First Financial Holdings Inc., the parent of First Federal Bank, the largest financial institution based in the Charleston area, has agreed to merge with Columbia-based SCBT Financial Corp.

The companies announced the agreement today. Both boards approved it unanimously, according to their joint news release.

First Financial shareholders would receive 0.4237 of a share of SCBT stock for each share they own. Based on SCBT’s closing price of $43.18 on Tuesday, that works out to $18.30 a share, or about $302.4 million in all, the companies said.

The combined company would have about $8.3 billion in assets, $6.9 billion in deposits and $6.1 billion in loans across 148 branches. It would rank fifth in deposit market share in South Carolina, according to the release, which cited SNL Financial.

“We are pleased to announce that two of the Southeast’s oldest, strongest and largest banks are merging to form a dynamic banking company,” Robert R. Hill Jr., SCBT’s president and CEO, said in the release.

Two old banks

First Federal was founded in 1934 and has 66 locations in coastal South Carolina, Florence, Greenville and Wilmington, North Carolina, according to the release. First Financial had $3.2 billion in assets at the end of 2012. By assets, First Federal is the largest financial institution headquartered in the Charleston metro area and the third largest headquartered in South Carolina.

SCBT, in business for more than 79 years, has about $5.1 billion in assets and 82 locations in South Carolina, Georgia and Mecklenburg County, North Carolina. Its divisions include NCBT, CBT, The Savannah Bank and Minis & Co.

“For nearly 80 years, both SCBT and First Federal have consistently served the financial needs of our customers and we look forward to continuing this legacy,” R. Wayne Hall, First Financial’s president and CEO since May 2010, said in the release.

On a conference call with analysts, Hall called the deal “an amazing opportunity for both organizations,” according to a transcript SCBT filed with the Securities and Exchange Commission. Hill said First Financial had “been the gold standard of banking in Charleston and other communities that they serve.”

What it means for Charleston

The holding company would keep its headquarters in Columbia, according to an investor presentation the companies filed with the SEC. Charleston would be home to an expanded operations and support center.

SCBT Chief Operating Officer and Chief Financial Officer John C. Pollok told analysts the company is “going to be able to expand our operations and support center in Charleston South Carolina, where they have a phenomenal facility.” First Financial’s corporate offices are on Mall Drive, where First Federal also houses its operations and administrative groups, according to its filings.

First Financial’s name would survive. If shareholders approve, the combined holding company would be renamed First Financial Holdings Inc. at closing, the release said.

Hall would become president of the combined company. Paula Harper Bethea, First Financial’s board chair, would become vice chair. Hill would remain CEO, and Robert R. Horger would remain chairman. Five First Financial directors would join SCBT’s board.

In the Charleston metro area, First Financial ranks second in deposit market share and SCBT ranks 10th, according to the presentation. Together, they would rank second.

Costs and branches

Pollok said cost savings would be phased in over 18 months, reaching about 30% of First Financial’s roughly $126 million in 2012 core costs.

“We obviously have some branch overlap,” he said. Hill told analysts the company would review the profitability of all of its branches going forward. Neither company said in its announcement how many jobs or branches might be affected.

The companies estimated one-time merger costs at $24 million to $30 million after taxes. SCBT said it would initially keep the $65 million in preferred stock that First Financial sold to the U.S. Treasury in 2008, and that it needs no new capital to complete the deal.

First Financial shareholders would own about 29.3% of the combined company.

What’s next

The deal needs approval from shareholders of both companies and from regulators. The companies expect it to close in the third quarter.

Keefe, Bruyette & Woods advised SCBT. Sandler O’Neill + Partners advised First Financial and gave it a fairness opinion.