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10 Buy Rated Regional Bank Stocks (Update 3)

4. Home BancShares

Home BancShares (HOMB) of Conway, Ark., has seen its stock pull back slightly year-to-date, to close at $25.83 on Monday. The five-year total return was 33%. Based on a quarterly payout of eight cents, the shares have a dividend yield of 1.24%.

The stock is rated an "A" by TheStreet Ratings.

The company on Nov. 17 announced an agreement to purchase Vision Bank of Panama City, Fla., from Park National Corp. (PRK), for $27.9 million. Home BancShares will take on 17 branches with about $535 million in deposits, along with roughly $379 million in performing loans, with Park National keeping the dregs. The deal is expected to be completed during the first quarter.

Home BancShares had $3.6 billion in total assets as of Dec. 31, with 90 branches in Arkansas and Florida.

The company reported fourth-quarter net income available to common shareholders of $14.2 million, or 50 cents a share, increasing from $13.8 million, or 48 cents a share, the previous quarter and a net loss of $14.5 million, or 51 cents a share, a year earlier, when the company booked a $63 million provision for loan losses, resulting in part from a $53.4 million loan impairment charge.

The fourth-quarter loss in 2010, was the only loss over the past five quarters for any of the 10 regional bank holding companies featured here.

During the fourth quarter, Home BancShares made a $2.3 million provision for loan losses, after making no provision the previous quarter. This hit to earnings was offset by $2.2 million in securities gains. The fourth-quarter improvement also reflected gains in fee income and a $394,000 in gains on repossessed real estate.

The fourth-quarter net interest margin was a very strong 4.73%, declining slightly from 4.75% the previous quarter, but improving from 4.19% a year earlier. The fourth-quarter ROA was 1.57%.

FIG Partners analyst Brian Martin on Monday reiterated his "Outperform" rating on Home BancShares, with a $29 price target, citing the strong net interest margin and ROA, and saying that "looking forward, the game plan heading into 2012 is M&A--either live bank or FDIC," with "all eyes on Florida, [with Orlando a priority], given HOMB is a small player in a big market."

The shares trade for 1.8 times tangible book value, according to SNL Financial, and for 13 times the consensus 2012 EPS estimate of $2.02, among analysts polled by FactSet.

Interested in more on Home BancShares? See TheStreet Ratings' report card for this stock.
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