UNDERWRITING AGREEMENT

Exhibit 1.1

CRESCENT FINANCIAL CORPORATION

(a North Carolina corporation)

                     Shares of Common Stock

UNDERWRITING AGREEMENT

THIS UNDERWRITING AGREEMENT (this “Agreement”) is made and entered into this          day of                                  , 2005 by and between Crescent Financial Corporation, a North Carolina corporation (the “Company”), and Ryan Beck & Co, Inc. (the “Underwriter”). The Company hereby confirms its agreement with the Underwriter with respect to the issue and sale by the Company and the purchase by the Underwriter of                          shares (the “Initial Securities”) of the Company’s $1.00 par value common stock (“Common Stock”). The Company also proposes to issue and sell to the Underwriter, at the Underwriter’s option, up to an additional          shares of Common Stock (the “Option Securities”) as set forth herein. The term “Securities” as used herein, unless indicated otherwise, shall mean the Initial Securities and the Option Securities.

The initial public offering price for the Securities, the purchase price to be paid by the Underwriter for the Securities, and the number of Securities to be sold to the Underwriter by the Company shall be agreed upon by the Company and the Underwriter, and such agreement shall be set forth in a separate written instrument substantially in the form of Exhibit A hereto (the “Price Determination Agreement”). The Price Determination Agreement may take the form of an exchange of any standard form of written telecommunication between the Company and the Underwriter and shall specify such applicable information as is indicated in Exhibit A hereto. The offering of the Securities will be governed by this Agreement, as supplemented by the Price Determination Agreement. From and after the date of the execution and delivery of the Price Determination Agreement, this Agreement shall be deemed to incorporate, and all references herein to “this Agreement” shall be deemed to include, the Price Determination Agreement.

The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-2 (File No.                          ) covering the registration of the Securities under the Securities Act of 1933, as amended (the “1933 Act”), including the related preliminary prospectus, and, if such registration statement has not become effective, the Company will prepare and file, prior to the effective date of such registration statement, an amendment to such registration statement, including a final prospectus. Each prospectus used before the time such registration statement becomes effective is herein called a “preliminary prospectus.” Such registration statement, at the time it becomes effective, is herein called the “Registration Statement,” and the prospectus, included in the Registration Statement at the time it becomes effective is herein called the “Prospectus,” except that, if any revised prospectus provided to the Underwriter by the Company for use in connection with the offering of the Securities differs from the prospectus included in the Registration Statement at the time it becomes

effective (whether or not such prospectus is required to be filed pursuant to Rule 424(b) under the 1933 Act (“Rule 424(b)”), the term “Prospectus” shall refer to such revised prospectus from and after the time it is first furnished to the Underwriter for such use.

The Company understands that the Underwriter proposes to make a public offering of the Securities (the “Offering”) as soon as possible after the Registration Statement becomes effective. The Underwriter may assemble and manage a selling group of broker-dealers that are members of the National Association of Securities Dealers, Inc. (“NASD”) to participate in the solicitation of purchase orders for the Securities.

Section 1. Representations and Warranties .

(a) The Company represents and warrants to and agrees with the Underwriter that:

(i) The Company meets the requirements for use of Form S-2 under the 1933 Act and, when the Registration Statement on such form shall become effective and at all times subsequent thereto up to the Closing Time referred to below (and, with respect to the Option Securities, up to the “Option Closing Time” referred to below), (A) the Registration Statement and any amendments and supplements thereto will comply in all material respects with the requirements of the 1933 Act and the rules and regulations of the Commission under the 1933 Act (the “1933 Act Regulations”); (B) neither the Registration Statement nor any amendment or supplement thereto will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (C) neither the Prospectus nor any amendment or supplement thereto will include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that this representation and warranty does not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by the Underwriter expressly for use in the Registration Statement or the Prospectus. The statements contained under the caption “Underwriting” in the Prospectus constitute the only information furnished to the Company in writing by the Underwriter expressly for use in the Registration Statement or the Prospectus.

(ii) Documents previously filed either with the Commission or, if filed by Crescent State Bank (the “Bank”) as predecessor filer to the Company, the Federal Deposit Insurance Corporation (the “FDIC”), complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the rules and regulations of the Commission thereunder (the “1934 Act Regulations”) as adopted by the FDIC and, when read together and with the other information in the Prospectus, at the time the Registration Statement becomes effective and at all times subsequent thereto up to the Closing Time (and with respect to the Option Securities, up to the “Option Closing Time” referred to below), will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in

2

order to make the statements therein not misleading, in each case after excluding any statement that does not constitute a part of the Registration Statement or the Prospectus pursuant to Rule 412 of the 1933 Act Regulations.

