CHARLESTON, S.C., Oct. 27, 2010 (GLOBE NEWSWIRE) -- First Financial Holdings, Inc. (Nasdaq:FFCH) ("First Financial" or the "Company"), the holding company for First Federal Savings and Loan Association of Charleston ("First Federal"), today reported results for the fourth quarter of its fiscal year ended September 30, 2010. The net loss for the quarter ended September 30, 2010 was ($1.2) million compared to a net loss of ($1.3) million from the comparative quarter ended September 30, 2009. Including the preferred stock dividend and related accretion, the net loss to common shareholders was ($2.1) million for the fourth quarter compared to ($2.2) million for the fourth quarter one year ago. Basic and diluted net loss per common share was ($0.13) for the current quarter compared to ($0.19) for the quarter ended September 30, 2009.

Net loss for the fiscal year ended September 30, 2010 totaled ($36.8) million compared with a net income before extraordinary item of $463 thousand and net income of $29.3 million for the fiscal year ended September 30, 2009. The extraordinary item recorded in fiscal 2009 was related to the gain on the FDIC-assisted acquisition of Cape Fear Bank ("Cape Fear Acquisition"). Including the preferred stock dividend and related accretion, the net loss available to common shareholders was ($40.6) million for the fiscal year ended September 30, 2010 compared to net income to common shareholders of $26.2 million for the September 30, 2009 fiscal year. Basic and diluted net loss per common share was ($2.46) for the current fiscal year compared to net income per common share of $2.24 for the fiscal year ended September 30, 2009. 

President and Chief Executive Officer R. Wayne Hall commented, "We are pleased to report improved financial results and another quarter of solid pre-tax pre-provision profit. Although the economic recovery in our markets remains slow, we are very focused on returning to profitability.   Our capital levels remain strong and we continue to explore opportunities evolving in our markets."

The following summarizes key activities of the Company during the quarter ended September 30, 2010:

  • Net interest margin, on a fully tax equivalent basis, was 3.91%, compared to 3.94% for the June 30, 2010 quarter and down from 4.03% for the comparable quarter last year.   
  • The provision for loan losses was down $18.8 million from the linked quarter and $3.7 million from the same period last year. Net charge-offs were $17.7 million and $7.3 million for the September 30, 2010 and 2009 quarters respectively. The current quarter net charge-offs were down from $32.2 million for the linked quarter.   
  • Core deposits, which include checking, money market and savings accounts, increased during the quarter, while higher priced certificates of deposit declined as a result of matured accounts not being renewed.     
  • First Federal remains categorized as "well-capitalized" under regulatory standards with total risk-based capital at 12.55% and Tier 1 risk-based capital of 11.27% as of September 30, 2010.

Note: Several balance sheet and income statement accounts have been reclassified for presentation consistent with industry standards. All prior periods have been conformed to current period presentation.

Balance Sheet

As of September 30, 2010, First Financial's total assets were $3.3 billion, relatively flat with the June 30, 2010 quarter end and a decrease of $187.3 million or 5.3% from September 30, 2009. The decline was primarily related to reductions in the loan portfolio resulting from decreased customer demand and increased charge-offs, as well as higher levels of prepayments on mortgage-backed securities.

Investment securities, primarily comprised of mortgage-backed securities, totaled $473.4 million at September 30, 2010, a decrease of $8.9 million or 1.8% from the linked quarter and down $87.9 million or 15.7% from September 30, 2009. The reductions in investment securities are the result of higher levels of prepayments during the year combined with the challenge in finding replacement securities that have acceptable yields.

The following table displays total loans by major loan category at each of the last five quarters:

 
LOANS (in thousands) September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30, 2009
Residential loans          
Residential 1-4 Family  $ 836,644  $ 810,180  $ 778,747  $ 767,923  $ 749,289
Residential construction 14,436 12,016 16,926 14,502 15,681
Residential land 56,344 57,977 61,893 65,606 75,707
Total residential loans 907,424 880,173 857,566 848,031 840,677
           
Commercial loans          
Commercial business 92,650 111,826 115,417 123,543 128,097
Commercial real estate 598,547 593,894 593,128 591,787 601,135
Commercial construction 28,449 40,102 60,561 69,865 80,247
Commercial land 143,366 164,671 188,838 214,023 221,845
Total commercial loans 863,012 910,493 957,944 999,218 1,031,324
           
Consumer loans          
Home equity 397,632 404,140 406,872 405,701 398,423
Manufactured housing 269,857 264,815 256,193 250,646 243,823
Marine 65,901 68,393 70,506 73,536 76,608
Other consumer 60,522 62,805 63,134 67,070 70,887
Total consumer loans 793,912 800,153 796,705 796,953 789,741
Total loans 2,564,348 2,590,819 2,612,215 2,644,202 2,661,742
Less: Allowance for loan losses 86,871 86,945 82,731 73,534 68,473
Net loans  $ 2,477,477  $ 2,503,874  $ 2,529,484  $ 2,570,668  $ 2,593,269
 
 Note: Certain amounts have been reclassified to conform with current period presentation.

