First Foundation (NYSE:FFWM) versus Farmers & Merchants Bancorp (OTCMKTS:FMCB) Financial Analysis

Farmers & Merchants Bancorp (OTCMKTS:FMCB) and First Foundation (NYSE:FFWM) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Profitability

This table compares Farmers & Merchants Bancorp and First Foundation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bancorp	30.88%	15.05%	1.67%
First Foundation	-26.37%	1.06%	0.08%

Valuation & Earnings

This table compares Farmers & Merchants Bancorp and First Foundation”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bancorp	$303.12 million	2.77	$93.61 million	$134.01	8.95
First Foundation	$190.67 million	2.60	-$155.16 million	($1.89)	-3.16

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

Analyst Recommendations

This is a breakdown of recent recommendations for Farmers & Merchants Bancorp and First Foundation, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bancorp	0	0	0	0	0.00
First Foundation	1	2	0	1	2.25

Volatility and Risk

Farmers & Merchants Bancorp has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500. Comparatively, First Foundation has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $20.20 per share and has a dividend yield of 1.7%. First Foundation pays an annual dividend of $0.04 per share and has a dividend yield of 0.7%. Farmers & Merchants Bancorp pays out 15.1% of its earnings in the form of a dividend. First Foundation pays out -2.1% 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.

Insider and Institutional Ownership

5.6% of Farmers & Merchants Bancorp shares are owned by institutional investors. Comparatively, 73.1% of First Foundation shares are owned by institutional investors. 8.0% of Farmers & Merchants Bancorp 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 hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Farmers & Merchants Bancorp beats First Foundation on 9 of the 15 factors compared between the two stocks.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals. The company accepts various deposit products, including checking, savings, money market, time certificates of deposit, and individual retirement accounts. It also offers range of lending products comprising commercial and residential real estate, real estate construction, agribusiness, and consumer loans, as well as equipment leases and credit card services; commercial products, including term loans, lines of credit and other working capital financing, and letters of credit; and financing products, such as automobile financing, home improvement, and home equity lines of credit. In addition, the company provides various specialized services consisting of credit card programs for merchants, lockbox and other collection services, account reconciliation, investment sweep, online account access, and electronic funds transfers through domestic and international wire and automated clearinghouse; online banking services; and investment products, such as mutual funds and annuities. The company was founded in 1916 and is headquartered in Lodi, 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.