Carolina First Corporation
and
Anchor Financial Corporation
have merged to form
The South Financial Group
January 10, 2000
Forward Looking Statement
-------------------------
The forward-looking statements being made today are subject to risks and
uncertainties. The actual results of Carolina First Corporation ("Carolina
First") and Anchor Financial Corporation ("Anchor") may differ materially from
those set forth in such forward-looking statements. Reference is made to
Carolina First's and Anchor's reports filed with the Securities and Exchange
Commission for a discussion of factors that may cause such differences to occur.
Transaction Summary
-------------------
Fixed Exchange Ratio: 2.1750 CAFC shares per AFSC Share
Price per Anchor Share: $35.89(1)
Transaction Value: $300 million(1)(2)
Transaction Structure: Pooling-of-interests
Tax-free Merger
19.9% Lock-up Option
Company Name: The South Financial Group
Headquarters: Greenville, SC
Board Representation: 5 Additional Directors (Total of 18)
Pro Forma Anchor Ownership: 41%
Expected Closing: 2Q 2000
Due Diligence: Completed
Required Approvals: Regulatory
Carolina First and Anchor Shareholder
(1) Based on share price as of January 7, 2000.
(2) Based on 8.4 million diluted AFSC shares outstanding.
Transaction Rationale
---------------------
- - Significantly enhances presence in rapidly growing markets
- - Top 5 market position in South Carolina's four largest MSAs
- Boosts statewide market share to #4 from #6
- - Improves scale and leverages management/technology infrastructure
- - Low risk, in-market transaction
- Similar markets, customers and management team
- - Similar and successful super community bank strategies
- - Identifiable and achievable cost savings
- 35% of Anchor overhead expenses
- - Attractive financially
Expansion Within Core South Carolina Markets
--------------------------------------------
CAROLINA FIRST ANCHOR PRO FORMA
-------------- ------ ---------
MSA Branches Share Rank Branches Share Rank Branches Deposits Share Rank
($MM)
SOUTH CAROLINA
Augusta-Aiken 3 2.0% 10 - - - 3 $ 77 2.0% 10
Charleston-North Charleston 6 3.0 11 3 3.0 10 9 226 6.0 4
Charlotte-Gastonia-Rock Hill 1 0.1 26 - 0.2 18 1 87 0.3 16
Columbia 11 9.9 4 1 2.0 9 12 595 11.8 4
Florence 1 1.8 12 2 1.9 11 3 45 3.6 9
Greenville-Spartanburg-Anderson 23 9.0 5 - - - 23 903 9.0 5
Myrtle Beach 5 4.9 9 9 13.4 3 14 440 18.3 1
South Carolina not in any MSA 12 3.1 8 13 4.4 7 25 672 7.5 4
-- --- -- --- -- --- ---
TOTAL 62 6.0% 6 28 3.0% 9 90 $3,044 8.9% 4
NORTH CAROLINA
Jacksonville - - - 1 2.8% 6 1 $ 15 2.8% 6
Wilmington - - - 3 1.3 11 3 32 1.3 11
North Carolina not in any MSA - - - 1 0.1 47 1 35 0.1 47
- --- - -- ---
TOTAL - - - 5 4.3% - 5 $ 82 4.3% -
FLORIDA
Orlando 9 1.2% 12 - - - 9 $172 1.2% 12
Florida not in any MSA 4 0.5 41 - - - 4 50 0.5 41
- --- - -- ---
TOTAL 13 1.7% - - - - 13 $222 1.7% -
<FN>
Source: SNL Branch Migration database for deposits, market share and rankings as of February 23, 1999.
</FN>
Statewide Presence
------------------
[Map depicting Carolina First's and Anchor's South Carolina and North Carolina
branch locations, including the five markets where there is branch overlap.]
South Carolina Competitive Profile
----------------------------------
Dollars in Millions
Market
Rank Institution Capitalization Branches Deposits Market Share
1 Wachovia Corp. $13,495 124 $5,691 16.7%
2 Bank of America Corp. 83,119 148 4,683 13.7
3 BB&T Corp. 8,521 92 3,515 10.3
4 CAROLINA FIRST/ANCHOR(2) 715 90 3,044 8.9
4 First Union Corp. 33,275 56 2,335 6.8
5 First Citizens Bancorp. 261 136 2,085 6.1
of SC
6 CAROLINA FIRST CORP. 424 62 2,034 6.0
7 First Financial Holdings 217 36 1,165 3.4
Inc.
8 Synovus Financial Corp. 5,369 39 1,120 3.3
9 ANCHOR FINANCIAL CORP. 211 28 1,011 3.0
10 Regions Financial Corp. 5,029 33 960 2.8
(1) Based on share prices as of January 7, 2000.
(2) Based on the transaction exchange ratio of 2.1750.
Source: SNL Branch Migration database for deposits, market share and ranking as
of February 23, 1999.