Total loans decreased $26.5 million or 1.0% from June 30, 2010 and declined $97.4 million or 3.7% from the same period one year ago. The decrease from September 30, 2009 in residential construction, residential land and commercial loans results from a combination of lower loan demand, increased loan charge-offs and the transfer of nonperforming loans to real estate owned. Increased volume in residential loans is attributable to originations and refinances during the current low interest rate environment. Manufactured housing loans increased due to higher customer demand and the expansion of relationships with dealers.

Total deposits at September 30, 2010 were $2.4 billion, which was essentially unchanged from the June 30, 2010 quarter end, and an increase of $95.5 million, or 4.1% from September 30, 2009. Core deposits, which exclude all certificates of deposit, totaled $1.1 billion at September 30, 2010, compared to $1.0 billion at the prior year end reflecting First Federal's initiatives in attracting and retaining core deposits. The largest increase was in personal interest-bearing checking accounts resulting from several advertising campaigns highlighting the product during the year. Certificates of deposit increased $12.4 million during the fiscal year to total $1.3 billion at September 30, 2010. Increases in deposits, combined with reductions in assets, resulted in the reduction of short-term borrowings of $258.0 million while FHLB advances increased by $15.5 million or 3.1% as of September 30, 2010 compared to the same quarter of last year.

Shareholders' equity at September 30, 2010 totaled $318.2 million, a decrease of $5.6 million or 1.7% from June 30, 2010 and a decrease of $33.5 million or 9.5% from September 30, 2009. The decrease was primarily a result of net losses incurred. First Federal's regulatory capital ratios are above "well-capitalized" minimums, as evidenced by the following key capital ratios.  Additional capital information is presented in the following table for the last five quarters:
             
 
    For the Quarter Ended
  September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30,  2009
First Financial:            
Equity to assets   9.58% 9.74% 9.91% 10.20% 10.02%
Tangible common equity to tangible assets (non-GAAP)  6.55  6.71  6.93  7.30  7.16
Book value per common share    $ 15.32  $ 15.66  $ 16.34  $ 17.52  $ 18.03
Tangible common book value per share (non-GAAP)  13.02  13.34  14.02  15.19  15.64
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  16,526  15,897
             
First Federal: Regulatory Minimum for "Well-Capitalized"          
Leverage capital ratio 4.00% 8.47% 8.46% 7.74% 7.67% 7.67%
Tier 1 risk-based capital ratio 6.00%  11.27  11.19  9.83  9.78  9.77
Total risk-based capital ratio 10.00%  12.55  12.46  11.10  11.05  11.02
 

Credit Quality

First Federal's loan portfolio is impacted by numerous factors, most importantly, the economic environment in the markets in which we operate. The allowance for loan losses was $86.9 million or 3.39% of gross loans at September 30, 2010 compared to $86.9 million or 3.36% at June 30, 2010, and $68.5 million or 2.57% at September 30, 2009. The increase in fiscal 2010 was primarily a result of the higher levels of net charge-offs impacting historical lost rates, as well as higher levels of delinquent and nonperforming loans requiring reserves.

The following tables include information on delinquent loans, nonperforming assets and charge-offs over the last five quarters. 

 
DELINQUENT LOANS September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30, 2009
(30-89 days past due) (in thousands)  $   % of Portfolio   $   % of Portfolio   $   % of Portfolio   $   % of Portfolio   $   % of Portfolio 
Residential loans                    
Residential 1-4 Family  $ 3,486 0.42%  $ 5,244 0.65%  $ 8,214 1.05%  $ 6,076 0.79%  $ 9,819 1.31%
Residential construction  --   --   --   --   --   --   --   --   --   -- 
Residential land  302  0.54  799  1.38  791  1.28  2,799  4.27  1,278  1.69
Total residential loans  3,788  0.42  6,043  0.69  9,005  1.05  8,875  1.05  11,097  1.32
                     
Commercial loans                    
Commercial business  2,140  2.31  2,355  2.11  4,315  3.74  4,909  3.97  1,515  1.18
Commercial real estate  8,920  1.49  7,441  1.25  13,381  2.26  12,249  2.07  7,722  1.28
Commercial construction  1,981  6.96  --   --   1,602  2.65  947  1.36  662  0.82
Commercial land  3,428  2.39  1,192  0.72  2,314  1.23  4,662  2.18  7,464  3.36
Total commercial loans  16,469  1.91  10,988  1.21  21,612  2.26  22,767  2.28  17,363  1.68
                     
