CARY, N.C., July 17, 2007 (PRIME NEWSWIRE) -- Crescent Financial Corporation (Nasdaq:CRFN), parent company of Crescent State Bank headquartered in Cary, North Carolina, announced unaudited net income for the quarter ended June 30, 2007 of $1,448,000, reflecting a 44% increase over net income of $1,003,000 for the prior year quarter. Diluted earnings per share for both three-month periods was $0.15. Per share calculations have been adjusted to reflect the 11-for-10 stock split declared on April 18, 2007 and payable on May 22, 2007 to stockholders of record May 11, 2007. Comparative diluted earnings per share results were impacted by the 2,432,000 shares issued on August 31, 2006 in connection with the acquisition of Port City Capital Bank. Net income for the period ended June 30, 2007 included several non-recurring expense items. During June 2007, Port City Capital Bank, formerly a separate banking subsidiary of Crescent Financial Corporation, was merged into Crescent State Bank. Expenses related to the merger incurred during the second quarter amounted to $146,000, pre-tax. Additionally, the Company incurred $44,000 of legal and consulting expenses during the second quarter which are deemed to be non-recurring. The after tax impact of these expenses was approximately $122,000.
The increase in earnings resulted from strong earning asset growth, which was partially offset by a lower net interest margin. Net interest income increased by 56% from $4.2 million in the second quarter of 2006 to $6.6 million in the current quarter. Average earning assets grew by $277.8 million, from $427.8 million to $705.6 million, of which approximately $153.9 million was attributable to the acquisition of Port City Capital Bank and $123.9 million represented organic growth. Net interest margin was 3.73% for the quarter ended June 30, 2007 compared with 3.95% for the prior year quarter. Strong loan demand, the competitive loan pricing environment in our markets, reliance on wholesale forms of funding and the flat interest rate yield curve have caused downward pressure on net interest margin.
Non-interest income grew by $28,000 or 5% from $619,000 for the prior year quarter to $647,000 for the three months ended June 30, 2007. Earnings on cash value of bank owned life insurance increased by $43,000 and revenue from service charges and other deposit related fees increased by $14,000. Fees earned on origination of brokered residential mortgage loans declined by $30,000 from $165,000 to $135,000. The decrease in origination revenue is indicative of slower home sales compared to a year ago.
Non-interest expenses increased by $1.5 million or 49% from $3.1 million during the second quarter of 2006 to $4.6 million for the current year quarter. A portion of that increase is attributed to the acquisition of Port City Capital Bank in the third quarter of 2006. Total non-interest expenses attributed to Port City for the second quarter of 2007 were approximately $910,000. Personnel expense experienced the largest increase over the past year growing from $1.7 million to $2.5 million. The Company has added head count in several operational areas over the past year in order to strengthen the infrastructure needed to further expand the franchise. The provision for loan losses was $322,000 during the current quarter compared with $164,000 for the prior year period.
For the six months ended June 30, 2007, the Company reported net income of $2,914,000 reflecting a 47% increase when compared to net income of $1,986,000 for the six months ended June 30, 2006. Diluted earnings per share was $0.30 for both of the two comparative periods. Net interest income increased by $4.5 million or 55% from $8.3 million for the prior year period to $12.8 million for the current six-month period. The net interest margin for the current six-month period was 3.77% compared to 4.02% for the prior year period. Non-interest income increased by $61,000 or 5%. Non-interest expenses increased by $2.9 million or 48%. Non interest expenses attributable to the Port City subsidiary for the six-month period ended June 20, 2007 were approximately $1.4 million of the total increase. The provision for loan losses for the current six-month period was $682,000 compared with $434,000 for the prior year period.
Crescent Financial Corporation reported total assets on June 30, 2007 of $782.3 million reflecting a 66% increase over total assets of $470.8 million on June 30, 2006. Total net loans increased by 67% from $360.4 million a year ago to $600.8 million at June 30, 2007. Total deposits increased 67% from $369.6 million to $617.8 million and total borrowings increased by 34% from $56.2 million to $75.2 million. Total stockholders' equity grew by 100% from $43.0 million to $86.0 million due in large part to the acquisition of Port City Capital Bank.
