HomeTrust Bank to acquire Blue Ridge Bank in $448 million deal

HomeTrust Bank, headquartered in Asheville, North Carolina, has agreed to acquire Blue Ridge Bank in a transaction valued at $448.1 million. The merger is designed to expand HomeTrust’s asset base to approximately $7 billion and increase its physical footprint to 60 locations across the Southeastern United States. Currently, HomeTrust manages about $4.4 billion in assets through 30 branches situated in North Carolina, South Carolina, eastern Tennessee, southwestern Virginia, and Georgia. The acquisition is expected to significantly bolster the lender’s presence in the Virginia market, a region where HomeTrust has previously had a limited presence.

The combined institution will hold approximately $5.7 billion in loans and a similar amount in deposits, according to an investor presentation released by the company. HomeTrust executives stated that the increased scale will provide lending capacity and infrastructure that smaller competitors are unable to match. C. Hunter Westbrook, the chief executive and president of HomeTrust, described the transaction as a compelling opportunity to accelerate the bank’s growth strategy. He noted that Blue Ridge brings a strong deposit franchise, a growing commercial loan portfolio, and deep local relationships that complement HomeTrust’s existing capabilities. Westbrook added that the merger aims to create a more profitable and resilient regional commercial bank with top-quartile earnings and continued recognition as an employer of choice.

Under the terms of the agreement, Blue Ridge shareholders will receive 0.086 shares of HomeTrust stock for each share of Blue Ridge they own. The total value of the deal is based on HomeTrust’s five-day volume-weighted average price of approximately $49.82 per share as of Friday. HomeTrust projects that the transaction will be about 30% accretive to earnings per share, assuming anticipated cost savings are achieved in 2028. However, the deal is estimated to result in an 8.3% dilution to tangible book value per share upon closing, with an earnback period of roughly 3.25 years. The HomeTrust executive team will lead the combined company, and the new 11-person board of directors will comprise nine directors from HomeTrust and two from Blue Ridge. Following the completion of the deal, HomeTrust shareholders are expected to own about 65% of the company, while Blue Ridge shareholders will hold approximately 35%.

Blue Ridge Bank, which manages $2.3 billion in assets, has faced regulatory scrutiny in recent years. The lender received a consent order from the Office of the Comptroller of the Currency in January 2024, which was terminated last November. That order addressed the bank’s alleged failure to maintain a strong Bank Secrecy Act and anti-money laundering compliance program, following issues flagged in 2022. A previous 2022 order had directed the bank to improve its oversight of third-party fintech partnerships. Harry Golliday, Blue Ridge’s interim president and chief executive, stated that the lender has successfully completed a clean-up of legacy challenges and repositioned itself for profitability. He noted that HomeTrust’s transformation from a legacy thrift into a high-performing commercial bank provides a proven roadmap to accelerate Blue Ridge’s next phase of success. HomeTrust’s investor presentation highlighted that Blue Ridge has reduced problem assets, eliminated all fintech and banking-as-a-service partnerships, and exited non-core business lines such as out-of-market and specialized finance-related lending. The company expects a common equity tier 1 ratio of 13% and a return on average tangible common equity of 15.6% for 2027.