Consumer loans                    
Home equity  4,625  1.16  4,661  1.15  4,477  1.10  4,609  1.14  2,113  0.53
Manufactured housing  3,207  1.19  2,992  1.13  3,806  1.49  3,697  1.47  3,132  1.28
Marine  462  0.70  425  0.62  981  1.39  1,754  2.39  1,226  1.60
Other consumer  1,765  2.92  527  0.84  594  0.94  1,172  1.75  481  0.68
Total consumer loans  10,059  1.27  8,605  1.08  9,858  1.24  11,232  1.41  6,952  0.88
Total delinquent loans  $ 30,316 1.18%  $ 25,636 0.99%  $ 40,475 1.55%  $ 42,874 1.62%  $ 35,412 1.33%
 
 Note: Certain amounts have been reclassified to conform with current period presentation.

At September 30, 2010, total delinquencies increased $4.7 million or 18.3% to $30.3 million from the linked quarter.  Of these delinquencies, $5.0 million or 16.6% are covered under a purchase and assumption agreement with the FDIC for the Cape Fear Acquisition. The increase in commercial loan delinquencies from the linked quarter is primarily related to five loans.  The reduction in delinquent residential loans for the same period is due to proactively managing delinquent loans.
 
  September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30, 2009
NONPERFORMING ASSETS (in thousands)  $   % of Portfolio   $   % of Portfolio   $   % of Portfolio   $   % of Portfolio   $   % of Portfolio 
Residential loans                    
 Residential 1-4 Family  $ 17,350 2.07%  $ 17,898 2.21%  $ 13,763 1.77%  $ 15,759 2.05%  $ 12,374 1.65%
 Residential construction  --   --   --   --   --   --   --   --   --   -- 
 Residential land  4,872  8.65  5,527  9.53  5,922  9.57  5,485  8.36  6,095  8.05
 Total residential loans  22,222  2.45  23,425  2.66  19,685  2.30  21,244  2.51  18,469  2.20
                     
Commercial loans                    
 Commercial business  6,951  7.50  6,789  6.07  7,563  6.55  5,238  4.24  1,237  0.97
 Commercial real estate  48,973  8.18  35,560  5.99  34,583  5.83  28,637  4.84  13,674  2.27
 Commercial construction  5,704  20.05  5,738  14.31  7,127  11.77  3,706  5.30  6,227  7.76
 Commercial land  46,109  32.16  50,269  30.53  55,719  29.51  40,164  18.77  32,847  14.81
Total commercial loans  107,737  12.48  98,356  10.80  104,992  10.96  77,745  7.78  53,985  5.23
                     
Consumer loans                    
 Home equity  6,969  1.75  6,937  1.72  7,773  1.91  6,626  1.63  5,474  1.37
 Manufactured housing  2,909  1.08  3,189  1.20  2,899  1.13  2,715  1.08  2,280  0.94
 Marine  188  0.29  135  0.20  166  0.24  259  0.35  143  0.19
 Other consumer  206  0.34  16  0.03  143  0.23  153  0.23  81  0.11
Total consumer loans  10,272  1.29  10,277  1.28  10,981  1.38  9,753  1.22  7,978  1.01
 Total nonaccrual loans  140,231 5.47%  132,058 5.10%  135,658 5.19%  108,742 4.11%  80,432 3.02%
Loans 90+ days still accruing  175    170    104    124    121  
Restructured Loans, still accruing  750    --     --     --     --   
Total nonperforming loans  141,156    132,228    135,762    108,866    80,553  
Other repossessed assets acquired  11,950    12,543    11,957    20,864    22,002  
Total nonperfoming assets  $153,106    $144,771    $147,719    $129,730    $102,555  
 
 Note: Certain amounts have been reclassified to conform with current period presentation.

At September 30, 2010, total nonperforming assets increased $8.3 million or 5.8% from the linked quarter to $153.1 million. Of these nonperforming assets, $14.7 million, or 9.6%, are covered under a purchase and assumption agreement with the FDIC for the Cape Fear Acquisition.  The increase from the June 30, 2010 quarter end was primarily related to three commercial real estate properties.  
                     
