Exhibit 99.1
THE SOUTH FINANCIAL GROUP ANNOUNCES FOURTH QUARTER AND 2004 EARNINGS
Highlights include 16% organic loan growth, net interest margin expansion,
improved operating efficiency, expansion in Florida and five-year annualized
total return to shareholders of 15%
GREENVILLE, S.C., Jan. 17 /PRNewswire-FirstCall/ -- The South Financial
Group, Inc. (Nasdaq: TSFG) today reported fourth quarter 2004 net income of
$25.8 million, or $0.35 per diluted share, compared with $28.4 million, or $0.50
per diluted share, in the fourth quarter of 2003. Net income for 2004 totaled
$119.1 million, or $1.80 per diluted share, compared with $95.1 million, or
$1.89 per diluted share, for the same period of 2003.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000424/TSFGLOGO )
Fourth quarter 2004 operating earnings, which exclude merger-related costs
and other non-operating items, totaled $37.0 million, or $0.51 per diluted
share, compared with $27.7 million, or $0.48 per diluted share, for fourth
quarter 2003. Operating earnings for 2004 totaled $129.6 million, or $1.96 per
diluted share, compared with $89.2 million, or $1.77 per diluted share, in 2003.
"For The South Financial Group, 2004 was another great year, reflecting
progress in executing our plans. We produced strong year-over-year operating EPS
growth through 16% organic loan growth, an expanding net interest margin and
improved operating efficiency, while significantly improving our earning asset
mix and further enhancing our footprint," stated Mack I. Whittle, Jr., President
and Chief Executive Officer of The South Financial Group. "In the second half of
2004, we completed two strategic acquisitions and announced a third. With these
acquisitions, our Florida markets represent approximately 42% of our total
deposit base. Importantly, we are now the only bank over $4 billion in total
assets having 90% or more of its deposits in multiple MSAs in the coastal states
from North Carolina to Florida. That speaks to the franchise value of our
company. Our current earnings momentum, combined with a very dynamic footprint,
positions us well for continued growth in 2005."
"In 2004, TSFG's total return to shareholders was 19%, making 2004 a
rewarding year for our shareholders," Whittle continued. "Over the past three
and five years, TSFG's compound annualized total return to shareholders,
assuming reinvestment of dividends, was 24% and 15%, respectively, outperforming
the S&P 500 Index and Philadelphia KBW Bank Index."
Fourth quarter 2004 non-operating items included a non-cash charge of $10.4
million for "other-than-temporary" impairment on Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation perpetual preferred
stock. This impairment had no impact on TSFG's taxes, capital or operating
earnings.
Strong Balance Sheet Growth Drives Revenues Upward
Fourth quarter 2004 total revenue of $120.0 million was negatively impacted
by the non-cash "other-than-temporary" impairment charge taken, and as a result
was down 12% annualized from the third quarter 2004 revenue of $123.8 million.
Total operating revenue, which includes tax-equivalent net interest income and
operating noninterest income, increased 16% on a sequential quarter annualized
basis to $129.8 million, compared with third quarter 2004 operating revenue of
$124.7 million. The growth in operating revenues was primarily attributable to
an increase in net interest income.
Fourth quarter net interest income rose 19% annualized over third quarter
2004. The increase was primarily attributable to strong organic loan growth and
an improved net interest margin. Fourth quarter organic loan growth was 6% on a
sequential quarter annualized basis. Organic loan growth for the full year of
2004 was 16%. The fourth quarter decline in the percentage growth rate of
organic loans resulted from increased loan pay-offs. However, absolute
production of new loans and TSFG's loan pipelines remain at levels experienced
throughout the year.
The net interest margin for fourth quarter 2004 rose 3 basis points to
3.39% from 3.36% in the third quarter 2004 and rose 16 basis points from 3.23%
in the fourth quarter of 2003. For the full year 2004, TSFG's net interest
margin totaled 3.34%, expanding 7 basis points from 3.27% for 2003. TSFG's
margin benefited from the rising rate environment during 2004, which included
five short-term rate increases. Also, a significant portion of TSFG's 2004 loan
production was variable rate, allowing a greater percentage of earning assets to
re-price more quickly. Additionally, in 2004, TSFG shifted its asset mix during
a period of strong loan growth and in connection with its acquisitions. This
enhanced earning asset mix consisting of higher-yielding loans contributed to an
increased net interest margin.
