BANC CORP, S-1, 2000-06-30

BANC CORP
S-1, 2000-06-30
STATE COMMERCIAL BANKS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 2000

REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
---------------------

THE BANC CORPORATION
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 6022 63-1201350
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

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

TBC CAPITAL STATUTORY TRUST
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
CONNECTICUT 6022 ------------
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

17 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 326-2265
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)

JAMES A. TAYLOR, JR.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
THE BANC CORPORATION
17 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 326-2265
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)

COPIES TO:

<TABLE>
<S> <C> <C>
ROBERT E. LEE GARNER ROBERT M. BORDEN WILLIAM K. HOLBROOK
F. HAMPTON MCFADDEN, JR. BINGHAM DANA LLP RITCHIE & REDIKER, L.L.C.
HASKELL SLAUGHTER & YOUNG, L.L.C. ONE STATE STREET 312 23RD STREET NORTH
1200 AMSOUTH/HARBERT PLAZA HARTFORD, CONNECTICUT 06103 BIRMINGHAM, ALABAMA 35203
1901 SIXTH AVENUE NORTH (860) 240-2700 (205) 251-1288
BIRMINGHAM, ALABAMA 35203 (860) 240-2800 (205) 324-7830 (FAX)
(205) 251-1000
(205) 324-1133 (FAX)
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement. If delivery
of the prospectus is expected to be made pursuant to Rule 434, please check the
following box [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE FEE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Securities of TBC
Capital Statutory Trust......... 920,000 $25.00 $23,000,000(2) $6,072(2)
--------------------------------------------------------------------------------------------------------------------------
Subordinated Debentures of The
Banc Corporation(3).............
--------------------------------------------------------------------------------------------------------------------------
Guarantee of The Banc Corporation
with respect to Preferred
Securities(4)...................
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes 120,000 preferred securities which may be sold by the Trust to
cover over-allotments.
(2) The registration fee is calculated pursuant to Section 6(b), in accordance
with Rule 457(a) of the Securities Act of 1933.
(3) The subordinated debentures will be purchased by the Trust with the proceeds
of the sale of the preferred securities. The subordinated debentures may
later be distributed for no additional consideration to holders of the
preferred securities upon the Trust's dissolution and distribution of its
assets.
(4) No fee is required pursuant to Rule 457(n).

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

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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS
[SUBJECT TO COMPLETION: DATED JUNE 30, 2000]

800,000 PREFERRED SECURITIES

TBC CAPITAL STATUTORY TRUST
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25.00 PER PREFERRED SECURITY)
GUARANTEED BY
[THE BANC CORPORATION LOGO]

THE BANC CORPORATION:

The Banc Corporation is a financial holding company which offers a broad range
of banking services in Alabama and Florida through its banking subsidiary, The
Bank.

THE TRUST:

TBC Capital Statutory Trust is a Connecticut statutory trust and a subsidiary of
The Banc Corporation which will:

- Sell preferred securities to the public and common securities to The Banc
Corporation;

- Use the proceeds from these sales to buy an equal principal amount of
subordinated debentures due , 2030, of The Banc Corporation; and

- Distribute the cash payments it receives from The Banc Corporation on the
debentures to the holders of the preferred securities and the common
securities.

THE OFFERING:

- For each preferred security that you own, you will receive cumulative cash
distributions accumulating from , 2000, at an annual rate of % of
the liquidation amount of $25.00 per preferred security on March 31, June 30,
September 30 and December 31 of each year, beginning , 2000.

- The Banc Corporation may defer interest payments on the debentures at any time
for up to 20 consecutive quarterly periods, in which case, the Trust will also
defer payment of distributions on the preferred securities to you. However,
deferred distributions will themselves accumulate interest at an annual rate
of %.

- The preferred securities mature on , 2030.

- The Trust may redeem the preferred securities, at a redemption price of $25.00
per preferred security plus accrued and unpaid distributions, at any time on
or after , 2005, or earlier under certain circumstances.

- The Banc Corporation will fully and unconditionally guarantee payment of all
distributions the Trust is obligated to make, but only to the extent the Trust
has sufficient funds to satisfy these payments.

We have applied to list the preferred securities on the American Stock Exchange
under the trading symbol " ."
---------------------

INVESTING IN THE PREFERRED SECURITIES INVOLVES CERTAIN RISKS WHICH ARE DESCRIBED
IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE .

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

NONE OF THE SECURITIES OFFERED BY THIS PROSPECTUS ARE DEPOSITS OR ACCOUNTS OF A
BANK. THEY ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
---------------------

<TABLE>
<CAPTION>
PER SECURITY TOTAL
------------ -----
<S> <C> <C>
Public offering price....................................... $ 25.00 $ 20,000,000
Underwriting commissions (paid by The Banc Corporation)..... $ 1.00 $ 800,000
Proceeds to the Trust....................................... $ 25.00 $ 20,000,000
</TABLE>

The underwriters may also purchase up to an additional 120,000 preferred
securities at the public offering price within 30 days after the date of this
prospectus to cover any over-allotments. The Trust expects the preferred
securities will be ready for delivery in book-entry form only through The
Depository Trust Company on or about , 2000.
---------------------

STERNE, AGEE & LEACH, INC.

The date of this prospectus is , 2000.
<PAGE> 3

[INSIDE FRONT COVER]
[MAP OF BRANCHES OF THE BANK]
<PAGE> 4

PROSPECTUS SUMMARY

This summary highlights information from this prospectus. The summary is
not complete and does not contain all of the information that you should review.
You should read the entire prospectus carefully before investing in the
preferred securities.

The term "Trust" refers to TBC Capital Statutory Trust, a Connecticut
statutory trust organized to purchase our subordinated debentures and issue the
preferred securities. We use the term "bank subsidiaries" to refer to our bank
subsidiaries, The Bank, Emerald Coast Bank and C&L Bank, which were merged into
one surviving entity, The Bank, on June 16, 2000. The terms "we", "our", "us'
and "the Corporation" refer to The Banc Corporation and, in some cases, will
include the Trust and the bank subsidiaries.

THE BANC CORPORATION

The Banc Corporation is a bank holding company and, effective March 13,
2000, became a financial holding company. The Banc Corporation is incorporated
under the laws of Delaware and headquartered in Birmingham, Alabama. Through its
banking subsidiary, The Bank, The Banc Corporation had assets of approximately
$848.4 million, loans of approximately $666.5 million, deposits of approximately
$681.8 million and stockholders equity of approximately $69.7 million as of
March 31, 2000.

The Banc Corporation was formed in April 1998 for Warrior Capital
Corporation to 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 through a combination of
internal growth, the acquisition of existing community banks and branches and
the opening of new bank branches. Through The Bank, The Banc Corporation offers
a broad range of banking services in 30 locations throughout Alabama and the
Florida panhandle.

The Banc Corporation operates under a community banking philosophy
primarily focusing on individuals and owner-managed and regional businesses that
prefer local bank decision making and personalized service. Each local president
has the primary responsibility for day-to-day operations. We supplement this
decentralized management approach with centralized policy oversight, management
systems and credit quality review. Our management team has been instrumental in
the expansion and growth of our banking operations since 1998.

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) 326-2265.

TBC CAPITAL STATUTORY TRUST

TBC Capital Statutory Trust is a Connecticut statutory trust and will exist
solely to issue and sell its preferred securities to the public and engage in
other activities that are necessary or incidental to the offering described
below. The Trust's corporate offices are located at c/o , and its
telephone number is .

1
<PAGE> 5

THE OFFERING

Issuer........................ TBC Capital Statutory Trust, which was formed
by us for purposes of this offering, will issue
the preferred securities.

Securities offered............ The Trust is offering for sale 800,000(1)
preferred securities at an offering price of
$25 each. The preferred securities represent an
indirect interest in our subordinated
debentures which will be purchased by the Trust
with the proceeds of this offering.

The Trust will sell its preferred securities to
the public and its common securities to us.
Together, the preferred securities and the
common securities are referred to as "trust
securities."

Use of proceeds............... The Trust will use the net proceeds from the
sale of trust securities to buy our %
subordinated debentures which will have the
same payment terms as the preferred securities.
We plan to use the net proceeds of
approximately $ million(2) from the issuance of
the subordinated debentures for general
corporate purposes, including capital
investments in our bank subsidiary to fund
growth. See "Use of Proceeds" and
"Capitalization."

Quarterly distributions are
payable to you on the
preferred securities.......... The distributions payable on each preferred
security will:

- accumulate at a fixed rate of % per
year;

- accrue from the date of issuance of the
preferred securities; and

- be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each
year that the preferred securities are
outstanding, beginning on , 2000.

We may defer distributions to
you on the preferred
securities.................... The Trust may defer distributions on the
preferred securities if we defer paying
interest to the Trust on the subordinated
debentures. We generally have the right to
defer interest payments on the subordinated
debentures for up to 20 consecutive quarters.
During any deferral period, you will accumulate
distributions at the annual rate of %,
plus you will earn additional interest at the
annual rate of %, compounded quarterly, on
the deferred distributions.

During any deferral period, we will not be
permitted (with certain exceptions) to pay a
dividend or make any other payment or
distribution on our common stock or redeem,
purchase or make a liquidation payment on our
common stock. We currently have no intention of
exercising our right to defer payments of
interest by extending the interest payment
period on the subordinated debentures.

If we defer distributions, you must still
include the related income in your taxable
gross income for United States federal income
tax purposes for as long as the subordinated
debentures remain out-

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

1 An additional 120,000 preferred securities may be sold by the Trust upon
exercise of the over-allotment option granted to the underwriters.

2 Underwriting commissions for this offering will be $ and expenses
are estimated to be approximately $ , all of which will be paid by
The Banc Corporation.
2
<PAGE> 6

standing. For further information on deferrals
and their tax consequences, see "Risk
Factors -- Preferred Securities Risk Factors"
and "United States Federal Income Tax
Consequences."

You will be required to sell
your preferred securities when
the subordinated debentures
mature........................ The subordinated debentures will mature on
, 2030. You will be required to sell
your preferred securities to the Trust upon the
stated maturity date of the subordinated
debentures.

If the subordinated debentures
are prepaid, your preferred
securities will be redeemed... Subject to prior approval of the Federal
Reserve, if then required, we may prepay the
subordinated debentures prior to maturity:

- in whole or in part at any time on or after
, 2005; or

- in whole, but not in part, if certain changes
in tax or investment company laws or in
federal bank regulatory capital requirements
occur or may occur.

Upon any prepayment of the subordinated
debentures, your preferred securities will be
redeemed at the liquidation amount of $25.00
each, plus any accrued and unpaid distributions
to the date of redemption. For further
information on redemptions, see "Description of
the Preferred Securities -- Redemption" and
"Description of the Subordinated
Debentures -- Redemption."

At our option, we may require
you to exchange your preferred
securities for our
subordinated debentures....... We have the right at any time to dissolve or
liquidate the Trust and distribute the
subordinated debentures to you in exchange for
your preferred securities. If that happens, you
will receive subordinated debentures in
exchange for the same principal amount of your
holdings of preferred securities. However, we
must pay the creditors of the Trust and receive
prior approval of the Federal Reserve, if then
required, before we dissolve or liquidate the
Trust. If the subordinated debentures are
distributed, we will use our best efforts to
list them on a national securities exchange or
comparable automated quotation system in place
of the preferred securities. For further
information concerning distribution of the
subordinated debentures, see "Description of
the Preferred Securities -- Distribution of
Subordinated Debentures."

We guarantee your preferred
securities on a subordinated
basis......................... We fully and unconditionally guarantee the
payment of all distributions the Trust is
obligated to make, but only to the extent the
Trust has sufficient funds to satisfy those
payments.

If we do not make a payment on the subordinated
debentures, the Trust will not have sufficient
funds to make payments on the preferred
securities. The guarantee does not require us
to make any payments on our subordinated
debentures nor does it require us to make up
any shortfall in the Trust's funds needed to
make a payment on the preferred securities to
you. The guarantee only covers payments to the
extent the Trust holds any funds.

We believe that, taken together, our
obligations under the Indenture, the Guarantee
Agreement, the Trust Agreement and the

3
<PAGE> 7

Expense Agreement (each defined on page
) provide in the aggregate, a
full, irrevocable and unconditional guarantee,
on a subordinated basis, of all of the
obligations of the Trust under the preferred
securities.

For further information concerning our
guarantee of the preferred securities, see
"Risk Factors -- Preferred Securities Risk
Factors" and "Description of Guarantee."

Your preferred securities rank
lower in payment compared to
our other obligations......... Our obligations under the guarantee, the
subordinated debentures and the related
governing documents are unsecured and have a
payment priority below all of our current and
future Senior and Subordinated Debt (as defined
on page ). In addition, because we are a
holding company that relies on dividends from
our bank subsidiary for virtually all of our
income, all existing and future borrowings and
other liabilities of our bank subsidiary will
effectively rank higher than all of our
obligations relating to the preferred
securities and the subordinated debentures. See
"Risk Factors -- Preferred Securities Risk
Factors."

The terms of the preferred securities and the
subordinated debentures do not limit the amount
of other debt, preferred securities or other
subordinated debentures that we or the Trust
may issue in the future or on the amount of
future liabilities of the bank subsidiary.
Future issuances of securities similar to the
preferred securities and the subordinated
debentures will rank equally with our
obligations under the subordinated debentures
and our guarantee of the preferred securities
described in this prospectus.

Limited voting rights......... As a holder of preferred securities, you will
have very limited voting rights. See "Risk
Factors -- Preferred Securities Risk Factors"
and "Description of the Preferred
Securities -- Voting Rights; Amendment of the
Trust Agreement."

Book-entry issuance........... You will not receive a certificate for your
preferred securities. Instead, the preferred
securities will be represented by a global
security that will be deposited with The
Depository Trust Company or its custodian and
registered in the name of The Depository Trust
Company or its nominee.

Trustees...................... The Trust will have trustees. of the
trustees are officers of The Banc Corporation
and will act as "administrative trustees" for
the Trust. State Street Bank and Trust Company
will act as "property trustee" for the Trust,
"indenture trustee" for the subordinated
debentures and "guarantee trustee" for the
guarantee. Its offices are located at 2 Avenue
de Lafayette, Boston, Massachusetts 02111-1724
Attention: Corporate Trust (referred to in this
prospectus as the "Corporate Trust Office").

The American Stock Exchange... The Trust has applied to list the preferred
securities on the American Stock Exchange
(AMEX) under the trading symbol
" ." See "Risk
Factors -- Preferred Securities Risk Factors"
and "Underwriting."

4
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth selected financial data for the Corporation
derived from, and qualified in its entirety by reference to, the Consolidated
Financial Statements, including the notes thereto, and Management's Discussion
and Analysis of Financial Condition and Results of Operations included elsewhere
in this prospectus.

<TABLE>
<CAPTION>
MARCH 31, (2) DECEMBER 31, (1)
------------------- ------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- ----------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF FINANCIAL CONDITION DATA
(AT PERIOD END):
Total assets.................................. $848,362 $641,898 $827,427 $630,089 $461,956 $359,533 $ 278,799
Total earning assets.......................... 744,076 572,513 728,009 561,131 419,603 325,673 255,171
Loans, net of unearned income................. 666,476 474,914 632,777 431,931 282,902 213,533 152,440
Allowance for loan losses..................... 8,734 6,598 8,065 6,466 3,741 2,522 2,072
Investment securities......................... 70,495 83,821 70,916 98,208 98,885 93,590 82,732
Deposits...................................... 681,817 544,065 682,517 531,070 395,222 313,514 243,814
Advances from FHLB and notes payable.......... 86,774 23,160 69,604 23,160 -- 1,600 --
Stockholders' Equity.......................... 69,699 68,459 68,848 65,967 53,716 40,875 31,882
SELECTED STATEMENT OF INCOME DATA:
Interest income............................... 16,649 11,915 55,557 42,472 33,705 25,207 20,052
Interest expense.............................. 8,284 5,609 26,749 20,206 15,793 11,486 8,739
-------- -------- -------- -------- -------- -------- ----------
Net interest income................... 8,365 6,306 28,808 22,266 17,912 13,721 11,313
Provision for loan losses..................... 888 244 2,850 4,657 2,685 1,236 699
Noninterest income............................ 1,647 1,413 6,164 4,081 3,019 2,646 2,246
Merger related costs.......................... -- 69 744 1,466 -- -- --
Other noninterest expense..................... 7,851 6,426 27,938 20,663 14,776 12,031 9,588
-------- -------- -------- -------- -------- -------- ----------
Income(loss) before income taxes............ 1,273 980 3,440 (439) 3,470 3,100 3,272
Income tax expense (benefit).................. 371 168 520 (724) 1,074 917 841
-------- -------- -------- -------- -------- -------- ----------
Net income............................ $ 902 $ 812 $ 2,920 $ 285 $ 2,396 $ 2,183 $ 2,431
======== ======== ======== ======== ======== ======== ==========
PER SHARE DATA:
Net income - basic............................ $ 0.06 $ 0.06 $ 0.20 $ 0.02 $ 0.23 $ 0.23 $ 0.28
- diluted.......................... 0.06 0.06 0.20 0.02 0.22 0.23 0.28
Dividends..................................... -- -- -- -- 0.09 0.08 0.08
Book value at period end...................... 4.85 4.81 4.79 4.69
Tangible book value at period end............. 4.35 4.76 4.28 4.63
PERFORMANCE RATIOS:
Return on average assets(2)................... 0.43% 0.53% 0.41% 0.05% 0.58% 0.71% 0.97%
Return on average equity(2)................... 5.24 4.90 4.33 0.51 5.57 6.12 8.53
Net interest margin(2)(3)(4).................. 4.56 4.63 4.55 4.73 4.84 4.97 5.11
Net interest spread(2)(4)(5).................. 4.07 3.87 3.98 3.96 3.98 4.05 4.45
Noninterest income to average assets(2)....... 0.80 0.92 0.86 0.77 0.74 0.86 0.90
Noninterest expense to average assets(2)(6)... 3.76 4.16 3.98 4.17 3.60 3.91 3.83
Efficiency ratio(6)(7)........................ 77.66 82.76 80.91 82.50 69.40 72.18 69.18
Average loan to average deposit ratio......... 94.62 99.81 89.71 74.77 70.37 73.62 67.34
Average interest-earning assets to average
interest bearing liabilities................ 110.85 118.94 113.73 118.45 120.44 122.57 117.15
ASSETS QUALITY RATIOS:
Allowance for loan losses to nonperforming
loans....................................... 166.05% 221.41% 216.22% 172.93% 146.42% 111.49% 230.22%
Allowance for loan losses to loans, net of
unearned income............................. 1.31 1.39 1.27 1.50 1.32 1.18 1.36
Nonperforming loans to loans, net of unearned
income...................................... 0.79 0.63 0.59 0.58 0.90 1.06 0.59
Net chargeoffs to average loans(2)............ 0.13 0.10 0.90 0.67 0.58 0.45 0.31
CAPITAL RATIOS:
Average equity to average assets.............. 8.27 10.75 9.36 10.46 10.48 11.61 11.37
Tier-1 risk-based capital ratio............... 9.52 13.52 9.41 13.92 17.12 17.19 18.59
Total risk-based capital ratio................ 10.77 14.77 10.61 15.05 18.29 18.21 19.66
EARNINGS TO FIXED CHARGES
Including interest on deposits................ 1.15x 1.17x 1.13x 0.98x 1.22x 1.27x 1.37x
Excluding interest on deposits................ 2.20 4.23 2.24 0.33 27.90 111.71 3,273.00
</TABLE>

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

(1) Information for all prior periods has been restated for all poolings of
interests business combinations.
(2) Certain financial ratios for interim periods have been annualized.
(3) Net interest income divided by average earning assets.
(4) Calculated on a tax equivalent basis.
(5) Yield on average interest earning assets less rate on average interest
bearing liabilities.
(6) Includes merger related expenses of $744,000 and $1,466,000 and $69,000 in
1999, 1998, and for the period ended March 31, 1999, respectively.
(7) Efficiency ratio is calculated by dividing noninterest expense by
noninterest income plus net interest income on a fully tax equivalent basis.

5
<PAGE> 9

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This prospectus contains certain information, including forward-looking
statements, that are based on management's beliefs, assumptions and information
currently available with respect to: our ability to achieve the operating
results, anticipated cost savings and revenue enhancements we expect relating to
our completed acquisitions; our ability to successfully assimilate acquired
operations including installing our centralized policy oversight, credit review
and management systems at the acquired institutions; the absence of material
contingencies related to the acquired operations; the adequacy of the allowance
for loan losses; the effect of legal proceedings on the Corporation's financial
condition, results of operations and liquidity and market risk disclosures, as
well as other information. When we use the words "anticipate," "believe,"
"estimate," "expect," "intend," "may," "plan(s)," "seek(s)," "should," "will"
and similar expressions or their negative, we are making forward-looking
statements. Many possible events or factors could affect the future financial
results and performance of our company. 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.

Some of the important factors that could cause our actual results of
operation or financial condition to differ materially from expectations, which
in turn could have an adverse impact on our ability to pay distributions on the
subordinated debentures and preferred securities, are:

- 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 fluctuations;

- the impact of comprehensive products, services and pricing;

- timely development by the Corporation of technology enhancements for
products and operating systems;

- changes in legislation and regulatory requirements; and

- other factors described in this prospectus.

Should one or more of the foregoing risks materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary materially from
those described in the forward-looking statements. These and other material risk
factors relating to our operations and the subordinated debentures and the
preferred securities are more fully described under the caption "Risk Factors."

6
<PAGE> 10

RISK FACTORS

In addition to the other information in this prospectus, you should
carefully consider the following risk factors before investing in the preferred
securities.

PREFERRED SECURITIES RISK FACTORS

THE HOLDERS OF OUR SENIOR AND SUBORDINATED DEBT WILL BE PAID BEFORE YOU ARE PAID
UNDER THE GUARANTEE OR SUBORDINATED DEBENTURES

Our obligations under the guarantee and subordinated debentures are
unsecured and rank junior in right of payment to all of our senior debt and
equal to any securities we may later have that are similar to the preferred
securities and subordinated debentures. The guarantee and subordinated
debentures also will be effectively junior to all obligations of our bank
subsidiaries.

The preferred securities, the subordinated debentures and the guarantee do
not limit our ability to incur additional indebtedness, including indebtedness
that ranks senior to the subordinated debentures and the guarantee. As of March
31, 2000, we had approximately $8.9 million of senior debt outstanding
(substantially all of which was outstanding under our $15 million revolving line
of credit). Only our common stock currently ranks junior in right of payment to
the subordinated debentures and our obligations under the guarantee. See "Use of
Proceeds," "Description of Guarantee -- Status of Guarantee" and "Description of
the Subordinated Debentures -- Subordination."

IF WE ARE UNABLE TO MAKE PAYMENTS ON THE SUBORDINATED DEBENTURES, THE TRUST WILL
NOT BE ABLE TO PAY DISTRIBUTIONS ON THE PREFERRED SECURITIES AND THE GUARANTEE
WILL NOT APPLY

The Trust's ability to pay distributions on the preferred securities
depends upon our making timely payments on the subordinated debentures. In turn,
our ability to make payments on the subordinated debentures depends primarily
upon our receipt of cash dividends from The Bank. Dividend payments from The
Bank are subject to a number of operational, regulatory and other risks which we
describe in more detail under the caption "Risk Factors -- The Banc
Corporation."

If we default on our obligations under the subordinated debentures, you
will not be able to rely on the guarantee for payment because the guarantee only
applies if we make a payment of principal or interest on the subordinated
debentures. Instead, you or the property trustee will have to sue us to enforce
the rights of the holder of the subordinated debentures. For more information on
our obligations under the preferred securities guarantee and the subordinated
debentures, see "Description of Guarantee -- Status of Guarantee" and
"Description of the Subordinated Debentures -- Subordination."

DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED; YOU MAY HAVE TO
INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH

It is possible that you will not receive cash distributions on the
preferred securities for up to 20 consecutive quarters (in each case, an
"Extension Period"). We have the right, at one or more times, to defer interest
payments on the subordinated debentures for an Extension Period, but not beyond
the maturity date of the subordinated debentures. We must make payments of all
deferred interest upon the earlier of the end of the Extension Period or the
maturity date. This deferral right exists only if no event of default under the
subordinated debentures has occurred and is continuing. If we exercise this
right, the Trust will also defer distributions on the preferred securities
during an Extension Period. However, you would still accumulate distributions at
an annual rate of % of the liquidation amount of $25 per preferred
security, plus you will earn interest at the annual rate of %, compounded
quarterly, on any unpaid distributions. When we pay all the accumulated amounts
due to you during an Extension Period, the Extension Period will terminate.
However, we have the right to begin another Extension Period under the same
terms outlined above. There is no limit on the number of times we can elect to
begin an Extension Period. During an Extension Period, the preferred securities
may trade at a price that does not fully reflect the value of accrued but unpaid
distributions. See "Description of the Preferred Securities."

You will also not receive the cash distributions related to any accrued and
unpaid interest from the Trust if you sell the preferred securities before the
end of an Extension Period. However, you will be required to
7
<PAGE> 11

include accrued interest income as original issue discount for United States
federal income tax purposes with respect to your pro rata share of the
subordinated debentures held by the Trust. While we will take the position that
original issue discount will not arise before the first Extension Period, it is
possible that all interest on the subordinated debentures would be required to
be accounted for as original issue discount. In these circumstances, the receipt
of interest would not separately be reported as taxable income. See "United
States Federal Income Tax Consequences" for more information regarding the tax
consequences of the preferred securities.

We have no current intention of exercising our right to defer interest
payments on the subordinated debentures. However, if we exercise our right in
the future, the market price of the preferred securities is likely to be
adversely affected.

IF WE REDEEM THE SUBORDINATED DEBENTURES IT WILL CAUSE A REDEMPTION OF THE
PREFERRED SECURITIES AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT THE
SAME OR HIGHER RATE OF RETURN

You are subject to risk of prepayment of your preferred securities under
certain circumstances as provided below. If your preferred securities are
redeemed, you may not be able to reinvest the money you receive in the
redemption at a rate that is equal to or higher than the rate of return you
receive on the preferred securities. Although the subordinated debentures have a
stated maturity date of , 2030, they may be redeemed by us prior to
maturity (which, in turn, would cause an early redemption of the preferred
securities) in the following circumstances:

- in whole or in part at any time on or after , 2005, at our
option;

- in whole, but not in part, within 90 days following a change in the
federal tax laws or a change in the interpretation of the tax laws by the
courts or the Internal Revenue Service, which would result in a risk that
(1) the Trust may be subject to federal income tax with respect to income
received or accrued on the subordinated debentures, (2) the interest
payable on the subordinated debentures will not be deductible by us for
federal income tax purposes, or (3) the Trust is or will be subject to
more than a minimal amount of other taxes or governmental charges;

- in whole, but not in part, within 90 days following a change in
investment company laws or regulations if there is a risk that the Trust
is or will be considered to be an investment company that is required to
be registered under the Investment Company Act of 1940; or

- in whole, but not in part, within 90 days following a change in banking
laws or regulations if there is a risk that we will not be able to treat
all or a substantial portion of the preferred securities as "Tier 1
capital" for purposes of federal banking guidelines.

Our exercise of these redemption rights is subject to our receipt of prior
approval of the Federal Reserve, if then required. For tax or regulatory events
that may trigger redemption of the subordinated debentures and prepayment of the
preferred securities, see "Description of the Preferred
Securities -- Redemption." Additionally, for a discussion of certain tax
consequences that could be caused by a redemption, see "Federal Income Tax
Consequences -- Receipt of Subordinated Debentures or Cash Upon Termination or
Redemption."

AN ACTIVE TRADING MARKET FOR THE PREFERRED SECURITIES MAY NOT DEVELOP AND A
DISTRIBUTION OF SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED SECURITIES MAY
HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF YOUR INVESTMENT

The preferred securities constitute a new issue of securities with no
established trading market. Although an application for listing of the preferred
securities on the American Stock Exchange has been filed, there can be no
assurance that the listing will be approved. Further, even if approved, a
listing does not guarantee that a trading market for the preferred securities
will develop. If a trading market does develop, there is no assurance of the
depth of that market or that holders of preferred securities will be able to
sell their preferred securities easily.

Your investment in the preferred securities may decrease in value if the
subordinated debentures are distributed to you in exchange for your preferred
securities. We cannot predict the liquidity or market prices
8
<PAGE> 12

for the subordinated debentures that may be distributed. Accordingly, the
subordinated debentures that you receive upon a distribution, or the preferred
securities you hold pending such a distribution, may trade at a discount to your
purchase for the preferred securities.

Because you may receive subordinated debentures, you must also make an
investment decision with regard to those securities. You should carefully review
all the information regarding the subordinated debentures contained in this
prospectus.

Under "United States Federal Income Tax Consequences," we discuss
applicable United States federal income tax consequences of a distribution of
the subordinated debentures.

IN AN EVENT OF A DEFAULT, YOU MAY BE REQUIRED TO RELY ON THE PROPERTY TRUSTEE OF
THE TRUST TO ENFORCE YOUR RIGHTS

You may not be able to directly enforce rights against us if an event of
default occurs with respect to the subordinated debentures. For a list of events
of default, see "Description of the Preferred Securities -- Events of Default;
Notice" and "Description of the Subordinated Debentures -- Debenture Events of
Default."

If an event of default under the subordinated debentures occurs and is
continuing, this event will also be an event of default under the preferred
securities. In that case, you generally would first have to rely on the property
trustee's enforcement of its rights as holder of the subordinated debentures
against us. If the property trustee fails to exercise its rights under the
subordinated debentures, you will then be able to exercise any other remedies
available under the subordinated debentures.

However, if the default arises because we fail to pay interest or principal
(except during an Extension Period) on the subordinated debentures, you may
proceed directly against us without first relying on the property trustee.

LIMITED COVENANTS RELATING TO THE PREFERRED SECURITIES AND THE SUBORDINATED
DEBENTURES WILL NOT NECESSARILY PROTECT YOU

The governing documents impose only limited obligations on us with respect
to the preferred securities and the subordinated debentures. As a result, the
governing documents will not necessarily protect you in the event of an adverse
change in our financial condition or results of operations. The governing
documents do not limit our ability to incur additional debt. You should not
consider the covenants contained in the governing documents to be a significant
factor in evaluating whether we will be able to comply with our obligations
under the subordinated debentures or the guarantee.

YOU WILL HAVE LIMITED VOTING RIGHTS

As a holder of preferred securities, you will have very limited voting
rights relating only to the modification of the preferred securities, the
dissolution or winding up of the Trust and the removal of the property trustee
upon a limited number of events. You will not have any voting rights regarding
the Corporation's business or any matters regarding the administrative trustees.
See "Description of the Preferred Securities -- Voting Rights; Amendment of the
Trust Agreement" for more information on your limited voting rights.

TRADING CHARACTERISTICS OF THE PREFERRED SECURITIES MAY CREATE ADVERSE TAX
CONSEQUENCES FOR YOU

The preferred securities may trade at a price that does not reflect the
value of accrued but unpaid interest on the underlying subordinated debentures.
If you use the accrual method of accounting for tax purposes (or if you use the
cash method and the preferred securities are deemed to have been issued with
original issue discount) and you dispose of your preferred securities between
record dates for any distribution payments, you will have to include as ordinary
income for United States federal income tax purposes an amount equal to the
accrued but unpaid interest on your proportionate share of the interest on the
subordinated debentures through the date of your disposition.

You will recognize a capital loss on the amount that the selling price is
less than your adjusted tax basis. Generally, capital losses may be used by a
corporate taxpayer only to offset capital gains and may be used by individual
taxpayers only to offset capital gains plus $3,000 of other income annually.

9
<PAGE> 13

See "United States Federal Income Tax Consequences -- Potential Extension
of Interest Payment Period and Original Issue Discount" and "-- Sale of
Preferred Securities" for more information on possible adverse tax consequences
to you.

THE BANC CORPORATION RISK FACTORS

Each of these factors may have a material adverse effect on our operations,
financial results or financial conditions in future periods which in turn could
adversely affect our ability to make payments on the subordinated debentures and
the Trust's ability to effect distributions on the preferred securities. Some of
the risks and uncertainties relate to economic conditions generally and would
affect other financial institutions in similar ways. These aspects are discussed
under the heading "Special Note Regarding Forward Looking Information." This
section addresses particular risks and uncertainties that are specific to the
Corporation.

OUR ABILITY TO SUSTAIN GROWTH INVOLVES RISKS

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

- internal growth;

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

- the acquisition of other financial institutions or branches.

Furthermore, the Corporation's continued growth and profitability depends
on our ability:

- to manage our growth;

- to attract and retain skilled employees;

- to finance our growth, if necessary, at an acceptable cost; and

- to expand the capabilities of the Corporation's management information
systems.

Our growth strategy 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 address adequately all of the changing demands our planned
growth may create.

OUR GROWTH INVOLVES INTEGRATION RISKS AND MAY AFFECT FUTURE EARNINGS

Since June 30, 1998, we have acquired eight banking institutions, purchased
three bank branches and opened four de novo branches. Additionally, as of June
16, 2000, we merged two of our subsidiaries, Emerald Coast Bank and C&L Bank,
into our largest subsidiary, The Bank. Our expectations concerning future
earnings depend in part on being able to combine the operations of the acquired
institutions with our operations promptly and efficiently, and also on our being
correct in our assumptions about the financial impact of the acquisitions on our
growth.

The risks and uncertainties that may affect our future earnings and
financial condition include:

- Our revenues after the acquisitions may be lower than expected.

In connection with the acquisitions, we estimated that we could reduce
expenses by combining their separate operations. There is a risk that the cost
savings may not be achieved and that revenues may erode over time.

- Our restructuring charges may be higher than expected.

We have recorded restructuring and merger-related charges in connection
with the acquisitions. There is a risk there may be additional costs and charges
resulting from these transactions that exceed the charges we have recorded for
financial reporting and accounting purposes.

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

10
<PAGE> 14

Converting the systems and procedures of each acquired institution to our
system is an important part of our acquisition program. There is a risk that the
conversion of an acquired institution may not be completed on schedule or may be
more difficult and costly than expected. There is also a risk that we may not be
able to retain key personnel of an acquired institution, which could cause the
acquired operations to perform below expectations.

- Our operating costs after the acquisitions may be greater than expected,
and our cost savings from the acquisitions may be less than expected, or
we may be unable to obtain those cost savings as soon as expected.

WE CANNOT PREDICT LOAN LOSSES OR THE ADEQUACY OF 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 -- 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 earned
and interest paid and it will change as interest rates fluctuate. Interest rates
are largely dependent on the rate of interest charged by the Federal Reserve for
funds it makes available to financial institutions. Changes in interest rates
may have an adverse effect on our deposit levels, net interest margin, loan
demand or our business and earnings. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

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

Substantially all of The Bank's and C&L Banks' deposits and assets at March
31, 2000, were derived from operations in relatively rural markets of Alabama or
Florida while Emerald Coast Bank's revenues were derived from operations in
markets in Florida which depend on tourism. Consequently, our profitability may
be negatively affected by factors that have a significant impact on agriculture
and tourism, including weather. Some of our market areas experienced severe
weather in 1999, primarily heavy rains and flooding. See "Business of the
Corporation."

Our success depends on the general economic 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 conditions in the geographic markets
that The Bank serves would likely impair The Bank's ability to collect loans and
could otherwise negatively affect the Corporation's financial condition and
results of operations. See "Business of the Corporation."

