UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0-20251

CRESCENT BANKING COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Georgia	58-1968323
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
7 Caring Way, Jasper, Georgia	30143
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (678) 454-2266

Securities registered pursuant to Section 12(b) of the Act: None

Title of Each Class Name of Each Exchange
on Which Registered

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1.00 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act

Large Accelerated Filer  ¨                Accelerated Filer  ¨                Non-Accelerated Filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  x

The aggregate market value of Crescent Banking Company’s Common Stock, par value $1.00 per share, held by non-affiliates, computed by reference to the price at which the stock was last sold on June 30, 2006, as reported on the Nasdaq Capital Market (formerly the Nasdaq SmallCap Market), was $62.0 million.

The number of shares outstanding of Crescent Banking Company’s Common Stock, par value $1.00 per share, as of March 23, 2007 was 2,624,773, of which 16,668 shares were held by Crescent Banking Company as treasury stock.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of Crescent Banking Company’s 2006 Annual Report to Shareholders for the year ended December 31, 2006 (the “Annual Report”) are incorporated by reference into this Form 10-K. Other than those portions of the Annual Report specifically incorporated by reference pursuant to selected portions of Item 5 and Items 6 through 8 of Part II hereof, no other portions of the Annual Report shall be deemed so incorporated.

Certain portions of Crescent Banking Company’s definitive Proxy Statement for its 2007 Annual Meeting of Shareholders (the “Proxy Statement”) filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934, as amended, are incorporated by reference into this Form 10-K. Other than those portions of the Proxy Statement specifically incorporated by reference pursuant to Items 10 through 14 of Part III hereof, no other portions of the Proxy Statement shall be deemed so incorporated.

IMPORTANT INFORMATION ABOUT THIS REPORT

In this report, the words “the Company,” “we,” “us” and “our” refer to the combined entities of Crescent Banking Company and its wholly owned subsidiaries, Crescent Bank & Trust Company and Crescent Mortgage Services, Inc. The words “Crescent,” “Crescent Bank” and “CMS” refer to the individual entities of Crescent Banking Company, Crescent Bank & Trust Company and Crescent Mortgage Services, Inc., respectively.

SPECIAL CAUTIONARY NOTICE

REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements made or incorporated by reference in this report, including those under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere, are “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, targets, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, and which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that may be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “target,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential,” and other similar words and expressions of the future. These forward-looking statements may not be realized due to a variety of factors, including, without limitation:

• the effects of future economic and business conditions;

• governmental monetary and fiscal policies, as well as legislative and regulatory changes, including changes in banking, securities and tax laws and regulations;

• the risks of changes in interest rates and the yield curve on the levels, composition and costs of deposits, loan demand, and the values of loan collateral, securities, and interest sensitive assets and liabilities;

• credit risks of borrowers;

• the effects of competition from a wide variety of local, regional, national, and other providers of financial, investment, mortgage and insurance services;

• the failure of assumptions underlying the establishment of allowances for loan losses and other estimates;

• the risks of mergers, acquisitions and divestitures (including the sale to Carolina Financial of the wholesale residential mortgage business conducted by CMS and the merger with Futurus Financial), including, without limitation, the related time and costs of implementing such transactions and the possible failure to achieve expected gains, revenue growth or expense savings from such transactions;

• changes in accounting policies, rules and practices;

• changes in technology or products that may be more difficult or costly, or less effective, than anticipated;

• the effects of war or other conflict, acts of terrorism or other events that affect general economic conditions; and

• other factors and other information contained in this report and in other reports that the Company makes with the Securities and Exchange Commission (the “Commission”) under the Exchange Act.

All written or oral forward-looking statements that are made by or are attributable to us are expressly qualified in their entirety by this cautionary notice. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date of this report, or after the respective dates on which such statements otherwise are made.

PART I

ITEM 1. BUSINESS

General

As of December 31, 2006, the Company was made up of the following six entities:

• Crescent Banking Company (“Crescent”), which is the parent holding company of Crescent Bank & Trust Company (“Crescent Bank” or the “Bank”) and Crescent Mortgage Services, Inc. (“CMS”);

• Crescent Bank, a community-focused commercial bank;

• CMS, a mortgage banking company;

• Crescent Capital Trust I, a Delaware statutory business trust;

• Crescent Capital Trust II, a Delaware statutory business trust; and

• Crescent Capital Trust III, a Delaware statutory business trust.

In connection with the redemption on December 29, 2006 of the trust preferred securities issued by Crescent Capital Trust I, Crescent Capital Trust I was dissolved effective January 5, 2007.

For purposes of the following discussion, the words the “Company,” “we,” “us” and “our” refer to the combined entities of Crescent Banking Company and its wholly owned subsidiaries, Crescent Bank and CMS. The words “Crescent,” “Crescent Bank” or the “Bank,” and “CMS” refer to the individual entities of Crescent Banking Company, Crescent Bank & Trust Company and Crescent Mortgage Services, Inc., respectively.

In accordance with Financial Accounting Standards Board Interpretation No. 46R (FIN 46), Crescent Capital Trust I, Crescent Capital Trust II and Crescent Capital Trust III (together, the “Trusts”) are not consolidated with the Company. Accordingly, the Company does not report the securities issued by the Trusts as liabilities, and instead reports as liabilities the junior subordinated debentures issued by the Company and held by the Trusts. The Company further reports its investment in the common shares of the Trusts as other assets. The Company has fully and unconditionally guaranteed the payment of interest and principal on the trust preferred securities to the extent that the Trusts have sufficient assets to make such payments but fail to do so. All of the outstanding trust preferred securities currently qualify as tier 1 capital for regulatory capital purposes.

The Company’s principal executive offices, including the principal executive offices of Crescent Bank and CMS, are located at 7 Caring Way, Jasper, Georgia 30143, and the telephone number at that address is (678) 454-2266. The Company maintains an Internet website at www.crescentbank.com. The Company is not incorporating the information on that website into this report, and the website and the information appearing on the website are not included in, and are not part of, this report.

As of December 31, 2006, the Company had total consolidated assets of approximately $779.7 million, total deposits of approximately $658.9 million, total consolidated liabilities, including deposits, of approximately $717.9 million and consolidated stockholders’ equity of approximately $61.8 million. The Company’s operations are discussed below under “Results of Operations.”

Crescent

Crescent is a Georgia corporation that is registered as a bank holding company with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) under the Federal Bank Holding Company Act of 1956, as amended (the “BHC Act”), and with the Georgia Department of Banking and Finance (the “Georgia Department”) under the Financial Institutions Code of Georgia, as amended. Crescent was incorporated on November 19, 1991 to become the parent holding company of the Bank. Crescent also owns 100% of CMS.

Commercial Banking Business

The Company currently conducts its traditional commercial banking operations through Crescent Bank. The Bank is a Georgia banking corporation that was founded in August 1989. The Bank is a member of the Federal Deposit Insurance Corporation (the “FDIC”). Effective March 31, 2006, the FDIC’s Bank Insurance Fund (“BIF”) and Savings Association Insurance Fund (“SAIF”) were merged into one fund, the Deposit Insurance Fund (“DIF”). The Bank’s deposits are insured by DIF. The Bank is also a member of the Federal Home Loan Bank of Atlanta.

Through the Bank, the Company provides a broad range of banking and financial services to those areas surrounding Jasper, Georgia. As its primary market area, the Bank focuses on Pickens, Bartow, Forsyth and Cherokee Counties, Georgia and nearby Dawson, Cobb, Walton and Gilmer Counties, Georgia, which are situated to the north of Atlanta, Georgia. The Bank’s commercial banking operations are primarily retail-oriented and aimed at individuals and small- to medium-sized businesses located within its market area. While the Bank provides most traditional banking services, its principal activities as a community bank are the taking of demand and time deposits and the making of secured and unsecured consumer loans and commercial loans to its target customers. The retail nature of the Bank’s commercial banking operations allows for diversification of depositors and borrowers, and the Bank’s management believes it is not dependent upon a single or a few customers. The Bank does not have a significant portion of commercial banking loans concentrated within a single industry or group of related industries; however, approximately 92% of the Bank’s loan portfolio is secured by commercial and residential real estate in its primary market area.

For the year ended December 31, 2006, the Company had revenues from continued operations from its commercial banking business of approximately $59.4 million and pretax income from continued operations from its commercial banking business of approximately $11.5 million. Pretax income from continuing operations represented 100% of the Company’s total pretax income for the year ended December 31, 2006. During the fiscal years 2005, 2004 and 2003, the Company had revenues from its continued operations in its commercial banking business of approximately $43.2 million, $27.1 million and $21.5 million, respectively, and pretax income from its continued operations in the commercial banking business of approximately $6.6 million, $2.0 million and $3.4 million, respectively. Pretax income from continuing operations represented approximately 100.0%, 1,285.5% and 12.0% of the Company’s total pretax income for the years ended December 31, 2005, 2004 and 2003, respectively. The Company’s commercial loan portfolio, which has experienced significant growth since 1998, represents the largest earning asset for the Company’s commercial banking operations. The Company’s portfolio grew 58% in 2004, 37% in 2005 and 17% for the year ended December 31, 2006. At December 31, 2006, the Company had total commercial loans of approximately $697.3 million. At each of December 31, 2006, 2005 and 2004, the Company’s total commercial banking assets from continuing operations were approximately $779.7 million, $704.1 million and $513.4 million, respectively.