The decrease in noninterest income from $24.1 million in the third quarter
2004 to $15.4 million in the fourth quarter 2004 was a result of the non-cash
"other-than-temporary" impairment charge recorded. Operating noninterest income
increased to $24.0 million, up 4% annualized from $23.8 million in the third
quarter of 2004 and 23% from $19.5 million in the fourth quarter of 2003.
Credit Quality Continues to Improve
TSFG's major credit quality indicators improved during the fourth quarter.
Nonperforming assets as a percentage of loans held for investment and foreclosed
property at December 31, 2004 was 0.69%, a meaningful improvement from 0.83% at
September 30, 2004 and 1.06% at December 31, 2003. TSFG's nonperforming asset
ratio has now improved every quarter since December 31, 2002. As expected, net
loan charge-offs as a percentage of average loans held for investment were 0.50%
for the fourth quarter 2004, compared with 0.51% for the third quarter 2004 and
0.47% for the fourth quarter 2003.
The allowance for loan losses was 1.20% of loans, compared with 1.21% at
the end of the third quarter of 2004. The allowance for loan losses now provides
more than two times coverage of nonperforming loans, increasing to 2.15 times at
December 31, 2004 from 1.67 times at September 30, 2004 and 1.47 times at
December 31, 2003.
Strong Operating Leverage Drives Efficiency
The South Financial Group continues to focus on producing operating revenue
efficiently. As a result of the non-cash impairment charge recorded in the
fourth quarter 2004, TSFG's GAAP efficiency ratio increased to 57.2% from 56.4%
in the third quarter of 2004 and 56.3% in the fourth quarter of 2003. For the
fourth quarter, total GAAP revenue decreased 12% annualized from the prior
quarter and increased 17% from the fourth quarter of 2003, while noninterest
expenses decreased 7% annualized from the prior quarter and increased 19% from
the fourth quarter of 2003.
TSFG's operating efficiency ratios improved to 50.9% in the fourth quarter
of 2004 from 51.5% in the third quarter of 2004 and 54.9% in the fourth quarter
of 2003. Total operating revenue increased 16% and 31%, respectively, on a
sequential quarter annualized basis and year-over-year basis while operating
noninterest expenses increased 12% and 22%, respectively, for the same periods.
TSFG's operating efficiency ratio has now improved 800 basis points from 58.9%
for the fourth quarter of 2002.
While TSFG does emphasize cost control, this significant improvement in
operating efficiency was primarily attributable to TSFG's ability to
consistently generate positive operating leverage by growing operating revenue
at a faster rate than operating noninterest expenses.
Pointe Acquisition Enhances High-Growth Florida Franchise
On October 27th, The South Financial Group entered into a definitive
agreement to acquire Pointe Financial, headquartered in Boca Raton, Florida.
Pointe will complement TSFG's existing locations in the Broward/Dade/Palm Beach
county area by adding approximately $311 million in deposits, $287 million in
loans and 10 additional banking locations and by improving our market presence
in South Florida. TSFG expects to close the acquisition, which is subject to
regulatory approval and approval by the Pointe Financial shareholders, in April
2005.
General Information
The South Financial Group is a financial services company, headquartered in
Greenville, South Carolina with approximately $13.8 billion in total assets and
153 branch offices in Florida, North Carolina and South Carolina. TSFG focuses
on fast-growing banking markets in the Southeast and concentrates its growth in
metropolitan statistical areas. TSFG operates two subsidiary banks. Carolina
First Bank, the largest South Carolina-based commercial bank, operates in North
Carolina, South Carolina and on the Internet under the brand name, Bank
CaroLine. Mercantile Bank operates in select Florida markets. CIO magazine
recognized The South Financial Group among its "Agile 100" companies in
information technology for 2004. The South Financial Group's common stock trades
on the Nasdaq National Market under the symbol TSFG. Press releases along with
additional information may also be found at The South Financial Group's website:
http://www.thesouthgroup.com .
