Financial Comparison: First Foundation (NYSE:FFWM) & Pinnacle Bank (OTCMKTS:PBNK)

Pinnacle Bank (OTCMKTS:PBNK) and First Foundation (NYSE:FFWM) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Pinnacle Bank and First Foundation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle Bank	0	0	0	0	0.00
First Foundation	1	1	0	2	2.75

Risk & Volatility

Pinnacle Bank has a beta of 0.25, meaning that its share price is 75% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pinnacle Bank	16.62%	8.37%	0.97%
First Foundation	-26.09%	-0.07%	-0.01%

Earnings and Valuation

This table compares Pinnacle Bank and First Foundation”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Bank	$53.91 million	2.14	$8.85 million	$0.86	22.67
First Foundation	$196.20 million	2.61	-$92.41 million	($1.96)	-3.15

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

Institutional & Insider Ownership

8.4% of Pinnacle Bank shares are owned by institutional investors. Comparatively, 73.1% of First Foundation shares are owned by institutional investors. 9.5% of First Foundation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

First Foundation beats Pinnacle Bank on 7 of the 13 factors compared between the two stocks.

About Pinnacle Bank

Pinnacle Bank, a commercial bank, provides various depository and credit services in Santa Clara, San Benito, and Monterey counties. The company offers checking, savings, money market, sweep, and individual retirement accounts, as well as certificates of deposit and certificates of deposit account registry services. It also provides home equity lines of credit and single family home construction loans; and loans and lines of credit, letters of credit, commercial real estate, and government assisted loans, as well as credit cards. In addition, the company offers automated teller machine cards/debit cards, debit card protection products, and safe deposit boxes; cash management products, such as online and mobile banking, online bill payment, mobile check deposit, automated clearing house (ACH) origination, remote deposit capture, night depository box, positive pay, ACH fraud filter, merchant card processing, wire transfer, and foreign currency services; and asset based lending covering accounts receivable financing, factoring, and purchase order financing services. It serves individual and business customers, as well as nonprofit organizations in Morgan Hill, Gilroy, Salinas, and Campbell. Pinnacle Bank was founded in 2006 and is headquartered in Gilroy, California.

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.