##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 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 LOGO)
 GREEN BANKSHARES, INC.
  Tennessee
    
    62-1222567(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 100 North Main Street, Greeneville, Tennessee
    
    37743-4992(Address of principal executive offices)
    
    (Zip Code)
 (423) 639-5111
 N/A
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 YES o
NO 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)
 YES o NO þ




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##### 



PART I  FINANCIAL INFORMATION
 ITEM 1.
    
    FINANCIAL STATEMENTS
  Condensed Consolidated Balance Sheets  June 30, 2009 and December 31, 2008

2Condensed Consolidated Statements of Income  For the three and six months ended June 30,
2009 and 2008

3Condensed Consolidated Statement of Changes in Shareholders Equity  For the six months
ended June 30, 2009

4Condensed Consolidated Statements of Cash Flows  For the six months ended June 30, 2009 and
2008

5Notes to Condensed Consolidated Financial Statements

6Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   1




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##### Table of Contents



GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30, 2009 and December 31, 2008
 (Amounts in thousands, except share and per share data)
 (Unaudited)June 30,
    
    
    December 31,2009
    
    
    2008*ASSETSCash and due from banks
    
    $
    103,454
    
    
    $
    193,095Federal funds sold
    
    
    4,119
    
    
    
    5,263Cash and cash equivalents
    
    
    107,573
    
    
    
    198,358Securities available for sale
    
    
    167,853
    
    
    
    203,562Securities held to maturity (with a market value of $629 and $601)
    
    
    647
    
    
    
    657Loans held for sale
    
    
    3,634
    
    
    
    442Loans, net of unearned interest
    
    
    2,183,754
    
    
    
    2,223,390Allowance for loan losses
    
    
    (50,157
    )
    
    
    (48,811
    )Other real estate owned and repossessed assets
    
    
    34,468
    
    
    
    45,371Premises and equipment, net
    
    
    83,448
    
    
    
    83,359FHLB and other stock, at cost
    
    
    12,734
    
    
    
    13,030Cash surrender value of life insurance
    
    
    30,113
    
    
    
    29,539Goodwill
    
    
    
    
    
    
    143,389Core deposit and other intangibles
    
    
    10,629
    
    
    
    12,085Other assets
    
    
    45,138
    
    
    
    40,300Total assets
    
    $
    2,629,834
    
    
    $
    2,944,671LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesNon-interest bearing deposits
    
    $
    165,735
    
    
    $
    176,685Interest bearing deposits
    
    
    1,746,895
    
    
    
    1,645,115Brokered deposits
    
    
    114,092
    
    
    
    362,347Total deposits
    
    
    2,026,722
    
    
    
    2,184,147Repurchase agreements
    
    
    25,990
    
    
    
    35,302FHLB advances and notes payable
    
    
    229,154
    
    
    
    229,349Subordinated debentures
    
    
    88,662
    
    
    
    88,662Accrued interest payable and other liabilities
    
    
    26,114
    
    
    
    25,980Total liabilities
    
    $
    2,396,642
    
    
    $
    2,563,440Shareholders equityPreferred stock: no par, 1,000,000 shares authorized, 72,278
shares outstanding
    
    $
    66,041
    
    
    $
    65,346Common stock: $2 par, 20,000,000 shares authorized, 13,175,817
and 13,112,687 shares outstanding
    
    
    26,351
    
    
    
    26,225Common stock warrants
    
    
    6,934
    
    
    
    6,934Additional paid-in capital
    
    
    187,966
    
    
    
    187,742Retained earnings (deficit)
    
    
    (53,918
    )
    
    
    95,647Accumulated other comprehensive (loss)
    
    
    (182
    )
    
    
    (663
    )Total shareholders equity
    
    
    233,192
    
    
    
    381,231Total liabilities and shareholders equity
    
    $
    2,629,834
    
    
    $
    2,944,671
 *
    
    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, 2008.   2




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##### Table of Contents



GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 Three and Six Months Ended June 30, 2009 and 2008
 (Amounts in thousands, except share and per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)Interest incomeInterest and fees on loans
    
    $
    32,528
    
    
    $
    39,407
    
    
    $
    65,173
    
    
    $
    82,156Taxable securities
    
    
    1,843
    
    
    
    2,784
    
    
    
    4,063
    
    
    
    5,647Nontaxable securities
    
    
    314
    
    
    
    324
    
    
    
    634
    
    
    
    657FHLB and other stock
    
    
    135
    
    
    
    157
    
    
    
    285
    
    
    
    317Federal funds sold and other
    
    
    36
    
    
    
    22
    
    
    
    81
    
    
    
    26Total interest income
    
    
    34,856
    
    
    
    42,694
    
    
    
    70,236
    
    
    
    88,803Interest expenseDeposits
    
    
    11,511
    
    
    
    13,377
    
    
    
    24,164
    
    
    
    29,312Federal funds purchased and repurchase agreements
    
    
    7
    
    
    
    700
    
    
    
    16
    
    
    
    1,792FHLB advances and notes payable
    
    
    2,469
    
    
    
    2,565
    
    
    
    4,912
    
    
    
    5,743Subordinated debentures
    
    
    689
    
    
    
    1,008
    
    
    
    1,535
    
    
    
    2,440Total interest expense
    
    
    14,676
    
    
    
    17,650
    
    
    
    30,627
    
    
    
    39,287Net interest income
    
    
    20,180
    
    
    
    25,044
    
    
    
    39,609
    
    
    
    49,516Provision for loan losses
    
    
    24,384
    
    
    
    11,019
    
    
    
    25,369
    
    
    
    11,907Net interest income (loss) after provision for loan losses
    
    
    (4,204
    )
    
    
    14,025
    
    
    
    14,240
    
    
    
    37,609Non-interest incomeService charges on deposit accounts
    
    
    5,795
    
    
    
    5,988
    
    
    
    11,151
    
    
    
    11,455Other charges and fees
    
    
    505
    
    
    
    505
    
    
    
    954
    
    
    
    1,009Trust and investment services income
    
    
    489
    
    
    
    548
    
    
    
    877
    
    
    
    834Mortgage banking income
    
    
    110
    
    
    
    293
    
    
    
    165
    
    
    
    550Other income
    
    
    642
    
    
    
    778
    
    
    
    1,337
    
    
    
    1,570Total non-interest income
    
    
    7,541
    
    
    
    8,112
    
    
    
    14,484
    
    
    
    15,418Non-interest expenseEmployee compensation
    
    
    8,064
    
    
    
    8,069
    
    
    
    15,756
    
    
    
    16,659Employee benefits
    
    
    1,229
    
    
    
    1,187
    
    
    
    2,524
    
    
    
    2,446Occupancy expense
    
    
    1,712
    
    
    
    1,649
    
    
    
    3,499
    
    
    
    3,364Equipment expense
    
    
    895
    
    
    
    745
    
    
    
    1,637
    
    
    
    1,847Computer hardware/software expense
    
    
    651
    
    
    
    719
    
    
    
    1,288
    
    
    
    1,351Professional services
    
    
    446
    
    
    
    504
    
    
    
    975
    
    
    
    958Advertising
    
    
    679
    
    
    
    814
    
    
    
    743
    
    
    
    1,688Loss on sale of OREO and repossessed assets
    
    
    3,346
    
    
    
    1,066
    
    
    
    3,427
    
    
    
    1,080FDIC Insurance
    
    
    2,550
    
    
    
    366
    
    
    
    3,250
    
    
    
    763Core deposit and other intangibles amortization
    
    
    652
    
    
    
    655
    
    
    
    1,456
    
    
    
    1,309Goodwill impairment
    
    
    143,389
    
    
    
    
    
    
    
    143,389
    
    
    
    Other expenses
    
    
    5,530
    
    
    
    4,366
    
    
    
    9,030
    
    
    
    8,236Total non-interest expenses
    
    
    169,143
    
    
    
    20,140
    
    
    
    186,974
    
    
    
    39,701Income (loss) before income taxes
    
    
    (165,806
    )
    
    
    1,997
    
    
    
    (158,250
    )
    
    
    13,326Provision for income taxes (benefit)
    
    
    (15,656
    )
    
    
    535
    
    
    
    (12,880
    )
    
    
    4,686Net income (loss)
    
    $
    (150,150
    )
    
    $
    1,462
    
    
    $
    (145,370
    )
    
    $
    8,640Preferred stock dividends and accretion of discount
    
    
    1,250
    
    
    
    
    
    
    
    2,482
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (151,400
    )
    
    $
    1,462
    
    
    $
    (147,852
    )
    
    $
    8,640Per share of common stock:Basic earnings (loss)
    
    $
    (11.58
    )
    
    $
    0.11
    
    
    $
    (11.32
    )
    
    $
    0.67Diluted earnings (loss)
    
    
    (11.58
    )
    
    
    0.11
    
    
    
    (11.32
    )
    
    
    0.67Dividends
    
    
    0.00
    
    
    
    0.13
    
    
    
    0.13
    
    
    
    0.26Weighted average shares outstanding:Basic
    
    
    13,070,216
    
    
    
    12,931,669
    
    
    
    13,066,569
    
    
    
    12,931,419Diluted1
    
    
    13,070,216
    
    
    
    12,958,439
    
    
    
    13,066,569
    
    
    
    12,939,638
 1
    
    Diluted weighted average shares outstanding for the three and six months ended June 30,
2009 excludes 105,734 and 92,420 shares, respectively, because they are anti-dilutive.   3




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##### Table of Contents



GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 For the Six Months Ended June 30, 2009
 (Amounts in thousands, except share and per share data)
 Warrants
    
    
    
    
    
    
    
    
    
    
    AccumulatedFor
    
    
    Additional
    
    
    Retained
    
    
    Other
    
    
    TotalPreferred
    
    
    Common Stock
    
    
    Common
    
    
    Paid-in
    
    
    Earnings
    
    
    Comprehensive
    
    
    ShareholdersStock
    
    
    Shares
    
    
    Amount
    
    
    Stock
    
    
    Capital
    
    
    (Deficit)
    
    
    Income(Loss)
    
    
    EquityBalance, December 31, 2008
    
    $
    65,346
    
    
    
    13,112,687
    
    
    $
    26,225
    
    
    $
    6,934
    
    
    $
    187,742
    
    
    $
    95,647
    
    
    $
    (663
    )
    
    $
    381,231Preferred stock transactions:Accretion of preferred stock discount
    
    
    695
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (695
    )
    
    
    
    
    
    
    Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,787
    )
    
    
    
    
    
    
    (1,787
    )Common stock transactions:Issuance of restricted common shares
    
    
    
    
    
    
    63,130
    
    
    
    126
    
    
    
    
    
    
    
    (126
    )
    
    
    
    
    
    
    
    
    
    
    Compensation expense:Stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    196Restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154
    
    
    
    
    
    
    
    
    
    
    
    154Dividends paid ($.13 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,713
    )
    
    
    
    
    
    
    (1,713
    )Comprehensive (loss):Net (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (145,370
    )
    
    
    
    
    
    
    (145,370
    )Change in unrealized gains, net of
reclassification and taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    481
    
    
    
    481Total comprehensive (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144,889
    )Balance, June 30, 2009
    
    $
    66,041
    
    
    
    13,175,817
    
    
    $
    26,351
    
    
    $
    6,934
    
    
    $
    187,966
    
    
    $
    (53,918
    )
    
    $
    (182
    )
    
    $
    233,192
   4




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##### Table of Contents



GREEN BANKSHARES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months Ended June 30, 2009 and 2008
 (Amounts in thousands, except share and per share data)
 June 30,
    
    
    June 30,2009
    
    
    2008(Unaudited)Cash flows from operating activitiesNet income (loss)
    
    $
    (145,370
    )
    
    $
    8,640Adjustments to reconcile net income (loss) to net cash provided by
operating activitiesProvision for loan losses
    
    
    25,369
    
    
    
    11,907Impairment of goodwill
    
    
    143,389
    
    
    
    Depreciation and amortization
    
    
    3,642
    
    
    
    3,509Security amortization and accretion, net
    
    
    47
    
    
    
    (548
    )Writedown of investment for impairment
    
    
    524
    
    
    
    FHLB stock dividends
    
    
    
    
    
    
    (303
    )Net gain on sale of mortgage loans
    
    
    (99
    )
    
    
    (388
    )Originations of mortgage loans held for sale
    
    
    (21,582
    )
    
    
    (33,715
    )Proceeds from sales of mortgage loans
    
    
    18,489
    
    
    
    33,894Increase in cash surrender value of life insurance
    
    
    (574
    )
    
    
    (536
    )Net losses from sales of fixed assets
    
    
    35
    
    
    
    386Stock-based compensation expense
    
    
    350
    
    
    
    385Net loss (gain) on other real estate and repossessed assets
    
    
    3,427
    
    
    
    (105
    )Deferred tax expense (benefit)
    
    
    305
    
    
    
    (1,095
    )Net changes:Other assets
    
    
    (5,453
    )
    
    
    6,482Accrued interest payable and other liabilities
    
    
    (228
    )
    
    
    (15,748
    )Net cash provided by operating activities
    
    
    22,271
    
    
    
    12,765Cash flows from investing activitiesPurchase of securities available for sale
    
    
    (45,873
    )
    
