THE SOUTH/FINANCIAL GROUP
1999
Annual
Report
WE CAN SEE THE FUTURE OF BANKING FROM HERE.
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CORPORATE PROFILE
Carolina First Corporation, renamed The South Financial Group in 2000, is a
financial services holding company headquartered in Greenville, South Carolina,
with assets of $3.6 billion at year end 1999. Through its principal banking
subsidiaries, Carolina First Bank and Citrus Bank, The South Financial Group
operates 75 branches in South Carolina and Florida. Carolina First Bank is the
largest South Carolina-based commercial bank. The South Financial Group, through
its subsidiary Carolina First Bank, F.S.B., also created and operates Bank
CaroLine, an Internet on-line bank with customers in all 50 states. Other
subsidiaries include a mortgage banking subsidiary (the second largest mortgage
loan servicer in South Carolina), a full service brokerage company, and a small
business investment company that concentrates principally on bank technology
companies. The common stock is traded on the Nasdaq National Market, under the
symbol CAFC, which will be changed to TSFG with the new corporate name.
A word about our new corporate name... while we will still operate Carolina
First Bank in South Carolina, our change to The South Financial Group accurately
reflects our new, regional focus across the fastest growing area of the country.
As a result, we have expanded our super community banking concept into new,
profitable markets within the South. Our new name also emphasizes
ABOUT OUR NEW NAME...
a broad and evolving array of financial services, a "group" designed to meet the
many needs of our customers. The South Financial Group. It means being more than
simply a bank. It means customer options, customer choice, and customer service,
all with a more regional, more far-sighted vision.
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THE SOUTH/FINANCIAL GROUP
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The rather unique spectacles on our cover belong to CaroLine, our Internet
banking representative. CaroLine, who made her debut in 1999, is emblematic of
our ability to provide customers with financial
services designed with an eye toward the future. And while she may be an
Internet dweller, CaroLine is modeled after our very best customer service
representatives, the kind of people who keep customers coming back. In other
words, whether our customers prefer a computer terminal or a teller counter,
customer service is still the top priority.
TABLE OF CONTENTS
Corporate Profile.......................INSIDE FRONT COVER
Financial Highlights.................................... 2
Letter to Shareholders.................................. 3
The Future of Banking................................... 6
Five-Year Summary.......................................12
Quarterly Financial Data................................13
Financial Review........................................14
Condensed Consolidated Balance Sheets...................20
Condensed Consolidated Income Statements................21
Independent Auditors' Report............................22
Statement of Financial Responsibility...................22
Directors and Executive Management......................23
Advisory Board Members..................................24
Locations...............................................25
Shareholder Information.................................26
Company Information......................INSIDE BACK COVER
The Future
Of Banking
Our Vision 6
- ----------------------------
Super
Community
Banking 7
- ----------------------------
Expanding
Markets 8
- ----------------------------
Internet
Strategies 10
- ----------------------------
Customer's
Choice 11
- ----------------------------
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2
FINANCIAL
HIGHLIGHTS
[BAR CHART APPEARS HERE]
ASSET GROWTH
($ in millions)
Compound Growth Rate:
5-year 24%
10-year 25%
89 90 91 92 93 94 95 96 97 98 99
$374 $417 $537 $628 $919 $1,220 $1,461 $1,651 $2,302 $2,953 $3,562
[BAR CHART APPEARS HERE]
NET INCOME
($ in millions)
Compound Growth Rate:
5-year 28%
10-year 50%
89 90 91 92 93 94 95 96 97 98 99
$0.5 $1.5 $1.9 $2.5 $5.5 $7.8* $9.3 $11.0 $14.0 $24.4 $27.2
*Excludes fourth quarter 1994 restructing charges of $9.4 (after-tax).
($ in thousands, except per share data)
December 31, Percent
1999 1998 Change
- ------------------------------------------------------------------------------------------------
FOR THE YEAR
Net income $ 27,151 $ 24,445 11.1%
.................................................
Per common share:
Net income - diluted 1.06 1.13 (6.2)
.................................................
Cash dividends declared 0.37 0.33 12.1
.................................................
Net interest margin 4.56% 4.36%
.................................................
Return on average assets 0.89 0.96
.................................................
Return on average equity 7.13 8.64
- ------------------------------------------------------------------------------------------------
CASH BASIS PERFORMANCE
(Excluding intangible amortization and balances)
Net income $ 33,121 $ 28,097 17.9%
.................................................
Net income per common share - diluted 1.29 1.30 (0.8)
.................................................
Return on average tangible assets 1.13% 1.13%
.................................................
Return on average tangible equity 12.81 12.52
- ------------------------------------------------------------------------------------------------
AT YEAR END
Total assets $ 3,561,888 $ 2,953,292 20.6%
.................................................
Loans - net of unearned income 2,429,225 2,030,186 19.7
.................................................
Deposits 2,514,994 2,334,183 7.7
.................................................
Shareholders' equity 409,817 361,987 13.2
.................................................
Book value 15.93 14.60 9.1
.................................................
Common stock closing market price (Nasdaq) 18.25 25.31 (27.9)
- ------------------------------------------------------------------------------------------------
ASSET QUALITY RATIOS
Nonperforming assets 0.46% 0.28%
.................................................
Net charge-offs 0.44 0.66
- ------------------------------------------------------------------------------------------------
OPERATIONS DATA
Branch offices 75 76
.................................................
ATMs 52 46
.................................................
Employees (full-time equivalent) 1,016 955
- ------------------------------------------------------------------------------------------------
Total assets and shareholders' equity include net unrealized securities gains.
However, ROA, ROE and net interest margin exclude this gain because it is not
included in net income.
3
Mack I. Whittle, Jr.
President and Chief Executive Officer
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TO OUR SHAREHOLDERS
"We can see the future of banking from here." We don't believe, as many do,
that technological advances will make banking in the future unrecognizable.
Quality products and responsive service, the things that truly matter today,
will continue to matter in the future. No cutting-edge technology will alter
this fundamental truth. At Carolina First, we are committed to ensuring that our
customers - current and potential - can access our products and benefit from our
service, regardless of the technology they use.
Our core aims will not change. We will always focus on providing
convenient, flexible and reasonably priced products, delivered in a friendly and
efficient manner. The guiding questions will always be, "Did the customer get
what she wanted?" and "Did he like us better at the conclusion of the
transaction than at the beginning?"
Of course, we recognize the undeniable shifts in banking. Many customers
will not "like us better" - indeed, may never find us at all - if they cannot
complete transactions cleanly and efficiently on-line. We will embrace and
develop new technology without abandoning our bedrock business principles. As we
build a solid Internet presence, we do so in service of our overall business,
and not for the simple thrill of saying we are there.
This philosophy guides all of our decisions. During this past year, we have
taken a number of significant steps, all directed toward serving our customers
and increasing long-term shareholder value.
THE YEAR IN REVIEW
Our Annual Report this year is focused on our strategic vision for the
future. In 1999, we laid the foundation to position us to become a high
performing bank.
Net income for the year increased 11% to $27.2 million. On a diluted per
share basis, earnings for 1999 totaled $1.06, compared with $1.13 a year
earlier. During 1999, Carolina First engaged in a number of actions, that
produced unusual gains or charges, to strengthen the Company strategically and
enhance its competitive position. These actions included the entry into Florida,
the introduction of our Internet bank, the sale of the credit card portfolio,
the sale of four branches, and the establishment of a charitable foundation and
a captive reinsurance subsidiary funded by the sale of Net.B@nk, Inc. stock.
