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 (Date of earliest event reported): January 24, 2008

                 The South Financial Group, Inc.          

(Exact name of registrant as specified in its charter)

South Carolina		0-15083		57-0824914
	(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer 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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.   Results of Operations and Financial Condition.

On January 24, 2008, The South Financial Group, Inc. (“TSFG”) issued a press release (the “Press Release”) announcing its results of operations for the year and quarter ended December 31, 2007. A copy of the Press Release and the Quarterly Financial Data Supplement are attached hereto as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.

Item 9.01.   Financial Statements and Exhibits .

Exhibit No. Description

99.1 Press Release dated January 24, 2008

99.2 Quarterly Financial Data Supplement, Fourth Quarter 2007

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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 24, 2008 By: /s/   William P. Crawford, Jr.
William P. Crawford, Jr.
Executive Vice President and General Counsel

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EX-99

102 South Main Street

Greenville, SC 29601

864.421.1068

Date: January 24, 2008

Release Time: Immediate

THE SOUTH FINANCIAL GROUP REPORTS FOURTH QUARTER

AND FULL-YEAR 2007 EARNINGS

GREENVILLE, SC – The South Financial Group, Inc. (NASDAQ: TSFG) today reported fourth quarter 2007 net income of $9.0 million, or $0.12 per diluted share, compared with net income of $23.6 million, or $0.31 per diluted share, for fourth quarter 2006. As previously-announced, the fourth quarter 2007 provision for credit losses increased to $31.9 million, primarily due to weakening credit expectations and a $7.9 million additional provision for the previously-disclosed Penland Development loans.

Operating earnings for fourth quarter 2007 totaled $10.9 million, or $0.15 per diluted share. This compares with $26.5 million, or $0.36 per diluted share, for third quarter 2007 and $27.6 million, or $0.37 per diluted share, for fourth quarter 2006. Fourth quarter 2007 non-operating pre-tax items include a $1.3 million loss on securities for other than temporary impairment on two non-marketable equity investments, a $881,000 reserve for losses for Visa-related litigation (shared among Visa and Visa member banks), and a $499,000 loss on early extinguishment of debt. A reconciliation of net income to operating earnings is provided in the attached financial highlights.

Net income for 2007 totaled $73.3 million, or $0.99 per diluted share, compared with $112.9 million, or $1.49 per diluted share, for 2006. Operating earnings for 2007 totaled $79.9 million, or $1.08 per diluted share, compared with $115.1 million, or $1.52 per diluted share, for 2006.

“Like many other banks, we face significant industry challenges, including a difficult credit environment, a slowing economy, and competition for deposits,” said Mack I. Whittle, Jr., Chairman, President and Chief Executive Officer of The South Financial Group.  “However, we continue to aggressively and prudently manage credit risk and have kept reserve and capital levels strong.

“In this challenging environment, we continue to focus on our strategic objectives.  In particular, we have improved our earning asset mix, maintained a strong capital position, controlled expenses, and kept the net interest margin relatively stable.  Throughout the year, we improved our earning asset mix by reinvesting investment securities proceeds into new loans.  We remained well-capitalized and ended 2007 with a tangible equity ratio of 6.61%, which is above our 6% to 6.5% targeted level.  Also, we kept expense control a priority and reduced noninterest expenses from the prior year.  Lastly, we remain committed to improving customer funding, which in large part will determine the longer-term outlook for our net interest margin.  We believe this customer focus, the long-term growth potential of our markets, and the disciplined execution of our strategic plan will serve us well as we face the challenges ahead.”

Revenue

Total revenue, defined as net interest income plus noninterest income, was $123.7 million in fourth quarter 2007, compared with total revenue of $126.7 million in third quarter 2007. Total revenue for fourth quarter 2007 included a $1.3 million non-operating pre-tax loss primarily related to other than temporary impairment on two non-marketable equity investments. This compares with a $287,000 pre-tax gain on securities for third quarter 2007.

Fourth quarter 2007 operating revenue, defined as tax-equivalent net interest income plus operating noninterest income, declined to $126.5 million from $127.9 million for the prior quarter. Fourth quarter 2007 tax-equivalent net interest income totaled $96.5 million, a decrease of $1.9 million from $98.3 million in third quarter 2007, principally from the slight compression in the net interest margin. Fourth quarter 2007 operating noninterest income totaled $30.0 million, an increase of $399,000 from $29.6 million in third quarter 2007.

Fourth quarter 2007 average earning assets declined 3.9% linked-quarter annualized to $12.4 billion, as loan growth partially offset continued planned reductions of investment securities. Fourth quarter 2007 average loans increased $120.8 million, or 4.8% linked-quarter annualized, from third quarter 2007. Average securities declined $242.0 million during fourth

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quarter 2007, due to the non-reinvestment of security proceeds. At December 31, 2007, securities totaled $2.0 billion, TSFG’s planned level before resuming reinvestment of cash flows. For full-year 2007, average loans increased 4.1%, while average investment securities declined 17.0%, leading to an improved earning asset mix. Average loans as a percentage of average earning assets totaled 82.0% for fourth quarter 2007, up from 76.7% for the year earlier period.

Fourth quarter 2007 average customer funding, defined as total deposits less brokered deposits plus customer sweeps, decreased $124.9 million, or 6.0% linked-quarter annualized. Similar to the prior quarter, TSFG kept its deposit pricing discipline instead of pursuing unprofitable deposit balances. Based on period-end balances, customer funding grew 3.0% linked-quarter annualized, reflecting growth toward the end of the quarter. Fourth quarter 2007 average wholesale borrowings, including brokered deposits and excluding customer sweeps, were essentially unchanged from third quarter 2007 at $4.1 billion. For full-year 2007, average customer funding increased 1.7%, while average wholesale borrowings declined 7.8%, enhancing TSFG’s funding mix.

The tax-equivalent net interest margin for fourth quarter 2007 declined 3 basis points to 3.09% from 3.12% for third quarter 2007, primarily from lower average customer funding balances and the timing of loan and deposit repricing following recent interest rate reductions by the Federal Reserve. Average earning asset yields declined more than average funding costs (a 17 basis points decline for average earning assets versus 15 basis points for average funding costs). Within earning assets, the fourth quarter 2007 average tax-equivalent yield for loans declined 27 basis points, while the average tax-equivalent yield for investment securities declined 2 basis points. The shift into loans, which had a fourth quarter 2007 average tax-equivalent yield of 7.43%, and away from investment securities, which had an average tax-equivalent yield of 4.80%, partially offset the earning asset yield decline. Within total funding, the total cost of customer funding declined 13 basis points to 3.33% while wholesale borrowing costs (including brokered deposits and excluding customer sweeps) declined 21 basis points to 5.20%. During the last five quarters, the net interest margin has remained relatively stable, ranging from 3.08% to 3.12%, and 3.10% for full-year 2007.

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Operating noninterest income (which excludes non-operating items) increased by $399,000 to $30.0 million for fourth quarter 2007 from $29.6 million for third quarter 2007. In fourth quarter 2007, noninterest income benefited from increases in mortgage banking income and customer fee income, partially offset by a lower gain on derivative activities and losses on sale of real estate. For the full-year 2007, operating noninterest income increased $3.1 million, or 2.7%, to $117.9 million, despite a $2.1 million decline in mortgage banking income. Customer fee income, up $2.4 million or 4.4%, and wealth management income, up $2.2 million or 7.9%, led the increase for 2007.

During the quarter, TSFG began presenting its debit card income, net of related expenses, and retail investment services income, net of certain revenue sharing arrangements with a third party. TSFG believes this presentation provides more clarity around its expense base as well as the net operating revenues for these services. As a result, TSFG reclassified these expenses for prior periods, moving them from noninterest expenses to noninterest income where they are deducted from the appropriate noninterest income category. The amounts reclassified are summarized in the attached financial highlights on page 6.

Noninterest Expenses and Operating Efficiency

Noninterest expenses for fourth quarter 2007 totaled $80.5 million, compared with $78.7 million for third quarter 2007. TSFG’s efficiency ratio totaled 65.1% for fourth quarter 2007 versus 62.2% for third quarter 2007. Fourth quarter 2007 noninterest expenses included an $881,000 accrual for the settlement of Visa-related litigation and a $499,000 non-operating pre-tax loss on early extinguishment of debt primarily from calling preferred securities totaling approximately $25 million with an average spread of 343 basis points over LIBOR. This compares with a $1.3 million loss on early extinguishment of debt for third quarter 2007.

Operating noninterest expenses (which exclude the non-operating items mentioned above) totaled $79.1 million for fourth quarter 2007, a $1.7 million increase from $77.4 million for third quarter 2007. The linked-quarter increase included $1.2 million related to an expected increase in FDIC insurance premiums, higher advertising and business development, and higher loan collection expense, partially offset by lower management incentive compensation. The cash operating efficiency ratio for fourth quarter 2007 totaled 61.1% versus 59.0% for third quarter 2007.

Fourth quarter 2007 operating noninterest expenses declined $5.1 million from $84.2 million for fourth quarter 2006. For full-year 2007, operating noninterest expenses decreased $3.9 million, or 1.2%, to $315.6 million. This decline over the prior year reflects continued focus on overall expense control.

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The effective income tax rate was 20.3% for fourth quarter 2007 and 31.3% for the full-year 2007. This compares with 29.7% for 2006, which included a $5.2 million income tax benefit, or $0.07 per diluted share, related to favorable income tax settlements in fourth quarter 2006.

Credit Quality

The provision for credit losses for fourth quarter 2007 totaled $31.9 million, versus $10.5 million for third quarter 2007, and included additional provisions of $7.9 million for the Penland Development loans. The provision for credit losses exceeded net loan charge-offs by approximately $8.2 million. This increased the overall allowance for credit losses as a percentage of loans held for investment to 1.26% at December 31, 2007 (from 1.18% at September 30, 2007).

Nonperforming assets and net loan charge-offs increased $31.0 million and $6.9 million, respectively, during the fourth quarter. These increases largely relate to residential housing loans and include loans to two real estate developers in Florida ($11.7 million in nonperforming loans, net of $3.0 million in charge-offs) and two mortgage warehouse relationships in Florida ($7.6 million in nonperforming loans, net of $1.6 million in loan charge-offs).

Net loan charge-offs in fourth quarter 2007 were $23.7 million, including $9.2 million for the Penland Development loans. Following these charge-offs, TSFG’s remaining exposure to the Penland Development loans totaled $2.0 million, all of which was classified as nonperforming at December 31, 2007. Annualized fourth quarter 2007 net loan charge-offs totaled 0.92% of average loans held for investment, compared with 0.66% for third quarter 2007. Excluding the charge-offs for the Penland Development loans, annualized fourth quarter 2007 net loan charge-offs totaled 0.57% of average loans held for investment, compared with 0.36% for third quarter 2007.

Nonperforming assets increased $31.0 million to $89.9 million, or 0.88% of loans held for investment and foreclosed property, at December 31, 2007, an increase from $58.9 million, or 0.58%, at September 30, 2007 and $41.5 million, or 0.43%, at December 31, 2006.

The allowance for credit losses totaled $128.7 million, or 1.26% of loans held for investment, at December 31, 2007, compared with $120.4 million, or 1.18%, at September 30, 2007 and $112.7 million, or 1.16%, at December 31, 2006. Fourth quarter 2007 allowance coverage of nonperforming loans totaled 1.55 times, compared with 2.23 times for third quarter 2007 and 3.00 times for fourth quarter 2006.

