trending Market Intelligence /marketintelligence/en/news-insights/trending/QycaWwRxA8tBmCbtoS8qUw2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us
In This List

Exiting energy lending, Green Bancorp eyes MOEs

Banking Essentials Newsletter - November Edition

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery

StreetTalk – Episode 70: Banks' Liquidity Conundrum Could Fuel M&A Activity


Exiting energy lending, Green Bancorp eyes MOEs

Houston-basedGreen Bancorp Inc.views its initiative to eliminate energy loan exposure as the best strategicapproach to position it to continue with its organic growth and return toopportunistic M&A, Chairman and CEO Manny Mehos said April 28 during aconference call to discuss first-quarter results.

Theinitiative, dubbedManaged Asset Reduction Strategy, aims to remove what the company called"temporary roadblock" to the execution of its growth plan due largelyto the energy market.

"[W]ebelieve our existing capital, reserves, purchase discount on acquired loans,and core earnings are sufficient to fund our MARS initiative," Mehos said,according to a transcript. "Although 2016 earnings will be negativelyimpacted, we believe a substantial reduction in energy and classified assetsresulting from this strategy will position us to continue all aspects of ourgrowth plan beginning in early 2017,"he added.

The chief executive also talked about the company'scontinued desire to exceed the $5 billion threshold in terms of asset size — along-term strategic goal now hindered by the "overhang from thechallenging energy market."

"We want to get to $5 billion. We've always talkedabout some sort of exit down the road or merger of equals. And a volatilecommodity like energy doesn't fit. So, we're better off pursuing the rest ofour portfolio, which is doing very well," Mehos stated. He emphasized:"[G]oing forward, we can still build this bank to $5 billion very fastwithout energy."

GreenBancorp hopes to return to the M&A market by the end of 2016, and wants todo more merger-of-equals transactions, Mehos said.

" was somewhat of ajunior MOE. They were a substantial organization, and we loved . It turned out much better than weexpected because the earnings turned out better," Mehos said. "[W]ehad 40% cost saves. We want to do another. We want to do more MOEs. They workreally well in Texas. And we can't do it with our stock price where it is,"he said in response to a question from an analyst.

The companysaid that first-quarter net income was $1.8 million, or 5 cents per share,compared to the year-ago period's $4.6 million, or 18 cents per share.