 
  September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30, 2009
NET CHARGE-OFFS (in thousands)  $   % of Portfolio*   $   % of Portfolio*   $   % of Portfolio*   $   % of Portfolio*   $   % of Portfolio* 
Residential loans                    
 Residential 1-4 Family  $ 2,311 1.12%  $ 1,673 0.84%  $ 2,715 1.40%  $ 59 0.03%  $ 936 0.50%
 Residential construction  --   --   --   --   --   --   --   --   (940)  (23.98)
 Residential land  1,297  9.08  975  6.51  1,127  7.07  1,781  10.08  1,502  7.94
 Total residential loans  3,608  1.61  2,648  1.22  3,842  1.80  1,840  0.87  1,498  0.71
                     
Commercial loans                    
 Commercial business  1,789  7.00  3,868  13.62  1,656  5.54  1,046  3.33  2,203  6.88
 Commercial real estate  3,402  2.28  5,267  3.55  8,085  5.46  1,807  1.21  166  0.11
 Commercial construction  270  3.15  2,051  16.30  1,094  6.71  3,114  16.60  1,509  7.52
 Commercial land  4,175  10.84  12,165  27.53  17,017  33.79  7,796  14.31  --   -- 
Total commercial loans  9,636  4.35  23,351  10.00  27,852  11.38  13,763  5.42  3,878  1.50
                     
Consumer loans                    
 Home equity  2,669  2.66  4,379  4.32  3,017  2.97  2,432  2.42  6  0.01
 Manufactured housing  1,145  1.71  950  1.46  638  1.01  763  1.23  866  1.42
 Marine  195  1.16  401  2.31  621  3.45  608  3.24  377  1.97
 Other consumer  399  2.59  430  2.73  748  4.60  860  4.99  682  3.85
Total consumer loans  4,408  2.21  6,160  3.09  5,024  2.52  4,663  2.35  1,931  0.98
Total net charge-offs  $ 17,652 2.71%  $ 32,159 4.91%  $ 36,718 5.55%  $ 20,266 3.02%  $ 7,307 1.07%
 
 *Represents an annualized rate
 Note: Certain amounts have been reclassified to conform with current period presentation.

The decrease in net charge-offs to $17.7 million for the quarter ended September 30, 2010 compared to $32.2 million for the linked quarter was due to fewer credit writedowns in commercial land and home equity loans in the quarter ended September 30, 2010 than in the third fiscal quarter, thus reducing the required charge-offs.

Quarterly Results of Operations

The net loss for the quarter ended September 30, 2010, the linked quarter and the comparable quarter of the prior year was driven by the provision for loan losses recorded each period and has shown improvement over the last two quarters. Total revenue for the quarter ended September 30, 2010, which consists of net interest income before the provision for loan losses and noninterest income, remained flat at $49.9 million compared to the June 30, 2010 quarter and decreased $1.3 million from the comparable quarter one year ago. 

Net interest income – The net interest margin, on a fully tax equivalent basis, for the quarter ended September 30, 2010 was 3.91% compared to 3.94% for the linked quarter ended June 30, 2010 and 4.03% for the comparable quarter ended September 30, 2009. Net interest income for the quarter ended September 30, 2010 was $30.9 million, decreasing from $31.2 million or a decline of 1.2% for the linked quarter ended June 30, 2010 and down from $34.1 million or a decline of 9.4% from the quarter ended September 30, 2009. This decrease from the prior year is primarily attributable to the reduction in average earnings assets, down 7.0% year over year and the lower net interest margin. The impact of higher nonperforming loans has also contributed to the reduction in the margin and net interest income. 

Provision for loan losses - After determining what the Company believes is an adequate allowance for loan losses based on the risk in the portfolio, the provision for loan losses is calculated based on the net effect of the quarterly change in the allowance for loan losses and net charge-offs. The provision was $17.6 million for the quarter ended September 30, 2010, compared to $36.4 million for the quarter ended June 30, 2010 and $21.3 million for the quarter ended September 30, 2009. The decrease in the fourth quarter of fiscal 2010 from the linked quarter was due primarily to the lower level of net charge-offs between the linked quarters. In addition, there has been no increase in the total loan balances and some stabilization in the level of impaired loans requiring specific reserve between the quarters.

Noninterest income – Noninterest income increased $354 thousand or 1.9% as compared to the linked quarter as a result of higher mortgage and other loan income which was $4.4 million for the fourth quarter of fiscal 2010, an increase of $1.9 million or 77.5% from the linked quarter ended June 30, 2010 and an increase of $1.7 million or 61.8% from the comparative quarter ended September 30, 2009. The increase over the linked and comparable quarters is the result of higher volume of loans sold and the related gain on sales of the loans. The Company continues to utilize certain economic hedging strategies to protect the value of the capitalized mortgage servicing asset from interest rate risk. These strategies produced positive results during the fourth quarter, contributing to the increase in mortgage and other loan income.  Insurance revenues, another main contributor to revenues, remained flat for the quarter ended September 30, 2010 at $6.3 million for the linked quarter and decreased slightly from $6.6 million for the comparable quarter one year ago. Insurance revenues continue to be reduced as a result of current market conditions. Offsetting increases in noninterest income during the fourth quarter was lower other income. This was a result of the final settlement from the FDIC totaling $1.5 million related to the Cape Fear Acquisition, which was received in the third quarter of the fiscal year.

