FFWM
First Foundation Inc.
$5.90
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 78.2% below fair value
You pay
$5.90
Bear
$18.92
Fair
$27.04
Bull
$35.15
Bear
$18.92
+220.8%
ROTCE 4.0% → 0.30x TBV
Fair
$27.04
+358.3%
ROTCE -17.0% → 0.30x TBV
Bull
$35.15
+495.8%
ROTCE -19.6% → 0.30x TBV
Key Value Driver
ROTCE (-17.0%) vs. cost of equity (9.4%)
Implied Market Multiple
0.54x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $7.35 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $27.04 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (-17.0%) is below the minimum investors require (9.4%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $7.35 (from 11 analysts). Our estimate is 335% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly