Home BancShares Inc.'s planned acquisition of a marine lending portfolio would provide the Arkansas-based banking company both geographic and business line diversification, an executive said.
Tracy French, president and CEO of Home's Centennial Bank, also said the purchase of Shore Premier Finance from Richmond, Va.-based Union Bankshares Corp. would bolster the company's operations in Florida, a state ripe with boat buyers. Shore Premier provides direct financing to buyers of high-end boats, as well as inventory floor plan lines of credit to marine dealers. It finished the second quarter with about $383 million in total loans.
"It's something we have been looking to do for a few years," French said in a July 2 interview after Home announced the deal. Home, which had $14.32 billion in assets as of March 31, has built up a substantial Florida presence via bank acquisitions in recent years, and as it has done this, it has scouted for possible ways to ramp up its boat lending offerings, he said. "This was the right fit."
French said that, long-term, Shore Premier provides Home a foundation to build out marine finance offerings along both the East and West coasts. The national lending platform will focus on consumer and commercial marine loans, Home said.
"I definitely think they see this as a growth vehicle long term," Stephens analyst Matthew Olney said in an interview.
In an era of heated competition for loans — not just among banks, but also credit unions, online lenders and financial technology companies — banks are looking for new lines of business and new ways to expand their overall loan portfolios. Specialty finance has emerged as a key consideration for many banks, said Rob Pachence, a managing partner working on bank M&A at Ambassador Financial Group.
"There's no doubt about it," he said in an interview.
Pachence said buying a specialty finance operation often is easier to do than trying to build one from scratch. By acquiring, a bank not only gets a book of loans but also a team of lenders with demonstrated expertise in a specialized area, he said. With an acquisition, a bank also absorbs what would have been a competitor. He expects more banks will announce specialty finance deals.
French said Home and its subsidiary Centennial Bank, long among the more acquisitive in the Southeast, will remain on the prowl for possible deals. It will consider both whole banks and lines of business, he said.
"We are always looking for opportunities — as long as they benefit our shareholders," he said.