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Green Bancorp, Inc. Reports Third Quarter 2015 Earnings

2015 Third Quarter Highlights

  • Third quarter 2015 earnings per share (diluted) were $0.15 and excluding one-time acquisition expenses would have been $0.17 per share
  • Net income was $4.1 million and would have been $4.6 million excluding one-time acquisition expenses
  • Pre-tax, pre-provision adjusted net income was $10.5 million for the third quarter 2015 compared to $7.7 million in the third quarter 2014, a 35.7% increase
  • Completion of the merger of Patriot Bancshares, Inc. on October 1, 2015 resulting in pro forma combined total assets of over $3.6 billion
  • Achieved year-end loan growth objective ahead of plan with loans increasing $87.5 million or 4.6% to $2.0 billion compared with June 30, 2015

HOUSTON, Oct. 28, 2015 (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 third quarter and nine months ended September 30, 2015.  The Company reported net income for the quarter of $4.1 million, or $0.15 per diluted common share, compared to net income of $4.5 million or $0.20 per diluted common share reported for the same period in 2014.  Excluding one-time acquisition expenses, net income for the third quarter 2015 would have been $4.6 million or $0.17 per diluted common share, compared to $4.8 million or $0.21 per diluted common share reported for the same period in 2014.

Manny Mehos, Chairman and Chief Executive Officer of Green Bancorp said, “Our merger with Patriot Bancshares is a significant step for our company and our employees.  Today we are among the 15 largest banking companies headquartered in Texas.  The merger taken together with continued strong organic growth in our target markets reflects the continued success of our well defined business strategy.  On a pre-tax, pre-provision basis, our performance for the quarter exceed our expectations.”

Geoff Greenwade, President of Green Bancorp and Chief Executive Officer of Green Bank remarked, “Our third quarter results highlight continued solid execution by our bankers as we achieved our annual loan growth objective a full quarter ahead of schedule.  The expense synergies to be recognized in the Patriot deal will largely be achieved this year due to our rapid closing and we continue to project EPS accretion from the merger will be at least 20% in 2016.”

Results of operations for the quarter ended September 30, 2015

Net income for the quarter ended September 30, 2015 was $4.1 million, compared with $4.5 million for the same period in 2014. Net income per diluted common share was $0.15 for the quarter ended September 30, 2015, compared with $0.20 for the same period in 2014. The decrease in net income was principally due to increases in provision for loan losses and noninterest expense, which includes a $246 thousand increase of one-time acquisition expenses net of tax, offset by increased interest income resulting from growth in loans.  Excluding the one-time acquisition expenses, net income for the quarter would have been $4.6 million, or $0.17 per diluted common share.  Returns on average assets and average common equity, each on an annualized basis, for the three months ended September 30, 2015 were 0.68% and 5.37%, respectively. Green Bancorp’s efficiency ratio, which represents noninterest expense divided by the sum of net interest income and noninterest income, was 59.80% for the three months ended September 30, 2015.  Excluding the impact of one-time acquisition expenses, returns on average assets and average common equity, each on an annualized basis, would have been 0.76% and 6.06%, respectively, and the efficiency ratio would have been 56.44% for the three months ended September 30, 2015.

Net interest income before provision for loan losses for the quarter ended September 30, 2015, was $21.2 million, an increase of $3.7 million, or 20.8%, compared with $17.5 million during the same period in 2014. The increase was primarily due to a 30.8% increase in average loan volume largely driven by the SharePlus acquisition and organic loan growth, somewhat offset by a decrease in the average loan yield. The net interest margin for the quarter ended September 30, 2015 decreased to 3.63%, compared with 3.90% for the same period in 2014. Average noninterest-bearing deposits for the quarter ended September 30, 2015 were $481.9 million, an increase of $107.1 million compared with the same period in 2014, and a decrease of $9.4 million compared to the quarter ended June 30, 2015. Average shareholders’ equity for the quarter ended September 30, 2015 was $301.4 million, an increase of $64.1 million compared with the same period in 2014, and an increase of $5.1 million compared to the quarter ended June 30, 2015.

Net interest income before provision for loan losses during the quarter ended September 30, 2015 increased 1.1% or $239 thousand, compared with $20.9 million for the quarter ended June 30, 2015, primarily due to a 4.6% increase in average loan volume. The net interest margin for the quarter ended September 30, 2015 of 3.63% decreased from 3.84% for the quarter ended June 30, 2015.  The decrease in net interest margin from the prior quarter was primarily due to lower loan yield resulting from lower impact of fee and discount accretion related to loans paid off early and recovered non-accrual interest recorded in the second quarter 2015. 

Noninterest income for the quarter ended September 30, 2015 was $2.9 million, an increase of $537 thousand, or 23.0%, compared with $2.3 million for the same period in 2014. This increase was primarily due to the acquired SharePlus operations and servicing income. When comparing the quarter ended September 30, 2015 to the quarter ended June 30, 2015, noninterest income decreased $84 thousand, or 2.8%, from $3.0 million.