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Capital

Tangible shareholders’ equity at December 31, 2007 totaled $872.1 million, or $12.04 per share, an increase from $868.6 million, or $11.90 per share, at September 30, 2007 and $876.5 million, or $11.63 per share, at December 31, 2006.

TSFG’s tangible equity to tangible assets ratio at December 31, 2007 was 6.61%, up from 6.47% at September 30, 2007 and 6.48% at December 31, 2006. The increase in tangible equity resulted from a reduction in the after-tax unrealized loss on available for sale securities, partially offset by 600,000 shares repurchased in the quarter (3.6 million shares for 2007). TSFG remains well-capitalized for all regulatory capital ratios and ended the quarter with a tier 1 capital ratio of 9.52%, compared with 9.89% at September 30, 2007.

Quarterly Dividend

As previously announced, the TSFG Board of Directors declared a first quarter 2008 cash dividend in the amount of $0.19 per common share. This dividend will be paid on February 1, 2008 to shareholders of record as of January 15, 2008. The first quarter 2008 cash dividend represents a $0.01, or 6%, increase over the previous quarterly dividend amount. TSFG has increased its quarterly cash dividends annually in each of the last 14 years.

Conference Call / Webcast Information

The South Financial Group will host a conference call on Friday, January 25^th at 10:00 a.m. (ET) to discuss fourth quarter 2007 financial results. Additional material information, including forward-looking statements such as trends and projections, may be discussed during the presentation. For supplemental financial information, please refer to the Form 8-K filed by TSFG with the Securities and Exchange Commission on January 24^th or visit the Investor Relations section of its website under the Quarterly Earnings button. To participate in the conference call or webcast, please follow the instructions listed below.

Conference Call: Please call 1-888-405-5393 or 1-517-645-6236 using the access code “The South.” A 7-day rebroadcast of the call will be available via 1-866-443-1209 or 1-203-369-1089.

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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 4^th 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 8, 2008.

General Information

The South Financial Group is the largest publicly-traded bank holding company headquartered in South Carolina and ranks among the top 50 U.S. commercial bank holding companies in total assets. At December 31, 2007, it had approximately $13.9 billion in total assets and 172 branch offices in Florida, North Carolina, and South Carolina. TSFG focuses on fast-growing banking markets in the Southeast, concentrating its growth in metropolitan statistical areas. TSFG operates Carolina First Bank, which conducts banking operations in North Carolina and South Carolina (as Carolina First Bank), in Florida (as Mercantile Bank), and on the Internet (as Bank CaroLine). At December 31, 2007, approximately 47% of TSFG’s total customer deposits were in South Carolina, 38% were in Florida, and 15% were in North Carolina. Investor information is available at www.thesouthgroup.com.

Explanation of TSFG’s Use of Certain Unaudited Non-GAAP Financial Measures and Forward-Looking Statements

This press release contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”). The attached financial highlights provide reconciliations between GAAP net income and operating earnings (which exclude gains or losses on certain items deemed not to reflect core operations). In addition, TSFG provides data eliminating intangibles and related amortization in order to present data on a “tangible” or “cash operating” basis and in other cases shows earnings and credit-related measures excluding the Penland Development loans. TSFG uses these non-GAAP measures in its analysis of TSFG’s performance and believes presentations of “operating” financial measures provide useful supplemental information, a clearer understanding of TSFG’s performance, and better reflect TSFG’s core operating activities. Management utilizes non-GAAP measures in the calculation of certain of TSFG’s ratios, in particular, to analyze on a consistent basis over time the performance of what it considers to be its core operations. TSFG believes the non-GAAP measures enhance investors’ understanding of TSFG’s business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures 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 and operating measures. These disclosures should not be considered an alternative to GAAP.

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This news release contains forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) that are provided to assist in the understanding of anticipated future financial performance. These statements (as well as other forward-looking statements that may be made by management in the related conference call) include, but are not limited to, descriptions of management's plans, objectives or goals for future operations, and predictions, forecasts or other statements about future operations. They also include such items as return goals, loan growth, customer deposit growth, expense reduction initiatives, income tax rate, expected financial results for acquisitions, factors that will affect credit quality, including the Penland Development loans, and the net interest margin, the effectiveness of its hedging strategies, the risks and effects of changes in interest rates, effects of future economic conditions, and market performance. However, such statements necessarily involve risks and uncertainties and there are a number of factors – many of which are beyond TSFG’s control -- that could cause the actual conditions, events, or 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, please refer to TSFG’s filings with the Securities and Exchange Commission. 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.

CONTACT:

Mary M. Gentry, EVP – Investor Relations (864) 421-1068

Christopher T. Holmes, EVP – Retail Banking and IR (864) 255-8970

***END***

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PAGE 1, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)

	Three Months Ended									% Change 12/31/07 vs.
	12/31/07			9/30/07			12/31/06			9/30/07			9/30/07 Annualized			12/31/06
EARNINGS SUMMARY
Net interest income (tax-equivalent)	$	96,460		$	98,312		$	98,337			(1.9	)%		(7.5	)%		(1.9	)%
Less: tax-equivalent adjustment		1,512			1,538			1,683			(1.7	)		(6.7	)		(10.2	)
Net interest income		94,948			96,774			96,654			(1.9	)		(7.5	)		(1.8	)
Provision for credit losses		31,926			10,504			8,838			203.9			809.1			261.2
Noninterest income: (1)
Operating noninterest income (noninterest       income, excluding non-operating items)		30,029			29,630			29,472			1.3			5.3			1.9
Gain (loss) on securities		(1,288	)		287			(239	)		n/m			n/m			n/m
Non-operating noninterest income (loss)		(1,288	)		287			(239	)		n/m			n/m			n/m
Total noninterest income		28,741			29,917			29,233			(3.9	)		(15.6	)		(1.7	)
Noninterest expenses: (1)
Operating noninterest expenses (noninterest       expenses, excluding non-operating items)		79,101			77,440			84,187			2.1			8.5			(6.0	)
Employment contract buyouts and severance		—			—			4,990			n/m			n/m			n/m
Loss on early extinguishment of debt		499			1,299			821			n/m			n/m			n/m
Visa-related litigation		881			—			—			n/m			n/m			n/m
Non-operating noninterest expenses		1,380			1,299			5,811			n/m			n/m			n/m
Total noninterest expenses		80,481			78,739			89,998			2.2			8.8			(10.6	)
Income before income taxes		11,282			37,448			27,051			(69.9	)		(277.	2)		(58.3	)
Income tax expense		2,293			11,609			3,500			(80.2	)		(318.	4)		(34.5	)
Net income	$	8,989		$	25,839		$	23,551			(65.2	)%		(258.	7)%		(61.8	)%
Earnings:
Operating earnings	$	10,857		$	26,537		$	27,649			(59.1	)%		(234.	4)%		(60.7	)%
Cash operating earnings		12,333			27,853			29,526			(55.7	)		(221.	1)		(58.2	)
Per share data:
Net income, basic	$	0.12		$	0.35		$	0.31			(65.7	)%		(260.	7)%		(61.3	)%
Net income, diluted		0.12			0.35			0.31			(65.7	)		(260.	7)		(61.3	)
Operating earnings, diluted		0.15			0.36			0.37			(58.3	)		(231.	4)		(59.5	)
Cash operating earnings, diluted		0.17			0.38			0.39			(55.3	)		(219.	3)		(56.4	)
Cash dividends declared per common share		0.19			0.18			0.18			5.6			22.0			5.6
Average shares outstanding:
Basic		72,571,612			73,146,211			75,161,032			(0.8	)%		(3.1	)%		(3.4	)%
Diluted		72,875,062			73,605,752			75,701,120			(1.0	)		(3.9	)		(3.7	)
PERFORMANCE RATIOS:
Total revenue:(1)(2)
GAAP	$	123,689		$	126,691		$	125,887			(2.4	)%		(9.4	)%		(1.7	)%
Operating (3)		126,489			127,942			127,809			(1.1	)		(4.5	)		(1.0	)
Return on average assets:
GAAP earnings		0.26	%		0.73	%		0.66	%
Operating earnings		0.31			0.75			0.78
Cash operating earnings on average        tangible assets		0.37			0.83			0.87
Return on average equity:
GAAP earnings		2.29			6.75			5.99
Operating earnings		2.77			6.93			7.04
Cash operating earnings on average        tangible equity		5.57			13.17			13.42
Net interest margin (tax-equivalent)		3.09			3.12			3.12
Efficiency ratios: (1)(4)
GAAP		65.07			62.15			71.49
Cash operating (3)		61.07			59.04			64.18

(1)	In fourth quarter 2007, TSFG began presenting its debit card income and retail investment services net of certain related amounts. Prior periods have been reclassified to conform to the current presentation; see footnotes on page 6 for amounts reclassified.
(2)	The sum of net interest income and noninterest income.
(3)	Total revenue and the cash 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.
(4)	Calculated as noninterest expenses divided by the sum of net interest income and noninterest income.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG’s web site: www.thesouthgroup.com.

PAGE 2, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)

	Year Ended
	12/31/07			12/31/06			% Change
EARNINGS SUMMARY
Net interest income (tax-equivalent)	$	389,027		$	408,274			(4.7	)%
Less: tax-equivalent adjustment		6,246			6,903			(9.5	)
Net interest income		382,781			401,371			(4.6	)
Provision for credit losses		68,568			32,789			109.1
Noninterest income: (1)
Operating noninterest income (noninterest income,        excluding non-operating items)		117,934			114,847			2.7
Gain (loss) on securities		(4,623	)		4,037			n/m
Gain on disposition of assets and liabilities		—			2,498			n/m
Loss on sale of indirect auto loans previously HFI		—			(3,477	)		n/m
Non-operating noninterest income (loss)		(4,623	)		3,058			n/m
Total noninterest income		113,311			117,905			(3.9	)
Noninterest expenses: (1)
Operating noninterest expenses (noninterest        expenses, excluding non-operating items)		315,632			319,530			(1.2	)
Employment contract buyouts and severance		2,306			5,588			n/m
Loss on early extinguishment of debt		2,029			821			n/m
Visa-related litigation		881			—			n/m
Non-operating noninterest expenses		5,216			6,409			n/m
Total noninterest expenses		320,848			325,939			(1.6	)
Income before income taxes		106,676			160,548			(33.6	)
Income tax expense		33,400			47,682			(30.0	)
Net income	$	73,276		$	112,866			(35.1	)%
Earnings:
Operating earnings	$	79,928		$	115,101			(30.6	)%
Cash operating earnings		85,466			121,402			(29.6	)
Per share data:
Net income, basic	$	1.00		$	1.51			(33.8	)%
Net income, diluted		0.99			1.49			(33.6	)
Operating earnings, diluted		1.08			1.52			(28.9	)
Cash operating earnings, diluted		1.15			1.61			(28.6	)
Cash dividends declared per common share		0.73			0.69			5.8
Average shares outstanding:
Basic		73,618,338			74,940,249			(1.8	)%
Diluted		74,085,440			75,542,848			(1.9	)
PERFORMANCE RATIOS:
Total revenue: (1)(2)
GAAP	$	496,092		$	519,276			(4.5	)%
Operating (3)		506,961			523,121			(3.1	)
Return on average assets:
GAAP earnings		0.52	%		0.79	%
Operating earnings		0.57			0.81
Cash operating earnings on average tangible assets		0.64			0.90
Return on average equity:
GAAP earnings		4.75			7.49
Operating earnings		5.18			7.64
Cash operating earnings on average tangible equity		9.92			14.86
Net interest margin (tax-equivalent)		3.10			3.22
Efficiency ratios: (1)(4)
GAAP		64.68			62.77
Cash operating (3)		60.70			59.40

(1)	In fourth quarter 2007, TSFG began presenting its debit card income and retail investment services income net of certain related amounts. Prior periods have been reclassified to conform to the current presentation; see footnotes on page 6 for amounts reclassified.
(2)	The sum of net interest income and noninterest income.
(3)	Total revenue and the cash 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.
(4)	Calculated as noninterest expenses divided by the sum of net interest income and noninterest income.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG’s web site: www.thesouthgroup.com.

