First Financial Holdings, Inc. Announces Fourth Quarter Earnings And Declares Cash Dividend

CHARLESTON, S.C., Jan. 24, 2013 (GLOBE NEWSWIRE) -- First Financial Holdings, Inc. ("First Financial") (Nasdaq:FFCH), the holding company for First Federal Bank ("First Federal"), announced today net income available to common shareholders of $6.8 million for the three months ended December 31, 2012, compared with $5.7 million for the three months ended September 30, 2012 and $14.6 million for the three months ended December 31, 2011. Diluted net income per common share was $0.41 for the quarter ended December 31, 2012, compared with $0.34 for the prior quarter and $0.88 for the same quarter last year. The quarter ended December 31, 2011 included a $12.7 million after-tax gain from a bulk loan sale of certain performing loans and classified assets.

For the year ended December 31, 2012, net income available to common shareholders was $24.9 million, compared with a net loss of $(30.6) million for the same period of 2011. Diluted net income per common share from continuing operations was $1.51 for 2012, compared with a net loss of $(1.64) for 2011.

"The fourth quarter continued First Financial's progress to produce solid operating trends in the core franchise and stable credit quality," said R. Wayne Hall, president and chief executive officer of First Financial and First Federal. "We have made consistent progress over the year to grow fee income, leverage our mortgage banking team, and expand our net interest margin. Our improvement in net interest income was driven by the acquisitions and strategic initiatives completed during 2012, and margin expansion was due in large part to continued credit improvement from our acquired loan portfolios. We are pleased with the earnings momentum we are building and the potential to improve performance and enhance shareholder value."

Highlights for the Quarter
  • Net interest margin increased 34 basis points over the September 30, 2012 quarter to 4.69% for the December 31, 2012 quarter as a result of additional income on a Cape Fear loan pool. Net interest margin for the current quarter without the impact of the additional income was 4.15%.
  • Net charge-offs totaled $6.3 million for the quarter ended December 31, 2012, compared with $7.0 million for the prior quarter, while the provision for loan losses was $4.2 million and $4.5 million for the quarters ended December 31, 2012 and September 30, 2012, respectively.
  • Noninterest income for the quarter ended December 31, 2012 totaled $16.2 million, or an 11.2% increase over the prior quarter. The increase was driven by improvements in fee income and higher mortgage banking volumes.
  • First Financial remains well capitalized at December 31, 2012 with total risk-based capital of 16.16%, Tier 1 risk-based capital of 14.89%, and Tier 1 leverage capital of 10.54%. The tangible common equity to tangible common assets ratio increased to 7.07% at quarter end, compared with 6.77% at September 30, 2012.

Quarterly Results of Operations

First Financial reported net income of $7.8 million for the three months ended December 31, 2012, compared with $6.7 million for the three months ended September 30, 2012 and $15.6 million for the three months ended December 31, 2011.

Net interest income

Net interest margin, on a fully tax-equivalent basis, was 4.69% for the quarter ended December 31, 2012, as compared with 4.35% for the quarter ended September 30, 2012 and 3.91% for the quarter ended December 31, 2011. The increase over the linked quarter was primarily the result of $3.6 million in cash received associated with the Cape Fear Bank ("Cape Fear") loans acquired from the FDIC in April 2009. The performance of an underlying Cape Fear loan pool has been better than originally projected and payments received exceeded First Federal's initial investment in the pool. Net interest margin adjusted for the cash received and the incremental loan accretion on the Cape Fear pool was 4.15% for the December 31, 2012 quarter, a 14 basis point decrease from the September 30, 2012 quarter. The net interest margin for the prior quarter was positively impacted by 9 basis points due to the full resolution and collection of certain nonperforming loans and by 2 basis points due to accelerated accretion on called investment securities. The increase over the same quarter last year was principally caused by the accretion and amortization of purchase accounting adjustments resulting from the acquisition of certain Plantation Federal Savings Bank ("Plantation") assets and liabilities from the FDIC in April 2012. In addition, improved performance on a Cape Fear loan pool, a lower cost of funds as maturing time deposits have been replaced with core deposits and the continued funding mix shift from borrowings, as well as higher yields on investments due to accelerated accretion on called investment securities have positively impacted net interest margin. 

Net interest income for the quarter ended December 31, 2012 was $35.1 million, an increase of $1.9 million or 5.7% over the prior quarter and an increase of $6.2 million or 21.4% over the same quarter last year. The increase over the prior quarter was primarily due to the $3.6 million cash received exceeding First Federal's initial investment in a Cape Fear loan pool, partially offset by the effect of lower average earning assets for the current quarter. The increase over the same quarter last year was primarily the effect of the improved performance of a Cape Fear loan pool as well as higher levels of average earning assets from the Plantation acquisition and Liberty Savings Bank ("Liberty") branch purchase in April 2012. 

Provision for loan losses

After determining what First Financial believes is an adequate allowance for loan losses based on the estimated risk inherent in the loan portfolio, the provision for loan losses is calculated based on the net effect of the change in the allowance for loan losses and net charge-offs. The provision for loan losses was $4.2 million for the quarter ended December 31, 2012, a decrease of $372 thousand or 8.2% from the linked quarter and a decrease of $3.3 million or 44.1% from the same quarter last year. The decreases were related to the continued improvement in historical loss trends and general stabilization of credit metrics through December 31, 2012. 

Noninterest income

Noninterest income totaled $16.2 million for the quarter ended December 31, 2012, an increase of $1.6 million or 11.2% over the prior quarter and a decrease of $16.6 million from the same quarter last year. The increase over the linked quarter was primarily the result of higher mortgage and other loan income and other income, partially offset by the final purchase accounting adjustment of $(661) thousand to the gain on the Plantation acquisition originally recorded in the second quarter of 2012. Mortgage and other loan income increased $1.9 million or 47.4% due in large part to more favorable hedge adjustments on both the mortgage servicing rights and the mortgage pipeline hedges in the current quarter as well as higher gains on residential mortgage loan sales into the secondary market as volumes increased and spreads improved due to a temporary shift in the mix of cash sales versus securitizations. Other income increased $308 thousand or 40.8% over the prior quarter due to the full-quarter impact of income on bank owned life insurance, which was substantially purchased during the September 30, 2012 quarter. 

The December 31, 2011 quarter included a $20.8 million pre-tax gain ($12.7 million after-tax) from a bulk loan sale of certain performing and nonperforming assets. Noninterest income without the impact of the gain from the sold loan pool for the December 31, 2011 quarter was $12.0 million, which was $4.2 million or 35.1% lower than the December 31, 2012 quarter. The increase for the current quarter was due to the Plantation and Liberty acquisitions, acquiring bank owned life insurance, and higher residential mortgage origination levels related to the continued low interest rate environment and the addition of correspondent lenders. 

