N.C.'s Bank of Granite Drops Its First Merger Deal

North Carolina's Bank of Granite Corp., a darling of long-term bank investors, stepped away from the first acquisition in its 90-year history Tuesday.

The Granite Falls commercial bank said its proposed merger with Carolina State Bank had been called off because the two could not agree on financial and other terms of the deal.

Bank of Granite had proposed paying $31.1 million in an all-stock transaction. The merger would have added $125 million of assets to the bank's $465 million.

"Bank of Granite is one of the premier banks in the United States," said John J. Godbold Jr., president of Carolina State, "and we're disappointed that this didn't come to fruition."

Mr. Godbold said the deal fell apart because of "various things," not just price. He declined to elaborate.

Bank of Granite chief executive John A. Forlines Jr. declined to comment beyond a short press release.

The bank's stock didn't skip a beat at the news. It stayed at $28.25 per share, a 52-week high and almost three times book value.

While Bank of Granite's currency in the deal - its stock - was strong, the purchase price was nevertheless rich. It had anticipated paying 2.6 times book value for Carolina State.

Bank of Granite came to national attention this year when investor Warren Buffett cited it as a paragon of internal growth.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER