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Mike Barone

713-275-8243

mbarone@greenbank.com 

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PRESS RELEASE

FOR IMMEDIATE RELEASE

Green Bancorp, Inc. Reports Fourth Quarter 2015 and Record Full Year 2015 Earnings

2015 Fourth Quarter Highlights

2015 Full Year Highlights

Houston, TX – January 29, 2016– 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 fourth quarter and year ended December 31, 2015.  The Company reported net income for the quarter of $2.6 million, or $0.07 per diluted common share, compared to net income of $2.0 million or $0.08 per diluted common share reported for the same period in 2014.    Excluding one-time acquisition expenses, net income for the fourth quarter 2015 would have been $4.6 million or $0.13 per diluted common share, compared to $4.8 million or $0.18 per diluted common share reported for the same period in 2014.

Manny Mehos, Chairman and Chief Executive Officer of Green Bancorp said, “While the drop in oil prices has resulted in a moderation of growth in the local Houston economy, we continue to experience opportunities for attractively priced loan generation in industries that are not directly impacted by the slowing energy sector. We have immediately recognized significant bottom-line impact from the Patriot merger and we believe we enter 2016 poised to post strong earnings.”

Geoff Greenwade, President of Green Bancorp and Chief Executive Officer of Green Bank remarked, “We are very pleased with the merger with Patriot and the integration of the bank, so far.  We have quickly made the necessary personnel decisions and achieved significantly all of the 40% costs saves that we previously outlined.”

Results of operations for the quarter ended December 31, 2015 

Net income for the quarter ended December 31, 2015 was $2.6 million, compared with $2.0 million for the same period in 2014. Net income per diluted common share was $0.07 for the quarter ended December 31, 2015, compared with $0.08 for the same period in 2014.  The increase in net income was principally due to increased interest income resulting from growth in loans offset by the increase in provision for loan losses and noninterest expense due to the Patriot merger.    Excluding the one-time acquisition expenses, net income for the quarter would have been  $4.6 million, or $0.13 per diluted common share.  Returns on average assets and average common equity, each on an annualized basis, for the three months ended December 31, 2015 were 0.27% and 2.38%, respectively. Green Bancorp’s efficiency ratio, which represents noninterest expense divided by the sum of net interest income and noninterest income, was 54.66% for the three months ended December 31, 2015.    Excluding the impact of one-time acquisition expenses, returns on average assets and average common equity, each on an annualized basis, would have been 0.49% and 4.28%, respectively, and the efficiency ratio would have been 49.96% for the three months ended December 31, 2015.

Net interest income before provision for loan losses for the quarter ended December 31, 2015, was $35.0 million, an increase of $14.7 million, or 72.6%, compared with $20.3 million during the same period in 2014.  The increase was primarily due to a 75.7% increase in average loan volume largely driven by the Patriot merger. The net interest margin for the quarter ended December 31, 2015 was 3.92%, compared with 3.92% for the same period in 2014. Average noninterest-bearing deposits for the quarter ended December 31, 2015 were $648.0 million, an increase of $229.3 million compared with the same period in 2014,  and an increase of $166.1 million compared to the quarter ended September 30, 2015. Average shareholders’ equity for the quarter ended December 31, 2015 was $429.5 million, an increase of $142.9 million compared with the same period in 2014, and an increase of $128.2 million compared to the quarter ended September 30, 2015.

Net interest income before provision for loan losses during the quarter ended December 31, 2015 increased 65.4% or $13.8 million, compared with $21.2 million for the quarter ended September 30, 2015,  primarily due to a 58.6% increase in average loan volume primarily driven by the Patriot merger. The net interest margin for the quarter ended December 31, 2015 of 3.92% increased from 3.63% for the quarter ended September 30, 2015.  Increases in noninterest-bearing deposits and shareholders’ equity contributed to the improvement in the net interest margin. The increase in net interest margin from the prior quarter was primarily due to higher loan yield resulting from higher discount accretion.  

Noninterest income for the quarter ended December 31, 2015 was $4.3 million, an increase of $2.2 million, or 100.1%, compared with $2.1 million for the same period in 2014.  This increase was primarily due to a $772 thousand gain on sale of available-for-sale securities, a $482 thousand increase in customer service fees and a $377 thousand increase in gain on sale of guaranteed portion of loans. When comparing the quarter ended December 31, 2015 to the quarter ended September 30, 2015, noninterest income increased $1.4 million, or 48.9%, from $2.9 million.