Noninterest expense

Noninterest expense totaled $35.4 million for the quarter ended December 31, 2012, an increase of $2.3 million or 7.0% over the prior quarter and an increase of $6.5 million or 22.4% over the same quarter last year. The December 31, 2012 quarter included an additional $2.9 million potential impairment on the FDIC indemnification asset related to the Cape Fear loans. Consistent with the loss share agreement with the FDIC, the $2.9 million represents 80% of the incremental cash received on the loan pool as the increase in the projected cash collections may result in lower future claims to the FDIC. Noninterest expense without the impact of the potential impairment on the FDIC indemnification asset for the December 31, 2012 quarter totaled $32.5 million or a decrease of $533 thousand or 1.6% from the linked quarter. Other real estate owned ("OREO") expenses decreased $1.0 million primarily as a result of final purchase accounting adjustments on the acquired Plantation OREO as well as lower writedowns on other OREO properties. Other loan expense increased $663 thousand or 40.9% due to higher foreclosure-related expenses and the timing and amount of reimbursements from the FDIC. 

In addition to the impact of the Plantation and Liberty transactions and the FDIC impairment amortization, the increase in noninterest expense over the same quarter of the prior year was related to higher professional services ($796 thousand) and other loan expense ($1.2 million), partially offset by lower OREO expenses ($1.5 million). The increase in professional fees was the result of various strategic initiatives implemented during the year. The increase in other loan expense was due to higher foreclosure-related costs as well as higher loan origination and servicing costs due to expanding mortgage origination channels. The decrease in OREO expenses was primarily the effect of fewer write-downs of OREO properties, recognition of more gains on the sales of properties, and less OREO related expense. 

Income Taxes

The income tax expense for the three months ended December 31, 2012 totaled $3.9 million, an increase of $405 thousand or 11.5% over the linked quarter and a decrease of $5.8 million from the same quarter last year. The quarter ended December 31, 2012 included a tax benefit of $931 thousand recorded as a final adjustment to the state deferred tax asset write-off originally recorded in the first quarter of 2012 related to a difference in applicable South Carolina tax laws for banks versus thrifts upon First Federal's conversion to a state-chartered commercial bank. In addition, the variances from both prior periods were the result of the change in pre-tax income. The effective tax rate for the three months ended December 31, 2012 was 33.39%, compared with 34.53% and 38.54% for the quarters ended September 30, 2012 and December 31, 2011 respectively. The decreases in the effective tax rate were principally due to higher tax-exempt income resulting from purchasing bank owned life insurance.

Year-to-Date Results of Operations

First Financial reported net income from continuing operations of $28.8 million for the year ended December 31, 2012, compared with a net loss of $(23.2) million for the year ended December 31, 2011. 

Net interest income

Net interest margin, on a fully tax-equivalent basis, was 4.24% for the year ended December 31, 2012, compared with 3.86% for the same period of 2011. Net interest margin excluding the $3.6 million interest income and $944 thousand in incremental loan accretion on a Cape Fear loan pool as discussed above was 4.09% for the year ended December 31, 2012. The increase was primarily the result of average rates paid on interest-bearing liabilities declining more than interest-earning asset yields declined. Contributing to the decline in interest-bearing liabilities was the replacement of high cost maturing time deposits with lower-cost core deposits from organic growth as well as acquired from Plantation and Liberty. 

Net interest income for the year ended December 31, 2012 totaled $128.3 million, an increase of $11.6 million or 9.9% over the same period of 2011. The increase was principally caused by the higher level of earning assets from the Plantation and Liberty transactions as well as the improved performance on a Cape Fear loan pool.

Provision for loan losses

The provision for loan losses was $20.1 million for the year ended December 31, 2012, compared with $106.9 million for the same period of 2011. The decrease was primarily the result of $65.7 million recorded in 2011 related to the reclassification of loans to loans held for sale, as well as improvement in historical loss trends and credit metrics through December 31, 2012. 

Noninterest income

Noninterest income totaled $76.4 million for the year ended December 31, 2012, an increase of $6.7 million or 9.7% over the same period of 2011. The increase was impacted by the $13.9 million gain on the Plantation acquisition and the $3.9 million gain on the sale or call of investment securities and was partially offset by a $22.7 million gain on the loan pool sold during the December 31, 2011 quarter. In addition, mortgage and other loan income increased $9.3 million and service charges on deposit accounts increased $2.9 million, both due to an increased volume of transactions. 

Noninterest expense

Noninterest expense totaled $136.3 million for the year ended December 31, 2012, an increase of $19.1 million or 16.3% over the same period of 2011. The increase was due in large part to the $8.5 million termination charge from the Federal Home Loan Bank of Atlanta ("FHLB") recorded in the June 30, 2012 quarter related to prepaying certain FHLB advances as part of a balance sheet repositioning strategy. Noninterest expense without the impact of the termination charge from the FHLB increased $10.6 million or 9.0% over 2011. In addition to the impact of the Plantation and Liberty acquisitions, other significant variances included higher occupancy costs ($1.1 million), professional services ($2.0 million), other loan expense ($2.5 million), FDIC indemnification impairment ($4.0 million), and other expenses ($4.3 million), partially offset by lower FDIC insurance and regulatory fees ($646 thousand), and a goodwill impairment in 2011 ($630 thousand). Other expenses increased as a result of new deposit product expenses related to higher customer debit card usage and a $487 thousand post-sale settlement recorded in the September 30, 2012 quarter related to the 2011 sale of one of the insurance agencies. The decrease in FDIC insurance and regulatory fees was due to the new assessment methodology implemented by the FDIC during 2011. The variances in the other categories were essentially caused by the factors discussed above in the quarterly analysis.

Income Taxes

The income tax expense for the year ended December 31, 2012 totaled $19.4 million, an increase of $33.9 million over the prior year. The increase was primarily the result of the change in pre-tax income, a $1.2 million net write-down of the state deferred tax asset during 2012 related to First Federal's charter conversion, and the establishment of a $5.6 million deferred tax liability related to the gain on the Plantation acquisition in the second quarter of 2012. The effective tax rate for the year ended December 31, 2012 was 40.23%, compared with 38.54% for the same period last year. The increase was principally caused by the state deferred tax asset write-down, partially offset by higher tax-exempt income related to bank owned life insurance.

Balance Sheet

Total assets at December 31, 2012 were $3.2 billion, essentially unchanged from September 30, 2012 and an increase of $68.6 million or 2.2% over December 31, 2011. While total assets were stable with September 30, 2012, the decrease of $79.0 million or 3.1% in total loans from September 30, 2012 was substantially offset by increases in interest-bearing deposits with banks and securities available for sale. The increase in total assets over December 31, 2011 was principally due to the Plantation and Liberty acquisitions, partially offset by a decrease in investment securities as part of repositioning the balance sheet during the second quarter of 2012. 

