Bank of Granite Corporation
Bank of Granite Corporation
23 North Main Street
Granite Falls, North Carolina 28630 U.S.A.
Telephone: (828) 496-2027
Fax: (828) 496-2077
Total Assets: $1.19 billion (2006)
Stock Exchanges: NASDAQ
Ticker Symbol: GRAN
NAIC: 551111 Offices of Bank Holding Companies; 522110 Commercial Banking
Bank of Granite Corporation is the holding company for Bank of Granite and Granite Mortgage, Inc. Bank of Granite, with 22 offices in an eight-county territory in North Carolina, is the financial mainstay of the holding company, possessing assets in excess of $1 billion. Granite Mortgage operates through 14 offices in three counties in North Carolina. Bank of Granite’s banking activities consist of taking deposits and making loans, primarily to individuals and small businesses. Granite Mortgage underwrites mortgage loans to individuals, specializing in government-guaranteed mortgage products.
In 1906, residents of Granite Falls, in Caldwell County, North Carolina, decided to pool their money and start their own bank. The town, incorporated seven years earlier, was coming into its own, the establishment of Granite Bottling Works and Granite Drug Company being the most recent major businesses to open their doors, but residents were forced to take tiresome, horse-and-buggy journeys to the county seat of Lenoir to the north or to the town of Hickory to the south for any banking need. Granite Falls needed its own bank, the founding group of investors concluded, and in October, with $8,000 in start-up capital, they secured a charter to start Bank of Granite, taking the name of their new institution, as did the town, from a 35-foot waterfall cascading over granite boulders on nearby Gunpowder Creek. In December, the doors to the bank opened, admitting their first customer, Sunday school teacher Lula Hickman. By the end of its first day in operation, the bank had $901.68 in deposits and the aspiring town of Granite Falls had an essential tool to promote its growth.
A century later, Bank of Granite stood as one of the most respected banks of any size in the United States, lavished with praise by none other than famed investor Warren Buffett, who referred to the Granite Falls institution as “the best bank in America,” as reported in the April 2001 issue of Business North Carolina. The bank’s development from the modest venture founded in 1906 to a more than $1 billion-in-assets regional force a century later was a story with two distinct chapters, each consisting of 50-year spans that divided Bank of Granite’s first century of business. Although the first half-century of the bank’s existence were not years to be dismissed—the institution gained its footing and held on through two world wars and, most notably, the Great Depression—the most meaningful chapter in its history began in the latter half of the 20th century, when the John Forlines, Jr., era began. Forlines, “the guy I’d love to have as my partner,” Buffett commented in an August 26, 1997, interview with the Charlotte Observer, influenced the personality and development of Bank of Granite to an extent that could not be overstated.
Forlines led the bank for 52 years, employing a managerial style that reflected the qualities of his own character: frugality, cautiousness, sagaciousness, and dedication. Forlines took control over the enterprise in 1954 that stood much as it did in 1906. During his lengthy tenure, the bank became much more, an institution that earned its accolades by being efficient, profitable, and expertly managed. When the Business Journal Serving Charlotte and the Metropolitan Area, for its September 2, 1991, issue, asked Forlines, the 73-year-old banking executive who had headed Bank of Granite for 37 years at that point, to list his hobbies, one of the three after-work passions he offered was “banking.” No one questioned Forlines’ commitment to Bank of Granite, an institution that, in many observers’ minds, stood as the Bank of Forlines at the end of its first century of business.
A North Carolina native born in Graham and raised in Durham, Forlines grew up as the son of a grocery clerk. He attended Durham’s most notable institution, Duke University, paying $75 per semester to earn a bachelor’s degree in business and economics. After finishing college in 1939, Forlines remained on campus, running the Duke branch of Citizens National Bank, a branch that counted Forlines as its only employee. He spent roughly a year working for Citizens National before joining the military, becoming an officer stationed in Europe in the U.S. Army Finance Department, later renamed the Finance Corps. After World War II, Forlines returned to Durham, got married, and went into the hardware and appliance business with his brother-in-law. He worked with his brother-in-law until he heard a bank in Granite Falls was searching for a new executive. A group of Caldwell County residents purchased Bank of Granite in 1954, intent on reorganizing the bank and appointing a new leader who could locate new capital and expand its services. Although the bank had added a second floor, a consumer loan department, and a drive-through window during the previous 48 years, it retained the modest trappings of a half-century earlier. The bank had $1.2 million in assets, one office, four employees, and it was heated by a potbellied stove on the first floor. “It was a right dismal-looking situation,” Forlines recalled in an April 2001 interview with Business North Carolina.
