......... (5,675) (.5) 2,058 .1 5,629 .6
-------- ---- -------- ---- -------- ----
Income tax provision... $475,909 37.1% $472,497 37.1% $379,065 37.3%
======== ==== ======== ==== ======== ====

F-54

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES -- (CONTINUED)

The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities are presented
below.

AT DECEMBER 31,
-------------------
2000 1999
-------- --------

Deferred tax assets:
Allowance for loan losses................................. $ 60,000 $138,000
Deferred compensation..................................... 169,000 143,000
Other..................................................... 2,000 2,000
-------- --------
Gross deferred tax assets......................... 231,000 283,000
-------- --------
Deferred tax liabilities:
FHLB stock dividends...................................... (55,000) (55,000)
Premises and equipment.................................... (20,000) (35,000)
Charitable contributions.................................. -- (1,000)
Other..................................................... (5,000) (4,000)
-------- --------
Gross deferred tax liabilities.................... (80,000) (95,000)
-------- --------
Net deferred tax asset............................ $151,000 $188,000
======== ========

11. EARNINGS PER SHARE ("EPS")

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations ($ in thousands, except per
share amounts).

FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
2000 1999 1998
----------------------------- ----------------------------- -----------------------------
WEIGHTED- PER WEIGHTED- PER WEIGHTED- PER
AVERAGE SHARE AVERAGE SHARE AVERAGE SHARE
EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT
-------- --------- ------ -------- --------- ------ -------- --------- ------

Basic EPS:
Net earnings
available to
common
stockholders...... $806 168,947 $4.77 $801 168,504 $4.75 $639 167,350 $3.82
===== ===== =====
Effect of dilutive
securities:
Incremental shares
from assumed
exercise of
options........... 258 597 1,548
------- ------- -------
Diluted EPS:
Net earnings
available to
common
stockholders and
assumed
conversions....... $806 169,205 $4.76 $801 169,101 $4.74 $639 168,898 $3.78
==== ======= ===== ==== ======= ===== ==== ======= =====

12. EMPLOYEE STOCK OWNERSHIP PLAN

The Company has a employee stock ownership plan ("ESOP") for the benefit of
its employees. The plan was amended to include a 401(k) plan ("KSOP"), eligible
for all persons employed by the Company at least one year who are twenty-one
years of age. For the years ended December 31, 2000, 1999 and 1998, the
Company's contributions to the plan were $36,340, $30,215 and $28,116,
respectively.

F-55

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. RELATED PARTIES

All loans involving directors and officers were made in the ordinary course
of business. Activity with respect to these loans was as follows:

YEAR ENDED
DECEMBER 31,
--------------------
2000 1999
-------- ---------

Balance at beginning of year................................ $283,609 $ 249,507
Additions................................................. 180,657 319,877
Payments.................................................. (73,337) (285,775)
-------- ---------
Balance at end of year...................................... $390,929 $ 283,609
======== =========

14. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying consolidated financial statements.

15. STOCK OPTION PLANS

The Company has an Incentive Stock Option Plan ("Incentive Plan") and a
Stock Option Plan for Outside Directors ("Directors Plan"). Options are granted
for a period of ten years and vest at the time of grant. All options granted
under the Directors Plan were exercised during the year ending December 31,
1999. A summary of the activity for both the Incentive Plan and the Directors
Plan follows:

PER
SHARE NUMBER AGGREGATE
EXERCISE OF OPTION
PRICE SHARES PRICE
-------- -------- ---------

Outstanding at December 31, 1997........................... $10.00 2,292 $ 22,920
Options exercised.......................................... 10.00 (325) 3,250
------ --------
Outstanding at December 31, 1998........................... 10.00 1,967 19,670
Options exercised.......................................... 10.00 (1,177) (11,770)
------ --------
Outstanding at December 31, 1999........................... 10.00 790 7,900
Options exercised.......................................... 10.00 (460) (4,600)
------ --------
Outstanding at December 31, 2000........................... $10.00 330 $ 3,300
====== ====== ========
Available to be granted at December 31, 2000............... 2,820
======

The weighted-average remaining contractual life of the outstanding stock
options at December 31, 2000 and 1999 was three months and fifteen months,
respectively.

16. EMPLOYEE BENEFIT PLANS

The Company provides a supplemental executive retirement plan for certain
of its officers. The terms of the plan agreements provide for a specific
percentage of the participants compensation to be accrued for deferred
compensation. The Company is accruing interest on these amounts at a rate of 8%.
The benefits vest at various times and will be paid upon retirement, death or
disability. During 2000, 1999 and 1998 expense relating to this plan amounted to
$16,958, $15,658 and $20,832, respectively.

F-56

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. DIRECTORS RETIREMENT PLAN

The Company provides a nonfunded retirement plan for its directors. The
plan agreement provides for a specific amount to be accrued for deferred
compensation. The Company is accruing interest on these amounts at 8%. During
2000, 1999 and 1998 expense relating to this plan amounted to $73,222, $199,272
and $120,864, respectively.

18. REGULATORY MATTERS

Banking regulations place certain restrictions on dividends and loans or
advances made by the Savings Bank to the Holding Company.

The Savings Bank is subject to various regulatory capital requirements
administered by the regulatory banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Savings Bank must meet specific capital guidelines that involve quantitative
measures of their assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The capital amounts and
classification are also subject to qualitative judgements by the regulators
about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Savings Bank to maintain minimum amounts and percentages (set forth
in the following table) of total and Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as
defined) to assets (as defined). Management believes, as of December 31, 2000
and 1999, the Savings Bank met all capital adequacy requirements to which they
are subject.

As of December 31, 2000, the most recent notification from the regulatory
authorities categorized the Savings Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, an institution must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage percentages as set forth in the following
tables. There are no conditions or events since that notification that
management believes have changed the Savings Bank's category. The Savings Bank's
actual capital amounts and percentages are also presented in the table (dollars
in thousands).

MINIMUM
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION PROVISIONS
-------------- ------------- -----------------
AMOUNT % AMOUNT % AMOUNT %
------ ----- ------ ---- -------- ------

AS OF DECEMBER 31, 2000:
Total capital to Risk-Weighted assets.......... $7,507 12.66% $4,742 8.00% $5,928 10.00%
Tier I Capital to Risk-Weighted Assets......... 7,218 12.18 2,371 4.00 3,557 6.00
Tier I Capital to Total Assets................. 7,218 7.69 3,756 4.00 4,695 5.00
AS OF DECEMBER 31, 1999:
Total capital to Risk-Weighted assets.......... $6,945 14.83% $3,746 8.00% $4,682 10.00%
Tier I Capital to Risk-Weighted Assets......... 6,663 14.23 1,873 4.00 2,809 6.00
Tier I Capital to Total Assets................. 6,663 8.90 2,993 4.00 3,742 5.00

F-57

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

19. PARENT COMPANY ONLY FINANCIAL STATEMENTS

Condensed financial statements of the Holding Company are presented below.

CONDENSED BALANCE SHEETS

AT DECEMBER 31,
-----------------------
2000 1999
---------- ----------

ASSETS
Cash and cash equivalents................................... $ 119,016 $ 117,554
Investment in wholly-owned subsidiaries..................... 7,564,554 7,003,175
Other assets................................................ 58,937 64,729
---------- ----------
Total.............................................. $7,742,507 $7,185,458
========== ==========
STOCKHOLDERS' EQUITY
Stockholders' equity........................................ $7,742,507 $7,185,458
========== ==========

CONDENSED STATEMENTS OF EARNINGS

YEAR ENDED DECEMBER 31,
------------------------------
2000 1999 1998
-------- -------- --------

Revenues.................................................... $ -- $ -- $ 1,415
Expenses.................................................... (15,407) (23,450) (22,771)
-------- -------- --------
Loss before earnings of subsidiaries............... (15,407) (23,450) (21,356)
Earnings of subsidiaries.................................... 821,379 823,977 659,887
-------- -------- --------
Net earnings....................................... $805,972 $800,527 $638,531
======== ======== ========

CONDENSED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
---------------------------------
2000 1999 1998
--------- --------- ---------

Cash flows from operation activities:
Net earnings.............................................. $ 805,972 $ 800,527 $ 638,531
Adjustments to reconcile net earnings to net cash used in
operating activities:
Equity in undistributed earnings of subsidiaries........ (821,379) (823,977) (659,887)
Net decrease (increase) in other assets................. 5,792 (1,783) 24,114
--------- --------- ---------
Net cash (used in) provided by operating
activities...................................... (9,615) (25,233) 2,758
--------- --------- ---------
Cash flows from investing activity:
Investment in subsidiary.................................. -- -- (20,000)
--------- --------- ---------
Cash flows from financing activities:
Dividends from subsidiary................................. 260,000 275,000 400,001
Shares issued............................................. 4,600 11,770 3,250
Cash dividends paid....................................... (253,523) (210,668) (334,657)
--------- --------- ---------
Net cash provided by financing activities.......... 11,077 76,102 68,594
--------- --------- ---------
Net increase in cash and cash equivalents................... 1,462 50,869 51,352
Cash and cash equivalents at beginning of the year.......... 117,554 66,685 15,333
--------- --------- ---------
Cash and cash equivalents at end of year.................... $ 119,016 $ 117,554 $ 66,685
========= ========= =========

20. MERGER (UNAUDITED)

On August 30, 2001, the Company entered into a definitive agreement (the
"Agreement") to merge with The Banc Corporation. Under the terms of the
Agreement, The Banc Corporation will pay cash or exchange shares of its common
stock for all outstanding shares of the Company. The merger is subject to both
regulatory and stockholder approval.

F-58

CF BANCSHARES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

JUNE 30,
2001
------------

ASSETS
Cash and due from banks..................................... $ 3,859,474
Interest-bearing deposits with banks........................ 6,024,208
------------
Total cash and cash equivalents................... 9,883,682
Securities held to maturity (fair value of $2,805,287)...... 2,756,326
Loans, net of allowance for loan losses of $342,361......... 87,811,058
Federal Home Loan Bank stock, at cost....................... 812,500
Premises and equipment, net................................. 2,386,943
Foreclosed real estate...................................... 134,000
Accrued interest receivable................................. 710,631
Income taxes receivable..................................... 103,738
Deferred income taxes....................................... 151,000
Other assets................................................ 482,693
------------
Total............................................. $105,232,571
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits....................... 7,546,798
Savings and NOW deposits.................................. 17,256,187
Money-market deposits..................................... 9,873,562
Time deposits............................................. 45,501,083
------------
Total deposits.................................... 80,177,630
Federal Home Loan Bank advances........................... 16,250,000
Other liabilities......................................... 689,898
------------
Total liabilities................................. 97,117,528
------------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued or outstanding................. --
Common stock, $.01 par value 5,000,000 shares authorized;
169,345 shares issued and outstanding.................. 1,693
Additional paid-in capital................................ 1,435,555
Retained earnings......................................... 6,677,795
------------
Total stockholders' equity........................ 8,115,043
------------
Total liabilities and stockholders' equity........ $105,232,571
============

See Accompanying Notes to Condensed Consolidated Financial Statements.

F-59

CF BANCSHARES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

SIX MONTHS ENDED JUNE 30,
--------------------------
2001 2000
----------- -----------

Interest income:
Loans..................................................... $3,772,020 $3,048,393
Securities held to maturity............................... 118,494 53,731
Other..................................................... 106,416 76,164
---------- ----------
Total interest income............................. 3,996,930 3,178,288
---------- ----------
Interest expense:
Deposits.................................................. 1,902,539 1,533,995
Federal Home Loan Bank advances........................... 434,308 233,768
---------- ----------
Total interest expense............................ 2,336,847 1,767,763
---------- ----------
Net interest income............................... 1,660,083 1,410,525
Provision for loan losses................................... 95,925 42,760
---------- ----------
Net interest income after provision for loan
losses.......................................... 1,564,158 1,367,765
---------- ----------
Noninterest income:
Service charges on deposit accounts....................... 168,650 143,734
Other service charges and fees............................ 81,161 77,256
Gain on sale of developed real estate..................... -- 22,762
Other..................................................... 13,004 11,086
---------- ----------
Total noninterest income.......................... 262,815 254,838
---------- ----------
Noninterest expenses:
Salaries and employee benefits............................ 494,312 507,171
Occupancy expense......................................... 236,902 211,419
Data processing........................................... 59,774 54,499
Legal and professional.................................... 27,844 31,013
Federal deposit insurance premium......................... 6,892 6,161
Stationary and office supplies............................ 44,510 33,000
Other expense............................................. 164,169 185,014
---------- ----------
Total noninterest expenses........................ 1,034,403 1,028,277
---------- ----------
Earnings before income taxes................................ 792,570 594,326
Income taxes...................................... 296,385 220,685
---------- ----------
Net earnings................................................ $ 496,185 $ 373,641
========== ==========
Basic earnings per share.................................... $ 2.93 $ 2.21
========== ==========
Diluted earnings per share.................................. $ 2.93 $ 2.21
========== ==========
Dividends per share......................................... $ 0.75 $ 0.75
========== ==========

See Accompanying Notes to Condensed Consolidated Financial Statements.

F-60

CF BANCSHARES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2001

COMMON STOCK ADDITIONAL TOTAL
----------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
-------- ------ ---------- ---------- -------------

Balance at December 31, 2000.............. $169,015 $1,690 $1,432,258 $6,308,559 $7,742,507
Net earnings for the six months ended
June 30, 2001 (unaudited)............ -- -- -- 496,185 496,185
Cash dividends.......................... -- -- -- (126,949) (126,949)
Shares issued........................... 330 3 3,297 -- 3,300
-------- ------ ---------- ---------- ----------
Balance at June 30, 2001 (unaudited)...... $169,345 $1,693 $1,435,555 $6,677,795 $8,115,043
======== ====== ========== ========== ==========

See Accompanying Notes to Condensed Consolidated Financial Statements.

F-61

CF BANCSHARES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

SIX MONTHS ENDED JUNE 30,
--------------------------
2001 2000
----------- ------------

Cash flows from operating activities:
Net earnings.............................................. $ 496,185 $ 373,641
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation........................................... 128,853 125,407
Provision for loan losses.............................. 95,925 42,760
Amortization of premiums on securities held to
maturity.............................................. 15,779 10,257
Decrease (increase) in accrued interest receivable and
other assets.......................................... 60,847 (235,637)
Proceeds from sale of development lots................. -- 59,092
Cost of development of real estate..................... -- (36,330)
Gain on sale of developed lots......................... -- (22,762)
Write down of foreclosed real estate................... 1,000 --
Increase in other liabilities.......................... 65,701 137,073
Decrease in income taxes payable....................... -- (143,029)
Decrease (increase) in income taxes receivable......... 1,611 (81,286)
----------- ------------
Net cash provided by operating activities......... 865,901 229,186
----------- ------------
Cash flows from investing activities:
Principal paydowns of securities held to maturity......... 437,203 177,668
Purchase of securities held to maturity................... -- (706,354)
Net increase in loans..................................... (5,665,974) (11,349,879)
Purchase of Federal Home Loan Bank stock.................. (150,000) (175,600)
Net purchases of premises and equipment................... (48,078) (25,129)
----------- ------------
Net cash used in investing activities............. (5,426,849) (12,079,294)
----------- ------------
Cash flows from financing activities:
Net increase in deposits.................................. 7,074,238 11,358,645
Cash dividends paid....................................... (126,949) (126,762)
Net increase in Federal Home Loan Bank advances........... 3,000,000 4,000,000
Issuance of common stock.................................. 3,300 4,600
----------- ------------
Net cash provided by financing activities......... 9,950,589 15,236,483
----------- ------------
Net increase in cash and cash equivalents......... 5,389,641 3,386,375
Cash and cash equivalents at beginning of period.......... 4,494,041 3,221,715
----------- ------------
Cash and cash equivalents at end of period................ $ 9,883,682 $ 6,608,090
=========== ============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest.................. $ 2,337,116 $ 1,750,723
=========== ============
Cash paid during the period for income taxes.............. $ 295,000 $ 445,000
=========== ============

See Accompanying Notes to Condensed Consolidated Financial Statements.

