Market Overview

Green Bancorp, Inc. Reports First Quarter 2016 Earnings

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2016 First Quarter Highlights

  • First quarter 2016 net income was $1.8 million and earnings per share (diluted) were $0.05
  • Pre-tax, pre-provision adjusted net income was $19.3 million for the first quarter 2016 compared to $9.1 million for the first quarter 2015, a 112.6% increase
  • Recorded $16.0 million in provision for loan losses; the level of allowance for the Company's energy related loans is 7%

HOUSTON, April 28, 2016 (GLOBE NEWSWIRE) -- Green Bancorp, Inc. (NASDAQ: GNBC), the bank holding company ("Green Bancorp" or the "Company") that operates Green Bank, N.A. ("Green Bank"), today announced results for its first quarter ended March 31, 2016.  The Company reported net income for the quarter of $1.8 million, or $0.05 per diluted common share, compared to net income of $4.6 million or $0.18 per diluted common share reported for the same period in 2015. 

Manny Mehos, Chairman and Chief Executive Officer of Green Bancorp said, "The core earnings power of the bank has grown substantially as a result of the scale and efficiencies that we have achieved through the Patriot acquisition as well as the solid organic growth delivered by our portfolio bankers.  That said, our results are clearly being impacted by the challenging energy cycle and the duress that it is causing throughout the oil patch.  As a result, we have made the decision to more aggressively remove this uncertainty.  We have determined that the prudent course of action is to exit the energy lending business and eliminate our energy loan exposure.  To successfully accomplish this goal, we have created a strategic initiative that we are calling the "Managed Asset Reduction Strategy".  With the successful execution of this plan, we expect to substantially reduce the uncertainty in our financial results caused by our energy loan portfolio."

Geoff Greenwade, President of Green Bancorp and Chief Executive Officer of Green Bank remarked, "Donald Perschbacher, our Corporate Chief Credit Officer, will manage a dedicated team of eight workout professionals whose sole responsibility is the successful management of the Managed Asset Reduction Strategy.  This portfolio includes all of our energy related loans as well as other classified assets.  The resolution of this portfolio will take place by utilizing proven management and disposition techniques."

Results of operations for the quarter ended March 31, 2016

Net income for the quarter ended March 31, 2016 was $1.8 million, compared with $4.6 million for the same period in 2015. Net income per diluted common share was $0.05 for the quarter ended March 31, 2016, compared with $0.18 for the same period in 2015. The decrease in net income was principally due to the increase in provision for loan losses and, to a lesser extent, an increase in noninterest expense offset by increased interest income resulting from growth in loans.  Returns on average assets and average common equity, each on an annualized basis, for the three months ended March 31, 2016 were 0.20% and 1.68%, respectively. Green Bancorp's efficiency ratio, which represents noninterest expense divided by the sum of net interest income and noninterest income, was 50.77% for the three months ended March 31, 2016.  Excluding the impact of one-time acquisition expenses, returns on average assets and average common equity, each on an annualized basis, would have been 0.22% and 1.91%, respectively, and the efficiency ratio would have been 49.75% for the three months ended March 31, 2016.

Net interest income before provision for loan losses for the quarter ended March 31, 2016 was $34.2 million, an increase of $13.7 million, or 66.8%, compared with $20.5 million during the same period in 2015. The increase was primarily due to a 75.1% increase in average loan volume largely driven by the Patriot acquisition. The net interest margin for the quarter ended March 31, 2016 was 3.87%, compared with 3.93% for the same period in 2015. Average noninterest-bearing deposits for the quarter ended March 31, 2016 were $604.3 million, an increase of $173.7 million compared with the same period in 2015, and a decrease of $43.7 million compared to the quarter ended December 31, 2015. Average shareholders' equity for the quarter ended March 31, 2016 was $440.7 million, an increase of $149.1 million compared with the same period in 2015, and an increase of $11.2 million compared to the quarter ended December 31, 2015.

Net interest income before provision for loan losses during the quarter ended March 31, 2016 decreased 2.2% or $779 thousand, compared with $35.0 million for the quarter ended December 31, 2015, primarily due to a reduction in the accretion of purchase discounts. The net interest margin for the quarter ended March 31, 2016 of 3.87% decreased from 3.92% for the quarter ended December 31, 2015.  A decrease in noninterest-bearing deposits contributed to the change in the net interest margin.

Noninterest income for the quarter ended March 31, 2016 was $4.2 million, an increase of $2.1 million, or 99.3%, compared with $2.1 million for the same period in 2015. This increase was primarily due to a $323 thousand increase in swap income, a $541 thousand increase in customer service fees, a $328 thousand increase in loan fees, a $493 thousand increase in gain on sale of guaranteed portion of loans and a $177 thousand increase in bank owned life insurance income mainly due to the Patriot acquisition.  When comparing the quarter ended March 31, 2016 to the quarter ended December 31, 2015, noninterest income decreased $121 thousand, or 2.8%, from $4.3 million.  Fourth quarter 2015 noninterest income includes a $772 thousand gain on the sale of securities. 

