CARY, N.C., Oct. 16, 2008 (GLOBE NEWSWIRE) -- Crescent Financial Corporation (Nasdaq:CRFN), parent company of Crescent State Bank headquartered in Cary, North Carolina, announced unaudited net income for the three months ended September 30, 2008 of $746,000 compared to net income of $1,563,000 for the prior year period. Diluted earnings per share for the current three-month period was $.08 compared to $.16 for the third quarter of 2007. Return on average assets and return on average equity for the period were 0.31% and 3.12%, respectively compared with 0.79% and 7.04% for the prior year period. Earnings were impacted by continued net interest margin compression resulting from the lower interest rate environment along with an increase in provision for loan losses.
Interest income was $13.8 million for the current quarter compared to $14.1 million for the prior year quarter. Lower interest rates and the competitive loan pricing environment over the past twelve months resulted in a $3.0 million decline in interest income due to rate changes, which more than offset the $2.7 million increase due to the rise in earning asset volume. The volume of average earning assets grew by $146.3 million, from $725.4 million to $871.7 million. Interest expense for the third quarter increased to $7.4 million from $7.3 million for the prior year period. The volume of new interest-bearing liabilities to fund the earning asset growth cost an additional $1.8 million in interest expense, while the decline in interest expense due to lower rates was only $1.7 million. Deposit rates in our markets remain at higher levels than one might anticipate given a 325 basis point drop in short-term interest rates as certain banks experiencing liquidity issues have offered well above market rates to attract retail deposits. We have selectively matched rates for good relationship customers which has not allowed the cost of our time deposit portfolio to fall to the extent expected. Net interest margin declined by 83 basis points to 2.89% for the quarter ended September 30, 2008 compared with 3.72% for the prior year quarter.
The provision for loan losses for the comparable periods rose by $616,000 to $1.3 million for the current quarter. Total non performing assets increased by $2.0 million during the quarter from $2.6 million to $4.6 million. Of the $1.3 million in provision, approximately $1.0 million was related to specific credits and $300,000 was attributable to loan growth. The Company experienced net charge-offs of $148,000 or an annualized 0.08% of average gross loans during the quarter.
Non-interest income grew by $367,000 or 53% to $1.1 million compared to $689,000 for the prior year quarter. Revenues increased across several non interest income categories including earnings on cash value of bank owned insurance, customer service fees, mortgage loan origination fees and deposit service charges. The Company received approximately $121,000, pre-tax, in miscellaneous, non-recurring revenue during the quarter.
Non-interest expenses increased by $664,000 or 15% to $5.1 million compared with $4.4 million for the prior year quarter. Personnel and occupancy expenses accounted for $533,000 of the total increase as the Company opened two new banking offices and relocated a third office to a new more visible location.
For the nine months ended September 30, 2008, the Company reported net income of $2,777,000 compared to $4,476,000 for the nine months ended September 30, 2007. Diluted earnings per share was $.29 for the current period and $.47 for the prior period. Net interest income was $19.2 million compared with $19.6 million. The positive impact of an increase in average earning assets for the current nine-month period of $136.1 million was offset by a 69 basis point decline in net interest margin from 3.76% to 3.07%. Non-interest income increased by $717,000, or 37%, primarily in the areas of customer service fees, earnings on cash value of bank owned life insurance and mortgage loan origination fees. Non-interest expenses increased by $1.9 million, or 15%, with $1.7 million attributable to personnel, occupancy and FDIC insurance premium expenses. The provision for loan losses for the current nine-month period was $2.5 million compared with $1.3 million for the prior year period.
Crescent Financial Corporation reported total assets on September 30, 2008 of $955.5 million reflecting a 17% increase over total assets of $814.3 million at September 30, 2007. Total net loans increased by 18% from $643.5 million to $759.1 million, total deposits increased 19% from $595.6 million to $711.6 million and total borrowings increased by 15% from $126.2 million to $145.2 million. Total stockholders' equity grew by 6% from $89.1 million to $94.2 million.
