90 Remarkable Years

September 19, 1996
This address, dealing with the history of Bank of Granite was delivered at a 1996 North Carolina Meeting of The Newcomen Society of the United States held in Hickory, North Carolina, when John A. Forlines, Jr. was guest of honor and speaker.
 
Introduction of John A. Forlines, Jr., on September 19, 1996, in Hickory, North Carolina, by Mr. Charles M. Snipes, President and Chief Executive Officer, Bank of Granite, a member of the Newcomen Society of the US.
 

Newcomen Society Members & Guests:

We thank the Newcomen Society of the United States for honoring Bank of Granite and John A. Forlines, Jr. It is my honor and great privilege to introduce a man I have known for almost 39 years. In fact, John was my competitor for 25 years, my boss for the last 14 years and my friend for the entire 39 years. There is some risk in introducing your boss - the result could vary from a raise (NOT MUCH CHANCE!) to early retirement, if you really goof up!

John Forlines, a native North Carolinian, was born in Alamance County, grew up in Durham, graduated from Durham High School and Duke University. John has 4 children and 8 grandchildren. His wife, Julia, died in 1982.

The Banker
John Forlines is probably the best known community banker in the world. He became CEO of the Bank of Granite when the bank had only one office and total resources were just over one million dollars. Today, the bank has 11 offices in Caldwell, Catawba, and Burke Counties with resources of approximately $465 million. Not only has he led our bank to become one of the country's best known, most profitable and strongest community banks, he has served as an industry leader throughout the state and nation. He graduated from the Stonier Graduate School of Banking at Rutgers University. He is Past President of the North Carolina Bankers Association; he has and is now serving on numerous ABA committees and councils. John is known far and wide for his ability to control expenses. Some of his friends say he is tight with a dollar, but since I love my job, I will just say he is frugal! He believes a dollar not spent will find its way to the bottom line to build capital and pay dividends to shareholders. John has tremendous drive and energy and works long hours. Recently we became concerned that he was slowing down since he had only worked 60 hours that week! We checked and remembered he was out of town for 1 1/2 days!

The Community Leader
John Forlines has shared his talents and leadership in all areas of civic and religious life in the community. His contributions are too numerous to mention. First Presbyterian Church, Chamber of commerce, Catawba Valley Executives Club, North Carolina Citizens for Business and Industry, Caldwell County Hospice, and many others have benefited greatly from his leadership. He promotes and directs the annual ACC basketball luncheon which raises over $65,000 annually for Hospice. He headed the campaign to raise $1.6 million to build the civic center in Caldwell County.

Friend of Education
I know of no one who has made a greater contribution to education on the local and state level. A Trustee Emeritus at Duke University, he served 16 years as a trustee, chaired and served on many committees including Executive Committee. John is currently a member of the Board of Directors of Duke University Management Corporation which manages Duke University endowment funds. Chairman of Board of Caldwell Community College and Technical Institute for 19 years. John served two terms as Chairman of the State Community College Board from 1983 to 1989. He was appointed by Governors Jim Hunt and Jim Martin. Chaired Lenoir Rhyne Business Council for two years.

Awards
John has received numerous awards and recognition for his years of leadership and outstanding service. Just to mention a few:

• Caldwell County Chamber of Commerce "Man of the Year"
• NC Community College System "Distinguished Service Award"
• Financial World Magazine 'CEO of the Year"
• Banks $300 - $500 Million - 1992, 1993, 1994 & 1995
• Duke University Alumni Association "Distinguished Alumni Award"
• Lenoir Rhyne College "Business Leader of the Year"
• North Carolina Citizens for Business & Industry "Distinguished Citizenship"

John Forlines is truly one of the great leaders in North Carolina. His life has contributed greatly to the business, religious, educational, civic and cultural life of our area and great state. He has accomplished more since his 65th birthday than most people accomplish in a lifetime.

KPMG/Peat Marwick in their Project Excellence, a study of 25 top performing community banks said and I quote, "Before the hosiery, textiles, furniture and technology, there was granite. This area was once the largest producer of this stone. Although the quarries are now idle, all that they symbolized in strength and endurance has been transferred to a local bank appropriately named Bank of Granite." I would add to the quote that a remarkable man of great vision, strength, leadership and endurance made the transfer. Those of us who we are fortunate enough to be associated with Bank of Granite are who we are and what we are because of his great leadership and example. John Forlines is truly a remarkable man who has built a remarkable bank while giving remarkable service to humanity.

