Home BancShares, Inc. (NASDAQ:HOMB)

CAPS Rating: 4 out of 5

A financial holding company whose five wholly owned community bank subsidiaries provide a range of commercial and retail banking and related financial services to businesses, real estate developers and investors, individuals, and municipalities.

Recs

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Player Avatar NetscribeFinServ (20.16) Submitted: 3/13/2007 7:14:21 AM : Outperform Start Price: $9.41 HOMB Score: +181.01

Home BancShares, Inc. (HOMB) witnessed a successful launch of initial public offering last year with proceeds to be used for working capital needs, investments in subsidiaries and to finance bank acquisitions. Being a financial holding company headquartered in Conway, HOMB has five wholly owned community bank subsidiaries which provide a broad range of commercial and retail banking and related financial services to businesses, real estate developers and investors, individuals, and municipalities.
Currently it leads deposit market in many places of Arkansas and has entered into Florida in June 2005 through the acquisition of Marine Bank. In order to sustain leadership in Arkanas and grow in Florida, company has gone for organic growth and had opened around 9 branches in 2006. It concentrates on opening in current market and attractive new market areas as well, enabling them to strengthen its lead and expand further. Due to financial strengths, strategic acquisitions are considered, with primary focus on Arkansas and Southwestern Florida.
Most of the revenue is generated from interest on loans and investments, service charges, and mortgage banking income, with around 22% from non- interest income and 78% from net interest income. For year 2006 company witnessed an increase in net interest income and non-interest income, but net interest margin declined to 3.4%, due to competitive pressures and a slightly inverted yield curve.
Non performing assets (NPAs) showed an admirable decline of 45% over previous year, and recorded NPAs to asset ratio of 0.22%. The company recorded strong capital adequacy ratio. Efficiency ratio is slightly on higher side. Deposits are primary source of funding and with expansion it’s going to get better. Thus considering all factors, strong performance is expected out of the stock in the coming year.

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