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SCBT Reports Third Quarter 2012 Financial Results; Increases Quarterly Cash Dividend

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COLUMBIA, S.C.--(BUSINESS WIRE)--

SCBT Financial Corporation (NASDAQ: SCBT), the holding company for SCBT, today released its unaudited results of operations and other financial information for the three-month and nine-month periods ended September 30, 2012. Highlights of the third quarter 2012 include the following:

  • Net income of $9.1 million, or $0.60 diluted EPS in 3Q 2012 compared to $8.0 million, or $0.55 diluted EPS in 2Q 2012 and $10.3 million, or $0.74 diluted EPS in 3Q 2011 (which included an acquisition gain);
  • Operating earnings, which exclude merger and conversion expense, of $9.4 million, or $0.63 diluted EPS in 3Q 2012 compared to $9.4 million, or $0.63 diluted EPS in 2Q 2012 and $4.6 million, or $0.33 diluted EPS in 3Q 2011;
  • Return on average assets was 0.83% annualized in 3Q 2012 compared to 0.75% in 2Q 2012 and 1.04% in 3Q 2011; Operating return on average assets was 0.87% in 3Q 2012 compared to 0.88% in 2Q 2012 and 0.47% in 3Q 2011;
  • Return on average equity was 8.4% annualized in 3Q 2012 compared to 7.8% in 2Q 2012 and 10.8% in 3Q 2011; Operating return on average equity was 8.7% annualized in 3Q 2012 compared to 9.1% in 2Q 2012 and 4.8% in 3Q 2011;
  • Net charge-offs of non-acquired loans increased to 0.85% annualized in 3Q 2012, compared to 0.77% annualized in 2Q 2012 and decreased from 1.16% annualized in 3Q 2011;
  • Non-performing Assets (NPAs): 1.89% of total assets for 3Q 2012 compared to 1.90% for 2Q 2012 and 2.44% for 3Q 2011; 3.22% of loans and repossessed assets, excluding acquired assets, for 3Q 2012 compared to 3.32% for 2Q 2012 and 3.87% for 3Q 2011; and
  • Legacy loan growth was $36.1 million or 5.8% annualized during 3Q 2012.

Quarterly Cash Dividend

The Board of Directors of SCBT has declared a quarterly cash dividend of $0.18 per share payable on its common stock. This per share amount is a $0.01, or 5.9%, increase to the dividend paid in the immediately preceding quarter and will be payable on November 23, 2012 to shareholders of record as of November 16, 2012.

Third Quarter 2012 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 of $9.1 million, or $0.60 per diluted share for the three months ended September 30, 2012. Driving this increase from the prior quarter were an increase in net interest income, improved customer-oriented noninterest income, good control over noninterest expense, and partially offset by an increase in negative accretion on the indemnification asset.

“I am pleased with our overall performance for the third quarter. We have made consistent progress in most operating facets each quarter this year. This quarter we continued growing fee income, expanded the net interest margin, and controlled expenses well, all contributing to an improved efficiency ratio,” said Robert R. Hill, Jr., president and CEO of SCBT Financial Corporation. “We also experienced solid legacy loan growth of approximately 6.0% annualized. This loan growth came primarily in the commercial owner occupied and commercial and industrial categories as we continue to develop quality banking relationships across our footprint. During this quarter, we also completed the systems integration of Peoples Bancorporation, Inc. and announced the agreement to acquire The Savannah Bancorp, Inc., a merger that we plan to close in the fourth quarter. While we are continuing to experience improvement in operations and profitability, I remain encouraged by the significant momentum and potential we have to improve performance further and to take advantage of many opportunities to grow our customer base, performance, and earnings.”

Asset Quality

During the third quarter of 2012, SCBT continued to see improvement in asset quality with non-acquired nonperforming assets falling to 1.89% of total assets, classified assets declining by another $3.1 million to $157.5 and 30-89 day past due loans declined by $1.2 million from the second quarter of 2012. We continue to see improvement in the trailing average historical loan losses as the high charge-off quarters are replaced with much lower current loss rates.

At September 30, 2012, the allowance for non-acquired loan losses was $46.4 million or 1.84% of non-acquired period-end loans. The current allowance for loan losses provides .78 times coverage of period-end non-acquired nonperforming loans. Net charge-offs within the non-acquired portfolio were $5.3 million for the quarter or 0.85% annualized, up slightly from the second quarter of 2012 of $4.7 million or 0.77% annualized and down from the third quarter of 2011 of $7.2 million or 1.16% annualized. OREO costs increased to $4.0 million during the quarter, up from the second quarter amount of $2.1 million. This increase was primarily as the result of write downs of two properties totaling $1.7 million.

Net Interest Income and Margin

Non-taxable equivalent net interest income was $46.9 million for the third quarter of 2012, a $4.4 million increase from the second quarter, resulting from the following:

1. A $2.8 million interest income improvement in acquired covered loans due to increased expected cash flows;

2. Full quarter impact from the loans acquired in the Peoples Bancorporation acquisition of $1.3 million; and

3. Decrease of $310,000 in the company's overall cost of funds.

Tax-equivalent net interest margin increased 8 basis points from the third quarter of 2011 and 34 basis points from the second quarter of 2012 to 5.03%. The Company's average yield on interest-earning assets decreased 23 basis points while the average rate on interest-bearing liabilities decreased 30 basis points from the third quarter of 2011. During the third quarter of 2012, the Company's average total assets increased to $4.3 billion and average earning assets increased to almost $3.8 billion. The growth in average total assets was supported by growth in average total deposits to $3.6 billion.

