Green Bankshares Announces Financial Results for the Third Quarter of 2011

GREENEVILLE, Tenn.--(BUSINESS WIRE)--

Green Bankshares, Inc. GRNB, a majority-owned subsidiary of North American Financial Holdings, Inc. ("NAFH"), today reported unaudited financial results for the third quarter of 2011. Operating and financial highlights include the following:

• On September 7, 2011, NAFH completed its $217 million investment (the “NAFH Investment”) in Green Bankshares, Inc. ("the Company");
• Effectively immediately after completion of the investment, GreenBank, formerly the wholly owned banking subsidiary of the Company, was merged with and into Capital Bank, National Association ("Capital Bank, NA");
• As a result of these mergers, the Company held a 34% ownership in Capital Bank, NA as of September 30, 2011;
• The Company reported a net loss available to common shareholders of $9.8 million and $33.7 million, or $0.75 and $2.57 per diluted share, for the periods prior to the NAFH Investment from July 1, 2011 through September 7, 2011, and January 1, 2011 through September 7, 2011, respectively; and
• The Company reported net income of $930 thousand, or $.01 per diluted share, for the period subsequent to the NAFH Investment from September 8, 2011 through September 30, 2011.

NAFH is a bank holding company formed with the goal of creating a regional banking franchise in the southeastern region of the United States through organic growth and acquisition of other banks, including failed, underperforming and undercapitalized banks. NAFH is the controlling owner of Capital Bank, NA, a $6.6 billion bank with 146 branches in Florida, North Carolina, South Carolina, Tennessee and Virginia.

NAFH Investment

On September 7, 2011, the Company completed the issuance and sale of 119.9 million shares of its common stock to NAFH for approximately $217 million in consideration. The consideration included $147.6 million of cash and NAFH's contribution of the Company's Series A Preferred Stock and warrant to purchase shares of common stock issued to the U.S. Treasury through the TARP, which were repurchased by NAFH.

Financial results for the first nine months of 2011 were significantly impacted by the controlling investment in the Company by NAFH. The Company applied push-down accounting. Accordingly, the Company's assets and liabilities were adjusted to estimated fair values at the NAFH Investment date, resulting in elimination of the allowance for loan losses. The Company is still in the process of completing its fair value analysis of assets and liabilities, and final fair value adjustments may differ from the preliminary estimates recorded to date. Balances and activity in the Company's consolidated financial statements prior to the NAFH Investment have been labeled with "Predecessor Company" while balances and activity subsequent to the NAFH Investment have been labeled with "Successor Company."

Bank Merger

On September 7, 2011, GreenBank, which was formerly a wholly owned subsidiary of the Company, merged (the "Bank Merger") with and into Capital Bank, NA, a national banking association and subsidiary of TIB Financial Corp. ("TIB Financial"), a corporation organized under the laws of the State of Florida, Capital Bank Corporation, a corporation organized under the laws of the state of North Carolina ("Capital Bank Corp.") and NAFH, with Capital Bank, NA as the surviving entity. NAFH is the owner of approximately 90% of the Company's common stock, approximately 83% of Capital Bank Corp.'s common stock and approximately 94% of TIB Financial's common stock.

Capital Bank, NA (formerly NAFH National Bank) was formed on July 16, 2010, in connection with the purchase and assumption of assets and deposits of three banks – Metro Bank of Dade County (Miami, Florida), Turnberry Bank (Aventura, Florida) and First National Bank of the South (Spartanburg, South Carolina) – from the Federal Deposit Insurance Corporation (the "FDIC") and is a party to loss sharing agreements with the FDIC covering the large majority of the loans it acquired from the FDIC. As of September 30, 2011, Capital Bank, NA had total assets of $6.6 billion, total deposits of $5.3 billion and shareholders' equity of $931.1 million. As of September 30, 2011, following the Bank Merger, Capital Bank, NA operated 146 branches in Tennessee, Florida, North Carolina, South Carolina, and Virginia.

The Bank Merger occurred pursuant to the terms of an Agreement and Plan of Merger entered into by and between the Bank and Capital Bank, NA, dated as of September 7, 2011 (the "Merger Agreement"). In the Merger, each share of Bank common stock was converted into the right to receive shares of Capital Bank, NA common stock. As a result of the Merger, the Company now owns approximately 34% of Capital Bank, NA, with NAFH owning 19%, Capital Bank Corp. owning 26% and TIB Financial owning the remaining 21%.

