Parent company of Centennial Bank acquires Happy State Bank

Home BancShares, Inc., the parent company of Centennial Bank, and Happy Bancshares, Inc., the parent company of Happy State Bank, jointly announced today 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 with the opportunity to leverage each company’s track record of performance, integration and leadership. The combination positions Home BancShares to expand further into Texas and potentially acquire additional institutions over time.

Under the terms of the definitive merger agreement, which was unanimously approved by the Boards of directors of both companies, Happy Bancshares shareholders upon closing of the merger 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, 2021, the per share consideration value is $47.24 and the aggregate transaction value is approximately $919 million.

The transaction is consistent with Home BancShares’ M&A track record and is expected to be immediately triple accretive: resulting in increases to earnings per share of 5.5%1 and 9.2%1 for 2022 and 2023, respectively; book value per share of 5.1%2 and tangible book value per share of 1.5%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 be approximately $23.3 billion2 in assets, $13.4 billion2 in loans and $18.7 billion2 in deposits and will be one of the 75 largest banks headquartered in the United States3.

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 are to 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,” said J. Pat Hickman, Chairman of Happy Bancshares. “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.”

John Allison, Co-Founder, Chairman, President and CEO of Home BancShares, stated, “We have expressed our desire to return to Texas for several years. 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. 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. 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. It’s exciting to see two great community banks with great cultures join forces,” added Mikel Williamson, President and CEO of Happy State Bank.

The merger is expected to close early in the first quarter of 2022, subject to satisfaction of customary closing conditions, including customary regulatory approvals and approval by the shareholders of each company.

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