First Financial Holdings, Inc. Reports Strong Second Quarter Results

CHARLESTON, S.C., April 17 /PRNewswire-FirstCall/ -- First Financial
Holdings, Inc. ("Company") (Nasdaq: FFCH) today reported net income for the
second quarter of its fiscal year ending September 30, 2008. Net income for
the quarter ended March 31, 2008 remained unchanged at $7.5 million compared
with the quarter ended March 31, 2007. Basic and diluted earnings per share
totaled $0.65 and $0.64, respectively, for the current quarter, compared to
$0.62 per diluted share and $.63 per basic share for the quarter ended March
31, 2007. Net income and diluted earnings per share for the six months ended
March 31, 2008 totaled $10.4 million, or $0.89, compared with $13.4 million,
or $1.09 per diluted share, for the six months ended March 31, 2007.
President and Chief Executive Officer A. Thomas Hood commented, "We are
very pleased with our results this quarter. Net income and earnings per share
were consistent with the comparable quarter and increased 160% over the linked
quarter. Net interest income for the quarter ended March 31, 2008 was $22.1
million, increasing from $21.1 million or 5.1% for the linked quarter ended
December 31, 2007. Mortgage banking income increased by $2.2 million or
285.6% from the comparative quarter ended March 31, 2007. Because of the
strategies we have in place to protect the value of our capitalized mortgage
servicing asset from interest rate risk and the increased demand for mortgage
loans and refinancing of existing mortgage loans, we had a significant
increase in our mortgage banking income for the quarter ended March 31, 2008.
The March quarter also typically results in seasonally higher revenues
from our insurance subsidiary, First Southeast Insurance Services. Insurance
revenues for the quarter ended March 31, 2008 were $6.5 million and met our
expectation."
"The net interest margin was 3.35% for the quarter ended March 31, 2008
compared to a net interest margin of 3.38% for the quarter ended March 31,
2007. Compared with the most recent quarter, the net interest margin
increased by 12 basis points from a net interest margin of 3.23% for the
quarter ended December 31, 2007. We have been able to lower funding costs as
a result of recent declines in the Fed Funds rate and similar declines in
deposit rates in our markets."
The Company recognized a loan loss provision of $3.6 million for the
quarter ended March 31, 2008 compared to $3.2 million for the quarter ended
December 31, 2007, and $1.1 million for the quarter ended March 31, 2007. The
increase in the provision on both a linked and comparative quarter basis is
attributable to increased charge offs and the current economic slow down. It
should be noted that we increased our loan loss reserve as a percent of total
loans from 76 basis points during the quarter ended December 31, 2007 to 80
basis points during the quarter ended March 31, 2008. Problem assets, which
include problem loans as well as real estate owned, as a percentage of total
assets were 0.60% at March 31, 2008 compared with 0.24% at March 31, 2007 and
0.46% at December 31, 2007. The Company's loan loss reserve coverage of non-
performing loans was 138.8% at March 31, 2008 compared to 289.1% at March 31,
2007 and 163.6% at December 31, 2007.
Hood noted, "We continue to carefully analyze and monitor credit trends in
our loan portfolio. The Company continues to experience higher levels of non-
performing loans and net loan charge-offs. Annualized net loan charge-offs as
a percentage of net loans totaled 0.43% for the quarter ended March 31, 2008
compared with 0.20% for the comparable quarter one year ago and 0.36% for the
quarter ended December 31, 2007. We also experienced an increase in our home
equity loan charge-offs during this quarter."
The Company's operating results for the second quarter of 2008 were
favorably affected by a $645 thousand pre-tax gain from the redemption of VISA
Inc. Class B common stock in connection with its initial public offering in
March 2008, and the reversal of a pre-tax charge of $260 thousand recognized
in the first quarter of fiscal 2008 related to a reserve established for the
Company's share of the VISA Inc. litigation settlements. We reversed the
litigation settlement reserve as a result of VISA Inc. establishing an escrow
account to satisfy this obligation as part of its initial public offering.
The net after-tax effect of these two VISA Inc. items increased net income for
the second quarter of 2008 by $552 thousand.
Non-interest income totaled $17.8 million for the second quarter of fiscal
2008, an increase of $3.1 million from $14.7 million for the quarter ended
March 31, 2007. Again, this increase during the quarter is primarily
attributable to increases in 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 $39.2 million, for the quarter ended March
31, 2008, an increase of $4.4 million, or 12.6%, from $34.8 million during the
comparable quarter ended March 31, 2007.
Total non-interest expenses, net of the reversal of VISA litigation
expenses discussed earlier, decreased by $2.1 million, or 7.8%, to $24.3
million for the quarter ended March 31, 2008 compared to $26.4 million for the
quarter ended December 31, 2007. While the effects of our early retirement
program have reduced salary and employee benefits costs, we continue to see
higher occupancy expenses related to our on-going property renovations. This
renovation work is nearly complete and we anticipate starting to lease the
unoccupied space in the near future.
Hood continued, "One of our ongoing goals is to increase non-interest
revenues and to improve our operating efficiency. With the recently completed
early retirement program announced in the quarter ending December 31, 2007, we
are seeing positive results in our efficiency trends. We are also working on
technology initiatives such as merchant capture systems and document imaging
systems that will further improve our efficiency."
"In-store expansion and diversification continued with the February 2008
opening of our 14th in-store sales center in the Lowe's Food Store in Murrells
Inlet, South Carolina. Two additional in-store sales centers are expected to
open in late fiscal 2008. In order to take advantage of emerging markets, we
are relocating our Shoppers Port branch on Highway 17 South in Charleston.
Likewise, in Florence, South Carolina we are consolidating our Second Loop and
South Park branches into one office near our current South Park location."
Hood continued, "Last week, we announced that our subsidiary, First
Southeast Insurance Services, Inc. acquired the operations of The Somers-
Pardue Agency, Inc., a Burlington, North Carolina-based independent insurance
agency. We are very excited to have their team of professionals join the
First Financial family. They will be strategic partners in our insurance and
financial services businesses, contributing further to the diversification of
our non-interest revenues. First Southeast Insurance now represents more than
40 major insurance companies offering an extensive group of personal and
business insurance products."
"While current market conditions continue to present many challenges, we
are dedicated to finding the best financial solutions for our customers and
the best results for our shareholders. Our Board of Directors, officers and
employees are very focused on achieving financial and operational goals for
fiscal 2008," Hood concluded.
As of March 31, 2008, First Financial's total assets were $2.9 billion,
loans receivable totaled $2.2 billion and deposits were $1.9 billion.
Stockholders' equity was $186.6 million and book value per common share
totaled $16.00 at March 31, 2008.
First Financial is the holding company for First Federal Savings and Loan
Association of Charleston, 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 (ET), April 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 the State of South
Carolina, interest rates, the South Carolina real estate market, the demand
for mortgage loans, 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 Six Months Ended
03/31/08 03/31/07 12/31/07 03/31/08 03/31/07

