Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): April 26, 2018

Green Bancorp, Inc.
(Exact name of registrant as specified in its charter)

 
 
 
 
 
 
 
 
 
 
TEXAS
(State or other jurisdiction
of incorporation)
001-36580
(Commission File Number)
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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company x
 
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. x





Item 2.02. Result of Operations and Financial Condition
On April 26, 2018, Green Bancorp, Inc. publicly disseminated a press release announcing its financial results as of and for the first quarter ended March 31, 2018.  A copy of the press release and the related presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, hereto and incorporated herein by reference.
The press release includes certain non−GAAP (generally accepted accounting principles) financial measures that Green Bancorp, Inc.’s management uses to evaluate its performance. Specifically, the release includes tangible book value per common share, the tangible common equity to tangible assets ratio, the return on average tangible common equity ratio, allowance for loan losses less allowance for loan losses on acquired loans to total loans held for investment excluding acquired loans, allowance for loan losses plus acquired loans net discount to total loans held for investment adjusted for acquired loan net discount, operating earnings, pre-tax, pre-provision operating earnings, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio.   The earnings release furnished as Exhibit 99.1 hereto includes a reconciliation the non-GAAP measures to the most directly comparable GAAP financial measure.
The information furnished in Item 2.02, Exhibit 99.1 and Exhibit 99.2 of the Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
 
(d) Exhibits.  The following is furnished as an exhibit to this Current Report on Form 8-K:

Exhibit
Number
 
Description of Exhibit
 
 
 
 
Press Release issued by Green Bancorp, Inc. dated April 26, 2018
 
 
 
 
First Quarter 2018 Earnings Presentation dated April 26, 2018






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date: April 26, 2018














































 
Green Bancorp, Inc.
 
/s/ Terry S. Earley
Terry S. Earley
Executive Vice President and Chief Financial Officer






Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12206499&doc=24




PRESS RELEASE
FOR IMMEDIATE RELEASE


Green Bancorp, Inc. Reports First Quarter 2018 Financial Results
2018 First Quarter Significant Items (GAAP)
First quarter 2018 net income totaled $9.4 million, or $0.25 per diluted common share
First quarter 2018 efficiency ratio was 50.81%
First quarter 2018 net interest margin expanded 23 bps to 3.87% from 3.64% during fourth quarter 2017
Noninterest-bearing deposits increased $46.1 million during Q1 2018 and now comprise 24.6% of total deposits
2018 First Quarter Significant Items (Non-GAAP)
First quarter 2018 net operating earnings totaled $9.7 million, or $0.26 per diluted share
First quarter 2018 operating efficiency ratio was 49.90%
Pre-tax, pre-provision operating return on average assets (annualized) was 2.10% for Q1 2018, representing the 4th consecutive quarter over 2.00%
Houston, TX – April 26, 2018 – Green Bancorp, Inc. (NASDAQ: GNBC), the bank holding company (“Green Bancorp” or the “Company”) that operates Green Bank, N.A. (“Green Bank”), today announced results for its first quarter ended March 31, 2018.  The Company reported net income for the quarter of $9.4 million, or $0.25 per diluted common share.
Manny Mehos, Chairman and Chief Executive Officer of Green Bancorp, said, “We reported pre-tax, pre-provision operating earnings for the first quarter of $21.7 million, up 8% annualized from the $21.3 million that we reported in the fourth quarter of 2017, which demonstrates the core earnings power of the Bank. While our provision expense was elevated this quarter primarily related to a healthcare credit that moved to nonaccrual, we are confident that our credit profile is stable, our problem loans are isolated, and our NPA trends are expected to show meaningful improvement. Given the confidence in our outlook, our Board of Directors has determined that it is in the best interest of the Company and our shareholders to initiate a regular quarterly cash dividend of $0.10 per share to be paid in May. We believe this decision reflects the Bank’s improved financial performance that we have experienced over the last year which we expect to continue.”
Geoff Greenwade, President of Green Bancorp and Chief Executive Officer of Green Bank, commented, “During the first quarter, we experienced typical seasonal trends which led to a $54.0 million decline in loan balances. Looking forward, the economic backdrop in our primary markets remains favorable and we remain confident in our guidance of 7 to 9% loan growth for the full year 2018. We also continued to make solid progress in growing our core deposit base, as noninterest-bearing deposits increased $46.1 million and now comprise 24.6% of total deposits. The successful execution of our strategy to improve our deposit mix should help to offset some of the deposit price pressures that will come as the Fed continues to raise interest rates.”

