CARY, N.C., Oct. 29, 2010 (GLOBE NEWSWIRE) -- Crescent Financial Corporation (Nasdaq:CRFN), parent company of Crescent State Bank headquartered in Cary, North Carolina, announced an unaudited net loss for the three months ended September 30, 2010, before adjusting for the effective dividend on preferred stock, of ($1,884,000) compared with net income of $636,000 for the three month period ended September 30, 2009. After adjusting for dividends and accretion on preferred stock of $423,000 and $422,000, respectively for each period, the net loss attributable to common shareholders for the current period was ($2,307,000) or ($0.24) per diluted share compared to net income attributable to common shareholders of $214,000 or $0.02 per diluted share for the prior year period. Financial results for the third quarter of 2010 were negatively impacted by an increase in loan loss provision, expenses related to the loan collection process and the increased level of loans moved to nonaccrual status.

Net Interest Income

Net interest income for the three-month period ended September 30, 2010 decreased by $600,000 to $6.8 million compared with $7.4 million for the period ended September 30, 2009. The yield on average earning assets decreased by 32 basis points from 5.77% to 5.45%, of which 20 basis points was due to the reversal of accrued but uncollected interest income on loans moved into nonaccrual status during the quarter. The cost of interest bearing deposits declined from 3.03% in the prior year period to 2.63% for the quarter ended September 30, 2010. The tax equivalent net interest margin was 3.08% for both comparative quarters as the decline in the percentage of average earning assets to average interest bearing liabilities offset the improvement in the interest rate spread..

Net interest income for the current three-month period declined by $727,000 when compared to the second quarter of 2010 as a result of lower earning assets volume and the reversal of interest income on nonaccrual loans. Approximately $453,000 of previously accrued interest income was reversed during the third quarter. The yield on earning assets decreased by 37 basis points from 5.82%, the cost of interest-bearing liabilities declined by 15 basis points from 2.78%, and the net interest margin declined by 25 basis points from 3.33%. 

Provision for Loan Losses and Asset Quality

The provision for loan losses was $4.9 million for the quarter ended September 30, 2010, an increase of $3.0 million over the $1.9 million recorded for the third quarter of 2009. The increase in the provision was due to the need for additional loan loss reserves resulting from qualitative factors driven by economic conditions, the level of historical charge-offs and specific reserves determined through the analysis of impaired loans. Annualized net charge-offs were 2.96% for the current quarter, 3.73% for the second quarter of 2010 and 0.68% for the third quarter of 2009. The allowance for loan losses as a percentage of total gross outstanding loans was 2.60% at September 30, 2010, 2.59% at June 30, 2010 and 1.79% at September, 2009. 

Nonperforming loans as a percentage of total loans held for investment was 4.42% at September 30, 2010 compared to 1.68% at June 30, 2010 and 2.14% at September 30, 2009. Total nonperforming assets, which include nonaccrual loans, loans past due 90 days or more and still accruing, other real estate owned and repossessed loan collateral, as a percentage of total assets at September 30, 2010, was 4.71% compared with 2.84% at June 30, 2010 and 2.05% at September 30, 2009. The loan loss reserve coverage ratio, which is the reserve as a percentage of nonperforming loans, was 59% at September 30, 2010, 154% at June 30, 2010 and 83% at September 30, 2009. The reduction in the loan loss reserve coverage ratio is primarily due to the increase of specific reserves during the second quarter of 2010 on loans that were not moved to nonaccrual status until the third quarter of 2010.

The level of non-performing assets increased during the third quarter of 2010 due to the deterioration of several construction land development and commercial real estate relationships originated primarily in our Triangle and Sandhills regions. Management continues to caution that future results will be dependent on reducing the number of loans migrating into a problem status. The Company will continue to devote resources to managing problem credits and adequately providing for future loan losses.

Noninterest Income

Noninterest income increased by $187,000 or 17% to $1.3 million for the current period compared to $1.1 million for the period ended September 30, 2009. The increase in noninterest income is primarily attributed to an increase of $254,000 in mortgage loan related revenue and $40,000 in customer service fees and service charges on deposit accounts. The Company has established a correspondent bank platform for its mortgage division and we have begun originating loans in our name and selling them in the secondary market. Mortgage loan related revenue now includes both brokered origination fees as well as gains on the sale of loans. Noninterest income for the third quarter of 2009 includes a $110,000 gain on the sale of investment securities.

