All options granted have a maximum term of ten years from the grant date, 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 granted 1,423,940 options to the new management team. These options have an exercise price of $8.17 per share. They have a ten year term and a tiered vesting schedule as discussed in Note 24 to the Consolidated Financial Statements included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2004.

The Corporation has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (Statement 123) which allows an entity to continue to measure compensation costs for those plans using the intrinsic value-based method of accounting prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees.” The Corporation has elected to follow APB Opinion 25 and related interpretations in accounting for its employee stock options. Accordingly, compensation cost for fixed and variable stock-based awards is measured by the excess, if any, of the fair market price of the underlying stock over the amount the individual is required to pay. Compensation cost for fixed awards is measured at the grant date, while compensation cost for variable awards is estimated until both the number of shares an individual is entitled to receive and the exercise or purchase price are known (measurement date). No option-based employee compensation cost is reflected in net income, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The pro forma information below was determined as if the Corporation had accounted for its employee stock options under the fair value method of Statement 123. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period.

The Corporation’s pro forma information follows (in thousands, except earnings per share information):

		For the three months ended
		March 31,				March 31,
		2005				2004
		(Restated)
Net (loss) income:
As reported		$	(8,161	)		$	1,228
Pro forma			(10,322	)			919
(Loss) earnings per common share:
As reported		$	(.44	)		$	.07
Pro forma			(.56	)			.05
Diluted (loss) earnings per common share:
As reported		$	(.44	)		$	.07
Pro forma			(.56	)			.05

The fair value of the options granted was based upon the Black-Scholes pricing model. The Corporation used the following weighted average assumptions for the quarter ended:

		March 31,
		2005				2004
Risk free interest rate			4.34	%			3.84	%
Volatility factor			.41				.32
Weighted average life of options			7.0				7.0
Dividend yield			0.00				0.00

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Basis of Presentation

The following is a discussion and analysis of our March 31, 2005 consolidated financial condition and results of operations for the three-month periods ended March 31, 2005 (first quarter of 2005) and 2004 (first quarter of 2004). All significant intercompany accounts and transactions have been eliminated. Our accounting and reporting policies conform to generally accepted accounting principles.

This information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this report and the audited consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, appearing in our Annual Report on Form 10-K for the year ended December 31, 2004.

Restated Results of Operations and Financial Condition:

     We are restating our previously reported financial information for the first quarter of 2005 to correct errors in those consolidated financial statements relating to its derivative accounting under Statement of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”).

     In 2005 and prior years, we entered into interest rate swap agreements (CD swaps) to hedge the interest rate risk inherent in certain of our brokered certificates of deposit (brokered CDs). From the inception of the hedging program, we applied a method of fair value hedge accounting under SFAS 133 to account for the CD swaps that allowed us to assume no ineffectiveness in these transactions (the so-called “short-cut” method). We have recently concluded that the CD swaps did not qualify for this method in prior periods because the related CD broker placement fee was determined, in retrospect, to have caused the swap not to have a fair value of zero at inception (which is required under SFAS 133 to qualify for the short-cut method).

     Fair value hedge accounting allows a company to record the effective portion of the change in fair value of the hedged item (in this case, the brokered CDs) as an adjustment to income that offsets the fair value adjustment on the related interest rate swaps. Eliminating the application of fair value hedge accounting reverses the fair value adjustments that were made to the brokered CDs. Therefore, while the interest rate swap is recorded on the consolidated statement of condition at its fair value, the related hedged item, the brokered CDs, are required to be carried at par, net of the unamortized balance of the CD broker placement fee. In addition, the CD broker placement fee, which was incorporated into the swap, is now separately recorded as an adjustment to the par amount of the brokered CDs and amortized through the maturity date of the related CDs.

The net cumulative pre-tax effect of eliminating the fair value adjustment to the brokered CDs at March 31, 2005 is $230,000 (representing a $962,000 elimination of the fair value adjustment to the brokered CDs less a $732,000 adjustment to record the unamortized CD broker placement fees). The cumulative after-tax impact was a $145,000 reduction to retained earnings. Although these CD swaps cannot retrospectively qualify for hedge accounting under SFAS 133, there is no effect on cash flows for these changes, and the effectiveness of the CD swaps as economic hedge transactions has not been affected by these changes in accounting treatment. The increase to previously reported net loss and reduction in retained earnings did not cause any violation of our debt covenants and did not cause either our or our subsidiary bank’s regulatory capital ratios to fall below the “well-capitalized” levels at the end of the period.

Overview

Our principal subsidiary is The Bank, an Alabama-chartered financial institution headquartered in Birmingham, Alabama, which operates 26 banking offices in Alabama and the eastern panhandle of Florida. Other subsidiaries include TBC Capital Statutory Trust II (“TBC Capital II”), a Connecticut statutory trust, TBC Capital Statutory Trust III (“TBC Capital III”), a Delaware business trust, and Morris Avenue Management Group, Inc. (“MAMG”), an Alabama corporation, all of which are wholly owned. TBC Capital II and TBC Capital III are unconsolidated special purpose entities formed solely to issue cumulative trust preferred securities. MAMG is a real estate management company that manages our headquarters, our branch facilities and certain other real estate owned by The Bank.

Our total assets were $1.427 billion at March 31, 2005, an increase of $3.7 million, or .26%, from $1.423 billion as of December 31, 2004. Our total loans, net of unearned income, were $942 million at March 31, 2005, an increase of $7.5 million, or .80%, from $935 million as of December 31, 2004. Our total deposits were $1.079 billion at March 31, 2005, an increase of $12.1 million, or 1.14%,

from $1.067 billion as of December 31, 2004. Our total stockholders’ equity was $99.0 million at March 31, 2005, a decrease of $1.5 million, or 1.53%, from $100.5 million as of December 31, 2004.

