Green Bancorp, Inc. Reports Fourth Quarter and Full Year 2017 Financial Results

2017 Fourth Quarter Significant Items (GAAP)

Fourth quarter 2017 net income totaled $2.6 million, or $0.07 per diluted common share
Fourth quarter 2017 results were negatively impacted by the following:
- $5.8 million in tax expense, or $0.16 per diluted common share, for the deferred tax asset write-off resulting from the 2017 Tax Cuts and Jobs Act
- $3.1 million in salaries and employee benefits expense, or $2.0 million net of the related tax benefit, which represents $0.05 per diluted common share, for the accelerated vesting of certain performance options
- $3.2 million in provision for loan losses and $1.1 million in loss on held for sale loans related to the last two E&P relationships in the portfolio impacted EPS by $0.07 per diluted common share (net of tax)
Total loans increased $108.2 million, 14.0% annualized from Q3 2017
Nonperforming assets decreased $21.0 million to $71.6 million
Energy portfolio declined $33.3 million to $53.0 million; energy production loans represent only 0.63% and oil field services loans only 1.03% of total loans
Noninterest-bearing deposits increased $118.9 million during Q4 2017 and now comprise 23.6% of total deposits

2017 Fourth Quarter Significant Items (Non-GAAP)

Pre-tax, pre-provision operating return on average assets (annualized) was 2.01% for Q4 2017, representing the 3rd consecutive quarter over 2.00%

HOUSTON, Jan. 25, 2018 (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 fourth quarter and twelve months ended December 31, 2017. The Company reported net income for the quarter of $2.6 million, or $0.07 per diluted common share.

Manny Mehos, Chairman and Chief Executive Officer of Green Bancorp, said, “We finished the year with great momentum, highlighted by double digit loan growth and strong improvement in the Bank’s credit quality as non-performing assets were reduced by 23% in the fourth quarter. Looking to 2018, we are well positioned for a return to sustained growth, as we strive to deliver consistent organic growth combined with attractive acquisition opportunities as we continue to build the franchise value of the Bank and deliver value to shareholders.”

Geoff Greenwade, President of Green Bancorp and Chief Executive Officer of Green Bank, commented, “I am pleased with our results this quarter, as we delivered 14% annualized total loan growth and grew noninterest-bearing deposits by $119 million. Growing core deposits has been a key focus for the Bank and noninterest-bearing deposits now comprise approximately 24% of our deposit base. Importantly, our core markets of Houston, Dallas-Fort Worth and Austin remain robust and we are confident in our outlook for 7-9% loan growth for the 2018 fiscal year.”

Results of Operations -Quarter Ended December 31, 2017 compared with Quarter Ended September 30, 2017

Net income for the quarter ended December 31, 2017 was $2.6 million, a decrease of $8.8 million, or 77.0%, compared with $11.4 million for the quarter ended September 30, 2017. Net income per diluted common share was $0.07 for the quarter ended December 31, 2017, compared with $0.31 for the quarter ended September 30, 2017. Net income for the quarter was reduced by income tax expense of $5.8 million due to the deferred tax write-off resulting from the 2017 Tax Cuts and Jobs Act. The deferred tax write-off reduced the carrying value of the net deferred tax asset from 35% to 21%, the new tax rate effective for the Company as of January 1, 2018. Net income was also reduced by $3.1 million in stock-based compensation expense for the accelerated vesting of certain performance options, or $2.0 million net of the related tax benefit. Returns on average assets and average common equity, each on an annualized basis, for the three months ended December 31, 2017 were 0.25% and 2.23%, respectively. Green Bancorp’s efficiency ratio, which represents noninterest expense divided by the sum of net interest income and noninterest income, was 57.87% for the three months ended December 31, 2017. The Company recorded a provision for loan losses of $4.4 million, primarily related to specific reserves, including $3.2 million related to energy loans. In addition, the Company recorded a $1.1 million loss on energy loans held for sale.

Net interest income before provision for loan losses for the quarter ended December 31, 2017 increased $541 thousand, or 1.5%, to $36.8 million, compared with $36.3 million for the quarter ended September 30, 2017. The increase in net interest income was comprised of a $689 thousand, or 1.5%, increase in interest income, offset by a $148 thousand, or 1.8%, increase in interest expense. Net interest margin for the quarter ended December 31, 2017 was 3.64%, compared with 3.65% for the quarter ended September 30, 2017.

Noninterest income for the quarter ended December 31, 2017 was $3.9 million, an increase of $538 thousand, or 15.9%, from $3.4 million for the quarter ended September 30, 2017. The increase was primarily due to a $346 thousand increase in gain on sale of guaranteed portion of loans, a $332 thousand decrease in net loss on sale of available for sale securities, and a $196 thousand decrease in net loss on held for sale loans, offset by decreases of $167 thousand in loan fees and a $92 thousand decrease in customer service fees.

Noninterest expense for the quarter ended December 31, 2017 was $23.6 million, an increase of $3.5 million, or 17.5%, from $20.1 million for the quarter ended September 30, 2017. The increase was primarily due to a $2.5 million increase in salaries and employee benefits, a $361 thousand increase in loan related expenses, a $281 thousand favorable change in the reserve for unfunded commitments and small changes in other expense categories. The $2.5 million increase in salaries and employee benefits includes $3.1 million in stock-based compensation expense for the accelerated vesting of certain performance options, which was offset by a decrease in stock-based compensation expense related to stock appreciation rights.

