EX-99 5 supplemental.htm SUPPLEMENTAL SCHEDULES
 
 
Quarterly Financial Data Supplement (Unaudited)
First Quarter 2007
 
Page  
 
 
  
Consolidated Statements of Income   1  
  
Details for Noninterest Income and Noninterest Expenses   2  
  
Consolidated Balance Sheets   3  
  
Investment Securities Portfolio Analysis   4  
  
Loan Portfolio Composition Based on Loan Purpose and Loan Growth   5  
  
Summary of Credit Quality and Allowance for Credit Losses   6  
  
Types of Customer Funding and Customer Funding Growth   7  
  
Types of Organic Customer Funding Growth   8  
  
Summary of Wholesale Borrowings, Capital and Capital Ratios   9  
  
Comparative Average Balance Sheets - Yields and Costs   10-11  
  
GAAP to Non-GAAP Reconciliation: Earnings, ROA and ROE   12-15  
  
GAAP to Non-GAAP Reconciliation: Noninterest income as a %
   of total revenue and efficiency ratios 		  16-19  
       
See disclosure of explanation of TSFG’s use of certain Non-GAAP financial measures in the earnings release.


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data) (unaudited)
 
Three Months Ended
 
 
3/31/07 12/31/06 9/30/06 6/30/06 3/31/06
 
 
 
 
 
 
Interest Income                    
Interest and fees on loans $ 186,628   $ 187,385   $ 184,476   $ 179,971   $ 169,188  
Interest and dividends on securities:                              
   Taxable   28,825     29,876     30,779     31,652     32,543  
   Exempt from federal income taxes   3,048     3,125     3,140     3,210     3,344  
 
 
 
 
 
 
      Total interest and dividends on securities   31,873     33,001     33,919     34,862     35,887  
Interest on short-term investments   141     144     196     879     292  
 
 
 
 
 
 
      Total interest income   218,642     220,530     218,591     215,712     205,367  
 
 
 
 
 
 
Interest Expense                              
Interest on deposits   88,479     82,716     77,393     68,704     62,479  
Interest on borrowed funds   35,625     41,160     42,515     43,886     39,976  
 
 
 
 
 
 
   Total interest expense   124,104     123,876     119,908     112,590     102,455  
 
 
 
 
 
 
   Net Interest Income   94,538     96,654     98,683     103,122     102,912  
Provision for Credit Losses   9,013     8,838     6,553     7,487     9,911  
 
 
 
 
 
 
   Net interest income after provision for credit losses   85,525     87,816     92,130     95,635     93,001  
Noninterest Income   30,844     32,799     37,912     32,020     29,320  
Noninterest Expenses   85,351     93,564     83,628     83,059     79,834  
 
 
 
 
 
 
   Income before income taxes   31,018     27,051     46,414     44,596     42,487  
Income tax expense   10,500     3,500     14,249     15,253     14,680  
 
 
 
 
 
 
   Net Income $ 20,518   $ 23,551   $ 32,165   $ 29,343   $ 27,807  
 
 
 
 
 
 
  
Average common shares outstanding, basic   74,736,832     75,161,032     75,003,605     74,864,648     74,685,192  
Average common shares outstanding, diluted   75,244,968     75,701,120     75,590,748     75,504,683     75,339,283  
Net income per common share, basic $ 0.27   $ 0.31   $ 0.43   $ 0.39   $ 0.37  
Net income per common share, diluted   0.27     0.31     0.43     0.39     0.37  
Cash dividends declared per common share   0.18     0.18     0.17     0.17     0.17  

1


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
DETAILS FOR NONINTEREST INCOME AND NONINTEREST EXPENSES
(dollars in thousands) (unaudited)
  Three Months Ended  
 
 
3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Noninterest Income                    
Service charges on deposit accounts $ 10,613   $ 10,704   $ 11,457   $ 11,592   $ 11,288  
Debit card income   2,177     2,198     2,055     2,095     1,921  
Customer service fee income   1,291     1,267     1,117     1,074     1,009  
 
 
 
 
 
 
   Total customer fee income   14,081     14,169     14,629     14,761     14,218  
 
 
 
 
 
 
Retail investment services   1,958     1,671     1,689     2,249     2,023  
Insurance income   3,297     3,411     2,831     2,806     2,977  
Trust and investment management income   1,594     1,506     1,483     1,678     1,457  
Benefits administration fees   742     722     795     749     667  
 
 
 
 
 
 
   Total wealth management income   7,591     7,310     6,798     7,482     7,124  
 
 
 
 
 
 
Mortgage banking income   2,069     2,224     1,969     2,078     1,884  
Bank-owned life insurance   2,851     2,932     2,916     2,969     2,819  
Merchant processing income   3,755     3,069     3,449     3,318     2,686  
Gain (loss) on certain derivative activities   97     596     3,924     (245 )   (1,125 )
Loss on indirect auto loans (1)   —     —     (667 )   (985 )   —  
Other   1,785     2,738     2,396     2,518     1,039  
 
 
 
 
 
 
   Operating noninterest income (noninterest income,
     excluding non-operating items) 		  32,229     33,038     35,414     31,896     28,645  
 
 
 
 
 
 
Loss on sale of available for sale securities   (1,385 )   (113 )   —     (150 )   (183 )
Gain (loss) on equity investments   —     (126 )   —     3,751     858  
Gain on disposition of assets and liabilities   —     —     2,498     —     —  
Loss on sale of indirect auto loans previously HFI (1)   —     —     —     (3,477 )   —  
 
 
 
 
 
 
   Non-operating noninterest income (loss)   (1,385 )   (239 )   2,498     124     675  
 
 
 
 
 
 
     Total noninterest income $ 30,844   $ 32,799   $ 37,912   $ 32,020   $ 29,320  
 
 
 
 
 
 
  
Noninterest Expenses                              
Salaries and wages $ 35,072   $ 35,188   $ 34,494   $ 33,605   $ 31,456  
Employee benefits   9,759     8,927     9,080     8,703     9,029  
Occupancy   8,608     8,856     7,949     7,684     7,313  
Furniture and equipment   6,462     6,579     6,217     6,468     5,952  
Professional services   4,103     5,637     4,549     5,497     5,779  
Advertising and business development   1,931     2,937     2,264     2,187     2,506  
Merchant processing expense   3,020     2,542     2,830     2,678     2,165  
Telecommunications   1,393     1,384     1,407     1,421     1,418  
Amortization of intangibles   2,001     2,156     2,204     2,208     2,207  
Other   11,242     13,547     12,634     12,608     11,411  
 
 
 
 
 
 
   Operating noninterest expenses (noninterest
     expenses, excluding non-operating items)		   83,591     87,753     83,628     83,059     79,236  
 
 
 
 
 
 
Employment contract buyouts and severance   1,760     4,990     —     —     598  
Loss on early extinguishment of debt   —     821     —     —     —  
 
 
 
 
 
 
   Non-operating noninterest expenses   1,760     5,811     —     —     598  
 
 
 
 
 
 
     Total noninterest expenses $ 85,351   $ 93,564   $ 83,628   $ 83,059   $ 79,834  
 
 
 
 
 
 
                               
(1) In June 2006, TSFG sold approximately $360 million of indirect auto loans originated from August 2005 through the end of May 2006 and classified the loss on sale of these loans previously held for investment as a non-operating item. TSFG classified its June and July production of indirect auto loans as held for sale and reported the loss from the lower of cost or market adjustment as an operating item. As of July 31, 2006, TSFG transferred these loans, originally classified as held for sale, to held for investment.

