The South Financial Group Reports Fourth Quarter Results

The South Financial Group, Inc. (NASDAQ: TSFG) today reported a fourth quarter 2009 net loss available to common shareholders of $193.9 million, or $(0.90) per diluted share, compared to a net loss available to common shareholders of $340.8 million, or $(1.95) per diluted share, for third quarter 2009. Reconciliations of GAAP-reported results to operating results are provided in the attached financial highlights.

"Credit costs have begun to show signs of moderating, although they will continue to be challenging. We remain focused on assertively addressing credit issues and executing sales and liquidations of problem loans and foreclosed properties,” said H. Lynn Harton, President and CEO of The South Financial Group. "At the same time, our bankers are focused on strengthening our non-credit results. In the fourth quarter, we saw continued growth in core deposits, net interest margin expansion, and progress in reducing non-core loans. Finally, as part of our continued focus on balance sheet strength, we are suspending dividends on all remaining outstanding equity and capital instruments. While our year-end capital ratios exceeded well-capitalized regulatory requirements, the suspension of dividends will preserve approximately $4.5 million in capital on a quarterly basis going forward.”

Key points for the fourth quarter included:

• A 7.6% linked-quarter decline in nonperforming loan balances to $399.0 million from $431.8 million at September 30, 2009, the second consecutive quarterly decline
• A 15.3% linked-quarter decline in net loan charge-offs to $142.9 million from $168.6 million for third quarter 2009; fourth quarter 2009 net charge-offs included approximately $25 million related to acceleration of sales and resolutions of problem loans with an unpaid principal balance of $144 million
• A 23.8% linked-quarter decrease in the provision for credit losses to $170.8 million from $224.2 million, increasing the allowance for credit losses to 4.45% of loans held for investment at December 31, 2009 and exceeding net charge-offs by $27.9 million
• Continued reductions of non-core loans held for investment, down $277 million linked-quarter ($1.3 billion for 2009), while core loans declined $211 million linked-quarter
• Continued period-end core deposit growth of 0.9% linked-quarter and 10.5% for 2009; this reflects the fifth consecutive quarter of period-end core deposit increases
• A net interest margin of 2.97%, up 4 basis points linked-quarter, primarily from funding cost reductions
• A decrease in operating noninterest income of $4.7 million linked-quarter, primarily from a lower gain on certain derivative activities, an adjustment to bank-owned life insurance (BOLI) income, the previously announced third quarter sales of ancillary businesses, and lower customer fee income
• A decrease in operating noninterest expenses, excluding the impact of credit-related expenses and FDIC insurance premiums, of $1.7 million linked-quarter
• Income tax expense of $23.8 million, primarily from continued valuation allowances for current period losses as well as changes in the taxes applicable to other comprehensive income
• A decline in the tangible common equity ratio to 3.67%, due to the fourth quarter 2009 loss and a decrease in other comprehensive income
• Capital ratios exceeded "well-capitalized” regulatory requirements for TSFG and Carolina First Bank at December 31, 2009
• Announced suspension of dividend payments on all remaining outstanding equity and capital instruments, which will preserve approximately $4.5 million in capital on a quarterly basis
• Increase in weighted average shares outstanding to 215.4 million, due to third quarter 2009 conversions of preferred stock into common

Net Interest Income and Average Balance Sheet

Fourth quarter 2009 net interest income increased $0.5 million to $80.5 million from $80.0 million in third quarter 2009 from net interest margin expansion, partially offset by lower average earning assets.

The tax-equivalent net interest margin for fourth quarter 2009 increased to 2.97%, up 4 basis points from 2.93% for third quarter 2009. An enhanced deposit mix, disciplined pricing, and downward pricing of certificates of deposit upon renewal improved customer funding costs by 20 basis points. This improvement was partially offset by a 53 basis point decline in investment security yields following actions taken to strengthen liquidity and reduce interest rate risk in the portfolio, including the sale of $325 million of higher-yielding mortgage-backed securities (MBS) and municipal securities during fourth quarter 2009 for a net gain of $6.2 million (which were reinvested into lower-yielding MBS).

Fourth quarter 2009 average loans decreased $456.6 million, or 5.0% linked-quarter, to $8.7 billion, and period-end loans held for investment decreased $488.1 million. For internal management purposes, TSFG segregates its loan portfolio into core ($7.0 billion at period-end) and non-core ($1.3 billion at period-end) loans, principally based on its ability to establish or expand a banking relationship. Loan balances declined due to reductions of non-core loans, sales and liquidations of problem loans, net loan charge-offs, and weaker loan demand. During fourth quarter 2009, period-end core loans declined $210.9 million, or 2.9% linked-quarter, while non-core loans declined $277.2 million, or 17.1% linked-quarter ($1.3 billion for 2009).

Fourth quarter 2009 average securities increased $334.4 million, or 18.1% linked-quarter, to $2.2 billion, and period-end securities increased $64.1 million.

