In less than two weeks this spring, a North Carolina community bank was contacted by more than a hundred interested investors calling from as far away as Hong Kong.
To satisfy demand, the Bank of Granite had to order several hundred more annual reports than usual.
Bank of Granite was Buffetted.
The Granite City-based bank's 1995 performance caught the attention of Warren Buffett, the world-renowned guru of investing. In May, the Nebraskan subsequently praised the $465 million-asset bank at the annual meeting of his Berkshire Hathaway Inc., and its phones started ringing.
In the month following Mr. Buffett's comments, Bank of Granite's stock price rose 8% to $26.50. It now trades at around $25.25. All this, and Mr. Buffet hasn't even invested in the bank.
"If you're a self-made multibillionaire and you make a statement, people are tuned into what you're saying," said Randall C. Hall, chief financial officer of the Granite Springs-based bank.
On May 6, at the lavish annual meeting of his $40 billion-asset holding company in Omaha, Mr. Buffett called the bank one of the most profitable in the country, saying it proved that bigger isn't necessarily better.
The Bank of Granite is so profitable that "it makes you kind of wonder about the underlying rationale" behind all the mergers in the industry, Mr. Buffett told the audience of more than 5,000 at the Omaha meeting, according to Bloomberg Business News.
John A. Forlines Jr., the bank's chief executive, heard the praise firsthand - he was a guest of Mr. Buffett at the meeting and was sitting in a reserved seat.
"Needless to say, this was a great personal experience for me, and I am proud of the recognition Mr. Buffett gave the Bank of Granite," Mr. Forlines wrote in a letter to shareholders after the trip.
The bank was brought to Mr. Buffett's attention by Paul M. Fleetwood, chairman of Bank of Granite Corp.'s Hickory subsidiary, who wrote to the investor after reading a book about him. He included a Bank of Granite annual report with his letter.
Three days later, Mr. Buffett responded and subsequently invited Mr. Fleetwood and Mr. Forlines to Berkshire Hathaway's annual meeting.
Mr. Forlines attributed his bank's stellar numbers to strong fee income and "watching expenses like a hawk."
The first quarter was the bank's 53d consecutive period of increased earnings from the year-earlier period. Its returns on assets and equity were 2.58% and 15.84%, respectively, both well above industry norms. The bank's efficency ratio - 33% - is among the lowest in the country, said Mr. Forlines.