##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-14289
 
 GREEN BANKSHARES, INC.
  Tennessee
    
    62-1222567(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)100 North Main Street, Greeneville, Tennessee
    
    37743-4992(Address of principle executive offices)
    
    (Zip Code)
 (423) 639-5111
 N/A
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o   
    Accelerated filer þ
    Non-accelerated filer o
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
  Condensed Consolidated Balance Sheets  March 31, 2011 and December 31, 2010
    
    
    
    2Condensed Consolidated Statements of Income  For the three months ended March 31, 2011 and 2010
    
    
    
    3Condensed Consolidated Statement of Changes in Shareholders Equity  For the three months ended March 31, 2011
    
    
    
    4Condensed Consolidated Statements of Cash Flows  For the three months ended March 31, 2011 and 2010
    
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    
    6EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  1




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GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31, 2011 and December 31, 2010
 (Amounts in thousands, except share and per share data)
 (Unaudited)March 31,
    
    
    December 31,2011
    
    
    2010*ASSETSCash and due from banks
    
    $
    323,485
    
    
    $
    289,358Federal funds sold
    
    
    7,931
    
    
    
    4,856Cash and cash equivalents
    
    
    331,416
    
    
    
    294,214Interest earning deposits in other banks
    
    
    
    
    
    
    Securities available for sale
    
    
    226,732
    
    
    
    202,002Securities held to maturity (with a market value of $115 and $467)
    
    
    115
    
    
    
    465Loans held for sale
    
    
    960
    
    
    
    1,299Loans, net of unearned interest
    
    
    1,680,249
    
    
    
    1,745,378Allowance for loan losses
    
    
    (65,109
    )
    
    
    (66,830
    )Other real estate owned and repossessed assets
    
    
    60,033
    
    
    
    60,095Premises and equipment, net
    
    
    77,814
    
    
    
    78,794FHLB and other stock, at cost
    
    
    12,734
    
    
    
    12,734Cash surrender value of life insurance
    
    
    31,758
    
    
    
    31,479Core deposit and other intangibles
    
    
    6,125
    
    
    
    6,751Deferred tax asset ( net of valuation allowance of $47,563 and
$43,455)
    
    
    6,339
    
    
    
    2,177Other assets
    
    
    23,528
    
    
    
    37,482Total assets
    
    $
    2,392,694
    
    
    $
    2,406,040LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesNon-interest bearing deposits
    
    $
    165,927
    
    
    $
    152,752Interest bearing deposits
    
    
    1,808,309
    
    
    
    1,822,703Brokered deposits
    
    
    1,399
    
    
    
    1,399Total deposits
    
    
    1,975,635
    
    
    
    1,976,854Repurchase agreements
    
    
    18,712
    
    
    
    19,413FHLB advances and notes payable
    
    
    158,588
    
    
    
    158,653Subordinated debentures
    
    
    88,662
    
    
    
    88,662Accrued interest payable and other liabilities
    
    
    18,267
    
    
    
    18,561Total liabilities
    
    $
    2,259,864
    
    
    $
    2,262,143Shareholders equityPreferred stock: no par, 1,000,000 shares authorized, 72,278
shares outstanding
    
    $
    68,468
    
    
    $
    68,121Common stock: $2 par, 20,000,000 shares authorized, 13,182,797
and 13,188,896 shares outstanding
    
    
    26,366
    
    
    
    26,378Common stock warrants
    
    
    6,934
    
    
    
    6,934Additional paid-in capital
    
    
    189,022
    
    
    
    188,901Accumulated Deficit
    
    
    (158,997
    )
    
    
    (147,436
    )Accumulated other comprehensive income
    
    
    1,037
    
    
    
    999Total shareholders equity
    
    
    132,830
    
    
    
    143,897Total liabilities and shareholders equity
    
    $
    2,392,694
    
    
    $
    2,406,040
 
 *
    
    Derived from the audited consolidated balance sheet, as filed in the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2010.  2




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##### Table of Contents



GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three Months Ended March 31, 2011 and 2010
 (Amounts in thousands, except share and per share data)
 Three Months EndedMarch 31,2011
    
    
    2010(Unaudited)Interest incomeInterest and fees on loans
    
    $
    24,600
    
    
    $
    30,060Taxable securities
    
    
    1,401
    
    
    
    1,288Nontaxable securities
    
    
    305
    
    
    
    312FHLB and other stock
    
    
    138
    
    
    
    138Federal funds sold and other
    
    
    181
    
    
    
    94Total interest income
    
    
    26,625
    
    
    
    31,892Interest expenseDeposits
    
    
    5,330
    
    
    
    8,061Federal funds purchased and repurchase agreements
    
    
    4
    
    
    
    6FHLB advances and notes payable
    
    
    1,543
    
    
    
    1,694Subordinated debentures
    
    
    481
    
    
    
    472Total interest expense
    
    
    7,358
    
    
    
    10,233Net interest income
    
    
    19,267
    
    
    
    21,659Provision for loan losses
    
    
    13,897
    
    
    
    3,889Net interest income after provision for loan losses
    
    
    5,370
    
    
    
    17,770Non-interest incomeService charges on deposit accounts
    
    
    5,830
    
    
    
    5,940Other charges and fees
    
    
    430
    
    
    
    356Trust and investment services income
    
    
    515
    
    
    
    582Mortgage banking income
    
    
    87
    
    
    
    118Other income
    
    
    765
    
    
    
    690Total non-interest income
    
    
    7,627
    
    
    
    7,686Non-interest expenseEmployee compensation
    
    
    8,131
    
    
    
    7,665Employee benefits
    
    
    977
    
    
    
    977Occupancy expense
    
    
    1,794
    
    
    
    1,699Equipment expense
    
    
    877
    
    
    
    708Computer hardware/software expense
    
    
    919
    
    
    
    824Professional services
    
    
    788
    
    
    
    607Advertising
    
    
    719
    
    
    
    598OREO maintenance expense
    
    
    1,155
    
    
    
    445Collection and repossession expense
    
    
    547
    
    
    
    1,287Loss on OREO and repossessed assets
    
    
    2,101
    
    
    
    509FDIC Insurance
    
    
    1,086
    
    
    
    851Core deposit and other intangibles amortization
    
    
    626
    
    
    
    651Other expenses
    
    
    3,307
    
    
    
    3,725Total non-interest expenses
    
    
    23,027
    
    
    
    20,546Income (loss) before income taxes
    
    
    (10,030
    )
    
    
    4,910Provision for income/(loss) taxes
    
    
    281
    
    
    
    1,714Net income/(loss)
    
    $
    (10,311
    )
    
    $
    3,196Preferred stock dividends and accretion of discount
    
    
    1,250
    
    
    
    1,250Net income/(loss) available to common shareholders
    
    $
    (11,561
    )
    
    $
    1,946Per share of common stock:Basic earnings
    
    $
    (0.88
    )
    
    $
    0.15Diluted earnings
    
    
    (0.88
    )
    
    
    0.15Dividends
    
    
    
    
    
    
    Weighted average shares outstanding:Basic
    
    
    13,108,598
    
    
    
    13,082,347Diluted
    
    
    13,108,598
    
    
    
    13,172,727
  3




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GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 For the Three Months Ended March 31, 2011
 (Unaudited)
 (Amounts in thousands, except share and per share data)
 Warrants
    
    
    
    
    
    
    
    
    
    
    AccumulatedFor
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalPreferred
    
    
    Common Stock
    
    
    Common
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    ShareholdersStock
    
    
    Shares
    
    
    Amount
    
    
    Stock
    
    
    Capital
    
    
    (Deficit)
    
    
    Income
    
    
    EquityBalance, December 31, 2010
    
    $
    68,121
    
    
    
    13,188,896
    
    
    $
    26,378
    
    
    $
    6,934
    
    
    $
    188,901
    
    
    $
    (147,436
    )
    
    $
    999
    
    
    $
    143,897Preferred stock transactions:Accretion of preferred stock discount
    
    
    347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (347
    )
    
    
    
    
    
    
    Preferred stock dividends accrued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (903
    )
    
    
    
    
    
    
    (903
    )Common stock transactions:Forfeiture of restricted common shares
    
    
    
    
    
    
    (6,099
    )
    
    
    (12
    )
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    
    
    
    
