South Financial (TSFG) 8-K The South Financial Group Reports Fourth Quarter 2008

Quarterly Financial Data Supplement (Unaudited)
Fourth Quarter 2008

	Page
Financial Summary	1
Consolidated Statements of Income (Loss)	2
Details for Noninterest Income and Noninterest Expenses	3
Consolidated Balance Sheets	4
Investment Securities Portfolio Analysis	5
Investment Securities Portfolio Credit Risk Profile	6
Loan Portfolio Composition Based on Loan Purpose and Loan Growth	7
Summary of Credit Quality and Allowance for Credit Losses	8
Commercial Real Estate Loans	9
Types of Customer Funding and Customer Funding Growth	10
Wholesale Borrowings	11
Summary of Capital, Capital Ratios, Unrealized Gains (Losses) on Available for Sale Securities and Market Rates on Treasury Notes	12
Comparative Average Balance Sheets - Yields and Costs	13-14
GAAP to Non-GAAP Reconciliation: Earnings, ROA and ROE	15-17
GAAP to Non-GAAP Reconciliation: Noninterest income as a % of total revenue and efficiency ratios	18-20

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 2008 FINANCIAL SUMMARY

Changes vs. prior quarter, unless indicated otherwise:
Quarterly EPS
•	Net loss available to common shareholders of $319.4 million; operating loss of $75.0 million
•	Net loss per diluted share of $4.29; operating loss per diluted share of $1.01
•	Preferred stock dividends totaled $9.4 million, up from $6.2 million for previous quarter due to dividends payable to the Treasury for the CPP Preferred
•	Average diluted shares of 74.5 million, up 2.4% versus prior quarter; up 2.2% versus prior year
Revenue
•	Total revenue, defined as net interest income plus noninterest income, of $121.4 million
•	Operating revenues of $121.1 million, down $5.2 million
	— Non-operating items: $1.6 million net gain on securities
•	Tax-equivalent net interest income of $92.9 million, down $4.0 million
	— Net interest margin of 2.97%, down 11 basis points from 3.08%
	— Average earning assets of $12.5 billion, down $92.3 million
•	Operating noninterest income of $28.2 million, down $1.2 million from prior quarter; $2.1 million from prior year
Average Balance Sheet Growth
•	Average loans decreased $114.5 million or 1.1% compared to prior quarter
•	Average securities, up $58.2 million since prior quarter; down $113.5 million since 4Q07
•	Average customer funding, defined as total deposits less brokered deposits plus customer sweep accounts, down $145.6 million or 1.8% linked-quarter
•	Average wholesale borrowings, including brokered deposits and excluding customer sweep accounts, up $5.1 million or 0.1% linked-quarter
Noninterest Expenses and Operating Efficiency
•	Noninterest expenses of $341.8 million
	— Non-operating items: $237.6 million goodwill impairment, $9.6 million employment contracts and severance, $1.7 loss on early extinguishment of debt, and $1.1 million loss on derivative collateral
•	Operating noninterest expenses of $91.8 million, up $2.1 million from prior quarter
	— Loan and foreclosed asset expense up $67,000 from prior quarter; $3.1 million from prior year
	— FDIC insurance premiums (included in regulatory assessments) up $432,000 from prior quarter; $2.0 million from prior year
•	Operating noninterest expenses 2.65% of average assets (annualized), an increase from 2.58% prior quarter
Credit Quality
•	Nonperforming assets of $421.2 million or 4.10% of loans and foreclosed property
•	Nonperforming loans held for investment increased to $355.6 million from $240.1 million at September 30, 2008; nonperforming loans held for sale totaled $16.5 million
•	Net loan charge-offs of $76.1 million, or 2.93% annualized as a% of average loans held for investment
•	Provision for credit losses exceeded net loan charge-offs by $46.9 million and increased allowance
•	Allowance for credit losses of $249.9 million or 2.45% of loans held for investment, up from 1.97% prior quarter
•	Allowance coverage of nonperforming loans held for investment of 0.69 times, a decrease from 0.84 times at September 30, 2008
Capital
•	U.S. Treasury’s $347 million equity investment in TSFG under the voluntary Capital Purchase Program (CPP)
•	Tangible common equity to tangible asset ratio of 6.05%, or 7.84% assuming conversion of the mandatorily convertible preferred stock, stable from September 30, 2008
•	Common tangible book value per share assuming conversion of the mandatorily convertible preferred stock of $9.40, compared to $9.42 at September 30, 2008
•	After-tax unrealized gain on available for sale securities increased $37.2 million from prior quarter
•	Tier 1 capital ratio of 12.86%, up from 11.18% at September 30, 2008; capital ratios exceed all “well capitalized” regulatory requirements

1

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

	Three Months Ended
	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Interest Income
Interest and fees on loans	$	145,289		$	155,433		$	158,016		$	171,228		$	190,846
Interest and dividends on securities:
Taxable		20,575			20,186			20,591			20,392			22,431
Exempt from federal income taxes		2,351			2,422			2,479			2,693			2,809
Total interest and dividends on securities		22,926			22,608			23,070			23,085			25,240
Interest on short-term investments		10			197			106			72			64
Total interest income		168,225			178,238			181,192			194,385			216,150
Interest Expense
Interest on deposits		65,646			69,071			63,180			77,106			93,253
Interest on borrowed funds		10,946			13,548			17,807			24,573			27,949
Total interest expense		76,592			82,619			80,987			101,679			121,202
Net Interest Income		91,633			95,619			100,205			92,706			94,948
Provision for Credit Losses		122,926			84,608			63,763			73,292			31,926
Net interest income after provision for credit losses		(31,293	)		11,011			36,442			19,414			63,022
Noninterest Income		29,729			28,665			32,187			31,103			28,991
Noninterest Expenses		341,810			94,157			87,617			268,366			80,731
Income (loss) before income taxes		(343,374	)		(54,481	)		(18,988	)		(217,849	)		11,282
Income tax expense (benefit)		(33,435	)		(29,526	)		(8,056	)		(16,557	)		2,293
Net Income (Loss)		(309,939	)		(24,955	)		(10,932	)		(201,292	)		8,989
Preferred stock dividends		9,421			6,250			5,833			—			—
Net Income (Loss) Available to Common Shareholders	$	(319,360	)	$	(31,205	)	$	(16,765	)	$	(201,292	)	$	8,989
Average common shares outstanding, basic		74,505,656			72,755,480			72,611,024			72,449,437			72,571,612
Average common shares outstanding, diluted (1)		74,505,656			72,755,480			72,611,024			72,449,437			72,875,062
Earnings (loss) per common share, basic	$	(4.29	)	$	(0.43	)	$	(0.23	)	$	(2.78	)	$	0.12
Earnings (loss) per common share, diluted		(4.29	)		(0.43	)		(0.23	)		(2.78	)		0.12
Cash dividends declared per common share		0.01			0.01			0.01			0.19			0.19

⁽¹⁾ For the three months ended December 31, 2008, September 30, 2008, June 30, 2008, and March 31, 2008 average diluted shares exclude convertible preferred stock, warrants, and outstanding equity awards since either their effect would be antidilutive or the exercise price was greater than the average market price of the common shares.

