CARY, N.C., Oct. 26, 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 September 30, 2009, before adjusting for the effective dividend on preferred stock, of $636,000 compared to net income of $746,000 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 $214,000 or $.02 per diluted share compared to $.08 per diluted share for the prior year period. Core pre-tax operating earnings for the current period benefited from increases in the net interest margin and non-interest income, which more than offset increases in non-interest expenses. The increase in loan loss provision had a negative impact on bottom-line earnings.
Interest income was $14.1 million for the current quarter compared to $13.8 million for the prior year quarter. The increase in interest income from the higher volume of earning assets exceeded the unfavorable impact from lower yields on those assets. Yields on total earning assets did increase slightly on a linked quarter basis. Average total earning assets increased by $111.3 million to $983.0 million at September 30, 2009 compared with $871.7 million for the prior year period. The yield on earning assets was 5.68% for the current quarter compared to 6.30% from a year ago and 5.66% for the second quarter of 2009. Interest expense for the third quarter declined by $794,000 to $6.7 million from $7.5 million for the prior year period. Interest expense fell by $1.3 million as a result of the cost of funds declining from 3.81% for the third quarter of 2008 to 3.03% for the current quarter. That was partially offset by a $505,000 increase due to the volume of interest-bearing liabilities increasing by $92.2 million to $870.7 million. Due primarily to the drop in cost of funds, net interest margin improved by 10 basis points to 2.99% for the quarter ended September 30, 2009 compared with 2.89% for the prior year quarter.
The provision for loan losses rose by $676,000 or 53% to almost $2.0 million for the current quarter compared with $1.3 million for the third quarter of 2008. Total nonperforming loans increased by $3.2 million during the third quarter to $16.5 million from $13.3 million at June 30, 2009. Net charge-offs of loans in the third quarter was $1.3 million or an annualized 0.68% of average gross loans.
Non-interest income grew by $70,000 or 7% to $1.1 million for the quarter ended September 30, 2009. Revenues increased across several non-interest income categories including mortgage loan origination fees, earnings on cash value of bank owned insurance, deposit service charges and customer service fees. The Company realized $110,000 in gains on the sale of available for sale securities in September 2009. Total non-interest income for the quarter ended September 30, 2008 included approximately $121,000 in pre-tax, non-recurring revenue.
Non-interest expenses increased by $819,000 or 16% to $5.9 million compared with $5.1 million for the prior year quarter. Occupancy and personnel expenses increased by $242,000 and $149,000, respectively, as the Company opened two new branch offices during 2009. FDIC deposit insurance premiums increased by $207,000 and expenses related to loans and loan collections increased by $116,000.
The Company has been evaluating its goodwill asset for impairment in accordance with established accounting standards. The analysis involves a two-step process. Step one determines, based on a variety of valuation techniques, whether there is an indication that goodwill might be impaired. If there is an indication of impairment, a second step is performed to determine if actual impairment exists and to what extent. Subsequent to quarter end, the Company completed a step one analysis that suggests an indication of impairment. Step two is currently being performed and the results are not expected prior to the filing deadline of the SEC Form 10-Q. If in the future, it is determined that goodwill is impaired, it will be a non-cash accounting transaction that will not impact the company's cash flows, liquidity, or tangible capital.
For the nine months ended September 30, 2009, the Company reported unaudited net income, before adjusting for the effective dividend on preferred stock, of $1,821,000 compared to $2,777,000 for the nine months ended September 30, 2008. After adjusting for $1,012,000 in dividends and accretion on preferred stock, net income available for common shareholders for the current period is $809,000 or $.08 per diluted share compared with $.29 for the prior period. Net interest income was $21.9 million compared with $19.2 million. Although the net interest margin declined by 11 basis points to 2.96% for 2009, the positive impact from the increased volume of earning assets and the reduction in the cost of funds more than offset the negative effects of lower earning asset yields and the increased volume of interest-bearing liabilities. Non-interest income decreased by $88,000 to $2.7 million from $2.8 million. These results include transactions related to investment securities and other non-recurring transactions. In 2009, the Company recorded $297,000 in net losses related to investment securities compared with net gains for 2008 of $16,000. Total non-interest income for the nine-month period ended September 30, 2008 included $238,000 of non-recurring revenue. Non-interest expenses increased by $2.5 million, or 17%, with $2.0 million attributable to personnel, occupancy and FDIC insurance premium expenses. The provision for loan losses for the current nine-month period was $4.8 million compared with $2.5 million for the prior year period.
