The following table shows, at September 30, 2000, the dollar amount of adjustable-rate loans and fixed-rate loans in the Company's portfolio based on their contractual terms to maturity. The amounts in the table do not include adjustments for undisbursed amounts in loans in process, deferred loan fees and discounts or allowances for loan losses. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. Contractual principal repayments of loans do not necessarily reflect the actual term of the Company's loan portfolios. The average life of mortgage loans is substantially less than their contractual terms because of loan prepayments and because of enforcement of due-on-sale clauses, which gives the Company the right to declare a loan immediately due and payable if, among other things, the borrower sells the real property subject to the mortgage. The average life of mortgage loans tends to increase when current market rates on mortgage loans substantially exceed rates on existing mortgage loans. Correspondingly, when market rates on mortgages decline below rates on existing mortgage loans, the average life of these loans tends to be reduced.

Consolidated		Within One Year	Over One to Two Years	Over Two to Three Years	Over Three to Five Years	Over Five to Ten Years	Over Ten to Fifteen Years	Over Fifteen Years	Total
		(in thousands)
Real estate mortgages:
	Adjustable-rate	$ 3,611	$ 1,614	$ 4,166	$ 4,538	$   21,700	$ 65,830	$ 769,996	$    871,455
	Fixed-rate	43,449	30,400	22,748	40,717	84,947	140,221	251,791	614,273
Consumer loans:
	Adjustable-rate	125,490	355	551	1,048	2,496	1,551	627	132,118
	Fixed-rate	30,077	9,482	14,104	42,636	29,032	11,840	42,702	179,873
Commercial business loans:
	Adjustable-rate	17,955	2,998	869	2,500	261	75		24,658
	Fixed-rate	13,986	4,255	5,661	8,567	229	25		32,723
Total		$ 234,568	$ 49,104	$ 48,099	$ 100,006	$  138,665	$ 219,542	$ 1,065,116	$ 1,855,100

Residential Mortgage Lending

At September 30, 2000, the Company's real estate loans totaled approximately $1.5 billion, or 83.7% of net loans receivable. One- to four-family residential mortgage loans totaled $1.3 billion, or 82.4% of the Company's real estate loans and 68.9% of total net loans receivable. The Company offers adjustable-rate mortgage loans ("ARMs") and fixed-rate mortgage loans with terms ranging from 10 years to 30 years.

The ARMs currently offered by the Company have up to 30-year terms and interest rates which adjust annually or adjust annually after being fixed for a period of three, five or seven years in accordance with a designated index. ARMs may be originated with a 1% or 2% cap on any increase or decrease in the interest rate per year, with a 4%, 5% or 6% limit on the amount by which the interest rate can increase or decrease over the life of the loan.

The Company emphasizes the origination of ARMs rather than long-term, fixed-rate mortgage loans for inclusion in its loan portfolios. In order to encourage the origination of ARMs with interest rates which adjust annually, the Company, like many of its competitors, may offer a rate of interest on such loans below the fully-indexed rate for the initial period of the loan. The Company presently offers single-family ARMs indexed to the one year constant maturity treasury index. While these loans are expected to adjust more quickly to changes in market interest rates, they may not adjust as rapidly as changes occur in the Company's cost of funds. Included in the Company's single-family ARMs are loans originated in the past which reprice to spreads over cost of funds indices. The Company underwrites ARMs based on the fully-indexed rate. The Company's fixed-rate residential mortgage loans have terms ranging from 10 to 30 years and require monthly payments sufficient to amortize principal over the life of the loan.

The Company originates residential mortgage loans with loan-to-value ratios up to 95%. Generally, on mortgage loans exceeding the 80% loan-to-value ratio, the Company requires private mortgage insurance which protects the Company against losses of at least 20% of the mortgage loan amount. All property securing real estate loans made by the Company is appraised either by appraisers employed by the Company or by independent appraisers selected by the Company. Loans are usually made pursuant to certain guidelines which will permit the sale of these loans in the secondary market.

The Company offers various other residential lending programs, including bi-weekly mortgage loans and two-step mortgage loans originated principally for first-time home buyers. The Company also offers, as part of its Community Reinvestment Act program, more flexible underwriting criteria to broaden the availability of mortgage loans in the communities it serves.

The majority of the Company's residential construction loans are made to finance the construction of individual owner-occupied houses with up to 90% loan-to-value ratios. Residential construction loans totaled $80.8 million at September 30, 2000. These construction loans are generally structured to be converted to permanent loans at the end of the construction phase. Loan proceeds are disbursed in increments as construction progresses and as inspections warrant. As part of its residential lending program, the Company also offers construction loans with 75% loan-to-value ratios to qualified builders. These construction loans are generally at a competitive fixed rate of interest for one- or two-year periods. The Company also offers lot loans intended for residential use, which may be on a fixed-rate or adjustable-rate basis.

Commercial Real Estate, Multi-family and Land Lending

At September 30, 2000, the Company's commercial real estate portfolio totaled $131.0 million, or 7.1% of total net loans and 8.5% of real estate loans. Its multi-family portfolio totaled $48.9 million, or 2.7% of total net loans and 3.2% of total real estate loans. Loans made with land as security totaled $91.4 million, or 5.0% of total net loans and 5.9% of total real estate loans. Because of market conditions, since 1993 the Company has limited growth in loans made on commercial real estate, multi-family properties and on land acquisition and development projects and placed greater emphasis on single-family real estate lending.

Interest rates charged on permanent commercial real estate loans are determined by market conditions existing at the time of the loan commitment. Generally, the loans are adjustable in interest and the rate is fixed for three to five years determined by market conditions, collateral and the relationship with the borrower. The amortization of the loans vary but will not exceed 20 years. In the past, the Company originated a substantial portion of its commercial real estate loans at rates generally two to three percentage points above its prevailing cost of funds. As these loans reach call or loan review dates or refinance, it is the Company's current policy to negotiate most of these loans to new terms based either on the prime lending rate as the interest rate index or to fix the rate of interest for a three year to five year period.

Commercial and multi-family mortgage lending generally involves greater risk than single-family lending. Such lending typically involves larger loan balances to single borrowers or groups of related borrowers than single-family lending. Furthermore, the repayment of loans secured by income-producing properties is typically dependent upon the successful operation of the related real estate project. If the cash flow from the property is reduced (for example, if leases are not obtained or renewed), the borrower's ability to repay the Company's loans may be impaired. These risks can be affected significantly by supply and demand in the market for the type of property securing the loan and by general economic conditions, and commercial and multi-family loans may thus be subject, to a greater extent than single-family property loans, to adverse conditions in the economy.

Consumer Lending

Federal regulations permit the Company to make secured and unsecured consumer loans up to 35% of assets. In addition, the Associations have lending authority above the 35% category for certain consumer loans, such as home equity loans, property improvement loans, mobile home loans and loans secured by savings accounts. The Company's consumer loans totaled $312.0 million at September 30, 2000, or 16.9% of net loans receivable. The largest component of consumer lending is comprised of single-family home equity lines of credit and other equity loans, currently totaling $122.0 million, or 39.1% of all consumer loans. Other consumer loans primarily consist of loans secured by mobile homes, boats, automobiles and credit cards.

Commercial Business Lending

The Company is permitted under federal law to make secured or unsecured loans for commercial, corporate business and agricultural purposes including issuing letters of credit. The aggregate amount of such loans outstanding generally may not exceed 20% of an institution's assets, provided that amounts in excess of 10% of total assets may be used only for small business loans.

The Company's commercial business loans are generally made on a secured basis with terms that usually do not exceed five years. Most of the Company's commercial business loans to date have interest rates that change at periods ranging from 30 days to one year based on the Company's prime lending rate. Some loans have fixed interest rates determined at the time of commitment. At September 30, 2000, the Company's commercial business loans outstanding were $57.4 million, which represented 3.1% of total net loans receivable.

Loan Sales and Servicing

While the Company originates adjustable-rate loans for its own portfolio, fixed-rate loans are generally made on terms that will permit their sale in the secondary market. The Company participates in secondary market activities by selling whole loans and participations in loans to the Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as other institutional investors. This practice enables the Company to satisfy the demand for such loans in its local communities, to meet asset and liability objectives of management and to develop a source of fee income through loan servicing. At September 30, 2000, the Company was servicing loans for others in the amount of $648.2 million.

Based on the current level of market interest rates and other factors, the Company presently intends to sell selected current originations of conforming 30-year and 15-year conventional fixed-rate mortgage loans. The Company's policy with respect to the sale of fixed-rate loans is dependent to a large extent on the general level of market interest rates. Sales of fixed-rate residential loans totaled $48.4 million in 2000, $200.3 million in 1999 and $173.0 million in 1998. At September 30, 2000, the Company had $9.4 million in loans held for sale.

Risk Factors

Certain risks are inherent with loan portfolios which contain commercial real estate, multi-family, commercial business and consumer loans. While these types of loans provide benefits to the Company's asset/liability management programs and reduce exposure to interest rate changes, such loans may entail significant additional credit risks compared to residential mortgage lending. Commercial real estate and multi-family loans may involve large loan balances to single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by income-producing properties is typically dependent on the successful operation of the properties and thus may be subject to a greater extent to adverse conditions in the local or regional real estate market or in the general economy.

Commercial business lending generally involves greater risk than residential mortgage lending and involves risks that are different from those associated with residential, commercial and multi-family real estate lending. Real estate lending is generally considered to be collateral based lending with loan amounts based on predetermined loan to collateral values and liquidation of the underlying real estate collateral is viewed as the primary source of repayment in the event of borrower default. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable or other business assets, the liquidation of collateral in the event of a borrower default is often not a sufficient source of repayment because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial business loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment.

Construction loans also involve additional risks attributable to the fact that loan funds are advanced upon the security of the project under construction.

Consumer loans entail greater risk than do residential mortgage loans, particularly in the case of loans that are unsecured or secured by rapidly depreciating assets such as automobiles and other vehicles. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

All of the above risk factors are present in the Company's loan portfolio and could have an impact on future delinquency and charge-off rates and levels.

Limits on Loan Concentrations

The Associations' permissible lending limits for loans to one borrower is the greater of $500,000, or 15% of unimpaired capital and surplus (except for loans fully secured by certain readily marketable collateral, in which case this limit is increased to 25% of unimpaired capital and surplus). At September 30, 2000, First Federal's and Peoples Federal's lending limits under this restriction were $16.4 million and $7.4 million, respectively. A broader limitation (the lesser of $30 million, or 30% of unimpaired capital and surplus) is provided under certain circumstances and subject to OTS approval for loans to develop domestic residential housing units. In addition, the Associations may provide purchase money financing for the sale of any asset without regard to the loans to one borrower limitation so long as no new funds are advanced and the Associations are not placed in a more detrimental position than if they had held the asset. At September 30, 2000, the largest aggregate amount of loans by First Federal and Peoples Federal to any one borrower, including related entities, was approximately $13.4 million and $3.3 million, respectively. All of these loans were performing according to their respective terms at September 30, 2000.

Delinquencies and Nonperforming Assets

Delinquent and problem loans are a normal part of any lending activity. When a borrower fails to make a required payment on a loan, the Company attempts to cure the default by contacting the borrower. The Company contacts the borrower after a payment is past due less than 20 days, and a late charge is assessed on the loan. In most cases, defaults are cured promptly. If the delinquency on a mortgage loan continues 60 to 90 days and is not cured through normal collection procedures or an acceptable arrangement is not worked out with the borrower, the Company will institute measures to remedy the default, including commencing a foreclosure action. The Company may accept voluntary deeds of the secured property in lieu of foreclosure.

The Company's mortgage loans are generally secured by the use of a mortgage instrument. Notice of default under these loans is required to be recorded and mailed. If the default is not cured within three months, a notice of sale is posted, mailed and advertised, and a sale is then conducted.

Real estate acquired by the Company as a result of foreclosure or by deed in lieu of foreclosure is classified as real estate owned until it is sold. When property is acquired, it is recorded at the lower of cost or estimated fair value less cost to sell at the date of acquisition, and any resulting write-down is charged to the allowance for losses. Generally, interest accrual on a loan ceases when the loan becomes 90 days delinquent.

OTS Asset Classification System

OTS regulations include a classification system for problem assets. Under this classification system, problem assets for insured institutions are classified as "substandard," "doubtful" or "loss," depending on the presence of certain characteristics discussed below.

An asset is considered "substandard" if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. "Substandard" assets include those assets characterized by the "distinct possibility" that the institution will sustain "some loss" if the deficiencies are not corrected. Assets classified as "doubtful" have all of the weaknesses inherent in those classified "substandard" with the added characteristic that the weaknesses present make "collection or liquidation in full," on the basis of currently existing facts, conditions, and values, "highly questionable and improbable." Assets classified "loss" are those considered "uncollectible" and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.

When an institution classifies problem assets as either substandard or doubtful, it is required to establish general allowances for loan losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risks associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an institution classifies problem assets as "loss," it is required either to establish a specific allowance for losses equal to 100% of the amount of the asset so classified or to charge off such amount. An institution's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the OTS, which can order the establishment of additional general or specific loss allowances. The Company has classified $22.5 million in assets as substandard and $151,000 as doubtful, as of September 30, 2000.

The OTS classification of assets regulation also provides for a "special mention" designation, in addition to the "substandard," "doubtful" and "loss" classifications. "Special mention" assets are defined as those that do not currently expose an institution to a sufficient degree of risk to warrant classification as either "substandard," "doubtful" or "loss" but do possess credit deficiencies or potential weaknesses deserving management's close attention which, if not corrected, could weaken the asset and increase such risk in the future. The Company had $6.9 million of assets designated "special mention" as of September 30, 2000.

Management periodically reviews its loan portfolio, and has, in the opinion of management, appropriately classified and established allowances against all assets requiring classification under the regulation.

For further discussion of the Company's problem assets, see Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Asset Quality," and Note 7 of Notes to Consolidated Financial Statements contained in Item 8 herein.

INVESTMENT ACTIVITIES

The Associations are required under federal regulations to maintain a minimum amount of liquid assets which may be invested in specified short-term securities and are also permitted to invest in other types of securities. Investment decisions are made by authorized officers of the Company and the Associations within policies established by the Company's and the Associations' Boards of Directors.

At September 30, 2000, the Company's investment and mortgage-backed securities portfolio totaled approximately $292.6 million, which included stock in the FHLB of Atlanta of $39.3 million. Investment securities include U.S. Government and agency obligations, corporate bonds and mutual funds approximating $6.2 million. Mortgage-backed securities totaled $247.1 million as of September 30, 2000. See Note 1 of Notes to Consolidated Financial Statements, contained in Item 8 herein for a discussion of the Company's accounting policy for investment and mortgage-backed securities. See Notes 3, 4 and 5 of Notes to Consolidated Financial Statements for additional information regarding investment and mortgage-backed securities and FHLB of Atlanta stock.

Objectives of the investment policies of the Company are achieved through investing in U.S. Government, federal agency, corporate debt securities, mortgage-backed securities, short-term money market instruments, mutual funds, loans and other investments as authorized by OTS regulations and specifically approved by the Boards of Directors of the Company and the Associations. Investment portfolio guidelines specifically identify those securities eligible for purchase and describe the operations and reporting requirements of the Investment Committees which execute investment policy. The primary objective of the Company in its management of the investment portfolio is to maintain a portfolio of high quality, highly liquid investments with returns competitive with short-term treasury or agency securities and highly rated corporate securities.

As members of the FHLB System, the Associations are required to maintain an investment in the common stock of the FHLB of Atlanta. See "Regulation -- Federal Regulation of Savings Associations -- Federal Home Loan Bank System." The stock of the FHLB of Atlanta is redeemable at par value.

Securities may differ in terms of default risk, interest risk, liquidity risk and expected rate of return. Default risk is the risk that an issuer will be unable to make interest payments, or to repay the principal amount on schedule. The Company primarily invests in U.S. Government and federal agency obligations. U.S. Government obligations are regarded as free of default risk. The issues of most government agencies are backed by the strength of the agency itself plus a strong implication that in the event of financial difficulty, the agency would be assisted by the federal government. The credit quality of corporate debt varies widely. The Company only invests in corporate debt securities which are rated in either one of the three highest categories by two nationally recognized investment rating services.

The Company's investment in mortgage-backed securities serves several primary functions. First, the Company has securitized whole loans for mortgage-backed securities issued by federal agencies to use as collateral for certain of its borrowings and to secure public agency deposits. Second, the Company previously securitized loans with federal agencies to reduce its credit risk exposure and to reduce regulatory risk-based capital requirements. Third, the Company acquires mortgage-backed securities from time to time to meet earning asset growth objectives and provide additional interest income when necessary to augment lower loan originations and replace loan portfolio runoff.

The following tables set forth the carrying value of the Company's investment and mortgage-backed securities portfolio (excluding stock in the FHLB of Atlanta), maturities and average yields at September 30, 2000. The fair value of the Company's investment and mortgage-backed securities portfolio (excluding stock in the FHLB of Atlanta) was $253.3 million on September 30, 2000.

Investment and Mortgage-backed Securities Portfolio
				As of September 30,
				2000			1999		1998
				Amortized Cost	Fair		Amortized Cost	Fair	Amortized Cost	Fair
					Value			Value		Value
Securities Held to Maturity:				(in thousands)
U.S. Treasury and U.S. Government agencies and corporations									$ 3,499	$ 3,514
State and local government obligations				$ 249	$ 255		$ 249	$ 258	649	680
Mortgage-backed securities				19	21		28	31	444	452
Total securities held to maturity				$ 268	$ 276		$ 277	$ 289	$ 4,592	$ 4,646
Maturity and Yield Schedule as of September 30, 2000
				Amortized Cost	Weighted Average Yield
			(dollar amounts in thousands)
State and local government obligations
	After 5 but within 10 years			$ 249	10.56%
				249	10.56
Mortgage-backed securities
	After 5 but within 10 years			19	9.95
				19	9.95
Total securities held to maturity				$ 268	10.52%
				As of September 30,
				2000			1999		1998
				Amortized Cost	Fair		Amortized Cost	Fair	Amortized Cost	Fair
					Value			Value		Value
Securities Available for Sale:				(dollar amounts in thousands)
U.S. Treasury and U.S. Government agencies and corporations				$ 3,241	$ 3,247		$ 4,006	$ 4,021	$ 6,981	$ 7,094
Corporate debt and other securities				2,331	2,301		2,468	2,429	3,009	3,000
Mutual Funds				370	370		1,119	1,119	1,170	1,170
Mortgage-backed securities				249,450	247,076		183,868	181,217	144,695	148,186
	Total securities available for sale			$ 255,392	$ 252,994		$ 191,461	$ 188,786	$ 155,855	$ 159,450
Maturity and Yield Schedule as of September 30, 2000
				Amortized Cost	Weighted Average Yield
			(dollar amounts in thousands)
U.S. Treasury and U.S. Government agencies and corporations:
	Within 1 year			$ 1,000	6.25%
	After 1 but within 5 years			2,241	6.92
				3,241	6.71
Corporate debt and other securities:
	After 1 but within 5 years			978	7.52
	After 10 years			1,353	5.42
				2,331	6.30
Mutual funds
	Within 1 year			370	6.59
				370	6.59
Mortgage-backed securities
	Within 1 year			1,268	8.85
	After 1 but within 5 years			10,763	6.56
	After 5 but within 10 years			17,189	7.34
	After 10 years			220,230	6.91
				249,450	6.93
				$ 255,392	6.92%

SOURCES OF FUNDS

Deposits have historically been the primary source of funds for lending and investing activities. The amortization and scheduled payment of loans and maturities of investment securities provide a stable source of funds, while deposit fluctuations and loan prepayments are significantly influenced by the overall interest rate environment and other market conditions. FHLB advances and short-term borrowings provide supplemental liquidity sources based on specific needs or if management determines that these are the best sources of funds to meet current requirements.

Deposits

The Company offers a number of deposit accounts including regular savings accounts, negotiable order of withdrawal ("NOW")/checking, commercial checking, money market accounts, Individual Retirement Accounts ("IRA") and certificate accounts which generally range in maturity from three months to five years. Deposit account terms vary, with the principal differences being the minimum balance required, the time period the funds must remain on deposit and the interest rate. For a schedule of the dollar amounts in each major category of the Company's deposit accounts, see Note 10 of Notes to Consolidated Financial Statements contained in Item 8 herein.

The Associations are subject to fluctuations in deposit flows because of the influence of general interest rates, money market conditions and competitive factors. The Asset and Liability Committees of the Associations meet frequently and make changes relative to the mix, maturity and pricing of assets and liabilities in order to minimize the impact on earnings from such external conditions.

The Associations' deposits are obtained primarily from residents of South Carolina. Management estimates that less than 3% of deposits at September 30, 2000, are obtained from customers residing outside of South Carolina. The principal methods used by the Company to attract deposit accounts include the offering of a wide variety of services and accounts, competitive interest rates, and convenient office locations and service hours. The Company utilizes traditional marketing methods to attract new customers and savings deposits, including mass media advertising and direct mail. The Company also provides customers access to the convenience of automated teller machines ("ATMs") through a proprietary ATM network and access to regional and national ATM networks. The Company also enjoys an excellent reputation for providing products and services to meet the needs of market segments, such as seniors. For example, 50-Plus Club members benefit from a number of advantageous programs, such as exclusive travel packages, special events and classic movies.

Jumbo Certificates of Deposit

The following table indicates the amount of the Company's jumbo certificates of deposit by time remaining until maturity as of September 30, 2000. Jumbo certificates of deposit require minimum deposits of $100,000 and have negotiable interest rates.

Maturity Period	At September 30, 2000
	(in thousands)
Three months or less		$   43,316
Over three through six months		14,985
Over six through twelve months		17,807
Over twelve months		2,992
Total		$   79,100

Borrowings

The Company relies upon advances from the FHLB of Atlanta to supplement its supply of lendable funds and to meet deposit withdrawal requirements. The FHLB of Atlanta has served as the Company's primary borrowing source. Advances from the FHLB of Atlanta are typically secured by the Company's stock in the FHLB of Atlanta and a portion of the Company's first mortgage loans. Interest rates on advances vary from time to time in response to general economic conditions.

At September 30, 2000, the Company had advances totaling $766.5 million from the FHLB of Atlanta at an average rate of 6.38%. At September 30, 2000, the maturity of the Associations' FHLB advances ranged from one to ten years. For more information on borrowings, see Note 11 of Notes to Consolidated Financial Statements contained in Item 8 herein.

The Associations have periodically entered into transactions to sell securities under agreements to repurchase ("reverse repurchase agreements") through broker-dealers. Reverse repurchase agreements evidence indebtedness of the Company arising from the sale of securities that the Company is obligated to repurchase at specified prices and dates. At the date of repurchase, the Company will, in some cases, enter into another reverse repurchase agreement to fund the repurchase of the maturing agreement. For regulatory and accounting purposes these reverse repurchase agreements are deemed to be borrowings collateralized by the securities sold. At September 30, 2000, the Company had $49.3 million of outstanding reverse repurchase agreements secured by mortgage-backed securities. The agreements had a weighted average interest rate of 6.73% at September 30, 2000, and mature within three months. For more information on other borrowings, see Note 12 of Notes to Consolidated Financial Statements contained in Item 8 herein.

During 1998, the Company entered into a loan agreement with another bank for a $25.0 million funding line. The rate on the funding line is based on LIBOR. During fiscal 2000, the line was increased to $35.0 million. At September 30, 2000, $12.3 million was outstanding under this agreement with a weighted average rate of 8.63%.

The following table sets forth certain information regarding short-term borrowings by the Company at the end of and during the periods indicated:

			At or For the Year Ended September 30,
			2000		1999		1998
			(dollar amounts in thousands)
Weighted Average Rate Paid On (at end of period):
		FHLB advances	6.38	%	5.50	%	5.54	%
		Securities sold under agreements to repurchase	6.73		5.45		5.58
		Bank line of credit	8.63		7.38		7.69
Maximum Amount of Borrowings Outstanding (during period):
		FHLB advances	$ 795,500		$ 611,500		$ 514,000
		Securities sold under agreements to repurchase	73,943		73,991		87,405
		Bank line of credit	12,250		8,750		4,000
Approximate Average Amount of Short-term Borrowings
	With Respect To:
		FHLB advances	706,551		540,893		470,441
		Securities sold under agreements to repurchase	57,138		35,323		45,241
		Bank line of credit	9,645		6,698		373
Approximate Weighted Average Rate Paid On (during period):
		FHLB advances	6.10	%	5.37	%	5.70	%
		Securities sold under agreements to repurchase	6.26		5.39		5.73
		Bank line of credit	8.35		6.38		7.69

---

During 1998, the Company retired its $19.8 million 9.375% Senior Notes issued in fiscal 1992. The early redemption resulted in an extraordinary loss (net of income taxes) of $340,000 in 1998.

ASSET AND LIABILITY MANAGEMENT

Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates. The Company's market risk arises principally from interest rate risk inherent in its lending, deposit and borrowing activities. Management actively monitors and manages its interest rate risk exposure. Although the Company manages other risks, as in credit quality and liquidity risk, in the normal course of business, management considers interest rate risk to be its most significant market risk and could potentially have the largest material effect on the Company's financial condition and results of operations. Other types of market risks, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company's business activities.