Noninterest Income and Expense

Noninterest income was $9.2 million in the third quarter of 2012 down $2.6 million from the second quarter of 2012 and down $11.6 million from third quarter of 2011. The third quarter of 2011 included an acquisition gain of $11.0 million from the BankMeridian transaction. From customer-oriented noninterest income (includes service charges, mortgage banking, bankcard services, and trust and investment services) the Company saw a significant increase in mortgage banking income due to the continued low interest rates for home mortgages and an increase in service charges on deposit accounts from the second quarter of 2012. Compared to the third quarter of 2011, there were improvements in all categories of customer-oriented noninterest income by approximately $2.0 million. The increases were totally offset by a $2.3 million increase in negative accretion on the FDIC indemnification asset compared to the second quarter of 2012 and by a $3.1 million increase compared to the third quarter of 2011. The increases in negative accretion were the result of the reduction of expected cash flows of the indemnification asset related to certain pools of acquired loans which had improved estimated cash flows. Other noninterest income declined from the second quarter of 2012 by $908,000 due primarily to lower recoveries from acquired assets, but it increased by $366,000 over the third quarter of 2011.

Noninterest expense was $38.0 million in the third quarter of 2012, up from $37.5 million in the second quarter. This increase from the second quarter of 2012 was primarily due to a $1.8 million increase in OREO expense driven by write downs of two properties and offset by a decline of $1.4 million in merger and conversion cost. The efficiency ratio improved during the quarter from 68.3% in the second quarter to 66.9%.

Balance Sheet and Capital

At the end of the third quarter of 2012, SCBT's total assets were $4.3 billion, down from $4.4 billion at June 30, 2012. SCBT continued to reduce the balances of acquired loans and certificates of deposit. Since December 31, 2011, the company's balance sheet has grown by more than $428.7 million, or 11.0%, due primarily to the second quarter closing of the Peoples Bancorporation, Inc acquisition. The asset growth was spread among increases in investment securities, acquired loans, non-acquired loans, premises and equipment, bank owned life insurance, and intangibles; and these were offset by declines in OREO of $9.3 million and decreases in FDIC receivables of $88.3 million. The asset growth was supported primarily by $337.0 million in core deposit growth, $45.9 million in correspondent bank federal funds purchased and $52.1 million in additional capital.

Book value per share and tangible book value per share increased to $28.71 and $23.46 at September 30, 2012, which represents increases of $0.54 and $0.60 per share from June 30, 2012 and $1.45 and $1.55 per share from September 30, 2011.

The company's total risk-based capital ratio is estimated to increase to 15.3% from 15.1% at June 30, 2012 due primarily to a change in risk-weighted asset mix relative to the increase in capital. The Tier 1 leverage ratio is likewise estimated to increase slightly from 9.2% to 9.3%. The Company's capital position remains “well-capitalized” by all measures at September 30, 2012.

“We continue to see our margin expand due in large part to continued credit improvement from our acquired loan portfolios,” said John C. Pollok, COO and CFO. “OREO and merger costs remain volatile, and excluding these, our operating efficiency ratio improved to 58.9% from 60.8% in the second quarter of 2012. We are pleased with the earnings momentum we are building, which is the result of a balanced organic growth and merger and acquisition strategy.”

SCBT Financial Corporation will hold a conference call on October 26th at 11 a.m. ET during which management will review earnings and performance trends. Callers wishing to participate may call toll-free by dialing 877-883-0383. The number for international participants is 412-902-6506. The conference ID number is 2399551. Participants can also listen to the live audio webcast through the Investor Relations section of www.SCBTonline.com. A replay will be available beginning October 26th by 2:00 p.m. ET until 9:00 a.m. on November 12th. To listen to the replay, dial 877-344-7529 or 412-317-0088. The pass code is 10018831.

SCBT Financial Corporation, Columbia, South Carolina is a registered bank holding company incorporated under the laws of South Carolina. The Company consists of SCBT; NCBT, a division of SCBT; and CBT, a division of SCBT. Providing financial services for over 78 years, SCBT Financial Corporation operates 75 locations in 19 South Carolina counties, 10 north Georgia counties, and Mecklenburg County in North Carolina. SCBT Financial Corporation has assets of approximately $4.3 billion, is the largest publicly traded bank holding company in South Carolina, 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 press release 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. SCBT Financial Corporation (‘SCBT”) and The Savannah Bancorp, Inc. (SAVB”) cautions readers that forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from forecasted results. Such risks and uncertainties, include, among others, the following possibilities: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive merger agreement between SCBT and SAVB; (2) the outcome of any legal proceedings that may be instituted against SCBT or SAVB; (3) the inability to complete the transactions contemplated by the definitive merger agreement due to the failure to satisfy each transaction's respective conditions to completion, including the receipt of regulatory approval; (4) credit risk associated with an obligor's failure to meet the terms of any contract with the bank or otherwise fail to perform as agreed; (5) interest risk involving the effect of a change in interest rates on both the bank's earnings and the market value of the portfolio equity; (6) liquidity risk affecting the bank's ability to meet its obligations when they come due; (7) price risk focusing on changes in market factors that may affect the value of traded instruments in "mark-to-market" portfolios; (8) transaction risk arising from problems with service or product delivery; (9) compliance risk involving risk to earnings or capital resulting from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards; (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) economic downturn risk resulting in deterioration in the credit markets; (14) greater than expected noninterest expenses; (15) excessive loan losses; (16) potential deposit attrition, higher than expected costs, customer loss and business disruption associated with the integration of Peoples Bancorporation and The Savannah Bancorp, Inc., including, without limitation, potential difficulties in maintaining relationships with key personnel and other integration related-matters; (17) the risks of fluctuations in market prices for SCBT stock that may or may not reflect economic condition or performance of SCBT; (18) the payment of dividends on SCBT is subject to regulatory supervision as well as the discretion of the SCBT board of directors; and (19) other factors, which could cause actual results to differ materially from future results expressed or implied by such forward looking statements.