WE ARE SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION

Financial holding companies, bank 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. The Corporation is
subject to the Gramm-Leach-Bliley Act, Bank Holding Company Act and to
regulation and supervision by the Federal Reserve Board and the Alabama Banking
Department. The Bank is subject to supervision and regulation by the state
regulatory authorities, the Federal Reserve and the FDIC. Regulatory agencies
such as the FDIC and the Alabama 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. These regulations are intended primarily for the protection of
depositors and consumers, rather than for the benefit of stockholders. The
Corporation is subject to changes in federal and state law, as well as changes
in regulatory and governmental policies, income tax laws and accounting

11
<PAGE> 15

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.
The recent authorization of interstate branching is likely 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 Corporation or any bank to be acquired in a merger.
See "Supervision and Regulation."

THERE ARE RESTRICTIONS ON OUR ABILITY TO PAY DIVIDENDS

We rely on dividends from The Bank as our principal source of funds for our
operations including the repayment of our debt. Federal and state banking
regulations restrict the ability of The Bank to pay dividends. Although we
expect the level of The Bank's dividends to be adequate to meet our current and
anticipated cash needs, the continued ability to pay dividends at adequate
levels is determined primarily by the net profits, after taxes, of The Bank.
Accordingly, because there can be no assurance as to the future profitability of
The Bank, dividends we receive may not be sufficient to meet our future cash
requirements, including payments on the subordinated debentures. Also, there can
be no assurance that additional federal or state regulations will not further
restrict The Bank's ability to pay dividends. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and "Supervision and Regulation -- The Bank."

WE ARE DEPENDENT ON THE SERVICES OF KEY MANAGEMENT

At this stage of our development, our prospects for success depend, to a
significant degree, on the efforts of James A. Taylor, the Corporation's
Chairman of the Board, Chief Executive Officer and President. There is no
assurance that Mr. Taylor's services will remain available to us indefinitely or
that we will be successful under his management. The Corporation maintains key
employee insurance on Mr. Taylor in the amount of $6 million. See "Management of
the Corporation" and "Principal Stockholders of the 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
we do and offer certain services that we may not provide. In addition,
non-depository institution competitors are generally not subject to the
extensive regulation applicable to us and The Bank. Pursuant to the Riegle-Neal
Interstate Banking and Branching Efficiency Act, commercial banks may now
acquire financial institutions nationwide, further increasing competition. The
Gramm-Leach-Bliley Act permits insurance companies and securities companies that
meet certain criteria to become financial holding companies and thereby acquire
banks and bank holding companies. This may increase competition. Our long-term
success will be dependent on our ability to compete successfully with other
financial institutions in our market areas. See "Business of the Corporation --
Competition."

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

As of March 31, 2000, the Corporation's directors and executive officers
own or control approximately 32% of the outstanding shares of Corporation common
stock. See "Security Ownership of Certain Beneficial Owners and Management."
Accordingly, if the directors and executive officers were to act in concert,
they would likely control the Corporation's Board of Directors and, therefore,
the business and policies of the Corporation. As a result, the Corporation's
management has significant control of the Corporation.

12
<PAGE> 16

USE OF PROCEEDS

The net proceeds from the sale of preferred securities by the Trust will be
invested in the subordinated debentures to be issued by us and are expected to
be approximately $19,200,000 million ($22,080,000 million if the underwriters'
over-allotment option is exercised in full), after deducting underwriting
commissions and offering expenses payable by the Corporation.

We intend to use the net proceeds from the sale of the subordinated
debentures for general corporate purposes, including capital investments in and
advances to The Bank to finance our growth strategy and for working capital. See
"Business -- Growth Strategy." The precise amounts and timing of expenditure of
the net proceeds will depend on our funding requirements and the availability of
other capital resources. Pending application of the net proceeds as described
above, we intend to invest the net proceeds in short term and intermediate term
interest bearing securities or in deposits in The Bank.

ACCOUNTING TREATMENT

For financial reporting purposes, the Corporation will treat the Trust as
its subsidiary. Accordingly, the Corporation will include the accounts of the
Trust in its consolidated financial statements. The preferred securities will be
presented as a separate category in the consolidated balance sheet of the
Corporation under the caption "Guaranteed preferred beneficial interest in the
Corporation's subordinated debentures." Appropriate disclosures about the
preferred securities, the guarantee and the subordinated debentures will be
included in the notes to the consolidated financial statements. The Corporation
will record distributions on the preferred securities as a reduction in net
earnings available to common stockholders in its consolidated statements of
income.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the Corporation's consolidated ratios of
earnings to fixed charges for the periods indicated. For purposes of computing
the ratios of earnings to fixed charges, earnings represent income from
continuing operations before income taxes, extraordinary items and cumulative
effect of changes in accounting principle plus fixed charges. Fixed charges
represent total interest expense, including and excluding interest on deposits,
as applicable.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- ---------------------------------------
2000 1999 1999 1998 1997 1996 1995
----- ----- ---- ---- ----- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to fixed charges:
Including interest on deposits........ 1.15x 1.17x 1.13x 0.98x 1.22x 1.27x 1.37x
Excluding interest on deposits........ 2.20 4.23 2.24 0.33 27.90 111.71 3,273.00
</TABLE>

13
<PAGE> 17

CAPITALIZATION

The following table shows the consolidated capitalization of the
Corporation at March 31, 2000 and as adjusted to give effect to the receipt and
application of the estimated net proceeds from the offering (assuming no
exercise of the underwriters' over-allotment option). See "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 2000
--------------------------
AS ADJUSTED
ACTUAL FOR THE OFFERING
------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Note Payable................................................ $ 8,934 $ 8,934
Guaranteed preferred beneficial interest in the
Corporation's subordinated debentures..................... -- 19,200
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; 14,385,021 shares issued and
outstanding............................................ 14 14
Surplus................................................... 47,756 47,756
Retained Earnings......................................... 24,184 24,184
Accumulated other comprehensive loss...................... (2,255) (2,255)
------- -------
Total stockholders' equity........................ 69,699 69,699
------- -------
Total capitalization.............................. $78,633 $97,833
======= =======
Ratio of equity to assets................................... 8.22% 8.03%
Regulatory capital ratios Leverage capital ratio............ 7.71 9.79
Tier 1 risk-based capital................................. 9.52 12.09
Total risk-based capital.................................. 10.77 13.31
</TABLE>

The net proceeds of the preferred securities are expected to qualify as
Tier 1 capital with respect to the Corporation under the risk-based guidelines
established by the Federal Reserve. These guidelines currently provide that the
Tier 1 capital related to the preferred securities cannot constitute more than
25% of the total core capital elements of the Corporation. As of March 31, 2000,
this 25% limitation would not limit the amount of net proceeds of the preferred
securities eligible for inclusion in Tier 1 capital.

14
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

BASIS OF PRESENTATION

The following is a narrative discussion and analysis of significant changes
in the 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 document.

The Corporation consolidated its three banking subsidiaries into one
banking subsidiary on June 16, 2000. Emerald Coast Bank, a federally-chartered
thrift, and C&L Bank, a Florida chartered bank, were merged with and into The
Bank, an Alabama chartered bank and member of the Federal Reserve headquartered
in Birmingham, Alabama.

Recently Completed Acquisitions. The acquisitions of other banks and
related institutions have contributed significantly to the Corporation's growth.
The following chart lists the Corporation's acquisitions completed during 1998
and 1999:

1998

<TABLE>
<CAPTION>
DATE COMPLETED ACQUISITIONS BANKING LOCATION
-------------- ------------ ----------------
<S> <C> <C>
October 16.................... Commercial Bancshares of Roanoke, Alabama(2)
Roanoke, Inc.
October 30.................... First Citizens Bancorp, Inc. Monroeville and Frisco City,
Alabama
October 30.................... City National Corporation Sylacauga, Childersburg and
Mignon, Alabama
November 6.................... Commerce Bank of Alabama Albertville, Gadsden,
Guntersville and Rainbow City,
Alabama
</TABLE>

1999

<TABLE>
<CAPTION>
DATE COMPLETED ACQUISITIONS BANKING LOCATIONS
-------------- ------------ -----------------
<S> <C> <C>
February 12................... Emerald Coast Bancshares, Inc. Panama City Beach, Destin,
Seagrove and Bay Point,
Florida
June 30....................... C&L Banking Corporation Bristol, Florida
June 30....................... C&L Bank of Blountstown Blountstown and Altha, Florida
July 13....................... BankersTrust of Alabama, Inc. Huntsville and Madison,
Alabama
November 4.................... Branches of Community Bank & Opp, Samson and Kinston,
Trust of Southeast Alabama, Alabama
Inc.
</TABLE>

RESULTS OF OPERATIONS

Three months ended March 31, 2000, compared with three months ended March 31,
1999

The Corporation's net income increased $90,000, or 11.1% to $902,000 for
the three-month period ended March 31, 2000, from $812,000 for the three-month
period ended March 31, 1999. This increase was due primarily to an increase in
net interest income offset by an increase in the provision for loan losses and
noninterest expenses.

Net interest income increased $2.1 million, or 32.7% to $8.4 million for
the three-month period ended March 31, 2000 compared to $6.3 million for the
three-month period ended March 31, 1999, primarily due to

15
<PAGE> 19

a higher level of loans funded by the maturity of short-term commercial paper,
increases in borrowings from the FHLB and federal funds purchased.

The provision for loan losses was $888,000 for the three-month period ended
March 31, 2000 compared to $244,000 for the same period 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, 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 March 31, 2000, totaled $8.7 million, or 1.31%
of total loans, compared to $8.1 million, or 1.27% of total loans at December
31, 1999.

Noninterest income increased $234,000, or 16.6% to $1.6 million for the
three-month period ended March 31, 2000 compared to $1.4 million for the
three-month period ended March 31, 1999, primarily due to enhanced service
charge income resulting from an increase in the volume of deposits, and an
increase in earnings related to the cash surrender value of single premium life
insurance policies.

Noninterest expense increased $1.4 million, or 20.9% to $7.9 million for
the three-month period ended March 31, 2000 compared to $6.5 million for the
three-month period ended March 31, 1999. Salaries and benefits increased
$573,000, or 17.8%, to $3.8 million from $3.2 million for the first three months
of 1999. The increase in salaries and benefits primarily resulted from the
acquisition of new banks and branches, and the addition of personnel in the
administrative and operations area.

All other noninterest expenses increased $783,000, or 23.9% to $4.1
million, for the three-month period ended March 31, 2000 compared to $3.3
million for the three-month period ended March 31, 1999. This increase in other
expenses included a $256,000 increase in occupancy, furniture and equipment
expenses, a $142,000 increase in goodwill amortization and $167,000 in
foreclosure losses. Occupancy expenses increased during 2000 as a result of
increased depreciation and maintenance associated with the John A. Hand Building
and The Bank's operations center. The increase in goodwill amortization relates
to purchase acquisitions closed in the third and fourth quarters of 1999. The
foreclosure losses represent writedowns, or losses incurred on sales, of
properties acquired in foreclosure from a single commercial account.

Income tax expense was $371,000 for the three-month period ended March 31,
2000, compared to $168,000 for the same period in 1999. The primary difference
in the effective rate and the federal statutory rate (34%) is due to the
recognition of a rehabilitation tax credit generated from the restoration of the
Corporation's headquarters, the John A. Hand Building.

Year ended December 31, 1999, compared with year ended December 31, 1998

The Corporation's net income increased $2.6 million or 866.7% to $2.9
million for the year ended December 31, 1999, from $285,000 for the year ended
December 31, 1998. This increase is primarily attributable to increases in the
Corporation's net interest income and noninterest income, partially offset by an
increase in noninterest expenses. The 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 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 $194.9 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 $159.8 million, or 39.4% increase in average
interest-bearing liabilities to $565.6 million during 1999, from $405.7 million
during 1998.

16
<PAGE> 20

The 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 other markets. However, the
lower yields are offset by an increase in the volume of loans produced in the
Birmingham 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 Corporation had net chargeoffs of $4.8 million in 1999,
resulting in a ratio of net chargeoffs to average loans of .90%. This compares
to $2.3 million or .67% in 1998. Net chargeoffs as a percentage of the provision
for loan losses was 169.89% in 1999, compared to 49.39% in 1998. The increase in
net chargeoffs resulted primarily from the chargeoff of loans acquired in a
business combination and chargeoffs 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 implementing standard 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 an 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 a $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 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 Corporation to secure certain rights in properties acquired in
foreclosure from a single commercial account.

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 Corporation's headquarters, the John A. Hand
building.

The 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 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 assets that
can be realized in any year is subject to certain statutory federal income tax
limitations. The Corporation periodically evaluates the realizability of the
deferred tax assets and, if necessary, adjusts any valuation allowance
accordingly.

17
<PAGE> 21

Year ended December 31, 1998, compared with the year ended December 31, 1997

The Corporation's net income decreased $2.1 million, or 88.1% to $285,000
in the year ended December 31, 1998, from $2.4 million in the year ended
December 31, 1997. This decrease was primarily due to increases in the
Corporation's provision for loan losses and other noninterest expenses. The
Corporation's return on average assets in 1998 was .05% compared to .58% in
1997. Return on average equity was .51% in 1998 compared to 5.57% in 1997.
Average equity to average assets was 10.46% in 1998 compared to 10.48% in 1997.

During 1998, the Corporation incurred nonrecurring merger related costs of
$1.5 million. Without these nonrecurring expenses, operating earnings for the
year ended December 31, 1998 would have been $1.8 million, a decrease of
$645,000 from 1997 operating earnings of $2.4 million. These nonrecurring
expenses consisted primarily of professional fees for legal and accounting
services, and the write off of obsolete equipment.

Net interest income increased $4.4 million, or 24.3% to $22.3 million for
the year ended December 31, 1998, from $17.9 million for the year ended December
31, 1997, as interest income increased $8.8 million, or 26.0%, and interest
expense increased $4.4 million, or 27.9%. The increase in net interest income is
primarily attributable to an $86.7 million, or 34.1% increase in average loans
to $340.8 million during 1998, from $254.1 million during 1997. This increase
was offset by a $92.2 million, or 29.4% increase in average interest bearing
liabilities to $405.7 million during 1998, from $313.6 million during 1997.

The Corporation's net interest spread and net interest margin were 3.96%
and 4.73%, respectively, in 1998, compared to 3.98% and 4.84% in 1997. The 11
basis point decline in net interest margin is primarily a result of lower yields
in the loan portfolio during 1998. 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
Birmingham market.

The provision for loan losses was $4.7 million for the year ended December
31, 1998 compared to $2.7 million in 1997. The provision for loan losses
represents the amount determined by management to maintain the allowance for
loan losses at a level capable of absorbing inherent losses in the loan
portfolio. The Corporation had net chargeoffs of $2.3 million in 1998, resulting
in a ratio of net chargeoffs to average loans of .67%. This compares to $1.5
million, or .58% in 1997. Net chargeoffs as a percentage of the provision for
loan losses was 49.39% in 1998 compared to 54.60% in 1997.

Noninterest income increased $1.1 million, or 35.2% to $4.1 million in
1998, from $3.0 million in 1997, primarily as the result of additional customer
service charges and fees. Income from customer service charges and fees of $3.0
million comprised 73.7% of noninterest income and increased $544,000 or 22.1%
from $2.5 million in 1997, due to increases in the volume of customer deposits
and the related fees charged.

Noninterest expense increased $7.4 million, or 49.8% to $22.1 million in
1998 from $14.8 million in 1997. The increase is primarily attributable to
increases in salaries and employee benefits, occupancy expenses due to the
opening of new offices, the creation of new departments and the conversion of
the data processing system. Another major component of the increase in
noninterest expense is approximately $1.5 million incurred in legal, accounting
and printing expenses related to the Corporation's recent acquisitions and the
write off of obsolete equipment.

Income tax (benefit) expense was $(724,000) and $1.1 million in 1998 and
1997, respectively. The primary difference in the effective rate and the federal
statutory rate of 34% for 1998 arose from the recognition of a rehabilitation
tax credit of $1.7 million generated from the restoration of the Corporation's
headquarters, the John A. Hand building. The rate difference for 1997 is related
to the Corporation's investment in tax-free state, county and municipal
securities.

18
<PAGE> 22

NET INTEREST INCOME

The largest component of the 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 components include the rates earned on the
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 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 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 are derived from daily averages.

19
<PAGE> 23

CONSOLIDATED AVERAGE BALANCE INTEREST/INCOME/EXPENSE
AND YIELD/RATES TAXABLE EQUIVALENT BASIS
<TABLE>
<CAPTION>
THREE MONTH PERIOD
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
--------------------------------------------------------- ---------------------------
2000 1999 1999
--------------------------- --------------------------- ---------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
-------- ------- ------ -------- ------- ------ -------- ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans, net of unearned
income(1)....................... $650,563 $15,201 9.40% $453,545 $10,385 9.29% $535,754 $49,244 9.19%
Investment securities
Taxable......................... 59,440 954 6.46 67,762 1,006 6.02 68,240 4,141 6.07
Tax-exempt(2)................... 15,418 289 7.54 20,129 379 7.64 18,373 1,400 7.62
-------- ------- -------- ------- -------- -------
Total investment
securities................. 74,858 1,243 6.68 87,891 1,385 6.39 86,613 5,541 6.40
Federal funds sold.............. 14,214 202 5.72 17,440 219 5.09 15,136 763 5.04
Other investments............... 7,014 101 5.79 4,325 55 5.16 5,701 485 8.51
-------- ------- -------- ------- -------- -------
Total interest-earning
assets..................... 746,649 16,747 9.02 563,201 12,044 8.67 643,204 56,033 8.71
Noninterest-earning assets:
Cash and due from banks........... 26,225 25,388 32,771
Premises and equipment............ 38,647 29,995 28,738
Accrued interest and other
assets.......................... 34,702 13,215 21,583
Allowance for loan losses......... (8,400) (6,532) (6,361)
-------- -------- --------
Total assets................ $837,823 $625,267 $719,935
======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits................... $175,643 1,614 3.70 $142,291 1,172 3.34 $149,755 5,129 3.42
Savings deposits.................. 34,036 247 2.92 30,229 215 2.88 32,248 938 2.91
Time deposits..................... 388,339 5,395 5.59 281,873 3,937 5.66 333,720 18,034 5.40
Other borrowings.................. 75,559 1,028 5.47 19,107 285 6.05 49,850 2,648 5.31
-------- ------- -------- ------- -------- -------
Total interest-bearing
liabilities................ 673,577 8,284 4.95 473,500 5,609 4.80 565,573 26,749 4.73
Noninterest-bearing liabilities:
Demand deposits................... 89,521 79,530 81,500
Accrued interest and other
liabilities..................... 5,451 5,024 5,454
Stockholders' equity.............. 69,274 67,213 67,408
-------- -------- --------
Total liabilities and
stockholders' equity....... $837,823 $625,267 $719,935
======== ======== ========
Net interest spread................ 8,463 4.07% 6,435 3.87% 29,284 3.98%
==== ==== ====
Net interest margin................ 4.56% 4.63% 4.55%
==== ==== ====
Taxable equivalent adjustment:
Investment securities(2).......... 98 129 476
------- ------- -------
Net interest income......... $ 8,365 $ 6,306 $28,808
======= ======= =======

YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1998 1997
--------------------------- ---------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
-------- ------- ------ -------- ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans, net of unearned
income(1)....................... $340,813 $34,310 10.07% $254,146 $26,090 10.27%
Investment securities
Taxable......................... 90,727 5,493 6.05 85,786 5,552 6.47
Tax-exempt(2)................... 18,391 1,402 7.62 12,526 1,055 8.42
-------- ------- -------- -------
Total investment
securities................. 109,118 6,895 6.32 98,312 6,607 6.72
Federal funds sold.............. 27,189 1,492 5.49 23,118 1,234 5.34
Other investments............... 3,475 252 7.25 2,075 133 6.41
-------- ------- -------- -------
Total interest-earning
assets..................... 480,595 42,949 8.94 377,651 34,064 9.02
Noninterest-earning assets:
Cash and due from banks........... 22,019 17,114
Premises and equipment............ 23,465 9,579
Accrued interest and other
assets.......................... 10,313 9,236
Allowance for loan losses......... (5,653) (3,374)
-------- --------
Total assets................ $530,739 $410,206
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities:
Demand deposits................... $106,691 3,529 3.31 $ 66,351 2,302 3.47
Savings deposits.................. 30,155 889 2.95 32,070 937 2.92
Time deposits..................... 257,360 15,198 5.91 212,697 12,425 5.84
Other borrowings.................. 11,543 590 5.11 2,437 129 5.29
-------- ------- -------- -------
Total interest-bearing
liabilities................ 405,749 20,206 4.98 313,555 15,793 5.04
Noninterest-bearing liabilities:
Demand deposits................... 61,624 50,031
Accrued interest and other
liabilities..................... 7,831 3,630
Stockholders' equity.............. 55,535 42,990
-------- --------
Total liabilities and
stockholders' equity....... $530,739 $410,206
======== ========
Net interest spread................ 22,743 3.96% 18,271 3.98%
===== =====
Net interest margin................ 4.73% 4.84%
===== =====
Taxable equivalent adjustment:
Investment securities(2).......... 477 359
------- -------
Net interest income......... $22,266 $17,912
======= =======
</TABLE>

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

(1) Nonaccrual loans of an immaterial amount 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.

20
<PAGE> 24

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 three months ended March 31, 2000
and 1999, and the years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,(1) YEAR ENDED DECEMBER 31,(1)
--------------------------- ------------------------------------------------------------
2000 VS. 1999 1999 VS. 1998 1998 VS. 1997
--------------------------- ------------------------------ ---------------------------
CHANGES DUE CHANGES DUE CHANGES DUE
TO TO TO
INCREASE -------------- INCREASE ----------------- INCREASE --------------
(DECREASE) RATE VOLUME (DECREASE) RATE VOLUME (DECREASE) RATE VOLUME
---------- ----- ------ ---------- ------- ------- ---------- ----- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in:
Income from earning
assets:
Interest and fees on
loans.............. $4,816 $ 128 $4,688 $14,934 $(3,224) $18,158 $8,220 $(512) $8,732
Interest on securities:
Taxable.............. (52) 354 (406) (1,352) 18 (1,370) (59) (361) 302
Tax-exempt........... (90) (5) (85) (2) -- (2) 347 (104) 451
Interest on federal
funds................ (17) 125 (142) (729) (114) (615) 258 35 223
Interest on other
investments.......... 46 8 38 233 50 183 119 19 100
------ ----- ------ ------- ------- ------- ------ ----- ------
Total interest
income......... 4,703 610 4,093 13,084 (3,270) 16,354 8,885 (923) 9,808
------ ----- ------ ------- ------- ------- ------ ----- ------
Expense from interest-
bearing liabilities:
Interest on demand
deposits............. 442 139 303 1,600 122 1,478 1,227 (109) 1,336
Interest on savings
deposits............. 32 3 29 49 (12) 61 (48) 10 (58)
Interest on time
deposits............. 1,458 (336) 1,794 2,836 (1,395) 4,231 2,773 149 2,624
Interest on other
borrowings........... 743 (191) 934 2,058 24 2,034 461 (5) 466
------ ----- ------ ------- ------- ------- ------ ----- ------
Total interest
expense........ 2,675 (385) 3,060 6,543 (1,261) 7,804 4,413 45 4,368
------ ----- ------ ------- ------- ------- ------ ----- ------
Net interest
income......... $2,028 $ 995 $1,033 $ 6,541 $(2,009) $ 8,550 $4,472 $(968) $5,440
====== ===== ====== ======= ======= ======= ====== ===== ======
</TABLE>

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

(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 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.

The Corporation has structured its rate sensitive assets and liabilities to
increase net interest income if rates rise over the next twelve-month period. As
of December 31, 1999, approximately $3.3 million more interest-earning assets
than interest-bearing liabilities could be repriced to current market rates over
the next

21
<PAGE> 25

twelve months. As a result, the one-year cumulative gap (the ratio of rate
sensitive assets to rate sensitive liabilities) at December 31, 1999, was 1.01,
indicating a slightly asset sensitive position. The Corporation's interest rate
risk was heavily asset sensitive during the first ninety days of 2000 with a gap
ratio of 1.90. The Corporation's interest rate risk will be liability sensitive
during the remainder of 2000 with a liability sensitive gap ratio of .30. As of
December 31, 1999, the Corporation's interest rate risk model indicated that
projected net interest income would increase on an annual basis by 1.4%, or
approximately $468,000, 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
1.6%, or approximately $531,000. The amounts produced by these scenarios are
well within the Corporation's policy.

The Corporation attempts to manage the one-year gap position as close to
even as possible. This ensures the 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 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 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 Corporation has maintained a high loan-to-deposit ratio.
To meet its short-term liquidity needs, the 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

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. Loans, net of unearned income, totaled $666.5 million at March
31, 2000, an increase of $33.7 million from $632.8 million at December 31, 1999.
Loans, net of unearned income, comprised 78.6% of total assets at March 31,
2000, as compared with 76.5% at December 31, 1999. At December 31, 1999, total
loans net of unearned income were $632.8 million, an increase of $200.9 million
from $431.9 million at December 31, 1998, compared to an increase of $149.0
million during 1998 from $282.9 million at December 31, 1997. For the two-year
period ended December 31, 1999, these increases represent an annual compound
growth rate of 49.6%. Loans averaged $535.8 million during 1999 compared to
$340.8 million during 1998 and $254.1 million during 1997. Loan growth during
1999 and 1998 was generated primarily through internal growth in the Birmingham,
Alabama and Florida markets. During these periods approximately $42.0 million in
loan growth was attributable to cash purchases of existing banks and branches.

22
<PAGE> 26

DISTRIBUTION OF LOANS BY CATEGORY

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------------------------------------
2000 1999 1998 1997 1996 1995
--------- -------- -------- ------------ -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial, industrial and
agricultural................... $218,154 $207,620 $158,855 $ 96,783 $ 74,083 $ 42,483
Real estate -- construction...... 73,545 59,496 36,121 17,730 5,604 4,272
Real estate -- mortgage.......... 293,424 282,717 152,732 115,790 87,474 67,339
Consumer......................... 74,854 74,769 75,796 51,471 45,701 39,459
Other............................ 7,152 8,802 9,671 2,995 2,861 443
-------- -------- -------- -------- -------- --------
Total loans............ 667,129 633,404 433,175 284,769 215,723 153,996
Unearned income.................. (653) (627) (1,244) (1,867) (2,190) (1,556)
Allowance for loan losses........ (8,734) (8,065) (6,466) (3,741) (2,522) (2,072)
-------- -------- -------- -------- -------- --------
Net loans.............. $657,742 $624,712 $425,465 $279,161 $211,011 $150,368
======== ======== ======== ======== ======== ========
</TABLE>

The repayment of loans as they mature is a source of liquidity for the
Corporation. The following table sets forth the Corporation's loans in selected
categories maturing within specified intervals at December 31, 1999.

SELECTED LOAN MATURITY AND INTEREST RATE SENSITIVITY

<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C>
Commercial, industrial and
agricultural................. $106,269 $ 89,534 $11,817 $207,620 $ 87,248 $14,103
Real estate -- construction.... 41,754 14,984 2,758 59,496 16,510 1,232
-------- -------- ------- -------- -------- -------
$148,023 $104,518 $14,575 $267,116 $103,758 $15,335
======== ======== ======= ======== ======== =======
</TABLE>

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 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 credits and unfunded
lines of credit. The 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 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 Corporation 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.

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.

23
<PAGE> 27

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 Corporation's independent auditors.

The 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
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ---------------------------------------------------------------
2000 1999 1998 1997 1996
---------------- ---------------- ---------------- ---------------- ------
PERCENT PERCENT PERCENT PERCENT
OF OF OF OF
AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT
------ ------- ------ ------- ------ ------- ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic: Commercial, industrial
and Agricultural................. $4,909 56.2% $4,460 55.3% $3,119 48.2% $1,583 42.3% $ 983
Real estate -- Construction........ 262 3.0 223 2.8 181 2.8 151 4.1 70
Real estate -- Mortgage............ 899 10.3 871 10.8 826 12.8 1,296 34.6 919
Consumer........................... 2,577 29.5 2,452 30.4 2,295 35.5 686 18.3 532
Unallocated........................ 87 1.0 59 .7 45 .7 25 .7 18
------ ----- ------ ----- ------ ----- ------ ----- ------
$8,734 100.0% $8,065 100.0% $6,466 100.0% $3,741 100.0% $2,522
====== ===== ====== ===== ====== ===== ====== ===== ======

<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
------- ----------------
PERCENT PERCENT
OF OF
TOTAL AMOUNT TOTAL
------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Domestic: Commercial, industrial
and Agricultural................. 39.0% $ 684 33.0%
Real estate -- Construction........ 2.8 62 3.0
Real estate -- Mortgage............ 36.4 795 38.4
Consumer........................... 21.1 525 25.3
Unallocated........................ .7 6 .3
----- ------ -----
100.0% $2,072 100.0%
===== ====== =====
</TABLE>

Net chargeoffs increased 110.5% from $2.3 million in 1998 to $4.8 million
in 1999. The ratio of net chargeoffs to average loans has increased in each of
the past four years, averaging .72%, with a ratio of .90% in 1999 and .67% in
1998. Historically, net chargeoffs have been more significant for commercial and
consumer loans. The increase in net chargeoffs during 1999 resulted primarily
from the chargeoff of loans acquired in a business combination, and from a
single commercial loan customer. These chargeoffs constituted approximately 83%
of the net chargeoffs during 1999. The Corporation believes that in future
periods loan losses should reflect amounts that are similar to its historical
averages. Net chargeoffs for the period ended March 31, 2000 were $219,000 or
.13% of average loans on an annualized basis.

The allowance as a percentage of loans at December 31, 1999 was 1.27%. The
allowance as a percentage of period ending loans for the last three years has
averaged 1.36%. Allowance for loan losses as a percentage of non-performing
loans increased to 216.2% at December 31, 1999 from 172.9% at December 31, 1998.
The dollar level of nonperforming loans has remained consistent for the past
three years; however, with the increase in loan volume, the actual dollar amount
could increase in the future. Nonperforming loans as a percent of net loans
decreased from .87% at December 31, 1998 to .59% at December 31, 1999. The
allowance as a percentage of loans at March 31, 2000 was 1.31%. Allowance for
loan losses as a percentage of non-performing loans decreased to 166.5% at March
31, 2000 from 216.2% at December 31, 1999. Nonperforming loans as a percent of
net loans increased from .59% at December 31, 1999 to .79% at March 31, 2000.
This increase in nonperforming loans is primarily attributable to two commercial
credit lines that management believes are fully secured and will not create any
loss for the Corporation.

24
<PAGE> 28

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

SUMMARY OF LOAN LOSS EXPERIENCE

<TABLE>
<CAPTION>
YEAR
MARCH 31, ----------------------------------------------------
2000 1999 1998 1997 1996 1995
--------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Allowance for loan losses at
beginning of year........... $ 8,065 $ 6,466 $ 3,741 $ 2,522 $ 2,072 $ 1,781
Allowance of acquired banks... -- 3,591 368 -- -- --
Chargeoffs:
Commercial, industrial and
agricultural............. 186 4,531 1,256 795 114 41
Real estate................. -- 286 359 81 56 95
Consumer.................... 145 975 1,291 883 789 446
-------- -------- -------- -------- -------- --------
Total chargeoffs.... 331 5,792 2,906 1,759 959 582
Recoveries:
Commercial, industrial and
agricultural............. 27 418 108 42 24 37
Real estate................. 19 172 86 23 5 7
Consumer.................... 66 360 412 228 144 130
-------- -------- -------- -------- -------- --------
Total recoveries.... 112 950 606 293 173 174
-------- -------- -------- -------- -------- --------
Net chargeoffs................ 219 4,842 2,300 1,466 786 408
Provision for loan losses..... 888 2,850 4,657 2,685 1,236 699
-------- -------- -------- -------- -------- --------
Allowance for loan losses at
end of year................. $ 8,734 $ 8,065 $ 6,466 $ 3,741 $ 2,522 $ 2,072
======== ======== ======== ======== ======== ========
Loans at end of period, net of
unearned income............. $666,476 $632,777 $431,931 $282,902 $213,533 $152,440
Average loans, net of unearned
income...................... 650,563 535,754 340,813 254,146 175,772 130,672
Ratio of ending allowance to
ending loans................ 1.31% 1.27% 1.50% 1.32% 1.18% 1.36%
Ratio of net chargeoffs to
average loans(1)............ 0.13 0.90 0.67 0.58 0.45 0.31
Net chargeoffs as a percentage
of:
Provision for loan losses... 24.66 169.89 49.39 54.60 63.59 58.37
Allowance for loan
losses(1)................ 10.03 60.04 35.57 39.19 31.17 19.69
Allowance for loan losses as a
percentage of nonperforming
loans(2).................... 166.05 216.22 172.93 146.42 111.49 230.22
</TABLE>

(1) Interim period ratios have been annualized.

(2) Nonperforming loans include nonaccrual loans and loans contractually past
due greater than 90 days.

25
<PAGE> 29

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

NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ----------------------------------------
2000 1999 1998 1997 1996 1995
--------- ------ ------ ------ ------ ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual..................................... $4,003 $3,097 $1,496 $1,169 $1,562 $544
Past due (contractually past due 90 days or
more)........................................ 1,257 575 2,243 1,386 700 356
Restructured................................... 111 58 -- -- -- --
------ ------ ------ ------ ------ ----
$5,371 $3,730 $3,739 $2,555 $2,262 $900
====== ====== ====== ====== ====== ====
</TABLE>

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.

Investment Securities. The investment securities portfolio is a
significant component of the Corporation's total earning assets. Total
securities averaged $86.6 million in 1999, compared to $109.1 million in 1998
and $98.3 million in 1997. At March 31, 2000 and December 31, 1999, the
Corporation's securities portfolio had an amortized cost of $74.2 and $74.5
million, respectively.

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

INVESTMENT PORTFOLIO

<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
------------------------------------------- ---------------------------------------------
DECEMBER 31, DECEMBER 31,
MARCH 31, ------------------------------- MARCH 31, -----------------------------
2000 1999 1998 1997 2000 1999 1998 1997
--------- ------ ------ ------------- ------------- ------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and agencies.......... $ -- $ -- $ -- $19,787 $13,104 $11,645 $20,965 $40,408
State and political subdivisions.... 3,709 3,711 4,124 7,837 14,110 13,991 18,345 7,798
Mortgage-backed securities.......... 1,736 1,766 2,602 6,109 41,070 42,292 48,894 12,867
Other investments................... -- -- -- 200 438 1,090 3,095 3,328
------ ------ ------ ------- ------- ------- ------- -------
Total investment
securities................ $5,445 $5,477 $6,726 $33,933 $68,722 $69,018 $91,299 $64,401
====== ====== ====== ======= ======= ======= ======= =======
</TABLE>

26
<PAGE> 30

The following table shows the scheduled maturities and average yields of
securities held at December 31, 1999.

