South Financial (TSFG) 8-K The South Financial Group Reports Second Quarter Results

Quarterly Financial Data Supplement (Unaudited)
Second Quarter 2009

	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, Core vs. Non-Core	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
SECOND QUARTER 2009 FINANCIAL SUMMARY

Changes vs. prior quarter, unless indicated otherwise:
Quarterly EPS
•	Net loss available to common shareholders of $111.5 million; operating loss of $101.9 million
•	Net loss per diluted share of $1.23; operating loss per diluted share of $1.12
•	Preferred stock dividends totaled $21.8 million, up from $16.4 million for previous quarter due to deemed dividend on induced conversion of mandatorily convertible preferred stock
•	Average diluted shares of 91.0 million, up 10.7% versus prior quarter; up 25.3% versus prior year
•	Period-end common shares outstanding increased to 160.2 million from 84.8 million at March 31, 2009, due to the issuance of 75 million common shares in June
Revenue
•	Total revenue, defined as net interest income plus noninterest income, of $118.2 million
•	Operating revenues of $114.7 million, up $1.8 million
	— Non-operating items: $4.6 million net gain on securities
•	Tax-equivalent net interest income of $87.0 million, up $825,000
	— Net interest margin of 2.96%, up 13 basis points from 2.83%
	— Average earning assets of $11.8 billion, down from $12.3 billion
•	Operating noninterest income of $27.7 million, up $997,000 from prior quarter, primarily from increases in mortgage banking income; down $2.6 million from prior year
Average Balance Sheet
•	Period-end loans decreased $680.7 million or 6.8% compared to prior quarter
•	Period-end securities, down $174.4 million since prior quarter
•	Period-end customer funding, defined as total deposits less brokered deposits plus customer sweep accounts, down $108.0 million or 1.4% linked-quarter
•	Period-end wholesale borrowings, including brokered deposits and excluding customer sweep accounts, up $534.9 million or 14.3% linked-quarter
Noninterest Expenses and Operating Efficiency
•	Noninterest expenses of $136.2 million
	— Non-operating items: $3.0 million gain on early extinguishment of debt, $17.4 million impairment of long lived assets, $5.7 million FDIC special assessment, $2.5 million goodwill impairment, and $829,000 employment contracts and severance
•	Operating noninterest expenses of $112.8 million, up $23.1 million from prior quarter
	— Project NOW and other expense initiatives showing progress
	— FDIC insurance premiums (included in regulatory assessments) up $1.8 million from prior quarter; $4.1 million from prior year
	— Advertising and business development expenses up $828,000 or 64.6% from prior quarter
	— Loss on other real estate owned up $12.7 million
	— Excluding credit-related expenses and FDIC insurance premiums, down $1.4 million from prior quarter
Credit Quality
•	Nonperforming assets of $560.7 million or 5.94% of loans and foreclosed property
•	Nonperforming loans held for investment increased to $464.6 million from $422.9 million at March 31, 2009; nonperforming loans held for sale totaled $376,000
•	Net loan charge-offs of $120.6 million, or 4.91% annualized as a% of average loans held for investment
•	Provision for credit losses exceeded net loan charge-offs by $10.7 million and increased allowance
•	Allowance for credit losses of $289.7 million or 3.11% of loans held for investment, up from 2.84% prior quarter
•	Allowance coverage of nonperforming loans held for investment of 0.61 times, a decrease from 0.66 times at March 31, 2009
Capital
•	Tangible common equity to tangible asset ratio of 6.07%, or 7.60% assuming conversion of the mandatorily convertible preferred stock
•	Common tangible book value per share of $4.67, compared to $9.31 at March 31, 2009
•	After-tax unrealized gain on available for sale securities decreased $8.2 million from prior quarter
•	Tier 1 capital ratio of 12.36%, up from 12.10% at March 31, 2009; 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
	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Interest Income
Interest and fees on loans	$	121,823		$	124,119		$	145,289		$	155,433		$	158,016
Interest and dividends on securities:
Taxable		18,140			20,548			20,575			20,186			20,591
Exempt from federal income taxes		2,072			2,234			2,351			2,422			2,479
Total interest and dividends on securities		20,212			22,782			22,926			22,608			23,070
Interest on short-term investments		—			1			10			197			106
Total interest income		142,035			146,902			168,225			178,238			181,192
Interest Expense
Interest on deposits		49,541			54,843			65,646			69,071			63,180
Interest on borrowed funds		6,564			7,041			10,946			13,548			17,807
Total interest expense		56,105			61,884			76,592			82,619			80,987
Net Interest Income		85,930			85,018			91,633			95,619			100,205
Provision for Credit Losses		131,337			142,627			122,926			84,608			63,763
Net interest income after provision for credit losses		(45,407	)		(57,609	)		(31,293	)		11,011			36,442
Noninterest Income		32,272			23,741			30,012			28,665			32,187
Noninterest Expenses		136,188			90,241			342,093			94,157			87,617
Income (loss) before income taxes		(149,323	)		(124,109	)		(343,374	)		(54,481	)		(18,988	)
Income tax expense (benefit)		(59,647	)		(49,706	)		(33,435	)		(29,526	)		(8,056	)
Net Income (Loss)		(89,676	)		(74,403	)		(309,939	)		(24,955	)		(10,932	)
Preferred stock dividends and other (1)		(21,809	)		(16,408	)		(9,424	)		(6,257	)		(5,840	)
Net Income (Loss) Available to Common Shareholders	$	(111,485	)	$	(90,811	)	$	(319,363	)	$	(31,212	)	$	(16,772	)
Average common shares outstanding, basic		90,986,862			82,223,190			74,505,656			72,755,480			72,611,024
Average common shares outstanding, diluted (2)		90,986,862			82,223,190			74,505,656			72,755,480			72,611,024
Earnings (loss) per common share, basic	$	(1.23	)	$	(1.10	)	$	(4.29	)	$	(0.43	)	$	(0.23	)
Earnings (loss) per common share, diluted		(1.23	)		(1.10	)		(4.29	)		(0.43	)		(0.23	)
Cash dividends declared per common share		0.01			0.01			0.01			0.01			0.01

