Exhibit 99.1
THE SOUTH FINANCIAL GROUP ANNOUNCES SECOND QUARTER 2005 EARNINGS
HIGHLIGHTS INCLUDE DOUBLE-DIGIT ORGANIC DEPOSIT, ORGANIC LOAN, AND OPERATING
NONINTEREST INCOME GROWTH; NET LOAN CHARGE-OFF RATIO OF 0.32%; AND
STRENGTHENED BALANCE SHEET.
GREENVILLE, S.C., July 21 /PRNewswire-FirstCall/ -- The South Financial
Group, Inc. (Nasdaq: TSFG) today reported second quarter 2005 net income of
$28.4 million, or $0.38 per diluted share, compared with $30.0 million, or
$0.49 per diluted share, for the second quarter of 2004. Net income for the
first six months of 2005 totaled $62.9 million, or $0.85 per diluted share,
compared with $62.3 million, or $1.02 per diluted share, for the same period
of 2004.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000424/TSFGLOGO)
Second quarter 2005 operating earnings, which exclude non-operating items,
totaled $33.2 million, or $0.45 per diluted share, compared with
$29.1 million, or $0.48 per diluted share, for the second quarter of 2004.
Operating earnings for the first six months of 2005 totaled $66.5 million, or
$0.90 per diluted share, compared with $57.6 million, or $0.95 per diluted
share, in 2004.
"At our Investor Day last month, we identified three key opportunities to
improve longer-term financial performance -- lower net loan charge-offs,
increase noninterest income as a percentage of total revenues, and stabilize
and subsequently expand the net interest margin," said Mack I. Whittle, Jr.,
President and Chief Executive Officer of The South Financial Group. "This
quarter, we made meaningful progress. We lowered net loan charge-offs to
0.32%, our best level since 2000. Our growth in noninterest income
accelerated, reflecting the investments we've made in our mortgage, treasury
management, and wealth management areas over the last few quarters. Also, we
took actions to help stabilize our net interest margin."
"The banking industry continues to face a challenging interest rate
environment that's putting pressure on net interest margins. In the second
quarter, we took steps to counter these pressures by reducing our investment
securities and wholesale funding levels. Longer-term, we're striving to
improve our funding mix, while continuing our strong deposit and loan growth.
During the second quarter, we produced high-quality double-digit loan growth.
And recently, we have begun to see results from our programs to grow customer
deposits. For the second quarter in a row, deposits grew faster than loans."
Whittle continued, "Equally important, we're making great strides in
improving the overall risk profile of our company. This quarter, we
diversified our revenue sources through three acquisitions, reduced our net
loan charge-offs, reported loan loss provisions in excess of net charge-offs,
maintained a stable allowance for loan loss percentage, and reduced our
investment securities and wholesale funding."
As discussed at its June 2005 Investor Day, TSFG began repositioning its
balance sheet to reduce interest rate risk and improve longer-term return on
assets and capital. In connection with these actions, TSFG reported second
quarter losses on security sales and prepayment penalties on early
extinguishment of debt.
TSFG ended the quarter with securities to total assets of 29% at June 30,
2005, down from 33% at March 31, 2005, and wholesale funding (including
brokered certificates of deposits) to total assets of 38% at June 30, 2005,
down from 43% at March 31, 2005. In the near-term, TSFG intends to pay down
additional wholesale funding by allowing investment securities to mature
without reinvestment and continuing its focus on growing customer deposits.
Revenue
Total revenue, defined as net interest income plus noninterest income,
increased to $131.5 million in the second quarter 2005 from $129.6 million in
the first quarter of 2005. Second quarter 2005 total revenues included
$853,000 in losses on investment securities sales, principally related to the
reduction in investment securities levels. First quarter 2005 total revenues
included $1.9 million in gains on investment securities sales. Second quarter
2005 total operating revenues (tax-equivalent net interest income plus
noninterest income, excluding non-operating items such as gains and losses on
investment securities sales) increased 14.7% annualized to $133.8 million from
$129.0 million for the first quarter 2005.
