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Correspondence Letter

 ALSTON&BIRD LLP

 One Atlantic Center

 1201 West Peachtree Street

 Atlanta, Georgia 30309-3424

 404-881-7000

 Fax: 404-881-4777

 www.alston.com

Christopher C. Frieden

Direct Dial: 404-881-7457

E-mail: cfrieden@alston.com

 June 30, 2005

 Via EDGAR and Facsimile

 The United States Securities and Exchange Commission

 100 F Street, N.E.

 Washington, D.C. 20549

 Attn: Mr. Isa Farhat

Re:
Crescent Banking Company (the “Company”)

 Form 10-K for the Year Ended December 31, 2004

 File No. 0-20251

 Mr. Farhat:

 We represent the Company, which has received the Securities and Exchange Commission (the “Commission”) Staff’s comments on its Form
10-K for the year ended December 31, 2004.

 The Staff’s
comments and the Company’s responses are set forth below.

 Form
10-K

 Financial Statements

 Note 1 – Summary of Significant Accounting Policies

 Loans, page F-10

1.
Comment. You disclose that costs are netted against fees and are reported as a reduction of other expenses in the statement of income. Please revise to clarify
what those costs represent and how your accounting policy considers the requirements of paragraph 5 of SFAS 91 and paragraph 21 of SFAS 65. Also, clarify the basis for reporting these amounts as a reduction of other expenses since they appear to
more appropriately represent other income.

 Response.

 In accordance with SFAS 91
and SFAS 65, the Company defers and recognizes over the life of the loan both the direct loan origination fees and direct loan origination costs. The loan origination fees and the related direct loan origination cost for a given loan are offset and
only the net amount is deferred and amortized over the life of the loan. The direct loan origination costs represent the incremental direct costs for the time spent by the lenders and their loan administration staff on evaluating, preparing and
closing loans. This cost was previously recorded on the face of the income statement as a reduction of expenses as a separate line item titled Capitalized loan origination costs. In the future we intend to record these costs net of salaries and
employee benefits which the Company believes is consistent with industry practice.

 Bank of America Plaza

 101 South Tryon Street, Suite 4000

 Charlotte, NC 28280-4000

 704-444-1000

 Fax: 704-444-1111

 90 Park Avenue

 New York, NY 10016

 212-210-9400

 Fax: 212-210-9444

 3201 Beechleaf Court, Suite 600

 Raleigh, NC 27604-1062

 919-862-2200

 Fax: 919-862-2260

601 Pennsylvania Avenue, N.W.
North Building, 10th Floor
Washington, DC 20004-2601
202-756-3300
Fax: 202-756-3333

 The Securities and Exchange Commission

 June 30, 2005

 Page 2

 Note 2 – Discontinued Operations, page F-14

2.
Comment. Please revise here and in MD&A, as appropriate, to discuss the following:

a.
The facts and circumstances resulting in the increased liability after the disposal date, clarifying why it was not identified and measured at the measurement date;

b.
The period over which you have to indemnify the acquiror for losses;

c.
Discuss the reasons why you structured the disposal of these operations in such a manner that it was possible that you would receive no proceeds from the disposal, including
why management believed this was the best course of action in disposing of these operations;

d.
Discuss the terms of the earn out agreement in more detail, including whether it was based on only the operations of the disposed component of your operations or of the
acquiror’s total operations;

e.
Discuss the reasons for the deterioration of these operations subsequent to their disposal. It appears to us that these operations were profitable when you owned them; and

f.
Please disclose, if true, that the acquiror of these operations was an unrelated, third party.

 Response.

 The Company believes that it has disclosed the information requested by the Staff’s comment and material to investors in its previous filings on
Forms 8-K, 10-K and 10-Q.

 a.