Fourth quarter average core deposits (noninterest-bearing, interest checking, money market, and savings) increased $111.7 million, or 2.5% linked-quarter, and period-end core deposits increased $40.3 million. Fourth quarter 2009 customer funding levels (defined as total deposits less brokered deposits plus customer sweep accounts) remained relatively unchanged, as declines in certificates of deposit were offset by growth in core deposits and customer sweep accounts. Fourth quarter 2009 average wholesale borrowings, including brokered deposits and excluding customer sweep accounts, increased $203.6 million, while period-end wholesale borrowings declined $164.0 million.

Noninterest Income

Fourth quarter 2009 operating noninterest income (which excludes the non-operating items mentioned below) totaled $21.9 million, down $4.7 million from third quarter 2009. The decrease was largely attributable to a $1.6 million decline in the gain on certain derivative activities, a $1.0 million adjustment to BOLI cash surrender value due to various provisions of stable value contracts, and a $0.9 million decline in customer fee income. In addition, merchant processing income and wealth management income declined $0.6 million and $0.4 million, respectively, from the third quarter sales of ancillary businesses, which also reduced noninterest expenses.

Total noninterest income, including non-operating items, was $28.6 million for fourth quarter 2009, compared with $33.5 million for third quarter 2009. Non-operating noninterest income for fourth quarter 2009 included a $6.7 million net gain from the sale of securities, principally the sale of municipal securities. This compares with a $7.2 million gain, primarily from the sale of Carolina First Bank’s merchant processing portfolio, and a $0.3 million net loss on securities for third quarter 2009.

Noninterest Expenses

Operating noninterest expenses (which exclude the non-operating items mentioned below) totaled $99.7 million for fourth quarter 2009, a $10.9 million linked-quarter increase from $88.8 million for third quarter 2009, due to higher credit-related expenses, partially offset by expense reductions in many categories.

Excluding the impact of credit-related expenses and FDIC insurance premiums, all other operating noninterest expenses declined $1.7 million, or 2.3%, linked-quarter, driven by expense control throughout the Company and the sales of ancillary businesses (which had a corresponding decrease in noninterest income). Full-time equivalent employees totaled 2,214 at December 31, 2009, up from 2,196 at September 30, 2009 (principally from additions related to TSFG’s new SBA lending division) and down 11.6% from 2,505 at year-end 2008.

Credit-related noninterest expenses, which include loan collection and foreclosed asset expenses, gains or losses on nonmortgage loans held for sale, and losses on other real estate owned, and FDIC insurance premiums increased $12.6 million linked-quarter, primarily from a $10.6 million increase in losses and write-downs on other real estate owned.

Total noninterest expenses, including non-operating items, were $103.2 million for fourth quarter 2009, compared with $89.5 million for third quarter 2009. Fourth quarter 2009 non-operating noninterest expenses included a $3.5 million impairment charge for long-lived assets related to the corporate campus, which is being marketed for sale. Third quarter 2009 non-operating noninterest expenses included a $0.7 million impairment charge for long-lived assets related to the closing of office locations.

Credit Quality

At December 31, 2009, nonperforming loans held for investment totaled $399.0 million, a $32.8 million decrease from $431.8 million at September 30, 2009. Fourth quarter commercial loan sales included approximately $144 million in unpaid principal balance (versus $168 million for third quarter 2009). Commercial nonaccrual loans declined for the second consecutive quarter, and mortgage nonaccrual loans, including consumer lot loans, declined for the fourth quarter in a row. Nonperforming asset balances also decreased $22.2 million to $522.4 million at December 31, 2009. Despite the decline in nonperforming assets, nonperforming assets as a percentage of loans and foreclosed property increased to 6.13% at December 31, 2009 from 6.05% at September 30, 2009, due to lower period-end total loans. Nonperforming assets as a percentage of total assets declined to 4.39% at December 31, 2009 from 4.43% at September 30, 2009.

The provision for credit losses for fourth quarter 2009 totaled $170.8 million, compared with $224.2 million for third quarter 2009. For fourth quarter 2009, the provision for credit losses exceeded net loan charge-offs by $27.9 million. The overall allowance for credit losses increased to $373.1 million, or 4.45% of loans held for investment, up from $345.3 million, or 3.89% of loans held for investment, at September 30, 2009. The allowance coverage of nonperforming loans held for investment increased to 0.92 times at December 31, 2009 from 0.79 times at September 30, 2009.

Net loan charge-offs in fourth quarter 2009 decreased $25.7 million to $142.9 million, or 6.52% annualized of average loans held for investment, from $168.6 million, or 7.31% annualized, for third quarter 2009. Fourth quarter 2009 charge-offs included approximately $25 million in additional charge-offs related to sales and resolutions of problem loans, versus approximately $60 million for third quarter 2009.

Capital

Capital levels exceed "well-capitalized” standards for all regulatory capital ratios applicable to TSFG and Carolina First Bank at December 31, 2009. TSFG’s Tier 1 risk-based and Tier 1 common capital ratios totaled 9.93% and 4.04%, respectively, at December 31, 2009.

