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SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 for the fiscal year ended December 31, 2007 or
 o
    
    Transition report pursuant to section 12 or 15(d) of the Securities Exchange Act of 1934
 for transition period from to
 Commission File Number: 0-15083
 The South Financial Group, Inc.
  South Carolina
    
    57-0824914(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)102 South Main Street, Greenville, South Carolina
    
    29601(Address of principal executive offices)
    
    (Zip Code)
 (864) 255-7900
 Securities registered pursuant to Section 12(b) of the Act:
 None
    
    None(Title of Each Class)
    
    (Name of each exchange on which registered)
 Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
 þ o
 o þ
 þ o
 o
  Large accelerated filer
þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



INDEX
 PagePART IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    9Item 1B. Unresolved Staff Comments
    
    
    11Item 2. Properties
    
    
    11Item 3. Legal Proceedings
    
    
    11Item 4. Submission of Matters to a Vote of Shareholders
    
    
    11PART IIItem 5. Market for the Registrants Common Equity, Related Shareholder Matters, and Issuer
Purchases of Equity Securities
    
    
    12Item 6. Selected Financial Data
    
    
    14Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    56Item 8. Financial Statements and Supplementary Data
    
    
    57Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    111Item 9A. Controls and Procedures
    
    
    111Item 9B. Other Information
    
    
    112PART IIIItem 10. Directors, Executive Officers, and Corporate Governance
    
    
    113Item 11. Executive Compensation
    
    
    113Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    113Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    113Item 14. Principal Accountant Fees and Services
    
    
    113PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    114Exhibit 10.6Exhibit 10.7Exhibit 10.8Exhibit 10.19Exhibit 10.20Exhibit 10.24Exhibit 10.27Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 
 Item 1. Business
 The Company
     Available Information
  Subsidiary Bank
   1




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
    
    the Greenville and Anderson metropolitan area (located in the Upstate region of
South Carolina);
    
    the Hendersonville and Asheville metropolitan area (located in the Western region of
North Carolina);
    
    the Rock Hill, or greater South Charlotte, metropolitan area (located in the
Piedmont region of South Carolina);
    
    the Columbia metropolitan area (located in the Midlands region of South Carolina);
    
    the Myrtle Beach, Georgetown, and Wilmington metropolitan areas (located in the
North Coast of South Carolina and Wilmington, North Carolina ); and
    
    the Charleston and Hilton Head metropolitan areas (located in the South Coast of
South Carolina).
  
    
    the Jacksonville metropolitan area (located in the North East Florida region);
    
    the Gainesville metropolitan area (located in the North Central region);
    
    the Marion County area (located in the Mid Florida region);
    
    the Orlando metropolitan area (located in the Central Florida region);
    
    the Tampa Bay metropolitan area (located in the Tampa Bay region);
    
    the Palm Beach County, Miami-Dade County, and Broward County area (located in the
South Florida region).
   Non-Bank Subsidiaries
  American Pensions, Inc.
 Bowditch Insurance Corporation.
 Carolina First Community Development Corporation.
 Koss Olinger.
 2




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REIT Subsidiaries.
 South Group Insurance Services, Inc.
 Summit Title, LLC.
 Business Segments
  Competition
    Employees
  3




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Executive Officers of the Registrant (Section 16 Reporting Persons)
  Name
    
    Age
    
    TSFG Offices Currently Held
    
    TSFG Officer SinceMack I. Whittle, Jr.
    
    
    59
    
    
    President and Chief Executive Officer
    
    
    1986William P. Crawford, Jr.
    
    
    45
    
    
    Executive Vice President  General Counsel and Secretary
    
    
    2002J. W. Davis
    
    
    61
    
    
    Chairman  Carolina First Bank/North Carolina
    
    
    2003James R. Gordon
    
    
    42
    
    
    Executive Vice President  Chief Financial Officer
    
    
    2007H. Lynn Harton
    
    
    46
    
    
    Executive Vice President  Chief Risk and Credit Officer
    
    
    2007Christopher T. Holmes
    
    
    44
    
    
    Executive Vice President Retail Banking
    
    
    2006Mary A. Jeffrey
    
    
    57
    
    
    Executive Vice President  Human Resources
    
    
    2002Maurice J. Spagnoletti
    
    
    53
    
    
    President  Carolina First Bank/South Carolina
    
    
    2006Kendall L. Spencer
    
    
    55
    
    
    President  Mercantile Bank Operations
    
    
    2000
          4




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Monetary Policy
   Impact of Inflation
  Supervision and Regulation
 General
  The South Financial Group, Inc.
   5




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Carolina First Bank.
 6




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Other Regulations.
 Dividends
  Capital Adequacy
 TSFG.
 Carolina First Bank.
 Deposit Insurance Assessments
  7




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Other Safety and Soundness Regulations
 Prompt Corrective Action.
 Brokered Deposits.
 Transactions Between TSFG, its Subsidiaries, and Affiliates
    Anti-Money Laundering Legislation
  8




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##### Table of Contents



Sarbanes-Oxley
  Future Legislation
  Additional Information
  
 Item 1A. Risk Factors
 Our business, operating results and/or the market price of our common stock may be
significantly affected by a number of factors, including the following:
 The recent downturn in the residential real estate market has affected our results of
operations, and further deterioration could have an adverse affect on collateral values and
borrowers ability to repay, and consequently our financial condition and results of operations.
 9




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Our loans are predominately focused in three states and adverse economic conditions in those
states, in particular, could have a negative impact on our financial condition and results of
operations.
 TSFGs earnings are exposed to risks associated with movements in market interest rates.
 TSFG and its subsidiaries are extensively regulated and non-compliance with the USA Patriot
and Bank Secrecy Acts may result in fines or sanctions that may adversely affect results of
operations.
 TSFG is required to make a number of judgments in applying accounting policies and different
estimates and assumptions in the application of these policies could result in changes to our
reporting of financial condition and results of operations.
 TSFGs controls and procedures may fail or be circumvented or outside parties may perpetrate a
fraud, resulting in an adverse effect on the Companys results of operations and financial
condition.
 An interruption or breach in security with respect to TSFGs information systems, as well as
information systems of TSFGs outsourced service providers, could damage our reputation, result in
a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil
litigation, any of which could have a material adverse effect on our financial condition and
results of operations.
 Inability to achieve customer deposit growth could adversely impact profitability and
liquidity.
 10




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Our stock price can be volatile in response to a number of factors.
 Hurricanes and other natural disasters may adversely affect loan portfolios and operations and
increase the cost of doing business.
 TSFG has experienced significant growth through acquisitions and anticipates engaging in
selected acquisitions in the future. There are risks associated with acquisitions
 
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
    
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Shareholders
  11




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PART II
 
 Item 5.  Market for the Registrants Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
 Market for Common Stock and Related Matters
  Three Months EndedDecember 31
    
    September 30
    
    June 30
    
    March 312007Common stock price:High
    
    $
    24.04
    
    
    $
    24.79
    
    
    $
    24.81
    
    
    $
    27.47Low
    
    
    15.29
    
    
    
    20.47
    
    
    
    22.23
    
    
    
    24.57Close
    
    
    15.63
    
    
    
    22.74
    
    
    
    22.64
    
    
    
    24.72Cash dividend declared
    
    
    0.19
    
    
    
    0.18
    
    
    
    0.18
    
    
    
    0.18Volume traded
    
    
    50,923,185
    
    
    
    42,171,530
    
    
    
    38,917,664
    
    
    
    22,510,110
 Three Months EndedDecember 31
    
    September 30
    
    June 30
    
    March 312006Common stock price:High
    
    $
    27.03
    
    
    $
    27.49
    
    
    $
    28.41
    
    
    $
    27.99Low
    
    
    25.45
    
    
    
    25.30
    
    
    
    24.96
    
    
    
    24.60Close
    
    
    26.59
    
    
    
    26.03
    
    
    
    26.41
    
    
    
    26.15Cash dividend declared
    
    
    0.18
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17Volume traded
    
    
    13,172,752
    
    
    
    11,278,889
    
    
    
    21,702,895
    
    
    
    23,508,239
 Unregistered Sales of Securities
    Equity Compensation Plan Data
  12




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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 ISSUER PURCHASES OF EQUITY SECURITIES
 ApproximateTotal
    
    
    Dollar Value ofNumber of
    
    
    Shares thatShares Purchased
    
    
    May Yet BeTotal
    
    
    Average
    
    
    as Part
    
    
    PurchasedNumber
    
    
    Price
    
    
    of Publicly
    
    
    Under Plans orof Shares
    
    
    Paid per
    
    
    Announced Plans
    
    
    Programs(2)Period
    
    Purchased
    
    
    Share
    
    
    or Programs
    
    
    (in thousands)October 1, 2007 to October 31, 2007
    
    
    297,486
    (1)
    
    $
    20.47
    
    
    
    297,300
    
    
    $
    93,916November 1, 2007 to November 30, 2007
    
    
    302,700
    
    
    
    19.46
    
    
    
    302,700
    
    
    
    88,024December 1, 2007 to December 31, 2007
    
    
    2,647
    (1)
    
    
    15.63
    
    
    
    
    
    
    
    88,024Total
    
    
    602,833
    
    
    $
    19.94
    
    
    
    600,000
    
    
    $
    88,024
 
 (1)
    
    Includes 186 shares in October and 2,647 shares in December canceled in connection
with exercise of options, vesting of restricted stock, or distribution from the deferred
compensation plan. Pursuant to TSFGs stock option plans, participants may exercise stock
options by surrendering shares of TSFG common stock the participants already own or, in some
cases, by
surrendering fully vested stock options as payment of the option exercise price. Pursuant to
TSFGs restricted stock plans, participants may tender shares of vested restricted stock as
payment for taxes due at the time of vesting. Pursuant to TSFGs Executive Deferred Compensation
Plan, participants may tender shares of stock as payment for taxes due at the time of
distribution. Shares surrendered by participants of these plans are repurchased at current
market value pursuant to the terms of the applicable stock option, restricted stock, or deferred
compensation plan and not pursuant to publicly announced share repurchase programs.(2)
    
    In August 2007, the Board of Directors amended and restated TSFGs existing stock
repurchase authorization to be an aggregate of $100.0 million, which expires if unused on or
before June 30, 2008. During fourth quarter 2007, TSFG repurchased 600,000 shares of its
common stock pursuant to this authorization, leaving $88.0 million under the authorization. Total Shareholder Return
  
 12/31/02
    
    
    12/31/03
    
    
    12/31/04
    
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07The South Financial Group
    
    
    $
    100
    
    
    
    $
    138
    
    
    
    $
    165
    
    
    
    $
    143
    
    
    
    $
    141
    
    
    
    $
    86SNL Mid Cap Bank Index
    
    
    
    100
    
    
    
    
    134
    
    
    
    
    163
    
    
    
    
    152
    
    
    
    
    162
    
    
    
    
    129S&P 500
    
    
    
    100
    
    
    
    
    129
    
    
    
    
    143
    
    
    
    
    150
    
    
    
    
    173
    
    
    
    
    183
 13




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Item 6. Selected Financial Data
  SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA
(dollars and shares (except per share data) in thousands)
 Five-YearYears Ended December 31,
    
    
    Compound2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    Growth RateEarnings SummaryNet interest income
    
    $
    382,781
    
    
    $
    401,371
    
    
    $
    409,056
    
    
    $
    335,841
    
    
    $
    250,890
    
    
    $
    210,143
    
    
    
    12.7
    %Noninterest income
    
    
    113,311
    
    
    
    117,905
    
    
    
    43,850
    
    
    
    115,243
    
    
    
    92,841
    
    
    
    68,331
    
    
    
    10.6Total revenue
    
    
    496,092
    
    
    
    519,276
    
    
    
    452,906
    
    
    
    451,084
    
    
    
    343,731
    
    
    
    278,474
    
    
    
    12.2Provision for credit losses
    
    
    68,568
    
    
    
    32,789
    
    
    
    40,592
    
    
    
    34,987
    
    
    
    20,581
    
    
    
    22,266
    
    
    
    25.2Noninterest expenses
    
    
    320,848
    
    
    
    325,939
    
    
    
    316,693
    
    
    
    240,610
    
    
    
    199,272
    
    
    
    156,608
    
    
    
    15.4Income from continuing operations
    
    
    73,276
    
    
    
    112,866
    
    
    
    70,217
    
    
    
    119,998
    
    
    
    83,583
    
    
    
    65,239
    
    
    
    2.4Net income
    
    
    73,276
    
    
    
    112,866
    
    
    
    69,821
    
    
    
    119,508
    
    
    
    83,583
    
    
    
    63,833
    
    
    
    2.8Per Common ShareBasic:Income from continuing operations
    
    $
    1.00
    
    
    $
    1.51
    
    
    $
    0.96
    
    
    $
    1.86
    
    
    $
    1.70
    
    
    $
    1.56
    
    
    
    (8.5
    )%Net income
    
    
    1.00
    
    
    
    1.51
    
    
    
    0.95
    
    
    
    1.85
    
    
    
    1.70
    
    
    
    1.53
    
    
    
    (8.2
    )Diluted:Income from continuing operations
    
    $
    0.99
    
    
    
    1.49
    
    
    
    0.94
    
    
    
    1.81
    
    
    
    1.66
    
    
    
    1.53
    
    
    
    (8.3
    )Net income
    
    
    0.99
    
    
    
    1.49
    
    
    
    0.94
    
    
    
    1.80
    
    
    
    1.66
    
    
    
    1.49
    
    
    
    (7.9
    )Average common shares outstanding:Basic
    
    
    73,618
    
    
    
    74,940
    
    
    
    73,307
    
    
    
    64,592
    
    
    
    49,204
    
    
    
    41,715
    
    
    
    12.0Diluted
    
    
    74,085
    
    
    
    75,543
    
    
    
    74,595
    
    
    
    66,235
    
    
    
    50,328
    
    
    
    42,715
    
    
    
    11.6Cash dividends declared
    
    $
    0.73
    
    
    $
    0.69
    
    
    $
    0.65
    
    
    $
    0.61
    
    
    $
    0.57
    
    
    $
    0.50
    
    
    
    7.9Book value (December 31)
    
    
    21.40
    
    
    
    20.73
    
    
    
    19.90
    
    
    
    19.56
    
    
    
    16.46
    
    
    
    13.76
    
    
    
    9.2Market price (December 31)
    
    
    15.63
    
    
    
    26.59
    
    
    
    27.54
    
    
    
    32.53
    
    
    
    27.75
    
    
    
    20.66
    
    
    
    (5.4
    )Balance Sheet Data (Year End)Loans held for investment
    
    $
    10,213,420
    
    
    $
    9,701,867
    
    
    $
    9,439,395
    
    
    $
    8,107,757
    
    
    $
    5,732,205
    
    
    $
    4,434,011
    
    
    
    18.2
    %Allowance for credit losses
    
    
    128,695
    
    
    
    112,688
    
    
    
    109,350
    
    
    
    96,918
    
    
    
    73,287
    
    
    
    70,275
    
    
    
    12.9Securities
    
    
    2,025,903
    
    
    
    2,795,764
    
    
    
    3,159,617
    
    
    
    4,310,088
    
    
    
    4,007,571
    
    
    
    2,572,186
    
    
    
    (4.7
    )Intangible assets
    
    
    678,182
    
    
    
    685,568
    
    
    
    691,758
    
    
    
    611,450
    
    
    
    353,079
    
    
    
    242,182
    
    
    
    22.9Total assets
    
    
    13,877,584
    
    
    
    14,210,516
    
    
    
    14,319,285
    
    
    
    13,798,689
    
    
    
    10,724,715
    
    
    
    7,939,960
    
    
    
    11.8Customer funding (1)
    
    
    8,178,471
    
    
    
    8,392,597
    
    
    
    8,201,571
    
    
    
    6,827,268
    
    
    
    5,547,466
    
    
    
    4,260,192
    
    
    
    13.9Deposits
    
    
    9,788,568
    
    
    
    9,516,740
    
    
    
    9,234,437
    
    
    
    7,670,944
    
    
    
    6,032,238
    
    
    
    4,585,927
    
    
    
    16.4Long-term debt
    
    
    698,340
    
    
    
    1,130,475
    
    
    
    1,922,151
    
    
    
    2,972,270
    
    
    
    2,711,699
    
    
    
    1,221,511
    
    
    
    (10.6
    )Shareholders equity
    
    
    1,550,308
    
    
    
    1,562,032
    
    
    
    1,486,907
    
    
    
    1,393,460
    
    
    
    972,299
    
    
    
    651,683
    
    
    
    18.9Balance Sheet Data (Averages)Loans
    
    $
    10,013,387
    
    
    $
    9,621,846
    
    
    $
    8,883,837
    
    
    $
    6,927,336
    
    
    $
    4,915,437
    
    
    $
    4,008,094
    
    
    
    20.1
    %Securities (excludes unrealized gains,
losses on available for sale securities)
    
    
    2,525,317
    
    
    
    3,043,385
    
    
    
    4,388,351
    
    
    
    4,158,202
    
    
    
    3,471,324
    
    
    
    1,850,798
    
    
    
    6.4Total earning assets
    
    
    12,545,223
    
    
    
    12,692,872
    
    
    
    13,307,956
    
    
    
    11,101,951
    
    
    
    8,425,590
    
    
    
    5,924,077
    
    
    
    16.2Total assets
    
    
    14,044,565
    
    
    
    14,202,649
    
    
    
    14,752,973
    
    
    
    12,208,069
    
    
    
    9,261,657
    
    
    
    6,496,692
    
    
    
    16.7Customer funding (1)
    
    
    8,216,762
    
    
    
    8,077,605
    
    
    
    7,606,071
    
    
    
    6,167,731
    
    
    
    4,788,040
    
    
    
    3,666,123
    
    
    
    17.5Deposits
    
    
    9,805,367
    
    
    
    9,129,011
    
    
    
    8,631,714
    
    
    
    6,899,366
    
    
    
    5,144,412
    
    
    
    3,852,776
    
    
    
    20.5Shareholders equity
    
    
    1,543,552
    
    
    
    1,506,195
    
    
    
    1,463,125
    
    
    
    1,164,004
    
    
    
    709,791
    
    
    
    499,579
    
    
    
    25.3Performance RatiosReturn on average assets
    
    
    0.52
    %
    
    
    0.79
    %
    
    
    0.47
    %
    
    
    0.98
    %
    
    
    0.90
    %
    
    
    0.98
    %Return on average equity
    
    
    4.75
    
    
    
    7.49
    
    
    
    4.77
    
    
    
    10.27
    
    
    
    11.78
    
    
    
    12.78Net interest margin (tax-equivalent)
    
    
    3.10
    
    
    
    3.22
    
    
    
    3.12
    
    
    
    3.06
    
    
    
    3.01
    
    
    
    3.59Tangible equity to tangible assets
    
    
    6.61
    
    
    
    6.48
    
    
    
    5.83
    
    
    
    5.93
    
    
    
    5.97
    
    
    
    5.32Dividend payout ratio
    
    
    73.74
    
    
    
    46.31
    
    
    
    69.15
    
    
    
    33.89
    
    
    
    34.34
    
    
    
    33.56Credit QualityNonperforming assets
    
    $
    89,907
    
    
    $
    41,509
    
    
    $
    43,977
    
    
    $
    55,976
    
    
    $
    60,774
    
    
    $
    74,186
    
    
    
    3.9
    %Nonperforming assets as a % of
loans held for investment and
foreclosed property
    
    
    0.88
    %
    
    
    0.43
    %
    
    
    0.47
    %
    
    
    0.69
    %
    
    
    1.06
    %
    
    
    1.67
    %Net charge-offs to average loans
held for investment
    
    
    0.53
    
    
    
    0.28
    
    
    
    0.36
    
    
    
    0.46
    
    
    
    0.62
    
    
    
    0.49Allowance for credit losses as a % of
loans held for investment
    
    
    1.26
    
    
    
    1.16
    
    
    
    1.16
    
    
    
    1.20
    
    
    
    1.28
    
    
    
    1.58Operations DataBranch offices
    
    
    172
    
    
    
    167
    
    
    
    172
    
    
    
    154
    
    
    
    134
    
    
    
    117
    
    
    
    8.0
    %Employees (full-time equivalent)
    
    
    2,474
    
    
    
    2,618
    
    
    
    2,607
    
    
    
    2,308
    
    
    
    1,918
    
    
    
    1,700
    
    
    
    7.8
 
 (1)
    
    Customer funding is total deposits less brokered deposits plus customer sweep
accounts. 14




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Index to Item 7, Managements Discussion and Analysis of Financial Condition and Results of
Operations
 PageForward-Looking Statements
    
    
    15Non-GAAP Financial Information
    
    
    16Overview
    
    
    16Critical Accounting Policies and Estimates
    
    
    18Expanded Corporate Facilities
    
    
    21Acquisitions and Sales
    
    
    21Balance Sheet Review
    
    
    22Results of Operations
    
    
    43Enterprise Risk Management
    
    
    51Off-Balance Sheet Arrangements
    
    
    54Liquidity
    
    
    55Recently Adopted/Issued Accounting Pronouncements
    
    
    56
 
 Forward-Looking Statements
  
    
    risks from changes in economic, monetary policy, and industry conditions;
    
    changes in interest rates, shape of the yield curve, deposit rates, the net interest
margin, and funding sources;
    
    market risk (including net income at risk analysis and economic value of equity risk
analysis) and inflation;
    
    risks inherent in making loans including repayment risks and changes in the value of
collateral;
    
    loan growth, the adequacy of the allowance for credit losses, provision for credit
losses, and the assessment of problem loans (including loans acquired via acquisition
and loans in the Penland Development in western North Carolina);
    
    continued deterioration in the overall credit environment;
    
    level, composition, and repricing characteristics of the securities portfolio;
    
    deposit growth, change in the mix or type of deposit products and cost of deposits;
    
    availability of wholesale funding;
    
    fluctuations in consumer spending;
    
    competition in the banking industry and demand for our products and services;
    
    continued availability of senior management;
    
    technological changes;
    
    ability to increase market share;
 15




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##### Table of Contents




    
    income and expense projections, ability to control expenses, and expense reduction
initiatives;
    
    changes in the compensation, benefit, and incentive plans, including compensation
accruals;
    
    risks associated with income taxes, including the potential for adverse adjustments;
    
    acquisitions, greater than expected deposit attrition or customer loss, inaccuracy
of related cost savings estimates, inaccuracy of estimates of financial results, and
unanticipated integration issues;
    
    valuation of goodwill and intangibles and related impairment;
    
    significant delay or inability to execute strategic initiatives designed to grow
revenues;
    
    changes in managements assessment of and strategies for lines of business, asset,
and deposit categories;
    
    changes in accounting policies and practices;
    
    changes in the evaluation of the effectiveness of our hedging strategies;
    
    changes in regulatory actions, including the potential for adverse adjustments;
    
    changes, costs, and effects of litigation, and environmental remediation; and
    
    recently-enacted or proposed legislation.
  