Total loans, which includes loans held for investment and loans held for sale, at December 31, 2017 were $3.2 billion, an increase of $108.2 million, or 3.5%, when compared with September 30, 2017. The increase is primarily due to a $137.6 million increase in commercial and industrial loans, offset by a $28.9 million reduction in construction and land loans. Energy loans of $14.4 million were transferred from loans held for sale to loan held for investment during December 2017. At December 31, 2017, energy loans totaled $53.0 million, or 1.7% of total loans. SBA loans comprise the balance of loans held for sale at December 31, 2017.

Deposits at December 31, 2017 were $3.4 billion, a decrease of $11.1 million, or 0.3%, compared with September 30, 2017. The net decrease is comprised of decreases of $78.1 million, or 5.8%, in time deposits and $51.9 million, or 3.8%, in interest-bearing transaction and savings deposits, offset by an increase of $118.9 million, or 17.4%, in noninterest-bearing deposits. Noninterest-bearing deposits totaled 23.6% of total deposits at December 31, 2017. Average deposits increased $50.6 million, or 1.5%, for the quarter ended December 31, 2017, compared with the prior quarter.

Asset Quality -Quarter Ended December 31, 2017 compared with Quarter Ended September 30, 2017

Nonperforming assets totaled $71.6 million, or 1.68% of period end total assets, at December 31, 2017, a decrease of $21.0 million, compared with $92.6 million, or 2.23% of period end total assets, at September 30, 2017. Accruing loans classified as troubled debt restructures and included in the nonperforming asset totals were $13.1 million at December 31, 2017, compared with $18.3 million at September 30, 2017. Real estate acquired through foreclosure totaled $802 thousand at December 31, 2017.

The allowance for loan losses was 0.98% of total loans held for investment at December 31, 2017, compared with 1.09% of total loans held for investment at September 30, 2017. At December 31, 2017, the Company’s allowance for loan losses to total loans held for investment, excluding acquired loans that are accounted for under ASC 310-20 and ASC 310-30 and their related allowance, was 1.12%. Further, the allowance for loan losses plus acquired loan net discount to total loans held for investment adjusted for acquired loan net discount was 1.11% as of December 31, 2017.

The Company recorded a provision for loan losses of $4.4 million for the quarter ended December 31, 2017 up from the $2.3 million provision for loan losses recorded for the quarter ended September 30, 2017. The fourth quarter of 2017 provision of $4.4 million was primarily related to specific reserves, including $3.2 million related to energy loans. Uncertainty related to loans in the counties affected by Hurricane Harvey has significantly diminished as we continue to monitor the loans initially identified as having some level of impact.

Net charge-offs were $6.7 million, or 0.22% of average loans, for the quarter ended December 31, 2017, compared with net charge-offs of $811 thousand, or 0.03% of average loans, for the quarter ended September 30, 2017. Net charge-offs included partial charge-offs of $6.2 million in energy production loans.

Results of Operations –Twelve Months Ended December 31, 2017 compared with Twelve Months Ended December 31, 2016

Net income for the twelve months ended December 31, 2017 was $34.1 million, compared with net loss of $972 thousand for the twelve months ended December 31, 2016. Net income per diluted common share was $0.92 for the twelve months ended December 31, 2017, compared with net loss per diluted common share of $(0.03) for the twelve months ended December 31, 2016. The Company recorded a provision for loan losses of $14.4 million, which included $10.5 million in reserves on the energy portfolio. The provision for loan losses was $64.7 million for the same period in 2016, which included $50.7 million related to the energy portfolio. Net charge-offs were $9.5 million for the twelve months ended December 31, 2017, compared with net charge-offs of $71.3 million for the twelve months ended December 31, 2016, which included $68.0 million of energy loans.

Net interest income before provision for loan losses for the twelve months ended December 31, 2017 was $141.0 million, an increase of $7.4 million, or 5.6%, compared with $133.6 million during the twelve months ended December 31, 2016. The increase in net interest income was comprised of a $16.7 million, or 10.7%, increase in interest income, offset by a $9.3 million, or 42.4%, increase in interest expense. The increase in interest income was primarily due to a $11.1 million increase in securities, driven by a $383.3 million, or 133.9%, increase in the average balance and a 81 basis point increase in rate, and a $4.8 million increase in loans due to a 27 basis point increase in rate on an average balance that decreased by $72.6 million. The increase in interest expense was comprised of increases of $3.1 million in subordinated debentures due to the issuance in December 2016, $3.5 million in interest-bearing demand and savings deposits, due to a $169.3 million increase in the average balance and a 20 basis point increase in the average rate, and $1.4 million in time deposits due to a 16 basis point increase in rate on an average balance that decreased by $72.7 million, and $1.3 million in other borrowed funds, due to a $25.0 million increase in balance and a 54 basis point increase in rate. Net interest margin for the twelve months ended December 31, 2017 was 3.60%, compared with 3.65% for the twelve months ended December 31, 2016.

Noninterest income for the twelve months ended December 31, 2017 was $18.5 million, an increase of $4.3 million, or 30.4%, compared with $14.2 million for the twelve months ended December 31, 2016. This increase was primarily due to a $3.0 million increase in customer service fees, a $2.4 million increase in gain on sale of guaranteed portion of loans and a $541 thousand increase in loan fees, offset by a $904 thousand increase in net loss on loans held for sale and a $708 thousand decrease in derivative income.

