UNITED STATES
SECURITY AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly period ended March 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-17122
FIRST FINANCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-0866076
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
34 Broad Street, Charleston, South Carolina 29401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 529-5800
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding Shares at
Common Stock April 30, 1997
$.01 Par Value 6,329,661
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Consolidated Statements of Financial Condition
at March 31, 1997 and September 30, 1996 1
Consolidated Statements of Income for the Three
Months Ended March 31, 1997 and 1996 2
Consolidated Statements of Income for the Six
Months Ended March 31, 1997 and 1996 3
Consolidated Statements of Cash Flows for the
Six Months Ended March 31, 1997 and 1996 4
Notes to Financial Statements 6
Management's Discussion and Analysis of Results
of Operations and Financial Condition 12
PART II - OTHER INFORMATION 26
SIGNATURES 28
SCHEDULES OMITTED
All schedules other than those indicated above are omitted because of the
absence of the conditions under which they are required or because the
information is included in the Financial Statements and related notes.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, September 30,
1997 1996
(Amounts in thousands)
(Unaudited)
ASSETS
Cash and cash equivalents $ 30,940 $ 34,124
Investments held to maturity (market value of
$20,357 and $27,417) 20,481 27,487
Investments available for sale, at fair value 45,586 66,434
Investment in capital stock of Federal Home
Loan Bank, at cost 18,319 15,620
Loans receivable, net 1,341,354 1,278,757
Loans held for sale 6,088 1,353
Mortgage-backed securities available for sale,
at fair value 101,838 82,991
Accrued interest receivable 9,877 9,799
Office properties and equipment, net 15,749 16,125
Real estate and other assets acquired in
settlement of loans 1,384 2,326
Other assets 10,402 11,133
Total assets $ 1,602,018 $1,546,149
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposit accounts $ 1,063,066 $ 1,061,617
Advances from Federal Home Loan Bank 366,382 312,402
Securities sold under agreements to
repurchase 29,970 16,805
Long-term debt 19,763 19,763
Advances by borrowers for taxes and
insurance 4,292 7,341
Other 20,027 33,426
Total liabilities 1,503,500 1,451,354
Stockholders' equity:
Serial preferred stock, authorized
3,000,000 shares--none issued
Common stock, $.01 par value, authorized
12,000,000 shares,issued and outstanding
7,010,958 and 6,974,645 shares at
March 31, 1997 and September 30, 1996,
respectively 70 70
Additional paid-in capital 25,049 24,543
Retained income, substantially restricted 80,409 75,780
Unrealized net gain on securities available
for sale, net of income tax 439 341
Treasury stock at cost, 684,683 and 617,096
shares at March 31, 1997 and
September 30, 1996, respectively (7,449) (5,939)
Total stockholders' equity 98,518 94,795
Total liabilities and stockholders' equity $ 1,602,018 $ 1,546,149
The accompanying notes are an integral part of the statements.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
1997 1996
(Amounts in thousands,
except per share
amounts)
(Unaudited)
INTEREST INCOME
Interest on loans and mortgage-backed securities $ 28,346 $ 25,421
Interest and dividends on investments 863 1,318
Other 632 742
Total interest income 29,841 27,481
INTEREST EXPENSE
Interest on deposits 11,885 12,380
Interest on borrowed money 5,890 3,838
Total interest expense 17,775 16,218
NET INTEREST INCOME 12,066 11,263
Provision for loan losses 525 420
Net interest income after provision for loan
losses 11,541 10,843
OTHER INCOME
Net gain on sale of loans 66 2
Loan servicing fees 311 294
Service charges and fees on deposit accounts 1,271 1,126
Commissions on insurance 458 349
Brokerage fees 156 77
Bank card fees 372 218
Real estate operations, net (19) 9
Other 393 399
Total other income 3,008 2,474
NON-INTEREST EXPENSE
Salaries and employee benefits 4,800 4,556
Occupancy costs 842 798
Marketing 370 286
Depreciation, amortization, rental and
maintenance of equipment 633 624
FDIC insurance premiums 174 644
Other 2,175 1,827
Total non-interest expense 8,994 8,735
Income before income taxes 5,555 4,582
Income tax expense 2,024 1,665
NET INCOME $ 3,531 $ 2,917
NET INCOME PER COMMON SHARE $ 0.56 $ 0.46
Cash dividends $ 0.18 $ 0.16
Weighted average shares outstanding 6,310 6,332
The accompanying notes are an integral part of the statements.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended
March 31,
1997 1996
(Amounts in thousands,
except per share amounts)
(Unaudited)
INTEREST INCOME
Interest on loans and mortgage-backed securities $ 56,139 $ 50,014
Interest and dividends on investments 2,070 2,634
Other 1,317 1,389
Total interest income 59,526 54,037
INTEREST EXPENSE
Interest on deposits 24,000 25,234
Interest on borrowed money 11,331 6,928
Total interest expense 35,331 32,162
NET INTEREST INCOME 24,195 21,875
Provision for loan losses 1,050 725
Net interest income after provision for loan
losses 23,145 21,150
OTHER INCOME
Net gain on sale of loans 118 2
Loan servicing fees 607 596
Service charges and fees on deposit accounts 2,594 2,271
Commissions on insurance 886 803
Brokerage fees 279 125
Bank card fees 690 456
Real estate operations, net (68) (80)
Other 719 648
Total other income 5,825 4,821
NON-INTEREST EXPENSE
Salaries and employee benefits 9,730 8,847
Occupancy costs 1,694 1,592
Marketing 648 619
Depreciation, amortization, rental and
maintenance of equipment 1,297 1,229
FDIC insurance premiums 650 1,298
Other 4,032 3,876
Total non-interest expense 18,051 17,461
Income before income taxes 10,919 8,510
Income tax expense 4,013 3,088
NET INCOME $ 6,906 $ 5,422
NET INCOME PER COMMON SHARE $ 1.09 $ 0.86
Cash dividends $ 0.36 $ 0.32
Weighted average shares outstanding 6,324 6,320
The accompanying notes are an integral part of the statements.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
March 31,
1997 1996
(Amounts in thousands)
(Unaudited)
OPERATING ACTIVITIES
Net income $ 6,906 $ 5,422
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 979 908
Gain on sale of loans, net (118) (2)
Gain on sale of investments, net (5) (32)
Loss on sale of property and equipment, net 6
(Gain) loss on sale of real estate owned, net 17 (78)
Amortization of unearned discounts/premiums on
investments 7 52
Increase (decrease) in deferred loan fees and
discounts (310) 113
(Increase) decrease in receivables and prepaid
expenses 775 (1,885)
Provision for loan losses 1,050 725
Write downs of real estate acquired in
settlement of loans 24 41
Proceeds from sales of loans held for sale 19,149 389
Origination of loans held for sale (23,884) (389)
Decrease in accounts payable and accrued
expenses (13,450) (1,464)