SCBT Financial Corporation
(Unaudited)
(Dollars in thousands, except per share data)
                 
Third
Three Months Ended Quarter Nine Months Ended YTD
September 30, June 30, March 31, December 31, September 30, 2012 - 2011 September 30, 2012 - 2011
EARNINGS SUMMARY (non tax equivalent) 2012 2012 2012 2011 2011 % Change     2012     2011   % Change
Interest income $

49,535

$ 45,470 $ 42,220 $ 43,825 $ 45,307 9.3 % $ 137,225 $ 127,893 7.3 %
Interest expense   2,625     2,936     3,182     3,900     4,627   -43.3 %   8,743       16,366   -46.6 %
Net interest income

46,910

42,534 39,038 39,925 40,680 15.3 % 128,482 111,527 15.2 %
Provision for loan losses (1) 4,044 4,641 2,723 7,057 8,323 -51.4 % 11,408 23,179 -50.8 %
Noninterest income 9,166 11,744 9,473 9,663 20,791 -55.9 % 30,383 45,456 -33.2 %
Noninterest expense  

38,031

    37,509     35,219     36,548     37,157   2.3 %   110,759       106,430   4.1 %
Income before provision for income taxes 14,001 12,128 10,569 5,983 15,991 -12.4 % 36,698 27,374 34.1 %
Provision for income taxes  

4,938

    4,097     3,541     1,154     5,658   -12.7 %   12,576       9,608   30.9 %
Net income $

9,063

  $ 8,031   $ 7,028   $ 4,829   $ 10,332   -12.3 % $ 24,122   $ 17,766   35.8 %
 
Basic weighted-average common shares 14,920,423 14,650,914 13,882,801 13,845,444 13,818,012 8.0 % 14,484,214 13,612,811 6.4 %
Diluted weighted-average common shares 15,043,067 14,733,325 13,951,290 13,914,814 13,883,897 8.3 % 14,573,097 13,688,574 6.5 %
 
Earnings per share - Basic $ 0.61 $ 0.55 $ 0.51 $ 0.35 $ 0.75 -18.7 % $ 1.67 $ 1.30 28.5 %
Earnings per share - Diluted 0.60 0.55 0.50 0.35 0.74 -18.9 % 1.66 1.28 29.7 %
 
Cash dividends declared per share $ 0.17 $ 0.17 $ 0.17 $ 0.17 $ 0.17 0.0 % $ 0.51 $ 0.51 0.0 %
Dividend payout ratio (2) 31.97 % 36.48 % 49.48 % 23.07 % 48.39 % -33.9 % 37.82 % 89.20 % -57.6 %
 
Operating Earnings (non-GAAP) (3)
Net income (GAAP) $

9,063

$ 8,031 $ 7,028 $ 4,829 $ 10,332 -12.3 % $ 24,122 $ 17,766 35.8 %
Gains on acquisitions, net of tax -- -- -- -- (6,806 ) -- (10,226 )
Other-than-temporary impairment (OTTI), net of tax -- -- -- -- -- -- --
Merger and conversion related expense, net of tax   357     1,323     64     327     1,102   -67.6 %   1,744     1,890  
Net operating earnings (loss) (non-GAAP) $

9,420

  $ 9,354   $ 7,092   $ 5,156   $ 4,628   103.5 % $ 25,865   $ 9,430   174.3 %
 
Operating earnings (loss) per share - Basic $ 0.63 $ 0.64 $ 0.51 $ 0.37 $ 0.33 90.9 % $ 1.78 $ 0.67 165.7 %
Operating earnings (loss) per share - Diluted 0.63 0.63 0.51 0.37 0.33 90.9 % 1.77 0.67 164.2 %
 
