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First Financial Holdings Inc. Reports Operating Results (10-Q)

February 05, 2010 | About:
10qk

10qk

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First Financial Holdings Inc. (FFCH) filed Quarterly Report for the period ended 2009-12-31.

First Financial Holdings Inc. has a market cap of $178.3 million; its shares were traded at around $10.79 with a P/E ratio of 98.1 and P/S ratio of 0.8. The dividend yield of First Financial Holdings Inc. stocks is 1.9%. First Financial Holdings Inc. had an annual average earning growth of 4.4% over the past 10 years.FFCH is in the portfolios of Private Capital of Private Capital Management, Paul Tudor Jones of The Tudor Group, Chuck Royce of ROYCE & ASSOCIATES, Diamond Hill Capital of Diamond Hill Capital Management Inc.

Highlight of Business Operations:

Capital growth, liquidity and earnings are the top priorities of the Company. Total assets decreased $34.1 million, or 0.97%, for the three months ended December 31, 2009, primarily due to decreases in cash and cash equivalents of $11.6 million, investment securities of $13.9 million, and net loans of $22.6 million, somewhat offset by an increase in other assets of $16.2 million. The decrease in investments was attributable to mortgage-backed security repayments of $35.8 million somewhat offset by purchase of MBS held for sale of $21.9 million. Loan originations of $195.7 million and discounts on Cape Fear Bank nonperforming loans of $5.0 million during the quarter ended December 31, 2009, less maturities and early payoffs of $108.6 million, charge-offs of $20.3 million, an increase in the allowance for loan losses of $5.0 million and foreclosures of $4.4 million resulted in loan growth of $62.4 million. However, the Company s decision to sell $85.0 million of securitized loans to increase liquidity resulted in the $22.6 million decrease of loans for the quarter. The increase in the allowance for loan loss is due to the increase of nonaccruals, charge-offs, and delinquencies for residential and commercial loans. Nonaccruals, charge-offs, and delinquencies for residential and consumer loans increased $4.7 million, $5.4 million, and $2.2 million, respectively. Nonaccruals, charge-offs, and delinquencies for commercial loans increased $23.6 million, $7.5 million, and $5.3 million, respectively, primarily related to continued deteriorating economic conditions and a new problem loan review process which was initiated during the quarter and is discussed under Item 1A-Risk Factors. Other assets increased $16.2 million, primarily due to the prepayment of three years of FDIC deposit insurance assessment fees, which totaled $14.1 million.

Liabilities decreased $36.9 million, or 1.17%, for the quarter ended December 31, 2009. Non-interest and interest-bearing checking accounts increased $34.3 million, savings and money market accounts decreased $6.0 million, and certificates of deposit decreased $54.5 million. The Company competitively priced the certificates of deposit to maintain the net interest margin; however, we did not have the highest interest rate in the market which played a role in the decrease in certificate accounts, as well as maturities. Increases in FHLB advances of $72.9 million were more than offset by decreases in other short-term borrowings to the Federal Reserve Bank of $60.0 million and a $17.0 million prepayment on the JPMorgan Chase Bank line of credit.

Equity increased $2.8 million during the three months ended December 31, 2009. Paid-in capital increased $9.4 million primarily due to the over-allotment option exercised by the underwriters of the Company s recent public offering of common stock. Retained earnings decreased $6.3 million due to dividend payments and the net loss for the quarter.

The Company s subsidiary First Federal increased its total risk-based capital ratio, which was considered “well capitalized” for regulatory purposes in the first quarter of fiscal year 2010 when compared to September 30, 2009. At December 31, 2009, total assets were $3.5 billion, while total portfolio loans and deposits were $2.6 billion and $2.3 billion, respectively.

Long-term capital growth was a specific focus for the Company during fiscal 2009. The Company applied for and received approval to participate in the U.S. Treasury s Troubled Asset Relief Program (“TARP”). On December 5, 2008, the Company received $65.0 million related to this program. On September 29, 2009, the Company announced it had raised $65.0 million through a public offering by issuing 4,193,550 shares of the Company s common stock at $15.50 per share. On October 9, 2009, the Company announced that the underwriters of its recent public offering of common stock had fully exercised their over-allotment option, resulting in the issuance of an additional 629,032 shares at $15.50 per share.

On December 5, 2008, pursuant to the Capital Purchase Program (the “CPP”) established by the United States Department of the Treasury (the “Treasury”), First Financial issued and sold to the Treasury for an aggregate purchase price of $65.0 million 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”).

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