Tangible common equity to tangible assets at December 31, 2009 totaled 3.67%, down from 5.25% at September 30, 2009. The decrease was attributable to the fourth quarter 2009 net loss and a reduction in other comprehensive income. Tangible common book value per common share was $1.98 at December 31, 2009, down from $2.94 at September 30, 2009.

In connection with TSFG’s capital planning, the Company has decided to suspend the dividends on its (i) Cumulative Perpetual Preferred Stock, Series 2008-T (issued to the U.S. Treasury under the Capital Purchase Program); (ii) subordinated debentures to various trusts with applicable outstanding trust preferred securities; (iii) Mandatory Convertible Non-Cumulative Preferred Stock; (iv) Series 2000A Cumulative Fixed Rate REIT Preferred Stock; and (v) Series 2002C Cumulative Floating Rate REIT Preferred Stock. In the aggregate, the total quarterly dividends will preserve capital of approximately $4.5 million and cash of approximately $6.1 million quarterly. Certain of these dividends are cumulative, and the Company is restricted from certain actions until such dividends are declared and paid, including declaring or paying common dividends.

Conference Call / Webcast Information

The South Financial Group will host a conference call/webcast on Wednesday, January 27^th at 10:00 a.m. ET to discuss fourth quarter 2009 financial results. Additional material information, including forward-looking statements such as trends and projections, may be discussed during the presentation. For supplemental financial information and financial review presentation slides, please refer to the Form 8-K filed by TSFG with the Securities and Exchange Commission on January 26^th or visit the Investor Relations section of its website under the Quarterly Results 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 1-866-430-4720 or 1-203-369-0923.

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 4^th Quarter Financial Results Conference Call.” For those unable to participate during the live webcast, it will be archived on The South Financial Group website until February 10, 2010.

General Information

The South Financial Group is a bank holding company focused on serving small businesses, middle market companies, and retail customers in the Carolinas and Florida. At December 31, 2009, it had approximately $11.9 billion in total assets and 177 branch offices. TSFG operates Carolina First Bank, which conducts banking operations in North Carolina and South Carolina (as Carolina First Bank), in Florida (as Mercantile Bank), and on the Internet (as Bank CaroLine). At December 31, 2009, approximately 45% of TSFG’s total customer deposits were in South Carolina, 43% were in Florida, and 12% were in North Carolina. Investor information is available at www.thesouthgroup.com.

Explanation of TSFG’s Use of Certain Unaudited Non-GAAP Financial Measures and Forward-Looking Statements

This press release contains financial information determined by methods other than Generally Accepted Accounting Principles ("GAAP”). The attached financial highlights provide reconciliations between GAAP net income (loss) and operating measures, which exclude gains or losses on certain items deemed not to reflect core operations. TSFG uses these non-GAAP measures in its analysis of TSFG’s performance and believes presentations of "operating” financial measures provide useful supplemental information, a clearer understanding of TSFG’s performance, and better reflect TSFG’s core operating activities. Management utilizes non-GAAP measures in the calculation of certain of TSFG’s ratios, in particular, to analyze on a consistent basis over time the performance of what it considers to be its core operations. 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 other financial institutions. The limitations associated with 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 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, expectations, goals, projections, and statements, which are subject to numerous assumptions, risks, and uncertainties. They also include such items as return goals, loan growth, loan sales, customer funding growth, expense control, goodwill impairment, income tax rate and deferred tax assets, expected financial results for acquisitions, noninterest income, adequacy of capital and future capital levels, factors that will affect credit quality and the net interest margin, effectiveness of its hedging strategies, risks and effects of changes in interest rates, 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.

