First Financial Holdings Inc. of Charleston, S.C., warned Thursday that it expects to report a steep loan-loss provision for its fiscal second quarter, which ended March 31.
The $3.5 billion-asset company said it expects to take a $44 million to $46 million provision, which would represent a 75% to 80% increase from the previous quarter and would be more than three times higher than the provision taken a year earlier.
The higher provision is the result of a continuing review of First Financial's commercial loan portfolio.
Thomas Hood, First Financial's chief executive, said in a press release that it completed a review of its acquisition and development portfolios, and has appropriately reserved or charged off losses in those portfolios.
He said First Financial would complete the review of other commercial real estate and business loans greater than $1 million by June 30.
But Hood stressed that "loan-loss provisions and chargeoffs will remain elevated through fiscal 2010 because of the continued deterioration in the real estate sector and the weak economy."
In a research note published Wednesday, Catherine Mealor, an analyst with KBW Inc.'s Keefe, Bruyette & Woods Inc., said the increased provision was not surprising given the loan review, but her estimates called for a provision of $28 million. Mealor had expected the company to report a loss of 35 cents a share. With the heightened provision, she expects a loss of 91 cents a share.
Despite the increased credit costs, First Financial said it expects its thrift unit to remain well capitalized as of March 31. First Financial is set to release its second-quarter results April 27.