Conference Call / Webcast Information
The South Financial Group will host a conference call Tuesday, January 18,
at 10:00 a.m. (ET) to discuss the fourth quarter 2004 results. Additional
material information, including forward-looking statements such as trends and
projections, may be discussed during the presentation. TSFG will also provide
supplemental financial information in the Investor Relations section of its
website under the financial information button. To participate in the conference
call or webcast, please follow the instructions listed below.
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
1-888-445-8682 or 1-402-998-1334.
Webcast: To gain access to the webcast, which will be "listen-only," please
go to http://www.thesouthgroup.com under the Investor Relations tab and click on
the sequential "Webcast/The South Financial Group 4th Quarter Earnings
Conference Call." For those unable to participate during the live webcast, it
will be archived on The South Financial Group website until February 1, 2005.
Explanation of TSFG's Use of Certain Non-GAAP Financial Measures and
Forward-Looking Statements
This press release contains financial information determined by methods
other than in accordance with Generally Accepted Accounting Principles ("GAAP").
The attached financial highlights provide reconciliations between GAAP net
income and net income excluding merger-related costs and other non- operating
items (such as gain or losses on asset sales, loss on early extinguishment of
debt, impairment charges, and non-operating expenses). In addition, TSFG
provides data eliminating intangibles and related amortization in order to
present data on a "cash operating basis." The economic substance of
non-operating and "cash operating basis" items is clearly defined.
TSFG's management uses these non-GAAP measures in its analysis of TSFG's
performance and believes presentations of financial measures excluding merger-
related costs and these non-operating items provide useful supplemental
information, a clearer understanding of TSFG's financial performance, and better
reflect TSFG's core operating activities. Management uses operating earnings in
the calculation of certain of TSFG's ratios, 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 operating activities. TSFG believes the non-GAAP
measures enhance investors' understanding of the Company's business and
performance. These measures are also useful in understanding performance trends
and facilitate comparisons with the performance of others in the financial
services industry.
The limitations associated with utilizing operating measures 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
measures. These disclosures should not be considered an alternative to GAAP.
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, credit
quality assessment, the risks of changes in interest rates and effects of future
economic conditions and market performance. 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, 2003. 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.
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
% Change
12/31/04
Three Months Ended vs.
--------------------------------------------- (Annualized)
12/31/04 9/30/04 12/31/03 9/30/04 12/31/03
------------- ------------- ------------- ------------- -------------
TOTAL REVENUE (A)
GAAP $ 119,966 $ 123,841 $ 102,427 (12.4)% 17.1%
Operating (B) 129,797 124,683 98,764 16.3 31.4
EARNINGS
GAAP earnings $ 25,822 $ 31,015 $ 28,421 (66.6)% (9.1)%
Operating earnings 37,047 34,925 27,700 24.2 33.7
Cash operating
earnings 38,218 36,212 28,592 22.0 33.7
DILUTED SHARE DATA
Average common shares
outstanding 72,832,859 70,342,922 57,229,604 14.1% 27.3%
GAAP earnings $ 0.35 $ 0.44 $ 0.50 (81.4) (30.0)
Operating earnings 0.51 0.50 0.48 8.0 6.3
Cash operating
earnings 0.52 0.51 0.50 7.8 4.0
PERFORMANCE RATIOS
(Annualized)
RETURN ON AVERAGE
ASSETS:
GAAP earnings 0.75% 0.94% 1.07%
Operating earnings 1.08 1.06 1.04
Cash operating earnings on
