425: FB Financial to Merge with Southern States Bancshares in $380 Million Deal

FB Financial Corporation announces a definitive agreement to acquire Southern States Bancshares in an all-stock transaction valued at approximately $380 million, aimed at expanding its footprint and enhancing shareholder value.

Summary

• FB Financial Corporation (FB Financial) and Southern States Bancshares (Southern States) have announced a merger agreement.
• The transaction is an all-stock deal where Southern States shareholders will receive 0.8 shares of FB Financial common stock for each share of Southern States common stock.
• This values the total deal consideration at approximately $380 million.
• FB Financial anticipates the merger will result in 12% earnings per share (EPS) accretion.
• The deal is expected to cause less than 4% tangible book value dilution, with an earn-back period of less than two years.
• The combined company is projected to have a pro forma return on average assets of 1.41%, a return on average tangible common equity of 14.5%, and an efficiency ratio of 50% by 2026.
• The merger is expected to close in Q3 or early Q4 of 2025, subject to regulatory and shareholder approvals.
• Southern States CEO Mark Chambers and CFO Lynn Joyce will remain with the company after the merger.
• Cost savings are estimated at approximately 25%, phased in over 2025 and 2026.
• Pre-tax transaction costs are estimated at around $38 million.
• The loan portfolio will have a total mark of 3.2% or $71 million, with $36 million related to credit and $35 million to interest rates.
• The combined common equity tier-one ratio is projected to be 12.1%, and the total capital ratio is 14.8%.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the merger, highlighting the expected financial benefits and strategic advantages. The management's comments are optimistic, and the overall tone suggests confidence in the success of the transaction.

Positives

• The merger is expected to be accretive to FB Financial's earnings per share by 12%.
• Tangible book value dilution is limited to less than 4% with a quick earn-back period of under two years.
• The combined company will have improved return and efficiency ratios, exceeding peer group medians.
• The transaction combines two banks with strong capital positions, resulting in robust capital ratios for the combined entity.
• The merger expands FB Financial's footprint into new markets in East Alabama and West Georgia.
• Southern States' management team will remain with the company after the merger, ensuring continuity and leveraging their expertise.
• The deal is expected to improve shareholder value through added scale and geographic expansion.

Negatives

• The transaction involves tangible book value dilution, although it is expected to be less than 4%.
• There are pre-tax transaction costs of approximately $38 million associated with the merger.
• The integration process could divert management's attention from other strategic initiatives.

Risks

• The cost savings and revenue synergies from the merger may be less than expected.
• The integration of the two businesses could be materially delayed or more costly than anticipated.
• Regulatory approvals for the merger may not be obtained in a timely manner or at all.
• Shareholder approval for the merger may not be obtained.
• There is a risk of potential litigation or regulatory action related to the merger.
• General competitive, economic, political, and market conditions could negatively impact the combined company.

Future Outlook

FB Financial expects the merger to enhance its growth opportunities and improve shareholder value. The combined company aims to capitalize on opportunities in the Southeast and continue to improve its operating foundation.

Management Comments

• Chris Holmes: 'We're proud to announce the combination of FB Financial Corporation and Southern States Bancshares.'
• Chris Holmes: 'We believe that scalable business success requires a team of people with a common mission and shared values.'
• Chris Holmes: 'We anticipate 12% EPS accretion, limited tangible book value dilution in less than -at less than 4%, and a tangible book value earn back period of less than two years.'
• Michael Mettee: 'The transaction itself is an all-stock deal with an exchange ratio of 0.8 shares of FB Financial common stock for each share of Southern States common stock, which values the total deal consideration just north of $380 million.'
• Michael Mettee: 'As a combined entity, we'll see meaningful improvements in our return and efficiency ratios.'
• Chris Holmes: 'We do look forward to combining our companies into a bigger and better company than either of us could be on our own.'

Industry Context

This merger reflects the ongoing consolidation trend in the banking industry, where institutions are seeking to gain scale, expand their geographic footprint, and improve efficiency. The deal positions FB Financial to better compete in the Southeast market.

Comparison to Industry Standards

• The projected pro forma returns on average assets and tangible common equity for the combined entity are above the peer group median, indicating a strong financial profile.
• The efficiency ratio of 50% is also competitive compared to industry benchmarks.
• The tangible book value earn-back period of less than two years is relatively quick compared to other similar transactions.
• The capital ratios of the combined entity are well above regulatory thresholds, providing a solid foundation for future growth.

Management Changes

Stakeholder Impact

• Shareholders of both FB Financial and Southern States are expected to benefit from the merger through increased value and growth opportunities.
• Employees of both companies will be integrated into the combined entity, with Southern States' CEO and CFO remaining with the company.
• Customers of both banks will have access to a broader range of products and services.
• The merger is expected to strengthen the combined company's position in the Southeast market, benefiting the communities it serves.

Next Steps

• FB Financial and Southern States will file a Registration Statement on Form S-4 with the SEC.
• The companies will seek regulatory approvals for the merger.
• FB Financial and Southern States will seek shareholder approval for the merger.
• The companies will work towards closing the deal in Q3 or early Q4 of 2025.
• The integration of the two businesses will commence after the closing.

Key Dates

Keywords

merger, acquisition, FB Financial, Southern States Bancshares, bank, financial, accretion, dilution, capital, regulatory, integration