EX-99 2 pressrelease.htm PRESS RELEASE DATED JANUARY 26, 2010

 

 


102 South Main Street

Greenville, SC 29601

864.421.1068

 

The South Financial Group Reports Fourth Quarter Results

 

GREENVILLE, SC – January 26, 2010 – The South Financial Group, Inc. (NASDAQ: TSFG) today reported a fourth quarter 2009 net loss available to common shareholders of $193.9 million, or $(0.90) per diluted share, compared to a net loss available to common shareholders of $340.8 million, or $(1.95) per diluted share, for third quarter 2009. Reconciliations of GAAP-reported results to operating results are provided in the attached financial highlights.

 

“Credit costs have begun to show signs of moderating, although they will continue to be challenging. We remain focused on assertively addressing credit issues and executing sales and liquidations of problem loans and foreclosed properties,” said H. Lynn Harton, President and CEO of The South Financial Group. “At the same time, our bankers are focused on strengthening our non-credit results. In the fourth quarter, we saw continued growth in core deposits, net interest margin expansion, and progress in reducing non-core loans. Finally, as part of our continued focus on balance sheet strength, we are suspending dividends on all remaining outstanding equity and capital instruments. While our year-end capital ratios exceeded well-capitalized regulatory requirements, the suspension of dividends will preserve approximately $4.5 million in capital on a quarterly basis going forward.”

 

Key points for the fourth quarter included:

 

A 7.6% linked-quarter decline in nonperforming loan balances to $399.0 million from $431.8 million at September 30, 2009, the second consecutive quarterly decline

 

 

A 15.3% linked-quarter decline in net loan charge-offs to $142.9 million from $168.6 million for third quarter 2009; fourth quarter 2009 net charge-offs included approximately $25 million related to acceleration of sales and resolutions of problem loans with an unpaid principal balance of $144 million

 

 

A 23.8% linked-quarter decrease in the provision for credit losses to $170.8 million from $224.2 million, increasing the allowance for credit losses to 4.45% of loans held for investment at December 31, 2009 and exceeding net charge-offs by $27.9 million

 

 

Continued reductions of non-core loans held for investment, down $277 million linked-quarter ($1.3 billion for 2009), while core loans declined $211 million linked-quarter

 


 

 

Continued period-end core deposit growth of 0.9% linked-quarter and 10.5% for 2009; this reflects the fifth consecutive quarter of period-end core deposit increases

 

 

A net interest margin of 2.97%, up 4 basis points linked-quarter, primarily from funding cost reductions

 

 

A decrease in operating noninterest income of $4.7 million linked-quarter, primarily from a lower gain on certain derivative activities, an adjustment to bank-owned life insurance (BOLI) income, the previously announced third quarter sales of ancillary businesses, and lower customer fee income

 

 

A decrease in operating noninterest expenses, excluding the impact of credit-related expenses and FDIC insurance premiums, of $1.7 million linked-quarter

 

 

Income tax expense of $23.8 million, primarily from continued valuation allowances for current period losses as well as changes in the taxes applicable to other comprehensive income

 

 

A decline in the tangible common equity ratio to 3.67%, due to the fourth quarter 2009 loss and a decrease in other comprehensive income

 

 

Capital ratios exceeded “well-capitalized” regulatory requirements for TSFG and Carolina First Bank at December 31, 2009

 

 

Announced suspension of dividend payments on all remaining outstanding equity and capital instruments, which will preserve approximately $4.5 million in capital on a quarterly basis

 

 

Increase in weighted average shares outstanding to 215.4 million, due to third quarter 2009 conversions of preferred stock into common

 

Net Interest Income and Average Balance Sheet

Fourth quarter 2009 net interest income increased $0.5 million to $80.5 million from $80.0 million in third quarter 2009 from net interest margin expansion, partially offset by lower average earning assets.

 

The tax-equivalent net interest margin for fourth quarter 2009 increased to 2.97%, up 4 basis points from 2.93% for third quarter 2009. An enhanced deposit mix, disciplined pricing, and downward pricing of certificates of deposit upon renewal improved customer funding costs by 20 basis points. This improvement was partially offset by a 53 basis point decline in investment security yields following actions taken to strengthen liquidity and reduce interest rate risk in the portfolio, including the sale of $325 million of higher-yielding mortgage-backed securities (MBS) and municipal securities during fourth quarter 2009 for a net gain of $6.2 million (which were reinvested into lower-yielding MBS).

 

2

 


 

Fourth quarter 2009 average loans decreased $456.6 million, or 5.0% linked-quarter, to $8.7 billion, and period-end loans held for investment decreased $488.1 million. For internal management purposes, TSFG segregates its loan portfolio into core ($7.0 billion at period-end) and non-core ($1.3 billion at period-end) loans, principally based on its ability to establish or expand a banking relationship. Loan balances declined due to reductions of non-core loans, sales and liquidations of problem loans, net loan charge-offs, and weaker loan demand. During fourth quarter 2009, period-end core loans declined $210.9 million, or 2.9% linked-quarter, while non-core loans declined $277.2 million, or 17.1% linked-quarter ($1.3 billion for 2009).

 

Fourth quarter 2009 average securities increased $334.4 million, or 18.1% linked-quarter, to $2.2 billion, and period-end securities increased $64.1 million.

 

Fourth quarter average core deposits (noninterest-bearing, interest checking, money market, and savings) increased $111.7 million, or 2.5% linked-quarter, and period-end core deposits increased $40.3 million. Fourth quarter 2009 customer funding levels (defined as total deposits less brokered deposits plus customer sweep accounts) remained relatively unchanged, as declines in certificates of deposit were offset by growth in core deposits and customer sweep accounts. Fourth quarter 2009 average wholesale borrowings, including brokered deposits and excluding customer sweep accounts, increased $203.6 million, while period-end wholesale borrowings declined $164.0 million.

 

Noninterest Income

Fourth quarter 2009 operating noninterest income (which excludes the non-operating items mentioned below) totaled $21.9 million, down $4.7 million from third quarter 2009. The decrease was largely attributable to a $1.6 million decline in the gain on certain derivative activities, a $1.0 million adjustment to BOLI cash surrender value due to various provisions of stable value contracts, and a $0.9 million decline in customer fee income. In addition, merchant processing income and wealth management income declined $0.6 million and $0.4 million, respectively, from the third quarter sales of ancillary businesses, which also reduced noninterest expenses.