average tangible assets 1.16 1.14 1.11
RETURN ON AVERAGE EQUITY:
GAAP earnings 7.39 9.55 12.87
Operating earnings 10.60 10.75 12.54
Cash operating earnings on
average tangible equity 19.60 19.45 20.96
NET INTEREST MARGIN
(tax-equivalent) 3.39 3.36 3.23
NONINTEREST INCOME
AS A % OF TOTAL
REVENUE (C):
GAAP 12.84 19.45 23.33
Operating (B) 18.49 19.07 19.70
EFFICIENCY RATIOS (D):
GAAP 57.22 56.41 56.28
Operating (B) 50.89 51.49 54.91
Cash operating (B) 49.49 50.01 53.62
RECONCILIATION OF
GAAP TO NON-GAAP
MEASURES
NET INCOME, AS
REPORTED (GAAP) $ 25,822 $ 31,015 $ 28,421 (66.6)% (9.1)%
Non-operating items:
Gain on sale of
available for
sale securities (499) (678) (2,399)
(Gain) loss on equity
investments (1,267) 367 (2,046)
Employment contract
payments 965 174 512
Merger-related costs 1,627 5,487 2,903
Related income taxes (293) (1,605) 309
Impairment of GSE
preferred stock 10,367 - -
Discontinued operations,
net of income tax 325 165 -
OPERATING EARNINGS
(net income, excluding
non-operating items) 37,047 34,925 27,700 24.2 33.7
Add: Amortization of
intangibles, net of
income tax 1,171 1,287 892
CASH OPERATING EARNINGS
(net income, excluding
non-operating items
and amortization
of intangibles) $ 38,218 $ 36,212 $ 28,592 22.0 33.7
(A) The sum of net interest income and noninterest income.
(B) Total revenue, noninterest income as a % of total revenue, and the
efficiency ratio, on an operating basis, are calculated using tax-
equivalent net interest income and exclude non-operating items. The cash
operating efficiency ratio also excludes amortization of intangibles.
(C) Calculated as noninterest income, divided by the sum of net interest income
and noninterest income.
(D) Calculated as noninterest expenses, divided by the sum of net interest
income and noninterest income.
Supplemental financial information may be found in the Investor Relations
section of TSFG's web site: http://www.thesouthgroup.com .
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
Year Ended
---------------------------
12/31/04 12/31/03 % Change
------------ ------------ --------
TOTAL REVENUE (A)
GAAP $ 461,495 $ 368,081 25.4%
Operating (B) 462,147 353,705 30.7
EARNINGS
GAAP earnings $ 119,117 $ 95,058 25.3%
Operating earnings 129,550 89,232 45.2
Cash operating earnings 133,639 91,606 45.9
DILUTED SHARE DATA
Average common shares outstanding 66,235,171 50,328,353 31.6%
GAAP earnings $ 1.80 $ 1.89 (4.8)
Operating earnings 1.96 1.77 10.7
Cash operating earnings 2.02 1.82 11.0
PERFORMANCE RATIOS (Annualized)
RETURN ON AVERAGE ASSETS:
GAAP earnings 0.98% 1.03%
Operating earnings 1.06 0.96
Cash operating earnings on average
tangible assets 1.14 1.02
RETURN ON AVERAGE EQUITY:
GAAP earnings 10.17 13.40
Operating earnings 11.06 12.58
Cash operating earnings on average
tangible assets 19.01 20.74
NET INTEREST MARGIN (tax-equivalent) 3.34 3.27
NONINTEREST INCOME AS A % OF TOTAL
REVENUE (C):
GAAP 20.53 25.94
Operating (B) 19.70 22.17
EFFICIENCY RATIOS (D):
GAAP 54.22 56.28
Operating (B) 51.24 56.14
Cash operating (B) 49.93 55.17
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES
NET INCOME, AS REPORTED (GAAP) $ 119,117 $ 95,058 25.3%
Non-operating items:
Gain on sale of available for sale
securities (6,998) (11,080)
Gain on equity investments (4,723) (5,376)
Gain on disposition of assets and
liabilities (2,350) (601)
Employment contract payments 1,080 512
Merger-related costs 7,866 5,127
Impairment (recovery) loss from
write-down of assets (277) 268
Conservation grant of land 3,350 -
Loss on early extinguishment of debt 1,429 2,699
Related income taxes 199 2,625
Impairment of GSE preferred stock 10,367 -
Discontinued operations, net of
income tax 490 -
OPERATING EARNINGS (net income,
excluding non-operating items) 129,550 89,232 45.2
Add: Amortization of intangibles,
net of income tax 4,089 2,374
CASH OPERATING EARNINGS (net income,
excluding non-operating items
and amortization of intangibles) $ 133,639 $ 91,606 45.9
(A) The sum of net interest income and noninterest income.