Continued Expansion

Consistent with the Company’s efforts to better serve its market, the Company has engaged in recent expansion of its business. The sale of the Company’s wholesale residential mortgage business on December 31, 2003 made available $27 million in capital that was used to expand our commercial banking business through our ongoing branching initiatives. During 2004 and 2005, we opened three new full service branches and two new loan production offices in our market area, and on April 1, 2005 we completed a merger with Futurus Financial Services, Inc. (“Futurus Financial”) and Futurus Bank, N.A. in which we acquired one full service branch and one loan production office. We completed construction of our new Cumming, Georgia branch office in January of 2006 and we concurrently closed our existing Cumming branch location that was being operated out of leased space in a shopping center. We completed construction of our new office in Canton, Georgia in the third quarter of 2006, and we concurrently closed our existing Canton branch location and our Canton loan production office that were being operated out of leased space. We completed construction of a new office in south Cherokee County near Woodstock, Georgia in the first quarter of 2007. With the completion of these two branches, the Bank has three full service branches in Cherokee County, which is one of the fastest growing counties in Georgia.

Seasonality; Cycles

The Company does not consider its commercial banking operations to be seasonal in nature. The Bank makes loans to acquire and develop commercial and residential real estate. Real estate activity and values tend to be cyclical and vary over time with interest rates and economic activity.

Competition

The Company’s commercial banking business operates in highly competitive markets. The Bank competes directly for deposits in its commercial banking market with other commercial banks, savings and loan associations, credit unions, mutual funds, securities brokers and insurance companies, locally, regionally and nationally, some of which compete by offering products and services by mail, telephone, computer and the Internet. In its commercial bank lending activities, the Bank competes with other financial

institutions as well as consumer finance companies, mortgage companies and other lenders engaged in the business of extending credit to customers located in its market area. Interest rates, both on loans and deposits, and prices of services are significant competitive factors among financial institutions generally. Important competitive factors, such as office location, types and quality of services and products, office hours, customer service, a local presence, community reputation and continuity of personnel, among others, are and continue to be a focus of the Bank.

Competition in our primary markets includes:

• 6 commercial banks have offices in Pickens County, Georgia;

• 12 commercial banks have offices in Bartow County, Georgia;

• 15 commercial banks have offices in Cherokee County, Georgia;

• 51 commercial banks have offices in Fulton County, Georgia; and

• 18 commercial banks have offices in Forsyth County, Georgia.

Many of the largest banks operating in Georgia, including some of the largest banks in the country, also have offices within the Bank’s market area. Virtually every type of competitor for business of the type served by the Bank has offices in Atlanta, Georgia, which is approximately 60 miles away from Jasper. Many of these institutions have greater resources, broader geographic markets and higher lending limits than the Company and may offer various services that the Company does not offer. In addition, these institutions may be able to better afford and make broader use of media advertising, support services and electronic technology than the Company. To offset these competitive disadvantages, the Bank depends on its reputation as an independent and locally-owned community bank, its personal service, its greater community involvement and its ability to make credit and other business decisions quickly and locally.

Employees

At December 31, 2006, the Company had 182 full-time and 17 part-time employees. The Company considers its employee relations to be good, and it has no collective bargaining agreements with any employees.

Supervision and Regulation

Bank holding companies and banks are extensively regulated under both federal and state law. The following discussion summarizes certain laws, rules and regulations affecting the Company and the Bank. This summary is qualified in its entirety by reference to the statutory and regulatory provisions referred to below and is not intended to be an exhaustive description of the statutes or regulations applicable to the Company’s and the Bank’s businesses. Supervision, regulation and examination of banks by the bank regulatory agencies are intended primarily for the protection of depositors rather than holders of Company securities. Any change in applicable laws or regulations, or regulatory policies and practices, may have a material effect on the business of the Company and the Bank.

Bank Holding Company Regulation

General

As a bank holding company registered with the Federal Reserve under the BHC Act, and with the Georgia Department under the Financial Institutions Code of Georgia, the Company is subject to supervision, examination and reporting by the Federal Reserve and the Georgia Department. Prior approval by the Federal Reserve and the Georgia Department is required for many transactions, including, without limitation, acquisitions. The Company is required to file periodic reports and other information with the Federal Reserve. The Federal Reserve examines the Company, and may examine its subsidiaries.

The BHC Act requires prior Federal Reserve approval for, among other things, the acquisition by a bank holding company of direct or indirect ownership or control of more than 5% of the voting shares or substantially all of the assets of any bank, or for a merger or consolidation of a bank holding company with another bank holding company. A bank holding company may acquire direct or indirect ownership or control of voting shares of any company that is engaged directly or indirectly in banking or managing or controlling banks or performing services for its authorized subsidiaries. A bank holding company may also engage in or acquire an interest in a company that engages in activities that the Federal Reserve has determined by regulation or order to be so closely related to banking as to be a proper incident thereto. The BHC Act also requires prior Federal Reserve approval for the merger or consolidation of the Company with another bank holding company. Similar requirements are imposed by the Georgia Department.

The BHCA permits a bank holding company located in one state to acquire a bank located in any other state, subject to deposit-percentage, aging requirements, and other restrictions. The Riegle-Neal Interstate Banking and Branching Efficiency Act also generally provides that national and state-chartered banks may, subject to applicable state law, branch interstate through acquisitions of banks in other states.

The Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) substantially revised the statutory restrictions separating banking activities from certain other financial activities. Under the GLB Act, bank holding companies that are “well-capitalized” and “well-managed,” as defined in Federal Reserve Regulation Y, that have and maintain “satisfactory” or better ratings under the Community Reinvestment Act of 1977, as amended (the “CRA”), and that meet certain other conditions, may elect to become “financial holding companies.” Financial holding companies and their subsidiaries are permitted to acquire or engage in previously impermissible activities such as insurance underwriting, securities underwriting and distribution, travel agency activities, broad insurance agency activities, merchant banking and other activities that the Federal Reserve determines to be financial in nature or complementary thereto. While the Company has not elected to become a financial holding company, it may to do so in the future.

Transactions with Affiliates and Insiders

The Company is a legal entity separate and distinct from the Bank and its other subsidiaries. Various legal limitations restrict the Bank from lending or otherwise supplying funds to the Company or its non-bank subsidiaries. The Company and the Bank are subject to Section 23A of the Federal Reserve Act and Federal Reserve Regulation W. Section 23A defines “covered transactions,” which include extensions of credit, and limits a bank’s covered transactions with any affiliate to 10% of such bank’s capital and surplus. All covered and exempt transactions between a bank and its affiliates must be on terms and conditions consistent with safe and sound banking practices, and banks and their subsidiaries are prohibited from purchasing low-quality assets from their affiliates. Finally, Section 23A requires that all of a bank’s extensions of credit to an affiliate be appropriately secured by acceptable collateral, generally United States government or agency securities. The Company and the Bank also are subject to Section 23B of the Federal Reserve Act, which generally requires covered and other transactions among affiliates to be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the Bank or its subsidiary as those prevailing at the time for transactions with unaffiliated companies.

Due to Sections 23A and 23B, the Bank is limited in its ability to lend funds or engage in transactions with the Company, and all such transactions must be on an arms-length basis and on terms at least as favorable to the Bank as those prevailing at the time for transactions with unaffiliated companies. Outstanding loans from the Bank to the Company may not exceed 10% of the Bank’s capital stock and surplus, and these loans must be fully or over-collateralized. Total outstanding extensions of credit from the Bank to all affiliates may not exceed 20% of capital stock and surplus.

The Bank is also restricted in the loans that it may make to its executive officers and directors, the executive officers and directors of the Company, any owner of 10% or more of its stock or the stock of the Company, and certain entities affiliated with any such persons.

Source of Financial Strength

Federal Reserve policy requires a bank holding company to act as a source of financial strength and to take measures to preserve and protect bank subsidiaries in situations where additional investments in a troubled bank may not otherwise be warranted. In addition, where a bank holding company has more than one bank or thrift subsidiary, each of the bank holding company’s subsidiary depository institutions are responsible for any losses to the FDIC as a result of an affiliated depository institution’s failure. As a result, a bank holding company may be required to loan money to its subsidiaries in the form of capital notes or other instruments which qualify as capital under regulatory rules. Any such loans from the Company to the Bank likely will be unsecured and subordinated to the Bank’s depositors and perhaps to other creditors of the Bank.

Limitations on Acquisitions of Bank Holding Companies

As a general proposition, other companies seeking to acquire control of a bank holding company would require the approval of the Federal Reserve under the BHCA. In addition, individuals or groups of individuals seeking to acquire control of a bank holding company would need to file a prior notice with the Federal Reserve (which the Federal Reserve may disapprove under certain circumstances) under the Change in Bank Control Act. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding company. Control may exist under the Change in Bank Control Act if the individual or company acquires 10% or more of any class of voting securities of the bank holding company. A company may be presumed to have control under the BHCA if it acquires 5% or more of any class of voting securities of the bank holding company.

