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First Financial Holdings, Inc. Announces First Quarter Fiscal 2011 Net Income

Advances from the FHLB at December 31, 2010 decreased $11.1 million or 2.2% from September 30, 2010 to $497.1 million and decreased $68.5 million or 12.1% from December 31, 2009. The decreases were primarily the result of using cash flow from the investment securities and loan portfolios to paydown advances, as well as the shift in funding mix to core and time deposits. First Financial maintains a strong liquidity position, with substantial on- and off-balance sheet liquidity sources and a stable funding base comprised of approximately 73% deposits, 16% borrowings, 10% equity, and 1% short-term liabilities. 

Shareholders' equity totaled $315.3 million at December 31, 2010, essentially unchanged from September 30, 2010 and a decrease of $39.1 million or 11.0% from December 31, 2009. The decrease was primarily the result of net losses incurred during the last year. First Federal's regulatory capital ratios continue to be above "well-capitalized" minimums, as evidenced by the key capital ratios and additional capital information presented in the following table.

             
    For the Quarter Ended
    December 31,  2010 September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009
First Financial:            
Equity to assets   9.55% 9.58% 9.74% 9.91% 10.20%
Tangible common equity to tangible assets (non-GAAP)  6.51   6.55   6.71   6.93   7.30 
Book value per common share    $ 15.15   $ 15.32   $ 15.66   $ 16.34   $ 17.52 
Tangible common book value per share (non-GAAP)  12.86   13.02   13.34   14.02   15.19 
Dividends paid per common share, authorized    0.05   0.05   0.05   0.05   0.05 
Common shares outstanding, end of period (000s)    16,527   16,527   16,527   16,527   16,526 
             
First Federal: Regulatory Minimum for "Well- Capitalized"          
Leverage capital ratio 4.00% 8.58% 8.47% 8.46% 7.74% 7.67%
Tier 1 risk-based capital ratio  6.00   11.42   11.27   11.19   9.83   9.78 
Total risk-based capital ratio  10.00   12.69   12.55   12.46   11.10   11.05 

Credit Quality

First Federal's loan portfolio is affected by numerous factors, including the economic environment in the markets it serves. First Federal carefully monitors its loans in an effort to identify and mitigate any potential credit quality issues and losses in a proactive manner. The following tables highlight several of the significant qualitative aspects of the loan portfolio to illustrate the overall level of quality and risk inherent in the portfolio.

                     
DELINQUENT LOANS December 31, 2010 September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009
(30-89 days past due) (in thousands)  $   % of Portfolio   $   % of Portfolio   $   % of Portfolio   $   % of Portfolio   $   % of Portfolio 
Residential loans                    
 Residential 1-4 Family  $ 6,712  0.76%  $ 3,486  0.42%  $ 5,244  0.65%  $ 8,214  1.05%  $ 6,076  0.79%
 Residential construction  ---  ---  ---  ---  ---  ---  ---  ---  ---  ---
 Residential land  432  0.80  302  0.54  799  1.38  791  1.28  2,799  4.27
 Total residential loans  7,144  0.75  3,788  0.42  6,043  0.69  9,005  1.05  8,875  1.05
                     
Commercial loans                    
 Commercial business  3,476  3.81  2,140  2.31  2,355  2.11  4,315  3.74  4,909  3.97
 Commercial real estate  10,600  1.79  8,920  1.49  7,441  1.25  13,381  2.26  12,249  2.07
 Commercial construction  635  2.66  1,981  6.96  ---  ---  1,602  2.65  947  1.36
 Commercial land  5,348  3.99  3,428  2.39  1,192  0.72  2,314  1.23  4,662  2.18
Total commercial loans  20,059  2.39  16,469  1.91  10,988  1.21  21,612  2.26  22,767  2.28
                     
Consumer loans                    
 Home equity  4,355  1.10  4,625  1.16  4,661  1.15  4,477  1.10  4,609  1.14
 Manufactured housing  4,043  1.50  3,207  1.19  2,992  1.13  3,806  1.49  3,697  1.47
 Marine  707  1.13  462  0.70  425  0.62  981  1.39  1,754  2.39
 Other consumer  905  1.56  1,765  2.92  527  0.84  594  0.94  1,172  1.75
Total consumer loans  10,010  1.27  10,059  1.27  8,605  1.08  9,858  1.24  11,232  1.41
Total delinquent loans  $ 37,213  1.44%  $ 30,316  1.18%  $ 25,636  0.99%  $ 40,475  1.55%  $ 42,874  1.62%

Total delinquencies at December 31, 2010 increased $6.9 million or 22.8% over the prior quarter. The increase in the residential 1-4 family category was primarily related to one large borrower with a $1.6 million loan, which has adequate collateral to mitigate any potential loss. Increases in the commercial business and commercial real estate categories were related to one loan totaling $1.8 million, which is supported by income-producing collateral, as well as numerous smaller dollar loans. These commercial and small business loans have started to show signs of weakness and are being actively monitored for resolution. The increase in delinquent commercial land loans was primarily the result of one loan totaling $1.8 million, which matured while negotiations with the borrowers continue. 

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