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1. Company Snapshot

1.a. Company Description

Home Bancshares, Inc.(Conway, AR) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities.Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit.


The company's loan portfolio comprises non-farm/non-residential real estate, construction/land development, residential mortgage, consumer, agricultural, and commercial and industrial loans.It also provides internet banking, mobile banking and voice response information, cash management, overdraft protection, direct deposit, and automatic account transfer services, as well as safe deposit boxes and the United States savings bonds.In addition, the company writes policies for commercial and personal lines of business, including insurance for property, casualty, life, health, and employee benefits.


As of December 31, 2021, it operated through 160 branch locations that included 76 branches in Arkansas, 78 branches in Florida, 5 branches in Alabama, and 1 branch in New York City.Home Bancshares, Inc.(Conway, AR) was founded in 1998 and is headquartered in Conway, Arkansas.

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1.b. Last Insights on HOMB

Negative drivers behind Home BancShares' recent performance include rising deposit costs and inflationary pressures, which remain concerns despite the company's net interest margin improvement and disciplined pricing strategy. Loan growth is mixed, with some regions showing potential but overall growth expected to be flattish to slightly negative in the near term. Additionally, the company's strong capital levels and conservative payout ratio provide a buffer for potential upside, but this is not enough to offset the negative impact of rising deposit costs and inflationary pressures.

1.c. Company Highlights

2. Home Bancshares Delivers Record Earnings with Strong Financial Performance

Home Bancshares, Inc. reported another stellar quarter, achieving record earnings of $118.4 million, or $0.60 per share, for the second quarter of 2025. This performance underscores the company's ability to maintain momentum, with a return on assets (ROA) of 2.08% and a return on tangible common equity (ROTCE) of 17.68% on a GAAP basis. The non-GAAP ROTCE stood at 18.26%, reflecting strong profitability metrics. The company's loan loss reserve remained robust at 1.86%, while Tier 1 capital and leverage ratio were at 15.6% and 13.4%, respectively, highlighting a solid balance sheet. Home Bancshares also returned capital to shareholders through the repurchase of 1 million shares during the quarter, bringing the year-to-date total to 2 million shares, and maintained its quarterly dividend of $0.20 per share.

Publication Date: Jul -19

📋 Highlights
  • Record Earnings: - Reported $118.4 million in earnings for Q2 2025, with a 2.08% return on assets.
  • Strong Capital Position: - Loan loss reserve at 1.86%, Tier 1 capital at 15.6%, and leverage ratio at 13.4%.
  • Share Buybacks: - Bought back 2 million shares year-to-date, with 1 million shares repurchased in Q2.
  • Return on Equity: - Achieved 18.26% ROTCE (non-GAAP) and 17.68% GAAP return on tangible common equity.
  • Future Targets: - Aiming for $450 million in income for 2025 and $500 million for 2026, with a focus on accretive M&A opportunities.

Loan Pipeline and Margin Performance

The company's loan pipeline remained strong, with $1.1 billion in production during the second quarter. The net interest margin (NIM) came in at 4.44%, consistent with the prior quarter, as noted by CEO Stephen Tipton. While deposits declined slightly by $53 million in Q2, balances rebounded in May and June, suggesting stabilizing deposit trends. The trust, wealth management, and mortgage divisions also showed improvement, contributing to the company's diversified revenue streams. Tipton highlighted that the core NIM for June improved to 4.47%, up a few basis points from the quarterly average, positioning the company well to navigate competitive deposit pricing dynamics.

Expense Management and Asset Quality

Expenses for the quarter were elevated at $116 million, largely due to a $3.5 million lawsuit settlement. Excluding one-time items, core expenses were $111.5 million, demonstrating the company's ability to manage operational costs. Asset quality metrics were mixed, but none of the changes were material, according to Kevin Hester, Chief Lending Officer. The company recovered $3 million from previously charged-off loans during the quarter and remains on track to achieve $30 million in total recoveries over time. Credit quality improvement is expected to continue, with around $12 million in nonperforming assets potentially moving in Q3.

Mergers and Acquisitions (M&A) Strategy

Chairman John Allison emphasized the company's focus on accretive deals, with a preference for stock-for-stock trades. The company is evaluating acquisition opportunities in the $400-700 million range and has not ruled out larger deals in the $2-6 billion range. Allison noted, "We are focused on finding opportunities that make sense and are additive to our EPS." The company's strong capital position, with $400 million in cash, provides flexibility for strategic initiatives. While the company has not taken dilution in previous deals, Allison indicated a willingness to consider short-term dilution for the right opportunity.

