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                                                                   EXHIBIT 10.26

                            THE SOUTH FINANCIAL GROUP

                     MANAGEMENT INCENTIVE COMPENSATION PLAN

                                        I
                                     PURPOSE

         The South Financial Group Management Incentive Compensation Plan (the
"Plan") which, subject to approval by the stockholders of The South Financial
Group (the "Company"), shall be effective with respect to Covered Employees as
of January 1, 2003, is designed to provide a significant and variable economic
opportunity to selected officers and employees of the Company as a reflection of
their individual and group contributions to the success of the Company and its
subsidiaries. Payments pursuant to Section IX of the Plan are intended to
qualify under Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as
amended, as excluded from the term "applicable employee remuneration" (such
payments are hereinafter referred to as "Excluded Income").

                                       II
                                   DEFINITIONS

         "Board" shall mean the Board of Directors of the Company.

         "Bonus" shall mean a cash award payable to a Participant pursuant to
the terms of the Plan, including an Incentive Award.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Committee" shall mean the Compensation Committee of the Board.

         "Company" shall mean The South Financial Group, a South Carolina
corporation, and its subsidiaries.

         "Covered Employees" shall mean Participants designated by the Committee
who are or are expected to be "covered employees" within the meaning of Section
162(m)(3) of the Code for the Measurement Period in which a Bonus hereunder is
payable and for whom the Committee intends that amounts payable hereunder
constitute Excluded Income.

         "Disinterested Person" shall mean a member of the Board who qualifies
as an "outside director" for purposes of Section 162(m) of the Code.

         "Incentive Award" shall have the meaning set forth in Article IX
hereof.

         "Individual Agreement" shall mean an employment, consulting or similar
agreement between a Participant and the Company or one of its Subsidiaries or
Affiliates.

         "Measurement Period" shall have the meaning set forth in Article IX
hereof.

         "Participant" shall have the meaning set forth in Article IV hereof.

         "Payment Date" shall mean the date following the conclusion of a
particular Measurement Period on which the Committee certifies that applicable
Performance Goals have been satisfied and authorizes payment of corresponding
Bonuses.

         "Performance Goals" shall have the meaning set forth in Article IX
hereof.

         "Target Bonus" shall mean the amount determined by multiplying a
Participant's base salary as of the last day of the applicable Measurement
Period by a percentage designated by the Committee in its sole discretion at the
time the award is granted, which percentage need not be the same for each
Participant. Notwithstanding the foregoing, in the case of a Participant who is
a Covered Employee, such Target Bonus shall be determined based upon the
Participant's base salary as of the day immediately preceding the commencement
of the applicable Measurement Period. The maximum Bonus payable to a Participant
for any Measurement Period shall be 250 percent of such Participant's annual
base salary (as determined above) appropriately adjusted to reflect the length
of such Measurement Period.

                                       III
                                 ADMINISTRATION

         The Plan shall be administered by the Committee or such other committee
of the Board which is composed of not less than two Disinterested Persons, each
of whom shall be appointed by and serve at the pleasure of the Board.

         In administering the Plan, the Committee may at its option employ
compensation consultants, accountants and counsel (who may be the independent
auditors and outside counsel and compensation consultants of the Company) and
other persons to assist or render advice to the Committee, all at the expense of
the Company.



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                                       IV
                                   ELIGIBILITY

         The Committee shall, in its sole discretion, determine for each
Measurement Period those officers and employees of the Company who shall be
eligible to participate in the Plan (the "Participants") for such Measurement
Period based upon such Participants' opportunity to have a substantial impact on
the Company's operating results. Nothing contained in the Plan shall be
construed as or be evidence of any contract of employment with any Participant
for a term of any length nor shall participation in the Plan in any Measurement
Period by any Participant require continued participation by such Participant in
any subsequent Measurement Period.

                                        V
                             DETERMINATION OF BONUS

         Subject to Article IX hereof, the form and amount of each Bonus award
to a Participant shall be determined by and in the discretion of the Committee.
The Committee may condition the earning of a Bonus upon the attainment of
specified performance goals measured over a period not greater than one year
relating to the Participant or the Company, or a subsidiary, division or
department of the Company for or within which the Participant is primarily
employed, or upon such other factors or criteria as the Committee shall
determine, which performance goals may be different for each Participant.
Bonuses payable under the Plan will consist of a cash award from the Company,
based upon a percentage of the Target Bonus and the degree of achievement of
such performance goals over the Measurement Period. Bonuses under this Plan for
Covered Employees shall be subject to pre-established Performance Goals in
accordance with Article IX hereof. The Committee may, in its sole discretion,
increase (other than for Covered Employees) or decrease the amount of any Bonus
payable to a Participant and may award Bonuses to Participants (other than
Covered Employees) even though the Bonuses are not earned. Bonuses earned or
otherwise awarded will be paid on the Payment Date.

