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| 8-K - 8-K GNBC 3 6 2018 - Green Bancorp, Inc. | gnbc-form8xk_3618.htm |
Fourth Quarter and Year Ended
December 31, 2017
Investor Presentation
NASDAQ: GNBC
2
Safe Harbor
The following information contains, or may be deemed to contain, "forward-looking statements" (as defined in the U.S. Private Securities Litigation
Reform Act of 1995) giving Green Bancorp, Inc.’s (“Green Bancorp”) expectations or predictions of future financial or business performance or
conditions. Most forward-looking statements contain words that identify them as forward-looking, such as "plan", "seek", "expect", "intend",
"estimate", "anticipate", "believe", "project", "opportunity", "target", "goal", "growing“, "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 that relate to future
events, as opposed to past or current events, or negatives of such words. By their nature, forward-looking statements are not statements of historical
facts and involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These
statements give Green Bancorp's current expectation of future events or its future performance and do not relate directly to historical or current
events or Green Bancorp's historical or future performance. As such, Green Bancorp's future results may vary from any expectations or goals
expressed in, or implied by, the forward-looking statements included in this presentation, possibly to a material degree.
Green Bancorp cannot assure you that the assumptions made in preparing any of the forward-looking statements will prove accurate or that any long-
term financial goals will be realized. All forward-looking statements included in this presentation speak only as of the date made, and Green Bancorp
undertakes no obligation to update or revise publicly any such forward-looking statements, whether as a result of new information, future events, or
otherwise. In particular, Green Bancorp cautions you not to place undue weight on certain forward-looking statements pertaining to potential growth
opportunities or long-term financial goals set forth herein. Green Bancorp's business is subject to numerous risks and uncertainties, which may cause
future results of operations to vary significantly from those presented herein.
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. Unlisted factors may present significant additional
obstacles to the realization of forward-looking statements.
Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
3
Non-GAAP Financial Information
This document includes the presentation of both GAAP (generally accepted accounting principles) and non-GAAP financial measures. Green Bancorp’s
management uses certain non−GAAP financial measures to evaluate its performance and believes that the presentation of non-GAAP financial
measures is useful to investors because it provides investors with a more complete understanding of Green Bancorp’s operational results and a
meaningful comparison of Green Bancorp’s performance between periods. Non-GAAP financial measures presented in this presentation or other
presentations, press releases and similar documents issued by Green Bancorp may include, but are not limited to, pre-tax pre-provision return on
average assets, net income excluding amortization of core deposit intangibles (net of tax), tangible book value per common share, the return on
average tangible common equity ratio, allowance for loan losses less allowance for loan losses on acquired loans to total loans excluding acquired
loans, and allowance for loan losses plus acquired loans net discount to total loans adjusted for acquired loan net discount. These non-GAAP financial
measures do not have any standardized meaning and, therefore, are unlikely to be comparable to similar measures presented by comparable
companies. Management may use these non-GAAP financial measures to establish operational goals and, in some cases, for measuring the
performance of Green Bancorp. Please refer to the “GAAP to Non-GAAP Reconciliations” in the Annex of this presentation for a reconciliation of non-
GAAP financial measures used in this presentation.