    
    (80,644
    )Proceeds from maturities of securities available for sale
    
    
    82,098
    
    
    
    37,276Proceeds from maturities of securities held to maturity
    
    
    10
    
    
    
    335Purchase of FHLB stock
    
    
    
    
    
    
    (417
    )Net change in loans
    
    
    19,980
    
    
    
    (28,255
    )Proceeds from sale of other real estate
    
    
    3,110
    
    
    
    11,498Improvements to other real estate
    
    
    
    
    
    
    (443
    )Proceeds from sale of fixed assets
    
    
    555
    
    
    
    50Premises and equipment expenditures
    
    
    (2,865
    )
    
    
    (2,949
    )Net cash provided (used) by investing activities
    
    
    57,015
    
    
    
    (63,549
    )Cash flows from financing activitiesNet change in core deposits
    
    
    90,830
    
    
    
    161,219Net change in brokered deposits
    
    
    (248,255
    )
    
    
    112,938Net change in repurchase agreements
    
    
    (9,312
    )
    
    
    (102,884
    )Proceeds from FHLB advances and notes payable
    
    
    
    
    
    
    20,916Repayments of FHLB advances and notes payable
    
    
    (195
    )
    
    
    (109,597
    )Preferred stock dividends paid
    
    
    (1,426
    )
    
    
    Common stock dividends paid
    
    
    (1,713
    )
    
    
    (3,380
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    14Net cash provided (used) by financing activities
    
    
    (170,071
    )
    
    
    79,226Net change in cash and cash equivalents
    
    
    (90,785
    )
    
    
    28,442Cash and cash equivalents, beginning of period
    
    
    198,358
    
    
    
    65,717Cash and cash equivalents, end of period
    
    $
    107,573
    
    
    $
    94,159Supplemental disclosures  cash and noncashInterest paid
    
    $
    33,944
    
    
    $
    42,901Income taxes paid
    
    
    1,675
    
    
    
    5,250Loans converted to other real estate
    
    
    34,193
    
    
    
    26,901Unrealized gain (loss) on available for sale securities, net of tax
    
    
    481
    
    
    
    (1,709
    )
   5




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##### Table of Contents



GREEN BANKSHARES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 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 SaleJune 30, 2009U.S. government agencies
    
    $
    36,860
    
    
    $
    242
    
    
    $
    (279
    )
    
    $
    36,823Obligations of states and political
Subdivisions
    
    
    32,167
    
    
    
    301
    
    
    
    (789
    )
    
    
    31,679Mortgage-backed
    
    
    96,477
    
    
    
    2,191
    
    
    
    (1,143
    )
    
    
    97,525Trust preferred securities
    
    
    2,648
    
    
    
    
    
    
    
    (822
    )
    
    
    1,826$
    168,152
    
    
    $
    2,734
    
    
    $
    (3,033
    )
    
    $
    167,853December 31, 2008U.S. government agencies
    
    $
    98,143
    
    
    $
    685
    
    
    $
    (22
    )
    
    $
    98,806Obligations of states and political
Subdivisions
    
    
    32,641
    
    
    
    139
    
    
    
    (976
    )
    
    
    31,804Mortgage-backed
    
    
    70,915
    
    
    
    945
    
    
    
    (1,401
    )
    
    
    70,459Trust preferred securities
    
    
    2,954
    
    
    
    
    
    
    
    (461
    )
    
    
    2,493$
    204,653
    
    
    $
    1,769
    
    
    $
    (2,860
    )
    
    $
    203,562Held to MaturityJune 30, 2009Obligations of states and political
subdivisions
    
    $
    395
    
    
    $
    8
    
    
    $
    
    
    
    $
    403Other securities
    
    
    252
    
    
    
    
    
    
    
    (26
    )
    
    
    226$
    647
    
    
    $
    8
    
    
    $
    (26
    )
    
    $
    629December 31, 2008Obligations of states and political
subdivisions
    
    $
    404
    
    
    $
    7
    
    
    $
    
    
    
    $
    411Other securities
    
    
    253
    
    
    
    
    
    
    
    (63
    )
    
    
    190$
    657
    
    
    $
    7
    
    
    $
    (63
    )
    
    $
    601
   6




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
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
    
    $
    
    
    
    $
    
    
    
    $
    Due after one year through five years
    
    
    2,882
    
    
    
    647
    
    
    
    629Due after five years through ten years
    
    
    32,768
    
    
    
    
    
    
    
    Due after ten years
    
    
    34,678
    
    
    
    
    
    
    
    Collateralized mortgage obligations
    
    
    81,577
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    15,948
    
    
    
    
    
    
    
    Total maturities
    
    $
    167,853
    
    
    $
    647
    
    
    $
    629
    Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    LossJune 30, 2009U. S. government agencies
    
    $
    11,709
    
    
    $
    (279
    )
    
    $
    
    
    
    $
    
    
    
    $
    11,709
    
    
    $
    (279
    )Obligations of states and
political subdivisions
    
    
    10,852
    
    
    
    (312
    )
    
    
    3,356
    
    
    
    (477
    )
    
    
    14,208
    
    
    
    (789
    )Other securities
    
    
    1,145
    
    
    
    (20
    )
    
    
    907
    
    
    
    (828
    )
    
    
    2,052
    
    
    
    (848
    )Collateralized mortgage
obligations
    
    
    3,600
    
    
    
    (24
    )
    
    
    3,076
    
    
    
    (1,060
    )
    
    
    6,676
    
    
    
    (1,084
    )Mortgage-backed securities
    
    
    9,245
    
    
    
    (54
    )
    
    
    631
    
    
    
    (5
    )
    
    
    9,876
    
    
    
    (59
    )Total temporarily impaired
    
    $
    36,551
    
    
    $
    (689
    )
    
    $
    7,970
    
    
    $
    (2,370
    )
    
    $
    44,521
    
    
    $
    (3,059
    )December 31, 2008U. S. government agencies
    
    $
    977
    
    
    $
    (22
    )
    
    $
    
    
    
    $
    
    
    
    $
    977
    
    
    $
    (22
    )Obligations of states and
political subdivisions
    
    
    18,445
    
    
    
    (838
    )
    
    
    643
    
    
    
    (139
    )
    
    
    19,088
    
    
    
    (977
    )Other securities
    
    
    1,210
    
    
    
    (14
    )
    
    
    1,474
    
    
    
    (509
    )
    
    
    2,684
    
    
    
    (523
    )Collateralized mortgage
obligations
    
    
    8,721
    
    
    
    (1,310
    )
    
    
    
    
    
    
    
    
    
    
    8,721
    
    
    
    (1,310
    )Mortgage-backed securities
    
    
    640
    
    
    
    (24
    )
    
    
    1,446
    
    
    
    (67
    )
    
    
    2,086
    
    
    
