SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO________

Commission file number 0-15083
-------

THE SOUTH FINANCIAL GROUP, INC.
-------------------------------
(Exact name of registrant as specified in its charter)

South Carolina 57-0824914
-------------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

102 South Main Street, Greenville, South Carolina 29601
- ------------------------------------------------- -----
(Address of principal executive offices) (ZIP Code)

Registrant's telephone number, including area code (864) 255-7900
--------------

Carolina First Corporation
- --------------------------
(Former name, former address and former fiscal year, if changed since last
report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ----

The number of outstanding shares of the issuer's $1.00 par value common stock as
of May 10, 2000 was 25,396,172.

CONSOLIDATED BALANCE SHEETS
The South Financial Group and Subsidiaries
($ in thousands, except share data) (Unaudited)

March 31, December 31,
------------------------ -----------
ASSETS 2000 1999 1999
- ------ ---------- ---------- -----------

Cash and due from banks.................................. $ 107,118 $ 141,848 $ 102,986
Interest-bearing bank balances........................... 15,637 28,558 28,820
Federal funds sold and resale agreements................. 547 54,674 925
Securities
Trading................................................ 3,097 2,134 4,668
Available for sale.................................... 608,458 328,003 633,108
Held for investment (market value $61,371, $50,980 and
$63,320, respectively)................................ 61,940 50,310 63,795
----------- ---------- -----------
Total securities.................................... 673,495 380,447 701,571
----------- ---------- -----------
Loans
Loans held for sale..................................... 38,727 84,820 45,316
Loans held for investment............................... 2,500,748 2,002,704 2,389,436
Less unearned income............................... (4,230) (8,005) (5,527)
Less allowance for loan losses..................... (25,616) (21,580) (23,832)
----------- ----------- -----------
Net loans........................................ 2,509,629 2,057,939 2,405,393
----------- ----------- -----------
Premises and equipment, net.............................. 67,773 54,613 57,751
Accrued interest receivable.............................. 23,505 18,683 21,651
Intangible ssets......................................... 111,869 128,773 113,431
Other assets............................................. 118,737 80,504 129,360
----------- ----------- -----------
$ 3,628,310 $ 2,946,039 $ 3,561,888
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest-bearing.................................... $ 340,894 $ 309,255$ 331,865
Interest-bearing....................................... 2,266,724 2,013,057 2,183,129
----------- ----------- -----------
Total deposits....................................... 2,607,618 2,322,312 2,514,994
Borrowed funds........................................... 555,022 194,310 566,332
Subordinated notes....................................... 25,779 25,650 25,747
Accrued interest payable................................. 20,551 14,594 18,307
Other liabilities........................................ 24,038 21,926 26,691
----------- ----------- -----------
Total liabilities.................................... 3,233,008 2,578,792 3,152,071
----------- ----------- -----------
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 25,344,581, 24,765,256
and 25,723,444 shares, respectively................... 25,345 24,765 25,723
Surplus................................................... 302,917 300,824 308,765
Retained earnings......................................... 62,653 43,164 58,625
Guarantee of employee stock ownership plan debt and
nonvested restricted stock............................ (4,173) (2,746) (3,532)
Accumulated other comprehensive income, net of tax........ 8,560 1,240 20,236
----------- ----------- -----------
Total shareholders' equity............................ 395,302 367,247 409,817
----------- ----------- -----------
$ 3,628,310 $ 2,946,039 $ 3,561,888
=========== =========== ===========

CONSOLIDATED STATEMENTS OF INCOME
The South Financial Group and Subsidiaries
($ in thousands, except share data) (Unaudited)

Three Months Ended
March 31,
------------------------
2000 1999
------------------------
INTEREST INCOME
Interest and fees on loans............... $ 55,941 $ 47,234
Interest and dividends on securities..... 10,468 5,815
Interest on short-term investments....... 352 942
----------- -----------
Total interest income.................. 66,761 53,991
----------- -----------

INTEREST EXPENSE
Interest on deposits...................... 26,464 22,248
Interest on borrowed funds................ 8,792 2,767
----------- -----------
Total interest expense.................. 35,256 25,015
----------- -----------
Net interest income..................... 31,505 28,976

PROVISION FOR LOAN LOSSES................... 3,395 4,207
----------- -----------
Net interest income after
provision for loan losses............. 28,110 24,769
----------- -----------
NONINTEREST INCOME
Service charges on deposit accounts....... 3,158 2,431
Mortgage banking income................... 1,112 914
Fees for investment services.............. 510 506
Loan securitization income................ -- 597
Gain on sale of securities................ 71 163
Gain on disposition of equity investments. 2,278 15,471
Other..................................... 2,614 1,608
----------- -----------
Total noninterest income................ 9,743 21,690
----------- -----------
NONINTEREST EXPENSES
Personel expense........................... 13,700 12,405
Occupancy.................................. 2,834 1,812
Furniture and equipment.................... 1,994 1,494
Amortization of intangibles................ 1,549 1,918
Charitable contribution to foundation...... -- 11,890
Other...................................... 8,117 6,785
----------- -----------
Total noninterest expenses............... 28,194 36,304
----------- -----------
Income before income taxes............... 9,659 10,155
Income taxes................................. 3,091 3,120
----------- -----------
Net income .............................. $ 6,568 $ 7,035
=========== ===========

NET INCOME PER COMMON SHARE:
Basic................................... $ 0.26 $ 0.29
Diluted................................. 0.26 0.28
AVERAGE COMMON SHARES OUTSTANDING:
Basic.................................... 25,412,082 24,623,715
Diluted.................................. 25,598,243 25,115,545

CASH DIVIDENDS DECLARED PER COMMON SHARE..... $ 0.10 $ 0.09

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY AND COMPREHENSIVE INCOME
The South Financial Group and Subsidiaries
($ in thousands, except share data) (Unaudited)

Retained
Shares of Earnings
Common Preferred Common and
Stock Stock Stock Surplus Other*
-------------------------------------------------------------------

Balance, December 31, 1998 ........................... 24,785,621 $ -- $ 24,785 $ 301,215 $ 35,150

Net income ......................................... -- -- -- -- 7,035

Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gains arising during
period, net of taxes of $379 ............... -- -- -- -- --
Less: reclassification adjustment for gains
included in net income, net of taxes of $153 -- -- -- -- --

Other comprehensive income ...................... -- -- -- -- --

Comprehensive income ............................... -- -- -- -- --

Cash dividends declared ($0 09 per common share) .. -- -- -- -- (1,982)
Common stock issued pursuant to:
Repurchase of stock .............................. (40,000) -- (40) (816) --
Dividend reinvestment plan ....................... 16,554 -- 17 335 --
Employee stock purchase plan ..................... 2,991 -- 3 60 --
Exercise of stock options and stock warrants ..... 90 -- -- 2 --
Miscellaneous ...................................... -- -- -- 28 215
-----------------------------------------------------------------
BALANCE, MARCH 31, 1999 .............................. 24,765,256 $ -- $ 24,765 $ 300,824 $ 40,418
=================================================================

BALANCE, DECEMBER 31, 1999 ........................... 25,723,444 $ -- $ 25,723 $ 308,765 $ 55,093

Net income ......................................... -- -- -- -- 6,568

Other comprehensive loss, net of tax:
Unrealized losses on securities:
Unrealized holding losses arising during
period, net of taxes of $5,320 ............. -- -- -- -- --
Less: reclassification adjustment for gains
included in net income, net of taxes of $731 -- -- -- -- --

Other comprehensive income loss .................. -- -- -- -- --

Comprehensive loss ................................. -- -- -- -- --

Cash dividends declared ($0 10 per common share) .. -- -- -- -- (2,540)
Common stock issued pursuant to:
Repurchase of stock .............................. (524,600) -- (524) (7,784) --
Dividend reinvestment plan ....................... 28,816 -- 29 422 --
Employee stock purchase plan ..................... 4,238 -- 4 61 --
Restricted stock plan ............................ 89,792 -- 90 1,269 (726)
Exercise of stock options and stock warrants ..... 22,891 -- 23 184 --
Miscellaneous ...................................... -- -- -- -- 85
-----------------------------------------------------------------
BALANCE, MARCH 31, 2000 .............................. 25,344,581 $ -- $ 25,345 $ 302,917 $ 58,480
=================================================================

