Breaking Down FFBW, Inc. (FFBW) Financial Health: Key Insights for Investors

You're looking at FFBW, Inc. (FFBW) and wondering if this regional bank's financial health justifies its current valuation, and honestly, the numbers show a fascinating, mixed picture you need to unpack. The headline is that this is a story of margin expansion offsetting asset contraction: the Net Interest Margin (NIM) jumped to a strong 4.4% in the third quarter of 2025, up from 3.7% a year prior, thanks to a sharp 34.3% drop in Q3 2025 interest expense, but you can't ignore that total assets dipped to $276.3 million by September 30, 2025, a 4.0% decrease from year-end 2024. Still, management is actively boosting shareholder value, pushing the tangible book value per share to a healthy $16.42 as of Q3 2025, a figure that sits above the recent stock price of $14.33. For the first nine months of 2025, the company delivered a year-to-date net income of approximately $1.69 million, which means they are generating profit while maintaining exceptional credit quality, with nonaccrual loans at a negligible 0.02% of total loans. We need to dig into whether their new relationship-banking strategy can reverse the $9.7 million net loan decline and fuel future growth, so let's get into the details.

Revenue Analysis

You need a clear picture of where FFBW, Inc. (FFBW)'s money is coming from, especially with the market volatility we've seen. The direct takeaway is that while total revenue for the first nine months of 2025 is down, the core profitability metric-Net Interest Margin-is actually improving. That's a crucial distinction for a bank.

For the first nine months of the 2025 fiscal year (ending September 30, 2025), FFBW generated approximately $11.83 million in total revenue. This marks an approximate year-over-year (YOY) decrease of 8.35% compared to the same period in 2024, which is a trend we need to watch. The decline stems primarily from a drop in interest-earning assets, specifically net loans, due to accelerated payoffs and slower growth. Still, the company is getting more efficient at turning those assets into profit.

Here's the quick math on the revenue breakdown for the nine months ended September 30, 2025:

The vast majority of FFBW's revenue, roughly 93.8%, comes from Total Interest and Dividend Income. This is standard for a community bank like First Federal Bank of Wisconsin (the operating subsidiary). Their core business is lending and earning interest on those loans, which include one- to four-family residential real estate, multifamily residential real estate, and commercial real estate. Noninterest income, which is service charges and other fees, contributes the remaining 6.2%.

The significant change in the revenue stream isn't about a shift in business focus, but rather a contraction in the loan portfolio. For example, in the quarter ended June 30, 2025, Total Interest and Dividend Income decreased by 10.2% YOY, largely due to a decrease of $12.0 million in net loans from accelerated payoffs. This is a headwind, defintely.

But here is the opportunity: FFBW is actively managing its cost of funds (the interest it pays out). This is why the Net Interest Margin (NIM)-a key profitability measure for banks-has actually increased. For the quarter ended September 30, 2025, the NIM hit 4.4%, up from 3.7% in the same quarter last year. They are paying less on deposits and using less expensive alternative funding. This focus on 'disciplined loan and deposit pricing' is the right action to take right now to strengthen the margin, even if it means slower loan growth. For a deeper dive into the balance sheet impact, check out Breaking Down FFBW, Inc. (FFBW) Financial Health: Key Insights for Investors.

• Total interest income is down, but margin is up.
• Loan payoffs reduced interest-earning assets by 4.3% in Q3 2025.
• Noninterest income saw a modest 2.4% decrease in Q3 2025.

Profitability Metrics

You want to know if FFBW, Inc. (FFBW) is making money, and more importantly, how efficiently. The short answer is yes, they are profitable, and their core lending profitability-the Net Interest Margin (NIM)-is strong and trending up in 2025, which is a key sign of effective pricing and cost management. This is defintely a positive signal.

For a bank, profitability looks a little different than for a typical manufacturer. We focus on the spread between what they earn on loans and what they pay on deposits, which is Net Interest Income (NII). Think of NII as the equivalent of a manufacturer's gross profit.

