Two of Charleston's locally based banks said Thursday that the credit crunch and real estate slowdown dragged down their respective bottom lines during their most recent earnings period.

First Financial Holdings Inc., the biggest banking company based in the Charleston area, reported its first-quarter income was halved when compared with the prior year's period, mainly because of a number of one-time writeoffs.

Meanwhile, Bank of South Carolina Corp. said slowing loan demand and concerns about the real estate market helped pull down its profit by about 2.5 percent during its latest fiscal year.

First Financial, the parent of First Federal Savings and Loan Association of Charleston, reported earnings for the three months ended Dec. 31 of $2.9 million, a 50 percent drop from the same quarter in 2006. Earnings per share were 25 cents, compared with 48 cents per share a year earlier.

Last week, First Financial announced it had set aside $3.3 million to cover bad loans. The company said it expects losses on four loans that are secured by residential properties, and it also wrote off a $475,000 commercial loan for a Myrtle Beach property. The company also said it will record expenses of $1.75 million related to an early retirement offer that 26 employees accepted.

A. Thomas Hood, First Financial's president and chief executive officer, said the company, like many others, is monitoring credit trends in its loan portfolio as a result of the slowing real estate market and other economic factors.

"This was an unusual quarter for most financial institutions, so I suppose we won't disappoint in that regard," Hood said during a conference call.

While the company is experiencing moderately higher levels of delinquent loans and loan charge-offs, "we have not experienced significant deterioration in our single-family residential loan

portfolios," he noted.

Hood also said he expects to see foreclosures and loan delinquencies increase this year.

Bank of South Carolina Corp., the parent of Bank of South Carolina, reported earnings for its fiscal year that ended Dec. 31 of $3.8 million, or 97 cents a share, down from $3.9 million, or $1.01 a share, in 2006.

"In the final analysis ,we're pretty pleased," said Hugh C. Lane Jr., Bank of South Carolina's president and CEO, referring to the company's performance for the year.

However, fourth-quarter earnings slid by 12.5 percent to nearly $894,000, or 23 cents a share.

"The last three quarters of 2007 were a challenge, with the lack of loan demand, concern over the real estate market, and the disruption and losses in the financial markets," Lane said. "Our primary focus in 2008 will be watching asset quality and emphasizing business development."

Reach Peter Hull at 937-5594 or phull@postandcourier.com.

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