First Foundation (NYSE:FFWM) versus Prosperity Bancshares (NYSE:PB) Head-To-Head Comparison

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

Profitability

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

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

Dividends

First Foundation pays an annual dividend of $0.04 per share and has a dividend yield of 0.8%. Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.6%. First Foundation pays out -2.0% of its earnings in the form of a dividend. Prosperity Bancshares pays out 42.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Prosperity Bancshares has increased its dividend for 27 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

First Foundation has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Foundation	1	1	0	2	2.75
Prosperity Bancshares	0	6	11	0	2.65

Prosperity Bancshares has a consensus price target of $80.21, suggesting a potential upside of 21.37%. Given Prosperity Bancshares’ higher possible upside, analysts clearly believe Prosperity Bancshares is more favorable than First Foundation.

Insider & Institutional Ownership

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Foundation	$196.20 million	2.14	-$92.41 million	($1.96)	-2.59
Prosperity Bancshares	$1.19 billion	5.27	$479.39 million	$5.61	11.78

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.

Summary

Prosperity Bancshares beats First Foundation on 13 of the 18 factors compared between the two stocks.

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.

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.