Armed with fresh capital from its new ownership group, Crescent Financial Bankshares (CRFN) in Raleigh, N.C., has reported its first profitable quarter in two years and said it has won approval from regulators to resume divided payments on both trust-preferred securities and shares issued to the Treasury Department under the Troubled Asset Relief Program.
The $826 million-asset parent of Crescent State Bank announced Monday that it earned $324,000 in the first quarter, or a penny per share, compared to a net loss of $7.5 million in last year's first quarter.
The results were driven by significantly improved credit quality and a sharp increase in its net interest margin stemming from reduced funding costs. Its ratio of nonperforming assets to total assets fell from 6.33% in last year's first quarter to 2.53% this year, which allowed the company to reduce its provision for loan losses by 89% year over year, to $804,000.
Though the company sharply shrunk its balance sheet, net interest income climbed 32%, to $7.9 million, and its net interest margin increased 164 basis points, to 4.46%, due to a 71% reduction in its interest expense.
Crescent late last year received more than $100 million of new capital from Piedmont Community Holdings, an investment group formed in 2009 to buy stakes in struggling banks. As a result of that investment, the company's total risk-based capital ratio now sits at 16.87%, up from just over 12% at March 31 last year.
Because of asset-quality troubles, Crescent early last year deferred its quarterly interest payments on the $25 million it received from Tarp. It said in Monday's announcement that it will resume its payments and pay roughly $1.3 million of accrued interest when its next installment is due May 15. It also said it will resume payments on trust-preferred securities, including $371,000 of deferred interest, beginning July 7.