Safe and Sound

Sandhills Bank

North Myrtle Bea, SC
4
Star Rating
Started in 1959, Sandhills Bank is an FDIC-insured bank headquartered in North Myrtle Bea, SC. Regulatory filings show the bank having equity of $17.4 million on $184,780,000 in assets, as of June 30, 2017.

U.S. bank customers have $161.8 million on deposit at 6 offices in SC run by 43 full-time employees. With that footprint, the bank currently holds loans and leases worth $135.4 million, including real estate loans of $126.3 million.

Overall, Bankrate believes that, as of June 30, 2017, Sandhills Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's an analysis of how the bank did on the three important criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of a bank's financial resilience. It works as a cushion against losses and affords protection for depositors during periods of financial instability for the bank. When it comes to safety and soundness, the higher the capital, the better.
On our test to measure the adequacy of a bank's capital, Sandhills Bank received a score of 8 out of a possible 30 points, less than the national average of 13.38.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Sandhills Bank's Tier 1 capital ratio was 11.28 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to weather financial headwinds.

Overall, Sandhills Bank held equity amounting to 9.39 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due loans, on the bank's capitalization and allocated loan loss reserves.

Having a large number of these types of assets could eventually force a bank to use capital to absorb losses, shrinking its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, resulting in diminished earnings and potentially more risk of a future failure.

On Bankrate's asset quality test, Sandhills Bank scored 36 out of a possible 40 points, failing to reach the national average of 37.62 points.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.95 percent of Sandhills Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of problematic loans can be a handy indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Sandhills Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to address problematic loans, likely making the bank better able to withstand financial trouble. Obviously, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, Sandhills Bank scored 12 out of a possible 30, falling short of the national average of 16.52.

One important way to measure a bank's earnings is return on equity, or net income (profit, essentially) divided by total equity. The most recent annualized quarterly return on equity for Sandhills Bank was 5.22 percent, below the national average of 9.28 percent.

For the twelve months ended June 30, 2017, the bank reported net income of $450,000 on total equity of $17.4 million. The bank reported an annualized return on average assets, or ROA, of 0.51 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.