The Company's profitability is affected by fluctuations in interest rates. Management's goal is to maintain a reasonable balance between exposure to interest rate fluctuations and earnings. A sudden and substantial increase in interest rates may adversely impact the Company's earnings to the extent that the interest rates on interest-earning assets and interest-bearing liabilities do not change at the same speed, to the same extent or on the same basis. The Company monitors the impact of changes in interest rates on its net interest income using several tools. One measure of the Company's exposure to differential changes in interest rates between assets and liabilities is shown in the Company's Interest Rate Sensitivity Analysis Table. See Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Asset and Liability Management." Another measure, required to be performed by OTS-regulated institutions, is the test specified by OTS Thrift Bulletin No. 13A, "Interest Rate Risk Management" ("TB-13A"). This test measures the impact on net interest income and net portfolio value of an immediate change in interest rates in 100 basis point increments. Net portfolio value is defined as the net present value of assets, liabilities and off-balance sheet contracts. At September 30, 2000, the Company's internal calculations, based on the information and assumptions produced for the analysis, suggested that a 200 basis point increase in rates would reduce net interest income over a twelve-month period by 20.3% and reduce net portfolio value by 27.1% while a 200 basis point decline in rates would increase net interest income over a twelve-month period by 7.1% and increase net portfolio value by 25.7% in the same period.

Computation of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay rates, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Company could undertake in response to changes in interest rates.

The following table shows the Company's financial instruments that are sensitive to changes in interest rates, categorized by expected maturity, and the instruments' fair values at September 30, 2000. Market risk sensitive instruments are generally defined as on- and off-balance sheet derivatives and other financial instruments.

Expected Maturity/Principal Repayments at September 30,
			Average Rate		2001	2002	2003	2004	2005	Thereafter	Cost	Fair Value

Interest-sensitive assets:		(dollar amounts in thousands)
	Loans receivable	8.13%		$ 275,775	$ 234,408	$ 199,247	$ 169,360	$ 143,956	$ 815,751	$ 1,838,497	$ 1,824,936
	Mortgage-backed securities	6.93		37,420	31,807	27,036	22,981	19,534	110,691	249,469	247,097
	Investments and other interest-earning assets	6.66		18,130	2,241			978	1,602	22,951	22,933
	FHLB Stock	7.75							39,325	39,325	39,325
Interest-sensitive liabilities:
	Checking accounts	0.31		77,677	42,324	28,766	19,575	13,311	28,285	209,938	209,938
	Savings accounts	2.38		20,209	16,773	13,922	11,555	9,591	46,824	118,874	118,874
	Money Market accounts	4.39		151,270	12,063	8,444	5,911	4,138	9,655	191,481	191,481
	Certificate accounts	6.04		526,497	130,669	24,200	8,581	24,125	6,930	721,002	719,351
	Borrowings	6.43		485,772	-	55,000		125,000	162,250	828,022	818,752
Off-balance sheet items:
	Commitments to extend credit	8.11								19,723	19,591

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Expected maturities are contractual maturities adjusted assumptions to estimate fair values and expected maturities. For assets, expected maturities are based upon contractual maturity, projected repayments and prepayment of principal. The prepayment experience reflected herein is based on the Company's historical experience. For deposit liabilities, in accordance with standard industry practice, the Company has used decay rates utilized by the OTS. The actual maturities and run-off of loans could vary substantially if future prepayments differ from the Company's historical experience.

Rate/Volume Analysis

For the Company's rate/volume analysis and information regarding the Company's yields and costs and changes in net interest income, refer to Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Net Interest Income."

SUBSIDIARY ACTIVITIES OF THE ASSOCIATIONS

First Federal has the following wholly-owned subsidiaries:

Charleston Financial Services

Incorporated on January 28, 1977, its primary operations include the sale of data processing consulting services and software.

The Carolopolis Corporation

The Carolopolis Corporation ("Carolopolis") was incorporated in 1976 for the principal purpose of land acquisition and development and construction of various projects for resale. Development activities began in 1981 and ended in 1989. Carolopolis had been inactive for a number of years until 1996 when a lower tier corporation of Carolopolis was formed to operate and market for resale a commercial real estate property acquired through foreclosure by First Federal. Carolopolis is currently inactive.

Broad Street Holdings

Broad Street Holdings was incorporated in 1998 as the holding company for Broad Street Investments, Inc., which was also formed in 1998. Broad Street Investments has been organized as a real estate investment trust to hold mortgage-related assets.

First Reinsurance

First Reinsurance was incorporated in 1998 as the holding company for First Southeast Reinsurance, Inc., a company also organized in 1998 and domiciled in Vermont. First Southeast Reinsurance reinsures mortgage insurance originated through mortgage insurance companies in connection with real estate loans originated by the Associations.

First Southeast Fiduciary and Trust

First Southeast Fiduciary and Trust Services, Inc. was incorporated in 1998 for the purpose of extending trust and other asset management services to customers of the Associations.

Peoples Federal has two wholly-owned subsidiaries:

First Southeast Insurance Services, Inc.

This subsidiary, formerly known as the Magrath Insurance Agency, was purchased by Peoples Federal in 1986. In 1988, the agency purchased two smaller insurance agencies. During 1995, an additional agency in Lake City, South Carolina, was purchased as well as the Adams Insurance Agency in Charleston, previously owned by a subsidiary of First Federal. In June of 2000, First Southeast Insurance Services purchased the operations of Associated Insurors, Inc. of Myrtle Beach, South Carolina. In terms of premium dollars, the insurance agency is approximately 64% commercial lines and 36% personal lines. The agency represents several companies for both commercial and personal insurance products.

Coastal Carolina Service Corporation

Coastal Carolina Service Corporation was incorporated in 1980 for the purpose of conducting data processing activities. All such activities ended prior to 1992. Beginning in 1998, Coastal Carolina Service Corporation was engaged in certain investment activities, including holding for investment purposes mortgage loans, mortgage-backed securities and U.S. treasury and agency securities.

COMPETITION

First Federal was the largest and Peoples Federal the third largest of savings associations headquartered in South Carolina at September 30, 2000, based on asset size as reported by the OTS. The Company faces strong competition in the attraction of savings deposits and in the origination of real estate and other loans. The Company's most direct competition for savings deposits has historically come from commercial banks and from other savings institutions located throughout South Carolina. The Company also faces competition for savings from credit unions and competition for investors' funds from short-term money market securities and other corporate and government securities. In the more recent past, money market, stock, and fixed-income mutual funds have attracted an increasing share of household savings and are significant competitors of the Company.

The Company's competition for real estate and other loans comes principally from commercial banks, other thrift institutions, mortgage banking companies, insurance companies, developers, and other institutional lenders. The Company competes for loans principally through the interest rates and loan fees charged and the efficiency and quality of the services provided borrowers, developers, real estate brokers, and home builders.

PERSONNEL

As of September 30, 2000, the Company had 639 full-time equivalent employees. The Company provides its full-time employees and certain part-time employees with a comprehensive program of benefits, including medical and dental benefits, life insurance, long-term disability coverage, a profit-sharing plan and a 401(k) plan. The employees are not represented by a collective bargaining agreement. The Company believes its employee relations are excellent.

REGULATION

As federally chartered and federally insured thrift institutions, the Associations are subject to extensive regulation, examination and supervision by the OTS as its chartering agency, and the FDIC, as the insurer of their deposits. Lending activities and other investments must comply with various statutory and regulatory capital requirements. The Associations are regularly examined by federal regulators and file periodic reports concerning their activities and financial condition. In addition, the Associations' relationship with their depositors and borrowers also is regulated to a great extent by both federal and state laws, especially in such matters as the ownership of deposit accounts and the form and content of the Associations' mortgage documents.

Federal Regulation of Savings Associations

Office of Thrift Supervision

The OTS is an office in the Department of the Treasury subject to the general oversight of the Secretary of the Treasury. Among other functions, the OTS issues and enforces regulations affecting federally insured savings associations and regularly examines these institutions.

Federal Home Loan Bank System

The FHLB System, consisting of 12 FHLBs, is under the jurisdiction of the Federal Housing Finance Board ("FHFB"). The Associations, as members of the FHLB of Atlanta, are required to acquire and hold shares of capital stock in the FHLB of Atlanta in an amount equal to the greater of (i) 1.0% of the aggregate outstanding principal amount of residential mortgage loans, home purchase contracts and similar obligations at the beginning of each year, or (ii) 1/20 of its advances (borrowings) from the FHLB of Atlanta. First Federal and Peoples Federal were in compliance with this requirement with an investment in FHLB of Atlanta stock of $23.7 million and $15.6 million, respectively, at September 30, 2000.

Among other benefits, the FHLB of Atlanta provides a central credit facility primarily for member institutions. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes advances to members in accordance with policies and procedures established by the FHFB and the Board of Directors of the FHLB of Atlanta.

Federal Deposit Insurance Corporation

The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of depository institutions. The FDIC maintains two separate insurance funds: the Bank Insurance Fund ("BIF") and the SAIF. As insurer of the Associations' deposits, the FDIC has examination, supervisory and enforcement authority over the Associations.

Under applicable regulations, the FDIC assigns an institution to one of three capital categories based on the institution's financial information, as of the reporting period ending seven months before the assessment period. The capital categories are: (i) well-capitalized, (ii) adequately capitalized, or (iii) undercapitalized. An institution is also placed in one of three supervisory subcategories within each capital group. The supervisory subgroup to which an institution is assigned is based on a supervisory evaluation provided to the FDIC by the institution's primary federal regulator and information that the FDIC determines to be relevant to the institution's financial condition and the risk posed to the deposit insurance funds. An institution's assessment rate depends on the capital category and supervisory category to which it is assigned with the most well-capitalized, healthy institutions receiving the lowest rates. Risk classification of all insured institutions is made by the FDIC semi-annually. At September 30, 2000, the Associations were classified as well-capitalized institutions.

Effective January 1, 1997, the premium schedule for BIF and SAIF insured institutions ranged from 0 to 27 basis points. However, SAIF insured institutions and BIF insured institutions are required to pay a Financing Corporation assessment in order to fund the interest on bonds issued to resolve thrift failures in the 1980s. This amount is currently equal to about two basis points for each $100 in domestic deposits for SAIF and BIF insured institutions. These assessments, which may be revised based upon the level of BIF and SAIF deposits, will continue until the bonds mature in the year 2015.

The FDIC is authorized to raise the assessment rates in certain circumstances. The FDIC has exercised this authority several times in the past and may raise insurance premiums in the future. If such action is taken by the FDIC, it could have an adverse effect on the earnings of the Associations.

Under the Federal Deposit Insurance Act, insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or the OTS. Management of the Associations do not know of any practice, condition or violation that might lead to termination of deposit insurance.

Liquidity Requirements

Under OTS regulations, each savings institution is required to maintain an average daily balance of specified liquid assets equal to a monthly average of not less than a specified percentage of net withdrawable deposit accounts and borrowings due in one year. This liquidity requirement is currently 4%, but may be changed from time to time by the OTS to any amount within the range of 4% to 10%. Monetary penalties may be imposed for failure to meet liquidity requirements.

Prompt Corrective Action

Each federal banking agency is required to implement a system of prompt corrective action for institutions that it regulates. The federal banking agencies have promulgated substantially similar regulations to implement this system of prompt corrective action. Under the regulations, an institution shall be deemed to be "well capitalized" if it has a total risk-based capital ratio of 10.0% or more, has a Tier I risk-based capital ratio of 6.0% or more, has a leverage ratio of 5.0% or more and is not subject to specified requirements to meet and maintain a specific capital level for any capital measure. At September 30, 2000, First Federal and Peoples Federal were categorized as "well capitalized" under the prompt corrective action regulations of the OTS. See Note 17 of Notes to Consolidated Financial Statements contained in Item 8 herein.

Standards for Safety and Soundness

The federal banking regulatory agencies have prescribed, by regulation, standards for all insured depository institutions relating to: (i) internal controls, information systems and internal audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest rate risk exposure; (v) asset growth; (vi) asset quality; (vii) earnings; and (viii) compensation, fees and benefits ("Guidelines"). The Guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the OTS determines that the Associations fail to meet any standard prescribed by the Guidelines, the agency may require the Associations to submit to the agency an acceptable plan to achieve compliance with the standard. Management is aware of no conditions relating to these safety and soundness standards which would require submission of a plan of compliance.

Qualified Thrift Lender Test

The Qualified Thrift Lender ("QTL") test requires that a savings association maintain at least 65% of its total tangible assets in "qualified thrift investments" on a monthly average basis in nine out of every 12 months. At September 30, 2000, the Associations were in compliance with the QTL test.

Capital Requirements

The OTS capital regulations require savings institutions to meet three capital standards: a 1.5% tangible capital standard, a 3% leverage (core capital) ratio and an 8% risk based capital standard. Core capital is defined as common stockholder's equity (including retained earnings), certain non-cumulative perpetual preferred stock and related surplus, minority interests in equity accounts of consolidated subsidiaries less intangibles other than certain mortgage servicing rights, and credit card relationships. The OTS regulations require that, in meeting the leverage ratio, tangible and risk-based capital standards institutions generally must deduct investments in and loans to subsidiaries engaged in activities not permissible for a national bank. In addition, the OTS prompt corrective action regulation provides that a savings institution that has a leverage capital ratio of less than 4% (3% for institutions receiving the highest CAMEL examination rating) will be deemed to be "undercapitalized" and may be subject to certain restrictions.

The OTS risk-based requirement requires savings associations to have total capital of at least 8% of risk-weighted assets. Total capital consists of core capital, as defined above, and supplementary capital. Supplementary capital consists of certain permanent and maturing capital instruments that do not qualify as core capital and general valuation loan and lease loss allowances up to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used to satisfy the risk-based requirement only to the extent of core capitalfor prepayments of principal. The Company uses certain.

In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet items, will be multiplied by a risk weight, ranging from 0% to 100%, based on the risk inherent in the type of asset. For example, the OTS has assigned a risk weight of 50% for prudently underwritten permanent one- to- four family first lien mortgage loans not more than 90 days delinquent and having a loan-to-value ratio of not more than 80% at origination unless insured to such ratio by an insurer approved by Fannie Mae or Freddie Mac.

The OTS is authorized to impose capital requirements in excess of these standards on individual associations on a case-by-case basis. The OTS and FDIC are authorized and, under certain circumstances required, to take certain actions against savings associations that fail to meet their capital requirements. The OTS is generally required to take action to restrict the activities of an "undercapitalized association" (generally defined to be one with less than either a 4% core capital ratio, a 4% Tier 1 risk-based capital ratio or an 8% risk-based capital ratio). Any such association must submit a capital restoration plan and until such plan is approved by the OTS may not increase its assets, acquire another institution, establish a branch or engage in any new activities, and generally may not make capital distributions. The OTS is authorized to impose the additional restrictions that are applicable to significantly undercapitalized associations.

See Note 17 of Notes to Consolidated Financial Statements contained in Item 8 herein for a summary of all applicable capital requirements of First Federal and Peoples Federal.

Limitations on Capital Distributions

OTS regulations require the Associations to give the OTS 30 days' advance notice of any proposed declaration of dividends, and the OTS has the authority under its supervisory powers to prohibit the payment of dividends.

OTS regulations impose uniform limitations on the ability of all savings associations to engage in various distributions of capital such as dividends, stock repurchases and cash-out mergers. In addition, the regulation utilizes a three-tiered approach which permits various levels of distributions based primarily upon a savings association's capital level.

The Associations currently meet the criteria to be designated Tier 1 associations and, consequently, could at their option (after prior notice to, and no objection made by, the OTS) distribute up to 100% of its net income during the calendar year plus 50% of their surplus capital at the beginning of the calendar year less any distributions previously paid during the year.

Regulation of the Company

On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley Act (the "Act") that reforms the U. S. banking laws to allow full affiliation between commercial banks, insurance companies and securities firms. The legislation primarily addresses permissible activities of bank holding companies and national banks by expanding the permissible nonbanking activities of these entities. Since the Corporation is a multiple savings and loan holding company and is subject to restrictions on its nonbanking activities, the expanded activities of bank holding companies may put the Corporation at a competitive disadvantage. The Act substantially expands the financial services activities for financial institutions and permits bank holding companies and unitary savings and loan holding companies to form financial holding companies with extensive powers to invest in a broad range of financial services organizations and activities. The Corporation is a multiple savings and loan holding company and is unable to take advantage of these expanded powers, because the Act does not provide for the formation of a financial holding company by a multiple savings and loan holding company.

Provisions of the Act permit national banks to establish financial subsidiaries that may engage in a broad range of financial activities, including securities underwriting activities. State-chartered commercial banks may also engage in these expanded activities if permitted by relevant state law. As a result of the legislation, the Associations' national and state commercial bank competitors may be able to engage in additional financial activities not permissible for the Associations and their respective subsidiaries.

The Act also imposes certain obligations on financial institutions to develop privacy policies, restrict the sharing of nonpublic customer data with nonaffiliated parties at the customer's request, and establish procedures and practices to protect and secure customer data. These privacy provisions were implemented by regulations that were effective on November 12, 2000. Compliance with the privacy provisions will be required by July 1, 2001.

The Company is subject to certain restrictions under the Home Owners' Loan Act ("HOLA") and the OTS regulations issued thereunder. Such restrictions generally concern, among others, acquisitions of other savings associations and savings and loan holding companies.

As a multiple savings and loan holding company within the meaning of HOLA, the Company's activities are generally subject to more restrictions than those of a unitary savings and loan holding company. Specifically, if First Federal or Peoples Federal fail to meet the QTL test, the activities of the Company and of its subsidiaries (other than the Associations or other federally insured subsidiary savings associations) would thereafter be subject to further restrictions. The HOLA provides that, among other things, no multiple savings and loan holding company or subsidiary thereof which is not an insured association shall commence or continue for more than two years after becoming a multiple savings and loan association holding company or subsidiary thereof, any business activity other than: (i) furnishing or performing management services for a subsidiary insured institution, (ii) conducting an insurance agency or escrow business, (iii) holding, managing, or liquidating assets owned by or acquired from a subsidiary insured institution, (iv) holding or managing properties used or occupied by a subsidiary insured institution, (v) acting as trustee under deeds of trust, (vi) those activities previously directly authorized by regulation as of March 5, 1987 to be engaged in by multiple holding companies or (vii) those activities authorized by the Federal Reserve Board as permissible for bank holding companies, unless the OTS by regulation prohibits or limits such activities for savings and loan holding companies. Those activities described in (vii) above also must be approved by the OTS prior to being engaged in by a multiple savings and loan holding company.

Additionally, the HOLA requires any savings and loan holding company that controls a savings association that fails the QTL test to, within one year after the date on which the association ceases to be a QTL, register as and be deemed a bank holding company subject to all applicable laws and regulations.

ITEM 2. PROPERTIES

The Company's principal executive offices are located at 2440 Mall Drive, North Charleston, South Carolina, in an office building partially leased by First Federal. The building also serves as First Federal's Operations Center. First Federal owns eighteen of its branch offices, including its home office at 34 Broad Street in downtown Charleston. A substantial portion of its home office is now leased and approximately 50% of its offices in Beaufort County are also leased to others. The remaining seven branch offices are leased properties on which First Federal has constructed banking offices. All of the leases include various renewal or purchase options.

Peoples Federal conducts its executive and support service functions from its 14,700 square foot Operations Center at 1601 Eleventh Avenue in Conway, South Carolina. Approximately 65% of the building is available for lease to others. Nine of Peoples Federal's branch offices are owned and six facilities are leased.

Peoples Federal leases space for certain insurance agency operations in Charleston, Lake City and Myrtle Beach and for loan origination functions in Ocean Isle, North Carolina. In addition, First Federal leases properties in four locations for off-site ATM facilities. First Federal also has a business partnership with Piggly Wiggly for ATM operations in supermarket locations. Both Associations also own land purchased for potential future branch locations.

The Company evaluates on a continuing basis the suitability and adequacy of all of its facilities, including branch offices and service facilities, and has active programs of relocating, remodeling or closing any as necessary to maintain efficient and attractive facilities. The Company believes its present facilities are adequate for its operating purposes.

At September 30, 2000, the total book value of the premises and equipment owned by the Company was $29.5 million. Reference is made to Note 16 of Notes to Consolidated Financial Statements contained in Item 8 herein for information relating to minimum rental commitments under the Company's leases for office facilities and to Note 8 for further details on the Company's properties.

ITEM 3. 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 Associations' 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended September 30, 2000.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Stock Prices and Dividends:

						Cash Dividend
		High		Low		Declared
2000:
	First Quarter		$ 19.25		$ 15.25		$   0.14
	Second Quarter		16.44		12.94		0.14
	Third Quarter		15.63		12.75		0.14
	Fourth Quarter		15.56		12.88		0.14
1999:
	First Quarter		$ 20.00		$ 14.00		$   0.12
	Second Quarter		20.75		17.88		0.12
	Third Quarter		21.00		14.50		0.12
	Fourth Quarter		20.25		17.00		0.12

The Company's common stock is traded in the Nasdaq National Market under the symbol "FFCH." Trading information in newspapers is provided on the Nasdaq Stock Market quotation page under the listing, "FSTFNHLD." As of September 30, 2000, there were approximately 2,476 stockholders of record.

The Company has paid a cash dividend since February 1986. The amount of the dividend to be paid is determined by the Board of Directors dependent upon the Company's earnings, financial condition, capital position and such other factors as the Board may deem relevant. The dividend rate has been increased 13 times with the most recent dividend paid in November 2000, at $.155 per share. Cash dividends per share totaled $.56, $.48 and $.42 for fiscal 2000, 1999 and 1998, respectively. These dividends per share amounted to 37.58%, 33.33% and 34.43% of basic net income per common share, respectively.

Please refer to Item 1. "Business--Regulation--Federal Regulation of Savings Associations--Limitations on Capital Distributions" for information with respect to current restrictions on the Associations' ability to pay dividends to the Company.

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ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

			At or For the Year Ended September 30,
			2000	1999	1998(1)	1997(1)	1996(1)
			(dollar amounts in thousands, except per share amounts)
Summary of Operations
	Interest income		$ 161,642	$ 140,832	$ 136,345	$ 126,359	$ 115,486
	Interest expense		98,888	80,394	81,689	75,340	68,314
	Net interest income		62,754	60,438	54,656	51,019	47,172
	Provision for loan losses		(2,745)	(2,765)	(2,405)	(2,435)	(1,908)
	Net interest income after provision for loan losses		60,009	57,673	52,251	48,584	45,264
	Other income		18,310	15,314	13,357	12,296	10,019
	Non-interest expense		(47,884)	(43,280)	(40,158)	(37,356)	(36,203)
	SAIF special assessment					(313)	(6,955)
	Income tax expense		(10,507)	(10,400)	(8,571)	(8,501)	(4,471)
	Net income before extraordinary loss		19,928	19,307	16,879	14,710	7,654
	Extraordinary loss on retirement of debt (2)				(340)
	Net income		$ 19,928	$ 19,307	$ 16,539	$ 14,710	$ 7,654
Per Common Share
	Net income before extraordinary loss		$ 1.49	$ 1.44	$ 1.24	$ 1.10	$ 0.57
	Net income before extraordinary loss, diluted		1.47	1.40	1.20	1.07	0.56
	Extraordinary loss				(0.02)
	Extraordinary loss, diluted				(0.03)
	Net income		1.49	1.44	1.22	1.10	0.57
	Net income, diluted		1.47	1.40	1.17	1.07	0.56
	Book value		10.35	9.43	9.16	8.28	7.53
	Dividends		0.56	0.48	0.42	0.36	0.32
	Dividend payout ratio		37.58%	33.33%	34.43%	32.73%	56.14%
Core Earnings (3)
	Net income before extraordinary loss		$ 19,928	$ 19,307	$ 16,879	$ 14,710	$ 7,654
	Investors merger related expenses				210
	SAIF assessment					198	4,391
	Core income		$ 19,928	$ 19,307	$ 17,089	$ 14,908	$ 12,045
Core Earnings Per Share (3)
	Basic:
		Net income before extraordinary loss	$ 1.49	$ 1.44	$ 1.24	$ 1.10	$ 0.57
		Investors merger related expenses			0.02
		SAIF assessment				0.01	0.33
		Core income	$ 1.49	$ 1.44	$ 1.26	$ 1.11	$ 0.90
	Diluted:
		Net income before extraordinary loss	$ 1.47	$ 1.40	$ 1.20	$ 1.07	$ 0.56
		Investors merger related expenses			0.01
		SAIF assessment				0.01	0.32
		Core income	$ 1.47	$ 1.40	$ 1.21	$ 1.08	$ 0.88

At September 30,
	Assets		$ 2,256,511		$ 2,070,752		$ 1,839,708		$ 1,774,952		$ 1,603,177
	Loans receivable, net		1,838,497		1,742,150		1,565,040		1,451,497		1,324,925
	Mortgage-backed securities		247,095		181,245		148,630		149,781		83,993
	Investment securities		45,492		37,743		40,412		76,959		110,686
	Deposits		1,241,295		1,219,848		1,164,440		1,123,988		1,111,943
	Borrowings		828,022		677,241		504,942		498,236		348,970
	Stockholders' equity		137,851		125,881		125,163		111,528		101,016
	Number of offices		40		38		36		35		35
	Full-time equivalent employees		638		611		576		564		561
Selected Ratios:
	Return on average equity		15.21%		15.38%		13.97%		13.94%		7.60%
	Return on average assets		0.91		0.99		0.90		0.88		0.51
	Core return on average equity		15.21		15.38		14.43		14.13		11.96
	Core return on average assets		0.91		0.99		0.93		0.89		0.80
	Gross interest margin		2.77		2.99		2.84		2.89		2.94
	Net interest margin		2.99		3.22		3.10		3.15		3.22
	Efficiency ratio		59.55		58.30		59.42		59.40		63.12
	Average equity as a percentage of average assets		5.99		6.42		6.48		6.28		6.67
Asset Quality Ratios:
	Allowance for loan losses to net loans		0.84%		0.84%		0.82%		0.83%		0.88%
	Allowance for loan losses to nonperforming loans		178.65		202.08		177.76		86.74		66.22
	Nonperforming assets to loans and real estate
		and other assets acquired in settlement of loans	0.79		0.74		0.83		1.75		1.51
	Nonperforming assets to total assets		0.64		0.62		0.71		1.44		1.25
	Net charge-offs to average loans		0.11		0.06		0.11		0.14		0.10
(1)	During 1998 First Financial acquired Investors. This business combination was accounted for utilizing the pooling-of-interests method of accounting, and accordingly all financial information prior to the merger has been retroactively restated.
(2)	Loss on retirement of First Financial's 9.375% senior notes, net of income tax benefit of $173.
(3)	Core earnings represent net income before extraordinary loss exclusive of after-tax expenses related to the Investors pooling and a one time SAIF assessment recorded in 1997 and 1996.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The information presented in the following discussion of financial results is generally indicative of the activities of its two thrift operating subsidiaries, First Federal and Peoples Federal. The following discussion should be read in conjunction with the Selected Consolidated Financial Data contained in Item 6 of this report and the Consolidated Financial Statements and accompanying notes contained in Item 8 of this report.

