- Key insight: HomeTrust Bancshares in Asheville, North Carolina, said it plans to buy Blue Ridge Bankshares in Richmond, Virginia. The deal will help HomeTrust expand into a high-growth market.
- What's at stake: The pending acquisition comes as Blue Ridge moves on from a series of failed fintech partnerships that led to regulatory trouble.
- Forward look: The $448.1 million deal is expected to close early in the first quarter of 2027.
HomeTrust Bancshares in Asheville, North Carolina, is gaining coveted scale in Virginia — a key part of its Southeast growth strategy — by acquiring a struggling bank in Richmond.
The parent company of HomeTrust Bank agreed to buy Blue Ridge Bankshares in an all-stock transaction valued at around $448.1 million. The deal, which is expected to close early in the first quarter of 2027, would nearly double the size of HomeTrust's branch network, boost its assets to roughly $7 billion and push its market valuation beyond $1 billion.
For the $2.3 billion-asset Blue Ridge, the sale follows a period of challenges. The bank ran into regulatory trouble earlier this decade due to problems with fintech partnerships. It was
"Blue Ridge has successfully completed a clean-up of legacy challenges and repositioned itself for profitability and growth," Harry Golliday, the bank's
The $4.4 billion-asset HomeTrust has been looking for opportunities to broaden its presence from Atlanta to Richmond. It entered the high-growth Atlanta market in 2023 when it bought Quantum National Bank's parent company, Quantum Capital Corp. in Suwanee, Georgia.
The Blue Ridge deal will add approximately $1.9 billion of loans and $1.9 billion of deposits to HomeTrust's balance sheet. The buyer expects to improve its profitability, estimating that its return on average assets will rise to 1.70% by 2027. That metric was 1.46% during the second quarter.
The proposed acquisition of Blue Ridge "represents a compelling opportunity to further expand our presence in the attractive Virginia market and accelerate our growth strategy," Hunter Westbrook, HomeTrust's president and CEO, said Monday in the press release. "Blue Ridge brings a strong deposit franchise, a growing commercial loan portfolio and deep local relationships that complement our existing footprint and capabilities."
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HomeTrust said it expects a tangible-book-value earn-back period of 3.25 years. That's above the three-year earn-back period that investors tend to prefer, according to Feddie Strickland, an analyst at Hovde Group. That could be one reason why HomeTrust's share price was down Monday, he said. The stock declined by more than 4% for the day.
The pending deal is consistent with HomeTrust's recent messaging about its growth strategy, analysts said.
"They've talked for a very long time about building an Atlanta-to-Richmond franchise," said Strickland, arguing that Richmond offers "an avenue for growth."
Bank merger-and-acquisition activity
A pickup in M&A is expected in the second half of the year, given the strength of most bank stocks, pent-up demand to do acquisitions and a faster regulatory approval timeline, Hunsicker said in her latest note.
Under the terms of the HomeTrust-Blue Ridge agreement, the seller's shareholders will receive 8.6% of a share of HomeTrust common stock for each share of Blue Ridge common stock, the banks said. Once the deal is finalized, HomeTrust stockholders will own about 65% of the combined company.
The transaction requires regulatory approval, as well as the approval of HomeTrust and Blue Ridge shareholders. The boards of directors for both companies have already signed off on the transaction.
As part of the deal, two Blue Ridge directors will join the boards of HomeTrust and its bank.
The deal assumes cost savings of 45% of Blue Ridge's noninterest expenses. Seventy-five percent of the cost savings will be phased in in 2027, with the rest to be achieved thereafter.
Some of the cost savings will likely come from a reduction in expenses related to Blue Ridge's recent regulatory challenges and the bank's related remediation work, Chris Marinac, an analyst at Brean Capital, told American Banker. At one point, Blue Ridge had approximately 70 banking-as-a-service partnerships, though it
Regulators had determined the bank had
Marinac said Monday that he was "a little surprised" at the relatively large size of the deal, noting that the $448.1 million price tag is more than 50% of Blue Ridge's market cap.
"But I do think the earnings power is there," he noted.
Strickland said Monday that Blue Ridge appears to have "worked through" most of its issues.
"The consent order is gone, and they completed all of the regulatory remediation," he said. "It's more of a community bank at this point, which is a good thing for HomeTrust."
Last week, Blue Ridge revised its second-quarter results, reporting a net loss of $1.3 billion. The bank had earlier reported a net loss of $200,000 for the quarter. The steeper loss was due to the demise of a commercial borrower with $11.4 million of outstanding loans, which led the bank to revise its estimated expected credit losses.