4
Company Snapshot
Company Highlights
• Headquartered in Houston, Texas
• Established in 2006 via merger with Redstone Bank;
completed IPO in 2014
• Focused on commercial and private banking relationships
across a variety of industries, predominantly in the “Texas
Triangle”
Balance Sheet – Quarter Ended December 31, 2017
Asset Quality – Quarter Ended December 31, 2017
Profitability – Year Ended December 31, 2017
Total Assets $4,262
Total Loans $3,198
Total Deposits $3,397
Tangible Book Value Per Common Share $9.97
NPAs / Total Assets 1.68%
NCOs / Average Loans 0.22%
ROAA 0.83%
ROATCE 9.84%
Efficiency Ratio 52.71%
Listing NASDAQ: GNBC
Market Capitalization (February 23, 2018) $851
Total Branches 22
$ in millions, except per share
Overview Branch Map
5
Fourth Quarter 2017 Highlights
• Fourth quarter 2017 net income totaled $2.6 million, or $0.07 per diluted common share
• Fourth quarter 2017 results were negatively impacted by the following:
o $5.8 million in tax expense, or $0.16 per diluted common share for the deferred tax
asset write-off resulting from the 2017 Tax Cuts and Jobs Act
o $3.1 million in salaries and employee benefits expense, $2.0 million net of the related
tax benefit, or $0.05 per diluted common share, for the accelerated vesting of certain
performance options
o $3.2 million in provision for loan losses and $1.1 million in loss on held for sale loans
related to the last two E&P relationships in the portfolio impacted EPS by $0.07 per
diluted common share (net of tax)
• Total loans, including held for investment and held for sale, increased by $108.2 million, up
14.0% annualized from 3Q17, driven by the following loan types:
o Commercial and Industrial (C&I): +$131.4 million
o Commercial Real Estate (CRE): -$28.6 million
o Mortgage Warehouse: +$1.3 million
o Other: +$4.1 million
• Nonperforming assets decreased by $21.0 million to $71.6 million
• Noninterest bearing deposits increased by $118.9 million during 4Q17
• Pre-tax, pre-provision operating return on average assets (annualized) was 2.01% for 4Q17,
representing the third consecutive quarter over 2.00%
6
Fully Diluted EPS and TBVPS
$9.06
$9.25
$9.65
$9.93 $9.97
$8.75
$9.00
$9.25
$9.50
$9.75
$10.00
$10.25
4Q16 1Q17 2Q17 3Q17 4Q17
Tangible Book Value Per Share
Earnings Per Share
$0.61 $0.65
$0.54
$(0.03)
$0.92
-$0.25
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
FY13 FY14 FY15 FY16 FY17
7
Investment Highlights
(*) Represents Houston and Dallas rank amongst the Top 25 largest U.S. MSAs by population
Well Positioned for
Growth
• Scalable platform to support significant organic growth
• Highly skilled bankers in Houston and Dallas metro areas with capacity to drive growth
• Significant liquidity and capital to support growth initiatives
Attractive Core
Markets
• Attractive commercial footprint supported by deposit base that is nearly entirely held in Texas
• Well positioned for growth: core markets of Houston and Dallas rank * in the Top 5 MSAs in the nation
for both estimated 2018-2023 population growth and in the Top 10 for total MSA deposits
Strong Core
Earnings Profile
• Branch-light business model delivers efficient funding
• 4Q17 pre-tax, pre-provision (PTPP) operating return of $21.3 million, representing an annualized PTPP
return on average assets of 2.01% vs. 2.04% for 3Q17
• Asset-sensitive balance sheet benefits from rising interest rates
Capable
Strategic Acquirer
• Track record of disciplined acquisitions and successful integrations
• Acquisitions have provided significant strategic benefits and opportunities