 Non-GAAP Financial Information
  
 Overview
   16




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Strategic Plan.
 17




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Critical Accounting Policies and Estimates
  Allowance for Loan Losses and Reserve for Unfunded Lending Commitments
     Derivatives and Hedging Activities
  18




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Fair Value of Certain Financial Instruments
       Income Taxes
  19




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Share-Based Compensation
  Accounting for Acquisitions
    20




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Expanded Corporate Facilities
       
 Acquisitions and Sales
  21




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Table 1
Summary of Completed Acquisitions
(dollars in thousands)
 Purchase
    
    
    IdentifiableAcquisition
    
    
    Total
    
    
    Shares
    
    
    Price Paid
    
    
    IntangibleDate
    
    
    Assets(1)
    
    
    Issued
    
    
    in Cash
    
    
    Assets(2)
    
    
    Goodwill(2)Bank AcquisitionsPointe BankBoca Raton, Florida
    
    
    05/06/05
    
    
    $
    432,550
    
    
    
    2,193,941
    
    
    $
    24,495
    
    
    $
    6,689
    
    
    $
    64,590Insurance Agency/Other AcquisitionsLossing Insurance AgencyOcala, Florida
    
    
    11/01/05
    
    
    
    476
    
    
    
    
    
    
    
    5,646
    (3)
    
    
    2,184
    
    
    
    4,368Bowditch Insurance CorporationJacksonville, Florida
    
    
    06/06/05
    
    
    
    713
    
    
    
    89,077
    (4)
    
    
    2,081
    (4)
    
    
    2,276
    
    
    
    3,327Koss OlingerGainesville, Florida
    
    
    04/04/05
    
    
    
    287
    
    
    
    56,398
    (5)
    
    
    4,718
    
    
    
    1,742
    
    
    
    4,956
 
 (1)
    
    Book value at the acquisition date.(2)
    
    Carrying amount (identifiable intangible assets are not reported net of accumulated
amortization) at December 31, 2007.(3)
    
    TSFG agreed to issue annual cash earn-outs for each of September 30, 2006, 2007,
2008 and 2009, based on targeted earnings achievement. For each of 2007 and 2006, earn-outs
totaled $321,000. The earn-outs would have a maximum total value of $1.3 million.(4)
    
    TSFG agreed to issue annual earn-out shares/cash for each of May 31, 2006, 2007,
2008 and 2009, based on targeted earnings achievement. In 2007, earn-outs totaled 1,738
shares and $41,000 cash. The earn-outs would have a maximum total value of approximately $1.9
million.(5)
    
    TSFG agreed to issue earn-out shares on May 17, 2010 based on earnings achievement.
The base earn-out shares would have a total value of $3 million for achievement of the minimum
performance target, with potential additional earn-out shares based on achievement of higher
performance levels.  Sales
  
 Balance Sheet Review
 Loans
    22




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Table 2
Loan Portfolio Composition Based on Collateral/Borrower Type
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commercial, financial and agricultural
    
    $
    2,309,294
    
    
    $
    2,152,375
    
    
    $
    1,936,963
    
    
    $
    1,584,198
    
    
    $
    1,358,409Real estate  construction (1)
    
    
    1,763,365
    
    
    
    1,630,366
    
    
    
    1,497,605
    
    
    
    1,007,061
    
    
    
    619,124Real estate  residential mortgages (1-4 family)
    
    
    1,390,729
    
    
    
    1,416,005
    
    
    
    1,493,317
    
    
    
    1,278,310
    
    
    
    940,744Commercial secured by real estate (1)
    
    
    3,946,440
    
    
    
    3,727,316
    
    
    
    3,441,576
    
    
    
    3,109,242
    
    
    
    2,146,650Consumer
    
    
    803,592
    
    
    
    775,805
    
    
    
    1,069,934
    
    
    
    1,128,946
    
    
    
    667,278Loans held for investment
    
    $
    10,213,420
    
    
    $
    9,701,867
    
    
    $
    9,439,395
    
    
    $
    8,107,757
    
    
    $
    5,732,205
 
 (1)
    
    These categories include loans to businesses other than real estate companies where
owner-occupied real estate is pledged on loans to finance operations, equipment, and
facilities. 23




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Table 3
Loan Portfolio Composition Based on Loan Purpose
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commercial LoansCommercial and industrial
    
    $
    2,759,492
    
    
    $
    2,491,210
    
    
    $
    2,258,789
    
    
    $
    2,049,160
    
    
    $
    1,593,346Owner  occupied real estate (1)(2)
    
    
    1,070,376
    
    
    
    830,179
    
    
    
    801,953
    
    
    
    825,582
    
    
    
    634,604Commercial real estate (2)
    
    
    4,158,384
    
    
    
    4,171,631
    
    
    
    3,933,927
    
    
    
    3,246,729
    
    
    
    2,071,2427,988,252
    
    
    
    7,493,020
    
    
    
    6,994,669
    
    
    
    6,121,471
    
    
    
    4,299,192Consumer Loans(3)Indirect  sales finance
    
    
    699,014
    
    
    
    660,401
    
    
    
    916,318
    
    
    
    790,372
    
    
    
    591,807Consumer lot loans
    
    
    311,386
    
    
    
    357,325
    
    
    
    310,532
    
    
    
    103,473
    
    
    
    42,039Direct retail
    
    
    94,228
    
    
    
    98,181
    
    
    
    107,295
    
    
    
    111,516
    
    
    
    91,532Home equity
    
    
    548,928
    
    
    
    512,881
    
    
    
    553,194
    
    
    
    524,909
    
    
    
    379,2881,653,556
    
    
    
    1,628,788
    
    
    
    1,887,339
    
    
    
    1,530,270
    
    
    
    1,104,666Mortgage Loans(3)
    
    
    571,612
    
    
    
    580,059
    
    
    
    557,387
    
    
    
    456,016
    
    
    
    328,347Total loans held for investment
    
    $
    10,213,420
    
    
    $
    9,701,867
    
    
    $
    9,439,395
    
    
    $
    8,107,757
    
    
    $
    5,732,205Percentage of Loans Held for InvestmentCommercial and industrial
    
    
    27.0
    %
    
    
    25.7
    %
    
    
    23.9
    %
    
    
    25.3
    %
    
    
    27.8
    %Owner  occupied real estate (1)
    
    
    10.5
    
    
    
    8.6
    
    
    
    8.5
    
    
    
    10.2
    
    
    
    11.1Commercial real estate
    
    
    40.7
    
    
    
    43.0
    
    
    
    41.7
    
    
    
    40.0
    
    
    
    36.1Consumer
    
    
    16.2
    
    
    
    16.7
    
    
    
    20.0
    
    
    
    18.9
    
    
    
    19.3Mortgage
    
    
    5.6
    
    
    
    6.0
    
    
    
    5.9
    
    
    
    5.6
    
    
    
    5.7Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1)
    
    In Table 2, these loans are included in the Real estate-construction and
Commercial secured by real estate categories, which also include loans to non-real estate
industry borrowers.(2)
    
    During 2007, TSFG reclassified certain loan balances from owner-occupied real estate
to commercial real estate. Amounts for prior periods (specifically, $80.1 million for 2006)
have been reclassified to conform to the current presentation.(3)
    
    During 2007, TSFG reclassified certain loan balances from mortgage loans to consumer
loans. Amounts for prior periods (including $146.5 million for 2006, $46.8 million for 2005,
$91,000 for 2004, and $115,000 for 2003) have been reclassified to conform to the current
presentation. Commercial and industrial loans
 Owner-occupied real estate loans
 Commercial real estate loans
 24




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##### Table of Contents



Indirect  sales finance loans
 Consumer lot loans
 Direct retail consumer loans
 Home equity loans
 Mortgage loans
   25




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Table 4
Commercial Real Estate Loans
(dollars in thousands)
 December 31, 2007
    
    
    December 31, 2006% of
    
    
    
    
    
    
    % ofBalance
    
    
    Total
    
    
    Balance
    
    
    Total CRECommercial Real Estate Loans by Geographic Diversification(1)Western North Carolina (Hendersonville/Asheville)
    
    $
    868,226
    
    
    
    20.9
    %
    
    $
    913,742
    
    
    
    21.9
    %Tampa Bay Florida
    
    
    565,917
    
    
    
    13.6
    
    
    
    562,905
    
    
    
    13.5Upstate South Carolina (Greenville)
    
    
    400,936
    
    
    
    9.6
    
    
    
    338,576
    
    
    
    8.1Northeast Florida (Jacksonville)
    
    
    327,877
    
    
    
    7.9
    
    
    
    354,372
    
    
    
    8.5North Central Florida
    
    
    301,485
    
    
    
    7.3
    
    
    
    313,009
    
    
    
    7.5Midlands South Carolina (Columbia)
    
    
    300,414
    
    
    
    7.2
    
    
    
    381,810
    
    
    
    9.2North Coastal South Carolina (Myrtle Beach)
    
    
    297,075
    
    
    
    7.2
    
    
    
    274,548
    
    
    
    6.6South Florida (Ft. Lauderdale)
    
    
    283,937
    
    
    
    6.8
    
    
    
    263,807
    
    
    
    6.3Central Florida (Orlando)
    
    
    278,416
    
    
    
    6.7
    
    
    
    279,922
    
    
    
    6.7South Coastal South Carolina (Charleston)
    
    
    231,881
    
    
    
    5.6
    
    
    
    233,834
    
    
    
    5.6Marion County, Florida (Ocala)
    
    
    168,054
    
    
    
    4.0
    
    
    
    147,098
    
    
    
    3.5Greater South Charlotte South Carolina (Rock Hill)
    
    
    134,166
    
    
    
    3.2
    
    
    
    108,008
    
    
    
    2.6Total commercial real estate loans
    
    $
    4,158,384
    
    
    
    100.0
    %
    
    $
    4,171,631
    
    
    
    100.0
    %
 % of Total
    
    
    
    
    
    % of TotalBalance
    
    
    Loans HFI
    
    
    Balance
    
    
    Loans HFICommercial Real Estate Loans by Product TypeCompleted income property
    
    $
    2,000,010
    
    
    
    19.6
    %
    
    $
    1,961,961
    
    
    
    20.2
    %Residential acquisition and development
    
    
    666,999
    
    
    
    6.5
    
    
    
    725,248
    
    
    
    7.5Commercial acquisition and development
    
    
    525,933
    
    
    
    5.1
    
    
    
    551,570
    
    
    
    5.7Commercial construction
    
    
    471,772
    
    
    
    4.6
    
    
    
    412,014
    
    
    
    4.2Residential construction
    
    
    262,224
    
    
    
    2.6
    
    
    
    266,779
    
    
    
    2.8Undeveloped land
    
    
    231,446
    
    
    
    2.3
    
    
    
    254,059
    
    
    
    2.6Total commercial real estate loans
    
    $
    4,158,384
    
    
    
    40.7
    %
    
    $
    4,171,631
    
    
    
    43.0
    %
 
 (1)
    
    Geography is primarily determined by the originating operating geographic market and
not necessarily the ultimate location of the underlying collateral.Note:
    
    At December 31, 2007 and 2006, average loan size for commercial real estate loans totaled
$557,000 and $478,000, respectively. 26




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Table 5
Selected Loan Maturity and Interest Sensitivity  (dollars in thousands)
 Over One But
    
    
    OverOne Year
    
    
    Less Than
    
    
    Fiveor Less
    
    
    Five Years
    
    
    Years
    
    
    TotalCommercial secured by real estate
    
    $
    1,256,480
    
    
    $
    2,052,613
    
    
    $
    637,347
    
    
    $
    3,946,440Commercial, financial and agricultural
    
    
    1,419,881
    
    
    
    680,927
    
    
    
    208,486
    
    
    
    2,309,294Real estateconstruction
    
    
    1,114,420
    
    
    
    584,472
    
    
    
    64,473
    
    
    
    1,763,365Total of loans with:Floating interest rates(1)
    
    
    3,171,007
    
    
    
    1,560,621
    
    
    
    468,440
    
    
    
    5,200,068Predetermined interest rates
    
    
    619,774
    
    
    
    1,757,391
    
    
    
    441,866
    
    
    
    2,819,031
 
 (1)
    
    TSFG has entered into swaps and an interest rate floor to hedge the forecasted
interest income from certain prime-based commercial loans. The notional amount of the swaps
and the floor totaled $830.0 million and $200.0 million, respectively, at December 31, 2007.  Table 6
Loan Relationships Greater than $20 Million
 Outstanding Principal BalancePercentage ofNumber
    
    Total
    
    
    
    
    
    Loans Heldof Borrowers
    
    Commitment
    
    Amount
    
for InvestmentDecember 31, 2007
    
    
    57
    
    
    $1.6 billion
    
    $979.8 million
    
    
    9.6
    %December 31, 2006
    
    
    58
    
    
    1.5 billion
    
    907.7 million
    
    
    9.4
   27




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Credit Quality
   Table 7
Credit Quality Indicators                    
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Loans held for investment
    
    $
    10,213,420
    
    
    $
    9,701,867
    
    
    $
    9,439,395
    
    
    $
    8,107,757
    
    
    $
    5,732,205Allowance for loan losses
    
    
    126,427
    
    
    
    111,663
    
    
    
    107,767
    
    
    
    96,434
    
    
    
    72,811Allowance for credit losses(1)
    
    
    128,695
    
    
    
    112,688
    
    
    
    109,350
    
    
    
    96,918
    
    
    
    73,287Nonaccrual loans  commercial and industrial (2)
    
    $
    25,944
    
    
    $
    7,052
    
    
    $
    25,145
    
    
    $
    38,015
    
    
    $
    47,137Nonaccrual loans  owner occupied real estate(2)
    
    
    4,085
    
    
    
    4,512
    
    included above
    
    included above
    
    included aboveNonaccrual loans  commercial real estate (2)
    
    
    36,634
    
    
    
    17,169
    
    included above
    
    included above
    
    included aboveNonaccrual loans  consumer
    
    
    7,911
    
    
    
    5,250
    
    
    
    3,417
    
    
    
    2,312
    
    
    
    2,686Nonaccrual loans  mortgage (3)
    
    
    5,617
    
    
    
    3,185
    
    
    
    4,693
    
    
    
    4,755
    
    
    
    Restructured loans accruing interest
    
    
    1,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total nonperforming loans
    
    
    81,631
    
    
    
    37,168
    
    
    
    33,255
    
    
    
    45,082
    
    
    
    49,823Foreclosed property (other real estate owned and
personal property repossessions) (4)
    
    
    8,276
    
    
    
    4,341
    
    
    
    10,722
    
    
    
    10,894
    
    
    
    10,951Total nonperforming assets
    
    
    89,907
    
    
    
    41,509
    
    
    
    43,977
    
    
    
    55,976
    
    
    
    60,774Loans past due 90 days or more (mortgage and
consumer with interest accruing) (3)
    
    $
    5,349
    
    
    $
    3,129
    
    
    $
    4,548
    
    
    $
    3,764
    
    
    $
    3,960Total nonperforming assets as a percentage of loans
held for investment and foreclosed property
    
    
    0.88
    %
    
    
    0.43
    %
    
    
    0.47
    %
    
    
    0.69
    %
    
    
    1.06
    %Allowance for loan losses as a percentage of loans
held for investment
    
    
    1.24
    
    
    
    1.15
    
    
    
    1.14
    
    
    
    1.19
    
    
    
    1.27Allowance for credit losses as a percentage of loans
held for investment
    
    
    1.26
    
    
    
    1.16
    
    
    
    1.16
    
    
    
    1.20
    
    
    
    1.28Allowance for loan losses to nonperforming loans
    
    
    1.55
    x
    
    
    3.00
    x
    
    
    3.24
    x
    
    
    2.14
    x
    
    
    1.46
    x
 
 (1)
    
    The allowance for credit losses is the sum of the allowance for loan losses and the
reserve for unfunded lending commitments.(2)
    
    At December 31, 2007, 2006, 2005 and 2004, commercial nonaccrual loans included
$218,000, $500,000, $1.9 million and $4.7 million, respectively, in restructured loans.(3)
    
    Effective September 30, 2004, TSFG began placing residential mortgage loans in
nonaccrual status when 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.(4)
    
    At December 31, 2007, 2006, 2005, and 2004, personal property repossessions totaled
$1.8 million, $900,000, $850,000, and $652,000, respectively, and were included in
nonperforming assets. Personal property repossessions totaled $1.0 million at December 31,
2003, and were excluded from nonperforming assets. 28




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Table 8
Penland Development Loans
(dollars in thousands)
 December 31, 2007# of
    
    
    June 30, 2007
    
    
    2007
    
    
    Net
    
    
    
    
    
    
    AllocatedLoans
    
    
    Balance
    
    
    Charge-offs
    
    
    Balance
    
    
    Nonaccrual
    
    
    AllowanceLot loans
    
    
    93
    
    
    $
    17,422
    
    
    $
    15,702
    
    
    $
    1,720
    
    
    $
    1,720
    
    
    
    Development loans
    
    
    2
    
    
    
    3,007
    
    
    
    2,707
    
    
    
    300
    
    
    
    300
    
    
    
    Total
    
    
    95
    
    
    $
    20,429
    
    
    $
    18,409
    
    
    $
    2,020
    
    
    $
    2,020
    
    
    $
    
 Allowance for Loan Losses and Reserve for Unfunded Lending Commitments
     29




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Table 9
Summary of Loan Loss Experience
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Allowance for loan losses, beginning of year
    
    $
    111,663
    
    
    $
    107,767
    
    
    $
    96,434
    
    
    $
    72,811
    
    
    $
    69,625Purchase accounting adjustments
    
    
    
    
    
    
    
    
    
    
    3,741
    
    
    
    20,682
    
    
    
    12,690Allowance adjustment for loans sold
    
    
    
    
    
    
    (3,089
    )
    
    
    
    
    
    
    (506
    )
    
    
    Charge-offs:Commercial, financial and agricultural
    
    
    18,716
    
    
    
    16,895
    
    
    
    23,188
    
    
    
    20,882
    
    
    
    18,474Real estateconstruction
    
    
    10,770
    
    
    
    6,814
    
    
    
    1,329
    
    
    
    2,513
    
    
    
    3,049Real estateresidential mortgages (1-4 family)
    
    
    2,090
    
    
    
    2,373
    
    
    
    2,107
    
    
    
    1,980
    
    
    
    3,034Commercial secured by real estate
    
    
    6,105
    
    
    
    5,200
    
    
    
    6,644
    
    
    
    4,842
    
    
    
    2,410Consumer
    
    
    21,727
    
    
    
    5,341
    
    
    
    5,946
    
    
    
    6,786
    
    
    
    7,657Total loans charged-off
    
    
    59,408
    
    
    
    36,623
    
    
    
    39,214
    
    
    
    37,003
    
    
    
    34,624Recoveries:Commercial, financial and agricultural
    
    
    3,905
    
    
    
    6,558
    
    
    
    4,651
    
    
    
    2,762
    
    
    
    1,997Real estateconstruction
    
    
    773
    
    
    
    931
    
    
    
    548
    
    
    
    719
    
    
    
    109Real estateresidential mortgages (1-4 family)
    
    
    319
    
    
    
    287
    
    
    
    537
    
    
    
    416
    
    
    
    355Commercial secured by real estate
    
    
    981
    
    
    
    1,474
    
    
    
    776
    
    
    
    568
    
    
    
    1,044Consumer
    
    
    869
    
    
    
    1,011
    
    
    
    801
    
    
    
    1,006
    
    
    
    860Total loans recovered
    
    
    6,847
    
    
    
    10,261
    
    
    
    7,313
    
    
    
    5,471
    
    
    
    4,365Net charge-offs
    
    
    52,561
    
    
    
    26,362
    
    
    
    31,901
    
    
    
    31,532
    
    
    
    30,259Additions through provision expense
    
    
    67,325
    
    
    
    33,347
    
    
    
    39,493
    
    
    
    34,979
    
    
    
    20,755Allowance for loan losses, end of year
    
    $
    126,427
    
    
    $
    111,663
    
    
    $
    107,767
    
    
    $
    96,434
    
    
    $
    72,811Average loans held for investment
    
    $
    9,985,751
    
    
    $
    9,581,602
    
    
    $
    8,848,279
    
    
    $
    6,909,545
    
    
    $
    4,864,168Loans held for investment (period end)
    
    
    10,213,420
    
    
    
    9,701,867
    
    
    
    9,439,395
    
    
    
    8,107,757
    
    
    
    5,732,205Net charge-offs as a percentage of average
loans
held for investment
    
    
    0.53
    %
    
    
    0.28
    %
    
    
    0.36
    %
    
    
    0.46
    %
    
    
    0.62
    %
 Table 10
Composition of Allowance for Loan Losses Based on Collateral/Borrower Type
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commercial, financial and agricultural
    
    $
    30,600
    
    
    $
    27,072
    
    
    $
    23,658
    
    
    $
    20,077
    
    
    $
    16,568Real estate  construction
    
    
    29,030
    
    
    
    20,001
    
    
    
    16,640
    
    
    
    12,763
    
    
    
    7,551Real estate  residential mortgages (1-4 family)
    
    
    3,285
    
    
    
    2,675
    
    
    
    3,965
    
    
    
    2,092
    
    
    
    804Commercial secured by real estate
    
    
    46,926
    
    
    
    46,604
    
    
    
    43,387
    
    
    
    39,404
    
    
    
    26,182Consumer
    
    
    10,570
    
    
    
    8,950
    
    
    
    14,525
    
    
    
    17,325
    
    
    
    18,162Unallocated
    
    
    6,016
    
    
    
    6,361
    
    
    
    5,592
    
    
    
    4,773
    
    
    
    3,544Total
    
    $
    126,427
    
    
    $
    111,663
    
    
    $
    107,767
    
    
    $
    96,434
    
    
    $
    72,811
  30




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Securities
  Table 11Investment Securities Portfolio Composition(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Trading Account(at fair value)U.S. Treasury
    
    $
    
    
    
    $
    
    
    
    $
    22
    
    
    $
    
    
    
    $
    U.S. Government agencies
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    
    
    
    
    460State and municipal
    
    
    
    
    
    
    
    
    
    
    1,243
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    1,402
    
    
    
    
    
    
    
    480Securities Available for Sale(at fair value)U.S. Treasury
    
    
    27,592
    
    
    
    166,719
    
    
    
    182,468
    
    
    
    234,538
    
    
    
    246,659U.S. Government agencies
    
    
    503,571
    
    
    
    653,034
    
    
    
    656,442
    
    
    
    930,046
    
    
    
    866,968Agency mortgage-backed securities
    
    
    1,088,427
    
    
    
    1,400,288
    
    
    
    1,688,862
    
    
    
    2,502,440
    
    
    
    2,375,557State and municipal
    
    
    302,586
    
    
    
    341,488
    
    
    
    373,892
    
    
    
    272,535
    
    
    
    127,181Other investments:Corporate bonds
    
    
    20,380
    
    
    
    113,365
    
    
    
    112,246
    
    
    
    141,970
    
    
    
    148,517Federal Home Loan Bank (FHLB) stock
    
    
    35,333
    
    
    
    52,246
    
    
    
    67,553
    
    
    
    72,733
    
    
    
    50,411Community bank stocks
    
    
    4,988
    
    
    
    12,406
    
    
    
    10,067
    
    
    
    14,899
    
    
    
    23,487Federal National Mortgage Association preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,062
    
    
    
    54,678Federal Home Loan Mortgage Corporation preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,990
    
    
    
    12,130Other equity investments
    
    
    3,335
    
    
    
    3,910
    
    
    
    4,037
    
    
    
    3,630
    
    
    
    10,4061,986,212
    
    
    