F-62

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

In the opinion of management, the accompanying condensed consolidated
financial statements of CF Bancshares, Inc. (the "Company") contain all
adjustments (consisting principally of normal recurring accruals) necessary to
present fairly the financial position at June 30, 2001, and the results of
operations and the cash flows for the six-month periods ended June 30, 2001 and
2000. The results of operations for the six months ended June 30, 2001 are not
necessarily indicative of the results to be expected for the full year.

2. LOAN IMPAIRMENT AND LOSSES

At June 30, 2001 and 2000 management had not identified any impaired loans.
The activity in the allowance for loan losses is as follows:

JUNE 30,
-------------------
2001 2000
-------- --------

Balance at beginning of period.............................. $289,041 $282,257
Provision for loan losses................................... 95,925 42,760
Loan charge-offs............................................ (48,605) (87,238)
Recoveries.................................................. 6,000 8,000
-------- --------
Balance at end of period.................................... $342,361 $245,779
======== ========

3. EARNINGS PER SHARE ("EPS")

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations ($ in thousands, except per
share amounts).

SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------
2001 2000
----------------------------- -----------------------------
WEIGHTED- PER WEIGHTED- PER
AVERAGE SHARE AVERAGE SHARE
EARNINGS SHARES AMOUNT EARNINGS SHARES AMOUNT
-------- --------- ------ -------- --------- ------

Basic EPS:
Net earnings available to common
stockholders.......................... $496 169,279 $2.93 $374 168,880 $2.21
==== ===== ==== =====
Effect of dilutive securities:
Incremental shares from assumed exercise
of options............................ -- 129
------- -------
Diluted EPS:
Net earnings available to common
stockholders and assumed
conversions........................... $496 169,279 $2.93 $374 169,009 $2.21
==== ======= ===== ==== ======= =====

4. REGULATORY MATTERS

The Savings Bank is subject to various regulatory capital requirements
administered by various regulatory banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Savings Bank must meet specific capital guidelines that involve quantitative
measures of the Savings Bank's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory

F-63

CF BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) -- (CONTINUED)

4. REGULATORY MATTERS -- (CONTINUED)

accounting practices. The Savings Bank's capital amounts and classification are
also subject to qualitative judgements by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Savings Bank to maintain minimum amounts and percentages (set forth
in the table below) of total and Tier I capital (as defined in the regulations)
to risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, at June 30, 2001, that the
Savings Bank meets all capital adequacy requirements to which it is subject.

As of June 30, 2001, the most recent notification from the regulatory
authorities categorized the Savings Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Savings Bank must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage percentages as set forth in the table. There are
no conditions or events since that notification that management believes have
changed the Savings Bank's category. The Savings Bank's actual capital amounts
and percentages are also presented in the table (dollars in thousands).

MINIMUM
TO BE WELL
CAPITALIZED
UNDER
PROMPT
FOR CAPITAL CORRECTIVE
ADEQUACY ACTION
ACTUAL PURPOSES PROVISIONS
-------------- ------------- --------------
AMOUNT % AMOUNT % AMOUNT %
------ ----- ------ ---- ------ -----

AT JUNE 30, 2001:
Total capital (to Risk-Weighted Assets).......... $7,811 11.86% $5,269 8.00% $6,586 10.00%
Tier I Capital (to Risk-Weighted Assets)......... 7,469 11.34 2,635 4.00 3,952 6.00
Tier I Capital (to Average Assets)............... 7,469 7.20 4,149 4.00 5,187 5.00

5. MERGER

F-64

ANNEX A
REORGANIZATION AGREEMENT AND PLAN OF MERGER

This Reorganization Agreement and Plan of Merger ("Plan of Merger") is
entered into this 30th day of August, 2001, by and between The Banc Corporation,
a Delaware corporation ("TBC"), The Bank, an Alabama bank ("The Bank"), TBC
Merger Corporation, a Florida corporation (the "Subsidiary"), CF Bancshares,
Inc., a Florida corporation ("CF Bancshares"), and Citizens Federal Savings Bank
of Port St. Joe, a federal savings association ("Citizens Federal").

RECITALS:

WHEREAS, TBC is a financial holding company existing under the laws of the
State of Delaware with its principal office at 17 North Twentieth Street,
Birmingham, Alabama 35203, owns all of the issued and outstanding shares of The
Bank, and the Subsidiary.

WHEREAS, The Bank is a bank chartered under the laws of the State of
Alabama with its principal office at 17 North Twentieth Street, Birmingham,
Alabama 35203.

WHEREAS, the Subsidiary is a corporation existing under the laws of the
State of Florida with its principal office at 17 North Twentieth Street,
Birmingham, Alabama 35203.

WHEREAS, CF Bancshares is a unitary thrift holding company existing under
the laws of the State of Florida, with its principal office at 401 Cecil G.
Costin, Sr. Boulevard, Port St. Joe, Florida 32457, and owns all of the issued
and outstanding shares of Citizens Federal.

WHEREAS, Citizens Federal is a federally chartered savings association with
its principal office at 401 Cecil G. Costin, Sr. Boulevard, Port St. Joe,
Florida 32457.

WHEREAS, the respective Boards of Directors of TBC, the Subsidiary, The
Bank, Citizens Federal and CF Bancshares have determined that it is in the best
interests and welfare of TBC, the Subsidiary and CF Bancshares, respectively,
and in the best interests of their respective stockholders that first the
Subsidiary and CF Bancshares merge, second CF Bancshares and TBC merge, and
third The Bank and Citizens Federal merge on the terms and conditions
hereinafter set forth.

WHEREAS, the respective Boards of Directors of TBC, the Subsidiary, The
Bank, Citizens Federal and CF Bancshares have, by resolutions, approved and
authorized the execution and delivery of this Plan of Merger and the merger of
the Subsidiary with and into CF Bancshares (the "Merger") on the terms and
conditions set forth herein.

WHEREAS, subsequent to the Merger, CF Bancshares shall merge with and into
TBC immediately following the Merger (the "Subsidiary Merger").

WHEREAS, subsequent to the Merger and the Subsidiary Merger, Citizens
Federal Bank shall merge with and into The Bank (the "Bank Merger").

THEREFORE, in consideration of the mutual covenants, promises, agreements
and provisions contained herein and subject to the satisfaction of the terms and
conditions set forth herein, and intending to be legally bound hereby, TBC, the
Subsidiary, The Bank, Citizens Federal and CF Bancshares agree as follows:

SECTION 1

THE MERGER

1.1 The Mergers.

(a) The Merger. Upon the terms and conditions of this Plan of Merger,
including the receipt of all requisite governmental and shareholder
approvals, and in accordance with the Florida Business Corporation Act (the
"FBCA") at the Effective Time, (i) the Subsidiary shall merge with and into

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CF Bancshares; (ii) the separate existence of the Subsidiary shall cease;
(iii) CF Bancshares shall continue as the surviving entity, (CF Bancshares,
in its capacity as the corporation surviving the Merger, is hereinafter
sometimes referred to as the "Surviving Corporation"); and (iv) CF
Bancshares shall be a wholly owned subsidiary of TBC.

(b) The Subsidiary Merger. Subsequent to the Effective Time of the
Merger, upon the terms and conditions of this Plan of Merger, including
receipt of all requisite governmental and shareholder approvals, and in
accordance with the FBCA and the General Corporation Law of the State of
Delaware ("DGCL"), (i) CF Bancshares shall merge with and into TBC; (ii)
the separate existence of CF Bancshares shall cease; and (iii) TBC shall
continue as the surviving entity.

(c) The Bank Merger. Subsequent to the Merger and the Subsidiary
Merger, upon the terms and conditions of this Plan of Merger, including
receipt of all requisite governmental and shareholder approvals, and in
accordance with the Alabama Business Corporation Act (the "ABCA") and the
regulations of the Office of Thrift Supervision (the "OTS"), (i) Citizens
Federal shall merge with and into The Bank; (ii) the separate existence of
Citizens Federal shall cease, and (iii) The Bank shall continue as the
surviving entity.

1.2 The Closing. The closing of the Merger, the Subsidiary Merger and The
Bank Merger (the "Closing") shall be no later than the second business day
following the satisfaction of the conditions specified in Section 8 of this Plan
of Merger (the "Closing Date"). The Closing Date may be extended from time to
time by the mutual agreement of the parties. The Closing shall take place at
10:00 a.m. at the offices of Haskell Slaughter Young & Rediker, L.L.C. on the
Closing Date or at such other place as the parties may agree. At the Closing,
the parties shall exchange the various agreements, certificates, instruments and
documents to be delivered pursuant to the terms of this Plan of Merger.

1.2 Effective Time.

(a) Effective Time of the Merger. Subject to the provisions of this
Plan of Merger, Articles of Merger, substantially in the form of Exhibit
1.3(a), shall be duly executed and, on the Closing Date (as defined in
section 1.2 hereof) or as soon thereafter as reasonably practicable but no
later than twenty days after the Closing Date, filed with the Secretary of
State of the state of Florida (the "Florida Secretary of State") in
accordance with the FBCA. The Merger shall become effective upon the filing
of the Articles of Merger with the Florida Secretary of State (the
"Effective Time").

(b) Effective Time of the Subsidiary Merger. Articles of Merger and a
Certificate of Merger, substantially in the form of Exhibit 1.3(b), shall
be duly executed and filed with the Florida Secretary of State and the
Secretary of State of the State of Delaware (the "Delaware Secretary of
State") in accordance with the FBCA and DGCL. The Subsidiary Merger shall
become effective upon the filing of the Articles of Merger with the Florida
Secretary of State and the Certificate of Merger with the Delaware
Secretary of State.

(c) Effective Time of the Bank Merger. Articles of Merger,
substantially in the form of Exhibit 1.3(c), shall be duly executed and
filed with the Secretary of State of the State of Alabama in accordance
with the ABCA and with the OTS. The Bank Merger shall become effective upon
the filing of the Articles of Merger with the Alabama Secretary of State.

1.4 Effect of the Mergers. The Merger shall have the effect provided in
Section 658.45 of the FBCA. The Subsidiary Merger shall have the effect provided
in Section 658.45 of the FBCA and Section 259 of the DGCL. The Bank Merger shall
have the effect provided in Section 10-2B-11.06 of the ABCA.

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SECTION 2

EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of CF Bancshares Common
Stock:

(a) Conversion of Shares. At the Effective Time of the Merger, all of
the issued and outstanding shares of the CF Bancshares Common Stock (except
those exercising dissenter's rights of appraisal, as described in Section
2.3) will be converted into the right to receive the total amount of
$15,250,000, plus 50% of CF Bancshares' net earnings after June 30, 2001
until the Closing Date, in cash or TBC Common Stock valued at its then
current market value (the "Merger Consideration"). A CF Bancshares
stockholder may elect to receive either cash or TBC Common Stock in
exchange for the shares of CF Bancshares Common Stock owned by such
stockholder as set forth in Section 2.1(b). In either case, each share of
CF Bancshares Common Stock is entitled to participate pro rata in the
Merger Consideration. The market value of TBC Common Stock means the
average last sale price for shares of TBC Common Stock for the 20
consecutive trading days (as reported to TBC by Nasdaq), ending at the
close of trading on the third trading day immediately preceding the
shareholder meeting to vote on the Plan of Merger. As of the Effective
Time, by virtue of the Merger and without any action on the part of any
holder of shares of CF Bancshares Common Stock, each share of the CF
Bancshares Common Stock issued and outstanding immediately prior to the
Effective Time shall cease to be outstanding and shall automatically be
canceled and retired. The holders of CF Bancshares Common Stock shall cease
to have any rights with respect to such shares except as otherwise provided
herein or by law.

(b) Election Procedure. Holders of CF Bancshares Common Stock shall
be provided with an opportunity to elect to receive cash consideration in
lieu of receiving shares of TBC Common Stock in the Merger, in accordance
with the election procedures set forth below. Holders who are to receive
cash shall receive an amount in cash (the "Per Share Cash Consideration")
in respect of each share of CF Bancshares Common Stock that is so converted
equal to the holder's pro rata share of the Merger Consideration.

An election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing CF Bancshares
Common Stock (the "Old Certificates") shall pass, only upon proper delivery
of such Old Certificates to SunTrust Bank or such bank or trust company as
may be designated by TBC and which is reasonably acceptable to CF
Bancshares (the "Exchange Agent")) in such form as TBC and CF Bancshares
shall mutually agree (the "Election Form") shall be mailed within five
business days of the Effective Time or on such other date as CF Bancshares
and TBC shall mutually agree (the "Mailing Date") to each holder of record
of CF Bancshares Common Stock as of five business days prior to the Mailing
Date (the "Election Form Record Date").

Each Election Form shall permit a holder (or the beneficial owner
through appropriate and customary documentation and instructions) of CF
Bancshares Common Stock to elect to receive cash with respect to all or a
portion of such holder's CF Bancshares Common Stock (shares as to which the
election is made being referred to as "Cash Election Shares").

Any shares of CF Bancshares Common Stock with respect to which the
holder (or the beneficial owner, as the case may be) shall not have
submitted to the Exchange Agent an effective, properly completed Election
Form on or before 5:00 p.m. on the 60th day following the Mailing Date (or
such other time and date as TBC and CF Bancshares may mutually agree) (the
"Election Deadline") shall be converted into shares of TBC Common Stock as
set forth in Section 2.1(a) of this Plan of Merger (such shares being
referred to as "No Election Shares").

TBC shall make available one or more Election Forms as may be
reasonably requested by all persons who become holders (or beneficial
owners) of CF Bancshares Common Stock between the Election Form Record Date
and the close of business on the business day prior to the Election
Deadline, and
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CF Bancshares shall provide to the Exchange Agent all information
reasonably necessary for it to perform as specified herein.

Any such election shall have been properly made only if the Exchange
Agent shall have actually received a properly completed Election Form by
the Election Deadline. An Election Form shall be deemed properly completed
only if accompanied by one or more certificates (or customary affidavits
and indemnification regarding the loss or destruction of such certificates
or guaranteed delivery of such certificates) representing all shares of CF
Bancshares Common Stock covered by such Election Form, together with duly
executed transmittal materials included in the Election Form. Any Election
Form may be revoked or changed by the person submitting such Election Form
at or prior to the Election Deadline. In the event an Election Form is
revoked prior to the Election Deadline, the shares of CF Bancshares Common
Stock represented by such Election Form shall become No Election Shares and
TBC shall send or shall cause the Exchange Agent to send to such person
submitting the Election Form any transmittal materials necessary for such
person to receive No Election Shares. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial defects
in the Election Forms, and any good faith decisions of the Exchange Agent
regarding such matters shall be binding and conclusive. In the event an
election was timely made but contains a defect, the Exchange Agent shall
notify the holder of CF Bancshares Common Stock of such defect and such
holder shall have twenty business days to correct such defect and return
the properly completed Election Form to the Exchange Agent.

(c) Anti-Dilution Provisions. The Merger Consideration shall be
amended to reflect any TBC or CF Bancshares stock split or stock dividend
or reclassification (a "Stock Event"), so that, at the Effective Time, each
CF Bancshares shareholder (except those choosing cash, or those effectively
exercising their dissenters rights of appraisal, as described in Section
2.3) shall be entitled to receive a number of shares of TBC Common Stock
equal to what such shareholder would have received if the shares of TBC
Common Stock had been issued immediately prior to the Stock Event.

2.2 Exchange of Certificates. TBC shall deliver, or cause its Exchange
Agent to deliver, to the holders of certificates evidencing ownership of CF
Bancshares Common Stock, within fifteen business days of receipt from the
holders thereof of such certificates, duly executed and in proper form for
transfer, the Merger Consideration to which they are entitled pursuant to the
following provisions:

(a) At or prior to the Effective Time, TBC shall deposit or shall
cause to be deposited in a separate account at The Bank as of the Effective
Time, for the benefit of the holders of CF Bancshares Common Stock, for
exchange in accordance with this Section 2, through the Exchange Agent,
certificates representing the shares of TBC Common Stock and $15,250,000
plus 50% of CF Bancshares' net earnings after June 30, 2001 until the
Closing date (such shares of TBC Common Stock, together with any dividends
or distributions with respect thereto with a record date after the
Effective Time but prior to their exchange, being hereinafter referred to
as the "Exchange Fund") to be paid pursuant to Sections 2.1 and 2.2 in
exchange for outstanding shares of CF Bancshares Common Stock.

