Head-To-Head Review: Live Oak Bancshares (NASDAQ:LOB) & First Foundation (NASDAQ:FFWM)

Live Oak Bancshares (NASDAQ:LOB) and First Foundation (NASDAQ:FFWM) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Risk and Volatility

Live Oak Bancshares has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500. Comparatively, First Foundation has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.4%. First Foundation pays an annual dividend of $0.04 per share and has a dividend yield of 0.7%. Live Oak Bancshares pays out 6.0% of its earnings in the form of a dividend. First Foundation pays out -1.1% 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. First Foundation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Live Oak Bancshares and First Foundation’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Live Oak Bancshares	$451.28 million	3.26	$73.90 million	$1.99	16.43
First Foundation	$161.44 million	2.06	-$199.06 million	($3.66)	-1.61

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Live Oak Bancshares	10.62%	10.25%	0.81%
First Foundation	-32.44%	1.11%	0.08%

Analyst Ratings

This is a breakdown of recent recommendations for Live Oak Bancshares and First Foundation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Live Oak Bancshares	0	1	2	0	2.67
First Foundation	0	1	0	1	3.00

Live Oak Bancshares currently has a consensus price target of $38.00, suggesting a potential upside of 16.21%. First Foundation has a consensus price target of $9.50, suggesting a potential upside of 61.29%. Given First Foundation’s stronger consensus rating and higher possible upside, analysts plainly believe First Foundation is more favorable than Live Oak Bancshares.

Insider and Institutional Ownership

64.0% of Live Oak Bancshares shares are held by institutional investors. Comparatively, 73.1% of First Foundation shares are held by institutional investors. 23.9% of Live Oak Bancshares shares are held by insiders. Comparatively, 8.3% of First Foundation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Live Oak Bancshares beats First Foundation on 11 of the 17 factors compared between the two stocks.

About Live Oak Bancshares

Live Oak Bancshares, Inc. operates as the bank holding company for Live Oak Banking Company that provides various banking products and services in the United States. It operates through two segments, Banking and Fintech. The company accepts various deposit products, including noninterest-bearing demand, as well as interest-bearing checking, money market, savings, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. In addition, the company provides settlement, accounting, and securitization services for government guaranteed loans; financing for renewable energy application industry; wealth and investment management services to high-net-worth individuals and families; and investment advisory services to a series of funds focused on providing venture capital to new and emerging financial technology companies. Live Oak Bancshares, Inc. was incorporated in 2008 and is headquartered in Wilmington, North Carolina.

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.