On January 24, 2005, we announced that we had entered into a series of executive management change agreements. These agreements set forth the employment of C. Stanley Bailey as Chief Executive Officer and a director of the corporation and chairman of our banking subsidiary, C. Marvin Scott as President of the corporation and our banking subsidiary, and Rick D. Gardner as Chief Operating Officer of the corporation and our banking subsidiary. These agreements also provided for the purchase by Mr. Bailey, Mr. Scott and Mr. Gardner, along with other investors, of 925,636 shares of common stock of the corporation at $8.17 per share. We also entered into agreements with James A. Taylor and James A. Taylor, Jr. that would allow them continue to serve as Chairman of the Board of the corporation and as a director of the corporation, respectively, but would cease their employment as officers and directors of our banking subsidiary.

Under the agreement with Mr. Taylor, in lieu of the payments to which he would have been entitled under his employment agreement, we paid to Mr. Taylor $3,940,155 on January 24, 2005 and are scheduled to pay an additional $3,152,124 on January 24, 2006, and $788,031 on January 24, 2007. The agreement also provides for the provision of certain insurance benefits to Mr. Taylor, the transfer of a “key man” life insurance policy to Mr. Taylor, and the maintenance of such policy by us for five years (with the cost of maintaining such policy included in the above amounts), in each case substantially as required by his employment agreement. This obligation to provide such payments and benefits to Mr. Taylor is absolute and will survive the death or disability of Mr. Taylor.

Under the agreement with Mr. Taylor, Jr., in lieu of the payments to which he would have been entitled under his employment agreement, we paid to Mr. Taylor, Jr., $1,382,872 on January 24, 2005. The agreement also provides for the provision of certain insurance benefits to Mr. Taylor, Jr. and for the immediate vesting of his unvested incentive awards and deferred compensation in each case substantially as required by his employment agreement. This obligation to provide such payments and benefits to Mr. Taylor, Jr. is absolute and will survive the death or disability of Mr. Taylor, Jr..

In connection with the above management separation transaction, we recognized pre-tax expenses of $12.4 million in the first quarter of 2005. At March 31, 2005, we had $4.2 million of accrued liabilities related to these agreements. See Note 24 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2004 for further information.

Management reviews the adequacy of the allowance for loan losses on a quarterly basis. The provision for loan losses represents the amount determined by management necessary to maintain the allowance for loan losses at a level capable of absorbing inherent losses in the loan portfolio. Management’s determination of the adequacy of the allowance for loan losses, which is based on the factors and risk identification procedures discussed in the following pages, requires the use of judgments and estimates that may change in the future. Changes in the factors used by management to determine the adequacy of the allowance or the availability of new information could cause the allowance for loan losses to be increased or decreased in future periods. In addition, bank regulatory agencies, as part of their examination process, may require that additions or reductions be made to the allowance for loan losses based on their judgments and estimates.

Results of Operations

We incurred an $8.16 million net loss for the first quarter of 2005, compared to $1.23 million net income for the first quarter of 2004. Basic and diluted net (loss) income per common share was $(.44) and $.07, respectively, for the first quarters of 2005 and 2004, based on weighted average shares outstanding for the respective periods. Return on average assets, on an annualized basis, was (2.31)% for the first quarter of 2005 compared to .41% for the first quarter of 2004. Return on average stockholders’ equity, on an annualized basis, was (32.80)% for the first quarter of 2005 compared to 4.91% for the first quarter of 2004. Book value per share at March 31, 2005 was $4.95, compared to $5.31 as of December 31, 2004. Tangible book value per share at March 31, 2005 was $4.29, compared to $4.62 as of December 31, 2004.

The decrease in our net income during the first quarter of 2005 compared to the first quarter of 2004 is the result of certain nonoperating charges related to the management changes which occurred in the first quarter of 2005, the recognition of losses in the bond portfolio and losses from the sale of certain assets (see notes 3 and 4 in the condensed consolidated financial statements and the noninterest income and noninterest expenses sections of management’s discussion and analysis).

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 $682,000, or 7.64%, to $9.6 million for the first quarter of 2005 compared to $8.9 million for the first quarter of 2004. Net interest income increased primarily due to a $2.7 million increase in total

interest income offset by a $2.0 increase in total interest expense. The increase in total interest income is primarily due to a $95.6 million increase in the average volume of loans and a $121.4 million increase in the average volume of investment securities.

The increase in total interest expense is attributable to a 24 basis point increase in the average interest rate paid on interest-bearing liabilities and a $207 million increase in the volume of average interest-bearing liabilities. The average rate paid on interest-bearing liabilities was 2.84% for the first quarter of 2005, compared to 2.60% for the first quarter of 2004. Our net interest spread and net interest margin were 2.94% and 3.06%, respectively, for the first quarter of 2005, compared to 3.22% and 3.35% for the first quarter of 2004.

Average interest-earning assets for the first quarter of 2005 increased $206 million, or 19.2%, to $1.277 billion from $1.071 billion in the first quarter of 2004. This increase in average interest-earning assets was offset by a $208 million, or 20.4%, increase in average interest-bearing liabilities, to $1.224 billion for the first quarter of 2005 from $1.016 billion for the first quarter of 2004. The ratio of average interest-earning assets to average interest-bearing liabilities was 104.4% and 105.4% for the first quarters of 2005 and 2004, respectively. Average interest-bearing assets produced a taxable equivalent yield of 5.78% for the first quarter of 2005 compared to 5.82% for the first quarter of 2004.

Average Balances, Income, Expense and Rates. The following table depicts, on a taxable equivalent basis for the periods indicated, certain information related to our average balance sheet and average yields on assets and average costs of liabilities. Average yields are calculated by dividing income or expense by the average balance of the corresponding assets or liabilities. Average balances have been calculated on a daily basis.

