News Column

First Financial Holdings, Inc. Reports Record 2013 Operating Earnings of $63.5 Million

January 28, 2014

Declares Quarterly Cash Dividend COLUMBIA, S.C. --(BUSINESS WIRE)-- First Financial Holdings, Inc. (NASDAQ: SCBT ) today released its unaudited results of operations and other financial information for the three-month period and year ended December 31, 2013 . Highlights of 2013 include the following: Net income available to common shareholders of $13.2 million , or $0.55 diluted EPS in 4Q 2013, up 5.7%, compared to $11.5 million , or $0.52 diluted EPS in 3Q 2013, and up 44.7% from $5.9 million , or $0.38 diluted EPS in 4Q 2012; Diluted EPS for YTD 2013 was $2.38 , up 17.2%, compared to $2.03 in 2012, operating diluted EPS was $3.16 , up 26.9%, compared to $2.49 in 2012; Operating earnings of $19.3 million , which exclude merger expenses and include preferred stock dividends, or $0.80 diluted EPS in 4Q 2013 compared to $18.8 million , or $0.85 diluted EPS in 3Q 2013 and $11.1 million , or $0.72 diluted EPS in 4Q 2012; Return on average assets was 0.70% annualized in 4Q 2013 compared to 0.66% in 3Q 2013 and 0.52% in 4Q 2012; Operating return on average assets was 1.00% annualized in 4Q 2013 compared to 1.07% in 3Q 2013 and 0.98% in 4Q 2012; Net charge-offs of non-acquired loans decreased to 0.26% annualized in 4Q 2013, compared to 0.45% annualized in 3Q 2013 and 0.64% annualized in 4Q 2012; Legacy loan growth for 4Q 2013 was $124.0 million or 18.1% annualized and for the year legacy loan growth was $294.2 million or 11.4% in all categories; and Core deposit growth, excluding CDs and legacy First Financial merger, up $78.0 million or 9.5% annualized in 4Q 2013 and $121.0 or 3.7% for the year. Including legacy First Financial, core deposit growth was $44.0 million , or 3.5% annualized from 3Q 2013. Quarterly Cash Dividend The Board of Directors of First Financial Holdings, Inc. has declared a quarterly cash dividend of $0.19 per share payable on its common stock. This per share amount is equal to the dividend paid in the immediately preceding quarter and is $0.01 per share, or 5.6%, higher than a year ago. The dividend will be payable on February 21, 2014 to shareholders of record as of February 14, 2014 . Fourth Quarter 2013 Financial Performance Please refer to the accompanying tables for detailed comparative data on results of operations and financial results. The Company reported consolidated net income available to common shareholders of $13.2 million , or $0.55 per diluted common share for the three months ended December 31, 2013 up from $11.5 million , or $0.52 per diluted common share for the three months ended September 30, 2013 . Driving this increase from the third quarter was the following: an increase in net interest income primarily the result of the full quarter impact of legacy First Financial after the merger; continued improvement in asset quality resulting in no non-acquired provision for loan losses; an increase in noninterest income primarily the result of the full quarter impact of legacy First Financial after the merger; a decrease in the effective tax rate to 34% from 36.1%; partially offset by an increase in noninterest expense primarily the result of the full quarter impact of legacy First Financial after the merger. “We are pleased to report record operating earnings per share for the year, which increased 26.9% to $3.16 ,” said Robert R. Hill , Jr. CEO of First Financial Holdings, Inc. “I am also pleased with the total return to our shareholders for 2013, which was over 67%. This was certainly a transformational year for our company. While the merger with First Financial has created a lot of momentum, I am also pleased with the non-merger related performance. Asset quality improved significantly with many of our credit metrics returning to pre-downturn levels, our organic loan and deposit growth was exceptional with 11% organic loan growth for the year, and we continued to add talent to the team, which only makes us stronger. We are also on track with our merger integration and achieving our efficiency targets. We experienced a mortgage volume decline this quarter as a result of the rising rate environment, and saw some margin compression linked quarter. Overall, 2013 was a record year for our company. With our merger integration going well and our branding change scheduled for this summer, we are optimistic about the opportunities in 2014.” Asset Quality During the fourth quarter of 2013, SCBT continued to experience improvement in asset quality, excluding acquired loans and acquired other real estate owned (OREO), as nonperforming loans declined by $7.3 million , or 14.7%, and classified assets declined by $15.3 million , or 13.8% from the third quarter of 2013. Classified assets declined by $47.2 million during 2013, or 32.9%. Non-acquired nonperforming assets (NPAs) as a percentage of total non-acquired loans and repossessed assets declined to 1.94% compared to 2.40% in the third quarter of 2013. NPAs, excluding acquired NPAs, declined by $10.4 million from the third quarter 2013 level. In addition, 30-89 day past due non-acquired loans declined by $1.3 million during the fourth quarter of 2013 as compared to the third quarter of 2013. At December 31, 2013 , the allowance for non-acquired loan losses was $34.3 million or 1.20% of non-acquired period-end loans. The current allowance for loan losses provides 0.81 times coverage of period-end non-acquired nonperforming loans, up from 0.73 times at the end of the third quarter of 2013. Net charge-offs within the non-acquired portfolio were $1.8 million for the quarter or 0.26% annualized, down from the third quarter of 2013 of $3.0 million or 0.45% annualized and down from the fourth quarter of 2012 of $4.1 million or 0.64% annualized. For the year, SCBT’s net charge-offs totaled $11.1 million , or 0.41%, compared to $18.2 million , or 0.73%, in 2012. OREO costs increased $914,000 from the third quarter to $4.3 million for the fourth quarter of 2013. This increase was the result of approximately $300,000 in additional write downs on commercial OREO, a full quarter of carrying cost on the OREO acquired in the First Financial merger, and an increase in the carrying cost on the all other OREO assets, (including property taxes, insurance, appraisals, and legal cost). Net Interest Income and Margin Non-taxable equivalent net interest income was $84.4 million for the fourth quarter of 2013, a $4.7 million increase from the third quarter, resulting from the following: 1. A $455.7 million increase in the average balance of acquired loans from the third quarter of 2013 resulting from the full quarter impact of FFCH acquired loans; 2. An increase in non-acquired loans and resulting yield contributed $1.3 million in additional interest income; partially offset by 3. A decrease of 72 basis points in the yield on