MATURITY DISTRIBUTION OF INVESTMENT SECURITIES

<TABLE>
<CAPTION>
MATURING
--------------------------------------------------------------------------------------
AFTER ONE AFTER FIVE
WITHIN BUT WITHIN BUT WITHIN AFTER TEN
ONE YEAR FIVE YEARS TEN YEARS YEARS TOTAL
-------------- --------------- --------------- --------------- ---------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------- ----- ------- ----- ------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasury and agencies.............. $ -- --% $ 5,445 5.60% $ 5,205 6.53% $ 995 6.83% $11,645 6.12%
State and political subdivision......... 455 5.05 1,452 6.13 857 5.83 11,227 5.36 13,991 5.46
Mortgage-backed securities.............. -- -- 2,808 6.13 5,309 6.61 34,175 6.33 42,292 6.35
Other securities........................ 420 6.43 403 6.45 267 5.62 -- -- 1,090 6.24
---- ------- ------- ------- -------
Total............................. $875 5.71% $10,108 5.86% $11,638 6.50% $46,397 6.11% $69,018 6.13%
==== ==== ======= ==== ======= ==== ======= ==== ======= ====
Securities held to maturity:
State and political subdivision......... $715 4.89% $ 2,379 4.91% $ 489 5.03% $ 128 7.00% $ 3,711 4.99%
Mortgage-backed securities.............. 112 5.50 8 8.75 150 7.34 1,496 6.50 1,766 6.52
---- ------- ------- ------- -------
Total............................. $827 4.96% $ 2,387 4.92% $ 639 6.23% $ 1,624 6.50% $ 5,477 5.48%
==== ==== ======= ==== ======= ==== ======= ==== ======= ====
</TABLE>

Short-Term Investments. The Corporation had $3.2 million in federal funds
sold as of March 31, 2000. Short-term investments as of December 31, 1999
consisted of federal funds sold and short-term commercial paper of $5.8 million
and $14.5 million, respectively. Typically, the Corporation's short-term
investments consist primarily of federal funds, which averaged $15.1 million in
1999, compared to $27.2 million in 1998 and $23.1 million in 1997. Federal funds
are a primary source of the Corporation's liquidity and are generally invested
on an overnight basis. All of the short-term commercial paper held at December
31, 1999 matured in January 2000.

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

Deposits. During 1999, average total deposits increased $141.4 million, or
31.0% to $597.2 million, from $455.8 million in 1998. Average total deposits
increased $94.7 million, or 26.2% to $455.8 million during 1998, from $361.1
million in 1997. The increase in average deposits for the two-year period ended
December 31, 1999 represents an average annual compound growth rate of 28.6%.
Deposit growth during this two-year period has been generated primarily through
internal growth in the Corporation's various markets. Deposit growth attributed
to the cash purchase of existing banks and branches totaled approximately $94.0
million dollars during same period. For the three months ended March 31, 2000,
total deposits averaged $687.5 million which represents a $5.0 million, or .7%
increase from total deposits of $682.5 million at December 31, 1999.

27
<PAGE> 31

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

AVERAGE DEPOSITS

<TABLE>
<CAPTION>
YEAR ENDED
THREE MONTHS ENDED ---------------------------------------------------------------------
MARCH 31, 2000 1999 1998 1999
--------------------- --------------------- --------------------- ---------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE AMOUNT RATE AMOUNT RATE
OUTSTANDING PAID OUTSTANDING PAID OUTSTANDING PAID OUTSTANDING PAID
----------- ------- ----------- ------- ----------- ------- ----------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest bearing demand
deposits........................ $ 89,521 --% $ 81,500 --% $ 61,624 --% $ 50,031 --%
Interest-bearing demand
deposits........................ 175,643 3.70 149,755 3.42 106,691 3.31 66,351 3.47
Savings deposits.................. 34,036 2.92 32,248 2.91 30,155 2.95 32,070 2.92
Time deposits..................... 388,339 5.59 333,720 5.40 257,360 5.91 212,697 5.84
-------- -------- -------- --------
Total average deposits.... $687,539 4.24% $597,223 4.04% $455,830 4.30% $361,149 4.34%
======== ==== ======== ==== ======== ==== ======== ====
</TABLE>

Deposits, and particularly core deposits, have historically been the
Corporation's primary source of funding and have enabled the Corporation to meet
successfully both its short-term and long-term liquidity needs. These core
deposits represent 75.9% and 73.5% of the Corporation's total deposits at March
31, 2000, and December 31, 1999, respectively. The Corporation anticipates that
such deposits will continue to be its primary source of funding in the future.
The Corporation's loan-to-deposit ratio was 97.7% and 92.7% at March 31, 2000,
and December 31, 1999, respectively, compared to 81.3% at December 31, 1998. The
maturity distribution of the Corporation's time deposits over $100,000 at
December 31, 1999 is shown in the following table.

MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE

<TABLE>
<CAPTION>
AT DECEMBER 31, 1999
-----------------------------------------------
UNDER 3-6 6-12 OVER
3 MONTHS MONTHS MONTHS 12 MONTHS TOTAL
-------- ------- ------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
$74,533 $14,939 $55,827 $35,342 $180,641
======== ======= ======= ========= ========
</TABLE>

Borrowed Funds. During 1999, average borrowed funds increased $38.3
million, or 331.9%, to $49.9 million, from $11.5 million during 1998, which
increased $9.1 million, or 373.6%, from $2.4 million during 1997. The average
rate paid on borrowed funds during 1999, 1998 and 1997 was 5.3%, 5.1% and 5.3%
respectively. For the three-month period ended March 31, 2000, average borrowed
funds totaled $75.6 million which represents a $5.7 million increase from total
borrowed funds of $69.9 million at December 31, 1999. Because of a relatively
high loan-to-deposit ratio, the existence and stability of these funding sources
are critical to the Corporation's maintenance of short-term and long-term
liquidity.

Borrowed funds consist primarily of two types of borrowings; advances from
the FHLB and a note payable from a regional bank.

28
<PAGE> 32

The following is a summary, by year of maturity, of advances from the FHLB:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
MARCH 31, 2000 1999 1998
---------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
YEAR AVERAGE RATE BALANCE AVERAGE RATE BALANCE AVERAGE RATE BALANCE
---- ------------ ------- ------------ ------- ------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
2000............................. 6.59% $ 7,000 6.07% $ 1,000 --% $ --
2003............................. 4.99 15,660 5.05 17,660 5.05 17,660
2004............................. 5.21 25,000 5.21 25,000 -- --
2005............................. 7.24 5,000 -- -- -- --
2008............................. 5.52 2,500 5.52 2,500 5.24 5,500
2009............................. 5.65 16,340 5.65 16,340 -- --
2010............................. 5.91 6,340 -- -- -- --
------- ------- -------
Total.................. 5.58% $77,840 5.20% $62,500 5.09% $23,160
==== ======= ==== ======= ==== =======
</TABLE>

The above schedule is by contractual maturity. Certain advances are subject
to call dates as follows: year 2000, $8,000,000; 2002, $28,000,000; 2003,
$2,500,000 and 2004, $2,000,000.

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 $111.0 million at March 31, 2000. The Corporation has remaining
approximately $59.3 million in unused lines of credit with the FHLB subject to
the availability of qualified collateral.

As of March 31, 2000, the Corporation has borrowed $8.9 million under a
$15.0 million 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 matures May 1, 2001.

The Corporation also has available approximately $26.6 million in unused
federal funds lines of credit with regional banks, subject to certain
restrictions and collateral requirements.

Stockholders' Equity. Stockholders' equity increased $851,000 to $69.7
million during the three-month period ended March 31, 2000 from $68.8 million at
December 31, 1999, primarily as a result of $902,000 in net income offset by an
increase in the unrealized loss on securities available for sale. Stockholders'
equity increased $2.9 million during 1999 to $68.8 million at December 31, 1999
from $66.0 million at December 31, 1998. The increase in stockholders' equity
during 1999 consisted of $2.9 million net income and $2.3 million in proceeds
from the issuance of common stock. This increase was offset by a $2.3 million
unrealized loss on securities available for sale, net of taxes.

Regulatory Capital. The table below represents the Corporation's actual
regulatory and minimum regulatory capital requirements at March 31, 2000 and
December 31, 1999:

MARCH 31, 2000

<TABLE>
<CAPTION>
FOR CAPITAL
ADEQUACY TO BE WELL
ACTUAL PURPOSES CAPITALIZED
--------------- --------------- ---------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Risk-Based Capital................... $72,564 10.77% $53,919 8.00% $67,399 10.00%
Tier 1 Risk-Based Capital.................. 64,135 9.52 26,960 4.00 40,439 6.00
Leverage Capital........................... 64,135 7.71 33,294 4.00 41,618 5.00
</TABLE>

29
<PAGE> 33

DECEMBER 31, 1999

<TABLE>
<CAPTION>
FOR CAPITAL
ADEQUACY TO BE WELL
ACTUAL PURPOSES CAPITALIZED
--------------- --------------- ---------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- ------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Risk-Based Capital................... $71,288 10.61% $53,746 8.00% $67,182 10.00%
Tier 1 Risk-Based Capital.................. 63,224 9.41 26,873 4.00 40,309 6.00
Leverage Capital........................... 63,224 7.74 32,671 4.00 40,839 5.00
</TABLE>

Each of the Corporation's subsidiaries is required to maintain risk-based
and leverage ratios equal to those required for the Corporation. Each of the
banking subsidiaries were well capitalized at March 31, 2000 and December 31,
1999, as set forth in the following table:

<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
----------------------------------- -----------------------------------
TOTAL RISK TIER 1 RISK TIER 1 TOTAL RISK TIER 1 RISK TIER I
BASED BASED LEVERAGE BASED BASED LEVERAGE
---------- ----------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
The Bank................................... 10.98% 9.73% 8.17% 10.61% 9.41% 8.10%
Emerald Coast Bank......................... 10.38 9.49 N/A 10.04 9.51 N/A
C&L Bank................................... 14.10 12.85 9.44 14.08 12.84 9.21
</TABLE>

IMPACT OF INFLATION

Unlike most industrial companies, the assets and liabilities of financial
institutions such as the Corporation are primarily monetary in nature.
Therefore, interest rates have a more significant effect on the 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
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.

30
<PAGE> 34

SUPPLEMENTAL QUARTERLY DATA

A summary of the unaudited results of operations of the Corporation for
each quarter indicated as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1999 1999 1999 1999 2000
--------- -------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Total interest income..................... $11,915 $12,851 $14,580 $16,211 $16,649
Total interest expense.................... 5,609 6,078 6,930 8,132 8,284
Net interest income....................... 6,306 6,773 7,650 8,079 8,365
Provision for loan losses................. 244 298 1,445 863 888
Securities (losses) gains................. (20) 79 6 18 --
Merger related costs...................... 69 622 53 -- --
Income before income taxes................ 980 816 1,107 537 1,273
Net income................................ 812 579 755 774 902
Basic and diluted net income per share.... .06 .04 .05 .05 .06
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1998 1998 1998 1998
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Total interest income.............................. $ 9,407 $ 9,819 $11,168 $12,078
Total interest expense............................. 4,545 4,578 5,231 5,852
Net interest income................................ 4,862 5,241 5,937 6,226
Provision for loan losses.......................... 440 853 2,275 1,089
Securities gains (losses).......................... 75 (6) 148 62
Merger related costs............................... -- -- -- 1,466
Income (loss) before income taxes.................. 1,423 929 (1,814) (977)
Net income (loss).................................. 1,028 818 (964) (597)
Basic and diluted net income (loss) per share...... .08 .06 (.07) (.05)
</TABLE>

31
<PAGE> 35

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 ("GLBA"). The Corporation is
incorporated under the laws of Delaware and headquartered in Birmingham,
Alabama. Through its banking subsidiaries, the Corporation had assets of
approximately $848.4 million, loans of approximately $666.5 million, deposits of
approximately $681.8 million and stockholders equity of approximately $69.7
million as of March 31, 2000.

The Corporation was established in April 1998 so that Warrior Capital
Corporation could merge into the Corporation on September 24, 1998, and thereby
change its name to "The Banc Corporation" and its domicile from Alabama to
Delaware. Since then, the Corporation has grown through a combination of
internal growth, the acquisition of existing community banks and branches and
the opening of new bank centers. The Corporation has acquired two banks, six
bank holding companies and three additional branches and has opened de novo
locations in Birmingham, Decatur, Boaz and Andalusia, Alabama.

On June 16, 2000, two of the Corporation's subsidiaries, Emerald Coast
Bank, a federally chartered thrift, and C&L Bank, a Florida banking corporation,
were merged into the Corporation's largest subsidiary, The Bank, an Alabama
banking corporation. The former locations of Emerald Coast Bank will operate as
Emerald Coast Bank, a branch of The Bank, and the former locations of C&L Bank
will operate as C&L Bank, a branch of The Bank. The Banc Corporation offers a
broad range of banking services in 30 locations in Alabama and the Florida
panhandle.

The Bank is headquartered in Birmingham, Alabama, and is 99.95% owned by
the Corporation. The Bank became a subsidiary of the 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 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. In 1999, BankersTrust of Alabama, Inc. was
merged with and into The Bank and The Bank opened or acquired four new branches.
As a result, The Bank currently has 23 locations in Alabama. On February 3,
2000, The Bank was converted from an Alabama state chartered nonmember bank to a
state member of the Federal Reserve System under the supervision and regulation
of the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") and the State of Alabama Banking Department.

Prior to its merger into The Bank, Emerald Coast Bank was a federally
chartered thrift regulated by the Office of Thrift Supervision. Emerald Coast
Bank became a subsidiary of the Corporation on February 12, 1999, as a result of
the merger of Emerald Coast Bancshares, Inc. with the Corporation. 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 has four
locations in Panama City Beach, Destin, Seagrove and Bay Point, Florida. Emerald
Coast Bank has one subsidiary, Emerald Coast Financial Management, Inc., a
Florida corporation, which provides investment services and insurance to Emerald
Coast 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 Corporation as a result of the
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 Corporation and The Bank are located
at 17 North 20th Street, Birmingham, Alabama 35203, and the telephone number is
(205) 326-2265. As used in this prospectus, the term "Corporation" refers to The
Banc Corporation and its respective subsidiaries and affiliates, including The
Bank, C&L Bank and Emerald Coast Bank, unless the context requires otherwise.

32
<PAGE> 36

STRATEGY

Operations. The Corporation's management team has historically been
successful in the integration of multiple community banking organizations and in
maximizing their returns. The Corporation operates under a community banking
philosophy focusing on individuals and owner-managed and regional businesses
that prefer local bank decision making and personalized service. To implement
this strategy, the Corporation operates on a decentralized basis, emphasizing
local knowledge and authority to make credit decisions. The branch presidents
and chief executive officers of The Bank are responsible for the day-to-day
operations and decisions for the branches under his or her supervision. The
Corporation supplements this decentralized management approach with centralized
policy oversight, credit review and management systems. The Corporation
implements administrative and operations policies at each of its locations while
retaining local management and directors as an advisory board to capitalize on
their knowledge of the local community. The Corporation believes this strategy
enables its banking subsidiaries to generate high yielding loans and to attract
and retain low cost core deposits that provide substantially all of its banking
subsidiaries' funding requirements.

The Bank focuses on residential mortgage, consumer, commercial and real
estate construction lending to customers in each of their respective local
markets. The Bank also offers a variety of deposit programs to individuals and
to businesses and other organizations at interest rates generally consistent
with local market conditions. In addition, The Bank offers individual
retirement, 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. The Bank operates in Birmingham, Alabama, and its suburbs of
Warrior, Morris and Mt. Olive, Alabama, in relatively rural northern Jefferson
County. The Bank also operates branches in: Albertville, Andalusia, Boaz,
Childersburg, Decatur, Frisco City, Gadsden, Guntersville, Huntsville, Kinston,
Madison, Mignon, Monroeville, Opp, Rainbow City, Roanoke (2), Samson, and
Sylacauga, Alabama; the panhandle region of Florida, including Destin, Panama
City Beach, Seagrove, Bay Point, Altha, Blountstown and Bristol, Florida.

Growth. Our future growth depends primarily on the expansion of the
business of The Bank through internal growth, the opening of new branch offices
in new markets and the acquisition of other financial institutions and branches.
The 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 locate sound loans
and investment opportunities within such markets.

Since 1998, a substantial portion of our growth has been through the
acquisition of eight financial institutions and their assets and deposits. In
addition, we acquired three branches from a regional bank. We from time to time
evaluate business combination opportunities and sometimes conduct discussions
and due diligence activities in connection with them. As a result, business
combination discussions and, in some cases, negotiations may take place and
transactions involving cash, debt or equity securities might occur from time to
time. Any future business combination or series of business combinations that
the Corporation 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. Through The Bank, 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. The Corporation's total loans at
March 31, 2000, were $666.5 million, or 89.6% of total earning assets. The
interest rates charged on loans vary with the degree of risk, maturity and
amount of the loan and are further subject to competitive pressures, money
market rates, availability of funds and government regulations. The Bank has no
foreign loans or loans for highly leveraged transactions.

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<PAGE> 37

Loan Portfolio

Real Estate Loans. Loans secured by real estate are a significant
component of The Bank's loan portfolio, constituting $367.0 million, or 55.0% of
total loans at March 31, 2000. The Bank's 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. The Bank charges an origination fee on these
loans.

The Bank's nonresidential mortgage loans include commercial, industrial and
raw land loans. The commercial real estate loans are typically used to provide
financing for retail establishments, offices and manufacturing facilities. The
Bank generally requires nonresidential mortgage loans to have an 80% loan-to-
value ratio and usually underwrites 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 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. The Bank makes 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. The Bank attempts to reduce its credit risk on commercial loans by
limiting the loan to value ratio to 65% on loans secured by accounts receivable
or inventory and 75% on equipment loans. The Bank also makes unsecured
commercial loans. Commercial, industrial and agricultural loans constituted
$218.2 million, or 32.7% of the Corporation's loan portfolio at March 31, 2000.

Consumer Loans. Consumer lending includes installment lending to
individuals in our market areas and consists of loans to purchase automobiles,
recreational vehicles, mobile homes and appliances. Consumer loans constituted
$74.9 million, or 11.2% of our loan portfolio at March 31, 2000. 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 collectibility.

We use generally recognized loan underwriting criteria and attempt to
minimize loan losses through various means. In particular, on larger credits,
the Corporation generally relies on the cash flow of a debtor as the source of
repayment and secondarily on the value of the underlying collateral. In
addition, the Corporation attempts 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 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 the Corporation.

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 loan review department
which also performs ongoing, independent review of the risk management process
which 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
non-performing assets. The loan review function is centralized and

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<PAGE> 38

independent of the lending function. Review results are reported to the Audit
Committee of the Board of Directors.

DEPOSITS

The principal sources of funds for The Bank are core deposits, consisting
of demand deposits, interest-bearing transaction accounts, money market
accounts, savings deposits and certificates of deposit. Transaction accounts
include checking, money market and negotiable order of withdrawal accounts that
provide the banks 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 the Corporation's market areas.

Deposit rates are set periodically by senior management of The Bank,
subject to approval by management of the Corporation. Management believes that
the rates The Bank offers are competitive with those offered by competing
institutions in their market areas. The Bank focuses on customer service, not
high rates, to attract and retain deposits.

COMPETITION

The Bank encounters 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 the
Corporation's 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."

EMPLOYEES

As of March 31, 2000, the Corporation and The Bank together employed
approximately 366 individuals primarily at The Bank. We believe that our
employee relations have been and continue to be good.

PROPERTIES

The corporate headquarters of the Corporation are located at 17 North 20th
Street, Birmingham, Alabama, in the John A. Hand Building, a 21-story building.
As of December 21, 1999, the Corporation and The Bank, who jointly own the
building, converted the building into condominiums known as The Bank
Condominiums. The Corporation owns the Bank Unit, which consists of 4 floors of
the building, including a branch of The Bank and the Corporation's headquarters,
and intends to sell or lease the remaining condominium units for commercial or
residential use.

The Corporation and The Bank operate through 31 facilities, including its
operations center. Of these, 24 are owned by the Corporation or its subsidiaries
and 7 are leased. Rental expense on the leased properties totaled approximately
$734,000 in 1999.

LEGAL PROCEEDINGS

While the Corporation may from time to time be a party to various legal
proceedings arising in the ordinary course of its business, the Corporation
believes that there are currently no proceedings threatened or pending against
the Corporation at this time that will individually, or in the aggregate,
materially or adversely effect the Corporation's business or financial
condition.

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<PAGE> 39

SUPERVISION AND REGULATION

As 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, the Corporation and The Bank are subject to the supervision, examination
and reporting requirements of the Federal Reserve Act, the BHCA and 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 and certain
other regulatory authorities with jurisdiction over activities permitted by the
GLBA have broad enforcement power over financial 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 the Corporation and The Bank 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.

Holding Company Regulation

Recent Legislative Developments. The GLBA became law on November 12, 1999,
and 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 the affiliation of banks and these other
financial services entities under a single holding company. 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
virtually any type 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. On February 12, 2000, the Corporation filed
with the Federal Reserve Board its election to become a financial holding
company. The Corporation's election was effective as of March 13, 2000.

The GLBA establishes a system of functional regulation, under which the
Federal Reserve Board will regulate the banking activities of financial holding
companies and other federal regulators will regulate banks' financial
subsidiaries. The SEC will regulate securities activities of financial holding
companies and state insurance regulators will regulate their business
activities. The GLBA also provides new protections against the transfer and use
by financial institutions of consumers' non-public, personal information.

Regulatory Restrictions on Dividends. The payment of dividends to the
Corporation by The Bank is subject to certain restrictions imposed by state and
federal banking laws, regulations and authorities. It is the policy of the
Federal Reserve Board that bank holding companies should pay cash dividends on
common stock only out of income available over the past year and only if
prospective earnings retention is consistent with the organization's expected
future needs and financial condition. The policy provides that bank holding
companies should not maintain a level of cash dividends that undermines the bank
holding company's ability to serve as a source of strength to its banking
subsidiaries.

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<PAGE> 40

The federal banking statutes prohibit federally insured banks from making
any capital distributions, including a dividend payment if, after making the
distribution, the institution would be "undercapitalized" as defined by the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). In
addition, the relevant federal regulatory agencies also have authority to
prohibit an insured bank from engaging in an unsafe or unsound practice, as
determined by the agency, in conducting an activity. The payment of dividends
could be deemed to constitute such an unsafe or unsound practice, depending on
the financial conditions of the banking subsidiaries. Regulatory authorities
could impose administratively stricter limitations on the ability of The Bank to
pay dividends to the Corporation if such limits were deemed appropriate to
preserve certain capital adequacy requirements.

The Bank is also restricted under Alabama law from declaring and paying
dividends in excess of 90% of annual net income until such time as its surplus
funds equal at least 20% of capital stock. The Bank's surplus is currently in
excess of this amount.

As of March 31, 2000, an aggregate of approximately $3.1 million was
available for payment of dividends by the Corporation's subsidiaries to the
Corporation under applicable restrictions, without obtaining regulatory
approval. See "-- The Bank Regulation."

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 otherwise 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.

In the event of a bank holding company's bankruptcy under Chapter 11 of the
U.S. Bankruptcy Code, the bankruptcy trustee will assume any deficit under any
commitment by the debtor holding company to any of the federal banking agencies
to maintain the capital of a banking subsidiary, and any claim for breach of
such obligation will generally have priority over most other unsecured claims.

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's
Regulation Y, for example, generally requires a holding company to give the
Federal Reserve Board prior notice of any redemption or repurchase of its own
equity securities, if the consideration to be paid, together with the
consideration paid for any repurchases or redemptions in the preceding year, is
equal to 10% or more of the company's consolidated net worth. The Federal
Reserve Board may oppose certain bank holding company activities if it believes
that the activity would constitute an unsafe or unsound practice or would
violate any law or regulation. Depending upon the circumstances, the Federal
Reserve Board could take the position that paying a dividend would constitute an
unsafe or unsound banking practice.

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.

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<PAGE> 41

Capital Adequacy Requirements. The Corporation and The Bank, as members of
the Federal Reserve System, are required to comply with the capital adequacy
standards established by the Federal Reserve Board and federal bank regulatory
agencies. 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. The Corporation's Leverage Ratio at March 31, 2000, was 7.71%. 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 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 is subject to risk based and leverage capital requirements that
are substantially similar to those established by the Federal Reserve Board for
bank holding companies. Each of the Corporation's banking subsidiaries were in
compliance with the applicable minimum capital requirements as of March 31,
2000. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." 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.

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<PAGE> 42

The following is a table of the Corporation's and its subsidiaries'
regulatory capital ratios at March 31, 2000:

<TABLE>
<CAPTION>
MARCH 31, 2000
----------------------------------------
TOTAL RISK- TIER 1 RISK-
BASED CAPITAL BASED CAPITAL LEVERAGE
RATIO RATIO RATIO
------------- ------------- --------
<S> <C> <C> <C>
Corporation......................................... 10.77% 9.52% 7.71%
The Bank............................................ 10.98 9.73 8.17
Emerald Coast Bank.................................. 10.38 9.49 N/A
C&L Bank............................................ 14.10 12.85 9.44
</TABLE>

Acquisitions by Bank Holding Companies. The BHCA requires every bank
holding company to obtain the prior approval of the Federal Reserve Board before
(1) it may acquire all or substantially all of the assets of any bank; (2) it
may acquire direct or indirect ownership or control of any voting shares of any
bank, if after such acquisition it would own or control, directly or indirectly,
more than 5% of the voting shares of such bank; or (3) it may merge or
consolidate with any other bank holding company. In approving bank acquisitions
by bank holding companies, the Federal Reserve Board is required to consider the
financial and managerial resources and future prospects of the bank holding
company and the banks concerned, the convenience and needs of the communities to
be served including the parties' performance under the Community Reinvestment
Act of 1977 ("CRA") and various competitive factors.

The BHCA further provides that the Federal Reserve Board may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint of
trade, unless the anti-competitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served.

Control Acquisitions. The Change in Bank Control Act prohibits a person or
group of persons from acquiring "control" of a bank holding company unless the
Federal Reserve Board has been notified and has not objected to the transaction.
Under a rebuttable presumption established by the Federal Reserve Board, the
acquisition of 10% or more of a class of voting stock of a bank holding company
with a class of securities registered under Section 12 of the Exchange Act,
would, under the circumstances set forth in the presumption, constitute
acquisition of control of that bank holding company.

In addition, any company is required to obtain the approval of the Federal
Reserve Board under the BHCA before acquiring 25% (and bank holding companies
are required to obtain approval of the Federal Reserve Board before acquiring
5%) or more of the outstanding common stock of the Corporation, or otherwise
obtaining control or a "controlling influence" over the Corporation.

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 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, 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 Florida each have laws relating specifically to acquisitions of
banks, bank holding companies and other types of financial institutions in each
state, by financial institutions that are based in, and not based in those
states. Alabama law sets five years as the minimum age of banks which may be
acquired. Florida law requires that the bank to be acquired be in existence at
least three years and the satisfaction of various provisions of state law before
a bank may be acquired.

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<PAGE> 43

The Bank Regulation

The Bank is also subject to numerous state and federal statutes and
regulations that affect its business, activities and operations, and each is
supervised and examined by one or more state or federal bank regulatory agencies
which is given authority to approve or disapprove mergers, establishment of
branches, to prevent unsafe or unsound banking practices or other violations of
law and similar actions.

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

The deposits of The Bank are insured by the Bank Insurance Fund ("BIF") of
the FDIC. Such supervision and regulation subjects The Bank to special
restrictions, requirements, potential enforcement actions and periodic
examination by the FDIC. In addition to the Federal Reserve Board's regulation
of bank holding companies generally, the Federal Reserve is the primary
regulatory authority of The Bank as a member of the Federal Reserve System.

Restrictions on Transactions With Affiliates and Insiders. Transactions
between The Bank and its affiliates, including the 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 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. Federal banking law
also prohibits a bank holding company and its subsidiaries from engaging in
certain tie-in arrangements in connection with the extension of credit, the
lease or sale of property or the furnishing of services.

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.

Restrictions on Distribution of Subsidiary Bank Dividends and
Assets. Dividends paid by The Bank are, and will be for the foreseeable future,
a substantial part of the Corporation's operating funds. The FDIC and Alabama
Banking Department regulations govern the amount of dividends that may be paid
by The Bank. Capital adequacy requirements serve to limit the amount of
dividends that may be paid by banks. Under federal law, The Bank can not pay a
dividend if, after paying the dividend, it would be "undercapitalized." The FDIC
may declare a dividend payment to be unsafe and unsound even though the banking
subsidiary would continue to meet its capital requirements after the dividend.
See "-- Regulatory Restriction on Dividends."

Examinations. The FDIC periodically examines and evaluates insured banks.
Based upon such an evaluation, the FDIC may revalue the assets of the
institution and require that it establish specific reserves to compensate for
the difference between the FDIC-determined value and the bank's established book
value of such assets. The Bank is also periodically examined by the Federal
Reserve Board and the Alabama Banking Department as the appropriate federal or
state bank regulatory agencies.

Corrective Measures for Capital Deficiencies. The federal banking
regulators are required to take "prompt corrective action" with respect to
capital-deficient institutions. Agency regulations define, for each capital
category, the levels at which institutions are "well capitalized," "adequately
capitalized," "under capitalized," "significantly under capitalized" and
"critically under capitalized." A "well capitalized" bank has a total risk based
capital ratio of 10.0% or higher; a Tier 1 risk based capital ratio of 6.0% or
higher; a leverage ratio of 5.0% or higher; and is not subject to any written
agreement, order or directive requiring it to
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<PAGE> 44

maintain a specific capital level for any capital measure. An "adequately
capitalized" bank has a total risk based capital ratio of 8.0% or higher; a Tier
1 risk based capital ratio of 4.0% or higher; a leverage ratio of 4.0% or higher
(3.0% or higher if the bank was rated a CAMEL 1 in its most recent examination
report and is not experiencing significant growth); and does not meet the
criteria for a well capitalized bank. A depository institution that has a Total
Capital ratio of less than 8.0%, a Tier 1 Capital ratio of less than 4.0%, or a
Leverage Ratio of less than 4.0% is considered to be "undercapitalized." A
depository institution that has a Total Capital Ratio of less than 6.0%, a Tier
1 Capital ratio of less than 3.0%, or a Leverage Ratio of less than 3.0% is
considered to be "significantly undercapitalized," and an institution that has a
tangible equity capital to assets ratio equal to or less than 2.0% is deemed to
be "critically undercapitalized." For purposes of the regulation, the term
"tangible equity" includes core capital elements counted as Tier 1 Capital for
purposes of the risk-based capital standards plus the amount of outstanding
cumulative perpetual preferred stock (including related surplus), minus all
intangible assets with certain exceptions. A depository institution may be
deemed to be in a capitalization category that is lower than is indicated by its
actual capital position if it receives an unsatisfactory examination rating.

An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that subsidiary depository
institution meet its capital restoration plan, subject to certain limitations.
The obligation of a controlling bank holding company under FDICIA to fund a
capital restoration plan is limited to the lesser of 5.0% of an undercapitalized
subsidiary's assets and the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.

As of March 31, 2000, each of the Corporation's banking subsidiaries had
the requisite capital levels to be classified as "well capitalized."

In addition to requiring undercapitalized institutions to submit a capital
restoration plan, federal banking regulations contain broad restrictions on
certain activities of undercapitalized institutions including asset growth,
acquisitions, branch establishment and expansion into new lines of business.
With certain exceptions, an insured depository institution is prohibited from
making capital distributions, including dividends, and is prohibited from paying
management fees to control persons if the institution would be undercapitalized
after any such distribution or payment.

As an institution's capital decreases, the FDIC's enforcement powers become
more extensive. A significantly undercapitalized institution is subject to
mandated capital raising activities, restrictions on interest rates paid and
transactions with affiliates, removal of management, and other restrictions. The
FDIC has only very limited discretion in dealing with a critically
undercapitalized institution and is virtually required to appoint a receiver or
conservator.

Banks with risk-based capital and leverage ratios below the required
minimums may also be subject to certain administrative actions, including the
termination of deposit insurance upon notice and hearing, or a temporary
suspension of insurance without a hearing in the event the institution has no
tangible capital.

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
41
<PAGE> 45

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.

FDICIA requires a system of risk-based assessments under which banks that
pose a greater risk of loss to the FDIC will be required to pay a higher
insurance assessment. 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.

Enforcement Powers. The federal banking agencies have broad enforcement
powers, including the power to terminate deposit insurance, impose substantial
fines and other civil and criminal penalties and appoint a conservator or
receiver. Failure to comply with applicable laws, regulations and supervisory
agreements could subject the Corporation or The Bank, as well as officers,
directors and other institution-affiliated parties of these organizations, to
administrative sanctions and substantial civil money penalties. The appropriate
federal banking agency may appoint the FDIC as conservator or receiver for a
banking institution (or the FDIC may appoint itself, under certain
circumstances) if any one or more of a number of circumstances exist, including,
without limitation, the fact that the banking institution is undercapitalized
and has no reasonable prospect of becoming adequately capitalized; fails to
become adequately capitalized when required to do so; fails to submit a timely
and acceptable capital restoration plan; or materially fails to implement an
accepted capital restoration plan. The Alabama Banking Department also has broad
enforcement powers over The Bank, including the power to impose orders, remove
officers and directors, impose fines and appoint supervisors and conservators.

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. Each of
the banking subsidiaries has 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 and the GLBA, 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 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 Corporation cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect the
Corporation.

42
<PAGE> 46

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 Corporation and its
subsidiaries cannot be predicted.

43
<PAGE> 47

MANAGEMENT

The following table sets forth certain information about directors and
certain executive officers of the Corporation as of June 30, 2000:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH CORPORATION
---- --- -------------------------
<S> <C> <C>
James A. Taylor.............................. 58 Chairman of the Board, Chief Executive
Officer and President
David R. Carter.............................. 48 Executive Vice President, Chief Financial
Officer and Director
James A. Taylor, Jr. ........................ 35 Executive Vice President, General Counsel,
Secretary and Director
Terry DuBose................................. 52 Vice Chairman
James Mailon Kent, Jr.(1).................... 59 Vice Chairman
Larry D. Striplin, Jr.(1).................... 70 Vice Chairman
James R. Andrews, M.D........................ 57 Director
Neal R. Berte, Ed.D.......................... 59 Director
W. T. Campbell, Jr. ......................... 53 Director
Peter N. Dichiara(2)......................... 44 Director
K. Earl Durden(2)............................ 63 Director
John F. Gittings............................. 53 Director
Steven C. Hays............................... 43 Director
Larry R. House............................... 56 Director
Thomas E. Jernigan, Jr.(2)................... 35 Director
Randall E. Jones............................. 46 Director
Mayer Mitchell............................... 67 Director
Ronald W. Orso, M.D.(1)...................... 54 Director
Harold W. Ripps.............................. 61 Director
Richard M. Scrushy........................... 47 Director
Jerry M. Smith............................... 60 Director
Michael E. Stephens.......................... 56 Director
Marie Swift.................................. 58 Director
T. Mandell Tillman........................... 51 Director
Johnny Wallis................................ 71 Director
</TABLE>

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

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

James A. Taylor has been Chairman of the Board and Chief Executive Officer
of the Corporation since its incorporation in 1998. Mr. Taylor has served as
President of the Corporation since February 1999. Mr. Taylor served as President
of the Corporation from its incorporation until November 1998. 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 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 the American Sports Medicine
Institute and Vesta Insurance Group, Inc., a publicly traded insurance holding
company.

David R. Carter has been Executive Vice President and Chief Financial
Officer of the Corporation since September 1998. Mr. Carter has served as a
Director of the 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
January 1998, Mr. Carter served as the Chief Financial

44
<PAGE> 48

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.

