SOURCE: Bank of Granite Corporation

April 24, 2008 15:28 ET

Bank of Granite Corporation Reports First Quarter Results

GRANITE FALLS, NC--(Marketwire - April 24, 2008) - Bank of Granite Corporation (NASDAQ: GRAN) ("the Company") reported earnings of $1.72 million, or $0.11 per share, for the quarter ended March 31, 2008, a decrease of 57.6% from the $4.04 million, or $0.25 per share, reported for the first quarter of 2007. As of March 31, 2008, the Company's total assets, loans, and deposits were all at higher levels compared to March 31, 2007. The Company and its banking subsidiary remained well capitalized according to regulatory capital measures.

The earnings decrease for the quarter primarily resulted from decreases in interest and fee income from loans and higher noninterest expenses. The decline in loan income was due to a combination of lower loan yields on the Company's variable rate loans and higher levels of nonperforming loans. The Company's net interest margin decreased to 3.81% in the first quarter of 2008 compared to 4.95% in the first quarter of 2007, primarily due to the lower loan income without comparable decreases in funding costs. The Company also reported a 15.9% increase in its noninterest expenses related primarily to increased costs of personnel, professional, and consulting fees.

The Company's nonperforming loans of $41.23 million as of March 31, 2008 were up significantly compared to March 31, 2007 as the Company's banking subsidiary continued to work through problem commercial loans. Scott Anderson, CEO, said, "While we were disappointed in our first quarter results, we continue to focus on strengthening our credit quality and underwriting as we resolve our problem loans. This is a difficult and necessary process, and I commend our employees for their commitment and dedication in dealing with our challenges and opportunities."

As of March 31, 2008, the Company's total assets were $1.24 billion, total loans were $0.95 billion, and total deposits were $1.01 billion. Total assets grew 1.6%, loans grew 1.8%, and deposits grew 3.8% from March 31, 2007. Total assets, total loans, and total deposits were at record levels as of March 31, 2008. The Company's leverage, Tier I, and total risk-based capital ratios were 8.63%, 9.83%, and 11.08%, respectively, as of March 31, 2008.

Bank of Granite Corporation's common stock trades on the NASDAQ Global Select Market(SM) under the symbol "GRAN." Bank of Granite Corporation is the parent company of Bank of Granite and Granite Mortgage, Inc. Bank of Granite operates twenty-two full-service banking offices in eight North Carolina counties -- Burke, Caldwell, Catawba, Forsyth, Iredell, Mecklenburg, Watauga, and Wilkes, as well as a loan production office in Guilford County. Granite Mortgage, a mortgage banking company headquartered in Winston-Salem, originates home mortgages in these counties as well as in Cumberland and Rowan counties.

Please see the attached supplemental "Financial Data" tables.

For further information, please contact: Karen Clark-Caruso, Public Relations, 828.345.6863 or kcaruso@bankofgranite.com, or Kirby Tyndall, Chief Financial Officer, 828.496.2026 or ktyndall@bankofgranite.com

Disclosures about Forward Looking Statements

The discussions included in this document contain statements that may be deemed forward looking statements within the meaning of the Private Securities Litigation Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from these statements. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward looking statements. Such statements are often characterized by the use of qualifying words such as "expects," "anticipates," "believes," "estimates," "plans," "projects," or other statements concerning opinions or judgments of our Company and our management about future events. The accuracy of such forward looking statements could be affected by certain factors, including but not limited to, the financial success or changing conditions or strategies of our customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel, and general economic conditions. For additional factors that could affect the matters discussed in forward looking statements, see the "Risk Factors" section of the Company's most recent Annual Report on Form 10-K/A filed with the Securities and Exchange Commission.

