[THE SOUTH FINANCIAL GROUP LETTERHEAD]
102 South Main Street
Greenville, SC 29601
864.255.4919
DATE: July 15, 2003
RELEASE DATE: Immediate
THE SOUTH FINANCIAL GROUP REPORTS RECORD EARNINGS;
SECOND QUARTER NET INCOME UP 48%
GREENVILLE, SC - The South Financial Group, Inc. (Nasdaq/NM: TSFG) today
reported record net income of $22.7 million, an increase of 48% compared with
$15.3 million for the second quarter 2002. For the second quarter 2003, net
income per diluted share totaled $0.48, a 30% increase from $0.37 per diluted
share for the second quarter 2002.
For the second quarter 2003, operating earnings totaled $20.6 million, or $0.43
per diluted share, compared with $15.3 million, or $0.37 per diluted share, for
the second quarter 2002. This represents a 16% increase in operating earnings
per diluted share.
"I am very pleased to report record earnings for the second quarter of 2003,"
said Mack I. Whittle, Jr., President and Chief Executive Officer of The South
Financial Group. "Our earnings momentum continues, and we delivered another
quarter of outstanding results. We increased operating earnings per share for
the ninth consecutive quarter and achieved a 41% annualized growth rate during
that period. Our earnings per share growth rate places us among the best top
performing U.S. banks."
Whittle continued, "We are successfully executing our business plan. During the
second quarter, we continued to focus on three initiatives: noninterest income,
loan growth, and credit quality. First, we exceeded our challenging noninterest
income goals. Noninterest income, excluding gains on asset sales, grew over 50%
from second quarter last year. Second, we met our loan growth projections with
15% annualized loan growth for the second quarter. We operate in some of the
best markets in the Southeast and are gaining business in all of our markets.
Our third initiative was to continue to improve credit quality, and we did.
These results demonstrate our discipline and focus on achieving superior
financial performance and building long-term value for our shareholders."
For the first six months of 2003, net income totaled $42.7 million, or $0.89 per
diluted share, up 50% from $28.4 million for the first six months of 2002. For
the first six months of 2003, operating earnings totaled $39.7 million, or $0.83
per diluted share, up 33% from $29.8 million for the first six months of 2002.
EARNINGS SUMMARY - STRONG TOP-LINE REVENUE GROWTH
Strong top-line revenue growth drove TSFG's record performance for the second
quarter of 2003. Fully tax equivalent net interest income for the second quarter
of 2003 increased 26% over the prior year quarter as average earning assets grew
43%. The net interest margin declined to 3.32% in the second quarter 2003 from
3.79% in the prior year quarter. This decline was largely attributable to higher
investment securities balances, which generally have a lower yield than loans.
Noninterest income increased to $24.0 million for the second quarter 2003, up
79% from $13.4 million for the second quarter 2002. In the second quarter 2003,
noninterest income included $3.2 million in gains on sales of securities and a
$601,000 gain from the sale of a branch office. Excluding these non-operating
gains, noninterest income increased $6.8 million, or 51%, to $20.2 million,
reflecting expansion in noninterest income sources and continuing benefits from
TSFG's Elevate sales process. Noninterest expenses increased 40% for the second
quarter 2003 versus second quarter 2002, or 38% excluding $382,000 in
merger-related costs and a $268,000 impairment loss from the write-down of
assets.
ACCELERATING LOAN AND TRANSACTION DEPOSIT GROWTH
Loans held for investment at June 30, 2003 increased 20% over the prior year,
with accelerating internal loan growth in the first half of 2003. Loan growth
strengthened to 15% annualized growth for the second quarter 2003 from 7% for
the first quarter.
Whittle commented, "We expected our loan growth to be strong this quarter, and
it was. Our lenders and markets are both outstanding. We continue to move market
share from larger competitors and are leveraging our Florida markets. With our
Elevate sales process, we are building an effective sales culture throughout our
company, which is generating results."
TSFG continues to enhance its deposit mix by focusing on increasing transaction
accounts through increased sales referrals and targeted deposit promotions.
Average deposits for the second quarter 2003 increased 32% over the prior year
second quarter average. Deposit transaction account balances increased 49%
during the same period, driven by growth in money market and noninterest-bearing
deposits.
