First Financial Holdings, Inc. (FFCH)
F3Q10 (Qtr End 06/30/10) Earnings Call
July 26, 2010 2:00 pm ET
Dee Bee Wright – SVP and Corporate Secretary
Wayne Hall – President and CEO
Blaise Bettendorf – CFO
Joe Amy – Chief Credit Officer
Mac Hodgson – Suntrust Robinson Humphrey
Christopher Marinac – FIG Partner
Previous Statements by FFCH
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As a reminder, this conference is being recorded Monday, July 26, 2010. I’d like to turn the conference now over to Dee Bee Wright, Senior Vice President and Corporate Secretary. Please go ahead, ma'am.
Dee Bee Wright
Thank you, Sean. Good afternoon. And thank you for participating in our third quarter 2010 earnings conference call. Before we begin, I have several brief administrative items to address. You should have received our third quarter fiscal 2010 earnings release and supplemental information today. For those who did not, both are available on our website at firstfinancialholdings.com.
In addition to this teleconference call, we have a listen-only 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 firstfinancialholdings.com.
On our call today will be our President and Chief Executive Officer, Wayne Hall; Blaise Bettendorf, our Chief Financial Officer; and Joe Amy, our Chief Credit Officer. They will all be presenting and will take questions at the end.
Before we begin, I need to remind you that during the course of the call the company may make forward-looking statements about future events and future financial performance. Management's plans, objectives or goals for future operations, products or services, forecasts of financial and other performance measures and statements about the company's general outlook for economic and business conditions.
You should not put undue reliance on any forward-looking statements which may speak only as of the date made. These statements are subject to numerous factors that could cause actual results to differ materially from those anticipated or projected. For a list of some of these factors, please see the company's forward-looking statement disclosure in our fiscal 2010 third quarter earnings release.
I will now turn this call over to Wayne.
Thanks, Dee Bee. Good afternoon, everyone. And thank you for joining us on the call today and for your interest in First Financial. I encourage you to thoroughly review our third quarter earnings release, if you have not done so already. As Dee Bee mentioned, it is available on our website and we’ll be taking questions at the end of the call.
Today we reported a net loss for the quarter of $12 million or $0.73 per share. This is an improvement from the net loss of $19.1 million for the last quarter, as compared to net income before extraordinary items of $5.2 million for the same period last year.
We reported an increase of $2.3 million in pre-tax, pre-provision income as compared to the linked quarter, demonstrating the strength of our fundamentals, despite the current state of the economy.
Non-interest income exclusive of impairment on investment securities, gained on disposition of assets and a final settlement with the FDIC from our Cape Fear acquisition was $16 million, up from the linked quarter total of $15.7 million.
Our net interest margin is very strong at 3.92% for the quarter. We reported increases in mortgage banking income, brokerage fees and service charges on deposit accounts, and OTTI charge on investment securities was down.
The loss for the quarter was driven by higher loan loss provisions related to the continued stress on our loan portfolio. We have now completed our target reviews of the higher risk segments of the commercial portfolio and continue with our ongoing monitoring of our loans.
While charge-offs and provisions were higher than we would have liked, we have recognized all identified losses in the June quarter and believe that we have a thorough understanding of the current status of our portfolio.
I will now turn it over to Joe Amy, our Chief Credit Officer, to review the credit trends and second quarter activity.
The provision for loan losses increased $9.5 million for the period -- from the prior quarter to $36.4 million. We also noted decreases in delinquency, total non-performing loans and charge-offs in the third quarter. I will review those results in a moment.
The level of the provision is relative to the ongoing stress of the loan portfolio, most notably in the land and commercial real estate sectors. This deterioration has led to the increase in our allowance for loan losses at June 30th, which is $86.9 million or 3.36% of total loans outstanding, up from 3.17% from the prior quarter and 2.05% from the same period of last year.
As we have previously reported to you during this fiscal year, we have increased the frequency of our regular loan reviews and performed target reviews in higher risk sectors of the portfolio, which we identified as commercial land and A&D loans, and commercial real estate and business loans in excess of $1 million. These targeted reviews were undertaken due to the prolonged nature of the recession and the deterioration of the markets in which we operate, as well as our borrower's financial condition.