Oct. 28--First Financial Holdings Inc. on Tuesday reported a loss of $1.3 million in its fiscal fourth quarter.

The parent company of First Federal Savings and Loan Association of Charleston cited the continuing economic downturn and an increase in nonperforming loans. The company had a profit of $6.3 million in the fourth quarter of 2008.

The loss in the latest quarter was 19 cents a share, in contrast to a profit of 54 cents a share a year earlier.

Thanks to the benefits of its takeover of Wilmington's Cape Fear Bank in April, First Financial reported higher profit for the full fiscal year -- an increase to $29.3 million from $22.6 million in fiscal 2008.

Included in the latest results was an after-tax extraordinary gain of $28.9 million, which represents the difference between the purchase price of Cape Fear and the fair market value of its assets and liabilities on April 13, when First Financial acquired the failed Cape Fear.

"We are very pleased with our performance given the impact of the current economic environment," A. Thomas Hood, president and CEO, said in the filing with the Securities and Exchange Commission.

Hood cited the public sale of $65 million of common stock in the fourth quarter and the "conversion of the systems of the former Cape Fear Bank."

First Financial increased its

provision for loan losses -- that is, what it has set aside as an allowance for loan losses -- to $21.3 million in the fourth quarter compared with $12.4 million in the year-earlier period. It cited in its SEC filing an increase in nonperforming loans and "an ongoing assessment of current economic conditions specific to the markets we serve" -- including the Charleston, S.C., area, Myrtle Beach and Wilmington.

The company's allowance for loan losses in the fourth quarter rose to 2.92 percent of problem assets to total assets, said Dee Bee Wright, vice president-investor relations and corporate secretary. That compared with 0.84 percent in the fourth quarter of 2008.

Its loan loss reserve coverage of nonperforming loans was 85 percent as of Sept. 30 compared with 116.3 percent on Sept. 30, 2008.

That means that First Financial has already set aside 85 percent of the value of non-accruing loans. While that is down from 116 percent a year earlier, "we are very meticulous, we're monitoring much more closely" the quality of loans, Wright said. That mitigates the decline, she added.

"We continue to devote significant resources to the monitoring and early recognition of potential problems in our loan portfolio," Hood said.