Greenbrier-based HomeBank of Arkansas will become the Barksdale Federal Credit Union of Louisiana later this year after federal and state regulators approve the deal. This should be finalized in the third quarter.
Terms of the acquisition were not disclosed, but John Stacks, chairman and CEO of HomeBank, told Talk Business & Politics he was pleased with the deal and the timeliness of the historic transaction.
HomeBank, owned by Peoples Home Holdings, is based in the state and its board of directors, led by Stacks, approved the sale to Barksdale Federal Credit Union, based in Bossier City, La., on Friday, Feb. 25. He said all assets of Peoples Home were acquired for an undisclosed amount, pending regulatory approval. The bank’s board of directors will be dissolved, as will the bank’s charter, and the bank’s customers will become members of the credit union.
“This is the first time an Arkansas state-chartered bank has been sold to a credit union,” Stacks said. “We are thrilled to join Barksdale, a $2 billion institution with operations in Louisiana and Texas.”
HomeBank has five Arkansas branches in Damascus, Greenbrier, Little Rock, Marshall and Portland. HomeBank’s combined assets totaled about $73.8 million at the end of 2021, according to FDIC reports. The bank had $66 million in total deposits, most of which are core deposits – local to the bank – at $57.7 million at year end. The bank posted a net loss of $50,000 at the end of the year. This is an improvement from the loss of $419,000 recorded at the end of 2020 and the net loss of $984,000 recorded at the end of 2019. The bank was profitable in the first three quarters of 2021. The bank was sitting on $1.8 million in non-current loans. in his books at the end of the year. This was down from $2.1 million in the prior year period.
Stacks said 2021 was tough and the bank overcame losses. He said the bank’s assets should return to profitability by the end of this year. After 40 years in banking, Stacks said he will stay on through the transition, but plans to leave the company later this year to focus on his other farming and manufacturing business pursuits.
The acquisition is expected to increase Barksdale’s branch count to 30, its employees to 425 and its total assets to approximately $2.1 billion, according to the statement. A call to Barksdale Federal Credit was not returned.
Randy Dennis, president of DD&F Consulting in Little Rock, said it was the first time a credit union had bought an Arkansas bank. He said there have been other rumors in the past, but this is the first real deal. He expects Barksdale probably got the bank at a good price, even after the usual bonus allowance to cover the double capital gains taxation of the bank and the board that occurs when a sale.
Dennis also said the ambitious Barksdale was likely looking for a strong deposit base in a strong market and they found it in HomeBank and central Arkansas. Dennis expects to see more bank consolidation in the coming years as increased regulatory requirements continue to weigh on earnings.
John Dominick, a retired banking consultant and banking professor, said this type of acquisition wasn’t all that unusual, even though it hadn’t been done in Arkansas before. He said credit unions have fewer regulations than banks and often seek to increase deposits in new geographies.
Barksdale expanded east into Texas a few years earlier and this deal gives them a presence in central Arkansas. Dominick said the acquisition was likely a good deal for the credit union as a way to grow deposits with a lower cost of capital than establishing their own branches.
Dr. Tim Yeager, chair of the Bankers of Arkansas Chair at the University of Arkansas, said this type of acquisition is much more common than a bank acquiring a credit union. He said that the taxation of banks is different from that of credit unions. He said it makes more sense for credit unions looking to grow membership and consumer lending to look to community banks looking to sell. He said banks that have stable core deposits, home loans and not business loans — which cannot exceed 12.25% of a credit union’s assets — are particularly attractive.
Bancorp I was financial advisor to Peoples Home Holdings and law firm HomeBank and Stacks served as legal advisor. McQueen Financial Advisors advised Barksdale, while Luse Gorman PC acted as legal advisor throughout the acquisition.