Crescent Financial Corporation reports total assets on September 30, 2009 of $1.1 billion reflecting an 11% increase over total assets of $955.5 million at September 30, 2008. Total net loans decreased slightly from $759.1 million to $758.2 million, total deposits increased from $711.6 million to $714.2 million and total borrowings increased from $145.7 million to $221.7 million. Total stockholders' equity grew from $94.2 million to $123.5 million.
Mike Carlton, President and CEO, stated, "While there continues to be many challenges throughout the markets we serve, we remain pleased with the level of core earnings that the Company has been able to generate during this time. Non-interest income and the company wide focus on core deposit gathering along with pricing discipline on loans has had a favorable impact on the net interest margin and earnings. Higher loan loss provisions have had an impact on earnings in recent quarters, however, we continue to believe our focused approach to managing asset quality will position us well for when the market begins to recover. As we approach the end of 2009, we will continue to monitor economic conditions and make the appropriate adjustments to the loan loss provision and reserve coverage. We remain committed to working with our customers through these difficult times and look forward to the opportunities that may be created by the current market conditions."
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
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
--------- --------- --------- --------- ---------
INTEREST INCOME
Loans $ 11,986 $ 12,026 $ 12,077 $ 12,500 $ 12,571
Investment
securities
available
for sale 2,081 2,053 1,999 1,203 1,206
Fed funds
sold and
other
interest-
earning
deposits 1 5 2 8 17
--------- --------- --------- --------- ---------
Total
Interest
Income 14,068 14,084 14,078 13,711 13,794
--------- --------- --------- --------- ---------
INTEREST EXPENSE
Deposits 4,885 5,069 5,243 5,898 5,953
Short-term
borrowings 507 506 463 323 126
Long-term debt 1,265 1,241 1,141 1,315 1,372
--------- --------- --------- --------- ---------
Total
Interest
Expense 6,657 6,816 6,847 7,536 7,451
--------- --------- --------- --------- ---------
Net
Interest
Income 7,411 7,268 7,231 6,175 6,343
Provision for
loan losses 1,958 1,132 1,697 3,937 1,282
--------- --------- --------- --------- ---------
Net interest
income after
provision
for loan
losses 5,453 6,136 5,534 2,238 5,061
--------- --------- --------- --------- ---------
Non-interest
income
Mortgage
loan
origination
income 223 215 296 207 189
Service
charges and
fees on
deposit
accounts 424 396 388 429 414
Earnings on
life
insurance 225 228 207 305 189
Gain/loss
on sale of
available
for sale
securities 110 -- -- -- --
Loss on
impairment
of non-
marketable
investment -- (219) (188) -- --
Other 146 132 85 107 267
--------- --------- --------- --------- ---------
Total non-
interest
income 1,128 752 788 1,048 1,059
Non-interest
expense
Salaries and
employee
benefits 3,030 3,017 2,971 2,508 2,881
Occupancy
and
equipment 952 904 751 699 709
Data
processing 358 302 450 279 270
FDIC deposit
insurance
premium 310 773 249 107 103
Other 1,237 1,299 1,197 1,197 1,105
--------- --------- --------- --------- ---------
Total
non-
interest
expense 5,887 6,295 5,618 4,790 5,068
--------- --------- --------- --------- ---------
Income
before
income
taxes 694 593 704 (1,504) 1,052
Income taxes 58 19 94 (738) 306
--------- --------- --------- --------- ---------
Net income 636 574 610 (766) 746
--------- --------- --------- --------- ---------
Effective
dividend on
preferred
stock 422 422 168 -- --
--------- --------- --------- --------- ---------
Net income
available
for common
shareholders $ 214 $ 152 $ 442 $ (766) $ 746
--------- --------- --------- --------- ---------
NET INCOME
PER COMMON
SHARE
Basic $ 0.02 $ 0.02 $ 0.05 $ (0.08) $ 0.08
--------- --------- --------- --------- ---------
Diluted $ 0.02 $ 0.02 $ 0.05 $ (0.08) $ 0.08
