2008-07-17 07:00:00
CHARLESTON, S.C., July 17 /EMWNews/ -- 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 in Charleston. In Florence, 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 coastal South Carolina. Coastal markets in North and South 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 to South 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 of Charleston ("First Federal"), which operates 57 offices located in the Charleston metropolitan area, Horry, Georgetown, Florence and Beaufort counties in South Carolina and Brunswick County in coastal North 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 http://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 the State of South Carolina, interest rates, the South 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 http://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%
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