Noninterest expense for the quarter ended September 30, 2015 was $14.4 million, an increase of $1.8 million, or 14.4%, compared with $12.6 million for the same period in 2014. The increase was due to a $379 thousand increase of one-time acquisition expenses.  In addition, the increase was due to a $372 thousand increase in professional and regulatory fees; a $255 thousand increase in real estate acquired by foreclosure; a $234 thousand increase in data processing; and a $133 thousand increase in salaries and employee benefits.  Factors contributing to the increase include recurring expenses related to the SharePlus acquisition and related to being a public company.  When comparing the quarter ended September 30, 2015 to the quarter ended June 30, 2015, noninterest expense decreased 13.3%, or $2.2 million, from $16.6 million, primarily due to a $1.2 million decrease of one-time acquisition expenses, a $615 decrease in salaries and wages, and a $230 thousand decrease in occupancy.

Loans held for investment at September 30, 2015 were $2.0 billion, an increase of $477.3 million, or 31.7%, compared with $1.5 billion at September 30, 2014, primarily due to the SharePlus acquisition, continued opportunities for our portfolio bankers to generate new loans and expand existing relationships within our target markets, and increased mortgage warehouse volume. Excluding loans acquired in the SharePlus acquisition based on the acquisition date balance, loans increased $315.5 million, or 21.0% from the September 30, 2014 balance.  Loans held for investment at September 30, 2015 increased $87.5 million, or 4.6%, from June 30, 2015 due to increases in the loan portfolio with mortgage warehouse volume contributing $5.4 million to the quarterly increase.  Average loans held for investment increased 30.8% or $451.4 million to $1.9 billion for the quarter ended September 30, 2015, compared with $1.5 billion for the same period in 2014. Average loans held for investment for the quarter ended September 30, 2015 increased 4.6% or $84.9 million from the quarter ended June 30, 2015.

Deposits at September 30, 2015 were $1.9 billion, an increase of $363.4 million, or 23.0%, compared to September 30, 2014, primarily due to $218.0 million related to the SharePlus acquisition and $94.0 million increase in our commercial deposits. Deposits at September 30, 2015 decreased $83.4 million or 4.1% from June 30, 2015 due primarily to the expected outflow of the prior quarter’s temporary balance increase of approximately $95 million related to a title company relationship. Noninterest-bearing deposits at September 30, 2015 were $499.1 million, an increase of $105.5 million, or 26.8%, compared to September 30, 2014 and a decrease of $105.0 million, or 17.4%, compared to June 30, 2015 due to the title company deposit.  Average deposits increased 21.8% or $340.7 million to $1.9 billion for the quarter ended September 30, 2015, compared with the same period of 2014. Average noninterest bearing deposits for the quarter ended September 30, 2015 were $481.9 million, an increase of $107.1 million compared with the same period in 2014, and a decrease of $9.4 million compared with the quarter ended June 30, 2015.

Results of operations for the nine months ended September 30, 2015

Net income for the nine months ended September 30, 2015 was $12.9 million, compared with $12.7 million for the same period in 2014. Net income per diluted common share was $0.49 for the nine months ended September 30, 2015, compared with $0.58 for the same period in 2014. The increase in net income was principally due to increased interest income resulting from growth in loans. Other factors also contributed to the increase, including an increase in noninterest income and a decrease in interest expense, offset by increases in noninterest expense, provision for loan losses and provision for income taxes.  Returns on average assets and average common equity, each on an annualized basis, for the nine months ended September 30, 2015 were 0.75% and 5.80%, respectively. Green Bancorp’s efficiency ratio was 63.40% for the nine months ended September 30, 2015.

Net interest income before provision for loan losses for the nine months ended September 30, 2015, was $62.6 million an increase of $12.7 million, or 25.5%, compared with $49.9 million during the same period in 2014. The increase was primarily due to a 30.1% increase in average loan volume, partially offset by a 24 basis point decrease in loan yields. The net interest margin for the nine months ended September 30, 2015 decreased to 3.79%, compared with 3.86% for the same period in 2014. Average noninterest-bearing deposits for the nine months ended September 30, 2015 were $468.1 million, an increase of $144.9 million compared with the same period in 2014. Average shareholders’ equity for the nine months ended September 30, 2015 was $296.5 million, an increase of $81.7 million compared with the same period in 2014.

Noninterest income for nine months ended September 30, 2015 was $7.9 million, an increase of $2.0 million, or 33.7%, compared with $5.9 million for the same period in 2014. This increase was primarily due to a $788 thousand increase in customer service fees, a $345 thousand in gain on sale of held for sale loans, a $288 thousand increase in loan fees, and a $240 thousand increase in gain on sale of the guaranteed portion of certain loans.

Noninterest expense for the nine months ended September 30, 2015, was $44.7 million, an increase of $10.2 million, or 29.4%, compared with $34.6 million for the same period in 2014. This increase was primarily due to a $3.7 million increase in salaries and employee benefits resulting from increased staffing principally due to the SharePlus acquisition and increased compensation due to our portfolio banker compensation program and general merit compensation increases; a $2.1 million increase in one-time acquisition expenses; a $1.2 million increase in professional and regulatory fees; a $913 thousand increase in occupancy; a $666 thousand increase in data processing; and  a $418 thousand increase in real estate acquired by foreclosure due to write-downs.  Factors contributing to the increases include recurring expenses related to the SharePlus acquisition and related to being a public company.