2


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) (unaudited)
 
3/31/07 12/31/06 9/30/06 6/30/06 3/31/06
 
 
 
 
 
 
Assets                    
Cash and due from banks $ 257,884   $ 326,567   $ 295,534   $ 286,954   $ 249,324  
Interest-bearing bank balances  7,012    31,264    5,224    16,275    10,406  
Federal funds sold and securities
    purchased to resell		  50,000    —    7,500    7,176    —  
Securities                              
   Available for sale  2,546,047    2,743,456    2,820,383    2,861,182    2,982,574  
   Held to maturity  46,217    52,308    52,790    53,617    57,508  
 
 
 
 
 
 
         Total securities  2,592,264    2,795,764    2,873,173    2,914,799    3,040,082  
 
 
 
 
 
 
Loans held for sale  33,519    28,556    36,155    78,763    23,536  
Loans held for investment  9,898,134    9,701,867    9,513,833    9,439,445    9,720,891  
   Less: Allowance for loan losses  (113,736 )  (111,663 )  (109,401 )  (108,995 )  (111,219 )
 
 
 
 
 
 
         Net loans held for investment  9,784,398    9,590,204    9,404,432    9,330,450    9,609,672  
 
 
 
 
 
 
Premises and equipment, net  223,738    219,163    213,820    207,393    203,953  
Accrued interest receivable  72,801    77,523    72,459    71,905    69,739  
Intangible assets  683,611    685,568    687,403    689,690    691,328  
Other assets  452,920    455,907    452,002    473,678    463,885  
 
 
 
 
 
 
  $ 14,158,147   $ 14,210,516   $ 14,047,702   $ 14,077,083   $ 14,361,925  
 
 
 
 
 
 
Liabilities and Shareholders’ Equity                              
Liabilities                              
   Deposits                              
      Noninterest-bearing $ 1,286,800   $ 1,280,908   $ 1,261,421   $ 1,465,811   $ 1,468,825  
      Interest-bearing  8,664,408    8,235,832    7,920,531    7,774,508    7,709,857  
 
 
 
 
 
 
         Total deposits  9,951,208    9,516,740    9,181,952    9,240,319    9,178,682  
   Federal funds purchased and repurchase
      agreements		  1,496,168    1,421,099    1,614,664    1,088,143    1,534,680  
   Other short-term borrowings  111,365    347,620    220,366    171,157    36,356  
   Long-term debt  809,290    1,130,475    1,261,306    1,846,062    1,911,929  
   Accrued interest payable  77,380    68,940    60,075    60,928    58,000  
   Other liabilities  151,126    163,610    162,519    188,897    161,585  
 
 
 
 
 
 
      Total liabilities  12,596,537    12,648,484    12,500,882    12,595,506    12,881,232  
 
 
 
 
 
 
Shareholders’ equity                              
   Preferred stock  —    —    —    —    —  
   Common stock  74,673    75,341    75,192    75,034    74,907  
   Surplus  1,150,288    1,167,685    1,162,889    1,158,758    1,153,056  
   Retained earnings  373,788    367,261    357,371    338,019    321,427  
   Guarantee of employee stock ownership plan debt  (95 )  (151 )  (210 )  (268 )  (327 )
   Accumulated other comprehensive loss, net of
      income tax		  (37,044 )  (48,104 )  (48,422 )  (89,966 )  (68,370 )
 
 
 
 
 
 
        Total shareholders’ equity  1,561,610    1,562,032    1,546,820    1,481,577    1,480,693  
 
 
 
 
 
 
  $ 14,158,147   $ 14,210,516   $ 14,047,702   $ 14,077,083   $ 14,361,925  
 
 
 
 
 
 

3


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
INVESTMENT SECURITIES PORTFOLIO ANALYSIS
(dollars in thousands) (unaudited)
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Investment Securities Portfolio                    
Available for sale (at fair value):                              
   U.S. Treasury $ 167,295   $ 166,719   $ 174,739   $ 173,049   $ 178,864  
   U.S. Government agencies   657,708     653,034     655,447     641,315     648,264  
   Mortgage-backed securities   1,246,384     1,400,288     1,459,220     1,504,818     1,603,090  
   State and municipal   315,372     341,488     345,077     351,462     356,057  
   Other investments (1)   159,288     181,927     185,900     190,538     196,299  
 
 
 
 
 
 
      Total available for sale securities   2,546,047     2,743,456     2,820,383     2,861,182     2,982,574  
 
 
 
 
 
 
Held to maturity (at amortized cost)   46,217     52,308     52,790     53,617     57,508  
 
 
 
 
 
 
   Total securities $ 2,592,264   $ 2,795,764   $ 2,873,173   $ 2,914,799   $ 3,040,082  
 
 
 
 
 
 
Total securities as a percentage of
   total assets		   18.3 %   19.7 %   20.5 %   20.7 %   21.2 %
 
 
 
 
 
 
 
(1) Other investments in available for sale securities includes corporate bonds, FHLB stock, community bank stocks, and other equity securities.
 
  March 31, 2007
  
 
 
  Amortized
Cost
  Percentage
of Total 		  Duration
   Book
Yield
  
 
 
 
 
 
Debt Securities                
U.S. Treasury$ 169,105    6.6 %  1.4    4.07 %
U.S. Government agencies 666,331    26.2    2.9    5.41  
Mortgage-backed securities:                        
   Collateralized mortgage obligations 919,654    36.1    5.5    4.55  
   Adjustable rate mortgages 250,648    9.9    2.0    4.75  
   Pass-through 122,093    4.8    3.3    4.79  
State and municipal 319,645    12.5    3.5    4.80  
Corporate bonds 100,002    3.9    3.8    4.86  
 
 
 
 
 
   Total available for sale debt securities$ 2,547,478    100.0 %  3.8    4.82 %
 
 
 
 
 
  
Fixed interest rate:                        
   Mortgage-backed securities$ 1,040,009    40.8 %  5.2    4.58 %
   Other 1,230,138    48.3    2.9    5.00  
Variable interest rate:                        
   Mortgage-backed securities 252,386    9.9    2.0    4.75  
   Other 24,945    1.0    2.6    6.61  
 
 
 
 
 
      Total available for sale debt securities$ 2,547,478    100.0 %  3.8    4.82 %
 
 
 
 
 
 
Projected Cash Flows for Debt Securities
 
          Projected Annual Cash Flows by Interest Rate Scenario
  
         
 
Year   Roll-Off
Yield		   Current   Up 1.00%   Down 1.00%  
 
 
 
 
 
Remainder of 2007   4.94 %   $ 500,884   $ 278,859   $ 1,181,936  
2008   4.35       305,533    201,253    446,234  
 
Projected Interest Rate Shock for Debt Securities
 
Interest
Rate
Scenario
   Estimated
Impact on
Fair
Value
  Duration
  
 
 
 
 Up 2.00%    (9.8 )% 5.2  
 Up 1.00%    (4.7 ) 4.9  
   Flat    —   3.8  
Down 1.00%    3.2   2.0  
Down 2.00%    4.9   0.8  
 
The estimated decrease in fair value for a five year U.S. Treasury Note when interest rates increase 100 basis points is 4.31%.
 

4


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION BASED ON LOAN PURPOSE AND LOAN GROWTH
(dollars in thousands) (unaudited)
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Commercial Loans                    
Commercial and industrial $2,596,705   $ 2,491,210   $ 2,378,533   $ 2,393,706   $ 2,371,946  
Owner - occupied real estate  883,738    830,179    859,306    880,545    754,229  
Commercial real estate   4,209,149     4,171,631    4,060,602    4,043,550    4,090,130  
 
 
 
 
 
 
    7,689,592     7,493,020    7,298,441    7,317,801    7,216,305  
 
 
 
 
 
 
  
Consumer Loans                              
Indirect - sales finance   666,801     660,401    651,419    555,678    928,633  
Direct retail   283,461    292,993    291,555    304,934    333,773  
Home equity   531,922    528,909    537,406    554,266    561,964  
 
 
 
 
 
 
    1,482,184    1,482,303    1,480,380    1,414,878    1,824,370  
 
 
 
 
 
 
  
Mortgage Loans   726,358    726,544    735,012    706,766    680,216  
 
 
 
 
 
 
  
    Total loans held for investment $ 9,898,134   $ 9,701,867   $ 9,513,833   $ 9,439,445   $ 9,720,891  
 
 
 
 
 
 
  
Percentage of Loans Held for Investment                              
Commercial and industrial   26.2 %   25.7 %  25.0 %  25.4 %  24.4 %
Owner - occupied real estate   8.9    8.6    9.0    9.3    7.7  
Commercial real estate   42.5    43.0    42.7    42.8    42.1  
Consumer   15.0    15.2    15.6    15.0    18.8  
Mortgage   7.4    7.5    7.7    7.5    7.0  
 
 
 
 
 
 
    Total   100.0 %  100.0 %  100.0 %  100.0 %  100.0 %
 
 
 
 
 
 
     
  For The Period Ended  
 
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Non organic change in loans held for
    investment related to:		                              
    Origination and transfer of indirect auto
      loans originally held for sale to held for
       investment		 $ —   $ —   $51,019   $ (51,019 ) $ —  
    Sale of indirect auto loans —    —    —    (359,609 )  —  
    Other acquisitions (dispositions) (1) —     —    (2,629 )  —    —  
                               
Growth in Loans Held for Investment (2)                              
Growth vs. prior quarter, annualized   8.2 %   7.8 %  3.1 %  (11.6 )%  12.1 %
Growth year-to-date, annualized   8.2   2.8    1.1    —    12.1  
                               
Growth in Loans Held for Investment,
    Excluding Changes from Acquisitions
    and Dispositions (2)		                              
Organic growth vs. prior quarter, annualized   8.2 %   7.8 %  1.1 %  5.3 %  12.1 %
Organic growth year-to-date, annualized   8.2   6.6    6.2    8.8    12.1  
   
(1) Other acquisitions (dispositions) during the three months ended September 30, 2006 related to the sale of the Mullins branch.
   