		THREE MONTHS ENDED MARCH 31,
		2005																				2004
		AVERAGE				INCOME/				YIELD/				AVERAGE				INCOME/				YIELD/
		BALANCE				EXPENSE				RATE				BALANCE				EXPENSE				RATE
		(Dollars in thousands)
ASSETS
Interest-earning assets:
Loans, net of unearned income(1)		$	953,891			$	14,878				6.33	%		$	858,225			$	13,567				6.36	%
Investment securities
Taxable			276,595				2,925				4.29				160,538				1,713				4.29
Tax-exempt(2)			6,632				88				5.38				1,316				23				7.03
Total investment securities			283,227				3,013				4.31				161,854				1,736				4.31
Federal funds sold			13,589				82				2.45				14,440				34				.95
Other investments			26,380				243				3.74				36,570				165				1.81
Total interest-earning assets			1,277,087				18,216				5.78				1,071,089				15,502				5.82
Noninterest-earning assets:
Cash and due from banks			27,483												25,832
Premises and equipment			59,959												58,018
Accrued interest and other assets			79,797												78,153
Allowance for loan losses			(12,802	)											(25,492	)
Total assets		$	1,431,524											$	1,207,600
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Demand deposits		$	302,756				1,110				1.49			$	237,751				681				1.15
Savings deposits			28,214				11				0.16				30,397				13				0.17
Time deposits			658,162				4,916				3.03				544,141				3,583				2.65
Other borrowings			202,603				1,857				3.69				172,047				1,666				3.89
Subordinated debentures			31,959				685				8.69				31,959				626				7.88
Total interest-bearing liabilities			1,223,694				8,579				2.84				1,016,295				6,569				2.60
Noninterest-bearing liabilities:
Demand deposits			95,483												81,250
Accrued interest and other liabilities			11,429												9,468
Stockholders’ equity			100,918												100,587
Total liabilities and stockholders’ equity		$	1,431,524											$	1,207,600
Net interest income/net interest spread							9,637				2.94	%							8,933				3.22	%
Net yield on earning assets											3.06	%											3.35	%
Taxable equivalent adjustment:
Investment securities(2)							30												8
Net interest income						$	9,607											$	8,925

The following table sets forth, on a taxable equivalent basis, the effect which the varying levels of interest-earning assets and interest-bearing liabilities and the applicable rates have had on changes in net interest income for the three months ended March 31, 2005 and 2004.

		THREE MONTHS ENDED MARCH 31 (1)
		2005 VS. 2004
		INCREASE				CHANGES DUE TO
		(DECREASE)				RATE				VOLUME
		(Dollars in thousands)
Increase (decrease) in:
Income from interest-earning assets:
Interest and fees on loans		$	1,311			$	(69	)		$	1,380
Interest on securities:
Taxable			1,212				—				1,212
Tax-exempt			65				(7	)			72
Interest on federal funds			48				50				(2	)
Interest on other investments			78				134				(56	)
Total interest income			2,714				108				2,606
Expense from interest-bearing liabilities:
Interest on demand deposits			429				223				206
Interest on savings deposits			(2	)			(1	)			(1	)
Interest on time deposits			1,333				542				791
Interest on other borrowings			191				(78	)			269
Interest on subordinated debentures			59				59				—
Total interest expense			2,010				745				1,265
Net interest income		$	704			$	(637	)		$	1,341

Noninterest income. Noninterest income decreased $2.7 million, or 68.6%, to $1.3 million for the first quarter of 2005 from $4.0 million for the first quarter of 2004, primarily due to the $739,000 gain we realized on the sale of our Morris branch during the first quarter of 2004 combined with the $909,000 loss we realized in 2005 in our investment securities portfolio and $230,000 decline in the fair value of our interest rate swaps ( See Note 1 to financial statements). The investment portfolio losses were realized as a result of a $50 million sale of bonds in the investment portfolio that closed in April 2005. We reinvested the proceeds in bonds intended to enhance the yield and cash flows of our investment securities portfolio. The new investment securities will be classified as available for sale. Service charges and fees on deposits decreased $279,000, or 20.1%, to $1.1 million in the first quarter of 2005 from $1.4 million in the first quarter of 2004. This decrease is primarily due to a loss of transaction accounts from 2004 to 2005. Management is currently pursuing new accounts and customers through direct marketing and other promotional efforts to increase this source of revenue. Mortgage banking income increased $42,000, or 10.4%, to $446,000 in the first quarter of 2005 from $404,000 in the first quarter of 2004.

Noninterest expenses. Noninterest expenses increased $12.0 million, or 105.4%, to $23.3 million for the first quarter of 2005 from $11.4 million for the first quarter of 2004. This increase is primarily due to the management separation costs of $12.4 million incurred in the first quarter of 2005. The management separation charges primarily include severance payments, accelerated vesting of restricted stock and professional fees (see note 3 in the condensed consolidated financial statements). Salaries and benefits decreased $184,000, or 3.3%, to $5.4 million for the first quarter of 2005 from $5.6 million for the first quarter of 2004. Occupancy expenses decreased $183,000, or 8.5%, to $2.0 million for the first quarter of 2005 from $2.2 million for the first quarter of 2004. We also realized a $355,000 loss on the sale of our corporate aircraft in the first quarter of 2005.

Income tax expense. An income tax benefit of $5.05 million was recognized for the first quarter of 2005, compared to income tax expense of $319,000 for the first quarter of 2004. The primary difference in the effective rate and the federal statutory rate (34%) for the first quarter of 2005 and 2004 is due to certain tax-exempt income from investments and insurance policies.

