Published:
First Financial Holdings, Inc. Reports Third Quarter Earnings
CHARLESTON, S.C., July 17 /PRNewswire-FirstCall/ -- First Financial
Holdings, Inc. ("Company") (Nasdaq: FFCH) today reported net income for the
third quarter of its fiscal year ending September 30, 2008. Net income for
the quarter ended June 30, 2008 was $5.9 million and decreased $596 thousand
or 9.2% from the comparative quarter ended June 30, 2007. Basic and diluted
earnings per share totaled $0.51 for the current quarter, compared to $0.55
per basic share and $0.54 per diluted share, respectively for the quarter
ended June 30, 2007. Net income and diluted earnings per share for the nine
months ended June 30, 2008 totaled $16.3 million, or $1.40, compared with
$19.9 million, or $1.63 per diluted share, for the nine months ended June 30,
2007.
President and Chief Executive Officer A. Thomas Hood commented, "In the
current economic environment, we are very pleased with our results this
quarter. While our net income and earnings per share were 9.2% lower than the
comparable quarter and 21.6% lower than the linked quarter, our net interest
margin was 3.56% for the quarter ended June 30, 2008 compared to a net
interest margin of 3.40% for the quarter ended June 30, 2007. Compared with
the most recent quarter, the net interest margin increased by 21 basis points
from a net interest margin of 3.35% for the quarter ended March 31, 2008.
While lower funding costs continued this quarter, we expect continued pressure
on our net interest margin in future quarters as most of our deposit base has
repriced and we are seeing increased competition for deposits in the markets
we serve. Net interest income for the quarter ended June 30, 2008 was $24.0
million, increasing from $22.1 million or 8.4% for the linked quarter ended
March 31, 2008.
Mortgage banking income increased by $550 thousand or 43.0% from the
comparative quarter ended June 30, 2007. We continue to provide our customers
with a variety of options for real estate finance. We have had strong
revenues from mortgage origination and sales during the first nine months of
the fiscal year.
The Company recognized a provision for loan losses of $4.9 million for the
quarter ended June 30, 2008 compared to $3.6 million for the quarter ended
March 31, 2008, and $1.4 million for the quarter ended June 30, 2007. The
increase in the provision on both a linked and comparative quarter basis is
attributable to increased non-performing loans, charge offs and an assessment
of current economic conditions in our markets. The Company increased its
allowance for loan losses as a percent of total loans from 80 basis points
during the quarter ended March 31, 2008 to 92 basis points during the quarter
ended June 30, 2008. Problem assets, which include non-accrual loans,
accruing loans more than 90 days past due and real estate owned, as a
percentage of total assets were 0.76% at June 30, 2008 compared with 0.28% at
June 30, 2007 and 0.60% at March 31, 2008. Problem Assets increases in the
linked quarter were in the Construction and Single Family categories. The
Company's loan loss reserve coverage of non-performing loans was 126.3% at
June 30, 2008 compared to 261.9% at June 30, 2007 and 138.8% at March 31,
2008.
Hood noted, "We are very vigorously monitoring credit trends and specific
loans in our loan portfolio. While the Company is experiencing higher levels
of non-performing loans and net loan charge-offs, our comparisons are to
historical lows. We remain very confident in our underwriting. Annualized
net loan charge-offs as a percentage of net loans totaled 0.32% for the
quarter ended June 30, 2008 compared with 0.17% for the comparable quarter one
year ago and 0.43% for the quarter ended March 31, 2008. During the June
quarter, we experienced decreases in commercial and real estate charge-offs
while consumer charge-offs increased. Specifically, increased consumer
charge-offs were in the credit card and manufactured housing categories. Our
total exposure to 1-4 family construction loans at June 30, 2008 was
approximately $75 million."
Non-interest income had an especially strong quarter with the addition of
Somers-Pardue and increased revenues in each major category. Total non-
interest revenues were $16.4 million for the third quarter of fiscal 2008, an
increase of $2.9 million from $13.5 million for the quarter ended June 30,
2007. This increase is primarily attributable to increases in insurance
commissions, mortgage banking operations and service charges and fees on
deposit accounts. Total revenues, defined as net interest income plus total
other income, excluding gains on sales of investments and gains on disposition
of assets, increased to $40.4 million, for the quarter ended June 30, 2008, an
increase of $6.0 million, or 17.4%, from $34.4 million during the comparable
quarter ended June 30, 2007.
