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DBRS downgrades South Financial
DBRS said it downgraded South Financial Group, Inc.'s issuer and senior debt ratings to B from BB, subordinated debt to B (low) and short-term instruments to R-5 and Carolina First Bank's deposits and senior debt to BB (low).
All ratings were placed Under Review with negative implications.
The agency said the downgrade follows a much larger than expected $341 million quarterly net loss available to common shareholders, which reflected higher credit costs and the negative impact of a sizeable $200 million valuation allowance against its $203 million deferred tax assets.
The downgrade reflects South's weakened tangible common equity position, severe asset quality deterioration, moderate core earnings capacity and DBRS' expectation of sustained elevated credit costs and expenses over the near term, the agency said.
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