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Home BancShares Chairman John Allison: Q&A

Stocks in this article: HOMB

NEW YORK ( TheStreet) -- John Allison, the founder and chairman of Home BancShares (HOMB) of Conway, Ark., says "there will be more deals coming in Florida" for the company.

Home BancShares is one of only seven publicly traded bank or thrift holding companies currently assigned an A-plus (Excellent) rating by TheStreet Ratings, based on a very conservative emphasis on long-term total returns as well as revenue trends and capital strength and dividends. The ratings also consider short-term performance, financial stability and volatility.

Home BancShares Founder and Chairman, John W. Allison

Home BancShares had $4.1 billion in total assets as of March 31, with 84 branches in Arkansas, Alabama and Florida, having expanded beyond its original Arkansas market footprint with the purchase of six failed Florida banks from the Federal Deposit Insurance Corp. in 2010.

In February, the company's main subsidiary Centennial Bank purchased Vision Bank of Panama City, Fla., from Park National Corp. (PRK) of Newark, Ohio.

Centennial Bank paid $27.9 million for Vision Bank, picking up 10 branches in Florida and seven branches in Alabama, along with $520 million in deposits and $354 million in performing loans, while not taking on any of Vision Bank's nonperforming loans or repossessed real estate.

Home BancShares has posted consistently strong earnings, with operating returns on average assets ranging from 1.38% to 1.58% over the past five quarters, according to Thomson Reuters Bank Insight. The company focuses on commercial real estate lending, and its 's first-quarter net interest margin -- the difference between a bank's average yield on loans and investments and its average cost for deposits and wholesale borrowings -- was a very strong tax-adjusted 4.65%, declining slightly from 4.73% the previous quarter, but increasing from 4.61% a year earlier. The margin has "been boosted minimally" by the better-than-expected performance of loan pools acquired from failed institutions, according to Allison.

In an interview with TheStreet on Thursday, Allison said "there's more opportunity" in Florida for failed or whole-bank acquisitions, because "a lot of these guys aren't recognizing their problems."

TheStreet: What is your approach to community banking?

John Allison: We focus on the touch and the feel of the customers. We bank to win in our markets. In our markets in Arkansas, we give to the community, bank with cities, counties, hospitals and schools. We bank with these people because we give to these communities. We run an efficient shop, but we give away lots of money too.

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