 

Total noninterest income, including non-operating items, was $28.6 million for fourth quarter 2009, compared with $33.5 million for third quarter 2009. Non-operating noninterest income for fourth quarter 2009 included a $6.7 million net gain from the sale of securities, principally the sale of municipal securities. This compares with a $7.2 million gain, primarily from the sale of Carolina First Bank’s merchant processing portfolio, and a $0.3 million net loss on securities for third quarter 2009.

 

Noninterest Expenses

Operating noninterest expenses (which exclude the non-operating items mentioned below) totaled $99.7 million for fourth quarter 2009, a $10.9 million linked-quarter increase from $88.8 million for third quarter 2009, due to higher credit-related expenses, partially offset by expense reductions in many categories.

 

3

 


Excluding the impact of credit-related expenses and FDIC insurance premiums, all other operating noninterest expenses declined $1.7 million, or 2.3%, linked-quarter, driven by expense control throughout the Company and the sales of ancillary businesses (which had a corresponding decrease in noninterest income). Full-time equivalent employees totaled 2,214 at December 31, 2009, up from 2,196 at September 30, 2009 (principally from additions related to TSFG’s new SBA lending division) and down 11.6% from 2,505 at year-end 2008.

 

Credit-related noninterest expenses, which include loan collection and foreclosed asset expenses, gains or losses on nonmortgage loans held for sale, and losses on other real estate owned, and FDIC insurance premiums increased $12.6 million linked-quarter, primarily from a $10.6 million increase in losses and write-downs on other real estate owned.

 

Total noninterest expenses, including non-operating items, were $103.2 million for fourth quarter 2009, compared with $89.5 million for third quarter 2009. Fourth quarter 2009 non-operating noninterest expenses included a $3.5 million impairment charge for long-lived assets related to the corporate campus, which is being marketed for sale. Third quarter 2009 non-operating noninterest expenses included a $0.7 million impairment charge for long-lived assets related to the closing of office locations.

 

Credit Quality

At December 31, 2009, nonperforming loans held for investment totaled $399.0 million, a $32.8 million decrease from $431.8 million at September 30, 2009. Fourth quarter commercial loan sales included approximately $144 million in unpaid principal balance (versus $168 million for third quarter 2009). Commercial nonaccrual loans declined for the second consecutive quarter, and mortgage nonaccrual loans, including consumer lot loans, declined for the fourth quarter in a row. Nonperforming asset balances also decreased $22.2 million to $522.4 million at December 31, 2009. Despite the decline in nonperforming assets, nonperforming assets as a percentage of loans and foreclosed property increased to 6.13% at December 31, 2009 from 6.05% at September 30, 2009, due to lower period-end total loans. Nonperforming assets as a percentage of total assets declined to 4.39% at December 31, 2009 from 4.43% at September 30, 2009.

 

The provision for credit losses for fourth quarter 2009 totaled $170.8 million, compared with $224.2 million for third quarter 2009. For fourth quarter 2009, the provision for credit losses exceeded net loan charge-offs by $27.9 million. The overall allowance for credit losses increased to $373.1 million, or 4.45% of loans held for investment, up from $345.3 million, or 3.89% of loans held for investment, at September 30, 2009. The allowance coverage of nonperforming loans held for investment increased to 0.92 times at December 31, 2009 from 0.79 times at September 30, 2009.

 

Net loan charge-offs in fourth quarter 2009 decreased $25.7 million to $142.9 million, or 6.52% annualized of average loans held for investment, from $168.6 million, or 7.31% annualized, for third quarter 2009. Fourth quarter 2009 charge-offs included approximately $25 million in additional charge-offs related to sales and resolutions of problem loans, versus approximately $60 million for third quarter 2009.

 

4

 


Capital

Capital levels exceed “well-capitalized” standards for all regulatory capital ratios applicable to TSFG and Carolina First Bank at December 31, 2009. TSFG’s Tier 1 risk-based and Tier 1 common capital ratios totaled 9.93% and 4.04%, respectively, at December 31, 2009.

 

Tangible common equity to tangible assets at December 31, 2009 totaled 3.67%, down from 5.25% at September 30, 2009. The decrease was attributable to the fourth quarter 2009 net loss and a reduction in other comprehensive income. Tangible common book value per common share was $1.98 at December 31, 2009, down from $2.94 at September 30, 2009.

 

In connection with TSFG’s capital planning, the Company has decided to suspend the dividends on its (i) Cumulative Perpetual Preferred Stock, Series 2008-T (issued to the U.S. Treasury under the Capital Purchase Program); (ii) subordinated debentures to various trusts with applicable outstanding trust preferred securities; (iii) Mandatory Convertible Non-Cumulative Preferred Stock; (iv) Series 2000A Cumulative Fixed Rate REIT Preferred Stock; and (v) Series 2002C Cumulative Floating Rate REIT Preferred Stock. In the aggregate, the total quarterly dividends will preserve capital of approximately $4.5 million and cash of approximately $6.1 million quarterly. Certain of these dividends are cumulative, and the Company is restricted from certain actions until such dividends are declared and paid, including declaring or paying common dividends.

 

Conference Call / Webcast Information

The South Financial Group will host a conference call/webcast on Wednesday, January 27th at 10:00 a.m. ET to discuss fourth quarter 2009 financial results. Additional material information, including forward-looking statements such as trends and projections, may be discussed during the presentation. For supplemental financial information and financial review presentation slides, please refer to the Form 8-K filed by TSFG with the Securities and Exchange Commission on January 26th or visit the Investor Relations section of its website under the Quarterly Results 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 1-866-430-4720 or 1-203-369-0923.

 

Webcast:To gain access to the webcast, which will be “listen-only,” please go to www.thesouthgroup.com under the Investor Relations tab and click on the link “Webcast/The South Financial Group 4th Quarter Financial Results Conference Call.” For those unable to participate during the live webcast, it will be archived on The South Financial Group website until February 10, 2010.

 

General Information

The South Financial Group is a bank holding company focused on serving small businesses, middle market companies, and retail customers in the Carolinas and Florida. At December 31, 2009, it had approximately $11.9 billion in total assets and 177 branch offices. TSFG operates Carolina First Bank, which conducts banking operations in North Carolina and South Carolina (as Carolina First Bank), in Florida (as

 

5

 


Mercantile Bank), and on the Internet (as Bank CaroLine). At December 31, 2009, approximately 45% of TSFG’s total customer deposits were in South Carolina, 43% were in Florida, and 12% 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 (loss) and operating measures, which exclude gains or losses on certain items deemed not to reflect core operations. 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.