    (64
    )Compensation expense:Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    50Restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    123Comprehensive income/(loss):Net (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,311
    )
    
    
    
    
    
    
    (10,311
    )Change in unrealized gains, net of
reclassification and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    38Total comprehensive income/(loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,273
    )Balance, March 31, 2011
    
    $
    68,468
    
    
    
    13,182,797
    
    
    $
    26,366
    
    
    $
    6,934
    
    
    $
    189,022
    
    
    $
    (158,997
    )
    
    $
    1,037
    
    
    $
    132,830
  4




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GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Three Months Ended March 31, 2011 and 2010
 (Amounts in thousands, except share and per share data)
 March 31,
    
    
    March 31,2011
    
    
    2010(Unaudited)Cash flows from operating activitiesNet income (loss)
    
    $
    (10,311
    )
    
    $
    3,196Adjustments to reconcile net income/(loss) to net cash provided by operating activitiesProvision for loan losses
    
    
    13,897
    
    
    
    3,889Depreciation and amortization
    
    
    1,736
    
    
    
    1,828Security amortization and accretion, net
    
    
    129
    
    
    
    59Net gain on sale of mortgage loans
    
    
    (78
    )
    
    
    (110
    )Originations of mortgage loans held for sale
    
    
    (7,421
    )
    
    
    (8,741
    )Proceeds from sales of mortgage loans
    
    
    7,838
    
    
    
    9,794Increase in cash surrender value of life insurance
    
    
    (279
    )
    
    
    (265
    )Net losses from sales of fixed assets
    
    
    203
    
    
    
    3Stock-based compensation expense
    
    
    109
    
    
    
    156Net loss on other real estate and repossessed assets
    
    
    2,099
    
    
    
    509Deferred tax benefit
    
    
    
    
    
    
    (303
    )Net changes:Other assets
    
    
    9,769
    
    
    
    4,970Accrued interest payable and other liabilities
    
    
    (1,196
    )
    
    
    (5,895
    )Net cash provided by operating activities
    
    
    16,495
    
    
    
    9,090Cash flows from investing activitiesPurchase of securities available for sale
    
    
    (35,782
    )
    
    
    (51,525
    )Proceeds from maturities of securities available for sale
    
    
    10,985
    
    
    
    27,072Proceeds from maturities of securities held to maturity
    
    
    350
    
    
    
    10Net change in loans
    
    
    43,266
    
    
    
    28,763Proceeds from sale of other real estate
    
    
    4,322
    
    
    
    2,368Improvements to other real estate
    
    
    (113
    )
    
    
    (332
    )Proceeds from sale of fixed assets
    
    
    7
    
    
    
    Premises and equipment expenditures
    
    
    (342
    )
    
    
    (566
    )Net cash provided by investing activities
    
    
    22,693
    
    
    
    5,790Cash flows from financing activitiesNet change in core deposits
    
    
    (1,219
    )
    
    
    (41,046
    )Net change in brokered deposits
    
    
    
    
    
    
    (5,185
    )Net change in repurchase agreements
    
    
    (702
    )
    
    
    (619
    )Repayments of FHLB advances and notes payable
    
    
    (65
    )
    
    
    (80
    )Preferred stock dividends paid
    
    
    
    
    
    
    (903
    )Common stock dividends paid
    
    
    
    
    
    
    Net cash (used) in financing activities
    
    
    (1,986
    )
    
    
    (47,833
    )Net change in cash and cash equivalents
    
    
    37,202
    
    
    
    (32,953
    )Cash and cash equivalents, beginning of period
    
    
    294,214
    
    
    
    210,494Cash and cash equivalents, end of period
    
    $
    331,416
    
    
    $
    177,541Supplemental disclosures  cash and noncashInterest paid
    
    $
    7,044
    
    
    $
    10,523Loans converted to other real estate
    
    
    6,616
    
    
    
    18,540Unrealized gain on available for sale securities, net of tax
    
    
    38
    
    
    
    970Loans Originated to finance/sell other real estate
    
    
    1,020
    
    
    
    1,417
  5




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GREEN BANKSHARES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2011
 Unaudited
 (Amounts in thousands, except share and per share data)
 NOTE 1  PRINCIPLES OF CONSOLIDATION
  NOTE 2  SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueAvailable for SaleMarch 31, 2011U.S. government agencies
    
    $
    93,966
    
    
    $
    138
    
    
    $
    (1,031
    )
    
    $
    93,073States and political subdivisions
    
    
    30,225
    
    
    
    845
    
    
    
    (271
    )
    
    
    30,799Collateralized mortgage obligations
    
    
    78,300
    
    
    
    1,861
    
    
    
    (395
    )
    
    
    79,766Mortgage-backed securities
    
    
    20,685
    
    
    
    749
    
    
    
    (30
    )
    
    
    21,404Trust preferred securities
    
    
    1,850
    
    
    
    
    
    
    
    (160
    )
    
    
    1,690$
    225,026
    
    
    $
    3,593
    
    
    $
    (1,887
    )
    
    $
    226,732December 31, 2010U.S. government agencies
    
    $
    84,106
    
    
    $
    115
    
    
    $
    (922
    )
    
    $
    83,299States and political subdivisions
    
    
    31,192
    
    
    
    705
    
    
    
    (396
    )
    
    
    31,501Collateralized mortgage obligations
    
    
    66,043
    
    
    
    1,901
    
    
    
    (369
    )
    
    
    67,575Mortgage-backed securities
    
    
    17,168
    
    
    
    815
    
    
    
    (19
    )
    
    
    17,964Trust preferred securities
    
    
    1,850
    
    
    
    
    
    
    
    (187
    )
    
    
    1,663$
    200,359
    
    
    $
    3,536
    
    
    $
    (1,893
    )
    
    $
    202,002Held to MaturityMarch 31, 2011States and political subdivisions
    
    $
    115
    
    
    $
    
    
    
    $
    
    
    
    $
    115$
    115
    
    
    $
    
    
    
    $
    
    
    
    $
    115December 31, 2010States and political subdivisions
    
    $
    215
    
    
    $
    1
    
    
    $
    
    
    
    $
    216Other securities
    
    
    250
    
    
    
    1
    
    
    
    
    
    
    
    251$
    465
    
    
    $
    2
    
    
    $
    
    
    
    $
    467
 6




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 2  SECURITIES
  Available for Sale
    
    
    Held to MaturityFair
    
    
    Carrying
    
    
    FairValue
    
    
    Amount
    
    
    ValueDue in one year or less
    
    $
    989
    
    
    $
    115
    
    
    $
    115Due after one year through five years
    
    
    4,723
    
    
    
    
    
    
    
    Due after five years through ten years
    
    
    64,980
    
    
    
    
    
    
    
    Due after ten years
    
    
    54,870
    
    
    
    
    
    
    
    Collateralized mortgage obligations
    
    
    79,766
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    21,404
    
    
    
    
    
    
    
    Total maturities
    
    $
    226,732
    
    
    $
    115
    
    
    $
    115
    Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    LossMarch 31, 2011U. S. government agencies
    
    $
    66,950
    
    
    $
    (1,031
    )
    
    $
    
    
    
    $
    
    
    
    $
    66,950
    
    
    $
    (1,031
    )States and political subdivisions
    
    
    3,798
    
    
    
    (58
    )
    
    
    1,749
    
    
    
    (213
    )
    
    
    5,547
    
    
    
    (271
    )Collateralized mortgage obligations
    
    
    19,893
    
    
    
    (383
    )
    
    
    2,790
    
    
    
    (12
    )
    
    
    22,683
    
    
    
    (395
    )Mortgage-backed securities
    
    
    2,986
    
    
    
    (27
    )
    
    
    6
    
    
    
    (3
    )
    
    
    2,992
    
    
    
    (30
    )Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,690
    
    
    
    (160
    )
    
    
    1,690
    
    
    
    (160
    )Total temporarily impaired
    
    $
    93,627
    
    
    $
    (1,499
    )
    
    $
    6,235
    
    
    $
    (388
    )
    
    $
    99,862
    
    
    $
    (1,887
    )December 31, 2010U. S. government agencies
    
    $
    65,178
    
    
    $
    (922
    )
    
    $
    
    
    
    $
    
    
    
    $
    65,178
    
    
    $
    (922
    )States and political subdivisions
    
    
    2,488
    
    
    
