McDERMOTT COLUMN: Owner of Charleston’s CresCom emerging from the shadows



Charleston bankers might have heard of Carolina Financial Corp., but few outside the industry are familiar with the low-key company with the plain-vanilla name.

Not for long, perhaps.

The closely held owner of CresCom Bank is emerging from the bumpiest stretch in its 16-year history under new management and with a sudden pep in its step, buoyed by its robust mortgage business and the rebounding local economy.

“At this point in time, we’re looking for growth, whether it’s new branches ... or other opportunities we see in the marketplace,” said Jerry Rexroad, CEO of Carolina Financial.

The Charleston-based holding company is making two notable moves as it steps out of the shadow of the recession.

For starters, it’s working to make it easier for investors to buy and sell its shares by seeking to list its stock on the over-the-counter market.

“The board of directors is committed to improving our stock’s liquidity,” Rexroad told shareholders in a April 24 letter.

He also informed investors of plans to pay out a semi-annual dividend for the first time, probably this summer.

Rough road

All the while, the company’s CresCom unit is jumping back into it core business of making loans, said David Morrow, CEO of the 10-branch community bank. It’ll have plenty of company in Charleston, which has attracted a fresh crop of out-of-town lenders.

“We are truly blessed to be in this market, no question,” said Morrow, who added that the surge of new rivals in Charleston “keeps us on our toes.”

“It’s makes it very competitive and makes it a very positive environment for borrowers right now,” he said.

Carolina Financial opened Community FirstBank in May 1997 at 288 Meeting St., which remains the headquarters. It expanded to Myrtle Beach in 2000 by forming Crescent Bank, which merged with the Charleston lender to create CresCom last year.

It’s been a rough road to get to this long-awaited upswing in the banking cycle.

CresCom, like many coastal lenders, has spent much of the past few years cleaning up the damage from the real estate crash in Charleston and along the Grand Strand. It losses totaled $13.6 million for 2010-11, when the bank had to set aside more than $40 million to cover souring loans.

‘Back on the street’

Last year marked the turning point. “As we went through 2012, a lot of positive things happened,” Rexroad said.

Much of the credit goes to CresCom’s Crescent Mortgage subsidiary. Its business soared as housing rebounded, driving up demand for home loans, while low interest rates fueled a refinancing boom.

Last year, the Georgia-based mortgage unit, which Rexroad runs, originated $2.2 billion in loans and earned $21 million.

The hefty gain was offset by losses elsewhere, netting Carolina Financial $16 million last year. That earned CresCom the highest returns based on assets and equity among South Carolina banks by the Financial Management Consulting Group.

The holding company reported a $4.4 million gain for the January-March period this year. And for the first quarter in recent memory, it didn’t set aside a nickel to cover losses.

“Needless to say, it’s fun to be a banker again,” said Morrow, whose predecessor, John Russ, finalized his retirement in April after lengthy negotiations. “We went through some difficult times. Now, we’re back on the street.”



Reach John P. McDermott at 937-5572.

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