================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 29549
FORM 10-Q
(mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2001
------------------
OR
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
--------------- --------------------
Commission file number 0-15956
-------
BANK OF GRANITE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 56-1550545
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
POST OFFICE BOX 128, GRANITE FALLS, N.C. 28630
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(828) 496-2000
---------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
COMMON STOCK, $1 PAR VALUE
11,060,815 SHARES OUTSTANDING AS OF OCTOBER 31, 2001
================================================================================
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 1 of 20
INDEX
Begins
on Page
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets
September 30, 2001 and December 31, 2000 3
Consolidated Statements of Income
Three Months Ended September 30, 2001 and 2000
And Nine Months Ended September 30, 2001 and 2000 4
Consolidated Statements of Comprehensive Income
Three Months Ended September 30, 2001 and 2000
And Nine Months Ended September 30, 2001 and 2000 5
Consolidated Statements of Changes in Shareholders' Equity
Nine Months Ended September 30, 2001 and 2000 6
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2001 and 2000 7
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 20
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 2 of 20
ITEM 1. FINANCIAL STATEMENTS
BANK OF GRANITE CORPORATION SEPTEMBER 30, DECEMBER 31,
Consolidated Balance Sheets 2001 2000
(unaudited)
ASSETS:
Cash and cash equivalents:
Cash and due from banks $ 22,755,415 $ 23,603,938
Interest-bearing deposits 12,643,895 423,142
Federal funds sold 6,700,000 6,600,000
------------- -------------
Total cash and cash equivalents 42,099,310 30,627,080
------------- -------------
Investment securities:
Available for sale, at fair value 85,086,107 85,296,735
Held to maturity, at amortized cost 86,706,865 82,208,485
Loans 483,415,687 450,398,252
Allowance for loan losses (6,630,188) (6,351,756)
------------- -------------
Net loans 476,785,499 444,046,496
------------- -------------
Premises and equipment, net 8,615,516 9,239,836
Accrued interest receivable 5,871,217 6,268,844
Other assets 11,964,183 3,935,336
------------- -------------
Total assets $ 717,128,697 $ 661,622,812
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Demand accounts $ 88,006,084 $ 94,326,293
NOW accounts 75,353,512 80,283,789
Money market accounts 39,015,219 29,993,262
Savings accounts 24,950,535 23,717,236
Time deposits of $100,000 or more 132,733,912 124,437,284
Other time deposits 172,565,133 164,523,636
------------- -------------
Total deposits 532,624,395 517,281,500
Overnight borrowings 14,246,054 12,768,442
Other borrowings 19,790,571 7,840,267
Accrued interest payable 2,382,222 2,796,811
Other liabilities 23,754,069 1,620,455
------------- -------------
Total liabilities 592,797,311 542,307,475
============= =============
Shareholders' equity:
Common stock, $1 par value
Authorized - 25,000,000 shares
Issued - 11,537,515 shares in 2001 and 11,517,084 shares in 2000
Outstanding - 11,069,888 shares in 2001 and 11,152,949 shares in 2000 11,537,515 11,517,084
Capital surplus 23,577,604 23,260,188
Retained earnings 97,902,877 91,794,837
Accumulated other comprehensive income,
net of deferred income taxes 1,055,419 358,923
Less: Cost of common shares in treasury;
Held - 467,627 shares in 2001 and 364,135 shares in 2000 (9,742,029) (7,615,695)
------------- -------------
Total shareholders' equity 124,331,386 119,315,337
------------- -------------
Total liabilities and shareholders' equity $ 717,128,697 $ 661,622,812
============= =============
See notes to consolidated financial statements.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 3 of 20
BANK OF GRANITE CORPORATION THREE MONTHS NINE MONTHS
Consolidated Statements of Income Ended September 30, Ended September 30,
(unaudited) 2001 2000 2001 2000
INTEREST INCOME:
Interest and fees on loans $10,448,673 $11,606,509 $33,042,400 $32,900,701
Federal funds sold 139,957 50,230 663,622 686,546
Interest-bearing deposits 45,029 7,639 60,586 19,749
Investments:
U.S. Treasury 45,218 116,753 204,235 380,702
U.S. Government agencies 1,020,554 1,345,629 3,351,368 3,657,752
States and political subdivisions 846,610 845,398 2,476,836 2,515,769
Other 168,244 161,694 511,206 502,311
----------- ----------- ----------- -----------
Total interest income 12,714,285 14,133,852 40,310,253 40,663,530
----------- ----------- ----------- -----------
INTEREST EXPENSE:
Time deposits of $100,000 or more 1,702,982 1,842,769 5,852,936 4,963,599
Other deposits 2,785,789 2,922,773 9,068,185 7,991,547
Overnight borrowings 122,998 146,078 343,277 454,584
Other borrowings 166,998 123,073 491,742 323,613
----------- ----------- ----------- -----------
Total interest expense 4,778,767 5,034,693 15,756,140 13,733,343
----------- ----------- ----------- -----------
Net interest income 7,935,518 9,099,159 24,554,113 26,930,187
Provision for loan losses 798,497 1,504,859 3,509,075 2,938,286
----------- ----------- ----------- -----------
Net interest income after
provision for loan losses 7,137,021 7,594,300 21,045,038 23,991,901
----------- ----------- ----------- -----------
OTHER INCOME:
Service charges on deposit accounts 1,260,530 1,319,164 3,857,746 3,480,277
Other service charges, fees and commissions 1,025,320 734,051 2,832,665 2,114,390
Securities gains 3,300 -- 140,849 --
Other 200,515 82,480 435,207 249,681
----------- ----------- ----------- -----------
Total other income 2,489,665 2,135,695 7,266,467 5,844,348
----------- ----------- ----------- -----------
OTHER EXPENSES:
Salaries and wages 2,408,867 2,065,342 7,092,376 6,163,574
Employee benefits 559,363 431,365 1,386,173 1,314,145
Occupancy expense, net 212,788 214,798 639,394 632,232
Equipment expense 374,475 360,097 1,141,498 1,049,979
Other 1,085,498 1,116,514 3,444,784 3,412,813