Our banking business fundamentals - loan growth, credit quality, and net
interest margin - remained strong in 1999. Loans increased 20% during 1999 to
$2.4 billion at December 31, 1999, driven by a rise in commercial loans. Asset
quality remained sound with nonperforming assets at 0.46% of loans and other
real estate owned as of December 31, 1999. In addition, the net interest margin
rose to 4.56%, compared with 4.36% for 1998.
4
MARKET LEADERSHIP
Our vision for the future includes leadership in the most attractive markets in
the Southeast. This regional focus is why we are asking our shareholders to
approve changing our corporate name to "The South Financial Group."
In 1999, we entered Florida, targeting the Orlando and Jacksonville
markets, which are two of the most attractive markets in the most attractive
banking state in the Southeast. During the second quarter, we acquired Citizens
First National Bank in Crescent City and opened a de novo branch in
Jacksonville. Acquiring Citrus Bank in July gave us immediate presence in the
Orlando market, along with an excellent team of commercial bankers. At the same
time we gained a recognized name in our targeted Florida markets.
In January 2000, we announced a proposed merger with Anchor Financial
Corporation, a Myrtle Beach-based bank with a strong presence in the
fast-growing coastal markets. This merger solidified Carolina First's position
as the largest independent bank in South Carolina. After the merger, we will
have the fourth-largest market share in South Carolina overall, a top-five
market share in the four largest South Carolina markets, and a top-three market
share in the five fastest-growing counties in the state.
We also took a strong step into the Internet market by creating CaroLine, a
unique, personal on-line banker. We offer Internet services both to our
traditional branch customers and our Internet only customers. Bank CaroLine, our
Internet bank, has exceeded expectations, attracting customers from all 50
states in her first 90 days of operation. We expect to evolve in this market by
casting ourselves as a sound and resourceful bank with a competent Internet
presence and strategy.
DESIGNED FOR THE FUTURE
Carolina First's rapid growth has taught us the importance of planning for
growth. In 1999, we readied ourselves for the future by investing in management
and technology.
In 2000, we will convert our core operating system for the first time in
our history. By the end of the year, we will have systems in place to support a
$10 billion financial institution. We will continue to identify the technologies
that ensure we don't expand at the expense of the personal touch and
responsiveness our customers have come to expect. Our small business investment
company, CF Investment Company, continues to play a central role in our efforts
to identify and develop these technologies.
We have also assembled a management team with the experience needed to run
multi-state organizations, people who are excited by the prospect of operating
within a bank that still believes its mission, on behalf of its shareholders, is
to be an entrepreneur.
5
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"WE'RE COMMITTED TO CUSTOMER OPTIONS, CUSTOMER CHOICE, AND CUSTOMER SERVICE, ALL
WITH A MORE REGIONAL, MORE FAR-SIGHTED VISION."
GROWING WITH REVENUE
Fee income is our engine for future revenue growth. We'll continue our
focus on improving our fee business by expanding geographically, offering new
services, and increasing business with our existing customers through enhanced
customer information.
Following our mergers in Florida, we began providing trust services and
mortgage products. We recently added brokerage services in Florida. In December,
we added insurance products to our mix of services in South Carolina. During the
first half of 2000, we plan to add new insurance products and to roll out these
offerings in Florida.
Our new core operating system will provide superior customer information
geared to expanding revenues. We have a tremendous opportunity to increase our
profitability by providing the full gamut of banking services - trust,
investments, brokerage, international banking, mortgage banking, cash
management, insurance - to our existing customers.
LONG-TERM PERFORMANCE
In retrospect, 1999 will be significant for the important steps we took to
prepare for the future. We recognize that some of these steps impaired certain
financial performance indicators, and we are committed to seeing those
indicators improve.
We are confident in our plans and ability to benefit our shareholders by
improving our financial performance. We forecast that the proposed merger with
Anchor Financial Corporation will enhance future performance beginning in 2001.
Our focus will be on achieving higher returns on equity and assets, producing
superior long-term earnings per share growth, and improving our efficiency
ratio.
WE'VE ALWAYS SEEN THE FUTURE
When we founded Carolina First, we set out to build an innovative,
entrepreneurial bank with the ability to listen, the nerve to make decisions,
and the will and stamina to follow through. We wanted to serve small and
medium-sized businesses in growing communities, providing them with the right
mix of sophisticated products and personal service.
We will not alter our course. While there may be new sights and sounds, new
lights and colors along the way, our destination has always been set, and has
always been the same. From our founding, we have always seen the future of
banking. And that is the direction we will take.
Thank you for your continued support and confidence in our vision.
/s/ Mack I. Whittle, Jr.
- ------------------------
Mack I. Whittle, Jr.
President and Chief Executive Officer
6
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OUR VISION
"Our ability to uncover markets where customers desire our combination of
quality, personal service and innovative, flexible delivery is the catalyst for
our vision."
We can see the future of banking from here.
To see where we're going, we must first remember where we've been.
Thirteen years ago, Carolina First Bank was founded on a commitment to
small and medium-sized businesses, offering them commercial loans, personalized
service and localized decisions - the things these businesses weren't receiving
from the large regional banks. As we refined our concept, we began to offer
retail services to customers who had been disenfranchised by the rash of bank
mergers in the late 1980's. As a result, we created the "super community" bank
concept: high-tech, progressive products coupled with personal, individualized
service. Our responsiveness and our face-to-face service became our hallmarks.
Our ability to uncover markets where customers desire our combination of
quality, personal service and innovative, flexible delivery is the catalyst for
our vision. At The South Financial Group, we will continue to evolve and expand
in the fast-growing Southeast and on the super-fast-growing Internet, as we
develop new, unique ways to adapt to the needs of each of our customers. The
strategy that helped make our mark in the banking world will serve us well for
years to come.
The customer is, as always, the core of our vision. The ways we "touch"
customers may evolve as the years go by. But our commitment to exceed their
expectations and earn their trust will never change.
7
Our super community banking strategy allows us to offer highly personalized
service, localized decision making and leading edge products to customers.
Following that strategy, we have become a $3.6 billion financial services
company in just thirteen years. However, as we continue to grow, maintaining and
adapting our super community banking concept becomes more of a challenge. In
short, how big can you grow without becoming bad?
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SUPER COMMUNITY BANKING
We believe the answer lies in technology. The infrastructure we have today
can actually support more services by managing the commodity facets of our
business with automated technology. This allows us to focus on adding value
where it matters most to customers. In essence, technology allows growth, while
permitting us to remain close to each and every customer.
We will remain attentive to customer demands for regional bank products
delivered with flexible, personal service. We realize that each customer's needs
are different and will continue to customize our offerings to satisfy these
requirements.
The bottom line? Our super community bank concept is alive and well. We
recognize that the world of banking is never revolutionary, yet always
evolutionary. And so, as the evolution takes place, we will continue to tap the
technology necessary to remain a customer-focused organization.
"Our super community bank concept is alive and well. It still serves as our
bedrock, the foundation upon which we will build The South Financial Group."
8
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EXPANDING MARKETS
"Our vision for the future includes leadership in the most attractive markets in
the Southeast. This regional focus is why we are asking our shareholders to
approve changing our corporate name to The South Financial Group."
Our vision for the future includes a continued emphasis on researching and
identifying potential markets in fast-growing areas, the kinds of places where
super community banking would thrive. For this reason, in 1999, we expanded our
focus outside of South Carolina's borders to include the booming Southeastern
region.
In Florida we entered a market where mega-bank mergers created a
disenfranchised customer base, longing for a return to personal banking. The
result was an expansion into the Orlando and Jacksonville markets through the
purchase of Citrus Bank and Citizens First National Bank and the opening of a de
novo branch. Our merger with Citrus Bank gave The South Financial Group an
outstanding staff of commercial bankers and a ready-made customer base in the
attractive Orlando area, as well as a recognizable bank name for our Florida
franchise.
Our proposed merger with Anchor Financial will bring us significantly
increased market share in South Carolina, in addition to a presence in North
Carolina. Upon completion of the merger, Carolina First will own a top-five
market share rank in the four leading metro areas of South Carolina, as well as
the fourth-largest deposit market share in the state.
9
During this market expansion, we did not, of course, ignore the needs of
our established locations and our long-time customers. By offering new products
and new ways to access them, we substantially grew our existing customer bases,
reaching them in new, unique ways.
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As of December 31, 1999, Carolina First Corporation served 51 communities with
75 branch offices.
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Carolina First Bank
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New communities served by Carolina First Bank following completion of proposed
merger with Anchor Financial Corporation
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Citrus Bank
10
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INTERNET STRATEGIES
"We also took a strong step into the Internet market by creating Bank CaroLine,
our branded on-line bank, featuring CaroLine, a unique, personal on-line
banker."
The sheer numbers are staggering. Each day, 11,000 new users, each a
potential Internet banking customer, access the Internet. Many are worried about
security. Some are concerned about the lack of personalized service on-line.
When we set out to develop Internet banking, we decided to address these
concerns directly.
The result is CaroLine, our version of a personal on-line banker. She was
designed to be the on-line version of our very best customer service
representatives. She's personable, helpful, friendly... always smiling and
always ready to assist customers who click her up.
In South Carolina, customers are able to "Meet CaroLine" and access her
on-line banking services through www.carolinafirst.com, the Carolina First Bank
website. For other customers across the country, we created a separate on-line
bank, Bank CaroLine, at www.bankcaroline.com.
At Bank CaroLine, customers can receive free on-line checking, some of the
highest CD rates available, free Quicken integration, insurance products, loans,
helpful financial tools and even on-line assistance, live and in-person! More
importantly, each Bank CaroLine or Meet CaroLine cus-tomer receivesour Internet
brand of customer service, an extension of our tradition of personalized banking
care.
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11
One of the few certainties in the world of banking is this: you lose touch
with the customer, and you lose. Period. That's why, in 1999, we reaffirmed our
commitment to customer choice.
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CUSTOMER'S CHOICE
For those more comfortable with the traditional, "bricks and mortar" branch
banking, we continue to be an industry leader in the super community banking
approach. We expanded our product offerings within existing branches, opened new
branch locations, and upped the levels of individualized attention, for both
commercial and retail customers.
For those who value convenience and round-the-clock access, we created an
on-line banking strategy that is attracting customers coast-to-coast. And of
course, many customers utilize both the traditional branches and the on-line
accessibility. Simply, it's their choice.
As banking evolves, the customer will continue to be the centerpoint, the
focus of product development and enhancement. The customer will want more and
more choices. It's our job to deliver them. It's a challenge we readily accept.
"Many customers utilize both the traditional branches and the on-line
accessibility. Simply, it's their choice."
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12
Five-Year Summary
FINANCIAL
HIGHLIGHTS
Carolina First Corporation and Subsidiaries
($ in thousands, except per share data)
Years Ended December 31, Five - Year
- ---------------------------------------------------------------------------------------------------------------- Compound
1999 1998 1997 1996 1995 Growth Rate
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INCOME STATEMENT DATA
Net interest income $ 121,744 $ 99,155 $ 72,231 $ 60,091 $ 52,102 22.6%
.............................................
Provision for loan losses 15,846 12,724 12,108 10,723 7,166 66.6
.............................................
Noninterest income 48,386 24,389 20,400 21,779 17,607 41.8
.............................................
Noninterest expenses 113,821 71,978 58,587 53,816 48,340 16.7
.............................................
Net income 27,151 24,445 14,040 11,015 9,310 28.3
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PER COMMON SHARE DATA
Net income - basic $ 1.08 $ 1.15 $ 1.00 $ 0.89 $ 0.75 8.2%
.............................................
Net income - diluted 1.06 1.13 0.99 0.85 0.75 7.7
.............................................
Book value (December 31) 15.93 14.60 11.83 8.69 7.07 19.9
.............................................
Common stock closing market price
(December 31) 18.25 25.31 21.50 16.15 14.58 10.4
.............................................
Cash dividends declared 0.37 0.33 0.29 0.25 0.21
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CASH BASIS PERFORMANCE (1)
Net income $ 33,121 $ 28,097 $ 15,120 $ 12,224 $ 10,445 28.8%
.............................................
Net income per common share - diluted 1.29 1.30 1.06 0.94 0.84 7.7
.............................................
Return on average tangible assets 1.13% 1.13% 0.86% 0.80% 0.81%
.............................................
Return on average tangible equity 12.81 12.52 16.02 13.74 13.81
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BALANCE SHEET DATA (YEAR END)
Total assets $ 3,561,888 $ 2,953,292 $ 2,302,169 $ 1,651,085 $ 1,461,094 23.9%
.............................................
Loans - net of unearned income 2,429,225 2,030,186 1,696,555 1,176,634 1,085,483 21.1
.............................................
Allowance for loan losses 23,832 20,266 17,369 12,039 8,987 31.2
.............................................
Nonperforming assets 10,904 5,321 3,767 5,880 4,882 17.4
.............................................
Total earning assets 3,128,706 2,572,714 2,058,251 1,464,907 1,287,875 23.8
.............................................
Deposits 2,514,994 2,334,183 1,878,627 1,349,942 1,134,192 19.9
.............................................
Long-term debt 218,154 63,081 39,119 26,442 26,347 184.9
.............................................
Shareholders' equity 409,817 361,987 215,213 112,855 102,315 36.0
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA (AVERAGES)
Total assets $ 3,082,224 $ 2,552,865 $ 1,805,019 $ 1,542,221 $ 1,300,639 23.5%
.............................................
Loans - net of unearned income 2,199,731 1,769,313 1,354,216 1,123,021 981,657 22.7
.............................................
Total earning assets 2,693,873 2,293,368 1,634,801 1,374,120 1,157,026 23.0
.............................................
Deposits 2,410,993 2,074,338 1,460,095 1,234,548 1,049,350 20.7
.............................................
Shareholders' equity 391,130 285,617 134,312 106,805 94,703 34.5
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FINANCIAL RATIOS
Net interest margin 4.56% 4.36% 4.47% 4.40% 4.55%
.............................................
Return on average assets 0.89 0.96 0.78 0.71 0.72
.............................................
Return on average equity 7.13 8.64 10.65 10.34 9.79
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ASSET QUALITY RATIOS
Nonperforming assets as a % of loans and
other real estate owned 0.46% 0.28% 0.26% 0.50% 0.51%
.............................................
