##### 



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, 2007
 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
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 100 North Main Street, Greeneville, Tennessee
    
    37743-4992(Address of principal executive offices)
    
    (Zip Code)
 (423) 639-5111
  Common Stock  $2.00 par value  Securities registered pursuant to Section 12(g) of the Act: None
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if you are a smaller reporting Company)
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE
  1.
    
    Portions of Proxy Statement for 2008 Annual Meeting of Shareholders. (Part III)




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##### 



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) lack of
sustained growth in the economy in the markets that the Bank serves; (3) increased competition with
other financial institutions in the markets that the Bank serves; (4) changes in the legislative
and regulatory environment; (5) the Companys failure to successfully implement its growth
strategy; and (6) 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.
 The Company
     2




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##### 



The Bank and its Subsidiaries
      Growth and Business Strategy
    3




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##### 



Lending Activities
 General
 Loan Composition
 2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commercial real estate
    
    $
    1,549,457
    
    
    $
    921,190
    
    
    $
    729,254
    
    
    $
    484,088
    
    
    $
    445,104Residential real estate
    
    
    398,779
    
    
    
    281,629
    
    
    
    319,797
    
    
    
    319,713
    
    
    
    295,528Commercial
    
    
    320,264
    
    
    
    258,998
    
    
    
    245,285
    
    
    
    165,975
    
    
    
    134,823Consumer
    
    
    97,635
    
    
    
    87,111
    
    
    
    90,682
    
    
    
    82,532
    
    
    
    81,624Other
    
    
    3,871
    
    
    
    2,203
    
    
    
    3,476
    
    
    
    4,989
    
    
    
    6,134Unearned interest
    
    
    (13,630
    )
    
    
    (11,502
    )
    
    
    (9,852
    )
    
    
    (10,430
    )
    
    
    (10,988
    )Loans, net of unearned interest
    
    $
    2,356,376
    
    
    $
    1,539,629
    
    
    $
    1,378,642
    
    
    $
    1,046,867
    
    
    $
    952,225Allowance for loan losses
    
    $
    (34,111
    )
    
    $
    (22,302
    )
    
    $
    (19,739
    )
    
    $
    (15,721
    )
    
    $
    (14,564
    )
 Loan Maturities
 Due in One
    
    
    Due After One Year
    
    
    Due AfterYear or Less
    
    
    Through Five Years
    
    
    Five Years
    
    
    TotalCommercial real estate
    
    $
    866,485
    
    
    $
    591,190
    
    
    $
    91,782
    
    
    $
    1,549,457Residential real estate (1)
    
    
    72,041
    
    
    
    119,053
    
    
    
    202,184
    
    
    
    393,278Commercial
    
    
    186,528
    
    
    
    123,045
    
    
    
    10,691
    
    
    
    320,264Consumer (1)
    
    
    27,212
    
    
    
    58,961
    
    
    
    3,333
    
    
    
    89,506Other
    
    
    3,341
    
    
    
    382
    
    
    
    148
    
    
    
    3,871Total
    
    $
    1,155,607
    
    
    $
    892,631
    
    
    $
    308,138
    
    
    $
    2,356,376
 (1)
    
    Net of unearned interest  4




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##### 



Fixed Rate
    
    
    Variable Rate
    
    
    TotalCommercial real estate
    
    $
    494,423
    
    
    $
    188,549
    
    
    $
    682,972Residential real estate
    
    
    169,696
    
    
    
    151,541
    
    
    
    321,237Commercial
    
    
    101,174
    
    
    
    32,562
    
    
    
    133,736Consumer
    
    
    61,512
    
    
    
    782
    
    
    
    62,294Other
    
    
    426
    
    
    
    104
    
    
    
    530Total
    
    $
    827,231
    
    
    $
    373,538
    
    
    $
    1,200,769
 Commercial Real Estate Loans
 Residential Real Estate
  Commercial Loans
 Consumer Loans
  5




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##### 



Past Due, Special Mention, Classified and Nonaccrual Loans
   At December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Loans accounted for on a non-accrual
basis
    
    $
    32,060
    
    
    $
    3,479
    
    
    $
    5,915
    
    
    $
    6,242
    
    
    $
    4,305Accruing loans which are contractually
past due 90 days or more as to interest
or principal payments
    
    
    18
    
    
    
    28
    
    
    
    809
    
    
    
    664
    
    
    
    224Total non-performing loans
    
    
    32,078
    
    
    
    3,507
    
    
    
    6,724
    
    
    
    6,906
    
    
    
    4,529Real estate owned:Foreclosures
    
    
    4,401
    
    
    
    1,445
    
    
    
    2,920
    
    
    
    1,353
    
    
    
    3,599Other real estate held and
repossessed assets
    
    
    458
    
    
    
    243
    
    
    
    823
    
    
    
    213
    
    
    
    627Total non-performing assets
    
    $
    36,937
    
    
    $
    5,195
    
    
    $
    10,467
    
    
    $
    8,472
    
    
    $
    8,755
     6




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##### 



Allowance for Loan Losses
   7




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##### 



Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Balance at beginning of year
    
    $
    22,302
    
    
    $
    19,739
    
    
    $
    15,721
    
    
    $
    14,564
    
    
    $
    12,586Reserve acquired in acquisition
    
    
    9,022
    
    
    
    
    
    
    
    1,467
    
    
    
    363
    
    
    
    1,340Subtotal
    
    
    31,324
    
    
    
    19,739
    
    
    
    17,188
    
    
    
    14,927
    
    
    
    13,926Commercial real estateCharge-offs:Commercial real estate
    
    
    (7,516
    )
    
    
    (494
    )
    
    
    (189
    )
    
    
    (1,044
    )
    
    
    (664
    )Commercial
    
    
    (2,065
    )
    
    
    (879
    )
    
    
    (1,500
    )
    
    
    (1,538
    )
    
    
    (1,007
    )Subtotal
    
    
    (9,581
    )
    
    
    (1,373
    )
    
    
    (1,689
    )
    
    
    (2,582
    )
    
    
    (1,671
    )Residential real estate
    
    
    (840
    )
    
    
    (947
    )
    
    
    (622
    )
    
    
    (424
    )
    
    
    (745
    )Consumer
    
    
    (3,050
    )
    
    
    (2,009
    )
    
    
    (3,250
    )
    
    
    (3,962
    )
    
    
    (4,381
    )Other
    
    
    
    
    
    
    (28
    )
    
    
    (22
    )
    
    
    (12
    )
    
    
    Total charge-offs
    
    
    (13,471
    )
    
    
    (4,357
    )
    
    
    (5,583
    )
    
    
    (6,980
    )
    
    
    (6,797
    )Recoveries:Commercial real estate
    
    
    289
    
    
    
    17
    
    
    
    180
    
    
    
    66
    
    
    
    90Commercial
    
    
    227
    
    
    
    171
    
    
    
    160
    
    
    
    304
    
    
    
    195Subtotal
    
    
    516
    
    
    
    188
    
    
    
    340
    
    
    
    370
    
    
    
    287Residential real estate
    
    
    213
    
    
    
    284
    
    
    
    166
    
    
    
    63
    
    
    
    92Consumer
    
    
    1,038
    
    
    
    936
    
    
    
    1,246
    
    
    
    1,504
    
    
    
    1,281Other
    
    
    8
    
    
    
    5
    
    
    
    17
    
    
    
    1
    
    
    
    Total recoveries
    
    
    1,775
    
    
    
    1,413
    
    
    
    1,769
    
    
    
    1,938
    
    
    
    1,660Net charge-offs
    
    
    (11,696
    )
    
    
    (2,944
    )
    
    
    (3,814
    )
    
    
    (5,042
    )
    
    
    (5,137
    )Provision for loan losses
    
    
    14,483
    
    
    
    5,507
    
    
    
    6,365
    
    
    
    5,836
    
    
    
    5,775Balance at end of year
    
    $
    34,111
    
    
    $
    22,302
    
    
    $
    19,739
    
    
    $
    15,721
    
    
    $
    14,564Ratio of net charge-offs to average
loans outstanding, net of
unearned discount, during
the period
    
    
    .57
    %
    
    
    .20
    %
    
    
    .32
    %
    
    
    0.51
    %
    
    
    .64
    %Ratio of allowance for loan losses to
non-performing loans
    
    
    106.34
    %
    
    
    635.93
    %
    
    
    293.56
    %
    
    
    227.64
    %
    
    
    321.57
    %Ratio of allowance for loan losses to
total loans, net of unearned income
    
    
    1.45
    %
    
    
    1.45
    %
    
    
    1.43
    %
    
    
    1.50
    %
    
    
    1.53
    %
 Breakdown of allowance for loan losses by category.
 At December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Percent 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
    
    
    
    
    
    
    categoryBalance at end of period
    
    
    
    
    
    to total
    
    
    
    
    
    
    to total
    
    
    
    
    
    
    to total
    
    
    
    
    
    
    to total
    
    
    
    
    
    
    to totalapplicable to:
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loansCommercial real estate
    
    $
    20,489
    
    
    
    65.38
    %
    
    $
    10,619
    
    
    
    59.38
    %
    
    $
    8,889
    
    
    
    52.90
    %
    
    $
    5,939
    
    
    
    46.25
    %
    
    $
    4,737
    
    
    
    46.75
    %Residential real estate
    
    
    2,395
    
    
    
    16.83
    %
    
    
    1,639
    
    
    
    18.16
    %
    
    
    2,035
    
    
    
    22.92
    %
    
    
    1,922
    
    
    
    30.11
    %
    
    
    2,037
    
    
    
    30.56
    %Commercial
    
    
    7,575
    
    
    
    13.51
    %
    
    
    6,645
    
    
    
    16.70
    %
    
    
    4,797
    
    
    
    17.79
    %
    
    
    3,666
    
    
    
    15.85
    %
    
    
    3,001
    
    
    
    14.16
    %Consumer
    
    
    3,635
    
    
    
    4.12
    %
    
    
    3,384
    
    
    
    5.62
    %
    
    
    3,960
    
    
    
    6.14
    %
    
    
    3,856
    
    
    
    7.31
    %
    
    
    4,080
    
    
    
    7.89
    %Other
    
    
    17
    
    
    
    .16
    %
    
    
    15
    
    
    
    0.14
    %
    
    
    58
    
    
    
    0.25
    %
    
    
    338
    
    
    
    0.48
    %
    
    
    709
    
    
    
    0.64
    %Totals
    
    $
    34,111
    
    
    
    100.00
    %
    
    $
    22,302
    
    
    
    100.00
    %
    
    $
    19,739
    
    
    
    100.00
    %
    
    $
    15,721
    
    
    
    100.00
    %
    
    $
    14,564
    
    
    
    100.00
    %
  8




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##### 



Investment Activities
 General
 Securities by Category
 At December 31,2007
    
    
    2006
    
    
    2005Securities Held to Maturity:Obligations of state and political subdivisions
    
    $
    1,049
    
    
    $
    1,794
    
    
    $
    2,630Corporate Securities
    
    
    254
    
    
    
    751
    
    
    
    749Total
    
    $
    1,303
    
    
    $
    2,545
    
    
    $
    3,379Securities Available for Sale:U.S. Government, corporations and agencies
    
