Home BancShares plans Texas market entry through $918M acquisition

by Paul Gatling ([email protected]) 2,945 views 

Conway-based Home BancShares (NASDAQ: HOMB), holding company of Centennial Bank, announced Wednesday (Sept. 15) its entrance to the Texas market with the $918 million all-stock acquisition of Happy Bancshares, parent of $6.2 billion-asset Happy State Bank.

Happy State Bank is based in Amarillo.

According to a news release, the pro forma bank will be approximately $23.3 billion in assets, $13.4 billion in loans and $18.7 billion in deposits. It will be one of the 75 largest banks headquartered in the U.S.

The deal is pending regulatory approval and is expected to close in the first quarter of 2022.

“The combination grants Home BancShares access to the high growth Texas market and establishes the combined entity as a dominant Southern institution with the opportunity to leverage each company’s track record of performance, integration and leadership,” Home BancShares officials said in a news release. “The combination positions Home BancShares to expand further into Texas and potentially acquire additional institutions over time.”

The boards of both holding companies unanimously approved the merger agreement. According to the release, Happy Bancshares shareholders will receive 2.17 shares of Home BancShares stock for each share of Happy Bancshares they own once the deal is finalized.

Happy Bancshares chairman J. Pat Hickman will join the Home BancShares board of directors. Happy Bancshares CEO Mikel Williamson will join the Centennial Bank executive team while additional Happy State Bank executives will maintain leadership roles in Texas markets.

“Happy State Bank is excited to join forces with one of the top-performing banks in the country,” Hickman said in a statement. “Centennial Bank is one of the few banks that has grown even faster and stronger than Happy, and with a similar mix of serving both small towns and metropolitan areas, they check every box when it comes to taking care of customers, stockholders and employees. It’s just a great match. I have to say it…we’re happy to be joining the HOMB team.”

“We have expressed our desire to return to Texas for several years. We are thrilled to have found such a quality bank to partner with to make this expansion a reality,” said Johnny Allison, Home BancShares’ co-founder, chairman, president and CEO. “As strong as HOMB’s loan yield is, Happy’s is even stronger. Combine that with joining forces with their founder, J. Pat Hickman, quality employees and 1,300 loyal individual shareholders, makes this a very attractive combination.

“Making a ‘triple accretive’ transaction, with no earn-back period (which includes $55 million in deal costs plus $28 million to be taken immediately after close reflective of the CECL “double count”) and now being in two of the best growth markets in the U.S. (Texas and Florida) should reap strong returns for our shareholders.”

When the merger is completed, Happy Bancshares’ 64 branches in Texas will be branded Happy State Bank, a Division of Centennial Bank.

Home BancShares stock closed Tuesday at $21.04. In the past 52 weeks, Home BancShares stock has traded between $14.42 and $29.76.