    (114
    )
    
    
    1,659
    
    
    
    (282
    )
    
    
    4,147
    
    
    
    (396
    )Collateralized mortgage obligations
    
    
    14,666
    
    
    
    (266
    )
    
    
    2,699
    
    
    
    (104
    )
    
    
    17,365
    
    
    
    (370
    )Mortgage-backed securities
    
    
    2,821
    
    
    
    (17
    )
    
    
    8
    
    
    
    (2
    )
    
    
    2,829
    
    
    
    (19
    )Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    1,663
    
    
    
    (186
    )
    
    
    1,663
    
    
    
    (186
    )Total temporarily impaired
    
    $
    85,153
    
    
    $
    (1,319
    )
    
    $
    6,029
    
    
    $
    (574
    )
    
    $
    91,182
    
    
    $
    (1,893
    )
 7




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 2  SECURITIES
    8




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GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 2  SECURITIES
  CurrentCredit
    
    Book
    
    Fair
    
    UnrealizedDescription
    
    Cusip#
    
    Rating
    
    Value
    
    Value
    
    LossCollateralized mortgage
obligationsWells Fargo  2007 - 4 A21
    
    
    94985RAW2
    
    
    Caa2
    
    $
    2,802
    
    
    $
    2,790
    
    
    $
    (12
    )Trust preferred securitiesWest Tennessee Bancshares, Inc.
    
    
    956192AA6
    
    
    
    N/A
    
    
    
    675
    
    
    
    638
    
    
    
    (37
    )
  First Quarter
    
    
    First Quarter2011
    
    
    2010Beginning balance of credit losses at January 1, 2011 and 2010
    
    $
    1,069
    
    
    $
    976Other-than-temporary impairment credit losses
    
    
    
    
    
    
    Ending balance of cumulative credit losses recognized in earnings
    
    $
    1,069
    
    
    $
    976
 9




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS
  March 31,
    
    
    December 31,2011
    
    
    2010Commercial real estate
    
    $
    1,028,903
    
    
    $
    1,080,805Residential real estate
    
    
    379,616
    
    
    
    378,783Commercial
    
    
    208,496
    
    
    
    222,927Consumer
    
    
    75,379
    
    
    
    75,498Other
    
    
    3,139
    
    
    
    1,913Unearned income
    
    
    (15,284
    )
    
    
    (14,548
    )Loans, net of unearned income
    
    $
    1,680,249
    
    
    $
    1,745,378Allowance for loan losses
    
    $
    (65,109
    )
    
    $
    (66,830
    )
  March 31,
    
    
    March 31,2011
    
    
    2010Beginning balance
    
    $
    66,830
    
    
    $
    50,161Add (deduct):Provision for loan losses
    
    
    13,897
    
    
    
    3,889Loans charged off
    
    
    (16,404
    )
    
    
    (4,733
    )Recoveries of loans charged off
    
    
    786
    
    
    
    850Balance, end of period
    
    $
    65,109
    
    
    $
    50,167
  10




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
  Commercial
    
    
    ResidentialReal Estate
    
    
    Real Estate
    
    
    Commercial
    
    
    Consumer
    
    
    Other
    
    
    Total2011Allowance for loan losses:Beginning balance
    
    $
    54,203
    
    
    $
    4,431
    
    
    $
    5,080
    
    
    $
    3,108
    
    
    $
    8
    
    
    $
    66,830Add (deduct):Charge-offs
    
    
    (14,919
    )
    
    
    (312
    )
    
    
    (728
    )
    
    
    (445
    )
    
    
    
    
    
    
    (16,404
    )Recoveries
    
    
    196
    
    
    
    29
    
    
    
    378
    
    
    
    183
    
    
    
    
    
    
    
    786Provision
    
    
    13,886
    
    
    
    234
    
    
    
    915
    
    
    
    (1,138
    )
    
    
    
    
    
    
    13,897Ending balance
    
    $
    53,366
    
    
    $
    4,382
    
    
    $
    5,645
    
    
    $
    1,708
    
    
    $
    8
    
    
    $
    65,109As of December 31, 2010Allowance for loan lossesAllocation for loans
individually evaluated
for impairment
    
    $
    22,939
    
    
    $
    1,027
    
    
    $
    722
    
    
    $
    146
    
    
    $
    
    
    
    $
    24,834Allocation for loans
collectively evaluated
for impairment
    
    
    31,264
    
    
    
    3,404
    
    
    
    4,358
    
    
    
    2,962
    
    
    
    8
    
    
    
    41,996Ending Balance
    
    $
    54,203
    
    
    $
    4,431
    
    
    $
    5,080
    
    
    $
    3,108
    
    
    $
    8
    
    
    $
    66,830As of March 31, 2011Allowance for loan losses:Allocation for loans
individually evaluated
for impairment
    
    $
    19,662
    
    
    $
    1,120
    
    
    $
    1,732
    
    
    $
    154
    
    
    $
    
    
    
    $
    22,668Allocation for loans
collectively evaluated
for impairment
    
    
    33,704
    
    
    
    3,262
    
    
    
    3,913
    
    
    
    1,554
    
    
    
    8
    
    
    
    42,441Ending Balance
    
    $
    53,366
    
    
    $
    4,382
    
    
    $
    5,645
    
    
    $
    1,708
    
    
    $
    8
    
    
    $
    65,109As of December 31, 2010Loans:Ending balance:individually evaluated
for impairment
    
    $
    170,175
    
    
    $
    8,697
    
    
    $
    6,149
    
    
    $
    970
    
    
    $
    
    
    
    $
    185,991Ending balance:collectively evaluated
for impairment
    
    $
    910,630
    
    
    $
    363,506
    
    
    $
    216,778
    
    
    $
    66,470
    
    
    $
    1,913
    
    
    $
    1,559,387As of March 31, 2011Loans:Ending balance:individually evaluated
for impairment
    
    $
    181,082
    
    
    $
    9,657
    
    
    $
    7,512
    
    
    $
    1,286
    
    
    $
    
    
    
    $
    199,537Ending balance:collectively evaluated
for impairment
    
    $
    847,821
    
    
    $
    363,266
    
    
    $
    200,984
    
    
    $
    66,458
    
    
    $
    3,139
    
    
    $
    1,481,668
  11




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
  March 31,
    
    December 31,2011
    
    2010Loans with no allowance allocated
    
    $
    95,432
    
    
    $
    81,981Loans with allowance allocated
    
    $
    104,105
    
    
    $
    104,010Amount of allowance allocated
    
    
    22,668
    
    
    
    24,834Average impaired loan balance during the year
    
    
    207,166
    
    
    
    212,167Interest income not recognized during impairment
    
    
    500
    
    
    
    1,105
  Impaired loans by class are
presented below as of March 31, 2011:
 Unpaid
    
    
    
    
    
    
    Average
    
    
    InterestRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedCommercial Real Estate:Speculative 1-4 Family
    
    $
    75,482
    
    
    $
    111,392
    
    
    $
    11,085
    
    
    $
    79,742
    
    
    $
    231Construction
    
    
    46,456
    
    
    
    65,525
    
    
    
    4,379
    
    
    
    49,747
    
    
    
    71Owner Occupied
    
    
    14,782
    
    
    
    15,365
    
    
    
    543
    
    
    
    15,143
    
    
    
    18Non-owner Occupied
    
    
    43,663
    
    
    
    46,035
    
    
    
    3,655
    
    
    
    44,177
    
    
    
    182Other
    
    
    699
    
    
    
    738
    
    
    
    
    
    
    
    706
    
    
    
    Residential Real Estate:HELOC
    
    
    3,199
    
    
    
    3,295
    
    
    
    
    
    
    
    3,206
    
    
    
    15Mortgage-Prime
    
    
    6,260
    
    
    
    6,801
    
    
    
    1,069
    
    
    
    6,373
    
    
    
    41Mortgage-Subprime
    
    
    650
    
    
    
    649
    
    
    
    51
    
    
    
    650
    
    
    
    Other
    
    
    102
    
    
    
    122
    
    
    
    
    
    
    
    103
    
    
    
    Commercial
    
    
    7,512
    
    
    
    8,702
    
    
    
    1,732
    
    
    
    7,825
    
    
    
    17Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer:Prime
    
    
    222
    
    
    