Investment securities at December 31, 2012 totaled $290.3 million, an increase of $13.6 million or 4.9% over September 30, 2012 and a decrease of $167.5 million or 36.6% from December 31, 2011. The increase over September 30, 2012 was due to new security purchases, partially offset by normal principal reductions and cash flows from called securities. The decrease from December 31, 2011 was primarily the result of the sale of $203.6 million of mortgage-backed securities during the June 30, 2012 quarter as part of repositioning the balance sheet, partially offset by new security purchases since the repositioning. 

Total loans at December 31, 2012 decreased $79.0 million or 3.1% from September 30, 2012 and increased $109.9 million or 4.6% over December 31, 2011. The decrease from September 30, 2012 was a result of reductions in residential and commercial loan categories due to several large payoffs and paydowns on commercial real estate and commercial land loans, higher loss claims on the Plantation portfolio, and normal cash flows. The decline in commercial loans is consistent with a strategy to reduce problem and criticized loan balances, both legacy as well as those in acquired portfolios. The increase in total loans over December 31, 2011 was primarily the result of the Plantation and Liberty acquisitions which occurred during the June 30, 2012 quarter, partially offset by normal loan portfolio activity. The marine portfolio continues to increase due to strong demand for First Federal's yacht loan product, which was introduced in early 2012. 

First Federal's credit quality metrics at December 31, 2012 reflect seasonal increases normally experienced in the fourth calendar quarter each year. Delinquent loans at December 31, 2012 totaled $17.1 million, an increase of $5.6 million or 48.6% over September 30, 2012 and a decrease of $1.3 million or 7.0% from December 31, 2011. The increase over the prior quarter was driven by higher delinquent commercial loans, of which several larger loans are in the process of resolution, and higher delinquent home equity and manufactured housing loans due to normal seasonal fluctuations. The decrease from the same quarter last year was primarily the result of continued collection efforts. Total delinquent loans at December 31, 2012 included $1.6 million in loans covered under loss share agreements with the FDIC ("covered loans"), as compared with $1.4 million and $2.3 million at September 30, 2012 and December 31, 2011, respectively. 

Nonperforming assets at December 31, 2012 totaled $67.8 million, a decrease of $2.8 million or 4.0% from September 30, 2012 and essentially unchanged from December 31, 2011. The decrease was primarily due to resolution of several nonperforming residential 1-4 family loans and OREO sales outpacing new foreclosures. These reductions were partially offset by higher nonperforming commercial real estate and commercial land loans resulting primarily from two large relationships and higher nonperforming manufactured housing loans due to seasonal fluctuations. Covered nonperforming loans totaled $8.6 million at December 31, 2012, compared with $10.0 million and $17.5 million at September 30, 2012 and December 31, 2011, respectively. Covered OREO totaled $9.6 million at December 31, 2012, compared with $14.6 million and $7.6 million at September 30, 2012 and December 31, 2011, respectively. 

Classified loans at December 31, 2012 totaled $124.6 million, an increase of $6.7 million or 5.7% over September 30, 2012 and an increase of $9.9 million or 8.7% over December 31, 2011. The increases were in the legacy portfolio due in large part to the effect of the prolonged economic downturn as well as the lengthy cycle to resolve foreclosed residential mortgages in South Carolina. The classified loans acquired from Cape Fear continue to be reduced through resolution or loss claims with the FDIC. Covered classified loans totaled $17.9 million at December 31, 2012, compared with $20.6 million and $33.5 million at September 30, 2012 and December 31, 2011, respectively. Non-covered classified assets to Tier 1 capital plus the allowance for loan losses totaled 30.21% at December 31, 2012, compared with 27.60% and 25.15% at September 30, 2012 and December 31, 2011, respectively. 

Net charge-offs for the quarter ended December 31, 2012 totaled $6.3 million, a decrease of $648 thousand or 9.3% from the prior quarter and a decrease of $1.9 million or 23.3% from the same quarter last year. There were no individually large loans charged-off during the most recent two quarters.

The allowance for loan losses was 1.77% of total loans at December 31, 2012, compared with 1.80% of total loans at September 30, 2012 and 2.24% of total loans at December 31, 2011. The decrease in the allowance ratio from September 30, 2012 was due to the continued improvement in historical loss factors and stable credit metrics since the bulk loan sale in October 2011. In addition, the change in the allowance ratio from December 31, 2011 was affected by acquiring loans in the Plantation and Liberty acquisitions that are carried at fair value and do not currently have an associated allowance. The allowance for loan losses at December 31, 2012 was 1.94% of loans excluding covered loans, and represented 1.1 times coverage of the non-covered nonperforming loans. 

The FDIC indemnification asset, net at December 31, 2012 was $80.3 million, an increase of $5.3 million or 7.0% over September 30, 2012 and an increase of $29.2 million or 57.3% over December 31, 2011. The increase over September 30, 2012 was due to finalizing the purchased accounting related to the Plantation covered loans and normal accretion, partially offset by the receipt of claims reimbursement from the FDIC and amortization of a potential impairment on the FDIC indemnification asset related to the Cape Fear transaction as the performance of the underlying loan pool has been better than originally projected and may result in lower future reimbursements under the loss share agreement. In addition to the normal potential impairment amortization of $563 thousand, First Financial recorded $2.9 million during the December 31, 2012 quarter which, in accordance with its loss share agreement with the FDIC, represents 80% of the cash payments received in excess of First Federal's initial investment. The cash received was recognized in interest income and the potential impairment was recognized in noninterest expense during the current quarter. The increase over December 31, 2011 was the result of establishing a $34.3 million indemnification asset during the second quarter of 2012 to recognize the loss share agreement associated with the Plantation transaction, as well as normal accretion of the existing indemnification asset, partially offset by the receipt of claims reimbursement from the FDIC and the potential impairment amortization.  

Bank owned life insurance totaled $50.6 million at December 31, 2012, essentially unchanged from September 30, 2012 and an increase of $50.6 million over December 31, 2011. The increase was the result of establishing a bank owned life insurance program on certain corporate officers as part of a strategy to offset the costs of existing employee benefit plans. 

Other assets totaled $77.2 million at December 31, 2012, a decrease of $5.8 million or 7.0% from September 30, 2012 and a decrease of $18.8 million or 19.6% from December 31, 2011. The decrease from September 30, 2012 was principally the result of a $3.2 million decline in OREO as sales of properties continue to outpace foreclosures, combined with miscellaneous reductions in other asset categories. The decrease from December 31, 2011 was principally due to current tax adjustments recorded, federal tax refunds received during the twelve month period ended December 31, 2012 and a $1.2 million net write-down of the state deferred tax asset due to First Federal's conversion to a South Carolina state-chartered commercial bank. 