Proactively Managed
Loan Exposure
• Meaningfully reduced energy exposure of $277.4 million to $53.0 million over two years
• Energy loans (including HFS) represent 1.7% of total loans as of December 31, 2017 with E&P only 0.6%
• Managed commercial real estate exposure down to within regulatory guidance over three quarters
Experienced
Management Team
• Management team with significant experience driving the franchise
• Track record of successful strategic acquisitions, proactive management of energy exposure and building
out origination teams to support growth
8
Scalable Platform with Attractive Growth Profile
• Highly productive origination team actively generating
loans and serving as the primary point of contact for our
customers
— Private and business bankers focus on emerging,
affluent and small business customers
— Commercial and specialty bankers focus on C&I, real
estate, mortgage warehouse and SBA loans
• Continue to drive increased productivity of existing
bankers
• Strategic M&A has been an important growth driver
• Disciplined acquisition strategy to supplement organic
growth
• Since 2010:
— Completed 5 transactions
– 3 whole-bank, 2 branch
— Acquired $1.4bn in loans
— Acquired $1.8bn in deposits
Organic Growth Strategic Acquisitions
4%
14%
43%
14%
25%
Banking Staff
(as of December 31, 2017)
Private Banker - 3
Business Banker - 12
Commercial Banker - 36
Specialty Banker - 12
Deposit Relationship
Manager - 21
Total Loans Total Deposits
$1,179 $1,359
$1,548
$2,050
$3,098 $3,190
$26
$251
$1,081
$1,205 $1,359
$1,799
$3,131 $3,098 $3,190
2012 2013 2014 2015 2016 2017
Total Loans Acquired in Period
'12-'17 CAGR: 22%
$1,417 $1,447 $1,576
$1,998
$3,375 $3,397
$44
$270
$1,103
$1,461 $1,447
$1,846
$3,101
$3,375 $3,397
201 2013 2014 2015 2016 2017
Total Deposits Acquired in Period
'12-'17 CAGR: 19%
9
Well Positioned in Attractive Texas Markets
Overview Favorable Demographics
• Texas remains one of the more attractive states in the
U.S. from a demographic and commercial opportunity
perspective:
— Population growth expected to double U.S. average
— If Texas were a sovereign nation, it would be the
world’s 12th largest economy (ahead of Australia and
just behind Canada)
— Pro-business environment with no state income
taxes
— 44 of the 51 Fortune 500 companies headquartered
in Texas are located near either Houston or Dallas
— Texas is the #1 exporter in the nation, exporting
$232 billion in goods in 2016
— Third largest share of domestic travel revenue
generating $67.5 billion
• Crude oil prices have recovered since their recent lows in
1Q16, driving stabilization in the production market:
MSA
Deposits
($ in billions)
(Top 25 Rank 1)
2018-2023
Pop. Growth
(Top 25 Rank 1)
2018-2023
HHI Growth
(Top 25 Rank 1)
Houston, TX $ 241
(#6)
8.3%
(#1)
7.7%
(#24)
Dallas, TX $ 265
(#7)
7.7%
(#4)
9.8%
(#16)
Texas $ 818 7.1% 9.5%
United States $ 11,781 3.5% 8.9%
Continued Strengthening of Texas Economy
Oil Rig Count Current 1-Year Ago % Change
Texas 453 324 +40%
United States 929 658 +41%
Sources: Baker Hughes; oil rig count data as of December 29, 2017 (Note: figures include land,
inland waters and offshore), Texas Office of the Governor (Economic Development and
Tourism) Source: Federal Reserve Bank of Dallas
Source: Federal Deposit Insurance Corporation; S&P Global Market Intelligence (Demographic data
as of September 30, 2017, 1 Represents Houston and Dallas rank amongst the Top 25 largest U.S.
MSAs by population)
326.9
200
230
260
290
320
350
