Granite State Bankshares, Inc. Announces Fourth Quarter and Year End Earnings

KEENE, New Hampshire, UNITED STATES


KEENE, N.H., Jan. 12, 2001 (PRIMEZONE) -- Granite State Bankshares, Inc. (Nasdaq:GSBI) today announced net earnings for the three and twelve months ended December 31, 2000 of $2,531,000 and $10,078,000 compared to net earnings of $2,651,000 and $10,125,000 for the three and twelve months ended December 31,1999. Basic earnings per share were $.48 and $1.83 for the three and twelve months ended December 31, 2000, compared to $.46 and $1.75 for the three and twelve months ended December 31, 1999. Diluted earnings per share were $.47 and $1.82 for the three and twelve months ended December 31, 2000 compared to $.45 and $1.71 for the three and twelve months ended December 31, 1999.

Earnings before income taxes, exclusive of net gains on sales of securities available for sale ("core earnings"), were $15,415,000 for the twelve months ended December 31, 2000, compared with $14,695,000 for the twelve months ended December 31, 1999, an increase of 4.90%.

Net interest and dividend income for the three and twelve months ended December 31, 2000 was $8,114,000 and $32,242,000, compared with $8,073,000 and $31,906,000 for the three and twelve months ended December 31, 1999. The net yield on average interest earning assets for the three and twelve months ended December 31, 2000 was 3.82% and 3.90%, compared with 3.90% and 3.94% for the three and twelve months ended December 31, 1999.

The provision for possible loan losses for the three and twelve months ended December 31, 2000 was $100,000 and $330,000, compared with $0 and $50,000 for the three and twelve months ended December 31, 1999.

Total assets at December 31, 2000 were $955,009,000 compared to $867,677,000 at December 31, 1999. The Company completed its acquisition of the two branch offices of the former Olde Port Bank effective at year end 2000. Loans acquired in connection with the acquisition totaled approximately $43 million and deposits and repurchase agreement liabilities assumed totaled approximately $40 million. Since the acquisition closed effective at year end, the assets acquired and liabilities assumed are included in the balance sheet data. Additionally, since the acquisition is being accounted for under the purchase method of accounting, the operating results relating to the acquired branches will be reflected in earnings commencing January 1, 2001.

Total nonperforming assets were $3,617,000 or 0.38% of total assets at December 31, 2000 and consisted of $3,201,000 of nonperforming loans and $416,000 of other real estate owned. At December 31, 1999, total nonperforming assets were $2,804,000 or 0.32% of total assets and consisted of $1,516,000 of nonperforming loans and $1,288,000 of other real estate owned. The allowance for possible loan losses was $7,854,000 or 245.36% of nonperforming loans at December 31, 2000. At December 31, 1999, the allowance for possible loan losses was $7,032,000, or 463.85% of nonperforming loans.

Stockholders' equity at December 31, 2000 and December 31, 1999 was $73,464,000 and $70,369,000, respectively, representing 7.69% and 8.11% of total assets, respectively.

"Despite the Federal Reserve Board's recent actions to ease interest rates, the year 2000 was marked by increasing interest rates and considerable pressure on interest rate spreads. Additionally, consistent with its ongoing capital management strategies, the Company expended $7.1 million to repurchase 417 thousand shares of its stock during the year. We are pleased to report solid earnings and a significant increase in our earnings per share for the year," commented Charles W. Smith, Chairman and Chief Executive Officer. "We also closed the year with a further enhancement of the Company's franchise through the completion of the acquisition of the two branch offices of the former Olde Port Bank in Portsmouth and Hampton, New Hampshire" Smith stated.