Core deposits, which include checking, savings, and money market accounts, totaled $1.6 billion at December 31, 2012, an increase of $24.2 million or 1.5% over September 30, 2012 and an increase of $412.2 million or 33.5% over December 31, 2011. The increases were primarily the result of the Plantation and Liberty transactions as well as the introduction of new retail deposit products and sales processes during 2012.  Time deposits at December 31, 2012 totaled $951.5 million, a decrease of $45.6 million or 4.6% from September 30, 2012 and a decrease of $56.0 million or 5.6% from December 31, 2011. The decreases were due to a strategy to focus on core transaction accounts and to reduce high rate retail and wholesale time deposits as they matured. 

Advances from the FHLB at December 31, 2012 totaled $233.0 million, a decrease of $20.0 million or 7.9% from September 30, 2012 and a decrease of $328.0 million or 58.5% from December 31, 2011. The decrease from September 30, 2012 was due to repaying short-term funding. The decrease from December 31, 2011 was primarily the effect of prepaying $125.0 million of long-term FHLB advances during the June 30, 2012 quarter as part of repositioning the balance sheet, as well as a shift in funding mix due to the organic growth of core deposits and the acquisition of low-cost deposits from Plantation and Liberty. 

Shareholders' equity at December 31, 2012 was $299.6 million, an increase of $7.1 million or 2.4% over September 30, 2012 and an increase of $22.5 million or 8.1% over December 31, 2011. The increases were due to the effect of net operating results. Both First Financial's and First Federal's regulatory capital ratios are in excess of "well-capitalized" minimums. 

Cash Dividend Declared

On January 24, 2013, First Financial declared a quarterly cash dividend of $12.50 per share on its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, payable on February 15, 2013 to preferred shareholders of record as of February 5, 2013. First Financial also declared a quarterly cash dividend of $0.05 per common share, payable on February 22, 2013 to shareholders of record as of February 8, 2013.

Conference Call

R. Wayne Hall, president and CEO, and Blaise B. Bettendorf, EVP and CFO, will review the quarter's results in a conference call at 9:00 am (ET), January 25, 2013. The live audio webcast is available on First Financial's website at www.firstfinancialholdings.com and will be available for 90 days.

About First Financial

First Financial Holdings, Inc. ("First Financial") (Nasdaq:FFCH) is a Charleston, South Carolina financial services provider with $3.2 billion in total assets as of December 31, 2012. First Financial offers integrated financial solutions, including personal, business, and wealth management services. First Federal Bank ("First Federal"), which was founded in 1934 and is the primary subsidiary of First Financial, serves individuals and businesses throughout coastal South Carolina, Florence, and Greenville, South Carolina, and Wilmington, North Carolina.  First Financial subsidiaries include: First Federal; First Southeast Investor Services, Inc., a registered broker-dealer; and First Southeast 401(k) Fiduciaries, Inc., a registered investment advisor. First Federal is the largest financial institution headquartered in the Charleston, South Carolina metropolitan area and the third largest financial institution headquartered in South Carolina, based on asset size. Additional information about First Financial is available at www.firstfinancialholdings.com .

Discontinued Operations Financial Statement Presentation

As a result of First Financial's sales of its insurance agency subsidiary, First Southeast Insurance Services, Inc., which was completed on June 1, 2011, and its managing general insurance agency subsidiary, Kimbrell Insurance Group, Inc., which was completed on September 30, 2011, the financial condition, operating results, and the gain or loss on the sales, net of transaction costs and taxes, for these subsidiaries have been segregated from the financial condition and operating results of First Financial's continuing operations throughout this release and, as such, are presented as discontinued operations. While all prior periods have been revised retrospectively to align with this treatment, these changes do not affect First Financial's reported consolidated financial condition or operating results for any of the prior periods.

Non-GAAP Financial Information

In addition to results presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release includes non-GAAP financial measures such as the efficiency ratio, the tangible common equity to tangible assets ratio, tangible common book value per share, and pre-tax pre-provision earnings. First Financial believes these non-GAAP financial measures provide additional information that is useful to investors in understanding its underlying performance, business, and performance trends and such measures help facilitate performance comparisons with others in the banking industry as well as period-to-period comparisons. Non-GAAP measures have inherent limitations, are not required to be uniformly applied, and are not audited. Readers should be aware of these limitations and should be cautious to their use of such measures. To mitigate these limitations, First Financial has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that its performance is properly reflected to facilitate consistent period-to-period comparisons. Although management believes the above non-GAAP financial measures enhance investors' understanding of First Financial's business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures. 

Please refer to the Selected Financial Information table and the Non-GAAP Reconciliation table later in this release for additional information.

Forward-Looking Statements 

Statements in this release that are not statements of historical fact, including without limitation, statements that include terms such as "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook," or similar expressions or future conditional verbs such as "may," "will," "should," "would," or "could" constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements regarding First Financial's future financial and operating results, plans, objectives, expectations and intentions involve risks and uncertainties, many of which are beyond First Financial's control or are subject to change. No forward-looking statement is a guarantee of future performance and actual results could differ materially from those anticipated by the forward-looking statements. Factors that could cause or contribute to such differences 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 delinquent and nonperforming loans and charge-offs; changes in First Federal's 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 banking regulators, including the possibility that any such regulatory authority may, among other things, require First Federal to increase its allowance for loan losses, write-down assets, change First Federal's regulatory capital position or affect its ability to borrow funds or maintain or increase deposits, which could adversely affect liquidity and earnings; First Financial's ability to control operating costs and expenses; First Financial's ability to successfully integrate any assets, liabilities, customers, systems, and management personnel acquired or may in the future acquire into its operations and its 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; and regulatory changes, including new or revised rules and regulations implemented pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Other risks are also detailed in First Financial's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K that are filed with the Securities and Exchange Commission ("SEC"), which are available at the SEC's website www.sec.gov . Other factors not currently anticipated may also materially and adversely affect First Financial's results of operations, financial position, and cash flows. There can be no assurance that future results will meet expectations. While First Financial believes that the forward-looking statements in this release are reasonable, the reader should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. First Financial does not undertake, and expressly disclaims any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
 