(B) Total revenue, noninterest income as a % of total revenue, and the
efficiency ratio, on an operating basis, are calculated using tax-
equivalent net interest income and exclude non-operating items. The
cash operating efficiency ratio also excludes amortization of
intangibles.
(C) Calculated as noninterest income, divided by the sum of net interest
income and noninterest income.
(D) Calculated as noninterest expenses, divided by the sum of net interest
income and noninterest income.
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
% Change
12/31/04
vs.
(Annualized)
12/31/04 9/30/04 12/31/03 9/30/04 12/31/03
------------ ------------ ------------ -------- ------------
CREDIT QUALITY
Nonaccrual loans
- commercial $ 38,015 $ 51,881 $ 47,137 (106.3)% (19.4)%
Nonaccrual loans
- consumer 2,312 2,239 2,686 13.0 (13.9)
Nonaccrual loans
- mortgage (A) 4,755 3,594 - 128.5 n/m
Restructured loans - - - - -
Nonperforming loans 45,082 57,714 49,823 (87.1) (9.5)
Foreclosed property
(other real estate
owned and personal
property
repossessions) (B) 10,894 8,859 10,951 91.4 (0.5)
Nonperforming
assets 55,976 66,573 60,774 (63.3) (7.9)
Nonperforming loans
as a % of loans held
for investment 0.56% 0.72% 0.87%
Nonperforming assets as
a % of loans held for
investment and
foreclosed property (B) 0.69 0.83 1.06
Allowance for loan
losses as a %
of loans HFI 1.20 1.21 1.28
Allowance for
loan losses to
nonperforming loans 2.15x 1.67x 1.47x
Specific allowance for
impaired loans $ 11,129 $ 15,001 $ 9,689 (102.7) 14.9
Loans past due
90 days or more
(mortgage and
consumer with
interest accruing) (C) 3,764 2,374 3,960 232.9 (4.9)
Net loan charge-offs:
Three months ended 10,229 9,715 6,693 21.0 52.8
Year to date 31,532 21,303 30,259
Average loans
held for
investment:
Three months ended 8,058,301 7,602,063 5,651,082
Year to date 6,909,545 6,523,832 4,864,168
Net loan charge-offs
as a % of
avg. loans
HFI (annualized):
Three months ended 0.50% 0.51% 0.47%
Year to date 0.46 0.44 0.62
CAPITAL RATIOS
Total risk-based
capital 11.21 11.25 12.51
Tier 1 risk-based
capital 9.53 9.53 10.51
Leverage ratio 7.39 7.52 7.49
Tangible equity
to tangible assets 5.99 5.92 6.05
SHARE DATA
Book value per
common share $ 19.66 $ 19.50 $ 16.59 3.3% 18.5%
Tangible book
value per
common share 11.08 10.89 10.61 6.9 4.4
Shares outstanding 71,252,346 70,894,247 59,064,375 2.0 20.6
STOCK PERFORMANCE
Market price per
share of common
stock $ 32.53 $ 28.20 $ 27.75 61.1% 17.2%
Indicated annual
dividend 0.64 0.60 0.60 26.5 6.7
Dividend yield 1.97% 2.13% 2.16%
Price/book ratio 1.65x 1.45x 1.67x
Market
capitalization $ 2,317,839 $ 1,999,218 $ 1,639,036 63.4 41.4
OPERATIONS DATA
Branch offices 153 153 134 -% 14.2%
ATMs 145 141 122 11.3 18.9
Employees (full-time
equivalent) 2,308 2,324 1,918 (2.7) 20.3
Internet banking
customers 190,313 155,248 90,132 89.9 111.1
(A) Effective September 30, 2004, residential mortgage loans were placed
in nonaccrual status as they become 150-days delinquent. Previously,
these loans were not placed in nonaccrual status (unless impaired),
but any associated accrued interest was reserved. See (C) below.