1



Results of Operations - Quarter Ended March 31, 2018 compared with Quarter Ended December 31, 2017

Net income for the quarter ended March 31, 2018 was $9.4 million, an increase of $6.7 million, or 257.5%, compared with $2.6 million for the quarter ended December 31, 2017. Net income per diluted common share was $0.25 for the quarter ended March 31, 2018, compared with $0.07 for the quarter ended December 31, 2017. Net income for the quarter ended December 31, 2017 was reduced by income tax expense of $5.8 million related to the deferred tax asset revaluation due to enactment of the Tax Cuts and Jobs Act and $3.1 million in stock-based compensation expense, or $2.0 million net of the related tax benefit, for the accelerated vesting of certain performance options, with no comparable expenses in the quarter ended March 31, 2018. During the quarter ended March 31, 2018, provision for loan losses increased $5.3 million, which was offset by increases of $1.4 million in net interest income and $1.2 million in noninterest income.  Provision for income taxes decreased during the current quarter due to lower pre-tax net income and the reduction in the statutory tax rate to 21% effective January 1, 2018. Returns on average assets and average common equity, each on an annualized basis, for the three months ended March 31, 2018 were 0.90% and 8.15%, respectively. Green Bancorp’s efficiency ratio, which represents noninterest expense divided by the sum of net interest income and noninterest income, was 50.81% for the three months ended March 31, 2018.

Net interest income before provision for loan losses for the quarter ended March 31, 2018 increased $1.4 million, or 3.9%, to $38.2 million, compared with $36.8 million for the quarter ended December 31, 2017.  The increase in net interest income was comprised of a $1.9 million, or 4.2%, increase in interest income, offset by a $500 thousand, or 5.9%, increase in interest expense. Net interest margin for the quarter ended March 31, 2018 was 3.87%, compared with 3.64% for the quarter ended December 31, 2017.  

Noninterest income for the quarter ended March 31, 2018 was $5.2 million, an increase of $1.2 million, or 31.3%, from $3.9 million for the quarter ended December 31, 2017.  The increase was primarily due to a $1.1 million net loss on held for sale loans in the prior quarter, with no loss recorded in the current quarter, offset by $707 thousand decrease in gain on sale of guaranteed portion of loans.

Noninterest expense for the quarter ended March 31, 2018 was $22.1 million, a decrease of $1.5 million, or 6.5%, from $23.6 million for the quarter ended December 31, 2017.  The decrease was primarily due to a $1.4 million decrease in salaries and employee benefits, a $585 thousand decrease in loan related expenses, offset by a $575 thousand increase in the reserve for unfunded commitments. The $1.4 million decrease in salaries and employee benefits is primarily due to the $3.1 million in stock-based compensation expense for the accelerated vesting of certain performance options recorded in the quarter ended December 31, 2017, which was offset by additional stock-based compensation expense of $1.2 million in the current quarter. The additional stock-based compensation expense in the current quarter includes $701 thousand related to new awards issued during the restructuring of the remaining performance options and an increase of $335 thousand related to stock appreciation rights.

Total loans, which includes loans held for investment and loans held for sale, at March 31, 2018 were $3.1 billion, a decrease of $53.8 million, or 1.7%, when compared with December 31, 2017.  The decrease is primarily due to a $34.4 million decrease in mortgage warehouse loans, $27.6 million decrease in commercial and industrial loans and a $16.2 million reduction in construction and land loans, offset by a $20.1 million increase in owner occupied commercial real estate loans.  At March 31, 2018, energy loans totaled $50.0 million, or 1.6% of total loans. SBA loans comprise the balance of loans held for sale at March 31, 2018.

Deposits at March 31, 2018 were $3.5 billion, an increase of $56.6 million, or 1.7%, compared with December 31, 2017.  The net increase is comprised of increases of $46.1 million, or 5.7%, in noninterest-bearing deposits, $6.4 million in interest-bearing transaction and savings deposits and $4.1 million in time deposits.  Noninterest-bearing deposits totaled 24.6% of total deposits at March 31, 2018. Average deposits decreased $73.5 million, or 2.1%, for the quarter ended March 31, 2018, compared with the prior quarter.


