On September 15, Conway, Arkansas-based Home BancShares Inc. (HOMB), the parent company of Centennial Bank, and Amarillo-based Happy Bancshares Inc., the parent company of Happy State Bank, jointly announced that they have entered into a definitive merger agreement pursuant to which Home BancShares will acquire Happy Bancshares in an all-stock merger, with Home BancShares as the surviving entity. The combination grants Home BancShares access to the high-growth Texas market and establishes the combined entity as a dominant Southern institution. The combination positions Home BancShares to expand further into Texas and potentially acquire additional institutions over time. The merger is expected to close early in the first quarter of 2022.

Under the terms of the definitive merger agreement, upon closing of the merger Happy Bancshares shareholders will receive 2.17 shares of Home BancShares stock for each share of Happy Bancshares they own and will begin receiving quarterly dividends declared by Home BancShares. 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 September 13, the per-share consideration value is $47.24 and the aggregate transaction value is approximately $919 million.

The transaction is consistent with Home BancShares’ mergers-and-acquisitions track record and is expected to be triple accretive immediately, resulting in: increases to earnings per share of 5.5 percent ^[1] and 9.2 percent ^[1] for 2022 and 2023, respectively; book value per share of 5.1 percent ^[2] and tangible book value per share of 1.5 percent ^[2]. Following the completion of this transaction, Home BancShares will continue to have a robust capital position along with an improved operating profile. The pro forma bank will have approximately $23.3 billion ^[2] in assets, $13.4 billion ^[2] in loans and $18.7 billion ^[2] in deposits and will be one of the 75 largest banks headquartered in the U.S. ^[3].

Home BancShares will continue to be headquartered in Conway, Arkansas, and operate as Centennial Bank in its current markets. As part of the transaction, Home BancShares will add J. Pat Hickman, current Happy Bancshares chairman, to its board of directors. Happy Bancshares CEO Mikel Williamson will join the Centennial Bank executive team, while additional Happy State Bank executives will maintain leadership roles in Texas markets. Following completion of the merger, branches located in Texas will be branded Happy State Bank, a Division of Centennial Bank.

“Happy State Bank is excited to join forces with one of the top-performing banks in the country,” Hickman says. “Centennial Bank is one of the few banks that has grown even faster and stronger than Happy, and with a similar mix of serving both small towns and metropolitan areas, they check every box when it comes to taking care of customers, stockholders and employees. It’s just a great match. I have to say it…we’re happy to be joining the HOMB team.”

“We have expressed our desire to return to Texas for several years,” says John Allison, co-founder, chairman, president and CEO of Home BancShares. “We are thrilled to have found such a quality bank to partner with to make this expansion a reality. As strong as HOMB’s loan yield is, Happy’s is even stronger. Combining that with joining forces with their founder, J. Pat Hickman, quality employees and 1,300 loyal individual shareholders, makes this a very attractive combination. Making a ‘triple accretive’ transaction, with no earn-back period—which includes $55 million in deal costs plus $28 million to be taken immediately after close reflective of the CECL “double count”—and now being in two of the best growth markets in the U.S.—Texas and Florida—should reap strong returns for our shareholders.”

“Centennial is one of the best banks in the country and Happy is one of the best banks in Texas when it comes to taking care of their stockholders, customers, employees and communities,” Williamson says. “It’s exciting to see two great community banks with great cultures join forces.”

Piper Sandler served as the financial advisor to Home BancShares and provided a fairness opinion, with Mitchell, Williams, Selig, Gates & Woodyard serving as legal advisor. Stephens Inc. served as financial advisor to Happy Bancshares and provided a fairness opinion, with Alston & Bird serving as legal advisor.

Established in 1908 in Happy, Texas, Happy State Bank serves communities across the Texas Panhandle, South Plains, Austin, Central Texas and the Dallas/Fort Worth metroplex with more than 60 locations. Established in 1903, Centennial Bank operates more than 160 branches in Arkansas, Florida, South Alabama and New York City.

^[1] Assumes 75 percent realization of cost savings in 2022 and full realization of cost savings in 2023.
^[2] Estimates are based on December 31, 2021, projections.
^[3] By deposit market share—source S&P Global Market Intelligence.