(B) Personal property repossessions totaled $1.0 million at December 31,
2003 and were excluded from nonperforming assets.
(C) Accrued interest reserve associated with these loans totaled $474,000
at December 31, 2003.
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
% Change
12/31/04
Three Months Ended vs.
------------------------------------------ (Annualized)
12/31/04 9/30/04 12/31/03 9/30/04 12/31/03
------------ ------------ ------------ -------- ------------
INCOME STATEMENT
Interest income
(tax-equivalent) $ 161,269 $ 148,371 $ 117,944 34.6% 36.7%
Interest expense 55,474 47,460 38,634 67.2 43.6
Net interest income
(tax-equivalent) 105,795 100,911 79,310 19.3 33.4
Less: tax-equivalent
adjustment 1,230 1,153 782 26.6 57.3
Net interest income 104,565 99,758 78,528 19.2 33.2
Provision for
loan losses 10,829 9,440 4,290 58.5 152.4
Net interest income
after provision
for loan losses 93,736 90,318 74,238 15.1 26.3
NONINTEREST INCOME:
Customer fee income 11,671 11,736 9,926 (2.2) 17.6
Brokerage and trust
income 1,972 2,064 1,885 (17.7) 4.6
Mortgage banking
income, excluding
recovery 1,340 1,498 1,866 (42.0) (28.2)
Recovery on mortgage
servicing rights
impairment 72 16 78 1,392.4 (7.7)
Bank-owned life insurance 2,598 2,869 2,376 (37.6) 9.3
Merchant processing
income 1,681 2,528 1,646 (133.3) 2.1
Insurance income 1,351 1,132 890 77.0 51.8
Gain (loss) on trading
and derivative
activities 1,076 1,150 (214) (25.6) 602.8
Other 2,241 779 1,001 746.6 123.9
Operating noninterest
income (noninterest
income, excluding
non-operating items) 24,002 23,772 19,454 3.8 23.4
Gain on sale of available
for sale securities 499 678 2,399 n/m n/m
Gain (loss) on
equity investments 1,267 (367) 2,046 n/m n/m
Impairment of GSE
preferred stock (10,367) - - n/m n/m
Non-operating
noninterest income (8,601) 311 4,445 n/m n/m
Total noninterest
income 15,401 24,083 23,899 (143.4) (35.6)
NONINTEREST EXPENSES:
Personnel expense 33,642 31,984 26,765 20.6 25.7
Occupancy 5,780 5,841 4,944 (4.2) 16.9
Furniture and equipment 5,763 5,670 4,651 6.5 23.9
Professional fees 2,280 2,318 1,771 (6.5) 28.7
Merchant processing
expense 1,358 1,984 1,280 (125.5) 6.1
Telecommunications 1,346 1,237 1,338 35.1 0.6
Amortization of
intangibles 1,814 1,839 1,274 (5.4) 42.4
Other 14,074 13,324 12,206 22.4 15.3
Operating noninterest
expenses (noninterest
expenses, excluding
non-operating items) 66,057 64,197 54,229 11.5 21.8
Employment contract
payments 965 174 512 n/m n/m
Merger-related costs 1,627 5,487 2,903 n/m n/m
Non-operating
noninterest expenses 2,592 5,661 3,415 n/m n/m
Total noninterest
expenses 68,649 69,858 57,644 (6.9) 19.1
Income before income
taxes and
discontinued operations 40,488 44,543 40,493 (36.2) (0.0)
Income tax expense 14,341 13,363 12,072 29.1 18.8
Discontinued operations,
net of income tax (325) (165) - n/m n/m
Net income $ 25,822 $ 31,015 $ 28,421 (66.6)% (9.1)%
SHARE DATA:
Net income per common
share, basic $ 0.36 $ 0.45 $ 0.51 (79.6)% (29.4)%
Net income per common
share, diluted 0.35 0.44 0.50 (81.4) (30.0)
Cash dividends
declared per common