James A. Taylor, Jr. has been Executive Vice President and General Counsel
of the Corporation since September 1998. Mr. Taylor has served as a Director of
the Corporation since December 1998 and Secretary of the Corporation since
December 1998. Mr. Taylor served as Executive Vice President General Counsel and
Secretary of The Bank from December 1998 until November 1999 and from June 21,
2000, to the present. Mr. Taylor was a director of Warrior Capital Corporation
from October 1997 until it was merged into the 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, to May 23, 2000, Mr. Taylor served as Senior Vice President -- Finance
of Vesta Insurance Group, Inc.

Terry DuBose has been a director of the Corporation and served as Vice
Chairman since December 1998. Mr. DuBose has served The Bank as Chief Executive
Officer -- Florida since June 2000. Mr. DuBose served as Chief Executive Officer
and Chairman of Emerald Coast Bank until it was merged into The Bank on June 16,
2000. Mr. DuBose served as Chief Executive Officer and President of Emerald
Coast Bancshares, Inc. from its inception in 1996 until it was merged into the
Corporation on February 12, 1999. Mr. DuBose served as Chairman of the Board,
President and Chief Executive Officer of SouthTrust of Northwest Florida Holding
Company from January 1987 until 1996. Mr. DuBose served as President and Chief
Executive Officer of First Bank of Marianna from 1978 until it was acquired by
SouthTrust in 1987. Mr. DuBose serves on the Board of Directors of the Florida
Banking Association, the Florida Government Relations Counsel and the Florida
Community Bankers Counsel.

James Mailon Kent, Jr. has been a director of the Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
October 1997 until it was merged into the Corporation on September 24, 1998. Mr.
Kent has served as Vice Chairman of the 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.

Larry D. Striplin, Jr. has been a member of the Board of Directors of the
Corporation since September 1998 and served as a director of Warrior Capital
Corporation from October 1997 until it was merged into the Corporation on
September 24, 1998. Mr. Striplin has served as Vice Chairman of the 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, and
Vesta Insurance Group, Inc.

James R. Andrews, M.D. has been a director of the Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
October 1997 until it was merged into the 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 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 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 Corporation on October 30, 1998, and was a director of City National Bank
from 1984 until it was merged into The Bank. Mr. Campbell is a practicing
attorney in Sylacauga, Alabama with the firm of McKay and Campbell.

45
<PAGE> 49

Peter N. Dichiara has been a director of the Corporation since September
1998 and served as a director of Warrior Capital Corporation from 1984 until it
was merged into the 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 Corporation since December 1998.
Mr. Durden served as a Director of Emerald Coast Bancshares, Inc. from its
inception in 1996 until it was merged into the 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.

John F. Gittings has been a director of the Corporation since September
1999. Mr. Gittings also serves as President of The Bank-Monroeville. Mr.
Gittings served as President, Chief Executive Officer, and director of First
Citizens Bancorp, Inc., from 1996 until it was merged into the Corporation on
October 31, 1998. Mr. Gittings served in various capacities for First Bank &
Trust in Grove Hill, Alabama, from 1990 to 1996.

Steven C. Hays has been a director of the Corporation since December 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.

Larry R. House has been a director of the Corporation since September 1998
and served as a director of Warrior Capital Corporation from October 1997 until
it was merged into the Corporation on September 24, 1998. From 1985 to 1992, he
was Chief Operating Officer of HEALTHSOUTH Rehabilitation Corporation, now
HEALTHSOUTH Corporation. From 1992 to 1993, Mr. House was President of
HEALTHSOUTH International, Inc. From 1993 to 1998, Mr. House served as Chairman
of the Board and Chief Executive Officer of MedPartners, Inc., now Caremark Rx,
Inc. Mr. House is presently the Chairman of the Executive Committee of
onehealthbank.com. Mr. House is also managing principal of VENTUREHOUSE, a
venture capital firm headquartered in Birmingham, Alabama.

Thomas E. Jernigan, Jr. has been a director of the Corporation since
September 1998 and served as a director of Warrior Capital Corporation from
December 1997 until it was merged into the 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 Corporation since December
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.

Mayer Mitchell has been a director of the Corporation since September 1998
and served as a director of Warrior Capital Corporation from December 1997 until
it was merged into the 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 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 Corporation since September
1998 and served as a director of Warrior Capital Corporation from October 1997
until it was merged into the 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.

46
<PAGE> 50

Harold W. Ripps has been a director of the Corporation since September 1998
and served as a director of Warrior Capital Corporation from December 1997 until
it was merged into the 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
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 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 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 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 E. Stephens has been a director of the Corporation since September
1998 and served as a director of Warrior Capital Corporation from December 1997
until it was merged into the 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.

Marie Swift has been a director of the Corporation since September 1998 and
served as a director of Warrior Capital Corporation from its incorporation in
1982 until it was merged into the Corporation on September 24, 1998. Ms. Swift
served as Secretary of the 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.

T. Mandell Tillman has been a director of the Corporation since December
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 Corporation since September 1998
and served as director of Warrior Capital Corporation from its incorporation in
1982 until it was merged into the 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 continues to serve as Chairman of the Board
of The Bank -- Warrior.

CLASSIFIED BOARD OF DIRECTORS

Pursuant to the terms of the Corporation's Restated Certificate of
Incorporation (the "Corporation Certificate") and the Corporation's Bylaws, the
Board of Directors of the Corporation is divided into three classes, with each
class being as nearly equal in number as reasonably possible. One class holds
office for a term that will expire at the annual meeting of stockholders to be
held in 2001, a second class holds office for a term that will expire at the
annual meeting of stockholders to be held in 2002, and a third class 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 term to which he is elected and
until his successor is duly elected and qualified. At each annual meeting of
stockholders of the Corporation, the successors to the class of directors whose
terms expire at such meeting are 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. Messrs. Taylor, Berte, Carter, DuBose, Kent and Striplin and
Drs. Andrew and Orso have terms expiring in 2001. Messrs. Campbell, Durden,
Gittings, Jernigan, Jr., Mitchell, Ripps, Taylor, Jr. and Tillman have terms
expiring in 2002. Messrs. Dichiara, Hays, House, Jones, Scrushy, Smith, Stephens
and Wallis and Ms. Swift have terms expiring in 2003. The Board of Directors of
the Corporation elects officers annually, and these officers serve at the
discretion of the Board of Directors of the Corporation.

47
<PAGE> 51

CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors of the Corporation 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 Corporation. The Audit Committee makes recommendations
to the Board of Directors of the Corporation with respect to the Corporation's
financial statements and the appointment of independent auditors, reviews
significant audit and accounting policies and practices, meets with the
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 Corporation. The Audit Committee consists of
Messrs. Dichiara, Durden and Jernigan, directors of the Corporation, and Roger
Barker and Glenn Guthrie, directors of The Bank. During 1999, there were five
meetings of the Audit Committee.

The Compensation Committee is responsible for reviewing the performance of
the officers of the Corporation and recommending to the Board of Directors of
the Corporation annual salary and bonus amounts for all officers of the
Corporation. The Compensation Committee also administers the Amended and
Restated 1998 Incentive Stock Plan of the Corporation and the Commerce Bank of
Alabama Stock Option Plan. The Compensation Committee consists of Messrs. Kent
and Striplin and Dr. Orso. During 1999, there were four meetings of the
Compensation Committee.

The Board of Directors as a whole acts in place of a nominating committee.
The 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
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 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 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 Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.

48
<PAGE> 52

EXECUTIVE COMPENSATION AND OTHER INFORMATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

Executive Officer Compensation. The following table presents certain
information concerning compensation paid or accrued for services rendered to the
Corporation in all capacities during the years ended December 31, 1999, 1998 and
1997, for the chief executive officer and the four other most highly compensated
executive officers of the 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

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION HELD YEAR SALARY ($) BONUS ($) COMPENSATION(1) OPTIONS (#)
-------------------------------- ---- ---------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C>
James A. Taylor.......................... 1999 $250,000 $150,000 $75,409 75,000
Chairman of the Board and 1998 161,111 96,667 31,113 125,000
Chief Executive Officer 1997 25,000 -- 4,200 --
Terry DuBose............................. 1999 $228,035 $ -- $28,653 50,000
Vice Chairman of the Board, 1998 175,000 25,000 17,916 --
Chief Executive Officer -- 1997 160,718 -- 17,524 --
Florida of The Bank
James A. Taylor, Jr. (2)................. 1999 $164,742 $ -- $62,792 15,000
Executive Vice President, 1998 108,000 25,000 14,000 50,000
General Counsel, Secretary 1997 -- -- -- --
and Director
David R. Carter (3)...................... 1999 $164,742 $ -- $61,817 15,000
Executive Vice President, 1998 162,000 25,000 8,968 50,000
Chief Financial Officer and 1997 -- -- -- --
Director
Robert S. McKean (4)..................... 1999 $135,663 $ -- $39,395 15,000
President and Chief Executive 1998 86,000 10,000 -- 10,000
Officer of The Bank 1997 -- -- -- --
</TABLE>

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

(1) Represents the dollar value of board fees received and insurance premiums
paid by the 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 in 1998, which is
included in his reported 1998 salary.
(3) Mr. Carter received $40,500 in consultation fees in 1998, which is included
in his reported 1998 salary.
(4) Mr. McKean received $10,000 in consultation fees in 1998, which is included
in his reported 1998 salary.

Option Grants in 1999. The following table contains information concerning
the grant of stock options under the Amended and Restated 1998 Stock Incentive
Plan, and the Commerce Bank of Alabama Incentive Stock Option Plan to the named
executive officers.

49
<PAGE> 53

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------- ALTERNATIVE TO
NUMBER OF PERCENT OF (F) AND (G):
SECURITIES TOTAL OPTIONS/ GRANT DATE
UNDERLYING SARS VALUE
OPTIONS/ GRANTED TO --------------
SARS EMPLOYEES EXERCISE OF GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE
NAME (#) YEAR ($/SH) DATE $(1)
---- ---------- -------------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C>
James A. Taylor........ 75,000 31.38% 10.50 6/14/2009 $408,000
Terry DuBose........... 50,000 20.92 11.00 2/15/2009 273,500
James A. Taylor, Jr.... 15,000 6.28 10.50 6/14/2009 81,600
David R. Carter........ 15,000 6.28 10.50 6/14/2009 81,600
Robert S. McKean....... 15,000 6.28 10.50 6/14/2009 81,600
</TABLE>

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

(1) The fair value of the options granted was based upon the Black-Scholes
pricing model. The Corporation used the following weighted average
assumptions for 1999: a risk free interest rate of 6.12%, a volatility
factor of .39%, a weighted average expected to be of options (in years) of
6.5 and a dividend yield of 0%.

Aggregated Option Exercises in 1999 and Option Values at Year End. The
following table provides information with respect to options exercised by the
named executive officers during 1999 and the number and value of securities
underlying unexercised options held by the named executive officers at December
31, 1999.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
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
---- ------------ -------- ---------------------- --------------------
<S> <C> <C> <C> <C>
James A. Taylor........ -- -- 65,000/135,000 --
Terry DuBose........... -- -- 20,000/30,000 --
James A. Taylor, Jr.... -- -- 23,000/42,000 --
David R. Carter........ -- -- 23,000/42,000 --
Robert S. McKean....... -- -- 7,000/18,000 --
</TABLE>

EMPLOYMENT AGREEMENTS

James A. Taylor. Pursuant to the executive employment agreement entered
into between the Corporation and James A. Taylor in October 1997, Mr. Taylor
will serve as Chairman of the Board and Chief Executive Officer of the
Corporation and Chairman of the Board of The Bank. In addition, Mr. Taylor will
be nominated to serve as a director of the Corporation and each of its
subsidiaries. Mr. Taylor will receive a minimum annual base compensation of
$250,000 plus a bonus of 15% of the base amount per quarter.

Under this agreement, Mr. Taylor will be entitled to receive other benefits
including a car allowance and country club dues and may participate in other
executive compensation plans. The agreement is for a term of three years which
is renewable daily for an additional three-year term, and it is terminable by
the Corporation only upon three years' notice. 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,
directors' fees and all benefits or their cash equivalents and be entitled to a
"gross-up" payment to cover any excise tax imposed on any severance payment to
Mr. Taylor.

50
<PAGE> 54

Mr. Taylor's employment agreement was amended (in November 1999) to include
as part of his compensation the rental payments for the condominium the
Corporation will provide for Mr. Taylor as a residence.

The Corporation entered into a deferred compensation agreement with Mr.
Taylor on July 23, 1998. That agreement provides that the Corporation shall fund
the premium of two life insurance policies on Mr. Taylor's life which will
provide a split dollar benefit to the 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.

Terry DuBose. The Corporation entered into an employment agreement with
Terry DuBose on February 12, 1999. Under the terms of his employment agreement,
Mr. DuBose will serve as Vice Chairman of the Corporation and Chairman of the
Board and Chief Executive Officer of Emerald Coast Bank. The agreement is for a
term of three years which is renewable daily for a three-year term and
terminable by the Corporation only upon three years' notice. Mr. DuBose will
receive a minimum annual compensation of $235,000. In addition, Mr. DuBose is
entitled to receive other benefits such as performance bonuses, payment of
country club fees and dues, life insurance, an automobile and payment of
reasonable travel expenses, and may participate in all benefit plans provided by
the Corporation. If Mr. DuBose is terminated for any reason other than "cause"
as defined in the agreement, Mr. DuBose shall receive his annual compensation
for the three years following his termination. In the event of a "Change in
Control" as defined in the agreement, the Corporation shall pay Mr. DuBose his
average monthly compensation as calculated per the agreement for thirty-six
months.

J. Daniel Sizemore. The Corporation had an employment agreement with J.
Daniel Sizemore from November 6, 1998, until he resigned his employment on
February 15, 1999. Mr. Sizemore was employed in November 1998 as President and
Chief Operating Officer of the Corporation, President and Chief Executive
Officer of The Bank and President of The Bank's Albertville branch. In addition,
Mr. Sizemore served as a director of the Corporation and each of its subsidiary
banks. The agreement provided for minimum annual compensation of $270,000
including salary, director's fees and bonuses and entitled Mr. Sizemore to
receive other benefits such as a car allowance, country club dues and life
insurance and participation in other executive compensation plans. The agreement
was for a term of three years, was renewable daily for a three-year term and
terminable by the employer only upon three years' notice.

On February 15, 1999, Mr. Sizemore and the Corporation entered into a
three-year Non-Competition and Referral Agreement pursuant to which Mr. Sizemore
resigned from the Corporation and terminated his employment. Under this
agreement, Mr. Sizemore will receive a total of $240,000: $20,000 each month
from March 1999 to August 1999, $10,500 each month from September 1999 to
February 2000, and $5,000 per month from March 2000 to February 2001. As part of
this agreement, Mr. Sizemore agreed to refer $12,000,000 in loans to the
Corporation's subsidiaries. In addition, Mr. Sizemore agreed not to compete
directly or indirectly with the Corporation and not to solicit the employment of
any employee of the Corporation.

James A. Taylor, Jr. The Corporation has entered into an employment
agreement with James A. Taylor, Jr., dated as of January 1, 1999. Under his
employment agreement, Mr. Taylor, Jr. will serve as the Executive Vice
President, General Counsel and Secretary of the Corporation and Executive Vice
President, General Counsel and Secretary of The Bank. In addition, Mr. Taylor,
Jr. will be nominated to serve as a director of the Corporation and its
subsidiaries. Mr. Taylor, Jr. resigned his position as Executive Vice President,
General Counsel and Secretary of the Bank on November 1, 1999. He continues to
serve as a director of The Bank. Mr. Taylor, Jr. will receive a base salary of
$162,000 per year and is eligible for bonuses. 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 and will be reviewed at least annually by
the Corporation's Board of Directors for the extension of the term for an
additional three-year period. If Mr. Taylor, Jr. is terminated for any reason
other than "cause" as defined in the agreement, he shall receive three years'
base compensation, director's fees and all benefits or their cash

51
<PAGE> 55

equivalents. In addition, he would be entitled to a "gross up" payment to cover
any excise tax imposed on any severance payment. Mr. Taylor, Jr.'s agreement was
renewed on March 21, 2000, for a three year term.

W. T. Campbell, Jr. On October 30, 1998, Mr. Campbell entered into an
employment agreement with the Corporation and The Bank for a three year term.
Mr. Campbell will serve as the Chairman of the Board for The Bank of Sylacauga
and 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 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 Corporation in any county where the Corporation or its subsidiaries do
business. Mr. Campbell's contract was renewed as of October 30, 1999, for an
additional three-year period.

John F. Gittings. On October 30, 1998, Mr. Gittings entered into an
employment agreement with the Corporation and The Bank for a three-year term.
Mr. Gittings serves as Chief Executive Officer of The BankMonroeville 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
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 Corporation in any county where the Corporation or its
subsidiaries do business.

Marie Swift. On January 1, 1998, The Bank entered into an employment
agreement with Marie Swift, a director of the Corporation. 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. Ms. Swift's agreement was renewed as of January 1, 2000, for an
additional three-year period.

Johnny Wallis. On January 1, 1998, The Bank entered into an employment
agreement with Johnny Wallis, a director of the Corporation. Mr. Wallis serves
as Chairman of the Board and Chief Executive Officer of The Bank. The term of
the agreement is for three years and will be reviewed annually by the Board of
Directors. Mr. Wallis receives a base salary of $100,000. In addition, The Bank
must provide Mr. Wallis an automobile.

David R. Carter. The Corporation has entered into an employment agreement
with David R. Carter, effective as of January 1, 2000. Under his employment
agreement, Mr. Carter will serve as the Executive Vice President and Chief
Financial Officer of the Corporation and Executive Vice President and Chief
Financial Officer of The Bank. In addition, Mr. Carter will receive a base
salary of $162,000 per year and is eligible for bonuses. 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 and will be reviewed at least
annually by the Corporation's Board of Directors for the extension of the term
for an additional three-year period. If Mr. Carter is terminated for any reason
other than "cause" as defined in the agreement, 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 Mr. Carter.

DIRECTOR COMPENSATION

Directors of the 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 Corporation. Directors are eligible to receive the grant of
stock options under the Corporation's Second Amended and Restated 1998 Stock
Incentive Plan.

52
<PAGE> 56

The following directors of the Corporation have entered into Deferred
Compensation Agreements with the Corporation effective as of September 1, 1999:
Andrews, Berte, Campbell, Carter, Dichiara, Durden, Gittings, Hays, House,
Jernigan, Jones, Kent, Orso, Ripps, Scrushy, Stephens, Swift, Taylor, Taylor,
Jr., Tillman. Taylor, Kent and Jernigan also have Deferred Compensation
Agreements with The Bank. These agreements provide that the Corporation will
establish and fund investments in 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 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
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 director's termination of service, which is payable to
the director in ten equal annual installments. The secondary benefit is the
amount equal to the growth in the 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 Corporation
between any of the directors, nominees for director or executive officers of the
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 Corporation were
elected or nominated to the Board of Directors of the Corporation in connection
with certain acquisitions: Steven C. Hays, Randall E. Jones and T. Mandell
Tillman -- Commerce Bank of Alabama, Inc.; W.T. Campbell, Jr. -- City National
Corporation; K. Earl Durden and Terry DuBose -- Emerald Coast Bancshares Inc.;
and Jerry M. Smith -- C&L Banking Corporation and C&L Bank of Blountstown. See
"Management of Corporation -- Incumbent Directors and Executive Officers" and
"Executive Compensation and Other Information -- 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 Corporation of the Corporation or any of its
subsidiaries.

INCENTIVE PLANS

Corporation Incentive Plan. The objectives of the Second Amended and
Restated 1998 Stock Incentive Plan of The Banc Corporation are to further the
growth and development of the Corporation and its subsidiaries by (1)
encouraging selected Participants who contribute or are expected to contribute
materially to the Corporation's success to obtain proprietary interests in the
Corporation to encourage them so as to promote the best interests of the
Corporation and (2) affording the Corporation a means of attracting qualified
personnel. The Corporation Stock Incentive Plan covers 1,500,000 shares of
Corporation common stock. Those shares may be, in whole or in part, authorized
but unissued shares or issued shares that have been re-acquired by the
Corporation. The Corporation Stock Incentive Plan authorizes the grant of
options to purchase Corporation common stock. The options may be qualified as
incentive stock options under Section 422 of the Internal Revenue Code of 1986
(the "Code") if so determined at the time of grant. The Corporation Stock
Incentive Plan also authorizes other awards, including stock appreciation
rights, restricted stock and performance shares.

The Corporation Stock Incentive Plan is administered by the Compensation
Committee. The Compensation Committee, subject to the approval of the Board of
Directors and the provisions of the Corporation Stock Incentive Plan, has full
power to determine the types of awards to be granted, to select the individuals
to whom awards will be granted, to fix the number of shares that each optionee
may purchase, to set the terms and conditions of each option, and to determine
all other matters relating to the Corporation Stock Incentive Plan. The
Corporation Stock Incentive Plan provides that the Compensation Committee will
select grantees from among employees, officers, directors, consultants, agents,
independent contractors and other persons who contributed or are expected to
contribute materially to the success of the Corporation or its subsidiaries.

53
<PAGE> 57

The option exercise price of each option shall be determined by the
Compensation Committee, but shall not be less than 100% of the fair market value
of the shares on the date of grant in the case of incentive options. No
incentive option may be granted to any employee who owns, on the date of grant,
stock representing in excess of 10% of the combined voting power of all classes
of stock of the Corporation or a subsidiary unless the exercise price for stock
subject to such options is at least 110% of the fair market value of such stock
at the time of grant and the option term does not exceed five years. The
aggregate fair market value of stock with regard to which incentive options are
exercisable by an individual for the first time during any calendar year may not
exceed $100,000. The terms and conditions of each option shall be fixed from
time to time by the Compensation Committee. As of June 15, 2000, the
Compensation Committee has approved grants under the Corporation Stock Incentive
Plan of options to purchase 696,500 shares at an exercise price equal to "Fair
Market Value" (as defined in the Corporation Stock Incentive Plan) on the date
of the grant.

The Commerce Bank of Alabama Option Plan. On May 4, 1995, the Commerce
Bank of Alabama, Inc. shareholders adopted the Commerce Bank of Alabama
Incentive Stock Option Plan for the benefit of key employees of Commerce. The
Commerce Option Plan authorizes the grant of options to purchase Commerce common
stock intended to qualify as Incentive Options and the grant of non-qualified
options. The Commerce Option Plan was assumed by the Corporation pursuant to the
merger of Commerce with and into The Bank. As of December 31, 1999, there were
outstanding options under the Commerce Option Plan to purchase 30,169 shares of
Corporation common stock at a price of $6.24 per share.

The Corporation Executive Incentive Compensation Plan. The Corporation has
adopted the Executive Incentive Compensation Plan. Pursuant to this plan, the
Corporation will pay to the participants of the plan a one-time cash bonus in
the aggregate amount equal to three percent of the amount that the total market
capitalization (as defined in the plan) on the determination date exceeds the
total market capitalization on January 5, 2000. The determination date is
defined as the earlier of (1) January 5, 2003, or (2) the date on which the
Corporation ceases to be publicly traded. James A. Taylor is the only
participant of the Executive Incentive Compensation Plan.

CERTAIN TRANSACTIONS AND RELATIONSHIPS

The Bank, Emerald Coast Bank and C&L Bank have 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,
Emerald Coast Bank and C&L 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 Corporation. As a result of the merger, K. Earl Durden and Terry
DuBose, who became directors of the Corporation on December 15, 1998, received
407,068 and 85,483 shares of Corporation common stock, respectively.

Emerald Coast Land Management leases three branches to The Bank. The rent
payments totaled $419,342 in 1999. Emerald Coast Land Management is owned by
certain directors and officers of the Corporation and The Bank, including Terry
DuBose and K. Earl Durden.

James A. Taylor, Chairman of the Board, Chief Executive Officer and
President of the Corporation and Chairman of the Board of The Bank, and Larry D.
Striplin, Jr., Vice Chairman of the Corporation, are both members of the Board
of Directors of Vesta Insurance Group, Inc. ("Vesta"). Effective September 30,
1999, Vesta entered into secured revolving credit facilities with the
Corporation and The Bank in the aggregate amount of $20 million. The loans under
these facilities bore interest rates varying from The Bank's Prime Rate to 2%
over the interest rate earned on a certificate of deposit provided by Vesta as
collateral. On December 30, 1999, Vesta repaid $15 million of the principal
amount outstanding under these credit facilities. In connection with the
repayment of this debt, the Corporation and Vesta restructured the credit
facilities to consist of two lines of credit provided by The Bank as follows: a
$5 million unsecured line, all of which was outstanding as of December 31, 1999,
and a $10 million secured line of credit, none of which was outstanding as of
December 31, 1999. The loans under these new credit facilities bore interest at
The Bank's prime rate.
54
<PAGE> 58

Subsequent to December 31, 1999, Vesta repaid the $5 million outstanding on the
unsecured line of credit and canceled both credit agreements relating to the
lines of credit effective February 29, 2000.

In November 1999, James A. Taylor, Jr. was employed as Senior Vice
President -- Finance of J. Gordon Gaines, Inc., a subsidiary of Vesta. Mr.
Taylor, Jr. received an annual base salary of $140,000, 50,000 options to
purchase Vesta common stock and a restricted stock award of 25,000 shares. Mr.
Taylor resigned from his position with J. Gordon Gaines, Inc., effective as of
May 23, 2000.

CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS

On June 16, 1998, the Board of Directors of the Corporation approved the
engagement of Ernst & Young LLP as its independent auditors for the three years
ended December 31, 1998, to replace the firm of Dudley, Hopton-Jones, Sims &
Freeman PLLP, who were the auditors of Warrior Capital Corporation, the
predecessor of the Corporation. The reports of Dudley, Hopton-Jones, Sims &
Freeman PLLP on Warrior Capital Corporation's financial statements for the past
two fiscal years did not contain an adverse opinion or a disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principles.

In connection with the audits of Warrior Capital Corporation's financial
statements for each of the two fiscal years ended December 31, 1997, and in the
subsequent interim period, there were no disagreements with Dudley,
Hopton-Jones, Sims & Freeman PLLP on any matters of accounting principles or
practices, financial statement disclosure or auditing scope and procedures
which, if not resolved to the satisfaction of Dudley, Hopton-Jones, Sims &
Freeman PLLP, would have caused Dudley, Hopton-Jones, Sims & Freeman PLLP to
make reference to the matter in their report. The Corporation has requested
Dudley, Hopton-Jones, Sims & Freeman PLLP to furnish it a letter addressed to
the Commission stating whether it agrees with the above statements, and Dudley,
Hopton-Jones, Sims & Freeman has provided such letter.

55
<PAGE> 59

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, to the best of the Corporation's knowledge,
certain information regarding beneficial stock ownership of the Corporation as
of June 15, 2000, by: (a) each director and named executive officer of the
Corporation, (b) all directors and executive officers as a group, and (c) each
stockholder known by the Corporation to be the beneficial owner of more than 5%
of the outstanding Corporation common stock. 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.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE(1)(2)
OF THE CORPORATION OF COMMON
NAME POSITION HELD COMMON STOCK STOCK OWNED
---- ------------- ------------------ ----------------
<S> <C> <C> <C>
James A. Taylor............ Chairman of the Board,
Chief Executive Officer
and President 682,600(3)(4) 4.72%
Terry DuBose............... Vice Chairman; Chairman
and Chief Executive
Officer of Emerald
Coast Bank 262,204(6)(19) 1.82%
James Mailon Kent, Jr...... Vice Chairman 214,000(7) 1.49%
Larry D. Striplin, Jr...... Vice Chairman 228,000(7)(8) 1.59%
David R. Carter............ Executive Vice President,
Chief Financial Officer
and Director 31,000(5) *
James A. Taylor, Jr........ Executive Vice President,
General Counsel,
Secretary and Director 166,000(5) 1.15%
James R. Andrews, M.D...... Director 297,000(9) 2.06%
Neal R. Berte, Ed.D........ Director 12,000(9) *
W. T. Campbell, Jr......... Director 422,469(9)(10) 2.94%
Peter N. Dichiara.......... Director 212,000(9)(11) 1.47%
K. Earl Durden............. Director 409,068(9)(20) 2.84%
John F. Gittings........... Director 54,813(12)(13) *
Steven C. Hays............. Director 76,096(9)(14) *
Larry R. House............. Director 105,800(9) *
Thomas E. Jernigan, Jr..... Director 24,000(7) *
Randall E. Jones........... Director 49,866(9) *
Mayer Mitchell............. Director 107,000(9)(15) *
Ronald W. Orso, M.D........ Director 222,000(9)(16) 1.54%
Harold W. Ripps............ Director 212,000(9) 1.47%
Richard M. Scrushy......... Director 227,000(9) 1.58%
Jerry M. Smith............. Director 177,585(12) 1.23%
Michael E. Stephens........ Director 232,353(9) 1.62%
Marie Swift................ Director 54,500(9) *
T. Mandell Tillman......... Director 56,172(9)(17) *
</TABLE>

56
<PAGE> 60

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE(1)(2)
OF THE CORPORATION OF COMMON
NAME POSITION HELD COMMON STOCK STOCK OWNED
---- ------------- ------------------ ----------------
<S> <C> <C> <C>
Johnny Wallis.............. Director 107,000(9) *
All executive officers and
directors as a group (26
persons)................. 4,642,526(18) 31.84%
</TABLE>

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

(1) Except as otherwise noted herein, percentage is determined on the basis of
14,385,021 shares of Corporation common stock outstanding plus securities
deemed outstanding pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Under Rule 13d-3, a
person is deemed to be a beneficial owner of any security owned by certain
family members and any security of which that person has the right to
acquire beneficial ownership within 60 days, including, without limitation,
shares of 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 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 80,000 shares subject to options.
(5) Includes 26,000 shares subject to options.
(6) Includes 156,721 shares held as Trustee for the Emerald Coast Bank Profit
Sharing Plan, of which he maintains voting control, and 14,247 held by his
spouse.
(7) Includes 4,000 shares subject to options.
(8) Includes 6,000 shares as Custodian.
(9) Includes 2,000 shares subject to options.
(10) Includes 3,300 shares held by his minor children.
(11) Includes 210,000 shares held by City Wholesale Grocery Co., Inc., of which
he is the President.
(12) Includes 1,000 shares subject to options.
(13) Includes 900 shares held by spouse.
(14) Includes 4,046 shares held for the benefit of his minor children.
(15) Includes 105,000 shares held by Mitchell Holdings, L.P. of which he is
president of Mitchell Investment Holdings Inc., the general partners.
(16) Includes 210,000 shares held by Birmingham OB/GYN Pension Plan, of which he
is Trustee.
(17) Includes 4,620 shares held for the benefit of children and 3,802 shares
held by his spouse.
(18) Includes 198,000 shares subject to options.
(19) Includes 20,000 shares subject to options.
(20) Includes 203,534 shares held as co-trustee.

57
<PAGE> 61

DESCRIPTION OF THE PREFERRED SECURITIES

DEFINITIONS OF MATERIAL AGREEMENTS

For purposes of this prospectus:

- the "Indenture" means the Subordinated Indenture, dated as of ,
2000, as amended and supplemented from time to time, between the
Corporation and State Street Bank and Trust Company, as the indenture
trustee, under which the subordinated debentures will be issued,

- the "Trust Agreement" means the Amended and Restated Trust Agreement,
under which the preferred securities and the common securities will be
issued, dated as of , 2000, as amended and supplemented from
time to time, among the Corporation, , as Depositor, State
Street Bank and Trust Company, as property trustee, and the
administrative trustees named therein,

- the "Guarantee" means the Guarantee Agreement relating to the guarantee
of the Corporation, between the Corporation, as guarantor and State
Street Bank and Trust Company, as the guarantee trustee, on behalf of the
holders of the preferred securities, and

- the "Expense Agreement" means the Agreement as to expenses and
liabilities between the Corporation and the Trust.

The preferred securities and the common securities will be issued pursuant
to the terms of the Trust Agreement, which is qualified as an indenture under
the Trust Indenture Act of 1939 (the "Trust Indenture Act"). This summary is not
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Trust Agreement, including the definitions portion of
the Trust Agreement, and the Trust Indenture Act. The form of each agreements
referenced above has been filed as an exhibit to the registration statement,
which is on file with the SEC. This prospectus is a part of the registration
statement. See "Where You Can Find More Information."

GENERAL

The Trust will issue the preferred securities and the common securities
(collectively, the "trust securities"). The Corporation will own 100% of the
common securities and you may purchase the preferred securities. The preferred
securities will represent undivided preferred beneficial interests in the assets
of the Trust, and each holder will be entitled to a preference in respect of
certain distributions by the Trust and amounts payable on redemption or
liquidation of the Trust. Otherwise, the preferred securities will generally
rank the same as the common securities.

The preferred securities, as well as the subordinated debentures, are
scheduled to mature on , 2030.

The property trustee will hold the subordinated debentures which have been
issued in trust for the benefit of the holders of trust securities. The
guarantee will be subordinated to most of the Corporation's other obligations
and liabilities. The guarantee will not provide for the payment of distributions
(as described below) or amounts payable on redemption of the preferred
securities if the Trust does not have funds available to make such payments. See
"Description of Guarantee."

If we do not make required payments on the subordinated debentures held by
the Trust, taking into account our right to defer the payments for up to 20
consecutive quarters, the Trust will be unable to pay any distributions to you.
In such event, you may make a claim directly against the Corporation to enforce
payment of the amounts due to you. See "Description of the Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities."

DISTRIBUTIONS

Distributions on the preferred securities will be fixed at an annual rate
of % of the liquidation amount of $25 per preferred security. Unpaid
distributions that are past due will accumulate additional interest at an

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annual rate of % of the unpaid distributions, compounded quarterly. The
term "distribution" includes any additional amounts payable in respect of
distributions unless otherwise stated.

Distributions on the preferred securities:

- will be cumulative;

- will accumulate from , 2000, the date of initial issuance of
the preferred securities; and

- will be payable quarterly in arrears on March 31, June 30, September 30,
and December 31 in each year, commencing , 2000.

The amount of distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which a distribution is payable is not a business day, the payment of that
distribution will generally be made on the next business day (and without any
additional interest). "Business day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in Birmingham, Alabama are
authorized or required by law or executive order to remain closed or a day on
which the Corporate Trust Office of the property trustee or the indenture
trustee is closed for business.

The Corporation may defer the payment to the Trust of interest on the
subordinated debentures at any time for one or more extension periods (each an
"Extension Period"). However, the Corporation may not defer any payments if it
is in default under the Indenture. No Extension Period may extend beyond the
maturity date of the subordinated debentures. If the Corporation elects to defer
the payment of interest, then quarterly distributions on the preferred
securities will be deferred by the Trust during the Extension Period. The
distributions will continue to accumulate, with additional interest, generally
at an annual rate of % compounded quarterly, during the Extension Period.
During an Extension Period, interest will continue to accrue and holders of
preferred securities will be required to accrue interest income for United
States Federal income tax purposes. See "United States Federal Income Tax
Consequences."

During any Extension Period, the Corporation may not:

- declare or pay any dividends, make any distribution, or redeem, purchase,
acquire or make a liquidation payment on any of its common stock; and

- make any payment of interest, principal or premium on or repay,
repurchase or redeem any debt securities issued by it (or the Trust) that
rank equal or junior to the subordinated debentures (of which there are
none at the time of this printing), or make any payments on any guarantee
by the Corporation of any of its subsidiaries if such guarantee ranks
equal or junior to the subordinated debenture.