(2) At December 31, 2005, loans held for investment totaled $9,439,935.

5


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
SUMMARY OF CREDIT QUALITY AND ALLOWANCE FOR CREDIT LOSSES
(dollars in thousands) (unaudited)
 
  At and for the Three Months Ended
  
 
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Credit Quality                    
Loans held for investment$ 9,898,134   $ 9,701,867   $ 9,513,833   $ 9,439,445   $ 9,720,891  
Allowance for loan losses 113,736    111,663    109,401    108,995    111,219  
Allowance for credit losses 114,822    112,688    110,349    110,320    112,454  
Nonperforming loans (1) 43,222    37,168    31,396    37,782    35,722  
Foreclosed property (other real estate owned
   and personal property repossessions)		 3,572    4,341    4,851    10,187    9,323  
 
 
 
 
 
 
      Nonperforming assets$ 46,794   $ 41,509   $ 36,247   $ 47,969   $ 45,045  
 
 
 
 
 
 
Nonperforming loans as a % of loans
   held for investment		 0.44 %  0.38 %  0.33 %  0.40 %  0.37 %
Nonperforming assets as a % of loans held
   for investment and foreclosed property		 0.47    0.43    0.38    0.51    0.46  
Allowance for loan losses as a % of loans
   held for investment		 1.15    1.15    1.15    1.15    1.14  
Allowance for credit losses as a % of loans
   held for investment		 1.16    1.16    1.16    1.17    1.16  
Allowance for loan losses to nonperforming
   loans		 2.63 x  3.00 x  3.48 x  2.88 x  3.11 x
Impaired loans (1)(2)$ 36,403   $ 28,733   $ 24,604   $ 30,860   $ 22,055  
Specific allowance for impaired loans 7,716    6,686    3,987    8,027    4,904  
Loans past due 90 days or more (mortgage
   and consumer with interest accruing) (3)		 193    3,129    3,163    2,849    2,369  
Net loan charge-offs 6,879    6,499    6,524    6,532    6,807  
Average loans held for investment 9,783,328    9,589,732    9,467,123    9,664,441    9,606,556  
Net loan charge-offs as a % of average
   loans held for investment (annualized)		 0.29 %  0.27 %  0.27 %  0.27 %  0.29 %
  
Allowance for Loan Losses                              
Balance at beginning of period$ 111,663   $ 109,401   $ 108,995   $ 111,219   $ 107,767  
Allowance adjustment for loans sold —    —    —    (3,089 )  —  
Provision for loan losses 8,952    8,761    6,930    7,397    10,259  
Loans charged-off (8,611 )  (9,197 )  (9,768 )  (8,785 )  (8,873 )
Recoveries of loans previously charged-off 1,732    2,698    3,244    2,253    2,066  
 
 
 
 
 
 
Balance at end of period$ 113,736   $ 111,663   $ 109,401   $ 108,995   $ 111,219  
 
 
 
 
 
 
  
Reserve for Unfunded Lending Commitments                              
Balance at beginning of period$ 1,025   $ 948   $ 1,325   $ 1,235   $ 1,583  
Provision for unfunded lending commitments 61    77    (377 )  90    (348 )
 
 
 
 
 
 
Balance at end of period$ 1,086   $ 1,025   $ 948   $ 1,325   $ 1,235  
 
 
 
 
 
 
  
Allowance for Credit Losses                              
Balance at beginning of period$ 112,688   $ 110,349   $ 110,320   $ 112,454   $ 109,350  
Allowance adjustment for loans sold —    —    —    (3,089 )  —  
Provision for credit losses 9,013    8,838    6,553    7,487    9,911  
Loans charged-off (8,611 )  (9,197 )  (9,768 )  (8,785 )  (8,873 )
Recoveries of loans previously charged-off 1,732    2,698    3,244    2,253    2,066  
 
 
 
 
 
 
Balance at end of period$ 114,822   $ 112,688   $ 110,349   $ 110,320   $ 112,454  
 
 
 
 
 
 
   
(1) At March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006, these credit quality indicators (nonperforming loans and impaired loans) included $1.9 million, $500,000, $661,000, $743,000, and $693,000, respectively, in restructured loans.
   
(2) In second quarter 2006, TSFG changed its policy to include nonaccruing loans that are fully protected by collateral as impaired loans. This change added $7.5 million to impaired loans at June 30, 2006.
   
(3) In first quarter 2007, there were no mortgage loans past due 90 days or more still accruing interest, compared with $3.0 million for fourth quarter 2006.

6


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
TYPE OF CUSTOMER FUNDING AND CUSTOMER FUNDING GROWTH
(dollars in thousands) (unaudited)
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Noninterest-bearing $ 1,286,800   $ 1,280,908   $ 1,261,421   $ 1,465,811   $ 1,468,825  
Interest-bearing checking 1,198,714    1,208,125    1,245,167    1,220,949    1,188,449  
Money market accounts 2,374,242    2,435,413    2,477,982    2,333,992    2,261,672  
Savings accounts 184,283    181,192    188,629    181,871    191,449  
 
 
 
 
 
 
   Core deposits 5,044,039    5,105,638    5,173,199    5,202,623    5,110,395  
Time deposits under $100,000 1,797,170    1,680,878    1,546,422    1,426,624    1,381,468  
Time deposits of $100,000 or more 1,132,510    1,105,793    1,088,827    1,205,796    1,285,048  
 
 
 
 
 
 
   Customer deposits (1) 7,973,719    7,892,309    7,808,448    7,835,043    7,776,911  
Brokered deposits 1,977,489    1,624,431    1,373,504    1,405,276    1,401,771  
 
 
 
 
 
 
   Total deposits 9,951,208    9,516,740    9,181,952    9,240,319    9,178,682  
Less: Brokered deposits (1,977,489 )  (1,624,431 )  (1,373,504 )  (1,405,276 )  (1,401,771 )
Add: Customer sweeps 479,698    500,288    378,116    349,471    311,992  
 
 
 
 
 
 
   Customer funding (2)$ 8,453,417   $ 8,392,597   $ 8,186,564   $ 8,184,514   $ 8,088,903  
 
 
 
 
 
 
Percentage of Deposits                              
Noninterest-bearing 12.9 %  13.4 %  13.7 %  15.9 %  16.0 %
Interest-bearing checking 12.0    12.7    13.6    13.2    12.9  
Money market accounts 23.9    25.6    27.0    25.3    24.6  
Savings accounts 1.8    1.9    2.0    2.0    2.1  
 
 
 
 
 
 
   Core deposits 50.6    53.6    56.3    56.4    55.6  
Time deposits under $100,000 18.1    17.7    16.8    15.4    15.1  
Time deposits of $100,000 or more 11.4    11.6    11.9    13.0    14.0  
 
 
 
 
 
 
   Customer deposits (1) 80.1    82.9    85.0    84.8    84.7  
Brokered deposits 19.9    17.1    15.0    15.2    15.3  
 
 
 
 
 
 
   Total deposits 100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
 
 
 
 
 
 
     
  For The Period Ended  
 
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Growth vs. Prior Quarter, Annualized (3)                    
Noninterest-bearing1.9 %   6.1 %   (55.3 )%   (0.8 )%   2.8 %  
Core deposits(4.9 )   (5.2 )   (2.2 )   7.2     0.9    
Total deposits18.5     14.5     (2.5 )   2.7     (2.4 )  
Customer funding (2)2.9     10.0     0.1     4.7     (5.6 )  
                               
Growth Year-To-Date, Annualized (3)                              
Noninterest-bearing1.9 %   (12.2 )%   (18.1 )%   1.0 %   2.8 %  
Core deposits(4.9 )   0.1     1.9     4.1     0.9    
Total deposits18.5     3.1     (0.8 )   0.1     (2.4 )  
Customer funding (2)2.9     2.3     (0.2 )   (0.4 )   (5.6 )  
   
(1) Total deposits less brokered deposits.
   