 

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, expectations, goals, projections, and statements, which are subject to numerous assumptions, risks, and uncertainties. They also include such items as return goals, loan growth, loan sales, customer funding growth, expense control, goodwill impairment, income tax rate and deferred tax assets, expected financial results for acquisitions, noninterest income, adequacy of capital and future capital levels, factors that will affect credit quality and the net interest margin, effectiveness of its hedging strategies, 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:

James R. Gordon, Senior EVP & Chief Financial Officer (864) 552-9050

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

 

6

 

 


 

PAGE 1, FINANCIAL HIGHLIGHTS

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

(dollars in thousands, except share data) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

% Change 12/31/09 vs.

 

 

 

 

   

 

 

12/31/09

 

9/30/09

 

12/31/08

 

9/30/09

 

9/30/09
Annualized

 

12/31/08

 

                                       

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (tax-equivalent)

 

$

81,393

 

$

81,118

 

$

92,898

 

 

0.3

%

 

1.3

%

 

(12.4

)%

Less: tax-equivalent adjustment

 

 

847

 

 

1,080

 

 

1,265

 

 

(21.6

)

 

(85.6

)

 

(33.0

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Net interest income

 

 

80,546

 

 

80,038

 

 

91,633

 

 

0.6

 

 

2.5

 

 

(12.1

)

Provision for credit losses

 

 

170,761

 

 

224,179

 

 

122,926

 

 

(23.8

)

 

(94.5

)

 

38.9

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating noninterest income (noninterest income, excluding non-operating items)

 

 

21,856

 

 

26,522

 

 

28,451

 

 

(17.6

)

 

(69.8

)

 

(23.2

)

Gain (loss) on securities

 

 

6,694

 

 

(286

)

 

1,561

 

 

n/m

 

 

n/m

 

 

n/m

 

Gain on sale of ancillary businesses

 

 

 

 

7,234

 

 

 

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Non-operating noninterest income

 

 

6,694

 

 

6,948

 

 

1,561

 

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Total noninterest income

 

 

28,550

 

 

33,470

 

 

30,012

 

 

(14.7

)

 

(58.3

)

 

(4.9

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Noninterest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating noninterest expenses (noninterest expenses, excluding non-operating items)

 

 

99,685

 

 

88,783

 

 

92,068

 

 

12.3

 

 

48.7

 

 

8.3

 

Goodwill impairment

 

 

 

 

 

 

237,618

 

 

n/m

 

 

n/m

 

 

n/m

 

Employment contracts and severance

 

 

 

 

 

 

9,599

 

 

n/m

 

 

n/m

 

 

n/m

 

Impairment of long lived assets

 

 

3,478

 

 

746

 

 

 

 

n/m

 

 

n/m

 

 

n/m

 

Loss on early extinguishment of debt

 

 

 

 

 

 

1,747

 

 

n/m

 

 

n/m

 

 

n/m

 

Loss on derivative collateral

 

 

 

 

 

 

1,061

 

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Non-operating noninterest expenses

 

 

3,478

 

 

746

 

 

250,025

 

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Total noninterest expenses

 

 

103,163

 

 

89,529

 

 

342,093

 

 

15.2

 

 

60.4

 

 

(69.8

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Income (loss) before income taxes

 

 

(164,828

)

 

(200,200

)

 

(343,374

)

 

n/m

 

 

n/m

 

 

n/m

 

Income tax expense (benefit)

 

 

23,843

 

 

123,304

 

 

(33,435

)

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Net income (loss)

 

 

(188,671

)

 

(323,504

)

 

(309,939

)

 

n/m

 

 

n/m

 

 

n/m

 

Preferred stock dividends and other (1)

 

 

(5,221

)

 

(17,251

)

 

(9,424

)

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Net income (loss) available to common shareholders

 

$

(193,892

)

$

(340,755

)

$

(319,363

)

 

n/m

%

 

n/m

%

 

n/m

%

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Per common share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss)

 

$

(0.90

)

$

(1.95

)

$

(4.29

)

 

n/m

%

 

n/m

%

 

n/m

%

Diluted earnings (loss)

 

 

(0.90

)

 

(1.95

)

 

(4.29

)

 

n/m

 

 

n/m

 

 

n/m

 

Cash dividends declared per common share

 

 

 

 

 

 

0.01

 

 

n/m

 

 

n/m

 

 

n/m

 

Average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

215,365,464

 

 

174,426,381

 

 

74,505,656

 

 

23.5

%

 

93.1

%

 

189.1

%

Diluted

 

 

215,365,464

 

 

174,426,381

 

 

74,505,656

 

 

23.5

 

 

93.1

 

 

189.1

 

PERFORMANCE RATIOS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP (2)

 

$

109,096

 

$

113,508

 

$

121,645

 

 

(3.9

)%

 

(15.4

)%

 

(10.3

)%

Operating (3)

 

 

103,249

 

 

107,640

 

 

121,349

 

 

(4.1

)

 

(16.2

)

 

(14.9

)

Return on average assets (4)

 

 

(6.12

)%

 

(10.33

)%

 

(8.94

)%

 

 

 

 

 

 

 

 

 

Return on average common equity (5)

 

 

(93.05

)

 

(133.73

)

 

(99.16

)

 

 

 

 

 

 

 

 

 

Return on average equity (4)

 

 

(64.42

)

 

(85.43

)

 

(76.17

)

 

 

 

 

 

 

 

 

 

Net interest margin (tax-equivalent)

 

 

2.97

 

 

2.93

 

 

2.97

 

 

 

 

 

 

 

 

 

 

Cash operating efficiency ratio (6)

 

 

80.42

 

 

77.28

 

 

74.73

 

 

 

 

 

 

 

 

 

 


 

 

(1)

For the quarter ended September 30, 2009, includes $11.9 million for the value of common shares recorded as an inducement for early conversion of mandatorily convertible preferred stock.

(2)

The sum of net interest income and noninterest income.

(3)

The sum of tax-equivalent net interest income and operating noninterest income.

(4)

Return on average assets and return on average equity are calculated as net income (loss) divided by either average assets or average total equity.

(5)

Return on average common equity is calculated as net income (loss) available to common shareholders divided by average common equity.

