##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-14289
 
 GREEN BANKSHARES, INC.
  Tennessee
    
    62-1222567(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)100 North Main Street, Greeneville, Tennessee
    
    37743-4992(Address of principal executive offices)
    
    (Zip Code)
 (423) 639-5111
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Exchange on which RegisteredCommon Stock  $2.00 par value
    
    Nasdaq Global Select Market
 Securities registered pursuant to Section 12(g) of the Act:
None
 YES o NO þ
 YES o NO þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT INDEXExhibit 10.8Exhibit 10.35Exhibit 10.36Exhibit 10.37Exhibit 10.38Exhibit 10.39Exhibit 10.40Exhibit 10.41Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2    Table of Contents  
 
 PART I
 Forward-Looking Statements
 The information contained herein contains forward-looking statements that involve a number of
risks and uncertainties. A number of factors, including those discussed herein, could cause
results to differ materially from those anticipated by such forward-looking statements which are
within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. In addition, such forward-looking
statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or
imprecise. Accordingly, any forward-looking statements included herein do not purport to be
predictions of future events or circumstances and may not be realized. Forward-looking statements
can be identified by, among other things, the use of forward-looking terminology such as intends,
believes, expects, may, will, should, seeks, pro forma or anticipates, or the
negatives thereof, or other variations thereon of comparable terminology, or by discussions of
strategy or intentions. Such statements may include, but are not limited to, projections of income
or loss, expenditures, acquisitions, plans for future operations, financing needs or plans relating
to services of the Company, as well as assumptions relating to the foregoing. The Companys actual
results may differ materially from the results anticipated in forward-looking statements due to a
variety of factors, including, but not limited to those identified in Item 1A. Risk Factors in
this Form 10-K and (1) unanticipated deterioration in the financial condition of borrowers
resulting in significant increases in loan losses and provisions for those losses; (2) continued
deterioration in the residential real estate market; (3) lack of sustained growth in the economy in
the markets that the Bank serves; (4) increased competition with other financial institutions in
the markets that the Bank serves; (5) changes in the legislative and regulatory environment; (6)
the Companys failure to successfully implement its growth strategy; and (7) the loss of key
personnel. All forward-looking statements herein are based on information available to us as of the
date this Annual Report on Form 10-K was filed with the Securities and Exchange Commission (SEC).
 
 
 ITEM 1. BUSINESS.
 Presentation of Amounts
 All dollar amounts set forth below, other than per-share amounts, are in thousands unless
otherwise noted. Unless this Form 10-K indicates otherwise or the context otherwise requires, the
terms we, our, us, the Company or Green Bancshares as used herein refer to Green
Bankshares, Inc. and its subsidiaries, including GreenBank, which we sometimes refer to as
GreenBank, the Bank or our Bank.
 Green Bankshares, Inc
     1




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##### Table of Contents



Lending Activities:
 General:
 Consumer Lending:
  Commercial Real Estate Lending:
 Commercial Business Lending:
  Investment Activities:
  Sources of Funds:
 Deposits:
  2




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##### Table of Contents



Borrowings:
     www.greenbankusa.com
 GreenBank and its Subsidiaries
   3




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##### Table of Contents



Growth and Business Strategy
       4




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##### Table of Contents



Lending Activities
 General
 Loan Composition
 2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Commercial real estate
    
    $
    1,430,225
    
    
    $
    1,549,457
    
    
    $
    921,190
    
    
    $
    729,254
    
    
    $
    484,088Residential real estate
    
    
    397,922
    
    
    
    398,779
    
    
    
    281,629
    
    
    
    319,797
    
    
    
    319,713Commercial
    
    
    315,099
    
    
    
    320,264
    
    
    
    258,998
    
    
    
    245,285
    
    
    
    165,975Consumer
    
    
    89,733
    
    
    
    97,635
    
    
    
    87,111
    
    
    
    90,682
    
    
    
    82,532Other
    
    
    4,656
    
    
    
    3,871
    
    
    
    2,203
    
    
    
    3,476
    
    
    
    4,989Unearned interest
    
    
    (14,245
    )
    
    
    (13,630
    )
    
    
    (11,502
    )
    
    
    (9,852
    )
    
    
    (10,430
    )Loans, net of unearned interest
    
    $
    2,223,390
    
    
    $
    2,356,376
    
    
    $
    1,539,629
    
    
    $
    1,378,642
    
    
    $
    1,046,867Allowance for loan losses
    
    $
    (48,811
    )
    
    $
    (34,111
    )
    
    $
    (22,302
    )
    
    $
    (19,739
    )
    
    $
    (15,721
    )
 Loan Maturities
 Due in One
    
    
    Due After One Year
    
    
    Due AfterYear or Less
    
    
    Through Five Years
    
    
    Five Years
    
    
    TotalCommercial real estate
    
    $
    756,134
    
    
    $
    624,142
    
    
    $
    49,949
    
    
    $
    1,430,225Residential real estate (1)
    
    
    63,299
    
    
    
    107,994
    
    
    
    220,703
    
    
    
    391,996Commercial
    
    
    197,727
    
    
    
    106,019
    
    
    
    11,353
    
    
    
    315,099Consumer (1)
    
    
    23,691
    
    
    
    54,214
    
    
    
    3,509
    
    
    
    81,414Other
    
    
    4,303
    
    
    
    253
    
    
    
    100
    
    
    
    4,656Total
    
    $
    1,045,154
    
    
    $
    892,622
    
    
    $
    285,614
    
    
    $
    2,223,390
 (1)
    
    Net of unearned interest.  Fixed Rate
    
    
    Variable Rate
    
    
    TotalCommercial
real estate
    
    $
    482,450
    
    
    $
    191,641
    
    
    $
    674,091Residential real estate
    
    
    154,260
    
    
    
    174,437
    
    
    
    328,697Commercial
    
    
    79,149
    
    
    
    38,223
    
    
    
    117,372Consumer
    
    
    57,042
    
    
    
    681
    
    
    
    57,723Other
    
    
    256
    
    
    
    97
    
    
    
    353Total
    
    $
    773,157
    
    
    $
    405,079
    
    
    $
    1,178,236
 Commercial Real Estate Loans
  5




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##### Table of Contents



Residential Real Estate
  Commercial Loans
 Consumer Loans
 Past Due, Special Mention, Classified and Nonaccrual Loans
   6




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##### Table of Contents



At December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Loans accounted for on a non-accrual
basis
    
    $
    30,926
    
    
    $
    32,060
    
    
    $
    3,479
    
    
    $
    5,915
    
    
    $
    6,242Accruing loans which are contractually
past due 90 days or more as to interest
or principal payments
    
    
    509
    
    
    
    18
    
    
    
    28
    
    
    
    809
    
    
    
    664Total non-performing loans
    
    
    31,435
    
    
    
    32,078
    
    
    
    3,507
    
    
    
    6,724
    
    
    
    6,906Real estate owned:Foreclosures
    
    
    44,964
    
    
    
    4,401
    
    
    
    1,445
    
    
    
    2,920
    
    
    
    1,353Other real estate held and
repossessed assets
    
    
    407
    
    
    
    458
    
    
    
    243
    
    
    
    823
    
    
    
    213Total non-performing assets
    
    $
    76,806
    
    
    $
    36,937
    
    
    $
    5,195
    
    
    $
    10,467
    
    
    $
    8,472
   
   7




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##### Table of Contents



Allowance for Loan Losses
   8




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##### Table of Contents



Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Balance at beginning of year
    
    $
    34,111
    
    
    $
    22,302
    
    
    $
    19,739
    
    
    $
    15,721
    
    
    $
    14,564Reserve acquired in acquisition
    
    
    
    
    
    
    9,022
    
    
    
    
    
    
    
    1,467
    
    
    
    363Subtotal
    
    
    34,111
    
    
    
    31,324
    
    
    
    19,739
    
    
    
    17,188
    
    
    
    14,927Charge-offs:Commercial real estate
    
    
    (28,759
    )
    
    
    (7,516
    )
    
    
    (494
    )
    
    
    (189
    )
    
    
    (1,044
    )Commercial
    
    
    (6,177
    )
    
    
    (2,065
    )
    
    
    (879
    )
    
    
    (1,500
    )
    
    
    (1,538
    )Subtotal
    
    
    (34,936
    )
    
    
    (9,581
    )
    
    
    (1,373
    )
    
    
    (1,689
    )
    
    
    (2,582
    )Residential real estate
    
    
    (2,275
    )
    
    
    (840
    )
    
    
    (947
    )
    
    
    (622
    )
    
    
    (424
    )Consumer
    
    
    (4,058
    )
    
    
    (3,050
    )
    
    
    (2,009
    )
    
    
    (3,250
    )
    
    
    (3,962
    )Other
    
    
    
    
    
    
    
    
    
    
    (28
    )
    
    
    (22
    )
    
    
    (12
    )Total charge-offs
    
    
    (41,269
    )
    
    
    (13,471
    )
    
    
    (4,357
    )
    
    
    (5,583
    )
    
    
    (6,980
    )Recoveries:Commercial real estate
    
    
    1,691
    
    
    
    289
    
    
    
    17
    
    
    
    180
    
    
    
    66Commercial
    
    
    221
    
    
    
    227
    
    
    
    171
    
    
    
    160
    
    
    
    304Subtotal
    
    
    1,912
    
    
    
    516
    
    
    
    188
    
    
    
    340
    
    
    
    370Residential real estate
    
    
    138
    
    
    
    213
    
    
    
    284
    
    
    
    166
    
    
    
    63Consumer
    
    
    1,106
    
    
    
    1,038
    
    
    
    936
    
    
    
    1,246
    
    
    
    1,504Other
    
    
    3
    
    
    
    8
    
    
    
    5
    
    
    
    17
    
    
    
    1Total recoveries
    
    
    3,159
    
    
    
    1,775
    
    
    
    1,413
    
    
    
    1,769
    
    
    
    1,938Net charge-offs
    
    
    (38,110
    )
    
    
    (11,696
    )
    
    
    (2,944
    )
    
    
    (3,814
    )
    
    
    (5,042
    )Provision for loan losses
    
    
    52,810
    
    
    
    14,483
    
    
    
    5,507
    
    
    
    6,365
    
    
    
    5,836Balance at end of year
    
    $
    48,811
    
    
    $
    34,111
    
    
    $
    22,302
    
    
    $
    19,739
    
    
    $
    15,721Ratio of net charge-offs to average
loans outstanding, net of
unearned discount, during
the period
    
    
    1.63
    %
    
    
    .57
    %
    
    
    .20
    %
    
    
    .32
    %
    
    
    0.51
    %Ratio of allowance for loan losses to
non-performing loans
    
    
    155.28
    %
    
    
    106.34
    %
    
    
    635.93
    %
    
    
    293.56
    %
    
    
    227.64
    %Ratio of allowance for loan losses to
total loans, net of unearned income
    
    
    2.20
    %
    
    
    1.45
    %
    
    
    1.45
    %
    
    
    1.43
    %
    
    
    1.50
    %
 Breakdown of allowance for loan losses by category.
 At December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent of
    
    
    
    
    
    
    Percent ofloans in
    
    
    
    
    
    
    loans in
    
    
    
    
    
    
    loans in
    
    
    
    
    
    
    loans in
    
    
    
    
    
    
    loans ineach
    
    
    
    
    
    
    each
    
    
    
    
    
    
    each
    
    
    
    
    
    
    each
    
    
    
    
    
    
    eachcategory
    
    
    
    
    
    
    category
    
    
    
    
    
    
    category
    
    
    
    
    
    
    category
    
    
    
    
    
    
    categoryto total
    
    
    
    
    
    
    to total
    
    
    
    
    
    
    to total
    
    
    
    
    
    
    to total
    
    
    
    
    
    
    to totalAmount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loansBalance at end of period
applicable to:Commercial real estate
    
    $
    35,714
    
    
    
    64.33
    %
    
    $
    20,489
    
    
    
    65.38
    %
    
    $
    10,619
    
    
    
    59.38
    %
    
    $
    8,889
    
    
    
    52.90
    %
    
    $
    5,939
    
    
    
    46.25
    %Residential real estate
    
    
    3,669
    
    
    
    17.63
    %
    
    
    2,395
    
    
    
    16.83
    %
    
    
    1,639
    
    
    
    18.16
    %
    
    
    2,035
    
    
    
    22.92
    %
    
    
    1,922
    
    
    
    30.11
    %Commercial
    
    
    6,479
    
    
    
    14.17
    %
    
    
    7,575
    
    
    
    13.51
    %
    
    
    6,645
    
    
    
    16.70
    %
    
    
    4,797
    
    
    
    17.79
    %
    
    
    3,666
    
    
    
    15.85
    %Consumer
    
    
    2,927
    
    
    
    3.66
    %
    
    
    3,635
    
    
    
    4.12
    %
    
    
    3,384
    
    
    
    5.62
    %
    
    
    3,960
    
    
    
    6.14
    %
    
    
    3,856
    
    
    
    7.31
    %Other
    
    
    22
    
    
    
    0.21
    %
    
    
    17
    
    
    
    0.16
    %
    
    
    15
    
    
    
    0.14
    %
    
    
    58
    
    
    
    0.25
    %
    
    
    338
    
    
    
    0.48
    %Totals
    
    $
    48,811
    
    
    
    100.00
    %
    
    $
    34,111
    
    
    
    100.00
    %
    
    $
    22,302
    
    
    
    100.00
    %
    
    $
    19,739
    
    
    
    100.00
    %
    
    $
    15,721
    
    
    
    100.00
    %
  9




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##### Table of Contents



Investment Activities
 General
 Securities by Category
 At December 31,2008
    
    
    2007
    
    
    2006Securities Held to Maturity:Obligations of state and political subdivisions
    
    $
    404
    
    
    $
    1,049
    
    
    $
    1,794Corporate Securities
    
    
    253
    
    
    
    254
    
    
    
    751Total
    
    $
    657
    
    
    $
    1,303
    
    
    $
    2,545Securities Available for Sale:U.S. Government, corporations and agencies
    
    $
    169,265
    
    
    $
    197,908
    
    
    $
    33,814Obligations of state and political subdivisions
    
    
    31,804
    
    
    
    34,388
    
    
    
    1,702Trust Preferred Securities
    
    
    2,493
    
    
    
    2,977
    
    
    
    2,224Total
    
    $
    203,562
    
    
    $
    235,273
    
    
    $
    37,740
 Maturity Distributions of Securities
 Due After One
    
    
    Due After FiveDue in One
    
    
    Year Through
    
    
    Years Through
    
    
    DueYear or Less
    
    
    Five Years
    
    
    10 Years
    
    
    After 10 Years
    
    
    TotalU.S. Government agency
obligations  available for sale
    
    $
    
    
    
    $
    930
    
    
    $
    43,763
    
    
    $
    124,365
    
    
    $
    169,058Obligations of state and political subdivisions 
available for sale
    
    
    155
    
    
    
    2,623
    
    
    
    17,760
    
    
    
    12,103
    
    
    
    32,641Obligations of state and political subdivisions 
held to maturity
    
    
    
    
    
    
    404
    
    
    
    
    
    
    
    
    
    
    
    404Other securities  available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,954
    
    
    
    2,954Other securities  held to maturity
    
    
    
    
    
    
    253
    
    
    
    
    
    
    
    
    
    
    
    253Subtotal
    
    $
    155
    
    
    $
    4,210
    
    
    $
    61,523
    
    
    $
    139,422
    
    
    $
    205,310Market value adjustment on available for sale
securities
    
    
    1
    
    
    
    25
    
    
    
    217
    
    
    
    (1,335
    )
    
    
    (1,092
    )Total
    
    $
    156
    
    
    $
    4,235
    
    
    $
    61,740
    
    
    $
    138,087
    
    
    $
    204,218Weighted average yield (a)
    
    
    5.43
    %
    
    
    6.60
    %
    
    
    5.81
    %
    
    
    5.56
    %
    
    
    5.66
    %
 
 (a)
    
    Weighted average yields on tax-exempt obligations have been computed on a fully
taxable-equivalent basis using a tax rate of 35%.   10




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##### Table of Contents



Deposits
   Year Ended December 31,2008
    
    
    2007
    
    
    2006Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    AverageBalance
    
    
    Rate Paid
    
    
    Balance
    
    
    Rate Paid
    
    
    Balance
    
    
    Rate PaidTypes of deposits (all in domestic
offices):Noninterest bearing demand deposits
    
    $
    187,058
    
    
    
    
    
    
    $
    184,529
    
    
    
    
    
    
    $
    147,947
    
    
    
    Interest-bearing demand deposits
    
    
    577,024
    
    
    
    1.57
    %
    
    
    581,340
    
    
    
    2.78
    %
    
    
    420,041
    
    
    
    2.38
    %Savings deposits
    
    
    68,612
    
    
    
    .77
    %
    
    
    73,355
    
    
    
    .75
    %
    
    
    72,978
    
    
    
    .70
    %Time deposits
    
    
    1,317,362
    
    
    
    3.68
    %
    
    
    951,455
    
    
    
    4.70
    %
    
    
    641,672
    
    
    
    3.98
    %Total deposits
    
    $
    2,150,056
    
    
    
    
    
    
    $
    1,790,679
    
    
    
    
    
    
    $
    1,282,638
  Certificates ofMaturity Period
    
    DepositsThree months or less
    
    $
    363,137Over three through six months.
    