Third
AVERAGE for Quarter Ended Quarter AVERAGE for Nine Months YTD
September 30, June 30, March 31, December 31, September 30, 2012 - 2011 September 30, September 30, 2012 - 2011
BALANCE SHEET HIGHLIGHTS   2012     2012     2012     2011     2011   % Change   2012     2011   % Change
Loans held for sale $ 56,300 $ 29,604 $ 34,073 $ 52,743 $ 21,331 163.9 % $ 40,052 $ 18,003 122.5 %
Acquired loans, net of allowance for acquired loan losses 501,214 484,084 357,668 386,713 400,635 25.1 % 447,851 377,307 18.7 %
Non-acquired loans 2,497,478 2,456,069 2,456,080 2,467,363 2,444,199 2.2 % 2,469,977 2,374,386 4.0 %
Total loans (1) 2,998,692 2,940,153 2,813,748 2,854,076 2,844,834 5.4 % 2,917,828 2,751,693 6.0 %
FDIC receivable for loss share agreements 194,116 219,183 246,556 267,904 304,089 -36.2 % 219,858 281,622 -21.9 %
Total investment securities 501,816 468,334 324,473 317,940 304,642 64.7 % 431,797 263,459 63.9 %
Intangible assets 79,857 79,583 74,089 74,601 74,960 6.5 % 77,797 74,366 4.6 %
Earning assets 3,766,889 3,703,552 3,371,704 3,346,444 3,293,141 14.4 % 3,614,606 3,262,610 10.8 %
Total assets 4,331,436 4,295,911 3,957,918 3,947,773 3,935,427 10.1 % 4,195,406 3,889,734 7.9 %
Noninterest-bearing deposits 813,394 795,867 700,438 675,998 636,659 27.8 % 770,058 595,723 29.3 %
Interest-bearing deposits 2,800,446 2,808,884 2,570,595 2,614,304 2,641,830 6.0 % 2,726,912 2,637,370 3.4 %
Total deposits 3,613,840 3,604,751 3,271,033 3,290,302 3,278,489 10.2 % 3,496,970 3,233,093 8.2 %
Federal funds purchased and repurchase agreements 223,844 215,678 229,099 194,427 195,777 14.3 % 222,877 215,379 3.5 %
Other borrowings 45,908 46,203 46,480 46,774 47,272 -2.9 % 46,196 47,396 -2.5 %
Shareholders' equity 429,183 415,952 383,377 382,909 380,934 12.7 % 409,576 365,804 12.0 %
SCBT Financial Corporation
(Unaudited)
(Dollars in thousands, except per share data)
          Third
ENDING Balance Quarter
September 30, June 30, March 31, December 31, September 30, 2012 - 2011
BALANCE SHEET HIGHLIGHTS 2012 2012 2012 2011 2011 % Change
Loans held for sale $ 71,585 $ 42,525 $ 34,706 $ 45,809 $ 45,870 56.1 %
Acquired loans 520,991 560,058 369,144 402,201 435,761 19.6 %
Non-acquired loans 2,517,352 2,481,251 2,437,314 2,470,565 2,461,639 2.3 %
Total loans (1) 3,038,343 3,041,309 2,806,458 2,872,766 2,897,400 4.9 %
FDIC receivable for loss share agreements 174,321 200,569 231,331 262,651 274,658 -36.5 %
Total investment securities 500,587 511,138 357,448 324,056 321,047 55.9 %
Intangible assets 79,391 79,971 73,926 74,426 74,949 5.9 %
Allowance for acquired loan losses (31,138 ) (35,813 ) (34,355 ) (31,620 ) (29,870 ) 4.2 %
Allowance for non-acquired loan losses (1) (46,439 ) (47,269 ) (47,607 ) (49,367 ) (49,110 ) -5.4 %
Premises and equipment 105,579 106,458 93,209 94,250 90,020 17.3 %
Total assets 4,325,232 4,373,269 4,046,343 3,896,557 3,935,518 9.9 %
Noninterest-bearing deposits 818,633 806,235 757,777 658,454 653,924 25.2 %
Interest-bearing deposits 2,770,665 2,854,737 2,598,860 2,596,018 2,633,729 5.2 %
Total deposits 3,589,298 3,660,972 3,356,637 3,254,472 3,287,653 9.2 %
Federal funds purchased and repurchase agreements 226,330 220,264 235,412 180,436 184,403 22.7 %
Other borrowings 45,807 46,105 46,397 46,683 46,955 -2.4 %
Total liabilities 3,891,308 3,948,363 3,659,836 3,514,777 3,553,796 9.5 %
Shareholders' equity 433,924 424,906 386,507 381,780 381,722 13.7 %
 
Common shares issued and outstanding 15,114,185 15,085,991 14,052,177 14,039,422 14,004,372 7.9 %
 
Third
Quarter
September 30, June 30, March 31, December 31, September 30, 2012 - 2011
NONPERFORMING ASSETS (ENDING BALANCE) 2012 2012 2012 2011 2011 % Change
Non-acquired
Non-acquired nonaccrual loans $ 46,295 $ 47,940 $ 59,278 $ 64,170 $ 61,163 -24.3 %
Restructured loans 12,882 9,530 10,578 11,807 11,698 10.1 %
Other real estate owned ("OREO") not covered under
FDIC loss share agreements 22,424 25,518 21,381 18,022 22,686 -1.2 %
Accruing loans past due 90 days or more 156 137 130 926 495 -68.5 %
Other nonperforming assets   --     --     24     24     24   -100.0 %
Total non-acquired nonperforming assets   81,757     83,125     91,391     94,949     96,066   -14.9 %
Acquired (7)
Acquired nonaccrual loans -- -- -- -- --
OREO covered under FDIC loss share agreements 47,063 53,146 61,788 65,849 79,739 -41.0 %
OREO not covered under FDIC loss share agreements 5,059 5,745 -- -- --
Other nonperforming assets   57     73     215     251     347  
Total acquired nonperforming assets   52,179     58,964     62,003     66,100     80,086   -34.8 %
Total nonperforming assets $ 133,936   $ 142,089   $ 153,394   $ 161,049   $ 176,152   -24.0 %
 
Excluding Acquired Assets
Total nonperforming assets as a percentage of
total non-acquired loans and repossessed assets (1) (4)   3.22 %   3.32 %   3.72 %   3.82 %   3.87 %
Total nonperforming assets as a percentage
of total assets (5)   1.89 %   1.90 %   2.26 %   2.44 %   2.44 %
NPLs as a percentage of period end non-acquired loans   2.36 %   2.32 %   2.87 %   3.11 %   2.98 %
Including Acquired Assets
Total nonperforming assets as a percentage of
total loans and repossessed assets (1) (4)   4.31 %   4.55 %   5.31 %   5.45 %   5.91 %
Total nonperforming assets as a percentage
of total assets   3.10 %   3.25 %   3.79 %   4.13 %   4.48 %
NPLs as a percentage of period end loans   1.95 %   1.89 %   2.49 %   2.68 %   2.55 %
 
