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

Exhibit 99 (a)

Bank of Granite NEWS

 — C O R P O R A T I O N —

FOR RELEASE: July 23, 2007

BANK OF GRANITE CORPORATION REPORTS
EARNINGS FOR SECOND QUARTER OF 2007

     Bank of Granite Corporation (NASDAQ: GRAN) (the “Company”) reported earnings of $0.74 million, or $0.05 per share, for the quarter ended June 30, 2007, a decrease of 83.5% from the $4.46 million, or $0.28 per share, reported for the second quarter of 2006. For the six months ended June 30, 2007, net income decreased 46.3% to $4.78 million, or $0.30 per share, from $8.91 million, or $0.55 per share, reported for the comparable period of 2006. The earnings decreases for both the quarterly and year-to-date periods primarily resulted from higher provisions for loan losses made in order to increase estimated reserves related to significant increases in nonperforming loans in the Company’s Catawba Valley market area. Earnings per share for 2006 have been adjusted to reflect the five-for-four stock split distributed in September of 2006.

     For the reasons cited above, provisions for loan losses were $7.47 million for the quarter ended June 30, 2007, an increase of $5.55 million from the $1.92 million reported for the second quarter of 2006. For the six-month period ended June 30, 2007, loan loss provisions increased $6.24 million to $9.39 million from $3.15 million for the comparable six months in 2006. Nonperforming loans increased $14.14 million to $25.38 million at June 30, 2007 from $11.24 million at June 30, 2006. In April 2007, management deemed it prudent to place loans to one borrower on nonaccruing status for a period of six months in order to help the borrower become better positioned to perform under certain contracts that should improve the borrower’s cash flows. This borrower accounted for approximately $8.51 million of the increase in nonaccruing loans and approximately $2.34 million of the increase in loan reserves. The remainder of the increases in nonperforming loans and loan loss provisions was primarily attributable to various other borrowers in the Company’s Catawba Valley market area. In addition, management estimates there are $1.69 million in asset-based loans that are fully reserved and may ultimately be charged-off.

     Charles Snipes, Chairman and CEO, said, “We are deeply disappointed in these results. Loan quality is our highest priority until we see improvement in the levels of our problem loans. In late June, we hired Jefferson C. Easley as our new Chief Credit Officer. Jeff brings to our bank over 20 years of experience as a credit management leader and was most recently the chief credit officer of a bank of comparable size to ours. Jeff adds tremendous credit strength to our executive management team and we expect to see marked progress in our loan quality in the near future.” Snipes expressed his appreciation to the Company’s employees for their hard work during this difficult quarter.

     The earnings decrease also resulted in less favorable key performance ratios. The annualized return on average assets (ROA) was 0.24% in the second quarter of 2007 compared to 1.56% in the second quarter of 2006, while the annualized return on average equity (ROE) was 1.98% compared to 12.59% for the same period. The Company’s efficiency ratio for the second quarter was 50.91% in 2007 compared to 47.88% in 2006.

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

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     The Company ended the second quarter of 2007 with total assets of $1.22 billion, total loans of $0.94 billion, and total deposits of $0.98 billion. Total assets grew 3.8%, loans grew 7.4%, and deposits grew 4.1% from the second quarter of 2006. Total assets, total loans, and total deposits were all at record levels as of June 30, 2007.

     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. Granite Mortgage, a mortgage banking company headquartered in Winston-Salem, originates home mortgages in these counties as well as in Cumberland, Guilford, and Rowan counties.

* * * * *

Please see the attached supplemental “Financial Data” tables.
For further information, contact Kirby Tyndall, Chief Financial Officer at
Voice (828) 496-2026, Fax (828) 496-2010 or Internet: 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 onForm 10-K filed with the Securities and Exchange Commission.

