Bank Of Granite 8-K Results of Operations and Financial Condition

Exhibit 99 (a)

Bank of Granite Corporation
     News

For Release: January 10, 2005

BANK OF GRANITE CORPORATION’S FOURTH QUARTER EARNINGS VIRTUALLY
EVEN WITH FOURTH QUARTER OF 2003—DECLINE FOR FULL YEAR

     Bank of Granite Corporation (Nasdaq: GRAN) has reported its earnings for the fourth quarter of 2004 and also for the full year, both periods ending on December 31, 2004.

     Net income for the fourth quarter of 2004 totaled $3,293,285 compared with $3,320,462 for the fourth quarter of 2003, a slight decline of 0.8%. On a per share basis, this translates to 25¢ in 2004 vs. 24¢ in 2003, an increase of 4.2%.

     For the full year, also ending on December 31, 2004, net income totaled $12,718,220 compared to $15,307,893 in 2003, a decrease of 16.9%. On a per share basis, earnings were 94¢ vs. $1.13 for 2004, a decline of 16.8%.

     According to Charles M. Snipes, President and CEO of Bank of Granite Corporation, the primary reason for the 2004 decline in net income for the Company was the significant drop in income of mortgage originations of its subsidiary, Granite Mortgage, Inc. The mortgage company earned $534,630 in 2004 compared to $2,244,639 in 2003, a 76.2% decline. Also, Snipes cited decreased net interest margins for the quarter and the full year, higher provisions for loan losses and increased overhead resulting from the bank’s newly opened offices were factors in the earnings decline. The bank opened its 20th full service office in Winston-Salem, in October. Snipes expressed optimism concerning the future of the Company’s long-term earnings. He said recent increases in interest rates by the Federal Reserve should help the interest margin in 2005.

     Snipes thanked all members of the Bank of Granite family for their hard work during a very challenging year.

     The balance sheet showed considerable growth during the year. Assets moved above $1 billion for the first time in 2004 and ended the year at $1,032,238,449 compared to $971,382,727 on December 31, 2003—an increase of 6.3%. Deposits and loans also reached all-time year-end highs. The quarterly dividend was increased to 13¢ from 12¢ per share during the year and 2004 marked the 51st consecutive year of increased dividends, a record for any banking company in the country.

     Bank of Granite Corporation is the parent company of Bank of Granite and Granite Mortgage, Inc. (formerly GLL & Associates). The bank operates twenty full-service banking offices in Caldwell, Catawba, and Burke Counties—the “Unifour” area of North Carolina, and in Mecklenburg, Watauga, Forsyth 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 and Wilkesboro, and in Hilton Head, South Carolina. Bank of Granite Corporation has an estimated 6,700 shareholders with approximately 13,316,000 shares of common stock outstanding as of December 31, 2004. Its stock trades on the national NASDAQ Stock Market® under the symbol GRAN. The closing price of the stock on December 31, 2004 was $20.90.