--------- --------- --------- --------- ---------
COMMON SHARE
DATA
------------
Book value
per common
share $ 10.46 $ 10.24 $ 10.17 $ 9.88 $ 9.79
Tangible
book value
per common
share 7.23 7.00 6.93 6.64 6.55
Ending
shares
outstanding
-- basic 9,626,559 9,626,559 9,626,559 9,626,559 9,612,743
Weighted
average
common
shares
outstanding
-- diluted 9,569,290 9,569,290 9,569,290 9,565,583 9,548,589
--------- --------- --------- --------- ---------
Weighted
average
common
shares
outstanding 9,606,186 9,599,466 9,581,873 9,565,583 9,628,147
PERFORMANCE
RATIOS
(annualized)
------------
Return on
average
assets 0.24% 0.21% 0.24% -0.14% 0.31%
Return on
average
equity 2.06% 1.89% 2.08% -1.36% 3.12%
Yield on
earning
assets 5.68% 5.66% 5.79% 6.13% 6.30%
Cost of
interest
bearing
liabilities 3.03% 3.10% 3.18% 3.76% 3.81%
Net interest
margin 2.99% 2.92% 2.98% 2.75% 2.89%
Efficiency
ratio 68.94% 78.49% 69.96% 66.33% 68.46%
Net loan
charge-offs 0.68% 0.94% 0.22% 0.68% 0.08%
(Amounts in thousands except share and per share data and prior
quarters' information may have been reclassified)
INCOME STATEMENTS (unaudited)
-----------------------------
For the Nine Month
Period Ended
Sept 30, Sept 30,
2009 2008
--------- ---------
INTEREST INCOME
Loans $ 36,089 $ 36,978
Investment securities available
for sale 6,134 3,640
Fed funds sold and other
interest-earning deposits 8 75
--------- ---------
Total Interest Income 42,231 40,693
--------- ---------
INTEREST EXPENSE
Deposits 15,197 17,165
Short-term borrowings 1,477 333
Long-term debt 3,646 4,036
--------- ---------
Total Interest Expense 20,320 21,534
--------- ---------
Net Interest Income 21,911 19,159
Provision for loan losses 4,787 2,547
--------- ---------
Net interest income after
provision for loan losses 17,124 16,612
--------- ---------
Non-interest income
Mortgage loan origination income 735 512
Service charges and fees on
deposit accounts 1,208 1,177
Earnings on life insurance 660 431
Gain/loss on sale of available
for sale securities 110 16
Gain/(loss) on disposal of assets -- --
Loss on impairment of
nonmarketable investment (407) --
Other 363 621
--------- ---------
Total non-interest income 2,669 2,757
Non-interest expense
Salaries and employee benefits 9,018 8,603
Occupancy and equipment 2,607 2,028
Data processing 1,110 801
FDIC deposit insurance premium 1,332 295
Other 3,733 3,528
--------- ---------
Total non-interest expense 17,800 15,255
--------- ---------
Income before income taxes 1,993 4,114
Income taxes 172 1,337
Net income 1,821 2,777
--------- ---------
Effective dividend on preferred
stock 1,012 --
--------- ---------
Net income available for common
shareholders' $ 809 $ 2,777
========= =========
NET INCOME PER COMMON SHARE
Basic $ 0.08 $ 0.29
========= =========
Diluted $ 0.08 $ 0.29
========= =========
Weighted average common shares
outstanding - basic 9,569,290 9,476,117
========= =========
Weighted average common shares
outstanding - diluted 9,585,422 9,642,969
========= =========
PERFORMANCE RATIOS (annualized)
-------------------------------
Return on average assets 0.23% 0.41%
Return on average equity 2.01% 3.94%
Yield on earning assets 5.71% 6.51%
Cost of interest-bearing
liabilities 3.16% 3.90%
Net interest margin 2.96% 3.07%
Efficiency ratio 72.42% 69.50%
Net loan charge-offs 0.61% 0.15%
(Amounts in thousands except share and per share data)
CONSOLIDATED BALANCE SHEETS (unaudited)
---------------------------------------
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 (a) 2008
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and due
from banks $ 7,841 $ 10,394 $ 10,373 $ 9,917 $ 12,320
Interest
earning
deposits
with banks 4,436 3,207 24,236 267 639
Federal funds
sold 5,545 15,285 99 99 9,477
Investment
securities
available
for sale at
fair value 198,309 193,764 197,957 105,649 96,015
Loans 771,997 775,301 787,657 785,377 769,060
Allowance for
loan losses (13,782) (13,144) (13,855) (12,585) (9,988)
---------- ---------- ---------- ---------- ----------