2

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

	Three Months Ended
	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Noninterest Income
Service charges on deposit accounts	$	10,149		$	11,376		$	10,986		$	10,429		$	11,470
Debit card income, net		1,867			2,006			2,056			1,876			1,938
Customer service fee income		1,221			1,425			1,358			1,331			1,422
Total customer fee income		13,237			14,807			14,400			13,636			14,830
Retail investment services, net		1,751			2,294			2,120			1,546			2,103
Insurance income		2,266			2,368			2,388			3,060			2,906
Trust and investment management income		1,437			1,728			1,857			1,666			1,625
Benefits administration fees		833			813			734			756			881
Total wealth management income		6,287			7,203			7,099			7,028			7,515
Mortgage banking income		1,038			879			1,858			1,485			1,273
Bank-owned life insurance		3,939			2,881			2,910			3,147			3,065
Merchant processing income, net		697			916			809			857			829
Gain (loss) on certain derivative activities		(256	)		(199	)		236			12			5
Other (1)		3,226			2,903			2,999			2,638			2,762
Operating noninterest income (noninterest income, excluding non-operating items)		28,168			29,390			30,311			28,803			30,279
Gain (loss) on securities		1,561			(725	)		1,876			396			(1,288	)
Gain on Visa IPO share redemption		—			—			—			1,904			—
Non-operating noninterest (loss) income		1,561			(725	)		1,876			2,300			(1,288	)
Total noninterest income	$	29,729		$	28,665		$	32,187		$	31,103		$	28,991
Noninterest Expenses
Salaries and wages	$	35,348		$	37,700		$	36,136		$	34,853		$	33,220
Employee benefits		10,537			9,252			9,113			9,298			9,232
Occupancy		9,946			9,770			8,972			8,623			8,783
Furniture and equipment		7,454			6,991			6,733			6,383			6,590
Professional services		4,804			4,573			3,579			3,527			3,767
Advertising and business development		2,611			2,114			2,731			2,471			2,054
Telecommunications		1,613			1,628			1,476			1,423			1,453
Amortization of intangibles		1,417			1,474			1,589			1,658			1,853
Regulatory assessments		3,452			3,020			2,374			2,077			1,464
Loan and foreclosed asset expense		4,558			4,491			2,303			1,079			1,463
Other (1)		10,045			8,648			9,664			8,859			9,472
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		91,785			89,661			84,670			80,251			79,351
Goodwill impairment		237,618			—			—			188,431			—
Employment contracts and severance		9,599			4,621			2,299			—			—
Branch acquisition and conversion costs		—			—			731			—			—
(Gain) loss on early extinguishment of debt		1,747			(125	)		(83	)		547			499
Visa-related litigation		—			—			—			(863	)		881
Loss on derivative collateral		1,061			—			—			—			—
Non-operating noninterest expenses		250,025			4,496			2,947			188,115			1,380
Total noninterest expenses	$	341,810		$	94,157		$	87,617		$	268,366		$	80,731

⁽¹⁾ In fourth quarter 2008, TSFG reclassified gain (loss) on sale of other real estate owned from noninterest income to noninterest expense. Such amounts totaled (in thousands) a gain of $316 for fourth quarter 2008, a loss of $765 for third quarter 2008, a gain of $3 for second quarter 2008, a loss of $187 for first quarter 2008, and a loss of $250 for fourth quarter 2007.

3

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

	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Assets
Cash and due from banks	$	292,219		$	176,293		$	224,991		$	223,185		$	290,974
Interest-bearing bank balances		166			35			55,713			10,035			5,551
Federal funds sold and securities purchased to resell		—			—			50,000			—			—
Securities
Available for sale		2,107,194			1,995,681			1,987,232			2,069,898			1,986,212
Held to maturity		22,709			24,518			26,677			31,468			39,691
Total securities		2,129,903			2,020,199			2,013,909			2,101,366			2,025,903
Loans held for sale		30,963			37,575			21,871			16,119			17,867
Loans held for investment		10,192,072			10,299,640			10,475,731			10,275,653			10,213,420
Less: Allowance for loan losses		(247,086	)		(200,748	)		(191,727	)		(174,420	)		(126,427	)
Net loans held for investment		9,944,986			10,098,892			10,284,004			10,101,233			10,086,993
Premises and equipment, net		282,472			274,258			265,853			243,628			233,852
Accrued interest receivable		50,388			51,207			56,118			56,764			70,464
Goodwill		224,161			461,458			463,300			462,572			651,003
Other intangible assets, net		21,859			23,112			24,586			25,521			27,179
Other assets		625,209			552,149			516,525			491,297			467,798
	$	13,602,326		$	13,695,178		$	13,976,870		$	13,731,720		$	13,877,584
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing	$	1,041,140		$	1,022,632		$	1,107,115		$	1,108,623		$	1,127,657
Interest-bearing customer deposits		6,455,810			6,412,343			6,388,904			6,466,940			6,402,503
Interest-bearing brokered deposits		1,908,767			2,573,833			2,390,350			1,875,969			2,258,408
Total deposits		9,405,717			10,008,808			9,886,369			9,451,532			9,788,568
Short-term borrowings		1,626,374			1,188,929			1,581,601			1,917,450			1,637,550
Long-term debt		707,769			773,109			772,957			799,217			698,340
Accrued interest payable		71,465			61,463			55,880			58,705			69,288
Other liabilities		170,470			129,255			120,861			126,495			133,530
Total liabilities		11,981,795			12,161,564			12,417,668			12,353,399			12,327,276
Shareholders’ equity
Mandatorily convertible preferred stock		238,700			249,000			250,000			—			—
Perpetual preferred stock		327,679			—			—			—			—
Common stock		74,644			73,006			72,796			72,630			72,455
Surplus		1,135,920			1,104,697			1,101,524			1,110,356			1,107,601
Retained earnings (deficit)		(199,540	)		120,578			152,567			170,186			386,061
Accumulated other comprehensive income (loss), net of income tax		42,558			(13,667	)		(17,685	)		25,149			(15,809	)
Other, net		570			—			—			—			—
Total shareholders’ equity		1,620,531			1,533,614			1,559,202			1,378,321			1,550,308
	$	13,602,326		$	13,695,178		$	13,976,870		$	13,731,720		$	13,877,584

4

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

	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Investment Securities Portfolio
Available for sale (at fair value):
U.S. Treasury	$	2,069		$	28,084		$	27,703		$	28,798		$	27,592
U.S. Government agencies		313,729			327,933			335,593			337,775			503,571
Agency mortgage-backed securities		1,468,639			1,312,116			1,276,145			1,343,108			1,088,427
Private label mortgage-backed securities		12,771			15,152			15,544			16,209			—
State and municipal		262,248			260,532			270,521			279,788			302,586
Other investments (1)		47,738			51,864			61,726			64,220			64,036
Total available for sale securities		2,107,194			1,995,681			1,987,232			2,069,898			1,986,212
Held to maturity (at amortized cost)		22,709			24,518			26,677			31,468			39,691
Total securities	$	2,129,903		$	2,020,199		$	2,013,909		$	2,101,366		$	2,025,903
Total securities as a percentage of total assets		15.7	%		14.8	%		14.4	%		15.3	%		14.6	%

	December 31, 2008
	Amortized Cost		Percentage of Total			Duration			Book Yield
Debt Securities
U.S. Treasury	$	2,001		0.1	%		0.6			5.92	%
U.S. Government agencies		307,025		14.9			2.0			4.42
Mortgage-backed securities:
Collateralized mortgage obligations		843,189		40.9			4.3			4.56
Adjustable rate mortgages		220,222		10.7			1.5			4.53
Pass-through		419,446		20.4			1.8			4.94
State and municipal		256,755		12.5			2.5			5.01
Corporate bonds		9,948		0.5			0.2			5.53
Total available for sale debt securities	$	2,058,586		100.0	%		2.9	(2)		4.67	%
Fixed interest rate:
Mortgage-backed securities	$	1,255,811		61.0	%		3.5			4.68	%
Other		575,729		28.0			2.2			4.70
Variable interest rate:
Mortgage-backed securities		227,046		11.0			1.8			4.54
Total available for sale debt securities	$	2,058,586		100.0	%		2.9	(2)		4.67	%

Projected Interest Rate Shock for Debt Securities

Interest Rate Scenario	Estimated Impact on Fair Value		Duration
Up 2.00%	(7.4	)%	4.5
Up 1.00%	(3.4	)	4.0
Flat	—		2.9

The estimated decrease in fair value for a five year U.S. Treasury Note when interest rates increase 100 basis points is 4.63%.