    234
    
    
    
    
    
    
    
    235
    
    
    
    3Subprime
    
    
    86
    
    
    
    86
    
    
    
    90
    
    
    
    86
    
    
    
    Auto-Subprime
    
    
    424
    
    
    
    424
    
    
    
    64
    
    
    
    424
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    199,537
    
    
    
    259,368
    
    
    
    22,668
    
    
    
    208,417
    
    
    
    578
  12




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 Impaired loans by class are presented below as of December 31, 2010:
 Unpaid
    
    
    
    
    
    
    Average
    
    
    InterestRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedCommercial Real Estate:Speculative 1-4 Family
    
    $
    72,138
    
    
    $
    98,141
    
    
    $
    11,830
    
    
    $
    85,487
    
    
    $
    2,292Construction
    
    
    56,758
    
    
    
    69,355
    
    
    
    8,366
    
    
    
    63,710
    
    
    
    2,565Owner Occupied
    
    
    13,590
    
    
    
    14,513
    
    
    
    851
    
    
    
    14,119
    
    
    
    644Non-owner Occupied
    
    
    25,824
    
    
    
    27,561
    
    
    
    1,823
    
    
    
    28,786
    
    
    
    1,375Other
    
    
    1,865
    
    
    
    2,090
    
    
    
    69
    
    
    
    2,278
    
    
    
    66Residential Real Estate:HELOC
    
    
    2,807
    
    
    
    2,894
    
    
    
    346
    
    
    
    2,603
    
    
    
    88Mortgage-Prime
    
    
    4,539
    
    
    
    4,722
    
    
    
    590
    
    
    
    4,661
    
    
    
    209Mortgage-Subprime
    
    
    370
    
    
    
    370
    
    
    
    57
    
    
    
    370
    
    
    
    Other
    
    
    981
    
    
    
    1,285
    
    
    
    34
    
    
    
    2,419
    
    
    
    47Commercial
    
    
    6,149
    
    
    
    7,510
    
    
    
    722
    
    
    
    6,729
    
    
    
    171Consumer:Prime
    
    
    217
    
    
    
    228
    
    
    
    32
    
    
    
    252
    
    
    
    13Subprime
    
    
    228
    
    
    
    228
    
    
    
    35
    
    
    
    228
    
    
    
    Auto-Subprime
    
    
    525
    
    
    
    525
    
    
    
    79
    
    
    
    525
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    185,991
    
    
    
    229,422
    
    
    
    24,834
    
    
    
    212,167
    
    
    
    7,470
  Prime credit risk rating:
  13




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 Desirable credit risk rating:
 Satisfactory I credit risk rating or pass credit rating:
 Satisfactory II credit risk rating:
 Acceptable with care credit risk rating:
 Management watch credit risk rating:
 Substandard credit risk rating:
 Loss credit rating:
  14




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 Credit quality indicators by class are presented below as of March 31, 2011:
 Speculative 1-4
    
    
    
    
    
    
    Owner
    
    
    Non-OwnerFamily
    
    
    Construction
    
    
    Occupied
    
    
    Occupied
    
    
    OtherCommercial Real
Estate Credit
ExposurePrime
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Desirable
    
    
    
    
    
    
    1,585
    
    
    
    971
    
    
    
    173Satisfactory tier I
    
    
    2,773
    
    
    
    899
    
    
    
    29,677
    
    
    
    35,754
    
    
    
    919Satisfactory tier II
    
    
    13,816
    
    
    
    18,949
    
    
    
    111,367
    
    
    
    155,082
    
    
    
    6,664Acceptable with care
    
    
    60,611
    
    
    
    43,092
    
    
    
    58,729
    
    
    
    185,416
    
    
    
    6,850Management Watch
    
    
    25,855
    
    
    
    15,592
    
    
    
    8,985
    
    
    
    34,028
    
    
    
    2,036Substandard
    
    
    78,764
    
    
    
    55,190
    
    
    
    19,051
    
    
    
    52,929
    
    
    
    3,146Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    181,819
    
    
    
    135,307
    
    
    
    228,780
    
    
    
    463,382
    
    
    
    19,615
 Credit quality indicators by class are presented below as of December 31, 2010:
 Speculative 1-4
    
    
    
    
    
    
    Owner
    
    
    Non-OwnerFamily
    
    
    Construction
    
    
    Occupied
    
    
    Occupied
    
    
    OtherCommercial Real
Estate Credit
ExposurePrime
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Desirable
    
    
    
    
    
    
    1,573
    
    
    
    968
    
    
    
    177
    
    
    
    Satisfactory tier I
    
    
    2,836
    
    
    
    978
    
    
    
    38,623
    
    
    
    56,221
    
    
    
    4,246Satisfactory tier II
    
    
    14,010
    
    
    
    34,239
    
    
    
    102,383
    
    
    
    130,850
    
    
    
    17,999Acceptable with care
    
    
    69,902
    
    
    
    47,093
    
    
    
    62,198
    
    
    
    159,216
    
    
    
    45,597Management Watch
    
    
    27,383
    
    
    
    15,259
    
    
    
    5,298
    
    
    
    26,415
    
    
    
    2,965Substandard
    
    
    91,845
    
    
    
    61,388
    
    
    
    16,289
    
    
    
    38,037
    
    
    
    6,817Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    205,976
    
    
    
    160,530
    
    
    
    225,759
    
    
    
    410,916
    
    
    
    77,624
  15




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 March 31,
    
    
    December 31,2011
    
    
    2010Commercial
    
    
    CommercialCommercial Credit ExposurePrime
    
    $
    1,418
    
    
    $
    1,236Desirable
    
    
    6,098
    
    
    
    7,951Satisfactory tier I
    
    
    31,276
    
    
    
    33,859Satisfactory tier II
    
    
    85,849
    
    
    
    91,505Acceptable with care
    
    
    63,295
    
    
    
    72,286Management Watch
    
    
    8,826
    
    
    
    8,511Substandard
    
    
    11,734
    
    
    
    7,579Loss
    
    
    
    
    
    
    Total
    
    
    208,496
    
    
    
    222,927
 As of March 31, 2011
 Mortgage HELOC
    
    
    Mortgage
    
    
    Subprime
    
    
    OtherConsumer Real Estate Credit ExposurePass
    
    $
    192,083
    
    
    $
    151,975
    
    
    $
    11,668
    
    
    $
    3,932Management Watch
    
    
    1,017
    
    
    
    2,042
    
    
    
    Substandard
    
    
    3,695
    
    
    
    6,359
    
    
    
    50
    
    
    
    102Total
    
    
    196,795
    
    
    
    160,376
    
    
    
    11,718
    
    
    
    4,034
 As of December 31, 2010
 Mortgage HELOC
    
    
    Mortgage
    
    
    Subprime
    
    
    OtherConsumer Real Estate Credit ExposurePass
    
    $
    188,086
    
    
    $
    131,845
    
    
    $
    11,692
    
    
    $
    29,833Management Watch
    
    
    1,017
    
    
    
    317
    
    
    
    
    
    
    
    Substandard
    
    
    2,807
    
    
    
    5,117
    
    
    
    50
    
    
    
    1,529Total
    
    
    191,910
    
    
    
    137,279
    
    
    
    11,742
    
    
    
    31,362
  16




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 As of March 31, 2011
 Consumer 
    
    
    Consumer AutoConsumer   Prime
    
    
    Subprime
    
    
     SubprimeConsumer Credit ExposurePass
    
    $
    33,964
    
    
    $
    12,963
    
    
    $
    19,468Management Watch
    
    
    
    
    
    
    
    
    
    
    Substandard
    
    
    221
    
    
    
    76
    
    
    
    96Total
    
    
    34,185
    
    
    
    13,039
    
    
    
    19,564
 As of December 31, 2010
 Consumer  
    
    
    Consumer AutoConsumer   Prime
    
    
    Subprime
    
    
     SubprimeConsumer Credit ExposurePass
    
    $
    35,029
    
    
    $
    13,093
    
    
    $
    18,588Management Watch
    
    
    
    
    
    
    
    
    
    
    Substandard
    
    
    217
    
    
    
    39
    
    
    
    474Total
    
    
    35,246
    
    
    
    13,132
    
    
    
