gnbc_Current_Folio_10Q_new

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to

Commission File Number: 001-36580


Green Bancorp, Inc.

(Exact name of registrant as specified in its charter)


 

 

 

 

TEXAS

(State or other jurisdiction of incorporation or organization)

42-1631980

(I.R.S. Employer Identification No.)

 

4000 Greenbriar

Houston, Texas 77098

(Address of principal executive offices, including zip code)

(713) 275 - 8220

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer      

 

Accelerated filer                        ☒

 

 

 

Non-accelerated filer        

 

Emerging growth company  

(Do not check if a smaller reporting company)

Smaller reporting company       ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No

 

As of August 4, 2017, there were 37,215,115 outstanding shares of the registrant’s Common Stock, par value $0.01 per share.

 

 

 


 

Table of Contents

 

 

GREEN BANCORP, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

   

 

 

 

Special Cautionary Notice Regarding Forward-Looking Statements 

3

PART I—FINANCIAL INFORMATION 

 

Item 1. 

Interim Condensed Consolidated Financial Statements

5

 

Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016 (Unaudited)

5

 

Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2017 and 2016 (Unaudited)

6

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2017 and 2016 (Unaudited)

7

 

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2017 and 2016 (Unaudited)

8

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 (Unaudited)

9

 

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)

10

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

49

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

70

Item 4. 

Controls and Procedures

70

PART II—OTHER INFORMATION 

 

Item 1. 

Legal Proceedings

70

Item 1A. 

Risk Factors

70

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

71

Item 3. 

Defaults upon Senior Securities

71

Item 4. 

Mine Safety Disclosures

71

Item 5. 

Other Information

71

Item 6. 

Exhibits

71

Signatures 

72

 

 

 

2


 

Table of Contents

Special Cautionary Notice Regarding Forward-Looking Statements

Statements and financial discussion and analysis contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on various facts and derived utilizing numerous important assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  You should understand that the following important factors could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements:

·

risks related to the concentration of our business within our geographic areas of operation in Texas, including the continued impact of downturns in the energy sector, as well as risks associated with the technology and real estate sectors within our geographic areas of operation in Texas;

·

risks related to our energy reserve exposure and energy-related service industry exposure of our total funded loans and the decline in oil prices and our ability to successfully execute our strategy to mitigate these risks;

·

our ability to execute on our growth strategy, including through the identification of acquisition candidates that will be accretive to our financial condition and results of operation;

·

risks related to the integration of any acquired businesses, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, the time and costs associated with integrating systems, technology platforms, procedures and personnel, the need for additional capital to finance such transactions, and possible failures in realizing the anticipated benefits from acquisitions;

·

our ability to comply with various governmental and regulatory requirements applicable to financial institutions;

·

our ability to meet the supervisory expectations of our regulators and the impact of any regulatory restrictions or supervisory actions imposed on us, including on our ability to grow, conduct acquisitions or pay dividends;

·

market conditions and economic trends nationally, regionally and in our target markets, particularly in Texas and the geographic areas in which we operate;

·

our ability to attract and retain successful bankers that meet our expectations in terms of customer relationships and profitability;

·

risks related to our strategic focus on lending to small to medium-sized businesses;

·

risks associated with our commercial and industrial loan portfolio, including the risk for deterioration in value of the general business assets that generally secure such loans;

·

potential changes in the prices, values and sales volumes of commercial and residential real estate securing our real estate loans;

·

the sufficiency of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates;

·

risks related to our concentration of loans to a limited number of borrowers and in a limited geographic area;

·

our ability to maintain adequate liquidity and to raise necessary capital to fund our acquisition strategy, operations or to meet increased minimum regulatory capital levels;

·

changes in market interest rates that affect the pricing of our loans and deposits and our net interest income;

·

accounting estimates and risk management processes that rely on analytical and forecasting models;

·

our ability to maintain an effective system of disclosure controls and procedures and internal controls over financial reporting;

