RESTATED CERTIFICATE OF INCORPORATION
 
                      OF BANCSHARES OF GRANITE CORPORATION
 
        Bancshares of Granite Corporation, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
 
1.       The name of the Corporation is Bancshares of Granite Corporation. The
         date of filing its original Certificate of Incorporation with the
         Secretary of State was January 30, 1987.
 
2.       This restated Certificate of Incorporation restates and integrates and
         further amends the Certificate of Incorporation of this Corporation
         by:
 
         a.       Deleting Article I of the Certificate of Incorporation in its
                  entirety and inserting in place thereof, the following new
                  Article I:
 
                     "i. The name of the Corporation is Bank of Granite
                     Corporation."
 
         b.       Deleting Article 10 of the Certificate of Incorporation in its
                  entirety and inserting in place thereof the following new
                  Article 10:
 
                     "10. The Board of Directors of the Corporation shall
                     consist of a maximum of nine (9) persons. The number of
                     members of the initial Board of Directors shall be seven
                     (7), and they shall serve until the next annual meeting of
                     shareholders, and until their successors be elected and
                     qualified. The Board of Directors, by majority vote, shall
 
<PAGE>
 
                     have the authority, without further approval of the
                     shareholders, to implement staggered terms for Directors,
                     i.e., the terms of 1/3 (or as near 1/3 as possible) of the
                     Directors shall be 1 year, the terms of 1/3 shall be two
                     years, and the terms of 1/3 shall be three years.
                     Thereafter, 1/3 of the Directors shall be elected by a
                     majority of the votes cast at each annual meeting of the
                     shareholders, or by similar vote at any special meeting
                     called for the purpose, to serve three-year terms. Each
                     Director shall hold office until the expiration of the term
                     for which he is elected, except as otherwise stated in the
                     Bylaws, and thereafter until his successor has been elected
                     and qualified. Election of directors need not be by written
                     ballot.
 
                     The affirmative vote of the holders of not less than
                     sixty-seven percent (67%) of the outstanding voting stock
                     of the corporation is required to increase the maximum
                     number of Directors as provided herein. The affirmative
                     vote of the holders of not less than eighty percent (80%)
                     of the outstanding voting stock of the corporation is
                     required to amend or repeal all other provisions of this
                     Article 10, or the staggered terms implemented by the Board
                     of Directors pursuant to this Article 10."
 
3.       The text of the Certificate of Incorporation, as amended or
         supplemented heretofore, is further amended hereby to read as herein
         set forth in full:
 
                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                          BANK OF GRANITE CORPORATION
 
 
                       The undersigned natural person, having capacity to
                     contract and acting as the incorporator of a corporation
                     under the Delaware General Corporation Law, adopts the
                     following Certificate of Incorporation for such
                     corporation:
 
                     1.  The name of the corporation is Bank of Granite
                         Corporation.
 
 
                                      -2-
 
 
<PAGE>
 
                     2.  The address of the registered office of the corporation
                         in the State of Delaware shall be 1209 Orange Street,
                         Wilmington, Delaware, 19801, County of New Castle and
                         the name of its Delaware registered agent at such
                         address shall be The Corporation Trust Company.
 
                     3.  The principal purpose for which the corporation
                         is organized is to exercise all powers of a banking
                         holding company which is registered with the Board of
                         Governors of the Federal Reserve System under the Bank
                         Holding Company Act of 1956, as amended, and to
                         engage in any and all banking and non-banking
                         activities allowed for such a bank holding company
                         under Delaware and federal law.
 
                     4.  The maximum number of shares which the corporation
                         shall have the authority to issue is 5,000,000 shares
                         of common stock, each of which shall have a par value
                         of Five Dollars ($5.00).
 
                         Shareholders shall have no pre-emptive rights.
 
                     5.  The capital stock of the corporation may be issued for
                         valid corporate purposes upon authorization by the
                         Board of Directors of the corporation without prior
                         stockholder approval. Such authorization by the Board
                         of Directors may be made by a majority or other vote of
                         the Board as may be provided in the Bylaws of the
                         corporation. The provisions of this Article 5 may only
                         be amended or repealed by the affirmative vote of the
                         holders of not less than eighty percent (80%) of the
                         outstanding voting stock of the Corporation.
 
