Green Bancorp, the Houston lender that went public in 2014, is exploring a sale, according to people with knowledge of the matter, as weakness in its energy loan book pressures its share price.
The $3.8 billion-asset company is working with Sandler O'Neill to review its strategic options, said the people, who asked not to be identified because the matter is private.
While Green has been holding informal talks with potential buyers for about three months, it hasn't decided to start an official auction yet, one person said. This is in part because it doesn't want to run a failed sales process, and recent volatility in stock and commodities prices has made it tougher to strike bank deals, this person said.
Takeovers in the U.S. banking market have begun to pick up in recent months after slumping dramatically in the years following the financial crisis. Huntington Bancshares agreed to buy FirstMerit for $3.8 billion in January, about three months after KeyCorp agreed to pay about $4 billion for First Niagara Financial Group.
Representatives for Green and Sandler declined to comment. Green's stock climbed 10.8% on Tuesday, to close at $7.92 a share.
While the company was profitable last year, investors have grown increasingly nervous about its energy loans, which accounted for about 9% of total loans at year-end, according to company filings.
Nonperforming assets - overdue loans in danger of not being paid back - totaled about $57 million as of Dec. 31., compared with $12 million a year earlier. The increase reflects a souring batch of energy loans the bank absorbed after completing a recent acquisition, according to its fourth-quarter report.
The company currently trades at a price equal to about 64% of book value, or assets excluding liabilities, according to data compiled by Bloomberg. The median U.S. regional and community bank, by comparison, trades at about 123% of book value.