Provision for Loan Losses. The provision for loan losses represents the amount determined by management necessary to maintain the allowance for loan losses at a level capable of absorbing inherent losses in the loan portfolio. Management reviews the adequacy of the allowance for loan losses on a quarterly basis. The allowance for loan loss calculation is segregated into various segments that

include classified loans, loans with specific allocations and pass rated loans. A pass rated loan is generally characterized by a very low to average risk of default and in which management perceives there is a minimal risk of loss. Loans are rated using an eight-point scale, with loan officers having the primary responsibility for assigning risk ratings and for the timely reporting of changes in the risk ratings. These processes, and the assigned risk ratings, are subject to review by our internal loan review function and senior management. Based on the assigned risk ratings, the criticized and classified loans in the portfolio are segregated into the following regulatory classifications: Special Mention, Substandard, Doubtful or Loss. Generally, regulatory reserve percentages are applied to these categories to estimate the amount of loan loss allowance, adjusted for previously mentioned risk factors. Impaired loans are reviewed specifically and separately under Statement of Financial Accounting Standards (“SFAS”) Statement No. 114 to determine the appropriate reserve allocation. Management compares the investment in an impaired loan with the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral, if the loan is collateral-dependent, to determine the specific reserve allowance. Reserve percentages assigned to non-rated loans are based on historical charge-off experience adjusted for other risk factors. To evaluate the overall adequacy of the allowance to absorb losses inherent in our loan portfolio, management considers historical loss experience based on volume and types of loans, trends in classifications, volume and trends in delinquencies and non-accruals, economic conditions and other pertinent information. Based on future evaluations, additional provisions for loan losses may be necessary to maintain the allowance for loan losses at an appropriate level. See “Financial Condition — Allowance for Loan Losses” for additional discussion.

The provision for loan losses was $750,000 for the first quarter of 2005. We did not record a provision for loan loss in the first quarter of 2004. During the first quarter of 2005, we had net charged-off loans totaling $336,000, compared to net charged-off loans of $2.6 million in the first quarter of 2004. The annualized ratio of net charged-off loans to average loans was .14% in the first quarter of 2005, compared to 1.20% for the first quarter of 2004 and 1.52% for the year 2004. The allowance for loan losses totaled $13.0 million, or 1.37% of loans, net of unearned income at March 31, 2005, compared to $12.5 million, or 1.34% of loans, net of unearned income, at December 31, 2004. See “Financial Condition — Allowance for Loan Losses” for additional discussion.

Financial Condition

Total assets were $1.427 billion at March 31, 2005, an increase of $4 million, or .26%, from $1.423 billion as of December 31, 2004. Average total assets for the first quarter of 2005 were $1.432 billion, which was supported by average total liabilities of $1.331 billion and average total stockholders’ equity of $101 million.

Short-term liquid assets. Short-term liquid assets (cash and due from banks, interest-bearing deposits in other banks and federal funds sold) decreased $5.3 million, or 11.6%, to $40.6 million at March 31, 2005 from $45.9 million at December 31, 2004. At March 31, 2005, short-term liquid assets comprised 2.9% of total assets, compared to 3.2% at December 31, 2004. We continually monitor our liquidity position and will increase or decrease our short-term liquid assets as we deem necessary.

Investment Securities. Total investment securities decreased $23.7 million, or 8.2%, to $264.6 million at March 31, 2005, from $288.3 million at December 31, 2004. Mortgage-backed securities, which comprised 21.7% of the total investment portfolio at March 31, 2005, decreased $3.3 million, or 5.4%, to $57.3 million from $60.6 million at December 31, 2004. Investments in U.S. agency securities, which comprised 58.5% of the total investment portfolio at March 31, 2005, decreased $25.1 million, or 14.0 %, to $154.7 million from $179.8 million at December 31, 2004. During the first quarter of 2005, we had a $50 million sale of bonds in the investment portfolio that closed in April 2005. We reinvested the proceeds in bonds intended to enhance the yield and cash flows of our investment securities portfolio. The new investment securities will be classified as available for sale. The total investment portfolio at March 31, 2005 comprised 21.6% of all interest-earning assets compared to 22.8% at December 31, 2004 and produced an average taxable equivalent yield of 4.3% for the first quarter of 2005 and 2004.

Loans. Loans, net of unearned income, totaled $942.4 million at March 31, 2005, an increase of         .80%, or $7.5 million, from $934.9 million at December 31, 2004. Mortgage loans held for sale totaled $22.0 million at March 31, 2005, an increase of $13.9 million from $8.1 million at December 31, 2004. Average loans, including mortgage loans held for sale, totaled $953.9 million for the first quarter of 2005 compared to $858.2 million for the first quarter of 2004. Loans, net of unearned income, comprised 75.01% of interest-earning assets at March 31, 2005, compared to 73.88% at December 31, 2004. Mortgage loans held for sale comprised 1.75% of interest-earning assets at March 31, 2005, compared to .6% at December 31, 2004. The loan portfolio produced an average yield of 6.3% for the first quarter of 2005, compared to 6.4% for the first quarter of 2004. The following table details the distribution of the loan portfolio by category as of March 31, 2005 and December 31, 2004:

DISTRIBUTION OF LOANS BY CATEGORY

		MARCH 31, 2005								DECEMBER 31, 2004
						PERCENT OF								PERCENT OF
		AMOUNT				TOTAL				AMOUNT				TOTAL
Commercial and industrial		$	135,495				14.3	%		$	131,979				14.1	%
Real estate — construction and land development			272,319				28.9				249,188				26.6
Real estate — mortgage
Single-family			230,863				24.5				250,718				26.8
Commercial			248,282				26.3				242,279				25.9
Other			25,814				2.7				25,745				2.7
Consumer			24,484				2.6				28,431				3.0
Other			6,636				.7				8,045				.9
Total loans			943,893				100.0	%			936,385				100.0	%
Unearned income			(1,502	)							(1,517	)
Allowance for loan losses			(12,957	)							(12,543	)
Net loans		$	929,434							$	922,325

Deposits. Noninterest-bearing deposits totaled $93.5 million at March 31, 2005, an increase of 4.5%, or $4.0 million, from $89.5 million at December 31, 2004. Noninterest-bearing deposits comprised 8.7% of total deposits at March 31, 2005, compared to 8.4% at December 31, 2004. Of total noninterest-bearing deposits $69.0 million, or 73.8%, were in the Alabama branches while $24.5 million, or 26.2%, were in the Florida branches.