Bank Regulation

General

As a Georgia bank whose deposits are insured by the FDIC up to the maximum amounts provided by law, the Bank is subject to regulation and examination by the Georgia Department and the FDIC. The Georgia Department and the FDIC regulate and monitor all of the Bank’s operations, including reserves, loans, mortgages, and payments of dividends, interest rates and the establishment of branches. Interest and certain other charges collected or contracted for by the Bank are subject to state usury laws and certain federal laws concerning interest rates. The Bank, subject to necessary regulatory approvals, may branch anywhere in the State of Georgia.

Dividends

Various statutes and contracts limit the Bank’s ability to pay dividends, extend credit or otherwise supply funds to the Company and its subsidiaries. Dividends from the Bank are expected to constitute the Company’s major source of funds for servicing Company debt and paying cash dividends on the Company’s stock. Under Georgia law, the Bank may not pay any dividends unless its paid-in capital and appropriated retained earnings, together, are equal to at least 20% of its capital stock. In addition, the Georgia Department’s prior approval of a dividend by the Bank generally is required if: (i) total classified assets at the most recent examination of the Bank exceed 80% of tier 1 capital plus the allowance for loan losses as reflected at such examination; (ii) the aggregate amount of dividends to be paid in the calendar year exceeds 50% of the Bank’s net profits, after taxes but before dividends, for the previous year; and (iii) the ratio of the Bank’s tier 1 capital to its adjusted total assets is less than 6%. A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. The FDIC and the Georgia Department also have the general authority to limit the dividends paid by insured banks, if such payment is deemed an unsafe and unsound practice. The FDIC has indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsound and unsafe banking practice. Furthermore, the FDIC has the right to prevent or remedy unsafe or unsound banking practices or other violations of law. Generally, the FDIC will not permit a bank to pay dividends in excess of the current fiscal year’s net earnings, plus the net earnings from the preceding two years.

The FDIC has adopted the Federal Financial Institutions Examination Council’s (“FFIEC”) updated internal rating system used by the federal and state regulators for assessing the soundness of financial institutions on a uniform basis and for identifying those institutions requiring special supervisory attention. Each financial institution is assigned a confidential composite rating based on an evaluation and rating of six essential components of an institution’s financial condition and operations, including capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk. These ratings reflect an increased emphasis on the quality of risk management practices and the addition of a sixth component of sensitivity to market risk. For most institutions, the FDIC has indicated that market risk primarily reflects exposures to changes in interest rate. When regulators evaluate this component, consideration is expected to be given to management’s ability to identify, measure, monitor and control market risk; the institution’s size; the nature and complexity of its activities and its risk profile; and the adequacy of its capital and earnings in relation to its level of market risk exposure. Market risk is rated based upon, but not limited to, an assessment of the sensitivity of the financial institution’s earnings or the economic value of its capital to adverse changes in interest rates, foreign exchange rates, commodity prices, or equity prices; management’s ability to identify, measure and control exposure to market risk; and the nature and complexity of interest rate risk exposure arising from non-trading positions.

Capital Requirements

The Federal Reserve and the FDIC have adopted risk-based capital guidelines for bank holding companies and state banks, respectively. The guideline for a minimum ratio of capital to risk-weighted assets (including certain off- balance-sheet activities, such as standby letters of credit) is 8%. At least half of the total capital must consist of tier 1 capital, which includes common equity, retained earnings and a limited amount of qualifying perpetual preferred stock and trust preferred securities, less goodwill and intangibles. The remainder may consist of non-qualifying preferred stock, qualifying subordinated, perpetual or mandatory convertible debt, term subordinated debt and intermediate term preferred stock and up to 45% of the pretax unrealized holding gains on available-for-sale equity securities with readily determinable market values that are prudently valued, and a limited amount of any loan loss allowance (“tier 2 capital” and, together with tier 1 capital, “total capital”).

In addition, the federal bank regulatory agencies have established minimum leverage ratio guidelines for bank holding companies, national banks, and state member banks, which provide for a minimum leverage ratio of tier 1 capital to adjusted average quarterly assets (“leverage ratio”) equal to 3%, plus an additional cushion of 1.0% to 2.0% if the institution has less than the highest regulatory rating. The guidelines also provide that institutions experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Higher capital may be required in individual cases, depending upon a bank holding company’s or a bank’s risk profile. All bank holding companies and banks are expected to hold capital commensurate with the level and nature of their risks, including the volume and severity of their problem loans. Lastly, the Federal Reserve’s guidelines indicate that the Federal Reserve will continue to consider a “tangible tier 1 leverage ratio” (deducting all intangibles) in evaluating proposals for expansion or new activity.

The Federal Deposit Insurance Corporation Improvement Act of 1992 (“FDICIA”) requires the federal banking agencies to take “prompt corrective action” in respect of depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. Critically undercapitalized institutions are subject to the appointment of a receiver or conservator.

The capital measures used by the federal banking regulators are the total capital ratio, tier 1 capital ratio, and the leverage ratio. Under the regulations, a national or state member bank will be (i) well capitalized if it has a total capital ratio of 10% or greater, a tier 1 capital ratio of 6% or greater, a leverage ratio of 5% or greater, and is not subject to any written agreement, order, capital directive, or prompt corrective action directive by a federal bank regulatory agency to meet and maintain a specific capital level for any capital measure, (ii) adequately capitalized if it has a total capital ratio of 8% or greater, a tier 1 capital ratio of 4% or greater, and a leverage ratio of 4% or greater (3% in certain circumstances) and does not qualify as well capitalized, (iii) undercapitalized if it has a total capital ratio of less than 8%, or a tier 1 capital ratio of less than 4% or a leverage ratio of less than 4% (3% in certain circumstances), (iv) significantly undercapitalized if it has a total capital ratio of less than 6%, or a tier 1 capital ratio of less than 3% or a leverage ratio of less than 3% or (v) critically undercapitalized if its ratio of tangible equity to total assets is equal to or less than 2%.

The regulations also establish procedures for “downgrading” an institution to a lower capital category based on supervisory factors other than capital. Specifically, a federal banking agency may, after notice and an opportunity for a hearing, reclassify a well-capitalized institution as adequately capitalized and may require an adequately capitalized institution or an undercapitalized institution to comply with supervisory actions as if it were in the next lower category if the institution is operating in an unsafe or unsound condition or engaging in an unsafe or unsound practice. The FDIC may not, however, reclassify a significantly undercapitalized institution as critically undercapitalized.

As of December 31, 2006, the Company had total capital and tier 1 capital ratios of approximately 10.45% and 9.37%, respectively, and the Bank had total capital and tier 1 capital ratios of approximately 9.91% and 8.83%, respectively. As of December 31, 2006, the Company had a leverage ratio of tier 1 capital to total average assets of approximately 8.83% and the Bank had a leverage ratio of tier 1 capital to total average assets of approximately 8.31%.

The Georgia Department also expects bank holding companies and banks to maintain minimum levels of primary capital and adjusted primary capital on a consolidated basis. The Georgia Department has adopted generally the same definitions for capital adequacy as the Federal Reserve and the FDIC. Under Georgia Department policies, Georgia state banks must maintain not less than 4.5% tier 1 capital, and generally most institutions will be required to have at least 5.5% tier 1 capital. Additional capital may be required based on the Georgia Department’s consideration of the quality, type and diversification of assets, current and historical earnings, provisions for liquidity with particular emphasis on asset/liability mismatches and sensitivity to market risks in the asset portfolios, the quality of management, and the existence of other activities that may expose the institution to risk, including the degree of leverage and risk undertaken by any parent company or affiliates. Further, the Georgia Department’s policies generally require that Georgia bank holding companies maintain a tier 1 capital ratio of 4.0%, although higher ratios are required for holding companies experiencing or anticipating higher growth, and for those companies with significant financial or operational weaknesses, or higher risk profiles.

The following table sets forth certain capital information of the Company and Bank as of December 31, 2006:

	Company				Bank
	Amount		Percentage		Amount		Percentage
	(Dollars in Thousands)
Risk-Based Capital:
Total Risk-Based Capital:
Actual		77,602	10.45	%		73,294	9.91	%
Minimum		59,414	8.00	%		59,153	8.00	%
Tier 1 Capital
Actual		69,578	9.37	%		65,270	8.83	%
Minimum Requirement		29,707	4.00	%		29,577	4.00	%
Leverage Ratio:
Actual	$	69,578	8.83	%	$	65,270	8.31	%
Minimum (1)		31,527	4.00	%		31,415	4.00	%

(1) Represents the highest minimum requirement of the federal banking regulators. Institutions that are contemplating acquisitions or are anticipating or experiencing significant growth may be required to maintain a substantially higher leverage ratio.

We believe our outstanding trust preferred securities presently qualify as tier 1 regulatory capital under the Federal Reserve’s capital rules.

FDICIA directs that each federal banking regulatory agency prescribe standards for depository institutions and depository institution holding companies relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth compensation, a maximum ratio of classified assets to capital, minimum earnings sufficient to absorb losses, a minimum ratio of market value to book value for publicly traded shares, and such other standards as the federal regulatory agencies deem appropriate. The agencies also must prescribe standards for asset quality, earnings, and stock valuation, as well as standards for compensation, fees and benefits. The federal banking agencies have adopted regulations and Interagency Guidelines Prescribing Standards for Safety and Soundness (“Guidelines”) to implement these required standards. The Guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. Under the regulations, if the FDIC determines that the Bank fails to meet any standards prescribed by the Guidelines, the agency may require the Bank to submit to the agency an acceptable plan to achieve compliance with the standard, as required by the FDIC. The final regulations establish deadlines for the submission and review of such safety and soundness compliance plans.

FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to growth limitations and are required to submit a capital restoration plan for approval. An acceptable capital restoration plan requires the depository institution’s parent holding company to guarantee that the institution comply with such capital restoration plan. The aggregate liability of the parent holding company is limited to the lesser of 5% of the depository institution’s total assets at the time it became undercapitalized and the amount necessary to bring the institution into compliance with applicable capital standards. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized. If the controlling holding company fails to fulfill its obligations under FDICIA and files (or has filed against it) a petition under the federal Bankruptcy Code, the claim would be entitled to a priority in such bankruptcy proceeding over third party creditors of the bank holding company.

FDIC Insurance Assessments

The Bank’s deposits are primarily insured by DIF, and the Bank is subject to FDIC insurance assessments. The FDIC’s Board of Directors enacted a new rule, effective January 1, 2007, pursuant to which the assessment rates are no longer required to be set semi-annually. Under the new rule, the FDIC uses a risk-based assessment system that assigns insured depository institutions to one of four risk categories based on three primary sources of information—supervisory risk ratings for all institutions, financial ratios for most institutions, and long-term debt issuer ratings for large institutions that have such ratings. The new premium rate structure imposes a minimum assessment of from five to seven cents for every $100 of domestic deposits on institutions that are assigned to the lowest risk category. This category is expected to encompass substantially all insured institutions, including the Bank. A one-time assessment credit is available to offset up to 100% of the 2007 assessment. Any remaining credit can be used to offset up to 90% of subsequent annual assessments through 2010. For institutions assigned to higher risk categories, the premium that took effect in 2007 ranges from ten cents to forty-three cents per $100 of deposits.

The FDIC also collects a deposit-based assessment from insured financial institutions on behalf of The Financing Corporation (FICO). The funds from these assessments are used to service debt issued by FICO in its capacity as a financial vehicle for the Federal Savings & Loan Insurance Corporation. The FICO assessment rate is set quarterly and ranged from 1.44 basis points in the first quarter of 2005 to 1.34 basis points in the last quarter of 2005 and from 1.32 basis points in the first quarter of 2006 to 1.24 basis points in the fourth quarter of 2006. For the first quarter of 2007, the FICO assessment rate is 1.22 cents per $100 of assessable deposits. The Bank paid $75,075, $62,322 and $44,785 in FICO assessments in 2006, 2005 and 2004, respectively.

Community Reinvestment Act and Other Regulations

The Company and the Bank are subject to the provisions of the CRA and the federal banking agencies’ regulations thereunder. Under the CRA, all banks and thrifts have a continuing and affirmative obligation, consistent with safe and sound operation, to help meet the credit needs for their entire communities, including low- and moderate-income neighborhoods. The CRA requires a depository institution’s primary federal regulator, in connection with its examination of the institution, to assess the institution’s record in assessing and meeting the credit needs of the community served by that institution, including low- and moderate-income neighborhoods. The regulatory agency’s assessment of the institution’s record is made available to the public. Further, such assessment is required of any institution which has applied to: (i) charter a national bank; (ii) obtain deposit insurance coverage for a newly-chartered institution; (iii) establish a new branch office that accepts deposits; (iv) relocate an office; (v) merge or consolidate

with, or acquire the assets or assume the liabilities of, a federally regulated financial institution, or (vi) expand other activities, including engaging in financial services activities authorized by the GLB Act. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, or to become a “financial holding company,” the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank holding company, and such records may be the basis for denying the application. Following its most recent CRA examination, the Bank received a “satisfactory” CRA rating.

The GLB Act and federal bank regulators have made various changes to the CRA. Among other changes, CRA agreements with private parties must be disclosed and annual CRA reports must be made to a bank’s primary federal regulator. A bank holding company will not be permitted to become a financial holding company and no new activities authorized under the GLB Act may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a “satisfactory” CRA rating in its latest CRA examination.

Current CRA regulations rate institutions based on their actual performance in meeting community credit needs. CRA performance is evaluated by the FDIC, the Bank’s primary federal regulator, using a lending test, an investment test and a service test. The Federal Reserve also will consider: (i) demographic data about the community; (ii) the institution’s capacity and constraints; (iii) the institution’s product offerings and business strategy; and (iv) data on the prior performance of the institution and similarly-situated lenders. The federal bank regulators recently proposed changes to their CRA regulations that would, among other things, require that evidence of discriminatory, illegal or abusive lending transactions be considered in an institution’s CRA evaluation.

Consumer Protection Regulations

Activities of the Bank are also subject to a variety of statutes and regulations designed to protect consumers, such as including the Fair Credit Reporting Act (FCRA), Equal Credit Opportunity Act (ECOA), the Fair Housing Act (FHA) and Truth-in-Lending Act (TILA). Interest and other charges collected or contracted for by the Bank are also subject to state usury laws and certain other federal laws concerning interest rates. The Bank’s loan operations are also subject to federal laws and regulations applicable to credit transactions. Together, these laws and regulations include provisions that:

• govern disclosures of credit terms to consumer borrowers;

• require financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

• prohibit discrimination on the basis of race, creed, or other prohibited factors in extending credit;

• govern the use and provision of information to credit reporting agencies; and

• govern the manner in which consumer debts may be collected by collection agencies.

The deposit operations of the Banks are also subject to laws and regulations that:

• prescribe procedures for complying with administrative subpoenas of financial records; and

• govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

In April 1994, the Department of Housing and Urban Development, the Department of Justice (the “DoJ”), and the federal banking agencies issued an Interagency Policy Statement on Discrimination in Lending in order to provide guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices. The DoJ has also increased its efforts to prosecute what it regards as violations of the ECOA and FHA.

The Federal Reserve, the FDIC and the Georgia Department also monitor compliance with these laws and regulations. Violations of laws and regulations, or other unsafe and unsound practices, may result in these agencies imposing fines or penalties, cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees and others participating in the affairs of a bank or bank holding company.

Anti-Money Laundering and Anti-Terrorism Financing Regulation

The International Money Laundering Abatement and Anti-Terrorism Funding Act of 2001 specifies new “know your customer” requirements that obligate financial institutions to take actions to verify the identity of the account holders in connection with opening an account at any U.S. financial institution. Banking regulators will consider compliance with this Act’s money laundering provisions in acting upon acquisition and merger proposals, and sanctions for violations of this Act can be imposed in an amount equal to twice the sum involved in the violating transaction, up to $1 million.

Under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, financial institutions are subject to prohibitions against specified financial transactions and account relationships as well as to enhanced due diligence and “know your customer” standards in their dealings with foreign financial institutions and foreign customers. For example, the enhanced due diligence policies, procedures, and controls generally require financial institutions to take reasonable steps:

• to conduct enhanced scrutiny of account relationships to guard against money laundering and report any suspicious transaction;

• to ascertain the identity of the nominal and beneficial owners of, and the source of funds deposited into, each account as needed to guard against money laundering and report any suspicious transactions;

• to ascertain for any foreign bank, the shares of which are not publicly traded, the identity of the owners of the foreign bank, and the nature and extent of the ownership interest of each such owner; and

• to ascertain whether any foreign bank provides correspondent accounts to other foreign banks and, if so, the identity of those foreign banks and related due diligence information.

The USA PATRIOT Act requires financial institutions to establish anti-money laundering programs, and sets forth minimum standards for these programs, including:

• the development of internal policies, procedures, and controls;

• the designation of a compliance officer;

• an ongoing employee training program; and

• an independent audit function to test the programs.

In addition, the USA PATRIOT Act authorizes the Secretary of the Treasury to adopt rules increasing the cooperation and information sharing between financial institutions, regulators, and law enforcement authorities regarding individuals, entities and organizations engaged in, or reasonably suspected based on credible evidence of engaging in, terrorist acts or money laundering activities. Any financial institution complying with these rules will not be deemed to have violated the privacy provisions of the GLB Act, as discussed above.

Privacy and Data Security

The GLB Act imposed new requirements on financial institutions with respect to consumer privacy. The GLB Act generally prohibits disclosure of consumer information to non-affiliated third parties unless the consumer has been given the opportunity to object and has not objected to such disclosure. Financial institutions are further required to disclose their privacy policies to consumers annually. Financial institutions, however, will be required to comply with state law if the state law is more protective of consumer privacy than the GLB Act. The GLB Act also directed federal regulators, including the FDIC, to prescribe standards for the security of consumer information. The Bank is subject to such standards, as well as standards for notifying consumers in the event of a security breach. Under federal law, the Company must disclose its privacy policy to consumers, permit consumers to “opt out” of having non-public customer information disclosed to third parties, and allow customers to opt out of receiving marketing solicitations based on information about the customer received from another subsidiary. States may adopt more extensive privacy protections. The Company is similarly required to have an information security program to safeguard the confidentiality and security of customer information and to ensure proper disposal. Customers must be notified when unauthorized disclosure involves sensitive customer information that may be misused.