Accumulated
Other
Comprehensive
Income Total
------------------------

Balance, December 31, 1998 ........................... $ 836 $ 361,986

Net income ......................................... -- 7,035

Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gains arising during
period, net of taxes of $379 ............... 716 --
Less: reclassification adjustment for gains
included in net income, net of taxes of $153 (312) --
--------
Other comprehensive income ...................... 404 404
-------- ---------
Comprehensive income ............................... 7,439
---------
Cash dividends declared ($0 09 per common share) .. -- (1,982)
Common stock issued pursuant to:
Repurchase of stock .............................. -- (856)
Dividend reinvestment plan ....................... -- 352
Employee stock purchase plan ..................... -- 63
Exercise of stock options and stock warrants ..... -- 2
Miscellaneous ...................................... -- 243
-----------------------
BALANCE, MARCH 31, 1999 .............................. $ 1,240 $ 367,247
=======================

BALANCE, DECEMBER 31, 1999 ........................... $ 20,236 $ 409,817

Net income ......................................... -- 6,568

Other comprehensive loss, net of tax:
Unrealized losses on securities:
Unrealized holding losses arising during
period, net of taxes of $5,320 ............. (10,122) --
Less: reclassification adjustment for gains
included in net income, net of taxes of $731 (1,554) --
-------- ---------
Other comprehensive income loss .................. (11,676) (11,676)
-------- ---------
Comprehensive loss ................................. (5,108)
---------

Cash dividends declared ($0 10 per common share) .. -- (2,540)
Common stock issued pursuant to:
Repurchase of stock .............................. -- (8,308)
Dividend reinvestment plan ....................... -- 451
Employee stock purchase plan ..................... -- 65
Restricted stock plan ............................ -- 633
Exercise of stock options and stock warrants ..... -- 207
Miscellaneous ...................................... -- 85
-----------------------
BALANCE, MARCH 31, 2000 .............................. $ 8,560 $ 395,302
=======================

* Other includes guarantee of employee stock ownership plan debt and nonvested
restricted stock

CONSOLIDATED STATEMENTS OF CASH FLOWS
The South Financial Group and Subsidiaries
($ in thousands, except share data) (Unaudited)

Three Months Ended March 31,
----------------------------
2000 1999
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES

Net income ............................................. $ 6,568 $ 7,035
Adjustments to reconcile net income to net cash used for
operations
Depreciation ....................................... 1,454 1,124
Amortization of intangibles ........................ 1,549 1,918
Charitable contribution to foundation .............. -- 11,890
Provision for loan losses .......................... 3,395 4,207
Gain on sale of securities ......................... (71) (163)
Gain on disposition of equity investments .......... (2,278) (15,471)
Trading account assets, net ........................ 1,646 1,519
Originations of mortgage loans held for sale ....... (58,395) (119,222)
Sale of mortgage loans held for sale ............... 27,334 105,030
Other assets, net .................................. 5,246 (826)
Other liabilities, net ............................. 5,677 (2,098)
-----------------------
Net cash used for operating activities ................ (7,875) (5,057)
-----------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Increase (decrease) in cash realized from
Interest-bearing bank balances ..................... 13,183 26,430
Federal funds sold and resale agreements ........... 378 (26,633)
Sale of securities available for sale .............. 3,498 73,373
Maturity of securities available for sale .......... 6,945 109,761
Maturity of securities held for investment ......... 4,418 3,103
Purchase of securities available for sale .......... (3,274) (105,953)
Purchase of securities held for investment ......... (2,863) (1,336)
Origination of loans, net .......................... (76,877) (38,269)
Capital expenditures, net .......................... (6,968) (1,107)
Proceeds from disposition of equity investments .... 2,327 4,389
-----------------------
Net cash (used for) provided by investing activities ... (59,233) 43,758
-----------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in cash realized from
Change in deposits, net ............................ 92,624 (11,871)
Borrowed funds, net ................................ (11,310) 1,024
Cash dividends paid ................................ (2,573) (1,980)
Repurchase of common stock ......................... (8,308) --
Other common stock activity ........................ 807 (265)
-----------------------
Net cash (used for) provided by financing activities .... 71,240 (13,092)
-----------------------
Net change in cash and due from banks .................... 4,132 25,609
Cash and due from banks at beginning of period ........... 102,986 116,239
-----------------------
Cash and due from banks at end of period ................. $ 107,118 $ 141,848
=======================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of these policies is included in the 1999 Annual Report on
Form 10-K.

(2) STATEMENTS OF CASH FLOWS

Cash includes currency and coin, cash items in process of collection
and due from banks. Interest paid, net of interest capitalized,
amounted to approximately $33.0 million and $27.0 million for the three
months ended March 31, 2000 and 1999, respectively. Income tax payments
of $390,000 and $2.1 million were made for the three months ended March
31, 2000 and 1999, respectively.

(3) BUSINESS COMBINATIONS

In January 2000, the Company signed a definitive agreement to merge
with Anchor Financial Corporation ("Anchor Financial"), headquartered
in Myrtle Beach, South Carolina. At March 31, 2000, Anchor operated
through 33 locations in North Carolina and South Carolina and had total
assets of approximately $1.2 billion. The merger agreement provides
that Anchor Financial shareholders receive 2.175 shares of the
Company's common stock for each common stock share of Anchor Financial.
The Company expects to issue approximately 17.6 million shares in
connection with the merger. This transaction, which is subject to
regulatory approvals, will be accounted for using the
pooling-of-interest method of accounting and is expected to close in
the second quarter of 2000.

(4) SECURITIES

The net unrealized gain on securities available for sale, net of tax
decreased $11.7 million for the three months ended March 31, 2000. The
Company began recording its investment in Net.B@nk, Inc. at market
value effective July 31, 1999, or one year prior to the termination of
restrictions on the sale of these securities.

(5) COMMON STOCK

Basic earnings per share are computed by dividing net income applicable
to common shareholders by the weighted average number of common shares
outstanding.

Diluted earnings per share are computed by dividing net income by the
weighted average number of shares of common shares outstanding during
each period, plus the assumed exercise of dilutive stock options using
the treasury stock method.

(6) COMMITMENTS AND CONTINGENT LIABILITIES

The Company is subject to various legal proceedings and claims that
arise in the ordinary course of its business. In the opinion of
management based on consultation with legal counsel, any outcome of
such pending litigation would not materially affect the Company's
consolidated financial position or results of operations.

On May 6, 1999, plaintiff Kimberly C. McFall filed a gender
discrimination lawsuit against the Company in the United States
District court for the District of South Carolina. The plaintiff's
complaint sought actual and punitive damages in unspecified amounts.
The plaintiff was an employee of The Poinsett Bank, F.S.B., a
subsidiary of Poinsett Financial Corporation. Poinsett Financial
Corporation merged with the Company on September 30, 1998. Following
the merger, the plaintiff worked for Carolina First Bank until October
12, 1998. The plaintiff alleged she was on an equal organizational
level within The Poinsett Bank, F.S.B. as two males who received more
pay and benefits (including change of control benefits) than she
received. She further alleged that after she complained about the
discrimination, the Company refused to provide her with a job
commensurate with her credentials and experience following the merger.
The plaintiff claimed she was constructively discharged.

This lawsuit was vigorously contested. Mediation began in December 1999
and resulted in a settlement in April 2000. Since insurers contributed
to the settlement, the Company's contribution to the settlement fund is
expected to be less than $150,000.

(7) BUSINESS SEGMENTS

The Company has six wholly-owned operating subsidiaries which are
evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and assess performance. Three of these
subsidiaries qualify as separately reportable operating segments:
Carolina First Bank, Citrus Bank and Carolina First Mortgage Company
("CF Mortgage"). Carolina First Bank and CF Mortgage offer products and
services primarily to customers in South Carolina and the surrounding
areas, while Citrus Bank offers products and services primarily to
customers in northern and central Florida. Revenues for Carolina First
Bank and Citrus Bank are derived primarily from interest and fees on
loans, interest on investment securities and service charges on
deposits, while CF Mortgage's revenue is from mortgage banking income.