(b) Within five business days of the Effective Time or such other date
as CF Bancshares and TBC shall mutually agree, TBC shall send or cause to
be sent a notice and transmittal form in such form as TBC and CF Bancshares
shall mutually agree (the "Letter of Transmittal") (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and shall be in such form and have such other provisions
as the parties may reasonably specify) together with the Election Form to
each record holder of a certificate evidencing CF Bancshares Common Stock,
advising such holder of the Merger and the procedure for surrendering to
TBC such certificate in exchange for such holder's pro rata share of the
Merger Consideration. Each holder of such certificate, upon surrender of
the same to TBC in accordance with such Letter of Transmittal, shall be
entitled to receive such holder's pro rata share of the Merger
Consideration.

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(c) No transfer taxes shall be payable by any holder of record of CF
Bancshares Common Stock at the Effective Time in respect of the exchange of
certificates for the Merger Consideration. If the Merger Consideration for
the CF Bancshares Common Stock provided for herein is to be delivered to
any person other than the registered holder of the CF Bancshares Common
Stock surrendered for exchange, the amount of any stock-transfer or similar
taxes (whether imposed on the holder of record or such person) payable on
account of the transfer to such person shall be paid to TBC by such person.
TBC may refuse to make such exchange unless satisfactory evidence of the
payment of such taxes or exemption therefrom is submitted.

(d) After the Effective Time, each outstanding certificate which
theretofore represented CF Bancshares Common Stock shall, until surrendered
for exchange in accordance with this Section 2.2, be deemed for all
purposes to evidence only the right to receive the Merger Consideration.
After the Effective Time, there shall be no further registration or
transfer of CF Bancshares Common Stock. No dividends or other distributions
which are declared on TBC Common Stock will be paid to persons otherwise
entitled to receive the same until the certificates representing CF
Bancshares Common Stock have been surrendered in the manner herein
provided, but upon such surrender, such dividends or other distributions,
from and after the Effective Time, will be paid to such persons. In no
event shall the persons entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions.

(e) Notwithstanding anything to the contrary set forth herein, if any
holder of CF Bancshares Common Stock shall be unable to surrender his or
her certificates because such certificates have been lost or destroyed,
such holder may deliver in lieu thereof a lost certificate affidavit in
form and substance and with surety satisfactory to TBC.

(f) No certificates or scrip representing fractional shares of TBC
Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of TBC.
Notwithstanding any other provision of this Plan of Merger, each holder of
CF Bancshares Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of TBC Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal
to such fractional part of a share of TBC Common Stock multiplied by the
Closing Date Trading Price.

(g) After the Election Deadline, the portion of the Exchange Fund not
allocated as Per Share Cash Consideration pursuant to the proper election
of cash by holders of CF Bancshares Common Stock shall be delivered to TBC.
In addition prior to the Election Deadline, the cash in the Exchange Fund
shall be reduced by the pro rata share of the Merger Consideration of each
holder of CF Bancshares Common Stock upon the receipt of such holder's
Letter of Transmittal. Any portion of the Exchange Fund which remains
undistributed to the holders of the Certificates for six months after the
Effective Time shall be delivered to TBC, upon demand, and any holders of
the Certificates who have not theretofore complied with this Section 2
shall thereafter look only to TBC for payment of TBC Common Stock, any cash
in lieu of fractional shares of TBC Common Stock and any dividends or
distributions with respect to TBC Common Stock.

2.3 Dissenting Shareholders. Any shares of CF Bancshares Common Stock
held by persons who have perfected their dissenters rights under the FBCA, and
have not effectively withdrawn or lost their dissenters rights under the FBCA,
shall not be converted pursuant to this Plan of Merger but shall be entitled
only to such rights as are granted them by the dissenters rights provisions of
the FBCA. Dissenting shareholders entitled to payment for shares of CF
Bancshares stock pursuant to the Florida dissenters rights statute shall receive
payment from TBC in an amount as determined pursuant to the FBCA.

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2.4 Articles of Incorporation of the Surviving Corporations.

(a) The Merger. The articles of incorporation of CF Bancshares shall
be in effect immediately prior to the Effective Time and will remain the
articles of incorporation of CF Bancshares until amended or repealed in
accordance with their provisions and applicable law.

(b) The Subsidiary Merger. The certificate of incorporation of TBC in
effect immediately prior to the Subsidiary Merger shall remain the
certificate of incorporation of TBC from and after the Subsidiary Merger
until amended or repealed in accordance with its provisions and applicable
law.

(c) The Bank Merger. The articles of incorporation of The Bank in
effect immediately prior to the Bank Merger shall remain the articles of
incorporation of The Bank from and after the Bank Merger until amended or
repealed in accordance with its provisions and applicable law.

2.5 Bylaws of the Surviving Corporations.

(a) The Merger. The bylaws of the Subsidiary shall be in effect
immediately prior to the Effective Time and will remain the bylaws of the
Surviving Corporation until amended or repealed in accordance with their
provisions and applicable law.

(b) The Subsidiary Merger. The bylaws of TBC in effect immediately
prior to the Subsidiary Merger shall remain the bylaws of TBC from and
after the Subsidiary Merger until amended or repealed in accordance with
their provisions and applicable law.

(c) The Bank Merger. The bylaws of The Bank in effect immediately
prior to the Bank Merger shall remain the bylaws of The Bank from and after
the Bank Merger until amended or repealed in accordance with their
provisions and applicable law.

2.6 Capitalization of the Surviving Corporation. The combined
capitalization of CF Bancshares and the Subsidiary immediately prior to the
Effective Time shall be the capitalization of the Surviving Corporation until
changed by resolution of the Board of Directors or by action of its shareholders
(as adjusted for payout of merger consideration as necessary).

2.7 Directors and Officers of the Surviving Corporation.

(a) The Merger. The directors and officers of Subsidiary immediately
following the Effective Time shall be the directors and officers of the
Surviving Corporation to serve until their successors have been elected or
qualified or until their resignation or removal according to law and the
bylaws of the Surviving Corporation.

(b) The Subsidiary Merger. The directors and officers of TBC
immediately prior to the Subsidiary Merger shall be the directors and
officers of TBC to serve until their successors have been elected or
qualified or until their resignation or removal according to applicable law
and the bylaws of TBC.

(c) The Bank Merger. The directors and officers of The Bank
immediately prior to the Bank Merger shall be the directors and officers of
The Bank to serve until their successors have been elected or qualified or
until their resignation or removal according to applicable law and the
bylaws of The Bank.

SECTION 3

REPRESENTATIONS AND WARRANTIES OF CF BANCSHARES AND CITIZENS FEDERAL

Except as set forth in the Disclosure Schedule delivered to TBC by CF
Bancshares and Citizens Federal (the "CF Bancshares Disclosure Schedule") within
five business days of execution of this Plan of Merger, CF Bancshares and
Citizens Federal hereby represent and warrant to TBC, as of the date hereof and
up to and including the Closing Date as follows (all representations and
warranties by CF Bancshares include its subsidiaries):

3.1 Organization of CF Bancshares. CF Bancshares is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, with full corporate power and authority, and
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possesses all material governmental, regulatory and other permits, licenses and
authorizations necessary to carry on its business as now conducted and to own
and operate the properties and assets it owns or operates, to enter into this
Plan of Merger and the Merger and to perform its obligations thereunder. CF
Bancshares is duly qualified or licensed to transact business as a foreign
corporation in good standing in the states and foreign jurisdictions where the
character of its assets or the nature or conduct of the business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a material adverse effect on the business, operations,
properties or assets, or the condition, financial or otherwise, of CF
Bancshares. The deposit accounts of Citizens Federal are insured by the Savings
Association Insurance Fund (the "SAIF") to the full extent permitted under
applicable law and the rules and regulations of the SAIF.

3.2 CF Bancshares Capital Stock.

(a) CF Bancshares' authorized capital stock consists solely of
5,000,000 shares of common stock, $.01 par value per share, of which
169,345 shares are outstanding, all of which are fully paid, validly issued
and outstanding and 1,000,000 shares of preferred stock of which no shares
are issued and outstanding.

(b) Other than Citizens Federal and Citizens Properties, Inc. or as
otherwise set forth on the CF Bancshares Disclosure Schedule, CF Bancshares
does not own directly, beneficially or of record, more than five percent of
the outstanding stock of any other corporation and does not otherwise
control any company or bank.

(c) CF Bancshares has no outstanding securities convertible into
shares of capital stock or existing options, warrants, calls, commitments
or other rights of any character granted or entered into by CF Bancshares
relating to its authorized, issued or unissued capital stock, and no such
rights will be granted or entered into.

(d) There are no outstanding or unsatisfied preemptive rights or
rights of first refusal with respect to CF Bancshares' capital stock.

(e) No additional shares of CF Bancshares' capital stock will be
issued between the date hereof and the Effective Time.

(f) Attached to the CF Bancshares Disclosure Schedule are copies, as
of the date of such letter, of CF Bancshares' articles of incorporation and
bylaws, both certified to be complete and correct by the Cashier or
Secretary of CF Bancshares, the same to remain unchanged up to the
Effective Time.

3.3 Subsidiaries and Assets. CF Bancshares (other than Citizens Federal
and Citizens Properties, Inc.) does not have any direct or indirect subsidiaries
and does not have any interest in any partnership, firm, association,
corporation or joint venture other than investment securities purchased and
loans made in the regular and usual course of its business.

3.4 Financial Statements. CF Bancshares has delivered to TBC balance
sheets of CF Bancshares as of December 31, 2000 and 1999, and June 30, 2001, the
related statements of operations, changes in shareholders' equity and changes in
financial position or statements of cash flows for the periods then ended, and
the related notes and related opinions thereon as applicable (the "CF Bancshares
Financial Statements"). The CF Bancshares Financial Statements, as and when
prepared, (i) with the exception of the statements for and as of the period
ended June 30, 2001, have been audited, (ii) present fairly the financial
condition of CF Bancshares as of the respective dates indicated and the results
of operations, the changes in shareholders equity, the changes in financial
position and cash flows for the respective periods indicated; (iii) have been
prepared in accordance with generally accepted accounting principles ("GAAP") as
to audited statements and in a manner consistent with past practice as to
unaudited statements; (iv) contain and reflect reserves for all material accrued
liabilities and for all reasonably anticipated losses, including but not limited
to appropriate reserves for loan and lease losses; and (v) are based on the
books and records of CF Bancshares and Citizens Federal.

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3.5 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the CF Bancshares Financial Statements or
disclosed in the CF Bancshares Disclosure Schedule, CF Bancshares has no
material liabilities or obligations whether accrued, absolute, contingent or
otherwise, including governmental charges or lawsuits, or any tax liabilities
due or to become due and whether (i) incurred in respect of or measured by the
income of CF Bancshares for any period up to the close of business on the
respective dates of the CF Bancshares Financial Statements, or (ii) arising out
of transactions entered into, or any state of facts existing, prior thereto. CF
Bancshares does not have any liabilities or obligations, either accrued or
contingent, which are material to CF Bancshares and which have not been either
(i) reflected or disclosed in the CF Bancshares audited financial statements for
the year ended December 31, 2000, and provided to TBC in writing; or (ii)
incurred subsequent to December 31, 2000, in the ordinary course of business.

3.6 Absence of Certain Changes or Events. Since December 31, 2000, there
has not been:

(a) any material adverse change in the condition (financial or
otherwise), assets, liabilities or business of CF Bancshares;

(b) any material adverse change in the character of the assets or
liabilities of CF Bancshares;

(c) any capital improvements, except for ordinary maintenance and
repairs, or any purchase of property by CF Bancshares at a cost in excess
of $25,000 other than supplies in the ordinary course of business;

(d) any physical damage, destruction or loss not covered by insurance
exceeding $25,000 in value or affecting in a material and adverse way the
property, assets, business or prospects of CF Bancshares;

(e) any material change in the accounting methods or practices of CF
Bancshares unless required by regulation or GAAP;

(f) any material change in the capital structure of CF Bancshares;

(g) any loss incurred or determined to be probable for CF Bancshares
as a result of environmental problems or a violation of applicable
environmental law or regulation which has or would be expected to have a
material adverse effect on the financial position of CF Bancshares; or

(h) any increase in the compensation payable or to become payable by
CF Bancshares to any officer or employee or any bonus, except bonuses
accrued and reflected on the CF Bancshares Financial Statements, percentage
compensation, service award or other like benefit, granted, made or accrued
or credited to any officer or employee or any pension, retirement or
deferred compensation payment agreed to, other than in accordance with
preexisting plans or normal and customary annual salary reviews and
adjustments and promotional increases.

3.7 Tax Matters. To the best of CF Bancshares' knowledge, CF Bancshares
has filed all federal, state, municipal and local income, excise, property,
special district, sales, transfer and other tax returns and reports of
information statements that are required to be filed and has paid all taxes that
have become due pursuant to such returns or pursuant to any assessment that has
become payable. To the best of CF Bancshares' knowledge, the returns filed by CF
Bancshares have been and will be accurately and properly prepared. Reserves
reflected in the CF Bancshares Financial Statements are accurate and to the
extent that any tax liability or assessment has accrued, but has not yet become
payable or has been proposed for assessment or determination but remains unpaid,
the same has been reflected as a liability on the books and records of CF
Bancshares and the CF Bancshares Financial Statements subject to normal year-end
adjustments. Since December 31, 2000, CF Bancshares has not incurred any
liability with respect to any such taxes except for normal taxes incurred in the
ordinary and regular course of its business. CF Bancshares has not executed or
filed with the Internal Revenue Service or any other taxing authority any
agreement extending the period for the assessment or collection of any income
taxes. There are no examinations, reviews, audits or investigations of any tax
return or report of CF Bancshares that are presently pending or threatened, and
CF Bancshares is not a party to any pending action or proceeding by any
governmental authority for assessment or collection of income taxes and no
notice of a proposed deficiency has been received.
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3.8 Title to Properties; Absence of Liens and Encumbrances; Enforceability
of Leases.

(a) Except as to property indicated in the CF Bancshares Disclosure
Schedule as being leased or mortgaged, CF Bancshares has good and
marketable title to its assets, real and personal (including those
reflected in the CF Bancshares Financial Statements, except for loans and
investments and as thereafter sold or otherwise disposed of in the ordinary
course of business and for adequate consideration), free and clear of all
material mortgages, pledges, liens, charges and encumbrances, except (i)
investment securities that are pledged to secure the deposit of public
monies or monies under the control of any court, (ii) the lien of taxes not
yet due and payable or being contested in good faith by appropriate
proceedings, and (iii) such imperfections of title and encumbrances, if
any, and such liens, if any, incidental to the conduct of CF Bancshares'
business or the ownership of its assets as are not material in amount and
do not affect the value of, or interfere with the present use of, CF
Bancshares' assets or otherwise materially impair its operations.

(b) To the best knowledge of CF Bancshares, the structures and
equipment owned or used by CF Bancshares comply in all material respects
with applicable laws, regulations and ordinances and are in good operating
condition, subject to ordinary wear and tear.

(c) The real property, if any, leased by CF Bancshares is held by it
under valid and enforceable leases. CF Bancshares is not in material
default under any such leases.

3.9 Legal Proceedings. There are no material claims, actions, suits,
proceedings or investigations pending, or to the best knowledge of CF
Bancshares, threatened by or against or otherwise affecting CF Bancshares or its
assets, business or properties, or the transactions contemplated by the Plan of
Merger, or its directors, officers or employees in reference to actions taken by
them in such capacity at law or in equity, or before or by any federal, state,
municipal or other government department, commission, board, agency,
instrumentality or authority, nor to CF Bancshares' knowledge is there any valid
basis for any such action, proceeding or investigation, other than (i) claims by
CF Bancshares in the ordinary course of its business for the recovery of loans
or protection of its interest as a secured or unsecured creditor, and (ii)
claims fully covered by insurance. To the best knowledge of CF Bancshares, it is
in compliance in all material respects with laws, ordinances, rules,
regulations, orders, licenses and permits that are applicable to its business as
now conducted, and it is not in material default under any thereof.