    2,743,456
    
    
    
    3,095,567
    
    
    
    4,234,843
    
    
    
    3,915,994Securities Held to Maturity(at amortized cost)State and municipal
    
    
    39,451
    
    
    
    52,208
    
    
    
    62,548
    
    
    
    75,145
    
    
    
    90,745Other investments
    
    
    240
    
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    35239,691
    
    
    
    52,308
    
    
    
    62,648
    
    
    
    75,245
    
    
    
    91,097Total
    
    $
    2,025,903
    
    
    $
    2,795,764
    
    
    $
    3,159,617
    
    
    $
    4,310,088
    
    
    $
    4,007,571Total securities as a percentage of total assets
    
    
    14.6
    %
    
    
    19.7
    %
    
    
    22.1
    %
    
    
    31.2
    %
    
    
    37.4
    %
  31




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32




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##### Table of Contents



Table 12
Investment Securities Portfolio Credit Risk Profile
(dollars in thousands)
 December 31, 2007Balance
    
    
    % of TotalGovernment and agencyU.S. Treasury
    
    $
    27,592
    
    
    
    1.4
    %U.S. Government agencies
    
    
    503,571
    
    
    
    24.9Agency mortgage-backed securities (MBS) (1)
    
    
    1,088,427
    
    
    
    53.7Federal Home Loan Bank Stock
    
    
    35,333
    
    
    
    1.7Total government and agency
    
    
    1,654,923
    
    
    
    81.7State and municipal(2)(3)Pre-funded with collateral or AAA-rated backed by Texas Permanent School Fund
    
    
    214,675
    
    
    
    10.6Underlying issuer or collateral rated A or better (including South Carolina State Aid)
    
    
    102,187
    
    
    
    5.1Underlying issuer or collateral rated BBB
    
    
    12,930
    
    
    
    0.6Non-rated
    
    
    12,245
    
    
    
    0.6Total state and municipal
    
    
    342,037
    
    
    
    16.9Corporate bondsAA or A rated
    
    
    17,068
    
    
    
    0.8BBB rated
    
    
    3,312
    
    
    
    0.2Total corporate bonds
    
    
    20,380
    
    
    
    1.0Community bank stocks and other
    
    
    8,563
    
    
    
    0.4Total securities
    
    $
    2,025,903
    
    
    
    100.0
    %Percent of total securities: (3)Rated A or higher
    
    
    
    
    
    
    98.2
    %Investment grade
    
    
    
    
    
    
    99.0
    %
 
 (1)
    
    MBS, including CMOs, are agency-backed with no sub-prime exposure. Current policies
restrict MBS/CMO purchases to agency-backed and a small percent of private-label securities
and prohibit securities collateralized by sub-prime assets.(2)
    
    Includes $39.5 million of securities held to maturity at amortized cost.(3)
    
    Ratings shown above do not reflect the benefit of guarantees by bond insurers or the
State of South Carolina. In total, $43.5 million of municipal bonds are guaranteed by bond
insurers and approximately $55 million are guaranteed by the State of South Carolina. Note:
    
    Within each category, securities are ordered based on risk assessment from lowest to
highest. TSFG holds no collateralized debt obligations.
  33




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Table 13
Investment Securities Maturity Schedule
(dollars in thousands)
 Available for Sale  Fair Value
 After One
    
    
    After Five
    
    
    
    
    
    
    NoWithin
    
    
    But Within
    
    
    But Within
    
    
    After
    
    
    ContractualOne Year
    
    
    Five Years
    
    
    Ten Years
    
    
    Ten Years
    
    
    Maturity(1)
    
    
    TotalU.S. Treasury
    
    $
    
    
    
    $
    2,092
    
    
    $
    25,500
    
    
    $
    
    
    
    $
    
    
    
    $
    27,592U.S. Government agencies
    
    
    
    
    
    
    92,438
    
    
    
    227,062
    
    
    
    184,071
    
    
    
    
    
    
    
    503,571Agency mortgage-backed securities
    
    
    92,038
    
    
    
    427,774
    
    
    
    209,342
    
    
    
    359,273
    
    
    
    
    
    
    
    1,088,427State and municipal
    
    
    34,870
    
    
    
    163,326
    
    
    
    94,313
    
    
    
    10,077
    
    
    
    
    
    
    
    302,586Other investments
    
    
    761
    
    
    
    9,452
    
    
    
    10,934
    
    
    
    
    
    
    
    42,889
    
    
    
    64,036$
    127,669
    
    
    $
    695,082
    
    
    $
    567,151
    
    
    $
    553,421
    
    
    $
    42,889
    
    
    $
    1,986,212Weighted Average YieldU.S. Treasury
    
    
    
    %
    
    
    5.93
    %
    
    
    3.81
    %
    
    
    
    %
    
    
    
    %
    
    
    3.96
    %U.S. Government agencies
    
    
    
    
    
    
    4.92
    
    
    
    5.06
    
    
    
    5.49
    
    
    
    
    
    
    
    5.19Agency mortgage-backed securities
    
    
    4.22
    
    
    
    4.55
    
    
    
    4.47
    
    
    
    4.75
    
    
    
    
    
    
    
    4.57State and municipal
    
    
    3.95
    
    
    
    4.85
    
    
    
    5.56
    
    
    
    6.83
    
    
    
    
    
    
    
    5.03Other investments
    
    
    4.50
    
    
    
    5.55
    
    
    
    5.96
    
    
    
    
    
    
    
    n/a
    
    
    
    5.464.15
    %
    
    
    4.68
    %
    
    
    4.88
    %
    
    
    5.02
    %
    
    
    
    %
    
    
    4.80
    %Held to Maturity  Amortized
CostState and municipal
    
    $
    11,484
    
    
    $
    22,999
    
    
    $
    4,968
    
    
    $
    
    
    
    $
    
    
    
    $
    39,451Other investments
    
    
    140
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    240$
    11,624
    
    
    $
    23,099
    
    
    $
    4,968
    
    
    $
    
    
    
    $
    
    
    
    $
    39,691Weighted Average YieldState and municipal
    
    
    5.50
    %
    
    
    6.00
    %
    
    
    5.39
    %
    
    
    
    %
    
    
    
    %
    
    
    5.78
    %Other investments
    
    
    5.10
    
    
    
    5.48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.265.50
    %
    
    
    6.00
    %
    
    
    5.39
    %
    
    
    
    %
    
    
    
    %
    
    
    5.77
    %
 
 (1)
    
    These securities have no contractual maturity or yield and accordingly are excluded
from the Other Investments yield calculation, as well as the overall Available for Sale
yield calculation. Community Bank Stocks.
 Investments Included in Other Assets.
 34




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##### Table of Contents



Derivative Financial Instruments
  Table 14
Summary of Derivative Assets and Liabilities
(dollars in thousands)
 December 31, 2007




    
    
    December 31, 2006Fair Value
    
    
    Notional
    
    
    Fair Value
    
    
    NotionalAsset
    
    
    Liability
    
    
    Amount
    
    
    Asset
    
    
    Liability
    
    
    AmountCash Flow HedgesInterest rate swaps associated with
borrowing activities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    143
    
    
    $
    
    
    
    $
    183,000Interest rate swaps associated with
lending activities
    
    
    20,114
    
    
    
    
    
    
    
    830,000
    
    
    
    1,979
    
    
    
    3,408
    
    
    
    870,000Interest rate floor associated with
lending activities
    
    
    4,531
    
    
    
    
    
    
    
    200,000
    
    
    
    1,564
    
    
    
    
    
    
    
    200,000Fair Value HedgesInterest rate swaps associated with
brokered CDs
    
    
    672
    
    
    
    8,235
    
    
    
    988,477
    
    
    
    
    
    
    
    33,541
    
    
    
    1,167,585Other DerivativesForward foreign currency contracts
    
    
    5
    
    
    
    5
    
    
    
    653
    
    
    
    36
    
    
    
    36
    
    
    
    18,119Customer swap contracts
    
    
    5,065
    
    
    
    5,065
    
    
    
    238,224
    
    
    
    918
    
    
    
    918
    
    
    
    155,448Options, interest rate swaps and other
    
    
    5,807
    
    
    
    7,712
    
    
    
    161,832
    
    
    
    5,318
    
    
    
    5,004
    
    
    
    123,398$
    36,194
    
    
    $
    21,017
    
    
    $
    2,419,186
    
    
    $
    9,958
    
    
    $
    42,907
    
    
    $
    2,717,550
  Customer Hedging Programs.
  Fair Value Hedges.
 35




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##### Table of Contents



Cash Flow Hedges.
 Trading.
 Mortgage Loan Commitments and Forward Sales Commitments.
  Indirect Auto Loan Sales.
 Credit Risk of Derivative Financial Instruments.
 36




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##### Table of Contents



Deposits
   37




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##### Table of Contents



Table 15
Types of Deposits
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Noninterest-bearing demand deposits
    
    $
    1,127,657
    
    
    $
    1,280,908
    
    
    $
    1,458,914
    
    
    $
    1,237,877
    
    
    $
    882,129Interest-bearing checking
    
    
    1,117,850
    
    
    
    1,208,125
    
    
    
    1,162,891
    
    
    
    816,933
    
    
    
    699,956Money market accounts
    
    
    2,188,261
    
    
    
    2,435,413
    
    
    
    2,290,134
    
    
    
    2,704,287
    
    
    
    2,237,299Savings accounts
    
    
    158,092
    
    
    
    181,192
    
    
    
    187,101
    
    
    
    192,769
    
    
    
    159,013Time deposits under $100,000 (1)
    
    
    1,442,030
    
    
    
    1,272,056
    
    
    
    1,246,791
    
    
    
    836,386
    
    
    
    794,802Time deposits of $100,000 or more (1)
    
    
    1,496,270
    
    
    
    1,514,615
    
    
    
    1,549,925
    
    
    
    665,820
    
    
    
    557,588Customer deposits (2)
    
    
    7,530,160
    
    
    
    7,892,309
    
    
    
    7,895,756
    
    
    
    6,454,072
    
    
    
    5,330,787Brokered deposits
    
    
    2,258,408
    
    
    
    1,624,431
    
    
    
    1,338,681
    
    
    
    1,216,872
    
    
    
    701,451Total deposits
    
    $
    9,788,568
    
    
    $
    9,516,740
    
    
    $
    9,234,437
    
    
    $
    7,670,944
    
    
    $
    6,032,238Percentage of DepositsNoninterest-bearing demand deposits
    
    
    11.5
    %
    
    
    13.4
    %
    
    
    15.8
    %
    
    
    16.1
    %
    
    
    14.6
    %Interest-bearing checking
    
    
    11.4
    
    
    
    12.7
    
    
    
    12.6
    
    
    
    10.6
    
    
    
    11.6Money market accounts
    
    
    22.4
    
    
    
    25.6
    
    
    
    24.8
    
    
    
    35.3
    
    
    
    37.1Savings accounts
    
    
    1.6
    
    
    
    1.9
    
    
    
    2.0
    
    
    
    2.5
    
    
    
    2.7Time deposits under $100,000
    
    
    14.7
    
    
    
    13.4
    
    
    
    13.5
    
    
    
    10.9
    
    
    
    13.2Time deposits of $100,000 or more
    
    
    15.3
    
    
    
    15.9
    
    
    
    16.8
    
    
    
    8.7
    
    
    
    9.2Customer deposits (2)
    
    
    76.9
    
    
    
    82.9
    
    
    
    85.5
    
    
    
    84.1
    
    
    
    88.4Brokered deposits
    
    
    23.1
    
    
    
    17.1
    
    
    
    14.5
    
    
    
    15.9
    
    
    
    11.6Total deposits
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1)
    
    In 2007, TSFG reclassified certain deposit balances from time deposits under
$100,000 to time deposits of $100,000 or more. Amounts presented for prior periods have been
reclassified to conform to the current presentation. The reclassification totaled $408.8
million and $154.7 million, respectively, for December 31, 2006 and 2005.(2)
    
    TSFG defines customer deposits as total deposits less brokered deposits. Table 16
Types of Customer Funding
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Customer deposits(1)
    
    $
    7,530,160
    
    
    $
    7,892,309
    
    
    $
    7,895,756
    
    
    $
    6,454,072
    
    
    $
    5,330,787Customer sweep accounts (2)
    
    
    648,311
    
    
    
    500,288
    
    
    
    305,815
    
    
    
    373,196
    
    
    
    216,679Customer funding
    
    $
    8,178,471
    
    
    $
    8,392,597
    
    
    $
    8,201,571
    
    
    $
    6,827,268
    
    
    $
    5,547,466
 
 (1)
    
    TSFG defines customer deposits as total deposits less brokered deposits.(2)
    
    TSFG includes customer sweep accounts in short-term borrowings on its consolidated
balance sheet.  38




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##### Table of Contents



Table 17
Maturity Distribution of Time Deposits of $100,000 or More
(dollars in thousands)
 Three months or less
    
    $
    743,873Over three through six months
    
    
    436,086Over six through twelve months
    
    
    247,759Over twelve months
    
    
    68,552Total outstanding
    
    $
    1,496,270
 39




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##### Table of Contents



Borrowed Funds
  Table 18
Types of Borrowed Funds
(dollars in thousands)
 December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Short-Term BorrowingsFederal funds purchased and repurchase agreements
    
    $
    206,216
    
    
    $
    920,811
    
    
    $
    1,115,486
    
    
    $
    1,210,299
    
    
    $
    618,187Customer sweep accounts
    
    
    648,311
    
    
    
    500,288
    
    
    
    305,815
    
    
    
    373,196
    
    
    
    216,679FHLB advances
    
    
    
    
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    Treasury, tax and loan note
    
    
    752,195
    
    
    
    139,989
    
    
    
    20,131
    
    
    
    14,111
    
    
    
    11,781Commercial paper
    
    
    30,828
    
    
    
    32,631
    
    
    
    32,933
    
    
    
    29,405
    
    
    
    36,949Lines of credit and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,3491,637,550
    
    
    
    1,768,719
    
    
    
    1,474,365
    
    
    
    1,627,011
    
    
    
    890,945Long-Term BorrowingsRepurchase agreements
    
    
    200,000
    
    
    
    521,000
    
    
    
    821,000
    
    
    
    1,665,134
    
    
    
    1,494,800FHLB advances
    
    
    223,087
    
    
    
    328,113
    
    
    
    852,140
    
    
    
    1,057,167
    
    
    
    989,500Subordinated notes
    
    
    216,704
    
    
    
    188,871
    
    
    
    155,695
    
    
    
    155,695
    
    
    
    135,075Mandatorily redeemable preferred stock of REIT subsidiary
    
    
    56,800
    
    
    
    89,800
    
    
    
    89,800
    
    
    
    89,800
    
    
    
    89,800Employee stock ownership plan note payable
    
    
    
    
    
    
    200
    
    
    
    500
    
    
    
    800
    
    
    
    1,100Note payable
    
    
    786
    
    
    
    828
    
    
    
    865
    
    
    
    900
    
    
    
    927Purchase accounting premiums, net of amortization
    
    
    963
    
    
    
    1,663
    
    
    
    2,151
    
    
    
    2,774
    
    
    
    497Total long-term borrowings
    
    
    698,340
    
    
    
    1,130,475
    
    
    
    1,922,151
    
    
    
    2,972,270
    
    
    
    2,711,699Total borrowings
    
    
    2,335,890
    
    
    
    2,899,194
    
    
    
    3,396,516
    
    
    
    4,599,281
    
    
    
    3,602,644Less: customer sweep accounts
    
    
    (648,311
    )
    
    
    (500,288
    )
    
    
    (305,815
    )
    
    
    (373,196
    )
    
    
    (216,679
    )Add: brokered deposits(1)
    
    
    2,258,408
    
    
    
    1,624,431
    
    
    
    1,338,681
    
    
    
    1,216,872
    
    
    
    701,451Total wholesale borrowings
    
    $
    3,945,987
    
    
    $
    4,023,337
    
    
    $
    4,429,382
    
    
    $
    5,442,957
    
    
    $
    4,087,416Total wholesale borrowings as a percentage of total assets
    
    
    28.4
    %
    
    
    28.3
    %
    
    
    30.9
    %
    
    
    39.4
    %
    
    
    38.1
    %
 
 (1)
    
    TSFG includes brokered deposits in total deposits on its consolidated balance sheet.    40




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##### Table of Contents



Table 19
Short-Term Borrowings
(dollars in thousands)
 Maximum
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    InterestOutstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Rate atat any
    
    
    Average
    
    
    Average
    
    
    Ending
    
    
    YearYear Ended December 31,
    
    Month End
    
    
    Balance
    
    
    Interest Rate
    
    
    Balance
    
    
    End2007Federal funds purchased and repurchase agreements
    
    $
    1,048,334
    
    
    $
    767,413
    
    
    
    5.17
    %
    
    $
    206,216
    
    
    
    3.70
    %Customer sweep accounts
    
    
    648,311
    
    
    
    525,606
    
    
    
    4.32
    
    
    
    648,311
    
    
    
    3.79FHLB advances
    
    
    175,000
    
    
    
    83,288
    
    
    
    5.37
    
    
    
    
    
    
    
    Treasury, tax and loan note
    
    
    752,195
    
    
    
    227,045
    
    
    
    4.94
    
    
    
    752,195
    
    
    
    4.13Commercial paper
    
    
    35,704
    
    
    
    33,454
    
    
    
    5.35
    
    
    
    30,828
    
    
    
    5.04$
    1,636,806
    
    
    
    4.88
    %
    
    $
    1,637,550
    
    
    
    3.96
    %2006Federal funds purchased and repurchase agreements
    
    $
    1,462,673
    
    
    $
    1,225,832
    
    
    
    5.06
    %
    
    $
    920,811
    
    
    
    5.27
    %Customer sweep accounts
    
    
    500,288
    
    
    
    349,963
    
    
    
    4.36
    
    
    
    500,288
    
    
    
    4.44FHLB advances
    
    
    175,000
    
    
    
    87,500
    
    
    
    4.67
    
    
    
    175,000
    
    
    
    5.32Treasury, tax and loan note
    
    
    140,821
    
    
    
    68,280
    
    
    
    4.93
    
    
    
    139,989
    
    
    
    5.18Commercial paper
    
    
    39,532
    
    
    
    35,122
    
    
    
    5.12
    
    
    
    32,631
    
    
    
    5.36$
    1,766,697
    
    
    
    4.90
    %
    
    $
    1,768,719
    
    
    
    5.03
    %2005Federal funds purchased and repurchase agreements
    
    $
    1,428,510
    
    
    $
    1,129,523
    
    
    
    3.34
    %
    
    $
    1,115,486
    
    
    
    4.27
    %Customer sweep accounts
    
    
    373,202
    
    
    
    320,965
    
    
    
    2.72
    
    
    
    305,815
    
    
    
    3.63Treasury, tax and loan note
    
    
    183,001
    
    
    
    43,002
    
    
    
    4.28
    
    
    
    20,131
    
    
    
    3.06Commercial paper
    
    
    35,085
    
    
    
    31,045
    
    
    
    3.51
    
    
    
    32,933
    
    
    
    4.42$
    1,524,535
    
    
    
    3.24
    %
    
    $
    1,474,365
    
    
    
    4.13
    %
    Capital Resources and Dividends
  41




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##### Table of Contents



Table 20
Capital Ratios
 Well CapitalizedDecember 31, 2007
    
    RequirementTSFGTotal risk-based capital
    
    
    10.88
    %
    
    
    n/aTier 1 risk-based capital
    
    
    9.49
    
    
    
    n/aLeverage ratio
    
    
    8.42
    
    
    
    n/aCarolina First BankTotal risk-based capital
    
    
    10.78
    %
    
    
    10.00
    %Tier 1 risk-based capital
    
    
    9.16
    
    
    
    6.00Leverage ratio
    
    
    8.12
    
    
    
    5.00
    42




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##### Table of Contents



Results of Operations
 Net Interest Income
  43




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##### Table of Contents



Table 21
Comparative Average Balances  Yields and Costs
(dollars in thousands)
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateAssetsEarning assetsLoans (1)
    
    $
    10,013,387
    
    
    $
    764,828
    
    
    
    7.64
    %
    
    $
    9,621,846
    
    
    $
    721,020
    
    
    
    7.49
    %
    
    $
    8,883,837
    
    
    $
    568,222
    
    
    
    6.40
    %Investment securities, taxable (2)
    
    
    2,165,589
    
    
    
    103,525
    
    
    
    4.78
    
    
    
    2,628,947
    
    
    
    124,850
    
    
    
    4.75
    
    
    
    4,000,697
    
    
    
    173,657
    
    
    
    4.34Investment securities, nontaxable (2) (3)
    
    
    359,728
    
    
    
    17,847
    
    
    
    4.96
    
    
    
    414,438
    
    
    
    19,722
    
    
    
    4.76
    
    
    
    387,654
    
    
    
    17,297
    
    
    
    4.46Total investment securities
    
    
    2,525,317
    
    
    
    121,372
    
    
    
    4.81
    
    
    
    3,043,385
    
    
    
    144,572
    
    
    
    4.75
    
    
    
    4,388,351
    
    
    
    190,954
    
    
    
    4.35Federal funds sold and interest-bearing
bank balances
    
    
    6,519
    
    
    
    402
    
    
    
    6.17
    
    
    
    27,641
    
    
    
    1,511
    
    
    
    5.47
    
    
    
    35,768
    
    
    
    1,175
    
    
    
    3.29Total earning assets
    
    
    12,545,223
    
    
    $
    886,602
    
    
    
    7.07
    
    
    
    12,692,872
    
    
    $
    867,103
    
    
    
    6.83
    
    
    
    13,307,956
    
    
    $
    760,351
    
    
    
    5.71Non-earning assets
    
    
    1,499,342
    
    
    
    
    
    
    
    
    
    
    
    1,509,777
    
    
    
    
    
    
    
    
    
    
    
    1,445,017Total assets
    
    $
    14,044,565
    
    
    
    
    
    
    
    
    
    
    $
    14,202,649
    
    
    
    
    
    
    
    
    
    
    $
    14,752,973Liabilities and Shareholders EquityLiabilitiesInterest-bearing liabilitiesInterest-bearing depositsInterest-bearing checking
    
    $
    1,140,753
    
    
    $
    22,141
    
    
    
    1.94
    
    
    $
    1,137,031
    
    
    $
    21,099
    
    
    
    1.86
    
    
    $
    981,947
    
    
    $
    8,758
    
    
    
    0.89Savings
    
    
    174,100
    
    
    
    2,756
    
    
    
    1.58
    
    
    
    185,649
    
    
    
    1,858
    
    
    
    1.00
    
    
    
    191,727
    
    
    
    678
    
    
    
    0.35Money market
    
    
    2,275,380
    
    
    
    89,338
    
    
    
    3.93
    
    
    
    2,336,433
    
    
    
    81,876
    
    
    
    3.50
    
    
    
    2,640,614
    
    
    
    63,069
    
    
    
    2.39Time deposits, excluding brokered deposits
    
    
    2,900,260
    
    
    
    144,299
    
    
    
    4.98
    
    
    
    2,681,737
    
    
    
    115,304
    
    
    
    4.30
    
    
    
    2,125,474
    
    
    
    64,605
    
    
    
    3.04Brokered deposits
    
    
    2,114,211
    
    
    