Average loans held for investment increased 30.0% or $425.9 million to $1.8 billion for nine months ended September 30, 2015, compared with $1.4 billion for the same period in 2014.  Average deposits increased 25.6% or $386.9 million to $1.9 billion for the nine months ended September 30, 2015, compared with the same period of 2014.

Asset Quality

Nonperforming assets totaled $36.3 million or 1.50% of period end total assets at September 30, 2015, up from $13.5 million or 0.72% of period end total assets at September 30, 2014, and $11.3 million or 0.47% of period end total assets at June 30, 2015. The increase was due primarily to a classified E&P credit relationship moved to nonperforming during the third quarter 2015. Accruing loans classified as troubled debt restructures and included in the nonperforming asset totals were $6.0 million at September 30, 2015, compared with $4.0 million at September 30, 2014. 

The allowance for loan losses was 1.05% of total loans at September 30, 2015, compared with 1.01% of total loans at September 30, 2014 and 0.97% of total loans at June 30, 2015.  The increase in the percentage when compared to September 30, 2014 was largely due to an increase in specific reserves.  At September 30, 2015, the Company’s allowance for loans losses was 1.15% of total loans excluding acquired loans that are accounted for under ASC 310-20 and ASC 310-30.  Further, the allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount was 1.17% as of September 30, 2015.

The Company recorded a provision for loan losses of $3.1 million for the quarter ended September 30, 2015, which included a $2.4 million specific reserve on the energy credit discussed above, up from the $805 thousand provision for the loan losses recorded for the quarter ended June 30, 2015.  The provision for loan losses was $5.4 million for nine months ended September 30, 2015, compared with $1.4 million for the nine months ended September 30, 2014.

Net charge offs were $622 thousand for the quarter ended September 30, 2015, compared with net charge offs of $55 thousand for the quarter ended June 30, 2015, and net charge offs of $663 thousand for the quarter ended September 30, 2014. Net charge offs were $245 thousand, or 0.01% of average loans outstanding, for nine months ended September 30, 2015, compared with net charge offs of $2.5 million for the nine months ended September 30, 2014.

Acquisition of SP Bancorp, Inc.

On October 17, 2014, Green Bancorp acquired SP Bancorp, Inc. (“SP Bancorp”) and its wholly-owned subsidiary, SharePlus Bank (“SharePlus”) headquartered in Plano, Texas.  Pursuant to the terms of the merger agreement, we paid $46.4 million in cash for all outstanding shares of SP Bancorp capital stock, which resulted in goodwill of $14.5 million as of September 30, 2015.

Merger with Patriot Bancshares, Inc.

On October 1, 2015, Green Bancorp completed the previously announced merger 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.

Under the terms of the merger agreement, we issued 10.4 million shares of Green Bancorp common stock for all outstanding shares of Patriot common stock, including the converted Series D and Series F preferred stock.  In addition, Patriot’s $27.3 million Series B and Series C preferred stock were redeemed in connection with the closing.

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.

Capital Management

The Basel III Capital Rules adopted by the federal regulatory authorities in 2013 substantially revised the risk-based capital requirements applicable to Green Bancorp and Green Bank. The Basel III Capital Rules became effective for Green Bancorp on January 1, 2015, subject to a phase-in period for certain provisions. Among other things, the Basel III Capital Rules introduced a new capital measure called “Common Equity Tier 1,” which is a comparison of the sum of certain equity capital components to total risk-weighted assets, and revised the risk-weighting approach of the capital ratios with a more risk-sensitive approach that expanded the risk-weighting categories from the previous Basel I derived categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets.

Conference Call

As previously announced, Green Bancorp will hold a conference call today, October 28, 2015, to discuss its third quarter 2015 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 Third Quarter 2015 Earnings Conference Call.  A replay will be available starting at 8:00 pm Eastern Time on October 28, 2015 and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517. The passcode for the replay is 13622160.  The replay will be available until 11:59 pm Eastern Time on November 4, 2015.

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 web site at www.greenbank.comGreen Bancorp uses its web site as a channel of distribution for material Company information. Financial and other material information regarding Green Bancorp is routinely posted on the Company's web site 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.

Green Bancorp, Inc.
Financial Highlights
(Unaudited) 
                               
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014
    (Dollars in thousands)
Period End Balance Sheet Data:                              
Cash and cash equivalents   $    96,451     $    168,416     $    129,108     $    68,923     $    71,547  
Securities        249,558          258,882          228,035          238,278          244,759  
Other investments        16,977          10,831          10,000          11,365          11,006  
Loans held for sale        192          1,287          939          573          -  
Loans held for investment        1,982,280          1,894,742          1,810,842          1,799,155          1,504,998  
Allowance for loan losses        (20,724 )        (18,292 )        (17,542 )        (15,605 )        (15,262 )
Goodwill        30,129          30,129          30,129          30,129          15,672  
Core deposit intangibles, net        3,704          3,852          4,000          4,148          800  
Real estate acquired through foreclosure        1,665          4,488          4,863          4,863          4,863  
Premises and equipment, net        24,766          24,773          24,817          25,200          21,080  
Other assets        30,989          29,843          27,474          29,106          17,279  
Total assets   $    2,415,987     $    2,408,951     $    2,252,665     $    2,196,135     $    1,876,742  
                               