Ladies and gentlemen, I am proud to introduce my friend and colleague, the Chairman and CEO of Bank of Granite Corporation, John A. Forlines, Jr.
 

 

John A. Forlines, Jr. (Chairman and CEO) and Charles M. Snipes (President)

John A. Forlines, Jr.

Good Evening:

This is a great evening for Bank of Granite. I want to thank all of you for helping us celebrate our 90th Birthday. I want to emphasize again that it is the bank's 90th Birthday not mine.

We are very grateful to the Newcomen Society for paying us this great honor, but I must tell you, in all honesty, that my greatest fear for the evening was that Newcomen would invite a lot of people to this party, and nobody would show up! So, thank you for your friendship and for being here this evening.

We also thank Jim Morgan and Peg Broyhill and all the Interstate/ Johnson Lane folks for hosting the Reception prior to our dinner. We are all grateful to Kim Hutchens, Senior Vice President of Bank of Granite, for working with Newcomen and Lake Hickory Country Club in making all of the arrangements for this wonderful event.

In attempting to tell you a little about the history and growth of Bank of Granite, I cannot say enough about Charles Snipes. He has made such an enormous contribution to our bank and to our community during the past 14 years. Working with him-day in and day out-has been one of the great joys of my life. Charles literally lives and breathes Bank of Granite and he sets such a wonderful example for all of our employees. I like to say that even though Bank of Granite has never had a merger in its 90 year history, it has had one major acquisition--and that was when Charles Snipes joined our organization in 1982. As a lot of people in this room know, Charles is an early riser. I often meet him for breakfast at 7 a.m. - usually at the West Hickory Country Club (a.k.a. Snack Bar) and he's usually had a couple of meetings earlier with customers prior to our meeting. It is well known that two restaurants in Hickory had to put FDIC signs in the window because Charles does so much banking business there. I asked my good friend, Glen Orr, for advice about what I should say this evening. He was a big help. He said, "Be Brief."

So many exciting and interesting things have happened during the past 43 years that I have been with the bank - I thought I might take about 10 minutes to talk about each year. Then I figured this would take about 4 1/2 hours and that wouldn't include anything about the first 48 years of the bank's history before I arrived. Fortunately, for you, I rejected that idea. My good friend, Peter Buck, who is here from Charlotte, did tell me that he knew Newcomen meetings often were long affairs, so he was "packing a bag".

Bank of Granite had its beginning in the fall of 1906. Granite Falls, we are told, was a "few horses town" and transportation was by foot or horse and buggy. A truly unique group of men and women, tired of traveling what was then a considerable distance to Hickory or Lenoir, formed a new bank and they named it Bank of Granite. It is one of the very few banks in North Carolina started in that era which is still in operation under its original name and charter. This, in itself, is rather remarkable when you consider that only one in three businesses founded in 1987 are still in business today.

Many of the descendants of these original shareholders still live in this area and they speak with great respect and admiration for these dedicated citizens - the founders of the bank - whose modest, conservative values coupled with a great sense of community service began the remarkable journey of Bank of Granite. The original shareholders invested $8,000 in beginning capital stock and the first day's deposits totaled $901.68, a most encouraging beginning. I do believe if Charles Snipes and I had been there we would have tried real hard to reach $1,000.

In reviewing the first 48 years, from 1906 to 1954, the amazing thing to me is that the bank survived. For the most part, it was a tough, very difficult time for the bank, the economy, and the country. The very next year after the bank was founded - in 1907 - there was a national financial crisis known as the Panic of 1907 which ended only after J. P. Morgan imported $100 million in gold from Europe to bail out the United States Treasury. In 1914 World War 1, "the War to end all wars", began, the dollar shot up and stock and bond prices collapsed. In fact, the N.Y. Stock Exchange closed in July and did not re-open until December. In 1916, just a couple of years later, devastating floods hit our area and we were told Bank of Granite was there to help citizens rebuild their homes, their businesses, and their lives. Then, of course, World War I ended in 1918 and terrible inflation took over. Despite all of these tragedies and disasters, Bank of Granite stood firm. In the 20's we gave women the right to vote in America and prosperity prevailed - but not for long, for on October 23, 1929 the stock market collapsed resulting in the loss of $30 billion and the beginning of the Great Depression. In March, 1933, FDR, shortly after his inauguration declared the famous "Bank Holiday." Bank of Granite re-opened after the holiday but, as a strictly local institution with a woefully weak economy, growth was nonexistent. Then, World War II began in 1941 with the bombing of Pearl Harbor. Little wonder that after all the tragedies, disasters, and problems of the bank's first 48 years of existence, the bank's fortunes had sagged, to say the least, and the owners decided to sell the bank.

