First Financial Holdings Inc. in Charleston, S.C., has proven its doubters wrong.
The $3.3 billion-asset company completed a bulk sale of $200 million of its nonperforming and problem assets on Thursday, a deal that some analysts thought would never happen given the uncertain economy.
Not only did the company pull the sale off, but it sold the assets at a higher price than it expected and will book a $20 million gain this quarter. The stock closed at $7.75 on Friday, up $2 from the beginning of the week. Its share price has risen 93% since the end of September. On Thursday, it also reported earnings for the quarter ended Sept. 30, after a big loss a quarter earlier.
"They announced that they were pursuing the loan sale in July, and then a few weeks later the market fell off and the stock got crushed. Investors were worried that they weren't going to be able to close," says Catherine Mealor, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc. "No one was expecting they would complete it at a higher price. They've managed to completely de-risk the balance sheet without diluting shareholders."
Mealor added that the deal should help the company close the year with a tangible common equity ratio of 6.6%. The ratio dropped to about 6% at June 30.
