Greenbrier-based HomeBank of Arkansas will become Barksdale Federal Credit Union of Louisiana later this year after federal and state regulators approve the deal. That’s expected to be finalized in the third quarter.
Terms of the acquisition were not disclosed, but John Stacks, chairman and CEO of HomeBank, told Talk Business & Politics he was pleased with the deal and opportunity regarding this historic transaction.
HomeBank, owned by Peoples Home Holdings, is state-based and its board of directors, led by Stacks, approved the sale to Bossier City, La.-based Barksdale Federal Credit Union on Friday, Feb. 25. He said all of the assets of Peoples Home were acquired for an undisclosed amount, pending regulatory approval. The bank board will be dissolved as will the bank charter and the bank customers will become credit union members.
“It’s the first time a state-chartered bank in Arkansas has been sold to a credit union,” Stacks said. “We are excited to join Barksdale, a $2 billion institution with locations in Louisiana and Texas.”
HomeBank has five Arkansas branches in Damascus, Greenbrier, Little Rock, Marshall and Portland. Combined assets for HomeBank totaled about $73.8 million at the end of 2021, according to FDIC reports. The bank had $66 million in total deposits, most of which are core deposits – local to the bank – at $57.7 million at year-end. The bank posted a net loss of $50,000 at year end. This was an improvement over the $419,000 loss reported at the end of 2020 and the $984,000 net loss reported at the end of 2019. The bank was profitable through the first three quarters of 2021. The bank was sitting on $1.8 million in non-current loans on its books at year-end. That was down from $2.1 million in the prior-year period.
Stacks said 2021 was challenging and the bank has been working through the losses. He said the bank’s assets should return to profitability by the end of this year. After 40 years in banking, Stacks said he will stay on through the transition but he plans to exit the business later this year to focus on his other business operations of farming and manufacturing.
The acquisition is expected to increase Barksdale’s branch count to 30, its employees to 425, and its total assets to approximately $2.1 billion, according to the release. A call to Barksdale Federal Credit was not returned.
Randy Dennis, president of DD&F Consulting in Little Rock, said this is the first time a credit union has acquired an Arkansas bank. He said there have been other rumblings in the past, but this is the first actual deal. He expects Barksdale likely got the bank for a good price even after customary premium allowance to cover the double capital gains taxation of the bank and the board of directors that occur with a sale.
Dennis also said the ambitious Barksdale was likely looking for a solid deposit base in a strong market and they found that in HomeBank and central Arkansas. Dennis expects to see more banking consolidation in the next few years as heightened regulatory requirements continue to pressure earnings.
John Dominick, banking consultant and retired banking professor, said it’s not that unusual for this type of acquisition, even though it hasn’t been done in Arkansas before now. He said credit unions have fewer regulations than banks and they are often looking to grow deposits in new geographies.
Barksdale expanded to East Texas a few years earlier and this deal gives them a presence in central Arkansas. Dominick said the acquisition was likely a good deal for the credit union as a way to grow deposits with a lower cost of capital than establishing their own branches.
Dr. Tim Yeager, Arkansas Bankers Chair at the University of Arkansas, said this type of acquisition is much more common than a bank acquiring a credit union. He said the taxation of banks is different from that of credit unions. He said it makes more sense for credit unions looking to grow membership and consumer-oriented loans to look at community banks wanting to sell. He said banks that have steady core deposits, home loans and not business loans – which can’t be more than 12.25% of a credit union’s assets – are particularly attractive.
Bancorp I was financial adviser to Peoples Home Holdings and HomeBank and Stacks Law Firm served as legal counsel. McQueen Financial Advisors advised Barksdale, while Luse Gorman PC is serving as legal counsel throughout the acquisition.