2



Asset Quality - Quarter Ended March 31, 2018 compared with Quarter Ended December 31, 2017

Nonperforming assets totaled $84.7 million, or 2.00% of period end total assets, at March 31, 2018, an increase of $13.1 million, compared with $71.6 million, or 1.68% of period end total assets, at December 31, 2017.  The increase was primarily due to the downgrade of a syndicated healthcare credit. Accruing loans classified as troubled debt restructures and included in the nonperforming asset totals were $13.6 million at March 31, 2018, compared with $13.1 million at December 31, 2017.  Real estate acquired through foreclosure totaled $802 thousand at March 31, 2018.

The allowance for loan losses was 1.22% of total loans held for investment at March 31, 2018, compared with 0.98% of total loans held for investment at December 31, 2017.  At March 31, 2018, the Company’s allowance for loan losses to total loans held for investment, excluding acquired loans that are accounted for under ASC 310-20 and ASC 310-30 and their related allowance, was 1.36%.  Further, the allowance for loan losses plus acquired loan net discount to total loans held for investment adjusted for acquired loan net discount was 1.33% as of March 31, 2018.

The Company recorded a provision for loan losses of $9.7 million for the quarter ended March 31, 2018 up from the $4.4 million provision for loan losses recorded for the quarter ended December 31, 2017.  The first quarter of 2018 provision was primarily due to the addition of specific reserves, with $3.8 million related to energy loans and $5.9 million to a syndicated healthcare credit. Uncertainty related to loans in the counties affected by Hurricane Harvey has significantly diminished as we continue to monitor the loans initially identified as having some level of impact. 

Net charge-offs were $2.7 million, or 0.08% of average loans, for the quarter ended March 31, 2018, compared with net charge-offs of $6.7 million, or 0.22% of average loans, for the quarter ended December 31, 2017. Net charge-offs included partial charge-offs of $2.7 million in energy production loans during the quarter ended March 31, 2018, a decrease from $6.2 million for the quarter ended December 31, 2017.
Dividend Information
On April 25, 2018, Green Bancorp’s Board of Directors declared the initiation of a regular quarterly cash dividend of $0.10 per share on its outstanding shares of common stock, payable on May 24, 2018 to shareholders of record as of May 10, 2018.
Non-GAAP Financial Measures

Green Bancorp’s management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance.  Specifically, Green Bancorp reviews tangible book value per common share, the tangible common equity to tangible assets ratio, the return on average tangible common equity ratio, allowance for loan losses less allowance for loan losses on acquired loans to total loans held for investment excluding acquired loans, allowance for loan losses plus acquired loans net discount to total loans held for investment adjusted for acquired loan net discount, operating earnings, pre-tax, pre-provision operating earnings, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio.  Green Bancorp has included in this Earnings Release information related to these non-GAAP financial measures for the applicable periods presented.  Please refer to the “Notes to Financial Highlights” at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Green Bancorp will hold a conference call today, April 26, 2018, to discuss its first quarter results at 5:00 p.m. (Eastern Time).  The conference call can be accessed live over the phone by dialing 1-877-407-0789, or for international callers, 1-201-689-8562 and requesting to be joined to the Green Bancorp First Quarter Earnings Conference Call.  A replay will be available starting at 8:00 p.m. (Eastern Time) on April 26, 2018 and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671.  The passcode for the replay is 13678215.  The replay will be available until 11:59 p.m. (Eastern Time) on May 3, 2018.

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


3



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

About Green Bancorp, Inc.

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

Forward Looking Statement

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

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made.  These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information.  By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.

Statements about the expected timing, completion and effects of the proposed transactions and all other statements in this release other than historical facts constitute forward-looking statements.

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

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


Media & Investor Relations Contacts:
Geoff Greenwade
 
Terry Earley
President
 
Chief Financial Officer
713-275-8203
 
713-316-3672
ggreenwade@greenbank.com
 
tearley@greenbank.com

4


Green Bancorp, Inc.
Financial Highlights
(Unaudited)


 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Period End Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
142,144

 
$
140,681

 
$
179,463

 
$
134,995

 
$
255,581

Securities
 
729,146

 
718,814

 
707,989

 
718,750

 
589,468

Other investments
 
38,157

 
27,283

 
22,443

 
26,002

 
19,057

 
 
 
 
 
 
 
 
 
 