    $
    197,908
    
    
    $
    33,814
    
    
    $
    40,755Obligations of state and political subdivisions
    
    
    34,388
    
    
    
    1,702
    
    
    
    1,700Trust Preferred Securities
    
    
    2,977
    
    
    
    2,224
    
    
    
    6,413Total
    
    $
    235,273
    
    
    $
    37,740
    
    
    $
    48,868
 Maturity Distributions of Securities
 Due After One
    
    
    Due After FiveDue in One
    
    
    Year through
    
    
    Years through
    
    
    Due AfterYear or Less
    
    
    Five Years
    
    

10 Years
    
    
    10 Years
    
    
    TotalUS Government agency
obligations  available for sale
    
    $
    258
    
    
    $
    5,517
    
    
    $
    37,685
    
    
    $
    152,091
    
    
    $
    195,551Obligations of state and political subdivisions 
available for sale
    
    
    500
    
    
    
    1,411
    
    
    
    11,485
    
    
    
    20,754
    
    
    
    34,150Obligations of state and political subdivisions 
held to maturity
    
    
    385
    
    
    
    664
    
    
    
    
    
    
    
    
    
    
    
    1,049Other securities  available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,094
    
    
    
    3,094Other securities  held to maturity
    
    
    
    
    
    
    254
    
    
    
    
    
    
    
    
    
    
    
    254Subtotal
    
    $
    1,143
    
    
    $
    7,846
    
    
    $
    49,170
    
    
    $
    175,939
    
    
    $
    234,098Market value adjustment on available for sale
securities
    
    
    (7
    )
    
    
    69
    
    
    
    615
    
    
    
    1,801
    
    
    
    2,478Total
    
    $
    1,136
    
    
    $
    7,915
    
    
    $
    49,785
    
    
    $
    177,740
    
    
    $
    236,576Weighted average yield (a)
    
    
    4.07
    %
    
    
    5.35
    %
    
    
    5.71
    %
    
    
    5.71
    %
    
    
    5.69
    %
 
 (a)
    
    Weighted average yields on tax-exempt obligations have been computed on a fully
taxable-equivalent basis using a tax rate of 35%.   9




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##### 



Deposits
   Year Ended December 31,2007
    
    
    2006
    
    
    2005Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    AverageBalance
    
    
    Rate Paid
    
    
    Balance
    
    
    Rate Paid
    
    
    Balance
    
    
    Rate PaidTypes of deposits (all in domestic
offices):Noninterest bearing demand deposits
    
    $
    184,529
    
    
    
    
    
    
    $
    147,947
    
    
    
    
    
    
    $
    125,071
    
    
    
    Interest-bearing demand deposits
    
    
    581,340
    
    
    
    2.78
    %
    
    
    420,041
    
    
    
    2.38
    %
    
    
    355,566
    
    
    
    1.52
    %Savings deposits
    
    
    73,355
    
    
    
    .75
    %
    
    
    72,978
    
    
    
    .70
    %
    
    
    68,053
    
    
    
    0.36
    %Time deposits
    
    
    951,455
    
    
    
    4.70
    %
    
    
    641,672
    
    
    
    3.98
    %
    
    
    591,608
    
    
    
    3.01
    %Total deposits
    
    $
    1,790,679
    
    
    
    
    
    
    $
    1,282,638
    
    
    
    
    
    
    $
    1,140,298
  Certificates ofMaturity Period
    
    DepositsThree months or less
    
    $
    216,170Over three through six months
    
    
    217,746Over six through twelve months
    
    
    74,090Over twelve months
    
    
    44,957Total
    
    $
    552,963
  10




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##### 



Competition
   County
    
    Deposit ShareGreene, TN
    
    
    39.83
    %Hawkins, TN
    
    
    14.33
    %Sumner, TN
    
    
    13.57
    %Lawrence, TN
    
    
    13.39
    %Smith, TN
    
    
    13.25
    %Blount, TN
    
    
    10.73
    %Macon, TN
    
    
    10.24
    %Montgomery, TN
    
    
    9.45
    %Hamblen, TN
    
    
    7.27
    %Cocke, TN
    
    
    7.18
    %Williamson, TN
    
    
    6.56
    %McMinn, TN
    
    
    6.16
    %Madison, NC
    
    
    5.35
    %Washington, TN
    
    
    3.85
    %Loudon, TN
    
    
    3.36
    %Bristol, VA1
    
    
    2.24
    %Rutherford, TN
    
    
    2.20
    %Sullivan, TN
    
    
    1.63
    %Monroe, TN
    
    
    0.94
    %Davidson, TN
    
    
    0.65
    %Knox, TN
    
    
    0.45
    %
 1
    
    Bristol, VA is deemed a city. Employees
  Regulation, Supervision and Governmental Policy
   11




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##### 



Bank Holding Company Regulation
 Acquisitions and Mergers
   Capital Requirements
 Dividends
 Support of Banking Subsidiaries
  Transactions with Affiliates
  12




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##### 



Bank Regulation
 Extensions of Credit
 Federal Deposit Insurance
 Safety and Soundness Standards
 Capital Requirements
   13




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##### 



Legislative, Legal and Regulatory Developments
 USA Patriot Act
  Additional Information
  ITEM 1A. RISK FACTORS.
 The Companys business is subject to the success of the local economies where it operates.
    14




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##### 



The Company could sustain losses if its asset quality declines further.
  An inadequate allowance for loan losses would reduce the Companys earnings.
  Continued problems in residential real estate construction markets could adversely affect the
Companys loan portfolio quality.
  The Companys business strategy includes the continuation of growth plans, and its financial
condition and results of operations could be affected if its 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
  15




---



##### 



Expansion into New Markets
 Regulatory and Economic Factors
  Liquidity needs could adversely affect the Companys results of operations and financial
condition.
  Competition from financial institutions and other financial service providers may adversely affect
the Companys profitability.
     16




---



##### 



The Company 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;
    
    the Companys ability to finance an acquisition and possible dilution to its existing
shareholders;
    
    the diversion of the Companys 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 the Company lacks experience;
    
    the introduction of new products and services into the Companys business;
    
    the incurrence and possible impairment of goodwill associated with an acquisition and
possible adverse short-term effects on the Companys results of operations; and
    
    the risk of loss of key employees and customers.
  Changes in interest rates could adversely affect the Companys results of operations and financial
condition.
  The Company relies heavily on the services of key personnel
   17




---



##### 



The Company is subject to extensive regulation that could limit or restrict its activities.
    The Companys recent results may not be indicative of its future results.
  The Company is subject to Tennessee anti-takeover statutes and certain charter provisions which
could decrease its chances of being acquired even if the acquisition is in the Companys
shareholders best interests.
     18




---



##### 



The Companys continued pace of growth may require it to raise additional capital in the future,
but that capital may not be available when it is needed.
   The success and growth of the Companys business will depend on its ability to adapt to
technological changes.
  Even though the Companys common stock is currently traded on The Nasdaq Global Select Market, the
trading volume in its common stock has been thin and the sale of substantial amounts of the
Companys common stock in the public market could depress the price of its common stock.
    The Company may issue additional common stock or other equity securities in the future which could
dilute the ownership interest of existing shareholders.
  The Companys ability to declare and pay dividends is limited by law and it may be unable to pay
future dividends.
   19




---



##### 



Holders of the Companys junior subordinated debentures have rights that are senior to those of its
common shareholders.
  ITEM 1B. UNRESOLVED STAFF COMMENTS.
  ITEM 2. PROPERTIES.
  ITEM 3. LEGAL PROCEEDINGS.
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   20




---



##### 



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 Share2007: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$
    0.682006:First quarter
    
    $
    29.93 / 27.01
    
    
    $
    29.21
    
    
    $
    0.12Second quarter
    
    
    32.20 / 27.90
    
    
    
    30.96
    
    
    
    0.12Third quarter
    
    
    37.77 / 29.28
    
    
    
    36.56
    
    
    
    0.12Fourth quarter
    
    
    39.73 / 35.06
    
    
    
    39.73
    
    
    
    0.28$
    0.64
     21




---



##### 



ITEM 6. SELECTED FINANCIAL DATA.
 2007(1)
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Total interest income
    
    $
    176,626
    
    
    $
    117,357
    
    
    $
    87,191
    
    
    $
    65,076
    
    
    $
    56,737Total interest expense
    
    
    81,973
    
    
    
    45,400
    
    
    
    28,405
    
    
    
    16,058
    
    
    
    15,914Net interest income
    
    
    94,653
    
    
    
    71,957
    
    
    
    58,786
    
    
    
    49,018
    
    
    
    40,823Provision for loan losses
    
    
    (14,483
    )
    
    
    (5,507
    )
    
    
    (6,365
    )
    
    
    (5,836
    )
    
    
    (5,775
    )Net interest income after provision for loan losses
    
    
    80,170
    
    
    
    66,450
    
    
    
    52,421
    
    
    
    43,182
    
    
    
    35,048Noninterest income
    
    
    27,678
    
    
    
    20,778
    
    
    
    14,756
    
    
    
    13,028
    
    
    
    11,588Noninterest expense
    
    
    (69,328
    )
    
    
    (52,776
    )
    
    
    (44,340
    )
    
    
    (36,983
    )
    
    
    (30,618
    )Income before income taxes
    
    
    38,520
    
    
    
    34,452
    
    
    
    22,837
    
    
    
    19,227
    
    
    
    16,018Income tax expense
    
    
    (14,146
    )
    
    
    (13,190
    )
    
    
    (8,674
    )
    
    
    (7,219
    )
    
    
    (5,781
    )Net income
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163
    
    
    $
    12,008
    
    
    $
    10,237Per Share Data:Net income, basic
    
    $
    2.07
    
    
    $
    2.17
    
    
    $
    1.73
    
    
    $
    1.57
    
    
    $
    1.48Net income, assuming dilution
    
    $
    2.07
    
    
    $
    2.14
    
    
    $
    1.71
    
    
    $
    1.55
    
    
    $
    1.47Dividends declared
    
    $
    .68
    
    
    $
    .64
    
    
    $
    .62
    
    
    $
    0.61
    
    
    $
    .59Book value
    
    $
    24.94
    
    
    $
    18.80
    
    
    $
    17.20
    
    
    $
    14.22
    
    
    $
    13.31Tangible book value2
    
    $
    12.73
    
    
    $
    14.87
    
    
    $
    13.15
    
    
    $
    11.12
    
    
    $
    10.57Financial Condition Data:Assets
    
    $
    2,947,741
    
    
    $
    1,772,654
    
    
    $
    1,619,989
    
    
    $
    1,233,403
    
    
    $
    1,108,522Loans, net of unearned interest
    
    $
    2,356,376
    
    
    $
    1,539,629
    
    
    $
    1,378,642
    
    
    $
    1,046,867
    
    
    $
    952,225Cash and investments
    
    $
    314,615
    
    
    $
    91,997
    
    
    $
    104,872
    
    
    $
    76,637
    
    
    $
    80,910Federal funds sold
    
    $
    
    
    