(1)	For the quarters ended June 30, 2009 and March 31, 2009, includes $14.0 million and $6.5 million, respectively, for the value of common shares recorded as an inducement for early conversion of mandatorily convertible preferred stock.
(2)	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
	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Noninterest Income
Service charges on deposit accounts	$	9,535		$	9,268		$	10,149		$	11,376		$	10,986
Debit card income, net		2,168			1,925			1,867			2,006			2,056
Customer service fee income		1,264			1,209			1,221			1,425			1,358
Total customer fee income		12,967			12,402			13,237			14,807			14,400
Retail investment services, net		1,646			2,010			1,751			2,294			2,120
Insurance income		1,765			2,457			2,266			2,368			2,388
Trust and investment management income		1,495			1,465			1,437			1,728			1,857
Benefits administration fees		571			642			833			813			734
Total wealth management income		5,477			6,574			6,287			7,203			7,099
Mortgage banking income		2,050			1,205			1,038			879			1,858
Bank-owned life insurance		2,560			2,502			3,939			2,881			2,910
Merchant processing income, net		817			610			697			916			809
Gain (loss) on certain derivative activities		1,085			1,135			(256	)		(199	)		236
Other		2,736			2,267			3,509			2,903			2,999
Operating noninterest income (noninterest income, excluding non-operating items)		27,692			26,695			28,451			29,390			30,311
Gain (loss) on securities		4,580			(2,954	)		1,561			(725	)		1,876
Non-operating noninterest income (loss)		4,580			(2,954	)		1,561			(725	)		1,876
Total noninterest income	$	32,272		$	23,741		$	30,012		$	28,665		$	32,187
Noninterest Expenses
Salaries and wages	$	34,739		$	35,191		$	35,348		$	37,700		$	36,136
Employee benefits		8,925			8,923			10,537			9,252			9,113
Occupancy		9,506			9,436			9,946			9,770			8,972
Furniture and equipment		6,801			6,945			7,454			6,991			6,733
Professional services		4,351			4,507			4,533			4,573			3,579
Project NOW expense		281			1,298			271			—			—
Advertising and business development		2,109			1,281			2,611			2,114			2,731
Telecommunications		1,551			1,526			1,613			1,628			1,476
Amortization of intangibles		1,286			1,291			1,417			1,474			1,589
Regulatory assessments		6,479			4,655			3,452			3,020			2,374
Loan collection and foreclosed asset expense		7,247			4,891			4,558			4,491			2,303
Loss on nonmortgage loans held for sale		9,461			1,838			283			—			—
(Gain) loss on OREO		12,873			124			(316	)		765			(3	)
Other		7,154			7,711			10,361			7,883			9,667
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		112,763			89,617			92,068			89,661			84,670
Goodwill impairment		2,511			—			237,618			—			—
Employment contracts and severance		829			—			9,599			4,621			2,299
Impairment of long lived assets		17,376			—			—			—			—
FDIC special assessment		5,700			—			—			—			—
Branch acquisition and conversion costs		—			—			—			—			731
(Gain) loss on early extinguishment of debt		(2,991	)		(52	)		1,747			(125	)		(83	)
Loss on derivative collateral		—			—			1,061			—			—
Loss on repurchase of auction rate securities		—			676			—			—			—
Non-operating noninterest expenses		23,425			624			250,025			4,496			2,947
Total noninterest expenses	$	136,188		$	90,241		$	342,093		$	94,157		$	87,617

3

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

	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Assets
Cash and due from banks	$	303,456		$	152,725		$	292,219		$	176,293		$	224,991
Interest-bearing bank balances		3			1			166			35			55,713
Federal funds sold and securities purchased to resell		—			—			—			—			50,000
Securities
Available for sale		1,803,458			2,106,281			2,107,194			1,995,681			1,987,232
Held to maturity		146,469			18,039			22,709			24,518			26,677
Total securities		1,949,927			2,124,320			2,129,903			2,020,199			2,013,909
Loans held for sale		40,290			29,726			30,963			37,575			21,871
Loans held for investment		9,306,009			9,986,681			10,192,072			10,299,640			10,475,731
Less: Allowance for loan losses		(285,290	)		(280,156	)		(247,086	)		(200,748	)		(191,727	)
Net loans held for investment		9,020,719			9,706,525			9,944,986			10,098,892			10,284,004
Premises and equipment, net		273,365			285,580			282,472			274,258			265,853
Accrued interest receivable		40,517			42,927			50,388			51,207			56,118
Goodwill		221,650			224,161			224,161			461,458			463,300
Other intangible assets, net		19,282			20,568			21,859			23,112			24,586
Other assets		719,022			698,714			625,209			552,149			516,525
	$	12,588,231		$	13,285,247		$	13,602,326		$	13,695,178		$	13,976,870
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing	$	1,099,743		$	1,067,953		$	1,041,140		$	1,022,632		$	1,107,115
Interest-bearing customer deposits		6,233,137			6,316,548			6,455,810			6,412,343			6,388,904
Interest-bearing brokered deposits		2,055,772			1,842,577			1,908,767			2,573,833			2,390,350
Total deposits		9,388,652			9,227,078			9,405,717			10,008,808			9,886,369
Short-term borrowings		343,154			1,342,088			1,626,374			1,188,929			1,581,601
Long-term debt		1,126,435			931,977			707,769			773,109			772,957
Accrued interest payable		72,699			74,032			71,465			61,463			55,880
Other liabilities		148,038			157,889			170,470			129,255			120,861
Total liabilities		11,078,978			11,733,064			11,981,795			12,161,564			12,417,668
Shareholders’ equity
Mandatorily convertible preferred stock		190,026			190,026			238,700			249,000			250,000
Perpetual preferred stock		329,380			328,523			327,679			—			—
Common stock		160,248			84,781			74,644			73,006			72,796
Surplus		1,191,170			1,182,423			1,135,920			1,104,697			1,101,524
Retained earnings (deficit)		(403,296	)		(291,199	)		(199,540	)		120,578			152,567
Accumulated other comprehensive income (loss), net of income tax		41,115			57,018			42,558			(13,667	)		(17,685	)
Other, net		610			611			570			—			—
Total shareholders’ equity		1,509,253			1,552,183			1,620,531			1,533,614			1,559,202
	$	12,588,231		$	13,285,247		$	13,602,326		$	13,695,178		$	13,976,870