(1)	Other investments in available for sale securities include corporate bonds, FHLB stock, community bank stocks, and other equity securities. Also, excludes certain other investments recorded in other assets totaling $18.1 million.
(2)	Compared to 4.0 years duration at September 30, 2008 due to overall lower interest rates and anticipated prepayments.

5

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

	December 31, 2008					December 31, 2007
	Balance		% of Total			Balance		% of Total
Government and agency
U.S. Treasury	$	2,069		0.1	%	$	27,592		1.4	%
U.S. Government agencies (1)		313,729		14.7			503,571		24.9
Agency mortgage-backed securities (MBS) (1)(2)		1,468,639		68.9			1,088,427		53.7
Federal Home Loan Bank Stock		35,536		1.7			35,333		1.7
Total government and agency		1,819,973		85.4			1,654,923		81.7
State and municipal (3)(4)(5)
Pre-funded with collateral or AAA-rated backed by Texas Permanent School Fund		188,598		8.9			214,675		10.6
Underlying issuer or collateral rated A or better (including South Carolina State Aid)		81,238		3.8			102,187		5.1
Underlying issuer or collateral rated BBB		7,344		0.3			12,930		0.6
Non-rated		7,677		0.4			12,245		0.6
Total state and municipal		284,857		13.4			342,037		16.9
Corporate bonds
AA or A-rated		9,963		0.5			17,068		0.8
BBB-rated		—		—			3,312		0.2
Total corporate bonds		9,963		0.5			20,380		1.0
Private label mortgage-backed securities (2)
AAA-rated		12,771		0.6			—		—
Total private label mortgage-backed securities		12,771		0.6			—		—
Community bank stocks and other		2,339		0.1			8,563		0.4
Total securities	$	2,129,903		100.0	%	$	2,025,903		100.0	%
Percent of total securities:
Rated A or higher				99.2	%				98.2	%
Investment grade				99.5	%				99.0	%

(1)	At December 31, 2008, these numbers include, in the aggregate, $172.8 million and $1.5 billion related to senior debt and MBS, respectively, issued by FNMA and FHLMC.
(2)	Current policies restrict MBS/CMO purchases to agency-backed and a small percent of private-label securities and prohibit securities collateralized by sub-prime assets.
(3)	At December 31, 2008 and December 31, 2007, state and municipal securities include $22.6 million and $39.5 million, respectively, of securities held to maturity at amortized cost.
(4)	Ratings shown above do not reflect the benefit of guarantees by bond insurers. At December 31, 2008, $39.1 million of municipal bonds are guaranteed by bond insurers. At December 31, 2007, $43.5 million of municipal bonds are guaranteed by bond insurers.
(5)	At December 31, 2008, the breakdown by current bond rating is as follows: $188.6 million pre-funded with collateral or AAA-rated backed Texas Permanent School Fund, $7.7 million AAA-rated, $83.7 million AA or A-rated, $2.6 million BBB-rated, and $2.3 million non-rated.

Note: Within each category, securities are ordered based on risk assessment from lowest to highest. TSFG holds no collateralized debt obligations.

6

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

	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Commercial Loans
Commercial and industrial	$	2,722,611		$	2,824,117		$	2,891,007		$	2,788,980		$	2,742,863
Owner - occupied real estate		1,270,746			1,206,597			1,183,618			1,107,069			1,070,376
Commercial real estate		4,074,331			4,094,164			4,162,248			4,156,522			4,158,384
		8,067,688			8,124,878			8,236,873			8,052,571			7,971,623
Consumer Loans
Indirect - sales finance		635,637			680,413			728,433			710,806			699,014
Consumer lot loans		225,486			249,062			266,242			291,378			311,386
Direct retail		95,397			100,257			99,951			101,278			107,827
Home equity		813,201			784,357			781,120			754,344			754,158
		1,769,721			1,814,089			1,875,746			1,857,806			1,872,385
Mortgage Loans		354,663			360,673			363,112			365,276			369,412
Total loans held for investment	$	10,192,072		$	10,299,640		$	10,475,731		$	10,275,653		$	10,213,420
Percentage of Loans Held for Investment
Commercial and industrial		26.7	%		27.4	%		27.6	%		27.1	%		26.9	%
Owner - occupied real estate		12.5			11.7			11.3			10.8			10.5
Commercial real estate		40.0			39.8			39.7			40.5			40.7
Consumer		17.3			17.6			17.9			18.1			18.3
Mortgage		3.5			3.5			3.5			3.5			3.6
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
	For The Period Ended
	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Growth in Loans Held for Investment (1)
Growth vs. prior quarter, annualized		(4.2	)%		(6.7	)%		7.8	%		2.5	%		1.6	%
Growth year-to-date, annualized		(0.2	)		1.1			5.2			2.5			5.3

⁽¹⁾ At September 30, 2007 and December 31, 2006, loans held for investment totaled $10,173,237 and $9,701,867, respectively.

7

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
	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Credit Quality
Loans held for investment	$	10,192,072		$	10,299,640		$	10,475,731		$	10,275,653		$	10,213,420
Allowance for loan losses		247,086			200,748			191,727			174,420			126,427
Allowance for credit losses		249,874			203,000			193,825			177,016			128,695
Nonperforming loans held for investment (1)		355,631			240,091			220,151			223,790			81,631
Nonperforming loans held for sale		16,544			22,576			—			—			—
Foreclosed property (other real estate owned and personal property repossessions)		48,993			30,503			21,780			8,227			8,276
Nonperforming assets	$	421,168		$	293,170		$	241,931		$	232,017		$	89,907
Nonperforming loans as a % of loans held for investment		3.49	%		2.33	%		2.10	%		2.18	%		0.80	%
Nonperforming assets as a % of loans and foreclosed property (2)		4.10			2.83			2.30			2.25			0.88
Allowance for loan losses as a % of loans held for investment		2.42			1.95			1.83			1.70			1.24
Allowance for credit losses as a % of loans held for investment		2.45			1.97			1.85			1.72			1.26
Allowance for loan losses to nonperforming loans		0.69	x		0.84	x		0.87	x		0.78	x		1.55	x
Impaired loans (1)	$	287,497		$	198,018		$	195,774		$	206,621		$	68,102
Specific allowance for impaired loans		44,418			29,911			39,238			32,070			11,340
Loans past due 90 days or more (interest accruing)		47,481			12,899			8,779			9,588			5,349
Net loan charge-offs		76,052			75,433			46,954			24,971			23,655
Average loans held for investment		10,308,823			10,441,580			10,435,248			10,221,424			10,164,807
Net loan charge-offs as a % of average loans held for investment (annualized)		2.93	%		2.87	%		1.81	%		0.98	%		0.92	%
Allowance for Loan Losses
Balance at beginning of period	$	200,748		$	191,727		$	174,420		$	126,427		$	118,861
Provision for loan losses		122,390			84,454			64,261			72,964			31,221
Loans charged-off		(78,297	)		(76,558	)		(48,523	)		(27,583	)		(25,249	)
Recoveries of loans previously charged-off		2,245			1,125			1,569			2,612			1,594
Balance at end of period	$	247,086		$	200,748		$	191,727		$	174,420		$	126,427
Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	2,252		$	2,098		$	2,596		$	2,268		$	1,563
Provision for unfunded lending commitments		536			154			(498	)		328			705
Balance at end of period	$	2,788		$	2,252		$	2,098		$	2,596		$	2,268
Allowance for Credit Losses
Balance at beginning of period	$	203,000		$	193,825		$	177,016		$	128,695		$	120,424
Provision for credit losses		122,926			84,608			63,763			73,292			31,926
Loans charged-off		(78,297	)		(76,558	)		(48,523	)		(27,583	)		(25,249	)
Recoveries of loans previously charged-off		2,245			1,125			1,569			2,612			1,594
Balance at end of period	$	249,874		$	203,000		$	193,825		$	177,016		$	128,695