    $
    25,983
    
    
    $
    28,387
    
    
    $
    39,921
    
    
    $
    5,254Deposits
    
    $
    1,986,793
    
    
    $
    1,332,505
    
    
    $
    1,295,879
    
    
    $
    988,022
    
    
    $
    907,115FHLB advances and notes payable
    
    $
    318,690
    
    
    $
    177,571
    
    
    $
    105,146
    
    
    $
    85,222
    
    
    $
    63,030Subordinated debentures
    
    $
    88,662
    
    
    $
    13,403
    
    
    $
    13,403
    
    
    $
    10,310
    
    
    $
    10,310Federal funds purchased and repurchase agreements
    
    $
    194,525
    
    
    $
    42,165
    
    
    $
    17,498
    
    
    $
    13,868
    
    
    $
    12,896Shareholders equity
    
    $
    322,477
    
    
    $
    184,471
    
    
    $
    168,021
    
    
    $
    108,718
    
    
    $
    101,935Tangible shareholders equity2
    
    $
    164,650
    
    
    $
    145,931
    
    
    $
    128,399
    
    
    $
    85,023
    
    
    $
    80,965Selected Ratios:Interest rate spread
    
    
    3.83
    %
    
    
    4.32
    %
    
    
    4.30
    %
    
    
    4.53
    %
    
    
    4.59
    %Net interest margin3
    
    
    4.25
    %
    
    
    4.77
    %
    
    
    4.61
    %
    
    
    4.75
    %
    
    
    4.83
    %Return on average assets
    
    
    0.98
    %
    
    
    1.28
    %
    
    
    1.02
    %
    
    
    1.06
    %
    
    
    1.12
    %Return on average equity
    
    
    8.96
    %
    
    
    11.91
    %
    
    
    11.09
    %
    
    
    11.23
    %
    
    
    12.59
    %Return on average tangible equity2
    
    
    15.41
    %
    
    
    15.25
    %
    
    
    14.04
    %
    
    
    13.95
    %
    
    
    13.38
    %Average equity to average assets
    
    
    10.91
    %
    
    
    10.78
    %
    
    
    9.20
    %
    
    
    9.47
    %
    
    
    8.87
    %Dividend payout ratio
    
    
    32.85
    %
    
    
    29.49
    %
    
    
    35.84
    %
    
    
    38.85
    %
    
    
    39.86
    %Ratio of nonperforming assets to total assets
assets
    
    
    1.25
    %
    
    
    0.29
    %
    
    
    0.65
    %
    
    
    0.69
    %
    
    
    0.79
    %Ratio of allowance for loan losses to
nonperforming loans
    
    
    106.34
    %
    
    
    635.93
    %
    
    
    293.56
    %
    
    
    227.64
    %
    
    
    321.57
    %Ratio of allowance for loan losses to total
loans, net
of unearned income loans
    
    
    1.45
    %
    
    
    1.45
    %
    
    
    1.43
    %
    
    
    1.50
    %
    
    
    1.53
    %
 
 1
    
    Information for the 2007 fiscal year includes the operations of CVBG, with which the
Company merged on May 18, 2007.2
    
    Tangible shareholders equity is shareholders equity less goodwill and intangible
assets.3
    
    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.  22




---



##### 



GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
  
    
    Tangible book value per share is defined as total equity reduced by recorded goodwill and
other intangible assets 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. 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 shareholders equity is shareholders equity less goodwill and other intangible
assets.
    
    Return on average tangible equity is defined as earnings for the period divided by
average equity reduced by average goodwill and other intangible assets.
  At and for the Fiscal Years Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Book value per
share
    
    $
    24.93
    
    
    $
    18.80
    
    
    $
    17.20
    
    
    $
    14.22
    
    
    $
    13.31Effect of
intangible assets
per share
    
    $
    (12.20
    )
    
    $
    (3.93
    )
    
    $
    (4.05
    )
    
    $
    (3.10
    )
    
    $
    (2.74
    )Tangible book value
per share
    
    $
    12.73
    
    
    $
    14.87
    
    
    $
    13.15
    
    
    $
    11.12
    
    
    $
    10.57Return on average
equity
    
    
    8.96
    %
    
    
    11.91
    %
    
    
    11.09
    %
    
    
    11.23
    %
    
    
    12.59
    %Effect of
intangible
assets
    
    
    6.45
    %
    
    
    3.34
    %
    
    
    2.95
    %
    
    
    2.72
    %
    
    
    0.79
    %Return on average
tangible equity
    
    
    15.41
    %
    
    
    15.25
    %
    
    
    14.04
    %
    
    
    13.95
    %
    
    
    13.38
    %
  23




---



##### 



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   Critical Accounting Policies and Estimates
      24




---



##### 



Changes in Results of Operations
 Net income
  Net Interest Income
   25




---



##### 



Average Balances, Interest Rates and Yields.
  2007
    
    
    2006
    
    
    2005Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-earning assets:Loans(1)(4)Real estate loans
    
    $
    1,661,640
    
    
    $
    127,459
    
    
    
    7.67
    %
    
    $
    1,104,471
    
    
    $
    82,857
    
    
    
    7.50
    %
    
    $
    896,485
    
    
    $
    59,026
    
    
    
    6.58
    %Commercial loans
    
    
    303,799
    
    
    
    24,180
    
    
    
    7.96
    %
    
    
    259,264
    
    
    
    20,214
    
    
    
    7.80
    %
    
    
    208,964
    
    
    
    13,683
    
    
    
    6.55
    %Consumer and other loans-
net(2)
    
    
    94,280
    
    
    
    10,903
    
    
    
    11.56
    %
    
    
    86,781
    
    
    
    9,746
    
    
    
    11.23
    %
    
    
    85,628
    
    
    
    9,319
    
    
    
    10.88
    %Fees on loans
    
    
    
    
    
    
    4,217
    
    
    
    
    
    
    
    
    
    
    
    1,768
    
    
    
    
    
    
    
    
    
    
    
    2,136Total loans
(including fees)
    
    $
    2,059,719
    
    
    $
    166,759
    
    
    
    8.10
    %
    
    $
    1,450,516
    
    
    $
    114,585
    
    
    
    7.90
    %
    
    $
    1,191,077
    
    
    $
    84,164
    
    
    
    7.07
    %Investment securities(3)Taxable
    
    $
    146,642
    
    
    $
    8,415
    
    
    
    5.76
    %
    
    $
    45,446
    
    
    $
    2,273
    
    
    
    5.00
    %
    
    $
    48,774
    
    
    $
    1,920
    
    
    
    3.94
    %Tax-exempt(4)
    
    
    22,227
    
    
    
    1,334
    
    
    
    6.00
    %
    
    
    2,922
    
    
    
    166
    
    
    
    5.68
    %
    
    
    3,668
    
    
    
    212
    
    
    
    5.78
    %FHLB and other stock
    
    
    9,804
    
    
    
    617
    
    
    
    6.29
    %
    
    
    6,784
    
    
    
    345
    
    
    
    5.09
    %
    
    
    6,308
    
    
    
    282
    
    
    
    4.47
    %Total investment
securities
    
    $
    178,673
    
    
    $
    10,366
    
    
    
    5.80
    %
    
    $
    55,152
    
    
    $
    2,784
    
    
    
    5.05
    %
    
    $
    58,750
    
    
    $
    2,414
    
    
    
    4.11
    %Other short-term
investments
    
    
    1,054
    
    
    
    54
    
    
    
    5.12
    %
    
    
    2,799
    
    
    
    138
    
    
    
    4.93
    %
    
    
    25,964
    
    
    
    777
    
    
    
    2.99
    %Total interest-
earning assets
    
    $
    2,239,446
    
    
    $
    177,179
    
    
    
    7.91
    %
    
    $
    1,508,467
    
    
    $
    117,507
    
    
    
    7.79
    %
    
    $
    1,275,791
    
    
    $
    87,355
    
    
    
    6.85
    %Noninterest-earning assets:Cash and due from
banks
    
    $
    47,436
    
    
    
    
    
    
    
    
    
    
    $
    39,068
    
    
    
    
    
    
    
    
    
    
    $
    32,971Premises and
equipment
    
    
    73,176
    
    
    
    
    
    
    
    
    
    
    
    53,304
    
    
    
    
    
    
    
    
    
    
    
    38,891Other, less allowance
for loan losses
    
    
    135,296
    
    
    
    
    
    
    
    
    
    
    
    55,939
    
    
    
    
    
    
    
    
    
    
    
    40,943Total noninterest-
earning assets
    
    $
    255,908
    
    
    
    
    
    
    
    
    
    
    $
    148,311
    
    
    
    
    
    
    
    
    
    
    $
    112,805Total assets
    
    $
    2,495,354
    
    
    
    
    
    
    
    
    
    
    $
    1,656,778
    
    
    
    
    
    
    
    
    
    
    $
    1,388,596
 
 1
    
    Average loan balances include nonaccrual loans. 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.  26




---



##### 



2007
    
    
    2006
    
    
    2005Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-bearing
liabilities:DepositsSavings, interest
checking,
and money market
accounts
    
    $
    654,696
    
    
    $
    16,703
    
    
    
    2.55
    %
    
    $
    493,019
    
    
    $
    10,524
    
    
    
    2.13
    %
    
    $
    423,619
    
    
    $
    5,654
    
    
    
    1.33
    %Time deposits
    
    
    951,455
    
    
    
    44,669
    
    
    
    4.69
    %
    
    
    641,672
    
    
    
    25,566
    
    
    
    3.98
    %
    
    
    591,608
    
    
    
    17,827
    
    
    
    3.01
    %Total deposits
    
    $
    1,606,151
    
    
    $
    61,372
    
    
    
    3.82
    %
    
    $
    1,134,691
    
    
    $
    36,090
    
    
    
    3.18
    %
    
    $
    1,015,227
    
    
    $
    23,481
    
    
    
    2.31
    %Securities sold under
repurchase agreements
and short-term
borrowings
    
    
    95,715
    
    
    
    4,183
    
    
    
    4.37
    %
    
    
    32,487
    
    
    
    1,469
    
    
    
    4.52
    %
    
    
    15,695
    
    
    
    414
    
    
    
    2.64
    %Subordinated debentures
    
    
    60,730
    
    
    
    4,512
    
    
    
    7.43
    %
    
    
    13,403
    
    
    
    1,043
    
    
    
    7.78
    %
    
    
    11,878
    
    
    
    729
    
    
    
    6.14
    %FHLB advances and notes
payable
    
    
    247,007
    
    
    
    11,906
    
    
    
    4.82
    %
    
    
    130,752
    
    
    
    6,798
    
    
    
    5.20
    %
    
    
    77,551
    
    
    
    3,781
    
    
    
    4.88
    %Total interest-bearing
liabilities
    
    $
    2,009,603
    
    
    $
    81,973
    
    
    
    4.08
    %
    
    $
    1,311,333
    
    
    $
    45,400
    
    
    
    3.46
    %
    
    $
    1,120,351
    
    
    $
    28,405
    
    
    
    2.54
    %Noninterest bearing
liabilities:Demand deposits
    
    $
    184,529
    
    
    
    
    
    
    
    
    
    
    $
    147,947
    
    
    
    
    
    
    
    
    