Second quarter 2005 tax-equivalent net interest income of $108.3 million
increased $3.0 million, or 11.5% annualized, compared with the first quarter
of 2005. A 17.2% annualized increase in average earning assets, principally
from strong organic loan growth and the May 2005 Pointe Financial acquisition,
and one additional calendar day helped offset the impact from an 8 basis point
decline in the net interest margin.
The net interest margin for the second quarter of 2005 declined to 3.23%
from 3.31% in the first quarter of 2005. The margin contraction was due
primarily to the continued flattening of the yield curve and narrowing
interest rate spreads for investment securities relative to wholesale funding
costs. The second quarter 2005 investment security yield declined 6 basis
points from the prior quarter, while the wholesale funding cost (including
brokered CDs) increased 38 basis points. In the second quarter of 2005,
TSFG's loan yield increased 26 basis points, while the total cost of customer
deposits (total deposits minus brokered CDs) increased 16 basis points,
improving the interest spread between loans and customer deposits.
Operating noninterest income totaled $25.5 million, up 28.9% annualized
from $23.8 million for the first quarter of 2005. TSFG benefited from double-
digit annualized growth in customer fee income and strong growth from all of
its fee-based businesses, as well as noninterest income from the acquisitions
that closed during the quarter. In the second quarter of 2005, deposit
service charges rebounded from recent declines experienced throughout the
industry. Second quarter 2005 operating noninterest income included a
$1.0 million loss on trading activities, whereas the first quarter of 2005 had
a $904,000 gain from these activities.
Balance Sheet Trends
For the second consecutive quarter, customer deposits grew faster than
loans, both in growth rates as well as balances. Annualized organic customer
deposit growth (based on period end customer deposits, excluding acquired
customer deposits) totaled 21.6% for the second quarter of 2005 and 23.0% for
the first half of 2005.
TSFG is making strides to enhance its funding with strong customer deposit
growth, as evidenced by total customer deposits funding a larger percentage of
average earning assets than in the prior quarter. In addition, TSFG
experienced strong double-digit growth in two of its lower-cost customer
deposit categories. For the second quarter of 2005, organic noninterest-
bearing deposits and interest checking grew at annualized rates of 19.5% and
18.4%, respectively.
TSFG's total deposit growth was widespread throughout its markets, with
ten of its 12 banking markets reaching double-digit annualized growth rates
for the first half of 2005. TSFG attributes its success in generating
customer deposits to increased management focus, maturation of its banking
markets, introduction of new products, and effective deposit campaigns.
Annualized organic loan growth (based on period end loans held for
investment, excluding acquired loans) totaled 12.2% for the second quarter of
2005 and 13.6% for the first half of 2005. This continued TSFG's history of
strong organic loan growth. Organic loan growth totaled 16.2% and 11.9% for the
years ended December 31, 2004 and 2003, respectively.
Credit Quality
Second quarter 2005 net loan charge-offs were $6.8 million, which
represents a decline of $2.4 million, or 25.8%, from first quarter 2005. Net
loan charge-offs as a percentage of average loans held for investment totaled
0.32% for the second quarter of 2005, an improvement from 0.45% for the first
quarter of 2005 and 0.36% for the second quarter of 2004.
Nonperforming assets as a percentage of loans held for investment and
foreclosed property at June 30, 2005 was 0.61%, up slightly from 0.58% at
March 31, 2005 and down significantly from 0.92% at June 30, 2004. This
follows nine consecutive quarters of improvement in TSFG's nonperforming asset
ratio.
For the quarter, the provision for loan losses exceeded net loan charge-
offs by $3.1 million. The allowance for loan losses at June 30, 2005 was
1.18% of loans held for investment, the same as March 31, 2005. The allowance
for loan losses covered nonperforming loans 2.49 times at June 30, 2005, the
same as March 31, 2005.
Efficiency
TSFG's GAAP efficiency ratio totaled 60.5% for the second quarter of 2005,
up from 51.3% in the first quarter of 2005 and 51.2% in the second quarter of
2004. TSFG's operating efficiency ratio totaled 54.7%, up from 51.9% for the
first quarter of 2005 and 51.2% for the second quarter of 2004. The increase in
TSFG's operating efficiency ratio was primarily from a reduction in revenue from
net interest margin compression and trading losses, growth and investment in
fee-based businesses, and the recent acquisitions.