The following table summarizes certain financial information concerning
the Company's reportable operating segments at and for the three months
ended ($ in thousands):

CAROLINA FIRST CF CITRUS ELIMINATING
BANK MORTGAGE BANK OTHER ENTRIES (1) TOTAL
- -----------------------------------------------------------------------------------------------------------------------
MARCH 31, 2000
--------------

Income Statement Data
Total revenue $ 60,392 $ 1,653 $ 8,853 $ 15,613 $ (10,007) $ 76,504
Net interest income 25,405 -- 5,054 1,046 -- 31,505
Provision for loan losses 2,255 -- 530 610 -- 3,395
Noninterest income 5,293 1,653 500 11,430 (9,133) 9,743
Mortgage banking
income (loss) (564) 1,617 28 31 -- 1,112
Noninterest expenses 21,048 1,439 4,335 10,433 (9,061) 28,194
Amortization 1,322 -- -- 227 -- 1,549
Net income 4,476 140 446 1,578 (72) 6,568

Balance Sheet Data
Total assets $3,008,026 $ 4,426 $ 385,601 $ 685,857 $ (455,600) $ 3,628,310
Loans - net of
unearned income 2,095,189 -- 324,808 115,248 -- 2,535,245
Allowance for loan losses 19,954 -- 4,136 1,526 -- 25,616
Intangibles 95,848 -- -- 16,021 -- 111,869
Deposits 2,090,378 -- 347,828 175,948 (6,536) 2,607,618

MARCH 31, 1999

Income Statement Data
Total revenue $ 49,761 $ 2,274 $ 5,700 $ 19,941 $ (1,995) $ 75,681
Net interest income 24,630 -- 3,290 1,056 -- 28,976
Provision for loan losses 2,787 -- 796 624 -- 4,207
Noninterest income 3,262 2,274 571 17,096 (1,513) 21,690
Mortgage banking
income (loss) (1,360) 2,230 66 (22) -- 914
Noninterest expenses 19,347 1,371 1,934 15,165 (1,513) 36,304
Amortization 1,431 -- -- 487 -- 1,918
Net income 3,399 585 711 2,340 -- 7,035

Balance Sheet Data
Total assets $ 2,557,515 $ 7,424 $ 247,802 $ 524,838 $ (391,540) $ 2,946,039
Loans - net of unearned income 1,841,743 -- 177,745 60,031 -- 2,079,519
Allowance for loan losses 15,095 -- 3,478 3,007 -- 21,580
Intangibles 105,539 -- 13 23,221 -- 128,773
Deposits 2,033,347 -- 228,871 77,306 (17,212) 2,322,312

(1) The majority of the eliminating entries relate to intercompany accounts.

(8) MANAGEMENT'S OPINION

The financial statements in this report are unaudited. In the opinion of
management, all adjustments necessary to present a fair statement of the
results for the interim periods have been made. All such adjustments are
of a normal, recurring nature.

(9) SUBSEQUENT EVENTS

On April 7, 2000, the Company signed a definitive agreement to sell a
branch office located in Prosperity, South Carolina to Mid State Bank, a
subsidiary of Community Capital Corporation. The Prosperity branch office
has total deposits of approximately $10.0 million. The transaction is
expected to be completed during the second quarter of 2000, pending
regulatory approval and certain other conditions of closing.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES AND WITH THE
STATISTICAL INFORMATION AND FINANCIAL DATA APPEARING IN THIS REPORT AS WELL AS
THE ANNUAL REPORT OF THE SOUTH FINANCIAL GROUP, INC. (THE "COMPANY") ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1999. RESULTS OF OPERATIONS FOR THE THREE
MONTH PERIOD ENDED MARCH 31, 2000 ARE NOT NECESSARILY INDICATIVE OF RESULTS TO
BE ATTAINED FOR ANY OTHER PERIOD.

THE COMPANY, A SOUTH CAROLINA CORPORATION HEADQUARTERED IN GREENVILLE,
SOUTH CAROLINA, IS A FINANCIAL INSTITUTION HOLDING COMPANY, WHICH COMMENCED
BANKING OPERATIONS IN DECEMBER 1986, AND CURRENTLY CONDUCTS BUSINESS THROUGH 62
LOCATIONS IN SOUTH CAROLINA AND 13 LOCATIONS IN NORTHERN AND CENTRAL FLORIDA.
THE COMPANY OPERATES THROUGH THE FOLLOWING PRINCIPAL SUBSIDIARIES: CAROLINA
FIRST BANK, A SOUTH CAROLINA STATE-CHARTERED COMMERCIAL BANK; CITRUS BANK, A
FLORIDA STATE-CHARTERED COMMERCIAL BANK; CAROLINA FIRST MORTGAGE COMPANY ("CF
MORTGAGE"), A MORTGAGE BANKING COMPANY; AND CAROLINA FIRST BANK, F.S.B., A
FEDERAL SAVINGS BANK WHICH OPERATES BANK CAROLINE (AN INTERNET BANK). THROUGH
ITS SUBSIDIARIES, THE COMPANY PROVIDES A FULL RANGE OF BANKING SERVICES,
INCLUDING MORTGAGE, TRUST AND INVESTMENT SERVICES, DESIGNED TO MEET
SUBSTANTIALLY ALL OF THE FINANCIAL NEEDS OF ITS CUSTOMERS.

EFFECTIVE APRIL 24, 2000, FOLLOWING RECEIPT OF SHAREHOLDER APPROVAL,
THE COMPANY CHANGED ITS CORPORATE NAME TO THE SOUTH FINANCIAL GROUP, INC. AND
BEGAN TRADING UNDER A NEW NASDAQ MARKET SYMBOL, "TSFG."

FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements (as defined in
the Private Securities Litigation Reform Act of 1995) to assist in the
understanding of anticipated future operating and financial performance, growth
opportunities, growth rates, and other similar forecasts and statements of
expectations. These forward-looking statements reflect current views, but are
based on assumptions and are subject to risks, uncertainties and other factors,
which may cause actual results to differ materially from those in such
statements. Those factors include, but are not limited to, the following: risks
from changes in economic, monetary policy and industry conditions; changes in
interest rates and deposit rates; inflation; risks inherent in making loans
including repayment risks and value of collateral; loan growth; adequacy of the
allowance for loan losses and the assessment of problem loans; fluctuations in
consumer spending; the demand for the Company's products and services;
dependence on senior management; technological changes; ability to increase
market share; expense projections; system conversion costs; costs associated
with new buildings; acquisitions; risks, realization of costs savings, and total
financial performance associated with the Company's proposed acquisition of
Anchor Financial Corporation; changes in accounting policies and practices;
costs and effects of litigation; and recently-enacted or proposed legislation.

Such forward-looking statements speak only as of the date on which such
statements are made. The Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.
In addition, certain statements in future filings by the Company with the
Securities and Exchange Commission, in press releases and in oral and written
statements made by or with the approval of the Company which are not statements
of historical fact constitute forward-looking statements.

PENDING MERGER

On January 10, 2000, the Company signed a definitive agreement to merge
with Anchor Financial, a $1.2 billion institution headquartered in Myrtle Beach,
South Carolina. The resulting holding company will have approximately $4.9
billion in assets and 108 branch offices (pre-branch closings) in South
Carolina, Florida and North Carolina. The merger agreement provides that Anchor
Financial shareholders receive 2.1750 shares of the Company's common stock for
each share of Anchor Financial's common stock. The Company expects to issue
approximately 17.6 million shares in connection with this merger. This
transaction, which is subject to regulatory approval, will be accounted for
using the pooling-of-interests method and is expected to close in the second
quarter of 2000.

EQUITY INVESTMENTS

INVESTMENT IN NET.B@NK, INC.

At March 31, 2000, the Company owned 2,175,000 shares of Net.B@nk, Inc.
("Net.B@nk") common stock, or approximately 8.4% of the outstanding shares.
Under the terms of the Office of Thrift Supervision's regulatory ruling with
respect to Net.B@nk in 1997, certain affiliates of Net.B@nk, including the
Company, may not sell their shares in Net.B@nk until July 31, 2000. Effective
July 31, 1999, or one year prior to the termination of the restriction, the
Company began recording its investment in Net.B@nk at market value. As of March
31, 2000, the Company's investment in Net.B@nk, which is included in securities
available for sale, had a pre-tax market value of approximately $28.3 million.
Prior to July 31, 1999, these shares were recorded at the Company's book basis,
which was approximately $604,000 as of March 31, 2000. The Company's shares of
Net.B@nk common stock are "restricted" securities, as that term is defined in
federal securities laws.

INVESTMENT IN AFFINITY TECHNOLOGY GROUP, INC.

At March 31, 2000, the Company, through its subsidiary Blue Ridge
Finance Company, Inc. ("Blue Ridge"), owned 1,753,366 shares of common stock of
Affinity Technology Group, Inc. ("Affinity") and a warrant to purchase an
additional 3,471,340 shares for approximately $0.0001 per share ("Affinity
Warrant"). In March 2000, the Company sold 775,000 shares of Affinity common
stock for a pre-tax gain of approximately $2.3 million.