Due to its ownership level and significant influence, the Company's investment in Capital Bank, NA is recorded as an equity-method investment in that entity. As of September 30, 2011, the Company's investment in Capital Bank, NA totaled $312.4 million, which reflected the Company's pro rata ownership of Capital Bank, NA's total shareholders' equity as a result of the Bank Merger. In periods subsequent to the Bank Merger, the Company will adjust this equity investment balance based on its equity in Capital Bank, NA's net income and comprehensive income. In connection with the Bank Merger, assets and liabilities of GreenBank were deconsolidated from the Company's balance sheet, resulting in a significant decrease in total assets and total liabilities of the Company in the third quarter of 2011.

Financial Discussion

The Company reported a net loss available to common shareholders for the period from July 1, 2011 through September 7, 2011, of $9.8 million compared to a net loss of $12.4 million for the second quarter of 2011 and a net loss of $36.4 million for the third quarter of 2010. For the period from September 8, 2011 through September 30, 2011, the Company reported net income of $930 thousand. Financial results prior to the September 7^th NAFH Investment have been labeled with "Predecessor Company" while results subsequent to the NAFH Investment have been labeled with "Successor Company."

Due to the difference in lengths of reporting periods and the Merger discussed above and the resulting deconsolidation of GreenBank on September 7, 2011, the operating results for the period from July 1, 2011 through September 7, 2011, only include the results of GreenBank for approximately two months and therefore are generally not comparable to the operations in prior quarters.

The loss reported in the period from July 1, 2011 through September 7, 2011, was primarily due to a $15.5 million provision for loan losses and $14.7 million in foreclosed asset related expenses. The loss reported in the second quarter of 2011 was primarily due to a $14.3 million provision for loan losses and $6.3 million in foreclosed asset related expenses, while the loss reported in the third quarter of 2010 was primarily due to a $36.8 million provision for loan losses and $7.8 million in foreclosed asset related expenses.

The net interest margin for the period from July 1, 2011 through September 7, 2011, was 3.91%, up a modest 0.01% versus the second quarter of 2011. Subsequent to the deconsolidation of GreenBank on September 7, 2011, the net interest margin is not meaningful as the Company has no interest earning asset. As the Company accounts for its investment in Capital Bank, NA using the equity method, the Company's proportional share of the net after tax earnings of Capital Bank, NA is recorded as Equity in income of Capital Bank, NA, which for the period from September 8, 2011 through September 30, 2011, was $1.1 million.

About Green Bankshares

Headquartered in Greeneville, Tennessee, Green Bankshares, Inc. is a financial services company with a 34% equity method investment in Capital Bank, NA, a national banking association with approximately $6.6 billion in total assets and 146 branches serving communities in Tennessee, Florida, North Carolina, South Carolina, and Virginia.

GREEN BANKSHARES INC. Unaudited Consolidated Statements of Operations
(Dollars in thousands except per share data)			Successor Company				Predecessor Company
							July 1 - Sept. 7, 2011				Three Months Ended
			Sept. 8 - Sept. 30, 2011								June 30, 2011				March 31, 2011				Dec. 31, 2010				Sept. 30 2010
Operating Data:
Total interest income			$	–			$	18,480			$	26,075			$	26,625			$	28,213			$	29,455
Total interest expense				236				4,422				6,623				7,358				8,499				8,708
Net interest income				(236	)			14,058				19,452				19,267				19,714				20,747
Provision for loan losses				–				15,513				14,333				13,897				25,646				36,823
Net interest income (loss) after provision for loan losses				(236	)			(1,455	)			5,119				5,370				(5,932	)			(16,076	)
Non-interest income				1,138				11,940				8,236				7,627				7,058				9,029
Non-interest expense				95				29,585				24,770				23,027				41,986				27,009
Income (loss) before income taxes				807				(19,100	)			(11,415	)			(10,030	)			(40,860	)			(34,056	)
Income tax expense (benefit)				(123	)			974				(281	)			281				10,688				1,098
Net income (loss)				930				(20,074	)			(11,134	)			(10,311	)			(51,548	)			(35,154	)
Preferred stock dividend and accretion of discount on warrants				–				909				1,250				1,250				1,250				1,251
Gain on retirement of Series A preferred allocated to common shareholders				–				11,188				–				–				–				–
Net income (loss) available to common shareholders			$	930			$	(9,795	)		$	(12,384	)		$	(11,561	)		$	(52,798	)		$	(36,405	)
Per Share of Common Stock:
Basic earnings (loss)			$	0.01			$	(0.75	)		$	(0.94	)		$	(0.88	)		$	(4.03	)		$	(2.78	)
Diluted earnings (loss)			$	0.01			$	(0.75	)		$	(0.94	)		$	(0.88	)		$	(4.03	)		$	(2.78	)
Dividends			$	0.00			$	0.00			$	0.00			$	0.00			$	0.00			$	0.00
Weighted Average Shares Outstanding:
Basic				133,083,705				13,145,744				13,126,923				13,108,598				13,097,611				13,097,611
Diluted				133,174,370				13,145,744				13,126,923				13,108,598				13,097,611				13,097,611