The difference in the second quarter 2005 GAAP efficiency and operating
efficiency ratios is primarily attributable to a $3.0 million loss on early
extinguishment of debt, $2.2 million of merger-related costs from the Pointe
Financial acquisition and two non-bank acquisitions, and other non-operating
noninterest expense items totaling $1.1 million.
Over the last year, TSFG made investments to build several noninterest
income areas, particularly mortgage, wealth management, and treasury
management. In general, these areas operate with higher efficiency ratios but
require less capital. TSFG's goal is to maintain an operating efficiency
ratio below 55%.
Capital
Tangible shareholders' equity at June 30, 2005 totaled $828.9 million, or
$11.15 per share, representing 5.84% of tangible assets. This compares with
$772.5 million, or $10.77 per share at March 31, 2005, representing 5.49% of
tangible assets. Tangible equity per share increased 14.2% annualized during
this period, partially due to an improvement in the unrealized loss on
available for sale securities to $42.9 million at June 30, 2005 from
$106.1 million at March 31, 2005. Excluding the impact of the unrealized loss
on available for sale securities, TSFG's tangible equity to tangible assets
ratio improved to 6.02% at June 30, 2005 from 5.92% at March 31, 2005, despite
the fact that the second quarter included partial cash payments in three
acquisitions.
Expansion
During the second quarter of 2005, TSFG completed three acquisitions and
opened two de novo branches -- one in Shelby, North Carolina and one in St.
Augustine, Florida. Non-banking acquisitions included the Koss Olinger group
of companies, a wealth management advisory firm operating in North Florida,
and Bowditch Insurance Corporation, a property and casualty company operating
in Jacksonville, Florida. TSFG also acquired Pointe Financial, a community
bank headquartered in Boca Raton, Florida, complementing TSFG's existing
locations in the Broward/Miami-Dade/Palm Beach county areas. With this
acquisition, TSFG improved its market presence in South Florida and added
approximately $328 million in deposits, $312 million in loans, and 10
additional banking locations.
Conference Call / Webcast Information
The South Financial Group will host a conference call on Friday, July 22nd
at 10:00 a.m. (ET) to discuss the second quarter 2005 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 1-517-645-6236 using the
access code "The South." A 7-day rebroadcast of the call will be available
via 1-866-448-7646 or 1-203-369-1196.
Webcast: To gain access to the webcast, which will be "listen-only,"
please go to www.thesouthgroup.com under the Investor Relations tab and click
on the link "Webcast/The South Financial Group 2nd Quarter Earnings Conference
Call." For those unable to participate during the live webcast, it will be
archived on The South Financial Group website until August 5, 2005.
General Information
The South Financial Group is a financial services company, headquartered
in Greenville, South Carolina with approximately $14.9 billion in total assets
and 167 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 Florida. Approximately 40%
of TSFG's total bank deposits as of June 30, 2005 are in Florida. 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: www.thesouthgroup.com.
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, 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 utilizes
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 TSFG'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.
This news release contains forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995) that are provided to assist
in the understanding of anticipated future financial performance. These
statements (as well as other forward-looking statements that may be made by
management in the related conference call) include but are not limited to,
descriptions of management's plans, objectives or goals for future operations,
and predictions, forecasts or other statements about future operations. They
also include such items as return goals, expected financial results for
mergers, estimates of merger synergies and merger-related charges, factors
that will affect credit quality and the net interest margin, the risks and
effects of changes in interest rates, and effects of future economic
conditions and market performance. However, such statements necessarily
involve risks and uncertainties and there are a number of factors -- many of
which are beyond TSFG's control -- that could cause the actual conditions,
events or 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, please refer to TSFG's
filings with the Securities and Exchange Commission. 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)
Three Months Ended % Change 6/30/05 vs.
