GCBS Greene County Bancshares (MM)

Greene County Bancshares, Inc. (NASDAQ:GCBS), the third largest bank holding company headquartered in the State of Tennessee, today announced record third quarter and nine-month 2006 earnings of $5,509,000 and $16,088,000, respectively, reflecting increases of 50% and 56% over comparable year-earlier periods. Diluted per share earnings for the third quarter of 2006 reached $0.56 for an increase of 19% over the third quarter of 2005, while diluted earnings per share for the 2006 year-to-date period totaled $1.63 and represented an improvement of 23% over year-to-date 2005. Commenting on the Company's announcement, Stan Puckett, Chairman and Chief Executive Officer, said, "We are pleased to note increasing momentum in our operations, driven by an expanding loan portfolio, stable net interest margins, improving asset quality measures, and continued growth in non-interest income. These broad trends have translated into strong earnings growth for the Company and solid returns for our shareholders." Return on Average Assets (ROAA) improved notably compared with the year-earlier period. The Company's ROAA was 1.32% in the third quarter of 2006 compared with 1.34% in the second quarter of 2006 and 1.07% in the year-earlier quarter. Return on Average Equity, reflecting the issuance of new stock in the fourth quarter of 2005, was 12.22% in the third quarter of 2006 compared with 12.43% in the second quarter of 2006 and 12.52% in the third quarter of 2005. Return on Average Tangible Equity (average shareholders' equity less goodwill and intangible assets) was 15.59% in the third quarter of 2006 versus 15.99% in the second quarter of 2006 and 15.60% in the year-earlier quarter. Puckett noted that quarterly loan growth was vigorous in the third quarter, rising approximately 16% on an annualized basis and underscoring the economic strength of the Company's key markets. At the same time, credit quality remained strong, as non-performing loans relative to total loans declined to 0.33% in the third quarter compared with 0.34% in the second quarter of 2006 and 0.58% in the same quarter last year. Net charge-offs in the third quarter totaled 0.20% of average total loans versus 0.17% in the second quarter of 2006 and 0.29% in the year-earlier period. Net interest margin increased three basis points to 4.83% in the third quarter of 2006 versus the second quarter of 2006 and was 29 basis points ahead of net interest margin in the year-earlier quarter. Improving margins, achieved against generally challenging competitive and interest rate environments, reflected the Company's ongoing efforts to optimize its funding mix. Despite this progress, margin compression remains a concern and management believes some pressure may yet develop in the final quarter the year. Greene County Bancshares also continues to focus on controlling expenses in step with the expansion of its business. The Company's efficiency ratio was 55.38% in the third quarter, demonstrating continued improvement from 55.61% in the second quarter of 2006 and 58.28% in the third quarter of 2005. Net interest income for the third quarter increased 27% to $18,530,000 from $14,548,000 in the year-earlier period, driven by a 23% increase in average loans outstanding for the periods. The quarter's provision for loan losses declined 3% to $1,661,000 from $1,704,000 in the third quarter of last year, reflecting ongoing improvements in asset quality. Net interest income increased 28% to $53,489,000 for the year-to-date period in 2006 compared with $41,947,000 in the same period last year. The Company's provision for loan losses declined 10% to $3,969,000 in the first nine months of 2006 from $4,386,000 in the year-earlier period. Non-interest income increased 37% in the third quarter to $5,191,000 from $3,796,000 in the same quarter last year, while non-interest income for the year-to-date period rose 43% to $14,974,000 from $10,435,000 in the comparable 2005 period. These advances reflected the ongoing positive impact of the Company's High Performance Checking Account product, a key strategic initiative. Third quarter 2006 "net" new accounts opened totaled 3,329 compared with 2,289 during the same quarter last year, an increase of over 45%. This momentum has helped drive non-interest income to 22% of total revenue in 2006, up from 20% in the first nine months of 2005. At September 30, 2006, the Company's total assets increased 7% to $1,727,268,000 from $1,619,989,000 at December 31, 2005, and were 23% ahead of the $1,405,580,000 in total assets reported as of September 30, 2005. Net loans increased 8% to $1,493,878,000 at September�30,�2006, from $1,378,642,000 at December 31, 2005, and were 23% higher than net loans of $1,215,072,000 at September�30, 2005. Deposits declined slightly to $1,242,810,000 at September 30, 2006, from $1,295,879,000 at December 31, 2005, but were 10% ahead of deposits of $1,134,864,000 as of September 30, 2005. Total shareholders' equity increased 8% to $181,659,000 at September�30,�2006, versus $168,021,000 at December 31, 2005, and was 13% higher than total shareholders' equity of $160,307,000 at September�30, 2005. Greeneville, Tennessee-based Greene County Bancshares, Inc., with total assets of approximately $1.727 billion, is the holding company for Greene County Bank. Greene County Bank, founded in 1890, now has 48 branches throughout East and Middle Tennessee, one branch in Bristol, Virginia, one branch in western North Carolina, and a trust services office in Lebanon, Tennessee. Greene County Bank does business in Washington County, Tennessee, as Washington County Bank; in Blount County and Knox County, Tennessee, as American Fidelity Bank; in Montgomery County, Tennessee, as Clarksville Community Bank; in Sumner County, Tennessee, as First Independent Bank; in Rutherford County, Tennessee, as Rutherford Bank and Trust; in Sullivan County, Tennessee, as Sullivan County Bank and First Bristol Bank; in Hamblen County, Tennessee, as Hamblen County Bank; in McMinn County, Tennessee, as Bank of Athens and Bank of Niota; in Hawkins County, Tennessee, as Hawkins County Bank and Bank of Bulls Gap; in Lawrence County, Tennessee, as Bank of Lawrence County; in Cocke County, Tennessee, as Cocke County Bank; in Loudon County, Tennessee, as Community Bank of Loudon County; in Monroe County, Tennessee, as Community Trust Bank; in the City of Bristol, Virginia, as First Bristol Bank; in Davidson County and Williamson County, Tennessee, as Middle Tennessee Bank & Trust; and in Wilson County, Tennessee, as President's Trust. In addition, Greene County Bank also conducts separate businesses through three wholly owned subsidiaries: Superior Financial Services, Inc., a consumer finance company; GCB Acceptance Corporation, a consumer finance company specializing in subprime automobile lending; and Fairway Title Co., a title insurance company. This news release may contain forward-looking statements regarding Greene County Bancshares, Inc., as defined in Section 21E of the Securities Exchange Act of 1934. All forward-looking statements involve risk and uncertainty and actual results could differ materially from the anticipated results or other expectations expressed in the forward-looking statements. A discussion of factors that could cause actual results to differ materially from those expressed in the forward-looking statements is included in the Greene County Bancshares, Inc. filings with the Securities and Exchange Commission. GREENE COUNTY BANCSHARES, INC. Unaudited Financial Highlights (In thousands, except per share amounts) � Three Months Ended Nine Months Ended Sept. 30, June 30, Sept 30, Sept. 30, Sept. 30, 2006� 2006� 2005� 2006� 2005� Interest income $ 30,367� $ 28,489� $ 22,115� $ 85,623� $ 