Contrasting Towne Bank (NASDAQ:TOWN) & South Atlantic Bancshares (OTCMKTS:SABK)

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Atlantic Bancshares	$93.28 million	1.54	$14.21 million	$1.89	10.08
Towne Bank	$791.07 million	3.18	$161.76 million	$2.24	14.97

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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
South Atlantic Bancshares	N/A	N/A	N/A
Towne Bank	15.69%	9.86%	1.23%

Volatility and Risk

South Atlantic Bancshares has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500. Comparatively, Towne Bank has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Institutional and Insider Ownership

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

Dividends

South Atlantic Bancshares pays an annual dividend of $0.10 per share and has a dividend yield of 0.5%. Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.2%. South Atlantic Bancshares pays out 5.3% of its earnings in the form of a dividend. Towne Bank pays out 48.2% 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 raised 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.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Atlantic Bancshares	0	0	1	1	3.50
Towne Bank	0	1	2	0	2.67

South Atlantic Bancshares currently has a consensus target price of $19.00, indicating a potential downside of 0.26%. Towne Bank has a consensus target price of $41.00, indicating a potential upside of 22.26%. Given Towne Bank’s higher possible upside, analysts clearly believe Towne Bank is more favorable than South Atlantic Bancshares.

Summary

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

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.

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.