Net cash provided by (used in) operating
activities (8,854) 3,800
INVESTING ACTIVITIES
Proceeds from maturity of investments 15,100 15,671
Proceeds from sale of investments 3,994 6,963
Net redemption of mutual funds available for sale 8,766
Purchase of investments (17,556)
Purchase of FHLB stock (2,699) (1,531)
Increase in loans, net (45,100) (76,651)
Increase in credit card receivables (618) (580)
Purchase of loans and loan participations (18,017) (8,600)
Repayments on mortgage-backed securities 8,315 9,846
Purchase of mortgage-backed securities (30,182) (4,238)
Proceeds from sale of mortgage-backed securities 3,039
Proceeds from the sales of real estate owned 1,417 1,660
Net purchase of office properties and equipment (609) (1,530)
Net cash used in investing activities (56,594) (76,546)
FINANCING ACTIVITIES
Net increase (decrease) in deposit accounts 1,449 (10,266)
Net proceeds of FHLB advances 53,980 97,554
Increase (decrease) of securities sold under
agreements to repurchase 13,165 (4,853)
Decrease in funds held for others (3,049) (1,887)
Proceeds from sale of common stock 506 560
Dividends paid (2,277) (2,022)
Treasury stock purchased (1,510) (237)
Net cash provided by financing activities 62,264 78,849
Net increase in cash and cash equivalents (3,184) 6,103
Cash and cash equivalents at beginning of period 34,124 24,486
Cash and cash equivalents at end of period $ 30,940 $ 30,589
Supplemental disclosures:
Cash paid during the period for:
Interest $ 36,600 $ 34,045
Income taxes 3,401 2,250
Loans foreclosed 518 1,142
Unrealized net gain on securities available
for sale, net of income tax 98 626
Transfers of securities held to maturity to
available for sale 50,185
The accompanying notes are an integral part of the statements.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Consolidation
The unaudited consolidated financial statements include the accounts of
First Financial Holdings, Inc. ("the Company") and its wholly-owned
subsidiaries, First Federal Savings and Loan Association of Charleston and
Peoples Federal Savings and Loan Association of Conway and all of their
subsidiaries. All significant intercompany items related to the consolidated
subsidiaries have been eliminated.
Earnings per Share
Earnings per share are computed by dividing earnings by the weighted
average number of shares outstanding during the period. The weighted average
shares outstanding amounted to 6,310,377 for the quarter ended March 31, 1997
as compared to 6,331,858 for the quarter ended March 31, 1996. The weighted
average shares outstanding amounted to 6,323,670 for the six months ended
March 31, 1997 as compared to 6,319,771 for the six months ended March 31,
1996.
Adoption of SFAS 114 and SFAS 118
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 114, "Accounting by Creditors for Impairment of a Loan" ("SFAS 114"), on
October 1, 1995. SFAS 114 requires that all creditors value all specifically
reviewed loans for which it is probable that the creditor will be unable to
collect all amounts due according to the terms of the loan agreement at the
loan s fair value. Fair value may be determined based upon the present value
of expected cash flows, market price of the loan, if available, or the value
of the underlying collateral. Expected cash flows are required to be
discounted at the loan's effective interest rate.
SFAS 114 was amended by SFAS 118, "Accounting by Creditors for Impairment
of a Loan -- Income Recognition and Disclosures," to allow a creditor to use
existing methods for recognizing interest income on an impaired loan and by
requiring additional disclosures about how a creditor recognizes interest
income related to impaired loans.
A loan is also considered impaired if its terms are modified in a troubled
debt restructuring after October 1, 1995. For these accruing impaired loans,
cash receipts are typically applied to principal and interest receivable in
accordance with the terms of the restructured loan agreement. Interest income
is recognized on these loans using the accrual method of accounting.
Investments in Debt and Equity Securities
The Company's investments in debt securities principally consist of U.S.
Treasury securities and mortgage-backed securities purchased by the Company or
created when the Company exchanges pools of loans for mortgage-backed
securities. The Company adopted SFAS 115, "Accounting for Certain Investments
in Debt and Equity Securities" ("SFAS 115"), as of September 30, 1993. In
accordance with SFAS 115, the Company classifies its investments in debt
securities as held to maturity securities, trading securities and available
for sale securities as applicable.
Debt securities are designated as held to maturity if the Company has the
positive intent and the ability to hold the securities to maturity. Held to
maturity securities are carried at amortized cost, adjusted for the
amortization of any related premiums or the accretion of any related discounts
into interest income using a methodology which approximates a level yield of
interest over the estimated remaining period until maturity. Unrealized
losses on held to maturity securities, reflecting a decline in value judged by
the Company to be other than temporary, are charged to income in the
Consolidated Statements of Operations.
Debt and equity securities that are purchased and held principally for the
purpose of selling in the near term are reported as trading securities.
Trading securities are carried at fair value with unrealized holding gains and
losses included in earnings.
The Company classifies debt and equity securities as available for sale
when at the time of purchase it determines that such securities may be sold at
a future date or if the Company does not have the intent or ability to hold
such securities to maturity.
Securities designated as available for sale are recorded at fair value.
Changes in the fair value of debt and equity securities available for sale are
included in stockholders' equity as unrealized gains or losses, net of the
related tax effect. Unrealized losses on available for sale securities,
reflecting a decline in value judged to be other than temporary, are charged
to income in the Consolidated Statements of Operations. Realized gains or
losses on available for sale securities are computed on the specific
identification basis.
In November 1995, the FASB issued a Special Report as an aid in
understanding and implementing SFAS 115. The Special Report included guidance
that caused the Company to reassess the appropriateness of the classifications
of all securities held and account for any resulting reclassifications at fair
value in accordance with SFAS 115. During the first quarter of fiscal 1996,
the Company reclassified $32,161 of investment securities and $18,024 of
mortgage-backed securities from held to maturity to available for sale.