    
    $
    125,071Other liabilities
    
    
    29,067
    
    
    
    
    
    
    
    
    
    
    
    18,952
    
    
    
    
    
    
    
    
    
    
    
    15,460Total non-interest-
bearing liabilities
    
    $
    213,596
    
    
    
    
    
    
    
    
    
    
    $
    166,899
    
    
    
    
    
    
    
    
    
    
    $
    140,531Shareholders equity
    
    
    272,155
    
    
    
    
    
    
    
    
    
    
    
    178,546
    
    
    
    
    
    
    
    
    
    
    
    127,714Total liabilities and
shareholders equity
    
    $
    2,495,354
    
    
    
    
    
    
    
    
    
    
    $
    1,656,778
    
    
    
    
    
    
    
    
    
    
    $
    1,388,596Net interest income
    
    
    
    
    
    $
    95,206
    
    
    
    
    
    
    
    
    
    
    $
    72,107
    
    
    
    
    
    
    
    
    
    
    $
    58,950Margin analysis:Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.83
    %
    
    
    
    
    
    
    
    
    
    
    4.33
    %
    
    
    
    
    
    
    
    
    
    
    4.31
    %Net yield on interest-earning assets (net
interest margin)
    
    
    
    
    
    
    
    
    
    
    4.25
    %
    
    
    
    
    
    
    
    
    
    
    4.78
    %
    
    
    
    
    
    
    
    
    
    
    4.62
    %
  27




---



##### 



Rate/Volume Analysis
 2007 vs. 2006
    
    
    2006 vs. 2005Rate/
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    Rate/
    
    
    TotalVolume
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Volume
    
    
    Rate
    
    
    Volume
    
    
    ChangeInterest income:Loans, net of unearned income
    
    $
    48,133
    
    
    $
    2,846
    
    
    $
    1,195
    
    
    $
    52,174
    
    
    $
    18,329
    
    
    $
    9,929
    
    
    $
    2,163
    
    
    $
    30,421Investment securities:Taxable
    
    
    5,030
    
    
    
    346
    
    
    
    766
    
    
    
    6,142
    
    
    
    (131
    )
    
    
    520
    
    
    
    (36
    )
    
    
    353Tax-exempt
    
    
    1,097
    
    
    
    9
    
    
    
    62
    
    
    
    1,168
    
    
    
    (42
    )
    
    
    (5
    )
    
    
    1
    
    
    
    (46
    )FHLB and other stock, at cost
    
    
    170
    
    
    
    65
    
    
    
    37
    
    
    
    272
    
    
    
    16
    
    
    
    45
    
    
    
    2
    
    
    
    63Other short-term investments
    
    
    (86
    )
    
    
    5
    
    
    
    (3
    )
    
    
    (84
    )
    
    
    (693
    )
    
    
    503
    
    
    
    (449
    )
    
    
    (639
    )Total interest income
    
    
    54,344
    
    
    
    3,271
    
    
    
    2,057
    
    
    
    59,672
    
    
    
    17,479
    
    
    
    10,992
    
    
    
    1,681
    
    
    
    30,152Interest Expense:Savings, interest checking, and
money market accounts
    
    
    3,248
    
    
    
    2,065
    
    
    
    866
    
    
    
    6,179
    
    
    
    840
    
    
    
    3,455
    
    
    
    575
    
    
    
    4,870Time deposits
    
    
    12,343
    
    
    
    4,559
    
    
    
    2,201
    
    
    
    19,103
    
    
    
    1,509
    
    
    
    5,744
    
    
    
    486
    
    
    
    7,739Short-term borrowings
    
    
    2,800
    
    
    
    (31
    )
    
    
    (55
    )
    
    
    2,714
    
    
    
    178
    
    
    
    233
    
    
    
    644
    
    
    
    1,055Subordinated debentures
    
    
    3,683
    
    
    
    (47
    )
    
    
    (167
    )
    
    
    3,469
    
    
    
    94
    
    
    
    195
    
    
    
    25
    
    
    
    314Notes payable
    
    
    6,065
    
    
    
    (501
    )
    
    
    (456
    )
    
    
    5,108
    
    
    
    2,619
    
    
    
    244
    
    
    
    154
    
    
    
    3,017Total interest expense
    
    
    28,139
    
    
    
    6,045
    
    
    
    2,389
    
    
    
    36,573
    
    
    
    5,240
    
    
    
    9,871
    
    
    
    1,884
    
    
    
    16,995Net interest income
    
    $
    26,205
    
    
    $
    (2,774
    )
    
    $
    (332
    )
    
    $
    23,099
    
    
    $
    12,239
    
    
    $
    1,121
    
    
    $
    (203
    )
    
    $
    13,157
    28




---



##### 



Provision for Loan Losses
        29




---



##### 



Noninterest Income
  Noninterest Expense
  Income Taxes.
 Changes in Financial Condition
    30




---



##### 



Liquidity and Capital Resources
 Liquidity
  31




---



##### 



Capital Resources
    32




---



##### 




    
    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.
     33




---



##### 



Minimum Amounts to beMinimum Required
    
    
    Well Capitalized Underfor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsActual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)2007Total 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
    
    
    
    5.02006Total Capital (to Risk Weighted Assets)Consolidated
    
    $
    178.5
    
    
    
    11.5
    
    
    $
    124.6
    
    
    
    8.0
    
    
    $
    155.8
    
    
    
    10.0Bank
    
    
    177.3
    
    
    
    11.4
    
    
    
    124.5
    
    
    
    8.0
    
    
    
    155.6
    
    
    
    10.0Tier 1 Capital (to Risk Weighted
Assets)Consolidated
    
    $
    159.1
    
    
    
    10.2
    
    
    $
    62.3
    
    
    
    4.0
    
    
    $
    93.5
    
    
    
    6.0Bank
    
    
    157.8
    
    
    
    10.1
    
    
    
    62.3
    
    
    
    4.0
    
    
    
    93.4
    
    
    
    6.0Tier 1 Capital (to Average Assets)Consolidated
    
    $
    159.1
    
    
    
    9.5
    
    
    $
    67.4
    
    
    
    4.0
    
    
    $
    84.2
    
    
    
    5.0Bank
    
    
    157.8
    
    
    
    9.4
    
    
    
    67.3
    
    
    
    4.0
    
    
    
    84.2
    
    
    
    5.0
 Off-Balance Sheet Arrangements
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years
    
    
    TotalCommitments to make loans  fixed
    
    $
    7,837
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,837Commitments
to make loans  variable
    
    
    23,843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,843Unused lines of credit
    
    
    458,809
    
    
    
    148,487
    
    
    
    13,849
    
    
    
    83,584
    
    
    
    704,729Letters of credit
    
    
    37,751
    
    
    
    4,560
    
    
    
    9,410
    
    
    
    6,894
    
    
    
    58,615Total
    
    $
    528,240
    
    
    $
    153,047
    
    
    $
    23,259
    
    
    $
    90,478
    
    
    $
    795,024
  34




---



##### 



Asset/Liability Management
          35




---



##### 



Disclosure of Contractual Obligations
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years
    
    
    TotalCertificate of deposits
    
    $
    1,013,078
    
    
    $
    89,255
    
    
    $
    7,558
    
    
    $
    4,352
    
    
    $
    1,114,243Federal funds purchased
    
    
    87,787
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87,787Repurchase agreements
    
    
    106,738
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,738FHLB advances and notes payable
    
    
    109,825
    
    
    
    67,323
    
    
    
    80,902
    
    
    
    60,640
    
    
    
    318,690Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,662
    
    
    
    88,662Operating lease obligations
    
    
    987
    
    
    
    1,187
    
    
    
    663
    
    
    
    1,527
    
    
    
    4,364Deferred compensation
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    1,638
    
    
    
    3,638Purchase obligations
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    291Total
    
    $
    1,320,706
    
    
    $
    157,765
    
    
    $
    89,123
    
    
    $
    156,819
    
    
    $
    1,724,413
  Inflation
    Effect of New Accounting Standards
   36




---



##### 



.
 Business Combinations Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements, an
amendment of ARB No. 51
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   37




---



##### 



Managements Annual Report on Internal Control Over Financial Reporting
      38




---



##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
ControlIntegrated Framework
    Internal ControlIntegrated Framework
 Accounting for Uncertainty in Income Taxes
  
  39




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Accounting for
Uncertainty in Income Taxes
   
  40




---



##### 



GREEN BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and 2006
(Amounts in thousands, except share and per share data)
 2007
    
    
    2006ASSETSCash and due from banks
    
    $
    65,717
    
    
    $
    44,657Federal funds sold
    
    
    
    
    
    
    25,983Cash and cash equivalents
    
    
    65,717
    
    
    
    70,640Securities available for sale
    
    
    235,273
    
    
    
    37,740Securities held to maturity (with a market value of $1,280 and $2,544)
    
    
    1,303
    
    
    
    2,545Loans held for sale
    
    
    2,331
    
    
    
    1,772Loans, net of unearned interest
    
    
    2,356,376
    
    
    
    1,539,629Allowance for loan losses
    
    
    (34,111
    )
    
    
    (22,302
    )Other real estate owned and repossessed assets
    
    
    4,859
    
    
    
    1,688Premises and equipment, net
    
    
    82,697
    
    
    
    57,258FHLB and other stock, at cost
    
    
    12,322
    
    
    
    7,055Cash surrender value of life insurance
    
    
    28,466
    
    
    
    21,176Goodwill
    
    
    143,140
    
    
    
    31,327Core deposit and other intangibles
    
    
    14,687
    
    
    
    7,213Other assets
    
    
    34,681
    
    
    
    16,913Total assets
    
    $
    2,947,741
    
    
    $
    1,772,654LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesNoninterest-bearing deposits
    
    $
    201,289
    
    
    $
    152,635Interest-bearing deposits
    
    
    1,785,504
    
    
    
    1,179,870Total deposits
    
    
    1,986,793
    
    
    
    1,332,505Federal funds purchased
    
    
    87,787
    
    
    
    20,000Repurchase agreements
    
    
    106,738
    
    
    
    22,165FHLB advances and notes payable
    
    
    318,690
    
    
    
    177,571Subordinated debentures
    
    
    88,662
    
    
    
    13,403Accrued interest payable and other liabilities
    
    
    36,594
    
    
    
    22,539Total liabilities
    
    $
    2,625,264
    
    
    $
    1,588,183Shareholders equityCommon stock: $2 par, 20,000,000 shares authorized, 12,931,015 and
9,810,867 shares outstanding
    
    $
    25,862
    
    
    $
    19,622Additional paid-in capital
    
    
    185,170
    
    
    
    71,828Retained earnings
    
    
    109,938
    
    
    
    93,150Accumulated other comprehensive income (loss)
    
    
    1,507
    
    
    
    (129
    )Total shareholders equity
    
    
    322,477
    
    
    
    184,471Total liabilities and shareholders equity
    
    $
    2,947,741
    
    
    $
    1,772,654
   41




---



##### 



GREEN BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2007, 2006 and 2005
(Amounts in thousands, except share and per share data)
 2007
    