Noninterest-bearing deposits   $    499,101     $    604,073     $    459,100     $    431,942     $    393,567  
Interest-bearing transaction and savings deposits        792,957          758,123          809,300          777,431          638,917  
Certificates and other time deposits        649,082          662,335          663,451          636,340          545,207  
Total deposits        1,941,140          2,024,531          1,931,851          1,845,713          1,577,691  
Securities sold under agreements to repurchase        3,080          9,858          13,012          4,605          4,391  
Other borrowed funds        158,893          67,309          7,323          47,586          -  
Other liabilities        9,645          8,601          6,709          9,826          8,696  
Total liabilities        2,112,758          2,110,299          1,958,895          1,907,730          1,590,778  
Shareholders' equity        303,229          298,652          293,770          288,405          285,964  
Total liabilities and equity   $    2,415,987     $    2,408,951     $    2,252,665     $    2,196,135     $    1,876,742  


                                           
    For the Quarter Ended   For the
 Nine Months Ended
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014   Sep 30, 2015   Sep 30, 2014
    (Dollars in thousands)
Income Statement Data:                                          
Interest income:                                          
Loans, including fees   $  22,601   $  22,252   $  21,659   $    21,414     $  18,745   $  66,512   $ 53,707
Securities      809      838      878        986        954      2,525      3,007
Other investments      111      113      110        111        82      334      241
Federal funds sold      -      -      -        -        -      -      -
Deposits in financial institutions      78      53      55        47        36      186      92
Total interest income      23,599      23,256      22,702        22,558        19,817      69,557     57,047
                                           
Interest expense:                                          
Transaction and savings deposits      696      695      682        684        657      2,073      1,855
Certificates and other time deposits      1,651      1,607      1,474        1,553        1,624      4,732      5,194
Other borrowed funds      90      31      30        38        24      151      104
Total interest expense      2,437      2,333      2,186        2,275        2,305      6,956      7,153
                                           
Net interest income      21,162      20,923      20,516        20,283        17,512      62,601     49,894
Provision for loan losses      3,054      805      1,505        1,250        220      5,364      1,443
Net interest income after provision for loan losses      18,108      20,118      19,011        19,033        17,292      57,237      48,451
                                           
Noninterest income:                                          
Customer service fees      867      917      863        796        694      2,647      1,859
Loan fees      680      671      371        483        422      1,722      1,434
Gain on sale of held for sale loans, net      113      157      75        28        -      345      -
Gain on sale of guaranteed portion of loans, net      908      960      645        594        1,050      2,513      2,273
Other      303      250      131        236        168      684      353
Total noninterest income      2,871      2,955      2,085        2,137        2,334      7,911      5,919
                                           
Noninterest expense:                                          
Salaries and employee benefits      8,562      8,878      8,757        8,891        8,131      26,197     22,211
Occupancy      1,332      1,562      1,460        1,585        1,138      4,354      3,443
Professional and regulatory fees      1,988      3,605      1,467        1,612        1,488      7,060      4,035
Data processing      610      583      644        4,173        403      1,837      1,180
Software license and maintenance      352      392      362        418        350      1,106      1,006
Marketing      160      152      148        95        191      460      559
Loan related      185      263      109        220        101      557      303
Real estate acquired by foreclosure, net      339      382      13        (30 )      85      734      316
Other      844      761      796        916        673      2,401      1,500
Total noninterest expense      14,372      16,578      13,756        17,880        12,560      44,706      34,553
                                           
Income before income taxes      6,607      6,495      7,340        3,290        7,066      20,442     19,817
Provision for income taxes      2,528      2,357      2,691        1,243        2,533      7,576      7,122
Net income   $  4,079   $  4,138   $  4,649   $    2,047     $  4,533   $  12,866   $  12,695


                                             
    As of and For the Quarter Ended   As of and For the
Nine Months Ended
 
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014   Sep 30, 2015   Sep 30, 2014  
    (In thousands, except per share data)  
Per Share Data (Common Stock):                                            
Basic earnings per common share   $  0.16   $  0.16   $  0.18   $  0.08   $  0.20   $  0.49   $  0.59  
Diluted earnings per share      0.15      0.16      0.18      0.08      0.20      0.49      0.58  
Book value per common share      11.54      11.37      11.22      11.02      10.93      11.54      10.93  
Tangible book value per common share (1)      10.25      10.08      9.92      9.71      10.30      10.25      10.30  
                                             
Common Stock Data:                                            
Shares outstanding at period end      26,277      26,270     26,176      26,176      26,171      26,277      26,171  
Weighted average basic shares outstanding for the period      26,274      26,199      26,176      26,171      22,714      26,215      21,430  
Weighted average diluted shares outstanding for the period      26,551      26,518      26,359      26,592      23,102      26,481      21,728  
                                             
Selected Performance Metrics:                                            
Return on average assets      0.68 %    0.73 %    0.85 %    0.38 %    0.98 %    0.75 %    0.95 %
Return on average equity      5.37      5.60      6.46      2.83      7.58      5.80      7.90  
Efficiency ratio      59.80      69.43      60.86      79.75      63.29      63.40      61.91  
Loans to deposits ratio      102.12      93.59      93.74      97.48      95.39      102.12      95.39  
Noninterest expense to average assets      2.38      2.93      2.53      3.32      2.71      2.61      2.59  
                                             
