Surrey Bancorp (OTCMKTS:SRYB) & First Foundation (NASDAQ:FFWM) Critical Analysis

Surrey Bancorp (OTCMKTS:SRYB) and First Foundation (NASDAQ: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 analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.

Insider and Institutional Ownership

3.7% of Surrey Bancorp shares are held by institutional investors. Comparatively, 73.1% of First Foundation shares are held by institutional investors. 33.7% of Surrey Bancorp shares are held by company insiders. Comparatively, 9.5% of First Foundation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Surrey Bancorp has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, First Foundation has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Surrey Bancorp and First Foundation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Surrey Bancorp	0	0	0	0	0.00
First Foundation	0	1	3	0	2.75

First Foundation has a consensus target price of $6.58, suggesting a potential upside of 27.21%. Given First Foundation’s stronger consensus rating and higher possible upside, analysts clearly believe First Foundation is more favorable than Surrey Bancorp.

Earnings and Valuation

This table compares Surrey Bancorp and First Foundation”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Surrey Bancorp	$16.20 million	4.23	$5.10 million	$1.52	10.99
First Foundation	$196.20 million	2.19	-$92.41 million	($1.96)	-2.64

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Surrey Bancorp	37.97%	N/A	N/A
First Foundation	-13.94%	-0.73%	-0.05%

Dividends

Surrey Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.9%. First Foundation pays an annual dividend of $0.04 per share and has a dividend yield of 0.8%. Surrey Bancorp pays out 31.6% of its earnings in the form of a dividend. First Foundation pays out -2.0% 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.

Summary

Surrey Bancorp beats First Foundation on 9 of the 16 factors compared between the two stocks.

About Surrey Bancorp

Surrey BanCorp engages in the provision of banking solutions through its subsidiaries, Surrey Bank & Trust . It offers checking accounts, savings, deposit services, mortgages, real estate loans, commercial credit products, business checking, and electronic banking. The company was founded on May 1, 2003 and is headquartered in Mount Airy, NC.

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.