Mike Carlton, President and CEO, stated, "Given the challenging economic environment for the entire financial services industry, we are pleased with the accomplishments during the quarter. We continued to conservatively expand the balance sheet and experienced greater net interest income and non interest income in comparison to the prior quarter while working diligently to reduce non interest expenses. As a Company, credit quality and credit management continue to be a top priority for our organization. While we are fortunate to be providing banking services in the more economically stable communities within North Carolina, there are areas within our footprint that are feeling the effects of a slowing economy and as a result, we have taken proactive steps toward increasing our loan loss reserves in the event that certain credits further deteriorate. The level of non performing assets and charge-offs continue to be significantly less than our peer group. Nonperforming loans to total loans were .36% while the charge offs for the second quarter were only $148,000 or .08% of average gross loans during the quarter. From a capital perspective, we are pleased that we were able to finalize the $7.5 million subordinated debt transaction prior to quarter end. Management and the Board of Directors believed it was prudent to raise the new capital at attractive pricing without diluting our existing shareholder base. With this additional capital, we should be able to continue to expand the balance sheet and be in a better position to take advantage of opportunities that may be created by the current economic environment."
Crescent State Bank is a state chartered bank operating thirteen banking offices in Cary (2), Apex, Clayton, Holly Springs, Southern Pines, Pinehurst, Sanford, Garner, Raleigh, Wilmington (2) and Knightdale, 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 Income Statements
(Amounts in thousands except share and per share data)
(Unaudited)
For the Three Month Period Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2008 2008 2008 2007 2007
--------- --------- --------- --------- ---------
INTEREST INCOME
Loans $ 12,571 $ 11,936 $ 12,472 $ 13,249 $ 12,867
Investment
securities
available
for sale 1,206 1,227 1,206 1,155 1,142
Fed funds sold
and other
interest 17 14 44 14 86
--------- --------- --------- --------- ---------
Total
Interest
Income 13,794 13,177 13,722 14,418 14,095
--------- --------- --------- --------- ---------
INTEREST
EXPENSE
Deposits 5,953 5,502 5,709 5,782 6,121
Short-term
borrowings 126 91 117 182 149
Long-term debt 1,372 1,292 1,372 1,421 1,016
--------- --------- --------- --------- ---------
Total
Interest
Expense 7,451 6,885 7,198 7,385 7,286
--------- --------- --------- --------- ---------
Net
Interest
Income 6,343 6,292 6,524 7,033 6,809
Provision for
loan losses 1,282 459 806 337 666
--------- --------- --------- --------- ---------
Net interest
income after
provision
for loan
losses 5,061 5,833 5,718 6,696 6,143
--------- --------- --------- --------- ---------
Non-interest
income
Mortgage
loan
origination
income 189 151 172 116 146
Service
charges and
fees on
deposit
accounts 414 381 381 355 336
Gain/loss on
sale of
securities -- 16 -- -- --
Gain/(loss)
on disposal
of assets (4) (63) (9) (65) --
Other 458 332 264 249 208
--------- --------- --------- --------- ---------
Total non-
interest
income 1,057 817 808 655 690
Non-interest
expense
Salaries and
employee
benefits 2,881 2,917 2,804 2,460 2,476
Occupancy and
equipment 709 656 663 602 582
Data
processing 270 261 271 261 278
Other 1,206 1,259 1,283 1,254 1,066