(iii) Dixon Hughes PLLC (“Dixon Hughes”), who is reporting upon the audited financial statements included or incorporated by reference in the Registration Statement, has advised the Company that it is an independent certified public accountant as required by the 1933 Act and the 1933 Act Regulations and within the meaning of the Code of Ethics of the American Institute of Certified Public Accountants (“AICPA”), is, with respect to the Company and each of its subsidiaries, an independent certified public accountant and is a “registered public accounting firm” within the meaning of Section 102(a)(12) of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).

(iv) The audited and unaudited consolidated financial statements (including the notes thereto), included or incorporated by reference in the Registration Statement present fairly the consolidated financial position of the Company and its subsidiaries as of the dates indicated and the consolidated results of operations and cash flows of the Company and its subsidiaries for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved, except as otherwise stated therein. The financial statement schedules, if any, included in the Registration Statement present fairly the information required to be stated therein. The selected financial and statistical data included in the Prospectus are accurate in all material respects and present fairly the information shown therein and have been compiled on a basis consistent with that of the audited and, if any, unaudited consolidated financial statements included or incorporated by reference in the Registration Statement.

(v) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina with corporate power and authority under such laws to own, lease and operate its properties and conduct its business as described in the Prospectus. Each direct and indirect subsidiary of the Company is an entity duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization with corporate power and authority under such laws to own, lease and operate its properties and conduct its business. The Company and each of its direct and indirect subsidiaries is duly qualified to transact business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs, assets or business prospects of the Company and its subsidiaries, considered as one enterprise.

(vi) The Company is duly registered with the Board of Governors of the Federal Reserve System as a bank holding company under the Bank Holding Company Act of 1956, as amended. The Bank is a North Carolina-chartered commercial bank subsidiary of the Company; and the deposit accounts of the Bank are insured by the Bank

3

Insurance Fund of the FDIC up to the maximum allowable limits thereof. The Company has all such power, authority, authorization, approvals and orders as may be required to enter into this Agreement to carry out the provisions and conditions hereof and thereof and to issue and sell the Securities.

(vii) All of the outstanding shares of capital stock of the Bank have been duly authorized and validly issued and are fully paid and non-assessable (except to the extent set forth in N.C.G.S. 53-42 as to the Bank) and are owned by the Company free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind.

(viii) Except for the Bank and Crescent Financial Capital Trust I, the Company does not have any “significant subsidiaries” as defined in Rule 1-02 of Regulation S-X of the Commission.

(ix) The Company had at the date indicated a duly authorized and outstanding capitalization as set forth in the Prospectus under the caption “Description of Capital Our Securities.” The capital stock, subordinated debentures and associated trust preferred securities and other securities of the Company conform in all material respects to the description thereof contained or incorporated by reference in the Prospectus and such description conforms to the rights set forth in the instruments defining the same.

(x) This Agreement has been duly authorized, executed and delivered by the Company and, when duly executed by the Underwriter, will constitute the valid and binding agreements of the Company enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.

(xi) The Securities have been duly and validly authorized by the Company for issuance and sale to the Underwriter pursuant to this Agreement and, when issued and delivered by the Company to the Underwriter pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued, fully paid and non-assessable and will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms. The Securities conform in all material respects to the description thereof in the Prospectus, and such description conforms in all material respects to the rights set forth in the instruments defining the same; the holders of the Securities will be entitled to the same limitation of personal liability extended to shareholders of private corporations for profit organized under the North Carolina Business Corporation Act; and the issuance of the Securities is not subject to any preemptive or other similar rights.

(xii) Except for information provided in writing to the Company by the Underwriter about the Underwriter for use in the Prospectus, the Company has not relied upon the Underwriter or its legal or other advisors for any legal, tax or accounting advice.

(xiii) The issuance and sale of the Securities by the Company, the compliance by the Company with all of the provisions of this Agreement and the consummation of

4

the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties; and no consent, approval, authorization, order, license, certificate, permit, registration or qualification of or with any such court or other governmental agency or body is required to be obtained by the Company for the issue and sale of the Securities by the Company, or the consummation by the Company of the transactions contemplated by this Agreement, except for such consents, approvals, authorizations, licenses, certificates, permits, registrations or qualifications as have already been obtained, or as may be required under the 1933 Act or the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations, or state securities laws.

(xiv) Each person who is an executive officer or director of the Company has agreed to sign an agreement substantially in the form attached hereto as Exhibit B (the “Lock-up Agreements”). The Company has provided to counsel for the Underwriter true, accurate and complete copies of all of the Lock-up Agreements presently in effect or effected hereby. The Company hereby represents and warrants that it will not release any of its officers, directors or other shareholders from any Lock-up Agreements currently existing or hereafter effected without the prior written consent of the Underwriter.

(xv) The Company has not engaged in any activity that would result in the Company being, and after giving effect to the offering and sale of the Securities, the Company will not be, an “investment company,” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

(xvi) All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and non-assessable, and are not subject to the preemptive rights of any stockholder of the Company.

