SOURCE: Granite Community Bank, NA

November 03, 2008 20:00 ET

Granite Bancshares Inc. Announces 2008 Year to Date Results for Granite Community Bank, N.A.

GRANITE BAY, CA--(Marketwire - November 3, 2008) - Granite Bancshares, Inc. (OTCBB: GBSI) today announced 2008 year to date financial information for its wholly owned subsidiary Granite Community Bank, N.A. (the "Bank").

Net income for the nine months ended September 30, 2008 totaled $784 thousand compared to net income of $1.04 million for same period in 2007, a decrease of $251 thousand or 24%. The 2008 results included income of approximately $500 thousand from the redemption of a bank-owned life insurance plan during the second quarter of 2008. Factors that contributed to a net decrease in earnings during the first nine months of 2008 compared to the same period in 2007 include the following:

--  Decrease of $781 thousand in net interest income from a decrease in
    loan volume of certain loan types coupled with a 146 basis point decrease
    in yield on loans.  In addition, due to a strategic decision to maintain
    liquidity higher yielding proceeds from matured investment securities lead
    to an increase in lower yielding Federal funds.  The decrease of 71 basis
    points in rates paid on deposits was due to a shifting of higher interest
    rate time deposits to non-interest checking and savings accounts.
    
--  Increase of $160 thousand in the Bank's reserve for potential loan
    losses.
    
--  Decrease of $115 thousand on gains on sales of loans and loan
    packaging fees due to a diminishing market for these products and services.
    

The allowance for potential loan losses as a percentage of gross loans as of September 30, 2008 and 2007 were 2.17% and 1.20%, respectively. Non-performing loans plus other real estate owned (OREO) as a percentage of total assets were 5.07% and 0.20% at September 30, 2008 and 2007, respectively.

Management has recognized risks associated within the current credit market and believes that the Bank maintains an appropriate allowance for potential loan losses. Increases to the reserve for the nine months in the periods ended September 30, 2008 and 2007 totaled $450 thousand and $290, respectively, have negatively affected net income and earnings per share.

"Our fortunes, like those of our clients and shareholders, are tied to the strength of our local marketplace and we are supported by the character and integrity of our neighbors. Unfortunately, we are not immune to the national financial turmoil or the more visible struggles within our local economy. When our clients are thriving, we thrive and when our clients are facing difficult times, we share in their struggles," said David R. Kaiser, President and CEO. "The increase in non-performing loans is a reflection of the challenges facing our South Placer County marketplace. These assets are well secured by real estate and we are actively managing them through this economic cycle."

At September 30, 2008, assets totaled $153.6 million, a decrease of $5.11 million or 3% compared to total assets at September 30, 2007. Loans totaled $125.2 million at September 30, 2008, a decrease of $3.90 million or 3% compared to September 30, 2007. Deposits totaled $122.9 million at September 30, 2008, a decrease of $7.5 million or 6%, compared to September 30, 2007.

ABOUT GRANITE BANCSHARES, INC. and GRANITE COMMUNITY BANK, N.A.

Granite Bancorp, Inc. is the parent holding Bank of Granite Community Bank, N.A., headquartered in Granite Bay, California, has three offices serving the South Placer County region of Northern California. For further information, please contact David Kaiser, President CEO, at (916) 787-3970.

Cautionary Statement: This release may contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results and events to differ materially from those stated herein. Words such as "anticipate," "believe," "estimate," "expect," "should," "intend," "project," and words or phrases of similar meaning are intended to identify forward-looking statements. Management's assumptions and projections are based on their anticipation of future events and actual performance may differ materially from that projected.


      (Dollar amounts in thousands, except share and per share data)
                                (Unaudited)

                     Three months ended             Nine months ended
                ----------------------------  ----------------------------
                        September 30,                 September 30,
                ----------------------------  ----------------------------
                                        %                             %
FOR THE PERIOD:   2008       2007     Change    2008       2007     Change
                ---------  ---------  ------  ---------  ---------  ------
Net interest
 income         $   1,420  $   1,719  -17.39% $   4,271  $   5,052  -15.46%
Provision for
 loan and lease
 loss                 275        200   37.50%       450        290   55.17%
Noninterest
 income               138         95   45.26%       875        368  137.77%
Noninterest
 expense            1,271      1,122   13.28%     3,726      3,516    5.97%
Pretax income          12        492  -97.56%       970      1,614  -39.90%
Provision for
 tax                    6        140  -95.71%       186        579  -67.88%
Net income              6        352  -98.30%       784      1,035  -24.25%

Net income per
 basic share        0.004       0.26  -98.30%      0.58       0.77  -24.93%
Net income per
 diluted share      0.004       0.25  -98.24%      0.57       0.74  -22.09%

Shares
 outstanding    1,362,884  1,355,550          1,362,884  1,355,550
Average         1,362,884  1,355,550          1,362,616  1,350,415
Fully diluted   1,362,884  1,403,478          1,368,481  1,407,483

SELECTED FINANCIAL
 RATIOS:
(Annualized):
Return on
 average assets      0.02%      0.91%              0.66%      0.90%
Return on
 average equity      0.14%      8.62%              6.43%      8.62%
Average
 shareholder
 equity to average
 assets             10.47%     10.51%             10.25%     10.41%
Net interest
 margin              3.13%      3.85%              3.83%      4.39%

AT PERIOD END:
Loans and
 leases                                       $ 125,160  $ 129,056
Allowance for
 loan and lease
 loss                                             2,718      1,589
Total assets                                    153,594    158,700
Shareholder
 equity                                          16,498     16,492
Deposits                                        122,890    130,394
Total risk
 based capital
 ratio                                            13.05%     11.73%
Allowance for
 loan and lease
 loss to total
 loans                                             2.17%      1.20%


Contact Information

  • Granite Community Bank, N.A.
    David R. Kaiser
    916-788-8200
    Granitecb.com