Financial Analysis: First Foundation (NASDAQ:FFWM) versus MetroCity Bankshares (NASDAQ:MCBS)

First Foundation (NASDAQ:FFWM) and MetroCity Bankshares (NASDAQ:MCBS) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, dividends, profitability, earnings, institutional ownership and risk.

Valuation and Earnings

This table compares First Foundation and MetroCity Bankshares’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Foundation	$623.04 million	0.69	-$199.06 million	($3.66)	-1.74
MetroCity Bankshares	$124.92 million	5.98	$51.61 million	$1.97	15.06

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

Profitability

This table compares First Foundation and MetroCity Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Foundation	1.34%	1.07%	0.07%
MetroCity Bankshares	24.20%	13.85%	1.52%

Institutional & Insider Ownership

73.1% of First Foundation shares are held by institutional investors. Comparatively, 25.3% of MetroCity Bankshares shares are held by institutional investors. 8.3% of First Foundation shares are held by insiders. Comparatively, 27.5% of MetroCity Bankshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for First Foundation and MetroCity Bankshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Foundation	0	4	1	0	2.20
MetroCity Bankshares	0	1	0	0	2.00

First Foundation presently has a consensus price target of $7.80, indicating a potential upside of 22.64%. MetroCity Bankshares has a consensus price target of $32.00, indicating a potential upside of 7.89%. Given First Foundation’s stronger consensus rating and higher probable upside, equities research analysts clearly believe First Foundation is more favorable than MetroCity Bankshares.

Risk & Volatility

First Foundation has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, MetroCity Bankshares has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500.

Summary

MetroCity Bankshares beats First Foundation on 8 of the 14 factors compared between the two stocks.

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.

About MetroCity Bankshares

MetroCity Bankshares, Inc. operates as the bank holding company for Metro City Bank that engages in the provision of banking products and services in the United States. It offers customary banking services, such as consumer and commercial checking accounts, savings, and money market accounts, as well as certificates of deposit. The company also provides commercial and consumer loans, including single family residential loans; construction and development, and owner and non-owner occupied commercial real estate loans; letters of credit; and commercial and industrial loans, residential mortgage loans, and SBA loans. In addition, it offers online banking services, which include access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; mobile banking solutions, such as remote check deposit with mobile bill pay; and automated teller machines and telephone banking services. Further, it provides debit cards for checking customers, direct deposits, and cashier's checks; treasury management services, including wire transfer, automated clearing house, and stop payments services; and cash management deposit products, such as remote deposit capture, positive pay, zero balance accounts, and sweep accounts. The company was founded in 2006 and is headquartered in Atlanta, Georgia.