The Extension Period restrictions do not apply to:

- repurchases, redemptions or other acquisitions of shares of the
Corporation's common stock in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of any
one or more employees, officers or directors, or a dividend reinvestment
or shareholder stock purchase plan;

- any declaration of a dividend in connection with any shareholders' rights
plan, or the issuance of rights, stock or other property under any
shareholders' rights plan, or the redemption or repurchase of rights
pursuant to the plan;

- dividends or distributions in shares of common stock; or

- payments under the guarantee.

When all accumulated amounts due to you are paid during an Extension
Period, the Extension Period will terminate. However, the Corporation may begin
another Extension Period under the same terms outlined above. There is no limit
on the number of times the Corporation can elect to begin an Extension Period.
In no way may any single Extension Period extend beyond 20 consecutive calendar
quarters.

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We have no current intention of exercising our right to defer payments of
interest by extending the interest payment period on the subordinated
debentures.

REDEMPTION

If the Corporation repays or redeems some or all of the subordinated
debentures, whether at maturity or upon earlier redemption, the property trustee
will apply the proceeds from the repayment or redemption to redeem the same
proportionate amount of preferred securities and common securities. The
Corporation will make this redemption not less than 30 nor more than 60 days
after the notice of a date of redemption (the "Redemption Date"), at the
Redemption Price (as defined below). See "Description of the Subordinated
Debentures -- Redemption."

If less than all the subordinated debentures are to be repaid or redeemed,
then the aggregate liquidation amount of preferred and common securities to be
redeemed will be allocated approximately 3% to the common securities and 97% to
the preferred securities, except in the case of an event of default under the
Indenture. See "-- Subordination of Common Securities."

The Corporation will have the right, subject to Federal Reserve approval,
if then required, to redeem the subordinated debentures:

- at any time on or after , 2005, in whole or in part from time
to time; or

- prior to , 2005, in whole, but not in part, at any time within
90 days following the occurrence and continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, each as defined
below. See "Description of the Subordinated Debentures -- Optional
Redemption."

SELECTED DEFINITIONS

"Additional Sums" means the additional payments the Corporation is required
by the Indenture to make under the subordinated debentures to cover certain
charges imposed upon the Trust so that the funds available to the Trust for
payment of distributions will not be reduced. An example of the Additional Sums
could be any additional taxes, duties and other governmental charges that the
Trust may incur.

"Capital Treatment Event" means that, in the reasonable determination of
the Corporation, as a result of:

- any amendment to, or change, including any proposed change, in applicable
laws or regulations or official interpretations thereof or policies with
respect thereto; or

- any official or administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment,
change, pronouncement or decision is announced or is effective after the
date of this prospectus,

there is more than an insubstantial risk that the preferred securities will
not then constitute Tier 1 capital of the Corporation for purposes of the
capital adequacy guidelines of federal banking regulators (subject to the
limitation imposed by the Federal Reserve that proceeds of the preferred
securities will qualify for Tier 1 capital up to an amount not in excess of 25%
of the Corporation's total Tier 1 capital).

"Investment Company Event" means that the Corporation or the Trust has
received an opinion of counsel, who may be an employee of or counsel to the
Corporation, experienced in such matters that, as a result of the occurrence of
a change, including any announced prospective change, in law or regulation or a
written change, including any announced prospective change, in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority on or after the date of this prospectus, there is
more than an insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940 (the "Investment Company Act").

"Liquidation Amount" means the stated amount of $25 per trust security. The
liquidation amount is the amount that you are entitled to receive if the Trust
is terminated on or before the maturity date and its assets are distributed to
the holders of its securities. You are entitled to receive this amount from the
assets of the
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Trust for distribution, after it has paid liabilities owed to its creditors, if
the Trust has sufficient funds to pay this amount.

"Redemption Price" means, with respect to any trust security, the
liquidation amount of such trust security, plus accumulated and unpaid
distributions to the Redemption Date, allocated on a pro rata basis (based on
liquidation amounts) among the holders of trust securities.

"Tax Event" means that the Corporation and the regular trustees, or, if the
Trust has been terminated at the time, an appropriate representative of the
holders of the subordinated debentures, have received an opinion of counsel
experienced in such matters, who may be an employee of or counsel to the
Corporation, to the effect that, as a result of:

- any amendment to, or change, including any announced prospective change,
in the laws, or any regulations under the laws, of the United States or
any political subdivision or taxing authority affecting taxation;

- any judicial decision or official administrative pronouncement, including
any announced prospective change;

which amendment or change is effective, or which pronouncement or decision is
announced, in each case, on or after the date of this prospectus, there is more
than an insubstantial risk that:

- the Trust is, or will be within 90 days of the date of the opinion of
counsel, subject to United States federal income tax with respect to
income accrued or received on the subordinated debentures;

- the Trust is, or will be within 90 days of the date of the opinion of
counsel, subject to more than a de minimis amount of taxes, duties or
other governmental charges; or

- interest payable to the Trust on the subordinated debentures is not, or
within 90 days of the date of the opinion of counsel will not be,
deductible, in whole or in part, by the Corporation for United States
federal income tax purposes.

If any event described in clause (1) or (2) of the definition of "Tax
Event" above has occurred and is continuing and the Trust is the holder of all
of the subordinated debentures, the Corporation will pay Additional Sums, if
any, on the subordinated debentures (other than Additional Amounts with respect
to withholding taxes).

DISTRIBUTION OF SUBORDINATED DEBENTURES

We may at any time elect to dissolve the Trust and, after we have paid all
of the liabilities of the Trust as provided by applicable law, cause the
subordinated debentures to be distributed to you. However, we may only dissolve
the Trust if we have received prior approval of the Federal Reserve, if then
required. If we dissolve the Trust and distribute the subordinated debentures to
you:

- the preferred securities will no longer be outstanding;

- the Depositary or its nominee, as the record holder of the preferred
securities, will, upon the distribution of the subordinated debentures,
receive a registered global certificate or certificates representing the
subordinated debentures; and

- any certificates representing preferred securities not held by the
Depositary or its nominee will be deemed to represent the subordinated
debentures having a principal amount equal to the liquidation amount of
the preferred securities, accruing interest at the rates provided in the
subordinated debentures from the last Distribution Date that occurred for
the preferred securities until such certificates are surrendered.

If the subordinated debentures are distributed, the Corporation will use
its best efforts to list them on a national securities exchange or comparable
automated quotation system in place of the preferred securities.

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If the subordinated debentures are distributed, until you surrender your
preferred securities certificates to the administrative trustees or their agent
for replacement by certificates representing an equal amount of subordinated
debentures, no payments of principal or interest will be made to you with
respect to those subordinated debentures.

REDEMPTION PROCEDURES

The Trust may not redeem fewer than all of the outstanding preferred
securities unless it has paid all accumulated and unpaid distributions on all
preferred securities for all quarterly distribution periods terminating on or
before the date of redemption. The Trust will only redeem the preferred
securities if the Corporation has redeemed the subordinated debentures. The
Trust may redeem preferred securities only in an amount equal to the funds it
has on hand and legally available to pay the Redemption Price. See
"-- Subordination of Common Securities" and "Description of Guarantee."

Unless there is a payment default, additional interest will stop accruing
on those preferred securities called for redemption on the date they are called
for redemption.

The property trustee will give you notice of the redemption at least 30 but
not more than 60 days before the date fixed for redemption. If notice of
redemption is given, then, by 12:00 noon, New York City time, on the date of
redemption, if the funds are available for payment, the property trustee will,
for preferred securities held in book-entry form:

- deposit with The Depository Trust Company ("DTC") funds sufficient to pay
the Redemption Price; and

- give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of the preferred securities.

With respect to preferred securities not held in book-entry form, if funds
are available for payment, the property trustee will:

- deposit with the paying agent for the preferred securities funds
sufficient to pay the Redemption Price; and

- give the paying agent irrevocable instructions and authority to pay the
Redemption Price to the holders of preferred securities upon surrender of
their certificates evidencing the preferred securities.

Notwithstanding the foregoing, distributions payable on or before the date
of redemption for any preferred securities called for redemption will be payable
to the holders on the relevant record dates.

Once notice of redemption is given and funds are deposited as required,
then all rights of the holders of preferred securities called for redemption
will cease, except the right to receive the Redemption Price, but without
interest after the date of redemption. At that time, those preferred securities
will cease to be outstanding.

Payment of the Redemption Price on the preferred securities and any
distribution of subordinated debentures to holders of preferred securities will
be made to the applicable record holders on the relevant record date, which date
will be one business day before the relevant redemption date or liquidation
date, as applicable; provided, however, that in the event that any preferred
securities are not in book-entry form, the relevant record date for those
preferred securities will be a date at least 15 days prior to the redemption
date or liquidation date, as applicable. In the case of a liquidation, the
record date will be no more than 45 days before the liquidation date.

If any date fixed for redemption is not a business day, then payment of the
Redemption Price will be made on the next day that is a business day, without
any interest or other payment for the delay. If the next business day falls in
the next calendar year, the payment will instead be made on the immediately
preceding business day.

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If payment of the Redemption Price for the preferred securities called for
redemption is improperly withheld or refused and not paid, either by the Trust
or by the Corporation under the guarantee, then distributions on those preferred
securities will continue to accumulate at the then applicable rate, from the
date of redemption to the date of actual payment. In this case, the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price.

The Corporation or its affiliates may at any time and from time to time
purchase outstanding preferred securities, by tender, in the open market or by
private agreement, and may resell preferred securities.

If the Trust plans to redeem less than all the preferred securities and
common securities, then the aggregate liquidation amount of preferred and common
securities to be redeemed will be allocated approximately 3% to the common
securities and 97% to the preferred securities, except if an Event of Default
has occurred. In such case, holders of preferred securities will be paid first.
See "-- Subordination of the Common Securities" immediately below for a more
complete discussion. The property trustee will select the particular preferred
securities to be redeemed on this pro rata basis not more than 60 days before
the date of redemption by any method the property trustee deems fair and
appropriate, or if the preferred securities are then held in book-entry form, in
accordance with DTC's customary procedures.

SUBORDINATION OF COMMON SECURITIES

Payment of distributions on, and the Redemption Price of, the preferred
securities and common securities will be made on a proportionate basis, based on
the aggregate Liquidation Amounts of the preferred securities and common
securities. However, if a Debenture Event of Default has occurred and is
continuing, then no payment of any distribution will be made on any of the
common securities, unless all unpaid amounts due on the preferred securities
have been paid in full or provided for, as appropriate.

In the case of any Event of Default under the Trust Agreement resulting
from a Debenture Event of Default, the Corporation, as the holder of the common
securities, will be deemed to have waived any right to act upon the Event of
Default under the Trust Agreement until the effects of all Events of Default
under the Trust Agreement regarding the preferred securities have been cured,
waived or otherwise eliminated. Until that time, the property trustee shall act
solely on behalf of the holders of the preferred securities.

LIQUIDATION DISTRIBUTION UPON DISSOLUTION

We will have the right at any time to dissolve the Trust, and after paying
all the expenses and liabilities of the Trust, distribute the subordinated
debentures to you. However, we may only dissolve the Trust if we have received
prior approval of the Federal Reserve, if approval is then required. See
"-- Distribution of Subordinated Debentures" above.

In addition, the Trust will dissolve:

- on the expiration of the term of the Trust, which currently expires on
, 2030;

- upon the bankruptcy of the Corporation;

- upon the filing of a certificate of dissolution or its equivalent of the
Corporation;

- upon our delivery of a written direction to the property trustee to
dissolve the Trust, which we may do in our discretion; or

- upon entry of a court order for the dissolution of the Trust.

In the event of a dissolution, after the Trust pays all amounts owed to its
creditors, the holders of the preferred securities and common securities issued
by the Trust will be entitled to receive:

- cash, if the dissolution arises from redemption of the subordinated
debentures, equal to the aggregate Liquidation Amount of each preferred
security and common security specified in this prospectus, plus
accumulated and unpaid distributions to the date of payment; or

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- subordinated debentures, if the dissolution does not arise from
redemption of the subordinated debentures, in an aggregate principal
amount equal to the aggregate liquidation amount of the preferred
securities and common securities of the holders to whom the subordinated
debentures are distributed.

If the Trust cannot pay the full amount due on its preferred securities and
common securities because insufficient assets are available for payment, then
the amounts payable by the Trust on its preferred securities and common
securities shall be paid pro rata. However, if a Debenture Event of Default has
occurred, the total amounts due on such preferred securities will be paid before
any distribution on the common securities.

Under current United States federal income tax law and interpretations and
assuming, as expected, the Trust is treated as a grantor trust, a distribution
of the subordinated debentures should not be a taxable event to you. Should
there be a change in law, a change in legal interpretation, a Tax Event or other
circumstances, how ever, the distribution could be a taxable event to you. See
"United States Federal Income Tax Consequences."

If we elect to liquidate the Trust and cause the subordinated debentures to
be distributed to you, we will continue to have the right to shorten the
maturity of the subordinated debentures, subject to certain conditions. See
"Description of the Subordinated Debentures -- Option to Accelerate Maturity."

EVENTS OF DEFAULT; NOTICE

The following events constitute an Event of Default (an "Event of Default")
under the terms of the Trust Agreement with respect to the preferred securities
and common securities:

- the occurrence of a Debenture Event of Default under the Indenture (see
"Description of Subordinated Debentures -- Debenture Events of Default");
or

- default by the Trust in the payment of any distribution when it becomes
due and payable (other than during an Extension Period), and continuation
of the default for a period of 30 days; or

- default by the Trust in the payment of any Redemption Price of any trust
security when it becomes due and payable.

The property trustee must give notice of any uncured or unwaived Event of
Default to you, to us and to the administrative trustees. This notice must be
given within five business days after the property trustee actually knows of the
Event of Default. The Corporation and the administrative trustees are required
to file annual certificates with the property trustee declaring whether it and
they are in compliance with all the conditions and covenants applicable to it
and them under the Trust Agreement.

If a Debenture Event of Default has occurred and is continuing, the
preferred securities will have a preference over the common securities upon
dissolution of the Trust as described above. See "-- Liquidation Distribution
upon Dissolution." Upon a Debenture Event of Default, unless the principal of
all the subordinated debentures has already become due and payable, either the
property trustee or the holders of not less than 25% in aggregate principal
amount of the subordinated debentures then outstanding may declare all of the
subordinated debentures to be due and payable immediately by giving the
Corporation written notice of that fact (and to the property trustee, if notice
is given by holders of the subordinated debentures). If the property trustee or
the holders of the subordinated debentures fail to declare the principal of all
of the subordinated debentures due and payable upon a Debenture Event of
Default, the holders of at least 25% in liquidation amount of the preferred
securities then outstanding will have the right to declare the subordinated
debentures immediately due and payable. In either event, payment of principal
and interest on the subordinated debentures will remain subordinated to the
extent provided in the Indenture. In addition, holders of the preferred
securities have the right in certain circumstances to bring a Direct Action (as
defined below). See "Description of the Subordinated Debentures -- Enforcement
of Certain Rights by Holders of Preferred Securities."

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REMOVAL OF TRUSTEES

As the holder of the common securities, we may at any time remove any
trustee, unless a Debenture Event of Default has occurred and is continuing. If
a Debenture Event of Default has occurred and is continuing, the property
trustee may be removed at such time by the holders of a majority in liquidation
amount of the outstanding preferred securities. In no event will the holders of
the preferred securities have the right to vote to appoint, remove or replace
the administrative trustees. As the holder of the common securities, we have the
sole power to remove the administrative trustee. The resignation or removal of
any trustee and the appointment of a successor trustee is effective only on the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Trust Agreement.

CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE

Unless an Event of Default has occurred and is continuing, the Corporation
and the administrative trustees have the right to appoint co-trustees or a
separate property trustee. The Corporation may appoint these additional trustees
in order to meet the requirements of the Trust Indenture Act or the state laws
of any jurisdiction where property of the Trust may be located. Our appointment
of any additional trustees will be subject to provisions of the Trust Agreement.
In case a Debenture Event of Default has occurred and is continuing or if the
Corporation and the administrative trustees refuse to join in the appointment of
a property trustee pursuant to a request from the property trustee to do so, the
property trustee alone will have power to make the appointment.

MERGER OR CONSOLIDATION OF TRUSTEES

Any Person (as defined in the Trust Agreement) into which the property
trustee or any administrative trustee that is not a natural person may be merged
or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such trustee will be a party,
or any person succeeding to all or substantially all the corporate trust
business of such trustee, shall be the successor of such trustee under the Trust
Agreement, provided such corporation shall be otherwise qualified and eligible.

MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST

The Trust may, at our request, with the consent of the administrative
trustees and without your consent, consolidate, amalgamate, merge with or into
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to another trust organized under the laws of any
state provided that:

- such successor entity either (a) expressly assumes all of the obligations
of the Trust with respect to the preferred securities or (b) substitutes
for the preferred securities other securities having substantially the
same terms as the preferred securities (the "Successor Securities") so
long as the Successor Securities rank the same as the preferred
securities for distributions and payments upon liquidation, redemption
and otherwise;

- the Corporation expressly appoints a trustee of the successor entity
possessing the same powers and duties as the property trustee as the
holder of the subordinated debentures;

- any such transaction does not adversely affect the rights, preferences
and privileges of the holders of the preferred securities (including any
Successor Securities) in any material respect;

- such successor entity has a purpose identical to that of the Trust;

- the Successor Securities will be listed or traded on any national
securities exchange or other organization on which the preferred
securities may then be listed;

- before such a transaction, the Corporation has received an opinion of
counsel experienced in such matters, who may be counsel for the Trust, to
the effect that (a) such transaction does not adversely affect the
rights, preferences and privileges of the holders of the preferred
securities (including any Successor Securities) in any material respect,
and (b) following any such transaction, neither the Trust

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nor such successor entity will be required to register as an investment
company under the Investment Company Act; and

- the Corporation or any permitted successor or designee owns all of the
common securities of the successor entity and guarantees the obligations
of the successor entity under the Successor Securities at least to the
extent provided by the guarantee.

In addition, unless all of the holders of the preferred securities and
common securities agree, the Trust may not consolidate, amalgamate, merge with
or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if that transaction
would cause the Trust or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.

VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT

Except as provided below and under "Description of Guarantee -- Amendments
and Assignment" and as otherwise required by law and the Trust Agreement, you
will have no voting rights.

The Trust Agreement may be amended from time to time by the Corporation,
the property trustee and the administrative trustees, without the consent of the
holders of trust securities, (1) to cure any ambiguity, correct or supplement
any provisions in the Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under the Trust Agreement which shall not be inconsistent with the other
provisions of the Trust Agreement, or (2) to modify, eliminate or add to any
provisions of the Trust Agreement to the extent as necessary to ensure that the
Trust will be classified for United States federal income tax purposes as a
grantor trust at all times that any trust securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act.

The Corporation and the trustees may amend the Trust Agreement (1) with the
consent of holders representing not less than a majority of the aggregate
liquidation amount of the outstanding trust securities, and (2) upon receipt by
both the property and administrative trustees of an opinion of counsel to the
effect that the amendment or the exercise of any power granted to trustees in
accordance with the amendment will not affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's exemption
from status as an "investment company" under the Investment Company Act.

However, the Trust Agreement may not be amended without the consent of each
holder of trust securities to (1) change the amount or timing of any
distribution on trust securities or otherwise adversely affect the amount of any
distribution required to be made in respect of trust securities as of a
specified date or (2) restrict the right of a holder of trust securities to
institute suit for the enforcement of any required payment on or after such
date.

So long as any subordinated debentures are held by the property trustee,
the trustees shall not (1) direct the time, method and place of conducting any
proceeding for any remedy available to the indenture trustee, or execute any
trust or power conferred on the property trustee with respect to the
subordinated debentures, (2) waive any past default that is waivable under the
Indenture, (3) exercise any right to rescind or annul a declaration that the
principal of all the subordinated debentures shall be due and payable or (4)
consent to any amendment, modification or termination of the Indenture or the
subordinated debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of a majority in aggregate
liquidation amount of all outstanding preferred securities or in some cases, the
prior consent of each holder of the preferred securities.

In addition to obtaining required approvals, before taking any of the
foregoing actions, the trustees must also obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be classified
as an association taxable as a corporation for United States federal income tax
purposes on account of taking any of the foregoing actions.

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The trustees may not revoke any action previously authorized or approved by
a vote of the holders of the preferred securities except by subsequent vote of
the holders of the preferred securities.

The property trustee will notify each holder of the preferred securities of
any notice of default with respect to the subordinated debentures.

Any required approval of holders of the preferred securities may be given
at a meeting of holders of preferred securities convened for such purpose or
pursuant to written consent. The property trustee will cause a notice of any
meeting at which holders of the preferred securities are entitled to vote, or of
any matter upon which action by written consent of the holders of the preferred
stock is to be taken, to be given to each holder of record of the preferred
securities in the manner described in the Trust Agreement.

If the Corporation or any of its affiliates, or the trustees or any of
their affiliates own any preferred securities, those preferred securities will
not be treated as outstanding for purposes of the votes or consents described
above.

BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY

DTC will act as securities depositary for the preferred securities. The
Trust will issue one or more fully registered global preferred securities
certificates in the name of Cede & Co. (DTC's nominee). These certificates will
represent the total aggregate number of preferred securities. The Trust will
deposit these certificates with DTC or a custodian appointed by DTC. The Trust
will not issue certificates to represent the preferred securities, unless DTC's
services are discontinued. For a description of DTC and the specific terms of
the depositary arrangements, see "Book Entry Issuance."

CERTIFICATED SECURITIES

If the preferred securities do not remain in book-entry only form as
described above, the following provisions would apply:

- The property trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.

- Registration of transfers of preferred securities will be effected
without charge by or on behalf of the Trust, but the registration will
require payment, with the giving of such indemnity as the Trust or the
Corporation may require, for any tax or other governmental charges that
may be imposed.

- The Trust will not be required to register or cause to be registered the
transfer of preferred securities after they have been called for
redemption.

INFORMATION CONCERNING THE PROPERTY TRUSTEE

The property trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only those duties as
are specifically described in the Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs.

Subject to this provision, the property trustee is under no obligation to
exercise any of the powers vested in it by the Trust Agreement at the request of
any holder of preferred securities unless the property trustee is offered
reasonable indemnity against the costs, expenses and liabilities that it might
incur. If the property trustee is required to decide between alternative causes
of action, construe ambiguous provisions in the Trust Agreement or is unsure of
the application of any provision of the Trust Agreement, and the matter is not
one on which holders of the preferred securities are entitled under the Trust
Agreement to vote, then the property trustee shall take such action as is
directed by the Corporation, unless an Event of Default has occurred and is
continuing. If the Corporation does not direct any action, then the property
trustee shall take such action as it deems advisable and in the best interests
of the holders of trust securities and will have no liability except for its own
bad faith, negligence or willful misconduct.

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MISCELLANEOUS

The administrative trustees are authorized and directed to operate the
Trust in a manner in which the Trust will not be:

- required to register as an "investment company" under the Investment
Company Act; or

- characterized as other than a grantor trust for United States federal
income tax purposes.

The Corporation is authorized and directed to conduct its affairs so that
the subordinated debentures will be treated as indebtedness for United States
federal income tax purposes on the Corporation's books and accounts.

The Corporation and the administrative trustees are authorized to take any
action, consistent with applicable law, the certificate of trust of the Trust or
the Corporation's certificate of incorporation, that either the Corporation or
the administrative trustees determine in either of their discretion to be
necessary or desirable to achieve that end, as long as the action does not
adversely affect the interests of the holders of the preferred securities.

The Trust may not borrow money, issue debt or mortgage or pledge any of its
assets.

DESCRIPTION OF THE SUBORDINATED DEBENTURES

The subordinated debentures will be issued under the Subordinated
Indenture, dated as of , 2000 (the "Indenture"), between the
Corporation and State Street Bank and Trust Company, as the indenture trustee.
The following summary of the terms and provisions of the subordinated debentures
and the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture. You should also read
the Indenture for the complete terms of the subordinated debentures. The
Indenture has been filed as an exhibit to the Registration Statement. This
prospectus forms a part of the Registration Statement. The Indenture is also
qualified in its entirety by reference to the Trust Indenture Act. The Indenture
is qualified under the Trust Indenture Act. The Corporation believes that this
section of the prospectus describes the material terms of the subordinated
debentures and the related Indenture.

GENERAL

The Corporation will issue the subordinated debentures as subordinated
unsecured debt under the Indenture. The Trust will invest the proceeds of the
issuance of the preferred securities and common securities in the subordinated
debentures that are issued by the Corporation. The subordinated debentures will
be limited in aggregate principal amount to the sum of the liquidation amount of
the preferred securities and the amount of capital that the Corporation
contributed to the Trust in exchange for the common securities.

The subordinated debentures contain no sinking fund provisions. The entire
principal amount of the subordinated debentures will become due and payable,
together with any accrued and unpaid interest, including compound interest and
additional sums, if any, on , 2030.

If subordinated debentures are distributed to holders of preferred
securities in liquidation of those holders' interests in the Trust, the
subordinated debentures will initially be issued as a global security. As
described in "Description of the Subordinated Debentures -- Discontinuance of
the Depositary's Services," under limited circumstances, subordinated debentures
may be issued in certificated form in exchange for a global security. See
"-- Book-Entry and Settlement; Depositary" below. If subordinated debentures are
issued in certificated form, the Corporation will issue them in denominations of
$25, and integral multiples of $25, and they may be transferred or exchanged at
the offices described below.

The Corporation will make payments on subordinated debentures issued as a
global security to DTC, a successor depositary or, if no depositary is used, to
a paying agent for the subordinated debentures. If the Corporation issues
subordinated debentures in certificated form, principal and interest will be
payable, the transfer of the subordinated debentures will be registrable, and
subordinated debentures will be exchangeable for subordinated debentures of
other denominations of a like aggregate principal amount, at the Corporate
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Trust Office of the indenture trustee in Boston, Massachusetts. At the
Corporation's option, however, it may pay interest by check mailed to the
address of the persons entitled to the interest.

INTEREST

The subordinated debentures will bear interest at an annual rate of %
from the original date of issuance until the principal becomes due and payable.
Interest is payable quarterly in arrears on March 31, June 30, September 30, and
December 31, in each year, beginning , 2000. Interest payments not
paid when due will accrue interest, compounded quarterly, at the annual rate of
%.

The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months, and, for any period shorter than a
quarter, on the basis of the actual number of days elapsed per 30-day month.

The interest payment provisions for the subordinated debentures correspond
to the distribution provisions for the preferred securities. See "Description of
the Preferred Securities -- Distributions."

OPTION TO EXTEND INTEREST PAYMENT PERIOD

As long as we are not in default on the payment of interest on the
subordinated debentures, we have the right, at any time and from time to time,
to defer payments of interest by extending the interest payment period for a
period not exceeding 20 consecutive quarters (an "Extension Period"), but not
beyond the maturity date of the subordinated debentures. At the end of any
Extension Period, we will pay all interest then accrued and unpaid, together
with interest on that amount, compounded quarterly, at the annual rate of
%. After termination of any Extension Period and the payment of all amounts
then due, we may begin a new Extension Period.

During an Extension Period, interest will continue to accrue and holders of
subordinated debentures will be required to accrue interest income for United
States federal income tax purposes. See "United States Federal Income Tax
Consequences."

During any Extension Period:

- we may not declare or pay any dividends on, make any distribution, or
redeem, purchase, acquire or make a liquidation payment on any of our
common stock; and

- we may not make any payment of interest, principal or premium on or
repay, repurchase or redeem any debt securities issued by us that rank
equal or junior to the subordinated debentures, or make any payments on
any guarantee by us of any of our subsidiaries if such guarantee ranks
equal or junior to the subordinated debentures.

The Extension Period restrictions do not apply to:

- repurchases, redemptions or other acquisitions of shares of the
Corporation's capital stock in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of any
one or more employees, officers or directors, or a dividend reinvestment
plan or shareholder stock purchase plan;

- dividends or distributions in shares of common stock; or

- payments by the Corporation under the guarantee.

The restrictions described above will also apply if we default on our
obligations under the subordinated debentures or the guarantee.

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Before termination of any Extension Period, we may further extend the
interest payment period. However, the Extension Period, including all previous
and further extensions, may not exceed 20 consecutive quarters or extend beyond
the maturity date of the subordinated debentures. After termination of any
Extension Period and the payment of all amounts then due, we may begin a new
Extension Period, for up to an additional 20 consecutive calendar quarters, as
described above.

If the property trustee is the sole holder of the subordinated debentures,
we will give the administrative trustees, the indenture trustee and the property
trustee notice of our election of an Extension Period one business day before
the earlier of:

- the next date distributions on the preferred securities are payable; or

- the date the trustee is required to give notice of the record date to the
American Stock Exchange or other applicable self-regulatory organization,
or to the holders of record of the preferred securities.

The indenture trustee will give notice of our election of an Extension
Period to the holders of the preferred securities. We may elect to begin an
Extension Period an unlimited number of times.

If the property trustee is not the sole holder of the subordinated
debentures, we will give the holders of the subordinated debentures and the
indenture trustee notice of our election of an Extension Period one business day
before the earlier of:

- the next interest payment date; or

- the date upon which we are required to give notice of the record date to
the American Stock Exchange, or other applicable self-regulatory
organization, or to holders of the subordinated debentures of the record
or payment date of the related interest payment.

We have no present intention of exercising our right to defer payments of
interest by extending the interest payment period on the subordinated
debentures.

ADDITIONAL SUMS

If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the subordinated debentures the amounts (the "Additional
Sums") required to be paid so that the distributions paid by the Trust shall not
be reduced as a result of such charges.

REDEMPTION

We have the right, after receipt of prior approval of the federal banking
regulators, if then required, to redeem the subordinated debentures:

- at any time on or after , 2005, in whole or in part from time
to time; or

- at any time in whole (but not in part), within 90 days after the
occurrence of a Tax Event, an Investment Company Event or a Capital
Treatment Event.

In either case, the Redemption Price will equal 100% of the principal
amount to be redeemed, plus any accrued and unpaid interest, to the date of
redemption.

Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of subordinated debentures to
be redeemed at such holder's registered address. Interest will cease to accrue
on any subordinated debentures that we call for redemption, unless we default in
payment of the Redemption Price.

The subordinated debentures will not be subject to any sinking fund.

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OPTION TO ACCELERATE MATURITY DATE

The subordinated debentures will mature on , 2030. We may, at our
option, shorten the maturity to any date not earlier than , 2005. We
may only shorten the maturity date if we receive prior approval from the federal
banking regulators, if then required. We may only elect to shorten the maturity
once.

If we elect to shorten the maturity, we will give notice to each registered
holder of the subordinated debentures, the property trustee and the indenture
trustee within 90 days of the effective date of the shortened maturity. The
property trustee must give notice to the holders of trust securities of the new
maturity date of the subordinated debentures. You may be subject to adverse
United States federal income tax consequences if the Corporation shortens the
maturity. See "United States Federal Income Tax Consequences -- Exercise of
Right to Shorten Maturity."

DISTRIBUTION UPON LIQUIDATION

As described under "Description of the Preferred Securities -- Liquidation
Distribution upon Dissolution," under certain circumstances involving the
dissolution of the Trust, the subordinated debentures may be distributed to the
holders of the preferred securities and common securities in liquidation of the
Trust after the expenses of the Trust have been paid in full. If distributed to
holders of the preferred securities in liquidation, the subordinated debentures
will initially be issued in the form of one or more global securities and the
Depositary, or any successor depositary for the preferred securities, will act
as depositary for the subordinated debentures. The Corporation anticipates that
the depositary arrangements for the subordinated debentures will be
substantially identical to those in effect for the preferred securities. See
"Book-Entry Issuance."

If the subordinated debentures are distributed to the holders of preferred
securities upon the liquidation of the Trust, there can be no assurance as to
the market price of the subordinated debentures.

SUBORDINATION

The Indenture provides that the subordinated debentures rank junior in
right of payment to all of the Corporation's "Senior and Subordinated Debt,"
defined below. The Corporation may not make payment of principal, including
redemption payments, or interest on the subordinated debentures if:

- any of its Senior and Subordinated debt is not paid when due and any
applicable grace period after the default has ended and the default has
not been cured or waived; or

- the maturity of any of its Senior and Subordinated Debt has been
accelerated because of a default, and the acceleration has not been
rescinded.

Upon any distribution of the Corporation's assets to creditors upon its
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any, and interest due or to become due on all of the
Corporation's Senior and Subordinated Debt must be paid in full before the
holders of subordinated debentures are entitled to receive or retain any
payment. In that event, any payment or distribution on the subordinated
debentures that would otherwise be payable in respect of the subordinated
debentures, but for the subordination provision, will be paid or delivered
directly to the holders of Senior and Subordinated Debt in accordance with the
priorities then existing among the holders of the Corporation's Senior and
Subordinated Debt until all of its Senior and Subordinated Debt has been paid in
full.

If the indenture trustee or any holder of subordinated debentures receives
any payment or distribution on account of the subordinated debentures before all
of the Corporation's Senior and Subordinated Debt is paid in full, then that
payment or distribution will be paid to the holders of the Corporation's Senior
and Subordinated Debt at the time outstanding.

The rights of the holders of the subordinated debentures will be subrogated
to the rights of the holders of the Corporation's Senior and Subordinated Debt
to the extent of any payment it has made to the holders of

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Senior and Subordinated Debt that otherwise would have been made to the holders
of the subordinated debentures but for the subordination provisions.

SELECTED DEFINITIONS

"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent:

- every obligation of such person for money borrowed;

- every obligation of such person evidenced by bonds, debentures, notes or
other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses;

- every reimbursement obligation of such person with respect to letters of
credit, bankers' acceptances or similar facilities;

- every obligation of such person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business);

- every capital lease obligation of such person; and

- every obligation of the type referred to in the foregoing clauses of
another person and all dividends of another person the payment of which,
in either case, such person has guaranteed or is responsible or liable,
directly or indirectly, as obligor or otherwise.

"Senior and Subordinated Debt" means the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Corporation whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on, prior to or after the date of the Indenture, unless,
in the instrument creating or evidencing the Debt, it is provided that such
obligations are not superior in right of payment to the subordinated debentures
or to other Debt which ranks equal with, or subordinated to, the subordinated
debentures. However, Senior and Subordinated Debt will not include:

- any Debt of the Corporation which when incurred (and without respect to
any election under section 1111(b) of the United States Bankruptcy Code
of 1978), was without recourse to the Corporation;

- any Debt of the Corporation to any of its subsidiaries;

- any Debt to any employee of the Corporation;

- the guarantee; and

- any other debt securities issued pursuant to the Indenture.

The Indenture does not limit the amount of additional Senior and
Subordinated Debt that we may incur. We expect that from time to time we may
incur additional indebtedness constituting Senior and Subordinated Debt.

BOOK-ENTRY AND SETTLEMENT; DEPOSITARY

If we distribute the subordinated debentures to holders of preferred
securities in connection with the involuntary or voluntary dissolution,
winding-up or liquidation of the Trust, they will be issued in the form of one
or more global certificates registered in the name of a depositary or its
nominee. Except under the limited circumstances described immediately below
under "-- Discontinuance of the Depositary's Services," subordinated debentures
represented by a global security will not be exchangeable for, and will not
otherwise be issuable as, certificated securities.

If subordinated debentures are distributed to holders of preferred
securities upon termination of the Trust, DTC will act as securities depositary
for the subordinated debentures. For a description of DTC and the specific terms
of the depositary arrangements, see "Book-Entry Only Issuance."