61,553� Interest expense � 11,837� � 10,716� � 7,567� � 32,134� � 19,606� Net interest income 18,530� 17,773� 14,548� 53,489� 41,947� Provision for loan losses � 1,661� � 1,244� � 1,704� � 3,969� � 4,386� Net interest income after provision for loan losses 16,869� 16,529� 12,844� 49,520� 37,561� Non-interest income 5,191� 5,028� 3,796� 14,974� 10,435� Non-interest expense � 13,136� � 12,679� � 10,691� � 38,521� � 31,388� Income before income taxes 8,924� 8,878� 5,949� 25,973� 16,608� Income taxes � 3,415� � 3,395� � 2,273� � 9,885� � 6,283� Net income $ 5,509� $ 5,483� $ 3,676� $ 16,088� $ 10,325� Comprehensive income $ 5,672� $ 5,498� $ 3,639� $ 16,259� $ 10,193� � Earnings per share: Basic $ 0.56� $ 0.56� $ 0.48� $ 1.65� $ 1.35� Diluted $ 0.56� $ 0.55� $ 0.47� $ 1.63� $ 1.33� � Weighted average shares: Basic � 9,790� � 9,786� � 7,711� � 9,782� � 7,671� Diluted � 9,900� � 9,898� � 7,805� � 9,893� � 7,765� � Dividends declared per share $ 0.12� $ 0.12� $ 0.12� $ 0.36� $ 0.36� Sept. 30, Dec. 31, Sept. 30, 2006� 2005� 2005� Total assets $ 1,727,268� $ 1,619,989� $ 1,405,580� Cash and cash equivalents 41,474� 46,136� 35,464� Investment securities 52,796� 58,736� 63,565� Loans, net of unearned interest 1,493,878� 1,378,642� 1,215,072� Allowance for loan losses 21,616� 19,739� 17,640� Deposits 1,242,810� 1,295,879� 1,134,864� Shareholders' equity 181,659� 168,021� 160,307� Tangible shareholders' equity (1) 142,848� 128,399� 137,176� Book value per share 18.54� 17.20� 16.90� Tangible book value per share (1) 14.58� 13.15� 14.46� � � (1) Tangible shareholders' equity is shareholders' equity less goodwill and intangible assets. GREENE COUNTY BANCSHARES, INC. Condensed Consolidated Balance Sheets September 30, 2006, December 31, 2005 and September 30, 2005 (Dollars in thousands except share and per share data) � (Unaudited) (Unaudited) September 30, December 31, September 30, � 2006� � 2005 (1) � 2005� ASSETS � Cash and due from banks $ 41,474� $ 46,136� $ 35,464� � Federal funds sold & other 28,004� 28,387� 10,857� � Securities available-for-sale ("AFS") 43,142� 48,868� 53,778� Securities held-to-maturity (with a market value of $2,674, $3,335 and $3,394 on September 30, 2006, December 31, 2005 and September 30, 2005) 2,690� 3,379� 3,380� � FHLB, Bankers Bank and other stock, at cost 6,964� 6,489� 6,407� � Loans held for sale 2,195� 2,686� 4,260� � Loans, net of unearned interest 1,493,878� 1,378,642� 1,215,072� � Allowance for loan losses (21,616) (19,739) (17,640) � Bank premises and equipment, net of accumulated depreciation 54,125� 49,985� 36,311� � Goodwill and other intangible assets 38,811� 39,622� 23,131� � Other assets 37,601� 35,534� 34,560� � � � � � � Total Assets $ 1,727,268� $ 1,619,989� $ 1,405,580� � LIABILITIES AND SHAREHOLDERS' EQUITY � Deposits $ 1,242,810� $ 1,295,879� $ 1,134,864� Federal funds purchased 75,000� -� -� Repurchase agreements 22,601� 17,498� 11,393� FHLB advances and notes payable 173,058� 105,146� 70,240� Subordinated debentures 13,403� 13,403� 13,403� Accrued interest payable and other liabilities � 18,737� � 20,042� � 15,373� � Total Liabilities � 1,545,609� � 1,451,968� � 1,245,273� � SHAREHOLDERS' EQUITY � Common Stock: $2 par value, 15,000,000 shares authorized; 9,796,349, 9,766,336 and 9,485,949 shares outstanding 19,593� 19,533� 18,972� Paid in Capital 71,542� 70,700� 64,634� Retained Earnings 90,723� 78,158� 76,860� Accumulated Other Comprehensive Income (Loss) � (199) � (370) � (159) � Total Shareholders' Equity � 181,659� � 168,021� � 160,307� � Total Liabilities & Shareholders' Equity $ 1,727,268� $ 1,619,989� $ 1,405,580� � (1) Derived from Audited Consolidated Financial Statements. GREENE COUNTY BANCSHARES, INC. Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended September 30, 2006, June 30, 2006 and September 30, 2005 and Nine Months Ended September 30, 2006 and 2005 (Unaudited) (Dollars in thousands except share and per share data) � � Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, � 2006� � 2006� � 2005� � 2006� � 2005� � Interest Income: Interest and Fees on Loans $ 29,600� $ 27,781� $ 21,335� $ 83,481� $ 59,265� Interest on Investment Securities 752� 649� 626� 2,032� 1,691� Interest on Federal Funds Sold and Interest-earning Deposits � 15� � 59� � 154� � 110� � 597� Total Interest Income � 30,367� � 28,489� � 22,115� � 85,623� � 61,553� � Interest Expense: Interest on Deposits 8,828� 8,647� 6,285� 25,517� 16,048� Interest on Borrowings � 3,009� � 2,069� � 1,282� � 6,617� � 3,558� Total Interest Expense � 11,837� � 10,716� � 7,567� � 32,134� � 19,606� � Net Interest Income 18,530� 17,773� 14,548� 53,489� 41,947� � Provision for Loan Losses � 1,661� � 1,244� � 1,704� � 3,969� � 4,386� � Net Interest Income after Provision for Loan Losses � 16,869� � 16,529� � 12,844� � 49,520� � 37,561� � Noninterest Income: Service Charges, Commissions and Fees 4,125� 4,001� 3,159� 11,357� 8,137� Other Income � 1,066� � 1,027� � 637� � 3,617� � 2,298� Total Noninterest Income � 5,191� � 5,028� � 3,796� � 14,974� � 10,435� Noninterest Expense: Salaries and Benefits 6,768� 6,266� 5,366� 19,425� 15,710� Occupancy and Furniture and Equipment Expense 2,046� 2,050� 1,821� 6,155� 5,334� Other Expenses � 4,322� � 4,363� � 3,504� � 12,941� � 10,344� Total Noninterest Expense � 13,136� � 12,679� � 10,691� � 38,521� � 31,388� � Income Before Income Taxes 8,924� 8,878� 5,949� 25,973� 16,608� � Income Taxes � 3,415� � 3,395� � 2,273� � 9,885� � 6,283� � Net Income $ 5,509� $ 5,483� $ 3,676� $ 16,088� $ 10,325� � Comprehensive Income $ 5,672� $ 5,498� $ 3,639� $ 16,259� $ 10,193� � Per Share of Common Stock: Basic Earnings � $0.56� � $0.56� � $0.48� � $1.65� � $1.35� Diluted Earnings � $0.56� � $0.55� � $0.47� � $1.63� � $1.33� Dividends � $0.12� � $0.12� � $0.12� � $0.36� � $0.36� � Weighted Average Shares Outstanding: Basic � 9,790,058� � 9,785,936� � 7,710,871� � 9,782,255� � 7,670,502� Diluted � 9,900,396� � 9,897,987� � 7,805,458� � 9,893,417� � 7,765,343� GREENE COUNTY BANCSHARES, INC. Consolidated Financial Highlights (UNAUDITED) � (Dollars in thousands except share and per share data) � September 30, December 31, % � 2006� � 2005� Change Financial Condition Data: � Assets $ 1,727,268� $ 1,619,989� 6.62% Loans, net of unearned interest 1,493,878� 1,378,642� 8.36% Cash and investments 94,270� 104,872� -10.11% Federal funds sold 28,004� 28,387� -1.35% Deposits 1,242,810� 1,295,879� -4.10% Federal funds purchased 75,000� -� -� FHLB advances and notes payable 173,058� 105,146� 64.59% Subordinated debentures 13,403� 13,403� 0.00% Federal funds purchased and repurchase agreements 22,601� 17,498� 29.16% Shareholders' equity 181,659� 168,021� 8.12% Tangible shareholders' equity (1) 142,848� 128,399� 11.25% � Ratios: Book value per share $18.54� $17.20� 7.79% Tangible book value per share (1) $14.58� $13.15� 10.87% Average equity to average assets 10.78% 9.20% 17.17% Dividend payout ratio 21.90% 37.38% (2) -41.41% � (1) Tangible shareholders' equity is shareholders' equity less goodwill and intangible assets. (2) Includes special dividend of $.14 per share paid in December 2005. Three Months Ended Nine Months Ended September 30, September 30, � 2006� � 2005� % Change� � 2006� � 2005� % Change� Operating Data: � Total Interest Income $ 30,367� $ 22,115� 37.31% $ 85,623� $ 61,553� 39.10% Total Interest Expense � 11,837� � 7,567� 56.43% � 32,134� � 19,606� 63.90% Net Interest Income 18,530� 14,548� 27.37% 53,489� 41,947� 27.52% Provision for Loan Losses � 1,661� � 1,704� -2.52% � 3,969� � 4,386� -9.51% Net Interest Income After Provision for Loan Losses 16,869� 12,844� 31.34% 49,520� 37,561� 31.84% Non-Interest Income 5,191� 3,796� 36.75% 14,974� 10,435� 43.50% Non-Interest Expense � 13,136� � 10,691� 22.87% � 38,521� � 31,388� 22.73% Income Before Income Taxes � 8,924� � 