PAGE 1, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)
					Three Months Ended															% Change 12/31/09 vs.
																				9/30/09
					12/31/09					9/30/09					12/31/08					9/30/09				Annualized				12/31/08
EARNINGS SUMMARY
Net interest income (tax-equivalent)					$	81,393				$	81,118				$	92,898				0.3		%		1.3		%		(12.4	)	%
Less: tax-equivalent adjustment						847					1,080					1,265				(21.6	)			(85.6	)			(33.0	)
Net interest income						80,546					80,038					91,633				0.6				2.5				(12.1	)
Provision for credit losses						170,761					224,179					122,926				(23.8	)			(94.5	)			38.9
Noninterest income:
		Operating noninterest income (noninterest income, excluding non-operating items)				21,856					26,522					28,451				(17.6	)			(69.8	)			(23.2	)
		Gain (loss) on securities				6,694					(286	)				1,561				n/m				n/m				n/m
		Gain on sale of ancillary businesses				-					7,234					-				n/m				n/m				n/m
		Non-operating noninterest income				6,694					6,948					1,561				n/m				n/m				n/m
			Total noninterest income			28,550					33,470					30,012				(14.7	)			(58.3	)			(4.9	)
Noninterest expenses:
		Operating noninterest expenses (noninterest expenses, excluding non-operating items)				99,685					88,783					92,068				12.3				48.7				8.3
		Goodwill impairment				-					-					237,618				n/m				n/m				n/m
		Employment contracts and severance				-					-					9,599				n/m				n/m				n/m
		Impairment of long lived assets				3,478					746					-				n/m				n/m				n/m
		Loss on early extinguishment of debt				-					-					1,747				n/m				n/m				n/m
		Loss on derivative collateral				-					-					1,061				n/m				n/m				n/m
		Non-operating noninterest expenses				3,478					746					250,025				n/m				n/m				n/m
			Total noninterest expenses			103,163					89,529					342,093				15.2				60.4				(69.8	)
Income (loss) before income taxes						(164,828	)				(200,200	)				(343,374	)			n/m				n/m				n/m
Income tax expense (benefit)						23,843					123,304					(33,435	)			n/m				n/m				n/m
		Net income (loss)				(188,671	)				(323,504	)				(309,939	)			n/m				n/m				n/m
Preferred stock dividends and other (1)						(5,221	)				(17,251	)				(9,424	)			n/m				n/m				n/m
		Net income (loss) available to common shareholders			$	(193,892	)			$	(340,755	)			$	(319,363	)			n/m		%		n/m		%		n/m		%
Per common share data:
		Basic earnings (loss)			$	(0.90	)			$	(1.95	)			$	(4.29	)			n/m		%		n/m		%		n/m		%
		Diluted earnings (loss)				(0.90	)				(1.95	)				(4.29	)			n/m				n/m				n/m
		Cash dividends declared per common share				-					-					0.01				n/m				n/m				n/m
Average common shares outstanding:
		Basic				215,365,464					174,426,381					74,505,656				23.5		%		93.1		%		189.1		%
		Diluted				215,365,464					174,426,381					74,505,656				23.5				93.1				189.1
PERFORMANCE RATIOS:
Total revenue:
		GAAP (2)			$	109,096				$	113,508				$	121,645				(3.9	)	%		(15.4	)	%		(10.3	)	%
		Operating (3)				103,249					107,640					121,349				(4.1	)			(16.2	)			(14.9	)
Return on average assets (4)						(6.12	)	%			(10.33	)	%			(8.94	)	%
Return on average common equity (5)						(93.05	)				(133.73	)				(99.16	)
Return on average equity (4)						(64.42	)				(85.43	)				(76.17	)
Net interest margin (tax-equivalent)						2.97					2.93					2.97
Cash operating efficiency ratio (6)						80.42					77.28					74.73
(1)		For the quarter ended September 30, 2009, includes $11.9 million for the value of common shares recorded as an inducement for early conversion of mandatorily convertible preferred stock.
(2)		The sum of net interest income and noninterest income.
(3)		The sum of tax-equivalent net interest income and operating noninterest income.
(4)		Return on average assets and return on average equity are calculated as net income (loss) divided by either average assets or average total equity.
(5)		Return on average common equity is calculated as net income (loss) available to common shareholders divided by average common equity.
(6)		The cash operating efficiency ratio is calculated as operating noninterest expenses before gain/loss on OREO, loss on nonmortgage loans held for sale, and amortization of intangibles divided by the sum of tax-equivalent net interest income and operating noninterest income.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG's web site: www.thesouthgroup.com.