PAGE 3, FINANCIAL HIGHLIGHTS THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES (dollars in thousands, except share data) (unaudited)
										% Change 12/31/07 vs.
	12/31/07			9/30/07			12/31/06			9/30/07			9/30/07 Annualized			12/31/06
BALANCE SHEET DATA (Averages - Three Months Ended)
Total assets	$	13,917,386		$	14,022,518		$	14,130,681			(0.7	)%		(3.0	)%		(1.5	)%
Intangible assets		(678,851	)		(680,526	)		(686,393	)		(0.2	)		(1.0	)		(1.1	)
Tangible assets		13,238,535			13,341,992			13,444,288			(0.8	)		(3.1	)		(1.5	)
Loans		10,186,272			10,065,454			9,623,050			1.2			4.8			5.9
Securities (1)		2,230,627			2,472,628			2,904,106			(9.8	)		(38.8	)		(23.2	)
Total earning assets		12,421,732			12,544,656			12,538,677			(1.0	)		(3.9	)		(0.9	)
Noninterest-bearing deposits		1,149,816			1,198,350			1,302,329			(4.1	)		(16.1	)		(11.7	)
Total deposits		9,906,020			9,843,553			9,205,366			0.6			2.5			7.6
Customer funding (2)		8,070,219			8,195,078			8,141,772			(1.5	)		(6.0	)		(0.9	)
Wholesale borrowings (3)		4,071,605			4,067,181			4,123,798			0.1			0.4			(1.3	)
Total funding		12,141,824			12,262,259			12,265,570			(1.0	)		(3.9	)		(1.0	)
Shareholders’ equity		1,556,766			1,519,488			1,559,088			2.5			9.7			(0.1	)
Intangible assets		(678,851	)		(680,526	)		(686,393	)		(0.2	)		(1.0	)		(1.1	)
Tangible equity	$	877,915		$	838,962		$	872,695			4.6			18.4			0.6
Loans/total earning assets		82.0	%		80.2	%		76.7	%
Securities/total assets		16.0			17.6			20.6
Customer funding/total funding		66.5			66.8			66.4
Wholesale borrowings/total assets		29.3			29.0			29.2
Loans/customer funding		126.2			122.8			118.2
BALANCE SHEET DATA (Averages - Year to Date)
Total assets	$	14,044,565		$	14,087,424		$	14,202,649									(1.1	)%
Intangible assets		(681,628	)		(682,564	)		(689,116	)								(1.1	)
Tangible assets		13,362,937			13,404,860			13,513,533									(1.1	)
Loans		10,013,387			9,955,125			9,621,846									4.1
Securities (1)		2,525,317			2,624,627			3,043,385									(17.0	)
Total earning assets		12,545,223			12,586,839			12,692,872									(1.2	)
Noninterest-bearing deposits		1,200,663			1,217,798			1,386,792									(13.4	)
Total deposits		9,805,367			9,771,448			9,129,011									7.4
Customer funding (2)		8,216,762			8,266,147			8,077,605									1.7
Wholesale borrowings (3)		4,053,062			4,046,813			4,394,579									(7.8	)
Total funding		12,269,824			12,312,960			12,472,184									(1.6	)
Shareholders’ equity		1,543,552			1,539,098			1,506,195									2.5
Intangible assets		(681,628	)		(682,564	)		(689,116	)								(1.1	)
Tangible equity	$	861,924		$	856,534		$	817,079									5.5
Loans/total earning assets		79.8	%		79.1	%		75.8	%
Securities/total assets		18.0			18.6			21.4
Customer funding/total funding		67.0			67.1			64.8
Wholesale borrowings/total assets		28.9			28.7			30.9
Loans/customer funding		121.9			120.4			119.1

(1)	The average balances for investment securities exclude the unrealized loss recorded for available for sale securities.
(2)	Customer funding includes total deposits less brokered deposits plus customer sweeps.
(3)	Wholesale borrowings include borrowings less customer sweeps plus brokered deposits.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG’s web site: www.thesouthgroup.com.

PAGE 4, FINANCIAL HIGHLIGHTS THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES (dollars in thousands, except share data) (unaudited)
										% Change 12/31/07 vs.
	12/31/07			9/30/07			12/31/06			9/30/07			9/30/07 Annualized			12/31/06
BALANCE SHEET DATA (Period End)
Loans held for investment	$	10,213,420		$	10,173,237		$	9,701,867			0.4	%		1.6	%		5.3	%
Allowance for loan losses		(126,427	)		(118,861	)		(111,663	)		6.4			25.3			13.2
Allowance for credit losses		(128,695	)		(120,424	)		(112,688	)		6.9			27.2			14.2
Securities		2,025,903			2,364,415			2,795,764			(14.3	)		(56.8	)		(27.5	)
Intangible assets		678,182			679,669			685,568			(0.2	)		(0.9	)		(1.1	)
Total assets		13,877,584			14,100,221			14,210,516			(1.6	)		(6.3	)		(2.3	)
Noninterest-bearing deposits		1,127,657			1,164,312			1,280,908			(3.1	)		(12.5	)		(12.0	)
Total deposits		9,788,568			9,501,669			9,516,740			3.0			12.0			2.9
Customer funding (1)		8,178,471			8,117,185			8,392,597			0.8			3.0			(2.6	)
Wholesale borrowings (2)		3,945,987			4,187,268			4,023,337			(5.8	)		(22.9	)		(1.9	)
Total funding		12,124,458			12,304,453			12,415,934			(1.5	)		(5.8	)		(2.3	)
Shareholders’ equity		1,550,308			1,548,252			1,562,032			0.1			0.5			(0.8	)
CAPITAL RATIOS
Tier 1 risk-based capital		9.52	%		9.89	%		9.77	%
Total risk-based capital		10.91			11.28			11.32
Leverage ratio		8.44			8.64			8.34
Tangible equity to tangible assets		6.61			6.47			6.48
SHARE DATA
Shares outstanding		72,455,205			72,971,394			75,341,276			(0.7	)%		(2.8	)%		(3.8	)%
Book value per common share	$	21.40		$	21.22		$	20.73			0.8			3.4			3.2
Tangible book value per common share		12.04			11.90			11.63			1.2			4.7			3.5
Market price per share of common stock		15.63			22.74			26.59			(31.3	)		(124.0	)		(41.2	)
Market capitalization		1,132,475			1,659,369			2,003,325			(31.8	)		(126.0	)		(43.5	)
OPERATIONS DATA
Branch offices		172			172			167			—	%		—	%		3.0	%
ATMs		187			183			169			2.2			8.7			10.7
Employees (full-time equivalent)		2,474			2,457			2,618			0.7			2.7			(5.5	)

(1)	Customer funding includes total deposits less brokered deposits plus customer sweeps.
(2)	Wholesale borrowings include borrowings less customer sweeps plus brokered deposits.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG’s web site: www.thesouthgroup.com.

PAGE 5, FINANCIAL HIGHLIGHTS THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES (dollars in thousands, except share data) (unaudited)
										% Change 12/31/07 vs.
	12/31/07			9/30/07			12/31/06			9/30/07			9/30/07 Annualized			12/31/06
CREDIT QUALITY
Loans held for investment	$	10,213,420		$	10,173,237		$	9,701,867			0.4	%		1.6	%		5.3	%
Allowance for loan losses		(126,427	)		(118,861	)		(111,663	)		6.4						13.2
Allowance for credit losses		(128,695	)		(120,424	)		(112,688	)		6.9						14.2
Nonperforming loans	$	81,631		$	53,257		$	37,168			53.3	%					119.6	%
Foreclosed property (other real estate owned and personal    property repossessions)		8,276			5,658			4,341			46.3						90.6
Nonperforming assets	$	89,907		$	58,915		$	41,509			52.6	%					116.6	%
Nonperforming loans as a % of loans held for investment		0.80	%		0.52	%		0.38	%
Nonperforming assets as a % of loans held for investment and    foreclosed property		0.88			0.58			0.43
Allowance for loan losses as a % of loans HFI		1.24			1.17			1.15
Allowance for credit losses as a % of loans HFI		1.26			1.18			1.16
Allowance for loan losses to nonperforming loans		1.55	x		2.23	x		3.00	x
Loans past due 90 days or more (mortgage and onsumer with    interest accruing)	$	5,349		$	2,629		$	3,129									70.9	%
Average loans held for investment:
Three months ended		10,164,807			10,042,419			9,589,732
Year to date		9,985,751			9,925,410			9,581,602
Net loan charge-offs:
Three months ended		23,655			16,801			6,499			40.8	%					264.0	%
Year to date		52,561			28,906			26,362									99.4
Net loan charge-offs as a % of average loans held for    investment (annualized):
Three months ended		0.92	%		0.66	%		0.27	%
Year to date		0.53			0.39			0.28

CREDIT QUALITY - Excluding the Penland Development Loans (1)
Loans held for investment	$	10,211,400		$	10,162,039
Allowance for loan losses		(126,427	)		(117,592	)
Allowance for credit losses		(128,695	)		(119,155	)
Nonperforming loans	$	79,611		$	43,823
Foreclosed property (other real estate owned and personal    property repossessions)		8,276			5,658
Nonperforming assets	$	87,887		$	49,481
Nonperforming loans as a % of loans held for investment		0.78	%		0.43	%
Nonperforming assets as a % of loans held for investment and    foreclosed property		0.86			0.49
Allowance for loan losses as a % of loans HFI		1.24			1.16
Allowance for credit losses as a % of loans HFI		1.26			1.17
Allowance for loan losses to nonperforming loans		1.59	x		2.68	x
Loans past due 90 days or more (mortgage and consumer    with interest accruing)	$	5,349		$	2,629
Net loan charge-offs:
Three months ended		14,477			9,070
Year to date		34,152			19,675
Net loan charge-offs as a % of average loans held for    investment (annualized):
Three months ended		0.57	%		0.36	%
Year to date		0.34			0.27

(1)

These non-GAAP measures exclude loans held for investment of $2.0 million, quarter to date charge-offs of $9.2 million, year to date charge-offs of $18.4 million, and nonperforming assets of $2.0 million related to the Penland Development loans at and for the period ended December 31, 2007. At and for the period ended September 30, 2007, these non-GAAP measures exclude loans held for investment of $11.2 million, quarter to date charge-offs of $7.7 million, year to date charge-offs of $9.2 million, allowance of $1.3 million, and nonperforming assets of $9.4 million related to the Penland Development loans. See page 9 of the Quarterly Financial Data Supplement for additional details on these loans.

A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG’s web site: www.thesouthgroup.com.

