Shareholders Say 'Bye, Bye' To Bank Of Granite
Shareholders of one of North Carolina's oldest and most well-respected community banks met for the last time Tuesday and approved a merger they hope will save the bank from collapse. Granite Falls-based Bank of Granite is 105 years old. It's on the verge of being acquired by the parent company of another long-time North Carolina bank: CommunityONE.
Early next year, the "Bank of Granite" name will disappear from its branches if the merger is approved. Many of the people who've invested in Bank of Granite over the years are the same people who've deposited their money with the bank and played on the community sports leagues it sponsored over the decades.
Long-time Hickory resident Louise Phillips bought her first shares about 25 years ago - around the same time she took out a loan with the bank. "I think I bought 150 shares to start with and I just kept hanging on to it," says Phillips. "It just kept doubling, and I just kept reinvesting my dividends. . . it was a good stock and it was a good bank."
Every year for 50 in a row, Bank of Granite paid a dividend to stockholders. That was a major point of pride for the bank's longest serving CEO John Forlines and he was pained when the recession dried up those dividends in 2008. During his time, Forlines - who passed away in 2010 - led the annual shareholder meetings like a folksy family reunion.
Many of the investors - including Louise Phillips - had big hopes for the stock, which traded for more than $20 a share in the late 90s. Most of this last year it's been worth less than a dollar. "It was an investment for later in my life when I became older and needed some funds," says Phillips. "And right now, the rose garden's got a lot of thorns in it." Phillips is 64, retired from her shoe sales job and sitting on thousands of Bank of Granite shares. "I just want to see if it's gonna do anything - if before I pass on to the other world I'm gonna get something out of this world from Bank of Granite!" says Phillips, with a little laugh.
The only explanation Henry Patterson has for why he's still holding thousands of Bank of Granite shares? "I just didn't want to desert a sinking ship."
"Not such a good move in hindsight," Patterson he adds.
But intense loyalty is a hallmark of community bank investors. The 48 shareholders at Bank of Granite's final shareholder meeting look a little sullen, as they quietly approve the plan to merge with CommunityOne Bank.
"I think it's our only hope," says Patterson, a retired dentist from Hickory. He invested in 1985 - during Bank of Granite's heyday. Each dividend he collected from the stock went toward buying more. "At that time it was touted to be one of the best run banks in the country," says Patterson, referring to a praise for Bank of Granite from legendary investor Warren Buffett in the 1990s. But the collapse of the housing market proved too much for Bank of Granite and by 2009 it was under orders from federal regulators to improve its bottom line or risk being taken over.
While long-time shareholders now hope to minimize their losses through a merger, new investors see an opportunity. Belmont resident John Morris only recently bought Bank of Granite stock when he noticed how far it had fallen - as low as 44 cents a share. "So I looked into it a little bit further, saw the merger was coming up to put the two banks together and thought I'd join in," says Morris. He had no idea about Bank of Granite's 100-plus year pedigree, but figured the two banks were on the right track with the merger.
"(They're trying to) put themselves together and, I hope, turn two banks that weren't doing very well into one bank that's gonna do very well," says Morris. That fundamental hope is shared by everyone still holding Bank of Granite stock. If the merger is approved by CommunityONE's shareholders on Wednesday, it's expected to close by the end of this month. The combined bank will be based in Asheboro.