Noninterest expense for the twelve months ended December 31, 2017 was $84.1 million, a decrease of $399 thousand, or 0.5%, compared with $84.5 million for the twelve months ended December 31, 2016. The decrease is primarily due to decreases of $2.5 million in expense for real estate acquired by foreclosure, $2.0 million in loan related expenses and a $1.6 million favorable change in the reserve for unfunded commitments and smaller decreases in other expense categories, offset by a $5.4 million increase in salaries and employee benefits. The increase in salaries and employee benefits includes $3.1 million in stock-based compensation expense for the accelerated vesting of certain performance options recorded in the fourth quarter.

Total loans, which includes loans held for investment and loans held for sale, at December 31, 2017 were $3.2 billion, an increase of $75.4 million, or 2.4%, compared with $3.1 billion at December 31, 2016. Average total loans decreased $72.6 million, or 2.3%, to $3.1 billion for the twelve months ended December 31, 2017, compared with $3.1 billion for the same period in 2016. New loan production during the year was offset by the resolution of $42.5 million in energy loans in addition to the resolution of other nonperforming loans and reductions in commercial real estate.

Deposits at December 31, 2017 were $3.4 billion, an increase of $22.4 million, or 0.7%, compared with December 31, 2016, primarily due to continued opportunities for our portfolio bankers to generate deposit growth within our target markets. Noninterest-bearing demand deposits increased $153.1 million, or 23.6%, during the twelve months ended December 31, 2017, which more than offset decreases of $103.1 million in time deposits and $27.6 million in interest-bearing transaction and savings deposits. Average deposits increased $176.0 million, or 5.5%, to $3.4 billion for the twelve months ended December 31, 2017, compared with the same period of 2016. Average noninterest-bearing deposits for the twelve months ended December 31, 2017 were $690.8 million, an increase of $79.4 million, or 13.0%, compared with the same period in 2016.

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, the return on average tangible common equity ratio, allowance for loan losses less allowance for loan losses on acquired loans to total loans held for investment excluding acquired loans, allowance for loan losses plus acquired loans net discount to total loans held for investment adjusted for acquired loan net discount, and pre-tax, pre-provision operating return on average assets. 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, January 25, 2018, to discuss its fourth quarter and full year 2017 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 Fourth Quarter and the Full Year 2017 Earnings Conference Call. A replay will be available starting at 8:00 p.m. (Eastern Time) on January 25, 2018 and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13675213. The replay will be available until 11:59 p.m. (Eastern Time) on February 1, 2018.

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 the Houston and Dallas metropolitan areas and Austin, Louisville and Honey Grove. 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: 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.

Green Bancorp, Inc.
Financial Highlights
(Unaudited)


	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Period End Balance Sheet Data:
Cash and cash equivalents	$	140,681		$	179,463		$	134,995		$	255,581		$	389,007
Securities	718,814			707,989			718,750			589,468			310,124
Other investments	27,283			22,443			26,002			19,057			18,649

Loans held for sale	7,156			17,673			18,030			17,350			23,989
Loans held for investment	3,190,485			3,071,761			3,123,355			3,012,275			3,098,220
Total Loans	3,197,641			3,089,434			3,141,385			3,029,625			3,122,209
Allowance for loan losses	(31,220		)	(33,480		)	(31,991		)	(31,936		)	(26,364		)
Goodwill	85,291			85,291			85,291			85,291			85,291
Core deposit intangibles, net	8,503			8,835			9,215			9,595			9,975
Real estate acquired through foreclosure	802			802			921			1,356			5,220
Premises and equipment, net	24,002			29,733			30,108			30,604			25,674
Other assets	90,119			70,415			71,021			83,359			85,037
Total assets	$	4,261,916		$	4,160,925		$	4,185,697		$	4,072,000		$	4,024,822

Noninterest-bearing deposits	$	803,210		$	684,329		$	683,656		$	705,480		$	650,064
Interest-bearing transaction and savings deposits	1,331,601			1,383,514			1,324,307			1,404,988			1,359,187
Certificates and other time deposits	1,262,332			1,340,410			1,352,459			1,305,670			1,365,449
Total deposits	3,397,143			3,408,253			3,360,422			3,416,138			3,374,700
Securities sold under agreements to repurchase	5,173			5,867			5,221			4,316			3,493
Other borrowed funds	325,000			215,000			305,000			150,000			150,000
Subordinated debentures and subordinated notes	47,737			47,596			47,454			47,304			47,492
Other liabilities	23,068			21,898			15,859			16,954			18,655
Total liabilities	3,798,121			3,698,614			3,733,956			3,634,712			3,594,340
Shareholders' equity	463,795			462,311			451,741			437,288			430,482
Total liabilities and equity	$	4,261,916		$	4,160,925		$	4,185,697		$	4,072,000		$	4,024,822

Green Bancorp, Inc.
Financial Highlights
(Unaudited)


