Upward estimate revisions on the back of strong third quarter
results - including an earnings surprise of 21.4% - have helped
First Financial Holdings Inc.
) achieve a Zacks #1 Rank (Strong Buy) on December 26. With a
solid year-to-date return of 42.9%, this provider of integrated
financial solutions offers an attractive investment opportunity.
FIRST FINL HLDG (FFCH): Free Stock Analysis
FIRST MERCHANTS (FRME): Free Stock Analysis
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The Rank Drivers
Better-than-expected third quarter results, improving credit
quality and strong capital ratios are the primary rank drivers
for this stock.
First Financial Holdings reported its third quarter results on
October 25 with earnings per share of 34 cents, beating the Zacks
Consensus Estimate of 28 cents by 21.4% and more-than-doubling
the year-ago earnings of 12 cents. Robust results for the
reported quarter were primarily aided by higher non-interest
income, elevated net interest income and reduced provision for
Non-interest expenses, which increased 11.5% on a year-over year
basis to $33.0 million, were a dampener for the quarter.
Net interest income increased 14.1% to $33.2 million from $29.1
million in the year-ago quarter. Net interest margin expanded 48
basis points on a year-over year basis to 4.35%. The rise was
primarily due to lower cost of funds. Non-interest income
jumped 2.1% year over year to $14.5 million. Provision for loan
losses skidded 49.4% from the year-ago quarter to $4.5 million.
Credit quality continued to exhibit improvement. The allowance
for loan losses was 1.80% of total loans as of September 30,
2012, compared with 2.31% of total loans as of September 30,
2011. Non-performing assets for the quarter were $70.6 million,
dipping 34.9% from the prior-year period. Net charge-offs were
$7.0 million, down 30.7% year over year.
As of September 30, 2012, First Financial Holdings' total
risk-based capital ratio was 15.70%, Tier 1 risk-based capital
ratio was 14.42% and Tier 1 leverage capital ratio was 10.12%,
above the "well-capitalized" regulatory requirements of 10.00%,
6.00% and 5.00%, respectively.
Earnings Estimate Revisions
Over the past 60 days, upward revisions of 6 out of 8 estimates
pushed the Zacks Consensus Estimate for 2012 up by 8.7% to $1.37
per share, reflecting year-over-year growth of about 154.7%. The
Zacks Consensus Estimate for 2013 has advanced 3.7% to $1.11, as
5 out of 8 estimates moved upward over the same time frame.
Shares of First Financial Holdings currently trade at 10.0x
12-month forward earnings, a 12% discount to the peer group
average of 11.3x. Its price to book ratio of 0.8 is at a 27%
discount to the industry median of 1.1.
About the Company
Headquartered in Charleston, South Carolina, First Financial
Holdings serves as the bank holding company for First Federal
Savings and Loan Association of Charleston. It operates through
65 offices located in coastal South Carolina, as well as in the
Florence, South Carolina; and Wilmington, North Carolina markets
and offers an array of integrated financial solutions to
individuals and businesses. The company, which was founded in
1934, has a market capitalization of roughly $221.3 million.
Other Zacks #1 Rank bank stocks include
First Merchants Corporation