Net charge-offs to average loans 0.44 0.66 0.81 0.79 0.51
.............................................
Allowance for loan losses times
nonperforming loans 2.82x 9.41x 7.10x 4.20x 3.79x
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OPERATIONS DATA
Branch offices 75 76 68 56 54
.............................................
Employees (full-time equivalent) 1,016 955 772 643 613
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(1) Excludes the amortization of intangibles from earnings and goodwill and
acquisition intangibles from assets and equity. Total assets and shareholders'
equity include the net unrealized securities gain. However, earning assets and
the financial ratios exclude this gain because it is not included in net income.
13
QUARTERLY
FINANCIAL
DATA
Carolina First Corporation and Subsidiaries
($ in thousands, except per share data)
Three Months Ended
- ----------------------------------------------------------------------------------
December 31, September 30, June 30, March 31,
- ----------------------------------------------------------------------------------
1999
FOR THE QUARTER
Interest income $ 60,982 $ 57,753 $ 56,142 $ 53,991
.........................
Interest expense 29,770 26,651 25,688 25,015
.........................
Net interest income 31,212 31,102 30,454 28,976
.........................
Provision for loan losses 4,094 3,986 3,559 4,207
.........................
Noninterest income 8,381 8,753 9,562 21,690
.........................
Noninterest expense 24,898 27,146 25,473 36,304
.........................
Income taxes 3,455 2,993 3,744 3,120
.........................
Net income 7,146 5,730 7,240 7,035
.........................
Shares outstanding:
Average - basic 25,566,304 25,519,678 25,285,903 24,623,715
.........................
Average - diluted 25,848,986 25,872,028 25,982,295 25,115,545
.........................
At quarter end 25,723,444 25,695,083 25,593,045 24,765,256
- ----------------------------------------------------------------------------------
PER COMMON SHARE
Net income - basic $ 0.28 $ 0.22 $ 0.29 $ 0.29
.........................
Net income - diluted 0.28 0.22 0.28 0.28
.........................
Cash dividend declared 0.10 0.09 0.09 0.09
.........................
Common stock price:
High 22.00 25.50 30.81 26.00
.........................
Low 14.88 19.38 21.44 20.25
.........................
Close 18.25 19.81 24.38 22.00
.........................
Volume traded 5,255,283 2,464,908 7,955,001 3,969,931
- ----------------------------------------------------------------------------------
1998
FOR THE QUARTER
Interest income $ 54,965 $ 49,598 $ 47,309 $ 45,188
.........................
Interest expense 26,772 24,434 23,588 23,111
.........................
Net interest income 28,193 25,164 23,721 22,077
.........................
Provision for loan losses 3,193 3,342 3,832 2,357
.........................
Noninterest income 7,197 6,656 5,561 4,975
.........................
Noninterest expense 21,335 18,226 15,690 16,727
.........................
Income taxes 4,016 3,831 3,601 2,949
.........................
Net income 6,846 6,421 6,159 5,019
.........................
Shares outstanding:
Average - basic 24,683,695 20,816,324 20,441,711 19,202,388
.........................
Average - diluted 25,152,752 21,232,259 20,896,305 19,606,295
.........................
At quarter end 24,785,621 24,508,829 20,901,633 20,469,014
- ----------------------------------------------------------------------------------
PER COMMON SHARE
Net income - basic $ 0.28 $ 0.31 $ 0.30 $ 0.26
.........................
Net income - diluted 0.27 0.30 0.29 0.26
.........................
Cash dividend declared 0.09 0.08 0.08 0.08
.........................
Common stock price:
High 26.25 27.13 30.63 26.00
.........................
Low 16.81 19.88 25.00 19.88
.........................
Close 25.31 22.13 25.38 25.38
.........................
Volume traded 3,656,410 4,612,822 4,598,827 4,333,100
.........................
14
1999
FINANCIAL
REVIEW
The following review is a summary of the Management's Discussion and Analysis of
Financial Condition and Results of Operations from the Annual Report to the
Securities and Exchange Commission on Form 10-K for the year ended December 31,
1999 ("Form 10-K") for Carolina First Corporation (the "Company"). This review
provides a perspective for evaluating 1999. The reader is advised to consult the
Form 10-K for the full text. This review contains forward-looking statements
that are provided to assist in the understanding of anticipated future financial
performance. For a discussion of certain factors that may cause such
forward-looking statements to differ materially from the Company's actual
results, see the Company's Form 10-K.
MERGERS
At December 31, 1999, Carolina First Bank was the largest independent financial
institution in South Carolina. During 1999, the Company expanded into Florida
where banking relationships were in a state of flux due to bank mergers. This
expansion included two acquisitions in Florida. The table below summarizes
acquisitions completed by the Company during the last two years.
On January 10, 2000, the Company signed a definitive agreement to merge with
Anchor Financial Corporation ("Anchor Financial"), a $1.2 billion institution
headquartered in Myrtle Beach, South Carolina. The transaction was valued at
approximately $300 million, as of the announcement date, and provides that
Anchor Financial shareholders will receive 2.1750 shares of the Company's common
stock for each Anchor Financial share. This transaction is subject to regulatory
approvals and the shareholder approval of both companies.
ACQUISITION ACTIVITY
Total Assets Shares Method of Intangible
Date Acquired Issued Accounting Recorded
- ------------------------------------------------------------------------------------------------------------------------------------
COMPLETED ACQUISITIONS
Citrus Bank 7/99 $ 285 million 3,086,478 Pooling-of-interests n/a
Orlando, Florida
Citizens First National Bank 4/99 59 million 505,851 Pooling-of-interests n/a
Crescent City, Florida
Colonial Bank of South Carolina, Inc. 10/98 61 million 651,455 Purchase $ 10.4 million
Camden, South Carolina
Poinsett Financial Corporation 9/98 89 million 753,530 Purchase 11.7 million
Travelers Rest, South Carolina
First National Bank of Pickens County 9/98 121 million 2,817,350 Purchase 45.4 million
Easley, South Carolina
Resource Processing Group, Inc. 6/98 15 million 398,610 Purchase 3.4 million
Columbia, South Carolina
2000 PENDING ACQUISITION
- ------------------------------------------------------------------------------------------------------------------------------------
Anchor Financial Corporation Expected 2nd $ 1.2 billion Approximately Pooling-of-interests n/a
Myrtle Beach, South Carolina Qtr 2000 17.6 million
15
EQUITY INVESTMENTS
As of December 31,1999
If Publicly Traded,
Primary Ownership Pre-Tax
Business % Market Value
- ------------------------------------------------------------------------------------------------------------------
PUBLICLY TRADED COMPANIES
o Net.B@nk, Inc. (NTBK) Internet banking 8% or 2.415 $ 45 million
million shares
o Affinity Technology Group, Inc. Automated lending 18% or 6 2 million
(AFFI) technologies million shares
o 14 Community banks in the Southeast Community banking Less than 5% 9 million
PRIVATE COMPANIES
- ------------------------------------------------------------------------------------------------------------------
o ITS, Inc. Electronic document 49%
management
o MarkNet, Inc. Internet service 20%
provider
o Syneractive, LLC Internet development 45%
EQUITY INVESTMENTS
The Company has equity investments in companies that have a bank-related
technology or service the Company or its subsidiaries can use. As of December
31, 1999, these investments included two publicly traded companies and three
private companies. In addition, the Company has invested in 14 community banks
located in the Southeast to develop correspondent banking relationships and to
promote community banking.