These Affinity shares and the shares represented by the Affinity
Warrant constitute approximately a 16% ownership in Affinity. As of March 31,
2000, the investment in Affinity's common stock, which is included in securities
available for sale and has a basis of approximately $111,000, was recorded at
its pre-tax market value of approximately $3.4 million. The Affinity Warrant was
not reported on the Company's balance sheet as of March 31, 2000.

The Company's shares in Affinity and the shares issuable upon the
exercise of the Affinity Warrant are "restricted" securities, as that term is
defined in federal securities laws.

INVESTMENTS IN COMMUNITY BANKS

As of March 31, 2000, the Company had equity investments in the
following community banks located in the Southeast: CNB Florida Bancshares,
Inc.; Capital Bank; Carolina Bank; Coastal Banking Company, Inc.; Community
Capital Corporation; First Reliance Bank; FirstSpartan Financial Corporation;
Florida Banks, Inc.; Greenville First Bancshares, Inc.; Heritage Bancorp, Inc.;
High Street Banking

Company; Marine Bancshares; People's Community Capital Corp.; and Trinity Bank.
In each case, the Company owns less than 5% of the community bank's outstanding
common stock. The Company has made these investments to develop correspondent
banking relationships and to promote community banking in the Southeast.

CF INVESTMENT COMPANY

In September 1997, the Company's subsidiary, CF Investment Company,
became licensed through the Small Business Administration to operate as a Small
Business Investment Company. CF Investment Company is a wholly-owned subsidiary
of Blue Ridge. CF Investment Company's principal focus is investing in companies
that have a bank-related technology or service the Company and its subsidiaries
can use. As of March 31, 2000, CF Investment Company had invested approximately
$3.4 million (principally in the form of loans) in companies specializing in
electronic document management and Internet-related services.

CF Investment Company's loans represent a higher credit risk to the
Company due to the start up nature of these companies. One of these equity
investments, in which the Company has invested approximately $1.7 million
primarily in the form of loans, has encountered severe cash flow difficulties,
and its future as a going concern became doubtful subsequent to March 31, 2000.

EARNINGS REVIEW

OVERVIEW

Net income for the first quarter of 2000 was $6.6 million compared with
$7.0 million for the first quarter of 1999. Earnings per diluted share for the
three months ended March 31, 2000 were $0.26 per diluted share compared with
$0.28 for the prior year period. First quarter 2000 earnings included a $2.3
million gain associated with the sale of 775,000 shares of Affinity Technology
Group, Inc. stock. In the first quarter of 1999, Carolina First recognized a
$15.5 million gain, largely offset by an $11.9 million charitable contribution
to form a foundation, related to the sale of Net.B@nk, Inc. common stock. At
March 31, 2000, the Company had approximately $3.6 billion in assets, $2.5
billion in loans, $2.6 billion in deposits and $395.3 million in shareholders'
equity. At March 31, 2000, the Company's ratio of nonperforming assets to loans
and other real estate owned was 0.62%.

NET INTEREST INCOME

Net interest income is the difference between the interest earned on
assets and the interest paid for the liabilities to support such assets as well
as such items as loan fees and dividend income. Net interest margin measures how
effectively a company manages the difference between the yield on earning assets
and the rate paid on funds to support those assets. Fully tax-equivalent net
interest income adjusts the yield for assets earning tax-exempt income to a
comparable yield on a taxable basis. Average earning assets and the net interest
margin exclude the net unrealized gain on securities available for sale because
this gain is not included in net income.

Fully tax-equivalent net interest income increased $2.5 million, or 9%,
to $31.7 million in the first three months of 2000 from $29.2 million in the
first three months of 1999. The increase resulted from a higher level of average
earning assets partially offset by a lower net interest margin. Average earning
assets increased $534.7 million, or 21%, to approximately $3.1 billion in the
first three months of 2000 from $2.6 billion in the first three months of 1999.
This increase resulted from internal loan growth and an increased level of
investment securities. Average loans, net of unearned income, were $2.5 billion
in the first three months of 2000 compared with $2.1 billion in the first three
months of 1999. Average investment securities were $630.8 million and $405.7
million in the first three months of 2000 and 1999, respectively. The majority
of the increase in average investment securities 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.

The net interest margin of 4.10% for the first quarter of 2000 was
lower than the margin of 4.60% for the first quarter of 1999 and 4.36% for the
fourth quarter of 1999. As interest rates rose during the second half of 1999
and the first quarter of 2000, increases in deposit costs, particularly
certificates of deposits, have outpaced increases in loan yields. In addition,
in September 1999, the Company introduced Bank CaroLine, an Internet bank
offered as a service of Carolina First Bank, F.S.B. Deposit rates for Bank
CaroLine are generally higher than those offered by the Company's other
subsidiary banks to reflect the lower cost structure associated with operating
on the Internet. Accordingly, as deposits build for Bank CaroLine, the Company
expects the cost of deposits on a consolidated basis to continue to increase. As
of March 31, 2000, total deposits for Bank CaroLine were approximately $100
million.

Increases in the prime interest rate, which increased 0.75% during the
second half of 1999 and 0.50% during the first quarter of 2000, had a positive
impact on the yield on earning assets. Variable rate loans, which include 53% of
the commercial loan portfolio, immediately repriced upward with the increases in
the prime interest rate. The overall yield on commercial loans (including both
fixed and variable rate loans) during the first quarter of 2000 was 9.00%
compared with 8.59% for the first quarter of 1999 and 8.78% for the fourth
quarter of 1999.

PROVISION FOR LOAN LOSSES

The provision for loan losses decreased to $3.4 million for the first
three months of 2000 compared with $4.2 million for the first three months of
1999. As a percentage of average loans, the net charge-off ratio was 0.26% for
the first three months of 2000 compared with 0.57% for the same period last
year. This decrease was a reflection of the fact that the Company no longer had
a material credit card portfolio after the sale of substantially all of its
credit card portfolio in April 1999.

Management currently anticipates significant loan growth will continue
in 2000. New market areas, particularly northern and central Florida, as well as
the expansion of the coastal market through the merger with Anchor Financial,
are expected to contribute to 2000 portfolio growth. Management intends to
closely monitor economic trends and the potential effect on the banking
subsidiaries' loan portfolios.

NONINTEREST INCOME

Noninterest income, including nonrecurring gains, decreased to $9.7
million in the first quarter of 2000 from $21.7 million in the first quarter of
1999. Noninterest income in the first quarter of 2000 included a nonrecurring
pre-tax gain of approximately $2.3 million related to the sale of 775,000 shares
of Affinity stock (see "EQUITY INVESTMENTS-Investment in Affinity Technology
Group, Inc."). During the first quarter of 1999, a nonrecurring pre-tax gain of
approximately $15.1 million (primarily offset by a contribution to the Carolina
First Foundation) was recorded which related to the sale of Net.B@nk stock (see
"EQUITY INVESTMENTS-Investment in Net.B@nk, Inc."). In addition, a pre-tax gain
of approximately $412,000 was recorded relating to the sale of Corporate
Solutions International stock (see "EQUITY INVESTMENTS-CF Investment Company").
Excluding these nonrecurring gains, noninterest income increased $1.3 million to
$7.5 million during the first quarter of 2000 from $6.2 million for the first
quarter of 1999. This increase was primarily attributable to higher service
charges on deposit accounts and the establishment of a bank-owned life insurance
program, partially offset by lower loan securitization income.

Service charges on deposit accounts, the largest contributor to
noninterest income, rose

30% to $3.2 million in the first three months of 2000 from $2.4 million for the
same time period in 1999. Average deposits for the same period increased 11%.
The increase in service charges was attributable to attracting new transaction
accounts and improved collection of fees. Effective July 1, 1999, certain
deposit service charges were increased to reflect competitive pricing.

Mortgage banking income includes origination fees, gains from the sale
of loans and servicing fees (which are net of the related amortization for the
mortgage servicing rights and subservicing payments). Mortgage banking income in
the first quarter of 2000 increased to $1.1 million compared with $914,000 in
the first quarter of 1999.

Income from originations and sales of mortgage loans, including sales
of loans originated by Carolina First Bank, totaled $817,000 in the first three
months of 2000 compared with $1.2 million in 1999. The decrease in 2000 resulted
primarily from lower levels of activity due to increases in mortgage loan rates.
Mortgage originations totaled $58 million and $119 million in the first three
months of 2000 and 1999, respectively. Similarly, fewer mortgage loans were sold
with sales of $27 million for the first quarter of 2000 and $105 million for the
first quarter of 1999.