(1)	At December 31, 2008, September 30, 2008, June 30, 2008, March 31, 2008, and December 31, 2007, these credit quality indicators (nonperforming loans and impaired loans) included $6.4 million, $2.4 million, $1.6 million, $1.6 million, and $1.7 million, respectively, in restructured loans.
(2)	Excluding nonperforming loans held for sale, nonperforming assets as a% of loans held for investment and foreclosed property totaled 3.95% at December 31, 2008 and 2.62% at September 30, 2008.

8

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

COMMERCIAL REAL ESTATE LOANS

(dollars in millions) (unaudited)

	12/31/08 Commercial Real Estate (“CRE”) Loans by Geography (1)
	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	$	539		$	288		$	468		$	211		$	358		$	136		$	203		$	2,203			21	%
Residential A&D		101			72			170			35			74			4			32			488			5
Commercial A&D		50			31			43			41			9			30			70			274			3
Commercial construction		164			34			29			50			17			19			21			334			3
Residential construction		27			40			44			20			31			—			8			170			2
Residential condo		23			87			11			1			31			21			25			199			2
Undeveloped land		43			46			65			73			68			23			88			406			4
Total CRE Loans	$	947		$	598		$	830		$	431		$	588		$	233		$	447		$	4,074			40	%
% of Total Loans HFI		9	%		6	%		8	%		4	%		6	%		2	%		5	%		40	%
	12/31/08 CRE Nonaccrual Loans HFI (“NAL”) by Geography
	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		2.2			11.1			8.2			11.4			3.8			6.1			16.1		$	58.9			17	%
Residential A&D		3.6			2.6			21.8			1.7			3.9			0.8			9.8			44.2			13
Commercial A&D		0.4			5.9			1.1			0.1			—			5.3			1.0			13.8			4
Commercial construction		—			—			0.6			—			—			3.7			11.4			15.7			4
Residential construction		0.9			1.8			8.0			6.4			3.0			—			—			20.1			6
Residential condo		8.2			2.8			0.1			—			—			8.0			5.8			24.9			7
Undeveloped land		1.1			0.4			0.3			10.4			5.3			7.4			27.9			52.8			15
Total CRE Nonaccrual Loans	$	16.4		$	24.6		$	40.1		$	30.0		$	16.0		$	31.3		$	72.0		$	230.4			66	%
CRE Nonaccrual Loans as % of Total Nonaccrual Loans (1)		5	%		7	%		11	%		9	%		4	%		9	%		21	%		66	%
	Three Months Ended 12/31/08 CRE Net Charge-offs (“NCO”) by Geography
	SC, Excl Coastal			Coastal SC			Western NC			Central FL			North FL			South FL			Tampa Bay			Total CRE NCO			% of NCO
CRE Net Charge-offs by Product Type:
Completed income property	$	1.4		$	0.1		$	0.7		$	3.6		$	1.1		$	2.7		$	0.7		$	10.3			14	%
Residential A&D		0.1			0.3			3.4			2.2			—			—			5.7			11.7			15
Commercial A&D		—			1.5			—			—			—			0.1			—			1.6			2
Commercial construction		—			—			0.8			—			—			0.2			—			1.0			1
Residential construction		0.1			0.4			0.5			0.9			1.2			—			—			3.1			4
Residential condo		1.1			—			—			0.5			—			2.3			3.4			7.3			10
Undeveloped land		—			—			—			—			0.1			1.0			1.3			2.4			3
Total CRE Net Charge-offs	$	2.7		$	2.3		$	5.4		$	7.2		$	2.4		$	6.3		$	11.1		$	37.4			49	%
CRE Net Charge-offs as % of Total Net Charge-offs		4	%		3	%		7	%		9	%		3	%		8	%		15	%		49	%

⁽¹⁾ Calculated as a percent of nonaccrual loans held for investment, which totaled $349.4 million at December 31, 2008. Excludes nonaccrual loans held for sale, which totaled $16.5 million at December 31, 2008.

9

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
TYPES OF CUSTOMER FUNDING AND CUSTOMER FUNDING GROWTH
(dollars in thousands) (unaudited)

	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Noninterest-bearing	$	1,041,140		$	1,022,632		$	1,107,115		$	1,108,623		$	1,127,657
Interest-bearing checking		1,078,921			1,090,874			1,127,497			1,162,374			1,117,850
Money market accounts		1,834,115			1,806,143			2,162,599			2,182,709			2,188,261
Savings accounts		190,519			150,150			150,696			155,337			158,092
Time deposits under $100,000		1,863,520			1,840,363			1,468,372			1,408,593			1,442,030
Time deposits of $100,000 or more		1,488,735			1,524,813			1,479,740			1,557,927			1,496,270
Customer deposits (1)		7,496,950			7,434,975			7,496,019			7,575,563			7,530,160
Brokered deposits		1,908,767			2,573,833			2,390,350			1,875,969			2,258,408
Total deposits		9,405,717			10,008,808			9,886,369			9,451,532			9,788,568
Less: Brokered deposits		(1,908,767	)		(2,573,833	)		(2,390,350	)		(1,875,969	)		(2,258,408	)
Add: Customer sweep accounts		493,012			551,559			536,642			631,214			648,311
Customer funding (2)	$	7,989,962		$	7,986,534		$	8,032,661		$	8,206,777		$	8,178,471
Percentage of Deposits
Noninterest-bearing		11.1	%		10.2	%		11.2	%		11.7	%		11.5	%
Interest-bearing checking		11.5			10.9			11.4			12.3			11.4
Money market accounts		19.5			18.1			21.9			23.1			22.4
Savings accounts		2.0			1.5			1.5			1.6			1.6
Time deposits under $100,000		19.8			18.4			14.8			14.9			14.7
Time deposits of $100,000 or more		15.8			15.2			15.0			16.5			15.3
Customer deposits (1)		79.7			74.3			75.8			80.1			76.9
Brokered deposits		20.3			25.7			24.2			19.9			23.1
Total deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
	For The Period Ended
	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Growth vs. Prior Quarter, Annualized (3)
Noninterest-bearing		7.2	%		(30.4	)%		(0.5	)%		(6.8	)%		(12.5	)%
Total deposits		(24.0	)		4.9			18.5			(13.8	)		12.0
Customer funding (2)		0.2			(2.3	)		(8.5	)		1.4			3.0
Growth Year-To-Date, Annualized (4)
Noninterest-bearing		(7.7	)%		(12.4	)%		(3.7	)%		(6.8	)%		(12.0	)%
Total deposits		(3.9	)		3.0			2.0			(13.8	)		2.9
Customer funding (2)		(2.3	)		(3.1	)		(3.6	)		1.4			(2.6	)

(1)	Total deposits less brokered deposits.
(2)	Total deposits less brokered deposits plus customer sweep accounts.
(3)	At September 30, 2007, noninterest-bearing totaled $1,164,312, total deposits totaled $9,501,669, and customer funding totaled $8,117,185.
(4)	At December 31, 2006, noninterest-bearing totaled $1,280,908, total deposits totaled $9,516,740, and customer funding totaled $8,392,597.