Here is the quick math for the first nine months (9M) of the 2025 fiscal year, ending September 30, 2025:

• Gross Profit Margin (Proxy: Net Interest Margin): Trending from 4.1% in Q1 2025 to 4.4% in Q3 2025.
• Operating Profit Margin (Proxy: Pre-Provision Net Revenue Margin): Approximately 16.33%. (Calculated from $1.945 million PPNR on $11.907 million Total Revenue).
• Net Profit Margin: Approximately 14.22%. (Calculated from $1.693 million Net Income on $11.907 million Total Revenue).

Trends in Core Profitability

The most important trend for FFBW, Inc. is the consistent expansion of its Net Interest Margin (NIM), which is the bank's primary measure of core profitability. The NIM has climbed steadily throughout 2025, rising from 4.1% in the first quarter to 4.4% in the third quarter. This is a direct result of management's focus on pricing discipline, which is reducing interest expense on deposits faster than the decline in interest income. They are successfully lowering the cost of funds.

The total Net Income for the first three quarters of 2025 reached $1.693 million, which is solid, but the quarterly trend shows some volatility: Q1 was $537,000, Q2 was $556,000, and Q3 was $600,000. The CEO noted that earnings were impacted in Q2 by large commercial loan payoffs and strategic exits from lower-margin loans, which suggests a deliberate, long-term focus on improving asset quality and future margin, even if it causes near-term earnings bumps.

Operational Efficiency and Cost Management

Operational efficiency-how well the bank manages its noninterest expenses-is a key driver of the Operating Profit (Pre-Provision Net Revenue). FFBW, Inc.'s noninterest expense has remained remarkably stable, hovering around $2.4 million each quarter in 2025. This stability, while revenue has slightly declined quarter-over-quarter, shows strong cost control, but also highlights a challenge in growing the top line. The increase in noninterest expense in Q1 and Q2 compared to the prior year was primarily due to higher employee and data processing costs, which are necessary investments.

The stability of the noninterest expense is a good sign of discipline. You can read more about the strategic goals driving these decisions in the Mission Statement, Vision, & Core Values of FFBW, Inc. (FFBW).

Profitability vs. Industry Averages

FFBW, Inc. is a community bank, so we compare its metrics against that peer group, not the larger regional or national banks. The comparison is favorable, especially in the core lending business:

Here's the quick math: Q3 Net Income of $600k annualized is $2.4M. Average Total Assets at Q3 was $276.3M. $2.4M / $276.3M = 0.87%. The ROA is slightly weaker than the industry aggregate, which is a point of concern. What this estimate hides is the impact of the share repurchase programs, which, while reducing the share count by 45% since 2020 to boost earnings per share, also reduces the total assets and equity base.

The key takeaway is that the bank's core lending engine (NIM at 4.4%) is performing exceptionally well compared to the community bank average of 3.62%, but the overall asset utilization needs to catch up to fully reflect that strength in the Return on Assets metric.

Debt vs. Equity Structure

You're looking at FFBW, Inc. (FFBW) and wondering how they fund their operations-it's a crucial question because a high debt load can crush a bank in a downturn. The direct takeaway here is that FFBW operates with an exceptionally conservative capital structure, relying almost entirely on deposits and equity, not traditional debt. This is a sign of financial strength and a low-risk profile.

As of the end of the third fiscal quarter, September 30, 2025, FFBW's debt-to-equity (D/E) ratio stood near zero, specifically around 0.07x, or even 0.0% on an adjusted basis. This is a stark contrast to the broader Financials sector average, which hovers around 75.1%. For a bank, a near-zero D/E ratio means they have minimal long-term borrowings, preferring to use customer deposits and shareholder equity to finance their loan portfolio. That's a very safe position to be in.

Here's the quick math on their funding mix, based on the September 30, 2025, period. Total assets were approximately $276.3 million. With a tangible book value per share of $16.42 and 4,260,000 shares outstanding, the company's tangible equity is approximately $70.0 million. The vast majority of the remaining funding comes from customer deposits, which were over $219.0 million as of Q1 2025, and this structure has remained consistent. They are a deposit-funded institution. Exploring FFBW, Inc. (FFBW) Investor Profile: Who's Buying and Why?

