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First Financial Holdings Corp. (FFCH)

F1Q09 Earnings Call

January 22, 2009 2:00 pm ET


Thomas A. Hood - President; Chief Executive Officer

Wayne Hall - Executive Vice President; Chief Financial Officer

Dorothy B. Wright - Vice President, Investor Relations; Corporate Secretary


Cary Morris - Scott & Stringfellow

Matt Hodgson - SunTrust Robinson Humphrey



Ladies and gentlemen, thank you for standing by. Welcome to the First Financial Holdings, first quarter earnings conference call. During the presentation all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions)

I would now like to turn the conference over to D. B. Wright, Vice President and corporate secretary; please go ahead.

Dorothy B. Wright

Thank you, Rhonda. Good afternoon and thank you for participating in our first quarter 2009 earnings conference call. Before we begin, I have several brief administrative items to address. You should have received our first quarter 2009 Earnings Release along with supplemental information earlier today. For those who did not, both are available on our website at

In addition to this teleconference call, we have a listen-only live webcast available. This webcast will be available for the next 90 days. Both the live and archived webcast maybe accessed via a link on 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’s plans, objectives or goals for future operations, products or services, forecasts of 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-and-answer period 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 also from the Form 10-K for the year ended September 30, 2008. Forward-looking statements are effective only as of the date that they are made and the company assumes no obligation to update this information.

I will now turn the call over to Tom.

Tom Hood

Thanks DB and thanks to everyone on the call. We’re very, very appreciative. We know there’s a flurry of releases occurring today and so we’re very, very grateful to have had your interest in First Financial and we hope this is going to be a very productive call today, emphasizing the operations of the company and focusing on those results. Your interest in First Financial is greatly appreciated.

We do hope that you have had an opportunity to go to the website earlier today to review the press release itself and other information and we’ll provide you with some key details as we discuss results and operations for the quarter. After commenting on the highlights from the quarter, I’ll comment on some continuing strategic initiatives and report on other results.

Obviously, our results reflect the impact of the current recession, the impact it’s having on our earnings and asset quality and company operations. Certainly higher levels of unemployment, declining real estate values, higher home inventories, along with other economic factors are really having a negative impact on all of the markets that we serve throughout South Carolina.

It is a snapshot for the first quarter; we had a net loss of $6.5 million, compared to our linked quarter with income of $6.3 million. Our earnings per share loss was $0.58, compared to a linked quarter of $0.54 positive earnings. Our return on equity was a negative 13% for the quarter, compared to a 9/30/08 linked quarter of positive 13.59 return-on-equity.

The loss for the quarter was significantly impacted by an increase in the provision for loan losses and impairment charges on three CDO securities. Earnings compared to our September ‘08 quarter were favorably impacted and we’re certainly pleased about this result, by a higher net interest income and an interest margin of 3.48%. We also experienced strong loan growth during the quarter. For the quarter, loans increased over $30 million. We also had higher mortgage banking income, something that we expect to continue into the future.

The negatives on the December quarter are pretty clear. We had a much higher loan loss provision in response to a higher level of charge-offs and a higher level of problem loans. We increased our loan loss reserve to $41.5 million or 174 basis points of total loans. The quarter was also negatively impacted by a $2.1 million charge for the other than temporary impairment; I’ve already mentioned on the three CDO securities.

During the quarter we experienced lower fees on deposit services charges. Our observation is that customers are simply being more cautious in their spending practices. Insurance revenues were also lower in the December quarter and that’s typically the case, the December quarter is generally a slower quarter for insurance revenues.

We had higher operating expenses, something we are addressing vigorously currently. As you compare the December ‘08 quarter with the December ‘07 quarter, quarterly earnings were positively impacted again by a higher net interest income, higher spread and higher insurance revenues in that comparative quarter and lower salary and benefit costs, again comparing the December ‘08 quarter to the December ‘07 quarter.

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