--------- --------- --------- --------- ---------
Total non-
interest
expense 5,066 5,093 5,021 4,577 4,402
--------- --------- --------- --------- ---------
Income
before
income
taxes 1,052 1,557 1,505 2,774 2,431
Income taxes 306 526 505 1,002 868
--------- --------- --------- --------- ---------
Net income $ 746 $ 1,031 $ 1,000 $ 1,772 $ 1,563
========= ========= ========= ========= =========
NET INCOME PER
COMMON SHARES
Basic $ 0.08 $ 0.11 $ 0.11 $ 0.19 $ 0.17
Diluted $ 0.08 $ 0.11 $ 0.10 $ 0.18 $ 0.16
WEIGHTED
AVERAGE COMMON
SHARES
OUTSTANDING
Basic 9,548,589 9,467,294 9,417,694 9,363,700 9,246,318
Diluted 9,628,147 9,678,841 9,678,862 9,678,862 9,642,429
Return on
average
assets 0.31% 0.46% 0.47% 0.85% 0.79%
Return on
average
equity 3.12% 4.37% 4.32% 7.73% 7.04%
Net interest
margin 2.89% 3.05% 3.27% 3.64% 3.72%
Allowance
for loan
losses to
avg loans 1.30% 1.19% 1.19% 1.22% 1.26%
Non-
performing
loans to
total
loans 0.36% 0.10% 0.04% 0.40% 0.22%
Non-
performing
assets to
total
assets 0.49% 0.29% 0.29% 0.36% 0.21%
Crescent Financial Corporation
Consolidated Balance Sheet
(Amounts in thousands except share and per share data)
(Unaudited)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2008 2008 2008 2007 (a) 2007
--------- --------- --------- --------- ---------
ASSETS
Cash and due
from banks $ 12,320 $ 13,234 $ 14,088 $ 12,048 $ 13,127
Interest
earning
deposits with
banks 639 391 387 212 365
Federal funds
sold 9,477 98 467 97 4,054
Investment
securities
available for
sale at fair
value 96,015 95,979 94,855 90,758 89,799
Loans 769,060 742,855 710,545 675,916 651,652
Allowance for
loan losses (9,988) (8,855) (8,425) (8,273) (8,190)
--------- --------- --------- --------- ---------
Net Loans 759,072 734,000 702,120 667,643 643,462
Accrued
interest
receivable 3,327 3,105 3,268 3,762 3,721
Federal Home
Loan Bank
stock 7,264 7,714 7,039 6,791 6,566
Bank premises
and equipment 10,297 10,156 9,966 8,094 6,921
Investment in
life
insurance 16,517 16,343 9,210 9,123 9,035
Goodwill 30,233 30,233 30,233 30,233 30,233
Other assets 10,366 9,323 9,460 6,779 6,968
--------- --------- --------- --------- ---------
Total
Assets $ 955,527 $ 920,576 $ 881,093 $ 835,540 $ 814,251
========= ========= ========= ========= =========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits
Demand $ 69,594 $ 64,306 $ 65,890 $ 69,368 $ 72,653
Savings 64,214 76,591 88,982 110,516 122,359
Money market
and NOW 120,430 128,274 106,109 80,316 88,295
Time 457,405 384,508 392,240 345,231 312,320
--------- --------- --------- --------- ---------
Total
Deposits 711,643 653,679 653,221 605,431 595,627
Short-term
borrowings 20,000 30,894 10,000 13,755 10,000
Long-term debt 125,748 138,248 121,248 121,248 116,248
Accrued
expenses and
other
liabilities 3,986 3,692 3,286 3,447 3,273
--------- --------- --------- --------- ---------
Total
Liabilities 861,377 826,513 787,755 743,881 725,148
STOCKHOLDERS'
EQUITY
Common stock 9,613 9,605 9,496 9,405 9,336
Additional
paid-in
capital 74,256 74,172 73,699 73,596 73,394
Retained
earnings 11,254 10,509 9,478 8,620 6,847
Accumulated
other
comprehensive
loss (973) (223) 665 38 (474)
--------- --------- --------- --------- ---------
Total
Stockholders'
Equity 94,150 94,063 93,338 91,659 89,103
Total
Liabilities
and
Stockholders'
Equity $ 955,527 $ 920,576 $ 881,093 $ 835,540 $ 814,251
========= ========= ========= ========= =========
Ending
shares
outstanding 9,612,743 9,604,826 9,496,555 9,404,579 9,335,755
Book value
per share $ 9.79 $ 9.79 $ 9.83 $ 9.75 $ 9.54
Tangible
book value
per share $ 6.55 $ 6.54 $ 6.53 $ 6.42 $ 6.19
(a) Derived from audited consolidated financial statements.