CONTINUED FAVORABLE CREDIT QUALITY TRENDS
To facilitate quarterly comparisons, two sets of credit quality indicators are
provided: one that includes all loans and one that excludes the Rock Hill Bank &
Trust Workout Loans. In connection with the October 2002 purchase from Rock Hill
Bank & Trust, The South Financial Group segregated certain identified problem
loans into a separately-managed portfolio, referred to as the Rock Hill Bank &
Trust Workout Loans. At June 30, 2003, this portfolio totaled $50.6 million,
down from $63.6 million at March 31, 2003. Nonperforming assets in the Rock Hill
Bank & Trust Workout Loans declined to $25.6 million, and the allowance for loan
losses was $8.4 million. For the Rock Hill Bank & Trust Workout Loans, net loan
charge-offs for the second quarter 2003, which were fully reserved as of the
prior quarter-end, totaled $2.7 million.
Credit Quality Including Rock Hill Bank & Trust Workout Loans. Nonperforming
assets declined to 1.39% of loans and other real estate owned at June 30, 2003
from 1.59% at March 31, 2003. Net loan charge-offs decreased to 0.62% for the
second quarter 2003 from 0.85% for the first quarter 2003. As anticipated, the
allowance for loan losses declined to 1.37% of loans held for investment at June
30, 2003 from 1.46% at March 31, 2003.
Credit Quality Excluding Rock Hill Bank & Trust Workout Loans. The South
Financial Group's core credit quality (which excludes the Rock Hill Bank & Trust
Workout Loans) continued to show improvement during the second quarter. For the
fifth consecutive quarter, the nonperforming asset ratio declined, ending the
quarter at 0.85% of loans and other real estate owned at June 30, 2003 down from
0.87% at March 31, 2003. Net loan charge-offs in the second quarter 2003 were
$4.5 million, or 0.39% of average loans, down from 0.50% for the first quarter
2003. The allowance for loan losses declined slightly as a percent of loans held
for investment to 1.20% at June 30, 2003 from 1.22% at March 31, 2003.
TSFG EXPANDS INTO WESTERN NORTH CAROLINA MARKETS
On May 14, 2003, The South Financial Group announced plans to acquire
MountainBank Financial Corporation. MountainBank, the largest community bank
headquartered in Western North Carolina, operates 19 branch offices in 11
western North Carolina counties and has approximately $960 million in assets. On
July 11th, MountainBank released record second quarter 2003 net income of $1.7
million and reported improvement in credit quality measures. MountainBank's net
loan charge-offs declined to only $125,000 for the second quarter 2003, or an
annualized 0.07% of average loans. Assuming expense savings of 20%, TSFG
anticipates that the merger will be accretive to earnings in the first year. The
merger is expected to close in October 2003.
GENERAL INFORMATION
The attached financial highlights provide reconciliations between GAAP net
income and operating earnings. As has been TSFG's practice, operating earnings
exclude after-tax merger-related costs, gain or losses on asset sales,
impairment from write-down of assets, and the cumulative effect of a change in
accounting principle. Management believes that excluding these non-operating
items provides a clearer understanding of TSFG's financial performance and
better reflects its core operating activities.
The South Financial Group, headquartered in Greenville, South Carolina, is a
financial services company with $9.3 billion in total assets and 114 branch
offices in South Carolina, Florida, and North Carolina. It operates two
subsidiary banks: Carolina First Bank and Mercantile Bank. Carolina First Bank,
the largest South Carolina-based commercial bank, operates in South Carolina,
North Carolina, and on the internet under the brand name, Bank CaroLine.
Mercantile Bank operates in Florida, principally in the Jacksonville, Orlando,
and Tampa Bay markets. TSFG's common stock trades on the Nasdaq National Market
under the symbol TSFG. Press releases along with additional information may also
be found at TSFG's web site: www.thesouthgroup.com.
CONFERENCE CALL/WEBCAST INFORMATION
- -----------------------------------
The South Financial Group will host a conference call today at 10:00
a.m. (ET) to discuss the earnings results and provide a live webcast of the
call, which may be accessed through TSFG's Internet site at
www.thesouthgroup.com under the Investor Relations tab. Additional material
information, including forward-looking statements such as trends and
projections, may be discussed during the presentation. To participate in the
conference call, please call 1-888-405-5393 or 1-484-630-4135 using the access
code "The South." A 7-day rebroadcast of the call will be available via
1-800-695-1276 or 1-402-220-0307. TSFG will also provide a copy of the
presentation and supplemental financial information in the Investor Relations
section of its website prior to the call.