----------- ----------- ----------- -----------
Total other expenses 4,640,991 4,188,116 13,704,225 12,572,743
----------- ----------- ----------- -----------
Income before income taxes 4,985,695 5,541,879 14,607,280 17,263,506
Income taxes 1,573,880 1,807,456 4,716,852 5,780,177
----------- ----------- ----------- -----------
Net income $ 3,411,815 $ 3,734,423 $ 9,890,428 $11,483,329
----------- ----------- ----------- -----------
PER SHARE AMOUNTS:
Net income - Basic $ 0.31 $ 0.33 $ 0.89 $ 1.01
Net income - Diluted 0.31 0.33 0.89 1.01
Cash dividends 0.12 0.11 0.34 0.31
Book value 11.23 10.48
See notes to consolidated financial statements.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 4 of 20
BANK OF GRANITE CORPORATION THREE MONTHS NINE MONTHS
Consolidated Statements of Ended September 30, Ended September 30,
Comprehensive Income 2001 2000 2001 2000
(unaudited)
Net income $3,411,815 $3,734,423 $ 9,890,428 $11,483,329
---------- ---------- ----------- -----------
ITEMS OF OTHER COMPREHENSIVE INCOME:
Items of other comprehensive
income, before tax:
Unrealized gains on
securities available for sale 526,692 1,101,209 1,299,256 597,110
Less: Reclassification
adjustments for gains
included in net income 3,300 -- 140,849 --
---------- ---------- ----------- -----------
Items of other comprehensive
income, before tax 523,392 1,101,209 1,158,407 597,110
Less: Change in deferred income
taxes related to change in
unrealized gains or losses on
securities available for sale 208,702 439,110 461,911 238,093
---------- ---------- ----------- -----------
Other comprehensive
income, net of tax 314,690 662,099 696,496 359,017
---------- ---------- ----------- -----------
Comprehensive income $3,726,505 $4,396,522 $10,586,924 $11,842,346
========== ========== =========== ===========
See notes to consolidated financial statements.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 5 of 20
BANK OF GRANITE CORPORATION NINE MONTHS
Consolidated Statements of Changes in Ended September 30,
Shareholders' Equity (unaudited) 2001 2000
COMMON STOCK, $1 PAR VALUE
At beginning of period $ 11,517,084 $ 11,495,897
Shares issued under incentive stock option plans 20,431 563
------------- -------------
At end of period 11,537,515 11,496,460
------------- -------------
CAPITAL SURPLUS
At beginning of period 23,260,188 22,987,562
Shares issued under incentive stock option plans 317,416 7,319
------------- -------------
At end of period 23,577,604 22,994,881
------------- -------------
RETAINED EARNINGS
At beginning of period 91,794,837 80,976,641
Net income 9,890,428 11,483,329
Cash dividends paid (3,782,388) (3,526,557)
------------- -------------
At end of period 97,902,877 88,933,413
------------- -------------
ACCUMULATED OTHER COMPREHENSIVE INCOME,
NET OF DEFERRED INCOME TAXES
At beginning of period 358,923 (746,948)
Net change in unrealized gains or losses on securities
available for sale, net of deferred income taxes 696,496 359,017
------------- -------------
At end of period 1,055,419 (387,931)
------------- -------------
Cost of common shares held in treasury
At beginning of period (7,615,695) (1,262,043)
Cost of common shares repurchased (2,126,334) (3,855,531)
------------- -------------
At end of period (9,742,029) (5,117,574)
------------- -------------
TOTAL SHAREHOLDERS' EQUITY $ 124,331,386 $ 117,919,249
============= =============
SHARES ISSUED
At beginning of period 11,517,084 11,495,897
Shares issued under incentive stock option plans 20,431 563
------------- -------------
At end of period 11,537,515 11,496,460
------------- -------------
SHARES HELD IN TREASURY
At beginning of period (364,135) (56,696)
Common shares repurchased (103,492) (185,739)
------------- -------------
At end of period (467,627) (242,435)
------------- -------------
TOTAL SHARES OUTSTANDING 11,069,888 11,254,025
============= =============
See notes to consolidated financial statements.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 6 of 20
BANK OF GRANITE CORPORATION Nine Months
Consolidated Statements of Cash Flows Ended September 30,
(unaudited) 2001 2000
INCREASE (DECREASE) IN CASH & cash equivalents:
Cash flows from operating activities:
Interest received $ 40,820,072 $ 39,762,091
Fees and commissions received 7,125,618 5,844,348
Interest paid (16,170,729) (13,298,231)
Cash paid to suppliers and employees 2,110,608 (12,435,220)
Income taxes paid (6,033,500) (6,583,762)
------------ ------------
Net cash provided by operating activities 27,852,069 13,289,226
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and/or calls of
securities available for sale 58,876,226 9,725,000
Proceeds from maturities and/or calls of
securities held to maturity 9,220,225 8,166,750
Proceeds from sales of securities
available for sale 130,755 --
Purchase of securities available for sale (57,506,558) (24,142,739)
Purchase of securities held to maturity (13,821,336) (5,407,858)
Net increase in loans (36,248,078) (48,005,925)
Capital expenditures (231,134) (470,610)
Proceeds from sale of fixed assets 125 6,600
Proceeds from sale of other real estate -- 142,000
------------ ------------
Net cash used by investing activities (39,579,775) (59,986,782)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand, NOW, money market
and savings deposits (995,230) (57,017)
Net increase in time deposits 16,338,125 24,466,297
Net increase (decrease) in overnight borrowings 1,477,612 (13,020)
Net increase in other borrowings 11,950,304 488,383
Net proceeds from issuance of common stock 337,847 7,882
Dividend paid (3,782,388) (3,526,557)
Purchases of common stock for treasury (2,126,334) (3,855,531)
------------ ------------
Net cash provided by financing activities 23,199,936 17,510,437
------------ ------------
Net increase (decrease) in cash equivalents 11,472,230 (29,187,119)
Cash and cash equivalents at beginning of period 30,627,080 51,138,496
------------ ------------
Cash and cash equivalents at end of period $ 42,099,310 $ 21,951,377
============ ============
See notes to consolidated financial statements.