OTHER ASSET QUALITY INFORMATION
Classified Assets (Ending Balance) (11)
Classified loans $ 135,095 $ 135,099 $ 156,118 $ 166,383 $ 157,569 -14.3 %
OREO and other nonperforming assets   22,424     25,518     21,405     18,046     22,710   -1.3 %
Total classified assets $ 157,519   $ 160,617   $ 177,523   $ 184,429   $ 180,279   -12.6 %
 
Tier 1 capital and non-acquired allowance for loan losses $ 444,200   $ 436,964   $ 406,070   $ 402,470   $ 398,231   11.5 %
Classified assets as a percentage of Tier 1 capital and
non-acquired allowance for loan losses   35.46 %   36.76 %   43.72 %   45.82 %   45.27 %
 
Non-acquired Loans 30-89 Day Past Due $ 9,270   $ 10,464   $ 7,290   $ 9,235   $ 8,371   10.7 %
 
SCBT Financial Corporation
(Unaudited)
(Dollars in thousands)
          Third    
Quarter Ended             Quarter Nine Months Ended YTD
September 30, June 30, March 31, December 31, September 30, 2012 - 2011 September 30, September 30, 2012 - 2011
ALLOWANCE FOR LOAN LOSSES (1) 2012 2012 2012 2011 2011 % Change 2012 2011 % Change
Non-acquired Loans:
Balance at beginning of period $ 47,269 $ 47,607 $ 49,367 $ 49,110 $ 48,180 -1.9 % $ 49,367 $ 47,512 3.9 %
Loans charged off (5,506 ) (5,114 ) (5,344 ) (6,846 ) (7,426 ) -25.9 % (15,964 ) (22,235 ) -28.2 %
Overdrafts charged off (434 ) (441 ) (354 ) (413 ) (432 ) 0.5 % (1,229 ) (750 ) 63.9 %
Loan recoveries 481 700 1,424 409 569 -15.5 % 2,605 2,514 3.6 %
Overdraft recoveries   129     125     216     138     112   15.2 %   470     384   22.4 %
Net charge-offs (5,330 ) (4,730 ) (4,058 ) (6,712 ) (7,177 ) -25.7 % (14,118 ) (20,087 ) -29.7 %
Provision for loan losses on non-acquired loans   4,500     4,392     2,298     6,969     8,107   -44.5 %   11,190     21,685   -48.4 %
Balance at end of period, non-acquired loans   46,439     47,269     47,607     49,367     49,110   -5.4 %   46,439     49,110   -5.4 %
Acquired Loans:
Balance at beginning of period 35,812 34,355 31,620 29,870 25,545 31,620 --
Loans charged off -- -- -- -- -- -- --
Loan recoveries   --     --     --     --     --     --     --  
Net charge-offs -- -- -- -- -- -- --
Provision for loan losses on acquired loans:
Provision for loan losses before benefit attributable
to FDIC loss share agreements (4,674 ) 1,457 2,735 1,750 4,325 (482 ) 29,870
Benefit attributable to FDIC loss share agreements   4,218     (1,208 )   (2,310 )   (1,663 )   (4,109 )   699     (28,376 )
Net provision for loan losses on acquired loans   (456 )   249     425     87     216     217     1,494  
Provision for loan losses recorded through the FDIC
loss share receivable   (4,218 )   1,208     2,310     1,663     4,109     (699 )   28,376  
Balance at end of period, acquired loans   31,138     35,812     34,355     31,620     29,870     31,138     29,870  
Balance at end of period, total allowance for loan losses $ 77,577   $ 83,081   $ 81,962   $ 80,987   $ 78,980   -1.8 % $ 77,577   $ 78,980   -1.8 %
 
Total provision for loan losses charged to operations $ 4,044   $ 4,641   $ 2,723   $ 7,057   $ 8,323   $ 11,408   $ 23,179  
Allowance for non-acquired loan losses as a
percentage of non-acquired loans (1)   1.84 %   1.91 %   1.95 %   2.00 %   2.00 %   1.84 %   2.00 %
Allowance for loan losses as a
percentage of total loans (1)   2.55 %   2.73 %   2.92 %   2.82 %   2.73 %   2.55 %   2.73 %
Allowance for non-acquired loan losses as a
percentage of non-acquired nonperforming loans   78.27 %   82.05 %   68.02 %   64.19 %   66.95 %   78.27 %   66.95 %
Net charge-offs on non-acquired loans as a percentage of
average non-acquired loans (annualized) (1)   0.85 %   0.77 %   0.66 %   1.08 %   1.16 %   0.76 %   1.13 %
 
Third
Quarter
September 30, June 30, March 31, December 31, September 30, 2012 - 2011
LOAN PORTFOLIO (ENDING balance) (1) 2012 2012 2012 2011 2011 % Change
Acquired covered loans $ 309,034 $ 332,874 $ 363,050 $ 394,495 $ 427,466 21.9 %
Acquired non-covered loans 211,957 227,184 6,094 7,706 8,295 2455.2 %
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development 273,606 279,519 294,865 310,845 316,072 -13.4 %
Commercial non-owner occupied   278,935     284,147     284,044     299,698     304,616   -8.4 %
Total commercial non-owner occupied real estate 552,541 563,666 578,909 610,543 620,688 -11.0 %
Consumer real estate:
Consumer owner occupied 430,825 420,298 407,697 391,529 394,205 9.3 %
Home equity loans   255,677     257,061     258,054     264,986     264,588   -3.4 %
Total consumer real estate 686,502 677,359 665,751 656,515 658,793 4.2 %
Commercial owner occupied real estate 787,623 763,338 744,441 742,890 719,791 9.4 %
Commercial and industrial 245,285 228,010 216,083 220,454 216,573 13.3 %
Other income producing property 131,832 132,193 130,177 140,693 142,325 -7.4 %
Consumer non real estate 86,729 87,290 85,350 85,342 84,972 2.1 %
Other   26,840     29,395     16,603     14,128     18,471   45.3 %
Total non-acquired loans   2,517,352     2,481,251     2,437,314     2,470,565     2,461,613   2.3 %
Total loans (net of unearned income) (1) $ 3,038,343   $ 3,041,309   $ 2,806,458   $ 2,872,766   $ 2,897,374   4.9 %
 