                     6.  The affirmative vote of the holders of not less than
                         eighty percent (80%) of the outstanding voting stock of
                         the corporation is required in the event that the Board
                         of Directors of the corporation does not recommend to
                         the stockholders of the corporation a vote in favor of
                         (1) a merger or consolidation of the corporation with,
                         or (2) a sale, exchange or lease of all or
                         substantially all of the assets of the corporation to,
                         any person or entity. For purposes of this provision,
                         substantially all of the assets shall mean assets
                         having a fair market value or book value, whichever is
                         greater, of 25 percent or more of the total assets as
                         reflected on a balance sheet of the
 
 
                                      -3-
 
 
<PAGE>
 
                         corporation as of a date no earlier than 45 days prior
                         to any acquisition of such assets. The affirmative
                         vote of the holders of not less than eighty percent
                         (80%) of the outstanding voting stock of the
                         corporation is required to amend or repeal the
                         provisions of this Article 6.
 
                     7.  The affirmative vote of the holders of not less than
                         eighty percent (80%) of the outstanding shares of all
                         voting stock of the corporation and the affirmative
                         vote of the holders of not less than sixty-seven
                         percent (67%) of the outstanding shares of voting stock
                         held by stockholders other than the Controlling Party
                         (as defined below) shall be required for the approval
                         or authorization of any merger, consolidation, sale,
                         exchange or lease of all or substantially all the
                         assets of the corporation (as defined in Article 6 of
                         this Certificate) if such transaction involves any
                         stockholder owning or controlling twenty percent (20%)
                         or more of the corporation's voting stock at the time
                         of the proposed transaction ("Controlling Party");
                         provided, however, that these voting requirements shall
                         not be applicable in such transactions in which: (a)
                         the cash or fair market value of the property,
                         securities or other consideration to be received (which
                         includes common stock of this corporation retained by
                         its existing stockholders in such a transaction in
                         which the corporation is the surviving entity) per
                         share by holders of common stock of the corporation in
                         such transaction is not less than the highest per share
                         price (with appropriate adjustments for
                         recapitalizations, stock splits, stock dividends and
                         distributions), paid by the Controlling Party in the
                         acquisition of any of its holdings of the corporation's
                         common stock in the three years preceding the
                         announcement of the proposed transaction; or (b) the
                         transaction is recommended by a majority of the entire
                         Board of Directors. The affirmative vote of not less
                         than eighty percent (80%) of the outstanding voting
                         stock of the corporation is required to amend or repeal
                         this Article 7. The requirements of this Article 7 are
                         in addition to and separate from any consent or
                         approval that may be required by this Charter to
                         authorize any merger, consolidation or sale,
 
 
                                      -4-
 
 
<PAGE>
 
 
                         exchange or lease of all or substantially all of the
                         assets of the corporation (as defined by Article 6
                         of this Certificate).
 
                     8.  The Directors of the Corporation shall consider all
                         factors they deem relevant in evaluating any proposed
                         tender offer or exchange offer for the corporation or
                         any subsidiary's stock, any proposed merger or
                         consolidation of the corporation or subsidiary with or
                         into another entity and any proposal to purchase or
                         otherwise acquire all or substantially all the assets
                         of the corporation or any subsidiary. The directors
                         shall evaluate whether the proposal is in the best
                         interests of the corporation and its subsidiaries by
                         considering the best interests of the shareholders and
                         other factors the directors determine to be relevant,
                         including the social, legal and economic effects on
                         employees, customers, depositors, and communities
                         served by the corporation and any subsidiary. The
                         directors shall evaluate the consideration being
                         offered to the shareholders in relation to the then
                         current market value of the corporation or any
                         subsidiary, the then current market value of the stock
                         of the corporation or any subsidiary in a freely
                         negotiated transaction, and the directors' estimate of
                         the future value of stock of the corporation or any
                         subsidiary as an independent entity. The affirmative
                         vote of the holders of not less than eighty percent
                         (80%) of the outstanding voting stock of the
                         corporation is required to amend or repeal the
                         provisions of this Article 8.
 
                     9.  A director of the corporation may only be removed for
                         cause as defined as "final conviction of a felony,
                         unsound mind, adjudication of bankruptcy,
                         non-acceptance of office or conduct prejudicial to the
                         interests of the corporation," by the affirmative vote
                         of a majority of the entire Board of Directors of the
                         corporation or by the requisite shareholder vote.
                         Shareholders shall not have the right to remove
                         directors without cause. Shareholders may only attempt
                         to remove a director for cause after service of
                         specific charges, adequate notice and full opportunity
                         to refute the charges.
 
