Forbright, Inc.: Initiate at Neutral: Superior Balance Sheet Growth but Lack of Near-Term Catalysts Keeps Us On Sidelines

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Forbright, Inc.: Initiate at Neutral: Superior Balance Sheet Growth but Lack of Near-Term Catalysts Keeps Us On Sidelines

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2027 to further diversify its funding base. As a result, we expect digital deposits

to increase to 65% of total deposits by the end of 2028.

• Not Just Deposits—But Loan Portfolio Has a National Angle To It As Well.

Forbright has built a nationwide middle-market lending platform and has

deliberately focused on serving customers across six verticals, each supported

by experienced leaders and relationship managers. These verticals include

healthcare finance, lender finance, fund finance, real estate finance, corporate

finance, and asset finance. Looking ahead, we forecast loan growth in the 15-

20%+ range annually through 2028 (vs. mid-single-digit growth for our

coverage universe), and this outlook does not contemplate Forbright entering

new verticals or adding headcount.

• Valuation: Lack of Near-Term Catalysts Likely to Keep Discount in Place.

While FRBT shares trade at 6.5x 2027e EPS (~30% discount to our coverage),

~0.8x 2027e TBV (~25% discount), and have a 2027e implied cost of equity

(ROTE / P/TBV) of 16.5% (coverage: ~12%), the challenge we have at this

stage is that we see the lack of near-term catalysts in place to support a material

re-rating of the shares above what we expect from our coverage universe. Over

time, what could make us more bullish on FRBT shares is a sustained higher-

for-longer Fed funds rate path (beyond just the one expected 25 bp hike by

YE26), which is not baked into the latest forward curve and would support the

company’s asset-sensitive balance sheet. We initiate coverage on FRBT shares

at Neutral with a Dec-27 price target of $21, with FRBT standing out as a highly