-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K/Iw+uQfNOCLEUCMKWNf9G4/AkcJeu69ta90OZJ79sHeB0cv9gO84zOc1Qq+2VJH iqz9ltb91GzadGcy3PHphg== 0000891092-04-000306.txt : 20040127 0000891092-04-000306.hdr.sgml : 20040127 20040127083041 ACCESSION NUMBER: 0000891092-04-000306 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040127 ITEM INFORMATION: FILED AS OF DATE: 20040127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTH FINANCIAL GROUP INC CENTRAL INDEX KEY: 0000797871 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 570824914 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15083 FILM NUMBER: 04544713 BUSINESS ADDRESS: STREET 1: 102 S MAIN ST CITY: GREENVILLE STATE: SC ZIP: 29601 BUSINESS PHONE: 8642557900 MAIL ADDRESS: STREET 1: 102 S MAIN STREET CITY: GREENVILLE STATE: SC ZIP: 29601 FORMER COMPANY: FORMER CONFORMED NAME: CAROLINA FIRST CORP DATE OF NAME CHANGE: 19920703 8-K 1 e16690_8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: January 27, 2004 The South Financial Group, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) South Carolina 0-15083 57-0824914 ------------------------- ------------ ---------------------- (State or other juris- (Commission (IRS Employer diction of incorporation) File Number) Identification Number) 102 South Main Street, Greenville, South Carolina 29601 ------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (864) 255-7900 Item 12. Results of Operations and Financial Condition TSFG's fourth quarter 2003 earnings release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. Exhibit Index EXHIBIT 99.1 Earnings Release and attached documentation issued January 27, 2004 (furnished and not filed). Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE SOUTH FINANCIAL GROUP, INC. January 27, 2004 By: /s/ William S. Hummers III -------------------------- William S. Hummers III Executive Vice President EX-99.1 3 e16690ex99_1.txt PRESS RELEASE Exhibit 99.1 The South Financial Group Reports Record Earnings; Net Income Up 61% for 2003 and 78% for Fourth Quarter GREENVILLE, S.C., Jan. 27 /PRNewswire-FirstCall/ -- The South Financial Group, Inc. (Nasdaq: TSFG) today reported record fourth quarter 2003 net income of $28.4 million, an increase of 78% compared with $15.9 million for the fourth quarter 2002. For the fourth quarter 2003, net income per diluted share totaled $0.50, a 43% increase from $0.35 per diluted share for the fourth quarter 2002. For the fourth quarter 2003, operating earnings totaled $27.7 million, or $0.48 per diluted share, compared with $17.5 million, or $0.39 per diluted share, for the prior year period. This represents a 23% increase in operating earnings per diluted share. "In 2003, we had the best year in the history of our company," said Mack I. Whittle, Jr., President and Chief Executive Officer of The South Financial Group. "We achieved double-digit growth in revenues, loans, and low-cost core deposits. We delivered record operating earnings for both the fourth quarter 2003 and the full year. This represents the 11th consecutive quarter of operating earnings per share growth. During this 11 quarter period, we've grown operating earnings per share at a 37% annualized growth rate. During 2003, our stock price increased 34%, which makes it a rewarding year for our employees and shareholders." Whittle continued, "Our strong fourth quarter results demonstrate the tremendous progress we've made. We've improved our operating efficiency ratio to 54%. After three quarters of declines, our net interest margin turned upward. We are particularly pleased to report stronger credit quality measures, as both the nonperforming asset and charge-off ratios improved during the fourth quarter. We enter 2004 with strong banking fundamentals. Our management team is disciplined and focused on achieving our goal of double-digit operating EPS growth." For 2003, net income totaled $95.1 million, or $1.89 per diluted share, up 61% from $59.2 million for 2002. For 2003, operating earnings totaled $89.2 million, or $1.77 per diluted share, up 41% from $63.5 million for 2002. Strong Top-Line Revenue Growth and Efficiency Improvements Strong top-line revenue growth drove TSFG's record performance. Total revenues for the fourth quarter 2003 increased 35% over the fourth quarter 2002 as both net interest income and noninterest income produced double-digit gains. Net interest