FIRST FINANCIAL HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
             
  For the Quarters Ended
(dollars in thousands) December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
Average for the Quarter            
Total assets  $ 3,216,018  $ 3,283,512  $ 3,339,705  $ 3,151,385  $ 3,153,286  
Investment securities  283,929  291,223  443,181  490,356  469,925  
Loans  2,602,812  2,673,438  2,619,409  2,420,000  2,428,743  
Allowance for loan losses  45,997  48,329  50,547  52,282  54,178  
Deposits  2,594,112  2,664,207  2,596,642  2,228,613  2,272,035  
Borrowings  282,122  294,796  428,505  609,665  565,114  
Shareholders' equity  296,851  290,047  285,672  277,390  279,066  
             
Performance Metrics            
Return on average assets 1.06% 0.81% 1.51% 0.22% 1.98%  
Return on average shareholders' equity  11.43  9.20  17.62  2.51  22.32  
Net interest margin (FTE) 1  4.69  4.35  4.08  3.84  3.91  
Net interest margin, adjusted (non-GAAP) 2  4.15  4.29  4.08  3.84  3.91  
Efficiency ratio (non-GAAP)  67.69  69.19  66.05  68.87  70.12  
Pre-tax pre-provision earnings (non-GAAP)  $ 16,566  $ 14,716  $ 24,993  $ 12,725  $ 32,783  
             
Capital Ratios            
Equity to assets 9.32% 9.01% 8.69% 8.84% 8.81%  
Tangible common equity to tangible assets (non-GAAP)  7.07  6.77  6.47  6.70  6.67  
Book value per common share  $ 14.20  $ 13.77  $ 13.45  $ 12.89  $ 12.84  
Tangible book value per common share (non-GAAP)  13.71  13.25  12.91  12.75  12.69  
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  16,527  
Tier 1 leverage capital ratio 3 10.54% 10.12% 9.79% 10.22%    
Tier 1 risk-based capital ratio 3  14.89  14.42  13.89  14.81    
Total risk-based capital ratio 3  16.16  15.70  15.16  16.08    
Tier 1 leverage capital ratio (bank only) 4  9.97  9.47  9.06  9.00 8.92%  
Tier 1 risk-based capital ratio (bank only) 4  14.10  13.50  12.86  13.05  12.35  
Total risk-based capital ratio (bank only) 4  15.37  14.78  14.13  14.32  13.61  
             
Asset Quality Metrics            
Allowance for loan losses as a percent of loans 1.77% 1.80% 1.85% 2.16% 2.24%  
Allowance for loan losses as a percent of nonperforming loans  89.30  94.53  97.72  101.75  112.19  
Nonperforming loans as a percent of loans  1.98  1.90  1.90  2.12  2.00  
Nonperforming assets as a percent of loans and other repossessed assets acquired  2.70  2.72  2.94  3.02  2.83  
Nonperforming assets as a percent of total assets  2.11  2.18  2.36  2.28  2.17  
Net loans charged-off as a percent of average loans (annualized)  0.99  1.07  1.04  1.60  1.39  
Net loans charged-off  $ 6,333  $ 6,981  $ 6,673  $ 9,493  $ 8,254  
             
Asset Quality Metrics Excluding Covered Loans            
Allowance for loan losses as a percent of non-covered loans 1.94% 1.99% 2.06% 2.28% 2.39%  
Allowance for loan losses as a percent of non-covered nonperforming loans  108.10  118.82  123.61  148.22  177.35  
Nonperforming loans as a percent of non-covered loans  1.81  1.67  1.67  1.54  1.34  
Nonperforming assets as a percent of non-covered loans and other repossessed assets acquired  2.18  1.97  2.01  2.00  1.91  
Nonperforming assets as a percent of total assets  1.53  1.42  1.45  1.42  1.37  
 
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%.
2  See Non-GAAP Reconciliation table for details.
3 The quarter ended March 31, 2012 represented the first period holding company ratios for First Financial were required to be filed with the Federal Reserve Bank included within FR Y-9C, Consolidated Financial Statements for Bank Holding Companies. The capital ratios presented above for the quarter ended September 30, 2012 at the holding company are considered preliminary until the regulatory report is filed with the Federal Reserve Bank.
4 Capital ratios beginning with the quarter ended March 31, 2012 for First Federal Bank are based on reporting requirements for financial institutions filing FFIEC 041, FDIC Consolidated Reports of Condition and Income (the "Call Report"). Prior period ratios are reported based on superseded regulatory requirements previously issued by the Office of Thrift Supervision.  
   
               
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
               
  Three Months Ended Twelve Months Ended
(in thousands, except per share data) December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31,  2011 December 31, 2012 December 31, 2011
               
INTEREST INCOME              
Interest and fees on loans  $ 38,927  $ 37,104  $ 35,643  $ 32,476  $ 33,460  $ 144,150  $ 136,629
Interest and dividends on investments  2,519  2,771  3,538  3,867  3,859 12,695  17,551
Other  103  139  162  16  293 420  1,646
Total interest income  41,549  40,014  39,343  36,359  37,612  157,265  155,826
INTEREST EXPENSE              
Interest on deposits  3,388  3,747  3,981  3,951  4,554 15,067  22,685
Interest on borrowed money  3,072  3,070  3,649  4,156  4,159 13,947  16,474
Total interest expense  6,460  6,817  7,630  8,107  8,713  29,014  39,159
NET INTEREST INCOME  35,089  33,197  31,713  28,252  28,899  128,251  116,667
Provision for loan losses  4,161  4,533  4,697  6,745  7,445 20,136  106,863
Net interest income after provision for loan losses  30,928  28,664  27,016  21,507  21,454  108,115  9,804
NONINTEREST INCOME              
Service charges on deposit accounts  7,900  7,772  7,558  7,302  7,099 30,532  27,658
Mortgage and other loan income  5,987  4,061  4,372  3,435  2,681 17,855  8,599
Trust and plan administration  1,219  1,117  1,078  1,081  1,192 4,495  4,753
Brokerage fees  810  655  875  664  532 3,004  2,443
Other  1,062  754  699  769  650 3,284  2,642
Other-than-temporary impairment on securities  (144)  (145)  (145)  (69)  (180) (503)  (525)
Gain on acquisition  (661)  ---  14,550  ---  --- 13,889  ---
Gain on sale or call of securities  ---  334  3,543  ---  --- 3,877  1,419
Gain on sold loan pool, net ---  ---  ---  ---  20,796  ---  22,696
Total noninterest income  16,173  14,548  32,530  13,182  32,770  76,433  69,685
NONINTEREST EXPENSE              
Salaries and employee benefits  16,020  15,621  15,212  15,142  14,511 61,995  61,952
Occupancy costs  2,214  2,333  2,933  2,267  2,144 9,747  8,656
Furniture and equipment  2,033  2,132  1,893  1,809  1,870 7,867  7,188
Other real estate owned, net  18  1,030  134  530  1,541 1,712  5,324
FDIC insurance and regulatory fees  646  693  761  994  830 3,094  3,740
Professional services  1,838  1,980  1,875  1,465  1,042 7,158  5,203
Advertising and marketing  714  964  966  652  789 3,296  3,454
Other loan expense  2,283  1,620  1,283  1,351  1,043 6,537  4,057
Intangible amortization  512  512  368  90  90 1,482  334
FDIC indemnification impairment  3,423  563  ---  ---  --- 3,986  ---
Other expense  5,656  5,581  5,300  4,409  5,026 20,946  16,681
FHLB prepayment termination charge  ---  ---  8,525  ---  --- 8,525  ---
Goodwill impairment  --- ---  ---  ---  ---  ---  630
Total noninterest expense  35,357  33,029  39,250  28,709  28,886  136,345  117,219
Income (loss) from continuing operations before taxes  11,744  10,183  20,296  5,980  25,338  48,203  (37,730)
Income tax expense (benefit) from continuing operations  3,921  3,516  7,712  4,241  9,766 19,390  (14,542)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS  7,823  6,667  12,584  1,739  15,572  28,813  (23,188)
Loss from discontinued operations, net of tax  ---  ---  --- --- --- ---  (3,594)
NET INCOME (LOSS)  $ 7,823  $ 6,667  $ 12,584  $ 1,739  $ 15,572  $ 28,813  $ (26,782)
Preferred stock dividends  812  813  812  813  813  3,250  3,250
Accretion on preferred stock discount  163  160  158  156  153  637  600
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS  $ 6,848  $ 5,694  $ 11,614  $ 770  $ 14,606  $ 24,926  $ (30,632)
               