10

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
WHOLESALE BORROWINGS
(dollars in thousands) (unaudited)

	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Types of wholesale borrowings
Short-term borrowings
Federal funds purchased and repurchase agreements	$	67,309		$	137,927		$	169,074		$	541,022		$	206,216
Customer sweep accounts		493,012			551,559			536,642			631,214			648,311
Federal Reserve borrowings		1,050,000			30,000			500,000			200,000			—
Commercial paper		12,537			19,068			25,155			29,582			30,828
Treasury, tax and loan note		3,516			450,375			350,730			515,632			752,195
Total short-term borrowings		1,626,374			1,188,929			1,581,601			1,917,450			1,637,550
Long-term borrowings
Repurchase agreements		200,000			200,000			200,000			200,000			200,000
FHLB advances		233,497			298,119			297,873			324,080			223,087
Subordinated notes		216,704			216,704			216,704			216,704			216,704
Mandatorily redeemable preferred stock of subsidiary		56,800			56,800			56,800			56,800			56,800
Note payable		768			779			791			775			786
Purchase accounting premiums, net of amortization		—			707			789			858			963
Total long-term borrowings		707,769			773,109			772,957			799,217			698,340
Total borrowings		2,334,143			1,962,038			2,354,558			2,716,667			2,335,890
Less: Customer sweep accounts		(493,012	)		(551,559	)		(536,642	)		(631,214	)		(648,311	)
Add: Brokered deposits		1,908,767			2,573,833			2,390,350			1,875,969			2,258,408
Total wholesale borrowings	$	3,749,898		$	3,984,312		$	4,208,266		$	3,961,422		$	3,945,987
Wholesale borrowings as a percentage of total assets		27.6	%		29.1	%		30.1	%		28.8	%		28.4	%

11

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
SUMMARY OF CAPITAL, CAPITAL RATIOS, UNREALIZED GAINS (LOSSES) ON
AVAILABLE FOR SALE SECURITIES, AND MARKET RATES FOR U.S. TREASURY NOTES
(dollars in thousands, except per share data) (unaudited)

	12/31/08			9/30/08			6/30/08			3/31/08			12/31/07
Regulatory Capital
Tier 1 capital	$	1,513,452		$	1,295,008		$	1,311,908		$	1,089,115		$	1,114,915
Tier 2 capital		174,625			173,820			177,271			180,711			163,095
Total risk-based capital		1,688,077			1,468,828			1,489,179			1,269,826			1,278,010
Total risk-weighted assets		11,764,518			11,584,136			11,872,790			11,674,210			11,743,799
Tangible Equity
Mandatorily convertible preferred stock	$	238,700		$	249,000		$	250,000		$	—		$	—
Perpetual preferred stock		327,679			—			—			—			—
Common equity		1,054,152			1,284,614			1,309,202			1,378,321			1,550,308
Shareholders’ equity		1,620,531			1,533,614			1,559,202			1,378,321			1,550,308
Intangible assets		(246,020	)		(484,570	)		(487,886	)		(488,093	)		(678,182	)
Tangible equity		1,374,511			1,049,044			1,071,316			890,228			872,126
Capital Ratios
Tier 1 risk-based capital		12.86	%		11.18	%		11.05	%		9.33	%		9.49	%
Total risk-based capital		14.35			12.68			12.54			10.88			10.88
Leverage ratio		11.22			9.70			9.81			8.16			8.42
Tangible equity to tangible assets ratio		10.29			7.94			7.94			6.72			6.61
Impact of unrealized (gain) loss on securities		(0.05	)		0.21			0.24			0.02			0.21
Tangible equity to tangible assets ratio, excluding unrealized gain or loss		10.24			8.15			8.18			6.74			6.82
Tangible common equity to tangible assets ratio		6.05			6.06			6.09			6.72			6.61
-Assuming conversion of mandatorily convertible preferred (1)		7.84			7.94			7.94			6.72			6.61
Unrealized Gains (Losses) on AFS Securities
Gross (included in AFS securities)	$	10,949		$	(48,147	)	$	(54,391	)	$	(3,042	)	$	(48,841	)
Net of income tax (included in equity)		6,890			(30,334	)		(34,287	)		(1,912	)		(30,765	)
Per Share Data
Mandatorily convertible preferred shares outstanding		238,700			249,000			250,000			—			—
Common shares outstanding		74,643,649			73,005,766			72,795,797			72,629,724			72,455,205
Conversion of preferred stock into common (1)		36,723,077			38,307,692			38,461,538			—			—
Common shares outstanding, assuming conversion		111,366,726			111,313,458			111,257,335			72,629,724			72,455,205
Common book value per common share	$	14.12		$	17.60		$	17.98		$	18.98		$	21.40
Common tangible book value per common share		10.83			10.96			11.28			12.26			12.04
Book value per common share, assuming conversion (1)		14.55			13.78			14.01			18.98			21.40
Common tangible book value per common share, assuming conversion (1)		9.40			9.42			9.63			12.26			12.04
Market Rates for U.S. Treasury Notes
Three year		1.00	%		2.28	%		2.91	%		1.79	%		3.07	%
Five year		1.55			2.98			3.34			2.46			3.45

⁽¹⁾ Using a $6.50 conversion price.

12

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
COMPARATIVE AVERAGE BALANCES - YIELDS AND COSTS
(dollars in thousands) (unaudited)

