Business & Finance
Business and Finance
Business and Finance
Mon, February 2, 2009
Sun, February 1, 2009
Fri, January 30, 2009 Bank of Granite Corporation: Bank of Granite Corporation Reports Fourth Quarter and Full-Year Results
GRANITE FALLS, NC--(Marketwire - January 30, 2009) - Bank of Granite Corporation (
Credit actions we took in the fourth quarter of 2008 resulted in a $16.79 million loan loss provision for the quarter. The two primary reasons for these credit actions were the continued deterioration of a group of approximately $20 million of related watch list loans in the real estate development portfolio and non-performance related to one additional real estate development loan of $4.5 million. The current valuations of the collateral underlying these loans caused us to allocate approximately $8 million of loss reserves to these loans. Additionally, the overall decline in economic activity, which is stressing all sections of our loan portfolio, caused us to take action to build our allowances for loan loss to $29.95 million or 3.14% of gross loans. Our fourth quarter provision for losses exceeded our charge-offs by $7.63 million.
Another significant factor in our fourth quarter results was the continued decline in net interest income, down $1.98 million compared to the preceding quarter and down $15.30 million when comparing the twelve-month periods ended December 31, 2008 and 2007. The multiple rate reductions by the Federal Reserve in the fourth quarter and the continued aggressive competition for deposits in our market were the primary causes of the margin compression. Increasing levels of non-performing assets have also depressed the net interest margin throughout 2008. Our overhead expenses for the fourth quarter of 2008 were $1.13 million less than the same quarter of 2007 and reflect our ongoing efforts to be more efficient.
As of December 31, 2008, the Company's total assets were $1.17 billion, total loans were $0.95 billion, and total deposits were $0.99 billion. Nonperforming assets increased to $62.66 million as of December 31, 2008 compared to $54.84 million at September 30 and $39.10 million as of December 31, 2007. The Company's and its banking subsidiary's leverage and Tier I risk-based capital ratios met the regulatory capital measures of "well" capitalized as of December 31, 2008. For the total risk-based capital ratio measure, the Company and its banking subsidiary ended the year "adequately" capitalized with capital ratios of 9.96% and 9.41%, respectively, slightly below the 10% threshold needed to be categorized as "well" capitalized.
"These results are disappointing and are indicative of the severe credit crisis and the effect it has on businesses and customers in our markets," said Scott Anderson, CEO. "However, we are committed to doing the things we have always done -- serving our customers, striving to make good loans, and running our business for what we believe to be the long-term benefit of our shareholders." Mr. Anderson continued, "While we cannot control the ultimate severity of the current economic crisis, we believe our loyal customer base, the continued commitment of our employees, and our confidence in our current risk management and problem loan mitigation efforts are reasons to be optimistic about the Bank's future."
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, as well as a loan production office in Guilford County. Granite Mortgage, a mortgage banking company headquartered in Winston-Salem, originates home mortgages in these counties as well as in Cumberland and Rowan counties.
Please see the attached supplemental "Financial Data" tables. For further information, please contact: Scott Anderson, Chief Executive Officer, 828.345.6866 or [ sanderson@bankofgranite.com ] Kirby Tyndall, Chief Financial Officer, 828.496.2026 or [ 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 on Form 10-K/A filed with the Securities and Exchange Commission.