This press release contains financial information determined by methods
other than in accordance with Generally Accepted Accounting Principles ("GAAP").
The South Financial Group's management uses these non-GAAP measures in their
analysis of TSFG's performance and believes presentations of financial measures
excluding the impact of these items provide useful supplemental information and
better reflects its core operating activities. Management uses operating
earnings, in particular, to analyze on a consistent basis and over a longer
period of time, the performance of which it considers to be its core banking
operations. It also provides data eliminating intangibles and related
amortization in order to present data on a "cash basis." The economic substance
of operating earnings and "cash basis" items are clearly defined. Operating
earnings adjust GAAP information to exclude the effects of non-operating items
(such as merger-related costs, gains or losses on asset sales, and non-operating
expenses). Cash basis items exclude intangibles and their amortization. The
limitations associated with utilizing operating earnings and cash basis
information are the risk that persons might disagree as to the appropriateness
of items comprising these measures and that different companies might calculate
these measures differently. Management compensates for these limitations by
providing detailed reconciliations between GAAP information and operating
earnings. These disclosures should not be viewed as a substitute for GAAP
operating results.
Certain matters set forth in this news release may contain
forward-looking statements that are provided to assist in the understanding of
anticipated future financial performance. These statements, as well as other
statements that may be made by management in the conference call, include, but
are not limited to, factors which may affect earnings, return goals, expected
financial results for mergers, estimates of merger synergies and merger-related
charges, and credit quality assessment. However, such performance involves risks
and uncertainties, such as market deterioration, that may cause actual results
to differ materially from those in such statements. For a discussion of certain
factors that may cause such forward-looking statements to differ materially from
TSFG's actual results, see TSFG's Annual Report on Form 10-K for the year ended
December 31, 2002. The South Financial Group undertakes no obligation to release
revisions to these forward-looking statements or reflect events or circumstances
after the date of this release.
CONTACTS:
William S. Hummers III, Executive Vice President, (864) 255-7913
Mary M. Gentry, Treasurer, (864) 255-4919
***END***
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
RESTATED (1) %
6/30/03 6/30/02 CHANGE
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Interest income (tax-equivalent) $ 101,174 $ 87,269 15.9 %
Interest expense 34,407 34,100 0.9
--------- -------- -----
Net interest income (tax-equivalent) 66,767 53,169 25.6
Less: Tax-equivalent adjustment 595 572 4.0
--------- -------- -----
Net interest income 66,172 52,597 25.8
Provision for loan losses 5,200 6,244 (16.7)
--------- -------- -----
Net interest income after provision for loan losses 60,972 46,353 31.5
--------- -------- -----
NONINTEREST INCOME:
Service charges on deposit accounts 7,581 5,421 39.8
Fees for investment services 2,142 1,853 15.6
Mortgage banking income, excluding impairment 2,795 1,312 113.0
Impairment on mortgage servicing rights (234) (23) 917.4
Other 7,893 4,823 63.7
--------- -------- -----
Noninterest income, excluding non-operating gains on asset sales 20,177 13,386 50.7
--------- -------- -----
Gain on sale of available for sale securities 3,197 186 n/m
Loss on equity investments - (150) n/m
Gain on disposition of assets and liabilities 601 - n/m
--------- -------- -----
Gains on non-operating asset sales, net 3,798 36 n/m
--------- -------- -----
Total noninterest income 23,975 13,422 78.6
--------- -------- -----
NONINTEREST EXPENSES:
Personnel expense 25,738 17,514 47.0
Occupancy 4,668 3,686 26.6
Furniture and equipment 4,211 3,483 20.9
Amortization of intangibles 724 240 201.7
Other 14,104 10,869 29.8
--------- -------- -----
Noninterest expenses, excluding non-operating items 49,445 35,792 38.1
--------- -------- -----
Merger-related costs 382 - n/m
Impairment loss from write-down of assets 268 - n/m
--------- -------- -----
Non-operating noninterest expenses 650 - n/m
--------- -------- -----
Total noninterest expenses 50,095 35,792 40.0
--------- -------- -----
Income before income taxes and minority interest 34,852 23,983 45.3
Income tax expense 11,153 7,886 41.4
Minority interest in consolidated subsidiary, net of tax (1,000) (758) 31.9
--------- -------- -----
Net income $ 22,699 $ 15,339 48.0 %
========= ======== =====
SHARE DATA:
Net income per common share, basic $ 0.49 $ 0.38 28.9 %
Net income per common share, diluted 0.48 0.37 29.7
Cash dividends declared per common share 0.14 0.12 16.7
Average common shares outstanding, basic 46,629,666 40,217,873 15.9
Average common shares outstanding, diluted 47,760,781 41,232,890 15.8
(1) As restated in TSFG's December 31, 2002 10-K.