PAGE 2, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)
					Year Ended
					12/31/09					12/31/08					% Change
EARNINGS SUMMARY
Net interest income (tax-equivalent)					$	335,778				$	385,517				(12.9	)	%
Less: tax-equivalent adjustment						4,246					5,354				(20.7	)
Net interest income						331,532					380,163				(12.8	)
Provision for credit losses						668,904					344,589				94.1
Noninterest income:
		Operating noninterest income (noninterest income, excluding non-operating items)				102,765					116,955				(12.1	)
		Gain on securities				8,034					3,108				n/m
		Gain on sale of ancillary businesses				7,234					-				n/m
		Gain on Visa IPO share redemption				-					1,904				n/m
		Non-operating noninterest income				15,268					5,012				n/m
			Total noninterest income			118,033					121,967				(3.2	)
Noninterest expenses:
		Operating noninterest expenses (noninterest expenses, excluding non-operating items)				390,848					346,650				12.8
		Goodwill impairment				2,511					426,049				n/m
		Employment contracts and severance				829					16,519				n/m
		Impairment of long lived assets				21,600					-				n/m
		FDIC special assessment				5,700					-				n/m
		Branch acquisition and conversion costs				-					731				n/m
		(Gain) loss on early extinguishment of debt				(3,043	)				2,086				n/m
		Loss on repurchase of auction rate securities				676					-				n/m
		Visa-related litigation				-					(863	)			n/m
		Loss on derivative collateral				-					1,061				n/m
		Non-operating noninterest expenses				28,273					445,583				n/m
			Total noninterest expenses			419,121					792,233				(47.1	)
Income (loss) before income taxes						(638,460	)				(634,692	)			n/m
Income tax expense (benefit)						37,794					(87,574	)			n/m
		Net income (loss)				(676,254	)				(547,118	)			n/m
Preferred stock dividends and other (1)						(60,689	)				(21,658	)			n/m
		Net income (loss) available to common shareholders			$	(736,943	)			$	(568,776	)			n/m		%
Per common share data:
		Basic earnings (loss)			$	(5.22	)			$	(7.78	)			n/m		%
		Diluted earnings (loss)				(5.22	)				(7.78	)			n/m
		Cash dividends declared per common share				0.02					0.22				(90.9	)
Average common shares outstanding:
		Basic				141,207,510					73,136,936				93.1		%
		Diluted				141,207,510					73,136,936				93.1
PERFORMANCE RATIOS:
Total revenue:
		GAAP (2)			$	449,565				$	502,130				(10.5	)	%
		Operating (3)				438,543					502,472				(12.7	)
Return on average assets (4)						(5.28	)	%			(3.96	)	%
Return on average common equity (5)						(75.10	)				(41.33	)
Return on average equity (4)						(46.63	)				(35.11	)
Net interest margin (tax-equivalent)						2.92					3.09
Cash operating efficiency ratio (6)						77.92					67.59
(1)		For the year ended December 31, 2009, includes $32.4 million for the value of common shares recorded as an inducement for early conversion of mandatorily convertible preferred stock.
(2)		The sum of net interest income and noninterest income.
(3)		The sum of tax-equivalent net interest income and operating noninterest income.
(4)		Return on average assets and return on average equity are calculated as net income (loss) divided by either average assets or average total equity.
(5)		Return on average common equity is calculated as net income (loss) available to common shareholders divided by average common equity.
(6)		The cash operating efficiency ratio is calculated as operating noninterest expenses before gain/loss on OREO, loss on nonmortgage loans held for sale, and amortization of intangibles divided by the sum of tax-equivalent net interest income and operating noninterest income.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG's web site: www.thesouthgroup.com.

PAGE 3, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)
																				% Change 12/31/09 vs.
																				9/30/09
					12/31/09					9/30/09					12/31/08					9/30/09				Annualized				12/31/08
BALANCE SHEET DATA (Averages - Three Months Ended)
Total assets					$	12,227,135				$	12,428,707				$	13,784,934				(1.6	)	%		(6.4	)	%		(11.3	)	%
Intangible assets						(230,129	)				(235,986	)				(481,380	)			(2.5	)			(9.8	)			(52.2	)
		Tangible assets				11,997,006					12,192,721					13,303,554				(1.6	)			(6.4	)			(9.8	)
Loans						8,706,846					9,163,404					10,344,242				(5.0	)			(19.8	)			(15.8	)
Securities (1)						2,181,669					1,847,284					2,117,087				18.1				71.8				3.1
Total earning assets						10,888,797					11,010,863					12,462,457				(1.1	)			(4.4	)			(12.6	)
Noninterest-bearing deposits						1,115,349					1,109,176					1,001,516				0.6				2.2				11.4
Total deposits (2)						9,458,249					9,278,472					9,630,077				1.9				7.7				(1.8	)
Customer funding (3)						7,630,291					7,676,212					7,932,366				(0.6	)			(2.4	)			(3.8	)
Wholesale borrowings (4)						3,250,421					3,046,830					4,032,710				6.7				26.5				(19.4	)
Total funding						10,880,712					10,723,042					11,965,076				1.5				5.8				(9.1	)
Preferred stock						335,302					491,365					337,439				(31.8	)			(126.0	)			(0.6	)
Common equity						826,724					1,010,920					1,281,312				(18.2	)			(72.3	)			(35.5	)
		Shareholders' equity				1,162,026					1,502,285					1,618,751				(22.6	)			(89.9	)			(28.2	)
Intangible assets						(230,129	)				(235,986	)				(481,380	)			(2.5	)			(9.8	)			(52.2	)
		Tangible equity				931,897					1,266,299					1,137,371				(26.4	)			(104.8	)			(18.1	)
Loans/total earning assets						80.0		%			83.2		%			83.0		%
Securities/total assets						17.8					14.9					15.4
Customer funding/total funding						70.1					71.6					66.3
Wholesale borrowings/total assets						26.6					24.5					29.3
Loans/customer funding						114.1					119.4					130.4
BALANCE SHEET DATA (Averages - Year to Date)
Total assets					$	12,819,697				$	13,019,389				$	13,833,355												(7.3	)	%
Intangible assets						(238,825	)				(241,755	)				(532,517	)											(55.2	)
		Tangible assets				12,580,872					12,777,634					13,300,838												(5.4	)
Loans						9,478,536					9,738,592					10,374,423												(8.6	)
Securities (1)						2,018,845					1,963,974					2,087,745												(3.3	)
Total earning assets						11,497,608					11,702,775					12,478,993												(7.9	)
Noninterest-bearing deposits						1,080,503					1,068,760					1,055,855												2.3
Total deposits (2)						9,342,906					9,304,036					9,690,581												(3.6	)
Customer funding (3)						7,723,889					7,755,431					8,065,982												(4.2	)
Wholesale borrowings (4)						3,432,202					3,493,463					4,019,601												(14.6	)
Total funding						11,156,091					11,248,894					12,085,583												(7.7	)
Preferred stock						469,036					514,104					181,849												157.9
Common equity						981,237					1,033,307					1,376,232												(28.7	)
		Shareholders' equity				1,450,273					1,547,411					1,558,081												(6.9	)
Intangible assets						(238,825	)				(241,755	)				(532,517	)											(55.2	)
		Tangible equity				1,211,448					1,305,656					1,025,564												18.1
Loans/total earning assets						82.4		%			83.2		%			83.1		%
Securities/total assets						15.7					15.1					15.1
Customer funding/total funding						69.2					68.9					66.7
Wholesale borrowings/total assets						26.8					26.8					29.1
Loans/customer funding						122.7					125.6					128.6
(1)		The average balances for investment securities exclude the unrealized gain/loss recorded for available for sale securities.
(2)		Total deposits include brokered deposits.
(3)		Customer funding includes total deposits less brokered deposits plus customer sweep accounts.
(4)		Wholesale borrowings include borrowings less customer sweep accounts plus brokered deposits.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG's web site: www.thesouthgroup.com.

