Leader Blues

Friday, October 09, 2009

TOP STORY >> Centennial raises $107M, may buy troubled banks

By JOHN HOFHEIMER
Leader senior staff writer

With $107 million in its war chest from a recent common stock offering, Centennial Bank is shopping the bargain bins for troubled or failed banks in Arkansas, Florida, Memphis, east Texas and southern Missouri, CEO John Allison said this week.

Centennial, a wholly owned subsidiary of Home BancShares Inc. of Conway, has 46 branches and 58 automatic teller machines within 50 miles of Jacksonville.

“We have the ability to grow the company by $2.6 billion and still maintain an 8 percent tangible asset ratio,” Allison said.

Tangible assets presume what shareholders would receive in case of liquidation. Centennial currently has the highest tangible common-equity ratio — 13.3 — of any publicly traded bank in the country that has at least $500 million in assets. The FDIC wants the largest banks to have TCE ratios of 4 or higher, Allison said.

Home BancShares raised $107 million in new capital in only two days, selling about 5.7 million new shares through Stephens Inc. RBC Capital Markets Corporation served as joint book runners, and Stifel, Nicolaus and Company Inc. and Howe Barnes
Hoefer and Arnett Inc. served as co-managers.

“We could double the size of the company,” Allison said.

He said that any banks his company buys would be rebranded as Centennial Bank.

Allison said that the federal government notifies banks like his of failed banks. When Centennial buys another bank, federal bank examiners and Centennial personnel would move in over the weekend, everything would be changed out and the bank would reopen on Monday as a Centennial Bank.

If they offered the winning bid on a bank, “We’d have to be prepared to take over on the weekend,” Allison said.
Could they do that?

“We’re going to school right now,” he said. “We have teams for (human resources), and teams for data that have to be organized.”

There are 71 banks with a so-called “Texas ratio” of one-to-one or worse, many of which could be closed soon. More than 90 banks have failed so far this year.

He said that local Arkansas banks are good, healthy banks.