Securities Sold Under Agreements to Repurchase
The Company enters into sales of securities under agreements to repurchase
("reverse repurchase agreements"). Fixed coupon reverse repurchase agreements
are treated as financings. The obligations to repurchase securities sold are
reflected as a liability and the securities underlying the agreements continue
to be reflected as assets in the Consolidated Statements of Financial
Condition.
Loans Receivable and Loans Held for Sale
The Company's real estate loan portfolio consists primarily of long-term
loans secured by first mortgages on single-family residences, other
residential property, commercial property and land. The adjustable-rate
mortgage loan is the Company's primary loan product for portfolio lending
purposes. The Company's consumer loans include lines of credit, auto loans,
marine loans, mobile home loans and loans on various other types of consumer
products. The Company also makes shorter term commercial business loans on a
secured and unsecured basis.
Fees are charged for originating loans at the time the loan is granted.
Loan origination fees received, if any, are deferred and offset by the
deferral of certain direct expenses associated with loans originated. The net
deferred fees or costs are recognized as yield adjustments by applying the
interest method.
Interest on loans is accrued and credited to income based on the principal
amount and contract rate on the loan. The accrual of interest is discontinued
when, in the opinion of management, there is an indication that the borrower
may be unable to meet future payments as they become due, generally when a
loan is ninety days past due. When interest accrual is discontinued, all
unpaid accrued interest is reversed. While a loan is on non-accrual status,
interest is recognized only as cash is received. Loans are returned to
accrual status only when the loan is reinstated and ultimate collectibility of
future interest is no longer in doubt.
Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or estimated market value in the aggregate. Net
unrealized losses are provided for in a valuation allowance by charges to
operations.
Allowance for Loan Losses
The Company provides for loan losses on the allowance method. Accordingly,
all loan losses are charged to the related allowance and all recoveries are
credited to the allowance. Additions to the allowance for loan losses are
provided by charges to operations based on various factors which, in
management's judgment, deserve current recognition in estimating losses. Such
factors considered by management include the fair value of the underlying
collateral, growth and composition of the loan portfolios, the relationship of
the allowance for loan losses to outstanding loans, loss experience,
delinquency trends and economic conditions. Management evaluates the carrying
value of loans periodically and the allowances are adjusted accordingly.
While management uses the best information available to make evaluations,
future adjustments to the allowances may be necessary if economic conditions
differ substantially from the assumptions used in making the evaluations. The
allowance for loan losses is subject to periodic evaluation by various
regulatory authorities and may be subject to adjustment upon their
examination.
The Company considers a loan to be impaired when, based upon current
information and events, it believes it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the
loan agreement on a timely basis. The Company s impaired loans include loans
identified as impaired through review of the non-homogeneous portfolio and
troubled debt restructurings. Specific valuation allowances are established
on impaired loans for the difference between the loan amount and the fair
value less estimated selling costs. Impaired loans may be left on accrual
status during the period the Company is pursuing repayment of the loan. Such
loans are placed on non-accrual status at the point either: (1) they become 90
days delinquent; or (2) the Company determines the borrower is incapable of,
or has ceased efforts toward, continuing performance under the terms of the
loan. Impairment losses are recognized through an increase in the allowance
for loan losses and a corresponding charge to the provision for loan losses.
Adjustments to impairment losses due to changes in the fair value of the
collateral properties for impaired loans are included in provision for loan
losses. When an impaired loan is either sold, transferred to real estate
owned or written down, any related valuation allowance is charged off.
Increases to the allowance for loan losses are charged by recording a
provision for loan losses. Charge-offs to the allowance are made when all, or
a portion, of the loan is confirmed as a loss based upon management s review
of the loan or through possession of the underlying security or through a
troubled debt restructuring transaction. Recoveries are credited to the
allowance.
Office Properties and Equipment
Office properties and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is provided generally on the
straight-line method over the estimated life of the related asset for
financial reporting purposes. Estimated lives range up to thirty years for
buildings and improvements and up to ten years for furniture, fixtures and
equipment. Maintenance and repairs are charged to expense as incurred.
Improvements, which extend the useful lives of the respective assets, are
capitalized. Accelerated depreciation is utilized on certain assets for
income tax purposes.
Real Estate
Real estate acquired through foreclosure is initially recorded at the lower
of cost or estimated fair value. Subsequent to the date of acquisition, it is
carried at the lower of cost or fair value, adjusted for net selling costs.
Fair values of real estate owned are reviewed regularly and writedowns are
recorded when it is determined that the carrying value of real estate exceeds
the fair value less estimated costs to sell. Costs relating to the
development and improvement of such property are capitalized, whereas those
costs relating to holding the property are charged to expense.
Risk Management Instruments
Risk management instruments are utilized to modify the interest rate
characteristics of related assets or liabilities or hedge against changes in
interest rates or other exposures as part of the Company s asset and liability
management process. Instruments must be designated as hedges and must be
effective throughout the hedge period.
Gains and losses associated with futures and forward contracts used as
effective hedges of existing risk positions or anticipated transactions are
deferred as an adjustment to the carrying value of the related asset and
liability and recognized in income over the remaining term of the related
asset or liability.
The Company also utilizes forward delivery contracts and options for the
sale of mortgage-backed securities to reduce the interest rate risk inherent
in mortgage loans held for sale and the commitments made to borrowers for
mortgage loans which have not been funded. These financial instruments are
considered in the Company s valuation of its mortgage loans held for sale
which are carried at the lower of cost or market.
Risks and Uncertainties
In the normal course of its business the Company encounters two significant
types of risk: economic and regulatory. There are three main components of
economic risk: interest rate risk, credit risk and market risk. The Company
is subject to interest rate risk to the degree that its interest-bearing
liabilities mature or reprice at different speeds, or on different bases, than
its interest-earning assets. Credit risk is the risk of default on the
Company s loan portfolio that results from borrowers' inability or
unwillingness to make contractually required payments. Market risk reflects
changes in the value of collateral underlying loans receivable, the valuation
of real estate held by the Company, and the valuation of loans held for sale,
mortgage-backed securities available for sale, purchased mortgage servicing
rights, and capitalized servicing fees receivable.
The Company is subject to the regulations of various government agencies.