While the times and technology may have changed, Bank of Granite’s commitment to customer service has not. And, it is that commitment that has fostered the bank’s growth and success. By focusing on the surrounding communities and providing high-quality, personalized service, Bank of Granite has developed an enviable record of satisfying customers, employees and shareholders.
Despite some reservations, Forlines accepted the job offer, invested $25,000 of his savings, and began his extraordinarily long tenure as the bank’s senior executive in May 1954. Either consciously or subconsciously, Forlines turned Bank of Granite into a reflection of his own character: he eschewed ostentation, prized personal relationships, and worked exceedingly hard. Under his control, Bank of Granite achieved distinction not through size, but simply by being better than its competition, by executing its mission assiduously. Forlines, as the press often reported, refused to return a long-distance telephone call if the caller did not have a toll-free number. (When pressed on the subject, Forlines said he refused only to respond to long-distance sales calls.) Forlines, who read six newspapers (three local and three national) each day, mailed clippings of articles referring to anyone he knew, each with a personal message written in the margin. From 1954 to 1983, he personally handed out paychecks to each Bank of Granite employee every other Friday before limiting the practice to once or twice a year. Forlines, the banking executive who counted banking as his hobby, imbued the bank with his personal traits, creating a success story gauged not by aggressive geographic expansion, but by the harder to measure particulars of performing well year after year. “I don’t know how to answer this to anyone’s satisfaction,” Forlines was quoted as saying in the February 2003 issue of ABA Banking Journal, when asked to explain Bank of Granite’s success. “There is no magic formula. We think we have the best people and we believe they work harder and with more dedication than our competitors. We watch expenses like a hawk ... and we try not to pay above market rates for deposits. Also, we have a diversified, stable economic environment and this helps a great deal.” Under Forlines’ stewardship, Bank of Granite was a qualitative success story, not a quantitative success story.
Bank of Granite’s expansion occurred in measured steps, reflecting the philosophy of its chief architect. “Most people think bigness is better,” Forlines said in a September 2, 1991, interview with the Business Journal Serving Charlotte and the Metropolitan Area. “I just can’t see it. At the bottom line, I just don’t think bigness is better.” In 1960, the bank took its first step outside Granite Falls, opening an office in Lenoir—Forlines insisted on referring to Bank of Granite branches as “offices.” The following year, a third office was opened in Hudson. In 1970, one year after the bank moved into a new headquarters office in Granite Falls, a fourth office opened in Hickory, establishing the bank in Catawba County, its first presence outside Caldwell County.
In 1972, the bank’s fifth office opened its doors in Whitnel. Expansion halted after the opening of the Whitnel office. A dozen years passed until Bank of Granite added a sixth office in Newton in 1984, the same year Forlines took the bank public, completing an initial public offering (IPO) of stock priced at $12.50 per share.
The 1980s witnessed the opening of four new offices, an IPO, and the formation of a bank holding company, but the most notable event of the decade was the arrival of Charles Snipes. Snipes, a North Carolina native raised in Lincolnton, spent more than 20 years working for First National Bank of Catawba County before he decided to start his own community bank. While he was taking the necessary steps to strike out on his own, he met with Forlines at the Lake Hickory Country Club, an encounter that prompted him to drop his plans for starting his own bank. Forlines offered Snipes a job, and Snipes accepted, becoming the bank’s executive vice-president and chief administrative officer in 1982, when the bank had $62 million in assets. Snipes became Forlines’ closest adviser, earning his trust and respect. Snipes was named president of the bank in 1987, when Bank of Granite Corporation was formed as a holding company for Bank of Granite, taking over Forlines’ former title. In 1994, Forlines’ handed Snipes another of his titles, appointing him chief executive officer of the bank. (Forlines served as chief executive officer and chairman of Bank of Granite Corp.)