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As of the date of this prospectus, the description of DTC's book-entry
system and DTC's practices as they relate to purchases of, transfers of, notices
concerning and payments on the preferred securities apply in all material
respects to any debt obligations represented by one or more global securities
held by DTC.

The Corporation may appoint a successor to DTC or any successor depositary
if the current depositary is unable or unwilling to continue as a depositary for
the global securities.

DISCONTINUANCE OF THE DEPOSITARY'S SERVICES

A global security will be exchangeable for subordinated debentures
registered in the names of persons other than the depositary or its nominee only
if:

- the depositary notifies the Corporation that it is unwilling or unable to
continue as a depositary for the global security and no successor
depositary has been appointed;

- the depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934 at a time the depositary is required to
be so registered to act as depositary, and no successor depositary has
been appointed;

- the Corporation, in its sole discretion, determines that the global
security shall be exchangeable for definitive certificates; or

- there shall have occurred a Debenture Event of Default.

Any global security that is exchangeable as described above will be
exchangeable for subordinated debentures registered in the names the depositary
directs. The Corporation expects that the instructions will be based upon
directions received by the depositary from its participants with respect to
ownership of beneficial interests in the global security.

PAYMENT AND PAYING AGENTS

Payment of principal and interest on the subordinated debentures will be
made at the office of the indenture trustee. In addition, at the Corporation's
option, it may pay interest by check mailed to the address of the holder of the
preferred security as it appears in the securities register or by transfer to an
account of the holder of the preferred security pursuant to proper transfer
instructions that the Corporation has received prior to the regular record date.
However, the Corporation may not exercise these options if the subordinated
debentures are represented by a global subordinated debenture. Payment of any
interest on subordinated debentures will be made to the person in whose name
such subordinated debenture is registered at the close of business on the
regular record date for such interest. The Corporation may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent;
however, the Corporation will at all times be required to maintain a Paying
Agent in each place of payment for the subordinated debentures.

Any moneys deposited with the indenture trustee or any Paying Agent, or
held by the Corporation in trust, for the payment of the principal of or
interest on the subordinated debentures and remaining unclaimed for two years
after the principal or interest has become due and payable shall, at the
Corporation's request, be repaid to it. Thereafter, the holder of the
Corporation's subordinated debenture shall look only to the Corporation for
payment as one of its general unsecured creditors.

MODIFICATION OF INDENTURE

The Indenture provides that the Corporation and the indenture trustee may
enter into supplemental indentures without the consent of the holders of
preferred securities to:

- cure any ambiguity, defect, or inconsistency in the Indenture or in the
subordinated debentures, provided that any such change does not
materially adversely affect the interests of the holders of the preferred
securities;

- evidence the assumption by a successor corporation of the Corporation's
obligations;

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- add to the covenants of the Corporation for the benefit of the holders of
subordinated debentures or to surrender any right or power conferred by
the Indenture upon the Corporation;

- make any change that does not adversely affect the rights of any holder
of preferred securities in any material respect;

- qualify or maintain the qualification of the Indenture under the Trust
Indenture Act; and

- evidence and provide for acceptance of appointment by a successor
trustee.

The Indenture also provides that the Corporation and the indenture trustee
may, with the consent of at least a majority of the holders in aggregate
principal amount of the subordinated debentures then outstanding and affected,
add any provisions to or change the provisions of the Indenture or the rights of
the holders of the subordinated debentures. The Corporation and the indenture
trustee may not, however, without the consent of each holder of the subordinated
debentures:

- extend the final maturity of the subordinated debentures;

- reduce the principal amount or premium, if any;

- reduce the rate or extend the time of payment of interest;

- reduce any amount payable on redemption; or

- reduce the percentage of holders of the subordinated debentures whose
consent is required for any modification of the Indenture.

DEBENTURE EVENTS OF DEFAULT

The Indenture provides that any one or more of the following described
events with respect to the subordinated debentures that has occurred and is
continuing constitutes a "Debenture Event of Default" with respect to the
subordinated debentures:

- failure for 30 days to pay any interest on the subordinated debentures,
when due (not including the deferral of any due date in the case of an
Extension Period); or

- failure to pay any principal on the subordinated debentures when due
whether at maturity, upon redemption, by declaration or otherwise; or

- certain events in bankruptcy, insolvency or reorganization of the
Corporation, including the voluntary commencement of bankruptcy
proceedings, entry of an order for relief against the Corporation in a
bankruptcy proceeding, appointment of a custodian over substantially all
of its property, a general assignment for the benefit of creditors, or a
court order for its liquidation; or

- if the Trust shall have voluntarily or involuntarily dissolved, wound up
its business or otherwise terminated its existence (except in connection
with (1) the distribution of subordinated debentures to the holders in
liquidation of their interests in the Trust; (2) the redemption of all of
the outstanding trust securities; or (3) certain mergers, consolidations
or amalgamations, each as permitted by the Trust Agreement).

The holders of a majority in aggregate outstanding principal amount of the
subordinated debentures have the right to direct any proceeding for any remedy
available to the indenture trustee. The indenture trustee or the holders of not
less than 25% in aggregate outstanding principal amount of the subordinated
debentures may declare the principal due and payable immediately upon a
Debenture Event of Default.

However, the holders of a majority in aggregate outstanding principal
amount of the subordinated debentures may annul such declaration and waive the
default if the default (other than the non-payment of the principal of the
subordinated debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
indenture trustee. If the holders of the subordinated debentures fail

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to annul such declaration and waive such default, the holders of a majority in
aggregate liquidation amount of the preferred securities would have such right.

In case a Debenture Event of Default occurs, the property trustee may
declare the principal of and the interest on the subordinated debentures, and
any other amounts payable under the Indenture, to be due and payable and to
enforce its other rights as a creditor with respect to the subordinated
debentures.

We will be required to file annually with the indenture trustee a
certificate, signed by one of our officers, stating whether or not the officer
knows of any default by the Corporation in the performance, observance or
fulfillment of any condition or covenant of the Indenture.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES

If a Debenture Event of Default for failure to pay interest or principal on
the subordinated debentures has occurred and is continuing, you may institute a
legal proceeding directly against the Corporation for enforcement of payment to
you of the principal of or interest on the subordinated debentures in an amount
equal to the aggregate liquidation amount of the preferred securities you hold
("Direct Action"). The Corporation's failure to pay principal or interest during
an Extension Period is not a Debenture Event of Default. If the right to bring a
Direct Action is removed, the Trust may become subject to the reporting
obligations under the Exchange Act. The Corporation has the right under the
Indenture to set-off any payment made to a holder of preferred securities by the
Corporation in connection with a Direct Action.

Unless an Event of Default under the Trust Agreement has occurred, you will
not be able to exercise directly any remedies except for those listed above. See
"Description of the Preferred Securities -- Events of Default; Notice."

CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS

The Indenture provides that the Corporation shall not consolidate with,
convert into or merge into any other Person or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, and no Person
shall consolidate with, convert into or merge into the Corporation or convey,
transfer or lease its properties and assets substantially as an entirety to the
Corporation.

However, this does not apply if (1) in case the Corporation consolidates
with, converts into or merges into another Person or conveys or transfers its
properties and assets substantially as an entirety to any Person, the successor
Person is organized under the laws of the United States or any state or the
District of Columbia, and such Person expressly assumes the Corporation's
obligations on the subordinated debentures issued under the Indenture; (2)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have occurred and be continuing; and (3) certain other
conditions as prescribed in the Indenture are met.

If these conditions are met, the holders of the preferred securities have
no grounds to object to a highly leveraged or other transaction involving the
Corporation even if it may adversely affect holders of the subordinated
debentures.

SATISFACTION AND DISCHARGE

The Indenture provides that when, among other things, all subordinated
debentures not previously delivered to the indenture trustee for cancellation
(1) have become due and payable or (2) will become due and payable at their
maturity date within one year, and the Corporation deposits with the indenture
trustee, in trust, funds for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on the outstanding subordinated debentures,
for the principal and interest to the date of the deposit or to the stated
maturity, as the case may be, then the Indenture will cease to be of further
effect. However, the Corporation will continue to be obligated to pay all other
sums due pursuant to the Indenture and to provide the officers' certificates and
opinions of counsel required by the Indenture. Under these conditions, the
Corporation will be deemed to have satisfied and discharged the Indenture.

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GOVERNING LAW

The Indenture and the subordinated debentures will be governed by and
construed in accordance with the laws of the State of Connecticut.

INFORMATION CONCERNING THE INDENTURE TRUSTEE

The indenture trustee will be unaffiliated with the Corporation. For
matters relating to compliance with Trust Indenture Act, the indenture trustee
will have all of the duties and responsibilities of an Indenture Trustee under
the Trust Indenture Act. The indenture trustee, other than during the occurrence
and continuance of a Debenture Event of Default, undertakes to perform only such
duties as are specifically set forth in the Indenture and, upon a Debenture
Event of Default, must use the same degree of care and skill as a prudent person
would use in the conduct of his or her own affairs. Subject to this provision,
the indenture trustee is under no obligation to exercise any of the powers given
it by the Indenture at the request of any holder of preferred securities unless
it is offered reasonable security or indemnity against the costs, expenses and
liabilities that it might incur. However, the holders of the preferred
securities will not be required to offer such an indemnity where the holders, by
exercising their voting rights, direct the indenture trustee to take any action
following a Debenture Event of Default.

COVENANTS OF THE CORPORATION

We have made certain covenants in the Indenture. One specific covenant we
have agreed to is that we will pay to the Trust the Additional Sums so long as
the Trust holds the subordinated debentures.

In addition, we have also agreed to the following terms:

- we will maintain directly or indirectly 100% ownership of the common
securities. However, the Indenture does allow us to transfer ownership of
the common securities to certain successors;

- we will not voluntarily dissolve the Trust unless we have received prior
approval from the Federal Reserve, if required. However, we may
voluntarily dissolve the Trust if we distribute the subordinated
debentures to holders of the preferred securities or if the Trust is a
party to certain mergers, consolidations or amalgamations permitted by
the Trust Agreement; and

- we will use our reasonable best efforts to cause the Trust to be
classified as a grantor trust and thus not be taxed as a corporation for
United States federal income tax purposes.

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BOOK-ENTRY ISSUANCE

DTC will act as securities depositary for all of the preferred securities
and, if there is a dissolution of the Trust, the subordinated debentures. The
preferred securities and the subordinated debentures will be issued only as
fully-registered securities registered in the name of Cede & Co. (the DTC's
nominee) or such other name as may be requested by an authorized representative
of DTC. One or more fully-registered global certificates will be issued for the
preferred securities and the subordinated debentures and will be deposited with
DTC or its custodian.

DTC may discontinue providing its services as securities depositary with
respect to any of the preferred securities or the subordinated debentures at any
time by giving reasonable notice to the relevant trustee and the Corporation. In
the event that a successor securities depositary is not obtained, definitive
preferred securities or subordinated debenture certificates representing such
preferred securities or subordinated debentures are required to be printed and
delivered. At the Corporation's option, it may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary). After a
Debenture Event of Default, the holders of a majority in liquidation amount of
preferred securities or aggregate principal amount of subordinated debentures
may determine to discontinue the system of book-entry transfers through DTC. In
any such event, definitive certificates for such preferred securities or
subordinated debentures will be printed and delivered.

DTC has provided the Trust and the Corporation with the following
information: DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants deposit with DTC. DTC also facilitates the
settlement among participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations ("Direct Participants").

DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others, such as securities brokers and dealers, banks and trust
companies, that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant ("Indirect Participants"). The
rules applicable to DTC and its participants are on file with the SEC.

When a purchase of preferred securities is made within the DTC system, it
must be made by or through a Direct Participant. The Direct Participant will
receive a credit for the preferred securities on DTC's records. The actual owner
of the preferred securities is the "beneficial owner." Beneficial ownership
interests will be recorded on the Direct and Indirect Participants' records, but
DTC will have no knowledge of any underlying beneficial ownership. DTC's records
reflect only the identity of the Direct Participants to whose accounts preferred
securities are credited.

DTC will not provide written confirmation of purchases. The Direct or
Indirect Participant through whom purchases of the preferred securities are made
should send written confirmations to purchasers providing details of their
transactions, as well as periodic statements of their holdings. The participants
are responsible for keeping accurate account of the holdings of their customers.

Transfers of ownership interests in the preferred securities will be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners.

The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
impair the ability to transfer beneficial interests in the global certificate
representing the preferred securities.

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<PAGE> 81

Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to beneficial owners will be governed by
arrangements among them, and any statutory or regulatory requirements that may
be in effect from time to time.

Redemption notices will be sent to Cede & Co. If less than all of the
preferred securities are being redeemed, DTC will reduce each Direct
Participant's holdings of preferred securities in accordance with its
procedures.

In those cases where a vote by the holders of the preferred securities is
required, neither DTC nor Cede & Co. will itself consent or vote. Under its
usual procedures, DTC would mail an omnibus proxy to the Trust as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
preferred securities are credited on the record date, which are identified in a
listing attached to the omnibus proxy.

The Trust will make distribution payments on the preferred securities
directly to Cede & Co. DTC's practice is to credit Direct Participants' accounts
on the relevant payment date in accordance with their respective holdings shown
on DTC's records, unless DTC has reason to believe that it will not receive
payment on such payment date.

Payments by participants (whether Direct Participants or Indirect
Participants) to beneficial owners will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in "street name." These payments will be
the responsibility of the participant and not of DTC, the Trust or the
Corporation.

Except as provided below in "Description of the Subordinated
Debentures -- Discontinuance of the Depositary's Services," a beneficial owner
in a global preferred securities certificate will not be entitled to receive
physical delivery of preferred securities. Accordingly, each beneficial owner
must rely on the procedures of DTC to exercise any rights under the preferred
securities.

DTC may discontinue providing its services as securities depositary with
respect to the preferred securities at any time by giving reasonable notice to
the Trust. In the event that a successor securities depositary is not obtained,
the Trust will print and deliver preferred securities certificates.
Additionally, the administrative trustees, with our consent, may decide to
discontinue the book-entry only system of transfers with respect to the
preferred securities. In that event, the Trust will print and deliver
certificates for the preferred securities to its holders.

The Corporation and the Trust have obtained the information in this section
concerning DTC and DTC's book-entry system from sources that the Corporation and
the Trust believe to be reliable, but neither take responsibility for the
accuracy of the information.

DESCRIPTION OF GUARANTEE

The Corporation will execute and deliver the preferred securities Guarantee
Agreement (the "Guarantee Agreement") for the benefit of the holders of the
preferred securities concurrently with the issuance of the preferred securities.
State Street Bank and Trust Company will act as trustee under the guarantee as
the guarantee trustee for the purposes of compliance with the Trust Indenture
Act, and the Guarantee Agreement will be qualified under the Trust Indenture
Act. The following summary of certain provisions of the Guarantee Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all of the provisions of the Guarantee Agreement, including the
definitions of certain terms, and the Trust Indenture Act. The form of the
Guarantee Agreement has been filed as an exhibit to the Registration Statement
of which this prospectus forms a part. You should also read the Guarantee
Agreement. The guarantee trustee will hold the Guarantee Agreement for the
benefit of the holders of the preferred securities.

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GENERAL

Pursuant to the Guarantee, we will agree to pay in full on a subordinated
basis, to the extent set forth in the Guarantee Agreement, the Guarantee
Payments, as defined below, to the holders of the preferred securities, as and
when due, regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert other than the defense of payment.

The following payments on the preferred securities, if not fully paid by
the Trust (the "Guarantee Payments"), are covered by the Guarantee Agreement,
without duplication:

- any accumulated and unpaid distributions required to be paid on the
preferred securities, if the Trust has funds available to make the
payment;

- the Redemption Price, if the Trust has funds available to make the
payment, with respect to any preferred securities called for redemption;
and

- upon a voluntary or involuntary dissolution, winding up or liquidation of
the Trust other than in connection with the distribution of the
subordinated debentures to holders of the preferred securities, the
lesser of

(1) the aggregate of the $25 liquidation amount and all accumulated
and unpaid distributions on the preferred securities to the date of payment
if the Trust has funds available to make the payment; or

(2) the amount of assets the Trust has remaining available for
distribution to holders of preferred securities.

Our obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by us to the holders of the preferred securities
or by causing the Trust to pay the amounts to the holders.

The guarantee will be full and unconditional from the time of issuance.
However, the guarantee will not apply to any payment of distributions due if the
Trust lacks funds legally available for payment as a result of a failure by us
to make payments of interest or principal on the subordinated debentures.

The Corporation is a holding company and it has the right to participate in
any distribution of assets of any of its subsidiaries if any of the
Corporation's subsidiaries are liquidated or reorganized. However, our right to
participate is subject to the prior claim of the subsidiary's creditors.
Accordingly, our obligations under the guarantee will be effectively
subordinated to all existing and future liabilities of our subsidiaries, and
holders of preferred securities should look only to the Corporation's assets for
payments.

The guarantee does not limit the Corporation's incurrence or issuance of
other secured or unsecured debt. We may, and we expect that we will, issue or
incur Senior and Subordinated Debt in the future.

The Corporation has, through the Guarantee Agreement, the Trust Agreement,
the subordinated debentures, the Indenture and the Expense Agreement, taken
together, guaranteed on a subordinated basis all of the Trust's obligations
under the preferred securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes the
guarantee. It is only the combined operation of these documents that has the
effect of providing the Corporation's guarantee on a subordinated basis of all
of the Trust's obligations under the preferred securities. See "Relationship
Among the Preferred Securities, the Subordinated Debentures and the Guarantee."

THE EXPENSE AGREEMENT

The Corporation will enter into an agreement with the Trust as to the
expenses and liabilities of the Trust (the "Expense Agreement"). We will fully
and unconditionally guarantee to each person or entity to whom the Trust becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
the Trust, other than obligations of the Trust to the holders of the preferred
securities or other similar interests in the Trust.

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STATUS OF THE GUARANTEE

The guarantee is unsecured and ranks subordinate and junior in right of
payment to all Senior and Subordinated Debt in the same manner as the
subordinated debentures. As such, it is (1) subordinate and junior in right of
payment to all of the Corporation's other liabilities, (2) equal to the most
senior preferred stock now or hereafter issued by the Corporation, and with any
guarantee now or hereafter issued by the Corporation in respect of any preferred
stock of its affiliates, and (3) senior to its common stock.

The guarantee will constitute a guarantee of payment and not of collection.
The guaranteed party may institute a legal proceeding directly against the
Corporation to enforce its rights under the Guarantee Agreement without first
instituting a legal proceeding against any other person or entity. The guarantee
will be held for the benefit of the holders of the preferred securities. The
guarantee will not be discharged except by payment of the Guarantee Payments in
full to the extent not paid by the Trust or upon distribution of the
subordinated debentures to the holders of the preferred securities.

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes which do not materially adversely affect
the rights of holders of the preferred securities (in which case no vote will be
required), the Guarantee Agreement may not be amended without the prior approval
of the holders of not less than a majority of the liquidation amount of the
outstanding preferred securities. A description of the way to obtain any
approval is described under "Description of the Preferred Securities -- Voting
Rights; Amendment of the Trust Agreement." All guarantees and agreements
contained in the Guarantee Agreement will bind the Corporation's successors,
assigns, receivers, trustees and representatives and are for the benefit of the
holders of the preferred securities then outstanding.

EVENTS OF DEFAULT

An event of default under the Guarantee Agreement will occur if the
Corporation fails to perform any of its payment or other obligations under the
Guarantee Agreement. The holders of at least a majority in aggregate liquidation
amount of the preferred securities have the right to direct any proceeding for
any remedy available to the guarantee trustee relating to the guarantee or to
direct the exercise of any trust or power conferred upon the guarantee trustee
under the Guarantee Agreement.

If the guarantee trustee fails to enforce the guarantee, you may, after
your written request to the guarantee trustee to enforce the guarantee, sue the
Corporation directly to enforce the guarantee trustee's rights under the
guarantee without first instituting a legal proceeding against the Trust, the
guarantee trustee, or any other person or entity.

Notwithstanding the foregoing, if the Corporation has failed to make a
Guarantee Payment, you may directly institute a proceeding against the
Corporation to enforce the guarantee.

The Corporation is required to file annually with the guarantee trustee a
certificate as to the Corporation's compliance with all the conditions and
covenants under the Guarantee Agreement.

INFORMATION CONCERNING THE GUARANTEE TRUSTEE

The guarantee trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of the guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee
Agreement and, after default with respect to the guarantee, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the guarantee
trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee Agreement at the request of any holder of the preferred securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that it might incur.

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TERMINATION OF THE GUARANTEE

The guarantee will remain in effect as long as the preferred securities are
outstanding.

GOVERNING LAW

The Guarantee Agreement will be governed by and construed in accordance
with the laws of the State of Connecticut.

RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE

GUARANTEE

Payments of distributions and other amounts due on the preferred securities
are guaranteed by the Corporation to the extent described under "Description of
Guarantee." Taken together, the Corporation's obligations under the subordinated
debentures, the Indenture, the Trust Agreement, the Expense Agreement and the
Guarantee Agreement provide, in the aggregate, a guarantee on a subordinated
basis for payments of distributions and other amounts due on the preferred
securities (but only to the extent the Trust has funds available for the payment
of such distributions). No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of the Corporation's obligations
under those documents that has the effect of providing a guarantee on a
subordinated basis of the Trust's obligations under the preferred securities.

To the extent that the Corporation does not make required payments on the
subordinated debentures, the Trust will not pay distributions or other amounts
due on the preferred securities. Neither the guarantee described above nor the
Guarantee Agreement covers payment of distributions when the Trust does not have
sufficient funds to pay such distributions. In those circumstances, your remedy
is to institute a legal proceeding directly against the Corporation to enforce
the payment of the distributions to you. The Corporation's obligations under the
guarantee and the Guarantee Agreement are subordinate and junior in right of
payment to all Senior and Subordinated Debt.

SUFFICIENCY OF PAYMENTS

As long as we make payments required by the subordinated debentures held by
the Trust, there will be sufficient funds to cover distributions and other
payments due on the preferred securities, primarily because:

- the aggregate principal amount of the subordinated debentures will exceed
the aggregate liquidation amount of the preferred securities by the
amount of the common securities;

- the interest rate and interest and other payment dates on the
subordinated debentures will match the distribution rate and distribution
and other payment dates for the preferred securities;

- the Corporation will directly pay for all costs, expenses and liabilities
of the Trust except the Trust's obligations to holders of preferred
securities; and

- the Trust Agreement further provides that the Trust will not engage in
any activity that is not consistent with the limited purposes of the
Trust.

Notwithstanding anything to the contrary in the Indenture, we have the
right to set-off any payment we are required to make with and to the extent we
have made, or are concurrently making a payment under the guarantee.

ENFORCEMENT RIGHTS OF HOLDERS OF THE PREFERRED SECURITIES UNDER THE GUARANTEE

A holder of the preferred securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
Agreement without first instituting a legal proceeding against the guarantee
trustee, the Trust or any other person or entity.
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A default or event of default under any Senior and Subordinated Debt would
not constitute a Debenture Event of Default. However, in the event of payment
defaults under, or acceleration of, Senior and Subordinated Debt, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the subordinated debentures until the Senior and Subordinated Debt
have been paid in full or any payment default has been cured or waived. The
Corporation's failure to make the required payments on subordinated debentures
will constitute a Debenture Event of Default.

LIMITED PURPOSE OF THE TRUST

The preferred securities evidence a beneficial interest in the Trust, and
it exists for the sole purpose of issuing trust securities and investing those
proceeds in the subordinated debentures. A principal difference between the
rights of a holder of the preferred securities and a holder of a subordinated
debenture is that a holder of a subordinated debenture is entitled to receive
the principal amount of and interest accrued on subordinated debentures from the
Corporation, while a holder of the preferred securities is entitled to receive
distributions from the Trust (or from the Corporation under the guarantee) if
and to the extent the Trust has funds available for the payment of such
distributions.

RIGHTS UPON DISSOLUTION

Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Trust involving the liquidation of the subordinated debentures, the holders
of preferred securities will be entitled to receive, out of assets held by the
Trust, the liquidation distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution upon Dissolution." Upon the Corporation's
voluntary or involuntary liquidation or bankruptcy, the property trustee, as
holder of the subordinated debentures, would be one of the Corporation's
subordinated creditors, subordinated in right of payment to all Senior and
Subordinated Debt as set forth in the Indenture. However, the property trustee,
and indirectly the holders of the preferred securities, are entitled to receive
payment in full of principal and interest, before any of the Corporation's
stockholders receive payments or distributions. Since the Corporation is the
guarantor under the Guarantee Agreement and has agreed to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to the
holders of its preferred securities), the positions of a holder of the preferred
securities and a holder of subordinated debentures relative to other creditors
and to the Corporation's stockholders in the event of the Corporation's
liquidation or bankruptcy are expected to be substantially the same.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following is a general summary of the material United States federal
income tax consequences of the purchase, ownership and disposition of the
preferred securities. The matters of law or legal conclusions set forth in this
summary constitute the opinion of Haskell Slaughter & Young, L.L.C., special tax
counsel to the Corporation and the Trust. Unless otherwise stated, this summary
only deals with preferred securities held as capital assets (generally, assets
held for investment) by holders who purchase the preferred securities upon
original issuance. Your tax treatment may vary depending on your particular
situation.

This summary does not address:

- all of the tax consequences that may be relevant to holders who may be
subject to special tax treatment such as, for example, financial
institutions, insurance companies, broker-dealers, tax-exempt
organizations or investors who have acquired preferred securities as part
of a straddle, hedge or similar transaction or, except as described
below, non-U.S. holders, as we define that term below;

- the tax consequences to holders that have a functional currency other
than the United States dollar;

- the tax consequences to shareholders, partners or beneficiaries of a
holder of preferred securities;

- any aspects of state, local or foreign tax laws; or

- the United States federal alternative minimum tax consequences of the
purchase, ownership and sale of preferred securities.

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This summary and tax counsel's opinion is based on the United States
federal income tax law in effect as of the date of this prospectus. These laws
may change, and any change could have a retroactive effect. These laws are also
subject to various interpretations, and the IRS or the courts could later
disagree with the explanation of conclusions contained in this summary. The IRS
has not formally ruled (and we do not intend to seek a ruling) on the tax
consequences of purchasing, holding, and selling the preferred securities.
Accordingly, the IRS could challenge the opinions expressed in this prospectus
concerning such consequences, and a court could agree with the IRS. We urge you
to consult your tax advisor as to the particular tax consequences to you of
purchasing, owning, and disposing of the preferred securities, including the
application and effect of United States federal, state, local, foreign and other
tax laws.

For purposes of this discussion, a "U.S. holder" means:

- a citizen or resident of the United States (or someone treated as a
citizen or resident of the United States for federal income tax
purposes);

- a corporation, partnership, or other entity created or organized (or
treated as created or organized for United States federal income tax
purposes) in the United States or under the laws of the United States or
of any political subdivision of the United States;

- an estate, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source; or

- a trust, the administration of which is subject to the primary
supervision of a United States court and that has one or more United
States persons who have the authority to control all substantial
decisions of the trust.

CLASSIFICATION OF THE SUBORDINATED DEBENTURES

In the opinion of tax counsel, based on current law and assuming full
compliance with the terms of the Trust and the Indenture, the subordinated
debentures should be treated for United States federal income tax purposes as
indebtedness of the Corporation. By accepting the preferred securities, you
agree to treat the subordinated debentures as indebtedness for United States
federal income tax purposes and to treat the preferred securities as evidence of
an indirect beneficial ownership interest in the subordinated debentures. No
assurance can be given, however, that such treatment will not be challenged by
the IRS or, if challenged, that such a challenge will not be successful.

CLASSIFICATION OF THE TRUST

Tax counsel is of the opinion that, based on current law and assuming full
compliance with the terms of the Trust and the Indenture, the Trust should be
classified for United States federal income tax purposes as a grantor trust and
not as an association taxable as a corporation. Accordingly, for United States
federal income tax purposes, you should generally be treated as the owner of an
undivided beneficial ownership interest in the subordinated debentures. As
further discussed below, you may be required to include in ordinary income your
allocable share of interest paid or accrued on the subordinated debentures.

POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
("OID")

The Corporation has the right to defer payments of interest on the
subordinated debentures, which could cause the subordinated debentures to be
treated as having been issued with OID. In general, a debt instrument will be
deemed to have been issued with OID for United States federal income tax
purposes if there is more than a remote contingency that periodic stated
interest payments due on the instrument will not be timely paid. Because the
exercise by the Corporation of its option to defer the payment of stated
interest on the subordinated debentures would also prevent it from declaring
dividends on any class of equity, the Corporation believes that the likelihood
that it would exercise the option is remote.

As a result, the Corporation intends to take the position, based on the
advice of tax counsel, that the subordinated debentures will not be deemed to be
issued with OID. Accordingly, based on this position, stated

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interest payments on the subordinated debentures will be includible in your
ordinary income at the time that those payments are paid or accrued in
accordance with your regular method of accounting and in the amount of each
payment.

If the likelihood of the Corporation deciding to defer any payments of
interest were not treated as remote, the subordinated debentures would be
considered as issued initially with OID in an amount equal to the sum of all the
interest payable over the term of the subordinated debentures. This would mean
that you would have to include interest income in gross income for United States
federal income tax purposes as it accrued daily on an economic accrual basis
instead of on the dates you actually received the cash payments.

The IRS has not issued any rulings or interpretations which define the
meaning of the term "remote" as used in the applicable income tax regulations.
The IRS could take a position that differs from what we state in this
prospectus.

EXERCISE OF DEFERRAL OPTION

If the Corporation exercises its option to defer the payment of stated
interest on the subordinated debentures, they would be treated, solely for
purpose of the OID rules, as being "re-issued" at that time with OID. Under
these rules, you would be required to include OID in ordinary income, on a
current basis, over the period that the instrument is held, even though we would
not be making any actual cash payments during the extended interest payment
period.

The amount of interest income treated as OID and therefore includible in
the taxable income of a holder of the subordinated debentures would be
determined on the basis of a constant yield method over the remaining term of
the instrument, not on the basis of the stated interest amount. The actual
receipt of future payments of stated interest on the subordinated debentures
would no longer be separately reported as taxable income because it would have
been replaced, solely for tax purposes, by the amount of OID. The amount of OID
that would accrue, in total, during the extended interest payment period would
be approximately equal to the amount of the cash payment due at the end of the
period. Any OID included in income would increase your adjusted tax basis in the
preferred securities or the subordinated debentures, depending on which you held
at that time, and interest payments actually received would reduce your adjusted
tax basis.

CORPORATE U.S. HOLDERS

Because the income from the preferred securities will not be considered to
be dividends for federal income tax purposes, corporate U.S. holders of the
preferred securities will not be entitled to a dividends-received deduction for
any income received from the preferred securities.

RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON TERMINATION OR REDEMPTION

If the Corporation exercises its right to terminate the Trust and cause the
subordinated debentures to be distributed to you on a basis proportionate to
your ownership in the preferred securities, the distribution would be treated as
a nontaxable event to you. In that event, you would have an adjusted tax basis
in the subordinated debentures that you receive equal to the adjusted tax basis
in the preferred securities that you surrender, and the holding period of the
subordinated debentures would include the period during which you held the
preferred securities. If, however, the Trust is characterized for United States
federal income tax purposes as an association taxable as a corporation at the
time of the termination, the distribution of the subordinated debentures would
be a taxable event to the holders of preferred securities.

If the Corporation redeems the subordinated debentures for cash and the
Trust distributes the proceeds of the redemption to holders in redemption of
their preferred securities, the redemption would be treated as a sale of the
preferred securities in which you would recognize gain or loss as described
below.

EXERCISE OF RIGHT TO SHORTEN MATURITY

The Corporation has the right to shorten the maturity of the subordinated
debentures. If the Corporation exercises its right to shorten the maturity of
the subordinated debentures, this could result in a taxable event to
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you. Federal income tax regulations provide that a significant modification of a
debt instrument is a taxable event. A significant modification includes
shortening the maturity of a debt instrument, provided that the instrument's
rate of return changes by more than the greater of 25 basis points or five
percent of the annual rate of return. At the present time, the extent to which
the subordinated debenture's rate of return would change (if the Corporation
exercised its right to shorten the maturity) is unclear.

SALE OF PREFERRED SECURITIES

Upon the sale of preferred securities (including a redemption for cash),
you will recognize gain or loss in an amount equal to the difference between the
amount realized (which for this purpose, will exclude amounts attributable to
accrued interest or OID not previously included in income, which amount will be
subject to tax as ordinary interest income) and your adjusted tax basis in the
preferred securities.

If the Corporation does not defer interest payments on the subordinated
debentures, your adjusted tax basis in the preferred securities generally will
equal the initial purchase price that you paid for the preferred securities. If,
however, the Corporation elects to defer interest payments on the subordinated
debentures, your adjusted tax basis in the preferred securities will equal: (1)
the initial purchase price that you paid for the preferred securities; (2)
increased by the amount of any accrual and unpaid distributions you were
required to treat as OID; and (3) reduced by the amount of cash or other
property received by you with respect to such OID.

The gain or loss generally will be capital gain or loss and will be
long-term capital gain or loss if you have held the preferred securities for
more than one year. Capital losses generally may be used by a corporate taxpayer
only to offset capital gains and may be used by individual taxpayers only to
offset capital gains plus $3,000 of other income.

The preferred securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest (or OID, if the subordinated
debentures are treated as having been issued, or reissued, with OID) relating to
the underlying subordinated debentures. If you dispose of your preferred
securities, you will be required to include in your ordinary income:

- any portion of the amount realized that is attributable to accrued but
unpaid interest to the extent not previously included in income; or

- any amount of OID that has accrued on your proportionate share of the
underlying subordinated debentures during the taxable year of sale
through the date of disposition.

However, you can also increase your adjusted tax basis in the preferred
securities to the extent that you include these amounts in ordinary income.

WITHHOLDING OF U.S. TAXES ON NON-U.S. HOLDERS

This summary assumes that the non-U.S. holder

- is an individual;

- is not and will not become engaged in a United States trade or business;
and

- will not be present in the United States for 183 days or more during any
particular taxable year.

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UNDERWRITING

Pursuant to the underwriting agreement, the form of which is filed as an
exhibit to the registration statement of which this prospectus forms a part, and
subject to the terms and conditions thereof, the underwriters named below (the
"Underwriters"), acting through Sterne, Agee & Leach, Inc. and [ ], as
representatives of the several Underwriters (the "Representatives"), have
severally agreed to purchase from the Trust the number of preferred securities
set forth below opposite their respective names.

<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER PREFERRED SECURITIES
------------------- --------------------
<S> <C>
Sterne, Agee & Leach, Inc...................................
[TO BE COMPLETED]...........................................

-------
Total............................................. 800,000
=======
</TABLE>

The several Underwriters have agreed in the underwriting agreement, subject
to the terms and conditions set forth therein, to purchase all the preferred
securities offered hereby if any of the preferred securities are purchased. In
the event of default by an Underwriter, the underwriting agreement provides
that, in certain circumstances, purchase commitments of the nondefaulting
Underwriters may be increased or the underwriting agreement may be terminated.

The preferred securities are new securities with no established trading
market. The preferred securities are expected to be listed on the American Stock
Exchange under the trading symbol [" "]. No assurance can be given about
the liquidity of the trading market for the preferred securities.