share 0.16 0.15 0.15 26.5 6.7
Average common
shares outstanding,
basic 70,910,845 68,635,847 55,837,554 13.2 27.0
Average common
shares outstanding,
diluted 72,832,859 70,342,922 57,229,604 14.1 27.3
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
Year Ended
----------------------------------
12/31/04 12/31/03 % Change
--------------- --------------- ---------------
INCOME STATEMENT
Interest income (tax-equivalent) $ 546,588 $ 416,809 31.1%
Interest expense 175,504 141,537 24.0
Net interest income (tax-equivalent) 371,084 275,272 34.8
Less: tax-equivalent adjustment 4,356 2,681 62.5
Net interest income 366,728 272,591 34.5
Provision for loan losses 34,987 20,581 70.0
Net interest income after provision
for loan losses 331,741 252,010 31.6
NONINTEREST INCOME:
Customer fee income 43,499 35,466 22.6
Brokerage and trust income 8,501 8,464 0.4
Mortgage banking income, excluding
impairment 5,897 10,499 (43.8)
Impairment recovery (loss) on mortgage
servicing rights 209 (18) 1,261.1
Bank-owned life insurance 11,215 8,320 34.8
Merchant processing income 8,653 7,214 19.9
Insurance income 4,520 3,565 26.8
Gain on trading and derivative
activities 3,209 1,843 74.1
Other 5,360 3,080 74.0
Operating noninterest income
(noninterest income, excluding non-
operating items) 91,063 78,433 16.1
Gain on sale of available for sale
securities 6,998 11,080 n/m
Gain on equity investments 4,723 5,376 n/m
Impairment of GSE preferred stock (10,367) - n/m
Gain on disposition of assets and
liabilities 2,350 601 n/m
Non-operating noninterest income 3,704 17,057 n/m
Total noninterest income 94,767 95,490 (0.8)
NONINTEREST EXPENSES:
Personnel expense 118,410 100,778 17.5
Occupancy 21,878 18,925 15.6
Furniture and equipment 20,938 17,922 16.8
Professional fees 8,206 6,479 26.7
Merchant processing expense 6,811 5,622 21.1
Telecommunications 4,834 4,815 0.4
Amortization of intangibles 6,043 3,433 76.0
Other 49,676 40,590 22.4
Operating noninterest expenses
(noninterest expenses, excluding non-
operating items) 236,796 198,564 19.3
Employment contract payments 1,080 512 n/m
Merger-related costs 7,866 5,127 n/m
Impairment (recovery) loss from
write-down of assets (277) 268 n/m
Conservation grant of land 3,350 - n/m
Loss on early extinguishment of debt 1,429 2,699 n/m
Non-operating noninterest expenses 13,448 8,606 n/m
Total noninterest expenses 250,244 207,170 20.8
Income before income taxes, minority
interest and discontinued operations 176,264 140,330 25.6
Income tax expense 56,657 43,260 31.0
Minority interest in consolidated
subsidiary, net of income tax - (2,012) 100.0
Discontinued operations, net of
income tax (490) - n/m
Net income $ 119,117 $ 95,058 25.3%
SHARE DATA:
Net income per common share, basic $ 1.84 $ 1.93 (4.7)%
Net income per common share, diluted 1.80 1.89 (4.8)
Cash dividends declared per common
share 0.61 0.57 7.0
Average common shares outstanding,
basic 64,592,317 49,204,173 31.3
Average common shares outstanding,
diluted 66,235,171 50,328,353 31.6
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
% Change
12/31/04
vs.