Capital Ratios:                                            
Average shareholders’ equity to average total assets      12.6 %    13.0 %    13.2 %    13.4 %    12.9 %    12.9 %    12.0 %
Tier 1 capital to average assets (leverage)      12.1      11.9      12.0      12.1      14.7      12.1      14.7  
Common equity tier 1 capital(2)      12.2      12.5      13.0     N/A     N/A      12.2     N/A  
Tier 1 capital to risk-weighted assets      12.2      12.5      13.0      13.1      15.9      12.2      15.9  
Total capital to risk-weighted assets      13.2      13.4      13.9      14.0      16.9      13.2      16.9  
Tangible common equity to tangible assets (1)      11.3      11.1      11.7      11.8      14.5      11.3      14.5  
                                             
Selected Other Metrics:                                            
Number of full time equivalent employees      258      266      267      272      219      258      219  
Number of portfolio bankers      52      55      53      53      48      52      48  
Period end actual loan portfolio average per portfolio banker   $  36,601   $  33,191   $  32,721   $  31,500   $  29,823   $  36,601   $  29,823  
Period end target loan portfolio average per portfolio banker   $  52,299   $  47,348   $  46,679   $  44,698   $  47,271   $  52,299   $  47,271  
Estimated remaining capacity to target loan portfolio size      30.02 %    29.90 %    29.90 %    29.53 %    36.91 %    30.02 %    36.91 %

(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  
    September 30, 2015     June 30, 2015     September 30, 2014  
    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   $    1,918,999     $  22,601    4.67 %   $    1,834,975     $  22,252    4.86 %   $    1,466,708     $  18,745    5.07 %
Securities        257,930        809    1.24          263,900        838    1.27          249,923        954    1.51  
Other investments        15,909        111    2.77          9,940        113    4.56          9,065        82    3.59  
Federal funds sold        959        -    -          1,006        -    -          801        -    -  
Interest earning deposits in financial institutions        117,465        78    0.26          75,836        53    0.28          55,548        36    0.26  
Total interest-earning assets        2,311,262        23,599    4.05 %        2,185,657        23,256    4.27 %        1,782,045        19,817    4.41 %
                                                       
Allowance for loan losses        (18,892 )                    (18,387 )                    (15,669 )            
Noninterest-earning assets        103,186                      106,027                      74,850              
Total assets   $    2,395,556                 $    2,273,297                 $    1,841,226              
                                                       
Liabilities and Shareholders’ Equity                                                      
Interest-bearing liabilities:                                                      
Interest-bearing demand and savings deposits   $    769,454     $  696    0.36 %   $    775,043     $  695    0.36 %   $    625,834     $  657    0.42 %
Certificates and other time deposits        651,334        1,651    1.01          662,109        1,607    0.97          561,408        1,624    1.15  
Securities sold under agreements to repurchase        7,483        3    0.16          11,699        4    0.14          4,911        2    0.16  
Other borrowed funds        174,531        87    0.20          29,230        27    0.37          29,025        22    0.30  
Total interest-bearing liabilities        1,602,802        2,437    0.60 %        1,478,081        2,333    0.63 %        1,221,178        2,305    0.75 %
                                                       
Noninterest-bearing liabilities:                                                      
Noninterest-bearing demand deposits        481,947                      491,305                      374,811              
Other liabilities        9,437                      7,652                      7,999              
Total liabilities        2,094,186                      1,977,038                      1,603,988              
Shareholders’ equity        301,370                      296,259                      237,238              
Total liabilities and  shareholders’ equity   $    2,395,556                 $    2,273,297                 $    1,841,226              
                                                       
Net interest rate spread                 3.45 %                3.63 %                3.66 %
Net interest income and margin(1)         $  21,162    3.63 %         $  20,923    3.84 %         $  17,512    3.90 %

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


                                     
    For the Nine Months Ended September 30,  
    2015     2014  
    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   $    1,846,618     $  66,512    4.82 %   $    1,419,540     $  53,707    5.06 %
Securities        252,673        2,525    1.34          253,830        3,007    1.58  
Other investments        12,115        334    3.69          8,982        241    3.59  
Federal funds sold        869        -     -          720        -    -  
Interest earning deposits in financial institutions        93,393        186    0.27          46,369        92    0.27   
Total interest-earning assets        2,205,668        69,557    4.22 %        1,729,441        57,047    4.41 %
                                     
Allowance for loan losses        (17,699 )                    (15,993 )            
Noninterest-earning assets        104,959                      71,539              
Total assets   $    2,292,928                 $    1,784,987              
                                     
Liabilities and Shareholders’ Equity                                    
Interest-bearing liabilities:                                    
Interest-bearing demand and savings deposits   $    777,438     $  2,073    0.36 %   $    614,431     $  1,855    0.40 %
Certificates and other time deposits        650,959        4,732    0.97          572,010        5,194    1.21  
Securities sold under agreements to repurchase        11,430        13    0.15          5,943        7    0.16  
Other borrowed funds        80,276        138    0.23          48,180        97    0.27  
Total interest-bearing liabilities        1,520,103        6,956    0.61 %        1,240,564        7,153    0.77 %
                                     