The Representatives have advised the Trust that they propose initially to
offer the preferred securities to the public at the public offering price set
forth on the cover page of this prospectus. In view of the fact that the
proceeds of the sale of the preferred securities will be used to purchase the
subordinated debentures of the Corporation, the underwriting agreement provides
that the Corporation will pay as compensation to the Underwriters arranging the
investment therein of such proceeds, an amount in immediately available funds of
$1.00 per preferred security (or $800,000 in the aggregate and, if the
Underwriters' over-allotment option is exercised, or $920,000 in the aggregate)
for the accounts of the several Underwriters.

The following table sets forth the nature of the compensation and the
amount of commissions to be paid to the Underwriters for each security and in
total:

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- --------
<S> <C> <C>
Amount of Commission........................................ $1.00 $800,000
Other compensation.......................................... N/A $ 75,000(1)
----- --------
Total............................................. $1.00 $875,000(1)
</TABLE>

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

(1) In the event that this offering is not closed by December 31, 2000 as a
result of the actions or inactions of the Corporation, the Corporation has
agreed to reimburse the Representative for its out-of-pocket expenses
incurred in connection with this offering up to a maximum of $75,000.

In addition, the Corporation will incur various expenses in registering the
preferred securities which, excluding the commission to the Underwriter's, is
estimated to be $[ ].

The offering of the preferred securities is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares. The
Representatives have

86
<PAGE> 90

advised the Corporation that they do not intend to confirm sales to accounts
over which they exercise discretionary authority.

The Representatives have advised the Trust that sales of preferred
securities to certain dealers may be made at a concession of an amount not in
excess of $[ ] per preferred security and that the underwriters may allow,
and such dealers may re-allow, discounts not in excess of $[ ] per
preferred security on sales to certain other dealers. Following completion of
this offering, the public offering price, the concession and the re-allowance
may be changed by the underwriters.

The Trust has granted the Underwriters an option to purchase up to an
additional 120,000 preferred securities at the initial public offering price.
This option, which expires 30 days from the date of this prospectus, may be
exercised solely to cover over-allotments. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof which the number of shares of
preferred securities to be purchased by it shown in the table above bears to the
total and the Trust will be obligated pursuant to the option, to sell such
shares to the Underwriters. The Underwriters may exercise such options only to
cover over-allotments made in connection with the sale of shares of preferred
securities offered hereby. If purchased, the Underwriters will sell such
additional shares on the same terms as those on which the shares are being
offered.

During a period of 180 days from the date of this prospectus, none of the
officers, directors and 5% shareholders of the Trust nor the Corporation will,
subject to certain exceptions, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, grant any option
for sale of, or otherwise dispose of, any preferred securities, any security
convertible into or exchangeable into or exercisable for preferred securities or
subordinated debentures or any debt securities substantially similar to the
subordinated debentures or equity securities similar to the preferred securities
(except for the subordinated debentures and the preferred securities offered
hereby).

In connection with this offering, certain underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the preferred
securities during and after this offering. Such transactions may include
stabilization transactions pursuant to which such persons may bid for or
purchase preferred securities for the purpose of stabilizing its market price.
The underwriters also may create a short position for the account of the
underwriters by selling more preferred securities in connection with this
offering than they are committed to purchase from the Trust, and in such case
may purchase preferred securities in the open market following completion of
this offering to cover all or a portion of such short position. The underwriters
may also cover all or a portion of such short position by exercising the
underwriters' over-allotment option referred to above. In addition, the
representatives may impose "penalty bids" under contractual arrangements with
the underwriters whereby they may reclaim from the underwriter (or dealer
participating in the offering) for the account of the other underwriters, the
selling concession with respect to preferred securities that are distributed in
this offering but subsequently purchased for the account of the underwriters in
the open market. Any of the transactions described in this paragraph may result
in the maintenance of the price of the preferred securities at a level above
that which might otherwise prevail in the open market. None of the transactions
described in this paragraph are required, and, if they are undertaken, they may
be discontinued at any time.

The offering price and distribution rate have been determined by
negotiations among the representatives of the Corporation and the Underwriters,
and the offering price of the preferred securities may not be indicative of the
market price following the offering. Since the preferred securities are expected
to be traded on the American Stock Exchange, neither the Representatives nor any
of the other Underwriters will have any obligation to make market in the
preferred securities and, if ever commenced, may cease any such marketing-
making activities at any time.

Representative Sterne, Agee & Leach, Inc. provides certain services to the
Corporation including advice regarding its securities portfolio for which
Sterne, Agee & Leach, Inc. receives competitive commissions if and when trades
are executed, through its affiliate, The Trust Company of Sterne, Agee & Leach,
Inc., an Alabama state chartered trust company, trustee services to the
Corporation's 401(k) and through its affiliate,

87
<PAGE> 91

SAL Financial Services, Inc., brokerage management and clearing services for the
Corporation's brokerage activities.

The Trust and the Corporation have agreed to indemnify the Underwriters and
controlling persons, if any, against certain liabilities, including liabilities
under the Securities Act, or will contribute to payments that the Underwriters
or any such controlling persons may be required to make in respect thereof.

TRANSFER AGENT

[ ] will act as registrar and transfer agent for the preferred
securities.

LEGAL MATTERS

The validity of the preferred securities offered hereby, and certain
matters relating to United States federal income tax consequences of the
offering, are being passed upon for the Corporation and the Trust by Haskell
Slaughter & Young, L.L.C., Birmingham, Alabama. As of the date of this
prospectus, representatives of Haskell, Slaughter & Young, L.L.C. owned
shares of Corporation common stock. Bingham Dana LLP, Hartford, Connecticut,
will pass upon certain matters relating to Connecticut law for the Trust.
Certain legal matters will be passed upon for the underwriters by Ritchie &
Rediker, L.L.C., Birmingham, Alabama. As of the date of this prospectus,
representatives of Ritchie & Rediker, L.L.C. owed shares of Corporation
common stock.

EXPERTS

The consolidated financial statements of The Banc Corporation at December
31, 1999 and 1998, and for each of the three years in the period ended December
31, 1999, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing herein which, as to the years 1998 and 1997, are based
in part on the reports of Saltmarsh, Cleaveland & Gund, independent auditors,
and Williams, Cox, Weidner and Cox, independent auditors. The financial
statements referred to above are included in reliance upon such reports given on
the authority of such firms as experts in accounting and auditing.

88
<PAGE> 92

WHERE YOU CAN FIND MORE INFORMATION

This prospectus is part of a registration statement (on Form S-1) filed by
the Corporation and the Trust with the SEC relating to the preferred securities
registered under this prospectus. As permitted by SEC rules, this prospectus
does not contain all of the information contained in the registration statement
and accompanying exhibits and schedules filed by the Corporation and the Trust
with the SEC. The registration statement, the exhibits and schedules provide
additional information about the Corporation, the Trust and the preferred
securities. The registration statement, exhibits and schedules are also
available at the SEC's public reference rooms or through its EDGAR database on
the internet.

The Corporation files annual, quarterly and current reports, proxy
statements and other information with the SEC. These documents are available for
inspection and copying, upon payment of a fee set by the SEC, at the public
reference rooms of the SEC in Washington, D.C. (450 Fifth Street, N.W., 20549),
New York, New York (Seven World Trade Center, Suite 1300, 10048) and Chicago,
Illinois (Citicorp Center, 500 West Madison Street, 14th Floor, Suite 1400,
60661). The SEC may be contacted at 1-800-432-0330 for more information on the
public reference rooms. The Corporation's filings are also available to the
public on the internet through the SEC's EDGAR database at the SEC's web site at
http://www.sec.gov.

There are not separate financial statements of the Trust in this prospectus
because:

- The Trust is a subsidiary of the Corporation which files consolidated
financial information under the Exchange Act.

- The Trust does not have any independent operations other than issuing the
preferred and common securities and purchasing the subordinated
debentures of the Corporation.

- The Trust's only material assets will be the subordinated debentures of
the Corporation when issued.

- The combined obligations of the Corporation under the subordinated
debentures, the Guarantee, the Trust Agreement and the Indenture have the
effect of providing a full and unconditional guarantee of the Trust's
obligations under its preferred securities. See "Description of
Subordinated Securities," "Description of Preferred Securities,"
"Description of Guarantee" and "Relationship Among Preferred Securities,
the Subordinated Debentures and the Guarantee."

89
<PAGE> 93

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE BANC CORPORATION AND SUBSIDIARIES
Report of Independent Auditors, Ernst & Young LLP........... F-2
Report of Independent Auditors, Saltmarsh, Cleaveland &
Gund...................................................... F-3
Report of Independent Auditors, Williams, Cox, Weidner &
Cox....................................................... F-4
Report of Independent Auditors, Williams, Cox, Weidner &
Cox....................................................... F-5
Consolidated Statements of Financial Condition as of
December 31, 1999 and 1998................................ F-6
Consolidated Statements of Income for the Years Ended
December 31, 1999, 1998 and 1997.......................... F-7
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997.......................... F-8
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1999, 1998 and 1997...... F-10
Notes to Consolidated Financial Statements.................. F-11
Condensed Consolidated Statements of Financial Condition as
of March 31, 2000 (Unaudited)............................. F-35
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 2000 and 1999 (Unaudited).......... F-36
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999 (Unaudited).... F-37
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................... F-38
</TABLE>

F-1
<PAGE> 94

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, 1999 and
1998, 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, 1999. 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 each of the two years in the period
ended December 31, 1998, which statements combined reflect total assets
constituting 30% in 1998, and net interest income constituting 33% in 1998 and
32% in 1997, of the related consolidated totals. 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 reports 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, 1999 and 1998, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.

Ernst & Young LLP

Birmingham, Alabama
March 3, 2000

F-2
<PAGE> 95

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
<PAGE> 96

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 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 each of the two years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.

Williams, Cox, Weidner and Cox

March 3, 1999
Marianna, Florida

F-4
<PAGE> 97

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 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 each of the two years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.

Williams, Cox, Weidner and Cox

March 3, 1999
Marianna, Florida

F-5
<PAGE> 98

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1999 1998
--------- ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 31,825 $ 31,307
Interest bearing deposits in other banks.................... 1,862 1,048
Federal funds sold.......................................... 5,843 25,045
Short-term commercial paper................................. 14,484 --
Securities available for sale............................... 65,439 91,482
Securities held to maturity (fair value of $5,411,000 and
$6,775,000 in 1999 and 1998, respectively)................ 5,477 6,726
Mortgage loans held for sale................................ 2,127 4,899
Loans....................................................... 633,404 433,175
Unearned income............................................. (627) (1,244)
-------- --------
Loans, net of unearned income............................... 632,777 431,931
Less allowance for loan losses.............................. (8,065) (6,466)
-------- --------
Net loans......................................... 624,712 425,465
Premises and equipment, net................................. 37,734 29,666
Accrued interest receivable................................. 6,286 4,812
Stock in FHLB and Federal Reserve Bank...................... 3,461 1,760
Other assets................................................ 28,177 7,879
-------- --------
$827,427 $630,089
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing demand................................ $ 83,733 $ 79,990
Interest bearing demand................................... 160,044 141,416
Savings................................................... 33,998 30,356
Time deposits $100,000 and over........................... 180,641 90,557
Other time................................................ 224,101 188,751
-------- --------
Total deposits.................................... 682,517 531,070
Advances from FHLB.......................................... 62,500 23,160
Other borrowed funds........................................ 295 3,700
Notes payable............................................... 7,104 --
Accrued expenses and other liabilities...................... 6,163 6,192
-------- --------
Total liabilities................................. 758,579 564,122
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 and outstanding 14,385,021 in
1999 and 14,077,036 in 1998............................ 14 14
Surplus................................................... 47,756 45,492
Retained earnings......................................... 23,283 20,363
Accumulated other comprehensive (loss) income............. (2,205) 98
-------- --------
Total stockholders' equity........................ 68,848 65,967
-------- --------
$827,427 $630,089
======== ========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 99

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998 1997
------- ------- -------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest income:
Interest and fees on loans................................ $49,244 $34,310 $26,090
Interest on taxable securities............................ 4,141 5,493 5,552
Interest on tax exempt securities......................... 924 925 696
Interest on federal funds sold............................ 763 1,492 1,234
Interest and dividends on other investments............... 485 252 133
------- ------- -------
Total interest income............................. 55,557 42,472 33,705
Interest expense:
Interest on deposits...................................... 24,101 19,616 15,664
Interest expense on advances from FHLB and other borrowed
funds.................................................. 2,648 590 129
------- ------- -------
Total interest expense............................ 26,749 20,206 15,793
------- ------- -------
Net interest income......................................... 28,808 22,266 17,912
Provision for loan losses................................... 2,850 4,657 2,685
------- ------- -------
Net interest income after provision for loan
losses.......................................... 25,958 17,609 15,227
Noninterest income:
Service charges and fees.................................. 3,350 3,007 2,463
Mortgage banking income................................... 1,409 232 25
Securities gains.......................................... 83 279 220
Other..................................................... 1,322 563 311
------- ------- -------
Total noninterest income.......................... 6,164 4,081 3,019
Noninterest expense:
Salaries and employee benefits............................ 13,421 10,629 7,893
Occupancy and equipment................................... 5,242 3,432 2,471
Merger related costs...................................... 744 1,466 --
Other..................................................... 9,275 6,602 4,412
------- ------- -------
Total noninterest expenses........................ 28,682 22,129 14,776
------- ------- -------
Income (loss) before income taxes......................... 3,440 (439) 3,470
Income tax expense (benefit).............................. 520 (724) 1,074
------- ------- -------
Net income........................................ $ 2,920 $ 285 $ 2,396
======= ======= =======
Average common shares outstanding........................... 14,335 13,115 10,553
Average common shares outstanding, assuming dilution........ 14,362 13,210 10,672
Basic net income per common share........................... $ .20 $ .02 $ .23
Diluted net income per common share......................... .20 .02 .22
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE> 100

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 2,920 $ 285 $ 2,396
Adjustments to reconcile net income to net cash provided by
operations:
Depreciation.............................................. 2,194 1,786 1,121
Net (accretion) amortization of securities................ (69) 301 (241)
Gain on sale of securities available for sale............. (83) (279) (220)
Provision for loan losses................................. 2,850 4,657 2,685
Decrease (increase) in mortgage loans held for sale....... 2,772 (4,899) --
Increase in accrued interest receivable................... (1,055) (326) (547)
Deferred income tax expense (benefit)..................... 46 (1,977) (127)
Other changes, net........................................ (826) 1,382 575
--------- --------- ---------
Net cash provided by operating activities......... 8,749 930 5,642
INVESTING ACTIVITIES
(Increase) decrease in interest bearing deposits in other
banks..................................................... (814) 435 (100)
Decrease (increase) in federal funds sold................... 22,422 19,705 (19,898)
Increase in short-term commercial paper..................... (14,151) -- --
Proceeds from sale of subsidiary's net assets............... 3,392 -- --
Proceeds from sales of securities available for sale........ 18,283 65,170 30,592
Proceeds from maturities of securities available for sale... 19,426 39,509 8,951
Proceeds from maturities of securities held to maturity..... 1,231 15,926 12,933
Purchase of securities available for sale................... (12,499) (78,833) (41,746)
Purchase of securities held to maturity..................... -- (23,520) (15,181)
Net increase in loans....................................... (178,349) (138,013) (70,886)
Net cash received (paid) in business combinations........... 11,893 (5,786) --
Purchase of premises and equipment.......................... (8,312) (14,740) (5,000)
Proceeds from sale of bank premises......................... -- 3,795 --
Other investing activities, net............................. (9,804) (3,447) (434)
--------- --------- ---------
Net cash used in investing activities............. (147,282) (119,799) (100,769)
</TABLE>

F-8
<PAGE> 101

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
-------- -------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
FINANCING ACTIVITIES
Net increase in demand and savings deposits................. $ 6,450 $ 67,170 $33,516
Net increase in time deposits............................... 87,392 33,068 48,193
Increase (decrease) in FHLB advances........................ 39,340 23,160 (1,600)
Payment on assumed debt..................................... -- -- (1,513)
Net increase in note payable................................ 7,104 -- --
(Payments) advances of other borrowed funds................. (3,405) (4,529) 7,980
Proceeds from issuance and reissuance of common stock....... 2,170 12,279 17,890
Repurchase of common stock.................................. -- -- (9,496)
Dividends paid by pooled subsidiaries....................... -- (231) (498)
-------- -------- -------
Net cash provided by financing activities................... 139,051 130,917 94,472
-------- -------- -------
Increase (decrease) in cash and due from banks.............. 518 12,048 (655)
Cash and due from banks at beginning of year................ 31,307 19,259 19,914
-------- -------- -------
Cash and due from banks at end of year...................... $ 31,825 $ 31,307 $19,259
======== ======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest.................................................. $ 25,888 $ 19,710 $15,554
Income taxes.............................................. 1,168 1,042 1,481
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 --
Real estate acquired by assuming related liability and
issuing common stock...................................... -- -- 4,534
Minority interest in subsidiary acquired by issuing common
stock..................................................... 95 130 --
</TABLE>

See notes to consolidated financial statements.

F-9
<PAGE> 102

THE BANC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE TOTAL
COMMON RETAINED INCOME TREASURY STOCKHOLDERS'
STOCK SURPLUS EARNINGS (LOSS) STOCK EQUITY
------ ------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1997................... $10 $22,451 $18,498 $ (84) $ -- $40,875
Comprehensive income:........................
Net income................................. -- -- 2,396 -- -- 2,396
Other comprehensive income, net of taxes of
$179..................................... -- --
Unrealized gains on securities available
for sale, net of reclassification
adjustment............................. -- -- -- 345 -- 345
-------
Comprehensive income......................... 2,741
Dividends declared by pooled subsidiaries.... -- -- (499) -- -- (499)
Issuance of 1,778,215 shares of common stock,
net of direct costs........................ 2 8,429 -- -- -- 8,431
Acquisition of building through issuance of
460,500 shares of common stock............. -- 2,205 -- -- -- 2,205
Purchase of 1,990,908 shares of treasury
stock...................................... -- -- -- -- (9,496) (9,496)
Reissuance of treasury stock................. -- -- -- -- 9,459 9,459
Retirement of 14,908 shares of treasury
stock...................................... -- -- (37) -- 37 --
--- ------- ------- ------- ------- -------
BALANCE AT DECEMBER 31, 1997................. 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
=== ======= ======= ======= ======= =======
</TABLE>

See notes to consolidated financial statements.

F-10
<PAGE> 103

THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Banc Corporation ("Corporation"), through its three 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 13 for
more disclosure regarding the Corporation's business combinations.

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."

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.

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.

F-11
<PAGE> 104
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 risk factors.

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.

F-12
<PAGE> 105
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, as
determined based on the undiscounted cash flows of the entity acquired over the
remaining amortization period, the carrying value of the goodwill will be
reduced by the estimated shortfall of such cash flows. At December 31, 1999 and
1998 goodwill, net of accumulated amortization totaled $7,219,000 and $731,000,
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. Gain
or loss from the sale of other real estate is included in other expense. Total
other real estate was $2,185,000 and $546,000 at December 31, 1999 and 1998,
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
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.

F-13
<PAGE> 106
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 8).

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.

The Corporation plans to adopt the provisions of this statement, as
amended, for its quarterly and annual reporting beginning January 1, 2001, the
statement's effective date. The impact of adopting the provisions of this
statement on the Corporation's financial position, results of operations and
cash flow subsequent to the

F-14
<PAGE> 107
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
effective date is not currently estimable and will depend on the financial
position of the Corporation and the nature and purpose of the derivative
instruments in use at that time.

2. INVESTMENT SECURITIES

The amounts at which investment securities are carried and their
approximate fair values at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
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
======= ==== ====== =======
</TABLE>

The amounts at which investment securities are carried and their
approximate fair values at December 31, 1998 are as follows:

<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
Equity securities.............................. $ 170 $ -- $ 25 $ 145
U.S. Treasury and agency securities............ 20,965 85 40 21,010
State, county and municipal securities......... 18,345 452 18 18,779
Mortgage-backed securities..................... 48,894 173 491 48,576
Corporate debt................................. 1,712 25 -- 1,737
Other securities............................... 1,213 22 -- 1,235
------- ---- ---- -------
Total................................ $91,299 $757 $574 $91,482
======= ==== ==== =======
INVESTMENT SECURITIES HELD TO MATURITY:
State, county and municipal securities......... $ 4,124 $ 97 $ -- $ 4,221
Mortgage-backed securities..................... 2,602 47 95 2,554
------- ---- ---- -------
Total................................ $ 6,726 $144 $ 95 $ 6,775
======= ==== ==== =======
</TABLE>

F-15
<PAGE> 108
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. INVESTMENT SECURITIES (CONTINUED)
Securities with an amortized cost of $36,450,000 and $44,684,000 at
December 31, 1999 and 1998, 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, 1999, 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.

<TABLE>
<CAPTION>
SECURITIES HELD SECURITIES AVAILABLE
TO MATURITY FOR SALE
---------------------- ----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------- ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less................................ $ 715 $ 718 $ 505 $ 505
Due after one year through five years.................. 2,379 2,391 7,300 7,049
Due after five years through ten years................. 489 491 6,330 5,981
Due after ten years.................................... 128 128 12,221 11,212
Mortgage-backed securities............................. 1,766 1,683 42,292 40,355
Equity securities...................................... -- -- 370 337
------ ------ ------- -------
$5,477 $5,411 $69,018 $65,439
====== ====== ======= =======
</TABLE>

Gross realized gains on sales of investment securities available for sale
in 1999, 1998 and 1997 were $170,000, $391,000 and $249,000, respectively, and
gross realized losses for the same periods were $87,000, $112,000 and $29,000,
respectively.

During 1998 the Corporation transferred securities with a carrying value of
$34,790,000 and fair value of $34,988,000 from the held to maturity category to
available for sale. The unrealized gain of $198,000 at the date of transfer has
been recognized in other comprehensive income net of deferred income taxes of
$79,000. The securities were transferred in order to provide liquidity to the
Corporation to meet the increasing loan demand being generated from its
Birmingham branch which opened on July 1, 1998.

The components of other comprehensive income for the years ended December
31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
PRE-TAX INCOME TAX NET OF INCOME
AMOUNT (BENEFIT) EXPENSE TAX
------- ----------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
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)
======= ======= =======
</TABLE>

F-16
<PAGE> 109
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. LOANS

At December 31, 1999 and 1998 the composition of the loan portfolio was as
follows:

<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Commercial, industrial and agricultural..................... $207,620 $158,855
Real estate -- construction................................. 59,496 36,121
Real estate -- mortgage..................................... 282,717 152,732
Consumer.................................................... 74,769 75,796
All other loans............................................. 8,802 9,671
-------- --------
Total loans....................................... $633,404 $433,175
======== ========
</TABLE>

At December 31, 1999 and 1998 the Corporation's recorded investment in
loans considered to be impaired under SFAS No. 114 was $12,111,000 and $894,000,
respectively. There was approximately $3,000,000 and $134,000 at December 31,
1999 and 1998, respectively, in the allowance for loan losses specifically
allocated to impaired loans. The average recorded investment in impaired loans
during 1999, 1998 and 1997 was approximately $6,484,000, $598,000 and $258,000,
respectively. Interest income recognized on loans considered impaired totaled
approximately $431,000 for the year ended December 31, 1999. No material amount
of interest income was recognized on impaired loans for the years ended December
31, 1998 and 1997.

The Corporation has no commitments to loan additional funds to the
borrowers whose loans are considered impaired.

4. ALLOWANCE FOR LOAN LOSSES

A summary of the allowance for loan losses for the years ended December 31,
1999, 1998 and 1997 follows:

<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year.............................. $ 6,466 $ 3,741 $ 2,522
Allowance of acquired bank.............................. 3,591 368 --
Provision for loan losses............................... 2,850 4,657 2,685
Loan charge-offs........................................ (5,792) (2,906) (1,759)
Recoveries.............................................. 950 606 293
------- ------- -------
Balance at end of year.................................... $ 8,065 $ 6,466 $ 3,741
======= ======= =======
</TABLE>

F-17
<PAGE> 110
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. PREMISES AND EQUIPMENT

Components of premises and equipment at December 31, 1999 and 1998 are as
follows:

<TABLE>
<CAPTION>
1999 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land........................................................ $ 5,096 $ 3,922
Premises.................................................... 26,335 21,005
Furniture and equipment..................................... 12,303 10,529
------- -------
43,734 36,456
Less accumulated depreciation and amortization.............. (7,822) (6,417)
------- -------
Net book value of premises and equipment in service......... 35,912 29,039
Real estate under renovation or held for sale............... 1,822 627
------- -------
Total............................................. $37,734 $29,666
======= =======
</TABLE>

Depreciation expense for the years ended December 31, 1999, 1998 and 1997
was $2,194,000, $1,786,000 and $1,121,000, respectively.

Emerald Coast Bank leases all of its 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 (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-----------------------
<S> <C>
2000........................................................ $ 460
2001........................................................ 448
2002........................................................ 433
2003........................................................ 244
------
Total minimum lease payments...................... $1,585
======
</TABLE>

Rental expense relating to operating leases amounted to approximately
$734,000, $299,000 and $135,000 for the years ended December 31, 1999, 1998 and
1997, respectively.

6. DEPOSITS

The following schedule details interest expense on deposits:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998 1997
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest-bearing demand................................... $ 5,129 $ 3,529 $ 2,302
Savings................................................... 938 889 937
Time deposits $100,000 and over........................... 7,275 4,721 3,889
Other time................................................ 10,759 10,477 8,536
------- ------- -------
Total........................................... $24,101 $19,616 $15,664
======= ======= =======
</TABLE>

F-18
<PAGE> 111
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. DEPOSITS (CONTINUED)
At December 31, 1999, the scheduled maturities of time deposits are as
follows (in thousands):

<TABLE>
<S> <C>
2000........................................................ $332,315
2001........................................................ 36,661
2002........................................................ 11,444
2003........................................................ 15,269
2004 and thereafter......................................... 9,053
--------
$404,742
========
</TABLE>

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, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
1999 1998
---------------------- ----------------------
WEIGHTED WEIGHTED
YEAR AVERAGE RATE BALANCE AVERAGE RATE BALANCE
---- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
2000......................................... 6.07% $ 1,000 --% $ --
2003......................................... 5.05 17,660 5.05 17,660
2004......................................... 5.21 25,000 -- --
2008......................................... 5.52 2,500 5.24 5,500
2009......................................... 5.18 16,340 -- --
---- ------- ---- -------
5.20% $62,500 5.09% $23,160
==== ======= ==== =======
</TABLE>

The above schedule is by contractual maturity. Certain advances have call
dates as follows: 2000, $16,340,000; 2002, $25,000,000; 2003, $2,500,000 and
2004, $2,000,000.

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 $111,000,000 at December 31, 1999.

As of December 31, 1999 the Corporation has borrowed $7,104,000 under a
$10,000,000 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.

The Corporation had federal funds purchased outstanding of $3,150,000 at
December 31, 1998. There were no outstanding federal funds purchased at December
31, 1999.

8. STOCK OPTION PLAN

The Corporation has established a stock option plan for directors and
certain key employees that provides for the granting of incentive and
nonqualified options to purchase up to 1,000,000 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.

F-19
<PAGE> 112
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. STOCK OPTION PLAN (CONTINUED)
In addition, the Corporation assumed the Commerce Bank of Alabama Incentive
Stock Compensation 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.

For purposes of the following disclosures, the number and exercise prices
for options granted by entities which merged with the Corporation during 1998
have been converted to equivalent amounts for the Corporation based on the
exchange ratios in the mergers.

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------
1999 1998 1997
--------------------- -------------------- --------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE NUMBER PRICE
--------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Under option, beginning of year.... 620,806 $ 9.52 202,589 $ 4.70 186,575 $4.64
Granted.......................... 239,000 10.64 466,677 10.87 16,014 5.40
Exercised........................ (134,137) 4.74 (48,460) 3.65 -- --
Forfeited........................ (10,000) 11.00 -- -- -- --
--------- -------- --------
Under option, end of year.......... 715,669 10.68 620,806 9.52 202,589 4.71
========= ======== ========
Exercisable at end of year......... 256,569 255,606 196,751
========= ======== ========
Weighted-average fair value per
option of options granted during
the year......................... $ 5.40 $ 5.49 $ 1.22
========= ======== ========
</TABLE>

A further summary about options outstanding at December 31, 1999 is as
follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
---------------------------------------------------------------------------------------------
WEIGHTED-
AVERAGE
NUMBER CONTRACTUAL NUMBER
EXERCISE PRICE OUTSTANDING LIFE IN YEARS EXERCISABLE
-------------- ----------- ------------- -----------
<S> <C> <C> <C>
$ 6.24.......................................... 30,169 6.50 30,169
10.50.......................................... 174,000 9.54 34,800
11.00.......................................... 511,500 8.88 191,600
------- -------
715,669 256,569
======= =======
</TABLE>

F-20
<PAGE> 113
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. 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, 1999,
1998 and 1997. 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):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998 1997
------ ----- ------
<S> <C> <C> <C>
Net Income (Loss):
As reported................................................. $2,920 $ 285 $2,396
Pro forma................................................... 2,379 (119) 2,384
Basic Net Income (Loss) Per Share:
As reported................................................. $ .20 $ .02 $ .23
Pro forma................................................... .17 (.01) .23
Diluted Net Income (Loss) Per Share:
As reported................................................. .20 .02 .22
Pro forma................................................... .17 (.01) .22
</TABLE>

The fair value of the options granted was based upon the Black-Scholes
pricing model. The Corporation used the following weighted-average assumptions
for 1999 and 1998, respectively: a risk free interest rate of 6.12% and 6.44%, a
volatility factor of .39% and .42%, a weighted average expected life of options
(in years) of 6.5 and 6.0, and a dividend yield of 0% for both years.

9. RETIREMENT PLANS

Warrior Savings Bank ("Warrior"), which merged with the Corporation on
September 24, 1998, sponsors a defined benefit plan ("Plan") that provides
retirement, disability and death benefits. All employees of Warrior over age 21
are eligible to participate in the plan after the completion of one year of
service. The Corporation contributes 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 is in the process of being terminated.

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, $199,000 and $191,000 in 1999, 1998 and 1997, respectively.

The Corporation has nonqualified retirement plans for the benefit of
certain executive officers and directors. The present value of these benefits is
accrued on a monthly basis. Payments under these plans are scheduled to begin in
2003 for some participants who will reach retirement age. In connection with the
plans, the Corporation has purchased single premium life insurance policies with
cash surrender values of approximately $11,500,000 at December 31, 1999. No
significant amount of compensation expense was incurred for the years ended
December 31, 1999 and 1998.

F-21
<PAGE> 114
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES

The components of the income tax expense (benefit) are as follows (in
thousands):

<TABLE>
<CAPTION>
1999 1998 1997
---- ------- ------
<S> <C> <C> <C>
CURRENT:
Federal..................................................... $320 $ 706 $ 985
State....................................................... 154 92 185
---- ------- ------
Total current expense............................. 474 798 1,170
Deferred tax expense (benefit).............................. 46 (1,522) (96)
---- ------- ------
Total income tax expense (benefit)................ $520 $ (724) $1,074
==== ======= ======
</TABLE>

Significant components of the Corporation's deferred tax assets and
liabilities as of December 31, 1999 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
DEFERRED TAX ASSETS:
Rehabilitation tax credit................................... $2,468 $1,737
Provision for loan losses................................... 1,664 2,094
NOL carryover............................................... -- 235
Alternative minimum tax credit carryover.................... 143 47
Unrealized loss on securities............................... 1,372 --
Other....................................................... 171 129
------ ------
Total deferred tax assets before valuation
allowance....................................... 5,818 4,242
Valuation allowance......................................... -- (200)
------ ------
Total deferred tax assets after valuation
allowance....................................... 5,818 4,042
DEFERRED TAX LIABILITIES:
Difference in book and tax basis of premises and
equipment................................................. 1,928 1,445
Depreciation................................................ 602 320
Unrealized gain on securities............................... -- 86
Other....................................................... 93 408
------ ------
Total deferred tax liabilities.................... 2,623 2,259
------ ------
Net deferred tax asset............................ $3,195 $1,783
====== ======
</TABLE>

The valuation allowance for net deferred tax assets was eliminated in 1999
as a result of the Corporation's reassessment of its ability to fully utilize
its rehabilitation tax credit.

F-22
<PAGE> 115
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. 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):

<TABLE>
<CAPTION>
1999 1998 1997
------ ------- ------
<S> <C> <C> <C>
Expected tax (benefit) at 34% of income before taxes........ $1,170 $ (146) $1,180
Add (deduct):
Rehabilitation tax credit................................. (731) (1,737) --
State income taxes, net of federal tax benefit............ 102 20 97
Effect of interest income exempt from Federal income
taxes.................................................. (346) (338) (268)
Nondeductible merger costs................................ 253 447 --
Basis reduction........................................... 251 590 --
Valuation allowance....................................... (200) 200 --
Other items -- net........................................ 21 240 65
------ ------- ------
Income tax expense (benefit)................................ $ 520 $ (724) $1,074
====== ======= ======
</TABLE>

The Corporation has generated a rehabilitation tax credit of approximately
$2,468,000 during 1998 and 1999 which can be carried forward and utilized
through 2019 and 2020. 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, 1999. 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 $32,000, $111,000 and $81,000 on
securities gains for the years ended December 31, 1999, 1998 and 1997,
respectively, is included in income taxes.

11. 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, 1999 and 1998 were $25,975,000 and $21,180,000,
respectively.

Activity during the year ended December 31, 1999 is summarized as follows
(in thousands):

<TABLE>
<CAPTION>
BALANCE BALANCE
DECEMBER 31, OTHER DECEMBER 31,
1998 ADVANCES REPAYMENTS CHANGES 1999
------------ -------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C>
$21,180 $27,239 $(14,130) $(8,314) $25,975
======= ======= ======== ======= =======
</TABLE>

At December 31, 1999, the deposits of such related parties in the
subsidiary banks amounted to approximately $4,254,000.

During 1997 the Corporation, through its predecessor Warrior, purchased a
twenty-one story building in downtown Birmingham from Taylor Acquisition
Corporation, a corporation owned by James A. Taylor, Sr., Chairman and Chief
Executive Officer of the Corporation and certain family members. The building
was purchased through the issuance of 1,535 shares of Warrior common stock
(equivalent to 460,500 shares of the Corporation) and, in addition, the
Corporation assumed $1,513,000 in outstanding debt on the property. The building
and related equipment have been capitalized at the appraised fair value of
$3,718,000.

F-23
<PAGE> 116
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. RELATED PARTY TRANSACTIONS (CONTINUED)
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, 1999, the deferred gain amounted to
approximately $62,000. Terms of the leases are described in Note 5. Rental
expense under these operating leases amounted to approximately $459,000 and
$163,000 in 1999 and 1998, respectively.

12. 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):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
Commitments to extend credit................................ $68,693 $50,319
Standby letters of credit................................... 4,121 2,465
</TABLE>

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.

