Getting Happy may be only the beginning for Home BancShares Inc. in Texas.
The Conway bank announced Wednesday that it will pay $919 million in stock to purchase Happy Bancshares Inc. of Amarillo, Texas. The deal, 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 base to expand operations in the state with additional merger-and-acquisition opportunities.
Even more, the Arkansas bank says it is "creating a dominant southern institution from panhandle to panhandle," noting its strong market presence in Florida, Home BancShares' largest and most productive market. After closing, Home BancShares projects it will have about $24 billion in assets, $14 billion in loans and $19 billion in deposits.
With a $919 million acquisition, Home is making a Texas-sized wager that it can deliver robust results when it folds the western neighbor into its operations.
"If we can do as well as the panhandle of Florida did for us, we're going to kick some tail and do extremely well," Centennial Bank Chairman and Chief Executive Officer Terry French said on a conference call with industry analysts after the deal was announced.
The jump over the border now puts Home BancShares in two of the nation's fastest-growing states. The 2020 census revealed that Texas was the third-fastest growing state in the nation over the past decade with nearly 16% population growth. Florida ranked seventh with population growth of 14.6%.
Texas alone provides a target-rich environment -- the acquisition includes banks in Austin, Fort Worth and suburban San Antonio. World Population Review ranks those cities among the five fastest growing metro areas in the United States.
Indeed, the Interstate-35 corridor connecting Austin to San Antonio has exploded over the past decade. For example, the city of New Braunfels at the northeast tip of San Antonio, grew 56%, according to census data from 2021.
Besides a growing population, Texas offers a banking market that is "fragmented and should provide more M&A opportunities" for Home BancShares, Stephens Inc. banking analysts reported about the deal. The analysts noted that the Texas market has 31 banks with assets ranging from $2 billion to $10 billion, compared with just 14 combined in Arkansas and Florida, Home's two largest legacy markets.
Home BancShares is adding a proven acquisition team from Happy Bancshares. The Texas bank has expanded its operations in the panhandle primarily through acquisitions, buying four banks with assets ranging from $58 million to $795 million since January 2020. John Allison, Home's chairman and chief executive officer, is familiar with the Texas market, having served as a director of First Commercial Corp., which operated in the state.
In a presentation related to the deal, Home BancShares said the transaction provides an "opportunity to better compete in future Texas consolidations."
Allison noted that consolidating and integrating the two companies is the primary focus right now though future purchases are on the table for consideration. "We're constantly looking for M&A," he told banking analysts on Wednesday's call.
All of those factors are producing a warm reception for the combined operations of Home and Happy.
On Thursday, Stephens raised its earnings per share for the combined company from $1.58 to $1.65 for 2022 and upped its 2023 EPS forecast from $1.66 to $1.80. The investment banking firm also increased Home BancShares' price target to $29 per share, up from $27.
BANKING GUIDANCE
The Little Rock Venture Center and Simmons Bank executives are holding a lunch workshop Tuesday to help small businesses learn more about building an effective relationship with their bank.
The hourlong session will include topics such as figuring out exactly what a bank needs from small business owners and the factors that influence loans.
Small business owners will learn how to speak the language of bankers so operators can be ahead of the process when they apply for loans.
The panel from Simmons will include Dee Davenport, senior vice president and trust manager; Carole J. Smith, senior vice president and business development officer; and David Stogsdill, head of the area market.
OFFICE SALE
Acadia Properties of Little Rock has purchased an office building at 11219 Financial Centre Parkway for $2.15 million.
Acadia, registered to Ali Raja, purchased the multitenant, 32,767-square-foot Financial Park Place building near the Interstate 630-430 interchange 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 RPM Group.
"This property obviously benefits from its excellent visibility from Financial Centre Parkway and its freeway access," Irwin said in a statement. "In addition, the west Little Rock office market continues to perform well within the central Arkansas MSA, 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 request through the agency's covid-related economic injury disaster loan program.
Beginning Oct. 8, small business owners, including agricultural operations and nonprofit organizations in all U.S. states, can apply for up to $2 million through the initiative. Loans have been limited to $500,000.
The loans are directly from SBA and must be repaid. The low-interest, fixed-rate loans are designed to help small companies overcome economic harm caused by the pandemic by providing working capital to meet operating expenses. Loans carry terms of 30 years and payments can be deferred for the first two years though interest will accrue.
Working capital includes regular payments for operating expenses such as payroll, rent or mortgage, utilities and other ordinary business expenses. The loans also can be used to pay business debt incurred at any time.
For more information or go apply go to covid19relief.sba.gov.
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