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First Financial Holdings, Inc. (FFCH)

F2Q08 Earnings Call

April 17, 2008 2:00 pm ET


Dorothy B. Wright – VP, Investor Relations and Corporate Secretary

A. Thomas Hood - President and CEO

Wayne Hall – Executive VP and CFO



Welcome to the First Financial Holdings Quarterly Earnings Conference Call. (Operator Instructions) I would now like to turn the conference over to D.B. Wright, VP and Corporate Secretary.

D.B. Wright

Good afternoon and thank you for participating in our Second Quarter 2008 Earnings Conference Call. Before we begin, I have several brief administrative items to address.

You should’ve received our second quarter fiscal 2008 earnings release and supplemental information earlier today. For those who did not, those are available on our website and that address is In addition to this teleconference call, we have a listen-only live webcast available. This webcast will be available for the next 90 days. Those are live and archived webcasts may be accessed via a link to our website, and again that address is

Our President and Chief Executive Officer, A. Thomas Hood, will make opening remarks on our call today. Wayne Hall, Executive Vice President and Chief Financial Officer, will follow and both will take questions at the end.

Our presentation today discusses the company’s business outlook and will include forward-looking statements. Those statements include descriptions of management plans, objectives or goals for future operations, products or services, forecast the financial or other performance measures and statements about the company’s general outlook for economic and business conditions.

We also may make forward-looking statements during the Question & Answer session following management’s presentation. These forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those discussed today.

Information on the risk factors that could cause actual results to differ is available from the earnings release that was distributed today and from this Form 10-K for the year ended September 30, 2007.

Forward-looking statements are affected only as of the date they are made and the company assumes no obligations to update this information.

I will now turn the call over to Tom.

Tom Hood

We’re very pleased to have such a large number of people on the call with us and we think we have some very interesting results for the March quarter. I hope you had a chance to review the second quarter’s earnings release we issued very early this morning. If not, then please do review it on our website as D.B. mentioned.

I’ll provide you with some key details as we discuss operations for the quarter, as well as, the six months ended March 31, 2008. After commenting on highlights from the quarter and six months, I’ll comment on some specific continuing strategic initiatives and specific results.

As a snapshot generated the second quarter, net income was $7.5 million on a comparative basis to the March of seven quarter, it was also $7.5 million. And to the late quarter, $2.9 million. Earnings per share of diluted for the March ’08 quarter was $0.64 compared to $0.62 for the comparative quarter in ’07 and compared to $0.25 for the December quarter.

Earnings compared to our late December ’07 quarter were positively impacted by higher net interest income and you’ll hear me comment on that in several respects. Increased profitability of our mortgage banking operations and that’s a recurring fee in various periods. Lower operating expenses which we’re very, very pleased to see—and then, consistent with our March quarters, we have typically reported in the past, information about higher insurance revenues during the March quarter.

We typically produce insurance operations that are seasonally higher revenues in the March quarter of each year, principally due to the receipt of contingency commission revenues. This quarter was no exception to that, although on a comparative basis, was a little bit behind the March ’07 quarter.

March quarter earnings were negatively impacted by a higher loan loss provision. In response to continuing higher levels of loan charge offs, we increased our loan loss reserves to a total of $17.9 million, or 80 basis points of total loans.

When we compare our March ’08 quarter with March ’07 quarter earnings, we were positively impacted in that comparison by, again, higher net interest income, increased profitability of our mortgage banking operations, higher service charges and fees on deposit accounts for those compared in the two quarters. Earnings were negatively impacted to the prior year by higher loan loss provisions than was provisioned in March ’07 and higher operating expenses for that comparative period.

For the six-month period, net income was $10.4 million for the current six-month period compared to $13.4 million. Again, the six months ended March 30, 2007. Earnings per share on a diluted basis was $0.89 for our first six months of this year and compared to $1.09 in the first six months of fiscal ’07.

Net income, thus, was down 22% from the first half of fiscal 2007. Earnings per share of diluted were down $0.20 or by 18% for the first six months of fiscal 2007. Again, for the six-month period, earnings were positively impacted by, again, higher net interest income, higher earnings on our mortgage banking operations, and higher service charges and fees on deposit accounts. But likewise, earnings were negatively impacted again by higher loan loss provisions and higher operation expenses during that comparative period.

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