income for the fourth quarter 2003 increased 36% over fourth quarter last year, due to higher investment securities and solid loan growth. After declining for three quarters, the net interest margin turned upward in the fourth quarter 2003. It increased to 3.30%, up 22 basis points from the third quarter 2003. During the fourth quarter, slower mortgage-backed security prepayments, the higher net interest margin from MountainBank, and effective management of deposit rates drove the net interest margin upward. Noninterest income increased to $23.9 million for the fourth quarter 2003, up 34% from $17.8 million for the fourth quarter 2002. Excluding $4.4 million in gains on sales of securities and equity investments, fourth quarter 2003 noninterest income increased from the fourth quarter 2002 by $3.4 million, or 21%, to $19.5 million, reflecting expansion in noninterest income sources and continuing benefits from TSFG's Elevate sales process. Service charges on deposits, merchant processing income, benefits administration fees, and bank- owned life insurance drove the increases in noninterest income. These increases were partially offset by losses on trading activities, losses on the sale of real estate owned, and declines in mortgage banking income. The South Financial Group's operating efficiency ratio for the fourth quarter 2003 was 54%, a significant improvement from 59% for the fourth quarter 2002. (See page 5 of the financial highlights for the efficiency ratio calculation and reconciliation to its related GAAP measure.) Since the fourth quarter 2002, The South Financial Group has improved its efficiency each quarter. These gains are largely attributable to increasing net interest income and controlling noninterest expenses. Noninterest expenses increased 19% for the fourth quarter 2003 versus fourth quarter 2002, or 22% excluding non-operating items in both years. In fourth quarter 2003, non-operating items included $2.9 million in merger- related costs and $512,000 from employment contract payments. Double-Digit Loan and Transaction Deposit Growth TSFG's strong loan growth continued during the fourth quarter 2003. Loans held for investment at December 31, 2003 increased 29% over the prior year. Adjusting for approximately $770 million in loans acquired in the MountainBank merger, 2003 organic loan growth reached 10%. TSFG continues to gain core deposits and enrich its deposit mix, reflecting successful sales and promotional campaigns. Average deposits for the fourth quarter 2003 increased 40% over the prior year fourth quarter average. Deposit transaction account balances increased 64% during the same period, driven by growth in money market and noninterest-bearing deposits. Adjusting for fourth quarter 2003 average transaction deposits of approximately $365 million acquired in the MountainBank merger, organic average transaction deposit growth exceeded 40%. Key Credit Quality Measures Show Improvement The South Financial Group's key credit quality measures improved during the fourth quarter. To facilitate quarterly comparisons, two sets of credit quality indicators are provided: one that includes all loans and one that excludes the Rock Hill Bank & Trust Workout Loans. In connection with its October 2002 asset purchase transaction with Rock Hill Bank & Trust, TSFG segregated certain identified problem loans into a separately-managed portfolio, referred to as the Rock Hill Bank & Trust Workout Loans. At December 31, 2003, this portfolio totaled $28.6 million, down from $41.7 million at September 30, 2003 and $72.4 million at December 31, 2002. Nonperforming assets in the Rock Hill Bank & Trust Workout Loans declined to $19.6 million, and the allowance for loan losses was $3.2 million. For the Rock Hill Bank & Trust Workout Loans, net loan charge-offs for the fourth quarter 2003 totaled $1.6 million. Credit Quality Including Rock Hill Bank & Trust Workout Loans. Nonperforming assets declined to 1.06% of loans and other real estate owned at December 31, 2003 from 1.33% at September 30, 2003. Net loan charge-offs decreased to 0.47% for the fourth quarter 2003 from 0.57% for the third quarter 2003. Credit Quality Excluding Rock Hill Bank & Trust Workout Loans. The South Financial Group's core credit quality measures (which exclude the Rock Hill Bank & Trust Workout Loans) strengthened in the fourth quarter 