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

Quarterly Financial Data Supplement
Fourth Quarter 2009

	Page
Financial Summary	1
Consolidated Statements of Operations	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
FOURTH QUARTER 2009 FINANCIAL SUMMARY

Changes vs. prior quarter, unless indicated otherwise:
Quarterly EPS
•	Net loss available to common shareholders of $193.9 million
•	Net loss per diluted share of $0.90
•	Average diluted shares of 215.4 million, up 23.5% versus prior quarter; up 189.1% versus prior year
•	Period-end common shares outstanding of 215.5 million, comparable to 215.4 million at September 30, 2009
Revenue
•	Total revenue, defined as net interest income plus noninterest income, of $109.1 million
•	Operating revenues of $103.2 million, down $4.4 million
	— Non-operating items: $6.7 million net gain on securities
•	Tax-equivalent net interest income of $81.4 million, up $275,000
	— Net interest margin of 2.97%, up 4 basis points from 2.93%
	— Average earning assets of $10.9 billion, down from $11.0 billion
•	Operating noninterest income of $21.9 million, down $4.7 million from prior quarter
Balance Sheet
•	Period-end loans held for investment decreased $488.1 million or 5.5% compared to prior quarter
•	Period-end securities, up $64.1 million since prior quarter
•	Period-end core deposits, defined as noninterest-bearing, interest checking, money market, and savings, up $40.3 million, or 0.9% linked quarter
•	Period-end customer funding, defined as total deposits less brokered deposits plus customer sweep accounts, down $4.2 million or 0.1% linked-quarter
•	Period-end wholesale borrowings, including brokered deposits and excluding customer sweep accounts, down $164.0 million or 5.1% linked-quarter
Noninterest Expenses and Operating Efficiency
•	Noninterest expenses of $103.2 million
	— Non-operating items: $3.5 million impairment of long lived assets
•	Operating noninterest expenses of $99.7 million, up $10.9 million from prior quarter
	— Loss on nonmortgage loans held for sale of $518,000, up $559,000
	— Loss on other real estate owned of $15.0 million, up $10.6 million
•	Operating noninterest expenses, excluding credit-related expenses and FDIC insurance premiums, down $1.7 million from prior quarter and $14.4 million from fourth quarter 2008
	— Project NOW and other expense initiatives showing progress
	— Full-time equivalent employees totaled 2,214, up 0.8% from prior quarter; down 11.6% from year-end 2008
Credit Quality
•	Nonperforming assets of $522.4 million or 6.13% of loans and foreclosed property and 4.39% of total assets
•	Nonperforming loans held for investment decreased to $399.0 million from $431.8 million at September 30, 2009
•	Net loan charge-offs of $142.9 million, or 6.52% annualized as a % of average loans held for investment
•	Provision for credit losses exceeded net loan charge-offs by $27.9 million and increased allowance
•	Allowance for credit losses of $373.1 million or 4.45% of loans held for investment, up from 3.89% for prior quarter
•	Allowance coverage of nonperforming loans held for investment of 0.92 times, an increase from 0.79 times at September 30, 2009
Capital
•	Tangible common equity to tangible asset ratio of 3.67%
•	Common tangible book value per share of $1.98, compared to $2.94 at September 30, 2009
•	After-tax unrealized gain on available for sale securities decreased $13.3 million from prior quarter
•	Tier 1 capital ratio of 9.93%, down from 11.19% at September 30, 2009; capital ratios exceed all “well-capitalized” regulatory requirements

1

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

	Three Months Ended
	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Interest Income
Interest and fees on loans	$	107,878		$	112,673		$	121,823		$	124,119		$	145,289
Interest and dividends on securities:
Taxable		18,097			16,742			18,140			20,548			20,575
Exempt from federal income taxes		1,573			2,006			2,072			2,234			2,351
Total interest and dividends on securities		19,670			18,748			20,212			22,782			22,926
Interest on short-term investments		—			—			—			1			10
Total interest income		127,548			131,421			142,035			146,902			168,225
Interest Expense
Interest on deposits		41,046			45,156			49,541			54,843			65,646
Interest on borrowed funds		5,956			6,227			6,564			7,041			10,946
Total interest expense		47,002			51,383			56,105			61,884			76,592
Net Interest Income		80,546			80,038			85,930			85,018			91,633
Provision for Credit Losses		170,761			224,179			131,337			142,627			122,926
Net interest income after provision for credit losses		(90,215	)		(144,141	)		(45,407	)		(57,609	)		(31,293	)
Noninterest Income		28,550			33,470			32,272			23,741			30,012
Noninterest Expenses		103,163			89,529			136,188			90,241			342,093
Income (loss) before income taxes		(164,828	)		(200,200	)		(149,323	)		(124,109	)		(343,374	)
Income tax expense (benefit)		23,843			123,304			(59,647	)		(49,706	)		(33,435	)
Net Income (Loss)		(188,671	)		(323,504	)		(89,676	)		(74,403	)		(309,939	)
Preferred stock dividends and other (1)		(5,221	)		(17,251	)		(21,809	)		(16,408	)		(9,424	)
Net Income (Loss) Available to Common Shareholders	$	(193,892	)	$	(340,755	)	$	(111,485	)	$	(90,811	)	$	(319,363	)
Average common shares outstanding, basic		215,365,464			174,426,381			90,986,862			82,223,190			74,505,656
Average common shares outstanding, diluted (2)		215,365,464			174,426,381			90,986,862			82,223,190			74,505,656
Earnings (loss) per common share, basic	$	(0.90	)	$	(1.95	)	$	(1.23	)	$	(1.10	)	$	(4.29	)
Earnings (loss) per common share, diluted		(0.90	)		(1.95	)		(1.23	)		(1.10	)		(4.29	)
Cash dividends declared per common share		—			—			0.01			0.01			0.01