4

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

	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Investment Securities Portfolio
Available for sale (at fair value):
U.S. Treasury	$	4,051		$	2,042		$	2,069		$	28,084		$	27,703
U.S. Government agencies		44,220			313,159			313,729			327,933			335,593
Agency mortgage-backed securities		1,449,961			1,489,583			1,468,639			1,312,116			1,276,145
Private label mortgage-backed securities		11,600			12,462			12,771			15,152			15,544
State and municipal		232,916			241,478			262,248			260,532			270,521
Other investments (1)		60,710			47,557			47,738			51,864			61,726
Total available for sale securities		1,803,458			2,106,281			2,107,194			1,995,681			1,987,232
Held to maturity (at amortized cost)		146,469			18,039			22,709			24,518			26,677
Total securities	$	1,949,927		$	2,124,320		$	2,129,903		$	2,020,199		$	2,013,909
Total securities as a percentage of total assets		15.5	%		16.0	%		15.7	%		14.8	%		14.4	%

	June 30, 2009
	Amortized Cost		Percentage of Total			Duration			Book Yield
Debt Securities
U.S. Treasury	$	4,080		0.2	%		1.9			3.62	%
U.S. Government agencies		43,418		2.5			2.4			2.78
Mortgage-backed securities:
Collateralized mortgage obligations		729,550		42.6			3.5			4.54
Adjustable rate mortgages		217,275		12.7			2.2			4.41
Pass-through		491,374		28.7			4.3			4.76
State and municipal		226,572		13.3			2.4			5.08
Total available for sale debt securities	$	1,712,269		100.0	%		3.4	(2)		4.61	%
Fixed interest rate:
Mortgage-backed securities	$	1,215,505		71.0	%		3.8			4.63	%
Other		274,070		16.0			2.4			4.69
Variable interest rate:
Mortgage-backed securities		222,694		13.0			2.2			4.41
Total available for sale debt securities	$	1,712,269		100.0	%		3.4	(2)		4.61	%

Projected Interest Rate Shock for Debt Securities

Interest Rate Scenario	Estimated Impact on Fair Value			Duration
Up 2.00%		(6.5	) %		5.0
Up 1.00%		(2.9	)		4.3
Flat		—			3.4

The estimated decrease in fair value for a five year U.S. Treasury Note when interest rates increase 100 basis points is 4.55%.
(1)	Other investments in available for sale securities include FHLB stock, community bank stocks, and other equity securities. Also, excludes certain other investments recorded in other assets totaling $20.7 million.
(2)	Compared to 1.9 years duration at March 31, 2009 due to overall higher interest rates.

5

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

	June 30, 2009					December 31, 2008
	Balance		% of Total			Balance		% of Total
Government and agency
U.S. Treasury	$	4,051		0.2	%	$	2,069		0.1	%
U.S. Government agencies (1)		44,220		2.3			313,729		14.7
Agency mortgage-backed securities (MBS) (1)(2)		1,579,495		81.0			1,468,639		68.9
Federal Home Loan Bank Stock		58,825		3.0			35,536		1.7
Total government and agency		1,686,591		86.5			1,819,973		85.4
State and municipal (3)(4)(5)
Pre-funded with collateral or AAA-rated backed by Texas Permanent School Fund		172,767		8.9			188,598		8.9
Underlying issuer or collateral rated A or better (including South Carolina State Aid)		66,511		3.4			81,238		3.8
Underlying issuer or collateral rated BBB		3,881		0.2			7,344		0.3
Non-rated		6,592		0.3			7,677		0.4
Total state and municipal		249,751		12.8			284,857		13.4
Corporate bonds AA or A-rated		—		—			9,963		0.5
Private label mortgage-backed securities AAA-rated (2)		11,600		0.6			12,771		0.6
Community bank stocks and other		1,985		0.1			2,339		0.1
Total securities	$	1,949,927		100.0	%	$	2,129,903		100.0	%
Percent of total securities:
Rated A or higher				99.4	%				99.2	%
Investment grade				99.6	%				99.5	%

(1)	At June 30, 2009, these numbers include, in the aggregate, $29.1 million and $1.6 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 June 30, 2009, agency mortgage-backed securities include $129.5 million of securities held to maturity at amortized cost. At June 30, 2009 and December 31, 2008, state and municipal securities include $16.8 million and $22.6 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 June 30, 2009, $38.3 million of municipal bonds are guaranteed by bond insurers. At December 31, 2008, $39.1 million of municipal bonds are guaranteed by bond insurers.
(5)	At June 30, 2009, the breakdown by current bond rating is as follows: $172.8 million pre-funded with collateral or AAA-rated backed Texas Permanent School Fund, $3.6 million AAA-rated, $68.1 million AA or A-rated, $2.4 million BBB-rated, and $2.9 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, CORE VS. NON-CORE
(dollars in thousands) (unaudited)

	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Commercial Loans
Commercial and industrial	$	2,428,511		$	2,645,871		$	2,722,611		$	2,824,117		$	2,891,007
Owner - occupied real estate		1,315,442			1,285,530			1,270,746			1,206,597			1,183,618
Commercial real estate		3,873,199			4,042,871			4,074,331			4,094,164			4,162,248
		7,617,152			7,974,272			8,067,688			8,124,878			8,236,873
Consumer Loans
Indirect - sales finance		285,658			573,653			635,637			680,413			728,433
Consumer lot loans		178,212			198,032			225,486			249,062			266,242
Direct retail		87,326			90,999			95,397			100,257			99,951
Home equity		811,057			813,015			813,201			784,357			781,120
		1,362,253			1,675,699			1,769,721			1,814,089			1,875,746
Mortgage Loans		326,604			336,710			354,663			360,673			363,112
Total loans held for investment	$	9,306,009		$	9,986,681		$	10,192,072		$	10,299,640		$	10,475,731
Percentage of Loans Held for Investment
Commercial and industrial		26.1	%		26.4	%		26.7	%		27.4	%		27.6	%
Owner - occupied real estate		14.2			12.9			12.5			11.7			11.3
Commercial real estate		41.6			40.5			40.0			39.8			39.7
Consumer		14.6			16.8			17.3			17.6			17.9
Mortgage		3.5			3.4			3.5			3.5			3.5
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
	For The Period Ended
	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Growth in Loans Held for Investment (1)
Growth vs. prior quarter, annualized		(27.3	)%		(8.2	)%		(4.2	)%		(6.7	)%		7.8	%
Growth year-to-date, annualized		(17.5	)		(8.2	)		(0.2	)		1.1			5.2

LOAN PORTFOLIO COMPOSITION – CORE AND NON-CORE LOANS
(BASED ON ABILITY TO BUILD/EXPAND BANKING RELATIONSHIP)