Mike Carlton, President and CEO, stated, "On June 15th, we merged Port City Capital Bank into Crescent State Bank. This successful conversion was made possible by the tremendous effort and dedication of our employees. With the conversion behind us, we can now focus our attention on the future of Crescent Financial Corporation. The current interest rate environment is challenging, but we are poised to continue growing both our franchise and our earnings."
Crescent State Bank is a state chartered bank operating eleven banking offices in Cary (2), Apex, Clayton, Holly Springs, Southern Pines, Pinehurst, Sanford, Garner, Raleigh and Wilmington, North Carolina. Crescent Financial Corporation stock can be found on the NASDAQ Global Market trading under the symbol CRFN. Investors can access additional corporate information, product descriptions and online services through the Bank's website at www.crescentstatebank.com.
Information in this press release contains "forward-looking statements." These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates and the effects of competition. Additional factors that could cause actual results to differ materially are discussed in Crescent Financial Corporation's recent filings with the Securities Exchange Commission, including but not limited to its Annual Report on Form 10-K and its other periodic reports.
Crescent Financial Corporation
Consolidated Balance Sheet
(Amounts in thousands except share and per share data)
(Unaudited)
June 30, March 31, Dece. 31, Sept. 30, June 30,
2007 2007 2006 (a) 2006 2006
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and
due from
banks $ 14,350 $ 12,731 $ 14,295 $ 14,046 $ 12,263
Interest
earning
deposits
with
banks 1,021 209 763 812 207
Federal
funds
sold 16,664 13,158 92 11,556 8,738
Investment
securities
available
for sale at
fair value 88,240 86,360 84,723 83,827 64,397
Loans 608,318 586,148 549,819 526,066 365,174
Allowance
for loan
losses (7,536) (7,277) (6,945) (6,573) (4,772)
---------- ---------- ---------- ---------- ----------
Net
Loans 600,782 578,871 542,874 519,493 360,402
Accrued
interest
receivable 3,422 3,263 3,046 2,950 2,146
Federal Home
Loan Bank
stock 4,271 4,181 3,583 3,133 3,072
Bank
premises
and
equipment 6,923 6,710 5,908 5,818 5,067
Investment in
life
insurance 8,947 8,858 5,683 5,633 5,583
Goodwill 30,233 30,225 30,225 30,284 3,600
Other
assets 7,369 6,911 6,717 6,619 5,288
---------- ---------- ---------- ---------- ----------
Total
Assets $ 782,222 $ 751,477 $ 697,909 $ 684,171 $ 470,763
========== ========== ========== ========== ==========
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits
Demand $ 81,181 $ 74,127 $ 70,420 $ 74,875 $ 52,179
Savings 101,429 95,744 78,379 74,277 33,664
Money
market
and NOW 97,146 101,088 97,343 110,235 85,342
Time 338,057 319,050 295,739 280,844 198,444
---------- ---------- ---------- ---------- ----------
Total
Deposits 617,813 590,009 541,881 540,231 369,629
Short-term
borrowings -- 18,000 24,451 14,741 16,000
Long-term
debt 75,248 55,248 45,248 45,248 40,248
Accrued
expenses
and other
liabil-
ities 3,118 3,179 3,295 2,697 1,922
---------- ---------- ---------- ---------- ----------
Total
Liabil-
ities 696,179 666,436 614,875 602,917 427,799
STOCKHOLDERS'
EQUITY
Common stock 9,187 8,302 8,265 8,249 5,798
Additional
paid-in
capital 72,554 62,832 62,659 62,522 28,829
Retained
earnings 5,285 14,076 12,611 10,967 9,693
Accumulated
other
comprehensive
loss (983) (169) (501) (484) (1,356)
---------- ---------- ---------- ---------- ----------
