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Crescent Financial Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 14, 2011 10:49AM

Crescent Financial Corp. (CRFN) filed Quarterly Report for the period ended 2011-09-30. Crescent Financial Corp. has a market cap of $43 million; its shares were traded at around $4.45 with and P/S ratio of 0.77.



Highlight of Business Operations:

Total assets decreased by approximately $57.1 million or 6% to $916.0 million at September 30, 2011 from $973.0 million at December 31, 2010. Earning assets are $866.9 million or 95% of total assets at September 30, 2011 compared to $915.7 or 94% at December 31, 2010. Components of earning assets at September 30, 2011 are $616.0 million in gross loans held for investment, $226.1 million in investment securities and Federal Home Loan Bank (FHLB) stock, $22.0 in overnight investments and interest-earning deposits with correspondent banks and $2.8 million in loans held for sale. Earning assets at December 31, 2010 consisted of $676.8 million in gross loans held for investment, $192.4 million in investment securities and FHLB stock, $40.7 million in overnight investments and interest-earning deposits and $5.7 million in loans held for sale. Total deposits and stockholders equity at September 30, 2011 are $686.2 million and $67.0 million, respectively, compared to $724.4 million and $79.0 million at December 31, 2010.

Gross loans held for investment, net of deferred loan fees declined by $60.8 million over the first nine months of 2011. All loan categories experienced a decline due in part to normal principal payments, continued softness in loan demand, loan sales and loan charge-offs. The net decline by loan category is as follows: $27.5 million in construction, land acquisition and development, $16.1 million in commercial real estate, $8.2 million in residential first trust mortgages, $5.1 million in home equity loans and lines, $3.8 in commercial and industrial and $93,000 in consumer loans. The decline in the construction, land acquisition and development category is due to the lack of loan demand and a desire by the Company to reduce our credit concentration in this sector that has been most negatively impacted during the current economic downturn. The net $60.8 million decrease is comprised of $70.0 million in normal principal payments and payoffs, $13.3 million in gross loan charge-offs, $10.8 million in loan sales, $4.8 million of loans transferred to other asset categories, and are partially offset by $38.1 million in new loan production. The composition of the loan portfolio, by category, as of September 30, 2011 is 54% commercial mortgage loans, 18% construction loans, 12% residential mortgage loans, 8% home equity loans and lines, 7% commercial loans and 1% consumer loans. The composition of the loan portfolio, by category, as of December 31, 2010 was 51% commercial real estate mortgage loans, 21% construction and land development loans, 12% residential one-to-four family first deed of trust mortgage loans, 8% home equity lines and loans, 7% commercial and industrial loans and 1% consumer loans.

The Company has investment securities with an amortized cost of $211.2 million at September 30, 2011. All investments are accounted for as available for sale and are presented at their fair market value of $216.9 million compared with $181.9 million at year-end 2010. The Company s investment securities at September 30, 2011, consist of U.S. Government agency securities, collateralized mortgage obligations, mortgage-backed securities, corporate bonds, municipal bonds and marketable equity securities. The $35.0 million increase in the available for sale portfolio during 2011 is the net result of $83.8 million in new purchases, a $2.0 million increase in the fair value of the portfolio less $28.0 million in sales of available for sale securities, $21.5 million in normal principal payments, and $1.6 million in net amortization of premiums. Gains on sales of available for sale and non-marketable securities of $347,000 and $179,000, respectively, have been realized during the first nine months of 2011 and we have taken impairment write-downs of $47,900 and $179,000, respectively, on available for sale and non-marketable equity investments during the same period. The Company owned $9.2 million and $10.5 million of Federal Home Loan Bank stock at September 30, 2011 and December 31, 2010, respectively.

Total average earning assets decreased $43.7 million or 5% from an average of $915.2 million for the prior three-month period to an average of $871.5 million for the current three-month period. The composition of the decrease was as follows: the average balance of loans outstanding decreased by 11% or $77.9 million from $704.2 million to $626.3 million, the average balance of the investment securities portfolio increased by 11% or $21.3 million from $191.7 million to $213.0 million and the average balance of federal funds sold and other interest earning assets increased by $12.9 million from $19.3 million to $32.2 million. The average of gross loans outstanding has declined due to the Company s efforts to reduce its concentration exposure to construction, land acquisition and development lending, loan charge-offs and weakened loan demand over the past twelve months.

Total average earning assets decreased $46.6 million or 5% from an average of $938.9 million to an average of $892.3 million for the current nine-month period. The composition of the net decrease was as follows: the average balance of loans outstanding decreased by 12% or $84.7 million from $730.6 million to $645.9 million, the average balance of federal funds sold and other interest-earning assets increased by $30.5 million from $13.2 million to $43.7 million and the average balance of the investment securities portfolio increased by $7.5 million from $195.1 million to $202.6 million. The average of gross loans outstanding has declined due to the Company s efforts to reduce its concentration exposure to construction, land acquisition and development lending, loan charge-offs and soft loan demand.

Read the The complete Report



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