Interest-bearing deposits totaled $986.1 million at March 31, 2005, an increase of .83%, or $8.4 million, from $977.7 million at December 31, 2004. Interest-bearing deposits averaged $989.1 million for the first quarter of 2005 compared to $812.2 million for the first quarter of 2004. The average rate paid on all interest-bearing deposits during the first quarter of 2005 was 2.5%, compared to 2.1% for the first quarter of 2004. Of total interest-bearing deposits, $731.4 million, or 74.2%, were in the Alabama branches while $254.7 million, or 25.8%, were in the Florida branches.

Borrowings. Advances from the Federal Home Loan Bank (“FHLB”) totaled $146.1 million at March 31, 2005 and $156.1 million at December 31, 2004. Borrowings from the FHLB were used primarily to fund growth in the loan portfolio and have a weighted average rate of approximately 4.04% at March 31, 2005. The advances are secured by FHLB stock, agency securities and a blanket lien on certain residential real estate loans and commercial loans. The FHLB has issued for the benefit of our banking subsidiary a $20,000,000 irrevocable letter of credit in favor of the Chief Financial Officer of the State of Florida to secure certain deposits of the State of Florida. The letter of credit expires January 6, 2006 upon sixty days’ prior notice; otherwise, it will automatically extend for a successive one-year term.

Junior Subordinated Debentures. We have sponsored two trusts, TBC Capital Statutory Trust II (“TBC Capital II”) and TBC Capital Statutory Trust III (“TBC Capital III”), of which we own 100% of the common. The trusts were formed for the purpose of issuing mandatory redeemable trust preferred securities to third-party investors and investing the proceeds from the sale of such trust preferred securities solely in our junior subordinated debt securities (the debentures). The debentures held by each trust are the sole assets of that trust. Distributions on the trust preferred securities issued by each trust are payable semi-annually at a rate per annum equal to the interest rate being earned by the trust on the debentures held by that trust. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the debentures. We have entered into agreements which, taken collectively, fully and unconditionally guarantee the trust preferred securities subject to the terms of each of the guarantees. The debentures held by the TBC Capital II and TBC Capital III capital trusts are first redeemable, in whole or in part, by us on September 7, 2010 and July 25, 2006, respectively.

The trust preferred securities held by the trusts qualify as Tier 1 capital under Federal Reserve Board guidelines.

Consolidated debt obligations related to subsidiary trusts holding solely our debentures follow:

		March 31, 2005				December 31, 2004
		(In thousands)
10.6% junior subordinated debentures owed to TBC Capital Statutory Trust II due September 7, 2030		$	15,464			$	15,464
6-month LIBOR plus 3.75% junior subordinated debentures owed to TBC Capital Statutory Trust III due July 25, 2031			16,495				16,495
Total junior subordinated debentures owed to unconsolidated subsidiary trusts		$	31,959			$	31,959

As of March 31, 2005 and December 31, 2004, the interest rate on the $16,495,000 subordinated debentures was 6.71% and 5.74%, respectively.

Currently, we must obtain regulatory approval prior to paying any dividends on these trust preferred securities. The Federal Reserve approved the timely payment of our semi-annual distributions on our trust preferred securities in January and March, 2005.

Allowance for Loan Losses. We maintain an allowance for loan losses within a range we believe is adequate to absorb estimated losses inherent in the loan portfolio. We prepare a quarterly analysis to assess the risk in the loan portfolio and to determine the adequacy of the allowance for loan losses. Generally, we estimate the allowance using specific reserves for impaired loans, and other factors, such as historical loss experience based on volume and types of loans, trends in classifications, volume and trends in delinquencies and non-accruals, economic conditions and other pertinent information. The level of allowance for loan losses to net loans will vary depending on the quarterly analysis.

We manage and control risk in the loan portfolio through adherence to credit standards established by the board of directors and implemented by senior management. These standards are set forth in a formal loan policy, which establishes loan underwriting and approval procedures, sets limits on credit concentration and enforces regulatory requirements. In addition, we have engaged Credit Risk Management, LLC, an independent loan review firm, to supplement our existing independent loan review function.

Loan portfolio concentration risk is reduced through concentration limits for borrowers, collateral types and geographic diversification. Concentration risk is measured and reported to senior management and the board of directors on a regular basis.

The allowance for loan loss calculation is segregated into various segments that include classified loans, loans with specific allocations and pass rated loans. A pass rated loan is generally characterized by a very low to average risk of default and in which management perceives there is a minimal risk of loss. Loans are rated using an eight-point scale, with the loan officer having the primary responsibility for assigning risk ratings and for the timely reporting of changes in the risk ratings. These processes, and the assigned risk ratings, are subject to review by our internal loan review function and senior management. Based on the assigned risk ratings, the criticized and classified loans in the portfolio are segregated into the following regulatory classifications: Special Mention, Substandard, Doubtful or Loss. Generally, regulatory reserve percentages (5%, Special Mention; 15%, Substandard; 50%, Doubtful; 100%, Loss) are applied to these categories to estimate the amount of loan loss allowance required, adjusted for previously mentioned risk factors.