(continued on next page)
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 7 of 20
BANK OF GRANITE CORPORATION Nine Months
Consolidated Statements of Cash Flows Ended September 30,
(unaudited) - (concluded) 2001 2000
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 9,890,428 $ 11,483,329
------------ ------------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 851,128 779,202
Provision for loan loss 3,509,075 2,938,286
Premium amortization, net 112,192 142,831
Deferred income taxes (60,824) (553,117)
Gains on sales or calls of securities
available for sale (137,549) --
Gains on calls of securities
held to maturity (3,300) --
Losses (gains) on disposal or sale of equipment 4,201 (3,120)
Decrease in taxes payable (1,255,824) (250,468)
Decrease (increase) in accrued interest receivable 397,627 (1,044,270)
Increase (decrease) in interest payable (414,589) 435,112
Increase in other assets (8,429,934) (712,089)
Increase in other liabilities 23,389,438 73,530
------------ ------------
Net adjustments to reconcile net income to
net cash provided by operating activities 17,961,641 1,805,897
------------ ------------
Net cash provided by operating activities $ 27,852,069 $ 13,289,226
============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Increase in unrealized gains or
losses on securities available for sale $ 1,158,407 $ 597,110
Decrease in deferred income taxes
on unrealized gains or losses on
securities available for sale 461,911 238,093
Transfer from loans to other real estate owned 170,531 170,626
See notes to consolidated financial statements.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 8 of 20
BANK OF GRANITE CORPORATION
Notes to Consolidated Financial Statements
September 30, 2001
1. In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the financial
position of Bank of Granite Corporation (the "Company") as of September 30, 2001
and December 31, 2000, and the results of its operations for the three and nine
month periods ended September 30, 2001 and 2000, and its cash flows for the nine
month periods ended September 30, 2001 and 2000.
The consolidated financial statements include the Company's two wholly-owned
subsidiaries, the Bank of Granite (the "Bank"), a full service commercial bank,
and GLL & Associates, Inc. ("GLL"), a mortgage banking company.
The accounting policies followed are set forth in Note 1 to the Company's 2000
Annual Report to Shareholders on file with the Securities and Exchange
Commission.
2. Earnings per share have been computed using the weighted average number
of shares of common stock and potentially dilutive common stock equivalents
outstanding as follows:
Three Months Nine Months
Ended September 30, Ended September 30,
(in shares) 2001 2000 2001 2000
Weighted average shares outstanding 11,098,426 11,287,584 11,118,718 11,352,602
Potentially dilutive effect of stock options 1,704 14,681 2,167 11,048
----------------------------------------------------------------
Weighted average shares outstanding,
including potentially dilutive effect of
stock options 11,100,130 11,302,265 11,120,885 11,363,650
----------------------------------------------------------------
3. In the normal course of business there are various commitments and
contingent liabilities such as commitments to extend credit, which are not
reflected on the financial statements. Management does not anticipate any
significant losses to result from these transactions. The unfunded portion of
loan commitments and standby letters of credit as of September 30, 2001 and
December 31, 2000 were as follows:
September 30, December 31,
2001 2000
Unfunded commitments $ 78,215,410 $ 81,135,503
Letters of credit 4,069,297 2,865,570
4. New Accounting Standards - In June 1998, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 was amended by SFAS No. 138, "Accounting for Certain
Derivative Instrument and Certain Hedging Activities." SFAS No. 133, as amended,
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. The new
standard requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS No. 133 was amended by SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
for FASB Statement No. 133," which delayed the Company's effective date until
January 1, 2001. Effective January 1, 2001, the Company adopted the Standard.
The Standard did not have an impact on the Company's financial statements and
current disclosures.
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." SFAS No. 140
revises the standards for accounting for securitization and other transfers of
financial assets and collateral and requires certain disclosures, but carries
over most of the provisions of SFAS No. 125 without reconsideration. The
statement is effective for transfers and servicing of financial assets and
extinguishment of liabilities occurring after March 31, 2001. The Standard did
not have an impact on the Company's financial statements and current
disclosures.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 9 of 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CHANGES IN FINANCIAL CONDITION
September 30, 2001 Compared With December 31, 2000
Total assets increased $55,505,885, or 8.39%, from December 31, 2000 to
September 30, 2001. Earning assets increased $49,625,940, or 7.94%, over the
same nine month period. Loans, the largest earning asset, increased $33,017,435,
or 7.33%, over the same period, primarily because of a $20,697,911, or 4.70%,
increase as of September 30, 2001 in loans of the Bank and a $12,319,524, or
124.05%, increase as of September 30, 2001 in the level of mortgage loans of
GLL. Cash and cash equivalents increased $11,472,230, or 37.46%, primarily
because of calls of debt securities due to lower interest rates. Investment
securities increased $4,287,752, or 2.56%. Also during this period, other assets
increased $8,028,847, or 204.02%, primarily due to the Bank's investment of
$7,984,500 into bank owned life insurance intended to provide for supplemental
life insurance and retirement benefits for the Bank's officers.
Funding the asset growth was a combination of growth in deposits,
overnight borrowings, other borrowings, other liabilities and earnings retained.
