Note 4 — Mergers and Acquisitions

First Financial Holdings, Inc. Acquisition

On February 19, 2013, the Company entered into an Agreement and Plan of Merger (the “Agreement”) with First Financial Holdings, Inc. (“First Financial”), a bank holding company headquartered in Charleston, South Carolina. First Federal Bank (“First Federal”) is a wholly-owned bank subsidiary of First Financial. Other First Financial subsidiaries include First Southeast 401(k) Fiduciaries, Inc., a registered investment advisor, and First Southeast Investor Services, Inc., a registered broker-dealer. At March 31, 2013, First Financial reported $3.2 billion in total assets, $2.4 billion in loans and $2.6 billion in deposits. First Federal has a total of 66 branches that serve individuals and businesses throughout coastal South Carolina, Florence and Greenville, South Carolina and Wilmington, North Carolina. Pursuant to the terms of the Agreement, First Financial will merge with and into SCBT Financial Corporation, with SCBT Financial Corporation as the surviving entity in the merger. In addition, First Federal will merge with and into the Company’s bank subsidiary, SCBT (“SCBT Bank” or the “Bank”), with the Bank as the surviving entity. The other subsidiaries of First Financial are expected to become subsidiaries of SCBT Financial Corporation.

Under the terms of the Agreement, First Financial common shareholders will receive aggregate consideration of approximately 7,002,384 shares of SCBT common stock. The common stock consideration is based upon a fixed exchange ratio of 0.4237 shares of SCBT common stock for each of the outstanding shares of FFCH common stock, and each outstanding share of First Financial Fixed Rate Cumulative Perpetual Preferred Stock, Series A ("First Financial Preferred Stock"), will be converted into the right to receive one share of preferred stock of SCBT, to be designated Series A Fixed Rate Cumulative Perpetual Preferred Stock and having such rights, preferences and privileges as are not materially less favorable than the rights, preferences and privileges of the First Financial Preferred Stock.

The transaction is subject to regulatory approvals, the affirmative vote of both SCBT Financial Corporation’s and First Financial’s shareholders, and other customary closing conditions. The transaction is expected to close during the third quarter of 2013.

The Savannah Bancorp, Inc. Acquisition

On December 13, 2012, the Company acquired all of the outstanding common stock of The Savannah Bancorp, Inc. (“Savannah”), a bank holding company based in Savannah, Georgia, in a stock transaction. Savannah common shareholders received 0.2503 shares of the Company’s common stock in exchange for each share of Savannah stock, resulting in the Company issuing 1,802,137 common shares. In total, the purchase price was $68.9 million including the value of “in the money” outstanding stock options totaling $63,000.

The Savannah transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Fair values are preliminary and subject to refinement for up to a year after the closing date of the acquisition.

The following table presents the assets acquired and liabilities assumed as of December 13, 2012, as recorded by Savannah on the acquisition date and initial and subsequent fair value adjustments.

							Subsequent
	As Recorded by			Fair Value			Fair Value			As Recorded
(Dollars in thousands)	Savannah			Adjustments			Adjustments			by SCBT
Assets
Cash and cash equivalents	$	86,244		$	—		$	—		$	86,244
Investment securities	75,460			(1,288		)(a)	31		(a)	74,203
Loans	660,555			(59,196		)(b)	—			601,359
Premises and equipment	12,555			(1,843		)(c)	(264		)(c)	10,448
Intangible assets	3,357			9,546		(d)	15		(d)	12,918
Other real estate owned and repossessed assets	13,934			(5,315		)(e)	264		(e)	8,883
Bank owned life insurance	6,705			—			—			6,705
Deferred tax asset	(790		)	39,143		(f)	(128		)(f)	38,225
Other assets	8,497			(2,348		)(g)	—			6,149
Total assets	$	866,517		$	(21,301	)	$	(82	)	$	845,134

Liabilities
Deposits:
Noninterest-bearing	$	129,902		$	—		$	—		$	129,902
Interest-bearing	619,198			2,530		(h)	—			621,728
Total deposits	749,100			2,530			—			751,630
Federal funds purchased and securities sold under agreements to repurchase	13,491			—			—			13,491
Other borrowings	30,613			(232		)(i)	—			30,381
Other liabilities	8,026			6,657		(j)	(311		)(j)	14,372
Total liabilities	801,230			8,955			(311		)	809,874
Net identifiable assets acquired over (under) liabilities assumed	65,287			(30,256		)	229			35,260
Goodwill	—			33,886			(229		)	33,657
Net assets acquired over liabilities assumed	$	65,287		$	3,630		$	—		$	68,917