Valuation and Outlook

Home Bancshares' valuation reflects its strong financial performance and growth prospects. The stock trades at a price-to-tangible book value (P/TBV) of 1.46, in line with peers, and offers a dividend yield of 2.6%. The company's net interest margin is expected to benefit from sub-debt, with approximately 5-6 basis points of benefit anticipated, two-thirds of which will be realized in Q3 and the full benefit in Q4. With a strong loan pipeline and a focus on organic growth, the company is well-positioned to achieve its 2025 income target of $450 million and its 2026 target of $500 million. Analysts estimate revenue growth of 2.6% for next year, aligning with the company's strategic initiatives and market expectations.

3. NewsRoom

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Home BancShares Is Finally A Good Home For Your Money (Upgrade)

Dec -02

Source: seekingalpha.com

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Boston Partners Sells 198,090 Shares of Home BancShares, Inc. $HOMB

Nov -29

Source: defenseworld.net

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Humana (NYSE:HUM) Stock Acquired Rep. Lisa C. McClain

Nov -27

Source: defenseworld.net

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Rep. Lisa C. McClain Sells Spire Inc. (NYSE:SR) Stock

Nov -27

Source: defenseworld.net

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Roivant Sciences (NASDAQ:ROIV) Shares Unloaded Rep. Lisa C. McClain

Nov -27

Source: defenseworld.net

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Loews (NYSE:L) Shares Unloaded Rep. Lisa C. McClain

Nov -27

Source: defenseworld.net

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Taiwan Semiconductor Manufacturing (NYSE:TSM) Stock Unloaded Rep. Lisa C. McClain

Nov -27

Source: defenseworld.net

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Rep. Lisa C. McClain Sells Off Shares of SLB Limited (NYSE:SLB)

Nov -27

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Banking and Related Activities

Expected Growth: 3.0%

Home Bancshares' 3.0% growth in Banking and Related Activities is driven by strategic acquisitions, expanding loan portfolios, and increased deposit growth. The bank's focus on community banking, diversified revenue streams, and cost control measures have also contributed to its growth. Additionally, a strong presence in the Arkansas market and a solid risk management framework have enabled the bank to capitalize on market opportunities.

7. Detailed Products

Checking Accounts

Personal and business checking accounts with various features such as online banking, mobile banking, and bill pay

Savings Accounts

Personal and business savings accounts with competitive interest rates and online banking access

Loans

Personal and commercial loans, including mortgages, home equity loans, and lines of credit

Credit Cards

Personal and business credit cards with rewards programs and online account management

Investment Services

Brokerage services, investment advice, and retirement planning

Treasury Management

Cash management services, including wire transfers, ACH payments, and account reconciliation

Online Banking

Secure online access to account information, bill pay, and fund transfers

Mobile Banking

Mobile app access to account information, bill pay, and fund transfers

8. Home Bancshares, Inc. (Conway, AR)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Home Bancshares, Inc. operates in a highly competitive industry, and customers have various alternatives for their banking needs. However, the company's strong brand presence and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

Home Bancshares, Inc. has a diverse customer base, and no single customer has significant bargaining power. The company's customer-centric approach and personalized services also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Home Bancshares, Inc. has a diversified supplier base, and no single supplier has significant bargaining power. The company's strong relationships with suppliers and its ability to negotiate favorable terms also reduce the bargaining power of suppliers.

Threat Of New Entrants

The banking industry has significant barriers to entry, including regulatory hurdles and capital requirements. While new entrants may emerge, Home Bancshares, Inc.'s established brand and customer base provide a competitive advantage.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. Home Bancshares, Inc. faces intense competition from larger banks and fintech companies, which may erode its market share and profitability.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.30%
Debt Cost 3.95%
Equity Weight 66.70%
Equity Cost 9.42%
WACC 7.60%
Leverage 49.92%

11. Quality Control: Home Bancshares, Inc. (Conway, AR) passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
United Bankshares

A-Score: 6.8/10

Value: 6.8

Growth: 5.0

Quality: 7.6

Yield: 8.0

Momentum: 5.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Home Bancshares

A-Score: 6.6/10

Value: 5.4

Growth: 5.6

Quality: 7.8

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Cullen Frost Bankers

A-Score: 6.3/10

Value: 4.2

Growth: 6.9

Quality: 6.9

Yield: 6.0

Momentum: 6.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Columbia Banking System

A-Score: 6.3/10

Value: 6.7

Growth: 7.1

Quality: 6.4

Yield: 8.0

Momentum: 4.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Huntington Bancshares

A-Score: 6.1/10

Value: 6.5

Growth: 4.8

Quality: 5.7

Yield: 8.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
United Community Banks

A-Score: 5.3/10

Value: 6.6

Growth: 5.0

Quality: 7.5

Yield: 5.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

28.38$

Current Price

28.38$

Potential

-0.00%

Expected Cash-Flows