3.10 Authority Relative to This Plan of Merger.

(a) CF Bancshares has the requisite corporate power and authority to
enter into this Plan of Merger and perform its obligations hereunder,
subject to the required vote of its shareholders and to obtaining the
regulatory approvals and other consents contemplated by this Plan of
Merger.

(b) The execution, delivery and performance of this Plan of Merger by
CF Bancshares has been duly authorized and approved by the Board of
Directors of CF Bancshares, subject to the required vote of its
shareholders, and subject to obtaining the regulatory approvals and other
consents contemplated by this Plan of Merger.

(c) This Plan of Merger has been duly executed and delivered by CF
Bancshares and constitutes a valid and binding obligation of CF Bancshares
enforceable in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws affecting creditors' rights generally and principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

(d) The consummation of the transactions contemplated by this Plan of
Merger will not in any material respect conflict with, violate or result in
a material breach of or material default in any (A) term, condition or
provision of the articles of incorporation or bylaws of CF Bancshares; (B)
applicable law, rule, regulation or order of any court or governmental
agency; or (C) material agreement, lease, mortgage, note, contract or
commitment of any kind, oral or written, to which CF Bancshares is a party
or by which its properties may be bound.

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3.11 No Untrue Representations. The documents furnished by CF Bancshares
to TBC (the "CF Bancshares Documents"), including but not limited to the CF
Bancshares Disclosure Schedule and the CF Bancshares Financial Statements, are
true and complete copies of such documents and do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. There is no known fact that CF Bancshares has
not disclosed in the CF Bancshares Documents or otherwise to TBC in writing
which materially and adversely affects the properties, business, prospects,
profits or condition (financial or otherwise) of CF Bancshares or the ability of
CF Bancshares to perform this Plan of Merger, except that CF Bancshares makes no
representation or warranty as to the effect of general economic conditions, the
condition of the financial markets, future legislation or future regulatory
action.

3.12 Employee Benefit Plans.

(a) Except as described in the CF Bancshares Documents or set forth in
the CF Bancshares Disclosure Schedule, CF Bancshares has neither
established nor maintains nor is obligated to make contributions to or
under or otherwise participate in (i) any bonus or other type of incentive
compensation plan, program, agreement, policy, commitment, contract or
arrangement (whether or not set forth in a written document), (ii) any
pension, profit-sharing, retirement or other plan, program or arrangement,
or (iii) any other employee benefit plan, fund or program, including, but
not limited to, those described in Section 3(3) of ERISA. All such plans
(individually, a "Plan" and collectively, the "Plans") have been operated
and administered in all material respects in accordance with, as
applicable, ERISA, the Internal Revenue Code of 1986, as amended, Title VII
of the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1967, as
amended, the Age Discrimination in Employment Act of 1967, as amended, and
the related rules and regulations adopted by those federal agencies
responsible for the administration of such laws. No act or failure to act
by CF Bancshares has resulted in a "prohibited transaction" (as defined in
ERISA) with respect to the Plans that is not subject to a statutory or
regulatory exception. No "reportable event" (as defined in ERISA) has
occurred with respect to any of the Plans which is subject to Title IV of
ERISA. CF Bancshares has not previously made, is not currently making, and
is not obligated in any way to make, any contributions to any
multi-employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980.

(b) Except as described in the CF Bancshares Documents or set forth in
the CF Bancshares Disclosure Schedule, CF Bancshares is not a party to any
oral or written (i) union, guild or collective bargaining agreement which
agreement covers employees in the United States (nor is it aware of any
union organizing activity currently being conducted in respect to any of
its employees), (ii) agreement with any executive officer or other key
employee the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction of the nature
contemplated by this Plan of Merger and which provides for the payment of
in excess of $25,000, or (iii) agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the
vesting the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Plan of Merger or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Plan of Merger.

3.13 Environmental Protection.

(a) To the best of CF Bancshares' knowledge, none of the assets of CF
Bancshares (defined for purposes of this subsection as the real property
and tangible personal property owned or leased by CF Bancshares as of the
date of this Plan of Merger and as of the Effective Time) contain any
hazardous materials, defined as any substance whose nature and/or quantity
or existence, use, manufacture or effect render it subject to federal,
state or local regulation as potentially injurious to public health or
welfare, or to the environment, including, without limitation, friable
asbestos, petroleum products or PCBs ("Hazardous Materials"), other than in
such quantities which are incidental and customary for the maintenance and
operation of such assets, e.g., cleaning fluids and as otherwise permitted
by law ("Incidental Quantities").

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(b) To the best of CF Bancshares' knowledge, no notice or other
communication has been received from any governmental agency having
jurisdiction over CF Bancshares or to the best knowledge of CF Bancshares
from any other person, with respect to any alleged violation by CF
Bancshares of any federal, state or local laws, rules, regulations,
ordinances and codes governing Hazardous Materials and which are applicable
to the assets of CF Bancshares.

(c) To the best of CF Bancshares' knowledge, all Hazardous Materials
which have been remediated from any assets of CF Bancshares prior to or
during their ownership by CF Bancshares have been handled in compliance
with all applicable laws.

(d) To the best of CF Bancshares' knowledge, no collateral securing
any loan made by CF Bancshares, as of the date of this Plan of Merger and
as of the Effective Time, contains any Hazardous Materials, other than in
Incidental Quantities.

3.14 Material Contract Defaults. CF Bancshares is not in default in any
material respect under the terms of any outstanding material contract,
agreement, lease or other commitment, which would have a material adverse effect
on the business, operations, properties or assets, or the condition, financial
or otherwise, of CF Bancshares or under its articles of incorporation or bylaws,
and no event has occurred which, with notice or lapse of time, or both, may be
or become a material default of any such contract, agreement, lease or other
commitment or under the articles of incorporation or bylaws of CF Bancshares.

3.15 Brokers and Finders. Neither CF Bancshares nor any of its officers,
directors or employees have employed any broker or finder or incurred any
liability for any financial advisory, brokerage or finders fees or commissions
and no broker or finder has acted directly or indirectly for CF Bancshares in
connection with this Plan of Merger or the transactions contemplated hereby.

SECTION 4

REPRESENTATIONS AND WARRANTIES OF TBC

Except as set forth in its Disclosure Schedule delivered to CF Bancshares
(the "TBC Disclosure Schedule"), within five business days of execution of this
Plan of Merger, TBC hereby represents and warrants to CF Bancshares as of the
date hereof and up to and including the Closing Date as follows (all
representations and warranties by TBC include its subsidiaries):

4.1 Organization. TBC is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, with full corporate power and
authority, and possesses all material governmental, regulatory and other
permits, licenses and other authorization, necessary to carry on its business as
now conducted and to own and operate the properties and assets it owns or
operates, to enter into this Plan of Merger and the Merger and to perform its
obligations thereunder. TBC is duly qualified or licensed to transact business
as a foreign corporation in good standing in the states and foreign
jurisdictions where the character of its assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the business, operations, properties, or assets, or the condition,
financial or otherwise, of TBC. The deposit accounts of The Bank are insured by
the Bank Insurance Fund to the full extent permitted under applicable law and
the rules and regulations of the Bank Insurance Fund.

4.2 TBC Capital Stock.

(a) The authorized capital stock of TBC consists solely of 25,000,000
shares of common stock of which [14,294,755] shares of common stock are
fully paid, validly issued and outstanding and 5,000,000 shares of
preferred stock of which no shares are issued and outstanding. TBC Common
Stock issued in this Merger will be, when issued, duly authorized, validly
issued, fully paid and nonassessable.

(b) Other than as set forth on the TBC Disclosure Schedule, TBC does
not own directly or indirectly, beneficially or of record, more than five
percent of the outstanding stock of any other corporation and does not
otherwise control any company or bank.

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(c) Other than as set forth on the TBC Disclosure Schedule, there are
not, and as of the Effective Time and thereafter there will not be,
outstanding securities convertible into or exercisable or exchangeable for
TBC Common Stock or TBC's preferred stock.

(d) There are no outstanding or unsatisfied preemptive rights or
rights of first refusal with respect to TBC Common Stock or TBC's preferred
stock.

(e) Except as disclosed to CF Bancshares in the TBC Disclosure
Schedule, as of the date of this Agreement there are, and as of the Closing
Date and thereafter there will be, no outstanding agreements, arrangements,
or understandings of any kind, to which TBC is a party, affecting or
relating to the voting, issuance, purchase, redemption, repurchase, or
transfer of the TBC Common Stock or any other securities of TBC or The
Bank.

(f) Attached to the TBC Disclosure Schedule are copies of TBC's
articles of incorporation and bylaws, certified to be complete and correct
by the Secretary of such entity, the same to remain unchanged up to the
Effective Time.

4.3 Subsidiaries and Assets. TBC (except as set forth on the TBC
Disclosure Schedule) does not have any direct or indirect subsidiaries and does
not have any interest in any partnership, firm, association, corporation, or
joint venture other than investment securities purchased and loans made in the
regular and usual course of its business.

4.4 TBC Public Information and Financial Statements. TBC has made
available to CF Bancshares a true and complete copy of each report, schedule, or
definitive proxy statement (as such documents since the time of their original
filing may have been amended, the "TBC Documents") that it was required to file
with the Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934. The TBC Documents contain balance sheets of TBC as of
December 31, 2000 and 1999 and June 30, 2001, and the related statements of
operations, changes in shareholders' equity, and changes in financial position
or statements of cash flows for the year then ended, and the related notes and
related opinions thereon as applicable ("TBC Financial Statements"). TBC
Financial Statements, as and when prepared, (i) with the exception of the
statements for and as of the period ended June 30, 2001, have been audited, (ii)
present fairly the financial condition of TBC as of the date indicated and the
results of operations, the changes in shareholders equity, the changes in
financial position and cash flows for the respective periods indicated; (iii)
have been prepared in accordance with generally accepted accounting principles
("GAAP") as to audited statements and in a manner consistent with past practice
as to unaudited statements; (iv) contain and reflect reserves for all material
accrued liabilities and for all reasonably anticipated losses, including but not
limited to appropriate reserves for loan and lease losses; and (v) are based on
the books and records of TBC.

4.5 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in TBC Financial Statements or disclosed in the
TBC Documents or the TBC Disclosure Schedule, TBC has no material liabilities or
obligations whether accrued, absolute, contingent or otherwise, including,
governmental charges or lawsuits, or any tax liabilities due or to become due
and whether (i) incurred in respect of or measured by the income of TBC for any
period up to the close of business on the respective dates of the TBC Financial
Statements, or (ii) arising out of transactions entered into, or any state of
facts existing, prior thereto. TBC has no liabilities or obligations, either
accrued or contingent, which are material to TBC and which have not been either
(i) reflected or disclosed in the audited financial statements of TBC for the
year ended December 31, 2000, and provided to CF Bancshares in writing; or (ii)
incurred subsequent to December 31, 2000, in the ordinary course of business.

4.6 Absence of Certain Changes or Events. Since December 31, 2000, there
has not been:

(a) any material adverse change in the condition (financial or
otherwise), of the assets, liabilities or business of TBC;

(b) any material adverse change in the character of the assets or
liabilities of TBC;

(c) any capital improvements, except for ordinary maintenance and
repairs, or any purchase of property by TBC at a cost in excess of $100,000
other than supplies in the ordinary course of business;
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(d) any physical damage, destruction or loss not covered by insurance
exceeding $100,000 in value or affecting in a material and adverse way the
property, assets, business or prospects of TBC;

(e) any material change in the accounting methods or practices of TBC
unless required by law or GAAP;

(f) any material change in the capital structure of TBC;

(g) any loss incurred or determined to be probable for TBC as a result
of environmental problems or a violation of applicable environmental law or
regulation which has or would be expected to have a material adverse effect
on the financial position of TBC; or

(h) any increase in the compensation payable or to become payable by
TBC to any officer or employee or any bonus, except bonuses accrued and
reflected on the December 31, 2000 TBC Financial Statements, percentage
compensation, service award or other like benefit, granted, made or accrued
or credited to any officer or employee or any pension, retirement, or
deferred compensation payment agreed to, other than in accordance with
preexisting plans or normal and customary annual salary reviews and
adjustments and promotional increases.

4.7 Tax Matters. To the best of TBC's knowledge, TBC has filed all
federal, state, municipal and local income, excise, property, special district,
sales, transfer and other tax returns and reports of information statements that
are required to be filed and have paid all taxes that have become due pursuant
to such returns or pursuant to any assessment that has become payable. To the
best of TBC's knowledge, the returns filed by TBC have been and will be
accurately and properly prepared. Reserves reflected in the TBC Financial
Statements are accurate and to the extent that any tax liability or assessment
has accrued, but has not yet become payable or has been proposed for assessment
or determination but remains unpaid, the same has been reflected as a liability
on the books and records of TBC and the TBC Financial Statements subject to
normal year-end adjustments. Since December 31, 2000, TBC has not incurred any
liability with respect to any such taxes except for normal taxes incurred in the
ordinary and regular course of its business. TBC has not executed or filed with
the Internal Revenue Service or any other taxing authority any agreement
extending the period for assessment or collection of any income taxes. There are
no examinations, reviews, audits or investigations of any tax return or report
of TBC that is presently pending or threatened, and TBC is not a party to any
pending action or proceeding by any governmental authority for assessment or
collection of income taxes and no notice of a proposed deficiency has been
received.

4.8 Title to Properties; Absence of Liens and Encumbrances, Leases
Enforceable.

(a) Except as to property indicated in the TBC Documents or the TBC
Disclosure Schedule as being leased or mortgaged, TBC has good and
marketable title to its assets, real and personal (including those
reflected in TBC Financial Statements, except for loans and investments as
thereafter sold or otherwise disposed of in the ordinary course of business
and for adequate consideration), free and clear of all material mortgages,
pledges, liens, charges and encumbrances, except (i) investment securities
that are pledged to secure the deposit of public monies, FHLB advances or
monies under the control of any court, (ii) the lien of taxes not yet due
and payable or being contested in good faith by appropriate proceedings,
and (iii) such imperfections of title and encumbrances, if any, and such
liens, if any, incidental to the conduct of TBC's business or the ownership
of its assets as are not material in amount and do not affect the value of,
or interfere with the present use of, TBC's assets or otherwise materially
impair its operations.

(b) To the best knowledge of TBC, the structures and equipment owned
or used by TBC comply in all material respects with applicable laws,
regulations and ordinances and are in good operating condition, subject to
ordinary wear and tear.

(c) The real property, if any, leased by TBC is held by it under valid
and enforceable leases. TBC is not in material default under any such
leases.

4.9 Legal Proceedings. Except as disclosed in the TBC Documents or the
TBC Disclosure Schedule, there are no material claims, actions, suits,
proceedings or investigations pending, or to the best knowledge of
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TBC, threatened, by or against, or otherwise affecting TBC or its assets,
business or properties, or the transactions contemplated by the Plan of Merger,
or its directors, officers or employees in reference to actions taken by it in
such capacity at law or in equity, or before or by any federal, state, municipal
or other government department, commission, board, agency, instrumentality or
authority, nor to TBC's knowledge is there any valid basis for any such action,
proceeding or investigation, other than (i) claims by TBC in the ordinary course
of its business for the recovery of loans or protection of its interest as a
secured or unsecured creditor, and (ii) claims fully covered by insurance. To
the best knowledge of TBC, TBC is in compliance in all material respects with
laws, ordinances, rules, regulations, orders, licenses and permits that are
applicable to its business as now conducted and is not in material default under
any thereof.

4.10 Authority Relative to This Plan of Merger.

(a) TBC has the requisite corporate power and authority to enter into
this Plan of Merger and perform its obligations hereunder, subject to
obtaining the regulatory approvals and other consents contemplated by this
Plan of Merger.

(b) The execution, delivery and performance of this Plan of Merger by
TBC has been duly authorized and approved by the Board of Directors of TBC,
subject to any required vote of its shareholders, and subject to obtaining
the regulatory approvals and other consents contemplated by this Plan of
Merger.