Sarbanes-Oxley Act of 2002

We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC, the Public Company Accounting Oversight Board and Nasdaq. In particular, we will be required to include management reports on internal controls over financial reporting as part of our annual report for the year ended December 31, 2007 pursuant to Section 404 of the Sarbanes-Oxley Act. We expect to spend significant amounts of

time and money on compliance with these rules. We may not be able to complete our assessment of our internal controls over financial reporting in a timely manner. Our failure to comply with these internal control rules may materially adversely affect our reputation, our ability to obtain the necessary certifications to our financial statements, and the values of our securities.

Fiscal and Monetary Policy

Banking is a business that depends on interest rate differentials. In general, the difference between the interest paid by a bank on its deposits and its other borrowings and the interest received by a bank on its loans and securities holdings constitutes the major portion of a bank’s earnings. Thus, the earnings and growth of the Company and the Bank will be subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The Federal Reserve regulates the supply of money through various means, including open market dealings in United States government securities, the discount rate at which banks may borrow from the Federal Reserve, and the reserve requirements on deposits. The nature and timing of any changes in such policies and their effect on the Bank cannot be predicted. From 2004 through the first six months of 2006 the Federal Reserve raised the targeted federal funds rate 18 times for a total of 4.50%. Since the second quarter of 2006, the Federal Reserve has left these rates unchanged.

Legislative and Regulatory Changes

Deposit Insurance Reform

Congress passed the Federal Deposit Insurance Reform Act in the first quarter of 2006. Among other things, this act merged BIF and SAIF into DIF, permits the maximum amount insured to be adjusted every five years from $100,000 based on inflation, permits retirement accounts to be insured for up to $250,000, prohibits banks that are less than adequately capitalized from accepting employee benefit deposits, changes the way FDIC insurance assessments and credits are calculated, authorizes the FDIC to revise the risk-based deposit insurance assessment scheme, and gives the FDIC flexibility in maintaining the level of the DIF (including imposing assessments on and paying dividends to insured institutions).

Commercial Real Estate Lending and Concentrations

On December 12, 2006, the federal bank regulatory agencies released final guidance on Concentrations in Commercial Real Estate Lending (the “Guidance”), effective December 12, 2006. This proposal defines commercial real estate (“CRE”) loans as exposures secured by raw land, land development and construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property where the primary source of repayment is cash flows from the real estate collateral (rather than where real estate is a secondary source of repayment or is taken as collateral through an abundance of caution). Loans to REITs and unsecured loans to developers are considered CRE loans if their performance is closely linked to the performance of the general CRE market.

The agencies will continue to assess the risks posed by financial institutions with concentrations in CRE. While the final Guidance does not impose lending limits, it does maintain certain thresholds as indicators for examiners to screen institutions for potential CRE concentration risk, and to engage management in discussions and analysis regarding CRE risk. Institutions experiencing rapid growth in CRE lending, having exposure to a specific type of CRE, or approaching or exceeding the following criteria will be identified for further supervisory analysis:

• Total reported loans for construction, land development, and other land represent 100% or more of the institution’s total capital; or

• Total CRE loans represent 300% or more of the institution’s total capital and the institution’s CRE portfolio has increased 50% or more during the prior 36 months.

These criteria are not a “safe harbor,” and institutions where other risk indicators are present may also be subject to further supervisory analysis. While the agencies’ will review institutions on a case-by-case basis in connection with regular examinations, institutions with substantial CRE portfolios may be advised or required to address the risks associated with CRE lending by, among other actions, implementing enhanced strategic planning, CRE underwriting policies, risk management and internal controls, portfolio stress testing, risk exposure limits, and other policies, including management compensation and incentives, increasing or reallocating allowances for loan losses, and maintaining increased capital levels.

The Company believes its CRE lending will subject it to further supervisory analysis. The Company has reviewed certain of its risk management and internal controls policies, portfolio stress testing procedures, risk exposure limits, other lending policies, and allowance for loan loss policies in light of the Guidance and the Company’s CRE portfolio, and has made revisions to such policies and procedures where appropriate.

Legislative and regulatory proposals regarding changes in banking laws and the regulation of banks, bank holding companies, thrifts and other financial institutions are being considered by the executive branch of the Federal government, Congress and various state governments, including Georgia. Other proposals pending in Congress would, among other things, allow banks to pay interest on checking accounts, permit the Federal Reserve to pay interest on deposits, and permit interstate branching on a de novo basis. Various federal oversight authorities are also reviewing the capital adequacy and riskiness of government sponsored enterprises such as Fannie Mae and Freddie Mac. Changes from such review could affect the cost and availability of such government sponsored enterprise’s services. It cannot be predicted whether any of these proposals will be adopted, and, if adopted, how these proposals will affect the Company and its subsidiaries.

Discontinued Operations – Mortgage Banking Business

Prior to the sale of our mortgage operations on December 31, 2003, the Company originated, sold and serviced mortgage loans through its subsidiary, CMS. CMS offered wholesale mortgage banking services and provided servicing for residential mortgage loans as an approved servicer of mortgage loans sold to the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and private investors.

In 2006, 2005 and 2004, the Company conducted nearly all of its business through the Bank and will continue to do so. On December 31, 2003, the Company completed the sale of its wholesale residential mortgage business conducted by CMS to Carolina Financial Corporation (“Carolina Financial”) and its subsidiary Crescent Mortgage Corporation (“CMC”). Carolina Financial and CMC are not affiliated with the Company or its subsidiaries. In connection with the sale, Carolina Financial purchased all of CMS’s mortgage loans, pipeline mortgage loans and premises and equipment and assumed all leases and liabilities related to the transferred assets. The assets were sold at their carrying value. The Company was to be paid 100% of the pre-tax income of the divested mortgage business during the first 60 days following closing as well as 30% of the pre-tax income of the divested mortgage business for the nine months following the first 60-day period. The Company received no payments from Carolina Financial for either period due to the losses experienced by CMC. The Company retained the mortgage servicing portfolio, which was approximately $13 million at December 31, 2006.

The sale of the wholesale residential mortgage business simplified the Company’s business model and allowed us to focus on our core community banking business. The Bank currently operates in some of the fastest growing counties in the United States. We have reinvested the capital previously invested in CMS in the Bank, and applied the net proceeds from the sale of the mortgage operation to support expansion through internal growth and strategic acquisitions. As a result of the sale of our wholesale mortgage business, we expect that our financial position and performance will continue to be substantially different from the operations and financial results reported prior to 2004.

For the years ended December 31, 2006 and 2005, the Company had no revenues or expenses from discontinued operations of its mortgage banking business. During the fiscal year 2004, the Company had revenues from its mortgage banking business of approximately $439,000 and pretax losses from its mortgage banking business of approximately $(3.6) million, representing approximately (2,285.5)% of the Company’s total pretax income. At each of December 31, 2006, 2005 and 2004 the Company had no assets related to its mortgage banking business.

ITEM 1A. RISK FACTORS

General and Local Economic Conditions Strongly Affect Our Business

Crescent Bank is a community bank operating in the market area comprised of Pickens, Bartow, Forsyth, north Fulton, Cherokee, Dawson, Cobb, Walton and Gilmer Counties, Georgia. To a significant extent, our success depends on the economic conditions in these counties and, specifically, in those areas where we operate our offices. Additionally, our ability to diversify and manage economic risks is limited by the performance of these local economies. Any significant downturn in these local economies will likely affect our loan demand as well as the value of the collateral that secures these loans. Our market area is primarily retail-oriented and our operations are dependent upon local individuals and small- to medium-sized businesses. As a result, we may face greater lending and credit risks than financial institutions lending to larger, better-capitalized businesses.

In addition, any economic slowdown or recession over a prolonged period or other similar economic problems in our market area may be accompanied by reduced demand for consumer credit and declining real estate values in these areas, which may in turn result in an increased possibility of loss in the event of default. Any sustained period of decreased economic activity and increased delinquencies, foreclosures or losses could harm our growth and the results of our banking operations.

We Face Credit Risks and Our Allowance for Loan Losses May Be Insufficient

We may suffer losses because borrowers, guarantors and related parties fail to perform their obligations in accordance with the terms of their loans. We also are exposed to risks that the realizable value of collateral securing loans may be insufficient to provide a full recovery in the event a borrower defaults on a loan. A significant portion of our net income is derived from our loan portfolio. Our credit policies and underwriting and credit monitoring procedures may not be adequate and we may be unable to avoid unexpected losses that could materially harm our results of operations and financial condition. We have established an evaluation process designed to determine the adequacy of the allowance for loan losses. While this evaluation process uses historical and other objective information, the classification of loans and the establishment of loan losses is an estimate based upon experience, judgment, estimates and expectations regarding our borrowers, the economies in which we and our borrowers operate, as well as the judgments of our regulators. Accordingly, we cannot assure you that our loan loss reserves will be sufficient to absorb future loan losses.

Actual losses may exceed our estimates and we may have to increase the allowance for loan losses. This would cause us to increase our provision for loan losses, which would decrease our net income. Further, state and federal regulatory agencies, as an integral part of their examination process, review our loans and our allowance for loan losses. Regulators, when reviewing our loan portfolio, may require us to increase our allowance for loan losses, which would negatively affect our net income.