    
    2006
    
    
    2005Interest incomeInterest and fees on loans
    
    $
    166,673
    
    
    $
    114,493
    
    
    $
    84,074Taxable securities
    
    
    8,415
    
    
    
    2,273
    
    
    
    1,920Nontaxable securities
    
    
    867
    
    
    
    108
    
    
    
    138FHLB and other stock
    
    
    617
    
    
    
    345
    
    
    
    282Federal funds sold and other
    
    
    54
    
    
    
    138
    
    
    
    777Total interest income
    
    
    176,626
    
    
    
    117,357
    
    
    
    87,191Interest expenseDeposits
    
    
    61,372
    
    
    
    36,090
    
    
    
    23,481Federal funds purchased and repurchase agreements
    
    
    4,183
    
    
    
    1,469
    
    
    
    414FHLB advances, notes payable and subordinated debentures
    
    
    16,418
    
    
    
    7,841
    
    
    
    4,510Total interest expense
    
    
    81,973
    
    
    
    45,400
    
    
    
    28,405Net interest income
    
    
    94,653
    
    
    
    71,957
    
    
    
    58,786Provision for loan losses
    
    
    14,483
    
    
    
    5,507
    
    
    
    6,365Net interest income after provision for loan losses
    
    
    80,170
    
    
    
    66,450
    
    
    
    52,421Noninterest incomeService charges and fees
    
    
    21,181
    
    
    
    15,046
    
    
    
    11,019Mortgage banking income
    
    
    1,524
    
    
    
    1,116
    
    
    
    664Gain on sales of OREO and repossessed assets
    
    
    76
    
    
    
    69
    
    
    
    Other
    
    
    4,897
    
    
    
    4,547
    
    
    
    3,073Total noninterest income
    
    
    27,678
    
    
    
    20,778
    
    
    
    14,756Noninterest expenseSalaries and employee benefits
    
    
    35,491
    
    
    
    26,308
    
    
    
    22,185Occupancy expense
    
    
    5,711
    
    
    
    4,285
    
    
    
    3,570Equipment expense
    
    
    4,786
    
    
    
    3,954
    
    
    
    3,703Professional services
    
    
    2,184
    
    
    
    1,596
    
    
    
    1,241Advertising
    
    
    2,736
    
    
    
    2,584
    
    
    
    2,529Loss on OREO and repossessed assets
    
    
    
    
    
    
    
    
    
    
    109Core deposit and other intangibles amortization
    
    
    2,011
    
    
    
    1,082
    
    
    
    854Other
    
    
    16,409
    
    
    
    12,967
    
    
    
    10,149Total noninterest expense
    
    
    69,328
    
    
    
    52,776
    
    
    
    44,340Income before income taxes
    
    
    38,520
    
    
    
    34,452
    
    
    
    22,837Provision for income taxes
    
    
    14,146
    
    
    
    13,190
    
    
    
    8,674Net income
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163Earnings per share:Basic
    
    $
    2.07
    
    
    $
    2.17
    
    
    $
    1.73Diluted
    
    
    2.07
    
    
    
    2.14
    
    
    
    1.71
   42




---



##### 



GREEN BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
Years ended December 31, 2007, 2006 and 2005
(Amounts in thousands, except share and per share data)
 AccumulatedOther
    
    
    TotalAdditional
    
    
    
    
    
    
    Compre-
    
    
    Share-Common Stock
    
    
    Paid-in
    
    
    Retained
    
    
    Hensive
    
    
    holdersShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income(Loss)
    
    
    EquityBalance, January 1, 2005
    
    
    7,647,740
    
    
    $
    15,296
    
    
    $
    24,160
    
    
    $
    69,289
    
    
    $
    (27
    )
    
    $
    108,718Common stock transactions:Issuance of shares in public
offering
    
    
    2,108,000
    
    
    
    4,216
    
    
    
    46,419
    
    
    
    
    
    
    
    
    
    
    
    50,635Exercise of shares under stock
option plan
    
    
    10,596
    
    
    
    21
    
    
    
    121
    
    
    
    
    
    
    
    
    
    
    
    142Dividends paid ($.61 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,294
    )
    
    
    
    
    
    
    (5,294
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,163
    
    
    
    
    
    
    
    14,163Change in unrealized gains
(losses), net of reclassification
and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (343
    )
    
    
    (343
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,820Balance, December 31, 2005
    
    
    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
    
    
    $
    322,477
   43




---



##### 



GREEN BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2007, 2006 and 2005
(Amounts in thousands)
 2007
    
    
    2006
    
    
    2005Cash flows from operating activitiesNet income
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163Adjustments to reconcile net income to net cash provided from
operating activitiesProvision for loan losses
    
    
    14,483
    
    
    
    5,507
    
    
    
    6,365Depreciation and amortization
    
    
    5,786
    
    
    
    4,143
    
    
    
    3,740Security amortization and accretion, net
    
    
    (637
    )
    
    
    (42
    )
    
    
    13Loss on sale of securities
    
    
    41
    
    
    
    8
    
    
    
    FHLB stock dividends
    
    
    
    
    
    
    (341
    )
    
    
    (278
    )Net gain on sale of mortgage loans
    
    
    (1,205
    )
    
    
    (869
    )
    
    
    (501
    )Originations of mortgage loans held for sale
    
    
    (74,994
    )
    
    
    (66,964
    )
    
    
    (40,823
    )Proceeds from sales of mortgage loans
    
    
    84,282
    
    
    
    68,747
    
    
    
    39,789Increase in cash surrender value of life insurance
    
    
    (938
    )
    
    
    (761
    )
    
    
    (635
    )Net losses from sales of fixed assets
    
    
    86
    
    
    
    1
    
    
    
    20Stock-based compensation
    
    
    472
    
    
    
    354
    
    
    
    Net (gain) loss on OREO and repossessed assets
    
    
    (76
    )
    
    
    (69
    )
    
    
    109Deferred tax benefit
    
    
    (1,111
    )
    
    
    (499
    )
    
    
    (767
    )Net changes:Other assets
    
    
    (6,834
    )
    
    
    (4,534
    )
    
    
    (2,170
    )Accrued interest payable and other liabilities
    
    
    10,639
    
    
    
    2,472
    
    
    
    2,115Net cash provided from operating activities
    
    
    54,368
    
    
    
    28,415
    
    
    
    21,140Cash flows from investing activitiesPurchase of securities available for sale
    
    
    (30,160
    )
    
    
    (13,936
    )
    
    
    (21,310
    )Proceeds from sale of securities available for sale
    
    
    2,230
    
    
    
    1,979
    
    
    
    Proceeds from maturities of securities available for sale
    
    
    33,762
    
    
    
    23,507
    
    
    
    7,193Proceeds from sale of securities held to maturity
    
    
    496
    
    
    
    
    
    
    
    Proceeds from maturities of securities held to maturity
    
    
    745
    
    
    
    835
    
    
    
    1,003Purchase of life insurance
    
    
    
    
    
    
    (652
    )
    
    
    (3,657
    )Purchase of FHLB stock
    
    
    (2,304
    )
    
    
    
    
    
    
    Net change in loans
    
    
    (203,894
    )
    
    
    (167,453
    )
    
    
    (229,042
    )Net cash received (paid) in acquisitions
    
    
    (24,611
    )
    
    
    
    
    
    
    33,191Proceeds from sale of other real estate
    
    
    4,080
    
    
    
    5,469
    
    
    
    2,955Improvements to other real estate
    
    
    (32
    )
    
    
    (47
    )
    
    
    Proceeds from sale of fixed assets
    
    
    175
    
    
    
    48
    
    
    
    8Premises and equipment expenditures
    
    
    (11,143
    )
    
    
    (10,383
    )
    
    
    (4,657
    )Net cash used in investing activities
    
    
    (230,656
    )
    
    
    (160,633
    )
    
    
    (214,316
    )Cash flows from financing activitiesNet change in deposits
    
    
    (44,806
    )
    
    
    36,626
    
    
    
    124,920Net change in federal funds purchased and repurchase agreements
    
    
    57,070
    
    
    
    24,667
    
    
    
    3,630Tax benefit resulting from stock options
    
    
    138
    
    
    
    126
    
    
    
    Proceeds from FHLB advances and notes payable
    
    
    189,500
    
    
    
    446,321
    
    
    
    303,755Proceeds from subordinated debentures
    
    
    57,732
    
    
    
    
    
    
    
    3,093Repayment of FHLB advances and notes payable
    
    
    (80,380
    )
    
    
    (373,896
    )
    
    
    (283,830
    )Dividends paid
    
    
    (8,386
    )
    
    
    (6,270
    )
    
    
    (5,294
    )Proceeds from issuance of common stock
    
    
    497
    
    
    
    761
    
    
    
    50,777Net cash provided from financing activities
    
    
    171,365
    
    
    
    128,335
    
    
    
    197,051Net change in cash and cash equivalents
    
    
    (4,923
    )
    
    
    (3,883
    )
    
    
    3,875Cash and cash equivalents, beginning of year
    
    
    70,640
    
    
    
    74,523
    
    
    
    70,648Cash and cash equivalents, end of year
    
    $
    65,717
    
    
    $
    70,640
    
    
    $
    74,523Supplemental disclosures  cash and noncashInterest paid
    
    $
    76,385
    
    
    $
    44,424
    
    
    $
    27,937Income taxes paid
    
    
    17,225
    
    
    
    13,154
    
    
    
    7,694Loans converted to other real estate
    
    
    7,955
    
    
    
    5,095
    
    
    
    6,403Unrealized (loss) gain on available for sale securities, net of tax
    
    
    1,636
    
    
    
    241
    
    
    
    (343
    )Fair value of assets acquired
    
    
    1,011,590
    
    
    
    
    
    
    
    141,300Fair value of liabilities assumed
    
    
    847,322
    
    
    
    
    
    
    
    173,600
   44




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 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
    45




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Allowance for Loan Losses
  Foreclosed Assets
 Premises and Equipment
 Mortgage Banking Activities
 Bank Owned Life Insurance
   46




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Goodwill, Core Deposit Intangibles and Other Intangible Assets
   Long-term Assets
 Repurchase Agreements
 Benefit Plans
 Stock Compensation
    47




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Year-endedDecember 31,2005Net income:As reported
    
    $
    14,163Add:
Stock-based employee compensation expense included in reported net income, net of related tax effects
    
    
    Deduct:
Total stock-based compensation expense determined under fair value-based method for all awards, net of tax
    
    
    (207
    )Pro forma
    
    $
    13,956Earnings per common share:As reported
    
    $
    1.73Pro forma
    
    $
    1.71Diluted earnings per common share:As reported
    
    $
    1.71Pro forma
    
    $
    1.69
 Income Taxes
 Loan Commitments and Related Financial Instruments
 Earnings Per Common Share
 Comprehensive Income
   48




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 New Accounting Pronouncements
    .
   49




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business Combinations Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements, an
amendment of ARB No. 51
 Loss Contingencies
 Restrictions on Cash
 Segments
 Fair Value of Financial Instruments
 Reclassifications
   50




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 2  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAvailable for Sale2007U.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
    )
    
    $
    235,2732006U.S. government agencies
    
    $
    25,461
    
    
    $
    44
    
    
    $
    (100
    )
    
