Green Bancorp in Texas Raises $25M from Private Equity

Green Bancorp has raised another $25 million from the same private-equity groups that invested in the Houston company two years ago.

The $1.4 billion-asset Green Bank has more than doubled its asset size since its parent received over $100 million in capital in July 2010 from funds affiliated with Friedman Fleischer & Lowe, Harvest Partners and Pine Brook Road Partners. Green Bancorp has completed three bank acquisitions since, prompting the private-equity groups to pump in more cash to see if the bank can double in size again.

The capital "wasn't needed ... but it does send a message to the markets that we are going to do more acquisitions and we're going to continue to grow organically," Geoff Greenwade, Green Bancorp's president and chief executive, says. The company plans to grow to $3 billion in assets in another two years by targeting banks in Texas' most attractive growth markets, including Dallas-Fort Worth, Houston and Austin.

Unlike most states, Texas has been able to sustain organic commercial loan growth since the financial crisis. Green Bank has been strategically buying small banks with far more deposits than loans so it will have low-cost funding on its balance sheet. The company has acquired a mere $40 million in loans but $350 million in deposits from its three deals.

"It's much easier to transfer deposit customers in than it is to transfer loan customers," Greenwade says.

Green Bancorp's latest acquisition, involving Opportunity Bancshares in Richardson, Texas, closed in May. Greenwade says the new capital will help the company to go after bigger deals that will ultimately make Green a more attractive acquisition target.

With $3 billion in assets, "we just think that's where we would be attractive to out-of-state banks entering Texas," he said. "From an earnings standpoint, that's large enough to have true economies of scale."