Texas Business Cycle Index
10
Well Positioned in Attractive Texas Markets
Houston Dallas
Trade,
Transportation,
& Utilities
21.0%
Professional
Services
15.2%
Edu. &
Health Svcs.
12.9%
Govt.
13.2%
Leisure &
Hospitality
10.6%
Manufacturing
7.7%
Construction
7.0% Other
12.3%
• 5th most populous MSA in
the U.S. (6.9 million
residents)
• 3rd most headquartered
location for Fortune 500
companies
• Largest export market in
the U.S., with a diverse
economy
• 4th most populous MSA in
the U.S. (7.3 million
residents)
• 4th most headquartered
location for Fortune 500
companies
• Experienced the largest
year-over-year percentage
increase in employment
among MSAs for 2016 2016 2021
$ 353 bn
$ 434 bn
Houston Employment Dallas Real GDP
$ in millions, Source: BEA, Federal Deposit Insurance Corporation, Perryman Group, Texas Workforce Commission, Greater Houston Partnership
Houston
50%Dallas
36%
Other
14%
Branches Bankers Deposits
Houston
63%
Dallas
33%
Other
4%
Regional Distribution as of December 31, 2017
Total Branches: 22 Total Bankers: 84 Total Deposits: $3,397
Houston
54%
Dallas
40%
Other
6%
11
Loan Portfolio Overview
Acquired
16%
Originated
84%
Highlights
• Commercial-focused loan portfolio with over 98% of the
loan portfolio focused on non-energy loans
• In-footprint focus with portfolio primarily distributed
across Houston 54% and Dallas 22%
• Diversified loan portfolio with no concentration to any
single industry in excess of 10% of total loans
• Only 4.1% of the loan portfolio is classified
• Large number of lending relationships with no significant
borrower concentration
Loan Portfolio Detail as of December 31, 2017
Loan Portfolio Composition
By Class By Regional Distribution*
$ in millions, loan balance and corresponding percentages exclude HFS loans, (*) Central TX denotes Austin, San Antonio and San Marcos
Dallas
22%
Houston
54%
Central TX, 8%
Remaining TX, 8%
Other 8%
38 %35 %34 %31 %31 %
2 %2 %2 %3 %3 %
13 %13 %13 %14 %13 %
34 %35 %36 %37 %37 %
5 %6 %6 %7 %8 %
8 %9 %8 %8 %8 %
<1%1 %1 %1 %1 %
4Q173Q172Q171Q174Q16
C&I (ex. Energy) Energy
Owner Occ. CRE Non-Owner Occ. CRE
Constr. and Dev. Consumer & Other
Held for Sale
$3,122 $3,030 $3,141 $3,089 $3,198
Regulatory CRE/Total Risk Based Capital
$372 $383 $409 $435 $444
$1,389
$1,324 $1,300 $1,252 $1,224 373%
345%
318%
288%
276%
250%
275%
300%
325%
350%
375%
400%
$0
$250
$500
$750
$1,000
$1,250
$1,500
4Q16 1Q17 2Q17 3Q17 4Q17
Total RBC CRE Ratio
12
Investment Portfolio Overview
Highlights
• 4Q17 decrease in cash was partially offset by an increase
in securities balances
— Securities increased to $719 million at December 31,
2017 from $708 million at September 30, 2017
— Securities comprised 84% of total cash and securities
at December 31, 2017, up from 80% at September
30, 2017
• Average yield of the securities portfolio was 2.47% in
4Q17, up from 2.42% in 3Q17
Portfolio Distribution *
Total Cash & Securities
Sector Allocation Coupon Type
Cash & Sec.
% of Assets
17 % 21 % 20 % 21 % 20 %
$ in millions, (*) denotes portfolio distribution based on investment portfolio par value as of December 31, 2017, 2 denotes securities excl. other investments
84 %80 %84 %
70 %
44 %
16 %20 %16 %
30 %
56 %
$ 859
$ 887
$ 854 $ 845
$ 699
4Q173Q172Q171Q174Q16
Securities² Cash
Fixed
81%
Adj.
19%
MBS
45%
CMO
38%
Corp.
<1%
1%
SBA
15%
Tax-free
Muni.
1%
13
Deposits & Liquidity
Highlights
• Deposits comprised ~82% of overall funding at
December 31, 2017
— Total deposits decreased by $11 million or 0.3%
during 4Q17, to $3.4 billion
— Cost of deposits was 0.77% in 4Q17 unchanged from