Net Loans 758,215 762,157 773,802 772,792 759,072
Accrued
interest
receivable 4,255 4,347 4,207 3,341 3,327
Federal Home
Loan Bank
stock 11,777 11,777 11,910 7,264 7,264
Bank premises
and
equipment 11,946 12,007 11,842 10,845 10,297
Investment
in life
insurance 17,444 17,229 17,011 16,812 16,517
Goodwill 30,233 30,233 30,233 30,233 30,233
Other
intangibles 860 893 926 960 993
Other assets 12,842 12,064 9,749 10,132 9,373
---------- ---------- ---------- ---------- ----------
Total
Assets $1,063,703 $1,073,357 $1,092,345 $ 968,311 $ 955,527
---------- ---------- ---------- ---------- ----------
LIABILITIES
AND STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits
Demand $ 66,947 $ 67,371 $ 64,985 $ 63,946 $ 69,594
Savings 59,973 58,150 59,393 58,834 64,214
Money market
and NOW 148,560 136,644 134,160 130,542 120,430
Time 438,702 444,537 473,066 461,561 457,405
---------- ---------- ---------- ---------- ----------
Total
Deposits 714,182 706,702 731,604 714,883 711,643
Short-term
borrowings 88,000 128,000 114,758 37,706 20,000
Long-term
debt 133,748 113,748 121,748 116,748 125,748
Accrued
expenses
and other
liabilities 4,258 3,680 3,762 3,882 3,986
---------- ---------- ---------- ---------- ----------
Total
Liabilities 940,188 952,130 971,872 873,219 861,377
STOCKHOLDERS'
EQUITY
Preferred stock 22,798 22,687 22,576 -- --
Common stock 9,627 9,627 9,626 9,627 9,613
Warrant 2,367 2,367 2,367 -- --
Additional
paid-in
capital 74,484 74,439 74,395 74,349 74,256
Retained
earnings 11,298 11,083 10,931 10,489 11,254
Accumulated
other
comprehensive
income
(loss) 2,941 1,024 578 627 (973)
---------- ---------- ---------- ---------- ----------
Total
Stockholders'
Equity 123,515 121,227 120,473 95,092 94,150
Total
Liabilities
and
Stockholders'
Equity $1,063,703 $1,073,357 $1,092,345 $ 968,311 $ 955,527
========== ========== ========== ========== ==========
(a) Derived from audited consolidated financial statements.
CAPITAL RATIOS
--------------
Tangible
equity to
tangible
assets 8.95% 8.65% 8.42% 6.82% 6.81%
Tangible
common
equity to
tangible
assets 6.74% 6.47% 6.29% 6.82% 6.81%
Tier 1
leverage
ratio
(current
quarter
estimate 9.48% 9.34% 9.45% 7.67% 7.89%
Tier 1
risk-based
capital
ratio
(current
quarter
estimate) 11.49% 11.43% 11.29% 8.53% 8.66%
Total
risk-based
capital
ratio
(current
quarter
estimate) 13.63% 13.56% 13.42% 10.68% 10.77%
ASSET QUALITY
RATIOS (in
thousands)
-------------
Non accrual
loans 16,540 13,335 16,421 13,094 2,772
Accruing
loans > 90
days past
due -- -- 4 -- --
---------- ---------- ---------- ---------- ----------
Total non-
performing
loans 16,540 13,335 16,425 13,094 2,772
Other real
estate
owned &
reposs-
essions 5,298 4,401 1,911 1,716 1,870
---------- ---------- ---------- ---------- ----------
Total non-
performing
assets 21,838 17,736 18,336 14,810 4,642
========== ========== ========== ========== ==========
Allowance
for loan
losses to
loans 1.79% 1.70% 1.76% 1.60% 1.30%
Non-
performing
loans to
total loans 2.14% 1.72% 2.09% 1.67% 0.36%
Non-
performing
assets to
total assets 2.05% 1.65% 1.68% 1.53% 0.49%
Restructured
not
included in
categories
above 4,482 4,482 89 -- --
AVERAGE BALANCES
(in thousands)
----------------
For the Three Month Period Ended
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
---------- ---------- ---------- ---------- ----------
Total
Assets $1,060,002 $1,070,516 $1,053,447 $ 958,547 $ 941,317
Gross
loans 772,419 782,886 788,810 779,534 765,539
Earnings
assets 983,005 998,892 985,755 889,992 871,723
Deposits 706,356 704,791 703,872 712,511 695,083
Interest-
bearing
liabilities 870,680 882,079 872,056 796,557 778,529
Share-
holders'
equity 122,498 122,049 119,070 95,457 94,824
For the Nine Month
Period Ended
Sept 30, Sept 30,
2009 2008
---------- ----------
Total
Assets 1,061,343 901,142
Gross
loans 781,311 728,901
Earnings
assets 989,207 834,737
Deposits 705,015 663,080
Interest-
bearing
liabilities 874,933 738,228
Share-
holders'
equity 121,250 94,214