* * * * *

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)	2004			2003			% change			2004			2003			% change
Consolidated earnings summary:
Interest income, taxable equivalent	$	14,818		$	13,948			6.2	%	$	56,614		$	52,204			8.4	%
Interest expense		3,697			3,155			17.2	%		13,108			11,389			15.1	%
Net interest income, taxable equivalent		11,121			10,793			3.0	%		43,506			40,815			6.6	%
Taxable equivalent adjustment		321			372			-13.7	%		1,348			1,508			-10.6	%
Net interest income		10,800			10,421			3.6	%		42,158			39,307			7.3	%
Loan loss provision		1,412			1,340			5.4	%		5,439			4,764			14.2	%
Noninterest income		2,883			3,004			-4.0	%		11,257			14,438			-22.0	%
Noninterest expense		7,356			7,187			2.4	%		29,116			25,863			12.6	%
Income before income taxes		4,915			4,898			0.3	%		18,860			23,118			-18.4	%
Income taxes		1,622			1,578			2.8	%		6,142			7,810			-21.4	%
Net income	$	3,293		$	3,320			-0.8	%	$	12,718		$	15,308			-16.9	%
Earnings per share — Basic	$	0.25		$	0.24			4.2	%	$	0.94		$	1.14			-17.5	%
Earnings per share — Diluted		0.25			0.24			4.2	%		0.94			1.13			-16.8	%
Average shares — Basic		13,352			13,640			-2.1	%		13,481			13,438			0.3	%
Average shares — Diluted		13,401			13,740			-2.5	%		13,531			13,517			0.1	%
Consolidated balance sheet data at December 31:
Total assets										$	1,032,238		$	971,383			6.3	%
Total deposits											749,862			735,099			2.0	%
Loans (gross)											778,137			715,845			8.7	%
Shareholders’ equity											141,016			141,815			-0.6	%
Consolidated average balance sheet data:
Total assets	$	1,016,830		$	970,788			4.7	%	$	993,022		$	861,870			15.2	%
Total deposits		759,430			640,270			18.6	%		746,481			640,270			16.6	%
Loans (gross)		762,644			704,721			8.2	%		740,316			618,278			19.7	%
Shareholders’ equity		140,756			141,615			-0.6	%		141,023			134,303			5.0	%
Consolidated performance ratios:
Return on average assets*		1.29	%		1.36	%					1.28	%		1.78	%
Return on average equity*		9.31	%		9.30	%					9.02	%		11.40	%
Efficiency ratio		52.53	%		52.09	%					53.17	%		46.81	%
Consolidated asset quality data and ratios:
Nonaccruing loans										$	6,634		$	8,115			-18.3	%
Accruing loans 90 days past due											4,227			3,218			31.4	%
Nonperforming loans											10,861			11,333			-4.2	%
Foreclosed properties											1,280			1,775			-27.9	%
Nonperforming assets											12,141			13,108			-7.4	%
Allowance for loan losses											13,665			10,799			26.5	%
Loans charged off											3,038			5,088			-40.3	%
Recoveries of loans charged off											465			425			9.4	%
Net loan charge-offs (recoveries)											2,573			4,663			-44.8	%
Net charge-offs to average loans*											0.35	%		0.75	%
Nonperforming loans to total assets											1.05	%		1.17	%
Allowance coverage of nonperforming loans											125.82	%		95.29	%
Allowance for loan losses to gross loans											1.76	%		1.51	%
Allowance for loan losses to net loans											1.79	%		1.53	%
Subsidiary earnings summary:
Bank of Granite
Net interest income	$	9,960		$	9,410			5.8	%	$	38,755		$	34,362			12.8	%
Loan loss provision		1,406			1,340			4.9	%		5,431			4,764			14.0	%
Noninterest income		1,870			1,940			-3.6	%		7,414			7,566			-2.0	%
Noninterest expense		5,516			5,300			4.1	%		22,058			17,478			26.2	%
Income taxes		1,523			1,449			5.1	%		5,786			6,314			-8.4	%
Net income		3,385			3,261			3.8	%		12,894			13,372			-3.6	%
Granite Mortgage
Net interest income	$	926		$	1,060			-12.6	%	$	3,673		$	4,969			-26.1	%
Loan loss provision		6			—			n/a			8			—			n/a
Noninterest income		1,014			1,069			-5.1	%		3,844			6,892			-44.2	%
Noninterest expense		1,693			1,806			-6.3	%		6,625			8,119			-18.4	%
Income taxes		99			129			-23.3	%		357			1,497			-76.2	%
Net income		148			194			-23.7	%		535			2,245			-76.2	%