(1)	For the quarters ended December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, includes $0, $11.9 million, $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
	12/31/09		9/30/09			6/30/09			3/31/09			12/31/08
Noninterest Income
Service charges on deposit accounts	$	10,102	$	10,754		$	9,535		$	9,268		$	10,149
Debit card income, net		2,073		2,139			2,168			1,925			1,867
Customer service fee income		1,115		1,251			1,264			1,209			1,221
Total customer fee income		13,290		14,144			12,967			12,402			13,237
Retail investment services, net		1,890		2,157			1,646			2,010			1,751
Insurance income		1,667		1,911			1,765			2,457			2,266
Trust and investment management income		924		1,251			1,495			1,465			1,437
Benefits administration fees		—		—			571			642			833
Total wealth management income		4,481		5,319			5,477			6,574			6,287
Mortgage banking income		1,302		1,137			2,050			1,205			1,038
Bank-owned life insurance		1,656		2,797			2,560			2,502			3,939
Merchant processing income, net		—		591			817			610			697
Gain (loss) on certain derivative activities		32		1,597			1,085			1,135			(256	)
Other		1,095		937			2,736			2,267			3,509
Operating noninterest income (noninterest income, excluding non-operating items)		21,856		26,522			27,692			26,695			28,451
Gain on sale of ancillary businesses		—		7,234			—			—			—
Gain (loss) on securities		6,694		(286	)		4,580			(2,954	)		1,561
Non-operating noninterest income (loss)		6,694		6,948			4,580			(2,954	)		1,561
Total noninterest income	$	28,550	$	33,470		$	32,272		$	23,741		$	30,012
Noninterest Expenses
Salaries and wages	$	31,059	$	32,559		$	34,739		$	35,191		$	35,348
Employee benefits		7,321		7,724			8,925			8,923			10,537
Occupancy		9,600		9,658			9,506			9,436			9,946
Furniture and equipment		7,062		6,950			6,801			6,945			7,454
Professional services		3,876		4,034			4,351			4,507			4,533
Project NOW expense		—		114			281			1,298			271
Advertising and business development		1,293		1,264			2,109			1,281			2,611
Telecommunications		1,548		1,572			1,551			1,526			1,613
Amortization of intangibles		1,102		1,238			1,286			1,291			1,417
Regulatory assessments		6,278		6,181			6,479			4,655			3,452
Loan collection and foreclosed asset expense		8,117		6,835			7,247			4,891			4,558
(Gain) loss on nonmortgage loans held for sale		518		(41	)		9,461			1,838			283
(Gain) loss on OREO		15,032		4,406			12,873			124			(316	)
Other		6,879		6,289			7,154			7,711			10,361
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		99,685		88,783			112,763			89,617			92,068
Goodwill impairment		—		—			2,511			—			237,618
Employment contracts and severance		—		—			829			—			9,599
Impairment of long lived assets		3,478		746			17,376			—			—
FDIC special assessment		—		—			5,700			—			—
(Gain) loss on early extinguishment of debt		—		—			(2,991	)		(52	)		1,747
Loss on derivative collateral		—		—			—			—			1,061
Loss on repurchase of auction rate securities		—		—			—			676			—
Non-operating noninterest expenses		3,478		746			23,425			624			250,025
Total noninterest expenses	$	103,163	$	89,529		$	136,188		$	90,241		$	342,093

3

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

	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Assets
Cash and due from banks	$	383,184		$	418,585		$	303,456		$	152,725		$	292,219
Interest-bearing bank balances		124			124			3			1			166
Securities
Available for sale (1)		2,095,401			2,020,569			1,744,633			2,060,448			2,071,658
Held to maturity		127,516			138,277			146,469			18,039			22,709
Total securities		2,222,917			2,158,846			1,891,102			2,078,487			2,094,367
Loans held for sale		15,758			8,071			40,290			29,726			30,963
Loans held for investment		8,386,127			8,874,234			9,306,009			9,986,681			10,192,072
Less: Allowance for loan losses		(365,642	)		(339,536	)		(285,290	)		(280,156	)		(247,086	)
Net loans held for investment		8,020,485			8,534,698			9,020,719			9,706,525			9,944,986
Premises and equipment, net		261,523			272,732			273,365			285,580			282,472
Accrued interest receivable		37,304			37,549			40,517			42,927			50,388
Goodwill		214,118			213,797			221,650			224,161			224,161
Other intangible assets, net		15,707			16,809			19,282			20,568			21,859
Deferred tax asset, net		—			3,568			131,670			65,314			51,093
Bank-owned life insurance		302,830			301,448			298,946			295,855			294,843
Other assets (1)		421,032			334,565			347,231			383,378			314,809
	$	11,894,982		$	12,300,792		$	12,588,231		$	13,285,247		$	13,602,326
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing	$	1,124,404		$	1,091,439		$	1,099,743		$	1,067,953		$	1,041,140
Interest-bearing customer deposits		6,225,707			6,298,309			6,233,137			6,316,548			6,455,810
Interest-bearing brokered deposits		1,946,101			2,099,040			2,055,772			1,842,577			1,908,767
Total deposits		9,296,212			9,488,788			9,388,652			9,227,078			9,405,717
Short-term borrowings		322,702			288,751			343,154			1,342,088			1,626,374
Long-term debt		1,116,869			1,126,393			1,126,435			931,977			707,769
Accrued interest payable		36,658			45,803			72,699			74,032			71,465
Other liabilities		129,367			152,356			148,038			157,889			170,470
Total liabilities		10,901,808			11,102,091			11,078,978			11,733,064			11,981,795
Shareholders’ equity
Mandatorily convertible preferred stock		4,650			4,650			190,026			190,026			238,700
Perpetual preferred stock		331,133			330,250			329,380			328,523			327,679
Common stock		215,456			215,372			160,248			84,781			74,644
Surplus		1,344,984			1,343,987			1,191,170			1,182,423			1,135,920
Retained earnings (deficit)		(934,598	)		(745,043	)		(403,296	)		(291,199	)		(199,540	)
Accumulated other comprehensive income, net of income tax		30,938			48,875			41,115			57,018			42,558
Other, net		611			610			610			611			570
Total shareholders’ equity		993,174			1,198,701			1,509,253			1,552,183			1,620,531
	$	11,894,982		$	12,300,792		$	12,588,231		$	13,285,247		$	13,602,326

⁽¹⁾ During fourth quarter 2009, TSFG reclassified FHLB stock from available for sale securities to other assets. Amounts for prior periods have been reclassified to conform to current presentation.