	For the Quarter Ended														For the Twelve Months Ended
	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017		Mar 31, 2017			Dec 31, 2016			Dec 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Income Statement Data:
Interest income:
Loans, including fees	$	39,870		$	39,549		$	38,476	$	36,371		$	36,469		$	154,266		$	149,422
Securities	4,446			4,337			3,928		2,583			1,151			15,294			4,209
Other investments	241			221			197		188			184			847			761
Deposits in financial institutions and fed funds sold	671			432			331		409			522			1,843			1,152
Total interest income	45,228			44,539			42,932		39,551			38,326			172,250			155,544
Interest expense:
Transaction and savings deposits	2,588			2,502			2,230		1,978			1,750			9,298			5,749
Certificates and other time deposits	4,017			4,042			3,786		3,607			3,766			15,452			14,022
Subordinated debentures and subordinated notes	1,065			1,059			1,051		1,041			456			4,216			1,182
Other borrowed funds	738			657			560		282			170			2,237			963
Total interest expense	8,408			8,260			7,627		6,908			6,142			31,203			21,916
Net interest income	36,820			36,279			35,305		32,643			32,184			141,047			133,628
Provision for loan losses	4,405			2,300			1,510		6,145			9,500			14,360			64,700
Net interest income after provision for loan losses	32,415			33,979			33,795		26,498			22,684			126,687			68,928
Noninterest income:
Customer service fees	2,273			2,365			2,199		2,266			1,755			9,103			6,129
Loan fees	704			871			1,106		834			750			3,515			2,974
(Loss) gain on sale of available-for-sale securities, net	—			(332		)	294		—			—			(38		)	—
(Loss) gain on held for sale loans, net	(1,098		)	(1,294		)	222		(138		)	(1,445		)	(2,308		)	(1,404		)
Gain on sale of guaranteed portion of loans, net	1,648			1,302			878		1,927			379			5,755			3,343
Other	401			478			1,000		606			729			2,485			3,154
Total noninterest income	3,928			3,390			5,699		5,495			2,168			18,512			14,196
Noninterest expense:
Salaries and employee benefits	14,996			12,487			12,653		12,406			11,804			52,542			47,169
Occupancy	2,069			2,080			2,048		1,997			2,060			8,194			8,319
Professional and regulatory fees	2,241			2,331			1,899		2,397			2,421			8,868			8,958
Data processing	981			924			995		908			1,023			3,808			3,859
Software license and maintenance	636			464			438		489			571			2,027			2,155
Marketing	259			154			163		199			232			775			1,114
Loan related	632			271			301		600			1,464			1,804			3,795
Real estate acquired by foreclosure, net	30			159			223		292			382			704			3,168
Other	1,738			1,197			891		1,551			996			5,377			5,961
Total noninterest expense	23,582			20,067			19,611		20,839			20,953			84,099			84,498
Income (loss) before income taxes	12,761			17,302			19,883		11,154			3,899			61,100			(1,374		)
Provision (benefit) for income taxes	10,142			5,895			6,985		3,942			1,355			26,964			(402		)
Net income (loss)	$	2,619		$	11,407		$	12,898	$	7,212		$	2,544		$	34,136		$	(972	)

Green Bancorp, Inc.
Financial Highlights
(Unaudited)


	For the Quarter Ended															For the Twelve Months Ended
	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Dec 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Per Share Data (Common Stock):
Basic earnings (loss) per common share	$	0.07		$	0.31		$	0.35		$	0.19		$	0.07		$	0.92		$	(0.03	)
Diluted earnings (loss) per share	0.07			0.31			0.35			0.19			0.07			0.92			(0.03		)
Book value per common share	12.50			12.46			12.20			11.81			11.64			12.50			11.64
Tangible book value per common share (1)	9.97			9.93			9.65			9.25			9.06			9.97			9.06

Common Stock Data:
Shares outstanding at period end	37,103			37,096			37,035			37,015			36,988			37,103			36,988
Weighted average basic shares outstanding for the period	37,103			37,056			37,023			36,990			36,731			37,043			36,677
Weighted average diluted shares outstanding for the period	37,393			37,332			37,264			37,238			36,937			37,297			36,677

Selected Performance Metrics:
Return on average assets(2)	0.25		%	1.10		%	1.26		%	0.73		%	0.25		%	0.83		%	(0.03		)%
Pre-tax, pre-provision operating return on average assets(1)(2)	2.01			2.04			2.09			1.76			1.49			1.97			1.68
Return on average equity(2)	2.23			9.90			11.62			6.71			2.37			7.57			(0.22		)
Return on average tangible common equity(1)(2)	3.02			12.74			15.04			8.88			3.35			9.84			0.02
Efficiency ratio	57.87			50.59			47.83			54.64			60.99			52.71			57.16
Loans to deposits ratio	93.92			90.13			92.95			88.18			91.81			93.92			91.81
Noninterest expense to average assets(2)	2.23			1.93			1.92			2.10			2.10			2.04			2.19

Green Bancorp Capital Ratios:
Average shareholders’ equity to average total assets	11.1		%	11.1		%	10.9		%	10.8		%	10.8		%	11.0		%	11.2		%
Tier 1 capital to average assets (leverage)	9.5			9.5			9.3			9.1			9.1			9.5			9.1
Common equity tier 1 capital	10.5			10.6			10.1			10.0			9.7			10.5			9.7
Tier 1 capital to risk-weighted assets	10.9			11.0			10.5			10.4			10.1			10.9			10.1
Total capital to risk-weighted assets	12.7			12.9			12.4			12.3			11.8			12.7			11.8
Tangible common equity to tangible assets (1)	8.9			9.1			8.7			8.6			8.5			8.9			8.5

Green Bank Capital Ratios:
Tier 1 capital to average assets (leverage)	10.1		%	10.1		%	9.6		%	9.1		%	9.0		%	10.1		%	9.0		%
Common equity tier 1 capital	11.6			11.8			10.9			10.4			10.0			11.6			10.0
Tier 1 capital to risk-weighted assets	11.6			11.8			10.9			10.4			10.0			11.6			10.0
Total capital to risk-weighted assets	12.4			12.6			11.7			11.2			10.8			12.4			10.8

⁽¹⁾Refer to “Notes to Financial Highlights” at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.
⁽²⁾Annualized ratio.