First Financial achieved record earnings of $19.9 million in 2000, increasing 3.2% from $19.3 million in 1999. Net income after the effect of an extraordinary charge and other non-recurring costs was $16.5 million in 1998. First Financial's income from core operating results increased $621,000 in fiscal 2000 following an increase of $2.2 million in both 1999 and 1998. Lower earnings growth in 2000 is principally attributable to less growth in net interest income. An important highlight in fiscal 2000 was the 19.6% increase in non-interest revenues over fiscal 1999. During the year, non-interest expense increased by 10.6% due principally to the Company's planned regional retail sales office expansion, technology initiatives, costs attributable to the Company's Year 2000 project and the acquisition of additional insurance operations.

Results for fiscal 1998 included several non-recurring charges, including after-tax merger related expenses of $210,000 and an extraordinary charge of $340,000, after-tax, related to the retirement of the Company's 9.375% senior notes.

Core basic and diluted earnings per share in 2000 improved to $1.49 and $1.47 compared with $1.44 and $1.40 in 1999. Core basic and diluted earnings per share totaled $1.26 and $1.21 in 1998, respectively. Basic and diluted earnings per share on net income totaled $1.22 and $1.17, respectively, in 1998. Core basic and diluted earnings per share exclude extraordinary items, merger related expenses and the SAIF special assessment.

On February 25, 2000, the Board of Directors of First Financial announced a stock repurchase program to acquire up to 500,000 shares of common stock, representing approximately 3.7% of outstanding shares at that time. Approximately 93,000 shares were repurchased under the program in fiscal 2000. A similar program initiated in October 1998 resulted in the repurchase of 500,000 shares of common stock in fiscal 1999.

During fiscal 2000, First Financial acquired the operations of Associated Insurors, Inc. of Myrtle Beach, South Carolina ("Associated Insurors"), a full-service insurance agency, specializing in commercial insurance lines. The transaction was accounted for as a purchase of assets with four months of operations included in fiscal 2000 results.

In fiscal 1998, First Financial acquired Investors in a transaction accounted for as a pooling-of-interests. Under the terms of the agreement, Investors' shareholders received 1.36 shares of First Financial common stock in exchange for each share of Investors' stock held, which resulted in the issuance of approximately 709,000 shares.

Fiscal 2000 ushered in the tenth year of expansion for the U.S. economy. During the fiscal year, the Federal Reserve's Open Market Committee raised short-term interest rates a quarter of a percentage point in November 1999, January 2000 and February 2000 and also took action to increase short-term rates by one half of a percentage point in May of 2000. The Federal Reserve began a series of such increases in June of 1999 in an effort to curb possible future inflation resulting from strong economic growth. Ultimately, the Federal Reserve increased the Fed Funds rate 175 basis points over a twelve-month period. Longer term interest rates have declined during the year leading to an inverted yield curve. Higher short-term interest rates combined with further flattening of the yield curve pressured the Company's net interest margins in fiscal 2000. An inverted yield curve may continue to adversely impact margins in fiscal 2001. Recent comments by Federal Reserve Board Chairman Greenspan acknowledge the economy is slowing and that the Federal Reserve may lower rates if the economy further weakens.

Financial Position

At September 30, 2000, First Financial's assets totaled $2.3 billion, increasing by 9.0%, or $185.8 million, from September 30, 1999. Net asset growth was principally attributable to growth in net loans receivable, which increased $96.3 million during 2000, and growth in mortgage-backed securities, which increased $65.9 million. Average assets increased 11.8% during the year and average interest-earning assets increased by 11.7%.

The Company securitized approximately $142 million of residential mortgage loans for mortgage-backed securities in the last two quarters of fiscal 2000. The securitizations will provide enhanced liquidity resources, improved capital ratios and growth in revenues from off-balance sheet servicing activities. Approximately $37 million of these securities were sold in September 2000 with the proceeds used to reduce borrowed funds.

At September 30, 1999, First Financial's assets totaled $2.1 billion, increasing by 12.6%, or $231.0 million, from September 30, 1998. Net asset growth was principally attributable to growth in net loans receivable, which increased $177.1 million during 1999, and also growth in mortgage-backed securities, which increased $32.6 million. Average interest-earning assets increased by 6.4% in 1999.

Investment Securities and Mortgage-backed Securities

At September 30, 2000, available for sale securities totaled $253.0 million compared to $188.8 million at September 30, 1999. The carrying value of held to maturity securities totaled $268,000 at September 30, 2000 compared with $277,000 at the end of 1999.

The primary objective of the Company in its management of the investment and mortgage-backed securities portfolio is to maintain a portfolio of high quality, highly liquid investments with returns competitive with short-term U.S. Treasury or agency securities and highly rated corporate securities. The Associations are required to maintain average daily balances of liquid assets according to certain regulatory requirements. The Associations have maintained higher than average required balances in short-term investments and mortgage-backed securities based on their continuing assessment of cash flows, the level of loan production, current interest rate risk strategies and the assessment of the potential direction of market interest rate changes.

Loans Receivable

Loans comprise the major portion of interest-earning assets of the Company, accounting for 87.7% and 87.4% of average interest-earning assets in 2000 and 1999, respectively. Compared with balances on September 30, 1999, net loans receivable grew by 5.5% during 2000. Adding the effect of loan securitizations of $142.0 million, loan growth approximated 13% in fiscal 2000. Loans held for sale increased to $9.4 million in 2000 from $6.5 million at September 30, 1999.

Real estate originations were lower in fiscal 2000 than in fiscal 1999 due principally to the effect of higher interest rates. The Company believes that housing conditions in coastal South Carolina are stable. Consumer loans grew to $312.0 million in fiscal 2000, increasing $94.9 million, or 43.7% in fiscal 2000. The Company's home equity lines of credit balances increased to $122.0 million in fiscal 2000, accounting for 36.8% of the consumer loan growth in 2000. The Company continues to emphasize growth in consumer lending and commercial business lending.

The Company's loan portfolio consists of real estate mortgage and construction loans, home equity, manufactured housing 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.

Asset Quality

The Company believes it maintains a conservative philosophy regarding its lending mix as well as its underwriting guidelines. The Company also maintains loan quality monitoring policies and systems that require detailed monthly and quarterly analyses of delinquencies, nonperforming loans, real estate owned and other repossessed assets. Reports of such loans and assets by various categories are reviewed by management and the Boards of Directors of the Associations. The majority of the Company's loans originated are in coastal South Carolina and North Carolina and in Florence, South Carolina.

The largest component of loan growth during fiscal 2000 has been in consumer loans. Had the Company not securitized approximately $142 million in residential loans during fiscal 2000, the largest increase would have been in single-family loans. The largest percentage increase in loan growth was attributable to consumer loans, which remain the sector of the portfolio where higher charge-off rates are generally experienced.

As a result of management's ongoing review of the loan portfolio, loans are classified as non-accruing when uncertainty exists about the ultimate collection of principal and interest under the original terms. The Company closely monitors trends in problem assets which include non-accrual loans, loans 90 days or more delinquent, renegotiated loans, and real estate and other assets acquired in settlement of loans. Renegotiated loans are those loans on which the Company has agreed to modifications of the terms of the loan such as changes in the interest rate charged and/or other concessions. The following table illustrates trends in problem assets and other asset quality indicators over the past five years.

	At September 30,
	2000		1999		1998		1997		1996
	(dollar amounts in thousands)
Non-accrual loans	$ 5,881		$ 4,466		$ 2,647		$ 6,609		$ 8,137
Accruing loans 90 days or more delinquent	29		20		50		568		1,391
Renegotiated loans	2,712		2,724		4,493		6,776		8,049
Real estate and other assets acquired in settlement of loans	5,895		5,685		5,871		11,658		2,432
	$ 14,517		$ 12,895		$ 13,061		$ 25,611		$ 20,009
As a percent of loans receivable and real estate and other assets acquired in settlement of loans	0.79%		0.74%		0.83%		1.75%		1.51%
As a percent of total assets	0.64		0.62		0.71		1.44		1.25
Allowance for loan losses as a percent of problem loans	178.65		202.08		177.76		86.74		66.22
Net charge-offs to average loans outstanding	0.11		0.06		0.11		0.14		0.10

Problem Assets

Problem assets were $14.5 million at September 30, 2000, or .64% of assets and .79% of loans receivable and real estate and other assets acquired in settlement of loans. At September 30, 1999, problem assets were $12.9 million, or .62% of assets and .74% of loans receivable and real estate and other assets acquired in settlement of loans.

The allowance for loan losses at September 30, 2000 covers 178.65% of reported problem loans, declining from 202.08% as of September 30, 1999. Management's long-term goals continue to include lower ratios of problem assets to total assets, although management expects there will always remain a core level of delinquent loans and real estate acquired in settlement of loans from normal lending operations.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level sufficient to provide for estimated probable losses in the loan portfolio at each reporting date. Management reviews the adequacy of the allowance no less frequently than each quarter, utilizing its internal portfolio analysis system. The factors that are considered in a determination of the level of the allowance are management's assessment of current economic conditions, the composition of the loan portfolio, previous loss experience on certain types of credit, a review of specific high-risk sectors of the loan portfolio, selected individual loans and concentrations of credit. The value of the underlying collateral is also considered during such reviews.

Allowance for Loan Losses

			At or For the Year Ended September 30,
			2000		1999		1998		1997		1996
			(dollar amounts in thousands)
Balance, beginning of period			$ 14,570		$ 12,781		$ 12,103		$ 11,639		$ 10,993
Loans charged-off:
	Real estate loans		338		122		981		682		824
	Commercial business loans		62		46		122		431		188
	Consumer loans		1,992		1,428		1,427		1,196		745
		Total charge-offs	2,392		1,596		2,530		2,309		1,757
Recoveries:
	Real estate loans		21		245		159		164		336
	Commercial business loans		47		82		407		8		40
	Consumer loans		412		293		237		166		119
		Total recoveries	480		620		803		338		495
		Net charge-offs	1,912		976		1,727		1,971		1,262
	Provision for loan losses		2,745		2,765		2,405		2,435		1,908
Balance, end of period:
	Real estate loans		6,374		8,456		8,753		9,003		9,047
	Commercial business loans		1,883		2,079		1,087		1,384		1,225
	Consumer loans		7,146		4,035		2,941		1,716		1,367
Balance, end of period			$ 15,403		$ 14,570		$ 12,781		$ 12,103		$ 11,639
Balance as a percent of net loans:
	Real estate loans		0.43%		0.56%		0.64%		0.70%		0.77%
	Commercial business loans		3.28		4.87		3.22		4.20		3.84
	Consumer loans (1)		2.29		1.86		1.70		1.17		1.10
	Total net loans		0.84		0.84		0.82		0.83		0.88
Net charge-offs as a percent of average net loans:
	Real estate loans		0.02%		(0.01%)		0.06%		0.04%		0.05%
	Commercial business loans		0.03		(0.09)		(0.85)		1.30		0.46
	Consumer loans (1)		0.60		0.58		0.75		0.76		0.52
		Total net loans	0.11		0.06		0.11		0.14		0.10
(1)	Consumer loans include home equity lines of credit.

On September 30, 2000, the total allowance for loan losses was $15.4 million compared with $14.6 million at September 30, 1999. Total net loan charge-offs increased to $1.9 million in 2000 from $1.0 million in 1999. Net real estate loan charge-offs totaled $317,000 in 2000 compared with net recoveries of $123,000 in 1999. Net real estate charge-offs in 1998 included approximately $679,000 related to a $2.8 million multi-family loan on which the Company had maintained an $800,000 specific reserve. Consumer loan net charge-offs were $1.6 million in 2000 compared with $1.1 million in 1999. Consumer loan charge-offs have increased due to growth in consumer loans. Commercial business loan net charge-offs of $15,000 in 2000 compared with $36,000 in net recoveries in 1999. Based on the current economic environment and other factors, management believes that the allowance for loan losses at September 30, 2000 was maintained at a level adequate to provide for estimated probable losses in the Company's loan portfolio.

The following table sets forth the breakdown of the Company's allowance for loan losses by loan category at the dates indicated. Management believes that the allowance can be allocated by category only on an approximate basis. The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category.

			At September 30,
			2000		1999		1998		1997		1996
			(dollar amounts in thousands)
Allowance for loan losses applicable to:
	Real estate loans		$ 6,374		$ 8,456		$ 8,753		$ 9,003		$ 9,047
	Commercial business loans		1,883		2,079		1,087		1,384		1,225
	Consumer loans		7,146		4,035		2,941		1,716		1,367
		Total	$ 15,403		$ 14,570		$ 12,781		$ 12,103		$ 11,639
Percent of loans to total net loans:
	Real estate loans		80.4	%	85.5	%	87.1	%	87.8	%	88.4	%
	Commercial business loans		3.0		2.3		2.1		2.2		2.3
	Consumer loans		16.6		12.2		10.8		10.0		9.3
		Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Deposits

Retail deposits have traditionally been the primary source of funds for the Company and also provide a customer base for the sale of additional financial products and services. The Company has set strategic targets for net growth in transaction accounts annually and in numbers of households served. The Company believes that its future focus must be on increasing the number of available opportunities to provide a broad array of products and services to retail consumers.

The Company's total deposits increased $21.4 million during the year ended September 30, 2000. First Financial's deposit composition at September 30, 2000 and 1999 is as follows:

	At September 30,
	2000			1999
	Balance	Percent of Total		Balance	Percent of Total
	(dollar amounts in thousands)
Checking accounts	$ 209,938	16.91%		$ 184,652	15.14%
Statement and other accounts	118,874	9.58		124,362	10.19
Money market accounts	191,481	15.43		180,328	14.78
Certificate accounts	721,002	58.08		730,506	59.89
Total deposits	$ 1,241,295	100.00%		$ 1,219,848	100.00%

National and local market trends over the past several years suggest that consumers are continuing to move an increasing percentage of discretionary savings funds into investments such as annuities and stock and fixed income mutual funds. While deposits remain a primary, highly stable source of funds for the Company, deposits have declined as a percentage of liabilities over the recent several years. As of September 30, 2000, deposits as a percentage of liabilities were 58.6% compared with 62.7% at September 30, 1999. The Company expects to maintain a significant portion of its overall deposits in core account relationships; however, future growth in overall deposit balances may be achieved primarily through specifically targeted programs offering higher yielding investment alternatives to consumers. Such targeted programs may increase the Company's overall cost of funds and thus impact the Company's future net margins. The Company's average cost of deposits at September 30, 2000 was 4.47% compared with 4.01% at September 30, 1999.

Borrowings

Borrowings increased $150.8 million during the current year to $828.0 million as of September 30, 2000. Borrowings as a percentage of total liabilities were approximately 39.1% at the end of 2000 compared with 34.8% in 1999. Borrowings from the FHLB of Atlanta increased $172.0 million and reverse repurchase agreements declined $24.7 million during 2000.

The Company's average cost of FHLB advances, reverse repurchase agreements and other borrowings increased from 5.52% at September 30, 1999 to 6.43% at September 30, 2000. Approximately $516.5 million in FHLB advances mature or are subject to call within one year and all of the reverse repurchase agreements mature within three months.

Capital Resources

Average shareholders' equity was $131.0 million during fiscal 2000, or 5.99% of average assets, declining from 6.42% during 1999. The Consolidated Statement of Stockholders' Equity and Comprehensive Income contained in Item 8 herein details the changes in stockholders' equity during the year. The principal reason for the decline in average equity to average assets during the current period relates to the completion of the 1999 stock repurchase program, the partial completion of the 2000 stock repurchase program and strong growth in assets during the past two fiscal periods. Total equity capital increased from $125.9 million at September 30, 1999 to $137.9 million at September 30, 2000. The primary source of the dollar increase in shareholders' equity during 2000 was the retention of net income. The Company's capital ratio, total capital to total assets, was 6.11% at September 30, 2000 compared to 6.08% at September 30, 1999.

Recent stock repurchase programs included the purchase of approximately 93,000 shares of common stock in fiscal 2000 and 500,000 shares of common stock in fiscal 1999. The dollar amount of such purchases totaled $1.3 million in fiscal 2000 and $9.7 million in fiscal 1999.

During fiscal 2000, the Company's cash dividend payout was 37.6% of income compared with a payout ratio of 33.3% in 1999. The Company recently increased its cash dividend by 10.7% to $.62 per share on an annual basis, effective with the payment on November 24, 2000 to shareholders.

The Associations are required to meet the regulatory capital requirements of the OTS, which currently include several measures of capital. Under current regulations, both banking subsidiaries meet all requirements including those to be categorized as well-capitalized under risk-based capital guidelines. Current capital distribution regulations of the OTS allow the greatest flexibility to well-capitalized institutions.

Liquidity and Asset and Liability Management

Liquidity

The desired level of liquidity for the Company is determined by management in conjunction with the Asset/Liability Committees of the Associations. The level of liquidity is based on management's strategic direction for the Company, commitments to make loans and the Committees' assessment of each Association's ability to generate funds. Historically, sources of liquidity have included net deposits to savings accounts, amortizations and prepayments of loans, FHLB advances, reverse repurchase agreements and sales of securities and loans held for sale.

The Associations are subject to federal regulations which currently require the maintenance of a daily average balance of liquid assets equal to 4.0% of net withdrawable deposits and borrowings payable in one year or less. The Associations have adopted policies to maintain liquidity levels well above the requirements. All liquidity requirements were met in 2000.

The Company's most stable and traditional source of funding has been the attraction and retention of deposit accounts, the success of which the Company believes is based primarily on the strength and reputation of the Associations, effective marketing and rates paid on deposit accounts. First Federal has a major market share of deposits in Charleston, Berkeley and Dorchester counties and a significant share of deposits in the Georgetown market. As a new entrant into Beaufort County, the Company holds a small market share. Peoples Federal's deposits are principally obtained in Horry and Florence counties. By continuing to promote innovative new products, pricing competitively and encouraging the highest level of quality in customer service, the Company continues to successfully meet challenges from competitors, many of which are non-banking entities offering investment products. Due to disintermediation of traditional savings balances to other investment products, including the equity markets, annuities and mutual funds, the pool of retail deposit funds held in financial institutions has contracted over time, resulting in more reliance by the Company on other sources of funds.

Other primary sources of funds include borrowings from the FHLB, principal repayments on loans and mortgage-backed securities, reverse repurchase agreements and sales of loans. As a measure of protection, the Associations have back-up sources of funds available, including FHLB borrowing capacity and securities available for sale. During fiscal 1999, the FHLB of Atlanta instituted a general policy of limiting borrowing capacity to a percent of assets, regardless of the level of advances that could be supported by available collateral for such advances. This new policy serves to define an upper cap for FHLB advances for each of the Associations.

During 2000, the Company experienced a net cash outflow from investing activities of $181.1 million, consisting principally of a net increase of $239.4 million in loans receivable, offset partially by $47.9 million of sales of mortgage-backed securities and $28.0 million in repayments to mortgage-backed securities. The Company experienced net cash inflows of $21.5 million from operating activities and $163.4 million from financing activities. Financing activities included $172.0 million in net additions to FHLB advances and growth of $21.4 million in deposit balances, offset partially by $24.7 million in net reductions in reverse repurchase agreements.

Proceeds from the sale of loans totaled $48.4 million in 2000, declining from $203.1 million in 1999. Based on recent asset/liability management objectives, management expects to continue its strategy of selling selected longer-term, fixed-rate loans in fiscal 2001 although it anticipates volume may be lower due to higher market interest rates and their likely effect on fixed-rate loan originations.

Parent Company Liquidity

As a holding company, First Financial conducts its business through its subsidiaries. Unlike the Associations, First Financial is not subject to any regulatory liquidity requirements. The principal source of funds for the acquisition of Peoples Federal in 1992 was the issuance of $20.3 million in senior notes by the Company in September 1992. During 1998, the early redemption of the remaining outstanding principal of $19.8 million was partially funded by a reduction in investment securities of First Financial and partially by a $4.0 million draw on a $25.0 million bank funding line. Potential sources for First Financial's payment of principal and interest on its borrowings and for its periodic repurchase programs include (i) dividends from First Federal and Peoples Federal; (ii) payments from existing cash reserves and sales of marketable securities; and (iii) interest on its investment securities. As of September 30, 2000, First Financial had cash reserves and existing marketable securities of $852,000 compared with $1.6 million at September 30, 1999.

The Associations' ability to pay dividends and make other capital contributions to First Financial is restricted by regulation and may require regulatory approval. Such distributions may also depend on the Associations' ability to meet minimum regulatory capital requirements in effect during the period. Current OTS regulations permit institutions meeting certain capital requirements and subject to "normal supervision" to pay out 100% of net income to date over the calendar year and 50% of surplus capital existing at the beginning of the calendar year without supervisory approval. Both Associations are currently subject to "normal supervision" as to the payment of dividends.

Asset/Liability Management

Asset/liability management is the process by which the Company constantly changes the mix, maturity and pricing of assets and liabilities in an attempt to reduce a materially adverse impact on earnings resulting from the direction, frequency and magnitude of change in market interest rates. Although the net interest income of any financial institution is perceived as being vulnerable to fluctuations in interest rates, the Company's management has attempted to minimize that vulnerability. The future regulatory capital requirements of all financial institutions will become subject to the inclusion of additional components measured by exposure to interest rate sensitivity.

The Company, working principally through the Asset and Liability Committees of the Associations, has established policies and monitors results to control interest rate risk. The Company utilizes measures such as static gap, which is the measurement of the difference between interest-sensitive assets and interest-sensitive liabilities repricing for a particular time period. More importantly may be the process of evaluating 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 sheet mix assumptions.

Management may adjust the Company's interest rate sensitivity position primarily through decisions on the pricing, maturity and marketing of particular deposit and loan products and by decisions regarding the maturities of FHLB advances and other borrowings. The Company has continued to emphasize adjustable-rate mortgage real estate lending and short-term consumer and commercial business lending to accomplish its objectives.

The following table sets forth in summary form the repricing attributes of the Company's interest-earning assets and interest-bearing liabilities. The time periods in the table represent the time period before an asset or liability matures or can be repriced.

Interest Rate Sensitivity Analysis at September 30, 2000

			Interest Rate Sensitivity Period
			3 Months	4-6 Months	7-12 Months	13 Months-  2 years	Over 2 Years	Cost
Interest-earning assets:			(dollar amounts in thousands)
	Loans (1)		$   289,540	$   120,648	$   218,141	$   126,904	$ 1,099,867	$ 1,855,100
	Mortgage-backed securities		123,853	2,362	10,281	5,103	107,870	249,469
	Interest-earning deposits, investments and FHLB stock		59,426			2,314	536	62,276
Total interest-earning assets			472,819	123,010	228,422	134,321	1,208,273	2,166,845
Interest-bearing liabilities:
	Deposits:
		Checking accounts (2)	12,037	12,037	24,073	26,233	55,745	130,125
		Savings accounts (2)	5,054	5,053	10,107	16,778	81,882	118,874
		Money market accounts	191,481					191,481
		Certificate accounts	176,288	131,024	222,631	128,061	62,998	721,002
	Total deposits		384,860	148,114	256,811	171,072	200,625	1,161,482
	Borrowings (3)		547,965	25,000	30,000	100,000	125,057	828,022
Total interest-bearing liabilities			932,825	173,114	286,811	271,072	325,682	1,989,504
Current period gap			$ (460,006)	$   (50,104)	$   (58,389)	$ (136,751)	$   882,591	$    177,341
Cumulative gap			$ (460,006)	$ (510,110)	$ (568,499)	$ (705,250)	$   177,341
Percent of total assets			(20.39%)	(22.61%)	(25.19%)	(31.25%)	7.86%

---

Assumptions:
(1)	Fixed-rate loans are shown in the time frame corresponding to contractual principal amortization schedules.  Adjustable-rate loans are shown in the time frame corresponding to the next contractual interest rate adjustment date.
(2)	Decay rates for savings accounts approximate 17% in the first year and 14% in the second year.  Decay rates for checking accounts approximate 37% in the first year and 20% in the second year.
(3)	Borrowings include fixed-rate FHLB advances at the earlier of maturity date or potential call dates.  If FHLB advances are not called, maturities may extend.