    (91
    )Total temporarily impaired
    
    $
    29,993
    
    
    $
    (2,208
    )
    
    $
    3,563
    
    
    $
    (715
    )
    
    $
    33,556
    
    
    $
    (2,923
    )
   7




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 2  SECURITIES
  NOTE 3  LOANS
  June 30,
    
    
    December 31,2009
    
    
    2008Commercial real estate
    
    $
    1,409,007
    
    
    $
    1,430,425Residential real estate
    
    
    400,207
    
    
    
    397,922Commercial
    
    
    300,325
    
    
    
    315,099Consumer
    
    
    86,491
    
    
    
    89,733Other
    
    
    2,933
    
    
    
    4,656Unearned income
    
    
    (15,209
    )
    
    
    (14,245
    )Loans, net of unearned income
    
    $
    2,183,754
    
    
    $
    2,223,390Allowance for loan losses
    
    $
    (50,157
    )
    
    $
    (48,811
    )
  June 30,
    
    
    December 31,2009
    
    
    2008Balance at beginning of year
    
    $
    48,811
    
    
    $
    34,111Add (deduct):Provision for loan losses
    
    
    25,369
    
    
    
    52,810Loans charged off
    
    
    (28,367
    )
    
    
    (41,269
    )Recoveries of loans charged off
    
    
    4,344
    
    
    
    3,159Ending balance
    
    $
    50,157
    
    
    $
    48,811
   8




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 3  LOANS
 June 30,
    
    
    December 31,2009
    
    
    2008Impaired loans were as follows:Loans with no allowance allocated
    
    $
    94,746
    
    
    $
    29,602Loans with allowance allocated
    
    
    27,256
    
    
    
    17,613Amount of allowance allocated
    
    
    5,519
    
    
    
    2,651Nonperforming loans were as follows:Loans past due 90 days still on accrual
    
    $
    820
    
    
    $
    509Nonaccrual loans
    
    
    93,889
    
    
    
    30,926Total
    
    $
    94,709
    
    
    $
    31,435
   9




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 4  EARNINGS PER SHARE OF COMMON STOCK
   Three Months Ended June 30,2009
    
    
    2008Basic Earnings (Loss) Per ShareNet income (loss)
    
    $
    (150,150
    )
    
    $
    1,462Less: preferred stock dividends and accretion of discount on warrants
    
    
    1,250
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (151,400
    )
    
    $
    1,462Weighted average common shares outstanding
    
    
    13,070,216
    
    
    
    12,931,669Basic earnings (loss) per share
    
    $
    (11.58
    )
    
    $
    0.11Diluted Earnings (Loss) Per ShareNet income (loss)
    
    $
    (150,150
    )
    
    $
    1,462Less: preferred stock dividends and accretion of discount on warrants
    
    
    1,250
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (151,400
    )
    
    $
    1,462Weighted average common shares outstanding
    
    
    13,070,216
    
    
    
    12,931,669Add: Dilutive effects of assumed conversions of restricted stock and
exercises of stock options and warrants1
    
    
    
    
    
    
    26,770Weighted average common and dilutive potential common shares
outstanding
    
    
    13,070,216
    
    
    
    12,958,439Diluted earnings (loss) per share1
    
    $
    (11.58
    )
    
    $
    0.11
 1
    
    Diluted earnings (loss) per share for the three months ended June 30, 2009 is calculated by using
the weighted average common shares outstanding, instead of the diluted weighted average shares outstanding
because they are anti-dilutive.   10




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 4  EARNINGS PER SHARE OF COMMON STOCK
 Six Months Ended June 30,2009
    
    
    2008Basic Earnings (Loss) Per ShareNet income (loss)
    
    $
    (145,370
    )
    
    $
    8,640Less: preferred stock dividends and accretion of
discount on warrants
    
    
    2,482
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (147,852
    )
    
    $
    8,640Weighted average common shares outstanding
    
    
    13,066,569
    
    
    
    12,931,419Basic earnings (loss) per share
    
    $
    (11.32
    )
    
    $
    0.67Diluted Earnings (Loss) Per ShareNet income (loss)
    
    $
    (145,370
    )
    
    $
    8,640Less: preferred stock dividends and accretion of
discount on warrants
    
    
    2,482
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (147,852
    )
    
    $
    8,640Weighted average common shares outstanding
    
    
    13,066,569
    
    
    
    12,931,419Add: Dilutive effects of assumed conversions of
restricted stock and exercises of stock options and
warrants1
    
    
    
    
    
    
    8,219Weighted average common and dilutive potential common
shares outstanding
    
    
    13,066,569
    
    
    
    12,939,638Diluted earnings (loss) per share1
    
    $
    (11.32
    )
    
    $
    0.67
 1
    
    Diluted earnings (loss) per share for the six months ended June 30, 2009 is calculated
by using the weighted average common shares outstanding, instead of the diluted weighted average
shares outstanding because they are anti-dilutive.   11




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 5  SEGMENT INFORMATION
   Three months ended June 30, 2009
    
    Bank
    
    
    Other Segments
    
    
    Holding Company
    
    
    Eliminations
    
    
    TotalsNet interest income (expense)
    
    $
    18,683
    
    
    $
    2,185
    
    
    $
    (688
    )
    
    $
    
    
    
    $
    20,180Provision for loan losses
    
    
    23,645
    
    
    
    739
    
    
    
    
    
    
    
    
    
    
    
    24,384Noninterest income
    
    
    7,204
    
    
    
    540
    
    
    
    24
    
    
    
    (227
    )
    
    
    7,541Noninterest expense
    
    
    167,643
    
    
    
    1,232
    
    
    
    495
    
    
    
    (227
    )
    
    
    169,143Income tax expense (benefit)
    
    
    (15,526
    )
    
    
    298
    
    
    
    (428
    )
    
    
    
    
    
    
    (15,656
    )Segment profit (loss)
    
    $
    (149,875
    )
    
    $
    456
    
    
    $
    (731
    )
    
    $
    
    
    
    $
    (150,150
    )Segment assets at June 30, 2009
    
    $
    2,577,886
    
    
    $
    42,282
    
    
    $
    9,666
    
    
    $
    
    
    
    $
    2,629,834
 Three months ended June 30, 2008
    
    Bank
    
    
    Other Segments
    
    
    Holding Company
    
    
    Eliminations
    
    
    TotalsNet interest income (expense)
    
    $
    24,078
    
    
    $
    1,974
    
    
    $
    (1,008
    )
    
    $
    
    
    
    $
    25,044Provision for loan losses
    
    
    10,502
    
    
    
    517
    
    
    
    
    
    
    
    
    
    
    
    11,019Noninterest income
    
    
    7,730
    
    
    
    566
    
    
    