During 2006, our loan portfolio grew approximately $104 million, or approximately 17%. Continued rapid growth in the loan portfolio of this magnitude has the potential to strain the Bank’s administrative capabilities and may result in losses which are, at present, unidentified. Also, given the relatively young age of a large portion of our loan portfolio, there may be unidentified risk since problems related to loan collections typically do not become evident until some time after the loans are originated.

Because a Significant Portion of Our Loan Portfolio Is Secured By Real Estate, Any Negative Conditions Affecting Real Estate May Harm Our Business

Approximately 92% of our loan portfolio consists of commercial and consumer loans that are secured by various types of real estate, the value and marketability of which are sensitive to economic conditions and interest rates. In addition, these loans are subject to the risk that the local real estate markets will be overbuilt, driving down the value and marketability of the real estate that secures these loans. A decrease in collateral values could increase our costs and time of collection, as well as the amount of potential losses we may incur on loans secured by real estate.

Commercial real estate or “CRE” is cyclical and poses risks of possible loss due to concentration levels and similar risks of the asset. As of December 31, 2006, we had approximately $545.5 million in CRE loans, or approximately 78.2% of our loan portfolio. Our CRE loans have grown by approximately 24.7% since December 31, 2005. The banking regulators are giving CRE lending greater scrutiny, and may require banks with higher levels of CRE loans to implement improved underwriting, internal controls, risk management policies and portfolio stress testing, as well as possibly higher levels of allowances for possible losses and capital levels as a result of CRE lending growth and exposures.

We Have a Significant Amount of Construction Loans That Pose Additional Risks to Those Posed By Real Estate Loans Generally

Historically, our loan portfolio has included a significant number of construction loans consisting of one-to-four family residential construction loans, commercial construction loans and land loans for residential and commercial development. As of December 31, 2006, approximately 50% of our total loan portfolio was in acquisition and development and construction loans. In addition to the risk of nonpayment by borrowers, construction lending poses additional risks in that:

• land values may decline;

• developers, builders or owners may fail to complete or develop projects;

• municipalities may place moratoriums on building, utility connections or required certifications;

• developers may fail to sell the improved real estate;

• there may be construction delays and cost overruns;

• collateral may prove insufficient; or

• permanent financing may not be obtained in a timely manner.

Any of these conditions could negatively affect our net income and our financial condition.

We Occasionally Purchase Non-Recourse Loan Participations From Other Banks Based on Information Provided By the Selling Bank

From time to time, we purchase loan participations from other banks in the ordinary course of business, usually without recourse to the selling bank. This may occur during times when we are experiencing excess liquidity in an effort to improve our profitability. When we purchase loan participations we apply the same underwriting standards as we would to loans that we directly originate and seek to purchase only loans that would satisfy these standards. We are less likely to be familiar with the borrower, and may rely to some extent on information provided to us by the selling bank and on the selling bank’s administration of the loan relationship. We therefore have less control over, and may incur more risk with respect to, loan participations that we purchase.

Changes in Interest Rates May Adversely Affect Our Earnings

As a financial institution, our earnings are significantly dependent on our net interest income. Net interest income is the difference between the interest income we earn on loans, investments and other interest-earning assets and the interest expense we pay on deposits and other interest-bearing liabilities. Therefore, any change in general market interest rates, including changes resulting from changes in the Federal Reserve’s fiscal and monetary policies, affects us more than non-financial institutions and can have a significant effect on our net interest income and total income. Our assets and liabilities may react differently to changes in overall market rates or conditions because there may be mismatches between the repricing or maturity characteristics of the assets and liabilities. As a result, an increase or decrease in market interest rates could have material adverse effects on our net interest margin and results of operations.

If We Are Unable to Increase Our Share of Deposits in Our Market, We May Accept Out of Market and Brokered Deposits, the Costs of Which May Be Higher than Expected

We can offer no assurance that we can maintain or increase our market share of deposits in our highly competitive service area. If we are unable to do so, we may be forced to accept increased amounts of out of market or brokered deposits. As of December 31, 2006, we had approximately $78.5 million in out of market deposits, including brokered deposits, which represented approximately 11.9% of our total deposits. Recently, the cost of out of market and brokered deposits has decreased to costs below the costs of deposits in our local market. However, the costs of out of market and brokered deposits can be volatile, and if we are unable to access these markets or if our costs related to out of market and brokered deposits increases, our liquidity and ability to support demand for loans could be adversely affected.

We Face Strong Competition

The commercial banking business is highly competitive. We compete with a variety of financial institutions, including the following:

• commercial banks;

• savings banks;

• savings and loan associations;

• credit unions;

• mortgage companies;

• mutual funds;

• insurance companies;

• brokerage and investment banking firms;

• securities firms;

• non-financial entities maintaining credit programs; and

• government organizations and government sponsored entities.

Many of these competitors have much greater resources and lending limits, more diversified markets and larger branch networks, and are able to offer similar and additional services more efficiently than we can. We compete with these institutions both in attracting deposits and in making loans. We generally have to attract our customer base from other existing financial institutions and from new residents. Several of our competitors are well-established and much larger financial institutions, and we may face a competitive disadvantage as a result of our smaller size and lack of geographic diversification. Many of our non-bank competitors are not subject to the extensive regulations that we are. Any future federal or state legislation could further affect this level of competition.

Our Business Is Highly Regulated

Our success depends not only on competitive factors but also on state and federal regulations affecting financial services companies generally. We operate in a highly regulated environment and are subject to supervision by several governmental regulatory agencies, including the Federal Reserve, the FDIC and the Georgia Department. Regulation of the financial institutions industry has undergone extensive changes in recent years and continues to change. We cannot predict the effects of these changes, and the regulations now affecting us may be modified at any time, and could adversely affect our business. In addition, any burden that may be imposed on us by federal or state regulations may create a relative competitive disadvantage to our less regulated competitors.

We May Need Additional Capital in the Future, Which May Not Be Available to Us on Favorable Terms

Our growth may require significant additional capital in the future to, among other things, fund our operations, expand the range of our services and finance our future growth and capital adequacy. We cannot provide any assurance that, at the time we might need this additional capital, additional financing will be available on terms that are favorable to us, if at all. Our ability to obtain additional financing will be subject to a number of factors, including market conditions, our operating performance and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive to us. Our inability to raise capital on favorable terms, if at all, may impede our growth opportunities or may have an adverse effect on our business, financial condition or results of operations.

The Bank’s Ability to Pay Dividends Is Limited

The Company’s only source of funds for the payment of principal of, and interest on, its indebtedness, as well as for the payment of dividends on our common stock, is from dividends paid by the Bank. As a result, our success and ability to pay dividends on our common stock depend upon the earnings and capital position of the Bank. The Bank’s ability to pay dividends is limited by its obligation to maintain sufficient capital and by other general restrictions on its dividends that are applicable to Georgia banks and banks that are regulated by the FDIC. Generally, a bank cannot, without prior regulatory approval, pay more dividends than its earnings for the current year or its retained earnings for the last two years. A Georgia bank may not, without prior regulatory approval, pay dividends of more than 50% of the previous year’s after-tax profits.

We May Face Risks With Respect to Future Acquisitions or Mergers

We may engage in acquisitions or mergers in the future. We also from time to time receive inquiries and have discussions with potential acquirers. Any future acquisitions and mergers in which we might engage involve a number of risks to us, including:

• the time and costs associated with identifying and evaluating potential acquisitions and merger partners;

• our ability to finance any acquisition that we may make;

• possible dilution to our existing shareholders;

• the diversion of our management’s attention to the negotiation of a transaction, and the integration of the assets, operations of personnel of the combining businesses;

• our entry into new markets, as a result of an acquisition, where we lack experience;

• the introduction of new products and services into our business;

• possible adverse effects on our results of operations and capital adequacy;

• the incurrence and possible write-off of goodwill and intangibles resulting from an acquisition; and

• the risk of loss of key employees and customers.

There can be no assurance that, following any mergers or acquisitions, whether we acquire someone or are acquired, the integration efforts will be successful.

We Rely on Our Executive Officers Who Would Be Difficult to Replace

Our success depends, and is expected to continue to depend, on our executive officers. In particular, we rely on J. Donald Boggus, Jr., President and Chief Executive Officer of Crescent and the Bank, Leland W. Brantley, Jr., Chief Financial Officer of Crescent and the Bank, Anthony N. Stancil, Executive Vice President and Chief of Loan Production of the Bank and A. Bradley Rutledge, Sr., Executive Vice President and Chief of Loan Administration of the Bank. Our growth will continue to place significant demands on our management, and the loss of these executive officers’ services could harm our future operations.

Our Rights to Collect Interest and Take Other Actions May Be Limited by the Servicemembers’ Civil Relief Act of 2003

The United States declared “war” on terrorism and National Guard and reserve forces either have been called up or may be called up for domestic and international service. Under the Servicemembers’ Civil Relief Act of 2003 (the “Relief Act”), which amended and expanded the Soldiers’ and Sailors’ Civil Relief Act of 1940, a borrower who enters military service is afforded various types of relief under their loans and other obligations, including a maximum annual interest rate of 6% during the period of the borrower’s active duty status. The Act further provides that any interest in excess of 6% may not become due once the servicemember leaves active duty; any accrued interest above 6% is permanently waived. The Relief Act applies to members of the Army, Navy, Air Force, Marines, National Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service assigned to active duty. Because the Relief Act applies to individuals who enter active military service after they enter into their loans, we cannot predict the effect that the Relief Act will have on our mortgage and commercial loans, if any. Under the Relief Act, we may be unable to collect the full amount of interest otherwise due on many of our loans for an indefinite period. Further, we may be unable to foreclose on these loans during, and in some cases after, the borrower’s period of active duty.

