Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Green Bancorp, Inc. | gnbcfirstquartermarch312018i.pdf |
| 8-K - 8-K - Green Bancorp, Inc. | gnbc-form8xk_5x4x2018.htm |
First Quarter
March 31, 2018
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, 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, net operating earnings, diluted operating earnings per share, net pre-tax pre-
provision operating earnings, pre-tax pre-provision operating return on average assets, operating earnings on average assets, operating earnings
adjusted for amortization of core deposit intangibles, operating return on average tangible common equity, operating efficiency ratio. 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 March 31, 2018
Asset Quality – Quarter Ended March 31, 2018
Profitability – Quarter Ended March 31, 2018
Total Assets $4,225
Total Loans $3,144
Total Deposits $3,454
Tangible Book Value Per Common Share $10.10
NPAs / Total Assets 2.00%
NCOs / Average Loans 0.08%
ROAA 0.90%
ROATCE 10.47%
Efficiency Ratio 50.81%
Listing NASDAQ: GNBC
Market Capitalization (May 1, 2018) $834
Total Branches 21
$ in millions, except per share
Overview Branch Map
5
First Quarter 2018 Significant Items
• Net income totaled $9.4 million, or $0.25 per diluted common share, in the first quarter of
2018, up from $2.6 million, or $0.07 per diluted common share, in the fourth quarter of 2017
• First quarter 2018 results were negatively impacted by $0.4 million, or $0.01 per diluted
common share (net of tax), in expenses related to the shelf and secondary offering, which
was completed in February
• Operating fully-diluted earnings per share were $0.26
o First quarter 2018 results were negatively impacted by $9.7 million in provision for loan
losses, of which $3.8 million was related to energy loans and $5.9 million was related to
the downgrade of a syndicated healthcare credit
• The operating efficiency ratio was 49.90% in the first quarter of 2018 and represented the
fourth consecutive quarter below 50.00%
• The net interest margin was 3.87% in the first quarter of 2018, up 23 basis points from 3.64%
in the fourth quarter of 2017
• Noninterest bearing deposits increased by $46.1 million during the first quarter of 2018 and
now comprise 24.6% of total deposits
• Pre-tax, pre-provision operating return on average assets was 2.10% (annualized) in the first
quarter of 2018, representing the fourth consecutive quarter above 2.00%
• Subsequent to the end of the first quarter, the Board of Directors approved the Company’s
first regular quarterly cash dividend of $0.10 per share, to be paid in May 2018
6
Fully Diluted EPS and TBVPS
$9.25
$9.65
$9.93 $9.97
$10.10
$9.00
$9.25
$9.50
$9.75
$10.00
$10.25
$10.50
1Q17 2Q17 3Q17 4Q17 1Q18
Tangible Book Value Per Share
Earnings Per Share
$0.19
$0.35
$0.31
$0.07
$0.25
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
1Q17 2Q17 3Q17 4Q17 1Q18
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
• 1Q18 pre-tax, pre-provision (PTPP) operating return of $21.7 million, representing an annualized PTPP
return on average assets of 2.10% vs. 2.01% for 4Q17
• 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 $50.0 million over two years
• Energy loans (including HFS) represent 1.6% of total loans as of March 31, 2018 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
3%
13%
41%15%
28%
Banking Staff
(as of March 31, 2018)
Private Banker - 3
Business Banker - 11
Commercial Banker - 35
Specialty Banker - 13
Deposit Relationship
Manager - 24
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 $67.5 billion
• Crude oil prices have recovered since their lows in 1Q16,
driving stabilization in the production market:
MSA
Deposits
($ in billions)
(Top 25 Rank 1)
2018-2023 Est.
Pop. Growth
(Top 25 Rank 1)
2018-2023 Est.