	Three Months Ended
	12/31/08						9/30/08						6/30/08
	Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate
Assets
Earning assets
Commercial loans	$	8,172,311	$	106,289	5.17	%	$	8,233,343	$	113,423	5.48	%	$	8,193,599	$	114,935	5.64	%
Consumer loans		1,514,602		19,941	5.24			1,518,642		22,577	5.91			1,530,817		23,272	6.11
Indirect loans		657,329		11,862	7.18			706,780		12,621	7.10			734,155		13,152	7.21
Risk management derivatives tied to loans		—		7,197				—		6,812				—		6,657
Total loans (1)		10,344,242		145,289	5.59			10,458,765		155,433	5.91			10,458,571		158,016	6.08
Investment securities (taxable) (2)		1,835,248		20,575	4.48			1,768,461		20,186	4.57			1,799,907		20,591	4.58
Investment securities (nontaxable) (3)		281,839		3,616	5.13			290,431		3,726	5.13			299,350		3,814	5.10
Total investment securities		2,117,087		24,191	4.57			2,058,892		23,912	4.65			2,099,257		24,405	4.65
Federal funds sold, interest-bearing bank balances, and other temp investments		1,128		10	3.53			37,149		197	2.11			20,256		106	2.10
Total earning assets		12,462,457		169,490	5.41			12,554,806		179,542	5.69			12,578,084		182,527	5.83
Non-earning assets		1,322,477						1,281,130						1,290,065
Total assets	$	13,784,934					$	13,835,936					$	13,868,149
Liabilities and Shareholders’ Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking	$	1,010,878	$	1,310	0.52		$	1,130,079	$	2,481	0.87		$	1,120,716	$	2,683	0.96
Savings		173,927		518	1.18			143,014		255	0.71			152,023		304	0.80
Money market		1,814,901		9,808	2.15			1,949,001		11,293	2.31			2,104,322		11,822	2.26
Time deposits, excluding brokered deposits		3,401,800		32,130	3.76			3,259,783		30,522	3.72			2,997,131		29,172	3.91
Brokered deposits		2,227,055		21,880	3.91			2,574,430		24,520	3.79			2,081,224		19,199	3.71
Total interest-bearing deposits		8,628,561		65,646	3.03			9,056,307		69,071	3.03			8,455,416		63,180	3.01
Customer sweep accounts		529,344		1,174	0.88			536,526		2,251	1.67			573,957		2,621	1.84
Other borrowings (4)		1,805,655		9,772	2.15			1,453,196		11,297	3.09			2,078,730		15,186	2.94
Total interest-bearing liabilities		10,963,560		76,592	2.78			11,046,029		82,619	2.98			11,108,103		80,987	2.93
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,001,516						1,059,565						1,079,390
Other noninterest liabilities		201,107						177,735						185,275
Total liabilities		12,166,183						12,283,329						12,372,768
Shareholders’ equity		1,618,751						1,552,607						1,495,381
Total liabilities and shareholders’ equity	$	13,784,934					$	13,835,936					$	13,868,149
Net interest margin (tax-equivalent)			$	92,898	2.97	%			$	96,923	3.08	%			$	101,540	3.24	%
Less: tax-equivalent adjustment (3)				1,265						1,304						1,335
Net interest income			$	91,633					$	95,619					$	100,205
Supplemental data:
Customer funding (5)	$	7,932,366	$	44,940	2.25	%	$	8,077,968	$	46,802	2.30	%	$	8,027,539	$	46,602	2.33	%
Wholesale borrowings (6)		4,032,710		31,652	3.12			4,027,626		35,817	3.54			4,159,954		34,385	3.32
Total funding (7)	$	11,965,076	$	76,592	2.55	%	$	12,105,594	$	82,619	2.72	%	$	12,187,493	$	80,987	2.67	%

(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, 2008, September 30, 2008, and June 30, 2008, TSFG capitalized $478,000, $424,000, and $332,000, respectively, of interest in conjunction with the construction of its expanded corporate facilities.
(5)	Customer funding includes total deposits less brokered deposits plus customer sweep accounts.
(6)	TSFG defines wholesale borrowings as borrowings less customer sweep accounts plus brokered deposits. For purposes of this table, wholesale borrowings equal the sum of other borrowings and brokered deposits, as customer sweep accounts are presented separately.
(7)	Total funding includes customer funding and wholesale borrowings.
Note: Average balances are derived from daily balances.

13

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
COMPARATIVE AVERAGE BALANCES - YIELDS AND COSTS - CONTINUED
(dollars in thousands) (unaudited)

	Three Months Ended
	3/31/08							12/31/07
	AverageBalance		Income/Expense		Yield/Rate			AverageBalance		Income/Expense		Yield/Rate
Assets
Earning assets
Commercial loans	$	7,983,464	$	128,741		6.49	%	$	7,919,926	$	149,001		7.46	%
Consumer loans		1,548,384		25,985		6.75			1,563,625		28,657		7.27
Indirect loans		703,670		12,680		7.25			702,721		12,565		7.09
Risk management derivatives tied to loans		—		3,822					—		623
Total loans (1)		10,235,518		171,228		6.73			10,186,272		190,846		7.43
Investment securities (taxable) (2)		1,749,423		20,392		4.66			1,885,631		22,431		4.76
Investment securities (nontaxable) (3)		326,318		4,143		5.08			344,996		4,321		5.01
Total investment securities		2,075,741		24,535		4.73			2,230,627		26,752		4.80
Federal funds sold, interest-bearing bank balances, and other temp investments		8,716		72		3.32			4,833		64		5.25
Total earning assets		12,319,975		195,835		6.39			12,421,732		217,662		6.96
Non-earning assets		1,524,930							1,495,654
Total assets	$	13,844,905						$	13,917,386
Liabilities and Shareholders’ Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking	$	1,155,418	$	4,653		1.62		$	1,078,194	$	4,606		1.69
Savings		156,848		427		1.09			164,365		617		1.49
Money market		2,193,504		16,633		3.05			2,195,506		20,883		3.77
Time deposits, excluding brokered deposits		2,953,364		33,651		4.58			2,891,656		35,717		4.90
Brokered deposits		1,934,922		21,742		4.52			2,426,483		31,430		5.14
Total interest-bearing deposits		8,394,056		77,106		3.69			8,756,204		93,253		4.23
Customer sweep accounts		684,752		5,472		3.21			590,682		5,977		4.01
Other borrowings (4)		1,922,959		19,101		4.00			1,645,122		21,972		5.30
Total interest-bearing liabilities		11,001,767		101,679		3.72			10,992,008		121,202		4.37
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,083,505							1,149,816
Other noninterest liabilities		194,655							218,796
Total liabilities		12,279,927							12,360,620
Shareholders’ equity		1,564,978							1,556,766
Total liabilities and shareholders’ equity	$	13,844,905						$	13,917,386
Net interest margin (tax-equivalent)			$	94,156		3.07	%			$	96,460		3.09	%
Less: tax-equivalent adjustment (3)				1,450							1,512
Net interest income			$	92,706						$	94,948
Supplemental data:
Customer funding (5)	$	8,227,391	$	60,836		2.97	%	$	8,070,219	$	67,800		3.33	%
Wholesale borrowings (6)		3,857,881		40,843		4.26			4,071,605		53,402		5.20
Total funding (7)	$	12,085,272	$	101,679		3.38	%	$	12,141,824	$	121,202		3.96	%

(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 March 31, 2008 and December 31, 2007, TSFG capitalized $329,000 and $317,000 of interest in conjunction with the construction of its expanded corporate facilities.
(5)	Customer funding includes total deposits less brokered deposits plus customer sweep accounts.
(6)	TSFG defines wholesale borrowings as borrowings less customer sweep accounts plus brokered deposits. For purposes of this table, wholesale borrowings equal the sum of other borrowings and brokered deposits, as customer sweep accounts are presented separately.
(7)	Total funding includes customer funding and wholesale borrowings

Note: Average balances are derived from daily balances.