 
                                      -5-
 
 
<PAGE>
 
 
                     10. The Board of Directors of the corporation shall consist
                         of a maximum of nine (9) persons. The number of members
                         of the initial Board of Directors shall be seven (7)
                         and they shall serve until the next annual meeting of
                         shareholders and until their successors be elected and
                         qualified. The Board of Directors, by majority vote,
                         shall have the authority, without further approval of
                         the shareholders, to implement staggered terms for
                         Directors, i.e., the terms of 1/3 (or as near 1/3 as
                         possible) of the Directors shall be one year, the terms
                         of 1/3 shall be two years and the terms of 1/3 shall be
                         three years. Thereafter, 1/3 of the Directors shall be
                         elected by a majority of the votes cast at each annual
                         meeting of the shareholders or by similar vote at any
                         special meeting called for the purpose, to serve
                         three-year terms. Each Director shall hold office until
                         the expiration of the term for which he is elected,
                         except as otherwise stated in the Bylaws, and
                         thereafter until his successor has been elected and
                         qualified. Election of directors need not be by written
                         ballot.
 
                         The affirmative vote of the holders of not less than
                         sixty-seven percent (67%) of the outstanding voting
                         stock of the Corporation is required to increase the
                         maximum number of directors as provided herein. The
                         affirmative vote of the holders of not less than eighty
                         percent (80%) of the outstanding voting stock of the
                         Corporation is required to amend or repeal all other
                         provisions of this Article 10, or the staggered terms
                         implemented by the Board of Directors pursuant to this
                         Article 10.
 
                     11. Any and all vacancies on the Board of Directors,
                         including those by increase in the number of directors
                         or by removal of directors shall be filled by the Board
                         of Directors.
 
                     12. The Board of Directors shall have the right to alter,
                         amend or repeal the Bylaws of the Corporation. The
                         affirmative vote of the holders of not less than 80%
                         of the outstanding voting stock of the Corporation
                         shall be required to amend, alter or repeal the
                         Bylaws.
 
                     13. Any meeting of shareholders, whether annual or special,
                         called to consider a vote in favor of a merger or
                         consolidation of the corporation
 
 
                                       -6-
 
 
<PAGE>
 
                         with or a sale, exchange or lease of substantially all
                         of the assets of the corporation to any person or
                         entity, as defined under Articles 6 and 7 of this
                         Certificate of Incorporation, which is not recommended
                         by the Board of Directors of the corporation by the
                         required  vote, shall require attendance in person or
                         by proxy of 80% of the shareholders of the corporation
                         in order for a quorum for the conduct of business to
                         exist. Such a meeting may not be adjourned absent
                         notice if a quorum is not present.
 
                     14. To the fullest extent permitted by the General
                         Corporation Law of Delaware, as the same exists or may
                         hereafter be amended, a director of this corporation
                         shall not be liable to the corporation or its
                         stockholders for monetary damages for breach of
                         fiduciary duty as a director. Any repeal or
                         modification of this section by stockholders of the
                         corporation shall be prospective only, and shall not
                         adversely affect any limitation on the personal
                         liability of a director of the corporation existing at
                         the time of such repeal or modification.
 
                         In the event any litigation is brought against a
                         director of the Corporation, authorization is hereby
                         made to advance all expenses needed by the director to
                         defend the lawsuit. There shall be no obligation to
                         repay the expenses forwarded, unless it shall be
                         ultimately determined by the corporation that the
                         director shall not be entitled to indemnification.
 
                     15. The name of the sole incorporator is J. Franklin
                         McCreary and the address of the incorporator is 80
                         Monroe Avenue, Memphis, Tennessee 38103.
 
4.       This restated Certificate of Incorporation was duly adopted by
         unanimous written consent of the stockholders, in accordance with the
         applicable provisions of Sections 228, 242 and 245 of the General
         Corporation Law of the State of Delaware.
 
 
                                      -7-
 
 
<PAGE>
 
         IN WITNESS WHEREOF, said Bank of Granite Corporation (formerly
Bancshares of Granite Corporation) has caused this Certificate to be signed
by John A. Forlines, Jr., its Chairman and President, and attested by
Joe A. Jones, its Secretary, this 13th day of February, 1987.
 
 
                                             By:   /s/ John A. Forlines, Jr.
                                                --------------------------------
                                                Chairman and President