On a linked quarter basis, non-interest income increased by $225,000. Revenue from mortgage loan related activities increased by $217,000 and income from various nonmarketable equity investments increased by $21,000. 

Noninterest Expenses

Noninterest expenses increased by $749,000 or 13% to $6.6 million in the third quarter of 2010 compared to $5.9 million for the prior year period. The Company experienced a $309,000 increase in loan collection expenses compared to the three-month period ended September 30, 2009. Total loan collection expenses for the current quarter totaled $489,000 compared to $180,000 for the prior year period. The loan collection expenses were primarily related to foreclosed and repossessed loan collateral; $389,000 in acquisition and ongoing servicing costs, $42,000 in valuation write-downs and $38,000 in net losses on disposition. Personnel expenses increased by $193,000 compared to the third quarter of 2009 due primarily to the creation of a correspondent mortgage platform and the increased volume of mortgage loan activity. Occupancy expenses were $47,000 higher in the current period compared with the prior year period primarily due to the expansion of our Operations Center in early 2010. Data processing expenses were up $30,000 due to increased account volumes over last year. FDIC deposit insurance premiums are $119,000 more than the same period a year ago.

On a linked quarter basis, non-interest expenses declined by $519,000 from $7.2 million for the three-month period ended June 30, 2010. The decrease was primarily the result of a $830,000 decline in loan collection expenses from $1.3 million for the prior period. Valuation write-downs on existing real estate owned were $42,000 for the third quarter of 2010 compared with $901,000 during the second quarter of 2010.

Nine-Month Period

For the nine months ended September 30, 2010, the Company reported a net loss, before adjusting for the effective dividend on preferred stock, of ($5,351,000) compared to net income of $1,821,000 for the nine months ended September 30, 2009. After adjusting for $1,264,000 and $1,012,000 in dividends and accretion on preferred stock for the two respective comparative periods, net loss attributable to common shareholders for the current period was ($6,615,000) or ($0.69) per share compared to net income attributed to common shareholders of $809,000 or $0.08 per share for the prior year nine-month period. Net interest income decreased by less than 1% or $101,000 to $21.8 million from $21.9 million. The tax equivalent net interest margin for the current nine-month period expanded by 19 basis points from 3.04% to 3.23%. The provision for loan losses was $15.1 million for the nine-month period ended September 30, 2010 compared to $4.8 million for the prior year period. The larger provision reflects current economic conditions, credit quality issues and an increase in net charge-offs. Non-interest income increased by $783,000 or 29% for the current nine-month period versus the same period in 2009. Non-recurring items for the nine-month period ended September 30, 2009, included the recognition of a $407,000 impairment on a nonmarketable equity investment and a $110,000 gain on the sale of investment securities. Other components of the current nine-month period increase include a $239,000 increase in mortgage loan related revenue, $163,000 increase in customer service fees and service charges on deposit accounts and a $48,000 increase in brokerage referral fees. Non-interest expenses increased by $2.2 million, or 12%, for the nine-month period ended September 30, 2010 with over $1.6 million of the increase in the loan collection expense category. Loan collection expenses for the current nine-month period were $2.1 million and include $1.1 million in expenses related to the acquisition and servicing of foreclosed and repossessed assets, $943,000 of valuation write-downs on foreclosed assets and $8,000 of net losses on disposal of foreclosed and repossessed assets. The Company converted its data processing platform during the first quarter of 2009 and incurred approximately $235,000 of one-time, non-recurring expenses. 

Balance Sheet

Crescent Financial Corporation reported unaudited total assets at September 30, 2010 of $972.5 million. Total assets have declined since December 31, 2009 by approximately 6% or $60.3 million. Total gross loans decreased by $64.9 million from $759.3 million at December 31, 2009 to $694.4 million at September 30, 2010. Approximately $31.7 million of the decline is attributed to transferring loans to foreclosed or repossessed assets and the charge-offs related to those accounts. The remaining $33.2 million of the decline resulted from payments and payoffs of approximately $69.7 million, net of $36.5 million in new loans. 

Total deposits declined by $5.6 million between December 31, 2009 and September 30, 2010, but the mix of deposits has changed significantly. Time deposits declined by $48.9 million, which includes a $39.3 million reduction in brokered deposits. Time deposits represent 54% of total deposits at September 30, 2010 compared to 61% at December 31, 2009. Total non-time deposits grew by $43.3 million during the first nine months of 2010 with interest-bearing checking, savings and non-interest checking increasing by $45.8 million, $7.6 million and $920,000, respectively. Money market account balances declined by $11.0 million as balances shifted into higher yielding products. The Company continues to experience great success in generating core deposits through Crescent Rewards, a high-yield checking product introduced in December 2008.   

