First Financial Holdings Inc. is selling its insurance agency subsidiary and its chief executive said that the Charleston, S.C., company intends to use the proceeds to shore up its capital base and invest in its core businesses of banking and wealth management.

The $3.3 billion-asset First Financial announced last week that it would sell the agency, First Southeast Insurance Services, to Hub International Ltd. in Chicago for $38 million in cash. The sale would generate a $6.9 million pre-tax gain for First Financial and would boost its total risk-based capital ratio from 14.38% to 15.72% and its tangible common equity ratio by 90 basis points, to 7.3%, based on first quarter data. In a news release, First Financial President and CEO R. Wayne Hall said, "This transaction accomplishes one of our strategic objectives of increasing our tangible equity and regulatory capital and therefore allowing us to be opportunistic in exploring strategies to better position the company for the future."

In a research note published Tuesday, the investment bank Sandler O'Neill said the sale is a "positive development" for shareholders because it might help First Financial avoid having to issue more stock repay the funds it received from the Treasury Department's Troubled Asset Relief Program.

First Financial's shares were trading at $9.68 midday Tuesday, up nearly 8% since the deal was announced after the market closed Thursday.

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