In 1954, a group of individuals, calling themselves "Caldwell County Citizens" outbid Northwestern Bank and bought the bank. A number of those citizens are here tonight and are still great friends and valued shareholders of our bank.

I joined the bank on May 1, 1954. Resources were approximately $1.2 million. I think there were 225 banks in North Carolina at that time (there are 55 today) and I believe, according to size, Bank of Granite was number 223 - almost the smallest bank in the state. My mission was to change the banks image - to rebuild its fortunes - to provide greater financial services, to help strengthen the economy of the area and, above all, to make this a profitable venture for the owners of the bank. This was real important because I became one of those new owners of the bank.

I think you should know it is very difficult for me to talk about Bank of Granite without it sounding as if I am taking too much credit for its remarkable record. Believe me, I give all of the credit to our wonderful Bank of Granite family - our employees, officers, directors, shareholders, and customers. Indeed, most everyone in this room has helped to make this bank truly a remarkable institution. We have a great team - and we work together to provide the best possible personal service and to make the bank the very best that it can be and we are never content to rest on our laurels - or, as we say, sit on our Assets!

Bill Staton, Chairman, The Staton Institute, in his book entitled "America's Finest Companies" - a group of 400 of the more than 16,000 publicly traded companies (of which we are one) says in his profile of our bank, "taking care of business and sticking to what it knows best has made Bank of Granite the most profitable bank in the country".

In 1954, shareholders paid $211.55 per share for their stock. Today one share of that stock, which cost $211.55, due to splits and dividends has become 2,352 shares worth approximately $67,000 based on today's closing price on the NASDAQ/National Market. The adjusted cost of each share is $.09. This is a compound 14.7% annual rate of appreciation and does not include any dividends or dividend reinvestment. We are very proud of this and also proud that earnings and dividends have increased every year - this will be our 43rd consecutive year - and as far as we know, this is a record for any bank in America. I should also mention that in 1955 we had the audacity to establish an Employee's Profit Sharing Plan probably one of the smallest businesses to ever do so - and this has proven to be such a wonderful benefit for our employees through the years. Our first contribution to the Plan in 1955 was $3,198.75. Last year's contribution was $515,718.30. Since 1962, Wachovia Bank has been trustee for this Plan and they have done a great job.

In 1984, we had the first public underwriting of our bank's stock, in an effort to broaden our shareholder base and to create marketability for our stock. Interstate/Johnson Lane was the chief underwriter. John Mason, their chief banking analyst, who is here this evening, was especially helpful in this process. The temptation at a time like this is to sell the stock for the highest price possible. We had a big demand for the stock and could have sold it for considerably more than we did. John urged us to use restraint, price it fairly and price it so that there is a good chance it would go up in the after market and make a lot of new shareholders happy. We did this. It worked and has worked well to this day.

His other advice - produce consistently good earnings and the stock price will take care of itself. We call this the Gospel according to St. John! In every quarter since the underwriting, in 1984, for 55 consecutive quarters, our earnings have been better than the same quarter in the preceding year - for almost 14 years. This, we think, is a record for any bank - maybe any company - in the country and investors have obviously been impressed because our stock has increased steadily through the years. Since the underwriting in 1984, our stock price has appreciated 1,060% through December 31, 1995 compared to an increase of 355% for the Dow-Jones Industrials during the same period - and, again, so far in 1996 we are outperforming the Dow. Often, as some of you know, when the Dow hits a bump and drops 100 points, Bank of Granite remains steady or goes up.