Based on the Company's September 30, 2000 static gap position, in a one-year time period $824.3 million in interest-sensitive assets will reprice and approximately $1.4 billion in interest-sensitive liabilities will reprice. This current static gap position results in a negative mismatch of $568.5 million, or 25.2% of assets. The Company's static gap position one year ago was a negative 31.25% of assets. 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, which may be significant in any year, based on the level and direction of market interest rates. The above table also does not consider the repricing considerations inherent in adjustable-rate loans, such as minimum and maximum annual and lifetime interest rate adjustments and also the index utilized.

During the past three years the Company extended maturities of interest-sensitive assets through retention of certain types of loans, particularly those originated under newer "hybrid" lending programs with both fixed-rate and variable-rate features. These loans have become very popular with consumers and carry a fixed rate of interest for three, five, or seven years and then adjust annually to an established index.

A negative gap would normally suggest that net interest income would increase if market rates decline. A rise in market rates would normally have a detrimental effect on net interest income based on a negative gap. The opposite would occur when an institution is positively-gapped. Based on its current static gap position in the above table, which reflects dollars repricing but not movements of indices to which assets and liabilities are tied, First Financial was more biased toward a decline in interest rates over the immediate future. As market interest rates declined during fiscal 1999, the Company's negative gap position was a factor in increasing the net interest margin. During fiscal 2000, higher interest rates resulted in compression in the Company's net interest margin. Because of the short-term nature of its liability funding, the effect of six increases by the Federal Reserve in one year may continue to have a detrimental effect on the net margin in fiscal 2001.

Derivative transactions may be used by the Company to better manage its interest rate sensitivity. Although not used extensively by the Company in the past, such measures may be utilized on a more frequent basis in the future.

Results of Operations

Net Interest Income

The largest component of operating earnings for the Company is net interest income. Net interest income totaled $62.8 million in 2000 compared with $60.4 million in 1999 and $54.7 million in 1998. The level of net interest income is determined by balances of earning assets and successfully managing the net interest margin. Changes in interest rates paid on assets and liabilities, the rate of growth of the asset and liability base, the ratio of interest-earning assets to interest-bearing liabilities and management of the balance sheet's interest rate sensitivity all factor into changes in net interest income.

Net interest income increased by 3.8% to $62.8 million in 2000, and represented approximately 77% of the gross income of First Financial. This followed an increase of 10.6% in 1999 and 7.1% in 1998. Economic conditions, market interest rates and competitive pressures in fiscal 2000 were more challenging than in fiscal 1999 and 1998. Funding pressures coupled with strong growth prospects in the markets served by First Financial also led to higher usage of more external sources of funds during fiscal 2000.

As the table below illustrates, for the year ended September 30, 2000 the net interest margin declined to 2.99% compared with 3.22% in fiscal 1999 and 3.10% in 1998. The net interest margin improved during fiscal 1999, as the Company experienced improving yields due to new business initiatives and also grew non-interest bearing checking accounts during the year.

The Company's net interest margin may be affected by many factors. Competition for deposit funds within the Company's markets ranges from many well-established regional banks and large credit unions to many smaller local banks. The general level and direction of interest rates and national monetary policy also can affect consumer deposit patterns and thus affect the Company's ability to utilize retail sources of funds. Fiscal 2000 was a very challenging year for retail deposit pricing. Late in calendar year 1999, many banks perceived the need to gather additional liquidity related to public concerns over the transition to the Year 2000. Many competitors developed special certificate of deposit products with higher interest rates to attract funds. Higher retail certificate of deposit pricing did not abate as expected after the first of the year and continued to affect the repricing of deposits, leading to higher average deposit costs for 2000. The demand for funds to originate loans required the Company to utilize other sources of funds, particularly FHLB borrowings.

Average Yields and Rates

		Year Ended September 30,
		2000				1999				1998
		Average Balance	Interest	Average Yield/Cost		Average Balance	Interest	Average Yield/Cost		Average Balance	Interest	Average Yield/Cost
		(dollar amounts in thousands)
Interest-earning assets:
	Loans (1)	$ 1,839,607	$ 144,177	7.84%		$ 1,640,497	$ 125,742	7.66%		$ 1,510,008	$ 119,306	7.90%
	Mortgage-backed securities	202,256	13,414	6.63		182,585	11,519	6.31		168,344	11,596	6.89
	Investment securities	42,084	3,207	7.62		39,112	2,801	7.16		69,122	4,479	6.48
	Other interest-earning assets (2)	13,293	844	6.35		15,124	770	5.09		16,601	964	5.81
Total interest-earning assets		2,097,240	161,642	7.71		1,877,318	140,832	7.50		1,764,075	136,345	7.73
Non-interest-earning assets		88,795				77,912				63,981
	Total assets	$ 2,186,035				$ 1,955,230				$ 1,828,056
Interest-bearing liabilities:
Deposit accounts:
Checking accounts		$ 203,103	805	0.40		$ 178,374	765	0.43		$ 150,976	1,190	0.79
Savings accounts		120,805	2,836	2.35		122,621	2,912	2.37		124,683	3,199	2.57
Money market accounts		181,130	7,088	3.91		168,659	6,090	3.61		144,331	5,157	3.57
Certificate accounts		723,999	40,658	5.62		727,822	39,233	5.39		715,210	41,002	5.73
Total deposits		1,229,037	51,387	4.18		1,197,476	49,000	4.09		1,135,200	50,548	4.45
FHLB advances		706,551	43,119	6.10		540,893	29,063	5.37		470,441	26,822	5.70
Other borrowings		66,783	4,382	6.56		42,021	2,331	5.55		63,733	4,319	6.78
Total interest-bearing liabilities		2,002,371	98,888	4.94		1,780,390	80,394	4.51		1,669,374	81,689	4.89
Non-interest-bearing liabilities		52,642				49,318				40,282
Total liabilities		2,055,013				1,829,708				1,709,656
Stockholders' equity		131,022				125,522				118,400
	Total liabilities and stockholders' equity	$ 2,186,035				$ 1,955,230				$ 1,828,056
Net interest income/gross margin			$ 62,754	2.77%			$ 60,438	2.99%			$ 54,656	2.84%
Net yield on average interest-earning assets				2.99%				3.22%				3.10%
Percent of average interest-earning assets to average interest-bearing liabilities				104.74%				105.44%				105.67%
(1)	Average balances of loans include non-accrual loans.
(2)	This computation includes interest-earning deposits, which are classified as cash equivalents in the Company's Consolidated Statements of Financial Condition contained in Item 8 herein.

The Company's weighted average yield on earning assets and weighted average cost of interest-bearing liabilities shown above are derived by dividing interest income and expense by the weighted average balances of interest-earning assets or interest-bearing liabilities. During 2000, the average yield on interest-earning assets increased by 21 basis points while the average rate paid on interest-bearing liabilities increased by 43 basis points, resulting in lowered interest spreads and net interest margins. As mentioned above, the Federal Reserve began an aggressive program in June1999 to mitigate the effects of expected inflationary tendencies in the strong growth economy. Due to the Company's negative gap position, short-term liability costs increased faster in late 1999 and throughout 2000 than did yields on earning assets. Average interest-earning assets increased $219.9 million in fiscal 2000, serving to partially offset the negative effect of spread expansion on net interest income in that period.

The Company's $113.2 million growth in average interest-earning assets during fiscal 1999 contributed significantly to the 10.6% growth in net interest income during that period, as did a 12 basis point expansion in the Company's net interest margin during the period. In the first quarter of fiscal 1999, the Federal Reserve Open Market Committee responded to world market conditions and other factors in the U.S. economy, cutting the federal funds rate by three quarters of one percent through mid-November 1998. A slight steepening of the treasury yield curve from fiscal 1998 to fiscal 1999 also generally benefited the Company's net interest margin in fiscal 1999.

The following table presents the dollar amount of changes in interest income and interest expense attributable to changes in volume and the amount attributable to changes in rate. The combined effect of changes in both volume and rate, which cannot be separately identified, has been allocated proportionately to the change due to volume and due to rate.

Rate/Volume Analysis

			Year Ended September 30,			Year Ended September 30,
			2000 versus 1999			1999 versus 1998
			Increase (Decrease)			Increase (Decrease)
			Due to			Due to
			Volume	Rate	Net	Volume	Rate	Net
			(dollar amounts in thousands)
Interest income:
	Loans		$ 15,445	$ 2,990	$ 18,435	$ 10,125	$ (3,689)	$ 6,436
	Mortgage-backed securities		1,288	607	1,895	940	(1,017)	(77)
	Investment securities		220	186	406	(2,108)	430	(1,678)
	Other interest-earning assets		(101)	175	74	(81)	(113)	(194)
Total interest income			16,852	3,958	20,810	8,876	(4,389)	4,487
Interest expense:
	Deposit accounts
		Checking accounts	98	(58)	40	189	(614)	(425)
		Savings accounts	(48)	(28)	(76)	(50)	(237)	(287)
		Money market accounts	470	528	998	875	58	933
		Certificate accounts	(211)	1,636	1,425	709	(2,478)	(1,769)
	Total deposits		309	2,078	2,387	1,723	(3,271)	(1,548)
	Borrowings		11,302	4,805	16,107	2,558	(2,305)	253
Total interest expense			11,611	6,883	18,494	4,281	(5,576)	(1,295)
Net interest income			$ 5,241	$ (2,925)	$ 2,316	$ 4,595	$ 1,187	$ 5,782

Provision for Loan Losses

The provision for loan losses is a charge to earnings in a given period to maintain the allowance at an adequate level. In fiscal 2000, the Company's provision expense was $2.7 million compared with $2.8 million in 1999 and $2.4 million in 1998. The provision was higher in 2000 and 1999 principally as a result of the Company's strong loan growth. Total loan loss reserves were $15.4 million and $14.6 million at September 30, 2000 and 1999, respectively, and represented .84% of net loans receivable.

Net charge-offs in fiscal 2000 totaled $1.9 million, or .11% of average net loans, compared with $1.0 million in 1999, or .06% of average net loans. Net loan charge-offs of $1.7 million in 1998 resulted in charge-offs to average loans of .11%. Net charge-offs in 1998 included approximately $679,000 related to a $2.8 million multi-family loan on which the Company had maintained an $800,000 specific reserve. Recoveries were higher in fiscal 1999, and in fiscal 2000 charge-offs increased due to growth in consumer lending.

Other Income

Other income in 2000 increased by $3.0 million, or 19.6%, to $18.3 million compared with $15.3 million in 1999. During 1999, other income improved by $2.0 million or 14.7% from 1998. Record growth in other income was achieved during 2000 despite a $1.3 million decline in gains on sale of loans in 2000 compared with 1999. Higher interest rates during the year curtailed agency-qualifying fixed-rate originations, which traditionally have been the Company's conduit for loan sales. Pricing competition also intensified with lower gains recorded on loan sales during the year.

In the current year, the largest dollar increase in revenues was a $1.0 million, or 15.3% increase, in service charges and fees on deposit accounts. The rate of growth in service charges and fees on deposit accounts improved from 13.3% in 1999 and 3.4% in 1998. Strong sales efforts continue to target growth in demand accounts in the markets served by First Financial.

Brokerage fees increased to $1.8 million in fiscal 2000, a 41.1% increase from $1.3 million in 1999. Commissions on insurance also increased to $2.8 million in 2000, up 45.4% from $2.0 million in 1999. The Company purchased the operations of Associated Insurors in June, 2000 and revenues of $464,000 were attributed to growth from Associated Insurors' operations.

Loan servicing fees increased $707,000, or 60.1% during the year due primarily to loan securitizations and growth in portfolio lending. The Company was servicing $648.2 million in loans for others at September 30, 2000 compared with $519.7 million at the end of fiscal 1999. Additionally, loan prepayment speeds slowed due to rising interest rates, reducing the amortization of the Company's originated servicing rights. Income from real estate operations improved to $377,000 in 2000 from $88,000 in the prior year and was primarily a result of income generated by one large commercial property acquired through foreclosure in a prior year.

Significant increases in other income during fiscal 1999 included a $400,000 increase in brokerage fees, up 45.9% from 1998 levels. The Company expanded the number of customers served by tits NASD registered broker-dealer. Net gain on sale of loans increased $373,000, or 36.6%, in 1999 from 1998 levels and was generally due to stronger originations and sales of agency-qualifying 15- and 30-year fixed-rate residential loans in fiscal 1999.

The Company delayed its implementation of pricing increases for checking and other deposit account services until late in fiscal 1998. Additional pricing changes went into effect in fiscal 1999. The significant growth in checking accounts in fiscal 1999 also contributed to the growth in service charges and fees on deposit accounts. Loan servicing fees declined $59,000, or 4.8%, in 1999 principally due to increased amortizations of the Company's originated servicing rights due to prepayment spreads experienced in the servicing portfolio.

Non-interest Expense

In the more competitive financial services market of recent years, management has recognized the importance of controlling non-interest expense to maintain and improve profitability. Management also recognizes that there are operational costs which continue to increase as a result of the present operating climate for regulated financial institutions. The technical and operating environment for financial institutions continues to require a well-trained and motivated staff, superior operating systems and sophisticated marketing efforts.

		Year Ended September 30,
		2000			1999			1998			1997			1996
		Amount	% Average Assets		Amount	% Average Assets		Amount	% Average Assets		Amount	% Average Assets		Amount	% Average Assets
		(dollar amounts in thousands)
Salaries and employee benefits		$ 28,008	1.28%		$ 25,625	1.31%		$ 22,263	1.22%		$ 20,425	1.22%		$ 18,920	1.25%
Occupancy costs		3,738	0.17		3,203	0.16		3,316	0.18		3,113	0.18		2,949	0.19
Marketing		1,579	0.07		1,316	0.07		1,264	0.07		1,518	0.09		1,216	0.08
Depreciation, amortization, rental and maintenance of equipment		3,914	0.18		3,328	0.17		2,717	0.15		2,779	0.16		2,588	0.17
FDIC insurance premiums		406	0.02		728	0.04		709	0.04		1,116	0.07		2,694	0.18
Other		10,239	0.47		9,080	0.46		9,572	0.52		8,405	0.50		7,836	0.52
Core expenses		47,884	2.19		43,280	2.21		39,841	2.18		37,356	2.22		36,203	2.39
SAIF Special assessment											313	0.02		6,955	0.46
Merger-related expenses								317	0.02
Total non-interest expense		$ 47,884	2.19%		$ 43,280	2.21%		$ 40,158	2.20%		$ 37,669	2.24%		$ 43,158	2.85%

Comparison of Non-Interest Expense

Total non-interest expense increased $4.6 million, or 10.6% in 2000. This followed a 7.8% increase in fiscal 1999, or 8.6% increase, if certain non-recurring expenses are eliminated from 1998 expenses. The largest component of non-interest expense, salaries and employee benefits, increased $2.4 million, or 9.3% in 2000 due to increased staffing for the expansion of products and services, staffing for two additional retail sales offices and higher overtime and incentive payments related to the Company's Year 2000 efforts, most of which involved internal staff activities. In fiscal 1999, salaries and employee benefits increased $3.4 million, or 15.1% from 1998.

Occupancy costs increased 16.7% to $3.7 million in fiscal 2000 after declining slightly in fiscal 1999. In the final quarter of fiscal 1999, First Financial added a retail sales office in Socastee, South Carolina. In fiscal 2000, two new retail sales offices were opened in the Hilton Head area and another office located in the Bluffton area opened in late November 2000.

In late 1998 and continuing in fiscal 1999 and 2000, the Company began the implementation of a new sales office automation system and improved telecommunication capabilities throughout its retail banking system. In fiscal 2000, the Company implemented a new image technology system and introduced Internet banking. These investments in new technology and other software upgrades contributed significantly to the increase of $586,000 and $611,000, respectively, in equipment costs in fiscal 2000 as compared to 1999 and fiscal 1999 compared to fiscal 1998, respectively.

Effective January 1, 2000, the Financing Corporation assessment was equalized among all FDIC insured banks and thrifts, resulting in a reduction in the thrift rate to 2.1 basis points of insured deposits. Fiscal 2000 deposit insurance costs declined $322,000 from costs in fiscal 1999 due to these rate reductions. Rates are expected to remain the same in fiscal 2001.

Increases in the general level of business activity and the conclusion of preparations for the Year 2000 rollover resulted in additional other costs in fiscal 2000.

Non-recurring professional fees of approximately $375,000 were incurred for several business initiatives in fiscal 1998 and non-recurring expenses of $317,000 related to the Investors merger, which was completed in November of 1997.

The Company's purchase of Associated Insurors resulted in four months of operating expenses and amortization of goodwill in fiscal 2000. Additional expenses included approximately $398,000 were incurred from these operations, including approximately $272,000 in salary and employee benefit costs, $34,000 in occupancy costs and $44,000 in amortization of goodwill.

The Company's efficiency ratio was 59.6% in 2000, 58.3% in 1999 and 59.4% in 1998, after excluding the effect of merger related expenses in 1998. Management continues to target lower expense ratios as an important strategic goal of the Company.

Income Tax Expense

Income taxes totaled $10.5 million in 2000, compared to $10.4 million in 1999 and $8.6 million in 1998. The Company's effective tax rate was 34.5% in 2000, 35.0% in 1999 and 33.7% in 1998. The effective tax rate in future periods is expected to range from 35% to 36%.

Regulatory and Accounting Issues

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 establishes, for the first time, comprehensive accounting and reporting standards for derivative instruments and hedging activities. For accounting purposes SFAS 133 comprehensively defines a derivative instrument. SFAS 133 requires that all derivative instruments be recorded in the statement of financial position at fair value. The accounting for the gain or loss due to change in fair value of the derivative instrument depends on whether the derivative instrument qualifies as a hedge. If the derivative does not qualify as a hedge, the gains or losses are reported in earnings when they occur. However, if the derivative instrument qualifies as a hedge, the accounting varies based on the type of risk being hedged.

SFAS 137 was issued in 1999, delaying the effective date of this statement for one year to be effective for all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS 138, issued in June of 2000, amended SFAS 133 for certain derivative instruments and certain hedging activities. The Company adopted SFAS 133, as amended, on October 1, 2000 and recorded the fair value of its derivative instruments in its statement of condition. Immaterial amounts were recognized as assets or liabilities based on the Company's limited use of derivatives. The Company does not expect the adoption to have a material effect on future operations of the Company.

SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," was issued in September 2000. This Statement replaces SFAS 125 and revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. SFAS 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. This Statement is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of the provisions of SFAS 140 is not expected to have a material impact on the Company.

Impact of Inflation and Changing Prices

The Consolidated Financial Statements contained in Item 8 herein and related data have been prepared in accordance with generally accepted accounting principles which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time because of inflation.

Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary. As a result, interest rates have a more significant impact on a financial institution's performance than the effect of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the price of goods and services since such prices are affected by inflation. The Company is committed to continue its efforts to manage the gap between its interest-sensitive assets and interest-sensitive liabilities.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

See Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Asset/Liability Management."

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

MANAGEMENT'S REPORT

Primary responsibility for the integrity and objectivity of the Company's consolidated financial statements rests with management. The accompanying consolidated financial statements are prepared in conformity with generally accepted accounting principles and accordingly include amounts that are based on management's best estimates and judgements. Non-financial information included in the Summary Annual Report to Stockholders has also been prepared by management and is consistent with the consolidated financial statements.

To assure that financial information is reliable and assets are safeguarded, management maintains an effective system of internal controls and procedures, important elements of which include: careful selection, training, and development of operating personnel and management; an organization that provides appropriate division of responsibility; and communications aimed at assuring that Company policies and procedures are understood throughout the organization. In establishing internal controls, management weighs the costs of such systems against the benefits it believes such systems will provide. An important element of the system is an ongoing internal audit program.

To assure the effective administration of the system of internal controls, the Company develops and widely disseminates written policies and procedures, provides adequate communications channels and fosters an environment conducive to the effective functioning of internal controls. All employees of the Company are informed of the need to conduct our business affairs in accordance with the highest ethical standards. The Company has set forth a written corporate code of conduct and communicated it to all employees.

KPMG LLP, independent auditors, have audited the Company's consolidated financial statements as described in their report.

 

	/s/ A. Thomas Hood
	President and Chief Executive Officer

 

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REPORT OF INDEPENDENT AUDITORS

 

 

 

 

The Board of Directors

First Financial Holdings, Inc. and Subsidiaries

We have audited the accompanying consolidated statements of financial condition of First Financial Holdings, Inc. and Subsidiaries as of September 30, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity and comprehensive income and cash flows for each of the years in the three-year period ended September 30, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of First Financial Holdings, Inc. and Subsidiaries as of September 30, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 2000, in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

 

Greenville, South Carolina

October 24, 2000

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FIRST FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
			September 30,
			2000	1999
			(dollar amounts in thousands)
Assets
Cash and cash equivalents			$      63,992	$      60,151
Investment securities held to maturity (fair value of $255 and $258)			249	249
Investment securities available for sale, at fair value			5,918	7,569
Investment in capital stock of FHLB, at cost			39,325	29,925
Loans receivable, net of allowance of $15,403 and $14,570			1,829,061	1,735,608
Loans held for sale			9,436	6,542
Mortgage-backed securities, held to maturity (fair value of $21 and $31)			19	28
Mortgage-backed securities available for sale, at fair value			247,076	181,217
Accrued interest receivable			13,552	11,495
Office properties and equipment, net			29,503	21,969
Real estate and other assets acquired in settlement of loans			5,895	5,685
Other assets			12,485	10,314
Total assets			$ 2,256,511	$ 2,070,752
Liabilities and Stockholders' Equity
Liabilities:
	Deposit accounts		$ 1,241,295	$ 1,219,848
	Advances from FHLB		766,500	594,500
	Securities sold under agreements to repurchase		49,272	73,991
	Other short-term borrowings		12,250	8,750
	Advances by borrowers for taxes and insurance		6,255	6,945
	Outstanding checks		15,405	11,509
	Other		27,683	29,328
Total liabilities			2,118,660	1,944,871
Commitments and contingencies (Note 16)
Stockholders' equity:
	Serial preferred stock, authorized 3,000,000 shares--none issued
	Common stock, $.01 par value, authorized 24,000,000 shares, issued
		15,292,726 and 15,234,462 shares at September 30, 2000 and 1999,
		respectively	153	152
	Additional paid-in capital		32,374	31,687
	Retained income, substantially restricted		125,366	112,914
	Accumulated other comprehensive loss		(1,467)	(1,631)
	Treasury stock at cost, 1,974,933 shares and 1,881,449 shares at
		September 30, 2000 and 1999, respectively	(18,575)	(17,241)
Total stockholders' equity			137,851	125,881
Total liabilities and stockholders' equity			$ 2,256,511	$ 2,070,752

See accompanying notes to consolidated financial statements.

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FIRST FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
			Year Ended September 30,
			2000	1999	1998
Interest Income			(dollar amounts in thousands, except per share amounts)
	Interest on loans		$ 144,177	$ 125,742	$ 119,306
	Interest on mortgage-backed securities		13,414	11,519	11,596
	Interest and dividends on investment securities		3,207	2,801	4,479
	Other		844	770	964
Total interest income			161,642	140,832	136,345
Interest Expense
	Interest on deposits
		NOW accounts	805	765	1,190
		Passbook, statement and other accounts	2,836	2,912	3,199
		Money market accounts	7,088	6,090	5,157
		Certificate accounts	40,658	39,233	41,002
	Total interest on deposits		51,387	49,000	50,548
	Interest on FHLB advances		43,119	29,063	26,822
	Interest on short-term borrowings		4,382	2,331	2,620
	Interest on long-term debt				1,699
Total interest expense			98,888	80,394	81,689
Net interest income			62,754	60,438	54,656
Provision for loan losses			2,745	2,765	2,405
Net interest income after provision for loan losses			60,009	57,673	52,251
Other Income
	Net gain on sale of loans		128	1,392	1,019
	Gain on sale of investment and mortgage-backed securities		144	37	306
	Brokerage fees		1,793	1,271	871
	Commissions on insurance		2,837	1,951	1,850
	Service charges and fees on deposit accounts		7,593	6,586	5,814
	Loan servicing fees		1,883	1,176	1,235
	Real estate operations, net		377	88	(363)
	Other		3,555	2,813	2,625
Total other income			18,310	15,314	13,357
Non-Interest Expense
	Salaries and employee benefits		28,008	25,625	22,263
	Occupancy costs		3,738	3,203	3,316
	Marketing		1,579	1,316	1,264
	Depreciation, amortization, rental and maintenance of equipment		3,914	3,328	2,717
	FDIC insurance premiums		406	728	709
	Other		10,239	9,080	9,889
Total non-interest expense			47,884	43,280	40,158
Income before income taxes			30,435	29,707	25,450
Income tax expense			10,507	10,400	8,571
Net income before extraordinary loss			19,928	19,307	16,879
Extraordinary loss on extinguishment of debt (net of related
	income tax benefit of $173)				(340)
Net income			$ 19,928	$ 19,307	$ 16,539
Earnings Per Common Share
	Income before extraordinary loss
		Basic	$ 1.49	$ 1.44	$ 1.24
		Diluted	1.47	1.40	1.20
	Extraordinary loss on extinguishment of debt, net of related income tax
		Basic			(0.02)
		Diluted			(0.03)
	Net income
		Basic	1.49	1.44	1.22
		Diluted	1.47	1.40	1.17
Average Number of Shares Outstanding
	Basic		13,341	13,451	13,572
	Diluted		13,559	13,786	14,101
Dividends Per Common Share			$ 0.56	$ 0.48	$ 0.42

See accompanying notes to consolidated financial statements.

