UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): JANUARY 22, 2006
THE BANC CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-25033 63-1201350
(Commission File Number) (IRS Employer Identification No.)
17 NORTH 20TH STREET, BIRMINGHAM, ALABAMA 35203
(Address of Principal Executive Offices) (Zip Code)
(205) 327-3600
(Registrant's Telephone Number, Including Area Code)
(i) NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
SECTION 2 - FINANCIAL INFORMATION
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On January 23, 2006, The Banc Corporation issued a press release announcing
its operating results for the quarter and year ended December 31, 2005. A copy
of the press release is attached hereto as Exhibit 99. The information in Item
2.02 of this Current Report on Form 8-K, including Exhibit 99, shall not be
deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liability of that section, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
except as we may specifically state in any such filing.
SECTION 4 - MATTERS RELATED TO ACCOUNTANTS AND FINANCIAL STATEMENTS
ITEM 4.02 NON-RELIANCE ON PREVIOUS ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW
On January 22, 2006, the Audit Committee of the Board of Directors of the
Corporation, after consultation with senior management and the Corporation's
independent registered public accounting firm, authorized the filing of
corrected financial statements for the quarters ended March 31, June 30 and
September 30, 2005. The corrections relate to the accounting for interest rate
swaps related to brokered certificates of deposit under Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended ("SFAS 133"). The Corporation will file amendments to its
quarterly reports on Form 10-Q for each of those quarters containing the
corrected financial statements and reflecting a change in management's
assessment of the Corporation's disclosure controls and procedures for those
periods. Accordingly, investors should no longer rely on the Corporation's
previously filed financial statements and other financial information for each
of the quarters ended March 31, June 30 and September 30, 2005. The Corporation
will also file an amendment to its annual report on Form 10-K for the year ended
December 31, 2004 reflecting a change in management's assessment of the
Corporation's disclosure controls and procedures and internal control over
financial reporting as a result of a material weakness in internal control
relating to the accounting for interest rate swaps. The change in accounting for
interest rate swaps had no material impact on the Corporation's 2004 results, so
no correction is required in the Corporation's 2004 audited financial
statements.
BACKGROUND
Recently, there has been considerable discussion within the accounting
profession of the proper way to account for certain derivative instruments under
SFAS 133, including interest rate swaps commonly used by financial institutions
to hedge their interest rate exposure with respect to brokered certificates of
deposit. The Corporation has entered into such swap arrangements from time to
time, and has historically accounted for these swaps using an abbreviated method
of fair value hedge accounting under SFAS 133, known as the "short-cut" method,
which assumes that the hedging transactions are effective.
However, in light of recent informal technical interpretations of
accounting for these instruments, the Corporation has determined that these
swaps may not have qualified for the short-cut method in prior periods because
the related certificates-of-deposit broker placement fee caused the swap not to
have a fair value of zero at inception, which is a requirement for use of the
short-cut method under SFAS 133. Therefore, after discussions with its
independent registered public accounting firm, the Corporation has concluded
that any fluctuations in the market value of these interest rate swaps should
have been recorded through the Corporation's income statement. Accordingly,
while the Corporation believes that the swaps have been and will continue to be
highly effective hedges, the Corporation will be amending its previously
reported results for the first three quarters of 2005 to reflect the
Corporation's determination that such swaps did not qualify for hedge accounting
under SFAS 133. The cumulative impact of this revised treatment reduced earnings
by $625,000, or $.03 per share, for the year ended 2005. The change had no
impact on the Corporation's cash flows and no material impact to prior years.
The year-end and fourth quarter results of 2005 reported below reflect such
revised treatment of the swaps. The Corporation has re-designated these
interest-rate swaps as fair value hedges under the "long-haul" method in order
to qualify them under SFAS 133 for fair value hedge accounting in future
periods.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In its amended quarterly reports on Form 10-Q/A for the quarters ended
March 31, June 30 and September 30, 2005 and in its amended annual report on
Form 10-K/A for the year ended December 31, 2004, the Corporation will amend its
disclosures relating to changes in management's assessment of the Corporation's
disclosure controls and procedures and internal control over financial reporting
to conclude that its accounting for the interest rate swaps described above was
not in accordance with generally accepted accounting principles and therefore
represents a material weakness.
Management and the Audit Committee have discussed these matters with Carr,
Riggs & Ingram, LLP, the Corporation's independent registered public accounting
firm, who served as the Corporation's external auditors for all affected
periods.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit 99 Press Release of The Banc Corporation dated
January 23, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
THE BANC CORPORATION
Date: January 26, 2006 By: /s/ Rick D. Gardner
------------------------------------
Rick D. Gardner
Chief Operating Officer