Balanced Loan Portfolio
-----------------------
CAFC Stand-alone Pro Forma
Commercial & Industrial 20.8 19.4
Commercial Real Estate 41.1 42.9
Construction 4.9 6.4
Residential Real Estate 24.0 21.3
Consumer 8.1 6.9
Other 1.0 3.1
TOTAL $2.3 billion $3.1 billion
Note: As of September 30, 1999.
More Diversified Sources of Fee Income
--------------------------------------
CAFC Stand-alone Pro Forma
Service Charges on Deposits 44.2 41.8
Mortgage Banking 13.5 12.6
Other Non-Interest Income 31.9 30.5
Securities Gains 1.7 1.5
Trust Income 5.6 9.6
Commissions and Fees 3.0 4.1
Note: Based on actual data for the nine months ended September 30, 1999;
excluding non-recurring items and loan securitization income.
More Attractive Deposit Funding
-------------------------------
CAFC Stand-alone Pro Forma
Time 49.2 43.0
Interest Checking 20.9 18.8
Demand Deposits 13.4 14.9
Money Market & Savings 16.5 23.4
TOTAL $2.4 billion $3.4 billion
Note: As of September 30, 1999.
Pro Forma Impact
----------------
Dollars in Millions
CAFC STAND ALONE PRO FORMA
Assets $3,169 $4,393
Net Loans 2,258 3,110
Deposits 2,398 3,352
Equity 412 500
LTM Net Income(1) 27 51(2)
Note: Data at or for the twelve months ended September 30, 1999.
(1) Excludes non-recurring items.
(2) Includes 100% of after-tax cost saves.
EPS Impact
----------
Dollars in Millions
PROJECTED NET INCOME 2000 2001
Carolina First $32.3 $36.0
Anchor 15.9 17.6
---- ----
Pro Forma Combined 48.2 53.6
After-tax Cost Savings(1) 2.8 9.5
--- ---
Pro Forma Earnings $51.0 $63.1
Average Diluted Shares O/S
(millions)(2) 44.1 44.1
Pro Forma EPS $1.16 $1.43
Carolina First Stand-Alone 1.25 1.39
EPS ACRETION (7.7%) 2.7%
Note: Earnings based on median IBES estimates and IBES long-term growth rates as
of January 4, 2000 .
(1) Assumes 30% of synergies are realized in 2000 and 100% in 2001; 3%
noninterest expense growth and a 35% tax rate.
(2) Based on 12/31/99 pro forma combined diluted shares.
Estimated Cost Savings
----------------------
- - Cost savings are estimated to be 35% of Anchor's estimated annual
non-interest operating expenses(1), or $13.8 million pre-tax
- - Cost savings are expected to come from staff reductions, systems
consolidations and other back office overlap
- - Cost savings estimates exclude potential benefits from branch closings
- - In 5 in-market banking transactions over the last three years, Carolina
First has realized cost savings ranging from 33% to 40%, for an average of
39%
Note: Synergies are expected to be realized 30% in 2000 and 100% thereafter.
(1) Based on 9 monhts ended 9/30/99 annualized.
Carolina First Acquisition Activity -
1997 to 1999 (Banks Only)
-------------------------
Assets Cost
Acquisition Acquired Savings
Date Acquisition (in millions) Realized
In-Market Transactions
- ----------------------
10/19/98 Colonial Bank of SC $60 40%
Camden, South Carolina
09/30/98 Poinsett Financial Corporation 88 40
Travelers Rest, South Carolina
09/29/98 First National Bank of Pickens County 120 40
Easley, South Carolina
11/21/97 First Southeast Financial Corp. 350 40
Anderson, South Carolina
07/18/97 Lowcountry Savings Bank, Inc. 80 33
Mt. Pleasant, South Carolina
Out-of-Market Transactions
- --------------------------
07/01/99 Citrus Bank $275 20%
Orlando, Florida
04/23/99 Citizens First National Bank 57 20
Crescent City, Florida
Transaction Pricing
-------------------
Transaction Carolina First Comparable
Multiples Multiples Transactions
Price as a Multiple of:
LTM Normalized EPS 19.6x 15.7x 26.7x
2000E EPS(1) 18.9 13.2 19.9
2000E EPS with Synergies(2) 12.1 NA NA
Book Value(3) 3.22x 1.04x 2.99x
Tangible Book Value 3.24 1.45 3.18
Premium to Deposits 22.2% 5.4% 26.5%
Premium to Market 37.4 NA 33.0
Note:Transactions in the southeast 1997-1999 with $250-$750 million in purchase
price, as compiled by Salomon Smith Barney.
(1) Earnings based on median IBES estimates as of January 4, 2000.
(2) Includes 100% realization of synergies in 2000, although management expects
30% synergies to be phased in 2000.
(3) Diluted book value includes the exercise of options.
Summary
-------
- - Expansion in attractive, rapidly growing markets
- - Consistent with strategy
- - Low risk transaction
- - Significant, attainable synergies
- - Attractive financially