Bank of Granite Corporation Selected Financial Data Three Months Ended Twelve Months Ended December 31, December 31, ------------------------------ ------------------------------ (in thousands except per % % share data) 2008 2007 change 2008 2007 change ---------- ---------- ------ ---------- ---------- ------ Consolidated earnings summary: Interest income, taxable equivalent$ 14,751 $ 22,273 -33.8% $ 67,642 $ 90,172 -25.0% Interest expense 7,071 9,309 -24.0% 29,753 36,848 -19.3% ---------- ---------- ---------- ---------- Net interest income, taxable equivalent 7,680 12,964 -40.8% 37,889 53,324 -28.9% Taxable equivalent adjustment (1) 171 205 -16.6% 719 857 -16.1% ---------- ---------- ---------- ---------- Net interest income 7,509 12,759 -41.1% 37,170 52,467 -29.2% Loan loss provision 16,791 3,006 458.6% 30,228 55,131 -45.2% Noninterest income 2,640 3,535 -25.3% 11,515 13,179 -12.6% Noninterest expense 9,367 10,496 -10.8% 38,210 37,001 3.3% ---------- ---------- ---------- ---------- Income (loss) before income taxes (benefits) (16,009) 2,792 -673.4% (19,753) (26,486) -25.4% Income tax expense (benefit) (6,427) 860 -847.3% (8,253) (11,183) -26.2% ---------- ---------- ---------- ---------- Net income (loss) $ (9,582) $ 1,932 -596.0% $ (11,500) $ (15,303) -24.9% ========== ========== ========== ========== Earnings (loss) per share - Basic $ (0.62) $ 0.12 -616.7% $ (0.74) $ (0.97) -23.7% Earnings (loss) per share - Diluted (0.62) 0.12 -616.7% (0.74) (0.97) -23.7% ---------- ---------- ---------- ---------- Average shares - Basic 15,454 15,468 -0.1% 15,448 15,775 -2.1% Average shares - Diluted 15,454 15,490 -0.2% 15,448 15,775 -2.1% ========== ========== ====== ========== ========== ====== Consolidated balance sheet data at December 31: Total assets $1,170,931 $1,219,148 -4.0% Total deposits 991,822 971,989 2.0% Loans (gross) 953,295 946,326 0.7% Stockholders' equity 98,413 115,265 -14.6% ========== ========== ====== ========== ========== ====== Consolidated average balance sheet data: Total assets $1,157,425 $1,198,879 -3.5% $1,189,759 $1,205,911 -1.3% Total deposits 971,033 971,663 -0.1% 982,463 969,911 1.3% Loans (gross) 957,037 929,342 3.0% 955,639 933,347 2.4% Stockholders' equity 109,422 117,042 -6.5% 113,316 139,764 -18.9% ========== ========== ====== ========== ========== ====== Consolidated performance ratios: Return on average assets* -3.29% 0.64% -0.97% -1.27% Return on average equity* -34.84% 6.55% -10.15% -10.95% Net interest margin* 2.87% 4.69% 3.48% 4.77% Efficiency ratio (2) 90.77% 63.62% 77.34% 55.64% ========== ========== ====== ========== ========== ====== Consolidated asset quality data and ratios: Nonaccruing loans $ 55,737 $ 36,450 52.9% Accruing loans 90 days past due 114 162 -29.6% ---------- ---------- Nonperforming loans 55,851 36,612 52.5% Foreclosed properties 6,805 2,491 173.2% ---------- ---------- Nonperforming assets 62,656 39,103 60.2% ---------- ---------- Allowance for loan losses 29,952 17,673 69.5% ---------- ---------- Loans charged off 21,568 53,663 -59.8% Recoveries of loans charged off 3,619 418 765.8% ---------- ---------- Net loan charge- offs 17,949 53,245 -66.3% ---------- ---------- Net charge- offs to average loans* 1.88% 5.70% Nonperforming loans to total assets 4.77% 3.00% Allowance coverage of nonperforming loans 53.63% 48.27% Allowance for loan losses to gross loans 3.14% 1.87% Allowance for loan losses to net loans 3.24% 1.90% ========== ========== ====== ========== ========== ====== Subsidiary earnings summary: Bank of Granite Net interest income $ 6,928 $ 12,207 -43.2% $ 34,345 $ 50,093 -31.4% Loan loss provision 16,767 2,994 460.0% 30,143 55,083 -45.3% Noninterest income 2,109 2,619 -19.5% 8,809 9,263 -4.9% Noninterest expense 7,863 8,777 -10.4% 31,009 30,105 3.0% Income tax expense (benefit) (6,355) 852 -845.9% (8,158) (11,437) -28.7% Net income (loss) (9,238) 2,203 -519.3% (9,840) (14,395) -31.6% ---------- ---------- ------ ---------- ---------- ------ Granite Mortgage Net interest income $ 617 $ 751 -17.8% $ 3,158 $ 3,249 -2.8% Loan loss provision 24 12 100.0% 85 48 77.1% Noninterest income 682 916 -25.5% 3,560 3,916 -9.1% Noninterest expense 1,455 1,635 -11.0% 6,870 6,482 6.0% Income tax expense (benefit) (72) 8 n/m (95) 254 -137.4% Net income (loss) (108) 12 n/m (142) 381 -137.3% ========== ========== ====== ========== ========== ====== * Annualized based on number of days in the period. (1) Yields and interest income on tax-exempt investments have been adjusted to tax equivalent basis using a 35% tax rate. (2) Calculated by dividing noninterest expense by the sum of tax equivalent net interest income and noninterest income. Bank of Granite Corporation Supplemental Quarterly Financial Data Quarters Ended (in thousands ---------------------------------------------------------- except per Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, share data) 2008 2008 2008 2008 2007 ---------- ---------- ---------- ---------- ---------- Consolidated earnings summary: Interest income, taxable equivalent $ 14,751 $ 16,537 $ 17,254 $ 19,101 $ 22,273 Interest expense 7,071 6,881 7,190 8,611 9,309 ---------- ---------- ---------- ---------- ---------- Net interest income, taxable equivalent 7,680 9,656 10,064 10,490 12,964 Taxable equivalent adjustment(1) 171 170 182 197 205 ---------- ---------- ---------- ---------- ---------- Net interest income 7,509 9,486 9,882 10,293 12,759 Loan loss provision 16,791 3,581 8,445 1,411 3,006 Noninterest income 2,640 2,494 3,103 3,278 3,535 Noninterest expense 9,367 8,775 10,409 9,659 10,496 ---------- ---------- ---------- ---------- ---------- Income (loss) before income taxes (benefits) (16,009) (376) (5,869) 2,501 2,792 Income tax expense (benefit) (6,427) (105) (2,507) 786 860 ---------- ---------- ---------- ---------- ---------- Net income (loss) $ (9,582) $ (271) $ (3,362) $ 1,715 $ 1,932 ========== ========== ========== ========== ========== Earnings (loss) per share - Basic $ (0.62) $ (0.02) $ (0.22) $ 0.11 $ 0.12 Earnings (loss) per share - Diluted (0.62) (0.02) (0.22) 0.11 0.12 ---------- ---------- ---------- ---------- ---------- Average shares - Basic 15,454 15,454 15,446 15,438 15,468 Average shares - Diluted 15,454 15,454 15,446 15,457 15,490 ========== ========== ========== ========== ========== Consolidated ending balance sheet data: Total assets $1,170,931 $1,159,917 $1,187,696 $1,235,624 $1,219,148 Total deposits 991,822 969,172 982,213 1,011,717 971,989 Loans (gross) 953,295 951,665 955,497 949,065 946,326 Stockholders' equity 98,413 108,673 109,458 115,434 115,265 ========== ========== ========== ========== ========== Consolidated average balance sheet data: Total assets $1,157,425 $1,181,505 $1,205,959 $1,214,147 $1,198,879 Total deposits 971,033 980,633 989,560 988,626 971,663 Loans (gross) 957,037 958,033 958,754 948,732 929,342 Stockholders' equity 109,422 110,616 115,545 117,681 117,042 ========== ========== ========== ========== ========== Consolidated performance ratios: Return on average assets* -3.29% -0.09% -1.12% 0.57% 0.64% Return on average equity* -34.84% -0.97% -11.70% 5.86% 6.55% Net interest margin* 2.87% 3.56% 3.66% 3.80% 4.69% Efficiency ratio (2) 90.77% 72.22% 79.05% 70.16% 63.62% ========== ========== ========== ========== ========== Consolidated asset quality data and ratios: Nonaccruing loans $ 55,737 $ 51,132 $ 39,629 $ 40,260 $ 36,450 Accruing loans 90 days past due 114 466 297 969 162 ---------- ---------- ---------- ---------- ---------- Nonperforming loans 55,851 51,598 39,926 41,229 36,612 Foreclosed properties 6,805 3,237 2,172 2,511 2,491 ---------- ---------- ---------- ---------- ---------- Nonperforming assets 62,656 54,835 42,098 43,740 39,103 ---------- ---------- ---------- ---------- ---------- Allowance for loan losses 29,952 21,553 18,833 15,459 17,673 ---------- ---------- ---------- ---------- ---------- Loans charged off 9,158 1,711 6,097 4,602 3,140 Recoveries of loans charged off 765 851 1,027 976 238 ---------- ---------- ---------- ---------- ---------- Net loan charge-offs 8,393 860 5,070 3,626 2,902 ---------- ---------- ---------- ---------- ---------- Net charge-offs to average loans* 3.49% 0.36% 2.13% 1.54% 1.24% Nonperforming loans to total assets 4.77% 4.45% 3.36% 3.34% 3.00% Allowance coverage of nonperforming loans 53.63% 41.77% 47.17% 37.50% 48.27% Allowance for loan losses to gross loans 3.14% 2.26% 1.97% 1.63% 1.87% Allowance for loan losses to net loans 3.24% 2.32% 2.01% 1.66% 1.90% ========== ========== ========== ========== ========== Subsidiary earnings summary: Bank of Granite Net interest income $ 6,928 $ 8,871 $ 9,003 $ 9,543 $ 12,207 Loan loss provision 16,767 3,556 8,421 1,399 2,994 Noninterest income 2,109 2,348 2,117 2,235 2,619 Noninterest expense 7,863 6,878 8,421 7,847 8,777 Income tax expense (benefit) (6,355) 25 (2,539) 711 852 Net income (loss) (9,238) 760 (3,183) 1,821 2,203 ---------- ---------- ---------- ---------- ---------- Granite Mortgage Net interest income $ 617 $ 703 $ 996 $ 842 $ 751 Loan loss provision 24 25 24 12 12 Noninterest income 682 849 986 1,043 916 Noninterest expense 1,455 1,852 1,878 1,685 1,635 Income tax expense (benefit) (72) (130) 32 75 8 Net income (loss) (108) (195) 48 113 12 ========== ========== ========== ========== ========== * Annualized based on number of days in the period. (1) Yields and interest income on tax-exempt investments have been adjusted to tax equivalent basis using a 35% tax rate. (2) Calculated by dividing noninterest expense by the sum of tax equivalent net interest income and noninterest income.
