Reviewing Five Star Bancorp (NASDAQ:FSBC) and C&F Financial (NASDAQ:CFFI)

C&F Financial (NASDAQ:CFFI) and Five Star Bancorp (NASDAQ:FSBC) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, institutional ownership, dividends, profitability, analyst recommendations, earnings and valuation.

Dividends

C&F Financial pays an annual dividend of $1.76 per share and has a dividend yield of 3.4%. Five Star Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.9%. C&F Financial pays out 29.0% of its earnings in the form of a dividend. Five Star Bancorp pays out 30.4% 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. C&F Financial has raised its dividend for 12 consecutive years. C&F Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares C&F Financial and Five Star Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
C&F Financial	12.16%	9.13%	0.79%
Five Star Bancorp	22.24%	15.23%	1.23%

Institutional & Insider Ownership

37.2% of C&F Financial shares are held by institutional investors. Comparatively, 46.9% of Five Star Bancorp shares are held by institutional investors. 6.3% of C&F Financial shares are held by company insiders. Comparatively, 25.6% of Five Star Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares C&F Financial and Five Star Bancorp’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
C&F Financial	$123.32 million	1.43	$23.60 million	$6.06	8.67
Five Star Bancorp	$115.51 million	5.09	$47.73 million	$2.63	10.49

Five Star Bancorp has lower revenue, but higher earnings than C&F Financial. C&F Financial is trading at a lower price-to-earnings ratio than Five Star Bancorp, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

C&F Financial has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500. Comparatively, Five Star Bancorp has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for C&F Financial and Five Star Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
C&F Financial	0	0	0	0	N/A
Five Star Bancorp	0	1	2	0	2.67

Five Star Bancorp has a consensus target price of $32.33, indicating a potential upside of 17.19%. Given Five Star Bancorp’s higher possible upside, analysts plainly believe Five Star Bancorp is more favorable than C&F Financial.

Summary

Five Star Bancorp beats C&F Financial on 11 of the 16 factors compared between the two stocks.

About C&F Financial

C&F Financial Corporation operates as a bank holding company for Citizens and Farmers Bank that provides banking services to individuals and businesses. It operates through three segments: Community Banking, Mortgage Banking, and Consumer Finance. The Community Banking segment offers various banking services, including checking and savings deposit accounts, as well as business, real estate, development, mortgage, home equity, and installment loans. This segment also provides ATMs, Internet and mobile banking, peer-to-peer payment capabilities, and debit cards, as well as safe deposit box rentals, notary public, electronic transfer, and other customary bank services. The Mortgage Banking segment provides various residential mortgage loans; originates conventional mortgage loans, mortgage loans insured by the Federal Housing Administration, and mortgage loans guaranteed by the United States Department of Agriculture and the Veterans Administration; and ancillary mortgage loan production services to third parties for residential appraisals, as well as various mortgage origination activities. The Consumer Finance segment provides automobile loans. It also offers brokerage and wealth management services, and insurance products and services, as well as title and settlement agency. C&F Financial Corporation was founded in 1927 and is headquartered in Toano, Virginia.

About Five Star Bancorp

Five Star Bancorp operates as the bank holding company for Five Star Bank that provides a range of banking products and services to small and medium-sized businesses, professionals, and individuals in Northern California. It accepts various deposits, such as money market accounts, noninterest-bearing and interest checking accounts, savings accounts, term certificate accounts, and time deposits. The company also offers loan products, including commercial and residential real estate loans; commercial loans; commercial land loans; farmland loans; commercial and residential construction loans; and consumer and other loans, as well as operating lines of credit. In addition, it provides debit cards; and remote deposit capture, online and mobile banking, and direct deposit services. Five Star Bancorp was founded in 1999 and is headquartered in Rancho Cordova, California.