Total borrowings have declined by $52.0 million since December 31, 2009, the majority of which represented overnight borrowings. Liquidity generated through declines in both the loan and investment portfolios was used to reduce borrowings. Total stockholders' equity was $85.6 million at September 30, 2010 compared to $89.5 million at year end 2009. The net decrease was primarily related to the net loss for the year and an increase in other comprehensive income. The total risk-based capital ratios at both the Company and Crescent State Bank remain very strong and are 13.57% and 13.24%, respectively, at September 30, 2010. Crescent State Bank exceeded "well capitalized" standards according to regulatory guidelines at September 30, 2010.

Mike Carlton, President and CEO, stated, "The economy continues to present challenges for our customers, which in turn has a direct impact on our operating performance. During the third quarter, we continued to be aggressive in identifying credits that portray collateral and cash flow weaknesses as a result of the current economic conditions. As such, the elevated amounts of loan loss provision and charge offs has negatively impacted our earnings. While total dollars of nonperforming assets increased during the quarter, the actual number of loans moving into a nonperforming status declined from the prior period. 

On a brighter side, the core bank operations remain solid. We continue to have successes in improving the mix within the deposit portfolio which has allowed us to reduce our interest expense. Additionally, we are especially pleased with the increase in noninterest income primarily attributable from the successes within the mortgage division. Our capital ratios at both the Bank and the Company remain strong." 

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
  September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 September 30, 2009
           
INTEREST INCOME          
Loans  $ 10,420  $ 11,496  $ 11,484  $ 11,900  $ 11,986
Investment securities available for sale  1,844  1,857  1,936  2,064  2,081
Fed funds sold and other interest-earning deposits  13  8  5  12  1
Total Interest Income  12,277  13,361  13,425  13,976  14,068
           
INTEREST EXPENSE          
Deposits  3,980  4,232  4,346  4,674  4,885
Short-term borrowings  58  124  206  228  507
Long-term debt  1,428  1,467  1,412  1,399  1,265
Total Interest Expense  5,466  5,823  5,964  6,301  6,657
           
Net Interest Income  6,811  7,538  7,461  7,675  7,411
Provision for loan losses  4,948  8,389  1,801  6,740  1,958
Net interest income (loss) after provision for loan losses  1,863  (851)  5,660  935  5,453
           
Non-interest income          
Mortgage loan origination income  68  111  193  187  223
Service charges and fees on deposit accounts  464  474  432  455  424
Earnings on life insurance  223  219  217  226  225
Gain on sale of available for sale securities  --  --  --  760  110
Loss on impairment of nonmarketable investment  --  --  --  (197)  --
Gain on sale of loans  409  149  44  75  --
Other   151  137  159  153  146
Total non-interest income  1,315  1,090  1,045  1,659  1,128
           
Non-interest expense          
Salaries and employee benefits  3,223  3,050  3,130  2,816  3,030
Occupancy and equipment  998  994  957  936  952
Data processing   388  393  386  308  358
FDIC deposit insurance premium  429  275  309  587  310
Impairment of goodwill  --  --  --  30,233  --
Other  1,598  2,443  1,404  1,262  1,237
Total non-interest expense  6,636  7,155  6,186  36,142  5,887
           
Income (loss) before income taxes  (3,458)  (6,916)  519  (33,548)  694
Income taxes  (1,574)  (2,906)  (23)  (1,501)  58
           
Net income (loss)  (1,884)  (4,010)  542  (32,047)  636
Effective dividend on preferred stock  423  421  419  604  422
Net income (loss) attributable to common shareholders  $ (2,307)  $ (4,431)  $ 123  $ (32,651)  $ 214
           
NET INCOME (LOSS) PER COMMON SHARE          
Basic  $ (0.24)   $ (0.46)  $ 0.01  $ (3.41)  $ 0.02
Diluted  $ (0.24)   $ (0.46)  $ 0.01  $ (3.41)  $ 0.02
           