Pursuant to SFAS No. 114, impaired loans are specifically reviewed loans for which it is probable that we will be unable to collect all amounts due according to the terms of the loan agreement. Impairment is measured by comparing the recorded investment in the loan with the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. A valuation allowance is provided to the extent that the measure of the impaired loans is less than the recorded investment. A loan is not considered impaired during a period of delay in payment if we continue to expect that all amounts due will ultimately be collected. Larger groups of homogenous loans such as consumer installment and residential real estate mortgage loans are collectively evaluated for impairment.

Reserve percentages assigned to pass rated homogeneous loans are based on historical charge-off experience adjusted for current trends in the portfolio and other risk factors.

As stated above, risk ratings are subject to independent review by internal loan review, which also performs ongoing, independent review of the risk management process. The risk management process includes underwriting, documentation and collateral control. Loan review is centralized and independent of the lending function. The loan review results are reported to the Audit Committee of the board of directors and senior management. We have also established a centralized loan administration services department to serve our entire bank. This department will provide standardized oversight for compliance with loan approval authorities and bank lending policies and procedures, as well as centralized supervision, monitoring and accessibility.

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

SUMMARY OF LOAN LOSS EXPERIENCE

		THREE-MONTH
		PERIOD ENDED				YEAR ENDED
		MARCH 31,				DECEMBER 31,
		2005				2004
		(Dollars in thousands)
Allowance for loan losses at beginning of period		$	12,543			$	25,174
Charge-offs:
Commercial and industrial			41				7,690
Real estate — construction and land development			1				765
Real estate — mortgage
Single-family			87				1,012
Commercial			210				5,820
Other			—				86
Consumer			125				1,881
Other			91				87
Total charge-offs			555				17,341
Recoveries:
Commercial and industrial			82				1,468
Real estate — construction and land development			10				4
Real estate — mortgage
Single-family			29				470
Commercial			1				737
Other			10				97
Consumer			48				549
Other			39				410
Total recoveries			219				3,735
Net charge-offs			336				13,606
Provision for loan losses			750				975
Allowance for loan losses at end of period		$	12,957			$	12,543
Loans at end of period, net of unearned income		$	942,391			$	934,868
Average loans, net of unearned income			953,891				894,406
Ratio of ending allowance to ending loans			1.37	%			1.34	%
Ratio of net charge-offs to average loans(1)			0.14	%			1.52	%
Net charge-offs as a percentage of:
Provision for loan losses			44.8	%			1395.49	%
Allowance for loan losses(1)			10.52	%			108.47	%
Allowance for loan losses as a percentage of nonperforming loans			183.97	%			169.36	%

The allowance for loan losses as a percentage of loans, net of unearned income, at March 31, 2005 was 1.37%, compared to 1.34% as of December 31, 2004. The allowance for loan losses as a percentage of nonperforming loans increased to 183.97% at March 31, 2005 from 169.36% at December 31, 2004.

Net charge-offs were $336,000 for the first quarter of 2005. Net charge-offs to average loans on an annualized basis totaled 0.14% for the first quarter of 2005. Net commercial real estate loan charge-offs totaled $209,000, or 62.2% of total net charge-off loans, for the first quarter of 2005 compared to 37.4% of total net charge-off loans for the year 2004. Net single family real estate loan charge-offs totaled $58,000, or 17.3% of total net charge-off loans, for the first quarter of 2005 compared to 4.0% of total net charge-off loans for the year 2004. Net consumer loan charge-offs totaled $77,000, or 22.9% of total net charge-off loans, for the first quarter of 2005 compared with 9.8% of total net charge-off loans for the year 2004.

Nonperforming Assets. Nonperforming assets decreased $2.4 million, to $10.0 million as of March 31, 2005 from $12.4 million as of December 31, 2004. As a percentage of net loans plus nonperforming assets, nonperforming assets decreased from 1.32% at December 31, 2004 to 1.06% at March 31, 2005. The following table represents our nonperforming assets for the dates indicated.

NONPERFORMING ASSETS

		MARCH 31,				DECEMBER 31,
		2005				2004
		(Dollars in Thousands)
Nonaccrual		$	7,014			$	6,344
Accruing loans 90 days or more delinquent			29				431
Restructured			—				631
Total nonperforming loans			7,043				7,406
Other real estate owned			2,971				4,906
Repossessed assets			4				103
Total nonperforming assets		$	10,018			$	12,415
Nonperforming loans as a percent of loans			.75	%			.79	%
Nonperforming assets as a percent of loans plus nonperforming assets			1.06	%			1.32	%

Loans past due 30 days or more, net of non-accruals, improved to .54% at March 31, 2005 from .88% at December 31, 2004.

The following is a summary of nonperforming loans by category for the dates shown:

		MARCH 31				DECEMBER 31,
		2005				2004
		(Dollars in thousands)
Commercial and industrial		$	1,636			$	2,445
Real estate — construction and land development			229				187
Real estate — mortgages
Single-family			1,926				2,060
Commercial			2,961				2,273
Other			127				183
Consumer			164				250
Other			—				8
Total nonperforming loans		$	7,043			$	7,406

A delinquent loan is placed on nonaccrual status when it becomes 90 days or more past due and management believes, after considering economic and business conditions and collection efforts, that the 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 during the current period but remains unpaid is reversed and deducted from earnings as a reduction of reported interest income; any prior period accrued and unpaid interest is reversed and charged against the allowance for loan losses. No additional interest income is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain. When a problem loan is finally resolved, there may ultimately be an actual write-down or charge-off of the principal balance of the loan to the allowance for loan losses, which may necessitate additional charges to earnings.