These regulations can and do change significantly from period to period. The
Company also undergoes periodic examinations by the regulatory agencies, which
may subject it to further changes with respect to asset valuations, amounts of
required loss allowances and operating restrictions resulting from the
regulators' judgments based on information available to them at the time of
their examination.
In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as of the
dates of the Consolidated Statements of Financial Condition and the
Consolidated Statements of Operations for the periods covered. Actual results
could differ significantly from those estimates and assumptions.
Income Taxes
Because some income and expense items are recognized in different periods
for financial reporting purposes and for purposes of computing currently
payable income taxes, a provision or credit for deferred income taxes is made
for such temporary differences at currently enacted income tax rates
applicable to the period in which realization or settlement is expected. As
changes in tax laws or rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes.
Reclassifications
Certain amounts previously presented in the consolidated financial
statements for prior periods have been reclassified to conform to current
classifications. All such reclassifications had no effect on the prior
periods' net income or retained income as previously reported.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
BASIS OF CONSOLIDATIONS AND PRESENTATION
The unaudited consolidated financial statements include the accounts of
First Financial Holdings, Inc., ("First Financial, or the Company") and its
wholly-owned subsidiaries, First Federal Savings and Loan Association of
Charleston ("First Federal") and Peoples Federal Savings and Loan Association
of Conway ("Peoples Federal") (together, the "Associations"). All significant
intercompany items related to the consolidated subsidiaries have been
eliminated.
GENERAL
The Company's earnings for the second quarter of 1997 increased 21% over
the comparable quarter in 1996. First Financial earned $3.5 million in the
March 1997 quarter compared to $2.9 million in the March 1996 quarter. Per
share earnings of $.56 in the most recent quarter improved 22% over per share
earnings of $.46 in the March 1996 quarter. First Financial earned $6.9
million in the first six months of 1997, increasing 27% over earnings of $5.4
million in the comparable six months of 1996. Per share earnings increased to
$1.09 for the six months ended March 31, 1997 compared with $.86 per share for
the comparable period in 1996.
BALANCE SHEET ANALYSIS
Consolidated assets of the Company totaled $1.6 billion at March 31, 1997.
During the first six months of 1997 assets increased $55.9 million, or 7.2% on
an annualized basis.
Cash, Investment Securities and Mortgage-backed Securities
Cash, deposits in transit and interest-bearing deposits declined $3.2
million during the six months and totaled $30.9 million at March 31, 1997.
Investments held to maturity declined by $7.0 million while investments
available for sale declined $20.8 million. Maturities and sales of
investments totaled $19.1 million during the quarter. Mutual fund balances
declined $8.8 million during the six months. Mortgage-backed securities
totaled $101.8 million at March 31, 1997, increasing $18.8 million during the
first six months of 1997. Purchases of mortgage-backed securities totaled
$30.2 million during the six months.
Loans Receivable
Loans receivable, including loans held for sale, totaled $1.4 billion at
March 31, 1997, increasing $67.3 million from September 30, 1996. The
principal use of the Company's funds is the origination of mortgage and other
loans. The Company originated $122.4 million (net of refinances) in mortgage
loans, $27.7 million in consumer loans and $11.7 million in commercial
business loans during the six months ended March 31, 1997. The Company also
purchased $18.0 million in loans from correspondent originators. The Company
sold $19.1 million in fixed-rate mortgage loans during the current six months.
Loans comprise the major portion of interest-earning assets of the Company,
accounting for 84% of assets at March 31, 1997. The Company's loan portfolio
consists of real estate mortgage and construction loans, home equity and other
consumer loans, credit card receivables and commercial business loans.
Management believes it continues to reduce the risk elements of its loan
portfolio through strategies focusing on residential mortgage and consumer
loan production. The following table summarizes the composition of the
Company's gross loan portfolio (amounts in thousands):
<TABLE>
<CAPTION>
March 31, % of September 30, % of March 31, % of
1997 Total 1996 Total 1996 Total
<S> <C> <C> <C> <C> <C> <C>
Residential (1-4
family) $ 959,124 69.4% $ 903,269 68.5% $ 790,956 65.7%
Other residential 56,180 4.1 56,629 4.3 55,797 4.6
Land and lots 46,168 3.3 38,367 2.9 29,558 2.5
Commercial real estate 168,175 12.2 173,692 13.2 184,092 15.3
Consumer 124,075 9.0 120,285 9.1 115,606 9.6
Commercial business 28,378 2.0 26,634 2.0 27,561 2.3
Total gross loans $ 1,382,100 100.0% $ 1,318,876 100.0% $ 1,203,570 100.0%
</TABLE>
As the above table indicates, gross loan balances increased $63.2 million
during the current six months principally due to growth in 1-4 family
residential loans. These loans currently comprise 69% of total gross loans,
increasing from 66% one year ago. Outstanding commitments to originate
mortgage loans and to fund the undisbursed portion of construction loans
amounted to $48.4 million at March 31, 1997, compared to $47.1 million at
September 30, 1996. Unused lines of credit on equity loans, consumer loans,
credit cards and commercial loans totaled $121.4 million as of March 31, 1997
compared to $ 116.6 million at September 30, 1996.
The Company originates the majority of its loans in its primary market area
located in the coastal region of South Carolina. In an effort to expand
mortgage lending operations and improve earning asset growth the Company began
originating mortgage loans in other markets in 1995. The Company utilizes its
existing mortgage loan products and programs in establishing correspondent
relationships with other lenders.
Asset Quality
The following table summarizes the Company's problem assets for the periods
indicated (amounts in thousands):
March 31, September 30, March 31,
1997 1996 1996
Non-accrual loans $ 19,900 $ 8,129 $ 7,406
Loans 90 days or more delinquent
(1) 747 1,278 482
Renegotiated loans 7,139 8,049 9,207
Real estate and other assets
acquired in settlement of
loans 1,384 2,326 2,606
Total $ 29,170 $ 19,782 $ 19,701
As a percent of net loans and
real estate owned 2.16% 1.54% 1.68%
As a percent of total assets 1.82% 1.28% 1.36%
(1) The Company continues to accrue interest on these loans.