Noninterest expense for the quarter ended March 31, 2016 was $19.5 million, an increase of $5.7 million, or 41.7%, compared with $13.8 million for the same period in 2015. The increase was primarily due to increases related to ongoing acquired Patriot operations.  When comparing the quarter ended March 31, 2016 to the quarter ended December 31, 2015, noninterest expense decreased 9.2%, or $2.0 million, from $21.5 million, primarily due to lower one-time acquisition expenses related to the Patriot acquisition.

Loans held for investment at March 31, 2016 were $3.2 billion, an increase of $1.4 billion, or 75.0%, compared with $1.8 billion at March 31, 2015, primarily due to the Patriot acquisition, which was finalized at the beginning of the fourth quarter 2015 and continued opportunities for our portfolio bankers to generate new loans and expand existing relationships within our target markets.  Loans held for investment at March 31, 2016 increased $37.5 million, or 1.2%, from December 31, 2015.  Excluding loans acquired in the Patriot acquisition based on the merger date balance, loans at March 31, 2016 increased $276.2 million or 15.3% million from March 31, 2015.  Average loans held for investment increased 75.2% or $1.3 billion to $3.1 billion for the quarter ended March 31, 2016, compared with $1.8 billion for the same period in 2015. Average loans held for investment for the quarter ended March 31, 2016 increased 2.7% or $82.7 million from the quarter ended December 31, 2015.

Deposits at March 31, 2016 were $3.1 billion, an increase of $1.1 billion, or 58.2%, compared to March 31, 2015, primarily due to the Patriot acquisition.  Deposits at March 31, 2016 decreased $43.7 million or 1.4% from December 31, 2015 due to volatility in commercial deposits.  Noninterest-bearing deposits at March 31, 2016 were $592.7 million, an increase of $133.6 million, or 29.1%, compared to March 31, 2015 and a decrease of $50.7 million, or 7.9%, compared to December 31, 2015.  Average deposits increased 62.2% or $1.2 billion to $3.0 billion for the quarter ended March 31, 2016, compared with the same period of 2015. Average noninterest bearing deposits for the quarter ended March 31, 2016 were $604.3 million, an increase of $173.7 million compared with the same period in 2015, and a decrease of $43.7 million compared with the quarter ended December 31, 2015.

Asset Quality

Nonperforming assets totaled $77.5 million or 2.01% of period end total assets at March 31, 2016, an increase of $63.3 million compared to $14.2 million or 0.63% of period end total assets at March 31, 2015, the increase was due primarily to energy-related migration to nonperforming, and the nonperforming loans and real estate acquired through foreclosure that was acquired through the Patriot acquisition.  Nonperforming assets at March 31, 2016 increased by $20.3 million compared to $57.2 million or 1.51% of period end total assets at December 31, 2015, the increases were due primarily to energy-related migration to nonperforming and down grade of loans acquired through the Patriot acquisition. Accruing loans classified as troubled debt restructures and included in the nonperforming asset totals were $5.6 million at March 31, 2016, compared with $2.4 million at March 31, 2015 and $6.0 million at December 31, 2015.

The allowance for loan losses was 1.25% of total loans at March 31, 2016, compared with 0.97% of total loans at March 31, 2015 and 1.05% of total loans at December 31, 2015.  The increase in the percentage when compared to March 31, 2015 was due primarily to an increase in specific reserves and an increase in general reserves driven by loan growth, increases in classified loans, economic factors and an increase in the Company's historical loss general reserve factor.  At March 31, 2016, the Company's allowance for loans losses to total loans excluding acquired loans that are accounted for under ASC 310-20 and ASC 310-30 was 1.91%.  Further, the allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount was 1.96% as of March 31, 2016.

The Company recorded a provision for loan losses of $16.0 million for the quarter ended March 31, 2016 up from the $12.5 million provision for the loan losses recorded for the quarter ended December 31, 2015.  The first quarter provision reflects the addition of specific reserves and an increase in general reserves driven by loan growth, increases in classified loans, economic factors and an increase in the Company's historical loss general reserve factor. 

Net charge offs were $9.2 million for the quarter ended March 31, 2016 primarily related to an energy production loan, compared with net charge offs of $277 thousand for the quarter ended December 31, 2015, and net loan recoveries of $432 thousand for the quarter ended March 31, 2015.

Managed Asset Reduction Strategy ("MARS")

The Company has segregated its portfolio of energy loans and certain other classified assets that have been identified for accelerated resolution.  The objective of the MARS initiative is to remove the temporary roadblock to execution of the Company's growth plan due largely to the energy market.  A team of eight workout professionals reporting to the Company's Corporate Chief Credit Officer have been assigned to focus solely on the resolution of the MARS portfolio.  The MARS team will take a multifaceted approach to reducing the portfolio through the use of proven management and disposition techniques. 

Acquisition of Patriot Bancshares, Inc.

On October 1, 2015, Green Bancorp completed the acquisition of Patriot Bancshares, Inc. ("Patriot") and its wholly-owned subsidiary, Patriot Bank. Patriot, headquartered in Houston, TX, operated six locations in Houston, two in Dallas and one in Fannin County, Texas.  As of September 30, 2015, Patriot, on a consolidated basis, reported total assets of $1.4 billion, total loans of $1.1 billion, total deposits of $1.1 billion and total shareholders' equity of $125.2 million.