(6)

The cash operating efficiency ratio is calculated as operating noninterest expenses before gain/loss on OREO, loss on nonmortgage loans held for sale, and amortization of intangibles divided by the sum of tax-equivalent net interest income and operating 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

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/09

 

12/31/08

 

% Change

 

               

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

Net interest income (tax-equivalent)

 

$

335,778

 

$

385,517

 

 

(12.9

)%

Less: tax-equivalent adjustment

 

 

4,246

 

 

5,354

 

 

(20.7

)

 

 

   

 

   

 

   

 

Net interest income

 

 

331,532

 

 

380,163

 

 

(12.8

)

Provision for credit losses

 

 

668,904

 

 

344,589

 

 

94.1

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Operating noninterest income (noninterest income, excluding non-operating items)

 

 

102,765

 

 

116,955

 

 

(12.1

)

Gain on securities

 

 

8,034

 

 

3,108

 

 

n/m

 

Gain on sale of ancillary businesses

 

 

7,234

 

 

 

 

n/m

 

Gain on Visa IPO share redemption

 

 

 

 

1,904

 

 

n/m

 

 

 

   

 

   

 

   

 

Non-operating noninterest income

 

 

15,268

 

 

5,012

 

 

n/m

 

 

 

   

 

   

 

   

 

Total noninterest income

 

 

118,033

 

 

121,967

 

 

(3.2

)

 

 

   

 

   

 

   

 

Noninterest expenses:

 

 

 

 

 

 

 

 

 

 

Operating noninterest expenses (noninterest expenses, excluding non-operating items)

 

 

390,848

 

 

346,650

 

 

12.8

 

Goodwill impairment

 

 

2,511

 

 

426,049

 

 

n/m

 

Employment contracts and severance

 

 

829

 

 

16,519

 

 

n/m

 

Impairment of long lived assets

 

 

21,600

 

 

 

 

n/m

 

FDIC special assessment

 

 

5,700

 

 

 

 

n/m

 

Branch acquisition and conversion costs

 

 

 

 

731

 

 

n/m

 

(Gain) loss on early extinguishment of debt

 

 

(3,043

)

 

2,086

 

 

n/m

 

Loss on repurchase of auction rate securities

 

 

676

 

 

 

 

n/m

 

Visa-related litigation

 

 

 

 

(863

)

 

n/m

 

Loss on derivative collateral

 

 

 

 

1,061

 

 

n/m

 

 

 

   

 

   

 

   

 

Non-operating noninterest expenses

 

 

28,273

 

 

445,583

 

 

n/m

 

 

 

   

 

   

 

   

 

Total noninterest expenses

 

 

419,121

 

 

792,233

 

 

(47.1

)

 

 

   

 

   

 

   

 

Income (loss) before income taxes

 

 

(638,460

)

 

(634,692

)

 

n/m

 

Income tax expense (benefit)

 

 

37,794

 

 

(87,574

)

 

n/m

 

 

 

   

 

   

 

   

 

Net income (loss)

 

 

(676,254

)

 

(547,118

)

 

n/m

 

Preferred stock dividends and other (1)

 

 

(60,689

)

 

(21,658

)

 

n/m

 

 

 

   

 

   

 

   

 

Net income (loss) available to common shareholders

 

$

(736,943

)

$

(568,776

)

 

n/m

%

 

 

   

 

   

 

   

 

 

Per common share data:

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss)

 

$

(5.22

)

$

(7.78

)

 

n/m

%

Diluted earnings (loss)

 

 

(5.22

)

 

(7.78

)

 

n/m

 

Cash dividends declared per common share

 

 

0.02

 

 

0.22

 

 

(90.9

)

Average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

141,207,510

 

 

73,136,936

 

 

93.1

%

Diluted

 

 

141,207,510

 

 

73,136,936

 

 

93.1

 

PERFORMANCE RATIOS:

 

 

 

 

 

 

 

 

 

 

Total revenue:

 

 

 

 

 

 

 

 

 

 

GAAP (2)

 

$

449,565

 

$

502,130

 

 

(10.5

)%

Operating (3)

 

 

438,543

 

 

502,472

 

 

(12.7

)

Return on average assets (4)

 

 

(5.28

)%

 

(3.96

)%

 

 

 

Return on average common equity (5)

 

 

(75.10

)

 

(41.33

)

 

 

 

Return on average equity (4)

 

 

(46.63

)

 

(35.11

)

 

 

 

Net interest margin (tax-equivalent)

 

 

2.92

 

 

3.09

 

 

 

 

Cash operating efficiency ratio (6)

 

 

77.92

 

 

67.59

 

 

 

 


 

 

(1)

For the year ended December 31, 2009, includes $32.4 million for the value of common shares recorded as an inducement for early conversion of mandatorily convertible preferred stock.

(2)

The sum of net interest income and noninterest income.

(3)

The sum of tax-equivalent net interest income and operating noninterest income.

(4)

Return on average assets and return on average equity are calculated as net income (loss) divided by either average assets or average total equity.

(5)

Return on average common equity is calculated as net income (loss) available to common shareholders divided by average common equity.

(6)

The cash operating efficiency ratio is calculated as operating noninterest expenses before gain/loss on OREO, loss on nonmortgage loans held for sale, and amortization of intangibles divided by the sum of tax-equivalent net interest income and operating 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 12/31/09 vs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/09

 

9/30/09

 

12/31/08

 

9/30/09

 

9/30/09
Annualized

 

12/31/08

 

                           

BALANCE SHEET DATA
(Averages - Three Months Ended)

 

 

 

 

 

 

 

 

 

Total assets

 

$

12,227,135

 

$

12,428,707

 

$

13,784,934

 

 

(1.6

)%

 

(6.4

)%

 

(11.3

)%

Intangible assets

 

 

(230,129

)

 

(235,986

)

 

(481,380

)

 

(2.5

)

 

(9.8

)

 

(52.2

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Tangible assets

 

 

11,997,006

 

 

12,192,721

 

 

13,303,554

 

 

(1.6

)

 

(6.4

)

 

(9.8

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

 

Loans

 

 

8,706,846

 

 

9,163,404

 

 

10,344,242

 

 

(5.0

)

 

(19.8

)

 

(15.8

)

Securities (1)

 

 

2,181,669

 

 

1,847,284

 

 

2,117,087

 

 

18.1

 

 

71.8

 

 

3.1

 

Total earning assets

 

 

10,888,797

 

 

11,010,863

 

 

12,462,457

 

 

(1.1

)

 

(4.4

)

 

(12.6

)

 

Noninterest-bearing deposits

 