5,949� 50.01% � 25,973� � 16,608� 56.39% Income Tax Expense 3,415� 2,273� 50.24% � 9,885� � 6,283� 57.33% Net Income $ 5,509� $ 3,676� 49.86% $ 16,088� $ 10,325� 55.82% � Comprehensive Income $ 5,672� $ 3,639� 55.87% $ 16,259� $ 10,193� 59.51% � Per Share of Common Stock: Basic Earnings � $0.56� � $0.48� 16.67% � $1.65� � $1.35� 22.22% Diluted Earnings � $0.56� � $0.47� 19.15% � $1.63� � $1.33� 22.56% Dividends � $0.12� � $0.12� 0.00% � $0.36� � $0.36� 0.00% � Weighted Average Shares Outstanding: Basic � 9,790,058� � 7,710,871� � 9,782,255� � 7,670,502� Diluted � 9,900,396� � 7,805,458� � 9,893,417� � 7,765,343� Three Months Ended Nine MonthsEndedSeptember 30, September 30,2006 June 30,2006 September 30,2005 2006� 2005� Key Financial Ratios: � Return on Average Assets 1.32% 1.34% 1.07% 1.31% 1.04% Return on Average Shareholders' Equity 12.22% 12.43% 12.52% 12.17% 12.08% Return on Average Tangible Shareholders' Equity (1) 15.59% 15.99% 15.60% 15.66% 15.21% Interest Rate Spread 4.35% 4.35% 4.23% 4.37% 4.30% Net Interest Margin 4.83% 4.80% 4.54% 4.81% 4.58% Efficiency Ratio 55.38% 55.61% 58.28% 56.27% 59.92% � (1) Tangible shareholders' equity is shareholders' equity less goodwill and intangible assets. September 30, June 30, September 30, 2006� 2006� 2005� Asset Quality Ratios: Nonperforming Loans as a Percentage of Total Loans, net of Unearned Income 0.33% 0.34% 0.58% Nonperforming Assets as a Percentage of Total Assets 0.42% 0.47% 0.75% Allowance for Loan Losses as a Percentage of Total Loans, net of Unearned Income 1.45% 1.45% 1.45% Allowance for Loan Losses as a Percentage of Nonperforming Assets 295.22% 263.55% 166.27% Net Charge-Offs to Average Total Loans, Net of Unearned Income 0.20% 0.17% 0.29% GREENE COUNTY BANCSHARES, INC. Consolidated Financial Highlights September 30, 2006 (UNAUDITED) � Nonperforming Assets and Net Charge-offs � As of and for the three months ended September 30, 2006 � Bank � Other � Total Loans past due 90 days and still accruing $ 51� $ 14� $ 65� Nonaccrual loans 4,304� 519� 4,823� Other real estate owned and repossessed assets � 2,207� � 227� � 2,434� Total nonperforming assets $ 6,562� $ 760� $ 7,322� � YTD annualized net charge-offs $ 1,931� $ 859� $ 2,789� � As of and for the three months ended September 30, 2005 � Bank � Other � Total Loans past due 90 days and still accruing $ 1,077� $ -� $ 1,077� Nonaccrual loans 5,506� 517� 6,023� Other real estate owned and repossessed assets � 3,247� � 262� � 3,509� Total nonperforming assets $ 9,830� $ 779� $ 10,609� � YTD annualized net charge-offs $ 1,959� $ 1,331� $ 3,289� � As of and for the year ended December 31, 2005 � Bank � Other � Total Loans past due 90 days and still accruing $ 809� $ -� $ 809� Nonaccrual loans 5,393� 522� 5,915� Other real estate owned and repossessed assets � 3,396� � 347� � 3,743� Total nonperforming assets $ 9,598� $ 869� $ 10,467� � Net charge-offs $ 2,490� $ 1,324� $ 3,814� � � Asset Quality Ratios � As of and for the three months ended September 30, 2006 � Bank Other Consolidated Nonperforming loans as a percentage of total loans, net of unearned income 0.29% 1.63% 0.33% Nonperforming assets as a percentage of total assets 0.38% 2.02% 0.42% Allowance for loan losses as a percentage of total loans, net of unearned income 1.28% 7.92% 1.45% Allowance for loan losses as a percentage of nonperforming assets 289.90% 341.18% 295.22% YTD annualized net charge-offs to average total loans, net of unearned income 0.14% 2.72% 0.20% � � As of and for the three months ended September 30, 2005 � Bank Other Consolidated Nonperforming loans as a percentage of total loans, net of unearned income 0.54% 1.69% 0.58% Nonperforming assets as a percentage of total assets 0.70% 1.85% 0.75% Allowance for loan losses as a percentage of total loans, net of unearned income 1.26% 7.92% 1.45% Allowance for loan losses as a percentage of nonperforming assets 154.79% 311.17% 166.27% YTD annualized net charge-offs to average total loans, net of unearned income 0.17% 4.22% 0.29% � � As of and for the year ended December 31, 2005 � Bank Other Consolidated Nonperforming loans as a percentage of total loans, net of unearned income 0.45% 1.68% 0.49% Nonperforming assets as a percentage of total assets 0.59% 2.37% 0.65% Allowance for loan losses as a percentage of total loans, net of unearned income 1.26% 7.89% 1.43% Allowance for loan losses as a percentage of nonperforming assets 180.06% 282.74% 188.58% Net charge-offs to average total loans, net of unearned income 0.21% 4.22% 0.32% GREENE COUNTY BANCSHARES, INC. Condensed Average Balances, Interest Rates and Yields September 30, 2006 � Three Months Ended Nine Months Ended September 30, September 30, 2006� 2005� 2006� 2005� � Average Average Average Average Average Average Average Average Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Interest-earning assets: � Loans 1,464,356� 29,600� 8.02% 1,190,852� 21,335� 7.11% 1,428,177� 83,481� 7.82% 1,137,400� 59,265� 6.97% Investment securities 57,226� 752� 5.21% 62,860� 626� 3.95% 56,084� 2,032� 4.84% 58,229� 1,691� 3.88% Other short-term investments 1,168� 15� 5.10% 18,123� 154� 3.37% 2,998� 110� 4.91% 28,446� 597� 2.81% Total interest-earning assets 1,522,750� 30,367� 7.91% 1,271,835� 22,115� 6.90% 1,487,259� 85,623� 7.70% 1,224,075� 61,553� 6.72% � Non-interest earning assets 148,418� 104,047� 147,364� 103,577� Total assets 1,671,168� 1,375,882� 1,634,623� 1,327,652� � � Interest-bearing liabilities: Deposits: Now accounts, money market and savings 467,112� 2,447� 2.08% 406,431� 1,449� 1.41% 497,576� 7,703� 2.07% 399,016� 3,476� 1.16% Time deposits 630,258� 6,381� 4.02% 611,800� 4,836� 3.14% 627,269� 17,814� 3.80% 578,403� 12,572� 2.91% Total interest bearing-deposits 1,097,370� 8,828� 3.19% 1,018,231� 6,285� 2.45% 1,124,845� 25,517� 3.03% 977,419� 16,048� 2.20% � Securities sold under repurchase and short-term borrowings 42,775� 531� 4.93% 13,551� 98� 2.87% 33,156� 1,135� 4.58% 15,646� 282� 2.41% Notes payable 178,786� 2,478� 5.50% 91,493� 1,184� 5.13% 134,820� 5,482� 5.44% 88,342� 3,276� 4.96% � � � � � � � � � � � � Total interest-bearing liabilities 1,318,931� 11,837� 3.56% 1,123,275� 7,567� 2.67% 1,292,821� 32,134� 3.32% 1,081,407� 19,606� 2.42% � Non-Interest Bearing Liabilities: Demand Deposits 152,035� 120,460� 147,049� 117,930� Other Liabilities 19,868� 14,686� 18,535� 14,387� Total Non-Interest Bearing Liabilities 171,903� 135,146� 165,584� 132,317� � Total liabilities 1,490,834� 1,258,421� 1,458,405� 1,213,724� � Shareholders' equity 180,334� 117,461� 176,218� 113,928� � Total liabilities & shareholders' equity 1,671,168� 1,375,882� 1,634,623� 1,327,652� � Net interest income 18,530� 14,548� 53,489� 41,947� � Interest rate spread 4.35% 4.23% 4.37% 4.30% � Net yield on interest-earning assets (net interest margin) 4.83% 4.54% 4.81% 4.58% GREENE COUNTY BANCSHARES, INC. Consolidated Financial Highlights September 30, 2006 (UNAUDITED) � � September 30, 2006 � December 31, 2005 Loans � Balance % � Balance % % Change� Commercial $ 260,709� 17.32% $ 245,285� 17.67% 6.29% Commercial real estate 862,526� 57.31% 729,254� 52.52% 18.28% Residential real estate 287,529� 19.11% 319,797� 23.03% -10.09% Consumer 89,389� 5.94% 90,682� 6.53% -1.43% Other 4,757� 0.32% 3,476� 0.25% 36.85% 1,504,910� 100.00% 1,388,494� 100.00% 8.38% � Less: Unearned interest income � (11,032) � (9,852) Total $ 1,493,878� $ 1,378,642� � � Loan Balances by Banking Units and Operating Subsidiaries � September 30, 2006 December 31, 2005 � LoanBalance % toTotal Loans � LoanBalance % toTotal Loans % Change� � Greene County Bank $ 110,945� 7.43% $ 113,213� 8.21% -2.00% American Fidelity Bank 512,411� 34.29% 447,261� 32.46% 14.57% Bank of Athens 48,912� 3.27% 46,744� 3.39% 4.64% Bank of Bulls Gap 5,080� 0.34% 5,273� 0.38% -3.66% Bank of Niota 8,524� 