Supplemental financial information, including results for the last five
quarters, may be found in the Investor Relations section of TSFG's web site:
www.thesouthgroup.com.
Financial Highlights, 1
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended
Restated (1) %
6/30/03 6/30/02 Change
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Interest income (tax-equivalent) $ 200,802 $ 173,144 16.0 %
Interest expense 67,907 67,995 (0.1)
--------- --------- -----
Net interest income (tax-equivalent) 132,895 105,149 26.4
Less: Tax-equivalent adjustment 1,252 1,160 7.9
--------- --------- -----
Net interest income 131,643 103,989 26.6
Provision for loan losses 10,700 12,482 (14.3)
--------- --------- -----
Net interest income after provision for loan losses 120,943 91,507 32.2
--------- --------- -----
NONINTEREST INCOME:
Service charges on deposit accounts 14,541 10,328 40.8
Fees for investment services 4,633 3,280 41.3
Mortgage banking income, excluding impairment 5,229 2,193 138.4
(Impairment) recovery on mortgage servicing rights (496) 177 (380.2)
Other 13,295 9,006 47.6
--------- --------- -----
Noninterest income, excluding non-operating gains on asset sales 37,202 24,984 48.9
--------- --------- -----
Gain on sale of available for sale securities 4,183 215 n/m
Gain (loss) on equity investments 1,875 (139) n/m
Gain on disposition of assets and liabilities 601 - n/m
--------- --------- -----
Gains on non-operating asset sales, net 6,659 76 n/m
--------- --------- -----
Total noninterest income 43,861 25,060 75.0
--------- --------- -----
NONINTEREST EXPENSES:
Personnel expense 50,332 35,528 41.7
Occupancy 9,282 7,231 28.4
Furniture and equipment 8,805 7,079 24.4
Amortization of intangibles 1,429 479 198.3
Other 26,990 20,327 32.8
--------- --------- -----
Noninterest expenses, excluding non-operating items 96,838 70,644 37.1
--------- --------- -----
Merger-related costs 1,879 - n/m
Impairment loss from write-down of assets 268 - n/m
--------- --------- -----
Non-operating noninterest expenses 2,147 - n/m
--------- --------- -----
Total noninterest expenses 98,985 70,644 40.1
--------- --------- -----
Income before income taxes, minority interest, and cumulative
effect of change in accounting principle 65,819 45,923 43.3
Income tax expense 21,063 14,885 41.5
Minority interest in consolidated subsidiary, net of tax (2,012) (1,186) 69.6
Cumulative effect of change in accounting principle, net of tax - (1,406) (100.0)
--------- --------- -----
Net income $ 42,744 $ 28,446 50.3 %
========= ========= =====
SHARE DATA:
Net income per common share, basic $ 0.91 $ 0.70 30.0 %
Net income per common share, diluted 0.89 0.68 30.9
Cash dividends declared per common share 0.28 0.24 16.7
Average common shares outstanding, basic 46,975,635 40,699,166 15.4
Average common shares outstanding, diluted 48,007,767 41,646,176 15.3
(1) As restated in TSFG's December 31, 2002 10-K.