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 496 411 +21%
United States 993 824 +21%
Sources: Baker Hughes; oil rig count data as of March 29, 2018 (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)
200
230
260
290
320
350
Sep-07 Mar-09 Sep-10 Mar-12 Sep-13 Mar-15 Sep-16 Mar-18
Texas Business Cycle Index 330.1
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 Forecast
$ in millions, Source: BEA, Federal Deposit Insurance Corporation, Perryman Group, Texas Workforce Commission, Greater Houston Partnership
Housto
n
53%
Dallas
33%
Other
14%
Branches Bankers Deposits
Houston
58%
Dallas
38%
Other
4%
Regional Distribution as of March 31, 2018
Total Branches: 21 Total Bankers: 86 Total Deposits: $3,454
Housto
n
53%
Dallas
37%
Other
10%
11
Loan Portfolio Overview
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 53% and Dallas 22%
• Diversified loan portfolio with no concentration to any
single industry in excess of 10% of total loans
• Large number of lending relationships with no significant
borrower concentration
Loan Portfolio Composition
$ in millions, loan balance and corresponding percentages exclude HFS loans, (*) Central TX denotes Austin, San Antonio and San Marcos
Acquired
14%
Originated
86%
Loan Portfolio Detail as of March 31, 2018
By Class By Regional Distribution*
Dallas
22%
Houston
53%
Central TX, 8%
Remaining TX, 9%
Other 8%
CRE to Total Risk Based Capital
$383 $409 $435 $444 $465
$1,324 $1,300 $1,252 $1,224 $1,209
345%
318%
288%
276%
260%
250%
275%
300%
325%
350%
375%
400%
$0
$250
$500
$750
$1,000
$1,250
$1,500
1Q17 2Q17 3Q17 4Q17 1Q18
Total RBC CRE Ratio
6 %7 %7 %7 %4 %
33 %33 %30 %30 %29 %
14 %13 %13 %13 %14 %
39 %39 %41 %42 %44 %
8 %8 %8 %8 %8 %
<1%<1%1 %1 %1 %
1Q184Q173Q172Q171Q17
Mtge. Warehouse C&I Owner Occ. CRE
CRE Consumer & Other Held for Sale
$3,030 $3,141 $3,089 $3,198 $3,144
12
Investment Portfolio Overview
Highlights
• Both cash and securities portfolio balances increased in
1Q18:
— Securities increased to $729 million at March 31,
2018 from $719 million at December 31, 2017
— Securities comprised 84% of total cash and securities
at March 31, 2018, unchanged from December 31,
2017
• Average yield of the securities portfolio was 2.57% in
1Q18, up 10 bps from 2.47% in 4Q17
Portfolio Distribution *
Total Cash & Securities
Sector Allocation Coupon Type
Cash & Sec.
% of Assets
21 % 20 % 21 % 20 % 21 %
$ in millions, (*) denotes portfolio distribution based on investment portfolio par value as of March 31, 2018, 2 denotes securities excl. other investments
84 %84 %80 %84 %
70 %
16 %16 %20 %16 %
30 %
$ 871 $ 859
$ 887
$ 854 $ 845
1Q184Q173Q172Q171Q17
Securities² Cash
MBS
44%
CMO
38%
Corp.
2%
SBA
15%
Tax-free
Muni.
1%
Fixed
85%
Adj.
15%
13
Deposits & Liquidity
Highlights
• Deposits comprised ~80% of overall funding at March
31, 2018
— Total deposits increased by $57 million or 1.7% during
1Q18, to $3.5 billion
— Cost of deposits was 0.79% in 1Q18 up just 2 basis
points from 4Q17
• Loan to Deposit ratio was 90.8% at March 31, 2018 and is
below the target level of 95%
• Noninterest-bearing deposits increased by $46 million
and comprised 25% of deposits as of March 31, 2018
Average Cost of Total Deposits Loan to Deposit Ratio
Deposit Composition
$ in millions
21% 20% 20% 24% 25%
6% 6% 6% 6%
7%
35% 33% 35% 33%
32%
38% 40% 39% 37% 37%
$ 3,416 $ 3,360 $ 3,408 $ 3,397 $ 3,454
1Q17 2Q17 3Q17 4Q17 1Q18
Noninterest-bearing Interest-bearing transaction
MMDA and savings Certificates and other time88.2%
92.9%
90.1%
93.9%
90.8%
1Q17 2Q17 3Q17 4Q17 1Q18
100%
0.68% 0.72%
0.77% 0.77% 0.79%
1Q17 2Q17 3Q17 4Q17 1Q18
14
Asset Quality
• Nonperforming assets (NPAs) totaled $84.7 million or 2.00% of period end total assets at
March 31, 2018, compared to $71.6 million or 1.68% of period end total assets at December
31, 2017, primarily due to the downgrade of a syndicated healthcare credit
