1
Exhibit 99 (a)
BANK OF GRANITE CORPORATION
NEWS
- --------------------------------------------------------------------------------
FOR RELEASE: JULY 9, 2001
BANK OF GRANITE CORPORATION REPORTS EARNINGS
FOR SECOND QUARTER AND SIX MONTHS
Bank of Granite Corporation (Nasdaq: GRAN) has reported earnings for
the second quarter and for the six month period, both ending June 30, 2001.
For the second quarter, net income was $2,630,507 compared with
$4,087,430 for the second quarter of 2000 - a decrease of 35.6%. Quarterly per
share income was 24(cent) vs 36(CENT) in 2000 - a decrease of 33.3%. For the
six-month period, net income was $6,478,613 compared with $7,748,906 for the
first six months of 2000 - a decrease of 16.4%. Per share earnings for the six
month period were 58(cent) vs 68(cent) for the six-month period in 2000-a
decreasE OF 14.7%. Book value of the Bank's stock showed an increase of 7.8% at
the end of June 2001.
John A. Forlines, Jr., Chairman and CEO of Bank of Granite Corporation
said the earnings were disappointing, but not surprising in view of the Federal
Reserve's six rate cuts in the first half of the year. According to Mr.
Forlines, the interest rates on many of the Bank's loans are tied to the prime
rate, which has declined 275 basis points (2 3/4%) since the first of the year.
"It takes time for us to adjust our liabilities when there are sudden drops in
interest rates," he said. "Hopefully, these interest rate declines will
favorably impact the economy, but there is generally a six to nine month lag.
During the past quarter, the economy in our area," according to Mr. Forlines,
"has weakened a great deal. Evidence of this is the recent report that the
Hickory/Morganton/Lenoir Metropolitan Statistical Area (the Bank's marketing
area) - composed of Alexander, Burke, Caldwell, and Catawba Counties - had the
largest one-year unemployment rate increase in the Nation, a 3.8% increase from
May 2000 to May 2001. The weak economy also contributed significantly to higher
levels of nonperforming loans, which caused the Bank to increase its loan loss
reserves." Mr. Forlines said he was optimistic regarding the Bank's future
earnings and the economy, but that it would take a few quarters to get through
"a very tough period".
The Bank's assets reached $700,704,491 at the end of the six-month
period, an increase of 10.0%. Deposits totaled $537,183,667, up 9.6% and loans
of $485,037,913 were up 14.8%. In view of this loan growth and the rise in
nonperforming loans, the loan loss reserve was increased by approximately $2.7
million from a year ago. This reserve is now 1.74% of net loans outstanding.
Also during the second quarter, Directors of Bank of Granite
Corporation increased the cash dividend to 12(cent) from 11(cent), a 9.1%
increase. 2001 will mark the Company's 48th consecutive year of increased
dividends, believed to be a record for any banking company in the United States.
Bank of Granite Corporation is the parent of Bank of Granite, which
operates fourteen full service offices in Caldwell, Catawba, and Burke Counties,
and GLL & Associates, a mortgage banking company headquartered in Winston-Salem,
N. C. Bank of Granite Corporation has approximately 5,300 shareholders, with
11,116,247 shares of common stock outstanding at the end of the second quarter.
Closing price of its stock at the end of the second quarter was $23.00 per
share.
- - 0 - -
Please see "Financial Data" tables, which are attached.