    19,062
   17




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 Age analysis of past due loans by class are presented below as of March 31, 2011:
 RecordedInvestmentGreater
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    > 90 Days30-59 Days
    
    
    60-89 Days
    
    
    Than 90
    
    
    Total Past
    
    
    
    
    
    
    
    
    
    
    andPast Due
    
    
    Past Due
    
    
    Days
    
    
    Due
    
    
    Current
    
    
    Total Loans
    
    
    AccruingCommercial real estate:Speculative 1-4 Family
    
    $
    9,179
    
    
    $
    3,222
    
    
    $
    41,377
    
    
    $
    53,778
    
    
    $
    128,041
    
    
    $
    181,819
    
    
    $
    5,518Construction
    
    
    
    
    
    
    248
    
    
    
    18,622
    
    
    
    18,870
    
    
    
    116,437
    
    
    
    135,307
    
    
    
    Owner Occupied
    
    
    4,499
    
    
    
    126
    
    
    
    11,610
    
    
    
    16,235
    
    
    
    212,545
    
    
    
    228,780
    
    
    
    Non-owner Occupied
    
    
    6,170
    
    
    
    3,848
    
    
    
    17,675
    
    
    
    27,693
    
    
    
    435,689
    
    
    
    463,382
    
    
    
    Other
    
    
    835
    
    
    
    619
    
    
    
    192
    
    
    
    1,646
    
    
    
    17,969
    
    
    
    19,615
    
    
    
    Residential real estate:HELOC
    
    
    1,077
    
    
    
    155
    
    
    
    1,024
    
    
    
    2,256
    
    
    
    194,539
    
    
    
    196,795
    
    
    
    Mortgage-Prime
    
    
    6,196
    
    
    
    1,381
    
    
    
    2,711
    
    
    
    10,288
    
    
    
    150,088
    
    
    
    160,376
    
    
    
    Mortgage-Subprime
    
    
    51
    
    
    
    6
    
    
    
    72
    
    
    
    129
    
    
    
    11,589
    
    
    
    11,718
    
    
    
    Other
    
    
    85
    
    
    
    3
    
    
    
    81
    
    
    
    169
    
    
    
    3,865
    
    
    
    4,034
    
    
    
    Commercial
    
    
    608
    
    
    
    267
    
    
    
    5,795
    
    
    
    6,670
    
    
    
    201,826
    
    
    
    208,496
    
    
    
    72Consumer:Prime
    
    
    201
    
    
    
    58
    
    
    
    51
    
    
    
    310
    
    
    
    33,875
    
    
    
    34,185
    
    
    
    2Subprime
    
    
    140
    
    
    
    104
    
    
    
    53
    
    
    
    297
    
    
    
    12,742
    
    
    
    13,039
    
    
    
    Auto-Subprime
    
    
    565
    
    
    
    110
    
    
    
    125
    
    
    
    800
    
    
    
    18,764
    
    
    
    19,564
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,139
    
    
    
    3,139
    
    
    
    Total
    
    
    29,606
    
    
    
    10,147
    
    
    
    99,388
    
    
    
    139,141
    
    
    
    1,541,108
    
    
    
    1,680,249
    
    
    
    5,592
  18




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 Age analysis of past due loans by class are presented below for December 31, 2010:
 RecordedInvestment60-89
    
    
    Greater
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    > 90 Days30-59 Days
    
    
    Days Past
    
    
    Than 90
    
    
    Total Past
    
    
    
    
    
    
    
    
    
    
    andPast Due
    
    
    Due
    
    
    Days
    
    
    Due
    
    
    Current
    
    
    Total Loans
    
    
    AccruingCommercial real estate:Speculative 1-4 Family
    
    $
    22,267
    
    
    $
    1,777
    
    
    $
    30,802
    
    
    $
    54,846
    
    
    $
    151,130
    
    
    $
    205,976
    
    
    $
    1,758Construction
    
    
    14,541
    
    
    
    
    
    
    
    26,915
    
    
    
    41,456
    
    
    
    119,074
    
    
    
    160,530
    
    
    
    Owner Occupied
    
    
    8,114
    
    
    
    1,633
    
    
    
    4,137
    
    
    
    13,884
    
    
    
    211,875
    
    
    
    225,759
    
    
    
    Non-owner Occupied
    
    
    4,014
    
    
    
    5,961
    
    
    
    8,814
    
    
    
    18,789
    
    
    
    392,127
    
    
    
    410,916
    
    
    
    170Other
    
    
    116
    
    
    
    865
    
    
    
    1,491
    
    
    
    2,472
    
    
    
    75,152
    
    
    
    77,624
    
    
    
    18Residential real estate:HELOC
    
    
    747
    
    
    
    358
    
    
    
    644
    
    
    
    1,749
    
    
    
    190,161
    
    
    
    191,910
    
    
    
    Mortgage-Prime
    
    
    1,359
    
    
    
    915
    
    
    
    1,779
    
    
    
    4,053
    
    
    
    133,226
    
    
    
    137,279
    
    
    
    8Mortgage-Subprime
    
    
    100
    
    
    
    51
    
    
    
    98
    
    
    
    249
    
    
    
    11,493
    
    
    
    11,742
    
    
    
    Other
    
    
    403
    
    
    
    176
    
    
    
    566
    
    
    
    1,145
    
    
    
    30,217
    
    
    
    31,362
    
    
    
    19Commercial
    
    
    2,422
    
    
    
    593
    
    
    
    3,922
    
    
    
    6,937
    
    
    
    215,990
    
    
    
    222,927
    
    
    
    92Consumer:Prime
    
    
    315
    
    
    
    86
    
    
    
    108
    
    
    
    509
    
    
    
    34,737
    
    
    
    35,246
    
    
    
    29Subprime
    
    
    155
    
    
    
    64
    
    
    
    6
    
    
    
    225
    
    
    
    12,907
    
    
    
    13,132
    
    
    
    Auto-Subprime
    
    
    476
    
    
    
    166
    
    
    
    101
    
    
    
    743
    
    
    
    18,319
    
    
    
    19,062
    
    
    
    18Other
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    1,840
    
    
    
    1,913
    
    
    
    Total
    
    
    55,102
    
    
    
    12,645
    
    
    
    79,383
    
    
    
    147,130
    
    
    
    1,598,248
    
    
    
    1,745,378
    
    
    
    2,112
  19




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
 Non-accrual loans by class are presented below:
 March 31,
    
    
    December2011
    
    
    31, 2010Commercial real estate:Speculative 1-4 Family
    
    $
    60,024
    
    
    $
    63,298Construction
    
    
    38,629
    
    
    
    41,789Owner Occupied
    
    
    14,458
    
    
    
    5,511Non-owner Occupied
    
    
    30,720
    
    
    
    18,772Other
    
    
    192
    
    
    
    1,865Residential real estate:HELOC
    
    
    2,025
    
    
    
    1,668Mortgage-Prime
    
    
    4,758
    
    
    
    3,350Mortgage-Subprime
    
    
    351
    
    
    
    254Other
    
    
    102
    
    
    
    957Commercial
    
    
    7,034
    
    
    
    5,813Consumer:Prime
    
    
    143
    
    
    
    130Subprime
    
    
    163
    
    
    
    107Auto-Subprime
    
    
    217
    
    
    
    193Other
    
    
    
    
    
    
    Total
    
    
    158,816
    
    
    
    143,707
  March 31,
    
    
    December 31,2011
    
    
    2010Loans past due 90 days still on accrual
    
    $
    5,592
    
    
    $
    2,112Nonaccrual loans
    
    
    158,816
    
    
    
    143,707Total
    
    $
    164,408
    
    
    $
    145,819
   20




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS (Continued)
    21




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 4  EARNINGS PER SHARE OF COMMON STOCK
   Three Months EndedMarch 31,2011
    
    
    2010Basic Earnings Per ShareNet income (loss)
    
    $
    (10,311
    )
    
    $
    3,196Less: preferred stock dividends and accretion of discount
on warrants
    
    
    1,250
    
    
    
    1,250Net income (loss) available to common shareholders
    
    $
    (11,561
    )
    
    $
    1,946Weighted average common shares outstanding
    
    
    13,108,598
    
    
    
    13,082,347Basic earnings (loss) per share available to common shareholders
    
    $
    (0.88
    )
    
    $
    0.15Diluted Earnings  Per ShareNet income (loss)
    
