Solid as a rock: for decades, that described bank of granite. Here's what caused it to crumble.

• Author: Martin, Edward
• Position: COVER STORY

All is quiet in the modest white house under the oaks he planted as saplings when he and Kathleen moved here in 1954. Floyd Council Wilson shivers under two flannel shirts, and the dark sky of a rising spring storm makes the red-bloomed shrubbery outside seem brighter. "Azaleas are the fullest this year I've ever seen them," he says softly. I le tugs a wingback chair under a lamp by the mantle, opens a green spiral-bound notebook, squints and moistens his thumb.

"The old bank sold out in '54, and we were part of the new ones who bought in," he says. "Bought five shares, $211.55 a share." He would serve on its board of directors. "Now, I want to get this right. Yes, right here, paid $1,057.75." He leafs through page after page of dates and figures in small, neat handwriting. "Here's where we got $358.34 in dividends for these three months, and here's where we got ..." As he flips the pages, the years pass faster.

The oaks grew tall. He and his wife raised two sons, who moved away and became success ful. He buried her in 1988 and retired from the other love of his life, Wilson-Abernathy Hardware Co., up the hill on Main Street. At 92, he still misses it. A few doors down from what's now Granite Hardware are some small shops. At Fairway Cleaners & Laundry, just up the street, Fran and Doris still keep track of who's laid up, who's having a baby.

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Wilson thought Bank of Granite would always be like this, solid as Granite Falls, the little town that gave it its name. By the middle '90s, with growth and splits, a share like his bought in 1954 had blossomed into about 2,300 shares, worth more than $67,000. The little bank from the little town won big fame. By then, it had recorded more than 160 straight quarters of increasing dividends--it would go on to exceed 200--a feat no U.S. bank, big or small, is likely to match.

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He turns to another page and stops. There's a blank where the dividend should be. "That's what I had been living on. This is when it quit coming." Now there's a notation: "Social Security, $1,200." A labored breath turns into a sigh. "I tried to warn them." He lowers his voice. "Don't know if I should say this, but I think maybe they got greedy."

In September 2008, 102 years after it was founded, Bank of Granite was so close to collapse the Federal Deposit Insurance Corp. warned that it would have to, as regulators say, "cease and desist" operations unless things got better in a hurry. Staggering under bad loans, its death march stumbled through three years of recovery attempts. "Bless our investors," a board member prayed at a 2010 shareholder meeting, as the stock price plunged to less than a dollar a share.

The prayer went unanswered. In April 2011, Bank of Granite announced it would be acquired in an all-stock deal, with its shares valued at 84 cents each, by Asheboro-based FNB United Corp. Its signs in eight counties, including the one now rusting in Granite Falls, will come down by the end of this year, says FNB CEO Brian Simpson, who helped raise $310 million in private-equity capital to seal the deal. The combined banks have about 500 employees, 63 branches--including Bank of Granite's 18--and about $2.5 billion of assets. "We'll consolidate operations in Asheboro and operate as Community One Bank," Simpson says, adding that he expects "some branch consolidation." But he won't say how many closings and layoffs are coming.

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The deal was Bank of Granite's salvation but an ignominious ending. FNB started as First National Bank of Asheboro in 1907, scarcely a year after Bank of Granite opened. It too had recently been warned that it was on the brink of failure and barely avoided prosecution in connection with a customer's $40 million Ponzi scheme, paying $400,000 in restitution and promising the U.S. Department of Justice it wouldn't happen again.

The implications of Bank of Granite's downfall go far beyond the town of Granite Falls, population about 4,600. Many of North Carolina's...