COMMON SHARE DATA          
           
Book value per common share  $ 6.45  $ 6.62  $ 7.00  $ 6.92  $ 10.46
Tangible book value per common share  $ 6.37  $ 6.54  $ 6.92  $ 6.83  $ 7.23
Ending shares outstanding  9,664,059 9,664,059 9,626,559 9,626,559 9,626,559
Weighted average common shares outstanding - basic 9,581,390 9,581,390 9,574,264 9,569,290 9,569,290
Weighted average common shares outstanding - diluted 9,581,390 9,581,390 9,587,748 9,569,290 9,606,186
           
PERFORMANCE RATIOS (annualized)          
Return on average assets -0.77% -1.60% 0.21% -12.00% 0.24%
Return on average equity -8.49% -17.75% 2.36% -103.58% 2.06%
Yield on earning assets 5.45% 5.82% 5.78% 5.76% 5.80%
Cost of interest-bearing liabilities 2.63% 2.78% 2.80% 2.87% 3.03%
Tax equivalent net interest margin 3.08% 3.33% 3.27% 3.21% 3.08%
Efficiency ratio 81.66% 82.92% 72.72% 387.22% 68.94%
Net loan charge-offs 2.96% 3.73% 1.38% 1.53% 0.68%
 
 
(Amounts in thousands except share and per share data and prior years' information may have been reclassified)
INCOME STATEMENTS (unaudited)
     
  For the Nine Month Period Ended
  September 30, 2010 September 30, 2009
     
INTEREST INCOME    
Loans  $ 33,400  $ 36,089
Investment securities available for sale  5,637  6,134
Fed funds sold and other interest-earning deposits  26  8
Total Interest Income  39,063  42,231
     
INTEREST EXPENSE    
Deposits  12,558  15,197
Short-term borrowings  388  1,477
Long-term debt  4,307  3,646
Total Interest Expense  17,253  20,320
     
Net Interest Income  21,810  21,911
Provision for loan losses  15,138  4,787
Net interest income after provision for loan losses  6,672  17,124
     
Non-interest income    
Mortgage loan origination income  372  735
Service charges and fees on deposit accounts  1,370  1,208
Earnings on life insurance  660  660
Gain on sale of available for sale securities  --  110
Loss on impairment of nonmarketable investment  --  (407)
Gain on sale of loans  602  --
Other   447  363
Total non-interest income  3,451  2,669
     
Non-interest expense    
 Salaries and employee benefits  9,402  9,018
 Occupancy and equipment  2,949  2,607
 Data processing   1,168  1,110
 FDIC deposit insurance premium  1,013  1,332
 Other  5,445  3,733
Total non-interest expense  19,977  17,800
     
Income (loss) before income taxes  (9,854)  1,993
Income taxes  (4,503)  172
     
Net income (loss)  (5,351)  1,821
Effective dividend on preferred stock  1,264  1,012
Net income (loss) attributable to common shareholders  $ (6,615)  $ 809
     
NET INCOME (LOSS) PER COMMON SHARE    
Basic  $ (0.69)  $ 0.08
Diluted  $ (0.69)  $ 0.08
     
Weighted average common shares outstanding - basic 9,579,041 9,569,290
Weighted average common shares outstanding - diluted 9,579,041 9,585,422
     
PERFORMANCE RATIOS (annualized)    
Return on average assets -0.72% 0.23%
Return on average equity -8.00% 2.01%
Yield on earning assets 5.68% 5.71%
Cost of interest-bearing liabilities 2.74% 3.16%
Tax equivalent net interest margin 3.23% 3.04%
Efficiency ratio 79.08% 72.42%
Net loan charge-offs 2.68% 0.61%
 
 
(Amounts in thousands)
CONSOLIDATED BALANCE SHEETS (unaudited)
           
  September 30, 2010 June 30, 2010 March 31, 2010 December 31, 2009 (a) September 30, 2009
ASSETS          
Cash and due from banks  $ 8,019  $ 10,895  $ 9,964  $ 9,285  $ 7,841
Interest earning deposits with banks   1,491  2,160  884  4,617  4,436
Federal funds sold  20,155  15,930  15,785  17,825  5,545
Investment securities available for sale at fair value  186,562  186,128  188,609  193,123  198,309
Loans held for sale  2,039  1,317  138  --  --
Loans  694,450  709,443  744,484  759,348  771,997
Allowance for loan losses  (18,049)  (18,348)  (16,807)  (17,567)  (13,782)
Net Loans  676,401  691,095  727,677  741,781  758,215
Accrued interest receivable  3,682  4,150  4,121  4,260  4,255
Federal Home Loan Bank stock  10,933  11,777  11,777  11,777  11,777
Bank premises and equipment  11,743  11,972  12,002  11,861  11,946
Investment in life insurance  18,277  18,068  17,863  17,658  17,444
Goodwill  --  --  --  --  30,233
Other intangibles  726  760  793  826  860
Foreclosed assets  15,205  16,072  8,128  6,306  5,298
Other assets  17,275  15,401  13,394  13,486  7,544
           