With Snipes at his side, Forlines pressed ahead with his careful approach to expansion. In 1985, one year after establishing a sixth office, Forlines opened a seventh, an office located in Springs Road. Another office was opened in 1987, and the bank’s ninth office, its first in Burke County, opened in Morganton in 1989. Bank of Granite’s network of offices reached double digits in 1991, when it opened its Hibriten location amid the first rumors of Forlines’ retirement. Forlines, 73 years old at the time, had made overtures that he might cut back on his duties, but the onset of an economic recession prompted him to change his mind. “I guess in the next few years I’ll move,” he said in a September 2, 1991, interview with the Business Journal Serving Charlotte and the Metropolitan Area. From that point forward, the question of succession loomed, becoming an issue that Forlines and Snipes would be forced to address for years to come. (Snipes, 58 years old in 1991, was not perceived as an ideal, long-term replacement for Forlines.)
- A group of Granite Falls residents establish Bank of Granite.
- John Forlines, Jr., is hired as president and chairman of Bank of Granite, beginning a52-year tenure at the bank.
- Bank of Granite opens a second location in Lenoir.
- Bank of Granite moves outside Caldwell County for the first time, establishing an office in Hickory, Catawba County.
- Charles Snipes is hired by Forlines as Bank of Granite’s executive vice-president and chief administrative officer.
- Bank of Granite completes an initial public offering of stock.
- Bank of Granite Corporation is formed as a holding company for Bank of Granite.
- Bank of Granite enters Burke County by opening an office in Morganton.
- Bank of Granite Corp. acquires GLL & Associates, Inc., a mortgage bank based in Winston-Salem, North Carolina.
- Bank of Granite Corp. acquires First Commerce Corp., a three-branch bank with $180 million in assets.
- Forlines hands the reins of command to Snipes during Bank of Granite’s centennial.
By the time Bank of Granite celebrated its 90th anniversary, its assets had increased to $465 million, more than seven times the total recorded 14 years earlier. Forlines, in his 42nd year of running the bank, had increased annual cash dividends each year during his tenure. He also was on his way toward posting more than 60 consecutive quarters of increased earnings. Aside from the stellar consistency on display, the occasion of Bank of Granite’s 90th anniversary marked the stunning announcement of its first acquisition. The bank had tentatively agreed to acquire Shelby-based Carolina State Bank for $3.1 million, a purchase that was as much about gaining the $125 million in assets of the five-year-old bank as it was about gaining its managerial staff. “Truthfully, we’ve done so well you think you don’t want to disturb anything,” Forlines said in a July 26, 1996, interview with the Charlotte Observer, before adding, “We need some good top management to help us in our bank.” The previous month, David Clark, a 39-year-old executive who was being groomed to run Bank of Granite, abruptly left to take charge of a North Carolina steakhouse operator and food processor, leaving the bank’s aging partnership of Forlines and Snipes without a successor. They had hoped to gain new senior executives, and perhaps a future leader, by purchasing Carolina State Bank, but the deal collapsed after the two parties failed to agree on a final price.
The decade that followed the scuttled Carolina State Bank deal was a period of great change for Bank of Granite. The bank completed the first acquisition in its history in 1997, when Bank of Granite Corp. purchased GLL & Associates, Inc., a mortgage bank with North Carolina offices in Winston-Salem, Charlotte, Greensboro, High Point, and Statesville. The acquisition, which became a Bank of Granite Corp. subsidiary named Granite Mortgage, Inc., more than doubled the size of the company’s mortgage operations, moving it into the business of making government-backed mortgage loans. Forlines’ salubrious touch, meanwhile, showed no signs of losing its influence. In January 2001, when the bank had $661 million in assets and $517 million in deposits, it paid its 189th consecutive quarterly dividend after posting a record high of $15.6 million in earnings the previous year. Additional evidence of the bank’s financial strength was found in its return on assets (ROA) percentage, an indicator of the profitability of a company relative to its total assets. Most banking executives were delighted to record an ROA of 1.5 percent, but Forlines occupied a higher plateau, achieving an ROA of 2.45 percent in 2000, the 15th consecutive year Bank of Granite recorded an ROA of more than 2 percent.
