8-K: FB Financial Secures Key Regulatory Approvals for Southern States Merger, Paving Way for July 1st Close

FB Financial Corporation has announced the receipt of all necessary regulatory approvals for its merger with Southern States Bancshares, Inc., with the transaction now expected to close on July 1, 2025.

Summary

• FB Financial Corporation (FBK) has received all required regulatory approvals for its previously announced merger with Southern States Bancshares, Inc. (SSBK).
• The merger is now anticipated to close on July 1, 2025, subject to customary closing conditions, including Southern States shareholder approval.
• As of March 31, 2025, FB Financial reported total assets of $13.1 billion, loans of $9.9 billion, and deposits of $11.2 billion.
• Southern States Bancshares, Inc. reported total assets of $2.9 billion, loans of $2.3 billion, and deposits of $2.4 billion as of March 31, 2025.
• The combined entity will have approximately $16 billion in total assets, $12.2 billion in loans, and $13.6 billion in deposits.
• FB Financial's management team is scheduled to present at the KBW Investor Conference on June 17, 2025.
• The merger is expected to result in low double-digit earnings accretion with fully realized cost savings and manageable tangible book value dilution earned back in under two years.
• FB Financial reported a 1Q25 Adjusted Return on Average Assets (ROAA) of 1.23% and an Adjusted Return on Average Tangible Common Equity (ROATCE) of 12.3%.
• The company's Net Interest Margin (NIM) for 1Q25 was 3.55%, with Net Interest Income (NII) at $108.4 million.
• Loans Held for Investment (HFI) ending balances grew by $169 million, or 7.14% on an annualized basis, in 1Q25.
• The mortgage segment contributed a positive pre-tax net contribution of $1.5 million in 1Q25, stabilizing profitability over the last five quarters.

Sentiment

Score: 8

Explanation: The document conveys a highly positive sentiment, primarily driven by the successful receipt of all regulatory approvals for a significant merger, which is described with strong financial and strategic benefits. The company's current financial metrics also indicate solid performance and strong capital. The risks mentioned are standard forward-looking statements for such transactions and general economic conditions, not specific new negative developments.

Positives

• Receipt of all regulatory approvals for the merger with Southern States Bancshares, Inc. significantly de-risks the transaction.
• The merger is projected to be financially attractive, offering low double-digit earnings accretion with fully realized cost savings.
• Tangible book value dilution from the merger is expected to be manageable and earned back in under two years.
• The combined company is anticipated to have strong pro forma capital ratios and loan concentrations well below industry guidelines.
• FB Financial maintains a solid capital foundation with a 12.8% Common Equity Tier 1 (CET1) ratio and 10.5% Tangible Common Equity to Tangible Assets (TCE/TA) as of 1Q25.
• The company's asset quality metrics show improvement, with Nonperforming Assets (NPAs) declining and a strong Allowance for Credit Losses (ACL) coverage ratio of 1.54% in 1Q25.
• The mortgage segment has stabilized, delivering positive pre-tax net contribution for five consecutive quarters, with increased revenue in 1Q25 driven by higher lock volumes.
• FB Financial's diversified loan portfolio and granular deposit base provide a valuable and solid funding foundation.

Negatives

• Net Interest Income (NII) in 1Q25 was impacted by two fewer days in the quarter, lower yields on earning assets, and lower cash balances, partially offset by deposit cost management.
• Noninterest expense increased by approximately $6 million quarter-over-quarter in 1Q25, primarily due to higher performance-based incentives and seasonal HR-related compensation expenses, and the absence of a one-time franchise tax benefit from 4Q24.

