Safe and Sound

South Atlantic Bank

Myrtle Beach, SC
4
Star Rating
South Atlantic Bank is an FDIC-insured bank started in 2007 and currently based in Myrtle Beach, SC. The bank holds equity of $44.3 million on $514.8 million in assets, according to December 31, 2017, regulatory filings.

U.S. bank customers have $454.3 million on deposit at 7 offices in SC run by 94 full-time employees. With that footprint, the bank holds loans and leases worth $429.6 million, $398.4 million of which are for real estate.

Overall, Bankrate believes that, as of December 31, 2017, South Atlantic Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three key criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial strength, capital is useful. It acts as a buffer against losses and provides protection for accountholders when a bank is struggling financially. From a safety and soundness perspective, the more capital, the better.

On our test to measure capital adequacy, South Atlantic Bank received a score of 8 out of a possible 30 points, failing to reach the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. South Atlantic Bank's Tier 1 capital ratio was 10.59 percent, higher than the 6 percent level considered adequate by regulators, but lower than 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, South Atlantic Bank held equity amounting to 8.61 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the effect of troubled assets, such as past-due mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having a large number of these kinds of assets could eventually require a bank to use capital to cover losses, decreasing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and elevating the chances of a failure in the future.

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

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 0.01 percent of South Atlantic 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 1.01 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a helpful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. South Atlantic Bank's loan loss allowance was 11,360.61 percent of its total noncurrent loans, higher than the national average. All else being equal, the higher the ratio of loan loss allowance to noncurrent loans, the better.

Earnings score

How profitable a bank is affects its safety and soundness. A bank can retain its earnings, expanding its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.

South Atlantic Bank scored 16 out of a possible 30 on Bankrate's test of earnings, above the national average of 15.12.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by the total amount of equity. South Atlantic Bank's most recent annualized quarterly return on equity was 7.70 percent, below the national average of 8.10 percent.

The bank reported net income of $3.1 million on total equity of $44.3 million for the twelve months ended December 31, 2017. The bank reported an annualized return on average assets, or ROA, of 0.63 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.