Noninterest-bearing liabilities:                                    
Noninterest-bearing demand deposits        468,119                      323,180              
Other liabilities        8,236                      6,503              
Total liabilities        1,996,458                      1,570,247              
Shareholders’ equity        296,470                      214,740              
Total liabilities and  shareholders’ equity   $    2,292,928                 $    1,784,987              
                                     
Net interest rate spread                 3.60 %                3.64 %
Net interest income and margin(1)         $  62,601    3.79 %         $  49,894    3.86 %

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


Yield Trend

                       
    For the Quarter Ended  
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014  
                       
Average yield on interest-earning assets:                      
Loans, including fees    4.67 %  4.86 %  4.92 %  4.90 %  5.07 %
Securities    1.24    1.27    1.51    1.59    1.51  
Other investments    2.77    4.56    4.28    3.89    3.59  
Federal funds sold    -    -    -    -    -  
Interest-earning deposits in financial institutions    0.26    0.28    0.26    0.30    0.26  
Total interest-earning assets    4.05 %  4.27 %  4.35 %  4.36 %  4.41 %
                       
Average rate on interest-bearing liabilities:                      
Interest bearing transaction and savings    0.36 %  0.36 %  0.35 %  0.37 %  0.42 %
Certificates and other time deposits    1.01    0.97    0.94    0.99    1.15  
Other borrowed funds    0.20    0.30    0.24    0.27    0.28  
Total interest-bearing liabilities    0.60 %  0.63 %  0.60 %  0.64 %  0.75 %
                       
Net interest rate spread    3.45 %  3.63 %  3.75 %  3.73 %  3.66 %
Net interest margin (1)    3.63 %  3.84 %  3.93 %  3.92 %  3.90 %

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


Supplemental Yield Trend

                       
    For the Quarter Ended  
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014  
                       
Average yield on loans, excluding fees (2)    4.37 %  4.47 %  4.50 %  4.48 %  4.63 %
Average cost of interest-bearing deposits    0.66    0.64    0.61    0.65    0.76  
Average cost of total deposits, including noninterest-bearing    0.49    0.48    0.47    0.50    0.58  

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


Interest Rate Sensitivity

                       
    Percentage Change in Net Interest Income over a 12-month Horizon as of  
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014  
                       
+200 basis point change in interest rates      21.5   %    22.3   %    19.6   %    19.2   %    20.7   %
+100 basis point change in interest rates      11.6        11.9        10.7        10.3        10.7    
No change in interest rates      -        -        -        -        -    
-100 basis point change in interest rates      (4.8 )      (6.1 )      (3.9 )      (4.8 )      (3.3 )  


Portfolio Composition

                                                             
    Sep 30, 2015     Jun 30, 2015     Mar 31, 2015     Dec 31, 2014     Sep 30, 2014  
                                                             
    (Dollars in thousands)  
Period End Balances                                                            
                                                             
Commercial & industrial   $  820,337    41.4 %   $  795,483    42.0 %   $  744,380    41.1 %   $  788,410    43.8 %   $  725,583    48.2 %
Real Estate:                                                            
Owner occupied commercial      183,224    9.2        176,453    9.2        166,604    9.1         163,592    9.1        132,940    8.8  
Commercial      483,628    24.4        383,863    20.3         367,071    20.3        339,006    18.8        308,700    20.5  
Construction, land & land development      252,206    12.8        290,469    15.3        273,125    15.1        240,666    13.4        230,259    15.3  
Residential mortgage      230,796    11.6        234,026    12.4        249,591    13.8        257,066    14.3        100,818    6.8  
Consumer and Other      12,089    0.6        14,448    0.8        10,071    0.6         10,415    0.6        6,698    0.4  
Total loans held for investment   $  1,982,280    100.0 %   $  1,894,742    100.0 %   $  1,810,842    100.0 %   $  1,799,155    100.0 %   $  1,504,998    100.0 %
                                                             
Deposits:                                                            
Noninterest-bearing   $  499,101    25.7 %   $  604,073    29.9 %   $  459,100    23.8 %   $  431,942    23.4 %   $  393,567    24.9 %
Interest-bearing transaction      132,604    6.8        133,584    6.6        142,442    7.4        134,448    7.3        81,816    5.2  
Money market      604,912    31.2        567,613    28.0        607,033    31.4        581,346    31.5        525,726    33.3  
Savings      55,441    2.9        56,926    2.8        59,825    3.1        61,637    3.3        31,375    2.0  
Certificates and other time deposits      649,082    33.4        662,335    32.7        663,451    34.3        636,340    34.5        545,207    34.6  
Total deposits   $  1,941,140    100.0 %   $  2,024,531    100.0  %   $  1,931,851    100.0  %   $  1,845,713    100.0  %   $  1,577,691    100.0  %
                                                             
Loan to Deposit Ratio      102.1 %          93.6 %          93.7 %          97.5 %          95.4 %    