PAGE 6, FINANCIAL HIGHLIGHTS THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES (dollars in thousands, except share data) (unaudited)
	Three Months Ended								% Change 12/31/07 vs.
	12/31/07			9/30/07		12/31/06			9/30/07			9/30/07 Annualized			12/31/06
NONINTEREST INCOME
Customer fee income (1)	$	14,830		$	14,584	$	13,422			1.7	%		6.7	%		10.5	%
Wealth management income (2)		7,515			7,434		7,033			1.1			4.3			6.9
Mortgage banking income		1,273			834		2,224			52.6			208.8			(42.8	)
Bank-owned life insurance		3,065			2,974		2,932			3.1			12.1			4.5
Merchant processing income, net		829			928		527			(10.7	)		(42.3	)		57.3
Gain on certain derivative activities		5			198		596			n/m			n/m			n/m
Other		2,512			2,678		2,738			(6.2	)		(24.6	)		(8.3	)
Operating noninterest income (noninterest      income, excluding non-operating items)		30,029			29,630		29,472			1.3			5.3			1.9
Non-operating noninterest income (loss)		(1,288	)		287		(239	)		n/m			n/m			n/m
Total noninterest income	$	28,741		$	29,917	$	29,233			(3.9	)%		(15.6	)%		(1.7	)%
NONINTEREST EXPENSES
Personnel expense	$	42,452		$	43,397	$	44,115			(2.2	)%		(8.6	)%		(3.8	)%
Occupancy		8,783			8,723		8,856			0.7			2.7			(0.8	)
Furniture and equipment		6,590			6,543		6,579			0.7			2.8			0.2
Professional services		3,767			4,278		5,637			(11.9	)		(47.4	)		(33.2	)
Advertising and business development		2,054			1,443		2,937			42.3			168.0			(30.1	)
Telecommunications		1,453			1,404		1,384			3.5			13.8			5.0
Amortization of intangibles		1,853			1,907		2,156			(2.8	)		(11.2	)		(14.1	)
Other		12,149			9,745		12,523			24.7			97.9			(3.0	)
Operating noninterest expenses (noninterest      expenses, excluding non-operating items)		79,101			77,440		84,187			2.1			8.5			(6.0	)
Non-operating noninterest expenses		1,380			1,299		5,811			n/m			n/m			n/m
Total noninterest expenses	$	80,481		$	78,739	$	89,998			2.2	%		8.8	%		(10.6	)%

	Year Ended
	12/31/07			12/31/06			% Change
NONINTEREST INCOME
Customer fee income (1)	$	57,349		$	54,945			4.4	%
Wealth management income (2)		29,787			27,615			7.9
Mortgage banking income		6,053			8,155			(25.8	)
Bank-owned life insurance		13,344			11,636			14.7
Merchant processing income, net		3,263			2,307			41.4
Gain (loss) on certain derivative activities		(1,197	)		3,150			n/m
Loss on indirect auto loans		—			(1,652	)		n/m
Other		9,335			8,691			7.4
Operating noninterest income (noninterest income,      excluding non-operating items)		117,934			114,847			2.7
Non-operating noninterest income (loss)		(4,623	)		3,058			n/m
Total noninterest income	$	113,311		$	117,905			(3.9	)%
NONINTEREST EXPENSES
Personnel expense	$	174,183		$	170,482			2.2	%
Occupancy		34,659			31,802			9.0
Furniture and equipment		26,081			25,216			3.4
Professional services		17,062			21,462			(20.5	)
Advertising and business development		7,401			9,894			(25.2	)
Telecommunications		5,668			5,630			0.7
Amortization of intangibles		7,897			8,775			(10.0	)
Other		42,681			46,269			(7.8	)
Operating noninterest expenses (noninterest      expenses, excluding non-operating items)		315,632			319,530			(1.2	)
Non-operating noninterest expenses		5,216			6,409			n/m
Total noninterest expenses	$	320,848		$	325,939			(1.6	)%

(1)	In fourth quarter 2007, TSFG began presenting its debit card income net of related expenses. Debit card expense totaled (in thousands) $582 for fourth quarter 2007, $607 for third quarter 2007, and $747 for fourth quarter 2006. For the years ended December 31, 2007 and 2006, debit card expense totaled (in thousands) $2,363 and $2,832, respectively.
(2)	In fourth quarter 2007, TSFG began presenting its retail investment services income net of certain revenue sharing arrangments with a third party. Such amounts for these arrangements totaled (in thousands) $242 for fourth quarter 2007, $249 for third quarter 2007, and $277 for fourth quarter 2006. For the years ended December 31, 2007 and 2006, such amounts totaled (in thousands) $996 and $1,099, respectively.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG’s web site: www.thesouthgroup.com.

PAGE 7, FINANCIAL HIGHLIGHTS THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES (dollars in thousands, except share data) (unaudited)
	Three Months Ended							% Change 12/31/07 vs.
	12/31/07		9/30/07			12/31/06		9/30/07			9/30/07 Annualized			12/31/06
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
NET INCOME, AS REPORTED (GAAP)	$	8,989	$	25,839		$	23,551		(65.2	)%		(258.7	)%		(61.8	)%
Add: Income tax expense		2,293		11,609			3,500
Income before income taxes		11,282		37,448			27,051		(69.9	)		(277.2	)		(58.3	)
Non-operating items:
(Gain) loss on securities		1,288		(287	)		239
Employment contract buyouts and severance		—		—			4,990
Loss on early extinguishment of debt		499		1,299			821
Visa-related litigation		881		—			—
PRE-TAX OPERATING EARNINGS (income     before taxes, excluding non-operating items)		13,950		38,460			33,101		(63.7	)		(252.8	)		(57.9	)
Related income taxes		3,093		11,923			5,452
OPERATING EARNINGS (net income, excluding     non-operating items)		10,857		26,537			27,649		(59.1	)		(234.4	)		(60.7	)
Add: Amortization of intangibles, net of income tax		1,476		1,316			1,877
CASH OPERATING EARNINGS (net income,     excluding non-operating items and     amortization of intangibles)	$	12,333	$	27,853		$	29,526		(55.7	)%		(221.1	)%		(58.2	)%

	Year Ended
	12/31/07		12/31/06			% Change
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
NET INCOME, AS REPORTED (GAAP)	$	73,276	$	112,866			(35.1	)%
Add: Income tax expense		33,400		47,682
Income before income taxes		106,676		160,548			(33.6	)
Non-operating items:
(Gain) loss on securities		4,623		(4,037	)
Gain on disposition of assets and liabilities		—		(2,498	)
Loss on sale of indirect auto loans previously HFI		—		3,477
Employment contract buyouts and severance		2,306		5,588
Loss on early extinguishment of debt		2,029		821
Visa-related litigation		881		—
PRE-TAX OPERATING EARNINGS (income before taxes,     excluding non-operating items)		116,515		163,899			(28.9	)
Related income taxes		36,587		48,798
OPERATING EARNINGS (net income, excluding     non-operating items)		79,928		115,101			(30.6	)
Add: Amortization of intangibles, net of income tax		5,538		6,301
CASH OPERATING EARNINGS (net income, excluding     non-operating items and amortization of intangibles)	$	85,466	$	121,402			(29.6	)%

A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG’s web site: www.thesouthgroup.com.

EX-99

Quarterly Financial Data Supplement (Unaudited)
Fourth Quarter 2007

	Page
Financial Summary		1
Consolidated Statements of Income		2
Details for Noninterest Income and Noninterest Expenses		3
Consolidated Balance Sheets		4
Investment Securities Portfolio Analysis		5
Loan Portfolio Composition Based on Loan Purpose and Loan Growth		6
Summary of Credit Quality and Allowance for Credit Losses		7
Commercial Real Estate Loans		8
Summary of Loans in Penland Development		9
Types of Customer Funding and Customer Funding Growth		10
Summary of Wholesale Borrowings, Capital and Capital Ratios		11
Comparative Average Balance Sheets - Yields and Costs		12-13
GAAP to Non-GAAP Reconciliation: Earnings, ROA and ROE		14-16
GAAP to Non-GAAP Reconciliation: Noninterest income as a %    of total revenue and efficiency ratios		17-19

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
FOURTH QUARTER 2007 FINANCIAL SUMMARY

Changes vs. prior quarter, unless indicated otherwise:
Quarterly EPS
•	Net income of $9.0 million, or $0.12 per diluted share
•	Operating earnings of $10.9 million, or $0.15 per diluted share
•	Fourth quarter 2007 provision for credit losses increased to $31.9 million (up from $10.5 million for the prior quarter), primarily due to weakening credit expectations and a $7.9 million additional provision for the previously-disclosed Penland Development loans
•	Average diluted shares of 72.9 million, down 1.0% versus prior quarter; down 3.7% versus prior year
Revenue
•	Total revenue, defined as net interest income plus noninterest income, of $123.7 million
	—  Non-operating items: $1.3 million net loss on securities for other than temporary impairment
•	Operating revenues of $126.5 million, down $1.5 million
•	Tax-equivalent net interest income of $96.5 million, down $1.9 million
	—  Net interest margin of 3.09%, down 3 basis points from 3.12% for the prior quarter
	—  Average earning assets of $12.4 billion, down 3.9% linked-quarter annualized
•	Operating noninterest income of $30.0 million, up $399,000
	—  Increase of $557,000 or 1.9% from prior year
Average Balance Sheet Growth
•	Average loans, up 4.8% linked-quarter annualized
•	Average securities, down $242.0 million since prior quarter; down $673.5 million since 4Q06
•	Average customer funding, defined as total deposits less brokered deposits plus customer sweeps, down 6.0% linked-quarter annualized
•	Average wholesale borrowings, including brokered deposits and excluding customer sweeps, up 0.4% linked-quarter annualized
Noninterest Expenses and Operating Efficiency
•	Noninterest expenses of $80.5 million
	—  Non-operating items: $881,000 reserve for Visa-related litigation losses and $499,000 loss on early extinguishment of debt
•	Operating noninterest expenses of $79.1 million, up $1.7 million
	—  Decrease of $5.1 million or 6.0% from prior year
•	Cash operating efficiency of 61.1%, an increase from 59.0% for the prior quarter
Credit Quality
•	Provision for credit losses of $31.9 million, up $21.4 million from prior quarter; $23.1 million from prior year
•	Net loan charge-offs of $23.7 million, or 0.92% annualized as a % of average loans held for investment
	—  Includes $9.2 million related to the Penland Development loans
	—  Excluding the Penland Development loans, net loan charge-offs of 0.57%
•	Nonperforming assets of $89.9 million or 0.88% of loans held for investment and foreclosed property
	—  Includes $2.0 million related to the Penland Development loans
•	Allowance for credit losses of $128.7 million or 1.26% of loans held for investment
Capital
•	Tangible equity to tangible asset ratio of 6.61%, up from 6.47% at September 30, 2007
•	Tangible equity per share of $12.04, up from $11.90 at September 30, 2007
•	Repurchased 600,000 shares 4Q07 and 3.6 million shares for full-year 2007
•	Called approximately $25 million of trust preferred securities; approximately $125 million for full-year 2007
•	After-tax unrealized loss on available for sale securities decreased $8.0 million from prior quarter
•	Tier 1 capital ratio of 9.52%, down from 9.89% at September 30, 2007

1

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share data) (unaudited)