PAGE 4, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)
																				% Change 12/31/09 vs.
																				9/30/09
					12/31/09					9/30/09					12/31/08					9/30/09				Annualized				12/31/08
BALANCE SHEET DATA (Period End)
Loans held for sale					$	15,758				$	8,071				$	30,963				95.2		%		377.9		%		(49.1	)	%
Loans held for investment						8,386,127					8,874,234					10,192,072				(5.5	)			(21.8	)			(17.7	)
Allowance for loan losses						(365,642	)				(339,536	)				(247,086	)			7.7				30.5				48.0
Allowance for credit losses						(373,126	)				(345,256	)				(249,874	)			8.1				32.0				49.3
Securities (1)						2,222,917					2,158,846					2,094,367				3.0				11.8				6.1
Intangible assets						229,825					230,606					246,020				(0.3	)			(1.3	)			(6.6	)
Total assets						11,894,982					12,300,792					13,602,326				(3.3	)			(13.1	)			(12.6	)
Noninterest-bearing deposits						1,124,404					1,091,439					1,041,140				3.0				12.0				8.0
Total deposits (2)						9,296,212					9,488,788					9,405,717				(2.0	)			(8.1	)			(1.2	)
Customer funding (3)						7,666,801					7,670,983					7,989,962				(0.1	)			(0.2	)			(4.0	)
Wholesale borrowings (4)						3,068,982					3,232,949					3,749,898				(5.1	)			(20.1	)			(18.2	)
Total funding						10,735,783					10,903,932					11,739,860				(1.5	)			(6.1	)			(8.6	)
Mandatorily convertible preferred stock						4,650					4,650					238,700				-				-				(98.1	)
Perpetual preferred stock						331,133					330,250					327,679				0.3				1.1				1.1
Common equity						657,391					863,801					1,054,152				(23.9	)			(94.8	)			(37.6	)
Shareholders' equity						993,174					1,198,701					1,620,531				(17.1	)			(68.0	)			(38.7	)
CAPITAL RATIOS
Tier 1 risk-based capital (preliminary)						9.93		%			11.19		%			12.86		%
Total risk-based capital (preliminary)						11.24					12.49					14.35
Leverage ratio (preliminary)						7.91					9.22					11.22
Tangible equity to tangible assets						6.54					8.02					10.29
Tangible common equity to tangible assets						3.67					5.25					6.05
SHARE DATA
Convertible preferred shares outstanding:
		-Series 2008				4,650					4,650					238,700				-		%		-		%		(98.1	)	%
Common shares outstanding						215,455,541					215,371,687					74,643,649				-				0.2				188.6
Common book value per common share (5)					$	3.05				$	4.01				$	14.12				(23.9	)			(95.0	)			(78.4	)
Common tangible book value per common share (5)						1.98					2.94					10.83				(32.7	)			(129.5	)			(81.7	)
OPERATIONS DATA
Branch offices						177					177					180				-		%		-		%		(1.7	)	%
ATMs						197					198					202				(0.5	)			(2.0	)			(2.5	)
Employees (full-time equivalent)						2,214					2,196					2,505				0.8				3.3				(11.6	)
(1)		During fourth quarter 2009, TSFG reclassified FHLB stock from securities to other assets. Amounts for prior periods have been reclassified to conform to the current presentation.
(2)		Total deposits include brokered deposits.
(3)		Customer funding includes total deposits less brokered deposits plus customer sweep accounts.
(4)		Wholesale borrowings include borrowings less customer sweep accounts plus brokered deposits.
(5)		Common book value per common share is calculated as total shareholders' equity less preferred stock divided by common shares outstanding. Common tangible book value per common share also excludes intangible assets.
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG's web site: www.thesouthgroup.com.

