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First Financial Holdings, Inc. (FFCH)

F3Q08 Earnings Call

July 17, 2008 2:00 pm ET

Executives

A. Thomas Hood – President and Chief Executive Officer

R. Wayne Hall – Chief Financial Officer

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

Analysts

Mac Hodges - SunTrust Robinson Humphrey

Nicole Peterson - Scott & Stringfellow

Presentation

Operator

Welcome to the First Financial Holdings quarterly earnings conference call. (Operator Instructions) Now, I would like to turn the conference over to Dee Bee Wright, the Vice President and Corporate Secretary.

Dee Bee Wright

Thank you for participating in our third quarter 2008 earnings conference call. Before we begin, I have several brief administrative items to address.

You should have received our third quarter fiscal 2008 earnings release along with our supplemental information earlier today. For those who did not, they are both available on our website and that address is www.firstfinancialholdings.com.

In addition to this telecast, we have a listen-only live webcast available. The webcast will be available for the next 90 days. Both the live and the archived webcasts may be accessed via a link at the bottom of our home page and again that address is firstfinancialholdings.com.

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 of 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 can cause actual results to differ is available from the earnings release that was distributed earlier today and also from the Form 10-K for the year ended September 30, 2007. Forward-looking statements are effective only as of the date they are made and the company assumes no obligation to update this information.

I will now turn the call over to Tom.

A. Thomas Hood

We’re very appreciative of your interest in First Financial. I hope you’ve had a chance to review the third quarter earnings release that we issued this morning. If not, please review it at our website, as Dee Bee referenced.

I’ll provide you with some key details as we discuss operations for the quarter as well as the nine months ended June 30, 2008. After commenting on highlights in the quarter and the nine months, I will comment on some continuing strategic initiatives and report on some other results.

Just a brief snapshot of third quarter, net income was $5.9 million for the June quarter compared to $6.5 million in June ’07, compared to $7.5 million for a length quarter, the March quarter of ’08. Earnings per share diluted at $0.51 for the June ’08 quarter, $0.54 for the comparative quarter of ’07 and $0.64 for the March 31, 2008 quarter.

Return on equity for the June quarter was 12.6%, compared to 13.75% for the June ’07 quarter, and 16.11% in the March of ’08 quarter.

Earnings decreased 22% over the length quarter. As we commented in the past, the March quarter is typically a very strong quarter for insurance revenues. On a comparative quarter basis, the earnings were down about 9% from the June quarter in fiscal 2000.

Earnings compared to our March ’08 quarter were favorably impacted by higher net interest income, a higher margin, and also strong loan growth. They were also favorably impacted by higher insurance revenues.

The June quarter compared to our length quarter, the March ’08 quarter, and earnings were negatively impacted by higher loan loss provision, in response to a continued higher level of charge-offs a higher level of problem loans. We increased our loan loss reserve to $21 million. We’re at 92 basis points of total loans. We also had lower mortgage banking income for the June quarter.

Our operating expenses were higher due to the addition of Somers-Pardue. The completion of that acquisition occurred in that quarter. I want to add that we’re very, very pleased with the early results from the acquisition of Somers-Pardue.

When we compare our June ’08 quarter to the June ’07 quarter, the earnings were positively impacted by again a higher interest income, increased profitability of our mortgage banking operations and again, higher insurance revenues.

Our earnings for the June ’08 quarter compared to ’07 were negatively impacted by again, a higher loan loss provision and a higher operating expense, again primarily due to the acquisition of Somers-Pardue.

For the comparative nine-month period ending June 30, net income was $16.3 million for June ’08 compared to $19.9 million for June ’07. Earnings per share diluted for that nine-month period in the current year was $1.40 compared to $1.63 for the first nine months of fiscal ’07.

Net income was down $3.6 million, or 18%. Earnings per share were down $0.23 or 14%.

I want to remind everybody that we did have a large charge in the first quarter related to our early retirement plan.

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