	6/30/09		3/31/09		12/31/08
Core Relationship Loans
Commercial	$	6,210,451	$	6,353,401	$	6,305,111
Consumer and mortgage		1,175,883		1,178,809		1,202,258
Total Core		7,386,334		7,532,210		7,507,369
Non-Core Loans
Commercial		1,406,701		1,620,871		1,762,577
Indirect - sales finance		276,179		569,124		635,637
Consumer lot loans		171,725		192,903		222,416
Other consumer and mortgage		65,070		71,573		64,073
Total Non-Core		1,919,675		2,454,471		2,684,703
Total loans held for investment	$	9,306,009	$	9,986,681	$	10,192,072

⁽¹⁾ At March 31, 2008 and December 31, 2007, loans held for investment totaled $10,275,653 and $10,213,420, 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
	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Credit Quality
Loans held for investment	$	9,306,009		$	9,986,681		$	10,192,072		$	10,299,640		$	10,475,731
Allowance for loan losses		285,290			280,156			247,086			200,748			191,727
Allowance for credit losses		289,680			283,425			249,874			203,000			193,825
Nonperforming loans held for investment		464,565			422,950			349,382			237,812			218,726
Nonperforming loans held for sale		376			12,766			16,282			22,576			—
Foreclosed property (other real estate owned and personal property repossessions)		95,752			77,210			48,993			30,503			21,780
Nonperforming assets	$	560,693		$	512,926		$	414,657		$	290,891		$	240,506
Restructured loans not included in nonperforming assets	$	17,291		$	11,073		$	6,249		$	2,279		$	1,425
Nonperforming loans as a % of loans held for investment		4.99	%		4.24	%		3.43	%		2.31	%		2.09	%
Nonperforming assets as a % of loans and foreclosed property		5.94			5.08			4.04			2.81			2.29
Allowance for loan losses as a % of loans held for investment		3.07			2.81			2.42			1.95			1.83
Allowance for credit losses as a % of loans held for investment		3.11			2.84			2.45			1.97			1.85
Allowance for loan losses to nonperforming loans held for investment		0.61	x		0.66	x		0.71	x		0.84	x		0.88	x
Impaired loans	$	432,366		$	369,339		$	287,497		$	198,018		$	195,774
Specific allowance for impaired loans		70,006			66,988			44,418			29,911			39,238
Loans past due 90 days or more (interest accruing)		11,107			6,444			47,481			12,899			8,779
Net loan charge-offs		120,611			109,076			76,052			75,433			46,954
Average loans held for investment		9,847,366			10,154,853			10,308,823			10,441,580			10,435,248
Net loan charge-offs as a % of average loans held for investment (annualized)		4.91	%		4.36	%		2.93	%		2.87	%		1.81	%
Allowance for Loan Losses
Balance at beginning of period	$	280,156		$	247,086		$	200,748		$	191,727		$	174,420
Allowance adjustment for loans sold		(4,471	)		—			—			—			—
Provision for loan losses		130,216			142,146			122,390			84,454			64,261
Loans charged-off		(124,122	)		(110,443	)		(78,297	)		(76,558	)		(48,523	)
Recoveries of loans previously charged-off		3,511			1,367			2,245			1,125			1,569
Balance at end of period	$	285,290		$	280,156		$	247,086		$	200,748		$	191,727
Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	3,269		$	2,788		$	2,252		$	2,098		$	2,596
Provision for unfunded lending commitments		1,121			481			536			154			(498	)
Balance at end of period	$	4,390		$	3,269		$	2,788		$	2,252		$	2,098
Allowance for Credit Losses
Balance at beginning of period	$	283,425		$	249,874		$	203,000		$	193,825		$	177,016
Allowance adjustment for loans sold		(4,471	)		—			—			—			—
Provision for credit losses		131,337			142,627			122,926			84,608			63,763
Loans charged-off		(124,122	)		(110,443	)		(78,297	)		(76,558	)		(48,523	)
Recoveries of loans previously charged-off		3,511			1,367			2,245			1,125			1,569
Balance at end of period	$	289,680		$	283,425		$	249,874		$	203,000		$	193,825

8

THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
COMMERCIAL REAL ESTATE LOANS
(dollars in millions) (unaudited)

	6/30/09 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	$	536		$	342		$	395		$	202		$	359		$	147		$	154		$	2,135			23	%
Residential A&D		95			62			153			32			64			16			41			463			5
Commercial A&D		43			22			34			35			6			14			33			187			2
Commercial construction		208			46			25			47			16			31			25			398			4
Residential construction		36			40			23			13			24			2			5			143			2
Residential condo		20			67			11			8			31			23			16			176			2
Undeveloped land		53			64			57			63			63			15			56			371			4
Total CRE Loans	$	991		$	643		$	698		$	400		$	563		$	248		$	330		$	3,873			42	%
% of Total Loans HFI		11	%		7	%		8	%		4	%		6	%		3	%		4	%		42	%
	6/30/09 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	$	7.8		$	12.8		$	17.0		$	9.5		$	3.6		$	10.0		$	17.1		$	77.8			17	%
Residential A&D		20.2			9.4			13.5			4.3			3.0			2.0			5.7			58.1			12
Commercial A&D		0.1			0.7			1.0			—			—			—			19.9			21.7			5
Commercial construction		0.8			—			4.5			—			—			—			13.6			18.9			4
Residential construction		2.6			5.9			3.7			9.5			0.7			—			3.5			25.9			6
Residential condo		8.4			33.8			0.2			4.3			—			8.6			4.8			60.1			13
Undeveloped land		1.5			0.4			1.1			13.3			0.8			8.4			21.3			46.8			10
Total CRE Nonaccrual Loans	$	41.4		$	63.0		$	41.0		$	40.9		$	8.1		$	29.0		$	85.9		$	309.3			67	%
CRE Nonaccrual Loans as % of Total Nonaccrual Loans (1)		9	%		14	%		9	%		9	%		2	%		6	%		18	%		67	%
	Three Months Ended 6/30/09 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	$	1.6		$	4.3		$	2.2		$	3.0		$	0.4		$	1.0		$	2.7		$	15.2			13	%
Residential A&D		2.4			1.8			2.0			0.8			0.9			1.6			6.1			15.6			13
Commercial A&D		—			0.5			0.2			0.1			—			—			13.4			14.2			12
Commercial construction		—			0.2			—			—			—			—			—			0.2			—
Residential construction		0.5			0.5			1.1			3.9			0.1			—			0.3			6.4			5
Residential condo		(0.5	)		4.9			—			—			—			—			4.1			8.5			7
Undeveloped land		—			—			0.6			4.2			1.2			4.6			11.4			22.0			18
Total CRE Net Charge-offs	$	4.0		$	12.2		$	6.1		$	12.0		$	2.6		$	7.2		$	38.0		$	82.1			68	%
CRE Net Charge-offs as % of Total Net Charge-offs		3	%		10	%		5	%		10	%		2	%		6	%		32	%		68	%

⁽¹⁾ Calculated as a percent of nonaccrual loans held for investment, which totaled $464.6 million at June 30, 2009. Excludes nonaccrual loans held for sale, which totaled $376,000 at June 30, 2009.