 
Loans held for sale
 
7,461

 
7,156

 
17,673

 
18,030

 
17,350

Loans held for investment
 
3,136,336

 
3,190,485

 
3,071,761

 
3,123,355

 
3,012,275

Total Loans
 
3,143,797

 
3,197,641

 
3,089,434

 
3,141,385

 
3,029,625

Allowance for loan losses
 
(38,233
)
 
(31,220
)
 
(33,480
)
 
(31,991
)
 
(31,936
)
Goodwill
 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

Core deposit intangibles, net
 
8,187

 
8,503

 
8,835

 
9,215

 
9,595

Real estate acquired through foreclosure
 
802

 
802

 
802

 
921

 
1,356

Premises and equipment, net
 
23,694

 
24,002

 
29,733

 
30,108

 
30,604

Other assets
 
92,262

 
90,119

 
70,415

 
71,021

 
83,359

Total assets
 
$
4,225,247

 
$
4,261,916

 
$
4,160,925

 
$
4,185,697

 
$
4,072,000

 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
849,297

 
$
803,210

 
$
684,329

 
$
683,656

 
$
705,480

Interest-bearing transaction and savings deposits
 
1,337,973

 
1,331,601

 
1,383,514

 
1,324,307

 
1,404,988

Certificates and other time deposits
 
1,266,457

 
1,262,332

 
1,340,410

 
1,352,459

 
1,305,670

Total deposits
 
3,453,727

 
3,397,143

 
3,408,253

 
3,360,422

 
3,416,138

Securities sold under agreements to repurchase
 
4,948

 
5,173

 
5,867

 
5,221

 
4,316

Other borrowed funds
 
230,000

 
325,000

 
215,000

 
305,000

 
150,000

Subordinated debentures and subordinated notes
 
47,878

 
47,737

 
47,596

 
47,454

 
47,304

Other liabilities
 
19,816

 
23,068

 
21,898

 
15,859

 
16,954

Total liabilities
 
3,756,369

 
3,798,121

 
3,698,614

 
3,733,956

 
3,634,712

Shareholders' equity
 
468,878

 
463,795

 
462,311

 
451,741

 
437,288

Total liabilities and equity
 
$
4,225,247

 
$
4,261,916

 
$
4,160,925

 
$
4,185,697

 
$
4,072,000




5


Green Bancorp, Inc.
Financial Highlights
(Unaudited)

 
 
For the Quarter Ended
 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Income Statement Data:
 
 
 
 
 
 
 
 
 
 
Interest income:
 
 
 
 
 
 
 
 
 
 
Loans, including fees
 
$
41,799

 
$
39,870

 
$
39,549

 
$
38,476

 
$
36,371

Securities
 
4,558

 
4,446

 
4,337

 
3,928

 
2,583

Other investments
 
300

 
241

 
221

 
197

 
188

Deposits in financial institutions and fed funds sold
 
493

 
671

 
432

 
331

 
409

Total interest income
 
47,150

 
45,228

 
44,539

 
42,932

 
39,551

Interest expense:
 
 
 
 
 
 
 
 
 
 
Transaction and savings deposits
 
2,464

 
2,588

 
2,502

 
2,230

 
1,978

Certificates and other time deposits
 
4,071

 
4,017

 
4,042

 
3,786

 
3,607

Subordinated debentures and subordinated notes
 
1,079

 
1,065

 
1,059

 
1,051

 
1,041

Other borrowed funds
 
1,294

 
738

 
657

 
560

 
282

Total interest expense
 
8,908

 
8,408

 
8,260

 
7,627

 
6,908

Net interest income
 
38,242

 
36,820

 
36,279

 
35,305

 
32,643

Provision for loan losses
 
9,663

 
4,405

 
2,300

 
1,510

 
6,145

Net interest income after provision for loan losses
 
28,579

 
32,415

 
33,979

 
33,795

 
26,498

Noninterest income:
 
 
 
 
 
 
 
 
 
 
Customer service fees
 
2,395

 
2,273

 
2,365

 
2,199

 
2,266

Loan fees
 
833

 
704

 
871

 
1,106

 
834

(Loss) gain on sale of available-for-sale securities, net
 

 

 
(332
)
 
294

 

(Loss) gain on held for sale loans, net
 

 
(1,098
)
 
(1,294
)
 