(c) This Plan of Merger has been duly executed and delivered by TBC
and constitutes a valid and binding obligation of TBC enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally and principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

(d) The consummation of the transactions contemplated by this Plan of
Merger will not in any material respect conflict with, violate or result in
a material breach of or material default in any (A) term, condition or
provision of the certificate of incorporation or bylaws of TBC; (B)
applicable law, rule, regulation or order of any court or governmental
agency; or (C) material agreement, lease, mortgage, note, contract or
commitment of any kind, oral or written, to which TBC is a party or by
which its properties may be bound.

4.11 No Untrue Representations. The documents furnished by TBC to CF
Bancshares, including but not limited to the TBC Documents, the TBC Disclosure
Schedule and the TBC Financial Statements, are true and complete copies of such
documents and do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. There is
no known fact that TBC has not disclosed in the TBC Documents or TBC Disclosure
Schedule in writing which materially and adversely affects the properties,
business, prospects, profits or condition (financial or otherwise) of TBC or the
ability of TBC to perform this Plan of Merger, except that TBC makes no
representation or warranty as to the effect of general economic conditions, the
condition of the financial markets, future legislation or future regulatory
action.

4.12 Employee Benefit Plans.

(a) Except as described in the TBC Documents or the TBC Disclosure
Schedule, TBC has neither established nor maintains nor is obligated to
make contributions to or under or otherwise participate in (i) any bonus or
other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document), (ii) any pension, profit-sharing, retirement or other plan,
program or arrangement, or (iii) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of
ERISA. All such plans (individually, a "Plan" and collectively, the
"Plans") have been operated and administered in all material respects in
accordance with, as applicable, ERISA, the Internal Revenue Code of 1986,
as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act
of 1967, as amended, and the related rules and regulations adopted by
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those federal agencies responsible for the administration of such laws. No
act or failure to act by TBC has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Plans that is not subject to a
statutory or regulatory exception. No "reportable event" (as defined in
ERISA) has occurred with respect to any of the Plans which is subject to
Title IV of ERISA. TBC has not previously made, is not currently making,
and is not obligated in any way to make, any contributions to any
multi-employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980.

(b) Except as described in the TBC Documents or the TBC Disclosure
Schedule, TBC is not a party to any oral or written (i) union, guild or
collective bargaining agreement which agreement covers employees in the
United States (nor is it aware of any union organizing activity currently
being conducted in respect to any of its employees), (ii) agreement with
any executive officer or other key employee the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction of the nature contemplated by this Plan of
Merger and which provides for the payment of in excess of $100,000, or
(iii) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Plan of Merger or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Plan of Merger.

4.13 Environmental Protection.

(a) To the best of TBC's knowledge, none of the assets of TBC (defined
for purposes of this subsection as the real property and tangible personal
property owned or leased by TBC as of the date of this Plan of Merger and
as of the Effective Time) contain any hazardous materials, defined as any
substance whose nature and/or quantity or existence, use, manufacture or
effect render it subject to federal, state or local regulation as
potentially injurious to public health or welfare, or the environment,
including, without limitation, friable asbestos, petroleum products or PCBs
("Hazardous Materials"), other than in such quantities which are incidental
and customary for the maintenance and operation of such assets, e.g.,
cleaning fluids and as otherwise permitted by law ("Incidental
Quantities").

(b) To the best of TBC's knowledge, no notice or other communication
has been received from any governmental agency having jurisdiction over TBC
or to their best knowledge from any other person, with respect to any
alleged violation by TBC of any federal, state or local laws, rules,
regulations, ordinances and codes governing Hazardous Materials and which
are applicable to the assets of TBC.

(c) To the best of TBC's knowledge, all Hazardous Materials which have
been remediated from any assets of TBC prior to or during their ownership
by TBC have been handled in compliance with all applicable laws.

(d) To the best of TBC's knowledge, no collateral securing any loan
made by TBC, as of the date of this Plan of Merger and as of the Effective
Time, contains any Hazardous Materials, other than in Incidental
Quantities.

4.14 Material Contract Defaults. TBC is not in default in any material
respect under the terms of any outstanding material contract, agreement, lease
or other commitment, which would have a material adverse effect on the business,
operations, properties or assets, or the condition, financial or otherwise, of
TBC or under its articles of association or bylaws and no event has occurred
which, with notice or lapse of time, or both, may be or become a material
default of any such contract, agreement, lease or other commitment or under the
certificate of incorporation or bylaws of TBC.

4.15 Brokers and Finders. Neither TBC nor any of its officers, directors
or employees have employed any broker or finder or incurred any liability for
any financial advisory, brokerage or finders fees or commissions and no broker
or finder has acted directly or indirectly for TBC in connection with this Plan
of Merger or the transactions contemplated hereby.

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SECTION 5

REPRESENTATIONS AND WARRANTIES OF THE SUBSIDIARY AND TBC

The Subsidiary and TBC, jointly and severally, hereby represent and warrant
to CF Bancshares as follows:

5.1 Organization, Existence and Capital Stock. The Subsidiary is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Florida. The Subsidiary's authorized capital consists
of 1,000 shares of Common Stock, par value $1.00 per share, all of which shares
are issued and registered in the name of TBC. The Subsidiary has not, within the
two years immediately preceding the date of this Plan of Merger, owned, directly
or indirectly, any shares of CF Bancshares Common Stock.

5.2 Power and Authority. The Subsidiary has corporate power to execute,
deliver and perform the Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to the
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein, has taken all actions required by law, its Articles of
Incorporation, its Bylaws or otherwise, to authorize the execution and delivery
of the Plan of Merger and such related documents. The execution and delivery of
the Plan of Merger does not and, subject to the receipt of required stockholder
and regulatory approvals and any other required third-party consents or
approvals, the consummation of the Merger contemplated hereby will not, violate
any provisions of the Articles of Incorporation or Bylaws of the Subsidiary, or
any agreement, instrument, order, judgment or decree to which the Subsidiary is
a party or by which it is bound, violate any restrictions of any kind to which
the Subsidiary is subject, or result in the creation of any lien, charge or
encumbrance upon any of the property or assets of the Subsidiary.

5.3 No Subsidiaries. The Subsidiary does not own stock in, and does not
control, directly or indirectly, any other corporation, association or business
organization. The Subsidiary is not a party to any joint venture or partnership.

5.4 Legal Proceedings. There are no actions, suits or proceedings pending
or threatened against the Subsidiary, at law or in equity, relating to or
affecting the Subsidiary, including the Merger. The Subsidiary does not know or
have any reasonable grounds to know of any justification for any action, suit or
proceeding.

5.5 No Contracts or Liabilities. Other than the obligations created under
the Plan of Merger, the Subsidiary is not obligated under any contracts, claims,
leases, liabilities (contingent or otherwise), loans or otherwise.

SECTION 6

ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS

6.1 Access to Information. CF Bancshares and TBC will give to one another
and to their respective counsel, accountants and other representatives
("advisors"), upon reasonable notice, during normal business hours throughout
the period prior to the Closing Date, full access to their respective books,
records, customer and loan files, contracts and commitments. For the period
prior to the Effective Time, CF Bancshares and TBC shall deliver to one another
such statements, schedules and reports concerning the business, operations and
financial condition of CF Bancshares and TBC as are regularly provided to their
respective Board of Directors at such times as they are regularly supplied to
their respective Board of Directors.

6.2 Return of Records. If the transactions contemplated hereby are not
consummated and this Plan of Merger terminates, each party agrees to promptly
return all documents, contracts, records or properties of the other party and
all copies thereof furnished pursuant to this Section 6 or otherwise. All
information disclosed by any party or any affiliate or representative of any
party shall be deemed to be "Confidential Information" under the terms of the
Letter of Intent dated July 31, 2001, between CF Bancshares and TBC (the "Letter
of Intent").

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6.3 Effect of Access.

Nothing contained in this Section 5 shall be deemed to create any duty or
responsibility on the part of either party to investigate or evaluate the value,
validity or enforceability of any contract, lease or other asset included in the
assets of the other party.

SECTION 7

COVENANTS

7.1 Preservation of Business. From the date of this Agreement, each of
TBC and CF Bancshares will use its reasonable best efforts to preserve the
respective business organization of CF Bancshares and TBC intact, to keep
available to the Surviving Corporation the services of the present employees of
CF Bancshares, and to preserve for the Surviving Corporation the goodwill of the
suppliers, customers, depositors and others having business relations with CF
Bancshares.

7.2 Material Transactions.

(a) Until the Effective Time or the earlier termination of this Plan
of Merger, and except as contemplated by this Plan of Merger or disclosed
in the Disclosure Schedules or as consented to or otherwise approved by TBC
in writing, which consent or approval will not be unreasonably withheld:

(i) the business of CF Bancshares shall be conducted only in the
ordinary course and CF Bancshares will not encumber any asset or enter
into any transaction or make any contract or commitment relating to
their respective properties, assets and businesses, other than in the
ordinary course of business, including but not limited to transactions
less than $50,000, or as otherwise disclosed herein;

(ii) no change shall be made in the articles of incorporation or
bylaws of CF Bancshares;

(iii) no change shall be made in the number of shares of capital
stock of CF Bancshares issued and outstanding, nor shall any option,
warrant, call, convertible security, commitment or other right be
granted or made by CF Bancshares relating to its authorized or issued
capital stock;

(iv) except in the ordinary course of business as previously
conducted, no purchase order, contract or commitment (other than
deposits, loan commitments and investments or the sale of other real
estate owned in the ordinary course of business of CF Bancshares) shall
be entered into by or on behalf of CF Bancshares extending for more than
one year or involving payment by CF Bancshares of more than $50,000 in
any one contract or related series of contracts or otherwise materially
affecting its business;

(v) no employment agreement or other agreement will be entered into
with any employee of CF Bancshares and no employee's salary or benefits
(other than bonuses scheduled to be paid which have been previously
accrued) will be increased except for normal annual increases as agreed
to in writing and no employee benefit plan will be modified or amended
except as required by law;

(vi) CF Bancshares will comply in all material respects with all
laws applicable to it and to the conduct of its business, if failure to
comply could have a material adverse effect upon its business;

(vii) no dividends shall be paid, or distributions made, with
respect to CF Bancshares Stock;

(viii) no loan other than in ordinary course of business including,
but not limited to, loans less than $50,000 will be made by CF
Bancshares without providing TBC with all relevant documents related
thereto and giving TBC a reasonable opportunity to review such loan and
comment thereon;

(ix) no security owned by CF Bancshares will be sold and no new
securities will be purchased without the approval of TBC except those
sold or acquired in the ordinary course of business; and

(x) the obligations under all employment, severance or other
agreements between CF Bancshares and its employees related to the
termination of such agreements shall not be in excess of the
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amounts described in the Employment Agreements attached to the CF
Bancshares Disclosure Schedule.

(b) Until the Effective Time or the earlier termination of this Plan
of Merger, and except as contemplated by this Plan of Merger or disclosed
in the Disclosure Schedules or as consented to or otherwise approved by CF
Bancshares in writing which consent or approval will not be unreasonably
withheld:

(i) the business of TBC shall be conducted only in the ordinary
course and TBC will not encumber any asset or enter into any transaction
or make any contract or commitment relating to their respective
properties, assets and businesses, other than in the ordinary course of
business or as otherwise disclosed herein;

(ii) no change shall be made in the certificate of incorporation or
bylaws of TBC; and

(iii) TBC will comply in all material respects with all laws
applicable to it and to the conduct of its business, if failure to
comply could have a material adverse effect upon its business.

7.3 Confidentiality. Until the Merger is consummated, CF Bancshares and
TBC shall not, without the prior written consent of the other party, as the case
may be, disclose to third parties, and shall use care to assure that its
directors, officers, employees and advisors do not disclose to third parties any
information regarding the Merger or any confidential information, which shall
include all information received from the other party, as the case may be, in
the course of discussing, investigating, negotiating and performing the
transactions contemplated by this Plan of Merger, whether such information has
been obtained before or after the date of execution of this Plan of Merger. The
term "confidential information" does not include information which (i) was known
to the other party, as the case may be, its directors, officers, employees or
advisors prior to the time of its disclosure to such party by the other party;
(ii) is or becomes publicly known or available; or (iii) is independently
developed or discovered by the other party or their respective directors,
officers, employees or advisors outside of the discussions, investigations,
negotiations and performance contemplated by this Plan of Merger. "Third
parties" does not include the directors, officers, employees or advisors of the
other party.

7.4 CF Bancshares Shareholder Meeting. As soon as reasonably practicable,
CF Bancshares shall take all action necessary in accordance with applicable law
and its articles of incorporation and bylaws to call, give notice of, convene
and hold a meeting of its shareholders (the "Special Meeting") for the purpose
of approving and adopting this Plan of Merger, the Merger and the transactions
contemplated thereby. In connection therewith, CF Bancshares shall mail to all
shareholders of record entitled to vote at such meeting the Registration
Statement (as defined in Section 7.8(a)) which shall indicate that the Board of
Directors of CF Bancshares has, by resolution, approved the Merger on the terms
and subject to the conditions set forth in this Plan of Merger. Subject to
applicable laws and the fiduciary duties of its directors, CF Bancshares shall
use reasonable efforts to solicit from its shareholders proxies in favor of such
adoption and approval and shall take all other reasonable action necessary or
helpful to secure a vote of its shareholders in favor of the Merger.

7.5 Affiliate's Letters. CF Bancshares and TBC shall use their respective
best efforts to obtain and deliver to one another prior to the Special Meeting a
signed letter in the form attached as Exhibit 7.5 from each of their respective
officers, directors or shareholders who may be deemed an "affiliate" of CF
Bancshares or TBC, as appropriate within the meaning of such term as used in
Rule 145 under the Securities Act who intends to receive TBC Common Stock in the
Merger.

7.6 Accounting Methods. Neither CF Bancshares nor TBC shall change, in
any material respect, its methods of accounting in effect at its most recent
fiscal year end, except as required by changes in generally accepted accounting
principles, if applicable, as concurred by such parties' independent
accountants.

7.7 Approvals of Regulatory Authorities. CF Bancshares, Citizens Federal,
the Subsidiary, The Bank and TBC will cooperate in the preparation and the
filing by TBC of such applications to the Board of Governors of the Federal
Reserve System (the "Fed"), the Federal Deposit Insurance Corporation (the
"FDIC"), the Alabama Banking Department and the Office of Thrift Supervision
(the "OTS"), and other

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regulatory authorities as may be necessary to obtain all governmental approvals
requisite to the consummation of the Merger, the Subsidiary Merger and the Bank
Merger. As soon as practicable, TBC shall file applications with the proper
regulatory authorities for approval of the Merger, the Subsidiary Merger and the
Bank Merger and the acquisition of CF Bancshares by TBC and shall thereafter
take all action to obtain the approval of such regulatory authorities. All of
the representations contained in the applications filed by TBC with regulators
with or on behalf of CF Bancshares, will be, at the time they are made, accurate
in all material respects, except TBC makes no representation or warranty as to
matters contained therein that are based on information provided by CF
Bancshares. All filings, requests for approval or other submissions for any
regulatory approval shall be made available for review and comment by CF
Bancshares prior to filing.

7.8 Registration Statement.

(a) Within sixty days of the date of this Plan of Merger, TBC shall
prepare and file with the Securities and Exchange Commission (the "SEC")
and any other applicable regulatory bodies, as soon as reasonably
practicable, a Registration Statement on Form S-4 with respect to the
shares of TBC Common Stock to be issued in the Merger (the "Registration
Statement") and will otherwise proceed promptly to satisfy the requirements
of the Securities Act of 1933 (the "Securities Act") including Rule 145
thereunder. Such Registration Statement shall contain a proxy statement of
CF Bancshares (the "Proxy Statement"), prepared by CF Bancshares and
subject to review and comments by TBC, containing information required by
the Securities Exchange Act of 1934 (the "Exchange Act"). Prior to the
filing, TBC shall provide CF Bancshares with a draft of the Registration
Statement and allow CF Bancshares sufficient time to review and comment on
the same. TBC shall take all reasonable steps necessary to cause the
Registration Statement to be declared effective and to maintain such
effectiveness until all of the shares of TBC Common Stock covered thereby
have been distributed. TBC shall promptly amend or supplement the
Registration Statement to the extent necessary in order to make the
statements therein not misleading or to correct any statements which have
become false or misleading. TBC shall use its reasonable best efforts to
have the Registration Statement declared effective by the SEC under the
provisions of the Securities Act and the Exchange Act. TBC shall provide CF
Bancshares with copies of all filings made pursuant to this Section 7.8 and
shall consult with CF Bancshares on responses to any comments made by the
staff of the SEC with respect thereto.