3Q17
• Loan to deposit ratio was 93.9% at December 31, 2017
and is slightly below our targeted level
• Noninterest-bearing deposits increased by $119 million
and comprised 24% of deposits as of December 31, 2017
Average Cost of Total Deposits Loan to Deposit Ratio
Deposit Composition
$ in millions
19% 21% 20% 20% 24%
5% 6% 6% 6%
6%
35% 35% 33% 35%
33%
40% 38% 40% 39% 37%
$ 3,375 $ 3,416 $ 3,360 $ 3,408 $ 3,397
4Q16 1Q17 2Q17 3Q17 4Q17
Noninterest-bearing Interest-bearing transaction
MMDA and savings Certificates and other time
91.8%
88.2%
92.9%
90.1%
93.9%
2016 1Q17 2Q17 3Q17 4Q17
100%
0.66% 0.68%
0.72%
0.77% 0.77%
4Q16 1Q17 2Q17 3Q17 4Q17
14
Asset Quality
• Nonperforming assets (NPAs) totaled $71.6 million or 1.68% of period end total assets at
December 31, 2017 compared to $92.6 million or 2.23% of period end total assets at
September 30, 2017
• Allowance for loan losses was 0.98% of total loans held for investment at December 31,
2017, and the allowance for loan losses plus acquired loan net discount to total loans held for
investment adjusted for acquired loan net discount was 1.11%
• Provision expense for the fourth quarter of 2017 was $4.4 million, primarily related to
specific reserves, including $3.2 million related to energy loans
Asset Quality Allowance for Loan Losses Ratio *
(*) Based on percentage of total gross loans held for investment
0.85%
1.06% 1.02%
1.09%
0.98%
4Q16 1Q17 2Q17 3Q17 4Q17
2.22% 2.52% 2.33% 2.86% 3.05%
1.68%
2.23%
1.80%
2.15%
2.64%
0.83% 0.78% 0.76%
0.95%
1.11%
4Q173Q172Q171Q174Q16
NPLs / Total Loans NPAs / Total Assets
NPAs (Ex-Energy) / Total Assets
15
Overview of Energy Portfolio Progress
Net Charge Offs
• On April 28, 2016, the Company announced its intent to exit energy lending with $277.4
million of energy loans, the primary objective was to de-risk the loan portfolio, reduce
balance sheet volatility and position the company for normalized earnings and growth
• As of December 31, 2017, the Company’s total energy exposure stood at $53.0 million, or
1.7% of total loans, comprised of $20.1 million in energy production loans and $32.9 million
in oilfield services loans
− The $53.0 million of energy loans held for investment are being carried at 67% of
outstanding customer principal balance
− Energy loans of $14.4 million were transferred from loans held for sale to loans held for
investment during December 2017
Energy Portfolio Resolution History
$ 38.0 $ 31.5 $ 28.5 $ 27.6 $ 20.1
$ 81.5
$ 62.2 $ 58.7 $ 58.7
$ 32.9
$ 119.5
$ 93.7
$ 87.2 $ 86.3
$ 53.0
4Q16 (inc. HFS) 1Q17 (inc. HFS) 2Q17 (inc. HFS) 3Q17 (inc. HFS) 4Q17
Energy Production Oilfield Services$ in millions
0.63%
0.02% 0.05% 0.03%
0.22%
0.07%
-0.02%
0.04% 0.01% 0.02%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
4Q16 1Q17 2Q17 3Q17 4Q17
NCOs / Avg. Loans NCOs (Ex-Energy) / Avg. Loans
16
Performance Metrics
(*) Pre-tax, pre-provision operating return on average assets is a non-GAAP measure used by management to evaluate the Company’s financial performance
60.99%
54.64%
47.83%
50.59%
57.87%
45%
50%
55%
60%
65%
70%
4Q16 1Q17 2Q17 3Q17 4Q17
Reported
0.25%
0.73%
1.26%
1.10%
0.25%
1.49%
1.76%
2.09% 2.04% 2.01%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
4Q16 1Q17 2Q17 3Q17 4Q17
Reported PTPP Operating *
3.35%
8.88%
15.04%
12.74%
3.02%
0%
5%
10%
15%
20%
25%
4Q16 1Q17 2Q17 3Q17 4Q17
Reported
Efficiency Ratio
Net Interest MarginROAA
ROATCE
3.40%
3.47%
3.63% 3.65% 3.64%
3.25%
3.50%
3.75%
4.00%
4Q16 1Q17 2Q17 3Q17 4Q17
Reported
17