Total non-interest expenses increased by $2.9 million or 12.7%, to $25.7
million for the quarter ended June 30, 2008 compared to $22.8 million for the
quarter ended June 30, 2007. Salary and employee benefits costs increased
this quarter as a result of the acquisition of the operations of The Somers-
Pardue Agency, Inc. and to increased healthcare costs. We continue to have
higher occupancy expenses as a result of our recently completed renovations.
We expect that leases on these properties will reduce occupancy costs in
future quarters. Several new leases have been executed and occupancy is
expected during the first quarter of fiscal 2009. Marketing expenses also
increased slightly this quarter compared to the quarter ended March 31, 2008.
Hood noted, "Two additional in-store sales centers are expected to open
late 2008 and we are relocating our Shoppers Port branch on Highway 17 South
inCharleston. InFlorence, South Carolina we closed our Second Loop branch
and we will be relocating our South Park branch into a new facility later this
year. Our in-store operations produce many new deposit account relationships.
Our overall checking account growth rate during fiscal 2008 is 6.4% while our
in-store growth rate on demand accounts is 22%. Our in-store locations now
represent 25% of total sales offices."
Hood commented, "The housing market outlook remains challenging and we are
continuing to see slowness in the housing market as a result of increased
inventories of residential units and fewer housing starts. We expect that our
markets will perform better than other markets in the southeast. The vast
majority of our loans finance properties in coastalSouth Carolina. Coastal
markets in North andSouth Carolina continue to have lower levels of
unemployment and better job growth. Recent (May 2008) unemployment rates in
our primary market, the Charleston MSA, were 4.9% compared toSouth Carolina
at 6.5% and the U.S. at 5.5%"
Hood continued, "While current market conditions continue to present many
challenges for all financial institutions, we are committed to finding the
best financial solutions for our customers and the best results for our
shareholders. Our Board of Directors, officers and employees remain focused
on achieving our financial and operational goals for fiscal 2008," Hood
concluded.
As of June 30, 2008, First Financial's total assets were $2.9 billion,
loans receivable totaled $2.3 billion and deposits were $1.9 billion.
Stockholders' equity was $188.0 million and book value per common share
totaled $16.10 at June 30, 2008. First Federal's capital ratio (i.e., equity
divided by assets) was 7.0% at June 30, 2008, compared to 7.0% and 7.4% at
March 31, 2008 and June 30, 2007, respectively. Tangible equity to assets was
7.2% at June 30, 2008, compared to 7.1% and 7.5% at March 31, 2008 and June
30, 2007, respectively. As of June 30, 2008, First Federal remained
categorized "well capitalized" under regulatory standards.
First Financial is the holding company for First Federal Savings and Loan
Association ofCharleston ("First Federal"), which operates 57 offices located
in theCharleston metropolitan area,Horry,Georgetown,Florence andBeaufort
counties inSouth Carolina andBrunswick County in coastalNorth Carolina.
The Company also provides insurance, brokerage and trust services through
First Southeast Insurance Services, The Kimbrell Insurance Group, First
Southeast Investor Services and First Southeast Fiduciary and Trust Services.
NOTE: A. Thomas Hood, President and CEO of the Company, and R. Wayne
Hall, Executive Vice President and CFO, will discuss these results in a
conference call at 2:00 PM (EDT), July 17, 2008. 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 forward-looking statements due to a wide
range of factors including, but not limited to, the general business
environment, general economic conditions nationally and in theState of South
Carolina, interest rates, theSouth Carolina real estate market, the demand
for mortgage loans, the credit risk of lending activities, including changes
in the level of and trend of loan delinquencies and charge-offs, results of
examinations by our banking regulators, 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, including the Annual Report on Form 10-K for the fiscal year ended
September 30, 2007. Accordingly, these factors should be considered in
evaluating the forward-looking statements, and undue reliance should not be
placed on these statements.
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, Vice
President-Investor Relations and Corporate Secretary, (843) 529-5931.
FIRST FINANCIAL HOLDINGS, INC.
