Home Bancshares John Allison on Dodd-Frank, Cuba, and the possibility of a merger of equals

by Roby Brock ([email protected]) 912 views 

Home Bancshares Chairman John Allison says his bank’s growing footprint in Florida has positioned the Conway-based bank enterprise for more regional growth as well as new opportunities depending on the Trump administration.

Allison was a guest on this week’s TV edition of Talk Business & Politics, where he discussed a wide range of banking topics. With Home Bancshares recent $778.4 million acquisition of Florida-based Stonegate Bank, Allison bucked the normal trend of buying an underperforming asset. Stonegate is in excellent financial condition – including some performance metrics that exceed Home Bancshares subsidiary Centennial Bank.

Of most curiosity is Stonegate’s presence in Cuba. Sitting at near $13 billion in assets, Home Bancshares could benefit if U.S. policy towards Cuba were to open up further in the Trump administration.

“That could really be big. That could be very big. However, someone asked me, ‘How much value did you assign to it?’ I said, ‘Nothing because I don’t understand it yet,’” said Allison, who is planning a trip to Cuba this week.

“We’ll be going next week to Cuba and meeting the minister of finance, and having a little rum and smoking some cigars, and drinking some coffee,” he said. “Maybe by the time I get back, I can give you a report on how Cuba was and what we think we can do with that.”

Centennial and Stonegate both have a major community bank presence across Arkansas and Florida. While additional buyout targets exist in and out of those states, Allison said don’t be surprised if some regional super banks come together.

“We have a nice presence is South Alabama and I like that market a lot. I have some friends that have a great presence in Mississippi. Who knows down the road? There’s five or six banks in the country that have separated themselves from the pack, and Home Bancshares is one of them, that we run together, we visit together, we share ideas together, and who knows. You may see a merger of equals of those great institutions that have separated themselves from the pack in the future,” Allison said.

“We’re all wrestling with the same situation. We could be $20 or $25 [billion]. Really the steps to go to $30 or $40 [billion] from here are not near as big as they were to get from zero to $10 [billion]. But I don’t have aspirations, I’d love to run a good community bank of $25 billion, and pay my shareholders a good dividend, and have fun and enjoy life. There’s nothing wrong with that. And be one of the most profitable banks, or continue to be one of the most profitable banks.”

Watch Allison’s full interview, in which he also discusses potential changes to the Dodd-Frank Act, in the video below. Trump has signaled that major regulatory relief for financial institutions is likely during his administration.