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Bank reports net loss of $4.5 million for second quarter

Long View office to close

By John Dayberry | Hickory Daily Record

Published: July 30, 2009

GRANITE FALLS - Bank of Granite Corp. on Wednesday reported a net loss of $4.52 million, or 29 cents per share, for the quarter ended June 30, compared to a net loss of $3.36 million, or 22 cents per share, reported for the second quarter of 2008.

For the six months ended June 30, the company reported a net loss of $8.75 million, or 57 cents per share, compared to a net loss of $1.65 million, or 11 cents per share, for the comparable period of 2008.

Bank of Granite also announced it would consolidate its Long View office on First Avenue, SW, into its downtown Hickory office on Third Street, NW, effective Aug. 31.

The bank hopes to find other positions within the organization for most of the Long View office's six employees, said Scott Anderson, Bank of Granite's president and chief executive officer.

Bank of Granite, which employs 250 people, has trimmed its staff by about 16 percent since late last year.

"In this difficult economy, we have carefully examined all of our offices looking for ways to eliminate duplicate costs without sacrificing our standards for superior service," Anderson said.

Bank of Granite will still have six locations in Catawba County — Hickory, Mountain View, Springs Road, Viewmont, Newton and Conover.

The company does not have any plans for the Long View office building at this time.

Bank of Granite Corp.'s earnings decreased in both the three and six-month periods ended June 30 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 non-performing assets, Anderson said.

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.

Anderson said 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 $520,000 for the company.

"While operating results continue to disappoint, we are making progress," he said.

"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. 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 head winds prevent too much optimism. Lastly, the improvement of the company's capital position is a challenge that we are pursuing daily."

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. For the total risk-based capital ratio measure, the company and its banking subsidiary ended the quarter with capital ratios of 8.74 percent and 8.41 percent, respectively, as compared to the 8 percent threshold needed to be categorized as "adequately" capitalized.