Green Bancorp, Inc.
Financial Highlights
(Unaudited)

	For the Quarter Ended
	December 31, 2017							September 30, 2017							December 31, 2016
	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	$	3,082,005		$	39,870	5.13	%	$	3,071,039		$	39,549	5.11	%	$	3,077,242		$	36,469	4.71	%
Securities	713,137			4,446		2.47		712,431			4,337		2.42		316,223			1,151		1.45
Other investments	23,359			241		4.09		26,009			221		3.37		18,627			184		3.93
Interest earning deposits in financial institutions and federal funds sold	197,454			671		1.35		134,868			432		1.27		356,367			522		0.58
Total interest-earning assets	4,015,955			45,228		4.47	%	3,944,347			44,539		4.48	%	3,768,459			38,326		4.05	%
Allowance for loan losses	(33,708		)					(32,395		)					(34,994		)
Noninterest-earning assets	221,858							219,754							240,779
Total assets	$	4,204,105						$	4,131,706						$	3,974,244

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	1,387,873		$	2,588	0.74	%	$	1,349,701		$	2,502	0.74	%	$	1,330,734		$	1,750	0.52	%
Certificates and other time deposits	1,290,277			4,017		1.24		1,343,732			4,042		1.19		1,382,930			3,766		1.08
Securities sold under agreements to repurchase	5,153			2		0.15		5,943			2		0.13		3,469			—		—
Other borrowed funds	237,989			736		1.23		227,936			655		1.14		150,000			170		0.45
Subordinated debentures and subordinated notes	47,673			1,065		8.86		47,531			1,059		8.84		22,400			456		8.10
Total interest-bearing liabilities	2,968,965			8,408		1.12	%	2,974,843			8,260		1.10	%	2,889,533			6,142		0.85	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	745,707							679,851							636,218
Other liabilities	23,574							19,709							20,943
Total liabilities	3,738,246							3,674,403							3,546,694
Shareholders’ equity	465,859							457,303							427,550
Total liabilities and shareholders’ equity	$	4,204,105						$	4,131,706						$	3,974,244

Net interest rate spread						3.35	%						3.38	%						3.20	%
Net interest income and margin⁽¹⁾				$	36,820	3.64	%				$	36,279	3.65	%				$	32,184	3.40	%

⁽¹⁾ Net interest margin is equal to net interest income divided by interest-earning assets.

Green Bancorp, Inc.
Financial Highlights
(Unaudited)


	2017							2016
	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	$	3,065,360		$	154,266	5.03	%	$	3,137,994		$	149,422	4.76	%
Securities	669,588			15,294		2.28		286,299			4,209		1.47
Other investments	22,823			847		3.71		21,052			761		3.61
Interest earning deposits in financial institutions and federal funds sold	160,810			1,843		1.15		211,950			1,152		0.54
Total interest-earning assets	3,918,581			172,250		4.40	%	3,657,295			155,544		4.25	%
Allowance for loan losses	(31,471		)					(39,417		)
Noninterest-earning assets	225,674							242,930
Total assets	$	4,112,784						$	3,860,808

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	1,370,503		$	9,298	0.68	%	$	1,201,198		$	5,749	0.48	%
Certificates and other time deposits	1,317,180			15,452		1.17		1,389,834			14,022		1.01
Securities sold under agreements to repurchase	4,770			7		0.15		3,605			4		0.11
Other borrowed funds	211,407			2,230		1.05		186,453			959		0.51
Subordinated debentures	47,533			4,216		8.87		15,623			1,182		7.57
Total interest-bearing liabilities	2,951,393			31,203		1.06	%	2,796,713			21,916		0.78	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits	690,786							611,388
Other liabilities	19,458							18,784
Total liabilities	3,661,637							3,426,885
Shareholders’ equity	451,147							433,923
Total liabilities and shareholders’ equity	$	4,112,784						$	3,860,808

Net interest rate spread						3.34	%						3.47	%
Net interest income and margin⁽¹⁾				$	141,047	3.60	%				$	133,628	3.65	%

⁽¹⁾Net interest margin is equal to net interest income divided by interest-earning assets.

Green Bancorp, Inc.
Financial Highlights
(Unaudited)

Yield Trend

	For the Quarter Ended
	Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016
Average yield on interest-earning assets:
Loans, including fees	5.13	%	5.11	%	5.02	%	4.86	%	4.71	%
Securities	2.47		2.42		2.32		1.83		1.45
Other investments	4.09		3.37		3.45		4.03		3.93
Interest-earning deposits in financial institutions and federal funds sold	1.35		1.27		1.06		0.89		0.58
Total interest-earning assets	4.47	%	4.48	%	4.42	%	4.21	%	4.05	%

Average rate on interest-bearing liabilities:
Interest-bearing transaction and savings	0.74	%	0.74	%	0.66	%	0.58	%	0.52	%
Certificates and other time deposits	1.24		1.19		1.16		1.10		1.08
Other borrowed funds	1.20		1.11		1.01		0.70		0.44
Subordinated debentures	8.86		8.84		8.90		8.88		8.10
Total interest-bearing liabilities	1.12	%	1.10	%	1.04	%	0.96	%	0.85	%

Net interest rate spread	3.35	%	3.38	%	3.38	%	3.25	%	3.20	%
Net interest margin ⁽¹⁾	3.64	%	3.65	%	3.63	%	3.47	%	3.40	%

⁽¹⁾Net interest margin is equal to net interest income divided by interest-earning assets.

