First Financial Holdings, Inc F2Q10 (Qtr End 09/30/10) Earnings Call Transcript

While our markets have clearly suffered as a result of the recession, according to the Charleston Chamber of Commerce’s Centre for Business Research and the College of Charleston, School of Business and Economics, the outlook for 2010 is stable with expansion beginning the end of the year and gaining strength in 2011. We are encouraged by the slight improvements in South Carolina unemployment rates over the last two periods. But we recognized that the states’ economy remains fairly fragile. Unemployment in the counties in which we operate have shown a slight improvement over the past few months as well as Boeing's construction of the $750 million aircraft assembly operation for the 787 aircraft is well underway. This investment will create as I think we have reported in the past as many as 3,800 new direct jobs in the market.

This decision by Boeing is expected to significantly improve Charleston's economy over the next decade and attract thousands of additional jobs from suppliers and other support companies. Unfortunately, the commercial real estate market is expected to continue to decline through 2010, a retail sales in our primary market are focused to grow in both 2010 and 2011. Part of this increase is expected from a boost in our tourism sector from a new carnival cruise business that was announced recently.

Approximately 69 ships with 2000 visitors per week will be calling on the Charleston port. The economic impact of the carnival ships will be about $37 million per year. In addition, the Port of Charleston recently announced a new Asia service for China and South Korea and also announced a 24% increase in container volume gain from the period of March last year. We believe these current expansion plans along with interest in our markets will help with our recovery as we continue to work through these economic challenges. The Charleston real estate market continues to be one of the top real estate markets in the country. The losses for the quarter have been driven by higher loan loss provisions related to the continued stress on our loan portfolio resulting from economic and unemployment considerations discussed above.

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