Bank of Granite Corporation
Selected Financial Data                       Three Months Ended
(in thousands except per share                    March 31,
 data)                               ------------------------------------
                                         2008         2007       % change
                                     ===========  ===========  ===========
Consolidated earnings summary:
   Interest income, taxable
    equivalent                       $    19,159  $    22,635        -15.4%
   Interest expense                        8,611        8,960         -3.9%
                                     -----------  -----------
   Net interest income, taxable
    equivalent                            10,548       13,675        -22.9%
   Taxable equivalent adjustment (1)         197          232        -15.1%
                                     -----------  -----------
   Net interest income                    10,351       13,443        -23.0%
   Loan loss provision                     1,411        1,917        -26.4%
   Noninterest income                      3,220        3,151          2.2%
   Noninterest expense                     9,659        8,336         15.9%
                                     -----------  -----------
   Income before income taxes              2,501        6,341        -60.6%
   Income taxes                              786        2,297        -65.8%
                                     -----------  -----------
   Net income                        $     1,715  $     4,044        -57.6%
                                     ===========  ===========
   Earnings per share - Basic        $      0.11  $      0.25        -56.0%
   Earnings per share - Diluted             0.11         0.25        -56.0%
                                     -----------  -----------
   Average shares - Basic                 15,438       16,018         -3.6%
   Average shares - Diluted               15,457       16,074         -3.8%
                                     ===========  ===========  ===========
Consolidated balance sheet data at
 March 31:
   Total assets                      $ 1,235,624  $ 1,215,633          1.6%
   Total deposits                      1,011,717      974,754          3.8%
   Loans (gross)                         949,065      932,186          1.8%
   Stockholders’ equity                  115,434      148,248        -22.1%
                                     ===========  ===========  ===========
Consolidated average balance sheet
 data:
   Total assets                      $ 1,214,147  $ 1,202,007          1.0%
   Total deposits                        988,626      960,524          2.9%
   Loans (gross)                         948,732      927,001          2.3%
   Stockholders’ equity                  117,681      149,277        -21.2%
                                     ===========  ===========  ===========
Consolidated performance ratios:
   Return on average assets*                0.57%        1.36%
   Return on average equity*                5.86%       10.99%
   Net interest margin*                     3.81%        4.95%
   Efficiency ratio (2)                    70.16%       49.54%
                                     ===========  ===========  ===========
Consolidated asset quality data and
 ratios:
   Nonaccruing loans                 $    40,260  $    13,087        207.6%
   Accruing loans 90 days past due           969        1,615        -40.0%
                                     -----------  -----------
   Nonperforming loans                    41,229       14,702        180.4%
   Foreclosed properties                   2,511        1,453         72.8%
                                     -----------  -----------
   Nonperforming assets                   43,740       16,155        170.8%
                                     -----------  -----------
   Allowance for loan losses              15,459       16,672         -7.3%
                                     -----------  -----------
   Loans charged off                       4,602        1,134        305.8%
   Recoveries of loans charged off           976          101        866.3%
                                     -----------  -----------
   Net loan charge-offs                    3,626        1,033        251.0%
                                     -----------  -----------
   Net charge-offs to average loans*        1.54%        0.45%
   Nonperforming loans to total
    assets                                  3.34%        1.21%
   Allowance coverage of
    nonperforming loans                    37.50%      113.40%
   Allowance for loan losses to
    gross loans                             1.63%        1.79%
   Allowance for loan losses to net
    loans                                   1.66%        1.82%
                                     ===========  ===========  ===========
Subsidiary earnings summary:
   Bank of  Net interest income      $     9,601  $    12,944        -25.8%
   Granite  Loan loss provision            1,399        1,905        -26.6%
            Noninterest income             2,177        2,256         -3.5%
            Noninterest expense            7,847        6,771         15.9%
            Income taxes                     711        2,225        -68.0%
            Net income                     1,821        4,299        -57.6%
                                     -----------  -----------  -----------
   Granite  Net interest income      $       842  $       748         12.6%
   Mortgage Loan loss provision               12           12          0.0%
            Noninterest income             1,043          895         16.5%
            Noninterest expense            1,685        1,451         16.1%
            Income taxes                      75           72          4.2%
            Net income                       113          108          4.6%
                                     ===========  ===========  ===========

* Annualized based on number of days in the period.
(1) Yields and interest income on tax-exempt investments have been
    adjusted to tax equivalent basis using a 35% tax rate.
(2) Calculated by dividing noninterest expense by the sum of tax
    equivalent net interest income and noninterest income.



Bank of Granite Corporation
Supplemental
Quarterly                            Quarters Ended
Financial Data   ----------------------------------------------------------
(in thousands     Mar 31,     Dec 31,     Sep 30,     Jun 30,     Mar 31,
except per          2008        2007        2007        2007        2007
share data)      ==========  ==========  ==========  ==========  ==========