9

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

	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Noninterest-bearing	$	1,099,743		$	1,067,953		$	1,041,140		$	1,022,632		$	1,107,115
Interest-bearing checking		1,061,400			1,098,585			1,078,921			1,090,874			1,127,497
Money market accounts		1,978,114			1,889,041			1,834,115			1,806,143			2,162,599
Savings accounts		222,044			203,106			190,519			150,150			150,696
Core deposits		4,361,301			4,258,685			4,144,695			4,069,799			4,547,907
Time deposits under $100,000		1,710,870			1,742,177			1,863,520			1,840,363			1,468,372
Time deposits of $100,000 or more		1,260,709			1,383,639			1,488,735			1,524,813			1,479,740
Customer deposits (1)		7,332,880			7,384,501			7,496,950			7,434,975			7,496,019
Brokered deposits		2,055,772			1,842,577			1,908,767			2,573,833			2,390,350
Total deposits		9,388,652			9,227,078			9,405,717			10,008,808			9,886,369
Less: Brokered deposits		(2,055,772	)		(1,842,577	)		(1,908,767	)		(2,573,833	)		(2,390,350	)
Add: Customer sweep accounts		330,765			387,106			493,012			551,559			536,642
Customer funding (2)	$	7,663,645		$	7,771,607		$	7,989,962		$	7,986,534		$	8,032,661
Percentage of Deposits
Noninterest-bearing		11.7	%		11.6	%		11.1	%		10.2	%		11.2	%
Interest-bearing checking		11.3			11.9			11.5			10.9			11.4
Money market accounts		21.1			20.4			19.5			18.1			21.9
Savings accounts		2.4			2.2			2.0			1.5			1.5
Core deposits		46.5			46.1			44.1			40.7			46.0
Time deposits under $100,000		18.2			18.9			19.8			18.4			14.8
Time deposits of $100,000 or more		13.4			15.0			15.8			15.2			15.0
Customer deposits (1)		78.1			80.0			79.7			74.3			75.8
Brokered deposits		21.9			20.0			20.3			25.7			24.2
Total deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
	For The Period Ended
	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Growth vs. Prior Quarter, Annualized (3)
Noninterest-bearing		11.9	%		10.4	%		7.2	%		(30.4	)%		(0.5	)%
Total deposits		7.0			(7.7	)		(24.0	)		4.9			18.5
Customer funding (2)		(5.6	)		(11.1	)		0.2			(2.3	)		(8.5	)
Growth Year-To-Date, Annualized (4)
Noninterest-bearing		11.4	%		10.4	%		(7.7	)%		(12.4	)%		(3.7	)%
Total deposits		(0.4	)		(7.7	)		(3.9	)		3.0			2.0
Customer funding (2)		(8.2	)		(11.1	)		(2.3	)		(3.1	)		(3.6	)

(1)	Total deposits less brokered deposits.
(2)	Total deposits less brokered deposits plus customer sweep accounts.
(3)	At March 31, 2008, noninterest-bearing totaled $1,108,623, total deposits totaled $9,451,532, and customer funding totaled $8,206,777.
(4)	At December 31, 2007, noninterest-bearing totaled $1,127,657, total deposits totaled $9,788,568, and customer funding totaled $8,178,471.

10

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

	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Types of wholesale borrowings
Short-term borrowings
Federal funds purchased and repurchase agreements	$	25		$	197,309		$	67,309		$	137,927		$	169,074
Customer sweep accounts		330,765			387,106			493,012			551,559			536,642
Federal Reserve borrowings		—			750,000			1,050,000			30,000			500,000
Commercial paper		—			—			12,537			19,068			25,155
Treasury, tax and loan note		12,364			7,673			3,516			450,375			350,730
Total short-term borrowings		343,154			1,342,088			1,626,374			1,188,929			1,581,601
Long-term borrowings
Repurchase agreements		125,000			200,000			200,000			200,000			200,000
FHLB advances		762,188			467,717			233,497			298,119			297,873
Subordinated notes		206,704			206,704			216,704			216,704			216,704
Mandatorily redeemable preferred stock of subsidiary		31,800			56,800			56,800			56,800			56,800
Note payable		743			756			768			779			791
Purchase accounting premiums, net of amortization		—			—			—			707			789
Total long-term borrowings		1,126,435			931,977			707,769			773,109			772,957
Total borrowings		1,469,589			2,274,065			2,334,143			1,962,038			2,354,558
Less: Customer sweep accounts		(330,765	)		(387,106	)		(493,012	)		(551,559	)		(536,642	)
Add: Brokered deposits		2,055,772			1,842,577			1,908,767			2,573,833			2,390,350
Total wholesale borrowings	$	3,194,596		$	3,729,536		$	3,749,898		$	3,984,312		$	4,208,266
Wholesale borrowings as a percentage of total assets		25.4	%		28.1	%		27.6	%		29.1	%		30.1	%

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)

