The "Rock" Is on the Move: After 98 Years It's Not Too Late to Try Something New, like an Acquisition. (Community Banking)

Warren Buffet will have to change one of his lines. For several years, the world's most famous investor has said he regards North Carolina's Bank of Granite the country's best One of the reasons he believes that is because the $732 million-assets company has shunned the common bank tendency to grow by acquisition. Uh-oh. In December, Bank of Granite announced its first bank acquisition since its founding in 1906. If all goes well, it will close the deal to acquire Charlotte-based First Commerce Corp. early in the second quarter. The combination will bring Bank of Granite Corp., to just over $900 million, making the company the ninth-largest commercial bank headquartered in North Carolina. Anyone who knows Bank of Granite CEO John A. Forlines, Jr., however, knows that climbing the size ladder has no meaning for him. Profitability is something else again. The four-location bank, headquartered in Granite Falls, N.C., population 3,253, has a string of profitability-related records that most CEOs would give up their stock options for. If there were a national banking hall of fame, Forlines would get in on the first vote. (Actually he's already enshrined in the North Carolina Business Hall of Fame and the North Carolina Bankers Association's Banking Hall of Fame.) The bank's performance records include 197 consecutive quarterly dividends and 49 consecutive years of increased cash dividends. The bank also has posted a return on average assets of 2% or higher for the last 16 years. A previous record--62 consecutive quarters of increased earnings--ended in 1997, the victim of one large charged-off loan. hate to see a record come to an end, says Forlines, who may be setting another one for years a bank CEO. He's been running Bank of Granite since 1954. I'd like to make it an even 50, he says, as long I continue to feel well, and continue to be doing something good for the bank. At 85, Forlines sets a pace that would put many 30-year olds to shame. Yet he is quick to point out that all of Bank of Granite's employees work hard, which is one of the reasons he cites for the company's consistent success. No magic formula Charles Snipes, CEO of the bank and president of the holding company, has often been asked at industry gatherings, What's the secret to your bank's success? Snipes is not a particularly shy man, yet invariably his answer is brief. It usually goes something like this: have good people, we work hard, and we are conservative with our lending. Such a response tends to make people think he's holding something back. Not really. Warren Buffet says pretty much the same thing about the bank-it sticks to the basics, avoids fads, and is very efficient. Efficiency is institutionalized at Bank of Granite. A generous profit sharing plan has every employee treating the bank's money if it were his or her own. Forlines sets the pace. One now legendary example of his frugality is that he won't return long-distance calls if the caller doesn't leave an number. (While not strictly true, his assistant will ask if you have an 800 number.) Here's how Forlines himself responded to the question of the bank's success on the occasion of the bank's 90th anniversary: 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...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. The last point contains the rationale for the company's first bank acquisition. The bank's market area--roughly forming a triangle between Hickory, Lenoir, and Morganton in North Carolina's western midsection--had successfully weathered the gradual decline of the textile business and, more recently, the furniture business. …