Deposits increased $15,342,895, or 2.97%, from December 31, 2000 to September
30, 2001. Noninterest-bearing demand deposits decreased $6,320,209, or 6.70%,
and NOW account deposits decreased $4,930,277, or 6.14%, over the same nine
month period. Partially offsetting the declines in noninterest-bearing demand
and NOW account deposits over this period were increases of $9,021,957, or
30.08%, in money market deposits and $1,233,299, or 5.20%, in savings deposits.
Time deposits greater than $100,000 increased $8,296,628, or 6.67%, from
December 31, 2000 to September 30, 2001, while other time deposits increased
$8,041,497, or 4.89%, over the same period. The Company's loan to deposit ratio
was 90.76% as of
September 30, 2001 compared to 87.07% as of December 31, 2000, while
the Bank's loan to deposit ratio was 84.42% compared to 83.17% when comparing
the same periods.
The Company has sources of funding, in addition to deposits, in the
form of overnight and other short-term borrowings as well as other longer-term
borrowings. Overnight borrowings are primarily in the form of federal funds
purchased and commercial deposit products that sweep balances overnight into
securities sold under agreements to repurchase or commercial paper issued by the
Company. From December 31, 2000 to September 30, 2001, such overnight borrowings
increased $1,477,612, or 11.57%, reflecting an increase of $1,918,224, or
17.50%, in higher overnight borrowings in the form of commercial paper,
partially offset by a decrease of $440,612, or 24.42%, in lower overnight
borrowings in the form of federal funds purchased and securities sold under
agreements to repurchase. Other borrowings increased $11,950,304, or 152 .42%,
reflecting an increase in temporary borrowings by GLL primarily due to higher
mortgage origination activity. Other liabilities increased $22,133,614, or
1365.89%, from December 31, 2000 to September 30, 2001, primarily because of
investment security purchases of $23,500,000 that were in the process of
settlement, partially offset by a $1,255,824 decrease in income taxes currently
payable attributable to timing differences in due dates for estimated taxes.
Common stock outstanding decreased 83,061 shares, or 0.74%, from
December 31, 2000 to September 30, 2001, due to shares repurchased under the
Company's current stock repurchase plan, partially offset by shares issued in
connection with the exercise of stock options. From December 31, 2000 through
September 30, 2001, the Company repurchased 103,492 shares of its common stock
at an average price of $20.55. Also from December 31, 2000 through September 30,
2001, the Company issued 20,431 shares of its common stock at an average price
of $16.54 under its Incentive Stock Option Plan. Earnings retained were
$6,108,040 for the first nine months of 2001, after paying cash dividends of
$3,783,643. Accumulated other comprehensive income, net of deferred income
taxes, increased $696,496, or 194.05%, from December 31, 2000 to September 30,
2001, primarily because the value of securities available for sale rose when
interest rates on longer term bonds fell during the period.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 10 of 20
LIQUIDITY, INTEREST RATE SENSITIVITY AND MARKET RISKS
The objectives of the Company's liquidity management policy include
providing adequate funds to meet the needs of depositors and borrowers at all
times, as well as providing funds to meet the basic needs for on-going
operations of the Company and regulatory requirements. The Company's liquidity
position remained strong during the nine month period ended September 30, 2001.
The Company places great significance on monitoring and managing the
Company's asset/liability position. The Company's policy for managing its
interest margin (or net yield on interest-earning assets) is to maximize net
interest income while maintaining a stable deposit base. The Company's deposit
base has not historically been subject to the levels of volatility experienced
in national financial markets in recent years; however, the Company does realize
the importance of minimizing such volatility while at the same time maintaining
and improving earnings. Gap analysis, a common method historically used to
estimate interest rate sensitivity, measures the difference or gap between the
volume of interest-earning assets and interest-bearing liabilities repricing
over various time periods. However, this method addresses only the magnitude of
funding mismatches and does not address the magnitude or relative timing of rate
changes. Therefore, management prepares on a regular basis earnings projections
based on a range of interest rate scenarios of rising, flat and declining rates
in order to more accurately measure interest rate risk.
Interest-bearing liabilities and the loan portfolio are generally
repriced to current market rates. The Company's balance sheet is
asset-sensitive, meaning that in a given period there will be more assets than
liabilities subject to immediate repricing as the market rates change. Because
most of the Company's loans are at variable rates, they reprice more rapidly
than rate sensitive interest-bearing deposits. During periods of rising rates,
this results in increased net interest income. The opposite occurs during
periods of declining rates.
In response to a slowing economy during the first nine months of 2001,
the Federal Reserve lowered its rate on short-term overnight funds eight times
for a total of 350 basis points. Because of its asset sensitivity, the Company
experienced a 106 basis point decline in its net interest margin, which was
5.30% for the first nine months of 2001 compared with 6.36% for the first nine
months of 2000. For the third quarter, the margin declined 124 basis points to
5.07% in 2001 compared with 6.31% in 2000. The Company's variable rate loans,
and certain investments that matured or were called, repriced immediately at the
lower rates. The Company's time deposits will continue to reprice as they
mature. The Company believes that the Federal Reserve may further reduce
short-term rates as the economy continues to show signs of weakness. The Federal
Reserve lowers rates to reduce borrowing costs with the goal of increasing loan
demand to stimulate the economy. Such increases in loan demand, should they
occur, could mitigate the effects of the Company's repricing differences
discussed above.