Consolidated
 earnings
 summary:
  Interest
   income,
   taxable
   equivalent   $   19,159  $   22,318  $   22,152  $   23,246  $   22,635
  Interest
   expense           8,611       9,309       9,387       9,192       8,960
                ----------  ----------  ----------  ----------  ----------
  Net interest
   income,
   taxable
   equivalent       10,548      13,009      12,765      14,054      13,675
  Taxable
   equivalent
   adjustment(1)       197         205         205         216         232
                ----------  ----------  ----------  ----------  ----------
  Net interest
   income           10,351      12,804      12,560      13,838      13,443
  Loan loss
   provision         1,411       3,006      42,737       7,471       1,917
  Noninterest
   income            3,220       3,490       3,150       3,210       3,151
  Noninterest
   expense           9,659      10,496       9,380       8,789       8,336
                ----------  ----------  ----------  ----------  ----------
  Income (loss)
   before tax
   expense
   (benefit)         2,501       2,792     (36,407)        788       6,341
  Income tax
   expense
   (benefit)           786         860     (14,391)         51       2,297
                ----------  ----------  ----------  ----------  ----------
  Net income
   (loss)       $    1,715  $    1,932  $  (22,016) $      737  $    4,044
                ==========  ==========  ==========  ==========  ==========
  Earnings
   (loss) per
   share -
   Basic        $     0.11  $     0.12  $    (1.40) $     0.05  $     0.25
  Earnings
   (loss) per
   share -
   Diluted            0.11        0.12       (1.40)       0.05        0.25
                ----------  ----------  ----------  ----------  ----------
  Average shares
   - Basic          15,438      15,468      15,694      15,928      16,018
  Average shares
   - Diluted        15,457      15,490      15,694      15,970      16,074
                ==========  ==========  ==========  ==========  ==========
Consolidated
 ending balance
 sheet data:
  Total assets  $1,235,624  $1,219,148  $1,189,176  $1,221,282  $1,215,633
  Total deposits 1,011,717     971,989     979,365     984,153     974,754
  Loans (gross)    949,065     946,326     909,653     941,884     932,186
  Stockholders’
   equity          115,434     115,265     116,112     143,843     148,248
                ==========  ==========  ==========  ==========  ==========
Consolidated
 average balance
 sheet data:
  Total assets  $1,214,147  $1,198,879  $1,212,281  $1,210,595  $1,202,007
  Total deposits   988,626     971,663     977,049     970,408     960,524
  Loans (gross)    948,732     929,342     942,154     934,891     927,001
  Stockholders’
   equity          117,681     117,042     143,726     149,011     149,277
                ==========  ==========  ==========  ==========  ==========
Consolidated
 performance
 ratios:
  Return on
   average
   assets*            0.57%       0.64%      -7.21%       0.24%       1.36%
  Return on
   average
   equity*            5.86%       6.55%     -60.77%       1.98%      10.99%
  Net interest
   margin*            3.81%       4.69%       4.48%       4.99%       4.95%
  Efficiency
   ratio (2)         70.16%      63.62%      58.94%      50.91%      49.54%
                ==========  ==========  ==========  ==========  ==========
Consolidated
 asset quality
 data and ratios:
  Nonaccruing
   loans        $   40,260  $   36,450  $   27,267  $   22,549  $   13,087
  Accruing loans
   90 days past
   due                 969         162         491       2,830       1,615
                ----------  ----------  ----------  ----------  ----------
  Nonperforming
   loans            41,229      36,612      27,758      25,379      14,702
  Foreclosed
   properties        2,511       2,491       2,605       3,416       1,453
                ----------  ----------  ----------  ----------  ----------
  Nonperforming
   assets           43,740      39,103      30,363      28,795      16,155
                ----------  ----------  ----------  ----------  ----------
  Allowance for
   loan losses      15,459      17,673      17,569      22,102      16,672
                ----------  ----------  ----------  ----------  ----------
  Loans charged
   off               4,602       3,140      47,308       2,081       1,134
  Recoveries of
   loans charged
   off                 976         237          39          40         101
                ----------  ----------  ----------  ----------  ----------
  Net loan
   charge-offs       3,626       2,903      47,269       2,041       1,033
                ----------  ----------  ----------  ----------  ----------
  Net charge-offs
  to average
  loans*              1.54%       1.24%      19.90%       0.88%       0.45%
  Nonperforming
   loans to
   total assets       3.34%       3.00%       2.33%       2.08%       1.21%
  Allowance
   coverage of
   nonperforming
   loans             37.50%      48.27%      63.29%      87.09%     113.40%
  Allowance for
   loan losses
   to gross
   loans              1.63%       1.87%       1.93%       2.35%       1.79%
  Allowance for
   loan losses
   to net loans       1.66%       1.90%       1.97%       2.40%       1.82%
                ==========  ==========  ==========  ==========  ==========
Subsidiary earnings
 summary:
 Bank of Net interest
 Granite income $    9,601  $   12,252  $   11,906  $   13,169  $   12,944
         Loan loss
          provision  1,399       2,994      42,725       7,459       1,905
         Noninterest
          income     2,177       2,574       2,117       2,138       2,256
         Noninterest
          expense    7,847       8,777       7,584       6,973       6,771
         Income tax
          expense
          (benefit)    711         852     (14,456)        (58)      2,225
         Net income
          (loss)     1,821       2,203     (21,830)        933       4,299
                ----------  ----------  ----------  ----------  ----------
 Granite  Net interest
 Mortgage income $      842  $      751  $      857  $      893  $      748
          Loan loss
           provision    12          12          12          12          12
          Noninterest
           income    1,043         916       1,033       1,072         895
          Noninterest
           expense   1,685       1,635       1,715       1,681       1,451
          Income
           taxes        75           8          65         109          72
          Net
           income      113          12          98         163         108
                ==========  ==========  ==========  ==========  ==========

* Annualized based on number of days in the period.
(1) Yields and interest income on tax-exempt investments have been
   adjusted to tax equivalent basis using a 35% tax rate.
(2) Calculated by dividing noninterest expense by the sum of tax
   equivalent net interest income and noninterest income.

Contact Information

  • For further information, please contact:
    Karen Clark-Caruso
    Public Relations
    828.345.6863
    Email Contact

    Kirby Tyndall
    Chief Financial Officer
    828.496.2026
    Email Contact