Noninterest expense - Total noninterest expense increased by $1.6 million, or 4.9%, to $34.7 million for the quarter ended September 30, 2010 compared to $33.1 million for the quarter ended June 30, 2010. This increase was primarily attributable to higher real estate owned ("REO") expenses and writedowns on REO to reflect further fair-value declines for the underlying properties during the quarter ended September 30, 2010 as compared to the linked quarter. Net REO expenses were $2.7 million for the September 30, 2010 quarter as compared to $925 thousand and $631 thousand for the quarters ended June 30, 2010 and September 30, 2009, respectively. The total of all other operating expenses, exclusive of REO, decreased $184 thousand, from the linked quarter and increased $238 thousand from the comparable quarter of the prior year.

Annual Results of Operations

The pre-tax pre-provision income for the year ended September 30, 2010 declined 4.1% to $64.0 million from $66.7 million for the year ended September 30, 2009. Net interest income and noninterest income both increased year-over-year, as a result of the increase in earning assets from the Cape Fear Acquisition, increases in mortgage and other loan income related to the higher volume of loan originations and associated sales of the loans resulting from the low interest rate environment; increases in 401(k) plan administration fees related to the acquisition of American Pensions, Inc. during the latter part of fiscal 2009; and income related to the final settlement with the FDIC for the Cape Fear Acquisition. Offsetting the increases in revenue were higher levels of noninterest expenses. Noninterest expense increased $17.3 million or 14.9% to $133.7 million for fiscal 2010 as compared to the prior fiscal year. The majority of the increase, $7.7 million, was related to salaries and employee benefits due to the increase in personnel primarily associated with acquisitions and new positions added during the year. Other significant increases in expenses for the current fiscal year as compared to the prior year are related to occupancy and other costs associated with the acquisitions, higher levels of REO expenses and writedowns on REO to reflect further fair-value declines for the underlying properties, and reserves necessary in fiscal 2010 related to losses incurred at the Company's reinsurance subsidiary.

Non-GAAP Financial Information

This press release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). These measures include pre-tax, pre-provision earnings; tangible common equity to tangible assets ratio; tangible common book value; and efficiency ratio.  Management uses these non-GAAP measures in its analysis of First Financial's performance. Management also believes these non-GAAP financial measures provide additional information that is useful to investors in understanding the underlying performance of the Company, its business, and performance trends and such measures help facilitate additional performance comparisons with others in the banking industry. Non-GAAP financial measures have inherent limitations. Such measures are not uniformly applied by the Company or calculated by other companies in the same manner and are not audited. Readers should be aware of these limitations and should be cautious as to their use of such measures. These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP.

The Company believes that pre-tax, pre-provision earnings are a useful measure in assessing First Financial's core operating performance, particularly during times of economic stress. This measurement, as defined by management, represents total revenue, defined as net interest income plus noninterest income, less noninterest expense.

First Financial believes that the exclusion of goodwill and other intangible assets facilitates the comparison of results for ongoing business operations. The tangible common equity ("TCE") ratio and tangible common book value ("TBV") has become a focus of some investors, analysts and banking regulators. Management believes these measures may assist in analyzing the Company's capital position absent the effects of intangible assets and preferred stock. Because TCE and TBV are not formally defined by GAAP or codified in the federal banking regulations, these measures are considered to be non-GAAP financial measures. However, analysts and banking regulators may assess the Company's capital adequacy using TCE or TBV, therefore, management believes that it is useful to provide investors the ability to assess its capital adequacy on the same basis. 

Refer to the Selected Financial Information Table and the Non-GAAP Reconciliation Table later in this release for additional information.

About the Company

First Federal operates 66 financial centers located in the Charleston metropolitan area, Horry, Georgetown, Florence and Beaufort counties in South Carolina and Brunswick, New Hanover and Pender counties in coastal North Carolina offering banking, trust and pension administration services. The Company also provides insurance and brokerage services through First Southeast Insurance Services, The Kimbrell Insurance Group and First Southeast Investor Services.

NOTE: R. Wayne Hall, President and CEO of the Company, Blaise B. Bettendorf, Executive Vice President and CFO, and Joseph W. Amy, Executive Vice President and CCO, will discuss these results in a conference call at 2:00 PM (EDT), October 27, 2010. The call can be accessed via a webcast available on First Financial's website at www.firstfinancialholdings.com.