    30
    
    
    
    (214
    )
    
    
    8,112Noninterest expense
    
    
    18,553
    
    
    
    1,256
    
    
    
    545
    
    
    
    (214
    )
    
    
    20,140Income tax expense (benefit)
    
    
    815
    
    
    
    301
    
    
    
    (581
    )
    
    
    
    
    
    
    535Segment profit (loss)
    
    $
    1,938
    
    
    $
    466
    
    
    $
    (942
    )
    
    $
    
    
    
    $
    1,462Segment assets at June 30, 2008
    
    $
    2,969,897
    
    
    $
    39,778
    
    
    $
    8,861
    
    
    $
    
    
    
    $
    3,018,536
 Six months ended June 30, 2009
    
    Bank
    
    
    Other Segments
    
    
    Holding Company
    
    
    Eliminations
    
    
    TotalsNet interest income (expense)
    
    $
    36,893
    
    
    $
    4,251
    
    
    $
    (1,535
    )
    
    $
    
    
    
    $
    39,609Provision for loan losses
    
    
    23,986
    
    
    
    1,383
    
    
    
    
    
    
    
    
    
    
    
    25,369Noninterest income
    
    
    13,801
    
    
    
    989
    
    
    
    149
    
    
    
    (455
    )
    
    
    14,484Noninterest expense
    
    
    183,885
    
    
    
    2,471
    
    
    
    1,073
    
    
    
    (455
    )
    
    
    186,974Income tax expense (benefit)
    
    
    (12,510
    )
    
    
    545
    
    
    
    (915
    )
    
    
    
    
    
    
    (12,880
    )Segment profit (loss)
    
    $
    (144,667
    )
    
    $
    841
    
    
    $
    (1,544
    )
    
    $
    
    
    
    $
    (145,370
    )
 Six months ended June 30, 2008
    
    Bank
    
    
    Other Segments
    
    
    Holding Company
    
    
    Eliminations
    
    
    TotalsNet interest income (expense)
    
    $
    48,148
    
    
    $
    3,808
    
    
    $
    (2,440
    )
    
    $
    
    
    
    $
    49,516Provision for loan losses
    
    
    10,916
    
    
    
    991
    
    
    
    
    
    
    
    
    
    
    
    11,907Noninterest income
    
    
    14,604
    
    
    
    1,064
    
    
    
    177
    
    
    
    (427
    )
    
    
    15,418Noninterest expense
    
    
    36,559
    
    
    
    2,549
    
    
    
    1,020
    
    
    
    (427
    )
    
    
    39,701Income tax expense (benefit)
    
    
    5,446
    
    
    
    522
    
    
    
    (1,282
    )
    
    
    
    
    
    
    4,686Segment profit (loss)
    
    $
    9,831
    
    
    $
    810
    
    
    $
    (2,001
    )
    
    $
    
    
    
    $
    8,640
   12




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 5  SEGMENT INFORMATION
 Asset Quality Ratios
 As of and for the period ended June 30, 2009
    
    Bank
    
    
    Other
    
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    4.33
    %
    
    
    1.89
    %
    
    
    4.34
    %Nonperforming assets as a percentage of total assets
    
    
    4.88
    %
    
    
    2.00
    %
    
    
    4.91
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    2.15
    %
    
    
    8.11
    %
    
    
    2.30
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    49.70
    %
    
    
    428.99
    %
    
    
    52.96
    %YTD net charge-offs to average total loans, net of unearned income
    
    
    1.04
    %
    
    
    2.71
    %
    
    
    1.08
    %
 As of and for the period ended June 30, 2008
    
    Bank
    
    
    Other
    
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    1.71
    %
    
    
    1.51
    %
    
    
    1.73
    %Nonperforming assets as a percentage of total assets
    
    
    2.00
    %
    
    
    2.13
    %
    
    
    2.03
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    1.37
    %
    
    
    8.02
    %
    
    
    1.51
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    80.34
    %
    
    
    530.82
    %
    
    
    87.11
    %YTD net charge-offs to average total loans, net of unearned income
    
    
    0.42
    %
    
    
    2.04
    %
    
    
    0.45
    %
 As of and for the year ended December 31, 2008
    
    Bank
    
    
    Other
    
    
    TotalNonperforming loans as percentage of total loans, net of unearned income
    
    
    1.38
    %
    
    
    2.48
    %
    
    
    1.41
    %Nonperforming assets as a percentage of total assets
    
    
    2.58
    %
    
    
    2.57
    %
    
    
    2.61
    %Allowance for loan losses as a percentage of total loans, net of
unearned income
    
    
    2.06
    %
    
    
    8.27
    %
    
    
    2.20
    %Allowance for loan losses as a percentage of nonperforming loans
    
    
    149.59
    %
    
    
    333.81
    %
    
    
    155.28
    %Net charge-offs to average total loans, net of unearned income
    
    
    1.53
    %
    
    
    6.42
    %
    
    
    1.63
    %
 Net charge-offs
    
    Bank
    
    
    Other
    
    
    TotalFor the six month period ended June 30, 2009
    
    $
    22,893
    
    
    $
    1,130
    
    
    $
    24,023For the six month period ended June 30, 2008
    
    $
    9,865
    
    
    $
    802
    
    
    $
    10,667For the year ended December 31, 2008
    
    $
    35,564
    
    
    $
    2,546
    
    
    $
    38,110
   13




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
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
    14




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES (continued)
 Impaired Loans
 
 Other Real Estate
  Loan Servicing Rights
  Assets and Liabilities Recorded at Fair Value on a Recurring Basis
  Total CarryingAmount inStatement of
    
    
    Assets/LiabilitiesFair Value Measurement Using
    
    
    Financial
    
    
    Measured at FairDescription
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Position
    
    
    ValueJune 30, 2009Securities available for sale
    
    $
    
    
    
    $
    167,853
    
    
    $
    
    
    
    $
    167,853
    
    
    $
    167,853December 31, 2008Securities available for sale
    
    $
    
    
    
    $
    203,562
    
    
    $
    
    
    
    $
    203,562
    
    
    $
    203,562
   15




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES
 Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
  Total CarryingAmount inStatement of
    
    
    Assets/LiabilitiesFair Value Measurement Using
    
    
    Financial
    
    
    Measured at FairDescription
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Position
    
    
    ValueJune 30, 2009Other real estate
    
    $
    
    
    
    $
    
    
    
    $
    12,511
    
    
    $
    12,511
    
    
    $
    12,511Impaired loans
    
    
    
    
    
    
    
    
    
    
    21,737
    
    
    
    21,737
    
    
    
    21,737Total assets at fair value
    
    $
    
    
    
    $
    
    
    
    $
    34,248
    
    
    $
    34,248
    
    
    $
    34,248December 31, 2008Impaired loans
    
    
    