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FIRST FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
							Accumulated Other Comprehensive Income (Loss)
					Additional Paid-in Capital
				Common Stock		Retained Income		Treasury Stock
								Shares	Amount	Total
				(dollar amounts in thousands)
Balance at September 30, 1997				$ 148	$ 28,901	$ 88,787	$ 1,156	1,370	$ (7,464)	$ 111,528
	Net income					16,539				16,539
	Other comprehensive income:
		Unrealized net gain on securities available for sale, net of income tax					1,039			1,039
	Total comprehensive income									17,578
	Common stock issued pursuant to stock option and employee benefit plans			2	1,407					1,409
	Cash dividends ($.42 per share)					(5,700)				(5,700)
	Treasury stock purchased							5	(101)	(101)
	Cash payment for fractional shares related to pooling					(5)				(5)
	Cash dividends paid by pooled company prior to merger					(117)				(117)
	Equity adjustment of pooled company for the nine months ended September 30, 1997					571				571
Balance at September 30, 1998				150	30,308	100,075	2,195	1,375	(7,565)	125,163
	Net income					19,307				19,307
	Other comprehensive income:
		Unrealized net loss on securities available for sale, net of income tax					(3,826)			(3,826)
	Total comprehensive income									15,481
	Common stock issued pursuant to stock option and employee benefit plans			2	1,379					1,381
	Cash dividends ($.48 per share)					(6,468)				(6,468)
	Treasury stock purchased							506	(9,676)	(9,676)
Balance at September 30, 1999				152	31,687	112,914	(1,631)	1,881	(17,241)	125,881
	Net income					19,928				19,928
	Other comprehensive income:
		Unrealized net gain on securities available for sale, net of income tax					164			164
	Total comprehensive income									20,092
	Common stock issued pursuant to stock option and employee benefit plans			1	687					688
	Cash dividends ($.56 per share)					(7,476)				(7,476)
	Treasury stock purchased							94	(1,334)	(1,334)
Balance at September 30, 2000				$ 153	$ 32,374	$125,366	$ (1,467)	1,975	$(18,575)	$ 137,851

See accompanying notes to consolidated financial statements.

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FIRST FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
			Year Ended September 30,
			2000	1999	1998
Operating Activities			(dollar amounts in thousands)
Net income			$ 19,928	$ 19,307	$ 16,539
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation		2,977	2,450	2,002
	Gain on sale of loans, net		(128)	(1,392)	(1,019)
	Gain on sale of investments and mortgage-backed securities, net		(144)	(37)	(306)
	(Gain) loss on sale of property and equipment, net		(191)	4	8
	(Gain) loss on sale of real estate owned, net		19	(102)	(23)
	Amortization of unearned discounts/premiums on investments, net		899	689	(342)
	Increase (decrease) in deferred loan fees and discounts		228	714	(383)
	(Increase) decrease in receivables and prepaid expenses		(4,228)	880	(3,079)
	Provision for loan losses		2,745	2,765	2,405
	Write downs of real estate acquired in settlement of loans		14	13	275
	Deferred tax expense		(2,290)	6,835	7,231
	Proceeds from sales of loans held for sale		48,397	203,117	173,042
	Origination of loans held for sale		(51,163)	(193,794)	(182,999)
	Increase (decrease) in accounts payable and accrued expenses		4,428	(2,219)	(3,913)
	Amortization of discount on long-term debt				630
Net cash provided by operating activities			21,491	39,230	10,068
Investing Activities
Proceeds from maturity of investments			1,900	9,434	16,226
Proceeds from sales of investment securities available for sale			1,994		50,013
Purchases of investment securities available for sale			(2,238)	(2,007)	(26,093)
Purchase of FHLB stock			(9,400)	(4,925)	(3,149)
Increase in loans, net			(239,411)	(188,262)	(158,439)
Proceeds from sales of mortgage-backed securities available for sale			47,860	1,625	24,095
Repayments on mortgage-backed securities available for sale			27,958	61,552	53,388
Purchases of mortgage-backed securities available for sale				(102,542)	(22,092)
Proceeds from sales of real estate owned			591	855	7,046
Net purchase of office properties and equipment			(10,320)	(8,587)	(1,902)
Net cash used in investing activities			(181,066)	(232,857)	(60,907)
Financing Activities
Net increase in checking, passbook and money market fund accounts			30,951	52,676	34,004
Net increase (decrease) in certificates of deposit			(9,504)	2,732	6,448
Net proceeds of FHLB advances			172,000	123,000	51,923
Net increase (decrease) in securities sold under agreements to repurchase			(24,719)	44,549	(29,454)
Net increase in other borrowings			3,500	4,750	4,000
Retirement of Senior Notes					(19,763)
Increase (decrease) in advances by borrowers for taxes and insurance			(690)	442	(18)
Proceeds from exercise of stock options			688	1,381	1,409
Dividends paid			(7,476)	(6,468)	(5,700)
Treasury stock purchased			(1,334)	(9,676)	(106)
Equity adjustment of merged company					571
Cash dividend paid by pooled company					(117)
Net cash provided by financing activities			163,416	213,386	43,197
Net increase (decrease) in cash and cash equivalents			3,841	19,759	(7,642)
Cash and cash equivalents at beginning of period			60,151	40,392	48,034
Cash and cash equivalents at end of period			$ 63,992	$ 60,151	$ 40,392
Supplemental disclosures:
	Cash paid during the period for:
		Interest	$ 98,379	$ 80,362	$ 78,588
		Income taxes	11,694	(495)	7,008
	Loans foreclosed		1,018	635	3,162
	Loans securitized into mortgage-backed securities		142,151		52,341
	Unrealized net gain (loss) on securities available for sale, net of income tax		164	(3,826)	1,039

See accompanying notes to consolidated financial statements

---

 

FIRST FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2000, 1999 and 1998

(All Dollar Amounts, Except Per Share And Where Otherwise Indicated, In Thousands.)

1. Summary of Significant Accounting Policies

First Financial Holdings, Inc. ("First Financial" or the "Company") is incorporated under the laws of the State of Delaware and became a multiple savings and loan holding company upon the acquisition of Peoples Federal Savings and Loan Association ("Peoples Federal") on October 9, 1992. Prior to that date, First Financial was a unitary savings and loan holding company with First Federal Savings and Loan Association of Charleston ("First Federal") as its only subsidiary.

Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned thrift subsidiaries, First Federal and Peoples Federal (together, the "Associations") and First Southeast Investor Services, Inc. The Company's consolidated financial statements also include the assets and liabilities of service corporations and operating subsidiaries wholly-owned by the Associations. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company operates as one business segment.

Comprehensive Income

Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", establishes standards for the reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and net unrealized gains (losses) on securities and is presented in the statements of stockholders' equity and comprehensive income. The statement requires only additional disclosures in the consolidated financial statements; it does not affect the Company's financial position or results of operations.

The Company's other comprehensive income for the years ended September 30, 2000, 1999 and 1998 and accumulated other comprehensive income as of September 30, 2000, 1999 and 1998 are comprised solely of unrealized gains and losses on certain investments in debt and equity securities. Other comprehensive income for the years ended September 30, 2000, 1999 and 1998 follows:

			2000	1999	1998
	Unrealized holding gains (losses) arising during period		$  258	$ (3,803)	$  1,226
	Less: reclassification adjustment for realized gains, net of tax		94	23	187
	Unrealized gains (losses) on securities available for sale,
		net of applicable income taxes	$  164	$ (3,826)	$  1,039

Employee Benefit Plans

In 1999, the Company adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits". SFAS No. 132 provides additional information to facilitate financial analysis and eliminates certain disclosures which are no longer useful. In accordance with SFAS No. 132, the disclosures regarding the Company's pension plan obligation in note 15 have been revised for all periods presented.

Earnings Per Share

Basic earnings per share ("EPS") excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Stock Based Compensation

SFAS No. 123, "Accounting for Stock-Based Compensation," allows a company to either adopt the fair value method of valuation or continue using the intrinsic valuation method presented under APB Opinion 25, "Accounting for Stock Issued to Employees" ("APB Opinion 25") to account for stock-based compensation. The Company has elected to continue using APB Opinion 25 and has disclosed in the footnotes proforma net income and earnings per share information as if the fair value method had been applied.

Impaired Loans

SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -- Income Recognition and Disclosure" 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 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.

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 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.

Fair Value of Financial Instruments

SFAS 107, "Disclosures about Fair Values of Financial Instruments," requires disclosures about the fair value of all financial instruments whether or not recognized in the balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized through immediate settlement of the instrument. SFAS 107 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

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, manufactured housing 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 90 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 brought current and ultimate collectibility of principal and 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.

Mortgage Servicing Rights

SFAS No. 125, "Accounting for Transfer and Servicing of Financial Assets and Extinguishments of Liabilities", requires the recognition of originated mortgage servicing rights ("MSRs") as assets by allocating total costs incurred between the originated loan and the servicing rights retained based on their relative fair values. SFAS 125 also requires the recognition of purchased mortgage servicing rights at fair value, which is presumed to be the price paid for the rights.

Amortization of MSRs is based on the ratio of net servicing income received in the current period to total net servicing income projected to be realized from the MSRs. Projected net servicing income is in turn determined on the basis of the estimated future balance of the underlying mortgage loan portfolio, which declines over time from prepayments and scheduled loan amortization. The Company estimates future prepayment rates based on current interest rate levels, other economic conditions and market forecasts, as well as relevant characteristics of the servicing portfolio, such as loan types, interest rate stratification and recent prepayment experience.

SFAS No. 125 also requires that all MSRs be evaluated for impairment based on the excess of the carrying amount of the MSRs over their fair value. Fair values of servicing rights are determined by estimating the present value of future net servicing income considering the average interest rate and the average remaining lives of the related loans being serviced. Periodically, the Company uses an independent party to evaluate the present values of its portfolio of mortgage servicing. This evaluation is principally determined using discounted cash flows of disaggregated groups of mortgage servicing rights.

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, loss experience, delinquency trends and economic conditions. Management evaluates the carrying value of loans periodically and the allowance is adjusted accordingly. While management uses the best information available to make evaluations, future adjustments to the allowance 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 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 and mortgage servicing rights.

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.

2. Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

		September 30,
		2000	1999
Cash working funds		$ 16,274	$ 18,323
Non-interest-earning demand deposits		1,999	2,003
Deposits in transit		28,959	19,859
Interest-earning deposits		16,760	19,966
	Total	$ 63,992	$ 60,151

The Company considers all highly liquid investments with a maturity of 90 days or less at the time of purchase to be cash equivalents.

3. Investment and Mortgage-backed Securities Held to Maturity

The amortized cost, gross unrealized gains, gross unrealized losses and fair value of investment and mortgage-backed securities held to maturity are as follows:

			September 30, 2000
			Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair value
State and local government obligations			$   249	$    6		$   255
Mortgage-backed securities
	FHLMC		19	2		21
		Total	$   268	$    8		$   276
			September 30, 2000
			Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair value
State and local government obligations			$   249	$   9		$   258
Mortgage-backed securities
	FHLMC		28	3		31
		Total	$   277	$ 12		$   289

The amortized cost and fair value of investment and mortgage-backed securities held to maturity at September 30, 2000, by contractual maturity, are shown below.

		September 30, 2000
		Amortized Cost		Fair Value
Due after five through ten years		$ 249		$ 255
Mortgage-backed securities		19		21
	Total	$ 268		$ 276

There were no sales of investment or mortgage-backed securities held to maturity during fiscal 2000, 1999 and 1998.

4. Investment and Mortgage-backed Securities Available for Sale

The amortized cost, gross unrealized gains, gross unrealized losses and fair value of investment and mortgage-backed securities available for sale are as follows:

			September 30, 2000
			Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
U.S. Treasury securities and obligations of U.S. government agencies and corporations			$    3,241	$        7	$        1	$     3,247
Corporate securities			2,331	17	47	2,301
Mutual funds			370			370
			5,942	24	48	5,918
Mortgage-backed securities:
	FHLMC		28,374	302	269	28,407
	FNMA		119,307	851	434	119,724
	GNMA		14,759	60	173	14,646
	CMO's		87,010	5	2,716	84,299
			249,450	1,218	3,592	247,076
		Total	$ 255,392	$ 1,242	$ 3,640	$ 252,994
			September 30, 1999
			Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair  Value
U.S. Treasury securities and obligations of U.S. government agencies and corporations			$     4,006	$     16	$        1	$     4,021
Corporate securities			2,468	5	44	2,429
Mutual funds			1,119			1,119
			7,593	21	45	7,569
Mortgage-backed securities:
	FHLMC		46,938	969	474	47,433
	FNMA		23,548	190	358	23,380
	GNMA		18,435	161	121	18,475
	CMO's		94,947	19	3,037	91,929
			183,868	1,339	3,990	181,217
		Total	$ 191,461	$ 1,360	$ 4,035	$ 188,786

The amortized cost and fair value of investment and mortgage-backed securities available for sale at September 30, 2000 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

		September 30, 2000
		Amortized Cost		Fair Value
Due in one year or less			$      1,370	$       1,369
Due after one year through five years			3,219	3,243
Due after ten years			1,353	1,306
			5,942	5,918
Mortgage-backed securities			249,450	247,076
	Total		$  255,392	$  252,994

Proceeds from the sale of the Company's investment and mortgage-backed securities available for sale totaled $49,854 in fiscal 2000 resulting in a gross realized gain of $188 and a gross realized loss of $44. Proceeds from the sale of the Company's investment and mortgage-backed securities available for sale totaled $1,625 in fiscal 1999 resulting in a gross realized gain of $37. Proceeds from the sale of the Company's investment and mortgage-backed securities available for sale totaled $74,108 in fiscal 1998 resulting in a gross realized gain of $547 and a gross realized loss of $241.

5. Federal Home Loan Bank Capital Stock

The Associations, as member institutions of the Federal Home Loan Bank ("FHLB") of Atlanta, are required to own capital stock in the FHLB of Atlanta based generally upon the Associations' balances of residential mortgage loans and FHLB advances. FHLB capital stock is pledged to secure FHLB advances. No ready market exists for this stock and it has no quoted market value. However, redemption of this stock has historically been at par value.

6. Earnings per Share

Basic and diluted earnings per share have been computed based upon net income as presented in the accompanying statements of operations divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below:

		Year Ended September 30,
		2000	1999	1998
Weighted average number of common shares used in basic EPS		13,341,459	13,451,027	13,571,635
Effect of dilutive stock options		217,838	335,044	529,905
Weighted average number of common shares and dilutive
	potential common shares used in diluted EPS	13,559,297	13,786,071	14,101,540

7. Loans Receivable

Loans receivable, including loans held for sale, consisted of the following:

			September 30,
			2000	1999
Mortgage loans			$ 1,456,580	$ 1,461,104
Residential construction loans			80,806	92,161
Home equity lines of credit			121,993	86,764
Mobile home loans			63,016	44,561
Commercial business loans			57,381	42,721
Credit cards			11,643	10,831
Other consumer loans			115,339	74,959
			1,906,758	1,813,101
Less:
	Allowance for loan losses		15,403	14,570
	Loans in process		51,658	55,409
	Deferred loan fees and discounts on loans		1,200	972
			68,261	70,951
		Total	$ 1,838,497	$ 1,742,150

First mortgage loans are net of whole loans and participation loans sold and serviced for others in the amount of $648,200 and $519,682 at September 30, 2000 and 1999, respectively. Mortgage servicing rights totaled $5,888 and $4,668 at September 30, 2000 and 1999, respectively, and are included in "other assets" on the Consolidated Statements of Financial Condition. The fair value of mortgage servicing rights was $7,239 at September 30, 2000 and $5,847 at September 30, 1999. No valuation allowance was required at September 30, 2000.

The following table summarizes the changes in mortgage servicing rights during 2000 and 1999:

Non-accrual and renegotiated loans are summarized as follows:

			September 30,
			2000	1999
Non-accrual loans			$ 5,881	$ 4,466
Renegotiated loans			2,712	2,724
	Total		$ 8,593	$ 7,190

Interest income related to non-accrual and renegotiated loans that would have been recorded if such loans had been current in accordance with their original terms amounted to $489, $544 and $549 for the years ended September 30, 2000, 1999 and 1998, respectively. Recorded interest income on these loans was $269, $268 and $327 for 2000, 1999 and 1998, respectively.

An analysis of changes in the allowance for loan losses is as follows:

	Year Ended September 30,
	2000	1999	1998
Balance, beginning of period	$ 14,570	$ 12,781	$ 12,103
Charge-offs	(2,392)	(1,596)	(2,530)
Recoveries	480	620	803
Net charge-offs	(1,912)	(976)	(1,727)
Provision for loan losses	2,745	2,765	2,405
Balance, end of period	$ 15,403	$ 14,570	$ 12,781

At September 30, 2000 and 1999 impaired loans totaled $5,881 and $4,466, respectively. Included in the allowance for loan losses at September 30, 1999 was $59 related to $1,402 of impaired loans. The remainder of the impaired loans at September 30, 2000 and 1999 were recorded at or below fair value. The average recorded investment in impaired loans for the years ended September 30, 2000, 1999 and 1998 was $4,776, $3,933 and $4,882, respectively. No interest income was recognized on impaired loans in 2000 while interest income of $7 and $59 was recognized on impaired loans in 1999 and 1998, respectively, while they were impaired.

The Company principally originates residential and commercial real estate loans throughout its primary market area located in the coastal region of South Carolina and Florence County. Although the coastal region has a diverse economy, much of the area is heavily dependent on the tourism industry and industrial and manufacturing companies. A substantial portion of its debtors' ability to honor their contracts is dependent upon the stability of the real estate market and these economic sectors.

Residential one-to-four family real estate loans amounted to $1,266,025 and $1,296,523 at September 30, 2000 and 1999, respectively. The Company's multi-family residential loan portfolio of $48,937 and $46,254 at September 30, 2000 and 1999, respectively, are highly dependent on occupancy rates for such properties throughout the Company's market area. The Company generally maintains loan to value ratios of no greater than 80 percent on these loans.

Commercial real estate loans totaled $131,027 and $123,121 and acquisition and development loans and lot loans totaled $91,397 and $87,367 at September 30, 2000 and 1999, respectively. These loans include amounts used for acquisition, development and construction as well as permanent financing of commercial income-producing properties. Such loans generally are associated with a higher degree of credit risk than residential one-to-four family loans due to the dependency on income production or future development and sale of real estate.

Management closely monitors its credit concentrations and attempts to diversify the portfolio within its primary market area. Before the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA") was enacted, the Company was allowed to lend substantially higher amounts to any one borrower than the current regulatory limitations. However, the Company's internal loan policy placed lower limits on loans to any major borrower. Currently, there are no borrowers which exceed the current general regulatory limitation of 15 percent of each Association's capital. The maximum amount outstanding to any one borrower was $13,364 at September 30, 2000 and $9,748 at September 30, 1999.

8. Office Properties and Equipment

Office properties and equipment are summarized as follows:

		September 30,
		2000	1999
Land		$ 8,730	$ 5,675
Buildings and improvements		16,119	12,688
Furniture and equipment		19,849	16,372
Leasehold improvements		4,240	4,618
		48,938	39,353
Less, accumulated depreciation and amortization		(19,435)	(17,384)
	Total	$ 29,503	$ 21,969

9. Real Estate

Real estate and other assets acquired in settlement of loans held by the Company are summarized as follows:

			September 30,
			2000	1999
Real estate acquired in settlement of loans			$ 5,689	$ 5,443
Other assets acquired in settlement of loans			206	242
	Total		$ 5,895	$ 5,685
Real estate operations are summarized as follows:
		Year Ended September 30,
		2000	1999	1998
Gain (loss) on sale of real estate		$ (19)	$ 102	$ 23
Provision charged as a write-down to real estate		(14)	(13)	(275)
Expenses		(227)	(119)	(126)
Rental income		637	118	15
	Total	$ 377	$ 88	$ (363)

10. Deposit Accounts

The deposit balances and related rates were as follows:

			September 30,
			2000			1999
			Balance	Weighted Average Rate		Balance	Weighted Average Rate
Non-interest-bearing demand accounts			$ 79,813			$ 63,115
NOW accounts			130,125	0.50	%	121,537	0.50	%
Passbook, statement and other accounts			118,874	2.38		124,362	2.38
Money market accounts			191,481	4.39		180,328	3.67
			520,293	2.28		489,342	2.08
Certificate accounts:
	Fixed-rate		696,842	6.05		703,752	5.31
	Variable-rate		24,160	5.92		26,754	4.85
			721,002	6.04		730,506	5.29
		Total	$ 1,241,295	4.47	%	$ 1,219,848	4.01	%

Scheduled maturities of certificate accounts were as follows:

		September 30,
		2000	1999
Within one year		$ 526,497	$ 556,605
Within two years		130,669	109,249
Within three years		24,200	30,312
Within four years		8,581	16,703
Within five years		24,125	11,998
Thereafter		6,930	5,639
	Total	$ 721,002	$ 730,506

The Company has pledged certain interest-earning deposits and investment and mortgage-backed securities available for sale or held to maturity with a fair value of $33,007 and $23,702 at September 30, 2000 and 1999, respectively, to secure deposits by various entities.

Certificates of deposit with balances equal to or exceeding $100,000 totaled $160,053 and $157,055, at September 30, 2000 and 1999, respectively.

11. Advances From Federal Home Loan Bank

Advances from the FHLB of Atlanta consisted of the following:

		September 30,
		2000			1999
Maturity		Balance	Weighted Average Rate		Balance	Weighted Average Rate
One year		$ 436,500	6.64	%	$ 321,000	5.59	%
Three years		55,000	5.11		75,000	5.85
Four years					80,000	5.32
Five years		125,000	6.25
Eight years		25,000	5.57		50,000	5.10
Nine years					25,000	5.57
Ten years		125,000	6.31		43,500	5.02
	Total	$ 766,500	6.38	%	$ 594,500	5.50	%

As collateral for its advances, the Company has pledged qualifying first mortgage loans in the amount of $1,007,653 and $792,667 as of September 30, 2000 and 1999, respectively. Mortgage-backed securities with a book value of $44,260 are also pledged as collateral for advances at September 30, 2000. In addition, all of its FHLB stock is pledged as collateral for these advances. Advances are subject to prepayment penalties. Certain of the advances are subject to calls at the option of the FHLB of Atlanta.

12. Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings

Securities sold under agreements to repurchase consisted of the following:

		September 30,
		2000	1999
Investment and mortgage-backed securities with an amortized cost of $52,312 and $80,112 and fair value of $51,219 and $78,062 at September 30, 2000 and 1999, respectively		$ 49,272	$ 73,991

The agreements had a weighted average interest rate of 6.73% and 5.45% at September 30, 2000 and 1999, respectively, and mature within three months. The securities underlying the agreements were delivered to the dealers who arranged the transactions. At September 30, 2000 and 1999, the agreements were to repurchase identical securities. Securities sold under agreements to repurchase averaged $57,138 and $35,323 during 2000 and 1999, respectively, and the maximum amount outstanding at any month-end during 2000 and 1999 was $73,943 and $73,991, respectively.

The Company has a $35,000 funding line with another bank. The rate on the line is indexed to LIBOR.

	September 30,
	2000			1999
	Balance	Rate		Balance	Rate
Line of credit	$ 12,250	8.63	%	$ 8,750	7.38	%

13. Long-term Debt

At September 30, 1997 the Company had $19,763 of senior notes which were unsecured debt obligations, with a maturity date of September 1, 2002. In July 1998 the Company issued a redemption notice for the 9.375% notes. As of September 1, 1998, $19,763 in principal was paid plus accrued interest to redeem the notes. As a result of the redemption, an extraordinary charge of $340 (net of related income taxes) was recorded.