    $
    25,405Obligations of states and political
subdivisions
    
    
    1,708
    
    
    
    
    
    
    
    (6
    )
    
    
    1,702Mortgage-backed
    
    
    8,557
    
    
    
    10
    
    
    
    (158
    )
    
    
    8,409Trust preferred securities
    
    
    2,223
    
    
    
    1
    
    
    
    
    
    
    
    2,224$
    37,949
    
    
    $
    55
    
    
    $
    (264
    )
    
    $
    37,740Held to Maturity2007Obligations of states and political
subdivisions
    
    $
    1,049
    
    
    $
    8
    
    
    $
    (1
    )
    
    $
    1,056Other securities
    
    
    254
    
    
    
    
    
    
    
    (30
    )
    
    
    224$
    1,303
    
    
    $
    8
    
    
    $
    (31
    )
    
    $
    1,2802006Obligations of states and political
subdivisions
    
    $
    1,794
    
    
    $
    12
    
    
    $
    (5
    )
    
    $
    1,801Other securities
    
    
    751
    
    
    
    1
    
    
    
    (9
    )
    
    
    743$
    2,545
    
    
    $
    13
    
    
    $
    (14
    )
    
    $
    2,544
   51




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 2  SECURITIES
  Available for Sale
    
    
    Held to MaturityFair
    
    
    Carrying
    
    
    FairValue
    
    
    Amount
    
    
    ValueDue in one year or less
    
    $
    742
    
    
    $
    385
    
    
    $
    385Due after one year through five years
    
    
    4,162
    
    
    
    918
    
    
    
    895Due after five years through ten years
    
    
    37,458
    
    
    
    
    
    
    
    Due after ten years
    
    
    36,740
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    156,171
    
    
    
    
    
    
    
    Total maturities
    
    $
    235,273
    
    
    $
    1,303
    
    
    $
    1,280
    Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    Loss2007U. 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
    )Mortgage-backed securities
    
    
    5,508
    
    
    
    (45
    )
    
    
    5,513
    
    
    
    (92
    )
    
    
    11,021
    
    
    
    (137
    )Total temporarily impaired
    
    $
    11,548
    
    
    $
    (228
    )
    
    $
    7,133
    
    
    $
    (132
    )
    
    $
    18,681
    
    
    $
    (360
    )2006U. S. government agencies
    
    $
    9,953
    
    
    $
    (44
    )
    
    $
    3,444
    
    
    $
    (56
    )
    
    $
    13,397
    
    
    $
    (100
    )Obligations of states and
political subdivisions
    
    
    210
    
    
    
    
    
    
    
    1,837
    
    
    
    (11
    )
    
    
    2,047
    
    
    
    (11
    )Other securities
    
    
    
    
    
    
    
    
    
    
    246
    
    
    
    (9
    )
    
    
    246
    
    
    
    (9
    )Mortgage-backed securities
    
    
    5
    
    
    
    
    
    
    
    7,354
    
    
    
    (158
    )
    
    
    7,359
    
    
    
    (158
    )Total temporarily impaired
    
    $
    10,168
    
    
    $
    (44
    )
    
    $
    12,881
    
    
    $
    (234
    )
    
    $
    23,049
    
    
    $
    (278
    )
    52




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 3  LOANS
  2007
    
    
    2006Commercial real estate
    
    $
    1,549,457
    
    
    $
    921,190Residential real estate
    
    
    398,779
    
    
    
    281,629Commercial
    
    
    320,264
    
    
    
    258,998Consumer
    
    
    97,635
    
    
    
    87,111Other
    
    
    3,871
    
    
    
    2,203Unearned interest
    
    
    (13,630
    )
    
    
    (11,502
    )Loans, net of unearned interest
    
    $
    2,356,376
    
    
    $
    1,539,629Allowance for loan losses
    
    $
    (34,111
    )
    
    $
    (22,302
    )
  2007
    
    
    2006
    
    
    2005Beginning balance
    
    $
    22,302
    
    
    $
    19,739
    
    
    $
    15,721Reserve acquired in acquisition
    
    
    9,022
    
    
    
    
    
    
    
    1,467Provision for loan losses
    
    
    14,483
    
    
    
    5,507
    
    
    
    6,365Loans charged off
    
    
    (13,471
    )
    
    
    (4,357
    )
    
    
    (5,583
    )Recoveries of loans charged off
    
    
    1,775
    
    
    
    1,413
    
    
    
    1,769Balance, end of year
    
    $
    34,111
    
    
    $
    22,302
    
    
    $
    19,739
  2007
    
    
    2006
    
    
    2005Loans with allowance allocated
    
    $
    36,267
    
    
    $
    5,067
    
    
    $
    14,679Amount of allowance allocated
    
    
    5,440
    
    
    
    760
    
    
    
    2,202Average balance during the year
    
    
    16,276
    
    
    
    6,897
    
    
    
    11,964Interest income not recognized during impairment
    
    
    237
    
    
    
    207
    
    
    
    368
    53




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 3  LOANS
  2007
    
    
    2006Loans past due 90 days still on accrual
    
    $
    18
    
    
    $
    28Nonaccrual loans
    
    
    32,060
    
    
    
    3,479Total
    
    $
    32,078
    
    
    $
    3,507
   NOTE 4  PREMISES AND EQUIPMENT
  2007
    
    
    2006Land
    
    $
    18,151
    
    
    $
    12,447Premises
    
    
    56,100
    
    
    
    35,824Leasehold improvements
    
    
    2,551
    
    
    
    2,088Furniture, fixtures and equipment
    
    
    22,678
    
    
    
    18,614Automobiles
    
    
    122
    
    
    
    122Construction in progress
    
    
    4,334
    
    
    
    6,073103,936
    
    
    
    75,168Accumulated depreciation
    
    
    (21,239
    )
    
    
    (17,910
    )$
    82,697
    
    
    $
    57,258
  2008
    
    $
    9872009
    
    
    7532010
    
    
    4342011
    
    
    3402012
    
    
    323Thereafter
    
    
    1,528Total
    
    $
    4,365
   54




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 5  GOODWILL AND OTHER INTANGIBLE ASSETS
 Goodwill
  2007
    
    
    2006Beginning of year
    
    $
    31,327
    
    
    $
    31,327Goodwill from acquisition during year
    
    
    111,813
    
    
    
    End of year
    
    $
    143,140
    
    
    $
    31,327
  Core deposit and other intangible
  Core deposit intangibles
    
    2007
    
    
    2006Beginning of year
    
    $
    7,213
    
    
    $
    8,295Core deposit intangibles from acquisition during year
    
    
    8,740
    
    
    
    Accumulated amortization, beginning of year
    
    
    (3,843
    )
    
    
    (2,761
    )Amortization
    
    
    (1,962
    )
    
    
    (1,082
    )Accumulated amortization, end of year
    
    
    (5,805
    )
    
    
    (3,843
    )End of year
    
    $
    13,991
    
    
    $
    7,213
 Other intangibles
    
    2007Beginning of year
    
    $
    Mortgage servicing rights from acquisition during year
    
    
    745Accumulated amortization, beginning of year
    
    
    Amortization
    
    
    (49
    )Accumulated amortization, end of year
    
    
    (49
    )End of year
    
    $
    696
  2008
    
    $
    2,5992009
    
    
    2,5992010
    
    
    2,5952011
    
    
    2,5412012
    
    
    2,411Total
    
    $
    12,745
   55




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE
6  DEPOSITS
  2007
    
    
    2006Noninterest-bearing demand deposits
    
    $
    201,289
    
    
    $
    152,635Interest-bearing demand deposits
    
    
    598,984
    
    
    
    430,735Savings deposits
    
    
    72,277
    
    
    
    68,160Time deposits
    
    
    1,114,243
    
    
    
    680,975Total Deposits
    
    $
    1,986,793
    
    
    $
    1,332,505
   2008
    
    $
    1,013,0782009
    
    
    76,0472010
    
    
    13,2082011
    
    
    5,2112012
    
    
    2,347Thereafter
    
    
    4,352
  NOTE 7  BORROWINGS
   2007
    
    
    2006
    
    
    2005Average balance during the year
    
    $
    70,601
    
    
    $
    22,424
    
    
    $
    15,687Average interest rate during the year
    
    
    4.06
    %
    
    
    4.13
    %
    
    
    2.64
    %Maximum month-end balance during the year
    
    $
    114,045
    
    
    $
    26,753
    
    
    $
    19,931Weighted average interest rate at year-end
    
    
    3.25
    %
    
    
    4.08
    %
    
    
    3.37
    %
   56




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE
7  BORROWINGS (Continued)
  2007
    
    
    2006Short-term borrowingsFixed rate FHLB advances, 3.90% to 6.10%Maturing January 2008 and July 2008
    
    $
    99,409
    
    
    $
    Variable rate FHLB advance at 5.45%Maturing January 2008
    
    
    10,000
    
    
    
    Fixed rate FHLB advance, 5.18%,Matured January 2007
    
    
    
    
    
    
    84,900Total short-term borrowings
    
    
    109,409
    
    
    
    84,900Long-term borrowingsFixed rate FHLB advances, from 2.85% to 6.35%,Various maturities through July 2022
    
    
    152,781
    
    
    
    48,171Variable rate FHLB advances, from 5.00% to 5.76%,Maturities from November 2009 to December 2010
    
    
    56,500
    
    
    
    44,500Total long-term borrowings
    
    
    209,281
    
    
    
    92,671Total borrowings
    
    $
    318,690
    
    
    $
    177,571
   Total2008
    
    $
    10,4252009
    
    
    29,9022010
    
    
    37,4212011
    
    
    15,4412012
    
    
    65,461Thereafter
    
    
    60,640$
    219,290
    57




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 7  BORROWINGS
          58




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 8  BENEFIT PLANS
   NOTE 9  INCOME TAXES
  2007
    
    
    2006
    
    
    2005Current  federal
    
    $
    13,161
    
    
    $
    11,424
    
    
    $
    7,860Current  state
    
    
    2,096
    
    
    
    2,265
    
    
    
    1,581Deferred  federal
    
    
    (927
    )
    
    
    (416
    )
    
    
    (640
    )Deferred  state
    
    
    (184
    )
    
    
    (83
    )
    
    
    (127
    )$
    14,146
    
    
    $
    13,190
    
    
    $
    8,674
  2007
    
    
    2006Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesAllowance for loan losses
    
    $
    13,380
    
    
    $
    
    
    
    $
    8,748
    
    
    $
    Deferred compensation
    
    
    1,653
    
    
    
    
    
    
    
    1,487
    
    
    
    Purchase accounting adjustments
    
    
    1,219
    
    
    
    
    
    
    
    
    
    
    
    (327
    )Depreciation
    
    
    
    
    
    
    (1,771
    )
    
    
    
    
    
    
    (1,855
    )FHLB dividends
    
    
    
    
    
    
    (1,476
    )
    
    
    
    
    
    
    (1,067
    )Core deposit intangible
    
    
    
    
    
    
    (6,102
    )
    
    
    
    
    
    
    (2,566
    )Unrealized (gain) loss on securities
    
    
    
    
    
    
    (972
    )
    