Supplemental Yield Trend

	For the Quarter Ended
	Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016
Average yield on loans, excluding fees and discounts ⁽²⁾	4.74	%	4.69	%	4.59	%	4.42	%	4.29	%
Average cost of interest-bearing deposits	0.98		0.96		0.90		0.84		0.81
Average cost of total deposits, including noninterest-bearing	0.77		0.77		0.72		0.68		0.66

⁽²⁾Average yield on loans, excluding fees and discounts, is equal to loan interest income divided by average loan principal.

Green Bancorp, Inc.
Financial Highlights
(Unaudited)

Portfolio Composition

	Dec 31, 2017					Sep 30, 2017					Jun 30, 2017					Mar 31, 2017					Dec 31, 2016

	(Dollars in thousands)
Period End Balances

Commercial & industrial	$	1,286,496		40.3	%	$	1,148,850		37.4	%	$	1,144,332		36.6	%	$	1,012,982		33.6	%	$	1,053,925		34.0	%
Real Estate:
Owner occupied commercial	415,230			13.0		408,398			13.3		407,317			13.0		415,595			13.8		394,210			12.7
Commercial	1,067,779			33.5		1,068,742			34.8		1,109,237			35.5		1,129,031			37.5		1,143,751			36.9
Construction, land & land development	164,952			5.2		193,856			6.3		201,992			6.5		201,946			6.7		249,704			8.1
Residential mortgage	238,580			7.5		235,089			7.7		239,834			7.7		241,839			8.0		245,191			7.9
Consumer and Other	17,448			0.5		16,826			0.5		20,643			0.7		10,882			0.4		11,439			0.4
Total loans held for investment	$	3,190,485		100.0	%	$	3,071,761		100.0	%	$	3,123,355		100.0	%	$	3,012,275		100.0	%	$	3,098,220		100.0	%

Deposits:
Noninterest-bearing	$	803,210		23.6	%	$	684,329		20.1	%	$	683,656		20.3	%	$	705,480		20.7	%	$	650,064		19.3	%
Interest-bearing transaction	200,769			5.9		201,860			5.9		207,106			6.2		208,213			6.1		168,994			5.0
Money market	1,041,954			30.7		1,085,433			31.9		1,016,453			30.3		1,089,699			31.9		1,084,350			32.1
Savings	88,878			2.6		96,221			2.8		100,748			3.0		107,076			3.1		105,843			3.1
Certificates and other time deposits	1,262,332			37.2		1,340,410			39.3		1,352,459			40.2		1,305,670			38.2		1,365,449			40.5
Total deposits	$	3,397,143		100.0	%	$	3,408,253		100.0	%	$	3,360,422		100.0	%	$	3,416,138		100.0	%	$	3,374,700		100.0	%

Loan to Deposit Ratio	93.9		%			90.1		%			92.9		%			88.2		%			91.8		%

Green Bancorp, Inc.
Financial Highlights
(Unaudited)

Asset Quality

	As of and for the Quarter Ended																			For the Twelve Months Ended
	Dec 31, 2017			Sep 30, 2017				Jun 30, 2017				Mar 31, 2017				Dec 31, 2016				Dec 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Nonperforming Assets:
Nonaccrual loans	$	47,892		$		43,656		$		43,257		$		59,338		$		66,673		$	47,892		$		66,673
Accruing loans 90 or more days past due	375				4,828				2,651				5,500				1,169			375				1,169
Restructured loans—nonaccrual	9,446				10,555				19,362				10,276				10,133			9,446				10,133
Restructured loans—accrual	13,093				18,251				7,637				11,068				16,518			13,093				16,518
Total nonperforming loans held for investment	70,806				77,290				72,907				86,182				94,493			70,806				94,493
Nonperforming loans held for sale	—				14,552				1,700				—				6,598			—				6,598
Real estate acquired through foreclosure	802				802				921				1,356				5,220			802				5,220
Total nonperforming assets	$	71,608		$	92,644			$	75,528			$	87,538			$	106,311			$	71,608		$	106,311

Charge-offs:
Commercial and industrial	$	(6,447	)	$		(840	)	$		(466	)	$		(1,312	)	$		(17,378	)	$	(9,065	)	$		(68,383	)
Owner occupied commercial real estate	(126		)		—				(961		)		—				(250		)	(1,087		)		(1,405		)
Commercial real estate	—				—				—				—				—			—				(492		)
Construction, land & land development	—				—				—				(95		)		(1,631		)	(95		)		(1,631		)
Residential mortgage	(19		)		—				—				—				(30		)	(19		)		(548		)
Other consumer	(112		)		(10		)		(126		)		(8		)		(15		)	(256		)		(126		)
Total charge-offs	(6,704		)		(850		)		(1,553		)		(1,415		)		(19,304		)	(10,522		)		(72,585		)

Recoveries:
Commercial and industrial	$	6		$		12		$		73		$		585		$		206		$	676		$		1,000
Owner occupied commercial real estate	—				—				—				4				—			4				17
Commercial real estate	1				4				3				—				—			8				—
Construction, land & land development	2				1				—				74				5			77				84
Residential mortgage	27				21				16				57				33			121				155
Other consumer	3				1				6				122				13			132				46
Total recoveries	39				39				98				842				257			1,018				1,302