EARNINGS REVIEW
Net income in 1999 increased to $27.2 million from $24.4 million in 1998. On a
diluted per share basis, earnings for 1999 totaled $1.06, compared with $1.13 in
1998. In 1999, net income increased 11% while the average number of shares
outstanding increased 18% over the same time period resulting in a decline in
earnings per diluted share compared to net income. The increase in the number of
shares outstanding resulted principally from the completion of three bank
mergers in the fall of 1998, which were accounted for under the purchase method
of accounting. By December 31, 1999, the Company had approximately $3.6 billion
in assets, $2.4 billion in loans, $2.5 billion in deposits and $409.8 million in
shareholders' equity. By December 31, 1999, the Company's ratio of nonperforming
assets to loans and other real estate owned was 0.46%.
16
During 1999, the Company engaged in a number of actions that produced unusual
gains or charges to strengthen the Company strategically and enhance its
competitive position. Unusual gains or charges, which are nonrecurring,
associated with these actions are summarized below:
o During the first quarter of 1999, the Company realized a $15.5 million pre-tax
gain related to selling and transferring shares of Net.B@nk, Inc. stock and
the disposition of a bank technology investment. The gain from the sale of
Net.B@nk, Inc. stock was largely offset by an $11.9 million charitable
contribution made to fund the Carolina First Foundation. The Net.B@nk, Inc.
gain also funded the capital contribution to form Carolina First Guaranty
Reinsurance, Ltd., a company engaged in the reinsurance of credit insurance to
customers of the Company's banking subsidiaries.
o On April 30, 1999, the Company sold its consumer credit card receivables
totaling approximately $112 million to First USA Bank. The sale resulted in a
pre-tax gain of approximately $3.3 million and a reduction in the allowance
for loan losses of approximately $3.0 million. The credit cards sold included
approximately $58 million owned by the Company's off-balance-sheet credit card
trust. In connection with the sale, the Company's credit card trust was
terminated effective May 17, 1999.
o In connection with mergers completed in 1999 and 1998, the Company incurred
pre-tax merger-related costs of approximately $5.5 million.
o During the last half of 1999, Carolina First Bank completed the sale of four
rural branch offices located in South Carolina. In connection with the sale of
these branches, the Company recorded a gain of approximately $2.5 million,
sold loans of approximately $13.1 million and transferred deposits of
approximately $54.4 million.
Tax equivalent net interest income increased $22.9 million, or 23%, to $122.9
million in 1999 from $100.0 million in 1998. As shown in the table below, the
increase resulted principally from a higher level of average earning assets and
a higher net interest margin.
Noninterest income increased $24.0 million to $48.4 million in 1999 from $24.4
million in 1998. Noninterest income in 1999 included several nonrecurring items,
which are shown on a pre-tax
SUMMARY OF NET INTEREST INCOME
($ in millions)
Three - Year
Compound
1999 1998 1997 Growth Rate
- ---------------------------------------------------------------------------------------------------------------
Net interest income - tax equivalent basis $ 122.9 $ 100.0 $ 73.0 26.7%
Average earning assets 2,693.9 2,293.4 1,634.8 25.2
Net interest margin 4.56% 4.36% 4.47%
- ---------------------------------------------------------------------------------------------------------------
17
basis: a $15.5 million gain on disposition of equity investments (primarily
attributable to the sale of Net.B@nk, Inc. stock), a $3.3 million gain on sale
of credit cards, a $2.5 million gain on disposition of assets/liabilities
(primarily associated with the sale of branches, buildings and disposition of
equipment) and a $399,000 gain on sale of securities. Noninterest income,
excluding the nonrecurring items listed above, was $26.7 million in 1999, a $2.9
million increase over 1998 excluding securities transactions.
Service charges on deposit accounts, the largest contributor to noninterest
income, rose 22% to $11.5 million in 1999 from $9.4 million in 1998. Mortgage
banking income in 1999 decreased to $3.7 million, compared with $4.8 million in
1998. The decrease in 1999 resulted from lower gains on the sale of loans,
primarily due to a lower volume of sales. By December 31, 1999, CF Mortgage was
servicing or subservicing 24,201 loans having an aggregate principal balance of
approximately $2.1 billion. Fees for investment services in 1999 of $2.0 million
were 25% above the $1.6 million earned in 1998. The increase resulted from an
increase in the fees collected by Carolina First Securities, Inc., a full
service brokerage subsidiary of Carolina First Bank. The remaining increase was
primarily attributable to the establishment of a bank-owned life insurance
program, higher debit card income, lease fee income and merchant processing
fees.
Noninterest expenses increased to $113.8 million in 1999 from $72.0 million in
1998. Noninterest expenses in 1999 included several nonrecurring items, which
are shown on a pre-tax basis: an $11.9 million charitable contribution in the
form of Net.B@nk, Inc. common stock made to the Carolina First Foundation and
$5.5 million for merger-related costs. Noninterest expenses, excluding the items
listed above, totaled $96.4 million in 1999, $24.4 million higher than 1998.
Salaries and wages and employee benefits increased $7.9 million to $43.6 million
in 1999 compared with $35.7 million in 1998. The staffing cost increases were
primarily due to the costs of expanding in existing and new markets (including
the 1998 mergers), operational support to promote growth and additional
management and technical expertise. Occupancy, furniture and equipment expenses
increased $4.2 million to $15.9 million in 1999 from $11.7 million in 1998. This
increase resulted principally from costs associated with the branches acquired
through acquisitions in 1998, costs associated with developing a common computer
platform and the operating costs associated with additional ATMs. Amortization
of intangibles increased to $6.7 million in 1999 from $4.5 million in 1998. The
increase was due to the acquisitions completed in 1998. The remaining increase
was primarily attributable to the overhead and operating expenses associated
with higher lending and deposit activities. The largest items of other
noninterest expense were telephone, professional fees, other outside service
fees, advertising, printing, stationery, and supplies.
18
YEAR END LOANS
($ in millions)
[BAR GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
95 96 97 98 99
$1,085 $1,177 $1,697 $2,030 $2,429
5-Year Compound Growth Rate 21.1%
BALANCE SHEET REVIEW
Loans are the largest category of earning assets and produce the highest yields.
The Company's loan portfolio consists principally of commercial mortgage loans,
commercial loans, consumer loans and one-to-four family residential mortgage
loans. The Company's loans increased $399.0 million, or 20%, to approximately
$2.4 billion at December 31, 1999 from $2.0 billion at December 31, 1998. The
allowance for loan losses totaled $23.8 million, or 1.00% of loans held for
investment net of unearned income at December 31, 1999, compared with $20.3
million, or 1.06% at December 31, 1998.
By December 31, 1999, securities totaled $701.6 million, up $240.8 million from
the $460.8 million invested at the end of 1998. A significant portion of the
increase in investment securities in 1999 was attributable to the match funding
in December 1999 of approximately $200 million in mortgage-backed securities
with approximately $200 million in Federal Home Loan Bank borrowings. In
addition, effective July 31, 1999, the Company began recording its investment in
Net.B@nk, Inc. at market value, which was approximately $45 million as of
December 31, 1999.