    
    154,442Over six through twelve months
    
    
    165,903Over twelve months
    
    
    83,758Total
    
    $
    767,240
  11




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##### Table of Contents



Competition
   County
    
    Deposit ShareGreene, TN
    
    
    49.53
    %Hawkins, TN
    
    
    18.66
    %Lawrence, TN
    
    
    14.81
    %Smith, TN
    
    
    12.08
    %Sumner, TN
    
    
    12.04
    %Blount, TN
    
    
    9.94
    %Montgomery, TN
    
    
    8.74
    %Macon, TN
    
    
    8.64
    %Hamblen, TN
    
    
    8.33
    %Cocke, TN
    
    
    8.10
    %Washington, TN
    
    
    5.45
    %Madison, NC
    
    
    5.32
    %McMinn, TN
    
    
    5.23
    %Loudon, TN
    
    
    4.44
    %Williamson, TN
    
    
    3.84
    %Bristol, VA1
    
    
    3.63
    %Rutherford, TN
    
    
    2.55
    %Sullivan, TN
    
    
    2.17
    %Monroe, TN
    
    
    1.28
    %Davidson, TN
    
    
    0.64
    %Knox, TN
    
    
    0.50
    %
 1
    
    Bristol, VA is deemed a city. Employees
   12




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##### Table of Contents



Regulation, Supervision and Governmental Policy
  Bank Holding Company Regulation
 Acquisitions and Mergers
   Capital Requirements
 Dividends
    13




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##### Table of Contents



Support of Banking Subsidiaries
  Transactions with Affiliates
 Bank Regulation
 Extensions of Credit
  14




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##### Table of Contents



Federal Deposit Insurance
  Safety and Soundness Standards
 Participation in the Capital Purchase Program of the Troubled Asset Relief Program
 
    
    Ensure that the incentive compensation programs for its senior executive officers do
not encourage unnecessary and excessive risks that threaten the value of the Company;
 
    
    Implement a required clawback of any bonus or incentive compensation paid to the
Companys senior executive officers based on statements of earnings, gains, or other
criteria that are later proven to be materially inaccurate;
 
    
    Not make any golden parachute payment (as defined in the Internal Revenue Code) to
any of the Companys senior executive officers; and
 
    
    Agree not to deduct for tax purposes executive compensation in excess of $500,000 in
any one fiscal year for each of the Companys senior executive officers.
  15




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##### Table of Contents



Capital Requirements
  Legislative, Legal and Regulatory Developments
 USA Patriot Act
  16




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##### Table of Contents



Additional Information
  
 
 ITEM 1A. RISK FACTORS.
 We could sustain losses if our asset quality declines further.
  Recent negative developments in the financial services industry and U.S. and global credit markets
may adversely impact our operations and results.
   17




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##### Table of Contents



The enactment of Emergency Economic Stabilization Act of 2008 and the American Recovery and
Reinvestment Act of 2009 may not be able to stabilize the U.S. financial system or the economy and
may significantly affect the Companys financial condition, results of operation or liquidity.
   Our business is subject to the success of the local economies where we operate.
   Continued deterioration in residential real estate construction and development markets could
adversely affect our loan portfolio quality and our results of operations.
   18




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An inadequate allowance for loan losses would reduce our earnings.
  Liquidity needs could adversely affect our results of operations and financial condition.
  Changes in interest rates could adversely affect our results of operations and financial condition.
  Competition from financial institutions and other financial service providers may adversely affect
our profitability.
     19




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If we continue to experience losses at levels that we experienced during the fourth quarter of 2008
we may need to raise additional capital in the future, but that capital may not be available when
it is needed.
   We rely heavily on the services of key personnel.
    We are subject to extensive regulation that could limit or restrict our activities.
    The amount of common stock owned by, and other compensation arrangements with, our officers and
directors may make it more difficult to obtain shareholder approval of potential takeovers that
they oppose.
   20




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##### Table of Contents



Our long-term business strategy includes the continuation of growth plans, and our financial
condition and results of operations could be affected if our long-term business strategies are not
effectively executed.
  
    
    Maintaining loan quality;
 
    
    Maintaining adequate management personnel and information systems to oversee such
growth; and,
 
    
    Maintaining adequate control and compliance functions.
 Operating Results:
 Development of Offices:
 Expansion into New Markets:
 Regulatory and Economic Factors:
  We may face risks with respect to future expansion.
  
    
    the time and costs associated with identifying and evaluating potential acquisitions
and merger partners;
 
    
    inaccuracies in the estimates and judgments used to evaluate credit, operations,
management and market risks with respect to the target institution;
 
    
    the time and costs of evaluating new markets, hiring experienced local management and
opening new offices, and the time lags between these activities and the generation of
sufficient assets and deposits to support the costs of the expansion;
 
    
    our ability to finance an acquisition and possible dilution to our existing
shareholders;
 
    
    the diversion of our managements attention to the negotiation of a transaction, and
the integration of the operations and personnel of the combining businesses;
 
    
    entry into new markets where we lack experience;
 
    
    the introduction of new products and services into our business;
 
    
    the incurrence and possible impairment of goodwill associated with an acquisition and
possible adverse short-term effects on our results of operations; and
 
    
    the risk of loss of key employees and customers.
  21




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We are subject to Tennessee anti-takeover statutes and certain charter provisions which could
decrease our chances of being acquired even if the acquisition is in our shareholders best
interests.
  The success and growth of our business will depend on our ability to adapt to technological
changes.
   Even though our common stock is currently traded on The Nasdaq Global Select Market, the trading
volume in our common stock has been thin and the sale of substantial amounts of our common stock in
the public market could depress the price of our common stock.
    If our stock price continues to trade at a level below book value of the organization, we would
evaluate our goodwill balances for impairment, and if the value of our business has declined, we
could recognize an impairment charge for our goodwill.
   22




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We may issue additional common stock or other equity securities in the future which could dilute
the ownership interest of existing common shareholders.
  Our ability to declare and pay dividends is limited by law and by the terms of the Series A
preferred stock and we may be unable to pay future dividends.
  Holders of our junior subordinated debentures have rights that are senior to those of our common
and
Series A preferred shareholders.
  The Series A preferred stock impacts net income available to our common shareholders and our
earnings per share.
  Holders of the Series A preferred stock have rights that are senior to those of our common
shareholders.
   23




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##### Table of Contents



Holders of the Series A preferred stock may, under certain circumstances, have the right to elect
two directors to our board of directors.
  Holders of the Series A preferred stock have limited voting rights.
   24




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##### Table of Contents



ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 
 ITEM 2. PROPERTIES.
  
 
 ITEM 3. LEGAL PROCEEDINGS.
  
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 (a)
    
    A special meeting of shareholders (the Special Meeting) of the Company was
held on December 19, 2008. The meeting was held to amend the charter of the Company to
authorize a class of blank check preferred stock, consisting of one million (1,000,000)
authorized shares.(c)
    
    The following sets forth the results of voting on each matter at the Special
Meeting:
 Proposal 1  Amendment to Charter
 Votes
    
    VotesFor
    
    Against
    
    Abstentions7,592,229
    
    1,793,519
    
    112,423
  25




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##### Table of Contents



PART II
 
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
   High/Low Sales Price
    
    
    Closing
    
    
    Dividends PaidDuring Quarter
    
    
    Price
    
    
    Per Share2008:First quarter
    
    $
    22.36 / 15.18
    
    
    $
    17.53
    
    
    $
    0.13Second quarter
    
    
    21.98 / 13.89
    
    
    
    13.89
    
    
    
    0.13Third quarter
    
    
    25.17 / 11.85
    
    
    
    23.29
    
    
    
    0.13Fourth quarter
    
    
    24.61 / 13.20
    
    
    
    13.54
    
    
    
    0.13$
    0.522007:First quarter
    
    $
    40.50 / 32.83
    
    
    $
    33.91
    
    
    $
    0.13Second quarter
    
    
    35.86 / 31.19
    
    
    
    31.26
    
    
    
    0.13Third quarter
    
    
    38.63 / 29.84
    
    
    
    36.45
    
    
    
    0.13Fourth quarter
    
    
    37.49 / 16.76
    
    
    
    19.20
    
    
    
    0.29$
    0.68
     26




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA.
 2008
    
    
    2007(1)
    
    
    2006
    
    
    2005
    
    
    2004(in thousands, except per share data, ratios and percentages)Total interest income
    
    $
    170,516
    
    
    $
    176,626
    
    
    $
    117,357
    
    
    $
    87,191
    
    
    $
    65,076Total interest expense
    
    
    75,491
    
    
    
    81,973
    
    
    
    45,400
    
    
    
    28,405
    
    
    
    16,058Net interest income
    
    
    95,025
    
    
    
    94,653
    
    
    
    71,957
    
    
    
    58,786
    
    
    
    49,018Provision for loan losses
    
    
    (52,810
    )
    
    
    (14,483
    )
    
    
    (5,507
    )
    
    
    (6,365
    )
    
    
    (5,836
    )Net interest income after provision for loan losses
    
    
    42,215
    
    
    
    80,170
    
    
    
    66,450
    
    
    
    52,421
    
    
    
    43,182Noninterest income
    
    
    33,614
    
    
    
    27,602
    
    
    
    20,710
    
    
    
    14,756
    
    
    
    13,028Noninterest expense
    
    
    (85,837
    )
    
    
    (69,252
    )
    
    
    (52,708
    )
    
    
    (44,340
    )
    
    
    (36,983
    )Income (loss) before income taxes
    
    
    (10,008
    )
    
    
    38,520
    
    
    
    34,452
    
    
    
    22,837
    
    
    
    19,227Income tax (expense) benefit
    
    
    4,648
    
    
    
    (14,146
    )
    
    
    (13,190
    )
    
    
    (8,674
    )
    
    
    (7,219
    )Net income (loss)
    
    
    (5,360
    )
    
    
    24,374
    
    
    
    21,262
    
    
    
    14,163
    
    
    
    12,008Preferred stock dividend and accretion
of discount on warrants
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (5,452
    )
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163
    
    
    $
    12,008Per Share Data:Net income (loss), basic
    
    $
    (0.42
    )
    
    $
    2.07
    
    
    $
    2.17
    
    
    $
    1.73
    
    
    $
    1.57Net income (loss), assuming dilution
    
    $
    (0.42
    )
    
    $
    2.07
    
    
    $
    2.14
    
    
    $
    1.71
    
    
    $
    1.55Dividends declared
    
    $
    0.52
    
    
    $
    0.68
    
    
    $
    0.64
    
    
    $
    0.62
    
    
    $
    0.61Common book value(2)
    
    $
    23.56
    
    
    $
    24.94
    
    
    $
    18.80
    
    
    $
    17.20
    
    
    $
    14.22Tangible book value(3)
    
    $
    11.70
    
    
    $
    12.73
    
    
    $
    14.87
    
    
    $
    13.15
    
    
    $
    11.12Financial Condition Data:Assets
    
    $
    2,944,671
    
    
    $
    2,947,741
    
    
    $
    1,772,654
    
    
    $
    1,619,989
    
    
    $
    1,233,403Loans, net of unearned interest
    
    $
    2,223,390
    
    
    $
    2,356,376
    
    
    $
    1,539,629
    
    
    $
    1,378,642
    
    
    $
    1,046,867Cash and investments
    
    $
    415,607
    
    
    $
    314,615
    
    
    $
    91,997
    
    
    $
    104,872
    
    
    $
    76,637Federal funds sold
    
    $
    
    
    
    $
    
    
    
    $
    25,983
    
    
    $
    28,387
    
    
    $
    39,921Deposits
    
    $
    2,184,147
    
    
    $
    1,986,793
    
    
    $
    1,332,505
    
    
    $
    1,295,879
    
    
    $
    988,022FHLB advances and notes payable
    
    $
    229,349
    
    
    $
    318,690
    
    
    $
    177,571
    
    
    $
    105,146
    
    
    $
    85,222Subordinated debentures
    
    $
    88,662
    
    
    $
    88,662
    
    
    $
    13,403
    
    
    $
    13,403
    
    
    $
    10,310Federal funds purchased and repurchase agreements
    
    $
    35,302
    
    
    $
    194,525
    
    
    $
    42,165
    
    
    $
    17,498
    
    
    $
    13,868Shareholders equity
    
    $
    381,231
    
    
    $
    322,477
    
    
    $
    184,471
    
    
    $
    168,021
    
    
    $
    108,718Common shareholders equity(2)
    
    $
    308,953
    
    
    $
    322,477
    
    
    $
    184,471
    
    
    $
    168,021
    
    
    $
    108,718Tangible common shareholders equity(3)
    
    $
    153,479
    
    
    $
    164,650
    
    
    $
    145,931
    
    
    $
    128,399
    
    
    $
    85,023Tangible shareholders equity(4)
    
    $
    225,757
    
    
    $
    164,650
    
    
    $
    145,931
    
    
    $
    128,399
    
    
    $
    85,023Selected Ratios:Interest rate spread
    
    
    3.48
    %
    
    
    3.83
    %
    
    
    4.32
    %
    
    
    4.30
    %
    
    
    4.53
    %Net interest margin(6)
    
    
    3.70
    %
    
    
    4.25
    %
    
    
    4.77
    %
    
    
    4.61
    %
    
    
    4.75
    %Total tangible equity to tangible assets(4)(5)
    
    
    8.09
    %
    
    
    5.90
    %
    
    
    8.42
    %
    
    
    8.12
    %
    
    
    7.03
    %Tangible common equity to tangible assets(3)(5)
    
    
    5.50
    %
    
    
    5.90
    %
    
    
    8.42
    %
    
    
    8.12
    %
    
    
    7.03
    %Return on average assets
    
    
    (0.18
    %)
    
    
    0.98
    %
    
    
    1.28
    %
    
    
    1.02
    %
    
    
    1.06
    %Return on average equity
    
    
    (1.64
    %)
    
    
    8.96
    %
    
    
    11.91
    %
    
    
    11.09
    %
    
    
    11.23
    %Return on average common equity(2)
    
    
    (1.65
    %)
    
    
    8.96
    %
    
    
    11.91
    %
    
    
    11.09
    %
    
    
    11.23
    %Return on average common tangible equity(3)
    
    
    (3.14
    %)
    
    
    15.41
    %
    
    
    15.25
    %
    
    
    14.04
    %
    
    
    13.95
    %Average equity to average assets
    
    
    11.24
    %
    
    
    10.91
    %
    
    
    10.78
    %
    
    
    9.20
    %
    
    
    9.47
    %Dividend payout ratio
    
    
    123.81
    %
    
    
    32.85
    %
    
    
    29.49
    %
    
    
    35.84
    %
    
    
    38.85
    %Ratio of nonperforming assets to total assets
    
    
    2.61
    %
    
    
    1.25
    %
    
    
    0.29
    %
    
    
    0.65
    %
    
    
    0.69
    %Ratio of allowance for loan losses to
nonperforming loans
    
    
    155.28
    %
    
    
    106.34
    %
    
    
    635.93
    %
    
    
    293.56
    %
    
    
    227.64
    %Ratio of allowance for loan losses to total loans, net
of unearned income loans
    
    
    2.20
    %
    
    
    1.45
    %
    
    
    1.45
    %
    
    
    1.43
    %
    
    
    1.50
    %
 
 1
    
    Information for the 2007 fiscal year includes the operations of CVBG, with which the
Company merged on May 18, 2007.2
    
    Common shareholders equity is shareholders equity less preferred stock and common
stock warrants.3
    
    Tangible common shareholders equity is shareholders equity less goodwill, intangible
assets and preferred stock and common stock
warrants.4
    
    Tangible shareholders equity is shareholders equity less goodwill and intangible
assets.5
    
    Tangible assets is total assets less goodwill and intangible assets.6
    
    Net interest margin is the net yield on interest earning assets and is the difference
between the Fully Taxable Equivalent yield earned on
interest-earning assets less the effective cost of supporting liabilities.  27




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##### Table of Contents



GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
  
    
    Tangible book value per share is defined as total equity reduced by recorded goodwill,
other intangible assets, preferred stock and common stock warrants divided by total common
 shares outstanding. This measure discloses changes from period-to-period in book value per
share exclusive of changes in intangible assets and preferred stock. Goodwill, an intangible
asset that is recorded in a purchase business combination, has the effect of increasing total
book value while not increasing the tangible assets of a company. For companies such as the
Company that have engaged in business combinations, purchase accounting can result in the
recording of significant amounts of goodwill related to such transactions.
    