(b) The information specifically designated as being supplied by CF
Bancshares for inclusion or incorporation by reference in the Registration
Statement shall not, at the time the Registration Statement is declared
effective, at the time the Proxy Statement is first mailed to holders of CF
Bancshares Common Stock, at the time of the Special Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, not misleading. The information
specifically designated as being supplied by CF Bancshares for inclusion or
incorporation by reference in the Proxy Statement shall not, at the date
the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to holders of CF Bancshares Common Stock, at the time of the
Special Meeting and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event or circumstance relating to CF
Bancshares or its officers or directors should be discovered by CF
Bancshares which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, CF Bancshares shall
promptly inform TBC. All documents, if any, that CF Bancshares is
responsible for filing with the SEC in connection with the transactions
contemplated hereby will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder.

(c) The information specifically designated as being supplied by TBC
for inclusion or incorporation by reference in the Registration Statement
shall not, at the time the Registration Statement is declared effective, at
the time the Proxy Statement is first mailed to holders of CF Bancshares
Common Stock, at the time of the Special Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the
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statements therein, not misleading. The information specifically designated
as being supplied by TBC for inclusion or incorporation by reference in the
Proxy Statement in connection with the Special Meeting shall not, at the
date the Proxy Statement (or any amendment thereof or supplement thereto)
is first mailed to holders of CF Bancshares Common Stock, at the time of
the Special Meeting or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to TBC or its officers or directors, should be
discovered by TBC which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, TBC should
promptly inform CF Bancshares and shall promptly file such amendment to the
Registration Statement. All documents that TBC is responsible for filing
with the SEC in connection with the transactions contemplated herein will
comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations thereunder.

(d) Prior to the Closing Date, TBC shall use its best efforts to cause
the shares of TBC Common Stock to be issued in the Merger to be registered
or qualified under all applicable securities or Blue Sky laws of each of
the states and territories of the United States, and to take any other
actions which may be necessary to enable TBC Common Stock to be issued in
the Merger to be distributed in each such jurisdiction.

(e) Prior to the Closing Date, TBC shall file a notification form for
listing of additional shares (the "Listing Form") with Nasdaq relating to
shares of TBC Common Stock to be issued in connection with the Merger, and
shall use reasonable good faith efforts to cause such shares of TBC Common
Stock to be approved for listing on Nasdaq prior to the Closing Date.

(f) CF Bancshares shall furnish all information to TBC with respect to
CF Bancshares and its subsidiaries as TBC may reasonably request for
inclusion in the Registration Statement, the Proxy Statement and the
Listing Form, and shall otherwise cooperate with TBC in the preparation and
filing of such documents.

7.9 Deliveries. CF Bancshares and TBC shall each deliver by the Closing
Date all opinions, certificates and other documents required to be delivered by
it.

7.10 Status Reports. CF Bancshares and TBC shall advise one another from
time to time regarding the applications for regulatory approval of the Merger
and provide one another copies of all comments, correspondence and approvals to
or from regulators in connection with the applications, and give one another
copies of all regulatory approvals referred to in this Plan of Merger within two
business days of receipt.

7.11 Other Actions. Unless required by law, neither CF Bancshares nor TBC
shall knowingly or intentionally take any action, or omit to take any action, if
such action or omission would, or reasonably might be expected to, result in any
of its representations and warranties set forth herein being or becoming untrue
in any material respect, or in any of the conditions to the Merger set forth in
this Plan of Merger not being satisfied, or (unless such action is required by
applicable law) which would materially adversely affect the ability of TBC or CF
Bancshares to obtain any consents or approvals required for the consummation of
the Merger without imposition of a condition or restriction which would have a
material adverse effect on the Surviving Corporation or which would otherwise
materially impair the ability of TBC or CF Bancshares to consummate the Merger
in accordance with the terms of the Plan of Merger or materially delay such
consummation.

7.12 No Shopping. Neither CF Bancshares nor any of its officers and
directors will, and CF Bancshares shall direct and use its best efforts to
prevent its employees, agents and representatives, during the period beginning
on the date hereof and ending on the first to occur of (a) the Effective Time or
(b) the termination of this Plan of Merger, to (i) sell or arrange for sale of
any CF Bancshares Common Stock, other than as required by the CF Bancshares
employee stock purchase plan; (ii) negotiate, solicit or encourage or authorize
any person to solicit from any third party any proposals relating to the merger
or consolidation of CF Bancshares, disposition of the business or assets of CF
Bancshares or the acquisition of the capital stock of

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CF Bancshares; or (iii) except to the extent legally required for the discharge
by the board of directors of its fiduciary duties, make any information
concerning CF Bancshares available to any person for the purpose of affecting or
causing a merger, consolidation or disposition of CF Bancshares or its assets or
common stock.

7.13 Notice of Subsequent Events. Each party hereto shall notify the
other parties of any changes, additions or events which would cause any material
change in or material addition to any schedule to the Disclosure Schedule
delivered by the notifying party under this Plan of Merger, promptly after the
occurrence of the same. If the effect of such change or addition would,
individually or in the aggregate with the effect of changes or additions
previously disclosed pursuant to this Section 6.13, constitute a material
adverse effect on the notifying party, the non-notifying party may, within ten
(10) days after receipt of such notice, elect to terminate this Plan of Merger.
If the non-notifying party does not give written notice of such termination
within such 10-day period, the non-notifying party shall be deemed to have
consented to such change and shall not be entitled to terminate this Plan of
Merger by reason thereof.

7.15 Cooperation.

(a) TBC and CF Bancshares shall together, or pursuant to an allocation
of responsibility agreed to between them, (i) cooperate with one another in
determining whether any filings are required to be made or consents are
required to be obtained in any jurisdiction prior to the Effective Time in
connection with the consummation of the transactions contemplated hereby;
and cooperate in making any such filings promptly and in seeking to obtain
timely any such consents, (ii) use their respective best efforts to cause
to be lifted any injunction prohibiting the Merger, or any part thereof, or
the other transactions contemplated hereby, and (iii) furnish to one
another and to one another's counsel all such information as may be
required to effect the foregoing actions.

(b) Subject to the terms and conditions herein provided, and unless
this Plan of Merger shall have been validly terminated as provided herein,
each of TBC and CF Bancshares shall use all reasonable efforts (i) to take,
or cause to be taken, all actions necessary to comply promptly with all
legal requirements which may be imposed on such party (or any subsidiaries
or affiliates of such party) with respect to the Plan of Merger and to
consummate the transactions contemplated hereby and (ii) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order
or approval of, or any exemption by, any governmental entity and/or any
other public or private third party which is required to be obtained or
made by such party or any of its subsidiaries or affiliates in connection
with this Plan of Merger and the transactions contemplated hereby. Each of
TBC and CF Bancshares will promptly cooperate with and furnish information
to the other in connection with any such burden suffered by, or requirement
imposed upon, either of them or any of their subsidiaries or affiliates in
connection with the foregoing. The parties shall, from time to time, and
including as of and upon the Closing Date, prepare and deliver to each
other such supplements and amendments to their respective Disclosure
Schedules as are necessary or appropriate to assure the accuracy and
completeness thereof; provided that the furnishing of any such supplement
shall not modify, limit, or otherwise affect any representations or
warranties of a party contained in this Agreement or any right of a party
to terminate this Agreement.

7.16 Carrabelle Branch. The Boards of Directors of CF Bancshares and
Citizen Federal shall proceed with the construction and opening of the
Carrabelle branch of Citizens Federal provided that such construction remains in
the best interest of Citizens Federal. CF Bancshares and Citizens Federal shall
advise TBC from time to time regarding the status of any regulatory approvals
necessary and the construction process. CF Bancshares and Citizens Federal shall
provide TBC copies of all correspondence and approvals to or from regulators in
connection with the Carrabelle branch.

7.17 Dividends. CF Bancshares shall not declare nor pay any dividends to
its shareholders prior to or at the Effective Time.

7.18 Proxies from the Directors. The directors of CF Bancshares shall
have granted proxies to TBC, substantially in the form of Exhibit 7.18, as of
the date of this Plan of Merger, to vote the shares of CF Bancshares owned by
such directors in favor of the Merger and such proxies shall remain valid and in
effect until the Effective Time.

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7.19 Officers' and Directors' Liability Insurance. TBC shall maintain in
effect for not less than four years after the Effective Time CF Bancshares'
current policy of directors' and officers' liability insurance for the benefit
of the individuals who, at or before the Effective Time, were directors or
officers of CF Bancshares with respect to matters occurring prior to the
Effective Time; provided, however, that (i) TBC may substitute therefor policies
of at least the same coverage containing terms and conditions which are no less
advantageous to the covered officers and directors and (ii) TBC shall not be
required to pay an annual premium for such insurance in excess of the last
annual premium paid prior to the date hereof, but in the event such premium
shall exceed such amount shall purchase as much coverage as possible for such
amount with the exception of increases due to inflation.

SECTION 8

CONDITIONS

8.1 Mutual Conditions. The obligations of CF Bancshares, the Subsidiary
and TBC under this Plan of Merger are subject to and conditioned upon the
satisfaction, prior to the Closing Date, of each of the following conditions
except as CF Bancshares, the Subsidiary and TBC may waive in writing:

(a) Registration Statement. The Registration shall have been declared
effective by the SEC and no stop order shall be in effect, and all
applicable federal securities or state blue sky laws shall have been
complied with or an exemption thereunder shall be available.

(b) Listing of TBC Common Stock. The shares of TBC Common Stock to be
issued in connection with the Merger shall have been approved for listing
by Nasdaq.

(c) No Litigation. No suit, action, claim or other proceeding shall
have been threatened or pending before any court, administrative or
governmental agency which, in the reasonable opinion of CF Bancshares, TBC
or the Subsidiary, presents a significant risk of restraint or prohibition
of the transactions contemplated hereby or the attainment of material
damages or other relief against CF Bancshares or its shareholders or TBC or
its shareholders in connection with the transactions contemplated hereby.

(d) Shareholder Approval. The holders of a majority of the
outstanding shares of CF Bancshares Common Stock shall have approved the
Merger.

(e) Approvals. Receipt of all authorizations, approvals and/or
consents of any third parties as well as the expiration of applicable
waiting periods, including federal or state governmental and/or regulatory
bodies and officials, necessary for the consummation of this Plan of Merger
and for the continuation in all material respects of the business of TBC,
the Subsidiary and CF Bancshares, without interruption after the Effective
Time, in substantially the manner in which such business is now conducted
shall have been received, and no such authorizations or approvals shall
contain any conditions or restrictions that CF Bancshares, TBC or the
Subsidiary reasonably believes will materially restrict or limit the
business or activities of the Surviving Corporation subsequent to the
Merger, or have a material adverse effect on their businesses, operations
or financial conditions taken as a whole.

(f) Earnings Certificate. Each of TBC, the Subsidiary and CF
Bancshares shall have reviewed the net earnings of CF Bancshares from June
30, 2001 through the date of Closing as reflected on CF Bancshares' call
report for such period and any reports for such interim periods prepared in
accordance with GAAP and in a manner consistent with past practice as to
unaudited statements and CF Bancshares shall have delivered an officer's
certificate attaching such reports for such periods, certified by a duly
authorized officer of CF Bancshares and acknowledged by a duly authorized
officer of TBC.

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8.2 Conditions in Favor of CF Bancshares. All obligations of CF
Bancshares under this Plan of Merger are subject to and conditioned upon the
satisfaction, prior to the Closing Date, of each of the following conditions
except as CF Bancshares may waive in writing:

(a) Material Adverse Change. Since the date of this Plan of Merger,
there have been no material adverse changes, occurrences or developments in
the business of TBC that have, or would be expected to have, a material
adverse effect on the business, operations or financial condition of TBC,
and CF Bancshares shall not have discovered any fact or circumstance not
disclosed by TBC prior to the date of this Plan of Merger that has resulted
in, or could reasonably be expected to result in, a material adverse effect
on the business, operations or financial condition of TBC.

(b) Representations, Warranties and Agreements. Each representation
and warranty of TBC contained in this Plan of Merger or in any TBC
Document, including without limitation, financial statements, the TBC
Disclosure Schedules, deeds, exhibits, certificates, schedules or other
documents delivered pursuant hereto or in connection with the transactions
contemplated hereby, that is qualified as to materiality shall be true and
correct, and each representation and warranty that is not so qualified
shall be true and correct in all material respects, as of the date of the
Plan of Merger and at the Closing Date as if then made, except to the
extent that any such representation and warranty expressly relates to an
earlier date (in which case any such representation and warranty that is
qualified as to materiality shall be true and correct, and any such
representation that is not so qualified shall be true and correct in all
material respects, as of such earlier date). TBC and The Bank shall have
performed and complied with all covenants, agreements and conditions
required by this Plan of Merger to be performed or complied with in all
material respects by them, or either of them, prior to or at the Closing
Date.

(c) Officers' Certificate. CF Bancshares shall have received a
certificate in form and content satisfactory to CF Bancshares from the
appropriate officers of TBC and the Subsidiary, dated as of the Closing
Date, to the effect that the representations and warranties made herein by
TBC and the Subsidiary on the date hereof and on the Closing Date are true
and correct as set forth in Sections 4 and 5 and that TBC and the
Subsidiary have performed the covenants, obligations and agreements
undertaken by it herein in all material respects.

(d) Legal Opinion. CF Bancshares shall have received an opinion of
legal counsel for TBC, Haskell Slaughter Young & Rediker, L.L.C.,
substantially in the form attached hereto as Exhibit 8.2(d). In addition,
counsel may rely on representations and certificates of officers and
directors of TBC and certificates of public officials. Such opinion shall
be subject to reasonable and customary qualifications.

(e) Secretary's Certificate. CF Bancshares shall have received in
form and content satisfactory to it of the Secretary or an Assistant
Secretary of TBC and the Subsidiary to the effect that all necessary
approvals of the Merger by the Board of Directors and shareholders of TBC
and the Subsidiary were obtained at meetings duly called for such purposes
and as to the incumbency of all corporate officers of TBC and the
Subsidiary at all relevant times and containing copies of the Certificate
of Incorporation and Bylaws of TBC and the Subsidiary.

(f) Proper Actions and Documentation. All actions required to be
taken by TBC and the Subsidiary in connection with the transactions
contemplated by this Plan of Merger shall have been taken, and all
documents incidental thereto shall be in a form and substance reasonably
satisfactory to CF Bancshares and legal counsel, and CF Bancshares shall
have received copies of all documents that it may have reasonably requested
in connection with such transactions.

8.3 Conditions in Favor of TBC. All obligations of TBC and the Subsidiary
under this Plan of Merger are subject to and shall be conditioned upon the
satisfaction, prior to or on the Closing Date, of each of the following
conditions except as TBC and the Subsidiary may waive such conditions in
writing:

(a) Material Adverse Change. Since the date of this Plan of Merger
there have been no material adverse changes, occurrences or developments in
the business of CF Bancshares that have, or would be expected to have, a
material adverse effect on the business, operations or financial condition
of CF Bancshares, and TBC shall not have discovered any fact or
circumstance not disclosed by
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CF Bancshares prior to the date of this Plan of Merger that has resulted
in, or could reasonably be expected to result in, a material adverse effect
on the business, operations or financial condition of CF Bancshares.

