Bank of Granite Corporation (NASDAQ: GRAN) reported a net loss of
$4.52 million, or $0.29 per share, for the quarter ended June 30,
2009, compared to a net loss of $3.36 million, or $0.22 per share,
reported for the second quarter of 2008. For the six months ended
June 30, 2009, the Company reported a net loss of $8.75 million, or
$0.57 per share, compared to a net loss of $1.65 million, or $0.11
per share, for the comparable period of 2008.
The Company continued to operate in a very difficult economic
environment in the six months ended June 30, 2009. Unemployment
continued to rise throughout the Company's footprint, and the
effect was evidenced in the declining ability of small businesses
to service their debt. Real estate sales activity has slowed
dramatically which has caused a continued decline in real estate
values. Additionally, the Company has taken an aggressive position
on resolving problem loan issues. Short-sale and other asset
disposition activities have resulted in continued elevated credit
loss costs and charge-off levels. Such activity has been
significant in the reduction of loans by approximately $75.7
million in the period.
The Company's earnings decreased in both the three and six-month
periods ended June 30, 2009 when compared to the same periods in
2008, primarily due to decreases in interest and fee income from
loans. The decline in loan income was principally due to the
continuing impact of the Federal Reserve Bank's reduction of
overnight rates through January 2009 as well as higher levels of
nonperforming assets. The decline in loan loss provisions was
partially offset by the decrease in net interest income for the
same periods compared to 2008. Income tax benefits relating to the
net losses for the first two quarters of 2009 were not recorded.
The most significant regulatory impact to the Company has been
elevated FDIC assessments, which totaled $2.4 million for the
six-month period, including a special assessment of all banks in
the second quarter that totaled $520 thousand for the Company.
Scott Anderson, CEO, said, "The recessionary costs cited above
continue to outweigh the areas of improvement we see. While
operating results continue to disappoint, we are making progress.
Our personnel costs are down almost $1 million compared to the
first six months of 2008. Our banking subsidiary's net interest
margin improved for the first quarter in a year." Anderson
continued, "We are encouraged that a reduction in early stage
delinquencies may be an indication of a slowdown in new problem
loans. That said, the economic headwinds prevent too much optimism.
Lastly, the improvement of the Company's capital position is a
challenge that we are pursuing daily."
As of June 30, 2009, consolidated total assets were $1.11
billion, total loans were $0.87 billion, and total deposits were
$0.97 billion. Nonperforming assets increased to $60.00 million as
of June 30, 2009 compared to $57.51 million as of December 31, 2008
and $42.10 million as of June 30, 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
June 30, 2009. For the total risk-based capital ratio measure, the
Company and its banking subsidiary ended the quarter with capital
ratios of 8.74% and 8.41%, respectively, as compared to the 8%
threshold needed to be categorized as "adequately" capitalized. The
banking subsidiary continues 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.
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. 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.
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
Selected
Financial Data Three Months Ended Six Months Ended
(in June 30, June 30,
thousands ----------------------------- -----------------------------
except per % %
share data) 2009 2008 change 2009 2008 change
========== ========== ====== ========== ========== ======
Consolidated
earnings
summary:
Interest
income,
taxable
equiva-
lent $ 13,122 $ 17,254 -23.9% $ 27,276 $ 36,355 -25.0%
Interest