The Company's primary source of funds for loans and investments is its deposits,
which are gathered through the banking subsidiaries' branch network. Deposits
grew 8% to $2.5 billion at December 31, 1999 from $2.3 billion at December 31,
1998. The lower deposit growth rate reflects the Company's focus on reducing the
cost of deposits. During 1999, deposit pricing was very competitive, a pricing
environment which the Company expects to continue.
Total shareholders' equity amounted to $409.8 million, or 11.51% of total
assets, at December 31, 1999, compared with $362.0 million, or 12.26% of total
assets, at December 31, 1998. Book value per share at December 31, 1999 and 1998
was $15.93 and $14.60, respectively. Tangible book value per share at December
31, 1999 and 1998 was $11.52 and $9.34, respectively.
1999 LOAN COMPOSITON*
[PIE CHART WITH THE FOLLOWING PLOT POINTS APPEARS HERE]
Construction and Commercial
Real Estate 45%
Commercial 17%
Leases 1%
Consumer 13%
Mortgages 24%
*Excludes loans held for sale
19
The Company and its subsidiary banks continue to maintain higher capital ratios
than required under regulatory guidelines and exceeded the well-capitalized
requirements at December 31, 1999.
In January and February 2000, the Company adopted a share repurchase program to
better manage its capital position. The Board of Directors authorized the
repurchase of up to 1 million shares of the Company's common stock. The Company
intends to reissue the repurchased shares in connection with its proposed merger
with Anchor Financial.
ASSET QUALITY
Nonperforming assets as a percentage of loans and foreclosed property totaled
0.46% and 0.28% as of December 31, 1999 and 1998, respectively. Nonperforming
assets increased to $10.9 million as of December 31, 1999 from $5.3 million at
December 31, 1998 primarily due to the transfer of a $4.0 million loan to
nonaccrual status during the third quarter. This loan is a 3.2% participation in
a shared national credit. It is not delinquent and, in management's judgment,
repayment in full is possible. However, recent developments justify this change
in status, and reserves sufficient to absorb potential loss have been allocated
to the loan.
As demonstrated by the following analytical measures of asset quality,
management believes the Company has effectively managed its credit risk. Net
loan charge-offs, including credit card receivables, totaled $9.7 million and
$11.6 million in 1999 and 1998, respectively, or 0.44% and 0.66%, respectively,
as an annualized percentage of average loans.
ALLOWANCE FOR LOAN LOSSES
VS. NONPERFORMING LOANS
($ in millions)
[COMPARISON BAR GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
95 96 97 98 99
Allowance for loan losses $ 9.0 $12.0 $17.4 $20.3 $23.8
Nonperforming loans $ 2.4 $ 2.9 $ 2.4 $ 2.2 $ 8.5
NET CHARGE-OFFS
AS A % OF AVERAGE LOANS
[BAR GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
95 96 97 98 99
$0.51% $0.79% $0.81% $0.66% $0.44%
20
CONDENSED CONSOLIDATED
BALANCE SHEETS
Carolina First Corporation and Subsidiaries
($ in thousands, except per share data)
December 31,
-------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 102,986 $ 116,239
....................................................
Interest-bearing bank balances 28,820 54,988
....................................................
Federal funds sold and resale agreements 925 28,041
....................................................
Securities
Trading 4,668 3,543
....................................................
Available for sale 633,108 405,137
....................................................
Held for investment (market value $63,320 in 1999 and $52,940 in 1998) 63,795 52,077
- ---------------------------------------------------------------------------------------------------
Total securities 701,571 460,757
- ---------------------------------------------------------------------------------------------------
Loans
Loans held for sale 45,316 112,918
....................................................
Loans held for investment 2,389,436 1,925,332
....................................................
Less unearned income 5,527 8,064
....................................................
Less allowance for loan losses 23,832 20,266
- ---------------------------------------------------------------------------------------------------
Net loans 2,405,393 2,009,920
- ---------------------------------------------------------------------------------------------------
Premises and equipment, net 57,751 54,630
....................................................
Accrued interest receivable 21,651 19,787
....................................................
Intangible assets 113,431 130,415
....................................................
Other assets 129,360 78,515
- ---------------------------------------------------------------------------------------------------
$3,561,888 $2,953,292
===================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing $ 331,865 $ 332,531
....................................................
Interest-bearing 2,183,129 2,001,652
- ---------------------------------------------------------------------------------------------------
Total deposits 2,514,994 2,334,183
....................................................
Federal funds purchased and repurchase agreements 137,618 154,065
....................................................
Other short-term borrowings 236,307 1,758
....................................................
Long-term debt 218,154 63,081
....................................................
Accrued interest payable 18,307 16,530
....................................................
Other liabilities 26,691 21,688
- ---------------------------------------------------------------------------------------------------
Total liabilities 3,152,071 2,591,305
- ---------------------------------------------------------------------------------------------------
Shareholders' Equity
Preferred stock-no par value; authorized 10,000,000 shares;
issued and outstanding none -- --
....................................................
Common stock-par value $1 per share; authorized 100,000,000
shares; issued and outstanding 25,723,444 shares in 1999
and 24,785,621 shares in 1998 25,723 24,786
....................................................
Surplus 308,765 301,215
....................................................
Retained earnings 58,625 38,113
....................................................
Guarantee of employee stock ownership plan debt
and nonvested restricted stock (3,532) (2,963)
....................................................
Accumulated other comprehensive income, net of tax 20,236 836
- ---------------------------------------------------------------------------------------------------
Total shareholders' equity 409,817 361,987
- ---------------------------------------------------------------------------------------------------
$ 3,561,888 $ 2,953,292
===================================================================================================
21
CONDENSED CONSOLIDATED
STATEMENTS
OF INCOME
Carolina First Corporation and Subsidiaries
($ in thousands, except per share data)
Years Ended December 31,
-------------------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $ 199,679 $ 166,182 $ 127,528
.....................................................
Interest and dividends on securities
Taxable 23,213 21,826 13,182
.....................................................
Exempt from Federal income taxes 2,185 1,662 1,446
- ---------------------------------------------------------------------------------------------------
Total interest and dividends on securities 25,398 23,488 14,628
.....................................................
Interest on short-term investments 3,791 7,390 2,081
- ---------------------------------------------------------------------------------------------------
Total interest income 228,868 197,060 144,237
- ---------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 92,849 87,599 59,926
.....................................................
Interest on short-term borrowings 9,049 6,488 9,488
.....................................................
Interest on long-term debt 5,226 3,818 2,592
- ---------------------------------------------------------------------------------------------------
Total interest expense 107,124 97,905 72,006
- ---------------------------------------------------------------------------------------------------
NET INTEREST INCOME 121,744 99,155 72,231
.....................................................
PROVISION FOR LOAN LOSSES 15,846 12,724 12,108
- ---------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 105,898 86,431 60,123
- ---------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges on deposit accounts 11,519 9,385 7,502
.....................................................
Mortgage banking income 3,688 4,808 3,656
.....................................................
Fees for investment services 1,984 1,570 1,407
.....................................................
Loan securitization income 1,646 1,635 (545)
.....................................................
Gain on sale of securities 399 580 3,011
.....................................................