    $
    (10,311
    )
    
    $
    3,196Less: preferred stock dividends and accretion of discount
on warrants
    
    
    1,250
    
    
    
    1,250Net income (loss) available to common shareholders
    
    $
    (11,561
    )
    
    $
    1,946Weighted average common shares outstanding
    
    
    13,108,598
    
    
    
    13,082,347Add: Dilutive effects of assumed conversions of restricted
stock and exercises of stock options and warrants
    
    
    
    
    
    
    90,380Weighted average common and dilutive potential common
shares outstanding
    
    
    13,108,598
    
    
    
    13,172,727Diluted earnings (loss) per share available to common shareholders
    
    $
    (0.88
    )
    
    $
    0.15
  22




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 5  SEGMENT INFORMATION
   Other
    
    
    HoldingThree months ended March 31, 2011
    
    Bank
    
    
    Segments
    
    
    Company
    
    
    Eliminations
    
    
    TotalsNet interest income (expense)
    
    $
    17,611
    
    
    $
    2,148
    
    
    $
    (492
    )
    
    $
    
    
    
    $
    19,267Provision for loan losses
    
    
    13,627
    
    
    
    270
    
    
    
    
    
    
    
    
    
    
    
    13,897Noninterest income
    
    
    7,379
    
    
    
    476
    
    
    
    14
    
    
    
    (242
    )
    
    
    7,627Noninterest expense
    
    
    22,115
    
    
    
    1,243
    
    
    
    (89
    )
    
    
    (242
    )
    
    
    23,027Income tax expense (benefit)
    
    
    (46
    )
    
    
    436
    
    
    
    (109
    )
    
    
    
    
    
    
    281Segment profit (loss)
    
    
    (10,706
    )
    
    $
    675
    
    
    $
    (280
    )
    
    $
    
    
    
    $
    (10,311
    )Segment assets at March 31, 2011
    
    $
    2,342,891
    
    
    $
    43,322
    
    
    $
    6,481
    
    
    $
    
    
    
    $
    2,392,694
 Other
    
    
    HoldingThree months ended March 31, 2010
    
    Bank
    
    
    Segments
    
    
    Company
    
    
    Eliminations
    
    
    TotalsNet interest income (expense)
    
    $
    20,068
    
    
    $
    2,063
    
    
    $
    (472
    )
    
    $
    
    
    
    $
    21,659Provision for loan losses
    
    
    3,356
    
    
    
    533
    
    
    
    
    
    
    
    
    
    
    
    3,889Noninterest income
    
    
    7,528
    
    
    
    371
    
    
    
    14
    
    
    
    (227
    )
    
    
    7,686Noninterest expense
    
    
    19,469
    
    
    
    1,115
    
    
    
    189
    
    
    
    (227
    )
    
    
    20,546Income tax expense (benefit)
    
    
    1,628
    
    
    
    309
    
    
    
    (223
    )
    
    
    
    
    
    
    1,714Segment profit (loss)
    
    
    3,143
    
    
    $
    477
    
    
    $
    (424
    )
    
    $
    
    
    
    $
    3,196Segment assets at March 31, 2010
    
    $
    2,520,503
    
    
    $
    41,663
    
    
    $
    7,566
    
    
    $
    
    
    
    $
    2,569,732
 23




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 5  SEGMENT INFORMATION
 Asset Quality Ratios
 As of and for the period ended March 31, 2011
    
    Bank
    
    Other
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    9.84
    %
    
    
    1.65
    %
    
    
    9.78
    %Nonperforming assets as a percentage of total assets
    
    
    9.34
    %
    
    
    2.07
    %
    
    
    9.38
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    3.72
    %
    
    
    7.25
    %
    
    
    3.87
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    37.81
    %
    
    
    439.21
    %
    
    
    39.60
    %YTD net charge-offs to average total loans, net of unearned income
    
    
    0.90
    %
    
    
    0.61
    %
    
    
    0.91
    %
 As of and for the period ended March 31, 2010
    
    Bank
    
    Other
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    3.19
    %
    
    
    1.23
    %
    
    
    3.19
    %Nonperforming assets as a percentage of total assets
    
    
    5.25
    %
    
    
    1.37
    %
    
    
    5.27
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    2.36
    %
    
    
    8.13
    %
    
    
    2.52
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    73.98
    %
    
    
    661.74
    %
    
    
    78.85
    %YTD net charge-offs to average total loans, net of unearned income
    
    
    0.17
    %
    
    
    1.25
    %
    
    
    0.19
    %
 As of and for the year ended December 31, 2010
    
    Bank
    
    Other
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    8.40
    %
    
    
    1.30
    %
    
    
    8.35
    %Nonperforming assets as a percentage of total assets
    
    
    8.52
    %
    
    
    1.34
    %
    
    
    8.56
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    3.68
    %
    
    
    7.33
    %
    
    
    3.83
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    43.80
    %
    
    
    562.24
    %
    
    
    45.83
    %Net charge-offs to average total loans, net of unearned income
    
    
    2.76
    %
    
    
    4.20
    %
    
    
    2.84
    %
 Net charge-offs
 Bank
    
    Other
    
    TotalFor the three month period ended March 31, 2011
    
    $
    15,347
    
    
    $
    270
    
    
    $
    15,617For the three month period ended March 31, 2010
    
    $
    3,345
    
    
    $
    537
    
    
    $
    3,882For the year ended December 31, 2010
    
    $
    52,615
    
    
    $
    1,823
    
    
    $
    54,438
 24




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES
  Level 1
  Level 2
  Level 3
   Investment Securities Available-for-Sale
  Loans Held for Sale
  25




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES (continued)
 Impaired Loans
  Other Real Estate
  26




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES (continued)
 Assets and Liabilities Recorded at Fair Value on a Recurring Basis
  Total Carrying
    
    Assets/LiabilitiesFair Value Measurement Using
    
    Amount in
    
    Measured at FairDescription
    
    Level 1
    
    Level 2
    
    Level 3
    
    Balance Sheet
    
    ValueMarch 31, 2011Securities available for saleU.S. government agencies
    
    $
    
    
    
    $
    93,073
    
    
    $
    
    
    
    $
    93,073
    
    
    $
    93,073States and political subdivisions
    
    
    
    
    
    
    30,799
    
    
    
    
    
    
    
    30,799
    
    
    
    30,799Collateralized mortgage obligations
    
    
    
    
    
    
    79,766
    
    
    
    
    
    
    
    79,766
    
    
    
    79,766Mortgage-backed securities
    
    
    
    
    
    
    21,404
    
    
    
    
    
    
    
    21,404
    
    
    
    21,404Trust preferred securities
    
    
    
    
    
    
    1,052
    
    
    
    638
    
    
    
    1,690
    
    
    
    1,690December 31, 2010Securities available for saleU.S. government agencies
    
    $
    
    
    
    $
    83,299
    
    
    $
    
    
    
    $
    83,299
    
    
    $
    83,299States and political subdivisions
    
    
    
    
    
    
    31,501
    
    
    
    
    
    
    
    31,501
    
    
    
    31,501Collateralized mortgage obligations
    
    
    
    
    
    
    67,575
    
    
    
    
    
    
    
    67,575
    
    
    
    67,575Mortgage-backed securities
    
    
    
    
    
    
    17,964
    
    
    
    
    
    
    
    17,964
    
    
    
    17,964Trust preferred securities
    
    
    
    
    
    
    1,025
    
    
    
    638
    
    
    
    1,663
    
    
    
    1,663
 Level 3 Valuations
   27




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES (continued)
  March 31,
    
    
    March 31,2011
    
    
    2010Beginning balance, January 1
    
    $
    638
    
    
    $
    638Total gains or (loss) (realized/unrealized)Included in earnings
    
    
    
    
    
    
    Included in other comprehensive income
    
    
    
    
    
    
    Paydowns and maturities
    
    
    Transfers into Level 3
    
    
    
    
    
    
    Ending balance, March 31
    
    $
    638
    
    
    $
    638
 Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
  Total Carrying
    
    
    Assets/LiabilitiesFair Value Measurement Using
    
    
    Amount in
    
    
    Measured at FairDescription
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Balance Sheet
    
    
    ValueMarch 31, 2011Other real estate
    
    $
    
    
    
    $
    
    
    