CF Mortgage's mortgage servicing operations consist of servicing loans
that are owned by Carolina First Bank and subservicing loans, to which the
rights to service are owned by Carolina First Bank or other non-affiliated
financial institutions. At March 31, 2000, CF Mortgage was servicing or
subservicing 24,909 loans having an aggregate principal balance of approximately
$2.2 billion. In the first quarter of 1999, fees related to the servicing
portfolio from non-affiliated companies were offset by the related amortization
for the mortgage servicing rights and subservicing payments for a loss of
$256,000. In the first quarter of 2000, the increase in interest rates led to
lower amortization of mortgage servicing rights due to lower prepayment rates.
Fees related to the servicing portfolio, net of the related amortization and
subservicing payments, totaled $295,000 for the first quarter of 2000. Servicing
income does not include the benefit of interest-free escrow balances related to
mortgage loan servicing activities.

Fees for investment services in the first three months of 2000 and 1999
were $510,000 and $506,000, respectively. Fees collected by Carolina First
Securities, Inc. ("CF Securities"), a full service brokerage subsidiary,
increased to $217,000 for the first quarter of 2000, compared with $110,000 for
the first quarter of 1999. CF Securities offers a complete line of investment
products and services, including mutual funds, stocks, bonds and annuities. At
March 31, 2000 and 1999, the market value of assets administered by Carolina
First Bank's trust department totaled approximately $338.0 million and $346.8
million, respectively.

During the first quarter of 1999, the Company had income of $597,000
from its interests in the credit card and commercial real estate loan trusts.
With the sale of the Company's credit cards and the termination of the credit
card trust on May 17, 1999, loan securitization income related to credit cards
ceased during the second quarter of 1999. The commercial real estate loan trust
was terminated with the pay-off of the loans in the fourth quarter of 1999.
Accordingly, no loan securitization income was realized in the first quarter of
2000.

Other noninterest income totaled $2.6 million in the first quarter of
2000, compared with $1.6 million in the first quarter of 1999. Approximately
$804,000 of the increase was due to the establishment of a bank-owned life
insurance program initiated during the second quarter of 1999. Approximately
$339,000 of the increase was related to the sale of credit card receivables,
which had been previously charged off. Additional increases were attributable to
higher debit card income, merchant processing fees and insurance commissions.

NONINTEREST EXPENSES

Noninterest expenses, including nonrecurring items, decreased to $28.2
million in the first quarter of 2000 from $36.3 million in the first quarter of
1999. Noninterest expenses in the first quarter of 1999 included a nonrecurring
charitable contribution in the form of Net.B@nk common stock, valued at
approximately $11.9 million, which was made to the Carolina First Foundation.
Excluding this nonrecurring expense, noninterest expenses increased $3.8 million
from the first quarter of 1999 to the first quarter of 2000. The majority of the
increase related to increases in personnel, technology and space to support the
Company's current and future growth.

Salaries, wages and employee benefits increased to $13.7 million in the
first three months of 2000 from $12.4 million in the first three months of 1999.
Full-time equivalent employees increased to 1,035 at March 31, 2000 from 960 at
March 31, 1999. The staffing cost increases were primarily due to the costs of
expanding in existing and new markets, operational support to promote growth,
and additional management and technical expertise.

Occupancy and furniture and equipment expenses increased $1.5 million
to $4.8 million in the first three months of 2000 from $3.3 million in the first
three months of 1999. This increase resulted principally from lease payments
associated with two new buildings and the transition to a common computer
platform and new core operating system.

Amortization of intangibles decreased to $1.5 million in the first
quarter of 2000 from $1.9 million in the first quarter of 1999. The decrease was
due to the sale of four branches, previously acquired through mergers accounted
for as purchase transactions, in the last half of 1999. Upon completion of these
branch sales, the related intangible assets were written off resulting in lower
amortization of intangibles. This lower level of amortization is expected to
continue.

Other noninterest expenses increased $1.3 million to $8.1 million in
the first three months of 2000 from $6.8 million in the first three months of
1999. This increase included $380,000 related to the conversion to a new core
operating system and $220,000 for imaging system costs from imaging documents
including loan files. In addition, the overall increase in other noninterest
expenses was principally attributable to the overhead and operating expenses
associated with higher lending and deposit activities. The largest items of
other noninterest expense were telephone, advertising, professional fees,
stationery, supplies and printing.

BALANCE SHEET REVIEW

LOANS

Loans are the largest category of earning assets and produce the
highest yields. The Company's loan portfolio consists of commercial mortgage
loans, commercial loans, consumer loans and one-to-four family residential
mortgage loans. Substantially all of these borrowers are located in South
Carolina and Florida with concentrations in the Company's market areas. The
Company has no foreign loans or loans for highly leveraged transactions. The
loan portfolio does not contain any industry concentrations of credit risk
exceeding 10% of the portfolio. At March 31, 2000, the Company had total loans
outstanding of $2.5 billion that equaled approximately 97% of the Company's
total deposits and approximately 70% of the Company's total assets. Table 1
provides a summary of loans outstanding by category.

TABLE 1
LOAN PORTFOLIO COMPOSITION
(dollars in thousands)

- ---------------------------------------------------------------------------------------------------------------
March 31, December 31,
2000 1999 1999
- ---------------------------------------------------------------------------------------------------------------

Mortgage......................................................$ 606,892 $ 444,555 $ 569,031
Construction.................................................. 134,370 91,445 126,791
Commercial and industrial..................................... 391,253 359,400 407,228
Commercial and industrial secured by real estate.............. 999,508 817,542 950,369
Consumer...................................................... 343,075 201,001 312,274
Credit cards.................................................. 14,129 58,609 8,243
Lease financing receivables................................... 11,521 30,152 15,500
------ ------ ------
Loans held for investment..................................... 2,500,748 2,002,704 2,389,436
Loans held for sale........................................... 38,727 84,820 45,316
------ ------ ------
Gross loans................................................... 2,539,475 2,087,524 2,434,752
Less unearned income.......................................... 4,230 8,005 5,527
Less allowance for loan losses................................ 25,616 21,580 23,832
------ ------ ------
Net loans.....................................................$ 2,509,629 $ 2,057,939 $2,405,393
============ ========= ==========
- --------------------------------------------------------------------------------------------------------------

The Company's loans increased $455.7 million, or 22%, to approximately
$2.5 billion at March 31, 2000 from $2.1 billion at March 31, 1999 and increased
$106.0 million from approximately $2.4 billion at December 31, 1999.
Approximately $12 million of residential mortgage loans were sold in the first
three months of 2000 excluding loans originated by correspondents. Adjusting for
the 2000 loan sales, internal loan growth was approximately $118.0 million, or
an annualized rate of 19.4%, during the first quarter of 2000. Approximately $57
million of the first quarter's loan growth was attributable to the Citrus Bank
markets in Florida. In addition, the Company's consumer loans increased
significantly due primarily to the expansion of indirect lending to new markets
in South Carolina and Florida.

The Company had loans to 43 borrowers having principal amounts in
excess of $5 million, which loans accounted for $320.8 million, or 12.6%, of the
Company's loan portfolio at March 31, 2000. The Company had loans to 29
borrowers having principal amounts in excess of $5 million, which loans
accounted for $203.1 million, or 9.8%, of the Company's loan portfolio at March
31, 1999. Any material deterioration in the quality of any of these larger loans
could have a significant impact on the Company's earnings.

For the first quarter of 2000, the Company's loans averaged $2.5
billion with a yield of 9.10%, compared with $2.1 billion and a yield of 9.25%
for the same period in 1999. Selling the credit card portfolio in the second
quarter of 1999 lowered the average loan yield. This decrease was partially
offset by increases in variable rate loans related to prime interest rate
increases in the second half of 1999 and the first quarter of 2000. The interest
rates charged on loans vary with the degree of risk and the maturity and amount
of the loan. Competitive pressures, money market rates, availability of funds
and government regulations also influence interest rates.

ALLOWANCE FOR LOAN LOSSES

The adequacy of the allowance for loan and lease losses (the
"Allowance") is analyzed on a quarterly basis. For purposes of this analysis,
adequacy is defined as a level sufficient to absorb

probable losses in the portfolio. The methodology employed for this analysis is
as follows.