Asset Quality

                                             
    As of and for the Quarter Ended   As of and for the
 Nine Months Ended
 
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014   Sep 30, 2015   Sep 30, 2014  
    (Dollars in thousands)              
Nonperforming Assets:                                            
Nonaccrual loans   $    22,762     $    4,402     $    3,789     $    2,127     $    2,709     $    22,762     $    2,709    
Accruing loans 90 or more days past due        4,233          -          7          16          52          4,233          52    
Restructured loans—nonaccrual        1,623          1,712          3,113          2,717          1,948          1,623          1,948    
Restructured loans—accrual        6,048          681          2,390          2,257          3,973          6,048          3,973    
Total nonperforming loans        34,666          6,795          9,299          7,117          8,682          34,666          8,682    
Real estate acquired through foreclosure        1,665          4,488          4,863          4,863          4,863          1,665          4,863    
Total nonperforming assets   $    36,331     $    11,283     $    14,162     $    11,980     $    13,545     $    36,331     $    13,545    
                                             
Charge-offs:                                            
Commercial and industrial   $    (981 )   $    (1,227 )   $    (77 )   $    (960 )   $    (679 )   $    (2,285 )   $    (1,967 )  
Owner occupied commercial real estate       (12        -          -          -          -         (12 )        -    
Residential mortgage        (41 )        -          -          -          -          (41 )        -    
Other consumer        -          (12 )        (105 )        (10 )        (2 )        (117 )        (1,287 )  
Total charge-offs        (1,034 )        (1,239 )        (182 )        (970 )        (681 )        (2,455 )        (3,254 )  
                                             
Recoveries:                                            
Commercial and industrial   $    331     $    1,163     $    597     $    53     $    10     $    2,091     $    65    
Owner occupied commercial real estate        -          -          -          -          -          -          14    
Commercial real estate        75          -          1          -          -          76          1    
Residential mortgage        4          6          12          5          7          22          15    
Other consumer        2          15          4          5          1          21          617    
Total recoveries        412          1,184          614          63          18          2,210          712    
                                             
Net recoveries (charge-offs)   $    (622 )   $    (55 )   $    432     $    (907 )   $    (663 )   $    (245 )   $    (2,542 )  
                                             
Allowance for loan losses at end of period   $    20,724     $    18,292     $    17,542     $    15,605     $    15,262     $    20,724     $    15,262    
                                             
Asset Quality Ratios:                                            
Nonperforming assets to total assets        1.50   %      0.47   %      0.63   %      0.55   %      0.72   %      1.50   %      0.72   %
Nonperforming loans to total loans        1.75          0.36          0.51          0.40          0.58          1.75          0.58    
Total classified assets to total regulatory capital        28.19          19.03          10.93          11.76          6.35          28.19          6.35    
Allowance for loan losses to total loans        1.05          0.97          0.97          0.87          1.01          1.05          1.01    
Net charge-offs (recoveries) to average loans outstanding        0.03          0.00          (0.02 )        0.05          0.05          0.01          0.18    


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:

                                 
                                 
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014  
    (In thousands, except per share data)
Tangible Common Equity                                
Total shareholders’ equity   $  303,229   $  298,652   $  293,770   $  288,405   $  285,964  
Adjustments:                                
Goodwill      30,129      30,129      30,129      30,129      15,672  
Core deposit intangibles      3,704      3,852      4,000      4,148      800  
Tangible common equity   $  269,396   $  264,671   $  259,641   $  254,128   $  269,492  
Common shares outstanding (1)      26,277      26,270      26,176      26,176      26,171  
Book value per common share (1)   $  11.54   $  11.37   $  11.22   $  11.02   $  10.93  
Tangible book value per common share (1)   $  10.25   $  10.08   $  9.92   $  9.71   $  10.30  

(1) Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options.  The number of exercisable options outstanding was 939,576 as of Sep 30, 2015; 938,927 as of Jun 30, 2015; 1,021,555 as of Mar 31, 2015; 1,020,743 as of Dec 31, 2014; and 1,023,072 as of Sep 30, 2014.

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:

                                 
                                 
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014  
    (Dollars in thousands)
Tangible Common Equity                                
Total shareholders’ equity   $  303,229   $  298,652   $  293,770   $  288,405   $  285,964  
Adjustments:                                
Goodwill      30,129      30,129      30,129      30,129      15,672  
Core deposit intangibles      3,704      3,852      4,000      4,148      800  
Tangible common equity   $  269,396   $  264,671   $  259,641   $  254,128   $  269,492  
Tangible Assets                                
Total assets   $  2,415,987   $  2,408,951   $  2,252,665   $  2,196,135   $  1,876,742  
Adjustments:                                
Goodwill      30,129      30,129      30,129      30,129      15,672  
Core deposit intangibles      3,704      3,852      4,000      4,148      800  
Tangible assets   $  2,382,154   $  2,374,970   $  2,218,536   $  2,161,858   $  1,860,270  
Tangible Common Equity to Tangible Assets      11.3 %    11.1 %    11.7 %    11.8 %    14.5 %


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:

                                 
                                 