    $
    6,008
    
    
    $
    6,008
    
    
    $
    6,008Impaired loans
    
    
    
    
    
    
    
    
    
    
    125,361
    
    
    
    125,361
    
    
    
    125,361Total assets at fair value
    
    $
    
    
    
    $
    
    
    
    $
    131,369
    
    
    $
    131,369
    
    
    $
    131,369December 31, 2010Other real estate
    
    $
    
    
    
    $
    
    
    
    $
    38,806
    
    
    $
    38,806
    
    
    $
    38,806Impaired loans
    
    
    
    
    
    
    
    
    
    
    129,088
    
    
    
    129,088
    
    
    
    129,088Total assets at fair value
    
    $
    
    
    
    $
    
    
    
    $
    167,174
    
    
    $
    167,174
    
    
    $
    167,174
 28




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES
  March 31,
    
    December 31,2011
    
    2010Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    Value
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    331,416
    
    
    $
    331,416
    
    
    $
    294,214
    
    
    $
    294,214Securities available for sale
    
    
    226,732
    
    
    
    226,732
    
    
    
    202,002
    
    
    
    202,002Securities held to maturity
    
    
    115
    
    
    
    115
    
    
    
    465
    
    
    
    467Loans held for sale
    
    
    960
    
    
    
    970
    
    
    
    1,299
    
    
    
    1,317Loans, net
    
    
    1,615,140
    
    
    
    1,600,794
    
    
    
    1,678,548
    
    
    
    1,664,126FHLB and other stock
    
    
    12,734
    
    
    
    12,734
    
    
    
    12,734
    
    
    
    12,734Cash surrender value of life insurance
    
    
    31,758
    
    
    
    31,758
    
    
    
    31,479
    
    
    
    31,479Accrued interest receivable
    
    
    7,332
    
    
    
    7,332
    
    
    
    7,845
    
    
    
    7,845Financial liabilities:Deposit accounts
    
    $
    1,975,635
    
    
    $
    1,988,676
    
    
    $
    1,976,854
    
    
    $
    1,987,105Federal funds purchased and
repurchase agreements
    
    
    18,712
    
    
    
    18,712
    
    
    
    19,413
    
    
    
    19,413FHLB advances and notes payable
    
    
    158,588
    
    
    
    166,703
    
    
    
    158,653
    
    
    
    166,762Subordinated debentures
    
    
    88,662
    
    
    
    62,985
    
    
    
    88,662
    
    
    
    64,817Accrued interest payable
    
    
    2,454
    
    
    
    2,454
    
    
    
    2,140
    
    
    
    2,140
  29




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 7  SUBSEQUENT EVENTS
 Regulatory Matters
  Investment Agreement with North American Financial Holdings, Inc.
    30




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Forward-looking
statements, which are based on assumptions and estimates and describe our future plans, strategies
and expectations, are generally identifiable by the use of forward-looking terminology and words
such as trends, assumptions, target, guidance, outlook, opportunity, future, plans,
goals, objectives, expectations, near-term, long-term, projection, may, will,
would, could, expect, intend, estimate, anticipate, believe, potential, regular,
or continue (or the negative or other derivatives of each of these terms) or similar terminology
and expressions.
 Although the Company believes that the assumptions underlying any forward-looking statements
are reasonable, any of the assumptions could be inaccurate, and therefore, actual results may
differ materially from those projected in or implied by the forward-looking statements. Factors and
risks that may result in actual results differing from this forward-looking information include,
but are not limited to, those contained in the 2010 10-K as Part I, Item 1A thereof and in Part II,
Item 1A of this Form 10-Q, including (1) the occurrence of any event, change or other circumstances
that could give rise to the termination of the Investment Agreement by and among the Company, the
Bank and North American Financial Holdings, Inc., dated as of May 5, 2011 (the Investment
Agreement); (2) the outcome of any legal proceedings that may be instituted against the Company
and others following announcement of the Investment Agreement; (3) the inability to complete the
transactions contemplated by the Investment Agreement due to the failure to obtain shareholder
approval or the failure to satisfy other conditions to completion of the transaction, including the
receipt of regulatory approval; (4) risks that the proposed transaction contemplated by the
Investment Agreement disrupts current plans and operations and the potential difficulties in
employee retention as a result of the proposed transaction; (5) the amount of the costs, fees,
expenses and charges related to the proposed transaction contemplated by the Investment Agreement;
(6) deterioration in the financial condition of borrowers resulting in significant increases in
loan losses and provisions for those losses; (7) continuation of the historically low short-term
interest rate environment; (8) changes in loan underwriting, credit review or loss reserve policies
associated with economic conditions, examination conclusions, or regulatory developments; (9)
increased levels of non-performing and repossessed assets and the ability to resolve these may
result in future losses; (10) greater than anticipated deterioration or lack of sustained growth in
the national or local economies; (11) rapid fluctuations or unanticipated changes in interest
rates; (12) the impact of governmental restrictions on entities participating in the Capital
Purchase Program (the CPP) of the United States Department of the Treasury; (13) changes in state
and federal legislation, regulations or policies applicable to banks or other financial service
providers, including regulatory or legislative developments, like the Dodd-Frank Wall Street Reform
and Consumer Protection Act, arising out of current unsettled conditions in the economy; (14) the
results of regulatory examinations including requirements contained in any enforcement action against the
Company or the Bank as a result of such examinations; (15) the remediation efforts related to the Companys material
weakness in its internal control over financial reporting; (16) increased competition with other
financial institutions in the markets that the Bank serves; (17) the Companys recording a further
valuation allowance related to its deferred tax asset; (18) exploring alternatives available for
the future repayment or conversion of the preferred stock issued in the CPP, including in the
transaction contemplated by the Investment Agreement; (19) further deterioration in the valuation
of other real estate owned; (20)
 31




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##### Table of Contents



inability to comply with regulatory capital requirements and to secure any required regulatory
approvals for capital actions to raise capital if necessary to comply with any regulatory capital
requirements; and (21) the loss of key personnel, as well as other factors discussed throughout
this document, including, without limitation the factors described under Critical Accounting
Policies and Estimates on page 33 of this Quarterly Report on Form 10-Q, or from time to
time, in the Companys filings with the SEC, press releases and other communications.
 Readers are cautioned not to place undue reliance on forward-looking statements made in this
document, since the statements speak only as of the documents date. All forward-looking
statements included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety
by the cautionary statements in this section and to the more detailed risk factors included in the
Companys 2010 10-K and in Part II, Item 1A below. The Company has no obligation and does not
intend to publicly update or revise any forward-looking statements contained in or incorporated by
reference into this Quarterly Report on Form 10-Q , to reflect events or circumstances occurring
after the date of this document or to reflect the occurrence of unanticipated events. Readers are
advised, however, to consult any further disclosures the Company may make on related subjects in
its documents filed with or furnished to the SEC or in its other public disclosures.
  Investment Agreement with North American Financial Holdings, Inc.
  Business Strategy
     32




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##### Table of Contents



Overview
  Critical Accounting Policies and Estimates
       33




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Changes in Results of Operations
 Net Loss.
 Net Interest Income.
  34




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##### Table of Contents



Three Months EndedMarch 31,2011
    
    
    2010Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-earning assets:Loans(1) (2)
    
    $
    1,567,761
    
    
    $
    24,614
    
    
    
    6.37
    %
    
    $
    1,954,136
    
    
    $
    30,080
    
    
    
    6.24
    %Investment securities (2)
    
    
    227,762
    
    
    
    2,007
    
    
    
    3.57
    %
    
    
    169,020
    
    
    
    1,906
    
    
    
    4.57
    %Other short-term investments
    
    
    294,905
    
    
    
    181
    
    
    
    0.25
    %
    
    
    148,394
    
    
    
    94
    
    
    
    0.26
    %Total interest-earning assets
    
    $
    2,090,428
    
    
    $
    26,802
    
    
    
    5.20
    %
    
    $
    2,271,550
    
    
    $
    32,080
    
    
    
    5.73
    %Non-interest earning assets
    
    
    340,868
    
    
    
    
    
    
    
    
    
    
    
    306,586Total assets
    
    $
    2,431,296
    
    
    
    
    
    
    
    
    
    
    $
    2,578,136Interest-bearing liabilities:Deposits:Interest checking, savings and money
market
    
