Granite State Bankshares, Inc. Announces an 11.36% Increase in First Quarter Diluted Earnings Per Share


KEENE, N.H., April 9, 2001 (PRIMEZONE) -- Granite State Bankshares, Inc. (Nasdaq:GSBI) today announced net earnings for the three months ended March 31, 2001, of $2,657,000 compared to net earnings of $2,509,000 for the three months ended March 31, 2000. Basic earnings per share were $.50 for the three months ended March 31, 2001, compared to $.44 for the three months ended March 31, 2000. Diluted earnings per share were $.49 for the three months ended March 31, 2001, compared to $.44 for the three months ended March 31, 2000, an increase of 11.36%.

The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," on January 1, 2001. The cumulative effect on prior years of adopting SFAS No. 133 on January 1, 2001, was not significant and therefore has not been separately disclosed. The impact of accounting for derivative instruments under SFAS No. 133 during the three months ended March 31, 2001, decreased net interest and dividend income by $163,000. The after tax impact on net earnings was a decrease of $98,000.

Net interest and dividend income for the three months ended March 31, 2001, was $8,606,000, compared with $7,931,000 for the three months ended March 31, 2000. Interest rate spread for the three months ended March 31, 2001, was 3.45%, compared with 3.40% for the three months ended March 31, 2000.

The provision for possible loan losses for the three months ended March 31, 2001, was $60,000, compared with $30,000 for the three months ended March 31, 2000.

Total assets at March 31, 2001, were $962,272,000 compared to $955,009,000 at December 31, 2000.

Total nonperforming assets were $3,537,000 or 0.37% of total assets at March 31, 2001, and consisted of $3,070,000 of nonperforming loans and $467,000 of other real estate owned. At December 31, 2000, total nonperforming assets were $3,617,000 or 0.38% of total assets and consisted of $3,201,000 of nonperforming loans and $416,000 of other real estate owned. The allowance for possible loan losses was $7,969,000 or 259.58% of nonperforming loans at March 31, 2001. At December 31, 2000, the allowance for possible loan losses was $7,854,000, or 245.36% of nonperforming loans.

Stockholders' equity at March 31, 2001, and December 31, 2000, was $76,659,000 and $73,464,000, respectively, representing 7.97% and 7.69% of total assets, respectively.

Chairman and CEO Charles W. Smith said, "We are pleased with the increase in earnings for the three months ended March 31, 2001 over the same period in 2000. The Company's Board of Directors increased the quarterly cash dividend to $.17 per share, which represents an increase of 6.25% over the previous quarter's dividend and an annualized dividend rate of $.68 per share. We are also delighted with the completion and integration of the Olde Port acquisition, which will be accretive to earnings in 2001. This addition to our franchise gives us five offices on the seacoast, which is a strong growth area and a desirable part of the state to do business."

Granite State Bankshares, Inc. is the parent company for Granite Bank, a New Hampshire state-chartered commercial bank and the largest independent bank in the state of New Hampshire with 19 offices operating throughout southern New Hampshire.

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.


          GRANITE STATE BANKSHARES, INC. and SUBSIDIARY
              Selected Balance Sheet and Other Data
             ($ in thousands, except per share data)

                              March 31,       December 31,
                                2001             2000
                             ---------       ------------
                                     (unaudited)

 Total assets                 $962,272         $955,009
 Securities held
  to maturity                    6,009           18,011
 Securities available
  for sale                     213,799          196,522
 Stock in Federal Home
  Loan Bank of Boston            7,201            7,201
 Loans held for sale             1,098              657

 Loans                         661,529          657,385
 Unearned income                 1,148            1,177
 Allowance for possible
  loan losses                    7,969            7,854
 Net loans                     652,412          648,354

 Nonperforming loans             3,070            3,201
 Other real estate owned           467              416
 Total nonperforming assets      3,537            3,617
 Nonperforming assets as
  percent of total assets         0.37%            0.38%
 Allowance for possible
  loan losses as a percent
  of nonperforming loans        259.58%          245.36%

 Total deposits               $681,496         $683,334

 Securities sold under
  agreements to repurchase      78,996           90,811

 Other borrowings-Federal
   Home Loan Bank of Boston    120,502          100,515

 Stockholders' equity           76,659           73,464

 Book value per share            14.30            13.76


                 GRANITE STATE BANKSHARES, INC. and SUBSIDIARY
                  Selected Operating Statement and Other Data
                    ($ in thousands, except per share data)


                                      Three Months Ended
                                           March 31,
                                     ---------------------
                                       2001         2000
                                     --------     --------
                                           (unaudited)

 Interest and dividend income     $   17,104    $   15,314
 Interest expense                      8,498         7,383
                                  ----------    ----------
   Net interest and
    dividend income                    8,606         7,931
 Provision for possible
   loan losses                            60            30
   Net interest and
    dividend income after               --            --
    provision for possible
    loan losses                        8,546         7,901
 Net gains on sales of
  securities available
  for sale                               228             6
 Other noninterest income              1,394         1,266
 Other noninterest expenses            5,978         5,280
                                  ----------    ----------
   Earnings before
    income taxes                       4,190         3,893
 Income taxes                          1,533         1,384
                                  ----------    ----------
   Net earnings                   $    2,657    $    2,509
                                  ==========    ==========
 Weighted average shares
  outstanding
   Basic                           5,314,478     5,704,777
   Diluted                         5,419,844     5,752,907

 Net earnings per share-basic     $     0.50    $     0.44
                                  ==========    ==========

 Net earnings per share-diluted   $     0.49    $     0.44
                                  ==========    ==========

 Dividends declared per share     $     0.17    $     0.16
                                  ==========    ==========
 Average Balance Sheet Data:
   Average interest
    earning assets                $  885,533    $  819,194
                                  ==========    ==========

   Average interest
    bearing liabilities           $  786,913    $  721,378
                                  ==========    ==========

   Average stockholders'
    equity                        $   76,219    $   70,818
                                  ==========    ==========

   Average assets                 $  946,885    $  866,196
                                  ==========    ==========
 Key Operating Ratios:
   Return on Average Assets             1.14%         1.16%
                                  ==========    ==========

   Return on Average Equity            14.14%        14.25%
                                  ==========    ==========

   Weighted Average
    Interest Rate Spread                3.45%         3.40%
                                  ==========    ==========

   Net Yield on Average
    Interest Earning Assets             3.94%         3.89%
                                  ==========    ==========


            

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