expense 5,582 7,190 -22.4% 12,053 15,801 -23.7%
---------- ---------- ---------- ----------
Net
interest
income,
taxable
equivalent 7,540 10,064 -25.1% 15,223 20,554 -25.9%
Taxable
equivalent
adjustment
(1) 35 182 -80.8% 196 379 -48.3%
---------- ---------- ---------- ----------
Net
interest
income 7,505 9,882 -24.1% 15,027 20,175 -25.5%
Loan loss
provision 4,333 8,445 -48.7% 8,103 9,856 -17.8%
Noninterest
income 3,302 3,103 6.4% 4,787 6,381 -25.0%
Noninterest
expense 10,995 10,409 5.6% 20,457 20,068 1.9%
---------- ---------- ---------- ----------
Loss before
income tax
benefit (4,521) (5,869) -23.0% (8,746) (3,368) 159.7%
Income tax
benefit - (2,507) -100.0% - (1,721) -100.0%
---------- ---------- ---------- ----------
Net loss $ (4,521) $ (3,362) 34.5% $ (8,746) $ (1,647) 431.0%
========== ========== ========== ==========
Loss per
share -
Basic $ (0.29) $ (0.22) 31.8% $ (0.57) $ (0.11) 418.2%
Loss per
share -
Diluted (0.29) (0.22) 31.8% (0.57) (0.11) 418.2%
Tangible
book value
per share 4.18 6.38 -34.5% 4.18 6.38 -34.5%
---------- ---------- ---------- ----------
Average
shares -
Basic 15,454 15,446 0.1% 15,454 15,442 0.1%
Average
shares -
Diluted 15,454 15,446 0.1% 15,454 15,442 0.1%
========== ========== ====== ========== ========== ======
Consolidated
balance sheet
data at
June 30:
Total
assets $1,107,504 $1,187,696 -6.8%
Total
deposits 974,604 982,213 -0.8%
Loans
(gross) 872,459 955,497 -8.7%
Stockholders
equity 64,750 109,458 -40.8%
========== ========== ====== ========== ========== ======
Consolidated
average
balance
sheet data:
Total
assets $1,138,662 $1,205,959 -5.6% $1,153,163 $1,210,053 -4.7%
Total
deposits 991,904 989,560 0.2% 997,642 989,093 0.9%
Loans
(gross) 899,705 958,754 -6.2% 919,225 953,743 -3.6%
Stockholders
equity 70,100 115,545 -39.3% 72,266 116,613 -38.0%
========== ========== ====== ========== ========== ======
Consolidated
performance
ratios:
Return
on average
assets* -1.59% -1.12% -1.53% -0.27%
Return on
average
equity* -25.87% -11.70% -24.41% -2.84%
Net interest
margin* 2.83% 3.66% 2.84% 3.73%
Efficiency
ratio (2) 101.41% 79.05% 102.23% 74.51%
========== ========== ====== ========== ========== ======
Consolidated
asset quality
data and
ratios:
Nonaccruing
loans $ 38,531 $ 39,629 -2.8%
Restructured
loans 5,679 - n/a
Accruing
loans 90
days past
due 355 297 19.5%
---------- ----------
Nonperforming
loans 44,565 39,926 11.6%
Foreclosed
properties 15,437 2,172 610.7%
---------- ----------
Nonperforming
assets 60,002 42,098 42.5%
---------- ----------
Allowance for
loan losses 22,787 18,833 21.0%
---------- ----------
Loans charged
off 12,578 10,701 17.5%
Recoveries of
loans charged
off 2,456 2,005 22.5%
---------- ----------
Net loan
charge-
-offs 10,122 8,696 16.4%
---------- ----------
Net
charge-offs
to average
loans* 2.22% 1.83%
Nonperforming
loans to
total assets 4.02% 3.36%
Allowance
coverage of
nonperforming
loans 51.13% 47.17%
Allowance for
loan losses
to gross
loans 2.61% 1.97%
Allowance for
loan losses
to net
loans 2.68% 2.01%
========== ========== ====== ========== ========== ======
Subsidiary
earnings
summary:
Bank of Granite
Net
interest
income $ 7,245 $ 9,003 -19.5% $ 13,704 $ 18,546 -26.1%
Loan loss
provision 4,309 8,421 -48.8% 8,055 9,820 -18.0%
Noninterest
income 2,905 2,117 37.2% 4,250 4,352 -2.3%
Noninterest
expense 9,779 8,421 16.1% 17,038 16,268 4.7%
Income tax
(benefit) - (2,539) -100.0% - (1,828) -100.0%
Net loss (3,938) (3,183) 23.7% (7,139) (1,362) 424.2%
---------- ---------- ------ ---------- ---------- ------
Granite
Mortgage
Net
interest
income $ 266 $ 996 -73.3% $ 1,328 $ 1,838 -27.7%
Loan loss
provision 24 24 0.0% 48 36 33.3%
Noninterest
income 225 986 -77.2% 849 2,029 -58.2%
Noninterest
expense 1,123 1,878 -40.2% 3,300 3,563 -7.4%
Income
taxes - 32 -100.0% - 107 -100.0%
Net income
(loss) (656) 48 n/m (1,171) 161 -827.3%
========== ========== ====== ========== ========== ======
* 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 net interest
income and noninterest income.