222

 
(138
)
Gain on sale of guaranteed portion of loans, net
 
941

 
1,648

 
1,302

 
878

 
1,927

Other
 
989

 
401

 
478

 
1,000

 
606

Total noninterest income
 
5,158

 
3,928

 
3,390

 
5,699

 
5,495

Noninterest expense:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
13,601

 
14,996

 
12,487

 
12,653

 
12,406

Occupancy
 
2,077

 
2,069

 
2,080

 
2,048

 
1,997

Professional and regulatory fees
 
2,261

 
2,241

 
2,331

 
1,899

 
2,397

Data processing
 
972

 
981

 
924

 
995

 
908

Software license and maintenance
 
716

 
636

 
464

 
438

 
489

Marketing
 
176

 
259

 
154

 
163

 
199

Loan related
 
47

 
632

 
271

 
301

 
600

Real estate acquired by foreclosure, net
 
12

 
30

 
159

 
223

 
292

Other
 
2,191

 
1,738

 
1,197

 
891

 
1,551

Total noninterest expense
 
22,053

 
23,582

 
20,067

 
19,611

 
20,839

Income before income taxes
 
11,684

 
12,761

 
17,302

 
19,883

 
11,154

Provision for income taxes
 
2,322

 
10,142

 
5,895

 
6,985

 
3,942

Net income
 
$
9,362

 
$
2,619

 
$
11,407

 
$
12,898

 
$
7,212






6


Green Bancorp, Inc.
Financial Highlights
(Unaudited)

 
 
For the Quarter Ended
 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Per Share Data (Common Stock):
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.25

 
$
0.07

 
$
0.31

 
$
0.35

 
$
0.19

Diluted earnings per share
 
0.25

 
0.07

 
0.31

 
0.35

 
0.19

Book value per common share
 
12.62

 
12.50

 
12.46

 
12.20

 
11.81

Tangible book value per common share (1)
 
10.10

 
9.97

 
9.93

 
9.65

 
9.25

 
 
 
 
 
 
 
 
 
 
 
Common Stock Data:
 
 

 
 

 
 

 
 

 
 

Shares outstanding at period end
 
37,163

 
37,103

 
37,096

 
37,035

 
37,015

Weighted average basic shares outstanding for the period
 
37,341

 
37,103

 
37,056

 
37,023

 
36,990

Weighted average diluted shares outstanding for the period
 
37,586

 
37,393

 
37,332

 
37,264

 
37,238

 
 
 
 
 
 
 
 
 
 
 
Selected Performance Metrics:
 
 
 
 
 
 
 
 
 
 
Return on average assets(2)
 
0.90
%
 
0.25
%
 
1.10
%
 
1.26
%
 
0.73
%
Pre-tax, pre-provision operating return on average assets(1)(2)
 
2.10

 
2.01

 
2.04

 
2.04

 
1.76

Return on average equity(2)
 
8.15

 
2.23

 
9.90

 
11.62

 
6.71

Return on average tangible common equity(1)(2)
 
10.47

 
3.02

 
12.74

 
15.04

 
8.88

Efficiency ratio
 
50.81

 
57.87

 
50.59

 
47.83

 
54.64

Loans to deposits ratio
 
90.81

 
93.92

 
90.13

 
92.95

 
88.18

Net interest margin
 
3.87

 
3.64

 
3.65

 
3.63

 
3.47

Noninterest expense to average assets(2)
 
2.13

 
2.23

 
1.93

 
1.92

 
2.10

 
 
 
 
 
 
 
 
 
 
 
Selected Performance Metrics - Operating:(1)
 
 
 
 
 
 
 
 
 
 
Diluted operating earnings per share
 
$
0.26

 
$
0.14

 
$
0.33

 
$
0.34

 
$
0.20

Operating return on average assets (2)
 
0.93
%
 
0.50
%
 
1.20
%
 
1.23
%
 
0.74
%
Operating return on average tangible common equity(2)
 
10.81

 
5.90

 
13.89

 
14.66

 
8.99

Operating efficiency ratio
 
49.90

 
47.69

 
46.49

 
49.09

 
54.28

 
 
 
 
 
 
 
 
 
 
 
Green Bancorp Capital Ratios:
 
 
 
 
 
 
 
 
 
 
Average shareholders’ equity to average total assets
 
11.1
%
 
11.1
%
 
11.1
%
 
10.9
%
 
10.8
%
Tier 1 capital to average assets (leverage)
 
