Home BancShares Inc. president John Allison visited the Miami International Boat Show this month and walked away with a deal that will nearly double the bank’s marine lending business.
BancShares announced on Wednesday evening the acquisition of LH-Finance, the marine lending division of the United People’s Bank of Bridgeport, Connecticut. The transaction is expected to be finalized by the end of March. LH-Finance has a loan portfolio valued at $ 405 million.
“We 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. This seems like the perfect time for HOMB (Home Bancshares).”
Conway-based Centennial Bank, which is owned by Home BancShares, has agreed to acquire $ 405 million in loan balances from LH-Finance. The finance company provides loans to individuals and wholesale finance to boat dealers.
Home “paid a small premium” to buy the business, but specific terms were not disclosed at the seller’s request, said Donna Townsell, senior executive vice president and head of investor relations at the bank .
This decision further expands Home Bancshares’ efforts to develop its maritime loan portfolio. In July, the bank bought Shore Premier Finance from Union Bankshares Corp. of Richmond, Virginia.
At the time, Shore had $ 384 million in assets and $ 383 million in loans. The company finances loans for high-end sailboats and motorboats. The loan portfolio is currently valued at $ 517 million.
The LH-Finance transaction will be earnings accretive and strengthen Home’s boat finance business, according to Matt Olney, analyst at Stephens Inc ..
“The acquisition expands [Home’s] The acquisition of SPF in 2018 will bring the marine division’s total to $ 900 million, or 7.5% of total loans, “Olney wrote in a report released Thursday.
Olney forecast that Home BancShares will earn 3-4 cents in earnings per share with the transaction. In fourth quarter 2019 results, Home BancShares reported that earnings per share rose 7% to 44 cents and exceeded analysts’ expectations by 42 cents.
During the January earnings call, Allison said the bank was about to announce a transaction that “gives a little boost” to earnings per share.
Home will consolidate the LH-Finance portfolio into the Shore Premier Finance division of Centennial. Shore will be responsible for managing the portfolio of acquired loans and initiating production of new loans.
“The consolidation of LH-Finance into Shore Premier Finance is a natural evolution of two specialized marine finance teams that share common roots,” said Shore Chairman John Marshall. “Additionally, this is an exciting opportunity to leverage scale and our unique business model to provide even better service to our manufacturers, wholesalers and retail customers. “
As part of the acquisition, Centennial informed the Department of the State Bank of Arkansas of its intention 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.