Disappointment In

Stock Performance

Is Acknowledged

By DOUGLAS WATSON

Managing Editor

GreenBank executives spoke reassuringly about the bank's financial health during the annual shareholders meeting on Tuesday, although recent problems and continuing challenges were also acknowledged.

Nearly 200 GreenBank shareholders attended a 75-minute meeting at the General Morgan Inn that was followed by a luncheon.

Stan Puckett, chairman and CEO of GreenBank and of its holding company, Green Bankshares, Inc., opened the meeting by reviewing the fluctuating price of the bank's stock on the NASDAQ market over the past April-to-April financial year.

He showed the audience slides that compared GreenBank's stock prices over the past 12 months with the averages of other companies listed on the NASDAQ stock exchange, and also with the average of all banks in the Southeast.

Puckett noted that GreenBank's stock price was doing very well last summer, but by September began reflecting the collapse nationally of the subprime lending market and the housing industry. He stressed that GreenBank had not made subprime loans.

Puckett acknowledged that the bank's stock had suffered "a dramatic decline in December," as Wall Street and many banks were hit by a series of shocks with the collapse of the subprime lending and housing markets.

He told the bank's stockholders, "All of us as shareholders were disappointed . . . very, very disappointed . . . If you are a shareholder, you have every right to be frustrated."

He said GreenBank has "had some credit problems, and the stock market reflected that."

However, Puckett noted, Green Bankshares' stock lately has started climbing again. He said this probably reflects its recent report that the bank's net income for the first quarter of 2008 was $7.2 million, compared with $5.6 million for the same quarter of 2007, which was a 28 percent year-over-year increase.

Stock Market Analyses

In the packet of information provided by the bank to shareholders were the reports of three firms specializing in stock-market analysis.

Keefe, Bruyette & Woods reported on April 23, "We believe the earnings power of GRNB (Green Bankshares) is significantly higher than the current stock price suggests. We think the company's Tennessee franchise is well positioned to weather the current credit cycle."

Janney Montgomery Scott reported on April 23, "We are raising our rating on shares of Green Bankshares to BUY from Neutral, although we are maintaining our 12-month fair value estimate of $22 (per share). . . .

Stifel Nicolaus reported on April 23, "We are raising GRNB to Buy from Hold and establishing a $23 target price. . . .

Bank's Operations

Kent Vaught, GreenBank's president and chief of operations, then presented an overview of the bank's operations, which includes 64 offices in Tennessee, one in Virginia, and one in North Carolina.

He noted that GreenBank, which in recent years has expanded rapidly into Middle Tennessee, has $2.9 billion in assets, making it the largest bank based in East Tennessee and the third largest bank based in Tennessee.

Vaught said GreenBank has done very well with its extended banking hours, providing Saturday banking at 50 of its offices.

He also said GreenBank's brand recognition and marketing ability were strengthened with its renaming last year from Greene County Bank to GreenBank. The change ended having offices across the state operating with 18 different names.

Nevertheless, Vaught said, "We still consider ourselves a large community bank," with regional executives in 18 different areas managing the bank's offices with considerable latitude.

Financial Figures

Jim Adams, the bank's chief financial officer and senior vice president, reported that, although the bank's stock plummeted in late 2007, the bank's income last year increased by 15 percent over the previous year, marking the seventh consecutive year the bank has shown such a gain.

As for the current year, Adams said, "Generally, we were pleased with the 2008 first quarter earnings results."

Middle Tennessee Situation

Danny Herron, who heads the bank's Cumberland Region branches in Middle Tennessee that GreenBank acquired in May 2007, then spoke about the bank's progress and problems there.

He said GreenBank has benefited from the launching in the first quarter of 2007 of its "high-performance checking accounts," which have added more than 5,000 bank customers in just the last quarter.

Herron said GreenBank's executives thought they were being conservative in making many loans to the residential housing industry.

He stated that, generally, such loans are a solid investment area. But, he said, residential loans have been hard-hit financially, with many developer-built houses sitting empty and many developers facing foreclosure.

Herron said the bank's executives have relearned important lessons: that "Growth is only growth if it is profitable," and that the emphasis must be to "maximize earnings."

In regard to the crisis in the housing market, Herron said, "Our biggest challenge is to work the problem with builders," many of whom have been good customers for many years but now are in financial trouble, having constructed more houses than they reportedly can soon sell.

He predicted, "It's going to be a tough 12 to 24 months" dealing with the problems in the housing market.

Board Members Re-elected

In other action, the shareholders unanimously confirmed the reappointment to the bank's board of directors of Puckett, Bruce Campbell, Sam Lynch and John Tolsma, and the retaining of Dixon Hughes as the bank's independent certified public accountant.