Net income (loss) per common share from continuing operations              
Basic  $ 0.41  $ 0.34  $ 0.70  $ 0.05  $ 0.88  $ 1.51  $ (1.64)
Diluted  0.41  0.34  0.70  0.05  0.88  1.51  (1.64)
               
Net loss per common share from discontinued operations              
Basic $ --- $ --- $ --- $ --- $ --- $ ---  $ (0.22)
Diluted  ---  ---  ---  ---  ---  ---  (0.22)
               
Net income (loss) per common share              
Basic  $ 0.41  $ 0.34  $ 0.70  $ 0.05  $ 0.88  $ 1.51  $ (1.85)
Diluted  0.41  0.34  0.70  0.05  0.88  1.51  (1.85)
               
Average common shares outstanding              
Basic  16,527  16,527  16,527  16,527  16,527  16,527  16,527
Diluted  16,531  16,529  16,528  16,528  16,527  16,529  16,527
               
FIRST FINANCIAL HOLDINGS, INC.
NET INTEREST MARGIN ANALYSIS (Unaudited)
                   
  For the Quarters Ended      
  December 31, 2012 September 30, 2012 Change in
(dollars in thousands) Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Basis Points
Earning assets                  
Interest-bearing deposits with banks  $ 32,711  $ 13 0.17%  $ 19,130  $ 7 0.15%  $ 13,581  $ 6  2 
Investment securities 1  283,929  2,519 3.78  291,223  2,771  4.06   (7,294)  (252)  (28) 
Loans 2  2,602,812  38,927  5.96 3  2,673,438  37,104  5.53 3  (70,626)  1,823  43 
FDIC indemnification asset  75,530  90 0.47  77,641  132  0.68   (2,111)  (42)  (21) 
Total earning assets  2,994,982  41,549  5.55 3   3,061,432  40,014  5.23 3  (66,450)  1,535  32 
Interest-bearing liabilities                  
Deposits  2,205,336  3,388 0.61   2,292,106  3,747  0.65   (86,770)  (359)  (4) 
Borrowings  282,122  3,072 4.33   294,796  3,070  4.15   (12,674)  2  18 
Total interest-bearing liabilities  2,487,458  6,460 1.03   2,586,902  6,817  1.05   (99,444)  (357)  (2) 
                   
Net interest income    $ 35,089      $ 33,197      $ 1,892  
                   
Net interest margin      4.69% 3     4.35% 3      34 
 
Interest income used in the average rate calculation includes the tax equivalent adjustments of $168 thousand and $184 thousand for the quarters ended December 31, 2012 and September 30, 2012, respectively, calculated based on a federal tax rate of 35%.
2 Average loans include loans held for sale and nonaccrual loans. Loan fees, which are not material for any of the periods, have been included in loan interest income for the rate calculation.
3 See Non-GAAP Reconciliation for impact of improved performance of Cape Fear loan pool on net interest margin.
 
         
  For the Twelve Months Ended      
  December 31, 2012 December 31, 2011 Change in
(dollars in thousands) Average Balance Interest Average Rate Average Balance Interest Average Rate Average Balance Interest Basis Points
Earning Assets                  
Interest-bearing deposits with banks  $ 17,674  $ 41 0.23%  $ 10,808  $ 20 0.19%  $ 6,866  $ 21  4 
Investment securities 1  376,684  12,695  3.57   459,573  17,551  3.95   (82,889)  (4,856)  (38) 
Loans 2  2,579,225  144,150  5.59 3  2,510,604  136,629  5.44   68,621  7,521  15 
FDIC indemnification asset  67,987  379  0.56   58,969  1,626  2.76   9,018  (1,247)  (220) 
Total Earning Assets  3,041,570  157,265  5.20 3  3,039,954  155,826  5.15   1,616  1,439  5 
Interest-bearing liabilities                  
Deposits  2,174,451  15,067  0.69   2,081,813  22,685  1.09   92,638  (7,618)  (40) 
Borrowings  403,142  13,947  3.46   577,439  16,474  2.85   (174,297)  (2,527)  61 
Total interest-bearing liabilities  2,577,593  29,014  1.13   2,659,252  39,159  1.47   (81,659)  (10,145)  (34) 
                   
Net interest income    $ 128,251      $ 116,667      $ 11,584  
                   
Net interest margin 3     4.24% 3     3.86%      38 
 
Interest income used in the average rate calculation includes the tax equivalent adjustment of $759 thousand, and $593 thousand for the years ended December 31, 2012, and 2011, respectively, calculated based on a federal tax rate of 35%.
2 Average loans include loans held for sale and nonaccrual loans. Loan fees, which are not material for any of the periods, have been included in loan interest income for the rate calculation.
3 See Non-GAAP Reconciliation for impact of improved performance of Cape Fear loan pool on net interest margin.
 