·

the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services;

·

potential fluctuations in the market value and liquidity of the securities we hold for sale;

·

loss of our executive officers or other key employees could impair our relationship with our customers and adversely affect our business;

·

potential impairment on the goodwill we may record in connection with business acquisitions;

3


 

Table of Contents

·

risks associated with system failures or failures to prevent breaches of our network security;

·

a failure in or breach of operational or security systems of the Company’s infrastructure, or those of its third-party vendors and other service providers, including as a result of cyber attacks;

·

our ability to keep pace with technological change or difficulties when implementing new technologies;

·

risks associated with data processing system failures and errors;

·

risks associated with fraudulent and negligent acts by our customers, employees or vendors;

·

the institution and outcome of litigation and other legal proceeding against us or to which we become subject;

·

our new lines of business or new products and services may subject us to additional risks;

·

legal and regulatory proceedings or the results of regulatory examinations could adversely affect our business, financial condition, and results of operation;

·

we are subject to claims and litigation pertaining to intellectual property from time to time;

·

we could experience claims and litigation pertaining to fiduciary responsibility;

·

the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, such as the Dodd-Frank Act;

·

governmental monetary and fiscal policies, including the policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”);

·

the failure of the Company’s enterprise risk management framework to identify or address risks adequately;

·

the impact of, and our ability to comply with, formal or informal regulatory actions by federal banking agencies, including any requirements or limitations imposed on us as a result of our confidential supervisory ratings or the results of any regulatory examination;

·

many of our new activities and expansion plans require regulatory approvals, and failure to obtain them may restrict our growth;

·

financial institutions, such as the Bank, face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti‑money laundering statutes and regulations;

·

substantial regulatory limitations on changes of control of bank holding companies;

·

changes in the scope and cost of Federal Deposit Insurance Corporation (the “FDIC”) insurance and other coverages;

·

systemic risks associated with the soundness of other financial institutions;

·

acts of terrorism, an outbreak of hostilities or other international or domestic calamities, weather or other acts of God and other matters beyond the Company’s control; and

·

other risks and uncertainties listed from time to time in the Company’s reports and documents filed with the Securities and Exchange Commission (the “SEC”).

Other factors not identified above, including those described in our Annual Report on Form 10-K for year ended December 31, 2016 under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may also cause actual results to differ materially from those described in our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control. You should consider these factors in connection with considering any forward-looking statements that may be made by us. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

 

 

 

4


 

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

GREEN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2017

 

2016

 

 

 

 

 

 

 

ASSETS

 

 

   

 

 

   

Cash and due from banks

    

$

30,565

    

$

18,351

Interest bearing deposits in financial institutions and fed funds sold

 

 

104,430

 

 

370,656

Total cash and cash equivalents

 

 

134,995

 

 

389,007

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

 

687,100

 

 

274,619

Held-to-maturity securities, at amortized cost (fair value of $31,235 and $34,844, respectively)

 

 

31,650

 

 

35,505

Investment in Patriot Bancshares Capital Trusts I and II

 

 

666

 

 

666

Federal Reserve Bank stock

 

 

10,978

 

 

10,954

Federal Home Loan Bank of Dallas stock

 

 

14,358

 

 

7,029

Total securities and other investments

 

 

744,752

 

 

328,773

 

 

 

 

 

 

 

Loans held for sale

 

 

18,030

 

 

23,989

Loans held for investment

 

 

3,123,355

 

 

3,098,220

Allowance for loan losses

 

 

(31,991)

 

 

(26,364)

Loans, net

 

 

3,109,394

 

 

3,095,845

 

 

 

 

 

 

 

Premises and equipment, net

 

 

30,108

 

 

25,674

Goodwill

 

 

85,291

 

 

85,291

Core deposit intangibles, net of accumulated amortization

 

 

9,215

 

 

9,975

Accrued interest receivable

 

