Home BancShares Inc. of Conway announced Wednesday a $919 million deal to acquire Happy Bancshares Inc. of Happy, Texas, pushing up the parent company of Centennial Bank's assets by more than a third from $17.6 billion to beyond $23 billion.
In a news release, publicly traded Home BancShares (Nasdaq: HOMB) said the deal would be "immediately triple accretive," with increases to earnings per share of 5.5% and 9.2% for 2022 and 2023, respectively; book value per share of 5.1%; and tangible book value per share of 1.5%.
Led by co-founder and Chairman, President and CEO Johnny Allison, Home BancShares said it will continue to be headquartered in Conway and operate as Centennial Bank in its current markets. As part of the deal, the company will add J. Pat Hickman, Happy Bancshares' chairman, to its board of directors.
"We are thrilled to have found such a quality bank to partner with to make this expansion a reality," Allison said in a news release. "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."
Happy Bancshares CEO Mikel Williamson will join the Centennial Bank executive team, with other Happy State Bank executives maintaining leadership roles in Texas, the company said. Happy State branches in Texas will be rebranded as "Happy State Bank, a Division of Centennial Bank," after the merger is complete.
The deal is expected to close in the first quarter of 2022.
Both companies' boards unanimously approved the merger agreement. Per the deal, Happy Bancshares shareholders will receive 2.17 shares of Home BancShares stock for each share of Happy Bancshares they own.
Happy State Bank, founded in 1908, is chartered in Happy, a town of about 700 due south of Amarillo in the Panhandle of west Texas. Happy State Bank has been on an in-state acquisition spree, growing its assets from $3.8 billion at the end of 2019 to $6.26 billion as of June 30 by acquiring First State Bank of Mobeetie and, coincidentally, Centennial Bank of Lubbock in 2020 and First Bank of Muleshoe and First National Bank of Tahoka earlier this year.
With the acquisitions has come increased profitability. Happy State posted earnings of $47.6 million in 2019 and $60.1 million in 2020, and has already earned $53.6 million in the first six months of 2021.
Happy State had $810 million in equity capital as of June 30.
Happy State employs almost 900 people in 64 offices, all of them in Texas and most in the Panhandle. Other markets that Centennial — still using the Happy State Bank branding — will enter include Dallas, Austin and suburban San Antonio.
Centennial currently employs 2,000 people in 176 offices — 81 in Arkansas, 88 in Florida, six in Alabama and one in New York. It had $2.82 billion in equity capital as of June 30, and it has posted earnings of $175.5 million in the first two quarters of 2021 after earning $238.9 million in 2020.
Based on a volume-weighted average closing price per share of Home BancShares stock of $21.77 during the 20-trading-day period ending on Sept. 13, the per share consideration value is $47.24, putting the aggregate transaction value at about $919 million.
Home BancShares said Piper Sandler Cos. of Minneapolis was its financial advisor, and Mitchell Williams Selig Gates & Woodyard of Little Rock was its legal advisor. Stephens Inc. of Little Rock was the financial advisor to Happy Bancshares.
An earlier version of this story incorrectly stated Happy State Bank's 2020 earnings.