The company's minimal debt usage is clear from their recent activities and balance sheet:

• Debt Levels: The balance sheet shows minimal to no traditional long-term or short-term borrowings, with a reduced reliance on alternative funding sources and certificates of deposit.
• Debt-to-Equity Ratio: The D/E ratio of approximately 0.07x signals extremely conservative debt management, far below the industry average.
• Refinancing Activity: Instead of issuing debt, FFBW has focused on reducing interest expense by decreasing its reliance on higher-cost funding, like certain certificates of deposit, throughout 2025.

FFBW's strategy is currently focused on equity management, not debt. They have been aggressively executing a share repurchase program, completing a $5,000,000 repurchase in June 2025 and announcing a new $5,000,000 program in August 2025. This action reduces the share count-down to 4,260,000 shares as of September 30, 2025-which enhances earnings per share and tangible book value per share. It's a defintely capital-intensive way to reward shareholders when the balance sheet is already strong.

What this low debt estimate hides is the operational reality of a bank: deposits are technically a liability, but they're the core funding source. The key is that FFBW isn't taking on external, interest-bearing borrowings to fund growth; they are leveraging their core deposit base and their significant capital cushion. Your action item is to view FFBW's debt-related risk as minimal and focus your analysis instead on deposit stability and loan portfolio quality.

Liquidity and Solvency

You need to know how easily FFBW, Inc. (FFBW) can meet its short-term obligations, and the quick answer is that their liquidity position is defintely strong, anchored by a significant increase in cash and a zero-borrowing stance.

For a bank, the traditional Current Ratio (Current Assets / Current Liabilities) and Quick Ratio aren't the best tools; we look at liquid assets against short-term funding like deposits. The key takeaway for FFBW is their deliberate move toward a more liquid, less leveraged balance sheet through the first three quarters of 2025.

• Cash and Cash Equivalents surged by 98.8% in Q1 2025, rising by $6.1 million from December 31, 2024, to $12.185 million by March 31, 2025.
• The company reported $0 in borrowings at the end of Q1 2025, a major strength in a high-rate environment.
• Nonaccrual loans (a measure of asset quality) remained exceptionally low at just $37,000, or 0.02% of total loans, as of September 30, 2025.

Cash Flow Trends and Working Capital Management

The company's working capital management-which for a bank means managing deposits, loans, and cash-shows a clear focus on capital efficiency and core funding. This is a smart move right now. The increase in cash and cash equivalents was driven by deposit growth, which is the most cost-effective funding source for a bank.

Here's the quick math on the major cash flow drivers through the first nine months of 2025:

The reduction in net loans means cash is flowing back into the bank from loan payoffs, which is a source of liquidity, but it also means total assets decreased by 4.0% to $276.3 million by September 30, 2025. This is a trade-off: great liquidity, but a challenge for asset growth. You can see their strategic intent by reviewing their Mission Statement, Vision, & Core Values of FFBW, Inc. (FFBW).

Liquidity Strengths and Near-Term Actions

The primary strength is the quality and cost of funding. FFBW has reduced its reliance on alternative, higher-cost funding sources and certificates of deposit, which is why interest expense dropped significantly. The zero-borrowing position gives them immense flexibility to deploy capital when new, high-quality loan opportunities arise.

What this estimate hides is the long-term pressure on a bank to grow its loan portfolio. If loan payoffs continue to outpace originations, the company will have to find other ways to deploy its excess cash profitably, or its asset base will shrink further. Still, for now, the fortress balance sheet is a huge plus.

Your action: Monitor Q4 2025 loan originations to see if management's focus on a growing pipeline translates into asset growth that can sustain the strong Net Interest Margin.

Valuation Analysis

You want to know the bottom line: Is FFBW, Inc. (FFBW) a buy, a hold, or a sell right now? Based on key financial ratios and market price as of November 2025, FFBW appears to be overvalued on an earnings basis but trades at a discount to its tangible book value (TBV), which is critical for a bank.