Loans held for sale $ 71,585   $ 42,525   $ 34,706   $ 45,809   $ 45,870   56.1 %
SCBT Financial Corporation
(Unaudited)
(Dollars in thousands, except per share data)
               
 
Quarter Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
SELECTED RATIOS 2012 2012 2012 2011 2011 2012 2011
 
Return on average assets (annualized)   0.83 %   0.75 %   0.71 %   0.49 %   1.04 %   0.77 %   0.61 %
 
Operating return on average assets (annualized) (non-GAAP)   0.87 %   0.88 %   0.72 %   0.52 %   0.47 %   0.82 %   0.32 %
 
Return on average equity (annualized)   8.40 %   7.77 %   7.37 %   5.00 %   10.76 %   7.87 %   6.49 %
 
Operating return on average equity (annualized) (non-GAAP)   8.73 %   9.05 %   7.44 %   5.34 %   4.82 %   8.44 %   3.45 %
 
Return on average tangible equity (annualized) (non-GAAP) (10)   10.74 %   9.92 %   9.57 %   6.76 %   13.83 %   10.14 %   8.59 %
 
Net interest margin (tax equivalent)   5.03 %   4.69 %   4.70 %   4.78 %   4.95 %   4.82 %   4.60 %
 
Efficiency ratio (tax equivalent)   66.91 %   68.34 %   72.02 %   73.09 %   59.97 %   68.95 %   67.41 %
 
Operating efficiency ratio excluding OREO expense  

58.96

%   60.84 %   66.27 %   62.43 %   50.77 %   61.83 %   59.67 %
 
Book value per common share $ 28.71   $ 28.17   $ 27.51   $ 27.19   $ 27.26  
 
Tangible book value per common share (non-GAAP) (10) $ 23.46   $ 22.86   $ 22.24   $ 21.89   $ 21.91  
 
Common shares issued and outstanding   15,114,185     15,085,991     14,052,177     14,039,422     14,004,372  
 
Equity-to-assets   10.03 %   9.72 %   9.55 %   9.80 %   9.70 %
 
Tangible equity-to-tangible assets (non-GAAP) (10)   8.35 %   8.03 %   7.87 %   8.04 %   7.95 %
 
Tier 1 leverage (9)   9.3 %   9.2 %   9.2 %   9.1 %   9.0 %
 
Tier 1 risk-based capital (9)   14.0 %   13.9 %   14.5 %   14.0 %   13.9 %
 
Total risk-based capital (9)   15.3 %   15.1 %   15.8 %   15.3 %   15.1 %
 
 
Quarter Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
RECONCILIATION OF NON-GAAP TO GAAP 2012 2012 2012 2011 2011 2012 2011
 
Pre-tax, Pre-provision Operating Earnings (6)
Net income (GAAP) $

9,063

$ 8,031 $ 7,028 $ 4,829 $ 10,332 -12.3 % $ 24,122 $ 17,766 35.8 %
Provision for loan losses (1) 4,044 4,641 2,723 7,057 8,323 -51.4 % 11,408 23,179 -50.8 %
Provision for income taxes  

4,938

    4,097     3,541     1,154     5,658   -12.7 %   12,576       9,608   30.9 %
Pre-tax, pre-provision income 18,045 16,769 13,292 13,040 24,313 -25.8 % 48,106 50,553 -4.8 %
Gains on acquisitions -- -- -- -- (11,001 ) -- (16,529 )
Merger and conversion related expense   567     1,998     96     404     1,587   -64.3 %   2,662     2,794  
Pre-tax, pre-provision operating earnings (non-GAAP) $ 18,612   $ 18,767   $ 13,388   $ 13,444   $ 14,899   24.9 % $ 50,768   $ 36,818   37.9 %
 
Operating efficiency ratio excluding OREO expense
Operating efficiency ratio excluding OREO expense

58.96

% 60.84 % 66.27 % 62.43 % 50.77 % 61.83 % 59.67 %
Effect to adjust for OREO and loan related expense

6.95

% 3.86 % 5.56 % 9.85 % 6.64 % 5.47 % 5.97 %
Effect to adjust for Merger and conversion expenses   1.00 %   3.64 %   0.19 %   0.81 %   2.56 %   1.65 %   1.77 %
Efficiency ratio (Tax Equivalent)   66.91 %   68.34 %   72.02 %   73.09 %   59.97 %   68.95 %   67.41 %
 
Operating Return of Average Assets
Operating return on average assets (non-GAAP) 0.87 % 0.88 % 0.72 % 0.52 % 0.47 % 0.82 % 0.32 %
Effect to adjust for acquisition gains 0.00 % 0.00 % 0.00 % 0.00 % 0.69 % 0.00 % 0.35 %
Effect to adjust for merger and conversion related expenses   -0.04 %   -0.13 %   -0.01 %   -0.03 %   -0.12 %   -0.05 %   -0.06 %
Return on average assets (GAAP)   0.83 %   0.75 %   0.71 %   0.49 %   1.04 %   0.77 %   0.61 %
 