Non-GAAP Financial Measures

Green Bancorp's management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Green Bancorp reviews tangible book value per common share, the tangible common equity to tangible assets ratio, allowance for loan losses to total loans excluding acquired loans, allowance for loan losses plus acquired loans net discount to total loans adjusted for acquired loan net discount, selected metrics excluding one-time acquisition expenses and pre-tax, pre-provision adjusted net income.  Green Bancorp has included in this Earnings Release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to the "Notes to Financial Highlights" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Green Bancorp will hold a conference call today, April 28, 2016, to discuss its first quarter 2016 results at 5:00 p.m. (Eastern Time).  The conference call can be accessed live over the phone by dialing 1-877-407-0789, or for international callers, 1-201-689-8562 and requesting to be joined to the Green Bancorp First Quarter 2016 Earnings Conference Call.  A replay will be available starting at 8:00 pm (Eastern Time) on April 28, 2016 and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517. The passcode for the replay is 13635353.  The replay will be available until 11:59 pm (Eastern Time) on May 5, 2016.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company's website at investors.greenbank.com.  The online replay will remain available for a limited time beginning immediately following the call.

To learn more about Green Bancorp, please visit the Company's website at www.greenbank.com. Green Bancorp uses its website as a channel of distribution for material Company information. Financial and other material information regarding Green Bancorp is routinely posted on the Company's website and is readily accessible.

About Green Bancorp, Inc.
Headquartered in Houston, Texas, Green Bancorp is a bank holding company that operates Green Bank in Houston, Dallas and Austin. Commercial-focused, Green Bank is a nationally chartered bank regulated by the Office of the Comptroller of the Currency, a division of the Department of the Treasury of the United States.

Forward Looking Statement
The information presented herein and in other documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 giving Green Bancorp's expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," "positions," "prospects" or "potential," by future conditional verbs such as "will," "would," "should," "could" or "may", or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements speak only as of the date they are made and we assume no duty to update forward-looking statements.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements. Statements about the expected timing, completion and effects of the proposed transactions and all other statements in this release other than historical facts constitute forward-looking statements.

In addition to factors previously disclosed in Green Bancorp's reports filed with the SEC and those identified elsewhere in this communication, the following factors among others, could cause actual results to differ materially from forward-looking statements: difficulties and delays in integrating the Green Bancorp and Patriot businesses or fully realizing cost savings and other benefits; business disruption following the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions and divestitures; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.


                
                
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015
  (Dollars in thousands)
Period End Balance Sheet Data:               
Cash and cash equivalents $  171,421  $  124,906  $  96,451  $  168,416  $  129,108 
Securities    302,838     318,151     249,558     258,882     228,035 
Other investments    24,744     20,986     16,977     10,831     10,000 
Loans held for sale    -     384     192     1,287     939 
Loans held for investment    3,168,183     3,130,669     1,982,280     1,894,742     1,810,842 
Allowance for loan losses    (39,714)    (32,947)    (20,724)    (18,292)    (17,542)
Goodwill    85,291     85,291     30,129     30,129     30,129 
Core deposit intangibles, net    11,160     11,562     3,704     3,852     4,000 
Real estate acquired through foreclosure    9,230     12,122     1,665     4,488     4,863 
Premises and equipment, net    27,252     27,736     24,766     24,773     24,817 
Other assets    89,004     87,297     30,989     29,843     27,474 
Total assets $  3,849,409  $  3,786,157  $  2,415,987  $  2,408,951  $  2,252,665 
                
Noninterest-bearing deposits $  592,690  $  643,354  $  499,101  $  604,073  $  459,100 
Interest-bearing transaction and savings deposits    1,069,931     1,104,630     792,957     758,123     809,300 
Certificates and other time deposits    1,394,398     1,352,764     649,082     662,335     663,451 
Total deposits    3,057,019     3,100,748     1,941,140     2,024,531     1,931,851 
Securities sold under agreements to repurchase    3,544     3,073     3,080     9,858     13,012 
Other borrowed funds    328,968     223,265     158,893     67,309     7,323 
Subordinated debentures    13,292     13,187     -     -     - 
Other liabilities    15,676     16,482     9,645     8,601     6,709 
Total liabilities    3,418,499     3,356,755     2,112,758     2,110,299     1,958,895 
Shareholders' equity    430,910     429,402     303,229     298,652     293,770 
Total liabilities and equity $  3,849,409  $  3,786,157  $  2,415,987  $  2,408,951  $  2,252,665 


                
                
  For the Quarter Ended
  Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 Mar 31,
2015
  (Dollars in thousands)
Income Statement Data:               
Interest income:               
Loans, including fees $ 37,345 $ 37,693 $ 22,601 $ 22,252 $ 21,659
Securities   1,081   1,079   809   838   878
Other investments   173   119   111   113   110
Federal funds sold   1   2   -   -   -
Deposits in financial institutions   124   104   78   53   55
Total interest income   38,724   38,997   23,599   23,256   22,702
                
