CRESCENT STATE BANK DIRECTORS COMPENSATION PLAN

Exhibit 10.16

CRESCENT STATE BANK

DIRECTORS’ COMPENSATION PLAN

By a vote of the Board of Directors of Crescent State Bank, (hereinafter referred to as the “Bank”) on the 22 ^nd day of February, 2005, the Bank has established the Crescent State Bank Directors’ Compensation Plan ( hereinafter referred to as the “Plan”) to allow eligible directors the opportunity to participate in the Plan.

Those individuals who are members of the Board of Directors of the Bank shall be eligible to become a participant in this Plan. A member of the Board of Directors who chooses to participate in the Plan (hereinafter referred to as the “Participant”) shall complete and file a written statement with the Bank notifying the Bank of his or her election to participate in the Plan (the “Election Form”). A copy of the Election Form is attached hereto and marked as Exhibit A . If a Participant later chooses to discontinue participation in the Plan, the Participant shall notify the Bank in writing.

The amounts contributed to this Plan shall be any and all fees paid to the Participant for the Participant’s services as a director of the Bank, including but not limited to annual fees, meeting fees, and committee fees, plus a bonus equal to twenty-five percent (25%) of such fees (collectively, the “Fees”). Fees contributed to this Plan shall be transferred to an account in the name of the Participant (the “Compensation Account”) subject to the requirement of Section IV hereof.

Concurrent with adoption of this Plan, the Bank will appoint a third party to act as a purchasing agent (hereinafter referred to as the “Purchasing Agent”), enter into an Agency Agreement with the Purchasing Agent and, pursuant to the Agency Agreement and this Plan, the Bank shall transfer Participants’ Fees (collectively, the “Contributions”) to the Purchasing Agent. With the Contributions, the Purchasing Agent shall purchase shares of common stock of Crescent Financial Corporation (the “Common Stock”) during the sixty days following the receipt of the Contributions. Such purchases shall be made on the open market or in privately negotiated transactions. The Bank shall transfer to the Purchasing Agent the Contributions as of the day of the month or quarter on which such Contributions would otherwise have been paid to the Participants in the absence of the Plan.

The purchase price per share of Common Stock purchased either on the open market or in privately negotiated transactions will be the weighted average of the total price paid by the Purchasing Agent for all shares that were purchased by the Purchasing Agent in respect of a particular calendar quarter (the “Market Price Average”).

The Purchasing Agent shall establish and maintain a Compensation Account on behalf of each Participant. A Participant’s Compensation Account shall be credited with (i) the Participant’s Fees not already invested in Common Stock, and (ii) shares of Common Stock and any fraction thereof, which shall equal the proportionate share of the Participant’s Fees in the total purchase price of the Common Stock in respect of a particular quarter divided by the Market Price Average for that quarter. Each Compensation Account of a Participant shall be maintained by the Purchasing Agent until the assets held therein have been distributed to or on behalf of such Participant or to the beneficiary(ies) of the Participant. The value of the assets held in each Compensation Account shall be calculated at least monthly by the Purchasing Agent and reported to each Participant.

Distribution of assets held in each Participant’s Compensation Account shall be in the form of Common Stock and cash for any fractional shares held thereof. Any Fees held in the Compensation Account not invested in Common Stock shall be distributed to the Participant in the form of Cash. A Participant shall notify the Purchasing Agent by any reasonable means when the Participant wishes to have a part or all of the assets of the Participant’s Compensation Account distributed to the Participant. Notwithstanding the foregoing, distribution of the assets held in a Participant’s Compensation Account shall commence or occur not later than the first day of the calendar month following the end of a Participant’s term of office due to resignation, removal, failure to be re-elected or retirement.