9.8

 
9.5

 
9.5

 
9.3

 
9.1

Common equity tier 1 capital
 
10.9

 
10.5

 
10.6

 
10.1

 
10.0

Tier 1 capital to risk-weighted assets
 
11.2

 
10.9

 
11.0

 
10.5

 
10.4

Total capital to risk-weighted assets
 
13.3

 
12.7

 
12.9

 
12.4

 
12.3

Tangible common equity to tangible assets(1)
 
9.1

 
8.9

 
9.1

 
8.7

 
8.6

 
 
 
 
 
 
 
 
 
 
 
Green Bank Capital Ratios:
 
 
 
 
 
 
 
 
 
 
Tier 1 capital to average assets (leverage)
 
10.4
%
 
10.1
%
 
10.1
%
 
9.6
%
 
9.1
%
Common equity tier 1 capital
 
12.0

 
11.6

 
11.8

 
10.9

 
10.4

Tier 1 capital to risk-weighted assets
 
12.0

 
11.6

 
11.8

 
10.9

 
10.4

Total capital to risk-weighted assets
 
13.0

 
12.4

 
12.6

 
11.7

 
11.2


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

7


Green Bancorp, Inc.
Financial Highlights
(Unaudited)

 
 
For the Quarter Ended
 
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
 
 
Average
Outstanding
Balance
 
Interest
Earned/
Interest
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Interest
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Interest
Paid
 
Average
Yield/
Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
3,128,803

 
$
41,799

 
5.42
%
 
$
3,082,005

 
$
39,870

 
5.13
%
 
$
3,035,146

 
$
36,371

 
4.86
%
Securities
 
719,843

 
4,558

 
2.57

 
713,137

 
4,446

 
2.47

 
571,875

 
2,583

 
1.83

Other investments
 
32,191

 
300

 
3.78

 
23,359

 
241

 
4.09

 
18,908

 
188

 
4.03

Interest earning deposits in financial institutions and federal funds sold
 
124,487

 
493

 
1.61

 
197,454

 
671

 
1.35

 
186,418

 
409

 
0.89

Total interest-earning assets
 
4,005,324

 
47,150

 
4.77
%
 
4,015,955

 
45,228

 
4.47
%
 
3,812,347

 
39,551

 
4.21
%
Allowance for loan losses
 
(32,234
)
 
 
 
 
 
(33,708
)
 
 
 
 
 
(27,669
)
 
 
 
 
Noninterest-earning assets
 
231,110

 
 
 
 
 
221,858

 
 
 
 
 
232,066

 
 
 
 
Total assets
 
$
4,204,200

 
 
 
 
 
$
4,204,105

 
 
 
 
 
$
4,016,744

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings deposits
 
$
1,301,898

 
$
2,464

 
0.77
%
 
$
1,387,873

 
$
2,588

 
0.74
%
 
$
1,382,680

 
$
1,978

 
0.58
%
Certificates and other time deposits
 
1,262,644

 
4,071

 
1.31

 
1,290,277

 
4,017

 
1.24

 
1,325,329

 
3,607

 
1.10

Securities sold under agreements to repurchase
 
5,200

 
2

 
0.16

 
5,153

 
2

 
0.15

 
3,494

 
1

 
0.12

Other borrowed funds
 
314,833

 
1,292

 
1.66

 
237,989

 
736

 
1.23

 
160,778

 
281

 
0.71

Subordinated debentures and subordinated notes
 
47,814

 
1,079

 
9.15

 
47,673

 
1,065

 
8.86

 
47,550

 
1,041

 
8.88

Total interest-bearing liabilities
 
2,932,389

 
8,908

 
1.23
%
 
2,968,965

 
8,408

 
1.12
%
 
2,919,831

 
6,908

 
0.96
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand deposits
 
785,784

 
 
 
 
 
745,707

 
 
 
 
 
644,212

 
 
 
 
Other liabilities
 
20,012

 
 
 
 
 
23,574

 
 
 
 
 
17,006

 
 
 
 
Total liabilities
 
3,738,185

 
 
 
 
 
3,738,246

 
 
 
 
 
3,581,049

 
 
 
 
Shareholders’ equity
 
466,015

 
 
 
 
 
465,859

 
 
 
 
 
435,695

 
 
 
 
Total liabilities and  shareholders’ equity
 
$
4,204,200

 
 
 
 
 
$
4,204,105

 
 
 
 
 
$
4,016,744

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread 
 
 
 
 
 
