GSA Daily Staff Report
Published July 23, 2010

SCBT Financial Corp. reported today that net income available to common shareholders declined 62% to $575,000 for the quarter ended June 30, compared with $1.5 million for the second quarter of 2009.

Core deposits for the Columbia-based bank holding company of SCBT National Association, excluding all CDs, rose 18%, an increase of $73.2 million.

“I am pleased that we continued to be one of the few banks that have been profitable in every quarter of this downturn,” said Robert R. Hill Jr., president and CEO. “This was a more challenging quarter due to the integration of CBT, but year-to-date 2010 continues to be our most profitable six months ever. The second quarter was comprised of many moving parts as we worked to integrate the acquisition of CBT.”

“We completed the integration of the operating system in Georgia to the SCBT operating platform during June, and we closed 10 of the acquired locations,” Hill said. “We continued to incur merger costs related to the integration activities and during the midst of the changes, we have been successful in retaining almost all of the 109,000 Georgia customer relationships. These changes resulted in mixed operating results for this quarter, but prepare us very well for the future.”

“In the Carolinas, we experienced approximately $52.2 million in loan growth and strong core deposit growth of $85.9 million from the end of March. We are fortunate to continue to attract talented bankers and many new customers to our company,” Hill said.

During the second quarter, the company incurred $798,000 of merger related expenses, net of tax, and recorded additional OTTI of $559,000 after-tax. On a net operating basis which excludes the two items, SCBT would report an operating gain of $1.9 million, after tax, for the second quarter of 2010, compared $1.9 million, after tax for the second quarter of 2009.

During the first quarter of 2010, SCBT entered into a loss-share purchase agreement with the FDIC to purchase assets and assume most deposits (excluding brokered deposits) and certain liabilities of CBT. The company acquired assets with a value of approximately $1 billion, including $459.5 million in loans, and liabilities with a fair value of approximately $1.1 billion were also assumed, including $1.0 billion of deposits. The company received cash from the FDIC totaling approximately $225.7 million, which included the negative bid of $158.0 million.

In connection with the CBT acquisition, SCBT also entered into loss sharing agreements with the FDIC. Pursuant to the terms of these loss sharing agreements, the FDIC’s obligation to reimburse SCBT for losses with respect to certain loans and foreclosed real estate purchased, begins with the first dollar of loss incurred. The FDIC has agreed to reimburse SCBT for 80% of the losses incurred up to $233.0 million and 95% of losses in excess of $233 million. Gains and recoveries on covered assets will offset losses, or be paid to the FDIC, at the applicable loss share percentage at the time of recovery.

The second-quarter decrease in profit was primarily the result of:

• Provision for loan losses increased by $8.0 million over the comparable quarter within the non-covered SCBT loan portfolio; and
• Increase in non-interest expenses by $8.3 million due primarily to the addition of the Georgia franchise including merger related expenses of $964,000 for the quarter; offset by
• Increase in pre-tax net interest income of $5.1 million due to increases in earning assets and related interest income of $3.2 million, and reduction in interest expense on funding of the balance sheet by $1.9 million; and
• Increase in non-interest income by $3.7 million in all categories due to the acquisition of CBT and within legacy SCBT; and
• Second quarter of 2009 results included $3.9 million in dividends paid on preferred stock and accretion on preferred stock discount related to the redemption of preferred stock issued under the US Treasury TARP Capital Purchase Program.