acquired loans due to the lower yielding First Financial acquired loans and the full quarter impact. Tax-equivalent net interest margin decreased 20 basis points from the third quarter of 2013 and increased slightly by 3 basis points from the fourth quarter of 2012. The Company’s average yield on interest-earning assets decreased 19 basis points while the average rate on interest-bearing liabilities remained flat from the third quarter of 2013. During the fourth quarter of 2013, the Company’s average total assets increased to approximately $8.0 billion and average earning assets increased to $6.9 billion . The growth in average earning assets was supported by growth in average interest-bearing liabilities of more than $458.0 million . Noninterest Income and Expense Noninterest income was $20.7 million in the fourth quarter of 2013, up $5.5 million from the third quarter of 2013 and up $9.8 million from fourth quarter of 2012. The increase from the third quarter of 2013 was driven by impact of a full quarter of First Federal customer-oriented noninterest income which includes service charges, bankcard services, mortgage banking income, and trust and investment services. Noninterest income grew significantly by $9.8 million increase from fourth quarter of 2012 due to The Savannah Bancorp, Inc. and First Financial acquisitions. The increases were partially offset by lower mortgage banking income due to the decline in the mortgage pipeline and reduced gains from loans sold in the secondary market, and a decline in the fair value of the hedges related to mortgage banking activity. In addition the negative accretion on the FDIC indemnification asset in the third quarter was $7.4 million , $882,000 more than the fourth quarter of 2012, but $196,000 less than the third quarter of 2013. The increase in negative accretion was the result of the reduction of expected cash flows from the indemnification asset related to certain pools of acquired loans which had improved estimated cash flows. Other noninterest income increased from the third quarter of 2013 by $1.6 million and from the fourth quarter of 2012 by $2.5 million , due primarily to an increase in recoveries from acquired assets and from the full quarter contribution from the FFCH merger. Noninterest expense was $83.9 million in the fourth quarter of 2013, up from $75.4 million from the third quarter. This increase from the third quarter of 2013 was primarily due to the impact of full quarter of FFCH operational cost of $24.8 million for the fourth quarter of 2013, up from $18.7 million for the third quarter of 2013 (66 days of FFCH operations). The efficiency ratio for the quarter was 79.2%, up from 78.7% in the third quarter. Our operational efficiency ratio, which excludes merger expenses and OREO related expenses, was 66.3% compared to 64.3% in the third quarter. Balance Sheet and Capital At the end of the year, SCBT’s total assets were $7.9 billion , up from $5.1 billion at December 31, 2012 , and down from $8.0 billion at September 30, 2013 . Since December 31, 2012 , the Company’s balance sheet has grown by more than 54%. Asset growth is evident in every line item due to the FFCH merger except OREO and FDIC receivable for loss share agreements and loans held for sale. During the fourth quarter of 2013, the Company purchased $205.9 million in GSEs and mortgage backed securities. Offsetting this increase were decreases in cash and cash equivalents by $165.7 million , all loans net of the allowance by $42.0 million , loans held for sale by $21.9 million and the FDIC receivable by $21.8 million . The Company’s book value per share increased to $40.72 per share at December 31, 2013 , compared to $40.31 at September 30, 2013 . Capital increased by $11.4 million due primarily to net income available to common shareholder of $13.2 million , which was partially offset by $4.6 million in dividends paid to our shareholders. Tangible book value (“TBV”) per share increased by $0.59 per share to $22.35 at December 31, 2013 from $21.76 at September 30, 2013 due primarily to the capital increases described above. In addition, tangible common equity to tangible assets increased to 7.13% at December 31, 2013 up from 6.85% at the end of the third quarter. The total risk-based capital ratio is estimated to be around 14.3% consistent with the third quarter of 2013. Tier 1 leverage ratio decreased to approximately 9.1% from 10.1% at September 30, 2013 . The decline is driven by a $763.2 million increase in average total assets due to including a full quarter of FFCH assets in the average balance. The Company’s capital position remains “well-capitalized” by all measures at December 31, 2013 . “We continued to reposition our balance sheet during the quarter as we increased our investment securities portfolio to almost $800.0 million , and our growth in the non-acquired loan portfolio during the quarter was also encouraging as we move into 2014,” said John C. Pollok , COO and CFO. “The asset quality overall continues to improve and the quality of the acquired loan portfolio continues to reflect declines in riskier assets.” First Financial Holdings, Inc. will hold a conference call on January 28 th at 11 a.m. ET during which management will review earnings and performance trends. Callers wishing to participate may call toll-free by dialing 888-317-6016. The number for international participants is 412-317-6016. The conference ID number is 10038650. Participants can also listen to the live audio webcast through the Investor Relations section of www.SCBTonline.com . A replay will be available beginning January 28 th by 2:00 p.m. ET until 9:00 a.m. on February 12 th . To listen to the replay, dial 877-344-7529 or 412-317-0088. The pass code is 10038650. First Financial Holdings, Inc. , (SCBT) Columbia, South Carolina is a registered bank holding company incorporated under the laws of South Carolina . The Company consists of SCBT , the Bank and the following divisions: NCBT, Community Bank & Trust , The Savannah Bank , and First Federal. The Bank also operates Minis & Co., Inc. and First Southeast 401k Fiduciaries, both wholly owned registered investment advisors; and First Southeast Investor Services , a wholly owned broker dealer. Providing financial services for over 80 years, First Financial Holdings, Inc. operates 141 locations in 19 South Carolina counties, 12 Georgia counties, and 4 North Carolina counties. First Financial Holdings, Inc. has assets of approximately $7.9 billion and its stock is traded under the symbol SCBT in the NASDAQ Global Select Market. More information can be found at www.SCBTonline.com . Non-GAAP Measures Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Management believes that these non-GAAP measures provide additional useful information. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP. Cautionary Statement Regarding Forward Looking Statements Statements included in this report which are not historical in nature are intended to be, and are hereby identified as, forward looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934. Forward looking statements generally include words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions. The Company cautions readers that forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from anticipated results. Such risks and uncertainties, include, among others, the following possibilities: (1) the outcome of any legal proceedings instituted against the Company; (2) credit risks associated with an obligor’s failure to meet the terms of any contract with the bank or otherwise fail to perform as agreed under the terms of any loan-related document; (3) interest risk involving the effect of a change in interest rates on the bank’s earnings, the market value of the bank's loan and securities portfolios, and the market value of the Company's equity; (4) liquidity risk affecting the bank’s ability to meet its obligations when they come due; (5) risks associated with an anticipated increase in the Company's investment securities portfolio, including risks associated with acquiring and holding investment securities or potentially determining that the amount of investment securities the Company desires to acquire are not available on terms acceptable to the Company; (6) price risk focusing on changes in market factors that may affect the value of traded instruments in “mark-to-market” portfolios; (7) transaction risk arising from problems with service or product delivery; (8) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (9) regulatory change risk resulting from new laws, rules, regulations, accounting principles, proscribed practices or ethical standards, including, without limitation, increased capital requirements (including, without limitation, the impact of the capital rules adopted to implement Basel III), Consumer Financial Protection Bureau rules and regulations, and potential changes in accounting principles relating to loan loss recognition; (10) strategic risk resulting from adverse business decisions or improper implementation of business decisions; (11) reputation risk that adversely affects earnings or capital arising from negative public opinion; (12) terrorist activities risk that results in loss of consumer confidence and economic disruptions; (13) cybersecurity risk related to our dependence on internal computer systems and the technology of outside service providers, as well as the potential impacts of third-party security breaches, subjects the company to potential business disruptions or financial losses resulting from deliberate attacks or unintentional events; (14) economic downturn risk potentially resulting in deterioration in the credit markets, greater than expected non-interest expenses, excessive loan losses and other negative consequences, which risks could be exacerbated by potential negative economic developments resulting from federal spending cuts and/or one or more federal budget-related impasses or actions; (15) greater than expected noninterest expenses; (16) excessive loan losses; (17) failure to realize synergies and other financial benefits from, and to limit liabilities associates with, mergers and acquisitions, including, without limitation, mergers with The Savannah Bancorp, Inc. (“Savannah”) and First Financial Holdings, Inc. ("FFCH"), within the expected time frame; (18) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with merger and acquisition integration, including, without limitation, with respect to Savannah and FFCH, and including, without limitation, potential difficulties in maintaining relationships with key personnel and other integration related-matters; (19) the risks of fluctuations in market prices for Company common stock that may or may not reflect economic condition or performance of the Company; (20) the payment of dividends on Company common stock is subject to regulatory supervision as well as the discretion of the board of directors of the Company, the Company's performance and other factors; and (21) other risks and uncertainties disclosed in the Company's most recent Annual Report on Form 10-K filed with the SEC or disclosed in documents filed or furnished by the Company with or to the SEC after the filing of such Annual report on Form 10-K, any of which could cause actual results to differ materially from future results expressed, implied or otherwise anticipated by such forward looking statements. The Company undertakes no obligation to update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise. First Financial Holdings, Inc. (Unaudited) (Dollars in thousands, except per share data) Three Months Ended Fourth Quarter Twelve Months Ended YTD December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 December 31 , 2013 - 2012 EARNINGS SUMMARY (non tax equivalent) 2013 2013 2013 2013 2012 % Change 2013 2012 % Change Interest income $ 88,748 $ 83,808 $ 57,530 $ 56,169 $ 50,263 76.6 % $ 286,255 $ 187,488 52.7 % Interest expense 4,359 4,029 2,246 2,368 2,351 85.4 % 13,002 11,094 17.2 % Net interest income 84,389 79,779 55,284 53,801 47,912 76.1 % 273,253 176,394 54.9 % Provision for loan losses (1) (12 ) 659 179 1,060 2,211 -100.5 % 1,886 13,619 -86.2 % Noninterest income 20,683 15,157 8,485 9,523 10,900 89.8 % 53,848 41,283 30.4 % Noninterest expense 83,896 75,419 44,885 46,441 48,139 74.3 % 250,641 158,898 57.7 % Income before provision for income taxes 21,188 18,858 18,705 15,823 8,462 150.4 % 74,574 45,160 65.1 % Provision for income taxes 7,204 6,804 6,173 5,174 2,552 182.3 % 25,355 15,128 67.6 % Net income 13,984 12,054 12,532 10,649 5,910 136.6 % 49,219 30,032 63.9 % Preferred stock dividends 812 542 -- -- -- 1,354 -- Net income available to common shareholders (GAAP) $ 13,172 $ 11,512 $ 12,532 $ 10,649 $ 5,910 122.9 % $ 47,865 $ 30,032 59.4 % Effective tax rate 34.00 % 36.08 % 33.00 % 32.70 % 30.16 % 34.00 % 33.50 % Basic weighted-average common shares 23,825,636 21,893,528 16,790,167 16,787,487 15,320,472 55.5 % 19,865,674 14,698,236 35.2 % Diluted weighted-average common shares 24,079,350 22,127,979 16,989,818 16,954,039 15,446,778 55.9 % 20,077,108 14,795,722 35.7 % Earnings per common share - Basic $ 0.55 $ 0.53 $ 0.75 $ 0.63 $ 0.39 41.0 % $ 2.41 $ 2.04 18.1 % Earnings per common share - Diluted 0.55 0.52 0.74 0.63 0.38 44.7 % 2.38 2.03 17.2 % Cash dividends declared per common share $ 0.19 $ 0.19 $ 0.18 $ 0.18 $ 0.18 5.6 % $ 0.74 $ 0.69 7.2 % Dividend payout ratio (2) 34.74 % 39.71 % 24.46 % 28.75 % 46.07 % -24.6 % 31.91 % 34.11 % -6.4 % Operating Earnings (non-GAAP) (3) Net income (GAAP) $ 13,984 $ 12,054 $ 12,532 $ 10,649 $ 5,910 136.6 % $ 49,219 $ 30,032 63.9 % Securities (gains) losses, net of tax -- -- -- -- (89 ) -- (130 ) Merger and conversion related expense, net of tax 6,147 7,326 576 1,321 5,274 