	6/30/09			3/31/09			12/31/08			9/30/08			6/30/08
Regulatory Capital
Tier 1 capital	$	1,308,678		$	1,395,469		$	1,513,452		$	1,295,008		$	1,311,908
Tier 2 capital		136,453			164,973			174,625			173,820			177,271
Total risk-based capital		1,445,131			1,560,442			1,688,077			1,468,828			1,489,179
Total risk-weighted assets		10,584,755			11,532,895			11,764,518			11,584,136			11,872,790
Tangible Equity
Mandatorily convertible preferred stock	$	190,026		$	190,026		$	238,700		$	249,000		$	250,000
Perpetual preferred stock		329,380			328,523			327,679			—			—
Common equity		989,847			1,033,634			1,054,152			1,284,614			1,309,202
Shareholders’ equity		1,509,253			1,552,183			1,620,531			1,533,614			1,559,202
Intangible assets		(240,932	)		(244,729	)		(246,020	)		(484,570	)		(487,886	)
Tangible equity		1,268,321			1,307,454			1,374,511			1,049,044			1,071,316
Capital Ratios
Tier 1 risk-based capital (preliminary)		12.36	%		12.10	%		12.86	%		11.18	%		11.05	%
Total risk-based capital (preliminary)		13.65			13.53			14.35			12.68			12.54
Leverage ratio (preliminary)		10.30			10.55			11.22			9.70			9.81
Tangible equity to tangible assets ratio		10.27			10.03			10.29			7.94			7.94
Impact of unrealized (gain) loss on securities		(0.14	)		(0.19	)		(0.05	)		0.21			0.24
Tangible equity to tangible assets ratio, excluding unrealized gain or loss		10.13			9.84			10.24			8.15			8.18
Tangible common equity to tangible assets ratio		6.07			6.05			6.05			6.06			6.09
-Assuming conversion of mandatorily convertible preferred (1)		7.60			7.51			7.84			7.94			7.94
Unrealized Gains (Losses) on AFS Securities
Gross (included in AFS securities)	$	30,189		$	43,255		$	10,949		$	(48,147	)	$	(54,391	)
Net of income tax (included in equity)		19,013			27,233			6,890			(30,334	)		(34,287	)
Per Share Data
Mandatorily convertible preferred shares outstanding:
- Series 2008		95,526			190,026			238,700			249,000			250,000
- Series 2009		94,500			—			—			—			—
Total		190,026			190,026			238,700			249,000			250,000
Common shares outstanding		160,248,170			84,781,160			74,643,649			73,005,766			72,795,797
Conversion of preferred stock into common (1)		38,684,733			29,234,769			36,723,077			38,307,692			38,461,538
Common shares outstanding, assuming conversion		198,932,903			114,015,929			111,366,726			111,313,458			111,257,335
Common book value per common share	$	6.18		$	12.19		$	14.12		$	17.60		$	17.98
Common tangible book value per common share		4.67			9.31			10.83			10.96			11.28
Book value per common share, assuming conversion (1)		7.59			13.61			14.55			13.78			14.01
Market Rates for U.S. Treasury Notes
Three year		1.64	%		1.15	%		1.00	%		2.28	%		2.91	%
Five year		2.54			1.67			1.55			2.98			3.34

⁽¹⁾ Using a $6.50 conversion price for Series 2008 and a $3.9394 conversion price for Series 2009.

12

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

	Three Months Ended
	6/30/09						3/31/09						12/31/08
	Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate		Average Balance		Income/ Expense		Yield/ Rate
Assets
Earning assets
Commercial loans	$	7,900,570	$	83,970	4.26	%	$	8,086,559	$	83,794	4.20	%	$	8,172,311	$	106,243	5.17	%
Consumer loans		1,443,823		17,282	4.80			1,494,261		17,566	4.77			1,514,602		19,941	5.24
Indirect loans		530,875		9,544	7.21			607,548		10,845	7.24			657,329		11,862	7.18
Risk management derivatives tied to loans		—		11,027				—		11,914				—		7,243
Total loans (1)		9,875,268		121,823	4.95			10,188,368		124,119	4.94			10,344,242		145,289	5.59
Investment securities (taxable) (2)		1,680,893		18,140	4.32			1,854,149		20,548	4.43			1,835,248		20,575	4.48
Investment securities (nontaxable) (3)		246,001		3,188	5.18			266,600		3,437	5.16			281,839		3,616	5.13
Total investment securities		1,926,894		21,328	4.43			2,120,749		23,985	4.52			2,117,087		24,191	4.57
Federal funds sold, interest-bearing bank balances, and other temp investments		255		—	—			198		1	2.05			1,128		10	3.53
Total earning assets		11,802,417		143,151	4.86			12,309,315		148,105	4.87			12,462,457		169,490	5.41
Non-earning assets		1,283,139						1,246,813						1,322,477
Total assets	$	13,085,556					$	13,556,128					$	13,784,934
Liabilities and Shareholders’ Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking	$	1,036,339	$	724	0.28		$	1,131,456	$	865	0.31		$	1,010,878	$	1,310	0.52
Savings		208,856		472	0.91			196,974		529	1.09			173,927		518	1.18
Money market		1,924,037		6,726	1.40			1,913,927		7,779	1.65			1,814,901		9,808	2.15
Time deposits, excluding brokered deposits		3,067,471		26,581	3.48			3,199,427		28,867	3.66			3,401,800		32,130	3.76
Brokered deposits		1,954,201		15,038	3.09			1,905,805		16,803	3.58			2,227,055		21,880	3.91
Total interest-bearing deposits		8,190,904		49,541	2.43			8,347,589		54,843	2.66			8,628,561		65,646	3.03
Customer sweep accounts		362,342		245	0.27			455,781		298	0.27			529,344		1,174	0.88
Other borrowings (4)		1,682,118		6,319	1.51			1,899,771		6,743	1.44			1,805,655		9,772	2.15
Total interest-bearing liabilities		10,235,364		56,105	2.20			10,703,141		61,884	2.34			10,963,560		76,592	2.78
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,074,739						1,021,400						1,001,516
Other noninterest liabilities		235,432						230,741						201,107
Total liabilities		11,545,535						11,955,282						12,166,183
Shareholders’ equity		1,540,021						1,600,846						1,618,751
Total liabilities and shareholders’ equity	$	13,085,556					$	13,556,128					$	13,784,934
Net interest margin (tax-equivalent)			$	87,046	2.96	%			$	86,221	2.83	%			$	92,898	2.97	%
Less: tax-equivalent adjustment (3)				1,116						1,203						1,265
Net interest income			$	85,930					$	85,018					$	91,633
Supplemental data:
Customer funding (5)	$	7,673,784	$	34,748	1.82	%	$	7,918,965	$	38,338	1.96	%	$	7,932,366	$	44,940	2.25	%
Wholesale borrowings (6)		3,636,319		21,357	2.36			3,805,576		23,546	2.51			4,032,710		31,652	3.12
Total funding (7)	$	11,310,103	$	56,105	1.99	%	$	11,724,541	$	61,884	2.14	%	$	11,965,076	$	76,592	2.55	%