--------------------------------------------- -----------------------------
6/30/05 3/31/05 6/30/04 3/31/05 6/30/04
------------- ------------- ------------- ------------- -------------
(Annualized)
TOTAL REVENUE (1)
GAAP $ 131,513 $ 129,644 $ 106,384 5.8% 23.6%
Operating (2) 133,763 129,025 105,790 14.7 26.4
EARNINGS
GAAP earnings $ 28,373 $ 34,559 $ 29,987 (71.8)% (5.4)%
Operating earnings 33,211 33,280 29,105 (0.8) 14.1
Cash operating earnings 34,656 34,490 29,903 1.9 15.9
DILUTED SHARE DATA
Average common shares
outstanding 74,421,103 73,021,005 60,837,792 7.7% 22.3%
GAAP earnings $ 0.38 $ 0.47 $ 0.49 (76.8) (22.4)
Operating earnings 0.45 0.46 0.48 (8.7) (6.3)
Cash operating earnings 0.47 0.47 0.49 - (4.1)
PERFORMANCE RATIOS (Annualized)
RETURN ON AVERAGE ASSETS:
GAAP earnings 0.76% 0.98% 1.09%
Operating earnings 0.89 0.94 1.06
Cash operating earnings on
average tangible assets 0.98 1.02 1.12
RETURN ON AVERAGE EQUITY:
GAAP earnings 7.78 9.95 12.04
Operating earnings 9.10 9.58 11.68
Cash operating earnings
on average tangible
equity 17.22 17.54 18.48
NET INTEREST MARGIN
(tax-equivalent) 3.23 3.31 3.23
NONINTEREST INCOME AS A % OF TOTAL
REVENUE (3):
GAAP 18.75 19.86 24.44
Operating (2) 19.07 18.44 23.04
EFFICIENCY RATIOS (4):
GAAP 60.48 51.30 51.20
Operating (2) 54.74 51.92 51.20
Cash operating (2) 53.14 50.52 50.07
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES
NET INCOME, AS REPORTED
(GAAP) $ 28,373 $ 34,559 $ 29,987 (71.8)% (5.4)%
Non-operating items:
Loss (gain) on sale of
available for sale
securities 1,503 (234) (607)
Gain on equity
investments (650) (1,711) (1,013)
Employment contract
payments (reversals) 222 (37) -
Merger-related costs 2,194 305 575
Impairment (recovery) from
write-down of assets 917 - (277)
Charitable contribution to
foundation - 683 -
Loss (gain) on early
extinguishment
of debt 2,981 (1,428) -
Related income taxes (2,329) 747 440
Discontinued operations,
net of income tax - 396 -
OPERATING EARNINGS
(net income, excluding
non-operating items) 33,211 33,280 29,105 (0.8) 14.1
Add: Amortization of
intangibles, net of
income tax 1,445 1,210 798
CASH OPERATING EARNINGS
(net income, excluding
non-operating items
and amortization
of intangibles) $ 34,656 $ 34,490 $ 29,903 1.9 15.9
(1) The sum of net interest income and noninterest income.
(2) 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.
(3) Calculated as noninterest income, divided by the sum of net interest income
and noninterest income.
(4) 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:
www.thesouthgroup.com.
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
Six Months Ended
-----------------------------
6/30/05 6/30/04 % Change
------------ ------------ ------------
TOTAL REVENUE (1)
GAAP $ 261,157 $ 217,688 20.0%
Operating (2) 262,788 207,667 26.5
EARNINGS
GAAP earnings $ 62,932 $ 62,280 1.0%
Operating earnings 66,491 57,578 15.5
Cash operating earnings 69,146 59,209 16.8
DILUTED SHARE DATA
Average common shares outstanding 73,729,630 60,823,631 21.2%
GAAP earnings $ 0.85 $ 1.02 (16.7)
Operating earnings 0.90 0.95 (5.3)
Cash operating earnings 0.94 0.97 (3.1)
PERFORMANCE RATIOS (Annualized)
RETURN ON AVERAGE ASSETS:
GAAP earnings 0.87% 1.14%
Operating earnings 0.92 1.06
Cash operating earnings on average
tangible assets 1.00 1.12
RETURN ON AVERAGE EQUITY:
GAAP earnings 8.84 12.53
Operating earnings 9.34 11.59
Cash operating earnings on average
tangible equity 17.38 18.39
NET INTEREST MARGIN (tax-equivalent) 3.27 3.31
NONINTEREST INCOME AS A % OF TOTAL
REVENUE (3):
GAAP 19.30 25.40
Operating (2) 18.76 20.85
EFFICIENCY RATIOS (4):
GAAP 55.92 51.33
Operating (2) 53.35 51.30
Cash operating (2) 51.85 50.15
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES
NET INCOME, AS REPORTED (GAAP) $ 62,932 $ 62,280 1.0%
Non-operating items:
Loss (gain) on sale of available for
sale securities 1,269 (5,821)
Gain on equity investments (2,361) (3,823)
Gain on disposition of assets and
liabilities - (2,350)
Employment contract payments (reversals) 185 (59)
Merger-related costs 2,499 752
Impairment (recovery) from write-
down of assets 917 (277)
Charitable contribution to foundation 683 -
Conservation grant of land - 3,350
Loss on early extinguishment of debt 1,553 1,429
Related income taxes (1,582) 2,097
Discontinued operations, net of
income tax 396 -
OPERATING EARNINGS (net income,
excluding non-operating items) 66,491 57,578 15.5
Add: Amortization of intangibles,
net of income tax 2,655 1,631
CASH OPERATING EARNINGS (net income,
excluding non-operating items
and amortization of intangibles) $ 69,146 $ 59,209 16.8
(1) The sum of net interest income and noninterest income.