    109,761
    
    
    
    5.19
    
    
    
    1,401,369
    
    
    
    71,155
    
    
    
    5.08
    
    
    
    1,346,608
    
    
    
    59,579
    
    
    
    4.42Total interest-bearing deposits
    
    
    8,604,704
    
    
    
    368,295
    
    
    
    4.28
    
    
    
    7,742,219
    
    
    
    291,292
    
    
    
    3.76
    
    
    
    7,286,370
    
    
    
    196,689
    
    
    
    2.70Customer sweep accounts
    
    
    525,606
    
    
    
    22,723
    
    
    
    4.32
    
    
    
    349,963
    
    
    
    15,241
    
    
    
    4.36
    
    
    
    320,965
    
    
    
    8,746
    
    
    
    2.72Other borrowings (4)
    
    
    1,938,851
    
    
    
    106,557
    
    
    
    5.50
    
    
    
    2,993,210
    
    
    
    152,296
    
    
    
    5.09
    
    
    
    4,193,133
    
    
    
    139,806
    
    
    
    3.33Total interest-bearing liabilities
    
    
    11,069,161
    
    
    $
    497,575
    
    
    
    4.50
    
    
    
    11,085,392
    
    
    $
    458,829
    
    
    
    4.14
    
    
    
    11,800,468
    
    
    $
    345,241
    
    
    
    2.93Noninterest-bearing liabilitiesNoninterest-bearing deposits
    
    
    1,200,663
    
    
    
    
    
    
    
    
    
    
    
    1,386,792
    
    
    
    
    
    
    
    
    
    
    
    1,345,344Other noninterest-bearing liabilities
    
    
    231,189
    
    
    
    
    
    
    
    
    
    
    
    224,270
    
    
    
    
    
    
    
    
    
    
    
    144,036Total liabilities
    
    
    12,501,013
    
    
    
    
    
    
    
    
    
    
    
    12,696,454
    
    
    
    
    
    
    
    
    
    
    
    13,289,848Shareholders equity
    
    
    1,543,552
    
    
    
    
    
    
    
    
    
    
    
    1,506,195
    
    
    
    
    
    
    
    
    
    
    
    1,463,125Total liabilities and shareholders equity
    
    $
    14,044,565
    
    
    
    
    
    
    
    
    
    
    $
    14,202,649
    
    
    
    
    
    
    
    
    
    
    $
    14,752,973Net interest income (tax-equivalent)
    
    
    
    
    
    $
    389,027
    
    
    
    3.10
    %
    
    
    
    
    
    $
    408,274
    
    
    
    3.22
    %
    
    
    
    
    
    $
    415,110
    
    
    
    3.12
    %Less: tax-equivalent adjustment (3)
    
    
    
    
    
    
    6,246
    
    
    
    
    
    
    
    
    
    
    
    6,903
    
    
    
    
    
    
    
    
    
    
    
    6,054Net interest income
    
    
    
    
    
    $
    382,781
    
    
    
    
    
    
    
    
    
    
    $
    401,371
    
    
    
    
    
    
    
    
    
    
    $
    409,056Supplemental data:Customer funding(5)
    
    $
    8,216,762
    
    
    $
    281,257
    
    
    
    3.42
    %
    
    $
    8,077,605
    
    
    $
    235,378
    
    
    
    2.91
    %
    
    $
    7,606,071
    
    
    $
    145,856
    
    
    
    1.92
    %Wholesale borrowings(6)
    
    
    4,053,062
    
    
    
    216,318
    
    
    
    5.34
    
    
    
    4,394,579
    
    
    
    223,451
    
    
    
    5.08
    
    
    
    5,539,741
    
    
    
    199,385
    
    
    
    3.60Total funding (7)
    
    $
    12,269,824
    
    
    $
    497,575
    
    
    
    4.06
    
    
    $
    12,472,184
    
    
    $
    458,829
    
    
    
    3.68
    
    
    $
    13,145,812
    
    
    $
    345,241
    
    
    
    2.63
 
 (1)
    
    Nonaccrual loans are included in average balances for yield computations.(2)
    
    The average balances for investment securities exclude the unrealized loss recorded
for available for sale securities.(3)
    
    The tax-equivalent adjustment to net interest income adjusts the yield for assets
earning tax-exempt income to a comparable yield on a taxable basis.(4)
    
    During the year ended December 31, 2007, TSFG capitalized $505,000 of interest in
conjunction with the construction of its expanded corporate facilities.(5)
    
    Customer funding includes total deposits (total interest-bearing plus
noninterest-bearing deposits) less brokered deposits plus customer sweep accounts.(6)
    
    Wholesale borrowings include borrowings less customer sweep accounts plus brokered
deposits. For purposes of this table, wholesale borrowings equal the
sum of other borrowings and brokered deposits, as customer sweep accounts are presented
separately.(7)
    
    Total funding includes customer funding and wholesale borrowings.  44




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##### Table of Contents



Table 22
Rate/Volume Variance Analysis
(dollars in thousands)
 2007 Compared to 2006
    
    
    2006 Compared to 2005Total
    
    
    Change in
    
    
    Change in
    
    
    Total
    
    
    Change in
    
    
    Change inChange
    
    
    Volume
    
    
    Rate
    
    
    Change
    
    
    Volume
    
    
    RateEarning assetsLoans
    
    $
    43,808
    
    
    $
    29,724
    
    
    $
    14,084
    
    
    $
    152,798
    
    
    $
    49,846
    
    
    $
    102,952Investment securites, taxable
    
    
    (21,325
    )
    
    
    (22,145
    )
    
    
    820
    
    
    
    (48,807
    )
    
    
    (63,939
    )
    
    
    15,132Investment securites, nontaxable
    
    
    (1,875
    )
    
    
    (2,687
    )
    
    
    812
    
    
    
    2,425
    
    
    
    1,236
    
    
    
    1,189Federal funds sold and interest-
bearing bank balances
    
    
    (1,109
    )
    
    
    (1,281
    )
    
    
    172
    
    
    
    336
    
    
    
    (312
    )
    
    
    648Total interest income
    
    
    19,499
    
    
    
    3,611
    
    
    
    15,888
    
    
    
    106,752
    
    
    
    (13,169
    )
    
    
    119,921Interest-bearing liabilitiesInterest-bearing depositsInterest-bearing checking
    
    
    1,042
    
    
    
    69
    
    
    
    973
    
    
    
    12,341
    
    
    
    1,574
    
    
    
    10,767Savings
    
    
    898
    
    
    
    (122
    )
    
    
    1,020
    
    
    
    1,180
    
    
    
    (22
    )
    
    
    1,202Money market
    
    
    7,462
    
    
    
    (2,185
    )
    
    
    9,647
    
    
    
    18,807
    
    
    
    (7,936
    )
    
    
    26,743Time deposits
    
    
    28,995
    
    
    
    9,900
    
    
    
    19,095
    
    
    
    50,699
    
    
    
    19,620
    
    
    
    31,079Brokered deposits
    
    
    38,606
    
    
    
    36,973
    
    
    
    1,633
    
    
    
    11,576
    
    
    
    2,500
    
    
    
    9,076Total interest-bearing deposits
    
    
    77,003
    
    
    
    44,635
    
    
    
    32,368
    
    
    
    94,603
    
    
    
    15,736
    
    
    
    78,867Customer sweep accounts
    
    
    7,482
    
    
    
    7,617
    
    
    
    (135
    )
    
    
    6,495
    
    
    
    861
    
    
    
    5,634Other borrowings
    
    
    (45,739
    )
    
    
    (57,149
    )
    
    
    11,410
    
    
    
    12,490
    
    
    
    (47,422
    )
    
    
    59,912Total interest expense
    
    
    38,746
    
    
    
    (4,897
    )
    
    
    43,643
    
    
    
    113,588
    
    
    
    (30,825
    )
    
    
    144,413Net interest income
    
    $
    (19,247
    )
    
    $
    8,508
    
    
    $
    (27,755
    )
    
    $
    (6,836
    )
    
    $
    17,656
    
    
    $
    (24,492
    )
     45




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##### Table of Contents



Provision for Credit Losses
   46




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##### Table of Contents



Noninterest Income
  Table 23
Components of Noninterest Income
(dollars in thousands)
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Service charges on deposit accounts
    
    $
    44,519
    
    
    $
    45,041
    
    
    $
    42,645Debit card income, net(1)
    
    
    7,182
    
    
    
    5,437
    
    
    
    4,111Customer service fee income
    
    
    5,648
    
    
    
    4,467
    
    
    
    4,049Total customer fee income
    
    
    57,349
    
    
    
    54,945
    
    
    
    50,805Insurance income
    
    
    12,029
    
    
    
    12,025
    
    
    
    7,447Retail investment services, net (2)
    
    
    7,902
    
    
    
    6,533
    
    
    
    5,922Trust and investment management income
    
    
    6,595
    
    
    
    6,124
    
    
    
    4,819Benefits administration fees
    
    
    3,261
    
    
    
    2,933
    
    
    
    2,693Total wealth management income
    
    
    29,787
    
    
    
    27,615
    
    
    
    20,881Change in fair value of certain interest rate swaps
    
    
    
    
    
    
    
    
    
    
    (13,278
    )Net cash settlement of certain interest rate swaps
    
    
    
    
    
    
    
    
    
    
    10,360(Loss) gain on trading and certain derivative activities
    
    
    (1,197
    )
    
    
    3,150
    
    
    
    (335
    )Total (loss) gain on trading and certain derivative activities
    
    
    (1,197
    )
    
    
    3,150
    
    
    
    (3,253
    )Bank-owned life insurance income
    
    
    13,344
    
    
    
    11,636
    
    
    
    11,608Mortgage banking income
    
    
    6,053
    
    
    
    8,155
    
    
    
    7,434Merchant processing income, net (3)
    
    
    3,263
    
    
    
    2,307
    
    
    
    1,874(Loss) gain on securities
    
    
    (4,623
    )
    
    
    4,037
    
    
    
    (52,139
    )Gain on disposition of assets and liabilities
    
    
    
    
    
    
    2,498
    
    
    
    Loss on indirect auto loans
    
    
    
    
    
    
    (5,129
    )
    
    
    Other
    
    
    9,335
    
    
    
    8,691
    
    
    
    6,640Total noninterest income
    
    $
    113,311
    
    
    $
    117,905
    
    
    $
    43,850
 
 (1)
    
    In 2007, TSFG began presenting its debit card income net of related expenses. Debit
card expense totaled (in thousands) $2,363, $2,832, and $2,437, respectively, for the years
ended December 31, 2007, 2006, and 2005. Amounts presented for prior periods have been
reclassified to conform to the current presentation.(2)
    
    In 2007, TSFG began presenting its retail investment services income net of certain
revenue sharing arrangements with a third party. Such amounts for these arrangements totaled
(in thousands) $996, $1,099, and $980, respectively, for the years ended December 31, 2007,
2006, and 2005. Amounts presented for prior periods have been reclassified to conform to the
current presentation.(3)
    
    In 2007, TSFG began presenting its merchant income net of direct processing costs.
Direct merchant processing costs totaled (in thousands) $14,801, $10,215, and $7,943,
respectively, for the years ended December 31, 2007, 2006, and 2005. Amounts presented for
prior periods have been reclassified to conform to the current presentation.    47




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Table 24
Components of Mortgage Banking Income
(dollars in thousands)
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Origination income and secondary marketing operations
    
    $
    6,053
    
    
    $
    8,199
    
    
    $
    8,262Mortgage servicing loss, net of related amortization and subservicing payments
    
    
    
    
    
    
    (558
    )
    
    
    (828
    )Gain on sale of mortgage servicing rights
    
    
    
    
    
    
    514
    
    
    
    Total mortgage banking income
    
    $
    6,053
    
    
    $
    8,155
    
    
    $
    7,434
    Noninterest Expenses
  48




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Table 25  Components of Noninterest Expense  (dollars in thousands)
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Salaries and wages, excluding employment contract buyouts and severance
    
    $
    137,085
    
    
    $
    134,743
    
    
    $
    117,850Employee benefits
    
    
    37,098
    
    
    
    35,739
    
    
    
    34,802Occupancy
    
    
    34,659
    
    
    
    31,802
    
    
    
    27,764Furniture and equipment
    
    
    26,081
    
    
    
    25,216
    
    
    
    23,301Professional services
    
    
    17,062
    
    
    
    21,462
    
    
    
    22,820Advertising and business development
    
    
    7,401
    
    
    
    9,894
    
    
    
    8,627Amortization of intangibles
    
    
    7,897
    
    
    
    8,775
    
    
    
    8,637Telecommunications
    
    
    5,668
    
    
    
    5,630
    
    
    
    5,802Employment contract buyouts and severance
    
    
    2,306
    
    
    
    5,588
    
    
    
    10,327Loss on early extinguishment of debt
    
    
    2,029
    
    
    
    821
    
    
    
    7,101Merger-related costs
    
    
    
    
    
    
    
    
    
    
    4,009Other
    
    
    43,562
    
    
    
    46,269
    
    
    
    45,653Total noninterest expenses
    
    $
    320,848
    
    
    $
    325,939
    
    
    $
    316,693
      Income Taxes
  49




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Fourth Quarter Summary
        50




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##### Table of Contents



Enterprise Risk Management
   
    
    Board oversightThe Board approves risk strategies, policies and associated limits; and
the Board directly, or through its Risk Review and Capital Committee, receives regular
updates on the key risks to TSFG.
    
    AccountabilityBusiness units are responsible for identifying and managing risks within
their areas, as outlined in their policies and procedures.
    
    MonitoringThe risk management functions within the Company seek to provide objective
oversight of business unit activities and work with business units to ensure key risks are
properly identified and controlled.
    
    Independent reviewThe internal audit group reports directly to the Audit Committee of
the Board of Directors and provides an independent assessment of our system of internal
controls.
 Market Risk and Asset/Liability Management
 Market Risk Management.
 
    
    assets and liabilities (including derivative positions) may mature or reprice at
different times;
    
    assets and liabilities may reprice at the same time but by different amounts;
    
    short-term and long-term interest rates may change by different amounts;
    
    remaining maturities of assets or liabilities may shorten or lengthen as interest rates
change;
    
    the fair value of assets and liabilities may adjust by varying amounts; and
    
    changes in interest rates may have an indirect impact on loan and deposit demand, credit
quality, and other sources of earnings.
   51




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##### Table of Contents




    
    the timing, magnitude and frequency of interest rate changes;
    
    changes in market conditions;
    
    differences in the yields on earning assets and costs of interest-bearing liabilities;
and
    
    actions taken by TSFG to counter such changing market conditions.
 Interest Sensitivity Analysis.
 
    
    a static balance sheet for net income analysis;
    
    as assets and liabilities mature or reprice they are reinvested at current rates and
keep the same characteristics (i.e., remain as either variable or fixed rate) for net
income analysis;
    
    mortgage backed securities prepayments are based on historical industry data;
    
    loan prepayments are based upon historical bank-specific analysis and historical
industry data;
    
    deposit retention and average lives are based on historical bank-specific analysis;
    
    whether callable/puttable assets and liabilities are called/put is based on the implied
forward yield curve for each interest rate scenario; and
    
    management takes no action to counter any change.
  Table 26  Net Income at Risk Analysis
 Annualized Hypothetical Percentage Change inNet IncomeDecember 31,Interest Rate Scenario(1)
    
    2007
    
    20062.00 %
    
    
    (3.6
    )%
    
    
    (2.0
    )%1.00
    
    
    (2.5
    )
    
    
    (0.8
    )Flat
    
    
    
    
    
    
    (1.00)
    
    
    (0.1
    )
    
    
    1.3(2.00)
    
    
    0.5
    
    
    
    2.3
 
 (1)
    
    Net income sensitivity is shown for gradual rate shifts over a 12 month period.  52




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Table 27  Economic Value of Equity Risk Analysis
 Annualized Hypothetical Percentage Change inEconomic Value of EquityDecember 31,Interest Rate Scenario(1)
    
    2007
    
    20062.00 %
    
    
    (8.7
    )%
    
    
    (13.0
    )%1.00
    
    
    (3.4
    )
    
    
    (6.3
    )Flat
    
    
    
    
    
    
    (1.00)
    
    
    0.5
    
    
    
    3.4(2.00)
    
    
    (3.6
    )
    
    
    (2.1
    )
 
 (1)
    
    The rising 100 and 200 basis points and falling 100 and 200 basis point interest
rate scenarios assume an immediate and parallel change in interest rates along the entire
yield curve.  
    
    the flat scenarios are base case and are not indicative of historical results;
    
    they do not project an increase or decrease in net income or the fair value of net
assets, but rather the risk to net income and the fair value of net assets because of
changes in interest rates;
    
    they present the balance sheet in a static position; however, when assets and
liabilities mature or reprice, they do not necessarily keep the same characteristics (i.e.,
variable or fixed interest rate);
    
    the computation of prospective effects of hypothetical interest rate changes are based
on numerous assumptions and should not be relied upon as indicative of actual results; and
    
    the computations do not contemplate any additional actions TSFG could undertake in
response to changes in interest rates.
 Derivatives and Hedging Activities.
   Economic Risk
  53




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Credit Risk
  Liquidity Risks
  Operational Risk
   Compliance and Litigation Risks
    
 Off-Balance Sheet Arrangements
  54




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##### Table of Contents



Lending Commitments.
    Derivatives.
  
 Liquidity
   55




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##### Table of Contents



Table 28  Contractual Obligations  (dollars in thousands)
 Payments Due by PeriodLessthan 1
    
    
    1-3
    
    
    4-5
    
    
    After 5Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsTime deposits
    
    $
    5,196,708
    
    
    $
    3,521,825
    
    
    $
    652,183
    
    
    $
    329,684
    
    
    $
    693,016Short-term borrowings
    
    
    1,637,550
    
    
    
    1,637,550
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    697,377
    
    
    
    52,874
    
    
    
    135,167
    
    
    
    266,179
    
    
    
    243,157Operating leases
    
    
    181,645
    
    
    
    19,094
    
    
    
    33,527
    
    
    
    29,738
    
    
    
    99,286Expanded corporate facilities contracts
    
    
    28,659
    
    
    
    28,589
    
    
    
    70
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    7,741,939
    
    
    $
    5,259,932
    
    
    $
    820,947
    
    
    $
    625,601
    
    
    $
    1,035,459
      
 Recently Adopted/Issued Accounting Pronouncements
  
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk
  56




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Item 8. Financial Statements and Supplementary Data
 MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
    Internal Control  Integrated Framework
   -s- Mack I. Whittle
    

-s- James R. GordonMack I. Whittle, Jr.
    
    James R. GordonPresident and
    
    Executive Vice PresidentChief Executive Officer
    
    and Chief Financial OfficerFebruary 28, 2008
    
    February 28, 2008
 57




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 The Board of Directors and Shareholders
The South Financial Group, Inc.:
 Internal Control  Integrated
Framework
   
 58




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 The Board of Directors and Shareholders
The South Financial Group, Inc.:
    
 
 59




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THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except  share data)
 December 31,2007
    
    
    2006AssetsCash and due from banks
    
    $
    290,974
    
    
    $
    326,567Interest-bearing bank balances
    
    
    5,551
    
    
    
    31,264SecuritiesAvailable for sale, at fair value
    
    
    1,986,212
    
    
    
    2,743,456Held to maturity (fair value $39,782 in 2007 and $52,101 in 2006)
    
    
    39,691
    
    
    
    52,308Total securities
    
    
    2,025,903
    
    
    
    2,795,764Loans held for sale
    
    
    17,867
    
    
    
    28,556Loans held for investment
    
    
    10,213,420
    
    
    
    9,701,867Less: Allowance for loan losses
    
    
    (126,427
    )
    
    
    (111,663
    )Net loans held for investment
    
    
    10,086,993
    
    
    
    9,590,204Premises and equipment, net
    
    
    233,852
    
    
    
    219,163Accrued interest receivable
    
    
    70,464
    
    
    
    77,523Goodwill
    
    
    651,003
    
    
    
    650,492Other intangible assets, net
    
    
    27,179
    
    
    
    35,076Other assets
    
    
    467,798
    
    
    
    455,907Total assets
    
    $
    13,877,584
    
    
    $
    14,210,516Liabilities and Shareholders EquityLiabilitiesDepositsNoninterest-bearing
    
    $
    1,127,657
    
    
    $
    1,280,908Interest-bearing
    
    
    8,660,911
    
    
    
    8,235,832Total deposits
    
    
    9,788,568
    
    
    
    9,516,740Short-term borrowings
    
    
    1,637,550
    
    
    
    1,768,719Long-term debt
    
    
    698,340
    
    
    
    1,130,475Accrued interest payable
    
    
    69,288
    
    
    
    68,940Other liabilities
    
    
    133,530
    
    
    
    163,610Total liabilities
    
    
    12,327,276
    
    
    
    12,648,484Commitments and contingencies (Note 20)
    
    
    
    
    
    
    Shareholders equityPreferred stock-no par value; authorized 10,000,000 shares; issued and outstanding none
    
    
    
    
    
    
    Common stock-par value $1 per share; authorized 200,000,000 shares; issued and
outstanding 72,455,205 shares in 2007 and 75,341,276 shares in 2006
    
    
    72,455
    
    
    
    75,341Surplus
    
    
    1,107,601
    
    
    
    1,167,685Retained earnings
    
    
    386,061
    
    
    
    367,261Guarantee of employee stock ownership plan debt
    
    
    
    
    
    
    (151
    )Accumulated other comprehensive loss, net of tax
    
    
    (15,809
    )
    
    
    (48,104
    )Total shareholders equity
    
    
    1,550,308
    
    
    
    1,562,032Total liabilities and shareholders equity
    
    $
    13,877,584
    
    
    $
    14,210,516
  60




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THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Interest IncomeInterest and fees on loans
    
    $
    764,828
    
    
    $
    721,020
    
    
    $
    568,222Interest and dividends on securities:Taxable
    
    
    103,525
    
    
    
    124,850
    
    
    
    173,657Exempt from federal income taxes
    
    
    11,601
    
    
    
    12,819
    
    
    
    11,243Total interest and dividends on securities
    
    
    115,126
    
    
    
    137,669
    
    
    
    184,900Interest on short-term investments
    
    
    402
    
    
    
    1,511
    
    
    
    1,175Total interest income
    
    
    880,356
    
    
    
    860,200
    
    
    
    754,297Interest ExpenseInterest on deposits
    
    
    368,295
    
    
    
    291,292
    
    
    
    196,689Interest on short-term borrowings
    
    
    79,853
    
    
    
    86,524
    
    
    
    49,381Interest on long-term debt
    
    
    49,427
    
    
    
    81,013
    
    
    
    99,171Total interest expense
    
    
    497,575
    
    
    
    458,829
    
    
    
    345,241Net Interest Income
    
    
    382,781
    
    
    
    401,371
    
    
    
    409,056Provision for Credit Losses
    
    
    68,568
    
    
    
    32,789
    
    
    
    40,592Net interest income after provision for credit losses
    
    
    314,213
    
    
    
    368,582
    
    
    
    368,464Noninterest Income
    
    
    113,311
    
    
    
    117,905
    
    
    
    43,850Noninterest Expenses
    
    
    320,848
    
    
    
    325,939
    
    
    
