Redstone turns Green 10 July 2006
Redstone turns Green in bank merger
Houston Business Journal
7, 2006 by Jim Gre"
Houston Business Journal
Redstone Bank, N.A. agreed to be acquired this week by Green
Bancorp, Inc. in a colorful union of privately held Houston
compames.
Redstone Bank was formed by The Redstone Cos., a locally based
investment firm. Various holdings include The Houstonian Hotel,
Club & Spa along with several golf courses, such as Redstone Golf
Club.
Green Bancorp is a thrift holding company founded earlier this year
by former Coastal Banc, ssb leader Manuel Mehos.
The addition of Redstone Bank will give startup Green Bancorp a
sudden Houston presence.
About a year from now, the Redstone Bank name will be scrapped in favor of "Green Bank".
Mehos says Green Bancorp will take over Redstone Bank's national bank charter. The deal awaits
approval of regulators and Redstone Bank shareholders.
About $20 million of Redstone Bank's existing $23 million in capital will be invested in newly
issued Green Bancorp shares, with the freshly minted bank holding company buying out the
remainder from smaller investors.
All the large Redstone Bank shareholders are going to stay invested, notes Mehos.
In addition to the injection from Redstone Bank shareholders, Green Bancorp plans on raising
another $30 million to bring the initial capital base to $50 million.
Redstone Bank has area local branches led by the flagship at The Houstonian near the Galleria
area. The independent bank with $168 million in assets primarily caters to commercial businesses,
real estate developers and high-net worth individuals.
Redstone Bank will bring Green Bancorp about $135 million in deposits.
Local financier and philanthropist Gay Roane, originally the largest shareholder in Redstone Bank,
still owns a major stake that Mehos says will be switched over to Green Bancorp.
The foundation for Roane's fortune was laid when shares of energy titan Koch Industries Inc. were
passed to her from one ofthe oil and gas giant's early stockholders. By 2000, Wichita, Kan.-based
Koch had mushroomed into the nation's second-largest privately held corporation.
Another key Green Bancorp shareholder will be David Shindeldecker, chairman of Redstone Bank
and one of the largest shareholders. He will join the new bank holding company's board of
directors.
The closely held financial institutions didn't disclose the deal price.
The bigger the better
As CEO of Houston-based Coastal Bane, Mehos engineered the sale of the publicly traded savings
bank network with assets of nearly $3 billion to Hibernia Corp. for about $230 million in cash.
Part of the 2004 transaction included a non-compete agreement Mehos signed with Hibernia.
(New Orleans-based Hibernia was acquired by Capital One Financial Corp. last year.) The
agreement kept Mehos largely on the Texas banking industry sidelines until expiring last month.
Bythe time Coastal was purchased by Hibernia two years ago, his 12 percent ownership stake in
Nasdaq-listed holding company Coastal Bancorp Inc. delivered Mehos an estimated pretax
windfall of more than$27 million.
Some will be used for raising the $30 million in capital to complement the $20 million injection
. from Redstone Bank.
Completion of the deal appears on track for the fourth quarter. At that time, Redstone Bank will
become a wholly owned subsidiary of Green Bancorp.
Probably later this summer, Green Bancorp will start construction on a Houston headquarters
building and home office location at the southwest corner of Greenbriar and the Southwest
Freeway.
The Redstone Bank name will be used by Green Bancorp until construction is complete. Roughly a
year from now, the new headquarters building will open under the Green Bank banner.
Bob New, former chief banking officer of Coastal Bane, was named last week as CEO of Green
Bank.
Mehos, in his own role as chairman of the holding company, plans to spend most of his time
scouting additional acquisitions.
Green Bancorp will have assets in the ballpark of $170 million when the Redstone Bank deal
closes, but Mehos has ambitious goals for growth.
"One day, if we get to $3 billion to $5 billion ... we've met our objective," he says.
Green Bancorp can't get too big for Mehos.
"The bigger the better," he says.
Green Bancorp plans eventual expansion into the state's major metropolitan areas, along with the
Rio Grande Valley.
"We're going to be very active in calling on small banks to do acquisitions," says Mehos.
He'll face competition from other suitors in a highly active banking arena.
Texas already features an "extremely robust" merger and acquisition market, according to Barry
McCarver, bank equity analyst at Stephens Inc.
He says the state banking industry already has seen combined acquisitions of $10.7 billion in
assets through June 2006.
At that pace, the Texas banking industry is on track for the biggest M&Ayear since 2000.
McCarver calls it "The Texas Bank Run of 2006."
igreer@bizjournals.com dC