(2) Total deposits less brokered deposits plus customer sweeps.
   
(3) At December 31, 2005, noninterest-bearing totaled $1,458,914, core deposits totaled $5,099,040, total deposits totaled $9,234,437, and customer funding totaled $8,201,571.

7


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
TYPES OF ORGANIC CUSTOMER FUNDING GROWTH
(dollars in thousands) (unaudited)
 
  For The Period Ended  
 
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Noninterest-Bearing                    
Beginning balance$ 1,280,908   $ 1,261,421   $ 1,465,811   $ 1,468,825   $ 1,458,914  
Increase (decrease) during the three
   months ended related to:		                              
     Organic change 5,892    19,487    (202,167 )  (3,014 )  9,911  
     Bank acquisitions (dispositions) (1)  —    —    (2,223 )  —    —  
 
 
 
 
 
 
Ending balance$ 1,286,800   $ 1,280,908   $ 1,261,421   $ 1,465,811   $ 1,468,825  
 
 
 
 
 
 
  
Core Deposits                              
Beginning balance$ 5,105,638   $ 5,173,199   $ 5,202,623   $ 5,110,395   $ 5,099,040  
Increase (decrease) during the three
   months ended related to:		                              
     Organic change (61,599 )  (67,561 )  (13,848 )  92,228    11,355  
     Bank acquisitions (dispositions) (1)  —    —    (15,576 )  —    —  
 
 
 
 
 
 
Ending balance$ 5,044,039   $ 5,105,638   $ 5,173,199   $ 5,202,623   $ 5,110,395  
 
 
 
 
 
 
  
Customer Funding(2)                              
Beginning balance$ 8,392,597   $ 8,186,564   $ 8,184,514   $ 8,088,903   $ 8,201,571  
Increase (decrease) during the three
   months ended related to:		                              
     Organic change 60,820    206,033    29,991    95,611    (112,668 )
     Bank acquisitions (dispositions) (1)  —    —    (27,941 )  —    —  
 
 
 
 
 
 
Ending balance$ 8,453,417   $ 8,392,597   $ 8,186,564   $ 8,184,514   $ 8,088,903  
 
 
 
 
 
 
  
Organic Change vs. Prior Quarter,
   Annualized (3)		                              
Noninterest-bearing 1.9 %  6.1 %  (54.7 )%  (0.8 )%  2.8 %
Core deposits (4.9 )  (5.2 )  (1.1 )  7.2    0.9  
Customer funding (2)  2.9    10.0    1.5    4.7    (5.6 )
                               
Organic Change Year-To-Date,
    Annualized (3)		                              
Noninterest-bearing 1.9 %  (12.0 )%  (17.9 )%  1.0 %  2.8 %
Core deposits (4.9 )  0.4    2.4    4.1    0.9  
Customer funding (2)  2.9    2.7    0.2    (0.4 )  (5.6 )
   
(1) The non organic change in deposits relates to the September, 2006 disposition of the Mullins branch.
   
(2) Total deposits less brokered deposits plus customer sweeps.
   
(3) At December 31, 2005, noninterest-bearing totaled $1,458,914, core deposits totaled $5,099,040, and customer funding totaled $8,201,571.

8


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
SUMMARY OF WHOLESALE BORROWINGS, CAPITAL, CAPITAL RATIOS, UNREALIZED LOSSES
ON AVAILABLE FOR SALE SECURITIES, AND MARKET RATES FOR U.S. TREASURY NOTES
(dollars in thousands) (unaudited)
 
  3/31/07   12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
 
Types of wholesale borrowings                    
Short-term borrowings                              
Federal funds purchased and
    repurchase agreements		 $ 1,016,470   $ 920,811   $ 1,236,548   $ 738,672   $ 1,222,688  
Customer sweeps 479,698    500,288    378,116    349,471    311,992  
FHLB advances 75,000    175,000    175,000    —    —  
Commercial paper 35,584    32,631    36,032    30,336    35,210  
Treasury, tax and loan note 781    139,989    9,334    140,821    1,146  
 
 
 
 
 
 
    Total short-term borrowings 1,607,533    1,768,719    1,835,030    1,259,300    1,571,036  
Long-term borrowings                              
Repurchase agreements 200,000    521,000    596,000    771,000    821,000  
FHLB advances 328,107    328,113    339,620    749,127    842,134  
Subordinated notes 188,871    188,871    233,016    233,016    155,695  
Manditorily redeemable preferred
    stock of subsidiary		  89,800    89,800    89,800    89,800    89,800  
Note payable 818    828    838    847    856  
Employee stock ownership plan note
     payable		 125    200    275    350    425  
Purchase accounting premiums, net of
    amortization		 1,569    1,663    1,757    1,922    2,019  
 
 
 
 
 
 
    Total long-term borrowings 809,290    1,130,475    1,261,306    1,846,062    1,911,929  
 
 
 
 
 
 
    Total borrowings 2,416,823    2,899,194    3,096,336    3,105,362    3,482,965  
Less: Customer sweeps (479,698 )  (500,288 )  (378,116 )  (349,471 )  (311,992 )
Add: Brokered deposits 1,977,489    1,624,431    1,373,504    1,405,276    1,401,771  
 
 
 
 
 
 
    Total wholesale borrowings$ 3,914,614   $ 4,023,337   $ 4,091,724   $ 4,161,167   $ 4,572,744  
 
 
 
 
 
 
                               
Wholesale borrowings as a percentage
    of total assets		 27.6 %  28.3 %  29.1 %  29.6 %  31.8 %
                               
Regulatory Capital                              
Tier 1 capital$ 1,115,023   $ 1,123,448   $ 1,143,708   $ 1,117,710   $ 1,018,558  
Tier 2 capital 177,236    179,021    176,701    176,237    178,403  
 
 
 
 
 
 
   Total risk-based capital 1,292,259    1,302,469    1,320,409    1,293,947    1,196,961  
 
 
 
 
 
 
Total risk-weighted assets 11,424,481    11,502,152    11,277,236    11,255,642    11,588,786  
                               
Tangible Equity                              
Shareholders’ equity$ 1,561,610   $ 1,562,032   $ 1,546,820   $ 1,481,577   $ 1,480,693  
Intangible assets (683,611 )  (685,568 )  (687,403 )  (689,690 )  (691,328 )
 
 
 
 
 
 
  Tangible equity 877,999    876,464    859,417    791,887    789,365  
 
 
 
 
 
 
                               
Capital Ratios                              
Total risk-based capital 11.31 %  11.32 %  11.71 %  11.50 %  10.33 %
Tier 1 risk-based capital 9.76    9.77    10.14    9.93    8.79  
Leverage ratio 8.28    8.34    8.60    8.18    7.45  
Tangible equity to tangible assets ratio 6.52    6.48    6.43    5.92    5.77  
Less: impact of unrealized gain or loss (0.25 )  (0.31 )  (0.33 )  (0.56 )  (0.44 )
 
 
 
 
 
 
  Tangible equity to tangible assets
      ratio, excluding unrealized gain
      or loss		 6.77    6.79    6.76    6.48    6.21  
 
 
 
 
 
 
                               
Unrealized Losses on AFS Securities                              
Gross (included in AFS securities)$ (59,764 ) $ (75,302 ) $ (77,224 ) $ (134,480 ) $ (105,060 )
Net of income tax (included in equity) (37,601 )  (47,378 )  (48,599 )  (84,667 )  (66,137 )
                               