Financial Highlights, 2
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
% Change
Restated (1) 2nd Quarter
6/30/03 12/31/02 6/30/02 2003/2002
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET (Period End)
Cash and due from banks $ 212,445 $ 201,333 $ 137,925 54.0 %
Interest-bearing bank balances 64,738 58,703 40,532 59.7
Federal funds sold 50,000 31,293 - n/m
Securities 3,583,865 2,572,186 1,657,239 116.3
Loans held for sale 60,661 67,218 19,636 208.9
Loans held for investment 4,688,591 4,434,011 3,914,789 19.8
Allowance for loan losses (64,152) (70,275) (46,985) 36.5
---------- ---------- ---------- -----
Net loans 4,685,100 4,430,954 3,887,440 20.5
---------- ---------- ---------- -----
Premises and equipment, net 132,966 137,501 112,992 17.7
Intangible assets 245,007 242,182 95,255 157.2
Mortgage servicing rights 2,188 4,386 7,262 (69.9)
Other assets 281,540 262,472 224,942 25.2
---------- ---------- ---------- -----
Total assets $9,257,849 $7,941,010 $6,163,587 50.2 %
========== ========== ========== =====
Noninterest-bearing deposits $ 814,945 $ 743,174 $ 553,579 47.2 %
Interest-bearing deposits 4,306,394 3,849,336 3,170,038 35.8
---------- ---------- ---------- -----
Total deposits 5,121,339 4,592,510 3,723,617 37.5
Federal funds purchased and repurchase agreements 1,998,087 1,510,840 1,299,898 53.7
Debt and other borrowed funds 1,130,441 998,664 507,718 122.7
Other liabilities 261,142 105,785 74,426 250.9
---------- ---------- ---------- -----
Total liabilities 8,511,009 7,207,799 5,605,659 51.8
---------- ---------- ---------- -----
Minority interest in consolidated subsidiary 86,616 86,412 86,471 0.2
Shareholders' equity 660,224 646,799 471,457 40.0
---------- ---------- ---------- -----
Total liabilities and shareholders' equity $9,257,849 $7,941,010 $6,163,587 50.2
========== ========== ========== =====
CAPITAL RATIOS (Period End)
Tier 1 risk-based capital 8.44 % 9.21 % 9.22 %
Total risk-based capital 10.57 11.66 12.04
Leverage ratio 5.95 7.15 7.00
SHARE DATA (Period End)
Book value per common share $ 14.08 $ 13.66 $ 11.69 20.4 %
Shares outstanding 46,896,994 47,347,375 40,341,762 16.2
BALANCE SHEET (Averages - Three Months Ended)
Total assets $8,863,338 $6,130,406 44.6 %
Loans 4,656,461 3,886,016 19.8
Securities 3,339,471 1,689,736 97.6
Total earning assets 8,067,012 5,625,076 43.4
Intangible assets 244,410 96,688 152.8
Interest-bearing liabilities 7,279,817 5,038,030 44.5
Total deposits 4,834,710 3,651,124 32.4
Shareholders' equity 649,411 454,594 42.9
BALANCE SHEET (Averages - Six Months Ended)
Total assets $8,630,020 $6,132,254 40.7 %
Loans 4,589,087 3,830,696 19.8
Securities 3,175,367 1,712,468 85.4
Total earning assets 7,817,963 5,623,027 39.0
Intangible assets 243,263 96,808 151.3
Interest-bearing liabilities 7,064,208 5,053,965 39.8
Total deposits 4,713,341 3,633,457 29.7
Shareholders' equity 651,248 459,980 41.6
(1) As restated in TSFG's December 31, 2002 10-K.