 

1,115,349

 

 

1,109,176

 

 

1,001,516

 

 

0.6

 

 

2.2

 

 

11.4

 

Total deposits (2)

 

 

9,458,249

 

 

9,278,472

 

 

9,630,077

 

 

1.9

 

 

7.7

 

 

(1.8

)

Customer funding (3)

 

 

7,630,291

 

 

7,676,212

 

 

7,932,366

 

 

(0.6

)

 

(2.4

)

 

(3.8

)

Wholesale borrowings (4)

 

 

3,250,421

 

 

3,046,830

 

 

4,032,710

 

 

6.7

 

 

26.5

 

 

(19.4

)

Total funding

 

 

10,880,712

 

 

10,723,042

 

 

11,965,076

 

 

1.5

 

 

5.8

 

 

(9.1

)

 

Preferred stock

 

 

335,302

 

 

491,365

 

 

337,439

 

 

(31.8

)

 

(126.0

)

 

(0.6

)

Common equity

 

 

826,724

 

 

1,010,920

 

 

1,281,312

 

 

(18.2

)

 

(72.3

)

 

(35.5

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Shareholders’ equity

 

 

1,162,026

 

 

1,502,285

 

 

1,618,751

 

 

(22.6

)

 

(89.9

)

 

(28.2

)

Intangible assets

 

 

(230,129

)

 

(235,986

)

 

(481,380

)

 

(2.5

)

 

(9.8

)

 

(52.2

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Tangible equity

 

 

931,897

 

 

1,266,299

 

 

1,137,371

 

 

(26.4

)

 

(104.8

)

 

(18.1

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans/total earning assets

 

 

80.0

%

 

83.2

%

 

83.0

%

 

 

 

 

 

 

 

 

 

Securities/total assets

 

 

17.8

 

 

14.9

 

 

15.4

 

 

 

 

 

 

 

 

 

 

Customer funding/total funding

 

 

70.1

 

 

71.6

 

 

66.3

 

 

 

 

 

 

 

 

 

 

Wholesale borrowings/total assets

 

 

26.6

 

 

24.5

 

 

29.3

 

 

 

 

 

 

 

 

 

 

Loans/customer funding

 

 

114.1

 

 

119.4

 

 

130.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET DATA
(Averages - Year to Date)

 

 

 

 

 

 

 

 

 

Total assets

 

$

12,819,697

 

$

13,019,389

 

$

13,833,355

 

 

 

 

 

 

 

 

(7.3

)%

Intangible assets

 

 

(238,825

)

 

(241,755

)

 

(532,517

)

 

 

 

 

 

 

 

(55.2

)

 

 

   

 

   

 

   

 

 

 

 

 

 

 

   

 

Tangible assets

 

 

12,580,872

 

 

12,777,634

 

 

13,300,838

 

 

 

 

 

 

 

 

(5.4

)

 

 

   

 

   

 

   

 

 

 

 

 

 

 

   

 

 

Loans

 

 

9,478,536

 

 

9,738,592

 

 

10,374,423

 

 

 

 

 

 

 

 

(8.6

)

Securities (1)

 

 

2,018,845

 

 

1,963,974

 

 

2,087,745

 

 

 

 

 

 

 

 

(3.3

)

Total earning assets

 

 

11,497,608

 

 

11,702,775

 

 

12,478,993

 

 

 

 

 

 

 

 

(7.9

)

 

Noninterest-bearing deposits

 

 

1,080,503

 

 

1,068,760

 

 

1,055,855

 

 

 

 

 

 

 

 

2.3

 

Total deposits (2)

 

 

9,342,906

 

 

9,304,036

 

 

9,690,581

 

 

 

 

 

 

 

 

(3.6

)

Customer funding (3)

 

 

7,723,889

 

 

7,755,431

 

 

8,065,982

 

 

 

 

 

 

 

 

(4.2

)

Wholesale borrowings (4)

 

 

3,432,202

 

 

3,493,463

 

 

4,019,601

 

 

 

 

 

 

 

 

(14.6

)

Total funding

 

 

11,156,091

 

 

11,248,894

 

 

12,085,583

 

 

 

 

 

 

 

 

(7.7

)

 

Preferred stock

 

 

469,036

 

 

514,104

 

 

181,849

 

 

 

 

 

 

 

 

157.9

 

Common equity

 

 

981,237

 

 

1,033,307

 

 

1,376,232

 

 

 

 

 

 

 

 

(28.7

)

 

 

   

 

   

 

   

 

 

 

 

 

 

 

   

 

Shareholders’ equity

 

 

1,450,273

 

 

1,547,411

 

 

1,558,081

 

 

 

 

 

 

 

 

(6.9

)

Intangible assets

 

 

(238,825

)

 

(241,755

)

 

(532,517

)

 

 

 

 

 

 

 

(55.2

)

 

 

   

 

   

 

   

 

 

 

 

 

 

 

   

 

Tangible equity

 

 

1,211,448

 

 

1,305,656

 

 

1,025,564

 

 

 

 

 

 

 

 

18.1

 

 

 

   

 

   

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans/total earning assets

 

 

82.4

%

 

83.2

%

 

83.1

%

 

 

 

 

 

 

 

 

 

Securities/total assets

 

 

15.7

 

 

15.1

 

 

15.1

 

 

 

 

 

 

 

 

 

 

Customer funding/total funding

 

 

69.2

 

 

68.9

 

 

66.7

 

 

 

 

 

 

 

 

 

 

Wholesale borrowings/total assets

 

 

26.8

 

 

26.8

 

 

29.1

 

 

 

 

 

 

 

 

 

 

Loans/customer funding

 

 

122.7

 

 

125.6

 

 

128.6

 

 

 

 

 

 

 

 

 

 


 

 

(1)

The average balances for investment securities exclude the unrealized gain/loss recorded for available for sale securities.

(2)

Total deposits include brokered deposits.

(3)

Customer funding includes total deposits less brokered deposits plus customer sweep accounts.

(4)

Wholesale borrowings include borrowings less customer sweep accounts 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 12/31/09 vs.

