Company to Add $347 Million in Capital, Enhance its
Relationship-based Lending, and Gain Greater Flexibility in Managing
its Balance Sheet
GREENVILLE, S.C.--(BUSINESS WIRE)--Nov. 14, 2008--The South
Financial Group, Inc. (NASDAQ: TSFG) today announced that the Company
has received preliminary approval from the U.S. Treasury Department to
participate in its Capital Purchase Program, subject to standard terms
and conditions. The Board of Directors also announced that H. Lynn
Harton has been named Interim President and Chief Executive Officer,
Under the Treasury's Capital Purchase Program, the Treasury
purchases preferred shares on a voluntary basis in U.S. financial
institutions as part of its efforts to stabilize the financial system
and increase lending to businesses and consumers. The Treasury intends
to invest approximately $347 million in TSFG senior preferred stock
and common stock warrants.
John C.B. Smith, Jr., Chairman of the Board commented, "We are
extremely pleased that the Company will receive a TARP capital
investment. This approval is recognition of the fundamental strength
of TSFG and enhances our efforts to emerge from this environment as an
even stronger financial institution. The new capital from the Treasury
will allow us to increase our relationship-based lending activity in
the Carolinas and Florida. In addition, the capital increases our
already strong capital ratios and provides greater flexibility in
managing the balance sheet and in exploring strategic investments in
our banking franchise."
Mr. Smith continued, "We are also pleased to announce the
appointment of Lynn Harton as Interim President and CEO. The CEO
search continues to go well, and Lynn is a candidate for the permanent
position. However, we believed that the Treasury approval was an
appropriate time to refine the Company's leadership during this
transition. In the near term, the Company will need to lay the
groundwork for how it will utilize TARP capital, so the naming of an
Interim CEO was a logical event that will be helpful to that process."
H. Lynn Harton, Interim President and CEO, added, "We have a great
team focused on serving our customers and driving the changes needed
to make TSFG a stronger institution for our customers, shareholders
and employees. We will continue to be proactive in addressing our
challenges and building a stronger foundation for the future."
At September 30, 2008, TSFG's regulatory capital ratios remained
well in excess of "well capitalized" regulatory requirements.
Reflecting the Treasury's $347 million investment, on a pro forma
basis, TSFG's September 30, 2008 Tier 1 risk-based capital would
increase to 14.18% from 11.18%, and its total risk-based ratio would
increase to 15.68% from 12.68%. The Treasury's term sheet with
additional detail about the Capital Purchase Program is available on
the Treasury's website at www.ustreas.gov.
Mr. Harton joined TSFG in January of 2007 and has served most
recently as Senior Executive Vice President and Chief Commercial
Banking Officer and a member of the Company's Operating Council.
The South Financial Group is the largest publicly-traded bank
holding company headquartered in South Carolina and ranks among the
top 50 U.S. commercial bank holding companies in total assets. At
September 30, 2008, it had approximately $13.7 billion in total assets
and 180 branch offices in Florida, North Carolina, and South Carolina.
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 September 30, 2008, approximately 45% of TSFG's total customer
deposits were in South Carolina, 41% were in Florida, and 14% were in
North Carolina. Investor information is available at
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 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, loan
growth, customer funding growth, expense control, income tax rate,
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.
The South Financial Group, Inc.
James R. Gordon, 864-552-9050
Senior EVP & Chief Financial Officer
Mary M. Gentry, 864-421-1068
EVP - Investor Relations