Non-accruing loans and loans contractually delinquent 90 days or more are
comprised of the following types of loans (amounts in thousands):
March 31, September 30, March 31,
1997 1996 1996
Residential (1-4 family) $ 2,191 $ 3,190 $ 3,123
Other residential 3,533 2,928 164
Land and lots 1,475 1,514 1,327
Commercial real estate 11,788 607 1,488
Consumer 890 512 172
Commercial business 770 656 1,614
Total $ 20,647 $ 9,407 $ 7,888
Non-accrual loans increased $11.8 million in the six months ended March 31,
1997. This increase was attributable to the addition of two loans with
combined balances of $11.2 million which became delinquent due to cash flow
problems of the Company s largest borrower. The Company moved quickly to have
a receiver appointed for the two properties. One loan totaling $6.5 million
is collateralized by a 107,000 square foot shopping center and out parcels in
Summerville, South Carolina. The second loan totaling $4.7 million is
collateralized by a 92,000 square foot shopping center in North Charleston,
South Carolina. Management believes that it will be successful in acquiring
the two properties through foreclosure action by June of 1997. The management
company who is acting as the court-appointed receiver will also become the
manager for the property once title is obtained. Assessments are being
conducted for maintenance, upgrading and tenant mix. Both properties have
reasonable occupancy levels and negotiations are underway presently with
possible tenants for existing vacancies. Management believes it will be
successful in correcting noted deficiencies, improving occupancy levels and
marketing the properties for sale.
Allowance for Loan Losses
The allowance for loan losses represents a reserve for potential losses
existing in the loan portfolio. The adequacy of the allowance for loan losses
is evaluated at least quarterly based, among other factors, on a continuous
review of the Company's loan portfolio, with particular emphasis on adversely
classified loans.
The following table sets forth the allocation of the Company's allowance
for loan losses (excluding mortgage-backed securities) at March 31, 1997 and
September 30, 1996 (amounts in thousands). The allocation of the allowance
for loan losses set forth in the table should not be interpreted as an
indication that charge-offs will necessarily occur in these amounts or
proportions or that the allocation indicates future charge-off trends.
<TABLE>
<CAPTION>
March 31, 1997 September 30, 1996
% of % of
Allowance Allowance
Gross Loan to Gross Loan to
Allowance Balance Balance Allowance Balance Balance
<S> <C> <C> <C> <C> <C> <C>
Residential loans:
1-4 family $ 1,820 $ 959,124 0.19% $ 1,872 $ 903,269 .21%
Other 2,507 56,180 4.46 2,465 56,629 4.35
Land and lot loans 1,404 46,168 3.04 1,410 38,367 3.68
Commercial real estate 3,639 168,175 2.16 3,240 173,692 1.87
Commercial business 666 28,378 2.35 925 26,634 3.47
Consumer loans 1,409 124,075 1.14 1,290 120,285 1.07
Total $ 11,445 $ 1,382,100 0.83% $ 11,202 $1,318,876 0.85%
</TABLE>
The following table provides a summary of activity in the allowance for
loan losses for the first six months of fiscal 1997 (amounts in thousands).
Balance Balance
September 30, March 31,
1996 Additions Chargeoffs Recoveries 1997
Real estate $ 8,987 $ 416 $ 87 $ 54 $ 9,370
Commercial business 925 71 331 1 666
Consumer 1,290 563 513 69 1,409
Total $ 11,202 $ 1,050 $ 931 $ 124 $ 11,445
The Company's impaired loans totaled $19.3 million at March 31, 1997, $6.3
million at September 30, 1996 and $5.6 million at March 31, 1996. Included in
the allowance for loan losses at March 31, 1997 is $798 thousand related to
$2.8 million of impaired loans. The remainder of the impaired loans are
recorded at or below fair value.
Deposits and Borrowings
First Financial's deposit composition at the indicated dates is as follows
(amounts in thousands):
<TABLE>
<CAPTION>
March 31, 1997 September 30, 1996 March 31, 1996
% of % of % of
Balance Total Balance Total Balance Total
<S> <C> <C> <C> <C> <C> <C>
Checking accounts $ 128,713 12.11% $ 123,907 11.67% $ 123,596 11.61%
Passbook, statement and
other accounts 118,819 11.18 119,509 11.26 121,502 11.42
Money market accounts 131,814 12.40 131,393 12.38 131,397 12.35
Certificate accounts 683,720 64.31 686,808 64.69 687,552 64.62
Total deposits $ 1,063,066 100.00% $ 1,061,617 100.00% $1,064,047 100.00%
Checking and other transaction account balances have increased as the
Company has emphasized growth in these types of products. While deposits
remain a primary, highly stable source of funds for the Company, deposits have
declined as a percentage of liabilities over recent years. At March 31, 1997,
deposits as a percentage of liabilities, declined to 71% from 79% at March 31,
1996.
Primarily as a result of growth in loans receivable during the six months
ended March 31, 1997 and the utilization of FHLB advances as a primary source
of funds, total borrowings increased $67.1 million during the period.
Stockholders' Equity
Stockholders' equity increased $3.7 million during the first six months of
fiscal 1997 to total $98.5 million at March 31, 1997. The Company's capital
ratio, total capital to total assets, was 6.15% at March 31, 1997, compared to
6.13% at September 30, 1996. During the current six months, the Company
repurchased approximately 67,000 shares of common stock at an average price of
$22.45. In total, the Company repurchased 93,000 shares under its latest
stock repurchase program which ended March 31, 1997. During the six months,
the Company increased its dividends paid to $.36 per share compared with $.32
per share in the first six months of 1996.
Regulatory Capital
Under current Office of Thrift Supervision ("OTS") regulations, savings
associations must satisfy three minimum capital requirements: core capital,
tangible capital and risk-based capital. Savings associations must meet all
of the standards in order to comply with the capital requirements. At March
31, 1997, both subsidiaries were categorized as "well capitalized" under the
Prompt Corrective Action regulations adopted by the OTS pursuant to the
Federal deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). To
remain in this status, the Associations must maintain core and risk-based
capital ratios of at least 5.0% and 10.0%, respectively.
The following table summarizes the capital requirements for First Federal
and Peoples Federal as well as their capital positions at March 31, 1997:
First Federal Peoples Federal
Percent
Percent of
Amount of Assets Amount Assets
(Amounts in thousands)
Tangible capital $75,689 6.73% $ 30,458 6.54%
Tangible capital requirement 16,868 1.50 6,985 1.50
Excess $58,821 5.23% $ 23,473 5.04%
Core capital $75,689 6.73% $ 30,458 6.54%
Core capital requirement 33,736 3.00 13,970 3.00
Excess $41,953 3.73% $ 16,488 3.54%
Risk-based capital(a) $82,390 10.57% $ 32,396 12.51%
Minimum risk-based capital
requirement(a) 62,373 8.00 20,715 8.00
Excess(a) $20,017 2.57% $ 11,681 4.51%
(a) Based on total risk-weighted assets.