 

 

 

 

 

 

 

 

 

 

 

12/31/09

 

9/30/09

 

12/31/08

 

9/30/09

 

9/30/09
Annualized

 

12/31/08

 

                           

BALANCE SHEET DATA
(Period End)

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

15,758

 

$

8,071

 

$

30,963

 

 

95.2

%

 

377.9

%

 

(49.1

)%

Loans held for investment

 

 

8,386,127

 

 

8,874,234

 

 

10,192,072

 

 

(5.5

)

 

(21.8

)

 

(17.7

)

Allowance for loan losses

 

 

(365,642

)

 

(339,536

)

 

(247,086

)

 

7.7

 

 

30.5

 

 

48.0

 

Allowance for credit losses

 

 

(373,126

)

 

(345,256

)

 

(249,874

)

 

8.1

 

 

32.0

 

 

49.3

 

Securities (1)

 

 

2,222,917

 

 

2,158,846

 

 

2,094,367

 

 

3.0

 

 

11.8

 

 

6.1

 

Intangible assets

 

 

229,825

 

 

230,606

 

 

246,020

 

 

(0.3

)

 

(1.3

)

 

(6.6

)

Total assets

 

 

11,894,982

 

 

12,300,792

 

 

13,602,326

 

 

(3.3

)

 

(13.1

)

 

(12.6

)

 

Noninterest-bearing deposits

 

 

1,124,404

 

 

1,091,439

 

 

1,041,140

 

 

3.0

 

 

12.0

 

 

8.0

 

Total deposits (2)

 

 

9,296,212

 

 

9,488,788

 

 

9,405,717

 

 

(2.0

)

 

(8.1

)

 

(1.2

)

Customer funding (3)

 

 

7,666,801

 

 

7,670,983

 

 

7,989,962

 

 

(0.1

)

 

(0.2

)

 

(4.0

)

Wholesale borrowings (4)

 

 

3,068,982

 

 

3,232,949

 

 

3,749,898

 

 

(5.1

)

 

(20.1

)

 

(18.2

)

Total funding

 

 

10,735,783

 

 

10,903,932

 

 

11,739,860

 

 

(1.5

)

 

(6.1

)

 

(8.6

)

Mandatorily convertible preferred stock

 

 

4,650

 

 

4,650

 

 

238,700

 

 

 

 

 

 

(98.1

)

Perpetual preferred stock

 

 

331,133

 

 

330,250

 

 

327,679

 

 

0.3

 

 

1.1

 

 

1.1

 

Common equity

 

 

657,391

 

 

863,801

 

 

1,054,152

 

 

(23.9

)

 

(94.8

)

 

(37.6

)

Shareholders’ equity

 

 

993,174

 

 

1,198,701

 

 

1,620,531

 

 

(17.1

)

 

(68.0

)

 

(38.7

)

 

CAPITAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 risk-based capital (preliminary)

 

 

9.93

%

 

11.19

%

 

12.86

%

 

 

 

 

 

 

 

 

 

Total risk-based capital (preliminary)

 

 

11.24

 

 

12.49

 

 

14.35

 

 

 

 

 

 

 

 

 

 

Leverage ratio (preliminary)

 

 

7.91

 

 

9.22

 

 

11.22

 

 

 

 

 

 

 

 

 

 

Tangible equity to tangible assets

 

 

6.54

 

 

8.02

 

 

10.29

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

 

 

3.67

 

 

5.25

 

 

6.05

 

 

 

 

 

 

 

 

 

 

 

SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible preferred shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Series 2008

 

 

4,650

 

 

4,650

 

 

238,700

 

 

%

 

%

 

(98.1

)%

Common shares outstanding

 

 

215,455,541

 

 

215,371,687

 

 

74,643,649

 

 

 

 

0.2

 

 

188.6

 

Common book value per common share (5)

 

$

3.05

 

$

4.01

 

$

14.12

 

 

(23.9

)

 

(95.0

)

 

(78.4

)

Common tangible book value per common share (5)

 

 

1.98

 

 

2.94

 

 

10.83

 

 

(32.7

)

 

(129.5

)

 

(81.7

)

 

OPERATIONS DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Branch offices

 

 

177

 

 

177

 

 

180

 

 

%

 

%

 

(1.7

)%

ATMs

 

 

197

 

 

198

 

 

202

 

 

(0.5

)

 

(2.0

)

 

(2.5

)

Employees (full-time equivalent)

 

 

2,214

 

 

2,196

 

 

2,505

 

 

0.8

 

 

3.3

 

 

(11.6

)


 

 

(1)

During fourth quarter 2009, TSFG reclassified FHLB stock from securities to other assets. Amounts for prior periods have been reclassified to conform to the current presentation.

(2)

Total deposits include brokered deposits.

(3)

Customer funding includes total deposits less brokered deposits plus customer sweep accounts.

(4)

Wholesale borrowings include borrowings less customer sweep accounts plus brokered deposits.

(5)

Common book value per common share is calculated as total shareholders’ equity less preferred stock divided by common shares outstanding. Common tangible book value per common share also excludes intangible assets.

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 12/31/09 vs.

 

 

 

 

 

 

 

 

 

 

 

12/31/09

 

9/30/09

 

12/31/08

 

9/30/09

 

9/30/09
Annualized

 

12/31/08

 

                                       

CREDIT QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

$

8,386,127

 

$

8,874,234

 

$

10,192,072

 

 

(5.5

)%

 

(21.8

)%

 

(17.7

)%

Allowance for loan losses

 

 

(365,642

)

 

(339,536

)

 

(247,086

)

 

7.7

 

 

 

 

 

48.0

 

Allowance for credit losses

 

 

(373,126

)

 

(345,256

)

 

(249,874

)

 

8.1

 

 

 

 

 

49.3

 

 

Nonperforming loans held for investment

 

$

399,046

 

$

431,791

 

$

349,382

 

 

(7.6

)%

 

 

 

 

14.2

%

Nonperforming loans held for sale

 

 

 

 

 

 

16,282

 

 

n/m

 

 

 

 

 

n/m

 

Foreclosed property (other real estate owned and personal property repossessions)

 

 

123,314

 

 

112,771

 

 

48,993

 

 

9.3

 

 

 

 

 

151.7

 

 

 

   

 

   

 

   

 

   

 

 

 

 

   

 

Nonperforming assets

 

$

522,360

 

$

544,562

 

$

414,657

 

 

(4.1

)%

 

 

 

 

26.0

%

 

 

   

 

   

 

   

 

   

 

 

 

 

   

 

Restructured loans not included in nonperforming assets

 

$

26,128

 

$

17,236

 

$

6,249

 

 

 

 

 

 

 

 

 

 

Nonperforming loans held for investment as a % of loans held for investment

 

 

4.76

%

 

4.87

%

 

3.43

%

 