(2) 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.
(3) Calculated as noninterest income, divided by the sum of net interest income
and noninterest income.
(4) 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 6/30/05 vs.
-----------------------------
6/30/05 3/31/05 6/30/04 3/31/05 6/30/04
------------- ------------- ------------- ------------- -------------
(Annualized)
CREDIT QUALITY
Nonaccrual loans -
commercial (1) $ 34,616 $ 32,329 $ 46,436 28.4% (25.5)%
Nonaccrual loans -
consumer 3,323 2,901 2,133 58.3 55.8
Nonaccrual loans -
mortgage (2) 4,518 4,333 - 17.1 n/m
Restructured loans - - - - -
Nonperforming loans 42,457 39,563 48,569 29.3 (12.6)
Foreclosed property
(other real estate owned
and personal property
repossessions) (3) 12,618 9,416 8,985 136.4 40.4
Nonperforming assets 55,075 48,979 57,554 49.9 (4.3)
Nonperforming loans as a
% of loans held for
investment 0.47% 0.47% 0.78%
Nonperforming assets as a
% of loans held for
investment and foreclosed
property (3) 0.61 0.58 0.92
Allowance for loan losses
as a % of loans HFI 1.18 1.18 1.22
Allowance for loan losses
to nonperforming loans 2.49 x 2.49 x 1.56 x
Impaired loans (1) $ 28,266 $ 25,654 $ 46,436 40.8 (39.1)
Specific allowance for
impaired loans 4,956 5,247 10,806 (22.2) (54.1)
Loans past due 90 days
or more (mortgage and
consumer with interest
accruing) 2,035 1,816 3,930 48.4 (48.2)
Net loan charge-offs:
Three months ended 6,823 9,190 5,450 (103.3) 25.2
Year to date 16,013 9,190 11,588
Average loans held for
investment:
Three months ended 8,679,316 8,263,252 6,120,984
Year to date 8,472,434 8,263,252 5,978,791
Net loan charge-offs
as a % of average
loans HFI (annualized):
Three months ended 0.32% 0.45% 0.36%
Year to date 0.38 0.45 0.39
CAPITAL RATIOS
Total risk-based capital 10.72 10.96 12.62
Tier 1 risk-based capital 9.12 9.35 10.70
Leverage ratio 7.15 7.30 7.79
Tangible equity to
tangible assets 5.84 5.49 5.84
SHARE DATA
Book value per common
share $ 20.48 $ 19.29 $ 16.63 24.7% 23.2%
Tangible book value per
common share 11.15 10.77 10.88 14.2 2.5
Shares outstanding 74,348,330 71,757,924 59,796,124 14.5 24.3
STOCK PERFORMANCE
Market price per share
of common stock $ 28.42 $ 30.54 $ 28.37 (27.8)% 0.2%
Indicated annual
dividend 0.64 0.64 0.60 - 6.7
Dividend yield 2.25% 2.10% 2.11%
Price/book ratio 1.39 x 1.58 x 1.71 x
Market
capitalization $ 2,112,980 $ 2,191,487 $ 1,696,416 (14.4) 24.6
OPERATIONS DATA
Branch offices 167 155 133 31.1% 25.6%
ATMs 159 146 123 35.7 29.3
Employees (full-time
equivalent) 2,554 2,336 1,971 37.4 29.6
Active internet banking
customers 72,173 72,991 53,606 (4.5) 34.6
(1) At June 30, 2005 and March 31, 2005, these credit quality indicators
(nonaccrual loans - commercial and impaired loans) included $5.5 million
and $6.7 million, respectively, in restructured loans.