PAGE 5, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)
																			% Change 12/31/09 vs.
																			9/30/09
				12/31/09					9/30/09					12/31/08					9/30/09				Annualized				12/31/08
CREDIT QUALITY
Loans held for investment				$	8,386,127				$	8,874,234				$	10,192,072				(5.5	)	%		(21.8	)	%		(17.7	)	%
Allowance for loan losses					(365,642	)				(339,536	)				(247,086	)			7.7								48.0
Allowance for credit losses					(373,126	)				(345,256	)				(249,874	)			8.1								49.3
Nonperforming loans held for investment				$	399,046				$	431,791				$	349,382				(7.6	)	%						14.2		%
Nonperforming loans held for sale					-					-					16,282				n/m								n/m
Foreclosed property (other real estate owned and personal property repossessions)					123,314					112,771					48,993				9.3								151.7
		Nonperforming assets		$	522,360				$	544,562				$	414,657				(4.1	)	%						26.0		%
Restructured loans not included in nonperforming assets				$	26,128				$	17,236				$	6,249
Nonperforming loans held for investment as a % of loans held for investment					4.76		%			4.87		%			3.43		%
Nonperforming assets as a % of loans and foreclosed property					6.13					6.05					4.04
Nonperforming assets as a % of total assets					4.39					4.43					3.05
Allowance for loan losses as a % of loans HFI					4.36					3.83					2.42
Allowance for credit losses as a % of loans HFI					4.45					3.89					2.45
Allowance for loan losses to nonperforming loans HFI					0.92		x			0.79		x			0.71		x
Loans past due 90 days or more (interest accruing)				$	10,465				$	7,467				$	47,481												(78.0	)	%
Average loans held for investment:
	Three months ended				8,697,056					9,146,694					10,308,823
	Year to date				9,456,636					9,712,611					10,351,897
Net loan charge-offs:
	Three months ended				142,891					168,603					76,052				(15.3	)	%						87.9		%
	Year to date				541,181					398,290					223,410												142.2
Net loan charge-offs as a % of average loans held for investment (annualized):
	Three months ended				6.52		%			7.31		%			2.93		%
	Year to date				5.72					5.48					2.16
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG's web site: www.thesouthgroup.com.

PAGE 6, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)
				Three Months Ended											% Change 12/31/09 vs.
															9/30/09
				12/31/09			9/30/09				12/31/08				9/30/09				Annualized				12/31/08
NONINTEREST INCOME
Customer fee income				$	13,290		$	14,144			$	13,237			(6.0	)	%		(24.0	)	%		0.4		%
Wealth management income					4,481			5,319				6,287			(15.8	)			(62.5	)			(28.7	)
Mortgage banking income					1,302			1,137				1,038			14.5				57.6				25.4
Bank-owned life insurance					1,656			2,797				3,939			(40.8	)			(161.8	)			(58.0	)
Merchant processing income, net					-			591				697			n/m				n/m				n/m
Gain (loss) on certain derivative activities					32			1,597				(256	)		n/m				n/m				n/m
Other					1,095			937				3,509			16.9				66.9				(68.8	)
	Operating noninterest income (noninterest income, excluding non-operating items)				21,856			26,522				28,451			(17.6	)			(69.8	)			(23.2	)
	Non-operating noninterest income				6,694			6,948				1,561			n/m				n/m				n/m
		Total noninterest income		$	28,550		$	33,470			$	30,012			(14.7	)	%		(58.3	)	%		(4.9	)	%
NONINTEREST EXPENSES
Personnel expense				$	38,380		$	40,283			$	45,885			(4.7	)	%		(18.7	)	%		(16.4	)	%
Occupancy					9,600			9,658				9,946			(0.6	)			(2.4	)			(3.5	)
Furniture and equipment					7,062			6,950				7,454			1.6				6.4				(5.3	)
Professional services					3,876			4,034				4,533			(3.9	)			(15.5	)			(14.5	)
Project NOW expense					-			114				271			n/m				n/m				n/m
Advertising and business development					1,293			1,264				2,611			2.3				9.1				(50.5	)
Telecommunications					1,548			1,572				1,613			(1.5	)			(6.1	)			(4.0	)
Amortization of intangibles					1,102			1,238				1,417			(11.0	)			(43.6	)			(22.2	)
Regulatory assessments					6,278			6,181				3,452			1.6				6.2				81.9
Loan collection and foreclosed asset expense					8,117			6,835				4,558			18.8				74.4				78.1
(Gain) loss on nonmortgage loans held for sale					518			(41	)			283			n/m				n/m				n/m
(Gain) loss on OREO					15,032			4,406				(316	)		n/m				n/m				n/m
Other					6,879			6,289				10,361			9.4				37.2				(33.6	)
	Operating noninterest expenses (noninterest expenses, excluding non-operating items)				99,685			88,783				92,068			12.3				48.7				8.3
	Non-operating noninterest expenses				3,478			746				250,025			n/m				n/m				n/m
		Total noninterest expenses		$	103,163		$	89,529			$	342,093			15.2		%		60.4		%		(69.8	)	%
							Year Ended
							12/31/09				12/31/08				% Change
NONINTEREST INCOME
Customer fee income							$	52,803			$	56,080			(5.8	)	%
Wealth management income								21,851				27,617			(20.9	)
Mortgage banking income								5,694				5,260			8.3
Bank-owned life insurance								9,515				12,877			(26.1	)
Merchant processing income, net								2,018				3,279			(38.5	)
Gain (loss) on certain derivative activities								3,849				(207	)		n/m
Other								7,035				12,049			(41.6	)
	Operating noninterest income (noninterest income, excluding non-operating items)							102,765				116,955			(12.1	)
	Non-operating noninterest income							15,268				5,012			n/m
		Total noninterest income					$	118,033			$	121,967			(3.2	)	%
NONINTEREST EXPENSES
Personnel expense							$	166,441			$	182,237			(8.7	)	%
Occupancy								38,200				37,311			2.4
Furniture and equipment								27,758				27,561			0.7
Professional services								16,768				16,212			3.4
Project NOW expense								1,693				271			n/m
Advertising and business development								5,947				9,927			(40.1	)
Telecommunications								6,197				6,140			0.9
Amortization of intangibles								4,917				6,138			(19.9	)
Regulatory assessments								23,593				10,923			116.0
Loan collection and foreclosed asset expense								27,090				12,431			117.9
Loss on nonmortgage loans held for sale								11,776				283			n/m
Loss on OREO								32,435				633			n/m
Other								28,033				36,583			(23.4	)
	Operating noninterest expenses (noninterest expenses, excluding non-operating items)							390,848				346,650			12.8
	Non-operating noninterest expenses							28,273				445,583			n/m
		Total noninterest expenses					$	419,121			$	792,233			(47.1	)	%
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG's web site: www.thesouthgroup.com.