2003, continuing an improving trend that began seven quarters ago. Nonperforming assets as a percentage of loans and other real estate owned declined to 0.72% at December 31, 2003 from 0.88% at September 30, 2003. Net loan charge-offs as a percentage of average loans held for investment also improved, declining to 0.36% for the fourth quarter 2003 from 0.41% for the third quarter 2003. Successful Common Stock Offering In November 2003, The South Financial Group successfully completed a common stock offering of 6,325,000 shares, in which it received net proceeds of approximately $161 million. With the new capital, TSFG's tangible equity to tangible asset ratio totaled 6.05% at December 31, 2003. Whittle commented, "We ended the year with a strong capital base and are poised for profitable expansion. We can expand and still keep tangible capital levels above 6%. Also, in December, Carolina First Bank received an 'investment grade' rating from Moody's, enhancing our ability to borrow at reasonable rates." Enhanced and Strengthened Geographic Franchise Last week, on January 21st, The South Financial Group announced a definitive agreement to acquire CNB Florida Bancshares, headquartered in Jacksonville, Florida, in an all stock transaction valued at approximately $157 million. CNB Florida's banking subsidiary, CNB National Bank, operates 16 branch offices in 8 counties and has approximately $810 million in assets. Following the merger, TSFG's Northeast Florida deposit market share will increase to #7 from #20. For TSFG's Northeast/Central Florida markets, its deposit market share will increase to #7 from #11. Whittle commented, "We have stated that we want to be top 10 in our target Florida markets between Tampa Bay and Jacksonville. CNB Florida puts us firmly in that position. With the merger, we increase our Northeast Florida market ranking to #7 and gain an excellent foundation to build on. While our desire to achieve scale in key Florida markets is important, we remain committed to doing so only in a manner that adds to shareholder value. Our merger with CNB Florida is consistent with our disciplined acquisition criteria. We expect the merger to be accretive to earnings per share in the first full year." Once the merger is complete, TSFG's Florida operations will have 50 branches, over $3 billion in assets, and over $2 billion in deposits. The South Financial Group's Florida deposits will represent 30% of TSFG's total deposits. In October 2003, TSFG completed its merger with MountainBank Financial Corporation, which had approximately $1 billion in assets and operations principally in eleven Western North Carolina counties. The merger expanded TSFG's presence into attractive Western North Carolina markets, including a 24% market share in Henderson County. TSFG successfully completed the system conversion, and the former MountainBank branches now operate as Carolina First Bank branches. General Information The South Financial Group is a financial services company headquartered in Greenville, South Carolina, which had total assets of approximately $10.7 billion at December 31, 2003. TSFG operates two primary subsidiary banks, Carolina First Bank and Mercantile Bank, which conduct operations through approximately 134 branch offices in South Carolina, Florida and North Carolina. Carolina First Bank, the largest South Carolina-based commercial bank, operates in South Carolina and North Carolina and on the Internet under the brand name, Bank CaroLine. Mercantile Bank operates in Florida, principally in the Jacksonville, Orlando and Tampa Bay markets. The South Financial Group's common stock trades on the Nasdaq National Market under the symbol TSFG. Press releases along with additional information may also be found at The South Financial Group's website: www.thesouthgroup.com . Conference Call/Webcast Information The South Financial Group will host a conference call today at 10:00 a.m. (ET) to discuss the fourth quarter 2003 results. Additional material information, including forward-looking statements such as trends and projections, may be discussed during the presentation. TSFG will also provide presentation slides and supplemental financial information in the Investor Relations section of its website under the financial information button. To participate in the conference call or webcast, please follow the instructions listed