 
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
           
(in thousands) December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
           
ASSETS          
Cash and due from banks  $ 60,290  $ 50,749  $ 62,831  $ 57,645  $ 61,400
Interest-bearing deposits with banks  57,161  35,668  7,270  5,879  15,275
Total cash and cash equivalents  117,451  86,417  70,101  63,524  76,675
Investment securities          
Securities available for sale, at fair value  253,798  236,048  244,059  442,531  404,550
Securities held to maturity, at amortized cost  15,555  17,331  20,014  19,835  20,486
Nonmarketable securities   20,914  23,254  29,327  37,965  32,694
Total investment securities  290,267  276,633  293,400  500,331  457,730
Loans          
Residential  1,031,533  1,080,406  1,099,474  1,029,176  1,032,134
Commercial  681,119  721,587  758,604  606,468  618,070
Consumer  782,672  772,376  774,405  719,923  735,253
Total loans  2,495,324  2,574,369  2,632,483  2,355,567  2,385,457
Less: Allowance for loan losses  44,179  46,351  48,799  50,776  53,524
Net loans  2,451,145  2,528,018  2,583,684  2,304,791  2,331,933
Loans held for sale  55,201  53,761  72,402  52,339  48,303
FDIC indemnification asset, net  80,268  75,017  77,311  46,272  51,021
Premises and equipment, net  85,378  83,916  85,285  83,146  82,907
Bank owned life insurance  50,624  50,241  10,000  ---  ---
Other intangible assets, net  8,025  8,478  8,931  2,310  2,401
Other assets  77,199  83,006  103,060  92,825  95,994
Total assets  $ 3,215,558  $ 3,245,487  $ 3,304,174  $ 3,145,538  $ 3,146,964
           
LIABILITIES          
Deposits          
Noninterest-bearing checking  $ 388,259  $ 382,077  $ 359,352  $ 307,750  $ 279,310
Interest-bearing checking  511,647  507,262  502,731  435,320  429,907
Savings and money market  743,970  730,365  731,428  563,344  522,496
Retail time deposits  845,391  869,544  934,245  753,481  791,544
Wholesale time deposits  106,066  127,509  175,446  204,594  215,941
Total deposits  2,595,333  2,616,757  2,703,202  2,264,489  2,239,198
Advances from FHLB  233,000  253,000  233,000  533,000  561,000
Long-term debt  47,204  47,204  47,204  47,204  47,204
Other liabilities  40,380  36,026  33,504  22,802  22,384
Total liabilities  2,915,917  2,952,987  3,016,910  2,867,495  2,869,786
           
SHAREHOLDERS' EQUITY          
Preferred stock  1  1  1  1  1
Common stock  215  215  215  215  215
Additional paid-in capital  196,819  196,612  196,409  196,204  196,002
Treasury stock, at cost  (103,563)  (103,563)  (103,563)  (103,563)  (103,563)
Retained earnings  208,853  202,832  198,100  187,311  187,367
Accumulated other comprehensive loss  (2,684)  (3,597)  (3,898)  (2,125)  (2,844)
Total shareholders' equity  299,641  292,500  287,264  278,043  277,178
Total liabilities and shareholders' equity  $ 3,215,558  $ 3,245,487  $ 3,304,174  $ 3,145,538  $ 3,146,964
 
 
 
FIRST FINANCIAL HOLDINGS, INC.
DELINQUENT LOANS
                     
  December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
(30-89 days past due) (dollars in thousands)   $   % of Portfolio   $   % of Portfolio    $   % of Portfolio   $   % of Portfolio   $   % of Portfolio 
Residential loans                    
Residential 1-4 family  $ 2,800 0.29%  $ 2,361 0.23%  $ 1,244 0.12%  $ 1,889 0.19%  $ 2,986 0.31%
Residential land  47  0.09   157  0.30   475  0.85   123  0.30   561  1.35 
Total residential loans  2,847  0.28   2,518  0.23   1,719  0.16   2,012  0.20   3,547  0.34 
                     
Commercial loans                    
Commercial business  847  0.72   582  0.46   903  0.84   1,677  1.90   908  1.08 
Commercial real estate  3,492  0.71   2,397  0.46   3,014  0.54   3,065  0.69   3,514  0.77 
Commercial construction  --- ---   --- ---   --- ---  --- ---   --- --- 
Commercial land  1,573  2.24   318  0.43   675  0.87   2,271  4.15   1,185  1.94 
Total commercial loans  5,912  0.87   3,297  0.46   4,592  0.61   7,013  1.16   5,607  0.91 
                     
Consumer loans                    
Home equity  4,414  1.15   2,204  0.58   2,017  0.52   3,315  0.95   4,525  1.27 
Manufactured housing  3,241  1.16   2,506  0.90   1,835  0.66   1,502  0.54   3,267  1.19 
Marine  284  0.37   227  0.33   300  0.50   358  0.71   597  1.14 
Other consumer  384  0.91   742  1.64   626  1.26   445  0.97   831  1.66 
Total consumer loans  8,323  1.06   5,679  0.74   4,778  0.62   5,620  0.78   9,220  1.25 
Total delinquent loans  $ 17,082 0.68%  $ 11,494 0.45%  $ 11,089 0.42%  $ 14,645 0.62%  $ 18,374 0.77%
 
                     
 
FIRST FINANCIAL HOLDINGS, INC.
 NONPERFORMING ASSETS 
                     
  December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
(dollars in thousands)  $   % of Portfolio   $   % of Portfolio    $   % of Portfolio   $   % of Portfolio   $   % of Portfolio 
Residential loans                    
Residential 1-4 family  $ 7,137 0.75%  $ 10,881 1.08%  $ 10,460 1.02%  $ 6,649 0.68%  $ 4,977 0.51%
Residential land  785  1.49   1,558  2.96   1,423  2.54   1,398  3.43   1,448  3.48 
Total residential loans  7,922  0.77   12,439  1.15   11,883  1.08   8,047  0.78   6,425  0.62 
                     
Commercial loans                    
Commercial business  1,460  1.23   1,407  1.12   1,198  1.11   1,931  2.19   3,666  4.37 
Commercial real estate  18,386  3.74   15,853  3.05   15,918  2.87   18,474  4.13   17,127  3.75 
Commercial construction  247  23.21   247  13.71   261  1.52   261  1.60   605  3.67 
Commercial land  4,058  5.79   2,990  4.02   4,577  5.87   5,240  9.56   5,232  8.54 
Total commercial loans  24,151  3.55   20,497  2.84   21,954  2.89   25,906  4.27   26,630  4.31 
                     