Market Rates for U.S. Treasury
    Notes		                              
Three year 4.54 %  4.74 %  4.62 %  5.13 %  4.82 %
Five year 4.54    4.70    4.59    5.09    4.81  

9


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
COMPARATIVE AVERAGE BALANCES - YIELDS AND COSTS
(dollars in thousands) (unaudited)
 
  Three Months Ended  
 
 
  3/31/07   12/31/06   9/30/06  
 
 
 
 
  Average
Balance		   Income/
Expense		   Yield/
Rate 		  Average
Balance		   Income/
Expense 		  Yield/
Rate 		  Average
Balance 		  Income/
Expense 		  Yield/
Rate 		 
 
 
 
 
 
 
 
 
 
 
Assets                              
Earning assets                                                
  Loans (1) $ 9,813,010   $ 186,628  7.71 % $ 9,623,050   $ 187,385   7.73 % $ 9,523,286   $ 184,476   7.69 %
  Investment securities (taxable) (2)  2,414,896    28,825  4.78    2,503,989    29,876   4.77    2,586,438    30,779   4.76  
  Investment securities (nontaxable) (3)  383,804    4,689  4.89    400,117    4,808   4.81    407,005    4,831   4.75  
 
 
     
 
     
 
     
    Total investment securities  2,798,700    33,514  4.79    2,904,106    34,684   4.78    2,993,443    35,610   4.76  
  Federal funds sold, interest-bearing
    bank balances, and other temp
    investments		   8,331     141   6.86     11,521     144   4.96     13,479     196   5.77  
 
 
     
 
     
 
     
      Total earning assets  12,620,041    220,283  7.06    12,538,677    222,213   7.04    12,530,208    220,282   6.98  
     
         
         
     
  Non-earning assets   1,528,013               1,592,004               1,443,500            
 
         
         
         
      Total assets $ 14,148,054           $ 14,130,681            $ 13,973,708           
 
           
           
           
Liabilities and Shareholders’ Equity                                                
Liabilities                                                
  Interest-bearing liabilities                                                
   Interest-bearing deposits                                                
    Interest checking $ 1,187,239   $ 5,935   2.03   $ 1,106,819   $ 5,770   2.07   $ 1,132,556   $ 5,869   2.06  
    Savings  178,940    706  1.60    184,733    687   1.48    187,089    577   1.22
    Money market   2,377,771     23,537   4.01     2,445,437     24,109   3.91     2,420,756     22,771   3.73  
    Time deposits, excluding brokered
      deposits (4)		   2,893,638     35,581   4.99     2,687,712     32,635   4.82     2,620,505     29,653   4.49  
    Brokered deposits   1,771,081     22,720   5.20     1,478,336     19,515   5.24     1,344,521     18,523   5.47  
 
 
     
 
     
 
     
      Total interest-bearing deposits  8,408,669    88,479  4.27    7,903,037    82,716   4.15    7,705,427    77,393   3.98  
   Customer sweeps   453,928     4,981   4.45     414,742     4,695   4.49     369,697     4,274   4.59  
   Other borrowings  2,270,120    30,644  5.47    2,645,462    36,465   5.47    2,811,224    38,241   5.40  
 
 
     
 
     
 
     
    Total interest-bearing liabilities   11,132,717     124,104   4.52     10,963,241     123,876   4.48     10,886,348     119,908   4.37  
     
         
         
     
   Noninterest-bearing liabilities                                                
    Noninterest-bearing deposits   1,230,320           1,302,329           1,369,032            
    Other noninterest liabilities  233,248           306,023           217,223            
 
         
         
         
    Total liabilities   12,596,285           12,571,593           12,472,603            
Shareholders’ equity  1,551,769           1,559,088          1,501,105            
 
         
         
         
  Total liabilities and shareholders’
      equity		 $ 14,148,054         $ 14,130,681           $ 13,973,708          
 
           
           
           
Net interest margin (tax-equivalent)      $ 96,179  3.08 %      $ 98,337   3.12 %      $ 100,374   3.19 %
Less: tax-equivalent adjustment (3)         1,641               1,683               1,691      
       
           
           
     
Net interest income      $ 94,538           $ 96,654            $ 98,683      
   
 		    
 		        
   
                   
        Customer funding (5) $ 8,321,836   $ 70,740   3.45 % $ 8,141,772   $ 67,896   3.31 % $ 8,099,635   $ 63,144   3.09 %
        Wholesale borrowings (6)  4,041,201    53,364  5.36    4,123,798    55,980   5.39    4,155,745    56,764   5.42  
        Total funding (7)   12,363,037     124,104   4.07     12,265,570     123,876   4.01     12,255,380     119,908   3.88  
   
(1) Nonaccrual loans are included in average balances for yield computations.
   
(2) The average balances for investment securities exclude the unrealized gain or loss recorded for available for sale securities.
   
(3) The tax-equivalent adjustment to net interest income adjusts the yield for assets earning tax-exempt income to a comparable yield on a taxable basis.
   
(4) At March 31, 2007, December 31, 2006, and September 30, 2006, this line includes time deposits greater than $100,000 of (in thousands) $1,130,609, $1,084,753, and $1,142,089, respectively.
   
(5) Customer funding includes total deposits less brokered deposits plus customer sweeps.
   
(6) TSFG defines wholesale borrowings as borrowings less customer sweeps plus brokered deposits. For purposes of this table, wholesale borrowings equal the sum of other borrowings and brokered deposits, as customer sweeps are presented separately.
   
(7) Total funding includes customer funding and wholesale borrowings.
 
Note: Average balances are derived from daily balances.
 

10


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
COMPARATIVE AVERAGE BALANCES - YIELDS AND COSTS - CONTINUED
(dollars in thousands) (unaudited)
 
  Three Months Ended  
 
 
  6/30/06   3/31/06  
 
 
 
  Average
Balance
  Income/
Expense
  Yield/
Rate 		  Average
Balance
  Income/
Expense
  Yield/
Rate		  
 
 
 
 
 
 
 
Assets                    
Earning assets
  Loans (1) $ 9,711,641   $ 179,971   7.43 % $ 9,630,573   $ 169,188   7.12 %
  Investment securities (taxable) (2)   2,676,211     31,652   4.73     2,752,345     32,543   4.73  
  Investment securities (nontaxable) (3)   416,117     4,938   4.75     434,980     5,145   4.73  
 
 
     
 
     
    Total investment securities   3,092,328     36,590   4.73     3,187,325     37,688   4.73  
  Federal funds sold and interest-
     bearing bank balances		   64,319     879   5.48     21,509     292   5.51  
 
 
     
 
     
      Total earning assets   12,868,288     217,440   6.77     12,839,407     207,168   6.53  
       
           
     
  Non-earning assets   1,476,147             1,527,849          
 
         
         
      Total assets $ 14,344,435             $ 14,367,256            
 
           
           
Liabilities and Shareholders’ Equity                                
Liabilities                                
  Interest-bearing liabilities                                
   Interest-bearing deposits                                
    Interest checking $ 1,168,434   $ 5,054   1.73   $ 1,140,738   $ 4,406   1.57  
    Savings   179,220     287   0.64     191,613     308   0.65  
    Money market   2,261,040     18,651   3.31     2,215,043     16,345   2.99  
    Time deposits, excluding brokered deposits (4)   2,641,817     26,984   4.10     2,778,587     26,031   3.80  
    Brokered deposits   1,408,889     17,728   5.05     1,373,199     15,389   4.54  
 
 
     
 
     
      Total interest-bearing deposits   7,659,400     68,704   3.60     7,699,180     62,479   3.29  
   Customer sweeps   314,040     3,383   4.32     299,894     2,889   3.91  
   Other borrowings   3,252,647     40,503   4.99     3,272,395     37,087   4.60  
 
 
     
 
     
    Total interest-bearing liabilities   11,226,087     112,590   4.02     11,271,469     102,455   3.69  
       
           
     
   Noninterest-bearing liabilities                                
    Noninterest-bearing deposits   1,446,115               1,431,304            
    Other noninterest liabilities   195,999               176,487            
 
         
         
    Total liabilities   12,868,201               12,879,260            
Shareholders’ equity   1,476,234               1,487,996            
 
         
         
  Total liabilities and shareholders’ equity $ 14,344,435             $ 14,367,256            
 
           
           
Net interest margin (tax-equivalent)       $ 104,850   3.27 %       $ 104,713   3.29 %
Less: tax-equivalent adjustment (3)         1,728               1,801      
       
           
     
Net interest income       $ 103,122             $ 102,912      
       
           
     
                                 
        Customer funding (5) $ 8,010,666   $ 54,359   2.72 % $ 8,057,179   $ 49,979   2.52 %
        Wholesale borrowings (6)   4,661,536     58,231   5.01     4,645,594     52,476   4.58  
        Total funding (7)   12,672,202     112,590   3.56     12,702,773     102,455   3.27  
   
(1) Nonaccrual loans are included in average balances for yield computations.
   
