Conway bank buys marine-loan unit

Home BancShares, which owns Centennial Bank branches in four states, has acquired a lending division of Union Bankshares Corp. of Richmond, Va., the Conway-based firm said Monday.

Home BancShares paid Union $374.5 million in cash and 1.25 million shares of Home BancShares stock for Union’s Shore Premier Finance division, which makes loans for U.S. Coast Guardregistered high-end sailboats and power boats.

Home BancShares closed at $22.70 on Monday, up 14 cents a share, in trading on the Nasdaq exchange.

Shore Premier Finance has $384 million in assets and $383 million in total loans.

Since it is a loan purchase and not the purchase of an entire bank, the deal did not require regulatory approval, said Randy Dennis, president of DD&F Consulting Group in Little Rock.

The acquisition was effective as of Saturday.

“We’re always looking at acquisition opportunities to provide the strongest risk adjusted return for our investors,” John Allison, Home BancShares’ chairman, said in a prepared statement. “The Shore Premier Finance team has built a solid foundation in the marine finance space and we look forward to providing them the opportunity and resources to further develop that brand.”

The acquired loans represent less than 4 percent of Home BancShares’ loan balances, Matt Olney, a banking analyst in Little Rock with Stephens Inc., said in a research brief.

Shore Premier Finance originated $140 million in consumer loans in 2017, Olney said, and had only $45,000 in losses on originated loans since 2013.

The purchase fits with Centennial Bank’s lending strategy and diversifies the bank’s asset base more, Dennis said.

“It’s a good investment for them,” Dennis said.

Centennial Bank has a history of doing detailed due diligence before it makes an acquisition, Dennis said.

“They review portfolios and make sure they understand them backwards and forwards,” Dennis said. “One thing you can always be sure

about [Centennial Bank] is that [deals] have been vetted thoroughly.”

Garland Binns, a Little Rock banking attorney, noted that the purchase of an upscale marine lending business is a new dimension for Centennial Bank.

“What we’ve seen in the past is that [Centennial] is more focused on commercial lending vs. this type of lending,” Binns said. “Investors may want to take a wait-and-see approach going forward.”

Centennial has branches in Arkansas, Florida, New York and Alabama.