Statements of Income
Interest income $43,810 $41,388 $44,363 $88,172 $82,573
Interest expense 21,669 20,933 23,303 44,972 41,416
Net interest income 22,141 20,455 21,060 43,200 41,157
Provision for loan losses (3,567) (1,071) (3,248) (6,814) (1,924)
Net interest income after
provision 18,574 19,384 17,812 36,386 39,233
Other income
Net gain on sale of
investments and
mortgage-backed
securities 645 266 100 746 266
Brokerage fees 906 709 680 1,586 1,316
Commissions on
insurance 6,532 6,970 4,037 10,569 10,900
Other agency income 237 325 250 487 572
Service charges and
fees on deposit
accounts 5,780 4,938 6,077 11,857 10,028
Mortgage banking
income 2,961 768 1,849 4,810 2,055
Gains on disposition
of assets 59 19 36 96 75
Other 681 689 611 1,290 1,136
Total other
income 17,801 14,684 13,640 31,441 26,348
Other expenses
Salaries and employee
benefits 15,963 14,840 18,007 33,971 30,013
Occupancy costs 2,012 1,566 2,034 4,046 3,221
Marketing 570 562 694 1,264 989
Furniture and
equipment expense 1,481 1,380 1,532 3,013 2,753
Other 4,036 3,978 4,373 8,408 7,861
Total other
expenses 24,062 22,326 26,640 50,702 44,837
Income before income taxes 12,313 11,742 4,812 17,125 20,744
Provision for income taxes 4,783 4,202 1,915 6,698 7,361
Net income 7,530 7,540 2,897 10,427 13,383
Earnings per common share:
Basic 0.65 0.63 0.25 0.89 1.11
Diluted 0.64 0.62 0.25 0.89 1.09
Average shares outstanding 11,659 12,043 11,646 11,652 12,044
Average diluted shares
outstanding 11,675 12,223 11,727 11,701 12,242