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Bank of Granite Corporation	Three Months Ended									Six Months Ended
Selected Financial Data	June 30,									June 30,
(in thousands except per share data)	2007			2006			% change			2007			2006			% change
Consolidated earnings summary:
Interest income, taxable equivalent	$	23,246		$	21,739			6.9	%	$	45,881		$	41,746			9.9	%
Interest expense		9,192			7,516			22.3	%		18,152			14,138			28.4	%
Net interest income, taxable equivalent		14,054			14,223			-1.2	%		27,729			27,608			0.4	%
Taxable equivalent adjustment		216			253			-14.6	%		448			522			-14.2	%
Net interest income		13,838			13,970			-0.9	%		27,281			27,086			0.7	%
Loan loss provision		7,471			1,915			290.1	%		9,388			3,150			198.0	%
Noninterest income		3,210			3,295			-2.6	%		6,361			6,296			1.0	%
Noninterest expense		8,789			8,388			4.8	%		17,125			16,428			4.2	%
Income before income taxes		788			6,962			-88.7	%		7,129			13,804			-48.4	%
Income taxes		51			2,501			-98.0	%		2,348			4,896			-52.0	%
Net income	$	737		$	4,461			-83.5	%	$	4,781		$	8,908			-46.3	%
Earnings per share — Basic*	$	0.05		$	0.28			-82.1	%	$	0.30		$	0.55			-45.5	%
Earnings per share — Diluted*		0.05			0.28			-82.1	%		0.30			0.55			-45.5	%
Average shares — Basic*		15,928			16,058			-0.8	%		15,973			16,077			-0.6	%
Average shares — Diluted*		15,970			16,108			-0.9	%		16,022			16,130			-0.7	%
Consolidated balance sheet data at June 30:
Total assets										$	1,221,282		$	1,176,476			3.8	%
Total deposits											984,153			945,665			4.1	%
Loans (gross)											941,884			876,880			7.4	%
Stockholders’ equity											143,843			140,250			2.6	%
Consolidated average balance sheet data:
Total assets	$	1,210,595		$	1,144,210			5.8	%	$	1,206,301		$	1,129,100			6.8	%
Total deposits		970,408			913,170			6.3	%		965,466			899,817			7.3	%
Loans (gross)		934,891			869,153			7.6	%		930,946			858,262			8.5	%
Stockholders’ equity		149,011			142,161			4.8	%		149,144			141,288			5.6	%
Consolidated performance ratios:
Return on average assets**		0.24	%		1.56	%					0.80	%		1.59	%
Return on average equity**		1.98	%		12.59	%					6.46	%		12.71	%
Efficiency ratio		50.91	%		47.88	%					50.23	%		48.45	%
Consolidated asset quality data and ratios:
Nonaccruing loans										$	22,549		$	7,635			195.3	%
Accruing loans 90 days past due											2,830			3,603			-21.5	%
Nonperforming loans											25,379			11,238			125.8	%
Foreclosed properties											3,416			851			301.4	%
Nonperforming assets											28,795			12,089			138.2	%
Allowance for loan losses											22,102			13,912			58.9	%
Loans charged off											3,215			3,395			-5.3	%
Recoveries of loans charged off											142			233			-39.1	%
Net loan charge-offs (recoveries)											3,073			3,162			-2.8	%
Net charge-offs to average loans**	��										0.67	%		0.74	%
Nonperforming loans to total assets											2.08	%		0.96	%
Allowance coverage of nonperforming loans											87.09	%		123.79	%
Allowance for loan losses to gross loans											2.35	%		1.59	%
Allowance for loan losses to net loans											2.40	%		1.61	%
Subsidiary earnings summary:
Bank of Granite
Net interest income	$	13,169		$	13,316			-1.1	%	$	26,113		$	25,901			0.8	%
Loan loss provision		7,459			1,903			292.0	%		9,364			3,126			199.6	%
Noninterest income		2,138			2,087			2.4	%		4,394			4,179			5.1	%
Noninterest expense		6,973			6,489			7.5	%		13,744			12,878			6.7	%
Income taxes		(58	)		2,411			-102.4	%		2,167			4,788			-54.7	%
Net income		933			4,600			-79.7	%		5,232			9,288			-43.7	%
Granite Mortgage
Net interest income	$	893		$	891			0.2	%	$	1,641		$	1,598			2.7	%
Loan loss provision		12			12			0.0	%		24			24			0.0	%
Noninterest income		1,072			1,090			-1.7	%		1,967			1,999			-1.6	%
Noninterest expense		1,681			1,743			-3.6	%		3,132			3,303			-5.2	%
Income taxes		109			90			21.1	%		181			108			67.6	%
Net income		163			136			19.9	%		271			162			67.3	%

*   Periods prior to September 2006 have been adjusted to reflect the 5-for-4 stock split distributed in September 2006.                                More
** Annualized based on number of days in the period.