Impaired Loans. At March 31, 2005, the recorded investment in impaired loans under FAS 114 totaled $5.4 million, with approximately $1.9 million in allowance for loan losses specifically allocated to impaired loans. This represents an increase of $300,000 from $5.1 million at December 31, 2004. The following is a summary of impaired loans and the specifically allocated allowance for loan losses by category as of March 31, 2005:

		OUTSTANDING				SPECIFIC
		BALANCE				ALLOWANCE
Commercial and industrial		$	2,253			$	1,097
Real estate — construction and land development			229				57
Real estate — mortgages
Commercial			2,762				686
Other			113				19
Total		$	5,357			$	1,859

Potential Problem Loans. In addition to nonperforming loans, management has identified $140,000 in potential problem loans as of March 31, 2005 compared to $2.4 million as of December 31, 2004. Potential problem loans are loans where known information about possible credit problems of the borrowers causes management to have doubts as to the ability of such borrowers to comply with the present repayment terms and may result in disclosure of such loans as nonperforming.

Stockholders’ Equity. At March 31, 2005, total stockholders’ equity was $99.0 million, a decrease of $1.5 million from $100.5 million at December 31, 2004. The decrease in stockholders’ equity during the first quarter of 2005 resulted primarily from a net loss of $8.0 million offset by additional net proceeds of $7.3 million resulting from the sale of 925,636 shares of our common stock at $8.17 per share, the then current market price, to the new members of the management team and other investors, in a private placement. As of March 31, 2005 we had 19,020,943 shares of common stock issued and 18,756,632 outstanding. As of March 31, 2005, there were 52,914 shares held in treasury at a cost of $368,000.

On April 1, 2002, we issued 157,500 shares of restricted common stock to certain directors and key employees pursuant to the Second Amended and Restated 1998 Stock Incentive Plan. Under the Restricted Stock Agreements, the stock may not be sold or assigned in any manner for a five-year period that began on April 1, 2002. During this restricted period, the participant is eligible to receive dividends and exercise voting privileges. The restricted stock also has a corresponding vesting period with one-third vesting at the end of each of the third, fourth and fifth years. The restricted stock was issued at $7.00 per share, or $1,120,000, and classified as a contra-equity account, “Unearned restricted stock”, in stockholders’ equity. During 2003, 15,000 shares of this restricted common stock were forfeited. On January 24, 2005, the Corporation issued 49,375 additional shares of restricted common stock to certain key employees. Under the terms of the management separation agreement entered into during the first quarter of 2005, vesting was accelerated on 99,375 shares of restricted stock. Restricted shares outstanding as of March 31, 2005 were 92,500 and the remaining amount in the unearned restricted stock account is $333,000. This balance is being amortized as expense as the stock is earned during the restricted period. The amounts of restricted shares are included in the diluted earnings per share calculation, using the treasury stock method, until the shares vest. Once vested, the shares become outstanding for basic earnings per share. For the periods ended March 31, 2005 and 2004, we recognized $519,000 and $50,000, respectively, in restricted stock expense. Of the $519,000 expense in 2005, $486,000 is related to the accelerated vesting from the management separation agreements and is included in the amount of management separation cost.

We adopted a leveraged employee stock ownership plan (the “ESOP”) effective May 15, 2002 that covers all eligible employees who are at least 21 years old and have completed a year of service. As of March 31, 2005, the ESOP has been leveraged with 273,400 shares of the our common stock purchased in the open market and classified as a contra-equity account, “Unearned ESOP stock,” in stockholders’ equity.

On January 29, 2003, the ESOP trustees finalized a $2,100,000 promissory note to reimburse us for the funds used to leverage the ESOP. The unreleased shares and our guarantee secure the promissory note, which has been classified as long-term debt on our statement of financial condition. As the debt is repaid, shares are released from collateral based on the proportion of debt service. Principal payments on the debt are $17,500 per month for 120 months. The interest rate is adjusted annually to the Wall Street Journal prime rate. Released shares are allocated to eligible employees at the end of the plan year based on the employee’s eligible compensation to total compensation. We recognize compensation expense during the period as the shares are earned and committed to be released. As shares are committed to be released and compensation expense is recognized, the shares become outstanding for basic and diluted earnings per share computations. The amount of compensation expense we report is equal to the average fair value of the shares earned and committed to be released during the period. Compensation expense that we recognized during the periods ended March 31, 2005 and 2004 was $66,000 and $52,000, respectively. The ESOP shares as of March 31, 2005 were as follows:

		MARCH 31, 2005
Allocated shares			55,328
Estimated shares committed to be released			6,675
Unreleased shares			211,397
Total ESOP shares			273,400
Fair value of unreleased shares		$	2,807,818

     Regulatory Capital. The table below represents our and our subsidiary’s regulatory and minimum regulatory capital requirements at March 31, 2005 (dollars in thousands):

										FOR CAPITAL
										ADEQUACY								TO BE WELL
		ACTUAL								PURPOSES								CAPITALIZED
		AMOUNT				RATIO				AMOUNT				RATIO				AMOUNT				RATIO
Total Risk-Based Capital
Corporation		$	125,862				11.34	%		$	88,754				8.00	%		$	110,942				10.00	%
The Bank			123,966				11.37	%			87,238				8.00	%			109,047				10.00	%
Tier 1 Risk-Based Capital
Corporation			111,609				10.06	%			44,377				4.00	%			66,565				6.00	%
The Bank			111,009				10.18	%			43,619				4.00	%			65,428				6.00	%
Leverage Capital
Corporation			111,609				7.90	%			56,484				4.00	%			70,605				5.00	%
The Bank			111,009				7.98	%			55,610				4.00	%			69,513				5.00	%