    Tangible common shareholders equity is shareholders equity less goodwill, other
intangible assets, preferred stock and common stock warrants.
    
    Return on average common tangible equity is defined as earnings for the period divided by
average equity reduced by average goodwill, other intangible assets, preferred stock and
common stock warrants.
  At and for the Fiscal Years Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Common book value
per share
    
    $
    23.56
    
    
    $
    24.94
    
    
    $
    18.80
    
    
    $
    17.20
    
    
    $
    14.22Effect of
intangible
assets
    
    $
    (11.86
    )
    
    $
    (12.21
    )
    
    $
    (3.93
    )
    
    $
    (4.05
    )
    
    $
    (3.10
    )Tangible book value
per share
    
    $
    11.70
    
    
    $
    12.73
    
    
    $
    14.87
    
    
    $
    13.15
    
    
    $
    11.12Return on average
common equity
    
    
    (1.65
    %)
    
    
    8.96
    %
    
    
    11.91
    %
    
    
    11.09
    %
    
    
    11.23
    %Effect of
intangible
assets
    
    
    (1.49
    %)
    
    
    6.45
    %
    
    
    3.34
    %
    
    
    2.95
    %
    
    
    2.72
    %Return on average
common tangible
equity
    
    
    (3.14
    %)
    
    
    15.41
    %
    
    
    15.25
    %
    
    
    14.04
    %
    
    
    13.95
    %
  28




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##### Table of Contents



ITEM 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   Critical Accounting Policies and Estimates
      29




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Changes in Results of Operations
 Net income/loss
   30




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##### Table of Contents



Net Interest Income
  Average Balances, Interest Rates and Yields.
  31




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2008
    
    
    2007
    
    
    2006Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-earning assets:Loans(1)(4)Real estate loans
    
    $
    1,890,209
    
    
    $
    121,168
    
    
    
    6.41
    %
    
    $
    1,661,640
    
    
    $
    127,459
    
    
    
    7.67
    %
    
    $
    1,104,471
    
    
    $
    82,857
    
    
    
    7.50
    %Commercial loans
    
    
    319,131
    
    
    
    20,020
    
    
    
    6.27
    %
    
    
    303,799
    
    
    
    24,180
    
    
    
    7.96
    %
    
    
    259,264
    
    
    
    20,214
    
    
    
    7.80
    %Consumer and other loans-
net(2)
    
    
    89,565
    
    
    
    10,516
    
    
    
    11.74
    %
    
    
    94,280
    
    
    
    10,903
    
    
    
    11.56
    %
    
    
    86,781
    
    
    
    9,746
    
    
    
    11.23
    %Fees on loans
    
    
    
    
    
    
    3,979
    
    
    
    
    
    
    
    
    
    
    
    4,217
    
    
    
    
    
    
    
    
    
    
    
    1,768Total loans
(including fees)
    
    $
    2,298,905
    
    
    $
    155,683
    
    
    
    6.77
    %
    
    $
    2,059,719
    
    
    $
    166,759
    
    
    
    8.10
    %
    
    $
    1,450,516
    
    
    $
    114,585
    
    
    
    7.90
    %Investment securities(3)Taxable
    
    $
    227,710
    
    
    $
    12,770
    
    
    
    5.61
    %
    
    $
    146,642
    
    
    $
    8,415
    
    
    
    5.76
    %
    
    $
    45,446
    
    
    $
    2,273
    
    
    
    5.00
    %Tax-exempt(4)
    
    
    32,743
    
    
    
    1,995
    
    
    
    6.09
    %
    
    
    22,227
    
    
    
    1,334
    
    
    
    6.00
    %
    
    
    2,922
    
    
    
    166
    
    
    
    5.68
    %FHLB and other stock
    
    
    12,890
    
    
    
    647
    
    
    
    5.02
    %
    
    
    9,804
    
    
    
    617
    
    
    
    6.29
    %
    
    
    6,784
    
    
    
    345
    
    
    
    5.09
    %Total investment
securities
    
    $
    273,343
    
    
    $
    15,412
    
    
    
    5.64
    %
    
    $
    178,673
    
    
    $
    10,366
    
    
    
    5.80
    %
    
    $
    55,152
    
    
    $
    2,784
    
    
    
    5.05
    %Other short-term
investments
    
    
    17,941
    
    
    
    175
    
    
    
    0.98
    %
    
    
    1,054
    
    
    
    54
    
    
    
    5.12
    %
    
    
    2,799
    
    
    
    138
    
    
    
    4.93
    %Total interest-
earning assets
    
    $
    2,590,189
    
    
    $
    171,270
    
    
    
    6.61
    %
    
    $
    2,239,446
    
    
    $
    177,179
    
    
    
    7.91
    %
    
    $
    1,508,467
    
    
    $
    117,507
    
    
    
    7.79
    %Noninterest-earning assets:Cash and due from
banks
    
    $
    51,181
    
    
    
    
    
    
    
    
    
    
    $
    47,436
    
    
    
    
    
    
    
    
    
    
    $
    39,068Premises and
equipment
    
    
    83,411
    
    
    
    
    
    
    
    
    
    
    
    73,176
    
    
    
    
    
    
    
    
    
    
    
    53,304Other, less allowance
for loan losses
    
    
    231,499
    
    
    
    
    
    
    
    
    
    
    
    135,296
    
    
    
    
    
    
    
    
    
    
    
    55,939Total noninterest-
earning assets
    
    $
    366,091
    
    
    
    
    
    
    
    
    
    
    $
    255,908
    
    
    
    
    
    
    
    
    
    
    $
    148,311Total assets
    
    $
    2,956,280
    
    
    
    
    
    
    
    
    
    
    $
    2,495,354
    
    
    
    
    
    
    
    
    
    
    $
    1,656,778
 
 1
    
    2008 average loan balances exclude nonaccrual loans. 2007 and 2006 average loan
balances include nonaccrual loans, as they were not material. Interest income collected on
nonaccrual loans has been included.2
    
    Installment loans are stated net of unearned income.3
    
    The average balance of and the related yield associated with securities available for
sale are based on the cost of such securities.4
    
    Fully Taxable Equivalent (FTE) at the rate of 35%. The FTE basis adjusts for the
tax benefits of income on certain tax-exempt loans and investments using the federal statutory rate
of 35% for each period presented. The Company believes this measure to be the preferred industry
measurement of net interest income and provides relevant comparison between taxable and non-taxable
amounts.  32




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##### Table of Contents



2008
    
    
    2007
    
    
    2006Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-bearing
liabilities:DepositsSavings, interest
checking,
and money market
accounts
    
    $
    645,636
    
    
    $
    9,588
    
    
    
    1.49
    %
    
    $
    654,696
    
    
    $
    16,703
    
    
    
    2.55
    %
    
    $
    493,019
    
    
    $
    10,524
    
    
    
    2.13
    %Time deposits
    
    
    1,317,362
    
    
    
    48,502
    
    
    
    3.68
    %
    
    
    951,455
    
    
    
    44,669
    
    
    
    4.69
    %
    
    
    641,672
    
    
    
    25,566
    
    
    
    3.98
    %Total deposits
    
    $
    1,962,998
    
    
    $
    58,090
    
    
    
    2.96
    %
    
    $
    1,606,151
    
    
    $
    61,372
    
    
    
    3.82
    %
    
    $
    1,134,691
    
    
    $
    36,090
    
    
    
    3.18
    %Securities sold under
repurchase agreements
and short-term
borrowings
    
    
    106,309
    
    
    
    2,111
    
    
    
    1.99
    %
    
    
    95,715
    
    
    
    4,183
    
    
    
    4.37
    %
    
    
    32,487
    
    
    
    1,469
    
    
    
    4.52
    %Subordinated debentures
    
    
    88,662
    
    
    
    4,555
    
    
    
    5.14
    %
    
    
    60,730
    
    
    
    4,512
    
    
    
    7.43
    %
    
    
    13,403
    
    
    
    1,043
    
    
    
    7.78
    %FHLB advances and notes
payable
    
    
    254,154
    
    
    
    10,735
    
    
    
    4.22
    %
    
    
    247,007
    
    
    
    11,906
    
    
    
    4.82
    %
    
    
    130,752
    
    
    
    6,798
    
    
    
    5.20
    %Total interest-bearing
liabilities
    
    $
    2,412,123
    
    
    $
    75,491
    
    
    
    3.13
    %
    
    $
    2,009,603
    
    
    $
    81,973
    
    
    
    4.08
    %
    
    $
    1,311,333
    
    
    $
    45,400
    
    
    
    3.46
    %Noninterest bearing
liabilities:Demand deposits
    
    $
    187,058
    
    
    
    
    
    
    
    
    
    
    $
    184,529
    
    
    
    
    
    
    
    
    
    
    $
    147,947Other liabilities
    
    
    24,832
    
    
    
    
    
    
    
    
    
    
    
    29,067
    
    
    
    
    
    
    
    
    
    
    
    18,952Total non-interest-
bearing liabilities
    
    $
    211,890
    
    
    
    
    
    
    
    
    
    
    $
    213,596
    
    
    
    
    
    
    
    
    
    
    $
    166,899Shareholders equity
    
    
    332,267
    
    
    
    
    
    
    
    
    
    
    
    272,155
    
    
    
    
    
    
    
    
    
    
    
    178,546Total liabilities and
shareholders equity
    
    $
    2,956,280
    
    
    
    
    
    
    
    
    
    
    $
    2,495,354
    
    
    
    
    
    
    
    
    
    
    $
    1,656,778Net interest income
    
    
    
    
    
    $
    95,799
    
    
    
    
    
    
    
    
    
    
    $
    95,206
    
    
    
    
    
    
    
    
    
    
    $
    72,107Margin analysis:Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.48
    %
    
    
    
    
    
    
    
    
    
    
    3.83
    %
    
    
    
    
    
    
    
    
    
    
    4.33
    %Net yield on interest-
earning assets (net
interest margin)
    
    
    
    
    
    
    
    
    
    
    3.70
    %
    
    
    
    
    
    
    
    
    
    
    4.25
    %
    
    
    
    
    
    
    
    
    
    
    4.78
    %
  33




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##### Table of Contents



Rate/Volume Analysis
 2008 vs. 2007
    
    
    2007 vs. 2006Rate/
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    Rate/
    
    
    TotalVolume
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Volume
    
    
    Rate
    
    
    Volume
    
    
    ChangeInterest income:Loans, net of unearned income
    
    $
    19,449
    
    
    $
    (27,349
    )
    
    $
    (3,176
    )
    
    $
    (11,076
    )
    
    $
    48,133
    
    
    $
    2,846
    
    
    $
    1,195
    
    
    $
    52,174Investment securities:Taxable
    
    
    4,709
    
    
    
    (227
    )
    
    
    (127
    )
    
    
    4,355
    
    
    
    5,030
    
    
    
    346
    
    
    
    766
    
    
    
    6,142Tax-exempt
    
    
    631
    
    
    
    20
    
    
    
    10
    
    
    
    661
    
    
    
    1,097
    
    
    
    9
    
    
    
    62
    
    
    
    1,168FHLB and other stock, at cost
    
    
    211
    
    
    
    (129
    )
    
    
    (47
    )
    
    
    35
    
    
    
    170
    
    
    
    65
    
    
    
    37
    
    
    
    272Other short-term investments
    
    
    841
    
    
    
    (44
    )
    
    
    (681
    )
    
    
    116
    
    
    
    (86
    )
    
    
    5
    
    
    
    (3
    )
    
    
    (84
    )Total interest income
    
    
    25,841
    
    
    
    (27,729
    )
    
    
    (4,021
    )
    
    
    (5,909
    )
    
    
    54,344
    
    
    
    3,271
    
    
    
    2,057
    
    
    
    59,672Interest Expense:Savings, interest checking, and
money market accounts
    
    
    (651
    )
    
    
    (6,846
    )
    
    
    382
    
    
    
    (7,115
    )
    
    
    3,248
    
    
    
    2,065
    
    
    
    866
    
    
    
    6,179Time deposits
    
    
    17,215
    
    
    
    (9,665
    )
    
    
    (3,717
    )
    
    
    3,833
    
    
    
    12,343
    
    
    
    4,559
    
    
    
    2,201
    
    
    
    19,103Short-term borrowings
    
    
    511
    
    
    
    (2,334
    )
    
    
    (249
    )
    
    
    (2,072
    )
    
    
    2,800
    
    
    
    (31
    )
    
    
    (55
    )
    
    
    2,714Subordinated debentures
    
    
    2,081
    
    
    
    (1,396
    )
    
    
    (642
    )
    
    
    43
    
    
    
    3,683
    
    
    
    (47
    )
    
    
    (167
    )
    
    
    3,469Notes payable
    
    
    349
    
    
    
    (1,477
    )
    
    
    (43
    )
    
    
    (1,171
    )
    
    
    6,065
    
    
    
    (501
    )
    
    
    (456
    )
    
    
    5,108Total interest expense
    
    
    19,505
    
    
    
    (21,718
    )
    
    
    (4,269
    )
    
    
    (6,482
    )
    
    
    28,139
    
    
    
    6,045
    
    
    
    2,389
    
    
    
    36,573Net interest income
    
    $
    6,336
    
    
    $
    (6,011
    )
    
    $
    248
    
    
    $
    573
    
    
    $
    26,205
    
    
    $
    (2,774
    )
    
    $
    (332
    )
    
    $
    23,099
    34




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##### Table of Contents



Provision for Loan Losses
        35




---



##### Table of Contents



Noninterest Income
  Noninterest Expense
  Income Taxes.
  36




---



##### Table of Contents



Changes in Financial Condition
         37




---



##### Table of Contents



Liquidity and Capital Resources
 Liquidity
    Capital Resources
    38




---



##### Table of Contents




    
    On December 28, 2005, CVBG issued $13,403 of subordinated debentures, as part of
a privately placed pool of trust preferred securities. The securities, due in
2036, bear interest at a floating rate of 1.54% above the three-month LIBOR rate,
reset quarterly, and are callable in five years without penalty.
    
    On July 31, 2001, CVBG issued $4,124 of subordinated debentures, as part of a
privately placed pool of trust preferred securities. The securities, due in 2031,
bear interest at a floating rate of 3.58% above the three-month LIBOR rate, reset
quarterly, and are callable in five years without penalty.
         39




---



##### Table of Contents



Minimum Amounts tobe Well CapitalizedMinimum Required
    
    
    Under Promptfor Capital
    
    
    CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsActual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)2008Total Capital (to Risk Weighted Assets)Consolidated
    
    $
    344.0
    
    
    
    14.9
    
    
    $
    184.8
    
    
    
    8.0
    
    
    $
    231.1
    
    
    
    10.0Bank
    
    
    335.8
    
    
    
    14.6
    
    
    
    184.4
    
    
    
    8.0
    
    
    
    230.5
    
    
    
    10.0Tier 1 Capital (to Risk Weighted
Assets)Consolidated
    
    $
    315.0
    
    
    
    13.6
    
    
    $
    92.4
    
    
    
    4.0
    
    
    $
    138.6
    
    
    
    6.0Bank
    
    
    306.8
    
    
    
    13.3
    
    
    
    92.2
    
    
    
    4.0
    
    
    
    138.3
    
    
    
    6.0Tier 1 Capital (to Average Assets)Consolidated
    
    $
    315.0
    
    
    
    11.3
    
    
    $
    111.9
    
    
    
    4.0
    
    
    $
    139.9
    
    
    
    5.0Bank
    
    
    306.8
    
    
    
    11.0
    
    
    
    111.8
    
    
    
    4.0
    
    
    
    137.7
    
    
    
    5.02007Total Capital (to Risk Weighted Assets)Consolidated
    
    $
    280.2
    
    
    
    11.5
    
    
    $
    194.3
    
    
    
    8.0
    
    
    $
    242.8
    
    
    
    10.0Bank
    
    
    270.6
    
    
    
    11.1
    
    
    
    194.6
    
    
    
    8.0
    
    
    
    243.3
    
    
    
    10.0Tier 1 Capital (to Risk Weighted
Assets)Consolidated
    
    $
    249.8
    
    
    
    10.3
    
    
    $
    97.1
    
    
    
    4.0
    
    
    $
    145.7
    
    
    
    6.0Bank
    
    
    240.1
    
    
    
    9.9
    
    
    
    97.3
    
    
    
    4.0
    
    
    
    146.0
    
    
    
    6.0Tier 1 Capital (to Average Assets)Consolidated
    
    $
    249.8
    
    
    
    9.0
    
    
    $
    111.1
    
    
    
    4.0
    
    
    $
    138.9
    
    
    
    5.0Bank
    
    
    240.1
    
    
    
    8.7
    
    
    
    111.0
    
    
    
    4.0
    
    
    
    138.8
    
    
    
    5.0
 Off-Balance Sheet Arrangements
  Less than 1Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    More than 5Years
    
    
    TotalCommitments to make loans  fixed
    
    $
    9,221
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    9,221Commitments to make loans  variable
    
    
    9,427
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,427Unused lines of credit
    
    
    194,772
    
    
    
    60,051
    
    
    
    17,289
    
    
    
    84,528
    
    
    
    356,640Letters of credit
    
    
    29,573
    
    
    
    2,679
    
    
    
    7,393
    
    
    
    6,894
    
    
    
    46,539Total
    
    $
    242,993
    
    
    $
    62,730
    
    
    $
    24,682
    
    
    $
    91,422
    
    
    $
    421,827
  40




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##### Table of Contents



Asset/Liability Management
          41




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##### Table of Contents



Disclosure of Contractual Obligations
  Less than 1Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    More than 5Years
    
    
    TotalCertificate of deposits
    
    $
    1,283,669
    
    
    $
    121,834
    
    
    $
    3,812
    
    
    $
    3,934
    
    
    $
    1,413,249Federal funds purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase agreements
    
    
    35,302
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,302FHLB advances and notes payable
    
    
    29,928
    
    
    
    52,845
    
    
    
    65,918
    
    
    
    80,658
    
    
    
    229,349Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,662
    
    
    
    88,662Operating lease obligations
    
    
    1,300
    
    
    
    1,887
    
    
    
    1,361
    
    
    
    1,483
    
    
    
    6,031Deferred compensation
    
    
    1,919
    
    
    
    
    
    
    
    
    
    
    
    2,026
    
    
    
    3,945Purchase obligations
    
    
    203
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203Total
    
    $
    1,352,321
    
    
    $
    176,566
    
    
    $
    71,091
    
    
    $
    176,763
    
    
    $
    1,776,741
  Inflation
    Effect of New Accounting Standards
   42




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##### Table of Contents



.
 
