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C&F Financial Corporation operates as the holding company for C&F Bank, also known as Citizens and Farmers Bank, which provides commercial and retail banking services in Virginia. CFFI operates 16 branch offices in the Hampton - Richmond corridor of Virginia and plans to open two more in 2007. The company provides very little information on their website which is useful to prospective investors. It appears that residential mortgage lending is a substantial portion of their business.

Value Screen:

1) Does the stock’s dividend yield exceed the yield of the S&P 500? Yes - 2.97%.

2) Is the stock’s beta less than or equal to 1.00? Yes - .23.

3) Has the stock’s performance equaled or exceeded the performance of the S&P? Yes, by a good margin, and CFFI also behaved inversely to the S$P during the 2000-03 bear market.

4) Is the size of firm over 1 billion market capitalization? No. CFFI has a market cap of only 132M and the stock is thinly traded.

5) Price to earnings analysis: is the current P/E ratio below 20? Yes - 11.4.

6) Price to assets analysis: is the P/B ratio below 2.5? Yes: 1.96.

7) Current ratio analysis: Is the current ratio greater than 2.0? No: 1.10; also, the ratio has deteriorated from 1.13 in the two preceding years.

8) Dividend payout analysis: Is the payout ratio less than 50%? Yes: 29%.

9) Earnings stability - has there been positive net income for the prior ten years? Yes.

10) Earnings growth - is net income for the company greater than five years ago, preferably at least 1/3 greater? Yes, 50% greater.

11) Dividend growth - is the dividend greater than five years ago, preferably at least 1/3 greater? Yes. CFFI has increased the dividend annually and it has almost doubled in five years.

12) Is the business simple and understandable? Yes.

13) Does the business have favorable long term prospects? Yes.

14) Are company insiders buying more stock than they are selling? Insiders have made no market purchases or sales for two years.

15) Does technical analysis reveal a convincing uptrend? No. For the last year, CFFI has traded sideways with an upward bias, in a trading range between 37 and 42.

SUMMARY: CFFI came to my attention through a Forbes article which championed CFFI as a bank stock which famous investors Buffett and Neff might love. Most of the numbers do look good at first glance. However, the company is quite small, and like many small companies, not very transparent when it comes to providing useful information to prospective investors. C&F’s 1.10 current ratio is rather low. Although the ratio is in the same range as many other bank stocks which are considered solvent, the deteriorating trend of the ratio in recent years is a matter of more concern, since it could portend trouble in the future.

CFFI 1-yr. chart:

CFFI Investment

Source: Value Screen: C & F Financial