Liquidity

Our principal sources of funds are deposits, principal and interest payments on loans, federal funds sold and maturities and sales of investment securities. In addition to these sources of liquidity, we have access to purchased funds from several regional financial institutions, brokered and internet deposits, and may borrow from the Federal Home Loan Bank under a blanket floating lien on certain commercial loans and residential real estate loans. Also, we have established certain repurchase agreements with a large financial institution. While scheduled loan repayments and maturing investments are relatively predictable, interest rates, general economic conditions and competition primarily influence deposit flows and early loan payments. Management places constant emphasis on the maintenance of adequate liquidity to meet conditions that might reasonably be expected to occur. Management believes it has established sufficient sources of funds to meet its anticipated liquidity needs.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. Some of the disclosures in this Quarterly Report on Form 10-Q, including any statements preceded by, followed by or which include the words “may,” “could,” “should,” “will,” “would,” “hope,” “might,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “assume” or similar expressions constitute forward-looking statements.

These forward-looking statements, implicitly and explicitly, include the assumptions underlying the statements and other information with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions, financial condition, results of operations, future performance and business, including our expectations and estimates with respect to our revenues, expenses, earnings, return on equity, return on assets, efficiency ratio, asset quality, the adequacy of our allowance for loan losses and other financial data and capital and performance ratios.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, these statements involve risks and uncertainties which are subject to change based on various important factors (some of which are beyond our control). The following factors, among others, could cause our financial performance to differ materially from our goals, plans, objectives, intentions, expectations and other forward-looking statements: (1) the strength of the United States economy in general and the strength of the regional and local economies in which we conduct operations; (2) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (3) inflation, interest rate, market and monetary fluctuations; (4) our ability to successfully integrate the assets, liabilities, customers, systems and management we acquire or merge into our operations; (5) our timely development of new products and services in a changing environment, including the features, pricing and quality compared to the products and services of our competitors; (6) the willingness of users to substitute competitors’ products and services for our products and services; (7) the impact of changes in financial services policies, laws and regulations, including laws, regulations and policies concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies; (8) our ability to resolve any legal proceeding on acceptable terms and its effect on our financial condition or results of operations; (9) technological changes; (10) changes in consumer spending and savings habits; and (11) regulatory, legal or judicial proceedings.

If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this annual report. Therefore, we caution you not to place undue reliance on our forward-looking information and statements.

We do not intend to update our forward-looking information and statements, whether written or oral, to reflect change. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

There have been no material changes in our quantitative or qualitative disclosures about market risk as of March 31, 2005 from those presented in our annual report on Form 10-K for the year ended December 31, 2004.

The information set forth under the caption “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Market Risk-Interest Rate Sensitivity” included in our Annual Report on Form 10-K for the year ended December 31, 2004, is hereby incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

CEO AND PFO CERTIFICATION

Appearing as exhibits to this report are Certifications of our Chief Executive Officer (“CEO”) and our Principal Financial Officer (“PFO”). The Certifications are required to be made by Rule 13a - 14 of the Securities Exchange Act of 1934, as amended. This Item contains the information about the evaluation that is referred to in the Certifications, and the information set forth below in this Item 4 should be read in conjunction with the Certifications for a more complete understanding of the Certifications.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and PFO, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

We originally conducted an evaluation (the “Evaluation”) of the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our management, including our CEO and our then-serving Chief Financial Officer (“CFO”), as of March 31, 2005. Based upon the Evaluation, our CEO and CFO concluded that, as of March 31, 2005, our disclosure controls and procedures were effective to ensure that material information relating to The Banc Corporation and its subsidiaries is made known to management, including the CEO and PFO, particularly during the period when our periodic reports are being prepared.

In connection with the amendment to our financial statements described in the Introductory Note and Items 1 and 2 of this Amendment No. 1, we re-evaluated our disclosure controls and procedures as of March 31, 2005 and, in connection therewith, we identified the following material weakness in our internal control over financial reporting with respect to accounting for hedge transactions: a failure to ensure the correct application of generally accepted accounting principles, including SFAS 133 and its related interpretations for certain derivative transactions, as described in the Introductory Note, and failure to correct that error subsequently. Solely as a result of this material weakness, we concluded that our disclosure controls and procedures were not effective as of March 31, 2005.

Simultaneously with the filing of this Amendment No. 1, we filed an amendment on Form 10-K/A to our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as previously amended, reflecting the same material weakness as of that date and, for that reason, concluding that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2004. Other than as set forth in that amendment and this Amendment no. 1, there have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

While we are a party to various legal proceedings arising in the ordinary course of business, we believe that there are no proceedings threatened or pending against us at this time that will individually, or in the aggregate, materially adversely affect our business, financial condition or results of operations. We believe that we have strong claims and defenses in each lawsuit in which we are involved. While we believe that we will prevail in each lawsuit, there can be no assurance that the outcome of the pending, or any future, litigation, either individually or in the aggregate, will not have a material adverse effect on our financial condition or our results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None, other than as previously reported on Form 8-K.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

(a) Exhibit:

     31.01 Certification of principal executive officer pursuant to Rule 13a-14(a).

     31.02 Certification of principal financial officer pursuant to 13a-14(a).

     32.01 Certification of principal executive officer pursuant to 18 U.S.C. Section 1350.

     32.02 Certification of principal financial officer pursuant to 18 U.S.C. Section 1350.

SIGNATURES

     Pursuant with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		The Banc Corporation
		(Registrant)
Date: February 17, 2006		By:		/s/ C. Stanley Bailey
				C. Stanley Bailey Chief Executive Officer
Date: February 17, 2006		By:		/s/ James C. Gossett
				James C. Gossett
				Chief Accounting Officer
				(Principal Financial and Accounting Officer)