	Three Months Ended
	12/31/07		9/30/07		6/30/07		3/31/07		12/31/06
Interest Income
Interest and fees on loans	$	190,846	$	195,393	$	191,961	$	186,628	$	187,385
Interest and dividends on securities:
Taxable		22,431		25,390		26,879		28,825		29,876
Exempt from federal income taxes		2,809		2,856		2,888		3,048		3,125
Total interest and dividends on securities		25,240		28,246		29,767		31,873		33,001
Interest on short-term investments		64		100		97		141		144
Total interest income		216,150		223,739		221,825		218,642		220,530
Interest Expense
Interest on deposits		93,253		94,497		92,066		88,479		82,716
Interest on borrowed funds		27,949		32,468		33,238		35,625		41,160
Total interest expense		121,202		126,965		125,304		124,104		123,876
Net Interest Income		94,948		96,774		96,521		94,538		96,654
Provision for Credit Losses		31,926		10,504		17,125		9,013		8,838
Net interest income after provision for credit losses		63,022		86,270		79,396		85,525		87,816
Noninterest Income		28,741		29,917		27,683		26,970		29,233
Noninterest Expenses		80,481		78,739		80,151		81,477		89,998
Income before income taxes		11,282		37,448		26,928		31,018		27,051
Income tax expense		2,293		11,609		8,998		10,500		3,500
Net Income	$	8,989	$	25,839	$	17,930	$	20,518	$	23,551
Average common shares outstanding, basic		72,571,612		73,146,211		74,050,115		74,736,832		75,161,032
Average common shares outstanding, diluted		72,875,062		73,605,752		74,397,091		75,244,968		75,701,120
Net income per common share, basic	$	0.12	$	0.35	$	0.24	$	0.27	$	0.31
Net income per common share, diluted		0.12		0.35		0.24		0.27		0.31
Cash dividends declared per common share		0.19		0.18		0.18		0.18		0.18

2

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
DETAILS FOR NONINTEREST INCOME AND NONINTEREST EXPENSES
(dollars in thousands) (unaudited)

	Three Months Ended
	12/31/07			9/30/07		6/30/07			3/31/07			12/31/06
Noninterest Income
Service charges on deposit accounts	$	11,470		$	11,213	$	11,223		$	10,613		$	10,704
Debit card income, net (1)		1,938			1,838		1,839			1,567			1,451
Customer service fee income		1,422			1,533		1,402			1,291			1,267
Total customer fee income		14,830			14,584		14,464			13,471			13,422
Retail investment services, net (2)		2,103			2,064		2,021			1,714			1,394
Insurance income		2,906			2,839		2,987			3,297			3,411
Trust and investment management income		1,625			1,642		1,734			1,594			1,506
Benefits administration fees		881			889		749			742			722
Total wealth management income		7,515			7,434		7,491			7,347			7,033
Mortgage banking income		1,273			834		1,877			2,069			2,224
Bank-owned life insurance		3,065			2,974		4,454			2,851			2,932
Merchant processing income, net		829			928		771			735			527
Gain (loss) on certain derivative activities		5			198		(1,497	)		97			596
Other		2,512			2,678		2,360			1,785			2,738
Operating noninterest income (noninterest income,       excluding non-operating items)		30,029			29,630		29,920			28,355			29,472
Gain (loss) on securities		(1,288	)		287		(2,237	)		(1,385	)		(239	)
Non-operating noninterest income (loss)		(1,288	)		287		(2,237	)		(1,385	)		(239	)
Total noninterest income	$	28,741		$	29,917	$	27,683		$	26,970		$	29,233
Noninterest Expenses
Salaries and wages	$	33,220		$	34,535	$	34,258		$	35,072		$	35,188
Employee benefits		9,232			8,862		9,245			9,759			8,927
Occupancy		8,783			8,723		8,545			8,608			8,856
Furniture and equipment		6,590			6,543		6,486			6,462			6,579
Professional services		3,767			4,278		4,914			4,103			5,637
Advertising and business development		2,054			1,443		1,973			1,931			2,937
Telecommunications		1,453			1,404		1,418			1,393			1,384
Amortization of intangibles		1,853			1,907		2,136			2,001			2,156
Other		12,149			9,745		10,399			10,388			12,523
Operating noninterest expenses (noninterest expenses,       excluding non-operating items)		79,101			77,440		79,374			79,717			84,187
Employment contract buyouts and severance		—			—		546			1,760			4,990
Loss on early extinguishment of debt		499			1,299		231			—			821
Visa-related litigation		881			—		—			—			—
Non-operating noninterest expenses		1,380			1,299		777			1,760			5,811
Total noninterest expenses	$	80,481		$	78,739	$	80,151		$	81,477		$	89,998

(1)

In fourth quarter 2007, TSFG began presenting its debit card income net of related expenses. Debit card expense totaled (in thousands) $582 for fourth quarter 2007, $607 for third quarter 2007, $564 for second quarter 2007, $610 for first quarter 2007, and $747 for fourth quarter 2006. Amounts presented for prior periods have been reclassified to conform to current presentation.

(2)

In fourth quarter 2007, TSFG began presenting its retail investment services income net of certain revenue sharing arrangements with a third party. Such amounts for these arrangements totaled (in thousands) $242 for fourth quarter 2007, $249 for third quarter 2007, $261 for second quarter 2007, $244 for first quarter 2007, and $277 for fourth quarter 2006. Amounts presented for prior periods have been reclassified to conform to current presentation.

3

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) (unaudited)

	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Assets
Cash and due from banks	$	290,974		$	221,529		$	267,005		$	257,884		$	326,567
Interest-bearing bank balances		5,551			520			263			7,012			31,264
Federal funds sold and securities     purchased to resell		—			—			—			50,000			—
Securities
Available for sale		1,986,212			2,323,241			2,433,341			2,546,047			2,743,456
Held to maturity		39,691			41,174			41,892			46,217			52,308
Total securities		2,025,903			2,364,415			2,475,233			2,592,264			2,795,764
Loans held for sale		17,867			19,572			35,718			33,519			28,556
Loans held for investment		10,213,420			10,173,237			10,029,228			9,898,134			9,701,867
Less: Allowance for loan losses		(126,427	)		(118,861	)		(125,545	)		(113,736	)		(111,663	)
Net loans held for investment		10,086,993			10,054,376			9,903,683			9,784,398			9,590,204
Premises and equipment, net		233,852			226,784			224,951			223,738			219,163
Accrued interest receivable		70,464			73,383			75,851			72,801			77,523
Goodwill		651,003			650,637			650,544			650,536			650,492
Other intangible assets, net		27,179			29,032			30,939			33,075			35,076
Other assets		467,798			459,973			475,488			452,920			455,907
	$	13,877,584		$	14,100,221		$	14,139,675		$	14,158,147		$	14,210,516
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing	$	1,127,657		$	1,164,312		$	1,244,834		$	1,286,800		$	1,280,908
Interest-bearing		8,660,911			8,337,357			8,840,972			8,664,408			8,235,832
Total deposits		9,788,568			9,501,669			10,085,806			9,951,208			9,516,740
Short-term borrowings		1,637,550			2,070,581			1,432,650			1,607,533			1,768,719
Long-term debt		698,340			732,203			857,248			809,290			1,130,475
Accrued interest payable		69,288			73,418			77,751			77,380			68,940
Other liabilities		133,530			174,098			168,033			151,126			163,610
Total liabilities		12,327,276			12,551,969			12,621,488			12,596,537			12,648,484
Shareholders’ equity
Preferred stock		—			—			—			—			—
Common stock		72,455			72,971			73,699			74,673			75,341
Surplus		1,107,601			1,116,361			1,129,499			1,150,288			1,167,685
Retained earnings		386,061			391,019			378,399			373,788			367,261
Guarantee of employee stock ownership plan debt		—			—			(39	)		(95	)		(151	)
Accumulated other comprehensive loss, net of       income tax		(15,809	)		(32,099	)		(63,371	)		(37,044	)		(48,104	)
Total shareholders’ equity		1,550,308			1,548,252			1,518,187			1,561,610			1,562,032
	$	13,877,584		$	14,100,221		$	14,139,675		$	14,158,147		$	14,210,516

4

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
INVESTMENT SECURITIES PORTFOLIO ANALYSIS
(dollars in thousands) (unaudited)

	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Investment Securities Portfolio
Available for sale (at fair value):
U.S. Treasury	$	27,592		$	168,614		$	167,195		$	167,295		$	166,719
U.S. Government agencies		503,571			659,681			650,581			657,708			653,034
Agency mortgage-backed securities		1,088,427			1,119,547			1,158,498			1,246,384			1,400,288
State and municipal		302,586			303,388			308,070			315,372			341,488
Other investments (1)		64,036			72,011			148,997			159,288			181,927
Total available for sale securities		1,986,212			2,323,241			2,433,341			2,546,047			2,743,456
Held to maturity (at amortized cost)		39,691			41,174			41,892			46,217			52,308
Total securities	$	2,025,903		$	2,364,415		$	2,475,233		$	2,592,264		$	2,795,764
Total securities as a percentage of total assets		14.6	%		16.8	%		17.5	%		18.3	%		19.7	%

	December 31, 2007
	Amortized Cost		Percentage of Total			Duration		Book Yield
Debt Securities
U.S. Treasury	$	27,082		1.4	%		4.3		3.96	%
U.S. Government agencies		502,659		25.3			0.6		5.22
Agency mortgage-backed securities:
Collateralized mortgage obligations		834,467		41.9			5.3		4.56
Adjustable rate mortgages		195,994		9.8			2.1		4.99
Pass-through		107,889		5.4			3.1		4.79
State and municipal		302,775		15.2			2.9		4.86
Corporate bonds		20,775		1.0			3.9		5.74
Total available for sale debt securities	$	1,991,641		100.0	%		3.3		4.83	%
Fixed interest rate:
Agency mortgage-backed securities	$	940,828		47.2	%		5.1		4.58	%
Other		828,343		41.6			1.7		5.01
Variable interest rate:
Agency mortgage-backed securities		197,523		9.9			2.0		4.99
Other		24,947		1.3			0.2		6.76
Total available for sale debt securities	$	1,991,641		100.0	%		3.3		4.83	%

Projected Cash Flows for Debt Securities

	Roll-Off Yield		Projected Annual Cash Flows by Interest Rate Scenario
Year			Current		Up 1.00%		Down 1.00%
2008	4.49	%	$	381,016	$	157,403	$	1,101,968
2009	4.71			287,087		146,595		290,084

Projected Interest Rate Shock for Debt Securities

Interest Rate Scenario	Estimated Impact on Fair Value			Duration
Up 2.00%		(8.2	)%		5.1
Up 1.00%		(3.8	)		4.5
Flat		—			3.3
Down 1.00%		2.8			2.3
Down 2.00%		4.4			1.0

The estimated decrease in fair value for a five year U.S. Treasury Note when interest rates increase 100 basis points is 4.44%.
(1)	Other investments in available for sale securities includes corporate bonds, FHLB stock, community bank stocks, and other equity securities. Also, excludes certain other investments recorded in other assets totaling $16.4 million.