0.57% 10,478� 0.76% -18.65% Clarksville Community Bank 100,785� 6.75% 107,660� 7.81% -6.39% Cocke County Bank 6,239� 0.42% 6,021� 0.44% 3.62% Community Bank of Loudon County 27,451� 1.84% 23,362� 1.69% 17.50% Community Trust Bank 8,544� 0.57% 9,937� 0.72% -14.02% First Bristol Bank 61,089� 4.09% 57,661� 4.18% 5.95% First Independent Bank 59,832� 4.01% 65,391� 4.74% -8.50% Hamblen County Bank 48,142� 3.22% 48,944� 3.55% -1.64% Hawkins County Bank 35,219� 2.36% 31,887� 2.31% 10.45% Bank of Lawrence County 22,203� 1.49% 24,222� 1.76% -8.34% Middle Tennessee Bank and Trust 116,622� 7.81% 87,351� 6.34% 33.51% Rutherford Bank and Trust 92,473� 6.19% 83,590� 6.06% 10.63% Sullivan County Bank 13,167� 0.88% 16,865� 1.22% -21.93% Washington County Bank 183,486� 12.28% 161,643� 11.72% 13.51% � GCB Acceptance Corporation 12,697� 0.85% 12,140� 0.88% 4.59% Superior Financial Services, Inc. 20,057� 1.34% 18,999� 1.38% 5.57% � � � � � � � Totals $ 1,493,878� 100.00% $ 1,378,642� 100.00% 8.36% � � � � September 30, 2006 � December 31, 2005 Deposits � Balance % � Balance % % Change� Non-interest bearing demand $ 155,897� 12.23% $ 144,216� 11.13% 8.10% Interest bearing demand 245,279� 21.30% 268,714� 20.74% -8.72% Money market and savings 211,710� 16.97% 245,740� 18.96% -13.85% Retail time 404,400� 32.66% 425,506� 32.83% -4.96% Jumbo time � 225,524� 16.84% � 211,703� 16.34% 6.53% Total $ 1,242,810� 100.00% $ 1,295,879� 100.00% -4.10% � Deposit Balances by Banking Units and Operating Subsidiaries � � September 30, 2006 � December 31, 2005 � Balance % � Balance % % Change� Greene County Bank $ 334,206� 26.87% $ 322,396� 24.90% 3.66% American Fidelity Bank 168,246� 13.54% 184,874� 14.27% -8.99% Bank of Athens 30,310� 2.44% 26,280� 2.03% 15.33% Bank of Bulls Gap 17,085� 1.37% 16,181� 1.25% 5.59% Bank of Niota 16,005� 1.29% 16,237� 1.25% -1.43% Clarksville Community Bank 148,433� 11.94% 169,032� 13.04% -12.19% Cocke County Bank 29,568� 2.38% 28,314� 2.18% 4.43% Community Bank of Loudon County 24,837� 2.00% 24,507� 1.89% 1.35% Community Trust Bank 4,472� 0.36% 6,539� 0.50% -31.61% First Bristol Bank 27,969� 2.25% 47,351� 3.65% -40.93% First Independent Bank 90,803� 7.31% 101,071� 7.80% -10.16% Hamblen County Bank 50,907� 4.10% 52,998� 4.09% -3.95% Hawkins County Bank 42,581� 3.43% 47,484� 3.66% -10.33% Bank of Lawrence County 69,559� 5.60% 70,519� 5.44% -1.36% Middle Tennessee Bank and Trust 51,799� 4.17% 38,919� 3.00% 33.09% Rutherford Bank and Trust 50,804� 4.09% 51,903� 4.01% -2.12% Sullivan County Bank 12,328� 0.99% 13,671� 1.05% -9.82% Washington County Bank 72,898� 5.87% 77,603� 5.99% -6.06% � GCB Acceptance Corporation -� 0.00% -� 0.00% -� Superior Financial Services, Inc. -� 0.00% -� 0.00% -� � � � � � � � $ 1,242,810� 100.00% $ 1,295,879� 100.00% -4.10% Greene County Bancshares, Inc. (NASDAQ:GCBS), the third largest bank holding company headquartered in the State of Tennessee, today announced record third quarter and nine-month 2006 earnings of $5,509,000 and $16,088,000, respectively, reflecting increases of 50% and 56% over comparable year-earlier periods. Diluted per share earnings for the third quarter of 2006 reached $0.56 for an increase of 19% over the third quarter of 2005, while diluted earnings per share for the 2006 year-to-date period totaled $1.63 and represented an improvement of 23% over year-to-date 2005. Commenting on the Company's announcement, Stan Puckett, Chairman and Chief Executive Officer, said, "We are pleased to note increasing momentum in our operations, driven by an expanding loan portfolio, stable net interest margins, improving asset quality measures, and continued growth in non-interest income. These broad trends have translated into strong earnings growth for the Company and solid returns for our shareholders." Return on Average Assets (ROAA) improved notably compared with the year-earlier period. The Company's ROAA was 1.32% in the third quarter of 2006 compared with 1.34% in the second quarter of 2006 and 1.07% in the year-earlier quarter. Return on Average Equity, reflecting the issuance of new stock in the fourth quarter of 2005, was 12.22% in the third quarter of 2006 compared with 12.43% in the second quarter of 2006 and 12.52% in the third quarter of 2005. Return on Average Tangible Equity (average shareholders' equity less goodwill and intangible assets) was 15.59% in the third quarter of 2006 versus 15.99% in the second quarter of 2006 and 15.60% in the year-earlier quarter. Puckett noted that quarterly loan growth was vigorous in the third quarter, rising approximately 16% on an annualized basis and underscoring the economic strength of the Company's key markets. At the same time, credit quality remained strong, as non-performing loans relative to total loans declined to 0.33% in the third quarter compared with 0.34% in the second quarter of 2006 and 0.58% in the same quarter last year. Net charge-offs in the third quarter totaled 0.20% of average total loans versus 0.17% in the second quarter of 2006 and 0.29% in the year-earlier period. Net interest margin increased three basis points to 4.83% in the third quarter of 2006 versus the second quarter of 2006 and was 29 basis points ahead of net interest margin in the year-earlier quarter. Improving margins, achieved against generally challenging competitive and interest rate environments, reflected the Company's ongoing efforts to optimize its funding mix. Despite this progress, margin compression remains a concern and management believes some pressure may yet develop in the final quarter the year. Greene County Bancshares also continues to focus on controlling expenses in step with the expansion of its business. The Company's efficiency ratio was 55.38% in the third quarter, demonstrating continued improvement from 55.61% in the second quarter of 2006 and 58.28% in the third quarter of 2005. Net interest income for the third quarter increased 27% to $18,530,000 from $14,548,000 in the year-earlier period, driven by a 23% increase in average loans outstanding for the periods. The quarter's provision for loan losses declined 3% to $1,661,000 from $1,704,000 in the third quarter of last year, reflecting ongoing improvements in asset quality. Net interest income increased 28% to $53,489,000 for the year-to-date period in 2006 compared with $41,947,000 in the same period last year. The Company's provision for loan losses declined 10% to $3,969,000 in the first nine months of 2006 from $4,386,000 in the year-earlier period. Non-interest income increased 37% in the third quarter to $5,191,000 from $3,796,000 in the same quarter last year, while non-interest income for the year-to-date period rose 43% to $14,974,000 from $10,435,000 in the comparable 2005 period. These advances reflected the ongoing positive impact of the Company's High Performance Checking Account product, a key strategic initiative. Third quarter 2006 "net" new accounts opened totaled 3,329 compared with 2,289 during the same quarter last year, an increase of over 45%. This momentum has helped drive non-interest income to 22% of total revenue in 2006, up from 20% in the first nine months of 2005. At September 30, 2006, the Company's total assets increased 7% to $1,727,268,000 from $1,619,989,000 at December 31, 2005, and were 23% ahead of the $1,405,580,000 in total assets reported as of September 30, 2005. Net loans increased 8% to $1,493,878,000 at September 30, 2006, from $1,378,642,000 at December 31, 2005, and were 23% higher than net loans of $1,215,072,000 at September 30, 2005. Deposits declined slightly to $1,242,810,000 at September 30, 2006, from $1,295,879,000 at December 31, 2005, but were 10% ahead of deposits of $1,134,864,000 as of September 30, 2005. Total shareholders' equity increased 8% to $181,659,000 at September 30, 2006, versus $168,021,000 at December 31, 2005, and was 13% higher than total shareholders' equity of $160,307,000 at September 30, 2005. Greeneville, Tennessee-based Greene County Bancshares, Inc., with total assets of approximately $1.727 billion, is the holding company for Greene County Bank. Greene County Bank, founded in 1890, now has 48 branches throughout East and Middle Tennessee, one branch in Bristol, Virginia, one branch in western North Carolina, and a trust services office in Lebanon, Tennessee. Greene County Bank does business in Washington County, Tennessee, as Washington County Bank; in Blount County and Knox County, Tennessee, as American Fidelity Bank; in Montgomery County, Tennessee, as Clarksville Community Bank; in Sumner County, Tennessee, as First Independent Bank; in Rutherford County, Tennessee, as Rutherford Bank and Trust; in Sullivan County, Tennessee, as Sullivan County Bank and First Bristol Bank; in Hamblen County, Tennessee, as Hamblen County Bank; in McMinn County, Tennessee, as Bank of Athens and Bank of Niota; in Hawkins County, Tennessee, as Hawkins County Bank and Bank of Bulls Gap; in Lawrence County, Tennessee, as Bank of Lawrence County; in Cocke County, Tennessee, as Cocke County Bank; in Loudon County, Tennessee, as Community Bank of Loudon County; in Monroe County, Tennessee, as Community Trust Bank; in the City of Bristol, Virginia, as First Bristol Bank; in Davidson County and Williamson County, Tennessee, as Middle Tennessee Bank & Trust; and in Wilson County, Tennessee, as President's Trust. In addition, Greene County Bank also conducts separate businesses through three wholly owned subsidiaries: Superior Financial Services, Inc., a consumer finance company; GCB Acceptance Corporation, a consumer finance company specializing in subprime automobile lending; and Fairway Title Co., a title insurance company. This news release may contain forward-looking statements regarding Greene County Bancshares, Inc., as defined in Section 21E of the Securities Exchange Act of 1934. All forward-looking statements involve risk and uncertainty and actual results could differ materially from the anticipated results or other expectations expressed in the forward-looking statements. A discussion of factors that could cause actual results to differ materially from those expressed in the forward-looking statements is included in the Greene County Bancshares, Inc. filings with the Securities and Exchange Commission. -0- *T GREENE COUNTY BANCSHARES, INC. Unaudited Financial Highlights (In thousands, except per share amounts) Three Months Ended Nine Months Ended --------------------------- ------------------- Sept. 30, June 30, Sept 30, Sept. 30, Sept. 30, 2006 2006 2005 2006 2005 --------- -------- -------- --------- --------- Interest income $30,367 $28,489 $22,115 $85,623 $61,553 Interest expense 11,837 10,716 7,567 32,134 19,606 --------- -------- -------- --------- --------- Net interest income 18,530 17,773 14,548 53,489 41,947 Provision for loan losses 1,661 1,244 1,704 3,969 4,386 --------- -------- -------- --------- --------- Net interest income after provision for loan losses 16,869 16,529 12,844 49,520 37,561 Non-interest income 5,191 5,028 3,796 14,974 10,435 Non-interest expense 13,136 12,679 10,691 38,521 31,388 --------- -------- -------- --------- --------- Income before income taxes 8,924 8,878 5,949 25,973 16,608 Income taxes 3,415 3,395 2,273 9,885 6,283 --------- -------- -------- --------- --------- Net income $ 5,509 $ 5,483 $ 3,676 $16,088 $10,325 ========= ======== ======== ========= ========= Comprehensive income $ 5,672 $ 5,498 $ 3,639 $16,259 $10,193 ========= ======== ======== ========= ========= Earnings per share: Basic $ 0.56 $ 0.56 $ 0.48 $ 1.65 $ 1.35 ========= ======== ======== ========= ========= Diluted $ 0.56 $ 0.55 $ 0.47 $ 1.63 $ 1.33 ========= ======== ======== ========= ========= Weighted average shares: Basic 9,790 9,786 7,711 9,782 7,671 ========= ======== ======== ========= ========= Diluted 9,900 9,898 7,805 9,893 7,765 ========= ======== ======== ========= ========= Dividends declared per share $ 0.12 $ 0.12 $ 0.12 $ 0.36 $ 0.36 ========= ======== ======== ========= ========= *T -0- *T Sept. 30, Dec. 31, Sept. 30, 2006 2005 2005 ----------- ----------- ----------- Total assets $1,727,268 $1,619,989 $1,405,580 Cash and cash equivalents 41,474 46,136 35,464 Investment securities 52,796 58,736 63,565 Loans, net of unearned interest 1,493,878 1,378,642 1,215,072 Allowance for loan losses 21,616 19,739 17,640 Deposits 1,242,810 1,295,879 1,134,864 Shareholders' equity 181,659 168,021 160,307 Tangible shareholders' equity (1) 142,848 128,399 137,176 Book value per share 18.54 17.20 16.90 Tangible book value per share (1) 14.58 13.15 14.46 (1) Tangible shareholders' equity is shareholders' equity less goodwill and intangible assets. *T -0- *T GREENE COUNTY BANCSHARES, INC. Condensed Consolidated Balance Sheets September 30, 2006, December 31, 2005 and September 30, 2005 (Dollars in thousands except share and per share data) (Unaudited) (Unaudited) September 30, December 31, September 30, 2006 2005 (1) 2005 -------------- ------------- -------------- ASSETS -------------------------- Cash and due from banks $ 41,474 $ 46,136 $ 35,464 Federal funds sold & other 28,004 28,387 10,857 Securities available-for- sale ("AFS") 43,142 48,868 53,778 Securities held-to- maturity (with a market value of $2,674, $3,335 and $3,394 on September 30, 2006, December 31, 2005 and September 30, 2005) 2,690 3,379 3,380 FHLB, Bankers Bank and other stock, at cost 6,964 6,489 6,407 Loans held for sale 2,195 2,686 4,260 Loans, net of unearned interest 1,493,878 1,378,642 1,215,072 Allowance for loan losses (21,616) (19,739) (17,640) Bank premises and equipment, net of accumulated depreciation 54,125 49,985 36,311 Goodwill and other intangible assets 38,811 39,622 23,131 Other assets 37,601 35,534 34,560 -------------- ------------- -------------- Total Assets $ 1,727,268 $ 1,619,989 $ 1,405,580 ============== ============= ============== LIABILITIES AND SHAREHOLDERS' EQUITY -------------------------- Deposits $ 1,242,810 $ 1,295,879 $ 1,134,864 Federal funds purchased 75,000 - - Repurchase agreements 22,601 17,498 11,393 FHLB advances and notes payable 173,058 105,146 70,240 Subordinated debentures 13,403 13,403 13,403 Accrued interest payable and other liabilities 18,737 20,042 15,373 -------------- ------------- -------------- Total Liabilities 1,545,609 1,451,968 1,245,273 -------------- ------------- -------------- SHAREHOLDERS' EQUITY -------------------------- Common Stock: $2 par value, 15,000,000 shares authorized; 9,796,349, 9,766,336 and 9,485,949 shares outstanding 19,593 19,533 18,972 Paid in Capital 71,542 70,700 64,634 Retained Earnings 90,723 78,158 76,860 Accumulated Other Comprehensive Income (Loss) (199) (370) (159) -------------- ------------- -------------- Total Shareholders' Equity 181,659 168,021 160,307 -------------- ------------- -------------- Total Liabilities & Shareholders' Equity $ 1,727,268 $ 1,619,989 $ 1,405,580 ============== ============= ============== (1) Derived from Audited Consolidated Financial Statements. *T -0- *T GREENE COUNTY BANCSHARES, INC. Condensed Consolidated Statements of Income and Comprehensive Income Three Months Ended September 30, 2006, June 30, 2006 and September 30, 2005 and Nine Months Ended September 30, 2006 and 2005 (Unaudited) (Dollars in thousands except share and per share data) Three Months Ended ---------------------------------------- September 30, June 30, September 30, 2006 2006 2005 -------------- ----------- -------------- Interest Income: ----------------------------- Interest and Fees on Loans $ 29,600 $ 27,781 $ 21,335 Interest on Investment Securities 752 649 626 Interest on Federal Funds