below. Conference Call: Please call 1-888-405-5393 or 1-484-630-4135 using the access code "The South." A 7-day rebroadcast of the call will be available via 1-800-846-0305 or 1-402-998-0543. Webcast: To gain access to the webcast, which will be "listen-only," please go to www.thesouthgroup.com under the Investor Relations tab and click on the link "Webcast/The South Financial Group 4th Quarter Earnings Conference Call." For those unable to participate during the live webcast, it will be archived on The South Financial Group website until February 10, 2004. Explanation of TSFG's Use of Certain Non-GAAP Financial Measures and Forward-Looking Statements This press release contains financial information determined by methods other than in accordance with Generally Accepted Accounting Principles ("GAAP"). The attached financial highlights (see pages 5 and 6) provide reconciliations between GAAP net income and operating earnings. As has been TSFG's practice, operating earnings adjust GAAP information to exclude the after-tax effect of non-operating items (such as merger-related costs, gain or losses on asset sales, loss on early extinguishment of debt, and non-operating expenses). TSFG also provides data eliminating intangibles and related amortization in order to present data on a "cash basis." The economic substance of operating earnings and "cash basis" items are clearly defined. TSFG's management uses these non-GAAP measures in their analysis of TSFG's performance and believes presentations of financial measures excluding these non-operating items provide useful supplemental information, a clearer understanding of TSFG's financial performance, and better reflect its core operating activities. Management uses operating earnings, in particular, to analyze on a consistent basis and over a longer period of time the performance of which it considers to be its core operating activities. TSFG believes the non-GAAP measures enhance investors' understanding of the company's business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of others in the financial services industry. The limitations associated with utilizing operating earnings and cash basis information are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. Management compensates for these limitations by providing detailed reconciliations between GAAP information and operating earnings. These disclosures should not be considered an alternative to GAAP. Certain matters set forth in this news release may contain forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. These statements, as well as other statements that may be made by management in the conference call, include, but are not limited to, factors which may affect earnings, return goals, expected financial results for mergers, estimates of merger synergies and merger- related charges, and credit quality assessment. However, such performance involves risks and uncertainties, such as market deterioration, that may cause actual results to differ materially from those in such statements. For a discussion of certain factors that may cause such forward-looking statements to differ materially from TSFG's actual results, see TSFG's Annual Report on Form 10-K for the year ended December 31, 2002. The South Financial Group undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release. THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (dollars in thousands, except share data) (unaudited) Three Months Ended % 12/31/03 12/31/02 Change INCOME STATEMENT Interest income (tax-equivalent) $117,944 $93,422 26.2 % Interest expense 37,101 33,784 9.8 Net interest income (tax-equivalent) 80,843 59,638 35.6 Less: Tax-equivalent adjustment 782 607 28.8 Net interest income 80,061 59,031 35.6 Provision for loan losses 4,290 4,217 1.7 Net interest income after provision for loan losses 75,771 54,814 38.2 NONINTEREST INCOME: Service charges on deposit accounts 8,702 6,974 24.8 Fees for investment services 1,885 1,784 5.7 Mortgage banking income, excluding impairment 1,866 2,158 (13.5) Impairment (loss) recovery on mortgage servicing rights 78 (111) (170.3) Other 6,923 5,242 32.1 Noninterest income, excluding non- operating gains on asset sales 19,454 16,047 21.2 Gain on sale of available for sale securities 2,399 1,980 n/m Gain (loss) on equity investments 2,046 (253) n/m Gains on non-operating asset sales, net 4,445 1,727 