• Allowance for loan losses was 1.22% of total loans held for investment at March 31, 2018,
and the allowance for loan losses plus acquired loan net discount to total loans held for
investment adjusted for acquired loan net discount was 1.33%
• Provision expense for the first quarter of 2018 was $9.7 million, primarily related to specific
reserves, including $3.8 million related to energy loans and $5.9 million to a syndicated
healthcare credit
Asset Quality Allowance for Loan Losses Ratio *
(*) Based on percentage of total gross loans held for investment
1.06% 1.02%
1.09%
0.98%
1.22%
1Q17 2Q17 3Q17 4Q17 1Q18
2.68% 2.22% 2.52% 2.33% 2.86%
2.00%
1.68%
2.23%
1.80%
2.15%
1.20%
0.83% 0.78% 0.76%
0.95%
1Q184Q173Q172Q171Q17
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
• The Company’s total energy exposure stood at $50.0 million or 1.6% of total loans as of
March 31, 2018 comprised of $17.4 million in energy production loans and $32.6 million in
oilfield services loans
− The $50.0 million of energy loans held for investment are being carried at 61% of
outstanding customer principal balance
Energy Portfolio Resolution History
$ 31.5 $ 28.5 $ 27.6
$ 20.1 $ 17.4
$ 62.2
$ 58.7 $ 58.7
$ 32.9 $ 32.6
$ 93.7
$ 87.2 $ 86.3
$ 53.0 $ 50.0
1Q17 (inc. HFS) 2Q17 (inc. HFS) 3Q17 (inc. HFS) 4Q17 1Q18
Energy Production Oilfield Services$ in millions
0.02% 0.05% 0.03%
0.22%
0.08%
-0.02%
0.04% 0.01% 0.02% 0.00%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1Q17 2Q17 3Q17 4Q17 1Q18
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
54.64%
47.83%
50.59%
57.87%
50.81%
54.28%
49.09%
46.49% 47.69%
49.90%
35%
40%
45%
50%
55%
60%
65%
1Q17 2Q17 3Q17 4Q17 1Q18
Reported Operating
0.73%
1.26%
1.10%
0.25%
0.90%
1.76%
2.04% 2.04% 2.01% 2.10%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
1Q17 2Q17 3Q17 4Q17 1Q18
Reported PTPP Operating *
8.88%
15.04%
12.74%
3.02%
10.47%
8.99% 14.66%
13.89%
5.90%
10.81%
0%
5%
10%
15%
20%
1Q17 2Q17 3Q17 4Q17 1Q18
Reported Operating
Efficiency Ratio
Net Interest MarginROAA
ROATCE
3.47%
3.63%
3.65% 3.64%
3.87%
3.25%
3.50%
3.75%
4.00%
1Q17 2Q17 3Q17 4Q17 1Q18
Reported
17
Net Interest Income & Net Interest Margin
$32.6
$35.3
$36.3
$36.8
$38.2
3.47%
3.63% 3.65% 3.64%
3.87%
4.86%
5.02%
5.11% 5.13%
5.42%
4.42%
4.59%
4.69%
4.74%
4.94%
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
$10
$15
$20
$25
$30
$35
$40
$45
1Q17 2Q17 3Q17 4Q17 1Q18
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 increased 23 basis point to 3.87% in
1Q18 driven by:
• Loan yields increased by 29 basis points in
1Q18 driven by:
– The full quarter benefit of the Fed’s
December rate increase, and the partial
quarter benefit of the March rate
increase
– Funded new production rates were 42
basis points higher than the loan yield
excluding fees
– Stronger loan fees and discount accretion
• Improved earning asset mix
• Cost of deposits including noninterest-
bearing was 0.79%, up just 2 basis points
from the prior quarter
– Supported by a continued shift away from
higher cost deposits
Highlights
18
Noninterest Income
40.2% 42.4% 47.1% 45.2% 46.4%
14.8% 21.3% 17.4% 14.0%
16.1%
34.2%
16.9%
26.0% 32.8% 18.2%
10.8%
19.3% 9.5%
8.0%
19.2%
$5.6
$5.2
$5.0 $5.0
$5.2
$0
$1
$2
$3
$4
$5
$6
1Q17 * 2Q17 * 3Q17 * 4Q17 * 1Q18
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 $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
59.5% 64.5% 62.2%
63.6%
61.7%
9.6% 10.4% 10.4%
8.8%
9.4%
11.5% 9.7% 11.6%
9.5%
10.3%
19.4%
15.4% 15.8%
18.1%
18.6%
$20.8
$19.6 $20.1
$23.6
$22.1
$0
$5
$10
$15
$20
$25
1Q17 2Q17 3Q17 4Q17 1Q18
Salaries and Employee Benefits Occupancy Professional & Regulatory Fees Other
Efficiency
Ratio
54.6% 47.8% 50.6% 57.9% 50.8%
$ 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
10.9% 11.2%
13.3%
9.8%
12.0% 12.0%
13.0%
10.4%
CET1 Tier 1 RBC Total RBC T1 Leverage