For a complete discussion of capital issues, refer to "Capital
Requirements" and "Limitations on Capital Distributions" in the Company's 10K
for the fiscal year ending September 30, 1996.
LIQUIDITY AND ASSET AND LIABILITY MANAGEMENT
Liquidity
The Associations are subject to federal regulations which require the
maintenance of a daily average balance of liquid assets equal to 5.00% of net
withdrawable savings and borrowings payable in one year. First Federal had an
average liquidity ratio of 5.27% for the current six months compared to 6.54%
for the comparable period in fiscal 1996. Peoples Federal's average liquidity
ratio was 7.00% during the present six months compared with 7.05% in the prior
period.
The Associations' primary sources of funds consist of retail deposits,
borrowings from the FHLB, principal repayments on loans and mortgage-backed
securities, securities sold under agreements to repurchase and the sale of
loans. Each of the Association's sources of liquidity are subject to various
uncertainties beyond the control of the Associations. As a measure of
protection, the Association's have back-up sources of funds available,
including excess FHLB borrowing capacity and excess liquidity in securities
available for sale.
During the current six months the Company experienced a net cash outflow
from investing activities of $56.6 million, consisting principally of loans
originated and purchased for investment, and mortgage-backed securities
purchased, which were partially offset by sales and maturities of investment
securities. The Company experienced cash outflows of $8.9 million from
operating activities principally as a result of a $13.5 million decrease in
accounts payable and accrued expenses. Financing activities resulted in cash
inflows of $62.3 million, consisting principally of $54.0 million in FHLB
advances and $13.2 million in securities sold under agreements to repurchase.
Parent Company Liquidity
As a holding company, First Financial conducts its business through its
subsidiaries. First Financial issued $20.3 million in senior notes of the
Company in September 1992 principally for the purpose of acquiring Peoples
Federal. Potential sources for First Financial's payment of principal and
interest on the notes include: (I) dividends from First Federal and Peoples
Federal; (ii) payments from existing cash reserves and sales of marketable
investment securities; and (iii) interest on investment assets.
The Company has agreed to prepay, at a price of 100% of the principal plus
accrued interest to the date of prepayment, up to $1.0 million of the notes
tendered by noteholders for prepayment during the period of issuance through
September 1, 1993, and thereafter in any twelve month period ending September
1, subject to certain limitations. As of March 31, 1997, First Financial had
cash reserves and marketable securities of $10.7 million.
First Federal's and Peoples Federal's ability to pay dividends and make
other capital contributions to First Financial is restricted by regulation and
may require regulatory approval. First Federal's and Peoples Federal's
ability to make distributions may also depend on each institution's ability to
meet minimum regulatory capital requirements in effect during the period. For
a complete discussion of capital distribution regulations, refer to
"Limitations on Capital Distributions" in the Company's 10K for the fiscal
year ending September 30, 1996.
Asset/Liability Management
The Company's Asset and Liability Committees establish policies and monitor
results to control interest rate sensitivity. Although the Company utilizes
measures such as static gap, which is simply the measurement of the difference
between interest-sensitive assets and interest-sensitive liabilities repricing
for a particular time period, just as important a process is the evaluation of
how particular assets and liabilities are impacted by changes in interest
rates or selected indices as they reprice. Asset/liability modeling is
performed by the Company to assess varying interest rate and balance mix
assumptions. These projections enable the Company to adjust its strategies to
lessen the impact of significant interest rate fluctuations.
The following table is a summary of First Financial's one year gap at
indicated dates (amounts in thousands):
March 31, September 30, March 31,
1997 1996 1996
Interest-earning assets maturing or
repricing within one year $ 821,242 $ 843,281 $ 889,694
Interest-bearing liabilities maturing
or repricing within one year 1,007,934 1,008,920 958,331
Cumulative gap $ (186,692) $ (165,639) $ (68,637)
Gap as a percent of total assets (11.65)% (10.71)% (4.74)%
The Company's one year gap as a percent of total assets changed from
(10.71)% to (11.65)% during the current six months. One year ago, the
Company's one year gap as a percent of total assets was (4.74)%. The
respective ratios and dollars repricing as shown in the above table do not
take into effect prepayments to mortgage, consumer and other loans and
mortgage-backed securities. The trend in the one year static gap is
indicative of the retention of selected fixed-rate loans by the Company
throughout most of fiscal 1996. In addition, the Company has extended
maturities of interest-sensitive assets through origination of loans which
have a fixed rate of interest for three, five, or seven years and then adjust
annually thereafter to a treasury index.
A negative gap indicates that cumulative interest-sensitive liabilities
exceed cumulative interest-sensitive assets and suggests that net interest
income would decline if market interest rates increased. A positive gap would
suggest the reverse. This relationship is not always ensured due to the
repricing attributes of both interest sensitive assets and interest sensitive
liabilities. The Company has a variety of methods available to adjust its
interest sensitivity and expects to increase the average maturity of its
interest-sensitive liabilities throughout the remainder of fiscal 1997.
COMPARISON OF OPERATING RESULTS
QUARTERS ENDING March 31, 1997 AND 1996
Net Interest Income
First Financial's net interest income for the quarter ending March 31, 1997
was $12.1 million compared with $11.3 million for the comparable quarter in
fiscal 1996. The gross interest margin declined from 3.01% in the prior
quarter to 2.93% in the current quarter.