n/m Total noninterest income 23,899 17,774 34.5 NONINTEREST EXPENSES: Personnel expense 26,765 21,379 25.2 Occupancy 4,944 4,088 20.9 Furniture and equipment 4,651 4,269 8.9 Amortization of intangibles 1,274 688 85.2 Other 16,595 14,136 17.4 Noninterest expenses, excluding non- operating items 54,229 44,560 21.7 Merger-related costs 2,903 2,199 n/m Employment contract payments 512 263 n/m Impairment loss from write-down of assets - 1,449 n/m Non-operating noninterest expenses 3,415 3,911 n/m Total noninterest expenses 57,644 48,471 18.9 Income before income taxes and minority interest 42,026 24,117 74.3 Income tax expense 12,608 7,150 76.3 Minority interest in consolidated subsidiary, net of tax (997) (1,031) (3.3) Net income $28,421 $15,936 78.3 % SHARE DATA: Net income per common share, basic $0.51 $0.36 41.7 % Net income per common share, diluted 0.50 0.35 42.9 Cash dividends declared per common share 0.15 0.14 7.1 Average common shares outstanding, basic 55,837,554 43,925,905 27.1 Average common shares outstanding, diluted 57,229,604 45,032,301 27.1 Supplemental financial information, including results for the last five quarters, may be found in the Investor Relations section of TSFG's web site: www.thesouthgroup.com . THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (dollars in thousands, except share data) (unaudited) Twelve Months Ended % 12/31/03 12/31/02 Change INCOME STATEMENT Interest income (tax-equivalent) $416,809 $356,091 17.1 % Interest expense 138,475 135,487 2.2 Net interest income (tax-equivalent) 278,334 220,604 26.2 Less: Tax-equivalent adjustment 2,681 2,352 14.0 Net interest income 275,653 218,252 26.3 Provision for loan losses 20,581 22,266 (7.6) Net interest income after provision for loan losses 255,072 195,986 30.1 NONINTEREST INCOME: Service charges on deposit accounts 30,856 23,410 31.8 Fees for investment services 8,464 6,423 31.8 Mortgage banking income, excluding impairment 10,499 5,847 79.6 Impairment on mortgage servicing rights (18) (703) (97.4) Other 28,632 18,543 54.4 Noninterest income, excluding non- operating gains on asset sales 78,433 53,520 46.5 Gain on sale of available for sale securities 11,080 2,985 n/m Gain on equity investments 5,376 3,135 n/m Gain on disposition of assets and liabilities 601 - n/m Gains on non-operating asset sales, net 17,057 6,120 n/m Total noninterest income 95,490 59,640 60.1 NONINTEREST EXPENSES: Personnel expense 100,778 75,118 34.2 Occupancy 18,925 15,238 24.2 Furniture and equipment 17,922 15,341 16.8 Amortization of intangibles 3,433 1,519 126.0 Other 57,506 45,311 26.9 Noninterest expenses, excluding non- operating items 198,564 152,527 30.2 Merger-related costs 5,127 6,664 n/m Employment contract payments 512 1,846 n/m Impairment loss from write-down of assets 268 1,449 n/m Loss on early extinguishment of debt 2,699 354 n/m Non-operating noninterest expenses 8,606 10,313 n/m Total noninterest expenses 207,170 162,840 27.2 Income before income taxes, minority interest, and cumulative effect of change in accounting principle 143,392 92,786 54.5 Income tax expense 44,335 28,972 53.0 Minority interest in consolidated subsidiary, net of tax (3,999) (3,250) 23.0 Cumulative effect of change in accounting principle, net of tax - (1,406) (100.0) Net income $95,058 $59,158 60.7 % SHARE DATA: Net income per common share, basic $1.93 $1.42 35.9 % Net income per common share, diluted 1.89 1.38 37.0 Cash dividends declared per common share 0.57 0.50 14.0 Average common shares outstanding, basic 49,204,173 41,714,994 18.0 Average common shares outstanding, diluted 50,328,353 42,714,938 17.8 THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (dollars in thousands, except share data) (unaudited) 12/31/03 12/31/02 % Change BALANCE SHEET (Period End) Cash and due from banks $184,057 $201,333 (8.6)% Interest-bearing bank balances 2,048 58,703 (96.5) Federal funds sold 137 31,293 n/m Securities 4,007,571 2,572,186 55.8 Loans held for sale 29,619 67,218 (55.9) Loans held for investment 5,732,205 4,434,011 29.3 Allowance for loan losses (73,287) (70,275) 4.3 Net loans 5,688,537 4,430,954 28.4 Premises and equipment, net 142,705 137,501 3.8 Intangible assets 353,079 242,182 45.8 Mortgage servicing rights 1,781 4,386 (59.4) Other assets 339,486 262,472 29.3 Total assets $10,719,401 $7,941,010 35.0 % Noninterest-bearing deposits $882,129 $743,174 18.7 % Interest-bearing deposits 5,146,520 3,849,336 33.7 Total deposits 6,028,649 4,592,510 31.3 Federal funds purchased and repurchase agreements 2,329,666 1,510,840 54.2 Debt and other borrowed funds 1,177,337 998,664 17.9 Other liabilities 117,059 105,785 10.7 Total liabilities 9,652,711 7,207,799 33.9 Minority interest in consolidated subsidiary 86,821 86,412 0.5 Shareholders' equity 979,869 646,799 51.5 Total liabilities and shareholders' equity $10,719,401 $7,941,010 35.0 CAPITAL RATIOS (Period End) Tier 1 risk-based capital 10.51 % 9.21 % Total risk-based capital 12.51 11.66 Leverage ratio 7.49 7.15 Tangible equity to tangible assets 6.05 5.26 SHARE DATA (Period End) Book value per common share $16.59 $13.66 21.4 % Shares outstanding 59,064,375 47,347,375 24.7 BALANCE SHEET (Averages - Three Months Ended) Total assets $10,673,057 $7,244,663 47.3 % Loans 5,685,409 4,346,823 30.8 Securities 4,033,841 2,172,963 85.6 Total earning assets 9,728,449 6,563,909 48.2 Intangible assets 337,820 185,746 81.9 Interest-bearing liabilities 8,751,758 5,863,888 49.2 Total deposits 6,017,132 4,282,840 40.5 Shareholders' equity 883,514 555,053 59.2 BALANCE SHEET (Averages - Twelve Months Ended) Total assets $9,260,767 $6,497,607 42.5 % Loans 4,915,437 4,008,094 22.6 Securities 3,471,324 1,850,798 87.6 Total earning assets 8,425,590 5,924,077 42.2 Intangible assets 267,416 125,732 112.7 Interest-bearing liabilities 7,595,136 5,300,060 43.3 Total deposits 5,147,627 3,855,929 33.5 Shareholders' equity 709,139 497,341 42.6 THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (dollars in thousands, except share data) (unaudited) 12/31/03 12/31/02 % Change CREDIT QUALITY Nonaccrual loans - commercial $47,137 $61,206 (23.0)% Nonaccrual loans - consumer 2,686 2,384 12.7 Restructured loans - - - Nonperforming loans 49,823 63,590 (21.6) Other real estate owned 10,951 10,596 3.4 Nonperforming assets 60,774 74,186 (18.1) Nonperforming loans as a % of loans held for investment 0.87 % 1.43 % Nonperforming assets as a % of loans HFI and OREO 1.06 1.67 Allowance for loan losses as a % of loans held for investment 1.28 1.58 Allowance for loan losses to nonperforming loans 1.47 x 1.11 x Specific allowance for impaired loans $9,689 $22,016 (56.0) Loans past due 90 days still accruing interest 3,960 5,414 (26.9) Net loan charge-offs: QTR ended 6,693 4,049 65.3 YTD ended 30,259 19,539 54.9 Net loan charge-offs as a % of avg. loans HFI (annualized): QTR ended 0.47 % 0.38 % YTD ended 0.62 0.49 CREDIT QUALITY - Excluding Rock Hill B&T Workout Loans Loans held for investment $5,703,602 $4,361,658 30.8 % Allowance for loan losses 70,123 53,979 29.9 Nonaccrual loans - commercial 28,952 32,212 (10.1)% Nonaccrual loans - consumer 2,686 2,384 12.7 Restructured loans - - - Nonperforming loans 31,638 34,596 (8.6) Other real estate owned 9,561 10,422 (8.3) Nonperforming assets 41,199 45,018 (8.5) Nonperforming loans as a % of loans held for investment 0.55 % 0.79 % Nonperforming assets as a % of loans HFI and OREO 0.72 1.03 Allowance for loan losses as a % of loans held for investment 1.23 1.24 Allowance for loan losses to nonperforming loans 2.22 x 1.56 x Specific allowance for impaired loans $7,000 $9,429 (25.8) Loans past due 90 days still accruing interest 3,855 5,392 (28.5) Net loan charge-offs: QTR ended 5,110 4,416 15.7 YTD ended 19,962 19,906 0.3 Net loan charge-offs as a % of avg. loans HFI (annualized): QTR ended 0.36 % 0.42 % YTD ended 0.41 0.50 OPERATIONS DATA Branch offices 134 117 14.5 % ATMs 122 105 16.2 Employees (full-time equivalent) 1,918 1,700 12.8 Internet banking customers 90,132 35,227 155.9 STOCK PERFORMANCE (At Period End) Market price per share of common stock $27.75 $20.66 34.3 % Indicated annual dividend 0.60 0.56 7.1 Dividend yield 2.16 % 2.71 % Price/book ratio 1.67 x 1.51 x Market capitalization $1,639,036 $978,197 67.6 THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (dollars in thousands, except share data) (unaudited) Three Months Ended 12/31/03 12/31/02 % Change Diluted Diluted Diluted EPS EPS EPS RECONCILIATION OF GAAP TO NON-GAAP MEASURES NET INCOME, AS REPORTED (GAAP) $28,421 $0.50 $15,936 $0.35 78.3 % 42.9 % Merger-related costs 2,903 2,199 Related income taxes (871) (653) Net income, excluding merger-related items 30,453 0.53 17,482 0.39 74.2 35.9 Adjustments for other non-operating items: Gain on sale of available for sale