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
	12/31/08						9/30/08						6/30/08						3/31/08
				Diluted EPS						Diluted EPS						Diluted EPS						Diluted EPS
Net Loss, as Reported (GAAP)	$	(309,939	)				$	(24,955	)				$	(10,932	)				$	(201,292	)
Preferred stock dividends		(9,421	)					(6,250	)					(5,833	)					—
Net Loss Available to Common Shareholders	$	(319,360	)	$	(4.29	)	$	(31,205	)	$	(0.43	)	$	(16,765	)	$	(0.23	)	$	(201,292	)	$	(2.78	)
Net Loss, as Reported (GAAP)	$	(309,939	)				$	(24,955	)				$	(10,932	)				$	(201,292	)
Add: Income tax expense (benefit)		(33,435	)					(29,526	)					(8,056	)					(16,557	)
Loss Before Income Taxes		(343,374	)					(54,481	)					(18,988	)					(217,849	)
Non-Operating Items
(Gain) loss on securities		(1,561	)					725						(1,876	)					(396	)
Gain on Visa IPO share redemption		—						—						—						(1,904	)
Goodwill impairment		237,618						—						—						188,431
Employment contracts and severance		9,599						4,621						2,299						—
Branch acquisition and conversion costs		—						—						731						—
(Gain) loss on early extinguishment of debt		1,747						(125	)					(83	)					547
Visa-related litigation		—						—						—						(863	)
Loss on derivative collateral		1,061						—						—						—
Pre-tax Operating Loss (loss before taxes, excluding non-operating items)		(94,910	)					(49,260	)					(17,917	)					(32,034	)
Add: Provision for credit losses		122,926						84,608						63,763						73,292
Pre-Tax, Pre-Provision Operating Earnings (income before taxes and provision, excluding non-operating items)		28,016						35,348						45,846						41,258
Less: Provision for credit losses		(122,926	)					(84,608	)					(63,763	)					(73,292	)
Related income taxes		(29,368	)					(26,696	)					(7,655	)					(17,538	)
Operating Loss (net loss, excluding non-operating items)		(65,542	)					(22,564	)					(10,262	)					(14,496	)
Preferred stock dividends		(9,421	)					(6,250	)					(5,833	)					—
Operating Loss Available to Common Shareholders (net loss available to common shareholders, excluding non-operating items)		(74,963	)		(1.01	)		(28,814	)		(0.40	)		(16,095	)		(0.22	)		(14,496	)		(0.20	)
Amortization of intangibles		1,417						1,474						1,589						1,658
Related income taxes		(532	)					(552	)					(596	)					(622	)
Cash Operating Loss Available to Common Shareholders (net loss available to common shareholders, excluding non-operating items and amortization of intangibles)	$	(74,078	)	$	(0.99	)	$	(27,892	)	$	(0.38	)	$	(15,102	)	$	(0.21	)	$	(13,460	)	$	(0.19	)
Average Common Shares Outstanding, Diluted		74,505,656						72,755,480						72,611,024						72,449,437
Select Balance Sheet (Averages)
Total assets	$	13,784,934					$	13,835,936					$	13,868,149					$	13,844,905
Intangible assets		(481,380	)					(487,061	)					(487,440	)					(675,250	)
Tangible assets		13,303,554						13,348,875						13,380,709						13,169,655
Preferred stock		337,439						249,717						137,783						—
Common equity		1,281,312						1,302,890						1,357,598						1,564,978
Shareholders’ equity		1,618,751						1,552,607						1,495,381						1,564,978
Intangible assets		(481,380	)					(487,061	)					(487,440	)					(675,250	)
Tangible equity		1,137,371						1,065,546						1,007,941						889,728
Return on Average Assets (1)
GAAP loss		(8.94	)%					(0.72	)%					(0.32	)%					(5.85	)%
Return on Average Equity (1)
GAAP loss		(76.17	)					(6.39	)					(2.94	)					(51.73	)
Return on Average Common Equity (2)
GAAP loss available to common shareholders		(99.16	)					(9.53	)					(4.97	)					(51.73	)

(1)	Return on average assets and return on average equity are calculated as net income divided by average assets or average total equity.
(2)	Return on average common equity is calculated as net income available to common shareholders divided by average common equity.

15

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				$	25,839				$	17,930				$	20,518
Preferred stock dividends		—					—					—					—
Net Income Available to Common Shareholders	$	8,989		$	0.12	$	25,839		$	0.35	$	17,930		$	0.24	$	20,518		$	0.27
Net Income, as Reported (GAAP)	$	8,989				$	25,839				$	17,930				$	20,518
Add: Income tax expense		2,293					11,609					8,998					10,500
Income Before Income Taxes		11,282					37,448					26,928					31,018
Non-Operating Items
(Gain) loss on securities		1,288					(287	)				2,237					1,385
Employment contracts and severance		—					—					546					1,760
Loss on early extinguishment of debt		499					1,299					231					—
Visa-related litigation		881					—					—					—
Pre-tax Operating Income (income before taxes, excluding non-operating items)		13,950					38,460					29,942					34,163
Add: Provision for credit losses		31,926					10,504					17,125					9,013
Pre-Tax, Pre-Provision Operating Earnings (income before taxes and provision, excluding non-operating items)		45,876					48,964					47,067					43,176
Less: Provision for credit losses		(31,926	)				(10,504	)				(17,125	)				(9,013	)
Related income taxes		3,093					11,923					10,006					11,565
Operating Income (net income, excluding non-operating items)		10,857					26,537					19,936					22,598
Preferred stock dividends		—					—					—					—
Operating Income Available to Common Shareholders (net income available to common shareholders, 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 Income Available to Common Shareholders (net income available to common shareholders, 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
Common equity		1,556,766					1,519,488					1,546,392					1,551,769
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 (1)
GAAP income		0.26	%				0.73	%				0.51	%				0.59	%
Return on Average Equity (1)
GAAP income		2.29					6.75					4.65					5.36
Return on Average Common Equity (2)
GAAP income available to common shareholders		2.29					6.75					4.65					5.36

(1)	Return on average assets and return on average equity are calculated as net income divided by average assets or average total equity.
(2)	Return on average common equity is calculated as net income available to common shareholders divided by average common equity.

16

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,
	2008						2007					2006
				Diluted EPS						Diluted EPS					Diluted EPS
Net Income (Loss), as Reported (GAAP)	$	(547,118	)				$	73,276				$	112,866
Preferred stock dividends		(21,504	)					—					—
Net Income (Loss) Available to Common Shareholders	$	(568,622	)	$	(7.77	)	$	73,276		$	0.99	$	112,866		$	1.49
Net Income (Loss), as Reported (GAAP)	$	(547,118	)				$	73,276				$	112,866
Add: Income tax expense (benefit)		(87,574	)					33,400					47,682
Income (Loss) Before Income Taxes		(634,692	)					106,676					160,548
Non-Operating Items
(Gain) loss on securities		(3,108	)					4,623					(4,037	)
Gain on Visa IPO share redemption		(1,904	)					—					—
Gain on disposition of assets and liabilities		—						—					(2,498	)
Goodwill impairment		426,049						—					—
Loss on sale of indirect auto loans previously HFI		—						—					3,477
Employment contract buyouts and severance		16,519						2,306					5,588
Branch acquisition and conversion costs		731						—					—
Loss on early extinguishment of debt		2,086						2,029					821
Visa-related litigation		(863	)					881					—
Loss on derivative collateral		1,061						—					—
Pre-tax Operating Income (Loss) (income (loss) before taxes, excluding non-operating items)		(194,121	)					116,515					163,899
Add: Provision for credit losses		344,589						68,568					32,789
Pre-Tax, Pre-Provision Operating Earnings (income before taxes and provision, excluding non-operating items)		150,468						185,083					196,688
Less: Provision for credit losses		(344,589	)					(68,568	)				(32,789	)
Related income taxes		(81,257	)					36,587					48,798
Operating Income (Loss) (net income (loss), excluding non-operating items)		(112,864	)					79,928					115,101
Preferred stock dividends		(21,504	)					—					—
Operating Income (Loss) Available to Common Shareholders (net income (loss) available to common shareholders, excluding non-operating items)		(134,368	)	$	(1.84	)		79,928			1.08		115,101			1.52
Amortization of intangibles		6,138						7,897					8,775
Related income taxes		(2,302	)					(2,359	)				(2,474	)
Cash Operating Income (Loss) Available to Common Shareholders (net income (loss) available to common shareholders, excluding non-operating items and amortization of intangibles)	$	(130,532	)	$	(1.78	)	$	85,466		$	1.15	$	121,402		$	1.61
Average Common Shares Outstanding, Diluted		73,136,936						74,085,440					75,542,848
Select Balance Sheet (Averages)
Total assets	$	13,833,355					$	14,044,565				$	14,202,649
Intangible assets		(532,517	)					(681,628	)				(689,116	)
Tangible assets		13,300,838						13,362,937					13,513,533
Preferred stock		181,849						—					—
Common equity		1,376,232						1,543,552					1,506,195
Shareholders’ equity		1,558,081						1,543,552					1,506,195
Intangible assets		(532,517	)					(681,628	)				(689,116	)
Tangible equity		1,025,564						861,924					817,079
Return on Average Assets (1)
GAAP earnings (loss)		(3.96	) %					0.52	%				0.79	%
Return on Average Equity (1)
GAAP earnings (loss)		(35.11	)					4.75					7.49
Return on Average Common Equity (2)
GAAP earnings (loss) available to common shareholders		(41.32	)					4.75					7.49

