FIRST FINANCIAL HOLDINGS INC. acts as a financial intermediary by attracting deposits from the general public and using such funds together with borrowings and other funds to originate first mortgage loans on residential properties located in its primary market areas. First Financial Holdings Inc. has a market cap of $184.45 million; its shares were traded at around $9.18 with a P/E ratio of 8.7 and P/S ratio of 0.78. The dividend yield of First Financial Holdings Inc. stocks is 6.47%. First Financial Holdings Inc. had an annual average earning growth of 4.4% over the past 10 years.
Highlight of Business Operations:The core banking performance has resulted in an increase in average loans of $180 million, or 8.2%, increase in problem loans influenced by the struggling economic environment and a slight decrease in non-interest expense of $44 thousand for the quarter ended December 31, 2008 when compared to the same period a year ago. In addition, the Corporation increased its total risk-based capital ratio, which was already considered “well capitalized” for regulatory purposes in the first quarter of fiscal year 2009 when compared to the first quarter of fiscal 2008. At December 31, 2008, total assets were $3.0 billion, while total loans and deposits were $2.3 billion and $1.9 billion, respectively.
On December 5, 2008, pursuant to the CPP established by the Treasury First Financial entered into a Letter Agreement, which incorporates by reference the Securities Purchase Agreement — Standard Terms, with the Treasury (the “Agreement”), pursuant to which First Financial issued and sold to the Treasury for an aggregate purchase price of $65,000,000 in cash (i) 65,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, par value $.01 per share, having a liquidation preference of $1,000 per share (the “Series A Preferred Stock”), and (ii) a ten-year warrant to purchase up to 483,391 shares of common stock, par value $.01 per share, of First Financial (“Common Stock”), at an initial exercise price of $20.17 per share, subject to certain anti-dilution and other adjustments (the “Warrant”).
The Corporation s chief source of liquidity is the assets it possesses, which can either be pledged as collateral for secured borrowings or sold outright. At December 31, 2008, over $170 million of the Corporation s investment portfolio was immediately saleable at a market value equaling or exceeding its amortized cost basis. As an alternative to asset sales, the Corporation has the ability to pledge assets to raise secured borrowings. At December 31, 2008, $247.9 million of secured borrowings were employed, with sufficient collateral available to raise additional secured borrowings of over $190.0 million from the FHLB—Atlanta, the Federal Reserve s term auction facility, and securities sold under repurchase agreements. The Corporation also employs unsecured funding sources such as fed funds and brokered certificates of deposit. At December 31, 2008, $746 million of Federal Home Loan Bank advances were employed. At December 31, 2008, the Corporation had $120.7 million of brokered certificates of deposit outstanding.
First Federal s use of FHLB advances is limited by the policies of the FHLB. Based on the current level of advances, asset size and available collateral under the FHLB programs, First Federal at December 31, 2008 estimates that an additional $190.0 million of funding is available. Effective May 1, 2008, the FHLB of Atlanta increased the discount it applies to residential first mortgage collateral, resulting in a Lendable Collateral Value of 75% of the unpaid principal balance. Previously, Lendable Collateral Value was 80% of the unpaid principal balance. Other sources, such as unpledged investments and mortgage-backed securities are available should deposit cash flows and other funding be reduced in any given period. Should First Federal so desire, it may request additional availability at the FHLB, subject to standard lending policies in effect at the FHLB. Certain of the advances are subject to calls at the option of the FHLB of Atlanta, as follows: $250 million callable in fiscal 2009, with a weighted average rate of 4.70%; $50 million callable in fiscal 2010, with a weighted average rate of 6.48%; $50 million callable in fiscal 2011, with a weighted average rate of 3.47%. Call provisions are more likely to be exercised by the FHLB when market interest rates rise.
In April 2007 we entered into a loan agreement with another bank for a $25 million line of credit. The rate on the funding line is based on the three month LIBOR. In April 2008, the Board approved expanding the line from $25 million to $35 million, changing the interest rate from 100 basis points to 150 basis points over the three month LIBOR and extending the maturity from April 2009 to June 2010. At December 31, 2008, the balance on this line was $28 million.
During the current three months we experienced a net cash outflow from investing activities of $115.9 million. The total outflow consisted principally of purchases of investments and mortgage-backed securities available for sale of $107.5 million, purchase of office properties and equipment of $5.0 million, and a net increase of $31.2 million in loans. The total outflow was offset by repayments of mortgage-backed securities of $23.1 million and the redemption of FHLB stock of $3.1 million. We experienced a cash inflow of $3.8 million from operating activities and a cash inflow of $111.9 million from financing activities. Financing activities consisted principally of a net increase of $76 million in deposits, the issuance of preferred stock and warrants of $65 million , a net increase in other borrowings of $50 million and proceeds from exercise of stock options and tax benefit resulting from stock options of $250 thousand offset by decreases in advances by borrowers for taxes and insurance of $3.5 million, repayment of FHLB advance of $72 million and dividends paid of $3.2 million during the first three months of fiscal 2009.
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