3.54
%
 
 
 
 
 
3.35
%
 
 
 
 
 
3.25
%
Net interest income and margin(1)
 
 
 
$
38,242

 
3.87
%
 
 
 
$
36,820

 
3.64
%
 
 
 
$
32,643

 
3.47
%

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


8


Green Bancorp, Inc.
Financial Highlights
(Unaudited)

Yield Trend
 
 
For the Quarter Ended
 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
Average yield on interest-earning assets:
 
 
 
 
 
 
 
 
 
 
Loans, including fees
 
5.42
%
 
5.13
%
 
5.11
%
 
5.02
%
 
4.86
%
Securities
 
2.57

 
2.47

 
2.42

 
2.32

 
1.83

Other investments
 
3.78

 
4.09

 
3.37

 
3.45

 
4.03

Interest-earning deposits in financial institutions and federal funds sold
 
1.61

 
1.35

 
1.27

 
1.06

 
0.89

Total interest-earning assets
 
4.77
%
 
4.47
%
 
4.48
%
 
4.42
%
 
4.21
%
 
 
 
 
 
 
 
 
 
 
 
Average rate on interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
Interest-bearing transaction and savings
 
0.77
%
 
0.74
%
 
0.74
%
 
0.66
%
 
0.58
%
Certificates and other time deposits
 
1.31

 
1.24

 
1.19

 
1.16

 
1.10

Other borrowed funds
 
1.64

 
1.20

 
1.11

 
1.01

 
0.70

Subordinated debentures
 
9.15

 
8.86

 
8.84

 
8.90

 
8.88

Total interest-bearing liabilities
 
1.23
%
 
1.12
%
 
1.10
%
 
1.04
%
 
0.96
%
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread
 
3.54
%
 
3.35
%
 
3.38
%
 
3.38
%
 
3.25
%
Net interest margin(1)
 
3.87
%
 
3.64
%
 
3.65
%
 
3.63
%
 
3.47
%

(1)     Net interest margin is equal to net interest income divided by interest-earning assets.
Supplemental Yield Trend
 
 
For the Quarter Ended
 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
Average yield on loans, excluding fees and discounts(2)
 
4.94
%
 
4.74
%
 
4.69
%
 
4.59
%
 
4.42
%
Average cost of interest-bearing deposits
 
1.03

 
0.98

 
0.96

 
0.90

 
0.84

Average cost of total deposits, including noninterest-bearing
 
0.79

 
0.77

 
0.77

 
0.72

 
0.68


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


9


Green Bancorp, Inc.
Financial Highlights
(Unaudited)

Portfolio Composition
 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Period End Balances
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial & industrial
 
$
1,038,715

 
33.1
%
 
$
1,066,266

 
33.4
%
 
$
926,382

 
30.2
%
 
$
930,793

 
29.8
%
 
$
877,228

 
29.1
%
Mortgage warehouse
 
185,849

 
5.9
%
 
220,230

 
6.9
%
 
222,468

 
7.2
%
 
213,539

 
6.8
%
 
135,754

 
4.5
%
Real Estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Owner occupied commercial
 
