Green Bancorp buying local rival
Green Bancorp announced Wednesday that it will buy local competitor Patriot Bancshares for about $139 million.
“This acquisition is a significant step toward achieving our strategic goal of becoming a $5 billion asset bank,” said Manny Mehos, chairman of Green Bank, during a conference call with investors.
The combined Houston-based banks will have 23 locations and roughly $3.6 billion in assets. The bank, operating as Green Bancorp and its subsidiary Green Bank, will focus on businesses with $1 million to $100 million in revenues.
This is Green Bancorp’s sixth acquisition since 2006, and Mehos hopes there are several more to come.
“We’re going to be out searching for more,” he said. “That’s no exaggeration.”
Geoff Greenwade, president and CEO of Green Bank, said the two banks both target middle-market business clients and have branches in the same cities. Patriot Bancshares will add six locations in the Houston area and three in the Dallas area, strengthening Green Bancorp’s existing presence in these areas.
“Having the right locations is a key component to our success, and Patriot’s branch-
“This acquisition is a significant step toward achieving our strategic goal of becoming a $5 billion asset bank.” Manny Mehos, chairman of Green Bank
es complement ours well,” Greenwade said.
Once the stock deal is completed, the company will have 12 banks in the Houston area, nine in the Dallas area, one in Austin and one in Louisville, Ky. Greenwade doesn’t expect to close any branches and said the bank will look to see if it needs to lay off employees after the deal is completed.
Dan Bass, managing director of investment banking for bank advisory firm Performance Trust Capital Partners, said the combined bank will be a big competitor in Houston.
‘Good for Houston’
“It’s good for Houston,” he said. “It creates another large, local player that should be successful.”
And having $3.6 billion in assets puts Green Bancorp in the sweet spot, said C.K. Lee, Dallas-based managing director for Commerce Street Capital. The boutique investment banking firm focuses on the financial services sector.
He said banks with $3 billion to $7 billion in assets tend to drive better returns for their shareholders than their larger and smaller peers. Green Bancorp had $2.3 billion in assets as of March 31.
Across the nation, banks are consolidating. Lee said their stocks are performing well overall, which helps with deals, and high regulatory costs are pushing smaller banks to be acquired by larger ones that can handle the expense.
“We think consolidation in general will continue at a strong pace,” he said.
The deal is expected to close in the fourth quarter. Once finalized, Green Bancorp shareholders will own about 71 percent of the stock and Patriot Bancshares shareholders will own about 29 percent.
Vice chairman
The company will be led by Green Bancorp’s management team. Don Ellis, chairman and CEO of Patriot Bancshares, will become vice chairman of the board.
Ellis views the deal as a merger instead of an acquisition.
Being larger allows the bank to provide its clients with additional services at lower costs, Ellis said.
“It’s a 100 percent stock transaction,” he said. “We’re buying into Green Bank and the future we can create together.”
Green Bancorp’s stock closed Wednesday at $13.39, up 43 cents on the day.
The deal was announced after markets closed.