GREEN BANKSHARES INC. End of Period Balances
			Successor Company			Predecessor Company
(Dollars in thousands except per share data)			Sept. 30, 2011				June 30, 2011				March 31, 2011				Dec. 31, 2010				Sept 30, 2010
Assets			$	318,733			$	2,293,815			$	2,392,694			$	2,406,040			$	2,415,014
Loans, net of unearned interest				–				1,560,503				1,680,249				1,745,378				1,835,591
Cash and investments				2,347				574,555				570,997				509,415				384,698
Federal funds sold				–				5,023				7,931				4,856				3,682
Deposits				–				1,883,388				1,975,635				1,976,854				1,916,544
FHLB advances and notes payable				–				157,859				158,588				158,653				170,884
Subordinated debentures				43,637				88,662				88,662				88,662				88,662
Repurchase agreements				–				18,713				18,712				19,413				22,641
Shareholders' equity				258,617				122,046				132,830				143,897				197,824
Common shareholders' equity(1)				258,617				53,231				64,362				75,776				130,049
Tangible common shareholders' equity(2)				258,617				47,729				58,237				69,025				122,651
Tangible shareholders' equity(3)				258,617				116,544				126,705				137,146				190,426
Ratios:
Common book value per share(1)			$	1.94			$	4.02			$	4.88			$	5.75			$	9.86
Tangible common book value per share(2)			$	1.94			$	3.60			$	4.41			$	5.23			$	9.30
* Derived from Audited Consolidated Financial Statements.
(1) Common shareholders' equity is shareholders' equity less preferred stock.
(2) Tangible common shareholders' equity is shareholders' equity less goodwill, intangible assets and preferred stock.
(3) Tangible shareholders' equity is shareholders' equity less goodwill and intangible assets.
(4) Tangible assets is total assets less goodwill and intangible assets.

GREEN BANKSHARES INC. Consolidated Balance Sheets
			(Unaudited)
(Dollars in thousands except per share data)			Successor Company					Predecessor Company
			Sept. 30, 2011					Dec. 31, 2010
ASSETS
Cash and due from banks			$	2,347				$	289,358
Federal funds sold				–					4,856
Cash and cash equivalents				2,347					294,214
Interest earning deposits in other banks				–					–
Securities available-for-sale ("AFS")				–					202,002
Securities held-to-maturity (with a December 31, 2010 market value of $467)				–					465
FHLB and other stock, at cost				–					12,734
Loans held for sale				–					1,299
Loans, net of unearned income				–					1,745,378
Allowance for loan losses				–					(66,830	)
Other real estate owned and repossessed assets				–					60,095
Bank premises and equipment, net				–					78,794
Cash surrender value of life insurance				–					31,479
Core deposit and other intangibles				–					6,751
Deferred Tax Asset ( December 31, 2010 net of valuation allowance of $43,455)				–					2,177
Investment in Capital Bank, NA				312,432
Other assets				3,954					37,482
Total assets			$	318,733				$	2,406,040
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest-bearing deposits			$	–				$	152,752
Interest-bearing deposits				–					1,822,703
Brokered deposits				–					1,399
Total deposits				–					1,976,854
Repurchase agreements				–					19,413
FHLB advances and notes payable				–					158,653
Subordinated debentures				43,637					88,662
Deferred tax liability				16,073					–
Accrued interest payable and other liabilities				406					18,561
Total liabilities				60,116					2,262,143
SHAREHOLDERS' EQUITY:
Preferred stock: no par value, 1,000,000 shares authorized; 0 and 72,278 shares outstanding
				–					68,121
Common stock: $0.01 and $2 par value, 300,000,000 and 20,000,000 shares authorized; 133,174,370 and 13,188,896 shares outstanding
				1,332					26,378
Common stock warrants				–					6,934
Additional paid in capital				257,711					188,901
Accumulated earnings (deficit)				930					(147,436	)
Accumulated other comprehensive income				(1,356	)				999
Total shareholders' equity				258,617					143,897
Total liabilities & shareholders' equity			$	318,733				$	2,406,040