Ratios:
Return on average
equity 16.11% 15.99% 6.21% 11.18% 14.31%
Return on average
assets 1.06% 1.13% 0.42% 0.74% 1.00%
Net interest margin 3.35% 3.38% 3.23% 3.30% 3.37%
Total other
expense/average
assets 3.37% 3.41% 3.86% 3.61% 3.43%
Efficiency ratio (1) 61.39% 64.21% 71.10% 65.93% 66.95%
Net charge-offs/loans,
annualized 0.43% 0.20% 0.36% 0.40% 0.18%

(1) Excludes from income - (losses) gains on sales of securities,
net real estate operations, gains on disposition of assets;
excludes from expenses - early retirement expenses, expenses
related to VISA litigation.

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)

03/31/08 03/31/07 12/31/07

Statements of Financial Condition
Assets
Cash and cash equivalents $77,722 $118,653 $74,448
Investments 64,642 50,885 63,399
Mortgage-backed securities 370,848 285,321 345,397
Loans receivable, net 2,232,058 2,107,651 2,194,972
Office properties, net 76,708 63,349 74,791
Real estate owned 4,310 1,277 2,748
Intangible assets 22,420 22,823 22,523
Other assets 39,796 41,395 39,429
Total Assets 2,888,504 2,691,354 2,817,707
Liabilities
Deposits 1,875,099 1,877,084 1,806,585
Advances from FHLB 719,000 454,000 708,000
Other borrowings 52,204 104,730 52,206
Other liabilities 55,575 66,194 63,620
Total Liabilities 2,701,878 2,502,008 2,630,411
Stockholders' equity
Stockholders' equity 295,545 282,528 290,608
Treasury stock (103,268) (91,741) (103,268)
Accumulated other
comprehensive loss (5,651) (1,441) (44)
Total stockholders'
equity 186,626 189,346 187,296
Total liabilities
and stockholders'
equity 2,888,504 2,691,354 2,817,707
Stockholders' equity/assets 6.46% 7.04% 6.65%

Common shares outstanding 11,663 11,950 11,657
Book value per share $16.00 $15.84 $16.07

03/31/08 03/31/07 12/31/07
Credit quality-quarterly results
Total reserves for loan
losses $17,901 $14,756 $16,692
Loan loss reserves / loans 0.80% 0.70% 0.76%
Reserves/non-performing
loans 138.78% 289.05% 163.63%
Provision for losses $3,567 $1,071 $3,248
Net loan charge-offs $2,358 $1,030 $1,983

Problem assets
Non-accrual loans $12,800 $5,049 $10,133
Accruing loans 90 days or
more past due 99 56 68
REO through foreclosure 4,310 1,277 2,748
Total $17,209 $6,382 $12,949
As a percent of total
assets 0.60% 0.24% 0.46%

SOURCE First Financial Holdings, Inc.

Dorothy B. Wright, Vice President-Investor Relations and Corporate Secretary,
+1-843-529-5931 or +1-843-729-7005