(2) The average balances for investment securities exclude the unrealized gain or loss recorded for available for sale securities.
   
(3) The tax-equivalent adjustment to net interest income adjusts the yield for assets earning tax-exempt income to a comparable yield on a taxable basis.
   
(4) At June 30, 2006 and March 31, 2006, this line includes time deposits greater than $100,000 of (in thousands) $1,232,787 and $1,384,999, respectively.
   
(5) Customer funding includes total deposits less brokered deposits plus customer sweeps.
   
(6) TSFG defines wholesale borrowings as borrowings less customer sweeps plus brokered deposits. For purposes of this table, wholesale borrowings equal the sum of other borrowings and brokered deposits, as customer sweeps are presented separately.
   
(7) Total funding includes customer funding and wholesale borrowings
 
Note: Average balances are derived from daily balances.
 

11


 
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands, except share data) (unaudited)
     
  Three Months Ended  
 
  3/31/07  
 
      Diluted
EPS		  
   
 
Net Income, as Reported (GAAP) $ 20,518   $ 0.27  
Non-Operating Items            
Loss on sale of available for sale securities 1,385      
Employment contract buyouts and severance 1,760      
Related income taxes (1,065 )    
      
Operating Earnings (Net Income, Excluding
      Non-Operating Items)		 22,598    0.30  
Amortization of intangibles 2,001      
Related income taxes (677 )    
      
Cash Operating Earnings (Net Income,
      Excluding Non-Operating Items and
      Amortization of Intangibles)		$ 23,922   $ 0.32  
      
             
Average Common Shares Outstanding, Diluted 75,244,968      
             
Select Balance Sheet (Averages)            
Total assets$ 14,148,054      
Intangible assets (684,626 )    
      
      Tangible assets 13,463,428      
      
Shareholders’ equity 1,551,769      
Intangible assets (684,626 )    
      
      Tangible equity 867,143      
      
             
Return on Average Assets            
GAAP earnings 0.59 %    
Operating earnings 0.65      
Cash operating earnings on average tangible assets 0.72      
             
Return on Average Equity            
GAAP earnings 5.36      
Operating earnings 5.91      
Cash operating earnings on average tangible equity 11.19      

12


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands, except share data) (unaudited)
   
  Three Months Ended  
 
 
  12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
  Diluted
EPS 		    Diluted
EPS 		    Diluted
EPS 		    Diluted
EPS 		 
   
     
     
     
 
Net Income, as Reported (GAAP)  (1) $23,551   $0.31   $32,165   $ 0.43   $29,343   $ 0.39   $ 27,807   $ 0.37  
Non-Operating Items                                                
Loss on sale of available for sale securities 113        —        150        183      
(Gain) loss on equity investments 126        —        (3,751 )      (858 )    
Gain on disposition of assets and liabilities —        (2,498 )      —        —      
Loss on sale of indirect auto loans previously HFI —        —        3,477        —      
Employment contract buyouts 4,990        —        —        598      
Loss on early extinguishment of debt 821        —        —        —      
Related income taxes (1,952 )      767        42        27      
     
     
     
   
Operating Earnings (Net Income, Excluding
   Non-Operating Items)  (1)		  27,649    0.37    30,434    0.40    29,261    0.39    27,757    0.37  
Amortization of intangibles 2,156        2,204        2,208        2,207      
Related income taxes (279 )      (677 )      (755 )      (763 )    
     
     
     
   
Cash Operating Earnings (Net Income,
   Excluding Non-Operating Items and
   Amortization of Intangibles)		$ 29,526   $ 0.39   $ 31,961   $ 0.42   $ 30,714   $ 0.41   $ 29,201   $ 0.39  
     
     
     
   
  
Average Common Shares Outstanding, Diluted 75,701,120        75,590,748        75,504,683        75,339,283      
  
Select Balance Sheet (Averages)                                                
Total assets$ 14,130,681       $ 13,973,708       $ 14,344,435       $ 14,367,256      
Intangible assets (686,393 )      (688,493 )      (690,375 )      (691,262 )    
     
     
     
   
   Tangible assets 13,444,288        13,285,215        13,654,060        13,675,994      
     
     
     
   
  
Shareholders’ equity 1,559,088        1,501,105        1,476,234        1,487,996      
Intangible assets (686,393 )      (688,493 )      (690,375 )      (691,262 )    
     
     
     
   
   Tangible equity 872,695        812,612        785,859        796,734      
     
     
     
   
  
Return on Average Assets                                                
GAAP earnings 0.66 %       0.91 %      0.82 %      0.78 %     
Operating earnings 0.78        0.86        0.82        0.78      
Cash operating earnings on average tangible assets 0.87        0.95        0.90        0.87      
  
Return on Average Equity                                                
GAAP earnings 5.99        8.50        7.97        7.58      
Operating earnings 7.04        8.04        7.95        7.57      
Cash operating earnings on average tangible equity 13.42        15.60        15.68        14.86      
 
(1) Net income and operating earnings for fourth quarter 2006 included a $5.2 million income tax benefit, or $0.07 per diluted share, related to favorable income tax settlements.

13


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands, except share data) (unaudited)
     
  Three Months Ended  
 
 
  12/31/05   9/30/05   6/30/05   3/31/05  
 
 
 
 
 
  Diluted
EPS 		    Diluted
EPS 		    Diluted
EPS 		    Diluted
EPS 		 
   
     
     
     
 
Net Income (Loss), as Reported (GAAP) $ (16,397 ) $ (0.22 ) $ 21,090   $ 0.28   $ 42,712   $ 0.57   $ 22,416   $ 0.31  
Non-Operating Items                                                
Change in fair value of interest rate swaps  2,106        16,240        (22,277 )      17,209      
(Gain) loss on sale of available for sale securities  52,677        1,032        1,503        (234 )    
Gain on equity investments  (224 )      (254 )      (650 )      (1,711 )    
Employment contract buyouts (reversals)  9,998        144        222        (37 )    
Impairment from write-down of assets  —        —        917        —      
Merger-related costs  529        981        2,194        305      
Charitable contribution to foundation  —        —        —        683      
(Gain) loss on early extinguishment of debt  5,086        462        2,981        (1,428 )    
Related income taxes  (26,938 )      (5,582 )      4,911        (4,932 )    
Discontinued operations, net of income tax  —        —        —        396      
      
     
     
   
Operating Earnings (Net Income, Excluding
      Non-Operating Items)		 26,837    0.36    34,113    0.45    32,513    0.44    32,667    0.45  
Amortization of intangibles  2,354        2,337        2,140        1,806      
Related income taxes  (706 )      (701 )      (695 )      (596 )    
      
     
     
   
Cash Operating Earnings (Net Income,
      Excluding Non-Operating Items and
      Amortization of Intangibles)		$ 28,485   $ 0.38   $ 35,749   $ 0.47   $ 33,958   $ 0.46   $ 33,877   $ 0.46  
      
     
     
   
                                                 
Average Common Shares Outstanding, Diluted  75,485,436        75,414,866        74,421,103        73,021,005      
                                                 
Select Balance Sheet (Averages)                                                
Total assets $ 14,854,460       $ 14,945,151       $ 14,902,070       $ 14,302,030      
Intangible assets  (693,016 )      (691,881 )      (656,066 )      (610,914 )    
      
     
     
   
      Tangible assets  14,161,444        14,253,270        14,246,004        13,691,116      
      
