SOURCE: Granite Community Bank, NA

August 01, 2006 21:00 ET

Granite Community Bank Announces Second Quarter Results

GRANITE BAY, CA -- (MARKET WIRE) -- August 1, 2006 --Granite Community Bank, N.A. (the "Company") (OTCBB: GCBK), today announced results for the quarter ended June 30, 2006. Net income for the three months ended June 30, 2006 increased $43 thousand or 28% to $200 thousand, compared to net income of $157 thousand in the second quarter of 2005. Earnings per share increased 45% to $0.16 in the second quarter of 2006, compared to $0.11 in the second quarter of 2005. Net income for the six months ended June 30, 2006 increased $153 thousand or 50% to $459 thousand, compared to net income of $307 thousand for the six months ended June 30, 2005. Earnings per share increased 50% to $0.36 for the six months ended June 30, 2006, compared to $0.24 for the six months ended June 30, 2005.

Net interest income was $1.52 million and $2.94 million in the second quarter and first six months of 2006, respectively, compared to $1.15 million and $2.17 million for the same periods in 2005. The net interest margin for the second quarter and first six months of 2006 was 4.77% and 4.85%, respectively. This is an increase of 7 basis points and 15 basis points compared to the same periods in 2005. Increases in market rates in 2006 have helped to increase the Company's yield on earning assets by 116 basis points in the second quarter of 2006 compared to 2005 and, a change in the earnings assets mix resulted in an increase of 118 basis point for the six months ended June 30, 2006 compared to the same period in 2005. Partially offsetting the rise in earning asset yields were increases in the Company's cost of funds. The cost of funds rose 111 basis points to 2.76% in the second quarter of 2006 compared to 1.65% in 2005 and 132 basis points to 2.61% for the six months ended June 30, 2006 compared to 1.29% in 2005.

Non-interest income increased $7 thousand or 6% in the second quarter of 2006, compared to the second quarter of 2005. For the six months ended June 30, 2006 non-interest income increased $37 thousand or 20% compared to the same period in 2005.

Non-interest expense increased $226 or 25% in the second quarter of 2006, compared to the second quarter of 2005 and $393 or 23% for the six months ended June 30.2006 compared to the six months ended June 30, 2005. The increase in non-interest expense in 2006 compared to 2005 was primarily the result of opening a denovo branch in Roseville, CA.

At June 30, 2006, the Company's total assets were $135 million, an increase of $32 million or 31%, compared to June 30, 2005. Total loans and leases were $116 million at June 30, 2006, an increase of $42 million or 57%, compared to June 30, 2005. Total deposits were $112 million at June 30, 2006, an increase of $23 million or 26%, compared to June 30, 2005.

David R. Kaiser, President and CEO stated, "We are pleased with our results midway through 2006. Our new branch in Roseville is ahead of budget projections. We continue to focus on providing quality service to our clients, shareholders and community while simultaneously building shareholder value."

ABOUT GRANITE COMMUNITY BANK, N.A.

Granite Community Bank, N.A. was founded in June of 2002 and is headquartered in Granite Bay, California. A full service community bank serving Placer County, California, Granite Community Bank offers a full array of financial products and services through three offices located in Granite Bay, Auburn and Roseville, California. The Bank also operates a mortgage loan production office in Paradise, Butte County, California.

This report contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those reflected in these statements. The forward-looking statements are made pursuant to the safe harbor provisions of Section 21D of the Securities Exchange Act of 1934, as amended. Those forward-looking statements are based on management's assumptions and projections, and are sometimes identifiable by the use of the words, 'expect to,' 'plan,' 'will,' 'believe' and words of similar predictive nature. Because management's assumptions and projections are based on anticipation of future events, you should not place undue emphasis on forward-looking statements, and you should recognize that those statements are effective only as of the date of this release. You should anticipate that our actual performance may vary from those projections, and variations may be material and adverse. You should not rely solely on forward-looking statements in evaluating an investment or prospective investment, and you should consider all uncertainties and risks typical of the banking industry. Risks that may cause our results to differ materially and adversely from management's expectations discussed here include: unanticipated additional expenses associated with opening additional facilities; higher than expected costs of regulatory compliance, the impact on reported financial results that may occur with the adoption of new accounting rules and tax regulations; the inability to grow earning assets or the inability to fund loan growth through traditional deposit gathering; as well as general economic conditions in our market area and broader economic changes regionally and nationally, and the effect of bank regulatory changes. Granite Community Bank, N.A. undertakes no obligation to update any forward-looking statements contained herein.

                       Granite Community Bank, N.A.
                           FINANCIAL HIGHLIGHTS
      (Dollar amounts in thousands, except share and per share data)
                                (Unaudited)


                             Three months ended        Six months ended
                           ----------------------  -----------------------
FOR THE PERIOD:                   June 30,                 June 30,
                           ----------------------  -----------------------
                                              Cha-                    Cha-
                             2006      2005    nge    2006      2005   nge
                           --------- --------- --  --------- --------- ---

Net interest income        $   1,520 $   1,150 32% $   2,940 $   2,166  36%
Provision for loan and
 lease loss                      190        97 96%       325       138 136%
Noninterest income               125       118  6%       221       184  20%
Noninterest expense            1,144       918 25%     2,081     1,688  23%
Income before provision
 for income taxes                311       253 23%       755       524  44%
Provision for loan and
 income taxes                    111       109  2%       296       217  36%
Net income                       200       144 39%       459       307  50%
Net income per basic share $    0.16 $    0.11 45% $    0.36 $    0.24  50%
Net income per diluted
 share                     $    0.15 $    0.11 36% $    0.35 $    0.24  46%
Average shares outstanding 1,268,000 1,256,667     1,268,000 1,253,333
Fully diluted              1,300,657 1,259,732     1,298,657 1,256,731
SELECTED FINANCIAL RATIOS
 (Annualized):
Return on average assets        0.59%     0.56%         0.72%     0.63%
Return on average equity        5.59%     4.35%         6.47%     4.65%
Average shareholders'
 equity to average assets      10.61%    12.91%        11.07%    13.55%
Net interest margin             4.77%     4.70%         4.85%     4.70%

AT PERIOD END:

Loans and leases                                     115,924    73,692  57%
Allowance for loan and
 lease loss                                            1,347       739  82%
Total assets                                         135,454   103,247  31%
Shareholders' equity                                  14,340    13,344   7%
Deposits                                             112,327    89,195  26%
Total risk based capital.
 ratio                                                 11.46%    16.37%
Allowance for loan and
 lease loss to total loans                              1.16%     1.00%
Shares outstanding                                 1,268,000 1,260,000

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