Home BancShares Inc. Chairman John Allison went to the Miami International Boat Show this month and sailed away with a transaction that will nearly double the bank's marine-lending business.
Home BancShares announced late Wednesday that it is acquiring LH-Finance, the marine-lending division of People's United Bank of Bridgeport, Conn. The transaction is expected to close by the end of March. LH-Finance has a loan portfolio valued at $405 million.
"We have just returned from the Miami boat show, working with our Shore Premier Finance team," Allison said in a prepared statement. "The excitement and enthusiasm from manufacturers and dealers is very contagious. Looks like perfect timing for HOMB (Home Bancshares)."
Conway-based Centennial Bank, which is owned by Home BancShares, agreed to acquire $405 million in loan balances from LH-Finance. The finance company provides loans to individual customers and wholesale financing to boat dealers.
Home "paid a little premium" to purchase the business but specific terms were not disclosed at the request of the seller, said Donna Townsell, senior executive vice president and head of investor relations at the bank.
The move further expands Home Bancshares' efforts to grow its marine-lending portfolio. In July, the bank purchased Shore Premier Finance from Union Bankshares Corp. of Richmond, Va.
At the time, Shore had $384 million in assets and $383 million in loans. The company finances loans for high-end sailboats and power boats. The loan portfolio today is valued at $517 million.
The LH-Finance transaction will be accretive to earnings and bolsters Home's boat-financing business, according to Stephens Inc. analyst Matt Olney.
"The acquisition expands upon [Home's] 2018 acquisition of SPF and will bring the total marine division to $900 million or 7.5% of the total loans," Olney wrote in a report issued Thursday.
Olney projected Home BancShares will gain 3-4 cents of earnings per share with the transaction. In fourth-quarter 2019 earnings, Home BancShares reported that earnings per share increased by 7% to 44 cents and beat analysts' expectations of 42 cents.
On the January earnings call, Allison indicated that the bank was near to announcing a transaction that "gives a little kick" to earnings per share.
Home will fold the LH-Finance portfolio into Centennial's Shore Premier Finance division. Shore will be responsible for servicing the acquired loan portfolio and originating new loan production.
"The consolidation of LH-Finance into Shore Premier Finance is a natural evolution of two marine finance specialty teams that share common roots," said Shore President John Marshall. "Further, this is an exciting opportunity to leverage scale and our unique business model to provide even greater service to our manufacturer, wholesale dealer and retail customers."
In connection with the acquisition, Centennial has notified the Arkansas State Bank Department of its plans to establish a new loan production office in Baltimore.
Home BancShares has 77 branches in Arkansas, 78 in Florida, five in Alabama and one in New York City.
Business on 02/21/2020