    316,693Income before income taxes and discontinued operations
    
    
    106,676
    
    
    
    160,548
    
    
    
    95,621Income taxes
    
    
    33,400
    
    
    
    47,682
    
    
    
    25,404Income from continuing operations
    
    
    73,276
    
    
    
    112,866
    
    
    
    70,217Discontinued operations, net of income tax
    
    
    
    
    
    
    
    
    
    
    (396
    )Net Income
    
    $
    73,276
    
    
    $
    112,866
    
    
    $
    69,821Average Common Shares Outstanding, Basic
    
    
    73,618
    
    
    
    74,940
    
    
    
    73,307Average Common Shares Outstanding, Diluted
    
    
    74,085
    
    
    
    75,543
    
    
    
    74,595Per Common Share, BasicIncome from continuing operations
    
    $
    1.00
    
    
    $
    1.51
    
    
    $
    0.96Discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Net income
    
    $
    1.00
    
    
    $
    1.51
    
    
    $
    0.95Per Common Share, DilutedIncome from continuing operations
    
    $
    0.99
    
    
    $
    1.49
    
    
    $
    0.94Discontinued operations
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    0.99
    
    
    $
    1.49
    
    
    $
    0.94
  61




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##### Table of Contents



THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
(dollars in thousands, except per share data)
 Retained
    
    
    AccumulatedShares of
    
    
    
    
    
    
    
    
    
    
    Earnings
    
    
    OtherCommon
    
    
    Common
    
    
    
    
    
    
    and
    
    
    ComprehensiveStock
    
    
    Stock
    
    
    Surplus
    
    
    Other*
    
    
    Income (Loss)
    
    
    TotalBalance, December 31, 2004
    
    
    71,252,346
    
    
    $
    71,252
    
    
    $
    1,056,185
    
    
    $
    284,519
    
    
    $
    (18,496
    )
    
    $
    1,393,460Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,821
    
    
    
    
    
    
    
    69,821Other comprehensive loss, net of tax of $16,015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,404
    )
    
    
    (27,404
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,417Cash dividends declared ($0.65 per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,055
    )
    
    
    
    
    
    
    (48,055
    )Common stock activity:Acquisitions
    
    
    2,341,462
    
    
    
    2,341
    
    
    
    75,054
    
    
    
    241
    
    
    
    
    
    
    
    77,636Exercise of stock options, including
income tax benefit of $4,306
    
    
    890,757
    
    
    
    891
    
    
    
    14,500
    
    
    
    
    
    
    
    
    
    
    
    15,391Dividend reinvestment plan
    
    
    129,176
    
    
    
    129
    
    
    
    3,335
    
    
    
    
    
    
    
    
    
    
    
    3,464Restricted stock plan
    
    
    75,218
    
    
    
    75
    
    
    
    899
    
    
    
    314
    
    
    
    
    
    
    
    1,288Employee stock purchase plan
    
    
    17,903
    
    
    
    18
    
    
    
    458
    
    
    
    
    
    
    
    
    
    
    
    476Director compensation
    
    
    14,599
    
    
    
    15
    
    
    
    413
    
    
    
    
    
    
    
    
    
    
    
    428Common stock purchased by trust for
deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (503
    )
    
    
    
    
    
    
    (503
    )Deferred compensation payable in common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    503
    
    
    
    
    
    
    
    503Other, net
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    241
    
    
    
    
    
    
    
    402Balance, December 31, 2005
    
    
    74,721,461
    
    
    
    74,721
    
    
    
    1,151,005
    
    
    
    307,081
    
    
    
    (45,900
    )
    
    
    1,486,907Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,866
    
    
    
    
    
    
    
    112,866Other comprehensive loss, net of tax of $1,272
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,204
    )
    
    
    (2,204
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,662Cash dividends declared ($0.69 per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,960
    )
    
    
    
    
    
    
    (51,960
    )Common stock activity:Acquisitions
    
    
    4,991
    
    
    
    5
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    73Exercise of stock options, including
income tax benefit of $1,612
    
    
    459,317
    
    
    
    460
    
    
    
    8,111
    
    
    
    
    
    
    
    
    
    
    
    8,571Dividend reinvestment plan
    
    
    127,303
    
    
    
    127
    
    
    
    3,092
    
    
    
    
    
    
    
    
    
    
    
    3,219Restricted stock plan
    
    
    (8,988
    )
    
    
    (9
    )
    
    
    3,178
    
    
    
    
    
    
    
    
    
    
    
    3,169Employee stock purchase plan
    
    
    19,057
    
    
    
    19
    
    
    
    460
    
    
    
    
    
    
    
    
    
    
    
    479Director compensation
    
    
    18,135
    
    
    
    18
    
    
    
    461
    
    
    
    
    
    
    
    
    
    
    
    479Common stock released by trust for
deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    
    
    
    
    289Deferred compensation payable in common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (289
    )
    
    
    
    
    
    
    (289
    )Cumulative effect of initial application of SAB 108,
net of income tax of $1,858
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,412
    )
    
    
    
    
    
    
    (3,412
    )Reversal of unearned compensation upon adoption
of SFAS 123R
    
    
    
    
    
    
    
    
    
    
    (2,301
    )
    
    
    2,301
    
    
    
    
    
    
    
    Stock option expense
    
    
    
    
    
    
    
    
    
    
    3,483
    
    
    
    
    
    
    
    
    
    
    
    3,483Other, net
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    234
    
    
    
    
    
    
    
    362Balance, December 31, 2006
    
    
    75,341,276
    
    
    
    75,341
    
    
    
    1,167,685
    
    
    
    367,110
    
    
    
    (48,104
    )
    
    
    1,562,032Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,276
    
    
    
    
    
    
    
    73,276Other comprehensive income, net of tax of $18,292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,295
    
    
    
    32,295Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105,571Cash dividends declared ($0.73 per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,695
    )
    
    
    
    
    
    
    (53,695
    )Common stock activity:Stock repurchase
    
    
    (3,600,000
    )
    
    
    (3,600
    )
    
    
    (79,691
    )
    
    
    
    
    
    
    
    
    
    
    (83,291
    )Acquisitions
    
    
    7,918
    
    
    
    8
    
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    191Exercise of stock options, including
income tax benefit of $1,067
    
    
    476,386
    
    
    
    476
    
    
    
    8,675
    
    
    
    
    
    
    
    
    
    
    
    9,151Dividend reinvestment plan
    
    
    149,021
    
    
    
    149
    
    
    
    3,057
    
    
    
    
    
    
    
    
    
    
    
    3,206Restricted stock plan
    
    
    39,617
    
    
    
    40
    
    
    
    3,078
    
    
    
    (293
    )
    
    
    
    
    
    
    2,825Employee stock purchase plan
    
    
    19,378
    
    
    
    19
    
    
    
    402
    
    
    
    
    
    
    
    
    
    
    
    421Director compensation
    
    
    22,098
    
    
    
    22
    
    
    
    512
    
    
    
    
    
    
    
    
    
    
    
    534Common stock released by trust for
deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    122Deferred compensation payable in common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    (122
    )Cumulative effect of initial application of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (488
    )
    
    
    
    
    
    
    (488
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    3,657
    
    
    
    
    
    
    
    
    
    
    
    3,657Other, net
    
    
    (489
    )
    
    
    
    
    
    
    43
    
    
    
    151
    
    
    
    
    
    
    
    194Balance, December 31, 2007
    
    
    72,455,205
    
    
    $
    72,455
    
    
    $
    1,107,601
    
    
    $
    386,061
    
    
    $
    (15,809
    )
    
    $
    1,550,308
 
 *
    
    Other includes guarantee of employee stock ownership plan debt, deferred compensation, and (prior to January 1, 2006) nonvested restricted stock.  62




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##### Table of Contents



THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Cash Flows from Operating ActivitiesNet income
    
    $
    73,276
    
    
    $
    112,866
    
    
    $
    69,821Adjustments to reconcile net income to net cash provided by
operating activitiesDepreciation, amortization, and accretion, net
    
    
    33,963
    
    
    
    40,504
    
    
    
    48,973Provision for credit losses
    
    
    68,568
    
    
    
    32,789
    
    
    
    40,592Share-based compensation expense
    
    
    7,469
    
    
    
    6,418
    
    
    
    1,720Loss (gain) on securities
    
    
    4,623
    
    
    
    (4,037
    )
    
    
    52,139Loss (gain) on trading and certain derivative activities
    
    
    1,197
    
    
    
    (3,150
    )
    
    
    13,613Gain on sale of mortgage loans
    
    
    (5,179
    )
    
    
    (7,022
    )
    
    
    (6,607
    )Loss on early extinguishment of debt
    
    
    2,029
    
    
    
    821
    
    
    
    7,101Loss (gain) on disposition of premises and equipment
    
    
    70
    
    
    
    (476
    )
    
    
    (458
    )Loss on disposition of other real estate owned
    
    
    401
    
    
    
    341
    
    
    
    43Deferred income tax expense (benefit)
    
    
    7,426
    
    
    
    5,674
    
    
    
    (11,854
    )Excess tax benefits from share-based compensation
    
    
    (1,067
    )
    
    
    (1,612
    )
    
    
    Loss on indirect auto loans
    
    
    
    
    
    
    5,129
    
    
    
    Gain on disposition of assets and liabilities
    
    
    
    
    
    
    (2,498
    )
    
    
    Origination of loans held for sale
    
    
    (411,539
    )
    
    
    (632,920
    )
    
    
    (526,490
    )Sale of loans held for sale and principal repayments
    
    
    454,948
    
    
    
    565,832
    
    
    
    514,755(Increase) decrease in other assets
    
    
    (6,364
    )
    
    
    6,499
    
    
    
    (44,254
    )(Decrease) increase in other liabilities
    
    
    (12,894
    )
    
    
    22,231
    
    
    
    58,730Net cash provided by operating activities
    
    
    216,927
    
    
    
    147,389
    
    
    
    217,824Cash Flows from Investing ActivitiesSale of securities available for sale
    
    
    309,110
    
    
    
    40,274
    
    
    
    2,903,526Maturity, redemption, call, or principal repayments of securities available for sale
    
    
    483,630
    
    
    
    355,569
    
    
    
    992,708Maturity, redemption, call, or principal repayments of securities held to maturity
    
    
    12,655
    
    
    
    10,206
    
    
    
    12,385Purchase of securities available for sale
    
    
    (12,616
    )
    
    
    (38,267
    )
    
    
    (2,869,204
    )Purchase of securities held to maturity
    
    
    (140
    )
    
    
    
    
    
    
    Origination of loans held for investment, net of principal repayments
    
    
    (601,055
    )
    
    
    (591,378
    )
    
    
    (1,069,808
    )Sale of loans held for investment
    
    
    
    
    
    
    353,044
    
    
    
    Sale of other real estate owned
    
    
    4,746
    
    
    
    11,705
    
    
    
    7,850Sale of premises and equipment
    
    
    445
    
    
    
    6,004
    
    
    
    11,338Purchase of premises and equipment
    
    
    (35,658
    )
    
    
    (50,991
    )
    
    
    (51,577
    )Disposition of assets and liabilities, net
    
    
    
    
    
    
    (22,655
    )
    
    
    Cash equivalents acquired, net of payment for purchase acquisitions
    
    
    (363
    )
    
    
    (374
    )
    
    
    71,101Net cash provided by investing activities
    
    
    160,754
    
    
    
    73,137
    
    
    
    8,319
  63




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##### Table of Contents



THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Cash Flows from Financing ActivitiesIncrease in deposits
    
    $
    249,876
    
    
    $
    311,011
    
    
    $
    1,240,031(Decrease) increase in short-term borrowings
    
    
    (132,959
    )
    
    
    292,556
    
    
    
    (200,065
    )Issuance of long-term debt
    
    
    126,290
    
    
    
    127,321
    
    
    
    1,638,743Payment of long-term debt
    
    
    (557,726
    )
    
    
    (918,509
    )
    
    
    (2,715,340
    )Cash dividends paid on common stock
    
    
    (53,493
    )
    
    
    (51,097
    )
    
    
    (46,750
    )Repurchase of common stock
    
    
    (83,291
    )
    
    
    
    
    
    
    Excess tax benefits from share-based compensation
    
    
    1,067
    
    
    
    1,612
    
    
    
    Other common stock activity
    
    
    11,249
    
    
    
    11,706
    
    
    
    15,427Net cash used for financing activities
    
    
    (438,987
    )
    
    
    (225,400
    )
    
    
    (67,954
    )Net change in cash and cash equivalents
    
    
    (61,306
    )
    
    
    (4,874
    )
    
    
    158,189Cash and cash equivalents at beginning of year
    
    
    357,831
    
    
    
    362,705
    
    
    
    204,516Cash and cash equivalents at end of year
    
    $
    296,525
    
    
    $
    357,831
    
    
    $
    362,705Supplemental Cash Flow DataInterest paid, net of amounts capitalized
    
    $
    492,913
    
    
    $
    442,237
    
    
    $
    311,935Income taxes paid, net
    
    
    30,313
    
    
    
    19,466
    
    
    
    45,072Significant non-cash investing and financing transactions:Decrease (increase) in unrealized loss on available for sale securities
    
    
    26,461
    
    
    
    (1,667
    )
    
    
    (44,111
    )Loans transferred from held for sale to held for investment
    
    
    59
    
    
    
    97,196
    
    
    
    Loans transferred to other real estate owned
    
    
    8,173
    
    
    
    5,616
    
    
    
    8,323Security sales, redemptions and calls settled subsequent to period-end
    
    
    
    
    
    
    
    
    
    
    2,569Business combinations:Fair value of assets acquired (includes cash and cash equivalents)
    
    
    554
    
    
    
    572
    
    
    
    515,276Fair value of common stock issued and stock options recognized
    
    
    (191
    )
    
    
    (73
    )
    
    
    (77,636
    )Cash paid
    
    
    (363
    )
    
    
    (381
    )
    
    
    (36,257
    )Liabilities assumed
    
    
    
    
    
    
    118
    
    
    
    401,383
  64




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##### Table of Contents



THE SOUTH FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Summary of Significant Accounting Policies
  Nature of Operations
  Accounting Estimates and Assumptions
  Principles of Consolidation
   65




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##### Table of Contents



Reclassifications
  Business Combinations
  Cash and Cash Equivalents
  Securities
      66




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##### Table of Contents



Loans Held for Sale
    Loans Held for Investment
    67




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##### Table of Contents



Allowance for Loan Losses and Reserve for Unfunded Lending Commitments
    Concentrations of Credit Risk
  Premises and Equipment
   68




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##### Table of Contents



Impairment of Long-Lived Assets
    Intangible Assets
    Derivative Financial Instruments and Hedging Activities
  69




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##### Table of Contents



70




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##### Table of Contents



Other Investments
     Bank-Owned Life Insurance
  71




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##### Table of Contents



Foreclosed Property
   Debt Issuance Costs
  Borrowed Funds
  Commitments and Contingencies
  Deposit Accounts
   Income Taxes
  72




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##### Table of Contents



Comprehensive Income
  Share-Based Compensation
    73




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##### Table of Contents



2005Net IncomeNet income, as reported
    
    $
    69,821Deduct:Total stock-based employee compensation expense
determined under fair value based method for
all option awards, net of income tax
    
    
    (2,381
    )Pro forma net income
    
    $
    67,440Basic Earnings Per ShareAs reported
    
    $
    0.95Pro forma
    
    
    0.92Diluted Earnings Per ShareAs reported
    
    $
    0.94Pro forma
    
    
    0.90
  Per Share Data
  Business Segments
  Risk and Uncertainties
   74




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##### Table of Contents



Recently Adopted Accounting Pronouncements
 Accounting for Purchases of Life Insurance
  Accounting for Uncertainty in Income Taxes
  Accounting for Certain Hybrid Financial Instruments
  Fair Value Measurements
  Endorsement Split-Dollar Life Insurance Arrangements
  75




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##### Table of Contents



Fair Value Option for Financial Assets and Financial Liabilities
  Recently Issued Accounting Pronouncements
 Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements
  76




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##### Table of Contents



Note 2. Accumulated Other Comprehensive (Loss) Income
  2007
    
    
    2006
    
    
    2005Net Unrealized Losses on Securities Available for SaleBalance at beginning of year
    
    $
    (47,378
    )
    
    $
    (46,350
    )
    
    $
    (18,496
    )Other comprehensive income (loss):Unrealized holding gains (losses) arising during the period
    
    
    23,129
    
    
    
    (1,654
    )
    
    
    (96,250
    )Income tax (expense) benefit
    
    
    (8,682
    )
    
    
    634
    
    
    
    35,605Less: Reclassification adjustment for losses (gains) included in net income
    
    
    3,332
    
    
    
    (13
    )
    
    
    52,139Income tax (benefit) expense
    
    
    (1,166
    )
    
    
    5
    
    
    
    (19,348
    )16,613
    
    
    
    (1,028
    )
    
    
    (27,854
    )Balance at end of year
    
    
    (30,765
    )
    
    
    (47,378
    )
    
    
    (46,350
    )Net Unrealized Gains (Losses) on Cash Flow HedgesBalance at beginning of year
    
    
    (726
    )
    
    
    450
    
    
    
    Other comprehensive (loss) income:Unrealized gain (loss) on change in fair values
    
    
    24,678
    
    
    
    (113
    )
    
    
    692Income tax (expense) benefit
    
    
    (8,637
    )
    
    
    40
    
    
    
    (242
    )Less: Amortization of terminated swaps
    
    
    (552
    )
    
    
    (1,696
    )
    
    
    Income tax expense
    
    
    193
    
    
    
    593
    
    
    
    15,682
    
    
    
    (1,176
    )
    
    
    450Balance at end of year
    
    
    14,956
    
    
    
    (726
    )
    
    
    450$
    (15,809
    )
    
    $
    (48,104
    )
    
    $
    (45,900
    )Total other comprehensive income (loss)
    
    $
    32,295
    
    
    $
    (2,204
    )
    
    $
    (27,404
    )Net income
    
    
    73,276
    
    
    
    112,866
    
    
    
    69,821Comprehensive income
    
    $
    105,571
    
    
    $
    110,662
    
    
    $
    42,417
 77




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##### Table of Contents



Note 3. Noninterest Income and Noninterest Expenses
  2007
    
    
    2006
    
    
    2005Noninterest IncomeService charges on deposit accounts
    
    $
    44,519
    
    
    $
    45,041
    
    
    $
    42,645Debit card income, net (1)
    
    
    7,182
    
    
    
    5,437
    
    
    
    4,111Customer service fee income
    
    
    5,648
    
    
    
    4,467
    
    
    
    4,049Total customer fee income
    
    
    57,349
    
    
    
    54,945
    
    
    
    50,805Insurance income
    
    
    12,029
    
    
    
    12,025
    
    
    
    7,447Retail investment services, net (2)
    
    
    7,902
    
    
    
    6,533
    
    
    
    5,922Trust and investment management income
    
    
    6,595
    
    
    
    6,124
    
    
    
    4,819Benefits administration fees
    
    
    3,261
    
    
    
    2,933
    
    
    
    2,693Total wealth management income
    
    
    29,787
    
    
    
    27,615
    
    
    
    20,881Bank-owned life insurance income
    
    
    13,344
    
    
    
    11,636
    
    
    
    11,608Mortgage banking income
    
    
    6,053
    
    
    
    8,155
    
    
    
    7,434Merchant processing income, net(3)
    
    
    3,263
    
    
    
    2,307
    
    
    
    1,874(Loss) gain on securities
    
    
    (4,623
    )
    
    
    4,037
    
    
    
    (52,139
    )(Loss) gain on trading and certain derivative activities
    
    
    (1,197
    )
    
    
    3,150
    
    
    
    (3,253
    )Gain on disposition of assets and liabilities
    
    
    
    
    
    
    2,498
    
    
    
    Loss on indirect auto loans
    
    
    
    
    
    
    (5,129
    )
    
    
    Other
    
    
    9,335
    
    
    
    8,691
    
    
    
    6,640Total noninterest income
    
    $
    113,311
    
    
    $
    117,905
    
    
    $
    43,850Noninterest ExpensesSalaries and wages
    
    $
    139,391
    
    
    $
    140,331
    
    
    $
    128,177Employee benefits
    
    
    37,098
    
    
    
    35,739
    
    
    
    34,802Occupancy
    
    
    34,659
    
    
    
    31,802
    
    
    
    27,764Furniture and equipment
    
    
    26,081
    
    
    
    25,216
    
    
    
    23,301Professional services
    
    
    17,062
    
    
    
    21,462
    
    
    
    22,820Amortization of intangibles
    
    
    7,897
    
    
    
    8,775
    
    
    
    8,637Advertising and business development
    
    
    7,401
    
    
    
    9,894
    
    
    
    8,627Telecommunications
    
    
    5,668
    
    
    
    5,630
    
    
    
    5,802Loss on early extinguishment of debt
    
    
    2,029
    
    
    
    821
    
    
    
    7,101Merger-related costs
    
    
    
    
    
    
    
    
    
    
    4,009Other
    
    
    43,562
    
    
    
    46,269
    
    
    
    45,653Total noninterest expenses
    
    $
    320,848
    
    
    $
    325,939
    
    
    $
    316,693
 
 (1)
    
    In 2007, TSFG began presenting its debit card income net of related expenses.
Debit card expense totaled (in thousands) $2,363, $2,832, and $2,437, respectively,
for the years ended December 31, 2007, 2006, and 2005. Amounts presented for prior
periods have been reclassified to conform to the current presentation.(2)
    
    In 2007, TSFG began presenting its retail investment services income net of
certain revenue sharing arrangements with a third party. Such amounts for these
arrangements totaled (in thousands) $996, $1,099, and $980, respectively, for the years
ended December 31, 2007, 2006, and 2005. Amounts presented for prior periods have been
reclassified to conform to the current presentation.(3)
    
    In 2007, TSFG began presenting its merchant income net of direct processing
costs. Direct merchant processing costs totaled (in thousands) $14,801, $10,215, and
$7,943, respectively, for the years ended December 31, 2007, 2006, and 2005. Amounts
presented for prior periods have been reclassified to conform to the current
presentation. 78




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##### Table of Contents



Note 4. Business Combinations
 Pointe Financial Corporation
    Lossing Insurance Agency
  Bowditch Insurance Corporation
  Koss Olinger
  Amortization of Premiums and Discounts
  79




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##### Table of Contents



Note 5. Disposition of Assets and Liabilities
   Note 6. Discontinued Operations
  Note 7. Restrictions on Cash and Due From Banks
   80




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##### Table of Contents



Note 8. Securities
  2007Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueSecurities Available for SaleU.S. Treasury
    
    $
    27,081
    
    
    $
    511
    
    
    $
    
    
    
    $
    27,592U.S. Government agencies
    
    
    502,659
    
    
    
    1,142
    
    
    
    230
    
    
    
    503,571Agency mortgage-backed securities
    
    
    1,138,352
    
    
    
    289
    
    
    
    50,214
    
    
    
    1,088,427State and municipals
    
    
    302,775
    
    
    
    919
    
    
    
    1,108
    
    
    
    302,586Other investments
    
    
    64,186
    
    
    
    1,402
    
    
    
    1,552
    
    
    
