Income Tax

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Text Block]

NOTE 9. Income Tax

     The income tax expense for the three months ended June 30, 2012 was $7.7 million, compared with an income tax benefit of $(25.3) million for the three months ended June 30, 2011. The income tax expense for the six months ended June 30, 2012 was $12.0 million, compared with an income tax benefit of $(26.2) million for the same period of 2011. The quarter ended June 30, 2012 included the establishment of a $5.6 million deferred tax liability related to the gain on the Plantation acquisition. The quarter ended March 31, 2012 included a $2.1 million write-down of the state deferred tax asset in connection with First Federal’s conversion from a thrift to a state-chartered commercial bank due to a difference in South Carolina income tax laws for banks versus thrifts. The effective tax rate for the three months ended June 30, 2012, was 38.00%, compared with 38.57% for the same period of the prior year. The effective tax rate for the six months ended June 30, 2012 was 45.49%, compared with 38.62% for the same period of the prior year. The increase over the six month period of 2011 was primarily the result of the write-down of the state deferred tax asset as discussed above.

     First Financial regularly monitors its deferred tax position. At June 30, 2012, First Financial had a net deferred tax liability of $5.1 million, as compared with a deferred tax asset of $3.2 million at December 31, 2011. While currently in a net liability position, First Financial continues to evaluate its deferred tax assets and considers the cumulative three-year pretax operating results as well as the timing, nature and amount of future taxable income, various plans to maximize the realization of deferred tax assets and taxable income within the carryback and carryforward periods, the reversal of taxable temporary differences as well as future events and uncertainties. After evaluating all positive and negative evidence available as of June 30, 2012, First Financial concluded that it is more likely than not that it will be able to realize all remaining deferred tax assets and that a valuation allowance was not needed at June 30, 2012.