Interest expense:               
Transaction and savings deposits   1,150   1,030   696   695   682
Certificates and other time deposits   2,763   2,505   1,651   1,607   1,474
Subordinated debentures   237   227   -   -   -
Other borrowed funds   346   228   90   31   30
Total interest expense   4,496   3,990   2,437   2,333   2,186
                
Net interest income   34,228   35,007   21,162   20,923   20,516
Provision for loan losses   16,000   12,500   3,054   805   1,505
Net interest income after provision for loan losses   18,228   22,507   18,108   20,118   19,011
                
Noninterest income:               
Customer service fees   1,404   1,278   867   917   863
Loan fees   699   647   680   671   371
Gain on sale of available-for-sale securities, net   -   772   -   -   -
Gain on sale of held for sale loans, net   41   60   113   157   75
Gain on sale of guaranteed portion of loans, net   1,138   971   908   960   645
Other   873   548   303   250   131
Total noninterest income   4,155   4,276   2,871   2,955   2,085
                
Noninterest expense:               
Salaries and employee benefits   11,979   11,913   8,562   8,878   8,757
Occupancy   2,030   2,743   1,332   1,562   1,460
Professional and regulatory fees   1,922   1,863   1,988   3,605   1,467
Data processing   970   1,261   610   583   644
Software license and maintenance   476   738   352   392   362
Marketing   298   331   160   152   148
Loan related   243   628   185   263   109
Real estate acquired by foreclosure, net   300   352   339   382   13
Other   1,269   1,643   844   761   796
Total noninterest expense   19,487   21,472   14,372   16,578   13,756
                
Income before income taxes   2,896   5,311   6,607   6,495   7,340
Provision for income taxes   1,057   2,738   2,528   2,357   2,691
Net income $ 1,839 $ 2,573 $ 4,079 $ 4,138 $ 4,649


                 
 

 
 As of and For the Quarter Ended 
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 
  (Dollars in thousands, except per share data) 
Per Share Data (Common Stock):                
Basic earnings per common share $ 0.05 $ 0.07 $ 0.16 $ 0.16 $ 0.18 
Diluted earnings per share   0.05   0.07   0.15   0.16   0.18 
Book value per common share   11.71   11.67   11.54   11.37   11.22 
Tangible book value per common share (1)   9.09   9.04   10.25   10.08   9.92 
                 
Common Stock Data:                
Shares outstanding at period end   36,788   36,788   26,277   26,270   26,176 
Weighted average basic shares outstanding for the period   36,788   36,623   26,274   26,199   26,176 
Weighted average diluted shares outstanding for the period   36,791   36,854   26,551   26,518   26,359 
                 
Selected Performance Metrics:                
Return on average assets   0.20%  0.27%  0.68%  0.73%  0.85%
Return on average equity   1.68   2.38   5.37   5.60   6.46 
Efficiency ratio   50.77   54.66   59.80   69.43   60.86 
Loans to deposits ratio   103.64   100.96   102.12   93.59   93.74 
Noninterest expense to average assets   2.08   2.27   2.38   2.93   2.53 
                 
Capital Ratios:                
Average shareholders' equity to average total assets   11.7%  11.4%  12.6%  13.0%  13.2%
Tier 1 capital to average assets (leverage)   9.5   9.6   11.4   11.9   12.0 
Common equity tier 1 capital(2)   9.4   9.6   12.2   12.5   13.0 
Tier 1 capital to risk-weighted assets   9.7   10.0   12.2   12.5   13.0 
Total capital to risk-weighted assets   10.8   10.9   13.1   13.4   13.9 
Tangible common equity to tangible assets (1)   8.9   9.0   11.3   11.1   11.7 
                 
Selected Other Metrics:                
Number of full time equivalent employees   353   353   258   266   267 
Number of portfolio bankers   61   63   52   55   53 
Period end actual loan portfolio average per portfolio banker $ 49,823 $ 46,822 $ 36,601 $ 33,191 $ 32,721 
Period end target loan portfolio average per portfolio banker $ 60,738 $ 60,584 $ 52,299 $ 47,348 $ 46,679 
Estimated remaining capacity to target loan portfolio size   17.97%  22.72%  30.02%  29.90%  29.90%
                 
(1)   Refer to "Notes to Financial Highlights" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.
(2)    Common equity tier 1 capital ratio is a new ratio required under the Basel III Capital Rules effective January 1, 2015.


                            
                            
  For the Quarter Ended 
  March 31, 2016  December 31, 2015  March 31, 2015 
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 
  (Dollars in thousands) 
Assets                           
Interest-Earning Assets:                           
Loans $  3,124,711  $ 37,345  4.81% $  3,043,384  $ 37,693  4.91% $  1,784,400  $ 21,659  4.92%
Securities    312,861    1,081  1.39     340,381    1,079  1.26     235,946    878  1.51 
Other investments    22,498    173  3.09     23,189    119  2.04     10,435    110  4.28 
Federal funds sold    2,507    1  0.16     5,001    2  0.16     639    -  - 
Interest earning deposits in financial institutions    94,902    124  0.53     130,396    104  0.32     86,536    55  0.26 
Total interest-earning assets    3,557,479    38,724  4.38%    3,542,351    38,997  4.37%    2,117,956    22,702  4.35%
                            
Allowance for loan losses    (33,080)          (20,726)          (15,784)      
Noninterest-earning assets    245,025           239,425           105,697       
Total assets $  3,769,424        $  3,761,050        $  2,207,869       
                            
Liabilities and Shareholders' Equity                           
Interest-bearing liabilities:                           
Interest-bearing demand and savings deposits $  1,066,999  $ 1,150  0.43% $  1,088,605  $ 1,030  0.38% $  788,020  $ 682  0.35%
Certificates and other time deposits    1,342,562    2,763  0.83     1,290,885    2,505  0.77     639,300    1,474  0.94 
Securities sold under agreements to repurchase    4,121    2  0.20     4,362    2  0.18     15,194    6  0.16 
Other borrowed funds    280,838    344  0.49     270,149    226  0.33     35,540    24  0.27 
Subordinated debentures    13,244    237  7.20     12,982    227  6.94     -    -  - 
Total interest-bearing liabilities    2,707,764    4,496  0.67%    2,666,983    3,990  0.59%    1,478,054    2,186  0.60%
                            
Noninterest-bearing liabilities:                           
Noninterest-bearing demand deposits    604,261           647,997           430,542       
Other liabilities    16,654           16,543           7,599       
Total liabilities    3,328,679           3,331,523           1,916,195       
Shareholders' equity    440,745           429,527           291,674       
Total liabilities and  shareholders' equity $  3,769,424        $  3,761,050        $  2,207,869       
                            
Net interest rate spread         3.71%        3.77%        3.75%
Net interest income and margin(1)     $ 34,228  3.87%    $ 35,007  3.92%    $ 20,516  3.93%
   
(1)    Net interest margin is equal to net interest income divided by interest-earning assets.


Yield Trend

            
  For the Quarter Ended 
  Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 Mar 31,
2015
 
            
Average yield on interest-earning assets:           
Loans, including fees  4.81% 4.91% 4.67% 4.86% 4.92%
Securities  1.39  1.26  1.24  1.27  1.51 
Other investments  3.09  2.04  2.77  4.56  4.28 
Federal funds sold  0.16  0.16  -  -  - 
Interest-earning deposits in financial institutions  0.53  0.32  0.26  0.28  0.26 
Total interest-earning assets  4.38% 4.37% 4.05% 4.27% 4.35%
            
Average rate on interest-bearing liabilities:           
Interest bearing transaction and savings  0.43% 0.38% 0.36% 0.36% 0.35%
Certificates and other time deposits  0.83  0.77  1.01  0.97  0.94 
Other borrowed funds  0.49  0.33  0.20  0.30  0.24 
Subordinated debentures  7.20  6.94  -  -  - 
Total interest-bearing liabilities  0.67% 0.59% 0.60% 0.63% 0.60%
            
Net interest rate spread  3.71% 3.77% 3.45% 3.63% 3.75%
Net interest margin (1)  3.87% 3.92% 3.63% 3.84% 3.93%
            
(1)      Net interest margin is equal to net interestincome divided by interest-earning assets


Supplemental Yield Trend

            
            
  For the Quarter Ended 
  Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 Mar 31,
2015
 
            
Average yield on loans, excluding fees (2)  4.29% 4.22% 4.37% 4.47% 4.50%
Average cost of interest-bearing deposits  0.65  0.59  0.66  0.64  0.61 
Average cost of total deposits, including noninterest-bearing  0.52  0.46  0.49  0.48  0.47 
            
(2)     Average yield on loans, excluding fees and discount accretion,is equal to loan interest income divided by average loan principal.


Portfolio Composition

                               
  Mar 31, 2016  Dec 31, 2015  Sep 30, 2015  Jun 30, 2015  Mar 31, 2015 
                               
  (Dollars in thousands) 
Period End Balances                              
                               
Commercial & industrial $ 1,130,710  35.7% $ 1,206,452  38.5% $ 820,337  41.4% $ 795,483  42.0% $ 744,380  41.1%
Real Estate:                              
Owner occupied commercial   367,507  11.6    353,889  11.3    183,224  9.2    176,453  9.2    166,604  9.1 
Commercial   1,020,399  32.2    904,115  28.9    483,628  24.4    383,863  20.3    367,071  20.3 
Construction, land & land development   356,207  11.2    358,813  11.5    252,206  12.8    290,469  15.3    273,125  15.1 
Residential mortgage   280,236  8.9    293,483  9.4    230,796  11.6    234,026  12.4    249,591  13.8 
Consumer and Other   13,124  0.4    13,917  0.4    12,089  0.6    14,448  0.8    10,071  0.6 
Total loans held for investment $ 3,168,183  100.0% $ 3,130,669  100.0% $ 1,982,280  100.0% $ 1,894,742  100.0% $ 1,810,842  100.0%
                               
Deposits:                              
Noninterest-bearing $ 592,690  19.4% $ 643,354  20.7% $ 499,101  25.7% $ 604,073  29.9% $ 459,100  23.8%
Interest-bearing transaction   178,470  5.8    172,737  5.6    132,604  6.8    133,584  6.6    142,442  7.4 
Money market   760,992  24.9    793,808  25.6    604,912  31.2    567,613  28.0    607,033  31.4 
Savings   130,469  4.3    138,085  4.5    55,441  2.9    56,926  2.8    59,825  3.1 
Certificates and other time deposits   1,394,398  45.6    1,352,764  43.6    649,082  33.4    662,335  32.7    663,451  34.3 
Total deposits $ 3,057,019  100.0% $ 3,100,748  100.0% $ 1,941,140  100.0% $ 2,024,531  100.0% $ 1,931,851  100.0 %
                               
Loan to Deposit Ratio   103.6%     101.0%     102.1%     93.6%     93.7%  


Asset Quality

                 
  As of and for the Quarter Ended 
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 
  (Dollars in thousands) 
Nonperforming Assets:                
Nonaccrual loans $  49,264  $  37,541  $  22,762  $  4,402  $  3,789  
Accruing loans 90 or more days past due    12,147     52     4,233     -     7  
Restructured loans—nonaccrual    1,270     1,464     1,623     1,712     3,113  
Restructured loans—accrual    5,616     5,988     6,048     681     2,390  
Total nonperforming loans    68,297     45,045     34,666     6,795     9,299  
Real estate acquired through foreclosure    9,230     12,122     1,665     4,488     4,863  
Total nonperforming assets $  77,527  $  57,167  $  36,331  $  11,283  $  14,162  
                 
Charge-offs:                
Commercial and industrial $  (9,880) $  (362) $  (981) $  (1,227) $  (77) 
Residential mortgage    (6)    (22)    (41)    -     -  
Other consumer    (20)    (17)    (12)    (12)    (105) 
Total charge-offs    (9,906)    (401)    (1,034)    (1,239)    (182) 
                 
Recoveries:                
Commercial and industrial $  582  $  94  $  331  $  1,163  $  597  
Commercial real estate    -     1     75     -     1  
Construction, land & land development    26     5     -     -     -  
Residential mortgage    57     14     4     6     12  
Other consumer    8     10     2     15     4  
Total recoveries    673     124     412     1,184     614  
                 
Net (charge-offs) recoveries $  (9,233) $  (277) $  (622) $  (55) $  432  
                 
Allowance for loan losses at end of period $  39,714  $  32,947  $  20,724  $  18,292  $  17,542  
                 
Asset Quality Ratios:                
Nonperforming assets to total assets    2.01 %   1.51 %   1.50 %   0.47 %   0.63 %
Nonperforming loans to total loans    2.16     1.44     1.75     0.36     0.51  
Total classified assets to total regulatory capital    50.93     37.59     28.19     19.03     10.93  
Allowance for loan losses to total loans    1.25     1.05     1.05     0.97     0.97  
Net charge-offs (recoveries) to average loans outstanding    0.30     0.01     0.03     0.00     (0.02) 


We identify certain financial measures discussed in this release as being "non‑GAAP financial measures." In accordance with the SEC's rules, we classify a financial measure as being a non‑GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States in our statements of income, balance sheet or statements of cash flows. Non‑GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non‑GAAP financial measures or both.

The non‑GAAP financial measures that we discuss in this release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non‑GAAP financial measures that we discuss in this release may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non‑GAAP financial measures we have discussed in this release when comparing such non‑GAAP financial measures.

Tangible Book Value Per Common Share.  Tangible book value is a non‑GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as shareholders' equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by shares of common stock outstanding. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is our book value.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total shareholders' equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

                 
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 
  (Dollars in thousands, except per share data)
Tangible Common Equity                
Total shareholders' equity $ 430,910 $ 429,402 $ 303,229 $ 298,652 $ 293,770 
Adjustments:                
Goodwill   85,291   85,291   30,129   30,129   30,129 
Core deposit intangibles   11,160   11,562   3,704   3,852   4,000 
Tangible common equity $ 334,459 $ 332,549 $ 269,396 $ 264,671 $ 259,641 
Common shares outstanding (1)   36,788   36,788   26,277   26,270   26,176 
Book value per common share (1) $ 11.71 $ 11.67 $ 11.54 $ 11.37 $ 11.22 
Tangible book value per common share (1) $ 9.09 $ 9.04 $ 10.25 $ 10.08 $ 9.92 
                 
(1)    Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options.  The number of exercisable options outstanding was 874,466 as of Mar 31, 2016; 875,007 as of Dec 31, 2015; 939,576 as of Sep 30, 2015; 938,927 as of Jun 30, 2015; and 1,021,555 as of Mar 31, 2015.