Gain on disposition of equity investments 15,471 -- --
.....................................................
Gain on sale of credit cards 3,252 -- --
.....................................................
Gain on disposition of assets and liabilities 2,523 -- 2,250
.....................................................
Other 7,904 6,411 3,119
- ---------------------------------------------------------------------------------------------------
Total noninterest income 48,386 24,389 20,400
- ---------------------------------------------------------------------------------------------------
NONINTEREST EXPENSES
Salaries and wages 34,815 29,227 23,187
.....................................................
Employee benefits 8,818 6,434 5,259
.....................................................
Occupancy 8,347 6,613 5,560
.....................................................
Furniture and equipment 7,580 5,124 4,137
.....................................................
Amortization of intangibles 6,749 4,468 1,541
.....................................................
Charitable contribution to foundation 11,890 -- --
.....................................................
Merger-related costs 5,504 -- --
.....................................................
Other 30,118 20,112 18,903
- ---------------------------------------------------------------------------------------------------
Total noninterest expenses 113,821 71,978 58,587
- ---------------------------------------------------------------------------------------------------
Income before income taxes 40,463 38,842 21,936
.....................................................
Income taxes 13,312 14,397 7,896
- ---------------------------------------------------------------------------------------------------
NET INCOME $ 27,151 $ 24,445 $ 14,040
===================================================================================================
NET INCOME PER COMMON SHARE
Basic $ 1.08 $ 1.15 $ 1.00
.....................................................
Diluted 1.06 1.13 0.99
.....................................................
AVERAGE COMMON SHARES OUTSTANDING
Basic 25,248,900 21,284,266 14,046,599
.....................................................
Diluted 25,597,573 21,684,732 14,232,643
.....................................................
22
INDEPENDENT
AUDITORS'
REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheets of Carolina First Corporation and Subsidiaries as of
December 31, 1999 and 1998, and related consolidated statements of income,
changes in shareholders' equity and comprehensive income and cash flows for each
of the years in the three-year period ended December 31, 1999 (not presented
herein); and in our report dated January 25, 2000, we expressed an unqualified
opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheets and statements of income is fairly stated, in all
material respects, in relation to the consolidated financial statements from
which it has been derived.
/S/KPMG LLP
- -----------
KPMG LLP
Greenville, South Carolina
January 25, 2000
STATEMENT OF
FINANCIAL
RESPONSIBILITY
Management of Carolina First Corporation (the "Company") is committed to quality
customer service, enhanced shareholder value, financial stability and integrity
in all dealings. Management has prepared the accompanying consolidated financial
statements in conformity with generally accepted accounting principles. The
statements include amounts that are based on management's best estimates and
judgements. Other financial information contained in this report is presented on
a basis consistent with financial statements.
To ensure the integrity, objectivity and fairness of data in these statements,
management of the Company has established and maintains an internal control
structure that is supplemented by a program of internal audits. The internal
control structure is designed to provide reasonable assurance that assets are
safeguarded and transactions are executed, recorded and reported in accordance
with management intentions and authorizations. The financial statements have
been audited by KPMG LLP, independent auditors, in accordance with generally
accepted auditing standards. KPMG LLP reviews the results of its audit with both
management and the Audit Committee of the Board of Directors of the Company. The
Audit Committee, composed entirely of outside directors, meets periodically with
management, internal auditors and KPMG LLP (separately and jointly) to determine
that each is fulfilling its responsibilities and to consider recommendations for
enhancing internal controls. The financial statements have not been reviewed, or
confirmed for accuracy or relevance, by the Federal Deposit Insurance
Corporation.
/s/Mack I. Whittle, Jr.
- -----------------------
Mack I. Whittle, Jr.
President and
Chief Executive Officer
/s/William S. Hummers III
- -------------------------
William S. Hummers III
Executive Vice President
/s/Edward R. Matthews
- ---------------------
Edward R. Matthews
Chief Financial Officer
23
BOARDS OF DIRECTORS
R. Cobb Bell
Certified Public Accountant
Mary Rainey Belser
Community Volunteer
William P. Brant
Brant, Moore, MacDonald
& Wells, P.A.
Attorney
Paul D. Causey
President
Causey Fern Inc.
U.S. Exports Inc.
William F. Crider
Retired
Thomas B. Drage, Jr.
Attorney
Claude M. Epps, Jr.
Attorney
Bellamy, Rutenberg, Copeland,
Epps, Gravely & Bowers, P.A.
Judd B. Farr +
President
Greenco Beverage Co., Inc.
Richard J. Ferdon, Jr.
Commercial Real Estate
Edward J. Gerrits II
Executive Vice President
Citrus Bank
James H. Grantham
Business Development
Carolina First Bank
C. Claymon Grimes, Jr. +
Attorney
M. Dexter Hagy +
Principal, Vaxa Capital
Management, LLC
Keith C. Hinson
President
Waccamaw Land and Timber
Michael R. Hogan
Puckett, Scheetz & Hogan
Insurance
Douglas P. Hooker
President
Regional Development Group, Inc.
William S. Hummers III +
Executive Vice President
Carolina First Corporation
James J. Johnson
President and Treasurer
Dargan Construction Company, Inc.
Vernon E. Merchant, Jr., M.D. +
Surgeon
M. Rodney Metz
Retired
Cecil D. Moore
Moore Foundry & Machine
Real Estate Investments
William R. Phillips
Retired Investment Advisor
Joe H. Pickens
Attorney
Holmes & Pickens, P.A.
Walter J. Roberts, Jr., M.D.
Internist
Medical Director SCMA-PCN
H. Earle Russell, Jr., M.D. +
Surgeon
Greenville Surgical Associates
Jasper Salmond
Senior Marketing Coordinator
Wilbur Smith Associates
Commissioner, Richland
One School Board
Charles B. Schooler, O.D. +
Optometrist
Elizabeth P. Stall +
Community Volunteer
Eugene E. Stone IV +
Chief Executive Officer
Stone Manufacturing Company
David H. Swinton, Ph.D.
President
Benedict College
William R. Timmons, Jr. +
Chairman
Carolina First Corporation
Chairman
Canal Insurance Company
William R. Timmons III
Secretary and Treasurer
Canal Insurance Company
Samuel H. Vickers +
Chairman and
Chief Executive Officer
Design Containers, Inc.
David C. Wakefield III +
President
Wakefield Enterprises, LLC
J. Mark Whitehead, Sr.
Senior Vice President
AON Construction Services Group
Mack I. Whittle, Jr. +
President and
Chief Executive Officer
Carolina First Corporation
Thomas C. "Nap" Vandiver
Chairman Emeritus
Carolina First Bank
+ Carolina First Corporation
EXECUTIVE MANAGEMENT
Andrew B. Cheney
President
Citrus Bank
John C. DuBose
Executive Vice President
William S. Hummers III
Executive Vice President
William J. Moore
Executive Vice President
Michael W. Sperry
Executive Vice President
James W. Terry, Jr.
President
Carolina First Bank
Mack I. Whittle, Jr.
President and Chief Executive Officer
24
ADVISORY
BOARD
MEMBERS
ANDERSON GEORGETOWN COUNTY HORRY COUNTY
James W. Braswell, Jr. Alan S. Altman W. Scott Brandon
A. Reese Fant James H. Call H. Eugene Butler III, D.M.D.
Daniel J. Fleming, M.D. John P. Grimes Donald M. Carriker
William W. Jones Douglas G. Mahon III Edward C. Cribb, Jr.