Net (charge-offs) recoveries	$	(6,665	)	$		(811	)	$		(1,455	)	$		(573	)	$		(19,047	)	$	(9,504	)	$		(71,283	)

Allowance for loan losses at end of period	$	31,220		$		33,480		$		31,991		$		31,936		$		26,364		$	31,220		$		26,364

Asset Quality Ratios:
Nonperforming assets to total assets	1.68		%		2.23		%		1.80		%		2.15		%		2.64		%	1.68		%		2.64		%
Nonperforming loans to total loans held for investment	2.22				2.52				2.33				2.86				3.05			2.22				3.05
Total classified assets to total regulatory capital	28.61				32.21				28.70				38.00				39.09			28.61				39.09
Allowance for loan losses to total loans held for investment	0.98				1.09				1.02				1.06				0.85			0.98				0.85
Net charge-offs (recoveries) to average loans outstanding	0.22				0.03				0.05				0.02				0.63			0.31				2.28

Green Bancorp, Inc.
Notes to Financial Highlights
(Unaudited)

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:


	Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016

	(Dollars in thousands, except per share data)
Tangible Common Equity
Total shareholders’ equity	$	463,795	$	462,311	$	451,741	$	437,288	$	430,482
Adjustments:
Goodwill	85,291		85,291		85,291		85,291		85,291
Core deposit intangibles	8,503		8,835		9,215		9,595		9,975
Tangible common equity	$	370,001	$	368,185	$	357,235	$	342,402	$	335,216
Common shares outstanding ⁽¹⁾	37,103		37,096		37,035		37,015		36,988
Book value per common share ⁽¹⁾	$	12.50	$	12.46	$	12.20	$	11.81	$	11.64
Tangible book value per common share ⁽¹⁾	$	9.97	$	9.93	$	9.65	$	9.25	$	9.06

⁽¹⁾Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options. The number of exercisable options outstanding was 754,110 as of Dec 31, 2017; 467,257 as of Sep 30, 2017; 465,281 as of Jun 30, 2017; 472,653 as of Mar 31, 2017; and 493,241 as of Dec 31, 2016.

Green Bancorp, Inc.
Notes to Financial Highlights
(Unaudited)

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:


	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Tangible Common Equity
Total shareholders’ equity	$	463,795		$	462,311		$	451,741		$	437,288		$	430,482
Adjustments:
Goodwill	85,291			85,291			85,291			85,291			85,291
Core deposit intangibles	8,503			8,835			9,215			9,595			9,975
Tangible common equity	$	370,001		$	368,185		$	357,235		$	342,402		$	335,216
Tangible Assets
Total assets	$	4,261,916		$	4,160,925		$	4,185,697		$	4,072,000		$	4,024,822
Adjustments:
Goodwill	85,291			85,291			85,291			85,291			85,291
Core deposit intangibles	8,503			8,835			9,215			9,595			9,975
Tangible assets	$	4,168,122		$	4,066,799		$	4,091,191		$	3,977,114		$	3,929,556
Tangible Common Equity to Tangible Assets	8.88		%	9.05		%	8.73		%	8.61		%	8.53		%

Green Bancorp, Inc.
Notes to Financial Highlights
(Unaudited)

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

We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of intangible assets. Goodwill and other intangible assets, including core deposit intangibles, have the effect of increasing total shareholders’ equity, while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions who may have higher balances in goodwill and other intangible assets than non-acquisitive institutions.

The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income excluding amortization of core deposit intangibles, net of tax to net income and presents our return on average tangible common equity:


	As of and for the Quarter Ended															For the Twelve Months Ended
	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Dec 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Net income (loss) adjusted for amortization of core deposit intangibles
Net income (loss)	$	2,619		$	11,407		$	12,898		$	7,212		$	2,544		$	34,136		$	(972	)
Adjustments:
Plus: Amortization of core deposit intangibles	330			380			380			380			382			1,472			1,587
Less: Tax benefit at the statutory rate	116			133			133			133			134			515			555
Net income (loss) adjusted for amortization of core deposit intangibles	$	2,833		$	11,654		$	13,145		$	7,459		$	2,792		$	35,093		$	60

Average Tangible Common Equity
Total average shareholders’ equity	$	465,859		$	457,303		$	445,334		$	435,695		$	427,550		$	451,147		$	433,923
Adjustments:
Average goodwill	85,291			85,291			85,291			85,291			85,291			85,291			85,291
Average core deposit intangibles	8,661			9,065			9,461			9,844			10,223			9,254			10,818
Average tangible common equity	$	371,907		$	362,947		$	350,582		$	340,560		$	332,036		$	356,602		$	337,814
Return on Average Tangible Common Equity (Annualized)	3.02		%	12.74		%	15.04		%	8.88		%	3.35		%	9.84		%	0.02		%

Green Bancorp, Inc.
Notes to Financial Highlights
(Unaudited)

Allowance for Loan Losses less Allowance for Loan Losses on Acquired Loans to Total Loans Held for Investment excluding Acquired Loans. The allowance for loan losses less allowance for loan losses on acquired loans to total loans held for investment 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 held for investment. We calculate: (a) total allowance for loan losses less allowance for loan losses on acquired loans as allowance for loan losses less the allowance for loan losses on acquired loans; (b) total loans held for investment excluding acquired loans as total loans held for investment less the carrying value of acquired loans accounted for under ASC topics 310-20 and 310-30; and (c) allowance for loan losses less allowance for loan losses on acquired loans to total loans held for investment excluding acquired loans as the allowance for loan losses less allowance for loan losses on acquired loans (as calculated in clause (a)) divided by total loans held for investment excluding acquired loans (as calculated in clause (b)). For allowance for loan losses less allowance for loan losses on acquired loans to total loans held for investment excluding acquired loans, the most directly comparable financial measure calculated in accordance with GAAP is allowance for loan losses to total loans held for investment.