Consideration:
SCBT Financial Corporation common shares issued	1,802,137
Purchase price per share of the Company’s common stock	$	38.20
Company common stock issued and cash exchanged for fractional shares	68,854
Cash paid for stock options outstanding	63
Fair value of total consideration transferred	$	68,917

Explanation of fair value adjustments

(a)—Adjustment reflects marking the available for sale portfolio to fair value as of the acquisition date.

(b)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio and excludes the allowance for loan losses recorded by Savannah.

(c)—Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired premises and equipment.

(d)—Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts and other intangibles for non-compete agreements and customer lists.

(e)—Adjustment reflects the fair value adjustments to OREO based on the Company’s evaluation of the acquired OREO portfolio.

(f) —Adjustment to record deferred tax asset related to fair value adjustments at 35.8% income tax rate.

(g)—Adjustment reflects uncollectible portion of accrued interest receivable.

(h)—Adjustment arises since the rates on interest-bearing deposits are higher than rates available on similar deposits as of the acquisition date.

(i)— Adjustment reflects the prepayment fee paid when FHLB advances were completely paid off in December of 2012 and the fair value adjustment based on the Company’s evaluation of the junior subordinated debt.

(j)— Adjustment reflects the incremental accrual for employee related benefits, asset sale termination fee and other liabilities.

Peoples Bancorporation, Inc. Acquisition

On April 24, 2012, the Company acquired all of the outstanding common stock of Peoples Bancorporation, Inc. (“Peoples”), a bank holding company based in Easley, South Carolina, in a stock transaction. Peoples common shareholders received 0.1413 shares of the Company’s common stock in exchange for each share of Peoples stock, resulting in the Company issuing 1,002,741 common shares at a fair value of $31.1 million. Peoples’ preferred stock (including accrued and unpaid dividend) issued under the U.S. Treasury’s Troubled Asset Relief Program (“TARP”) were purchased by the Company for $13.4 million and retired as part of the merger transaction. In total, the purchase price was $44.5 million including the value of “in the money” outstanding stock options totaling $96,000.

The Peoples transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at fair value on the acquisition date.

The following table presents the assets acquired and liabilities assumed as of April 24, 2012, as recorded by Peoples on the acquisition date and initial and subsequent fair value adjustments.

			Initial			Subsequent
	As Recorded by		Fair Value			Fair Value			As Recorded
(Dollars in thousands)	Peoples		Adjustments			Adjustments			by SCBT
Assets
Cash and cash equivalents	$	24,459	$	—		$	—		$	24,459
Investment securities	176,334		(442		)(a)	—			175,892
Loans	262,858		(28,613		)(b)	—			234,245
Premises and equipment	10,094		3,202		(c)	—			13,296
Intangible assets	—		2,930		(d)	—			2,930
Other real estate owned and repossessed assets	13,257		(5,153		)(e)	—			8,104
Deferred tax asset	4,702		11,766		(f)	64		(f)	16,532
Other assets	17,588		(883		)(g)	—			16,705
Total assets	$	509,292	$	(17,193	)	$	64		$	492,163

Liabilities
Deposits:
Noninterest-bearing	$	54,884	$	—		$	—		$	54,884
Interest-bearing	378,781		1,405		(h)	—			380,186
Total deposits	433,665		1,405			—			435,070
Other borrowings	9,542		—			—			9,542
Other liabilities	4,291		2,475		(i)	178		(i)	6,944
Total liabilities	447,498		3,880			178			451,556
Net identifiable assets acquired over (under) liabilities assumed	61,794		(21,073		)	(114		)	40,607
Goodwill	—		3,828			114			3,942
Net assets acquired over (under) liabilities assumed	$	61,794	$	(17,245	)	$	—		$	44,549

Consideration:
SCBT Financial Corporation common shares issued	1,002,741
Purchase price per share of the Company’s common stock	$	31.06
Company common stock issued and cash exchanged for fractional shares	31,160
Cash paid for stock options outstanding	96
Cash paid for TARP preferred stock	13,293
Fair value of total consideration transferred	$	44,549