                                       VI
                            TERMINATION OF EMPLOYMENT

         In the event that a Participant's employment with the Company
terminates for any reason prior to the Payment Date with respect to any Bonus,
the balance of any Bonus which remains unpaid at the time of such termination
shall be payable to the Participant, or forfeited by the Participant, in
accordance with the terms of the award granted by the Committee; provided,
however, that in the case of a Covered Employee, no amount shall be payable
unless the Performance Goals are satisfied unless the termination of employment
of the Covered Employee is a termination due to death or disability.
Participants who remain employed through the Measurement Period but whose
employment is terminated prior to the Payment Date shall be entitled to receive
Bonuses payable with respect to such Measurement Period, unless such employment
is terminated for cause (as defined at common law, or if the Participant is
party to an Individual Agreement, as defined therein).

                                       VII
                            AMENDMENT AND TERMINATION

         The Board shall have the right to amend, modify or terminate the Plan
from time to time but no such amendment or modification shall, without prior
approval of the Company's stockholders, change Article IX of this Plan to alter
the business criteria on which the Performance Goals are based or to increase
the amount set forth in Section (e) of Article IX, materially increase the
amount available for Incentive Awards, materially increase the benefits accruing
to Participants hereunder who are Covered Employees, materially modify the
requirements regarding eligibility for participation in the Plan or, without the
consent of the Participant affected, impair any award made prior to the
effective date of the amendment, modification or termination.

                                      VIII
                                  MISCELLANEOUS

         Bonus payments shall be made from the general funds of the Company and
no special or separate fund shall be established or other segregation of assets
made to assure payment. No Participant or other person shall have under any
circumstances any interest in any particular property or assets of the Company.
The Plan shall be governed by and construed in accordance with the laws of the
State of South Carolina, without regard to its principles of conflict of laws.



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                                       IX
                 PROCEDURES FOR CERTAIN DESIGNATED PARTICIPANTS

         Bonuses under the Plan to Participants who are Covered Employees shall
be subject to pre-established Performance Goals as set forth herein.
Notwithstanding Article V hereof, the Committee shall not have discretion to
modify the terms of awards to such Participants except as specifically set forth
in this Article IX.

         Target Bonus. Prior to the commencement of a Measurement Period, the
Committee shall grant bonus award opportunities ("Incentive Awards") to such of
the Participants who may be Covered Employees, payment of which shall be
conditioned upon satisfaction of specific Performance Goals measured over a
period not greater than one year established by the Committee in writing prior
to or at the time of grant. An Incentive Award shall consist of a cash award
from the Company to be based upon a percentage of a Target Bonus. The extent, if
any, to which an Incentive Award will be payable will be based upon the degree
of achievement of such pre-established Performance Goals over such specified
Measurement Period; provided, however, that the Committee may, in its sole
discretion, reduce the amount which would otherwise be payable with respect to a
Measurement Period (under which circumstances the Participant will have no right
to receive the amount of such reduction even if the Performance Goals are met).

         Measurement Period. The Measurement Period will be a period of one
fiscal year, unless a shorter period is otherwise selected and established in
writing by the Committee at the time the Performance Goals are established with
respect to a particular Incentive Award (the period so specified being herein
referred to as the "Measurement Period").

         Performance Goals. The performance goals ("Performance Goals")
established by the Committee at the time an Incentive Award is granted will be
comprised of specified levels of the Company's stock price, market share, sales,
asset quality, non-performing assets, earnings per share, return on equity,
costs, operating income, marketing-spending efficiency, return on operating
assets, return on assets, core non-interest income and/or levels of cost savings
during the Measurement Period, provided that the outcome of such Performance
Goals shall be substantially uncertain at the time the Performance Goals are
established.

         Payment of an Incentive Award. At the time the Incentive Award is
granted, the Committee shall prescribe a formula to determine the percentage of
the Target Bonus which may be payable based upon the degree of attainment of the
Performance Goals during the Measurement Period. If the minimum Performance
Goals established by the Committee are not met, no payment will be made to a
Participant who is a Covered Employee. To the extent that the minimum
Performance Goals are satisfied or surpassed, and upon written certification by
the Committee that the Performance Goals have been satisfied to a particular
extent and any other material terms and conditions of the Incentive Awards have
been satisfied, payment shall be made on the Payment Date in accordance with the
prescribed formula based upon a percentage of the Target Bonus unless the
Committee determines, in its sole discretion, to reduce the payment to be made.
In no event shall an Incentive Award be paid to a Covered Employee unless and
until the Plan has been approved by the Company's stockholders.

         Maximum Payable. The maximum amount payable to a Covered Employee for
any fiscal year of the Company shall be $2,500,000.

                                        X
                               DEFERRAL ELECTIONS

The Committee may at its option establish procedures pursuant to which
Participants are permitted to defer the receipt of Bonuses payable hereunder.



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