CARY, N.C., July 21, 2008 (PRIME 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 June 30, 2008 of $1,031,000 compared to net income of $1,448,000 for the prior year period. Diluted earnings per share for the current three-month period was $0.11 compared to $.15 for the second quarter of 2007. Earnings in the current period were impacted by net interest margin compression resulting from the lower interest rate environment.
Net interest income was $6.3 million for the current quarter compared to $6.6 million for the comparative prior year quarter. Average earning assets grew by $124.5 million, from $705.6 million to $830.1 million. Despite growth in earning assets, the competitive loan pricing environment, the relative high cost of money to fund the strong loan demand and the impact of a rate environment which is 325 basis points lower than a year ago resulted in lower net interest income. Net interest margin declined by 68 basis points to 3.05% for the quarter ended June 30, 2008 compared with 3.73% for the prior year quarter.
Non-interest income grew by $170,000 or 26% to $817,000 compared to $647,000 for the prior year quarter. Revenues increased across several non interest income categories including customer service fees, deposit service charges, earnings on cash value of bank owned insurance and mortgage loan origination fees. The Company incurred a $63,000 loss on the disposition of other real estate owned during the quarter which was offset by a $16,000 gain on the sale of securities and $45,000 in other miscellaneous, non-recurring revenue.
Non-interest expenses increased by $470,000 or 10% from $4.6 million during the second quarter of 2007 to $5.1 million for the current quarter. Personnel, occupancy and data processing expenses together increased by $478,000 as a result of opening two new banking offices and growth in both lending and support staff. As a result of changes made in mid 2007 to assessment rates, FDIC insurance premiums increased by $84,000. Advertising, marketing and business development expenses declined by $29,000 and other non-interest expenses decreased by $64,000. There were non-recurring items in both the current and prior three-month periods. During the second quarter of 2007, $190,000 of expenses were non-recurring, the majority of which related to merging Port City Capital Bank into Crescent State Bank. During the second quarter of 2008, the Company was reimbursed for $65,000 of expenses incurred during the first quarter. The provision for loan losses was $459,000 during the current quarter compared with $322,000 for the prior year period.
For the six months ended June 30, 2008, the Company reported net income of $2,031,000 compared to $2,914,000 for the six months ended June 30, 2007. Diluted earnings per share was $0.21 for the current period and $0.30 for the prior six-month period. Net interest income was unchanged at $12.8 million. Average earning assets for the current six-month period increased by $131.0 million, but was offset by a 61 basis point decline in net interest margin from 3.77% to 3.16%. Non-interest income increased by $349,000, or 27%, primarily in the areas of customer service fees, mortgage loan origination fees and earnings on cash value of bank owned life insurance. Non-interest expenses increased by $1.3 million, or 14%, with $1.1 million attributable to personnel, occupancy and FDIC insurance premium expenses. The provision for loan losses for the current six-month period was $1.3 million compared with $682,000 for the prior year period.
Crescent Financial Corporation reported total assets on June 30, 2008 of $920.6 million reflecting an 18% increase over total assets of $782.2 million on June 30, 2007. Total net loans increased by 22% from $600.8 million to $734.0 million, total deposits increased 6% from $617.8 million to $653.7 million and total borrowings increased by 125% from $75.2 million to $169.1 million. Total stockholders' equity grew by 9% from $86.0 million to $94.1 million.
Mike Carlton, President and CEO, stated, "Recognizing that the current economic environment is very difficult for the entire financial services industry, we are pleased that we are able to report stable earnings in comparison with the first quarter of this year while continuing to expand the balance sheet with solid loan growth. During the first six months of the year we have been able to maintain a consistent mix within the loan portfolio as construction, acquisition and development make up only 26% of the portfolio while commercial real estate reflects 53% of the total loans. As a Company we continue to closely monitor risk within the portfolio and are pleased that our credit quality has held up during these uncertain economic times. Our levels of non performing assets and charge-offs are significantly less than our peer group and reflect our conservative underwriting practices. Nonperforming loans to total loans were .10% while the charge offs for the second quarter were only $29,000 or .02% of average loans on an annualized basis. As we move into the second half of the year we will continue to focus on non-interest income and better expense control while continuing to build the infrastructure needed for a billion dollar financial institution."