 In particular, with respect to the first bullet in the Staff’s comment,
the Company respectfully directs the Staff’s attention to the disclosure set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 29 of the Company’s Annual Report (set forth at
Exhibit 13.1 to the Company’s Form 10-K for the year ending December 31, 2004 and incorporated by reference therein) which states in part as follows:

 We carried our mortgage loans held for sale at the lower of aggregate cost or market price, and therefore we did not
maintain a reserve for mortgage loans held for sale. When we sold a loan, we typically made 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. We relied on our underwriting department to ensure compliance with individual investor standards prior to the sale of loans, and we relied on our quality control department to randomly test loans that we had sold.
Purchasers of our loans typically conducted their own review of the loans, and we could be liable for unpaid principal and interest on defaulted loans if we had breached our representations and warranties with respect to the loans that we sold. In
the wholesale mortgage business that we formerly operated, we regularly made representations and warranties to purchasers of our

 The Securities and Exchange Commission

 June 30, 2005

 Page 3

 mortgage loans that, if breached, would require us to indemnify the purchaser for losses or to repurchase the loans, and we considered this practice to be
customary and routine. At December 31, 2004, we had approximately $8.0 million of mortgage loans for which we had agreed to indemnify the purchaser for losses suffered by the purchaser, compared to $7.4 million as of December 31, 2003. In the event
that the purchaser of these loans experiences any losses with respect to the loans, we will be required to indemnify the purchaser for its losses or to repurchase the loans from the purchaser. The Company records a specific reserve for the recourse
liability for the loans on which the Company has already become obligated to make indemnification payments to the purchaser and an estimated reserve for the recourse liability for probable future losses from loans that the Company may have to
indemnify. The recourse liability at December 31, 2004 for future losses was $3.7 million and was estimated based upon historical information on the number of loans indemnified and the average loss on an indemnified loan, including higher risk loans
secured by manufactured housing. This reserve remained with the Company after the sale of the wholesale mortgage operation as did the risk and the liability from the indemnified loans. The loans that were indemnified in the fourth quarter of 2004
were primarily closed in 2002. The Company’s highest levels of mortgage production in its history were in 2002 and 2003, and therefore, we could see an increase in our indemnification liability in 2005. The Company had to make an additional
provision of approximately $2.9 million to the recourse liability in 2004 based upon increases in the number of indemnified loans and losses. If the balance of indemnified loan increases significantly, then the Company could have to make additional
provisions to the recourse liability reserve.

 The Company
notes that the indemnification and repurchase liabilities referenced in the above disclosure relate to loans that were sold into the secondary market as part of the wholesale mortgage business’ ordinary course operations prior to, and are
unrelated to, the disposition of the Company’s wholesale mortgage operations. Obligations related to loans that were sold into the secondary market prior to the divestiture of the mortgage operations were not assumed by Carolina Financial
Corporation (“Carolina Financial”) in connection with its acquisition of the Company’s wholesale mortgage operations.

 As disclosed, the Company estimates its recourse liability with respect to mortgage loans sold into the secondary market based upon historical
information. Prior to the fiscal year ending December 31, 2003, the Company had experienced no material losses related to its indemnification or repurchase obligations in connection with mortgage loans sold into the secondary market and, therefore,
deemed its reserves adequate at that time. The Company believes that the Company’s increased indemnification and repurchase liabilities relating to mortgage loans sold into the secondary market are a direct result of the historically high
Company and industry origination volume during the low mortgage interest rate environment of 2001-2003, and more rigorous reviews by secondary market purchasers since then. The Company believes that the above disclosure appropriately addresses these
obligations based on data known to the Company at each reporting date, including the possibility that the Company’s indemnification and repurchase obligations could increase in the future. Similar disclosure to that set forth above is also
contained in the Company’s Form 10-Q filings (see p. 25 of the Company’s Form 10-Q for the quarter ending March 31, 2005) as well as the Company’s earnings releases (see the Company’s press release set forth as Exhibit 99.1 to
the Company’s Form 8-K furnished to the Commission on May 9, 2005).

 The Securities and Exchange Commission

 June 30, 2005

 Page 4

 b.

 In response to the second bullet of the Staff’s comment, the Asset Purchase Agreement containing the terms of the Company’s limited indemnification obligations to Carolina Financial in connection with the
sale of the wholesale mortgage business was filed as Exhibit 10.1 to the Company’s Form 8-K timely filed with the Commission on November 5, 2003 following the execution of the sale agreement. Carolina Financial has made no indemnification
claims under the Asset Purchase Agreement or otherwise in connection with the sale of the Company’s wholesale mortgage operations.

 As described in the Asset Purchase Agreement, Crescent Mortgage Services, Inc. (“CMS”), the wholly owned subsidiary through which the
Company operated its wholesale mortgage operations, was obligated generally to indemnify Carolina Financial for breaches of representations and warranties for one year from the December 31, 2003 closing date. Certain representations and warranties
relating to CMS’ corporate organization, good standing and authority to engage in the transaction as well CMS’ title to the assets that were sold to Carolina Financial may be the basis for an indemnification claim for three years from the
closing date.