 

9,165

 

 

8,011

Deferred tax asset, net

 

 

12,467

 

 

11,266

Real estate acquired by foreclosure

 

 

921

 

 

5,220

Bank owned life insurance

 

 

34,827

 

 

34,385

Other assets

 

 

14,562

 

 

31,375

TOTAL ASSETS

 

$

4,185,697

 

$

4,024,822

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing

 

$

683,656

 

$

650,064

Interest-bearing transaction and savings

 

 

1,324,307

 

 

1,359,187

Certificates and other time deposits

 

 

1,352,459

 

 

1,365,449

Total deposits

 

 

3,360,422

 

 

3,374,700

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

5,221

 

 

3,493

Other borrowed funds

 

 

305,000

 

 

150,000

Subordinated debentures and subordinated notes

 

 

47,454

 

 

47,492

Accrued interest payable

 

 

2,203

 

 

2,387

Other liabilities

 

 

13,656

 

 

16,268

Total liabilities

 

 

3,733,956

 

 

3,594,340

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding

 

 

 -

 

 

 -

Common stock, $0.01 par value, 90,000,000 shares authorized; 37,213,087 and 37,165,674 shares issued at June 30, 2017 and December 31, 2016, respectively; 37,035,087 and 36,987,674 shares outstanding at June 30, 2017 and December 31, 2016, respectively

 

 

372

 

 

372

Capital surplus

 

 

384,119

 

 

382,961

Retained earnings

 

 

69,237

 

 

49,127

Accumulated other comprehensive income, net

 

 

(734)

 

 

(725)

Less treasury stock, at cost, 178,000 shares at both June 30, 2017 and December 31, 2016

 

 

(1,253)

 

 

(1,253)

Total shareholders’ equity

 

 

451,741

 

 

430,482

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

4,185,697

 

$

4,024,822

See notes to interim condensed consolidated financial statements.

5


 

Table of Contents

GREEN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST INCOME:

 

 

   

 

 

   

 

 

   

 

 

   

Loans, including fees

    

$

38,476

    

$

37,711

    

$

74,847

    

$

75,056

Securities

 

 

3,928

 

 

988

 

 

6,511

 

 

2,069

Other investments

 

 

197

 

 

205

 

 

385

 

 

378

Deposits in financial institutions and fed funds sold

 

 

331

 

 

158

 

 

740

 

 

283

Total interest income

 

 

42,932

 

 

39,062

 

 

82,483

 

 

77,786

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

Transaction and savings deposits

 

 

2,230

 

 

1,312

 

 

4,208

 

 

2,462

Certificates and other time deposits

 

 

3,786

 

 

3,702

 

 

7,393

 

 

6,465

Subordinated debentures and subordinated notes

 

 

1,051

 

 

243

 

 

2,092

 

 

480

Other borrowed funds

 

 

560

 

 

264

 

 

842

 

 

610

Total interest expense

 

 

7,627

 

 

5,521

 

 

14,535

 

 

10,017

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

 

35,305

 

 

33,541

 

 

67,948

 

 

67,769

PROVISION FOR LOAN LOSSES

 

 

1,510

 

 

11,000

 

 

7,655

 

 

27,000

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

 

 

33,795

 

 

22,541

 

 

60,293

 

 

40,769

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

2,199

 

 

1,447

 

 

4,465

 

 

2,851

Loan fees

 

 

1,106

 

 

719

 

 

1,940

 

 

1,418

Gain on sale of available-for-sale securities, net

 

 

294

 

 

 -

 

 

294

 

 

 -

Gain on held-for-sale loans, net

 

 

222

 

 

 -

 

 

84

 

 

41

Gain on sale of guaranteed portion of loans, net

 

 

878

 

 

858

 

 

2,805

 

 

1,996

Other

 

 

1,000

 

 

758

 

 

1,606

 

 

1,631

Total noninterest income

 