GREEN BANKSHARES INC. Consolidated Statements of Operations
(Dollars in thousands except share and per share data)			Successor Company					Predecessor Company
			Sept. 8 - Sept. 30, 2011					July 1 - Sept. 7, 2011					Three Months Ended Sept. 30, 2010					Jan. 1 - Sept. 7, 2011					Nine Months Ended Sept. 30, 2010
Interest income:
Interest and fees on loans			$	–				$	16,854				$	27,744				$	65,258				$	87,178
Taxable securities				–					1,202					1,181					4,290					3,860
Nontaxable securities				–					204					304					790					922
FHLB and other stock				–					102					136					374					408
Federal funds sold and other				–					118					90					468					283
Total interest income				–					18,480					29,455					71,180					92,651
Interest expense:
Deposits				–					2,873					6,444					12,764					22,131
Federal funds purchased and repurchase agreements				–					3					6					11					17
FHLB advances and notes payable				–					1,200					1,726					4,314					5,132
Subordinated debentures				236					346					532					1,315					1,492
Total interest expense				236					4,422					8,708					18,404					28,772
Net interest income (expense)				(236	)				14,058					20,747					52,776					63,879
Provision for loan losses				–					15,513					36,823					43,742					45,461
Net interest income (loss) after provision for loan losses				(236	)				(1,455	)				(16,076	)				9,034					18,418
Non-interest income:
Service charges on deposit accounts				–					4,137					6,651					16,346					19,283
Other charges and fees				–					348					417					1,147					1,156
Trust and investment services income				–					446					1,021					1,457					2,360
Mortgage banking income				–					72					212					271					453
Other income				1,138					6,937					728					8,582					2,234
Total non-interest income				1,138					11,940					9,029					27,803					25,486
Non-interest expense:
Employee compensation				–					6,105					8,266					21,560					23,903
Employee benefits				–					602					816					2,458					2,609
Occupancy expense				–					1,803					1,792					5,308					5,175
Equipment expense				–					661					742					2,176					2,118
Computer hardware/software expense				–					653					916					2,508					2,626
Professional services				61					1,189					741					3,099					1,924
Advertising				–					448					657					1,533					2,061
OREO maintenance expense				–					627					712					2,976					1,711
Collection and repossession expense				–					408					508					1,727					2,329
Loss on OREO and repossessed assets				–					13,672					6,538					20,101					7,973
FDIC insurance				–					260					1,099					2,629					3,159
Core deposit and other intangible amortization				–					467					646					1,716					1,937
Other expenses				34					2,690					3,576					9,591					11,304
Total non-interest expense				95					29,585					27,009					77,382					68,829
Income (loss) before income taxes				807					(19,100	)				(34,056	)				(40,545	)				(24,925	)
Income taxes provision (benefit)				(123	)				974					1,098					974					4,222
Net income (loss)				930					(20,074	)				(35,154	)				(41,519	)				(29,147	)
Preferred stock dividends and accretion of discount on warrants				–					909					1,251					3,409					3,751
Gain on retirement of Series A preferred allocated to common shareholders				–					11,188					–					11,188					–
Net income (loss) available to common shareholders			$	930				$	(9,795	)			$	(36,405	)			$	(33,740	)			$	(32,898	)
Per share of common stock:
Basic earnings (loss)			$	0.01				$	(0.75	)			$	(2.78	)			$	(2.57	)			$	(2.51	)
Diluted earnings (loss)			$	0.01				$	(0.75	)			$	(2.78	)			$	(2.57	)			$	(2.51	)
Dividends			$	0.00				$	0.00				$	0.00				$	0.00				$	0.00
Weighted average shares outstanding:
Basic				133,083,705					13,145,744					13,097,611					13,125,521					13,092,579
Diluted				133,174,366					13,145,744					13,097,611					13,125,521					13,092,579
(1) Diluted weighted average shares outstanding for the period from July 1, 2011 to September 7, 2011, January 1, 2011 to September 7, 2011 and three and nine months ended September 30, 2010 excludes 119,150, 94,930, 93,791 and 93,082 unvested shares, respectively, because they are anti-dilutive.

