Granite State Bankshares, Inc. Announces 11% Increases in Both Second Quarter and Year-To-Date Diluted Earnings Per Share


KEENE, N.H., July 10, 2001 (PRIMEZONE) -- Granite State Bankshares, Inc. (Nasdaq:GSBI) today announced net earnings for the three and six months ended June 30, 2001, of $2,730,000 and $5,387,000, compared to net earnings of $2,522,000 and $5,031,000 for the three and six months ended June 30, 2000. Basic earnings per share were $.52 and $1.02 for the three and six months ended June 30, 2001, compared to $.45 and $.89 for the three and six months ended June 30, 2000. Diluted earnings per share were $.50 and $.99 for the three and six months ended June 30, 2001 compared to $.45 and $.89 for the three and six months ended June 30, 2000, representing increases of 11.11% and 11.24%, respectively.

Net interest and dividend income for the three and six months ended June 30, 2001, was $9,016,000 and $17,622,000, compared with $8,081,000 and $16,012,000 for the three and six months ended June 30, 2000. Interest rate spread for the three and six months ended June 30, 2001 was 3.48% and 3.47%, compared with 3.46% and 3.43% for the three and six months ended June 30, 2000.

The provision for possible loan losses for the three and six months ended June 30, 2001 was $120,000 and $180,000, compared with $50,000 and $80,000 for the three and six months ended June 30, 2000.

Total assets at June 30, 2001 were $992,523,000 compared to $955,009,000 at December 31, 2000.

Total nonperforming assets were $4,411,000 or 0.44% of total assets at June 30, 2001 and consisted of $3,910,000 of nonperforming loans and $501,000 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 $8,016,000 or 205.01% of nonperforming loans at June 30, 2001. At December 31, 2000, the allowance for possible loan losses was $7,854,000, or 245.36% of nonperforming loans.

Stockholders' equity at June 30, 2001 and December 31, 2000 was $77,543,000 and $73,464,000, respectively, representing 7.81% and 7.69% of total assets, respectively.

Chairman and CEO Charles W. Smith said, "We are pleased with the increase in earnings per share for the three and six months ended June 30, 2001 over the same periods in 2000. The Olde Port acquisition, completed December 31, 2000, continues to 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 that 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)



                                              June 30,    December 31,
                                                2001          2000
                                              --------    ------------
                                                     (unaudited)

 Total assets                                 $992,523      $955,009
 Securities held
  to maturity                                    6,007        18,011
 Securities available
  for sale                                     226,792       196,522
 Stock in Federal Home
  Loan Bank of Boston                            7,201         7,201
 Loans held for sale                             8,388           657

 Loans                                         664,035       657,385
 Unearned income                                 1,056         1,177
 Allowance for possible
  loan losses                                    8,016         7,854
 Net loans                                     654,963       648,354

 Nonperforming loans                             3,910         3,201
 Other real estate owned                           501           416
 Total nonperforming assets                      4,411         3,617
 Nonperforming assets as
  percent of total assets                         0.44%         0.38%
 Allowance for possible
  loan losses as a
  percent of nonperforming loans                205.01%       245.36%

 Total deposits                               $699,792      $683,334

 Securities sold under
  agreements to repurchase                      85,768        90,811

 Other borrowings-Federal
  Home Loan Bank of Boston                     126,488       100,515

 Stockholders' equity                           77,543        73,464

 Book value per share                            14.55         13.76


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


                            Three Months Ended     Six Months Ended
                                  June 30,              June 30,
                            ------------------    ------------------
                             2001       2000        2001       2000
                            ------     ------      ------     ------
                               (unaudited)            (unaudited)

 Interest and
  dividend income          $ 17,357   $ 15,579   $ 34,461   $ 30,893
 Interest expense             8,341      7,498     16,839     14,881
                         ---------- ---------- ---------- ----------
 Net interest and
  dividend income             9,016      8,081     17,622     16,012
 Provision for
  possible loan
  losses                        120         50        180         80
                         ---------- ---------- ---------- ----------
   Net interest and
    dividend income
    after provision
    for possible
    loan losses               8,896      8,031     17,442     15,932
 Net gains on sales
  of securities
  available for sale            192          0        420          6
 Other noninterest
  income                      1,578      1,376      2,972      2,642
 Other noninterest
  expenses                    6,418      5,474     12,396     10,754
                         ---------- ---------- ---------- ----------
   Earnings before
    income taxes              4,248      3,933      8,438      7,826
 Income taxes                 1,518      1,411      3,051      2,795
                         ---------- ---------- ---------- ----------
   Net earnings          $    2,730 $    2,522 $    5,387 $    5,031
                         ========== ========== ========== ==========
 Weighted average
  shares outstanding
   Basic                  5,296,567  5,561,220  5,305,473  5,632,999
   Diluted                5,428,517  5,585,656  5,424,204  5,669,282

 Net earnings
  per share-basic        $     0.52 $     0.45 $     1.02 $     0.89
                         ========== ========== ========== ==========

 Net earnings per
  share-diluted          $     0.50 $     0.45 $     0.99 $     0.89
                         ========== ========== ========== ==========

 Dividends declared
  per share              $     0.17 $     0.16 $     0.34 $     0.32
                         ========== ========== ========== ==========
 Average Balance
  Sheet Data:
   Average interest
    earning assets       $  913,307 $  815,990 $  899,497 $  817,592
                         ========== ========== ========== ==========

   Average interest
    bearing
    liabilities          $  808,085 $  714,234 $  797,557 $  717,806
                         ========== ========== ========== ==========

   Average stockholders'
    equity               $   77,849 $   69,935 $   77,039 $   70,377
                         ========== ========== ========== ==========

   Average assets        $  975,318 $  863,292 $  961,180 $  864,744
                         ========== ========== ========== ==========

 Key Operating Ratios:
   Return on
    Average Assets             1.12%      1.17%      1.13%      1.17%
                         ========== ========== ========== ==========

   Return on
    Average Equity            14.07%     14.50%     14.10%     14.38%
                         ========== ========== ========== ==========

   Weighted Average
    Interest Rate
    Spread                     3.48%      3.46%      3.47%      3.43%
                         ========== ========== ========== ==========

   Net Yield on
    Average Interest
    Earning Assets             3.96%      3.98%      3.95%      3.94%
                         ========== ========== ========== ==========


            

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