Forward Looking Statements

Certain matters in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among others, expectations of the business environment in which the Company operates, projections of future performance, including operating efficiencies, perceived opportunities in the market, potential future credit experience, and statements regarding the Company's mission and vision. These forward-looking statements are based upon current management expectations, and may, therefore, involve risks and uncertainties. Management's ability to predict results or the effect of future plans or strategies is inherently uncertain. The Company's actual results, performance or achievements may differ materially from those suggested, expressed or implied by these forward-looking statements as a result of a wide range of factors. These factors include, but are not limited to, the general business environment, general economic conditions nationally and in the States of North and South Carolina, interest rates, the North and South Carolina real estate markets, the demand for mortgage loans, the credit risk of lending activities, including changes in the level and trend of loan delinquencies and charge-offs, changes in our allowance for loan losses and provision for loan losses that may be affected by deterioration in the housing and real estate markets; results of examinations by our banking regulators, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; our ability to control operating costs and expenses, our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto, competitive conditions between banks and non-bank financial services providers, regulatory changes and other risks detailed in the Company's reports filed with the Securities and Exchange Commission ("SEC"), including the Annual Report on Form 10-K for the fiscal year ended September 30, 2009, Quarterly Reports on Form 10-Q and current reports on Form 8-K. Accordingly, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on these statements.

Many aspects of the Dodd-Frank Act are subject to rulemaking and will take effect over several years, making it difficult to anticipate the overall financial impact on the Company and the financial services industry more generally.  Provisions in the legislation could also increase the capital requirements applicable to the Company and First Federal and could require the Company and First Federal to seek additional sources of capital in the future.

Such forward-looking statements may include projections. Such projections were not prepared in accordance with published guidelines of the American Institute of Certified Public Accountants or the SEC regarding projections and forecasts nor have such projections been audited, examined or otherwise reviewed by independent auditors of the Company. In addition, such projections are based upon many estimates and inherently subject to significant economic and competitive uncertainties and contingencies, many of which are beyond the control of management of the Company. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by the Company that the projections will prove to be correct. The Company does not undertake to update any forward-looking statement that may be made on behalf of the Company. 

For additional information about First Financial, please visit our web site at www.firstfinancialholdings.com or contact Dorothy B. Wright, Senior Vice President-Investor Relations and Corporate Secretary, (843) 529-5931 or (843) 729-7005.          
 
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
           
(in thousands) September 30,  2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30, 2009
          (audited)
ASSETS          
Cash and due from banks  $ 49,837  $ 53,596  $ 54,491  $ 58,244  $ 54,565
Interest-bearing deposits with banks  10,710  8,412  7,596  8,185  23,505
 Total cash and cash equivalents  60,547  62,008  62,087  66,429  78,070
Investment securities:          
Securities available for sale, at fair value  407,976  413,617  446,414  478,768  492,754
Securities held to maturity, at amortized cost  22,529  22,512  22,496  22,481  22,401
Nonmarketable securities - FHLB stock  42,867  46,141  46,141  46,141  46,141
 Total investment securities  473,372  482,270  515,051  547,390  561,296
Loans  2,564,348  2,590,819  2,612,215  2,644,202  2,661,742
Less: Allowance for loan losses  86,871  86,945  82,731  73,534  68,473
 Net loans  2,477,477  2,503,874  2,529,484  2,570,668  2,593,269
Loans held for sale  28,400  15,030  12,681  22,903  25,603
Premises and equipment, net  83,413  83,529  83,417  80,113  81,021
Goodwill  28,260  28,260  28,024  28,025  29,278
Other intangible assets, net  9,754  9,997  10,228  10,470  8,683
FDIC indemnification asset, net  67,583  66,794  65,461  64,130  62,754
Other assets  94,209  72,582  74,434  86,020  70,313
Total assets  $ 3,323,015  $ 3,324,344  $ 3,380,867  $ 3,476,148  $ 3,510,287
           
LIABILITIES          
Deposits:          
Noninterest-bearing  $ 223,915  $ 223,058  $ 220,375  $ 216,221  $ 206,081
Interest-bearing  2,191,148  2,240,599  2,233,655  2,077,206  2,113,452
 Total deposits  2,415,063  2,463,657  2,454,030  2,293,427  2,319,533
Advances from FHLB  508,235  478,364  530,493  565,622  492,751
Other short-term borrowings  812  813  812  181,812  258,813
Long-term debt  46,392  46,392  46,392  46,392  46,392
Other liabilities  34,323  11,321  14,139  34,441  41,149
Total liabilities  3,004,825  3,000,547  3,045,866  3,121,694  3,158,638
           
SHAREHOLDERS' EQUITY          
Preferred stock  1  1  1  1  1
Common stock  215  215  215  214  208
Additional paid-in capital  194,767  195,175  194,851  194,654  185,249
Treasury stock, at cost  (103,563)  (103,563)  (103,563)  (103,563)  (103,563)
Retained earnings  221,920  224,871  238,678  259,511  265,821
Accumulated other comprehensive income  4,850  7,098  4,819  3,637  3,933
Total shareholders' equity  318,190  323,797  335,001  354,454  351,649
Total liabilities and shareholders' equity  $ 3,323,015  $ 3,324,344  $ 3,380,867  $ 3,476,148  $ 3,510,287
 
 Note: Certain amounts have been reclassified to conform with current period presentation.
 