    64,036$
    2,035,053
    
    
    $
    4,263
    
    
    $
    53,104
    
    
    $
    1,986,212Securities Held to MaturityState and municipals
    
    $
    39,451
    
    
    $
    209
    
    
    $
    118
    
    
    $
    39,542Other investments
    
    
    240
    
    
    
    
    
    
    
    
    
    
    
    240$
    39,691
    
    
    $
    209
    
    
    $
    118
    
    
    $
    39,782
 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueSecurities Available for SaleU.S. Treasury
    
    $
    169,095
    
    
    $
    57
    
    
    $
    2,433
    
    
    $
    166,719U.S. Government agencies
    
    
    666,308
    
    
    
    20
    
    
    
    13,294
    
    
    
    653,034Agency mortgage-backed securities
    
    
    1,455,818
    
    
    
    137
    
    
    
    55,667
    
    
    
    1,400,288State and municipals
    
    
    346,164
    
    
    
    304
    
    
    
    4,980
    
    
    
    341,488Other investments
    
    
    181,373
    
    
    
    3,474
    
    
    
    2,920
    
    
    
    181,927$
    2,818,758
    
    
    $
    3,992
    
    
    $
    79,294
    
    
    $
    2,743,456Securities Held to MaturityState and municipals
    
    $
    52,208
    
    
    $
    248
    
    
    $
    455
    
    
    
    52,001Other investments
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    100$
    52,308
    
    
    $
    248
    
    
    $
    455
    
    
    $
    52,101
  81




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##### Table of Contents



December 31, 2007Amortized
    
    
    EstimatedCost
    
    
    Fair ValueSecurities Available for SaleDue in one year or less
    
    $
    131,587
    
    
    $
    127,669Due after one year through five years
    
    
    724,941
    
    
    
    695,082Due after five years through ten years
    
    
    574,311
    
    
    
    567,151Due after ten years
    
    
    561,570
    
    
    
    553,421No contractual maturity
    
    
    42,644
    
    
    
    42,889$
    2,035,053
    
    
    $
    1,986,212Securities Held to MaturityDue in one year or less
    
    $
    11,624
    
    
    $
    11,641Due after one year through five years
    
    
    23,099
    
    
    
    23,208Due after five years through ten years
    
    
    4,968
    
    
    
    4,933Due after ten years
    
    
    
    
    
    
    No contractual maturity
    
    
    
    
    
    
    $
    39,691
    
    
    $
    39,782
  2007
    
    
    2006
    
    
    2005Gross realized gains
    
    $
    2,795
    
    
    $
    4,722
    
    
    $
    6,003Gross realized losses
    
    
    (7,418
    )
    
    
    (685
    )
    
    
    (58,142
    )Net gain (loss) on securities
    
    $
    (4,623
    )
    
    $
    4,037
    
    
    $
    (52,139
    )Sale proceeds
    
    $
    309,110
    
    
    $
    40,274
    
    
    $
    2,903,526
    82




---



##### Table of Contents



2007Less than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesSecurities Available for SaleU.S. Treasury
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    U.S. Government agencies
    
    
    
    
    
    
    
    
    
    
    51,775
    
    
    
    230
    
    
    
    51,775
    
    
    
    230Agency mortgage-backed securities
    
    
    67,150
    
    
    
    512
    
    
    
    1,003,886
    
    
    
    49,702
    
    
    
    1,071,036
    
    
    
    50,214State and municipals
    
    
    4,641
    
    
    
    3
    
    
    
    157,857
    
    
    
    1,105
    
    
    
    162,498
    
    
    
    1,108Other investments
    
    
    7,836
    
    
    
    1,552
    
    
    
    
    
    
    
    
    
    
    
    7,836
    
    
    
    1,552$
    79,627
    
    
    $
    2,067
    
    
    $
    1,213,518
    
    
    $
    51,037
    
    
    $
    1,293,145
    
    
    $
    53,104Securities Held to MaturityState and municipals
    
    $
    813
    
    
    $
    1
    
    
    $
    15,136
    
    
    $
    117
    
    
    $
    15,949
    
    
    $
    118
 2006Less than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesSecurities Available for SaleU.S. Treasury
    
    $
    3
    
    
    $
    
    
    
    $
    164,629
    
    
    $
    2,433
    
    
    $
    164,632
    
    
    $
    2,433U.S. Government agencies
    
    
    129,597
    
    
    
    698
    
    
    
    520,778
    
    
    
    12,596
    
    
    
    650,375
    
    
    
    13,294Agency mortgage-backed securities
    
    
    122,674
    
    
    
    597
    
    
    
    1,264,180
    
    
    
    55,070
    
    
    
    1,386,854
    
    
    
    55,667State and municipals
    
    
    44,899
    
    
    
    194
    
    
    
    263,643
    
    
    
    4,786
    
    
    
    308,542
    
    
    
    4,980Other investments
    
    
    26,299
    
    
    
    786
    
    
    
    78,522
    
    
    
    2,134
    
    
    
    104,821
    
    
    
    2,920$
    323,472
    
    
    $
    2,275
    
    
    $
    2,291,752
    
    
    $
    77,019
    
    
    $
    2,615,224
    
    
    $
    79,294Securities Held to MaturityState and municipals
    
    $
    509
    
    
    $
    1
    
    
    $
    21,668
    
    
    $
    454
    
    
    $
    22,177
    
    
    $
    455
     83




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##### Table of Contents



Note 9. Loans
  2007
    
    
    2006Commercial, financial and agricultural
    
    $
    2,309,294
    
    
    $
    2,152,375Real estate  construction
    
    
    1,763,365
    
    
    
    1,630,366Real estate  residential mortgages (1-4 family)
    
    
    1,390,729
    
    
    
    1,416,005Commercial secured by real estate
    
    
    3,946,440
    
    
    
    3,727,316Consumer
    
    
    803,592
    
    
    
    775,805Loans held for investment
    
    $
    10,213,420
    
    
    $
    9,701,867Included in the above:Nonaccrual loans
    
    $
    81,631
    
    
    $
    37,168Loans past due 90 days still accruing interest
    
    $
    5,349
    
    
    $
    3,129
  2007
    
    2006
    
    2005Impaired loans (year end)
    
    $
    68,102
    
    
    $
    28,733
    
    
    $
    16,911Related allowance (year end)
    
    
    11,340
    
    
    
    6,686
    
    
    
    4,336Interest income recognized
    
    
    59
    
    
    
    
    
    
    
    Foregone interest
    
    
    3,437
    
    
    
    1,665
    
    
    
    1,200
    84




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##### Table of Contents



Note 10. Allowance for Credit Losses
  2007
    
    
    2006
    
    
    2005Allowance for loan lossesBalance at beginning of year
    
    $
    111,663
    
    
    $
    107,767
    
    
    $
    96,434Purchase accounting adjustments
    
    
    
    
    
    
    
    
    
    
    3,741Allowance adjustment for loans sold
    
    
    
    
    
    
    (3,089
    )
    
    
    Provision for loan losses
    
    
    67,325
    
    
    
    33,347
    
    
    
    39,493Loans charged off
    
    
    (59,408
    )
    
    
    (36,623
    )
    
    
    (39,214
    )Recoveries of loans previously charged off
    
    
    6,847
    
    
    
    10,261
    
    
    
    7,313Balance at end of year
    
    $
    126,427
    
    
    $
    111,663
    
    
    $
    107,767Reserve for unfunded lending commitmentsBalance at beginning of year
    
    $
    1,025
    
    
    $
    1,583
    
    
    $
    484Provision for (reversal of) unfunded lending commitments
    
    
    1,243
    
    
    
    (558
    )
    
    
    1,099Balance at end of year
    
    $
    2,268
    
    
    $
    1,025
    
    
    $
    1,583Allowance for credit lossesBalance at beginning of year
    
    $
    112,688
    
    
    $
    109,350
    
    
    $
    96,918Purchase accounting adjustments
    
    
    
    
    
    
    
    
    
    
    3,741Allowance adjustment for loans sold
    
    
    
    
    
    
    (3,089
    )
    
    
    Provision for credit losses
    
    
    68,568
    
    
    
    32,789
    
    
    
    40,592Loans charged off
    
    
    (59,408
    )
    
    
    (36,623
    )
    
    
    (39,214
    )Recoveries of loans previously charged off
    
    
    6,847
    
    
    
    10,261
    
    
    
    7,313Balance at end of year
    
    $
    128,695
    
    
    $
    112,688
    
    
    $
    109,350
 85




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##### Table of Contents



Note 11. Premises and Equipment
  2007
    
    
    2006Land and land improvements
    
    $
    53,360
    
    
    $
    51,720Buildings
    
    
    85,156
    
    
    
    79,669Furniture, fixtures and equipment
    
    
    121,502
    
    
    
    118,165Capitalized software
    
    
    31,967
    
    
    
    27,122Leasehold improvements
    
    
    51,576
    
    
    
    46,056Construction in progress
    
    
    19,287
    
    
    
    8,343362,848
    
    
    
    331,075Less accumulated depreciation and amortization
    
    
    128,996
    
    
    
    111,912$
    233,852
    
    
    $
    219,163
  Note 12. Goodwill
  South
    
    
    NorthCarolina
    
    
    Carolina
    
    
    FloridaBank
    
    
    Bank
    
    
    Bank
    
    
    Other
    
    
    TotalBalance, December 31, 2005
    
    $
    118,938
    
    
    $
    87,829
    
    
    $
    437,903
    
    
    $
    3,237
    
    
    $
    647,907Purchase accounting adjustments
    
    
    293
    
    
    
    71
    
    
    
    2,221
    
    
    
    
    
    
    
    2,585Balance, December 31, 2006
    
    
    119,231
    
    
    
    87,900
    
    
    
    440,124
    
    
    
    3,237
    
    
    
    650,492Purchase accounting adjustments
    
    
    89
    
    
    
    61
    
    
    
    414
    
    
    
    
    
    
    
    564Other
    
    
    (53
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53
    )Balance, December 31, 2007
    
    $
    119,267
    
    
    $
    87,961
    
    
    $
    440,538
    
    
    $
    3,237
    
    
    $
    651,003
 th
 86




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##### Table of Contents



Note 13. Other Intangible Assets
  2007
    
    
    2006Core deposit intangible
    
    $
    58,895
    
    
    $
    58,895Less accumulated amortization
    
    
    (37,168
    )
    
    
    (31,505
    )21,727
    
    
    
    27,390Non-compete agreement intangible
    
    
    5,672
    
    
    
    5,672Less accumulated amortization
    
    
    (4,989
    )
    
    
    (3,735
    )683
    
    
    
    1,937Customer list intangible
    
    
    7,797
    
    
    
    7,797Less accumulated amortization
    
    
    (3,028
    )
    
    
    (2,048
    )4,769
    
    
    
    5,749$
    27,179
    
    
    $
    35,076
  2007
    
    
    2006
    
    
    2005Core deposit intangible
    
    $
    5,663
    
    
    $
    6,362
    
    
    $
    6,680Non-compete agreement intangible
    
    
    1,254
    
    
    
    1,305
    
    
    
    1,331Customer list intangible
    
    
    980
    
    
    
    1,108
    
    
    
    626Total amortization expense of intangible assets
    
    $
    7,897
    
    
    $
    8,775
    
    
    $
    8,637
  Non-Core
    
    
    Compete
    
    
    CustomerDeposit
    
    
    Agreement
    
    
    ListIntangible
    
    
    Intangible
    
    
    Intangible
    
    
    Total2008
    
    $
    4,684
    
    
    $
    471
    
    
    $
    847
    
    
    $
    6,0022009
    
    
    3,830
    
    
    
    210
    
    
    
    737
    
    
    
    4,7772010
    
    
    3,396
    
    
    
    2
    
    
    
    644
    
    
    
    4,0422011
    
    
    3,007
    
    
    
    
    
    
    
    565
    
    
    
    3,5722012
    
    
    2,255
    
    
    
    
    
    
    
    478
    
    
    
    2,733Aggregate total for all years thereafter
    
    
    4,555
    
    
    
    
    
    
    
    1,498
    
    
    
    6,053$
    21,727
    
    
    $
    683
    
    
    $
    4,769
    
    
    $
    27,179
 87




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##### Table of Contents



Note 14. Derivative Financial Instruments and Hedging Activities
  2007
    
    
    2006Fair Value
    
    
    Notional
    
    
    Fair Value
    
    
    NotionalAsset
    
    
    Liability
    
    
    Amount
    
    
    Asset
    
    
    Liability
    
    
    AmountCash Flow HedgesInterest rate swaps associated with
borrowing activities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    143
    
    
    $
    
    
    
    $
    183,000Interest rate swaps associated with
lending activities
    
    
    20,114
    
    
    
    
    
    
    
    830,000
    
    
    
    1,979
    
    
    
    3,408
    
    
    
    870,000Interest rate floor associated with
lending activities
    
    
    4,531
    
    
    
    
    
    
    
    200,000
    
    
    
    1,564
    
    
    
    
    
    
    
    200,000Fair Value HedgesInterest rate swaps associated with
brokered CDs
    
    
    672
    
    
    
    8,235
    
    
    
    988,477
    
    
    
    
    
    
    
    33,541
    
    
    
    1,167,585Other DerivativesForward foreign currency contracts
    
    
    5
    
    
    
    5
    
    
    
    653
    
    
    
    36
    
    
    
    36
    
    
    
    18,119Customer swap contracts
    
    
    5,065
    
    
    
    5,065
    
    
    
    238,224
    
    
    
    918
    
    
    
    918
    
    
    
    155,448Options, interest rate swaps and other
    
    
    5,807
    
    
    
    7,712
    
    
    
    161,832
    
    
    
    5,318
    
    
    
    5,004
    
    
    
    123,398$
    36,194
    
    
    $
    21,017
    
    
    $
    2,419,186
    
    
    $
    9,958
    
    
    $
    42,907
    
    
    $
    2,717,550
      88




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##### Table of Contents



Note 15. Deposits
  2007
    
    
    2006Noninterest-bearing demand deposits
    
    $
    1,127,657
    
    
    $
    1,280,908Interest-bearing checking
    
    
    1,117,850
    
    
    
    1,208,125Money market accounts
    
    
    2,188,261
    
    
    
    2,435,413Savings accounts
    
    
    158,092
    
    
    
    181,192Time deposits under $100,000 (1)
    
    
    1,442,030
    
    
    
    1,272,056Time deposits of $100,000 or more (1)
    
    
    1,496,270
    
    
    
    1,514,615Customer deposits
    
    
    7,530,160
    
    
    
    7,892,309Brokered deposits
    
    
    2,258,408
    
    
    
    1,624,431Total deposits
    
    $
    9,788,568
    
    
    $
    9,516,740
 
 (1)
    
    In 2007, TSFG reclassified certain deposit balances from time deposits under
$100,000 to time deposits of $100,000 or more. Amounts presented for prior periods
have been reclassified to conform to the current presentation. The reclassification
totaled $408.8 million for December 31, 2006.  2008
    
    $
    3,521,8252009
    
    
    291,1012010
    
    
    361,0822011
    
    
    238,6432012
    
    
    91,041Thereafter
    
    
    693,016$
    5,196,708
  89




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##### Table of Contents



Note 16. Income Taxes
  2007
    
    
    2006
    
    
    2005Income before discontinued operations
    
    $
    33,400
    
    
    $
    47,682
    
    
    $
    25,404Discontinued operations
    
    
    
    
    
    
    
    
    
    
    (216
    )Changes recorded in shareholders equityCumulative effect of initial application of SAB 108
    
    
    
    
    
    
    (1,858
    )
    
    
    Cumulative effect of initial application of FIN 48
    
    
    (488
    )
    
    
    
    
    
    
    Change in unrealized gains on fair value of cash flow hedges
    
    
    (8,444
    )
    
    
    (633
    )
    
    
    242Change in unrealized losses on available for sale securities
    
    
    (9,848
    )
    
    
    (639
    )
    
    
    (16,257
    )$
    14,620
    
    
    $
    44,552
    
    
    $
    9,173
  2007
    
    
    2006
    
    
    2005CurrentU.S. Federal
    
    $
    22,937
    
    
    $
    42,691
    
    
    $
    34,138State and local
    
    
    3,037
    
    
    
    (683
    )
    
    
    3,12025,974
    
    
    
    42,008
    
    
    
    37,258DeferredU.S. Federal
    
    
    6,879
    
    
    
    5,266
    
    
    
    (11,105
    )State and local
    
    
    547
    
    
    
    408
    
    
    
    (749
    )7,426
    
    
    
    5,674
    
    
    
    (11,854
    )Total income tax expense
    
    $
    33,400
    
    
    $
    47,682
    
    
    $
    25,404
  2007
    
    
    2006
    
    
    2005Income tax expense at federal statutory rate
    
    $
    37,337
    
    
    $
    56,192
    
    
    $
    33,467State income tax, net of federal benefit
    
    
    2,329
    
    
    
    (179
    )
    
    
    1,541Increase (decrease) resulting from:Subsidiary stock, recognition of basis difference
    
    
    50
    
    
    
    2,537
    
    
    
    (2,444
    )Bank-owned life insurance
    
    
    (4,670
    )
    
    
    (4,073
    )
    
    
    (4,063
    )Book compensation cost for ISO stock options
    
    
    1,179
    
    
    
    995
    
    
    
    Nontaxable municipal interest
    
    
    (3,817
    )
    
    
    (3,635
    )
    
    
    (3,433
    )Income tax credits
    
    
    (841
    )
    
    
    (520
    )
    
    
    (170
    )Dividends received deduction
    
    
    (24
    )
    
    
    (26
    )
    
    
    (341
    )Change in federal and state valuation allowance for deferred income
tax assets
    
    
    (573
    )
    
    
    (1,923
    )
    
    
    (190
    )Other, net
    
    
    2,430
    
    
    
    (1,686
    )
    
    
    1,037$
    33,400
    
    
    $
    47,682
    
    
    $
    25,404
 90




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##### Table of Contents



2007
    
    
    2006Deferred Income Tax AssetsLoan loss allowance deferred for income tax purposes
    
    $
    47,611
    
    
    $
    40,689Unrealized losses on securities available for sale
    
    
    18,076
    
    
    
    27,924Compensation expense deferred for income tax reporting purposes
    
    
    18,394
    
    
    
    18,677Federal capital loss carryforward
    
    
    2,305
    
    
    
    1,669Unrealized losses on fair value of derivatives not qualifying for hedge accounting
    
    
    577
    
    
    
    3,438State net operating loss carryforwards
    
    
    2,880
    
    
    
    2,968Excess basis of securities for income tax purposes over financial reporting purposes
    
    
    873
    
    
    
    1,841Federal net operating loss carryforward
    
    
    946
    
    
    
    1,220Unrealized losses on cash flow hedges and fair value of derivatives deferred for income
tax reporting purposes
    
    
    
    
    
    
    391Excess tax basis over carrying value of assets acquired for financial reporting purposes
    
    
    179
    
    
    
    Miscellaneous accruals and reserves
    
    
    5,854
    
    
    
    5,417Other
    
    
    3,468
    
    
    
    5,665101,163
    
    
    
    109,899Less valuation allowance
    
    
    3,682
    
    
    
    4,25597,481
    
    
    
    105,644Deferred Income Tax LiabilitiesExcess basis of intangible assets for financial reporting purposes over income tax basis
    
    
    17,240
    
    
    
    19,545Income tax depreciation in excess of book depreciation
    
    
    20,649
    
    
    
    16,173Excess basis of prepaid and deferred expenses for financial reporting purposes over
income tax basis
    
    
    14,306
    
    
    
    6,638Unrealized gains on cash flow hedges and fair value of derivatives deferred for income
tax reporting purposes
    
    
    8,053
    
    
    
    Excess carrying value of assets acquired for financial reporting purposes over income
tax basis
    
    
    
    
    
    
    298Income tax bad debt reserve recapture adjustment
    
    
    58
    
    
    
    10160,306
    
    
    
    42,755Net deferred income tax assets
    
    $
    37,175
    
    
    $
    62,889
  2007
    
    
    2006Balance at beginning of year
    
    $
    62,889
    
    
    $
    65,413Purchase accounting adjustments
    
    
    4
    
    
    
    20Income tax effect from change in unrealized losses on available for sale securities
    
    
    (9,848
    )
    
    
    639Income tax effect from change in fair values on cash flow hedges
    
    
    (8,444
    )
    
    
    633Income tax benefit from cumulative effect of initial application of SAB 108
    
    
    
    
    
    
    1,858Deferred income tax (expense) benefit on continuing operations
    
    
    (7,426
    )
    
    
    (5,674
    )Balance at end of year
    
    $
    37,175
    
    
    $
    62,889
   91




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##### Table of Contents



Accounting for Uncertainty in Income Taxes
   Gross unrecognized tax benefits at January 1, 2007
    
    $
    13,218Increases related to current year tax positions
    
    
    2,836Decreases related to prior year tax positions
    
    
    (32
    )Decreases related to expiration of statute of limitations
    
    
    (21
    )Decreases related to audits/settlements with taxing authorities
    
    
    (5,183
    )Gross unrecognized tax benefits at December 31, 2007
    
    $
    10,818
     92




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##### Table of Contents



Note 17. Short-Term Borrowed Funds
  2007
    
    
    2006Amount
    
    
    Rate
    
    
    Amount
    
    
    RateFederal funds purchased and repurchase agreements
    
    $
    206,216
    
    
    
    3.70
    %
    
    $
    920,811
    
    
    
    5.27
    %Customer sweep accounts
    
    
    648,311
    
    
    
    3.79
    
    
    
    500,288
    
    
    
    4.44FHLB advances
    
    
    
    
    
    
    
    
    
    
    175,000
    
    
    
    5.32Treasury, tax and loan note
    
    
    752,195
    
    
    
    4.13
    
    
    
    139,989
    
    
    
    5.18Commercial paper
    
    
    30,828
    
    
    
    5.04
    
    
    
    32,631
    
    
    
    5.36$
    1,637,550
    
    
    
    3.96
    %
    
    $
    1,768,719
    
    
    
    5.03
    %
   2007
    
    2006Federal funds purchased and repurchase agreements
    
    $
    1,048,334
    
    
    $
    1,462,673Customer sweep accounts
    
    
    648,311
    
    
    
    500,288FHLB advances
    
    
    175,000
    
    
    
    175,000Treasury, tax and loan note
    
    
    752,195
    
    
    
    140,821Commercial paper
    
    
    35,704
    
    
    
    39,532Aggregate short-term borrowings
    
    
    2,070,581
    
    
    
    1,930,300
   2007
    
    
    2006
    
    
    2005Federal funds purchased and repurchase agreements
    
    $
    39,650
    
    
    $
    62,023
    
    
    $
    37,680Customer sweep accounts
    
    
    22,724
    
    
    
    15,241
    
    
    
    8,746FHLB advances
    
    
    4,476
    
    
    
    4,083
    
    
    
    Treasury, tax and loan note
    
    
    11,208
    
    
    
    3,366
    
    
    
    1,841Commercial paper
    
    
    1,790
    
    
    
    1,798
    
    
    
    1,090Line of credit to unaffiliated bank and other
    
    
    5
    
    
    
    14
    
    
    