(xvii) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, there has not been (A) any material adverse change in the condition (financial or otherwise), earnings, business affairs, assets or business prospects of the Company and its subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business, (B) any transaction entered into by the Company or any subsidiary thereof, other than in the ordinary course of business, that is material to the Company and its subsidiaries, considered as one enterprise, or (C) any cash dividend or cash distribution of any kind declared, paid or made by the Company on its capital stock. Neither the Company, the Bank nor any other subsidiary of the Company has any material liability of any nature, contingent or otherwise, except as set forth in the Prospectus.

(xviii) Neither the Company, the Bank nor any other direct or indirect subsidiary of the Company is in violation of any provision of its articles of incorporation, charter, certificate of trust, trust agreement or bylaws, as applicable, or in default in the performance or observance of any obligation, agreement, covenant or condition contained

5

in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which it is a party or by which it may be bound or to which any of its respective properties may be subject, except for such defaults that, individually or in the aggregate, would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs, assets or business prospects of the Company and its subsidiaries, considered as one enterprise.

(xix) Except as disclosed in the Prospectus, there is no action, suit or proceeding before or by any government, governmental instrumentality or court, domestic or foreign, now pending or, to the knowledge of the Company, threatened against the Company, the Bank or any other subsidiary that is required to be disclosed in the Prospectus or that could reasonably be expected to result in any material adverse change in the condition (financial or otherwise), earnings, business affairs, assets or business prospects of the Company and its subsidiaries, considered as one enterprise, or that could reasonably be expected materially and adversely to affect the properties or assets of the Company and its subsidiaries, considered as one enterprise, or that could reasonably be expected materially and adversely to affect the consummation of the transactions contemplated in this Agreement; all pending legal or governmental proceedings to which the Company, the Bank or any other subsidiary is a party that are not described in the Prospectus, including ordinary routine litigation incidental to its business, if decided in a manner adverse to the Company, would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and its subsidiaries, considered as one enterprise.

(xx) There are no material contracts or documents of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described and filed as required.

(xxi) Each of the Company and its direct and indirect subsidiaries, including the Bank, has good and marketable title to all properties and assets described in the Prospectus as owned by it, free and clear of all liens, charges, encumbrances or restrictions, except such as (A) are described in the Prospectus or (B) are neither material in amount nor materially significant in relation to the business of the Company and its subsidiaries, considered as one enterprise; all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise are in full force and effect, and neither the Company, the Bank nor any other subsidiary has any notice of any material claim that has been asserted by anyone adverse to the rights of the Company, the Bank or any other subsidiary under any such lease or sublease or affecting or questioning the rights of such corporation to the continued possession of the leased or subleased premises under any such lease or sublease.

(xxii) Each of the Company and its direct and indirect subsidiaries, owns, possesses or has obtained all material governmental licenses, permits, certificates, consents, orders, approvals and other authorizations necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as presently conducted, and neither the Company, the Bank nor any other subsidiary has received any notice of

6

any restriction upon, or any notice of proceedings relating to revocation or modification of, any such licenses, permits, certificates, consents, orders, approvals or authorizations.

(xxiii) No labor problem with the employees of the Company, the Bank or any other subsidiary exists or, to the best knowledge of the Company, is imminent such that it could materially adversely affect the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and its subsidiaries, considered as one enterprise, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its, the Bank’s or any other subsidiary’s principal suppliers, contractors or customers that could reasonably be expected to materially adversely affect the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and its subsidiaries, considered as one enterprise.

(xxiv) Except as disclosed in the Prospectus, there are no persons with registration or other similar rights to have any securities of the Company registered pursuant to the Registration Statement or otherwise registered by the Company under the 1933 Act.

(xxv) Except as disclosed in the Prospectus, to the best of its knowledge, the Company and its direct and indirect subsidiaries, including the Bank, own or are entitled to use or otherwise possess legally enforceable rights in all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets or other unpatented and/or unpatentable proprietary or confidential information systems or procedures), trademarks, service marks and trade names (collectively, “Patent and Proprietary Rights”), if any, currently employed by them in connection with the business now operated by them except where the failure to own, be entitled to use, possess or acquire such Patent and Proprietary Rights would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs, assets or business prospects of the Company and its subsidiaries, considered as one enterprise. Neither the Company, the Bank nor any other subsidiary has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Patent and Proprietary Rights, and which infringement or conflict (if the subject of any unfavorable decision, rule and refinement, singly or in the aggregate) could reasonably be expected to result in any material adverse change in the condition (financial or otherwise), earnings, business affairs, assets or business prospects of the Company and its subsidiaries, considered as one enterprise.

(xxvi) The Company and each subsidiary of the Company have filed all federal, state and local income, franchise or other tax returns required to be filed and have made timely payments of all taxes due and payable in respect of such returns, and no material deficiency has been asserted with respect thereto by any taxing authority.