4

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

	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Investment Securities Portfolio
Available for sale (at fair value):
U.S. Treasury	$	2,045		$	2,058		$	4,051		$	2,042		$	2,069
U.S. Government agencies		79,707			95,224			44,220			313,159			313,729
Agency mortgage-backed securities		1,980,305			1,688,201			1,449,961			1,489,583			1,468,639
Private label mortgage-backed securities		8,504			9,112			11,600			12,462			12,771
State and municipal		23,158			223,948			232,916			241,478			262,248
Other investments (1)(2)		1,682			2,026			1,885			1,724			12,202
Total available for sale securities		2,095,401			2,020,569			1,744,633			2,060,448			2,071,658
Held to maturity (at amortized cost)		127,516			138,277			146,469			18,039			22,709
Total securities	$	2,222,917		$	2,158,846		$	1,891,102		$	2,078,487		$	2,094,367
Total securities as a percentage of total assets		18.7	%		17.6	%		15.0	%		15.6	%		15.4	%

	December 31, 2009
	Amortized Cost		Percentage of Total			Duration			Book Yield
Debt Securities
U.S. Treasury	$	2,069		0.1	%		3.3			1.40	%
U.S. Government agencies		78,696		3.8			2.9			2.33
Mortgage-backed securities:
Agency collateralized mortgage obligations		1,222,098		59.2			3.1			3.44
Agency mortgage-backed securities		730,288		35.4			3.5			4.31
Private label mortgage-backed securities		8,757		0.4			2.5			4.70
State and municipal		23,086		1.1			0.2			3.00
Total available for sale debt securities	$	2,064,994		100.0	%		3.2	(3)		3.70	%
Fixed interest rate:
Mortgage-backed securities	$	1,731,020		83.8	%		3.3			3.76	%
Other		103,851		5.0			2.3			2.43
Variable interest rate:
Mortgage-backed securities		230,123		11.2			2.5			3.86
Total available for sale debt securities	$	2,064,994		100.0	%		3.2	(3)		3.70	%

(1)	During fourth quarter 2009, TSFG reclassified FHLB stock from available for sale securities to other assets. Amounts for prior periods have been reclassified to conform to current presentation.
(2)	Other investments in available for sale securities include community bank stocks and other equity securities. Excludes FHLB stock and certain other investments recorded in other assets totaling $58.8 million and $19.7 million, respectively, at December 31, 2009.
(3)	Compared to 2.3 years duration at September 30, 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)

	December 31, 2009					December 31, 2008
	Balance		% of Total			Balance		% of Total
Government and agency
U.S. Treasury	$	2,045		0.1	%	$	2,069		0.1	%
U.S. Government agencies (1)		79,707		3.6			313,729		15.0
Agency mortgage-backed securities (MBS) (1)(2)		2,091,504		94.0			1,468,639		70.1
Total government and agency		2,173,256		97.7			1,784,437		85.2
State and municipal (3)(4)(5)
Pre-funded with collateral or AAA-rated backed by Texas Permanent School Fund		19,392		0.9			188,598		9.0
Underlying issuer or collateral rated A or better (including South Carolina State Aid)		15,127		0.7			81,238		3.9
Underlying issuer or collateral rated BBB		2,337		0.1			7,344		0.3
Non-rated		2,519		0.1			7,677		0.4
Total state and municipal		39,375		1.8			284,857		13.6
Corporate bonds AA or A-rated		—		—			9,963		0.5
Private label mortgage-backed securities AAA-rated (2)		8,504		0.4			12,771		0.6
Community bank stocks and other		1,782		0.1			2,339		0.1
Total securities	$	2,222,917		100.0	%	$	2,094,367		100.0	%
Percent of total securities:
Rated A or higher				99.7	%				99.2	%
Investment grade				99.8	%				99.5	%

(1)	At December 31, 2009, these numbers include, in the aggregate, $29.4 million and $1.8 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, 2009, agency mortgage-backed securities include $111.2 million of securities held to maturity at amortized cost. At December 31, 2009 and December 31, 2008, state and municipal securities include $16.2 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 December 31, 2009, $4.9 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 December 31, 2009, the breakdown by current bond rating is as follows: $19.4 million pre-funded with collateral or AAA-rated backed Texas Permanent School Fund, $17.5 million AA or A-rated, and $2.5 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)

	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Commercial Loans
Commercial and industrial	$	2,080,329		$	2,249,929		$	2,428,511		$	2,645,871		$	2,722,611
Owner - occupied real estate		1,271,525			1,270,015			1,315,442			1,285,530			1,270,746
Commercial real estate		3,501,809			3,741,662			3,873,199			4,042,871			4,074,331
		6,853,663			7,261,606			7,617,152			7,974,272			8,067,688
Consumer Loans
Indirect - sales finance		230,426			259,296			285,658			573,653			635,637
Consumer lot loans		144,315			161,206			178,212			198,032			225,486
Direct retail		83,460			86,474			87,326			90,999			95,397
Home equity		787,645			803,295			811,057			813,015			813,201
		1,245,846			1,310,271			1,362,253			1,675,699			1,769,721
Mortgage Loans		286,618			302,357			326,604			336,710			354,663
Total loans held for investment	$	8,386,127		$	8,874,234		$	9,306,009		$	9,986,681		$	10,192,072
Percentage of Loans Held for Investment
Commercial and industrial		24.8	%		25.3	%		26.1	%		26.4	%		26.7	%
Owner - occupied real estate		15.2			14.3			14.2			12.9			12.5
Commercial real estate		41.8			42.2			41.6			40.5			40.0
Consumer		14.8			14.8			14.6			16.8			17.3
Mortgage		3.4			3.4			3.5			3.4			3.5
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
	For The Period Ended
	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Growth in Loans Held for Investment (1)
Growth vs. prior quarter, annualized		(21.8	)%		(18.4	)%		(27.3	)%		(8.2	)%		(4.2	)%
Growth year-to-date, annualized		(17.7	)		(17.3	)		(17.5	)		(8.2	)		(0.2	)
LOAN PORTFOLIO COMPOSITION — CORE AND NON-CORE LOANS (BASED ON ABILITY TO BUILD/EXPAND BANKING RELATIONSHIP)
	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Core Relationship Loans
Commercial	$	5,898,306		$	6,088,129		$	6,210,451		$	6,353,401		$	6,305,111
Consumer and mortgage		1,140,626			1,161,711			1,175,883			1,178,809			1,202,258
Total Core		7,038,932			7,249,840			7,386,334			7,532,210			7,507,369
Non-Core Loans
Commercial		955,357			1,173,477			1,406,701			1,620,871			1,762,577
Indirect - sales finance		208,572			240,638			276,179			569,124			635,637
Consumer lot loans		135,342			153,255			171,725			192,903			222,416
Other consumer and mortgage		47,924			57,024			65,070			71,573			64,073
Total Non-Core		1,347,195			1,624,394			1,919,675			2,454,471			2,684,703
Total loans held for investment	$	8,386,127		$	8,874,234		$	9,306,009		$	9,986,681		$	10,192,072

