Keefe Bruyette & Woods Comments On First Financial Holdings, First Potomac Realty Trust Following Earnings Announcements

After posting a quarter of profitability in fiscal 1Q11, First Financial Holdings FFCH slipped back into the red this quarter primarily on lower pre-provision earnings power and higher NCOs. While credit trends did show some positive signs, NCOs jumped back to 2.45%, increasing in mostly all categories linked quarter. Lowering estimates and reiterate Market Perform and $12 PT. KBW believes the risks to owning FFCH shares include: reliance on the coastal Carolinas economy, the company's high level of nonperforming assets and potential cumulative loss rates on the loan portfolio, integration risk associated with the Cape Fear deal and any other potential acquisitions, the higher-risk securities portfolio, and illiquidity of the shares. First Potomac Realty Trust FPO reported operating Q1 FFO/sh of $0.25, vs KBW's $0.23 est. & consensus of $0.24. SS NOI was +3.5%, rent spreads turned modestly positive. FPO maintained 2011 guidance of $1.02-$1.10 vs KBW's $1.09 estimate and consensus of $1.04. Expect FFO to ramp over course of 2011 with 2H occupancy gains. KBW maintains estimates, $18 PT, and Outperform Rating. FFCH closed Friday at $10.98 FPO closed Friday at $16.23