16.6 % 15,679 7,018 Net operating earnings (loss) (non-GAAP) 20,131 19,380 13,108 11,970 11,095 81.4 % 64,898 36,920 75.8 % Preferred stock dividends 812 542 -- -- -- 1,354 -- Net operating earnings (loss) available to common shareholders (non-GAAP) $ 19,319 $ 18,838 $ 13,108 $ 11,970 $ 11,095 74.1 % $ 63,544 $ 36,920 72.1 % Operating earnings (loss) per common share - Basic $ 0.81 $ 0.86 $ 0.78 $ 0.71 $ 0.72 12.5 % $ 3.20 $ 2.50 28.0 % Operating earnings (loss) per common share - Diluted 0.80 0.85 0.77 0.71 0.72 11.1 % 3.16 2.49 26.9 % AVERAGE for Quarter Ended Fourth Quarter AVERAGE for Twelve Months YTD December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 December 31 , December 31 , 2013 - 2012 BALANCE SHEET HIGHLIGHTS 2013 2013 2013 2013 2012 % Change 2013 2012 % Change Loans held for sale $ 35,673 $ 53,204 $ 40,040 $ 51,216 $ 60,183 -40.7 % $ 45,015 $ 45,112 -0.2 % Acquired loans, net of allowance for acquired loan losses 2,883,309 2,427,583 927,520 997,010 581,619 395.7 % 1,813,425 481,476 276.6 % Non-acquired loans 2,793,522 2,698,580 2,629,897 2,576,545 2,529,725 10.4 % 2,677,450 2,484,996 7.7 % Total loans (1) 5,676,831 5,126,163 3,557,417 3,573,555 3,111,344 82.5 % 4,490,875 2,966,472 51.4 % FDIC receivable for loss share agreements 105,554 116,849 114,724 139,172 162,580 -35.1 % 118,977 205,460 -42.1 % Total investment securities 699,592 656,658 527,926 553,214 510,503 37.0 % 610,252 451,583 35.1 % Intangible assets 379,878 308,730 123,881 125,257 87,372 334.8 % 235,337 80,072 193.9 % Earning assets 6,880,973 6,254,128 4,496,341 4,489,187 3,967,363 73.4 % 5,538,555 3,703,277 49.6 % Total assets 7,977,605 7,214,418 5,069,993 5,117,003 4,517,054 76.6 % 6,354,974 4,276,257 48.6 % Noninterest-bearing deposits 1,510,734 1,359,137 1,023,668 969,400 884,593 70.8 % 1,215,052 798,849 52.1 % Interest-bearing deposits 5,098,095 4,626,023 3,150,909 3,236,610 2,853,420 78.7 % 4,037,194 2,758,712 46.3 % Total deposits 6,608,829 5,985,160 4,174,577 4,206,010 3,738,013 76.8 % 5,252,246 3,557,561 47.6 % Federal funds purchased and repurchase agreements 229,382 251,551 297,025 319,602 248,225 -7.6 % 274,080 229,249 19.6 % Other borrowings 101,948 93,849 54,461 54,713 47,443 114.9 % 76,421 46,509 64.3 % Shareholders' common equity (excludes preferred stock) 914,336 790,554 517,141 511,392 450,305 103.0 % 684,753 419,601 63.2 % Shareholders' equity 979,336 837,185 517,141 511,392 450,305 117.5 % 712,890 419,814 69.8 % First Financial Holdings, Inc. (Unaudited) (Dollars in thousands) ENDING Balance Fourth Quarter December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 BALANCE SHEET HIGHLIGHTS 2013 2013 2013 2013 2012 % Change Loans held for sale $ 30,586 $ 52,467 $ 47,980 $ 50,449 $ 65,279 -53.1 % Acquired loans (13) 2,825,749 2,994,222 904,704 979,583 1,059,828 166.6 % Non-acquired loans 2,865,216 2,741,242 2,665,595 2,604,298 2,571,003 11.4 % Total loans (1) 5,690,965 5,735,464 3,570,299 3,583,881 3,630,831 56.7 % FDIC receivable for loss share agreements 93,947 115,773 104,048 124,340 146,171 -35.7 % Total investment securities 812,603 652,610 531,579 533,255 560,591 45.0 % Intangible assets 377,737 381,375 123,352 124,668 125,801 200.3 % Allowance for acquired loan losses (13) (11,618 ) (12,260 ) (14,461 ) (15,605 ) (17,218 ) -32.5 % Allowance for non-acquired loan losses (1) (34,331 ) (36,145 ) (38,625 ) (41,669 ) (44,378 ) -22.6 % Premises and equipment 188,114 184,959 109,794 110,792 115,583 62.8 % Total assets 7,937,911 8,028,441 5,043,078 5,141,929 5,136,446 54.5 % Noninterest-bearing deposits 1,487,798 1,481,791 1,046,537 1,002,662 982,046 51.5 % Interest-bearing deposits 5,067,699 5,181,315 3,136,432 3,216,694 3,316,397 52.8 % Total deposits 6,555,497 6,663,106 4,182,969 4,219,356 4,298,443 52.5 % Federal funds purchased and repurchase agreements 211,401 233,792 262,447 328,701 238,621 -11.4 % Other borrowings 102,060 101,347 54,372 54,638 54,897 85.9 % Total liabilities 6,956,441 7,058,415 4,526,486 4,627,718 4,628,897 50.3 % Shareholders' common equity (excludes preferred stock) 916,470 905,026 516,592 514,211 507,549 80.6 % Shareholders' equity 981,470 970,026 516,592 514,211 507,549 93.4 % Common shares issued and outstanding 24,104,124 24,066,545 17,032,061 17,017,904 16,937,464 42.3 % ENDING Balance Fourth Quarter December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 NONPERFORMING ASSETS (ENDING BALANCE) (7) 2013 2013 2013 2013 2012 % Change Non-acquired Non-acquired nonaccrual loans $ 31,333 $ 38,631 $ 40,854 $ 42,945 $ 48,387 -35.2 % Restructured loans 10,690 10,837 11,689 13,636 13,151 -18.7 % Non-acquired other real estate owned ("OREO") 13,456 16,555 15,950 19,680 19,069 -29.4 % Accruing loans past due 90 days or more 258 122 198 121 500 -48.4 % Other nonperforming assets -- -- -- -- -- Total non-acquired nonperforming assets 55,737 66,145 68,691 76,382 81,107 -31.3 % ASC Topic 310-20 Acquired Loans Acquired nonaccrual loans -- -- -- -- -- Acquired accruing loans past due 90 days or more -- -- -- -- -- Total ASC Topic 310-20 acquired loans -- -- -- -- -- ASC Topic 310-30 Acquired Loans (7) Acquired nonaccrual loans -- -- -- -- -- Total ASC Topic 310-30 acquired loans -- -- -- -- -- Acquired OREO and other nonperforming assets OREO covered under FDIC loss share agreements 27,520 40,543 35,142 34,244 34,257 -19.7 % OREO not covered under FDIC loss share agreements 23,941 18,775 17,536 16,766 13,179 81.7 % Other nonperforming assets 943 718 -- 26 44 Total acquired OREO and other nonperforming assets 52,404 60,036 52,678 51,036 47,480 10.4 % Total acquired nonperforming assets 52,404 60,036 52,678 51,036 47,480 10.4 % Total nonperforming assets $ 108,141 $ 126,181 $ 121,369 $ 127,418 $ 128,587 -15.9 % Excluding Acquired Assets NPLs as a percentage of period end non-acquired loans 1.48 % 1.81 % 1.98 % 2.18 % 2.41 % Total nonperforming assets as a percentage of total non-acquired loans and repossessed assets (1) (4) 1.94 % 2.40 % 2.56 % 2.91 % 3.13 % Total nonperforming assets as a percentage of total assets (5) 0.70 % 0.82 % 1.36 % 1.49 % 1.58 % Including Acquired Assets NPLs as a percentage of period end loans 0.74 % 0.86 % 1.47 % 1.58 % 1.70 % Total nonperforming assets as a percentage of total loans and repossessed assets (1) (4) 1.88 % 2.16 % 3.32 % 3.47 % 3.46 % Total nonperforming assets as a percentage of total assets 1.36 % 1.57 % 2.41 % 2.48 % 2.50 % First Financial Holdings, Inc. (Unaudited) (Dollars in thousands) ENDING Balance Fourth Quarter December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 OTHER ASSET QUALITY INFORMATION 2013 2013 2013 2013 2012 % Change Classified Assets (Ending Balance) (11) Classified non-acquired loans $ 82,593 $ 94,820 $ 107,671 $ 121,222 $ 124,133 -33.5 % OREO and other nonperforming assets 13,456 16,555 15,950 19,680 19,069 -29.4 % Total classified assets $ 96,049 $ 111,375 $ 123,621 $ 140,902 $ 143,202 -32.9 % Tier 