 CMS also is obligated to indemnify Carolina
Financial for losses suffered by Carolina Financial as a result of claims with respect to liabilities that were not assumed by Carolina Financial in the sale, as well as for judgments and litigation arising from or related to the operation of the
wholesale mortgage business prior to the closing date. The Asset Purchase Agreement does not specifically limit the duration of CMS’ indemnification obligations with respect to the types of claims set forth in the previous sentence. The Company
notes that CMS’ indemnification obligations under the Asset Purchase Agreement are distinct from any obligations that CMS may have to indemnify secondary market purchasers (such as Freddie Mac, Fannie Mae or other private parties) of mortgage
loans in connection with breaches of the representations and warranties made in connection with the sales of loans into the secondary market by CMS prior to the sale of its assets. Given that the sale of the Company’s wholesale mortgage
business closed approximately 18 months ago and that Carolina Financial has made no indemnification claims to date, the Company believes and suggests to the Staff that the Company’s exposure as a result of CMS’ indemnification obligations
under the Asset Purchase Agreement is not material to the Company’s financial condition or results of operations and that additional disclosure in the Company’s filings is unnecessary and may place undue emphasis on information which could
be misleading and confusing to investors.

 c.

 In response to the third bullet of the Staff’s comment, the Company
directs the Staff’s attention to its press release announcing the signing of the Asset Purchase Agreement that is set forth as Exhibit 99.1 to the Company’s Form 8-K as filed with the Commission on November 5, 2003. The press release and
the Form 8-K set forth the Company’s reasons for selling its wholesale mortgage operations. The press release quotes J. Donald Boggus, Jr., the Company’s Chief Executive Officer, as saying:

 This is a strategic decision for us. It simplifies our business model and
allows us to focus on our core community banking business where we operate in some of the fastest growing counties in the United States. The Bank’s commercial loans have grown at a 46% annual rate over the last five years. We expect to continue
to increase the Bank’s assets and are applying to expand with two new offices in Bartow County and another in Forsyth County. The proceeds from the sale of the mortgage operation will be available to support expansion in our existing markets
through internal growth, and to support expansion in new markets through strategic acquisitions.

 The Securities and Exchange Commission

 June 30, 2005

 Page 5

 Additionally, that Form 8-K states that “[a]s a result of the transaction, Crescent expects to reduce its outstanding indebtedness to $3.5 million of trust preferred
securities and to have approximately $22 million of capital available for Crescent for various purposes, including supporting the Crescent Bank & Trust Company’s operations and growth.”

 The Company respectfully provides for the Staff the following additional
background information. During 2003 CMS had in excess of $5.0 billion of mortgage originations and maintained warehouse credit facilities of $290 million. The terms of these warehouse credit facilities required the Company to maintain at least $18.0
million in capital in CMS. This capital would otherwise have been available to the Company for investment in its commercial banking operations.

 Desiring to make additional capital available to fund expansion of its commercial banking operations, in February 2003 the Company engaged a financial
advisor to assist in the sale of the wholesale mortgage operations. The financial advisor solicited bids from more than 47 potential purchasers of which 20 indicated some level of interest and 12 of which entered into confidentiality agreements with
the Company and received the confidential offering memorandum. During the auction process, mortgage rates began to rise which depressed the mortgage refinance market which had been a driving force behind CMS’ earnings during 2001 and 2002.
Carolina Financial submitted the only bid that the Company considered feasible and worth pursuing. Although the Company sought to sell CMS as an entity, the limited number of parties that expressed serious interest in a transaction only wanted to
purchase selected assets and liabilities and were not interested in acquiring the stock of CMS. On November 3, 2003, after intense arms-length negotiations, CMS entered into a definitive agreement to sell the assets and liabilities of the
Company’s wholesale mortgage operations to Carolina Financial and its wholly owned subsidiary. The assets that were transferred to Carolina Financial consisted primarily of the mortgage loans that had been previously closed by CMS but not yet
sold into the secondary market, the mortgage loan pipeline and certain fixed assets related to the wholesale mortgage business. The Company retained all mortgage servicing rights it held at that time.

 The Company believes that the Company’s previous fi