Sold and Interest-earning Deposits 15 59 154 -------------- ----------- -------------- Total Interest Income 30,367 28,489 22,115 -------------- ----------- -------------- Interest Expense: ----------------------------- Interest on Deposits 8,828 8,647 6,285 Interest on Borrowings 3,009 2,069 1,282 -------------- ----------- -------------- Total Interest Expense 11,837 10,716 7,567 -------------- ----------- -------------- Net Interest Income 18,530 17,773 14,548 Provision for Loan Losses 1,661 1,244 1,704 -------------- ----------- -------------- Net Interest Income after Provision for Loan Losses 16,869 16,529 12,844 -------------- ----------- -------------- Noninterest Income: ----------------------------- Service Charges, Commissions and Fees 4,125 4,001 3,159 Other Income 1,066 1,027 637 -------------- ----------- -------------- Total Noninterest Income 5,191 5,028 3,796 -------------- ----------- -------------- Noninterest Expense: ----------------------------- Salaries and Benefits 6,768 6,266 5,366 Occupancy and Furniture and Equipment Expense 2,046 2,050 1,821 Other Expenses 4,322 4,363 3,504 -------------- ----------- -------------- Total Noninterest Expense 13,136 12,679 10,691 -------------- ----------- -------------- Income Before Income Taxes 8,924 8,878 5,949 Income Taxes 3,415 3,395 2,273 -------------- ----------- -------------- Net Income $ 5,509 $ 5,483 $ 3,676 ============== =========== ============== Comprehensive Income $ 5,672 $ 5,498 $ 3,639 ============== =========== ============== Per Share of Common Stock: ----------------------------- Basic Earnings $0.56 $0.56 $0.48 ============== =========== ============== Diluted Earnings $0.56 $0.55 $0.47 ============== =========== ============== Dividends $0.12 $0.12 $0.12 ============== =========== ============== Weighted Average Shares Outstanding: ----------------------------- Basic 9,790,058 9,785,936 7,710,871 ============== =========== ============== Diluted 9,900,396 9,897,987 7,805,458 ============== =========== ============== Nine Months Ended ---------------------------- September 30, September 30, 2006 2005 -------------- -------------- Interest Income: ----------------------------- Interest and Fees on Loans $ 83,481 $ 59,265 Interest on Investment Securities 2,032 1,691 Interest on Federal Funds Sold and Interest-earning Deposits 110 597 -------------- -------------- Total Interest Income 85,623 61,553 -------------- -------------- Interest Expense: ----------------------------- Interest on Deposits 25,517 16,048 Interest on Borrowings 6,617 3,558 -------------- -------------- Total Interest Expense 32,134 19,606 -------------- -------------- Net Interest Income 53,489 41,947 Provision for Loan Losses 3,969 4,386 -------------- -------------- Net Interest Income after Provision for Loan Losses 49,520 37,561 -------------- -------------- Noninterest Income: ----------------------------- Service Charges, Commissions and Fees 11,357 8,137 Other Income 3,617 2,298 -------------- -------------- Total Noninterest Income 14,974 10,435 -------------- -------------- Noninterest Expense: ----------------------------- Salaries and Benefits 19,425 15,710 Occupancy and Furniture and Equipment Expense 6,155 5,334 Other Expenses 12,941 10,344 -------------- -------------- Total Noninterest Expense 38,521 31,388 -------------- -------------- Income Before Income Taxes 25,973 16,608 Income Taxes 9,885 6,283 -------------- -------------- Net Income $ 16,088 $ 10,325 ============== ============== Comprehensive Income $ 16,259 $ 10,193 ============== ============== Per Share of Common Stock: ----------------------------- Basic Earnings $1.65 $1.35 ============== ============== Diluted Earnings $1.63 $1.33 ============== ============== Dividends $0.36 $0.36 ============== ============== Weighted Average Shares Outstanding: ----------------------------- Basic 9,782,255 7,670,502 ============== ============== Diluted 9,893,417 7,765,343 ============== ============== *T -0- *T GREENE COUNTY BANCSHARES, INC. Consolidated Financial Highlights (UNAUDITED) (Dollars in thousands except share and per share data) September 30, December 31, % 2006 2005 Change -------------- ------------- ------- Financial Condition Data: ------------------------------ Assets $ 1,727,268 $ 1,619,989 6.62% Loans, net of unearned interest 1,493,878 1,378,642 8.36% Cash and investments 94,270 104,872 -10.11% Federal funds sold 28,004 28,387 -1.35% Deposits 1,242,810 1,295,879 -4.10% Federal funds purchased 75,000 - - FHLB advances and notes payable 173,058 105,146 64.59% Subordinated debentures 13,403 13,403 0.00% Federal funds purchased and repurchase agreements 22,601 17,498 29.16% Shareholders' equity 181,659 168,021 8.12% Tangible shareholders' equity (1) 142,848 128,399 11.25% Ratios: ------------------------------ Book value per share $18.54 $17.20 7.79% Tangible book value per share (1) $14.58 $13.15 10.87% Average equity to average assets 10.78% 9.20% 17.17% Dividend payout ratio 21.90% 37.38%(2) -41.41% (1) Tangible shareholders' equity is shareholders' equity less goodwill and intangible assets. (2) Includes special dividend of $.14 per share paid in December 2005. *T -0- *T Three Months Ended September 30, ---------------------- 2006 2005 % Change ----------- ----------- --------- Operating Data: ------------------------------------- Total Interest Income $ 30,367 $ 22,115 37.31% Total Interest Expense 11,837 7,567 56.43% ----------- ----------- --------- Net Interest Income 18,530 14,548 27.37% Provision for Loan Losses 1,661 1,704 -2.52% ----------- ----------- --------- Net Interest Income After Provision for Loan Losses 16,869 12,844 31.34% Non-Interest Income 5,191 3,796 36.75% Non-Interest Expense 13,136 10,691 22.87% ----------- ----------- --------- Income Before Income Taxes 8,924 5,949 50.01% ----------- ----------- --------- Income Tax Expense 3,415 2,273 50.24% ---------- ---------- --------- Net Income $ 5,509 $ 3,676 49.86% =========== =========== ========= Comprehensive Income $ 5,672 $ 3,639 55.87% =========== =========== ========= Per Share of Common Stock: ------------------------------------- Basic Earnings $0.56 $0.48 16.67% =========== =========== ========= Diluted Earnings $0.56 $0.47 19.15% =========== =========== ========= Dividends $0.12 $0.12 0.00% =========== =========== ========= Weighted Average Shares Outstanding: ------------------------------------- Basic 9,790,058 7,710,871 =========== =========== Diluted 9,900,396 7,805,458 =========== =========== Nine Months Ended September 30, ---------------------- 2006 2005 % Change ----------- ----------- --------- Operating Data: ------------------------------------ Total Interest Income $ 85,623 $ 61,553 39.10% Total Interest Expense 32,134 19,606 63.90% ----------- ----------- --------- Net Interest Income 53,489 41,947 27.52% Provision for Loan Losses 3,969 4,386 -9.51% ----------- ----------- --------- Net Interest Income After Provision for Loan Losses 49,520 37,561 31.84% Non-Interest Income 14,974 10,435 43.50% Non-Interest Expense 38,521 31,388 22.73% ----------- ----------- --------- Income Before Income Taxes 25,973 16,608 56.39% ----------- ----------- --------- Income Tax Expense 9,885 6,283 57.33% ----------- ----------- --------- Net Income $ 16,088 $ 10,325 55.82% =========== =========== ========= Comprehensive Income $ 16,259 $ 10,193 59.51% =========== =========== ========= Per Share of Common Stock: ------------------------------------ Basic Earnings $1.65 $1.35 22.22% =========== =========== ========= Diluted Earnings $1.63 $1.33 22.56% =========== =========== ========= Dividends $0.36 $0.36 0.00% =========== =========== ========= Weighted Average Shares Outstanding: ------------------------------------ Basic 9,782,255 7,670,502 =========== =========== Diluted 