So that’s what Johnny Allison was talking about.
Last week Home BancShares Inc. of Conway, the publicly traded holding company for Centennial Bank, announced that it intends to pay $88.5 million in cash and stock in the first quarter of 2017 for a Florida bank whose $463 million in assets would push Centennial’s assets to $10.2 billion.
And that reminded Whispers of a sly comment the colorful chairman of the board made in an interview in July.
“You’ll see me stay under $10 billion this year. We’re going to stay under $10 billion,” Allison said. “You’ll see me go over $10 billion next year. And I may crawl over $10 billion. I may not leap over $10 billion. Hopefully, I’ll announce a deal sometime late this year that’ll close next year, and I think I’m going to crawl over $10 billion because I’ve absorbed ... the personnel expenses. The only thing that I haven’t absorbed is the Durbin Amendment.”
Ten billion dollars in assets is a landmark for a bank under the Dodd-Frank Wall Street Reform & Consumer Protection Act of 2010 and its amendments, particularly the Durbin Amendment that caps “swipe fees” — debit card interchange fees charged to merchants. Triggering the Durbin Amendment would cost Centennial north of $6.5 million, Allison said in July.
“But my thought is I’ll buy me a $500 million bank and get me a 1.5 percent ROA, and that will take care of that,” he said.
While other banks — notably Bank of the Ozarks of Little Rock, which went from $9.8 billion at the end of 2015 to $18.5 billion as of Sept. 30 — have made big acquisitions to vault over the $10 billion mark, Allison was characteristically contrarian.
“I’m not going to leap over the $10 billion and pay two times book [value] and do it for the sake of the expense side,” he said. “I’m going to take my time. I may be the first to crawl over it, but I’ve seen enough by now that I’m not afraid to crawl over it because I’ve already absorbed most of the expenses. That one scares me.”