⁽¹⁾ At September 30, 2008 and December 31, 2007, loans held for investment totaled $10,299,640 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
	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Credit Quality
Loans held for investment	$	8,386,127		$	8,874,234		$	9,306,009		$	9,986,681		$	10,192,072
Allowance for loan losses		365,642			339,536			285,290			280,156			247,086
Allowance for credit losses		373,126			345,256			289,680			283,425			249,874
Nonperforming loans held for investment		399,046			431,791			464,565			422,950			349,382
Nonperforming loans held for sale		—			—			376			12,766			16,282
Foreclosed property (other real estate owned and personal property repossessions)		123,314			112,771			95,752			77,210			48,993
Nonperforming assets	$	522,360		$	544,562		$	560,693		$	512,926		$	414,657
Restructured loans not included in nonperforming assets	$	26,128		$	17,236		$	17,291		$	11,073		$	6,249
Nonperforming loans as a % of loans held for investment		4.76	%		4.87	%		4.99	%		4.24	%		3.43	%
Nonperforming assets as a % of loans and foreclosed property		6.13			6.05			5.94			5.08			4.04
Nonperforming assets as a % of total assets		4.39			4.43			4.45			3.86			3.05
Allowance for loan losses as a % of loans held for investment		4.36			3.83			3.07			2.81			2.42
Allowance for credit losses as a % of loans held for investment		4.45			3.89			3.11			2.84			2.45
Allowance for loan losses to nonperforming loans held for investment		0.92	x		0.79	x		0.61	x		0.66	x		0.71	x
Impaired loans	$	392,339		$	403,478		$	432,366		$	369,339		$	287,497
Specific allowance for impaired loans		37,656			48,929			70,006			66,988			44,418
Loans past due 90 days or more (interest accruing)		10,465			7,467			11,107			6,444			47,481
Net loan charge-offs		142,891			168,603			120,611			109,076			76,052
Average loans held for investment		8,697,056			9,146,694			9,847,366			10,154,853			10,308,823
Net loan charge-offs as a % of average loans held for investment (annualized)		6.52	%		7.31	%		4.91	%		4.36	%		2.93	%
Allowance for Loan Losses
Balance at beginning of period	$	339,536		$	285,290		$	280,156		$	247,086		$	200,748
Allowance adjustment for loans sold		—			—			(4,471	)		—			—
Provision for loan losses		168,997			222,849			130,216			142,146			122,390
Loans charged-off		(149,910	)		(172,110	)		(124,122	)		(110,443	)		(78,297	)
Recoveries of loans previously charged-off		7,019			3,507			3,511			1,367			2,245
Balance at end of period	$	365,642		$	339,536		$	285,290		$	280,156		$	247,086
Reserve for Unfunded Lending Commitments
Balance at beginning of period	$	5,720		$	4,390		$	3,269		$	2,788		$	2,252
Provision for unfunded lending commitments		1,764			1,330			1,121			481			536
Balance at end of period	$	7,484		$	5,720		$	4,390		$	3,269		$	2,788
Allowance for Credit Losses
Balance at beginning of period	$	345,256		$	289,680		$	283,425		$	249,874		$	203,000
Allowance adjustment for loans sold		—			—			(4,471	)		—			—
Provision for credit losses		170,761			224,179			131,337			142,627			122,926
Loans charged-off		(149,910	)		(172,110	)		(124,122	)		(110,443	)		(78,297	)
Recoveries of loans previously charged-off		7,019			3,507			3,511			1,367			2,245
Balance at end of period	$	373,126		$	345,256		$	289,680		$	283,425		$	249,874

8

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

	12/31/09 Commercial Real Estate (“CRE”) Loans by Geography
	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	$	566		$	428		$	380		$	204		$	347		$	131		$	114		$	2,170			26	%
Residential A&D		65			51			130			19			43			12			33			353			4
Commercial A&D		32			27			33			24			6			15			21			158			2
Commercial construction		188			14			23			37			15			10			30			317			4
Residential construction		40			7			15			9			10			5			3			89			1
Residential condo		12			37			8			12			30			16			13			128			2
Undeveloped land		40			60			51			51			39			10			36			287			3
Total CRE Loans	$	943		$	624		$	640		$	356		$	490		$	199		$	250		$	3,502			42	%
% of Total Loans HFI		11	%		8	%		8	%		4	%		6	%		2	%		3	%		42	%
	12/31/09 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	$	10.8		$	9.3		$	21.3		$	4.3		$	5.5		$	3.6		$	13.0		$	67.8			17	%
Residential A&D		9.9			6.2			22.8			4.6			5.8			1.1			5.3			55.7			14
Commercial A&D		1.8			0.6			2.1			1.0			—			0.6			17.7			23.8			6
Commercial construction		15.0			—			4.2			—			—			—			5.2			24.4			6
Residential construction		0.7			0.5			2.4			6.6			2.7			—			0.9			13.8			3
Residential condo		2.5			13.9			0.7			0.7			—			0.1			2.8			20.7			5
Undeveloped land		4.6			2.3			1.4			2.3			10.8			5.0			7.8			34.2			9
Total CRE Nonaccrual Loans	$	45.3		$	32.8		$	54.9		$	19.5		$	24.8		$	10.4		$	52.7		$	240.4			60	%
					��
CRE Nonaccrual Loans as % of Total Nonaccrual Loans (1)		11	%		8	%		14	%		5	%		6	%		3	%		13	%		60	%
	Three Months Ended 12/31/09 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	$	0.9		$	4.0		$	3.8		$	0.3		$	—		$	7.0		$	7.7		$	23.7			17	%
Residential A&D		8.2			2.8			4.0			0.3			0.9			—			2.3			18.5			13
Commercial A&D		0.3			—			0.8			4.4			0.4			—			6.1			12.0			8
Commercial construction		—			—			—			—			—			—			—			—			—
Residential construction		1.8			0.1			0.3			1.1			0.6			—			(0.1	)		3.8			3
Residential condo		4.4			0.1			—			—			—			2.8			—			7.3			5
Undeveloped land		2.4			—			0.1			3.4			4.9			—			7.6			18.4			13
Total CRE Net Charge-offs	$	18.0		$	7.0		$	9.0		$	9.5		$	6.8		$	9.8		$	23.6		$	83.7			59	%
CRE Net Charge-offs as % of Total Net Charge-offs		13	%		5	%		6	%		7	%		5	%		7	%		16	%		59	%

⁽¹⁾ Calculated as a percent of nonaccrual loans held for investment, which totaled $399.0 million at December 31, 2009.

