David Seleski had good reason to laugh when John Allison crowned him with a plastic hat in the shape of a razorback hog March 27.
Seleski was in Arkansas to announce the sale of Pompano Beach-based Stonegate Bank to Home BancShares, the Conway, Ark.-based parent of Centennial Bank, for a premium price post-recession. Seleski, the CEO of Stonegate, founded the bank in 2005.
In a strong sign community banking in Florida is recovering, Home BancShares agreed to buy Stonegate for $778 million, or about 2.35 times tangible book value — a common measure of a bank's value. “That's the highest price of any bank in Florida since the recession,” says Seleski, who will run most of Centennial's Florida operations, as well as a branch in Cuba. “It was a very fair price.”
Home BancShares' Arkansas rival, Bank of the Ozarks, paid two times tangible book value for St. Petersburg-based C1 Financial, parent of C1 Bank, last summer. When that deal closed in July, the $402.5 million was a record on a price-to-tangible-book basis.
Stonegate grew rapidly through acquisitions on Florida's west coast, buying struggling banks at a discount from Tampa to Naples through the recession. Most recently, the publicly traded bank (symbol: SGBK) reported $3.1 billion in total assets with 25 branches in West and South Florida. “We were one of the top three franchises in Florida,” Seleski says. “We expected the premium deal.”
Stonegate shareholders will receive $50 million in cash and the rest in Home publicly traded stock (symbol: HOMB). The deal is expected to be completed in the fourth quarter of this year, pending customary regulatory and shareholder approvals.
Seleski says the history of the Home BancShares deal will be spelled out in detail in an upcoming securities filing, but he says shareholders began to consider the bank's short-term options when Stonegate reached $3 billion in assets recently.
“Are shareholders better off at $4 billion than $3 billion, and the answer was no,” Seleski says. Besides, he adds, “we were running out of banks to acquire.”
Home BancShares officials say the Stonegate acquisition will be immediately accretive to its earnings and book value. Both banks were awarded a 2016 Raymond James Community Bankers Cup award, which recognized the top 28 community banks with assets between $500 million and $10 billion based on profitability, efficiency and balance sheets. Forbes magazine also named Home BancShares the eighth best bank in America among banks with assets from $8 billion to $2.5 trillion.
Together, Home and Stonegate will have a combined $13 billion in assets with 93 branches in Florida. The combined banks' deposits of $5.6 billion will make it the third-largest community bank-holding company in Florida behind IberiaBank and FCB Financial Holdings, according to a Home BancShares investor presentation outlining the deal.
“You're putting two really good banks together,” Seleski says. “Sixty percent of their assets are going to be in Florida.”
Adds Seleski: “It's a new chapter, not the end of the book.”