Operating Return of Average Equity
Operating return on average equity (non-GAAP) 8.73 % 9.05 % 7.44 % 5.34 % 4.82 % 8.44 % 3.45 %
Effect to adjust for acquisition gains 0.00 % 0.00 % 0.00 % 0.00 % 7.09 % 0.00 % 3.74 %
Effect to adjust for merger and conversion related expenses   -0.33 %   -1.28 %   -0.07 %   -0.34 %   -1.15 %   -0.57 %   -0.70 %
Return on average equity (GAAP)   8.40 %   7.77 %   7.37 %   5.00 %   10.76 %   7.87 %   6.49 %
SCBT Financial Corporation
(Unaudited)
(Dollars in thousands)
           
Quarter Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
RECONCILIATION OF NON-GAAP TO GAAP (CONTINUED) 2012 2012 2012 2011 2011 2012 2011
 
Return on Average Tangible Equity (10)
Return on average tangible equity (non-GAAP) 10.74 % 9.92 % 9.57 % 6.76 % 13.83 % 10.14 % 8.59 %
Effect to adjust for tangible assets   -2.34 %   -2.15 %   -2.20 %   -1.76 %   -3.07 % -2.27 % -2.10 %
Return on average equity (GAAP)   8.40 %   7.77 %   7.37 %   5.00 %   10.76 % 7.87 % 6.49 %
 
Tangible Book Value Per Common Share (10)
Tangible book value per common share (non-GAAP) $ 23.46 $ 22.86 $ 22.24 $ 21.89 $ 21.91
Effect to adjust for tangible assets   5.25     5.30     5.26     5.30     5.34  
Book value per common share (GAAP) $ 28.71   $ 28.17   $ 27.51   $ 27.19   $ 27.26  
 
Tangible Equity-to-Tangible Assets (10)
Tangible equity-to-tangible assets (non-GAAP) 8.35 % 8.03 % 7.87 % 8.04 % 7.95 %
Effect to adjust for tangible assets   1.68 %   1.69 %   1.68 %   1.76 %   1.75 %
Equity-to-assets (GAAP)   10.03 %   9.72 %   9.55 %   9.80 %   9.70 %
 
 
Three Months Ended  
September 30, 2012

September 30, 2011

 
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 $ 210,081 $ 282 0.53 %

122,334

$ 161 0.52 %
Investment securities (taxable) 480,208 2,893 2.40 % 276,793 2,023 2.90 %
Investment securities (tax-exempt) 21,608 181 3.33 % 27,849 211 3.01 %
Loans held for sale 56,300 492 3.48 % 21,331 178 3.31 %
Acquired loans, net of allowance for acquired loan losses 501,214 16,004 12.70 % 400,635 12,142 12.02 %
Non-acquired loans (1)   2,497,478    

29,683

  4.73 %   2,444,199     30,592   4.97 %
Total interest-earning assets 3,766,889

49,535

5.23 %

3,293,141

45,307 5.46 %
 
Noninterest-Earning Assets:
Cash and due from banks 80,332 68,861
Other assets 531,469 621,366
Allowance for non-acquired loan losses   (47,254 )   (47,940 )
Total noninterest-earning assets   564,547     642,287  
Total Assets $ 4,331,436   $ 3,935,427  
 
Interest-Bearing Liabilities:
Transaction and money market accounts $ 1,548,650 $ 712 0.18 % $ 1,335,423 $ 1,388 0.41 %
Savings deposits 307,087 115 0.15 % 260,592 205 0.31 %
Certificates and other time deposits 944,709 1,143 0.48 % 1,045,815 2,364 0.90 %
Federal funds purchased and repurchase agreements 223,844 105 0.19 % 195,777 118 0.24 %
Other borrowings   45,908     550   4.77 %   47,272     552   4.63 %
Total interest-bearing liabilities 3,070,198 2,625 0.34 % 2,884,879

4,627

0.64 %
 
Noninterest-Bearing Liabilities:
Demand deposits 813,394 636,659
Other liabilities   18,661     32,955  
Total noninterest-bearing liabilities ("Non-IBL") 832,055 669,614
Shareholders' equity   429,183     380,934  
Total Non-IBL and shareholders' equity   1,261,238     1,050,548  
Total liabilities and shareholders' equity $ 4,331,436   $ 3,935,427  
   
Net interest income and margin (NON-TAX EQUIV.) $

46,910

    4.95 % $

40,680

  4.90 %
Net interest margin (TAX EQUIVALENT)   5.03 % 4.95 %
SCBT Financial Corporation
(Unaudited)
(Dollars in thousands)
         
Nine Months Ended
September 30, 2012 September 30, 2011
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 $

224,929

$ 773 0.46 % $

229,455

$ 875 0.51 %
Investment securities (taxable) 408,801 7,800 2.55 % 234,437 5,621 3.21 %
Investment securities (tax-exempt) 22,996 576 3.35 % 29,022 662 3.05 %
Loans held for sale 40,052 1,089 3.63 % 18,003 472 3.51 %
Acquired loans, net of allowance for acquired loan losses 447,851 36,983 11.03 % 377,307 31,133 11.03 %
Non-acquired loans (1)   2,469,977     90,004 4.87 %   2,374,386     89,130 5.02 %
Total interest-earning assets

3,614,606

137,225 5.07 %

3,262,610

127,893 5.24 %
 
Noninterest-Earning Assets:
Cash and due from banks 88,935 80,763
Other assets 539,956 594,065
Allowance for non-acquired loan losses   (48,092 )   (47,702 )
Total noninterest-earning assets   580,799     627,126  
Total Assets $ 4,195,406   $ 3,889,734  
 
