Bank Of Granite 8-K Financial statements and exhibits

Exhibit 99 (a)

Bank of Granite Corporation

News

For Release: January 13, 2004

BANK OF GRANITE CORPORATION REPORTS SLIGHTLY IMPROVED
EARNINGS FOR 2003 DESPITE DECLINE IN FOURTH QUARTER

     Bank of Granite Corporation (NASDAQ: GRAN) reported a decline in fourth quarter earnings and a slight increase for the full year of 2003.

     Net income for the fourth quarter of 2003 was $3,320,462 compared with $4,185,842 for the fourth quarter of 2002, a decline of 20.7%. On a per share basis, this translates to 24¢ per diluted share vs 31¢ per share for 2002’s fourth quarter.

     For the full year, ending December 31, 2003, net income totaled $15,307,893 compared with $15,102,300, a 1.4% increase compared with the year 2002. On a diluted per share basis, this amounts to $1.13 vs $1.11 for 2002. The increase was largely due to record earnings of our mortgage bank subsidiary.

     John A. Forlines, Jr., Chairman and Chief Executive Officer, described earnings for 2003, especially for the fourth quarter, as “disappointing.” He said earnings were negatively impacted by overhead expenses associated with the three Charlotte offices acquired from First Commerce and the opening of three new offices in Boone, Wilkesboro and Conover. Also, he said the economy in the bank’s primary market area remained weak, with unemployment as high as 10% in some areas. In addition, earnings from the bank’s mortgage bank subsidiary declined rather substantially in the fourth quarter. Forlines said, “we invested a lot during 2003 preparing for the future and this, along with higher loan losses and a decline in our net interest margin, took its toll on earnings.” He added that he expects 2004 to show improvement.

     Forlines thanked all of the Bank of Granite family for their remarkably hard work during a difficult period.

     At year-end, assets totaled $971,382,727, a 30.9% increase for the year, loans totaled $715,802,466, a 32.3% increase, and deposits reached $735,099,355, up 34.3%. A significant part of this growth resulted from the acquisition of First Commerce.

     Key management ratios remained good compared with the bank’s peers, but were not up to Bank of Granite standards of previous years. The Company earned 1.78% on average assets for 2003 and the return on equity was 11.40%. The efficiency ratio was 46.81%. Dividends per share increased 12.2%, marking the 50th consecutive year of increased dividends to shareholders.

     Bank of Granite Corporation is the parent company of Bank of Granite and Granite Mortgage, Inc. (formerly GLL & Associates). The bank operates nineteen full-service banking offices in Caldwell, Catawba, and Burke Counties—the “Unifour” area of North Carolina, and in Mecklenburg, Watauga, and Wilkes Counties. Granite Mortgage, headquartered in Winston-Salem, originates home mortgages in the Catawba Valley and the Central and Southern Piedmont regions of North Carolina, in addition to Boone, Wilkesboro, and Hilton Head in South Carolina. Bank of Granite Corporation has an estimated 6,000 shareholders with 13,600,182 shares of common stock outstanding as of December 31, 2003. Its stock trades on the national NASDAQ Stock Market® under the symbol GRAN. It closed at $21.77 per share on December 31. The stock was up 24.4% in 2003.

* * * * *

Please see “Financial Data” tables, which are attached.
For further information, contact Kirby Tyndall, Chief Financial Officer
Voice (828) 496-2026, Fax (828) 496-2010 or Internet: ktyndall@bankofgranite.com.

Bank of Granite Corporation, PO Box 128, Granite Falls, NC 28630 www.bankofgranite.com