5

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION BASED ON LOAN PURPOSE AND LOAN GROWTH
(dollars in thousands) (unaudited)

	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Commercial Loans
Commercial and industrial	$	2,759,492		$	2,693,973		$	2,569,628		$	2,596,705		$	2,491,210
Owner - occupied real estate		1,070,376			1,042,131			961,806			883,738			830,179
Commercial real estate		4,158,384			4,178,653			4,258,837			4,209,149			4,171,631
		7,988,252			7,914,757			7,790,271			7,689,592			7,493,020
Consumer Loans
Indirect - sales finance		699,014			707,819			684,053			666,801			660,401
Consumer lot loans		311,386			334,971			350,539			353,694			357,325
Direct retail		94,228			97,289			96,768			97,786			98,181
Home equity		548,928			532,640			530,620			514,963			512,881
		1,653,556			1,672,719			1,661,980			1,633,244			1,628,788
Mortgage Loans		571,612			585,761			576,977			575,298			580,059
Total loans held for investment	$	10,213,420		$	10,173,237		$	10,029,228		$	9,898,134		$	9,701,867
Percentage of Loans Held for Investment
Commercial and industrial		27.0	%		26.5	%		25.6	%		26.2	%		25.7	%
Owner - occupied real estate		10.5			10.2			9.6			8.9			8.6
Commercial real estate		40.7			41.1			42.5			42.5			43.0
Consumer		16.2			16.4			16.6			16.5			16.7
Mortgage		5.6			5.8			5.7			5.9			6.0
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

	For The Period Ended
	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Growth in Loans Held for Investment (1)
Growth vs. prior quarter, annualized		1.6	%		5.7	%		5.3	%		8.2	%		7.8	%
Growth year-to-date, annualized		5.3			6.5			6.8			8.2			2.8
Growth in Loans Held for Investment, Excluding     Changes from Acquisitions and Dispositions (1)
Organic growth vs. prior quarter, annualized		1.6	%		5.7	%		5.3	%		8.2	%		7.8	%
Organic growth year-to-date, annualized		5.3			6.5			6.8			8.2			6.6

⁽¹⁾ At September 30, 2006 and December 31, 2005, loans held for investment totaled $9,513,833 and $9,439,935, respectively. Non organic change of $410,628 in the first nine months of 2006 related to the sale of indirect auto loans and the origination and transfer of indirect auto loans originally held for sale to held to investment.

6

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
	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Credit Quality
Loans held for investment	$	10,213,420		$	10,173,237		$	10,029,228		$	9,898,134		$	9,701,867
Allowance for loan losses		126,427			118,861			125,545			113,736			111,663
Allowance for credit losses		128,695			120,424			126,721			114,822			112,688
Nonperforming loans (1)		81,631			53,257			41,527			43,222			37,168
Foreclosed property (other real estate owned    and personal property repossessions)		8,276			5,658			4,028			3,572			4,341
Nonperforming assets	$	89,907		$	58,915		$	45,555		$	46,794		$	41,509
Nonperforming loans as a % of loans    held for investment		0.80	%		0.52	%		0.41	%		0.44	%		0.38	%
Nonperforming assets as a % of loans held    for investment and foreclosed property		0.88			0.58			0.45			0.47			0.43
Allowance for loan losses as a % of loans    held for investment		1.24			1.17			1.25			1.15			1.15
Allowance for credit losses as a % of loans    held for investment		1.26			1.18			1.26			1.16			1.16
Allowance for loan losses to nonperforming    loans		1.55	x		2.23	x		3.02	x		2.63	x		3.00	x
Impaired loans (1)	$	68,102		$	38,060		$	33,596		$	36,403		$	28,733
Specific allowance for impaired loans		11,340			11,010			9,414			7,716			6,686
Loans past due 90 days or more (mortgage    and consumer with interest accruing)		5,349			2,629			2,503			193			3,129
Net loan charge-offs		23,655			16,801			5,226			6,879			6,499
Average loans held for investment		10,164,807			10,042,419			9,947,636			9,783,328			9,589,732
Net loan charge-offs as a % of average    loans held for investment (annualized)		0.92	%		0.66	%		0.21	%		0.29	%		0.27	%
Allowance for Loan Losses
Balance at beginning of period	$	118,861		$	125,545		$	113,736		$	111,663		$	109,401
Provision for loan losses		31,221			10,117			17,035			8,952			8,761
Loans charged-off		(25,249	)		(17,926	)		(7,622	)		(8,611	)		(9,197	)
Recoveries of loans previously charged-off		1,594			1,125			2,396			1,732			2,698
Balance at end of period	$	126,427		$	118,861		$	125,545		$	113,736		$	111,663
Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	1,563		$	1,176		$	1,086		$	1,025		$	948
Provision for unfunded lending commitments		705			387			90			61			77
Balance at end of period	$	2,268		$	1,563		$	1,176		$	1,086		$	1,025
Allowance for Credit Losses
Balance at beginning of period	$	120,424		$	126,721		$	114,822		$	112,688		$	110,349
Provision for credit losses		31,926			10,504			17,125			9,013			8,838
Loans charged-off		(25,249	)		(17,926	)		(7,622	)		(8,611	)		(9,197	)
Recoveries of loans previously charged-off		1,594			1,125			2,396			1,732			2,698
Balance at end of period	$	128,695		$	120,424		$	126,721		$	114,822		$	112,688

⁽¹⁾ At December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007, and December 31, 2006, these credit quality indicators (nonperforming loans and impaired loans) included $1.7 million, $1.9 million, $1.9 million, $1.9 million, and $500,000, respectively, in restructured loans.

7

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

COMMERCIAL REAL ESTATE LOANS

(unaudited)

	12/31/07 CRE Loans by Geography (dollars in millions)
	SC, Excl Coastal			Coastal SC			Western NC			Central FL			North FL			South FL			Tampa Bay			Total CRE Loans			% of Loans HFI
CRE Loans by Product Type:
Completed income property	$	437		$	232		$	460		$	177		$	320		$	168		$	206		$	2,000			20	%
Residential A&D		106			83			169			80			134			5			90			667			6
Commercial A&D		81			44			66			67			74			76			118			526			5
Commercial construction		145			88			35			60			30			21			93			472			5
Residential construction		36			44			78			26			37			13			28			262			3
Undeveloped land		30			38			61			36			34			1			31			231			2
Total CRE Loans	$	835		$	529		$	869		$	446		$	629		$	284		$	566		$	4,158			41	%
% of Total Loans HFI		8	%		5	%		9	%		4	%		6	%		3	%		6	%		41	%

	12/31/07 CRE Nonaccrual Loans by Geography (dollars in millions)
	SC, Excl Coastal			Coastal SC			Western NC			Central FL			North FL			South FL			Tampa Bay			Total CRE NAL			% of NAL(1)
CRE Nonaccrual Loans by Product Type:
Completed income property	$	2.6		$	1.1		$	3.0		$	2.0		$	—		$	—		$	0.1		$	8.8			11	%
Residential A&D		1.0			3.3			3.2			—			0.1			0.5			8.7			16.8			21
Commercial A&D		—			—			1.2			—			—			—			3.0			4.2			5
Commercial construction		—			—			—			—			—			—			—			—			—
Residential construction		0.4			—			1.0			—			—			—			—			1.4			2
Undeveloped land		—			—			0.6			—			—			0.1			4.7			5.4			7
Total CRE Nonaccrual         Loans	$	4.0		$	4.4		$	9.0		$	2.0		$	0.1		$	0.6		$	16.5		$	36.6			46	%
CRE Nonaccrual Loans as % of Total Nonaccrual Loans (1)		5	%		5	%		11	%		3	%		0	%		1	%		21	%		46	%

⁽¹⁾  Calculated as a percent of nonaccrual loans, which totaled $80.2 million at Decenber 31, 2007.

8

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

SUMMARY OF LOANS IN PENLAND DEVELOPMENT

(dollars in thousands) (unaudited)

	At and for the Year Ended December 31, 2007
	# of Loans		Outstanding Balance		Charge-offs		Net Balance		Nonaccrual		Allocated Allowance
Lot loans		93	$	17,422	$	15,702	$	1,720	$	1,720	$	—
Development loans		2		3,007		2,707		300		300		—
Total		95	$	20,429	$	18,409	$	2,020	$	2,020	$	—

CREDIT QUALITY - Excluding the Penland Development Loans

	At and for the Year Ended December 31, 2007
	As reported (GAAP)			Adjustment for Penland Dev. Loans			Excluding Penland loans (Non-GAAP)
Loans held for investment	$	10,213,420		$	(2,020	)	$	10,211,400
Allowance for loan losses		(126,427	)		—			(126,427	)
Allowance for credit losses		(128,695	)		—			(128,695	)
Nonperforming loans	$	81,631		$	(2,020	)		79,611
Foreclosed property (other real estate owned     and personal property repossessions)		8,276			—			8,276
Nonperforming assets	$	89,907		$	(2,020	)	$	87,887
Nonperforming loans as a % of loans held for     investment		0.80	%					0.78	%
Nonperforming assets as a % of loans held for     investment and foreclosed property		0.88						0.86
Allowance for loan losses as a % of loans HFI		1.24						1.24
Allowance for credit losses as a % of loans HFI		1.26						1.26
Allowance for loan losses to nonperforming loans		1.55	x					1.59	x
Loans past due 90 days or more (mortgage and     consumer with interest accruing)	$	5,349		$	—		$	5,349
Net loan charge-offs:
Three months ended		23,655			(9,178	)		14,477
Year to date		52,561			(18,409	)		34,152
Net loan charge-offs as a % of average loans        held for investment (annualized):
Three months ended		0.92	%					0.57	%
Year to date		0.53						0.34

9

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

TYPES OF CUSTOMER FUNDING AND CUSTOMER FUNDING GROWTH

(dollars in thousands) (unaudited)

	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Noninterest-bearing	$	1,127,657		$	1,164,312		$	1,244,834		$	1,286,800		$	1,280,908
Interest-bearing checking		1,117,850			1,100,428			1,177,609			1,198,714			1,208,125
Money market accounts		2,188,261			2,184,822			2,245,466			2,374,242			2,435,413
Savings accounts		158,092			169,091			177,289			184,283			181,192
Time deposits under $100,000		1,442,030			1,384,094			1,363,462			1,320,108			1,272,056
Time deposits of $100,000 or more		1,496,270			1,515,417			1,583,653			1,609,572			1,514,615
Customer deposits (1)		7,530,160			7,518,164			7,792,313			7,973,719			7,892,309
Brokered deposits		2,258,408			1,983,505			2,293,493			1,977,489			1,624,431
Total deposits		9,788,568			9,501,669			10,085,806			9,951,208			9,516,740
Less: Brokered deposits		(2,258,408	)		(1,983,505	)		(2,293,493	)		(1,977,489	)		(1,624,431	)
Add: Customer sweeps		648,311			599,021			556,622			479,698			500,288
Customer funding (2)	$	8,178,471		$	8,117,185		$	8,348,935		$	8,453,417		$	8,392,597
Percentage of Deposits
Noninterest-bearing		11.5	%		12.2	%		12.3	%		12.9	%		13.4	%
Interest-bearing checking		11.4			11.6			11.7			12.0			12.7
Money market accounts		22.4			23.0			22.3			23.9			25.6
Savings accounts		1.6			1.8			1.8			1.8			1.9
Time deposits under $100,000		14.7			14.6			13.5			13.3			13.4
Time deposits of $100,000 or more		15.3			15.9			15.7			16.2			15.9
Customer deposits (1)		76.9			79.1			77.3			80.1			82.9
Brokered deposits		23.1			20.9			22.7			19.9			17.1
Total deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

	For The Period Ended
	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Growth vs. Prior Quarter, Annualized (3)
Noninterest-bearing		(12.5	)%		(25.7	)%		(13.1	)%		1.9	%		6.1	%
Total deposits		12.0			(23.0	)		5.4			18.5			14.5
Customer funding (2)		3.0			(11.0	)		(5.0	)		2.9			10.0
Growth Year-To-Date, Annualized (4)
Noninterest-bearing		(12.0	)%		(12.2	)%		(5.7	)%		1.9	%		(12.2	)%
Total deposits		2.9			(0.2	)		12.1			18.5			3.1
Customer funding (2)		(2.6	)		(4.4	)		(1.0	)		2.9			2.3

(1)	Total deposits less brokered deposits.
(2)	Total deposits less brokered deposits plus customer sweeps.
(3)	At September 30, 2006, noninterest-bearing totaled $1,261,421, total deposits totaled $9,181,952, and customer funding totaled $8,186,564.
(4)	At December 31, 2005, noninterest-bearing totaled $1,458,914, total deposits totaled $9,234,437, and customer funding totaled $8,201,571.