    
    79
    
    
    
    Deferred loan costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,502
    )Other
    
    
    868
    
    
    
    
    
    
    
    
    
    
    
    (115
    )Total deferred income taxes
    
    $
    17,120
    
    
    $
    (10,321
    )
    
    $
    10,314
    
    
    $
    (7,432
    )
    59




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 9  INCOME TAXES
  2007
    
    
    2006
    
    
    2005Statutory federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net of federal benefit
    
    
    3.2
    
    
    
    4.1
    
    
    
    4.1Tax exempt income
    
    
    (2.7
    )
    
    
    (0.7
    )
    
    
    (1.1
    )Other
    
    
    1.2
    
    
    
    (0.1
    )
    
    
    36.7
    %
    
    
    38.3
    %
    
    
    38.0
    %
   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
    
    $
    
      60




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 10  COMMITMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
   2007
    
    
    2006Commitments to make loans  fixed
    
    $
    7,837
    
    
    $
    24,308Commitments to make loans  variable
    
    
    23,843
    
    
    
    67,412Unused lines of credit
    
    
    704,729
    
    
    
    480,420Letters of credit
    
    
    58,615
    
    
    
    31,154
  NOTE 11  CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
     61




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE
11  CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
  Minimum Amounts to beMinimum Required
    
    
    Well Capitalized Underfor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsActual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)
    
    
    Actual
    
    
    Ratio (%)2007Total 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
    
    
    
    5.02006Total Capital (to Risk Weighted Assets)Consolidated
    
    $
    178.5
    
    
    
    11.5
    
    
    $
    124.6
    
    
    
    8.0
    
    
    $
    155.8
    
    
    
    10.0Bank
    
    
    177.3
    
    
    
    11.4
    
    
    
    124.5
    
    
    
    8.0
    
    
    
    155.6
    
    
    
    10.0Tier 1 Capital (to Risk Weighted Assets)Consolidated
    
    $
    159.1
    
    
    
    10.2
    
    
    $
    62.3
    
    
    
    4.0
    
    
    $
    93.5
    
    
    
    6.0Bank
    
    
    157.8
    
    
    
    10.1
    
    
    
    62.3
    
    
    
    4.0
    
    
    
    93.4
    
    
    
    6.0Tier 1 Capital (to Average Assets)Consolidated
    
    $
    159.1
    
    
    
    9.5
    
    
    $
    67.4
    
    
    
    4.0
    
    
    $
    84.2
    
    
    
    5.0Bank
    
    
    157.8
    
    
    
    9.4
    
    
    
    67.3
    
    
    
    4.0
    
    
    
    84.2
    
    
    
    5.0
    62




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE
12  STOCK-BASED COMPENSATION
     Stock Options
   2007
    
    
    2006Risk-free interest rate
    
    
    4.65
    %
    
    
    4.57
    %Volatility
    
    
    26.97
    %
    
    
    28.16
    %Expected life
    
    8 years
    
    
    8 yearsDividend yield
    
    
    1.7
    %
    
    
    2.3
    %
   63




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE
12  STOCK-BASED COMPENSATION
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at January 1, 2005
    
    
    336,278
    
    
    $
    20.28Granted
    
    
    71,228
    
    
    
    26.89Exercised
    
    
    (10,596
    )
    
    
    13.47Forfeited
    
    
    
    
    
    
    Outstanding at December 31, 2005
    
    
    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
    
    
    $
    25.72
    
    
    6.0 years
    
    $
    396Options exercisable at December 31,
2007
    
    
    256,854
    
    
    $
    22.29
    
    
    4.5 years
    
    $
    395Options available for future grants at
December 31, 2007
    
    
    279,071
     64




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 12  STOCK-BASED COMPENSATION
  Outstanding
    
    
    ExercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    AverageNumber
    
    
    Remaining
    
    
    Exercise
    
    
    Number
    
    
    Remaining
    
    
    ExerciseRange of Exercise prices
    
    Outstanding
    
    
    Contractual Life
    
    
    Price
    
    
    Outstanding
    
    
    Contractual Life
    
    
    Price$11.10 - $15.00
    
    
    42,142
    
    
    
    3.4
    
    
    $
    12.90
    
    
    
    42,142
    
    
    
    3.4
    
    
    $
    12.90$15.01 - $20.00
    
    
    78,457
    
    
    
    4.8
    
    
    $
    17.63
    
    
    
    71,104
    
    
    
    4.8
    
    
    $
    17.48$20.01 - $25.00
    
    
    66,945
    
    
    
    4.8
    
    
    $
    23.28
    
    
    
    46,439
    
    
    
    4.3
    
    
    $
    23.24$25.01 - $30.00
    
    
    164,731
    
    
    
    6.8
    
    
    $
    28.32
    
    
    
    70,299
    
    
    
    5.5
    
    
    $
    28.43$30.01 - $36.32
    
    
    99,802
    
    
    
    7.5
    
    
    $
    34.84
    
    
    
    26,870
    
    
    
    3.0
    
    
    $
    32.00Total
    
    
    452,077
    
    
    
    
    
    
    
    
    
    
    
    256,854
 Cash Settled Stock Appreciation Rights
    65




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE
12  STOCK-BASED COMPENSATION
  WeightedAveragePrice perSARs
    
    
    ShareOutstanding at January 1, 2007
    
    
    Granted
    
    
    19,000
    
    
    $
    34.63Outstanding at December 31, 2007
    
    
    19,000
    
    
    $
    34.63Weighted-average fair value of cash-settled SARs granted
during the twelve months ended December 31, 2007
    
    $
    11.37
 
 2007Risk-free interest rate
    
    
    4.58
    %Volatility
    
    
    26.92
    %Expected life
    
    8 yearsDividend yield
    
    
    1.8
    %
    66




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 13  EARNINGS PER SHARE
  2007
    
    
    2006
    
    
    2005Basic Earnings Per ShareNet income
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163Weighted average common
shares outstanding
    
    
    11,756,699
    
    
    
    9,788,004
    
    
    
    8,184,499Basic Earnings Per Share
    
    $
    2.07
    
    
    $
    2.17
    
    
    $
    1.73Diluted Earnings Per ShareNet income
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163Weighted average common
shares outstanding
    
    
    11,756,699
    
    
    
    9,788,004
    
    
    
    8,184,499Add: Dilutive effects of assumed conversions
and exercises of stock options
    
    
    42,443
    
    
    
    145,274
    
    
    
    91,634Weighted average common and dilutive
potential common shares outstanding
    
    
    11,799,142
    
    
    
    9,933,278
    
    
    
    8,276,133Diluted Earnings Per Share
    
    $
    2.07
    
    
    $
    2.14
    
    
    $
    1.71
    67




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 14  FAIR VALUE OF FINANCIAL INSTRUMENTS
  2007
    
    
    2006Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    65,717
    
    
    $
    65,717
    
    
    $
    70,640
    
    
    $
    70,640Securities available for sale
    
    
    235,273
    
    
    
    235,273
    
    
    
    37,740
    
    
    
    37,740Securities held to maturity
    
    
    1,303
    
    
    
    1,280
    
    
    
    2,545
    
    
    
    2,544Loans held for sale
    
    
    2,331
    
    
    
    2,355
    
    
    
    1,772
    
    
    
    1,787Loans, net of unearned interest
    
    
    2,356,376
    
    
    
    2,338,305
    
    
    
    1,539,629
    
    
    
    1,534,777Allowance for loan losses
    
    
    (34,111
    )
    
    
    (34,111
    )
    
    
    (22,302
    )
    
    
    (22,302
    )FHLB, Bankers Bank and other stock
    
    
    12,322
    
    
    
    12,322
    
    
    
    7,055
    
    
    
    7,055Cash surrender value of life insurance
    
    
    28,466
    
    
    
    28,466
    
    
    
    21,176
    
    
    
    21,176Accrued interest receivable
    
    
    13,532
    
    
    
    13,532
    
    
    
    8,581
    
    
    
    8,581Financial liabilities:Deposit accounts
    
    $
    1,986,793
    
    
    $
    1,985,482
    
    
    $
    1,332,505
    
    
    $
    1,329,770Federal funds purchased and repurchase
agreements
    
    
    194,525
    
    
    
    194,525
    
    
    
    42,165
    
    
    
    42,165FHLB Advances and notes payable
    
    
    318,690
    
    
    
    320,661
    
    
    
    177,571
    
    
    
    175,056Subordinated debentures
    
    
    88,662
    
    
    
    87,599
    
    
    
    13,403
    
    
    
    13,920Accrued interest payable
    
    
    9,098
    
    
    
    9,098
    
    
    
    3,511
    
    
    
    3,511
    68




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 15  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
 BALANCE SHEETS
Years ended December 31, 2007 and 2006
 2007
    
    
    2006ASSETSCash and due from financial institutions
    
    $
    8,248
    
    
    $
    1,902Investment in subsidiary
    
    
    398,892
    
    
    
    195,798Cash surrender value of life insurance contracts
    
    
    
    
    
    
    281Other
    
    
    5,147
    
    
    
    1,700Total assets
    
    $
    412,287
    
    
    $
    199,681LIABILITIESSubordinated debentures
    
    $
    88,662
    
    
    $
    13,403Other liabilities
    
    
    1,148
    
    
    
    1,807Total liabilities
    
    
    89,810
    
    
    
    15,210Shareholders equity
    
    
    322,477
    
    
    
    184,471Total liabilities and shareholders equity
    
    $
    412,287
    
    
    $
    199,681
 STATEMENTS OF INCOME
Years ended December 31, 2007, 2006, and 2005
 2007
    
    
    2006
    
    
    2005Dividends from subsidiary
    
    $
    6,757
    
    
    $
    5,096
    
    
    $
    3,511Other income
    
    
    145
    
    
    
    335
    
    
    
    208Interest expense
    
    
    (4,513
    )
    
    
    (1,101
    )
    
    
    (781
    )Other expense
    
    
    (921
    )
    
    
    (774
    )
    
    
    (829
    )Income before income taxes
    
    
    1,468
    
    
    
    3,556
    
    
    
    2,109Income tax benefit
    
    
    (2,096
    )
    
    
    (657
    )
    
    
    (592
    )Equity in undistributed net income of subsidiary
    
    
    20,810
    
    
    
    17,049
    
    
    
    11,462Net income
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163
   69




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 15  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS
 STATEMENTS OF CASH FLOWS
Years ended December 31, 2007, 2006, and 2005
 2007
    
    
    2006
    
    
    2005Operating activitiesNet income
    
    $
    24,374
    
    
    $
    21,262
    
    
    $
    14,163Adjustments to reconcile net income to net
cash provided (used) by operating activities:Undistributed net income of subsidiaries
    
    
    (20,810
    )
    
    
    (17,049
    )
    
    
    (11,462
    )Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    110Increase in cash surrender value of life insurance
    
    
    
    
    
    
    (8
    )
    
    
    (9
    )Stock compensation expense
    
    
    472
    
    
    
    354
    
    
    
    Change in assets
    
    
    (3,871
    )
    
    
    (424
    )
    
    
    (149
    )Change in liabilities
    
    
    (658
    )
    
    
    878
    
    
    