435,366

 
13.9

 
415,230

 
13.0

 
408,398

 
13.3

 
407,317

 
13.0

 
415,595

 
13.8

Commercial
 
1,068,832

 
34.2

 
1,067,779

 
33.5

 
1,068,742

 
34.8

 
1,109,237

 
35.5

 
1,129,031

 
37.5

Construction, land & land development
 
148,732

 
4.7

 
164,952

 
5.2

 
193,856

 
6.3

 
201,992

 
6.5

 
201,946

 
6.7

Residential mortgage
 
242,529

 
7.7

 
238,580

 
7.5

 
235,089

 
7.7

 
239,834

 
7.7

 
241,839

 
8.0

Consumer and Other
 
16,313

 
0.5

 
17,448

 
0.5

 
16,826

 
0.5

 
20,643

 
0.7

 
10,882

 
0.4

Total loans held for investment
 
$
3,136,336

 
100.0
%
 
$
3,190,485

 
100.0
%
 
$
3,071,761

 
100.0
%
 
$
3,123,355

 
100.0
%
 
$
3,012,275

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Noninterest-bearing
 
$
849,297

 
24.6
%
 
$
803,210

 
23.6
%
 
$
684,329

 
20.1
%
 
$
683,656

 
20.3
%
 
$
705,480

 
20.7
%
Interest-bearing transaction
 
248,680

 
7.2

 
200,769

 
5.9

 
201,860

 
5.9

 
207,106

 
6.2

 
208,213

 
6.1

Money market
 
1,004,174

 
29.0

 
1,041,954

 
30.7

 
1,085,433

 
31.9

 
1,016,453

 
30.3

 
1,089,699

 
31.9

Savings
 
85,119

 
2.5

 
88,878

 
2.6

 
96,221

 
2.8

 
100,748

 
3.0

 
107,076

 
3.1

Certificates and other time deposits
 
1,266,457

 
36.7

 
1,262,332

 
37.2

 
1,340,410

 
39.3

 
1,352,459

 
40.2

 
1,305,670

 
38.2

Total deposits
 
$
3,453,727

 
100.0
%
 
$
3,397,143

 
100.0
%
 
$
3,408,253

 
100.0
%
 
$
3,360,422

 
100.0
%
 
$
3,416,138

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan to Deposit Ratio
 
90.8
%
 
 
 
93.9
%
 
 
 
90.1
%
 
 

 
92.9
%
 
 

 
88.2
%
 
 


10


Green Bancorp, Inc.
Financial Highlights
(Unaudited)

Asset Quality
 
 
As of and for the Quarter Ended
 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Nonperforming Assets:
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
55,565

 
$
47,892

 
$
43,656

 
$
43,257

 
$
59,338

Accruing loans 90 or more days past due
 
5,412

 
375

 
4,828

 
2,651

 
5,500

Restructured loans—nonaccrual
 
9,298

 
9,446

 
10,555

 
19,362

 
10,276

Restructured loans—accrual
 
13,623

 
13,093

 
18,251

 
7,637

 
11,068

Total nonperforming loans held for investment
 
83,898

 
70,806

 
77,290

 
72,907

 
86,182

Nonperforming loans held for sale
 

 

 
14,552

 
1,700

 

Real estate acquired through foreclosure
 
802

 
802

 
802

 
921

 
1,356

Total nonperforming assets
 
$
84,700

 
$
71,608

 
$
92,644

 
$
75,528

 
$
87,538

 
 
 
 
 
 
 
 
 
 
 
Charge-offs:
 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
(2,699
)
 
$
(6,447
)
 
$
(840
)
 
$
(466
)
 
$
(1,312
)
Owner occupied commercial real estate
 

 
(126
)
 

 
(961
)
 

Construction, land & land development
 

 

 

 

 
(95
)
Residential mortgage
 

 
(19
)
 

 

 

Other consumer
 
(24
)
 
(112
)
 
(10
)
 
(126
)
 
(8
)
Total charge-offs
 
(2,723
)
 
(6,704
)
 
(850
)
 
(1,553
)
 
(1,415
)
 
 
 
 
 
 
 
 
 
 
 
Recoveries:
 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
8

 
$
6

 
$
12

 
$
73

 
$
585

Owner occupied commercial real estate
 

 

 

 

 
4

Commercial real estate
 
2

 
1

 
4

 
3

 

Construction, land & land development
 

 
2

 
1

 

 
74

Residential mortgage
 
15

 
27

 
21

 
16

 
57

Other consumer
 
48

 
3

 
1

 
6

 
122

Total recoveries
 
73

 
39

 
39

 
98

 
842

 
 
 
 
 
 
 
 
 
 
 
Net (charge-offs) recoveries
 
$
(2,650
)
 
$
(6,665
)
 
$
(811
)
 
$
(1,455
)
 
$
(573
)
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses at end of period
 
$
38,233

 
$
31,220

 
$
33,480

 
$
31,991

 
$
31,936

 
 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
 
2.00
%
 
1.68
%
 
2.23
%
 
1.80
%
 
2.15
%
Nonperforming loans to total loans held for investment
 
2.68

 
2.22

 
2.52

 
2.33

 
2.86

Total classified assets to total regulatory capital
 
27.99

 
28.61

 
32.21

 
28.70

 
38.00

Allowance for loan losses to total loans held for investment
 
1.22

 
0.98

 
1.09

 
1.02

 
1.06

Net charge-offs (recoveries) to average loans outstanding
 
0.08

 
0.22

 
0.03

 
0.05

 
0.02



11



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:
 
 
Mar 31, 2018
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands, except per share data)
Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
 
$
468,878