Noninterest expense for the quarter ended December 31, 2015 was $21.5 million, an increase of $3.6 million, or 20.1%, compared with $17.9 million for the same period in 2014.  The increase was primarily due to increases related to ongoing acquired Patriot operations.  Other increases in noninterest expense were offset by the $2.4 million decrease in one-time acquisition expenses.  When comparing the quarter ended December 31, 2015 to the quarter ended September 30, 2015, noninterest expense increased 49.4%, or $7.1 million, from $14.4 million, primarily due to increases related to ongoing acquired Patriot operations.

Loans held for investment at December 31, 2015 were $3.1 billion, an increase of $1.3 billion, or 74.0%, compared with $1.8 billion at December 31, 2014,  primarily due to the Patriot merger, which was finalized at the beginning of the fourth quarter 2015 and continued opportunities for our portfolio bankers to generate new loans and expand existing relationships within our target markets.  Loans held for investment at December 31, 2015 increased $1.1 billion, or 57.9%,

from September 30, 2015 primarily due to the Patriot merger.  Excluding loans acquired in the Patriot merger based on the merger date balance, loans increased $67.3 million or 3.4%  and $250.4 million or 13.9% from September 30, 2015 and December 31, 2014, respectively.  Average loans held for investment increased 75.7% or $1.3 billion to $3.0 billion for the quarter ended December 31, 2015, compared with $1.7 billion for the same period in 2014. Average loans held for investment for the quarter ended December 31, 2015 increased 58.6% or $1.1 billion from the quarter ended September 30, 2015.

Deposits at December 31, 2015 were $3.1 billion, an increase of $1.3 billion, or 68.0%, compared to December 31, 2014,  primarily due to $1.1 billion related to the Patriot merger and $117.4 million increase in our commercial deposits.    Deposits at December 31, 2015 increased $1.2 billion or 59.7% from September 30, 2015 due primarily to the Patriot merger.  Excluding the deposits acquired through the Patriot merger, period-end deposits at December 31, 2015 increased $73.1 million or 3.8% and $168.5 million or 9.1% from September 30, 2015 and December 31, 2014, respectively. Noninterest-bearing deposits at December 31, 2015 were $643.4 million, an increase of $211.4 million, or 48.9%, compared to December 31, 2014 and an increase of $144.3 million, or 28.9%, compared to September 30, 2015.  Average deposits increased 69.8% or $1.2 billion to $3.0 billion for the quarter ended December 31, 2015, compared with the same period of 2014. Average noninterest bearing deposits for the quarter ended December 31, 2015 were $648.0 million, an increase of $229.3 million compared with the same period in 2014, and an increase of $166.1 million compared with the quarter ended September 30, 2015.

Results of operations for the year ended December 31, 2015 

Net income for the year ended December 31, 2015 was $15.4 million, compared with $14.7 million for the same period in 2014. Net income per diluted common share was $0.53 for the year ended December 31, 2015, compared with $0.64 for the same period in 2014.  The increase in net income was principally due to increased interest income resulting from growth in loans.  The increase was offset by an increase in provision for loan losses and an increase in noninterest expense primarily resulting from the Patriot merger.    Returns on average assets and average common equity, each on an annualized basis, for the year ended December 31, 2015 were 0.58% and 4.68%, respectively. Green Bancorp’s efficiency ratio was 60.27% for the  year ended December 31, 2015. Excluding the impact of the one-time acquisition expenses, returns on average assets and average common equity, would have been 0.73% and 5.90% and the efficiency ratio would have been 55.83% for the twelve months ended December 31, 2015.    

Net interest income before provision for loan losses for the year ended December 31, 2015, was $97.6 million an increase of $27.4 million, or 39.1%, compared with $70.2 million during the same period in  2014.  The increase was primarily due to a 43.4% increase in average loan volume due to organic loan growth, the SharePlus acquisition, the Patriot merger and a 13 basis point decrease in the costs of interest-bearing deposits, partially offset by a 16 basis point decrease in loan yields. The net interest margin for the year ended December 31, 2015 decreased to 3.84%, compared with 3.88% for the same period in 2014. Average noninterest-bearing deposits for the year ended December 31, 2015  were $513.5 million, an increase of $166.2 million compared with the same period in 2014. Average shareholders’ equity for the year ended December 31, 2015 was $330.0 million, an increase of $97.1 million compared with the same period in 2014.

Noninterest income for year ended December 31, 2015 was $12.2 million, an increase of $4.1 million, or 51.3%, compared with $8.1 million for the same period in 2014.  This increase was primarily due to a $1.3 million increase in customer service fees, a $772 thousand gain on sale of available for sale securities, a $617 thousand increase in gain on sale of the guaranteed portion of certain loans, a $452 thousand increase in loan fees and a  $377 thousand increase in gain on sale of held for sale loans.

