CARY, N.C., July 30, 2009 (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 June 30, 2009, before adjusting for the effective dividend on preferred stock, of $872,000 compared to net income of $1,031,000 for the prior year period. After adjusting for $422,000 in dividends and accretion on preferred stock, net income available for common shareholders for the current period was $450,000 or $0.05 per diluted share compared with $0.11 per diluted share for the quarter ended June 30, 2008. Earnings in the current period were impacted by net interest margin compression resulting from the lower interest rate environment, higher loan loss provisions in response to current economic conditions and an increase in non-interest operating expenses.
Net interest income increased by $1.0 million to $7.3 million compared to $6.3 million for the comparative prior year quarter. The increase was primarily driven by an increased level of average earning assets which grew by $168.8 million, from $830.1 million to $998.9 million. The unfavorable impact on net interest income due to the lower interest rate environment has begun to ease as the Company continues to be able to reprice fixed rate time deposits and borrowings upon maturity. The net interest margin, the difference between interest income and interest expense expressed as a percentage of average earning assets for the quarter declined from 3.05% for the prior year period to 2.92% for the current period. On a linked quarter-to-quarter basis the net interest margin declined by 6 basis points from 2.98% primarily due to a larger percentage of interest income coming from lower yielding investment securities and an increase in on-balance sheet liquidity.
The provision for loan losses increased by $673,000 to $1.1 million for the current period from $459,000 for the prior year period. The large provision was primarily attributable to our continuing effort to identify and manage credit quality issues resulting from current economic conditions. During the second quarter, we experienced net charged-offs of approximately $1.8 million or an annualized 0.94% of our total average loans for the quarter. The loan loss reserve at June 30, 2009 is $13.1 million or 1.70% of total outstanding loans. Non-performing loans declined on a linked quarter-to-quarter basis from $16.4 million to $13.3 million and represented 1.72% of total outstanding loans compared to 2.09% at March 31, 2009. Although other real estate owned increased to $4.4 million from $1.9 million, total non-performing assets declined from $18.3 million to $17.7 million or 1.65% of total assets compared to 1.68% at March 31, 2009.
Non-interest income declined by $129,000 or 15% to $752,000 from $881,000 for the prior year quarter. During the second quarter of 2009, the company recorded a $219,000 impairment on a nonmarketable equity investment compared to realizing a $16,000 gain on the sale of available for sale securities for the quarter ended June 30, 2008. The Company experienced increases in several non-interest revenue categories. Service charges and other customer service fees on deposit related accounts increased by 4% from $381,000 to $396,000, mortgage loan origination fees increased by 43% from $151,000 to $215,000 and earnings on cash value on bank owned life insurance increased by 58% from $144,000 to $228,000. During the quarter ended June 30, 2008, $45,000 of other miscellaneous revenue was non-recurring.
Non-interest expenses increased by $653,000 or 13% from $5.1 million during the second quarter of 2008 to $5.8 million for the current quarter. Personnel, occupancy and FDIC deposit insurance premiums account for $540,000 of the total increase. Occupancy expenses have increased by 38% to $904,000 from $656,000 for the prior year. The Company opened two new offices in Raleigh, North Carolina during the second quarter; one branch office and one larger office which houses a branch, our Raleigh lending team and the mortgage and investment divisions. As a result of changes made to deposit insurance assessment rates, FDIC insurance premiums increased by $191,000. Despite the opening of the two new offices and hiring additional support staff, personnel expenses increased by a modest 3% to $3.0 million from $2.9 million. Data processing expenses increased by 16% to $302,000 from $261,000. We completed a full data processing conversion in the first quarter of 2009 and continued to incur certain trailing expenses related to the old system through the second quarter.