Net Interest Income & Net Interest Margin
$32.2 $32.6
$35.3
$36.3 $36.8
3.40%
3.47%
3.63% 3.65% 3.64%
4.71%
4.86%
5.02%
5.11% 5.13%
4.29%
4.42%
4.59%
4.69% 4.74%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
$10
$15
$20
$25
$30
$35
$40
4Q16 1Q17 2Q17 3Q17 4Q17
N
et
I
n
te
re
st
M
ar
gi
n
N
et
I
n
te
re
st
In
co
m
e
NII (L) NIM (R) Loan Yield (R) Loan Yield excl. Fees (R)
$ in millions
• NIM decreased 1 basis point to 3.64% in
4Q17
• Loan yields increased by 2 basis points in
4Q17 driven by the Fed’s rate increase in
December
• Cost of deposits including noninterest-
bearing was 0.77%, unchanged compared
to the prior quarter
• 70% of the loan portfolio is eligible for
repricing in Q1 2018
Highlights
Fixed Rate
19%
Rate Reset in
2Q18 or Later
11%
Eligible for
Rate Reset
in 1Q18
70%
Loan Repricing Distribution
18
Noninterest Income
48.6%
40.2% 42.4% 47.1% 45.2%
20.8%
14.8% 21.3% 17.4% 14.0%10.5%
34.2%
16.9%
26.0% 32.8%
20.2%
10.8%
19.3% 9.5%
8.0%
$3.6
$5.6
$5.2
$5.0 $5.0
$0
$1
$2
$3
$4
$5
$6
4Q16 * 1Q17 * 2Q17 * 3Q17 * 4Q17 *
Customer Service Fees Loan Fees Gain on sale of guaranteed portion of loans, net Other
(*) Excluding net loss on the sale of held-for-sale loans of $1.4 million in 4Q16 and $0.1 million in 1Q17, net gain on held-for-sale loans of $0.2 million and
net gain on the sale of available-for-sale securities of $0.3 million in 2Q17, net loss on held-for-sale loans of $1.3 million and net loss on the sale of
available-for-sale securities of $0.3 million in 3Q17, in addition to net loss on held-for-sale loans of $1.1 million in 4Q17
$ in millions
19
Noninterest Expense
56.3% 59.5% 64.5% 62.2%
63.6%
9.8%
9.6% 10.4% 10.4%
8.8%
11.6% 11.5%
9.7% 11.6%
9.5%22.3%
19.4%
15.4% 15.8%
18.1%
$21.0 $20.8
$19.6 $20.1
$23.6
$0
$5
$10
$15
$20
$25
4Q16 1Q17 2Q17 3Q17 4Q17
Salaries and Employee Benefits Occupancy Professional & Regulatory Fees Other
Efficiency
Ratio
61.0% 54.6% 47.8% 50.6% 57.9%
$ in millions
20
Capital Position
(*) denotes fully phased-in capital adequacy to take effect on January 1, 2019, the Basel III Capital Rules will require GNBC to maintain an additional capital
conservation buffer of 2.5% CET1, effectively resulting in minimum ratios of 7.0% CET1, 8.5% Tier 1, 10.5% Total RBC and 4.0% minimum leverage ratio
10.5%
10.9%
12.7%
9.5%
11.6% 11.6%
12.4%
10.1%
CET1 Tier 1 RBC Total RBC T1 Leverage
Holding Company Bank Capital Adequacy Level *
7.0%
Capital $377.3 $415.5 $390.7 $415.5 $455.8 $444.2 $390.7 $415.5
4.0%
10.5%
8.5%
$ in millions
21
Proven Track Record as a Strategic Acquirer
Date Target Value Loans Deposits Branches
October
2015
Patriot $ 139 $ 1,081 $ 1,103 9
October
2014
SharePlus $ 48 $ 251 $ 270 4
May
2012
Opportunity $ 10 $ 26 $ 44 1
October
2011
Main Street — $ 13 $ 168 3
October
2010
La Jolla /
One West
— — $ 188 1
December
2006
Redstone — $ 85 $ 183 2
• Selective use of strategic acquisitions to augment
growth
• Focused on well-managed banks in our target
markets with:
— Favorable market share
— Low-cost deposit funding
— Compelling fee income generating business
— Growth potential
— Other unique attractive characteristics
• Key metrics used when evaluating acquisitions:
— EPS accretion / (dilution)
— TBVPS earn-back
— IRR
• Reputation as an experienced acquirer
• Maintain discipline in pricing and pursue
transactions expected to produce attractive risk
adjusted returns
Overview Acquisition History
22
Experienced Management Team
Manuel J. Mehos
CEO,
Green Bancorp, Inc.
Chairman,
Green Bank
• Former Chairman / CEO / President of
Coastal Bancorp, Inc.