Unaudited Consolidated Financial Highlights
(in thousands, except share data)
Three Months Ended Nine Months Ended
06/30/08 06/30/07 03/31/08 06/30/08 06/30/07
Statements of Income
Interest income $43,229 $42,540 $43,810 $131,401 $125,113
Interest expense 19,220 21,559 21,669 64,192 62,975
Net interest income 24,009 20,981 22,141 67,209 62,138
Provision for loan losses (4,907) (1,390) (3,567) (11,721) (3,314)
Net interest income after
provision 19,102 19,591 18,574 55,488 58,824
Other income
Net gain on sale of
investments and
mortgage-backed
securities 4 645 750 266
Brokerage fees 665 571 906 2,251 1,887
Commissions on
insurance 7,136 5,083 6,532 17,705 15,982
Other agency income 296 321 237 783 893
Service charges and
fees on deposit
accounts 5,912 5,720 5,780 17,769 15,748
Mortgage banking
income 1,828 1,278 2,961 6,638 3,333
Gains on disposition
of assets 43 115 59 139 190
Other 504 407 681 1,794 1,544
Total other
income 16,388 13,495 17,801 47,829 39,843
Other expenses
Salaries and employee
benefits 16,625 14,484 15,963 50,596 44,497
Occupancy costs 2,016 1,601 2,012 6,062 4,822
Marketing 685 751 570 1,949 1,740
Furniture and
equipment expense 1,445 1,362 1,374 4,245 3,890
Other 4,944 4,580 4,143 13,565 12,666
Total other
expenses 25,715 22,778 24,062 76,417 67,615
Income before income taxes 9,775 10,308 12,313 26,900 31,052
Provision for income taxes 3,873 3,810 4,783 10,571 11,171
Net income 5,902 6,498 7,530 16,329 19,881
Earnings per common share:
Basic 0.51 0.55 0.65 1.40 1.66
Diluted 0.51 0.54 0.64 1.40 1.63
Average shares
outstanding 11,668 11,886 11,659 11,658 11,992
Average diluted shares
outstanding 11,679 12,032 11,675 11,694 12,172
Ratios:
Return on average
equity 12.60% 13.75% 16.11% 11.65% 14.14%
Return on average
assets 0.81% 0.97% 1.06% 0.77% 0.99%
Net interest margin 3.56% 3.40% 3.35% 3.39% 3.38%
Total other expense/
average assets 3.54% 3.40% 3.37% 3.59% 3.38%
Efficiency ratio (1) 63.47% 65.90% 61.39% 65.06% 66.28%
Net charge-offs/loans,
annualized 0.32% 0.17% 0.43% 0.37% 0.17%
(1) Excludes from income - (losses) gains on sales of securities, net real
estate operations, gains on disposition of assets; excludes from expenses -
non-recurring compensation expenses.
Please Note: Certain prior period amounts have been reclassified to
conform to current period presentation.
FIRST FINANCIAL HOLDINGS, INC.
Unaudited Consolidated Financial Highlights
(in thousands, except share data)
06/30/08 06/30/07 03/31/08
Statements of Financial Condition
Assets
Cash and cash equivalents $72,735 $101,011 $77,722
Investments 61,760 50,463 64,642
Mortgage-backed securities 353,257 264,655 370,848
Loans receivable, net 2,268,484 2,122,228 2,232,058
Office properties, net 77,673 66,140 76,708
Real estate owned 5,442 1,560 4,310
Intangible assets 40,401 22,712 22,420
Mortgage servicing rights 12,754 13,660 10,685
Other assets 31,522 28,505 29,111
Total Assets 2,924,028 2,670,934 2,888,504
Liabilities
Deposits 1,865,261 1,885,677 1,875,099
Advances from FHLB 747,000 435,000 719,000
Other borrowings 69,204 97,258 52,204
Other liabilities 54,585 64,240 55,575
Total Liabilities 2,736,050 2,482,175 2,701,878
Stockholders' equity
Stockholders' equity 298,835 286,761 295,545
Treasury stock (103,274) (96,149) (103,268)
Accumulated other
comprehensive loss (7,583) (1,853) (5,651)
Total stockholders' equity 187,978 188,759 186,626
Total liabilities and
stockholders' equity 2,924,028 2,670,934 2,888,504
Stockholders' equity/assets 6.43% 7.07% 6.46%
Common shares outstanding 11,674 11,841 11,663
Book value per share $16.10 $15.94 $16.00
06/30/08 06/30/07 03/31/08
Credit quality-quarterly results
Total reserves for loan losses $21,023 $15,188 $17,901
Loan loss reserves / loans 0.92% 0.71% 0.80%
Reserves/non-performing loans 126.34% 261.86% 138.78%
Provision for losses $4,907 $1,390 $3,567
Net loan charge-offs $1,785 $943 $2,358
Problem assets
Non-accrual loans $16,562 $5,710 $12,800
Accruing loans 90 days or more
past due 79 90 99
REO through foreclosure 5,442 1,560 4,310
Total $22,083 $7,360 $17,209
As a percent of total assets 0.76% 0.28% 0.60%
SOURCE First Financial Holdings, Inc.
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