The portfolio is segregated into risk-similar segments for which
average annual historical loss ratios are calculated over time periods
corresponding to loans in each segment. Loss rates are calculated by product
type for consumer loans and by risk grade for commercial loans. Large problem
loans are individually assessed for loss potential. A range of probable loss
percentages is then derived for each segment based on the relative volatility of
its historical loss ratio. These percentages are applied to the dollar amount of
loans in each segment to arrive at a range of probable loss levels.

The location of the Allowance within this range is then assessed in
light of material changes that may render historical loss levels less predictive
of future results. This assessment addresses issues such as the pace of loan
growth, newly emerging portfolio concentrations, risk management system changes,
entry into new markets, new product offerings, off-balance sheet risk exposures,
loan portfolio quality trends, and uncertainty in economic and business
conditions. To the extent this analysis implies lower or higher risk than that
which shaped historical loss levels, the Allowance is positioned toward the
lower or higher end of the range.

This methodology, first adopted for the March 31, 2000 analysis,
develops a RANGE of probable loss levels rather than a single, best-guess
estimate. This analysis did not change management's conclusion as to the
adequacy of the Allowance.

Assessing the adequacy of the Allowance is a process that requires
considerable judgment. Management's judgments are based on numerous assumptions
about future events which it believes to be reasonable, but which may or may not
be valid. Thus there can be no assurance that loan losses in future periods will
not exceed the Allowance or that future increases in the Allowance will not be
required. No assurance can be given that management's ongoing evaluation of the
loan portfolio in light of changing economic conditions and other relevant
circumstances will not require significant future additions to the Allowance,
thus adversely affecting the operating results of the Company.

The Allowance is also subject to examination and adequacy testing by
regulatory agencies, which may consider such factors as the methodology used to
determine adequacy and the size of the Allowance relative to that of peer
institutions. In addition, such regulatory agencies could require the Company to
adjust its Allowance based on information available to them at the time of their
examination.

The Allowance totaled $25.6 million, or 1.03% of loans held for
investment net of unearned income at March 31, 2000, compared with $21.6
million, or 1.08%, at March 31, 1999. At December 31, 1999, the Allowance was
$23.8 million, or 1.00% of loans held for investment net of unearned income.
During the second quarter of 1999, the Allowance was reduced $3.0 million as a
consequence of the sale of the credit card portfolio. The increase to 1.03% of
loans at March 31, 2000 reflects management's assessment of the effect on
probable loss levels attributable to changes in the portfolio and greater
uncertainty in economic conditions.

Table 2 presents changes in the allowance for loan losses.

TABLE 2
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(dollars in thousands)

At and for
At and for the three months the year ended
ended March 31, December 31,
2000 1999 1999
- ----------------------------------------------------------------------------------------------------------------

Balance at beginning of period $ 23,832 $ 20,266 $ 20,266
Purchase accounting acquisitions -- -- 408
Allowance adjustment for credit card sale -- -- (2,977)
Provision for loan losses 3,395 4,207 15,846
Charge-offs:
Credit cards -- (1,079) (1,683)
Bank loans, leases & Blue Ridge loans (2,040) (2,176) (9,494)
Recoveries 429 362 1,466
- --------------------------------------------------------------------------------------------------------------
Net charge-offs (1,611) (2,893) (9,711)
- --------------------------------------------------------------------------------------------------------------
Allowance at end of period $ 25,616 $ 21,580 $ 23,832
==============================================================================================================

The following summarizes impaired loan information as of March 31:

2000 1999
---- ----
($ in thousands)

Impaired loans.............................................................$ 12,493 $ 1,046
Related allowance.......................................................... 3,731 356

Recognized interest income.................................................$ 78 18
Foregone interest.......................................................... 247 28

The average recorded investment in impaired loans for the three months
ended March 31, 2000 and March 31, 1999 was approximately $11.1 million and $1.0
million, respectively.

SECURITIES

At March 31, 2000, the Company's investment portfolio totaled $673.5
million, up $293.1 million from the $380.4 million invested as of March 31, 1999
and down $28.1 million from the $701.6 million invested as of December 31, 1999.
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 at market value, which was approximately
$28 million at March 31, 2000, down from $45 million as of December 31, 1999
(see "EQUITY INVESTMENTS - Investment in Net.B@nk, Inc.").

Securities (i.e., securities held for investment, securities available
for sale and trading securities) averaged $630.8 million in the first quarter of
2000, 56% above the average of $409.2 million in the first quarter of 1999. The
average portfolio yield increased to 6.86% in the first three months of 2000
from 6.04% in the first three months of 1999. The portfolio yield increased as a
result of increasing rates in the second half of 1999 and the first quarter of
2000. The mix of securities also shifted by reinvesting maturing securities in
higher yielding agencies and mortgage-backed securities. The composition of the
investment portfolio as of March 31, 2000 follows: mortgage-backed securities
48%, treasuries and agencies 27%, other securities 16%, and states and
municipalities 9%.

At March 31, 2000, securities available for sale included the following
equity investments: 1,753,366 shares of common stock of Affinity (recorded at
its pre-tax market value of approximately $3.4

million), 2,175,000 shares of common stock of Net.B@nk (recorded at its pre-tax
market value of approximately $28.3 million), and investments in fourteen
community banks. The Affinity Warrant, which entitles the Company to purchase an
additional 3,471,340 shares of common stock at a purchase price of $0.0001 per
share, was not included in securities at March 31, 2000.

INTANGIBLE ASSETS AND OTHER ASSETS

The intangible assets balance at March 31, 2000 of $111.9 million
consisted of goodwill of $103.8 million and core deposit balance premiums of
$8.1 million. The intangible assets balance at March 31, 1999 of $128.8 million
consisted of goodwill of $115.3 million, core deposit balance premiums of $10.2
million and credit card intangibles of $3.3 million.

At March 31, 2000, other assets included other real estate owned of
$2.9 million and mortgage servicing rights of $25.7 million. At March 31, 1999,
other assets included other real estate owned of $2.7 million and mortgage
servicing rights of $23.5 million.

INTEREST-BEARING LIABILITIES

During the first three months of 2000, interest-bearing liabilities
averaged $2.8 billion, compared with $2.2 billion in the first three months of
1999. This increase resulted principally from internal deposit growth related to
account promotions, sales efforts and the introduction of Internet banking. The
average interest rates were 5.08% and 4.63% in the first three months of 2000
and 1999, respectively. At March 31, 2000, interest-bearing deposits comprised
approximately 87% of total deposits and 80% of interest-bearing liabilities.

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 12% to $2.6 billion at March 31, 2000 from $2.3 billion at March
31, 1999. During this period, the Company added approximately $53 million in
deposits from the April 1999 purchase of Citizens First National Bank
("Citizens"). In the last half of 1999, the Company sold approximately $54
million in deposits related to the sale of four branch offices.

During the first three months of 2000, total interest-bearing deposits
averaged $2.2 billion with a rate of 4.80%, compared with $2.0 billion with a
rate of 4.52% in the first three months of 1999. During the first three months
of 2000, deposit pricing remained very competitive, a pricing environment which
the Company expects to continue. Average noninterest-bearing deposits, which
increased 15% during the year, were 13.8% of average total deposits for the
first three months of 2000 compared to 13.4% of average total deposits for the
prior year period.

In September 1999, the Company introduced an Internet bank, which is
marketed as Bank CaroLine and offered as a service of Carolina First Bank,
F.S.B. Deposit rates for Bank CaroLine are generally higher than the rates
offered by the Company's other subsidiary banks due to lower operating costs.
Deposits gathered through Bank CaroLine will be used to fund commercial and
consumer loans generated by the Company's subsidiary banks. At March 31, 2000,
total deposits for Bank CaroLine totaled approximately $100 million.

Time deposits of $100,000 or more represented 16% of total deposits at
March 31, 2000 and 14% of total deposits at March 31, 1999. The Company's large
denomination time deposits are generally from customers within the local market
areas of its banks and, therefore, have a greater degree of stability than is
typically associated with this source of funds. As of March 31, 2000, the
Company did

not have any brokered deposits. Beginning with the second quarter 2000, the
Company plans to accept brokered deposits, on a limited basis, as an alternative
funding source.

In the first three months of 2000, average borrowed funds, which
includes repurchase agreements and Federal Home Loan Bank ("FHLB") advances,
totaled $550.6 million compared with $150.8 million for the same period in 1999.
This increase was primarily attributable to a rise in average FHLB advances to
$408.8 million in the first three months of 2000 from $43.4 million in the first
three months of 1999. Advances from the FHLB increased to $425.2 million as of
March 31, 2000 from $59.9 million at March 31, 1999. At December 31, 1999, FHLB
advances totaled $425.4 million. The increase since March 31, 1999 was primarily
due to additional borrowings from FHLB to fund increased loan activity and to
purchase corporate bonds for leveraging purposes. FHLB advances are a source of
funding which the Company uses depending on the current level of deposits and
management's willingness to raise deposits through market promotions.

