First Foundation (FFWM) AI Stock Analysis

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First Foundation

(NYSE:FFWM)

45Neutral

First Foundation's overall stock score reflects significant challenges in financial performance and valuation, marked by declining revenues and cash flow issues. Despite some positive momentum from strategic loan securitizations and NIM improvements, these are countered by increased credit losses and expenses. The technical indicators suggest a neutral position, but the negative P/E ratio underscores concerns about profitability. The company is attempting strategic adjustments, but the risks remain substantial.

First Foundation (FFWM) vs. S&P 500 (SPY)

Market Cap

$406.06M

Dividend Yield1%

Average Volume (3M)895.50K

Price to Earnings (P/E)―

Beta (1Y)1.46

Revenue Growth6.75%

EPS Growth62.30%

CountryUS

Employees551

SectorFinancial

Sector Strength76

IndustryBanks - Regional

Share Statistics

EPS (TTM)-1.33

Shares Outstanding82,365,390

10 Day Avg. Volume1,247,467

30 Day Avg. Volume895,503

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)4.14

Price to Cash Flow (P/CF)-4.70

P/FCF Ratio2.10

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$7.50

Price Target Upside52.13% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

First Foundation Business Overview & Revenue Model

Company DescriptionFirst 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.

How the Company Makes MoneyFirst Foundation Inc. makes money through a combination of interest income, fees, and service charges. Its banking operations generate revenue from interest earned on loans and advances given to customers, while simultaneously managing the cost of deposits from which these funds are sourced. The company also earns non-interest income through its wealth management and advisory services, which include fees from investment management, financial planning, and trust services. Additionally, First Foundation benefits from partnerships with other financial institutions to enhance its service offerings and generate additional fee-based income. The company's diversified revenue streams help it manage risk and sustain profitability across various economic cycles.

First Foundation Financial Statement Overview

Summary

First Foundation faces profitability and cash flow challenges despite maintaining a stable equity base. While the balance sheet shows improvement in debt management, negative trends in income and cash flow statements highlight the need for strategic interventions to boost revenue and manage expenses effectively.

Income Statement

Negative

The company's income statement shows a mixed performance with declining total revenue from $328.7 million in 2022 to $174.9 million in 2023, and a further decline to $610.9 million in 2024. Net income has been negative in the last two years, indicating profitability challenges. Gross profit margins remained stable, but negative EBIT and EBITDA in 2023 further highlight operational challenges.

Balance Sheet

Neutral

First Foundation's balance sheet reflects a stable equity base with stockholders' equity of $1.05 billion in 2024. The company has managed to reduce total debt to zero in 2024, improving its debt-to-equity ratio substantially. However, total assets have slightly decreased over the years, and the equity ratio remains moderate, indicating room for improved asset management.

Cash Flow

Negative

Cash flow analysis reveals significant challenges, with operating cash flow turning negative in 2024 at -$8.78 million. Free cash flow also declined to -$8.78 million, indicating liquidity and cash management issues. The company needs to address these cash flow deficits to ensure financial stability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
611.00M	174.85M	328.75M	294.96M	243.85M
	Gross Profit
611.00M	573.69M	328.75M	294.96M	243.85M
	EBIT
593.00M	-191.87M	226.28M	151.78M	118.77M
	EBITDA
0.00	-191.87M	158.51M	158.63M	125.40M
	Net Income Common Stockholders
-92.41M	-199.06M	110.51M	109.51M	84.37M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.33B	2.04B	882.65M	2.31B	1.44B
	Total Assets
12.65B	13.33B	13.01B	10.20B	6.96B
	Total Debt
1.60B	1.58B	1.37B	210.13M	269.00M
	Net Debt
582.70M	255.82M	713.44M	-911.63M	-360.71M
	Total Liabilities
11.59B	12.40B	11.88B	9.13B	6.26B
	Stockholders Equity
1.05B	925.34M	1.13B	1.06B	695.71M
Cash Flow		Free Cash Flow
-8.78M	-2.39M	96.47M	93.73M	64.58M
	Operating Cash Flow
-8.78M	5.82M	101.05M	96.94M	67.44M
	Investing Cash Flow
287.36M	134.88M	-3.25B	-79.37M	-24.90M
	Financing Cash Flow
-589.08M	529.44M	2.68B	474.49M	521.77M

First Foundation Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price4.93

Price Trends

50DMA

4.95

Negative

100DMA

5.73

Negative

200DMA

6.24

Negative

Market Momentum

MACD

-0.03

Negative

RSI

50.63

Neutral

STOCH

79.69

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FFWM, the sentiment is Neutral. The current price of 4.93 is above the 20-day moving average (MA) of 4.90, below the 50-day MA of 4.95, and below the 200-day MA of 6.24, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 50.63 is Neutral, neither overbought nor oversold. The STOCH value of 79.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for FFWM.

