Bank of Granite Corporation (NASDAQ: GRAN) reported a net loss of
$4.23 million, or $0.27 per share, for the quarter ended March 31,
2009, compared to net income of $1.72 million, or $0.11 per share,
reported for the first quarter of 2008.
A continued decline in economic activity, which is stressing all
sections of the loan portfolio, caused the Company to provide $3.77
million for loan losses to build its allowance for loan loss to
$26.49 million or 2.90% of gross loans. The first quarter provision
for loan losses exceeded net charge-offs for the quarter by $1.68
million. Loan loss provisions for the comparable quarter of 2008
were $1.41 million.
Another significant factor in the first quarter results was the
continued decline in net interest income, which slightly improved
from the preceding quarter, but was down $2.77 million when
comparing to the first quarter of 2008, primarily because of a
lower net interest margin. Continued aggressive competition for
deposits in the Company's market coupled with lower rates on loans
and increasing levels of nonperforming assets were the primary
causes of the margin compression. The values of investments in
equity securities further decreased during the quarter resulting in
impairment charges of approximately $1 million. Overhead expenses
for the first quarter of 2009 were slightly lower than the first
quarter of 2008 reflecting ongoing efforts to be more efficient.
Because the Company is in an income tax loss carry forward
position, it recorded no income tax benefit for the net loss
incurred during the quarter.
As of March 31, 2009, consolidated total assets were $1.16
billion, total loans were $0.91 billion, and total deposits were $1
billion. Nonperforming assets increased to $61.29 million as of
March 31, 2009 compared to $57.51 million as of December 31, 2008
and $43.74 million as of March 31, 2008. 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
March 31, 2009. For the total risk-based capital ratio measure, the
Company and its banking subsidiary ended the quarter with capital
ratios of 8.50% and 7.92%, respectively, as compared to the 8%
threshold needed to be categorized as "adequately" capitalized.
Subsequent to March 31, the Company made a capital contribution to
its banking subsidiary of $1.5 million, which increased the banking
subsidiary's total risk-based capital ratio category to that of
"adequately" capitalized. Additionally, the banking subsidiary is
in the process of restructuring its balance sheet to reduce its
risk-weighted assets with a goal of improving its total risk-based
capital position as quickly as possible.
"Our results continue to be disappointing as our customers
suffer the current economic conditions," said Scott Anderson, CEO.
"We are working diligently on every problem loan and to that end
are beginning to see some incremental improvement in the prospects
for liquidating problem assets." Mr. Anderson continued, "Our
deposits have been steady and we are committed to our strategy of
service excellence that has earned our loyal customer base."
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 is a mortgage banking company headquartered in
Winston-Salem.
Please see the attached supplemental "Financial Data"
tables.
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 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. 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 filed with the Securities and
Exchange Commission.
Bank of Granite Corporation Three Months Ended
Selected Financial Data March 31,
-------------------------------------
(in thousands except per share
data) 2009 2008 % change
=========== =========== ===========
Consolidated earnings summary:
Interest income, taxable
equivalent $ 14,154 $ 19,101 -25.9%
Interest expense 6,471 8,611 -24.9%
----------- -----------
Net interest income, taxable
equivalent 7,683 10,490 -26.8%