Total
Stockholders
Equity 86,043 85,041 83,034 81,254 42,964
Total
Liabilities
and
Stockholders
Equity $ 782,222 $ 751,477 $ 697,909 $ 684,171 $ 470,763
========== ========== ========== ========== ==========
Ending
shares
outstanding
(b) 9,187,468 9,132,055 9,091,650 9,073,519 6,378,064
Book
value
per
share $ 9.37 $ 9.31 $ 9.13 $ 8.96 $ 6.74
Crescent Financial Corporation
Consolidated Income Statements
(Amounts in thousands except share and per share data)
(Unaudited) For the three-month period ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
2007 2007 2006 2006 2006
---------- ---------- ---------- ---------- ----------
INTEREST
INCOME
Loans $ 12,331 $ 11,575 $ 11,125 $ 8,516 $ 7,019
Investment
securities
available
for sale 1,096 1,061 1,038 877 724
Fed funds sold
and other
interest 175 121 125 129 51
---------- ---------- ---------- ---------- ----------
Total
Interest
Income 13,602 12,757 12,288 9,522 7,794
---------- ---------- ---------- ---------- ----------
INTEREST
EXPENSE
Deposits 5,965 5,561 5,161 3,824 2,831
Short-term
borrowings 209 290 234 164 213
Long-term debt 859 662 649 620 534
---------- ---------- ---------- ---------- ----------
Total Interest
Expense 7,033 6,513 6,044 4,608 3,578
---------- ---------- ---------- ---------- ----------
Net Interest
Income 6,569 6,244 6,244 4,914 4,216
Provision for
loan losses 322 359 374 182 164
---------- ---------- ---------- ---------- ----------
Net interest
income after
provision
for loan
losses 6,247 5,885 5,870 4,732 4,052
---------- ---------- ---------- ---------- ----------
Non-interest
income
Mortgage loan
origination
income 135 115 138 193 165
Service
charges and
fees on
deposit
accounts 322 348 341 321 308
Realized
gain/loss
on sale of
securities -- -- -- -- --
Other 190 166 222 181 146
---------- ---------- ---------- ---------- ----------
Total
non-interest
income 647 629 701 695 619
Non-interest
expense
Salaries and
employee
benefits 2,535 2,404 2,169 1,899 1,670
Occupancy and
equipment 564 548 547 512 489
Data
processing 257 261 260 205 186
Other 1,267 1,007 1,003 816 759
---------- ---------- ---------- ---------- ----------
Total non-
interest
expense 4,623 4,220 3,979 3,432 3,104
---------- ---------- ---------- ---------- ----------
Income before
income taxes 2,271 2,294 2,592 1,995 1,567
Income taxes 823 828 949 721 564
---------- ---------- ---------- ---------- ----------
Net income $ 1,448 $ 1,466 $ 1,643 $ 1,274 $ 1,003
========== ========== ========== ========== ==========
NET INCOME
PER COMMON
SHARE (b)
Basic $0.16 $0.16 $0.18 $0.17 $0.16
===== ===== ===== ===== =====
Diluted $0.15 $0.15 $0.17 $0.16 $0.15
===== ===== ===== ===== =====
WEIGHTED
AVERAGE
COMMON SHARES
OUTSTANDING (b)
Basic 9,140,356 9,093,392 9,074,681 7,282,417 6,372,323
========== ========== ========== ========== ==========
Diluted 9,626,134 9,611,833 9,566,909 7,788,370 6,628,300
========== ========== ========== ========== ==========
Return on
average
assets 0.76% 0.82% 0.95% 0.94% 0.88%
Return on
average
equity 6.73% 7.06% 7.90% 8.99% 9.33%
Net interest
margin 3.73% 3.81% 3.92% 3.89% 3.95%
Allowance for
loan losses
to avg loans 1.24% 1.24% 1.26% 1.25% 1.31%
Nonperforming
loans to
total loans 0.10% 0.10% 0.02% 0.02% 0.07%
Nonperforming
assets to
total assets 0.09% 0.10% 0.03% 0.05% 0.06%
(a) Derived from audited consolidated financial statements.
(b) Adjusted, where applicable, for the stock split effected as a
10% stock dividend declared on April 18, 2007 to be paid on
May 22, 2007 to stockholders of record on May 11, 2007.