We May Incur Obligations Related to Our Discontinued Wholesale Mortgage Banking Operations

Prior to the sale of our wholesale residential mortgage banking business on December 31, 2003, we originated residential mortgage loans through our subsidiary, CMS. When we sold these loans, we made certain representations and warranties to the purchasers and insurers that we had properly originated and serviced the loans under state laws, investor guidelines and program eligibility standards. In some cases, we indemnified the purchasers for unpaid principal and interest on defaulted loans if we had breached the representations and warranties with respect to the loans that we sold. At December 31, 2006, we have approximately $3.6 million of mortgage loans where we had agreed to indemnify the purchaser against losses it might suffer. While we established a reserve based upon an estimated recourse liability at December 31, 2006 of approximately $2.3 million, this reserve was based upon historical information and certain assumptions by management. Because the Company’s highest levels of mortgage production in its history were in 2002 and 2003, we could experience an increase in our indemnification liability in the future. If the balance of indemnified loan increases significantly, then we could have to make additional provisions to the recourse liability reserve. In addition, if our recourse reserve is less than our actual indemnification obligations, we would be required to pay the indemnification obligations out of earnings, and our results of operations would be adversely affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

During 2006, the Bank conducted its business primarily through its main offices located on an approximately two-acre site at 251 Highway 515, Jasper, Pickens County, Georgia. The Bank’s main offices are approximately 1.2 miles west of downtown Jasper and 60 miles north of metropolitan Atlanta, Georgia. The main offices are housed in a modern two-story office building owned by the Bank which contains approximately 14,200 square feet of finished space used for offices, operations and storage, six teller windows and the Bank lobby. The building also has three drive-up teller windows and an automated teller machine (“ATM”) with 24-hour-a-day access. The main office facility opened for business on January 29, 1990 with 9,200 square feet of finished space, and we added 5,000 square feet of administrative office space in 1999. The facility is considered in good condition.

In Bartow County, Georgia, the Bank owns three full service branches. The Bank owns the full service branch on Joe Frank Harris Parkway in Cartersville, which has approximately 5,400 square feet of finished space used for offices and storage, five teller windows and the Bank lobby, three drive-up teller windows and an ATM with 24 hour-a-day access. The Bank also owns a 3,600

square foot building on the west side of Cartersville, which houses a branch office with five teller windows in the banking lobby, three drive-up teller windows and a drive-up ATM with 24 hour-a-day access. The Bank owns a 3,500 square foot building in Adairsville, which houses a branch office with five teller windows in the banking lobby, three drive-up teller windows and a drive-up ATM with 24 hour-a-day access.

In Cherokee County, Georgia, the Bank owns three full service branches. The Bank owns s full service branch on Towne Lake Parkway in Woodstock that contains approximately 3,500 square feet of finished space used for offices and storage, four teller windows and the Bank lobby, two drive-up teller windows and an ATM with 24 hour-a-day access. The Bank owns an 11,770 square foot branch building in Canton that has five teller windows in the banking lobby, three drive-up teller windows and a drive-up ATM with 24 hour-a-day access. In January 2007, the Bank completed construction and opened a 6,100 square foot branch building in Woodstock that has five teller windows in the banking lobby, three drive-up teller windows and a drive-up ATM with 24 hour-a-day access.

In Forsyth County, Georgia, the Bank owns two full service branches. The Bank owns a 3,055 square foot building in Alpharetta, which has two drive-up teller windows and a drive-up ATM with 24 hour-a-day access. The Bank also owns a 5,500 square foot branch building in Cumming that has five teller windows in the banking lobby, three drive-up teller windows and a drive-up ATM with 24 hour-a-day access.

In Fulton County, Georgia, the Bank owns one full service branch. The Bank owns a building that contains approximately 6,600 square feet of finished space and has four teller windows in the banking lobby, two drive-up teller windows and a drive-up ATM with 24 hour-a-day access. The property on which this building is constructed is being leased over a period of twelve years with two additional five year options. The expiration date for the first twelve year lease period is March 9, 2012.

In addition, the Bank leases space for our executive and administrative offices, one full service branch and two loan production offices. The Bank is party to a lease agreement that expired on December 31, 2006 for 13,500 square feet of office space in Jasper for executive and administrative offices. The Bank renewed this lease until December 31, 2008. The Bank leases approximately 1,200 square feet for its branch office located in Marble Hill with a lease expiration date of August 31, 2007. The Bank leases 1,500 square feet of office space in Marietta for a loan production office with a lease expiration date of January 31, 2007. The Bank renewed this lease until December 31, 2007. The Bank is party to a lease agreement for 1,100 square feet of space for a loan production office in Loganville that expired on September 9, 2006. This lease was extended until September 9, 2007.

The Bank also leases 3,200 square feet in Canton for a full-service branch with a lease expiration date of January 31, 2009. When we completed construction of our new office in Canton in the third quarter of 2006, we concurrently closed this office, and we remain obligated under the terms of this lease. We will continue to pursue options with respect to this lease, including buyouts or subleases. The Bank leases 1,200 square feet of space in Cartersville for a loan production office with a lease expiration date of December 31, 2010. When we completed construction of our branch office in Cartersville, we subsequently closed this office and subleased this space for the term of the lease.

The Bank leases a site for an ATM in the Big Canoe, Georgia community, which is located in eastern Pickens and western Dawson Counties, Georgia, approximately 15 road miles east of the Bank’s main office. The lease agreement expires on October 31, 2011. The Bank also leases a site for an ATM in the Bent Tree, Georgia community with a lease expiration date of September 30, 2007.

The Company and the Bank presently expect to renew each of their leases upon their respective expiration dates, except for the leases in Canton and Cartersville.

ITEM 3. LEGAL PROCEEDINGS

The Company and its subsidiaries are from time to time parties to various legal proceedings arising in the ordinary course of their business. Management believes, after consultation with legal counsel, that there are no proceedings threatened or pending against the Company or its subsidiaries that are likely, individually or in the aggregate, to have a material adverse effect on the consolidated financial condition or results of operations of the Company. However, no assurance can be given with respect to the ultimate outcome of any such proceedings.

We have incurred no penalties for failing to include on our tax returns any information required to be disclosed under Section 6011 of the Internal Revenue Code of 1986, as amended (the “Code”), with respect to a “reportable transaction” under the Code and that is require to be reported under Section 6707A(e) of the Code.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of shareholders of the Company, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year ended December 31, 2006.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Please refer to that section of the Company’s Annual Report entitled “Market Information and Dividends,” which is incorporated herein by reference, for information regarding the market price of and dividends on our common stock.

Recent Sales of Unregistered Securities

On September 30, 2005, the Company completed an offering of $8.0 million of trust preferred securities through Crescent Capital Trust II, a Delaware statutory trust. Information required by this Item with respect to this offering was furnished to the Commission in a Current Report on Form 8-K filed on October 6, 2005. On May 18, 2006, the Company completed an offering of $3.5 million of trust preferred securities through Crescent Capital Trust III, a Delaware statutory trust. Information required by this Item with respect to this offering was furnished to the Commission in a Current Report on Form 8-K filed on May 24, 2006.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 6. SELECTED FINANCIAL DATA

Please refer to that section of the Company’s Annual Report entitled “Selected Financial Data,” which is incorporated herein by reference. A complete copy of the Company’s Annual Report is included with this report as Exhibit 13.1.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Please refer to the section of the Company’s Annual Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Please refer to the section of the Company’s Annual Report entitled “Quantitative and Qualitative Disclosures About Our Market Risk,” which is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Please refer to the section of the Company’s Annual Report entitled “Consolidated Financial Report,” which is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company’s Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures in accordance with Rule 13a-15 under the Exchange Act. Based on their evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting in a timely manner the information that the Company is required to disclose in its Exchange Act reports.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ending December 31, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information regarding the Company’s directors and executive officers required by this Item 10 is contained in the Company’s Proxy Statement under the captions “Proposal One—Election of Directors—General,” “—Election of Directors” and “—Information Relating to Directors, Executive Officers and Nominees,” and is incorporated herein by reference.

Information regarding the Audit Committee of the Company’s Board of Directors required by this Item 10 is contained in the Proxy Statement under the captions “Corporate Governance—Audit Committee” and is incorporated herein by reference.

Information about compliance with Section 16 of the Exchange Act by the directors and executive officers of the Company is contained in the Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference.

Information regarding the Company’s director nomination procedures required by this Item 10 is contained in the Proxy Statement under the caption “Corporate Governance—Director Nominating Process” and is incorporated herein by reference.

Information regarding the Company’s code of ethics required by this Item 10 is contained in the Proxy Statemenet under the caption “Corporate Governance—Code of Conduct and Ethics” and is incorporated herein by reference. A copy of the Code of Conduct and Ethics will be provided, without charge, upon request to our Secretary, Crescent Banking Company, P.O. Box 668, Jasper, Georgia 30143.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding the compensation of the Company’s executive officers and directors required by this Item 11 is contained in the Company’s Proxy Statement under the captions “Executive Compensation and Related Information,” “Compensation Discussion and Analysis” and “Corporate Governance—Compensation Committee” and is incorporated herein by reference.