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 Balance Sheet
(Amounts in thousands except share and per share data)
(Unaudited)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007(a) 2007 2007
--------- --------- --------- --------- ---------
ASSETS
Cash and due
from banks $ 13,234 $ 14,088 $ 12,048 $ 13,127 $ 14,350
Interest earning
deposits with
banks 391 387 212 365 1,021
Federal funds sold 98 467 97 4,054 16,664
Investment securi-
ties available
for sale at fair
value 95,979 94,855 90,758 89,799 88,240
Loans 742,855 710,545 675,916 651,652 608,318
Allowance for
loan losses (8,855) (8,425) (8,273) (8,190) (7,536)
--------- --------- --------- --------- ---------
Net Loans 734,000 702,120 667,643 643,462 600,782
Accrued interest
receivable 3,105 3,268 3,762 3,721 3,422
Federal Home Loan
Bank stock 7,714 7,039 6,791 6,566 4,271
Bank premises and
equipment 10,156 9,966 8,094 6,921 6,923
Investment in life
insurance 16,343 9,210 9,123 9,035 8,947
Goodwill 30,233 30,233 30,233 30,233 30,233
Other assets 9,323 9,460 6,779 6,968 7,369
--------- --------- --------- --------- ---------
Total Assets $ 920,576 $ 881,093 $ 835,540 $ 814,251 $ 782,222
========= ========= ========= ========= =========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits
Demand $ 64,306 $ 65,890 $ 69,368 $ 72,653 $ 81,181
Savings 76,591 88,982 110,516 122,359 101,429
Money market
and NOW 128,274 106,109 80,316 88,295 97,146
Time 384,508 392,240 345,231 312,320 338,057
--------- --------- --------- --------- ---------
Total
Deposits 653,679 653,221 605,431 595,627 617,813
Short-term
borrowings 30,894 10,000 13,755 10,000 --
Long-term debt 138,248 121,248 121,248 116,248 75,248
Accrued expenses
and other
liabilities 3,692 3,286 3,447 3,273 3,118
--------- --------- --------- --------- ---------
Total
Liabilities 826,513 787,755 743,881 725,148 696,179
STOCKHOLDERS' EQUITY
Common stock 9,605 9,496 9,405 9,336 9,187
Additional paid-in
capital 74,172 73,699 73,596 73,394 72,554
Retained earnings 10,509 9,478 8,620 6,847 5,285
Accumulated other
comprehensive
loss (223) 665 38 (474) (983)
--------- --------- --------- --------- ---------
Total Stock-
holders'
Equity 94,063 93,338 91,659 89,103 86,043
Total Liabili-
ties and
Stockholders'
Equity $ 920,576 $ 881,093 $ 835,540 $ 814,251 $ 782,222
========= ========= ========= ========= =========
Ending shares
outstanding 9,604,826 9,496,555 9,404,579 9,335,755 9,187,468
Book value per
share $ 9.79 $ 9.83 $ 9.75 $ 9.54 $ 9.37
Tangible book
value per
share $ 6.54 $ 6.53 $ 6.42 $ 6.19 $ 5.95
Crescent Financial Corporation
Consolidated Income Statements
(Amounts in thousands except share and per share data)
(Unaudited)
For three month period ended
-----------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
--------- --------- --------- --------- ---------
INTEREST INCOME
Loans $ 11,936 $ 12,472 $ 13,249 $ 12,867 $ 12,331
Investment securi-
ties available
for sale 1,227 1,206 1,155 1,142 1,096
Fed funds sold and
other interest 14 44 14 86 175
--------- --------- --------- --------- ---------
Total Interest
Income 13,177 13,722 14,418 14,095 13,602
--------- --------- --------- --------- ---------
INTEREST EXPENSE
Deposits 5,502 5,709 5,782 6,121 5,965
Short-term
borrowings 91 117 182 149 209
Long-term debt 1,292 1,372 1,421 1,016 859
--------- --------- --------- --------- ---------
Total Interest
Expense 6,885 7,198 7,385 7,286 7,033
--------- --------- --------- --------- ---------
Net Interest
Income 6,292 6,524 7,033 6,809 6,569
Provision for
loan losses 459 806 337 666 322
--------- --------- --------- --------- ---------
Net interest
income after
provision for
loan losses 5,833 5,718 6,696 6,143 6,247
--------- --------- --------- --------- ---------
Non-interest income
Mortgage loan
origination
income 151 172 116 146 135
Service charges
and fees on
deposit accounts 381 381 355 336 322
Gain/loss on sale
of securities 16 -- -- -- --
Gain/(loss) on
disposal of
assets (63) (9) (65) -- --
Other 332 264 249 208 190
--------- --------- --------- --------- ---------
Total non-inte-
rest income 817 808 655 690 647
Non-interest
expense
Salaries and em-
ployee benefits 2,917 2,804 2,460 2,476 2,535
Occupancy and
equipment 656 663 602 582 564
Data processing 261 271 261 278 257
Other 1,259 1,283 1,254 1,066 1,267
--------- --------- --------- --------- ---------
Total non-
interest
expense 5,093 5,021 4,577 4,402 4,623
--------- --------- --------- --------- ---------
Income before
income taxes 1,557 1,505 2,774 2,431 2,271
Income taxes 526 505 1,002 868 823
--------- --------- --------- --------- ---------
Net income $ 1,031 $ 1,000 $ 1,772 $ 1,563 $ 1,448
========= ========= ========= ========= =========
NET INCOME PER
COMMON SHARE
Basic $ 0.11 $ 0.11 $ 0.19 $ 0.17 $ 0.16
========= ========= ========= ========= =========
Diluted $ 0.11 $ 0.10 $ 0.18 $ 0.16 $ 0.15
========= ========= ========= ========= =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 9,467,294 9,417,694 9,363,700 9,246,318 9,140,356
========= ========= ========= ========= =========
Diluted 9,678,841 9,678,862 9,678,862 9,642,429 9,626,134
========= ========= ========= ========= =========
Return on
average assets 0.46% 0.47% 0.85% 0.79% 0.76%
Return on
average equity 4.37% 4.32% 7.73% 7.04% 6.73%
Net interest
margin 3.05% 3.27% 3.64% 3.72% 3.73%
Allowance for
loan losses to
avg loans 1.19% 1.19% 1.22% 1.26% 1.24%
Nonperforming
loans to total
loans 0.10% 0.04% 0.40% 0.22% 0.10%
Nonperforming
assets to total
assets 0.29% 0.29% 0.36% 0.21% 0.09%
(a) Derived from audited consolidated financial statements.