CARY, N.C., April 16, 2008 (PRIME NEWSWIRE) -- Crescent Financial Corporation (Nasdaq:CRFN), parent company of Crescent State Bank of Cary, NC, today announced unaudited net income for the quarter ended March 31, 2008 of $1,000,000 or $.10 per diluted share compared with $1,466,000 or $.15 per diluted share for the prior year quarter. Earnings for the quarter were impacted by a contraction of net interest margin and the added expenses of continued franchise expansion.
Net interest income increased by 5% from $6.2 million in the first quarter of 2007 to $6.5 million in the current quarter. Average earning assets for the first quarter of 2008 increased by 21% or $137.8 million over the comparative period in 2007. The potential impact of earning asset growth was partially offset by the 300 basis point reduction in the Prime lending rate over the past year. The net interest margin, interest income less interest expense expressed as a percentage of average assets, declined by 54 basis points from 3.81% to 3.27%. The Company continues to experience strong loan demand and as a result, must rely on higher cost forms of money to fund balance sheet growth. The incremental cost of wholesale funds coupled with the competitive nature of loan pricing continues to cause downward pressure on net interest margin.
Non-interest income grew by $180,000 or 28% from $629,000 for the prior year quarter to $808,000 for the three months ended March 31, 2008. Fees earned on origination of brokered residential mortgage loans increased by $57,000 from $115,000 to $172,000. Revenues from service charges and other deposit related fees increased by $34,000 and earnings on cash value of bank owned life insurance and other miscellaneous fees increased by $15,000 and $9,000, respectively. During the quarter we benefited from the recovery of $72,000 from a deposit account previously written off in 2007.
Non-interest expenses increased by $801,000 or 19% from $4.2 million during the first quarter of 2007 to $5.0 million for the current year quarter. The Company has opened two new branch offices over the past twelve months and relocated one branch office to a larger, more favorable location, which have impacted both personnel and occupancy expense. Together, $515,000 of the total increase is attributable to these two areas with personnel increasing $400,000 and occupancy increasing $115,000. Other areas experiencing increases from the prior year quarter include FDIC insurance assessments, advertising and marketing, loan related collection fees and other professional fees.
The provision for loan losses was $806,000 for the first quarter of 2008 compared with $359,000 a year ago. As of December 31, 2007, the Company had $2.7 million of non-performing loans. During the first quarter, the majority of those non-accrual loans were foreclosed and moved to other real estate owned. Net charge-offs related to those loans were $654,000 or 0.38% of average loans on an annualized basis compared to $27,000 or 0.02% for the prior year quarter. At March 31, 2008, non-performing loans as a percentage of total loans is 0.04% and total non-performing assets as a percentage of total assets is 0.29% compared with 0.40% and 0.36%, respectively, at year end December 31, 2007. Management does not expect the volume of future charge-offs to continue at first quarter levels.
Crescent Financial Corporation reported total assets on March 31, 2008 of $881.1 million reflecting a 17% increase over total assets of $751.5 million on March 31, 2007. Total net loans increased by 21% from $578.9 million a year ago to $702.1 million at March 31, 2008. Total deposits increased 11% from $590.0 million to $653.2 million and total borrowings increased by 79% from $73.2 million to $131.2 million. Total stockholders' equity grew by 10% from $85.0 million to $93.3 million at March 31, 2008 due to earnings, the exercise of stock options and an improvement in the unrealized gain on available for sale securities.
Mike Carlton, President and CEO, stated, "First quarter earnings results did not meet our expectations due to the falling interest rate environment and cleaning up several problem loans identified as non-performing in the fourth quarter of 2007. The swift and pronounced reduction of short-term interest rates by the Federal Reserve caused a significant decline in our net interest margin. We are fortunate to be providing banking services in the faster growing communities of North Carolina and as a result, we continue to be pleased with the solid loan growth while maintaining high credit standards. Additionally, we are pleased to be able to report an increase in non-interest income, predominately through the originations of brokered residential mortgage loans. As we move into the remaining quarters of 2008, we will continue to identify and deliver financial products and services where the demand permits acceptable profit margins and where our company can exceed our customers expectations of quality and service."