For the six months ended June 30, 2009, the Company reported net income, before adjusting for the effective dividend on preferred stock, of $1,483,000 compared to $2,031,000 for the six months ended June 30, 2008. After adjusting for $590,000 in dividends and accretion on preferred stock, net income available for common shareholders for the current period was $893,000 or $0.09 for the current period compared to $0.21 for the prior six-month period. Net interest income increased by 13% or $1.7 million to $14.5 million from $12.8 million. The volume of average earning assets for the current six-month period increased by $176.3 million having a positive impact on net interest income, and was partially offset by a 21 basis point decline in net interest margin from 3.16% to 2.95%. The provision for loan losses was $2.8 million for the six-month period ended June 30, 2009 compared to $1.3 million for the prior year period. The larger provision reflects current economic conditions, credit quality and an increase in net charge-offs. Non-interest income declined by $158,000 primarily due to the impairment of a $407,000 non-marketable investment. Additionally, there was $117,000 of non-recurring income during the first half of 2008. Non-interest expenses increased by $1.2 million, or 12%, with all but $74,000 coming in the areas of personnel, occupancy, data processing and FDIC insurance premium expenses. The Company converted its data processing platform during the first quarter of 2009 and incurred approximately $235,000 of one-time, non-recurring expenses.
Crescent Financial Corporation reported total assets on June 30, 2009 of $1.1 billion reflecting an 17% increase over total assets of $920.6 million on June 30, 2008. Total net loans increased by 4% from $734.0 million to $762.2 million, total deposits increased 8% from $653.7 million to $706.5 million and total borrowings increased by 43% from $169.1 million to $241.7 million. Total stockholders' equity grew by 29% from $94.1 million to $121.5 million.
Mike Carlton, President and CEO, stated, "Given the challenging environment in which we operate, we are pleased that the company has been able to report positive earnings for each of the first two quarters of 2009 and remain well capitalized. While non-performing loans declined on a linked quarter-to-quarter basis, we continued to allocate significant funds toward the provision for loan losses in an effort to remain proactive in dealing with additional credit quality issues that may arise. We are committed to working with our customers and will continue to do so in order to get through this economic cycle. During the second quarter, we also concluded the conversion to a more robust data processing system and opened two new full service banking offices in Raleigh. These strategic enhancements further complement our long term goal of becoming the financial institution of choice in each of the markets we serve. We are proud of the accomplishments and dedication that each of our employees have taken during these times."
Crescent State Bank is a state chartered bank operating fifteen banking offices in Cary (2), Apex, Clayton, Holly Springs, Southern Pines, Pinehurst, Sanford, Garner, Raleigh (3), 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
Financial Summary
(Amounts in thousands except share and per share data and prior
quarters' information may have been reclassified)
INCOME STATEMENTS (unaudited)
-----------------------------
For the Three Month Period Ended
June 30, March 31, Dec. 31, Sept. 30, June 30,
2009 2009 2008 2008 2008
------- ------- ------- ------- -------
INTEREST INCOME