    
    
    
    
    
    
    
    43,364
    
    
    
    43,364
    
    
    
    43,364Total assets at fair value
    
    $
    
    
    
    $
    
    
    
    $
    43,364
    
    
    $
    43,364
    
    
    $
    43,364
   16




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##### Table of Contents



GREEN BANKSHARES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2009
Unaudited
(Amounts in thousands, except share and per share data)
 NOTE 6  FAIR VALUE DISCLOSURES
  June 30,
    
    
    December 31,2009
    
    
    2008Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    107,573
    
    
    $
    107,573
    
    
    $
    198,358
    
    
    $
    198,358Securities available for sale
    
    
    167,853
    
    
    
    167,853
    
    
    
    203,562
    
    
    
    203,562Securities held to maturity
    
    
    647
    
    
    
    629
    
    
    
    657
    
    
    
    601Loans held for sale
    
    
    3,634
    
    
    
    3,649
    
    
    
    442
    
    
    
    445Loans, net
    
    
    2,133,597
    
    
    
    2,088,545
    
    
    
    2,174,579
    
    
    
    2,135,732FHLB, Bankers Bank and other stock
    
    
    12,734
    
    
    
    12,734
    
    
    
    13,030
    
    
    
    13,030Cash surrender value of life insurance
    
    
    30,113
    
    
    
    30,113
    
    
    
    29,539
    
    
    
    29,539Accrued interest receivable
    
    
    9,075
    
    
    
    9,075
    
    
    
    10,808
    
    
    
    10,808Financial liabilities:Deposit accounts
    
    $
    2,026,722
    
    
    $
    2,035,351
    
    
    $
    2,184,147
    
    
    $
    2,195,459Federal funds purchased and repurchase
agreements
    
    
    25,990
    
    
    
    25,990
    
    
    
    35,302
    
    
    
    35,302FHLB Advances and notes payable
    
    
    229,154
    
    
    
    236,048
    
    
    
    229,349
    
    
    
    232,731Subordinated debentures
    
    
    88,662
    
    
    
    70,976
    
    
    
    88,662
    
    
    
    74,570Accrued interest payable
    
    
    3,511
    
    
    
    3,511
    
    
    
    6,828
    
    
    
    6,828
  NOTE 7  SUBSEQUENT EVENTS
    17




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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 2008 10-K in Part I, Item 1A thereof, which is
incorporated herein by this reference and (1) deterioration in the financial condition of borrowers
resulting in significant increases in loan losses and provisions for those losses; (2) continuation
of the historically low short-term interest rate environment; (3) changes in loan underwriting,
credit review or loss reserve policies associated with economic conditions, examination
conclusions, or regulatory developments; (4) increased competition with other financial
institutions in the markets that the Bank serves; (5) greater than anticipated deterioration or
lack of sustained growth in the national or local economies; (6) rapid fluctuations or
unanticipated changes in interest rates; (7) the impact of governmental restrictions on entities
participating in the Capital Purchase Program of the United States Department of the Treasury; (8)
changes in state and federal legislation, regulations or policies applicable to banks or other
financial service providers, including regulatory or legislative developments arising out of
current unsettled conditions in the economy and (9) 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 21 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 2008 10-K. 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.
   18




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##### Table of Contents



Growth and Business Strategy
       19




---



##### Table of Contents



Overview
  GREEN BANKSHARES, INC.
Reconciliation of Non-GAAP Measures  (Dollars in thousands)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Total non-interest expense
    
    $
    169,143
    
    
    $
    20,140
    
    
    $
    186,974
    
    
    $
    39,701Goodwill impairment charge
    
    
    (143,389
    )
    
    
    
    
    
    
    (143,389
    )
    
    
    Operating expenses
    
    $
    25,754
    
    
    $
    20,140
    
    
    $
    43,585
    
    
    $
    39,701Net income (loss) available
to common shareholders
    
    $
    (151,400
    )
    
    $
    1,462
    
    
    $
    (147,852
    )
    
    $
    8,640Goodwill impairment charge,
net of tax
    
    
    137,414
    
    
    
    
    
    
    
    137,414
    
    
    
    Net operating income (loss)
    
    $
    (13,986
    )
    
    $
    1,462
    
    
    $
    (10,438
    )
    
    $
    8,640Per Diluted Share:Net income (loss) available
to
common shareholders
    
    $
    (11.58
    )
    
    $
    0.11
    
    
    $
    (11.32
    )
    
    $
    0.67Goodwill impairment charge,
net of tax
    
    
    10.51
    
    
    
    
    
    
    
    10.52
    
    
    
    Net operating income (loss)
    
    $
    (1.07
    )
    
    $
    0.11
    
    
    $
    (0.80
    )
    
    $
    0.67
      20




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##### Table of Contents



Critical Accounting Policies and Estimates
       21




---



##### Table of Contents



Changes in Results of Operations
 Net Income (Loss).
 Net Interest Income.
    22




---



##### Table of Contents



FOMC Meeting
    
    Beginning
    
    
    Increase/
    
    
    EndingDate
    
    Rate
    
    
    Decrease
    
    
    RateJanuary 22, 2008
    
    
    4.25
    %
    
    
    (0.75
    %)
    
    
    3.50
    %January 30, 2008
    
    
    3.50
    %
    
    
    (0.50
    %)
    
    
    3.00
    %March 18, 2008
    
    
    3.00
    %
    
    
    (0.75
    %)
    
    
    2.25
    %April 30, 2008
    
    
    2.25
    %
    
    
    (0.25
    %)
    
    
    2.00
    %June 25, 2008
    
    
    2.00
    %
    
    
    0.00
    %
    
    
    2.00
    %August 6, 2008
    
    
    2.00
    %
    
    
    0.00
    %
    
    
    2.00
    %September 16, 2008
    
    
    2.00
    %
    
    
    0.00
    %
    
    
    2.00
    %September 29, 2008
    
    
    2.00
    %
    
    
    0.00
    %
    
    
    2.00
    %October 7, 2008
    
    
    2.00
    %
    
    
    (0.50
    %)
    
    
    1.50
    %October 29, 2008
    
    
    1.50
    %
    
    
    (0.50
    %)
    
    
    1.00
    %December 16, 2008
    
    
    1.00
    %
    
    
    (0.75%)  (1.00
    %)
    
    
    0.00%  0.25
    %January 28, 2009
    
    
    0.00%  0.25
    %
    
    
    0.00
    %
    
    
    0.00%  0.25
    %March 17, 2009
    
    
    0.00%  0.25
    %
    
    
    0.00
    %
    
    
    0.00%  0.25
    %April 30, 2009
    
    
    0.00%  0.25
    %
    
    
    0.00
    %
    
    
    0.00%  0.25
    %June 25, 2009
    
    
    0.00%  0.25
    %
    
    
    0.00
    %
    
    
    0.00%  0.25
    %
   23




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##### Table of Contents



Three Months EndedJune 30,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-earning assets:Loans(1) (2)
    