10

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)

	12/31/07			9/30/07			6/30/07			3/31/07			12/31/06
Types of wholesale borrowings
Short-term borrowings
Federal funds purchased and     repurchase agreements	$	206,216		$	595,272		$	654,299		$	1,016,470		$	920,811
Customer sweeps		648,311			599,021			556,622			479,698			500,288
FHLB advances		—			175,000			75,000			75,000			175,000
Commercial paper		30,828			32,601			32,687			35,584			32,631
Treasury, tax and loan note		752,195			668,687			114,042			781			139,989
Total short-term borrowings		1,637,550			2,070,581			1,432,650			1,607,533			1,768,719
Long-term borrowings
Repurchase agreements		200,000			200,000			200,000			200,000			521,000
FHLB advances		223,087			223,093			328,100			328,107			328,113
Subordinated notes		216,704			242,478			262,067			188,871			188,871
Manditorily redeemable preferred     stock of subsidiary		56,800			64,800			64,800			89,800			89,800
Note payable		786			797			808			818			828
Employee stock ownership     plan note payable		—			—			50			125			200
Purchase accounting premiums,    net of amortization		963			1,035			1,423			1,569			1,663
Total long-term borrowings		698,340			732,203			857,248			809,290			1,130,475
Total borrowings		2,335,890			2,802,784			2,289,898			2,416,823			2,899,194
Less: Customer sweeps		(648,311	)		(599,021	)		(556,622	)		(479,698	)		(500,288	)
Add: Brokered deposits		2,258,408			1,983,505			2,293,493			1,977,489			1,624,431
Total wholesale borrowings	$	3,945,987		$	4,187,268		$	4,026,769		$	3,914,614		$	4,023,337
Wholesale borrowings as a     percentage of total assets		28.4	%		29.7	%		28.5	%		27.6	%		28.3	%
Regulatory Capital
Tier 1 capital	$	1,117,915		$	1,152,663		$	1,171,055		$	1,115,023		$	1,123,448
Tier 2 capital		163,095			161,224			167,521			177,236			179,021
Total risk-based capital		1,281,010			1,313,887			1,338,576			1,292,259			1,302,469
Total risk-weighted assets		11,742,286			11,650,676			11,575,533			11,424,481			11,502,152
Tangible Equity
Shareholders’ equity	$	1,550,308		$	1,548,252		$	1,518,187		$	1,561,610		$	1,562,032
Intangible assets		(678,182	)		(679,669	)		(681,483	)		(683,611	)		(685,568	)
Tangible equity		872,126			868,583			836,704			877,999			876,464
Capital Ratios
Total risk-based capital		10.91	%		11.28	%		11.56	%		11.31	%		11.32	%
Tier 1 risk-based capital		9.52			9.89			10.12			9.76			9.77
Leverage ratio		8.44			8.64			8.73			8.28			8.34
Tangible equity to tangible     assets ratio		6.61			6.47			6.22			6.52			6.48
Impact of unrealized (gain) loss		0.21			0.27			0.41			0.26			0.33
Tangible equity to tangible assets       ratio, excluding unrealized       gain or loss		6.82			6.74			6.63			6.78			6.81
Unrealized Losses on AFS Securities
Gross (included in AFS securities)	$	(48,841	)	$	(61,462	)	$	(94,586	)	$	(59,764	)	$	(75,302	)
Net of income tax (included in equity)		(30,765	)		(38,717	)		(59,565	)		(37,601	)		(47,378	)
Market Rates for U.S. Treasury Notes
Three year		3.07	%		4.03	%		4.89	%		4.54	%		4.74	%
Five year		3.45			4.23			4.92			4.54			4.70

11

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

COMPARATIVE AVERAGE BALANCES - YIELDS AND COSTS

(dollars in thousands) (unaudited)

	Three Months Ended
	12/31/07						9/30/07							6/30/07
	Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense			Yield/ Rate		Average Balance		Income/ Expense			Yield/ Rate
Assets
Earning assets
Commercial loans	$	7,919,926	$	149,001	7.46	%	$	7,799,177	$	154,655		7.87	%	$	7,724,530	$	152,338		7.91	%
Consumer loans		1,563,625		28,657	7.27			1,570,591		29,432		7.43			1,584,646		29,382		7.44
Indirect loans		702,721		12,565	7.09			695,686		12,188		6.95			674,961		11,271		6.70
Risk management derivatives     tied to loans		—		623				—		(882	)				—		(1,030	)
Total loans (1)		10,186,272		190,846	7.43			10,065,454		195,393		7.70			9,984,137		191,961		7.71
Investment securities (taxable) (2)		1,885,631		22,431	4.76			2,121,044		25,390		4.79			2,247,092		26,879		4.79
Investment securities (nontaxable) (3)		344,996		4,321	5.01			351,584		4,394		5.00			359,043		4,443		4.95
Total investment securities		2,230,627		26,752	4.80			2,472,628		29,784		4.82			2,606,135		31,322		4.81
Federal funds sold, interest-     bearing bank balances, and     other temp investments		4,833		64	5.25			6,574		100		6.03			6,376		97		6.10
Total earning assets		12,421,732		217,662	6.96			12,544,656		225,277		7.13			12,596,648		223,380		7.11
Non-earning assets		1,495,654						1,477,862							1,496,431
Total assets	$	13,917,386					$	14,022,518						$	14,093,079
Liabilities and Shareholders’ Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking	$	1,078,194	$	4,606	1.69		$	1,122,793	$	5,571		1.97		$	1,176,182	$	6,029		2.06
Savings		164,365		617	1.49			172,110		697		1.61			181,166		736		1.63
Money market		2,195,506		20,883	3.77			2,236,493		22,390		3.97			2,294,181		22,528		3.94
Time deposits, excluding         brokered deposits		2,891,656		35,717	4.90			2,905,426		36,594		5.00			2,910,284		36,407		5.02
Brokered deposits		2,426,483		31,430	5.14			2,208,381		29,245		5.25			2,042,664		26,366		5.18
Total interest-bearing deposits		8,756,204		93,253	4.23			8,645,203		94,497		4.34			8,604,477		92,066		4.29
Customer sweeps		590,682		5,977	4.01			559,906		6,237		4.42			496,030		5,528		4.47
Other borrowings (4)		1,645,122		21,972	5.30			1,858,800		26,231		5.60			1,989,109		27,710		5.59
Total interest-bearing liabilities		10,992,008		121,202	4.37			11,063,909		126,965		4.55			11,089,616		125,304		4.53
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,149,816						1,198,350							1,225,075
Other noninterest liabilities		218,796						240,771							231,996
Total liabilities		12,360,620						12,503,030							12,546,687
Shareholders’ equity		1,556,766						1,519,488							1,546,392
Total liabilities and     shareholders’ equity	$	13,917,386					$	14,022,518						$	14,093,079
Net interest margin (tax-equivalent)			$	96,460	3.09	%			$	98,312		3.12	%			$	98,076		3.12	%
Less: tax-equivalent adjustment (3)				1,512						1,538							1,555
Net interest income			$	94,948					$	96,774						$	96,521
Supplemental data:
Customerr fundingt (5)	$	8,070,219	$	67,800	3.33	%	$	8,195,078	$	71,489		3.46	%	$	8,282,918	$	71,228		3.45	%
Wholesale borrowings (6)		4,071,605		53,402	5.20			4,067,181		55,476		5.41			4,031,773		54,076		5.38
Total funding (7)	$	12,141,824	$	121,202	3.96		$	12,262,259	$	126,965		4.11		$	12,314,691	$	125,304		4.08

(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)	During the three months ended December 31, 2007 and September 30, 2007, TSFG capitalized $317,000 and $188,000, respectively, of interest in conjunction with the construction of its expanded corporate facilities.
(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.

12

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

COMPARATIVE AVERAGE BALANCES - YIELDS AND COSTS - CONTINUED

(dollars in thousands) (unaudited)

	Three Months Ended
	3/31/07								12/31/06
	Average Balance		Income/ Expense			Yield/ Rate			Average Balance		Income/ Expense			Yield/ Rate
Assets
Earning assets
Commercial loans	$	7,579,574	$	148,078			7.92	%	$	7,371,401	$	148,325			7.98	%
Consumer loans		1,570,745		28,957			7.48			1,594,047		29,482			7.34
Indirect loans		662,691		10,646			6.52			657,602		10,612			6.40
Risk management derivatives tied to loans		—		(1,053	)					—		(1,034	)
Total loans (1)	$	9,813,010	$	186,628			7.71		$	9,623,050	$	187,385			7.73
Investment securities (taxable) (2)		2,414,896		28,825			4.78			2,503,989		29,876			4.77
Investment securities (nontaxable) (3)		383,804		4,689			4.89			400,117		4,808			4.81
Total investment securities		2,798,700		33,514			4.79			2,904,106		34,684			4.78
Federal funds sold, interest-bearing bank    balances, and other temp investments		8,331		141			6.86			11,521		144			4.96
Total earning assets		12,620,041		220,283			7.06			12,538,677		222,213			7.04
Non-earning assets		1,528,013								1,592,004
Total assets	$	14,148,054							$	14,130,681
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
Savings		178,940		706			1.60			184,733		687			1.48
Money market		2,377,771		23,537			4.01			2,445,437		24,109			3.91
Time deposits, excluding brokered deposits		2,893,638		35,581			4.99			2,687,712		32,635			4.82
Brokered deposits		1,771,081		22,720			5.20			1,478,336		19,515			5.24
Total interest-bearing deposits		8,408,669		88,479			4.27			7,903,037		82,716			4.15
Customer sweeps		453,928		4,981			4.45			414,742		4,695			4.49
Other borrowings		2,270,120		30,644			5.47			2,645,462		36,465			5.47
Total interest-bearing liabilities		11,132,717		124,104			4.52			10,963,241		123,876			4.48
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,230,320								1,302,329
Other noninterest liabilities		233,248								306,023
Total liabilities		12,596,285								12,571,593
Shareholders’ equity		1,551,769								1,559,088
Total liabilities and shareholders’ equity	$	14,148,054							$	14,130,681
Net interest margin (tax-equivalent)			$	96,179			3.08	%			$	98,337			3.12	%
Less: tax-equivalent adjustment (3)				1,641								1,683
Net interest income			$	94,538							$	96,654
Supplemental data:
Customer funding (4)	$	8,321,836	$	70,740			3.45	%	$	8,141,772	$	67,896			3.31	%
Wholesale borrowings (5)		4,041,201		53,364			5.36			4,123,798		55,980			5.39
Total funding (6)	$	12,363,037	$	124,104			4.07		$	12,265,570	$	123,876			4.01

(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)	Customer funding includes total deposits less brokered deposits plus customer sweeps.
(5)	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.
(6)	Total funding includes customer funding and wholesale borrowings
Note: Average balances are derived from daily balances.