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   43




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Managements Annual Report on Internal Control Over Financial Reporting
      44




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
ControlIntegrated Framework
    Internal ControlIntegrated Framework
 Accounting for Uncertainty in Income Taxes
  
  45




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  Accounting for
Uncertainty in Income Taxes
  
  46




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##### Table of Contents



GREEN BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2008 and 2007
(Amounts in thousands, except share and per share data)
 2008
    
    
    2007ASSETSCash and due from banks
    
    $
    193,095
    
    
    $
    65,717Federal funds sold
    
    
    5,263
    
    
    
    Cash and cash equivalents
    
    
    198,358
    
    
    
    65,717Securities available for sale
    
    
    203,562
    
    
    
    235,273Securities held to maturity (with a market value of $601 and $1,280)
    
    
    657
    
    
    
    1,303Loans held for sale
    
    
    442
    
    
    
    2,331Loans, net of unearned interest
    
    
    2,223,390
    
    
    
    2,356,376Allowance for loan losses
    
    
    (48,811
    )
    
    
    (34,111
    )Other real estate owned and repossessed assets
    
    
    45,371
    
    
    
    4,859Premises and equipment, net
    
    
    83,359
    
    
    
    82,697FHLB and other stock, at cost
    
    
    13,030
    
    
    
    12,322Cash surrender value of life insurance
    
    
    29,539
    
    
    
    28,466Goodwill
    
    
    143,389
    
    
    
    143,140Core deposit and other intangibles
    
    
    12,085
    
    
    
    14,687Other assets
    
    
    40,300
    
    
    
    34,681Total assets
    
    $
    2,944,671
    
    
    $
    2,947,741LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesNoninterest-bearing deposits
    
    $
    176,685
    
    
    $
    201,289Interest-bearing deposits
    
    
    2,007,462
    
    
    
    1,785,504Total deposits
    
    
    2,184,147
    
    
    
    1,986,793Federal funds purchased
    
    
    
    
    
    
    87,787Repurchase agreements
    
    
    35,302
    
    
    
    106,738FHLB advances and notes payable
    
    
    229,349
    
    
    
    318,690Subordinated debentures
    
    
    88,662
    
    
    
    88,662Accrued interest payable and other liabilities
    
    
    25,980
    
    
    
    36,594Total liabilities
    
    $
    2,563,440
    
    
    $
    2,625,264Shareholders equityPreferred stock: no par, 1,000,000 shares authorized, 72,278 and
-0- shares outstanding
    
    $
    65,346
    
    
    $
    Common stock: $2 par, 20,000,000 shares authorized, 13,112,687 and
12,931,015 shares outstanding
    
    
    26,225
    
    
    
    25,862Common stock warrants
    
    
    6,934
    
    
    
    Additional paid-in capital
    
    
    187,742
    
    
    
    185,170Retained earnings
    
    
    95,647
    
    
    
    109,938Accumulated other comprehensive income (loss)
    
    
    (663
    )
    
    
    1,507Total shareholders equity
    
    
    381,231
    
    
    
    322,477Total liabilities and shareholders equity
    
    $
    2,944,671
    
    
    $
    2,947,741
   47




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##### Table of Contents



GREEN BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2008, 2007 and 2006
(Amounts in thousands, except share and per share data)
 2008
    
    
    2007
    
    
    2006Interest incomeInterest and fees on loans
    
    $
    155,627
    
    
    $
    166,673
    
    
    $
    114,493Taxable securities
    
    
    12,770
    
    
    
    8,415
    
    
    
    2,273Nontaxable securities
    
    
    1,297
    
    
    
    867
    
    
    
    108FHLB and other stock
    
    
    647
    
    
    
    617
    
    
    
    345Federal funds sold and other
    
    
    175
    
    
    
    54
    
    
    
    138Total interest income
    
    
    170,516
    
    
    
    176,626
    
    
    
    117,357Interest expenseDeposits
    
    
    58,090
    
    
    
    61,372
    
    
    
    36,090Federal funds purchased and repurchase agreements
    
    
    2,111
    
    
    
    4,183
    
    
    
    1,469FHLB advances and notes payable
    
    
    10,735
    
    
    
    11,905
    
    
    
    6,798Subordinated debentures
    
    
    4,555
    
    
    
    4,513
    
    
    
    1,043Total interest expense
    
    
    75,491
    
    
    
    81,973
    
    
    
    45,400Net interest income
    
    
    95,025
    
    
    
    94,653
    
    
    
    71,957Provision for loan losses
    
    
    52,810
    
    
    
    14,483
    
    
    
    5,507Net interest income after provision for loan losses
    
    
    42,215
    
    
    
    80,170
    
    
    
    66,450Noninterest incomeService charges on deposit accounts
    
    
    23,176
    
    
    
    19,169
    
    
    
    13,217Other charges and fees
    
    
    2,192
    
    
    
    2,012
    
    
    
    1,830Trust and investment services income
    
    
    1,878
    
    
    
    2,019
    
    
    
    2,057Mortgage banking income
    
    
    804
    
    
    
    1,524
    
    
    
    1,116Net gain (loss) on the sale of securities
    
    
    2,661
    
    
    
    (41
    )
    
    
    (8
    )Other income
    
    
    2,903
    
    
    
    2,919
    
    
    
    2,498Total noninterest income
    
    
    33,614
    
    
    
    27,602
    
    
    
    20,710Noninterest expenseEmployee compensation
    
    
    33,615
    
    
    
    31,132
    
    
    
    22,629Employee benefits
    
    
    4,788
    
    
    
    4,359
    
    
    
    3,679Occupancy expense
    
    
    6,900
    
    
    
    5,711
    
    
    
    4,285Equipment expense
    
    
    3,555
    
    
    
    2,618
    
    
    
    2,130Computer hardware/software expense
    
    
    2,752
    
    
    
    2,169
    
    
    
    1,823Professional services
    
    
    2,069
    
    
    
    2,184
    
    
    
    1,596Advertising
    
    
    3,538
    
    
    
    2,736
    
    
    
    2,584Loss (gain) on OREO and repossessed assets
    
    
    7,028
    
    
    
    (76
    )
    
    
    559Core deposit and other intangibles amortization
    
    
    2,602
    
    
    
    2,011
    
    
    
    1,082Other expenses
    
    
    18,990
    
    
    
    16,408
    
    
    
    12,341Total noninterest expense
    
    
    85,837
    
    
    
    69,252
    
    
    
    52,708Income (loss) before income taxes
    
    
    (10,008
    )
    
    
    38,520
    
    
    
    34,452Provision (benefit) for income taxes
    
    
    (4,648
    )
    
    
    14,146
    
    
    
    13,190Net income (loss)
    
    $
    (5,360
    )
    
    
    24,374
    
    
    $
    21,262Preferred stock dividends and accretion of discount on warrants
    
    
    92
    
    
    
    
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (5,452
    )
    
    $
    24,374
    
    
    $
    21,262Earnings per share:Basic
    
    $
    (0.42
    )
    
    $
    2.07
    
    
    $
    2.17Diluted
    
    
    (0.42
    )
    
    
    2.07
    
    
    
    2.14
   48




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##### Table of Contents



GREEN BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
Years ended December 31, 2008, 2007 and 2006
(Amounts in thousands, except share and per share data)
 Warrants
    
    
    
    
    
    
    
    
    
    
    AccumulatedFor
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred
    
    
    Common Stock
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    ShareholdersStock
    
    
    Shares
    
    
    Amount
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income(Loss)
    
    
    EquityBalance, January 1, 2006
    
    $
    
    
    
    
    9,766,336
    
    
    $
    19,533
    
    
    $
    
    
    
    $
    70,700
    
    
    $
    78,158
    
    
    $
    (370
    )
    
    $
    168,021Common stock transactions:Exercise of shares under stock option
plan
    
    
    
    
    
    
    49,264
    
    
    
    99
    
    
    
    
    
    
    
    839
    
    
    
    
    
    
    
    
    
    
    
    938Common stock exchanged for
exercised stock options
    
    
    
    
    
    
    (4,733
    )
    
    
    (10
    )
    
    
    
    
    
    
    (167
    )
    
    
    
    
    
    
    
    
    
    
    (177
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    354
    
    
    
    
    
    
    
    
    
    
    
    354Stock option tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    102Dividends paid ($.64 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,270
    )
    
    
    
    
    
    
    (6,270
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,262
    
    
    
    
    
    
    
    21,262Change in unrealized gains (losses),
net of reclassification and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241
    
    
    
    241Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,503Balance, December 31, 2006
    
    
    
    
    
    
    9,810,867
    
    
    
    19,622
    
    
    
    
    
    
    
    71,828
    
    
    
    93,150
    
    
    
    (129
    )
    
    
    184,471Common stock transactions:Issuance of shares in acquisition
    
    
    
    
    
    
    3,091,495
    
    
    
    6,183
    
    
    
    
    
    
    
    112,292
    
    
    
    
    
    
    
    
    
    
    
    118,475Exercise of shares under stock option
plan
    
    
    
    
    
    
    38,529
    
    
    
    77
    
    
    
    
    
    
    
    743
    
    
    
    
    
    
    
    
    
    
    
    820Common stock exchanged for
exercised stock options
    
    
    
    
    
    
    (9,876
    )
    
    
    (20
    )
    
    
    
    
    
    
    (303
    )
    
    
    
    
    
    
    
    
    
    
    (323
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    472
    
    
    
    
    
    
    
    
    
    
    
    472Stock option tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    138Implementation of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    800Dividends paid ($.68 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,386
    )
    
    
    
    
    
    
    (8,386
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,374
    
    
    
    
    
    
    
    24,374Change in unrealized gains (losses),
net of reclassification and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,636
    
    
    
    1,636Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,010Balance, December 31, 2007
    
    
    
    
    
    
    12,931,015
    
    
    
    25,862
    
    
    
    
    
    
    
    185,170
    
    
    
    109,938
    
    
    
    1,507
    
    
    
    322,477Preferred stock transactions:Issuance of 72,278 shares of preferred
stock
    
    
    72,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,278Discount associated with 635,504 common
stock warrants issued with preferred
stock
    
    
    (6,934
    )
    
    
    
    
    
    
    
    
    
    
    6,934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accretion of preferred stock discount
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    Preferred stock dividends accrued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    (90
    )Common stock transactions:Exercise of shares under stock option
plan
    
    
    
    
    
    
    9,759
    
    
    
    19
    
    
    
    
    
    
    
    201
    
    
    
    
    
    
    
    
    
    
    
    220Common stock exchanged for
exercised stock options
    
    
    
    
    
    
    (7,991
    )
    
    
    (16
    )
    
    
    
    
    
    
    (93
    )
    
    
    
    
    
    
    
    
    
    
    (109
    )Issuance of restricted common shares
    
    
    
    
    
    
    60,907
    
    
    
    122
    
    
    
    
    
    
    
    (122
    )
    
    
    
    
    
    
    
    
    
    
    Stock dividend
    
    
    
    
    
    
    118,997
    
    
    
    238
    
    
    
    
    
    
    
    1,822
    
    
    
    (2,060)            -
    
    
    
    
    
    
    
    Compensation expense:Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    456
    
    
    
    
    
    
    
    
    
    
    
    456Restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    303
    
    
    
    
    
    
    
    
    
    
    
    303Stock option tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Dividends paid ($.52 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,779
    )
    
    
    
    
    
    
    (6,779
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,360
    )
    
    
    
    
    
    
    (5,360
    )Change in unrealized gains
(losses), net of reclassification
and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,170
    )
    
    
    (2,170
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,530
    )Balance, December 31, 2008
    
    $
    65,346
    
    
    
    13,112,687
    
    
    $
    26,225
    
    
    $
    6,934
    
    
    $
    187,742
    
    
    $
    95,647
    
    
    $
    (663
    )
    
    $
    381,231
   49




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##### Table of Contents



GREEN BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2008, 2007 and 2006
(Amounts in thousands)
 2008
    
    
    2007
    
    
    2006Cash flows from operating activitiesNet income (loss)
    
    $
    (5,360
    )
    
    $
    24,374
    
    
    $
    21,262Adjustments to reconcile net income to net cash provided from operating
activitiesProvision for loan losses
    
    
    52,810
    
    
    
    14,483
    
    
    
    5,507Depreciation and amortization
    
    
    7,030
    
    
    
    5,786
    
    
    
    4,143Security amortization and accretion, net
    
    
    (983
    )
    
    
    (637
    )
    
    
    (42
    )Write down of investment for impairment
    
    
    174
    
    
    
    
    
    
    
    (Gain) loss on sale of securities
    
    
    (2,661
    )
    
    
    41
    
    
    
    8FHLB stock dividends
    
    
    (464
    )
    
    
    
    
    
    
    (341
    )Net gain on sale of mortgage loans
    
    
    (573
    )
    
    
    (1,205
    )
    
    
    (869
    )Originations of mortgage loans held for sale
    
    
    (49,501
    )
    
    
    (74,994
    )
    
    
    (66,964
    )Proceeds from sales of mortgage loans
    
    
    51,962
    
    
    
    84,282
    
    
    
    68,747Increase in cash surrender value of life insurance
    
    
    (1,073
    )
    
    
    (938
    )
    
    
    (761
    )Net losses from sales of fixed assets
    
    
    665
    
    
    
    86
    
    
    
    1Stock-based compensation expense
    
    
    759
    
    
    
    472
    
    
    
    354Net (gain) loss on OREO and repossessed assets
    
    
    7,028
    
    
    
    (76
    )
    
    
    (69
    )Deferred tax benefit
    
    
    (4,374
    )
    
    
    (1,111
    )
    
    
    (499
    )Net changes:Other assets
    
    
    78
    
    
    
    (6,834
    )
    
    
    (4,534
    )Accrued interest payable and other liabilities
    
    
    (10,875
    )
    
    
    10,639
    
    
    
    2,472Net cash provided from operating activities
    
    
    44,642
    
    
    
    54,368
    
    
    
    28,415Cash flows from investing activitiesPurchase of securities available for sale
    
    
    (180,626
    )
    
    
    (30,160
    )
    
    
    (13,936
    )Proceeds from sale of securities available for sale
    
    
    123,701
    
    
    
    2,230
    
    
    
    1,979Proceeds from maturities of securities available for sale
    
    
    88,711
    
    
    
    33,762
    
    
    
    23,507Proceeds from sale of securities held to maturity
    
    
    
    
    
    
    496
    
    
    
    Proceeds from maturities of securities held to maturity
    
    
    645
    
    
    
    745
    
    
    
    835Purchase of life insurance
    
    
    
    
    
    
    
    
    
    
    (652
    )Purchase of FHLB stock
    
    
    (417
    )
    