14. Income Taxes

Income tax expense attributable to continuing operations for the years ended September 30, 2000, 1999 and 1998, is comprised of the following:

				Federal	State	Total
2000
Current				$ 12,994	$ (197)	$ 12,797
Deferred				(2,496)	206	(2,290)
	Total			$ 10,498	$       9	$  10,507
1999
Current				$   3,549	$     16	$    3,565
Deferred				6,829	6	6,835
	Total			$ 10,378	$     22	$  10,400
1998
Current				$   1,218	$   122	$    1,340
Deferred				7,244	(13)	7,231
	Total			$  8 ,462	$   109	$    8,571

A reconciliation from expected federal tax expense to consolidated effective income tax expense for the periods indicated follows:

				Year Ended September 30,
				2000	1999	1998
Expected federal income tax expense				$ 10,652	$ 10,397	$ 8,907
Increases (reductions) in income taxes resulting from:
Change in the beginning-of-the-year valuation allowance for deferred tax assets allocated to income tax expense						(429)
Tax exempt income				(56)	(25)	(54)
South Carolina income tax expense, net of federal income tax effect				6	14	71
Other, net				(95)	14	76
	Total			$ 10,507	$ 10,400	$ 8,571
Effective tax rate				34.5%	35.0%	33.7%

As a result of tax legislation in the Small Business Job Protection Act of 1996 ("SBJPA '96"), Peoples Federal and First Federal were required for the year ended September 30, 1997 to recapture bad debt tax reserves in excess of pre-1988 base year amounts of approximately $1,476 over an eight year period and to change their overall tax method of accounting for bad debts to the specific charge-off method. This legislation allows the Associations to defer recapture of this amount for the 1998 and 1997 tax years provided the "residential loan requirement" is met for both years. The Associations currently meet this requirement for the year ending September 30, 1998, suspending the six-year recapture for the 1997 tax year. The Associations have recorded the related deferred tax liability in other liabilities.

During the year ended September 30, 1999, the Associations began to recapture bad debt reserves in excess of pre-1988 base year. This amortization will occur through year 2003.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at September 30, 2000 and 1999 are presented below.

					September 30,
					2000	1999
Deferred tax assets:
	Loan loss allowances deferred for tax purposes				$ 5,769	$ 5,412
	Net operating loss carryforward				199	505
	Unrealized loss on securities available for sale				931	1,044
	Other				806	723
	Total gross deferred tax assets				7,705	7,684
	Less valuation allowance				-	-
	Net deferred tax assets				7,705	7,684
Deferred tax liabilities:
	Loan fee income adjustments for tax purposes				2,808	2,593
	FHLB stock dividends deferred for tax purposes				1,704	1,704
	Expenses deducted under economic performance rules				387	315
	Excess carrying value of assets acquired for financial reporting purposes over tax basis				2,363	1,913
	Tax bad debt reserve in excess of base year amount				402	518
	Book over tax basis in subsidiary				10,638	13,283
	Other				103	235
	Total gross deferred tax liabilities				18,405	20,561
	Net deferred liability (included in other liabilities)				$ (10,700)	$ (12,877)

A portion of the change in the net deferred tax liability relates to unrealized gains and losses on securities available for sale. The related current period tax expense of $113 has been recorded directly to stockholders' equity. The balance of the change in the net deferred tax liability results from current period deferred tax benefit of $2,290.

Under SFAS 109, deferred tax assets or liabilities are initially recognized for differences between the financial statement carrying amount and the tax bases of assets and liabilities which will result in future deductible or taxable amounts and operating loss and tax credit carryforwards. A valuation allowance is then established to reduce the deferred tax asset to the level at which it is "more likely than not" that the tax benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss or credit carryforwards depends on having sufficient taxable income of an appropriate character within the carryback and carryforward periods. Sources of taxable income that may allow for the realization of tax benefits include (1) taxable income in the current year or prior years that is available through carryback, (2) future taxable income that will result from the reversal of existing taxable temporary differences, and (3) taxable income generated by future operations. Management has determined that it is more likely than not that the net deferred tax asset can be supported based upon these criteria.

The consolidated financial statements at September 30, 2000 and 1999 did not include a tax liability of $8,468 related to the base year bad debt reserve amounts since these reserves are not expected to reverse until indefinite future periods, and may never reverse. Circumstances that would require an accrual of a portion or all of this unrecorded tax liability are failure to meet the tax definition of a bank, dividend payments in excess of current year or accumulated tax earnings and profits, or other distributions in dissolution, liquidation or redemption of the Associations' stock.

15. Benefit Plans

Stock Option Plans

On September 27, 1990, the Company's Board of Directors approved the 1990 Stock Option and Incentive Plan which was subsequently approved by the stockholders on January 23, 1991. The 1990 plan provided for the granting of Incentive Stock Options to key officers and employees to purchase the stock at the fair market value on the date of the grant. The 1990 Stock Option and Incentive Plan also provided for the grant of Non-Incentive Stock Options. Options of 319,635 granted under the 1990 Stock Option Plan expire at various dates through October 23, 2007.

On September 25, 1997, the Company's Board of Directors approved the 1997 Stock Option and Incentive Plan which was subsequently approved by the stockholders on January 28, 1998. An aggregate of 600,000 shares was reserved for future issuance by the Company upon the exercise of stock options under this Plan. The 1997 plan provides for the granting of Incentive Stock Options to key officers and employees to purchase the stock at the fair market value on the date of the grant. The 1997 Stock Option and Incentive Plan also provides for Non-Incentive Stock Options to be granted at a price to be determined by the Stock Option Committee. Officers have an exercise period of ten years and other employees must exercise options within five years. Options of 479,460 granted under the 1997 Stock Option Plan expire at various dates through June 22, 2010.

On July 28, 1994, the Company's Board of Directors approved the 1994 Outside Directors Stock Options-for-Fees Plan (the "1994 Director Plan") which was subsequently approved by the stockholders on January 25, 1995. The formula for computing the options awarded considers the percentage of annual fees each director wishes to allocate to the 1994 Director Plan, the market price of the common stock of the Company on the first business day of October of each fiscal year and the difference between the market price and an option price. The option price is based on 75% of the market value of the common stock. Options covering 31,976, 35,444 and 21,512 shares of common stock at an exercise price of $13.50, $12.66 and $14.06 were granted in lieu of otherwise payable cash compensation of $124, $161 and $100 for the Company's fiscal years ending September 30, 2000, 1999 and 1998, respectively.

During 1998 the Company, as part of its acquisition of Investors Savings Bank of South Carolina ("Investors"), converted all stock options of Investors outstanding at the time of the merger into options to acquire common stock of the Company. The stock option plan of Investors expired in May of 1996. Options remaining under the plan of Investors expire at various dates through September 19, 2006.

The Company applies APB Opinion No. 25 and related interpretations in accounting for its plans. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method prescribed by SFAS 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands except per share data):

			2000	1999	1998
Net Income	As reported		$ 19,928	$ 19,307	$ 16,539
	Pro-forma		19,110	18,751	16,108
Earnings per share	As reported
		Basic	$ 1.49	$ 1.44	$ 1.22
		Diluted	1.47	1.40	1.17
	Pro-forma
		Basic	1.43	1.39	1.19
		Diluted	1.41	1.36	1.14

The effects of applying SFAS 123 may not be representative of the effects on reported net income in future years.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2000, 1999 and 1998, respectively: dividend yield of 2.75%, 2.50% and 2.50%, expected volatility of 29%, average risk-free interest rate of 6.29%, 4.78% and 5.55%, and expected lives of 6 years. The weighted average fair value of options granted approximated $4.80 in 2000, $5.59 in 1999 and $6.22 in 1998.

		2000		1999		1998
		Shares	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Balance, beginning of year		813,142	$ 12.31	819,980	$ 9.58	881,078	$ 7.46
	Options exercised	(42,551)	10.58	(188,835)	6.18	(192,814)	6.81
	Options forfeited	(12,143)	18.18	(5,882)	16.74	(7,202)	10.46
	Options granted	329,002	14.99	187,879	17.96	138,918	19.24
Outstanding, September 30		1,087,450	$ 13.13	813,142	$ 12.31	819,980	$ 9.58

The following is a summary of the activity under the stock-based option plans for the years ended September 30, 2000, 1999 and 1998.

Stock options outstanding and exercisable as of September 30, 2000, are as follows:

Range of Exercise Prices				Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life
$ 5.82	-	7.63		269,699	$ 7.25	4.35	years
8.02	-	9.75		117,698	9.43	5.16
10.13	-	12.66		100,030	11.37	6.13
13.50	-	15.5		168,960	13.91	8.92
17.00	-	22.75		291,850	18.68	7.47
$ 5.82	-	22.75		948,237

Stock Purchase Plan

On January 25, 1995, the stockholders approved the Employee Stock Purchase Plan ("ESPP"). The ESPP allows employees to purchase stock of the Company at a discounted price. Purchases are made subject to various guidelines which allow the plan to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. Purchases of 35,461 shares of common stock have been made under the plan.

Performance Equity Plan

On January 22, 1997, the stockholders approved the Performance Equity Plan for Non-Employee Directors. The purpose of the Plan is to provide non-employee directors with an opportunity to increase their equity interest in the Company if the Company and the Associations attain specific financial performance criteria. Performance targets for the 1999, 1998 and 1997 year resulted in the awarding of 3,841, 3,230 and 884 shares in the years 2000, 1999 and 1998 to the directors serving the Corporation and the Associations.

Sharing Thrift Plan

The Company has established the Sharing Thrift Plan which includes a deferred compensation plan (401(k)) for all full-time and certain part-time employees. The Plan permits eligible participants to contribute a maximum of 15 percent of their annual salary (not to exceed limitations prescribed by law). Part-time employees who work at least 1,000 hours in a calendar year may also contribute to the Plan. The Company will match the employee's contribution up to 5 percent of the employee's salary based on the attainment of certain profit goals.

The Company's matching contribution charged to expense for the years ended September 30, 2000, 1999 and 1998, was $813, $745 and $723, respectively.

The Sharing Thrift Plan provides that all employees who have completed a year of service with the Company in which they have worked at least 1,000 hours are entitled to receive a quarterly Profit Sharing Contribution of from 0% to 100% of 6% of their base pay during such quarter depending upon the amount of each subsidiary's return on equity for that quarter. The Plan provides that regardless of the return on equity each eligible employee will receive a Profit Sharing Contribution equal to at least 1% of his base compensation on an annual basis. Employees become vested in Profit Sharing Contributions made to their accounts over a seven-year period or upon their earlier death, disability or retirement at age 65 or over. Employees are able to direct the investment of Profit Sharing Contributions made to their accounts to any of the Plan investment funds. Contributions to the Plan during 2000, 1999 and 1998 totaled $1,032, $1,109 and $993, respectively.

Other Postretirement Benefits

The Company sponsors postretirement benefit plans that provide health care, life insurance and other postretirement benefits to retired employees. The health care plans generally include participant contributions, co-insurance provisions, limitations on the Company's obligation and service-related eligibility requirements. The Company pays these benefits as they are incurred. Postretirement benefits for employees hired after January 1, 1989 and those electing early retirement or normal retirement after January 1, 1999, were substantially curtailed.

The combined change in benefit obligation, change in plan assets and funded status of the Company's postretirement benefit plan and the amounts included in "other liabilities" on the Consolidated Financial Statements at September 30, 2000 and 1999 are shown below:

			2000	1999
Change in benefit obligation:
Benefit obligation at October 1			$ 1,581	$  1,560
Service cost
Interest cost			115	99
Actuarial (gain) loss				(13)
Benefit payments			(96)	(65)
Benefit obligation at September 30			1,600	1,581
Change in plan assets:
Fair value of plan assets at October 1
Actual return on plan assets
Employer contributions			120	65
Plan participants' contributions			20	20
Benefit payments			(140)	(85)
Fair value of plan assets at September 30			-	-
Funded status:
As of end of year			(1,600)	(1,581)
Unrecognized transition (asset) obligation			946	1,024
Unrecognized prior-service cost
Unrecognized net (gain) loss			26	3
Accrued postretirement benefit expense			$    (628)	$   (554)

An increase in the assumed health care cost trend rate by one percentage point in each year would increase the accumulated postretirement benefit obligation as of September 30, 2000 and 1999, by $165 and $163 and the aggregate of service and interest cost by $12 and $11, respectively.

The combined postretirement benefit expense components for the Company's plan for the years ended September 30, 2000, 1999 and 1998 are shown below:

		2000	1999	1998
Interest Cost		$ 115	$  99	$   98
Amortization of transition (asset) obligation		78	79	79
Amortization of net (gain) loss			-	(24)
	Net pension expense	$ 193	$ 178	$ 153

Assumptions used in computing the actuarial present value of the Company's postretirement benefit obligation were as follows:

			2000	1999
Discount rate			7.50%	7.50%

16. Commitments and Contingencies

Loan Commitments

Outstanding commitments on mortgage loans not yet closed, including commitments issued to correspondent lenders, amounted to approximately $19,723 at September 30, 2000. These were principally single-family loan commitments. Other loan commitments totaled $2,983 at September 30, 2000.

Commitments to extend credit are agreements to lend to borrowers as long as there is no violation of any condition established by the commitment letter. Commitments generally have fixed expiration dates or other termination clauses. The majority of the commitments will be funded within a twelve month period. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the borrower. Collateral held varies but primarily consists of residential or income producing commercial properties.

The Company originates and services mortgage loans. Substantially all of the Company's loan sales have been without provision for recourse. Unused lines of credit on equity loans, credit cards, other consumer and commercial loans amounted to $202,815, $196,283 and $153,161 at September 30, 2000, 1999 and 1998, respectively. Based on historical trends, it is not expected that the percentage of funds drawn on existing lines of credit will increase substantially over levels currently utilized.

Interest Rate Cap

In connection with its asset/liability management program the Company purchased an interest rate cap agreement with a counterparty on September 30, 1999. The purchase was made at a premium of $338 for the purpose of hedging potential increases in interest rates on short-term liabilities. The Company is not a dealer, does not make a market in cap agreements and will not trade the instrument. The Board of Directors' approved policy governing the use of these instruments strictly forbids speculation of any kind. The cap agreement has a notional principal amount of $25,000 and matures September 30, 2002. As of September 30, 2000 the strike price was 6.25 percent versus three month LIBOR. Unamortized fees related to the cap as of September 30, 2000 totaled $225 and the fair value of the interest rate cap was $203.

Lease Commitments

The Company occupies office space and land under leases expiring on various dates through 2011. Minimum rental commitments under noncancelable operating leases were as follows:

		September 30, 2000
One year			$ 1,201
Two years			1,138
Three years			1,095
Four years			949
Five years			139
Thereafter			389
Total			$ 4,911

Rental expenses under operating leases were $1,146, $1,104 and $1,022 in 2000, 1999 and 1998, respectively.

17. Stockholders' Equity and Dividend Restrictions

The ability of the Company to pay dividends depends primarily on the ability of the Associations to pay dividends to the Company. The Associations are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory--and possibly additional discretionary--actions by regulators that, if undertaken, could have a direct material effect on the Associations' financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Associations must meet specific capital guidelines that involve quantitative measures of the Associations' assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Associations' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Associations to maintain minimum amounts and ratios (set forth in the table below) of tangible and core capital (as defined in the regulations) to total assets (as defined), and of risk-based capital (as defined) to risk-based assets (as defined). Management believes, as of September 30, 2000, that the Associations meet all capital adequacy requirements to which they are subject.

As of September 30, 2000, the Associations were categorized as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized the Associations must maintain minimum total risk-based, Tier I risk-based, and Tier I core ("leverage") ratios as set forth in the table. There are no conditions or events since that date that management believes have changed the institutions' category.

The Associations' actual capital amounts and ratios are also presented in the table.

First Federal:	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount	Ratio		Amount	Ratio		Amount	Ratio
As of September 30, 2000:
Tangible capital (to Total Assets)	$ 100,174	6.55	%	$ 22,954	1.50	%
Core capital (to Total Assets)	100,174	6.55		61,211	4.00		$ 76,514	5.00	%
Tier I capital (to Risk-based Assets)	100,174	9.69					62,017	6.00
Risk-based capital (to Risk-based Assets)	109,115	10.56		82,689	8.00		103,361	10.00
As of September 30, 1999:
Tangible capital (to Total Assets)	$ 88,522	6.37	%	$ 20,837	1.50	%
Core capital (to Total Assets)	88,522	6.37		55,567	4.00		$ 69,458	5.00	%
Tier I capital (to Risk-based Assets)	88,522	9.55					55,597	6.00
Risk-based capital (to Risk-based Assets)	97,543	10.53		74,129	8.00		92,661	10.00
Peoples Federal	Actual			For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provisions:
	Amount	Ratio		Amount	Ratio		Amount	Ratio
As of September 30, 2000:
Tangible capital (to Total Assets)	$ 48,434	6.67	%	$ 10,896	1.50	%
Core capital (to Total Assets)	48,434	6.67		29,056	4.00		$ 36,320	5.00	%
Tier I capital (to Risk-based Assets)	48,434	10.28					28,277	6.00
Risk-based capital (to Risk-based Assets)	49,368	10.48		37,702	8.00		47,127	10.00
As of September 30, 1999:
Tangible capital (to Total Assets)	$ 45,062	6.60	%	$ 10,235	1.50	%
Core capital (to Total Assets)	45,062	6.60		27,293	4.00		$ 34,116	5.00	%
Tier I capital (to Risk-based Assets)	45,062	10.40					26,002	6.00
Risk-based capital (to Risk-based Assets)	46,290	10.68		34,669	8.00		43,336	10.00

Under the framework, the Associations' capital levels allow the Associations to accept brokered deposits without prior approval from regulators.

OTS capital distribution regulations specify the conditions relative to an institution's ability to pay dividends. The new regulations permit institutions meeting fully phased-in capital requirements and subject only to normal supervision to pay out 100 percent of net income to date over the calendar year and 50 percent of surplus capital existing at the beginning of the calendar year without supervisory approval. The regulations state that an institution subject to more stringent restrictions may make a request through the OTS to be subject to the new regulations. The Company has received approval from the OTS to be subject to the requirements of the new regulations.

The Company may not declare or pay a cash dividend on, or purchase, any of its common stock, if the effect thereof would cause the capital of the Associations to be reduced below the minimum regulatory capital requirements.

Under Delaware law, the Company may declare and pay dividends on its common stock either out of its surplus, as defined under Delaware law, or, if there is no surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

18. Fair Value of Financial Instruments

The following table sets forth the fair value of the Company's financial instruments at September 30, 2000 and 1999:

					September 30,
					2000		1999
					Carrying Value	Fair Value	Carrying Value	Fair Value
Financial instruments:
	Assets:
		Cash and cash equivalents			$ 63,992	$ 63,992	$ 60,151	$ 60,151
		Investments held to maturity			249	255	249	258
		Investments available for sale			5,918	5,918	7,569	7,569
		Investment in capital stock of FHLB			39,325	39,325	29,925	29,925
		Loans receivable, net			1,829,061	1,815,500	1,735,608	1,736,355
		Loans held for sale			9,436	9,436	6,542	6,569
		Mortgage-backed securities held to maturity			19	21	28	31
		Mortgage-backed securities available for sale			247,076	247,076	181,217	181,217
	Liabilities:
		Deposits:
			Demand deposits, savings accounts
				and money market accounts	520,293	520,293	489,342	489,342
			Certificate accounts		721,002	719,351	730,506	737,357
		Advances from FHLB			766,500	757,230	594,500	598,182
		Securities sold under agreements to repurchase			49,272	49,272	73,991	73,991
		Other short-term borrowings			12,250	12,250	8,750	8,750
	Off-balance sheet items:
		Mortgage loan commitments			19,723	19,591	21,748	21,671

Financial instruments of the Company for which fair value approximates the carrying amount at September 30, 2000, include cash and cash equivalents and investment in the capital stock of the FHLB. The fair value of investments, mortgage-backed securities, loans held for sale and long-term debt is estimated based on bid prices published in financial newspapers or bid quotations received from independent securities dealers.

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as single-family residential, multi-family, non-residential, commercial and consumer. Each loan category is further segmented into fixed- and adjustable-rate interest terms and by performing and nonperforming categories.

The fair value of performing loans, except single-family residential mortgage loans, is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan. The estimate of maturity is based on the Company's historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. For performing single-family residential mortgage loans, fair value is derived from quoted market prices for securities backed by similar loans, adjusted for differences between the market for the securities and the loans being valued and an estimate of credit losses inherent in the portfolio.

Under SFAS 107, the fair value of deposits with no stated maturity, such as regular savings accounts, checking and NOW accounts and money market accounts, is equal to the amount payable on demand. The fair value of certificate accounts is estimated using the rates currently offered for deposits of similar remaining terms. No value has been estimated for the Company's long-term relationships with customers (commonly known as the core deposit intangible) since such intangible asset is not a financial instrument pursuant to the definitions contained in SFAS 107. The fair value of FHLB advances is estimated based on current rates for borrowings with similar terms. The fair value of securities sold under agreements to repurchase approximates the carrying value. The fair value of mortgage loan commitments is estimated based on current levels of interest rates versus the committed interest rates.

Management uses its best judgment in estimating the fair value of non-traded financial instruments but there are inherent limitations in any estimation technique. For example, liquid markets do not exist for many categories of loans held by the Company. By definition, the function of a financial intermediary is, in large part, to provide liquidity where organized markets do not exist. Therefore, the fair value estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current transaction.

The information presented is based on pertinent information available to management as of September 30, 2000. Although management is not aware of any factors, other than changes in interest rates, that would significantly affect the estimated fair values, the current estimated fair value of these instruments may have changed significantly since that point in time.

19. First Financial Holdings, Inc. (Parent Company Only) Condensed Financial Information

At fiscal year end, the Company's principal asset was its investment in the Associations, and the principal source of income for the Company was dividends and equity in undistributed earnings from the Associations. The following is condensed financial information for the Company.

Statements of Financial Condition
		September 30,
		2000	1999
Assets
Cash and cash equivalents		$ 45	$ 205
Investments		443	843
Mortgage-backed securities available for sale, at fair value		364	510
Investment in subsidiaries		149,777	132,410
Other		160	1,010
Total assets		$ 150,789	$ 134,978
Liabilities and Stockholders' Equity
Accrued expenses		$ 688	$ 347
Other borrowings		12,250	8,750
Stockholders' equity		137,851	125,881
Total liabilities and stockholders' equity		$ 150,789	$ 134,978
Statements of Operations
	Year Ended September 30,
	2000	1999	1998
Income
Equity in undistributed earnings of subsidiaries	$ 17,198	$ 8,246	$ 6,724
Dividend income	4,200	12,200	12,400
Interest income	85	145	795
Gain on sale of investments available for sale			52
Total income	21,483	20,591	19,971
Expenses
Interest expense	805	449	1,727
Salaries and employee benefits	917	855	922
Stockholder relations and other	625	593	1,258
Total expense	2,347	1,897	3,907
Net income before tax	19,136	18,694	16,064
Income tax benefit	(792)	(613)	(475)
Net income	$ 19,928	$ 19,307	$ 16,539

Statements of Cash Flows
			Year Ended September 30,
			2000	1999	1998
Operating Activities
Net income			$ 19,928	$ 19,307	$ 16,539
Adjustments to reconcile net income to net cash provided by operating activities
	Equity in undistributed earnings of subsidiaries		(17,198)	(8,246)	(6,724)
	Depreciation			15	15
	Amortization				10
	(Increase) decrease in accrued income and deferred expenses		850	(341)	339
	Increase (decrease) in accrued expenses		341	35	(95)
Net cash provided by operating activities			3,921	10,770	10,084
Investing Activities
Repayments on mortgage-backed securities			141	509	637
Proceeds from sale of mortgage-backed securities available for sale					816
Proceeds from sale of investments					5,794
Proceeds from maturing investments available for sale					1,000
Net redemption of mutual funds			400	50	1,755
Equity investment in subsidiary				(1,510)	(350)
Net cash provided by (used in) investing activities			541	(951)	9,652
Financing Activities
Retirement of senior notes					(19,763)
Net increase in other borrowings			3,500	4,750	4,000
Proceeds from exercise of stock options			688	1,381	1,409
Treasury stock purchased			(1,334)	(9,676)	(106)
Purchase of stock					(73)
Dividends paid			(7,476)	(6,468)	(5,700)
Net cash used in financing activities			(4,622)	(10,013)	(20,233)
Net decrease in cash and cash equivalents			(160)	(194)	(497)
Cash and cash equivalents at beginning of period			205	399	896
Cash and cash equivalents at end of period			$ 45	$ 205	$ 399
Supplemental disclosures:
	Cash paid during the period for:
		Interest	$ 805	$ 449	$ 1,882
		Income taxes	11,694	(150)	6,430
	Unrealized net gain (loss) on securities available for sale, net of income tax		(3)	(21)	3

20. Dividend Reinvestment and Direct Purchase Plan

The Company has a Dividend Reinvestment and Direct Purchase Plan, as amended December 1, 1998, for which shares are purchased only on the open market. At September 30, 2000, 1,302,221 shares had been purchased or transferred to the plan and remain in the plan.

21. Quarterly Results (Unaudited):

Summarized below are selected financial data regarding results of operations for the periods indicated:

			First Quarter	Second Quarter	Third Quarter	Fourth Quarter	Year
2000
Total interest income			$ 37,997	$ 39,409	$ 41,228	$ 43,008	$ 161,642
Net interest income			15,617	15,749	15,890	15,498	62,754
Provision for loan losses			840	690	640	575	2,745
Income before income taxes			7,280	7,634	7,790	7,731	30,435
Net income			4,767	4,925	5,100	5,136	19,928
Earnings per common share:
	Basic		$ 0.36	$ 0.37	$ 0.38	$ 0.39	$ 1.49
	Diluted		0.35	0.36	0.38	0.38	1.47
1999
Total interest income			$ 34,414	$ 34,142	$ 35,637	$ 36,639	$ 140,832
Net interest income			14,648	14,695	15,548	15,547	60,438
Provision for loan losses			660	585	760	760	2,765
Income before income taxes			7,168	7,126	7,600	7,813	29,707
Net income			4,659	4,633	4,941	5,074	19,307
Earnings per common share:
	Basic		$ 0.34	$ 0.34	$ 0.37	$ 0.38	$ 1.44
	Diluted		0.33	0.34	0.36	0.37	1.40

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The Company has not, within the 24 months before the date of the most recent financial statements, changed its accountants.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information contained under the section captioned "Proposal I--Election of Directors" in the Company's Proxy Statement is incorporated herein by reference.