9,893,417 7,765,343 =========== =========== *T -0- *T Three Months Ended Nine Months ------------------------------------ Ended September 30, September 30, June 30, September 30, ------------- 2006 2006 2005 2006 2005 ------------- -------- ------------- ------ ------ Key Financial Ratios: ------------------- Return on Average Assets 1.32% 1.34% 1.07% 1.31% 1.04% Return on Average Shareholders' Equity 12.22% 12.43% 12.52% 12.17% 12.08% Return on Average Tangible Shareholders' Equity (1) 15.59% 15.99% 15.60% 15.66% 15.21% Interest Rate Spread 4.35% 4.35% 4.23% 4.37% 4.30% Net Interest Margin 4.83% 4.80% 4.54% 4.81% 4.58% Efficiency Ratio 55.38% 55.61% 58.28% 56.27% 59.92% (1) Tangible shareholders' equity is shareholders' equity less goodwill and intangible assets. *T -0- *T September 30, June 30, September 30, 2006 2006 2005 ------------- -------- ------------- Asset Quality Ratios: -------------------------------- Nonperforming Loans as a Percentage of Total Loans, net of Unearned Income 0.33% 0.34% 0.58% Nonperforming Assets as a Percentage of Total Assets 0.42% 0.47% 0.75% Allowance for Loan Losses as a Percentage of Total Loans, net of Unearned Income 1.45% 1.45% 1.45% Allowance for Loan Losses as a Percentage of Nonperforming Assets 295.22% 263.55% 166.27% Net Charge-Offs to Average Total Loans, Net of Unearned Income 0.20% 0.17% 0.29% *T -0- *T GREENE COUNTY BANCSHARES, INC. Consolidated Financial Highlights September 30, 2006 (UNAUDITED) Nonperforming Assets and Net Charge-offs ---------------------------------------- As of and for the three months ended September 30, 2006 Bank Other Total -------------------------------------- -------- -------- ------------- Loans past due 90 days and still accruing $ 51 $ 14 $ 65 Nonaccrual loans 4,304 519 4,823 Other real estate owned and repossessed assets 2,207 227 2,434 -------- -------- ------------- Total nonperforming assets $ 6,562 $ 760 $ 7,322 ======== ======== ============= YTD annualized net charge-offs $ 1,931 $ 859 $ 2,789 ======== ======== ============= As of and for the three months ended September 30, 2005 Bank Other Total -------------------------------------- -------- -------- ------------- Loans past due 90 days and still accruing $ 1,077 $ - $ 1,077 Nonaccrual loans 5,506 517 6,023 Other real estate owned and repossessed assets 3,247 262 3,509 -------- -------- ------------- Total nonperforming assets $ 9,830 $ 779 $ 10,609 ======== ======== ============= YTD annualized net charge-offs $ 1,959 $ 1,331 $ 3,289 ======== ======== ============= As of and for the year ended December 31, 2005 Bank Other Total -------------------------------------- -------- -------- ------------- Loans past due 90 days and still accruing $ 809 $ - $ 809 Nonaccrual loans 5,393 522 5,915 Other real estate owned and repossessed assets 3,396 347 3,743 -------- -------- ------------- Total nonperforming assets $ 9,598 $ 869 $ 10,467 ======== ======== ============= Net charge-offs $ 2,490 $ 1,324 $ 3,814 ======== ======== ============= Asset Quality Ratios -------------------------------------- As of and for the three months ended September 30, 2006 Bank Other Consolidated -------------------------------------- -------- ------- ------------ Nonperforming loans as a percentage of total loans, net of unearned income 0.29% 1.63% 0.33% Nonperforming assets as a percentage of total assets 0.38% 2.02% 0.42% Allowance for loan losses as a percentage of total loans, net of unearned income 1.28% 7.92% 1.45% Allowance for loan losses as a percentage of nonperforming assets 289.90% 341.18% 295.22% YTD annualized net charge-offs to average total loans, net of unearned income 0.14% 2.72% 0.20% As of and for the three months ended September 30, 2005 Bank Other Consolidated -------------------------------------- -------- ------- ------------ Nonperforming loans as a percentage of total loans, net of unearned income 0.54% 1.69% 0.58% Nonperforming assets as a percentage of total assets 0.70% 1.85% 0.75% Allowance for loan losses as a percentage of total loans, net of unearned income 1.26% 7.92% 1.45% Allowance for loan losses as a percentage of nonperforming assets 154.79% 311.17% 166.27% YTD annualized net charge-offs to average total loans, net of unearned income 0.17% 4.22% 0.29% As of and for the year ended December 31, 2005 Bank Other Consolidated -------------------------------------- -------- ------- ------------ Nonperforming loans as a percentage of total loans, net of unearned income 0.45% 1.68% 0.49% Nonperforming assets as a percentage of total assets 0.59% 2.37% 0.65% Allowance for loan losses as a percentage of total loans, net of unearned income 1.26% 7.89% 1.43% Allowance for loan losses as a percentage of nonperforming assets 180.06% 282.74% 188.58% Net charge-offs to average total loans, net of unearned income 0.21% 4.22% 0.32% *T -0- *T GREENE COUNTY BANCSHARES, INC. Condensed Average Balances, Interest Rates and Yields September 30, 2006 Three Months Ended September 30, ---------------------------- 2006 ---------------------------- Average Average Balance Interest Rate ---------- -------- -------- Interest-earning assets: ----------------------------------------- Loans 1,464,356 29,600 8.02% Investment securities 57,226 752 5.21% Other short-term investments 1,168 15 5.10% ---------- -------- -------- Total interest-earning assets 1,522,750 30,367 7.91% ---------- -------- -------- Non-interest earning assets 148,418 ---------- Total assets 1,671,168 ========== Interest-bearing liabilities: ----------------------------------------- Deposits: ----------------------------------------- Now accounts, money market and savings 467,112 2,447 2.08% Time deposits 630,258 6,381 4.02% ---------- -------- -------- Total interest bearing-deposits 1,097,370 8,828 3.19% ---------- -------- -------- Securities sold under repurchase and short-term borrowings 42,775 531 4.93% Notes payable 178,786 2,478 5.50% ---------- -------- -------- Total interest-bearing liabilities 1,318,931 11,837 3.56% ---------- -------- -------- Non-Interest Bearing Liabilities: ----------------------------------------- Demand Deposits 152,035 Other Liabilities 19,868 ---------- Total Non-Interest Bearing Liabilities 171,903 ---------- Total liabilities 1,490,834 ---------- Shareholders' equity 180,334 Total liabilities & shareholders' equity 1,671,168 ========== Net interest income 18,530 ======== Interest rate spread 4.35% ======== Net yield on interest-earning assets (net interest margin) 4.83% ======== Three Months Ended September 30, ----------------------------- 2005 --------------------------- Average Average Balance Interest Rate ---------- -------- ------- Interest-earning assets: ----------------------------------------- Loans 1,190,852 21,335 7.11% Investment securities 62,860 626 3.95% Other short-term investments 18,123 154 3.37% ---------- -------- ------- Total interest-earning assets 1,271,835 22,115 6.90% ---------- -------- ------- Non-interest earning assets 104,047 ---------- Total assets 1,375,882 ========== Interest-bearing liabilities: ----------------------------------------- Deposits: ----------------------------------------- Now accounts, money market and savings 406,431 1,449 1.41% Time deposits 611,800 4,836 3.14% ---------- -------- ------- Total interest bearing-deposits 1,018,231 6,285 2.45% ---------- -------- ------- Securities sold under repurchase and short-term borrowings 13,551 98 2.87% Notes payable 91,493 1,184 5.13% ---------- -------- ------- Total interest-bearing liabilities 1,123,275 7,567 2.67% ---------- -------- ------- Non-Interest Bearing Liabilities: ----------------------------------------- Demand Deposits 120,460 Other Liabilities 14,686 ---------- Total Non-Interest Bearing Liabilities 135,146 ---------- Total liabilities 1,258,421 ---------- Shareholders' equity 117,461 Total liabilities & shareholders' equity 1,375,882 ========== Net interest income 14,548 ======== Interest rate spread 4.23% ======= Net yield on interest-earning assets (net interest margin) 4.54% ======= Nine Months Ended September 30, ---------------------------- 2006 ---------------------------- Average Average Balance Interest Rate ---------- -------- -------- Interest-earning assets: ----------------------------------------- Loans 1,428,177 83,481 7.82% Investment securities 56,084 2,032 4.84% Other short-term investments 2,998 110 4.91% ---------- -------- -------- Total interest-earning assets 1,487,259 85,623 7.70% ---------- -------- -------- Non-interest earning assets 147,364 ---------- Total assets 1,634,623 ========== Interest-bearing liabilities: ----------------------------------------- Deposits: ----------------------------------------- Now accounts, money market and savings 497,576 7,703 2.07% Time deposits 627,269 17,814 3.80% ---------- -------- -------- Total interest bearing-deposits 1,124,845 25,517 3.03% ---------- -------- -------- Securities sold under repurchase and short-term borrowings 33,156 1,135 4.58% Notes payable 134,820 5,482 5.44% ---------- -------- -------- Total interest-bearing liabilities 1,292,821 32,134 3.32% ---------- -------- -------- Non-Interest Bearing Liabilities: ----------------------------------------- Demand Deposits 147,049 Other Liabilities 18,535 ---------- Total Non-Interest Bearing Liabilities 165,584 ---------- Total liabilities 1,458,405 ---------- Shareholders' equity 176,218 Total liabilities & shareholders' equity 1,634,623 ========== Net interest income 53,489 ======== Interest rate spread 4.37% ======== Net yield on interest-earning assets (net interest margin) 4.81% ======== Nine Months Ended September 30, ----------------------------- 2005 --------------------------- Average Average Balance Interest Rate ---------- -------- ------- Interest-earning assets: ----------------------------------------- Loans 1,137,400 59,265 6.97% Investment securities 58,229 1,691 3.88% Other short-term investments 28,446 597 2.81% ---------- -------- ------- Total interest-earning assets 1,224,075 61,553 6.72% ---------- -------- ------- Non-interest earning assets 103,577 ---------- Total assets 1,327,652 ========== Interest-bearing liabilities: ----------------------------------------- Deposits: ----------------------------------------- Now accounts, money market and savings 399,016 3,476 1.16% Time deposits 578,403 12,572 2.91% ---------- -------- ------- Total interest bearing-deposits 977,419 16,048 2.20% ---------- -------- ------- Securities sold under repurchase and short-term borrowings 15,646 282 2.41% Notes payable 88,342 3,276 4.96% ---------- -------- ------- Total interest-bearing liabilities 1,081,407 19,606 2.42% ---------- -------- ------- Non-Interest Bearing Liabilities: ----------------------------------------- Demand Deposits 117,930 Other Liabilities 14,387 ---------- Total Non-Interest Bearing Liabilities 132,317 ---------- Total liabilities 1,213,724 ---------- Shareholders' equity 113,928 Total liabilities & shareholders' equity 1,327,652 ========== Net interest income 41,947 ======== Interest rate spread 4.30% ======= Net yield on interest-earning assets (net interest margin) 4.58% ======= *T -0- *T GREENE COUNTY BANCSHARES, INC. Consolidated Financial Highlights September 30, 2006 (UNAUDITED) September 30, 2006 December 31, 2005 ------------------- ------------------- Loans Balance % Balance % % Change ------------------- ----------- ------- ----------- ------- --------- Commercial $ 260,709 17.32% $ 245,285 17.67% 6.29% Commercial real estate 862,526 57.31% 729,254 52.52% 18.28% Residential real estate 287,529 19.11% 319,797 23.03% -10.09% Consumer 89,389 5.94% 90,682 6.53% -1.43% Other 4,757 0.32% 3,476 0.25% 36.85% ---------- ------- ---------- ------- --------- 1,504,910 100.00% 1,388,494 100.00% 8.38% ======= ======= ========= Less: Unearned interest income (11,032) (9,852) ----------- ----------- Total $1,493,878 $1,378,642 =========== =========== Loan Balances by Banking Units and Operating Subsidiaries --------------------------------------- September 30, 2006 December 31, 2005 ------------------ ------------------ % to % to Loan Total Loan Total Balance Loans Balance Loans % Change ----------- ------- ----------- ------- --------- Greene County Bank $ 110,945 7.43% $ 113,213 8.21% -2.00% American Fidelity Bank 512,411 34.29% 447,261 32.46% 14.57% Bank of Athens 48,912 3.27% 46,744 3.39% 4.64% Bank of Bulls Gap 5,080 0.34% 5,273 0.38% -3.66% Bank of Niota 8,524 0.57% 10,478 0.76% -18.65% Clarksville Community Bank 100,785 6.75% 107,660 7.81% -6.39% Cocke County Bank 6,239 0.42% 6,021 0.44% 3.62% Community Bank of Loudon County 27,451 1.84% 23,362 1.69% 17.50% Community Trust Bank 8,544 0.57% 9,937 0.72% -14.02% First Bristol Bank 61,089 4.09% 57,661 4.18% 5.95% First Independent Bank 59,832 4.01% 65,391 4.74% -8.50% Hamblen County Bank 48,142 3.22% 48,944 3.55% -1.64% Hawkins County Bank 35,219 2.36% 31,887 2.31% 10.45% Bank of Lawrence County 22,203 1.49% 24,222 1.76% -8.34% Middle Tennessee Bank and Trust 116,622 7.81% 87,351 6.34% 33.51% Rutherford Bank and Trust 92,473 6.19% 83,590 6.06% 10.63% Sullivan County Bank 13,167 0.88% 16,865 1.22% -21.93% Washington County Bank 183,486 12.28% 161,643 11.72% 13.51% GCB Acceptance Corporation 12,697 0.85% 12,140 0.88% 4.59% Superior Financial Services, Inc. 20,057 1.34% 18,999 1.38% 5.57% ----------- ------- ----------- ------- --------- Totals $1,493,878 100.00% $1,378,642 100.00% 8.36% =========== ======= =========== ======= ========= September 30, 2006 December 31, 2005 ------------------- ------------------- Deposits Balance % Balance % % Change ------------------- ----------- ------- ----------- ------- --------- Non-interest bearing demand $ 155,897 12.23% $ 144,216 11.13% 8.10% Interest bearing demand 245,279 21.30% 268,714 20.74% -8.72% Money market and savings 211,710 16.97% 245,740 18.96% -13.85% Retail time 404,400 32.66% 425,506 32.83% -4.96% Jumbo time 225,524 16.84% 211,703 16.34% 6.53% ----------- ------- ----------- ------- --------- Total $1,242,810 100.00% $1,295,879 100.00% -4.10% =========== ======= =========== ======= ========= Deposit Balances by Banking Units and Operating Subsidiaries --------------------------------------- September 30, 2006 December 31, 2005 ------------------- ------------------- Balance % Balance % % Change ----------- ------- ----------- ------- --------- Greene County Bank $ 334,206 26.87% $ 322,396 24.90% 3.66% American Fidelity Bank 168,246 13.54% 184,874 14.27% -8.99% Bank of Athens 30,310 2.44% 26,280 2.03% 15.33% Bank of Bulls Gap 17,085 1.37% 16,181 1.25% 5.59% Bank of Niota 16,005 1.29% 16,237 1.25% -1.43% Clarksville Community Bank 148,433 11.94% 169,032 13.04% -12.19% Cocke County Bank 29,568 2.38% 28,314 2.18% 4.43% Community Bank of Loudon County 24,837 2.00% 24,507 1.89% 1.35% Community Trust Bank 4,472 0.36% 6,539 0.50% -31.61% First Bristol Bank 27,969 2.25% 47,351 3.65% -40.93% First Independent Bank 90,803 7.31% 101,071 7.80% -10.16% Hamblen County Bank 50,907 4.10% 52,998 4.09% -3.95% Hawkins County Bank 42,581 3.43% 47,484 3.66% -10.33% Bank of Lawrence County 69,559 5.60% 70,519 5.44% -1.36% Middle Tennessee Bank and Trust 51,799 4.17% 38,919 3.00% 33.09% Rutherford Bank and Trust 50,804 4.09% 51,903 4.01% -2.12% Sullivan County Bank 12,328 0.99% 13,671 1.05% -9.82% Washington County Bank 72,898 5.87% 77,603 5.99% -6.06% GCB Acceptance Corporation - 0.00% - 0.00% - Superior Financial Services, Inc. - 0.00% - 0.00% - ----------- ------- ----------- ------- --------- $1,242,810 100.00% $1,295,879 100.00% -4.10% =========== ======= =========== ======= ========= *T