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What sets Crescent Financial apart is their hiring of
talented bankers that want to live and work in the community that they reside in and
individuals who are committed to the organization
Savings & Loan
Crescent Financial Corp.
1005 High House Road
Cary, N.C. 27513
Michael G. Carlton
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
July 14, 2005
Michael G. Carlton, President & CEO Crescent State Bank:
Mike Carlton is a native North Carolinian with 15 years of diversified financial
experience in the North Carolina banking community. As President and CEO of Crescent
State Bank, Mr. Carlton over sees the day-to-day operations of the bank. He also
presides over any expansions of the bank into new areas.
As a second-generation banker, Mr. Carlton began his
banking career in Wilmington, North Carolina as a Sales Finance Associate with Wachovia
Corporation and ultimately was promoted to Business Banker. In 1990, he returned to Wake
County where he joined United Carolina Bank as a Commercial Lender, in Raleigh. Two years
later, he became the City Executive for United Carolina Bank, and moved to Cary, North
Carolina. He continued to work at United Carolina Bank until it was acquired by Branch
Banking and Trust Company (BB&T) in 1997. At the time, Mr. Carlton joined South Trust
Bank in Raleigh as the Middle Market Lending Manager. Then in August of 1998, he left
South Trust to start a new bank, Crescent State Bank, with ten other Directors.
Mr. Carlton is very active in a number of civic and
charitable organizations throughout the community. He is a member of the South Wake
Rotary Club, as well as on the Board of Directors for the South Wake YMCA. Mr.
Carlton is a former treasurer for the Board of Directors for the Cary Chamber of Commerce
and was formerly on the Board of Directors and Executive Committee for the North Carolina
Bankers Association as well as the Community Investment Corporation of North Carolina,
which is a subsidiary of the North Carolina Bankers Association.
Mr. Carlton graduated from Elon University in Burlington,
North Carolina with a Bachelors of Science in Finance. He is married with two
Crescent State Bank is a wholly owned subsidiary of Crescent Financial Corporation. The
Bank was opened in December 1998 to serve the financial needs of the communities it
serves. The bank has total assets of approximately $354 million, deposits of approximately
$285 million, and loans of $278 million as of March 31, 2005, with nine full service
banking offices in the communities of Cary (2), Apex, Clayton, Garner, Holly Springs, Sanford,
Southern Pines, and Pinehurst, North Carolina.
CEOCFO: Mr. Carlton,
what was your vision when you started Crescent and how has it developed?
Mr. Carlton: The vision for Crescent was to establish a
local community bank and service the needs of the various communities. One of the main
reasons we began Crescent was that the bigger banks kept getting bigger; they kept moving
that threshold up as to what was important to them, and it did not seem to be aligned to
what the general consumer needed. For example, in 1998, the larger banks were directing
customers to the phone booth in the corner to dial 1800-Get-a-Loan. We did not think that
was the right way to do business; it was an option but it should not be a requirement. The
other reason is mergers have been going on-and-on and it creates opportunities for small
CEOCFO: Will you tell us
about the economy in the area you service?
Mr. Carlton: The economy is wonderful in central North
Carolina. Cary is a bedroom community to Raleigh North Carolina. We are not necessarily a
bedroom community anymore, with 110,000 residents. When I came here in 1990, there were
45,000. It is heavily populated in what I call the medical government, the hospital system
and certainly research and development from the Research Triangle Park. That is part of
our customer base, but it is heavily concentrated in residential real estate and
commercial real estate from a perspective that it has been a great place to live and it is
a great place to work and people want to do both in the same area.
CEOCFO: What sets
Crescent apart from its competitors?
Mr. Carlton: What sets us apart is we hire individuals
that want to live and work in the community that they reside in. We do not want employees
to join the company as a stepping-stone to go to work for a larger community. We want
folks who are committed to the organization. We hire talented bankers that have a book of
business, that can transition those relationships and they give that to the community
where they reside. We empower our lenders to do the right thing; if they need to pull the
trigger and make a quick decision, I am there to back them up. That is probably what sets
us apart. The customer knows that when they come in with a loan request, the layers or
channels to get that loan approved, is streamlined. They are going to know when they walk
out of our account officers office, whether their loan is going to be approved.
CEOCFO: How do you split
between business and consumer, and would you like to see that change?