D. Gray Suggs Charles A. Moore William W. DesChamps
Robert B. Plowden, Jr. Roger E. Grigg
CHARLESTON COUNTY Julian A. Reynolds, Jr. Debbie Leonard
Sam Altman Wright S. Skinner III, M.D. Daniel W. R. Moore, Sr.
Martha Ballenger R. Frank Swinnie, Jr. Edward L. Proctor, Jr., M.D.
Henry Berlin Steve Taylor
John W. Kornahrens GREENVILLE
Gary Lamberson Glenn E. Batson LAKE CITY
Ernest Masters Alfred N. Bell, Jr. Marlene T. Askins
Gordon McCay Steve Brandt Joe F. Boswell
John W. Molony Nesbit Q. Cline, Sr. Matthew C. Brown
Dewey Nettles, Jr. R. Jack Dill, Sr. William C. Garner, Jr.
Michael Robinson Henry W. Holseberg Roger K. Kirby
Robert Webb R. Montague Laffitte, Jr., M.D. James C. Lynch, Sr.
A. Foster McKissick III E. Leroy Nettles, Jr.
COLUMBIA/MIDLANDS Mary Louise Mims William J. Sebnick
T. Moffatt Burriss E. Hays Reynolds III
John Ducate, Jr. Porter B. Rose SWANSEA
D. Christian Goodall Jimmie Tate Paul E. Argoe
S. Stanley Juk, Jr., M.D., FACC Morris E. Williams, M.D. J. E. Hendrix
Jerry Kline Roy Lucas
Robert C. Pulliam Lawrence Kit Spires
James T. Tharp
Grace G. Young
25
LOCATIONS
As of December 31, 1999. Carolina First Corporations served 51 communities
with 75 branch offices.
CAROLINA FIRST BANK
- --------------------------------------------------------------------------------
www.carolinafirst.com
Aiken (2) Irmo Piedmont (2)
Anderson (4) Isle of Palms Prosperity
Andrews Lake City Rock Hill
Bennettsville Lexington Summerville
Camden Liberty Surfside
Chapin Litchfield Swansea
Charleston (3) Lugoff Taylors
Columbia (7) Mauldin Travelers Rest
Easley (2) McColl West Columbia
Edgefield Moncks Corner
Garden City Mt. Pleasant
Georgetown (2) Myrtle Beach (2)
Greenville (6) Newberry
Greenwood North Myrtle Beach
Greer Pendleton
Hilton Head Pickens
CITRUS BANK
- --------------------------------------------------------------------------------
www.mycitrus.com
Crescent City Kissimmee (2)
Crystal River Longwood
East Palatka Orlando (3)
Interlachen Palatka
Jacksonville Winter Park
BANK CAROLINE
- --------------------------------------------------------------------------------
www.bankcaroline.com
26
SHAREHOLDER
INFORMATION
DIVIDEND INFORMATION
CALENDAR
Dividends, if approved by the Board of Directors, are customarily paid to
shareholders of record as follows: Record Dates: January 15, April 15, July 15,
and October 15 Payment Dates: February 1, May 1, August 1, and November 1
DIRECT DEPOSIT
The South Financial Group offers shareholders the convenience of automatic
deposit of dividends into personal bank accounts on the same day dividends are
paid. For more information, please contact the Transfer Agent by phone at (800)
368-5948 or by e-mail at invrelations@rtco.com.
DIVIDEND REINVESTMENT PLAN
Shareholders may purchase additional shares of common stock at a 5% discount by
reinvesting cash dividends. Participants in the Plan may also invest additional
cash, up to a maximum of $10,000 per month, for purchase of common stock at
market value. For more information, please contact Investor Relations by phone
at (800) 951-2699 ext. 54919 or by e-mail at mary.gentry@thesouthgroup.com.
DIVIDENDS PER SHARE
[BAR GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
95 96 97 98 99
$.21 $.25 $.29 $.33 $.37
(Adjusted for stock dividends/split)
Since the first cash dividend payment on February 1, 1995 Carolina First has
increased cash dividends annually.
STOCK LISTING
The Nasdaq Stock Market
Ticker Symbol:
CAFC (before April 19, 2000)
TSFG (after April 19, 2000)
STOCK INFORMATION
AT YEAR-END 1999 1998 % CHANGE
- --------------------------------------------------------------------
Closing stock price $ 18.25 $ 25.31 (27.9)%*
- --------------------------------------------------------------------
Book value per
common share 15.93 14.60 9.1
- --------------------------------------------------------------------
Shareholders
of record 5,417 5,163 4.9
- --------------------------------------------------------------------
Annual shares
traded (000's) 19,645 17,201 14.2
- --------------------------------------------------------------------
Shares outstanding
(000's) 25,723 24,786 3.8
- --------------------------------------------------------------------
Price/earnings
multiple 17.22 22.40
- --------------------------------------------------------------------
Price/book
multiple 1.15 1.73
- --------------------------------------------------------------------
* During the same period, the SNL Southeast Bank Index declined 21.3%.
ANNUAL MEETING
The Annual Meeting of Shareholders will be held at 10:30 a.m., April 19, 2000 at
the Gunter Theatre, Peace Center for the Performing Arts, Greenville, South
Carolina.
ABOUT THE ANNUAL REPORT
The 1999 Annual Report is presented using a summary format intended to provide
information in a concise, summarized manner. The audited financial statements
are contained in Carolina First Corporation's Annual Report on Form 10-K for the
year ended December 31, 1999.
FORM 10-K
A copy of Carolina First Corporation's Annual Report on Form 10-K as filed with
the Securities and Exchange Commission is available at no charge by contacting
Investor Relations at the address under contact information.
[GRAPHIC APPEARS ON PAGE]
CORPORATE
HEADQUARTERS
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Pending approval of shareholders at the April 2000 Annual Meeting, Carolina
First Corporation will change its corporate name to The South Financial Group.
104 South Main Street
Poinsett Plaza, 10th Floor
Greenville, South Carolina 29601
(864) 255-7900
www.thesouthgroup.com
CONTACT INFORMATION
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Customer Service
For customers requesting assistance regarding accounts, products or services,
please contact our Customer Assistance Center by phone at (800) 476-6400 or by
e-mail at customerassistance@carolinafirst.com
Investor Relations
For analysts, investors and others seeking financial information, please
contact:
Mary M. Gentry, Treasurer
The South Financial Group
P.O. Box 1029
Greenville, South Carolina 29602
(800) 951-2699 ext. 54919
E-mail: mary.gentry@thesouthgroup.com
Transfer Agent
Shareholders with questions regarding their accounts, change of address,
dividends, lost certificates and stock transfers should contact the Transfer
Agent:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016-3572
(800) 368-5948
E-mail: invrelations@rtco.com
www.rtco.com
AVAILABLE INFORMATION
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Information on financial results, products and services, as well as press
releases, can be accessed on the Internet at http://www.thesouthgroup.com. Faxed
copies of current press releases are available at no charge by calling (800)
758-5804, ext. 144553.
THE SOUTH / FINANCIAL GROUP
The South Financial Group
104 South Main Street
Poinsett Plaza
Greenville, SC 29601
www.thesouthgroup.com