First Quarter

Shows Increase

Of 28 Percent

Green Bankshares, Inc., the holding company for GreenBank, has reported a first quarter 2008 net income of $7,178,000, compared with $5,616,000. That is an increase of almost 28 percent.

The quarterly earnings for Green Bankshares, whose headquarters is in Greeneville, were 56 cents per share on a diluted per-share basis, compared with 57 cents reported a year earlier.

Green Bankshares said, in a press release, "The fundamental year-over-year improvement in the company's net income reflects higher levels of net interest income and non-interest income, which were partially offset by increased non-interest expenses.

"Net interest income for the first quarter of 2008 rose 30 percent to $24,472,000 from $18,821,000 in the year-earlier quarter.

"This was the exclusive result of an increase of $978,000,000 in average earning assets, of which $796,000,000 related to the Civitas (BankGroup) acquisition, as well as $182,000,000 of organic loan growth.

"The quarter's provision for loan losses declined to $888,000 from $974,000 in the first quarter of last year due to loan contraction during the first quarter of 2008 compared with loan growth during the same period a year ago and was influenced further by the higher level of net loan charge-offs in 2008."

Puckett Comments

Stan Puckett, chairman and CEO of Green Bankshares as well as of Green Bank, said in a press release, "The interest rate environment remained challenging in the first quarter of 2008 as the Federal Reserve lowered market rates by 200 basis points or two full percentage points -- the largest quarterly rate reduction since the fourth quarter of 1984.

"As a result, our net interest margin declined 15 basis points in the first quarter on a linked-quarter basis, excluding interest reversals of $651,000 in the fourth quarter of 2007 and $344,000 in the first quarter of 2008."

Puckett continued, "Approximately one-half of our loan portfolio is set at variable rates, which re-priced downward immediately; however, we were not able to re-price certificates of deposit as quickly as loan rates were being reduced."

He added, "Net charge-offs for the quarter totaled $1,072,000, or five basis points, on a consolidated level and $682,000, or three basis points, at the bank level.

"Non-performing assets increased six percent to $39,308,000 in the first quarter. The majority of the increase in non-performing assets resulted from foreclosures initiated late during the fourth quarter of 2007 and, in most cases, the time-frame for taking title to foreclosed real estate has expanded from weeks to months.

"As the company is now taking possession of these foreclosed properties, we will be aggressive in attempting to dispose of them and reduce non-performing asset levels."

Puckett added, "Our High Performance Checking program continues to generate strong results. We opened 5,235 new checking accounts, net of account closings, in the first quarter for an opening-to-closing ratio of 2.68 to one.

"Management believes the average checking account opening-to-closing ratio for mature banks is less than 1.25 to one, so we are encouraged by the net growth in new checking customers.

"These new customers bring deposits, non-interest income and the opportunity to cross-sell other banking products."