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 Data
                 ($ in thousands, except per share data)

                                           December 31,   December 31,
                                               2000           1999
                                           ------------   ------------
                                                   (unaudited)

 Total assets                              $   955,009    $   867,677
 Securities held to maturity                    18,011         18,017
 Securities available for sale                 196,522        215,572
 Stock in Federal Home Loan Bank
  of Boston                                      7,201          7,201
 Loans held for sale                               657            479
 
 Loans                                         657,385        568,694
 Unearned income                                 1,177          1,248
 Allowance for possible loan losses              7,854          7,032
 Net loans                                     648,354        560,414
 
 Nonperforming loans                             3,201          1,516
 Other real estate owned                           416          1,288
 Total nonperforming assets                      3,617          2,804
 Nonperforming assets as percent
  of total assets                                0.38%          0.32%
 Allowance for possible loan losses
  as a percent of nonperforming loans          245.36%        463.85%
 
 Total deposits                            $   683,334    $   628,018
 
 Securities sold under agreements
  to repurchase                                 90,811         75,042
 
 Other borrowings-Federal Home Loan
  Bank of Boston                               100,515         90,563
 
 Stockholders' equity                           73,464         70,369
 
 Book value per share                            13.76          12.24
 
 
                  GRANITE STATE BANKSHARES, INC. and SUBSIDIARY
                  Selected Operating Statement and Other Data
                    ($ in thousands, except per share data)


                            Three Months Ended     Twelve Months Ended
                                December 31,            December 31,
                            -------------------    -------------------
                              2000       1999        2000       1999
                            --------   --------    --------   --------
                                (unaudited)             (unaudited)

 Interest and dividend
  income                  $  16,401  $  15,247   $  63,336  $  59,802
 Interest expense             8,287      7,174      31,094     27,896
                             ------     ------      ------     ------
  Net interest and
   dividend income            8,114      8,073      32,242     31,906
 Provision for possible
  loan losses                   100          0         330         50
                             ------     ------      ------     ------
  Net interest and dividend
   income after provision
   for possible loan losses   8,014      8,073      31,912     31,856
 Net gains on sales of
  Securities available
  for sale                      233         13         322        708
 Other noninterest income     1,268      1,211       5,247      4,755
 Other noninterest expenses   5,542      5,540      21,744     21,916
                             ------     ------      ------     ------
   Earnings before
    income taxes              3,973      3,757      15,737     15,403
 Income taxes                 1,442      1,106       5,659      5,278
                             ------     ------      ------     ------
   Net earnings           $   2,531  $   2,651   $  10,078  $  10,125
                             ======     ======      ======     ======
 Weighted average 
  shares outstanding
   Basic                  5,319,999  5,720,475   5,494,982  5,778,272
   Diluted                5,391,890  5,851,140   5,537,735  5,927,668

 Net earnings per
  share - basic           $    0.48  $    0.46   $    1.83  $    1.75
                             ======     ======      ======     ======
 Net earnings per
  share - diluted         $    0.47  $    0.45   $    1.82  $    1.71
                             ======     ======      ======     ======

 Dividends declared
  per share               $    0.16  $    0.14   $    0.64   $   0.56
                             ======     ======      ======     ======
 Average Balance
  Sheet Data:
   Average interest
    earning assets        $ 844,950  $ 820,584   $ 827,012   $809,421

   Average interest
    bearing liabilities   $ 741,942  $ 722,999   $ 725,261   $712,874

   Average stockholders'
    equity                $  72,139  $  72,850   $  70,714   $ 72,945

  Average assets          $ 896,972  $ 875,501   $ 875,848   $861,340

 Key Operating Ratios:
   Return on Average
    Assets                     1.12%      1.20%       1.15%      1.18%
                             ======     ======      ======     ======

  Return on Average
   Equity                     13.96%     14.44%      14.25%     13.88%
                             ======     ======      ======     ======

  Weighted Average Interest
   Rate Spread                 3.28%      3.44%       3.37%      3.48%
                             ======     ======      ======     ======

  Net Yield on Average
   Interest Earning Assets     3.82%      3.90%       3.90%      3.94%
                             ======     ======      ======     ======


        

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