    
    (2,304
    )
    
    
    Net change in loans
    
    
    27,754
    
    
    
    (203,894
    )
    
    
    (167,453
    )Net cash paid in acquisitions
    
    
    
    
    
    
    (24,611
    )
    
    
    Proceeds from sale of other real estate
    
    
    20,654
    
    
    
    4,080
    
    
    
    5,469Improvements to other real estate
    
    
    (1,071
    )
    
    
    (32
    )
    
    
    (47
    )Proceeds from sale of fixed assets
    
    
    58
    
    
    
    175
    
    
    
    48Premises and equipment expenditures
    
    
    (5,814
    )
    
    
    (11,143
    )
    
    
    (10,383
    )Net cash provided (used) in investing activities
    
    
    73,595
    
    
    
    (230,656
    )
    
    
    (160,633
    )Cash flows from financing activitiesNet change in deposits
    
    
    197,354
    
    
    
    (44,806
    )
    
    
    36,626Net change in federal funds purchased and repurchase agreements
    
    
    (159,223
    )
    
    
    57,070
    
    
    
    24,667Tax benefit resulting from stock options
    
    
    5
    
    
    
    138
    
    
    
    126Proceeds from FHLB advances and notes payable
    
    
    20,916
    
    
    
    189,500
    
    
    
    446,321Proceeds from subordinated debentures
    
    
    
    
    
    
    57,732
    
    
    
    Repayment of FHLB advances and notes payable
    
    
    (110,258
    )
    
    
    (80,380
    )
    
    
    (373,896
    )Common stock dividends paid
    
    
    (6,779
    )
    
    
    (8,386
    )
    
    
    (6,270
    )Proceeds from issuance of preferred stock
    
    
    72,278
    
    
    
    
    
    
    
    Proceeds from issuance of common stock
    
    
    111
    
    
    
    497
    
    
    
    761Net cash provided from financing activities
    
    
    14,404
    
    
    
    171,365
    
    
    
    128,335Net change in cash and cash equivalents
    
    
    132,641
    
    
    
    (4,923
    )
    
    
    (3,883
    )Cash and cash equivalents, beginning of year
    
    
    65,717
    
    
    
    70,640
    
    
    
    74,523Cash and cash equivalents, end of year
    
    $
    198,358
    
    
    $
    65,717
    
    
    $
    70,640Supplemental disclosures  cash and noncashInterest paid
    
    $
    77,761
    
    
    $
    76,385
    
    
    $
    44,424Income taxes paid
    
    
    5,674
    
    
    
    17,225
    
    
    
    13,154Loans converted to other real estate
    
    
    37,991
    
    
    
    7,955
    
    
    
    5,095Unrealized (loss) gain on available for sale securities, net of tax
    
    
    (1,905
    )
    
    
    1,636
    
    
    
    241Fair value of assets acquired
    
    
    
    
    
    
    1,011,590
    
    
    
    Fair value of liabilities assumed
    
    
    
    
    
    
    847,322
    
    
    
    
   50




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
 Nature of Operations
 Use of Estimates
 Cash Flows
 Securities
  Investments in Equity Securities Carried at Cost
 Loans
    51




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Allowance for Loan Losses
  Foreclosed Assets
 Premises and Equipment
 Mortgage Banking Activities
 Bank Owned Life Insurance
   52




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Goodwill, Core Deposit Intangibles and Other Intangible Assets
   Long-term Assets
 Repurchase Agreements
 Benefit Plans
 Stock Compensation
   53




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Income Taxes
 Loan Commitments and Related Financial Instruments
 Earnings Per Common Share
 Comprehensive Income
 Recent Accounting Pronouncements
 Business Combinations
    54




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Loss Contingencies
 Restrictions on Cash
 Segments
 Fair Value of Financial Instruments
 Reclassifications
   55




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 2  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAvailable for Sale2008U.S. government agencies
    
    $
    98,143
    
    
    $
    685
    
    
    $
    (22
    )
    
    $
    98,806Obligations of states and political
subdivisions
    
    
    32,641
    
    
    
    139
    
    
    
    (976
    )
    
    
    31,804Mortgage-backed
    
    
    70,915
    
    
    
    945
    
    
    
    (1,401
    )
    
    
    70,459Trust preferred securities
    
    
    2,954
    
    
    
    
    
    
    
    (461
    )
    
    
    2,493$
    204,653
    
    
    $
    1,769
    
    
    $
    (2,860
    )
    
    $
    203,5622007U.S. government agencies
    
    $
    41,287
    
    
    $
    453
    
    
    $
    (3
    )
    
    $
    41,737Obligations of states and political
subdivisions
    
    
    34,150
    
    
    
    310
    
    
    
    (72
    )
    
    
    34,388Mortgage-backed
    
    
    154,264
    
    
    
    2,044
    
    
    
    (137
    )
    
    
    156,171Trust preferred securities
    
    
    3,094
    
    
    
    
    
    
    
    (117
    )
    
    
    2,977$
    232,795
    
    
    $
    2,807
    
    
    $
    (329
    )
    
    $
    235,273Held to Maturity2008Obligations of states and political
subdivisions
    
    $
    404
    
    
    $
    7
    
    
    $
    
    
    
    $
    411Other securities
    
    
    253
    
    
    
    
    
    
    
    (63
    )
    
    
    190$
    657
    
    
    $
    7
    
    
    $
    (63
    )
    
    $
    6012007Obligations of states and political
subdivisions
    
    $
    1,049
    
    
    $
    8
    
    
    $
    (1
    )
    
    $
    1,056Other securities
    
    
    254
    
    
    
    
    
    
    
    (30
    )
    
    
    224$
    1,303
    
    
    $
    8
    
    
    $
    (31
    )
    
    $
    1,280
   56




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 2  SECURITIES
  Available for Sale
    
    
    Held to MaturityFair
    
    
    Carrying
    
    
    FairValue
    
    
    Amount
    
    
    ValueDue in one year or less
    
    $
    156
    
    
    $
    
    
    
    $
    Due after one year through five years
    
    
    2,625
    
    
    
    657
    
    
    
    601Due after five years through ten years
    
    
    57,951
    
    
    
    
    
    
    
    Due after ten years
    
    
    72,372
    
    
    
    
    
    
    
    Collateralized mortgage obligations
    
    
    68,372
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    2,086
    
    
    
    
    
    
    
    Total maturities
    
    $
    203,562
    
    
    $
    657
    
    
    $
    601
    Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss2008U. S. government agencies
    
    $
    977
    
    
    $
    (22
    )
    
    $
    
    
    
    $
    
    
    
    $
    977
    
    
    $
    (22
    )Obligations of states and
political subdivisions
    
    
    18,445
    
    
    
    (838
    )
    
    
    643
    
    
    
    (139
    )
    
    
    19,088
    
    
    
    (977
    )Other securities
    
    
    1,210
    
    
    
    (14
    )
    
    
    1,474
    
    
    
    (509
    )
    
    
    2,684
    
    
    
    (523
    )Collateralized mortgage
obligations
    
    
    8,721
    
    
    
    (1,310
    )
    
    
    
    
    
    
    
    
    
    
    8,721
    
    
    
    (1,310
    )Mortgage-backed securities
    
    
    640
    
    
    
    (24
    )
    
    
    1,446
    
    
    
    (67
    )
    
    
    2,086
    
    
    
    (91
    )Total temporarily impaired
    
    $
    29,993
    
    
    $
    (2,208
    )
    
    $
    3,563
    
    
    $
    (715
    )
    
    $
    33,556
    
    
    $
    (2,923
    )2007U. S. government agencies
    
    $
    
    
    
    $
    
    
    
    $
    497
    
    
    $
    (3
    )
    
    $
    497
    
    
    $
    (3
    )Obligations of states and
political subdivisions
    
    
    3,042
    
    
    
    (66
    )
    
    
    899
    
    
    
    (7
    )
    
    
    3,941
    
    
    
    (73
    )Other securities
    
    
    2,998
    
    
    
    (117
    )
    
    
    224
    
    
    
    (30
    )
    
    
    3,222
    
    
    
    (147
    )Collateralized mortgage
obligations
    
    
    4,246
    
    
    
    (43
    )
    
    
    
    
    
    
    
    
    
    
    4,246
    
    
    
    (43
    )Mortgage-backed securities
    
    
    1,262
    
    
    
    (2
    )
    
    
    5,513
    
    
    
    (92
    )
    
    
    6,775
    
    
    
    (94
    )Total temporarily impaired
    
    $
    11,548
    
    
    $
    (228
    )
    
    $
    7,133
    
    
    $
    (132
    )
    
    $
    18,681
    
    
    $
    (360
    )
    57




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 3  LOANS
  2008
    
    
    2007Commercial real estate
    
    $
    1,430,225
    
    
    $
    1,549,457Residential real estate
    
    
    397,922
    
    
    
    398,779Commercial
    
    
    315,099
    
    
    
    320,264Consumer
    
    
    89,733
    
    
    
    97,635Other
    
    
    4,656
    
    
    
    3,871Unearned interest
    
    
    (14,245
    )
    
    
    (13,630
    )Loans, net of unearned interest
    
    $
    2,223,390
    
    
    $
    2,356,376Allowance for loan losses
    
    $
    (48,811
    )
    
    $
    (34,111
    )
  2008
    
    
    2007
    
    
    2006Beginning balance
    
    $
    34,111
    
    
    $
    22,302
    
    
    $
    19,739Reserve acquired in acquisition
    
    
    
    
    
    
    9,022
    
    
    
    Provision for loan losses
    
    
    52,810
    
    
    
    14,483
    
    
    
    5,507Loans charged off
    
    
    (41,269
    )
    
    
    (13,471
    )
    
    
    (4,357
    )Recoveries of loans charged off
    
    
    3,159
    
    
    
    1,775
    
    
    
    1,413Balance, end of year
    
    $
    48,811
    
    
    $
    34,111
    
    
    $
    22,302
  2008
    
    
    2007
    
    
    2006Loans with no allowance allocated
    
    $
    29,602
    
    
    $
    
    
    
    $
    Loans with allowance allocated
    
    $
    17,613
    
    
    $
    36,267
    
    
    $
    5,067Amount of allowance allocated
    
    
    2,651
    
    
    
    5,440
    
    
    
    760Average impaired loan balance during the year
    
    
    48,347
    
    
    
    16,276
    
    
    
    6,897Interest income not recognized during impairment
    
    
    619
    
    
    
    237
    
    
    
    207
    58




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 3  LOANS
  2008
    
    
    2007Loans past due 90 days still on accrual
    
    $
    509
    
    
    $
    18Nonaccrual loans
    
    
    30,926
    
    
    
    32,060Total
    
    $
    31,435
    
    
    $
    32,078
   NOTE 4  FAIR VALUE DISCLOSURES
   Level 1
  Level 2
    59




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 4  FAIR VALUE DISCLOSURES
  Level 3
   Investment Securities Available-for-Sale
  Loans Held for Sale
  Impaired Loans
 
 Loan Servicing Rights
    60




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 4  FAIR VALUE DISCLOSURES
 Assets and Liabilities Recorded at Fair Value on a Recurring Basis
  December 31, 2008Total CarryingAmount inStatement of
    
    
    Assets/LiabilitiesFair Value Measurement Using
    
    
    Financial
    
    
    Measured at FairDescription
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Position
    
    
    ValueSecurities available for sale
    
    $
    
    
    
    $
    203,652
    
    
    $
    
    
    
    $
    203,652
    
    
    $
    203,652
 Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
  December 31, 2008Total CarryingAmount inStatement of
    
    
    Assets/LiabilitiesFair Value Measurement Using
    
    
    Financial
    
    
    Measured at FairDescription
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Position
    
    
    ValueImpaired Loans
    
    $
    
    
    
    $
    
    
    
    $
    43,364
    
    
    $
    43,364
    
    
    $
    43,364
   61




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 4  FAIR VALUE DISCLOSURES
  2008
    
    
    2007Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    198,358
    
    
    $
    198,358
    
    
    $
    65,717
    
    
    $
    65,717Securities available for sale
    
    
    203,562
    
    
    
    203,562
    
    
    
    235,273
    
    
    
    235,273Securities held to maturity
    
    
    657
    
    
    
    601
    
    
    
    1,303
    
    
    
    1,280Loans held for sale
    
    
    442
    
    
    
    445
    
    
    
    2,331
    
    
    
    2,355Loans, net
    
    
    2,174,579
    
    
    
    2,135,732
    
    
    
    2,322,265
    
    
    
    2,304,194FHLB, Bankers Bank and other stock
    
    
    13,030
    
    
    
    13,030
    
    
    
    12,322
    
    
    
    12,322Cash surrender value of life insurance
    
    
    29,539
    
    
    
    29,539
    
    
    
    28,466
    
    
    
    28,466Accrued interest receivable
    
    
    10,808
    
    
    
    10,808
    
    
    
    13,532
    
    
    
    13,532Financial liabilities:Deposit accounts
    
    $
    2,184,147
    
    
    $
    2,195,459
    
    
    $
    1,986,793
    
    
    $
    1,985,482Federal funds purchased and repurchase
agreements
    
    
    35,302
    
    
    
    35,302
    
    
    
    194,525
    
    
    
    194,525FHLB Advances and notes payable
    
    
    229,349
    
    
    
    232,731
    
    
    
    318,690
    
    
    
    320,661Subordinated debentures
    
    
    88,662
    
    
    
    74,570
    
    
    
    88,662
    
    
    
    87,599Accrued interest payable
    
    
    6,828
    
    
    
    6,828
    
    
    
    9,098
    
    
    
    9,098
    62




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 5  PREMISES AND EQUIPMENT
  2008
    
    
    2007Land
    
    $
    18,453
    
    
    $
    18,151Premises
    
    
    59,789
    
    
    
    56,100Leasehold improvements
    
    
    3,055
    
    
    
    2,551Furniture, fixtures and equipment
    
    
    24,117
    
    
    
    22,678Automobiles
    
    
    122
    
    
    
    122Construction in progress
    
    
    2,533
    
    
    
    4,334108,069
    
    
    
    103,936Accumulated depreciation
    
    
    (24,710
    )
    
    
    (21,239
    )$
    83,359
    
    
    $
    82,697
  2009
    
    $
    1,3002010
    
    
    9952011
    
    
    8922012
    
    
    7772013
    
    
    585Thereafter
    
    
    1,482Total
    
    $
    6,031
   63




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 6  GOODWILL AND OTHER INTANGIBLE ASSETS
 Goodwill
  2008
    
    
    2007Beginning of year
    
    $
    143,140
    
    
    $
    31,327Goodwill from acquisition during year
    
    
    
    
    
    
    111,813Adjustment to Goodwill1
    
    
    249
    
    
    
    End of year
    
    $
    143,389
    
    
    $
    143,140
 1
    
    Goodwill was adjusted for a correction of a deferred tax asset associated with the CVBG acquisition in 2007.   Core deposit and other intangible
  Core deposit intangibles
    
    2008
    
    
    2007Beginning of year
    
    $
    13,991
    
    
    $
    7,213Core deposit intangibles from acquisition during year
    
    
    
    
    
    
    8,740Accumulated amortization, beginning of year
    
    
    (5,805
    )
    
    
    (3,843
    )Amortization
    
    
    (2,499
    )
    
    
    (1,962
    )Accumulated amortization, end of year
    
    
    (8,304
    )
    
    
    (5,805
    )End of year
    
    $
    11,492
    
    
    $
    13,991
   64




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 6  GOODWILL AND OTHER INTANGIBLE ASSETS
 Other intangibles
    
    2008
    
    
    2007Beginning of year
    
    $
    696
    
    
    $
    Mortgage servicing rights from acquisition during year
    
    
    
    
    
    
    745Accumulated amortization, beginning of year
    
    
    (49
    )
    
    
    Amortization
    
    
    (103
    )
    
    
    (49
    )Accumulated amortization, end of year
    
    
    (152
    )
    
    
    (49
    )End of year
    
    $
    593
    
    
    $
    696
  2009
    
    $
    2,5992010
    
    
    2,5952011
    
    
    2,5412012
    
    
    2,4112013
    
    
    1,728Total
    
    $
    11,874
 NOTE 7  DEPOSITS
  2008
    
    
    2007Noninterest-bearing demand deposits
    
    $
    176,685
    
    
    $
    201,289Interest-bearing demand deposits
    
    
    531,983
    
    
    
    598,984Savings deposits
    
    
    62,230
    
    
    
    72,277Time deposits
    
    
    1,413,249
    
    
    