GREEN BANKSHARES INC. Average Balances, Interest Earned or Paid, and Interest Yields / Rates
			Predecessor Company
			Period of July 1 to Sept. 7, 2011									Three Months Ended Sept. 30, 2010
			Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Interest-earning assets:
Loans(1)(2)			$	1,404,673		$	16,863		6.35	%		$	1,812,154		$	27,759		6.08	%
Investment securities(2)				253,733			1,618		3.37	%			179,586			1,785		3.94	%
Other short-term investments				260,137			118		0.24	%			138,599			90		0.26	%
Total interest-earning assets				1,918,543			18,599		5.13	%			2,130,339			29,634		5.52	%
Non-interest earning assets				319,598									333,199
Total assets			$	2,238,141								$	2,463,538
Interest-bearing liabilities:
Deposits:
Interest checking, money market and savings			$	1,044,383		$	822		0.42	%		$	992,222		$	2,522		1.01	%
Time deposits				615,145			2,051		1.76	%			765,960			3,922		2.03	%
Total interest bearing-deposits				1,659,528			2,873		0.92	%			1,758,182			6,444		1.45	%
Securities sold under repurchase and short-term borrowings				15,456			3		0.10	%			22,990			6		0.10	%
Notes payable				157,826			1,200		4.03	%			171,216			1,726		4.00	%
Subordinated debentures				88,662			346		2.06	%			88,662			532		2.38	%
Total interest-bearing liabilities				1,921,472			4,422		1.22	%			2,041,050			8,708		1.69	%
Non-interest bearing liabilities:
Demand Deposits				173,999									171,237
Other Liabilities				22,652									19,161
Total non-interest bearing liabilities				196,651									190,398
Total liabilities				2,118,123									2,231,448
Shareholders' equity				120,018									232,090
Total liabilities & shareholders' equity			$	2,238,141								$	2,463,538
Net interest income						$	14,177								$	20,926
Interest rate spread									3.91	%								3.83	%
Net yield on interest-earning assets (net interest margin)									3.91	%								3.90	%
(1) Average loan balances exclude nonaccrual loans for the periods presented.
(2) Fully Taxable Equivalent ("FTE") at the rate of 35%. The FTE basis adjusts for the tax benefits of income on certain tax-exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

GREEN BANKSHARES INC. Average Balances, Interest Earned or Paid, and Interest Yields / Rates
			Predecessor Company
			Period of Jan. 1 to Sept. 7, 2011									Nine Months Ended Sept. 30, 2010
			Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Interest-earning assets:
Loans(1)(2)			$	1,491,844		$	65,293		6.39	%		$	1,886,937		$	87,230		6.18	%
Investment securities(2)				243,473			5,879		3.53	%			180,894			5,686		4.20	%
Other short-term investments				278,355			468		0.25	%			148,365			283		0.26	%
Total interest-earning assets				2,013,672			71,640		5.19	%			2,216,196			93,199		5.62	%
Non-interest earning assets				331,633									315,147
Total assets			$	2,345,305								$	2,531,343
Interest-bearing liabilities:
Deposits:
Interest checking, money market and savings			$	1,066,783		$	4,062		0.56	%		$	968,322		$	7,407		1.02	%
Time deposits				696,335			8,702		1.82	%			862,823			14,724		2.28	%
Total interest bearing-deposits				1,763,118			12,764		1.06	%			1,831,145			22,131		1.62	%
Securities sold under repurchase and short-term borrowings				16,466			11		0.10	%			22,847			17		0.10	%
Notes payable				158,351			4,314		3.98	%			171,673			5,132		4.00	%
Subordinated debentures				88,662			1,315		2.17	%			88,662			1,492		2.25	%
Total interest-bearing liabilities				2,026,597			18,404		1.33	%			2,114,327			28,772		1.82	%
Non-interest bearing liabilities:
Demand Deposits				166,768									166,685
Other Liabilities				19,575									18,243
Total non-interest bearing liabilities				186,343									184,928
Total liabilities				2,212,940									2,299,255
Shareholders' equity				132,365									232,088
Total liabilities & shareholders' equity			$	2,345,305								$	2,531,343
Net interest income						$	53,236								$	64,427
Interest rate spread									3.87	%								3.80	%
Net yield on interest-earning assets (net interest margin)									3.86	%								3.89	%
(1) Average loan balances exclude nonaccrual loans for the periods presented.
(2) Fully Taxable Equivalent ("FTE") at the rate of 35%. The FTE basis adjusts for the tax benefits of income on certain tax-exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.