PAGE 7, FINANCIAL HIGHLIGHTS
THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
(dollars in thousands, except share data) (unaudited)
				Three Months Ended
				12/31/09				9/30/09				12/31/08
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
NET INCOME (LOSS), AS REPORTED (GAAP)				$	(188,671	)		$	(323,504	)		$	(309,939	)
Add: Income tax expense (benefit)					23,843				123,304				(33,435	)
Income (loss) before income taxes					(164,828	)			(200,200	)			(343,374	)
Non-operating items:
	(Gain) loss on securities				(6,694	)			286				(1,561	)
	Gain on sale of ancillary businesses				-				(7,234	)			-
	Goodwill impairment				-				-				237,618
	Employment contracts and severance				-				-				9,599
	Impairment of long lived assets				3,478				746				-
	(Gain) loss on early extinguishment of debt				-				-				1,747
	Loss on derivative collateral				-				-				1,061
PRE-TAX OPERATING LOSS (income (loss) before taxes, excluding non-operating items)					(168,044	)			(206,402	)			(94,910	)
Add: Provision for credit losses					170,761				224,179				122,926
PRE-TAX, PRE-PROVISION OPERATING EARNINGS					2,717				17,777				28,016
Add: (Gain) loss on nonmortgage loans held for sale					518				(41	)			283
Add: (Gain) loss on OREO					15,032				4,406				(316	)
PRE-TAX, PRE-CREDIT OPERATING EARNINGS				$	18,267			$	22,142			$	27,983
								Year Ended
								12/31/09				12/31/08
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
NET INCOME (LOSS), AS REPORTED (GAAP)								$	(676,254	)		$	(547,118	)
Add: Income tax expense (benefit)									37,794				(87,574	)
Income (loss) before income taxes									(638,460	)			(634,692	)
Non-operating items:
	Gain on securities								(8,034	)			(3,108	)
	Gain on sale of ancillary businesses								(7,234	)			-
	Gain on Visa IPO share redemption								-				(1,904	)
	Goodwill impairment								2,511				426,049
	Employment contracts and severance								829				16,519
	Impairment of long lived assets								21,600				-
	FDIC special assessment								5,700				-
	Branch acquisition and conversion costs								-				731
	(Gain) loss on early extinguishment of debt								(3,043	)			2,086
	Visa-related litigation								-				(863	)
	Loss on repurchase of auction rate securities								676				-
	Loss on derivative collateral								-				1,061
PRE-TAX OPERATING EARNINGS (LOSS) (income (loss) before taxes, excluding non-operating items)									(625,455	)			(194,121	)
Add: Provision for credit losses									668,904				344,589
PRE-TAX, PRE-PROVISION OPERATING EARNINGS									43,449				150,468
Add: Loss on nonmortgage loans held for sale									11,776				283
Add: Loss on OREO									32,435				633
PRE-TAX, PRE-CREDIT OPERATING EARNINGS								$	87,660			$	151,384
A Quarterly Financial Data Supplement is available in the Investor Relations section of TSFG's web site: www.thesouthgroup.com.