    1,114,243Total deposits
    
    $
    2,184,147
    
    
    $
    1,986,793
   2009
    
    $
    1,283,6692010
    
    
    102,1652011
    
    
    19,6692012
    
    
    2,5112013
    
    
    1,301Thereafter
    
    
    3,934
    65




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 8  BORROWINGS
   2008
    
    
    2007
    
    
    2006Average balance during the year
    
    $
    74,881
    
    
    $
    70,601
    
    
    $
    22,424Average interest rate during the year
    
    
    1.57
    %
    
    
    4.06
    %
    
    
    4.13
    %Maximum month-end balance during the year
    
    $
    98,925
    
    
    $
    114,045
    
    
    $
    26,753Weighted average interest rate at year-end
    
    
    0.10
    %
    
    
    3.25
    %
    
    
    4.08
    %
  2008
    
    
    2007Short-term borrowingsFixed rate FHLB advance, 4.04%
Maturing December 2009
    
    $
    10,000
    
    
    $
    Variable rate FHLB advances at 5.49% to 5.76%
Maturing November 2009 and December 2009
    
    
    19,500
    
    
    
    10,000Fixed rate FHLB advances, 3.90% to 6.10%
Matured January 2008 and July 2008
    
    
    
    
    
    
    99,409Total short-term borrowings
    
    
    29,500
    
    
    
    109,409Long-term borrowingsFixed rate FHLB advances, from 1.50% to 6.35%, 
Various maturities through July 2023
    
    
    162,849
    
    
    
    152,781Variable rate FHLB advances, from 5.00% to 5.75%, 
Maturities from January 2010 to December 2010
    
    
    37,000
    
    
    
    56,500Total long-term borrowings
    
    
    199,849
    
    
    
    209,281Total borrowings
    
    $
    229,349
    
    
    $
    318,690
    66




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 8  BORROWINGS
  Total2009
    
    $
    29,9282010
    
    
    37,4132011
    
    
    15,4322012
    
    
    65,4512013
    
    
    467Thereafter
    
    
    80,658$
    229,349
        67




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 8  BORROWINGS
    NOTE 9  BENEFIT PLANS
     68




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
 NOTE 10  INCOME TAXES
  2008
    
    
    2007
    
    
    2006Current  federal
    
    $
    (221
    )
    
    $
    13,161
    
    
    $
    11,424Current  state
    
    
    (53
    )
    
    
    2,096
    
    
    
    2,265Deferred  federal
    
    
    (3,649
    )
    
    
    (927
    )
    
    
    (416
    )Deferred  state
    
    
    (725
    )
    
    
    (184
    )
    
    
    (83
    )$
    (4,648
    )
    
    $
    14,146
    
    
    $
    13,190
  2008
    
    
    2007Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesAllowance for loan losses
    
    $
    19,146
    
    
    $
    
    
    
    $
    13,380
    
    
    $
    Deferred compensation
    
    
    1,962
    
    
    
    
    
    
    
    1,653
    
    
    
    Purchase accounting adjustments
    
    
    815
    
    
    
    
    
    
    
    1,219
    
    
    
    Depreciation
    
    
    
    
    
    
    (2,059
    )
    
    
    
    
    
    
    (1,771
    )FHLB dividends
    
    
    
    
    
    
    (1,717
    )
    
    
    
    
    
    
    (1,476
    )Core deposit intangible
    
    
    
    
    
    
    (5,371
    )
    
    
    
    
    
    
    (6,102
    )Unrealized (gain) loss on securities
    
    
    428
    
    
    
    
    
    
    
    
    
    
    
    (972
    )Other
    
    
    
    
    
    
    (708
    )
    
    
    868
    
    
    
    Total deferred income taxes
    
    $
    22,351
    
    
    $
    (9,855
    )
    
    $
    17,120
    
    
    $
    (10,321
    )
   2008
    
    
    2007
    
    
    2006Statutory federal tax rate
    
    
    (35.0
    %)
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net of federal benefit
    
    
    (5.2
    )
    
    
    3.2
    
    
    
    4.1Tax exempt income
    
    
    (8.0
    )
    
    
    (2.7
    )
    
    
    (0.7
    )Other
    
    
    1.8
    
    
    
    1.2
    
    
    
    (0.1
    )(46.4
    %)
    
    
    36.7
    %
    
    
    38.3
    %
    69




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 10  INCOME TAXES
  2007Unrecognized tax benefits at the beginning of the year
    
    $
    475Additional based on tax positions related to current year
    
    
    Additional based on tax positions related to prior years
    
    
    Reduction based on lapse of statute
    
    
    (400
    )Settlements
    
    
    (75
    )Unrecognized tax benefits at the end of the year
    
    $
    
       70




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 11  COMMITMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET
RISK
   2008
    
    
    2007Commitments to make loans  fixed
    
    $
    9,221
    
    
    $
    7,837Commitments to make loans  variable
    
    
    9,427
    
    
    
    23,843Unused lines of credit
    
    
    356,640
    
    
    
    704,729Letters of credit
    
    
    46,539
    
    
    
    58,615
  NOTE 12  CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
     71




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 12  CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
  Minimum Amounts tobe Well CapitalizedMinimum Required
    
    
    Under Promptfor Capital
    
    
    CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsActual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)2008Total Capital (to Risk Weighted Assets)Consolidated
    
    $
    344.0
    
    
    
    14.9
    
    
    $
    184.8
    
    
    
    8.0
    
    
    $
    231.1
    
    
    
    10.0Bank
    
    
    335.8
    
    
    
    14.6
    
    
    
    184.4
    
    
    
    8.0
    
    
    
    230.5
    
    
    
    10.0Tier 1 Capital (to Risk Weighted Assets)Consolidated
    
    $
    315.0
    
    
    
    13.6
    
    
    $
    92.4
    
    
    
    4.0
    
    
    $
    138.6
    
    
    
    6.0Bank
    
    
    306.8
    
    
    
    13.3
    
    
    
    92.2
    
    
    
    4.0
    
    
    
    138.3
    
    
    
    6.0Tier 1 Capital (to Average Assets)Consolidated
    
    $
    315.0
    
    
    
    11.3
    
    
    $
    111.9
    
    
    
    4.0
    
    
    $
    139.9
    
    
    
    5.0Bank
    
    
    306.8
    
    
    
    11.0
    
    
    
    111.8
    
    
    
    4.0
    
    
    
    139.7
    
    
    
    5.02007Total Capital (to Risk Weighted Assets)Consolidated
    
    $
    280.2
    
    
    
    11.5
    
    
    $
    194.3
    
    
    
    8.0
    
    
    $
    242.8
    
    
    
    10.0Bank
    
    
    270.6
    
    
    
    11.1
    
    
    
    194.6
    
    
    
    8.0
    
    
    
    243.3
    
    
    
    10.0Tier 1 Capital (to Risk Weighted Assets)Consolidated
    
    $
    249.8
    
    
    
    10.3
    
    
    $
    97.1
    
    
    
    4.0
    
    
    $
    145.7
    
    
    
    6.0Bank
    
    
    240.1
    
    
    
    9.9
    
    
    
    97.3
    
    
    
    4.0
    
    
    
    146.0
    
    
    
    6.0Tier 1 Capital (to Average Assets)Consolidated
    
    $
    249.8
    
    
    
    9.0
    
    
    $
    111.1
    
    
    
    4.0
    
    
    $
    138.9
    
    
    
    5.0Bank
    
    
    240.1
    
    
    
    8.7
    
    
    
    111.0
    
    
    
    4.0
    
    
    
    138.8
    
    
    
    5.0
    72




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 12  CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
         73




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 13  STOCK-BASED COMPENSATION
  Stock Options
    2007Risk-free interest rate
    
    
    4.58
    %Volatility
    
    
    26.92
    %Expected life
    
    
    8 yearsDividend yield
    
    
    1.80
    %
   74




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 13  STOCK-BASED COMPENSATION
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateStock
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at January 1, 2006
    
    
    396,910
    
    
    $
    21.65Granted
    
    
    90,261
    
    
    
    28.90Exercised
    
    
    (49,264
    )
    
    
    18.28Forfeited
    
    
    (12,150
    )
    
    
    26.79Outstanding at December 31, 2006
    
    
    425,757
    
    
    $
    23.43Granted
    
    
    75,473
    
    
    
    35.89Exercised
    
    
    (38,530
    )
    
    
    19.22Forfeited
    
    
    (10,623
    )
    
    
    29.80Outstanding at December 31, 2007
    
    
    452,077
    
    
    $
    25.72Granted
    
    
    
    
    
    
    Exercised
    
    
    (9,759
    )
    
    
    12.63Forfeited
    
    
    (1,565
    )
    
    
    30.65Expired
    
    
    (16,310
    )
    
    
    23.00Outstanding at December 31, 2008
    
    
    424,443
    
    
    $
    26.10
    
    
    5.3 years
    
    
    $
    18Options exercisable at December
31, 2008
    
    
    288,643
    
    
    $
    23.73
    
    
    4.4 years
    
    
    $
    18
     75




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 13  STOCK-BASED COMPENSATION
  Outstanding
    
    
    ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    Average
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    Remaining
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    Contractual
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Outstanding
    
    
    Life
    
    
    Price$12.24  $15.00
    
    
    33,142
    
    
    
    3.1
    
    
    $
    13.08
    
    
    
    33,142
    
    
    
    3.1
    
    
    $
    13.08$15.01  $20.00
    
    
    77,698
    
    
    
    3.8
    
    
    $
    17.63
    
    
    
    77,698
    
    
    
    3.8
    
    
    $
    17.63$20.01  $25.00
    
    
    50,635
    
    
    
    5.1
    
    
    $
    23.36
    
    
    
    40,382
    
    
    
    5.1
    
    
    $
    23.36$25.01  $30.00
    
    
    163,675
    
    
    
    5.8
    
    
    $
    28.32
    
    
    
    96,066
    
    
    
    5.1
    
    
    $
    28.35$30.01  $36.32
    
    
    99,293
    
    
    
    6.5
    
    
    $
    34.83
    
    
    
    41,355
    
    
    
    4.2
    
    
    $
    33.36Total
    
    
    424,443
    
    
    
    
    
    
    
    
    
    
    
    288,643
 Restricted Stock
  WeightedAveragePrice PerShares
    
    
    ShareBalance at January 1, 2008
    
    
    
    
    
    $
    Granted:Non-employee Directors
    
    
    7,852
    
    
    
    16.56Executive officers & management
    
    
    62,015
    
    
    
    19.20Cancelled:Non-employee Directors
    
    
    
    
    
    
    Executive officers & management
    
    
    (8,960
    )
    
    
    19.44Balance at December 31, 2008
    
    
    60,907
    
    
    $
    18.83Weighted-average fair value of
nonvested stock awards granted
during the year ended December 31,2008
    
    $
    18.83
   76




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 13  STOCK-BASED COMPENSATION
 Cash Settled Stock Appreciation Rights
   WeightedAveragePrice PerSARs
    
    
    ShareBalance at January 1, 2007
    
    
    
    
    
    $
    Granted:Executive officers
    
    
    19,000
    
    
    
    34.63Balance at December 31, 2007
    
    
    19,000
    
    
    
    34.63Granted:Non-employee Directors
    
    
    7,852
    
    
    
    16.56Executive officers & management
    
    
    62,015
    
    
    
    19.20Cancelled:Non-employee Directors
    
    
    
    
    
    
    Executive officers & management
    
    
    (8,960
    )
    
    
    19.44Balance at December 31, 2008
    
    
    79,907
    
    
    $
    22.58Weighted-average fair value of
cash-settled SARs granted during
the year ended December 31,2008
    
    $
    18.932007
    
    $
    34.63
   77




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 13  STOCK-BASED COMPENSATION
 
 2008
    
    2007Risk-free interest rate
    
    3.81%  3.85%
    
    4.58%Volatility
    
    29.46%  32.81%
    
    26.92%Expected life
    
    1  5 years
    
    8 yearsDividend yield
    
    3.54%
    
    1.80%
     78




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 14  EARNINGS PER SHARE
  2008
    
    
    2007
    
    
    2006Basic Earnings Per ShareNet income (loss)
    
    $
    (5,360
    )
    
    $
    24,374
    
    
    $
    21,262Less: preferred stock dividends and accretion of discount on
warrants
    
    
    92
    
    
    
    
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (5,452
    )
    
    $
    24,374
    
    
    $
    21,262Weighted average common shares outstanding
    
    
    12,932,576
    
    
    
    11,756,699
    
    
    
    9,788,004Basic earnings (loss) per share
    
    $
    (0.42
    )
    
    $
    2.07
    
    
    $
    2.17Diluted Earnings Per ShareNet income (loss)
    
    $
    (5,360
    )
    
    $
    24,374
    
    
    $
    21,262Less: preferred stock dividends and accretion of discount on
warrants
    
    
    92
    
    
    
    
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (5,452
    )
    
    $
    24,374
    
    
    $
    21,262Weighted average common shares outstanding
    
    
    12,932,576
    
    
    
    11,756,699
    
    
    
    9,788,004Add: Dilutive effects of assumed conversions of restricted stock
and exercises of stock options
    
    
    58,214
    
    
    
    42,443
    
    
    
    145,274Weighted average common and dilutive potential
common shares outstanding
    
    
    12,990,790
    
    
    
    11,799,142
    
    
    
    9,933,278Diluted earnings (loss) per share
    
    $
    (0.42
    )
    
    $
    2.07
    
    
    $
    2.14
    79




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 15  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
 BALANCE SHEETS
Years ended December 31, 2008 and 2007
 2008
    
    
    2007ASSETSCash and due from financial institutions
    
    $
    5,511
    
    
    $
    8,248Investment in subsidiary
    
    
    459,046
    
    
    
    398,892Other
    
    
    6,560
    
    
    
    5,147Total assets
    
    $
    471,117
    
    
    $
    412,287LIABILITIESSubordinated debentures
    
    $
    88,662
    
    
    $
    88,662Other liabilities
    
    
    1,224
    
    
    
    1,148Total liabilities
    
    
    89,886
    
    
    
    89,810Shareholders equity
    
    
    381,231
    
    
    
    322,477Total liabilities and shareholders equity
    
    $
    471,117
    
    
    $
    412,287
 STATEMENTS OF INCOME
Years ended December 31, 2008, 2007, and 2006
 2008
    
    
    2007
    
    
    2006Dividends from subsidiary
    
    $
    13,600
    
    
    $
    6,757
    
    
    $
    5,096Other income
    
    
    241
    
    
    
    145
    
    
    
    335Interest expense
    
    
    (4,555
    )
    
    
    (4,513
    )
    
    
    (1,101
    )Other expense
    
    
    (2,022
    )
    
    
    (921
    )
    
    
    (774
    )Income before income taxes
    
    
    7,264
    
    
    
    1,468
    
    
    
    3,556Income tax benefit
    
    
    (2,330
    )
    
    
    (2,096
    )
    
    
    (657
    )Equity in undistributed net income (loss) of subsidiary
    
    
    (14,954
    )
    
    
    20,810
    
    
    
    17,049Net income (loss)
    
    
    (5,360
    )
    
    
    24,374
    
    
    
    21,262Preferred stock dividends and accretion of discount on
warrants
    
    
    92
    
    
    
    
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (5,452
    )
    
    $
    24,374
    
    
    $
    21,262
   80




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 15  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
 STATEMENTS OF CASH FLOWS
Years ended December 31, 2008, 2007, and 2006
 2008
    
    
    2007
    
    
    2006Operating activitiesNet income (loss)
    
    $
    (5,360
    )
    
    $
    24,374
    
    
    $
    21,262Adjustments to reconcile net income to net cash provided
(used) by operating activities:Undistributed (net income) loss of subsidiaries
    
    
    14,954
    
    
    
    (20,810
    )
    
    
    (17,049
    )Increase in cash surrender value of life insurance
    
    
    
    
    
    
    
    
    
    
    (8
    )Stock compensation expense
    
    
    759
    
    
    
    472
    
    
    
    354Change in other assets
    
    
    (1,413
    )
    
    
    (3,871
    )
    
    
    (424
    )Change in liabilities
    
    
    (14
    )
    
    
    (658
    )
    
    
    878Net cash provided (used) by operating activities
    
    
    8,926
    
    
    
    (493
    )
    
    
    5,013Investing activitiesCapital investment in bank subsidiary
    
    
    (77,278
    )
    
    
    (43,141
    )
    
    
    Net cash used in investing activities
    
    
    (77,278
    )
    
    
    (43,141
    )
    
    
    Financing activitiesCommon stock dividends paid
    
    
    (6,779
    )
    
    
    (8,386
    )
    
    
    (6,270
    )Proceeds from issuance of preferred stock
    
    
    72,278
    
    
    
    
    
    
    
    Proceeds from issuance of common stock
    
    
    111
    
    
    
    497
    
    
    
    761Proceeds from subordinated debentures
    
    
    
    
    
    
    57,732
    
    
    
    Tax benefit resulting from stock options
    
    
    5
    
    
    
    137
    
    
    
    126Repayment of debt
    
    
    
    
    
    
    
    
    
    
    (1,800
    )Net cash provided (used in) financing activities
    
    
    65,615
    
    
    
    49,980
    
    
    
    (7,183
    )Net change in cash and cash equivalents
    
    
    (2,737
    )
    
    
    6,346
    
    
    
    (2,170
    )Cash and cash equivalents, beginning of year
    
    
    8,248
    
    
    
    1,902
    
    
    
    4,072Cash and cash equivalents, end of year
    
    $
    5,511
    
    
    $
    8,248
    
    
    $
    1,902
 NOTE 16  OTHER COMPREHENSIVE INCOME
  2008
    
    
    2007
    
    
    2006Unrealized holding gains and
(losses) on securities available
for sale, net of tax of ($357),
$978 and $144, respectively
    
    $
    (553
    )
    
    $
    1,610
    
    
    $
    236Reclassification adjustment for
losses (gains) realized in net
income, net of tax of ($1,044),
$16 and $3, respectively
    
    
    (1,617
    )
    
    
    26
    
    
    
    5Other comprehensive income (loss)
    
    $
    (2,170
    )
    
    $
    1,636
    
    
    $
    241
   81




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 17  SEGMENT INFORMATION
   Other
    
    
    Holding
    
    
    
    
    
    
    Total2008
    
    Banking
    
    
    Segments
    
    
    Company
    
    
    Eliminations
    
    
    SegmentsNet interest income
    
    $
    91,900
    
    
    $
    7,680
    
    
    $
    (4,555
    )
    
    $
    
    
    
    $
    95,025Provision for loan losses
    
    
    50,074
    
    
    
    2,736
    
    
    
    
    
    
    
    
    
    
    
    52,810Noninterest income
    
    
    32,012
    
    
    
    2,231
    
    
    
    241
    
    
    
    (870
    )
    
    
    33,614Noninterest expense
    
    
    79,548
    
    
    
    5,137
    
    
    
    2,022
    
    
    
    (870
    )
    
    
    85,837Income tax expense (benefit)
    
    
    (3,118
    )
    
    
    800
    
    
    
    (2,330
    )
    
    
    
    
    
    
    (4,648
    )Segment profit (loss)
    
    $
    (2,592
    )
    
    $
    1,238
    
    
    $
    (4,006
    )
    
    $
    
    
    
    $
    (5,360
    )Segment assets
    
    $
    2,895,163
    
    
    $
    39,846
    
    
    $
    9,662
    
    
    $
    
    
    
    $
    2,944,671
 Other
    
    
    Holding
    
    
    
    
    
    
    Total2007
    
    Banking
    
    
    Segments
    
    
    Company
    
    
    Eliminations
    
    
    SegmentsNet interest income
    
    $
    92,562
    
    
    $
    6,604
    
    
    $
    (4,513
    )
    
    $
    
    
    
    $
    94,653Provision for loan losses
    
    
    12,636
    
    
    
    1,847
    
    
    
    
    
    
    
    
    
    
    
    14,483Noninterest income
    
    
    26,158
    
    
    
    2,761
    
    
    
    145
    
    
    
    (1,386
    )
    
    
    27,678Noninterest expense
    
    
    64,548
    
    
    
    5,246
    
    
    
    920
    
    
    
    (1,386
    )
    
    
    69,328Income tax expense (benefit)
    
    
    15,350
    
    
    
    890
    
    
    
    (2,094
    )
    
    
    
    
    
    
    14,146Segment profit (loss)
    
    $
    26,186
    
    
    $
    1,382
    
    
    $
    (3,194
    )
    
    $
    
    
    
    $
    24,374Segment assets
    
    $
    2,898,094
    
    
    $
    37,992
    
    
    $
    11,655
    
    
    $
    
    
    
    $
    2,947,741
 Other
    
    
    Holding
    
    
    
    
    
    
    Total2006
    
    Banking
    
    
    Segments
    
    
    Company
    
    
    Eliminations
    
    
    SegmentsNet interest income
    
    $
    67,377
    
    
    $
    5,681
    
    
    $
    (1,101
    )
    
    $
    
    
    
    $
    71,957Provision for loan losses
    
    
    4,356
    
    
    
    1,151
    
    
    
    
    
    
    
    
    
    
    
    5,507Noninterest income
    
    
    18,815
    
    
    
    2,524
    
    
    
    334
    
    
    
    (895
    )
    
    
    20,778Noninterest expense
    
    
    48,355
    
    
    
    4,543
    
    
    
    773
    
    
    
    (895
    )
    
    
    52,776Income tax expense (benefit)
    
    
    12,927
    
    
    
    920
    
    
    
    (657
    )
    
    
    
    
    
    
    13,190Segment profit (loss)
    
    $
    20,554
    
    
    $
    1,591
    
    
    $
    (883
    )
    
    $
    
    
    
    $
    21,262Segment assets
    
    $
    1,733,995
    
    
    $
    34,776
    
    
    $
    3,883
    
    
    $
    
    
    
    $
    1,772,654
   82




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GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 17  SEGMENT INFORMATION
 Asset Quality Ratios
 As of and for the period ended December 31, 2008
    
    Bank
    
    
    Other
    
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    1.38
    %
    
    
    2.48
    %
    
    
    1.41
    %Nonperforming assets as a percentage of total assets
    
    
    2.58
    %
    
    
    2.57
    %
    
    
    2.61
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    2.06
    %
    
    
    8.27
    %
    
    
    2.20
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    149.59
    %
    
    
    333.81
    %
    
    
    155.28
    %Net charge-offs to average total loans, net of unearned income
    
    
    1.53
    %
    
    
    6.42
    %
    
    
    1.63
    %
 As of and for the period ended December 31, 2007
    
    Bank
    
    
    Other
    
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    1.35
    %
    
    
    1.30
    %
    
    
    1.36
    %Nonperforming assets as a percentage of total assets
    
    
    1.22
    %
    
    
    2.11
    %
    
    
    1.25
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    1.32
    %
    
    
    7.96
    %
    
    
    1.45
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    98.37
    %
    
    
    609.80
    %
    
    
    106.34
    %Net charge-offs to average total loans, net of unearned income
    
    
    0.50
    %
    
    
    4.14
    %
    
    
    0.57
    %
 NOTE 18  SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  For the three months endedSummary of Operations
    
    3/31/08
    
    
    6/30/08
    
    
    9/30/08
    
    
    12/31/08Net interest income
    
    $
    24,472
    
    
    $
    25,044
    
    
    $
    24,384
    
    
    $
    21,125Provision for loan losses
    
    
    888
    
    
    
    11,019
    
    
    
    8,620
    
    
    
    32,283Noninterest income
    
    
    7,306
    
    
    
    8,112
    
    
    
    8,010
    
    
    
    10,186Noninterest expense
    
    
    19,561
    
    
    
    20,140
    
    
    
    21,944
    
    
    
    24,192Net income (loss)
    
    
    7,178
    
    
    
    1,462
    
    
    
    1,234
    
    
    
    (15,234
    )Basic earnings per share
    
    
    0.56
    
    
    
    0.11
    
    
    
    0.10
    
    
    
    (1.18
    )Diluted earning per share
    
    
    0.56
    
    
    
    0.11
    
    
    
    0.10
    
    
    
    (1.18
    )Dividends per common share
    
    
    0.13
    
    
    
    0.13
    
    
    
    0.13
    
    
    
    0.13Average common shares outstanding
    
    
    12,931,169
    
    
    
    12,931,669
    
    
    
    12,931,774
    
    
    
    12,935,665Average common shares outstanding  diluted
    
    
    12,931,169
    
    
    
    12,958,439
    
    
    
    12,947,618
    
    
    
    12,998,685
 For the three months endedSummary of Operations
    
    3/31/07
    
    
    6/30/07
    
    
    9/30/07
    
    
    12/31/07Net interest income
    
    $
    18,821
    
    
    $
    22,933
    
    
    $
    27,293
    
    
    $
    25,606Provision for loan losses
    
    
    974
    
    
    
    1,259
    
    
    
    1,444
    
    
    
    10,806Noninterest income
    
    
    5,399
    
    
    
    6,483
    
    
    
    7,688
    
    
    
    8,108Noninterest expense
    
    
    14,042
    
    
    
    16,709
    
    
    
    19,010
    
    
    
    19,567Net income
    
    
    5,616
    
    
    
    7,086
    
    
    
    8,914
    
    
    
    2,758Basic earnings per share
    
    
    0.57
    
    
    
    0.63
    
    
    
    0.69
    
    
    
    0.21Diluted earning per share
    
    
    0.57
    
    
    
    0.62
    
    
    
    0.69
    
    
    
    0.21Dividends per common share
    
    
    0.13
    
    
    
    0.13
    
    
    
    0.13
    
    
    
    0.29Average common shares outstanding
    
    
    9,815,452
    
    
    
    11,321,822
    
    
    
    12,921,240
    
    
    
    12,926,673Average common shares outstanding  diluted
    
    
    9,910,315
    
    
    
    11,395,518
    
    
    
    13,008,733
    
    
    
    12,962,869
   83




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GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 19  BUSINESS COMBINATION
    Cash and due from banks
    
    $
    21,182Securities
    
    
    200,081FHLB stock
    
    
    2,863Bankers Bank stock
    
    
    100Loans held for sale
    
    
    8,642Loans, net of unearned income
    
    
    631,496Allowance for loan losses
    
    
    (9,022
    )Premises and equipment
    
    
    18,332Goodwill
    
    
    112,062Core deposit intangible
    
    
    8,740Mortgage servicing rights
    
    
    745Other assets
    
    
    16,369Total assets acquired
    
    
    1,011,590Deposits
    
    
    (699,089
    )Federal funds purchased
    
    
    (52,500
    )Repurchase agreements
    
    
    (42,790
    )FHLB advances
    
    
    (32,000
    )Subordinated debentures
    
    
    (17,527
    )Other liabilities
    
    
    (3,416
    )Total liabilities assumed
    
    
    (847,322
    )Net assets acquired
    
    $
    164,268
    84




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2008, 2007 and 2006
 NOTE 19  BUSINESS COMBINATION
  Year endedDecember 31,2007
    
    
    2006Net interest income
    
    $
    104,634
    
    
    $
    97,508Net income
    
    $
    27,371
    
    
    $
    27,352Basic earnings per share
    
    $
    2.12
    
    
    $
    2.12Diluted earnings per share
    
    $
    2.11
    
    
    $
    2.10
   85




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 
 ITEM 9A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  Management Report on Internal Control Over Financial Reporting
  
 
 ITEM 9B. OTHER INFORMATION.
   86




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##### Table of Contents



PART III
 
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  
 
 ITEM 11. EXECUTIVE COMPENSATION.
  
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
 (a)
    
    Security Ownership of Certain Beneficial Owners
Information required by this item is incorporated herein by reference to the section captioned
Security Ownership of Certain Beneficial Owners and Management in the Proxy Statement.(b)
    
    Security Ownership of Management
Information required by this item is incorporated herein by reference to the section captioned
Security Ownership of Certain Beneficial Owners and Management in the Proxy Statement.(c)
    
    Changes in Control
Management of the Company knows of no arrangements, including any pledge by any person of
securities of the Company, the operation of which may at a subsequent date result in a change in
control of the registrant.(d)
    
    Equity Compensation Plan Information
The following table sets forth certain information with respect to securities to be issued under
the Companys equity compensation plans as of December 31, 2008.
 (c)(a)
    
    
    (b)
    
    
    Number of securitiesNumber of securities
    
    
    Weighted-average
    
    
    remaining available forto be issued upon
    
    
    exercise price of
    
    
    future issuance underexercise of
    
    
    outstanding
    
    
    equity compensation plansoutstanding options,
    
    
    options, warrants
    
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    
    and rights
    
    
    reflected in column (a))Equity compensation
plans approved by
security holders
    
    
    379,443
    
    
    $
    27.33
    
    
    
    219,729Equity compensation
plans not approved
by security holders
    
    
    45,000
    
    
    $
    15.75
    
    
    
    *Total
    
    
    424,443
    
    
    $
    26.10
    
    
    
    219,729
 *
    
    R. Stan Puckett, was the sole participant under this plan, which was a part of Mr. Pucketts
employment agreement. This employment agreement was amended during 2005 to provide that future
option grants to the key executive would be made at no less than fair market value on the date of
grant in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended. 
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  
 
 PART IV
 
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 (a)(1)
    
    The following consolidated financial statements of the Company included in the Companys
2008 Annual Report to the Shareholders (the Annual Report) are incorporated herein by
reference from Item 8 of this Form 10-K. The remaining information appearing in the Annual
Report is not deemed to be filed as part of this Form 10-K, except as expressly provided
herein.
 1.
    
    Report of Independent Registered Public Accounting Firm.2.
    
    Consolidated Balance Sheets  December 31, 2008 and 2007.3.
    
    Consolidated Statements of Income for the Years Ended December 31, 2008, 2007
and 2006.4.
    
    Consolidated Statements of Changes in Shareholders Equity for the Years Ended
December 31, 2008, 2007 and 2006.5.
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2008,
2007 and 2006.6.
    
    Notes to Consolidated Financial Statements.
 (a)(2)
    
    All schedules for which provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required under the related instructions or are
inapplicable and therefore have been omitted.
 (a)(3)
    
    The following exhibits either are filed as part of this Report or are incorporated herein by
reference:
 2.1
    
    Merger Agreement, dated as of January 25, 2007, by and between Greene County
Bancshares, Inc. and Civitas Bankgroup, Inc. (Pursuant to Item 601(b)(2) of
Regulation S-K the schedules and exhibits to this agreement have been omitted from this
filing)  incorporated herein by reference to the Companys Current Report on Form 8-K
filed January 26, 2007.3.1
    
    Amended and Restated Charter  incorporated herein by reference to the
Companys Current Report on Form 8-K12G3/A filed on January 22, 2009.3.2
    
    Amended and Restated Bylaws  incorporated herein by reference to the Companys
Current Report on Form 8-K filed on November 20, 2007.4.1
    
    Form of Certificate for the Series A Preferred Stock  incorporated herein by
reference to the Companys Current Report on Form 8-K filed on December 23, 2008.4.2
    
    Warrant for Purchase of Shares of Common Stock dated December 23, 2008 
incorporated herein by reference to the Companys Current Report on Form 8-K filed on
December 23, 2008.10.1
    
    Employment Agreement and Amendment to Employment Agreement between the Company
and R. Stan Puckett  incorporated herein by reference to the Companys Current Report
on Form 8-K filed on January 7, 2008.*10.2
    
    Employment Agreement between the Company and Kenneth R. Vaught  incorporated
herein by reference to the Companys Current Report on Form 8-K filed on January 7,
2008.*
  88




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##### Table of Contents



10.3
    
    Employment Agreement between the Company and Ronald E. Mayberry  incorporated
herein by reference to the Companys Annual Report on Form 10-K for the year ended
December 31, 2003.*10.4
    
    Non-competition Agreement between the Company and R. Stan Puckett 
incorporated herein by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 2003.*10.5
    
    Non-competition Agreement between the Company and Kenneth R. Vaught 
incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004.*10.6
    
    Non-competition Agreement between the Company and R. Stan Puckett 
incorporated herein by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 2003.*10.7
    
    Non-competition Agreement between the Company and Kenneth R. Vaught 
incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004.*10.8
    
    Green Bankshares, Inc. Amended and Restated 2004 Long-Term Incentive Plan.*10.9
    
    Greene County Bancshares, Inc. Amended and Restated Deferred Compensation Plan
for Non-employee Directors  incorporated herein by reference to the Companys Current
Report on Form 8-K filed on December 17, 2004.*10.10
    
    Form of Stock Option Award Agreement  incorporated herein by reference to the
Companys Annual Report on Form 10-K for the year ended December 31, 2004.*10.11
    
    Deferred Fee Agreement between the Bank and John Tolsma dated December 13,
2004  incorporated herein by reference to the Companys Annual Report on Form 10-K for
the year ended December 31, 2004.*10.12
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation
Agreements dated March 11, 1997, March 1, 1999 and November 15, 2004 between the Bank
and Philip M. Bachman dated March 11, 2005  incorporated herein by reference to the
Companys Annual Report on Form 10-K for the year ended December 31, 2004.*10.13
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation
Agreement dated March 1, 1999 between the Bank and W.T. Daniels dated March 11, 2005 
incorporated herein by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 2004 .*10.14
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation
Agreement dated March 1, 1999 between the Bank and Terry Leonard dated March 11, 2005 
incorporated herein by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 2004.*10.15
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation
Agreement dated May 1, 1999 between the Bank and Charles S. Brooks dated March 11, 2005
  incorporated herein by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 2004.*10.16
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation
Agreement dated May 1, 1999 between the Bank and Jerald K. Jaynes dated March 11, 2005
  incorporated herein by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 2004.*
  89