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, Knightdale and Wilmington (2), 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)
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007(a) 2007 2007 2007
--------- --------- --------- --------- ---------
ASSETS
Cash and due
from banks $ 14,088 $ 12,048 $ 13,127 $ 14,350 $ 12,731
Interest earning
deposits with
banks 387 212 365 1,021 209
Federal funds
sold 467 97 4,054 16,664 13,158
Investment
securities
available for
sale at fair
value 94,855 90,758 89,799 88,240 86,360
Loans 710,545 675,916 651,652 608,318 586,148
Allowance for
loan losses (8,425) (8,273) (8,190) (7,536) (7,277)
--------- --------- --------- --------- ---------
Net Loans 702,120 667,643 643,462 600,782 578,871
Accrued interest
receivable 3,268 3,762 3,721 3,422 3,263
Federal Home
Loan Bank stock 7,039 6,791 6,566 4,271 4,181
Bank premises
and equipment 9,966 8,094 6,921 6,923 6,710
Investment in
life insurance 9,210 9,123 9,035 8,947 8,858
Goodwill 30,233 30,233 30,233 30,233 30,225
Other assets 9,460 6,779 6,968 7,369 6,911
--------- --------- --------- --------- ---------
Total Assets $ 881,093 $ 835,540 $ 814,251 $ 782,222 $ 751,477
========= ========= ========= ========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Demand $ 65,890 $ 69,368 $ 72,653 $ 81,181 $ 74,127
Savings 88,982 110,516 122,359 101,429 95,744
Money market
and NOW 106,109 80,316 88,295 97,146 101,088
Time 392,240 345,231 312,320 338,057 319,050
--------- --------- --------- --------- ---------
Total
Deposits 653,221 605,431 595,627 617,813 590,009
Short-term
borrowings 10,000 13,755 10,000 -- 18,000
Long-term debt 121,248 121,248 116,248 75,248 55,248
Accrued expenses
and other
liabilities 3,286 3,447 3,273 3,118 3,179
--------- --------- --------- --------- ---------
Total
Liabilities 787,755 743,881 725,148 696,179 666,436
STOCKHOLDERS'
EQUITY
Common stock 9,496 9,405 9,336 9,187 8,302
Additional
paid-in capital 73,699 73,596 73,394 72,554 62,832
Retained earnings 9,478 8,620 6,847 5,285 14,076
Accumulated
other compre-
hensive loss 665 38 (474) (983) (169)
--------- --------- --------- --------- ---------
Total Stock-
holders'
Equity 93,338 91,659 89,103 86,043 85,041
Total Liabil-
ities and
Stockholders'
Equity $ 881,093 $ 835,540 $ 814,251 $ 782,222 $ 751,477
========= ========= ========= ========= =========
Ending shares
outstanding 9,496,555 9,404,579 9,335,755 9,187,468 9,132,055
Book value
per share $ 9.83 $ 9.75 $ 9.54 $ 9.37 $ 9.31
Tangible book
value per
share $ 6.53 $ 6.42 $ 6.19 $ 5.95 $ 5.87
Crescent Financial Corporation
Consolidated Income Statements
(Amounts in thousands except share and per share data)
(Unaudited)
For the three-month period ended
-----------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 2007
--------- --------- --------- --------- ---------
INTEREST INCOME
Loans $ 12,472 $ 13,249 $ 12,867 $ 12,331 $ 11,575
Investment
securities avail-
able for sale 1,206 1,155 1,142 1,096 1,061
Fed funds sold
and other
interest 44 14 86 175 121
--------- --------- --------- --------- ---------
Total Interest
Income 13,722 14,418 14,095 13,602 12,757
--------- --------- --------- --------- ---------
INTEREST EXPENSE
Deposits 5,709 5,782 6,121 5,965 5,561
Short-term
borrowings 117 182 149 209 290
Long-term debt 1,372 1,421 1,016 859 662
--------- --------- --------- --------- ---------
Total Interest
Expense 7,198 7,385 7,286 7,033 6,513
--------- --------- --------- --------- ---------
Net Interest
Income 6,524 7,033 6,809 6,569 6,244
Provision for
loan losses 806 337 666 322 359
--------- --------- --------- --------- ---------
Net interest
income after
provision for
loan losses 5,718 6,696 6,143 6,247 5,885
--------- --------- --------- --------- ---------
Non-interest
income
Mortgage loan
origination
income 172 116 146 135 115
Service charges
and fees on
deposit accounts 381 355 336 322 348
Gain/loss on
sale of
securities 0 -- -- -- --
Gain/(loss) on
disposal of
assets (9) (65) -- -- (1)
Other 264 249 208 190 167
--------- --------- --------- --------- ---------
Total non-
interest
income 808 655 690 647 629
Non-interest
expense
Salaries and
employee
benefits 2,804 2,460 2,476 2,535 2,404
Occupancy and
equipment 663 602 582 564 548
Data processing 271 261 278 257 261
Other 1,283 1,254 1,066 1,267 1,007
--------- --------- --------- --------- ---------
Total non-
interest
expense 5,021 4,577 4,402 4,623 4,220
--------- --------- --------- --------- ---------
Income before
income taxes 1,505 2,774 2,431 2,271 2,294
Income taxes 505 1,002 868 823 828
--------- --------- --------- --------- ---------
Net income $ 1,000 $ 1,772 $ 1,563 $ 1,448 $ 1,466
========= ========= ========= ========= =========
NET INCOME PER
COMMON SHARE
Basic $ 0.11 $ 0.19 $ 0.17 $ 0.16 $ 0.16
========= ========= ========= ========= =========
Diluted $ 0.10 $ 0.18 $ 0.16 $ 0.15 $ 0.15
========= ========= ========= ========= =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 9,417,694 9,363,700 9,246,318 9,140,356 9,093,392
========= ========= ========= ========= =========
Diluted 9,678,862 9,678,862 9,642,429 9,626,134 9,611,833
========= ========= ========= ========= =========
Return on
average assets 0.47% 0.85% 0.79% 0.76% 0.82%
Return on
average equity 4.32% 7.73% 7.04% 6.73% 7.06%
Net interest
margin 3.27% 3.64% 3.72% 3.73% 3.81%
Allowance for
loan losses
to avg loans 1.19% 1.22% 1.26% 1.24% 1.24%
Nonperforming
loans to
total loans 0.04% 0.40% 0.22% 0.10% 0.10%
Nonperforming
assets to
total assets 0.29% 0.36% 0.21% 0.09% 0.10%
(a) Derived from audited consolidated financial statements.