 

 

 

 

 

 

 

 

Nonperforming assets as a % of loans and foreclosed property

 

 

6.13

 

 

6.05

 

 

4.04

 

 

 

 

 

 

 

 

 

 

Nonperforming assets as a % of total assets

 

 

4.39

 

 

4.43

 

 

3.05

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a % of loans HFI

 

 

4.36

 

 

3.83

 

 

2.42

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses as a % of loans HFI

 

 

4.45

 

 

3.89

 

 

2.45

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses to nonperforming loans HFI

 

 

0.92

x

 

0.79

x

 

0.71

x

 

 

 

 

 

 

 

 

 

Loans past due 90 days or more (interest accruing)

 

$

10,465

 

$

7,467

 

$

47,481

 

 

 

 

 

 

 

 

(78.0

)%

Average loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

8,697,056

 

 

9,146,694

 

 

10,308,823

 

 

 

 

 

 

 

 

 

 

Year to date

 

 

9,456,636

 

 

9,712,611

 

 

10,351,897

 

 

 

 

 

 

 

 

 

 

Net loan charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

142,891

 

 

168,603

 

 

76,052

 

 

(15.3

)%

 

 

 

 

87.9

%

Year to date

 

 

541,181

 

 

398,290

 

 

223,410

 

 

 

 

 

 

 

 

142.2

 

Net loan charge-offs as a % of average loans held for investment (annualized):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

6.52

%

 

7.31

%

 

2.93

%

 

 

 

 

 

 

 

 

 

Year to date

 

 

5.72

 

 

5.48

 

 

2.16

 

 

 

 

 

 

 

 

 

 

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 12/31/09 vs.

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

9/30/09

 

 

 

12/31/09

 

9/30/09

 

12/31/08

 

9/30/09

 

Annualized

 

12/31/08

 

                           

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer fee income

 

$

13,290

 

$

14,144

 

$

13,237

 

 

(6.0

)%

 

(24.0

)%

 

0.4

%

Wealth management income

 

 

4,481

 

 

5,319

 

 

6,287

 

 

(15.8

)

 

(62.5

)

 

(28.7

)

Mortgage banking income

 

 

1,302

 

 

1,137

 

 

1,038

 

 

14.5

 

 

57.6

 

 

25.4

 

Bank-owned life insurance

 

 

1,656

 

 

2,797

 

 

3,939

 

 

(40.8

)

 

(161.8

)

 

(58.0

)

Merchant processing income, net

 

 

 

 

591

 

 

697

 

 

n/m

 

 

n/m

 

 

n/m

 

Gain (loss) on certain derivative activities

 

 

32

 

 

1,597

 

 

(256

)

 

n/m

 

 

n/m

 

 

n/m

 

Other

 

 

1,095

 

 

937

 

 

3,509

 

 

16.9

 

 

66.9

 

 

(68.8

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Operating noninterest income (noninterest income, excluding non-operating items)

 

 

21,856

 

 

26,522

 

 

28,451

 

 

(17.6

)

 

(69.8

)

 

(23.2

)

Non-operating noninterest income

 

 

6,694

 

 

6,948

 

 

1,561

 

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Total noninterest income

 

$

28,550

 

$

33,470

 

$

30,012

 

 

(14.7

)% 

 

(58.3

)%

 

(4.9

)%

 

 

   

 

   

 

   

 

   

 

   

 

   

 

NONINTEREST EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel expense

 

$

38,380

 

$

40,283

 

$

45,885

 

 

(4.7

)%

 

(18.7

)%

 

(16.4

)%

Occupancy

 

 

9,600

 

 

9,658

 

 

9,946

 

 

(0.6

)

 

(2.4

)

 

(3.5

)

Furniture and equipment

 

 

7,062

 

 

6,950

 

 

7,454

 

 

1.6

 

 

6.4

 

 

(5.3

)

Professional services

 

 

3,876

 

 

4,034

 

 

4,533

 

 

(3.9

)

 

(15.5

)

 

(14.5

)

Project NOW expense

 

 

 

 

114

 

 

271

 

 

n/m

 

 

n/m

 

 

n/m

 

Advertising and business development

 

 

1,293

 

 

1,264

 

 

2,611

 

 

2.3

 

 

9.1

 

 

(50.5

)

Telecommunications

 

 

1,548

 

 

1,572

 

 

1,613

 

 

(1.5

)

 

(6.1

)

 

(4.0

)

Amortization of intangibles

 

 

1,102

 

 

1,238

 

 

1,417

 

 

(11.0

)

 

(43.6

)

 

(22.2

)

Regulatory assessments

 

 

6,278

 

 

6,181

 

 

3,452

 

 

1.6

 

 

6.2

 

 

81.9

 

Loan collection and foreclosed asset expense

 

 

8,117

 

 

6,835

 

 

4,558

 

 

18.8

 

 

74.4

 

 

78.1

 

(Gain) loss on nonmortgage loans held for sale

 

 

518

 

 

(41

)

 

283

 

 

n/m

 

 

n/m

 

 

n/m

 

(Gain) loss on OREO

 

 

15,032

 

 

4,406

 

 

(316

)

 

n/m

 

 

n/m

 

 

n/m

 

Other

 

 

6,879

 

 

6,289

 

 

10,361

 

 

9.4

 

 

37.2

 

 

(33.6

)

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Operating noninterest expenses (noninterest expenses, excluding non-operating items)

 

 

99,685

 

 

88,783

 

 

92,068

 

 

12.3

 

 

48.7

 

 

8.3

 

Non-operating noninterest expenses

 

 

3,478

 

 

746

 

 

250,025

 

 

n/m

 

 

n/m

 

 

n/m

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

Total noninterest expenses

 

$

103,163

 

$

89,529

 

$

342,093

 

 

15.2

%

 

60.4

%

 

(69.8

)%

 

 

   

 

   

 

   

 

   

 

   

 

   

 


 

 

 

 

 

 

 

 

 

 

 

                     

 

 

 

Year Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/09

 

12/31/08

 

% Change

 

               

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Customer fee income

 

$

52,803

 

$

56,080

 

 

(5.8

)%

Wealth management income

 

 

21,851

 

 

27,617

 

 

(20.9

)

Mortgage banking income

 

 

5,694

 

 

5,260

 

 

8.3

 

Bank-owned life insurance

 

 

9,515

 

 

12,877

 

 

(26.1

)

Merchant processing income, net

 

 

2,018

 

 