Taxable equivalent adjustment (1) 161 197 -18.3%
----------- -----------
Net interest income 7,522 10,293 -26.9%
Loan loss provision 3,770 1,411 167.2%
Noninterest income 1,485 3,278 -54.7%
Noninterest expense 9,462 9,659 -2.0%
----------- -----------
Income (loss) before income taxes (4,225) 2,501 -268.9%
Income taxes - 786 -100.0%
----------- -----------
Net income (loss) $ (4,225) $ 1,715 -346.4%
=========== ===========
Earnings (loss) per share - Basic $ (0.27) $ 0.11 -345.5%
Earnings (loss) per share -
Diluted (0.27) 0.11 -345.5%
Tangible book value per share 4.51 6.77 -33.4%
----------- -----------
Average shares - Basic 15,454 15,438 0.1%
Average shares - Diluted 15,454 15,457 0.0%
=========== =========== ===========
Consolidated balance sheet data at
March 31:
Total assets $ 1,164,369 $ 1,235,624 -5.8%
Total deposits 1,009,593 1,011,717 -0.2%
Loans (gross) 913,277 949,065 -3.8%
Stockholders' equity 69,812 115,434 -39.5%
=========== =========== ===========
Consolidated average balance sheet
data:
Total assets $ 1,167,664 $ 1,214,147 -3.8%
Total deposits 1,003,380 988,626 1.5%
Loans (gross) 938,745 948,732 -1.1%
Stockholders' equity 74,432 117,681 -36.8%
=========== =========== ===========
Consolidated performance ratios:
Return on average assets* -1.47% 0.57%
Return on average equity* -23.02% 5.86%
Net interest margin* 2.85% 3.80%
Efficiency ratio (2) 103.21% 70.16%
=========== =========== ===========
Consolidated asset quality data and
ratios:
Nonaccruing loans $ 37,881 $ 40,260 -5.9%
Restructured loans 5,409 -
Accruing loans 90 days past due 434 969 -55.2%
----------- -----------
Nonperforming loans 43,724 41,229 6.1%
Foreclosed properties 17,567 2,511 599.6%
----------- -----------
Nonperforming assets 61,291 43,740 40.1%
----------- -----------
Allowance for loan losses 26,485 15,459 71.3%
----------- -----------
Loans charged off 2,905 4,603 -36.9%
Recoveries of loans charged off 814 978 -16.8%
----------- -----------
Net loan charge-offs 2,091 3,625 -42.3%
----------- -----------
Net charge-offs to average loans* 0.90% 1.54%
Nonperforming loans to total
assets 3.76% 3.34%
Allowance coverage of
nonperforming loans 60.57% 37.50%
Allowance for loan losses to
gross loans 2.90% 1.63%
Allowance for loan losses to net
loans 2.99% 1.66%
=========== =========== ===========
Subsidiary earnings summary:
Bank of Net interest income $ 6,459 $ 9,543 -32.3%
Granite Loan loss provision 3,746 1,399 167.8%
Noninterest income 1,345 2,235 -39.8%
Noninterest expense 7,259 7,847 -7.5%
Income taxes - 711 -100.0%
Net income (loss) (3,201) 1,821 -275.8%
----------- ----------- -----------
Granite Net interest income $ 1,062 $ 842 26.1%
Mortgage Loan loss provision 24 12 100.0%
Noninterest income 624 1,043 -40.2%
Noninterest expense 2,177 1,685 29.2%
Income taxes - 75 -100.0%
Net income (loss) (515) 113 -555.8%
=========== =========== ===========
* 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 Quarters Ended
-----------------------------------------------------
Supplemental
Quarterly
Financial Data
(in thousands
except per share Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
data) 2009 2008 2008 2008 2008
========= ========= ========= ========= =========
Consolidated
earnings summary:
Interest income,
taxable
equivalent $ 14,154 $ 14,751 $ 16,537 $ 17,254 $ 19,101
Interest expense 6,471 7,071 6,881 7,190 8,611
--------- --------- --------- --------- ---------
Net interest
income, taxable
equivalent 7,683 7,680 9,656 10,064 10,490
Taxable
equivalent
adjustment (1) 161 171 170 182 197
--------- --------- --------- --------- ---------
Net interest
income 7,522 7,509 9,486 9,882 10,293
Loan loss
provision 3,770 16,791 3,581 8,445 1,411
Noninterest
income 1,485 1,503 2,494 3,103 3,278
Noninterest
expense 9,462 20,131 8,775 10,409 9,659
--------- --------- --------- --------- ---------
Income (loss)
before income
taxes (benefit) (4,225) (27,910) (376) (5,869) 2,501