1 capital and non-acquired allowance for loan losses $ 737,735 $ 725,471 $ 494,562 $ 484,744 $ 477,686 54.4 % Classified assets as a percentage of Tier 1 capital and non-acquired allowance for loan losses 13.02 % 15.35 % 25.00 % 29.07 % 29.98 % Non-acquired Loans 30-89 Day Past Due $ 7,238 $ 8,543 $ 10,957 $ 7,199 $ 7,189 0.7 % Quarter Ended Fourth Quarter Twelve Months Ended YTD December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 December 31 , December 31 , 2013 - 2012 ALLOWANCE FOR LOAN LOSSES (1) 2013 2013 2013 2013 2012 % Change 2013 2012 % Change Non-acquired Loans: Balance at beginning of period $ 36,145 $ 38,625 $ 41,669 $ 44,378 $ 46,439 -22.2 % $ 44,378 $ 49,367 -10.1 % Loans charged off (2,778 ) (3,815 ) (2,827 ) (4,148 ) (4,291 ) -35.3 % (13,568 ) (20,255 ) -33.0 % Overdrafts charged off (389 ) (479 ) (393 ) (459 ) (446 ) -12.8 % (1,720 ) (1,675 ) 2.7 % Loan recoveries 1,215 1,095 436 826 550 120.9 % 3,572 3,155 13.2 % Overdraft recoveries 138 154 140 219 131 5.3 % 651 601 8.3 % Net charge-offs (1,814 ) (3,045 ) (2,644 ) (3,562 ) (4,056 ) -55.3 % (11,065 ) (18,174 ) -39.1 % Provision for loan losses on non-acquired loans -- 565 (400 ) 853 1,995 -100.0 % 1,018 13,185 -92.3 % Balance at end of period, non-acquired loans $ 34,331 $ 36,145 $ 38,625 $ 41,669 $ 44,378 -22.6 % $ 34,331 $ 44,378 -22.6 % Allowance for non-acquired loan losses as a percentage of non-acquired loans (1) 1.20 % 1.32 % 1.45 % 1.60 % 1.73 % 1.20 % 1.73 % Allowance for non-acquired loan losses as a percentage of non-acquired nonperforming loans 81.20 % 72.89 % 73.23 % 73.49 % 71.53 % 81.20 % 71.53 % Net charge-offs on non-acquired loans as a percentage of average non-acquired loans (annualized) (1) 0.26 % 0.45 % 0.40 % 0.56 % 0.64 % 0.41 % 0.73 % DAY 2 VALUATION ALLOWANCE ON ACQUIRED LOANS (13) Balance at beginning of period $ 12,260 $ 14,461 $ 15,605 $ 17,218 $ 17,421 $ 17,218 $ 23,607 Provision for loan losses on acquired loans: Provision for loan losses before benefit attributable to FDIC loss share agreements 73 (456 ) 320 (855 ) 994 (918 ) 512 Benefit attributable to FDIC loss share agreements (85 ) 550 259 1,062 (778 ) 1,786 (78 ) Net provision for loan losses on acquired loans (12 ) 94 579 207 216 868 434 Provision for loan losses recorded through the FDIC loss share receivable 85 (550 ) (259 ) (1,062 ) 778 (1,786 ) 78 Reduction due to loan removals (12) (715 ) (1,745 ) (1,464 ) (758 ) (1,197 ) (4,682 ) (6,901 ) Balance at end of period, ASC Topic 310-30 acquired loans $ 11,618 $ 12,260 $ 14,461 $ 15,605 $ 17,218 $ 11,618 $ 17,218 First Financial Holdings, Inc. (Unaudited) (Dollars in thousands, except per share data) ENDING Balance Fourth Quarter December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 LOAN PORTFOLIO (ENDING balance) (1) 2013 2013 2013 2013 2012 % Change Acquired loans: Acquired covered loans: Commercial non-owner occupied real estate: Construction and land development $ 43,396 $ 50,582 $ 31,647 $ 36,941 $ 40,358 7.5 % Commercial non-owner occupied 53,525 62,985 42,945 47,594 53,514 0.0 % Total commercial non-owner occupied real estate 96,921 113,567 74,592 84,535 93,872 3.2 % Consumer real estate: Consumer owner occupied 38,946 41,379 39,005 41,879 45,943 -15.2 % Home equity loans 35,884 37,943 20,857 21,370 22,066 62.6 % Total consumer real estate 74,830 79,322 59,862 63,249 68,009 10.0 % Commercial owner occupied real estate 88,722 93,309 41,401 43,395 50,189 76.8 % Commercial and industrial 14,475 16,596 9,454 10,742 12,421 16.5 % Other income producing property 31,739 37,543 34,941 37,366 40,674 -22.0 % Consumer non real estate 1,878 2,322 1,696 2,107 2,649 -29.1 % Total acquired covered loans 308,565 342,659 221,946 241,394 267,814 15.2 % Acquired non-covered loans: Commercial non-owner occupied real estate: Construction and land development 129,289 134,342 72,453 82,885 97,316 32.9 % Commercial non-owner occupied 226,530 245,046 158,100 169,504 177,278 27.8 % Total commercial non-owner occupied real estate 355,819 379,388 230,553 252,389 274,594 29.6 % Consumer real estate: Consumer owner occupied 974,392 1,013,022 90,258 98,117 102,683 848.9 % Home equity loans 335,241 349,517 70,903 75,039 77,896 330.4 % Total consumer real estate 1,309,633 1,362,539 161,161 173,156 180,579 625.2 % Commercial owner occupied real estate 211,030 230,849 124,312 132,851 139,007 51.8 % Commercial and industrial 98,046 111,135 61,237 64,913 73,446 33.5 % Other income producing property 171,544 183,996 97,747 106,019 113,460 51.2 % Consumer non real estate 371,112 383,656 7,748 8,861 10,928 3296.0 % Total acquired non-covered loans 2,517,184 2,651,563 682,758 738,189 792,014 217.8 % Total acquired loans 2,825,749 2,994,222 904,704 979,583 1,059,828 166.6 % Non-acquired loans: Commercial non-owner occupied real estate: Construction and land development 299,951 288,199 285,370 273,488 273,420 9.7 % Commercial non-owner occupied 291,170 282,678 298,769 298,707 290,071 0.4 % Total commercial non-owner occupied real estate 591,121 570,877 584,139 572,195 563,491 4.9 % Consumer real estate: Consumer owner occupied 548,170 498,734 460,434 443,134 434,503 26.2 % Home equity loans 257,139 255,291 250,988 249,356 255,284 0.7 % Total consumer real estate 805,309 754,025 711,422 692,490 689,787 16.7 % Commercial owner occupied real estate 833,513 814,259 802,125 796,139 784,152 6.3 % Commercial and industrial 321,824 301,845 294,580 291,308 279,763 15.0 % Other income producing property 143,204 140,024 136,957 131,776 133,713 7.1 % Consumer non real estate 136,410 116,312 104,239 93,997 86,934 56.9 % Other 33,835 43,900 32,133 26,393 33,163 2.0 % Total non-acquired loans 2,865,216 2,741,242 2,665,595 2,604,298 2,571,003 11.4 % Total loans (net of unearned income) (1) $ 5,690,965 $ 5,735,464 $ 3,570,299 $ 3,583,881 $ 3,630,831 56.7 % Loans held for sale $ 30,586 $ 52,467 $ 47,980 $ 50,449 $ 65,279 -53.1 % First Financial Holdings, Inc. (Unaudited) (Dollars in thousands, except per share data) Quarter Ended Twelve Months Ended December 31 , September 30 , June 30 , March 31 , December 31 , December 31 , December 31 , SELECTED RATIOS 2013 2013 2013 2013 2012 2013 2012 Return on average assets (annualized) 0.70 % 0.66 % 0.99 % 0.84 % 0.52 % 0.77 % 0.70 % Operating return on average assets (annualized) (non-GAAP) (3) 1.00 % 1.07 % 1.04 % 0.95 % 0.98 % 1.02 % 0.86 % Return on average common equity (annualized) 5.72 % 5.78 % 9.72 % 8.45 % 5.22 % 6.99 % 7.16 % Return on average equity (annualized) 5.67 % 5.71 % 9.72 % 8.45 % 5.22 % 6.90 % 7.15 % Operating return on average common equity (annualized) (non-GAAP) (3) 8.38 % 9.45 % 10.17 % 9.49 % 9.80 % 9.28 % 8.80 % Operating return on average equity (annualized) (non-GAAP) (3) 8.16 % 9.18 % 10.17 % 9.49 % 9.80 % 9.10 % 8.79 % Return on average common tangible equity (annualized) (non-GAAP) (10) 10.90 % 10.39 % 13.48 % 11.92 % 6.91 % 11.54 % 9.27 % Operating return