(2) 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 impairment was evident),
but any associated accrued interest was reserved.
(3) Prior to September 30, 2004, personal property repossessions were not
included in the definition of foreclosed property. At June 30, 2004,
personal property repossessions totaled $720,000.
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
Three Months Ended % Change 6/30/05 vs.
--------------------------------------------- -----------------------------
6/30/05 3/31/05 6/30/04 3/31/05 6/30/04
------------- ------------- ------------- ------------- -------------
(Annualized)
INCOME STATEMENT
Interest income
(tax-equivalent) $ 186,298 $ 171,575 $ 118,987 34.4% 56.6%
Interest expense 78,048 66,348 37,572 70.7 107.7
Net interest income
(tax-equivalent) 108,250 105,227 81,415 11.5 33.0
Less: tax-equivalent
adjustment 1,397 1,326 1,026 21.5 36.2
Net interest income 106,853 103,901 80,389 11.4 32.9
Provision for loan
losses 9,944 10,962 6,996 (37.2) 42.1
Net interest income
after provision
for loan losses 96,909 92,939 73,393 17.1 32.0
NONINTEREST INCOME:
Customer fee income 12,751 10,923 10,493 67.1 21.5
Brokerage and trust
income 2,395 2,268 2,342 22.5 2.3
Mortgage banking
income 2,140 1,487 1,625 176.1 31.7
Bank-owned life
insurance 2,759 2,761 3,458 (0.3) (20.2)
Merchant processing
income 2,713 2,038 2,431 132.8 11.6
Insurance income 1,449 1,286 1,015 50.8 42.8
Benefit administration
fees 650 587 461 43.0 41.0
(Loss) gain on trading
and derivative
activities (1,032) 904 2,352 (859.0) (143.9)
Other 1,688 1,544 198 37.4 752.5
Operating noninterest
income (noninterest
income, excluding
non-operating items) 25,513 23,798 24,375 28.9 4.7
(Loss) gain on sale of
available for sale
securities (1,503) 234 607 n/m n/m
Gain on equity
investments 650 1,711 1,013 n/m n/m
Non-operating
noninterest income (853) 1,945 1,620 n/m n/m
Total noninterest
income 24,660 25,743 25,995 (16.9) (5.1)
NONINTEREST EXPENSES:
Personnel expense 35,681 33,638 26,951 24.4 32.4
Occupancy 6,823 6,099 5,185 47.6 31.6
Furniture and equipment 6,023 5,533 4,890 35.5 23.2
Professional fees and
other outside service
fees 5,135 4,436 3,400 63.2 51.0
Merchant processing
expense 2,211 1,632 1,910 142.3 15.8
Telecommunications 1,384 1,326 1,106 17.5 25.1
Amortization of
intangibles 2,140 1,806 1,195 74.2 79.1
Other 13,824 12,517 9,531 41.9 45.0
Operating noninterest
expenses (noninterest
expenses, excluding
non-operating items) 73,221 66,987 54,168 37.3 35.2
Employment contract
payments (reversals) 222 (37) - n/m n/m
Merger-related costs 2,194 305 575 n/m n/m
Impairment (recovery)
from write-down of
assets 917 - (277) n/m n/m
Charitable contribution
to foundation - 683 - n/m n/m
Loss (gain) on early
extinguishment of
debt 2,981 (1,428) - n/m n/m
Non-operating
noninterest
expenses 6,314 (477) 298 n/m n/m
Total noninterest
expenses 79,535 66,510 54,466 78.5 46.0
Income before income
taxes and discontinued
operations 42,034 52,172 44,922 (77.9) (6.4)
Income tax expense 13,661 17,217 14,935 (82.8) (8.5)
Discontinued operations,
net of income tax - (396) - 401.1 n/m
Net income $ 28,373 $ 34,559 $ 29,987 (71.8)% (5.4)%