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##### Table of Contents



10.17
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation
Agreement dated May 1, 2003 between the Bank and Charles H. Whitfield, Jr. dated March
11, 2005  incorporated herein by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 2004 .*10.18
    
    Greene County Bank Executive Deferred Compensation Agreement between the Bank
and R. Stan Puckett dated March 11, 2005  incorporated herein by reference to the
Companys Annual Report on Form 10-K for the year ended December 31, 2004.*10.19
    
    Greene County Bank Executive Deferred Compensation Agreement between the Bank
and Kenneth R. Vaught dated March 11, 2005  incorporated herein by reference to the
Companys Annual Report on Form 10-K for the year ended December 31, 2004 .*10.20
    
    Greene County Bank Executive Deferred Compensation Agreement between the Bank
and Ronald E. Mayberry dated March 11, 2005  incorporated herein by reference to the
Companys Annual Report on Form 10-K for the year ended December 31, 2004 .*10.21
    
    Greene County Bancshares, Inc. Change in Control Protection Plan 
incorporated herein by reference to the Companys Current Report on Form 8-K filed on
October 26, 2004.*10.22
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation
Agreement between the Company and Steve L. Droke  incorporated herein by reference to
the Companys Current Report on Form 8-K filed on October 26, 2004.*10.23
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation
Agreement between the Company and Ronald E. Mayberry  incorporated herein by reference
to the Companys Current Report on Form 8-K filed on October 26, 2004.*10.20
    
    Revolving Credit Agreement dated as of August 30, 2005, by and between the
Company and SunTrust Bank  incorporated herein by reference to the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005.10.21
    
    Form of Revolving Credit Note  incorporated herein by reference to the
Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.10.22
    
    Summary of Compensation Arrangement for James E. Adams  incorporated herein
by reference to the Companys Current Report on Form 8-K filed on November 15, 2005.*10.23
    
    Amended and Restated Deferred Compensation Plan for Nonemployee Directors 
incorporated herein by reference to the Companys Current Report on Form 8-K filed on
December 21, 2005.*10.24
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation
Agreement between the Company and James E. Adams  incorporated by reference to the
Companys Current Report on Form 8-K filed March 12, 2007.*10.25
    
    Form of Stock Appreciation Right Award Agreement  incorporated by reference
to the Companys Current Report on Form 8-K filed March 23, 2007.*10.26
    
    Amended and Restated Trust Agreement of GreenBank Capital Trust I (GB Trust
I) dated as of May 16, 2007 by and among the Greene County Bancshares, Inc., as
Depositor, Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as
Delaware Trustee and the Administrative Trustees named therein (the GB Capital Trust
Agreement)  incorporated by reference to the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 2007.10.27
    
    Form of Certificate for Common Securities of GB Trust I included as Exhibit B
to the GB Capital Trust Agreement  incorporated by reference to the Companys
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.
  90




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##### Table of Contents



10.28
    
    Form of Certificate for Preferred Securities of GB Trust I included as Exhibit
C to the GB Capital Trust Agreement  incorporated by reference to the Companys
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.10.29
    
    Junior Subordinated Indenture dated as of May 16, 2007 between the Company and
Wilmington Trust Company, as Trustee included as Exhibit D to the GB Capital Trust
Agreement (the Junior Subordinated Indenture)  incorporated by reference to the
Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.10.30
    
    Form of Certificate for $57,732,000 Note issued pursuant to the Junior
Subordinated Indenture included as Sections 2.1 and 2.2 to the Junior Subordinated
Indenture  incorporated by reference to the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 2007.10.31
    
    Guarantee Agreement dated as of May 16, 2007 between Greene County Bancshares,
Inc., as Guarantor and Wilmington Trust Company, as Guarantee Trustee  incorporated by
reference to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
2007.10.32
    
    Form of Restricted Stock Agreement  incorporated by reference to the
Companys Current Report on Form 8-K filed January 23, 2008.*10.33
    
    Form of Stock Appreciation Right Agreement  incorporated by reference to the
Companys Current Report on Form 8-K filed February 29, 2008.*10.34
    
    Letter agreement, dated December 23, 2008, between the Company and the United
States Department of Treasury, including Securities Purchase Agreement  Standard Terms
with respect to the issuance and sale of the Series A preferred shares and the Warrant
 incorporated by reference to the Companys Current Report on Form 8-K filed December
23, 2008.10.35
    
    Director and Named Executive Officer Compensation Summary.*10.36
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares,
Inc. and R. Stan Puckett dated December 23, 2008.*10.37
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares,
Inc. and Kenneth R. Vaught dated December 23, 2008.*10.38
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares,
Inc. and James E. Adams dated December 23, 2008.*10.39
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares,
Inc. and Steve L. Droke dated December 23, 2008.*10.40
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares,
Inc. and William C. Adams dated December 23, 2008.*10.41
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation
Agreement between the Company and William C. Adams.*11.1
    
    Statement re Computation of Per Share Earnings  incorporated by reference to
Note 13 of the Notes to Consolidated Financial Statements herein.21.1
    
    Subsidiaries of the Company23.1
    
    Consent of Dixon Hughes PLLC31.1
    
    Chief Executive Officer Certification Pursuant to Rule 13a-14(a)/15d-14(a)
  91




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##### Table of Contents



31.2
    
    Chief Financial Officer Certification Pursuant to Rule 13a-14(a)/15d-14(a)32.1
    
    Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Management contract or compensatory plan.  (b)
    
    Exhibits. The exhibits required by Item 601 of Regulation S-K are
either filed as part of this Annual Report on Form 10-K or incorporated herein by
reference.(c)
    
    Financial Statements and Financial Statement Schedules Excluded From Annual
Report. There are no financial statements and financial statement schedules which
were excluded from the Annual Report pursuant to Rule 14a-3(b)(1) which are required to
be included herein.
  92




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##### Table of Contents



SIGNATURES
  GREEN BANCSHARES, INC.Date:  March 13, 2009
    By:
    /s/ R. Stan PuckettR. Stan PuckettChairman of the Board and
Chief Executive Officer
(Duly Authorized Representative)  SIGNATURE AND TITLE:
    
    DATE:/s/ R. Stan Puckett

R. Stan Puckett
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
    
    March 13, 2009/s/ Kenneth R. Vaught

Kenneth R. Vaught
President, Chief Operating Officer, and Director
    
    March 13, 2009/s/ James E. Adams

James E. Adams
Executive Vice President, 
Chief Financial Officer and Assistant Secretary
(Principal Financial and Accounting Officer)
    
    March 13, 2009/s/ Ronald E. Mayberry

Ronald E. Mayberry
Regional President, Sumner County and Director
    
    March 13, 2009/s/ Martha M. Bachman

Martha Bachman
Director
    
    March 13, 2009/s/ Bruce Campbell

Bruce Campbell
Director
    
    March 13, 2009/s/ W. T. Daniels

W.T. Daniels
Director
    
    March 13, 2009/s/ Robert K. Leonard

Robert K. Leonard
Director
    
    March 13, 2009/s/ Samuel E. Lynch

Samuel E. Lynch
Director
    
    March 13, 2009/s/ John Tolsma

John Tolsma
Director
    
    March 13, 2009/s/ Charles H. Whitfield, Jr.

Charles H. Whitfield, Jr.
Director
    
    March 13, 2009
  93




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##### Table of Contents



EXHIBIT INDEX
 2.1
    
    Merger Agreement, dated as of January 25, 2007, by and between Greene County Bancshares, Inc.
and Civitas Bankgroup, Inc. (Pursuant to Item 601(b)(2) of Regulation S-K the
schedules and exhibits to this agreement have been omitted from this filing)  incorporated
herein by reference to the Companys Current Report on Form 8-K filed January 26, 2007.3.1
    
    Amended and Restated Charter  incorporated herein by reference to the Companys Current
Report on Form 8-K12G3/A filed on January 22, 2009.3.2
    
    Amended and Restated Bylaws  incorporated herein by reference to the Companys Current
Report on Form 8-K filed on November 20, 2007.4.1
    
    Form of Certificate for the Series A Preferred Stock  incorporated herein by reference to
the Companys Current Report on Form 8-K filed on December 23, 2008.4.2
    
    Warrant for Purchase of Shares of Common Stock dated December 23, 2008  incorporated herein
by reference to the Companys Current Report on Form 8-K filed on December 23, 2008.10.1
    
    Employment Agreement and Amendment to Employment Agreement between the Company and R. Stan
Puckett  incorporated herein by reference to the Companys Current Report on Form 8-K filed
on January 7, 2008.*10.2
    
    Employment Agreement between the Company and Kenneth R. Vaught  incorporated herein by
reference to the Companys Current Report on Form 8-K filed on January 7, 2008.*10.3
    
    Employment Agreement between the Company and Ronald E. Mayberry  incorporated herein by
reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2003.*10.4
    
    Non-competition Agreement between the Company and R. Stan Puckett  incorporated herein by
reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2003.*10.5
    
    Non-competition Agreement between the Company and Kenneth R. Vaught  incorporated herein by
reference to the Companys Quarterly Report on Form 10-Q for the quarter ended September 30,
2004.*10.6
    
    Non-competition Agreement between the Company and R. Stan Puckett  incorporated herein by
reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2003.*10.7
    
    Non-competition Agreement between the Company and Kenneth R. Vaught  incorporated herein by
reference to the Companys Quarterly Report on Form 10-Q for the quarter ended September 30,
2004.*10.8
    
    Green Bankshares, Inc. Amended and Restated 2004 Long-Term Incentive Plan.*10.9
    
    Greene County Bancshares, Inc. Amended and Restated Deferred Compensation Plan for
Non-employee Directors  incorporated herein by reference to the Companys Current Report on
Form 8-K filed on December 17, 2004.*10.10
    
    Form of Stock Option Award Agreement  incorporated herein by reference to the Companys
Annual Report on Form 10-K for the year ended December 31, 2004.*10.11
    
    Deferred Fee Agreement between the Bank and John Tolsma dated December 13, 2004 -
incorporated herein by reference to the Companys Annual Report on Form 10-K for the year
ended December 31, 2004.*10.12
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation Agreements dated
March 11, 1997, March 1, 1999 and November 15, 2004 between the Bank and Philip M. Bachman
dated March 11, 2005  incorporated herein by reference to the Companys Annual Report on Form
10-K for the year ended December 31, 2004.*10.13
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation Agreement dated
March 1, 1999 between the Bank and W.T. Daniels dated March 11, 2005  incorporated herein by
reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2004 .*10.14
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation Agreement dated
March 1, 1999 between the Bank and Terry Leonard dated March 11, 2005  incorporated herein by
reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2004.*
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10.15
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation Agreement dated
May 1, 1999 between the Bank and Charles S. Brooks dated March 11, 2005  incorporated herein
by reference to the Companys Annual Report on Form 10-K for the year ended December 31,
2004.*10.16
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation Agreement dated
May 1, 1999 between the Bank and Jerald K. Jaynes dated March 11, 2005  incorporated herein
by reference to the Companys Annual Report on Form 10-K for the year ended December 31,
2004.*10.17
    
    Amendment and Restatement of the Greene County Bank Deferred Compensation Agreement dated
May 1, 2003 between the Bank and Charles H. Whitfield, Jr. dated March 11, 2005  incorporated
herein by reference to the Companys Annual Report on Form 10-K for the year ended December
31, 2004 .*10.18
    
    Greene County Bank Executive Deferred Compensation Agreement between the Bank and R. Stan
Puckett dated March 11, 2005  incorporated herein by reference to the Companys Annual Report
on Form 10-K for the year ended December 31, 2004.*10.19
    
    Greene County Bank Executive Deferred Compensation Agreement between the Bank and Kenneth R.
Vaught dated March 11, 2005  incorporated herein by reference to the Companys Annual Report
on Form 10-K for the year ended December 31, 2004 .*10.20
    
    Greene County Bank Executive Deferred Compensation Agreement between the Bank and Ronald E.
Mayberry dated March 11, 2005  incorporated herein by reference to the Companys Annual
Report on Form 10-K for the year ended December 31, 2004 .*10.21
    
    Greene County Bancshares, Inc. Change in Control Protection Plan  incorporated herein by
reference to the Companys Current Report on Form 8-K filed on October 26, 2004.*10.22
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation Agreement
between the Company and Steve L. Droke  incorporated herein by reference to the Companys
Current Report on Form 8-K filed on October 26, 2004.*10.23
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation Agreement
between the Company and Ronald E. Mayberry  incorporated herein by reference to the Companys
Current Report on Form 8-K filed on October 26, 2004.*10.20
    
    Revolving Credit Agreement dated as of August 30, 2005, by and between the Company and
SunTrust Bank  incorporated herein by reference to the Companys Quarterly Report on Form
10-Q for the quarter ended September 30, 2005.10.21
    
    Form of Revolving Credit Note  incorporated herein by reference to the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005.10.22
    
    Summary of Compensation Arrangement for James E. Adams  incorporated herein by reference to
the Companys Current Report on Form 8-K filed on November 15, 2005.*10.24
    
    Amended and Restated Deferred Compensation Plan for Nonemployee Directors  incorporated
herein by reference to the Companys Current Report on Form 8-K filed on December 21, 2005.*10.24
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation Agreement
between the Company and James E. Adams  incorporated by reference to the Companys Current
Report on Form 8-K filed March 12, 2007.*10.25
    
    Form of Stock Appreciation Right Award Agreement  incorporated by reference to the
Companys Current Report on Form 8-K filed March 23, 2007.*10.26
    
    Amended and Restated Trust Agreement of GreenBank Capital Trust I (GB Trust I) dated as of
May 16, 2007 by and among the Greene County Bancshares, Inc., as Depositor, Wilmington Trust
Company, as Property Trustee, Wilmington Trust Company, as Delaware Trustee and the
Administrative Trustees named therein (the GB Capital Trust Agreement)  incorporated by
reference to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.10.27
    
    Form of Certificate for Common Securities of GB Trust I included as Exhibit B to the GB
Capital Trust Agreement  incorporated by reference to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2007.
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10.28
    
    Form of Certificate for Preferred Securities of GB Trust I included as Exhibit C to the GB
Capital Trust Agreement  incorporated by reference to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2007.10.29
    
    Junior Subordinated Indenture dated as of May 16, 2007 between the Company and Wilmington
Trust Company, as Trustee included as Exhibit D to the GB Capital Trust Agreement (the Junior
Subordinated Indenture)  incorporated by reference to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2007.10.30
    
    Form of Certificate for $57,732,000 Note issued pursuant to the Junior Subordinated
Indenture included as Sections 2.1 and 2.2 to the Junior Subordinated Indenture  incorporated
by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
2007.10.31
    
    Guarantee Agreement dated as of May 16, 2007 between Greene County Bancshares, Inc., as
Guarantor and Wilmington Trust Company, as Guarantee Trustee  incorporated by reference to
the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.10.32
    
    Form of Restricted Stock Agreement  incorporated by reference to the Companys Current
Report on Form 8-K filed January 23, 2008.*10.33
    
    Form of Stock Appreciation Right Agreement  incorporated by reference to the Companys
Current Report on Form 8-K filed February 29, 2008.*10.34
    
    Letter agreement, dated December 23, 2008, between the Company and the United States
Department of Treasury, including Securities Purchase Agreement  Standard Terms with respect
to the issuance and sale of the Series A preferred shares and the Warrant  incorporated by
reference to the Companys Current Report on Form 8-K filed December 23, 2008.10.35
    
    Director and Named Executive Officer Compensation Summary.*10.36
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares, Inc. and R. Stan
Puckett dated December 23, 2008.*10.37
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares, Inc. and Kenneth
R. Vaught dated December 23, 2008.*10.38
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares, Inc. and James E.
Adams dated December 23, 2008.*10.39
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares, Inc. and R. Steve
L. Droke dated December 23, 2008.*10.40
    
    Senior Executive Officer Letter Agreement by and between Green Bankshares, Inc. and William
C. Adams dated December 23, 2008.*10.41
    
    Greene County Bancshares, Inc. Change in Control Protection Plan Participation Agreement
between the Company and William C. Adams.*11.1
    
    Statement re Computation of Per Share Earnings  incorporated by reference to Note 13 of the
Notes to Consolidated Financial Statements herein.21.1
    
    Subsidiaries of the Company23.1
    
    Consent of Dixon Hughes PLLC31.1
    
    Chief Executive Officer Certification Pursuant to Rule 13a-14(a)/15d-14(a)31.2
    
    Chief Financial Officer Certification Pursuant to Rule 13a-14(a)/15d-14(a)32.1
    
    Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Management contact or compensatory plan.  96