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Bank of Granite Corporation		Three Months Ended									Twelve Months Ended
Selected Financial Data		December 31,									December 31,
(in thousands except per share data)		2003			2002			% change			2003			2002			% change
Consolidated earnings summary:
	Interest income, taxable equivalent	$	13,948		$	12,120			15.1	%	$	52,204		$	47,442			10.0	%
	Interest expense		3,155			2,534			24.5	%		11,389			10,802			5.4	%
	Net interest income, taxable equivalent		10,793			9,586			12.6	%		40,815			36,640			11.4	%
	Taxable equivalent adjustment		372			411			-9.5	%		1,508			1,732			-12.9	%
	Net interest income		10,421			9,175			13.6	%		39,307			34,908			12.6	%
	Loan loss provision		1,340			797			68.1	%		4,764			3,492			36.4	%
	Noninterest income		3,004			3,354			-10.4	%		14,438			11,398			26.7	%
	Noninterest expense		7,187			5,388			33.4	%		25,863			20,317			27.3	%
	Income before income taxes		4,898			6,344			-22.8	%		23,118			22,497			2.8	%
	Income taxes		1,578			2,158			-26.9	%		7,810			7,395			5.6	%
	Net income	$	3,320		$	4,186			-20.7	%	$	15,308		$	15,102			1.4	%
	Earnings per share — Basic	$	0.24		$	0.31			-22.6	%	$	1.14		$	1.11			2.7	%
	Earnings per share — Diluted		0.24			0.31			-22.6	%		1.13			1.11			1.8	%
	Average shares — Basic		13,640			13,407			1.7	%		13,438			13,547			-0.8	%
	Average shares — Diluted		13,740			13,414			2.4	%		13,517			13,553			-0.3	%
Consolidated balance sheet data at December 31:
	Total assets										$	971,383		$	742,015			30.9	%
	Total deposits											735,099			547,249			34.3	%
	Loans (gross)											715,802			565,374			26.6	%
	Shareholders’ equity											141,815			127,443			11.3	%
Consolidated average balance sheet data:
	Total assets	$	965,687		$	723,712			33.4	%	$	861,870		$	708,239			21.7	%
	Total deposits		730,181			523,781			39.4	%		640,270			523,781			22.2	%
	Loans (gross)		704,714			551,624			27.8	%		618,276			526,759			17.4	%
	Shareholders’ equity		141,615			127,310			11.2	%		134,303			126,047			6.5	%
Consolidated performance ratios:
	Return on average assets*		1.36	%		2.29	%					1.78	%		2.13	%
	Return on average equity*		9.30	%		13.04	%					11.40	%		11.98	%
	Efficiency ratio		52.09	%		41.64	%					46.81	%		42.29	%
Consolidated asset quality data and ratios:
	Nonaccruing loans										$	8,115		$	3,265			148.5	%
	Accruing loans 90 days past due											3,218			1,153			179.1	%
	Nonperforming loans											11,333			4,418			156.5	%
	Foreclosed properties											1,775			1,203			47.5	%
	Nonperforming assets											13,108			5,621			133.2	%
	Allowance for loan losses											10,799			8,835			22.2	%
	Loans charged off											5,088			1,555			227.2	%
	Recoveries of loans charged off											425			471			-9.8	%
	Net loan charge-offs (recoveries)											4,663			1,084			330.2	%
	Net charge-offs to average loans*											0.75	%		0.21	%
	Nonperforming loans to total assets											1.17	%		0.60	%
	Allowance coverage of nonperforming loans											95.29	%		199.98	%
	Allowance for loan losses to gross loans											1.51	%		1.56	%
	Allowance for loan losses to net loans											1.53	%		1.59	%

Subsidiary earnings summary:
Bank of	Net interest income	$	9,410	$	8,112	16.0	%	$	34,362	$	31,584	8.8	%
Granite	Loan loss provision		1,340		797	68.1	%		4,764		3,422	39.2	%
	Noninterest income		1,940		1,930	0.5	%		7,566		7,542	0.3	%
	Noninterest expense		5,300		3,662	44.7	%		17,478		14,910	17.2	%
	Income taxes		1,449		1,826	-20.6	%		6,314		6,590	-4.2	%
	Net income		3,261		3,757	-13.2	%		13,372		14,204	-5.9	%
GLL &	Net interest income	$	1,060	$	1,070	-0.9	%	$	4,969	$	3,289	51.1	%
Associates	Loan loss provision		—		—	n/a			—		70	-100.0	%
(mortgage	Noninterest income		1,069		1,425	-25.0	%		6,892		3,949	74.5	%
(bank	Noninterest expense		1,806		1,663	8.6	%		8,119		5,226	55.4	%
	Income taxes		129		333	-61.3	%		1,497		805	86.0	%
	Net income		194		499	-61.1	%		2,245		1,207	86.0	%