• Securities Sales at Goldman, Sachs & Co.
• CPA at KPMG
• MBA – University of Texas
• BBA – University of Texas
• 30 years of banking
Geoffrey D. Greenwade
President,
Green Bancorp, Inc.
President and CEO,
Green Bank
• Wells Fargo
— Regional Manager of Business Banking
— EVP, Commercial Business Banking
• Bank of America
— Banking Center President
— Lending Manager
• MBA – Baylor University
• BBA – Texas A&M University
• 32 years of banking
Terry S. Earley
EVP and Chief Financial
Officer
• Yadkin – EVP & CFO
• Rocky Mountain Bank – CEO
• RBC Bank (USA) – CFO and COO
• CPA at KPMG
• BSBA – UNC Chapel Hill
• 33 years of banking
Donald S. Perschbacher
EVP and Corporate Chief
Credit Officer
• BBVA Compass Bank – EVP and Credit
Risk Executive
• Guaranty Bank – Executive VP and Chief
Credit Officer
• Bank of America – SVP and Senior
Approval Officer
• BBA in Finance – Texas A&M University
• 32 years of banking
Name and Title Qualification Details Education & Experience
23
Closing Remarks
• Branch-light business model located in attractive major metropolitan markets in Texas
• Scalable platform to accommodate significant organic growth and enhance profitability
• Houston market has broadly recovered from the impact of Hurricane Harvey, the bank
sustained no material impact
• CRE growth capacity supports expectations for stronger loan production and growth
• Demonstrated ability to grow both loans and deposits organically
• Strong core earnings profile, highlighted by 4Q17 pre-tax, pre-provision (PTPP) operating
return of $21.3 million, representing an annualized PTPP return on average assets (ROAA) of
2.01%
• Asset-sensitive balance sheet is well positioned for rising interest rates
• Significant liquidity and capital levels to support future growth
24
Appendix
25
Pre-Tax, Pre-Provision Operating Return
$ in millions
$14.8
$17.4
$21.3 $21.2 $21.3
1.49%
1.76%
2.09%
2.04% 2.01%
1.0%
1.5%
2.0%
2.5%
3.0%
$6
$8
$10
$12
$14
$16
$18
$20
$22
4Q16 1Q17 2Q17 3Q17 4Q17
PTPP Operating Return (L) PTPP Operating ROAA (R)
26
Commercial Real Estate (CRE) Portfolio Detail
(*) Central TX denotes Austin, San Antonio and San Marcos
By Regional Distribution as of December 31, 2017 * By Product as of December 31, 2017
CRE vs. ADC as of December 31, 2017
ADC 14%
CRE 86%
Houston 61%Dallas 14%
Other, 2%
Remaining TX, 13%
Central TX, 10%
Multifamily
23%
Office
21%
Industrial Warehouse, 13%
Senior Housing, 5%
Hospitality, 6%
Land, 4%
Residential
Real Estate, 3%
Retail,
25%
$ in millions, portfolio detail excludes Farmland per CRE guidance regulations, though it is included in financial reporting
27
Financial Guidance
• FY18 Net Interest Margin in the range of 3.80% – 3.95% *
• FY18 Net Interest Income in the range of $155 – $170 million
• FY18 Provision Expense in the range of $11 – $15 million
• FY18 Noninterest Income in the range of $21 – $25 million **
• FY18 Noninterest Expense in the range of $86 – $90 million
• FY18 EPS target in the range of $1.70 – $1.85 *
• FY18 Loan growth in the range of 7% - 9%
(*) Based on assumption of two 25 basis point increase to the Fed Funds target rate in 2018
(**) Excludes loss on held for sale loans and available for sale securities
28
Firm Analyst Rating Price Target
2018E
EPS
2019E
EPS
Brian Zabora Outperform $27.00 $1.76 $1.97
Brady Gailey Market Perform $28.00 $1.78 $1.97
Brett Rabatin Overweight $27.00 $1.76 $2.02
Brad Milsaps Buy $27.00 $1.80 $2.10
Michael Young Hold $24.00 $1.70 $2.00
Average $26.60 $1.76 $2.01
Analyst Coverage
29
GAAP to Non-GAAP Reconciliations
30
Reconciliation of Total Shareholders’ Equity to Tangible
Common Equity
1 Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options. The number of exercisable options outstanding was
754,110 as of December 31, 2017; 467,257 as of September 30, 2017; 465,281 as of June 30, 2017; 472,653 as of March 31, 2017; and 493,241 as of
December 31, 2016.