    (3
    )Net cash provided (used) by operating activities
    
    
    (493
    )
    
    
    5,013
    
    
    
    2,650Investing activitiesCapital investment in bank subsidiary
    
    
    (43,141
    )
    
    
    
    
    
    
    (47,800
    )Net cash used in investing activities
    
    
    (43,141
    )
    
    
    
    
    
    
    (47,800
    )Financing activitiesDividends paid
    
    
    (8,386
    )
    
    
    (6,270
    )
    
    
    (5,294
    )Proceeds from issuance of public offering
    
    
    
    
    
    
    
    
    
    
    50,635Proceeds from issuance of common stock options
    
    
    497
    
    
    
    761
    
    
    
    142Proceeds from subordinated debentures
    
    
    57,732
    
    
    
    
    
    
    
    3,093Tax benefit resulting from stock options
    
    
    137
    
    
    
    126
    
    
    
    Repayment of debt
    
    
    
    
    
    
    (1,800
    )
    
    
    Net cash from (used in) financing activities
    
    
    49,980
    
    
    
    (7,183
    )
    
    
    48,576Net change in cash and cash equivalents
    
    
    6,346
    
    
    
    (2,170
    )
    
    
    3,426Cash and cash equivalents, beginning of year
    
    
    1,902
    
    
    
    4,072
    
    
    
    646Cash and cash equivalents, end of year
    
    $
    8,248
    
    
    $
    1,902
    
    
    $
    4,072
 NOTE 16  OTHER COMPREHENSIVE INCOME
  2007
    
    
    2006
    
    
    2005Unrealized holding gains and (losses) on securities available
for sale, net of tax of $978, 144 and ($213), respectively
    
    $
    1,610
    
    
    $
    236
    
    
    $
    (343
    )Reclassification adjustment for losses realized in net income,
net of tax of $16, $3 and $-, respectively
    
    
    26
    
    
    
    5
    
    
    
    Other comprehensive income (loss)
    
    $
    1,636
    
    
    $
    241
    
    
    $
    (343
    )
   70




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 17  SEGMENT INFORMATION
   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
 Other
    
    
    Holding
    
    
    
    
    
    
    Total2005
    
    Banking
    
    
    Segments
    
    
    Company
    
    
    Eliminations
    
    
    SegmentsNet interest income
    
    $
    53,805
    
    
    $
    5,762
    
    
    $
    (781
    )
    
    $
    
    
    
    $
    58,786Provision for loan losses
    
    
    5,055
    
    
    
    1,310
    
    
    
    
    
    
    
    
    
    
    
    6,365Noninterest income
    
    
    13,332
    
    
    
    2,035
    
    
    
    209
    
    
    
    (820
    )
    
    
    14,756Noninterest expense
    
    
    39,980
    
    
    
    4,351
    
    
    
    829
    
    
    
    (820
    )
    
    
    44,340Income tax expense (benefit)
    
    
    8,428
    
    
    
    838
    
    
    
    (592
    )
    
    
    
    
    
    
    8,674Segment profit (loss)
    
    $
    13,674
    
    
    $
    1,298
    
    
    $
    (809
    )
    
    $
    
    
    
    $
    14,163Segment assets
    
    $
    1,583,655
    
    
    $
    31,083
    
    
    $
    5,251
    
    
    $
    
    
    
    $
    1,619,989
   71




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 NOTE 17  SEGMENT INFORMATION
 Asset Quality Ratios
 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
    %
 As of and for the period ended December 31, 2006
    
    Bank
    
    
    Other
    
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    0.19
    %
    
    
    1.84
    %
    
    
    0.23
    %Nonperforming assets as a percentage of total assets
    
    
    0.24
    %
    
    
    2.53
    %
    
    
    0.29
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    1.28
    %
    
    
    7.94
    %
    
    
    1.45
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    680.25
    %
    
    
    431.95
    %
    
    
    635.93
    %Net charge-offs to average total loans, net of unearned income
    
    
    0.14
    %
    
    
    2.82
    %
    
    
    0.20
    %
 NOTE 18  SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  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
 For the three months endedSummary of Operations
    
    3/31/06
    
    
    6/30/06
    
    
    9/30/06
    
    
    12/31/06Net interest income
    
    $
    17,186
    
    
    $
    17,773
    
    
    $
    18,530
    
    
    $
    18,468Provision for loan losses
    
    
    1,064
    
    
    
    1,244
    
    
    
    1,661
    
    
    
    1,538Noninterest income
    
    
    4,755
    
    
    
    5,028
    
    
    
    5,191
    
    
    
    5,804Noninterest expense
    
    
    12,706
    
    
    
    12,679
    
    
    
    13,136
    
    
    
    14,255Net income
    
    
    5,096
    
    
    
    5,483
    
    
    
    5,509
    
    
    
    5,174Basic earnings per share
    
    
    0.52
    
    
    
    0.56
    
    
    
    0.56
    
    
    
    0.53Diluted earning per share
    
    
    0.52
    
    
    
    0.55
    
    
    
    0.56
    
    
    
    0.52Dividends per common share
    
    
    0.12
    
    
    
    0.12
    
    
    
    0.12
    
    
    
    0.28Average common shares outstanding
    
    
    9,770,555
    
    
    
    9,785,936
    
    
    
    9,790,058
    
    
    
    9,805,065Average common shares outstanding  diluted
    
    
    9,870,691
    
    
    
    9,897,987
    
    
    
    9,900,396
    
    
    
    9,942,078
   72




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 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
    
    
    111,813Core deposit intangible
    
    
    8,740Mortgage servicing rights
    
    
    745Other assets
    
    
    16,618Total 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
    73




---



##### 



GREEN BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
December 31, 2007, 2006 and 2005
 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
   Cash
    
    $
    33,191Loans, net of unearned interest
    
    
    111,788Allowance for loan losses
    
    
    (1,467
    )Premises and equipment
    
    
    12,653Goodwill
    
    
    13,045Core deposit intangible
    
    
    3,736Other assets
    
    
    654Total assets acquired
    
    $
    173,600Deposits
    
    $
    172,937Other liabilities
    
    
    663Total liabilities assumed
    
    $
    173,600
   74




---



##### 



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.
   75




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##### 



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 sections captioned
Security Ownership of Certain Beneficial Owners and Management and Proposal 1  Election of
Directors 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, 2007.
 (a)

    
    

    (b)
    
    
    (c)Number of securitiesremaining available forNumber of securities
    
    
    Weighted-average
    
    
    future issuance underto be issued upon
    
    
    exercise price of
    
    
    equity compensationexercise of
    
    
    outstanding
    
    
    plansoutstanding options,
    
    
    options, warrants
    
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    
    and rights
    
    
    reflected in column (a))Equity compensation plans approved by
security holders
    
    
    398,077
    
    
    $
    27.15
    
    
    
    279,071Equity compensation plans not approved by
security holders
    
    
    54,000
    
    
    $
    15.16
    
    
    
    *Total
    
    
    452,077
    
    
    $
    25.72
    
    
    
    279,071
 
 *
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
  ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   76




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##### 



PART IV
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 (a)(1)
    
    The following consolidated financial statements of the Company included in the Companys
2007 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, 2007 and 2006.3.
    
    Consolidated Statements of Income for the Years Ended December 31, 2007, 2006
and 2005.4.
    
    Consolidated Statements of Changes in Shareholders Equity for the Years Ended
December 31, 2007, 2006 and 2005.5.
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2007,
2006 and 2005.6.
    
    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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.3.2
    
    Amended and Restated Bylaws  incorporated herein by reference to the Companys
Current Report on Form 8-K filed on November 20, 2007.10.1
    
    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
    
    Greene County Bancshares, Inc. 2004 Long-Term Incentive Plan  incorporated
herein by reference to the Companys Registration Statement on Form S-8 filed on April
30, 2004.*10.5
    
    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.*
  77




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##### 



10.6
    
    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.*10.7
    
    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.*10.8
    
    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.*10.9
    
    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 .*10.10
    
    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.*10.11
    
    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.*10.12
    
    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.*10.13
    
    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 .*10.14
    
    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.*10.15
    
    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 .*10.16
    
    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 .*10.17
    
    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.*10.18
    
    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.*
  78




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##### 



10.19
    
    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, 2007.10.28
    
    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.
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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.*Director and Named
Executive Officer Compensation Summary.*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
 
   (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.
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SIGNATURES
  GREENE COUNTY BANCSHARES, INC.Date:  March 14, 2008
    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
    
    
    
    March 14, 2008Chairman of the Board and Chief Executive Officer(Principal Executive Officer)/s/ Kenneth R. Vaught

Kenneth R. Vaught
    
    
    
    March 14, 2008President, Chief Operating Officer, and Director/s/ James E. Adams

James E. Adams
    
    
    
    March 14, 2008Executive Vice President, Chief Financial Officer and Assistant Secretary(Principal Financial and Accounting Officer)/s/ Ronald E. Mayberry

Ronald E. Mayberry
    
    
    
    March 14, 2008Regional Executive, Sumner County and Director/s/ Phil M. Bachman

Phil M. Bachman
    
    
    
    March 14, 2008Director and Secretary/s/ Martha M. Bachman

Martha Bachman
    
    
    
    March 14, 2008Director/s/ Charles S. Brooks

Charles S. Brooks
    
    
    
    March 14, 2008Director/s/ Bruce Campbell

Bruce Campbell
    
    
    
    March 14, 2008Director
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SIGNATURE AND TITLE:
    
    
    
    DATE:/s/ W. T. Daniels

W.T. Daniels
    
    
    
    March 14, 2008Director/s/ Robin Haynes

Robin Haynes
    
    
    
    March 14, 2008Director/s/ Jerald K. Jaynes

Jerald K. Jaynes
    
    
    
    March 14, 2008Director/s/ Robert K. Leonard

Robert K. Leonard
    
    
    
    March 14, 2008Director/s/ Terry Leonard

Terry Leonard
    
    
    
    March 14, 2008Director/s/ Samuel E. Lynch

Samuel E. Lynch
    
    
    
    March 14, 2008Director/s/ John Tolsma

John Tolsma
    
    
    
    March 14, 2008Director/s/ Charles H. Whitfield, Jr.

Charles H. Whitfield, Jr.
    
    
    
    March 14, 2008Director
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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 Quarterly
Report on Form 10-Q for the quarter ended June 30, 2007.3.2
    
    Amended and Restated Bylaws  incorporated herein by reference to the Companys Current
Report on Form 8-K filed on November 20, 2007.10.1
    
    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
    
    Greene County Bancshares, Inc. 2004 Long-Term Incentive Plan  incorporated herein by
reference to the Companys Registration Statement on Form S-8 filed on April 30, 2004.*10.5
    
    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.*10.6
    
    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.*10.7
    
    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.*10.8
    
    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.*10.9
    
    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 .*10.10
    
    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.*10.11
    
    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.*10.12
    
    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.*
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10.13
    
    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 .*10.14
    
    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.*10.15
    
    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 .*10.16
    
    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 .*10.17
    
    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.*10.18
    
    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.*10.19
    
    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.
  84




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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
    
    Director and Named Executive Officer Compensation Summary.*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.  85