Prepared for growth, Home BancShares in Texas is off to a happy start

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Getting happy may just be the beginning for Home BancShares Inc. in Texas.

Conway Bank announced Wednesday that it will pay $ 919 million in shares to purchase Happy Bancshares Inc. of Amarillo, Texas. The transaction, which is expected to close in the first quarter of next year, anchors Home BancShares deep in the heart of Texas and gives the lender a strong foundation to expand its operations in the state with additional merger and acquisition opportunities.

In addition, Arkansas Bank says it is “creating a panhandle-to-panhandle dominant Southern institution,” citing its strong market presence in Florida, Home BancShares’ largest and most prolific market. Upon closing, Home BancShares is expected to have $ 24 billion in assets, $ 14 billion in loans and $ 19 billion on deposits.

With a $ 919 million acquisition, Home is making a Texas-sized bet that it can deliver solid results by bringing its western neighbor into its operation.

“If we can do as well as Florida’s panhandle for us, we will put an end to it and do very well,” said Terry French, chairman and chief executive officer of Centennial Bank, on a conference call with industry analysts following the deal presented.

The leap across the border now brings Home BancShares to two of the fastest growing states in the country. The 2020 census found that Texas was the third fastest growing state in the nation over the past decade, with a population growth of nearly 16%. Florida ranked seventh with a population growth of 14.6%.

Texas alone offers a target group-rich environment – the takeover includes banks in Austin, Fort Worth and a suburb of San Antonio. World Population Review ranks these cities in the top five fastest growing metropolitan areas in the United States.

In fact, the Interstate 35 corridor connecting Austin to San Antonio has exploded in the past decade. For example, the city of New Braunfels on the northeast tip of San Antonio grew 56% according to 2021 census data.

In addition to a growing population, Texas offers a banking market that is “fragmented and should offer more M&A opportunities” for Home BancShares, bank analysts from Stephens Inc. reported the transaction. Analysts found that the Texan market includes 31 banks with assets between $ 2 billion and $ 10 billion, compared to just 14 combined in Arkansas and Florida, Home’s two largest legacy markets.

Home BancShares complements a proven Happy Bancshares acquisition team. The Texas bank has expanded its activities in the pan primarily through acquisitions, purchasing four banks since January 2020 with assets between $ 58 million and $ 795 million. John Allison, Chairman and Chief Executive Officer of Home, is familiar with the Texan marketplace as he served as a director of First Commercial Corp., which operated in the state.

In a presentation on the deal, Home BancShares said the deal presents an “opportunity to better compete in future consolidations in Texas.”

Allison noted that consolidation and integration of the two companies is a priority now, although future purchases are being considered. “We are constantly looking for M&A,” he told bank analysts on Wednesday’s conference call.

All of these factors make for a warm welcome to Home and Happy combined operations.

On Thursday, Stephens increased his earnings per share for the combined company from $ 1.58 to $ 1.65 for 2022 and raised his earnings per share forecast for 2023 from $ 1.66 to $ 1.80. The investment banking firm also raised Home BancShares’ price target to $ 29 per share from $ 27.

BANKING GUIDE

Executives from Little Rock Venture Center and Simmons Bank are hosting a lunch workshop Tuesday to help small businesses learn more about building an effective relationship with their bank.

The hour-long session covers topics such as figuring out exactly what a small business bank needs and what factors affect credit.

Small business owners are learning to speak the language of bankers so that operators can stay one step ahead when applying for credit.

The Simmons Board includes Dee Davenport, Senior Vice President and Trust Manager; Carole J. Smith, senior vice president and business development officer; and David Stogsdill, Head of Divisional Marketing.

OFFICE SALES

Acadia Properties of Little Rock has purchased an office building on 11219 Financial Center Parkway for $ 2.15 million.

Acadia, registered to Ali Raja, purchased the 32,767-square-foot Financial Park Place building near the Interstate 630-430 intersection in West Little Rock.

Hermitage Development Corp., which sold the property, was represented by Clark Irwin at Colliers of Arkansas. Acadia was represented by Reed Gibbons with the RPM Group.

“This property obviously benefits from great visibility from Financial Center Parkway and its freeway access,” Irwin said in a statement. “Additionally, the western Little Rock office market within central Arkansas MSA continues to perform well, making this a good investment property for its new owners.”

MORE MONEY AVAILABLE

The U.S. Small Business Administration is increasing the amount borrowers can apply for through the Covid-Related Economic Injury Agency’s catastrophe loan program.

Starting October 8, small business owners, including farms and nonprofits in all states, can apply for up to $ 2 million under the initiative. Loans are capped at $ 500,000.

The loans come directly from SBA and must be repaid. The low interest fixed rate loans are designed to help small businesses overcome the economic damage caused by the pandemic by providing working capital to cover operating costs. Loans have a term of 30 years and payments can be deferred for the first two years, with interest accruing.

Working capital includes regular payments for business expenses such as payroll, rent or mortgage, utilities, and other ordinary business expenses. The loans can also be used to settle business debts at any time.

Further information or an application can be found at covid19relief.sba.gov.

Ideas or Recommendations column? Thoughts or Thoughts to Follow? Contact me at [email protected] or at 501-378-3567.

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