Tangible Common Equity
Total shareholders ’ equity $ 463,795 $ 462,311 $ 451,741 $ 437,288 $ 430,482
Adjustments :
Goodwi l l 85,291 85,291 85,291 85,291 85,291
Core depos it intangibles 8,503 8,835 9,215 9,595 9,975
Tangible common equity $ 370,001 $ 368,185 $ 357,235 $ 342,402 $ 335,216
Common shares outstanding (1) 37,103 37,096 37,035 37,015 36,988
Book value per common share (1) $ 12.50 $ 12.46 $ 12.20 $ 11.81 $ 11.64
Tangible book value per common share (1) $ 9.97 $ 9.93 $ 9.65 $ 9.25 $ 9.06
(Dollars in thousands, except per share data)
Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016
31
Reconciliation of Avg. Tangible Common Equity to Avg. Common Equity and
Net Income excl. Amortization of Core Deposit Intangibles, Net of Tax to Net
Income
Net income (loss) adjusted for amortization of
core deposit intangibles
Net income (loss ) $ 2,619 $ 11,407 $ 12,898 $ 7,212 $ 2,544 $ 34,136 $ (972)
Adjustments :
Plus : Amortization of core depos it
intangibles 330 380 380 382 382 1,472 1,587
Less : Tax benefi t at the s tatutory rate 116 133 133 134 134 515 555
Net income (loss) adjusted for amortization of
core deposit intangibles $ 2,834 $ 11,654 $ 13,145 $ 7,460 $ 2,792 $ 35,093 $ 60
Aver ge Tangible Common Equity
Total average shareholders ’ equity $ 465,859 $ 457,303 $ 445,334 $ 435,695 $ 427,550 $ 451,147 $ 433,923
Adjustments :
Average goodwi l l 85,291 85,291 85,291 85,291 85,291 85,291 85,290
Average core depos it intangibles 8,661 9,065 9,461 9,844 10,223 9,254 10,818
Average tangible common equity $ 371,907 $ 362,947 $ 350,582 $ 340,560 $ 332,036 $ 356,602 $ 337,815
Return on Average Tangible Common Equity
(Annualized) 3.02 % 12.74 % 15.04 % 8.88 % 3.35 % 9.84 % 0.02 %
(Dollars in thousands)
For the Quarter Ended For the Year Ended
Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Dec 31, 2017 Dec 31, 2016
32
Reconciliation of Allowance for Loan Losses plus Acquired Loans Net
Discount to Total Loans adj. for Acquired Loan Net Discount
Allowance fo loan losses plus acquired loan net discount
Al lowance for loan losses at end of period $ 31,220 $ 33,480 $ 31,991 $ 31,936 $ 26,364
Plus : Net discount on acquired loans 4,371 5,112 6,240 7,314 9,937
Total allowance plus acquired loan net discount $ 35,591 $ 38,592 $ 38,231 $ 39,250 $ 36,301
Total loans adjusted for acquired loan net discount
Total loans $ 3,190,485 $ 3,071,761 $ 3,123,355 $ 3,012,275 $ 3,098,220
Plus : Net discount on acquired loans 4,371 5,112 6,240 7,314 9,937
Total loans adjusted for acquired loan net discount $ 3,194,856 $ 3,076,873 $ 3,129,595 $ 3,019,589 $ 3,108,157
Allowance for loan losses plus acquired loan net discount loans
to total loans adjusted for acquired loan net discount 1.11 % 1.25 % 1.22 % 1.30 % 1.17 %
(Dollars in thousands)
Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016
33
Reconciliation of Pre-Tax, Pre-Provision Return on Avg. Assets