* 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)	2004			2004			2004			2004			2003
Consolidated earnings summary:
Interest income, taxable equivalent	$	14,818		$	14,100		$	14,018		$	13,676		$	13,948
Interest expense		3,697			3,259			3,073			3,078			3,155
Net interest income, taxable equivalent		11,121			10,841			10,945			10,598			10,793
Taxable equivalent adjustment		321			321			340			365			372
Net interest income		10,800			10,520			10,605			10,233			10,421
Loan loss provision		1,412			1,678			1,104			1,245			1,340
Noninterest income		2,883			2,850			2,875			2,649			3,004
Noninterest expense		7,356			7,075			7,475			7,209			7,187
Income before income taxes		4,915			4,617			4,901			4,428			4,898
Income taxes		1,622			1,499			1,585			1,437			1,578
Net income	$	3,293		$	3,118		$	3,316		$	2,991		$	3,320
Earnings per share — Basic	$	0.25		$	0.23		$	0.25		$	0.22		$	0.24
Earnings per share — Diluted		0.25			0.23			0.24			0.22			0.24
Average shares — Basic		13,352			13,426			13,522			13,623			13,640
Average shares — Diluted		13,401			13,468			13,569			13,683			13,740
Consolidated ending balance sheet data:
Total assets	$	1,032,238		$	1,004,006		$	993,985		$	977,445		$	971,383
Total deposits		749,862			772,672			744,541			740,846			735,099
Loans (gross)		778,137			753,335			740,932			726,375			715,845
Shareholders’ equity		141,016			140,993			140,077			142,300			141,815
Consolidated average balance sheet data:
Total assets	$	1,016,830		$	1,000,136		$	987,822		$	967,298		$	970,788
Total deposits		759,430			763,643			738,039			724,811			730,181
Loans (gross)		762,644			745,999			732,768			719,853			704,721
Shareholders’ equity		140,756			140,111			140,739			142,486			141,615
Consolidated performance ratios:
Return on average assets*		1.29	%		1.24	%		1.35	%		1.24	%		1.36	%
Return on average equity*		9.31	%		8.85	%		9.48	%		8.44	%		9.30	%
Efficiency ratio		52.53	%		51.68	%		54.09	%		54.42	%		52.09	%
Consolidated asset quality data and ratios:
Nonaccruing loans	$	6,634		$	5,533		$	4,192		$	4,229		$	8,115
Accruing loans 90 days past due		4,227			3,927			6,274			2,568			3,218
Nonperforming loans		10,861			9,460			10,466			6,797			11,333
Foreclosed properties		1,280			1,352			1,462			1,709			1,775
Nonperforming assets		12,141			10,812			11,928			8,506			13,108
Allowance for loan losses		13,665			12,801			11,864			11,583			10,799
Loans charged off		688			875			920			556			1,874
Recoveries of loans charged off		139			135			96			95			95
Net loan charge-offs (recoveries)		549			740			824			461			1,779
Net charge-offs to average loans*		0.29	%		0.39	%		0.45	%		0.26	%		1.00	%
Nonperforming loans to total assets		1.05	%		0.94	%		1.05	%		0.70	%		1.17	%
Allowance coverage of nonperforming loans		125.82	%		135.32	%		113.36	%		170.41	%		95.29	%
Allowance for loan losses to gross loans		1.76	%		1.70	%		1.60	%		1.59	%		1.51	%
Allowance for loan losses to net loans		1.79	%		1.73	%		1.63	%		1.62	%		1.53	%
Subsidiary earnings summary:
Bank of Granite
Net interest income	$	9,960		$	9,728		$	9,595		$	9,472		$	9,410
Loan loss provision		1,406			1,676			1,104			1,245			1,340
Noninterest income		1,870			1,926			1,895			1,722			1,940
Noninterest expense		5,516			5,401			5,538			5,602			5,300
Income taxes		1,523			1,417			1,492			1,354			1,449
Net income		3,385			3,160			3,356			2,993			3,261
Granite Mortgage
Net interest income	$	926		$	859		$	1,081		$	807		$	1,060
Loan loss provision		6			2			—			—			—
Noninterest income		1,014			924			980			927			1,069
Noninterest expense		1,693			1,579			1,828			1,527			1,806
Income taxes		99			82			93			83			129
Net income		148			122			140			124			194

* Annualized based on number of days in the period.

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