CAPITAL RESOURCES AND DIVIDENDS

Total shareholders' equity amounted to $395.3 million, or 10.9% of
total assets, at March 31, 2000, compared with $367.2 million, or 12.5% of total
assets, at March 31, 1999. At December 31, 1999, total shareholders' equity
totaled $409.8 million, or 11.5% of total assets. The increase in total
shareholders' equity since March 31, 1999 resulted principally from the
retention of earnings less cash dividends paid, stock repurchased and a decline
in the net unrealized gain on securities.

In the first quarter of 2000, the Company repurchased 524,600 shares of
common stock, which decreased shareholders' equity by $8.3 million. In March
2000, the Company rescinded its share repurchase program due to the pending
merger with Anchor Financial.

The Company began recording its investment in Net.B@nk at market value
during the third quarter of 1999, which added $18.0 million (net of taxes) to
the March 31, 2000 net unrealized gain on securities, which is a component of
shareholders' equity. The Company's unrealized gain, net of taxes, related to
Net.B@nk declined $7.8 million from December 31, 1999 to March 31, 2000.

Book value per share at March 31, 2000 and 1999 was $15.60 and $14.83,
respectively. Recording the Company's Net.B@nk investment at market value,
effective with the third quarter of 1999, added approximately $0.71 to book
value at March 31, 2000. Tangible book value per share at March 31, 2000 and
1999 was $11.18 and $9.63, respectively. Tangible book value was below book
value as a result of the purchase premiums associated with branch acquisitions
and the acquisitions of CF Mortgage, RPGI and five banks (all of which were
accounted for as purchases).

At March 31, 2000, the Company and its subsidiary banks were in
compliance with each of the applicable regulatory capital requirements and
exceeded the well capitalized requirements. Table 3 sets forth various
capital ratios for the Company and its subsidiary banks.

TABLE 3
CAPITAL RATIOS

- -------------------------------------------------------------------------------------------------------
As of Well Capitalized Adequately Capitalized
3/31/00 Requirement Requirement
- -------------------------------------------------------------------------------------------------------

The Company:
Total Risk-based Capital 11.49% n/a n/a
Tier 1 Risk-based Capital 9.68 n/a n/a
Leverage Ratio 7.80 n/a n/a

Carolina First Bank:
Total Risk-based Capital 10.03% 10.0% 8.0%
Tier 1 Risk-based Capital 9.19 6.0 4.0
Leverage Ratio 7.52 5.0 4.0

Carolina First Bank, F.S.B.:
Total Risk-based Capital 12.40% 10.0% 8.0%
Tier 1 Risk-based Capital 11.53 6.0 4.0
Leverage Ratio 5.19 5.0 4.0

Citrus Bank:
Total Risk-based Capital 10.02% 10.0% 8.0%
Tier 1 Risk-based Capital 8.79 6.0 4.0
Leverage Ratio 7.84 5.0 4.0
- -------------------------------------------------------------------------------------------------------

The Company and its subsidiaries are subject to certain regulatory
restrictions on the amount of dividends they are permitted to pay. The Company
has paid a cash dividend each quarter since the initiation of cash dividends on
February 1, 1994. The Company presently intends to pay a quarterly cash dividend
on the Common Stock; however, future dividends will depend upon the Company's
financial performance and capital requirements.

MARKET RISK

Market risk is the risk of loss from adverse changes in market prices
and rates. The Company's market risk arises principally from interest rate risk
inherent in its lending, deposit and borrowing activities. Management actively
monitors and manages its interest rate risk exposure. Although the Company
manages other risks, such as credit quality and liquidity risk, in the normal
course of business, management considers interest rate risk to be its most
significant market risk. Other types of market risks, such as foreign currency
exchange risk and commodity price risk, do not arise in the normal course of the
Company's business activities.

Achieving consistent growth in net interest income is the primary goal
of the Company's asset/liability function. The Company attempts to control the
mix and maturities of assets and liabilities to achieve consistent growth in net
interest income despite changes in market interest rates. The Company seeks to
accomplish this goal while maintaining adequate liquidity and capital. The
Company's asset/liability mix is sufficiently balanced so that the effect of
interest rates moving in either direction is not expected to be significant over
time.

The Company's Asset/Liability Committee uses a simulation model to
assist in achieving consistent growth in net interest income while managing
interest rate risk. The model takes into account interest rate changes as well
as changes in the mix and volume of assets and liabilities. The model simulates
the Company's balance sheet and income statement under several different rate
scenarios. The model's inputs (such as interest rates and levels of loans and
deposits) are updated on a periodic basis in order to obtain the most accurate
forecast possible. The forecast presents information over a twelve-month period.
It reports a base case in which interest rates remain flat and reports
variations that occur when rates immediately increase and decrease 200 basis
points. According to the model as of March 31, 2000, the Company is positioned
so that net interest income will increase $4.2 million if interest rates rise
in the next twelve months and will decrease $3.7 million if interest rates
decline in the next twelve months. Computation of prospective effects of
hypothetical interest rate changes are based on

numerous assumptions, including relative levels of market interest rates and
loan prepayments, and should not be relied upon as indicative of actual results.
Further, the computations do not contemplate any actions the Company could
undertake in response to changes in interest rates.

As of March 31, 2000, there was no significant change from the interest
rate risk sensitivity analysis for various changes in interest rates calculated
as of December 31, 1999. The foregoing disclosures related to the market risk of
the Company should be read in conjunction with the Company's audited
consolidated financial statements, related notes and management's discussion and
analysis of financial condition and results of operations for the year ended
December 31, 1999 included in the Company's 1999 Annual Report on Form 10-K.

Interest sensitivity gap ("GAP position") measures the difference
between rate sensitive assets and rate sensitive liabilities during a given time
frame. The Company's GAP position, while not a complete measure of interest
sensitivity, is also reviewed periodically to provide insights related to the
static repricing structure of assets and liabilities. At March 31, 2000, on a
cumulative basis through twelve months, rate-sensitive liabilities exceeded
rate-sensitive assets, resulting in a liability sensitive position of $219.4
million.

LIQUIDITY

Liquidity management involves meeting the cash flow requirements of the
Company both at the holding company level as well as at the subsidiary level.
The holding company and non-banking subsidiaries of the Company require cash for
various operating needs, including general operating expenses, payment of
dividends to shareholders, interest on borrowing, extensions of credit at Blue
Ridge, business combinations and capital infusions into subsidiaries. The
primary source of liquidity for the Company's holding company is dividends from
the banking and non-banking subsidiaries.

The Company's banking subsidiaries have cash flow requirements
involving withdrawals of deposits, extensions of credit and payment of operating
expenses. The principal sources of funds for liquidity purposes for the banking
subsidiaries are customers' deposits, principal and interest payments on loans,
loan sales or securitizations, securities available for sale, maturities of
securities, temporary investments and earnings. The subsidiary banks' liquidity
is also enhanced by the ability to acquire new deposits through the established
branch network. The liquidity ratio is an indication of a bank's ability to meet
its short term funding obligations. At March 31, 2000, the liquidity ratios for
Carolina First Bank, Carolina First Bank, F.S.B., and Citrus Bank (the
"Subsidiary Banks") were approximately 12.9%, 37.3% and 10.3%, respectively. The
liquidity needs of the Subsidiary Banks are a factor in developing their deposit
pricing structure; deposit pricing may be altered to retain or grow deposits if
deemed necessary. Carolina First Bank and Carolina First Bank, F.S.B. have
access to borrowing from the FHLB. Each of the Subsidiary Banks maintain unused
short-term lines of credit from unrelated banks. At March 31, 2000, unused
borrowing capacity from the FHLB totaled approximately $64 million with an
outstanding balance of $225.2 million. At March 31, 2000, the Subsidiary Banks
had unused short-term lines of credit totaling approximately $73 million (which
are withdrawable at the lender's option). Management believes that these sources
are adequate to meet its liquidity needs.

The Company has entered into lease agreements for three new buildings
located in Columbia and Greenville, South Carolina. Payments began during the
fourth quarter of 1999 on two of the buildings and will begin in the second
quarter of 2000 on the third building. Aggregate annual lease

payments associated with these buildings are expected to total approximately
$5.8 million. In addition, the Company anticipates related leasehold
improvements of approximately $18.6 million and capitalized furniture and
equipment of approximately $6.0 million.