on average tangible common equity (annualized) (non-GAAP) (10) 15.46 % 16.43 % 14.07 % 13.30 % 12.59 % 15.03 % 11.30 % Return on average tangible equity (annualized) (non-GAAP) (10) 10.25 % 9.88 % 13.48 % 11.92 % 6.91 % 11.15 % 9.26 % Net interest margin (tax equivalent) 4.91 % 5.11 % 5.01 % 4.94 % 4.88 % 4.99 % 4.83 % Efficiency ratio (tax equivalent) 79.22 % 78.74 % 69.49 % 72.37 % 80.95 % 75.85 % 72.20 % Operating efficiency ratio excluding OREO expense 66.30 % 64.27 % 63.79 % 64.47 % 62.84 % 64.79 % 62.10 % Book value per common share $ 40.72 $ 40.31 $ 30.33 $ 30.22 $ 29.97 Tangible common equity per common share (non-GAAP) (10) $ 22.35 $ 21.76 $ 23.09 $ 22.89 $ 22.54 Common shares issued and outstanding 24,104,124 24,066,545 17,032,061 17,017,904 16,937,464 Common equity-to-assets 11.55 % 11.27 % 10.24 % 10.00 % 9.88 % Equity-to-assets 12.36 % 12.08 % 10.24 % 10.00 % 9.88 % Tangible common equity-to-tangible assets (non-GAAP) (10) 7.13 % 6.85 % 7.99 % 7.76 % 7.62 % Tangible equity-to-tangible assets (non-GAAP) (10) 7.99 % 7.70 % 7.99 % 7.76 % 7.62 % Tier 1 leverage (9) 9.1 % 10.0 % 9.2 % 8.8 % 9.8 % Tier 1 risk-based capital (9) 13.4 % 13.1 % 13.6 % 13.2 % 12.7 % Total risk-based capital (9) 14.3 % 14.4 % 14.8 % 14.4 % 13.9 % First Financial Holdings, Inc. (Unaudited) (Dollars in thousands, except per share data) Quarter Ended Twelve Months Ended December 31 , September 30 , June 30 , March 31 , December 31 , December 31 , December 31 , RECONCILIATION OF NON-GAAP TO GAAP 2013 2013 2013 2013 2012 2013 2012 Pre-tax, Pre-provision Operating Earnings (6) Net income (GAAP) $ 13,984 $ 12,054 $ 12,532 $ 10,649 $ 5,910 136.6 % $ 49,219 $ 30,032 63.9 % Provision for loan losses (1) (12 ) 659 179 1,060 2,211 -100.5 % 1,886 13,619 -86.2 % Provision for income taxes 7,204 6,804 6,173 5,174 2,552 182.3 % 25,355 15,128 67.6 % Pre-tax, pre-provision income 21,176 19,517 18,884 16,883 10,673 98.4 % 76,460 58,779 30.1 % Securities gains -- -- -- -- (128 ) -- (189 ) Merger and conversion related expense 9,314 10,397 860 1,963 7,552 22,784 10,214 Pre-tax, pre-provision operating earnings (non-GAAP) $ 30,490 $ 29,914 $ 19,744 $ 18,846 $ 18,097 68.5 % $ 99,244 $ 68,804 44.2 % Operating Return of Average Assets (3) Operating return on average assets (non-GAAP) 1.00 % 1.07 % 1.04 % 0.95 % 0.98 % 1.02 % 0.86 % Effect to adjust for securities gains (losses) 0.00 % 0.00 % 0.00 % 0.00 % 0.01 % 0.00 % 0.00 % Effect to adjust for merger and conversion related expenses -0.30 % -0.41 % -0.05 % -0.11 % -0.47 % -0.25 % -0.16 % Return on average assets (GAAP) 0.70 % 0.66 % 0.99 % 0.84 % 0.52 % 0.77 % 0.70 % Operating Return of Average Common Equity (3) Operating return on average equity (non-GAAP) 8.38 % 9.45 % 10.17 % 9.49 % 9.80 % 9.28 % 8.80 % Effect to adjust for securities gains (losses) 0.00 % 0.00 % 0.00 % 0.00 % 0.08 % 0.00 % 0.03 % Effect to adjust for merger and conversion related expenses -2.66 % -3.67 % -0.45 % -1.04 % -4.66 % -2.29 % -1.67 % Return on average common equity (GAAP) 5.72 % 5.78 % 9.72 % 8.45 % 5.22 % 6.99 % 7.16 % Operating Return of Average Equity (3) Operating return on average equity (non-GAAP) 8.16 % 9.18 % 10.17 % 9.49 % 9.80 % 9.10 % 8.79 % Effect to adjust for securities gains (losses) 0.00 % 0.00 % 0.00 % 0.00 % 0.08 % 0.00 % 0.03 % Effect to adjust for merger and conversion related expenses -2.49 % -3.47 % -0.45 % -1.04 % -4.66 % -2.20 % -1.67 % Return on average equity (GAAP) 5.67 % 5.71 % 9.72 % 8.45 % 5.22 % 6.90 % 7.15 % Return on Average Common Tangible Equity Return on average common tangible equity (non-GAAP) 10.90 % 10.39 % 13.48 % 11.92 % 6.91 % 11.54 % 9.27 % Effect to adjust for tangible assets -5.18 % -4.61 % -3.76 % -3.47 % -1.69 % -4.55 % -2.11 % Return on average common equity (GAAP) 5.72 % 5.78 % 9.72 % 8.45 % 5.22 % 6.99 % 7.16 % Operating Return on Average Common Tangible Equity Operating return on average common tangible equity (non-GAAP) 15.46 % 16.43 % 14.07 % 13.30 % 12.59 % 15.03 % 11.30 % Effect to adjust for securities gains (losses) 0.00 % 0.00 % 0.00 % 0.00 % 0.08 % 0.00 % 0.03 % Effect to adjust for merger and conversion related expenses -2.67 % -3.68 % -0.45 % -1.05 % -4.66 % -2.29 % -1.67 % Effect to adjust for tangible assets -7.07 % -6.97 % -3.90 % -3.80 % -2.79 % -5.75 % -2.50 % Return on average common equity (GAAP) 5.72 % 5.78 % 9.72 % 8.45 % 5.22 % 6.99 % 7.16 % Return on Average Tangible Equity (10) Return on average tangible equity (non-GAAP) 10.25 % 9.88 % 13.48 % 11.92 % 6.91 % 11.15 % 9.26 % Effect to adjust for intangible assets -4.58 % -4.17 % -3.76 % -3.47 % -1.69 % -4.25 % -2.11 % Return on average equity (GAAP) 5.67 % 5.71 % 9.72 % 8.45 % 5.22 % 6.90 % 7.15 % Operating efficiency ratio excluding OREO expense Operating efficiency ratio excluding OREO expense 66.30 % 64.27 % 63.79 % 64.47 % 62.84 % 64.79 % 62.10 % Effect to adjust for OREO and loan related expense 4.14 % 3.68 % 4.37 % 4.84 % 5.41 % 4.16 % 5.46 % Effect to adjust for merger and conversion expenses 8.75 % 11.05 % 1.33 % 3.06 % 12.70 % 6.81 % 4.64 % Efficiency ratio (Tax Equivalent) 79.22 % 78.74 % 69.49 % 72.37 % 80.95 % 75.85 % 72.20 % Tangible Book Value Per Common Share (10) Tangible book value per common share (non-GAAP) $ 22.35 $ 21.76 $ 23.09 $ 22.89 $ 22.54 Effect to adjust for intangible assets 18.37 18.55 7.24 7.33 7.43 Book value per common share (GAAP) $ 40.72 $ 40.31 $ 30.33 $ 30.22 $ 29.97 Tangible Common Equity-to-Tangible Assets Tangible common equity-to-tangible assets (non-GAAP) 7.13 % 6.85 % 7.99 % 7.76 % 7.62 % Effect to adjust for tangible assets 4.42 % 4.42 % 2.25 % 2.24 % 2.26 % Common equity-to-assets (GAAP) 11.55 % 11.27 % 10.24 % 10.00 % 9.88 % Tangible Equity-to-Tangible Assets (10) Tangible equity-to-tangible assets (non-GAAP) 7.99 % 7.70 % 7.99 % 7.76 % 7.62 % Effect to adjust for intangible assets 4.37 % 4.38 % 2.25 % 2.24 % 2.26 % Equity-to-assets (GAAP) 12.36 % 12.08 % 10.24 % 10.00 % 9.88 % First Financial Holdings, Inc. (Unaudited) (Dollars in thousands) Three Months Ended December 31, 2013 December 31, 2012 Average Interest Average Average Interest Average YIELD ANALYSIS Balance Earned/Paid Yield/Rate Balance Earned/Paid Yield/Rate Interest-Earning Assets: Federal funds sold, reverse repo, and time deposits $ 469,382 $ 541 0.46 % 285,331 $ 384 0.54 % Investment securities (taxable) 548,725 3,392 2.45 % 353,788 1,947 2.19 % Investment securities (tax-exempt) 150,867 1,191 3.13 % 156,715 1,201 3.05 % Loans held for sale 35,673 357 3.97 % 60,183 492 3.25 % Acquired loans, net of allowance for acquired loan losses 2,883,309 52,296 7.20 % 581,619 16,677 11.41 % Non-acquired loans (1) 2,793,522 30,971 4.40 % 2,529,725 29,562 4.65 % Total interest-earning assets 6,881,478 88,748 5.12 % 3,967,361 50,263 5.04 % Noninterest-Earning Assets: Cash and due from banks 160,995 92,044 Other assets 971,542 504,429 Allowance for non-acquired loan losses (36,410 ) (46,780 ) Total noninterest-earning assets 1,096,127 549,693 Total Assets $ 7,977,605 $ 4,517,054 Interest-Bearing Liabilities: Transaction and money market accounts $ 2,860,330 $ 889 0.12 % $ 1,626,511 $ 557 0.14 % Savings deposits 647,971 121 0.07 % 317,810 90 0.11 % Certificates and other time deposits 1,589,784 1,736 0.43 % 909,170 1,042 0.46 % Federal funds purchased and repurchase agreements 229,382 82 0.14 % 248,225 109 0.17 % Other borrowings 101,948 1,531 5.96 % 47,443 554 4.65 % Total interest-bearing liabilities 5,429,415 4,359 0.32 % 3,149,159 2,352 0.30 % Noninterest-Bearing Liabilities: Demand deposits 1,510,734 884,522 Other liabilities 58,120 33,068 Total noninterest-bearing liabilities ("Non- IBL ") 1,568,854 917,590 Shareholders' equity 979,336 450,305 Total Non- IBL and shareholders' equity 2,548,190 1,367,895 Total liabilities and shareholders' equity $ 7,977,605 $ 4,517,054 Net interest income and margin (NON-TAX EQUIV.) $ 84,389 4.87 % $ 47,911 4.80 % Net interest margin (TAX EQUIVALENT) 4.91 % 4.88 % First Financial Holdings, Inc. (Unaudited) (Dollars in thousands) Twelve Months Ended December 31, 2013 December 31, 2012 Average Interest Average Average Interest Average YIELD ANALYSIS Balance Earned/Paid Yield/Rate Balance Earned/Paid Yield/Rate Interest-Earning Assets: Federal funds sold, reverse repo, and time deposits $ 392,915 $ 1,906 0.49 % $ 240,113 $ 1,157 0.48 % Investment securities (taxable) 458,344 11,073 2.42 % 325,169 7,577 2.33 % Investment securities (tax-exempt) 151,908 4,773 3.14 % 126,414 3,947 3.12 % Loans held for sale 45,015 1,620 3.60 % 45,112 1,581 3.50 % Acquired loans, net of allowance for acquired loan losses 1,813,425 148,374 8.18 % 481,476 53,661 11.15 % Non-acquired loans (1) 2,677,450 118,509 4.43 % 2,484,996 119,565 4.81 % Total interest-earning assets 5,539,057 286,255 5.17 % 3,703,280 187,488 5.06 % Noninterest-Earning Assets: Cash and due from banks 125,653 89,716 Other assets 730,456 531,023 Allowance for non-acquired loan losses (40,192 ) (47,762 ) Total noninterest-earning assets 815,917 572,977 Total Assets $ 6,354,974 $ 4,276,257 Interest-Bearing Liabilities: Transaction and money market accounts $ 2,280,055 $ 2,897 0.13 % $ 1,538,800 $ 3,116 0.20 % Savings deposits 479,367 398 0.08 % 297,498 479 0.16 % Certificates and other time deposits 1,277,772 5,172 0.40 % 922,450 4,828 0.52 % Federal funds purchased and repurchase agreements 274,080 426 0.16 % 229,249 451 0.20 % Other borrowings 76,421 4,109 5.38 % 46,509 2,219 4.77 % Total interest-bearing liabilities 4,387,695 13,002 0.30 % 3,034,506 11,093 0.37 % Noninterest-Bearing Liabilities: Demand deposits 1,215,052 798,814 Other liabilities 39,337 23,123 Total noninterest-bearing liabilities ("Non- IBL ") 1,254,389 821,937 Shareholders' equity 712,890 419,814 Total Non- IBL and shareholders' equity 1,967,279 1,241,751 Total liabilities and shareholders' equity $ 6,354,974 $ 4,276,257 Net interest income and margin (NON-TAX EQUIV.) $ 273,253 4.93 % $ 176,395 4.76 % Net interest margin (TAX EQUIVALENT) 4.99 % 4.83 % First Financial Holdings, Inc. (Unaudited) (Dollars in thousands) Three Months Ended Fourth Quarter Twelve Months Ended YTD December 31 , September 30 , June 30 , March 31 , December 31 , 2013 - 2012 December 31 , 2013 - 2012 NONINTEREST INCOME & EXPENSE 2013 2013 2013 2013 2012 % Change 2013 2012 % Change Noninterest income: Service charges on deposit accounts $ 10,098 $ 8,966 $ 5,736 $ 5,761 $ 6,313 60.0 % 30,561 23,815 28.3 % Bankcard services income 7,252 6,493 4,245 3,893 3,665 97.9 % 21,883 14,173 54.4 % Mortgage banking income 2,489 1,342 1,922 3,355 4,179 -40.4 % 9,108 12,545 -27.4 % Trust and investment services income 4,316 3,593 2,438 2,314 1,744 147.5 % 12,661 6,360 99.1 % Securities gains, net (8) -- -- -- -- 128 -- 189 -100.0 % Amortization of FDIC indemnification asset (7,429 ) (7,625 ) (7,310 ) (7,171 ) (6,547 ) -13.5 % (29,535 ) (20,773 ) 42.2 % Other 3,957 2,388 1,454 1,371 1,418 179.1 % 9,170 4,974 84.4 % Total noninterest income $ 20,683 $ 15,157 $ 8,485 $ 9,523 $ 10,900 89.8 % $ 53,848 $ 41,283 30.4 % Noninterest expense: Salaries and employee benefits $ 40,634 $ 34,464 $ 23,746 $ 23,252 $ 21,351 90.3 % $ 122,096 $ 76,308 60.0 % Information services expense 4,323 3,827 2,992 3,192 3,060 41.3 % 14,334 11,091 29.2 % OREO expense and loan related 4,375 3,461 2,820 3,102 3,221 35.8 % 13,758 12,003 14.6 % Net occupancy expense 5,855 5,046 3,272 3,345 2,949 98.5 % 17,268 11,608 48.8 % Furniture and equipment expense 3,824 3,523 2,266 2,517 2,340 63.4 % 12,130 9,114 33.1 % Merger and conversion related expense 9,314 10,397 860 1,963 7,552 23.3 % 22,784 10,214 123.1 % Business development and staff related 1,702 1,186 1,276 1,228 1,017 67.4 % 5,392 3,336 61.6 % FDIC assessment and other regulatory charges 1,193 1,521 1,096 1,224 887 34.5 % 5,034 3,875 29.9 % Bankcard expense 2,283 1,752 1,236 1,164 985 131.8 % 6,435 4,062 58.4 % Amortization of intangibles 2,287 1,738 1,022 1,034 566 304.1 % 6,081 2,172 180.0 % Professional fees 1,509 1,377 760 691 673 124.2 % 4,337 2,681 61.8 % Advertising and marketing 1,301 1,150 648 842 689 88.8 % 3,941 2,735 44.1 % Other 5,296 5,977 2,891 2,887 2,849 85.9 % 17,051 9,699 75.8 % Total noninterest expense $ 83,896 $ 75,419 $ 44,885 $ 46,441 $ 48,139 74.3 % $ 250,641 $ 158,898 57.7 % Notes: (1) Loan data excludes mortgage loans held for sale. (2) The dividend payout ratio is calculated by dividing total dividends paid during the period by the total net income for the same period. (3) Operating earnings, operating return on average assets, and operating return on average equity are non-GAAP measures and exclude the after-tax effect of gains on acquisitions, gains or losses on sales of securities, OTTI, and merger and conversion related expense. Management believes that non-GAAP operating measures provide additional useful information that allows readers to evaluate the ongoing performance of the company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP. Operating earnings and the related operating return measures (non-GAAP) exclude the following from net income (GAAP) on an after-tax basis: (a) pre-tax merger and conversion related expense of $9,314,000 , $10,397,000 , $860,000 , $1,963,000 , and $7,552,000 , for the quarters ended December 31, 2013 , September 30, 2013 , June 30, 2013 , March 31, 2013 , and December 31, 2012 , respectively; and (b) pre-tax securities gains of $128,000 for the quarter ended December 31, 2012 . (4) Repossessed assets includes OREO and other nonperforming assets. (5) Calculated by dividing total non-acquired NPAs by total assets. (6) Pre-tax, pre-provision operating earnings is a non-GAAP measure and excludes the effect of the provision for loan losses, the provision for income taxes, the gains on acquisitions, gains or losses on sales of securities, OTTI, and merger and conversion related expense. Management believes that non-GAAP pre-tax, pre-provision operating earnings provides additional useful information that allows readers to evaluate the ongoing performance of the company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP. (7) ASC Topic 310-30 acquired loans are not included in non-performing assets because the accretion method is being used for these acquired loan pools. (8) If an other-than-temporary impairment charge was recorded during the quarter, the amount would be reflected in the "securities gains (losses), net" line item. (9) December 31, 2013 ratios are estimated and may be subject to change pending the final filing of the FR Y-9C; all other periods are presented as filed. All ratios are rounded down to one decimal point. (10) The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets. The tangible returns on equity and common equity measures also add back the after-tax amortization of intangibles to GAAP basis net income. Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP. The sections titled "Reconciliation of Non-GAAP to GAAP" provide tables that reconcile non-GAAP measures to GAAP. (11) Classified asset data excludes acquired assets. (12) The allowance for acquired loan losses is reduced for any loan removals, which occur when a loan has been fully paid off, fully charged off, sold or transferred to OREO. (13) During the fourth quarter of 2013, this table reflects a reclass that was included for all periods presented between the acquired allowance for loan losses and acquired loans. There was no impact to the balance sheet, only to the gross carrying value of acquired loans and the acquired allowance for loan losses. FIRST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except par value) December 31 , December 31 , 2013 2012 (Unaudited) ASSETS Cash and cash equivalents: Cash and due from banks $ 184,611 $ 186,196 Interest-bearing deposits with banks 32,632 15,664 Federal funds sold and securities purchased under agreements to resell 262,218 179,004 Total cash and cash equivalents 479,461 380,864 Investment securities: Securities held to maturity (fair value of $12,891 , and $16,553 , respectively) 12,426 15,440 Securities available for sale, at fair value 786,791 535,383 Other investments 13,386 9,768 Total investment securities 812,603 560,591 Loans held for sale 30,586 65,279 Loans: Acquired (covered of $297,627 , and $250,596 , respectively; non-covered of $2,516,504 , and $792,014 , respectively), net of allowance for loan losses 2,814,131 1,042,610 Non-acquired 2,865,216 2,571,003 Less allowance for non-acquired loan losses (34,331 ) (44,378 ) Loans, net 5,645,016 3,569,235 Goodwill 317,828 100,602 Premises and equipment, net 188,114 115,583 Bank owned life insurance 97,197 42,737 FDIC receivable for loss share agreements 93,947 146,171 Other real estate owned (covered of $27,520 , and $34,257 , respectively; non-covered of $37,398 , and $32,248 , respectively) 64,918 66,505 Core deposit and other intangibles 59,908 25,199 Mortgage servicing rights 19,965 -- Other assets 128,368 63,680 Total assets $ 7,937,911 $ 5,136,446 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing $ 1,487,798 $ 982,046 Interest-bearing 5,067,699 3,316,397 Total deposits 6,555,497 4,298,443 Federal funds purchased and securities sold under agreements to repurchase 211,401 238,621 Other borrowings 102,060 54,897 Other liabilities 87,483 36,936 Total liabilities 6,956,441 4,628,897 Shareholders' equity: Preferred stock - $.01 par value; authorized 10,000,000 shares; 65,000, and 0 shares issued and outstanding, respectively 1 -- Common stock - $2.50 par value; authorized 40,000,000 shares; 24,104,124, and 16,937,464 shares issued and outstanding, respectively 60,260 42,344 Surplus 762,355 328,843 Retained earnings 168,577 135,986 Accumulated other comprehensive (loss) (9,723 ) 376 Total shareholders' equity 981,470 507,549 Total liabilities and shareholders' equity $ 7,937,911 $ 5,136,446 FIRST FINANCIAL HOLDINGS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share data) Three Months Ended Twelve Months Ended December 31 , December 31 , 2013 2012 2013 2012 Interest income: Loans, including fees $ 83,624 $ 46,731 $ 268,503 $ 174,807 Investment securities: Taxable 3,392 1,947 11,073 7,577 Tax-exempt 1,191 1,201 4,773 3,947 Federal funds sold and securities purchased under agreements to resell 541 384 1,906 1,157 Total interest income 88,748 50,263 286,255 187,488 Interest expense: Deposits 2,746 1,689 8,467 8,424 Federal funds purchased and securities sold under agreements to repurchase 82 109 426 451 Other borrowings 1,531 553 4,109 2,219 Total interest expense 4,359 2,351 13,002 11,094 Net interest income 84,389 47,912 273,253 176,394 Provision for loan losses (12 ) 2,211 1,886 13,619 Net interest income after provision for loan losses 84,401 45,701 271,367 162,775 Noninterest income: Service charges on deposit accounts 10,098 6,313 30,561 23,815 Bankcard services income 7,252 3,665 21,883 14,173 Mortgage banking income 2,489 4,179 9,108 12,545 Trust and investment services income 4,316 1,744 12,661 6,360 Securities gains (losses), net -- 128 -- 189 Amortization of FDIC indemnification asset (7,429 ) (6,547 ) (29,535 ) (20,773 ) Other 3,957 1,418 9,170 4,974 Total noninterest income 20,683 10,900 53,848 41,283 Noninterest expense: Salaries and employee benefits 40,634 21,351 122,096 76,308 Information services expense 4,323 3,060 14,334 11,092 OREO expense and loan related 4,375 3,221 13,758 12,003 Net occupancy expense 5,855 2,949 17,268 11,608 Furniture and equipment expense 3,824 2,340 12,130 9,115 Merger and conversion related expense 9,314 7,552 22,784 10,214 FDIC assessment and other regulatory charges 1,193 887 5,034 3,875 Bankcard expense 2,283 985 6,435 4,062 Amortization of intangibles 2,287 566 6,081 2,172 Professional fees 1,509 673 4,337 2,681 Advertising and marketing 1,301 689 3,941 2,735 Other 6,998 3,866 22,443 13,033 Total noninterest expense 83,896 48,139 250,641 158,898 Earnings: Income before provision for income taxes 21,188 8,462 74,574 45,160 Provision for income taxes 7,204 2,552 25,355 15,128 Net income 13,984 5,910 49,219 30,032 Preferred stock dividends 812 -- 1,354 -- Accretion on preferred stock discount -- -- -- -- Net income available to common shareholders $ 13,172 $ 5,910 $ 47,865 $ 30,032 Earnings per common share: Basic $ 0.55 $ 0.39 $ 2.41 $ 2.04 Diluted $ 0.55 $ 0.38 2.38 2.03 Dividends per common share $ 0.19 $ 0.18 $ 0.74 $ 0.69 Weighted-average common shares outstanding: Basic 23,826 15,320 19,866 14,698 Diluted 24,079 15,447 20,077 14,796 Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140128005570/en/ First Financial Holdings, Inc. Media Contact: Donna Pullen , 803-765-4558 or Analyst Contact: John C. Pollok , 803-765-4628 Source: First Financial Holdings, Inc.


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