Dive Brief:

• Nashville, Tennessee-based FB Financial Corp., the parent company of FirstBank, seeks to acquire Anniston, Alabama-based Southern States Bancshares, the parent company of Southern States Bank, for $381 million, the companies said Monday.
• The combination adds to FB Financial’s density in the Birmingham and Huntsville, Alabama, markets, where both banks have a presence, FB’s CEO, Christopher Holmes, said during a conference call Monday to discuss the deal.
• The all-stock deal – which has been approved by both companies’ boards of directors and awaits regulatory and shareholder approvals – is expected to close late in the third quarter or early in the fourth quarter.

Dive Insight:

FB doesn’t have “an obsessive goal of getting to Atlanta,” Holmes said, but as the bank expands into the Carolinas, Tennessee and Georgia, it will pursue outlying towns around Atlanta, such as Carrollton and Cartersville, creeping closer to the Southeast’s largest city. 

“We’ll continue to do that if we have opportunities like this, to combine with others around there. That would be exactly how we would approach it,” he said. “And then some day, we may be in the center of Atlanta, but that’s not today.”   

Acquiring Southern States will add 15 Alabama- and Georgia-based branches, as well as two Atlanta-area loan production offices, to FB’s footprint.

As of Dec. 31, Southern States counted $2.8 billion in assets, $2.2 billion in loans and $2.4 billion in deposits, according to Monday’s release.

Southern States CEO Mark Chambers and CFO Lynn Joyce will take on “meaningful roles” at the combined company, according to the release.

“Other key employees and producers are also vital parts of the merger and will be offered employment arrangements with the combined company,” FB indicated in the release. One Southern States board member, agreed upon by both companies, will take a seat on FB Financial’s board.

“We believe this transaction benefits all of our shareholders and customers, and the combined company will be well positioned to capitalize on talent and financial strength with an enhanced presence in exceptional markets,” Chambers said in the release. 

Southern States’ core markets are a mix of community and metropolitan markets and match FB Financial’s desired areas for growth. In addition to Birmingham and Huntsville, that includes Atlanta; Auburn/Opelika, Alabama; and Columbus, Georgia, according to the release.

Southern States shareholders will receive 0.8 shares of FB Financial common stock for each Southern States share they own. The implied transaction value, based on FB Financial’s closing stock price of $47.05 per share as of Friday, is about $37.64 per Southern States share.

Executives said recent regulatory approvals suggest the deal is more likely to close in the third quarter than the fourth. 

“On the regulatory front, of course, we’ve had conversations with our regulators about this transaction, and we’re encouraged by the pace of approvals that we’ve seen in other recent deals in our asset size range,” Holmes said during Monday’s call, pointing to some recent “really quick” regulatory approvals.

Last month, the Federal Reserve approved Tupelo, Mississippi-based Renasant Corp.’s bid to acquire smaller Mississippi rival The First Bancshares, and Jacksonville, Florida-based EverBank Financial Corp. to buy Sterling Bank & Trust.

FB – which counts $13.2 billion in assets and 77 branches across Tennessee, Alabama, Kentucky and north Georgia, with mortgage offices across the Southeast – estimates the transaction will result in 12% earnings per share accretion in 2026, and the combined company would have a common equity tier 1 capital ratio of 12.1%, according to an investor presentation.

FB CFO Michael Mettee put estimated cost savings at about 25% of Southern States’ annual non-interest expenses. Pre-tax transaction expenses are expected to be about $38 million. 

Holmes acknowledged that’s a fairly conservative cost-savings estimate, “and we’re just not going to get much more aggressive,” because the bank envisions room to grow organically within its markets. 

“We have to continue to invest because we think we’ve got exciting opportunities from here,” he told analysts during the call. “This obviously extends our geography; we want to look to continue to extend the geography.” 

FB last acquired another bank in 2020, when it purchased Franklin Financial Network. When an analyst asked about the possibility of FB announcing another acquisition before the Southern States deal closes, Holmes said executives will “continue to have conversations and be reactive,” he said. 

If a strategic opportunity arises before the Southern States deal closes, “we’d have to have conversations with regulators and our team, our board, and figure out how quickly we’d undertake something else,” he said.

“The opportunity to improve our company, improve our value proposition and improve our return on capital – we don’t ever take that off the table,” Holmes said. It’s a matter of “when the factors line up, and we’ll continue to look for that.” 

Holmes referred to a period of “disruption” in the banking industry, and said it’s leading to more recruiting opportunities than FB executives have seen “in a long, long time,” including among bankers who “hadn’t changed jobs in 15 years.” 

“All of us who are really focused on the business are watching how this industry is evolving,” Holmes said.