Interest-Bearing Liabilities:
Transaction and money market accounts $ 1,509,328 $ 2,559 0.23 % $ 1,298,152 $ 5,269 0.54 %
Savings deposits 290,679 389 0.18 % 250,098 719 0.38 %
Certificates and other time deposits 926,905

3,788

0.55 % 1,089,122

8,347

1.02 %
Federal funds purchased and repurchase agreements 222,877 341 0.20 % 215,379 420 0.26 %
Other borrowings   46,196     1,666 4.82 %   47,396     1,611 4.54 %
Total interest-bearing liabilities 2,995,985

8,743

0.39 % 2,900,147

16,366

0.75 %
 
Noninterest-Bearing Liabilities:
Demand deposits 770,058 595,722
Other liabilities   19,787     28,061  
Total noninterest-bearing liabilities ("Non-IBL") 789,845 623,783
Shareholders' equity   409,576     365,804  
Total Non-IBL and shareholders' equity   1,199,421     989,587  
Total liabilities and shareholders' equity $ 4,195,406   $ 3,889,734  
   
Net interest income and margin (NON-TAX EQUIV.) $

128,482

4.75 % $

111,527

4.57 %
Net interest margin (TAX EQUIVALENT) 4.82 % 4.60 %
SCBT Financial Corporation
(Unaudited)
(Dollars in thousands)
          Third    
Three Months Ended             Quarter Nine Months Ended YTD
September 30, June 30, March 31, December 31, September 30, 2012 - 2011 September 30, 2012 - 2011
NONINTEREST INCOME & EXPENSE 2012 2012 2012 2011 2011 % Change 2012 2011 % Change
Noninterest income:
Gain on acquisition $ -- $ -- $ -- $ -- $ 11,001 $ -- $ 16,529
Service charges on deposit accounts 6,169 5,886 5,447 5,959 6,050 2.0 % 17,501 16,695 4.8 %
Mortgage banking income 3,526

3,052

1,830 1,942 2,341 50.6 % 8,408 4,329 94.2 %
Bankcard services income 3,570 3,618 3,320 3,037 2,980 19.8 % 10,508 8,684 21.0 %
Trust and investment services income 1,577 1,642 1,397 1,237 1,453 8.5 % 4,617 4,227 9.2 %
Securities gains (losses), net (8) -- 61 -- (25 ) (100 ) 100.0 % 61 233 -73.8 %
Accretion (amortization) on FDIC indemnification asset (6,623 ) (4,370 ) (3,233 ) (3,086 ) (3,515 ) -88.4 % (14,226 ) (7,049 ) 101.8 %
Other   947    

1,855

    712     599     581   63.0 %   3,514     1,808   94.4 %
Total noninterest income $ 9,166   $ 11,744   $ 9,473   $ 9,663   $ 20,791   -55.9 % $ 30,383   $ 45,456   -33.2 %
 
Noninterest expense:
Salaries and employee benefits $ 18,647 $ 18,262 $ 18,048 $ 16,930 $ 17,345 7.5 % $ 54,957 $ 52,007 5.7 %
Net occupancy expense 2,621 2,478 2,248 2,309 2,443 7.3 % 7,347 7,365 -0.2 %
Furniture and equipment expense 2,165 2,371 2,239 2,211 2,127 1.8 % 6,775 6,265 8.1 %
Information services expense

2,662

2,902 2,468 2,817 2,851 -6.6 % 8,032 7,695 4.4 %

FDIC assessment and other regulatory charges

878

1,073 1,037 980 859 2.3 % 2,988 3,593 -16.8 %
OREO expense and loan related

3,951

2,115 2,716 4,835 4,118 -3.5 % 8,782 9,428 -6.9 %
Advertising and marketing

736

553 757 707 824 -10.6 % 2,046 2,022 1.2 %
Business development and staff related 878 689 752 944 802 9.5 % 2,319 1,763 31.5 %
Professional fees

643

732 633 253 377 71.1 % 2,008 1,311 53.2 %
Amortization of intangibles 566 540 500 523 517 9.5 % 1,606 1,468 9.4 %
Merger and conversion related expense

568

1,998 96 404 1,587 -64.3 % 2,662 2,794
Other  

3,716

    3,796     3,725     3,635     3,307   11.6 %   11,237     10,719   4.8 %
Total noninterest expense $

38,031

  $ 37,509   $ 35,219   $ 36,548   $ 37,157   2.3 % $ 110,759   $ 106,430   4.1 %
 
 
 
Notes:
(1) Loan data excludes mortgage loans held for sale.
(2) The Company pays cash dividends on common shares out of earnings generated in the preceding quarter; therefore, the dividend payout ratio is calculated by dividing total dividends paid during the third quarter of 2012 by the total net income reported in the second quarter of 2012.

(3) Operating earnings is a non-GAAP measure and excludes the after-tax effect of gains on acquisitions, OTTI, and merger and conversion related expense. Management believes that non-GAAP 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. Operating earnings (non-GAAP) excludes the following from net income (GAAP) on an after-tax basis: (a) pre-tax gain on acquisitions of $11.0 million for the quarter ended September 30, 2011; and (b) pre-tax Merger and conversion related expense of $568,000, $1,998,000, $96,000, $404,000 and $1.6 million, for the quarters ended September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively.

(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, OTTI, merger and conversion related expense, and the termination fee for the former group insurance plan. 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) Acquired loans are not included in non-performing loans because the accretion method is being used for all 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) September 30, 2012 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 return on 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.

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SCBT Financial Corporation
Media Contact: Donna Pullen, 803-765-4558
Analyst Contact: John C. Pollok, 803-765-4628

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