Tangible Common Equity to Tangible Assets
.  Tangible common equity to tangible assets is a non‑GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as shareholders' equity less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total shareholders' equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing both total shareholders' equity and assets while not increasing our tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total shareholders' equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

                 
                 
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 
  (Dollars in thousands)
Tangible Common Equity                
Total shareholders' equity $ 430,910 $ 429,402 $ 303,229 $ 298,652 $ 293,770 
Adjustments:                
Goodwill   85,291   85,291   30,129   30,129   30,129 
Core deposit intangibles   11,160   11,562   3,704   3,852   4,000 
Tangible common equity $ 334,459 $ 332,549 $ 269,396 $ 264,671 $ 259,641 
Tangible Assets                
Total assets $ 3,849,409 $ 3,786,157 $ 2,415,987 $ 2,408,951 $ 2,252,665 
Adjustments:                
Goodwill   85,291   85,291   30,129   30,129   30,129 
Core deposit intangibles   11,160   11,562   3,704   3,852   4,000 
Tangible assets $ 3,752,958 $ 3,689,304 $ 2,382,154 $ 2,374,970 $ 2,218,536 
Tangible Common Equity to Tangible Assets    8.9%  9.0%  11.3%  11.1%  11.7%


Allowance for Loan Losses to Total Loans excluding Acquired Loans. 
The allowance for loan losses to total loans excluding acquired loans is a non‑GAAP measure used by management to evaluate the Company's financial condition. Due to the application of purchase accounting, we use this non-GAAP ratio that excludes that impact of these items to evaluate our allowance for loan losses to total loans.  We calculate: (a) total loans excluding acquired loans as total loans less the fair value of acquired loans accounted for under ASC topics 310-20 and 310-30; and (b) allowance for loan losses to total loans excluding acquired loans as the allowance for loan losses divided by total loans excluding acquired loans (as described in clause (a)).  For allowance for loan losses to total loans excluding acquired loans, the most directly comparable financial measure calculated in accordance with GAAP is allowance for loan losses to total loans.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in the allowance for loan losses to total loans excluding acquired loans.  The acquired loans may have a premium or discount associated with them that includes a potential credit loss component with similar characteristics to the allowance for loan losses.  This measure reports the allowance for loan loss coverage to only those loans not accounted for pursuant to ASC topics 310-20 and 310-30 which may assist the investor in evaluating the allowance coverage of loans excluding acquired loans.

The following table reconciles, as of the dates set forth below, allowance for loan losses to total loans excluding acquired loans:

                 
                 
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 
  (Dollars in thousands)
Allowance for loan losses $ 39,714 $ 32,947 $ 20,724 $ 18,292 $ 17,542 
Total loans excluding acquired loans                
Total loans $ 3,168,183 $ 3,130,669 $ 1,982,280 $ 1,894,742 $ 1,810,842 
Less: Fair value of acquired loans accounted for under ASC Topics 310-20 and 310-30   1,092,635   1,197,112   172,645   190,815   214,689 
Total loans excluding acquired loans $ 2,075,548 $ 1,933,557 $ 1,809,635 $ 1,703,927 $ 1,596,153 
Allowance for loan losses to total loans excluding acquired loans  1.91% 1.70% 1.15% 1.07% 1.10%


Allowance for Loan Losses plus Acquired Loan Net Discount to Total Loans adjusted for Acquired Loan Net Discount. 
Allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount is a non‑GAAP measure used by management to evaluate the Company's financial condition. We calculate: (a) allowance for loan losses plus acquired loan net discount as allowance for loan losses plus acquired loan net discount, net of accumulated amortization; (b) total loans adjusted for acquired loan net discount as total loans plus acquired loan net discount, net of accumulated amortization; and (c) allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount as allowance for loan losses plus acquired loan net discount (as calculated in clause (a)) divided by total loans adjusted for acquired loan net discount (as calculated in clause (b)).

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in the allowance for loan losses plus the acquired loan net discount to total loans adjusted for the acquired loan net discount.  This measure reports the combined allowance for loan loss and acquired loan net discount (or premium) as a percentage of loans inclusive of the acquired loan net discount (or premium) which may assist the investor in evaluating allowance coverage on loans inclusive of additional discount or premium resulting from purchase accounting adjustments.

The following table reconciles, as of the dates set forth below, allowance for loan losses plus acquired loans net discount to total loans adjusted for acquired loan net discount:

                 
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015 
                 
  (Dollars in thousands)
Allowance for loan losses plus acquired loan net discount                
Allowance for loan losses at end of period $ 39,714 $ 32,947 $ 20,724 $ 18,292 $ 17,542 
Plus: Net discount on acquired loans   22,871   25,348   2,580   2,771   3,474 
Total allowance plus acquired loan net discount $ 62,585 $ 58,295 $ 23,304 $ 21,063 $ 21,016 
                 
Total loans adjusted for acquired loan net discount                
Total loans $ 3,168,183 $ 3,130,669 $ 1,982,280 $ 1,894,742 $ 1,810,842 
Plus: Net discount on acquired loans   22,871   25,348   2,580   2,771   3,474 
Total loans adjusted for acquired loan net discount $ 3,191,054 $ 3,156,017 $ 1,984,860 $ 1,897,513 $ 1,814,316 
Allowance for loan losses plus acquired loan net discount loans to total loans adjusted for acquired loan net discount  1.96% 1.85% 1.17% 1.11% 1.16%


