Granite State Bankshares, Inc. Announces 25.53% and 15.93% Increases in Fourth Quarter and Year to Date Diluted Earnings Per Share

KEENE, New Hampshire, UNITED STATES


KEENE, N.H., Jan. 15, 2002 (PRIMEZONE) -- Granite State Bankshares, Inc. (Nasdaq:GSBI) today announced net earnings for the three and twelve months ended December 31, 2001 of $3,138,000 and $11,389,000, compared to net earnings of $2,531,000 and $10,078,000 for the three and twelve months ended December 31, 2000. Basic earnings per share were $.60 and $2.16 for the three and twelve months ended December 31, 2001, compared to $.48 and $1.83 for the three and twelve months ended December 31, 2000. Diluted earnings per share were $.59 and $2.11 for the three and twelve months ended December 31, 2001 compared to $.47 and $1.82 for the three and twelve months ended December 31, 2000, representing increases of 25.53% and 15.93%, respectively.

Net interest and dividend income for the three and twelve months ended December 31, 2001 was $9,995,000 and $37,010,000, compared with $8,114,000 and $32,242,000 for the three and twelve months ended December 31, 2000. The net interest margin for the three and twelve months ended December 31, 2001 was 4.10% and 3.98%, compared with 3.82% and 3.90% for the three and twelve months ended December 31, 2000.

Gains on sales of loans in the secondary mortgage market for the three and twelve months ended December 31, 2001 were $803,000 and $1,722,000, respectively, compared with $102,000 and $364,000, respectively, for the three and twelve months ended December 31, 2000. The large increase in 2001 relates to the lower interest rate environment, which encouraged residential borrowers to refinance into fixed rate loan products, which the Company sells in the secondary mortgage market.

The provision for possible loan losses for the three and twelve months ended December 31, 2001 was $300,000 and $660,000, compared with $100,000 and $330,000 for the three and twelve months ended December 31, 2000.

Total assets at December 31, 2001 were $1,018,942,000 compared to $955,009,000 at December 31, 2000.

Total nonperforming assets were $3,015,000 or 0.30% of total assets at December 31, 2001 and consisted of $3,015,000 of nonperforming loans. 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 $8,085,000 or 268.16% of nonperforming loans at December 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 December 31, 2001 and 2000 was $80,537,000 and $73,464,000, respectively, representing 7.90% and 7.69% of total assets, respectively.

Chairman and CEO Charles W. Smith said, "We are pleased to report solid earnings and a significant increase in earnings per share for the three and twelve months ended December 31, 2001 over the same periods in 2000. The Olde Port acquisition, completed December 31, 2000, continued to be accretive to earnings in 2001. This addition to our franchise is on the seacoast, which represents a strong growth area and a desirable part of the state to do business. Additionally, consistent with its ongoing capital management strategies, the Company expended $3.7 million to repurchase 163 thousand shares of its stock during the year. Also, we are delighted to report that strong asset growth during the year has enabled Granite State Bankshares, Inc. to report assets in excess of $1 billion for year end for the first time in its history."

Earnings Outlook for 2002

Commenting on the Company's earnings expectations for 2002, Chairman and CEO Smith stated: "We look forward to continued earnings momentum in 2002, although we do not expect to see significant further decreases in interest rates nor the related pace of loan originations and gains on sales of loans. Although it is acknowledged now that the economy has experienced a recession, we also do not expect to see the economic disruptions that occurred in prior periods of recession. We are currently estimating fully diluted earnings per share for 2002 in the range of $2.20 to $2.30."

Forward-looking Statements

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. 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.