The following table summarizes rates, yields and average earning asset and
costing liability balances for the respective quarters (amounts in thousands):
Quarter Ended March 31,
1997 1996
Average Average
Average Yield/ Average Yield/
Balance Rate Balance Rate
Loans and mortgage-backed $1,256,487 8.14%
securities $ 1,445,413 7.91%
Investments and other interest- 131,150 6.32
earning assets 101,325 6.58
Total interest-earning assets $ 1,546,738 7.82% $1,387,637 7.97%
Deposits $ 1,059,670 4.55% $1,059,935 4.70%
Borrowings 414,342 5.76 256,681 6.01
Total interest-bearing liabilities $ 1,474,012 4.89% $1,316,616 4.96%
Gross interest margin 2.93% 3.01%
Net interest margin 3.12% 3.25%
The following rate/volume analysis depicts the increase (decrease) in net
interest income attributable to interest rate and volume fluctuations compared
to the prior period (amounts in thousands):
Quarter Ended March 31
1997 versus 1996
Volume Rate Total
Interest income:
Loans and mortgage-backed securities $ 3,662 $ (737) $ 2,925
Investments and other interest-
earning assets (621) 56 (565)
Total interest income 3,041 (681) 2,360
Interest expense:
Deposits (4) (491) (495)
Borrowings 2,218 (166) 2,052
Total interest expense 2,214 (657) 1,557
Net interest income $ 827 $ (24) $ 803
Total interest income for the current quarter of $29.8 million represents
growth of $2.4 million from the comparative quarter in fiscal 1996. Average
balances of earning assets increased $159.1 million during the current quarter
compared to the March 1996 quarter. Average yields on loans and mortgage-
backed securities declined by 23 basis points and the average yield on all
other earning assets increased 26 basis points.
Total interest expense increased $1.6 million during the current quarter,
with average interest-bearing liability balances increasing by $157.4 million.
The average cost of deposits declined 15 basis points while the average cost
of borrowings declined 25 basis points. The Company's overall cost of funds
improved by 7 basis points to 4.89% from 4.96% in the prior period.
Provision for Loan Losses
During the current quarter, First Financial's provision for loan losses
totaled $525 thousand, compared to $420 thousand during the same period in the
previous year. Net charge-offs for the current quarter totaled $288 thousand
compared with $236 thousand in the comparable quarter in fiscal 1996. Total
loan loss reserves as of March 31, 1997 and 1996 were $11.4 million and $11.0
million, respectively. Loan loss reserves as a percentage of the total net
loan portfolio, excluding mortgage-backed securities, were .85% and .94% at
March 31, 1997 and 1996, respectively.
Other Income/Non-Interest Expenses
Total other income increased $534 thousand, or 22%, in the current
quarter. Fees on deposit accounts increased $145 thousand during the current
quarter, reflecting increased balances in checking and other transaction
accounts at the Company and changes to service charge pricing structure since
the March 1996 quarter. Bank card fee income increased $154 thousand in the
current quarter and commissions on sales of insurance and alternative
investment products increased $188 thousand.
Non-interest expense increased $259 thousand during the current quarter.
Non-interest expense as a percentage of average assets declined from 2.44% in
the March 31, 1996 quarter to 2.26% in the current quarter. The increase in
the current quarter is primarily attributable to staff additions related to
the opening of a new branch office in Surfside Beach, South Carolina and the
expansion of Link Investment Services.
Under the Deposit Insurance Funds Act of 1996, a special assessment was
charged to the Associations and other institutions with deposits insured by
the Savings Association Insurance Fund ( SAIF ). This $7.0 million expense
was recorded in the quarter ended September 30, 1996 and is discussed under
Federal Deposit Insurance Corporation ("FDIC") in the Company s Form 10-K
for the year ended September 30, 1996. FDIC premium expense declined $470
thousand in the current quarter compared with the comparable quarter in fiscal
1996. Both Associations benefited from lowered assessments in the March 1997
quarter, which declined 16.5 basis points from a rate of 23 basis points to
6.5 basis points, on an annualized basis.
Income Tax Expense
During the current quarter, the Company's effective tax rate was 36.4%
compared to 36.3% in the comparable quarter. The actual tax provision of $2.0
million resulted in an increase of $359 thousand from the prior period.
COMPARISON OF OPERATING RESULTS
SIX MONTHS ENDING March 31, 1997 AND 1996
Net Interest Income
First Financial's net interest income for the six months ending March 31,
1997 was $24.2 million compared with $21.9 million for the comparable six
months in fiscal 1996. The gross interest margin declined from 2.92% in the
prior six months to 2.91% in the current six months.
The following table summarizes rates, yields and average earning asset and
costing liability balances for the respective periods (amounts in thousands):
Six Months Ending
March 31,
1997 1996
Average Average
Average Yield/ Average Yield/
Balance Rate Balance Rate
Loans and mortgage-backed
securities $ 1,420,791 7.90% $ 1,238,730 8.07%
Other interest-earning assets 111,471 6.36 128,674 6.25
Total interest-earning assets $ 1,532,262 7.79% $ 1,367,404 7.90%
Deposits $ 1,060,015 4.53% $ 1,064,872 4.74%
Borrowings 392,339 5.81 226,827 6.11
Total interest-bearing
liabilities $ 1,452,354 4.88% $ 1,291,699 4.98%
Gross interest margin 2.91% 2.92%
Net interest margin 3.16% 3.20%
The following rate/volume analysis depicts the increase (decrease) in net
interest income attributable to interest rate and volume fluctuations compared
to the prior period (amounts in thousands):
Six Months Ending March 31,
1997 versus 1996
Volume Rate Total
Interest income:
Loans and mortgage-backed securities $ 7,194 $ (1,069) $ 6,125
Investments and other interest-
earning assets (687) 51 (636)
Total interest income 6,507 (1,018) 5,489
Interest expense:
Deposit accounts (115) (1,119) (1,234)
Borrowings 4,761 (358) 4,403
Total interest expense 4,646 (1,477) 3,169
Net interest income $ 1,861 $ 459 $ 2,320
Provision for Loan Losses
During the current six months, First Financial's provision for loan losses
totaled $1.1 million, compared to $725 thousand during the same period in the
previous year. Net charge-offs for the current six months totaled $807
thousand compared with $379 thousand in the comparable period in fiscal 1996.
Other Income/Non-interest Expense
Total other income improved $1.0 million in the current six months. Fees
on deposit accounts increased $323 thousand during the current six months
while brokerage fees and bank card fees increased $154 thousand and $234
thousand, respectively, in the current period. The Company recorded gains of
$118 thousand on loan sales during the current six months compared with gains
of $2 thousand in the six months ended March 31, 1997.
Non-interest expense increased $590 thousand or 3.4% during the current six
months. General and administrative expenses as a percentage of average assets
declined from 2.48% in the prior period to 2.29% in the current period.
