Head to Head Review: Towne Bank (NASDAQ:TOWN) and South Atlantic Bancshares (OTCMKTS:SABK)

Towne Bank (NASDAQ:TOWN) and South Atlantic Bancshares (OTCMKTS:SABK) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Towne Bank and South Atlantic Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Towne Bank	0	1	2	0	2.67
South Atlantic Bancshares	0	0	0	1	4.00

Towne Bank currently has a consensus target price of $41.00, indicating a potential upside of 20.41%. Given Towne Bank’s higher probable upside, analysts clearly believe Towne Bank is more favorable than South Atlantic Bancshares.

Dividends

Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.2%. South Atlantic Bancshares pays an annual dividend of $0.10 per share and has a dividend yield of 0.5%. Towne Bank pays out 48.2% of its earnings in the form of a dividend. South Atlantic Bancshares pays out 5.3% 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. Towne Bank has increased its dividend for 13 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

56.0% of Towne Bank shares are held by institutional investors. Comparatively, 13.3% of South Atlantic Bancshares shares are held by institutional investors. 8.1% of Towne Bank shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Towne Bank and South Atlantic Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Towne Bank	$791.07 million	3.23	$161.76 million	$2.24	15.20
South Atlantic Bancshares	$93.28 million	1.51	$14.20 million	$1.89	9.95

Towne Bank has higher revenue and earnings than South Atlantic Bancshares. South Atlantic Bancshares is trading at a lower price-to-earnings ratio than Towne Bank, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Towne Bank has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500. Comparatively, South Atlantic Bancshares has a beta of 0.15, meaning that its share price is 85% less volatile than the S&P 500.

Profitability

This table compares Towne Bank and South Atlantic Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Towne Bank	15.69%	9.64%	1.20%
South Atlantic Bancshares	N/A	N/A	N/A

Summary

Towne Bank beats South Atlantic Bancshares on 15 of the 18 factors compared between the two stocks.

About Towne Bank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.

About South Atlantic Bancshares

South Atlantic Bancshares, Inc. operates as the bank holding company for South Atlantic Bank that provides consumer and commercial banking products and services to individuals, small businesses, and corporations in South Carolina. The company offers checking, money market, and saving accounts, as well as certificate of deposit, individual retirement, and health saving accounts; personal, auto, and recreation loans, as well as home equity and ready reserve overdraft line of credits, and commercial lending products; and credit cards. It also provides cash management and merchant card services; remote deposit capture and automated clearing house services; online, mobile, and telephone banking services; personal and business checks; mortgage products and services; and wealth management services. The company operates offices in Myrtle Beach, Carolina Forest, North Myrtle Beach, Murrells Inlet, Pawleys Island, Georgetown, Mount Pleasant, Charleston, Bluffton, Hilton Head Island, and Beaufort, South Carolina. South Atlantic Bancshares, Inc. was founded in 2007 and is headquartered in Myrtle Beach, South Carolina.