3,279

 

 

(38.5

)

Gain (loss) on certain derivative activities

 

 

3,849

 

 

(207

)

 

n/m

 

Other

 

 

7,035

 

 

12,049

 

 

(41.6

)

 

 

   

 

   

 

   

 

Operating noninterest income (noninterest
income, excluding non-operating items)

 

 

102,765

 

 

116,955

 

 

(12.1

)

Non-operating noninterest income

 

 

15,268

 

 

5,012

 

 

n/m

 

 

 

   

 

   

 

   

 

Total noninterest income

 

$

118,033

 

$

121,967

 

 

(3.2

)%

 

 

   

 

   

 

   

 

NONINTEREST EXPENSES

 

 

 

 

 

 

 

 

 

 

Personnel expense

 

$

166,441

 

$

182,237

 

 

(8.7

)%

Occupancy

 

 

38,200

 

 

37,311

 

 

2.4

 

Furniture and equipment

 

 

27,758

 

 

27,561

 

 

0.7

 

Professional services

 

 

16,768

 

 

16,212

 

 

3.4

 

Project NOW expense

 

 

1,693

 

 

271

 

 

n/m

 

Advertising and business development

 

 

5,947

 

 

9,927

 

 

(40.1

)

Telecommunications

 

 

6,197

 

 

6,140

 

 

0.9

 

Amortization of intangibles

 

 

4,917

 

 

6,138

 

 

(19.9

)

Regulatory assessments

 

 

23,593

 

 

10,923

 

 

116.0

 

Loan collection and foreclosed asset expense

 

 

27,090

 

 

12,431

 

 

117.9

 

Loss on nonmortgage loans held for sale

 

 

11,776

 

 

283

 

 

n/m

 

Loss on OREO

 

 

32,435

 

 

633

 

 

n/m

 

Other

 

 

28,033

 

 

36,583

 

 

(23.4

)

 

 

   

 

   

 

   

 

Operating noninterest expenses (noninterest
expenses, excluding non-operating items)

 

 

390,848

 

 

346,650

 

 

12.8

 

Non-operating noninterest expenses

 

 

28,273

 

 

445,583

 

 

n/m

 

 

 

   

 

   

 

   

 

Total noninterest expenses

 

$

419,121

 

$

792,233

 

 

(47.1

)%

 

 

   

 

   

 

   

 

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

 

 

 

 

 

 

 

12/31/09

 

9/30/09

 

12/31/08

 

                     

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS), AS REPORTED (GAAP)

 

$

(188,671

)

$

(323,504

)

$

(309,939

)

Add: Income tax expense (benefit)

 

 

23,843

 

 

123,304

 

 

(33,435

)

 

 

   

 

   

 

   

 

Income (loss) before income taxes

 

 

(164,828

)

 

(200,200

)

 

(343,374

)

Non-operating items:

 

 

 

 

 

 

 

 

 

 

(Gain) loss on securities

 

 

(6,694

)

 

286

 

 

(1,561

)

Gain on sale of ancillary businesses

 

 

 

 

(7,234

)

 

 

Goodwill impairment

 

 

 

 

 

 

237,618

 

Employment contracts and severance

 

 

 

 

 

 

9,599

 

Impairment of long lived assets

 

 

3,478

 

 

746

 

 

 

(Gain) loss on early extinguishment of debt

 

 

 

 

 

 

1,747

 

Loss on derivative collateral

 

 

 

 

 

 

1,061

 

 

 

   

 

   

 

   

 

PRE-TAX OPERATING LOSS (income (loss) before taxes, excluding non-operating items)

 

 

(168,044

)

 

(206,402

)

 

(94,910

)

Add: Provision for credit losses

 

 

170,761

 

 

224,179

 

 

122,926

 

 

 

   

 

   

 

   

 

PRE-TAX, PRE-PROVISION OPERATING EARNINGS

 

 

2,717

 

 

17,777

 

 

28,016

 

Add: (Gain) loss on nonmortgage loans held for sale

 

 

518

 

 

(41

)

 

283

 

Add: (Gain) loss on OREO

 

 

15,032

 

 

4,406

 

 

(316

)

 

 

   

 

   

 

   

 

PRE-TAX, PRE-CREDIT OPERATING EARNINGS

 

$

18,267

 

$

22,142

 

$

27,983

 

 

 

   

 

   

 

   

 


 

 

 

 

 

 

 

 

       

 

 

 

Year Ended

 

 

 

 

 

 

 

12/31/09

 

12/31/08

 

           

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

 

 

 

 

 

 

 

NET INCOME (LOSS), AS REPORTED (GAAP)

 

$

(676,254

)

$

(547,118

)

Add: Income tax expense (benefit)

 

 

37,794

 

 

(87,574

)

 

 

   

 

   

 

Income (loss) before income taxes

 

 

(638,460

)

 

(634,692

)

Non-operating items:

 

 

 

 

 

 

 

Gain on securities

 

 

(8,034

)

 

(3,108

)

Gain on sale of ancillary businesses

 

 

(7,234

)

 

 

Gain on Visa IPO share redemption

 

 

 

 

(1,904

)

Goodwill impairment

 

 

2,511

 

 

426,049

 

Employment contracts and severance

 

 

829

 

 

16,519

 

Impairment of long lived assets

 

 

21,600

 

 

 

FDIC special assessment

 

 

5,700

 

 

 

Branch acquisition and conversion costs

 

 

 

 

731

 

(Gain) loss on early extinguishment of debt

 

 

(3,043

)

 

2,086

 

Visa-related litigation

 

 

 

 

(863

)

Loss on repurchase of auction rate securities

 

 

676

 

 

 

Loss on derivative collateral

 

 

 

 

1,061

 

 

 

   

 

   

 

PRE-TAX OPERATING EARNINGS (LOSS) (income (loss) before taxes, excluding non-operating items)

 

 

(625,455

)

 

(194,121

)

Add: Provision for credit losses

 

 

668,904

 

 

344,589

 

 

 

   

 

   

 

PRE-TAX, PRE-PROVISION OPERATING EARNINGS

 

 

43,449

 

 

150,468

 

Add: Loss on nonmortgage loans held for sale

 

 

11,776

 

 

283

 

Add: Loss on OREO

 

 

32,435

 

 

633

 

 

 

   

 

   

 

PRE-TAX, PRE-CREDIT OPERATING EARNINGS

 

$

87,660

 

$

151,384

 

 

 

   

 

   

 

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