This excerpt taken from the FFCH 10-K filed Dec 14, 2006.
NOTE 21. Loan Sales
had loan and participation sales of approximately $177.9 million during fiscal
year ended September 30, 2006 and $214.1 million in fiscal year ended September
30, 2005 of which $85.9 million in fiscal 2006 and $117.7 million in fiscal 2005
were to the FHLB of Atlanta.
FIRST FINANCIAL HOLDINGS, INC.
completion of a transfer of loans to the FHLB, First Federal recognizes the fair
value of the future cash flows from credit enhancement fees, reduced by the
costs of pool insurance. First Federal recognizes at fair value its recourse
obligation due to the credit enhancement obligation. When applying sales
accounting treatment to the MPF sales, these respective fair values enter into
First Federals gain or loss on the sales under SFAS 140. Thereafter, the
credit enhancement asset and the recourse obligation are reduced through normal
amortization methods. As a practical matter and based upon the fact that the
credit enhancement fees cannot be separated from the recourse obligation, a net
asset has been established. To date, First Federal has not incurred any actual
losses associated with its credit enhancement obligation of 20 basis points as
outlined above. Any losses to date have been immaterial and were out of the