(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 June 30, 2009, March 31, 2009, and December 31, 2008, TSFG capitalized $288,000, $450,000, and $478,000, 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
	9/30/08							6/30/08
	Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate
Assets
Earning assets
Commercial loans	$	8,233,343	$	113,281		5.47	%	$	8,193,599	$	114,935		5.64	%
Consumer loans		1,518,642		22,577		5.91			1,530,817		23,272		6.11
Indirect loans		706,780		12,621		7.10			734,155		13,152		7.21
Risk management derivatives tied to loans		—		6,954					—		6,657
Total loans (1)		10,458,765		155,433		5.91			10,458,571		158,016		6.08
Investment securities (taxable) (2)		1,768,461		20,186		4.57			1,799,907		20,591		4.58
Investment securities (nontaxable) (3)		290,431		3,726		5.13			299,350		3,814		5.10
Total investment securities		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		37,149		197		2.11			20,256		106		2.10
Total earning assets		12,554,806		179,542		5.69			12,578,084		182,527		5.83
Non-earning assets		1,281,130							1,290,065
Total assets	$	13,835,936						$	13,868,149
Liabilities and Shareholders’ Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking	$	1,130,079	$	2,481		0.87		$	1,120,716	$	2,683		0.96
Savings		143,014		255		0.71			152,023		304		0.80
Money market		1,949,001		11,293		2.31			2,104,322		11,822		2.26
Time deposits, excluding brokered deposits		3,259,783		30,522		3.72			2,997,131		29,172		3.91
Brokered deposits		2,574,430		24,520		3.79			2,081,224		19,199		3.71
Total interest-bearing deposits		9,056,307		69,071		3.03			8,455,416		63,180		3.01
Customer sweep accounts		536,526		2,251		1.67			573,957		2,621		1.84
Other borrowings (4)		1,453,196		11,297		3.09			2,078,730		15,186		2.94
Total interest-bearing liabilities		11,046,029		82,619		2.98			11,108,103		80,987		2.93
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,059,565							1,079,390
Other noninterest liabilities		177,735							185,275
Total liabilities		12,283,329							12,372,768
Shareholders’ equity		1,552,607							1,495,381
Total liabilities and shareholders’ equity	$	13,835,936						$	13,868,149
Net interest margin (tax-equivalent)			$	96,923		3.08	%			$	101,540		3.24	%
Less: tax-equivalent adjustment (3)				1,304							1,335
Net interest income			$	95,619						$	100,205
Supplemental data:
Customer funding (5)	$	8,077,968	$	46,802		2.30	%	$	8,027,539	$	46,602		2.33	%
Wholesale borrowings (6)		4,027,626		35,817		3.54			4,159,954		34,385		3.32
Total funding (7)	$	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 September 30, 2008 and June 30, 2008, TSFG capitalized $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.

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
	6/30/09						3/31/09
				Diluted EPS						Diluted EPS
Net Loss, as Reported (GAAP)	$	(89,676	)				$	(74,403	)
Preferred stock dividends and other (1)		(21,809	)					(16,408	)
Net Loss Available to Common Shareholders	$	(111,485	)	$	(1.23	)	$	(90,811	)	$	(1.10	)
Net Loss, as Reported (GAAP)		(89,676	)					(74,403	)
Add: Income tax expense (benefit)		(59,647	)					(49,706	)
Loss Before Income Taxes		(149,323	)					(124,109	)
Non-Operating Items
(Gain) loss on securities		(4,580	)					2,954
Goodwill impairment		2,511						—
Employment contracts and severance		829						—
Impairment of long lived assets		17,376						—
FDIC special assessment		5,700						—
Gain on early extinguishment of debt		(2,991	)					(52	)
Loss on repurchase of auction rate securities		—						676
Pre-tax Operating Loss (loss before taxes, excluding non-operating items)		(130,478	)					(120,531	)
Related income taxes		(50,402	)					(48,364	)
Operating Loss (net loss, excluding non-operating items)		(80,076	)					(72,167	)
Preferred stock dividends and other (1)		(21,809	)					(16,408	)
Operating Loss Available to Common Shareholders (net loss available to common shareholders, excluding non-operating items)	$	(101,885	)	$	(1.12	)	$	(88,575	)	$	(1.08	)
Average Common Shares Outstanding, Diluted		90,986,862						82,223,190
Select Balance Sheet (Averages)
Total assets	$	13,085,556					$	13,556,128
Intangible assets		(244,040	)					(245,341	)
Tangible assets		12,841,516						13,310,787
Preferred stock		518,968						532,430
Common equity		1,021,053						1,068,416
Shareholders’ equity		1,540,021						1,600,846
Intangible assets		(244,040	)					(245,341	)
Tangible equity		1,295,981						1,355,505
Return on Average Assets (2)
GAAP loss		(2.75	)%					(2.23	)%
Return on Average Equity (2)
GAAP loss		(23.36	)					(18.85	)
Return on Average Common Equity (3)
GAAP loss available to common shareholders		(43.79	)					(34.47	)

(1)	For the quarters ended June 30, 2009 and March 31, 2009, includes $14.0 million and $6.5 million, respectively, for the value of common shares recorded as an inducement for early conversion of mandatorily convertible preferred stock.
(2)	Return on average assets and return on average equity are calculated as net income divided by average assets or average total equity.
(3)	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
	12/31/08						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 and other		(9,424	)					(6,257	)					(5,840	)					(137	)
Net Loss Available to Common Shareholders	$	(319,363	)	$	(4.29	)	$	(31,212	)	$	(0.43	)	$	(16,772	)	$	(0.23	)	$	(201,429	)	$	(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	)
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 and other		(9,424	)					(6,257	)					(5,840	)					(137	)
Operating Loss Available to Common Shareholders (net loss available to common shareholders, excluding non-operating items)	$	(74,966	)	$	(1.01	)	$	(28,821	)	$	(0.40	)	$	(16,102	)	$	(0.22	)	$	(14,633	)	$	(0.20	)
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.