* Annualized based on number of days in the period More

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Bank of Granite Corporation		Quarters Ended
Supplemental Quarterly Financial Data		Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
(in thousands except per share data)		2003			2003			2003			2003			2002
Consolidated earnings summary:
	Interest income, taxable equivalent	$	13,948		$	14,052		$	12,443		$	11,762		$	12,120
	Interest expense		3,155			3,173			2,674			2,386			2,534
	Net interest income, taxable equivalent		10,793			10,879			9,769			9,376			9,586
	Taxable equivalent adjustment		372			369			368			400			411
	Net interest income		10,421			10,510			9,401			8,976			9,175
	Loan loss provision		1,340			1,139			1,149			1,136			797
	Noninterest income		3,004			4,284			3,817			3,333			3,354
	Noninterest expense		7,187			7,171			6,136			5,371			5,388
	Income before income taxes		4,898			6,484			5,933			5,802			6,344
	Income taxes		1,578			2,253			2,014			1,965			2,158
	Net income	$	3,320		$	4,231		$	3,919		$	3,837		$	4,186
	Earnings per share — Basic	$	0.24		$	0.31		$	0.30		$	0.29		$	0.31
	Earnings per share — Diluted		0.24			0.31			0.30			0.29			0.31
	Average shares — Basic		13,640			13,617			13,198			13,292			13,407
	Average shares — Diluted		13,740			13,692			13,200			13,294			13,414
Consolidated ending balance sheet data:
	Total assets	$	971,383		$	971,644		$	811,086		$	762,299		$	742,015
	Total deposits		735,099			728,334			600,084			566,096			547,249
	Loans (gross)		715,802			694,465			567,301			577,521			565,374
	Shareholders’ equity		141,815			141,762			130,040			127,881			127,443
Consolidated average balance sheet data:
	Total assets	$	965,687		$	955,694		$	785,070		$	731,640		$	723,712
	Total deposits		730,181			707,876			577,105			545,920			537,056
	Loans (gross)		704,714			671,057			535,295			562,039			551,624
	Shareholders’ equity		141,615			139,294			128,676			127,625			127,310
Consolidated performance ratios:
	Return on average assets*		1.36	%		1.76	%		2.00	%		2.13	%		2.29	%
	Return on average equity*		9.30	%		12.05	%		12.22	%		12.19	%		13.04	%
	Efficiency ratio		52.09	%		47.29	%		45.16	%		42.26	%		41.64	%
Consolidated asset quality data and ratios:
	Nonaccruing loans	$	8,115		$	6,690		$	4,019		$	5,079		$	3,265
	Accruing loans 90 days past due		3,218			4,061			4,397			2,241			1,153
	Nonperforming loans		11,333			10,751			8,416			7,320			4,418
	Foreclosed properties		1,775			2,819			2,578			1,203			1,203
	Nonperforming assets		13,108			13,570			10,994			8,523			5,621
	Allowance for loan losses		10,799			11,238			8,854			9,318			8,835
	Loans charged off		1,874			735			1,678			801			308
	Recoveries of loans charged off		95			116			66			149			123
	Net loan charge-offs (recoveries)		1,779			619			1,612			652			185
	Net charge-offs to average loans*		1.00	%		0.37	%		1.21	%		0.47	%		0.13	%
	Nonperforming loans to total assets		1.17	%		1.11	%		1.04	%		0.96	%		0.60	%
	Allowance coverage of nonperforming loans		95.29	%		104.53	%		105.20	%		127.30	%		199.98	%
	Allowance for loan losses to gross loans		1.51	%		1.62	%		1.56	%		1.61	%		1.56	%
	Allowance for loan losses to net loans		1.53	%		1.64	%		1.59	%		1.64	%		1.59	%

Subsidiary earnings summary:
Bank of	Net interest income	$	9,410	$	8,990	$	7,988	$	7,974	$	8,112
Granite	Loan loss provision		1,340		1,139		1,149		1,136		797
	Noninterest income		1,940		1,878		1,863		1,885		1,930
	Noninterest expense		5,300		4,607		3,835		3,737		3,662
	Income taxes		1,449		1,667		1,560		1,638		1,826
	Net income		3,261		3,455		3,307		3,348		3,757
GLL &	Net interest income	$	1,060	$	1,553	$	1,389	$	966	$	1,070
Associates	Loan loss provision		—		—		—		—		—
(mortgage	Noninterest income		1,069		2,408		1,954		1,461		1,425
bank)	Noninterest expense		1,806		2,496		2,208		1,609		1,663
	Income taxes		129		586		454		327		333
	Net income		194		879		681		491		499

* Annualized based on number of days in the period.

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