Bank of Granite
Corporation
Supplemental
Quarterly
Financial
Data Quarters Ended
(In thousands ----------------------------------------------------------
except per Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
share data) 2009 2009 2008 2008 2008
========== ========== ========== ========== ==========
Consolidated
earnings
summary:
Interest
income,
taxable
equivalent $ 13,122 $ 14,154 $ 14,751 $ 16,537 $ 17,254
Interest
expense 5,582 6,471 7,071 6,881 7,190
---------- ---------- ---------- ---------- ----------
Net interest
income,
taxable
equivalent 7,540 7,683 7,680 9,656 10,064
Taxable
equivalent
adjustment
(1) 35 161 171 170 182
---------- ---------- ---------- ---------- ----------
Net interest
income 7,505 7,522 7,509 9,486 9,882
Loan loss
provision 4,333 3,770 16,791 3,581 8,445
Noninterest
income 3,302 1,485 1,503 2,494 3,103
Noninterest
expense 10,995 9,462 20,131 8,775 10,409
---------- ---------- ---------- ---------- ----------
Loss before
income
taxes
(benefit) (4,521) (4,225) (27,910) (376) (5,869)
Income taxes
(benefit) - - 6,423 (105) (2,507)
---------- ---------- ---------- ---------- ----------
Net loss $ (4,521) $ (4,225) $ (34,333) $ (271) $ (3,362)
========== ========== ========== ========== ==========
Loss per
share -
Basic $ (0.29) $ (0.27) $ (2.22) $ (0.02) $ (0.22)
Loss per
share -
Diluted (0.29) (0.27) (2.22) (0.02) (0.22)
Tangible
book value
per share 4.18 4.51 4.79 6.33 6.38
---------- ---------- ---------- ---------- ----------
Average
shares -
Basic 15,454 15,454 15,454 15,454 15,446
Average
shares -
Diluted 15,454 15,454 15,454 15,454 15,446
========== ========== ========== ========== ==========
Consolidated
ending balance
sheet data:
Total assets $1,107,504 $1,164,369 $1,146,955 $1,159,917 $1,187,696
Total
deposits 974,604 1,009,593 991,822 969,172 982,213
Loans
(gross) 872,459 913,277 948,149 951,665 955,497
Stockholders'
equity 64,750 69,812 74,170 108,673 109,458
========== ========== ========== ========== ==========
Consolidated
average balance
sheet data:
Total assets $1,138,662 $1,167,664 $1,157,189 $1,181,505 $1,205,959
Total
deposits 991,904 1,003,380 971,033 980,633 989,560
Loans
(gross) 899,705 938,745 956,981 958,033 958,754
Stockholders'
equity 70,100 74,432 109,178 110,616 115,545
========== ========== ========== ========== ==========
Consolidated
performance
ratios:
Return on
average
assets* -1.59% -1.47% -11.80% -0.09% -1.12%
Return on
average
equity* -25.87% -23.02% -125.10% -0.97% -11.70%
Net interest
margin* 2.83% 2.85% 2.87% 3.56% 3.66%
Efficiency
ratio (2) 101.41% 103.21% 219.22% 72.22% 79.05%
========== ========== ========== ========== ==========
Consolidated
asset quality
data and ratios:
Nonaccruing
loans $ 38,531 $ 37,881 $ 50,591 $ 51,132 $ 39,629
Restructured
loans 5,679 5,409 - - -
Accruing
loans 90
days past
due 355 434 114 466 297
---------- ---------- ---------- ---------- ----------
Nonperforming
loans 44,565 43,724 50,705 51,598 39,926
Foreclosed
properties 15,437 17,567 6,805 3,237 2,172
---------- ---------- ---------- ---------- ----------
Nonperforming
assets 60,002 61,291 57,510 54,835 42,098
---------- ---------- ---------- ---------- ----------
Allowance
for loan
losses 22,787 26,485 24,806 21,553 18,833
---------- ---------- ---------- ---------- ----------
Loans
charged off 9,673 2,905 14,303 1,711 6,097
Recoveries
of loans
charged off 1,642 814 763 851 1,026
---------- ---------- ---------- ---------- ----------
Net loan
charge-offs 8,031 2,091 13,540 860 5,071
---------- ---------- ---------- ---------- ----------
Net
charge-offs
to average
loans* 3.58% 0.90% 5.63% 0.36% 2.13%
Nonperforming
loans to
total assets 4.02% 3.76% 4.42% 4.45% 3.36%
Allowance
coverage of
nonperforming
loans 51.13% 60.57% 48.92% 41.77% 47.17%
Allowance
for loan
losses to
gross loans 2.61% 2.90% 2.62% 2.26% 1.97%
Allowance
for loan
losses to
net loans 2.68% 2.99% 2.69% 2.32% 2.01%
========== ========== ========== ========== ==========
Subsidiary
earnings
summary:
Bank of Granite
Net
interest
income $ 7,245 $ 6,459 $ 6,928 $ 8,871 $ 9,003
Loan loss
provision 4,309 3,746 16,767 3,556 8,421
Noninterest
income 2,905 1,345 1,288 2,348 2,117
Noninterest
expense 9,779 7,259 18,627 6,878 8,421
Income taxes
(benefit) - - 6,645 25 (2,539)
Net income
(loss) (3,938) (3,201) (33,823) 760 (3,183)
---------- ---------- ---------- ---------- ----------
Granite Mortgage
Net
interest
income $ 266 $ 1,062 $ 617 $ 703 $ 996
Loan loss
provision 24 24 24 25 24
Noninterest
income 225 624 682 849 986
Noninterest
expense 1,123 2,177 1,455 1,852 1,878
Income taxes
(benefit) - - (222) (130) 32
Net income
(loss) (656) (515) 42 (195) 48
========== ========== ========== ========== ==========
* 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 net interest
income and noninterest income.
Contacts for this release: Scott Anderson Chief Executive
Officer 828.345.6866 Email Contact Jerry Felts Chief Operating
Officer 828.322.5343 Email Contact
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