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Bank of Granite Corporation	Quarters Ended
Supplemental Quarterly Financial Data	Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(in thousands except per share data)	2007			2007			2006			2006			2006
Consolidated earnings summary:
Interest income, taxable equivalent	$	23,246		$	22,635		$	23,112		$	22,682		$	21,739
Interest expense		9,192			8,960			8,985			8,654			7,516
Net interest income, taxable equivalent		14,054			13,675			14,127			14,028			14,223
Taxable equivalent adjustment		216			232			238			237			254
Net interest income		13,838			13,443			13,889			13,791			13,969
Loan loss provision		7,471			1,917			1,877			1,387			1,915
Noninterest income		3,210			3,151			3,029			3,183			3,295
Noninterest expense		8,789			8,336			8,036			8,484			8,387
Income before income taxes		788			6,341			7,005			7,103			6,962
Income taxes		51			2,297			2,465			2,519			2,501
Net income	$	737		$	4,044		$	4,540		$	4,584		$	4,461
Earnings per share — Basic*	$	0.05		$	0.25		$	0.28		$	0.29		$	0.28
Earnings per share — Diluted*		0.05			0.25			0.28			0.29			0.28
Average shares — Basic*		15,928			16,018			16,022			16,018			16,058
Average shares — Diluted*		15,970			16,074			16,082			16,072			16,108
Consolidated ending balance sheet data:
Total assets	$	1,221,282		$	1,215,633		$	1,199,773		$	1,184,469		$	1,176,476
Total deposits		984,153			974,754			963,837			950,545			945,665
Loans (gross)		941,884			932,186			912,492			887,218			876,880
Stockholders’ equity		143,843			148,248			146,433			143,950			140,250
Consolidated average balance sheet data:
Total assets	$	1,210,595		$	1,202,007		$	1,189,096		$	1,174,604		$	1,144,210
Total deposits		970,408			960,524			953,876			942,102			913,170
Loans (gross)		934,891			927,001			898,878			874,654			869,153
Stockholders’ equity		149,011			149,277			147,417			143,991			142,161
Consolidated performance ratios:
Return on average assets**		0.24	%		1.36	%		1.51	%		1.55	%		1.56	%
Return on average equity**		1.98	%		10.99	%		12.22	%		12.63	%		12.59	%
Efficiency ratio		50.91	%		49.54	%		46.84	%		49.29	%		47.88	%
Consolidated asset quality data and ratios:
Nonaccruing loans	$	22,549		$	13,087		$	9,289		$	9,012		$	7,635
Accruing loans 90 days past due		2,830			1,615			5,074			4,319			3,603
Nonperforming loans		25,379			14,702			14,363			13,331			11,238
Foreclosed properties		3,416			1,453			1,162			1,217			851
Nonperforming assets		28,795			16,155			15,525			14,548			12,089
Allowance for loan losses		22,102			16,672			15,787			14,921			13,912
Loans charged off		2,081			1,134			1,140			668			3,222
Recoveries of loans charged off		40			101			130			289			101
Net loan charge-offs (recoveries)		2,041			1,033			1,010			379			3,121
Net charge-offs to average loans**		0.88	%		0.45	%		0.45	%		0.17	%		1.44	%
Nonperforming loans to total assets		2.08	%		1.21	%		1.20	%		1.13	%		0.96	%
Allowance coverage of nonperforming loans		87.09	%		113.40	%		109.91	%		111.93	%		123.79	%
Allowance for loan losses to gross loans		2.35	%		1.79	%		1.73	%		1.68	%		1.59	%
Allowance for loan losses to net loans		2.40	%		1.82	%		1.76	%		1.71	%		1.61	%
Subsidiary earnings summary:
Bank of Granite
Net interest income	$	13,169		$	12,944		$	13,432		$	13,230		$	13,316
Loan loss provision		7,459			1,905			1,865			1,375			1,903
Noninterest income		2,138			2,256			2,178			2,058			2,087
Noninterest expense		6,973			6,771			6,446			6,709			6,489
Income taxes		(58	)		2,225			2,418			2,407			2,411
Net income		933			4,299			4,881			4,797			4,600
Granite Mortgage
Net interest income	$	893		$	748		$	767		$	861		$	891
Loan loss provision		12			12			12			12			12
Noninterest income		1,072			895			851			1,125			1,090
Noninterest expense		1,681			1,451			1,488			1,694			1,743
Income taxes		109			72			47			112			90
Net income		163			108			71			168			136

*   Periods prior to September 2006 have been adjusted to reflect the 5-for-4 stock split distributed in September 2006.
** Annualized based on number of days in the period.

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