Salaries and employee benefits increased $883 thousand in the six months ended
March 31, 1997. Most of the increase was attributable to expansion of Link
Investment Services, an additional branch location and annual merit increases
for existing staff. FDIC insurance premiums in the current six months were
approximately one-half of the cost in the prior period due to lower premium
rates in effect during the current period. FDIC premiums for the remainder of
fiscal 1997 should approximate $345 thousand. Included in the $3.9 million
of other expense for the prior six months was a non-recurring expense of $348
thousand related to a deposit account.
Income Tax Expense
During the first six months, the Company's effective tax rate was 36.8%
compared to 36.3% in the comparable period. The actual tax provision of $4.0
million resulted in an increase of $925 thousand from the prior period.
IMPACT OF REGULATORY AND ACCOUNTING ISSUES
For a comprehensive discussion of regulatory and accounting issues, refer
to "Federal Regulation of Savings Associations" in the Company's 10K for the
fiscal year ending September 30, 1996.
In an effort to simplify the current standards in the United States for
computing earnings per share ("EPS") and make them compatible with
international standards, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share" ("SFAS 128"), in February 1997. SFAS 128 applies to entities with
publicly traded common stock or potential common stock and is effective for
financial statements for periods ending after December 15, 1997, including
interim periods. SFAS 128 simplifies the standards for computing earnings per
share previously found in APB Opinion 15, "Earnings per Share." It replaces
the presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all companies with complex capital structures and requires
reconciliation of the numerator and denominator of the basic EPS computation
to the numerator and denominator of the diluted EPS computation. The Company's
present computation of diluted EPS under APB Opinion 15 is applied against
a materiality test of 3 percent. For financial statements issued by the
Company after December 15, 1997, the materiality test will no longer apply
and the Company will report basic and diluted EPS for each period presented
as well as the futher reconciliations required by SFAS 128. Although earlier
application is not permitted, SFAS 128 will require restatement of all
prior-period EPS data presented.
The FASB also issued Statement of Financial Accounting Standards No. 129
"Disclosure of Information about Capital Structure" ("SFAS 129") in
February 1997. The purpose of SFAS 129 is to consolidate existing disclosure
requirements for ease of retrieval. SFAS 129 contains no change in disclosure
requirements for companies, such as First Financial, that were subject to
the previously existing requirements. It applies to all entities and is
effective for financial statements issued for periods ending after
December 15, 1997.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
OTHER INFORMATION
Item 1 - Legal Proceedings
Periodically, there are various claims and lawsuits involving the
Associations and their subsidiaries mainly as defendants, such as claims to
enforce liens, condemnation proceedings on properties in which the
Associations hold security interests, claims involving the making and
servicing of real property loans and other issues incident to the
Association's business. In the opinion of management and the Company's legal
counsel, no material loss is expected from any of such pending claims or
lawsuits.
Item 6 - Exhibits and Report on Form 8-K.
There were no reports on Form 8-K filed during the quarter ended March 31,
1997.
Exhibits
(3.1) Certificate of Incorporation, as amended, of Registrant (1)
(3.2) Bylaws, as amended, of Registrant (2)
(4) Indenture, dated September 10, 1992, with respect to the
Registrant's 9.375% Senior Notes, due September 1, 2001 (3)
(10.1) Acquisition Agreement dated as of December 9, 1991 by and among the
Registrant, First Federal Savings and Loan Association of Charleston
and Peoples Federal Savings and Loan Association of Conway (3)
(10.3) Employment Agreement with A. Thomas Hood, as amended (8)
(10.4) Employment Agreement with Charles F. Baarcke, Jr. (4)
(10.5) Employment Agreement with John L. Ott, Jr. (4)
(10.6) 1990 Stock Option and Incentive Plan (5)
(10.7) 1994 Outside Directors Stock Options-for-Fees Plan (6)
(10.8) 1994 Employee Stock Purchase Plan (6)
(10.9) 1996 Performance Equity Plan for Non-Employee Directors (7)
(10.10) Employment Agreement with Susan E. Baham (8)
(22) Subsidiaries of the Registrant (8)
- ----------------
(1) Incorporated by reference to Exhibit 3 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1993
(2) Incorporated by reference to Exhibit 3 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995
(3) Incorporated by reference to the Registrant's Registration Statement on
Form S-8 File No. 33-55067
(4) Incorporated by reference to the Registrant s Annual Report on Form 10-K
for the year ended September 30, 1995
(5) Incorporated by reference to the Registrant's Registration Statement on
Form S-8 File No. 33-57855
(6) Incorporated by reference to the Registrant's Proxy Statement for the
Annual Meeting of Stockholders held on January 25, 1995
(7) Incorporated by reference to the Registrant s Proxy Statement for the
Annual Meeting of Stockholders to be held on January 22, 1997.
(8) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1996.
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
First Financial Holdings, Inc.
Date: May 14, 1997 By: /s/ A. Thomas Hood
A. Thomas Hood
President and Chief Executive Officer
Duly Authorized Representative
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 26,080
<INT-BEARING-DEPOSITS> 4,860
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 147,424
<INVESTMENTS-CARRYING> 38,800
<INVESTMENTS-MARKET> 38,676
<LOANS> 1,358,887
<ALLOWANCE> 11,445
<TOTAL-ASSETS> 1,602,018
<DEPOSITS> 1,063,066
<SHORT-TERM> 396,352
<LIABILITIES-OTHER> 0
<LONG-TERM> 19,763
<COMMON> 70
0
0
<OTHER-SE> 98,448
<TOTAL-LIABILITIES-AND-EQUITY> 1,602,018
<INTEREST-LOAN> 56,139
<INTEREST-INVEST> 2,070
<INTEREST-OTHER> 1,317
<INTEREST-TOTAL> 59,526
<INTEREST-DEPOSIT> 24,000
<INTEREST-EXPENSE> 35,331
<INTEREST-INCOME-NET> 24,195
<LOAN-LOSSES> 1,050
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 4,032
<INCOME-PRETAX> 10,919
<INCOME-PRE-EXTRAORDINARY> 6,906
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,906
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
<YIELD-ACTUAL> 3.16
<LOANS-NON> 19,900
<LOANS-PAST> 747
<LOANS-TROUBLED> 7,139
<LOANS-PROBLEM> 27,786
<ALLOWANCE-OPEN> 11,202
<CHARGE-OFFS> 931
<RECOVERIES> 124
<ALLOWANCE-CLOSE> 11,445
<ALLOWANCE-DOMESTIC> 11,445
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