SHARE DATA:
Net income per common
share, basic $ 0.39 $ 0.48 $ 0.50 (75.2)% (22.0)%
Net income per common
share, diluted 0.38 0.47 0.49 (76.8) (22.4)
Cash dividends
declared per
common share 0.16 0.16 0.15 - 6.7
Average common
shares outstanding,
basic 73,083,009 71,376,085 59,494,363 9.6 22.8
Average common
shares outstanding,
diluted 74,421,103 73,021,005 60,837,792 7.7 22.3
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
Six Months Ended
----------------------------
6/30/05 6/30/04 % Change
------------ ------------ ------------
INCOME STATEMENT
Interest income (tax-equivalent) $ 357,873 $ 236,948 51.0%
Interest expense 144,396 72,570 99.0
Net interest income (tax-equivalent) 213,477 164,378 29.9
Less: tax-equivalent adjustment 2,723 1,973 38.0
Net interest income 210,754 162,405 29.8
Provision for loan losses 20,906 14,718 42.0
Net interest income after provision
for loan losses 189,848 147,687 28.5
NONINTEREST INCOME:
Customer fee income 23,674 20,092 17.8
Brokerage and trust income 4,663 4,465 4.4
Mortgage banking income 3,627 3,180 14.1
Bank-owned life insurance 5,520 5,748 (4.0)
Merchant processing income 4,751 4,444 6.9
Insurance income 2,735 2,037 34.3
Benefit administration fees 1,237 1,088 13.7
(Loss) gain on trading and derivative
activities (128) 983 (113.0)
Other 3,232 1,252 158.1
Operating noninterest income
(noninterest income, excluding non-
operating items) 49,311 43,289 13.9
(Loss) gain on sale of available for
sale securities (1,269) 5,821 n/m
Gain on equity investments 2,361 3,823 n/m
Gain on disposition of assets and
liabilities - 2,350 n/m
Non-operating noninterest income 1,092 11,994 n/m
Total noninterest income 50,403 55,283 (8.8)
NONINTEREST EXPENSES:
Personnel expense 69,319 52,784 31.3
Occupancy 12,922 10,257 26.0
Furniture and equipment 11,556 9,505 21.6
Professional fees and other outside
service fees 9,571 6,482 47.7
Merchant processing expense 3,843 3,469 10.8
Telecommunications 2,710 2,251 20.4
Amortization of intangibles 3,946 2,390 65.1
Other 26,341 19,404 35.8
Operating noninterest expenses
(noninterest expenses, excluding
non-operating items) 140,208 106,542 31.6
Employment contract payments
(reversals) 185 (59) n/m
Merger-related costs 2,499 752 n/m
Impairment (recovery) from write-down
of assets 917 (277) n/m
Charitable contribution to foundation 683 - n/m
Conservation grant of land - 3,350 n/m
Loss on early extinguishment of debt 1,553 1,429 n/m
Non-operating noninterest expenses 5,837 5,195 n/m
Total noninterest expenses 146,045 111,737 30.7
Income before income taxes and
discontinued operations 94,206 91,233 3.3
Income tax expense 30,878 28,953 6.6
Discontinued operations, net of
income tax (396) - n/m
Net income $ 62,932 $ 62,280 1.0%
SHARE DATA:
Net income per common share, basic $ 0.87 $ 1.05 (17.1)%
Net income per common share, diluted 0.85 1.02 (16.7)
Cash dividends declared per common share 0.32 0.30 6.7
Average common shares outstanding,
basic 72,234,263 59,354,354 21.7
Average common shares outstanding,
diluted 73,729,630 60,823,631 21.2
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share data) (unaudited)
% Change 6/30/05 vs.
