Green Bancorp in Houston is getting out of energy lending.
The $3.8 billion-asset company said in a press release Thursday that it had developed a strategic plan to eliminate its energy loan exposure.
Donald Perschbacher, the company's chief credit officer, will work with eight workout professionals to get rid of all energy-related loans, along with other classified assets. Green said it had already segregated its portfolio of energy loans and certain other classified assets — totaling $277 million in assets — to allow for "accelerated resolution."
"Our results are clearly being impacted by the challenging energy cycle and the duress that it is causing throughout the oil patch," Manny Mehos, Green's chairman and chief executive, said in the release. "As a result, we have made the decision to more aggressively remove this uncertainty."
Green said it will employ a number of methods to get rid of the assets, including possible commitment reductions, negotiated repayment with borrowers, loan and portfolio sales, and potential foreclosure and liquidation of collateral. Auctions and other "proven asset management and disposition techniques" will also be considered.
Energy-related exposure made up 8.8% of Green's total loans on March 31.
Energy loans took a bite out of the company's first-quarter earnings, which fell 60% from a year earlier to $1.8 million. The loan-loss provision spiked to $16 million in the first quarter; it was just $1.5 million a year earlier, largely reflecting chargeoffs and grade migration in the energy-related portfolio.
Nonperforming assets more than quintupled from a year earlier, to $77.5 million.