Fitch Cuts South Financial Ratings; Shares Fall

CHICAGO (AP) — Fitch Ratings on Monday cut its issuer default rating for The South Financial Group Inc. and its Carolina First Bank subsidiary further into junk territory, citing continuing credit losses and economic stress in Southern markets.

Shares of South Financial fell 17 cents, or about 8.6 percent, to $1.82 in afternoon trading.

Fitch cut the long-term issuer default ratings for the bank holding company and Carolina First to 'B+' from the previous rating of 'BB+', Fitch's highest non-investment grade rating.

Fitch also cut its individual rating for Greenville, S.C.-based South Financial and Carolina First to 'D' — Fitch's lowest junk rating, signifying a default on obligations — from 'C/D'.

Fitch assigned a "Negative" outlook, signaling a possible further downgrade if conditions worsen.

Fitch said its downgrade "reflects the company's continued high net credit losses, and elevated and increasing level of problem assets."

Many areas within South Financial's geographic base in the South remain under economic stress, Fitch said, noting the company "has been particularly hard hit in its residential construction and development, land, and mortgage portfolios, particularly in Florida and the coastal areas of the Carolinas."