(b) Representations, Warranties and Agreements. Each representation
and warranty of CF Bancshares contained in this Plan of Merger or in any CF
Bancshares document, including, without limitation, financial statements,
the CF Bancshares Disclosure Schedules, deeds, exhibits, certificates,
schedules or other documents delivered pursuant hereto or in connection
with the transactions contemplated hereby, that is qualified as to
materiality shall be true and correct, and each representation and warranty
that is not so qualified shall be true and correct in all material
respects, as of the date of the Plan of Merger and at the Closing Date as
if then made, except to the extent that any such representation and
warranty expressly relates to an earlier date (in which case any such
representation and warranty that is qualified as to materiality shall be
true and correct, and any such representation that is not so qualified
shall be true and correct in all material respects, as of such earlier
date). CF Bancshares shall have performed and complied with all covenants,
agreements and conditions required by this Plan of Merger to be performed
or complied with in all material respects by it prior to or at the Closing
Date.

(c) Officer's Certificate. TBC shall have received a certificate in
form and content satisfactory to it from the President and the Chief
Financial Officer of CF Bancshares, dated the Closing Date, to the effect
that the representations and warranties made herein by CF Bancshares on the
date hereof, and on the Closing Date, are true and correct as set forth in
Section 3, and that CF Bancshares has performed the covenants, obligations
and agreements undertaken by it herein in all material respects.

(d) Secretary's Certificate. TBC shall have received in form and
content satisfactory to it a certificate of the Secretary or an Assistant
Secretary of CF Bancshares to the effect that all necessary approvals of
the Merger by the Board of Directors and shareholders of CF Bancshares were
obtained at meetings duly called for such purposes and as to the incumbency
of all corporate officers of CF Bancshares at all relevant times and
containing copies of the Articles of Incorporation and Bylaws of CF
Bancshares.

(e) Legal Opinion. TBC shall have received an opinion of CF
Bancshares' legal counsel, Igler & Dougherty, P.A., substantially in the
form attached as Exhibit 8.3(e). In addition, such counsel may rely on
representations and certificates of officers and directors of CF Bancshares
and certificates of public officials. Such opinion shall be subject to
reasonable and customary qualifications.

(f) Proper Actions and Documentation. All actions required to be
taken by CF Bancshares by this Plan of Merger shall have been taken or
satisfied in all material respects, and all documents incidental thereto
shall be in a form and substance reasonably satisfactory to TBC and its
counsel, and TBC shall have received copies of all documents that they may
have reasonably requested in connection with such transactions.

(g) Directors. The existing directors of Citizens Federal shall agree
to be advisory directors of the former Citizens Federal branches of The
Bank after the Effective Time of the Merger and the Bank Merger.

(h) Proxies. TBC shall have received proxies from each director of CF
Bancshares, substantially in the form attached hereto as Exhibit 6.18 to
vote the shares of CF Bancshares owned by such director in favor of the
Merger.

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SECTION 9

TERMINATION

9.1 Termination. This Plan of Merger may be terminated and the Merger
abandoned (either before or after approvals and authorizations by the
shareholders of CF Bancshares contemplated hereby and without seeking further
shareholder approval) at any time prior to the Effective Time only in one of the
following manners:

(a) Mutual Agreement. By mutual written consent of the parties
authorized by their respective Boards of Directors at any time prior to the
Effective Time.

(b) by either CF Bancshares or TBC:

(i) if, upon a vote at a duly held meeting of stockholders or any
adjournment thereof, any required approval of the holders of shares of
CF Bancshares Common Stock shall not have been obtained;

(ii) if the Merger shall not have been consummated on or before
March 31, 2002, unless the failure to consummate the Merger is the
result of a willful and material breach of this Plan of Merger by the
party seeking to terminate this Plan of Merger;

(iii) if any court of competent jurisdiction or other governmental
entity shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable;

(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Plan of Merger which (A) would give rise to the failure of a condition
set forth in Section 8.2(a) or (b) or Section 8.3(a) or (b), as
applicable, and (B) cannot be or has not been cured within 30 days after
the giving of written notice to the breaching party of such breach (a
"Material Breach") (provided that the terminating party is not then in
Material Breach of any representation, warranty, covenant or other
agreement contained in this Plan of Merger);

(c) By either CF Bancshares or TBC in the event that (i) all of the
conditions to the obligation of such party to effect the Merger set forth
in Section 8.1 shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Merger set forth in Section 8.2 (in
the case of CF Bancshares) or Section 8.3 (in the case of TBC) is not
capable of being satisfied prior to the end of the period referred to in
Section 9.1(b)(ii); or

(d) By TBC or CF Bancshares, if CF Bancshares' Board of Directors
shall have determined, in the exercise of its fiduciary duties under
applicable law, not to recommend the Merger to the holders of CF Bancshares
Common Stock or shall have withdrawn such recommendation or if TBC's Board
of Directors shall have determined, in the exercise of fiduciary duties
under applicable law, not to approve or shall have withdrawn approval of
the Merger;

9.2 Effect of Termination. In the event of termination of this Plan of
Merger as provided in Section 9.1, this Plan of Merger shall forthwith become
void and have no effect, without any liability or obligation on the part of any
party, other than the provisions of Sections 6.2, 9.2 and 9.6, and except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or other agreements
set forth in this Plan of Merger.

9.3 Amendment. This Plan of Merger may be amended by the parties at any
time before or after any required approval of matters presented in connection
with the Merger by the holders of shares of CF Bancshares Common Stock and by
the directors of TBC; provided, however, that after any such approval, there
shall be made no amendment that pursuant to Section 607.1103 of the FBCA
requires further approval by such stockholders without the further approval of
such stockholders. This Plan of Merger may not be amended except by an
instrument in writing signed on behalf of each of the parties.
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9.4 Extension; Waiver. At any time prior to the Effective Time of the
Merger, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c) subject to the proviso
of Section 8.3, waive compliance with any of the agreements or conditions
contained in this Plan of Merger. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this Plan of
Merger to assert any of its rights under this Plan of Merger or otherwise shall
not constitute a waiver of such rights.

9.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Plan of Merger pursuant to Section 9.1, an amendment of this
Plan of Merger pursuant to Section 9.3, or an extension or waiver pursuant to
Section 9.4 shall, in order to be effective, require in the case of CF
Bancshares or TBC, action by its Board of Directors or the duly authorized
designee of the Board of Directors.

9.6 Expenses and Damages. Each party shall pay its own expenses in
connection with the Plan of Merger and the Merger. Nothing contained in Section
9.7 shall be deemed to preclude either party from seeking to recover damages
which it incurs as a result of a breach by the other party of this Plan of
Merger or to obtain other legal or equitable relief (including specific
performance).

9.7 No Liability Upon Proper Termination. Upon proper termination by
written notice as provided in Section 9.1 of this Plan of Merger, this Plan of
Merger shall be void and of no further effect, except as set forth in Section
9.2, and there shall be no liability by reason of this Plan of Merger or the
termination thereof on the part of either TBC, CF Bancshares or the directors,
officers, employees, agents or shareholders of any of them, and all such parties
shall be released from all such liability, provided that any such termination
shall not excuse a party for liability for any breach of this Agreement.

SECTION 10

MISCELLANEOUS

10.1 Survival of Representations, Warranties and Covenants. The
respective representations, warranties, agreements and covenants of the parties
in this Plan of Merger shall survive the Effective Time. Each party shall be
deemed to have relied upon each and every representation and warranty of the
other party, regardless of any investigation heretofore or hereafter made by or
on behalf of such party.

10.2 Employee Benefits. All employees of CF Bancshares who continue as
employees of the Surviving Corporation after the Merger shall receive service
credits for employment at CF Bancshares prior to the Effective Time for purposes
of meeting all the eligibility requirements and all vesting requirements for all
of the Surviving Corporation's benefit programs in which such employees shall
become eligible to participate on or after the Effective Time, including but not
limited to health, retirement, vacation and disability plans. The Surviving
Corporation will waive waiting periods and pre-existing conditions limitations
under its group health plan (within the meaning of Section 5000(b)(i) of the
Internal Revenue Code of 1986, as amended) for those employees of CF Bancshares
who continue as employees of The Surviving Corporation after the Merger and who
had coverage under compatible group health plans of CF Bancshares immediately
prior to the Effective Time. The Surviving Corporation shall provide the
opportunity for continuation of coverage through COBRA for any former CF
Bancshares employee who participated as or who had a right to elect
participation as a COBRA continuee under CF Bancshares' group health plans
immediately prior to the Effective Time.

10.3 Benefits of this Plan of Merger. This Plan of Merger and the rights
and obligations of TBC and CF Bancshares hereunder shall not be assigned by any
party to any third party, except with the prior written consent of the other.
This Plan of Merger shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns. Nothing in
this Plan of Merger, expressed or implied, is intended to confer upon any
person, other than the parties hereto, the shareholders of CF Bancshares, and
their respective permitted successors and assigns, any rights or remedies under
or by reason of this Plan of Merger and, except as aforesaid, there are no
third-party beneficiaries of this Plan of Merger.

A-26

10.4 Notices. Any notice, request, instruction, legal process or other
instrument to be given or served hereunder by any party to another, shall be
deemed given or served if in writing and delivered personally or sent by a
reputable overnight express courier or by registered or certified mail, postage
prepaid, to the respective party or parties at the following addresses:

If to TBC or the Subsidiary:
Mr. James A. Taylor
Chairman of the Board and Chief Executive Officer
The Banc Corporation
17 North 20th Street
Birmingham, Alabama 35203

With copies to:
F. Hampton McFadden, Jr., Esq.
Executive Vice President, General
Counsel and Secretary
The Banc Corporation
17 North 20th Street
Birmingham, Alabama 35203

and
Haskell Slaughter Young & Rediker, L.L.C.
1200 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203
Attn: Robert E. Lee Garner, Esq.

If to CF Bancshares:
Mr. Greg Johnson
President and Chief Executive Officer
401 Cecil G. Costin, Sr. Boulevard
Port St. Joe, Florida 32457

With copies to:
A. George Igler, Esq.
Igler & Dougherty, P.A.
1501 Park Avenue East
Tallahassee, Florida 32301

and to such other address or addresses as either party may designate to the
other by like notice as set forth above.

10.5 Publicity. CF Bancshares and TBC shall ensure that all publicity,
press releases and other announcements relating to this Plan of Merger and the
transactions contemplated hereby are reviewed in advance by both TBC and CF
Bancshares and their respective legal counsel and shall not make any such
announcements without the written approval of the other party.

10.6 Entire Agreement. This Plan of Merger contains the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and thereby supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations, covenants or other agreements between the
parties in connection with the subject matter hereof except as specifically set
forth herein.

10.7 Waiver or Modification. Any party to this Plan of Merger may, at any
time prior to the Effective Time, by action taken by its Board of Directors or
officers thereunto duly authorized, waive any of the terms or
A-27

conditions of this Plan of Merger or agree to an amendment or modification to
this Plan of Merger by an agreement in writing executed in the same manner (but
not necessarily by the same persons) as this Plan of Merger. No amendment,
modification or waiver of this Plan of Merger shall be binding unless executed
in writing by the party to be bound thereby. No waiver of any of the provisions
of this Plan of Merger shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall any waiver constitute a
continuing waiver unless expressly provided. CF Bancshares' Board of Directors
may authorize the amendment or supplementation of this Plan of Merger or waiver
of any provision hereof or thereof, either before or after the approval of CF
Bancshares' shareholders (and without seeking further shareholder approval to
the extent allowed by law), so long as such amendment, supplement or waiver does
not result in the reduction of the consideration given or result in an adverse
tax or other effect to CF Bancshares' shareholders.

10.8 Controlling Law. This Plan of Merger shall be construed in
accordance with the laws of the State of Florida and the venue shall be Bay
County, Florida, except to the extent that federal law is applicable.

10.9 Counterparts. This Plan of Merger may be executed in any number of
copies, each of which shall be deemed an original, and all of which together
shall be deemed one and the same instrument.

10.10 Knowledge. Whenever the term "knowledge," "best knowledge" or
similar expression is used in this Plan of Merger, it shall mean the personal
knowledge of the Chairman, President, Chief Executive Officer or Chief Financial
Officer of such entity.

10.11 Material Adverse Effect. "Material adverse effect" on a party shall
mean an event, change, or occurrence which, individually or together with any
other event, change, or occurrence, has a material adverse impact on: (i) the
financial position, business, or results or operations of such party and its
subsidiaries, taken as a whole; or (ii) the ability of such party to perform its
obligations under this Plan of Merger or to consummate the Merger or the other
transactions contemplated hereby, provided that "material adverse effect" shall
not be deemed to include the impact of: (a) changes in banking and similar laws
of general applicability or interpretations thereof by courts or governmental
authorities; (b) changes in GAAP or regulatory accounting principles generally
applicable to banks and their holding companies; (c) actions and omissions of a
party (or any of its subsidiaries) taken with the prior informed consent of the
other party in contemplation of the transactions contemplated hereby; or (d) the
Merger and compliance with the provision of this Agreement on the operating
performance of the parties.

10.12 Material Adverse Change. "Material adverse change" shall mean any
change in the working capital, financial condition, operating results, assets,
liabilities (absolute, accrued, contingent or otherwise), reserves, earnings,
business, or employee or customer relations, that has a material adverse impact
on a party.

10.13 No Rule of Construction. The parties acknowledge that this Plan of
Merger was initially prepared by TBC and that all parties have read and
negotiated the language used in this Plan of Merger. The parties agree that,
because all parties participated in negotiating and drafting this Plan of
Merger, no rule of construction shall apply to this Plan of Merger which
construes ambiguous language in favor of or against any party by reason of that
party's role in drafting this Plan of Merger.

10.14 Binding Effect. This Plan of Merger shall be binding on, and shall
inure to the benefit of, the parties hereto, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Plan of Merger. No party may assign any right or obligation hereunder
without the prior written consent of the other parties.

A-28

IN WITNESS WHEREOF, pursuant to authority duly given by the respective
Boards of Directors of TBC, the Subsidiary, The Bank, CF Bancshares and Citizens
Federal, this Plan of Merger has been signed on behalf of said corporations by
their respective Chairman of the Board, President or Vice President, as the case
may be, all on the date, month and year first written above.

THE BANC CORPORATION

By: /s/ JAMES A. TAYLOR, JR.
------------------------------------
James A. Taylor, Jr.
President
and Chief Operating Officer

THE BANK

By: /s/ DAVID R. CARTER
------------------------------------
David R. Carter
Executive Vice President
and Chief Financial Officer

TBC MERGER CORPORATION

By: /s/ JAMES A. TAYLOR, JR.
------------------------------------
James A. Taylor, Jr.
President

CF BANCSHARES, INC.

By: /s/ DAVID MAY
------------------------------------
David May
Chairman of the Board

CITIZENS FEDERAL SAVINGS BANK
OF PORT ST. JOE

By: /s/ GREG JOHNSON
------------------------------------
Greg Johnson
President and Chief Executive
Officer

A-29

ANNEX B

DISSENTERS' RIGHTS UNDER THE FLORIDA BUSINESS CORPORATION ACT

607.1301 Dissenters' rights; definitions. The following definitions apply
to sec.sec. 607.1302 and 607.1320:

(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger of that issuer.

(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.

(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to sec. 607.1104, the day prior to the date on which a copy of
the plan of merger was mailed to each shareholder of record of the subsidiary
corporation.

History. sec. 118, ch. 89-154.

607.1302 Right of shareholders to dissent.

(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:

(a) Consummation of a plan of merger to which the corporation is a
party:

1. If the shareholder is entitled to vote on the merger, or

2. If the corporation is a subsidiary that is merged with its
parent under sec. 607.1104, and the shareholders would have been
entitled to vote on action taken, except for the applicability of
sec. 607.1104.

(b) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation, other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to sec. 607.1202, including a sale in dissolution but not
including a sale pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the sale will
be distributed to the shareholders within 1 year after the date of sale;

(d) Consummation of a plan of share exchange to which the corporation
is a party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;

(e) Any amendment of the articles of incorporation if the shareholder
is entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:

1. Altering or abolishing any preemptive rights attached to any of
his or her shares;

2. Altering or abolishing the voting rights pertaining to any of
his or her shares, except as such rights may be affected by the voting
rights of new shares then being authorized of any existing or new class
or series of shares;

3. Effecting an exchange, cancellation, or reclassification of any
of his or her shares, when such exchange, cancellation, or
reclassification would alter or abolish the shareholder's voting rights
or alter his or her percentage of equity in the corporation, or
effecting a reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;

4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to any
sinking fund for the redemption or purchase of any of his

B-1

or her shares, or making any of his or her shares subject to redemption
when they are not otherwise redeemable;

5. Making noncumulative, in whole or in part, dividends of any of
the shareholder's preferred shares which had theretofore been
cumulative;

6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or

7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary
liquidation; or

(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his or her shares.