(Annualized)
12/31/04 9/30/04 12/31/03 9/30/04 12/31/03
-------------- -------------- -------------- ------------ --------
BALANCE SHEET
(Period End)
Cash and due
from banks $ 199,847 $ 210,125 $ 184,057 (19.5)% 8.6%
Interest-bearing
bank balances 4,669 850 2,048 1,787.4 128.0
Federal funds
sold - - 137 n/m n/m
Securities 4,310,088 4,308,485 4,007,571 0.1 7.5
Loans held
for sale 21,302 21,933 29,619 (11.4) (28.1)
Loans held
for
investment 8,107,757 7,984,824 5,732,205 6.1 41.4
Allowance for
loan losses (96,918) (96,318) (73,287) 2.5 32.2
Net loans 8,032,141 7,910,439 5,688,537 6.1 41.2
Premises and
equipment,
net 170,648 163,428 142,705 17.6 19.6
Intangible
assets 611,450 610,347 353,079 0.7 73.2
Other assets 460,971 447,775 341,267 11.7 35.1
Total
assets $ 13,789,814 $ 13,651,449 $ 10,719,401 4.0% 28.6%
Noninterest-
bearing
deposits $ 1,237,877 $ 1,222,467 $ 882,129 5.0 40.3%
Interest-
bearing
deposits 6,427,660 6,589,002 5,146,520 (9.7) 24.9
Total
deposits 7,665,537 7,811,469 6,028,649 (7.4) 27.2
Federal funds
purchased
and repurchase
agreements 3,248,629 2,999,794 2,329,666 33.0 39.4
Debt and
other
borrowed
funds 1,340,525 1,340,364 1,264,158 - 6.0
Other
liabilities 134,520 117,148 117,059 59.0 14.9
Total
liabilities 12,389,211 12,268,775 9,739,532 3.9 27.2
Shareholders'
equity 1,400,603 1,382,674 979,869 5.2 42.9
Total
liabilities
and
shareholders'
equity $ 13,789,814 $ 13,651,449 $ 10,719,401 4.0% 28.6%
BALANCE SHEET (Averages
- Three Months Ended)
Total
assets $ 13,694,853 $ 13,162,858 $ 10,673,057 16.1% 28.3%
Intangible
assets (614,507) (551,625) (337,820) 45.3 81.9
Tangible
assets 13,080,346 12,611,233 10,335,237 14.8 26.6
Loans 8,071,632 7,617,721 5,685,409 23.7 42.0
Securities
(excludes
unrealized
gains (losses)
on available
for sale
securities) 4,342,378 4,313,121 4,033,841 2.7 7.6
Total
earning
assets 12,422,343 11,963,843 9,728,449 15.2 27.7
Interest-
bearing
liabilities 10,974,606 10,601,586 8,838,544 14.0 24.2
Total
deposits 7,773,699 7,671,886 6,017,132 5.3 29.2
Shareholders'
equity 1,390,092 1,292,162 883,514 30.2 57.3
Intangible
assets (614,507) (551,625) (337,820) 45.3 81.9
Tangible
equity 775,585 740,537 545,694 18.8 42.1
BALANCE SHEET
(Averages -
Year to Date)
Total
assets $ 12,200,614 $ 11,698,899 $ 9,260,767 17.1% 31.7%
Intangible
assets (468,060) (418,889) (267,416) 46.7 75.0
Tangible
assets 11,732,554 11,280,010 8,993,351 16.0 30.5
Loans 6,927,336 6,543,119 4,915,437 23.4 40.9
Securities
(excludes
unrealized
gains
(losses)
on available
for sale
securities) 4,158,202 4,096,363 3,471,324 6.0 19.8
Total
earning
assets 11,101,951 10,658,607 8,425,590 16.6 31.8
Interest-
bearing
liabilities 9,881,134 9,513,983 7,638,862 15.4 29.4
Total
deposits 6,893,753 6,598,296 5,147,627 17.8 33.9
Shareholders'
equity 1,171,121 1,097,598 709,139 26.6 65.1
Intangible
assets (468,060) (418,889) (267,416) 46.7 75.0
Tangible
equity 703,061 678,709 441,723 14.3 59.2
SOURCE The South Financial Group, Inc.
-0- 01/17/2005
/CONTACT: Timothy K. Schools, EVP Corporate Development of The South
Financial Group, Inc., +1-864-255-8980 /
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/Web site: http://www.thesouthgroup.com/