9

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

	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Noninterest-bearing	$	1,124,404		$	1,091,439		$	1,099,743		$	1,067,953		$	1,041,140
Interest-bearing checking		1,060,470			1,011,370			1,061,400			1,098,585			1,078,921
Money market accounts		2,072,664			2,174,627			1,978,114			1,889,041			1,834,115
Savings accounts		322,924			262,764			222,044			203,106			190,519
Core deposits		4,580,462			4,540,200			4,361,301			4,258,685			4,144,695
Time deposits under $100,000		1,632,582			1,651,560			1,710,870			1,742,177			1,863,520
Time deposits of $100,000 or more		1,137,067			1,197,988			1,260,709			1,383,639			1,488,735
Customer deposits (1)		7,350,111			7,389,748			7,332,880			7,384,501			7,496,950
Brokered deposits		1,946,101			2,099,040			2,055,772			1,842,577			1,908,767
Total deposits		9,296,212			9,488,788			9,388,652			9,227,078			9,405,717
Less: Brokered deposits		(1,946,101	)		(2,099,040	)		(2,055,772	)		(1,842,577	)		(1,908,767	)
Add: Customer sweep accounts		316,690			281,235			330,765			387,106			493,012
Customer funding (2)	$	7,666,801		$	7,670,983		$	7,663,645		$	7,771,607		$	7,989,962
Percentage of Deposits
Noninterest-bearing		12.1	%		11.5	%		11.7	%		11.6	%		11.1	%
Interest-bearing checking		11.4			10.7			11.3			11.9			11.5
Money market accounts		22.3			22.9			21.1			20.4			19.5
Savings accounts		3.5			2.8			2.4			2.2			2.0
Core deposits		49.3			47.9			46.5			46.1			44.1
Time deposits under $100,000		17.6			17.4			18.2			18.9			19.8
Time deposits of $100,000 or more		12.2			12.6			13.4			15.0			15.8
Customer deposits (1)		79.1			77.9			78.1			80.0			79.7
Brokered deposits		20.9			22.1			21.9			20.0			20.3
Total deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
	For The Period Ended
	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Growth vs. Prior Quarter, Annualized (3)
Noninterest-bearing		12.0	%		(3.0	)%		11.9	%		10.4	%		7.2	%
Total deposits		(8.1	)		4.2			7.0			(7.7	)		(24.0	)
Customer funding (2)		(0.2	)		0.4			(5.6	)		(11.1	)		0.2
Growth Year-To-Date, Annualized (4)
Noninterest-bearing		8.0	%		6.5	%		11.4	%		10.4	%		(7.7	)%
Total deposits		(1.2	)		1.2			(0.4	)		(7.7	)		(3.9	)
Customer funding (2)		(4.0	)		(5.3	)		(8.2	)		(11.1	)		(2.3	)

(1)	Total deposits less brokered deposits.
(2)	Total deposits less brokered deposits plus customer sweep accounts.
(3)	At September 30, 2008, noninterest-bearing totaled $1,022,632, total deposits totaled $10,008,808, and customer funding totaled $7,986,534.
(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)

	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Types of wholesale borrowings
Short-term borrowings
Federal funds purchased and repurchase agreements	$	25		$	25		$	25		$	197,309		$	67,309
Customer sweep accounts		316,690			281,235			330,765			387,106			493,012
Federal Reserve borrowings		—			—			—			750,000			1,050,000
Commercial paper		—			—			—			—			12,537
Treasury, tax and loan note		5,987			7,491			12,364			7,673			3,516
Total short-term borrowings		322,702			288,751			343,154			1,342,088			1,626,374
Long-term borrowings
Repurchase agreements		125,000			125,000			125,000			200,000			200,000
FHLB advances, net of discount		752,646			762,158			762,188			467,717			233,497
Subordinated notes		206,704			206,704			206,704			206,704			216,704
Mandatorily redeemable preferred stock of subsidiary		31,800			31,800			31,800			56,800			56,800
Note payable		719			731			743			756			768
Total long-term borrowings		1,116,869			1,126,393			1,126,435			931,977			707,769
Total borrowings		1,439,571			1,415,144			1,469,589			2,274,065			2,334,143
Less: Customer sweep accounts		(316,690	)		(281,235	)		(330,765	)		(387,106	)		(493,012	)
Add: Brokered deposits		1,946,101			2,099,040			2,055,772			1,842,577			1,908,767
Total wholesale borrowings	$	3,068,982		$	3,232,949		$	3,194,596		$	3,729,536		$	3,749,898
Wholesale borrowings as a percentage of total assets		25.8	%		26.3	%		25.4	%		28.1	%		27.6	%

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)