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
               
  Three Months Ended Twelve Months Ended
(in thousands, except share data) September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30, 2009 September 30,  2010 September 30,  2009
               
INTEREST INCOME              
Interest and fees on loans  $ 36,752  $ 37,485  $ 38,267  $ 40,018  $ 39,941  $ 152,522  $ 155,674
Interest and dividends on investments  5,574  5,892  6,140  6,967  7,492  24,573  30,711
Other  798  904  1,009  1,115  2,382  3,826  2,411
Total interest income  43,124  44,281  45,416  48,100  49,815  180,921  188,796
INTEREST EXPENSE              
Interest on deposits  8,042  8,189  7,835  8,718  9,407  32,784  40,894
Interest on borrowed money  4,232  4,863  6,085  6,494  6,357  21,674  26,220
Total interest expense  12,274  13,052  13,920  15,212  15,764  54,458  67,114
NET INTEREST INCOME  30,850  31,229  31,496  32,888  34,051  126,463  121,682
Provision for loan losses  17,579  36,373  45,915  25,327  21,280  125,194  66,883
Net interest income (loss) after provision for loan losses  13,271  (5,144)  (14,419)  7,561  12,771  1,269  54,799
NONINTEREST INCOME              
Service charges on deposit accounts  6,446  6,645  6,183  6,300  6,371  25,574  24,407
Insurance  6,273  6,298  7,507  5,429  6,571  25,507  27,022
Mortgage and other loan income  4,382  2,469  2,104  2,439  2,708  11,394  8,203
Trust and plan administration  1,087  1,016  1,040  1,269  1,093  4,412  1,841
Brokerage fees  591  644  550  496  532  2,281  2,028
Other  510  1,944  797  1,698  493  4,949  1,927
Net securities losses  (230)  (311)  (1,818)  (494)  (615)  (2,853)  (3,993)
Total noninterest income  19,059  18,705  16,363  17,137  17,153  71,264  61,435
               
NONINTEREST EXPENSE              
Salaries and employee benefits  18,586  18,894  18,697  17,780  18,816  73,957  66,221
Occupancy costs  2,516  2,308  2,442  2,447  2,428  9,713  8,856
Furniture and equipment  2,373  2,256  2,052  2,139  2,504  8,820  8,315
Real estate owned expenses, net  2,723  925  1,915  1,560  631  7,123  3,071
FDIC insurance and regulatory fees  1,274  1,112  1,345  941  1,345  4,672  5,787
Professional services  1,081  1,454  859  767  972  4,161  3,670
Advertising and marketing  951  707  821  786  818  3,265  2,852
Other loan expense  514  335  403  417  381  1,669  1,074
Intangible asset amortization  243  231  243  243  194  960  761
Other expense  4,456  4,881  4,519  5,514  4,298  19,370  15,779
Total noninterest expense  34,717  33,103  33,296  32,594  32,387  133,710  116,386
Loss before income taxes  (2,387)  (19,542)  (31,352)  (7,896)  (2,463)  (61,177)  (152)
Income tax benefit  (1,215)  (7,513)  (12,296)  (3,364)  (1,199)  (24,388)  (615)
(Loss) income before extraordinary item  (1,172)  (12,029)  (19,056)  (4,532)  (1,264)  (36,789)  463
EXTRAORDINARY ITEM              
Gain on acquisition, less income taxes of $18,833  --  --      --  --  28,857
NET (LOSS) INCOME   $ (1,172)  $ (12,029)  $ (19,056)  $ (4,532)  $ (1,264)  $ (36,789)  $ 29,320
Preferred stock dividends  813  813  813  813  802  3,252  2,663
Accretion on preferred stock discount  142  140  138  136  127  556  431
NET (LOSS) INCOME AVAILABLE TO COMMON  SHAREHOLDERS  $ (2,127)  $ (12,982)  $ (20,007)  $ (5,481)  $ (2,193)  $ (40,597)  $ 26,226
               
Net (loss) income per common share:              
Basic  $ (0.13)  $ (0.79)  $ (1.21)  $ (0.33)  $ (0.19)  $ (2.46)  $ 2.24
Diluted  $ (0.13)  $ (0.79)  $ (1.21)  $ (0.33)  $ (0.19)  $ (2.46)  $ 2.24
               
Average common shares outstanding:              
Basic  16,527  16,527  16,526  16,464  11,791  16,511  11,721
Diluted  16,527  16,527  16,526  16,464  11,791  16,511  11,721
 
 Note: Certain amounts have been reclassified to conform with current period presentation.
 