Risks

• Current and future economic conditions, including inflation, interest rate fluctuations, changes in the economy or global supply chain, and high unemployment rates.
• Changes or lack of changes in government interest rate policies and their impact on net interest margin and mortgage operations.
• Increased competition for deposits.
• Changes in the quality or composition of loan or investment portfolios, including adverse developments in borrower industries or repayment ability.
• Deterioration in commercial real estate market fundamentals.
• Risks associated with the Proposed Merger, including cost savings and revenue synergies being less than expected, disruption to customer/supplier/employee relationships, termination of the merger agreement, failure to obtain shareholder approval, higher than anticipated costs/fees, failure of closing conditions, integration delays or difficulties, diversion of management time, and reputational risk.
• Ability to manage unexpected outflows of uninsured deposits and avoid selling investment securities or other assets at a loss.
• Effectiveness of controls and procedures to detect, prevent, mitigate, and manage fraud or misconduct, including cybersecurity attacks.
• Dependence on information technology systems of third-party service providers and the risk of system failures or breaches.
• Impact of natural disasters, pandemics, acts of war or terrorism, or other catastrophic events.
• Events giving rise to international or regional political instability.

Future Outlook

The company anticipates the merger with Southern States Bancshares, Inc. to close on July 1, 2025, with systems conversion expected to follow during the third quarter of 2025. The merger is expected to yield low double-digit earnings accretion with fully realized cost savings and a tangible book value dilution earned back in under two years. FB Financial aims to continue its organic growth strategy, leveraging its expanded footprint in attractive metropolitan and community markets across the Southeast.

Management Comments

• Christopher T. Holmes, President and CEO of FB Financial, stated: "We're pleased to have received swift regulatory approval for the merger between FB Financial and Southern States. Both institutions share a deep commitment to community banking, and we're excited about bringing our teams together to continue delivering long-term value for our customers, associates, shareholders, and communities."

Industry Context

The merger between FB Financial and Southern States Bancshares reflects a continued trend of consolidation within the regional banking sector, particularly in the high-growth Southeast U.S. market. This strategic expansion allows FB Financial to enhance its market presence and achieve greater scale, which is crucial for competitiveness in an environment of increasing regulatory burdens and technological investment requirements. The focus on community banking and conservative underwriting aligns with broader industry efforts to maintain strong asset quality amidst economic uncertainties.

Comparison to Industry Standards

• FB Financial's 1Q25 Adjusted ROAA of 1.23% and Adjusted ROATCE of 12.3% position it as a 'Top-quartile performer' among its peers, as stated in the investor presentation, indicating strong profitability relative to industry benchmarks.
• The company's CET1 ratio of 12.8% and Total Risk-Based Capital ratio of 15.2% are robust and exceed typical regulatory minimums and often compare favorably to many regional banks, demonstrating a strong capital foundation.
• The projected low double-digit earnings accretion and tangible book value earn-back period of under two years for the Southern States merger are generally considered attractive metrics for bank M&A transactions, often surpassing the average earn-back periods seen in similar deals.
• The ACL coverage ratio of 1.54% and NPLs/Total Loans HFI of 0.79% suggest a prudent approach to credit risk management, aligning with or exceeding the asset quality standards of well-managed community and regional banks.

Stakeholder Impact

• Shareholders: Expected to benefit from low double-digit earnings accretion and manageable tangible book value dilution from the merger, as well as continued strong capital ratios.
• Customers: Anticipated to benefit from the combined entity's expanded footprint and continued commitment to community banking.
• Associates (Employees): Management expresses excitement about bringing teams together, suggesting potential for collaboration and growth within the larger organization.
• Communities: The merger is expected to continue delivering long-term value to the communities served by both institutions.

Next Steps

• Southern States Bancshares, Inc. shareholders to vote on the merger on June 26, 2025.
• Legal closing of the merger with Southern States Bancshares, Inc. expected on July 1, 2025.
• Systems conversion for the combined entity expected during the third quarter of 2025.
• FB Financial Corporation management team to present at the KBW Investor Conference on June 17, 2025.

Key Dates

Recommendation

Keywords

FB Financial Corporation, Southern States Bancshares, Merger, Acquisition, Regulatory Approval, Banking, Financial Services, SEC Filing, 8-K, Investor Presentation, Bank Holding Company, FirstBank, Community Banking, Financial Performance, Earnings Accretion, Capital Ratios, Asset Quality, Deposits, Loans, Mortgage Banking, Nashville, Tennessee, Alabama, Georgia, Kentucky