The following table sets forth certain information with respect to the executive officers of the Company and the Associations. The individuals listed below are executive officers of the Company and the Associations, as indicated.

Name	Age (1)		Position
A. Thomas Hood	54	President and Chief Executive Officer of the Company and
			President and Chief Executive Officer of First Federal
John L. Ott, Jr.	52	Senior Vice President of the Company and Senior Vice
			President/Retail Banking Division of First Federal
Charles F. Baarcke, Jr.	53	Senior Vice President of the Company and Senior Vice
			President/Lending Division of First Federal
George N. Magrath, Jr.	47	President and Chief Executive Officer of Peoples Federal
Susan E. Baham	50	Senior Vice President and Chief Financial Officer of the
			Company and First Federal

(1) At September 30, 2000.

The following is a description of the principal occupation and employment of the executive officers of the Company and the Associations during at least the past five years.

A. Thomas Hood has been the President and Chief Executive Officer of the Company since July 1, 1996. Mr. Hood had served as Executive Vice President and Chief Operating Officer of the Company from February 1, 1995 through June 30, 1996. Mr. Hood has also served as Treasurer of the Company and its Chief Financial Officer since 1984. Mr. Hood was named President and Chief Executive Officer of First Federal effective February 1, 1995. Prior to that time, he had been Executive Vice President and Treasurer of First Federal since 1984. As President and Chief Executive Officer of the Company and of First Federal, Mr. Hood is responsible for the daily business operations of the Company and of First Federal under policies and procedures established by the Board of Directors. Mr. Hood joined First Federal in 1975.

John L. Ott, Jr. is the Senior Vice President of the Company and First Federal and is responsible for directing and coordinating all retail banking operations, special savings and retirement programs and the sale of non-deposit investment products. He joined First Federal in 1971 and prior to becoming Senior Vice President of Retail Banking in 1985, he was the Senior Vice President for Branch Operations.

Charles F. Baarcke, Jr. is the Senior Vice President of the Company and First Federal. He is responsible for all lending operations, loan servicing and sales. He joined First Federal in 1975 and prior to becoming Senior Vice President for Lending Operations in 1985, he was the Vice President of Lending Operations.

George N. Magrath, Jr. became the President and Chief Executive Officer of Peoples Federal in 1993. Previously, Mr. Magrath was the Executive Vice President of Peoples Federal and was responsible for the general operations of Peoples Federal. Prior to serving as Executive Vice President, Mr. Magrath served as Senior Vice President, Lending.

Susan E. Baham became the Senior Vice President and Chief Financial Officer of the Company and of First Federal on July 1, 1996. Previously, Mrs. Baham served as Vice President and Chief Accounting Officer of the Company since 1988 and as Vice President of Finance of First Federal since 1984. Mrs. Baham is responsible for First Financial's treasury, finance, investor relations and strategic planning functions.

Pursuant to the Company's Bylaws, officers are elected on an annual basis. Directors of the Company are elected for a term of three years with approximately one-third of the directors standing for election each year.

ITEM 11. EXECUTIVE COMPENSATION

The information contained under the Section captioned "Proposal I -- Election of Directors" in the Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)	Security Ownership of Certain Beneficial Owners Information required by this item is incorporated herein by reference to the Section captioned "Voting Securities and Principal Holders Thereof" of the Proxy Statement.
(b)	Security Ownership of Management Information required by this item is incorporated herein by reference to the Sections captioned "Proposal I -- Election of Directors" and "Voting Securities and Principal Holders Thereof" of the Proxy Statement.
(c)	Changes in Control The Company is not aware of any arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change of control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference to the Section captioned "Proposal I--Election of Directors" and "Voting Securities and Principal Holders Thereof" of the Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

1.	Consolidated Financial Statements and Report of Independent Auditors - see Item 8 for reference.
	All other schedules have been omitted as the required information is either inapplicable or included in the Notes to Consolidated Financial Statements.
2.	Exhibits
(3.1)	Certificate of Incorporation, as amended, of Registrant (1)
(3.2)	Bylaws, as amended, of Registrant (2)
(3.4)	Amendment to Registrant's Certificate of Incorporation(3)
(3.6)	Amendment to Registrant's Bylaws (4)
(4)	Indenture, dated September 10, 1992, with respect to the Registrant's 9.375% Senior Notes, due September 1, 2001 (5)
(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 (5)
(10.3)	Employment Agreement with A. Thomas Hood, as amended (6)
(10.4)	Employment Agreement with Charles F. Baarcke, Jr. (7)
(10.5)	Employment Agreement with John L. Ott, Jr. (7)
(10.6)	1990 Stock Option and Incentive Plan (8)
(10.7)	1994 Outside Directors Stock Options-for-Fees Plan (9)
(10.8)	1994 Employee Stock Purchase Plan (10)
(10.9)	1996 Performance Equity Plan for Non-Employee Directors (11)
(10.10)	Employment Agreement with Susan E. Baham (6)
(10.11)	1997 Stock Option and Incentive Plan (12)
(10.12)	Investors Savings Bank of South Carolina, Inc. Incentive Stock Option Plan (13)
(10.13)	Borrowing Agreement with Bankers Bank (14)
(10.14)	Amended Borrowing Agreement with Bankers Bank
(22)	Subsidiaries of the Registrant
(23)	Consent of Independent Auditors
(27)	Financial Data Schedule

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(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 Quarterly Report on Form 10-Q for the quarter ended December 31, 1997.
(4)	Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended September 30, 1999.
(5)	Incorporated by reference to the Registrant's Registration Statement on Form S-8 File No. 33-55067.
(6)	Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended September 30, 1996.
(7)	Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended September 30, 1995.
(8)	Incorporated by reference to the Registrant's Registration Statement on Form S-8 File No. 33-57855.
(9)	Incorporated by reference to the Registrant's Proxy Statement for the Annual Meeting of Stockholders held on January 25, 1995
(10)	Incorporated by reference to the Registrant's Proxy Statement for the Annual Meeting of Stockholders held on January 26, 2000.
(11)	Incorporated by reference to the Registrant's Proxy Statement for the Annual Meeting of Stockholders held on January 22, 1997.
(12)	Incorporated by reference to the Registrant's Preliminary Proxy Statement for the Annual Meeting of Stockholders held on January 28, 1998.
(13)	Incorporated by reference to the Registrant's Registration Statement on Form S-8 File No. 333-45033.
(14)	Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
3.	Reports on Form 8-K
	On September 29, 2000, the Company filed a Form 8-K announcing the extension of its current stock repurchase program to March 31, 2001. Approximately 406,000 shares remained available for purchase under the plan.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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:	December 22, 2000		By:	/s/ A. Thomas Hood
				A. Thomas Hood
				President and Chief Executive Officer
				(Duly Authorized Representative)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By:	/s/ A. Thomas Hood		By:	/s/ D. Van Smith
	A. Thomas Hood			D. Van Smith
	Director (Principal Executive Officer)			Director
Date:	December 22, 2000		Date:	December 22, 2000
By:	/s/ Susan E. Baham		By:	/s/ Gary C. Banks, Jr.
	Susan E. Baham			Gary C. Banks, Jr.
	Senior Vice President			Director
	(Principal Financial Officer)
Date:	December 22, 2000		Date:	December 22, 2000
By:	/s/Paula Harper Bethea		By:	/s/ Paul G. Campbell, Jr.
	Paula Harper Bethea			Paul G. Campbell, Jr.
	Director			Director
Date:	December 22, 2000		Date:	December 22, 2000
By:	/s/ A. L. Hutchinson, Jr.		By:	/s/ Thomas J. Johnson
	A. L. Hutchinson, Jr.			Thomas J. Johnson
	Director			Director
Date:	December 22, 2000		Date:	December 22, 2000
By:	/s/ James C. Murray		By:	/s/ D. Kent Sharples
	James C. Murray			D. Kent Sharples
	Director			Director
Date:	December 22, 2000		Date:	December 22, 2000

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Exhibit 10.14

 

AMENDED AND RESTATED LOAN AGREEMENT

THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Amended Agreement") is made and entered into as of the 14^th day of September, 2000, by and between THE BANKERS BANK, a banking corporation organized under the laws of Georgia (the "Lender"), and FIRST FINANCIAL HOLDINGS, INC., a Delaware corporation (the "Borrower").

RECITALS

WHEREAS, the Lender and the Borrower previously entered into a loan agreement (the "Original Agreement") dated as of July 15, 1998 for a principal amount of $25,000,000;

WHEREAS, the Borrower wishes to obtain from the Lender additional financing such that a maximum principal amount of $35,000,000 may be borrowed, and the Lender, on the terms and conditions hereinafter set forth, is willing to lend such sum to the Borrower pursuant to this Amended Agreement; and

WHEREAS, as of September 14^th, 2000, $12,250,000 has been advanced to the Borrower under the Original Agreement and thus, the total remaining commitment to lend under the Amended Agreement shall be $22,750,000;

NOW, THEREFORE, for and in consideration of the premises, and the mutual agreements, warranties and representations herein made, the Lender and the Borrower agree as follows:

1. - DEFINITIONS

1. "Bank" means each of First Federal Savings and Loan Association of Charleston ("First Federal") and Peoples Federal Savings and Loan Association of South Carolina ("Peoples Federal"), two federal savings and loan associations formed under the laws of the United States, regulated by the Office of Thrift Supervision (the "OTS"), and authorized to do business in South Carolina.
2. "Bank Stock" means all of the issued and outstanding capital stock of each Bank owned by Borrower.
3. "Bank Subsidiaries" means each and every banking Subsidiary of the Borrower, now or hereafter in existence, including, but not limited to, First Federal and Peoples Federal.
4. "Capital" means all capital or all components of capital, other than any allowance for loan and lease losses that would otherwise be included and net of any intangible assets, as defined from time to time by the primary federal regulator of the Borrower, each Bank, or each of the other Bank Subsidiaries (as the case may be).
5. "Collateral" means and includes all property assigned or pledged to the Lender or in which the Lender has been granted a security interest or to which the Lender has been granted security title under this Agreement or the other Financing Documents or any other agreement, instrument, or document and the proceeds thereof.
6. "Core Capital" shall have the definition set forth in 12 C.F.R. Section 567.5(a), as amended from time to time.
7. "ERISA" means the Employee Retirement Income Security Act of 1974, P.L. No. 93-406, as amended from time to time.
8. "Event of Default" shall have the meaning set forth in Article VII hereof.
9. "Financing Documents" means and includes this Amended Agreement and the Original Agreement, the Amended Note, the Amended Pledge Agreement, and all other associated loan and collateral documents including, without limitation, all guaranties, suretyship agreements, stock powers, security agreements, security deeds, subordination agreements, exhibits, schedules, attachments, financing statements, notices, consents, waivers, opinions, letters, reports, records, assignments, documents, instruments, information and other writings related thereto, or furnished by the Borrower to the Lender in connection therewith or in connection with any of the Collateral, and any amendments, extensions, renewals, modifications or substitutions thereof or therefor.
10. "Lender" shall include transferees, assignees, and successors of the Lender, and all rights of the Lender under the Financing Documents shall inure to the benefit of its transferees, successors, and assigns. All obligations of the Borrower under the Financing Documents shall bind its heirs, legal representatives, successors, and assigns.
11. "LIBOR" means the one month London Interbank Offered Rate designated in the Money Rates Section of the Eastern Edition of The Wall Street Journal.
12. "Liabilities" means all indebtedness, liabilities, and obligations of the Borrower or any Subsidiary thereof of any nature whatsoever which the Lender may now or hereafter have, own or hold, and which are now or hereafter owing to the Lender regardless of however and whenever created, arising or evidenced, whether now, heretofore or hereafter incurred, whether now, heretofore or hereafter due and payable, whether alone or together with another or others, whether direct or indirect, primary or secondary, absolute or contingent, or joint or several, and whether as principal, maker, endorser, guarantor, surety or otherwise, and also regardless of whether such Liabilities are from time to time reduced and thereafter increased or entirely extinguished and thereafter reincurred, including without limitation the Amended Note and any amendments, extensions, renewals, modifications, or substitutions thereof or therefor.
13. "Loan" shall have the meaning set forth in Section 2.1 hereof.
14. "Material Adverse Change" means any act, omission, event or circumstance that would entail loss, liability, damage, or expense to the Borrower or any Subsidiary equal to or in excess of $1,200,000 in any single act, omission, event or circumstance, or $1,200,000 in the aggregate, for which amount Borrower has not previously provided a reserve or specific allocation.
15. "Amended Note" shall have the meaning set forth in Section 2.2 hereof.
16. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.
17. "Pledge Agreement" shall have the meaning set forth in Section 2.4(a) hereof.
18. "Subsidiary" means each of the Bank Subsidiaries and each other corporation for which the Borrower has the power, directly or indirectly, to direct its management or policies or to vote 25% or more of any class of its voting securities.
19. "Total Risk-Based Capital Ratio" means the total risk-based capital ratio as defined by the capital maintenance regulations of the primary federal bank regulatory agency of the relevant Bank Subsidiary.
20. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in effect from time to time.

1. - THE LOAN
   1. Subject to the terms and conditions of this Amended Agreement, the Lender agrees to lend to the Borrower the principal sum of up to $35,000,000 (the "Loan") in a series of advances as requested from time to time by the Borrower in a period beginning on the date of this Amended Agreement and ending on the date 24 months after the date of this Amended Agreement. Each such advance, and any advances previously made pursuant to the Original Agreement, will reduce the remaining commitment to lend hereunder and repayments of advances shall not permit the Borrower to receive an additional advance of such funds.
   2. The Loan shall be evidenced by an amended grid promissory note, in the form attached hereto as Exhibit A, duly executed and delivered by the Borrower in favor of the Lender in exchange and in cancellation of the original grid promissory note issued pursuant to the Original Agreement. This amended grid promissory note and any amendment(s), extension(s), renewal(s), modification(s) or substitution(s) thereof or therefor which is in effect at any particular time is hereinafter called the "Amended Note." The Amended Note shall provide that:
      1. The Loan shall bear interest at a rate per annum, calculated on the basis of a 360-day year and actual days elapsed, equal to LIBOR plus 200 basis points. This rate will be adjusted based on the LIBOR rate published on the first business day of each calendar month.
      2. Accrued interest shall be payable quarterly in arrears on the last day of each quarter, commencing September 30, 2000, and continuing to be due on the last day of each quarter (March 31, June 30, September 30, or December 31) thereafter until the loan is paid in full. Interest shall also be due and payable when the Loan shall become due (whether at maturity, by reason of acceleration or otherwise).
      3. Principal payments on the Loan shall be due in ten equal installments with the first installment due on September 14^th, 2003, and each subsequent installment to be paid on the date that is one calendar year subsequent to the due date of the previous installment, with the last installment due on September 14^th, 2012. The entire remaining outstanding balance of the Loan, together with all accrued and unpaid interest, shall be due and payable on September 14^th, 2012.
      4. No penalty or premium shall be imposed for the prepayment in whole or in part of the principal balance of the Loan. Any prepayment in full shall be accompanied by the payment in full of all accrued but unpaid interest on the Loan through the prepayment date, whether or not such interest is otherwise due and payable.
      5. In the event of conflict between the terms of this Section 2.2 and those of the Amended Note, the Amended Note shall control.
   3. The proceeds of the Loan shall be used by the Borrower for capital management, future expansion, repayment of debt, and/or repurchase of stock.
   4. To secure the repayment of the Loan:
      1. The Borrower shall execute and deliver to the Lender an amended and restated stock pledge agreement (the "Amended Pledge Agreement") in the form and substance attached hereto as Exhibit B, and pursuant to which the Borrower shall grant to the Lender a security interest in the Bank Stock. On or before the day the Loan is made, the Borrower shall have delivered to the Lender the certificate(s) representing the Bank Stock together with stock transfer powers for the same in form and substance satisfactory to the Lender. If at any time prior to repayment in full of the Loan the Borrower acquires any additional shares of the Bank Stock, the Borrower shall promptly deliver certificates evidencing such shares of the Bank Stock to the Lender and such additional shares shall be added to the collateral already pledged to the Lender under the Amended Pledge Agreement, and the Lender shall have a security interest in such additional shares.
      2. If at any time prior to repayment in full of the Loan the aggregate book value (as determined in accordance with generally accepted accounting principles) of the shares of Bank Stock under pledge to the Lender becomes less than $100,000,000, the Borrower shall promptly deliver to the Lender on demand additional collateral of a type and value acceptable to the Lender (and the Lender's judgment in valuing same shall be conclusive) so that the sum of the value of such additional collateral plus the aggregate book value of the Bank Stock then under pledge is equal to or in excess of $100,000,000. In connection with the Borrower's delivery of any additional collateral under this Section 2.4(b), the Borrower will execute any and all security documents as the Lender may request to evidence and perfect the Lender's rights in such additional collateral.
   5. In connection with the Loan, the Borrower also will deliver to the Lender the resolutions and other agreements or instruments specified in Section 6.5 hereof and such other documents as may be reasonably required by the Lender.
   6. At closing, which closing shall be considered to take place at the time the Amended Note has been duly executed and delivered by Borrower in favor of the Lender, Borrower shall remit a loan fee of $25,000 (one-quarter percent (.25%) on the additional $10,000,000) to the Lender.
2. - REPRESENTATIONS AND WARRANTIES

   The Borrower hereby represents and warrants to the Lender as follows:

   1. The Borrower is a corporation organized, validly existing and in good standing under the laws of the State of Delaware, and is qualified to do business in all jurisdictions where such qualification is necessary, except where the failure to so qualify would not have a material adverse effect on the Borrower or its business. The Borrower is registered as a multiple thrift holding company with the Office of Thrift Supervision.
   2. Each Bank is a federal savings and loan association formed under the laws of the United States, regulated by the Office of Thrift Supervision, and authorized to do business in South Carolina. First Federal has 7,000,000 shares of common stock, par value $1.00 per share, authorized, of which 10,000 are issued and outstanding, 3,000,000 shares of preferred stock authorized, none of which are issued and outstanding, and Peoples Federal has 10,000 shares of common stock, par value $1.00 per share, authorized, of which 10,000 are issued and outstanding, and no shares of preferred stock authorized. The Borrower owns all of the outstanding capital stock of each Bank, and there are no outstanding options, warrants or other rights which can be converted into shares of capital stock of either Bank (other than those, if any, issued in favor of the Borrower). Each Bank has all requisite corporate power and authority and possesses all licenses, permits and authorizations necessary for it to own its properties and conduct its business as presently conducted.
   3. Each financial statement of the Borrower or any Subsidiary which has been delivered to the Lender presents fairly the financial condition of the Borrower or such Subsidiary as of the date indicated therein and the results of its operations for the periods shown therein. The Borrower has filed all forms, reports, and documents required to be filed by the Borrower with the Securities and Exchange Commission since December 31, 1994 (collectively, the "First Financial SEC Reports") except where the failure to file would not have a material adverse effect on the Borrower or its business. The First Financial SEC Reports (i) at the time filed, complied in all material respects with the applicable requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934, as the case may be, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Amended Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated in such First Financial SEC Reports or necessary in order to make the statements in such First Financial SEC Reports, in light of the circumstances under which they were made, not misleading. There has been no Material Adverse Change in the financial condition or operations of the Borrower or any Subsidiary since the date of the most recent financial statements delivered to the Lender or the most recent First Financial SEC Report filed with the Securities and Exchange Commission.
   4. The Borrower has full power and authority to make, execute, and perform each of the Financing Documents in accordance with the respective terms thereof. The execution and performance by the Borrower of each and every one of the Financing Documents has been duly authorized by all requisite action, and each and every one of them constitutes the legal, valid, and binding obligation of the Borrower enforceable in accordance with its respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement rights of creditors generally and by general principles of equity.
   5. Execution, delivery, and performance by the Borrower of each and every one of the Financing Documents does not violate any provision of law or regulations applicable to Borrower and material to its operations and will not result in a material breach of or constitute a default under any material agreement, indenture, or other instrument to which the Borrower or any Subsidiary is a party or which the Borrower or any Subsidiary is bound.
   6. Except for the security interest created by the Amended Pledge Agreement, the Borrower owns the Bank Stock free and clear of all liens, charges, and encumbrances. The Bank Stock is duly issued, fully paid, and non-assessable, and the Borrower has the unencumbered right to pledge the Bank Stock.
   7. There is no claim, action, suit, arbitration, investigation, condemnation or other proceeding at law or in equity, or by or before any federal, state, local or other governmental agency, or by or before any other agency or arbitrator involving the Borrower, nor is there any judgment, order, writ, injunction or decree of any court pending that names the Borrower, or to the knowledge of Borrower, anticipated or threatened against the Borrower or any Subsidiary or against any of their properties or assets, which might have a material adverse effect on the Borrower, any Subsidiary, or their respective properties or assets, or which might call into question the validity or enforceability of any of the Financing Documents, or which might involve the alleged violation by the Borrower or any Subsidiary of any material federal, state, local or other law, rule or regulation.
   8. All of the Borrower's outstanding capital stock has been validly issued, fully paid, and is non-assessable. The Borrower is not in material violation of any applicable federal, state, local, or other securities laws and regulations with respect to the issuance of any of its capital stock or any other of its securities.
   9. The Borrower and each Subsidiary have accurately prepared and timely filed (or caused to be filed) in all material respects all required federal, state, local, or other tax returns and have paid (except as otherwise permitted by Section 4.2 hereof) all governmental taxes and other charges imposed upon it or on any of its properties or assets. The Borrower does not know of any proposed additional tax assessment against it or any Subsidiary.
   10. No consent, approval, order, authorization, designation, registration, declaration, or filing with or of any federal, state, local, or other governmental authority or public body on the part of the Borrower or any Subsidiary is required in connection with the Borrower's execution, delivery or performance of any of the Financing Documents; or if required, all such prerequisites have been, or as of the date the Loan is advanced will be, fully satisfied.
   11. Neither the Borrower nor any Subsidiary has established or maintains any defined employee benefit plan within the meaning of ERISA.
   12. None of the transactions contemplated in this Amended Agreement (including, without limitation, the use of the proceeds of the Loan) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934 or any regulations issued pursuant thereto, including, without limitation, Regulations G, T, U, and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Parts 207, 220, 221, and 224. None of the Collateral is "margin stock" within the meaning of Regulation U.
3. - AFFIRMATIVE COVENANTS

For so long as this Amended Agreement is in effect, and unless the Lender expressly consents in writing otherwise or to the contrary, the Borrower hereby expressly covenants and agrees as follows:

1. The Borrower and each Subsidiary shall promptly furnish to the Lender: (a) copies of all reports which it files or is required to file with the Securities and Exchange Commission under Section 12 or 15 of the Securities Exchange Act of 1934, in each case not later than the date such report is filed or required to be filed (If at any time the Borrower is not subject to the reporting requirements under Section 12 or 15 of the Securities and Exchange Commission, the Borrower shall furnish to the Lender the same information, including, when applicable, audited financial statements, that the Borrower would be required to file with the Securities and Exchange Commission if the Borrower were subject to the reporting requirements under Section 12 or 15.); and (b) copies of the Report of Condition and the Report of Income and Dividends as filed with the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, or other primary federal bank regulatory agency (as the case may be).
2. The Borrower and each Subsidiary shall punctually pay and discharge all taxes, assessments and governmental charges or levies imposed upon it or upon its income or upon any of its property, as well as all claims of any kind, which if unpaid, might by law become a lien or charge upon its property, except taxes, assessments, charges, levies or claims which are in good faith being timely litigated or otherwise properly contested by the Borrower or the Subsidiary and as to which the contestant has established an adequate reserve on its books.
3. The Borrower and each Subsidiary shall comply in all material respects with the requirements of all provisions of constitutions, statutes, rules, regulations and orders of governmental bodies or regulatory agencies applicable to it, and all orders and decrees of all courts and arbitrators in proceedings or actions to which it is a party or by which it is bound.
4. The Borrower shall promptly report to the Lender any significant change in Borrower's management or any change of greater than 1% of Borrower's total outstanding shares in the beneficial ownership of the Borrower's common stock by any officer, director, or 5% or greater stockholder of the Borrower, in each case not later than the date it publicly announces or reports or is required to report to the Securities and Exchange Commission.
5. The Borrow shall permit the Lender's appropriate officers to inspect the financial books and records of Borrower and each Subsidiary, to perform a review of the loan portfolio of each Subsidiary as reasonably deemed necessary, and to review regulatory reports to the extent permitted by the Borrower's and each Subsidiary's regulatory authorities. If the financial books and records are reviewed, the Lender and any participant of the Lender who is given access to that information shall sign a confidentiality agreement.
6. The Borrower shall promptly furnish to Lender immediately after the occurrence of a significant change in the management of the Borrower or any Subsidiary, a statement of the Borrower's chief executive officer or chief financial officer setting forth in reasonable detail such change and the action which the Borrower or any Subsidiary proposes to take with respect thereto.