    $
    2,127,104
    
    
    $
    32,538
    
    
    
    6.14
    %
    
    $
    2,340,923
    
    
    $
    39,421
    
    
    
    6.77
    %Investment securities (2)
    
    
    195,390
    
    
    
    2,461
    
    
    
    5.05
    %
    
    
    246,541
    
    
    
    3,439
    
    
    
    5.61
    %Other short-term investments
    
    
    59,883
    
    
    
    36
    
    
    
    0.24
    %
    
    
    4,358
    
    
    
    22
    
    
    
    2.03
    %Total interest-earning assets
    
    $
    2,382,377
    
    
    $
    35,035
    
    
    
    5.90
    %
    
    $
    2,591,822
    
    
    $
    42,882
    
    
    
    6.65
    %Non-interest earning assets
    
    
    420,404
    
    
    
    
    
    
    
    
    
    
    
    352,299Total assets
    
    $
    2,802,781
    
    
    
    
    
    
    
    
    
    
    $
    2,944,121Interest-bearing liabilities:Deposits:Interest checking, savings and money
market
    
    $
    731,422
    
    
    $
    2,542
    
    
    
    1.39
    %
    
    $
    675,467
    
    
    $
    2,255
    
    
    
    1.34
    %Time deposits
    
    
    1,155,533
    
    
    
    8,969
    
    
    
    3.11
    %
    
    
    1,233,075
    
    
    
    11,122
    
    
    
    3.63
    %Total interest-bearing deposits
    
    $
    1,886,955
    
    
    $
    11,511
    
    
    
    2.45
    %
    
    $
    1,908,542
    
    
    $
    13,377
    
    
    
    2.82
    %Securities sold under repurchase
agreements and short-term borrowings
    
    
    28,171
    
    
    
    7
    
    
    
    0.10
    %
    
    
    157,317
    
    
    
    700
    
    
    
    1.79
    %Notes payable
    
    
    229,165
    
    
    
    2,469
    
    
    
    4.32
    %
    
    
    246,776
    
    
    
    2,565
    
    
    
    4.18
    %Subordinated debentures
    
    
    88,662
    
    
    
    689
    
    
    
    3.12
    %
    
    
    88,662
    
    
    
    1,008
    
    
    
    4.57
    %Total interest-bearing liabilities
    
    $
    2,232,953
    
    
    $
    14,676
    
    
    
    2.64
    %
    
    $
    2,401,297
    
    
    $
    17,650
    
    
    
    2.96
    %Non-interest bearing liabilities:Demand deposits
    
    
    162,458
    
    
    
    
    
    
    
    
    
    
    
    186,136Other liabilities
    
    
    21,597
    
    
    
    
    
    
    
    
    
    
    
    23,311Total non-interest bearing liabilities
    
    
    184,055
    
    
    
    
    
    
    
    
    
    
    
    209,447Total liabilities
    
    
    2,417,008
    
    
    
    
    
    
    
    
    
    
    
    2,610,744Shareholders equity
    
    
    385,773
    
    
    
    
    
    
    
    
    
    
    
    333,377Total liabilities and shareholders
equity
    
    $
    2,802,781
    
    
    
    
    
    
    
    
    
    
    $
    2,944,121Net interest income
    
    
    
    
    
    $
    20,359
    
    
    
    
    
    
    
    
    
    
    $
    25,232Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.26
    %
    
    
    
    
    
    
    
    
    
    
    3.70
    %Net yield on interest-earning assets
    
    
    
    
    
    
    
    
    
    
    3.43
    %
    
    
    
    
    
    
    
    
    
    
    3.92
    %
 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.  24




---



##### Table of Contents



Six Months EndedJune 30,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-earning assets:Loans(1) (2)
    
    $
    2,151,190
    
    
    $
    65,193
    
    
    
    6.11
    %
    
    $
    2,332,642
    
    
    $
    82,187
    
    
    
    7.09
    %Investment securities (2)
    
    
    206,015
    
    
    
    5,323
    
    
    
    5.21
    %
    
    
    246,202
    
    
    
    6,975
    
    
    
    5.70
    %Other short-term investments
    
    
    65,141
    
    
    
    81
    
    
    
    0.25
    %
    
    
    2,408
    
    
    
    25
    
    
    
    2.09
    %Total interest-earning assets
    
    $
    2,422,346
    
    
    $
    70,597
    
    
    
    5.88
    %
    
    $
    2,581,252
    
    
    $
    89,187
    
    
    
    6.95
    %Non-interest earning assets
    
    
    402,244
    
    
    
    
    
    
    
    
    
    
    
    355,007Total assets
    
    $
    2,824,590
    
    
    
    
    
    
    
    
    
    
    $
    2,936,259Interest-bearing liabilities:Deposits:Interest checking, savings and money
market
    
    $
    677,863
    
    
    $
    4,394
    
    
    
    1.31
    %
    
    $
    686,444
    
    
    $
    5,580
    
    
    
    1.63
    %Time deposits
    
    
    1,225,516
    
    
    
    19,770
    
    
    
    3.25
    %
    
    
    1,185,132
    
    
    
    23,732
    
    
    
    4.03
    %Total interest-bearing deposits
    
    $
    1,903,379
    
    
    $
    24,164
    
    
    
    2.45
    %
    
    $
    1,871,576
    
    
    $
    29,312
    
    
    
    3.15
    %Securities sold under repurchase
agreements and short-term borrowings
    
    
    30,609
    
    
    
    16
    
    
    
    0.11
    %
    
    
    155,188
    
    
    
    1,792
    
    
    
    2.32
    %Notes payable
    
    
    229,223
    
    
    
    4,912
    
    
    
    4.32
    %
    
    
    278,822
    
    
    
    5,743
    
    
    
    4.14
    %Subordinated debentures
    
    
    88,662
    
    
    
    1,535
    
    
    
    3.49
    %
    
    
    88,662
    
    
    
    2,440
    
    
    
    5.53
    %Total interest-bearing liabilities
    
    $
    2,251,873
    
    
    $
    30,627
    
    
    
    2.74
    %
    
    $
    2,394,248
    
    
    $
    39,287
    
    
    
    3.30
    %Non-interest bearing liabilities:Demand deposits
    
    
    165,268
    
    
    
    
    
    
    
    
    
    
    
    186,295Other liabilities
    
    
    22,098
    
    
    
    
    
    
    
    
    
    
    
    24,639Total non-interest bearing liabilities
    
    
    187,366
    
    
    