 

5,699

 

 

3,782

 

 

11,194

 

 

7,937

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

12,653

 

 

11,461

 

 

25,059

 

 

23,440

Occupancy

 

 

2,048

 

 

2,035

 

 

4,045

 

 

4,065

Professional and regulatory fees

 

 

1,899

 

 

2,435

 

 

4,296

 

 

4,357

Data processing

 

 

995

 

 

945

 

 

1,903

 

 

1,915

Software license and maintenance

 

 

438

 

 

528

 

 

927

 

 

1,004

Marketing

 

 

163

 

 

301

 

 

362

 

 

599

Loan related

 

 

301

 

 

801

 

 

901

 

 

1,044

Real estate acquired by foreclosure, net

 

 

223

 

 

381

 

 

515

 

 

681

Other

 

 

891

 

 

1,788

 

 

2,442

 

 

3,057

Total noninterest expense

 

 

19,611

 

 

20,675

 

 

40,450

 

 

40,162

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

19,883

 

 

5,648

 

 

31,037

 

 

8,544

PROVISION FOR INCOME TAXES

 

 

6,985

 

 

2,017

 

 

10,927

 

 

3,074

NET INCOME

 

$

12,898

 

$

3,631

 

$

20,110

 

$

5,470

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.35

 

$

0.10

 

$

0.54

 

$

0.15

Diluted

 

$

0.35

 

$

0.10

 

$

0.54

 

$

0.15

 

See notes to interim condensed consolidated financial statements.

6


 

Table of Contents

GREEN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

    

$

12,898

    

$

3,631

    

$

20,110

    

$

5,470

OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX:

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gain (loss) on securities available-for-sale

 

 

1,562

 

 

55

 

 

(14)

 

 

971

Total other comprehensive income (loss) before tax

 

 

1,562

 

 

55

 

 

(14)

 

 

971

 

 

 

 

 

 

 

 

 

 

 

 

 

DEFERRED TAX EXPENSE (BENEFIT) RELATED TO OTHER COMPREHENSIVE INCOME (LOSS)

 

 

547

 

 

19

 

 

(5)

 

 

340

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

 

 

1,015

 

 

36

 

 

(9)

 

 

631

COMPREHENSIVE INCOME

 

$

13,913

 

$

3,667

 

$

20,101

 

$

6,101

 

See notes to interim condensed consolidated financial statements.

 

 

7


 

Table of Contents

GREEN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Capital

 

Retained

 

Accumulated
Other
Comprehensive

 

Treasury

 

 

 

 

    

Shares

    

Amount

    

Surplus

    

Earnings

    

Income (Loss)

    

Stock

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE — January 1, 2016

    

36,788

 

$

368

 

$

378,518

 

$

50,099

 

$

417

 

$

 -

 

$

429,402

Net income

 

 -

 

 

 -

 

 

 -

 

 

5,470

 

 

 -

 

 

 -

 

 

5,470

Net change in unrealized gains and losses on available-for-sale securities, net of taxes of $340 and reclassification adjustment

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

631

 

 

 -

 

 

631

Purchase of treasury stock

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(1,253)

 

 

(1,253)

Issuance of common stock in connection with exercise of stock options

 

 -

 

 

 -

 

 

71

 

 

 -

 

 

 -

 

 

 -

 

 

71

Stock-based compensation expense

 

 -

 

 

 -

 

 

620

 

 

 -

 

 

 -

 

 

 -

 

 

620

BALANCE — June 30, 2016

 

36,788

 

$

368

 

$

379,209

 

$

55,569

 

$

1,048

 

$

(1,253)

 

$

434,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE — January 1, 2017

 

36,988

 

$

372

 

$

382,961

 

$

49,127

 

$

(725)

 

$

(1,253)

 

$

430,482

Net income

 

 -

 

 

 -

 

 

 -

 

 

20,110

 

 

 -

 

 