Loans $12,026 $12,077 $12,500 $12,571 $11,936
Investment securities
available for sale 2,053 1,999 1,203 1,206 1,227
Fed funds sold and other
interest-earning deposits 5 2 8 17 14
------- ------- ------- ------- -------
Total Interest Income 14,084 14,078 13,711 13,794 13,177
------- ------- ------- ------- -------
INTEREST EXPENSE
Deposits 5,069 5,243 5,898 5,953 5,502
Short-term borrowings 506 463 323 126 91
Long-term debt 1,241 1,141 1,315 1,372 1,292
------- ------- ------- ------- -------
Total Interest Expense 6,816 6,847 7,536 7,451 6,885
------- ------- ------- ------- -------
Net Interest Income 7,268 7,231 6,175 6,343 6,292
Provision for loan losses 1,132 1,697 3,937 1,282 459
------- ------- ------- ------- -------
Net interest income
after provision for
loan losses 6,136 5,534 2,238 5,061 5,833
------- ------- ------- ------- -------
Non-interest income
Mortgage loan
origination income 215 296 207 189 151
Service charges and fees
on deposit accounts 396 388 429 414 381
Earnings on life
insurance 228 207 305 189 144
Gain/loss on sale of
available for sale
securities -- -- -- -- 16
Loss on impairment of
nonmarketable investment (219) (188) -- -- --
Other 132 85 107 267 189
------- ------- ------- ------- -------
Total non-interest
income 752 788 1,048 1,059 881
Non-interest expense
Salaries and employee
benefits 3,017 2,971 2,508 2,881 2,917
Occupancy and equipment 904 751 699 709 656
Data processing 302 450 279 270 261
FDIC deposit insurance
premium 288 249 107 103 97
Other 1,299 1,197 1,197 1,105 1,226
------- ------- ------- ------- -------
Total non-interest
expense 5,810 5,618 4,790 5,068 5,157
------- ------- ------- ------- -------
Income before income
taxes 1,078 704 (1,504) 1,052 1,557
Income taxes 206 94 (738) 306 526
------- ------- ------- ------- -------
Net income 872 610 (766) 746 1,031
------- ------- ------- ------- -------
Effective dividend on
preferred stock 422 168 -- -- --
------- ------- ------- ------- -------
Net income available for
common shareholders' $ 450 $ 442 $ (766) $ 746 $ 1,031
======= ======= ======= ======= =======
NET INCOME PER COMMON
SHARE
Basic $ 0.05 $ 0.05 $ (0.08) $ 0.08 $ 0.11
======= ======= ======= ======= =======
Diluted $ 0.05 $ 0.05 $ (0.08) $ 0.08 $ 0.11
======= ======= ======= ======= =======
PERFORMANCE RATIOS (annualized)
-------------------------------
Return on average assets 0.33% 0.24% -0.14% 0.31% 0.46%
Return on average equity 2.86% 2.08% -1.36% 3.12% 4.37%
Yield on earning assets 5.66% 5.79% 6.13% 6.30% 6.38%
Cost of interest-bearing
liabilities 3.10% 3.18% 3.76% 3.81% 3.77%
Net interest margin 2.92% 2.98% 2.75% 2.89% 3.05%
Efficiency ratio 72.39% 69.96% 66.33% 68.46% 71.64%
Net loan charge-offs 0.94% 0.22% 0.68% 0.08% 0.02%
(Amounts in thousands except share and per share data)
CONSOLIDATED BALANCE SHEETS (unaudited)
---------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2009 2009 2008(a) 2008 2008
--------- ---------- ---------- ---------- ----------
ASSETS
Cash and due
from banks $ 10,394 $ 10,373 $ 9,917 $ 12,320 $ 13,234
Interest
earning
deposits with
banks 3,207 24,236 267 639 391
Federal funds
sold 15,285 99 99 9,477 98
Investment
securities
available for
sale at fair
value 193,764 197,957 105,649 96,015 95,979
Loans 775,301 787,657 785,377 769,060 742,855
Allowance for
loan losses (13,144) (13,855) (12,585) (9,988) (8,855)
---------- ---------- ---------- ---------- ----------
Net Loans 762,157 773,802 772,792 759,072 734,000
Accrued
interest
receivable 4,347 4,207 3,341 3,327 3,105
Federal Home
Loan Bank
stock 11,777 11,910 7,264 7,264 7,714
Bank premises
and equipment 12,007 11,842 10,845 10,297 10,156
