Banker Allison on ASU, tax cuts, jump-starting his stock price

by Roby Brock (roby@talkbusiness.net) 434 views 

Johnny Allison, chairman of the board for Home BancShares, parent company of Centennial Bank

Jonesboro native Johnny Allison is chairman of the board for Home BancShares, parent company of Centennial Bank. The Conway-based bank has the largest market share in the Jonesboro metro market thanks to its 2014 acquisition of Liberty Bancshares.

Allison, an Arkansas State University alumnus, has been a major contributor to the ASU football program. He personally donated $5 million to ASU in 2014 for a stadium expansion that included a revamped press box, luxury suites and a club lounge for fans.

In 2017, Allison and Centennial Bank donated a combined $10 million for a north end zone facility that will include new locker rooms, weight training and rehabilitation areas for players, and new stadium amenities for fans, such as an all-you-can eat food and drink area and a water feature. ASU is naming the football field, “Allison Field.”

In an exclusive interview with Talk Business & Politics CEO Roby Brock, Allison reflects on the financial institution’s performance, how federal policies are impacting the bank, and his enthusiasm for ASU and Northeast Arkansas.

Roby Brock: Let’s talk a little politics here. Tell me how you see things playing out in the economy based on what you’ve been seeing during the Trump administration.

Johnny Allison: From an economic perspective, it’s really been very good. Employment is good. From a tax savings perspective, Donald Trump gave us about $55 million.

Brock: What did you do with it?

Allison: We haven’t done anything with it yet really to speak of. I bought back about 800,000 shares. Our stock’s been on fire, so when it’s on sale, you buy it back. We’ll continue to be in the buyback mode. We will probably reduce some debt. We’ll probably increase our dividend for our shareholders. Home’s balance sheet is in such good shape, we have all the handles pulled.

Brock: Your stock’s been trading somewhere in the $23 per share range, sometimes a little higher, sometimes a little lower. You said at your shareholders’ meeting not too long ago, and you still continue to say it to this day, that your share price is undervalued. What’s it going to take to make it move?

Allison: I don’t really know except keep your head down, do the right thing, which is what we do. But in ’16 and ’17, the stock was trading at $28-$29 a share. Now it’s trading at $22-$23. That was $600 million in income ago. It’s not rational.

Brock: An underperforming stock, in your words, and a very healthy balance sheet, and really good strong profits … could you guys be an acquisition target?

Allison: Well, we could be. When you evaluate prices from that aspect that could come our way, we’re trading at about 3.1 times tangible book. We were trading at four — it’s where we ought to be trading, north of $30. But what the last three deals that were done, were done north of, in the three times tangible book range. I don’t know if prices are coming to us in that respect. They’re not coming to us for us to be the acquirer, so maybe we’ll be the acquired someday. That’s not my game. We’re not out there to do that. I’m just watching it happen.

Brock: You’ve made a lot of major donations to your alma mater, especially for football. You got a big one coming online right now. What are you hoping the impact will be? What’s it going to do in terms of quality of life and accelerating ASU’s growth?

Allison: Well, No. 1 from a recruiting standpoint, it will be great for the football and the athletic program to have that on the recruiting side. Also, it will be wonderful for the fans. But think about the impact that Arkansas State University makes on Northeast Arkansas. We have a large bank there. As a matter of fact, I think our deposits grew more there last year than any other place in the country. The more Arkansas State grows, the more we grow in that marketplace. The excitement and the enthusiasm that football creates in the new program, the new press box, and the new facility we built, that all feeds on Northeast Arkansas and that feeds on our banking empire there.

Brock: What was the experience like for you at ASU? Are you giving back to the campus because of your experience there as a student or is it because of what you have seen happen since you’ve been a student there?

Allison: My father was the first president of the Indian Club [now the Red Wolf Club]. When I was growing up, Arkansas State surrounded our house. I was all over that campus. I went to grade school there through an early childhood development program with Dr. Mildred Vance. Five generations of Allisons have gone to school here. It’s ingrained in the Allison family, and the Allison family’s ingrained in Arkansas State University. Actually, where the football field was, was about a half a mile from my house, and there was a golf course years ago. My entire golfing experience: I found a putter and a ball out there one day, so that’s it. I work for a living, not golf.

Brock: What’s your prediction on what Northeast Arkansas’ potential is when you look at other parts of the state of Arkansas? But in particular, you see other parts of the country too. What do you see happening that’s special or significant?

Allison: Any time you have a university town, it just draws people whether the economy is good or bad — it makes an impact. We have a great mayor in Jonesboro. He’s a tremendous leader. He’s done an outstanding job in that marketplace. You’ve got the university. You seem to have all things going in that market, still a lot of agri going on up there. But years ago, the city fathers also built a nice industrial park, and that’s been extremely successful for them. They moved into the food [processing] market, and that’s worked out well.

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