The past month has been the most strenuous of his life, John Allison, chairman of Home BancShares, told stockholders Thursday at the bank's annual shareholders meeting in Conway.
First, the bank began meeting with a new set of regulators to go over Home BancShares' finances after it crossed $10 billion in assets earlier this year.
"They hit me with a ball bat," Allison said. "I said, 'If you're trying to get my attention, you've got my attention.'"
Then last month, Home BancShares announced the purchase of Stonegate Bank in Pompano Beach, Fla., and its $3.5 billion in assets. It's the biggest bank Home BancShares has ever bought. The Conway-based bank paid $778 million, about 2.4 times book value, one of the highest prices paid for a bank in recent years.
"We bought the best bank in America," Allison said. "They could have done anything they wanted -- sell to us, sell to another bank or not sell at all. It's the cream of the crop."
Dave Seleski, chairman and chief executive officer of Stonegate, told the shareholders Thursday, "We had a good bank in Florida, but we joined a much better bank."
In need of capital to help fund the purchase, Allison hired an international investment firm to sell the offering, but its effort fell well short of Home BancShares' needs.
Allison said he then called Stephens Inc. of Littlel Rock and asked if it would take the job. Allison also hired Sandler O'Neil of New York City and the two firms raised $300 million in less than a week.
"We had all these deals and the domino had to fall here, the domino had to fall here, the domino had to fall there," Allison said. "What happened was this domino falls, that domino falls and the next domino falls. And it was extremely difficult to make the dominoes fall."
Home BancShares and Simmons First National Corp. of Pine Bluff both released first-quarter earnings last week.
Home BancShares earned $46.9 million in the quarter, a record for the 24th-straight quarter. Home BancShares had $10.7 billion in assets in the quarter.
Simmons, which has $8.6 billion in assets, earned $22.1 million in the first quarter.
Simmons announced the purchase of three banks last year -- Hardeman County Investment Co. and its subsidiary bank, First South Bank of Jackson, Tenn.; Bank SNB of Stillwater, Okla.; and Southwest Bank of Fort Worth.
The three acquisitions are expected to close this year.
Simmons is facing scrutiny from federal regulators in the purchase of Hardeman County Investment Co. over a public comment about mortgage loans in low- and moderate-income neighborhoods.
It is a frustrating process, George Makris, Simmons' chairman and chief executive officer, said Thursday during a conference call.
"Frustrating not only for us but especially for the acquired bank," Makris said. "The risk that this current process puts into the [acquisition] system and financial system of the United States is an unbelievable experience to me."
Simmons has addressed all of the Federal Reserve's questions, Makris said.
"We generally get eight days to respond when they ask a question," Makris said. "They have no set timeline to respond to us."
Simmons has not yet filed its applications on the other two banks, Makris said.
"Quite honestly, we're a little hesitant to file those until the resolution on the Hardeman application comes through."
Still, Simmons is optimistic about what the acquisitions in Oklahoma and Texas will do for the Pine Bluff bank in the long term, Makris said.
With its current locations and loan growth, Simmons has benefited from its new expanded size, Makris said.
"But I'll tell you it pales in comparison with that opportunity in Dallas-Fort Worth, Oklahoma City, and Denver, Austin, San Antonio and some of the other new markets we're about ready to enter [with the Bank SNB and Southwest Bank deals], " Makris said. "We're planning for that integration and we all understand the long-term benefits of the new size and scale past $10 billion."
With the three acquisitions, Simmons will cross the $10 billion in assets threshold requiring more extensive regulatory oversight.
After passing $10 billion, a good long-term target for Simmons is to have a return on assets -- or profit as a percentage of assets -- of 1.50 percent and an efficiency ratio of 55 percent, Makris said. A 55 percent efficiency ratio means it costs Simmons $55 to earn $100.
SundayMonday Business on 04/24/2017