First Foundation (NYSE:FFWM) vs. Prosperity Bancshares (NYSE:PB) Critical Survey

Prosperity Bancshares (NYSE:PB) and First Foundation (NYSE:FFWM) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.

Insider & Institutional Ownership

80.7% of Prosperity Bancshares shares are owned by institutional investors. Comparatively, 73.1% of First Foundation shares are owned by institutional investors. 4.2% of Prosperity Bancshares shares are owned by company insiders. Comparatively, 9.5% of First Foundation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Prosperity Bancshares and First Foundation”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prosperity Bancshares	$1.19 billion	5.81	$479.39 million	$5.61	12.98
First Foundation	$545.12 million	0.92	-$92.41 million	($1.96)	-3.09

Prosperity Bancshares has higher revenue and earnings than First Foundation. First Foundation is trading at a lower price-to-earnings ratio than Prosperity Bancshares, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Prosperity Bancshares and First Foundation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prosperity Bancshares	30.28%	7.06%	1.37%
First Foundation	-26.09%	-0.07%	-0.01%

Analyst Recommendations

This is a breakdown of recent ratings for Prosperity Bancshares and First Foundation, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prosperity Bancshares	0	6	10	0	2.63
First Foundation	1	2	0	1	2.25

Prosperity Bancshares presently has a consensus target price of $80.21, indicating a potential upside of 10.15%. Given Prosperity Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Prosperity Bancshares is more favorable than First Foundation.

Volatility and Risk

Prosperity Bancshares has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, First Foundation has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

Summary

Prosperity Bancshares beats First Foundation on 12 of the 15 factors compared between the two stocks.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.

About First Foundation

First Foundation Inc., through its subsidiaries, provides personal banking, business banking, and private wealth management services in the United States. It operates through two segments, Banking and Wealth Management. The company offers a range of bank deposit products, including personal and business checking accounts, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificate of deposits; and loan products consisting of multifamily and single family residential real estate loans, commercial real estate loans, and commercial term loans and line of credits, as well as consumer loans, such as personal installment loans and line of credits, and home equity line of credits. It also provides various specialized services comprising trust services, internet and mobile banking, remote deposit capture services, merchant credit card services, ATM cards, Visa debit cards, and business sweep accounts, as well as insurance brokerage services and equipment financing solutions. In addition, the company offers investment management and financial planning services; treasury management services; advisory and coordination services in the areas of estate planning, retirement planning, and charitable and business ownership issues; and financial, investment, and economic advisory and related services. Further, it provides support services, including the processing and transmission of financial and economic data for charitable organizations. The company operates through a network of 28 branch offices and 3 loan production offices in California, Nevada, Texas, and Hawaii. First Foundation Inc. was founded in 1985 and is headquartered in Dallas, Texas.