GREENVILLE -- Carolina First Bank has agreed to take steps ordered by federal regulators to strengthen its financial position, and the chief financial officer of its parent company said one option is a combination or merger with another financial institution.

The bank's consent order with the Federal Deposit Insurance Corp. and state regulators instructs Carolina First's board to increase its participation in bank affairs, sets deadlines for raising capital levels to meet required ratios and mandates a reduction in the amount of assets considered "substandard" and "doubtful."

Regulators will monitor the bank's progress, and the consent order doesn't prevent them from taking additional action against Carolina First, a subsidiary of The South Financial Group.

James Gordon, South Financial's chief financial officer, said Carolina First's capital goals could be achieved through "an alignment with a strategic partner."

"It could involve a combination and/or merger," he said Thursday. "That is an alternative to your capital solution."

H. Lynn Harton, South Financial's chief executive, told analysts during a conference call last month that the company expects to report continued financial losses this year as it works through credit issues.

The losses will pressure South Financial's capital ratios, and "we are exploring all options" to increase the company's capital levels, Harton said. He declined to discuss those options, the preferred approach or the probability that South Financial, a Greenville-based bank holding company, would find the capital it is seeking.

Bank officials wouldn't specify how much money they need to raise.

Company officials have said publicly and told analysts they expected to enter into formal agreements with regulators during the second quarter that, among other things, would require capital levels in excess of the regulatory "well-capitalized" thresholds.

As a result, the consent order with the FDIC wasn't a surprise and won't affect bank services to Carolina First customers, Gordon said.

"It doesn't change anything about how we service our customers or how we operate as a bank," Gordon said. "It does add a little bit more formality and other things, and more oversight and involvement of our board."

The consent order with the FDIC doesn't differ substantially from a similar agreement between South Financial and the Federal Reserve Bank of Richmond, according to Christopher S. Gompper, Carolina First's interim president.

That agreement "simply reinforces what we agreed to with the FDIC, in a summary fashion," according to Gompper.

Carolina First had 110 banking offices as of March 31. It has a large civic and charitable footprint in Greenville, the region and across the state. The lender has about seven branches in the Charleston area. It also controls the naming rights to the College of Charleston basketball arena.

Sign up for our new business newsletter

We're starting a weekly newsletter about the business stories that are shaping Charleston and South Carolina. Get ahead with us - it's free.

South Financial began its operations in 1986 under the name Carolina First Corp. with the opening of its banking subsidiary, Carolina First Bank, in Greenville. Its opening was undertaken, in part, in response to opportunities resulting from the takeovers of several South Carolina-based banks by larger Southeastern regional bank holding companies in the mid-1980s.

As of last year, South Financial and its subsidiaries had 2,214 full-time employees, according to regulatory filings.

Its main banking business has been pummeled by soured real estate loans, especially in the Florida market.

South Financial recently reported its ninth consecutive quarterly loss, a deficit that has added up to about $1.4 billion over the past two years. In January, the company suspended all dividends to conserve cash. Its stock, fetching about $26 just three years ago, bottomed out at 34 cents in February.

Shares slipped 7 cents Friday to close at 60 cents.

John McDermott of The Post and Courier contributed to this report.