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

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

 Total assets                                   $1,018,942   $ 955,009
 Securities held to maturity                         5,006      18,011
 Securities available for sale                     274,201     196,522
 Stock in Federal Home Loan Bank of Boston           7,201       7,201

 Loans held for sale                                14,821         657

 Loans                                             655,000     657,385
 Unearned income                                     1,075       1,177
 Allowance for possible loan losses                  8,085       7,854
 Net loans                                         645,840     648,354

 Nonperforming loans                                 3,015       3,201
 Other real estate owned                                 -         416
 Total nonperforming assets                          3,015       3,617
 Nonperforming assets as percent of total assets     0.30%       0.38%
 Allowance for possible loan losses as a percent
  of nonperforming loans                           268.16%     245.36%

 Total deposits                                 $  714,143   $ 683,334

 Securities sold under agreements to repurchase     85,013      90,811

 Other borrowings - Federal Home
   Loan Bank of Boston                             135,464     100,515

 Stockholders' equity                               80,537      73,464

 Book value per share                                15.38       13.76


                 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,
                         --------------------   ----------------------
                             2001      2000         2001        2000
                            ------    ------       ------      ------
                               (unaudited)              (unaudited)

 Interest and
  dividend income       $    16,942 $   16,401 $    68,922 $   63,336

 Interest expense             6,947      8,287      31,912     31,094
                         ----------  ---------  ----------  ---------
  Net interest and
    dividend income           9,995      8,114      37,010     32,242
 Provision for
  possible loan losses          300        100         660        330
                         ----------  ---------  ----------  ---------

   Net interest and
    dividend income 
    after provision for
     possible loan 
     losses                   9,695      8,014      36,350     31,912
 Net gains (losses) on
  sales of securities
  available for sale            (54)       233         403        322
 Net gains on sales
  of loans                      803        102       1,722        364
 Other noninterest
  income                      1,476      1,166       5,367      4,883
 Other noninterest
  expenses                    6,795      5,542      25,680     21,744
                         ----------  ---------  ----------  ---------

   Earnings before
    income taxes              5,125      3,973      18,162     15,737
 Income taxes                 1,987      1,442       6,773      5,659
                         ----------  ---------  ----------  ---------

   Net earnings         $     3,138 $    2,531 $    11,389 $   10,078
                         ==========  =========  ==========  =========
 Weighted average
  shares outstanding
   Basic                  5,189,767  5,319,999   5,264,873  5,494,982
   Diluted                5,310,393  5,391,890   5,389,746  5,537,735

 Net earnings per
  share-basic           $     0.60  $     0.48  $     2.16 $     1.83
                         ==========  =========  ==========  =========

 Net earnings per
  share-diluted         $     0.59  $     0.47  $     2.11 $     1.82
                         ==========  =========  ==========  =========
 Dividends declared
  per share             $     0.17  $     0.16  $     0.68 $     0.64
                         ==========  =========  ==========  =========
 Average Balance
  Sheet Data:
   Average loans and
   loans held for sale  $   674,246 $  608,663 $   667,963 $  586,081
                         ==========  =========  ==========  =========
   Average interest
    earning assets      $   967,967 $  844,950 $   929,468 $  827,012
                         ==========  =========  ==========  =========
   Average interest
    bearing deposits    $   625,351 $  565,386 $   608,540 $  560,929
                         ==========  =========  ==========  =========
   Average interest
    bearing 
    liabilities         $   851,660 $  741,942 $   821,767 $  725,261
                         ==========  =========  ==========  =========
   Average 
    stockholders'
    equity              $    82,224 $   72,139 $    79,118 $   70,714
                         ==========  =========  ==========  =========
   Average assets       $ 1,034,015 $  896,972 $   992,782 $  875,848
                         ==========  =========  ==========  =========
 Key Operating Ratios:
  Return on
   Average Assets              1.20%      1.12%       1.15%      1.15%
                         ==========  =========  ==========  =========
   Return on
    Average Equity            15.14%     13.96%      14.39      14.25%
                         ==========  =========  ==========  =========
   Weighted Average
    Interest Rate 
    Spread                     3.71%      3.28%       3.53%      3.37%
                         ==========  =========  ==========  =========
   Net Yield on Average
    Interest Earning
    Assets                     4.10%      3.82%       3.98%      3.90%
                         ==========  =========  ==========  =========


        

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