CARY, N.C., Feb. 10, 2009 (GLOBE NEWSWIRE) -- Crescent Financial Corporation (Nasdaq:CRFN), parent company of Crescent State Bank in Cary, North Carolina today announced unaudited net income for the year ended December 31, 2008 of $2,011,000 or $0.21 per diluted share compared with $6,248,000 or $0.65 per diluted share for the year ended December 31, 2007. The decline in earnings was primarily due to a decrease in net interest margin and an increase in provision for loan losses.
Despite a $132.9 million or 19% increase in average earning assets from 2007 to 2008, net interest income fell $1.3 million from $26.6 million in 2007 to $25.3 million in 2008. The decline in net interest income for the current period is largely due to significant short-term interest rate reductions implemented by the Federal Reserve Bank (FRB) in an attempt to revitalize an ailing U.S. economy. Since September 2007, the FRB's interest rate cuts have resulted in a 500 basis point decline in the Prime Rate. The Prime Rate is used as an index for the majority of the Company's variable rate loan portfolio. Another contributing factor to the decline in net interest income has been the marketplace competition for retail deposits. Market rates for retail certificates of deposit have been held at high levels throughout the year despite the reduction in short-term interest rates. These factors caused the net interest margin to decline by 73 basis points from 3.72% for 2007 to 2.99% for 2008.
The provision for loan losses increased by $4.8 million from $1.7 million in 2007 to $6.5 million in 2008. The large provision was attributable to both loan growth during the year and a softening of credit quality. Due to continued economic weakness, particularly in the housing sector, the Company increased the allowance for loan losses during the fourth quarter to 1.60% from 1.30% at September 30, 2008. Non-performing loans and other real estate owned as a percentage of total assets at December 31, 2008 was 1.53% compared with 0.49% at September 30, 2008.
Non interest income increased by $1.1 million during the year or 42%. Earnings on cash value of life insurance increased by $356,000 or 94% due to the purchase of an additional $7.0 million in insurance during the year. Service charges on deposit accounts and other customer service related fees increased by $246,000 or 18% and a renewed focus on mortgage loan origination activities resulted in a $206,000 or 40% increase in brokered mortgage origination fees. The Company reported $16,000 in gains on the disposal of available for sale securities and had approximately $238,000 of other pre-tax, non-recurring income for the year.
Non-interest expenses increased by $2.2 million or 12% to $20.0 million compared with $17.8 million for the prior year. Personnel and occupancy expenses accounted for $1.7 million of the total increase as the Company opened one new banking office and relocated another to a more visible location in December 2007, and opened one additional office in March of 2008. Deposit assessments from the Federal Deposit Insurance Corporation increased by 83% in 2008 and are anticipated to double in 2009.
Crescent Financial Corporation has unaudited total assets at December 31, 2008 of $968.3 million, increasing by $132.8 million or 16% over the $835.5 million at December 31, 2007. Total net loans increased by $105.2 million or 16% from $667.6 million to $772.8 million, total deposits increased $109.5 million or 18% from $605.4 million to $714.9 million and total stockholders' equity grew by $3.4 million or 4% from $91.6 million to $95.1 million.
Mike Carlton, President and CEO stated, "This past year presented a very challenging environment for the industry and Crescent State Bank. While the markets we serve have historically performed better than others, these communities are now faced with rising unemployment rates and a slowing real estate market. During the fourth quarter, we made a decision to significantly add to the Bank's allowance for loan losses. Although this lowered our earnings for the year, we believe it was a prudent decision given the uncertain market conditions in which we operate. As we move into 2009, we will continue our focus on maintaining credit quality, further developing business with creditworthy customers that value relationship banking and being poised to take advantage of opportunities to build long-term shareholder value."