The Bank uses several modeling techniques to measure interest rate
risk, including the gap analysis previously discussed, the simulation of net
interest income under varying interest rate scenarios and the theoretical impact
of immediate and sustained rate changes referred to as "rate shocks." "Rate
shocks" measure the estimated theoretical impact on the Bank's tax equivalent
net interest income and market value of equity from hypothetical immediate
changes of plus and minus 1%, 2%, 3% and 4% as compared to the estimated
theoretical impact of rates remaining unchanged. The prospective effects of
these hypothetical interest rate changes is based upon numerous assumptions
including relative and estimated levels of key interest rates. "Rate shocks"
modeling is of limited usefulness because it does not take into account the
pricing strategies management would undertake in response to the depicted sudden
and sustained rate changes.
The Company has not experienced a change in the mix of its
rate-sensitive assets and liabilities or in interest rates in the market that it
believes would result in a material change in the Company's analysis of its
interest rate sensitivity as discussed in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 11 of 20
RESULTS OF OPERATIONS
For the Three Month Period Ended
September 30, 2001 Compared With the Same
Period in 2000 and for the Nine Month
Period Ended September 30, 2001 Compared
With the Same Period in 2000
During the three month period ended September 30, 2001, the Company's
net income decreased to $3,411,815, or 8.64%, from $3,734,423 earned in the same
period of 2000. The decline primarily resulted from lower net interest margins.
Year-to-date net income was also lower mainly due to lower net interest margins
and higher loan loss provisions. For the first nine months of 2001, net income
was $9,890,428, down $1,592,901, or 13.87%, from $11,483,329 earned in the same
year-to-date period of 2000.
NET INTEREST INCOME FOR THE QUARTERLY PERIODS
During the three month period ended September 30, 2001, the Company's
net interest income decreased $1,163,641, or 12.79%, compared to the three
months ended September 30, 2000, primarily due to the effects of a declining
interest rate environment on the Company's asset-sensitive balance sheet. The
Company's net interest margin averaged 5.07% during the three month period
compared to 6.31% during the same period in 2000. For a discussion of the
Company's asset-sensitivity and the related effects on the Company's net
interest income and net interest margins, please see "Liquidity, Interest Rate
Sensitivity and Market Risks" above.
During the quarter ended September 30, 2001, interest income decreased
$1,419,567, or 10.04%, from the same period last year, primarily because of
lower rates on loan and investment assets, partially offset by higher volumes of
loans. Interest and fees on loans decreased $1,157,836, or 9.98%, due to lower
average rates during the quarter. Yields on loans averaged 8.60% for the
quarter, down from 10.77% for the same quarter last year. The prime lending rate
during the three month period averaged 6.66% compared to 9.50% during the same
period in 2000. Gross loans averaged $482,004,617 compared to $428,585,257 last
year, an increase of $53,419,360, or 12.46%. Average loans of the Bank were
$459,307,945 compared to $417,310,637 last year, an increase of $41,997,308, or
10.06%, while average loans of GLL were $22,696,672 compared to $11,274,620 last
year, an increase of $11,422,052, or 101.31%. The large increase in loans at GLL
is further evidence of the declining rate environment, since mortgage loan
activity typically increases at such times. Interest on securities and overnight
investments decreased $261,731, or 10.36%, also due to yields during the
quarter. Average securities and overnight investments were $175,155,442 compared
to $173,419,698 last year, an increase of $1,735,744, or 1.00%.
Interest expense decreased $255,926, or 5.08%, primarily because of
lower rates on interest-bearing deposits and other borrowings, partially offset
by higher volumes of time deposits and other borrowings. Time deposits generally
pay a higher rate of interest than most other types of deposits. Overall, rates
on interest-bearing deposits averaged 4.03% for the quarter, down from 4.74% for
the same quarter last year. Total interest-bearing deposits averaged
$442,435,756 compared to $399,737,872 last year, an increase of $42,697,884, or
10.68%. Savings, NOW and money market deposits averaged $139,066,787 compared to
$132,409,932 last year, an increase of $6,656,855, or 5.03%. Time deposits
averaged $303,368,969 compared to $267,327,940 last year, an increase of
$36,041,029, or 13.48%. The Company believes that the increase in time deposits
may be attributable in part to recent flows of investment funds out of the
equity markets into markets offering greater protection of investment principal.
Overnight borrowings averaged $14,025,277 compared to $12,042,274 last year, an
increase of $1,983,004, or 16.47%, reflecting an increase of $3,166,566, or
34.25%, in average overnight borrowings in the form of commercial paper related
to the commercial deposit sweep arrangements of the Bank, partially offset by a
decrease of $1,183,562, or 42.31%, in average overnight borrowings in the form
of federal funds purchased and securities sold under agreements to repurchase of
the Bank. Other borrowings averaged $20,064,667 compared to $9,437,583 last
year, an increase of $10,627,084, or 112.60%, due to an increase in temporary
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 12 of 20
borrowings of GLL primarily due to higher mortgage origination activity. Other
borrowings were the principal source of funding for the mortgage origination
activities of GLL. The Company has not historically relied upon "out-of-market"
or "brokered" deposits as a source of funding.
NET INTEREST INCOME FOR THE YEAR-TO-DATE PERIODS
As was the case for the third quarter, the Company's net interest
income decreased for the year-to-date period. Although higher loan volumes
helped to buffer the year-to-date decline, falling loan yields in 2001 and
growth in higher cost time deposits during the last six months of 2000 caused
the Company's net interest income to decrease $2,376,074, or 8.82%, during the
nine month period ended September 30, 2001 compared to the same period in 2000.
The Company's net interest margin averaged 5.30% for the year-to-date period,
down from 6.36% for the same period last year. For a discussion of the Company's
asset-sensitivity and the related effects on the Company's net interest income
and net interest margins, please see "Liquidity, Interest Rate Sensitivity and
Market Risks" above.