Forlines credited much of his success to the economic strength of the bank’s three-county operating territory. Through the years, Caldwell, Catawba, and Burke counties had transitioned from a textiles-based economy to an economy supported by furniture and fiber-optics manufacturers, demonstrating impressive financial consistency throughout Bank of Granite’s existence. Entering the new millennium, however, the bank’s communities suffered from substantial layoffs by furniture and fiber-optics companies, forcing Forlines to venture outside the bank’s three-county area to avoid the financial consequences of relying exclusively on a weakened economic base. In 2003, he opened offices in Watauga, Wilkes, and Mecklenburg counties, positioning the bank in growing economies. His boldest move occurred midway through the year, when Bank of Granite acquired First Commerce Corp., a Charlotte-based bank with three branches in Mecklenburg County. The $18.5 million, cash-and-stock deal added First Commerce’s $180 million in assets, lifting Bank of Granite’s asset total above $900 million. It also marked the arrival of First Commerce’s 53-year-old chief executive officer, Wesley W. Sturges, who was appointed executive vice-president of Bank of Granite and Bank of Granite Corp. Sturges, expected to be named president and chief operating officer within two years, appeared to be the successor to Forlines and Snipes, but he left abruptly in February 2004, saying, as reported in the February 13, 2004, issue of American Banker, he was fired “over a clash in philosophies” with Forlines.
The question of succession was resolved as Bank of Granite celebrated its centennial. Forlines, who appointed Snipes chief executive officer of the holding company in late 2004, announced his intention to retire on his 88th birthday in January 2006, ending a 52-year reign highlighted by an increase in annual dividends every year of his service. Snipes, 72 years old in 2006, took charge of the venerable institution, hoping to lead the bank toward continued success by emulating the managerial style of his longtime partner. “While expansion is certainly on our horizon,” Snipes said in an April 2006 interview with Business North Carolina, “we’re not going to deviate from what has carried us for 100 years.”
Jeffrey L. Covell
Bank of Granite; Granite Mortgage, Inc.
RBC Centura Banks, Inc.; Peoples Bancorp of North Carolina, Inc.; First Citizens BancShares, Inc.
Adams, Jerry, “Rock of Aged,” Business North Carolina, April 2001, p. 22.
“Bank of Granite Corp. to Buy Carolina State Bank,” Charlotte Observer, July 26, 1996.
Brown, Kathy, “Like His Old Boss, He Isn’t the Retiring Type,” Business North Carolina, April 2006, p. 24.
Craver, Richard, “North Carolina–Based Bank Celebrates 100th Birthday,” Winston-Salem Journal, October 12, 2006.
Dinsmore, Christopher, “Solid As a Rock,” Business Journal Serving Charlotte and the Metropolitan Area, September 2, 1991, p. 12.
“Granite Falls, N.C., Bank Set to Make First Acquisition,” Knight-Ridder/Tribune Business News, August 26, 1997.
Milligan, John W., “You Can’t Knock the Rock,” US Banker, June 1997, p. 57.
Murray, Arthur O., “Bank of Granite: One Runs, No Fits, No Heirs,” Business North Carolina, April 2004, p. 14.
O’Hara, Terence, “N.C.’s Bank of Granite Drops Its First Merger Deal,” American Banker, September 12, 1996, p. 12.
Rothacker, Rick, “Bank of Granite Will Buy First Commerce,” Charlotte Observer, December 19, 2002.
________, “Forlines to Retire Jan. 8 from Bank,” Charlotte Observer, December 23, 2005.
Streeter, William, “The ‘Rock’ Is on the Move,” ABA Banking Journal, February 2003, p. 16.
Thompson, Laura K., “Deal Is Done; Succession Plan Is Undone,” American Banker, February 13, 2004, p. 1.