The parent company of First Federal Savings and Loan Association of Charleston is warning investors that it will report a quarterly loss based on mounting risks in its commercial loan portfolio.

First Financial Holdings Inc. said late Wednesday that it expects to set aside between $44 million and $46 million to cover potential loan losses, a move that will increase the size of its reserve fund to about $82 million.

That will trigger an unspecified loss for the North Charleston-based company, following a $4.5 million deficit it reported in January for its fiscal first quarter.

"Our ongoing review of our commercial loan portfolio has resulted in a significantly higher provision for loan losses this quarter," Tom Hood, chief executive of First Financial, said in a statement.

Troubled loans that have been classified as uncollectible are projected to total between $36 million and $38 million for the most recently completed quarter.

First Financial will release the results for the second quarter of its fiscal year April 27.

Hood said higher loan-loss provisions and charge-offs likely will "remain elevated" for much of this year because of weaknesses in real estate and the broader economy.

The lender already has pored over its residential development loans, "and we have appropriately reserved or charged-off identified losses in those portfolios," he added.

A similar review of commercial real estate loans and business loans that exceed $1 million has been under way since September. It is expected to be wrapped up by June 30.

Dee Bee Wright, vice president for investor relations at First Financial, said the lender is being required by regulation to beef up its reserves because the level of risk with some borrowers has deteriorated.

It's not likely that all of the flagged loans will go bad, she added.

"We have to look at the current value of property, and we have to look at the capacity of the borrower," she said.

"And even if that loan is performing and is current, not delinquent, we still may have to post a reserve if we have a concern with the borrower's ability to carry the debt going forward."

First Financial said its 76-year-old lending unit will continue to be classified as "well-capitalized" by regulatory standards. First Federal operates 65 offices, mostly in coastal areas from Charleston to Wilmington, N.C. It is the largest bank based in the local region.

While they remain well off their peak, shares of First Financial have risen sharply in recent weeks.

After slipping to $10.48 in early February, the stock suddenly climbed nearly 50 percent, hitting $15.63 on Tuesday. The shares closed lower Thursday, falling 6 percent, or $1.02, to $14.40.

Reach John McDermott at 937-5572 or jmcdermott@postandcourier.com.