    
    
    
    
    
    
    
    
    210,934Total liabilities
    
    
    2,439,239
    
    
    
    
    
    
    
    
    
    
    
    2,605,182Shareholders equity
    
    
    385,351
    
    
    
    
    
    
    
    
    
    
    
    331,077Total liabilities and shareholders
equity
    
    $
    2,824,590
    
    
    
    
    
    
    
    
    
    
    $
    2,936,259Net interest income
    
    
    
    
    
    $
    39,970
    
    
    
    
    
    
    
    
    
    
    $
    49,900Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.13
    %
    
    
    
    
    
    
    
    
    
    
    3.65
    %Net yield on interest-earning assets
    
    
    
    
    
    
    
    
    
    
    3.33
    %
    
    
    
    
    
    
    
    
    
    
    3.89
    %
  25




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##### Table of Contents



Provision for Loan Losses.
   Non-interest Income.
  Non-interest Expense.
  26




---



##### Table of Contents



Income Taxes.
 Changes in Financial Condition
     27




---



##### Table of Contents



Liquidity and Capital Resources
 Liquidity.
     28




---



##### Table of Contents



Capital Resources.
    Required
    
    
    RequiredMinimum
    
    
    to beRatio
    
    
    Well Capitalized
    
    
    Bank
    
    
    CompanyTier 1 risk-based
capital
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    13.45
    %
    
    
    13.72
    %Total risk-based capital
    
    
    8.00
    %
    
    
    10.00
    %
    
    
    14.72
    %
    
    
    14.98
    %Leverage Ratio
    
    
    4.00
    %
    
    
    5.00
    %
    
    
    10.85
    %
    
    
    11.07
    %
  29




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Year
    
    
    TotalCommitments to make loans  fixed
    
    $
    3,804
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,804Commitments to make loans 
variable
    
    
    14,390
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,390Unused lines of credit
    
    
    157,790
    
    
    
    24,655
    
    
    
    8,829
    
    
    
    82,283
    
    
    
    273,557Letters of credit
    
    
    24,529
    
    
    
    734
    
    
    
    7,353
    
    
    
    6,894
    
    
    
    39,510Total
    
    $
    200,513
    
    
    $
    25,389
    
    
    $
    16,182
    
    
    $
    89,177
    
    
    $
    331,261
 Disclosure of Contractual Obligations
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Years
    
    
    TotalCertificates of deposits
    
    $
    905,204
    
    
    $
    140,191
    
    
    $
    10,876
    
    
    $
    3,563
    
    
    $
    1,059,834FHLB advances and notes payable
    
    
    54,937
    
    
    
    37,863
    
    
    
    65,932
    
    
    
    70,422
    
    
    
    229,154Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,662
    
    
    
    88,662Operating lease obligations
    
    
    1,232
    
    
    
    2,010
    
    
    
    1,431
    
    
    
    1,270
    
    
    
    5,943Deferred compensation
    
    
    1,712
    
    
    
    
    
    
    
    
    
    
    
    2,210
    
    
    
    3,922Purchase obligations
    
    
    1,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,508Total
    
    $
    964,593
    
    
    $
    180,064
    
    
    $
    78,239
    
    
    $
    166,127
    
    
    $
    1,389,023
  Effect of New Accounting Standards
    30




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  ITEM 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
   31




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##### Table of Contents



PART II  OTHER INFORMATION
 Item 1.
    
    Legal Proceedings
  Item 1A.
    
    Risk Factors
  Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3.
    
    Defaults Upon Senior Securities
  Item 4.
    
    Submission of Matters to a Vote of Security Holders
 (a)
    
    The annual meeting of shareholders (the Annual Meeting) of the Company was
held on April 24, 2009. In addition to the election of directors, the proposals
described in section (c) below were considered by shareholders at the Annual Meeting.
 (b)
    
    Proxies for the Annual Meeting were solicited in accordance with Regulation 14
of the Exchange Act; there was no solicitation in opposition to managements nominees
and all of managements nominees were elected. Each director is elected to serve for a
3-year term and until his or her successor is elected and qualified. Accordingly, in
section (c) below, the Company has reported the voting results only with respect to
those directors who were voted on at the Annual Meeting.
 (c)
    
    The following sets forth the results of voting on each matter at the Annual
Meeting:
 Proposal 1  Election of directors
 Votes
    
    
    VotesFor
    
    
    WithheldMartha M. Bachman
    
    
    10,005,900
    
    
    
    376,822W.T. Daniels
    
    
    9,987,692
    
    
    
    395,029Charles H. Whitfield, Jr.
    
    
    9,924,572
    
    
    
    458,150
 Proposal 2  Shareholder proposal regarding majority election of
directors
 Votes
    
    Votes
    
    
    
    
    
    BrokerFor
    
    Against
    
    
    Abstentions
    
    
    Non-Votes3,490,805
    
    
    4,805,986
    
    
    
    241,965
    
    
    
    1,884,630
 Proposal 3  Shareholder proposal regarding annual election of
directors
 Votes
    
    Votes
    
    
    
    
    
    BrokerFor
    
    Against
    
    
    Abstentions
    
    
    Non-Votes3,577,166
    
    
    4,726,470
    
    
    
    235,122
    
    
    
    1,884,628
  32




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##### Table of Contents



Proposal 4  Ratification of the use of the performance measures in the
Companys 2004 Long-Term Incentive Plan
 Votes
    
    Votes
    
    
    
    
    
    
    BrokerFor
    
    Against
    
    
    Abstentions
    
    
    Non-Votes9,522,661
    
    
    596,787
    
    
    
    263,272
    
    
    
    40,665
 Proposal 5  Approval of the Companys executive compensation program
and procedures in accordance with recently enacted say on pay regulations
of the American Recovery and Reinvestment Act of 2009
 Votes
    
    Votes
    
    
    
    
    
    
    BrokerFor
    
    Against
    
    
    Abstentions
    
    
    Non-Votes9,537,961
    
    
    524,970
    
    
    
    319,787
    
    
    
    40,668
 Proposal 6  Ratification of the appointment of Dixon Hughes PLLC as
the Companys independent registered public accounting firm for 2009
 Votes
    
    Votes
    
    
    
    
    
    
    BrokerFor
    
    Against
    
    
    Abstentions
    
    
    Non-Votes10,048,843
    
    
    117,982
    
    
    
    214,899
    
    
    
    41,662
 Item 5.
    
    Other Information
  Item 6.
    
    Exhibits
   33




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##### Table of Contents



SIGNATURES
  Green Bankshares, Inc.
RegistrantDate: August 7, 2009
    By:
    /s/      James E. AdamsJames E. AdamsExecutive Vice President, Chief Financial
Officer and Secretary  34




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    
    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