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This Rich Bank Deal Is No Big Stretch

Sometimes, paying up for a deal is the right thing to do -- especially if you're richly valued yourself.

Arkansas lender Home BancShares Inc. said late Monday that it would buy Stonegate Bank for $780 million, taking its total assets to roughly $13.5 billion. The cash-and-stock deal values Fort Lauderdale, Florida-based Stonegate at roughly 2.4 times its tangible book value, making it the most expensive acquisition Home Bancshares has ever struck and a premium to recent regional bank deals, including Sterling Bancorp's purchase of Astoria Financial Corp.

The $3.8 billion lender's decision to splash out is validated by the fact that its stock is trading at a such a wide premium, making almost any deal in its sights accretive. And this transaction in particular will give Home BancShares a larger footprint in Florida, fulfilling a...