Critical Survey: First Foundation (NASDAQ:FFWM) vs. Peoples Financial (OTCMKTS:PFBX)

Peoples Financial (OTCMKTS:PFBX) and First Foundation (NASDAQ:FFWM) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Risk & Volatility

Peoples Financial has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500. Comparatively, First Foundation has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.

Institutional & Insider Ownership

32.8% of Peoples Financial shares are held by institutional investors. Comparatively, 73.1% of First Foundation shares are held by institutional investors. 28.1% of Peoples Financial shares are held by company insiders. Comparatively, 7.1% of First Foundation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Peoples Financial	20.91%	30.68%	2.55%
First Foundation	-11.52%	1.07%	0.07%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Peoples Financial and First Foundation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Financial	0	0	0	0	0.00
First Foundation	0	4	1	0	2.20

First Foundation has a consensus target price of $7.80, suggesting a potential downside of 5.34%. Given First Foundation’s stronger consensus rating and higher possible upside, analysts plainly believe First Foundation is more favorable than Peoples Financial.

Earnings and Valuation

This table compares Peoples Financial and First Foundation”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Financial	$39.52 million	2.12	$9.17 million	$4.70	3.83
First Foundation	$623.04 million	0.90	-$199.06 million	($1.12)	-7.36

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

Summary

Peoples Financial beats First Foundation on 8 of the 14 factors compared between the two stocks.

About Peoples Financial

Peoples Financial Corporation operates as the bank holding company for The Peoples Bank that provides banking, financial, and trust services to government entities, individuals, and small and commercial businesses in Mississippi. The company accepts various deposits, such as interest and non-interest-bearing checking accounts, savings accounts, certificates of deposit, and individual retirement accounts (IRAs). It offers business, commercial, real estate, construction, personal, and installment loans; and personal trust, agencies, and estate services, including living and testamentary trusts, executorships, guardianships, and conservatorships. In addition, the company provides self-directed IRAs; and escrow management, stock transfer, and bond paying agency accounts to corporate customers. Further, it offers other services consisting of safe deposit box rental, wire transfer, night drop facilities, collection, cash management, and Internet banking services. the company provides services to customers of various industries, such as seafood, retail, hospitality, hotel/motel, gaming, and construction. Peoples Financial Corporation was founded in 1896 and is headquartered in Biloxi, Mississippi.

About First Foundation

First Foundation Inc., through its subsidiaries, provides banking services, investment advisory, wealth management, and trust services to individuals, businesses, and other organizations in the United States. The company operates in two segments, Banking and Wealth Management. It offers a range of deposit products, including personal and business checking accounts, savings accounts, interest-bearing demand deposit 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, 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. The company also provides various specialized services comprising trust services, online 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, it offers investment management and financial planning services; financial, investment, and economic advisory and related services; and treasury management services, such as bill pay, check/payee/ACH positive pay, wire origination, internal and external transfers, account reconciliation reporting, mobile deposit, lockbox, cash vault services and merchant processing. Further, the company provides support services, including the processing and transmission of financial and economic data for charitable organizations. It operates through a network of branch offices and loan production offices. The company was founded in 1985 and is headquartered in Dallas, Texas.