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
	12/31/07					9/30/07					6/30/07					3/31/07
				Diluted EPS					Diluted EPS					Diluted EPS					Diluted EPS
Net Income, as Reported (GAAP)	$	8,989		$	0.12	$	25,839		$	0.35	$	17,930		$	0.24	$	20,518		$	0.27
Non-Operating Items
(Gain) loss on securities		1,288					(287	)				2,237					1,385
Employment contract buyouts     and severance		—					—					546					1,760
Loss on early extinguishment of debt		499					1,299					231					—
Visa-related litigation		881					—					—					—
Related income taxes		(800	)				(314	)				(1,008	)				(1,065	)
Operating Earnings (Net Income,     Excluding Non-Operating Items)		10,857			0.15		26,537			0.36		19,936			0.27		22,598			0.30
Amortization of intangibles		1,853					1,907					2,136					2,001
Related income taxes		(377	)				(591	)				(714	)				(677	)
Cash Operating Earnings (Net Income,    Excluding Non-Operating Items and    Amortization of Intangibles)	$	12,333		$	0.17	$	27,853		$	0.38	$	21,358		$	0.29	$	23,922		$	0.32
Average Common Shares Outstanding, Diluted		72,875,062					73,605,752					74,397,091					75,244,968
Select Balance Sheet (Averages)
Total assets	$	13,917,386				$	14,022,518				$	14,093,079				$	14,148,054
Intangible assets		(678,851	)				(680,526	)				(682,584	)				(684,626	)
Tangible assets		13,238,535					13,341,992					13,410,495					13,463,428
Shareholders’ equity		1,556,766					1,519,488					1,546,392					1,551,769
Intangible assets		(678,851	)				(680,526	)				(682,584	)				(684,626	)
Tangible equity		877,915					838,962					863,808					867,143
Return on Average Assets
GAAP earnings		0.26	%				0.73	%				0.51	%				0.59	%
Operating earnings		0.31					0.75					0.57					0.65
Cash operating earnings on     average tangible assets		0.37					0.83					0.64					0.72
Return on Average Equity
GAAP earnings		2.29					6.75					4.65					5.36
Operating earnings		2.77					6.93					5.17					5.91
Cash operating earnings on average    tangible equity		5.57					13.17					9.92					11.19

14

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 (gain) on securities		239					—					(3,601	)				(675	)
Gain on disposition of assets and liabilities		—					(2,498	)				—					—
Loss on sale of indirect auto loans    previously HFI		—					—					3,477					—
Employment contract buyouts and    severance		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.

15

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,
	2007					2006					2005
				Diluted EPS					Diluted EPS					Diluted EPS
Net Income, as Reported (GAAP)	$	73,276		$	0.99	$	112,866		$	1.49	$	69,821		$	0.94
Non-Operating Items
Change in fair value of interest rate swaps		—					—					13,278
(Gain) loss on securities		4,623					(4,037	)				52,139
Gain on disposition of assets and liabilities		—					(2,498	)				—
Loss on sale of indirect auto loans previously HFI		—					3,477					—
Employment contract buyouts and severance		2,306					5,588					10,327
Impairment loss from write-down of assets		—					—					917
Merger-related costs		—					—					4,009
Loss on early extinguishment of debt		2,029					821					7,101
Visa-related litigation		881					—					—
Charitable contribution to foundation		—					—					683
Related income taxes		(3,187	)				(1,116	)				(32,541	)
Discontinued operations, net of income tax		—					—					396
Operating Earnings (Net Income, Excluding    Non-Operating Items)		79,928			1.08		115,101			1.52		126,130			1.69
Amortization of intangibles		7,897					8,775					8,637
Related income taxes		(2,359	)				(2,474	)				(2,698	)
Cash Operating Earnings (Net Income,    Excluding Non-Operating Items and    Amortization of Intangibles)	$	85,466		$	1.15	$	121,402		$	1.61	$	132,069		$	1.77
Average Common Shares Outstanding, Diluted		74,085,440					75,542,848					74,594,626
Select Balance Sheet (Averages)
Total assets	$	14,044,565				$	14,202,649				$	14,752,973
Intangible assets		(681,628	)				(689,116	)				(663,274	)
Tangible assets		13,362,937					13,513,533					14,089,699
Shareholders’ equity		1,543,552					1,506,195					1,463,125
Intangible assets		(681,628	)				(689,116	)				(663,274	)
Tangible equity		861,924					817,079					799,851
Return on Average Assets
GAAP earnings		0.52	%				0.79	%				0.47	%
Operating earnings		0.57					0.81					0.85
Cash operating earnings on average tangible assets		0.64					0.90					0.94
Return on Average Equity
GAAP earnings		4.75					7.49					4.77
Operating earnings		5.18					7.64					8.62
Cash operating earnings on average tangible equity		9.92					14.86					16.51

16

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands) (unaudited)

	Three Months Ended
	12/31/07			9/30/07			6/30/07			3/31/07
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	94,948		$	96,774		$	96,521		$	94,538
Tax-equivalent adjustment		1,512			1,538			1,555			1,641
Net interest income (tax-equivalent)	$	96,460		$	98,312		$	98,076		$	96,179
Total noninterest income, as reported (GAAP)	$	28,741		$	29,917		$	27,683		$	26,970
Adjustments for non-operating items:
(Gain) loss on securities		1,288			(287	)		2,237			1,385
Operating noninterest income (noninterest income,       excluding non-operating items)	$	30,029		$	29,630		$	29,920		$	28,355
Total noninterest expenses, as reported (GAAP)	$	80,481		$	78,739		$	80,151		$	81,477
Adjustments for non-operating items:
Employment contract buyouts and severance		—			—			(546	)		(1,760	)
Loss on early extinguishment of debt		(499	)		(1,299	)		(231	)		—
Visa-related litigation		(881	)		—			—			—
Operating noninterest expenses (noninterest expenses,       excluding non-operating items)		79,101			77,440			79,374			79,717
Less: amortization of intangibles		(1,853	)		(1,907	)		(2,136	)		(2,001	)
Cash operating noninterest expenses (noninterest       expenses, excluding non-operating items and       amortization of intangibles)	$	77,248		$	75,533		$	77,238		$	77,716
Total Revenue (1)
GAAP	$	123,689		$	126,691		$	124,204		$	121,508
Operating (2)		126,489			127,942			127,996			124,534
Noninterest Income as a % of Total Revenue (3)
GAAP		23.24	%		23.61	%		22.29	%		22.20	%
Operating (2)		23.74			23.16			23.38			22.77
Efficiency Ratios (4)
GAAP		65.07			62.15			64.53			67.05
Operating (2)		62.54			60.53			62.01			64.01
Cash operating (2)		61.07			59.04			60.34			62.41

(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
	12/31/06			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)	$	29,233		$	34,119		$	28,315		$	26,238
Adjustments for non-operating items:
Loss (gain) on securities		239			—			(3,601	)		(675	)
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)	$	29,472		$	31,621		$	28,191		$	25,563
Total noninterest expenses, as reported (GAAP)	$	89,998		$	79,835		$	79,354		$	76,752
Adjustments for non-operating items:
Employment contract buyouts and severance		(4,990	)		—			—			(598	)
Loss on early extinguishment of debt		(821	)		—			—			—
Operating noninterest expenses (noninterest expenses,       excluding non-operating items)		84,187			79,835			79,354			76,154
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)	$	82,031		$	77,631		$	77,146		$	73,947
Total Revenue (1)
GAAP	$	125,887		$	132,802		$	131,437		$	129,150
Operating (2)		127,809			131,995			133,041			130,276
Noninterest Income as a % of Total Revenue (3)
GAAP		23.22	%		25.69	%		21.54	%		20.32	%
Operating (2)		23.06			23.96			21.19			19.62
Efficiency Ratios (4)
GAAP		71.49			60.12			60.37			59.43
Operating (2)		65.87			60.48			59.65			58.46
Cash operating (2)		64.18			58.81			57.99			56.76

(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.

18

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(dollars in thousands) (unaudited)

	Years Ended December 31,
	2007			2006			2005			2004			2003
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	382,781		$	401,371		$	409,056		$	335,841		$	250,890
Tax-equivalent adjustment		6,246			6,903			6,054			4,356			2,681
Net interest income (tax-equivalent)		389,027			408,274			415,110			340,197			253,571
Net cash settlement of certain interest rate swaps          included in noninterest income		—			—			10,360			27,560			19,486
Net interest income (tax-equivalent), including net cash        settlement of certain interest rate swaps	$	389,027		$	408,274		$	425,470		$	367,757		$	273,057
Net interest margin (tax-equivalent)		3.10	%		3.22	%		3.12	%		3.06	%		3.01	%
Net interest margin (tax-equivalent), including net cash        settlement of certain interest rate swaps		3.10			3.22			3.20			3.31			3.24
Total noninterest income, as reported (GAAP)	$	113,311		$	117,905		$	43,850		$	115,243		$	92,841
Adjustments for non-operating items:
Change in fair value of interest rate swaps		—			—			13,278			(2,550	)		14,237
(Gain) loss on securities		4,623			(4,037	)		52,139			(11,721	)		(16,456	)
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)		117,934			114,847			109,267			108,989			90,021
Net cash settlement of certain interest rate swaps          included in noninterest income		—			—			10,360			27,560			19,486
Operating noninterest income, excluding net cash        settlement of certain interest rate swaps	$	117,934		$	114,847		$	98,907		$	81,429		$	70,535
Total noninterest expenses, as reported (GAAP)	$	320,848		$	325,939		$	316,693		$	240,610		$	199,272
Adjustments for non-operating items:
Employment contract buyouts and severance		(2,306	)		(5,588	)		(10,327	)		(1,080	)		(512	)
Merger-related costs		—			—			(4,009	)		(7,866	)		(5,127	)
Impairment recovery (loss) from write-down of assets		—			—			(917	)		277			(268	)
Conservation grant of land		—			—			—			(3,350	)		—
Loss on early extinguishment of debt		(2,029	)		(821	)		(7,101	)		(1,429	)		(2,699	)
Visa-related litigation		(881	)		—			—			—			—
Charitable contribution to foundation		—			—			(683	)		—			—
Operating noninterest expenses (noninterest expenses,        excluding non-operating items)		315,632			319,530			293,656			227,162			190,666
Less: amortization of intangibles		(7,897	)		(8,775	)		(8,637	)		(6,043	)		(3,433	)
Cash operating noninterest expenses (noninterest        expenses, excluding non-operating items and        amortization of intangibles)	$	307,735		$	310,755		$	285,019		$	221,119		$	187,233
Total Revenue (1)
GAAP	$	496,092		$	519,276		$	452,906		$	451,084		$	343,731
Operating (2)		506,961			523,121			524,377			449,186			343,592
Noninterest Income as a % of Total Revenue (3)
GAAP		22.84	%		22.71	%		9.68	%		25.55	%		27.01	%
Operating (2)		23.26			21.95			20.84			24.26			26.20
Operating, excluding net cash settlement of certain        interest rate swaps (4)		23.26			21.95			18.86			18.13			20.53
Efficiency Ratios (5)
GAAP		64.68			62.77			69.92			53.34			57.97
Operating (2)		62.26			61.08			56.00			50.57			55.49
Cash operating (2)		60.70			59.40			54.35			49.23			54.49

(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