For further information, contact Kirby A. Tyndall, Senior Vice President and
Chief Financial Officer at Voice (828) 496-2026, Fax (828) 496-2116 or Internet
email: ktyndall@bankofgranite.com
Bank of Granite Corporation, PO Box 128, Granite Falls, NC 28630
www.bankofgranite.com
More
Bank of Granite Corporation, Form 8-K, July 9, 2001, page 5 of 7
2
BANK OF GRANITE CORPORATION Three Months Ended Six Months Ended
Selected Financial Data June 30, June 30,
-------------------------------- ---------------------------------
($ in thousands except
per share data) 2001 2000 % change 2001 2000 % change
- -------------------------------------------------------------------------------------------------
Consolidated earnings summary:
Interest income, taxable
equivalent $ 13,932 $ 14,189 -1.8% $ 28,474 $ 27,429 3.8%
Interest expense 5,433 4,487 21.1% 10,977 8,699 26.2%
---------------------- -----------------------
Net interest income, taxable
equivalent 8,499 9,702 -12.4% 17,497 18,730 -6.6%
Taxable equivalent adjustment 433 440 -1.6% 878 899 -2.3%
---------------------- -----------------------
Net interest income 8,066 9,262 -12.9% 16,619 17,831 -6.8%
Loan loss provision 2,011 788 155.2% 2,711 1,433 89.2%
Noninterest income 2,330 2,049 13.7% 4,777 3,709 28.8%
Noninterest expense 4,561 4,277 6.6% 9,063 8,385 8.1%
---------------------- -----------------------
Income before income taxes 3,824 6,246 -38.8% 9,622 11,722 -17.9%
Income taxes 1,193 2,159 -44.7% 3,143 3,973 -20.9%
---------------------- -----------------------
Net income $ 2,631 $ 4,087 -35.6% $ 6,479 $ 7,749 -16.4%
====================== =======================
Earnings per share - Basic $ 0.24 $ 0.36 -33.3% $ 0.58 $ 0.68 -14.7%
Earnings per share - Diluted 0.24 0.36 -33.3% 0.58 0.68 -14.7%
---------------------- -----------------------
Average shares - Basic 11,116 11,351 -2.1% 11,129 11,385 -2.2%
Average shares - Diluted 11,117 11,361 -2.1% 11,132 11,395 -2.3%
- --------------------------------------------------------------------------------------------------
Consolidated balance sheet data at June 30:
Total assets $ 700,704 $ 636,725 10.0%
Total deposits 537,184 490,018 9.6%
Loans (gross) 485,038 422,631 14.8%
Shareholders' equity 122,928 116,132 5.9%
- --------------------------------------------------------------------------------------------------
Consolidated average balance sheet data:
Total assets $ 699,709 $ 631,454 10.8% $ 686,044 $ 624,982 9.8%
Total deposits 537,287 487,007 10.3% 530,408 482,685 9.9%
Loans (gross) 480,700 415,396 15.7% 471,680 406,008 16.2%
Shareholders' equity 121,914 115,445 5.6% 121,023 114,800 5.4%
- --------------------------------------------------------------------------------------------------
Consolidated performance ratios:
Return on average assets* 1.51% 2.60% 1.90% 2.49%
Return on average equity* 8.66% 14.24% 10.80% 13.57%
Efficiency ratio 42.12% 36.40% 40.69% 37.37%
- --------------------------------------------------------------------------------------------------
Consolidated asset quality data and ratios:
Nonaccruing loans $ 2,594 $ 1,154 124.8%
Accruing loans 90 days past due 2,400 541 343.6%
Nonperforming loans $ 4,994 $ 1,695 194.6%
Foreclosed properties 287 136 111.0%
Nonperforming assets 5,281 1,831 188.4%
Allowance for loan losses 8,452 5,721 47.7%
Loans charged off 797 582 36.9%
Recoveries of loans charged off 187 123 52.0%
Net loan charge-offs (recoveries) 610 459 32.9%
-----------------------
Net charge-offs to average loans* 0.26% 0.23%
Nonperforming loans to total assets 0.71% 0.27%
Allowance coverage of nonperforming loans 169.24% 337.52%
Allowance for loan losses to gross loans 1.74% 1.35%
Allowance for loan losses to net loans 1.77% 1.37%
- --------------------------------------------------------------------------------------------------
Subsidiary earnings summary:
Bank of Net interest income $ 7,369 $ 8,900 -17.2% $ 15,400 $ 17,189 -10.4%
Granite Loan loss provision 1,981 778 154.6% 2,651 1,423 86.3%
Noninterest income 1,655 1,556 6.4% 3,432 2,819 21.7%
Noninterest expense 3,377 3,351 0.8% 6,922 6,643 4.2%
Income taxes 1,066 2,098 -49.2% 2,919 3,929 -25.7%
Net income 2,600 4,229 -38.5% 6,340 8,013 -20.9%
----------------------------------------------------------------------------------------
GLL & Net interest income $ 741 $ 445 66.5% $ 1,269 $ 779 62.9%
Associates Loan loss provision 30 10 200.0% 60 10 500.0%
(mortgage Noninterest income 711 567 25.4% 1,380 964 43.2%
bank) Noninterest expense 1,137 859 32.4% 2,088 1,633 27.9%
Income taxes 126 61 106.6% 224 44 409.1%
Net income 189 92 105.4% 337 66 410.6%
- --------------------------------------------------------------------------------------------------
* annualized based on number of days in the period
MORE
Bank of Granite Corporation, Form 8-K, July 9, 2001, page 6 of 7
3
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) 2001 2001 2000 2000 2000