Consumer loans                    
Home equity  10,049  2.61   10,145  2.67   10,636  2.74   9,779  2.81   8,192  2.29 
Manufactured housing  3,355  1.20   2,221  0.80   2,197  0.79   2,648  0.96   3,461  1.26 
Marine  139  0.18   90  0.13   29  0.05   63  0.12   246  0.47 
Other consumer  275  0.65   228  0.50   306  0.62   131  0.29   224  0.45 
Total consumer loans  13,818  1.77   12,684  1.64   13,168  1.70   12,621  1.75   12,123  1.65 
Total nonaccrual loans  45,891  1.84   45,620  1.77   47,005  1.79   46,574  1.98   45,178  1.89 
Loans 90+ days still accruing  43    74    75    51    121  
Restructured loans, still accruing  3,536    3,340    2,857    3,276    2,411  
Total nonperforming loans  49,470 1.98%  49,034 1.90%  49,937 1.90%  49,901 2.12%  47,710 2.00%
Nonperforming loans held for sale  ---    ---    ---    ---    ---  
Other repossessed assets acquired  18,338    21,579    28,191    21,818    20,487  
Total nonperforming assets  $ 67,808    $ 70,613    $ 78,128    $ 71,719    $ 68,197  
 
                     
 
FIRST FINANCIAL HOLDINGS, INC.
NET CHARGE-OFFS 
                     
  December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
(dollars in thousands)   $   % of Portfolio*   $   % of Portfolio*   $   % of Portfolio*    $   % of Portfolio*   $   % of Portfolio* 
Residential loans                    
Residential 1-4 family  $ 2,756 1.10%  $ 294 0.12%  $ 1,070 0.42%  $ 507 0.21%  $ 391 0.16%
Residential land  257  1.89   403  2.91   78  0.59   701  6.75   532  5.31 
Total residential loans  3,013  1.13   697  0.26   1,148  0.42   1,208  0.47   923  0.37 
                     
Commercial loans                    
Commercial business  126  0.42   924  3.22   334  1.34   825  3.60   640  3.22 
Commercial real estate  588  0.46   1,994  1.47   714  0.54   1,462  1.30   1,417  1.22 
Commercial construction  (1)  (0.41)  11  0.56   (2)  (0.05)  (2) (0.05)  (3)  (0.07)
Commercial land  89  0.48   1,037  5.43   723  4.00   1,439  9.87   804  4.94 
Total commercial loans  802  0.46   3,966  2.14   1,769  0.99   3,724  2.41   2,858  1.83 
                     
Consumer loans                    
Home equity  1,343  1.44   1,125  1.17   2,580  2.71   2,264  2.57   2,955  3.26 
Manufactured housing  899  1.29   778  1.12   666  0.97   1,467  2.13   845  1.23 
Marine  (19)  (0.11)  146  0.88   82  0.60   361  2.83   142  1.05 
Other consumer  295  2.51   269  2.22   428  3.48   469  3.90   531  4.09 
Total consumer loans  2,518  1.31   2,318  1.20   3,756  1.98   4,561  2.51   4,473  2.41 
Total net charge-offs  $ 6,333 0.99%  $ 6,981 1.07%  $ 6,673 1.04%  $ 9,493 1.60%  $ 8,254 1.39%
   
 *Represents an annualized rate                  
           
 
FIRST FINANCIAL HOLDINGS, INC.
NON-GAAP RECONCILIATION (Unaudited)
           
  As of and for the Quarters Ended
(dollars in thousands, except per share data) December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011
Efficiency Ratio from Continuing Operations          
Net interest income (A)  $ 35,089  $ 33,197  $ 31,713  $ 28,252  $ 28,899
Taxable equivalent adjustment (B)  168  184  226  182  145
Noninterest income (C)  16,173  14,548  32,530  13,182  32,770
Gain on acquisition (D)  (661)  --  14,550  --  --
Net securities gains (losses) (E)  (144)  189  3,398  (69)  (180)
Gain on sold loan pool, net (F)  --  --  --  --  20,796
Noninterest expense (G)  35,357  33,029  39,250  28,709  28,886
FHLB prepayment termination charge (H)  --  --  8,525  --  --
Efficiency Ratio: (G-H)/(A+B+C-D-E-F) (non-GAAP) 67.69% 69.19% 66.05% 68.87% 70.12%
           
Tangible Assets and Tangible Common Equity          
Total assets  $ 3,215,558  $ 3,245,487  $ 3,304,174  $ 3,145,538  $ 3,146,964
Other intangible assets, net  (8,025)  (8,478)  (8,931)  (2,310)  (2,401)
Tangible assets (non-GAAP)  $ 3,207,533  $ 3,237,009  $ 3,295,243  $ 3,143,228  $ 3,144,563
           
Total shareholders' equity  $ 299,641  $ 292,500  $ 287,264  $ 278,043  $ 277,178
Preferred stock  (65,000)  (65,000)  (65,000)  (65,000)  (65,000)
Other intangible assets, net  (8,025)  (8,478)  (8,931)  (2,310)  (2,401)
Tangible common equity (non-GAAP)  $ 226,616  $ 219,022  $ 213,333  $ 210,733  $ 209,777
           
Shares outstanding, end of period (000s)  16,527   16,527   16,527   16,527   16,527 
           
Tangible common equity to tangible assets (non-GAAP) 7.07% 6.77% 6.47% 6.70% 6.67%
Book value per common share  $ 14.20  $ 13.77  $ 13.45  $ 12.89  $ 12.84
Tangible book value per common share (non-GAAP)  13.71  13.25  12.91  12.75  12.69
           
Pre-tax Pre-provision Earnings from Continuing Operations          
Income before income taxes  $ 11,744  $ 10,183  $ 20,296  $ 5,980  $ 25,338
Provision for loan losses  4,161  4,533  4,697  6,745  7,445
Pre-tax pre-provision earnings (non-GAAP)  $ 15,905  $ 14,716  $ 24,993  $ 12,725  $ 32,783
           
Impact of Improved Performance of Cape Fear Loan Pool          
Net interest income  $ 35,089  $ 33,197  $ 31,713  $ 28,252  $ 28,899
Tax equivalent adjustment  168  184  226  182  145
Net interest income on taxable equivalent basis (A)  35,257  33,381  31,939  28,434  29,044
Incremental loan accretion  (472)  (472)  --   --   -- 
Interest income recognized on cash received in excess of initial investment  (3,576)  --   --   --   -- 
Net interest income, adjusted (non-GAAP) (B)  $ 31,209  $ 32,909  $ 31,939  $ 28,434  $ 29,044
           
Average earning assets (C)  $ 2,994,982  $ 3,061,432  $ 3,142,597  $ 2,967,614  $ 2,959,580
Net interest margin (A)/(C) 4.69%  4.35  4.08  3.84  3.91
Net interest margin, adjusted (B)/(C) (non-GAAP) 4.15%  4.29  4.08  3.84  3.91
 
 
CONTACT: First Financial Holdings, Inc.         Blaise B. Bettendorf         Executive Vice President and Chief Financial Officer         (843) 529-5931 or (843) 529-5456         investorrelations@firstfinancialholdings.com         bbettendorf@firstfinancialholdings.com

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