    $
    1,079,824
    
    
    $
    1,811
    
    
    
    0.68
    %
    
    $
    941,888
    
    
    $
    2,398
    
    
    
    1.03
    %Time deposits
    
    
    763,967
    
    
    
    3,519
    
    
    
    1.87
    %
    
    
    940,388
    
    
    
    5,663
    
    
    
    2.44
    %Total interest-bearing deposits
    
    $
    1,843,791
    
    
    $
    5,330
    
    
    
    1.17
    %
    
    $
    1,882,276
    
    
    $
    8,061
    
    
    
    1.74
    %Securities sold under repurchase
agreements and short-term borrowings
    
    
    16,994
    
    
    
    4
    
    
    
    0.10
    %
    
    
    23,615
    
    
    
    6
    
    
    
    0.10
    %Notes payable
    
    
    158,628
    
    
    
    1,543
    
    
    
    3.94
    %
    
    
    171,946
    
    
    
    1,694
    
    
    
    4.00
    %Subordinated debentures
    
    
    88,662
    
    
    
    481
    
    
    
    2.20
    %
    
    
    88,662
    
    
    
    472
    
    
    
    2.16
    %Total interest-bearing liabilities
    
    $
    2,108,075
    
    
    $
    7,358
    
    
    
    1.42
    %
    
    $
    2,166,499
    
    
    $
    10,233
    
    
    
    1.92
    %Non-interest bearing liabilities:Demand deposits
    
    
    161,702
    
    
    
    
    
    
    
    
    
    
    
    163,173Other liabilities
    
    
    17,731
    
    
    
    
    
    
    
    
    
    
    
    18,098Total non-interest bearing liabilities
    
    
    179,433
    
    
    
    
    
    
    
    
    
    
    
    181,271Total liabilities
    
    
    2,287,508
    
    
    
    
    
    
    
    
    
    
    
    2,347,770Shareholders equity
    
    
    143,788
    
    
    
    
    
    
    
    
    
    
    
    230,366Total liabilities and shareholders
equity
    
    $
    2,431,296
    
    
    
    
    
    
    
    
    
    
    $
    2,578,136Net interest income
    
    
    
    
    
    $
    19,444
    
    
    
    
    
    
    
    
    
    
    $
    21,847Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.77
    %
    
    
    
    
    
    
    
    
    
    
    3.81
    %Net yield on interest-earning assets
    
    
    
    
    
    
    
    
    
    
    3.77
    %
    
    
    
    
    
    
    
    
    
    
    3.90
    %
 
 1
    
    Average loan balances excluded nonaccrual loans for the periods presented.2
    
    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. 35




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##### Table of Contents



Provision for Loan Losses.
      Non-interest Income.
  Non-interest Expense.
 36




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##### Table of Contents



Income Taxes.
 Changes in Financial Condition
       37




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Liquidity and Capital Resources
 Liquidity
      38




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##### Table of Contents



Capital Resources.
     Required
    
    RequiredMinimum
    
    to beRatio
    
    Well Capitalized
    
    Bank
    
    CompanyTier 1 risk-based
capital
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    11.83
    %
    
    
    9.36
    %Total risk-based capital
    
    
    8.00
    %
    
    
    10.00
    %
    
    
    13.11
    %
    
    
    13.03
    %Leverage Ratio
    
    
    4.00
    %
    
    
    5.00
    %
    
    
    8.55
    %
    
    
    6.78
    %
  39




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##### Table of Contents



Off-Balance Sheet Arrangements
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years
    
    
    TotalCommitments to make loans  fixed
    
    $
    272
    
    
    $
    862
    
    
    $
    744
    
    
    $
    152
    
    
    $
    2,030Commitments to make loans 
variable
    
    
    606
    
    
    
    225
    
    
    
    
    
    
    
    698
    
    
    
    1,529Unused lines of credit
    
    
    126,883
    
    
    
    22,888
    
    
    
    14,379
    
    
    
    72,492
    
    
    
    236,642Letters of credit
    
    
    17,532
    
    
    
    7,762
    
    
    
    
    
    
    
    
    
    
    
    25,294Total
    
    $
    145,293
    
    
    $
    31,737
    
    
    $
    15,123
    
    
    $
    73,342
    
    
    $
    265,495
 40




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##### Table of Contents



Disclosure of Contractual Obligations
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years
    
    
    TotalCertificates of deposits
    
    $
    527,774
    
    
    $
    142,656
    
    
    $
    56,445
    
    
    $
    3,448
    
    
    $
    730,323FHLB advances and notes payable
    
    
    15,291
    
    
    
    75,570
    
    
    
    20,611
    
    
    
    47,115
    
    
    
    158,587Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,662
    
    
    
    88,662Operating lease obligations
    
    
    1,292
    
    
    
    2,284
    
    
    
    1,093
    
    
    
    648
    
    
    
    5,317Deferred compensation
    
    
    1,515
    
    
    
    
    
    
    
    264
    
    
    
    2,131
    
    
    
    3,910Purchase obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    545,872
    
    
    $
    220,510
    
    
    $
    78,413
    
    
    $
    142,004
    
    
    $
    986,799
  Effect of New Accounting Standards
   ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   41




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##### Table of Contents



Internal Control Over Financial Reporting
  
 
 
  PART II  OTHER INFORMATION
 Item 1. Legal Proceedings
 Bill Burgraff v. Green Bankshares, Inc., et al., U.S. District Court, Eastern District of
Tennessee, Northeastern Division, Case No. 2:10-cv-00253) Brian Molnar v. Green
Bankshares, Inc., et al., U.S. District Court, Eastern District of Tennessee, Northeastern
Division, Case No. 2:11-cv-00014
 42




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##### Table of Contents



Betty
Smith v. Green Bankshares, Inc. et al., Case No. 11-625-III, Davidson County, Tennessee, Chancery
Court
    Item 1A. Risk Factors
  We have a significant deferred tax asset and cannot assure you that it will be fully realized.
  43




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Failure to complete our proposed issuance of common stock to North American could negatively affect
us.
  
    
    the current market price of our common stock may reflect a market assumption that the
transaction will occur, and a failure to complete the transaction could result in a decline
in the market price of our common stock;
    
    the occurrence of any event, change or other circumstances that could give rise to the
termination of the investment agreement, including a termination that under certain
circumstances would require us to pay a $750,000 expense reimbursement and $8 million
termination fee to North American;
    
    the outcome of any legal proceedings that have been or may be instituted against us and
others relating to the investment agreement;
    
    the failure of the transaction to close for any reason, including the inability to
complete the transaction due to the failure to obtain shareholder approval or the failure
to satisfy other conditions to consummation of the transaction, and the risk that any
failure of the transaction to close may adversely affect our business and the price of our
common stock;
    
    the potential adverse effect on our business, properties and operations of any
affirmative or negative covenants we agreed to in the investment agreement;
    
    risks that the proposed transaction diverts managements attention and disrupts current
plans and operations, and potential difficulties in employee retention as a result of the
transaction;
    
    the effect of the announcement of the transaction and actions taken in anticipation of
the transaction on our business relationships, operating results and business generally;
and
    
    the amount of the costs, fees, expenses and charges related to the transaction.
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3. Defaults Upon Senior Securities
  Item 4. ( Removed and Reserved )
  44




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##### Table of Contents



Item 5. Other Information
  Item 6. Exhibits
  45




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SIGNATURES
  Green Bankshares, Inc.
RegistrantDate: May 16, 2011
    By:
    /s/ James E. AdamsJames E. AdamsExecutive Vice  President, Chief
Financial Officer and Secretary 46




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EXHIBIT INDEX
 Exhibit No.
    
    Description10.1
    
    Consulting Agreement, dated as of March 18, 2011, by and among Green Bancshares, Inc.,
GreenBank and James E. Adams.10.2
    
    Investment Agreement, dated May 5, 2011, among Green Bankshares, Inc., GreenBank and North
American Financial Holdings, Inc.  incorporated herein by reference to the Companys Current
Report on Form 8-K filed May 6, 2011.10.3
    
    Stock Option Agreement, dated May 5, 2011, between Green Bankshares, Inc. and North American
Financial Holdings, Inc.  incorporated herein by reference to the Companys Current Report
on Form 8-K filed May 6, 2011.31.1
    
    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