John A. Forlines, Jr. and Warren Buffett

While it probably wasn't important, I must admit that I was glad to see Bank of Granite's stock price hit a new all time high last Friday when the Dow also set its all time record high. Now that our stock is selling for over 20 times earnings and some 3 times book value, I often borrow my new best friend, Warren Buffett's statement (he uses it for his company) and say that our stock is "not underpriced"! At the 1996 Annual Meeting of Berkshire-Hathaway, Mr. Buffett made some nice comments about our bank and its management and we were very appreciative.

Let me take a minute to tell you about our first expansion outside Granite Falls. It is significant because if we had failed in this effort, there probably would not be a Bank of Granite as we know it today. In those days - 1959 - it was very difficult for a bank to obtain permission to move into another town unless you could prove "need and necessity" and this was difficult to do. I began to realize that in order to grow and be successful, we had to expand at least to other parts of Caldwell County. In 1959, we got a break when First Union, in an unprecedented move, merged both commercial banks in Lenoir. Obviously, I felt this created an opportunity and that we were a "natural" since we were from nearby Granite Falls and a lot of our shareholders and a few customers were from Lenoir.

Jesse Helms (now Senior US Senator from North Carolina), who was then Executive Director of our North Carolina Bankers Association, tells the interesting story in the Tar Heel Banker. He says immediately after the merger, "Bank of Granite hopped in like a Rooster on a June Bug"! and filed an application. Right behind us came Northwestern Bank which was in all the counties surrounding Caldwell, but not there. Edwin Duncan, head of Northwestern, was also a member of the NC Banking Commission and had just been elected a State Senator - so chances for Bank of Granite - we were only $3 million in resources didn't look good. Jesse tells the story.

He said, 'Seldom has such a behind the scenes campaign been waged in connection with a bank application in North Carolina. There were personal visits, telephone calls, letters by the dozen. John Forlines, kept the highways hot, traveling around the state, visiting with members of the Banking Commission. Bank of Granite was definitely the underdog, but Forlines perseverance paid off. The commission unanimously approved Bank of Granite's application and turned Northwestern down. It was a great victory for our bank and set the stage for much of our future growth. Fortunately, for us, other mergers of big banks have assisted our growth enormously. There is a perception among a lot of folks that as these banks get bigger and bigger and move into other states that they became less personal and don't care about the "homefolks" anymore so folks move their banking relationship to our bank where they feel, rightfully so, that they will receive great personal, caring service from our people. We do nothing, incidentally, to discourage that perception.

I am often asked how Bank of Granite does so well compared with our peers and the industry generally. I honestly don't know how to answer this to anyone's satisfaction. There is no magic formula. We think we have the best people and we believe they work harder and with more dedication than our competition. We watch expenses like a hawk, try not to waste money and we try not to pay above market rates for deposits. As a result of all these things, our efficiency ratio is about twice as good as the average bank. Also, doing business in what I call "The Garden Spot of the World", is a big plus. We have a diversified, stable economic environment and this helps a great deal.

As I close these remarks, I wish I had time to thank so many folks who have helped us through the years. I do want to acknowledge my wonderful family. They have been so supportive through the years and I honestly think my children and my grandchildren love the Bank of Granite almost as much as I do. Three of my four children are here tonight. As we speak my son is flying back from a business trip to London and couldn't be here. He works for J. P. Morgan. I tell him it's a good bank, but not as good as Bank of Granite.

There is one person here tonight I must recognize because she has been such a great help to me. She is Melodie Mathes, my Administrative Assistant, my secretary, my right arm, my very good friend for almost 30 years. She has enabled me to do so many things that I could never have done without her and I thank her from the bottom of my heart.

I haven't said anything about Bank of Granite's contribution to our community. In addition to our trying to be a good corporate citizen, I am so very proud of our employees who truly care about their community and contribute countless hours volunteering their time in worthwhile causes to make this a better place to live and work and raise our children.

I would like to also acknowledge the presence of a number of our friends from the press. Unlike a lot of banks, we have a great relationship with the news media. We try to be honest, forthright, and available and through the years they have said a lot of nice things about our bank. This is important to us and we appreciate it.

Finally, let me say that Bank of Granite will continue to meet new challenges and opportunities as we approach the 21st Century with the same enthusiasm and dedication that has served us so well in the past.

Looking ahead, I think of Casey Stengel's warning some years ago. He said, "Predictions are hard, especially about the future." Bank of Granite, in my opinion, is a work, perhaps a painting, in progress, and the best is yet to come!

God Bless You -- and thank you so very much.