     
     
   
   
Shareholders’ equity  1,497,231        1,508,140        1,450,674        1,394,839      
Intangible assets  (693,016 )      (691,881 )      (656,066 )      (610,914 )    
      
     
     
   
      Tangible equity  804,215        816,259        794,608        783,925      
      
     
     
   
                                                 
Return on Average Assets                                                
GAAP earnings (loss)  (0.44 )%      0.56 %      1.15 %      0.64 %    
Operating earnings  0.72        0.91        0.88        0.93      
Cash operating earnings on average tangible assets  0.80        1.00        0.96        1.00      
                                                 
Return on Average Equity                                                
GAAP earnings (loss)  (4.34 )      5.55        11.81        6.52      
Operating earnings  7.11        8.97        8.99        9.50      
Cash operating earnings on average tangible equity  14.05        17.38        17.14        17.53      

14


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands, except share data) (unaudited)
 
  Years Ended December 31,  
 
 
  2006   2005  
 
 
 
      Diluted
EPS 		      Diluted
EPS 		 
 
   
 
Net Income, as Reported (GAAP) $112,866   $ 1.49   $ 69,821   $ 0.94  
Non-Operating Items                        
Change in fair value of interest rate swaps  —        13,278      
Loss on sale of available for sale securities  446        54,978      
Gain on equity investments  (4,483 )      (2,839 )    
Gain on disposition of assets and liabilities  (2,498 )      —      
Loss on sale of indirect auto loans previously HFI  3,477        —      
Employment contract buyouts  5,588        10,327      
Impairment loss from write-down of assets  —        917      
Merger-related costs  —        4,009      
Loss on early extinguishment of debt  821        7,101      
Charitable contribution to foundation  —        683      
Related income taxes  (1,116 )      (32,541 )    
Discontinued operations, net of income tax  —        396      
 
       
       
Operating Earnings (Net Income, Excluding
   Non-Operating Items)		  115,101    1.52    126,130    1.69  
Amortization of intangibles  8,775        8,637      
Related income taxes  (2,474 )      (2,698 )    
 
       
       
Cash Operating Earnings (Net Income,
   Excluding Non-Operating Items and
   Amortization of Intangibles)		 $ 121,402   $ 1.61   $ 132,069   $ 1.77  
 
       
       
                         
Average Common Shares Outstanding, Diluted  75,542,848        74,594,626      
                         
Select Balance Sheet (Averages)                        
Total assets $ 14,202,649       $ 14,752,973      
Intangible assets  (689,116 )      (663,274 )    
 
       
       
   Tangible assets  13,513,533        14,089,699      
 
       
       
   
Shareholders’ equity  1,506,195        1,463,125      
Intangible assets  (689,116 )      (663,274 )    
 
       
       
   Tangible equity  817,079        799,851      
 
       
       
                         
Return on Average Assets                        
GAAP earnings  0.79 %      0.47 %    
Operating earnings  0.81        0.85      
Cash operating earnings on average tangible assets  0.90        0.94      
                         
Return on Average Equity                        
GAAP earnings  7.49        4.77      
Operating earnings  7.64        8.62      
Cash operating earnings on average tangible equity  14.86        16.51      

15


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands) (unaudited)
 
Three Months Ended  
 
 
3/31/07  
   
 
Select Financial Data Used in Ratios Calculated Below      
Net interest income  $ 94,538  
Tax-equivalent adjustment   1,641  
   
 
      Net interest income (tax-equivalent)  $ 96,179  
   
 
         
Total noninterest income, as reported (GAAP)  $ 30,844  
Adjustments for non-operating items:        
      Loss on sale of available for sale securities   1,385  
   
 
Operating noninterest income (noninterest income, excluding
      non-operating items)		   $ 32,229  
   
 
         
Total noninterest expenses, as reported (GAAP)  $ 85,351  
Adjustments for non-operating items:        
      Employment contract buyouts and severance   (1,760 )
   
 
Operating noninterest expenses (noninterest expenses, excluding
      non-operating items)		   83,591  
Less: amortization of intangibles   (2,001 )
   
 
Cash operating noninterest expenses (noninterest expenses,
      excluding non-operating items and amortization of
      intangibles)		  $ 81,590  
   
 
         
Total Revenue (1)        
GAAP  $ 125,382  
Operating (2)   128,408  
         
Noninterest Income as a % Total Revenue (3)        
GAAP   24.60 %
Operating (2)   25.10  
         
Efficiency Ratios (4)        
GAAP   68.07  
Operating (2)   65.10  
Cash operating (2)   63.54  
 
(1)
The sum of net interest income and noninterest income.
 
(2)
Total revenue, noninterest income as a % of total revenue, and the efficiency ratio, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items. The cash operating efficiency ratio also excludes amortization of intangibles.
 
(3)
Calculated as noninterest income, divided by the sum of net interest income and noninterest income.
 
(4)
Calculated as noninterest expenses, divided by the sum of net interest income and noninterest income.

16


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands) (unaudited)
 
Three Months Ended  
 
 
12/31/06   9/30/06   6/30/06   3/31/06  
 
 
 
 
 
Select Financial Data Used in Ratios Calculated Below                
Net interest income$ 96,654   $ 98,683   $ 103,122   $ 102,912  
Tax-equivalent adjustment 1,683    1,691    1,728    1,801  
 
 
 
 
 
     Net interest income (tax-equivalent)$ 98,337   $ 100,374   $ 104,850   $ 104,713  
 
 
 
 
 
                         
Total noninterest income, as reported (GAAP)$ 32,799   $ 37,912   $ 32,020   $ 29,320  
Adjustments for non-operating items:                        
     Loss on sale of available for sale securities 113    —    150    183  
     (Gain) loss on equity investments 126    —    (3,751 )  (858 )
     Gain on disposition of assets and liabilities —    (2,498 )  —    —  
     Loss on sale of indirect auto loans previously HFI —    —    3,477    —  
 
 
 
 
 
Operating noninterest income (noninterest income, excluding
     non-operating items)		$ 33,038   $ 35,414   $ 31,896   $ 28,645  
 
 
 
 
 
                         
Total noninterest expenses, as reported (GAAP)$ 93,564   $ 83,628   $ 83,059   $ 79,834  
Adjustments for non-operating items:                        
     Employment contract buyouts (4,990 )  —    —    (598 )
     Loss on early extinguishment of debt (821 )  —    —    —  
 
 
 
 
 
Operating noninterest expenses (noninterest expenses, excluding
     non-operating items)		 87,753    83,628    83,059    79,236  
Less: amortization of intangibles (2,156 )  (2,204 )  (2,208 )  (2,207 )
 
 
 
 
 
Cash operating noninterest expenses (noninterest expenses,
     excluding non-operating items and amortization of
     intangibles)		$ 85,597   $ 81,424   $ 80,851   $ 77,029  
 
 
 
 
 
                         
Total Revenue (1)                        
GAAP$ 129,453   $ 136,595   $ 135,142   $ 132,232  
Operating (2) 131,375    135,788    136,746    133,358  
                         
Noninterest Income as a % Total Revenue (3)                        
GAAP 25.34 %  27.76 %  23.69 %  22.17 %
Operating (2) 25.15    26.08    23.32    21.48  
                         
Efficiency Ratios (4)                        
GAAP 72.28    61.22    61.46    60.37  
Operating (2) 66.80    61.59    60.74    59.42  
Cash operating (2) 65.15    59.96    59.12    57.76  
 
(1)
The sum of net interest income and noninterest income.
 
(2)
Total revenue, noninterest income as a % of total revenue, and the efficiency ratio, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items. The cash operating efficiency ratio also excludes amortization of intangibles.
 
(3)
Calculated as noninterest income, divided by the sum of net interest income and noninterest income.
 
(4)
Calculated as noninterest expenses, divided by the sum of net interest income and noninterest income.

17


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands) (unaudited)
 
Three Months Ended  
 
 
12/31/05   9/30/05   6/30/05   3/31/05  
 
 
 
 
 
Select Financial Data Used in Ratios Calculated Below                
Net interest income$ 104,933   $ 103,589   $ 102,285   $ 98,249  
Tax-equivalent adjustment 1,730    1,601    1,397    1,326  
 
 
 
 
 
     Net interest income (tax-equivalent)$ 106,663   $ 105,190   $ 103,682   $ 99,575  
 
 
 
 
 
  
Total noninterest income (loss), as reported (GAAP)$ (24,960 ) $ 16,428   $ 50,471   $ 13,271  
Adjustments for non-operating items:                        
     Change in fair value of interest rate swaps 2,106    16,240    (22,277 )  17,209  
     (Gain) loss on sale of available for sale securities 52,677    1,032    1,503    (234 )
     Gain on equity investments (224 )  (254 )  (650 )  (1,711 )
 
 
 
 
 
Operating noninterest income (noninterest income, excluding
     non-operating items)		 29,599    33,446    29,047    28,535  
  
        Net cash settlement of certain interest rate swaps included in noninterest income (288 )  2,377    3,534    4,737  
 
 
 
 
 
Operating noninterest income, excluding net cash settlement
     of certain interest rate swaps		$ 29,887   $ 31,069   $ 25,513   $ 23,798  
 
 
 
 
 
                         
Total noninterest expenses, as reported (GAAP)$ 100,973   $ 81,035   $ 79,535   $ 66,510  
Adjustments for non-operating items:                        
     Employment contract (buyouts) reversals (9,998 )  (144 )  (222 )  37  
     Merger-related costs (529 )  (981 )  (2,194 )  (305 )
     Impairment from write-down of assets —    —    (917 )  —  
     Charitable contribution to foundation —    —    —    (683 )
     Gain (loss) on early extinguishment of debt (5,086 )  (462 )  (2,981 )  1,428  
 
 
 
 
 
Operating noninterest expenses (noninterest expenses, excluding
     non-operating items)		 85,360    79,448    73,221    66,987  
Less: amortization of intangibles (2,354 )  (2,337 )  (2,140 )  (1,806 )
 
 
 
 
 
Cash operating noninterest expenses (noninterest expenses,
     excluding non-operating items and amortization of
     intangibles)		$ 83,006   $ 77,111   $ 71,081   $ 65,181  
 
 
 
 
 
                         
Total Revenue (1)                        
GAAP$79,973   $ 120,017   $ 152,756   $ 111,520  
Operating (2) 136,262    138,636    132,729    128,110  
                         
Noninterest Income (Loss) as a % Total Revenue (3)                        
GAAP (31.21 )%  13.69 %  33.04 %  11.90 %
Operating (2) 21.72    24.13    21.88    22.27  
Operating, excluding net cash settlement of certain interest rate swaps (4) 21.93    22.41    19.22    18.58  
                         
Efficiency Ratios (5)                        
GAAP 126.26    67.52    52.07    59.64  
Operating (2) 62.64    57.31    55.17    52.29  
Cash operating (2) 60.92    55.62    53.55    50.88  
 
(1)
The sum of net interest income and noninterest income.
 
(2)
Total revenue, noninterest income as a % of total revenue, and the efficiency ratio, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items. The cash operating efficiency ratio also excludes amortization of intangibles.
 
(3)
Calculated as noninterest income, divided by the sum of net interest income and noninterest income.
 
(4)
Calculated excluding the net cash settlement of certain interest rate swaps.
 
(5)
Calculated as noninterest expenses, divided by the sum of net interest income and noninterest income.

18


THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands) (unaudited)
 
Years Ended December 31,  
 
 
2006   2005   2004   2003   2002  
 
 
 
 
 
 
Select Financial Data Used in Ratios Calculated Below                    
Net interest income$ 401,371   $ 409,056   $ 335,841   $ 250,890   $ 210,143  
Tax-equivalent adjustment 6,903    6,054    4,356    2,681    2,352  
 
 
 
 
 
 
     Net interest income (tax-equivalent) 408,274    415,110    340,197    253,571    212,495  
          Net cash settlement of certain interest rate swaps
              included in noninterest income		 —    10,360    27,560    19,486    7,396  
 
 
 
 
 
 
     Net interest income (tax-equivalent), including net cash
          settlement of certain interest rate swaps		$ 408,274   $ 425,470   $ 367,757   $ 273,057   $ 219,891  
 
 
 
 
 
 
                               
Net interest margin (tax-equivalent) 3.22 %  3.12 %  3.06 %  3.01 %  3.59 %
Net interest margin (tax-equivalent), including net cash
     settlement of certain interest rate swaps		 3.22    3.20    3.31    3.24    3.71  
                               
Total noninterest income, as reported (GAAP)$ 132,051   $ 55,210   $ 124,877   $ 100,739   $ 74,563  
Adjustments for non-operating items:                              
     Change in fair value of interest rate swaps —    13,278    (2,550 )  14,237    (7,527 )
     (Gain) loss on sale of available for sale securities 446    54,978    (6,998 )  (11,080 )  (2,985 )
     Gain on equity investments (4,483 )  (2,839 )  (4,723 )  (5,376 )  (3,135 )
     Impairment of perpetual preferred stock —    —    10,367    —    —  
     Gain on disposition of assets and liabilities (2,498 )  —    (2,350 )  (601 )  —  
     Loss on sale of indirect auto loans previously HFI 3,477    —    —    —    —  
 
 
 
 
 
 
Operating noninterest income (noninterest income,
     excluding non-operating items)		 128,993    120,627    118,623    97,919    60,916  
          Net cash settlement of certain interest rate swaps
              included in noninterest income		 —    10,360    27,560    19,486    7,396  
 
 
 
 
 
 
Operating noninterest income, excluding net cash
     settlement of certain interest rate swaps		$ 128,993   $ 110,267   $ 91,063   $ 78,433   $ 53,520  
 
 
 
 
 
 
                               
Total noninterest expenses, as reported (GAAP)$ 340,085   $ 328,053   $ 250,244   $ 207,170   $ 162,840  
Adjustments for non-operating items:                              
     Employment contract buyouts (5,588 )  (10,327 )  (1,080 )  (512 )  (1,846 )
     Merger-related costs —    (4,009 )  (7,866 )  (5,127 )  (6,664 )
     Impairment recovery (loss) from write-down of assets —    (917 )  277    (268 )  (1,449 )
     Conservation grant of land —    —    (3,350 )  —    —  
     Loss on early extinguishment of debt (821 )  (7,101 )  (1,429 )  (2,699 )  (354 )
     Charitable contribution to foundation —    (683 )  —    —    —  
 
 
 
 
 
 
Operating noninterest expenses (noninterest expenses,
     excluding non-operating items)		 333,676    305,016    236,796    198,564    152,527  
Less: amortization of intangibles (8,775 )  (8,637 )  (6,043 )  (3,433 )  (1,519 )
 
 
 
 
 
 
Cash operating noninterest expenses (noninterest
     expenses, excluding non-operating items and
     amortization of intangibles)		$ 324,901   $ 296,379   $ 230,753   $ 195,131   $ 151,008  
 
 
 
 
 
 
                               
Total Revenue (1)                              
GAAP$ 533,422   $ 464,266   $ 460,718   $ 351,629   $ 284,706  
Operating (2) 537,267    535,737    458,820    351,490    273,411  
                               
Noninterest Income as a % Total Revenue (3)                              
GAAP 24.76 %  11.89 %  27.10 %  28.65 %  26.19 %
Operating (2) 24.01    22.52    25.85    27.86    22.28  
Operating, excluding net cash settlement of certain
     interest rate swaps (4)		 24.01    20.58    19.85    22.31    19.57  
                               
Efficiency Ratios (5)                              
GAAP 63.76    70.66    54.32    58.92    57.20  
Operating (2) 62.11    56.93    51.61    56.49    55.79  
Cash operating (2) 60.47    55.32    50.29    55.52    55.23  
 
(1)
The sum of net interest income and noninterest income.
 
(2)
Total revenue, noninterest income as a % of total revenue, and the efficiency ratio, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items. The cash operating efficiency ratio also excludes amortization of intangibles.
 
(3)
Calculated as noninterest income, divided by the sum of net interest income and noninterest income.
 
(4)
Calculated excluding the net cash settlement of certain interest rate swaps.
 
(5)
Calculated as noninterest expenses, divided by the sum of net interest income and noninterest income.

19