Information regarding the Compensation Committee of the Company’s Board of Directors required by this Item 11 is contained in the Proxy Statement under the captions “Corporate Governance—Compensation Committee Interlocks and Insider Participation” and “—Report of the Compensation Committee” and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

Information concerning security ownership of certain beneficial owners and management required by this Item 12 is contained in the Proxy Statement under the caption “Ownership of Common Stock by Directors, Executive Officers and Certain Beneficial Owners” and is incorporated herein by reference.

Information concerning securities authorized for issuance under equity compensation plans required by this Item 12 is contained in the Proxy Statement under the caption “Compensation Discussion and Analysis—Securities Authorized for Issuance Under Equity Compensation Plans” and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information regarding certain relationships and related transactions involving the Company and its management required by this Item 13 is contained in the Proxy Statement under the caption “Transactions with Related Persons, Promoters and Certain Control Persons” and is incorporated herein by reference.

Information regarding director independence required by this Item 13 is contained in the Proxy Statement under the caption “Corporate Governance—Independent Directors,” “—Nominating and Corporate Governance Committee,” “—Audit Committee” and “—Compensation Committee” and is incorporated herein by reference.

With the exception of the disclosures referenced above, and other than in the ordinary course of business, there were no transactions during 2006, nor are there any presently proposed transactions, to which the Company was or is to be a party in which any of the Company’s officers or directors had or have direct or indirect material interest.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding fees paid by the Company to, and related disclosures about, its principal accountants required by this Item 14 is contained in the Proxy Statement under the caption “Information Concerning the Company’s Independent Auditor” and is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as a part of this report:

(1) Financial Statements – Please refer to that section of the Company’s Annual Report entitled “Consolidated Financial Report,” which is incorporated herein by reference.

(2) Financial Statement Schedules – Not applicable.

(3) Exhibits

The following Exhibits are attached hereto or incorporated by reference herein (numbered to correspond to Item 601(a) of Regulation S-K, as promulgated by the Securities and Exchange Commission).

PLEASE NOTE: It is inappropriate for readers to assume the accuracy of, or rely upon any covenants, representations or warranties that may be contained in agreements or other documents filed as Exhibits to, or incorporated by reference in, this report. Any such covenants, representations or warranties may have been qualified or superseded by disclosures contained in separate schedules or exhibits not filed with or incorporated by reference in this report, may reflect the parties’ negotiated risk allocation in the particular transaction, may be qualified by materiality standards that differ from those applicable for securities law purposes, and may not be true as of the date of this report or any other date and may be subject to waivers by any or all of the parties. Where exhibits and schedules to agreements filed or incorporated by reference as Exhibits hereto are not included in these exhibits, such exhibits and schedules to agreements are not included or incorporated by reference herein.

Exhibit Number	Description
3.1	Articles of Incorporation of the Company (Incorporated by reference from Exhibit 3.1 to the Company’s Registration Statement on Form S-4 dated January 27, 1992, Securities and Exchange Commission (the “Commission”) File No. 33-45254 (the “Form S-4”)).
3.2	Amendment to the Company’s Articles of Incorporation (Incorporated by reference from Exhibit 3.1 to the Company’s Registration Statement on Form S-2 filed October 26, 2001, Commission File No. 333-72300 (as amended, the “Form S-2”)).
3.3	Bylaws of the Company (Incorporated by reference from Exhibit 3.2 to the Form S-4).
10.1*	1991 Substitute Stock Option Plan (Incorporated by reference from Exhibit 10.2 to the Form S-4).
10.2*	1995 Stock Option Plan for Outside Directors (Incorporated by reference from Exhibit 10.2 to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 1995).
10.3*	1993 Employee Stock Option Plan (Incorporated by reference from Exhibit 10.3 to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 1995).
10.4*	Crescent Banking Company 2001 Non-Employee Director Stock Option Plan (Incorporated by reference from Exhibit 10.5 to the Form S-2).
10.5*	Crescent Banking Company 2001 Long-Term Incentive Plan (Incorporated by reference from Exhibit 10.6 to the Form S-2).
10.6	Warehouse Line of Credit, dated July 26, 1996, by and between Crescent Bank & Trust Company and Federal Home Loan Bank of Atlanta, including related documents (Incorporated by reference from Exhibit 10.11 to the Form S-2).
10.7	Amended and Restated Trust Agreement, dated as of May 18, 2006, by and among the Company, as Depositor, Wilmington Trust Company, as Property Trustee and Delaware Trustee, and the Administrators named therein (Incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed May 24, 2006).

Exhibit Number	Description
10.8	Junior Subordinated Indenture, dated as of May 18, 2006, by and between the Company and Wilmington Trust Company, as Trustee (Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 24, 2006).
10.9	Guarantee Agreement, dated as of May 18, 2006, by and between the Company, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee (Incorporated by reference From Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 24, 2006).
10.10*	Change of Control Employment Agreement, dated as of February 20, 2003, by and between Crescent Banking Company and J. Donald Boggus, Jr. (Incorporated by reference from Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002).
10.11*	Change of Control Employment Agreement, dated as of March 17, 2005, by and between Crescent Banking Company and Leland W. Brantley, Jr. (Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 22, 2005).
10.12*	Change of Control Employment Agreement, dated as of January 20, 2004, by and between Crescent Banking Company and Anthony N. Stancil (Incorporated by reference from Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.13*	Change of Control Employment Agreement, dated as of February 20, 2003 by and between Crescent Banking Company and A. Bradley Rutledge, Sr. (Incorporated by reference from Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.14*	Description of Director Compensation (Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 21, 2005).
10.15*	Description of Executive Compensation arrangements (Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 21, 2005).
10.16*	Form of Crescent Banking Company Non-Qualified Stock Option Agreement under the 2001 Non-Employee Director Stock Option Plan (Incorporated by reference from Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.17*	Form of Crescent Banking Company Incentive Stock Option Agreement under the 2001 Long-Term Incentive Plan (Incorporated by reference from Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.18*	Form of Director Supplemental Retirement Plan Agreement (Incorporated by reference from Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.19*	Form of Director Life Insurance Endorsement Method Split Dollar Plan Agreement (Incorporated by reference from Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.20*	Form of Executive Supplemental Retirement Plan Agreement (Incorporated by reference from Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.21*	Form of Executive Life Insurance Endorsement Method Split Dollar Plan Agreement (Incorporated by reference from Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004).
10.22*	Change of Control Employment Agreement, dated as of November 18, 2004, by and between Crescent Banking Company and Bonnie B. Boling.
10.23	Junior Subordinated Indenture, dated as of September 30, 2005, by and between the Company and Wilmington Trust Company, as Trustee (Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 6, 2005).
10.24	Amended and Restated Trust Agreement, dated as of September 30, 2005, by and among the Company, as Depositor, Wilmington Trust Company, as Property Trustee and Delaware Trustee, and the Administrators named therein (Incorporated by reference from Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 6, 2005).
10.25	Guarantee Agreement, dated as of September 30, 2005, by and between the Company, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee (Incorporated by reference from Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 6, 2005).
10.26*	Officer Incentive Plan (Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 24, 2007).

Exhibit Number	Description
11.1	Statement Regarding Computation of Per Share Earnings.
13.1	Crescent Banking Company 2006 Annual Report to Shareholders for the fiscal year ended December 31, 2006. With the exception of information expressly incorporated herein, the 2006 Annual Report to Shareholders is not deemed filed as part of this Annual Report on Form 10-K.
21.1	Subsidiaries of Crescent Banking Company.
23.1	Consent of Dixon Hughes PLLC.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Indicates management contracts and compensatory plans and arrangements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CRESCENT BANKING COMPANY
By:	/s/ J. Donald Boggus, Jr.
	J. Donald Boggus, Jr.
	President and Chief Executive Officer
Date:	March 27, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ J. Donald Boggus, Jr. J. Donald Boggus, Jr.	President, Chief Executive Officer and Director (Principal Executive Officer)	March 27, 2007
/s/ Leland W. Brantley, Jr. Leland W. Brantley, Jr.	Chief Financial Officer (Principal Financial and Accounting Officer)	March 27, 2007
/s/ John S. Dean, Sr. John S. Dean, Sr.	Chairman of the Board of Directors	March 27, 2007
/s/ Charles Fendley Charles Fendley	Director	March 27, 2007
/s/ Charles Gehrmann Charles Gehrmann	Director	March 27, 2007
/s/ Michael W. Lowe Michael W. Lowe	Director	March 27, 2007
/s/ Cecil Pruett Cecil Pruett	Director	March 27, 2007
/s/ Janie Whitfield Janie Whitfield	Director	March 27, 2007

EXHIBIT INDEX

Exhibit Number	Description
11.1	Statement Regarding Computation of Per Share Earnings.
13.1	Crescent Banking Company 2006 Annual Report to Shareholders for the fiscal year ended December 31, 2006. With the exception of information expressly incorporated herein, the 2006 Annual Report to Shareholders is not deemed filed as part of this Annual Report on Form 10-K.
21.1	Subsidiaries of Crescent Banking Company.
23.1	Consent of Dixon Hughes PLLC.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.