 -

 

 

20,110

Net change in unrealized gains and losses on available-for-sale securities, net of tax benefits of $5 and reclassification adjustment

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(9)

 

 

 -

 

 

(9)

Issuance of common stock in connection with exercise of stock options

 

225

 

 

 -

 

 

456

 

 

 -

 

 

 -

 

 

 -

 

 

456

Stock-based compensation expense

 

 -

 

 

 -

 

 

702

 

 

 -

 

 

 -

 

 

 -

 

 

702

BALANCE — June 30, 2017

 

37,213

 

$

372

 

$

384,119

 

$

69,237

 

$

(734)

 

$

(1,253)

 

$

451,741

 

See notes to interim condensed consolidated financial statements.

 

 

 

8


 

Table of Contents

GREEN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

   

 

 

 

Net income

    

$

20,110

    

$

5,470

Adjustments to reconcile net income to net cash provided (used) by operating activities:

 

 

 

 

 

 

Amortization and accretion of premiums and discounts on securities, net

 

 

542

 

 

427

Accretion of loan discounts, net

 

 

(2,470)

 

 

(4,579)

Amortization of deposit premiums

 

 

(567)

 

 

(1,532)

Amortization of core deposit intangibles

 

 

760

 

 

804

Amortization and accretion of borrowing and debt valuation allowance, net

 

 

210

 

 

79

Amortization of issuance costs of subordinated notes

 

 

72

 

 

 -

Provision for loan losses

 

 

7,655

 

 

27,000

Depreciation

 

 

1,048

 

 

1,251

Net gain on sale of available-for-sale securities

 

 

(294)

 

 

 -

Net loss on sale of real estate acquired by foreclosure

 

 

147

 

 

61

Net gain on loans held-for-sale

 

 

(84)

 

 

(41)

Net gain on sale of guaranteed portion of loans

 

 

(2,805)

 

 

(1,996)

Originations of loans held-for-sale

 

 

 -

 

 

(1,094)

Proceeds from sales of and principal collected on loans held-for-sale

 

 

13,903

 

 

1,519

Writedown of real estate acquired by foreclosure

 

 

185

 

 

 -

Stock-based compensation expense

 

 

1,059

 

 

509

Deferred tax benefit

 

 

(1,201)

 

 

(6,397)

Decrease (increase) in accrued interest receivable and other assets, net

 

 

15,222

 

 

(1,288)

Increase (decrease) in accrued interest payable and other liabilities, net

 

 

(3,473)

 

 

2,250

Net cash provided by operating activities

 

 

50,019

 

 

22,443

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Proceeds from the maturities or calls and paydowns of available-for-sale securities

 

 

37,329

 

 

79,210

Proceeds from the sale of available-for-sale securities

 

 

279,168

 

 

 -

Purchases of available-for-sale securities

 

 

(729,200)

 

 

 -

Proceeds from the maturities or calls and paydowns of held-to-maturity securities

 

 

3,815

 

 

4,419

Purchases of held-to-maturity securities

 

 

 -

 

 

(1,963)

Proceeds from sales of guaranteed portion of loans

 

 

33,606

 

 

22,375

Proceeds from sales of real estate acquired by foreclosure

 

 

3,967

 

 

6,265

Purchases of Federal Home Loan Bank of Dallas stock, net of redemptions

 

 

(7,329)

 

 

6,129

Purchases of Federal Reserve Bank stock

 

 

(24)

 

 

(3,729)

Net increase in loans held for investment

 

 

(68,624)

 

 

(93,767)

Investment in construction of premises and purchases of other fixed assets

 

 

(212)

 

 

(221)

Net cash (used in) provided by investing activities

 

 

(447,504)

 

 

18,718

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Net increase (decrease) in deposit accounts

 

 

(13,711)

 

 

108,045

Net decrease in securities sold under agreements to repurchase

 

 

1,728

 

 