	12/31/09			9/30/09			6/30/09			3/31/09			12/31/08
Regulatory Capital
Tier 1 capital	$	948,762		$	1,122,738		$	1,308,678		$	1,395,469		$	1,513,452
Tier 2 capital		124,710			130,294			136,453			164,973			174,625
Total risk-based capital		1,073,472			1,253,032			1,445,131			1,560,442			1,688,077
Total risk-weighted assets		9,550,193			10,030,335			10,584,755			11,532,895			11,764,518
Tangible Equity
Mandatorily convertible preferred stock	$	4,650		$	4,650		$	190,026		$	190,026		$	238,700
Perpetual preferred stock		331,133			330,250			329,380			328,523			327,679
Common equity		657,391			863,801			989,847			1,033,634			1,054,152
Shareholders’ equity		993,174			1,198,701			1,509,253			1,552,183			1,620,531
Intangible assets		(229,825	)		(230,606	)		(240,932	)		(244,729	)		(246,020	)
Tangible equity		763,349			968,095			1,268,321			1,307,454			1,374,511
Capital Ratios
Tier 1 risk-based capital (preliminary)		9.93	%		11.19	%		12.36	%		12.10	%		12.86	%
Total risk-based capital (preliminary)		11.24			12.49			13.65			13.53			14.35
Leverage ratio (preliminary)		7.91			9.22			10.30			10.55			11.22
Tier 1 common capital (preliminary)		4.04			5.59			5.31			5.64			6.12
Tangible equity to tangible assets ratio		6.54			8.02			10.27			10.03			10.29
Impact of unrealized gain on securities		(0.14	)		(0.23	)		(0.14	)		(0.19	)		(0.05	)
Tangible equity to tangible assets ratio, excluding unrealized gain on securities		6.40			7.79			10.13			9.84			10.24
Tangible common equity to tangible assets ratio		3.67			5.25			6.07			6.05			6.05
Accumulated Other Comprehensive Income (AOCI)
Gross	$	47,597		$	76,751		$	64,192		$	89,078		$	65,823
Net of income tax (included in equity)		30,938			48,875			41,115			57,018			42,558
Unrealized Gains on AFS Securities (included in AOCI)
Gross (included in AFS securities)	$	28,442		$	50,524		$	30,189		$	43,255		$	10,949
Net of income tax (included in equity)		18,487			31,827			19,013			27,233			6,890
Per Share Data
Mandatorily convertible preferred shares outstanding:
- Series 2008		4,650			4,650			95,526			190,026			238,700
- Series 2009		—			—			94,500			—			—
Total		4,650			4,650			190,026			190,026			238,700
Common shares outstanding		215,455,541			215,371,687			160,248,170			84,781,160			74,643,649
Common book value per common share	$	3.05		$	4.01		$	6.18		$	12.19		$	14.12
Common tangible book value per common share		1.98			2.94			4.67			9.31			10.83
Market Rates for U.S. Treasury Notes
Three year		1.70	%		1.45	%		1.64	%		1.15	%		1.00	%
Five year		2.69			2.31			2.54			1.67			1.55

12

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

	Three Months Ended
	12/31/09							9/30/09							6/30/09
	Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate
Assets
Earning assets
Commercial loans	$	7,123,480	$	79,160		4.41	%	$	7,504,007	$	81,465		4.31	%	$	7,900,570	$	83,970		4.26	%
Consumer loans		1,338,530		15,796		4.68			1,387,242		16,103		4.61			1,443,823		17,282		4.80
Indirect loans		244,836		4,767		7.72			272,155		5,180		7.55			530,875		9,544		7.21
Risk management derivatives tied to loans		—		8,155					—		9,925					—		11,027
Total loans (1)		8,706,846		107,878		4.92			9,163,404		112,673		4.88			9,875,268		121,823		4.95
Investment securities (taxable) (2)		2,000,755		18,097		3.62			1,610,244		16,742		4.16			1,680,893		18,140		4.32
Investment securities (nontaxable) (3)		180,914		2,420		5.35			237,040		3,086		5.21			246,001		3,188		5.18
Total investment securities		2,181,669		20,517		3.76			1,847,284		19,828		4.29			1,926,894		21,328		4.43
Federal funds sold, interest-bearing bank balances, and other temp investments		282		—		—			175		—		—			255		—		—
Total earning assets		10,888,797		128,395		4.68			11,010,863		132,501		4.78			11,802,417		143,151		4.86
Non-earning assets		1,338,338							1,417,844							1,283,139
Total assets	$	12,227,135						$	12,428,707						$	13,085,556
Liabilities and Shareholders’ Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking	$	1,039,799	$	724		0.28		$	1,011,374	$	699		0.27		$	1,036,339	$	724		0.28
Savings		294,704		763		1.03			243,787		599		0.97			208,856		472		0.91
Money market		2,118,805		6,498		1.22			2,092,634		7,030		1.33			1,924,037		6,726		1.40
Time deposits, excluding brokered deposits		2,771,704		18,471		2.64			2,909,664		22,241		3.03			3,067,471		26,581		3.48
Brokered deposits		2,117,888		14,590		2.73			1,911,837		14,587		3.03			1,954,201		15,038		3.09
Total interest-bearing deposits		8,342,900		41,046		1.95			8,169,296		45,156		2.19			8,190,904		49,541		2.43
Customer sweep accounts		289,930		238		0.33			309,577		230		0.29			362,342		245		0.27
Other borrowings (4)		1,132,533		5,718		2.00			1,134,993		5,997		2.10			1,682,118		6,319		1.51
Total interest-bearing liabilities		9,765,363		47,002		1.91			9,613,866		51,383		2.12			10,235,364		56,105		2.20
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,115,349							1,109,176							1,074,739
Other noninterest liabilities		184,397							203,380							235,432
Total liabilities		11,065,109							10,926,422							11,545,535
Shareholders’ equity		1,162,026							1,502,285							1,540,021
Total liabilities and shareholders’ equity	$	12,227,135						$	12,428,707						$	13,085,556
Net interest margin (tax-equivalent)			$	81,393		2.97	%			$	81,118		2.93	%			$	87,046		2.96	%
Less: tax-equivalent adjustment (3)				847							1,080							1,116
Net interest income			$	80,546						$	80,038						$	85,930
Supplemental data:
Customer funding (5)	$	7,630,291	$	26,694		1.39	%		$7,676,212	$	30,799		1.59	%	$	7,673,784	$	34,748		1.82	%
Wholesale borrowings (6)		3,250,421		20,308		2.48			3,046,830		20,584		2.68			3,636,319		21,357		2.36
Total funding (7)	$	10,880,712	$	47,002		1.71	%	$	10,723,042	$	51,383		1.90	%	$	11,310,103	$	56,105		1.99	%

(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, TSFG capitalized $288,000 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.