13. MERGERS AND ACQUISITIONS AND MERGER RELATED COSTS

The Corporation has completed the following business combinations during
1999 and 1998:

<TABLE>
<CAPTION>
ACCOUNTING
DATE INSTITUTION TOTAL ASSETS CONSIDERATION TREATMENT
---- ----------- ------------- ------------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
February 12,
1999............ Emerald Coast Bancshares, Inc. $ 92 1,379,978 shares of Pooling
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, Inc. 35 $1,584,000 cash Purchase
September 24,
1998............ Warrior Capital Corporation 84 5,448,000 shares of Pooling
common stock
October 16,
1998............ Commercial Bancshares of 42 $7,300,000 cash Purchase
Roanoke, Inc.
</TABLE>

F-24
<PAGE> 117
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. MERGERS AND ACQUISITIONS AND MERGER RELATED COSTS (CONTINUED)

<TABLE>
<CAPTION>
ACCOUNTING
DATE INSTITUTION TOTAL ASSETS CONSIDERATION TREATMENT
---- ----------- ------------- ------------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
October 30,
1998............ City National Corporation 84 2,026,579 shares of Pooling
common stock
October 30,
1998............ First Citizens Bancorp, Inc. 35 652,859 shares of Pooling
common stock
November 6, 1998.. Commerce Bank of Alabama 105 1,547,198 shares of Pooling
common stock
</TABLE>

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):

<TABLE>
<CAPTION>
NET INTEREST
1999 INCOME NET INCOME
---- ------------ ----------
<S> <C> <C>
Emerald..................................................... $ 474 $ 58
C&L......................................................... 1,162 319
Blountstown................................................. 989 166
</TABLE>

The following table presents net interest income, net income and basic net
income per common share of the combining entities on a historical and combined
basis in the years prior to the 1999 mergers (amounts in thousands, except per
share data):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
NET INTEREST INCOME:
Corporation................................................. $14,942 $12,189
Emerald..................................................... 3,149 1,563
C&L......................................................... 2,154 2,030
Blountstown................................................. 2,021 2,130
------- -------
Combined.................................................... $22,266 $17,912
======= =======
NET (LOSS) INCOME:
Corporation................................................. $ (439) $ 2,074
Emerald..................................................... 72 (396)
C&L......................................................... 576 699
Blountstown................................................. 76 19
------- -------
Combined.................................................... $ 285 $ 2,396
======= =======
BASIC NET (LOSS) INCOME PER EQUIVALENT SHARE OF CORPORATION:
Corporation................................................. $ (.04) $ .29
Emerald..................................................... .06 (.31)
C&L......................................................... .46 .55
Blountstown................................................. .09 .02
Combined.................................................... .02 .23
</TABLE>

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.

F-25
<PAGE> 118
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. MERGERS AND ACQUISITIONS AND MERGER RELATED COSTS (CONTINUED)
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 and Roanoke 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.

<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
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)
======= =======
</TABLE>

The following is a summary of pre-tax nonrecurring merger related costs
incurred by the Corporation during 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
---- ------
<S> <C> <C>
Professional and other fees................................. $744 $1,314
Obsolete equipment write-off................................ -- 152
---- ------
$744 $1,466
==== ======
</TABLE>

F-26
<PAGE> 119
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. REGULATORY RESTRICTIONS

A source of funds available to the Corporation is the payment of dividends
by its subsidiaries. Banking regulations limit the amount of dividends that may
be paid without prior approval of the subsidiaries' regulatory agency.
Approximately $3,622,000 in retained earnings are available to be paid as
dividends by the subsidiaries at December 31, 1999.

The Corporation and its subsidiaries 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 subsidiaries must meet specific capital
guidelines that involve quantitative measures of the Corporation's and its
subsidiaries' assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices. The Corporation's and its
subsidiaries' 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 subsidiaries 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). In February 1999, Emerald Coast Bank
changed its charter from a state bank to a Federal Thrift. The minimum
requirements for capital adequacy purposes for a thrift are also included in the
following table. Management believes, as of December 31, 1999 and 1998 that the
Corporation and its subsidiaries meet all capital adequacy requirements to which
it is subject.

As of December 31, 1999 and 1998, the most recent notification from the
FDIC categorized the subsidiaries as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized
the Corporation and its subsidiaries 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:

<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION
--------------- --------------- -----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
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................................ 53,074 10.61 40,036 8.00 50,046 10.00
Emerald Coast Bank...................... 8,943 10.04 7,128 8.00 8,910 10.00
C&L Bank................................ 11,746 14.08 6,673 8.00 8,341 10.00
Tier I Capital (to Risk Weighted Assets):
Corporation............................. 63,224 9.41 26,873 4.00 40,309 6.00
The Bank................................ 47,086 9.41 20,018 4.00 30,027 6.00
Emerald Coast Bank...................... 8,474 9.51 N/A N/A 4,455 5.00
C&L Bank................................ 10,710 12.84 3,336 4.00 5,005 6.00
Tier I Capital (to Average Assets):
Corporation............................. 63,224 7.74 32,671 4.00 40,839 5.00
The Bank................................ 47,086 8.10 23,245 4.00 29,056 5.00
C&L Bank................................ 10,710 9.21 4,653 4.00 5,817 5.00
</TABLE>

F-27
<PAGE> 120
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. REGULATORY RESTRICTIONS (CONTINUED)

<TABLE>
<CAPTION>
TO BE WELL
FOR CAPITAL CAPITALIZED UNDER
ADEQUACY PROMPT CORRECTIVE
ACTUAL PURPOSES ACTION
--------------- --------------- -----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1999 (CONTINUED):
Core Capital (to Adjusted Tangible
Assets):
Emerald Coast Bank................... $ 8,474 7.07% $ 4,797 4.00% $ 5,996 5.00%
Tangible Capital (to Tangible Assets):
Emerald Coast Bank................... 8,474 7.07 1,799 1.50 N/A N/A
AS OF DECEMBER 31, 1998:
Total Capital (to Risk Weighted Assets):
Corporation.......................... $70,559 15.05% $37,502 8.00% $46,878 10.00%
The Bank............................. 38,485 11.85 25,971 8.00 32,464 10.00
Emerald Coast Bank................... 6,283 9.50 5,293 8.00 6,618 10.00
C&L Bank............................. 9,636 15.47 4,982 8.00 6,228 10.00
Tier I Capital (to Risk Weighted
Assets): Corporation................. 65,236 13.92 18,751 4.00 28,127 6.00
The Bank............................. 34,626 10.67 12,985 4.00 19,478 6.00
Emerald Coast Bank................... 5,609 8.48 2,646 4.00 3,969 6.00
C&L Bank............................. 8,843 14.20 2,491 4.00 3,737 6.00
Tier I Capital (to Average Assets):
Corporation.......................... 65,236 10.59 24,650 4.00 30,813 5.00
The Bank............................. 34,626 8.32 16,646 4.00 20,808 5.00
Emerald Coast Bank................... 5,609 6.92 3,244 4.00 4,055 5.00
C&L Bank............................. 8,843 8.50 4,162 4.00 5,203 5.00
</TABLE>

15. 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 due from banks, federal
funds sold and short-term commercial paper, approximate their fair value.

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.

F-28
<PAGE> 121
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
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.

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.

The estimated fair values of the Corporation's financial instruments are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Cash and due from banks....................... $ 31,825 $ 31,825 $ 31,307 $ 31,307
Interest bearing deposits in other banks...... 1,862 1,862 1,048 1,048
Federal funds sold............................ 5,843 5,843 25,045 25,045
Short-term commercial paper................... 14,484 14,484 -- --
Securities available for sale................. 65,439 65,439 91,482 91,482
Securities held to maturity................... 5,477 5,411 6,726 6,775
Mortgage loans held for sale.................. 2,127 2,127 4,899 4,899
Net loans..................................... 624,712 626,842 425,465 433,483
Stock in FHLB and Federal Reserve Bank........ 3,461 3,461 1,760 1,760
Accrued interest receivable................... 6,286 6,286 4,812 4,812
FINANCIAL LIABILITIES:
Deposits...................................... 682,517 682,882 531,070 534,201
Advances from FHLB............................ 62,500 59,959 23,160 23,166
Other borrowed funds.......................... 295 295 3,700 3,700
Note payable.................................. 7,104 7,104 -- --
</TABLE>

F-29
<PAGE> 122
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. OTHER NONINTEREST EXPENSE

Other noninterest expense consisted of the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Professional fees........................................... $2,196 $1,159 $ 609
Directors fees.............................................. 789 760 486
Insurance and assessments................................... 478 354 256
Postage, stationery and supplies............................ 1,161 889 595
Advertising................................................. 372 420 334
Foreclosure losses.......................................... 907 -- --
Other operating expense..................................... 3,372 3,020 2,132
------ ------ ------
Total............................................. $9,275 $6,602 $4,412
====== ====== ======
</TABLE>

17. 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 12, respectively.

The Corporation maintains cash balances and federal funds sold at several
financial institutions in Alabama and Florida. 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 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.

18. 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):

<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
NUMERATOR:
For basic and diluted, net income......................... $ 2,920 $ 285 $ 2,396
======= ======= =======
DENOMINATOR:
For basic, weighted average common shares outstanding..... 14,335 13,115 10,553
Effect of dilutive stock options.......................... 27 95 119
------- ------- -------
Average common shares outstanding, assuming dilution...... 14,362 13,210 10,672
======= ======= =======
Basic net income per common share......................... $ .20 $ .02 $ .23
======= ======= =======
Diluted net income per common share....................... $ .20 $ .02 $ .22
======= ======= =======
</TABLE>

F-30
<PAGE> 123
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

19. PARENT COMPANY

The condensed financial information for The Banc Corporation (parent
company only) is presented as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
STATEMENTS OF FINANCIAL CONDITION
Assets:
Cash...................................................... $ 278 $ 2,542
Investment in subsidiaries................................ 71,621 49,420
Loans..................................................... 200 --
Intangibles, net.......................................... 276 444
Premises and equipment -- net............................. 3,637 15,012
Other assets.............................................. 867 703
------- -------
$76,879 $68,121
======= =======
Liabilities:
Accounts payable and deferred taxes....................... $ 554 $ 965
Dividends payable......................................... -- 24
Note payable.............................................. 7,104 --
Accrued expenses and other liabilities.................... 373 1,165
Stockholders' equity........................................ 68,848 65,967
------- -------
$76,879 $68,121
======= =======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998 1997
------- -------- ------
<S> <C> <C> <C>
STATEMENTS OF INCOME
Income:
Dividends from subsidiaries............................. $ -- $ 2,429 $ 328
Interest................................................ 133 199 67
Other income............................................ 837 515 95
------- -------- ------
970 3,143 490
Expense:
Directors' fees......................................... 140 194 136
Salaries and benefits................................... 965 529 94
Occupancy expense....................................... 439 250 --
Interest expense........................................ 210 81 --
Other................................................... 1,302 1,124 70
------- -------- ------
3,056 2,178 300
------- -------- ------
(Loss) income before income taxes and equity in
undistributed earnings of subsidiaries.................. (2,086) 965 190
Income tax benefit........................................ 1,100 1,321 48
------- -------- ------
(Loss) income before equity in undistributed earnings of
subsidiaries............................................ (986) 2,286 238
Equity in undistributed earnings (loss) of subsidiaries... 3,906 (2,001) 2,158
------- -------- ------
Net income........................................... $ 2,920 $ 285 $2,396
======= ======== ======
</TABLE>

F-31
<PAGE> 124
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

19. PARENT COMPANY (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998 1997
------- -------- ------
<S> <C> <C> <C>
STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 2,920 $ 285 $2,396
Adjustments to reconcile net income to net cash (used)
provided by operating activities:
Amortization and depreciation expense................... 275 171 25
Equity in undistributed (earnings) loss of
subsidiaries......................................... (3,906) 2,001 (2,158)
Gain on sale of property................................ (342) -- --
(Decrease) increase in other liabilities................ (1,587) 786 62
Increase in other assets................................ (21) (1,181) (202)
------- -------- ------
Net cash (used) provided by operating activities.......... (2,661) 2,062 123
NET CASH USED IN INVESTING ACTIVITIES
Purchases of premises and equipment....................... (3,810) (9,102) (141)
Proceeds from sale of property............................ 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 30
Capital contribution to subsidiary........................ (3,995) (5,000) --
------- -------- ------
Net cash used in investing activities..................... (8,877) (18,417) (111)
CASH USED IN FINANCING ACTIVITIES
Dividends paid by pooled subsidiaries..................... -- (170) (438)
Proceeds from issuance of common stock.................... 2,170 12,281 17,878
Repurchase of common stock................................ -- -- (9,496)
Increase in notes payable................................. 7,104 -- --
Payment on assumed debt................................... -- -- (1,513)
------- -------- ------
Net cash provided by financing activities................. 9,274 12,111 6,431
------- -------- ------
Net (decrease) increase in cash........................... (2,264) (4,244) 6,443
Cash at beginning of year................................. 2,542 6,786 343
------- -------- ------
Cash at end of year....................................... $ 278 $ 2,542 $6,786
======= ======== ======
</TABLE>

F-32
<PAGE> 125
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

A summary of the unaudited results of operations of the Corporation for
each quarter of 1999 and 1998 follows (in thousands, except per share data):

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>
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 (losses) gains................................. (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
1998
Total interest income..................................... $ 9,407 $ 9,819 $11,168 $12,078
Total interest expense.................................... 4,545 4,578 5,231 5,852
Net interest income....................................... 4,862 5,241 5,937 6,226
Provision for loan losses................................. 440 853 2,275 1,089
Securities gains (losses)................................. 75 (6) 148 62
Merger related costs...................................... -- -- -- 1,466
Income (loss) before income taxes......................... 1,423 929 (1,814) (977)
Net income (loss)......................................... 1,028 818 (964) (597)
Basic and diluted net income (loss) per share............. .08 .06 (.07) (.05)
</TABLE>

F-33
<PAGE> 126
THE BANC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

21. 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.

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.

<TABLE>
<CAPTION>
ALABAMA FLORIDA
REGION REGION COMBINED
-------- -------- --------
<S> <C> <C> <C>
1999
Net interest income......................................... $ 19,321 $ 9,487 $ 28,808
Provision for loan losses (reduction in allowance).......... 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.................................................. 165 2,755 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
1997
Net interest income......................................... $ 12,189 $ 5,723 $ 17,912
Provision for loan losses................................... 1,516 1,169 2,685
Noninterest income.......................................... 2,205 814 3,019
Noninterest expense......................................... 9,913 4,863 14,776
Income tax expense.......................................... 891 183 1,074
Net income.................................................. 2,074 322 2,396
Total assets................................................ 307,713 154,243 461,956
</TABLE>

F-34
<PAGE> 127

THE BANC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
MARCH 31,
2000
----------------------
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<S> <C>
ASSETS
Cash and due from banks..................................... $ 33,557
Interest bearing deposits in other banks.................... 2,486
Federal funds sold.......................................... 3,155
Short-term commercial paper................................. --
Investment securities available for sale.................... 65,050
Investment securities held-to-maturity...................... 5,445
Mortgage loans held for sale................................ 1,464
Loans, net of unearned income............................... 666,476
Less: Allowance for loan losses............................. (8,734)
--------
Net loans............................................. 657,742
--------
Premises and equipment, net................................. 39,560
Accrued interest receivable................................. 6,990
Stock in FHLB and Federal Reserve Bank...................... 4,961
Other assets................................................ 27,952
--------
Total assets...................................... $848,362
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing....................................... $ 94,496
Interest-bearing.......................................... 587,321
--------
Total deposits.................................... 681,817
Advances from FHLB.......................................... 77,840
Other borrowed funds........................................ 5,333
Note payable................................................ 8,934
Accrued expenses and other liabilities...................... 4,739
--------
Total liabilities................................. 778,663
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; 14,385,021 shares issued and
outstanding............................................ 14
Surplus................................................... 47,756
Retained Earnings......................................... 24,184
Accumulated other comprehensive loss...................... (2,255)
--------
Total stockholders' equity........................ 69,699
--------
Total liabilities and stockholders' equity........ $848,362
========
</TABLE>

See notes to condensed consolidated financial statements.

F-35
<PAGE> 128

THE BANC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
2000 1999
--------- ---------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans.................................. $15,201 $10,385
Interest on investment securities:
Taxable................................................... 954 1,006
Exempt from federal income tax............................ 191 250
Interest on federal funds sold.............................. 202 219
Interest and dividends on other investments................. 101 55
------- -------
Total interest income............................. 16,649 11,915
INTEREST EXPENSE
Interest on deposits........................................ 7,256 5,324
Interest on advance from FHLB and other borrowed funds...... 1,028 285
------- -------
Total interest expense............................ 8,284 5,609
------- -------
Net interest income............................... 8,365 6,306
Provision for loan losses................................... 888 244
------- -------
Net interest income after provision for loan
losses........................................... 7,477 6,062
Noninterest income.......................................... 1,647 1,433
Loss on sale of securities.................................. -- (20)
------- -------
Total noninterest income.......................... 1,647 1,413
------- -------
NONINTEREST EXPENSES
Salaries and employee benefits.............................. 3,796 3,223
Occupancy, furniture and equipment expense.................. 1,440 1,184
Merger related expenses..................................... -- 69
Other operating expenses.................................... 2,615 2,019
------- -------
Total noninterest expenses........................ 7,851 6,495
------- -------
Income before income taxes........................ 1,273 980
INCOME TAX EXPENSE.......................................... 371 168
------- -------
Net Income........................................ $ 902 $ 812
======= =======
BASIC AND DILUTED NET INCOME PER SHARE...................... $ 0.06 $ 0.06
======= =======
AVERAGE COMMON SHARES OUTSTANDING........................... 14,385 14,253
AVERAGE COMMON SHARES OUTSTANDING, ASSUMING DILUTION........ 14,388 14,301
</TABLE>

See notes to condensed consolidated financial statements.

F-36
<PAGE> 129

THE BANC CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES................... $ 2,033 $ 566
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest bearing deposits in other
banks.................................................. (624) (527)
Net decrease in federal funds sold........................ 2,688 12,854
Net decrease in short-term investments.................... 14,499 --
Proceeds from sales of securities available for sale...... -- 10,393
Proceeds from maturities of investment securities
available for sale..................................... 1,523 11,248
Purchases of investment securities available for sale..... (1,483) (6,013)
Proceeds from maturities of investment securities held to
maturity............................................... 30 121
Net increase in loans..................................... (33,679) (38,589)
Purchases of premises and equipment....................... (3,263) (2,290)
Other investing activities................................ (1,500) (26)
-------- --------
Net cash used by investing activities............. (21,809) (12,829)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposit accounts............... (700) 12,714
Net increase (decrease) in FHLB advance and other
borrowings............................................. 20,378 (1,283)
Proceeds from note payable................................ 1,830 --
Proceeds from issuance of common stock.................... -- 1,941
-------- --------
Net cash provided by financing activities......... 21,508 13,372
-------- --------
Net increase in cash and due from banks..................... 1,732 1,109
Cash and due from banks at beginning of period.............. 31,825 31,307
-------- --------
CASH AND DUE FROM BANKS AT END OF PERIOD.................... $ 33,557 $ 32,416
======== ========
</TABLE>

See notes to condensed consolidated financial statements.

F-37
<PAGE> 130

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions for interim financial
information, and, therefore, 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, 1999. 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 three-month period ended March 31, 2000, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.

Prior period financial information has been restated for business
combinations with C&L Banking Corporation ("C&L") and C&L Bank of Blountstown
("Blountstown"), which were consummated in the second quarter of 1999. These
business combinations were accounted for as poolings of interests. Additionally,
Blountstown was immediately merged into C&L's subsidiary C&L Bank of Bristol.

NOTE 2. BUSINESS COMBINATIONS

On June 30, 1999, the Corporation issued 1,289,454 shares of common stock
in exchange for all of the outstanding common stock of C&L, headquartered in
Bristol, Florida. This transaction, accounted for as a pooling of interests,
added approximately $49 million in assets.

On June 30, 1999, the Corporation issued 838,902 shares of common stock in
exchange for all of the outstanding common stock of Blountstown, headquartered
in Blountstown, Florida. This transaction, accounted for as a pooling of
interests, added approximately $56 million in assets.

As explained in Note 1, the Corporation restated prior period financial
information for the C&L and Blountstown transactions, which were closed in the
second quarter of 1999.

The following table presents financial information as reported by the
Corporation, C&L, Blountstown and on a combined basis for the three months ended
March 31, 1999.

<TABLE>
<S> <C>
Net interest income:
Corporation............................................... $5,265
C&L....................................................... 556
Blountstown............................................... 485
------
Combined.......................................... $6,306
======
Net income:
Corporation............................................... $ 504
C&L....................................................... 181
Blountstown............................................... 127
------
Combined.......................................... $ 812
======
Net income per equivalent share of Corporation:
Corporation............................................... $ .04
C&L....................................................... .14
Blountstown............................................... .15
Combined.......................................... .06
</TABLE>

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
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. The

F-38
<PAGE> 131
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. BUSINESS COMBINATIONS (CONTINUED)
Corporation's condensed consolidated financial statements include the results of
operations of BankersTrust only for the three months ended March 31, 2000. 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, 1999. 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 period presented, or of results that may
occur in the future.

<TABLE>
<CAPTION>
THREE
MONTHS ENDED
MARCH 31, 1999
--------------
<S> <C>
Interest income............................................. $12,651
Interest expense............................................ 6,040
-------
Net interest income............................... 6,611
Provision for loan losses................................... 551
Noninterest income.......................................... 1,532
Noninterest expense....................................... 7,034
-------
Income before income taxes........................ 558
Income tax expense.......................................... 137
-------
Net income.................................................. $ 421
=======
Basic and diluted net income per share...................... $ 0.03
=======
</TABLE>

NOTE 3. 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 region 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.

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, 1999. All costs have been allocated to the reportable segments.
Therefore, combined amounts agree to the consolidated totals.

F-39
<PAGE> 132
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. SEGMENT REPORTING (CONTINUED)

<TABLE>
<CAPTION>
ALABAMA FLORIDA
REGION REGION COMBINED
-------- -------- --------
<S> <C> <C> <C>
Three months ended March 31, 2000:
Net interest income....................................... $ 5,651 $ 2,714 $ 8,365
Provision for loan losses................................. 604 284 888
Noninterest income........................................ 1,302 345 1,647
Noninterest expense....................................... 6,238 1,613 7,851
Income tax (benefit) expense.............................. (35) 406 371
-------- -------- --------
Net income........................................ $ 146 $ 756 $ 902
======== ======== ========
Total assets...................................... $592,974 $255,388 $848,362
======== ======== ========
Three months ended March 31, 1999:
Net interest income....................................... $ 4,610 $ 1,696 $ 6,306
Provision for loan losses................................. 122 122 244
Noninterest income........................................ 647 766 1,413
Noninterest expense....................................... 4,838 1,657 6,495
Income tax (benefit) expense.............................. (65) 233 168
-------- -------- --------
Net income........................................ $ 362 $ 450 $ 812
======== ======== ========
Total assets...................................... $444,589 $197,427 $642,016
======== ======== ========
</TABLE>

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):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Numerator:
For basic and diluted, net income......................... $ 902 $ 812
======= =======
Denominator:
For basic, weighted average common shares outstanding..... 14,385 14,253
Effect of dilutive stock options.......................... 3 48
------- -------
Average diluted common shares outstanding................. 14,388 14,301
======= =======
Basic and diluted net income per share...................... $ .06 $ .06
======= =======
</TABLE>

NOTE 5. COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) was $851,000 and $(508,000) for the
three-month periods ended March 31, 2000 and 1999, respectively. Total
comprehensive income consists of net income and the unrealized gain or loss on
the Corporation's available for sale securities portfolio arising during the
period.

NOTE 6. INCOME TAXES

The primary difference between the effective tax rate and the federal
statutory rate in 2000 and 1999 is due to the recognition of rehabilitation tax
credits generated from the restoration of the Corporation's headquarters, the
John A. Hand Building.

F-40
<PAGE> 133

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

TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary.................... 1
Summary Consolidated Financial Data... 5
Special Note Regarding Forward-Looking
Information......................... 6
Risk Factors.......................... 7
Preferred Securities Risk Factors... 7
The Banc Corporation Risk Factors... 10
Use of Proceeds....................... 13
Accounting Treatment.................. 13
Ratio of Earnings to Fixed Charges.... 13
Capitalization........................ 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Supplemental Quarterly Data........... 31
Business of the Banc Corporation...... 32
Supervision and Regulation............ 36
Management............................ 44
Executive Compensation and Other
Information......................... 49
Security Ownership of Certain
Beneficial Owners and Management.... 56
Description of the Preferred
Securities.......................... 58
Description of the Subordinated
Debentures.......................... 68
Book-Entry Issuance................... 77
Description of Guarantee.............. 78
Relationship Among the Preferred
Securities, the Subordinated
Debentures and the Guarantee........ 81
United States Federal Income Tax
Consequences........................ 82
Underwriting.......................... 86
Transfer Agent........................ 88
Legal Matters......................... 88
Experts............................... 88
Where You Can Find More Information... 89
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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

YOU MAY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE SALE OF PREFERRED
SECURITIES MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER
THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY THE PREFERRED SECURITIES IN ANY CIRCUMSTANCES
UNDER WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------

800,000 PREFERRED SECURITIES

TBC CAPITAL STATUTORY TRUST
% CUMULATIVE TRUST
PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25
PER PREFERRED SECURITY)
GUARANTEED BY

[THE BANC CORPORATION LOGO]
-------------------------

P R O S P E C T U S
-------------------------
STERNE, AGEE & LEACH, INC.
-------------------------------------------
, 2000

------------------------------------------------------
------------------------------------------------------
<PAGE> 134

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses of this offering in connection with this registration
statement, other than underwriting compensation, are estimated as follows:

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 6,072
Nasdaq Listing Fee..........................................
NASD Filing Fee.............................................
Blue Sky Fees and Expenses..................................
Accounting Fees and Expenses................................
Legal Fees and Expenses.....................................
Printing and Engraving......................................
Trustee Fees and Expenses...................................
Miscellaneous...............................................
--------
Total............................................. $
========
</TABLE>

The foregoing expenses are to be paid by the Corporation

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

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 Corporation's Restated
Certificate of Incorporation contains a provision eliminating or limiting
director liability to the 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 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 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
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 Corporation's Bylaws provide for mandatory
indemnification rights, subject to limited exceptions, to any director, officer,
employee, or agent of the Corporation who, by reason of the fact that he or she
is a director, officer, employee, or agent of the 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.

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<PAGE> 135

The 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.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Effective February 12, 1999, the Corporation issued 1,379,958 shares of its
common stock in a transaction not registered under the Securities Act of 1933.
Such shares were issued to the former shareholders of Emerald Coast Bancshares,
Inc. ("Emerald") in connection with the Corporation's acquisition by merger of
Emerald. Such shares were issued in reliance upon the exemption provided by
Section 4(2) of the Securities Act in a transaction not involving a public
offering due to, among other things, the sophistication, particularly with
respect to financial institutions, of the former Emerald shareholders, their
relatively small number, and the fact that the offering, by its very nature, was
limited to the Emerald shareholders. The former Emerald shareholders received
approximately 2.03534 shares of Corporation common stock for each share of
Emerald common stock they owned, the aggregate value of which was approximately
$15,179,538 at the time of the closing of the transaction.

ITEM 16.

(a) Exhibits and Financial Statement Schedules

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <C> <S>
(1)-1 -- Form of Underwriting Agreement.
(1)-2 -- Form of Agreement Among Underwriters.
(3)-1 -- Restated Certificate of Incorporation of The Banc
Corporation, filed as Exhibit (3)-1 to the 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 Corporation's Registration Statement on Form S-4
(Registration No. 333-58493), is hereby incorporated herein
by reference.
(4)-1 -- Certificate of Trust of TBC Capital Trust.*
(4)-2 -- Trust Agreement of TBC Capital Trust.*
(4)-3 -- Preferred Securities Certificate.*
(4)-4 -- Agreement as to Expenses and Liabilities.*
(4)-6 -- Subordinated Debenture.*
(4)-7 -- Subordinated Indenture.*
(4)-8 -- Preferred Securities Guarantee Agreement.*
(5) -- Opinion of Haskell Slaughter & Young, L.L.C. regarding
legality of securities being registered.*
(8) -- Opinion of Haskell Slaughter & Young, L.L.C. regarding tax
matters.*
(10)-1 -- Second Amended and Restated 1998 Stock Incentive Plan of The
Banc Corporation, filed as Appendix A to the Corporation's
Proxy Statement for its 2000 Annual Stockholders Meeting,
dated May 1, 2000, is hereby incorporated herein by
reference.
</TABLE>

II-2
<PAGE> 136

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <C> <S>
(10)-2 -- Commerce Bank of Alabama Incentive Stock Compensation Plan,
filed as Exhibit (4)-3 to The 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 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
Corporation's Registration Statement on Form S-1
(Registration No. 333-67011), is hereby incorporated herein
by reference.
(10)-5 -- Deferred Compensation Agreement by and between The Banc
Corporation and James A. Taylor, filed as Exhibit (10)-2 to
the Corporation's Registration Statement on Form S-1
(Registration No. 333-67011), is hereby incorporated herein
by reference.
(10)-6 -- Employment Agreement between the Corporation and W. T.
Campbell, Jr., dated as of October 30, 1998, filed as
Exhibit (10)-4 to the Corporation's Registration Statement
on Form S-1 (Registration No. 333-67011), is hereby
incorporated herein by reference.
(10)-7 -- Employment Agreement between The Banc Corporation and Terry
DuBose, dated as of February 12, 1999, filed as Exhibit
(10)-7 to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1998, is hereby incorporated by
reference herein.
(10)-8 -- Employment Agreement, dated as of January 1, 1999, by and
between The Banc Corporation and James A. Taylor, Jr., filed
as Exhibit (10)-8 to the Corporation's Annual Report on Form
10-K for the year ended December 31, 1998, is hereby
incorporated by reference herein.
(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 Corporation's Annual Report on Form 10-K for the year
ended December 31, 1998, is hereby incorporated by reference
herein.
(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 Corporation's Annual Report on Form 10-K for the year
ended December 31, 1998, is hereby incorporated by reference
herein.
(10)-11 -- Employment Agreement, dated as of January 1, 2000, by and
between The Banc Corporation and David R. Carter, filed as
Exhibit (10) to the Corporation's Quarterly Report on Form
10-Q for the quarter ended March 31, 2000, is hereby
incorporated by reference herein.
(10)-12 -- Form of Deferred Compensation Agreement by and between The
Banc Corporation and the individuals listed on Schedule A
thereto, filed as Exhibit (10)-12 to the Corporation's
Annual Report on Form 10-K for the year ended December 31,
1999, is hereby incorporated by reference herein.
(10)-13 -- Form of Deferred Compensation Agreement by and between The
Banc Corporation and the individuals listed on Schedule A
thereto, filed as Exhibit (10)-13 to the Corporation's
Annual Report on Form 10-K for the year ended December 31,
1999, is hereby incorporated by reference herein.
(12) -- Statement re Computation of Ratios.
(16) -- Letter from Dudley, Hopton-Jones, Sims & Freeman, PLLP,
filed as Exhibit 16 to the Corporation's Registration
Statement on Form S-1 (Registration No. 333-67011), is
hereby incorporated by reference.
(21) -- Subsidiaries of the Corporation.
(23)-1 -- Consent of Ernst & Young LLP.
</TABLE>

II-3
<PAGE> 137

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <C> <S>
(23)-2 -- Consent of Saltmarsh Cleaveland & Gund.
(23)-3 -- Consent of Williams, Cox, Weidner and Cox.
(23)-4 -- Consent of Williams, Cox, Weidner and Cox.
(24) -- Powers of Attorney. See the signature pages to the original
filing of this Registration Statement.
(25)-1 -- Statement of Eligibility of Trustee.
(25)-2 -- Statement of Eligibility of Trustee.
(25)-3 -- Statement of Eligibility of Trustee.
</TABLE>

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

* To be filed by amendment.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
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 SEC, 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 indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned Registrant undertakes that:

1. For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

2. For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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.

II-4
<PAGE> 138

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, 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 June 30, 2000.

THE BANC CORPORATION

By: /s/ JAMES A. TAYLOR
------------------------------------
James A. Taylor
Chairman, Chief Executive Officer
and President

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James A. Taylor, Jr. and David R. Carter, and
each of them, the true and lawful agents and his attorneys-in-fact with full
power and authority in each said agents and attorney-in-fact, acting singly, to
sign for the undersigned as Director or an officer of the Registrant, or as
both, this Registration Statement on Form S-1 to be filed with the Securities
and Exchange Commission, Washington, D.C. under the Securities Act of 1933, and
to sign any amendment or amendments to this Registration Statement, hereby
ratifying and confirming all acts taken by such agents and attorneys-in-fact as
herein authorized.

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 date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES A. TAYLOR Chairman of the Board, Chief Executive June 30, 2000
--------------------------------------------- Officer and President (Principal
James A. Taylor Executive Officer)

/s/ DAVID R. CARTER Executive Vice President, Chief June 30, 2000
--------------------------------------------- Financial Officer and Director
David R. Carter (Principal Financial and Accounting
Officer)

/s/ TERRY DUBOSE Vice Chairman June 30, 2000
---------------------------------------------
Terry DuBose

/s/ JAMES MAILON KENT, JR. Vice Chairman June 30, 2000
---------------------------------------------
James Mailon Kent, Jr.

/s/ LARRY D. STRIPLIN, JR. Vice Chairman June 30, 2000
---------------------------------------------
Larry D. Striplin, Jr.

/s/ JAMES R. ANDREWS, M.D. Director June 30, 2000
---------------------------------------------
James R. Andrews, M.D.

/s/ NEAL R. BERTE, ED.D. Director June 30, 2000
---------------------------------------------
Neal R. Berte, Ed.D.

/s/ W. T. CAMPBELL, JR. Director June 30, 2000
---------------------------------------------
W. T. Campbell, Jr.
</TABLE>

II-5
<PAGE> 139

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ PETER N. DICHIARA Director June 30, 2000
---------------------------------------------
Peter N. Dichiara

/s/ K. EARL DURDEN Director June 30, 2000
---------------------------------------------
K. Earl Durden

/s/ JOHN F. GITTINGS Director June 30, 2000
---------------------------------------------
John F. Gittings

/s/ STEVEN C. HAYS Director June 30, 2000
---------------------------------------------
Steven C. Hays

/s/ LARRY R. HOUSE Director June 30, 2000
---------------------------------------------
Larry R. House

/s/ THOMAS E. JERNIGAN, JR. Director June 30, 2000
---------------------------------------------
Thomas E. Jernigan, Jr.

/s/ RANDALL E. JONES Director June 30, 2000
---------------------------------------------
Randall E. Jones

/s/ MAYER MITCHELL Director June 30, 2000
---------------------------------------------
Mayer Mitchell

/s/ RONALD W. ORSO, M.D. Director June 30, 2000
---------------------------------------------
Ronald W. Orso, M.D.

/s/ HAROLD W. RIPPS Director June 30, 2000
---------------------------------------------
Harold W. Ripps

/s/ RICHARD M. SCRUSHY Director June 30, 2000
---------------------------------------------
Richard M. Scrushy

/s/ JERRY M. SMITH Director June 30, 2000
---------------------------------------------
Jerry M. Smith

/s/ MICHAEL E. STEPHENS Director June 30, 2000
---------------------------------------------
Michael E. Stephens

/s/ MARIE SWIFT Director June 30, 2000
---------------------------------------------
Marie Swift

/s/ JAMES A. TAYLOR, JR. Director June 30, 2000
---------------------------------------------
James A. Taylor, Jr.

/s/ T. MANDELL TILLMAN Director June 30, 2000
---------------------------------------------
T. Mandell Tillman

/s/ JOHNNY WALLIS Director June 30, 2000
---------------------------------------------
Johnny Wallis
</TABLE>

II-6