During the first nine months of 2001, interest income decreased only
$353,277, or 0.87%, from the same period last year because decreased interest
income due to lower rates on loans was substantially offset by increases in
interest income due to higher volumes of loans. Interest and fees on loans
increased slightly by $141,699, or 0.43%, due to the higher volumes, while
yields on loans averaged 9.30% for the year-to-date period, down from 10.63% for
the same period last year. The prime rate during the nine month period averaged
7.71% compared to 9.08% during the same period in 2000. Gross loans averaged
$475,121,291 compared to $413,534,003 last year, an increase of $61,587,288, or
14.89%. Average loans of the Bank increased $51,080,562, or 12.68%, while
average loans of GLL increased $10,506,726, or 98.76%. Interest on securities
and overnight investments decreased $494,976, or 6.38%, due to both lower rates
and lower average volumes invested during the period. Average securities and
overnight investments were $178,482,624 compared to $180,936,398 last year, a
decrease of $2,453,774, or 1.36%.
Interest expense increased $2,022,797, or 14.73%, primarily because of
higher volumes of time deposits that resulted in rates on interest-bearing
deposits increasing to 4.52% for the year-to-date period, from 4.41% for the
same period last year. Interest-bearing deposits averaged $441,439,394 compared
to $392,201,944 last year, an increase of $49,237,450, or 12 .55%. Overnight
borrowings averaged $11,515,891 compared to $13,102,785 last year, a decrease of
$1,586,894, or 12.11%, reflecting a decrease of $607,582, or 24.08%, in federal
funds purchased and securities sold under agreements to repurchase of the Bank
and a decrease of $979,312, or 9.26%, in commercial paper related to the
commercial deposit sweep arrangements of the Bank. Other borrowings averaged
$18,674,199 compared to $8,902,871 last year, an increase of $9,771,328, or
109.75%, reflecting an increase in temporary borrowings of GLL primarily due to
higher mortgage origination activity. Other borrowings were the principal source
of funding for the mortgage origination activities of GLL.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 13 of 20
PROVISIONS FOR LOAN LOSSES, ALLOWANCE FOR LOAN LOSSES
AND DISCUSSIONS OF ASSET QUALITY
Management determines the allowance for loan losses based on a number
of factors, including reviewing and evaluating the Company's loan portfolio in
order to identify potential problem loans, credit concentrations and other risk
factors connected to the loan portfolio, as well as current and projected
economic conditions locally and nationally. Upon loan origination, management
evaluates the relative quality of each loan and assigns a corresponding loan
grade. All loans are periodically reviewed to determine whether any changes in
these loan grades are necessary. The loan grading system assists management in
determining the overall risk in the loan portfolio.
General economic trends greatly affect loan losses, and no assurances
can be made that further charges to the loan loss allowance may not be
significant in relation to the amount provided during a particular period or
that further evaluation of the loan portfolio based on conditions then
prevailing may not require sizable additions to the allowance, thus
necessitating similarly sizable charges to operations. Due to unfavorable
economic trends in the Company's market area and due to higher levels of
nonperforming loans resulting from the weakened local economy, management
believed it prudent to charge operations in the amount of $3,509,075 for the
nine month period ended September 30, 2001, to provide for future losses related
to uncollectible loans. The Company had provided an additional $1,200,000 for
loan losses in the second quarter of 2001 in anticipation of the higher
charge-off's experienced in the third quarter. At September 30, 2001, the loan
loss reserve was 1.39% of net loans outstanding, compared to 1.43% as of
December 31, 2000. The following table presents an analysis of changes in the
allowance for loan losses for the quarter-to-date and year-to-date periods.
Three Months Nine Months
Ended September 30, Ended September 30,
2001 2000 2001 2000
Allowance for loan losses, beginning of period $8,452,032 $5,721,018 $6,351,756 $4,746,692
---------- ---------- ---------- ----------
Net charge-offs:
Loans charged off:
Real estate 1,009,979 865,403 1,072,108 976,806
Commercial, financial and agricultural 1,510,848 307,476 1,689,133 544,253
Credit cards and related plans 5,847 1,737 16,833 6,693
Installment loans to individuals 75,580 22,052 405,827 161,757
Demand deposit overdraft program 108,544 154,134 323,911 243,616
---------- ---------- ---------- ----------
Total charge-offs 2,710,798 1,350,802 3,507,812 1,933,125
---------- ---------- ---------- ----------
Recoveries of loans previously charged off:
Real estate 20,008 76,563 46,335 89,012
Commercial, financial and agricultural 17,876 17,010 34,393 76,139
Credit cards and related plans 976 349 3,518 2,946
Installment loans to individuals 2,555 10,196 30,847 55,360
Demand deposit overdraft program 49,042 24,570 162,076 28,453
---------- ---------- ---------- ----------
Total recoveries 90,457 128,688 277,169 251,910
---------- ---------- ---------- ----------
Total net charge-offs 2,620,341 1,222,114 3,230,643 1,681,215
---------- ---------- ---------- ----------
Loss provisions charged to operations 798,497 1,504,859 3,509,075 2,938,286
---------- ---------- ---------- ----------
Allowance for loan losses, end of period $6,630,188 $6,003,763 $6,630,188 $6,003,763
---------- ---------- ---------- ----------
Ratio of annualized net charge-offs during the
period to average loans during the period 2.16% 1.13% 0.91% 0.54%
Allowance coverage of annualized net charge-offs 63.78% 123.82% 153.50% 267.10%
Allowance as a percentage of gross loans 1.37% 1.38%
Allowance as a percentage of net loans 1.39% 1.39%
Due to a weakened local economy, the 2001 quarter-to-date and
year-to-date charge-off's were substantially higher than those in the same
periods of the previous year. In the third quarter of 2001, the Company charged
off $2,710,798, an increase of $1,359,996, of which $1,203,372 were related to
commercial loans in default. The increase in year-to-date charge-off's resulted
from the higher level of charge-off's during the third quarter.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 14 of 20
Nonperforming assets at September 30, 2001 and December 31, 2000 were
as follows:
September 30, December 31,
2001 2000
Nonperforming assets:
Nonaccrual loans $3,647,213 $1,502,019
Loans past due 90 days or more and
still accruing interest 3,459,091 1,982,926
---------- ----------
Total nonperforming loans 7,106,304 3,484,945
Foreclosed properties 304,377 133,846
---------- ----------
Total nonperforming assets $7,410,681 $3,618,791
========== ==========
Nonperforming loans to total loans 1.47% 0.77%
Allowance coverage of nonperforming loans 93.30% 172.28%
Nonperforming assets to total assets 1.03% 0.55%
If interest from restructured loans, foreclosed properties and
nonaccrual loans had been recognized in accordance with the original terms of
the loans, net income for the third quarter would not have been materially
different from the amount reported.