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 and one loan production office in Raleigh, 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)
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2008 2008 2008 2008 2007(a)
--------- --------- --------- --------- ---------
ASSETS
Cash and due from
banks $ 9,917 $ 12,320 $ 13,234 $ 14,088 $ 12,048
Interest earning
deposits with banks 267 639 391 387 212
Federal funds sold 99 9,477 98 467 97
Investment
securities
available for sale
at fair value 105,649 96,015 95,979 94,855 90,758
Loans 785,377 769,060 742,855 710,545 675,916
Allowance for loan
losses (12,585) (9,988) (8,855) (8,425) (8,273)
--------- --------- --------- --------- ---------
Net Loans 772,792 759,072 734,000 702,120 667,643
Accrued interest
receivable 3,341 3,327 3,105 3,268 3,762
Federal Home Loan
Bank stock 7,264 7,264 7,714 7,039 6,791
Bank premises and
equipment 10,845 10,297 10,156 9,966 8,094
Investment in life
insurance 16,812 16,517 16,343 9,210 9,123
Goodwill 30,233 30,233 30,233 30,233 30,233
Other assets 11,092 10,366 9,323 9,460 6,779
--------- --------- --------- --------- ---------
Total Assets $ 968,311 $ 955,527 $ 920,576 $ 881,093 $ 835,540
========= ========= ========= ========= =========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits
Demand $ 63,946 $ 69,594 $ 64,306 $ 65,890 $ 69,368
Savings 58,834 64,214 76,591 88,982 110,516
Money market and
NOW 130,542 120,430 128,274 106,109 80,316
Time 461,561 457,405 384,508 392,240 345,231
--------- --------- --------- --------- ---------
Total Deposits 714,883 711,643 653,679 653,221 605,431
Short-term
borrowings 37,706 20,000 30,894 10,000 13,755
Long-term debt 116,748 125,748 138,248 121,248 121,248
Accrued expenses and
other liabilities 3,882 3,986 3,692 3,286 3,447
--------- --------- --------- --------- ---------
Total Liabilities 873,219 861,377 826,513 787,755 743,881
STOCKHOLDERS' EQUITY
Common stock 9,627 9,613 9,605 9,496 9,405
Additional paid-in
capital 74,349 74,256 74,172 73,699 73,596
Retained earnings 10,489 11,254 10,509 9,478 8,620
Accumulated other
comprehensive loss 627 (973) (223) 665 38
--------- --------- --------- --------- ---------
Total
Stockholders'
Equity 95,092 94,150 94,063 93,338 91,659
Total Liabilities
and Stockholders'
Equity $ 968,311 $ 955,527 $ 920,576 $ 881,093 $ 835,540
========= ========= ========= ========= =========
Ending shares
outstanding 9,626,559 9,612,743 9,604,826 9,496,555 9,404,579
Book value per
share $ 9.88 $ 9.79 $ 9.79 $ 9.83 9.75
Tangible book
value per share $ 6.64 $ 6.55 $ 6.54 $ 6.53 6.42
Crescent Financial Corporation
Consolidated Income Statements
(Amounts in thousands except share and per share data)
(Unaudited)
For the Year Ended
Dec. 31, Dec. 31,
2008 2007(a)
INTEREST INCOME
Loans $ 49,479 $ 50,022
Investment securities available for sale 4,843 4,454
Fed funds sold and other interest 83 396
--------- ---------
Total Interest Income 54,405 54,872
--------- ---------
INTEREST EXPENSE
Deposits 23,062 23,429
Short-term borrowings 657 830
Long-term debt 5,351 3,958
--------- ---------
Total Interest Expense 29,070 28,217
--------- ---------
Net Interest Income 25,335 26,655
Provision for loan losses 6,485 1,684
--------- ---------
Net interest income after provision for loan
losses 18,850 24,971
--------- ---------
Non-interest income
Mortgage loan origination income 718 512
Service charges and fees on deposit accounts 1,606 1,360
Gain/loss on sale of securities 16 --
Gain/(loss) on disposal of assets (74) (66)
Other 1,466 814
--------- ---------
Total non-interest income 3,732 2,620
Non-interest expense
Salaries and employee benefits 11,110 9,876
Occupancy and equipment 2,727 2,296
Data processing 1,081 1,056
Other 5,054 4,595
--------- ---------
Total non-interest expense 19,972 17,823
--------- ---------
Income before income taxes 2,610 9,768
Income taxes 599 3,520
--------- ---------
Net income $ 2,011 $ 6,248
========= =========
NET INCOME PER COMMON SHARE
Basic $ 0.21 $ 0.68
========= =========
Diluted $ 0.21 $ 0.65
========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 9,500,103 9,211,779
========= =========
Diluted 9,680,484 9,635,694
========= =========
Return on average assets 0.22% 0.80%
Return on average equity 2.13% 7.15%
Net interest margin 2.99% 3.72%
Allowance for loan losses to avg loans 1.60% 1.22%
Nonperforming loans to total loans 1.67% 0.40%
Nonperforming assets to total assets 1.53% 0.36%
For the Three Month Period Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2008 2008 2008 2008 2007
--------- --------- --------- --------- ---------
INTEREST INCOME
Loans $ 12,500 $ 12,571 $ 11,936 $ 12,472 $ 13,249
Investment
securities
available for sale 1,203 1,206 1,227 1,206 1,155
Fed funds sold and
other interest 8 17 14 44 14
--------- --------- --------- --------- ---------
Total Interest
Income 13,711 13,794 13,177 13,722 14,418
--------- --------- --------- --------- ---------
INTEREST EXPENSE
Deposits 5,898 5,953 5,502 5,709 5,782
Short-term
borrowings 323 126 91 117 182
Long-term debt 1,315 1,372 1,292 1,372 1,421
--------- --------- --------- --------- ---------
Total Interest
Expense 7,536 7,451 6,885 7,198 7,385
--------- --------- --------- --------- ---------
Net Interest
Income 6,175 6,343 6,292 6,524 7,033
Provision for loan
losses 3,937 1,282 459 806 337
--------- --------- --------- --------- ---------
Net interest income
after provision
for loan losses 2,238 5,061 5,833 5,718 6,696
--------- --------- --------- --------- ---------
Non-interest income
Mortgage loan
origination income 207 189 151 172 116
Service charges and
fees on deposit
accounts 429 414 381 381 355
Gain/loss on sale
of securities -- -- 16 -- --
Gain/(loss) on
disposal of assets 2 (4) (63) (9) (65)
Other 412 458 332 264 249
--------- --------- --------- --------- ---------
Total non-interest
income 1,050 1,057 817 808 655
Non-interest expense
Salaries and
employee benefits 2,508 2,881 2,917 2,804 2,460
Occupancy and
equipment 699 709 656 663 602
Data processing 279 270 261 271 261
Other 1,306 1,206 1,259 1,283 1,254
--------- --------- --------- --------- ---------
Total non-interest
expense 4,792 5,066 5,093 5,021 4,577
--------- --------- --------- --------- ---------
Income before
income taxes (1,504) 1,052 1,557 1,505 2,774
Income taxes (738) 306 526 505 1,002
--------- --------- --------- --------- ---------
Net income $ (766)$ 746 $ 1,031 $ 1,000 $ 1,772
========= ========= ========= ========= =========
NET INCOME PER
COMMON SHARE
Basic $ (0.08)$ 0.08 $ 0.11 $ 0.11 $ 0.19
========= ========= ========= ========= =========
Diluted $ (0.08)$ 0.08 $ 0.11 $ 0.10 $ 0.18
========= ========= ========= ========= =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING
Basic 9,565,583 9,548,589 9,467,294 9,417,694 9,363,700
========= ========= ========= ========= =========
Diluted 9,565,583 9,628,147 9,618,744 9,678,841 9,678,862
========= ========= ========= ========= =========
Return on average
assets -0.14% 0.31% 0.46% 0.47% 0.85%
Return on average
equity -1.36% 3.12% 4.37% 4.32% 7.73%
Net interest
margin 2.75% 2.89% 3.05% 3.27% 3.64%
Allowance for
loan losses to
avg loans 1.51% 1.30% 1.19% 1.19% 1.22%
Nonperforming
loans to total
loans 1.67% 0.36% 0.10% 0.04% 0.40%
Nonperforming
assets to total
assets 1.53% 0.49% 0.29% 0.29% 0.36%
(a) Derived from audited consolidated financial statements.