FIRST FINANCIAL HOLDINGS, INC.          
SELECTED FINANCIAL INFORMATION (Unaudited) For the Quarter Ended
(in thousands, except ratios) September 30,  2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30,  2009
Average for the Quarter          
Total assets  $ 3,316,098  $ 3,358,635  $ 3,429,172  $ 3,487,674  $ 3,563,973
Earning assets  3,144,763  3,192,199  3,256,664  3,311,040  3,382,201
Loans  2,602,059  2,617,584  2,645,741  2,684,929  2,724,079
Deposits  2,450,148  2,466,284  2,334,035  2,312,129  2,362,731
Interest-bearing liabilities  2,743,785  2,790,884  2,854,834  2,859,013  2,989,317
Shareholders' equity  321,379  330,829  346,194  356,897  309,287
           
Performance Metrics          
Return on average assets (0.14)% (1.43)% (2.22)% (0.52)% (0.14)%
Return on average shareholders' equity (1.46) (14.54) (22.02) (5.08) (1.57)
Net interest margin (FTE) (1)  3.91  3.94  3.94  3.96  4.03
Efficiency ratio (non-GAAP)  69.04  65.69  66.83  64.29  62.17
Pre-tax pre-provision earnings  (non-GAAP)  $ 15,192  $ 16,831  $ 14,563  $ 17,431  $ 18,817
           
Credit Quality Metrics          
Allowance for loan losses as a percent of loans 3.39% 3.36% 3.17% 2.78% 2.57%
Allowance for loan losses as a percent of nonperforming loans  61.54  65.75  60.94  67.55  85.00
Nonperforming loans as a percent of loans  5.51  5.10  5.20  4.12  3.03
Nonperforming assets as a percent of loans and other  repossessed assets acquired  5.94  5.56  5.63  4.87  3.82
Nonperforming assets as a percent of total assets  4.61  4.35  4.37  3.73  2.92
Net loans charged-off as a percent of average loans (annualized)  2.71  4.91  5.55  3.02  1.07
Net loans charged-off  $ 17,652  $ 32,159  $ 36,718  $ 20,266  $ 7,307
 
(1) Net interest margin is presented on an annual basis, includes taxable equivalent adjustments to interest income and is based on a federal tax rate of 35%.
 
FIRST FINANCIAL HOLDINGS, INC.          
Non-GAAP Reconciliation (Unaudited) For the Quarter Ended
(in thousands, except per share data) September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30,  2009
Efficiency Ratio          
Net interest income (A)  $ 30,850  $ 31,229  $ 31,496  $ 32,888  $ 34,051
Taxable equivalent adjustment (B)  149  148  148  183  274
Noninterest income (C)  19,059  18,705  16,363  17,137  17,153
Net securities losses (D)  (230)  (311)  (1,818)  (494)  (615)
Noninterest expense (E)  34,717  33,103  33,296  32,594  32,387
Efficiency Ratio: E/(A+B+C-D) 69.04% 65.69% 66.83% 64.29% 62.17%
           
Tangible Assets and Tangible Common Equity        
Total assets  $ 3,323,015  $ 3,324,344  $ 3,380,867  $ 3,476,148  $ 3,510,287
Goodwill  (28,260)  (28,260)  (28,024)  (28,025)  (29,278)
Other intangible assets, net  (9,754)  (9,997)  (10,228)  (10,470)  (8,683)
Tangible assets (non-GAAP)  $ 3,285,001  $ 3,286,087  $ 3,342,615  $ 3,437,653  $ 3,472,326
           
Total shareholders' equity  $ 318,190  $ 323,797  $ 335,001  $ 354,454  $ 351,649
Preferred stock  (65,000)  (65,000)  (65,000)  (65,000)  (65,000)
Goodwill  (28,260)  (28,260)  (28,024)  (28,025)  (29,278)
Other intangible assets, net  (9,754)  (9,997)  (10,228)  (10,470)  (8,683)
Tangible common equity (non-GAAP)  $ 215,176  $ 220,540  $ 231,749  $ 250,959  $ 248,688
           
Shares outstanding, end of period (000s)  16,527  16,527  16,527  16,526  15,897
           
Tangible common equity to tangible assets 6.55% 6.71% 6.93% 7.30% 7.16%
Tangible common book value per share  $ 13.02  $ 13.34  $ 14.02  $ 15.19  $ 15.64
           
Pre-tax pre-provision earnings          
(Loss) income before income taxes  $ (2,387)  $ (19,542)  $ (31,352)  $ (7,896)  $ (2,463)
Provision for loan losses  17,579  36,373  45,915  25,327  21,280
Pre-tax pre-provision earnings  $ 15,192  $ 16,831  $ 14,563  $ 17,431  $ 18,817
 
CONTACT: First Financial Holdings, Inc.         Dorothy B. Wright, Senior Vice President/Investor Relations          and Corporate Secretary         (843) 529.5931         (843) 729.7005         dwright@firstfinancialholdings.com

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