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
				Diluted EPS						Diluted EPS
Net Income (Loss), as Reported (GAAP)	$	(547,118	)				$	73,276
Preferred stock dividends and other		(21,658	)					(665	)
Net Income (Loss) Available to Common Shareholders	$	(568,776	)	$	(7.78	)	$	72,611		$	0.98
Net Income (Loss), as Reported (GAAP)	$	(547,118	)				$	73,276
Add: Income tax expense (benefit)		(87,574	)					33,400
Income (Loss) Before Income Taxes		(634,692	)					106,676
Non-Operating Items
(Gain) loss on securities		(3,108	)					4,623
Gain on Visa IPO share redemption		(1,904	)					—
Goodwill impairment		426,049						—
Employment contracts and severance		16,519						2,306
Branch acquisition and conversion costs		731						—
Loss on early extinguishment of debt		2,086						2,029
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
Related income taxes		(81,257	)					36,587
Operating Income (Loss) (net income (loss), excluding non-operating items)		(112,864	)					79,928
Preferred stock dividends and other		(21,658	)					(665	)
Operating Income (Loss) Available to Common Shareholders (net income (loss) available to common shareholders, excluding non-operating items)	$	(134,522	)	$	(1.84	)	$	79,263		$	1.07
Average Common Shares Outstanding, Diluted		73,136,936						74,006,978
Select Balance Sheet (Averages)
Total assets	$	13,833,355					$	14,044,565
Intangible assets		(532,517	)					(681,628	)
Tangible assets		13,300,838						13,362,937
Preferred stock		181,849						—
Common equity		1,376,232						1,543,552
Shareholders’ equity		1,558,081						1,543,552
Intangible assets		(532,517	)					(681,628	)
Tangible equity		1,025,564						861,924
Return on Average Assets (1)
GAAP earnings (loss)		(3.96	)%					0.52	%
Return on Average Equity (1)
GAAP earnings (loss)		(35.11	)					4.75
Return on Average Common Equity (2)
GAAP earnings (loss) available to common shareholders		(41.33	)					4.70

(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
	6/30/09			3/31/09
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	85,930		$	85,018
Tax-equivalent adjustment		1,116			1,203
Net interest income (tax-equivalent)	$	87,046		$	86,221
Total noninterest income, as reported (GAAP)	$	32,272		$	23,741
Adjustments for non-operating items:
(Gain) loss on securities		(4,580	)		2,954
Operating noninterest income (noninterest income, excluding non-operating items)	$	27,692		$	26,695
Total noninterest expenses, as reported (GAAP)	$	136,188		$	90,241
Adjustments for non-operating items:
Goodwill impairment		(2,511	)		—
Employment contracts and severance		(829	)		—
Impairment of long lived assets		(17,376	)		—
FDIC special assessment		(5,700	)		—
Gain on early extinguishment of debt		2,991			52
Loss on repurchase of auction rate securities		—			(676	)
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		112,763			89,617
Less: gain (loss) on OREO		(12,873	)		(124	)
Less: loss on nonmortgage loans held for sale		(9,461	)		(1,838	)
Less: amortization of intangibles		(1,286	)		(1,291	)
Cash operating noninterest expenses (noninterest expenses, excluding non-operating items, gain/loss on OREO, loss on nonmortgage loans held for sale, and amortization of intangibles)	$	89,143		$	86,364
Total Revenue (1)
GAAP	$	118,202		$	108,759
Operating (2)		114,738			112,916
Noninterest Income as a % Total Revenue (3)
GAAP		27.30			21.83	%
Operating (2)		24.13			23.64
Cash Operating Efficiency Ratio (4)		77.69			76.49

(1)	The sum of net interest income and noninterest income.
(2)	Total revenue and noninterest income as a% of total revenue, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items.
(3)	Calculated as noninterest income, divided by the sum of net interest income and noninterest income.
(4)	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.

18

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)	$	30,012		$	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)	$	28,451		$	29,390		$	30,311		$	28,803
Total noninterest expenses, as reported (GAAP)	$	342,093		$	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)		92,068			89,661			84,670			80,251
Less: gain (loss) on OREO		316			(765	)		3			(187	)
Less: loss on nonmortgage loans held for sale		(283	)		—			—			—
Less: amortization of intangibles		(1,417	)		(1,474	)		(1,589	)		(1,658	)
Cash operating noninterest expenses (noninterest expenses, excluding non-operating items, gain/loss on OREO, loss on nonmortgage loans held for sale, and amortization of intangibles)	$	90,684		$	87,422		$	83,084		$	78,406
Total Revenue (1)
GAAP	$	121,645		$	124,284		$	132,392		$	123,809
Operating (2)		121,349			126,313			131,851			122,959
Noninterest Income as a % Total Revenue (3)
GAAP		24.67	%		23.06	%		24.31	%		25.12	%
Operating (2)		23.45			23.27			22.99			23.42
Cash Operating Efficiency Ratio(4)		74.73			69.21			63.01			63.77

(1)	The sum of net interest income and noninterest income.
(2)	Total revenue and noninterest income as a % of total revenue, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items.
(3)	Calculated as noninterest income, divided by the sum of net interest income and noninterest income.
(4)	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.

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
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	380,163		$	382,781
Tax-equivalent adjustment		5,354			6,246
Net interest income (tax-equivalent)	$	385,517		$	389,027
Net interest margin (tax-equivalent)		3.09	%		3.10	%
Total noninterest income, as reported (GAAP)	$	121,967		$	113,712
Adjustments for non-operating items:
(Gain) loss on securities		(3,108	)		4,623
Gain on Visa IPO share redemption		(1,904	)		—
Operating noninterest income (noninterest income, excluding non-operating items)	$	116,955		$	118,335
Total noninterest expenses, as reported (GAAP)	$	792,233		$	321,249
Adjustments for non-operating items:
Goodwill impairment		(426,049	)		—
Employment contracts and severance		(16,519	)		(2,306	)
Branch acquisition and conversion costs		(731	)		—
Loss on early extinguishment of debt		(2,086	)		(2,029	)
Visa-related litigation		863			(881	)
Loss on derivative collateral		(1,061	)		—
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		346,650			316,033
Less: gain (loss) on OREO		(633	)		(401	)
Less: loss on nonmortgage loans held for sale		(283	)		—
Less: amortization of intangibles		(6,138	)		(7,897	)
Cash operating noninterest expenses (noninterest expenses, excluding non-operating items, gain/loss on OREO, loss on nonmortgage loans held for sale, and amortization of intangibles)	$	339,596		$	307,735
Total Revenue (1)
GAAP	$	502,130		$	496,493
Operating (2)		502,472			507,362
Noninterest Income as a % of Total Revenue (3)
GAAP		24.29	%		22.90	%
Operating (2)		23.28			23.32
Cash Operating Efficiency Ratio (4)		67.59			60.65

(1)	The sum of net interest income and noninterest income.
(2)	Total revenue and noninterest income as a % of total revenue, on an operating basis, are calculated using tax-equivalent net interest income and exclude non-operating items.
(3)	Calculated as noninterest income, divided by the sum of net interest income and noninterest income.
(4)	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.

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