Income taxes
(benefit) - 6,423 (105) (2,507) 786
--------- --------- --------- --------- ---------
Net income (loss) $ (4,225) $ (34,333) $ (271) $ (3,362) $ 1,715
========= ========= ========= ========= =========
Earnings (loss)
per share -
Basic $ (0.27) $ (2.22) $ (0.02) $ (0.22) $ 0.11
Earnings (loss)
per share -
Diluted (0.27) (2.22) (0.02) (0.22) 0.11
Tangible book
value per share 4.51 4.79 6.33 6.38 6.77
--------- --------- --------- --------- ---------
Average shares -
Basic 15,454 15,454 15,454 15,446 15,438
Average shares -
Diluted 15,454 15,454 15,454 15,446 15,457
========= ========= ========= ========= =========
Consolidated ending
balance sheet
data:
Total assets $1,164,369 $1,146,955 $1,159,917 $1,187,696 $1,235,624
Total deposits 1,009,593 991,822 969,172 982,213 1,011,717
Loans (gross) 913,277 948,149 951,665 955,497 949,065
Stockholders'
equity 69,812 74,170 108,673 109,458 115,434
========= ========= ========= ========= =========
Consolidated
average balance
sheet data:
Total assets $1,167,664 $1,157,189 $1,181,505 $1,205,959 $1,214,147
Total deposits 1,003,380 971,033 980,633 989,560 988,626
Loans (gross) 938,745 956,981 958,033 958,754 948,732
Stockholders'
equity 74,432 109,178 110,616 115,545 117,681
========= ========= ========= ========= =========
Consolidated
performance
ratios:
Return on average
assets* -1.47% -11.80% -0.09% -1.12% 0.57%
Return on average
equity* -23.02% -125.10% -0.97% -11.70% 5.86%
Net interest
margin* 2.85% 2.87% 3.56% 3.66% 3.80%
Efficiency ratio
(2) 103.21% 219.22% 72.22% 79.05% 70.16%
========= ========= ========= ========= =========
Consolidated asset
quality data and
ratios:
Nonaccruing loans $ 37,881 $ 50,591 $ 51,132 $ 39,629 $ 40,260
Restructured
loans 5,409 - - - -
Accruing loans 90
days past due 434 114 466 297 969
--------- --------- --------- --------- ---------
Nonperforming
loans 43,724 50,705 51,598 39,926 41,229
Foreclosed
properties 17,567 6,805 3,237 2,172 2,511
--------- --------- --------- --------- ---------
Nonperforming
assets 61,291 57,510 54,835 42,098 43,740
--------- --------- --------- --------- ---------
Allowance for
loan losses 26,485 24,806 21,553 18,833 15,459
--------- --------- --------- --------- ---------
Loans charged off 2,905 14,303 1,711 6,097 4,603
Recoveries of
loans charged
off 814 763 851 1,027 978
--------- --------- --------- --------- ---------
Net loan
charge-offs 2,091 13,540 860 5,070 3,625
--------- --------- --------- --------- ---------
Net charge-offs
to average
loans* 0.90% 5.63% 0.36% 2.13% 1.54%
Nonperforming
loans to total
assets 3.76% 4.42% 4.45% 3.36% 3.34%
Allowance
coverage of
nonperforming
loans 60.57% 48.92% 41.77% 47.17% 37.50%
Allowance for
loan losses to
gross loans 2.90% 2.62% 2.26% 1.97% 1.63%
Allowance for
loan losses to
net loans 2.99% 2.69% 2.32% 2.01% 1.66%
========= ========= ========= ========= =========
Subsidiary earnings
summary:
Bank of Net
Granite interest
income $ 6,459 $ 6,928 $ 8,871 $ 9,003 $ 9,543
Loan loss
provision 3,746 16,767 3,556 8,421 1,399
Noninterest
income 1,345 1,288 2,348 2,117 2,235
Noninterest
expense 7,259 18,627 6,878 8,421 7,847
Income
taxes
(benefit) - 6,645 25 (2,539) 711
Net income
(loss) (3,201) (33,823) 760 (3,183) 1,821
--------- --------- --------- --------- ---------
Granite Net
Mortgage interest
income $ 1,062 $ 617 $ 703 $ 996 $ 842
Loan loss
provision 24 24 25 24 12
Noninterest
income 624 682 849 986 1,043
Noninterest
expense 2,177 1,455 1,852 1,878 1,685
Income
taxes
(benefit) - (222) (130) 32 75
Net
income
(loss) (515) 42 (195) 48 113
========= ========= ========= ========= =========
* 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.
Contacts for this release: Scott Anderson Chief Executive
Officer 828.345.6866 Email Contact Kirby Tyndall Chief Financial
Officer 828.496.2026 Email Contact
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