First Foundation Risk Analysis

First Foundation disclosed 46 risk factors in its most recent earnings report. First Foundation reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

First Foundation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FBIZ	75 Outperform	$386.58M	8.96	13.98%	2.19%	15.98%	19.35%
UNTY	74 Outperform	$408.94M	9.54	15.17%	1.28%	6.99%	12.46%
GCBC	63 Neutral	$353.14M	13.40	12.73%	1.63%	15.35%	-1.43%
Sector *	63 Neutral	$12.07B	9.35	8.15%	79.57%	12.85%	-5.13%
BSRR	62 Neutral	$353.76M	9.08	11.67%	3.77%	5.69%	19.91%
KRNY	51 Neutral	$379.73M	―	-8.79%	7.43%	11.26%	-498.90%
FFWM	45 Neutral	$406.06M	―	-9.34%	1.00%	6.75%	62.30%

* Financial Sector Average

Performance Comparison

FFWM

First Foundation

4.93

-2.00

-28.86%

FBIZ

First Business Financial

48.65

15.13

45.14%

GCBC

Greene County Bancorp

21.43

-7.49

-25.90%

KRNY

Kearny Financial

6.10

0.62

11.31%

BSRR

Sierra Bancorp

26.46

7.21

37.45%

UNTY

Unity Bancorp

42.00

14.78

54.30%

First Foundation Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: -21.25% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture. On the positive side, there was successful execution of a multifamily loan securitization and an improvement in net interest margin. Additionally, the wealth and trust business remained stable. However, the company faced challenges with increased provisions for credit losses, higher non-interest expenses, and the first loss in the multifamily portfolio. While there are clear areas of progress, the significant challenges offset the positive developments.

Highlights

Successful Multifamily Loan Securitization

Executed a $489 million multifamily loan securitization in early December, achieving a price above 95, which was a premium compared to the portfolio's marks at the end of both the third and fourth quarters.

Net Interest Margin Improvement

Net interest margin increased from 1.5% in the third quarter to 1.58% in the fourth quarter, marking a 41 basis point improvement from the year's low point in the first quarter.

Wealth and Trust Business Stability

Continued success of the wealth and trust business, which remained stable sources of fee income during the fourth quarter.

Reduction in Interest Bearing Liability Costs

Interest bearing liability costs decreased to 4.05%, benefiting from the Fed's rate cuts, which was 19 basis points below the third quarter's 4.24%.

Lowlights

Increased Provision for Credit Losses

Provision for credit losses increased significantly due to $17.1 million in net charge-offs, primarily from three longstanding commercial relationships.

Higher Non-Interest Expenses

Non-interest expenses increased by $7.9 million, primarily driven by compensation and benefits expenses and year-end awards for non-executive officer team members.

Decline in Loan Interest Income

A reduction in loan balances contributed to lower loan interest income for the quarter.

First Loss in Multifamily Portfolio

Recorded the first loss in the history of the multifamily portfolio, amounting to $657,000, due to a property in the San Francisco market.

Company Guidance

During the Fourth Quarter 2024 Earnings Conference Call, First Foundation's CEO, Thomas C. Shafer, and CFO, Jamie Britton, provided several key metrics and insights into the company's performance and strategic initiatives. The company successfully executed a $489 million multifamily loan securitization in December, selling loans above 95% of face value, contributing to a modest improvement in net interest margin, which increased from 1.5% in Q3 to 1.58% in Q4. Proceeds from these sales were used to pay down high-cost broker deposits, with plans to further reduce the $1.4 billion in multifamily loans held for sale on the balance sheet. The allowance for credit losses (ACL) increased to 41 basis points, up from 36 basis points in the prior quarter, reflecting a $17.1 million in net charge-offs, primarily from three longstanding commercial relationships. Moreover, the company noted a 19 basis point decline in interest-bearing liability costs to 4.05%, which contributed positively to net interest income, despite a decrease in overall loan yields from 4.75% in Q3 to 4.68% in Q4. Looking ahead, First Foundation is focused on diversifying its loan portfolio, reducing commercial real estate concentration, and expanding its wealth and trust business as stable sources of fee income.

First Foundation Corporate Events

Executive/Board Changes

First Foundation Finalizes Executive Employment Agreements

Neutral

Feb 13, 2025

First Foundation Inc. and its subsidiary, First Foundation Bank, have finalized employment agreements with their top executives, Thomas C. Shafer and Simone Lagomarsino. Mr. Shafer was appointed CEO on November 21, 2024, and will earn an annual base salary of $1,090,000 with additional incentives, while Ms. Lagomarsino, appointed as President in 2024, will receive $800,000 annually. Both agreements include provisions for termination without cause and participation in executive benefit programs.

Business Operations and StrategyFinancial Disclosures

First Foundation Reports Strategic Plan Amid Financial Challenges

Negative

Jan 30, 2025

First Foundation Inc. released a slide presentation for its upcoming investor meetings, highlighting its strategic plan and financial performance for the fourth quarter of 2024. The company reported a challenging financial quarter, with an adjusted net loss and a decrease in tangible book value per share due to capital conversion. Notable activities included the sale of multifamily loans and efforts to strengthen capital and core funding, reflecting a focus on long-term sustainability and performance improvement.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.