Safe and Sound

Atlantic Community Bank

Bluffton, SC
3
Star Rating
Atlantic Community Bank is an FDIC-insured bank started in 2006 and currently headquartered in Bluffton, SC. The bank has equity of $9.9 million on assets of $85.1 million, according to December 31, 2017, regulatory filings.

U.S. bank customers have $75.0 million on deposit at 2 offices in SC run by 18 full-time employees. With that footprint, the bank holds loans and leases worth $63.0 million, including real estate loans of $61.7 million.

Overall, Bankrate believes that, as of December 31, 2017, Atlantic Community Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Here's an analysis of how the bank fared on the three important criteria Bankrate used to grade U.S. banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and as protection for account holders when a bank is struggling financially. Therefore, a bank's level of capital is a useful measurement of an institution's financial fortitude. When it comes to safety and soundness, the higher the capital, the better.

Atlantic Community Bank exceeded the national average of 13.13 points on our test to measure the adequacy of a bank's capital, racking up 14 out of a possible 30 points.

A bank's Tier 1 capital ratio is a widely used measure of this buffer. Atlantic Community Bank's Tier 1 capital ratio was 15.84 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. The higher the capital ratio, the better the bank will be able to stand up to economic downturns.

Overall, Atlantic Community Bank held equity amounting to 11.68 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

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

Having extensive holdings of these types of assets suggests a bank could eventually have to use capital to cover losses, diminishing its cushion of equity. Many of those assets are also likely to be in non-accrual status and thus aren't earning interest for the bank, reducing earnings and increasing the risk of a failure in the future.

Atlantic Community Bank scored 40 out of a possible 40 points on Bankrate's test of asset quality, exceeding the national average of 37.49.

A useful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, none of Atlantic Community Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

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

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings may be retained by the bank, expanding its capital buffer, or be used to deal with problematic loans, potentially making the bank better able to withstand economic trouble. Obviously, banks that are losing money are less able to do those things.

On Bankrate's test of earnings, Atlantic Community Bank scored 0 out of a possible 30, lower than the national average of 15.12.

One widely used measure of a bank's earnings is return on equity, or net income (profit, basically) divided by total equity. The most recent annualized quarterly return on equity for Atlantic Community Bank was -2.61 percent, below the national average of 8.10 percent.

The bank recorded net income of $-269,000 on total equity of $9.9 million for the twelve months ended December 31, 2017. The bank had an annualized return on average assets, or ROA, of -0.31 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 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.