Holding Company Bank Capital Adequacy Level *
7.0%
Capital $388.8 $427.9 $402.3 $427.9 $475.0 $465.2 $402.3 $427.9
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
• Credit outlook is stable, and NPA trends are expected to show meaningful improvement over
the near term
• Demonstrated ability to grow both loans and deposits organically
• Strong core earnings profile, highlighted by 1Q18 pre-tax, pre-provision (PTPP) operating
return of $21.7 million, representing an annualized PTPP return on average assets (ROAA) of
2.10%
• Asset-sensitive balance sheet is well positioned for rising interest rates, as evidenced by net
interest margin expansion of 23 basis points in 1Q18
• Significant liquidity and capital levels to support future growth
24
Appendix
25
Pre-Tax, Pre-Provision Operating Return
$ in millions
$17.4
$20.9
$21.2 $21.3
$21.7
1.76%
2.04% 2.04%
2.01%
2.10%
1.5%
2.0%
2.5%
3.0%
$10
$15
$20
$25
1Q17 2Q17 3Q17 4Q17 1Q18
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 March 31, 2018 * By Product as of March 31, 2018
CRE vs. ADC as of March 31, 2018
ADC 13%
CRE 87%
Houston 61%Dallas 15%
Other, 2%
Remaining TX, 12%
Central TX, 10%
Multifamily
22%
Office
22%
Industrial Warehouse, 13%
Senior Housing, 5%
Hospitality, 6%
Land, 4%
Residential
Real Estate, 2%
Retail,
26%
$ 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 3.90% – 4.00% *
• FY18 Net Interest Income in the range of $155 – $170 million
• FY18 Provision Expense in the range of $14 – $18 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 – $1.80
• FY18 Loan growth in the range of 7% - 9%
(*) Based on assumption of two additional 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 $1.71 $1.95
Brady Gailey Market Perform $26.00 $1.65 $1.97
Brett Rabatin Overweight $27.00 $1.71 $1.99
Brad Milsaps Buy $26.00 $1.70 $2.05
Michael Young Hold $24.00 $1.69 $2.07
Average $26.00 $1.69 $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
627,059 as of March 31, 2018; 754,110 as of December 31, 2017; 467,257 as of September 30, 2017; 465,281 as of June 30, 2017; and 472,653 as of March
31, 2017.
Tangible Common Equity
Total shareholders’ equity $ 468,878 $ 463,795 $ 462,311 $ 451,741 $ 437,288
Adjustments:
Goodwill 85,291 85,291 85,291 85,291 85,291
Core deposit intangibles 8,187 8,503 8,835 9,215 9,595
Tangible common equity $ 375,400 $ 370,001 $ 368,185 $ 357,235 $ 342,402
Common shares outstanding (1) 37,163 37,103 37,096 37,035 37,015
Book value per common share (1) $ 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
(Dollars in thousands, except per share data)
Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017
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 adjusted for amortization
of core deposit intangibles
Net income $ 9,362 $ 2,619 $ 11,407 $ 12,898 $ 7,212
Adjustments:
Plus: Amortization of core deposit
intangibles 316 330 380 382 380
Less: Tax benefit at the statutory rate 66 133 133 134 133
Net income adjusted for
amortization of core deposit
intangibles $ 9,612 $ 2,833 $ 11,654 $ 13,146 $ 7,459
Average Tangible Common Equity
Tot l average shareholders’ equity $ 466,015 $ 465,859 $ 457,303 $ 445,334 $ 435,695
Adjustments:
Average goodwill 85,291 85,291 85,291 85,291 85,291
Average core deposit intangibles 8,343 8,661 9,065 9,461 9,844
Average tangible common equity $ 372,381 $ 371,907 $ 362,947 $ 350,582 $ 340,560
Return on Average Tangible Common
Equity (Annualized) 10.47 % 3.02 % 12.74 % 15.04 % 8.88 %
(Dollars in thousands)
For the Quarter Ended
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
32
Reconciliation of Allowance for Loan Losses plus Acquired Loans Net
Discount to Total Loans adj. for Acquired Loan Net Discount
Al lowance for loan losses plus acquired loan net
discount
Allowance for loan losses at end of period $ 38,233 $ 31,220 $ 33,480 $ 31,991 $ 31,936