    24$
    79,853
    
    
    $
    86,525
    
    
    $
    49,381
 Note 18. Unused Lines of Credit
   93




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##### Table of Contents



Note 19. Long-Term Debt
  2007
    
    
    2006FHLB advances; fixed rates ranging from 3.36% to 6.27% due from 2008 to 2018,
notwithstanding certain earlier call dates; collateralized by a blanket lien on qualifying
loans secured by first mortgages on one-to-four family residences valued at
$453.1 million, commercial loans valued at $35.7 million, and mortgage-backed securities
valued at $14.3 million; initial maturity of one year or greater; interest payable quarterly
    
    $
    223,087
    
    
    $
    328,113Repurchase agreements; variable rates ranging from 4.88% to 5.18% due in 2012;
collateralized by securities of the United States government or its agencies, which are
held by third-party safekeepers, valued at $218.3 million; interest payable quarterly
    
    
    200,000
    
    
    
    521,000Subordinated Notes; due September 1, 2037; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 1.42%;
balance can be prepaid in whole or in part after September 1, 2012 at
accrued and unpaid interest plus outstanding principal (1)
    
    
    77,320
    
    
    
    Subordinated Notes; due June 15, 2036; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 1.59%; balance
can be prepaid in whole or in part after June 15, 2011 at accrued and unpaid interest
plus outstanding principal (1)
    
    
    41,238
    
    
    
    41,238Subordinated Notes; due July 7, 2036; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 1.56%; balance
can be prepaid in whole or in part after July 7, 2011 at accrued and unpaid interest
plus outstanding principal (1)
    
    
    36,083
    
    
    
    36,083Subordinated Notes; due September 15, 2037; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 1.32%;
balance can be prepaid in whole or in part after December 15, 2012 at accrued and
unpaid interest plus outstanding principal (1)
    
    
    30,928
    
    
    
    Mandatorily redeemable preferred stock of subsidiary; redeemable May 31, 2012;
unsecured; dividends payable quarterly and at maturity at a rate per annum equal to
three-month LIBOR plus 3.50% (2)
    
    
    30,500
    
    
    
    38,500Mandatorily redeemable preferred stock of subsidiary; redeemable January 31, 2031;
unsecured; dividends payable quarterly and at maturity at a rate per annum equal to
11.125% (2)
    
    
    26,300
    
    
    
    26,300Subordinated Notes; due October 30, 2037; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 1.33%;
balance can be prepaid in whole or in part after October 30, 2012 at accrued and
unpaid interest plus outstanding principal (1)
    
    
    18,042
    
    
    
    Subordinated Notes; due December 17, 2013; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 2.83%;
balance can be prepaid on December 17, 2008 at par plus accrued and unpaid interest
    
    
    10,000
    
    
    
    10,000Subordinated Notes; due June 26, 2033; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 3.10% (not to exceed
11.75% through June 26, 2008); balance can be prepaid in whole or in part after
June 26, 2008 at accrued and unpaid interest plus outstanding principal (1)
    
    
    3,093
    
    
    
    3,093
 94




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##### Table of Contents



2007
    
    
    2006Subordinated Notes; due October 7, 2032; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 3.65% (not to
exceed 12.5% through July 7, 2007); balance can be prepaid in whole or in part on or after
July 7, 2007 at accrued and unpaid interest plus outstanding principal (1)
    
    
    
    
    
    
    25,774Mandatorily redeemable preferred stock of subsidiary; redeemable January 31, 2011;
preferred stock can be redeemed in whole or in part on or after December 8, 2005; unsecured;
dividends payable quarterly and at maturity at a rate per annum equal to
three-month LIBOR plus 3.00% (2)
    
    
    
    
    
    
    25,000Subordinated Notes; due November 7, 2032; unsecured; interest payable semi-annually
and at maturity at a rate per annum equal to three-month LIBOR plus 3.45% (not to exceed
12.5% through November 7, 2007); balance can be prepaid in whole or in part after
November 7, 2007 at accrued and unpaid interest plus outstanding principal (1)
    
    
    
    
    
    
    22,681Subordinated Notes; due June 30, 2032; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 3.65% (not to exceed
12.0% through June 30, 2007); balance can be prepaid in whole or in part after June 30, 2007
at accrued and unpaid interest plus outstanding principal (1)
    
    
    
    
    
    
    20,619Subordinated Notes; due July 30, 2032; unsecured; interest payable semi-annually
and at maturity at a rate per annum equal to six-month LIBOR plus 3.625% (not to exceed
12.0% through July 30, 2007); balance can be prepaid in whole or in part after July 30, 2007
at accrued and unpaid interest plus outstanding principal (1)
    
    
    
    
    
    
    18,042Subordinated Notes; due June 30, 2032; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 3.65% (not to exceed
12.0% through June 30, 2007); balance can be prepaid in whole or in part after
June 30, 2007 at accrued and unpaid interest plus outstanding principal (1)
    
    
    
    
    
    
    4,124Subordinated Notes; due April 22, 2032; unsecured; interest payable semi-annually
and at maturity at a rate per annum equal to six-month LIBOR plus 3.70% (not to exceed
11.0% through April 22, 2007); balance can be prepaid in whole or in part after
April 22, 2007 at accrued and unpaid interest plus outstanding principal (1)
    
    
    
    
    
    
    4,124Subordinated Notes; due December 26, 2032; unsecured; interest payable quarterly
and at maturity at a rate per annum equal to three-month LIBOR plus 3.25% (not to exceed
11.75% through December 26, 2007); balance can be prepaid in whole or in part after
December 26, 2007 at accrued and unpaid interest plus outstanding principal (1)
    
    
    
    
    
    
    3,093Employee stock ownership plan note payable to RBC/Centura Bank; due July 23, 2007;
collateralized by shares of TSFG stock; interest at Centura Banks prime rate less 1.25%
with monthly principal payments of $25,000
    
    
    
    
    
    
    200Other
    
    
    786
    
    
    
    828697,377
    
    
    
    1,128,812Purchase accounting premiums, net of amortization
    
    
    963
    
    
    
    1,663$
    698,340
    
    
    $
    1,130,475
 
 (1)
    
    The balance can also be prepaid in whole (but not in part) at any time within a
specified number of days (as defined in the indenture) following the occurrence of a tax
event, an investment company event, or a capital treatment event at a special redemption
price (as defined in the indenture).(2)
    
    The balance can be redeemed in whole or in part following the occurrence of a
tax or capital event (as defined in the terms of the preferred stock). 95




---



##### Table of Contents



2008
    
    $
    52,8742009
    
    
    130,0802010
    
    
    5,0872011
    
    
    35,0942012
    
    
    231,085Thereafter
    
    
    243,157$
    697,377
   Note 20. Contingent Liabilities and Commitments
 Legal Proceedings
  Recourse Reserve
  Expanded Corporate Facilities
  96




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##### Table of Contents



Lease Commitments
  2008
    
    $
    19,0942009
    
    
    18,4522010
    
    
    15,0752011
    
    
    14,1422012
    
    
    15,596Thereafter
    
    
    99,286$
    181,645
  Lending Commitments and Guarantees
     Loan commitments:Commercial, financial, agricultural, and other
    
    $
    988,962Commercial secured by real estate
    
    
    698,179Home equity loans
    
    
    530,626Standby letters of credit
    
    
    184,529Documentary letters of credit
    
    
    153Unused business credit card lines
    
    
    32,948
   97




---



##### Table of Contents



Note 21. Capital Stock
   Note 22. Regulatory Capital Requirements
    98




---



##### Table of Contents



To Be Well CapitalizedUnder PromptFor Capital Adequacy
    
    Corrective ActionActual
    
    Purposes
    
    Provisions2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006TSFGTier 1 capital
    
    $
    1,114,915
    
    
    $
    1,123,448
    
    
    $
    469,752
    
    
    $
    460,086
    
    
    
    n/a
    
    
    
    n/aTotal risk-based capital
    
    
    1,278,010
    
    
    
    1,302,469
    
    
    
    939,504
    
    
    
    920,172
    
    
    
    n/a
    
    
    
    n/aTier 1 capital ratio
    
    
    9.49
    %
    
    
    9.77
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    n/a
    
    
    
    n/aTotal risk-based capital ratio
    
    
    10.88
    
    
    
    11.32
    
    
    
    8.00
    
    
    
    8.00
    
    
    
    n/a
    
    
    
    n/aLeverage ratio
    
    
    8.42
    
    
    
    8.34
    
    
    
    4.00
    
    
    
    4.00
    
    
    
    n/a
    
    
    
    n/aCarolina First Bank(1)Tier 1 capital
    
    $
    1,073,266
    
    
    $
    1,065,904
    
    
    $
    468,696
    
    
    $
    458,587
    
    
    $
    703,044
    
    
    $
    687,881Total risk-based capital
    
    
    1,262,661
    
    
    
    1,271,150
    
    
    
    937,392
    
    
    
    917,175
    
    
    
    1,171,740
    
    
    
    1,146,469Tier 1 capital ratio
    
    
    9.16
    %
    
    
    9.30
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    6.00
    %Total risk-based capital ratio
    
    
    10.78
    
    
    
    11.09
    
    
    
    8.00
    
    
    
    8.00
    
    
    
    10.00
    
    
    
    10.00Leverage ratio
    
    
    8.12
    
    
    
    7.96
    
    
    
    4.00
    
    
    
    4.00
    
    
    
    5.00
    
    
    
    5.00
 
 (1)
    
    Effective July 1, 2007, TSFG merged Mercantile Bank with and into Carolina First
Bank. Capital ratios for December 31, 2006 have been recalculated on a pro-forma basis to
conform to the current presentation. However, Mercantile Bank met all ratio requirements
to be considered well capitalized at December 31, 2006. Note 23. Restriction of Dividends from Subsidiaries
   Note 24. Average Share Information
  2007
    
    
    2006
    
    
    2005BasicAverage common shares outstanding (denominator)
    
    
    73,618,338
    
    
    
    74,940,249
    
    
    
    73,307,403DilutedAverage common shares outstanding
    
    
    73,618,338
    
    
    
    74,940,249
    
    
    
    73,307,403Dilutive potential common shares
    
    
    467,102
    
    
    
    602,599
    
    
    
    1,287,223Average diluted shares outstanding (denominator)
    
    
    74,085,440
    
    
    
    75,542,848
    
    
    
    74,594,626
 99




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##### Table of Contents



2007
    
    
    2006
    
    
    2005Number
    
    Range of
    
    
    Number
    
    
    Range of
    
    
    Number
    
    
    Range ofof shares
    
    Exercise Prices
    
    
    of shares
    
    
    Exercise Prices
    
    
    of shares
    
    
    Exercise Prices942,714
    
    $22.83 to $25.95
    
    
    
    500,900
    
    
    $26.69 to $27.68
    
    
    
    236,698
    
    
    $29.06 to $29.40792,367
    
    $26.55 to $30.72
    
    
    
    503,429
    
    
    $27.70 to $31.26
    
    
    
    61,419
    
    
    $29.93 to $31.26268,510
    
    $31.96
    
    
    
    362,515
    
    
    $31.96
    
    
    
    420,995
    
    
    $31.96
 Note 25. Stock Compensation Plans
  2007
    
    2006
    
    2005Compensation cost charged against income
    
    $
    7,469
    
    
    $
    6,418
    
    
    $
    1,720Total income tax benefit recognized in income statement
    
    
    1,432
    
    
    
    1,252
    
    
    
    602
 Restricted Stock and Other Share-Based Awards
    100




---



##### Table of Contents



LTIP
    
    
    Restricted Stock PlanWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageGrant-Date
    
    
    Restricted
    
    
    Grant-Date
    
    
    Restricted
    
    
    Grant-DateRSUs
    
    
    Fair Value
    
    
    Shares
    
    
    Fair Value
    
    
    Shares
    
    
    Fair ValueNonvested at January 1, 2007
    
    
    743,335
    (1)
    
    $
    26.08
    
    
    
    41,809
    
    
    $
    30.54
    
    
    
    75,521
    
    
    $
    28.04Granted
    
    
    569,453
    (1)
    
    
    23.26
    
    
    
    
    
    
    
    
    
    
    
    40,900
    
    
    
    21.41Vested
    
    
    (92,952
    )
    
    
    26.85
    
    
    
    (18,360
    )
    
    
    30.54
    
    
    
    (40,117
    )
    
    
    28.21Cancelled
    
    
    (71,286
    )
    
    
    26.05
    
    
    
    (1,820
    )
    
    
    30.54
    
    
    
    (1,713
    )
    
    
    28.00Nonvested at December 31, 2007
    
    
    1,148,550
    (1)
    
    $
    25.16
    
    
    
    21,629
    
    
    $
    30.54
    
    
    
    74,591
    
    
    $
    24.32
 
 (1)
    
    Assumes maximum performance targets are met for performance-based awards.   WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueShares
    
    
    Price
    
    
    Term (Years)
    
    
    ($000)Outstanding, January 1, 2007
    
    
    225,960
    
    
    $
    29.40Granted
    
    
    
    
    
    
    Cancelled
    
    
    (52,285
    )
    
    
    29.40Exercised
    
    
    
    
    
    
    Outstanding, December 31, 2007
    
    
    173,675
    
    
    $
    29.40
    
    
    
    7.9
    
    
    $
    Exercisable, December 31, 2007
    
    
    70,760
    
    
    $
    29.40
    
    
    
    7.7
    
    
    $
    
  Stock Option Plans
  101




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##### Table of Contents



2007
    
    2006
    
    2005Expected life (in years)
    
    
    6.01
    
    
    
    6.07
    
    
    
    6.71Expected volatility
    
    
    23.45
    %
    
    
    26.50
    %
    
    
    30.40
    %Risk-free interest rate
    
    
    3.93
    
    
    
    4.57
    
    
    
    4.30Expected dividend yield
    
    
    4.32
    
    
    
    2.61
    
    
    
    2.20Weighted-average fair value of options granted
during the period
    
    $
    2.95
    
    
    $
    6.70
    
    
    $
    8.79
  WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueShares
    
    
    Price
    
    
    Term (Years)
    
    
    ($000)Outstanding, January 1, 2007
    
    
    4,533,736
    
    
    $
    22.74Granted
    
    
    600,930
    
    
    
    17.12Cancelled
    
    
    (598,414
    )
    
    
    27.39Exercised
    
    
    (505,889
    )
    
    
    17.43Outstanding, December 31, 2007
    
    
    4,030,363
    
    
    $
    21.88
    
    
    
    5.9
    
    
    $
    2,622Exercisable, December 31, 2007
    
    
    2,538,773
    
    
    $
    21.09
    
    
    
    4.2
    
    
    $
    2,622
   102




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##### Table of Contents



Note 26. Employee Benefits
        103




---



##### Table of Contents



Note 27. Merger-Related and Direct Acquisition Costs
  2005Merger-Related CostsCompensation-related expenses
    
    $
    833System conversion costs
    
    
    906Travel
    
    
    491Advertising
    
    
    729Other
    
    
    1,050$
    4,009Direct Acquisition CostsInvestment banking and professional fees
    
    $
    2,808Contract and lease terminations
    
    
    1,078Severance
    
    
    312$
    4,198
  Note 28. Related Party Transactions
   Note 29. Fair Value of Financial Instruments
   104




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##### Table of Contents



2007
    
    2006Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueFinancial AssetsCash and due from banks
    
    $
    290,974
    
    
    $
    290,974
    
    
    $
    326,567
    
    
    $
    326,567Interest-bearing bank balances
    
    
    5,551
    
    
    
    5,551
    
    
    
    31,264
    
    
    
    31,264Securities available for sale
    
    
    1,986,212
    
    
    
    1,986,212
    
    
    
    2,743,456
    
    
    
    2,743,456Securities held to maturity
    
    
    39,691
    
    
    
    39,782
    
    
    
    52,308
    
    
    
    52,101Net loans
    
    
    10,104,860
    
    
    
    10,246,356
    
    
    
    9,618,760
    
    
    
    9,639,809Derivative assets
    
    
    36,194
    
    
    
    36,194
    
    
    
    9,958
    
    
    
    9,958Financial LiabilitiesDeposits
    
    
    9,788,568
    
    
    
    9,833,057
    
    
    
    9,516,740
    
    
    
    9,557,941Short-term borrowings
    
    
    1,637,550
    
    
    
    1,637,598
    
    
    
    1,768,719
    
    
    
    1,768,389Long-term debt
    
    
    698,340
    
    
    
    699,224
    
    
    
    1,130,475
    
    
    
    1,135,445Derivative liabilities
    
    
    21,017
    
    
    
    21,017
    
    
    
    42,907
    
    
    
    42,907
 Note 30. Business Segments
   105




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##### Table of Contents



South
    
    
    NorthCarolina
    
    
    Carolina
    
    
    FloridaBank
    
    
    Bank
    
    
    Bank
    
    
    Other
    
    
    TotalYear Ended December 31, 2007Net interest income before inter-segment income (expense)
    
    $
    169,271
    
    
    $
    83,989
    
    
    $
    167,260
    
    
    $
    (37,739
    )
    
    $
    382,781Inter-segment interest income (expense)
    
    
    3,946
    
    
    
    (26,540
    )
    
    
    (12,605
    )
    
    
    35,199
    
    
    
    Net interest income
    
    
    173,217
    
    
    
    57,449
    
    
    
    154,655
    
    
    
    (2,540
    )
    
    
    382,781Provision
for credit losses  net charge-offs (1)
    
    
    9,433
    
    
    
    24,727
    
    
    
    11,970
    
    
    
    5,615
    
    
    
    51,745Noninterest income
    
    
    49,606
    
    
    
    10,995
    
    
    
    38,932
    
    
    
    13,778
    
    
    
    113,311Noninterest expenses  direct (2)
    
    
    63,981
    
    
    
    21,675
    
    
    
    65,477
    
    
    
    3,536
    
    
    
    154,669Segment contribution
    
    $
    149,409
    
    
    $
    22,042
    
    
    $
    116,140
    
    
    $
    2,087
    
    
    
    289,678Provision for credit losses in excess of net charge-offs (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,823Noninterest expenses  unallocated (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,179Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,676Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,400Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    73,276December 31, 2007Total assets
    
    $
    4,106,563
    
    
    $
    1,851,969
    
    
    $
    4,202,474
    
    
    $
    3,716,578
    
    
    $
    13,877,584Total loans held for investment
    
    
    3,861,524
    
    
    
    1,726,407
    
    
    
    3,641,253
    
    
    
    984,236
    
    
    
    10,213,420Total deposits
    
    
    3,490,633
    
    
    
    1,128,376
    
    
    
    2,856,678
    
    
    
    2,312,881
    
    
    
    9,788,568Year Ended December 31, 2006Net interest income before inter-segment income (expense)
    
    $
    187,876
    
    
    $
    84,791
    
    
    $
    171,666
    
    
    $
    (42,962
    )
    
    $
    401,371Inter-segment interest income (expense)
    
    
    (1,892
    )
    
    
    (24,243
    )
    
    
    (7,337
    )
    
    
    33,472
    
    
    
    Net interest income
    
    
    185,984
    
    
    
    60,548
    
    
    
    164,329
    
    
    
    (9,490
    )
    
    
    401,371Provision for credit losses  net charge-offs (1)
    
    
    12,450
    
    
    
    6,049
    
    
    
    3,983
    
    
    
    4,143
    
    
    
    26,625Noninterest income
    
    
    49,489
    
    
    
    10,484
    
    
    
    36,102
    
    
    
    21,830
    
    
    
    117,905Noninterest expenses  direct (2)
    
    
    63,012
    
    
    
    21,126
    
    
    
    67,215
    
    
    
    4,596
    
    
    
    155,949Segment contribution
    
    $
    160,011
    
    
    $
    43,857
    
    
    $
    129,233
    
    
    $
    3,601
    
    
    
    336,702Provision for credit losses in excess of net charge-offs (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,164Noninterest expenses  unallocated (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169,990Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160,548Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,682Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    112,866December 31, 2006Total assets
    
    $
    4,751,457
    
    
    $
    1,735,919
    
    
    $
    3,949,910
    
    
    $
    3,773,230
    
    
    $
    14,210,516Total loans held for investment
    
    
    3,741,842
    
    
    
    1,614,216
    
    
    
    3,391,429
    
    
    
    954,380
    
    
    
    9,701,867Total deposits
    
    
    3,674,328
    
    
    
    1,102,249
    
    
    
    3,051,991
    
    
    
    1,688,172
    
    
    
    9,516,740
 
 (1)
    
    The provision for credit losses included in each segment represents the actual
net charge-offs for the period and/or any provision specifically allocated to that segment
for reporting purposes. Provision in excess of actual net charge-offs and specific
allocation is not allocated to any of the segments, and is thus presented as a reconciling
item. TSFG is refining its methodology for allocating provision to its segments and thus
the presentation of the provision allocation may change in future periods.(2)
    
    Noninterest expenses  direct include the direct costs of the segments
operations such as facilities, personnel, and other operating expenses.(3)
    
    Noninterest expenses  unallocated are managed on a centralized basis and thus
are not included in any segment column. This line item includes expenses not directly
attributable to the segments, such as information services,
operations, human resources, accounting, finance, treasury, and corporate incentive plans. TSFG is refining its
methodology for allocating these expenses to its segments and thus the presentation of
noninterest expenses may change in future periods. 106




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South
    
    
    NorthCarolina
    
    
    Carolina
    
    
    FloridaBank
    
    
    Bank
    
    
    Bank
    
    
    Other
    
    
    TotalYear Ended December 31, 2005Net interest income before inter-segment income (expense)
    
    $
    176,456
    
    
    $
    63,531
    
    
    $
    147,104
    
    
    $
    21,965
    
    
    $
    409,056Inter-segment interest income (expense)
    
    
    7,177
    
    
    
    (12,603
    )
    
    
    13,212
    
    
    
    (7,786
    )
    
    
    Net interest income
    
    
    183,633
    
    
    
    50,928
    
    
    
    160,316
    
    
    
    14,179
    
    
    
    409,056Provision for credit losses  net charge-offs (1)
    
    
    17,831
    
    
    
    3,543
    
    
    
    2,761
    
    
    
    4,886
    
    
    
    29,021Noninterest income
    
    
    47,460
    
    
    
    9,057
    
    
    
    27,181
    
    
    
    (39,848
    )
    
    
    43,850Noninterest expenses  direct (2)
    
    
    66,052
    
    
    
    19,764
    
    
    
    59,064
    
    
    
    4,105
    
    
    
    148,985Segment contribution
    
    $
    147,210
    
    
    $
    36,678
    
    
    $
    125,672
    
    
    $
    (34,660
    )
    
    
    274,900Provision for credit losses in excess of net charge-offs (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,571Noninterest expenses  unallocated (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,708Income before income taxes and discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,621Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,404Discontinued operations, net of income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (396
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    69,821
 
 (1)
    
    The provision for credit losses included in each segment represents the actual
net charge-offs for the period and/or any provision specifically allocated to that segment
for reporting purposes. Provision in excess of actual net charge-offs and specific
allocation is not allocated to any of the segments, and is thus presented as a reconciling
item. TSFG is refining its methodology for allocating provision to its segments and thus
the presentation of the provision allocation may change in future periods.(2)
    
    Noninterest expenses  direct include the direct costs of the segments
operations such as facilities, personnel, and other operating expenses.(3)
    
    Noninterest expenses  unallocated are managed on a centralized basis and thus
are not included in any segment column. This line item includes expenses not directly
attributable to the segments, such as information services, operations, human resources,
accounting, finance, treasury, and corporate incentive plans. TSFG is refining its
methodology for allocating these expenses to its segments and thus the presentation of
noninterest expenses may change in future periods. 107