The Company's investment in impaired loans at September 30, 2001 and
December 31, 2000 was as follows:
September 30, December 31,
2001 2000
Investment in impaired loans:
Impaired loans still accruing interest $1,084,317 $ 545,351
Accrued interest on accruing impaired loans 58,610 24,181
Impaired loans not accruing interest 3,647,213 1,502,019
Accrued interest on nonaccruing impaired loans 154,074 53,034
---------- ----------
Total investment in impaired loans $4,944,214 $2,124,585
---------- ----------
Loan loss allowance related to impaired loans $1,553,380 $1,009,562
========== ==========
When comparing September 30, 2001 with September 30, 2000, the recorded
investment in loans that are considered to be impaired under SFAS No. 114 was
$4,944,196 ($3,801,287 of which was on a non-accrual basis) and $1,936,404
($1,608,405 of which was on a non-accrual basis), respectively. The average
recorded balance of impaired loans during the first nine months of 2001 and 2000
was not significantly different from the balance at September 30, 2001 and 2000,
respectively. The related allowance for loan losses determined in accordance
with SFAS No. 114 for these loans was $1,553,380 and $991,283 at September 30,
2001 and 2000, respectively. For the nine months ended September 30, 2001 and
2000, the Company recognized interest income on those impaired loans of
approximately $212,684 and $75,468, respectively.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 15 of 20
NONINTEREST INCOME AND EXPENSES FOR THE QUARTERLY PERIODS
For the quarter ended September 30, 2001, total noninterest income was
$2,489,665, up $353,970, or 16.57%, from $2,135,695 earned in the same period of
2000, primarily because of higher fees from mortgage originations. Fees on
deposit accounts were $1,260,530 during the third quarter, down $58,634, or
4.44%, from $1,319,164 earned in the third quarter of 2000, primarily due to
lower activity in the Bank's demand deposit overdraft program. Other service
fees and commissions were $1,025,320 for the third quarter of 2001, up $291,269,
or 39.68%, from $734,051 earned in the same period of 2000. Included in other
service fees was mortgage origination fee income of $806,144 for 2001, up
$239,777, or 42.34%, from $566,367 earned in the same period of 2000. As
mortgage rates declined in 2001, mortgage origination activity rose
dramatically. There were no significant gains or losses on sales of securities
in the third quarter of 2001 or 2000. Other noninterest income was $200,515 for
the third quarter of 2001, up $118,035, or 143.11%, from $82,480 earned in the
third quarter of 2000, primarily due to income from the Bank's investment in
bank owned life insurance in the third quarter. Management continued to place
emphasis on nontraditional banking services such as annuities, life insurance,
and sales of mortgages, which produced $905,360 in nontraditional fee income
during the third quarter of 2001, up 49.58% from the third quarter of 2000.
Third quarter 2001 noninterest expenses, or overhead, totaled
$4,640,991, up $452,875, or 10.81%, from $4,188,116 in the same quarter of
2000, primarily because of higher costs associated with the increase in
mortgage origination activities. Personnel costs, the largest of the overhead
expenses, were $2,968,230 during the quarter, up $471,523, or 18.89%, from
$2,496,707 in 2000. Of the $471,523 increase in personnel costs, $277,015 were
related to mortgage operations, while the Bank's personnel costs increased
$194,508. Salaries and wages were $2,408,867 during the quarter, up $343,525,
or 16.63%, from $2,065,342 in 2000, while employee benefits were $559,363, up
$127,998, or 29.67%, compared to $431,365 in the third quarter of 2000. Bank
salaries rose $71,753 or 4.70%, while mortgage-related salaries rose $271,772
or 50.60%.
Noninterest expenses other than for personnel decreased $18,648, or
1.10%, to $1,672,761 during the quarter from $1,691,409 incurred in the same
period of 2000. A $54,085 decrease in the nonpersonnel costs of the Bank was
partially offset by a $33,270 increase in the nonpersonnel costs of GLL.
Occupancy expenses were up less than 1% for the quarter. Equipment expenses were
$374,475 during the third quarter, up $14,378, or 3.99%, from $360,097 in the
same period of 2000. Third quarter other noninterest expenses were $1,085,498 in
2001, down $31,016, or 2.78%, from $1,116,514 in the same quarter a year ago.