Total Assets  $ 972,508  $ 985,725  $ 1,011,135  $ 1,032,805  $ 1,063,703
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
LIABILITIES          
Deposits          
Demand  $ 61,962  $ 61,525  $ 55,421  $ 61,042  $ 66,947
Savings  65,681  65,653  61,894  58,086  59,973
Money market and NOW  200,764  191,240  182,702  165,994  148,560
Time  388,641  403,807  413,740  437,513  438,702
Total Deposits  717,048  722,225  713,757  722,635  714,182
           
Short-term borrowings  7,000  22,000  57,000  74,000  88,000
Long-term debt  157,748  149,748  145,748  142,748  133,748
Accrued expenses and other liabilities  5,145  4,657  4,158  3,902  4,258
           
Total Liabilities  886,941  898,630  920,663  943,285  940,188
STOCKHOLDERS' EQUITY          
Preferred stock  23,266  23,154  23,043  22,935  22,798
Common stock  9,664  9,664  9,627  9,627  9,627
Warrant  2,367  2,367  2,367  2,367  2,367
Additional paid-in capital  74,597  74,560  74,562  74,530  74,484
Retained earnings (deficit)  (27,969)  (25,662)  (21,231)  (21,354)  11,298
Accumulated other comprehensive income  3,642  3,012  2,104  1,415  2,941
           
Total Stockholders' Equity  85,567  87,095  90,472  89,520  123,515
           
Total Liabilities and Stockholders' Equity  $ 972,508  $ 985,725  $ 1,011,135  $ 1,032,805  $ 1,063,703
( a ) Derived from audited consolidated financial statements.          
           
CAPITAL RATIOS          
           
Tangible equity to tangible assets 8.73% 8.77% 8.88% 8.59% 8.95%
Tangible common equity to tangible assets 6.34% 6.41% 6.60% 6.37% 6.74%
Tier 1 leverage ratio (current quarter estimate) 9.20% 9.25% 9.49% 9.03% 9.48%
Tier 1 risk-based capital ratio (current quarter estimate) 11.36% 11.44% 11.63% 11.37% 11.49%
Total risk-based capital ratio (current quarter estimate) 13.57% 13.65% 13.80% 13.53% 13.63%
           
ASSET QUALITY RATIOS (in thousands)          
           
Non accrual loans $ 30,662 $ 11,934 $ 29,410 $ 18,134 $ 16,540
Accruing loans > 90 days past due -- -- -- 381 --
Total nonperforming loans 30,662 11,934 29,410 18,515 16,540
Other real estate owned & repossessions 15,205 16,072 8,128 6,306 5,298
Total nonperforming assets $ 45,867 $ 28,006 $ 37,538 $ 24,821 $ 21,838
Allowance for loan losses to loans 2.60% 2.59% 2.26% 2.31% 1.79%
Nonperforming loans to total loans 4.42% 1.68% 3.95% 2.44% 2.14%
Nonperforming assets to total assets 4.71% 2.84% 3.71% 2.40% 2.05%
Restructured not included in categories above 5,648 11,451 12,368 13,691 9,525
           
   
  Nonperforming Loan Analysis
  September 30, 2010 December 31, 2009
  Outstanding Loan Balance Percentage of Total Loans Outstanding Loan Balance Percentage of Total Loans
Construction and A&D  $ 18,680 2.69%  $ 7,073 0.93%
Commercial real estate  7,990 1.15%  4,655 0.61%
Residential mortgage  2,812 0.40%  2,758 0.36%
Home equity lines and loans  896 0.13%  1,314 0.17%
Commercial and industrial  272 0.04%  2,706 0.36%
Consumer  12 0.00%  9 0.00%
Totals  $ 30,662 4.42%  $ 18,515 2.44%
   
  Nonperforming Loans by Region
  As of September 30, 2010
  Loans Outstanding % of Total Loans Outstanding Nonperforming Loans Nonperforming Loans to Loans Outstanding
         
