After several turbulent years, the owner of First Federal of Charleston is looking to smoother seas on the horizon, the latest signal that the recession-battered banking industry is on the mend.

“We believe this past quarter demonstrated ... much more stable earnings,” said Wayne Hall, president and CEO of First Financial Holdings Inc.

The locally based holding company reported a third-quarter profit of $5.7 million, compared to a $113,000 gain for the same period in 2011.

Year to date, First Financial has earned $18.1 million against a $45.2 million loss through Sept. 30, 2011.

Burned by the real estate meltdown, First Financial has been restructuring its business plan while repairing its balance sheet for the past two years. It shed a large portfolio of loans and sold two insurance units as it sought to regain its footing and turn its attention to core commercial banking services.

Hall said the company is starting to realize the benefits of the strategic overhaul, which included a string of acquisitions that expanded First Federal’s footprint in the Hilton Head Island, Grand Strand and Greenville markets.

“We believe that all of our initiatives have positioned us well to provide enhanced value to our shareholders,” Hall said.

Stability was the dominant theme of First Financial’s conference call with industry analysts on Friday. And it wasn’t just contained to the bank’s performance.

“While we might not be seeing marked improvement in economic data relative to unemployment or real estate values, we are seeing continued stability in our market in both of those measurements,” said Blaise Bettendorf, chief financial officer. “So we’re certainly not seeing any increased risk in our loan portfolio.”

First Financial’s level of non-performing assets to total assets was essentially flat at 1.42 percent, as a decline in bad business debt was offset by an expected rise in soured home loans.

Total loans slipped by about 2 percent from the previous quarter, or $55 million, to $2.53 billion. Hall said he isn’t “terribly” concerned about the dip, noting much of the “run-off” is traced to older, poor-performing loans that First Federal wouldn’t approve under current conditions

“Even though the balance sheet has declined, we actually have a higher quality balance sheet than we had last quarter,” he said. “So we’re OK with that.”

First Federal is the largest and oldest bank based in the Charleston region. The 78-year-old lender has $3.2 billion in assets and about 70 branches.

Reach John McDermott at 937-5572.