Financial Highlights, 3
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
% Change
Restated (1) 2nd Quarter
6/30/03 12/31/02 6/30/02 2003/2002
- ------------------------------------------------------------------------------------------------------------------------------------
CREDIT QUALITY
Nonaccrual loans - commercial $ 54,306 $ 61,206 $ 35,477 53.1 %
Nonaccrual loans - consumer 2,928 2,384 3,519 (16.8)
Restructured loans - - - -
---------- ---------- ---------- -----
Nonperforming loans 57,234 63,590 38,996 46.8
Other real estate owned 7,827 10,596 7,696 1.7
---------- ---------- ---------- -----
Nonperforming assets 65,061 74,186 46,692 39.3
---------- ---------- ---------- -----
Nonperforming loans as a % of loans held for investment 1.22 % 1.43 % 1.00 %
Nonperforming assets as a % of loans held for inv. and OREO 1.39 1.67 1.19
Allowance for loan losses as a % of loans held for investment 1.37 1.58 1.20
Allowance for loan losses as a % of nonperforming loans 1.12 x 1.11 x 1.20 x
Specific allowance for impaired loans $ 11,937 $ 22,016 $ 4,259 180.3
Loans past due 90 days still accruing interest 5,456 5,414 6,951 (21.5)
Net loan charge-offs:
QTR ended 7,181 4,049 4,467 60.8
YTD ended 16,823 19,539 10,084
Net loan charge-offs as a % of avg. loans (annualized):
QTR ended 0.62 % 0.37 % 0.46 %
YTD ended 0.73 0.49 0.53
CREDIT QUALITY - Excluding Rock Hill B&T Workout Loans
Loans held for investment $4,637,959 $4,361,658 $3,914,789 18.5 %
Allowance for loan losses 55,798 53,979 46,985 18.8
Nonaccrual loans - commercial 28,747 32,212 35,477 (19.0)%
Nonaccrual loans - consumer 2,928 2,384 3,519 (16.8)
Restructured loans - - - -
---------- ---------- ---------- -----
Nonperforming loans 31,675 34,596 38,996 (18.8)
Other real estate owned 7,827 10,422 7,696 1.7
---------- ---------- ---------- -----
Nonperforming assets 39,502 45,018 46,692 (15.4)
---------- ---------- ---------- -----
Nonperforming loans as a % of loans held for investment 0.68 % 0.79 % 1.00 %
Nonperforming assets as a % of loans held for inv. and OREO 0.85 1.03 1.19
Allowance for loan losses as a % of loans held for investment 1.20 1.24 1.20
Allowance for loan losses as a % of nonperforming loans 1.76 x 1.56 x 1.20 x
Specific allowance for impaired loans $ 5,549 $ 9,429 $ 4,259 30.3
Loans past due 90 days still accruing interest 5,067 5,392 6,951 (27.1)
Net loan charge-offs:
QTR ended 4,523 4,416 4,467 1.3
YTD ended 10,056 19,539 10,084 (0.3)
Net loan charge-offs as a % of avg. loans (annualized):
QTR ended 0.39 % 0.41 % 0.46 %
YTD ended 0.44 0.49 0.53
OPERATIONS DATA
Branch offices 114 117 91 25.3 %
ATMs 105 105 81 29.6
Employees (full-time equivalent) 1,718 1,700 1,379 24.6
Internet banking customers 53,369 35,227 33,305 60.2
STOCK PERFORMANCE (At Period End)
Market price per share of common stock $ 23.13 $ 20.66 $ 22.41 3.2 %
Indicated annual dividend 0.56 0.56 0.48 16.7
Dividend yield 2.42 % 2.71 % 2.14 %
Price/book ratio 1.64 x 1.51 x 1.92 x
Market capitalization $1,084,727 $ 978,197 $ 904,059 20.0
(1) As restated in TSFG's December 31, 2002 10-K.