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 less allowance for loan losses on acquired loans to total loans held for investment 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 less allowance for loan losses on acquired loans to total loans held for investment excluding acquired loans:


	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Allowance for loan losses less allowance for loan losses on acquired loans
Allowance for loan losses	$	31,220		$	33,480		$	31,991		$	31,936		$	26,364
Less: Allowance for loan losses on acquired loans	1,242			1,326			1,462			2,825			2,509
Total allowance for loan losses less allowance for loan losses on acquired loans	$	29,978		$	32,154		$	30,529		$	29,111		$	23,855

Total loans held for investment excluding acquired loans
Total loans held for investment	$	3,190,485		$	3,071,761		$	3,123,355		$	3,012,275		$	3,098,220
Less: Carrying value of acquired loans accounted for under ASC Topics 310-20 and 310-30	513,994			586,522			646,601			730,064			796,292
Total loans held for investment excluding acquired loans	$	2,676,491		$	2,485,239		$	2,476,754		$	2,282,211		$	2,301,928
Allowance for loan losses less allowance for loan losses on acquired loans to total loans held for investment excluding acquired loans	1.12		%	1.29		%	1.23		%	1.28		%	1.04		%

Green Bancorp, Inc.
Notes to Financial Highlights
(Unaudited)

Allowance for Loan Losses plus Acquired Loan Net Discount to Total Loans Held for Investment adjusted for Acquired Loan Net Discount. Allowance for loan losses plus acquired loan net discount to total loans held of investment 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 held for investment adjusted for acquired loan net discount as total loans held for investment plus acquired loan net discount, net of accumulated amortization; and (c) allowance for loan losses plus acquired loan net discount to total loans held for investment 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 held for investment adjusted for acquired loan net discount (as calculated in clause (b)). 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 plus the acquired loan net discount to total loans held for investment 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 held for investment 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:


	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Allowance for loan losses plus acquired loan net discount
Allowance for loan losses at end of period	$	31,220		$	33,480		$	31,991		$	31,936		$	26,364
Plus: Net discount on acquired loans	4,371			5,112			6,240			7,314			9,937
Total allowance plus acquired loan net discount	$	35,591		$	38,592		$	38,231		$	39,250		$	36,301

Total loans held for investment adjusted for acquired loan net discount
Total loans held for investment	$	3,190,485		$	3,071,761		$	3,123,355		$	3,012,275		$	3,098,220
Plus: Net discount on acquired loans	4,371			5,112			6,240			7,314			9,937
Total loans held for investment adjusted for acquired loan net discount	$	3,194,856		$	3,076,873		$	3,129,595		$	3,019,589		$	3,108,157
Allowance for loan losses plus acquired loan net discount loans to total loans held for investment adjusted for acquired loan net discount	1.11		%	1.25		%	1.22		%	1.30		%	1.17		%

Green Bancorp, Inc.
Notes to Financial Highlights
(Unaudited)

Pre-tax, Pre-provision Operating Return on Average Assets. Pre-tax, pre-provision operating return on average assets is a non‑GAAP measure used by management to evaluate the Company’s financial performance. We calculate: (a) pre-tax, pre-provision operating return as net income (loss) plus provision (benefit) for income taxes, plus provision for loan losses, plus loss (gain) on sale of securities available-for-sale, net, plus loss (gain) on held for sale loans, net, plus stock based compensation expense for performance option vesting and (b) return (as described in clause (a)) divided by total average assets. For pre-tax, pre-provision operating return, the most directly comparable financial measure calculated in accordance with GAAP is net income and for pre-tax, pre-provision operating return on average assets is return on average assets.

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 operating return on average assets:


	For the Quarter Ended															For the Twelve Months Ended
	Dec 31, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 31, 2016			Dec 31, 2017			Dec 31, 2016

	(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Return
Net Income (loss)	$	2,619		$	11,407		$	12,898		$	7,212		$	2,544		$	34,136		$	(972	)
Plus: Provision (benefit) for income taxes	10,142			5,895			6,985			3,942			1,355			26,964			(402		)
Plus: Provision for loan losses	4,405			2,300			1,510			6,145			9,500			14,360			64,700
Plus: Loss (gain) on sale of securities available-for-sale, net	—			332			(294		)	—			—			38			—
Plus: Loss (gain) on held for sale loans, net	1,098			1,294			222			138			1,445			2,308			1,404
Plus: Stock based compensation expense for performance option vesting	3,051			—			—			—			—			3,051			—
Total pre-tax, pre-provision operating return	$	21,315		$	21,228		$	21,321		$	17,437		$	14,844		$	80,857		$	64,730

Total Average Assets	$	4,204,105		$	4,131,706		$	4,096,386		$	4,016,744		$	3,974,244		$	4,112,784		$	3,860,808
Pre-Tax, Pre-Provision Operating Return on Average Assets (Annualized)	2.01		%	2.04		%	2.09		%	1.76		%	1.49		%	1.97		%	1.68		%

Media Contact:
Mike Barone
713-275-8243
mbarone@greenbank.com

Investor Relations:
713-275-8220
investors@greenbank.com

Source: Green Bancorp, Inc.