Home BancShares Inc. Chairman Johnny Allison just had the "most stressful" quarter of his entire business career.
During the first quarter, Home BancShares closed its Bank of Commerce deal, announced the acquisition of Stonegate Bank, conducted a subordinated debt offering, crossed the $10 billion asset threshold and met with a new examiner team.
The bank also produced record profits, even as loans grew "a tick," Allison said during the bank's earnings call on April 20. The community bank unit produced about $43 million in loan growth during the first quarter, but accelerated payoffs in the company's Centennial Commercial Finance Group reduced outstanding balances by about $27 million, executives said. Florida drove essentially all of the gains. Going forward, Allison believes the bank could notch $100 million in loan growth a quarter.
"We're going to do what the market allows us to do. We're not going to push it," an executive said.
Allison said the bank is also raising prices on its construction loans, given that they have become "a limited resource" following regulatory scrutiny and concerns about overproduction. He told of a large construction client asking a bank executive how big a loan he could get in order to start making loans to other construction companies that could not get loans from banks. Allison compared the bank's construction lending business to being the only apple seller in town, and said if Home BancShares is willing to take the risk, it should make more money.
Management said Home BancShares' recent $300 million subordinated debt issuance should have a positive effect on commercial real estate concentrations, pushing the bank below the thresholds that can trigger extra regulatory scrutiny. That, coupled with the bank's enhanced risk management procedures, should allow for "significant" future CRE growth, an executive said.