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: October 16, 2007

BANK OF GRANITE CORPORATION REPORTS EARNINGS
OF $4.07 MILLION FOR THIRD QUARTER OF 2007

     Bank of Granite Corporation (NASDAQ: GRAN) (“the Company”) reported earnings of $4.07 million, or $0.26 per share, for the quarter ended September 30, 2007, a decrease of 11.1% from the $4.58 million, or $0.29 per share, reported for the third quarter of 2006. For the nine months ended September 30, 2007, net income decreased 34.4% to $8.85 million, or $0.56 per share, from $13.49 million, or $0.84 per share, reported for the comparable period of 2006.

     The earnings decrease for the quarterly period primarily resulted from a decrease in net interest income due to a lower net interest margin on interest-earning assets. While the Company’s net interest margin remains high by industry standards, its net interest margin was 4.75% in the third quarter of 2007 compared to 5.08% in the same quarter of 2006, primarily due to higher costs of deposit funding. The earnings decline for the nine months ended September 30, 2007 primarily resulted from the Company’s previously reported higher provisions for loan losses in the second quarter of 2007.

     The Company’s nonperforming assets of $24.11 million as of September 30, 2007, while up significantly compared to September 30, 2006, improved by 16.3% when compared to the levels at the end of the previous quarter. Charles Snipes, Chairman and CEO, said, “Although our earnings remain below our expectations and we still have opportunity to improve our asset quality; we are pleased with the progress made during the third quarter regarding our levels of nonperforming loans.” Snipes expressed his appreciation to the Company’s employees for their hard work during this difficult quarter.

     The earnings decline also resulted in less favorable key performance ratios. The annualized return on average assets (ROA) was 1.33% in the third quarter of 2007 compared to 1.55% in the third quarter of 2006, while the annualized return on average equity (ROE) was 11.22% compared to 12.63% for the same period. The Company’s efficiency ratio for the third quarter was 52.48% in 2007 compared to 49.29% in 2006.

     The Company ended the third quarter of 2007 with total assets of $1.21 billion, total loans of $0.95 billion, and total deposits of $0.98 billion. Total assets grew 2.4%, loans grew 7.0%, and deposits grew 3.1% from the third quarter of 2006. Total loans were at a record level as of September 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.

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

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Please see 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
Selected Financial Data

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
(in thousands except per share data)	2007			2006			% change			2007			2006			% change
Consolidated earnings summary:
Interest income, taxable equivalent	$	22,934		$	22,682			1.1	%	$	68,815		$	64,428			6.8	%
Interest expense		9,387			8,654			8.5	%		27,539			22,792			20.8	%
Net interest income, taxable equivalent		13,547			14,028			-3.4	%		41,276			41,636			-0.9	%
Taxable equivalent adjustment		205			237			-13.5	%		653			759			-14.0	%
Net interest income		13,342			13,791			-3.3	%		40,623			40,877			-0.6	%
Loan loss provision		1,407			1,387			1.4	%		10,795			4,537			137.9	%
Noninterest income		3,150			3,183			-1.0	%		9,511			9,479			0.3	%
Noninterest expense		8,762			8,484			3.3	%		25,887			24,912			3.9	%
Income before income taxes		6,323			7,103			-11.0	%		13,452			20,907			-35.7	%
Income taxes		2,250			2,519			-10.7	%		4,598			7,415			-38.0	%
Net income	$	4,073		$	4,584			-11.1	%	$	8,854		$	13,492			-34.4	%
Earnings per share — Basic	$	0.26		$	0.29			-10.3	%	$	0.56		$	0.84			-33.3	%
Earnings per share — Diluted		0.26			0.29			-10.3	%		0.56			0.84			-33.3	%
Average shares — Basic		15,694			16,018			-2.0	%		15,879			16,058			-1.1	%
Average shares — Diluted		15,712			16,072			-2.2	%		15,909			16,111			-1.3	%
Consolidated balance sheet data at September 30:
Total assets										$	1,213,385		$	1,184,469			2.4	%
Total deposits											979,834			950,545			3.1	%
Loans (gross)											949,600			887,218			7.0	%
Stockholders’ equity											142,201			143,950			-1.2	%
Consolidated average balance sheet data:
Total assets	$	1,212,634		$	1,174,604			3.2	%	$	1,208,412		$	1,144,268			5.6	%
Total deposits		977,055			942,102			3.7	%		969,329			913,912			6.1	%
Loans (gross)		942,595			874,654			7.8	%		934,829			863,726			8.2	%
Stockholders’ equity		144,011			143,991			0.0	%		147,433			142,189			3.7	%
Consolidated performance ratios:
Return on average assets*		1.33	%		1.55	%					0.98	%		1.58	%
Return on average equity*		11.22	%		12.63	%					8.03	%		12.69	%
Efficiency ratio		52.48	%		49.29	%					50.97	%		48.74	%
Consolidated asset quality data and ratios:
Nonaccruing loans										$	17,632		$	9,012			95.7	%
Accruing loans 90 days past due											3,256			4,319			-24.6	%
Nonperforming loans											20,888			13,331			56.7	%
Foreclosed properties											3,224			1,217			164.9	%
Nonperforming assets											24,112			14,548			65.7	%
Allowance for loan losses											15,718			14,921			5.3	%
Loans charged off											11,044			4,063			171.8	%
Recoveries of loans charged off											180			523			-65.6	%
Net loan charge-offs (recoveries)											10,864			3,540			206.9	%
Net charge-offs to average loans*											1.55	%		0.55	%
Nonperforming loans to total assets											1.72	%		1.13	%
Allowance coverage of nonperforming loans											75.25	%		111.93	%
Allowance for loan losses to gross loans											1.66	%		1.68	%
Allowance for loan losses to net loans											1.68	%		1.71	%
Subsidiary earnings summary:
Bank of Granite
Net interest income	$	12,688		$	13,230			-4.1	%	$	38,801		$	39,131			-0.8	%
Loan loss provision		1,395			1,375			1.5	%		10,759			4,501			139.0	%
Noninterest income		2,117			2,058			2.9	%		6,511			6,237			4.4	%
Noninterest expense		6,966			6,709			3.8	%		20,710			19,587			5.7	%
Income taxes		2,185			2,407			-9.2	%		4,352			7,195			-39.5	%
Net income		4,259			4,797			-11.2	%		9,491			14,085			-32.6	%
Granite Mortgage
Net interest income	$	857		$	861			-0.5	%	$	2,498		$	2,459			1.6	%
Loan loss provision		12			12			0.0	%		36			36			0.0	%
Noninterest income		1,033			1,125			-8.2	%		3,000			3,124			-4.0	%
Noninterest expense		1,715			1,694			1.2	%		4,847			4,997			-3.0	%
Income taxes		65			112			-42.0	%		246			220			11.8	%
Net income		98			168			-41.7	%		369			330			11.8	%