Mr. Carlton: We are a commercial bank and about 80% of
our loans are tied to real estate of some sort. We are not going to make budget doing core
lines and home equity loans, so our true customer base consists of professionals,
companies that are start-up; anywhere from $20-$25 million in revenues, so it is a wide
gamut. With that said, we have to rely on consumer deposits to fund the growth. To answer
your question, we need more of a mixture. One of the things we have done to try to
accomplish this goal is we have ten offices today in various communities. We believe that
over time, the deposits in those communities will help fund loan growth that we have in
each of the communities. Part of our strategy is to go into fast-growing communities, and
when you do that, that is a double-edged sword and your loans are going to lead to
deposits. We could go into slow-growth communities that are deposit-rich and not a strong
loan growth, but I am not sure that adds to franchise value.
CEOCFO: Do you
anticipate going into new locations in the foreseeable future?
Mr. Carlton: That is part of the strategy.
CEOCFO: Are there
services that you would like to add?
Mr. Carlton: We believe that we have the majority of
products and services that we need, to compete with all the providers of financial
services. Since day one, we have had online banking, and a customer has been able to pull
up their account, look at the check, look at the endorsement and view it for accuracy. We
believe that as early as 1998, we have been on the leading edge technology standpoint. We
have been able to do this because we have third-party providers that have been able to do
this for us. We acquired a small financial institution in the Pine Hurst area about two
years ago. We are going to continue to look for opportunities that make sense for the
customers in those various communities. We are not going to acquire, just to acquire; it
has to make sense from a shareholders perspective.
CEOCFO: Do you do much
Mr. Carlton: Because we are a financial institution, we
do not do a great deal of advertising. We rely on our customers to make referrals for us.
Our account officers are out knocking on doors daily. We advertise in Chamber of Commerce
publications, newsprint and the various communities we serve. We have a website that we
try to promote as often as possible. We do direct mail occasionally, but beyond that, we
really rely on internal efforts.
CEOCFO: What you are
doing is working; your last quarter was a good one!
Mr. Carlton: So far, so good.
CEOCFO: Do you do much
in the way of community involvement?
Mr. Carlton: We ask each of our lenders and city execs
to be active in the communities where they serve. They do not see that as an obligation
but as part of giving back to the community. Each of the communities we are in are fairly
small and close knit; there needs to be community involvement. It ranges from boards of
Chamber of Commerce to board members on the YMCA that are active in their church or in
their civic organization. We believe that is important for filling the role of a community
CEOCFO: You were
recently named one of the top public companies in North Carolina, will you tell us about
that and what it means for you?
Mr. Carlton: I do not know what it means other than the
fact that we think we are doing the right thing. We have continued to attract new
customers from a shareholder perspective. A shareholder could not be that unhappy if they
have been with us since day one. Our stock price split adjusted for the shareholders that
came in day one, is $4.98 and recently we were trading at 16 or $17.00 a share. We do not
get caught up on rankings, we do not need to be the biggest bank out there; we just want
to be the best.
service is todays technology, will you elaborate on that?
Mr. Carlton: That was our motto when we opened our
doors. We wanted the potential customers to know that we had all the products and services
that the big banks have. In addition, you can come in, we will greet you by name and thank
you for coming in, and we are going to ask you about your family and things of that sort.
It is almost bringing back the service of yesterday where you could walk into an
organization and get that kind of attention in todays environment. We have since
changed that line to we belong together, to keep it simple. We believe that we
belong together, reaches the individuals in their various communities we serve.
CEOCFO: Why should
potential investors be interested? What should investors notice that may get overlooked?
Mr. Carlton: I think they need to look at management.
We have a young management team and the average age among the four of us is 44 or 45 years
old. Our vision in long-term success, we are not looking for a paycheck; we are looking
for a future. The board is united in remaining independent; however, we all understand
that we have a fiduciary responsibility to the shareholders. From a shareholder that does
not know anything about Crescent, first they need to do research on each of the
communities we serve, look at the demographics of those communities, and look at how they
have been affected in the most recent economic environment. They will quickly determine
that from a location and economic standpoint, Crescent is well situated. When they look at
the history of the problem loans or the history of the organization and the internal
structure of the loan portfolio, they will quickly see that we believe in asset quality
first and growth second. We do not need to be the biggest but we do need to be the best.
We need to be the best by putting out good loans, which are going to stick with us for a
CEOCFO: In closing, as
CEO, what keeps you active during a typical day?
Mr. Carlton: Everyday is a new day and no two days are
alike. I spend a lot of my time cultivating relationships with prospects. I spend a lot of
my time with our account officers out in the field, trying to develop ways to make them
better. I deal with shareholders, new shareholders. We always try to tell the Crescent
story whenever possible and constantly exploring new products and services.
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