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Note 31. Parent Company Financial Information
  Condensed Balance Sheets
 December 31,2007
    
    
    2006AssetsCash and due from banks
    
    $
    29,968
    
    
    $
    44,986Investment in subsidiaries:Bank subsidiaries
    
    
    1,731,844
    
    
    
    1,697,533Nonbank subsidiaries
    
    
    4,779
    
    
    
    5,042Total investment in subsidiaries
    
    
    1,736,623
    
    
    
    1,702,575Receivable from subsidiaries
    
    
    749
    
    
    
    664Other investments
    
    
    7,346
    
    
    
    15,340Other assets
    
    
    35,934
    
    
    
    42,022$
    1,810,620
    
    
    $
    1,805,587Liabilities and Shareholders EquityAccrued expenses and other liabilities
    
    $
    15,344
    
    
    $
    31,421Payables to subsidiaries
    
    
    7,436
    
    
    
    432Borrowed funds
    
    
    30,828
    
    
    
    32,831Subordinated debt
    
    
    206,704
    
    
    
    178,871Shareholders equity
    
    
    1,550,308
    
    
    
    1,562,032$
    1,810,620
    
    
    $
    1,805,587
 Condensed Statements of Income
 Years Ended December 31,2007
    
    
    2006
    
    
    2005IncomeEquity in undistributed net income of subsidiaries
    
    $
    203
    
    
    $
    127,977
    
    
    $
    48,292Dividend income from subsidiaries
    
    
    75,886
    
    
    
    
    
    
    
    31,189(Loss) gain on equity investments
    
    
    (68
    )
    
    
    459
    
    
    
    3,239Interest income from subsidiaries
    
    
    356
    
    
    
    516
    
    
    
    336Sundry
    
    
    6,261
    
    
    
    6,603
    
    
    
    11,77482,638
    
    
    
    135,555
    
    
    
    94,830ExpensesInterest on borrowed funds
    
    
    17,074
    
    
    
    17,174
    
    
    
    10,950Loss on early extinguishment of debt
    
    
    1,772
    
    
    
    821
    
    
    
    Sundry
    
    
    (8,205
    )
    
    
    11,094
    
    
    
    19,34210,641
    
    
    
    29,089
    
    
    
    30,292Income before taxes
    
    
    71,997
    
    
    
    106,466
    
    
    
    64,538Income tax benefit
    
    
    (1,279
    )
    
    
    (6,400
    )
    
    
    (5,283
    )Net income
    
    $
    73,276
    
    
    $
    112,866
    
    
    $
    69,821
 108




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Condensed Statements of Cash Flows
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Operating ActivitiesNet income
    
    $
    73,276
    
    
    $
    112,866
    
    
    $
    69,821Adjustments to reconcile net income to net cash (used for)
provided by operationsEquity in undistributed net income of subsidiaries
    
    
    (203
    )
    
    
    (127,977
    )
    
    
    (48,292
    )Loss (gain) on disposition of equity investments
    
    
    68
    
    
    
    (459
    )
    
    
    (3,239
    )Loss on early extinguishment of debt
    
    
    1,772
    
    
    
    821
    
    
    
    Decrease (increase) in other assets
    
    
    3,326
    
    
    
    1,692
    
    
    
    (8,036
    )(Decrease) increase in other liabilities
    
    
    (16,279
    )
    
    
    3,606
    
    
    
    7,024Net cash provided by (used for) operating activities
    
    
    61,960
    
    
    
    (9,451
    )
    
    
    17,278Investing ActivitiesDistribution from subsidiaries
    
    
    12
    
    
    
    334
    
    
    
    2,048Loans to subsidiaries, net
    
    
    14,591
    
    
    
    3,896
    
    
    
    3,628Purchase of premises and equipment
    
    
    
    
    
    
    (10,894
    )
    
    
    (3,354
    )Sale of premises and equipment
    
    
    
    
    
    
    10,645
    
    
    
    8,605Proceeds from disposition of equity investments
    
    
    8,235
    
    
    
    910
    
    
    
    9,269Purchase of equity investments
    
    
    (1,178
    )
    
    
    (3,541
    )
    
    
    (3,845
    )Net cash provided by investing activities
    
    
    21,660
    
    
    
    1,350
    
    
    
    16,351Financing Activities(Decrease) increase in borrowings
    
    
    (2,003
    )
    
    
    (602
    )
    
    
    3,228Issuance of subordinated debt
    
    
    126,290
    
    
    
    77,321
    
    
    
    Payment of subordinated debt
    
    
    (98,457
    )
    
    
    (44,145
    )
    
    
    Cash dividends paid
    
    
    (53,493
    )
    
    
    (51,097
    )
    
    
    (46,750
    )Repurchase of common stock
    
    
    (83,291
    )
    
    
    
    
    
    
    Other, net
    
    
    12,316
    
    
    
    13,858
    
    
    
    15,855Net cash used for financing activities
    
    
    (98,638
    )
    
    
    (4,665
    )
    
    
    (27,667
    )Net change in cash and cash equivalents
    
    
    (15,018
    )
    
    
    (12,766
    )
    
    
    5,962Cash and cash equivalents at beginning of year
    
    
    44,986
    
    
    
    57,752
    
    
    
    51,790Cash and cash equivalents at end of year
    
    $
    29,968
    
    
    $
    44,986
    
    
    $
    57,752
 109




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Note 32. Quarterly Financial Data (Unaudited)
  2007 Quarterly Financial Data
 Three Months EndedDecember 31
    
    
    September 30
    
    
    June 30
    
    
    March 31Interest income
    
    $
    216,150
    
    
    $
    223,739
    
    
    $
    221,825
    
    
    $
    218,642Interest expense
    
    
    121,202
    
    
    
    126,965
    
    
    
    125,304
    
    
    
    124,104Net interest income
    
    
    94,948
    
    
    
    96,774
    
    
    
    96,521
    
    
    
    94,538Provision for credit losses
    
    
    31,926
    
    
    
    10,504
    
    
    
    17,125
    
    
    
    9,013Noninterest income
    
    
    28,741
    
    
    
    29,917
    
    
    
    27,683
    
    
    
    26,970Noninterest expenses
    
    
    80,481
    
    
    
    78,739
    
    
    
    80,151
    
    
    
    81,477Income before income taxes
    
    
    11,282
    
    
    
    37,448
    
    
    
    26,928
    
    
    
    31,018Income tax expense
    
    
    2,293
    
    
    
    11,609
    
    
    
    8,998
    
    
    
    10,500Net income
    
    $
    8,989
    
    
    $
    25,839
    
    
    $
    17,930
    
    
    $
    20,518Net income per common share, basic
    
    $
    0.12
    
    
    $
    0.35
    
    
    $
    0.24
    
    
    $
    0.27Net income per common share, diluted
    
    $
    0.12
    
    
    $
    0.35
    
    
    $
    0.24
    
    
    $
    0.27
 2006 Quarterly Financial Data
 Three Months EndedDecember 31
    
    
    September 30
    
    
    June 30
    
    
    March 31Interest income
    
    $
    220,530
    
    
    $
    218,591
    
    
    $
    215,712
    
    
    $
    205,367Interest expense
    
    
    123,876
    
    
    
    119,908
    
    
    
    112,590
    
    
    
    102,455Net interest income
    
    
    96,654
    
    
    
    98,683
    
    
    
    103,122
    
    
    
    102,912Provision for credit losses
    
    
    8,838
    
    
    
    6,553
    
    
    
    7,487
    
    
    
    9,911Noninterest income
    
    
    29,233
    
    
    
    34,119
    
    
    
    28,315
    
    
    
    26,238Noninterest expenses
    
    
    89,998
    
    
    
    79,835
    
    
    
    79,354
    
    
    
    76,752Income before income taxes
    
    
    27,051
    
    
    
    46,414
    
    
    
    44,596
    
    
    
    42,487Income tax expense
    
    
    3,500
    
    
    
    14,249
    
    
    
    15,253
    
    
    
    14,680Net income
    
    $
    23,551
    
    
    $
    32,165
    
    
    $
    29,343
    
    
    $
    27,807Net income per common share, basic
    
    $
    0.31
    
    
    $
    0.43
    
    
    $
    0.39
    
    
    $
    0.37Net income per common share, diluted
    
    $
    0.31
    
    
    $
    0.43
    
    
    $
    0.39
    
    
    $
    0.37
 110




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  Disclosure Controls and Procedures
 (a)
    
    At December 31, 2007, TSFGs management, under the supervision and with the
participation of TSFGs Chief Executive Officer and Chief Financial Officer, evaluated
its disclosure controls and procedures as currently in effect. Based on this
evaluation, TSFGs management concluded that as of December 31, 2007, TSFGs disclosure
controls and procedures were effective (1) to provide reasonable assurance that
information required to be disclosed by TSFG in the reports filed or submitted by it
under the Exchange Act was recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and (2) to provide reasonable assurance
that information required to be disclosed by TSFG in such reports was accumulated and
communicated to TSFGs management, including its Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.Internal Control over Financial Reporting(b)
    
    (1) Statement of managements responsibility for maintaining adequate internal control
over financial reporting:
See Managements Report on Internal Control Over Financial Reporting included in Item
8 of this Annual Report on Form 10-K.(2) Statement identifying the framework utilized by management to assess internal
control over financial reporting:
See Managements Report on Internal Control Over Financial Reporting included in Item
8 of this Annual Report on Form 10-K.(3) Managements assessment of the effectiveness of internal control over
financial reporting:
See Managements Report on Internal Control Over Financial Reporting included in Item
8 of this Annual Report on Form 10-K.(4) Statement that the independent registered public accounting firm has issued
an attestation report on internal control over financial reporting:
See Managements Report on Internal Control Over Financial Reporting included in Item
8 of this Annual Report on Form 10-K.
 (c)
    
    Attestation report of PricewaterhouseCoopers LLP, an independent registered
public accounting firm, on the effectiveness of TSFGs internal control over financial
reporting:
See Report of Independent Registered Public Accounting Firm included in Item 8 of
this Annual Report on Form 10-K.(d)
    
    Changes in internal control over financial reporting:
TSFG continually assesses the adequacy of its internal control over financial
reporting and strives to enhance its controls in response to internal control
assessments and internal and external audit and regulatory
 111




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recommendations. There
were no changes in TSFGs internal control over financial reporting identified in
connection with is assessment during the quarter ended December 31, 2007 or through
the date of this Annual Report on Form 10-K have materially affected, or are
reasonably likely to materially affect, TSFGs internal control over financial
reporting.
 
 Item 9B. Other Information
  112




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
     
 Item 11. Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  113




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
   
    Exhibit No.
    
    Description of Exhibit
    
    Location3.1
    
    Articles of Incorporation
    
    Incorporated by
reference to Exhibits
3.1 and 3.2 of TSFGs
Quarterly Report on
Form 10-Q for the
three months ended
March 31, 20043.2
    
    Bylaws of TSFG
    
    Incorporated by
reference to Exhibit
3.1 of TSFGs Current
Report on Form 8-K
dated August 17, 2005,
Commission File No.
0-15083 and to Exhibit
3.1 of TSFGs Current
Report on Form 8-K
dated February 20,
20074.1
    
    Specimen TSFG Common Stock certificate
    
    Incorporated by
Reference to Exhibit
4.1 of TSFGs
Registration Statement
on Form S-1,
Commission File No.
33-74704.2
    
    Articles of Incorporation, as amended
    
    Included as Exhibit 3.14.3
    
    Bylaws
    
    Included as Exhibit 3.24.4
    
    Amended and Restated Common Stock
Dividend Reinvestment Plan
    
    Incorporated by
reference to the
Prospectus in TSFGs
Registration Statement
on Form S-3,
Commission File No.
333-13757810.1*
    
    TSFG Amended and Restated Restricted
Stock Agreement Plan and Form of
Restricted Stock Award Agreement
    
    Incorporated by
reference to Exhibit
10.1 of TSFGs Annual
Report on Form 10-K
for the year ended
December 31, 2006 and
Exhibit 10.4 to TSFGs
Current Report on Form
8-K dated August 14,
200710.2*
    
    TSFG Third Amended and Restated Stock
Option Plan
    
    Incorporated by
reference to Exhibit
10.1 of TSFGs
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2006
 114




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit
    
    Location10.3*
    
    TSFG Salary Reduction Plan
    
    Incorporated by
reference to
Exhibit 28.1 of
TSFGs Registration
Statement on Form
S-8, Commission
File No. 33-2542410.4*
    
    Amended and Restated Employment
Agreement dated September 3, 2006
between TSFG and Mack I. Whittle, Jr.
    
    Incorporated by
reference to
Exhibit 99.1 of
TSFGs Current
Report on Form 8-K
dated September 3,
200610.5*
    
    Noncompetition, Severance and Employment
Agreement by and between TSFG and
Timothy K. Schools
    
    Incorporated by
reference to
Exhibit 10-5 of
TSFGs Quarterly
Report on Form 10-Q
for the quarter
ended September 30,
200410.6*
    
    Noncompetition, Severance and Employment
Agreement dated February 25, 2008 by and
between TSFG and James R. Gordon
    
    Included herewith10.7*
    
    Noncompetition, Severance and Employment
Agreement dated February 25, 2008 by and
between TSFG and Maurice J. Spagnoletti
    
    Included herewith10.8*
    
    Noncompetition, Severance and Employment
Agreement dated February 25, 2008 by and
between TSFG and Kendall L. Spencer
    
    Included herewith10.9*
    
    TSFG Management Performance
Incentive Plan (MPIP) (the short term bonus plan)
    
    Incorporated by
reference to
Exhibit 10.2 of
TSFGs Current
Report on Form 8-K
dated August 14,
200710.10*
    
    Long Term and Short Term Incentive
Compensation Plan Targets
    
    Incorporated by
reference to TSFGs
Current Report on
Form 8-K dated
March 20, 200710.11*
    
    Amended and Restated TSFG Employee Stock
Purchase Plan
    
    Incorporated by
reference to
Exhibit 10.1 of
TSFGs Quarterly
Report on Form 10-Q
for the quarter
ended June 30,
2000, Commission
File No. 1508310.12*
    
    TSFG Directors Stock Option Plan
    
    Incorporated by
reference to
Exhibit 99.1 from
TSFGs Registration
Statement on Form
S-8, Commission
File No.
33-82668/8267010.13*
    
    TSFG Amended and Restated Fortune 50 Plan
    
    Incorporated by
reference to the
Prospectus in
TSFGs Registration
Statement on Form
S-8, Commission
File No. 333-3194810.14*
    
    Supplemental Executive Retirement
Agreement between TSFG and Mack I.
Whittle, Jr.
    
    Incorporated by
reference to
Exhibit 10.25 of
TSFGs Annual
Report on Form 10-K
for the year ended
December 31, 200310.15*
    
    Amended TSFG Long Term Incentive Plan
    
    Incorporated by
reference to
Exhibit 10.1 of
TSFGs Current
Report on Form 8-K
dated August 14,
200710.16*
    
    TSFG Executive Deferred Compensation Plan
    
    Incorporated by
reference to
Exhibit 10.3 of
TSFGs Current
Report on Form 8-K
dated August 14,
200710.17*
    
    Form of Grant for TSFG 2006-2008
Long-Term Incentive Plan  Restricted
Stock Unit Award Agreement
    
    Incorporated by
reference to
Exhibit 10.18 of
TSFGs Annual
Report on Form 10-K
for the year ended
December 31, 200610.18*
    
    Form of Grant for TSFG 2007-2009
Long-Term Incentive Plan  Restricted
Stock Unit Award Agreement
    
    Incorporated by
reference to
Exhibit 10.1 of
TSFGs Current
Report on Form 8-K
dated August 14,
200710.19*
    
    Noncompetition, Severance and Employment
Agreement dated September 6, 2007 by and
between TSFG and Michael W. Sperry
    
    Included herewith10.20*
    
    Noncompetition, Severance and Employment
Agreement dated February 25, 2008 by and
between TSFG and H. Lynn Harton
    
    Included herewith
 115




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit
    
    Location10.21*
    
    Supplemental Executive Retirement Agreement
between TSFG and Timothy K. Schools
    
    Incorporated by
reference to
Exhibit 10.11 of
TSFGs Quarterly
Report on Form 10-Q
for the quarter
ended September 30,
200410.22*
    
    Supplemental Executive Retirement Agreement
between TSFG and James R. Gordon
    
    Incorporated by
reference to
Exhibit 99.2 of
TSFGs Current
Report on Form 8-K
dated March 20,
200710.23*
    
    Supplemental Executive Retirement Agreement
between TSFG and Michael. W. Sperry
    
    Incorporated by
reference to
Exhibit 10.13 of
TSFGs Quarterly
Report on Form 10-Q
for the quarter
ended September 30,
2004 and Exhibit
10.2 of TSFGs
Current Report on
Form 8-K dated
December 16, 200510.24*
    
    Supplemental Executive Retirement Agreement
between TSFG and H. Lynn Harton
    
    Included herewith10.25*
    
    Supplemental Executive Retirement Agreement
between TSFG and Maurice J. Spagnoletti
    
    Incorporated by
reference to
Exhibit 10.5 of
TSFGs Quarterly
Report on Form 10-Q
for the quarter ended
March 31, 200610.26*
    
    Supplemental Executive Retirement Agreement
between TSFG and Kendall L. Spencer
    
    Incorporated by
reference to
Exhibit 10.12 of
TSFGs Quarterly
Report on Form 10-Q
for the quarter
ended September 30,
200410.27*
    
    First Amendment to Supplemental Executive
Retirement Agreement between TSFG and Michael
W. Sperry
    
    Included herewith11.1
    
    Statement of Computation of Earnings Per Share
    
    Filed herewith as
Note 24 of the
Notes to
Consolidated
Financial
Statements21.1
    
    Subsidiaries of TSFG
    
    Filed herewith22.1
    
    Proxy Statement for the 2008 Annual Meeting
of Shareholders
    
    Future filing
incorporated by
reference pursuant
to General
Instruction G(3)23.1
    
    Consent of PricewaterhouseCoopers LLP
    
    Filed herewith23.2
    
    Consent of KPMG LLP
    
    Filed herewith23.3
    
    Opinion of PricewaterhouseCoopers LLP, an
Independent Registered Public Accounting Firm
    
    Included herewith23.4
    
    Opinion of KPMG LLP, an Independent
Registered Public Accounting Firm
    
    Included herewith31.1
    
    Certification of Principal Executive Officer
pursuant to Rule 13a-14a/15(d)-14(a) of
Securities Exchange Act of 1934, as amended,
as adopted pursuant to Section 302 of the
Sarbanes Oxley Act of 2002
    
    Filed herewith31.2
    
    Certification of Principal Financial Officer
pursuant to Rule 13a-14a/15(d)-14(a) of
Securities Exchange Act of 1934, as amended,
as adopted pursuant to Section 302 of the
Sarbanes Oxley Act of 2002
    
    Filed herewith32.1
    
    Certification of Chief Executive Officer
pursuant to 18 U.S.C. 1350, as adopted
pursuant to section 906 of the Sarbanes Oxley
Act of 2002
    
    Filed herewith32.2
    
    Certification of Principal Financial Officer
pursuant to 18 U.S.C. 1350, as adopted
pursuant to section 906 of the Sarbanes Oxley
Act of 2002
    
    Filed herewith
 
 *
    
    This is a management contract or compensatory plan.  116




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##### Table of Contents



Type
    
    Date Filed
    
    Reporting Purpose
 (c)
    
    See Item 15(a)(3).
 117




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##### Table of Contents



SIGNATURES
  The South Financial Group, Inc.
 Name
    
    Title
    
    Date/s/ Mack I. Whittle, Jr.
    
    President and Chief Executive Officer
    
    February 28, 2008Mack I. Whittle, Jr./s/ James R. Gordon

James R. Gordon
    
    Executive Vice President and Chief
Financial Officer
(Principal Accounting and Financial Officer)
    
    February 28, 2008
  Name
    
    Title
    
    Date/s/ Mack I. Whittle, Jr.
    
    Chairman and Director
    
    February 28, 2008Mack I. Whittle, Jr./s/ William P. Brant
    
    Director
    
    February 28, 2008William P. Brant/s/ J. W. Davis
    
    Director
    
    February 28, 2008J. W. Davis/s/ C. Claymon Grimes, Jr.
    
    Director
    
    February 28, 2008C. Claymon Grimes, Jr./s/ M. Dexter Hagy
    
    Director
    
    February 28, 2008M. Dexter Hagy/s/ Michael R. Hogan
    
    Director
    
    February 28, 2008Michael R. Hogan/s/ William S. Hummers III
    
    Director
    
    February 28, 2008William S. Hummers III/s/ Challis M. Lowe

Challis M. Lowe
    
    Director
    
    February 28, 2008Director
    
    February 28, 2008Darla D. Moore/s/ Jon W. Pritchett
    
    Director
    
    February 28, 2008Jon W. Pritchett
 118




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##### Table of Contents



Name
    
    Title
    
    Date/s/ H. Earle Russell, Jr.
    
    Director
    
    February 28, 2008H. Earle Russell, Jr./s/Charles B. Schooler
    
    Director
    
    February 28, 2008Charles B. Schooler/s/ Edward J. Sebastian
    
    Director
    
    February 28, 2008Edward J. Sebastian/s/John C. B. Smith, Jr.
    
    Director
    
    February 28, 2008John C. B. Smith, Jr./s/ William R. Timmons III
    
    Director
    
    February 28, 2008William R. Timmons IIIDirector
    
    February 28, 2008Samuel H. Vickers/s/ David C. Wakefield III
    
    Director
    
    February 28, 2008David C. Wakefield III
 119




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description10.6
    
    Noncompetition, Severance and Employment Agreement dated February 25, 2008
by and between TSFG and James R. Gordon10.7
    
    Noncompetition, Severance and Employment Agreement dated February 25, 2008
by and between TSFG and Maurice J. Spagnoletti10.8
    
    Noncompetition, Severance and Employment Agreement dated February 25, 2008
by and between TSFG and Kendall L. Spencer10.19
    
    Noncompetition, Severance and Employment Agreement dated September 6, 2007
by and between TSFG and Michael W. Sperry10.20
    
    Noncompetition, Severance and Employment Agreement dated February 25, 2008
by and between TSFG and H. Lynn Harton10.24
    
    Supplemental Executive Retirement Agreement between TSFG and H. Lynn Harton10.27
    
    First Amendment to Supplemental Executive Retirement Agreement between
TSFG and Michael W. Sperry21.1
    
    Subsidiaries of TSFG23.1
    
    Consent of PricewaterhouseCoopers LLP23.2
    
    Consent of KPMG LLP31.1
    
    Certification of Principal Executive Officer pursuant to Rule
13a-14a/15(d)-14(a) of Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes Oxley Act of 200231.2
    
    Certification of Principal Financial Officer pursuant to Rule
13a-14a/15(d)-14(a) of Securities Exchange Act of 1934, as amended, as
adopted pursuant to Section 302 of the Sarbanes Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as
adopted pursuant to section 906 of the Sarbanes Oxley Act of 200232.2
    
    Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350,
as adopted pursuant to section 906 of the Sarbanes Oxley Act of 2002
 120