Here's the quick math on where the company stands. The current stock price of FFBW is around $14.33. One fair value model suggests the intrinsic value is closer to $9.39, indicating a potential overvaluation of roughly 33%. This is a signal to be defintely cautious, but the picture changes when you look at the balance sheet.

Key Valuation Multiples: P/E and P/B

For a commercial bank like FFBW, Inc., the Price-to-Earnings (P/E) ratio shows how much the market is willing to pay for each dollar of annual earnings, while the Price-to-Book (P/B) ratio is the true acid test, telling you how the stock price compares to the company's net asset value per share.

• Price-to-Earnings (P/E): The trailing twelve months (TTM) P/E ratio is approximately 26.52x. This is high for the banking sector, where peers often trade closer to 17.0x. This high multiple suggests the market is either pricing in significant future earnings growth that hasn't materialized yet, or the stock is simply expensive on current earnings.
• Price-to-Book (P/B): The P/B ratio is a low 0.8x. This is a key opportunity. Since the stock trades below 1.0x tangible book value per share (which was $16.42 as of September 30, 2025), you are essentially buying the bank's assets for 80 cents on the dollar, after accounting for liabilities.

You can see the tension here: a high P/E says 'overvalued,' but the low P/B says 'cheap.' This is a common situation for a bank focused on capital rationalization, like FFBW, Inc., which has been aggressively repurchasing shares to enhance earnings per share (EPS).

Stock Performance and Analyst View

FFBW, Inc.'s stock price has shown modest movement, trading within a 52-week range of $13.03 to $14.49. Over the last 52 weeks, the stock price has increased by only +0.43%, which is a significant underperformance compared to the broader US market and the US Banks industry returns. The stock's low beta of 0.12 suggests it is far less volatile than the S&P 500, a sign of stability but also limited upside potential.

When it comes to external validation, you won't find much guidance: FFBW, Inc. is currently covered by 0 analysts, meaning there is no consensus (buy, hold, or sell) from major brokerage houses. This lack of coverage is typical for smaller, over-the-counter (OTC) traded banks and means you need to do your own homework. Also, FFBW, Inc. does not pay a dividend, with a dividend yield of 0.0% and a payout ratio of 0%. The management's focus is clearly on enhancing shareholder value through share repurchases, not direct cash payouts. This tells you they believe their stock is the best place to invest their excess capital right now. For a deeper dive into the shareholder base, check out Exploring FFBW, Inc. (FFBW) Investor Profile: Who's Buying and Why?

Next Step: Review FFBW, Inc.'s latest balance sheet to confirm the quality of assets underpinning that attractive 0.8x Price-to-Book ratio. That's where the real value lies.

Risk Factors

You're looking at FFBW, Inc. (FFBW) and trying to map out the near-term risks, which is smart. The headline is that while management is executing a clear strategy to boost earnings per share (EPS) through buybacks, the core business is still facing significant headwinds that are putting pressure on net income.

Here's the quick math: For the third quarter ended September 30, 2025, FFBW's net income was $600,000, a 15.8% drop from the $713,000 reported a year prior. You need to understand what's driving that decline, plus the broader market risks a regional bank like this defintely faces.

Operational and Financial Headwinds

The primary internal risk is the struggle for consistent profit expansion, which the CEO himself highlighted. The company is actively working to strengthen its net interest margin (NIM), which did improve to 4.4% in Q3 2025 from 3.7% a year earlier, but other income streams are shrinking.

• Revenue Contraction: Total interest and dividend income fell by 8.7%, or $347,000, to $3.6 million in Q3 2025, mainly because of a decline in interest-earning assets.
• Noninterest Income Dip: Noninterest income, which includes fees, also decreased by 2.4% to $246,000 in the same quarter.
• Loan Portfolio Volatility: The company is strategically exiting lower-margin transactional loans for relationship-based customers, but this caused net loans to decrease by $12.0 million, or 5.4%, in the first half of 2025 due to accelerated payoffs. That's a tough trade-off in the near term.

External and Strategic Risks to Watch

As a financial institution, FFBW, Inc. is highly exposed to macro forces, and their own disclosures point to several key areas. These aren't unique to FFBW, but they're amplified by the bank's smaller size and regional focus in Wisconsin's Waukesha and Milwaukee Counties.