13

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

	Three Months Ended
	3/31/09							12/31/08
	Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate
Assets
Earning assets
Commercial loans	$	8,086,559	$	83,794		4.20	%	$	8,172,311	$	106,243		5.17	%
Consumer loans		1,494,261		17,566		4.77			1,514,602		19,941		5.24
Indirect loans		607,548		10,845		7.24			657,329		11,862		7.18
Risk management derivatives tied to loans		—		11,914					—		7,243
Total loans (1)		10,188,368		124,119		4.94			10,344,242		145,289		5.59
Investment securities (taxable) (2)		1,854,149		20,548		4.43			1,835,248		20,575		4.48
Investment securities (nontaxable) (3)		266,600		3,437		5.16			281,839		3,616		5.13
Total investment securities		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		198		1		2.05			1,128		10		3.53
Total earning assets		12,309,315		148,105		4.87			12,462,457		169,490		5.41
Non-earning assets		1,246,813							1,322,477
Total assets	$	13,556,128						$	13,784,934
Liabilities and Shareholders’ Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking	$	1,131,456	$	865		0.31		$	1,010,878	$	1,310		0.52
Savings		196,974		529		1.09			173,927		518		1.18
Money market		1,913,927		7,779		1.65			1,814,901		9,808		2.15
Time deposits, excluding brokered deposits		3,199,427		28,867		3.66			3,401,800		32,130		3.76
Brokered deposits		1,905,805		16,803		3.58			2,227,055		21,880		3.91
Total interest-bearing deposits		8,347,589		54,843		2.66			8,628,561		65,646		3.03
Customer sweep accounts		455,781		298		0.27			529,344		1,174		0.88
Other borrowings (4)		1,899,771		6,743		1.44			1,805,655		9,772		2.15
Total interest-bearing liabilities		10,703,141		61,884		2.34			10,963,560		76,592		2.78
Noninterest-bearing liabilities
Noninterest-bearing deposits		1,021,400							1,001,516
Other noninterest liabilities		230,741							201,107
Total liabilities		11,955,282							12,166,183
Shareholders’ equity		1,600,846							1,618,751
Total liabilities and shareholders’ equity	$	13,556,128						$	13,784,934
Net interest margin (tax-equivalent)			$	86,221		2.83	%			$	92,898		2.97	%
Less: tax-equivalent adjustment (3)				1,203							1,265
Net interest income			$	85,018						$	91,633
Supplemental data:
Customer funding (5)	$	7,918,965	$	38,338		1.96	%	$	7,932,366	$	44,940		2.25	%
Wholesale borrowings (6)		3,805,576		23,546		2.51			4,032,710		31,652		3.12
Total funding (7)	$	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 March 31, 2009 and December 31, 2008, TSFG capitalized $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.

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
	12/31/09						9/30/09						6/30/09						3/31/09
				Diluted EPS						Diluted EPS						Diluted EPS						Diluted EPS
Net Loss, as Reported (GAAP)	$	(188,671	)				$	(323,504	)				$	(89,676	)				$	(74,403	)
Preferred stock dividends and other (1)		(5,221	)					(17,251	)					(21,809	)					(16,408	)
Net Loss Available to Common Shareholders	$	(193,892	)	$	(0.90	)	$	(340,755	)	$	(1.95	)	$	(111,485	)	$	(1.23	)	$	(90,811	)	$	(1.10	)
Net Loss, as Reported (GAAP)		(188,671	)					(323,504	)					(89,676	)					(74,403	)
Add: Income tax expense (benefit)		23,843						123,304						(59,647	)					(49,706	)
Loss Before Income Taxes		(164,828	)					(200,200	)					(149,323	)					(124,109	)
Non-Operating Items
(Gain) loss on securities		(6,694	)					286						(4,580	)					2,954
Gain on sale of ancillary businesses		—						(7,234	)					—						—
Goodwill impairment		—						—						2,511						—
Employment contracts and severance		—						—						829						—
Impairment of long lived assets		3,478						746						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)		(168,044	)					(206,402	)					(130,478	)					(120,531	)
Add: Provision for credit losses		170,761						224,179						131,337						142,627
Pre-tax, Pre-Provision Operating Earnings		2,717						17,777						859						22,096
Add: (Gain) loss on nonmortgage loans held for sale		518						(41	)					9,461						1,838
Add: Loss on OREO		15,032						4,406						12,873						124
Pre-tax, Pre-Credit Operating Earnings	$	18,267					$	22,142					$	23,193					$	24,058
Average Common Shares Outstanding, Diluted		215,365,464						174,426,381						90,986,862						82,223,190
Select Balance Sheet (Averages)
Total assets	$	12,227,135					$	12,428,707					$	13,085,556					$	13,556,128
Intangible assets		(230,129	)					(235,986	)					(244,040	)					(245,341	)
Tangible assets		11,997,006						12,192,721						12,841,516						13,310,787
Preferred stock		335,302						491,365						518,968						532,430
Common equity		826,724						1,010,920						1,021,053						1,068,416
Shareholders’ equity		1,162,026						1,502,285						1,540,021						1,600,846
Intangible assets		(230,129	)					(235,986	)					(244,040	)					(245,341	)
Tangible equity		931,897						1,266,299						1,295,981						1,355,505
Return on Average Assets (2)
GAAP loss		(6.12	)%					(10.33	)%					(2.75	)%					(2.23	)%
Return on Average Equity (2)
GAAP loss		(64.42	)					(85.43	)					(23.36	)					(18.85	)
Return on Average Common Equity (3)
GAAP loss available to common shareholders		(93.05	)					(133.73	)					(43.79	)					(34.47	)

(1)	For the quarters ended December 31, 2009, September 30, 2009, June 30, 2009 and March 31, 2009, includes $0, $11.9 million, $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						Diluted						Diluted						Diluted
				EPS						EPS						EPS						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	)
Add: Provision for credit losses		122,926						84,608						63,763						73,292
Pre-tax, Pre-Provision Operating Earnings		28,016						35,348						45,846						41,258
Add: Loss on nonmortgage loans HFS		283						—						—						—
Add: (Gain) loss on OREO		(316	)					765						(3	)					187
Pre-tax, Pre-Credit Operating Earnings	$	27,983					$	36,113					$	45,843					$	41,445
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,
	2009						2008						2007
				Diluted EPS						Diluted EPS						Diluted EPS
Net Income (Loss), as Reported (GAAP)	$	(676,254	)				$	(547,118	)				$	73,276
Preferred stock dividends and other		(60,689	)					(21,658	)					(665	)
Net Income (Loss) Available to Common Shareholders	$	(736,943	)	$	(5.22	)	$	(568,776	)	$	(7.78	)	$	72,611		$	0.98
Net Income (Loss), as Reported (GAAP)	$	(676,254	)				$	(547,118	)				$	73,276
Add: Income tax expense (benefit)		37,794						(87,574	)					33,400
Income (Loss) Before Income Taxes		(638,460	)					(634,692	)					106,676
Non-Operating Items
(Gain) loss on securities		(8,034	)					(3,108	)					4,623
Gain on sale of ancillary businesses		(7,234	)					—						—
Gain on Visa IPO share redemption		—						(1,904	)					—
Goodwill impairment		2,511						426,049						—
Employment contracts and severance		829						16,519						2,306
Impairment of long lived assets		21,600						—						—
FDIC special assessment		5,700						—						—
(Gain) loss on early extinguishment of debt		(3,043	)					2,086						2,029
Loss on repurchase of auction rate securities		676						—						—
Loss on derivative collateral		—						1,061						—
Branch acquisition and conversion costs		—						731						—
Visa-related litigation		—						(863	)					881
Pre-tax Operating Income (Loss) (income (loss) before taxes, excluding non-operating items)		(625,455	)					(194,121	)					116,515
Add: Provision for credit losses		668,904						344,589						68,568
Pre-tax, Pre-Provision Operating Earnings		43,449						150,468						185,083
Add: Loss on nonmortgage loans held for sale		11,776						283						—
Add: Loss on OREO		32,435						633						401
Pre-tax, Pre-Credit Operating Earnings	$	87,660					$	151,384					$	185,484
Average Common Shares Outstanding, Diluted		141,207,510						73,136,936						74,006,978
Select Balance Sheet (Averages)
Total assets	$	12,819,697					$	13,833,355					$	14,044,565
Intangible assets		(238,825	)					(532,517	)					(681,628	)
Tangible assets		12,580,872						13,300,838						13,362,937
Preferred stock		469,036						181,849						—
Common equity		981,237						1,376,232						1,543,552
Shareholders’ equity		1,450,273						1,558,081						1,543,552
Intangible assets		(238,825	)					(532,517	)					(681,628	)
Tangible equity		1,211,448						1,025,564						861,924
Return on Average Assets (1)
GAAP earnings (loss)		(5.28	)%					(3.96	)%					0.52	%
Return on Average Equity (1)
GAAP earnings (loss)		(46.63	)					(35.11	)					4.75
Return on Average Common Equity (2)
GAAP earnings (loss) available to common shareholders		(75.10	)					(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
	12/31/09			9/30/09			6/30/09			3/31/09
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	80,546		$	80,038		$	85,930		$	85,018
Tax-equivalent adjustment		847			1,080			1,116			1,203
Net interest income (tax-equivalent)	$	81,393		$	81,118		$	87,046		$	86,221
Total noninterest income, as reported (GAAP)	$	28,550		$	33,470		$	32,272		$	23,741
Adjustments for non-operating items:
(Gain) loss on securities		(6,694	)		286			(4,580	)		2,954
Gain on sale of ancillary businesses		—			(7,234	)		—			—
Operating noninterest income (noninterest income, excluding non-operating items)	$	21,856		$	26,522		$	27,692		$	26,695
Total noninterest expenses, as reported (GAAP)	$	103,163		$	89,529		$	136,188		$	90,241
Adjustments for non-operating items:
Goodwill impairment		—			—			(2,511	)		—
Employment contracts and severance		—			—			(829	)		—
Impairment of long lived assets		(3,478	)		(746	)		(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)		99,685			88,783			112,763			89,617
Less: loss on OREO		(15,032	)		(4,406	)		(12,873	)		(124	)
Less: gain (loss) on nonmortgage loans held for sale		(518	)		41			(9,461	)		(1,838	)
Less: amortization of intangibles		(1,102	)		(1,238	)		(1,286	)		(1,291	)
Cash operating noninterest expenses (noninterest expenses, excluding non-operating items, loss on OREO, gain/loss on nonmortgage loans held for sale, and amortization of intangibles)	$	83,033		$	83,180		$	89,143		$	86,364
Total Revenue (1)
GAAP	$	109,096		$	113,508		$	118,202		$	108,759
Operating (2)		103,249			107,640			114,738			112,916
Noninterest Income as a % Total Revenue (3)
GAAP		26.17			29.49			27.30			21.83	%
Operating (2)		21.17			24.64			24.13			23.64
Cash Operating Efficiency Ratio (4)		80.42			77.28			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 loss on OREO, gain/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.

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

	Years Ended December 31,
	2009			2008			2007
Select Financial Data Used in Ratios Calculated Below
Net interest income	$	331,532		$	380,163		$	382,781
Tax-equivalent adjustment		4,246			5,354			6,246
Net interest income (tax-equivalent)	$	335,778		$	385,517		$	389,027
Net interest margin (tax-equivalent)		2.92	%		3.09	%		3.10	%
Total noninterest income, as reported (GAAP)	$	118,033		$	121,967		$	113,712
Adjustments for non-operating items:
(Gain) loss on securities		(8,034	)		(3,108	)		4,623
Gain on Visa IPO share redemption		—			(1,904	)		—
Gain on sale of ancillary businesses		(7,234	)		—			—
Operating noninterest income (noninterest income, excluding non-operating items)	$	102,765		$	116,955		$	118,335
Total noninterest expenses, as reported (GAAP)	$	419,121		$	792,233		$	321,249
Adjustments for non-operating items:
Goodwill impairment		(2,511	)		(426,049	)		—
Employment contracts and severance		(829	)		(16,519	)		(2,306	)
Impairment of long lived assets		(21,600	)		—			—
FDIC special assessment		(5,700	)		—			—
Branch acquisition and conversion costs		—			(731	)		—
Gain (loss) on early extinguishment of debt		3,043			(2,086	)		(2,029	)
Loss on repurchase of auction rate securities		(676	)		—			—
Visa-related litigation		—			863			(881	)
Loss on derivative collateral		—			(1,061	)		—
Operating noninterest expenses (noninterest expenses, excluding non-operating items)		390,848			346,650			316,033
Less: loss on OREO		(32,435	)		(633	)		(401	)
Less: loss on nonmortgage loans held for sale		(11,776	)		(283	)		—
Less: amortization of intangibles		(4,917	)		(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)	$	341,720		$	339,596		$	307,735
Total Revenue (1)
GAAP	$	449,565		$	502,130		$	496,493
Operating (2)		438,543			502,472			507,362
Noninterest Income as a % of Total Revenue (3)
GAAP		26.25	%		24.29	%		22.90	%
Operating (2)		23.43			23.28			23.32
Cash Operating Efficiency Ratio (4)		77.92			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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