The Company signed a contract in December 1999 with FiServ, Inc. for a
new core operating system called the Comprehensive Banking System ("CBS") to
provide the infrastructure for existing and future growth plans. The associated
investment is expected to total approximately $4.6 million for capitalized
expenses and $1.1 million for annual service agreements. The system conversion
began during the first quarter of 2000.

ASSET QUALITY

Lending is a risk-taking business. Prudent lending requires a sound
risk-taking philosophy, policies and procedures which translate that philosophy
into practices, and a risk management process that ensures effective execution.
The Company's risk-taking philosophy is articulated in credit policies approved
by its Board of Directors annually. Implementing policies and procedures are
promulgated by the Credit Risk Management Group. These policies contain
underwriting standards, risk analysis requirements, loan documentation criteria,
credit approval requirements, and risk monitoring requirements. Credit approval
authority delegated to lending officers is limited in scope to actions that
comply with these policies. In the first quarter of 2000, a Credit Review
function was chartered to independently test for compliance with these policies
and report findings to the Credit Committee of the Company's Board of Directors.

Table 4 presents information pertaining to nonperforming assets.

TABLE 4
NONPERFORMING ASSETS AND PAST DUE LOANS
($ in thousands)

March 31, December 31,
------------------- ------------
2000 1999 1999
---- ---- ----
- ----------------------------------------------------------------------------------------------------

Nonaccrual loans $ 12,493 $ 1,046 $ 8,464
Restructured loans -- 1,283 --
- ----------------------------------------------------------------------------------------------------
Total nonperforming loans 12,493 2,329 8,464
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Other real estate 2,872 2,691 2,440
Total nonperforming assets $ 15,365 $ 5,020 $ 10,904

Nonperforming assets as a % of
loans and foreclosed property 0.61% 0.25% 0.46%

Net loan charge-offs as a % of
average loans (annualized) 0.26 0.57 0.42

Accruing loans past due 90 days $ 7,008 $12,328 $ 6,534

Allowance for loan losses to
nonperforming loans 2.05x 9.27x 2.82x
- ----------------------------------------------------------------------------------------------------

Nonaccrual loans increased to $12.5 million as of March 31, 2000 from $8.5
million as of December 31, 1999. The increase was primarily related to two
commercial loans, which were placed on nonaccrual during the quarter and in
aggregate total $3.8 million. Of the $12.5 million of nonaccrual loans as of
March 31, 2000, $9.2 million is comprised of four loans, all of which are
current.

Net loan charge-offs totaled $1.6 million and $2.9 million in the first
three months of 2000 and 1999, respectively, or 0.26% and 0.57%, respectively,
as an annualized percentage of average loans. Excluding losses on credit card
receivables, annualized net loan losses as a percentage of average loans were
0.28% and 0.36% during the first three months of 2000 and 1999, respectively.

INDUSTRY DEVELOPMENTS

Certain recently-enacted and proposed legislation could have an effect
on both the costs of doing business and the competitive factors facing the
financial institutions industry. The Company is unable at this time to assess
the impact of this legislation on its financial condition or operations.

PART II

ITEM 1 LEGAL PROCEEDINGS

ITEM 2 CHANGE IN SECURITIES

None.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

Annual Meeting of Shareholders
------------------------------
On April 19, 2000, the Company held its 2000 Annual Meeting of
Shareholders. The results of the 2000 Annual Meeting of Shareholders
follow.

PART II
(CONTINUED)

PROPOSAL #1 - ELECTION OF DIRECTORS
The shareholders approved setting the number of Company directors at 12
persons. The following persons were elected as Directors with the votes
indicated.

Voting shares in favor Withheld
----------------------
# % Authority
- - ---------

M. Dexter Hagy 18,785,209 94.1% 1,178,243
H. Earle Russell, Jr. 18,734,288 94.1% 1,179,164
William R. Timmons, Jr. 18,005,786 90.4% 1,907,666
Samuel H. Vickers 18,261,750 91.7% 1,651,702

Judd B. Farr, C. Claymon Grimes, Jr., William S. Hummers III, Charles
B. Schooler, Elizabeth P. Stall, Eugene E. Stone IV, David C. Wakefield
III, and Mack I. Whittle, Jr. continued in their present terms as
directors.

PROPOSAL #2 - CHANGE THE COMPANY'S NAME TO THE SOUTH FINANCIAL GROUP,
INC.
The shareholders approved changing the Company's name to The South
Financial Group, Inc.

Voting shares in favor
----------------------
# % Against Abstain
- - ------- -------
19,119,176 96.0% 647,750 146,526

PROPOSAL #3 - ADOPTION OF THE COMPANY'S AMENDED AND RESTATED FORTUNE 50
PLAN
The shareholders approved the Company's Amended and Restated Fortune 50
Plan.

Voting shares in favor
----------------------
# % Against Abstain Non-Vote
- - ------- ------- --------
11,976,957 60.1% 965,708 217,967 6,752,820

PROPOSAL #4 - ADOPTION OF AMENDMENT NO. 2 TO THE AMENDED AND RESTATED
STOCK OPTION PLAN
The shareholders approved amending the Company's Amended and Restated
Stock Option Plan to increase the number of shares of the Company's
common stock that may be issued to an aggregate of 2,500,000.

Voting shares in favor
----------------------
# % Against Abstain Non-Vote
- - ------- ------- --------
11,097,770 55.7% 1,788,292 274,544 6,752,846

PROPOSAL #5 - ADOPTION OF AMENDMENT NO. 1 TO THE COMPANY'S COMMON STOCK
AMENDED DIVIDEND REINVESTMENT PLAN
The shareholders approved amending the Company's Amended common Stock
Dividend Reinvestment Plan to increase the number of shares of the
Company's common stock that may be issued to an aggregate of 450,000.

Voting shares in favor
----------------------
# % Against Abstain Non-Vote
- - ------- ------- --------
11,104,751 55.8% 1,390,254 659,536 6,758,911

PART II
(CONTINUED)

Special Meeting of Shareholders
-------------------------------
On May 1, 2000, the Company held a Special Meeting of Shareholders. The
results of the Special Meeting of Shareholders follow.

PROPOSAL #1 - APPROVAL OF REORGANIZATION AGREEMENT WITH ANCHOR
FINANCIAL CORPORATION
The shareholders approved the Reorganization Agreement dated as of
January 10, 2000, providing for the merger of Anchor Financial
Corporation with and into a subsidiary of the Company and, in
connection therewith, the conversion of shares of common stock of
Anchor Financial Corporation into shareholder of common stock of the
Company.

Voting shares in favor
----------------------
# % Against Abstain
- ------- -------
13,567,333 89.4% 1,555,459 45,241

PROPOSAL #2 - INCREASE SIZE OF BOARD
The shareholders approved increasing the Company's board of
directors from twelve members to seventeen members.

Voting shares in favor
----------------------
# % Against Abstain
- - ------- -------
13,365,780 88.1% 1,716,410 85,843

ITEM 5 OTHER INFORMATION

Pending Acquisition
-------------------
On January 10, 2000, the Company signed a definitive agreement to merge
with Anchor Financial, a $1.2 billion institution headquartered in
Myrtle Beach, South Carolina. The resulting holding company will have
approximately $4.9 billion in assets and 108 branch offices (pre-branch
closings) in South Carolina, Florida and North Carolina. The merger
agreement provides that Anchor Financial shareholders receive 2.1750
shares of the Company's common stock for each Anchor Financial share.
The Company expects to issue approximately 17.6 million shares in
connection with this merger. This transaction, which is subject to
regulatory approval, will be accounted for using the
pooling-of-interests method and is expected to close in the second
quarter of 2000.

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.1 Amendment 1 to the Company's Amended Common Stock Dividend Reinvestment Plan.

10.2 Amendment 2 to the Company's Amended and Restated Stock Option Plan.

10.3 Amendment to the Company's Articles of Incorporation as filed with the State of South
Carolina Secretary of State.

PART II
(CONTINUED)

11.1 Computation of Basic and Diluted Earnings Per Share.

12.1 Computation of Earnings to Fixed Charges Ratio.

27.1 Financial Data Schedules.

(b) Reports on Form 8-K

The Company filed current reports on Form 8-K dated January 13,
2000 and April 24, 2000.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

The South Financial Group, Inc.

/s/William S. Hummers III
-------------------------
William S. Hummers III
Executive Vice President