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014  
    (Dollars in thousands)
Allowance for loan losses   $  20,724   $  18,292   $  17,542   $  15,605   $  15,262  
Total loans excluding acquired loans                                
Total loans   $  1,982,280   $  1,894,742   $  1,810,842   $  1,799,155   $  1,504,998  
Less: Fair value of acquired loans accounted for under ASC Topics 310-20 and 310-30      172,645      190,815      214,689      238,424      12,366  
Total loans excluding acquired loans   $  1,809,635   $  1,703,927   $  1,596,153   $  1,560,731   $  1,492,632  
Allowance for loan losses to total loans excluding acquired loans     1.15 %   1.07 %   1.10 %   1.00 %   1.02 %


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:

                                 
                                 
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014  
                                 
    (Dollars in thousands)
Allowance for loan losses plus acquired loan net discount                                
Allowance for loan losses at end of period   $  20,724   $  18,292   $  17,542   $  15,605   $  15,262  
Plus: Net discount on acquired loans      2,580      2,771      3,474      4,081      944  
Total allowance plus acquired loan net discount   $  23,304   $  21,063   $  21,016   $  19,686   $  16,206  
                                 
Total loans adjusted for acquired loan net discount                                
Total loans   $  1,982,280   $  1,894,742   $  1,810,842   $  1,799,155   $  1,504,998  
Plus: Net discount on acquired loans      2,580      2,771      3,474      4,081      944  
Total loans adjusted for acquired loan net discount   $  1,984,860   $  1,897,513   $  1,814,316   $  1,803,236   $  1,505,942  
Allowance for loan losses plus acquired loan net discount loans to total loans adjusted for acquired loan net discount     1.17 %   1.11 %   1.16 %   1.09 %   1.08 %


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   For the
 Nine Months Ended
 
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014   Sep 30, 2015   Sep 30, 2014  
                                             
    (In thousands, except per share data)  
Noninterest Expense Excluding One-time Acquisition Expenses                                            
Total noninterest expense   $  14,372   $  16,578   $  13,756   $  17,880   $  12,560   $  44,706   $  34,553  
Less: One-time acquisition expenses      808      1,996      226      4,290      429      3,030      936  
Noninterest expense excluding one-time acquisition expenses   $  13,564   $  14,582   $  13,530   $  13,590   $  12,131   $  41,676   $  33,617  
                                             
Net Income Excluding One-time Acquisition Expenses                                            
Net Income   $  4,079   $  4,138   $  4,649   $  2,047   $  4,533   $  12,866   $  12,695  
Plus: One-time acquisition expenses, net of taxes      525      1,297      147      2,788      279      1,970      608  
Net income excluding one-time acquisition expenses   $  4,604   $  5,435   $  4,796   $  4,835   $  4,812   $  14,836   $  13,303  
                                             
Weighted average diluted shares outstanding      26,551      26,518      26,359      26,592      23,102      26,481      21,728  
Diluted earnings per share   $  0.15   $  0.16   $  0.18   $  0.08   $  0.20   $  0.49   $  0.58  
Diluted earnings per share, excluding one-time acquisition expenses      0.17      0.20     0.18      0.18      0.21      0.56      0.61  
                                             
Average Total Assets   $  2,395,556   $  2,273,297   $  2,207,869   $  2,134,814   $  1,841,226   $  2,292,928   $  1,784,987  
Return on average assets      0.68 %    0.73 %    0.85 %    0.38 %    0.98 %    0.75 %    0.95 %
Return on average assets, excluding one-time acquisition expenses      0.76      0.96      0.88      0.90      1.04      0.87      1.00  
                                             
Average Common Shareholders' equity   $  301,370   $  296,259   $  291,674   $  286,660   $  237,238   $  296,470   $  214,740  
Return on average equity      5.37 %    5.60 %    6.46 %    2.83 %    7.58 %    5.80 %    7.90 %
Return on average equity, excluding one-time acquisition expenses      6.06      7.36      6.67      6.69      8.05      6.69      8.28  
                                             
Net interest income   $  21,162   $  20,923   $  20,516   $  20,283   $  17,512   $  62,601   $  49,894  
Noninterest Income   $  2,871   $  2,955   $  2,085   $  2,137   $  2,334   $  7,911   $  5,919  
                                             
Efficiency ratio      59.80 %    69.43 %    60.86 %    79.75 %    63.29 %    63.40 %    61.91 %
Efficiency ratio, excluding one-time acquisition expenses      56.44      61.07      59.86      60.62      61.13      59.10      60.23  


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   For the
 Nine Months Ended
    Sep 30, 2015   Jun 30, 2015   Mar 31, 2015   Dec 31, 2014   Sep 30, 2014   Sep 30, 2015   Sep 30, 2014
                                           
    (Dollars in thousands)            
Pre-Tax, Pre-Provision Adjusted Net Income                                          
Net Income   $  4,079   $  4,138   $  4,649   $  2,047   $  4,533   $  12,866   $  12,695
Plus: Provision on income taxes      2,528      2,357      2,691      1,243      2,533      7,576      7,122
Plus: Provision for loan losses      3,054      805      1,505      1,250      220      5,364      1,443
Plus: One-time acquisition expenses      808      1,996      226      4,290      429      3,030      936
Total pre-tax, pre-provision adjusted net income   $  10,469   $  9,296   $  9,071   $  8,830   $  7,715   $  28,836   $  22,196

 

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

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

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Green Bancorp, Inc.