Investment in
life insurance 17,229 17,011 16,812 16,517 16,343
Goodwill 30,233 30,233 30,233 30,233 30,233
Other assets 13,196 10,675 11,092 10,366 9,323
---------- ---------- ---------- ---------- ----------
Total Assets $1,073,596 $1,092,345 $ 968,311 $ 955,527 $ 920,576
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Demand $ 67,371 $ 64,985 $ 63,946 $ 69,594 $ 64,306
Savings 58,150 59,393 58,834 64,214 76,591
Money market
and NOW 136,644 134,160 130,542 120,430 128,274
Time 444,537 473,066 461,561 457,405 384,508
---------- ---------- ---------- ---------- ----------
Total
Deposits 706,702 731,604 714,883 711,643 653,679
Short-term
borrowings 128,000 114,758 37,706 20,000 30,894
Long-term debt 113,748 121,748 116,748 125,748 138,248
Accrued
expenses and
other
liabilities 3,680 3,762 3,882 3,986 3,692
---------- ---------- ---------- ---------- ----------
Total
Liabilities 952,130 971,872 873,219 861,377 826,513
STOCKHOLDERS'
EQUITY
Preferred stock 22,687 22,576 -- -- --
Common stock 9,627 9,626 9,627 9,613 9,605
Warrant 2,367 2,367 -- -- --
Additional
paid-in
capital 74,439 74,395 74,349 74,256 74,172
Retained
earnings 11,381 10,931 10,489 11,254 10,509
Accumulated
other
comprehensive
income (loss) 965 578 627 (973) (223)
---------- ---------- ---------- ---------- ----------
Total
Stockholders'
Equity 121,466 120,473 95,092 94,150 94,063
Total
Liabilities
and
Stockholders'
Equity $1,073,596 $1,092,345 $ 968,311 $ 955,527 $ 920,576
========== ========== ========== ========== ==========
(a) Derived from audited consolidated financial statements
COMMON SHARE DATA
-----------------
Book value
per common share $ 10.26 $ 10.17 $ 9.88 $ 9.79 $ 9.79
Tangible
book value per
common share $ 7.03 $ 6.93 $ 6.64 $ 6.55 $ 6.54
Ending shares
outstanding 9,626,559 9,626,559 9,626,559 9,612,743 9,604,826
Weighted
average common
shares
outstanding -
basic 9,569,520 9,569,520 9,565,583 9,548,589 9,467,294
========== ========== ========== ========== ==========
Weighted
average common
shares
outstanding -
diluted 9,599,466 9,581,873 9,565,583 9,628,147 9,618,744
========== ========== ========== ========== ==========
CAPITAL RATIOS
--------------
Tangible equity
to tangible
assets 8.67% 8.42% 6.82% 6.81% 7.06%
Tangible
common equity to
tangible assets 6.49% 6.29% 6.82% 6.81% 7.06%
Tier 1 leverage
ratio 9.37% 9.45% 7.67% 7.89% 8.21%
Tier 1 risk-
based capital
ratio 11.45% 11.29% 8.53% 8.66% 8.81%
Total risk-
based capital
ratio 13.59% 13.42% 10.68% 10.77% 9.90%
ASSET QUALITY RATIOS (in thousands)
-----------------------------------
Non accrual
loans 13,335 16,421 13,094 2,772 746
Accruing loans
> 90 days past
due -- 4 -- -- --
---------- ---------- ---------- ---------- ----------
Total
nonperforming
loans 13,335 16,425 13,094 2,772 746
Other real
estate owned &
repossessions 4,401 1,911 1,716 1,870 1,891
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets 17,736 18,336 14,810 4,642 2,637
========== ========== ========== ========== ==========
Allowance for
loan losses to
loans 1.70% 1.76% 1.60% 1.30% 1.19%
Nonperforming
loans to total
loans 1.72% 2.09% 1.67% 0.36% 0.10%
Nonperforming
assets to total
assets 1.65% 1.68% 1.53% 0.49% 0.29%
Restructured
not included in
categories
above 4,482 89 -- -- --
AVERAGE BALANCES (in thousands)
-------------------------------
Total Assets 1,070,519 1,053,447 958,547 941,317 896,654
Gross loans 782,886 788,810 779,534 765,539 724,011
Earnings assets 998,892 985,755 889,992 871,723 830,084
Deposits 704,791 703,872 712,511 695,083 659,501
Interest-
bearing
liabilities 882,079 872,056 796,557 778,529 734,170
Shareholders'
equity 122,147 119,070 95,457 94,824 94,618