* Annualized based on number of days in the period. More

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Bank of Granite Corporation
Supplemental Quarterly Financial Data

	Quarters Ended
	Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(in thousands except per share data)	2007			2007			2007			2006			2006
Consolidated earnings summary:
Interest income, taxable equivalent	$	22,934		$	23,246		$	22,635		$	23,112		$	22,682
Interest expense		9,387			9,192			8,960			8,985			8,654
Net interest income, taxable equivalent		13,547			14,054			13,675			14,127			14,028
Taxable equivalent adjustment		205			216			232			238			237
Net interest income		13,342			13,838			13,443			13,889			13,791
Loan loss provision		1,407			7,471			1,917			1,877			1,387
Noninterest income		3,150			3,210			3,151			3,029			3,183
Noninterest expense		8,762			8,789			8,336			8,036			8,484
Income before income taxes		6,323			788			6,341			7,005			7,103
Income taxes		2,250			51			2,297			2,465			2,519
Net income	$	4,073		$	737		$	4,044		$	4,540		$	4,584
Earnings per share — Basic	$	0.26		$	0.05		$	0.25		$	0.28		$	0.29
Earnings per share — Diluted		0.26			0.05			0.25			0.28			0.29
Average shares — Basic		15,694			15,928			16,018			16,022			16,018
Average shares — Diluted		15,712			15,970			16,074			16,082			16,072
Consolidated ending balance sheet data:
Total assets	$	1,213,385		$	1,221,282		$	1,215,633		$	1,199,773		$	1,184,469
Total deposits		979,834			984,153			974,754			963,837			950,545
Loans (gross)		949,600			941,884			932,186			912,492			887,218
Stockholders’ equity		142,201			143,843			148,248			146,433			143,950
Consolidated average balance sheet data:
Total assets	$	1,212,634		$	1,210,595		$	1,202,007		$	1,189,096		$	1,174,604
Total deposits		977,055			970,408			960,524			953,876			942,102
Loans (gross)		942,595			934,891			927,001			898,878			874,654
Stockholders’ equity		144,011			149,011			149,277			147,417			143,991
Consolidated performance ratios:
Return on average assets*		1.33	%		0.24	%		1.36	%		1.51	%		1.55	%
Return on average equity*		11.22	%		1.98	%		10.99	%		12.22	%		12.63	%
Efficiency ratio		52.48	%		50.91	%		49.54	%		46.84	%		49.29	%
Consolidated asset quality data and ratios:
Nonaccruing loans	$	17,632		$	22,549		$	13,087		$	9,289		$	9,012
Accruing loans 90 days past due		3,256			2,830			1,615			5,074			4,319
Nonperforming loans		20,888			25,379			14,702			14,363			13,331
Foreclosed properties		3,224			3,416			1,453			1,162			1,217
Nonperforming assets		24,112			28,795			16,155			15,525			14,548
Allowance for loan losses		15,718			22,102			16,672			15,787			14,921
Loans charged off		7,830			2,081			1,134			1,140			668
Recoveries of loans charged off		39			40			101			130			289
Net loan charge-offs (recoveries)		7,791			2,041			1,033			1,010			379
Net charge-offs to average loans*		3.28	%		0.88	%		0.45	%		0.45	%		0.17	%
Nonperforming loans to total assets		1.72	%		2.08	%		1.21	%		1.20	%		1.13	%
Allowance coverage of nonperforming loans		75.25	%		87.09	%		113.40	%		109.91	%		111.93	%
Allowance for loan losses to gross loans		1.66	%		2.35	%		1.79	%		1.73	%		1.68	%
Allowance for loan losses to net loans		1.68	%		2.40	%		1.82	%		1.76	%		1.71	%
Subsidiary earnings summary:
Bank of Granite
Net interest income	$	12,688		$	13,169		$	12,944		$	13,432		$	13,230
Loan loss provision		1,395			7,459			1,905			1,865			1,375
Noninterest income		2,117			2,138			2,256			2,178			2,058
Noninterest expense		6,966			6,973			6,771			6,446			6,709
Income taxes		2,185			(58	)		2,225			2,418			2,407
Net income		4,259			933			4,299			4,881			4,797
Granite Mortgage
Net interest income	$	857		$	893		$	748		$	767		$	861
Loan loss provision		12			12			12			12			12
Noninterest income		1,033			1,072			895			851			1,125
Noninterest expense		1,715			1,681			1,451			1,488			1,694
Income taxes		65			109			72			47			112
Net income		98			163			108			71			168

* Annualized based on number of days in the period.

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