154

Net proceeds (repayments) of other short-term borrowed funds

 

 

155,000

 

 

(64,250)

Proceeds from other long-term borrowed funds

 

 

 -

 

 

50,000

Repayment of other long-term borrowed funds

 

 

 -

 

 

(58,884)

Proceeds from issuance of common stock due to exercise of stock options

 

 

456

 

 

71

Purchase of treasury stock

 

 

 -

 

 

(1,253)

Net cash provided by financing activities

 

 

143,473

 

 

33,883

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

$

(254,012)

 

$

75,044

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS:

 

 

 

 

 

 

Beginning of period

 

 

389,007

 

 

124,906

End of period

 

$

134,995

 

$

199,950

 

 

 

 

 

 

 

NONCASH ACTIVITIES:

 

 

 

 

 

 

Noncash investing and financing activities - acquisition of real estate through foreclosure of collateral

 

$

5,270

 

$

420

Transfer of loans to held-for-sale

 

$

7,860

 

$

6,253

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

 

 

Interest paid

 

$

15,108

 

$

11,139

Income taxes paid

 

$

7,300

 

$

7,500

 

See notes to interim condensed consolidated financial statements.

 

 

9


 

Table of Contents

GREEN BANCORP, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017

(Unaudited)

1. BASIS OF PRESENTATION

The interim condensed consolidated financial statements include the accounts of Green Bancorp, Inc. (“Green Bancorp”), together with Green Bank, N.A., its subsidiary bank, (the “Company”).  All intercompany transactions and balances have been eliminated. 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial information.  In the opinion of management, the interim statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are of a normal recurring nature.  These financial statements and the accompanying notes should be read in conjunction with the financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or any other period. 

Organization—Green Bancorp is a Texas corporation that was incorporated on October 20, 2004. In 2006 Green Bancorp entered into an agreement and plan of merger with Redstone Bank, National Association (“Redstone Bank”), a national banking association located in Houston, Texas, for the purpose of acquiring all of the issued and outstanding stock of Redstone Bank. The acquisition was completed on December 31, 2006, and Green Bancorp became a bank holding company registered under the Bank Holding Company Act of 1956, as amended.

Green Bank, N.A. (the “Bank”) is a national banking association, which was chartered under the laws of the United States of America as a national bank on February 17, 1999, as Redstone Bank. On September 14, 2007, the name was changed to Green Bank, N.A. The Bank provides commercial and consumer banking services in the greater Houston and Dallas metropolitan areas, and Austin, Louisville and Honey Grove.

Use of Estimates—The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period.  The calculation of the allowance for loan losses, the valuation of goodwill and available for sale securities, acquired assets and liabilities and the calculation of stock based compensation are estimates particularly susceptible to significant change in the near term.  Actual results could differ from those estimates.

2. EARNINGS PER COMMON SHARE

Basic earnings per common share is computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period.

Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method. Outstanding stock options issued by the Company represent the only dilutive effect reflected in diluted weighted average shares. In the event of a net loss, the outstanding stock options are excluded from the diluted earnings per common share calculation due to their anti-dilutive effect and the diluted net loss per common share would equal the basic net loss per common share. 

10


 

Table of Contents

GREEN BANCORP, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2017

(Unaudited)

The following table illustrates the computation of basic and diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended  June 30,

 

Six Months Ended  June 30,

 

 

2017

 

2016

 

2017

 

2016

 

 

Amount

 

Per
Share
Amount

 

Amount

 

Per
Share
Amount

 

Amount

 

Per
Share
Amount

 

Amount

 

Per
Share
Amount

 

 

(Amounts in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

   

$

12,898

   

 

 

   

$

3,631

   

 

 

   

$

20,110

   

 

 

   

$

5,470

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

37,023

 

$

0.35

 

 

36,613

 

$

0.10

 

 

37,007

 

$

0.54

 

 

36,660

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add incremental shares for: