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First Financial Holdings, Inc. F3Q10 (Qtr End 06/30/10) Earnings Call Transcript

Our net interest margin is very strong at 3.92% for the quarter. We reported increases in mortgage banking income, brokerage fees and service charges on deposit accounts, and OTTI charge on investment securities was down.

The loss for the quarter was driven by higher loan loss provisions related to the continued stress on our loan portfolio. We have now completed our target reviews of the higher risk segments of the commercial portfolio and continue with our ongoing monitoring of our loans.

While charge-offs and provisions were higher than we would have liked, we have recognized all identified losses in the June quarter and believe that we have a thorough understanding of the current status of our portfolio.

I will now turn it over to Joe Amy, our Chief Credit Officer, to review the credit trends and second quarter activity.

Joe Amy

The provision for loan losses increased $9.5 million for the period -- from the prior quarter to $36.4 million. We also noted decreases in delinquency, total non-performing loans and charge-offs in the third quarter. I will review those results in a moment.

The level of the provision is relative to the ongoing stress of the loan portfolio, most notably in the land and commercial real estate sectors. This deterioration has led to the increase in our allowance for loan losses at June 30th, which is $86.9 million or 3.36% of total loans outstanding, up from 3.17% from the prior quarter and 2.05% from the same period of last year.

As we have previously reported to you during this fiscal year, we have increased the frequency of our regular loan reviews and performed target reviews in higher risk sectors of the portfolio, which we identified as commercial land and A&D loans, and commercial real estate and business loans in excess of $1 million. These targeted reviews were undertaken due to the prolonged nature of the recession and the deterioration of the markets in which we operate, as well as our borrower's financial condition.

Read the rest of this transcript for free on seekingalpha.com

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