(1)	Return on average assets and return on average equity are calculated as net income divided by average assets or average total equity.
(2)	Return on average common equity is calculated as net income available to common shareholders divided by average common equity.

17

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

	Three Months Ended
	12/31/08			9/30/08			6/30/08			3/31/08
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	91,633		$	95,619		$	100,205		$	92,706
Tax-equivalent adjustment		1,265			1,304			1,335			1,450
Net interest income (tax-equivalent)	$	92,898		$	96,923		$	101,540		$	94,156
Total noninterest income, as reported (GAAP)	$	29,729		$	28,665		$	32,187		$	31,103
Adjustments for non-operating items:
(Gain) loss on securities		(1,561	)		725			(1,876	)		(396	)
Gain on Visa IPO share redemption		—			—			—			(1,904	)
Operating noninterest income (noninterest income, excluding non-operating items)	$	28,168		$	29,390		$	30,311		$	28,803
Total noninterest expenses, as reported (GAAP)	$	341,810		$	94,157		$	87,617		$	268,366
Adjustments for non-operating items:
Goodwill impairment		(237,618	)		—			—			(188,431	)
Employment contracts and severance		(9,599	)		(4,621	)		(2,299	)		—
Branch acquisition and conversion costs		—			—			(731	)		—
Gain (loss) on early extinguishment of debt		(1,747	)		125			83			(547	)
Visa-related litigation		—			—			—			863
Loss on derivative collateral		(1,061	)		—			—			—
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		91,785			89,661			84,670			80,251
Less: amortization of intangibles		(1,417	)		(1,474	)		(1,589	)		(1,658	)
Cash operating noninterest expenses (noninterest expenses, excluding non-operating items and amortization of intangibles)	$	90,368		$	88,187		$	83,081		$	78,593
Total Revenue (1)
GAAP	$	121,362		$	124,284		$	132,392		$	123,809
Operating (2)		121,066			126,313			131,851			122,959
Noninterest Income as a % Total Revenue (3)
GAAP		24.50	%		23.06	%		24.31	%		25.12	%
Operating (2)		23.27			23.27			22.99			23.42
Efficiency Ratios (4)
GAAP		281.64			75.76			66.18			216.76
Operating (2)		75.81			70.98			64.22			65.27
Cash operating (2)		74.64			69.82			63.01			63.92
Noninterest Expense as a % of Average Assets (Annualized)
GAAP		9.86			2.71			2.54			7.80
Operating (2)		2.65			2.58			2.46			2.33
Cash operating (2)		2.61			2.54			2.41			2.28

(1)	The sum of net interest income and noninterest income.
(2)	Total revenue, noninterest income as a % of total revenue, the efficiency ratio, and noninterest expense as a % of average assets, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items. The cash operating ratios also exclude 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)

	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)	$	28,991		$	29,905		$	27,711		$	27,105
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)	$	30,279		$	29,618		$	29,948		$	28,490
Total noninterest expenses, as reported (GAAP)	$	80,731		$	78,727		$	80,179		$	81,612
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)		79,351			77,428			79,402			79,852
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)	$	77,498		$	75,521		$	77,266		$	77,851
Total Revenue (1)
GAAP	$	123,939		$	126,679		$	124,232		$	121,643
Operating (2)		126,739			127,930			128,024			124,669
Noninterest Income as a % of Total Revenue (3)
GAAP		23.39	%		23.61	%		22.31	%		22.28	%
Operating (2)		23.89			23.15			23.39			22.85
Efficiency Ratios (4)
GAAP		65.14			62.15			64.54			67.09
Operating (2)		62.61			60.52			62.02			64.05
Cash operating (2)		61.15			59.03			60.35			62.45
Noninterest Expense as a % of Average Assets (Annualized)
GAAP		2.30			2.23			2.28			2.34
Operating (2)		2.26			2.19			2.26			2.29
Cash operating (2)		2.21			2.14			2.20			2.23

(1)	The sum of net interest income and noninterest income.
(2)	Total revenue, noninterest income as a % of total revenue, the efficiency ratio, and noninterest expense as a % of average assets, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items. The cash operating ratios also exclude 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.

19

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(dollars in thousands) (unaudited)

	Years Ended December 31,
	2008			2007			2006
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	380,163		$	382,781		$	401,371
Tax-equivalent adjustment		5,354			6,246			6,903
Net interest income (tax-equivalent)	$	385,517		$	389,027		$	408,274
Net interest margin (tax-equivalent)		3.09	%		3.10	%		3.22	%
Total noninterest income, as reported (GAAP)	$	121,684		$	113,712		$	118,210
Adjustments for non-operating items:
(Gain) loss on securities		(3,108	)		4,623			(4,037	)
Gain on Visa IPO share redemption		(1,904	)		—			—
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)	$	116,672		$	118,335		$	115,152
Total noninterest expenses, as reported (GAAP)	$	791,950		$	321,249		$	326,244
Adjustments for non-operating items:
Goodwill impairment		(426,049	)		—			—
Employment contract buyouts and severance		(16,519	)		(2,306	)		(5,588	)
Merger-related costs		(731	)		—			—
Loss on early extinguishment of debt		(2,086	)		(2,029	)		(821	)
Visa-related litigation		863			(881	)		—
Loss on derivative collateral		(1,061	)		—			—
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		346,367			316,033			319,835
Less: amortization of intangibles		(6,138	)		(7,897	)		(8,775	)
Cash operating noninterest expenses (noninterest expenses, excluding non-operating items and amortization of intangibles)	$	340,229		$	308,136		$	311,060
Total Revenue (1)
GAAP	$	501,847		$	496,493		$	519,581
Operating (2)		502,189			507,362			523,426
Noninterest Income as a % of Total Revenue (3)
GAAP		24.25	%		22.90	%		22.75	%
Operating (2)		23.23			23.32			22.00
Efficiency Ratios (4)
GAAP		157.81			64.70			62.79
Operating (2)		68.97			62.29			61.10
Cash operating (2)		67.75			60.73			59.43
Noninterest Expense as a % of Average Assets
GAAP		5.72			2.29			2.30
Operating (2)		2.50			2.25			2.25
Cash operating (2)		2.46			2.19			2.19

(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.

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