Ahead of the Bell: South Financial downgraded

Keefe, Bruyette & Woods analyst Jefferson Harralson on Wednesday downgraded the shares of South Financial Group Inc. to "Market Perform," but said the bank has sufficient capital to weather the current economic environment.

Harralson, who maintained an $8 target price on the stock, said he believes South Financial won't return to profitability for another five quarters. At the same time though, Harralson believes the bank has enough capital to survive the credit crisis.

A company representative was not immediately available for comment.

Earlier this month, the Greenville, S.C.-based company said its 59-year-old founder and Chief Executive Mack Whittle will retire by year's end. Whittle will continue to sit on the board until his term ends in 2011. A successor has yet to be named.

Like many of its peers, the bank has been forced to raise additional capital through a stock sale and cut its dividend in the face of ongoing credit losses.

South Financial shares added 4 cents to $8.26 in premarket trading.