Noninterest expense for the year ended December 31, 2015, was $66.2 million, an increase of $13.7 million, or 26.2%, compared with $52.4 million for the same period in 2014.  The increase in noninterest expense is mainly due to recurring expenses related to the Patriot merger, the SharePlus acquisition, and related to being a public company.

Average loans held for investment increased 43.3% or $648.7 million to $2.1 billion for year ended December 31, 2015, compared with $1.5 billion for the same period in 2014.  Average deposits increased 38.2% or $603.0 million to $2.2 billion for the year ended December 31, 2015, compared with the same period of 2014.

Asset Quality 

Nonperforming assets totaled $57.2 million or  1.51% of period end total assets at December 31, 2015, up from $12.0 million or 0.55% of period end total assets at December 31, 2014, and $36.3 million or 1.50% of period end total assets at September 30, 2015.  The increases were due primarily to energy-related migration to nonperforming during the third and fourth quarter 2015 and the addition of $10.5 million in real estate acquired through foreclosure that was acquired through the Patriot merger.  Accruing loans classified as troubled debt restructures and included in the nonperforming asset totals were $6.0 million at  December 31, 2015, compared with $2.3 million at December 31, 2014 and $6.0 million at September 30, 2015.

The allowance for loan losses was 1.05% of total loans at December 31, 2015, compared with 0.87% of total loans at December 31, 2014 and 1.05% of total loans at September 30, 2015.  The increase in the percentage when compared to December 31, 2014 was largely due to an increase in specific reserves.  At December 31, 2015, the Company’s allowance for loans losses to total loans excluding acquired loans that are accounted for under ASC 310-20 and ASC 310-30 was 1.70%.  Further, the allowance for loan losses plus acquired loan net discount to total loans adjusted for acquired loan net discount was 1.85% as of December 31, 2015.

The Company recorded a provision for loan losses of $12.5 million for the quarter ended December 31, 2015 up from the $3.1 million provision for the loan losses recorded for the quarter ended September 30, 2015.    The fourth quarter provision reflects the addition of specific reserves on energy related credits.  The provision for loan losses was $17.9 million for year ended December 31, 2015, compared with $2.7 million for the  year ended December 31, 2014.

Net charge offs were $277 thousand for the quarter ended December 31, 2015, compared with net charge offs of $622 thousand for the quarter ended September 30, 2015,  and net charge offs of $907 thousand for the quarter ended December 31, 2014. Net charge offs were $522 thousand, or 0.02% of average loans outstanding, for year ended December 31, 2015, compared with net charge offs of $3.4 million for the year ended December 31, 2014.

Acquisition of SP Bancorp, Inc.

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

Merger with Patriot Bancshares, Inc.

On October 1, 2015, Green Bancorp completed the previously announced merger of Patriot Bancshares, Inc. (“Patriot”) and its wholly-owned subsidiary, Patriot Bank.  Patriot, headquartered in Houston, TX, operated six locations in Houston, two in Dallas and one in Fannin County, Texas.  As of September 30, 2015, Patriot, on a consolidated basis, reported total assets of $1.4 billion, total loans of $1.1 billion, total deposits of $1.1 billion and total shareholders’ equity of $125.2 million.

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

Non-GAAP Financial Measures

Green Bancorp’s management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Green Bancorp reviews tangible book value per common share,  the tangible

common equity to tangible assets ratio, allowance for loan losses to total loans excluding acquired loans, allowance for loan losses plus acquired loans net discount to total loans adjusted for acquired loan net discount, selected metrics excluding one-time acquisition expenses and pre-tax, pre-provision adjusted net income.  Green Bancorp has included in this Earnings Release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to the “Notes to Financial Highlights” at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.

Capital Management

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

Conference Call

As previously announced, Green Bancorp will hold a conference call today, January 29, 2016, to discuss its fourth quarter 2015 results at 9:00 a.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 Fourth Quarter 2015 Earnings Conference Call.  A replay will be available starting at 12:00 pm Eastern Time on January 29, 2016 and can be accessed by dialing 1-877-870-5176, or for international callers, 1-858-384-5517. The passcode for the replay is 13628482.  The replay will be available until 11:59 pm Eastern Time on February 5, 2016.

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

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

About Green Bancorp, Inc.

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

Forward Looking Statement

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

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements. Statements about the expected timing, completion and effects of the proposed transactions and all other statements in this release other than historical facts constitute forward-looking statements.

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

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

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

(2)Common equity tier 1 capital ratio is a new ratio required under the Basel III Capital Rules effective January 1, 2015.