(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which are
adversely affected by the amendment.

(3) A shareholder may dissent as to less than all the shares registered in
his or her name. In that event, the shareholder's rights shall be determined as
if the shares as to which he or she has dissented and his or her other shares
were registered in the name of different shareholders.

(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of shares of any class or series
which, on the record date fixed to determine the shareholders entitled to vote
at the meeting of shareholders at which such action is to be acted upon or to
consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.

(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating his or
her entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.

History. sec. 119, ch. 89-154; sec. 5, ch. 94-327; sec. 31, ch. 97-102.

607.1320 Procedure for exercise of dissenters' rights.

(1)(a) If a proposed corporate action creating dissenters' rights under
sec. 607-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of sec.sec. 607.1301, 607.1302,
and 607.1320. A shareholder who wishes to assert dissenters' rights shall:

1. Deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment for his or her
shares if the proposed action is effectuated; and

2. Not vote his or her shares in favor of the proposed action. A
proxy or vote against the proposed action does not constitute such a
notice of intent to demand payment.

(b) If proposed corporate action creating dissenters' rights under
sec. 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of sec.sec. 607.1301, 607.1302, and
607.1320 to each shareholder simultaneously with any request for the
shareholder's written consent or, if such a request is not made, within 10
days after the date the corporation received written consents without a
meeting from the requisite number of shareholders necessary to authorize
the action.

(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.

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(3) Within 20 days after the giving of notice to him or her, any
shareholder who elects to dissent shall file with the corporation a notice of
such election, stating the shareholder's name and address, the number, classes,
and series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such
election to dissent within the period set forth shall be bound by the terms of
the proposed corporate action. Any shareholder filing an election to dissent
shall deposit his or her certificates for certified shares with the corporation
simultaneously with the filing of the election to dissent. The corporation may
restrict the transfer of uncertified shares from the date the shareholder's
election to dissent is filed with the corporation.

(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
or her shares. After such offer, no such notice of election may be withdrawn
unless the corporation consents thereto. However, the right of such shareholder
to be paid the fair value of his or her shares shall cease, and the shareholder
shall be reinstated to have all his or her rights as a shareholder as of the
filing of his or her notice of election, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim,
if:

(a) Such demand is withdrawn as provided in this section;

(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;

(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or

(d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.

(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:

(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and

(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was
not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.

(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his or her shares shall be made within 90 days
after the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting shareholder
shall cease to have any interest in such shares.

(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in

B-3

the county in this state where the registered office of the corporation is
located requesting that the fair value of such shares be determined. The court
shall also determine whether each dissenting shareholder, as to whom the
corporation requests the court to make such determination, is entitled to
receive payment for his or her shares. If the corporation fails to institute the
proceeding as herein provided, any dissenting shareholder may do so in the name
of the corporation. All dissenting shareholders (whether or not residents of
this state), other than shareholders who have agreed with the corporation as to
the value of this shares, shall be made parties to the proceeding as an action
against their shares. The corporation shall serve a copy of the initial pleading
in such proceeding upon each dissenting shareholder who is a resident of this
state in the manner provided by law for the service of a summons and complaint
and upon each nonresident dissenting shareholder either by registered or
certified mail and publication or in such other manner as is permitted by law.
The jurisdiction of the court is plenary and exclusive. All shareholders who are
proper parties to the proceeding are entitled to judgment against the
corporation for the amount of the fair value of their shares. The court may, if
it so elects, appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers shall have
such power and authority as is specified in the order of their appointment or an
amendment thereof. The corporation shall pay each dissenting shareholder the
amount found to be due him or her within 10 days after final determination of
the proceedings. Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in such shares.

(8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.

(9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.

(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.

History. sec. 120, ch. 89-154; sec. 35, ch. 93-281; sec. 32, ch. 97-102.

B-4

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Banc Corporation

Section 102(b)(7) of Delaware law grants corporations the right to limit or
eliminate the personal liability of their directors in certain circumstances in
accordance with provisions therein set forth. The Banc Corporation's Restated
Certificate of Incorporation contains a provision eliminating or limiting
director liability to The Banc Corporation and its stockholders for monetary
damages arising from acts or omissions in the director's capacity as a director.
The provision does not, however, eliminate or limit the personal liability of a
director

- for any breach of such director's duty of loyalty to The Banc Corporation
or its stockholders.

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law.

- under the Delaware statutory provision making directors personally
liable, under a negligence standard, for unlawful dividends or unlawful
stock purchases or redemptions.

- for any transaction from which the director derived an improper personal
benefit. This provision offers persons who serve on the Board of
Directors of The Banc Corporation protection against awards of monetary
damages resulting from breaches of their duty of care (except as
indicated above). As a result of this provision, the ability of The Banc
Corporation or a stockholder thereof to successfully prosecute an action
against a director for a breach of his duty of care is limited. However,
the provision does not affect the availability of equitable remedies such
as an injunction or rescission based upon a director's breach of his duty
of care. The SEC has taken the position that the provision will have no
effect on claims arising under the federal securities laws.

Section 145 of Delaware law grants corporations the right to indemnify
their directors, officers, employees and agents in accordance with the
provisions therein set forth. The Bylaws of The Banc Corporation provide for
mandatory indemnification rights, subject to limited exceptions, to any
director, officer, employee, or agent of The Banc Corporation who, by reason of
the fact that he or she is a director, officer, employee, or agent of The Banc
Corporation, is involved in a legal proceeding of any nature. Such
indemnification rights include reimbursement for expenses incurred by such
director, officer, employee, or agent in advance of the final disposition of
such proceeding in accordance with the applicable provisions of Delaware law.

The Banc Corporation has entered into agreements with all of its directors
and its executive officers pursuant to which the Corporation has agreed to
indemnify such directors and executive officers against liability incurred by
them by reason of their services of a director to the fullest extent allowable
under applicable law.

See Item 22 of this Registration Statement on Form S-4.

II-1

ITEM 21. EXHIBITS.

Exhibits:

EXHIBIT
NO. EXHIBIT
------- -------

(2)-1 -- Reorganization Agreement and Plan of Merger, dated as of
August 30, 2001, by and between The Banc Corporation, TBC
Merger Corporation, The Bank, Citizens Federal Savings Bank
of Port St. Joe and CF Bancshares, Inc., is attached to this
prospectus-proxy statement as Annex A and incorporated
herein by reference.
(3)-1 -- Restated Certificate of Incorporation of The Banc
Corporation, filed as Exhibit (3)-1 to The Banc
Corporation's Registration Statement on Form S-4
(Registration No. 333-58493), is hereby incorporated herein
by reference.
(3)-2 -- Bylaws of The Banc Corporation, filed as Exhibit (3)-2 to
The Banc Corporation's Registration Statement on Form S-4
(Registration No. 333-58493), is hereby incorporated herein
by reference.
(4)-1 -- Amended and Restated Declaration of Trust, dated as of
September 7, 2000, by and among State Street Bank and Trust
Company of Connecticut, National Association, as
Institutional Trustee, The Banc Corporation, as Sponsor,
David R. Carter and James A. Taylor, as Administrators,
filed as Exhibit (4)-1 to The Banc Corporation's Annual
Report on Form 10-K for the year ended December 31, 2000, is
hereby incorporated herein by reference.
(4)-2 -- Guarantee Agreement, dated as of September 7, 2000, by and
between The Banc Corporation and State Street Bank and Trust
Company of Connecticut, National Association, filed as
Exhibit (4)-2 to The Banc Corporation's Annual Report on
Form 10-K for the year ended December 31, 2000, is hereby
incorporated herein by reference.
(4)-3 -- Indenture, dated as of September 7, 2000, by and among The
Banc Corporation as issuer and State Street Bank and Trust
Company of Connecticut, National Association, as Trustee,
filed as Exhibit (4)-3 to The Banc Corporation's Annual
Report on Form 10-K for the year ended December 31, 2000, is
hereby incorporated herein by reference.
(4)-4 -- Placement Agreement, dated as of August 31, 2000, by and
among The Banc Corporation, TBC Capital Statutory Trust II,
Keefe Bruyette & Woods, Inc., and First Tennessee Capital
Markets, filed as Exhibit (4)-4 to The Banc Corporation's
Annual Report on Form 10-K for the year ended December 31,
2000, is hereby incorporated herein by reference.
(4)-5 -- Amended and Restated Declaration of Trust, dated as of July
16, 2001, by and among The Banc Corporation, The Bank of New
York, David R. Carter, and James A. Taylor, Jr.*
(4)-6 -- Guarantee Agreement, dated as of July 16, 2001, by The Banc
Corporation and The Bank of New York.*
(4)-7 -- Indenture, dated as of July 16, 2001, by The Banc
Corporation and The Bank of New York.*
(4)-8 -- Placement Agreement, dated as of June 28, 2001, among TBC
Capital Statutory Trust III, and The Banc Corporation and
Sandler O'Neill & Partners, L.P.*
(5) -- Opinion of Haskell Slaughter Young & Rediker, L.L.C. as to
the legality of the shares of the Corporation common stock
being registered.
10-(1) -- Second Amended and Restated 1998 Stock Incentive Plan of The
Banc Corporation, filed as Annex A to The Banc Corporation's
Proxy Statement for the 2000 Annual Meeting of Shareholders
is hereby incorporated herein by reference.
10-(2) -- Commerce Bank of Alabama Incentive Stock Compensation Plan,
filed as Exhibit (4)-3 to The Banc Corporation's
Registration Statement on Form S-8, dated February 22, 1999
(Registration No. 333-72747), is hereby incorporated herein
by reference.
(10)-3 -- The Banc Corporation 401(k) Plan, filed as Exhibit (4)-2 to
The Banc Corporation's Registration Statement on Form S-8,
dated January 21, 1999 (Registration No. 333-7953), is
hereby incorporated herein by reference.
(10)-4 -- Employment Agreement by and between The Banc Corporation and
James A. Taylor, filed as Exhibit (10)-1 to The Banc
Corporation's Registration Statement on Form S-1
(Registration No. 333-67011), is hereby incorporated herein
by reference.

II-2

EXHIBIT
NO. EXHIBIT
------- -------

(10)-5 -- Deferred Compensation Agreement by and between The Banc
Corporation and James A. Taylor, filed as Exhibit (10)-2 to
The Banc Corporation's Registration Statement on Form S-1
(Registration No. 333-67011), is hereby incorporated herein
by reference.
(10)-6 -- Employment Agreement between The Banc Corporation and W. T.
Campbell, Jr., dated as of October 30, 1998, filed as
Exhibit (10)-4 to The Banc Corporation's Registration
Statement on Form S-1 (Registration No. 333-67011), is
hereby incorporated herein by reference.
(10)-8 -- Employment Agreement, dated as of September 19, 2000, by and
between The Banc Corporation and James A. Taylor, Jr., filed
as Exhibit (10)-8 to The Banc Corporation's Annual Report on
Form 10-K for the year ended December 31, 2001, is hereby
incorporated herein by reference.
(10)-9 -- Employment Agreement, dated as of January 1, 1999, by and
between The Bank and Marie Swift filed as Exhibit (10)-9 to
The Banc Corporation's Annual Report on Form 10-K for the
year ended December 31, 1998, is hereby incorporated herein
by reference.
(10)-10 -- Employment Agreement, dated as of January 1, 1999, by and
between The Bank and Johnny Wallis filed as Exhibit (10)-10
to The Banc Corporation's Annual Report on Form 10-K for the
year ended December 31, 1998, is hereby incorporated herein
by reference.
(10)-11 -- Form of Deferred Compensation Agreement by and between The
Banc Corporation and the individuals listed on Schedule A
attached thereto filed as Exhibit (10)-11 to The Banc
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1999, is hereby incorporated herein by
reference.
(10)-12 -- Form of Deferred Compensation Agreement by and between The
Bank and the individuals listed on Schedule A attached
thereto filed as Exhibit (10)-11 to The Banc Corporation's
Annual Report on Form 10-K for the year ended December 31,
1999, is hereby incorporated by reference herein.
(10)-13 -- Employment Agreement dated as of September 19, 2000, by and
between The Banc Corporation and David R. Carter, filed as
Exhibit (10)-14 to The Banc Corporation's Annual Report on
Form 10-K for the year ended December 31, 2001, is hereby
incorporated herein by reference.
21 -- Subsidiaries of The Banc Corporation.*
(23)-1 -- Consent of Ernst & Young LLP.
(23)-2 -- Consent of Saltmarsh Cleaveland & Gund.
(23)-3 -- Consent of Williams, Cox, Weidner & Cox.
(23)-4 -- Consent of Williams, Cox, Weidner & Cox.
(23)-5 -- Consent of Hacker, Johnson & Smith, P.A.
24 -- Powers of Attorney. See the signature page to the original
filing of this Registration Statement.
99 -- Form CF Bancshares Proxy.

---------------

* Previously filed.

ITEM 22. UNDERTAKINGS.

(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-

II-3

tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

(2) The undersigned Registrant hereby undertakes as follows: that prior to
any public re-offering of the securities registered hereunder through use of a
prospectus which is part of the registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such re-offering prospectus will contain the information called
for by the applicable registration form with respect to re-offerings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.

(3) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(4) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not subject of and included in
the Registration Statement when it became effective.

(5) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama on October 19, 2001.

THE BANC CORPORATION

By: /s/ JAMES A. TAYLOR
------------------------------------
James A. Taylor
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ JAMES A. TAYLOR Chairman of the Board and October 19, 2001
------------------------------------------------------ Chief Executive Officer
James A. Taylor (Principal Executive
Officer)

* Executive Vice President October 19, 2001
------------------------------------------------------ Chief Financial Officer
David R. Carter and Director (Principal
Financial and Accounting
Officer)

* Vice Chairman October 19, 2001
------------------------------------------------------
James Mailon Kent, Jr.

* Vice Chairman October 19, 2001
------------------------------------------------------
Larry D. Striplin, Jr.

* Director October 19, 2001
------------------------------------------------------
James R. Andrews, M.D.

* Director October 19, 2001
------------------------------------------------------
Neal R. Berte, Ed.D.

* Director October 19, 2001
------------------------------------------------------
W. T. Campbell, Jr.

* Director October 19, 2001
------------------------------------------------------
Peter N. DiChiara

* Director October 19, 2001
------------------------------------------------------
K. Earl Durden

II-5

SIGNATURE TITLE DATE
--------- ----- ----

* Director October 19, 2001
------------------------------------------------------
John F. Gittings

* Director October 19, 2001
------------------------------------------------------
Steven C. Hays

* Director October 19, 2001
------------------------------------------------------
Thomas E. Jernigan, Jr.

* Director October 19, 2001
------------------------------------------------------
Randall E. Jones

* Director October 19, 2001
------------------------------------------------------
Mayer Mitchell

* Director October 19, 2001
------------------------------------------------------
Ronald W. Orso, M.D.

* Director October 19, 2001
------------------------------------------------------
Harold W. Ripps

* Director October 19, 2001
------------------------------------------------------
Richard M. Scrushy

* Director October 19, 2001
------------------------------------------------------
Jerry M. Smith

* Director October 19, 2001
------------------------------------------------------
Michael E. Stephens

* Director October 19, 2001
------------------------------------------------------
Marie Swift

/s/ JAMES A. TAYLOR, JR. Director October 19, 2001
------------------------------------------------------
James A. Taylor, Jr.

* Director October 19, 2001
------------------------------------------------------
T. Mandell Tillman

* Director October 19, 2001
------------------------------------------------------
Johnny Wallis

*By: /s/ JAMES A. TAYLOR, JR.
------------------------------------------------
James A. Taylor, Jr.
Attorney-in-Fact

II-6