Home Bancshares (HOMB)

Regional banking company Home Bancshares (NYSE:HOMB) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 7.6% year on year to $277.7 million. Its non-GAAP profit of $0.61 per share was 2.2% above analysts’ consensus estimates.

Company Overview

Founded in Conway, Arkansas in 1998 and growing through strategic acquisitions across the Southeast, Home Bancshares (NYSE:HOMB) operates as the bank holding company for Centennial Bank, providing commercial and retail banking services to businesses and individuals across multiple states.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Home Bancshares competes with other regional banks operating in the Southeast, including Regions Financial (NYSE:RF), Synovus Financial (NYSE:SNV), Simmons First National (NASDAQ:SFNC), and Bank OZK (NASDAQ:OZK), as well as national banks with significant presence in its markets like JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Wells Fargo (NYSE:WFC).

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Luckily, Home Bancshares’s revenue grew at an impressive 9.4% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Home Bancshares’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.1% over the last two years was well below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Home Bancshares reported year-on-year revenue growth of 7.6%, and its $277.7 million of revenue exceeded Wall Street’s estimates by 3.5%.

Net interest income made up 82% of the company’s total revenue during the last five years, meaning Home Bancshares barely relies on non-interest income to drive its overall growth.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Home Bancshares’s efficiency ratio has increased by 1.4 percentage points, going from 41.7% to 41.7%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

In Q3, Home Bancshares’s efficiency ratio was 40.2%, beating analysts’ expectations by 94.5 basis points (100 basis points = 1 percentage point). This result was 1.5 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Home Bancshares to maintain its trailing one-year ratio with a projection of 41.8%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Home Bancshares’s EPS grew at a decent 5.8% compounded annual growth rate over the last five years. Despite its efficiency ratio improvement during that time, this performance was lower than its 9.4% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Home Bancshares, its two-year annual EPS growth of 4.8% is similar to its five-year trend, implying stable earnings power.

In Q3, Home Bancshares reported adjusted EPS of $0.61, up from $0.50 in the same quarter last year. This print beat analysts’ estimates by 2.2%. Over the next 12 months, Wall Street expects Home Bancshares’s full-year EPS of $2.25 to grow 5.9%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Home Bancshares’s TBVPS grew at an excellent 8.7% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 13.8% annually over the last two years from $10.90 to $14.13 per share.

Over the next 12 months, Consensus estimates call for Home Bancshares’s TBVPS to grow by 8.6% to $15.35, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Home Bancshares has averaged a Tier 1 capital ratio of 15%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Home Bancshares has averaged an ROE of 10.9%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Home Bancshares has a strong competitive moat.

We enjoyed seeing Home Bancshares beat analysts’ revenue expectations this quarter. We were also happy its tangible book value per share outperformed Wall Street’s estimates. On the other hand, its EPS slightly beat. Overall, this print had some key positives. The stock remained flat at $27.43 immediately following the results.

Updated: December 4, 2025 at 11:24 PM EST

Are you wondering whether to buy Home Bancshares or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Home Bancshares isn’t a terrible business, but it doesn’t pass our bar. First off, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its admirable net interest margin a wonderful starting point for the overall profitability of the business, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its estimated net interest income for the next 12 months are weak.

Home Bancshares’s P/B ratio based on the next 12 months is 1.3x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $33.13 on the company (compared to the current share price of $28.52).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.