Mitigation Strategies: Actions, Not Just Words

The good news is the company isn't just sitting still. Their strategy to counter these risks is clear and action-oriented. The most visible action is the share repurchase program. The company announced a new program on August 11, 2025, to buy back up to an additional $5,000,000 of common stock.

This is a direct financial lever. It has already reduced the outstanding share count by 45% since 2020, which is why diluted EPS held steady at $0.16 in Q3 2025 despite the lower net income. Operationally, they are also focused on a new sales and service program centered on relationship banking and plan to further expand their commercial sales team in 2025 to drive customer base growth. If you want a deeper dive into the numbers, check out Breaking Down FFBW, Inc. (FFBW) Financial Health: Key Insights for Investors.

Next Step: Compare FFBW's $16.42 tangible book value per share (as of September 30, 2025) against their regional peers to see if the buyback strategy is truly creating a valuation floor.

Growth Opportunities

You're looking for a clear map of where FFBW, Inc. (FFBW) is headed, and the data for the 2025 fiscal year gives us a solid, albeit deliberate, growth trajectory. The company is primarily focused on internal capital rationalization and margin expansion, not aggressive acquisitions, which is a safer bet in the current rate environment.

The core of FFBW's near-term growth strategy isn't about opening new branches; it's about making their existing book of business more profitable and rewarding shareholders through share buybacks. This capital rationalization effort has been significant, with share repurchases reducing the outstanding share count by 45% since 2020, which is a huge tailwind for Earnings Per Share (EPS).

Key Growth Drivers and Strategic Focus

The management team is clearly articulating a strategy that centers on disciplined pricing and a stronger commercial focus. This is a smart move for a community bank in the competitive Waukesha and Milwaukee County market in Wisconsin. To be fair, this isn't a high-flying tech growth story, but a steady, margin-focused financial institution.

The primary drivers for future profit expansion are clear:

• Net Interest Margin (NIM) Expansion: Focusing on disciplined loan and deposit pricing to increase the spread between what they earn and what they pay. The NIM for Q3 2025 hit 4.4%, up from 3.7% in Q3 2024, showing this strategy is working.
• Commercial Sales Team Expansion: They've been adding to the commercial sales team and plan to further expand it in 2025 to increase the customer base and earnings.
• New Relationship Banking Program: A new sales and service program was instituted in Q1 2025 to develop a bank-wide sales culture, which should expedite profitable growth.
• Strengthening Loan Pipeline: The CEO noted an encouragingly strengthening loan pipeline, which is the feed for future interest income.

Revenue and Earnings Trajectory

While the total revenue for FFBW, Inc. (FFBW) saw a slight decrease in Q3 2025 to $3.6 million compared to $4.0 million a year prior, this was due to a decline in interest-earning assets, which was offset by an increase in the yield on those assets. The real story is the bottom line and the per-share metrics. For the first nine months of 2025, the total net income was approximately $1,693,000 ($537,000 in Q1, $556,000 in Q2, and $600,000 in Q3).

Here's the quick math on the quarterly net income for 2025:

The sequential increase in both net income and diluted EPS from Q1 to Q3 2025 is a defintely positive trend, driven by the share repurchases and margin improvement. The tangible book value per share also rose to $16.42 at September 30, 2025, a key metric for bank investors.

Competitive Advantages

The company maintains a strong competitive position in its niche through a focus on credit quality and low stock volatility. Their nonaccrual loans were exceptionally low at $37,000, or just 0.02% of total loans, as of September 30, 2025, which shows excellent credit discipline. In a volatile market, FFBW's stock has a beta of just 0.18, meaning it's significantly less volatile than the S&P 500. This low-risk profile is a clear advantage for conservative investors.

To understand the foundation of their strategy, you should review their Mission Statement, Vision, & Core Values of FFBW, Inc. (FFBW).

What this estimate hides is the potential impact of a rapidly changing interest rate environment on their loan pipeline, but their current focus on disciplined pricing suggests they are well-prepared to manage those risks.