(xxvii) The Company has filed with The Nasdaq Stock Market, Inc. (“Nasdaq”) all documents and notices required by Nasdaq of companies that have issued securities that are traded in the over-the-counter market and quotations for which are reported by the Nasdaq SmallCap Market or, as applicable, the Nasdaq National Market.

7

(xxviii) Neither the Company, the Bank nor any other subsidiary of the Company has taken or will take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation, under the 1934 Act or otherwise, of the price of the Securities or the Common Stock.

(xxix) Neither the Company, the Bank nor any other subsidiary is or has been (by virtue of any action, omission to act, contract to which it is a party or by which it is bound, or any occurrence or state of facts whatsoever) in violation of any applicable foreign, federal, state, municipal or local statutes, laws, ordinances, rules, regulations and/or orders issued pursuant to foreign, federal, state, municipal or local statutes, laws, ordinances, rules, or regulations (including those relating to any aspect of securities registration or issuance, banking, bank holding companies, consumer credit, truth-in-lending, truth-in-savings, usury, currency transaction reporting, anti-money laundering and customer identification regulations, environmental protection, occupational safety and health and equal employment practices) heretofore or currently in effect, except such violations that have been fully cured or satisfied without recourse or that in the aggregate will not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs, assets or business prospects of the Company and its subsidiaries, considered as one enterprise.

(xxx) Neither the Company, the Bank nor any other subsidiary has any agreement or understanding with any person (A) concerning the future acquisition by the Company or the Bank of a controlling interest in any entity or (B) concerning the future acquisition by any person of a controlling interest in the Company, the Bank or any other subsidiary, in either case that is required by the 1933 Act or the 1933 Act Regulations to be disclosed by the Company that is not disclosed in the Prospectus.

(b) Any certificate signed by any authorized officer of the Company or the Bank and delivered to the Underwriter or to counsel for the Underwriter pursuant to this Agreement shall be deemed a representation and warranty by the Company to the Underwriter as to the matters covered thereby.

(c) The Underwriter represents and warrants to and agrees with the Company that:

(i) The Underwriter is registered as a broker-dealer with the Commission and is a member of the NASD.

(ii) The Underwriter is validly existing and in good standing as a corporation under the laws of the State of New Jersey with corporate power and authority to provide the services to be furnished to the Company hereunder.

(iii) This Agreement has been duly authorized, executed and delivered by the Underwriter and, when duly executed by the Underwriter, will constitute the valid and binding agreements of the Underwriter enforceable against the Underwriter in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights

8

generally or by general equitable principles.

(iv) The Underwriter and, to the Underwriter’s knowledge, its employees, and agents who shall perform any of the services required hereunder to be performed by the Underwriter shall be duly authorized and shall have all licenses, approvals and permits necessary to perform such services.

(v) The execution and delivery of this Agreement by the Underwriter, the fulfillment of the terms set forth herein and the consummation of the transactions herein contemplated shall not violate or conflict with the corporate charter or bylaws of the Underwriter or violate, conflict with or constitute a breach of, or default (or any event which, with notice or lapse of time, or both, would constitute a default) under, any material agreement, indenture or other instrument by which the Underwriter is bound or under any governmental license or permit or any law, administrative regulation, authorization, approval or order or court decree, injunction or order applicable to it.

(vi) There is not now pending or, to the Underwriter’s knowledge, threatened against the Underwriter any material action or proceeding before the Commission, the NASD, any state securities commission or any state or federal court concerning the Underwriter’s activities as a broker-dealer.

Section 2. Sale and Delivery to the Underwriter; Closing .

(a) On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to the Underwriter, and the Underwriter agrees to purchase from the Company, the number of Initial Securities set forth at the purchase price and terms set forth herein and in the Price Determination Agreement.

In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriter to purchase all or a portion of the Option Securities in accordance with the terms set forth herein and in the Price Determination Agreement. The option hereby granted will expire at 5:00 p.m. on the 30th day after the date the Registration Statement is declared effective by the Commission (or at 5:00 p.m. on the next business day following the 30th day if such 30th day is not a business day) and may be exercised, solely for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by the Underwriter to the Company setting forth the number of Option Securities as to which the Underwriter is exercising the option and the time, date and place of payment and delivery for the Option Securities. Such time and date of delivery (the “Option Closing Date”) shall be determined by the Underwriter but shall not be later than five full business days after the exercise of said option, nor in any event prior to the Closing Time, as hereinafter defined, nor earlier than the second business day after the date on which the notice of the exercise of the option shall have been given.

(b) Payment of the purchase price for, and delivery of certificates for, the Common Stock issuable in connection with the Initial Securities shall be made at such place as shall be agreed upon by the Company and the Underwriter, at 9:30 a.m. on the third full business

9