Selected Metrics Excluding One-time Acquisition Expenses. 
The selected metrics excluding one-time acquisition expenses are non‑GAAP measures used by management to evaluate the Company's performance. We calculate: (a) noninterest expense excluding one-time acquisition expenses as total noninterest expense less the one-time acquisition expenses; (b) net income excluding one-time acquisition expenses as net income plus one-time acquisition expenses, net of taxes; (c) diluted earnings per share excluding one-time acquisition expenses as net income excluding one-time acquisition expenses (as calculated in clause (b)) divided by the weighted average diluted shares outstanding; (d) return on average assets excluding one-time acquisition expenses as net income excluding one-time acquisition expenses (as calculated in clause (b)) divided by average total assets; (e) return on average equity excluding one-time acquisition expenses as net income excluding one-time acquisition expenses (as calculated in clause (b)) divided by average total shareholders' equity; and (f) efficiency ratio excluding one-time acquisition expenses as noninterest expense excluding one-time acquisition expenses (as calculated in clause (a)) divided by the sum of net interest income and noninterest income.  For noninterest expense excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is noninterest expense. For net income excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is net income. For diluted earnings per share excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is diluted earnings per share. For return on average assets excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is return on average assets. For return on average equity excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is return on average equity. For the efficiency ratio excluding one-time acquisition expenses, the most comparable financial measure calculated in accordance with GAAP is the efficiency ratio.

We believe that these measures are important to many investors in the marketplace who are interested in changes from period to period in noninterest expense, net income, diluted earnings per share, return on average assets, return on average equity and efficiency ratio with the exclusion of one-time acquisition expenses.

The following table reconciles, as of the dates set forth below, the selected metrics excluding one-time acquisition expenses:

                 
                 
  For the Quarter Ended 
  Mar 31,
2016
 Dec 31,
2015
 Sep 30,
2015
 Jun 30,
2015
 Mar 31,
2015
 
                 
  (Dollars in thousands, except per share data) 
Noninterest Expense Excluding One-time Acquisition Expenses                
Total noninterest expense $ 19,487 $ 21,472 $ 14,372 $ 16,578 $ 13,756 
Less: One-time acquisition expenses   390   1,846   808   1,996   226 
Noninterest expense excluding one-time acquisition expenses $ 19,097 $ 19,626 $ 13,564 $ 14,582 $ 13,530 
                 
Net Income Excluding One-time Acquisition Expenses                
Net Income $ 1,839 $ 2,573 $ 4,079 $ 4,138 $ 4,649 
Plus: One-time acquisition expenses, net of taxes   254   2,057   525   1,297   147 
Net income excluding one-time acquisition expenses $ 2,093 $ 4,630 $ 4,604 $ 5,435 $ 4,796 
                 
Weighted average diluted shares outstanding   36,791   36,854   26,551   26,518   26,359 
Diluted earnings per share $ 0.05 $ 0.07 $ 0.15 $ 0.16 $ 0.18 
Diluted earnings per share, excluding one-time acquisition expenses   0.06   0.13   0.17   0.20   0.18 
                 
Average Total Assets $ 3,769,424 $3,761,050 $2,395,556 $2,273,297 $2,207,869 
Return on average assets   0.20%  0.27%  0.68%  0.73%  0.85%
Return on average assets, excluding one-time acquisition expenses   0.22   0.49   0.76   0.96   0.88 
                 
Average Common Shareholders' equity $ 440,745 $ 429,527 $ 301,370 $ 296,259 $ 291,674 
Return on average equity   1.68%  2.38%  5.37%  5.60%  6.46%
Return on average equity, excluding one-time acquisition expenses   1.91   4.28   6.06   7.36   6.67 
                 
Net interest income $ 34,228 $ 35,007 $ 21,162 $ 20,923 $ 20,516 
Noninterest Income $ 4,155 $ 4,276 $ 2,871 $ 2,955 $ 2,085 
                 
Efficiency ratio   50.77%  54.66%  59.80%  69.43%  60.86%
Efficiency ratio, excluding one-time acquisition expenses   49.75   49.96   56.44   61.07   59.86 


Pre-tax, Pre-provision Adjusted Net Income. 
Pre-tax, pre-provision adjusted net income is a non‑GAAP measure used by management to evaluate the Company's financial condition. We calculate pre-tax, pre-provision adjusted net income as net income plus provision for income taxes, plus provision for loan losses, plus one-time acquisition expenses.  For pre-tax, pre-provision adjusted net income, the most directly comparable financial measure calculated in accordance with GAAP is net income.

We believe that this measure is important to many investors in the marketplace who are interested in understanding the operating performance of the company before provision for loan losses, which can vary from quarter to quarter, and income taxes.   

The following table reconciles, as of the dates set forth below, pre-tax, pre-provision adjusted net income:

                
  For the Quarter Ended
  Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Jun 30, 2015 Mar 31, 2015
                
  (Dollars in thousands)
Pre-Tax, Pre-Provision Adjusted Net Income               
Net Income $ 1,839 $ 2,573 $ 4,079 $ 4,138 $ 4,649
Plus: Provision on income taxes   1,057   2,738   2,528   2,357   2,691
Plus: Provision for loan losses   16,000   12,500   3,054   805   1,505
Plus: One-time acquisition expenses   390   1,846   808   1,996   226
Total pre-tax, pre-provision adjusted net income $ 19,286 $ 19,657 $ 10,469 $ 9,296 $ 9,071

 

Media Contact: Mike Barone 713-275-8243 mbarone@greenbank.com Investor Relations: 713-275-8220 investors@greenbank.com

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