Plus: Net discount on acquired loans 3,495 4,371 5,112 6,240 7,314
Total al lowance plus acquired loan net discount $ 41,728 $ 35,591 $ 38,592 $ 38,231 $ 39,250
Total loans adjusted for acquired loan net
discount
Total loans $ 3,136,336 $ 3,190,485 $ 3,071,761 $ 3,123,355 $ 3,012,275
Plus: Net discount on acquired loans 3,495 4,371 5,112 6,240 7,314
Total loans adjusted for acquired loan net discount $ 3,139,831 $ 3,194,856 $ 3,076,873 $ 3,129,595 $ 3,019,589
Al lowance for loan losses plus acquired loan net
discount loans to total loans adjusted for
acquired loan net discount 1.33 % 1.11 % 1.25 % 1.22 % 1.30 %
(Dollars in thousands)
Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017
33
Reconciliation of Net Operating Earnings and Selected
Performance Metrics
Operating Earnings
Net Income (loss) $ 9,362 $ 2,619 $ 11,407 $ 12,898 $ 7,212
Plus: Loss (gain) on sale of securities available-for-sale, net - - 332 (294) -
Plus: Loss (gain) on held for sale loans, net - 1,098 1,294 (222) 138
Plus: Stock based compensation expense for performance option vesting - 3,051 - - -
Plus: Shelf and secondary offering expenses 397 - - - -
Less: Tax benefit at the statutory rate 83 1,452 569 (181) 48
Net operating earnings $ 9,676 $ 5,316 $ 12,464 $ 12,563 $ 7,302
W eighted average di luted shares outs tanding 37,586 37,393 37,332 37,264 37,238
Di luted earnings ( loss ) per share $ 0.25 $ 0.07 $ 0.31 $ 0.35 $ 0.19
Di luted operating earnings per share 0.26 0.14 0.33 0.34 0.20
Pre-Tax, Pre-Provi s ion Operating Earnings
Net Income $ 9,362 $ 2,619 $ 11,407 $ 12,898 $ 7,212
Plus: Provision for income taxes 2,322 10,142 5,895 6,985 3,942
Plus: Provision for loan losses 9,663 4,405 2,300 1,510 6,145
Plus: Loss (gain) on sale of securities available-for-sale, net — — 332 (294) —
Plus: Loss (gain) on held for sale loans, net — 1,098 1,294 (222) 138
Plus: Stock based compensation expense for performance option vesting — 3,051 — — —
Plus: Shelf and secondary offering expenses 397 - — — —
Net pre- tax, pre-provi s ion operating earnings $ 21,744 $ 21,315 $ 21,228 $ 20,877 $ 17,437
Tota l average assets $ 4,204,200 $ 4,204,105 $ 4,131,706 $ 4,096,386 $ 4,016,744
Pre-Tax, Pre-Provi s ion Operating Return on Average Assets
( annua l i zed) 2.10 % 2.01 % 2.04 % 2.04 % 1.76 %
( Dol la rs in thousands , except per share data )
F or the Quarter Ended
Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017
34
Reconciliation of Net Operating Earnings and Selected
Performance Metrics (Continued)
Average Tota l Assets $ 4,204,200 $ 4,204,105 $ 4,131,706 $ 4,096,386 $ 4,016,744
Return on average assets 0.90 % 0.25 % 1.10 % 1.26 % 0.73 %
Operating Earnings on Average Assets (Annualized) 0.93 0.50 1.20 1.23 0.74
Operating earnings adjus ted f or am orti zation
of core depos i t intang ibles
Operating earnings $ 9,676 $ 5,316 $ 12,464 $ 12,563 $ 7,302
Adjustments:
Plus: Amortization of core deposit intangibles 316 330 380 380 380
Less: Tax benefit at the statutory rate 66 116 133 133 133
Operating earnings adjus ted f or am orti zation
of core depos i t intang ibles $ 9,926 $ 5,530 $ 12,711 $ 12,810 $ 7,549
Average Tang ible Com m on Equi ty
Total average shareholders’ equity $ 466,015 $ 465,859 $ 457,303 $ 445,334 $ 435,695
Adjustments:
Average goodwill 85,291 85,291 85,291 85,291 85,291
Average core deposit intangibles 8,343 8,661 9,065 9,461 9,844
Average tang ible com m on equi ty $ 372,381 $ 371,907 $ 362,947 $ 350,582 $ 340,560
Operating Return on Average Tang ible
Com m on Equi ty ( Annua l i zed) 10.81 % 5.90 % 13.89 % 14.66 % 8.99 %
Ef f i ciency ratio 50.81 % 57.87 % 50.59 % 47.83 % 54.64 %
Operating ef f i ciency ratio 49.90 47.69 46.49 49.09 54.28
( Dol la rs in thousands , except per share data )
F or the Quarter Ended
Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017 Mar 31, 2017