- --------------------------------------------------------------------------------------------------
Consolidated earnings summary:
Interest income, taxable equivalent $ 13,932 $ 14,542 $ 15,059 $ 14,589 $ 14,189
Interest expense 5,433 5,544 5,439 5,035 4,487
--------------------------------------------------------
Net interest income, taxable equivalent 8,499 8,998 9,620 9,554 9,702
Taxable equivalent adjustment 433 446 453 455 440
--------------------------------------------------------
Net interest income 8,066 8,552 9,167 9,099 9,262
Loan loss provision 2,011 700 955 1,505 788
Noninterest income 2,330 2,447 2,189 2,136 2,049
Noninterest expense 4,561 4,501 4,206 4,189 4,277
--------------------------------------------------------
Income before income taxes 3,824 5,798 6,195 5,541 6,246
Income taxes 1,193 1,950 2,104 1,807 2,159
--------------------------------------------------------
Net income $ 2,631 $ 3,848 $ 4,091 $ 3,734 $ 4,087
========================================================
Earnings per share - Basic $ 0.24 $ 0.35 $ 0.37 $ 0.33 $ 0.36
Earnings per share - Diluted 0.24 0.35 0.37 0.33 0.36
--------------------------------------------------------
Average shares - Basic 11,116 11,142 11,175 11,288 11,351
Average shares - Diluted 11,117 11,146 11,182 11,302 11,361
- --------------------------------------------------------------------------------------------------
Consolidated ending balance sheet data:
Total assets $ 700,704 $ 702,689 $ 661,623 $ 640,338 $ 636,725
Total deposits 537,184 546,828 517,282 496,068 490,018
Loans (gross) 485,038 473,157 450,398 436,514 422,631
Shareholders' equity 122,928 121,352 119,315 117,919 116,132
- --------------------------------------------------------------------------------------------------
Consolidated average balance sheet data:
Total assets $ 699,709 $ 672,380 $ 651,405 $ 636,428 $ 631,454
Total deposits 537,287 523,528 508,899 493,619 487,007
Loans (gross) 480,700 462,659 444,409 428,585 415,396
Shareholders' equity 121,914 120,132 117,916 117,146 115,445
- --------------------------------------------------------------------------------------------------
Consolidated performance ratios:
Return on average assets* 1.51% 2.32% 2.50% 2.33% 2.60%
Return on average equity* 8.66% 12.99% 13.80% 12.68% 14.24%
Efficiency ratio 42.12% 39.33% 35.62% 35.83% 36.40%
- --------------------------------------------------------------------------------------------------
Consolidated asset quality data and ratios:
Nonaccruing loans $ 2,594 $ 1,571 $ 1,502 $ 1,543 $ 1,154
Accruing loans 90 days past due 2,400 2,771 1,983 1,486 541
--------------------------------------------------------
Nonperforming loans 4,994 4,342 3,485 3,029 1,695
Foreclosed properties 287 134 134 83 136
--------------------------------------------------------
Nonperforming assets 5,281 4,476 3,619 3,112 1,831
--------------------------------------------------------
Allowance for loan losses 8,452 6,919 6,352 6,004 5,721
--------------------------------------------------------
Loans charged off 567 230 672 1,351 313
Recoveries of loans charged off 89 97 65 129 46
--------------------------------------------------------
Net loan charge-offs (recoveries) 478 133 607 1,222 267
--------------------------------------------------------
Annualized net charge-offs to average loans* 0.40% 0.12% 0.54% 1.13% 0.26%
Nonperforming loans to total assets 0.71% 0.62% 0.53% 0.47% 0.27%
Allowance coverage of nonperforming loans 169.24% 159.35% 182.27% 198.22% 337.52%
Allowance for loan losses to gross loans 1.74% 1.46% 1.41% 1.38% 1.35%
Allowance for loan losses to net loans 1.77% 1.48% 1.43% 1.39% 1.37%
- --------------------------------------------------------------------------------------------------
Subsidiary earnings summary:
Bank of Net interest income $ 7,369 $ 8,030 $ 8,776 $ 8,754 $ 8,900
Granite Loan loss provision ** 1,981 670 925 1,475 778
Noninterest income ** 1,655 1,777 1,657 1,569 1,556
Noninterest expense ** 3,377 3,545 3,414 3,329 3,351
Income taxes 1,066 1,852 2,028 1,759 2,098
Net income 2,600 3,740 4,066 3,760 4,229
----------------------------------------------------------------------------------------
** Item includes effects of Bounce program started in second quarter of 2000:
Loss provision 76 65 80 118 133
Noninterest income 438 401 480 512 456
Noninterest expense 18 17 17 14 11
----------------------------------------------------------------------------------------
GLL & Net interest income $ 741 $ 529 $ 438 $ 401 $ 445
Associates Loan loss provision 30 30 30 30 10
(mortgage Noninterest income 711 670 531 566 567
bank) Noninterest expense 1,137 954 784 849 859
Income taxes 126 98 76 48 61
Net income 189 147 109 70 92
- --------------------------------------------------------------------------------------------------
* annualized based on number of days in the period
Bank of Granite Corporation, Form 8-K, July 9, 2001, page 7 of 7