4. - NEGATIVE COVENANTS

For so long as this Amended Agreement is in effect, and unless the Lender expressly consents in writing otherwise or to the contrary, the Borrower hereby expressly covenants and agrees to the following negative covenants:

1. The Borrower shall not permit the book value (as determined in accordance with generally accepted accounting principles) of the shares of Bank Stock under pledge to the Lender as of the end of any fiscal quarter during the term of this Amended Agreement to be less than $100,000,000.
2. The Borrower shall not permit the Total Risk-Based Capital Ratio of the Borrower, if applicable, or any of the Bank Subsidiaries as of the end of any fiscal quarter during the term of this Amended Agreement to be less than 9.0% of risk weighted assets.
3. The Borrower shall not, and shall not permit any of the Bank Subsidiaries to, fail to comply with any minimum capital requirement imposed by any of their federal and state regulators.
4. The Borrower shall not permit the aggregate earnings of the Bank Subsidiaries, on an annualized basis as of the end of each calendar quarter during the term of this Amended Agreement, to be less than adequate on a prospective basis to pay to the Borrower in the immediately succeeding calendar year legally permissible dividends in amounts sufficient to fund the payments of principal and interest on the Loan required under the Amended Note and this Amended Agreement during such year, except to the extent that new funds available for debt service in an amount sufficient to cover the prospective deficiency are made available to the Borrower in a manner that does not violate any covenant in this Amended Agreement or any other Financing Document.
5. Neither the Borrower nor any Bank Subsidiary shall permit its Core Capital to be less than 5.0% of total assets as of the end of any fiscal quarter during the term of this Amended Agreement.
6. Neither the Borrower nor any Bank Subsidiary shall permit the ratio of its internally classified assets (including without limitation, "substandard," "doubtful" or "loss"), to the sum of its Core Capital plus its allowances for loan and lease losses to exceed 50%.
7. The Borrower shall receive a return on assets (as computed in accordance with generally accepted accounting principles) of at least 0.65% for each fiscal year during the term of this Amended Agreement.
8. The Borrower shall neither declare nor pay any dividend nor make any distribution on any shares of stock of the Borrower or to its stockholders (other than dividends or distributions payable in shares of stock of the Borrower), nor shall the Borrower retire, redeem, purchase or otherwise acquire for value, directly or indirectly, any shares of the capital stock of the Borrower (nor permit any Subsidiary to do so) if an Event of Default has occurred or if such declaration, payment, distribution, retirement, purchase, redemption, or other acquisition would result in an Event of Default hereunder or an event which, with the giving of notice or passage of time (or both), would constitute such an Event of Default.
9. The Borrower shall not, nor permit any Bank Subsidiary to, incur, create, assume or permit to exist any indebtedness or liability for borrowed money in an aggregate in excess of $1,000,000 other than to the Lender, the Borrower, or a wholly-owned Subsidiary of the Borrower, without prior Lender approval, except that this covenant shall not apply to deposits, repurchase agreements, reverse repurchase agreements, reverse dollar roll repurchase agreements, overdrafts, borrowing of federal funds, FHLB advances, and other banking transactions entered into by a Bank Subsidiary in the ordinary course of its business.
10. The Borrower shall not in any manner, directly or indirectly, become a guarantor of any obligation of, or an endorser of, or otherwise assume or become liable upon any notes, obligations, or other indebtedness of any other Person (other than a Subsidiary) except in connection with the normal and ordinary course of business.
11. Except for the real estate investment trust subsidiary established by First Federal (as outlined in the notice dated April 1, 1998 filed by First Federal with the FDIC and the OTS), without the prior written consent of the Lender, which consent will not be unreasonably withheld, the Borrower shall not permit any Subsidiary (either directly or indirectly by the issuance of rights or options for, or securities convertible into, such shares) to issue, sell or otherwise dispose of any shares of any class of its stock (other than directors' qualifying shares) except to the Borrower or a wholly-owned Subsidiary of the Borrower.
12. Without the prior written consent of the Lender, which consent will not be unreasonably withheld, the Borrower shall not sell or otherwise dispose of, or part with control of, any securities or indebtedness of any Subsidiary, and the Borrower shall not pledge, hypothecate, assign, transfer or grant a security interest in any of the capital stock or other securities of any of its Subsidiaries.

5. - CONDITIONS PRECEDENT

All of the Lender's obligations under this Amended Agreement, including without limitation any obligation to make any advance of the Loan to the Borrower, are subject to the prior fulfillment of each of the following conditions, and the Borrower shall use its best efforts to cause each of the following conditions to be so fulfilled:

1. All representations and warranties of the Borrower contained in this Amended Agreement and in each and every one of the other Financing Documents shall be true, correct, complete, and accurate in all material respects on and as of the date of each advance of the Loan.
2. The Borrower and each Subsidiary shall have duly and properly performed in all material respects all covenants, agreements, and obligations required by the terms of this Amended Agreement or any of the other Financing Documents to be performed by the Borrower or the Subsidiary at the closing of the Loan.
3. The Borrower shall not have taken or permitted to be taken any actions which would conflict with any of the provisions of Article V hereof.
4. Since the date of this Amended Agreement, no Material Adverse Change shall have occurred.
5. Prior to the advance of the Loan, the Borrower shall have delivered to the Lender the following described documents:
   1. This Amended Agreement duly executed by the Borrower;
   2. The Amended Note duly executed by the Borrower;
   3. The Amended Pledge Agreement duly executed by the Borrower;
   4. A Certificate of the Borrower's Secretary or Assistant Secretary, in the form attached hereto as Exhibit C, with respect to the corporate documents of the Borrower and each Bank, the resolutions of the Borrower's directors authorizing the execution of this Amended Agreement and the other Financing Documents, and such other matters as the Lender may reasonably require;
   5. A copy of the Borrower's certificate of incorporation certified by the Secretary of State of Delaware;
   6. A certificate of the Secretary of State of Delaware certifying that the Borrower is a corporation in good standing under the laws of such state;
   7. A copy of each Bank's Federal Stock Charter certified by the Office of Thrift Supervision;
   8. An opinion of legal counsel, in the form attached hereto as Exhibit D;
   9. Stock powers covering all of the Bank Stock; and
   10. Such other documents, instruments, and agreements as may be reasonably required by the Lender or the Lender's counsel in connection with the Loan hereunder.
6. No Event of Default or event which, with the giving of notice or passage of time (or both), would constitute an Event of Default under the terms of this Amended Agreement, shall have occurred.
7. Prior to the advance of any amount of the Loan such that total advances made pursuant to the Loan exceed $13,000,000, the Lender shall have received commitments from its respondent/correspondent banks to purchase the amounts over $13,000,000 in participations in the Loan.

6. - EVENTS OF DEFAULT

   The occurrence of any one or more of the following events will constitute an event of default (herein called an "Event of Default") by the Borrower under this Amended Agreement:

   1. After written notice from Lender of amount payable, failure of the Borrower punctually to make payment of any amount payable, whether principal or interest or other amount, on any of the Liabilities, whether at maturity, or at a date fixed for any prepayment or partial prepayment, or by acceleration or otherwise.
   2. If any statement, representation, or warranty of the Borrower made in this Amended Agreement or in any of the other Financing Documents or at any time furnished by or on behalf of the Borrower to the Lender proves to have been untrue, incorrect, misleading, or incomplete in any material respect as of the date made; provided that any such statement, representation, or warranty made prior to the initial advance under this Amended Agreement may be cured by a corrective statement, representation, or warranty identified as such and delivered in writing to the Lender prior to the earlier to occur of 30 days from the date of this Amended Agreement or the business day before the initial advance is made under this Amended Agreement.
   3. Failure of the Borrower to comply with the covenants set forth in Sections 5.1, 5.2, and 5.5 hereof, which failure is not cured as of the end of the fiscal quarter following the fiscal quarter as to which such failure occurred (i.e., the Borrower shall have one fiscal quarter to cure such failure).
   4. Failure of the Borrower to comply with any of the other covenants set forth in Article V hereof, which failure is not cured within 30 days after notice from the Lender to the Borrower.
   5. Failure of the Borrower to comply with any of the other covenants set forth in this Amended Agreement, which failure is not cured within 30 days after notice from the Lender to the Borrower.
   6. The occurrence of a default, an event of default, or an Event of Default under any of the other Financing Documents or under any other agreement to which the Borrower and the Lender are parties or under any other instrument executed by the Borrower in favor of the Lender, which failure is not cured within 30 days after notice from the Lender to the Borrower.
   7. If the Borrower or any Subsidiary becomes insolvent or makes an assignment for the benefit of creditors; or if any action is brought by the Borrower or any Subsidiary seeking dissolution of the Borrower or such Subsidiary or liquidation of its assets or seeking the appointment of a trustee, interim trustee, receiver, or other custodian for any of its property; or if the Borrower or any Subsidiary commences a voluntary case under the Federal Bankruptcy Code; or if any reorganization or arrangement proceeding is instituted by the Borrower or any Subsidiary for the settlement, readjustment, composition, or extension of any of its debts upon any terms; or if any action or petition is otherwise brought by the Borrower or any Subsidiary seeking similar relief or alleging that it is insolvent or unable to pay its debts as they mature.
   8. If any action is brought against the Borrower or any Subsidiary seeking dissolution of the Borrower or such Subsidiary or liquidation of any of its assets or seeking the appointment of a trustee, interim trustee, receiver or other custodian for any of its property, and such action is consented to or acquiesced in by the Borrower or such Subsidiary or is not dismissed within 30 days of the date upon which it was instituted; or if any proceeding under the Federal Bankruptcy Code is instituted against the Borrower or any Subsidiary and (i) an order for relief is entered in such proceeding or (ii) such proceeding is consented to or acquiesced in by the Borrower or such Subsidiary or is not dismissed within 30 days of the date upon which it was instituted; or if any reorganization or arrangement proceeding is instituted against the Borrower or any Subsidiary for the settlement, readjustment, composition, or extension of any of its debts upon any terms, and such proceeding is consented to or acquiesced in by the Borrower or such Subsidiary or is not dismissed within 30 days of the date upon which it was instituted; or if any action or petition is otherwise brought against the Borrower or any Subsidiary seeking similar relief or alleging that it is insolvent, unable to pay its debts as they mature, or generally not paying its debts as they become due, and such action or petition is consented to or acquiesced in by the Borrower or such Subsidiary or is not dismissed within 30 days of the date upon which it was brought.
   9. If the Borrower or any Subsidiary is in default on indebtedness to another Person or an event has occurred which, with the giving of notice or passage of time, or both, will cause the Borrower or any Subsidiary to be in default on indebtedness to another Person, and the amount of such indebtedness exceeds $500,000 or the acceleration of the maturity of such indebtedness would have a material adverse effect upon the Borrower or such Subsidiary.
   10. Any other Material Adverse Change occurs in the Borrower's financial condition.
   11. If any cease and desist order has been entered against Borrower or any Subsidiary by any federal or state bank or bank holding company regulatory agency or body, or if the Borrower or any Subsidiary enters into any form of memorandum of understanding, plan of corrective action, or letter agreement with any such federal or state bank or bank holding company regulatory agency or body concerning a material aspect of its business, or if any other regulatory enforcement action is taken against Borrower or any Subsidiary relating to the capitalization, management or material operation of the Borrower or any Subsidiary.
   12. If Borrower or any Subsidiary is indicted or convicted or pleads guilty or nolo contendere to any charge that Borrower or such Subsidiary has violated the Federal Money Laundering Control Act, the Controlled Substances Act, the Currency and Foreign Transactions Reporting Act, or any other federal, state, or local drug, controlled substances, money laundering, currency reporting, racketeering, or racketeering-influenced-and-corrupt-organization statute or regulations, or any other similar federal, state, or local forfeiture statute (including without limitation 18 U.S.C. Section 1963).
   13. If any Person or group of Persons acting in concert (other than a Person or group of Persons which controls Borrower as of the date of this Amended Agreement) shall at any time after the date of the Amended Agreement acquire control of the Borrower, as such term is defined by the Change in Bank Control Act of 1978, as amended, 12 U.S.C. Section 1817(j), and the rules and regulations adopted thereunder.
   14. If the Borrower ceases to own 100% of the issued and outstanding capital stock of, or to control, either Bank, or ceases to control any of the Bank Subsidiaries.
7. - REMEDIES UPON DEFAULT
   1. Upon the occurrence of an Event of Default:
      1. Any of the Liabilities may (notwithstanding any provisions contained therein or herein to the contrary), at the option of the Lender and without presentment, demand, notice, or protest of any kind (all of which are expressly waived by the Borrower in this Amended Agreement), be declared due and payable, whereupon they immediately will become due and payable;
      2. The Lender may also, at its option, and without notice or demand of any kind, exercise from time to time any and all rights and remedies available to it under this Amended Agreement or under any of the other Financing Documents, as well as exercise from time to time any and all rights and remedies available to a secured party when a debtor is in default under a security agreement as provided in the Uniform Commercial Code of Georgia, or available to the Lender under any other applicable law or in equity, including without limitation the right to any deficiency remaining after disposition of the Collateral; and
      3. The Borrower shall pay all of the reasonable and documented costs and expenses incurred by the Lender in enforcing its rights under this Amended Agreement and the other Financing Documents. In the event any claim under this Amended Agreement or under any of the other Financing Documents is referred to an attorney for collection, or collected by or through an attorney at law, the Borrower will be liable to the Lender for all reasonable and documented expenses incurred by it in seeking to collect the Liabilities or to enforce its rights hereunder, in the other Financing Documents, or in the Collateral, including, without limitation, reasonable and documented attorneys' fees.
   2. Any proceeds from disposition of any of the Collateral may be applied by the Lender first to the payment of all expenses and costs incurred by the Lender in collecting such Liabilities, in enforcing the rights of the Lender under each and every one of the Financing Documents, and in collecting, retaking, holding, preparing the Collateral for and advertising the sale or other disposition of and realizing upon the Collateral, including, without limitation, reasonable and documented attorneys' fees as well as all other reasonable and documented legal expenses and court costs. Any balance of such proceeds may be applied by the Lender toward the payment of such of the Liabilities and in such order of application as the Lender may from time to time elect. The Lender shall pay the surplus, if any, to the Borrower. The Borrower shall pay the deficiency, if any, to the Lender.
8. - MISCELLANEOUS
   1. Time is of the essence of this Amended Agreement.
   2. This Amended Agreement, together with all of the other Financing Documents, supersedes all prior discussions, understandings, and agreements by and between the Borrower and the Lender with respect to the Loan and the Collateral, and together they constitute the sole and entire agreement between the parties.
   3. This Amended Agreement and the security interests and security title conveyed under the Financing Documents shall remain in full force and effect until such time as (i) the Liabilities are repaid in full, (ii) the Lender is under no obligation to make loans or other financial accommodations to the Borrower, and (iii) either party in writing notifies the other that it is thereby terminating this Amended Agreement.
   4. The Lender will not be deemed as a consequence of any act, delay, failure, omission, or forbearance (including without limitation failure to exercise its rights of accelerating the maturity of any of the Liabilities or other indulgences granted from time to time by the Lender) or for any other reason: (i) to have waived, or to be estopped from exercising, any of its rights or remedies under this Amended Agreement or under any of the other Financing Documents; or (ii) to have modified, changed, amended, terminated, rescinded, or superseded any of the terms of this Amended Agreement or of any of the other Financing Documents unless such waiver, modification, amendment, change, termination, rescission, or supersession is express, in writing, and signed by a duly authorized officer of the Lender. No single or partial exercise by the Lender of any right or remedy will preclude other or further exercise thereof or preclude the exercise of any right or remedy, and a waiver expressly made in writing on one occasion will be effective only in that specific instance and only for the precise purpose for which given, and will not be construed as a consent to or a waiver of any right or remedy on any future occasion.
   5. Except as provided otherwise in this Amended Agreement, all notices and other communications under this Amended Agreement are to be in writing and are to be deemed to have been duly given and to be effective upon delivery to the party to whom they are directed. If sent by U.S. mail, first class, certified, return receipt requested, postage prepaid, and addressed to the Lender or to the Borrower at their respective addressees set forth below, such notices, demands and other communications are to be deemed to have been delivered on the second business day after being so posted.

   If to the Lender:	The Bankers Bank
   	2410 Paces Ferry Road
   	600 Paces Summit
   	Atlanta, Georgia 30339
   	Attn: Michael Bailey, Vice President
   If to the Borrower:	First Financial Holdings, Inc.
   	2440 Mall Drive
   	Suite 100
   	Charleston, South Carolina 29406
   	Attn: A. Thomas Hood
   	President and Chief Executive Officer

   Either the Lender or the Borrower may, by written notice to the other, designate a different address for receiving notices under this Amended Agreement; provided, however, that no such change of address will be effective until written notice thereof is actually received by the party to whom such change of address is sent.

   1. The Borrower may not, without the consent of the Lender, assign or transfer any of its rights or duties hereunder or under any of the other Financing Documents.
   2. The Lender may at any time grant participation in or sell, assign, transfer, or otherwise dispose of, all or any portion of the indebtedness of the Borrower outstanding pursuant to this Amended Agreement and the Amended Note; provided, however, that no such participant, nor any of its successors or assigns, may be a direct competitor of the Borrower. The Borrower hereby agrees that any holder of a participation in, and any assignee or transferee of, all or any portion of any amount owed by the Borrower under this Amended Agreement and the Amended Note (i) shall be entitled to the benefits of the provisions of this Amended Agreement as the Lender hereunder, and (ii) may exercise any and all rights of the banker's lien, set-off, or counterclaim with respect to any and all amounts owed by the Borrower to such assignee, transferee, or holder as fully as if such assignee, transferee, or holder had made the Loan in the amount of the obligation in which it holds a participation or which is assigned or transferred to it.
   3. All statements, reports, certificates, opinions, and other documents or information furnished to the Lender under the Financing Documents shall be supplied by the Borrower without cost to the Lender. Further, the Borrower shall reimburse the Lender on demand for all reasonable costs and expenses (including legal fees and recording costs) incurred by the Lender in connection with the preparation of the Financing Documents whether or not the loan is closed, and for all costs and expenses (including legal fees and recording costs) incurred by the Lender in connection with the interpretation, operation, and enforcement of the Financing Documents or the protection or preservation of any right or claim of the Lender with respect to the Financing Documents.
   4. The Borrower will pay all taxes (if any) in connection with this Amended Agreement, any of the other Financing Documents, any loan made in connection with this Amended Agreement, or the issuance or ownership of any of the Financing Documents and in connection with any modification of this loan, this Amended Agreement, or any of the Financing Documents (excluding, however, any taxes imposed upon or measured by the net income of the Lender), and will save the Lender harmless without limitation as to time against any and all liabilities with respect to all such taxes. The obligations of the Borrower under this section shall survive the payment of the Liabilities and the termination of this Amended Agreement.
   5. In addition to any other amounts payable by Borrower under this Amended Agreement, Borrower hereby agrees to pay and indemnify Lender from and against all claims, liabilities, losses, costs, and expenses (including, without limitation, reasonable attorneys' fees and expenses) which Lender may (other than as a result of the gross negligence or willful misconduct of Lender), incur or be subject to as a consequence, directly or indirectly, of (i) any breach by Borrower of any warranty, term, or condition in, or the occurrence of any default under, this Amended Agreement or any other Financing Document, including all fees or expenses resulting from the settlement or defense of any claims or liabilities arising as a result of any such breach or default, (ii) allegations of participation or interference by Lender in the management, contractual relations, or other affairs of Borrower or any Subsidiary, (iii) allegations that Lender has joint liability with Borrower or any Subsidiary for any reason, and (iv) any suit, investigation, or proceeding as to which Lender or such participant is involved as a consequence, directly or indirectly, of its execution of this Amended Agreement or any other Financing Document, or any other event or transaction contemplated by any of the foregoing. The obligations of Borrower under this Section 9.10 shall survive the termination of this Amended Agreement. The foregoing indemnities shall not apply to any claims, liabilities, losses, costs or expenses which are caused in whole or in part by Lender's gross negligence or willful misconduct.
   6. Upon the occurrence of an Event of Default hereunder, the Lender, without notice or demand of any kind, may hold and set off against such of the Liabilities (whether matured or unmatured) as the Lender may elect, any balance or amount to the credit of the Borrower in any deposit, agency, reserve, holdback, or other account of any nature whatsoever maintained by or on behalf of the Borrower with the Lender at any of its offices, regardless of whether such accounts are general or special and regardless of whether such accounts are individual or joint. The Lender agrees to notify Borrower promptly after any such set off and application. Any Person purchasing an interest in debt obligations under this Amended Agreement held by the Lender may exercise all rights of offset with respect to such interest as fully as if such Person were a holder of debt obligations hereunder in the amount of such interest.
   7. If at any time the Lender upon advice of its counsel shall determine that any further document shall be reasonably required to effect this Amended Agreement and the transactions and other agreements contemplated thereby, the Borrower shall, and shall cause its Subsidiaries to, execute and deliver such document and otherwise carry out the purposes of this Amended Agreement.
   8. This Amended Agreement and all of the other Financing Documents have been made and delivered in the State of Georgia, and the terms, provisions, and performance thereof are in all respects, including without limitation all matters of construction, interpretation, validity, enforcement, and performance, to be construed in accordance with and governed by the laws of that State, including without limitation the Uniform Commercial Code of Georgia, as amended from time to time. Wherever possible, each provision of this Amended Agreement and of each and every one of the other Financing Documents is to be interpreted in such manner as to be effective and valid under applicable law, but if any provision thereof is prohibited or invalid under such law, such provision is to be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amended Agreement or of any of the other Financing Documents.
   9. "Herein," "hereof," and "hereunder" and other words of similar import refer to this Amended Agreement as a whole and not to any particular article, paragraph, section, or other subdivision. The titles of the Articles appear as a matter of convenience only and shall not affect the interpretation hereof.
   10. This Amended Agreement may not be amended, supplemented, or otherwise modified except by an instrument in writing signed by each of the parties hereto.
   11. Unless specifically authorized in writing by the Borrower, the Lender shall hold all non-public information obtained pursuant to this Amended Agreement in accordance with the Lender's customer procedures for handling confidential information of this nature and in accordance with safe and sound banking practices.
   12. The representations and warranties of Borrower contained herein shall terminate immediately upon the expiration of the term of this Amended Agreement or any extension thereof and the repayment in full of all principal and interest and any other amounts due under the Amended Note or this Amended Agreement.

IN WITNESS WHEREOF, the Lender has executed this Amended Agreement, and the Borrower has executed this Amended Agreement and placed its seal hereon, all as of the day and year first above written.

	BORROWER:
	First Financial Holdings, Inc
	By:	/s/ A. Thomas Hood
		A. Thomas Hood
	Title:	President and Chief Executive Officer
	Attest:	/s/ Phyllis B. Ainsworth
	Title:	Vice President and Corporate Secretary
		[CORPORATE SEAL]
	LENDER:
	THE BANKERS BANK
	By:	/s/ Michael Bailey
		Michael Bailey
	Title:	Vice President
	Attest:	/s/ Susan E. Baham
	Title:	Senior Vice President, First Financial Holdings, Inc.

 

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EXHIBIT 22
Subsidiaries of the Registrant
PARENT
First Financial Holdings, Inc.
Subsidiaries (a)		Percentage of Ownership	Jurisdiction or State of Incorporation
First Federal Savings and Loan Association of Charleston		100%	United States
Peoples Federal Savings and Loan Association		100%	United States
First Southeast Investor Services, Inc.		100%	South Carolina
Charleston Financial Services (b)		100%	South Carolina
The Carolopolis Corporation (b)		100%	South Carolina
Broad Street Holdings, Inc. (b)		100%	North Carolina
Broad Street Investments, Inc. (c)		100%	North Carolina
First Southeast Fiduciary and Trust Services, Inc. (b)		100%	South Carolina
First Reinsurance Holdings, Inc. (b)		100%	South Carolina
First Southeast Reinsurance, Inc. (d)		100%	Vermont
First Southeast Insurance Services, Inc. (e)		100%	South Carolina
Coastal Carolina Corporation (e)		100%	South Carolina
(a)	The operations of the Company's wholly-owned subsidiaries are included in the Company's consolidated financial statements.
(b)	Second-tier subsidiaries of the Registrant. Wholly-owned by First Federal.
(c)	Third-tier subsidiary of the Registrant. Wholly-owned by Broad Street Holdings, Inc.
(d)	Third-tier subsidiary of the Registrant. Wholly-owned by First Reinsurance Holdings, Inc.
(e)	Second-tier subsidiaries of the Registrant. Wholly-owned by Peoples Federal.

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EXHIBIT 23

Consent of Independent Auditors

 

The Board of Directors

First Financial Holdings, Inc.:

We consent to incorporation by reference in the registration statement (No. 33-57855) on Form S-8 of First Financial Holdings, Inc. of our report dated October 24, 2000, relating to the consolidated statements of financial condition of First Financial Holdings, Inc. and subsidiaries as of September 30, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended September 30, 2000, which report appears in the September 30, 2000, annual report on Form 10-K of First Financial Holdings, Inc.

 

	/s/ KPMG LLP
Greenville, South Carolina
December 22, 2000