The Bank's decrease of $74,775 in other noninterest costs was partially offset
by a $41,592 increase in the other noninterest costs of GLL. Income tax expense
was $1,573,880 for the quarter, down $233,576, or 12.92%, from $1,807,456 for
the 2000 third quarter. The effective tax rate decreased to 31.57% for the third
quarter of 2001 compared to 32.61% for the same quarter of 2000, primarily
because of higher relative levels of income from tax-exempt loans and
investments in 2001 despite the lower overall level of net income.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 16 of 20
NONINTEREST INCOME AND EXPENSES FOR THE YEAR-TO-DATE PERIODS
For the nine months ended September 30, 2001, total noninterest income
was $7,266,467, up $1,422,119, or 24.33%, from $5,844,348 earned in the first
nine months of 2000, primarily because of higher fees on deposit accounts and
from mortgage originations. Fees on deposit accounts were $3,857,746 during the
first nine months of 2001, up $377,469, or 10.85%, from $3,480,277 in the same
period of 2000, primarily due to $288,480 in additional fees associated with the
new demand deposit overdraft program designed for retail customers and
introduced in the second quarter of 2000. Also for the year-to-date period,
other service fees and commissions were $2,832,665, up $718,275, or 33.97%, from
$2,114,390 in 2000. Included in other service fees was mortgage origination fee
income of $2,186,153 for 2001, up $655,668, or 42.84%, from $1,530,485 earned in
the same period of 2000. As was the case for the quarter, the drop in mortgage
rates that began in late 2000 and continued throughout the first nine months of
2001 caused a significant increase in mortgage origination activity.
Year-to-date gains on sales of securities were $140,849, most of which was
reported in the first quarter of 2001. Other noninterest income was $435,207
during the nine months ended September 30, 2001, up $185,526, or 74.31%, from
$249,681 in the same period of 2000, primarily due to income from the Bank's
investment in bank owned life insurance. Management continued to place emphasis
on nontraditional banking services such as annuities, life insurance, and sales
of mortgage loans, which produced $2,413,266 in nontraditional fee income during
the first nine months of 2001, up 46.79% from 2000.
Total noninterest expenses were $13,704,225 during the first nine
months of 2001, up $1,131,482, or 9.00%, from $12,572,743 in the same period of
2000. As was the case for the third quarter, the year-to-date changes in
overhead were primarily attributable to higher costs associated with the
increase in mortgage origination activities. Total personnel costs, the largest
of the overhead expenses, were $8,478,549 during the first nine months of 2001,
up $1,000,830, or 13.38%, from $7,477,719 in the same period of 2000. Salaries
and wages were $7,092,376 during the first nine months of 2001, up $928,802, or
15.07%, from $6,163,574 in the same period of 2000. The increase in salaries and
wages consisted of $306,274 related to banking operations and $622,528 related
to mortgage operations. Employee benefits were $1,386,173 up $72,028, or 5.48%,
from $1,314,145. Of this increase, $51,384 were related to banking operations
and $20,644 were related to mortgage operations.
Noninterest expenses other than for personnel increased to $5,225,676
during the first nine months of 2001, or 2.56%, from $5,095,024 incurred in the
same period of 2000, which reflected increases in nonpersonnel costs of $64,335
for the Bank and $71,608 for GLL. Year-to-date occupancy expenses were $639,394,
up $7,162, or 1.13%, from $632,232 in 2000, and equipment expenses were
$1,141,498, up $91,519, or 8.72%, from $1,049,979 in the same nine months of
2000. Other noninterest expenses were $3,444,784 for the nine months ended
September 30, 2001, up $31,971, or less than 1%, from $3,412,813 in the same
period of 2000. Of the $31,971 increase in other noninterest expenses, $105,661
were related to mortgage operations, partially offset by a $68,399 decrease
related to banking operations. Year-to-date income tax expense was $4,716,852 in
2001, down $1,063,325, or 18.40%, from $5,780,177 in 2000. The year-to-date
effective tax rates were 32.29% and 33.48% for 2001 and 2000, respectively, with
the decrease being primarily attributable to higher relative levels of income
from tax-exempt loans and investments in 2001. Net income was $9,890,428 during
the first nine months of 2001, down $1,592,901, or 13.87%, from $11,483,329
earned in the same year-to-date period of 2000.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 17 of 20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is included in Item 2,
Management's Discussion of Financial Condition and Results of Operations, above,
under the caption "Liquidity, Interest Rate Sensitivity and Market Risk."
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. 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 the Company and its 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 the Company's customers or vendors, fluctuations in interest rates, actions
of government regulators, the availability of capital and personnel, and general
economic conditions.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 18 of 20
PART II - OTHER INFORMATION
ITEMS 1, 2, 3, 4, AND 5 ARE INAPPLICABLE AND ARE THEREFORE OMITTED.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
* Exhibits, Financial Statement Schedules and Reports on Forms 8-K
included in or incorporated by reference into this filing were filed with the
Securities and Exchange Commission. Bank of Granite Corporation provides these
documents through its Internet site at www.bankofgranite.com or by mail upon
written request.
(a) 1. Financial Statements
The information required by this item is set forth under Item
1
2. Financial Statement Schedules
None
3. Exhibits
(a) Certificate of Incorporation
Bank of Granite Corporation's Restated Certificate of
Incorporation, as amended, filed as Exhibit 3.(a) to the
Quarterly Report to Shareholders on Form 10-Q for the
quarterly period ended March 31, 2001 is incorporated herein
by reference.
(b) Bylaws of the Registrant
Bank of Granite Corporation's Bylaws, filed as Exhibit D of
Pre-Effective Amendment No. 1 to the Registrant's Registration
Statement on Form S-4 (Registration Statement No. 33-11876) on
February 23, 1987 is incorporated herein by reference
10. Material Contracts
Not applicable.
11. Schedule of Computation of Net Income Per Share
The information required by this item is set forth under Item
1, Note 2
(b) Reports on Form 8-K
On October 10, 2001, the Company filed a report on Form 8-K
regarding its October 9, 2001 news release in which it
announced its earnings for the quarter ended September 30,
2001. The full text news release dated October 9, 2001 was
attached as exhibit 99(a) to this Form 8-K filing.
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 19 of 20
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Bank of Granite Corporation
(Registrant)
Date: November 12, 2001 /s/ Kirby A. Tyndall
----------------------------
Kirby A. Tyndall
Senior Vice President and
Chief Financial Officer and
Principal Accounting Officer
Bank of Granite Corporation, Form 10-Q, September 30, 2001, page 20 of 20