securities (2,399) (1,980) Gain on equity investments (2,046) 253 Employment contract payments 512 263 Impairment loss from write-down of assets - 1,449 Related income taxes 1,180 7 OPERATING EARNINGS 27,700 0.48 17,474 0.39 58.5 23.1 Add: Amortization of intangibles, net of tax 892 484 OPERATING EARNINGS, CASH BASIS $28,592 $0.50 $17,958 $0.40 59.2 25.0 Average common shares outstanding, diluted 57,229,604 45,032,301 27.1 SELECTED BALANCE SHEET (Averages) Total assets $10,673,057 $7,244,663 47.3 Intangible assets (337,820) (185,746) 81.9 Tangible assets 10,335,237 7,058,917 46.4 Shareholders' equity 883,514 555,053 59.2 Intangible assets (337,820) (185,746) 81.9 Tangible equity 545,694 369,307 47.8 PERFORMANCE RATIOS (Annualized) RETURN ON AVERAGE ASSETS: Using GAAP earnings 1.07 % 0.88 % Using operating earnings 1.04 0.96 Using operating earnings, cash basis on average tangible assets 1.11 1.02 RETURN ON AVERAGE EQUITY: Using GAAP earnings 12.87 11.48 Using operating earnings 12.54 12.59 Using operating earnings, cash basis on average tangible equity 20.96 19.45 NET INTEREST MARGIN 3.30 3.60 NONINTEREST INCOME AS A % OF TOTAL REVENUE (A) Using GAAP earnings 22.99 23.14 Using operating earnings 19.55 21.37 EFFICIENCY RATIOS (B): Using GAAP earnings 55.45 63.11 Using operating earnings 54.49 59.35 Using operating earnings, cash basis 53.21 58.44 (A) Calculated as noninterest income, divided by the sum of net interest income and noninterest income. (B) Calculated as noninterest expenses, divided by the sum of net interest income and noninterest income. THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (dollars in thousands, except share data) (unaudited) Twelve Months Ended 12/31/03 12/31/02 % Change Diluted Diluted Diluted EPS EPS EPS RECONCILIATION OF GAAP TO NON-GAAP MEASURES NET INCOME, AS REPORTED (GAAP) $95,058 $1.89 $59,158 $1.38 60.7 % 37.0 % Merger-related costs 5,127 6,664 Related income taxes (1,576) (2,015) Net income, excluding merger-related items 98,609 1.96 63,807 1.49 54.5 31.5 Adjustments for other non-operating items: Gain on sale of available for sale securities (11,080) (2,985) Gain on equity investments (5,376) (3,135) Gain on disposition of assets and liabilities (601) - Employment contract payments 512 1,846 Impairment loss from write-down of assets 268 1,449 Loss on early extinguishment of debt 2,699 354 Related income taxes 4,201 758 Cumulative effect of change in accounting principle, net of tax - 1,406 OPERATING EARNINGS 89,232 1.77 63,500 1.49 40.5 18.8 Add: Amortization of intangibles, net of tax 2,374 1,053 OPERATING EARNINGS, CASH BASIS $91,606 $1.82 $64,553 $1.51 41.9 20.5 Average common shares outstanding, diluted 50,328,353 42,714,938 17.8 SELECTED BALANCE SHEET (Averages) Total assets $9,260,767 $6,497,607 42.5 Intangible assets (267,416) (125,732) 112.7 Tangible assets 8,993,351 6,371,875 41.1 Shareholders' equity 709,139 497,341 42.6 Intangible assets (267,416) (125,732) 112.7 Tangible equity 441,723 371,609 18.9 PERFORMANCE RATIOS (Annualized) RETURN ON AVERAGE ASSETS: Using GAAP earnings 1.03 % 0.91 % Using operating earnings 0.96 0.98 Using operating earnings, cash basis on average tangible assets 1.02 1.01 RETURN ON AVERAGE EQUITY: Using GAAP earnings 13.40 11.89 Using operating earnings 12.58 12.77 Using operating earnings, cash basis on average tangible equity 20.74 17.37 NET INTEREST MARGIN 3.30 3.72 NONINTEREST INCOME AS A % OF TOTAL REVENUE (A) Using GAAP earnings 25.73 21.46 Using operating earnings 22.15 19.69 EFFICIENCY RATIOS (B): Using GAAP earnings 55.82 58.60 Using operating earnings 56.08 56.12 Using operating earnings, cash basis 55.11 55.56 (A) Calculated as noninterest income, divided by the sum of net interest income and noninterest income. (B) Calculated as noninterest expenses, divided by the sum of net interest income and noninterest income. SOURCE The South Financial Group, Inc. -0- 01/27/2004 /CONTACT: William S. Hummers III, Vice Chairman and CFO, +1-864-255-7913, or Mary M. Gentry, Director of Investor Relations, +1-864-255-4919, both of The South Financial Group/ /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20000424/TSFGLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com/ /Web site: http://www.thesouthgroup.com / (TSFG) CO: South Financial Group, Inc. ST: South Carolina IN: FIN SU: ERN CCA MAV -----END PRIVACY-ENHANCED MESSAGE-----