SOURCE: Granite Community Bank, N.A.

November 10, 2006 15:15 ET

Granite Community Bank Announces Third Quarter Results

GRANITE BAY, CA -- (MARKET WIRE) -- November 10, 2006 -- Granite Community Bank, N. A. (the "Company") (OTCBB: GCBK), today announced results for the quarter ended September 30, 2006. Net income for the three months ended September 30, 2006 increased $187 thousand or 94% to $385 thousand, compared to net income of $198 thousand in the third quarter of 2005. Earnings per diluted share increased 81% to $0.29 in the third quarter of 2006, compared to $0.16 in the third quarter of 2005. Net income for the nine months ended September 30, 2006 increased $359 thousand or 71% to $864 thousand, compared to net income of $505 thousand for the nine months ended September 30, 2005. Earnings per diluted share increased 63% to $0.65 for the nine months ended September 30, 2006, compared to $0.40 for the nine months ended September 30, 2005.

Net interest income was $1.68 million and $4.58 million in the third quarter and first nine months of 2006, respectively, compared to $1.26 million and $3.42 million for the same periods in 2005. The net interest margin for the third quarter and first nine months of 2006 was 4.76% and 4.80%, respectively. This is a decrease of 49 basis points and 8 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 78 basis points in the third quarter of 2006 compared to 2005 and, an increase of 104 basis point for the nine months ended September 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 143 basis points to 3.69% in the third quarter of 2006 compared to 2.26% in 2005 and 134 basis points to 3.46% for the nine months ended September 30, 2006 compared to 2.12% in 2005.

Non-interest income decreased $6 thousand and -6% in the third quarter of 2006, compared to the third quarter of 2005. For the nine months ended September 30, 2006 non-interest income increased $68 thousand or 24% compared to the same period in 2005.

Non-interest expense increased $175 thousand or 19% in the third quarter of 2006, compared to the third quarter of 2005 and $568 thousand or 22% for the nine months ended September 30, 2006 compared to the nine months ended September 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 September 30, 2006, the Company's total assets were $155.1 million, an increase of $49.6 million or 47%, compared to September 30, 2005. Total loans and leases were $113.4 million at September 30, 2006, an increased of $114 million or 35%, compared to September 30, 2005. Total deposits were $130.6 million at September 30, 2006, an increase of $39.6 million or 44%, compared to September 30, 2005.

David Kaiser, President and CEO, stated, "We are pleased with our results through the third quarter of 2006. We have made a significant investment in the infrastructure necessary to serve the fast growing South Placer County region of California. Our newest branch office in Roseville is ahead of budget projections and completes our strategic positioning within the marketplace. We continue to focus on building mutually beneficial relationships with our clients and serving the community while simultaneously building shareholder value."

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

                            Three months ended        Nine months ended
                         ------------------------  -----------------------
                               September 30,            September 30,
                         ------------------------  -----------------------
FOR THE PERIOD:            2006      2005   Change   2006      2005  Change
                         --------- ---------  ---  --------- ---------  --


Net interest income          1,679     1,258   33%     4,583     3,424  34%
Provision for loan and
 lease loss                     50       122  -59%       375       260  44%
Noninterest income              98       104   -6%       356       288  24%
Noninterest expense          1,080       905   19%     3,161     2,593  22%
Pretax income                  648       334   94%     1,403       858  64%
Provision for tax              263       136   93%       539       353  53%
Net income                     385       198   94%       864       505  71%
Net income per basic
 share                        0.30      0.16            0.68      0.40
Net income per diluted
 Share                        0.29      0.16            0.65      0.40
Shares outstanding       1,276,000 1,260,000       1,276,000 1,260,000
Average                  1,276,000 1,260,000       1,272,313 1,255,556
Fully diluted            1,329,500 1,262,731       1,329,750 1,259,732
SELECTED FINANCIAL RATIOS
(Annualized):
Return on average assets      1.04%     0.73%           0.83%     0.68%
Return on average equity     10.61%     5.88%           7.78%     5.12%
Average shareholder
 equity to average assets     9.85%    12.36%          10.61%    13.42%
Net interest margin           4.76%     5.25%           4.80%     4.88%

AT PERIOD END:

Loans and leases                                     113,974    84,649
Allowance for loan and
 lease loss                                            1,397       848
Total assets                                         155,059   105,478
Shareholder equity                                    14,839    13,523
Deposits                                             130,629    91,011

Total risk based capital
 ratio                                                 12.18%    15.10%
Allowance for loan and
 lease loss to total loans                              1.23%     1.00%
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 maybe material and adverse. You should not rely solely on forward-looking statements in evaluation an investment or prospective investment, and you should consider all uncertainties and risks typical for 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.

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