-----------------------------
6/30/05 3/31/05 6/30/04 3/31/05 6/30/04
------------- ------------- ------------- ------------- -------------
(Annualized)
BALANCE SHEET
(Period End)
Cash and due
from banks $ 269,996 $ 219,968 $ 265,401 91.2% 1.7%
Interest-bearing
bank balances 21,643 5,793 603 1,097.4 3,489.2
Securities 4,325,967 4,833,811 4,063,898 (42.1) 6.4
Loans held for
sale 41,427 23,958 22,908 292.5 80.8
Loans held for
investment 8,966,337 8,398,360 6,246,953 27.1 43.5
Allowance for
loan losses (105,552) (98,690) (75,910) 27.9 39.0
Net loans 8,902,212 8,323,628 6,193,951 27.9 43.7
Premises and
equipment, net 183,189 178,044 144,861 11.6 26.5
Intangible assets 693,541 611,921 344,195 53.5 101.5
Other assets 482,533 511,715 462,360 (22.9) 4.4
Total assets $ 14,879,081 $ 14,684,880 $ 11,475,269 5.3% 29.7%
Noninterest-bearing
deposits $ 1,466,803 $ 1,290,427 $ 971,540 54.8% 51.0%
Interest-bearing
deposits 7,403,743 6,864,148 5,465,370 31.5 35.5
Total deposits 8,870,546 8,154,575 6,436,910 35.2 37.8
Federal funds
purchased and
repurchase
agreements 1,328,931 1,724,813 1,001,192 (92.1) 32.7
Other short-term
borrowings 113,798 36,312 354,692 855.9 (67.9)
Long-term debt 2,891,308 3,197,287 2,569,597 (38.4) 12.5
Other liabilities 152,071 187,494 118,280 (75.8) 28.6
Total
liabilities 13,356,654 13,300,481 10,480,671 1.7 27.4
Shareholders'
equity 1,522,427 1,384,399 994,598 40.0 53.1
Total liabilities
and shareholders'
equity $ 14,879,081 $ 14,684,880 $ 11,475,269 5.3% 29.7%
BALANCE SHEET
(Averages - Three
Months Ended)
Total assets $ 14,890,608 $ 14,290,435 $ 11,092,032 16.8% 34.2%
Intangible assets (656,066) (610,914) (351,133) 29.6 86.8
Tangible
assets 14,234,542 13,679,521 10,740,899 16.3 32.5
Loans 8,706,276 8,283,500 6,144,778 20.5 41.7
Securities (excludes
unrealized gains
(losses) on
available for
sale securities) 4,731,121 4,592,887 3,987,234 12.1 18.7
Total earning
assets 13,460,095 12,906,414 10,137,649 17.2 32.8
Interest-bearing
liabilities 11,919,108 11,520,317 9,064,636 13.9 31.5
Total deposits 8,449,008 7,955,507 6,170,912 24.9 36.9
Shareholders'
equity 1,463,449 1,408,509 1,002,000 15.6 46.1
Intangible assets (656,066) (610,914) (351,133) 29.6 86.8
Tangible equity 807,383 797,595 650,867 4.9 24.0
BALANCE SHEET
(Averages - Year
to Date)
Total assets $ 14,592,179 $ 14,290,435 $ 10,958,876 8.5% 33.2%
Intangible assets (633,615) (610,914) (351,791) 14.9 80.1
Tangible
assets 13,958,564 13,679,521 10,607,085 8.2 31.6
Loans 8,496,056 8,283,500 5,999,914 10.3 41.6
Securities (excludes
unrealized gains
(losses) on
available for
sale securities) 4,662,386 4,592,887 3,986,793 6.1 16.9
Total earning
assets 13,184,784 12,906,414 9,992,101 8.7 32.0
Interest-bearing
liabilities 11,720,815 11,520,317 8,964,206 7.0 30.8
Total deposits 8,203,621 7,955,507 6,055,603 12.5 35.5
Shareholders'
equity 1,436,130 1,408,509 999,247 7.9 43.7
Intangible assets (633,615) (610,914) (351,791) 14.9 80.1
Tangible equity 802,515 797,595 647,456 2.5 23.9
SOURCE The South Financial Group, Inc.
-0- 07/21/2005
/CONTACT: Timothy K. Schools, EVP Corporate Development of The South
Financial Group, Inc., +1-864-255-8980/
/Photo: http://www.newscom.com/cgi-bin/prnh/20000424/TSFGLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, 888-776-6555 or 212-782-2840 /
/Web site: http://www.thesouthgroup.com /
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