         
Triangle Region  $ 408,981 58.69%  $ 17,198 4.21%
Sandhills Region  109,215 15.73%  6,814 6.24%
Wilmington Region  176,254 25.38%  6,650 3.77%
         
Totals   $ 694,450 100.00%  $ 30,662 4.42%
 
 
AVERAGE BALANCES, INTEREST AND YIELDS/COSTS (in thousands)
                   
  For the Three Months Ended 
  September 30, 2010 June 30, 2010 September 30, 2009
  Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost
                   
Interest-earnings assets                  
Loan portfolio  $ 704,177  $ 10,420 5.87%  $ 736,015  $ 11,496 6.26%  $ 772,419  $ 11,987 6.16%
Investment securities   191,714  1,844 4.57%  194,227  1,857 4.41%  207,599  2,081 4.46%
Fed funds and other interest-earning   19,278  13 0.27%  10,826  8 0.30%  2,987  1 0.13%
Total interest-earning assets  915,169  12,277 5.45%  941,068  13,361 5.82%  983,005  14,069 5.77%
Noninterest-earning assets  61,465      51,135      76,990    
Total Assets  $ 976,634      $ 992,203      $ 1,059,995    
                   
Interest-bearing liabilities                  
Interest-bearing NOW  $ 130,712  845 2.56%  $ 117,204  801 2.74%  $ 65,362  316 1.92%
Money market and savings  130,824  351 1.06%  133,295  395 1.19%  134,105  456 1.35%
Time deposits  394,895  2,784 2.80%  409,981  3,036 2.97%  443,337  4,113 3.68%
Short-term borrowings  12,174  58 1.89%  29,342  124 1.70%  107,389  507 1.87%
Long-term debt  155,313  1,428 3.60%  151,177  1,467 3.88%  120,487  1,265 4.11%
Total interest-bearing liabilities  823,918  5,466 2.63%  840,999  5,823 2.78%  870,680  6,657 3.03%
Non-interest bearing deposits  60,301      57,589      63,551    
Other liabilities  4,334      4,001      3,268    
Total Liabilities  888,553      902,589      937,499    
Stockholders' Equity  88,081      89,614      122,496    
Total Liabilities & Stockholders' Equity  $ 976,634      $ 992,203      $ 1,059,995    
                   
Net interest income    $ 6,811      $ 7,538      $ 7,412  
Interest rate spread     2.82%     3.04%     2.74%
Tax equivalent net interest-margin     3.08%     3.33%     3.08%
                   
Percentage of average interest-earning assets to average interest-bearing liabilities 111.08%     111.90%     112.90%
                   
                   
  For the Nine Months Ended      
  September 30, 2010 September 30, 2009      
  Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost      
                   
Interest-earnings assets                  
Loan portfolio  $ 730,611  $ 33,400 6.11%  $ 781,311  $ 36,089 6.18%      
Investment securities   195,132  5,637 4.43%  202,570  6,134 4.44%      
Fed funds and other interest-earning   13,161  26 0.26%  5,326  8 0.20%      
Total interest-earning assets  938,904  39,063 5.68%  989,207  42,231 5.79%      
Noninterest-earning assets  54,603      72,136          
Total Assets  $ 993,507      $ 1,061,343          
                   
Interest-bearing liabilities                  
Interest-bearing NOW  $ 115,043  2,270 2.64%  $ 54,085  594 1.47%      
Money market and savings  131,475  1,151 1.17%  135,555  1,427 1.41%      
Time deposits  409,091  9,137 2.99%  453,306  13,176 3.89%      
Short-term borrowings  35,411  388 1.46%  110,631  1,477 1.78%      
Long-term debt  151,279  4,307 3.75%  121,356  3,646 3.96%      
Total interest-bearing liabilities  842,299  17,253 2.74%  874,933  20,320 3.11%      
Non-interest bearing deposits  57,717      62,069          
Other liabilities  4,010      3,092          
Total Liabilities  904,026      940,094          
Stockholders' Equity  89,481      121,249          
Total Liabilities & Stockholders' Equity  $ 993,507      $ 1,061,343          
                   
Net interest income    $ 21,810      $ 21,911        
Interest rate spread     2.94%     2.68%      
Tax equivalent net interest-margin     3.23%     3.04%      
                   
Percentage of average interest-earning assets to average interest-bearing liabilities 111.47%     113.06%      
CONTACT:  Crescent Financial Corporation          Michael G. Carlton, President and CEO          Bruce W. Elder, Vice President          (919) 466-1005