- Forward look: Home BancShares CEO John Allison said Mountain Commerce Bank will serve as a platform for future Tennessee expansion.
- Supporting data: Allison ranked Tennessee as one of the most attractive markets in the country along with Texas and Florida, where Home already has a presence.
- Expert quote: "Given the current regulatory environment, we would expect Home to continue to monitor and pursue potential deals, with Tennessee now likely to the top-of-the-list in terms of future target markets," said Piper Sandler analyst Stephen Scouten.
After weeks of telling the industry that Home BancShares was close to unveiling its first acquisition in nearly four years, CEO John Allison pulled back the curtain Monday.
Conway Arkansas-based Home, the holding company for Centennial Bank, said it will pay $150 million in stock for the $1.8 billion-asset Mountain Commerce Bancorp in Knoxville, Tennessee.
Though it is by no means Home's largest deal — Happy State Bank in Amarillo, Texas, which Home acquired in April 2022, had $6.8 billion in assets — the Mountain Commerce transaction is strategically significant because it marks Home's entry into Tennessee.
"I think Tennessee, Texas and Florida are the three best states in the nation," Allison said Monday on a conference call with analysts. "Now we're in the third one."
Home entered Florida in 2017 with its acquisition of the $3.1 billion-asset Stonegate Bank.
Mountain Commerce offers Home an entrypoint into Nashville and Johnson City, as well as Knoxville. Allison called it a platform for future expansion. Mountain Commerce founder and CEO Bill Edwards will oversee the Tennessee market for the merged company and chart its growth path, Allison added.
"Bill will run the operation," Allison said. "He's going to be driving the bus."
Mountain Commerce has been a profitable bank, reporting net income totaling $10.6 million in 2024 and $9.7 million through the first nine months of 2025. But Edwards said the company's progress was "constrained" by funding and capital considerations. Those limits won't be an issue with access to Home's $22.7 billion-asset balance sheet.
"There are tremendous organic-growth opportunities," Edwards said.
Both Edwards and Allison were quick to add that Home will continue to make additional deals in Tennessee and elsewhere, even as it works to close the Mountain Commerce acquisition.
"We've got a war chest of capital, a fortress balance sheet," Allison said. "We pride ourselves on that."
Allison said Home has been interested in both Tennessee generally and Mountain Commerce specifically for a number of years. A deal might have happened sooner but for the legal battle that erupted after a group of Happy State bankers quit to join a rival bank, taking a large number of customers with them. Home claimed the defectors took confidential client information with them on their way out.
Home, which completed 26 acquisitions between 2003 and 2022, received a settlement payment to resolve the lawsuit earlier this year.
"We've known Mountain Commerce for a while," Allison said. "We didn't move earlier because we had to get our arms around the Texas stuff."
The deal's $150 million price tag amounts to 105% of Mountain Commerce's tangible book value. The transaction, which is expected to close in the first half of 2026, should be immediately accretive to earnings per share, book value per share and tangible book value per share, according to Allison.
"Both Mountain Commerce and Home will start accreting income as soon as the deal closes," Allison said.
Analysts and investors appeared supportive of the merger. The post-announcement drop in seller share price that has characterized many recent transactions was absent Monday, with Home's stock trending up in afternoon trading.
John Arfstrom, who covers Home for RBC Capital Markets, wrote in a research note that he had "full confidence" in the ability of Allison and his team "to drive successful merger execution."
"We see the deal targets as achievable and are confident management can deliver cost synergies and drive earnings accretion," Arfstrom added.
Piper Sandler's Stephen Scouten wrote in a research note that Home was wise to jump back into the merger-and-acquisition arena with a relatively small transaction.
"Home has a strong track record as an acquirer and an integrator, but this is also their first deal announcement in over 4 years, so we also like that this is a smaller, more digestible deal that can be leveraged further with additional deals down the road," Scouten wrote. "Given the current regulatory environment, we would expect Home to continue to monitor and pursue potential deals, with Tennessee now likely to [move to] the top-of-the-list in terms of future target markets."