Financial Highlights, 4
The South Financial Group, Inc. and Subsidiaries
Financial Highlights
(dollars in thousands, except share data) (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
-------------------------------------------------
6/30/03 Restated (1) 6/30/02 % Change
----------------------- ----------------------- --------------------
Diluted Diluted Diluted
EPS EPS EPS
- ------------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF GAAP vs. NON-GAAP MEASURES
NET INCOME, AS REPORTED (GAAP) $ 22,699 $0.48 $ 15,339 $0.37 48.0 % 29.7 %
Merger-related costs 382 -
Related income taxes (122) -
---------- ----------
Net income, excluding merger-related items 22,959 0.48 15,339 0.37 49.7 29.7
Adjustments for other non-operating items:
Gain on sale of available for sale securities (3,197) (186)
Loss on equity investments - 150
Gain on disposition of assets and liabilities (601) -
Impairment loss from write-down of assets 268 -
Related income taxes 1,129 12
---------- ----------
OPERATING EARNINGS 20,558 0.43 15,315 0.37 34.2 16.2
Add: Amortization of intangibles, net of tax 492 161
---------- ----------
OPERATING EARNINGS, CASH BASIS $ 21,050 $0.44 $ 15,476 $0.38 36.0 15.8
========== ==========
Average common shares outstanding, diluted 47,760,781 41,232,890 15.8
SELECTED BALANCE SHEET (Averages)
Total assets $8,863,338 $6,130,406 44.6
Intangible assets (244,410) (96,688) 152.8
---------- ---------- -----
Tangible assets 8,618,928 6,033,718 42.8
---------- ---------- -----
Shareholders' equity 649,411 454,594 42.9
Intangible assets (244,410) (96,688) 152.8
---------- ---------- -----
Tangible equity 405,001 357,906 13.2
---------- ---------- -----
PERFORMANCE RATIOS (Annualized)
RETURN ON AVERAGE ASSETS:
Using GAAP earnings 1.02 % 1.00 %
Using operating earnings 0.93 1.00
Using operating earnings, cash basis on
average tangible assets 0.98 1.03
RETURN ON AVERAGE EQUITY:
Using GAAP earnings 13.98 13.50
Using operating earnings 12.66 13.48
Using operating earnings, cash basis on
average tangible equity 20.79 17.30
NET INTEREST MARGIN 3.32 3.79
EFFICIENCY RATIOS (TAX EQUIVALENT) (A):
Using GAAP earnings 55.21 53.75
Using operating earnings 56.87 53.78
Using operating earnings, cash basis 56.04 53.42
(1) As restated in TSFG's December 31, 2002 10-K.
(A) Calculated as noninterest expenses, divided by the sum of interest income
(tax equivalent) and noninterest income.
Financial Highlights, 5
The South Financial Group, Inc. and Subsidiaries
Financial Highlights
(dollars in thousands, except share data) (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Ended
-------------------------------------------------
6/30/03 Restated (1) 6/30/02 % Change
----------------------- ----------------------- --------------------
Diluted Diluted Diluted
EPS EPS EPS
- ------------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF GAAP vs. NON-GAAP MEASURES
NET INCOME, AS REPORTED (GAAP) $ 42,744 $0.89 $ 28,446 $0.68 50.3 % 30.9 %
Merger-related costs 1,879 -
Related income taxes (601) -
---------- ----------
Net income, excluding merger-related items 44,022 0.92 28,446 0.68 54.8 35.3
Adjustments for other non-operating items:
Gain on sale of available for sale securities (4,183) (215)
(Gain) loss on equity investments (1,875) 139
Gain on disposition of assets and liabilities (601) -
Impairment loss from write-down of assets 268 -
Related income taxes 2,045 25
Cumulative effect of change in accounting
principle, net of tax - 1,406
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OPERATING EARNINGS 39,676 0.83 29,801 0.72 33.1 15.3
Add: Amortization of intangibles, net of tax 971 324
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OPERATING EARNINGS, CASH BASIS $ 40,647 $0.85 $ 30,125 $0.72 34.9 18.1
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Average common shares outstanding, diluted 48,007,767 41,646,176 15.3
SELECTED BALANCE SHEET (Averages)
Total assets $8,630,020 $6,132,254 40.7
Intangible assets (243,263) (96,808) 151.3
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Tangible assets 8,386,757 6,035,446 39.0
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Shareholders' equity 651,248 459,980 41.6
Intangible assets (243,263) (96,808) 151.3
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Tangible equity 407,985 363,172 12.3
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PERFORMANCE RATIOS (Annualized)
RETURN ON AVERAGE ASSETS:
Using GAAP earnings 0.99 % 0.93 %
Using operating earnings 0.92 0.97
Using operating earnings, cash basis on
average tangible assets 0.97 1.00
RETURN ON AVERAGE EQUITY:
Using GAAP earnings 13.13 12.37
Using operating earnings 12.18 12.96
Using operating earnings, cash basis on
average tangible equity 19.93 16.59
NET INTEREST MARGIN 3.43 3.77
EFFICIENCY RATIOS (TAX EQUIVALENT) (A):
Using GAAP earnings 56.00 54.25
Using operating earnings 56.93 54.29
Using operating earnings, cash basis 56.09 53.92
(1) As restated in TSFG's December 31, 2002 10-K.
(A) Calculated as noninterest expenses, divided by the sum of interest income
(tax equivalent) and noninterest income.
Financial Highlights, 6